text:
    Frank E. Kinsman, App’lt, v. Harvey Edward Fisk et al., Resp’ts.

      (Supreme Court, General Term, First Department,

      Filed January 18, 1895.)

    Corporations—Pledge.
    A pledge by a corporation to secure a loan made to it is none the less valid because one of its directors induced his firm to make such loan when no one else would make it.
    Appeal from an order denying a motion to continue an injunction pendente lite.

      Edmund Luis Mooney, for appl’t; Charles Steele and Edward C. Perkins, for resp’ts.
   Parker, J.

The plaintiff sues as a stockholder, in behalf of the defendant company, claiming that an application to the directors to sue would be unavailing. His motion for an injunction pendente lite having been denied, he seeks á review of the decision on this appeal. The defendant the Kinsman Block-System Company, in December, 1893, was without funds to carry on its business, and had incurred obligafions amounting to about $4,000. It had no resources, except its treasury stock, which was unsalable; and it became imperatively necessary that money should be raised in some manner, or else the company must fail. Accordingly, at a meeting of the board of directors held December 21, 1893, it was resolved that the company should endeavor to borrow money oh the pledge of its treasury stock, and the following resolutions were passed:

11 Whereas, in view of the fact that the company has no money in its treasury, and is in immediate need of $4,000 to meet the current bills and settlements; and whereas, in order to prosecute its work, the company will be in need of further advances from time to time, until some paying contracts can be secured: Therefore, be it resolved that the president and treasurer are hereby authorized to pledge all or any part of the treasury ctock for moneys which they may need to borrow for company purposes from time lo time, and that they be, and are hereby, authorized to give the notes of tjie company for such advances, and to sign such notes, and authenticate them with the official seal.”

As the invention had not proved a success, which the corporation was formed to put on the market, and it had no property whatever, except the patents, and had already expended a large sum of money, its stock had no market value, and little, if any, real value. It was only possible, therefore, to obtain a loan from Harvey Fisk & Sons, who were interested, because ttiey had already invested a considerable amount of money in the corporation. They loaned the money bn the company’s demand notes, secured by a pledge of treasury stock. When the $4,000 had been used, more was needed to conduct the experiments, and more was-furnished, under like conditions, until $21,500 had been loaned. After a time the loan was called, but the company could not pay it, although several extensions were given it for the purpose. That Harvey Fisk & Sons were then willing, and still are, to take the money due to them, and surrender the stock, is unquestioned.

The appellant urges, in the first place, that the pledge was void because a director of the defendant company, who participated in the meeting at which the resolution was passed, and was influential in procuring Harvey Fisk & Sons to make the loan, was a member of that firm. While the law looks with disfavor upon contracts made between a director or officer of a corporation and the corporation, because it cannot accurately measure the influence of a 'trustee with his associates, no case has been brought to our attention which, goes so far as to hold that a pledge as collatral for a loan actually made by an officer or director to the corporation is void. .The authorities cited by the appellant, Munson v. Syracuse, G. & C. Railroad Co. 103 N. Y. 59 ; 3 St. Rep. 31; and Hoyle v. Plattsburgh & M. Railroad Co., 54 N Y. 314, certainly do not support his contention. As appears from the resolution which we have quoted, the directors resolved to pledge, as collateral for loans to be made, its1 treasury stock. Harvey Fisk & Sons made the loan, and accepted the pledge. The corporation needed the money and used it. The pledgees have asked merely that the loan be paid. They seek no advantage by the contract of pledge, but simply such protection as it affords. They have on several occasions extended the time of payment, and it appears they are ready and willing to return the stock, if the loan made be paid. It is conceded that the pledge would be valid if made to an outsider. It is none the less valid because a director of the corporation induced his firm” to make a loan which no one else would make. Duncomb v. N.Y., H. & N. Railroad Co., 88 N. Y. 1.

It is further urged that the pledge was invalid because contrary to a certain trust agreement which the parties attempted—but unsuccessfully, as appellant contends—to terminate. It appears that prior to 1892 the plaintiff, being the patentee of certain electrical inventions, and owner of the patents issued therefor, -sought the assistance of Harvey Fisk & Sons in their exploitation. The plaintiff having represented- that the sum of $20,000 would be ample to demonstrate the practicability and usefulness of his invention, Fisk & Sons, on the faith of such representation, agreed to provide that amount by a nominal subscription, at par, for 200 shares of the new company’s stock. The plaintiff was anxious that the Fisks should agree to sell enough of the company’s stock to raise $100,000, but they refused to do so, on the ground that they could not offer such stock to their customers until its value had been practically demonstrated. They accordingly declined to, and did not, assume any obligation whatever, except to advance the sum of $20,000, which the plaintiff had represented was sufficient to demonstrate the value of his patents, and make the company’s stock marketable. The original negotiation contemplated that a certain amount of the new company’s stock should be left in its treasury for working capital; but when the agreement was actually formulated, it was deemed best, instead of returning such stock directly into the company’s treasury, to place it in the name of trustees, so that no question might be raised as to the stock being full paid, and also in order that the plaintiff and the Fisks might obtain a commission on future sales of such stock. Accordingly, the agreement provided for the transfer to this plaintiff and Pliny Fisk, as trustees, 6,940 shares of the stock of the company, upon the following trusts :

“One thousand shares thereof shall be offered for sale by the parties of the second part [Harvey Fisk & Sons] at par, and each subscriber thereto shall receive as a bonus, out of the said sixty-nine hundred and forty share, one other share of stock for each share which he may purchase. Ten per cent, of the proceeds of such sales shall be paid, as received, to the party of the first part, and five per. cent, thereof may be retained by or paid to the parties of the second part as a commission upon such sales. The balance shall be paid over by the said trustees to the treasurer of the corporation, for its own use. All stock in the hands of the trustees, not sold or disposed of as aforesaid, shall be held by the trustees for the use of the said corporation, and, from and after the sale of the said thousand shares, such remaining stock shall be sold by the trustees in such amounts as may be directed by the said corporation ; five per cent, upon the par value of said shares so sold shall be paid, as received, to the party of the first part; the parties of the second part shall receive a commission of five per cent, upon the par value of the stock so sold ; and the balance of the proceeds shall be paid over to the treasurer of the said company, for the use thereof, excepting, however, two hundred and fifty shares,” etc. . “* * * The said trustees shall not vote upon the said stock,oeither personally or by proxy. The said trustees are to receive no compensation for their services as such. In case, by death or otherwise, either of them, or any successor to the said trust, shall cease to be a trustee, a successor may be appointed, in writing, by the said company.”

The company was duly organized, with the plaintiff as president, Harvey Fisk & Sons paid the incorporation tax, paid the subscription of the several original subscribers to the stock, and also paid into the treasury $20,000, less the agreed commissions, as a nominal subscription for 200 shares of stock at par. An opportunity was obtained to place the experimental plant upon the Evanston Division of the St Paul Railroad. The plaintiff undertook the management of the business, but, after spending a great deal of time and a large portion of the company’s funds on the plant, the work resulted unsuccessfully. The Fisks thereupon entered into negotiations with the plaintiff, looking either to his or their withdrawal from the company, in the course of which they offered to sell their stock for the amount of money actually advanced by them to the company. This was not accomplished, but finally an arrangement was made by which the Fisks bought from the plaintiff, for cash, a sufficient amount of his stock to give them a majority of the outstanding stock of the company; and plaintiff, in turn, agreed to resign from the presidency, and accept the place of vice president or consulting engineer, with a salary of $5,000 per year. One of the objects of the new arrangement was the cancellation of the contract of January 14, 1892, which contained the provision relating to the so-called “trust stock,” which we have quoted; and the new agreement accordingly provided that the old contract should be canceled and terminated, except as to the provision reserving foreign rights of patents to the plaintiff. The new contract was fully consummated, and as a part of it, and for the purpose of putting an end to the trust-stock provision, a certificate for such shares, which had previously stood in the name of the plaintiff and one of the Fisks, as trustee, was indorsed by both of them, and transferred to the company, and was by the plaintiff himself surrendered to the company for cancellation ; a new certificate being issued in the name of the company, and placed in the company’s treasury. If it be assumed that the agreement of January 14, 1892, constituted a ¿valid trust, it was terminated on October 11, 1893, by the consent of all parties concerned; the beneficial interest of the company in the stock held by the trustees becoming merged in its legal title, which was acquired by the transfer of the stock. It was a trust which could be terminated by the combined action of the parties creating it,—the trustees and the cestui que trust— if the result aimed at was, as in this case, for the benefit of the cestui que trust. To accomplish that purpose, the parties to the original contract relinquished their right to commissions, the attempted limitations imposed were withdrawn, and so much of the stock as remained passed into the possession and control of the company by transfers duly made. All parties interested ac queisced, and the company proceeded to make use of the stock to meet its necessities. It is true that the company, the beneficiary, was not a formal party to the canceling agreement; but, so far as it was possible for it to do so, it confirmed and ratified the agreement by accepting the surrender of the old trustee certificate, and issuing anew one in its own name, and its acts of acquiescence and ratification were as effectual as if it had been a formal party to the contract. Butterfield v. Cowing, 112 N. Y. 486-491; 21 St. Rep. 500. But if it should be assumed that, as between the trustees and the cestui que trust, the trust agreement was not terminated, and the title to the trust stock vested in the cestui que trust, as we have held, still, the cestui que trust having accepted the stock from the trustees as its own, held it' out to another as such, and requested a loan thereon for its benefit, it cannot allege, in defense of a demand for payment, that the stock does not belong to it. Nor, is the plaintiff, who was a consenting party t» the transaction, through every stage of it, in any better position than the company because ■ he happens to be one of its stockholders. The order should be affirmed, with $10 costs and printing disbursements.

All concur.


source: Caselaw Access Project

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

license: Public Domain

text:
    Henry J. McGuckin, Resp’t, v. Samuel W. Milbank et al., as Executors, etc., App’lts.

      (Supreme Court, General Term, First Department,

      Filed January 18, 1895.)

    1. Mortgage—Foreclosure—Parties.
    In an action to foreclose a prior mortgage, a failure to make the mortgagee in a trust mortgage a party as such trustee does not discharge the lien of the trust mortgage.
    2. Damages—Covenant against incumbrances.
    Under the covenant against incumbrances, where no fraud intervenes, the grantee, where an incumbrance exists which no attempt has been made to enforce, can recover only nominal damages, unless he shall have paid the amount.
    Motion for a new trial on exceptions ordered to be heard at general term in the first instance.
    One Davies, prior to March, 1887, was theowner of lots Nos. 59, 61, 63, 35, 67, and 69 Bast 120th street, New York City. March 9, 1887, he executed and delivered to William A. Cauldwell a mortgage on each of said lots, each of which was given to secure $5,000, or such part as should be advanced towards improving the premises. June 27th following Davies made a further mortgage to George N. Manchester covering the six lots, which mortgage contained a clause, immediately following the description of the property, providing that the mortgage was in trust to secure the payment,.to various individuals therein named, of certain sums, aggregating $5,000. Cauldwell subsequently foreclosed this mortgage, and in the action of foreclosure made George N. Manchester a party, naming him individually and not as trustee. Decrees were entered in all of these foreclosure suits. Subsequently the properties were bought by Cauldwell at the foreclosure, who after-wards sold all the lots to this plaintiff. Plaintiff made no objection to taking the title on the ground that Manchester had been named individually as a defendant in the foreclosure suit, and it does not appear that either of the parties to the conveyance were aware that there was any basis for a claim that Manchester’s mortgage had not been cut off by the foreclosure. After plaintiff had obtained title, he made an application to the Metropolitan Life Insurance Company for a loan of $10,500 upon each of the lots. The loan was made, and thereafter plaintiff sold four of the lots, and as to them there is no controversy. In 1890 the Metropolitan Life Insurance Company commenced suits to foreclose its mortgages on Nos. .65 and 67, which resulted in judgments of foreclosure and sale, bearing date the 28th day of May of that year; the referee’s report of sale being dated October 20, 1890. It does not appear that at the sales the attention of any one was called to the fact that George N. Manchester was made a party defendant individually, and not as trustee in the Cauldwell foreclosure, and, so far as we are advised by the record, it does not appear that such fact was taken into consideration, or that it in any wise affected the bidding for the properties. After the commencement of such foreclosure suits the plaintiff made a contract for the sale of one of the two remaining houses to one Wittkowski, who subsequenty refused performance on the ground that the Davies mortgage was an incumbrance upon the property. Subsequent to the sale of the lots pursuant to the judgment of May 28, 1890, by which plaintiff was divested of title, a suit was commenced by George N. Manchester, as trustee, to foreclose the mortgage complained of, in which action all subsequent parties in interest were made defendants, including the plaintiff, and each of the persons who were cestuis que trustent under the Davies mortgage to Manchester. It resulted in. a judgment dismissing the complaint, adjudging that the sale under the six several judgments of foreclosure, obtained on the foreclosure of the Cauldwell mortgage, did actually divest the lien of the mortgage executed by Davies and wife to George N. Manchester as trustee. The court held that the plaintiff was entitled to recover, as damages, the proportionate part of the face of the mortgage which the two lots should bear, or one-third of $5,000, and in accordance with such holding he directed the jury to find a verdict in favor of plaintiff for $1,666.66.

      Daniel P. Mahoney, for p’lff; John L. Cadwalader, for def’ts.
   Parker, J.

The ruling of the court, that-the Manchester mortgage constituted an incumbrance upon the property at the time of the conveyance from Cauldwell to this plaintiff, is in accord with the decision of the court of appeals in Landon v. Townshend, 112 N. Y. 93; 20 St. Rep. 223, and 129 N. Y. 169; 41 St. Rep. 419, because Manchester was not made a party in his official capacity, nor was it made to appear on the face -of the complaint, hy answer, or by the appearance of Manchester in the capacity of trustee, that the trust which he represented was intended and understood to be affected by the suit. The trial court rightly. decided, as we think,. that the plaintiff was not estopped, by the judgment in the suit of Man-Chester as trustee against Davis et al, from asserting the existence of the incumbrance at the time of the conveyance to him, and its continuance during the period in which he had title to the property. It is true that he was made a party defendant in that suit, as were all the parties interested in any way in the property subsequent to the execution of the Manchester mortgage, including the cestuis que trustent thereunder, but he-made default; and thereupon, as against him, the plaintiff was at liberty to enter judgment for the relief demanded in the complaint, and to that extent; had judgment been so entered, he would have been concluded. He might have been concluded by the judgment rendered in favor of the defendant Cauldwell against the plaintiff, had he been served with a copy of Cauldwell’s answer as directed by section 521 of the Code of Civil Procedure, but that was not done; hence, as between him and his co-defendant Cauldwell, nothing was determined. Ostrander v. Hart, 130 N. Y. 406; 42 St. Rep. 513.

"Upon the question of damages, we think, the plaintiff, under •the evidence, was only entitled to recover nominal damages. The covenant against incumbrances was broken the instant the conveyance was made to him, because the Manchester mortgage constituted an incumbrance, but the plaintiff was not evicted because of it, nor was any proceeding taken to enforce the incumbrance during the time that the title to the property was vested in him, and he did not pay it, or pay anything on account of it, nor was he requested to. Delavergne v. Norris, 7 Johns. 358, is a leading case on that question in this state. The premises, which were conveyed by deed containing a covenant against incumbrances, were covered by several prior mortgages, which had been duly recorded, securing in the aggregate the sum of $2,000. The plaintiff paid mortgages aggregating $1,163.44 prior to the commencement of the action, leaving unpaid the sum of $835.30; and the question presented was whether he was entitled to recover the aggregate sum secured by the mortgages, or only the sum which he paid. And the court held that as to the mortgages remaining unpaid he could only recover nominal damages, as he might never be disturbed by an effort to enforce their collection. The court stated the rule as follows:

“If the plaintiff, when he sues on a covenant against incumbrances, has extinguished the incumbrance, he is entitled to recover the price he has paid for it; but if he has not extinguished it, but it is still an outstanding incumbrance, his damages are but nominal, for he ought not to realize the value of an incumbrance on a contingency where he may never be disturbed by tt. This is the reasonable rule, for, if he was to recover the value of an outstanding mortgage, the mortgagee might still resort to the defendant on his personal obligation, and compel him to pay it; and if the purchaser feels the inconvenience of the existing incumbrances, and the hazard of waiting until he is evicted, he may go and satisfy the mortgage, and then resort to his covenant.”

In Hall v. Dean, 13 Johns. 105, the incumbrance was a judgment, which the grantee paid before commencing the action, and the court held, citing Delavergne''s Case, supra, that, the covenant being broken, the grantee was only entitled to nominal damages without discharging the incumbrance, but, having paid it, he is entitled to recover the amount paid. The same rule was asserted in De Forest v. Leete, 16 Johns. 123. In Stanard v. Eldridge, Id. 255, the deed contained a covenant which was held to be, in effect, a covenant against incumbrances. The covenant was broken because there was in existence, at the time of the conveyance, a mortgage which covered the premises with others. At the time of thecommencement of the action the plaintiff had not paid nor had he suffered any disturbance in consequence of it, and the court held, on thq authority of Delavergne’s Case, that the plaintiff could only recover nominal' damages. In Dimmick v. Lockwood, 10 Wend. 142, the court cites with approval Mr. Justice Yan Ness’ statement that the covenant against incumbrances was strictly a covenant of indemnity, and the grantee may recover to the full extent of any incumbrance upon the land which he should have been compelled to discharge, and no more. The authorities referred to supra are-also cited with approval, but in that case the grantee was actually evicted by the foreclosure of the incumbrance, and the measure of damages was held to be the consideration paid-by the grantee,, with interest. In Grant v. Tallman, 20 N. Y. 191, a grantee of land, with covenants against incumbrances, in an action to recover the purchase money, alleged as a defense an outstanding incum* brance which his grantor had made a primary charge upon other lands which were of sufficient value to secure its payment. ■ The court said:

“It is, I think, well settled that where the incumbrance has not been paid off by the purchaser of the land, and he has remained in quiet and peaceable possession of the premises, he cannot have relief against his contract to pay the purchase money, or any part of it, on the ground of defect of title. The reason is that the in, cumbrance may not, if let alone, ever be asserted against the purchaser, as it may be paid off or satisfied in some other way, and then it would be inequitable that any part of the purchase money should be retained.”

In this case it may be remarked, in passing, that the incumbrance was never asserted against the plaintiff, and the evidence is that, since plaintiff was divested of his title through the foreclosure of a mortgage given by him, it has been satisfied other than by payment, in an action brought to enforce it. In Soule v. Dixon, 17 St. Rep. 360, and Barlow v. St. Nicholas Nat. Bank, 63 N. Y. 399, the cases of Delavergne v. Norris and Hall v. Dean, supra,. were cited with approval upon the proposition that a covenantee will be restricted to nominal damages if his possession has not been interfered with, unless he has paid the incumbrance. To the same effect is Sedg. Dam. (8th Ed.) 976 ; 2 Suth. Dam. (2d Ed.) § 622 ; Rawle, Cov. (4th Ed.) 288. Our attention has not been called to any case in this state in which the authority of the cases we have referred to is questioned, and the rule which they establish is that under the covenant against incumbrances, where no-fraud intervenes, the grantee, where an incumbrance exists which no attempt has been made to enforce, can only recover nominal damages, unless he shall have paid the amount. This plaintiff did not pay the amount of the incumbrance. His possessiop was not, interfered with because of its existence, and no attempt was ever made to enforce it until after his title and that of his grantee had, been divested by the foreclosure of a mortgage given by the plaintiff. The attempt which was then made to enforce it has resulted in an adverse judgment. The exceptions should be sustained, and a new trial ordered, with costs to the defendant to abide the event.

Van Brunt, P. J.

I concur in the result, and in the result only, of the opinion of Mr. Justice Parker in this case. I do. not think that the case of Landon v. Townshend, 112 N. Y. 93; 20 St. Rep. 223 ; and 129 N. Y. 167; 41 St. Rep. 419, necessarily applies to this case; and the doctrine in that case should not be extended beyond its actual requirements, as the result must, of necessity, be the unsettling of titles as to which there has heretofore been no question. The mortgage of Davies to Manchester was to him individually. He is described as a party individually. It is true that in a subsequent part of the mortgage it is declared that the mortgage is executed and delivered to Manchester as trustee for certain firms, of which Manchester’s firm is one. The habendum clause, however, is:

“ To have and to hold the above-granted, bargained, and described premises, with the appurtenances, unto the said party of the second part (Manchester), his heirs and assigns, to his and their own proper use, benefit, and behoof, forever.”

The premises were to be held by Manchester, his heirs and assigns, not his successors and assigns. In Landon v. Townshend, Waddell, an assignee, virtióte officii, took the title, and only in that way,—a very different state of the proof from that presented in the case at bar.

O’Brien, J., concurs.


author: Follett, J.

text:
    George B. Clarke et al., App’lts, v. Alice A. Schell, Individually and as Executrix, etc., et al., Resp’ts.

      (Supreme Court, General Term, First Department,

      Filed January 18, 1895.)

    1. Will—Undue influence.
    A bequest to intimate friends, to the exclusion of testator’s cousins, who were his next of kin, of whom he had never seen one and but seldom the other, does not establish undue influence.
    2. Same—Bequest to scrivener.
    The fact that two of the beneficiaries in the will are the attorneys of the testator, and drafted the will, does not alone create a presumption that the bequest to them was procured by fraud or undue influence.
    3. Evidence—Letter.
    The copy of an anonymous letter, not an act of the testator nor of the defendants, nor relevant to the issue, is wholly incompetent.
    4. Same—Character.
    The fact that the aunt of the principal beneficiary was in early life an immoral woman, or reputed to be such, is not relevant.
    5. Same—Conclusions.
    Where a witness has described an interview and stated what was said and done, it is not competent for him to draw the inferences and testify to the impression made on his mind by a gesture of the testator.
    Appeal from a judgment dismissing the complaint, entered on a verdict directed by the court in favor of defendants, and from an order denying a motion for a new trial, made on the minutes.

      W. Bourke Cockran, for app’lts; Daniel G. Rollins, for resp’ts.
   Follett, J.

This action was brought July 13,1893, pursuant to section 2653 of the Code of Civil Procedure, to set aside the probate.of the last will and testament, and of a codicil thereto, of Richard J. Clarke, on the ground that they were not the voluntary acts of the decedent, but were procured by the fraud, coercion, and undue influence of Alice A. Schell, William Mitchell, and others. Richard J. Clarke was born October 1, 1810, and died June 10, 1892, aged 81 years, 8 months, and 9 days. He had never been married, and he left no ancestor nor descendant, but left George B. Clarke and William J. Clarke, plaintiffs, his first cousins, only heirs and next of kin. He left realty valued at $41,000, and personalty valued at $110,000. He left a will, executed November 9, 1889, and a codicil executed September 3, 1891, which are the subject of this controversy. By the first clause of the will his executors are directed to pay his debts and funeral expenses; by the second he bequeathed $25,000 to Mrs. Alice A Schell; by the third, $1,000 to her daughter, Alibe Schell; by the fourth, $1,000 to her son, Richard M. Schell; by the fifth, $250 to William Egen, a clerk in the law office of Mitchell & Mitchell; by the sixth, $1,000 to Samuel H. Hopping; by the seventh, $1,000 to Eugene M. Berard; by the eighth, $5,000 to Edward Mitchell; by the ninth, $5,000 to William Mitchell; by the tenth clause the foregoing legacies were charged upon the testator’s real estate; by the eleventh the residue was divided into two equal parts, one of which was given to Alice A. Schell, and the other to his executor, who was directed to apply the income, or such portion thereof as he saw fit, to the use of Anson Clarke House during his life, with authority to convey all of such portion of the half so placed in trust to said Anson Clarke House; by the thirteenth he directed that, in case the trust should be held invalid, the one-half left in trust should go absolutely to Anson Clarke House; and by the fourteenth, if Anson Clarke House should die while any portion of the half was held in trust, that the trust estate so held should go to Alice A. Schell; by the fifteenth be directed that during the settlement of his estate his executors should pay Alice A. Schell and Anson Clarke House each $1,200 annually; by the last-clause Alice A. Schell and William Mitchell were nominated as executors, and given power to sell his realty. Anson Clarke House, for whose benefit the trust was created, died August 9, 1891, and on the 3d of September, 1891, the testator executed his codicil, in which he referred to the death of Anson Clarke House, and revoked the eleventh, twelfth, thirteenth, and fourteenth clauses of his will: and gave to Mrs. Mary Divins; $1,000; to Miss Emma Naylor, a sister of Mrs. Divins, $1,000; to'Mrs. Mary Naylor, $1,000; to Miss Mamie Naylor, daughter of Mrs. Mary Naylor, $1,000; to Frank Naylor, $1,000; to George Naylor, $1,000; to Mrs. Eliza T. Wilson, $1,000; to Cecelia R. Burford, $1,000; to Mrs. Clara Laveiy, $500; to Richard Divins, $500; to Miss Mamie Coonan, §500. The remainder he devised and bequeathed to Mrs. Alice A. Schell. The fifteenth clause of the will was modified by striking out the name of Arison Clarke House, and directing that $50 a week should be paid Mrs. Alice A. Schell while his estate was being settled. The general legacies, aside from those to Mrs. Schell and the Mitchells, amounted to $13,750, and, including those, to $48,750.

The main facts relied on to establish the* issue tendered by the plaintiffs are that the testator gave nothing to his first cousins, the plaintiffs ; that he gave $10,000 to Edward and William Mitchell, his legal advisers and the draftsmen of the will; $2,250 to employes in their office; and the remainder of his estate to Mrs. Schell and her relatives. Considering the circumstances of the testator and his surroundings, we think these facts do not give the slightest support to the contention of the plaintiffs. In 1819 the testator’s father and his eldest brother, William B., came from England to this country, and were followed the next year by the testator, his mother, his brother Thomas G\, his sister Elizabeth, and his maternal uncle John P. Brown. "Subsequently a brother Robert and a sister Rose, were born in this city. In 1820, John P. Brown and the testator’s father established a hotel or restaurant in Maiden Lane, and the business was continued by them, and by the testator and his brothers, until 1858, when it was abandoned. The testator’s father died in 1833 ; his mother, in 1835 ; his eldest brother William B., in 1837 ; his sister Rose, in 1844; his brother Thomas Gr., in 1865 ; his brother Robert, in 1884; and his sister Elizabeth, in 1887. None of his brothers or sisters left descendents. For more than 40 years prior to 1884 the testator lived at “Anson House,” a hotel or boarding bouse in Canal street, kept by Anson House and his wife, Sophia, and there his brother Robert lived for many years, until his marriage, when he left. Mrs. House was an aunt of Mrs. Alice A. Schell, and Anson Clark House was an illegitimate son o£ Anson House. Mrs. Schell was much at “Anson House,” andffiad known the testator from her childhood. About 1884 Anson House died, leaving his widow, and subsequently the hotel which they had kept for many years was abandoned, and the testator and the widow, Mrs. Anson House, took separate rooms at the St. Nicholas Hotel, on Washington Place, in this city, kept by Julius A Robinson. Mrs. House remained in this hotel until her death, which is stated by one witness to have occurred June 25, 1886, and by another June 20, 1887. The evidence is that until Mrs. House’s death the testator and Anson Clarke House occupied room 88, and, after her death, room 72, sleeping in the same bed, until Anson Clarke House became ill, when- they occupied single beds in the same room. During all this time Mrs. Schell and her daughter frequently visited the testator, and cared more or less for his wants. It is charged, but the charge is not supported by evidence, that the testator and Mrs, Anson House, and, after her death, the testator and Mrs. Schell, sustained improper relations. The evidence called out in behalf of the plaintiffs shows conclusively that the relations existing between the testator and Mrs. Schell and her family were for many years most intimate and friendly, but, as before stated, does not sustain the charge of improper intimacy. The testator’s cousin George B. Clarke lived in Brooklyn. They seldom saw each other, and had little or no intercourse. The other cousin, William J. Clarke, the testator never saw. Under such circumstances, we do not think that the fact that the property was given to those with whom he had sustained most intimate relations for half a century, to the exclusion of two cousins, one of whom he never saw. and the other whom he seldom saw, and with whom he had little intercourse, is a circumstance tending to show that the testator was unduly influenced, coerced, or defrauded into making his will.

Under the circumstances of this case, we do not think that the bequest of $10,000 to his attorneys, and of $2,250 to their employes, raises a presumption of undue influence on the part of his counsel who drafted the will. Prior to 1885, James B. Bullock had been the testator’s legal adviser, and Mitchell & Mitchell had been employed to assist in conducting a litigation in which the testator was involved. About 1885, Bullock died, leaving a will of which Bichard J. Clarke was the executor, and the estate was settled through the aid of Mitchell & Mitchell, who succeeded Bullock as the counsel of the testator. Besides this, the firm assisted Mr. Clarke, who was the representative of his deceased sister Elizabeth, in settling her estate. This brought him frequently to the office of his counsel, and made him acquainted with their employes. The undisputed evidence is that during his life he was accustomed to give liberal gratuities to the servants in the hotel where he boarded, and made liberal presents to those who served him. The fact that two of the beneficiaries in the will were the attorneys of the testator, and drafted the will, does not alone create a presumption that the bequest to them was procured by fraud or undue influence. In re Smith’s Will, 95 N. Y. 516.

The plaintiffs called a witness who testified that in November, 1876, Bichard J. Clarke executed a will to which the witness became a subscribing witness. He testified that the testator told him that he left his property to his sister Elizabeth, to Anson Clarke House, and to relatives in Brooklyn. The amount given to each was not stated, and the will was not produced. On the 20th of September, 1887, the testator executed a will in which he gave substantially the same general legacies to the same persons, excepting Mrs. Schell, to whom he made bequests in his last will and codicil thereto. He gave to Mitchell & Mitchell $10,000, as in his last will. The remainder of his estate he devised in trust for the benefit of Anson Clarke House, with power to the executor to vest House with the absolute title, and the remainder over, if not so vested, to three charitable institutions. When this will was executed his sister was dead. Anson Clarke House, whom he treated as an adopted son, was -living, and when he died he changed his will, and increased the legacy of Mrs. Schell from $1,000 to $25,000, and gave the residue to her. This, under the circumstances, does not seem to us to have been such an unnatural disposition of his estate as to arouse the slightest presumption of undue influence. His Brooklyn cousin was then 78 years old, and whether he required aid or assistance does not appear. It is certain that no such relations ever existed, between them as entitied him to a claim upon the bounty of the testator. The evidence is that the testator, for a man o£ his years, was in good health until a short time before his death, and that he transacted his business with intelligence and accuracy. It seems to us that the record is barren of any evidence which tends to show that this will was procured by fraud, coercion or undue influence, and that there was no question of fact for the jury, and no error committed in directing a verdict for the defendants.

Three exceptions to the exclusion of evidence were argued. It was testified that Mr. Clarke at one time received an anonymous letter, which the witness copied, and the copy was produced at the trial, and was offered in evidence, and excluded. There is nothing in the letter which is relevant to the issue, and, besides, it was not an act of the testator, or of any of the defendants, and was wholly incompetent. The plaintiffs offered to show that early in life Mrs. House had borne another name, and was reputed to be a woman of bad character, and a keeper of a house •of assignation. She had been married to Anson House for more than 40 years, and there was no attempt to show that during her married life she was a woman of bad repute. Mrs. House had ■died before the will was executed, and the fact that the aunt of the principal beneficiary in early life was an immoral woman, or reputed to be such, was not relevant. No error was committed in refusing to permit the witness Neiderstein to testify to the impression made on his mind by a gesture of the testator at an interview in the St, Nicholas Hotel on the 1st of October, 1892. The witness described the interview, stated what was said and done, and it was not competent for the witness to draw the inferences, which was the duty of the court or jury. After a careful reading of the whole of this voluminous record, we are of the ■opinion that no error was committed by the learned trial court, and'that the judgment and order should be affirmed, with costs.

All concur.


author: O’Brien, J. Parker, J.

text:
    Franklin Bank-Note Company, App’lt, v. Charles W. Mackey, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed January 18, 1895.)

    1. Principal and agent—Relation.
    The question of agency is one for the jury where the facts are disputed.
    3. Trial—Inconsistent rulings.
    To permit one party to give evidence on a disputed point, and then to exclude the other party from giving evidence on the same point, is error.
    Motion for a new trial on exceptions ordered to be heard at general term in the first instance.

      William J. Gibson, for pl’ ff; Henry L. Burnett, for def’t.
   O’Brien, J.

This action was tried at circuit, and a verdict directed for defendant, and the exceptions were ordered to be heard in the first instance at general term. The action was for work, labor and services in engraving and printing railway bonds and .stock certificates for a corporation, the defendant having guarantied payment. The defendant admitted the agreement and guaranty, but claimed that the work was not to be proceeded with until orders to that effect was given, which was never done, and that, therefore, no liability was created.

The plaintiff was a corporation engaged in the business of engraving and printing, and the defendant was interested in the formation of a railway corporation. In May, 1887, a man by the name of Hall, a stranger to plaintiff, applied to it about furnishing the bonds and stock certificates, stating that he had a bond to engrave, and wanted to know the price for which plaintiff would do it. After several visits, plaintiff gave a price, but Hall was informed that plaintiff would not go on with the work without a guaranty; and Hall, subsequently having proposed defendant as guarantor, the plaintiff’s manager prepared in writing a proposal and guaranty, which was signed by such manager and the defend- . ant. When models were selected, they were taken by Hall to defendant and by him brought back to the plaintiff, with a request to its manager to “ go on with the work, except the rate of interest.” According to defendant’s version, when the proposal or guaranty was signed, defendant fully explained to Hall the condition of the company; that it might go through, and it might not; and that it was to be understood that no work was to be done until the defendant was ready, This, defendant states, was again repeated to Hall when the models were brought for approval, and it was with this understanding—that plaintiff would do no work until further' orders—that he indorsed upon the models, “Model approved May 24, 1887, as far as it goes.” It will be seen, therefore, that the work for which suit is brought was done contrary to the express direction of the defendant to Hall, who, instead of delivering his message to plaintiff, told the latter to go on with the work. Plaintiff proceeded with the work, and engraved so much of the- plates and stock certificates as it was then able, and sent proofs of the same to defendant, which were never returned; and it is for the value of the work done between the submitting of the models and the sending of the proofs that the action is brought.

The right to recover is dependent upon the solution, of the question as to which of the parties Hall represented as agent in the - transaction ; the undisputed testimony of plaintiff’s manager being that Hall brought the models back from the defendant, and told him “to go ahead, engrave and print the bonds and stock certificates, except the rate of interest,” while the defendant and " Mr. Barnes testified without contradiction that the defendant told Hall that he did not want any work done until the plaintiff received further orders. This Hall never communicated to plaintiff. The court directed a verdict upon the ground that as a matter of law, upon the evidence, Hall was the agent of the plaintiff, and whether this conclusion was justified, and the rulings upon evidence were correct, are the questions presented upon this appeal.

The plaintiff or its manager had never seen Mr. Hall until he Called about the bonds, and never had any dealings with him before or since, and never expressly authorized him to represent the plaintiff. On the other hand, the defendant had known Hall since he was a boy; knew his father; and Hall had introduced defendant to Mr. Barnes, who was to be the chief engineer of the road, and with whom defendant had his office. The defendant does not appear, however, to have had any relation with Hall, beyond such acquaintance, nor does it appear that he authorized Hall to represent the company or- himself in the dealings with the plaintiff; but both plaintiff and defendant understood that Hall was engaged in arranging for the engraving of the bonds, for which he was to receive a commission from plaintiff. The latter fact—who was to pay the commission—is significant, but by no means conclusive; and it will be noticed upon the evidence, as it stood, that the question whether Hall was the agent of the plaintiff or the defendant, or of both, was a close one, and one which we do not think could be determined as a matter of law, presenting,, as we think it did, a disputed question of fact. As said in Mechera on Agency:

Section 105 : “Where the facts are undisputed, the court must determine whether they create an agency.” Section 106: “ It is impossible to lay down any inflexible rule by which it can be determined what evidence shall be sufficient to establish an agency in any given case; but it may be said, in general terms, that whatever evidence has a tendency to prove the agency is admissible, even though it be not full and satisfactory, as it is the province of the jury to pass upon it.”

It was important to both parties to be permitted to introduce-all competent evidence that they might have-which would tend teclear up the disputed question as to whether Hall was the agent of the plaintiff, or of the defendant.

Upon the examination of the plaintiff’s manager, who, it is admitted, was the person principally representing the plaintiff in the transaction, these questions were asked of him:

“ Q. Did you ever give Mr. Hall any authority to represent the company ?” “ Q.. Did Mr. Hall ever bring any other business te your company ?” “ Q. Has he ever brought any other work or job since this work ?”

These were objected to, and the objections sustained, and exceptions taken.

When the defendant was examined, the following questions were put to him:

“ Q. Did Mr. Hall make known to you at that time whether or not he was authorized by this Franklin Bank-Note Company to submit propositions ?” “ Q. State, when he [Mr. Hall] submitted these other propositions, as to what information you gave him about the condition of the enterprise,” etc.

Though these questions were objected to, the defendant was permitted to answer; going fully into what Hall had stated to him as to his being authorized, and also as well as to all the conversations that had taken place between the defendant and Hall-in the absence of the plaintiff. And such rulings were accentuated when, upon the examination of defendant’s witness Barnes, he was asked to tell what was said by Mr. Hall and Col. Mackey in his presence, though, as he stated, he could not recollect whether any one was present from the plaintiff company or not. This was objected to, but was also answered. These rulings were regarded as inconsistent. It may have been a good objection to the first question presented to plaintiff’s manager, as to whether he had ever given Mr. Hall any' authority, that this called for a -conclusion; but the same objection did not apply to the other questions, which sought to elicit information as to what dealings were had between Hall and the plaintiff, and what his relation was to the company. If the answers to these were to be excluded, then certainly the defendant shopld not have been permitted to answer the question as to statements of Hall in reghrd to his being authorized to act for the plaintiff, or to go fully into "the conversations had between them in the absence of the plaintiff. We do not hold that permitting the defendant and his witness to .give such testimony was error, but we think that granting leave to present such testimony on defendant’s part was clearly inconsistent with the ruling made which excluded the plaintiff from giving similar evidence. If it had been established, when the objections to plaintiff’s questions were sustained, that Hall was the agent of the plaintiff, then what ocdurred or was said between the plaintiff and its agent would not be binding upon the defendant, and would be competent to show what occurred between plaintiff’s agent and the defendant, even though the plaintiff was not present. But, when the rulings excluding plaintiff’s testimony were made, it had not been estáblished that Hall was plaintiff’s agent, the questions being directed to that very point of agency, and therefore the inconsistency appearing in the rulings cannot be reconciled. We think, for the errors committed in these rulings, the judgment should be reversed and a new trial ordered, with costs to appellant to abide the event.

Parker, J.

(concurring).—Plaintiff and defendant each claim to have regarded Hall as the agent of the other, and the case turned on the question whether he was the agent of the one or the other. On this question, plaintiff offered material evidence, which it was entitled to have considered with the other facts proved, which was excluded. I agree that for this error the judgment should be reversed.

Van Brunt, P. J., concurs.


author: Ehrlich, C. J.

text:
    Louis Proweeder, as Guardian, etc., Resp’t, v. Samuel Lewis, App’lt.

      (New York City Court, General Term,

      Filed January 12, 1895.)

    1. Pleading—Amendment.
    An error in entitling an action as brought by the guardian ad litem instead of the infant by such guardian is amendable under § 723 of the Code. ....

      3. Arrest— Apfadavit—Infant.
    An infant, if he is competent to testify upon the trial, is competent to make an affidavit to obtain an order of arrest in aid of his action.
    Appeal from an order denying a motion to vacate an order of arrest, and amending the title of the action.

      Goldfogle & Cohn, for app’lt; N. S. Levy, for resp’t
   Ehrlich, C. J.

The action was begun under the above title, instead of “Samuel Proweeder, an infant, by Louis Proweeder, his guardian,” etc. The affidavit upon which the order of arrest was issued was made by the infant, and alleged an assault and battery committed upon him, from the effects of which his nose became swollen, his left eye discolored, and his left ear bruised. That it was an action by the infant by his guardian ad litem was made evident by every allegation and feature throughout the proceeding. For the error in not naming the infant first, and the guardian afterwards, the defendant sought to vacate the order of arrest. The court below denied the motion, and directed that the title of the action be amended so as to read in the proper form. The defect was formal merely, and amendable, under section 723 of the Code, almost as of course.

It was also urged by the defendant that the infant, being of the age of 10 years, could not make the affidavit on which the arrest was founded.. There is nothing in the case which intimates that the infant was so devoid of intelligence as not to understand the nature of an unprovoked assault, and its effects upon his person, or which would justify a ruling that the infant did not know the nature of an oath and the consequences of its violation. It will therefore be inferred that he would be competent to testify upon the trial, and, if competent there, we cannot hold that he would be incompetent to make the preliminary affidavit necessary to obtain the provisional remedy of arrest in aid of his action. At all events, the justice below exercised his discretion, which was not abused; and the order appealed from must be affirmed, with costs. All concur.


author: Fitzsimons, J.

text:
    Lawrence W. Ahrens et al., Resp’ts, v. The United Growers’ Company, App’lt.

      (New York City Court, General Term,

      Filed January 12, 1895.

      1. Accord and satisfaction—Receipt.
    A receipt is not an accord and satisfaction.
    3. Evidence—Letter.
    A letter, written by a party, is not admissible in his own behalf.
    3. Same—Contract.
    In an action for services under a contract, evidence as to other work performed by the plaintiff is admissible.'
    Appeal from a judgment entered by the direction of the court, And from an order denying a motion for a new trial.

      George W. Carr, for app’lts; M. S. & I. S. Isaacs, for resp’t.
   Fitzsimons, J.

The quality of envelopes and circulars ordered from plaintiffs by defendant, and the prices therefor, as the evidence shows, were in dispute. The plaintiffs’ and defendant’s statements concerning that phase of this litigation were correctly submitted to the jury. . They decided in plaintiffs’ favor, and there is ample evidence justifying their finding. The quesiton at. folio 100 was perhaps wrong in form, but the answer shows what the receipt in full was for, and plaintiffs had a perfect right to-explain the meaning of the receipt referred to. Such a receipt may always be explained.

• The letter referred to in appellants’ second point was rightfully excluded. Defendant had no right to create evidence in its favor in that way. Again, the court was justified in refusing to permit the defendant to introduce in evidence other work done by plaintiffs for it. The question was, did they perform their contract in thisinstance? The receipts, because they read “in full payment,” etc., for that reason cannot be said to be an accord and satisfaction of plaintiffs’claim. They'can be explained as before stated. There was a sufficient offer of delivery of the goods in question, and also a sufficient demand, as the evidence shows. As to the preponderance of testimony, I think the jury was right in determining that it was in plaintiffs’ favor. The whole appeal record shows that the judgment was a fair one, and it is affirmed, with costs. All concur.


author: Conlan, J.

text:
    Ellen Meagher, Resp’t, v. John W. Campbell, App’lt.

      (New York City Court, General Term,

      Filed January 12, 1895.)

    Attachment—Chose in action.
    Proceeds of property sold by an actionéer, which are deposited in bank by him with his other money, are not the subject of attachment against the principal.
    Appeal from a judgment entered by the direction of the court,, and from an- order denying a motion for a new trial.

      Jeroloman & Arrowsmith, for pl’ff; Geo. W. McAdam, for def’t.
   Conlan, J.

This action was brought by the assignee of Elizabeth Burke, to recover the sum of $145. The evidence shows that about the 12th day of February, 1892, the assignor, Elizabeth Burke, placed with the defendant (who was an auctioneer) a quantity of furniture to be sold for her. It further appears that the property was sold on the 14th, then instant, for the sum of $413 ; also, that on the 24th the defendant paid the said Elizabeth Burke $186, at the same time claiming that his fees were $82,. leaving a balance in his hands of $145, which forms the subject-. matter of this action. It further appears that the said Elizabeth-Burke, on the 25th day of February, assigned this claim to her sister, Ellen Meagher, the present plaintiff. It further appears on the part of the defendant that one Mr. Stewart had a claim against the assignor, Elizabeth Burke, for rent; - and that on the 20th day of February an attachment was issued out of the third ■district court of the city of Hew York; and that on said day one James McCauley, then a marshal of said city, pursuant to the requisition contained in said attachment, levied upon the sum of $145, produced to him, and then being in the possession of the defendant, and said by him to be the money of the assignor, Elizabeth Burke, and took a receipt therefor. ' It also appears that ■on the 1st day of March, following, the said Stewart obtained a judgment in said attachment suit against the said Elizabeth Burke; and on the 3d day of March said sum of $145 was paid over to the marshal, and his receipt taken therefor.

Ho question arises as to the regularity of the attachment proceedings, and the only question presented for review is whether or not the money in the hands of the defendant was the money of the said assignor, and, as such, attachable by her creditors, or a chose in action in the hands of the defendant, and not the subject of attachment or levy on execution. The defendant testified that he put the entire proceeds of the sale of furniture in the safe, where it remained .until the 24th day of February, when he took out $186 for the said Burke, and $82 for Himself, as expenses, leaving $145, or the amount attached, in his safe. If there was no dispute as to this testimony, the attachment proceedings would have afforded, the defendant a perfect defense, and the complaint should have been dismissed. The assignor was called as a witness, and testified that the defendant told her he had the money in bank. The witness Arrowsmith testifies that, on either the 26th or 27th of February, he had a conversation with the defendant, in which he asked the defendant where the money was, and he answered that it was in bank. This testimony presented a fair question of fact. If the proceeds of the sale were placed in a bank, where they mingled with other moneys, their identity would be lost, and they would then become only a credit or chose in action, and, as such, not the subject of attachment. Crock. Sher. § 457; Carroll v. Cone, 40 Barb. 220.

At the conclusion of the trial, both plaintiff and defendant moved for a direction, thereby making the trial justice sole judge of the facts, and, as the case turned upon a disputed question of fact, we do not feel warranted in disturbing the judgment. Affirmed, with costs. All concur.


author: Bookstaver, J.

text:
    Charles G. Buckley, as Receiver, etc., Resp’t, v. John F. Harrison et al., App’lts.

      (New York Common Pleas, General Term,

      Filed January 7, 1895.)

    1. Receivers—Ancillary—Powers.
    An ancillary receiver of a foreign corporation is a mere common law receiver to protect tlie property and has only the powers conferred by the order appointing him.
    3. Same.
    Such a receiver is without authority to sue in this state to set aside a fraudulent transfer of property made by the corporation.
    3. Same.
    Such receiver, as representing the creditors, cannot maintain such actian in any event without showing judgment with execution issued and returned unsatisfied. An allegation of insolvency of the company cannot cure such defect.
    4. Pleading—Demurrer.
    A demurrer admits only facts alleged, and not allegations of conclusions contained in the pleading.
    5. Same.
    The nature of the relief demanded may properly he considered by the court on demurrer, in order to determine the theory of the action.
    Appeal from an interlocutory judgment, overruling a demurrer, to the complaint.

      John A. Straley, for app’Its; Andrew J. Shipman, for resp’t.
   Bookstaver, J.

Plaintiff brought this action, as receiver of the assets within the state of New York of a New Jersey corporation, to set aside as fraudulent the transfer of assets described in the complaint, and to recover- of defendants the value of the property so transferred, together with the profits thereon. The first question raised upon this appeal is as to the authority of the plaintiff to maintain this action as receiver. ' The allegations material to establish such authority are contained in the second clause of the complaint, which reads as follows : „

“ That on or about the 13th day of September, 1892, in an action pending in the court of chancery for the state of New Jersey, said court being a court of general and unlimited jurisdiction, wherein one Jane Fottrell was complainant and said company was defendant (that is the Fottrell Patent Hygienic Concrete and Imperishable Asphalt Company), the chancellor, of said court and state, on a bill of complaint duly filed herein, duly made an order enjoining and restraining said company, its officers, agents, and servants, from contracting any debts, and also collecting or receiving any money owing to said company, and also from paying out any money, or selling, assigning, or transferring any of its property, estate, or effects of any kind. That thereafter such proceedings were had in said action that on or about the 26th day of Septemtember, 1892, it appearing to the satisfaction of the said chancellor and said court that said company was insolvent, this plaintiff was, by an order entered therein, duly appointed receiver of said company and of its assets and property, with full power to demand, sue for, collect, and receive and take into his possession all the goods and chattels, rights and credits, moneys and effects, lands and tenements, books, papers, choses in action, bills, notes, and property of any and every description belonging to said company, and to do and perform all the duties imposed upon him and required by law, as by reference to said bill of complaint and order in said action will more fully appear. That thereafter, and on or about the 29th day of September, 1892, in an action pending in the supreme court of New York, wherein said Jane Fottrell was plaintiff and said company was defendant, an order was duly made enjoining and restraining said company [as in the order before recited]. That thereafter such proceedings were had in said last-mentioned action that on or about the 3d day of October, 1892, it appearing to the satisfaction of said court that sufficient grounds existed for the appointment of a receiver of the property of said company within this state, an order was duly entered therein appointing this plaintiff receiver of said company and of its stock, property, franchises, patents, contracts, assets, claims, demands, things in action, books, records, and effects of every kind and nature, with the usual powers and duties of receivers in like cases, according to law and the practice of this court. There thereupon this plaintiff duly qualified as such receiver, and entered upon the-performance of his duties as such, and has ever since continued in the performance thereof.”

We think it immaterial to inquire whether or not the plaintiff was, by order of the court of chancery in the state of Mew Jersey, appointed a statutory receiver of the corporation in the action pending in that state. The real question to be determined is, what are the powers of the receiver appointed by the court in the action pending in this state? It is clear that the receiver so appointed was an auxiliary receiver, and clothed only with the powers of such a receiver. In general, an auxiliary receiver is merely the custodian of the property within the state wherein he is appointed, for the purpose of preserving the assets belonging to-the party or corporation proceeded against within the state, in order that creditors may reach them without being compelled to go to a foreign jurisdiction to prove their claims. Therefore, as a general rule, the person so appointed is a mere common-law receiver to protect the property, and has only the powers conferred by the order appointing him. Woerishoffer v. North River Construction Co., 6 Civ. Proc. B. 113; Mann v. Rente, 3 N. Y. 415; Decker v. Gardner, 124 N. Y. 334; 36 St. Rep. 267; People v. St. Nicholas Bank, 76 Hun, 522; 58 St. Rep. 843. In re Van Allen, 37 Barb. 225: Bangs v. Duckinfleld,a 18 N. Y. 592; Weekes v. Cornwall, 19 Abb. N. C. 365 (see particularly the note to this last case); Keeney v. Home Insurance Co., 71 N. Y. 401; section 1788, Code Civ. Proc.; Forker v. Brown, 62 St. Rep. 480; In Woerishoffer v. North River Construction Co., supra, an attachment had been granted against certain property of the defendant company after the appointment of a receiver in Mew Jersey. Thereupon an application was made to the supreme court for the appointment of an auxiliary receiver in this state, which was granted, with an injunction- restraining the bringing of suits to interfere with the assets. In the course of the opinion the court said:

“The intervention of the courts of this state is merely to preserve the property of the corporation within this state for the equal distribution among the creditors of the corporation; such receiver being * * * bound to account in this state for all property within this state at the time of his appointment; the appointment of such auxiliary receiver being to preserve the assets of the corporation for distribution among its creditors equally, and not for the purpose of allowing such assets to be removed by the receiver to a foreign jurisdiction and compelling the creditors within this state to go to a foreign jurisdiction to prove their claims. against assets which they might have reached by action in this state but for the appointment of the receiver.”

We think the powers of such a receiver are closely analogous to a temporary receiver in an ordinary judgment creditors’ bill. The question whether a receiver appointed in such an action to sequestrate the property of a corporation after judgment and execution unsatisfied, under 2 Rev. St. p. 463, § 36 (incorporated in the Code of Civil Procedure, §§ 1784-1789), has the powers, etc., •of a receiver on voluntary dissolution, was decided in the negative in Mann v. Peniz, supra, which remains unreversed as far as we, after diligent inquiry, can ascertain. It is true that the amendment to section 1788 of the Code in 1882 provides that a permanent receiver appointed in such an action should have the powers, etc., of one appointed on voluntary dissolution, but that section expressly makes a temporary receiver in all respects subject to the control of the court. That section, as amended, also provides that .a receiver so appointed before final judgment is a temporary receiver until final judgment is entered, and defines his powers as follows:

“A temporary receiver has power to collect and receive the debts, demands and other property of the corporation; to preserve the property and the proceeds of the debts and demands collected; to sell or otherwise dispose of the property as directed by the court; to collect, receive and preserve the proceeds thereof, and to maintain any action or special proceeding for either of those purposes. * * * Unless additional powers are specially conferred upon him, as prescribed in the next section, a temporary receiver has only the powers specified in this section and those which are incidental to the exercise thereof.”

Section 1789 provides that a temporary receiver, appointed as therein prescribed, is in all reápects subject to the control of the court, and that the court may, by order or interlocutory judgment appointing him, or by order subsequently made in the action, or by final judgment, confer upon him the powers and authority of a permanent receiver. In a note to Weekes v. Cornwall, supra, Dr. Abbott says, in reference to receivers of foreign corporations :

“The receivership in these cases is either ancillary to the receivership appointed in the- foreign jurisdiction, or it rests on the general principle that equity may" appoint a receiver of property having no legal custodian within the jurisdiction, for the sake of its preservation for those to whom it belongs (Woerishoffer v. North River Construction Co., 6 Civ. Proc. R. 116), or upon the provisions of the Code of Civil Procedure (article 5).”

And asserts that “in either case the receiver seems to be a common-law receiver.” And it is well settled that such receivers have no powers except such as are conferred upon them by the order for their appointment, and the course and practice of the court. 20 Am. & Eng. En. Law, 111, and cases cited. In Herring v. N. Y., L. E &. W. Railroad Co., 105 N. Y. 342; 7 St. Rep. 557, it was held that a temporary receiver in an action to dissolve a corporation, prior to the Code, was not vested with the title to the property of the corporation, but that such title, until final judgment of dissolution and the appointment of a final receiver, remained in the corporation, and that the temporary receiver was a mere custodian and manager of the property, under the direction of th ecourt, during the pendency of the action. So in Railroad Co. v. Humphreys, 12 Sup. Ct. 787, it was held that a receiver appointed by ■a court of equity has not, without assignment or statutory investiture, any title to the assets, but is merely a custodian for the benefit of whoever is ultimately found to be entitled to the property. We think the allegations of the complaint before quoted in relation to the appointment of the auxiliary receiver in this state -clearly show that the plaintiff was but a temporary receiver, for it expressly says that he shall have the “ usual powers and duties of receivers in like cases according to law and the practice of this court.” And, as we have before shown, such receivers are not vested with the title of property of the corporation, nor are they thereby made trustees of creditors. They are mere custodians and managers of the property, under the direction of the •court, during the pendency of the action. It. would therefore seem to follow that the complaint is fearfully defective, in that it does not show that the receiver was appointed by judgment, or that the powers of a permanent receiver had been conferred by order upon him. ISTor is it anywhere alleged that he had been specially authorized by order of the court to. commence this action. Even in an order much broader than this, where the receiver was “ordered to collect immediately all said property together, and hold the same subject to the further, order of the court,” it was held that such direction did not confer authority to bring an action. Screven v. Clark, 48 Ga. 41.

The respondent relies with great confidence upon Attorney General v. Guardian Mut. Life Ins. Co., 77 N. Y. 272 ; but we think that case does not in any way conflict with the views here expressed, as it is clear from the case reported that the receiver was a permanent receiver, appointed in dissolution proceedings, where, ■of course, he was vested with all the property, assets and effects of the corporation, including the title thereto. In that case the court throughout the opinion clearly refers to permanent, and not temporary receivers. A permanent receiver may disaffirm and maintain an action as receiver to set aside legal or fraudulent transfers of the property or corporation by virtue of the statute in such case made and provided, but a temporary receiver cannot do so unless there be a statute which will enable him to maintain such action, or the power to do so is specifically conferred by order. ISTor does Whittlesey v. Delancy, 73 N. Y. 571, aid respondent’s contention, for in that case the authority of the receiver to bring the action was not questioned, and while it does not distinctly appear that the plaintiff was the permanent receiver, yet we think the entire reasoning of the case assumes that he was. ISTor can it be successfully contended that sections 1, 2, c. 314, Laws 1858, as amended by chapter 487 of Laws 1889, authorize the commencement of this action. This statute says that “ any * * * receiver * * * or other trustee of an estate or property and effects o£ an insolvent corporation * * * may for the benefit of creditors or others interested in the estate or property * * * so held in trust ” disaffirm “fraudulent transfers.” A mere custodian is not a trustee, but is an officer of the court. The legal title is not in him, even as trustee; and the appointment, of a temporary receiver does not prevent the corporation from performing corporate functions, and disposing of corporate property. The same sections say, in respect to the persons in whose behalf the fraudulent transfer may be disaffirmed, that it may be done- “ for the benefit of creditors * * * of the estate or property so held in trust,” showing the intention to be that the right should be vested only in permanent receivers, and not in temporary or common-law receivers. Section 1789 of the Code provides that, the court may give the receiver such power, but .it must be by order or decree. Section 2, c. 314, supra, provides that the persons receiving the property shall be liable in a proper action to-executors, receivers, or other trustees of such estate. In Decker v. Gardner, 124 N. Y. 334; 36 St. Rep. 267, after declaring the right to appoint a receiver upon the dissolution of the corporation to be purely statutory, it was said :

“ But the power of appointing a receiver pendente lite is incidental to the jurisdiction of a court of equity, and such an officer is a mere temporary officer of the court, and does not possess the-powers of a permanent receiver, nor any legal powers except such as are specifically conferred upon him by order of the court.”

But if it be admitted that the allegations of the complaint are broad enough to show plaintiff’s capacity to sue as receiver, the complaint would still, in our judgment, be fatally defective. A receiver of an insolvent corporation represents for different purposes three distinct interests ; the one as trustee of a corporation, another for the benefit of stockholders, and the third for the benefit of creditors. For certain purposes he may and can represent, one only. Curtis v. Leavitt, 15, N. Y. 45; Osgood v. Laytin, 48 Barb. 465 ; Butterworth v. O'Brien, 24 How. Pr. 438; Osgood v. Ogden, 3 Abb. Dec. 425; Attorney General v. Guardian Mut. Life Ins. Co., 77 N. Y. 275; Porter v. Williams. 9 N. Y. 142. In general, he can bring no action which the parties or estate he represents could not maintain. Coope v. Bowles, 42 Barb. 88; Gruff v. Bonnett, 31 N. Y. 9. But in seeking to set aside a transfer made by the corporation he acts, not for the corporation, but adversely to its interests, and consequently not for the stockholders. In such a case he does not act solely for the benefit of all the creditors, hence it follows that he can bring no action which the creditors cannot bring, unless the statute gives him larger powers. In Attorney General v. Guardian Mut. Life Ins. Co., supra, the-court, in speaking of the right of a receiver to sue, says:

“ The receiver, as the representative of all the creditors, was the proper person to prosecute the action to recover the assets of the Cuarclian Company, and he commenced the action for that purpose, with the sanction, as it must be presumed, of the court, which appointed him.”

In Osgood v. Ogden, supra, which was a case of a receiver of an insolvent corporation, appointed by final decree, the referee to whom it was referred was of the opinion that, though the receiver represented both the creditors and the corporation, he was peculiarly the trustee of the creditor, citing Haxton v. Bishop, 3 Wend. 13, and, as the acts for which the receiver sought to recover were both mala prohibita and constructive frauds upon the creditors, the reparation sought was in the right of the creditors and not in that of the company, or the stockholders. The court of appeal ssays, in reference to this reasoning:

“ I think the conclusion of the referee is right, and substantially upon the ground indicated. * * *In this suit, as to the parties and the subject matter of it, they represent the creditors of the insolvent corporation, and not the corporation itself. It is clear and is well established by the authorities that receivers have, so to speak, a double character; and while in some respects, and as respects certain interests, they represent solely the corporation in whose legal shoes they stand, as to others they represent the creditors alone.’’

So in Porter v. Williams, 9 N. Y. 142, it was held that a receiver in supplementary proceedings represented the creditors as well as the debtor; that he stands, in this respect, in the same position as the receiver of an insolvent corporation, or as an executor or administrator. In Butterworth v. O'Brien, supra, in a case where dividends had-been improperly declared, the supreme court held that the claim belonged to the creditors, and not to the receiver, and that the receiver could not collect such moneys for the benefit of stockholders. In Curtis v. Leavitt, 15, N. Y. 45, it is said:

“It has, however,- been uniformly assumed, and was not denied on the argument, that he [the receiver] succeeds to the rights of creditors, and takes his title under them, where conveyances have been made in fraud of their rights, but otherwise valid. In such case he holds adversely to the debtor corporation.”

It is fundamental that a creditor cannot attack a transfer of property as fraudulent until he has recovered judgment and issued execution, Adsit v. Butler, 87 N. Y. 585; Geery v. Geery, 63 N. Y. 252 ; Sturges v . Vanderbilt, 73 N. Y. 384; and if the creditors could not, without a judgment, and execution returned unsatisfied, this receiver, who stands in their shoes, cannot, unless some statute dispenses with the necessity of judgment and execution, plaintiff having neither alleged that there were judgments entered or executions issued and returned unsatisfied. Nor are such cases as Southard v. Benner, 72 N. Y. 424, and Geery v. Geery, supra, in conflict with this view of the law; for, as above shown, chapter 314, Laws 1858, which dispenses with the necessity of judgment and execution, does not apply to any receivers except those who are trustees, or have the legal title to the property. And it has been directly held that such statute does not apply to a receiver pendente lite, or temporary' receiver, Ogden v. Arnoux, 29 Hun, 146, or even to receivers appointed in supplementary proceedings, Peitibone v. Drakeford, 37 Hun, 628. See, also, Fincke v. Funke, 25 Hun, 616 ; Keeney v. Home Insurance Co., supra; Foster v. Townshend, 68 N. Y. 206. Plaintiff, therefore, as representing creditors, could not maintain this action in any event without showing judgment with execution issued and returned unsatisfied ; nor can the allegation of insolvency of the company cure this defect; Briggs v. Oliver, 68 N, Y. 336. Even an allegation that the debtor was insolvent, and had conveyed its property fraudulently, would not authorize a resort to equity until the remedy at law is exhausted ; Adee v. Bigler, 81 N. Y. 349. A judgment creditor, after the return of execution unsatisfied against the corporation, might maintain his creditor’s bill, but not before. Hastings v. Drew, 76 N. Y. 9. Plaintiff, as receiver, without express authority, could have no larger rights than the creditors, and, having failed to make the essential allegations of a creditor’s bill, his complaint must fall.

The confusion in this case has arisen from not distinguishing between statutory and common-law receivers, and from not fully considering the respective powers of each. A bare inspection of the complaint shows that in neither New Jersey nor New York is the plaintiff a permanent receiver, as defined by § 1788 of the Code; and, so far as his powers are ^concerned, it is not alleged that the powers of a permanent receiver were ever conferred upon him by order of the court. If appointed under the general equity powers of the court as above shown, the plaintiff could be a temporary receiver only, with powers limited by the order appointing him; and from this order it does not appear that he had power or authority to sue.

The charges that the tenders of resignations, acceptances thereof, and so forth, were pretenses, are not admitted by the demurrer. The allegtions referred to were nothing more than charges that the various acts were void, and which charges would be mere . conclusions, of which the court of appeals has said : It is also alleged in general terms that the judgment was void, in the state of Illinois.- These are statements of law, and not of facts; and the sufficiency of a pleading is to be determined by facts stated, and not by the conclusions of law averred, and the facts only are deemed to be admitted by demurrer. Kinnier v. Kinnier, 45 N. Y. 535; Bonnell v. Griswold, 68 N. Y. 294; Buffalo Catholic Inst. v. Bitter, 87 N. Y. 250; Bogardus v. Insurance Co., 101 N. Y. 328. Hence the allegations of the complaint relating “to resignations, acceptances, and so forth, stand admitted as facts, while the pretenses under which such acts were done, being mere conclusions are not admitted. Therefore Harrison and Handy were not officers or directors at the time of the transfer to them. It remains, therefore, to determine whether, under the statutes of New York or New Jersey, these defendants are liable under the complaint as framed. The material allegations remaining would be that these defendants are stockholders, and had been directors and stockholders, that the board of directors, through the connivance of these defendants, fraudulently, without consideration, transferred the assets described to them; that at that time the com..pany had creditors and stockholders within this state; that the transfer was made in contemplation of insolvency, and rendered the company insolvent. But it does not appear by the complaint that the stockholders and creditors did not consent to the transfer ; nor does it appear that any request had been made to the receiver to bring the action, or that, at the time the action was brought, the creditors had not been paid, or that there were then any creditors of the corporation, or that there were any judgment creditors with docketed judgments or executions returned unsatisfied at the time the suit was brought. Under the New York Code as to corporations it is provided in § 1812 :

“ The last three sections apply to an action against a corporation * * * created by or under the laws of * * * another state * * * or a trustee, director or other officer thereof. * * *”

Section 1810 provides:

“ A receiver of the property of a corporation can be appointed only by the court, and in one of the following cases: 1. Compelling the defendants to account for their official conduct in the management and disposition of the funds and property committed to their charge. 2. Compelling them to pay to the corporation which they represent or to its creditors, any money, and the value of any property which they have acquired to themselves or transferred to others or lost or wasted by violation of their duties.” Section 1781, Code Civ. Proc.

Sections 1784-1796 of the Code, which relate entirely to judgment creditors’ actions, cannot apply, there being no allegation that there were judgment creditors or general creditors at the time the action was brought, or that the attorney-general was requested to sue, etc. That remedy is confined to the attorney-gen eral. See note to section 1786, Throop’s Code. We have before shown that chapter 314, Laws 1858, does not apply, and it follows that plaintiff’s reliance must be on section 1781 of the Code. The prayer for relief in this action follows the relief afforded in that section : that is, that the assignment be set aside, and defendant’s account for the value of the property. The other sections allow sequestration of the property, and judgment of dissolution, the latter of which could not be had iri the case of a foreign corporation. The nature of the relief demanded may properly be considered by the court on demurrer. Swart v. Boughton, 35 Hun, 281. Section 1782, providing by whom such actions may be brought, does not include receivers. Under section 1781 the complaint is defective, because it does not allege authority to bring the action, or that defendants are trustees, directors, managers, or other officers of the corporation. The New Jersey statute is penal in its nature, and must be strictly construed, as similar ones are in this state. Van Dyck v. McQuade, 86 N. Y. 46; People v. Barker, Ct. App. 36 N. E. 196. Besides, that statute, as alleged, applies only- to directors, which these defendants were not, as before shown. The complaint is for a fraudulent transfer of specific property, not “ capital stock” or “ dividends.” The words “ money” or “ amounts,” as used in paragraph 13.of the complaint, indicate the meaning of the words “ dividend” and “ capital stock” as in the statute, but there is no charge of a division of money or amounts in the complaint. The liability of stockholders is only for the receipt of “money,” which is not alleged. Nor has plaintiff complied with the rule that to recover under a statute every fact mnst be pleaded to bring the complaint within it. Straus v. Sage, 5 Misc. Rep. 255 We think, therefore, that the interlocutory judgment should be vacated and set aside, and an interlocutory judgment ordered for the appellants, but with leave to plaintiff to amend the complaint within 20 days upon the payment of the im terlocutory costs and the costs of this appeal.

All concur. •


author: Giegerich, J.

text:
    Xavier Stierle, Plff. v. The Union Railway Company, Def't.

      (New York Common Pleas, Trial Term,

      Filed January 9, 1895.)

    Order—Resettlement.
    A motion to resettle an order will not be granted after the expiration of the time to appeal.
    Motion to resettle an order denying a motion for a new trial.

      Leopold Lee, for plff; John Vernon Bouvier, jr., for def't.
   Giegerich, J.

Upon the 26th day of November, 1894, a verdict was rendered in favor of the plaintiff; and defendant’s counsel, immediately after the rendition of the same, moved “ to set aside the verdict, and for a new trial, on all the grounds mentioned in section 999 of the Code,” which motion was denied. An order denying such motion was upon the same date entered, at the instance of the plaintiff’s attorney: Judgment was entered on the 28th day of November, 1894. Upon the 14th day of December, 1894, the present attorneys for the defendant were substituted; and upon the 27th day of December they requested the plaintiff’s attorney to “ permit” the service of notice of appeal from such order, which request was refused. The following day they served a notice of appeal from the judgment only, and later, but upon the same day, the present motion papers were served. The same, in substance, allege that the order, as entered, fails to state fully the grounds of the motion, and that it therefore furnishes an unsafe basis for an appeal.

Section 784 of the Code of Civil Procedure declares a court or .judge to be without authority to extend the time fixed by law within which to take an appeal, and the authorities are overwhelming that, as the legislature has seen fit to deprive the courts of this power, they should not exercise "it by indirection. Humphrey v. Chamberlain, 11 N. Y. 274; Fry v. Bennett, 16 How. Pr. 885; Whitney v. Townsend, 7 Hun, 233; Lavelle v. Skelly, 24 Hun, 642 ; Piper v. Van Buren, 27 Hun, 384; Parsons v. Vinne, 17 Wkly. Dig. 236; Durant v. Abendroth, 8 Civ. Proc. R. 87; Clapp v. Hawley, 97 N. Y. 610. That the effect, and the sole, effect, of granting this motion, would be to allow an extension of time for appealing, is clear, because the 30 days allowed by section 1351 of the Code of Civil Procedure had already expired before this motion was made; and to grant it now would not only contravene the spirit and intent of the above-cited provisions of the Code, but would virtually render uncertain the time within which appeals must be taken in cases like the present, and a successful party could never rest secure upon his judgment. It might be further remarked that this decision works no hardship, because the defendant is left in no worse condition than it would now be, by reason of its loches, had the order, as entered originally, been in the form in which this proposed resettlement seeks to place it. The fact that no dissatisfaction was expressed with the order until after the plaintiff’s attorney had refused to accept service of notice of appeal from the same is also significant. Having recognized the sufficiency of the order by seeking to make it the basis of an appeal, and by retaining it so long without objection, the defendant’s attorneys ought not now to be heard in complaint. For these reasons, the motion should be denied.


text:
    Edmund S. Whitman et al., App’lts, v. Edwin L. Johnson, Resp’t.

      (New York Common Pleas, General Term,

      Filed January 7, 1895.)

    1. Appeal—Order denying new trial.
    An appeal from an order denying a new trial lies, though the time to appeal from the judgment has expired without an appeal being taken therefrom.
    8. Same.
    In such case, the common pleas will consider whether the case has been submitted to the jury upon an erroneous theory of the law, whether any erroneous instruction was given, whether the appellant has sustained any injury from the jury’s having been misled because of the lack of proper instruction and whether the verdict was against the weight of evidence and the justice of the case, even though there were no exceptions taken.
    3. Principal and agent—Undisclosed agency.
    The agent must, in order to relieve himself from personal liability on a contract made in his own name, show that he had authority to make it in such form, and that he disclosed at the time not only the fact of his agency to the other party, but also the name of his principal in such a way that the contract would bind the principal and not himself.
    4, Same.
    A notice of such agency upon the heading of a confirmatory letter, received after the contract was made, is insufficient for this purpose.
    Appeal from an order denying a motion for a new trial on the grounds mentioned in § 999 of the Code.

      Osgood Smith, for app’lts; Benjamin L. Fairchild, for resp’t.
   Bookstaver, J.

This is an appeal from an order denying a new trial. The time to appeal from the judgment expired without an appeal being taken therefrom. It is nevertheless valid, and must be heard. Voisin v. Commercial Mutual Insurance Co., 123 N. Y. 120; 33 St. Rep. 160. notwithstanding there is no such appeal as an appeal from an order denying a new trial, this court, at general term, must consider whether the case has been submitted to the jury upon an erroneous theory of the law; whether any erroneous instruction was given ; whether the appellants have sustained any injury by the jury having been misled, because of the lack of proper instruction ; also whether the verdict was against the weight of evidence and the justice of the case; and this, even though there were not any exceptions taken. Whittaker v. D. & H. Canal Co., 49 Hun, 400; 22 St. Rep. 409; Vermilyea v. Palmer, 52 N. Y. 471; Standard Oil Co. v. Amazon Ins. Co., 79 N. Y. 506; Gillett v. Trustees of Kinderhook, 77 Hun, 604 ; 60 St. Rep. 485; Hamilton v. Third Ave. Railrood Co., 58 N. Y. 25. From the case it appears that this action was brought, to recover damages for the breach of an executory contract for the sale of 1,000 barrels of oil. The contract, irrespective of certain printed notices upon the billhead on which it was written, is as-follows:

“New York, Nov. 16th, 1892.
“ Messrs. Whitman Bros., Produce Exchange, City—Gentlemen: We herewith confirm sale to you of 1,000 Sbls. prime crude cotton oil, from Sulphur Springs and Wolfe City, Texas, at 26£ cents per gallon, delivered New York City, in tank cars, to be furnished the mills by you as needed.
“Yours, very truly, Faith Cotton-Oil Agency of N. Y.
Edwin L. Johnson, Prop’r.

The appellants are the Messrs. Whitman Bros, to whom the above is addressed, and the respondent is Edwin L. Johnson, the signer of the letter. The oil was never delivered, and the Messrs. Whitman Bros, brought this action against the defendant as principal in the transaction. The respondent’s defense was that he acted merely as the agent of two oil companies in Texas, and was therefore not liable. Nevertheless, as appears by the contract above, he signed ,it personally, and did not disclose to the appellants, as the latter claim, the name of the seller until the time came to send the tank cars ; and an examination of the notice of sale sent the oil companies shows that he did not disclose to them, the name of his purchaser. On the trial the respondent sought to relieve himself from the responsibility of the contract sued bn by claiming, not that he disclosed his principal to appellants^ but that he had made certain statements from which the appellants should have inferred that he was not acting as principal in the matter, but as agent for certain companies, the names of which he did not disclose; also that he had before that time dealt with the appellants as agent, and that they well knew he was in his transactions-acting as agent, and not as principal. These facts were, however, denied by the appellants, and respondent relied chiefly upon the notice or advertisement contained on the letterhead used in writing the confirmatory letter before set forth. These words were above that contract, and in much finer print, and are as follows: “ The Faith Cotton-Oil Agency represents the Independent Oil Mills and Eefineries, and does an exclusively commission and brokerage business in cotton-seeds products. Products sold by sample to arrive on consignment, with liberal advances, or for future shipment to any market, with contracts made direct between principals, if desired.” And also upon another form used by him, containing the expressions, “ Cotton-seed products on commission ” and "Manufacturers’ agents of the Independent Mills." The evidence is contradictory as to when and how this confirmatory letter was received by appellants ; respondent claiming that the contract was made verbally, and confirmed by the letter, which was sent by mail later in the day. The, witness Whitman testified that bethought it was by a personal delivery, although he would not be certain. It is clear from the case, however, that the letter was merely confirmatory of a sale made earlier in the day.

The whole controversy turned upon a question of whether or not the contract was made between the parties with the full knowledge of both that the respondent was acting in the matter as an agent merely, or whether he was acting as principal, or as agent for an undisclosed principal or principals. The law governing such transactions is too -well settled, to need extensive argument or review. Miller v. Hannibal & St. J. Railroad Co., 90 N. Y. 430; Hill v. Miller, 76 N. Y. 32; Rawson v. Penn. Railroad Co., 2 Abb. Pr. (M. S.) 220; Pearsall v. Western Union Telegraph Co., 124 N.Y. 256, 35 St. Rep. 307; Mahoney v. Kent, 7 Misc. Rep. 726 ; 58 St. Rep 366 ; Cobb v. Knapp, 71 N. Y. 348. From the cases cited, the-rule of law applicable to this case is clearly deducible, and according to suchrule, the respondent must show to the satisfaction of the jury —First, that when he made the contract he had authority from the persons for whom he made it to make it in the form he did; and, second, that he not only disclosed the fact of his agency to the appellants at the time of making the contract, and gave them an opportunity to discover who the principals were, but also disclosed the names of such principals to the appellants in such a way that the contract would bind the principals, and not himself. And while it is very apparent to the professional mind that these rules-of law were clearly in the mind of the learned justice who tried the case, and were presupposed by him, yet in such charge to the jury he nowhere explicitly states to them the second of these rules; that is, that at the time of making the contract, or before doing so,, he disclosed the fact of his agency to the appellants. Hence, at the close of the charge, appellants’ counsel asked the court to charge the jury “that the Messrs. Whitman Bros, are not bound by any notice on this written contract from Edwin L. Johnson, printed in very small type on the upper left-hand corner of this paper, unless the defendant first brought home to the Messrs. Whitman Bros, actual knowledge of this particular notice,” to which the court replied : “I charge as counsel requests, namely, that the Messrs. Whitman are not bound by that notice up thereabout the Faith. Agency doing an exclusive commission and brokerage business not at all, unless the Messrs. Whitman saw that, and whether they saw it and read it or not, or knew of it, you must determine, in view of the fact that the contract immediately, or a short time after its execution, that very paper was handed to the Messrs. Whitman, and has been in their custody from that day to this, so far as there is any evidence in the case ; and, furthermore,—correct me if I am wrong,—Mr. Whitman, going on the stand, did mot say he had not .seen that.” In view of the charge thus made, appellants’ counsel requested the court to further charge “that they must disregard that notice as bearing on the written part of this ■contract in evidence, without it was brought home to the plaintiffs at the time of the making of this contract,’’.which the court refused to charge, and proceeded to state that there was abundant -evidence, if the jury believed it, for them to find that Mr. Whitman knew of the notices on the face of the paper. But inasmuch as the court nowhere specifically charged the jury that the notice •of agency must have been given to the appellants before or at the time of making the contract, so that when it was made the appellants had full knowledge that they were dealing with an agent, and not a principal, the request, in our opinion, was proper, and should have been charged. From what the court said, the jury may have thought, although they believed Mr. Whitman’s testimony as to what took place before the contract was made, and not Mr. Johnson's, yet inasmuch as the notice, when attention was mailed to it, was clear that he was doing a general business as agent, and that this notice must have come to the attention of Mr. Whitman after he received' the paper, they were bound to find as "they did. But from the case it is apparent that this particular notice was not received by Mr. Whitman until after the contract was made, and, in fact, on the face of it it purports, to be a confirmation of the verbal contract theretofore made. A comparison' •of the confirmatory note sent the appellants and the notice sent to the oil companies shows that in the former he did not reveal his principals to the purchaser, nor in the latter did he reveal the purchaser to the companies ; and also shows a considerable diversity as to the price tb be paid and the terms of sale. The one lumps the 500 barrels sold for each company in one quantity, and at a uniform price, while the other shows the separate sales of the •500- barrels belonging to each company, at different prices, and on ■different terms. It may be true, as contended by the respondent, that the differences as to price are accounted for by the freight •charges, but, in view of the conclusion to which we have arrived •on the question first presented, we do not deem it necessary to pursue this inquiry further, as upon another trial this may be more fully and clearly explained. The judgment should therefore be reversed, and a new trial ordered, with costs to the appellants to abide event; and, inasmuch as the judgment has been paid, there should be an order of restitution to the appellants for the amount so paid, together with interest from the time of payment.

All concur.