author: Van Brunt, P. J.

text:
    Farmers’ Loan and Trust Company, Respt’s, v. The Bankers’ and Merchants’ Telegraph Company, App’lts.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887.)

    1. Mortgage—Power of sale in—Does not exclude other methods of foreclosure.
    The presence of a power of sale in. a mortgage does not exclude other modes of foreclosure provided by law, but is in addition to them.

      S. Same—Foreclosure—Property situate in different states.
    Where property is situated wholly within the state, and subject to its jurisdiction, the parties to a mortgage cannot by their agreement deprive the courts of the jurisdiction which they would otherwise have to enforce rights acquired under the mortgage; but where the property mortgaged is situate out of the state and beyond the jurisdiction of its courts, thejr may by agreement provide the method for the enforcement of their rights, unless contrary to some statutory legislation on the subject.

      3. Same—Courts of this state — Have no extra-territorial power.
    A court of this state cannot by its decree, or by a sale made by an officer appointed by it, or by a conveyance executed by such officer, affect the title to property without the limits of the state.
    4 Same—Purchaser at foreclosure sale cannot be compelled to take title—In what case.
    A purchaser at a foreclosure sale cannot be compelled to take title unless he can obtain possession upon the production of his deed, and if the court cannot put him into possession, he will not be obliged to take.
    5. Same—Provisions contained in.
    Provision having been fully made in a mortgage of property lying both in this and other states, for a method of sale not incompatible with the observation of the formalities prescribed in this state to be executed in the foreclosure by advertisement, and it being of advantage to the incumbered property to be sold entire Held, that these circumstances would be regarded and the rights of the mortgagee enforced in a manner not prejudicial to the property.
    6 Same—Principal sum—When due.
    A mortgage having been made to secure the payment of money at a certain date, and it being provided that in case of a certain default in payment of interest, the principal sum should become due: Held, that the principal sum could not be regarded as due before the date of payment fixed, except on the happening of the contingency provided for.
    Appeal from a judgment of foreclosure and sale under a mortgage given to the plaintiff as trustee.
    On the 2d day of July, 1883, the Bankers and Merchants’ Telegraph Company of New York, the Bankers and Merchants’ Telegraph Company of New Jersey, the Bankers and Merchants’ Telegraph Company of Pennsylvania and the Bankers and Merchants’ Telegraph Company of Baltimore city made a mortgage to the Farmers’ Loan and Trust Company, as trustee, whereby they mortgaged all their property, situate in several states, to secure an issue of $300,000 of bonds by the said Bankers and Merchants’ Telegraph Company, said bonds becoming due in 1913, the proceeds of which were to be used in the payment of the debts of the said corporation and in the extension of the telegraph lines, etc., of said company. The bonds provided that, in the event of non-payment of any interest coupons thereto attached, if such default should continue for six months after maturity and demand of payment, the principal of the bond should become due in the manner provided in the said mortgage.
    The mortgage provided that if default be made in the payment of any of the bonds or of any of the coupons which should become due thereon or should default be made in the payment of an annual instalment of principal of $10,000 dollars provided for in said mortgage and. such default should continue for the space of six months, it should be lawful for the said mortgagee, and upon the written request of one-third in interest of the owners and holders of said bonds, it should be the duty of the said mortgagee to enter upon the property mortgaged and sell and dispose of the? same at public auction, having given notice once a week for six successive weeks by publication in the newspapers in the city of New York, one in Philadelphia and one in Baltimore, of the time and place of any such sale, and as the attorneys of the said corporations by the said mortgage duly authorized, constituted and appointed, to execute to the purchasers thereof a good and sufficient deed of conveyance for the transfer of the real estate and other good and sufficient conveyance of the other mortgaged property Sold, and out of the money arising out of such sale to pay the principal and interest which then should be due or to grow due on the said several bonds and the expense of sale, rendering the .overplus, if any there be, to the said Bankers and Merchants’ Telegraph Company.
    The mortgage then contains provisions for the payment of taxes and assessments and further provides that in case of default in the payment of the said taxes and assessments or of the principal and interest of the bonds intended to be secured by the mortgage, it shall be lawful for the said mortgagee, and it shall be its duty so to do, upon being required in writing by one-third in interest,of the holders and owners of said bonds, to enter into and upon and take possession of all of the offices and electric lines of the mortgagors wheresoever situated, and their equipments and all the real and personal property described in said mortgage for the benefit of the holders of said bonds, to retain and keep possession thereof, and to use and operate until a sale thereof, as hereinbefore provided, or as may be decreed by a court of competent jurisdiction, and that upon any sale being made by the mortgagee under the mortgage, it shall grant and convey the property so sold to the purchaser thereof, freed and discharged from all the trusts by said mortgage created, and without any liability as to application of purchase-money, and that the recitals in any deed or conveyance, of default, demand and refusal to pay shall be as conclusive evidence as if the same had been duly judicially declared and determined, and that the mortgagee shall appropriate the purchase-money after deductions for expenses of sale, etc. First, to the payment of interest due in full, and second, to the payment of the principal of said bonds in full, if sufficient, but if not, then to pay the same pro rata.

    The mortgage then contains the following clauses:
    “It being expressly understood and agreed that in the event of any such entry upon or taking possession of the telegraph lines, estates and property, real and personal, and premises hereby mortgaged or agreed or intended so to be, or in the event of any sale thereof as hereinbefore mentioned then and in either such case, the whole principal sum of each and all of said bonds then outstanding and. unpaid and intended to be hereby secured, shall thereupon forthwith become due and payable, anything herein or therein contained to the contrary thereof notwithstanding. And it being further expressly understood and agreed, any law or usage to the contrary notwithstanding, that in case-of default in the payment of either the principal or interest of the said bonds aforesaid, no sale of the telegraph, lines, estates, property, franchises and premises hereby mortgaged or any of them shall be had, by reason of such default, otherwise than by and under the authority of the said trustee for the time being and in the mapner hereinbefore provided.”
    Default having been made in the payment of interest due upon said bonds and demand having been made therefor, and six months having elapsed, the plaintiffs, the trustees named in said mortgage, commenced this action to foreclose the same.
    The complaint herein alleges among things that because of the default therein of payment of interest above mentioned for said six months, it elected that the entire principal sum secured by the said mortgage should immediately become due and payable, and that the same has therefore become due, and the telegraph company becoming- embarrassed, and receivers having been appointed of its property by the courts of various states in which its property is situated, the plaintiff has ever since the right to take possession of the mortgaged property matured, been impeded and hindered in taking possession of the premises and property covered by said mortgage, and that in consequence of the embarrassed condition of the affairs of the telegraph company and of the facts above mentioned, it is impossible for the plaintiff as trustee under said mortgage to execute its said trust in the way and manner specified and provided in and by the said mortgage without the aid of this court, and thereupon prays for a decree of foreclosure and sale of the mortgaged property.
    The defendants admit in their answer failure to pay interest, but deny that under said mortgage or pursuant to the terms of any other agreement, that because of such failure the plaintiff had the right to elect that the whole principal sum should become due, or that it did become due because of such election, and deny that plaintiff has been hindered or impeded, in taking possession and selling of property as alleged, and that it is impossible for the plaintiff to execute the trust in the way provided by the mortgage without the aid of the court.
    The answer further alleges that no part of the principal has become due because no entry has been made as required by the mortgage.
    After a trial of the issue raised by the pleadings a decree was entered which after among other things reciting that the property to foreclose which the action is brought, extends over the state of New York and other states, and that it should in no case be sold or disposed of, except as an entirety, directs a foreclosure sale of said property by referee appointed therein, of all the property of the telegraph company situate within the states of New York, New Jersey, Pennsylvania and Maryland, and the District of Columbia, and which decree adjudged that the purchaser of the property sold should be let into the possession and enjoyment thereof, and that every person in possession thereof should surrender such possession to the purchaser upon production of .the referee’s deed, and that the purchaser should be fully vested with and hold and enjoy said property.
    From this decree, this appeal is taken.

      Robert G. Ingersoll, of counsel for def’ts and app’lts;. Herbert B. Turner, of counsel for pl’ffs and resp’ts.
   Van Brunt, P. J.

The grounds upon which the appellants base their appeal seem to be as follows:

First. That the plaintiff has mistaken its remedy in seeking a foreclosure by action, where the mortgage explicitly provides for a foreclosure by advertisement, and explicitly excludes every other method.

Second. That the decree provides for foreclosure for both principal and interest, whereas the principal is not yet due.

Our attention has not been called to any case or text book, nor have we been able to find any in which the questions involved in this controversy have been discussed or adjudicated.

The rule is undoubtedly well established that. the mere presence of a power of -sale contained in a mortgage does not exclude other modes for foreclosure provided by law, but is in addition to them.

In the case at bar, however, the mortgage by its terms expressly prohibits any sale under the mortgage, otherwise than by or under the authority of the trustee, and in the manner therein provided, a provision which was not contained in any of the powers of sale, as to which the rule above mentioned has been held to apply.

In discussing this question, it may be conceded that in the case of _ the mortgage of property which is situate wholly within this state and subject to the jurisdiction of its courts, that the parties cannot by their agreement deprive the courts of the jurisdiction which they would otherwise have, to enforce the rights acquired under the mortgage, but it is equally true that they may by agreement provide the method for the enforcement of their rights in those cases where the property mortgaged is situate out of this state and beyond the jurisdiction of its courts, unless contrary to some statutory regulation upon the subject. Elliott v. Wood, 45 N. Y., 71, and cases cited.

The statute of this state regulating the foreclosure of mortgages by advertisement, relates solely to mortgages of property situated within this state, and as no evidence is offered to show that there is any statute relating to foreclosure of mortgages in any of the other states in which property covered by the mortgage in question is situated, and as were it not for our statute regulating the foreclosure of, mortgages, the parties to a mortgage in this state might agree to any method of sale, even without notice. (Lawrence v. Farmers' Loan and Trust Co., 13 N. Y., 200; Davey v. Durant, 1 De Gex & Jones, 535), which might suit their purposes, the parties to the mortgage in question had at least the right as to the property situate in other states to regulate by agreement the method of its sale.

It seems also equally clear that a court of this state cannot by its decree, or by a sale made by an officer appointed by it, or by a conveyance executed by such officer, affect the title to property without the limits of the state (Elliot v. Wood, supra), and, therefore, by a sale under the decree entered in this action by the referee therein named, no title could possibly be conveyed to such of the mortgaged property as is situate in other states.

It is probably this fact that caused the insertion in the mortgage in question of the strong and apparently exclusive power of sale therein contained.

It was known by the parties to the mortgage, as it was found by the learned court upon the trial of this action, that the property mortgaged was situate in various states, that its value depended upon its being kept together and separated as one system and that it should not in any event be sold except as an entirety and could not be sold otherwise sold without destroying the value of the property.

The parties to the mortgage knew that no title could be conveyed, by a foreclosure in equity and a sale mffier a decree of foreclosure m equity by an officer appointed under such decree, to property situate in states other than the state in which action was brought, and they, therefore, carefully provided that no sale should be made otherwise than by and under the authority of the grantee in the mortgage, who alone could convey a title by virtue of the power contained in the mortgage to property situate in other states, in order that the property might be sold as a whole and to the best advantage.

This certainly, as far as the property situate in other states is. concerned, was a valid agreement and the mortgagors and their successors have a right to demand their execution.

The plaintiffs, in their bill, seem to have anticipated that the defendants might have some rights, under the power of sale provided for in the mortgage, to insist upon the observance of its conditions, for they allege the appointment of receivers in the various states of the property of the mortgagors estimate therein, and the possession by such receivers of the mortgagors property, and that in consequence they have been hindered and impeded in taking possession of the mortgaged property, as provided by the mortgage, and in selling the same as in the said mortgage required, and that it is impossible to execute the power of sale in the way and manner specified and provided in and by the mortgage.

These allegations in the complaint, except as to the appointment of receivers of the mortgagors property, are denied in the answer, and no proof seems to have been offered to show that the plaintiffs have made any effort whatever to take possession as required by the mortgage and consequently the questions involved in this appeal must be disposed of as though there were no impediments in the way of the mortgagees taking possession of the property as required by the terms of the mortgage.

No purchaser, at a sale under the decree in this action, could ever be compelled to take title, because this court is powerless to enforce its decree.

A purchaser at a foreclosure sale cannot be compelled to take title unless he can obtain possession upon the production of his deed and if the court cannot put him into possession, he will not be compelled to take.

Recognizing this rule, the decree appealed from provides that the purchaser of the property sold be let into the possession, use and enjoyment thereof and that all persons in possession thereof deliver the same to such purchaser on the production of the referee’s deed or other proper evidence of the sale and purchase of said property.

This provision of the decree the purchaser is entitled to have enforced, and how it can be made effective in respect to property in other states which it is admitted is in the possession of receivers appointed by the courts of those states and over whom the courts of this state have not the .slightest jurisdiction, has not been shown.

It would seem clear, therefore, that no sale can be had such as has been contemplated by this decree and that the-court should not decree any sale, as under such sale only the property in this state could be sold, which would almost destroy the value of the property mortgaged, it being possible, as far as appears from the evidence in the case, for; the mortgagee to enforce his rights by a method not entailing such great disaster upon the security of the mortgage.

It may be true that as far as the property in this state is-concerned our statute regulates the method of foreclosure by advertisement, and the regulations therein provided must be complied with, but they must be fulfilled as well as the provision of the mortgage in respect to the method of foreclosure and sale, and if this course is pursued a good and perfect title may be given by the mortgagee to the purchaser upon a sale as to all the property mortgaged whether situate in this state or in other states.

The use of the words “sale thereof * - * as may be decreed by a court of competent jurisdiction,” in no way militates against the views above expressed, as we have attempted to show that there is no court which can decree- and enforce a sale of the property mortgaged, and that it was for that reason probably that the parties agreed upon the power of sale inserted in the mortgage.

In view of the conclusion to which we have arrived in respect to the propriety of the decree appealed from, it may not be necessary to consider the remaining question as to whether or not the principal of the bonds has become due, but it may be best to briefly consider the question.

The provision of the. bond is that: “In the event óf nonpayment of any interest coupons hereto attached, if such default shall continue for six months after maturity and demand of payment, the principal of this bond shah become due in the manner provided for in the said mortgage.”

The mortgage provides that upon the happening of certain events that the mortgagee may enter and take possession of the mortgaged property and sell the same, and that in the event of such taking possession or in the event of any such sale, then and in either such case the whole principal sum of each and all the bonds then outstanding and unpaid shall thereupon forthwith become due and payable.

The bonds became due therefore upon the contingencies, viz., either upon the taking possession of the property by the trustees, or by a s'ale thereof either of which having taken place, the conditions have not been fulfilled, and the principal therefore is not yet due.

The judgment appealed from must be reversed and a new trial ordered, with costs to the appellants to abide the event.

Daniels and Brady, JJ., concur.


source: Caselaw Access Project

author: Per Curiam

license: Public Domain

text:
    John F. Klump et al., Resp’ts, v. Guy H. Gardner et al., App’lts.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887 )

    1. Bill of particulars—Successive motions fob.—not allowable except BY LEAVE OF COUBT.
    A motion for a bill of particulars as to any part of a complaint having been made and denied a further motion for that purpose cannot be made without leave of the court.
    3. Same—What will not affect the rule as to.
    The fact that several causes of action are joined in the complaint does not entitle the party to make separate motions in reference to each. Nor is this rule affected by the first motion, asking also that the complaint be made more definite and certain.
    Appeal from order denying motion for a bill of particulars.

      Henry P. StarbucJc, for app’lt; J. H. Kitchen, for resp’t.
   Per Curiam

It appears from the papers on appeal that the defendant in this action prior to answering, made a motion for all the relief which he seeks to obtain by the present motion, with the exception of that branch of his motion where he now asks for a bill of particulars in refer ence to the second cause of action mentioned in the com plaint herein.

The adjudication upon the prior motion seems to be a bar to the maintenance of the motion from the order denying which this appeal is taken. It is true that in the first motion a bill of particulars was not asked for, as to the second cause of action mentioned in the complaint; but having made a motion for a bill of particulars as to any part of the complaint, and such motion having been demed, the party cannot make another motion in reference to a bill of particulars as to the same complaint without leave of the court. The mere fact that different causes of action are set out in the complaint, does not entitle the party to make separate and distinct motions in reference to each portion of the complaint relating to the different causes of' action. It is true that in the first motion made, relief in respect to the making of the complaint more definite and certain was asked, but in default of that relief being granted, the defendant claimed the right to a bill of particulars.

This motion having been denied without any leave to renew the right to amend and to a bill of particulars, appear both to have been passed upon adversely to the defendant.

The order appealed from must therefore be affirmed, with $10 costs and disbursements.


text:
      John C. Henderson, Resp’t, v. Norman Henderson, Impleaded, etc., App’lt.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887)

    1 Partition of real property—Action for—What is not misjoinder of causes of action.
    The complaint in this action alleges the death of a testator, who was seized and possessed of real property, that by his will the deceased after providing for the payment of certain legacies, attempted to create a trust in his executors, which was void and that the heirs-at-law of said testator, are the owners as tenants in common of the real property left by him. It was further alleged that the said executors attempted to convey to a party mentioned, a certain portion of the property, which conveyance was made without authority, and that the title to said premises, attempted to be conveyed, still remains in the heirs-at-law of said testator. Relief was demanded adjudging the said conveyance void, and for a partition of the said real property among the heirs-at-law. held, that there was no misjoinder of causes of action, that but one cause of, action was set forth in the complaint, and that was for partition.

      2. Same—Who may bring—Code Civil Pro., § 1537.

      Held, that under Code Civil Pro § 1537, an action for the partition of real property might be brought by a person claiming to be entitled as a joint tenant or tenant in common by reason of his being an heir of the person, who died holding and in possession of the property whether he was in or out of possession notwithstanding an apparent devise thereof to another person by the decedent, and possession made under such devise.
    3. Same—Invalidity of attempted conveyance maybe shown.

      Held that in the present action the plaintiff, one of the heirs-at-law of the decedent, had the right to show, having made the necessary allegation that the devise to the executor contained in the will of the decedent, was void, and that be had no power of sale,, and that, therefore, the title to the property left, descended to the heirs-at-law not affected by such attempted devise.
    4. Same—What must be included.

      Held, that all the lands held in common by the same persons must be partitioned in one action.
    Appeal from an interlocutory judgment, entered upon on order overruling a demurrer interposed to the complaint by the defendant Norman Henderson.
    The complaint alleges that John 0. Henderson died leaving a last will and testament which was thereafter admitted to probate, and being seized and possessed of a large amount of real estate.
    That by his will the deceased after providing for the payment of certain legacies (the will being set out in full) attempted to create a trust in his executors which was void, and that the heirs-at-law of said Henderson are the owners as tenants in common of the real estate left by him.
    That the said executors attempted to convey to the defendants Travers, a certain portion of said real estate, which conveyance was made without authority and that the title to said premises attempted to be conveyed still remains in the heñs-at-law of said Henderson, and relief is demanded adjudging the said deed void and for partition of the said real estate amongst the heirs-at-law of said testator.
    The defendant Norman Henderson one of the said heirs-at-law demurs to the complaint upon the ground that causes of action have been therein improperly united, to-wit: a cause of action for the partition of certain real estate, which cause of action does not affect the other defendant, Travers, and which does affect the other defendants, and a cause of action to set aside a transfer and deed of certain real estate mentioned in the complaint made by the executor of Henderson to said defendant Travers, which cause of action affects Henderson as executor and the defendant Travers, and upon the ground that the two above described causes of action which have been united in the said complaint do not affect all the parties to the action.
    This demurrer was overruled and from the interlocutory judgment thereupon entered, this appeal has been taken.

      Edward Bajpallo, for def’ts. and app’lt; Francis Forbes, for pl’ffs. and resp’t.
   Van Brunt, P. J.

It would seem that the learned counsel bases his demurrer upon the fact that the complaint demands relief not only that the power of sale contained in the will be declared void and a partition be had, but also that the deed from the executor to the defendant Travers be also declared null and void.

It is admitted by the learned counsel for appellant that in a case in which a number of grantees each purchased separate parcels of real estate from an executor exercising a power of sale, each grantee would be interested in his own deed, but that in case of an action brought against them all to set aside these conveyances of the various parcels upon the ground that the power of sale is void, all the grantees would be so affected as that all might be joined in one suit, but it is urged that if such an action included a cause of action for partition of all such real estate and these grantees and the heirs-at-law were joined as defendants, that there would be a mis-joinder of causes of action.

The fallacy of this position seems to be in the assumption that there is of necessity any cause of action for the purpose of declaring the. deed void.

The cause of action is for partition and partition only.

By section 1537 of the Code of Civil Procedure such an action may be brought by a person claiming to be entitled as a joint tenant or as a tenant in common by reason of his being an heir of the person who died holding and in possession of real property, whether he is in or. out of possession, notwithstanding an apparent devise thereof to another person by the defendant, and possession under such devise.

Therefore in this action the plaintiff, one of the heirs at law of the decedent, has the right in this action to show, having made the necessary allegation that the devise to the executor contained in the will of the decedent was void, and that he had no power of sale whatever, and that therefore the title to the real estate left by the decedent descended to his heirs at law unaffected by such attempted devise.

The defendants Travers claim under and by virtue of said devise, and are in possession thereunder, and hence are necessary parties to this adjudication; and it is no answer to say that because they do not claim the whole of the real estate that therefore they are not proper parties.

It is not at all necessary to make any adjudication whatever as to the executor’s deed to Travers.

If it is adjudged in an action to which the Travers are made parties as persons to be affected by the adjudication, that the executor had no power of sale, their title falls with the devise.

The plaintiff would have been irregular in his practice had he not included the lands attempted to be conveyed to the defendants Travers.

If the executor had no power of sale, the title to the land attempted to be conveyed to the Travers descended to the heirs at law of decedent, and such heirs at law held the same as tenants in common in the same manner as they held the other lands left by the decedent, and rule 65 of the General Rules of Practice requires that all the lands owned by the same person in common must be partitioned in one action; hence the plaintiff was bound to include the land attempted to be conveyed to the Travers in his action of partition as the heirs at law of the decedent, if the executor had no power of sale, held the same as tenants in common.

There is, therefore, but one cause of action set forth in the plaintiff’s complaint, viz.: for the partition of the lands held as tenants in common by the heirs of John C. Henderson, deceased; and as an incident to this cause of action the plaintiff has the right to remove the cloud upon the title of the heirs caused by the apparent devise contained in the will of the deceased, and all persons claiming any portion of such real estate by virtue of such devise are necessary parties to such an action.

None of the authorities cited establish any other or different proposition.

The judgment appealed from must be affirmed, with costs.

The defendant to have leave to .withdraw his demurrer, and answer upon payment of costs of demurrer in court below, and the costs of this appeal.

Daniels and Brady, JJ., concur.


author: Per Curiam.

text:
    Guert G. Jackson, Resp’t, v. United States Mineral Wool Co., App’lt.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887.)

    Contract of employment—Construction of.
    By the terms of a certain employment if the plaintiff satisfactorily fulfilled his duties during the term of three months, his employment should continue for a year at a salary of §1,000. After the plaintiff had served for the three months his employment was continued. Seld, that this was evidence that his services were satisfactory and had been accepted as such; and the defendants allowed him to enter upon his yearly employment, and had no right to dismiss him until the expiration of the year, unless for good cause.
    Appeal from judgment of the court without jury.

      J. W. Hawes, for pl’ff; F. W. Bosworth, for def’ts.
   Per Curiam.

The terms of the employment of the plaintiff'were fixed by the letter of the 2d of November,

1881, written by the superintendent of the defendants to the plaintiff. By that letter it is apparent that it was the understanding of the parties that in case the plaintiff satisfactorily fulfilled his duties during the term of three months, that his employment should continue for a year at a salary of $1,000.

It appears, from the record, that after the plaintiff had .served for the three months his employment was continued. This was evidence that* his services were satisfactory and liad been accepted as such; and that the defendants allowed Mm to enter upon his yearly employment.

Such being the case, the defendants had no right to dismiss him until the expiration of the year, unless for good cause. No such good cause being shown by the record before the court, the plaintiff was entitled to recover judgment for the balance of the year’s salary succeeding his discharge.

He, however, has been permitted to recover for the balance of a year, commencing on the 1st day of February,

1882, upon the theory that the yearly employment commenced after the expiration of the three months mentioned in the letter of November 1, 1881.

We think that this recovery was too large by the amount óf the salary for the last three months, and that amount should be deducted from the recovery.

The judgment should, therefore, be reversed unless the plaintiff stipulates to reduce the judgment by the sum of $250 and interest, in which case it should be affirmed for balance without costs to either party.


author: Lawrence, J.

text:
    Cheesebrough Manufacturing Co. v. Michael Coleman et al., Commissioners of Taxes, and Thomas A. Wilson et al., Assessors, etc.

      (Supreme Court, General Term, First Department,

      Filed May, 13, 1887.)

    1. Manufacturing corporations — Taxation of property—Certificates CONCLUSIVE AS TO LOCATION OF BUSINESS OFFICE—LAWS 1848, CHAP. 40.
    This plaintiff is a corporation duly organized under Laws of 1848, chapter 40, and the acts amendatory thereof. The certificate of incorporation was filed with the clerk of the city and county of New York, and in the office of the secretary of state, designating New York as the seat of its business operations. It is provided by Revised Statutes, part 1, chap. 18, title 2, article 1, section 6, that the real estate of all incorporated companies liable to 'taxation shall be assessed in the town or ward in which the same shall lie, in the same manner as the real estate of individuals, and that the personal estate of every incorporated company liable to taxation on its capital shall be assessed in the town or ward where the principal office or place for- transacting the financial concerns of the company shall be, or if such company have no principal office or place for transacting its financial concerns, then in the town or ward where the operations of such company shall be carried on: Held, that the location of a manufacturing corporation for the purposes of taxation is the place designated in its certificate as that where the operations of the company are to be carried on.
    2. Same—Personal property of, where taxable—Laws 1861, chap-170, | 2.

      Held, that in absence of the filing of duplicate certificates, as provided for by Laws 1861, chapter 170, section 2, the personal property of a manufacturing corporation was taxable in the place designated in its original certificate as the seat of its principal business office.

      Western Transportation Company v. Scheu (19 N. Y., 408); Oswego Starch Factory v. Dolloway (21 id., 449), followed.

      Coudert Brothers, for pl’ff; E. Henry Lacombe, corporation counsel, and Ahnet F. Jenks, corporation counsel of Brooklyn, for def’ts.
   Lawrence, J.

This case comes before the court upon, submission.

The Cheesebrough Manufacturing Company, the plaintiff, is a corporation duly organized under chapter 40 of the Laws of 1848, and the acts amendatory thereof, for the purpose of manufacturing vaseline or other products of petroleum. The certificate of incorporation of the said plaintiff was filed with the clerk of the city and county of New York and in the office of the secretary of state of the state of New York, on the 13th day of November, 1874. The said certificate contained the following recital: “And: we do further certify that the operations of the said corporation shall be carried on in the city of New York.”

The certificate is signed by three persons who were the original corporators. The plaintiff was assessed for taxation on its personal property for the years 1878 and 1879, both in the city of New York and in the city of Brooklyn, and both cities claim the taxes for said years. It is to determine the respective rights of the two cities in the premises, that this case is now submitted.

The question before the court is in which of the two cities, Brooklyn or New York, were the operations of the plaintiff, carried on during the years 1878 and 1879, within the meaning of the law. It appears that in 1878 and 1879, the financial business of the plaintiff was largely transacted in Brooklyn, but that the directors held meetings in New York city, and that deposits were made with the Chemical National Bank in said city; that some checks, were signed there and the mail received there.

It is provided by statute, “that the real estate of all incorporated companies liable to taxation shall be assessed in the tcwn or ward in which the same shall lie, in the same manner as the real- estate of individuals. All the personal-estate of every incorporated company hable to taxation on its capital, shall be assessed in the town or ward where the principal office or place for transacting the financial concerns of the company shall be, or if such company have no principal office or place for transacting its financial concerns, then in the town ór ward, where the operations of such company shall be carried on.” See Rev. Stat., part 1, chap. 13, title 2, article 1. § 6

As has been stated, by the certificate of incorporation it was declared that the operations of the said corporation shall be carried on in the city of New York. It seems to us that under the provisions of the act of 1848, and the acts, amendatory thereof, the certificate is conclusive evidence, that the legal' residence of the' plaintiffs was in New York city. See act of 1848, §§ 1, 9 and 11.

No subsequent certificate seems to have been filed designating any other place than the city of New York, in which the plaintiffs should carry on their business. See Laws of 1853, chap. 333; Laws of 1857, chap. 29, §§ 2 and 3; Laws of 1861, chap. 170.

In the case of the Western Transportation Co. v. Scheu (19 N. Y., 408), it was held that the act for the incorporation of companies to navigate the lakes and rivers (Chap. 232 of the Laws of 1854), requiring the designation in their organic certificate of the city or town and county, in which the principal office for managing the affairs of such company is to be situated, the certificate is conclusive as to the location therein designated, as that of the principal office of the company.

In that case the court said: “The only question then is in regard to the effect as evidence of the statement of the certificate. There are some considerations which seem to me decisive of this question. Unless the legislature in-. tended that the certificate should be conclusive as to the location of the principal office, it is difficult to see any adequate motive for requiring the statement to be made. It is in no manner essential to the existence of a corporation that the place of its principal office, should be fixed or even that it should have any such office.”

“We can, however, see obvious reasons why it is expedient’ that corporations should be deemed to have a location for certain purposes, among which is that of taxation, and that this should be definite and certain and not subject to fluctuation or doubt * * * To avoid disputes upon the subject was, I apprehend, one motive for requiring the location to be fixed by the certificate. It is not important that a corporation should be taxed where it does the greatest amount of its business, but it is important that the place where it is liable to be taxed should be known.”

See also Oswego Starch Factory v. Dolloway (21 N. Y., 449). In that case the corporation was organized under the general act of 1848, and it was held that the location for the purposes of taxation of a manufacturing corporation is the place designated in its certificate as that where the operations of the company are to be carried on. It was held that it is immaterial that the principal office or place for transacting the financial concerns of the company is located in a different town.

See also case of The Union Steamboat Co. v. The City of Buffalo, 82 N. Y., 351.

These cases seem to conclusively establish that the plaintiff having declared by its certificate of incorporation that the operations of the said corporation shall be carried on in the city of New York, its liability to taxation was in the city of New York. The second section of chapter 170 of the Laws of 1861 is not in point, for the reason that it is expressly admitted in the submission that- the duplicate certificates thereby provided for were never filed, either in the city of New York or in the city of Brooklyn. We think the contention of the counsel for the city of New York, that in the absence of the duplicate certificates mentioned in the act, the assessors could safely assume that the original certificate controlled, is correct.

For these reasons we are of the opinion that judgment should be given for the defendants the commissioners of taxes and assessments of the city of New York.

Van Brunt, Ch. J., and Bartlett, J., concur.


author: Daniels, J. Van Beunt, P. J.

text:
    Jennie N. Thompson et al., executors, etc., Appl’ts, v. St. Nicholas National Bank, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887.)

    1. Action—Hypothecation of bonds—Recovery—Parties to action.
    The plaintiffs’ testator delivered certain bonds to Capron & Merriam, a firm of brokers, to be held by them as margins on his future individual stock transactions. Said firm delivered said bonds without the knowledge of the testator to the defendant bank, as security for its certifying the checks of said firm used in the course of its business. Said firm failed the same day, the testator at the time not being indebted to it. Said firm was indebted to the defendant bank in a large amount. In an action to recover from the bank said bonds, or their value, a demand for their return having been made and refused. Held, That what was necessary to maintain the action was proof that the debt of said firm on the pledge of these securities, had been extinguished and satisfied before the demand was made of the bank for their return. That it was not necessary that said firm should be made a party to the action.
    $. Practice—When action at law sufficient—Accounting.

      Held, That it was not necessary that the action be brought on the equity side of the court for an accouniing, with the firm of brokers as parties. That there was no need of an accounting.
    Appeal from a judgment on the dismissal of the plaintiff’s complaint at the circuit.

      Louis Sanders, for app’lts; John A. Taylor, for resp’t.
   Daniels, J.

The action was commenced by the testator himself, who departed this life after the service of the notice of appeal, and his executors were then substituted in his place as plaintiffs. He prosecuted the suit, as the complaint was finally amended to recover the possession of seventy-three mortgage bonds of the Jefferson, Madison and Indianapolis Railroad Company, of the denomination of one thousand dollars each, and twenty mortgage bonds of like denomination of the Indianapolis, Bloomington and Western Railroad Company, and the evidence given upon the trial was such as to prove his title to these bonds.

They were delivered by him on the 13th of April, 1874, to Capron & Merriam to be held as margins on his individual stock transactions. Capron & Merriam were at that time customers of the defendant, and delivered these bonds to the defendant as security for its certified checks, used by them in the course of their business. They failed on the same day, indebted to the bank in the sum of $72,000. ' On the 20th of May, 1879, notice was given of the sale of the securities held by the bank for the indebtedness of Capron & Merriam, which was served upon the testator He thereupon demanded these bonds of the bank but they were not delivered to him and a sale of the Jefferson, Madison and Indianapolis bonds was made, pursuant to the notice on the 28th of May, 1879.

The evidence tended to prove the fact to be that the testator was not indebted to Capron & Merriam at the time when the bonds were delivered by him to them, but that they were intended to supply margins on future transactions. And Capron & Merriam without his knowledge, or authority transferred the bonds to the defendant, as security for advances to be made by it to him. And as. these bonds are assumed to have been negotiable by delivery, the bank could legally acquire them in that manner and hold them for any advance made to Capron &. Merriam on their faith and security.

And evidence was given on behalf of the defendant directly tending to establish the fact that the bonds had been received and advances made upon them by certifying the. checks of Capron & Merriam on their faith and security. But whether any indebtedness remained in favor of the defendant against the pledgors of the bonds at the time-when the action was commenced was a fact which was. controverted by the testator. On his part it is to be inferred from the course of the trial, that he insisted that no-indebtedness remained for which the defendant was legally entitled to withhold the bonds from him. And if that position was true as a matter of fact, then the plaintiff was-entitled to maintain this action, for all the law required for that purpose was that he should prove that the bonds were his property, as he in fact did, and that the defendant had no legal right to withhold them from him. If it had that right,. it was because of the fact that its indebtedness-created on the faith of the bonds had not been paid, and that the testator was entitled to controvert and disprove to-maintain his right to recover the bonds. For that purpose-it was proposed to show the state of the accounts from the-defendants books, between itself and these pledgors, but. that was not allowed in consequence of the objections made-by the defendants to this character of proof. Why this, proof should have been rejected does not clearly appear from the case, for whatever entries might be contained in the defendants books pertinent to the plaintiffs case, would be evidence against it.

After the omission to produce the books, the counsel fertile testator proposed to prove an account which had been received by him, probably for the same object, although that was not expressly disclosed by the question which was. rejected. But it was not rejected on account of any insufficiency or defects in the" question itself, but upon a general objection, from which-it may be inferred that the account-handed to the testator as a witness was an account with the defendant itself. This inference is strengthened by the view which the court adopted in the disposition of the action, and that is, that it should have been brought on the equity side of the court, and that Capron & Merriam should have been made parties, and an accounting gone into and the rights of the parties established in that manner. But it was not necessary in the form in which the action was prosecuted that such an accounting should take place.

What was necessary to maintain the action was proof that the debt of Gapron & Merriam, on the pledge of these securities, had been extinguished and satisfied before the demand made for them, or the sale of the bonds which were sold, actually took place. And that proof could be given as well between the parties to the action as it could if Capron & Merriam had been joined as defendants. Their presence was not essential for that object. The bonds belonged to the plaintiff. Capron & Merriam had no title to them. And if he could prove that the defendant had been reimbursed in any manner for its advances upon the bonds he was entitled to recover them, or their value, in this action. If such proof had" been made, then the defendant would have been a wrongdoer in withholding the bonds from him, and he would have been entitled to a judgment for their recovery. It was proved that the sum of $211,263.50 stood to the credit of Capron &. Merriam on the 18th of April, 1814, and that rectified the ruling rejecting previous questions propounded by the counsel for the plaintiff. But the fact still remained that the court considered the action incapable of being maintained in the form in which it had been prosecuted, and for that reason excluded evidence of the account produced on the part of the plaintiff and dismissed his complaint. This was an erroneous view to be taken of the case, and for its correction the judgment should be reversed and a new trial ordered, with costs to the appellant to abide the event.

Beady, J., concurs.

Van Beunt, P. J.

I concur. It is evident upon reading the evidence that the bank endeavored to conceal the true state of the account between themselves and Capron & Merriam, that the trial proceeding as far as they were concerned upon the erroneous theory that the condition of this account was of no consequence to the plaintiff, whereas the defendant was bound to show not only the certification upon the faith of the bonds, but that no part had been paid, and that the bank had no funds of Capron & Merriam applicable to the payment of the same.

The plaintiff was entitled to have the whole account, so that the question at once could be determined on the lights of all ¡the facts. _


text:
    Elbert I. Jemison et al., Resp’ts, v. Citizens’ Savings Bank of Jefferson, Texas, App’lt.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887 )
    1. Corporation — Notice to parties dealing with, as to its powers.
    Parties dealing with corporations are chargeable with notice of the pur- • poses for which the corporation was formed, and every corporation necessarily carries its charter wherever its goes, for that is the law of its existence. Cases cited.
    2. Same—Liability for contracts ultra vires.

      Held, that it is entirely immaterial as to what the parties dealing with, the corporation know in reference to the limitations of its powers. They are bound to know whether or not the corporation had power to make the contract which they attempt to enforce, and they cannot plead their ignorance in support of their claim.
    3. Same—When not estopped from disputing the validity of contracts MADE.
    On the failure of a corporation to carry out a contract with the parties thereto, in regard to a transaction in which there had been a loss to said parties, which by the terms of the contract was chargeable to the corporation: Held, that said parties could not recover in a suit against the corporation, if by the act under which it was incorporated it had no authority to incur the liability. Whitney Arms Co. v. Barlow, 63 N. Y., 62; The Rider Co. v. Roach, 97 id., 378, and Parish v. Wheeler, 22 id., 494, distinguished.
    Appeal by the defendants from a judgment entered against them on trial by the court without a jury.

      W. D. Guthrie, for app’lt; F. C. Barlow, for resp’t.
   Van Brunt, P. J.

There is no dispute as to the facts which it is necessary to consider in the disposition of this appeal. The action was commenced to recover a balance of money claimed to have been expended by the plaintiffs on the purchase and sale of cotton futures for the defendants, and for the plaintiffs’ commissions.

The plaintiffs at the time of the transactions referred to, were copartners in business as commission merchants and cotton brokers.

The defendants were a corporation created and existing by and under the laws of the state of Texas, and doing business at Jefferson in that state being chartered in the year 1871, by an act of the legislature of the state of Texas.

The statute incorporating the defendants stated that the general business and object of the corporation should be to receive on deposit or in trust such sums of money as might from time to time be offered therefor, by tradesmen, merchants, clerks, laborers, servants and others, to be repaid to such depositors when demanded, at such times with such interest and under such regulations as the board of directors might, from time to time, prescribe.

The statute further provided that the corporation might loan money according to the constitution and Laws of the state, and might discount in accordance with banking usages, taking such security therefor, either real or personal, as the directors might deem sufficient; that the corporation should have power to borrow money, buy and sell exchanges, bullion, bank notes, government stocks or other securities. But the corporation was not by its charter given the power to deal or speculate in cotton or other articles of merchandise or property

The plaintiffs had no knowledge of the corporation, or off the Laws of Texas in regard to its powers, other than that which is implied from the title or name of the defendants.

At the time of the transactions in question, J. H. Parsons was the cashier of the defendants, and the by-laws provided that the board of directors should meet from time to time as they should appoint, and provided in regard to the cashier that he should have general charge of the business of the bank and the supervision of its concerns; and that he should have custody of the personal property of the bank, and sign all checks and orders, drafts, bills of exchange, and certificates of deposit. The transactions in question commenced in January, 1879, at which time Parsons as cashier wrote to the plaintiffs asking what margin and commission they would ask in transactions for the purchase of cotton futures. The plaintiffs answered by letter of the 27th of January, 1879, stating amongst other things that the margin required was $250 per contract, and added : This will give you an idea how much to require from any of your friends who wish to make an investment.”

On the 10th of February, Parsons as cashier gave the first order by telegraph, and wrote on the same day that the order was made for one of their customers who had deposited $250 in accordance with their letter, of January 27th. Other orders were given, on the 24th of May, and on the same day Parsons wrote a letter to the plaintiffs in which he stated that neither himself nor the bank dealt in futures, and that in case he ordered other purchases it would only be for good responsible customers, who had put the necessary margin up. Other correspondence was carried on between the parties and orders given, and the final result of the transactions was a loss, to recover which this action is brought. In June and July, 1879, upon the ledger of the defendants appeared entries of an account between the plaintiffs and defendants, showing debts and credits to the plaintiffs growing out of dealings in futures. An account also appeared on the defendants’ ledger with one Olopton, showing debits to said Clopton of losses on futures and credits, of profits, and deposits of margins. By an examination of said entries and accounts, the directors could have ascertained that the bank was having dealings in some kind of futures.

The defendants claim that they were not bound upon these contracts, because they were ultra vires and against public policy, and that they were acting simply as agents and not as principals. As the defendants did not disclose their principals at the time of the giving of the orders, they are not exonerated from responsibility merely because they stated that they were acting as agents.

From the finding of the learned judge who tried the case, that the plaintiffs had no knowledge of the powers of the defendants’ corporation, or of the laws of Texas, written or otherwise, in regard to its powers and functions, other than that which is implied from the title or name of the defendants, it is claimed on the part of the plaintiffs that they were not bound by any of the limitations contained in the defendants’ charter, or any laws relating thereto existing in the state of Texas. It is to be inferred, however, from this finding that the knowledge as to the powers of the defendants’ corporation, which is implied from the title or name of the defendants the plaintiffs are chargeable with. The title or name of the defendants is the Citizens Savings Bank, of Jefferson, Texas, and the knowledge of the powers of the defendants which the title or name of the defendants implies to citizens of this state, is that the defendants had powers similar to those which savings banks in this state had a right to exercise.

The courts have declared in the case of Sistare v. Best (88 N. Y., 527), in respect to the powers of a savings bank: “ The bank was a savings bank, and there can be no doubt that speculative contracts entered into for the sale of stock by the bank at the stock board or elsewhere, subject to the hazard and contingencies of gain and loss, would be ultra vires and a gross perversion of the powers conferred by its charter.” Therefore, applying the rule that the implied knowledge of the plaintiff as to the powers of the defendants was such as the name or title of the defendants gave, they, were bound to know from the very nature of its title, that speculating in cotton futures by defendants was a gross perversion of the powers conferred by its charter, and that neither its cashier nor its board of directors had any power to cause the bank to embark in any such enterprise. But it will appear upon an examination of the charter of the defendant that its powers differed very materially from those of a savings bank as known under the laws of this state. It was a corporation having all the banking powers which belong to ordinary incorporated banks, with the exception that it had no power to issue notes for the purposes of a circulating medium, unless the same was done in conformity to the laws of the United States in such case made and provided. In the consideration of the question as to whether these contracts were ultra vires, it is necessary to treat it not as a savings bank only, but as an ordinary banking association or corporation.

The rule seems to be well established that parties dealing with corporations are chargeable with notices of the purposes for which the corporation was formed, and that every corporation necessarily carries its charter where it goes, for that is the law of its existence. In Hoyt v. Thomson (19 N. Y., 208), in respect to corporations, the court of appeals say: “There is no doubt that all persons dealing with or deriving title from a foreign corporation are bound to take notice of every limitation upon its powers contained in the charter.”

In Alexander v. Cauldwell (83 N. Y., 480), the court say: “ Every one knows that corporations are artificial creations existing by virtue of law, and organized for purposes defined in their charters, and he who deals with one of them is chargeable with notice of the purpose for which it was formed, and when he deals with agents or officers of one of them, he is bound to know their powers and the extent of their authority. Corporations, like natural persons, are bound only by the acts and contracts of their agents done and made within the scope of their authority.

In Davis v. Old Colony R. R. Co. (131 Mass., 258), it is said that every person who enters into a contract with a corporation is bound at its peril to take notice of the legal limits of its capacity.

In Relf v. Rendle (103 N. Y., 223), it is said: “Every corporation necessarily carries its charter wherever it goes, for that is the law of its existence. It may be restricted in the use of some of its powers while doing business away from its corporate home, but every person who deals with it everywhere is bound to take notice of the provisions which liave been made in its charter for the management and control of its affairs, both in life and after dissolution.”

In Angel & Ames on Corporations (section 256), it is said that where a corporation is created for particular purposes, with, special powers, the contract does not bind it, if it appears from the express provisions of the statute creating the corporation, or by necessary and reasonable inference from its enactments, that the contract is ultra vires.

These authorities seem to show beyond question that it is entirely immaterial as to what the plaintiffs knew in reference to the limitations of the defendants powers. If the corporation had no power to speculate in the manner in which they,-attempted to do, with the plaintiffs, the plaintiffs were bound to know this fact, and they cannot plead their ignorance in support of a claim founded upon a contract which they were bound to know that the corporation had no power to make. We have already seen that there-is no dispute that if the plaintiffs were assumed to have had the knowledge conveyed by the title of the, defendants that they must have known that the defendants had no power or authority to enter into the speculative contracts-which form the basis or subject of this action. Upon an examination of the charter, we find no power conferred which authorized this bank to enter into the speculations which it is claimed they did with the plaintiffs. Their powers were defined to be, first, that of a savings bank; and secondly, the power to loan, money, to borrow money, buy and sell exchange, bullion, bank notes, government stocks and other securities.

There is nothing in their charter which m any degree seems to authorize this bank to engage in speculative' purchases of cotton merchandise or any other personal property,, and as we have seen that the powers of corporations only extend to the purposes defined in their charter, and that he-who deals with one of them is chargeable with notice of the purposes for which it has been formed, when he enters-into a contract with such corporation for a purpose manifestly foreign to its charter, he is bound to know that such contract is ultra vires.

In the findings of fact, the learned justice has found that speculating in cotton or other articles of merchandise or property was not forbidden to said corporation either by its charter, by the constitution or by any statute of the state of Texas. We have seen that such speculations were forbidden by the charter of the corporation because they were-foreign to the purposes for which it was created. It is true t-hat there was no evidence introduced in the case tending to show that such speculations were forbidden by the state of Texas. But this may be explained by the fact that under the objection of the plaintiffs’ evidence tending to show that such speculation was forbidden by any statute of the state of Texas was excluded.

The objections were interposed upon the ground that the powers and privileges of the defendants’ bank were immaterial because the contracts in question were executed on the part of the plaintiffs. In view of this condition of the-record the plaintiffs in this action cannot recover unless the grounds stated in this objection are well founded.

It appears from the evidence that the transactions were entirely closed and resulted in a loss, and that this action was brought to recover the balance of such loss. And from these facts it is urged that the contract being an executed one, the defendants cannot claim that it was ultra vires, or that its cashier had no power to make the same.

In considering this proposition it will not be necessary to pass upon the powers and authority of the cashier, because the difficulty with the plaintiffs’ case seems to be that neither the cashier nor the board of directors had any power to enter into any such contract, and the plaintiffs’ claim can only be sustained upon the ground that the contract although ultra vires, was executed. In support of this proposition is cited the cases of The Whitney Arms Co v. Barlow (63 N. Y., 62), The Rider Co. v. Roach (97 N Y., 378) and Parish v. Wheeler (22 N. Y., 494). The ground upon which the plaintiffs in this case claim that the contract is executed is that the plaintiffs have paid out money at the defendants’ request to the defendants’ creditors. It is to be observed that the plaintiffs, if acting for other persons, have nowhere disclosed who they were; and, therefore, applying the rule which is urged against the defendants, that although the plaintiffs knew that the defendants were acting as agents, yet not having disclosed their principals, they became principals themselves, these transactions are to be considered as transactions between the plaintiffs and defendants as principals, neither of them having disclosed for whom they were acting or pretending to act. The plaintiffs cannot claim in one breath that the defendants are principals because the persons for whom they were acting were not disclosed, and then claim on behalf of themselves that they were acting for others, and hence are not to be treated as principals, they have failed to disclose for whom they were acting under the facts disclosed, the plaintiffs were personally responsible to the defendants, There is no evidence, therefore, that the plaintiffs have paid out any money to any particular person at the request of the defendants. This they were bound to show under the general denial contained in the answer, if they sought to reach the defendants because of money laid out and expended at their request.

In the case of the Whitney Arms Co. v. Barlow (supra), the defendant had property which had been sold and delivered by the plaintiffs to the defendant and the court held that the defendant could not hold the property without paying the purchase-price.

The same state of affairs existed in the case of The Rider v. Roach, above referred to, and in Parish v. Wheeler, it was held that through a corporation exceeded its legal powers in a purchase of personal property, the person who paid at its request, the purchase-price of the property, could maintain an action against the corporation, such corporation having possession of the property, and that they could not defend on the ground that the purchase was ultra vires.

In all of these cases the party seeking to be charged, had possession of the property, which formed the basis of the action and such a defense could not be allowed as it would not advance justice, but on the contrary would accomplish a legal wrong.

In the case at bar the corporation has received nothing from the plaintiffs under the contracts in question and hence occupies a very different position from those corporations in the cases cited, who were in actual possession of the property forming the consideration for the contract sued upon.

In the case of the Rider Co. v. Roach (supra), attention is called to the fact that some of the decisions hold that the plea of ultra vires can only be interposed by a corporation, and not by an individual dealing with such corporation. It is very doubtful whether that is the law in this state.

In the case of Sistare v. Best (88 N. Y., 527), it is claimed by the respondents to be held that an agent is not to suffer for ultra vires acts when he does not know that they are ultra vires. Upon an examination of that case we fail to find any such proposition. The acts referred to in that case were expressly held to be within the powers of the corporation, and a recovery was sustained upon that ground and upon that ground alone.

It would appear, therefore, that these contracts made between the plaintiffs ahd the defendants being beyond the authority of the corporation and entirely foreign to the purposes of its incorporation, the losses sustained thereon cannot be removed.

The judgment must be reversed and a new trial ordered, with costs to appellants to abide events.

Daniels and Brady, JJ., concur.


text:
    Louis Chande v. Eugene Chande.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887.)

    Receiver—Must account to court.
    The receiver in an action, being an officer of the court and not of the parties litigant, is required to account to the court from which he received Ids appointment.
    Appeal from order directing receiver to account.

      E. B. Hill, for app’lt; W. H. Phillips, for resp’t.
   Per Curiam.

It has been properly observed that the receiver being an officer of the court and not of the parties litigant is required to account to the court from which he received his appointment (High on Receivers, § 802). We entertain no doubt whatever of the power of the court to make the order appealed from, and regard it as having been eminently proper.

If the contention on the part of the appellant should be tolerated, then the parties by an arrangement between themselves could dissipate the whole estate and deprive the creditors of the application of any part of the fund to the payment of their debts.

The order should be affirmed, with ten dollars costs and and disbursements.


text:
    William Williams, Resp’t, v. Robert Freeman, App’lt.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887.)

    Practice—Attachment—Not granted in accounting between copartners.
    In an action for an accounting between parties as part owners of a vessel an attachment cannot be had.
    Appeal from order denying motion to vacate attachment.

      H. P. Starbuclc, for app’lt; <7. S. Wood, for resp’t.
   Per Curiam.

The order made upon the first motion to discharge the attachment is not controlling over this appeal, for the case was then heard and decided upon exparte affidavits, which appeared to entitle the plaintiff to an attachment in the action as one for the recovery of a sum of money due upon contract.

Since then the action has been tried and the evidence has been obtained from the witnesses sworn upon the trial, and by their evidence it has been made to appear that the plaintiff is not entitled to recover for money owing upon a contract, but is entitled to maintain an action solely and only for an accounting between himself and the defendant as part owner of the vessel. In such an action an attachment cannot be had. (Thorington v. Merrick, 101 N. Y., 5.)

The order denying the motion to vacate the attachment must be reversed, with the usual costs and disbursements, and an order entered setting aside the attachment.


text:
    Henry Warner, Assignee of Penn Bank, App’lt, v. Fourth National Bank et al., Resp’ts.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887.)

    1. Attachment—How levy on negotiable securities must be made— Code Orv. Pro., § 649.
    An attachment having been issued in a certain action, the sheriff attempted to make a levy upon negotiable securities belonging to the defendant in said action, which were in the hands of a certain bank as pledgee The sheriff served on said bank a copy of the attachment, and a notice showing the interest in said securities claimed by the attaching party. Held, that until the officer has obtained the actual custody of such property, he has made no levy -under an attachment, and can make none. That negotiable securities were not personal property incapable oí delivery within Code Civ. Pro., § 649.
    3. Same.

      Anthony v. Wood (96 N. Y., 180), following; Olwrk v. Good/ridge (41 id., 310), and Brownell v. Garnley (3 Duer, 9), distinguished.
    3. Same
    The difference in the rules prescribing what constitutes a valid levy in the case of executors and the case of attachments stated and commented
    Upon May 13, 1884, the Penn bank, a foreign corporation, delivered to the American Exchange National Bank of New York a large amount of negotiable securities, among others notes of McGalmont Oil Company for $2,500, and notes of American Tube and Iron Company for $6,200, as collateral security for a loan then made to the Penn Bank by the American Exchange Bank, which loan was less than the face of the securities.
    On May 21, 1884, the defendant, the Fourth National Bank, began an action against the Penn Bank to recover $10,000, and obtained an attachment.
    Upon the 20th day of May, the sheriff served copies of said warrant upon the American Exchange Bank who still held said securities, and upon the McGalmont Company and the Tube and Iron Company; the copy warrant was accompanied by a notice showing that the interest of the Penn Bank was attached.
    On May twenty-eighth, the Penn Bank made at Pittsburg a general assignment under the statutes of Pennsylvania, to the plaintiff.
    Upon July 26, 1884, The Fourth National Bank perfected judgment in its action, aforesaid and issued execution to the sheriff against the attached property.
    The American Exchange Bank proceeded to collect the securities pledged to it as aforesaid, and after paying the amount of its advances there remained in its hands about $5,000.
    Claims being made by the sheriff and the assignee of the Penn Bank to this fund, The American Exchange National Bank interpleaded the parties in this action, and paid the fund into court.
    The action was tried at special term and the defendants having obtained judgment for the fund, from such judgment this appeal is taken.

      James Watson, for app’lts; David Wilcox, for resp’ts.
   Van Brunt, P. J.

The appellant claims that the title to this paper was in the Penn Bank at the time the attachment was served and that no lien was acquired because the sheriff did not take the paper into his actual custody.

Section 649 of the Code of Civil Procedure prescribes the method of levy under an attachment.

It provides that a levy under an attachment must be made upon personal property capable of manual delivery, including a bond, promissory note or other instrument for the payment of money by taking the same into the sheriff’s actual custody.

Upon other personal property by leaving a certified copy, etc.

In the case of Anthony v. Wood (96 N. Y., 180), the court expressly decided that until the officer has obtained the actual custody of the property, he has made no levy under an attachment and can make none.

In that case, however, the property sought to be reached was absolutely the defendant’s, and no one had any claim to possession except the defendant, and therefore the property was so situate that it was capable of manual delivery. But in case the property has been pledged does a different rule prevail ?

It is claimed by the respondents that when personal property although capable of manual delivery has been pledged, it comes within the description of personal property incapable of manual delivery because the sheriff could not wrest it from the pledgee in defiance of his prior rights and that this is so plain that it needs no argument to demonstrate.

It would seem to be the just and equitable view to take of the question, but we cannot see how the statute can be construed that way. The difficulty seems to be that it is not so denominated in the bond, and no argument can repeal the express wording of the statute.

Where the property is of a character which can be taken possession of by the sheriff, he must levy under an attachment, the Code says, by taking it into his actual custody.

A promissory note is mentioned among those things in the very section as capable of a manual delivery, and hence must be taken into the actual custody of the sheriff or no levy is made under an attachment. A different rule prevails as to a levy under an-execution.

In order to constitute a valid levy under an execution, it is not necessary that the sheriff should take actual possession of the property levied upon. Crocker on Sheriffs, section 636.

And hence a course of procedure which may create a valid lien by levy under an execution, is of no effect when an attachment is the process under which the procedure is taken.

Under an attachment the levy upon negotiable securities must be made, as the court says in Anthony v. Wood, supra, quoting from the Code, by the sheriff “taking the .same into his actual custody, who must thereupon, without delay, deliver to the person from whose possession the property is taken, if any, a copy of the warrant and of the affidavits upon which it is granted. No other mode is prescribed. Nothing else will constitute the levy. Until the -officer has obtained the actual custody he has made no levy and can make none. He is armed with power to get such custody. He may proceed by actual or special proceeding to reach that result, but until he has reached it he has mad» no levy and can make none. We have nothing to do with the wisdom of the rule. We can only enforce it as plainly written.”

The cases cited of Clarke v. Goodridge, (41 N. Y., 210), and of Brownell v. Caruley, (3 Duer, 9), relate to the provisions of' the old Code of Procedure. Such Code contained no such requirements as are contained in the Code of Civil Procedure, and if the Civil Code has made it impossible to reach by attachment the surplus arising from assets pledged, as it-seems to have done, it is one of those improvements which has to a very great degree destroyed the effectiveness of the process of attachment.

It being conceded by the respondent that the Penn Bank was the owner of the notes, notwithstanding the pledge, then no effectual levy was made, and the property passed to-the plaintiff by assignment of the Penn Bank.

The judgment must be reversed and new trial granted,, with costs to the appellant to abide event.

Daniels and Brady, JJ., concur.


text:
    James M. Smith, as Executor, etc., Resp’t, v. George W. Laird et al., App’lts.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887.)

    Amendment—Demurrer—Answer—Right of defendant to amend demurrer BY ANSWER—CODE OlV". PRO., § 542.
    A defendant has no right to withdraw his demurrer and serve an answer instead, without leave of the court. Code Civ Pro., § 542, does not allow him to do this even though he has not allowed his time to amend of course to pass. Frank v. Bush (2 Civ. Pro. R., 250), and People v. Whit-well (62 How., 383), not followed: Wallace v. Bennett (1 Abb. H. C., 476); S.neea County Bank v. Garlinghouse (4 How., 174); FryY. Bennett (3 Bosw., 200); Burrall v. Moore (5 Duer, 654), and Sands v. Calkins, (30 How., 1), distinguished.
    Appeal from order refusing to compel plaintiff to accept, the answer of the defendant.

      S. J. Goldsmith, for app’lts; W. H. Newman, for resp’t.
   Per Curiam.

Section 542 of the Code provides that within twenty days after the pleading or the answer or demurrer thereto is served or at any'time before the period for answering it expires, the pleading may be once amended by the party, of course.. We should not have thought it necessary to do anything more than to call attention to the explicit language of the Code to determine this appeal were it, not for the decisions in the cases of Frank v. Bush (2 Civ. Pro. Rep., 250), and People v. Whitwell, (62 How., 383).

An examination of the opinion of the court in the case of Frank v. Bush shows that the decision was based upon the-supposed authorities of Robertson v. Bennett (1 Abb. N. C., 476); Seneca County Bank v. Garlinghouse (4 How., 174); Fry v. Bennett (3 Bosw., 200); Burrall v. Moore, (5 Duer, 654), and Sands v. Calkins (30 How., 1).

In neither of those cases was the question then before the court adjudicated upon. Ho such question was raised in the case of Robertson v. Bennett, because the amended pleading had been received without objection. In the case of the Seneca County Bank v. Garlinghouse, the question involved was as to the right to serve an amended complaint after the service of an amended answer. In the case of Fry v. Bennett, the only question determined was as to whether the supplemental pleading takes the place of the original pleading; and in Burrall v. Moore, the only question was as to the right of the party to amend an answer. In Sands v. Calkins, it was held that an amended answer takes the place of and supersedes the original answer. In the case of People v. Whitwell, the learned judge based his decision upon the case of Wallace v. Bennett, above referred to. As has been seen, none of the cases cited as authorities for this ruling, adjudicated upon the question involved. Unless there was a well settled line of decisions, establishing the practice, we do not think the plain language of the statute should be disregarded.

The order should be affirmed, with ten dollars costs and disbursements.


author: Van Bbunt, P, J.

text:
    H. Eugene Vogel, Resp’t, v. John Rhind, et al., App’lts.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887.)

    Evidence—Secondary evidence—effect of notice to produce.
    The plaintiff gave defendants notice to produce certain letters on the trial. The letters in question were not written to the defendants but by them. There was no evidence given to show what had become of the letters and papers or the person to whom the said letter was addressed; he was dead at the time of the trial. Held, there was no presumption that it was under the control of defendants. That the mere notice to produce, given to the defendants authorized the plaintiff only to give secondary evidence of such papers and documents as might naturally be presumed to be within their control.
    Appeal from judgment entered upon report of a referee in favor of plaintiff.

      C. B. Alexander, for resp’t; F. II. Been, for app’lts.
   Van Bbunt, P, J.

This action was brought to recover damages for the failure of the defendants to deliver, according to agreement, certain cases of cambric. The answer admitted the the partnership of the defendants and denied each and every other allegation contained in the complaint.

There was no question but that a contract such as is described in the complaint was entered into by the plaintiff with one Alexander Rhind, and the question involved in the case was whether Alexander Rhind was acting; individually or on behalf of the defendants. Alexander Rhind was engaged in business in the city of New York and the defendants were co-partners in business at Dundee, Scotland, under the firm name of D. Martin & Co.

It is admitted that the contract made with the plaintiff by Alexander Rhind was transmitted to the defendants at Dundee, Scotland, to be filled. The defendants, claimed, however, that Alexander Rhind was not acting as their agent in the making of this contract, but that in accepting the order from him they were dealing with him as a principal and had no relations whatever with the plaintiffs. Evidence was offered for the purpose of showing that Alexander Rhind in the making of this contract was acting as the agent of the defendants, and the referee so found and reported against the defendants accordingly.

During the course of the trial, a witness was put upon the stand who had been in the employ of Alexander Rhind and subsequently in the employ of the firm of David Martin & Co. This witness was asked the following question.

“In your previous examination you testified you saw the copy letters from David Martin & Co., heretofore put in evidence in this case, and also a letter from David Martin & Co., to Alexander Rhind, inclosing these copy letters. Please state the contents of the letter from David Martin & Co., to Alexander Rhind ? ”

The defendant's counsel objected to the evidence, amongst others, on the ground of its not being the best evidence.

Notice having been given by the plaintiff’s counsel to the defendant’s counsel to produce this letter, amongst others, and said counsel having stated that he was unable to find the said letter, the objection was overruled, and an exception taken by the defendant’s and the witness gave the contents of the letter, which evidence was material upon the question of the relation existing between Alexander Rhind and David Martin & Co., in reference to this contract.

It would seem that this ruling was error. The letter in question was not written to the defendants but by them. There was no presumption that it was under their control, and there was no evidence going to show what had become of the letters, papers and book of Alexander Rhind, who was dead at the time of the trial. The mere notice to produce, given to the defendants, authorized the plaintiff only to give secondary evidence, of such papers and documents as might naturally be presumed to be within their control. No such presumption arose as to the corresponcence between David Martin & Co. and Alexander Rhind. At the. time of this correspondence, Alexander Rhind was in New York and David Martin & Co., were at Dundee, Scotland. There would seem, therefore, to be no reason to suppose that the firm of Martin & Co., would have the possession of letters which were directed and sent to Alexander Rhind. The

letter being material both as to its contents and as showing the enclosure and authenticity of the copy letters handed by Alexander Rhind to Mr Vogel, may have had, and probably did have great influence with the referee in determining the question at issue that Martin & Co., and not Alexander Rhind were the real principals in the contract made with Mr. Vogel.

For these reasons the error complained of cannot be disregarded, and the judgment must be reversed and a new trial ordered before another referee, with costs to the appellants to abide the event.

Brady and Daniels, JJ., concur.


author: Daniels, J.

text:
    Yamato Trading Company, App’lt, v. Leo W. Hoexter, Impleaded, etc., Resp’t.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887.

    •Costs—Dismissal of complaint because of infancy—Not allowed as MATTER OF COURSE—CODE ClV. Pito., g 3229.
    Where a person who is engaged in business as a co-partner with another and is ostensibly competent to carry it on, incurs in form the usual liabilities appertaining to it, and escapes that liability by his infancy, it is not a just exercise of the discretion given to the court in Code Civ Pro., % 3229, to allow him to recover costs on the dismissal of the complaint as to him. after having enjoyed the advantages of the purchase of the property.
    Appeal from a judgment recovered on the verdict of a jury in favor of the defendant, and from an order making him seventy-five dollars extra allowance for costs.

      Alfred Taylor, for app’lt; Blumenstiel & Hirsch, for resp’t.
   Daniels, J.

The action was Drought to recover for goods sold and delivered by the plaintiff to the firm of A. Hoexter -& Co. The defendant by his answer admitted himself to be a partner with Augustus Hoexter, and also with Henry W. Strauss who was a special partner in the firm.

But as a defense to his liability for the price of the goods he alleged in his behalf that he was a minor under the age of twenty-one years, and that fact was proved upon the trial by evidence justifying the court in directing a verdict in his favor. As to the other general partner a verdict was recovered against him for the price of the goods, and costs together with the allowance were adjusted and recovered by the judgment in favor of the defendant Leo H. Hoexter. In his defense he appeared by attorney and not by guardian as that was required to be done in the regular course of an action against him as an infant. But so far as judgment was recovered by him relieving him from liability upon the plaintiff’s demand it cannot be disturbed although irregularly obtained. But under section 3229 of the Code of Civil Procedure, he was not entitled to costs as a matter of course, but- that depended upon a special application to the court in which costs could be withheld or allowed according to its-sound discretion. But where a person who is engaged in business as a co-partner with another, and is ostensibly competent to carry it on, incurs in form the usual liabilities appertaining to it, and escapes that liability by his infancy, it does not seem to be a just exercise of discretion to allow him to recover costs after having enjoyed the advantages of the purchase of the property. "While infancy was a. legal defense to the action its successful interposition was not entitled to be rewarded in this manner. A person in trade with another as a co-partner is held out as competent to engage in and transact the business appertaining to the firm. 3 by reason of his immature years he is not in that condition and avoids the firm indebtedness by means of that circumstance, fair dealing and a reasonable execution of the law require that he should be satisfied with that measure of success without burdening the party with whom he and his partner have dealt by loading it with the expenses of the litigation required to ascertain the truth of the fact relied upon to exonerate such debtor from liability. It was a fact peculiarly within the knowledge of this defendant and the members of his family, and of which the plaintiff and its agents do not appear to have been aware. And it did no more than the circumstances required in putting the defendant to proof of his inability to bind himself by reason of his infancy.

So far as the judgment awards costs and the order directed an additional allowance they should be reversed, and as modified in that manner the residue of the judgment should be affirmed, without costs of the appeal to either party.

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


text:
    The Havemeyer Sugar Refining Co., Resp’t, v. Isaac N. Taussig et al., App’lts.

      (Supreme Court. General Term, First Department,

      Filed May 13, 1887.)

    Arrest— Discharge from—Code Crv. Pro., § 672 as amended by Laws 1886, Chap. 672—Construction op.
    These defendants were arrested under an order of arrest issued in this-action on October 11, 1883, and held to bail. Upon giving an undertaking with sureties in the form prescribed by Code .Civil Procedure, § 575, subd. 3, they were discharged. After trial a verdict was rendered against them and judgment entered thereon on December 24,1884, and in Februaiy, 1887, an execution having been issued upon the judgment, application was made for the release of the defendants and the discharge of their sureties. By Code Civ Pro § 572, as amended by Laws 1886, chap. 672 it is declared that except in a case where an ordei of arrest can be granted only by the court, if the plaintiff neglects to issue execution against the person of the defendant, within ten days after the return of the execution against the property, and in any event neglects to issue the same within three months after the entry of the judgment * * * the defendant, must upon his application made upon notice to the plaintiff, be discharged, from custody, if he has already been taken under the mandate against him in such action. Held, That the application should be granted, that to entitle the defendants to the benefit of the section cited it was not requisite that they should be in fact imprisoned
    Appeal from orders denying motions to discharge the -defendants from arrest and the sureties from an undertaking given in their behalf.
    In the first case a judgment had been entered; in the second, it had not.

      Abbett & Fullur, for appl’ts, Theron O. Strong and Joseph Kunzman, for resp’t.
   Daniels, J.

The defendants were arrested in this action under an order , of arrest and held to bail in the sum of $9,000, on the 11th of October, 1883. They were discharged upon giving an undertaking with sureties in the form prescribed by subdivision 3 of section 575 of the Code of Civil Procedure. The issue in the action was tried and a verdict recovered against the defendants and judgment entered upon it on the 24th of December, 1884, and in February, 1881, execution having been issued upon the judgment, this application was made for the release of the defendants and the discharge of their sureties.

Whether it should be allowed to be successful depends upon the construction which section 6 of chapter 672 of the Laws of 1886 should receive. This section amended and materially enlarged section 572 of the Code of Civil Procedure. It is declared, except in a case where an order of arrest can be granted only by the court, “if the plaintiff neglects to issue execution against the person of the defendant, within ten days after the return of the execution, against the property, and in any event neglects to issue the same within three months after the entry of the judgment * * * the defendant must, upon his application made upon notice to the plaintiff, be discharged from custody, if he has already been taken under the mandate against him in such action.”

The pivotal point in the case rests upon the construction required to be given to so much of the section as has been quoted. The defendants’ counsel has insisted that it includes the case of a person who has been arrested under an order, not within the exception contained in the first part of the section, and who may have been discharged from such arrest by giving the undertaking which has already been mentioned. While on the part of the plaintiff it has been insisted that the defendants must remain in actual custody, or be discharged only upon the limits, to entitle them to invoke in their favor the authority of this section of the statute. But this position does not appear to have been well taken. For both the case of a person who is in actual custody and imprisonment, and the case of a defendant who may be discharged from an order of arrest by giving an undertaking for the limits, are contained and provided for m section 111 of the Code of Civil Procedure, as that has been amended by section 5 of this chapter of the Laws of 1886. It consequently follows that to entitleth'e defendants to the benefit of section 572 as it has been amended, it is not requisite that he shall be in fact imprisoned within the walls of a jail, or that he should have been discharged from arrest, by giving a bond or undertaking for the jail liberties.

The legislature must have intended by section 572, as it has been amended, to include some other class of cases than those provided for by section 111 as that was amended in 1886, and the only other class of cases that can well be found is that where the defendants may have been arrestecL under an order of arrest, and discharged by giving the undertaking executed and delivered in this instance.

If the defendants were actually imprisoned under an order of arrest or by virtue of an execution, or because of their surrender by their bail, the case would be controlled by section 111. That has been made entirely complete for all cases of actual or close imprisonment under orders of arrest and execution, and for all cases where the defendants may be at large within the liberties of the jail upon a bond or undertaking given for that object.

It therefore results that if these parts of section 572, as amended, do not include the case of defendants arrested under an order and discharged under the form of undertaking given in this case, it can have no intelligible subject matter to which it may be made applicable or on which it can operate; and that it must be applicable to this class of cases arises out of the fact that although the defendant is nominally at large by reason of the undertaking given in his behalf, he is still not discharged from custody. For his-sureties may at any time, under the authority of sections 592-593 of the Code of Civil Procedure, themselves take the defendant into actual custody and surrender him to the sheriff, and upon such surrender he is to be detained and imprisoned, unless bail shall again be given in his behalf, either for the limits or in the form in which it was obtained for these defendants when they were taken under the order of arrest. Having this authority over the defendants, they continued subject to the custody and control of the sureties in the undertaking.

They cannot be said to have been set at liberty and to have been discharged from the order of arrest as long as' the sureties have been delegated with this authority to rearrest and surrender them at any time when they may consider that to be proper. They are still, while subjected to this liability, in custody in a general sense, and that is as much as this section has required. It is true it is not the custody of the sheriff, or of the court, but it is the custody of the sureties who have become bail, and it was the intention of this section that they should remain subject to no such control beyond the period of three months after the entry of the judgment in the action against them.

The further direction contained in the same section further sustains this construction. For it has been there pro vided that the defendants shall be relieved from imprison ment, even .though they have not been imprisoned in the action by virtue of the order of arrest, after the expiration of three months from the entry of the judgment, unless reasonable cause is shown why the application should not be granted.

This direction includes the case of a defendant who has not been arrested at all, and discloses the intention of the act to be not only to entitle the defendants to be discharged from liability to an arrest under execution, unless the execution is issued within three months after the entry of the judgment where they have been taken into custody under a mandate issued in the action, but also to authorize the court to relieve them from suspense, or the apprehension of imprisonment by execution after the lapse of the same period, where there has been no arrest or imprisonment unless reasonable cause is shown why the application should not be granted. The defendants brought themselves within this section of the statute, for the judgment in the action had been recovered and entered more than two years before notice was given that the application to relieve them from further liability to imprisonment was made. It has been suggested, although the fact does not appear in the case, that an appeal has been taken from the judgment, which is still pending, and for that reason an execution to enforce it has not been issued against the defendant. But such an appeal without stating the proceedings in the action will not be attended with the effect of enlarging the time within which, under this section of the statute, the execution must be issued against the body, or prevent the defendants from obtaining their discharge from its liability.

The order in the case should be reversed, but as the point is new and the statute somewhat obscure, without costs, and an order entered relieving the defendants from the risk of imprisonment and discharging their sureties.

Van Brunt, Oh. J., and Brady, J., concur.