author: Barrett, J. Van Brunt, P. J.

text:
    The National Broadway Bank, App’lt, v. The Wessell Metal Co. et al, Resp’ts.

      (Supreme Court, General Term, First Department,

      Filed February 13, 1891.)

    1. Corporations—Insolvent—Prevention of preference.
    The directors of an insolvent corporation have no right to secure equality of distribution for all its creditors by means _ other than those pointed out by the various statutes regulating their duties and powers and which, apart from the object s mglit to be obtained, would clearly be irregular and a fraud upon the law.

      2. Same—Sequestration proceedings.
    Plaintiff having commenced an action against the corporation to which it had no defense, its directors agreed with one of their number to confess judgment to him for a portion of a bona fide claim which he held against the company. The judgment was entered, the attorney for the company drawing the papers, and said attorney handed the execution to the sheriff with a direction to return it forthwith, which was done and sequestration proceedings commenced which resulted in the appointment of a receiver, who sold the assets to said judgment creditor for an inadequate sum. In an action to set aside the appointment of the receiver, Held, that unlawful means were used to effect a forbidden end; that plaintiff was in a legal sense hindered, delayed and defrauded, and that a dismissal of the complaint was erroneous.
    Appeal from a judgment of the special term dismissing the plaintiff’s complaint.

      W. F. MacRae, for app’lt; E. D. Worcester, Jr., for resp’t, Wessell Metal Company; Thorndike Saunders, for resp’t, Karrick Riggs; John J. Gleason, for resp’t, George W. Van Siclen, Receiver.
   Barrett, J.

The real question in this case is whether the directors of an insolvent corporation have a right, by improper indirection, to prevent an honest creditor from obtaining the preference which his diligence entitles him to. To put it more fully and precisely, have these directors a right to secure equality of distribution for all the creditors by means other than those pointed out by the various statutes regulating their duties and powers and which, apart from the object sought to be obtained, would clearly be irregular and a fraud upon the law ?

That it is not their duty to take measures to procure a disposition of the company’s property among the creditors, without preference, was expressly held in Varnum v. Hart, 119 N. Y., 105; 28 N. Y. State Rep., 262. “ They may,” says Earl, J., “ like an insolvent person, permit the creditors to take hostile proceedings, and allow those to obtain preferences who are the most vigilant. The statute places no restraint whatever upon the creditors, and they are permitted to pursue their remedies in all the ways allowed by the law and to procure satisfaction of their claims if they can.”

But while no such duty is imposed upon the officers of a corporation, there can, of course, be no objection to any lawful act on their part tending to effect equality of distribution. The statute (Revised Statutes, part 1, chap. 18, tit. 4, § 4) is aimed at unjust discrimination by the company or its officers among the creditors of an insolvent corporation, and these officers cannot be condemned for any lawful or proper effort to prevent one credit- or from obtaining an advantage over the rest. We think, however, that the officers are limited to such direct remedies as the statute affords, or at least to such methods as may be pursued without an abuse of the forms of law, and that they cannot effect their ends by legal shams or other improper indirection. - If the authority conferred by the statute, or the remedy afforded by a proper use of some of its provisions, is insufficient to prevent an impending preference by judgment and execution, the officers must submit However pure their motive, they cannot, to effect their end, transgress the law, or by an abuse of its forms and processes work an equity for which the legislature has made no provision.

Speaking of the legislative purpose to prevent “ unjust discrimination,” Earl, J., in the case cited, observed that it “was to be accomplished in only one way, to wit: By restraint upon the action of the corporation and its officers. They having the best and the earliest knowledge of the actual or impending insolvency, were not to transfer or assign any of its property so as to give any preference or advantage therein to any person; but the purpose was in such cases to have the property to be taken or disposed of by due course of law."

The officers of a corporation must not be wiser or more just than the law. When they find what they imagine to be a casus omissus, they must not attempt to supply the remedy by artifices foreign to the statute and which, but for an undoubtedly good motive, would be morally as well as legally corrupt and fraudulent. Let us apply these principles to the facts of this case. The present plaintiff had sued the defendant company and the directors found themselves face to face with an impending judgment and execution. What were they to do ? The company had personal property amply sufficient to satisfy the impending execution.

The directors could let the law take its course, and they were under no legal obligation tb do otherwise. They could not stop the plaintiff by any remedy pointed out in the statute. Proceedings for the voluntary dissolution of the corporation would not have authorized an injunction until final order. Matter of E. M. Boynton Saw & File Company, 34 Hun, 371; In re Waterbury Trustees, 8 Paige, 380.

Proceedings founded upon the company’s insolvency could not have been instituted for upwards of a year. The statute gave them no general power to apply to the court for an injunction and receiver because of the insolvency of the company or because creditors were menacing it. It is well settled that the court could not under such circumstances aid the directors by virtue of its general or inherent powers, for whatever power there is, is purely statutory. Nor could the directors prevent the collection of the plaintiff’s debt by making a general assignment for the equal benefit of all the creditors, as the statute expressly forbids the making of any assignment whatever, preferential or non-preferential.

The device, then, and the sole device at hand, was to obtain a receiver in sequestration proceedings, under § 1784 of the Code. But the right to institute proceedings under this section was not conferred upon the directors. They could only invoke the remedy indirectly, namely, by an arrangement with a judgment creditor. This proceeding, however, plainly excludes a case where the company, though insolvent, is possessed of sufficient property, real or personal, within the county where it transacts its general business or where its principal office is located, to satisfy the judgment creditors’ execution. It is a proceeding looking solely to the sequestration of such assets of the company as are not leviable. It thus contemplates the possibility of the very preference by clue course of law which the directors desired to prevent. For it is only when the vigilant creditors have had all the tangible property of the com¡3any, within one or the other of the specified counties, applied upon their executions, and there is still a balance unpaid thereon, that the court is authorized to appoint a receiver. And it is only the assets which are left after the ap>plication, thus preferentially, of the tangible property that are to be distributed in the sequestration proceedings equally among all the creditors. In the present case the directors arranged, we might, without intending any reflection upon their good motives, say colluded, with one of their number, Mr. Biggs, who was also the secretary of the company, to confess judgment in his favor, “for the purpose,” to quote the resolution of the board, “of at once placing the company in the hands of a receiver in order equitably to protect the interests of all creditors." Mr. Biggs had an entirely bona fide claim against the company, and there can bo no question on that head. It was a debt, however, which the statute expressly forbade the company to pay (after its notes had gone to protest) by the assignment or transfer, directly or indirectly, of any of its property. And although Mr. Biggs might have lawfully proceeded to judgment upon his claim, any levy thereunder would have been a fraud upon the statute, and such levy would have been treated as void. Kingsley v. First National Bank of Bath, 31 Hun, 337.

Thus the statutory prerequisite to sequestration proceedings was intended to be, and was, a mere form. For Mr. Biggs frankly avowed that he had no intention of levying under his execution, and that his sole object and that of his fellow directors was a mero nominal compliance with the law which required that such an execution should be returned unsatisfied in whole or in part In other words, the purpose was to proceed by means of an avowedly false return. For there was ample property to satisfy Mr. Biggs’ execution. There was also enough to satisfy the plaintiff's execution, even if Mr. Biggs had proceeded under his. Mr. Biggs’ judgment was for $4,108.70, while the two judgments recovered by the plaintiff amounted to $6,100. The tangible property was subsequently sold by the receiver appointed in the sequestration proceedings to this very Mr. Biggs for $10,000, which is but $175 less than the total amount of all the judgments. And this sum of $10,000 was but a fraction of the real value of the property. The receiver reported to the court that although no fraud or deception was practiced in the sale, the price was grossly inadequate, so much so that as an officer of the court he would not carry out the sale because of the “great hardship” and “actual injustice to the creditors of the company.” And in fact he refused to do so until directed by the court.

The sequel is thus a singular commentary upon the high-sounding professions of all concerned, and it illustrates what not unfrequently happens when, to avert some pretense or assumption of evil, the machinery of the law is diverted from its precise statutory uses. What in the end was accomplished here was the practical preference of Mr. Riggs. His judgment was for but a fraction of his claim against the company. In fact the company owed him some $30,000, and the property he has thus secured (even at the valuation put upon it by the president, Mr. Wessell, in his affidavit in the sequestration proceedings) is worth far more than that sum. We are quite aware that this action is not to set aside this sale nor to hold Mr. Riggs as a trustee with regard to his purchase, and these facts are only adverted to because they prove with incisive clearness the character and extent of the sham which permeated these proceedings throughout. They show most conclusively that if Mr. Riggs’ judgment and execution had been enforced, if the sheriff had been permitted to do his ordinary duty and to respect the command of the writ, the present plaintiff, though following that confessed judgment, would have collected every dollar of its execution. It was only because Mr. Riggs' judgment could not be legally enforced that it was confessed; only because the sheriff was not to make the amount of the execution that it ivas issued. In Freeman on Executions, the learned writer says (p. 216) that, “According to a very considerable preponderance of the authorities, no actual intent to hinder, delay or defraud any one (in the issuing of an execution) need be shown. An execution and its lien may be avoided by such conduct on the part of the plaintiff as shows an improper use of his writ, though the motives influencing such conduct, instead of being fraudulent, were grounded on kindness and charity toward the defendant, and free from the slightest design to injure others. The only proper use of an execution is to enforce the collection of a debt, and to enforce it with a considerable degree of diligence. To employ it for> other objects is inconsistent with its nature, and such a perversion from its legitimate purpose as brings it under the penalty prescribed by the statute of Elizabeth.” See also Smith v. Erwin, 77 N. Y., 471; and Forbes v. Waller, 25 id., 430.

Thus it may fairly be said that the plaintiff here has been frustrated solely by the note of the parties, not by the true or genuine operation of the law. The statute has simply been diverted from its natural and well defined channel and made to serve the defendants’ purposes. The entire proceedings were actually instituted, conducted and carried through by the defendant company. Mr. Riggs was, in fact, but the name in which the company applied for sequestration against itself. His participation in the matter was, it is true, active and personal, but it was at all times jointly with the company and its directors and attorney. This is apparent from the findings of the learned judge at special term. They are as follows :

Thirteenth. The action in which said judgment of Riggs was recovered was commenced by the drawing of a summons and complaint in the name of Karrick Riggs against said Wessell Metal Company, by one E. D. Worcester, Jr., an attorney-at-law, and a director of said Wessell Metal Company, who procured the same to be subscribed by one D. Frank Lloyd as said plaintiff’s attorney, on the 29th day of May, 1889; a notice of appearance for said Wessell Company was written out by said Worcester, and the name of his firm, Saunders, Webb & Worcester, subscribed thereto by him on June 3, 1889, and an offer of judgment for $4,000 and interest was written out and prepared by said Worcester and executed by said Wessell Metal Company, and dated as of June 8, 1889, and an acceptance of said offer was written out and prepared and dated as of said June 8, 1889, by said Worcester, and subscribed by said Lloyd.
Fourteenth. That said Worcester wrote out a form of judgment, and on said June 8, 1889, caused to be put together and filed with the clerk of the city and county of New York said papers in said action, and thereupon judgment was entered on said day with said clerk therein, in the name of Karrick Biggs against the Wessel 1 Metal Company, at the hour of eleven o’clock and twenty-one minutes, for the sum of $4,075.
Seventeenth. That after the return of said execution as aforesaid, defendant, Karrick Biggs, began an action to sequestrate the property of said defendant company, being the same action in which the defendant, George W. Van Siclen, was appointed receiver. That the summons and complaint therein were prepared by said Worcester in advance of June 8, 1889, and were subscribed by Saunders, Webb & Worcester as attorneys; and on said day an order was obtained by said Worcester to show cause, returnable on the 10th day of June, 1889, for the appointment of a receiver of said defendant company’s property; an*d on said return day an order was made for the appointment of the defendant, George W. Van Siclen, as such receiver.”

Mr. Worcester was the attorney for the company. His firm were its attorneys of record in Mr. Biggs’ common law action, and they were Mr. Biggs’ attorneys of record in his sequestration action.

Although Mr. Floyd was nominally Mr. Biggs’ attorney in the common law action, yet it was Mr. Worcester who procured his signature to the various papers, who handed the execution to the sheriff and who directed that officer to return it forthwith. It was also Mr. Worcester who moved the resolution in the board of directors authorizing the president to confess judgment to Mr. Biggs, and who moved a subsequent resolution authorizing the president to consent to the appointment of Mr. Biggs or any other proper person as receiver. Nearly every word in both records, the common law action and the sequestration proceedings, was written by Mr. Worcester, and his firm moved the court for the appointment of the receiver. Mr. Van Siclen was appointed upon the written suggestion of Mr. Biggs and upon the consent" of the defendant corporation. It is not too much to say, therefore, however it may appear in form, that this company applied for its own sequestration and, obtained its own receiver. If such proceedings as these are to be sustained, what then becomes of the statute forbidding an assignment or transfer of any kind, even non-preferential, in trust for creditors? What have these gentlemen effected if it be not the transfer thus forbidden? Formally the transfer is by operation of law; substantially it is by their own act. It was held in Kingsley v. First National Bank of Bath, supra, that a corporation by offering to “ allow judgments to be taken against it in certain actions, before its time to answer therein had expired, m effect transferred and assigned its property, in contemplation of insolvency, in violation of § 4 of title 4 of chapter 18 of part 1 of the Revised Statutes, and that the judgments entered upon such consent were thereby avoided and rendered of no effect.”

Barker, J., speaking for the general term, said' that “ there is no real distinction between a conveyance or transfer directly from the corporation to its creditor, and one from the sheriff by means of legal proceedings against its property. The sheriff realizes the money by a sale of the property and hands the same over to the creditor, with the consent of the debtor. In the eyes of the law it is a sale, with the consent of the latter, for the purpose of paying his debt. A perfect levy upon property by execution, issued on a valid judgment, followed by a sale, is in every sense of the term a transfer of the property to pay the judgment.”

The decision against confessed judgments in that case was not placed solely upon the ground that a preference was thus effected. That ground was specially applicable to officers of the company. But the court, in what we have quoted, was considering the cases of ordinary creditors, and the decision was expressly placed upon the ground not merely of a preference, but of what amounted in law to a transfer or assignment of property, forbidden by the statute. This is evident from Mr. Justice Barker’s subsequent language. “The statute,” he says, “ declares the assignment or transfer void, in case the same is made in -contemplation of insolvency. The question to be determined is not one of fraud, or of an intent on the part of the creditor to obtain a preference in the payment of his debt; but the simple inquiry is, was there actual or contemplative insolvency and a transfer of property for the benefit of creditors. If both these acts are established then the transaction is void. And he cites: Brouwer v. Harbeck, supra; Harris v. Thompson, 15 Barb., 62; cited and approved in 33 N. Y., 96; Robinson as Receiver v. The Bank of Attica, 21 id., 406 ; Dutcher v. Importers & Traders' Bank, 59 id., 5; Bump on Fraudulent Conveyances, 256 ; In the Matter of Hurst, an insolvent debtor, 7 Wend., 239.

The question then, is unimportant whether by means of the confession and subsequent proceedings there was a transfer for the benefit of a particular creditor or of creditors generally. Any transfer is forbidden, and if in fact such transfer was effected without direct statutory authority, and without even the genuine application of a judgment creditor, operating in good faith under the provisions of the statute as to sequestration,- such transfer is unauthorized and void, and being unauthorized and void, it is in law a fraudulent obstruction to the plaintiff’s judgment and execution.

We do not mean to intimate that in the sequestration proceedings the court had not jurisdiction, nor do we doubt that the defendant company could waive all objections to the proper return •of the execution. Whittlesey v. Frantz, 74 N. Y., 456. We lay-no technical stress upon the admitted fact that the sequestration action was actually commenced before the execution was returned. The return of an execution unsatisfied is undoubtedly a jurisdictional pre-requisite to sequestration proceedings, but the company could waive the point. It could even admit the false allegation that the execution had been returned before the commencement of the action, and a third person in a collateral suit could not question the jurisdiction acquired by such admission. The plaintiff’s rights in this action do not depend upon the question of jurisdiction at all, nor has the company’s waiver of technical difficulties anything to do with it The question is as to the acts of the parties within the jurisdiction, and how the exercise of jurisdiction was set in motion and utilized. The defendant seems to think that the bona fides of Mr. Biggs’ claim is the only important factor, and that when that is conceded all else is condoned. Their position, however, would be but little worse in principle if Mr. Biggs’ claim had not been bona fide. He could still have alleged (we will assume in an unverified complaint) a bona fide debt, the company could have admitted it, and judgment could have been taken on the admission or upon an offer. Now, if this proceeding were attacked, the same argument could be made: our object was not to collect a debt at all, but to effect an equal distribution of property. And after all, what harm have we done ? It was for the corporation, not you, the aggressive, pursuing creditor, to complain if the alleged debt was assailable. If the company was satisfied and the court had jurisdiction of parties and subject matter, that is the end of it. You cannot attack our proceedings collaterally. We have prevented an unjust preference, and the means adopted are immaterial. Anything to prevent the collection of a preferential judgment.

Such a doctrine would lead to perpetual evasions of the statute and in the end to its practical nullification.

Our judgment, then, rests on no narrow or technical point, but on the broad ground that unlawful means were here used to effect a forbidden end, namely, the means of a collusively confessed judgment, an equally collusive execution, issued as a sham and returned as a sham, followed by sequestration proceedings founded upon these shams, instituted by the defendant company against itself through its own counsel, all to effect the end of a practical transfer by the directors themselves (using the court as their agent and moving it with apparent frankness, but real concealment and deception) to an official trustee (of their own selection) for the benefit of creditors. We think the plaintiff was thus, in a legal sense, hindered, delayed and defrauded, and that it was entitled to proceed in the due course of law without being obstructed by the proceedings in question.

The judgment should, therefore, be reversed and a new trial ordered, with costs to abide the event.

Van Brunt, P. J.

I concur in the foregoing opinion except the proposition that in this action the question of the jurisdiction of the court in the sequestration proceedings could not be inquired into and that the defendant company could waive all objections based upon the want of return of the execution at the time the sequestration action was commenced. The authority cited, Whittlesey v. Frantz, 74 N. Y., 456, does not sustain the proposition.

This was an action by the receiver of a corporation to recover a debt, and it was held that in such an action the regularity of the appointment of the receiver could not be called in question as that would be assailing such appointment collaterally.

In the case at bar the sequestration proceedings are not attacked collaterally, but an action is brought to set them aside because of fraud; they are attacked directly. If the admission of the corporation that an execution has been returned unsatisfied where, in fact, it has not been so returned, is binding in this action, then I can see no reason why sequestration proceedings may not ripen into the appointment of a receiver which cannot be assailed, where there is not even a judgment in fact. All that would b'e necessary would be to have the complaint alleged a judgment and the answer of the corporation,admit it, and jurisdiction would be conferred. This, of course, cannot be so. In an action brought to set aside such proceedings, jurisdiction depending upon admission can certainly be inquired into.

Bartlett, J., concurs in the result.


source: Caselaw Access Project

author: Van Brunt, P. J.

license: Public Domain

text:
    Frank W. Miller, Pl'ff, v. The Union Switch & Signal Co., Def’t.

      (Supreme Court, General Term, First Department,

      Filed February 13, 1891.)

    1. Bab—Action fob instalments on contbact bbought by assignee.
    Where a plaintiff has by separate assignments, made at different times, acquired title to claims for instalments due under a contract, he is not bound to include all the claims in one action. It is only where the class of proof is the same as to all the causes of action existing that the rule that a recovery for one instalment under a contract is a bar to all that were due at the time of the commencement of the action applies.
    2. Fobmeb adjudication—Facts admitted in pleading.
    A judgment founded upon an admission in the pleadings establishes the fact admitted, if necessary to the judgment, as conclusively as though the fact had been found from the evidence.
    Motion on the part of plaintiff for judgment on the verdict and by defendant to set aside the verdict on exceptions ordered to be heard in the first instance at the general term.

      C. E. Hughes, for app’lt; George W. Miller, for resp’t.
   Van Brunt, P. J.

This action was brought on the 13th of October, 1888, by the plaintiff as the assignee of one Johnson, to recover an instalment of royalties claimed to have become due to said Johnson on the 1st of June, 1888, under a contract entered into in September, 1886, between said Johnson and the defendant.

It appeared upon the trial of the action that on the 31st of October, 1888, this plaintiff commenced an action in the superior court of the city of New York against this defendant to recover an instalment of royalties under said contract for the quarter ending September 1, 1888, and on the 12th of April, 1890, obtained a judgment in said superior court against the defendant for this second instalment. It was claimed by the defendant upon the trial that the judgment of the superior court was a judgment for the same cause of action as that upon which the plaintiff is now suing, and therefore whatever claim the plaintiff had for the first instalment is merged in that judgment And it is further claimed that plaintiff has failed to prove the termination of the contract, which was a necessary fact to be proven in order that the plaintiff might maintain this action.

It may be conceded that had Johnson, the original contracting party, commenced these actions, both instalments being due, that a judgment in one merged the claim for all that was due under the contract at the time at which the action was commenced, and that under such circumstances the claim of the defendants that the superior court judgment is a bar would be well founded.

The question, however, presented is whether the plaintiff, having by separate and distinct assignments made at different times acquired title to whatever claim Johnson had against the defendants for these royalties, was bound to embrace in one action all the claims which he had thus become the owner of by separate and distinct assignments. We think that the fact that the plaintiff had thus acquired his title makes the rule above cited inapplicable to the case at bar. The plaintiff would be required to give separate and distinct proof of his title to these.two causes of action. His authority to sue in each case depended upon different instruments. It is true that the foundation of the causes of action in Johnson rested upon one and the same instrument; but his assignee had his standing in court by virtue of the assignments of Johnson’s claims, which were separable, and which necessitated distinct and separate proof upon his part. It is only in those cases where the class of proof is the same as to all' the causes of action existing that the rule that a recovery for one instalment upon a contract is a bar to all that were due at the time of the commencement of the action applies. Stowell v. Chamberlain, 60 N. Y., 272. It was said in the case cited that the question is whether the same evidence will maintain both actions. In the case at bar in order to establish his cause of action the plaintiff was required to put in evidence his assignment In the action in the superior court he was obliged to put in evidence a different assignment Thus a difference in proof was necessary and no principle has been called to our attention, nor any case cited which holds that where a party obtains title by different instruments to his causes of action that he is bound to unite them all in one suit

This brings us to the second proposition, namely, that there was no proof of the termination of the contract in question so as to give Johnson the right to claim these royalties. It has not been deemed necessary to advert at length to the terms of this contract, inasmuch as the question presented is one of law upon conceded facts.

It is claimed upon the part of the plaintiff that it having been adjudicated in the action in the superior court that he had a right to recover for these royalties as though the contract had been terminated, that that question cannot be again litigated in the case at bar.

It is urged upon the part of the defendant that the adjudication in the superior court is not conclusive because the pleadings are not the same, in that in the answer in the superior court action it was admitted that the contract had been terminated, and in the case at bar such termination was denied.

We do not understand that the form of pleading in any way affects the conclusiveness of an adjudication as to a fact necessary for the maintenance of the action in which the judgment has been obtained. A judgment founded upon an admission establishes the fact admitted, if necessary to the judgment, as conclusively as though the fact had been found from evidence. The sole object of requiring an answer to a claim is to avoid the necessity of taking evidence as to admitted facts, and to inform the claimant what facts he must produce evidence to establish. The adjudication is founded upon the facts established by admissions contained in the pleadings as well as upon the facts proved by the evidence; and the judgment is conclusive between the parties to the record as to the facts thus established.

Therefore, it is immaterial whether the termination of the contract was adjudicated in the action in the superior court because of an admission in the pleadings or because' it had been so established by the evidence. As between the parties the effect of the adjudication was the same, and, therefore, the court was right in holding that the question as to the termination of the contract was not open to further investigation. The introduction of that judgment established the allegations of the complaint and overcame the denial contained in the answer.

The exceptions should be overruled and judgment ordered for the plaintiff upon the verdict, with costs.

Barrett and Bartlett, JJ., concur.


text:
    The People ex rel. John P. Leo et al. v. David B. Hill, as Commander in Chief of the Militia Forces of the State, et al.

      (Supreme Court, General Term, First Department,

      Filed February 13, 1891.)

    1. National guard—Certiorari will not lie to review action of commander IN CHIEF IN DISBANDING COMPANY.
    A writ of certiorari will not lie to review an order of the governor as commander in chief disbanding a company of the national guard.
    2. Same—Con stitutoinal law.
    The provision of the military code authorizing the commander in chief to disband a company is not unconstitutional.
    3. Same—Relieving officer of command not a removal.
    The effect of such disbandment is to relieve an officer thereof of his command, and not his removal from office.
    4. Same—Federal statute.
    The provisions of the United States revised statutes in reference to the government of the militia apply to the state militia only when they are called into the service of the general government.

      Application for a writ of certiorari, directed to the commander-in-chief of the state militia and to the adjutant-general and assistant inspector-general, to review an- order made by the governor of this state, as commander-in-chief, on the 10th of October, 1890, disbanding Company I of the Twenty-second regiment of the National Guard. The following is the opinion of the court below at chambers:
    Andrews, J.—This is an application for a writ of certiorari, made upon notice to the respondents, the object of which is to obtain a review of an order made by the governor of this state, as ■commander-in-chief of the military forces, on October 10, 1890, disbanding Company I of the Twenty-second regiment of the National Guard. The only question to be determined now is whether the court should grant the writ, so that the relators can apply to die general term of this court for such review. Upon the nearing of the application the governor appeared specially by the attorney-general for the purpose of objecting to the jurisdiction of the court to review his action, either in the capacity of governor or commander-in-chief of the state militia. The adjutant-general and assistant inspector-general also appeared by the judge advocate-general and objected to tbe granting of the writ on various grounds.'
    The statute of this state, known, as the Military Code, provides that the commander-in-chief shall have power to alter, divide, annex, consolidate, disband, or reorganize the several divisions, brigades, regiments, battalions, troops, 'batteries and companies of the National Guard, whenever, in his judgment, the efficiency of the state forces will be thereby increased.

    Under this statute the question whether Company I of the ‘Twenty-second regiment ought to have been disbanded was to be determined by the commander-in-chief alone; and the fact that he made the order in question raises the presumption that he did ■so because it was his judgment that the efficiency of the state forces would be thereby increased, and if said statute is a valid law the decision of the commander-in-chief cannot be reviewed by the courts, for the reason that the exercise by a public officer of a ■discretionary power, such as is given by the legislature to the ■commander-in-chief in this matter, is never subject to review by the courts. People v. Walter, 68 N. Y., 403; People v. Fire Com'rs, 82 id., 358; People v. Fire Gom'rs, 100 id., 82.
    If, therefore, the statute in question is a valid law, it would be useless to grant a writ of certiorari, because it is certain that the general term would not review the action of the commander in ■chief in disbanding said company.
    It is claimed, however, that the statute is invalid because it conflicts with the constitutions of this state and of the United States, .and also with certain acts of congress.
    I have examined the various objections raised against the validity of the provisions of the statute which authorize the disbandment of military organizations, and none of them seems to me to be well founded.

      It is claimed that such provisions conflict with that part of § 5 of art 11 of the constitution of this state, which prescribes the manner in which commissioned officers may be removed. This question, however, has been heretofore raised twice in this state, and in each case the decision of the courts was a verse to the contention of the relator. People v. Scrugham, 25 Barb., 217 ; People v. Ewen, 17 How. Pr., 375.
    It is also claimed that the statute conflicts with § 8 of art. 1 of the constitution of the United States, which empowers congress to provide for calling forth the militia of the several states, in certain cases, and for organizing, arming and disciplining such militia, and for governing such part of them as may be employed in the service of the United States It is, however, well settled that “state laws for organizing and disciplining the militia are valid except as they may conflict with national legislation.” Cooley’s Constitutional Limitations, 5th ed., p. 25; Houston v. Moore, 5 Wheaton, 1; Slurges v. Orouminshield, 4 id., 122 ; Gilman v. Philadelphia, 3 Wall, 713 ; Dunne v. People, 94 111., 125. But the statute in question not only does not conflict with national legislation but is expressly authorized by it, for § 1630 of the U. S. Revised Statutes provides that “the militia of each state shall be arranged into divisions, brigades, regiments, battalions and companies, as the legislature of the state may direct. ” The other provisions of the section as to the manner of organizing the militia are permissive merely, and it is only when the militia is called into the actual service of the United States that “ it is to be organized as in the regular service.” §§ 1645-1647. "
    Moreover, upon the merits, neither of the relators is in a position to complain of the provisions of the Military Code of this state which authorized the commander in chief to disband his company.
    The relator Leo received his commission in 1885, and at that time §§ 7 and 44 of the Military Code, chap. 299, Laws 1883, contained provisions for the disbandment of organizations of the militia, and the rendering their officers supernumerary, and substantially the same provisions had been upon the statute book for many years previous. People v. Scrugham, supra, pp. 224-226. Said relator must, therefore, be deemed to have known, when he took the office, that he might be deprived of it by the disbandment of his company.
    The relator Stryker also is chargeable with knowledge of the provisions of the statute, and although he may have enlisted for a definite term he must have been aware that his company might be lawfully disbanded and that he might thus be prevented from serving the full term for which he enlisted, and thereby obtaining exemption from jury duty.
    Nor is the objection well founded that Stryker could not be discharged, except after notice and a hearing, for § 48 of the Military Code, which provides for such notice and hearing, applies to those cases only where the discharge is made upon the recommendation of the commanding officer of the troop, battery or company, and has no application to a case like the present one,

      where the discharge results from the disbandment of a company. It may, however, be said that although the special term of this court is fully convinced that the provisions of the Military Code, which authorizes the commander in chief to disband organizations of the national guard, is a valid law, it should grant the writ, and thus enable the relators to have the questions involved passed upon by the general term of this court, and if the relators should see fit, by the court of appeals and the supreme court of the United States. There are several answers to this proposition. In the first place, the granting or refusal of the writ is discretionary with the court, Code of Civil Procedure, § 2127, and if the court is entirely satisfied that some of the questions raised by the relators have been repeatedly decided by the courts adversely to their contention, and that the other questions are free from doubt, it would seem to be a proper exercise of the discretion of the court to decline to grant the writ.
    In the second place, the relators can bring such questions before the general term, either by an appeal from an order denying their application or by another application for a writ, to be made directly to the general term itself.
    In the third place, the question of the legal right of the governor of this state, acting as commander in chief, to make the order which disbanded the company of the relators, cannot be reviewed by means of a writ of certiorari without issuing such writ directly to the governor himself. The adjutant general and the assistant inspector general are merely the agencies employed by the commander in chief, pursuant to military law and usage, in promulgating and carrying out the order.
    If the court has jurisdiction to review the action of the commander in chief in making the order, and the relators should be successful, it would seem to be the duty of the court to annul the order in question and to require the commander in chief and other military officers to recognize the disbanded company as one of the companies of the Twenty-second Regiment and to accord to such company, its officers and men, the same rights and privileges that are accorded to the other companies of that regiment. IE the court should undertake to exercise such powers, I do not see how its action could be made effective unless the writ should be issued to the governor and he be thereby made a party to the proceeding.
    It is, to say the least, extremely doubtful whether the court has jurisdiction to grant such a writ directed to the governor. The assumption of such jurisdiction by the court in time of war, insurrection or riot, might paralyze the military authorities of the state, and lead to intolerable confusion and mischief; but, if such jurisdiction exists at all, it could be exercised under those circumstances as well as under those existing in the present case, and that fact is certainly a strong argument against the existence of such jurisdiction.
    The learned and industrious counsel for the relators have not referred me to any case in which a writ of certiorari has been issued to the governor of a state. Reference is made to the case •of People ex rel. Nichols v. The Mayor, 19 Hun, 441; 21 id., 517, and Matter of Nichols, 6 Abb. N. G, 474. But that was a case in which it was said that the governor acted judicially in approving, the removal of a civil officer by the mayor of New York, city, and that the court had jurisdiction to review the decision of the governor by means of a writ of certiorari; but no writ was issued to the governor in that case, and what was said upon the subject of the power of the court by the judge at special term was entirely obiter, and cannot be regarded as a binding authority. Besides, it would by no means follow that, if the coiprt' did have jurisdiction to review the decision of the governor in that case, it would have jurisdiction to review a military order made by the governor as commander in chief.
    The learned attorney-general states in his brief that some years since a special term of the supreme court issued, ex parte, a writ of certiorari to his excellency, Gov. Eobinson, for the purpose of reviewing his action in dismissing one Cocheu from the military service. Gov. Eobinson declined to make any return to this writ, but sent a respectful communication to the court, denying its jurisdiction to inquire into his executive acts in such a manner, and no further proceedings were had in the case.
    The attorney-general also states that an application was made, upon notice, to the special term of'the supreme court, in the eighth district, for a writ of certiorari, for the purpose of reviewing the action of Gov. Hoffman in removing one Shaw from the office of commissioner of the Niagara frontier police. The then attorney-general appeared, and protested that the court did not have jurisdiction to grant the writ, and the application was denied.
    It is also stated that the above two are the only cases in which it can be ascertained that applications for writs of certiorari, directed to the governor, have been made in this state, and it is further stated that not a single precedent can be found in the jurisprudence of the country where an attempt has been made to review, in such a manner, the action of the executive department, either of the state or of the general government. The attorney-general also cites a number of cases in which it has been held that a writ of mandamus would not be issued to compel the performance of executive duties; but there are other cases, in which the contrary view has been taken. Cooley’s Constitutional Limitations, 5th ed., p. 138, note 3.
    There can be no question but that most of the duties imposed upon the governor are of an executive or ministerial character, performed under the direct authority of the constitution and of valid acts of the legislature, and that his acts in the performance of such duties cannot be reviewed by the courts ; but the precise question raised in the present case, whether the courts can review an act done by the governor as commander in chief, under authority not given by the constitution itself, but by an act of the legislature, which, it is claimed, is void because it is in conflict with the constitutions of the state and of the Hnited States and with acts of congress, does not appear to have been heretofore decided or considered by the courts.

      In view of the fact that, with the two exceptions above mentioned, no precedent for an application of this character can be found; of the decisions and reasoning of the courts in cases where it has been held that mandamus would not lie to compel the performance of executive duties; of the undoubted rule of law that the executive and ministerial acts of the governor, done under the direct authority of the constitution itself and of valid acts of the legislature, can not be reviewed by, the courts ; and of the many and serious objections .to any attempt on the part of the courts to review the acts of the governor, as commander in chief,even though done under a statute which, it is claimed, is void, I think that a writ of certiorari directed to the governor ought not to be granted in the present case, certainly not by a single judge, sitting at special term.
    For this reason, and the others hereinbefore set forth, the application will be denied with costs, but without prejudice to the right of relators to renew the application to the general term of this court, if they shall see fit to do so, instead of appealing from the order to be entered pursuant to this opinion.

      A. B. Gardner and W. C. Reddy, for the relators; Chas. F. Tabor, Almet F. Jenks and W. W. Ladd, Jr., for resp’ts.
   Van Brunt, P. J.

It would not be at all necessary to add anything to the very satisfactory opinion pronounced by Mr. Justice Andrews upon the application- to the special term for this same writ of certiorari because we can do little but reiterate what has already been said by him in the consideration of the subject when the application was before him for consideration, were it not for the fact that it seems to be assumed by the learned counsel for the relators that whatever rights the state of Hew York has in reference to the government of its militia are derived from the federal constitution and laws, and that unless we can find authority in such constitution or in the enactments of congress for the action which has been taken, the legislature of this state had no right to confer the power to act upon its governor; whereas, upon the contrary, whatever delegation of authority has been made is from the People to the United States, and only to the extent provided for in the constitution of the United States. It therefore follows that in considering the argument very briefly we must have regard to the constitution of the United States and gather from that what authority has been conferred by the People upon the United States in reference to its militia.

The 15th subdivision of § 8 of the constitution provides that congress shall have power to provide for calling forth the militia to execute the laws of the Union, suppress insurrection and repel invasion; and by the 16th subdivision to provide fot organizing, arming and disciplining' the militia and for governing such part of them as may be employed in the service of the United States, reserving to the states, respectively, the appointment of the officers and the authority of training the militia according to the discipline prescribed by congress.

It will thus be seen that the power conferred upon the United States is to provide for organizing, arming and disciplining the militia and governing such part of them as may be employed in the service of the United States. It is apparent that the organization here mentioned refers to the manner of formation of the militia, the weapons with which they shall be armed and the tactics in which they shall be instructed. “ Disciplining ” as used in this section refers in no wise to governmental action, as is apparent from the last clause of the section where it is provided that the authority of training the militia according to the discipline - prescribed by congress is reserved to the states. And the states were so zealous in guarding the right to control the government of the militia, and the material of its organization, that in order that there should be no mistake and that no greater powers should be claimed because of the word “ organizing ” than were implied in prescribing the method of the formation of the militia, the appointment of officers and authority to train is expressly reserved ; and the only instance where governmental powers may be exercised by the United States is distinctly mentioned, viz.: when the militia shall be employed in the' service of the United States. At all other times the whole government of the militia is within the province of the state; and therefore any legislation which the state may adopt relating to the government of the militia is in no" wise in contravention of the powers conferred upon congress as long as it does not infringe upon the method of organization.

Why was the power granted to the United States to provide for organizing, arming and disciplining the militia ? It was that the militia should be organized after one model, armed in an uniform manner, and disciplined in one system of tactics; the result being that when the militia of different states come together called into service by the government of the United States, they come together as a homogeneous body, all organized in one way, armed in one way -and disciplined in one way; and not as a confused mass having different methods of organization, different arms, and acquainted with different systems of tactics, and hence their usefulness very materially impaired.

It was to provide against this contingency that this power was conferred upon the United States by the constitution, and beyond this the state delegated no authority to the United States to interfere in their internal affairs in respect to the government of the militia.

Now it may be that in some particulars the Military Code which has been adopted by the state of Hew York may infringe upon some of the regulations of congress passed pursuant to the authority conferred by the constitution of the United States; but they in no respect relate to the subject which is presented to the court upon the claim of a right to review the action of the authorities of this state in disbanding a company of militia. - It was in pursuance of the authority conferred by the constitution that in the Eevised Statutes, § 1630, it was provided that the militia of each state shall be arranged into divisions, brigades, regiments, battalions and companies, as the legislature might direct; and that each brigade might consist of a certain number of regiments, each regiment of a certain number of battalions, each battalion of a certain number of companies, and each company of a certain number of men, and there is no attempt in .the legislation of congress to interfere with the government of the militia, except when called into the service of the United States.

It seems necessarily to follow that all governmental powers are to be exercised by the state within the limits of the constitution of the state in such manner as the legislature may direct.

But it is urged that the statute was a violation of the state constitution in that it removed the relator Leo from his office and status as an officer of the militia, contrary to art. 11, § 5, of the constitution of the state of Hew York, which provides that no commissioned officer shall be removed from office unless by the senate, on the recommendation of the governor, stating the ground on which such removal is recommended, or by the decision of a court martial pursuant to law. It is clear that this provision has not been transgressed. The relator has not been removed from his office, but simply relieved of his command, a distinction recognized by all military authorities and acted upon by the president of the United States continuously in his supervision of the regular army of the United States.

It is urged, however, that this court should exercise supervision of the action of the governor in cases of this description, because if he has the absolute discretion, as provided by the statute, such discretion may be grossly abused. The presumption usually is that public officers will perform their duty conscientiously and for the best interest of the community, and if this court is to review the action of the governor in doing those things which he has been expressly authorized in his discretion to do by the legislature, then the courts may be called upon to review executive officers in their appointment of officers, where the legislature has seen fit to confer such power, upon the ground that they have abused the discretion conferred upon them. It seems apparent that such an argument cannot obtain, as the power is no more absolute in the one case than it is in the other.

It seems to be assumed that all the provisions of the Revised Statutes of the United States in reference to the government of the militia are applicable to those times when the power to govern the militia has been expressly reserved to the states.

It is clear that these regulations apply to the militia only when they are subject to the governmental power of the United States, viz., when they are called into its service.

It is needless to pursue the subject further, because it seems to us that the arrogation by the court of any such power as is claimed would be an invasion of the functions of another department oi the government and would be absolutely subversive of that respect for and obedience to authority which is necessary in every military organization.

We think, therefore, that there is no case made out which would justify this court in granting the writ asked for, and the application must be denied.

Daniels and O’Brien, JJ., concur.


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    The People ex rel. Locke W. Winchester, Treas’r, Resp’t, v. Michael Colemant et al., App’lts, Com’rs.

      (Supreme Court, General Term, First Department,

      Filed February 13, 1891.)

    Taxes—Joint stock associations.
    A joint stock association formed solely by private agreement is not a corporation, and hence not taxable under the Revised Statutes on its. capital.

      (People ex rel. Platt v. Wemple, 117 N. Y., 136; 27 2ST. Y. State Rep., 341, distinguished.)
    Appeal from judgment entered in favor of the relators vacating assessment, etc.

      G. S. Coleman, for app’lts; J. C Carter, for resp’t.

       Affirming 24 N. Y. State Rep., 970.

   Van Brunt, P. J.

We might very well rest our decision in case upon very satisfactory opinion rendered in the court, below, because we think that the reasons given in that opinion for the conclusions therein reached are entirely sufficient.

But it might be said if we contented ourselves with that statement that we had overlooked the case of The People ex rel. Platt v. Wemple, 117 N. Y., 136; 27 N. Y. State Rep., 341, upon which great reliance seems to be placed by the counsel for the appellants, it being claimed by him that the grounds upon which the court below based its opinion are shown by this case to be unfounded.

An examination of that case will show undoubtedly a use of' language apparently inconsistent with that which was employed by the learned judge in his opinion in the case at bar; but it will be seen that there is a distinction in the language without any difference whatever in the position. ■

The learned judge stated that the true test is whether a body is natural or artificial. “It is artificial if created by statute or called into being by compliance with statutory provisions ; it is natural when solely the creature of private contract.”

In the case cited the court of appeals say, that the body resulting from the agreement for the formation of this joint stock association is an artificial body.

It is perfectly evident that what they meant by that is that the unit resulting from the agreement of the several individuals associatinf themselves together is an artificial body; the word “artificial ” in that case being used for the purpose of distinguishing this unit formed by this aggregation of individuals from an individual called a natural person.

The learned judge in the court below used the word “artificial ” in his decision in the case at bar in an entirely different sense.

He stated that a body was artificial which derived its wh right to exist from statutory enactment, and he called a body natural body which existed because of a private contract.

In other words an artificial body draws the whole of its lift from the state; a natural body from its inherent right to exist de^ rived from the common law. And therefore it seems to us that no argument whatever can be placed upon this case cited which is in any way hostile to the reasoning of the court below.

It is further to be observed that all that the court of appeals decided in that case was that joint stock associations are organized under the laws of the state.

The court were interpreting an act entitled as follows: “ An act for raising taxes for the use of the state upon certain corporations, joint stock companies, and associations,” by which it was provided that “ every corporation, joint stock company or association whatever now or hereafter incorporated or organized under any law of this state, or now or hereafter incorporated or organized by or under the laws of any other state or country, and doing business in this state, shall be subject to and pay a tax, etc.” Laws of 1881, chap. 361.

It was claimed upon the part of the relators that they, not being a corporation, were not subject to a tax, although joint stock associations were mentioned; and all that the court decided was that under the provisions of that act the relator, a joint stock association, was liable to taxation because they were organized under the laws of this state, in that their agreement of association permitted them to do those things which they were entitled to do only because of the existence of special statutes upon the subject. That, in the opinion of the legislature in this legislation, joint stock companies were not incorporated seems to be established by the fact that chap. 542 of the Laws of 1880 upon this subject was amended to insert the words “ or organized ” in addition to the word “incorporated.”

The language of the act of 1880 was “ every corporation, joint stock company or association whatever now or hereafter incorporated under any law of this state.” It is clear that it was deemed by the legislature that this did not subject joint stock associations to this taxation, although mentioned in the title, and they thought it necessary, because such companies were not incorporated, to use the words “or organized.” And the court held that because of the use of those words, they being organized under the laws of the state, they were subject to the taxation therein provided for.

In the case at bar it is sought to tax the relator as a corporation pure and simple under the Revised Statutes, which provide that all monied or stock corporations deriving an income or profit from their capital shall be liable to taxation upon their capital in the manner therein prescribed.

This is certainly going far beyond anything even hinted at by the decision of the court of appeals in the case of Plait v. Wempte.

It seems to be assumed by the counsel for the appellant that every association of individuals formed pursuant to or under the laws of the state must necessarily be a corporation. That this claim cannot be sustained is evident when we reflect that all limited partnerships are formed under the laws of this state.

All parties have a right, as these joint stock associations have a right, to form a partnership by agreement But the latter have no right to certain privileges resulting from the method of association, except they provide for the same by their agreement, which they are allowed to do by the provisions of the statute. And this is precisely the same as in the case of a limited partnership. A limited partnership enjoys certain privileges resulting from the provisions of the statute providing such provisions are complied with. A limited partnership is organized, therefore, under the laws of the state precisely the same as a joint stock association. But can it be said for a moment, because a limited partnership is organized under the laws of the state, and enjoys privileges conferred by statute resulting from its peculiar organization, that, therefore, it is a corporation; and that is all which a joint stock association enjoys.

There are no provisions of the statute regulating the formation of such associations, but they are authorized by statute to enjoy certain privileges not belonging to copartnerships, strictly speaking, provided the statute is complied with.

We think, therefore, that the judgment appealed from should be affirmed, with costs.

Bartlett, J., concurs.


text:
    William B. Cooper, Resp’t, v. Alfred M. Townsend, Impl’d, App’lt.

      (Supreme Court, General Term, First Department,

      Filed February 13, 1891.)

    1. Judgment—Effect of modification by general term.
    In a former action between a banking corporation which had made advances on consigned goods to the consignors who thereafter failed, and this plaintiff, the consignee, it was adjudged that a sum deposited as security belonged to plaintiff. The general term modified the judgment by providing that it should be without prejudice to any superior right of a creditor of the consignors or their assignee, if any exist. Meld, that such modification was intended simply to save the right of creditors other than the plaintiff therein to challenge the adjudication that the consignors were indebted to this plaintiff in a sum greater than the sum so deposited, and did not render attaching creditors of the consignors necessary parties to an action to recover said sum from the depositary. '
    8. Parties—Deposit as security—Attachments.
    The judgment in said action having determined that the money on deposit belonged to this plaintiff, an attachment against other persons could not affect his right to draw it. v
    8. Same.
    The deposit was in the form of a certified check of the banking company, to whom the fund had been paid, and the bank was directed to pay the same on the endorsement of P. and T. in case of a recovery in favor of this plaintiff. In an action to compel the delivery of the check and its proper endorsement to enable plaintiff to draw the money, Meld, that the bank was a proper party, and that its cashier, although not individually a necessary party was not an improper one.
    4. Same—Costs.
    Defendant T., having acted throughout in behalf of the banking company, and being the party who openly and defiantly resisted the decrees of the court, was properly charged with the costs.
    5. Same—Interest.
    As the agreement provided onlv for the payment of the money on surrender of the check, properly endorsed, the bank was not liable for interest from the time of the original demand.

      Appeal from judgment of special term in favor of plaintiff.

      A. A. Redfield, for app’lt; J. M. Bowers, for resp’t.
   Van Brunt, P. J.

It appeared from the evidence in this case that the Hong Kong & Shanghai Banking Company was a foreign corporation ; and that the plaintiff herein is a comission merchant doing business in the city of Hew York; that the firm of Martin, Dyce & Co. were merchants doing business at Manilla; that the firm of Martin, Turner & Co. were bankers doing business at Glasgow, Scotland, the same persons composing the two last mentioned firms.

In September, 1883, at the city of Hew York, the plaintiff sold 4.000 bales of hemp to certain merchants in the city of Hew York, to be shipped from Manilla during the month of October or Hoyember, 1883, to be paid for on arrival at the port of Hew York. Immediately after making said sales the plaintiff notified the firm of Martin, Dyce & Co. thereof, and that he had sold 4,000 bales of hemp for their account. In October, 1883, Martin, Dyce & Co. shipped 4,000 bales of hemp and received from the master of the vessel bills of lading therefor in the usual form, declaring that the same was deliverable at the port of Hew York to the order of Martin, Dyce & Co. Thereafter said firm endorsed said bills in blank and transferred them to said banking company, who, on the faith thereof, advanced to said firm over £18,000 and drew bills of exchange therefor on the firm of Martin, Turner & Co., of Glasgow. These bills were subsequently accepted by Martin, Turner & Co., and became due in May and June.

At the time of such advances the banking company had no knowledge or notice of the sale of said hemp. Thereafter said firm of Martin, Dyce & Co. notified the plaintiff that they had shipped the 4,000 bales, which notification reached him in December, 1883. In February, 1884, said firms of Martin, Dyce & Co., and Martin, Turner & Co. suspended payment and became bankrupt, leaving unpaid the bills of exchange. Upon the arrival of the hemp at the port of Hew York the banking company took possession thereof as the transferee of said bills of lading. In March, 1884, the banking company wrote to the plaintiff and inquired whether this hemp had been sold to arrive and was informed by the plaintiff that it had been so sold for something like £4,000 over its then value and that the contracts had been made in his name. Up to this time the plaintiff had no knowledge or notice that the banking company was at all interested in the hemp in question. A few days subsequently in March, 1884, the plaintiff wrote to the banking company rescinding his previous notification and claiming the right to treat the sales as for his own account. The banking company in no manner changed its position on the faith of the plaintiff’s first notification. Between the time of the execution of the contracts for the sale of 4.000 bales of hemp and the time of the arrival of the hemp ■shipped as above stated the prices of hemp had largely fallen in market and at the latter time similar hemp could be purchased at a price $17,950 less than the price at which the aforesaid buyers had contracted to purchase the same of the plaintiff. Upon the arrival of the hemp shipped as aforesaid the banking company demanded of the plaintiff that he should take the hemp and deliver it to the buyers under the aforesaid contracts of sale, and cause the proceeds thereof after deducting his commissions to be paid to them to the full extent of their advances on the pledge of' the hemp. The plaintiff, however claimed that he had a right to purchase other similar hemp in the market and deliver the-same to the buyers in fulfilment of his contracts, and - receive the profit of $17,950 and apply it in the reduction of the indebtedness to him of Martin, Turner & Co. and Martin, Dyce & Co., and the plaintiff refused to accede to the demand of the banking company. At this time the said firms were largely indebted to the plaintiff, exceeding the amount of' said profits, and such indebtedness still exists and arose out of transactions between him and said firms in which he acted for them as a commission merchant. Thereupon the banking company and the plaintiff for their mutual benefit and conveninece, in order that, the question might be completely determined as to their legal rights, entered into an agreement by which it was mutually agreed, among other things, that the plaintiff should cause the 4,000 bales-of hemp shipped from Manilla as aforesaid to be delivered to the purchasers under said contracts and the net proceeds after deducting his commissions and expenses and the sum of $17,950 to be paid over to the banking company on account of its advances on the faith of said hemp; and that said sum of $17,950 should be deposited with the Union Trust Company to be held by it subject to the judgment of a court to be made in an action to be-brought to determine the rights of the parties thereto. This sum of $17,950 was fixed as the amount of profits which the said plaintiff could have realized on the said hemp contracts had he filled his contracts with similar hemp which it is assumed he could have purchased in the market. By said agreement the question to be determined in such action was whether he had the right as against the banking company to deliver to the purchasers under the contracts aforesaid other hemp than that received from Martin, Dyce & Co., of Manilla-, to wit, the hemp now shipped by the ship Polynesia (that being the name of the ship in which said 4,000 bales were shipped), but purchased by said Cooper in the Hew York market at some time after the said bankruptcy of said Martin, Turner & Co., and after the 1st of March, 1884, or whether on the other hand, the said Hong Kong Banking Co. was entitled to demand as against the plaintiff that the 4,000 bales of hemp received by the Polynesia from Manilla aforesaid should be delivered under and in fulfilment of said contracts of sale and the proceeds thereof applied in satisfaction of their advances against said hemp.

In pursuance of this agreement the plaintiff took charge of the hemp, delivered it to his vendees and received the profits, retaining his commissions and expenses, depositing in the Union Trust Company $17,950 and paying over -the balance to the banking company. This deposit with the Union Trust Company was to be held in their hands subject to the joint order of James N. Platt and Alfred M. Townsend, or to be paid over in pursuance of the judgment of the court to be made in an action brought under said agreement An action was brought in the supreme •court to determine the question reserved in said agreement, in which action evidence was offered establishing the foregoing facts and the circumstances under which the plaintiff was doing business with and for the firm of Martin, Dyce & Co., and which resulted in a judgment, in favor of the plaintiff to the effect that said Platt and Townsend do forthwith collect from the Union Trust Company the $17,950 deposited with it as aforesaid, with all interest thereon, and pay to the banking company the sum of $3,367.35, and that they then forthwith pay the entire balance of said deposit, with all accumulations of interest thereon, to the plaintiff. • The banking company, intending to appeal to the general term from the aforesaid judgment in so far as it directed the 'payment of said balance to the plaintiff, entered upon an agreement with the plaintiff by which, after reciting the recovery of the judgment and their intention to appeal, and that the banking company was desirous of being in possession of said balance pending said appeal, and that the plaintiff was willing that it should hold the same on duly securing the repayment thereof 'to him on his securing the affirmance of the said judgment or otherwise being-adjudged to be entitled to the same, it was agreed that said Platt and Townsend should pay the entire balance, to wit, the sum of „ $14,665.82, to the banking company and the banking company should deliver its check for the sum of $14,346.50 to the order of said Platt and Townsend, which should be duly certified "by the Bank of Commerce and should be held by the cashier of the Bank of Commerce until the general term should render its judgment in that action. The bank, however, was at any time to pay said •check to the joint order of said Platt and Townsend, or in the event of said Platt and Townsend neglecting or refusing to endorse said check, then the said cashier was to dispose of said check in accordance with the judgment rendered on said appeal.

It was further agreed that said cashier should deliver a certificate that he had received and held said check in in accordance with said agreement. Thereupon said banking company delivered its check to the order of Platt and Townsend for $14,346.50, to the cashier of the Bank of Commerce, which was duly certified by the Bank of Commerce. Thereafter the banking company having changed its account from said Bank of Commerce to the defendant, the National City Bank, and at the request of said banking company, the check so drawn upon said Bank of Commerce was endorsed by said Platt & Townsend, and surrendered, and another agreement was entered into between the plaintiff and the banking company, whereby, after reciting the deposit of the check, and that the banking company was about to change its account from the Bank of Commerce to the National City Bank, it was further agreed that a certified check of the banking company, drawn upon the National City Bank, should be deposited with and held by the cashier of said bank, in place of the check held by the cashier of the Bank of Commerce, subject mutatis mutandis to each and every of the conditions of the aforesaid agreement, and whereby it was further agreed that in the event of the neglect or refusal of either Platt or Townsend, or their successors or legal representatives, to endorse said check, in order that the amount thereof might be applied in accordance with the judgment which it is designed to protect, the said cashier of the National City Bank should, without endorsement, on demand of the party in whose favor judgment should be entered, cash the same and apply the fund in accordance with such judgment. Thereupon the said banking company drew its check on the National City Bank for the sum of $14,346.50 in favor of the defendants, Platt and Townsend, and the National City Bank duly certified the same, and the same was delivered to and still remains in the custody of said cashier, who executed and delivered to the plaintiff a certificate whereby he acknowledged the receipt of the check above mentioned, and also of copies of the above agreement, and in which he stated that he would hold the check in accordance with the agreement, as requested.

Subsequently the said judgment was affirmed by the general term, with costs to the respondents, the said court adding to said judgment the following clause: “ But this judgment is without prejudice to any superior right of a creditor or assignee of Martin, Turner & Co. and Martin, Dyce & Co., if any such exist.” An appeal was taken to the court of appeals, in which court the judgment of the general term was affirmed. Immediately upon the general term’s affirmance, and pending the appeal to the court of appeals, the plaintiff commenced the present action against Platt and Townsend, Palmer, the cashier of the National City Bank, and the National City Bank, to compel the delivery of the check in question by the cashier of the National City Bank to such persons as should be named by the court; that Platt and Townsend be adjudged to endorse the same, and that when so endorsed the check be delivered to the plaintiff, and for judgment against the cashier of the National City Bank and the National City Bank for the amount of such check, with interest. In the meantime the banking company, as a creditor of Martin, Turner & Co., brought an action and obtained and attempted to levy an attachment upon the check in the hands of Palmer and upon the fund in the said bank which the check represented, and gave notice to Platt and Townsend not to endorse and deliver the check. The plaintiff himself also got out an attachment, and so did the firm of Kidder, Peabody & Co. The defendant Townsend answered to this action separately, setting up the pendency of the appeal in the court of appeals and also setting up the levy of the attachment and the notice by the attaching creditors that he should not endorse the check, and that the said banking company, Martin, Turner & Co., Martin, Dyce & Co. and all the attaching creditors of said firms were necessary parties.

The defendants Palmer and the City National Bank answered upon their own behalf that the check was not endorsed by either Townsend or Platt, setting up the granting of the attach-merits and that a copy had been served upon them with the usual notice, and that the check and the money represented by it was not the property of the plaintiff, and that they were under no legal obligation to deliver the check or pay the money to the plaintiff so long as said attachments are a lien thereon.

Upon the trial of the issues thus presented, proof of the foregoing facts having been offered, at the close of the'testimony a motion was made by the defendants Palmer and the City Bank that the Hong Kong Banking Co. and the attachment creditors and debtors be brought in, and on behalf of said bank it was also moved that the complaint should be dismissed on the ground that it contains no cause of action against the defendant, that it was not a party to the agreement, that it entered into no contract with any one except to pay its certified check when endorsed according to the terms of the check, and that there was no evidence that it was not ready to do so.

The defendant Palmer moved to dismiss upon the ground that if the action lies against the National City Bank it must be on the ground that Palmer acted only as the agent of the bank and that an agent cannot be joined with the principal, and second, on the theory that he individually is not shown to have violated any obligation or failed to perform any duty.

The defendant Townsend moved to dismiss upon the ground that the banking company was a necessary party as attaching creditor; that the attachment debtors or their assignees were necessary parties; that the sheriff was a necessary party and that the defendant Townsend was not a party to the agreement for the deposit and not a party to the judgment awarding the fund to the plaintiff, and that upon the facts shown he was justified in refusing to endorse the check The court found substantially the facts above stated and gave judgment for the plaintiff in accordance with the prayer of the complaint, and from such judgment this appeal is taken.

The points presented upon this appeal are that upon the complaint, the evidence and the findings at the trial it appeared that there was a defect of parties defendant; and that by a recovery in this action without bringing in attaching creditors, the judgment of the general term and of the court of appeals is practically nullified; and further that the complaint states no cause of action against the National City Bank and that it was not a necessary party.

We are of opinion that none of these grounds are well taken. It appears from the foregoing statement of facts that according to the judgment of the court this money belonged to the plaintiff in this action. This judgment was rendered in an action in which his title to it by the only claimant who presented itself was challenged, and the judgment of the court was that the money should be paid to him. But it is urged that this judgment was modified by the general term when it added to the judgment that it should be without prejudice to any superior right of a creditor or assignee of Martin, Turner & Co. and Martin, Dyce & Co., if any such existed.”

It is apparent what the general term had in mind at the time this judgment was rendered in the action which was then before them. It had been adjudicated that one of the grounds upon which the plaintiff should retain that money was because these firms were indebted to him in an amount exceeding the sum in his hands; and it was not intended to foreclose the right of any creditor of these firms except the banking company to challenge that part of the adjudication, and this was the whole scope of the modification of the judgment • and it apparently was so modified for no other purpose.

In this condition of affairs now are the ngnts of the piaintiff and the banking company affected in respect to this fund? As far as the banking company was concerned it had been adjudged as between it and the plaintiff that he was entitled to the money." It could not be allowed to come in and challenge this finding. It had been found against them in another action, and by no process •except by a reversal of that judgment could they get rid of that .adj udication. When that judgment was affirmed by the court of appeals they had no more interest in the fund on deposit in the National City Bank to secure the plaintiff than if the money had never been in their possession. They became absolute strangers to the transaction; and the plaintiff, instead of ringing an action in the form in which he did, might simply have brought an action against the National City Bank for money had and received to his use and upon these facts, with that one defendant before the court, been entitled to recover.

But it is claimed that there was another attaching creditor, Kidder, Peabody & Co., who was not bound by that judgment even if the bank was. But the mere service of an attachment upon this money did not authorize the bank to hold it against its true •owner.

If an attachment against John Jones is attempted to be .evied against money in the bank to the credit of John Smith, such attachment forms no defense to the bank when John Smith calls for his money. So the judgment having established as between the banking company and this plaintiff that this money on deposit was the plaintiff’s, an attachment against somebody in Glasgow or Manilla could not affect his right to draw it. It was necessary, before any party could have any claim against this property belonging to the plaintiff, to establish the fact not that they were creditors of these foreign firms but that the plaintiff in this action was their debtor.

To sustain the claim that the plaintiff is not entitled to draw that money it would be necessary to hold that an attachment against these foreign firms could be levied against the private account of this plaintiff, the attaching creditors claiming that the plaintiff is indebted to the foreign firms, because, as has already been stated, by the terms of the agreement and by the judgment of the court this deposit of money became the property of the plaintiff and the bank was holding it as his trustee. Therefore, instead of the judgment rendered by this court nullifying the judgment of the general term and of the court of appeals, a contrary judgment would have absolutely reversed the adjudication which placed the title to this deposit in the plaintiff. The relation between the plaintiff and these foreign firms was that of consignor and commission merchant The commission merchant had this fund in his hands, the proceeds of property which may have belonged to his consignors. He claimed that his consignors were indebted to him in a larger amount than these funds in his hands. How can any attaching creditor of the assignor prevent him from doing what he pleases with the money thus belonging to him, constructively in his possession, where it would have been actually had these depositaries of this money done their plain duty, and had not one of them, at least, wilfully violated what he knew to be his trust?

But it is said that no case was made out against the City Bank and therefore the complaint should have been dismissed as to it. The honesty of this claim is sufficiently characterized by the answers put in by the City Bank and its cashier. Those answers are: If the claim is urged against the bank, the contract is tho cashier’s; if the claim is urged against the cashier, then it is the bank’s contract. And this was the position which these defendants assumed upon this record as shown by the grounds of the motion to dismiss the complaint. It is plain from the whole transaction that Palmer was acting in his representative capacity . as cashier of the bank in his negotiations, because it was part and parcel of the agreement that the bank should pay these checks, under certain circumstances, without the endorsement of Platt and ■ Townsend, and certainly Palmer did not intend to agree individually to that condition. In agreeing to that condition of the agreement, which he did when he promised to hold this money pursuant to the provisions of the agreement, he was agreeing upon the part of the bank, as the representative of the bank, and not as an individual. It is probably true that as an individual he was not a necessary defendant. But it is far from true, in view of the position taken upon the trial, that he was an improper party. There was no method in which this agreement could be carried into effect was not Palmer acting for the bank; and the parties to the agreement, as well as Mr. Palmer, knew it perfectly when he signed his name to that receipt as cashier he intended to hold out that he was acting on behalf of the bank of which he was cashier. He intended to bind himself in his official capacity, and thereby to bind the bank. And under all the circumstances of the case it would seem that the claim that Palmer was acting as an individual has not the slightest foundation.

It is urged that the court should not have granted costs and allowances against Townsend, for the reason that he was not a party personally to the agreement between the plaintiff in this action and the banking company.

With all due deference to the learned counsel for the appellants, we think the record shows otherwise. It is true that in'" vidually he did not sign the agreements, and that it was o agent of the banking company that he signed them. But their contents. He knew what the trust was that was reposed in him. He assented to and acted upon these agreements when he endorsed the check drawn upon the Bank of Commerce; and he accepted the position of trustee in reference to the endorsement of this check when he, with personal knowledge as agent of the banking company signed the agreement, and conducted the transactions and negotiations to the point where the money was deposited in the National City Bank to the credit of the banking company, and the check drawn to the order of himself and Platt and given to the cashier of the National City Bank. He cannot say, after having participated in this transaction from beginning to end, when he is called upon to perform the duty which he voluntarily undertook: “ I did not sign the agreement, and, therefore, I can be guilty of as much bad faith as I please, without being required to pay any penalty therefor.” The defendant was" in a court of equity ; and we do not think equity will tolerate for a moment any such position upon the part of a defendant who is-subject to its jurisdiction.

The court below was entirely right in imposing upon him the costs of this litigation, because he was the party who openly and defiantly resisted the decrees of this court.

It is claimed upon the part of the plaintiff that he should be entitled to interest from the National City Bank from the time at which he originally made the demand. In this form of action, and in the form of the judgment which has been taken, we do not think this claim can be supported, because it seems to be assumed in the judgment in favor of the plaintiff that the only method of reaching this money is upon the surrender to the bank of this check, duly endorsed by Townsend and Platt.

Without adopting that theory, we do not think under the form of this action that the National City Bank can be considered to be in default until the check is presented in that form. That had not been done at the time of the commencement of this action, and consequently they were not liable for interest upon the deposit. Had the action, however, been brought against the National City Bank for money had and received to the use of the plaintiff, a different result might probably have ensued in respect to this question of interest, because, by the terms of the agreement to hold this deposit, it was bound to pay this money if that judgment was affirmed which adjudicated the title to the money to be in the plaintiff, whether the check was endorsed or not.

Upon the whole case, therefore, we think that the judgment appealed from should be affirmed, with costs.

Barrett and Bartlett, JJ., concur.


author: Peckham, J.

text:
    Lewis J. Fosdick et al., Ex'rs, v. The Town of Hempstead, Impl’d.

      (Court of Appeals,

      Filed April 21, 1891.)

    —Reabotmeht.
    motion for reargument must be founded on papers showing that some question decisive of the case and duly submitted by counsel has been ovei- • looked by the court, or that the decision is in conflict with the statute or with a controlling decision, to which the attention of the court was not drawn through the neglect or inadvertence of counsel.
    Motion for reargument.

      Edward E. Sprague and James S. Allen, for motion; J. T. Marean, opposed.

       T. State Rep., 863.

   Peckham, J.

This is a motion for a reargument, and the moving papers do not show a single ground recognized by this court as a proper foundation for the motion. The learned counsel for the defendant argued orally every proposition in the casé with zeal and ability.' The court has decided against him, not on account of his failure to properly present his views for the defendant, but because, after mature and careful deliberation, it has differed with the learned counsel in his contention as to the proper construction of the will.

Many years ago the court announced the rule which should govern in this class of motions.

In Mount v. Mitchell, 32 N. Y., 702, it was stated that a motion for reargument should be founded on papers showing that some question decisive of the case and duly submitted by counsel has been overlooked by the court, or that the decision is in conflict with the statute or a controlling decision to which the attention of the court was not drawn, through the neglect or inadvertence of counsel.

In Marine Nat. Bank v. Nat. City Bank, 59 N. Y., 67, at 73, the same rule was again alluded to and announcement again made that the court would adhere to it, and that motions for a reargument would not be entertained unless counsel brought the case within the rule.

Judging by the character of the papers upon which motions of this nature are now frequently made, we should assume that the profession has lost sight of the rule, for in most of the cases which have lately come under our notice there has been an entire failure to comply with its requirements, and the motion has been made simply because the unsuccessful counsel has thought that he would like to again argue the very questions he had already submitted to, and which had been expressly decided by the court.

While it is very possible that we err in many cases, yet the rule adopted in regard to rearguments is a proper one considering the fact that there must be at some point an end of litigation, and after counsel has had his day in this court and has been unsuccessful in his case, it is but fair to the court and to other litigants who are pressing to be heard, that a case should be made such as the court has decided to be necessary before entertaining the question of the propriety of granting a reargument.

In the case now before us the point upon which we decided it was in fact discussed in the opinion at the general term, and the learned judge said that the testator meant by the word poor those persons only who formed a class defined by law and which class was limited to those poor persons that the town was compelled by law to support. The counsel for the appellant in this court argued the point at some length, and the brief of the counsel for thé respondent is quite full upon the same point. This court in its opinion has discussed the question, and it has been decided. The counsel now asks for a re-argument simply because he desires to present further views upon the same question which has been already and after full argument carefully considered and decided by us. It is a mistake for counsel to assume that any particular portion of his argument which has not been the subject of express reference in the opinion has been overlooked. It is scarcely possible within the bounds of an ordinary opinion to meet and answer every argument which has been made by counsel orally or which may be in his brief. Many of the reasons now prominently set forth by counsel to strengthen his contention as to the meaning of the word poor in the will of the testator were the subject of our consultation, but in the result arrived at it was not thought necessary that each should be referred to and the answers given which we thought sufficient.

We see no reason for altering our view of the meaning of the word poor as used by the testator, if we should come to a consideration of the question de novo. But we think that the attention of counsel should be called again to our rule on the subject of motions for a re-argument, and that as this motion is not founded upon any ground recognized by this court as sufficient to warrant our entertaining it, the motion should for that reason be denied, with costs.

All concur.


author: Earl, J.

text:
    The People ex rel. Isaac Lichtenstein, App’lt, v. Thomas C. Hodgson, as Sheriff, Resp’t.

      (Court of Appeals,

      Filed April 21, 1891.)

    1. Disorderly person—Jurisdiction—Conviction when not a bar to SECOND PROCEEDING.
    Where a defendant is adjudged a disorderly person and directed to give a bond for his wife’s support or be imprisoned, and he fails to give the bond and appeals, giving an undertaking thereon and is discharged pending the appeal, the first conviction is not a bar to a second proceeding of the same character and to the issuance of a warrant therein, and these proceedings could be repeated until he consents to support his wife, or gives an undertaking for her support or until he is actually in prison under some conviction.
    2. Same—Question of marriage.
    Where a husband is proceeded against under the statute the justice has jurisdiction to try every question involved in the complaint, including that of ascertaining whether the defendant is the husband of the complainant.
    Appeal from judgment of the supreme court, general term, fifth department, affirming order of special term, dismissing writ of habeas corpus and remanding relator to custody of sheriff.
    On the 12th day of May, 1890, Dora Lichtenstein made complaint before a police justice of Rochester, charging the relator, her alleged husband, with being a disorderly person, in that he neglected to provide for her a support according to his means. Such proceedings were had that on May 16th he was adjudged a disorderly person'and directed to give a bond for his wife’s support, or failing in that' to be imprisoned in the Monroe county penitenitiary for six months. An appeal by the relator to the court of sessions was immediately perfected, and he gave an undertaking and was discharged pending the appeal. On June 30th, thereafter, while the appeal was pending and undetermined, upon complaint of his wife, another warrant for the same cause was issued by the police justice against the relator, and on the following day he was arrested and brought before the justice, who, not being ready to proceed with the case, issued a warrant directed to the sheriff requesting him to receive and detain the relator to answer the charges pending before him. In order to be relieved from imprisonment and detention under the last two warrants the relator procured a writ of habeas corpus from a justice of the supreme court returnable before him at a special term, and in obedience to the writ the relator was produced and the sheriff returned that he held him by virtue of the warrant last named. The relator traversed the return and a hearing upon the petition, return and traverse was had, and a final order was made dismissing the writ and remanding the relator to the custody of the sheriff. He then appealed to the supreme court, and from affirmance of the order » there to this court.

      J. B. M. Stephens, for app’lt; George A. Benton, for resp’t.

       Affirming 35 N. Y. State Rep., 981.

   Earl, J.

It is claimed on behalf of the relator that his conviction upon the first complaint was a bar to the subsequent proceedings, and that the justice had no jurisdiction to issue the second warrant. If he had been imprisoned in pursuance of the first conviction, or had given an undertaking for the support of his wife, as was required by the statute, and the decision of the police justice, he could not, during the pendency of his imprisonment, or the life of the undertaking, have been proceeded against again for not supporting his wife. But he did not give the undertaking, and was not imprisoned. He was at large and in a condition where it was possible for him to discharge the obligations cast upon him by the law, to support his wife according to his means, and for his neglect to provide for her support he committed a new offense and exposed himself to the new complaint and conviction, and the previous conviction for his neglect and refusal at that time to support his wife furnished no defense to the second proceeding. At any time subsequent to his first conviction when he neglected to support his wife according to his means, he committed a new offense for which he could be 'arrested and tried, and these proceedings could be repeated until he consented to support his wife, or gave an undertaking for her support, or until lie was actually in prison under some conviction.

The further ground for questioning the jurisdiction of the police justice is that the relator denied that he was the husband of the complainant, and that therefore the police justice had no jurisdiction to try the question of marriage and thus ascertain whether he was in fact her husband. If this claim be well founded, then in all cases where a husband is proceeded against for neglecting to suppoi’t his wife before any magistrate he may oust the magistrate of jurisdiction by simply putting in isssue his lawful marriage. Where a husband is proceeded against under the statute the justice has jurisdiction to try every question involved in the complaint, and there is nothing in the law or in reason that should prevent him from ascertaining whether the defendant is the husband of the complainant. It is a general rule, with no exceptions that occur to us, that where jurisdiction is given to a magistrate to try an offense, he may determine every question necessary to the finding of the guilt or innocence of the person -on trial.

For these reasons, and also for the more technical reasons specified in the opinion below, we think the order should be affirmed.

All concur, except Gray, J., absent.