text:
    THE MAYOR, ALDERMEN AND COMMONALTY OF THE CITY OF NEW YORK, Respondent, v. NATHANIEL SANDS, Appellant.

      Indorsement over of a cheek received by the compti’oller of New York, instead of depositing it — a, person receiving it is chargeable with knowledge of the comptroller’s want of power — it is no defense to show that it was transferred to one having a claim against the city — when the court may direct a verdict — when interest follows a recovery as matter of legal right.

    In August, 187), August Belmont & Co. delivered to Richard B. Connolly, the comptroller of the city of New York, their check for $75,000, made payable to-his order, for certain consolidated stock of the county of New York, which, was to he, and was thereafter, issued and delivered to them. Connolly thereafter indorsed the check as comptroller and delivered it to the defendant Sands; who was then a commissioner of taxes, who received and collected the same and applied the moneys so obtained to his own use.
    This action was brought by the board of supervisors of the county of New Y ork, and after the consolidation of the county and city was continued hy the-latter, to recover the said sum of money upon the ground that the check was' indorsed and delivered by Connolly and received by Sands with full knowledge' of all the facts, wrongfully and corruptly, and with the intent to cheat and. defraud the plaintiff.

      Held, that the comptroller by indorsing and delivering the check, instead of depositing it as required by law, palpably violated his official duty, and that the defendant Sands, being chargeable with knowledge of the fact that the comptroller had no power to indorse the cheek over to him, was also guilty of an official wrong which rendered him liable to the plaintiff in this action.
    The defense was that the defendant had rendered services for the county of New York in negotiating the sale of the bonds, under a contract entered into between him and the comptroller,which entitled him to receive the amount as a compensation for such services.

      Held, that assuming that the comptroller had the power to make such a contract with the defendant, nevertheless his right to the compensation to be received thereby was neither more nor less than a claim against the county to be ascertained, adjusted and paid in the mode prescribed by law.
    Where a defendant moves for a dismissal of the complaint, and the plaintiff moves for the direction of a verdict, it is proper for the court to direct a verdict for the plaintiff where the case would warrant a verdict for him upon any facts which the jury might have found.
    That a direction of a verdict in this case for the full amount with interest was proper.
    Appeal from a judgment in favor of tbe plaintiff, entered at the New York Circuit upon a verdict directed by the-court.

      L. It. Marsh and A. J. Vcmderpoel, for the appellant.

      C. P. Miller, for the respondent.
   Davis, P. J.:

This action was commenced October 21, 1S73, by the board of supervisors of the county of New York against the defendant Nathaniel Sands. Issue was joined therein in March, 1871. After the consolidation of the city and county of New York the name of the plaintiff was changed by substituting the mayor, aldermen and commonalty of the city of New York by stipulation, and an order based thereon. The complaint alleges substantially that in August, 1871, the defendant Sands was one of the commissioners of taxes and assessments of the city and county of New York, and Richard B. Connolly was comptroller of the city of New York; that on or about that day August Belmont <& Co. made their check, whereby they requested the National Bank of the city of New York to pay to the order of the comptroller the sum of $75,000, in payment for certain consolidated stock of the county of New York thereafter to be issued to them, which stock was afterwards issued and delivered ; that the said check was delivered to the comptroller for the use and benefit of the plaintiff, and that the comptroller did not apply the cheék nor the money therein mentioned, or any part of the same, to the use and benefit of. the plaintiff, but on the contrary he, with the intent to cheat and defraud the plaintiff out of the said sum of money, and with the intent that the defendant Sands should apply the said check to his own use, did indorse said check as comptroller, and willfully and corruptly delivered the same to the defendant, and that the defendant, knowing the facts, wrongfully and corruptly, with intent to cheat and defraud the plaintiff out of said sum, accepted said check from said Connolly, and afterwards obtained the money from the said National Bank thereon, and applied the same to his own use and benefit; and the complaint finally alleges in the usual form that the defendant has neglected and refused to pay the money to the plaintiff.

It can hardly be doubted that these allegations are of a cause of action sounding in fraud, and one of the principal questions presented on the appeal is whether the evidence in the case tended to establish the right to recover under the allegations of fraud contained in the complaint. It was proved on the part of the plaintiffs that Belmont & Co. did draw and deliver the check described in the complaint, payable to Connolly, the comptroller of the city of New York; that Connolly thereafter indorsed the same as such comptroller and delivered the check to the defendant Sands, and that the defendant received the same, presented it and collected the sum of $75,000, thereon which he applied to his own use. If this transaction was a wholly unlawful one, then it does sustain the allegations of fraud contained in the complaint. A public officer whose duty it is to receive moneys belonging to the city, and place the same in its treasury for its use, cannot after receiving a check for such moneys, instead of depositing the same as the law requires in the treasury, deliver the check with his indorsement to a third party for the use and benefit of such party, without being guilty of a fraud which the law denounces and punishes as such. Nor can any person receive from the comptroller a check indorsed in his favor, drawn for the benefit of the city or county and not deposited as required by law, and collect the moneys thereon and apply them to his own use, without being held in law guilty of such fraudulent conduct as charges him with obtaining tüe .money wrongfully and fraudulently and subjects him to an action therefor. This position we think is fully, supported by authority. (Supervisors, etc., v. Ellis, 59 N. Y., 620; Same v. Van Clief, 1 Hun, 454; People v. Fields, 58 N. Y., 504; People v. Ingersoll, 58 id., 27.)

By chapter 590 of the Laws of 1857, section 6, and chapter 190 of the Laws of 1870, it was enacted that all moneys drawn from the treasury by authority of the supervisors shall be upon vouchers for the expenditure thereof, examined and allowed by the auditor and approved by the comptroller, and no money shall be drawn therefrom except on a warrant drawn by the comptroller, countersigned by the mayor and the clerk of the board, and no other warrant shall be necessary for such purpose. When the check for $75,000 drawn and delivered'by Belmont & Co. to the comptroller payable to his order in payment for county stock, was delivered to the comptroller it became the property of the county. The comptroller’s duty under the law was forthwith to deposit it in the treasury in such form that it would be subject to the provisions of the statutes just referred to, and so that it could not be reached and disposed of except under those provisions for some lawful purpose. His neglect to do that was a palpable violation of his official duty, and his disposition of the check by indorsing it over to Sands was another step in violation of law for which he was alike chargeable with breach of duty. The defendant Sands was bound to know that the comptroller had no power whatever to receive the check and indorse it over to him, and that in doing so he was guilty of an official wrong. His knowledge of that fact and his receipt of the check with such knowledge charges him with all the responsibilities of participation in the violation by the comptroller of his official duty, and those several acts contain every element of wrong essential to sustain the allegations of fraud-contained in the complaint. The conduct of the defendant was equivalent to a ■ fraudulent appropriation to his own use of che money obtained upon the check with the collusion and help of an officer of the city and county, who he was bound to know had no authority to pay any city or county indebtedness to him otherwise than in accordance with the requirements of the statute. Such an appropriation was a wrongful conversion of moneys, and he cannot object that the transaction is characterized as one intended to cheat and defraud the plaintiffs. The proof is, therefore, in our opinion abundant to sustain the alleged cause of action and, unless the defense interposed was a sufficient one, the plaintiffs are entitled to judgment. That defense was in substance that the defendant had rendered services for the county of New York under a contract between him and the comptroller in negotiating the bonds of the county which entitled him to the amount received as a compensation for such services. The contract between him and the comptroller was contained in a letter written to him by the latter, in which after recital of various reasons for making the contract, the comptroller agreed in substance that he should have a commission of one-half of one per cent upon the bonds he should negotiate. Assuming that the comptroller had the power to make such a contract with the defendant, and that upon performance of the service he was entitled to the specified compensation, nevertheless his right to such a compensation was neither more nor less than a claim against the county to be ascertained, adjusted and paid in the mode prescribed by law. It is hardly necessary to say that the mode pursued in this case did not conform in any sense with the requirements of the statutes. His claim was never presented nor audited and allowed, nor put in any condition which justified its payment by a warrant drawn upon the treasury under the safeguards against fraud which the law had provided. The whole transaction was simply a private deal ” between the comptroller, assuming to act officially and the defendant, obviously for the purpose of making compensation for the services rendered in a manner that should avoid compliance with the requirements of the statute when such services- are to be compensated out of the funds of the county. Such a transaction is entitled to receive no sanction by the courts. To hold it lawful would open the door to innumerable frauds upon the city and county by preventing the moneys which belong to them, from reaching the treasury, whence they cannot be extracted without the process prescribed by statute. It is, therefore, no defense to show that the check of Belmont & Go., belonging to the county, was received by the defendant from the comptroller, under the circumstances detailed in the evidence, in payment of a claim for services, because no payment ca-n be lawfully made in that form and mode. The receiving of the check, therefore, and the collection of the moneys by the defendant was a fraudulent misappropriation of them to his own use. No person can acquire lawful title to the moneys of the city dr county, through its officers, without compliance with the requirements of law. This rule must, for the protection of the public, be held an inflexible one.

These, doubtless, were the views of the court in denying the motion to dismiss the complaint and directing judgment. The defendants moved for a dismissal of the complaint and the plaintiff moved for the direction of a verdict. Neither party asked to go to the jury on any question of fact. Under such circumstances the disposition of the case by the court was entirely proper, if the case would have w'-arranted a verdict for the plaintiffs upon any fact the jury might have found. (McCall v. Sun Mutual Ins. Co., 66 N.Y., 506, 517; Bridge v. Pierson, 66 Barb, 514; Ormes v. Dauchy, 82 N. Y., 443; Dillon v. Cockroft, 90 id., 649.)

We think the evidence would have warranted a verdict for plaintiff because the allegations of fraud contained in the case were substantially proved, not perhaps as matters of actual intent, but as a legal result of acts in violation of law and duty. The verdict directed for the full amount with -interest was proper.. The plaintiff is entitled to interest upon the moneys appropriated, and there being no dispute as to the sum upon which interest should be computed, if the recovery were had at all, its recovery followed as matter of legal right. (Phillips v. Speyers, 49 N. Y., 653; McCormick v. P. C. R. R. Co., 49 id., 303.)

The judgment must be affirmed.

Brady and Daniels, JJ., concurred.

Judgment affirmed.


source: Caselaw Access Project

author: Davis, P. J.:

license: Public Domain

text:
    THE PEOPLE OF THE STATE OF NEW YORK v. THE WALL STREET BANK. (In the Matter of the Petition of the RECEIVER for Relief from the Taxes of 1884.)

      Taxation of shares in national banks — neither the bank nor its receimer can apply for a reduction in the assessment — the assessments can only be reviewed by certiorari — the party aggrieved must apply to Use assessors for relief before applying to the court.

    On or about January 1, 1881, the commissioners of taxes and assessments of the city of New York assessed the outstanding stock in the Wall Street Bank to the several individual holders thereof at its par value, and assessed thereon to them, respectively, taxes amounting in the aggregate to $6,189.62. On September 15, 1884, judgment was obtained on behalf of the people of the State dissolving said banking corporation, forfeiting its charter and appointing one Osborn receiver of all its goods and property. Thereafter the receiver applied to the court at Special Term, alleging that an examination of the affairs of the bank had shown that the value of the stock had been so impaired b.y the frauds of the cashier as to make its assessable value not to exceed ten per cent of its par value. After a hearing an order was made reducing the taxes assessed from $6,189.96 to $618.96, directing the receiver to pay that sum to the receiver of taxes in full of all claims against the stockholders for taxes for that year, and that all taxes theretofore collected on such stock should be returned forthwith to the receiver.

      Held, that the order should be reversed for the reasons:
    That neither the receiver nor the bank itself had any interest in the question, as the tax was imposed upon the stockholders personally and not upon the bank or the receiver.
    That the stockholders themselves could not have made such an application, as the proceedings of the commissioners of taxes and assessments, being judicial in their nature, could only be reviewed or questioned in the courts by writ of certiorari prosecuted by the party aggrieved.
    That the failure of the stockholders to appear before the commissioners at the time appointed by law and establish the true value of the stock, or show other good reasons for a reduction of the assessment, concluded them from subsequently reviewing the action of the commissioners by certiorari or otherwise.
    Appeal from an order of the Special Term, directing a reduction of the taxes assessed against the stockholders on tlie capital stock of the Wall Street Bank in the year 1884.

      D. J. Dean., for the mayor, etc., of New York, appellant.

      E. P. Wheeler, for the receiver of the bank, respondent.
   Davis, P. J.:

By section 312 of the banking laws of the State of New York (Laws of 1882, chap. 409, p. 581) it is enacted that “ the stockholders in every bank or banking association organized under the authority of this State or of the United States shall be assessed and taxed on the value of their shares of stock therein. Said shares shall be included in the valuation of the personal property of such stockholders in the assessment of taxes at the place, city, town or ward where such bank or banking association is located, and not elsewhere, whether the said stockholders reside in said place, city, town or ward or not; but in the assessment of said shares each stockholder shall be allowed all the deductions and exceptions allowed by law in assessing the value of other taxable personal property, owned by individual citizens of this State, and the assessment and taxation shall not be at a greater rate than is made or assessed upon other moneyed capital in the hands of individual citizens of this State.” That section also contains other provisions relative to ascertaining the value of the stock so taxed and the notice required to be given of the assessment. And sections 314 and 315 make provisions for the mode of collecting said taxes when the person assessed does not reside in the town, ward or county in which the assessment is made, and imposes the duty on the bank, in prescribed cases, to retain any dividend or dividends belonging to the stockholders assessed as shall be necessary to pay his taxes until it shall be made to appear that such taxes have been paid. From these several and other provisions of the Code, it is apparent that the taxes upon the stock are imposed altogether upon the individual stockholders, and that the bank has no other legal interest therein or duty in respect thereto than those prescribed and pointed out by the several provisions of the act. The commissioners of taxes and assessments of the city of New York assessed the outstanding stock in said bank to the several individual holders thereof at its par value, and assessed thereon to them respectively taxes amounting in the aggregate to $6,189.62, on or about the 1st of January, 1884. The bank was then in full operation and no steps appear to have been taken by the several stockholders, or any of them, or any person on their behalf, for the purpose of reducing or otherwise affecting such assessments and taxes. On the 15th of September, 1884, judgment was obtained on behalf of the people of tlie State, dissolving the corporation, of said bank, forfeiting its franchises and appointing the petitioner Charles J. Osborn receiver of all its goods, property and effects, and the petitioner duly qualified and entered upon the discharge of his duties as such receiver.

It was afterwards, as alleged by the petition in this case, discovered by the receiver on an examination of the affairs of the bank that by reason of frauds of its cashier the value of the stock had been greatly impaired, and was in fact so much impaired at the time the assessment was made and the taxes imposed on the stockholders, that in the opinion of the accountant who made the investigation the real assessable value of the stock does not exceed ten per cent of its par value.

Upon this state of. facts the receiver, by his petition, made application to the court at Special Term for an order reducing the assessment and the taxes imposed upon the stockholders from $6,189.62 to $618.96. The petition came to a hearing in April, 1885, before Mr. Justice Donohue, at Special Term, and an order was made directing that the taxes assessed upon such stockholders be reduced from the sum of $6,189.62 to $618.96, and “ that Charles J. Osborn, the receiver of the Wall Street Bank, do pay that sum to the receiver of taxes in full satisfaction of all claims against the stockholders of the said bank for all taxes for the year 1884 upon its capital or surplus, or upon their shares of its capital stock, and that all taxes on such stock which may have been heretofore collected from the holders of any of the said stock, be returned forthwith to the said receiver.” From this order the mayor, aldermen and commonalty of the city of New York bring this'appeal.

We are not able to discover any authority or principle of law upon which the order'made in this case can be sustained. Neither the bank nor the receiver is aggrieved or injured by the assessment and imposition of the tax upon the several stockholders of the bank on their respective shares. Neither of them has any legal interest in the question, and the petition fails to show any right of the receiver to institute any proceedings to reduce such taxes and 'assessments. The shares of stock shown by the petition to have been assessed to their respective owners upon which the taxes have been laid, were not owned by the bank at the time of the assessment, nor afterwards, and no interest whatever therein became vested in the receiver on his appointment. On the contrary, they remained the property of the respective holders upon whom the taxes were imposed, and from whom they are by law to be collected by some one or other of the processes provided by law. No facts appear tending to show that the bank was liable, directly or indirectly, for their payment, or that the receiver can in his official capacity be charged therewith or disturbed in his possession of any fund or property now in his hands. It is not shown that any dividend had been declared on the stock which the bank or the receiver is bound to retain or apply thereon. In short not a single fact alleged in the petition tends to show that the bank or the receiver, or the property in his bauds, can be in any way affected by the reduction of the assessment and taxes. Under such circumstances there was no warrant for an order of the court directing the receiver to pay out of funds in his hands the reduced tax or any tax, and especially none directing the appellant to repay to the receiver the amount of any taxes that may have been paid by the stockholders. These reasons alone are entirely sufficient to require this court to reverse the order of the Special Term. But if they were for any reason unfounded, there are still other grounds upon which the order must be vacated. The parties who were or are aggrieved and entitled to question the assessment were the stockholders themselves who had been assessed individually and who alone could suffer any injury by reason' of the assessment. Their respective rights are fully protected by law and on their application, if made to the commissioners in due time, the assessments could have been readjusted and reduced in accordance with the provisions of the statutes or by proper proceedings for their revaluation by writ of certiorari. The law is thoroughly well settled in this State that the proceedings of the commissioners of taxes and assessments in making assessments for the purposes of taxation, and of the city authorities in levying taxes based on such assessment, are judicial in their nature and can only be reviewed or questioned in the courts by writ of certiorari prosecuted by the parties aggrieved or affected. (Vose v. Willard, 47 Barb., 320; Genessee Valley Nat. Bank v. Supervisors, 53 id., 223; Barhyte v. Sheppard, 35 N. Y., 238; Swift v. City of Poughkeepsie, 37 id., 513; Bank of Commonwealth v. Mayor, 43 id., 184; Buffalo and State Line Railroad v. Board of Supervisors, 48 id., 99, 100.)

But in respect of such aggrieved party there is no authority or practice that permits the institution of a summary proceeding by motion to a court for the purpose of reducing taxes and the assessments upon wliieh they are based, made by the properly authorized assessing officers. If such a proceeding were sanctioned it would result in bringing before the courts by petition and special motion interminable litigations over assessments of every person who felt himself aggrieved, for the purpose of trying the question whether or not the particular property taxed was over-valued by the assessors and for the purpose of reducing the taxes as he might show to be just or equitable. Such a system would overturn the scheme of assessment and taxation created by the laws and lead to inextricable confusion and embarrassment in the administration and enforcement of those laws. Fortunately the courts are clothed with no such power and can only exercise it by usurping the functions of other authorities created by law for the purpose of such review.

The assessed stockholders in this case had ample opportunity to make their application to that tribunal as provided by statute, and on showing the true value of the stock or any other good reason to have had the assessments reduced accordingly. Their failure to do this is conclusive against them and against all parties. The proceedings for that purpose, so far as this city is concerned, are con trolled by statute. (See Consolidation Act, chap. 410 of 1882, §§ 817, 822; Laws of 1859, chap. 302; Laws of 1880, chap. 269; Laws of 1867, chap. 410, § 4.) Where a person taxed has failed to avail himself of these opportunities he cannot subsequently ask to have his taxes reduced. This proposition is abundantly supported by authority. (Smith v. International Ins. Co., 35 How. Pr., 126; Matter of McMahon, receiver, v. Fowler Bros., 66 id., 190; McMahon, receiver, v. Jones & Fairchild, 1 How. Pr. [N. S.], 271; Ontario Bank v. Bunnell, 10 Wend., 195; Boyd v. Gray, 34 How. Pr., 323; Genesee Valley Nat. Bank v. Supervisors, 53 Barb., 223; Bank of Commonwealth v. The Mayor, 43 N. Y., 184; People ex rel. Coudert v. Tax Commissioners, 31 Hun, 235.)

And it is now settled by the court of last resort in the People ex rel. Mutual Union Telegraph Company v. The Commissioners of Taxes (99 N. Y., 254), that a writ of certiorari will not lie unless the partv applying therefor has first made the application provided by the statute.for relief. In the case just cited the Court of Appeals say: The case made by the relator does not entitle it to relief under chapter 269 of the Laws of 1880. The assessment was regular. The relator did not avail itself of the opportunity to apjilv for a correction of the assessment, either on the ground of over-valuation or of irregularity. The act of 1880 gives a remedy by certiorari to review and correct an illegal, excessive or unequal assessment. But it would, we think, be an unwarrantable construction of the statute to permit a party complaining of an assessment, to lie by, without availing himself of the opportunity to remedy his grievance by application to the tax commissioners, under the statute of 1859, and after the assessment had become confirmed by lapse of time, to arrest the collection of the tax by a proceeding under the act of 1880. There is an apparent injustice in compelling the relator to pay a tax on its whole capital, but it is an injustice brought about by its own negligence; first, in omitting to make a report in compliance with the statute, and then in neglecting to apply to the tax commissioners within the time limited for a correction of the assessment.”

In the present case no application whatever is shown to have been made by any one to the tax commissioners for a reduction of the assessment. The equities of the application, so far as the individual stockholders are concerned, rest upon the subsequent development of facts affecting the value of the stock. It is not the fault ■of the people that those facts were not sooner known and their injurious consequences must fall upon the stockholders of the bank, because under the circumstances no remedy against them can be successfully pursued.

The order of the court below must be reversed, with ten dollars ■.costs and disbursements to be paid by the receiver.

Beady and Daniels, JJ., concurred.

Order reversed, with ten dollars costs and disbursements to be ¡paid by receiver.


text:
    CATHARINE FAGAN, Appellant, v. CHARLES J. FAGAN, Respondent.
    Practice— the court has not power to compel a husband in an action for divorce to pay for the piinting of papers on an appeal by his vñfe — when the court mil relieve an appellant from printing the case.

    In this action, brought hy a wife for a limited divorce, a judgment dismissing the complaint was entered upon the confirmation of the report of a referee. The plaintiff having appealed from the judgment moved for an order requiring the defendant to furnish means to enable her to print the papers on appeal.

      Held, that the court properly denied the moiionhecause of awantof power to make the order after the entry of the judgment, but that as it appeared to the General Term that the appeal was hy no means a frivolous one, it would modify the order of the court below so as to allow the plaintiff to bring the case to a hearing upon written papers and without printing the same.
    Appeal from an order of the Special Term, denying a motion that the defendant furnish means for the printing of the papers on appeal from the judgment in this case.

      Knevals <& Iiansom, for the appellant.

      M. J. O'Brien, for the respondent.
   Davis, P. J.:

This is an action for a limited divorce. The issues of fact in it were tried before a refereg who reported adversely to the plaintiff. The report was confirmed by the court at Special Term and judgment entered dismissing the complaint Erom that judgment the plaintiff has in due form appealed to this court.

Upon evidence showing that she is old, infirm and in great poverty, and therefore unable to pay the expenses of printing the papers on the appeal, the plaintiff moved at Special Term for an order that the defendant furnish her with means sufficient to pay such expenses. The motion was denied by the court below for the want of power to make the same, the court on that subject feeling bound by the decision of this court in the case of Winton v. Winton (31 Hun, 290). The case is undoubtedly directly in point, although in that case the judgment had been entered in favor of the wife, and the husband was the appellant, and the order was reversed directing tlie payment of a sum of money for the services of her attorney on such appeal. This court held that the provisions of section Í769 of the Code were limited to a period antecedent to the judgment in the action. That section of the Code authorizes the court to make allowances during the time of the pendency of the action. I feel constrained to follow the ruling of that case as an authority which this court cannot disregard, but if the question was a new one a careful examination of the provisions of the Code might lead me to the conclusion that the words “during the time of the pendency of the action ” are not restricted to a period preceding the judgment. Where the right to appeal exists upon conditions prescribed by the Code, and those conditions are fully performed and the appeal taken is thereby perfected, the action, it seems to me, is still pending, and ought so to be regarded until the final determination of the appeal.

I have looked into the papers and the opinion of the referee so far as to see that the appeal is by no means a frivolous one. It brings up the whole merits of the case, and is to be determined upon the facts found by the referee and the evidence taken before him. But while we cannot under the decision referred to reverse the order of the court below, which was evidently based solely upon the authority of that decision, we at least have power to make such an order as will relieve the plaintiff from the expense of printing any of the papers upon the appeal. That we can properly do ■in disposing of this appeal, and we shall therefore direct, as a part of the order affirming the order of the court below, a modification providing that the plaintiff may bring the case to a hearing upon written papers and without printing the same; one written copy ■thereof and of the appellant’s points to be served on respondent’s ■attorney, one copy thereof to be filed with the clerk and one copy •for the court, and that the order as so modified be affirmed, without costs.

BrAdv and Daniels, JJ., concurred in the result.

Order modified as directed in opinion, and affirmed as modified, ■Without costs to either party.


author: Brady, J.: Davis, P. J.:

text:
    MARIE S. BREHM, Administratrix, etc., of HORATIO N. GRAY, Appellant, v. THE MAYOR, ALDERMEN AND COMMONALTY OF THE CITY OF NEW YORK, Respondent.

      When the payment of an assessment is deemed to have been made under coercion — right of an owi.er to recover it after vacating the assessment — statute of limitations — when time will be extended by a statutory provision requiring a certain time to elapse after presentation of the claim before an action will lie.

    On March 7,1870, an assessment was confirmed upon certain real estate in the city of New York owned by the plaintiff’s intestate subject to a mortgage. Thereafter on June 6, 1871, pursuant to the direction contained in a judgment entered in an' action brought to foreclose the said mortgage, the said assessment was paid by the referee out of the proceeds of the sale. In September of the same year proceedings were commenced on behalf of the intestate to vacate the assessment, in which on the fourth of the following December an order vacating the same was entered. On November 17, 1877, a written demand for the amount of the assessment was made against the city, and December eighteen of the same year this action was brought to recover the same.

      Held,, that the payment of the assessment under the direction contained in the judgment was a payment under coercion, so as to authorize the intestate, after the assessment had been vacated, to recover the amount paid.
    That as the charter of the city of New York required a demand in writing to bo made upon all claims against the city, and prohibited the commencement of any action against it for a period of thirty days after such demand had been made, and as such a demand had been made in this case within six years from the time the cause of action arose, although the action was not commenced until after the expiration of that period, the statute of limitations furnished no defense. (.Davis, P. J., not concurring.)
    Appeal from a judgment in favor of tlie defendant, entered upon a trial at the circuit without a jury.

      Moody B. Smith, for the appellant.

      Albert L. Cole, for the respondent.
   Brady, J.:

Horatio N. Gray, the intestate, was the owner of real estate upon which an assessment had been laid and which was subject to a mortgage held by Edward Robert. The assessment was confirmed on the 7th of March, 1870.

An action to foreclose the mortgage was commenced, which proceeded to a decree, in which it was ordered that the taxes and assessments on the premises should be paid out of the purchase-money. The premises were sold under the decree and the assessment was paid' by the referee out of the proceeds as directed by the court. The intestate was the owner of the equity of redemption and entitled to the surplus. The payment of the assessment seems to have been made on the 6th of June, 1871. Subsequently and on the twenty-fifth of September of the same year proceedings were commenced on behalf of the intestate to vacate the assessment, and an order declaring that result was entered upon the fourth of December following. Upon the 17th of November, 1877, the intestate caused a written demand to be presented to the comptroller of the city for the repayment to him of the amount paid to discharge the assessment; and payment not having been made this action was commenced on the eighteenth of December following.

The learned justice before whom this action was tried dismissed the complaint, finding, however, as one of the questions of fact, that the payment of the assessment by the referee was under a decree which directed its payment. But he seems to have been influenced by the fact that the decree of foreclosure had never been vacated or set aside, and that no proceedings had been instituted to set aside the assessment at the time it was paid, and, further, by the conclusions of law predicated of the facts and circumstances detailed, that the assessment was not paid by the plaintiff under coercion, but by the referee as an officer of the court and as the agent of the intestate.

It is conceded that the assessment was vacated, but it is contended that it was properly paid by the referee, and, further, on behalf of the city, that it was not paid under coercion of law. It seems to be a remarkable contention that an assessment paid under a decree directing its payment is not one by coercion of law. The premises affected by it, and which were purchased by the intestate subject to a mortgage, were sold by coercion of law and the proceeds appropriated in the manner directed by the decree, and the payment of the assessment made, therefore, out of the proceeds which belonged to the intestate. He did not institute the proceeding to dispose of his property, and its sale, for aught that appears in this action, was against his wishes. The decree, as is usual in actions of foreclosure, required the referee to discharge all existing liens. The paj nient of the assessment, therefore, having been made under the direction of the court it cannot be regarded as otherwise than by coercion of law.

The case of Peyser v. The Mayor (70 N. Y., 497) determines the right of the plaintiff to recover in this action. The reversal of the assessment and the declaration that it was illegal and void was conclusive evidence, as said in that case, that the money was obtained by the defendant without primary right, and under such circumstances the general rule is that the money, ex cequo et bono, belongs to the person having made the payment and is held by the defendant for his use. The law creates an obligation on the part of the person receiving it to make restitution. It was also said in that case: “ It is upon this principle that an action is maintainable to recover back money collected in satisfaction of an en’oneous judgment which has been reversed after payment made.”

It is true, it was further asserted as a general rule, pendant of the one just stated, that the payment must be involuntary, i. e., compulsory from coercion either in fact or by law, the reason of the rule being that a person cannot be permitted with a knowledge that the demand made upon him is illegal and unfounded, to make a payment without resistance, where resistance would be lawful and possible. And it is further declared in that case that coercion by law is where a court, having jurisdiction of the person or subject-matter, has rendered a judgment which is collectible in due course. There the party cast in judgment may not resist the execution of it. And further still that coercion of law exists where there are adjudications of inferior tribunals, when their proceedings are regular on their face and make out a right to have and demand an amount to be levied or collected in the due course of law, by a sale of goods or a municipal lease of real estate. Unléss void on their face they have the force of a judgment; the'party is legally bound to pay and has no lawful mode of resisting.

The facts distinguishing this case present all these elements. The assessment appears to have been regular on its face, the decree in the foreclosure suit directed its payment, and the sale of the property which was also decreed to take place was made for the purpose1 primarily of discharging the liens of which the assessment had precedence over the mortgage. Without arresting the proceedings in the foreclosure suit, therefore, the intestate was not in a position to avoid the direction of the court that the assessment should he paid. It was paid, therefore, out of his money and by due process of law. The subsequent declaration by a court having competent jurisdiction that the assessment paid was illegal and void, created an obligation, therefore, on the part of the city to make restitution and required that the judgment of this court should be in favor of the plaintiff who is the representative of the intestate.

In the consideration of this case no legal element in conflict with .the views expressed has been found or has occurred on reflection. The right of the plaintiff to recover seems to be very clear, and the dismissal of the complaint, therefore, was erroneous, and must be corrected by granting a new trial, unless the claim is lost by the application of the statute of limitations.

It appears that the learned justice presiding in the court below makes no reference to this defense either in his findings of fact or conclusions of law, although it was expressly set up by the answer. But this was doubtless for the reason that upon the merits he thought the plaintiff was not entitled to recover.

It appears, however, upon the record that on the 4th of December, 1871, the assessment was vacated and that the action was commenced upon the. 18th 'of December, 1877, which was more than six years after the cause of action accrued, namely, upon the day the' order was entered vacating the assessment. But the statute requires, in reference to claims against the city of New York, that demand in writing should be made upon it, and prohibits the commencement of any action for a period of at least thirty days after the written demand made as suggested. Such a demand was made upon the 17th of November, 1877, which was before the expiration of the six years prescribed by the statute of limitations, and-that circumstance prevented the application of that statute to the detriment of the claimant, for the reason that the law to which reference is made, prohibiting an action until within thirty days after the written presentation of the demand to the comptroller, has the effect of enlarging the statute of limitations necessarily to six years and thirty days. If this were not its effect, and the claimant must begin his proceedings so that the thirty days will form a part of the six years, then the period would be necessarily reduced to five years and eleven months within which he is obliged to commence proceedings to recover his debt against the city. There is nothing in the statute requiring the presentation of the written demand which sustains the conclusion that the legislature designed to shorten the period ; and as the service of notice is the beginning of the proceeding to enforce the claim, and therefore a quasi summons or legal process, it seems to follow as a necessary legal sequence that the service of the demand by the claimant within the period of six years after the claim arises, must prevent the application of the statute to his prejudice.

For these reasons it is thought the j ndgment should be reversed and a new trial ordered, with costs to abide the event.

Daniels, J., concurred.

Davis, P. J.:

The court below did not dismiss the complaint on the ground that the cause of action was barred by the statute of limitations. That question is not before us for adjudication. It will fully and fairly arise upon the new trial.

I am not prepared to concur in what is said by Bkadt, J., in the opinion on that subject, and as the discussion or decision of that question is not necessary to dispose of the case on this appeal, I think the question of the statute of limitations should be reserved and not now disposed of.

Judgment reversed, new trial ordered, costs.to abide event.


author: Davis, P. J.: Brady, J.: Daniels, J.

text:
    GEORGE H. RICHARDSON and C. AMORY STEVENS, Appellants, v. JAMES M. HERRON, JAMES H. SPENCER and HORACE K. THURBER, Respondents.

      General assignment — 1877, chap. 406, as amended by chapter 828 of 1884 — it cannot be attacked, for a defect which does not injure the complainant — it is not invalidated by reason of its containing no provision giving a preference to wages of employees.

    In this action, brought by judgment creditors of a firm to have a general assignment made by it for the benefit of creditors declared void, the complaint alleged that “ as plaintiffs are informed and believe the said James M. Herron and James H. Spencer were at the time of the execution of said assignment indebted to sundry persons for wages and salaries actually owing to such employees of said defendants, and that such wages and salaries were not preferred in said assignment before any other debts of said defendants as required by law, but that said assigned property and its proceeds was applied by said assignment to the payment of other debts of said defendants in priority to said wages and salaries, and these plaintiffs further allege on information and belief that said assignment is fraudulent and void.”
    The plaintiffs were not employees of the said firm, nor did the complaint state the amount of such wages and salaries so due, nor the names of the persons to whom the same were owing.

      Held, that as the failure of the assignors to give a preference to the wages and salaries of employees ivas not an injury, but a benefit to the plaintiffs, they could not object to the omission of the preference therefrom, and that a demurrer interposed to the complaint upon the ground that it did not state facts sufficient to constitute a cause of action should be sustained. (Daniels, J., dissenting.)
    In amending section 29 of chapter 466 of 1877, by chapter 828 of 1884, so as to direct that “in all assignments made in pursuance of this act, the wages or salaries actually owing to the employees of the assignor or assignors at the time of the execution of the assignment shall be preferred before any other debt," it was intended to secure a preference of the wages or salaries actually owing to employees of persons who made an assignment under the act, whether such preference was or ivas not expressed in the assignment, and the omission therefrom of a clause expressly preferring the same does not invalidate the assignment. (Daniels, J., dissenting.)
    Appeal from a judgment, entered upon an order sustaining a demurrer interposed to the complaint.

      James M. Bishop, for the appellants.

      More, Aplington <& More, for the respondents.
   Davis, P. J.:

The demurrer in this case presents but a single question, and that is whether an assignment for the benefit of creditors is void when the assignor owes any wages or salaries, at the time of the execution of the assignment, to any person or persons in his employment, because such wages or salaries are not preferred in and by the instrument of assignment before any other debt owing by the assignor.

In this case the complaint alleges that the assignors, at the time of the execution of the assignment, were indebted to sundry persons for wages and salaries actually owing to them without specifying any person or employee. The plaintiffs were not employees of the assignors, but had recovered a judgment against them as general creditors and not for wages or salaries. The court at Special Term disposed of this question upon the single ground that the plaintiffs, cannot avoid the assignment if the alleged illegality benefits instead of injuring them. On this question the court pronounced the following opinion:

Andrews, J.— The assignment which it is sought to set aside transferred property of the value of over $90,000. The plaintiffs have obtained a judgment against the defendants Herron ¿s Spencer, who were the assignors, for $2,912.68, and seels in this action to have such assignment set aside upon the sole ground that it is void, because wages and salaries owing to employees of the assignors were not preferred in the assignment as required by chapter 328 of the Laws of 1881.

The plaintiffs were not employees of the defendants Herron & Spencer, nor does the complaint state the' amount of such wages and salaries nor the persons 'to whom the same was owing. The complaint merely- alleges that, “as plaintiffs are informed and believe, the said James M. Herron and James H. Spencer were, at the time of the execution of said assignment, indebted to sundry persons for wages and salaries actually owing to such as employees of said defendants, and that such wages and salaries were not preferred in said assignment before any other debts of said defendants as required by law, but that said assigned property and its proceeds was applied by said assignment to the payment of other debts of said defendants in priority to said wages and salaries; and these plaintiffs further allege, on information and belief, that said assignment is fraudulent and void.”

No facts tending to show that the assignment is fraudulent or void are stated, except those set forth in the above quotation, and those might be true if wages and salaries wére owing when the assignment was made, to two employees, and to an amount not exceeding five dollars each.

The ground upon which the assignment is attached is therefore, so far as the plaintiffs are concerned, a technical one, and as they are not employees, it seems to me to be a fatal objection to the maintenance of the action that the plaintiffs are not injured by the failure of the assignors to make such employees preferred creditors. It is undoubtedly true that assignments have been set aside upon grounds more or less technical.

In Rennie v. Bean (24 Hun, 123) the assignment was executed and delivered to the assignee, who orally accepted the -trust, but the provision of the act of 1877, “that the assent of the assignee, subscribed and acknowledged by him, shall appear in writing,” was not complied with, and thi^ was held to invalidate the assignment, and the failure to observe various other requirements of the statute have been held to render the assignment void.

Objections to the validity of an assignment based upon grounds of this character are available to every creditor of the assignor, because they go to the validity of the assignment as a whole, but where a particular class of creditors, or a particular creditor, is prejudiced by some provision of an assignment, no one but the person or persons injured or defrauded can avoid the assignment on that ground. (Fox v. Heath, 16 Abb., 163; Morrison v. Atwell, 9 Bosw., 503; Scott v. Guthrie, 10 id., 408; Powers v. Graydon, Id., 630.)

The general rule on the subject, and the one which I think is' decisive of this case, is clearly stated by the learned counsel for the plaintiffs in section 219 of his very excellent treatise on insolvent debtors, as follows: “A creditor cannot avoid an assignment because it is illegal, if it benefits instead of injures him.” (Citing Fox v. Heath, supra, and other cases.) “No creditor but the one who is hindered, delayed or defrauded by the provision complained of can assail the instrument on that account. Thus, where a general assignment by a general partnership gives preference to the payment of the partnership debts, a creditor of the partnership cannot have the assignment set aside as void, because its provisions as to the subsequent payment of creditors of individual partners contain a direction calculated to hinder and delay them.” (Citing Morrison v. Atwell, Scott v. Guthrie, and Powers v. Graydon, supra.)

The failure of the assignors to give a preference to the wages and salaries of employees is not an injury but a benefit to the. plaintiffs in this action, and in my opinion it is an objection to the assignment, which is available to no one but such employees themselves. The demurrer to the complaint must be sustained.”

In our judgment this opinion disposes correctly of the issue upon the demurrer on the ground which it discusses.

Hut there is, we think, still another ground fatal to the plaintiffs. The question arises under section 29 of chapter 466 of the Laws of 1877, as amended by chapter 328 of the Laws of 1884. That section, as amended, reads as follows :

“ Sec. 29. In all assignments, made in pursuance of this act, the wages or salaries actually owing to the employees of the assignor or assignors, at the time of the execution of the assignment, shall be preferred before any other debt; and should the assets of the assignor or assignors not be sufficient to pay in full all the claims preferred, pursuant to this section, they shall be applied to the payment of the same pro rata to the amount of each claim.”

This statute is to have a reasonable construction: Its object and purpose are to secure a preference of the wages or salaries actually owing to employees of persons who make assignments under the act. ■The preference thus given is manifestly designed to be a statutory one and to be effective in all cases where assignments are made under the act, whether expressed in the body of the instrument or not. The section is to be read as though its words were: In cases of all assignments ” or whenever assignments are made in pursuance of this act the wages or salaries * * * shall be preferred before any other debt.”

It was not the design of the legislature to declare any assignment, which did not in its body prefer wages or salaries actually owing, to be absolutely void for all purposes, but rather to declare that such .wages or salaries, whether in terms preferred or not, should be paid out of the assets of the assignor before any other debt. The manifest intent being to give an absolute preference in administration to such wages or salaries, the legislature could not have intended to provide that if such wages or salaries were not actually preferred in the instrument, any general creditor might, for that reason, avoid the assignment and seize the assets for his own benefit and thus wholly defeat the payment of such wages or salaries. The effect of the plaintiffs’ attack upon the assignment, if successful in this case, will of course accomplish that very thing, and instead of insuring protection to the wages or salaries actually owing to employees, will defeat or prevent their payment and thus overthrow the scheme of the statute. It was not the object of the legislature to give such an opportunity or right to general creditors, but to impose upon the assignee the duty of paying out of the assets of the assignee such wages in full in preference to any other debt, and that manifest intent ought to be sustained if practicable by the courts. That intent can only be completely carried out by holding that it attaches to the assets a statutory lien which neither the assignee, nor the assignor nor any creditor can 'defeat. But to hold that the failure of the party to express this preference in the assignment itself wholly defeats it, is to thwart the effort of the legislature to secure the payment of such wages or salaries under all circumstances when an assignment is made. The intention is well illustrated by reference to the provisions of the statutes of the United States, which declare that whenever any person indebted to the United States is insolvent the debts due to the United States shall be first satisfied, and the priority hereby established shall extend as well to cases in which a debtor, not having sufficient property to pay all his debts, makes a voluntary assignment thereof. (Stat. of the U. S., § 3466.)

There can be no reasonable question, we think, of the power of the legislature by statute to make the provision intended to be made by the amendment passed in 1SS4, and we can conceive of no good reason why the courts should not carry out the provisions of the statute according to its manifest intent. A contrary construction, though plausibly justified by the language of the section, would clearly, in many cases totally, defeat the object of the legislature. The spirit of the maxim “ qui haeret in litera haeret in eortiee ” would be strikingly exemplified by such a literal construction, inasmuch as it would lead to results manifestly fatal to the legislative intent. Every assignment made by a debtor or by a firm composed of many persons would be open to the inquiry by mousing creditors, whether the assignor or assignors had not some indebtedness for wages or salaries actually owing ” (they need not even be due) to some employee either in his or their business, or to a domestic servant in his household; and the existence of a single dollar or cent of such indebtedness, not preferred in the body of the assignment, must be fatal to its validity, though such fatality deprives his servant of his or her pay for the benefit of another creditor whom the statute does not intend to prefer. This would lead to litigations to determine whether or not the assigning creditor did or did not, at the time of making his assignment, owe some trifling debt to an employee or to a domestic servant, but unknown to him because tlie mistress of tlie household regulates such affairs, or forgotten at the moment, in which litigation the employee or servant would not be a party, but may, by his or her testimony, be compelled to defeat the assingment and thus lose the plain statutory preference which the legislature intended to give.

If so strict a construction is to prevail, then of course it might be held, under the twenty-ninth section, that the language “ in all assignments,” * * * the wages or salaries, * * * “ shall be preferred before any other debt,” fixes the order in which preferences must appear in the assignment, and that not placing them first in order the assignment is fatal to its validity; but such a strict construction would be intolerable.

This provision applies to all assignments made under the act whether preferences are made or not. Where a debtor assigns all his property for the benefit of his creditors to be equally distributed, will it be contended that a failure to prefer debts for wages or salaries to employees in such an instrument makes the assignment void. Yet such must be the effect if the strict construction claimed for the section be allowed, or will it be said that the preference to wages is only given where some other debt is preferred in order to answer tlie language “ shall be preferred before any other debt.” That would be an absurd ground on which to defeat the assignment; yet, unless we hold that the preference is statutory and attaches to all cases, the manifest object of the legislature is thwarted if a general creditor can defeat all assignments that do not, in so many words, make a preference of wages.

It is supposed that this question is in some way analogous to the provision of section 1 of the act, requiring such assignments to be acknowledged by the assignors, etc , in order to be valid. The failure to comply with that requirement has been held .to invalidate the instrument. (Hardmann v. Bowen, 39 N. Y., 196; Britton v. Lorenz, 45 id., 51.) But there is no analogy between the questions. The one prescribes a form or mode of execution of the instrument which must be complied with, or it cannot be delivered as a valid assignment. Without compliance in some sufficient form with that specific requirement there is no assignment. But in the case before us the instrument is valid and complete in form and mode of execution. The question is quite dehors the instrument itself and arises wholly upon an extrinsic fact, which is a subject of proof outside of the instrument, and must depend upon facts to be established by litigation. The cases cited, therefore, have no legitimate bearing upon the controversy of this appeal. It has long been settled that where a statute prescribes that the execution of an instrument must be evidenced in a particular mode or form, as in case of wills, deeds of married women, etc., the specified mode must be substantially complied with, or the instrument is invalid for want of legal execution.

But in this case the object of the statute is not to prescribe a form, but to secure protection to a particular kind of indebtedness — not to defeat an assignment, but to impress upon every one a special preference; and it needs no argument to show that that object Í3 far more effectually secured by the direct force of a statute than by the provisions of an assignment. The law, therefore, by a just and sensible construction of section 29, provides for the benefit of all classes of employees of an assignor, protection for his or her wages or salaries in preference of any other indebtedness, without regard to the form of the assignment. This the legislature intended to do; and did not design to set a trap, for the benefit of general creditors, to enable them to destroy an assignment because such debts had not been preferred in its body in so many words.

For these reasons also, as well as those so well expressed in the opinion of the court below, the judgment should be affirmed.

Brady, J.:

The design of the amendment of section 29 by the act of 1884 •was to secure the payment of wages and salaries, and the law became a part of the assignment by legal and legislative intendment whether referred to or not, so as to impose upon the assignee the imperative duty of paying such wages and salaries first out of the assets. If, as suggested by Davis, P. J., the omission in the assignment to prefer them invalidates it, the protection sought is lost and the creditor reaps the benefit. I agree, therefore, with him.

Daniels, J.

(dissenting):

The plaintiffs brought this action as judgment creditors of James II. Herron and another, to obtain a judgment declaring a general assignment void, which the debtors made for the benefit of their creditors. The objection taken to the assignment is that it failed to comply with the direction contained in chapter 328 of the Laws of 1884, and that they owed debts entitled to be protected under that act. This act is an amendment to chapter 466 of the Laws of 1877, relating to assignments made by debtors for the benefit of their creditors and it is directed in it that in all assignments made in pursuance of this act, the wages or salaries actually owing to the employees of the assignor or assignors at the time of the execution of the assignment, shall be preferred before any other debt,” this language is entirely plain and free from all possible ambiguity. And accordingly it is required to be construed just as the legislature has used it in the enactment of this direction. For the rule of construction is settled by authority, when the language of an act may be plain and clear having a precise or definite meaning, that it shall be construed and carried into effect according to the import of its language. (Johnson v. Hudson River R. R. Co., 49 N. Y., 455; Benton v. Wickwire, 54 id., 226.)

The courts, therefore, have no discretion upon this subject and cannot substitute for what the law has directed to be done any other device securing the same end. The language of the act is that this preference “ shall be” in all assignments. The direction is mandatory that it shall be so made and it carries with it a plain implication that no assignment for the benefit of creditors shall be otherwise made. The language of section 2 of the act amended by this act directing that every assignment for the benefit of creditors shall be duly acknowledged before an officer authorized to take the acknowledgment of deeds, is no more explicit or mandatory than this direction that all assignments shall contain a preference of the wages or salaries owing to the employees of the assignors.

It was enacted in similar language by which the legislature declared that the assignment shall be duly acknowledged, as it is in the act of 1884 declared that these debts shall be preferred in all assignments.

A compliance with the direction made for the acknowledgment of the assignment has been held to be essential to the legal validity of the instrument itself. This construction and effect was given to the same direction contained in section 1 of chapter 348 of the Laws of 1860, which was -repealed by the act of 1877. Upon this sub* ject the language in each of the acts was exactly the same, and in considering its effect as it was employed in the act of 1860, it was held where the assignment was not acknowledged, that it was ineffectual and void. (Hardmann v. Bowen, 39 N. Y., 196.) And that was approved in Britton v. Lorenz (45 id., 51), and followed in Montfort v. Montfort (24 Hun, 120). And as the language of the act of 1884 is no more imperative but similar in its terms so far as it directs what shall be done, as that directing the .acknowledging of the assignment, these authorities require the same ■rule to be applied and followed, as they have applied to the direction for the acknowledging of the assignment. What was said in the ■opinion of the first case referred to, concerning the necessity of a ■compliance with a direction for the acknowledging of the assignment -is equally as applicable to the act of 1884. It was there held by the court that the direction that an assignment shall be acknowledged -contains “ a clear negative against an assignment being made in any other way.” And “ when the statute declares in terms that every assignment; shall be acknowledged before delivery, it by necessary implication provides that no assignment shall be delivered without .acknowledgment,” and as the assignment then in controversy liad not been.acknowledged it was held to be void. The preference required to be given by the act of 1884 is to be inserted in the ■.assignment. The act declares that “ in all assignments ” these wages or salaries” “shall be preferred before any other debt.” "That preference has been provided to render the assignment complete, and must precede its execution and acknowledgment. It «cannot lawfully be made without containing this preference. It is ■true that the legislature might have secured the same result by ■directing the assignee in the first instance to pay all such debts, but that it was not deemed proper to do. It took the other course, and ■•directed that the preference should be made in the assignment, and •by that direction and the implication to be derived from it, prohibited the assignment from being made in any other manner. By failing to observe the statutory direction the assignment was not imade as the law directed it should be, but it has violated the express provision of this statute, and being made in violation of law it ■.follows that it did not become operative as an assignment of the ■debtors property.

The persons designed to be protected by the statute will not be deprived of their rights to payment by this construction and enforcement of it, for they will be at full liberty to avail themselves of all legal proceedings to obtain the payment of the debts due to them out of the property of their debtors. That is the common right of all creditors which the statute did not intend pn any manner to interfere with. It went no farther than to impose this obligation upon the debtors, in case they made a general assignment. If the debtors attempted to do that, they could legally do it in no other manner than by complying with the direction contained in the law. They failed, to do that, and their assignment was necessarily void, and that entitled the plaintiffs as judgment creditors to appropriate the assigned property so far as it may be necessary to the payment of their judgment.

The judgment should be reversed, and a judgment entered overruling the demurrer to the complaint, with leave to the defendants to answer in twenty days on payment of the costs of the appeal, and of.the demurrer.

Judgment affirmed.


author: Brady, J.:

text:
    JAMES E. HELLER and Others, Appellants, v. THE ALLENTOWN MANUFACTURING COMPANY, Respondent.

      Contract for the sale of merchandize by weight — when the certificate as to the weight, by a person specified in the contract binds the purchaser.

    In an action, brought upon a promissory note, a counter-claim for damages was interposed by the defendant, founded upon a written agreement by which the plaintiff sold to the defendant ‘‘three hundred to four hundred tons raw kainit, * * * to be shipped in bulk from German ports to the port of New York, during the months of April and May, 1883, at seven dollars and twenty-five cents ($7.25) per ton, of two thousand two hundred and forty American pounds, on foreign invoice weights. Terms cash against German analysis and European weight return on delivery of goods ex-vessel at New York.”
    It appeared upon the trial that kainit was taken from a mine in Germany which belonged to the government and shipped from aplace called Staasfurt; that the plaintiff had purchased 320 tons of kainit, and paid for that amount through a banking-house; that they understood that amount hadbeen shipped to New Y ork, and had received from the defendant, upon the presentation of the papers specified in the contract, its note for that amount; that upon the arrival of the kainit a shortage of eighty-five tons was discovered, for which the defendant interposed the counter-claim.
    Witnesses called by the plaintiff testified, without objection or contradiction on the part of the defendant, that they were accustomed to deal in kainit and that the words “ cash against German analysis and European weight return ” meant cash on the presentation of the documents showing the cost of insurance and freight and the quantity shipped.

      Held, that the counter-claim could not be sustained as the defendant was concluded by the contract from controverting the facts stated in the papers therein specified.
    Appeal from a judgment in favor of the defendant, entered upon the verdict of a jury, and from' an order denying a motion for a new trial, made upon the minutes of the justice before whom the action was tried.

      Lewis. Johnson, for the appellants.

      Benjamin F. Dos Passos, for the respondent.
   Brady, J.:

This action was brought upon a promissory note. The defense was a counter-claim for damages growing out of the failure of the plaintiffs to perform their agreement for the delivery of 320 tons of kainit, and which contract is as follows :

“New York, April 20, 1883.
“We have this day sold to the Allentown Manufacturing Company, of Allentown, Pa., about 300 to 400 tons raw kainit, guaranteed not less than 23$ sulphate of potash, by foreign analysis, to be shipped in bulk from German ports to the port of New York, during the months of April and May, 1883, at seven dollars and twenty-five cents ($7.25) per ton of 2,240 American pounds, on foreign invoice weights.
“ Terms cash against German analysis and European weight return oil delivery of goods ex-vessel at New York; goods to be taken from alongside as soon as vessel is ready to discharge.
“HELLER, HIRSCH & CO.
“Accepted, Allentown, Pa., April 24,1883.
“THE ALLENTOWN M’E’G CO.,
“A. J. Brening, TreasP

It appeared upon tlie trial that the kainit was shipped at a place called Staasfurt, in Germany, and that the mine there from which it was taken belonged to that government. The process of loading and transporting it to Hamburg is deseribed by one of the plaintiffs’ witnesses.

It also appears that the plaintiffs purchased the kainit for delivery to the defendant, and paid for it through the house of Lazard Frere, who have a banking house in this city, and also in London and in Paris. The quantity paid for by them was 320 tons, which was the amount they understood was delivered and for which they were paid by the defendant, as per contract.

When the news of the arrival of the kainit was sent to the defendant it was so paid for on the supposition that 320 tons were secured and ready for delivery. When it finally reached its des tination, having been taken away from the vessel in which it was transported to this country, a shortage of eighty-five tons was discovered, and it was this shortage that was set up as a counter-claim against the promissory note sued upon herein, it thus appears that the plaintiffs paid for 320 tons of kainit which was to be shipped from Germany, and charged the defendant for that quantity, and for which payment was made as already stated.

The plaintiffs insist that although there may have been a shortage, and assuming that the verdict of the jury upon that subject was conclusive, yet, nevertheless, under the terms of the contract, they are relieved from any personal responsibility on the subject. The contract, as will have been seen, provides for the payment of seven dollars and twenty-five cents per ton upon “ foreign invoice weight,” terms “ cash against German analysis and European weight return.” And the papers having been received and put in evidence showing the German analysis and the European weight return, and such weight return showing 320 tons, it is insisted that the defendant was bound by the weights indicated by the foreign invoice and the European weight return. We do not see how this can be questioned. The kainit, as we have already discovered, was taken from a government mine in Germany and transported to Hamburg, there to be shipped to this country, and the plaintiffs doubtless knowing or believing they should be bound by the foreign weight in the payment of their purchase for this market, made the contract set up and from which it appears they contracted on foreign invoice weights, German analysis and European weight return, according to which the defendant was to pay. Of course they had a right to make such a contract to protect themselves against any shortage that might occur without their fault, and, 'therefore, they accepted the papers establishing the fact of foreign weight and German analysis, and paid according to the weight proved, as already stated, by such papers which had been received, and charged the defendant accordingly.

Indeed this meaning or interpretation of the contract was proved, and without objection, by witnesses called on 'behalf of the plaintiff. Mr. White said he was accustomed to transactions of purchase and sale of kainit with foreign houses, and that the words “cash against German analysis and European weight return ” meant cash on the presentation of the documents and showing the cost of insurance and freight paid, and showing that such quantity had been shipped as stated.

Mr. Weidinger also testified that he had been engaged in the business of fertilizers for a number of years, and was accustomed to transactions in kainit salts on foreign purchases, and that the ■words “ cash against German analysis and European weight return ” meant that cash is to be paid on the presentation of the foreign invoice and the European return, and other papers that may be mentioned in the contract. And James E. Heller, one of the plaintiffs, and who in the course of his evidence produced the documents relating to the weight and analysis, was asked what the words “cash against German analysis and European return weight” meant, and he said : “ The meaning is, that the cash is to be paid on the delivery of these documents to the buyer with the goods, ex-vessel.”

It would thus appear, according to the custom in reference to such contracts and their interpretation in commercial life, that tli¿ buyer takes the risk and not the seller, in the absence, of course, of any fraudulent' practices on the part of the vendor by which the quantity is diminished. Here there is no evidence to justify the conclusion that any portion of the kainit shipped for delivery to complete the contract made between the parties was lost on shipboard, or in any other way through the fault of the plaintiffs. The application of such a rule as this would seem to be harsh, but it is required by the terms of the contract, the interpretation of it by persons familiar with the subject and the terms employed in it, and therefore the responsibilities and dangers are assumed by the vendee. "When the intention of the parties is clearly expressed, every court is bound by it, however capricious it' may be. (Chitty on Cont. [8th Am. ed.], 87.)

If this conclusion were not considered controlling, the judgment would have to be affirmed, inasmuch as the jury have passed upon the question of shortage upon testimony, perhaps, to some extent, in conflict, but abundantly sufficient to justify the conclusion that there was a shortage to the extent they have declared it to exist. This case is, therefore, disposed of upon a construction of the contract against the right of the defendant to assail the German analysis and foreign weight, as disclosed by the documents received and proved upon the trial, and more particularly as it is shown the plaintiffs themselves paid for the quantity which they declared to have been purchased and transported on account of the contract.

It is contended on behalf of the defendant that the plaintiffs were bound to establish by competent evidence, aliunde the documents, that 320 tons of kainit were actually loaded upon the Paulina, the vessel in which the kainit was carried to this country, and that neither the ship’s papers nor the foreign weight nor the bills of lading prove the fact. But it is quite clear, from what has already been stated, that the defendant bound itself to accept the papers which "were received by the plaintiffs in consequence of the peculiar character of the contract. The defendant estopped itself from contesting, under the terms of the contract, the analysis of weight indicated by the foreign documents, and upon which the plaintiffs themselves acted in the payment of the kainit as to quantity and quality.

Diligent search has been made to find an adjudication illustrative of this particular contract but none has been found, and indeed none was suggested by the respective counsel whose briefs indicate research; and, therefore, the disposition of the case is a matter of impressions as to the contract, its meaning, force and the obligations and burdens assumed by its terms by both parties. It should be noted that the defendant offered no evidence to show that the meaning of the words “ cash against German analysis and European weight leturn” was not as was stated by the plaintiffs’ witnesses, and, therefore, there was no conflict upon that subject; indeed, the testimony is all one way.

The request to charge upon this interpretation of the contract, which was refused was, for the reasons stated, erroneous. The construction of the contract herein adopted was one insisted upon at the trial but rejected, and the plaintiffs protected their rights by proper exceptions.

For these reasons the judgment should be reversed and a new trial ordered, with costs to abide the event.

Davis, P. J., and Daniels, J., concurred.

Judgment reversed, new trial ordered, costs to abide event.


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    JOHN HILLS and WILLIAM HILLS, Respondents, v. THE RHENISH WESTFALIAN LLOYD TRANSPORT INSURANCE COMPANY, Appellant.

      Construction of a policy of marine insurance.

    This action was brought upon a policy of insurance issued by the defendant to recover for the loss of fifty casks of prunes, forty-seven of which were destroyed by the sinking of a lighter which was conveying them from Hamburg to a steamer which was to convey them to New York. The policy, most of the provisions of which were printed, had written thereon among other provisions, one by which the defendant insured the plaintiffs on account of “ whom it may concern to cover all shipments made under letters of credit issued to them by Brown Bros. & Co..” * * * at and from “ports and places * * * in Europe, generally, to New York and to Atlantic ports in the United States, direct or by port or ports with privilege of transhipment per steamer, sailing vessels and other conveyances, including aU risks of lighterage, one-half (J) interest in dried fruits or other merchandise. Bach kind of goods separately. Dried fruits and other merchandise by steamer to be insured free from particular average unless the vessel be stranded, sunk, burned or in collision."

    The defendant claimed that the words “ including all risks of lighterage,” when taken in connection with the other italicized words, made the insurance from Hamburg to New York, including the lighterage risk, warranted free from particular average unless the vessel was stranded, etc.

      Held, tliat this claim was untenable; that a due consideration of these provisions showed that the words “all risks of lighterage” meant any loss, partial or total, by lighterage, while the loss by steamer was limited and to be free from particular average.
    Appeal from an interlocutory judgment overruling the defendant’s demurrer to the complaint.
    The only objection to the complaint specified in the demurrer is that it does not state facts sufficient to constitute a cause of action. The complaint stated, in substance, that at the times therein mentioned the plaintiffs were partners in business in the city of New "York under the firm name of Hills Brothers, and that the defendant was a foreign corporation doing business in the same city under the name given above, and also under the name of the Rhenish Westfaliau Lloyd Marine and Inland Navigation Company; that the defendant, in consideration of the plaintiffs’ promiso to pay premiums, did by a certain policy of insurance, a copy of which is annexed to the complaint, promise to pay the plaintiffs one-half of all loss and damage accruing to them by reason of the injury or destruction of any goods shipped by means of letters of credit issued to them by Brown Brothers & Co. at and from all ports and places in Europe to New York; that the plaintiffs were the owners of the goods mentioned in the complaint and had an insurable interest therein ; that by the express terms and intent of the policy the defendant not only promised to pay one-half of such damage when caused by the perils of the sea, but the policy also included all risks, dangers, damage or loss happening to the goods from loading or transporting in any lighter, or from the damage or destruction of any lighter engaged in the necessary transporting of the said goods; that the policy was executed within this State; that on October 6, 18S1, by means of such letters of credit the plaintiffs caused to be shipped from Budapesth fifty casks of prunes to be transported by rail to Hamburg, and there transferred to the steamship “ Wieland ” which was plying between Hamburg and New York, the port or destination of said goods; that the invoice price of the said goods was £808 7s. 7d., and that their value by the terms of the policy was $4,040; that on October 17, 1881, forty-seven of the said fifty casks, after their safe arrival at Hamburg, were laden in good order and condition on board a lighter, which was then in a sound and seaworthy condition, for the purpose of being transported to the said steamship, but in consequence of the lateness of the hour the lighter was unable to transport them to the steamship and was intrusted to a guardship and watcher and all due care and precaution were exerted for her safety that night; that about midnight, despite the efforts and exertions of the watchers, the lighter 'did, as a result of the lighterage risks and dangers insured against in the said policy, then and there sink and fill, with all the said goods of the plaintiffs on board; that the three other casks were received in New York, but by the submersion in the ocean there was an entire loss of the forty-seven casks, and of more than fifty per cent of the value of the original shipment, and that the plaintiffs, after giving due notice to the defendant of the loss of the goods and their interest therein, abandoned to the defendant all their right, title and interest in and to the whole shipment of fifty casks; that the plaintiffs thereafter paid the defendant twenty-four dollars and twenty-four cents as premium of insurance on such shipment, and that the plaintiffs have duly performed all the other conditions of the said policy on their part, and demanded on the twenty-fifty day of October, 1881, payment of one-lialf the value of said goods, viz., $2,020, of the defendant in accordance with the terms of the said policy, and that the defendant then refused, and has ever since, although repeatedly besoughi, refused to pay that sum or any part thereof. The complaint demands judgment against the defendant for $2,020, with interest from October 25, 1881, and costs.
    The material provisions of the policy are as follows, the written parts being in italics and the printed'in roman type:
    “By the Rhenish "Westfalian Lloyd Marine and Inland Navigation Insurance Company, * * * Hills Bros., on account of “ Whom it may concern, to cover dll shipments made under letters of credit issued to them by Brown Bros. <& Co. •

    “ In case of loss to be paid in to them.

    “ Do make insurance, and cause to be insured, lost or not lost, at and from ports and places * * * in Europe generally, to New York and to Atlantic ports in the United States, direct or by port or forts, with- privilege of transhipment per steamers, sailing vessels and other conveyances, including all risks of lighterage, one-half (^) interest in dried fruits and other merchandise. Each kvnd

      of goods separately. Dried fruits and other merchandise by steamer, to be msured free from, particular average, unless the vessel be stranded, sunk, burned or in collision. Shipments of dried fruits by sailing vessels to be subject to ten per-cent particulur average on each invoice unless otherwise agreed upon at time of indorsement. * * * The remainder of the policy is in the usual marine policy form.

      JE. S. Hubble, for the appellant.

      Henry J. Scudder, for the respondents.
   Brady, J.:

The policy on which this action was brought is an open one, and the question presented arises upon the written clauses. The defendant contended that the words “ including all risks of lighterage ” taken in connection with the clause that “ dried fruits and other merchandise by steamer to be insured free from particular average unless the vessel be stranded, sunk, burned or in collision,” make the insurance secured one on fifty casks of prunes per steamship Wieland from Hamburg to New York, including lighter-age risk, warranted free from particular average unless the vessel be stranded, etc., and insists that if the insurance per steamer is against total loss only, the goods while on the lighters are only insured to the same extent.

This amalgamation of the two clauses does violence to the distinction between the risks assumed as expressed in the policy by its terms and as clearly intended. The underwriters undoubtedly knew what risks they proposed to take, particularly as the obligations were written in the policy and had an especial emphasis therefore. It will have been perceived that the policy makes the insurance from places in Europe to Atlantic ports in the United States direct or by port or ports, with privilege of transhipment for steamers, sailing vessels and other conveyances including all risks of lighterage.” There is no suggestion of partial or total loss or general or particular average as to lighters. Indeed the language relating to them is as broad and comprehensive as it can be “ all risks of lighterage.” The provision subsequently made for dried fruits does not relate to lighters in terms, but to such fruits and other merchandise by steamer, to be insured free from particular average. The result of a due consideration of the provisions relative to each other therefore is that the words “all risks of lighterage ” mean any loss partial or total, by lighterage, while the loss by steamer is limited and to be free from particular average.

This view gives to the language employed its ordinary meaning and carries out the familiar principle that in construing policies of insurance the words used must be taken in their ordinary sense as commonly used and understood, and if the sense in which they were used is uncertain, as they are found in a contract prepared and executed by the insurer they should be construed most favorably to the insured. (Herman v. Merchants Ins. Co., 81 N. Y., 184, 188.) This construction suggested is not however without authority to sustain it. In Goix v. Knox (1 Johns. Cas., 337) the words “against all risks” were held to cover all losses except those occasioned by the 'fraud of the insured. And that case was followed by Skidmore v. Desdoity (2 id., 77) again expressing the effect of such words.

In Anthony v. Ætna Insurance Company (1 Abb. [U. S.] Rep, 343) it was said that the words “ usual risk of lighterage at Ontonagon,” which was in addition to the ordinary lake risks and perils were sufficient to authorize a recovery although it was not considered necessary for the plaintiff’s success to invoke their power. It is true that the case of Goix v. Knox was reversed (see Goix v. Low, 2 Johns. Cas., 480), but for a reason which did not in any way affect the proposition enunciated predicate of the effect of the words “ against all risks.” (See, also, Lane v. Nixon L. R., 1 C. P., 412.) The cases of Morean v. United States Insurance Company (1 Wheat., 219) and Wadsworth v. Pacific Insurance Company (4 Wend., 33) cited by the defendants’ counsel, are not in any respect in conflict with the rule declared. Both of them relate to memorandum articles as to which the insurer agreed to pay for a total loss only, and which here is subordinate to the written part in regard to lighterage risks. And Chadsey v. Guion (97 N. Y., 333) was disposed of on the ground that the insurance secured was upon a proper construction of the policy on the whole shipment, and therefore a part of it having been delivered, the remainder was not covered by its terms. The defendants’ contention cannot, for these reasons be adopted.

The allegations in the complaint as to the loss of goods and notice of sueli loss and as to the demand, are regarded as sufficient for the purpose for which they were inserted. (Code, § 533.) It may be. as suggested, that the demand made upon the defendants within the thirty days allowed them by the policy for payment was premature, but it is cured by the allegations of repeated requests subsequently made in accordance with the terms of the policy, and the fact that this action was not commenced until more than a year had expired from the time the loss occurred. Whether the plaintiffs can recover for a total loss must depend upon the fact-s established upon the trial. The allegation in the complaint relative to that subject is sufficient to put the defendants to their answer. Indeed, it must be said that the only question of serious import here, if any exist, springs out of the phrase “ including all risks of lighterage.” The others depend upon proof to be made.

The judgment should be affirmed, with costs, with liberty to the defendants, however, to appear and answer on payment of costs.

Daniels, J., concurred ; Davis, P. J., concurred in the result.

Judgment affirmed, with costs, with liberty to the defendants to answer on payment of costs.