author: Van Brunt, P. J.

text:
    James H. Havens, Pl’ff, v. The West Side Electric Light & Power Co. et al., Def'ts.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    Mechanics’ lien—Landlord, when not liable.
    Where the owner of leased land has no power to prevent the tenant from making such improvements as he sees fit and from which the owner can derive no ultimate benefit, the owner is not liable therefor, and a lien does not attach to the land. The mere fact that he may know that the tenant contemplates making certain improvements, or applying the property to certain purposes, cannot make the owner liable for the expense of such work.
    Appeal from portion of a judgment entered after trial of an action to foreclose a mechanics’ hen dismissing complaint as to-defendant Striker, the owner of the land.

      James M. Hunt, for Vincent et al., app’lts; Geo. Bliss, for Striker, resp’t.

       Affirming 44 St. Rep., 589.

   Van Brunt, P. J.

We see no reason to differ from the conclusion arrived at by the learned justice who tried the cause below, and we think that the judgment appealed from should be-affirmed for the reasons assigned by him in his opinion. It does not seem to us that it could possibly have been the intention of the legislature to make the owner of land which he has leased for a long term of years liable for improvements made upon this land for purposes of trade by his tenant. The mere fact that he may know that the tenant contemplates making certain improvements, or applying the property to certain purposes, certainly cannot make the owner liable for the moneys expended by his tenant in the doing of such work. It seems to us that the clear intent of the statute was to prevent the owner of real estate from permitting improvements to be made upon his property from which he1 is to derive an ultimate benefit, and which, without his consent or acquiescence, could not be made, without incurring some obligation to those who have supplied labor and materials for the making of such improvements. But in those cases where the owner has no power to prevent the tenant from making such improvements as he sees fit, and from which the owner can derive no ultimate benefit, it never could have been the intention of the legislature to make such owner liable, and it is doubtful, if they had attempted to do so, whether it lies within their power. The granting of an extra allowance, no costs having been allowed, seems to have been unauthorized. This amount should be stricken from the judgment, and the judgment, as modified, affirmed, with costs.

O'Brien and Lawrence, JJ., concur.


source: Caselaw Access Project

license: Public Domain

text:
    Henry C. Sherburne, App’lt, v. Edward A. Taft et al., Resp’ts.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    Account stated—Accounting.
    Where the parties have settled and adjusted their several claims and agreed upon a balance, for which a note is given, the holder thereof may sue for the balance or upon the note, b.ut an action for an accounting cannot be maintained. «
    Appeal from an order dismissing the complaint in an action for an accounting of the proceeds of the sale of one-half of the capital stock of the New York & Boston Dispatch Express Company, and of the Kinsley Express Company, alleged in the complaint to have been made to the Adams Express Company in March, 1888.

      D. M. Porter, for app’lt; Elihu Root and S. B. Clarke, for resp’ts.
   Van Brunt, P. J.

It may not be at all necessary to add anything to the opinion delivered by the learned justice who tried the cause in the court below. His statement fully presents the facts which were established by the evidence; and it will only be necessary to consider one point of the opinion, which seems to have been misapprehended by the counsel for the appellant. He seems to think that the transaction in Paris between the plaintiff and the defendant Tal't was claimed to have been an accord and satisfaction, and that for reasons specified no such accord and satisfaction was established. This'we do not undertstand to have been the position of the court below in treating of this branch of the case. The court did not hold that the circumstances proven established an accord and satisfaction, but that they did establish that an account was stated between the parties, and the balance due to the plaintiff ascertained, for which the defendant Taft gave his note payable on demand, and that in view of this fact an action for an accounting could not be maintained. Under these circumstances, it is apparent that the plaintiff could sue for this balance, or he could sue upon the note, as he saw fit. But the parties having settled and adjusted their different claims, and having agreed upon a balance, and the party against whom the balance existed having promised to pay the same, and having given his written evidence of debt, in the absence of fraud or mistake this settlement cannot be impeached. The judgment, therefore, should be affirmed, with costs.

O’Brien and Lawrence, JJ., concur.


author: Lawrence, J.

text:
    The National Park Bank of New York, Resp’t, v. Leopold Haas et al., App’lts.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    Pleading-Sufficiency of complaint.
    An affirmance on appeal of an order appointing a receiver and granting an injunction in an action to restrain other actions and determine conflicting claims to property in one action, is conclusive on the question of the sufficiency of the complaint in such action.
    Appeal from interlocutory judgment overruling demurrer to the complaint.

      Benno Loewy, for app’lts; Horwitz & Hershfield (Otto Horwitz, of counsel), for resp’t
   Lawrence, J.

The firm of Levy Bros. & Co. was a special partnership, doing business in the city of Hew York. In May, 1891, the Hational Park Bank, the plaintiff herein, brought an action against them to recover the sum of $90,615.24, and in said action obtained a warrant of attachment, under and by virtue of which the sheriff of the city and county of Hew York levied upon and took into his possession the property of Levy Bros. & Co. Thereafter, a number of parties, including the appellants herein, claiming to be creditors of Levy Bros. & Co., instituted actions in replevin against the sheriff, seeking to recover the various articles of merchandise alleged by them to have been sold to Levy Bros. & Co. The number of these replevin creditors was some 50 or 60, and the Park Bank, in order to preserve the lien of its attachment, and to settle the controversies between itself and the replevying creditors, and determine the various conflicting claims between them, brought this action in equity, in the nature of a bill of peace, so that the interests of the different claimants might be determined in one action, and the rights of all parties protected.

To this complaint the defendants interposed three grounds of demurrer: (1) That the complaint did not state facts sufficient to constitute a cause of action; (2) that it appears upon the face of the complaint that there is a defect of parties defendant, inasmuch as it appears from the said complaint that John J. Gorman, the sheriff of the city and county of Hew York, has an interest in the property therein referred to; (3) it appeared upon the face of the said complaint that several causes of action have been improperly joined. An order was issued in this case, appointing a receiver of the property of Levy Bros. & Go., and granting an injunction, from which order appeals were taken to the general term of this court, 41 St. Rep., 439, and the court of appeals, 43 St. Rep'., 777, by which tribunals the said order was affirmed. The decision of the court in that case, as was held by the special term in overruling this demurrer, disposes of the questions sought to be raised on this appeal. The court there necessarily held, in affirming the order appointing the receiver and granting the injunction, that the complaint did state facts sufficient to constitute a cause of action; and, further, that while the sheriff and the coroner were proper parties to the action, and should be brought in, the failure to make them parties defendant did not affect the question of jurisdiction. The court also said “ that one or more of the defendants intimate in their affidavits that the property replevied by them was delivered to Levy Bros. & Co. to be sold on commission, and never passed into their ownership at all; and one or more of the defendants assert that there is no dispute as to the identity of the unmanufactured goods which they claim, and no conflicting title thereto alleged by any one except the plaintiff in the attachment. These facts, if satisfactorily established, may possibly prove to be a defense to the action as against such defendants; but these facts are new matter alleged outside of the complaint, as to which the plaintiff will have a right to be heard. They amount to a denial in some degree of the plaintiff’s general allegations, and may establish a defense without overturning or dislodging the jurisdiction.’’ The observation of the court of appeals upon this point disposes of the third ground of demurrer, and the order and judgment of the special term overruling the demurrer must, therefore, be affirmed, with costs and disbui'sements.

Van Brunt, P. J., and O’Brien, J., concur.


author: Beach, J. Beach; J. Per Curiam.

text:
    Lucius Willard Sawyer, Resp’t. v. James Gordon Bennett, Impl’d, App’lt.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    1. Libel—Actionable words.
    An article in a newspaper stating that a failure was caused by the firm’s foreign agent's, plaintiff’s, reckless speculation, is libelous per se, and allegations of special damage are not needful to the cause of action.
    2. Same—Pleadino—Demurrer.
    The plea of truth in defense is new matter, within the meaning of the statute, and demurrer is the proper remedy if such defense is insufficient.
    3. Same—Justification.
    A plea of justification which relates to portions only of the publication, and which is not specially pleaded as a partial defense or in mitigation, is insufficient.
    Appeal from orders overruling demurrer to certain portions of the complaint and sustaining demurrer to certain portions of the answer.
    Action for libel in publishing, concerning plaintiff, an article stating that “Sawyer, Wallace & Co., the largest commission merchants in ¡New York, have failed for $2,000,000. The failure was caused by their London agent’s reckless speculation in lard.”
   The following are the opinions at special term :

Beach, J.

The defendant’s demurrer to the third, fifth and eighth causes of action, because insufficient in statement of facts to constitute a cause of action, must be overruled. The words, in my opinion, are actionable per se, as tending to injure the defendant (plaintiff) in his trade, occupation or business. The case of Moore v. Francis, 121 N.Y., 199; 80 St. Rep., 467, governs in principle. I cannot add to the opinion of the learned appellate court, so aptly does it cover the case at bar. The allegations of special damage.are not needful to a cause of action in this view. They are too indefinite for such purpose, and for that reason may be useless on a trial to aggravate damages. Judgment for plaintiff on demurrer, with costs. Leave to answer on payment of costs.

Beach; J.

The action is for libel. The answer, by its second and third defenses, pleads in justification the truth of certain portions of the articles alleged to be libelous. The plaintiff demurs upon the ground that the defenses are insufficient in law upon the face thereof. It is provided by §494, Code Civil Pro., that plaintiff may demur to a defense consisting of new matter contained in the answer, on the ground above specified. The objection that the plaintiff has mistaken the remedy cannot be sustained. The plea of truth in defense is new matter, within the statute meaning. The reason is that it is wholly outside and distinct from the alleged cause of action, and must be affirmatively pleaded by the defendant, and so proven upon the trial. I am of opinion, too, that the demurrer is well taken. The justification fails as a complete defense, because it relates but to parts of the publication alleged libelous. It must be so weighed, not being pleaded specifically as a partial defense or in mitigation of damages. Thompson v. Halbert, 109 N. Y., 329; 15 St. Rep., 513. That the justification, as pleaded, is not a complete defense, is hardly debatable. To beso, the justification must be as broad as the charge, and of the very charge attempted to be justified. Townsh. Sland. & L. (3d ed.), § 212, and cases there cited; Skinner v. Powers, 1 Wend., 451; Fero v. Ruscoe, 4 N. Y, 162. The averments of verity in the defense will be found, upon examination, limited to specified facts contained in the publication, the libelous character whereof may be seriously questioned. The other charges against the plaintiff are omitted. That the justification falls far short of the charges seems apparent. Judgment ordered for plaintiff on demurrer to answer, with costs. Leave to amend on payment of costs.

John Townshend, for app’lt; Warner & Frayer (Eugene Frayer, of counsel), for resp’t.

Per Curiam.

The learned judge at special term, in disposing of the question raised by the two sets of demurrers, delivered two opinions covering the contention here urged by the appellant; and as his reasons, in which we agree, are ably and tersely given, it would serve no useful purpose to elaborate thereon. We are of opinion that his disposition thereof was correct, and that the orders appealed from should be affirmed, with costs and disbursements.

Van Brunt, P. J., O’Brien and Lawrence, JJ., concur.


text:
    Ephraim C. Gates et al., App’lts, v. James C. De La Mare, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    Attorneys—Lien.
    An attorney who, by his services, has procured an increase in the amount of an award for land taken by eminent domain, thereby acquires alien upon the fund to the extent of the sum agreed upon between him and the owner, which lien is not affected by a subsequent foreclosure of a mortgage on the land.
    Appeal from interlocutory judgment overruling a demurrer to the answer.
    Action to recover the amount of an award made in condemnation proceedings to one Denninger, for land of his taken for a street. Defendant, who claimed a lien on the fund for services rendered to said Denninger by which the award was increased, was substituted in place of the city.

      George W. Stephens, for app’lts ; James C. De la Mare, resp’t in person.
   Lawrence, J.

I am in favor of affirming the judgment in the court below, overruling the demurrer by the plaintiffs to the answer of the defendant for insufficiency. The defendant, by his skill and labor, increased the amount of the award of the commissioners, and thereby acquired an equitable lien upon the fund to the extent of the sum agreed upon between him and Denninger, as his compensation for obtaining such increase. The rights ol the defendant having accrued prior to the foreclosure of the mortgage of the Harlem Savings Bank, Toch, the purchaser at the sale under that foreclosure, did not acquire any interest in the award which was superior to the lien of the defendant, and the plaintiffs, as the assignees of Toch’s grantee, of course only acquired Toch’s interest. The judgment below must, therefore, be affirmed, with costs and disbursements, with leave, on payment of costs, to withdraw demurrer.

Van Brunt, P. J., and O’Brien, J., concur.


text:
    Henry M. Barrowcliffe, Adm’r, Resp’t, v. Henry Cummins et al., App’lts.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    Tenants in common—Conversion—Replevin.
    Defendant 0. borrowed certain stock of one H. for the purpose of raising money thereon and pledged the same, and afterwards purchased of H. a half interest therein. H. sold the other half to plaintiff's intestate. Held, that the hypothecation and failure to redeem did not constitute a conversion, but at most was a breach of contract, and that defendant having become a tenant in common of the slack, replevin would not lie against him.
    Appeal from judgment in favor of plaintiff, entered upon verdict in action of replevin.

      John Cummins {J. W. Lawton, of counsel), for app’lts; J. M. Hunt, for resp’t.
   Van Brunt, P. J.

This action was brought to recover possession of 700 shares of Electro Graphic Manufacturing Company stock borrowed by the defendant Cummins from one C. B. Hall, and also for the recovery of certain bonds and stock of the Postal Telegraph Company declared as dividends .upon Electro Graphic stock. It appeared that the said Electro Graphic Manufacturing Company stock, together with a large quantity of other stock, bad been borrowed by Cummins from one C. B. Hall, for the purpose of raising money thereon, and said stock was pledged therefor within a few days after its loan, from which pledge the shares have never been redeemed by either Cummins or Hall. The dividend in question was declared in September, 1883, and it is claimed that the stock had been sold under the pledge long before. It further appeared that in September, 1883, the defendant Cummins purchased from Hall an undivided half interest in and to all the interest Hall then had in the Electro Graphic stock theretofore borrowed-by Cummins from Hall, and that on the same day Cummins transferred to the defendant Roberts said one-half interest.

In May, 1884, Hall transferred to the plaintiff’s testator all his right and interest in said stock and demand having been made upon Cummins for the delivery of the stock, and refused upon the ground that the stock had been parted with, this action was commenced in replevin. Upon the trial the jury having rendered a verdict in favor of the plaintiff, from the judgment thereupon entered this appeal is taken. As the judgment only is appealed from, only exceptions are brought up for consideration ; and in the disposition of this appeal it is not at all necessary to reler to the many intricate facts which are indistinctly shadowed forth by the evidence which was produced upon the trial; and we need do no more than consider one exception *which was taken to the refusal of -the court to charge, although many other points against the maintenance of the action might be suggested. The court was asked to charge that if the jury believed that, under the assignment, Cummins became possessed of an undivided half interest in any of the stock, inclusive of the 7,800 shares, which included the 700 shares, then he became the tenant in common with Hall, and no action of replevin could be brought against Cummins or Boberts. The court refused so to do, and left the jury to find that a co-owner of a chattel may maintain replevin against his cotenant. It hardly needs argument to show that such a position cannot be true. It is only where there has been an exclusive right in denial of the title that such an action can be maintained ; and such might have been the case at bar if the hypothecation of these stocks by Cummins had amounted to a conversion thereof. But, under the circumstances developed upon the trial, Cummins was not guilty of conversion by such hypothecation. The case conclusively shows that the stocks were borrowed for the purpose of raising money upon them; and when he hypothecated them, for the purpose of raising such money, he did not convert them ; and when he did not return them because he had so hypothecated them, and could not redeem the pledge, it was simply a breach of contract, and not a conversion of the stock. There was no assertion of a claim hostile to any that Hall might have, and which he had not parted with, but simply a failure to comply with his contract to return. This would form no basis for a possessory action of one cotenant against another. It was error, therefore, upon the part of the court, to refuse to charge that, if the jury believed that under the assignment the defendant became possessed of an undivided half interest in the stock in question, he then became a tenant in common with Hall therein, and no action in replevin could be brought against Cummins or Boberts. ■ This error was fundamental, and goes to the root of the whole action ; and none of the transactions had between Hall and the plaintiff, as representing the testator, in any way affected his status in this regard. It seems to be assumed, upon the part of the plaintiff, that, because Cummins failed to return the stock pursuant to his contract, therefore he had become liable in tort therefor. On the contrary, the only penalty which he had incurred was for damages for the breach of contract. The judgment must be reversed, aud a new trial ordered, with costs to appellant to abide the event.

O’Brien and Lawrence, JJ., concur.


author: O’Brien, J.

text:
    Rebecca Elsberg, Ex’rx, Appl’t, v. Samuel D. Sewards, Impl’d, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    1. Insurance (Life)—Evidence. *
    In an action to determine conflicting claims to two insurance policies upon the life of plaintiff’s testator, letters and memoranda, written and signed by deceased, offered in evidence by plaintiff, not shown to have been, in any way, communicated to defendant, are properly excluded.
    2. Same—Assignment—Burden of proof.
    In such case, the policies having been assigned by the deceased to a creditor “as his interest may appear,” the burden of showing the extent of his interest is on him.
    3. Same.
    Such policies contained the provision that the “ claims of any creditor as assignee shall not exceed the amount of the actual bona fide indebtedness of the member to him at the time of his death, and this certificate, as to all amounts in excess thereof, shall be void.” Meld, that the insurance company having paid the full amount of the policies into court, and had the action discontinued as against it, such provision was not available by the creditor to defeat plaintiff’s claim to the excess.
    Appeal from a decree rendered at special term dismissing the complaint and adjudging said defendant entitled to the sum of money which was the subject matter of this action.

      John Alex. Beall, for app’lt; W. W. Gage, for resp’t.
   O’Brien, J.

This action was originally brought by plaintiff as executrix of Albert Elsberg, deceased, against the Mutual Reserve Fund Life Association, David M. Koehler and Samuel D. Sewards, to determine the conflicting claims made to two life insurance policies issued by said association upon the life of Albert Elsberg. one for $2,000, and the other for $500. The life association made an application for leave to pay the money into court, and for a discontinuance of the action as against it, which was granted, and the amount of the two policies was deposited, and so remained, subject to the order or decree .of the court in this action. The defendant Koehler was not served, for the reason, which was made to appear upon the trial, that he had no interest in the policies; the same, after his indebtedness was paid, having been assigned to the defendant, Sewards, who alone answered and defended the action. It will thus be seen that, at the time of the trial, the question presented for determination was as to the conflicting claims of the plaintiff, as executrix, and Sewards, as creditor, of Albert Elsberg, to the money paid by the life association into the court. The plaintiff, suing in her representative capacity as executrix, which was not denied by the answer, asserted that, the amount due Sewards, for which the policies were assigned to-him, did not exceed $1,500. The answer claimed that there was due a sum far in excess of the amount deposited, and that Sewards was entitled to the whole amount thereof.

According to the terms of the policies, which upon the trial were offered and admitted in evidence, it appeared that the same were issued to secure the payment to the defendant, Sewards, of an indebtedness due him by the plaintiff’s testator, and were made payable to “ Samuel D. Sewards, creditor, as his interest may appear.” There was a further provision in the policies as follows:

“ An insurable interest, existing at the time of the assignment or transfer, must be shown by all claimants at time of claim hereunder, and claims by any creditor as beneficiary or assignee shall not exceed the amount of the actual bona fide indebtedness of the member to him, existing at the time of said death, together with any payments made to the association under this certificate or policy of insurance by such creditor, with interest at six per cent, per annum; and this certificate or policy of insurance, as to all amounts in excess thereof, shall be void.”

In addition, plaintiff’s counsel offered in evidence two letters, in the handwriting of the deceased, signed by him, and bearing date six months before his death; also a memorandum made by him four month's before his death, which, under objection, were, we think, properly excluded, because not shown to have been in any way communicated to the defendant; nor were they admissible as declarations against interest, having been offered by the plaintiff to establish a claim by the deceased in the fund. The plaintiff also offered in evidence a statement made by the defendant’s son, under' his instructions, and which was shown to be a statement of notes held by defendant which he wished to have renewed by Blsberg, the deceased, furnished by defendant in answer to a request by letter from Blsberg to the defendant. When questioned in reference to this statement, as to whether it did, or did not, show the condition of the indebtedness between the parties at the time, the defendant answered that this statement was only made for the purpose of showing the identity of certain notes, and did not embrace the account between the parties. While, therefore, only a partial account, we are inclined to think that it was admissible in evidence as tending to show the way, or the circumstances out of which, the indebtedness arose. However, it in no way prejudiced the plaintiff, because, though admissible, it did not go to the extent of showing what was the condition of the account between the parties, and could not be regarded as an account stated; it but appearing to be what the witnesses stated with reference thereto, that it was a statement merely of notes due, in respect to which arrangements looking towards renewals thereof were pending. Such being the situation of the parties upon the pleadings and the evidence at the close of plaintiff’s case, the defendant moved to dismiss the complaint, and for a judgment in his favor for the full amount deposited, which motion was granted, and the decree subsequently entered from which this appeal is taken.

We are of opinion that it was error to dismiss the plaintiff’s complaint upon the proofs as they stood. She had made out a prima facie case entitling her to the moneys realized upon the policies, subject, however, to any claim of the defendant creditor as the same should be made to appear. Ho doubt the learned trial judge was influenced by the provision which we have quoted in full from the policies, that for any excess over such creditor’s claim the policy should be null and void, and, therefore, concluded, upon the proofs, that the defendant alone would be entitled to the amount, and that it would follow that the plaintiff had no interest therein. We think, however, that a consideration of the parties to the suit, and of this provision of the policies thus invoked, will lead to the conclusion that it should be given no weight in an adjudication between the parties then before the court. It is true that, had the association remained a party, and defended, making the point that the plaintiff had no interest in excess of what was the actual indebtedness, this condition in the policy as to such association might be available. We say advisedly “ might be available,” because it is not entirely clear that, as against the plaintiff, resort could be had to this condition. Its evident purpose is to protect the company against a creditor’s speculating upon the life of a member beyond what is actually due him. Where, therefore, the assignment from the member to one claiming to be a creditor is absolute in form, thus leaving no claim in favor of the member, the company is only liable to the creditor to the extent of his bona fide debt. That this must be the correct view is apparent if we consider the results to the member of the payment to the creditor of his entire indebtedness before the policy matured by death or limitation of time. It could not then be held that, because there was no indebtedness, the association would be free from any obligation to pay the member. The true construction, we think, therefore, of this provision is, that it was intended to protect the company against creditors or other persons speculating in policies of the company issued to members. But the company, by payment into court of the full amount of the policy, having waived not only that condition, but all others, such condition was not available in the defendant’s, Sewards’, behalf, to defeat the right which the plaintiff might have in the policies; in other words, the life association alone had the right to insist upon that condition, and its waiver and payment do not give the defendant the right to take the benefit of it, and claim the surplus over his debt, on the ground that plaintiff had violated or failed to perform any condition. That was a right in favor of the company, which was not assigned to the defendant, Sewards, and the effect of the payment into court by the company was not only a waiver of the condition, but an admission that it had no interest in the fund, which was deposited to the credit of the action with a view of having the respective rights of the plaintiff here and the defendant, Sewards, thereto determined. ,

The question, therefore, presented, having in view the admissions in the pleadings, was, what was the extent of Sewards’ interest as creditor in such fund? We think that the burden of showing the extent of his interest was upon him, and that, after a prima facie case made out by the plaintiff, upon production of the policies of insurance, the affirmative of this issue was upon such defendant. If, however, we assume that the affirmative was upon the plaintiff of showing the actual indebtedness to Sewards, and thus to establish her interest and title to the surplus, and that for failure of proof the complaint should have been dismissed, .we are yet of opinion that it was error, in the absence of any evidence to support the defendant’s claim to the fund, to decree that the entire amount thereof belonged to him. This, in effect, was to hold that, because the plaintiff’s complaint should be dismissed for want of proof, the defendant, without having given any proof, was entitled to a judgment upon the merits for the whole amount. As we have seen, his interest in the policies was as a creditor as the same should be made to appear, and it could only be upon its having appeared that he was entitled to the whole amount that he could obtain a judgment upon the merits in his favor. Upon the whole case, therefore, we think that this error alone requires that the judgment should be reversed, and a new trial ordered, with costs to abide the event.

Van Brunt, P. J., and Lawrence, J., concur.


author: Lawrence, J. Yan Brunt, P. J.

text:
    Sarah M. Mygatt et al., App’lts, v. George S. Coe, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    Deed—Covenants.
    Covenants of seisin and right to convey made by one who has no title are broken by the delivery of the deed, and become choses in action which do not run with the land and do not pass to subsequent grantees without an assignment of the cause of action.
    Appeal from a judgment dismissing the complaint in an action to recover damages for breach of the defendant’s covenants of quiet enjoyment and warranty, contained in the deed of conveyance by him and his wife, since deceased, of certain real property.

      Wm. J. Gay nor, for app’lts; Lyman B. Bunnell (Wm. S. Cogswell, of counsel), for resp’t
   Lawrence, J.

The action was brought to recover damages appellants claim to have suffered by reason of their alleged eviction from the premises described in the complaint. In 1858, Ebenezer L. Roberts delivered to Almira S. Goe, wife of the respondent, a deed purporting to convey said premises to her in fee “ to her sole and separate use.” Under this deed she entered into the occupancy of the said premises, and continued in such occupancy until she conveyed the same to Nancy Fisher, in 1867, by deed in which this defendant joined; the covenant of seisin being that said Almira S. Coe, at the time, etc., was “ seized in her own right of a good, absolute and indefeasible estate of inheritance in fee simple in said premises, and had good right,” etc., “ to convey the same.” Nancy Fisher mortgaged the premises to appellants for $15,000, and conveyed them, subject thereto, to Henry W. Fuller. Fuller conveyed them to Clara S. Leavitt, who was evicted therefrom by Louise M. Howell and others, on November 30, 1878, by title paramount to that derived from Almira S. Coe. On December 16, 1878, appellants commenced an action to foreclose their mortgage from Nancy Fisher, became the purchasers at the foreclosure sale, and, being unable to obtain possession of the premises, brought this action. This is the second trial of this action, the judgment for plaintiffs on the former trial having been reversed by the court of appeals. It appeared when this case was before the court of appeals (124 N.Y., 212-215 ; 35 St. Rep., 289), that the covenants made by Mrs. Coe and the defendant to Nancy Fisher were made with her, her heirs and assigns, and yet the court held that the defendant was not liable thereon to the plaintiffs, to whom the mortgage foreclosed by the plaintiffs was given by Fisher. Under this state of facts, .it is difficult to see how it can be held that the plaintiffs are entitled to recover in this action.

The question sought to be raised is res adjudícala; and the observation in the opinion of the court of appeals “ that it is unfortunate that the deed which fixes the rights of the parties is not contained in the case, but, if a new trial is had, this defect will be remedied, and the exact connection of the defendant with the case made clear,” cannot be regarded as an intimation that the court was in doubt as to the correctness of the exposition of the law of the case contained in the opinion. The deed to Fisher, as proven on this trial, contains no limitation upon the nature or effect of the covenants. The covenants are, as they were assumed to be in the opinion of the court of appeals, the usual full covenants of warranty as to seisin, right to convey, against incumbrances, quiet enjoyment, further assurance, and warranty, and all the covenants run to the grantee, her heirs and assigns. The court of appeals were in possession of the fact that all the covenants were joint, but they held that such covenants by one who has no title are broken by the delivery of the deed, and become choses in action; that they do not run with the land, and do not pass to subsequent grantees without an assignment of the cause of action. No such assignment was proven on the trial. The judgment appealed from must be affirmed, with costs and disbursements.

O’Brien, J., concurs.

Yan Brunt, P. J.

The court of appeals has, apparently, decided that the plaintiffs have no cause of action. If they did not intend to so decide, it must be left to them to say so. I concur.


text:
    Melvin Stephens, Resp’t, v. Robert Lewis Humphries, Impl’d, App’lt.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    Appeal—Foreclosure—Undertaking—Code Civ. Pro., § 1331.
    An appeal from an order, made long after the judgment of _ foreclosure, which was finally affirmed, directing a resale of the premises is not within the provisions of § 1331 of the Code, requiring the amount of the undertaking on appeal to be fixed by the court.
    Appeal from order of special term, denying motion by defendant to fix the amount of the undertaking under § 1331 of the Code, and to stay plaintiff’s sale of the mortgaged premises.

      John K. Van Ness, for app’lt; Smith & While, for resp’t
   Lawrence, J.

We agree with the learned counsel for the respondent that § 1331 of the Code of Civil Procedure does not ■ apply to this case. The appeal is not from a judgment directing a foreclosure and sale of real property. The security upon the appeal from the judgment has already been fixed on the appeal to the court of appeals, and the judgment has been affirmed by that court. 45 St. Rep. 929. This is an appeal from the order of the special term, denying a motion made by the appellant that the court fix the security to be given on a former appeal taken by him from a portion of the order directing a resale of the premises mentioned in the judgment, and requiring the appellant to pay certain expenses therein mentioned. That order was made long after the entry of the judgment, which was finally affirmed by the court of appeals, and the appeal does not, therefore, fall within either of the provisions of § 1331. We are, therefore, of the opinion that the order below should be affirmed, with costs and disbursements.

Van Brunt, P. J., and O’Brien, J., concur.


author: Per Curiam.

text:
    Albert Glaser, App’lt, v. Daniel Carroll et al., Resp’ts.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    1. Creditor's action--Trust.
    In an action to subject real estate owned by a wife to the claims of her husband’s creditors and for moneys alleged to have been received by her in fraud of such creditors, testimony of the husband that certain mortgages had been paid off and that his wife received the money through him is insufficient in itself to sustain the charge of fraud.
    2. Same—Evidence.
    Id such an action evidence in relation to real estate not referred to in the complaint is irrelevant.
    Appeal from' judgment dismissing complaint, rendered at special term, in an action to subject certain real estate to the operation of a trust in favor of a creditor.

      Benno Loewy, for appl’t; Barley & Prendergast, for resp’ts.
   Per Curiam.

This is a creditors’ action to subject certain real estate belonging to the defendant Catherine M. Carroll to the payment of a judgment recovered by plaintiff against her husband, Daniel Carroll. The question whether the property sought to be thus subjected was held by Mrs. Carroll in fraud of her husband’s creditors was one of fact, and we see no reason to distrust the finding of the special term in her favor. The evidence entirety failed to sustain the plaintiff’s charges with regard to the real estate specified in the complaint. Much of the evidence had relation to property in this city not referred to in the complaint, and this evidence was consequently irrelevant to the main issue with regard to the Brooklyn property. The claim is made, however, that a considerable sum of money was received by Mrs. Carroll from mortgages upon this New York property, and that these moneys belonged to her husband, and should be accounted for under an independent section of the complaint charging Mrs. Carroll genererally with receipt of moneys in fraud of creditors. Even in this particular the evidence is not sufficiently clear to warrant us in disturbing the findings of the special term. The defendant, Daniel Carroll, testified, it is true, that most of these mortgages had been paid off, and that his wife received the money through him. This testimony was insufficient in itself to establish the plaintiff’s charges of fraud. But the defendants claim, and the case is not without evidence to support it, that certain of the mortgages in question were made after Mrs. Carroll had become the owner of the property, and that whatever money she received out of such property was realized after her purchase. In view, also, of the fact that the claim with regard to this particular property is not referred to in the complaint, and is not made the subject of a direct issue, we think the complaint was properly dismissed, and that the judgment appealed from should be affirmed, with costs.

Van Brunt, P. J., O’Brien and Barrett, JJ., concur.


text:
    The New Central Coal Company, Resp’t, v. Joseph Cumings, App’lt.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    Bills and notes.
    L., president of the plaintiff company, which was a creditor of an insolvent, undertook to effect a compromise, and the note in suit indorsed by defendant to give it strength was delivered to him, with the understanding that, when paid, he should use the fund to pay the creditors who had assented to the composition, L. therefore' gave the attorney for the insolvent a check for the amount of the note, and the latter gave L. checks for the assenting creditors’ shares, and retained the amount necessary to pay the nonassenting creditors in full. L. collected such checks through plaintiff, and also transferred to it the note. Held, that the only legal obligation that L. was under being to pay the proceeds of the note when paid to the assenting creditors, he had power to transfer the note to plaintiff, and the latter was entitled to recover thereon.
    Appeal from a judgment entered upon the verdict of a jury • in an action to recover the value of a promissory note.

      A. G. N. Vermilya, for app’lt; De Forest & Weeks (Geo. Holmes,. of counsel), for resp’t.
   Van Brunt, P. J.

This action was brought to recover against the defendant as indorser of a promissory note. The answer alleged that the indorsement was made wholly without consideration, and merely for the accommodation of a previous indorser, all of which facts the plaintiff knew before it received the same, and denied that the plaintiff was a holder for value. The evidence in the case showed that in March, 1890, the firm of Stewart, Winslow & Oo. were insolvent, and offered to compromise with their creditors by paying fifty cents on the dollar, twenty-five cents in cash and twenty-five cents in notes. One Henry S. Little, the president of the plaintiff, one of the creditors, undertook to get the signature of the creditors to the compromise agreement, but all the creditors would not sign such agreement. The sum required to pay all creditors was $5,000. To raise this money the note in question was made, all the indorsements being upon it before its delivery, the defendant Cumings indorsing it to give it strength.

The note in question was delivered to Little with the understanding that, when it was paid or collected, he should use the fund to pay the respective creditors who had signed the composition their respective shares. The creditors who had not signed were, however, to be paid at once in full. Little thereupon gave to the attorney for Stewart, Winslow & Co. a check for $5,000, which was duly paid, and such attorney gave to Little a series of checks to the order of the creditors signing the composition deed for said Little,'said attorney retaining the amount necessary for the payment of creditors who did not sign such composition. These checks received from the attorney Little duly collected through the plaintiff, and the note for $5,000, being the note in question, he also transferred to the plaintiff, and this action was brought to recover the same; and upon the foregoing facts a verdict wa? directed in favor of the plaintiff, and from the judgment thereupon entered this appeal is taken. It is claimed upon the part of the defendant that Little held this note in a quasi trust capacity, and that he had no power to transfer it to the plaintiff, and that such transfer was a diversion of the note from its intended use, and, the defendant being an accommodation indorser, no recovery could be had. But upon an examination of the case it will appear that, in all that Little did in this respect, he was acting on behalf of the plaintiff, who was a creditor of Stewart, Winslow & Co., and that the only legal obligation that he was under was when the note was paid or collected to pay the money to the creditors signing the composition deed, and not before. Clearly, under these circumstances, the note could be collected by Little or any person to whom he might transfer the same, it having been given expressly to secure the payment of the creditors who signed the composition deed. In fact Little has advanced the money to pay the creditors who did not sign the compromise out of his own pocket, upon the faith of this note; and now it is sought not only to defraud the creditors who signed the compromise out of that which had been promised them, but also to prevent Little, who advanced this money to pay the non-signing creditors, from recovering that which he has actually advanced. It is apparent, therefore, that the right of recovery exists, and that the judgment should be affirmed, with costs.

O’Brien and Lawrence, JJ., concur.


text:
    Herbert Cecil Pelly, Resp’t, v. William M. Onderdonk, Impl’d, App’lt.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    Bills and notes—Fbatjd.
    In an action upon a promissory note by a transferee, the defense was want of consideration because of fraudulent representations by the payee. On the trial it appeared that the payee induced the defendant, with others, to organize a corporation for the purpose of manufacturing paints by cer-

      tain formulas patented by him, and under the agreement that to him should be transferred certificates of the entire capital stock of the corporation, in payment for his patents, and that defendant and the others should purchase of him & certain number of shares, for which notes were to be given; certificates of such shares and the notes, including the one in suit,' were delivered co a third party, pending a test of the paints proposed to be manufactuied. Defendant was a member of the testing committee, and the committee reported in writing that the paints were as represented, and ordered the notes and stock delivered, which was done. Ho evidence was introduced to show that the payee had anything to do with the test or delivery of the notes. The patents turned out failures. Meld, that the court properly directed a verdict for plaintiff.
    Appeal from judgment in favor of plaintiff, entered upon verdict directed by the court in action upon a promissory note.

      Edward S. Clinch, for app’lts; Birdseye, Cloyd & Bayliss, for resp’t.
   Lawrence, J.

This case has been before the general term of this court on a previous occasion, 40 St. Rep., 648, and it was there held that the justice holding circuit erred in excluding evidence which was offered by the defendant for the purpose of showing that the note upon which this action is brought was obtained from the defendant by means of fraudulent representations made by Griffiths, the payee, and by whom the same was indorsed to the plaintiff. Upon examining the opinion then delivered, it is apparent that the court held, in accordance with a long line of cases, that, where an action is brought upon a promissory note, and the defendant has pleaded that the same was obtained of him through fraud or misrepresentation, the plaintiff’s deposition that he is a bona fide holder for value does not preclude the defendant from giving evidence of the alleged fraud. Pelly v. Onderdonk, 40 St. Rep., 648.

The defendant, Onderdonk, alleges that the defendant Griffiths, •jaiming to be the owner and inventor of certain processes or formulas for the manufacture of certain paints and liquids, made certain representations to him in regard to the quality, character, durability, appearance and cost of the production of said articles; and that, in reliance upon and in the belief that the representations made by the defendant Griffiths were true, and at his instigation and request, the defendant, Onderdonk, and the defendants Robinson, Naylor and Moore, who were associated with him, procured to be incorporated under the laws of the state of New York a corporation known as the American Aquol & Pyrodene Paint Company, for the purpose of manufacturing, selling and dealing in the articles referred to, with a capital stock of $75,000, consisting of 750 shares, each of the par value of $100; and under the agreement that the defendant Griffiths should sell and transfer to the said company his alleged processes or formulas for the manufacture of aquol, pyrodene paint, pyrodene liquid, glossine and cycle enamel, and that in consideration of the transfer to the said Griffiths of a certificate or certificates for the entire capital stock of said company, and the delivery to him of the promissory note of the company for $18,500, and also under the agreement that the defendant Onderdonk and his associates should purchase from said Griffiths 315 shares of the said capital stock, a certificate or certificates of the said entire capital stock of said company was or were transferred to the said" Griffiths, and the promissory note of said company for $18,500 was delivered to him and his associates; also, that in pursuance of said agreement the said Griffiths delivered to the defendant, and the defendant received from said Griffiths, a certificate for eighty-four of the shares of the capital stock of said company so transferred to said Griffiths as aforesaid, and paid said Griffiths therefor at the par value thereof by cash and by three promissory notes of the defendant, two of which have been paid, and the other of which is the note described in the complaint herein. It is further averred that the defendant, at the time of paying said cash, and making and delivering said notes, and the payment of said two notes, believed and relied upon the representations made by said Griffiths in respect to the said alleged processes or formulas to the said articles, their usefulness and value, etc. It is further averred that after the purchase by the defendant of said shares of capital stock the said company purchased, for the manufacture of said articles, expensive machinery, selected by Griffiths for that purpose, and expended about or upwards of $40,000 in the attempt to manufacture said articles according to said processes or formulas sold by said Griffiths to said company; and then, for the first time, said company and defendant ascertained that it was not possible to produce by said formulas or processes articles having the qualities represented by Griffiths as aforesaid, or to manufacture under said formulas or processes at the cost represented by him; and that, in consequence thereof, the company was unable to carry on its business, and became financially embarrassed and insolvent, and discontinued its business.

On the trial which resulted in the judgment from which the present appeal was taken, the plaintiff, after having offered in evidence the note in suit, and after having read the deposition of the plaintiff, in which it is stated that on the 20th of March, 1890, he became the holder and owner of the said promissory note for value given by him on said date in good faith, proved the minutes of the company by the president of said company, and then rested his case. Thereupon the defendant was examined in his own behalf, and proved that, after certain negotiations or transactions with one Frank Smith, the agent of Griffiths, a conditional agreement was entered into on the 27th of March, 1889, between Griffiths, of the first part, and Onderdonk and four associates, of the second part, which agreement is fully set forth in the printed case. The defendant testified that, subsequent to the execution of the conditional agreement Griffiths came to this country, and certain negotiations were had with him, in which, the defendant testifies, Griffiths made representations respecting the qualities of “ these specialties.” He further testified that a subsequent agreement was entered into between Griffiths, himself, Hay lor, Eobinson and others, that involved the formation of a company for the manufacture of “these specialties." The certificate of incorporation of said company was offered and received in evidence. The defendant further testified that, as the result of the agreement with Griffiths, the company was organized, and stock was issued to him, and a note for $18,000 was given to him. He further testified that Griffiths parted with some of that stock subsequently, and that he and Eobinson bought some of the stock from Griffiths, and paid him money and gave him notes for it, and that the note in suit is one of the notes given for said stock. He further testified that, after the formation oE the company and the purchase of the stock by himself and Eobinson, the company attempted to manufacture the specialties, to which reference has' been made, under the superintendence of Griffiths personally; that premises were hired and machinery purchased for the purposes of the business, which was conducted for a time under the personal superintendence of the defendant Thomas Griffiths, who afterwards left the country, leaving behind him his nephew as his representative. The defendant also gave evidence tending to show that the statement alleged to have been made by Griffiths that pyrodene did not contain a single objectionable ingredient, such as potash, alum, etc., was false, and that the aquol paint faded and washed off, and rotted the wood and oakum when used upon boats.

On cross-examination the defendant testified that the note in suit was subsequently delivered to Mr. Clinch, the attorney who represented him and the other parties by whom notes were given upon this appeal and other appeals now before the court. He states that at or about the time of such delivery he and Mr. Naylor made a report in writing, not to the trustees of the company, but to Mr. Clinch, and that upon such report the stock was delivered to Mr. Clinch. Then, after denying that he had made any examination in reference to the qualities of the paints, he states that from time to time he may have made statements at the meetings of the trustees of the company that his report was not complete, and that he was not ready to make it. He states, however, that he sent an order to Mr. Clinch to deliver the stock, and the paper was offered and received in evidence, and is marked “Exhibit M.” That order states that “ Wm. M. Onderdonk and Henry Naylor, acting for the trustees of the American Aquol & Pyrodene Paint Co., being a committee on tests, appointed by said trustees on August 23, 1889, certify that we have tested certain specialties purchased from Thomas Griffiths by the American Aquol & Pyrodene Paint Company, and that by the manufacture of said specialties it has been demonstrated that they have the qualities respectively ascribed to them in a certain agreement dated 27th March, 1889, between Thomas Griffiths and the trustees of the American Aquol & Pyrodene Paint Co.” It then goes on to state: “ You will please, therefore, deliver the stock and notes held by you under said agreement as trustees, as prescribed therein.” An agreement between Griffiths of the first part, and Naylor and others, including the defendant, of the second part, was then put in evidence, in which it was recited that the party of the first part should deposit with Clinch certain certificates of stock of the American Aquol & Pyrodene Paint Company, which certificates are enumerated in the body of the agreement, and are stated as standing in the name of the party of the first part, and indorsed by him in blank. It was further agreed by said agreement that the party of the second part should place in the hands of Clinch the following notes, all indorsed to the order of the said parties of the second part. The notes are then enumerated, and among them is the note in suit. It was also stated that the note of the said company for $18,500, hereinbefore referred to, was placed in the possession of Mr. Clinch. It was then agreed that Mr. Clinch should hold said stock and notes as trustee, until such time as Mr. Onderdonk, or Mr. Naylor, acting for the parties of the second part, should notify him that by the manufacture of the certain specialties assigned and transferred to said company, it had been demonstrated that said specialties have the qualities respectively ascribed to them in a certain agreement between Griffiths and Wedemeyer and others, being the agreement dated March 27, 1889, hereinbefore referred to. It was further provided in said agreement that upon receiving said notification said Clinch should hand over to Naylor, Onderdonk, Pool, and others, the parties of the second part, or to such party or parties as they might designate, all of the notes in said agreement referred to.

The plaintiff, also, on the cross-examination of said defendant, put in evidence a notification, dated September 24, 1889, and signed by Onderdonk and Naylor, in which it is stated that it has-been demonstrated that said specialties have the qualities.ascribed to them in the agreement dated March 27, 1889, and that “ you are, therefore, authorized to deliver to the persons named in the agreement the certificates of stock therein referred to, and to deliver the notes therein referred to to Mr. Thomas Griffiths.” The delivery by Mr. Clinch of the notes and stocks were also proven, and the receipts therefor, signed by the respective parties, were produced. The plaintiff also proved by Mr. Ferris, who at one time acted as assistant secretary of the company, that he kept certain minutes, covering a period between the 1st day of August, 1889, and the 1st day of January, 1890, and that the same were correctly stated in the book then produced. The reception of this-book in evidence was objected to, on the ground that there is no-evidence that the report therein contained was ever presented by anybody, and that it appears on the face thereof that neither Naylor’s nor Onderdonk’s name was attached to it. Those minutes contain a report purporting to be made by the committee on tests to thq trustees and stockholders of the corporation, in which it is-stated, in substance, that the investigations made by the committee tallied satisfactorily with all the representations made by Mr. Griffiths, and fully substantiated the claims of the March agreement. It was further stated that “ we desire. to further add that in these investigations we have taken nothing for granted, but-have gone through all the details.” The witness by whom these-minutes were proved stated that he did not know anything about the report, as to who made it or who drew it; and Onderdonk, on being recalled, stated that such report was presented to him for his signature, and that he refused to sign it.

It is evident that the state of facts proven upon this trial was-very different from that which was before the court upon the previous appeal. On that appeal, as already stated, the judgment was reversed on the ground that the defendant was not permitted to give evidence tending to show that the note' was procured by false representations made by Griffiths to the defendant Onderdonk ; it being held that the testimony of plaintiff in his deposition, stating that he purchased the note in good faith, and for value, was not conclusive evidence against the defendant upon the question of fraud, and did not preclude him from giving evidence to prove the fraud. It appeared upon this trial that the negotiations and transactions between Griffiths and the defendant and those associated with him resulted in the agreement by which Clinch was to hold the stock and notes as trustee until such time as Onderdonk or Naylor should notify him that the specialties in question had been demonstrated to have the qualities ascribed to them in the agreement dated March 27, 1889, and that upon receiving said notification Clinch should hand over the stock and notes to the parties respectively entitled thereto. There is no dispute about the fact that certain tests were made, and that the notification to Clinch was given by the committee on tests, and that Clinch, acting thereupon, delivered the stock and notes as therein requested. There is no proof in the case showing or tending to show that any deception was resorted to by Griffiths, or misrepresentation made by him, in making the tests, for the purpose of obtaining the notification to Clinch, which was signed by Onderdonk and Naylor; and, even if there had been, the answer does not aver that the same was obtained from Clinch by fraud or misrepresentation. The misrepresentations set up in the amended answer of the defendant, as we have already seen, related to the character, quality and cost of the articles described in the first agreement; and that agreement, so far as this case i§ concerned, resulted or was merged in the agreement for the deposit of the certificates and notes with Clinch, which is undated, but which is marked as “Exhibit L.” There was no proof of any fraud on the part of Griffiths in procuring the latter agreement, nor in obtaining the notification subsequently addressed to Mr. Clinch by Onderdonk and Naylor, directing the delivery of the stock and notes, which notification bears date September 24, 1889 ; and we agree with the learned judge at circuit that, upon the proof of that agreement, the element of fraud was eliminated from the case, and disappeared as soon as it and the certificate to Clinch were produced.

It seems to us, therefore, clear that the point on which the former judgment was reversed and the new trial granted was not presented on the retrial, there being no allegation nor proof of fraud on the part of Griffiths in -respect to the agreement marked Exhibit L ” and the notification to Clinch. The burden of proof was therefore not shifted by the defendant’s evidence from the defendant to the plaintiff. All that was called for under the agreement Exhibit L had been proven, and it cannot be said that there was a failure of the consideration for which the notes were given. The plaintiff was not bound to prove more than that he had become the holder of the note in good faith and for value, and that is shown by the evidence contained in his deposition. There is nothing adverse to these views in the cases of Vosburgh v. Diefendorf, 119 N. Y., 357; 29 St. Rep., 448; and Joy v. Diefendorf 130 N. Y., 6 ; 40 St. Rep., 491. Those cases simply hold that where, in an action upon a promissory note, brought by the transferee, the maker establishes that the note was obtained from him through fraud, the burden rests upon the plaintiff to establish that he is a bona fide purchaser. If it be contended that the evidence tended to establish a want of consideration as between the maker and the payee, the answer to that position is that in such a case the burden of proof rests upon the defendant, and that the evidence in this case, which is uncontradicted, shows that the conditions and consideration upon which the note and stocks were delivered to Clinch had been fulfilled at the time when he, under the direction of Onderdonk and Naylor, turned over the notes- and stock in question.

Various exceptions were taken by the defendant’s counsel to the-rulings of the court in sustaining objections to questions asked of the witness Onderdonk and others. Those questions related to what was done by Griffiths in making the demonstration as to the character and quality of the articles which formed the subject, of the previous negotiations between the parties, which, as we have seen, were merged in the final agreement, Exhibit L, and there was-no allegation in the defendant’s answer which made the proof sought to be obtained by the answers to such questions competent, or relevant. Whether it is or is not true that Onderdonk and Naylor did not sign the report which, by the minutes proven by Ferris, purported to have been presented by them, is immaterial, in view of the statements made by them in their communication to Clinch under date of September 24, 1889. We think, too, that the offer of the defendant’s counsel to prove that the specialties referred to in the agreement of March 27,1889, did not have the qualities ascribed to them in that agreement was properly rejected inasmuch as, as has been already stated, that agreement had been merged in the agreement Exhibit L, which agreement was fully complied with, without, so far as the evidence discloses, any fraud on the part of Griffiths. The element of fraud being eliminated from the case, and it appearing upon the evidence that the plaintiff was a bona fide holder of the note in suit, for value and in good faith, we are of the opinion that the court below was correct in directing a verdict for the plaintiff, and the judgment and order-appealed from should, therefore,, be affirmed, with costs and disbursements.

Van Brunt, P. J., and O’Brien, J., concur in result


text:
    Herbert Cecil Pelly, Resp’t, v. Francess Naylor et al., Ex’rs, App’lts.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    Appeal from judgment in favor of plaintiff entered upon verdict-directed by the court and from order denying motion for a new trial.

      Edward S. Clinch, for app’lts; Birdseye, Cloyd & Bayliss (Luden Birdseye, of counsel), for resp’t.
   Lawrence, J.

For the reasons stated in the opinion filed in the case of the same plaintiff against Onderdonk, we are of the ■opinion that the judgment and order below should be affirmed, with costs and disbursements.

Van Brunt, P. J., and O’Brien, J., concur in result.


text:
    Herbert Cecil Pelly, Resp’t, v. Andrew J. Robinson, Imp’ld., App’lt.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    Appeal from judgment in favor of plaintiff entered upon verdict directed by the court and from order denying motion for a new trial.

      Edward S. Clinch, for app’lt; Birdseye, Cloyd & Bayliss (Laden Birdseye, of counsel), for resp’ts.
   Lawrence, J.

The case does not differ in any material respect from that of the same plaintiff against Onderdonk, and the points presented are the same as are involved in the appeal therein. The judgment and order appealed from must be affirmed, with costs and disbursements.

Van Brunt, F. J., and O’Brien, J., concur in result.


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

text:
    James C. Matthews, App’lt, v. Melville W. Cooper et al., Resp’ts.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    Lease—Covenants—Breach cannot be determined on affidavits.
    A receiver was appointed pendente lite to. take charge of an hotel and conduct the business in an action by the lessee of the hotel to reform certain chattel mortgages on the furniture and a deed of trust, both made to secure the rent. Thereafter the holder of a prior chattel mortgage asked leave to enforce his rights, whereupon the lessor alleged that the lessee had forfeited his rights under the lease by a breach of a covenant, that he was ready to pay such mortgage, and asked for possession of the property. Held, that it was proper for the special term to allow the lessor to foreclose his mortgages, but error to allow him to re-enter for breach of covenant, even though he indemnified the receiver from any liability for his acts, as the question of forfeiture could only be tried by a regular action, and could not be determined on mere affidavits.
    • Appeal from an order authorizing the receiver appointed by an order of this court to permit the defendant Sturtevant to reenter and enjoy as in his first • and former estate in the Sturtevant House, and to take possession of and retain the goods and chattels mentioned in two certain chattel mortgages referred to in the complaint.

      Durnin & Hendrick, for app’lt; Elihu Root and S. B. Clarke, for resp’t Sturtevant; George H. Adams, for receiver.
   Lawrence, J.

The action was brought by the appellant to procure a reformation of two chattel mortgages executed by him to the respondent Sturtevant, and also to reform a certain trust agreement executed by him to the respondents Cooper and Wad-dell simultaneously with the execution of the chattel mortgages. The plaintiff had, up to the time of the execution of the instruments in question, been engaged in conducting and carrying on an hotel business in the premises in the city of New York known as the “ Sturtevant House,” and those instruments related to the business, furniture and fixtures ot said hotel.

The plaintiff alleged in his coinplaut that the chattel mortgages should have contained a provision making them payable within one year, instead of on demand, and that there should be inserted in the trust agreement a provision that upon demand the property therein mentioned should be given back, and the management of the business turned over to him. He prayed that an injunction be granted restraining the respondent Sturtevant from selling the said property under the chattel mortgages, and Cooper and Wad-dell from conducting and carrying on said business, and that a receiver be appointed to take possession of the property and business, and manage and conduct the same during the pendency of the action. It was alleged in the complaint that the plaintiff at the time of the execution of the instruments referred to was ill and incapacitated from the transaction of business, and that he did not know that the provisions in respect to which a reformation of the instruments was sought had been omitted therefrom, but that he supposed that such provisions had been inserted therein. The answer of the defendant, Sturtevant, denies the allegations of the plaintiff in respect to the mistake in the provisions of the chattel mortgages and the trust agreement, and as to the plaintiff’s incapacity from illness, and generally all the equities in the complaint. Subsequently, on the motion of the plaintiff, on the 30th day of December, 1891, the defendant, Erhardt, was appointed receiver of the furniture and chattels in said hotel, and of the lease thereof, and of the business carried on therein, with directions to conduct and carry on said business. The defendants, Cooper and Waddell, were also directed to deliver to the receiver the property of the hotel then in their possession, and the defendants herein were enjoined and restrained, pending the action, from selling or disposing of the furniture and chattels in said hotel. On a subsequent motion to vacate and set aside said order it was ordered, on the 16th of February, 1892, by the special term of this court, that said injunction be vacated, unless the appellant, within 10 days, file a new undertaking, with good and sufficient sureties, in the sum of $10,000, to indemnify the defendant, Sturtevant, for the damages that he might sustain by reason of said injunction. The appellant has never given the additional security provided for by this order. Erhardt, the receiver, on or about the 11th of May, 1892, presented his petition to this court, in which, after stating that, after paying the rent of the premises, but a small balance remained in his hands from the assets turned over to him by Cooper and Waddell, and that during the period from June to August 15th the receipts will be insufficient to meet the obligations for rent, etc., he goes on to state:

“Fifth. Your petitioner respectfully shows to the court that he has received notice of a certain petition and motion of Jos. E. Janvrin, verified April 3, 1892, for an order requiring your petitioner, as the receiver of the furniture and chattels now in the Sturtevant House, to forthwith pay Jos. E. Janvrin, the petitioner in the said petition, the amount of a certain mortgage set forth in said petition, amounting to $5,000 and interest thereon since January 26, 1891, together with the costs of the said proceeding ; or, in default thereof, that your petitioner deliver possession of all the furniture and chattels now in his possession or under his control, and referred to in and covered by the said mortgage, to the said petitioner, Janvrin; and that he, the said Janvrin, be allowed to take possession of all of said furniture and chattels, and foreclose the said mortgage according to the terms thereof. “ Sixth. That your petitioner, as such receiver, is wholly unable to make payment of the principal and interest of the said mortgage; and that, if the furniture, fixtures and chattels described in and covered by the said mortgage shall be removed from the possession and control of your petitioner, your petitioner will be unable to continue to administer the trust in his hands, namely, the hotel business now conducted by the Sturtevant House.”

The defendant Sturtevant also presented his petition, dated May 4, 1892, in which he states in great detail the transactions between him and Matthews, and alleges that the appellant, as lessee, was ■in default for nonpayment of Croton water rates or rents accruing in the years 1891 and 1892, and claims that under the covenant in the lease he is entitled to reenter upon the premises by reason of such default. He also alleges that the appellant has made default in payment of certain promissory notes mentioned in the chattel mortgages, and that, under the terms thereof, he is authorized and empowered to take possession of the property covered by them, and desires to do so. He further averred that one Janvrin, claiming to be a creditor of the appellant for a debt secured by a chattel mortgage, executed prior to the mortgages to the petitioner, had by judicial proceedings attempted to remove the property covered by the mortgages held by the petitioner; that Janvrin had served notice of motion on the receiver for an order directing said receiver to forthwith pay the amount of his mortgage, or, in default, deliver possession of the property to him; that, said motion coming on to be heard, it was directed that a ■copy of Janvrin’s petition and notice be served on all the parties to this suit; that this had been done, and that said application was pending and waiting a hearing. He further averred that he elects that it is for his best interest to take possession of the property covered by said two chattel mortgages mentioned in the complaint, and that, under and by virtue of the terms of said chattel mortgages, he is, upon such election, entitled to take and retain possession thereof, and he is desirous to do so. He further averred that the said Matthews did not claim in his complaint in this action that the said two chattel mortgages in the complaint mentioned are erroneous in respect of any of the provisions thereof which give to your petitioner the right to take possession of the goods and chattels covered thereby upon an election by your petitioner that it is for his best interests so to do, or in case of an attempt on the part of any person, under the direction of said Matthews, or on his behalf, to take possession thereof. He further averred that he did not know whether the said Janvrin mortgage' is valid or not, but that, if the same be valid, he is ready and willing to redeem the property covered by all three of said chattel mortgages from the lien of the said Janvrin mortgage; and, if he should do so, as he hopes, that he may be subrogated to all the-rights of the said mortgagee under said Janvrin mortgage. Matthews, the appellant, when the hearing of the application of Sturtevant and of the receiver came on, opposed the same in an affidavit in which he denied that there had been a forfeiture by reason of the failure to pay the water rates, but he does not, in. that affidavit, in any way attack the validity of Janvrin’s mortgage, nor his right to take possession of the furniture and fixtures of the hotel thereunder. All the parties were served with notice of these applications, and, upon the hearing, the order from which, this appeal is taken was made.

We think that the order was right. Janvrin was confessedly entitled to be paid the amount due upon his mortgage, or to take possession of the property, and sell it, to obtain payment of his debt. The property was in possession of a receiver, who had been appointed by the court in another action, to which he was not a party. There was no money in the hands of the receiver, out of which Janvrin’s claim could be paid. Whether the mortgage to Sturtevant and the trust deed recited all the terms agreed upon between the parties or not, the fact is also conceded that Matthews was largely indebted to Sturtevant, and that the latter was vitally interested in preventing a sacrifice of the property upon a sale under the Janvrin mortgage. Matthews does not claim, in his affidavit in opposition to the motion, that he is able to protect the property or to pay Janvrin’s debt. To deny the application of Sturtevant might lead to a sacrifice of the property, and result in irreparable injury, not only to him, but to the plaintiff, if it should eventually be determined that he is entitled to relief at the hands-of this court. The order below must be affirmed, with costs and disbursements.

Van Brunt, P. J.

While concurring with the opinion of Mr. Justice Lawrence in so far as it affirms the order of the court appealed from, which allowed the defendant Sturtevant to proceed with the foreclosure of the mortgages, we cannot concur in his conclusion to affirm that part of the order which embodied a judgment in an action of forfeiture. The question as to whether the covenants of the lease by which the plaintiff, Matthews, held the premises in question was one which he had a right to have tried in a regular action, so that his rights and those of the defendant Sturtevant, could be determined therein. This court had no power to deprive him of that right of trial, and to determine the question upon affidavits. The defendant Sturtevant claimed a right to re-enter because of a breach of the covenants contained. in the lease. The plaintiff, Matthews, among other things, claimed .a waiver of the forfeiture, if any had taken place; and it is a well-settled rule that covenants of this description, which work a forfeiture of the term, unless such forfeiture is acquiesced in, •can only be enforced in the manner prescribed by law. Therefore, in order to obtain possession of these premises by reason of the alleged forfeiture, it was necessary for Sturtevant to establish the same in an action; but, by the order of this court upon affidavits, without giving Matthews an opportunity for the trial to which he was entitled upon the issues which would have been raised in respect to the question of forfeiture, this court decrees that its officer permit Sturtevant into and upon the premises demised in the lease wholly to re-enter, and to have the same again, to repossess and enjoy as his first and former estate. Our attention has been called to no process by which a forfeiture can be •enforced in this summary way, nor have we knowledge of any •authority for such a procedure. We think, therefore, that that portion of the order should be reversed, and the order limited solely to the right of said Sturtevant to enter upon these premises in order to take possession of and remove the property mortgaged for the purpose of foreclosure.

The order, as so modified, should be affirmed, without costs. '

O’Bbien, J., concurs.


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

text:
    James C. Matthews, Resp’t v. Mervelle W. Cooper et al., Def’ts.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    Receiver—'Title .
    A receiver appointed to take charge of an hotel and its property and to conduct the business, hut given no power to sell any of such property, except in the ordinary course of the business, is not vested with the title to such property, and it does not become assets in his hands to pay the receivership expenses.
    Appeal by defendant, Albert P. Sturtevant, from order-confirming the report of a referee to pass the accounts of Joel B. Erhardt, receiver.

      Elihu Root, and S. B. Clarke, for app’lt; Durnin & Hendrick, for resp’t; A. H. Holmes, for rec’r.
   Van Brunt, P. J.

Prior to the 10th of March, 1886, the appellant Sturtevant and one John D. Sturtevant were copartners in the hotel business in the city of New York, and, as such firm, were the owners of the property known as the “ Sturtevant House," which premises, in March or April, 1886, they leased to the plaintiff, Matthews, and one Pearson. The lease contained a ■covenant that the lessees would pay the Croton water rents imposed upon the demised premises, and that, if default should be made in any covenant, the lessors might re-enter. Matthews and Pearson entered upon said property, and conducted the hotel business therein after the execution of said lease, and continued the occupation thereof until March, 1891, when the business connection between Matthews and Pearson was dissolved by the withdrawal of Pearson, and, thereafter, Matthews continued to carry on such business in said premises until the time hereinafter mentioned. In July, 1889," John D. Sturtevant died, leaving the appellant his surviving partner. Prior to October, 1891, Matthews made and executed a chattel mortgage- upon the furniture, etc., contained in said hotel to one Janvrin, to secure the sum of $5,000; and in October, 1891, said Matthews also executed to the appellant, as surviving partner of the firm of A. P. & J. D. Sturtevant, two chattel mortgages upon the same goods and chattels, which mortgages contained a provision that, m case of default, the party of the second part might enter any dwelling-house and other premises, and such other place or places as said goods might be placed, and take and carry away said goods and chattels, and sell and dispose of the same for the best prices he could obtain, and out of the moneys arising therefrom to retain and pay the sum and interest due upon the mortgages, and all charges touching the same. The said chattel mortgages also contained a provision that, in case the party of the second part should elect that it was for his best interest to take possession of the property in any event, it should be lawful for him to immediately take and retain possession thereof, as if default had been made in payment of the sum of money secured to be paid by the mortgage. In October, 1891, Matthews made and executed to the defendants Cooper and Waddell a deed of trust, whereupon said trustees entered upon said property, and continued in possession thereof until the receiver appointed in this action took possession thereof about the last of December, 1891; said Matthews having in November, 1891, commenced this action to reform the said chattel mortgages and the trust deed, and having obtained an injunction, and the appointment of a receiver of said property and business, and to manage and conduct the same pendente lite.

In February, 1892, this injunction was vacated as to the appellant, Sturtevant, unless the plaintiff in ten days gave a bond in $10,000, which condition was not complied with. In May, Janvrin, the holder of the first chattel mortgage above mentioned, applied to the court for the payment of his mortgage by the receiver, or that he be put in possession of the mortgaged property, with leave to foreclose the mortgage. At the same time the appellant applied by petition, as owner and lessor of the Sturtevant House, and as second mortgagee of the furniture, chattels, etc., first, to re-enter under the lease; second, that the receiver put him in possession of the furniture and chattels covered by the mortgage; and, third, that the receiver be relieved from so much of the order appointing him as required him to conduct and carry on such hotel business. These applications of Janvrin and Sturtevant were heard and decided together and granted, and the extraordinary order was thereupon entered that, upon the appellant making an arrangement with the receiver satisfactory to him for his protection against any liability for his acts in the performance of his duties as receiver pursuant to his order of appointment, and upon one day’s notice, the said receiver suffer and permit said Sturtevant into and upon the premises in said lease mentioned wholly to re-enter, and the same to have again, repossess and enjoy as in his first and former estate; and that the receiver suffer and permit said Sturtevant to take and retain possession of the goods and chattels covered by said two chattel mortgages then in the Sturtevant House, and in the possession of said receiver; thus granting judgment upon a covenant in the lease without even the semblance of an action or legal proceeding to enforce the breach of the covenant Therepon the appellant Sturtevant entered into a stipulation with the receiver as follows:

“Memorandum of stipulation between Albert P. Sturtevant and Joel B. Erhardt, the receiver in the above-entitled action. Whereas, a motion made in this action by the defendant Sturtevant for an order that the said receiver permit said Sturtevant to re-enter under the lease mentioned in the complaint, and to take possession of the furniture covered by the chattel mortgages mentioned in the complaint, has been granted upon condition that the defendant Sturtevant make an arrangement w'ith said receiver satisfactory to said receiver for the protection of said receiver against any liability for his acts in the performance of his duties as such receiver; and whereas said receiver has incurred indebtedness for supplies and operating expenses of the business and other expenses of his receivership, and has in his possession as such receiver certain property, including supplies, which would necessarily be disposed of at a great loss for any other purpose than for use in the operation of the said business. It is hereby agreed: First. That said Sturtevant will take from the said receiver all supplies which the said receiver has on hand in the hotel known as the Sturtevant House,’ and mentioned in the complaint, and pay said receiver full cost price thereof and as of the time when said premises are taken possession of by said Sturtevant; second, that if at the time of such taking possession there shall remain any assets of said receivership, and any unpaid debts or expenses of said receivership, after the application thereto of all moneys then in said receiver’s hands, and all moneys paid to said receiver by said Sturtevant under the foregoing provisions, then the said Sturtevant agrees, upon any sale of the then remaining assets of the said receivership, to bid therefor a sum which shall be at least sufficient to pay all the remaining debts and expenses of such receivership, together with the expenses of such sale ; third, that, 'in any event, in case any lawful obligation of said receiver, incurred in the performance of his duties as such, shall remain unpaid after the application of all the property in said receiver’s hands applicable thereto, said Sturtevant shall indemnify and save harmless the said receiver from and against all liability thereupon.”

In June, 1892, the receiver gave notice that on his petition, account and schedules he would apply for a reference to- pass his accounts and for his discharge, and for other relief; and thereupon an order of reference was made, directing the receiver to ascertain and report to the court what, if any, property or assets vested in said receiver in this action remained undisposed of. The referee thereupon proceeded with the reference, and reported that the only property or assets vested in said receiver which remained undisposed of is the cash on hand with which said receiver is chargeable, and the amount due upon the obligation of the appellant Sturtevant to said receiver under the stipulation.

The appellant filed exceptions to said report, to the effect “ that the referee should have reported that the right, title, and equity of plaintiff, Matthews, in the furniture and chattels described in the mortgages and trust deed mentionéd in the complaint ought to be charged with the payment of the receiver’s debts, expenses and compensation, and sold for that purpose.” And also “that the referee should have reported that defendant Sturtevant is under no liability upon the stipulation with the receiver, referred to in the report, except contingently for any deficit there may be after a sale of plaintiff’s (Matthews) right, title, and equity in the said furniture and chattels, and the application of the proceeds of such sale to the payment of the debts, expenses, and compensation of the receiver.” Also to so much “ of said report as states, in effect, that the only property or assets vested in said receiver which remain undisposed of is the cash on hand, and the amount due upon the obligation of defendant Sturtevant upon his stipulation with the receiver.” And also to so much of the report as states that the receiver is entitled to commissions upon the amount of the obligation of the appellant Sturtevant above mentioned. The other exceptions are substantially embraced in those which have been mentioned. These exceptions being overruled by the court, and an order entered confirming the report, this appeal is taken from that order.

' The question presented arises principally upon the construction to be placed upon the stipulation entered into by the appellant Sturtevant and the receiver, and whether the equity of redemption of the plaintiff, Matthews, in the furniture, etc., described in the mortgages and trust deed, were property or assets vested in the receiver which remained undisposed of at the time of the application of the receiver for a passing of his accounts. In the consideration of this question it is to be borne in mind that the sole duty of the receiver was to act as stakeholder of the property which had been used by Matthews and his trustees in the conduct of the hotel business in the Sturtevant House, and to use such property in the continuing of such business. He had not authority to dispose of or sell any of such property, except such as might be sold in the ordinary conduct of said business. No such property was vested in him, except so far as necessary for the conduct of the business. It was entirely different from the case of a receiver appointed for the purpose of taking possession of property, selling it, reducing it to cash, and dividing it among the parties entitled thereto. The theory upon which his appointment was made was that it was necessary for the protection of the rights of the plaintiff that this property should be placed in the hands of a stakeholder, to be held by him until the rights of the parties might be determined, and then that the receiver should be required to deliver the property to the parties adjudged to be entitled thereto; and this was all the authority which was conferred upon the receiver by his appointment under the circumstances developed in this action.

Row, the applicant having applied to the court for the possession of this property, and not only for the possession, but that he might re-enter under his lease because of a breach of a covenant in the lease, without going through the forms of law which would entitle him to re enter for a breach of the covenant, and instead of removing the property from the demised premises, which was all he could do under the mortgages, he is granted this extraordinary and remarkable relief upon certain conditions, namely, that he save the receiver harmless; and he gave this stipulation, and now claims that, having obtained the advantages which he desired, the receiver should do that which his appointment never contemplated, i. e., sell out Matthews’ interest in this property for the payment, of the debts and of the expenses of the receivership and the compensation to the receiver. It seems to us that it would be going entirely beyond the contemplation of the order appointing the receiver, to allow him to dispose of any of the property, except, as already stated, so far as was necessary in the conduct of the business. Being a mere stakeholder, all that he could do would be to preserve the property of which he was appointed receiver, and not to sell the same. It was not necessary for the purposes of the action in which he was appointed, and, not being so necessary, no such power was conferred upon him. We think, therefore, that the referee was entirely right in holding that no title to this mortgaged property was vested in the receiver, and that he had no power to sell, and that it was not assets in his hands. As to the commissions of the receiver, he is clearly entitled to his commissions upon that which he receives and disburses, and the appellant having, for purposes of his own, in order to get possession of the leased property in this extraordinary manner, agreed to indemnify the receiver, he is as much bound to pay the commissions of the receiver upon the sums he is entitled to receive and disburse as any other debt or obligation connected with the receivership. We think, therefore, that the order should be affirmed, with ten dollars costs and disbursements to each of the respondents appearing.

O’Brien, J., concurs.

Lawrence, J.

I think that the order should be wholly affirmed for the reasons stated in my opinion on the appeal taken by Matthews. _