author: METCALF, J.

text:
    Henry M. Field, Pl'ff, v. Avery Ingreham, as Sheriff, etc., Def't.
    (Ontario County Court,
    Filed January, 1896.)
    1. Chattel Mortgages—Filing.
    The failure to file a chattel mortg'age, where there is no change of possession of the mortgaged property, renders the mortgage absolutely void as to the existing contract creditors, though covering only exempt property.
    2. Execution—Exemption.
    The rig'ht of exemption from execution is a personal right, which must be asserted by the execution debtor.
    3. Same.
    The delivery of an execution to the sheriff binds property, exempt under section 1391 of the Code, until the debtor claims such exemption and notifies the officer of his claim.
    Frank Rice and H. M. Field, for pl’ff; Clement & Scott, for def’t.
   METCALF, J.

This action is brought to foreclose a chattel mortgage given by Edward J. Bull to the plaintiff on the 17th day of March, 1894, and filed in the proper clerk’s office on the 3d day of May, 1894. Tbe defendant, as sheriff, of Ontario county, received an execution against said Bull on the 2d day of May, 1894, in favor of A. P. Tuller and J. E. Barnard, copartners, and on the 4th day of May, 1894, took the property described in said chattel mortgage into his possession, where it was subsequently attached by the plaintiff in this action, and sold by the coroner, upon which was realized $97.50, the expenses being $14.92, leaving $82.58 as the net proceeds of the sale, now in the hand's of the coroner. No change of possession of the mortgaged property followed the delivery and execution of the- mortgage; ami the plaintiff’s claim the sole right"to recover herein is based upon the said chattel mortgage. The defendant claims that the chattel mortgage was invalid, and was absolutely void as against the creditors of the mortgagor, as it was not filed for some forty-seven days after it was executed and delivered. Tuller & Barnard became judgment creditors of Bull on the 2d day of May, 1894. They were contract creditors of Bull from the 23d of November, 1893, long prior to the mailing and delivery of the chattel mortgage to the plaintiff on the 17th day of March, 1894.

The statute requiring the filing of chattel mortgages has been frquently construed to mean that the failure to file a chattel mortgage where there was no change of possession of the mortgaged property renders the mortgage absolutely void as to the existing contract creditors. Karst v. Gane, 136 N. Y. 316; 49 St. Rep. 740; Stephens v. Perrine, 143 N. Y. 476; 62 St. Rep. 843; Vreeland v. Pratt, 42 St. Rep. 582. The plaintiff contends that; even this being-so, the chattel mortgage covered only exempt property, which consisted of horses, wagons, and harnesses, and was not liable tovany debt of his creditors, unless such exemption was actually waived, and no waiver could be made by the mortgagor which would affect the rights of his mortgagee, and, the mortgage being good as between the mortgagor and mortgagee, the failure to file could not affect the rights of the mortgagor’s creditors, as they had no right or interest in exempt property. It has been repeatedly decided that the right to exemption from execution is a personal right, which must be asserted by the execution debtor. Smith v. Hill, 22 Barb. 656; Russell v. Dean, 30 Hun, 242. The plaintiff claims that, by section 1405 of the Code of Civil Procedure, personal property “not exempt” by express provision of law, etc., is bound by the execution; that therefore, this being exempt property, it could not be bound by execu-1 tion, and the lien of the chattel mortgage could be declared without the filing, as against the rights of such execution creditor. In Wilcox v. Howe, 59 Hun, 268; 36 St. Rep. 303, the plaintiff’s horse and wagon were levied upon by virtue of a warrant of attachment under section 2909, Code Civil Procedure, which provides “that the constable must execute a warrant of attachment by levying upon the goods and chattels of the defendant not exempt from levy and sale by virtue of an execution.” Judge Martin, in his opinion, at page 270, 59 Hun; 36 St. Rep. 303, says:

“There are two classes óf exemptions provided for by the statute. One relates to certain articles which are spcifically enumerated and absolutely exempted. The other is limited to the sum of $250, and there may be claimed under it property of the kind mentioned in section 1391 to that amount, but to that amount only. The latter exemption is limited and indefinite, and where the debtor has property of that character, of greater value than $250, it is dependent upon his election as to the particular property that may be retained by him as exempt. Construing the provisions of section 2909 in the light of the provisions of sections 1390 and 1391, the inquiry presents itself whether the provision that a constable must execute an attachment by levying upon the property of the defendant not exempt from levy and sale under execution, in effect, forbids the officer to levy upon any property that might be exempt under either section, or whether it relates only to the property specifically exempted by section 1390, and such as is claimed by the defendant, or known to the officer, to be exempt under section 1391. If it were to be held that an officer could not levy upon any property of the description mentioned in section 1391 without becoming liable to an action tor its recovery, when no demand was made, nor claim that it was exempt asserted by the owner, it would follow that all property of that character would be practically exempt from levy under an attachment, although it greatly exceeded in value the limit provided by that section. We think no such construction should be given to this statute. If the property consists of the articles ■mentioned in section 1390, it is absolutely exempt, if the owner is ¡3 householder, and the officer has no light to levy upon it. If, 'however, the property is of the description mentioned in section 1391, the exemption is a qualified one, and the debtor must claim it, and notify the officer of his claim, before he can properly maintain an action, either for its conversion, or to recover its possession, especially when there is other property to which such exemption might apply.”

For these reasons the plaintiff’s contention is untenable, and I am constrained to hold that the plaintiff’s chattel mortgage was void, as to the defendant and the creditors under whom he claims, by reason of the plaintiff’s failure to file the same as required-by the statute. The defendant is therefore entitled to judgment dismissing the plaintiff’s complaint, with costs, and directing the payment of the sum- of $82.58, the proceeds of the sale of said mortgaged property now in the hands of the coroner.

Ordered accordingly.


source: Caselaw Access Project

author: FITZSIMONS, J.

license: Public Domain

text:
    John M. Schmidt, App'lt, v. The Nelke Art Lithographic Company, Resp't.
    (New York City Court, General Term,
    Filed March 16, 1896.)
    1. Corporation—Goods sold and delivered.
    In an action for goods sold and delivered to a corporation, the vendor cannot recover where such corporation was not incorporated until several months after such sale and delivery.
    3. Same—Proof of incorporation.
    Plaintiff is not required to prove defendant’s incorporation, where the latter does not specifically deny such incorporation.
    Appeal from a judgment in favor of defendant.
    J. George Flammer, for app’lt; Albert E. Henschel (Fromme Bros., of counsel), for resp’t.
   FITZSIMONS, J.

This action is for goods sold and delivered to defendant, a corporation, and the answer is a general denial. Under the issue so framed, the plaintiff was required to prove that he sold and delivered the goods in question to the defendant. The entire testimony shows that he did not do so, and could not have done so, for the simple reason that the defendant was not incorporated until several months after such sale and delivery. Evidently, the sale was made to Hr. Yelke, who did business under the name of Yeilke Company, even, perhaps, under a name like defendant’s name; but that fact would not entitle him to judgment against the defendant. The plaintiff is correct in his contention that he is not required to prove the defendant’s incorporation, because defendant did not specifically deny its incorporation. He was, nevertheless, under the issues framed, as before stated, required to prove a sale and delivery of the goods to the defendant corporation. The justice who tried this case dismissed the complaint because of plaintiff’s failure to prove such sale and delivery to defendant, and he was right in doing so.

Judgment affirmed, with costs.

All concur.


author: McADAM, J.

text:
    Solomon Getzler et al., App'lts, v. Isaac Boehm et al., Resp’ts.
    (Supreme Court, Appellate Term, First Department,
    Filed March 23, 1896.)
    Brokers—Commissions.
    The rule that only conditions precedent to a right to recover brokerage are the original discovery of the purchaser, the starting of the negotiations by the broker, and the final closing of the harg'ain by or on behalf of the principal, does not apply where the right to brokerage is made conditional upon the personal introduction of the purchaser by the broker before a sale is consummated.
    Appeal from a judgment in favor of defendants.
    Wood, Shaffer & Eisler, for app’lts; Jeroloman & Arrowsmith, for resp’ts.
   McADAM, J.

The action is to recover brokerage on the sale of the lease and contents of the liquor store Mo. 63 Massau street, this city. In Movember, 1894, the place in question was run by Joseph Kopetsky, who was anxious to dispose of it. He mentioned his purpose to David Hoexter, who called upon the plaintiffs, and signed in his own name an agreement employing them to sell the place for $10,000 cash. Kopetsky did not pay his rent, and was dispossessed; and a chattel mortgage on the stock in the store, held by Beadlestown & Woerz, was foreclosed about December' 9, 1894. The defendant Boehm was one of the owners of the lease, and the codefendant Coon owned the fixtures in the place. Boehm was interested in protecting himself on the lease, and Coon in getting compensation for his fixtures. The plaintiffs called on Boehm after Kopetsky had been dispossessed, and asked him to sign a paper authorizing them to sell the place on ‘commission. Boehm said he was not the sole owner of the place; .that he had only an interest in the lease, but if they brought a man, and introduced him, and sold the place, they would then get their commission; and he thereupon gave the plaintiffs a letter to Mr. Coon, who owned- the fixtures. Coon testified that Mr. Meumann, one of the plaintiffs, called upon him with the letter; that he (Coon) said he would be pleased to have the plaintiffs dispose of the property; that Mumann wanted to know -the price, and Coon told him it was $6,000, but he would he pleased to get what offer Meumann could give; that Meumann said there was a commission, and Coon replied he was specific in all contracts, that he had had dealings in real estate, and had it understood with every broker that any man that procures a customer must introduce him, bring the party into his office, and close the contract there. While the plaintiffs had the property for sale under the Hoexter authority they advertised it, as a result of which they were waited upon by John E. Bartz, who in the latter part of December, 1894, purchased the property, in the name of his wife, for $4,500. Bartz was not introduced by the plaintiffs to the defendants. His name was not mentioned to them, nor theirs to him, until after the sale had been closed. The lowest, price at which Bartz was offered the place by the plaintiffs was. $6,000, and he said he dropped the matter as the price was toot high; that about the latter part of December he found the place? closed, and went downstairs into the restaurant, kept by a woman; named Fuchs, where he met a gentleman, and inquired who-the owners of the saloon and fixtures were; that he was directed to* go to 45 Maiden Lane, where he would find out who the owners-were; that he went there, and saw the defendant Boehm; and that his interview with Boehm there led to the sale.

While it is undoubtedly true that the defendants first directed Bartz’s attention to the place, it is equally true that they did not introduce him to either of the defendants, or even disclose his name as their customer, and so did not perform the condition upon which their brokerage was made to depend. The only proposed purchaser whose name was mentioned to the defendants by the plaintiffs was a Mr. Kramer, of Hoboken, who never presented himself. The brokers did not bring the vendors and purchaser together, or cause a meeting of minds upon the subject-matter and terms. The negotiations opened by the brokers did1 not continue uninterruptedly to a culmination. On the contrary, Mr. Bartz testified that he dropped the matter because the price named by the brokers was too high. The sale was not consummated until some weeks afterwards, and then on different terms; and it was brought about by the parties themselves, in the accidental manner before described. That it was consummated in good faith is proved by the fact that the defendants did not know they were dealing with a customer of the plaintiffs. In some respects, the case resmbles Baker v. Thomas, 12 Misc. Rep. 432; 67 St. Rep. 275, in which a recovery for brokerage was reversed. There are cases holding that the only conditions precedent to a right to recover brokerage are the original discovery of the puchaser, and the starting of the negotiations by the broker, and a final closing of the bargain by or on behalf of the principal, Stillman v. Mitchell 2 (N. Y), 523; that the broker need not introduce the purchaser to the owner, nor the owner be notified that the buyer is the broker’s customer. Lloyd v. Matthews, 51 N. Y. 124; Sussdorff v. Schmidt, 55 N. Y. 322; Hanford v. Shapter, 4 Daly, 243; Levy v. Coogan, 30 St. Rep. 553. And these cases are controlling where the negotiations continue uninterruptedly to a successful conclusion, except when the parties have as in this instance, made the right to brokerage conditional upon the personal introduction of the purchaser by the broker before a sale is consummated. The plaintiffs—having, according to the finding of the justice, assented to this condition precedent—cannot now complain; for they must recover according to the terms of their employment, or not at all. As was said by the court of appeals in Sibbald v. Iron Co., 83 N. Y., at page 383, a broker “may have created impressions which, under later and more favorable circumstances, naturally lead to, and materially assist in, the consummation of a sale. He may have planted the very seeds from which others reap the harvest. But all that gives him no claim. It was a part of his risk that, failing himself,— not successful in fulfilling his obligation,—other’s might be left, to some extent, to avail themselves of the fruits of his labors.” The judgment must be affirmed, with costs.

All concur.


text:
    Mary A. Kauffman, Resp't, v. Michael Klang et al., App'lts.
    (Supreme Court, Appellate Term, First Department,
    Filed March 23, 1896.)
    1. Pledge—Rights of Pledgee.
    Pledgees are neither purchasers nor mortgagees in good faith within the meaning of chapter 315 of 1848.
    3. Same.
    An unauthorized pledge to one, having no notice that another is the true owner, vests no title in the pledgee.
    3. Same—Remedy.
    The pledgee must necessarily rely upon the pledgor’s warranty of title, and, if title prove defective, his remedy is against the pledgor.
    4. Appeal—First instance.
    In an action of replevin, a demand, if necessary, is waived hy the failure of the defendant to move at the new trial for a dismissal of the complaint on such ground.
    Appeal from a judgment in favor of plaintiff.
    William N. Loew, for app’lts; Saul Bernstein, for resp’t.
   McADAM, J.

The action was in replevin to recover possession of a watch and chain, the property of the plaintiff, wrongfully detained from her hy the defendants under the following circumstances: On March 15, 1895, the defendant Klang obtained possession of the property from the plaintiff, under an agreement in writing, signed hy him, whereby he certified that he had rented and leased from the plaintiff the property in question, for which he agreed to pay $96, as follows: $20 on delivery, and the further sum of $2 on each and every Thursday of every week thereafter until said sum of $96 was fully paid, when the plaintiff should deliver to him a bill of sale of the property without further consideration. Klang agreed to safely keep in his possession the said property, in trust for the plaintiff; and it was understood that title thereto should not pass until all of the payments were fully made. It was further provided that, in case of default in any one or more of the payments, Klang should surrender the property to the plaintiff in good condition, and permit her to keep and retain all moneys theretofore paid thereon. It was also agreed that, before obtaining a bill of sale of the property, Klang should not deliver it to any person without first receiving in writing the consent of the owner. Klang paid the $20 mentioned in the agreement, and on the following day pledged the property with his codefendants, H. & S. Freund, pawnbrokers, obtaining thereon the sum of $40. The action was commenced Flay 7, 1895, and was tried on a stipulation by which the facts hereinbefore stated were admitted. It was also agreed that Bang "violated the conditions of the agreement by pledging the property, and that H. & S. Freund did not know, at the time they advanced the $40, of the existence of the agreement before referred to.

It is urged on behalf of the appellants Freund that the agreement by which Bang obtained possession of the property constituted a conditional sale, and, as no copy thereof had been filed as required by chapter 315 of the Laws of 1884, and the acts amendatory thereof, the same is not operative as to them. The statute provides that conditional sale agreements, unless filed, shall be void as against subsequent “purchasers or mortgagees” in good faith; and it is clear that pledgees are neither. La Fetra v. Glover, 10 Misc. Rep. 70; 62 St. Rep. 264; Dental Co. v. Webb, 16 N. Y. Supp. 932. So that there is nothing in the act relied upon that has any relevancy to this case. Bang had no title whatever, and could not, therefore, pledge the property; and the fact that his codefendants in' good faith advanced $40 upon it gives them no greater right than the pledgor himself had. He had a mere naked possession. This has never been held to confer a power of disposition, and an unauthorized pledge to one having no notice that another is the true owner vests no title in the pledgee. La Fetra v. Glover, supra; Smith v. Clews, 114 N. Y. 190; 23 St. Rep. 166; Heilbronn v. McAleenan, 16 St. Rep. 957; Anderson v. McAleenan, 29 id: 406. The plaintiff did not furnish the defendant with any, indicia of title, and she is in no manner estopped from asserting her rights. The pledgee must necessarily rely upon the pledgor’s warranty of title, and, if title prove defective, his remedy is against the pledgor.

Appellants contend that no demand has been proved. Assuming a demand to have been necessary, it was waived by the failure of the defendants to move at the trial for a dismissal of the complaint upon that ground. A defect in the plaintiff’s case should be pointed out so that he may supply it if he can. Gerding v. Haskin, 141 N. Y., at page 520; 57 St. Rep. 716; Booth v. Bunce, 31 N. Y. 246; Binsse v. Wood, 37 N. Y. 526; Thayer v. Marsh, 75 id. 340; Sterrett v. Third Nat. Bank, 122 N. Y. 659; 34 St. Rep. 241; Quinlan v. Welch, 141 N. Y. 158; 56 St. Rep. 680. The objection would probably have been obviated if it had been made in time.

The judgment must be affirmed, with costs.

All concur.


author: DALY, P. J.

text:
    Maggie Curtin, Resp't, v. Western Union Telegraph Company, App'lt.
    (Supreme Court, Appellate Term, First Dept.,
    Filed March 23, 1896.)
    Telegraph Companies—Contract Limiting Liability—Assent of Sender of Messages—Delay in Transmitting Message—Damage.
    A telegraph company may limit its liability for delay in the delivery of a message caused by the negligence of its servants; and a stipulation to that effect printed on the blanks furnished by the company constitutes a contract which binds the sender and the person to whom the message is produced, if the assent of the sender to such stipulation can he presumed. In this ease the conceded facts were that the sender, on the day of his brother’s death, went to the telegraph office in St. Louis, and wrote on the blank he procured there the following message to his sister in New York: “Con is dead. Can you come?” that he did not read the printed matter on the face or back of the message, and was ignorant of the contents of such printed matter, or that the message was to be transmitted subject to the terms contained in the printed matter; that nothing was said to him about it, and his attention was not called to it» It was held to be a question whether the stipulations contained in the printed matter were assented to, and a finding that they were not will not be disturbed; that the admitted facts seem to leave no-room for inferring- assent. The delivery of the message having been delayed for four days, and the deceased having been mean.while buried, his sister, who was expecting news of him, in order to go to St. Louis, if he died, and remove his body to New York, fell ill in consequence of the delay. She was held entitled to recover damages for her illness, and a verdict of $185 was sustained.
    Appeal from a judgment of the general term of the city court of New York, reversing a judgment in favor of plaintiff.
    Appeal by the plaintiff from an order of the general term reversing a judgment in her favor rendered by the trial judge without a jury, and ordering a new trial. The action was brought to recover damages for the nondelivery of a telegraphic message received hy the defendant, in St. Louis, from Henry Curtin, and' addressed to his sister, the paintiff, in Hew York, advising her of the death of their brother, and was in these words: “St. Louis," Mo., July 12, ’96. To Maggie A. Curtin, 12 Hubert St., New. York: Con died this morning. Can you come? H. 0.” It was not delivered to plaintiff until four days afterwards,—July16, 1892. The message was written hy Henry Curtin on a blank" form of the defendant company, which he got at its office. On the form, immediately over the space for the message, was printed, “Send the following message subject to the terms on the hack hereof, which are hereby agreed to;” and at the foot of the blank space were the words, “Head the notice and agreement on the hack.” On the hack of the message was printed: “All messages taken hy this company are subject to the following terms: To guard against mistakes or delays, the sender of a message should order it repeated; that is, telegraph hack to the originating office for For this one-half the regular rate i® charged in addition. It is agreed between the sender of the following message and this company that said company shall not-liable for mistakes or delays in the transmission or deivery, •or for non-delivery, of any nnrepeated message, beyond the amount received for sending the same.” The action was tried by the court without a jury, upon agreed statement of facts; and judgment was rendered in favor of the plaintiff for damages, $125, besides costs.
    Lyman W. Redington, for app’lt; Rush Taggart, for resp’t.
   DALY, P. J.

A telegraph company incorporated under the General Statutes of this state may, by contract, limit its liability for mistakes or delays in the transmission or delivery, or for the' nondelivery of messages, caused by the negligence of its servants, if the negligence he no gross. Pearsall v. W. U. Telegraph Co., 124 N. Y. 256, 267; 35 St. Rep. 307. The stipulation for exemption from liability contained in the printed blank of the company, upon which the sender writes his message, constitutes a contract which binds him and the person to whom the message is addressed, if the assent of the sender to such stipulation can be presumed.* Thus, where blanks have been for some time in the possession of the sender, he being the president of a bank, and having had abundant opportunity to read them, he was presumed to have understood their contents, and was held estopped from denying the agreement printed upon the blank on which he wrote his message. Breese v. Telegraph Co., 48 N. Y. 132. But in that case it was said he would not be estopped if the blank had been delivered to him at the time he wrote the message upon it, .and he had no opportunity to read it, and, to the knowledge of the telegraph operator, had not read it. In such case there would he no room for the application of the doctrine of estoppel, and no reason for indulging in presumptions. In another case, where the sender of the telegram was shown to be familiar «with the blanks of the company, and had used them extensively for several years, and had read the words at the bottom of them, “Read the notice and agreement at the top,” it was held, for that reason, although he may not have known what the precise terms of the stipulation contained in the blank were, yet, as he knew that some stipulations were therein contained, he must be held, assented to them. Kiley v. W. U. Telegraph Co., 109 N. Y. 236; by the use of the blank, and its delivery to the defendant, to have 14 St. Rep. 816. In the present case, according to the agreed facts, the sender of the message, on the day of his brother’s death, went to one of the offices of the defendant company in the city of St. Louis, and, taking a blank of the defendant, wrote thereon the message in question, to his sister, and paid for it, but did not read the printed matter upon the face or the back of the message, and was ignorant of the contents of such printed matter, and that the message was to be transmitted subject to the terms contained in the matter; and nothing was said to him about it, nor was his attention called to it, nor was his attention called to it, by the •defendant’s agent. Upon these facts, if there were a question whether the sender agreed to the stipulations of the printed blank, there were no such circumstances as were held in the cases cited to warrant the inference that the stipulations were accepted or assented to. The facts agreed on would seem to leave no room for such an inference in this cas. The decision of the trial judge in ¡the plaintiff’s favor necessarily found that there was no assent to these stipulations, and his decision upon the facts ought not to ¡be disturbed. In the case of a message delivered unconditionally, the mere fact that it was not promptly delivered makes out a prima facie case of negligence. Baldwin v. Telegraph Co., 45 N. Y. 744; Pearsall v. Telegraph Co., above.. In this case the message was received by the company in New York on the day of its receipt in St. Louis,—July 12th,—but was not delivered to the plaintiff, in Hew York, until four days thereafter. This was not a prompt delivery, and no excuse for the delay was offered. The plaintiff was therefore entitled to recover the damages directly resulting from the defendants negligence.

The plaintiff was expecting to receive news of her brother Con, or Conelius, who was ill in St. Louis. She had been in St. Louis in the month of July, prior to the 12th, and, when she left for Hew York, requested her brother Henry to telegraph her if Cornelius should grow worse or die, as she desired to remove his body to Hew York for burial. She did not receive news of her brother’s death until after he was dead and buried, owing to the delay in the delivery of the message. It was agreed in the facts submitted to the court that the plaintiff became sick in consequence of learning of the death and burial of her brother, and because she was not able to be present at his death and burial, and that she expended twenty dollars for medical services, and five dollar’s for medicine, in her sickness. The trial judge allowed one hundred and twenty-five dollars,—not an unreasonable allowance for her illness; and,Qas the findings do not show any particular sum allowed for any particular item of damage, there is no specific finding disclosing error. Collender v. Phelan, 79 N. Y. 366. The defendant is liable for such damages as were fairly to be anticipated by the parties as resulting from the delay. Baldwin v. Telegraph Co., 45 N. Y. 744; Telegraph Co. v. Hall, 124 U. S. 444; Primrose v. Telegraph Co., 154 id. 1. The damages allowed for in this case may be reasonably deemed to have been within the contemplation of the parties, because the message suggested the importance of the communication to the plaintiff, and the probable effect upon her feelings in its delivery. Delay in the transportation of a telegraph communication of death may be productive of an injury to the feelings, for which damages may be awarded. Shear & R. Neg. § 756. It is urged by defendant that illness might result to plaintiff by failure to deliver a message to her, “Con died this morning. Can you come?” Where the delayed dispatch was, “Dell is worse. Come-at once. Sister Annie,” the federal court allowed damages. Beasley v. Telegraph Co., 39 Fed. 182. In this case, although the relationship of the sender to the person addressed is not so clearly to he inferred as it might be in the above dispatch signed “Sister Annie,” yet there is as much reason in the one case as in the other for assuming that the message announced the death of a relative or intimate friend. “Con died this morning. Gan you come?” indicates as strong a personal interest as “Dell is worse. Gome at once.” The signature “H. C.” indicates familiarity and intimacy, and the identity of the initial of the last name of the sender and the person addressed is a circumstance from. Which relationship might be inferred.

The order for a new trial should be reversed, and the judgment of the trial term affirmed with costs of appeal in the city court and in this court. All concur.


text:
    Daniel C. Moynihan, App'lt, v. Matthew McKeon et al., Resp’t.
    (Supreme Court, Appellate Term, First Dept.,
    Filed March 23, 1896.)
    1. Negotiable Instruments.—Accommodation Indorser—Right to Recover from Maker.
    One who indorses a negotiable promissory note at the request and for the accommodation of the payee, and is compelled to take it up at maturity from a bona fide holder, may maintain an action •upon it, against the accommodation maker, although he knew, ■when he indorsed it, that it was made without consideration, and for the accommodation of the payee; his payment of the note placing him in the same position towards the maker as if he had originally advanced the money to the payee -for whose accommodation the note was made.
    2. Same.
    The presumption is that one who indorses a note indorses on faith of the maker, hut such presumption may he rebutted by showing that the note was made for his accommodation, as well as: that of the payee.
    8. Same—Evidence.
    Defendant made his promissory note to the0order of a third party to enable him to pay a bill for lumber then due. The cred-1 itor required the indorsement of the plaintiff who had guaranteed' the hill. Plaintiff indorsed and had to pay the note at maturity,' receiving it from the holder. Held, that plaintiff’s knowledge that' the note was to he used to pay the bill he had guaranteed, and that it had been made for that purpose, by defendant, without consideration, were circumstances to be considered in determining whether he indorsed on the faith of the maker, or whether he understood that the note was made for his accommodation as well; as that of the payee; hut the mere fact that he knew that the maker received no consideration would not affect his right to recover if he indorsed in reliance upon the maker. j
    Appeal from a judgment of the general term of the city court of New York, affirming a judgment on a verdict in favor of defendant McKeon.
    Appeal by the plaintiff from an affirmance by the city court of a judgment in favor of the defendant McKeon, entered upon ¡the verdict of the jury, and an order denying a motion for a new trial. The action was upon a promissory note for one hundred and sixty dollars, dated February 2, 1891, at three months, made by the defendant McKeon to the order of the defendant Smith, and indorsed by plaintiff at th request of Smith, who then indorsed it and delivered it to one Bussell, before maturity, for value. When it fell due, plaintiff paid it, and received it from Bussell, and brings this action upon it against the maker and payee. The defense was that the note was made for the joint accommodation of Smith and the plaintiff, Smith being indebted ¡to Bussell upon a bill of lumber which plaintiff had guarantied, ■and the note being obtained by Smith to be used in part payment of that bill, with plaintiff’s knowledge. There was no question 'but that the defendant McKeon made the note for the accomodation of Smith, but there was a conflict of testimony between them as to whether Smith told McKeon that plaintiff had guarantied the bill of lumber; Smith swearing that he did not tell him, and McKeon testifying that Smith stated that he had bought ,a load of lumber from Bussell, the payment of which plaintiff ¡had guarantied, that payment was coming due, and that plaintiff :was short of money, and wanted Smith to give a note to him which ¡they could indorse and present to Bussell, and get three months’ more time, and further testifying that the guaranty of plaintiff was the inducement to him (McKeon) to make the note. Plaintiff testified that Smith brought the note to him, and said that the defendant McKeon owed him money, and had given the note, as he was not able to give money; that Smith asked plaintiff to indorse it and promised to pay it when it became due. Smith testified that he asked plaintiff to indorse it, telling him that it was to be paid on account of the lumber bill; that Bussell would give ■an extension of time if plaintiff would indorse it; that he and ¡defendant would square it; and that he might have told plaintiff, only to get credit from him, that defendant McKeon was indebted to him. Bussell testified that he delivered the lumber on the plaintiff’s guaranty, and extended the payment of the note on the financial responsibility of the plaintiff, and. that the note and the cash discharged the guaranty and bill.
    Tierney & Halsey, for app’lt; David B. Simpson and Samuel E. Duffey, for resp’ts.
   DALY, P. J.

This is an action by an alleged accommodation' indorser of a negotiable promissory note against the accommodation maker. The defendant McKeon made the note to the order of the defendant Smith to enable him to pay a bill of lumber then due. The creditor required the indorsement of the plaintiff, who had guaranteed the bill. Plaintiff indorsed and had to pay the note when it fell due, receiving it from the holder, and now claims that he succeeds to all the rights of the holder against the maker. The latter claims that he made the note for the accommodation, not only of the payee, hnt of the plaintiff as well, who was liable with the payee for the debt which the note was given to extinguish or to extend.

It is the established rule that the parties to ordinary commercial paper, negotiated for value in the regular course of business, are liable to each other, in succession, as their names appear upon the instrument. The same rule applies, in the absence of special agreement, to successive accommodation parties; and a subsequent accommodation indorser who has been compelled to meet the obligation may maintain an action upon the instrument against any prior accommodation party, and recover the whole amount paid, although he knew that the latter’s signature was .given for accommodation merely. The reason for the rule is that each indorser is presumed to have indorsed upon- the faith of all prior signatures. 1 Am. & Eng. Enc. Law (2d Ed.) 356, 357. As was said by Marshall, C. J., in McDonald v. Magruder, 3 Pet. 470, which was an action upon a promissory note between accommodation indorsers, the second indorser, who had taken up the note, suing the first:

“The second indorser gives his name on the faith of the first indorser as well as of the maker. The first indorser gives liisname on the faith of the maker.

If the second indorser in such a case pays the note at maturity in the hands of a bona fide holder, he stands in the same position towards the first indorser as if he had originally given full consideration for it to the person for whose accommodation the first indorser lent his name. The principle expressed in that case must determine the present one. If the jury were to find, as a.fact, that the plaintiff indorsed the note upon the faith of the maker’s-signature, plaintiff would be entitled to, recover. If, on the other hand, plaintiff knew that the note was intended to he used to pay or extend the debt which he had guarantied and that the note was-made for that purpose, the fact is sufficient to warrant an inference that plaintiff indorsed and delivered it with the understanding that it was made for his accommodation as well as that of the payee. If the jury inferred this to be the case from the evidence, plaintiff could not enforce the note against the defendant.

The position of the parties upon the paper raises the presumption that the second indorser put his name upon the note upon the faith of the signature of the payee and the maker; but this presumption may be rebutted by circumstances 'showing that he did not do so. In this case the chief circumstances relied upon are that the plaintiff was liable upon his guaranty of the payee’s debt to Russell and that he must have understood that McKeon, in making this note, accommodated him as much as the payee. But, unless it can be inferred that the plaintiff so understood at the time of his indorsement, it might be reasonably inferred that he indorsed it on the faith of the maker, and in the expectation that the maker would be liable to him if he had to protect it. Upon the evidence, the question for the jury was whether the plaintiff indorsed the note upon the faith of the maker, or whether he understood that the note was made for his accommodation as well as that of the payee. If the evidence warranted the inference that the plaintiff indorsed in reliance upon the'maker, .then he could have recourse against the latter, although he knew, ¡when he indorsed, that the note had made for the accommodation of the payee.

The cage was left to the jury, and they found for the defendant;. but it was submitted to them upon conflicting theories, and certain instructions which were erroneous. They were charged that plaintiff was entitled to recover if he knew that the defendant .made the note without consideration. Such knowledge of .plaintiff, would not he conclusive, hut was one circumstance to he considered in determining whether he indorsed on the faith of' the maker. On the other hand, the court charged, at plaintiff’s-request, that, if the not was used to pay a debt for which the .plaintiff was liable, it constitutes no defense, unless it was obtained, [for that purpose on an agreement with the plaintiff to hold the jdefendant harmless. This was error, as it was not necessary for ■defendant to prove that he made the note upon any such agreement. The question is whether, when plaintiff indorsed it, he-.understood that it was made for his accommodation as well as that of the payee.

Judgment must he reversed, and new trial ordered, with costs, to abide the event. .

All concur.


author: RUMSEY, J.

text:
    In the Matter of the Application of Frank Tousey, etc.
    (Supreme Court, Appellate Division, First Dept.,
    Filed March 2, 1896.)
    1. Trusts—Death or trustee.
    All express trusts of personal property now vest in the supreme-court upon the death of the trustee, and they are to be executed by some person to be appointed by the court for that purpose.
    8. Same—Assignee for creditors.
    An assignee for the benefit of creditors is a trustee of an express trust. ------ . .
    3. Same.
    The court has power to make an appointment, of a new assigneefor creditors only in one case, i. e., when the assignee has died after the filing of the hond and before any proceedings have been had' under it. ' " . " -
    4. Same.
    The statute has not taken away the power of the supreme court to execute the trust under the law of 1888, and to appoint a person for that purpose, where no application is made by the surety.
    5. Same.
    In such case, the court is at liberty to select somebody else than the personal representative to execute the trust.
    6. Same.
    And the exercise of that discretion, under ordinary circumstances, cannot properly be interfered with on appeal.

      7. Same—Accounting.
    An. order, appointing a substituted assignee "for benefit of creditors, should provide for an accounting of the executor of a deceased assignee of the trust, and require him to turn over to the new assignee the property of the estate, and for the discharge of the surety when that is done.
    Appeal from an order appointing a substituted assignee.
    W. J. Foster, for app’lt; John B. Farrar, for resp’t.
   RUMSEY, J.

It appears, from the papers in this case, that in March, 1885, the petitioner, Frank Tousey, executed an assignment for the benefit of his creditors to one Stillman B. Walker, who accepted the trust and entered upon its execution. The Assignee died in December, 1895, leaving a last will and testament, whereby he appointed one William II. Hnbbard as sole executor. The petitioner” who was the assignor, upon an affidavit showing this and, other facts, obtained an order to show cause why a substituted assignee should not be appointed in the place of Stillman B. Walker, deceased. Upon the hearing of this motion a new assignee was appointed, and from the order making that appointment this appeal is taken.

There can be no question of the power of the court to make this order. Before the Bevised Statutes, upon the death of any trustee of an express trust, the trust estate, if it was real estate, descended to his heir, and, if it was personal property, passed to his personal representative, who took it under the trust, and was bound to carry the trust into effect. In that case, the new trustee was not appointed by the court, but he took the property because his ancestor or testator had been the owner of it, and it came to the heir or executor like any other property which had belonged to the ancestor. De Peyster v. Ferrers, 11 Paige, 13; Dias v. Brunell, 24 Wend. 9, 13; Perry Trusts, § 344. Under the Devised1 Statutes#this rule was altered, so far as regarded the trusts of real1 estate, and it was provided that, on the death of the trustee of an express trust, the trust estate should not descend to the heir nor pass to his personal representatives, but should vest in the court of chancery, whose duty it was to appoint some person to execute the. trust under its direction. 1 Rev. St. p. 730, § 68. This section of the statute was in that portion of the Bevised Statutes which treated of uses and trusts and which had prescribed the purposes for which express trusts of real estate might be created. It therefore applied, by its terms, only to trusts of real estate; and such has been the generally received notion with regard to it, although, in the case of Hawley v. Ross, 7 Paige, 103, it was suggested by the chancellor that the statute applied to express trusts or personal property as well as those of real estate. But that suggestion does not seem to have been adopted in practice, and, down- to the year 1882, it had been generally understood that, upon the death of the trustee of an express trust of personal property, the trust estate vested in his personal representatives, who were hound to execute the trust precisely as had been the case before the passage of the Revised Statutes. Such was the case in Boone v. Bank, 84 N. Y. 83, where the trustee died before 1882, and the personal representative was held to be the proper person to execute the trust.

Whatever may have been the proper interpretation of this section of the Revised Statutes, there is no doubt that chapter 185 of the Laws of 1882 altered the common-law rule with regard to express, trusts of personal property, and put them upon the same footing as express trusts of real estate had been put by section 68 of the Revised Statutes above cited. The law of 1882 was entitled “An act in relation to trustees of personal estates,” and it ¡provides that, upon the death of a trustee of an express trust of a personal estate, the estate shall not pass to his personal representatives, but shall vest in the supreme court, who may appoint a proper person to execute the trust. Under this section there can be no doubt that all express trusts of personal estate now vest in the supreme court upon the death of the trustee, and that they are to be executed by some person to be appointed by the court for that purpose. Delaney v. McCormack, 88 N. Y. 182. It is not .particularly important whether the person so appointed is called a trustee or assignee, or by any other name. It is his duty to execute the trust under the direction of the court, and for that purpose he is vested with all the rights and powers which any other trustee would have, except so far as he receives special directions from the court with regard to this particular case. There is no question that an assigness for the benefit of creditors is a trustee of an express trust, and the ease, therefore, is strictly within the terms, as well as within the meaning, of chapter 185 of the Laws of 1882 above cited, and upon his death the trust estate does not pass to his personal representative, but, under the provisions of that law, is to be administered by the supreme court, by some person appointed for the purpose. So far as the Case of Magnus, 22 N. Y. Supp. 70, holds to the contrary, it is not a correct-exposition of the law. Indeed, what was said on that subject by the court in that case was not necessary to the decision of the case, which had been decided upon other grounds, upon which alone the case can be supported.

Section 10 of the assignment act (chapter 466 of the Laws of 1877), provides as follows:

“In case an assignee shall die during the pendency of any proceeding under this act, or at any time subsequent to the filing of any bond required herein, his personal representative or successor in office, or both, may be brought in and substituted on such notice (of not less than eight days) as the county judge may direct to be given; and any decree made thereafter shall bind the parties thus substituted, as well as the property of such deceased assignee: Provided, however, that if such assignee die subsequent to the •filing of Ms bond, and before any proceedings may have been had! thereunder, then the surety on such bond may apply to the county judge for an accounting, who may on such terms as to him seem just and proper appoint another assignee and release such surety.”'

By Laws 1885, chap. 380, the power given to the county judge-by this act is also conferred upon the supreme court. This section is the -only section in the act which provides for the appointment of a new assignee, and it will be noticed that it gives the. power to the court to make such an appointment only in one case, and that is when the assignee has died after the filing of the bond and before any proceedings have been had under it. It was pursuant to the provisions of this portion of this section that the appointment was made by the court in Be Hagnus, supra. The court in that case held that the power was given to the court of common pleas, which had the power of the county courts in this-county, to appoint a new assignee, although the application was made by the surety. Whatever may have been the correctness of that decision in that regard, and we are not at all disposed to question it, the law does not take away the power of the supreme court to execute the trust under the law of 1882, and to appoint the person for that purpose, where no application is made by the surety; and, under that p-ower, the appointment in this case was well made.

It is objected that the personal representative should be appointed, but it is quite clear that his selection is *ot by any means obligatory upon the court. If the legislature had intended such to be the case, there would have been no necessity of passing any duties of the trustee without any action whatever on the part of law upon the subject; for, at common law, he was vested with the the court. The very fact that the legislature provided that he should not be vested with such duties, but that the trust should vest in the court, constitutes the best possible proof that the court is at liberty to select somebody else than the personal representative to execute the trust. The selection of a proper person to act in such cases, in the nature of things, is very largely with the court to which the application is made; and the exercise of that discretion, under ordinary circumstances, cannot properly bo interfered with. It is not charged that the person who is selected in this-case is not a proper person to execute this trust, and we see no reason to interfere with the act of the court in making the appointment. But we think that the order should have made some provision for the taHng of an account. This trust had been ’carried on by Stillman R. Walker during nearly eleven years. A large amount -of assets had undoubtedly come into his possession, and it is plain, from the papers in the case, that a considerable amount of money had passed through Ms hands as assignee. His proceedings in regard to the trust should certainly be accounted for, and the property which was in Ms possession as assignee, and' which, in the nature of things, would be held by Ms personal representative until a new assignee was appointed, should be turned over to the new assignee. This should he done, not only ¡that the new assignee may have possession of the assets of the «state, but that the surety of the old assignee should be discharged, as he has a right to be, upon the termination of the trust as. to ¡Walker. The order, therefore, should have provided for an accounting by the executor of Walker of the affairs of the assignment, and should have required him to turn over to the new assignee the property of the estate, and for the discharge of the surety when that was done.

The order of the special term must be modified by directing that the executor of Stillman R. Walker shall account, before a referee, to be appointed by the court, with regard to the property and affairs of the assignment, and shall turn over the assets of the assigned estate to the new assignee under the direction of the referee, and, when that has been done, the surety of Stillman E. Walker shall be discharged from further liability; and, as modified, the order should be affirmed, without costs to either party in this court.

All concur.


author: WILLIAMS, J.

text:
    Second National Bank of City of New York, Resp't, v. Benjamin D. F. Curtis et al., as Executors et al., App'lts.
    (Supreme Court, Appellate Division, First Dept.,
    Filed March 20, 1896.)
    1. Fraud—What is.
    One who falsely asserts a material fact, susceptible of accurate knowledge, to be true of his own knowledge and thereby induces another to act upon the facts represented to his prejudice, commits a fraud which will sustain an action for deceit.
    3. Same.
    A witness to a forged assignment in blank of a certificate of stock, with knowledge that it was to be made use of to secure a loan and that it would be relied upon by the person making the loan, is guilty of fraud. " '
    3. Same.
    Though both forger and witness are" officers of the corporation, which issued the certificate, their act is not binding upon the corporation. _ .. .
    Appeal from a judgment entered on the report of a referee in favor of plaintiff.
    The action was brought to recover damages for false representations made by the defendants’ testator, by his signing as a witness an assignment .to the plaintiff of stock in a street railroad •company". The transaction complained of occurred April 27, 1887. The plaintiff was a national bank, doing business in New ¡York City. The Forty-second Street & Grand Street Railroad Company was a corporation operating a street railroad in the city. It had been in existence since 1863, and its stock was selling at $210. It was well known to the plaintiff, with whom it ¡¡kept a bank account. The defendants’ testator was president of the railroad company, and one Allen was its treasurer and transfer agent. The certificate of stock which purported to have been assigned bore date May 1,1872. At that time one Green was president of the railroad company, and the defendants’ testator was its treasurer, and Allen was its transfer agent. .From 1868 until 1887, Allen kept the stock transfer book, stock ledger, dividend! book, and stock certificate book; and these books, with the seal of the company, were kept in his desk. "While Green was president of the company, in expectation of going abroad temporarily, he signed a number of bland certificates of stock to be used while he was away when transfers of stocks were necessary to be made, and left them in the possession of Allen, who still had some of them in 1887. May-1,1872, one "Westfall, of Illinois, became the owner of fifty shares of the stock of the railroad company; and a -certificate therefore was issued to him at that time, which he continued to hold on the 27th d.ay of April, 1887, and long thereafter, and which he assigned to no one. Allen knew the contents of such certificate, from having issued it himself, and having the books relating to the stock certificates in his possession. Shortly before April 27,1887, Allen, desiring to procure a loan from the plaintiff, took one of the blank certificates which had been signed by Green as president, and filled it out to correspond with WestJall’s real certificate for fifty shares, including the number and date. He put the company’s seal upon it, and wrote his own-signature to it, as transfer agent, and also wrote the name of defendants’ testator thereto, as treasurer. The certificate was then a duplicate of the real certificate, except that the name of defendants’ testator was written by Allen, instead of by the testator himself. Allen then wrote Westfall’s name as a signature to the blank assignment printed on the back of the certificate. He applied to the plaintiff for a loan of $7,500 on his note, to be secured by this fifty shares of stock. He did not have the certificate with him when he made the application, and he was then told by the plaintiff’s cáshier that he must have the assignment on the back of the certificate witnessed by some person whose signature was known to the plaintiff. Allen procured one Murray and the defendants’ testator to sign the assignment as witnesses to the same, saying that he was going to use the stock for the purpose of a loan. The two witnesses signed at the same time. Allen then, took the certificate to the plaintiff. The cashier looked at the signature of the defendants’ testator, recognized the handwriting, which he was well acquainted with, and said that would do; and he made the loan to Allen relying on the signature of defendants’ testator as such witness. He knew nothing of Westfall or his signature. The note was the ordinary stock note, payable on demand. Green, formerlv president, died in 1887, and defendants’ testator in 1888. Many irregularities on the part of Allen in respect to the certificates of stock of the company came to light in 1889, and he was indicted, convicted and .sent to state’s prison. Nothing was paid upon this note. The plaintiff demanded a transa fer of tlie fifty shares of stock upon the company’s books, but it was refused, .the real nature of the transaction having become known; and subsequently this action was begun. The signature of Westfall to the assignment made by Allen was not an imitation of Westfall’s handwriting. The defendants’ testator was more or less acquainted with Westfall’s handwriting. The complaint alleged that the attestation of defendants’ testator to the signature of Westfall to the assignment on the back of the certificate was wrongful and fraudulent, and was made by the defendants’ testator with the intent or knowledge that it should or would be relied or acted upon by the holder or assignee of the certificate. And the referee, in his decision, found that the defendants’ testator did state and represent to the plaintiff that Westfall had executed the assignment in the presence of the defendants’ testator; that this representation and statement was false, and was known by him at the time to be false, and was made by him fraudulently, and with the intent to deceive the plaintiff; that the plaintiff relied upon the statement and representation in making the loan, and it would not have been made if plaintiff had not believed the statement and representation to be true; and that the plaintiff had suffered damage thereby in the amount of the loan and interest, and directed judgment for the plaintiff accordingly.
    John A. Taylor, for app’lts; William Allen Butler and John Notman, for resp’t.
   WILLIAMS, J.

The action was based upon the allegation of fraud, and the decision found that there was fraud. The only rejuesentation made by the defendants’ testator was by means of fhe act of subscribing his name as a witness to the assignment of the stock. That act was a statement and representation by the testator, in éffect, that the signature to the assignment was made by Westfall in the testator’s presence, or was acknowledged by "Westfall in testator’s presence to be his (Westfall’s) signature, and that the testator thereupon, at Westfall’s request, wrote his name as witness thereto. Such was fairly the meaning of the act 'an law, and as generally understood in the business community. Greenl. Ev. (14th ed.) 569, 569a. It does not seem to us that it could be fairly said that this act implied merely that the testator believed or was of the opinion that the signature of Westfall was his genuine handwriting. Regarding this act as a statement and representation of the facts we have referred to, there can be no idoubt but that the conclusion of fraud, so far as it was essential to support the judgment, necessarily followed. The testator stated and represented as facts what he knew to be untrue. Westfall did not sign the assignment in the presence of the testator, nor did he acknowledge the signature to be his; and the testator did not thereupon become the witness thereto, at the request of Westfall. The testator was informed and knew at the time he siamed his manic as a witness to the assignment that the stock was to be used by Allen to secure a loan of money, and he understood, therefore, that his signature as a witness would be relied upon by the party malting the loan as establishing the actual execution of the assignment. Nevertheless, instead of stating the facts truly as they occurred, which would have avoided any injury to the plaintiff, he wholly misrepresented the facts, and thereby brought about the injury and damage complained of in this case.

The only question is whether there was sufficient evidence of an intent to defraud to support the finding of the referee and the judgment entered thereupon. It clearly appears that the defendants’ testator made the representations as of his own knowledge, fop the purpose of inducing the loan; that is, with knowledge that they were to be made use of to secure the loan, and that they would be relied upon by the person making the loan. The purpose of the testator in thus asserting his own personal knowledge must have been to induce a belief of the facts represented, and the inference of fraud therefore necessarily resulted. This principle of law has been frequently asserted, and is supported by abundant authority.

Andrews, C. J., in Kountz v. Kennedy, 147 N. Y. 124; 69 St. Rep. 388, said:

“It has been held that one who falsely asserts a material fact, susceptible of accurate knowledge, to be true of his own knowledge, and thereby induces another to act upon the fact represented, to his prejudice, commits a fraud, which will sustain an action for deceit. This is not an exception to, but an application of, the principle that actual fraud must be shown ,to sustain) such an action. <

We are of the opinion that fraud was properly found by the referee, so far as necessary to enable the plaintiff to maintain the action.

It is said that no damage resulted from this act of the defendants’ testator, because the plaintiff could have enforced against the railroad company its title to the stock; that Allen and the testator were the officials and agents for the railroad company, and acted within the scope of their authority as such in the assignment of the stock to the plaintiff. In Fifth Ave. Bank of New York v. Forty-second St. & G. St. Ferry R. Co., 137 N. Y. 231; 50 St. Rep. 712, the act complained of was the issue of the stock itself, and that was clearly within the course of employment of the officers of the company. Here, however, the act which caused' the damage.was not the original issue of the stock of the company, but was the illegal assignment of stock already issued and held by. a stockholder; and this act was not within the scope of the employment of such officers, and was not done as such officers, and was not binding upon the company itself. The damage here resulted solely from the act of the testator himself. The acts of Allen would not have produced the result,—the procuring of the loan from the plaintiff. If the assignment had been really exeLcuted_by Westfall, it would have carried good title to the fifty; shares gf stock to the plaintiff, irrespective of the question whether the certificate itself was the one actually issued by the railroad company or not. If the whole certificate had been merely a copy, and not the original at all, still, the fifty shares of stock being really owned by Westfall, his execution and delivery of the assignment on the back of it would have operated to give plaintiff good title to the stock described therein, the same as though the assignment had been written upon the back of the original certificate. The language of the assignment, in effect, was:

“For value received, I hereby sell, assign and transfer to plaintiff the shares of the within-mentioned stock, and hereby authorize ¡the plaintiff, as attorney, to make the necessary transfer on the books of the company.”

It was only necessary to refer to the body of the certificate itself for the purpose of identifying the stock intended to be assigned, and this would be made to appear as well by a copy as by the original certificate, the copy reading precisely the same as the original. The damage, therefore, resulted solely from the invalidity of the assignment, and the plaintiff was injured by relying upon the act, statement and representation that, to testator’s personal knowledge,- the assignment was executed by Westfall himself.

We conclude that the decision of the referee was correct, and that the judgment should be affirmed, with costs.

All concur.


author: BARRETT, J.

text:
    Jeanette A. Allen, Resp't, v. Eliza J. Arkenburgh, Individually and as Executrix, etc., App'lt.
    (Supreme Court, Appellate Division, First Dept.,
    Filed March 13, 1896.)
    1 Statute oe frauds—Shield.
    The rule that the statute of frauds may not be used to shield a fraud, does not apply, where there is a trust or confidential relation with regard to the property itself, where there is a community of interest between the owners, and where the promise of one relates to the vested interest of all. ■ - . - -
    S. Trust—Oral—Tenant in common. .
    Where one tenant in common expressly promises that he will purchase .land on sale in partition for the benefit of himself and co-tenants who are not nephews and nieces, upon their agreement not to bid, and hold the same for all the tenants, the trustee rule applies. " "
    R. Same.
    Where a person, through the influence of a confidential relation, acquires title to property or obtains an advantage which he cannot conscientiously retain, the courts, in order to prevent the abuse of confidence, will grant relief. — _ - . - - -

      4. Same.
    Where the trustees’ legal representatives recognize the trust and execute it, equity will impress a lien upon the proceeds of the sale which, being personalty, are exempt from the operation of the statute of frauds.
    Appeal from a judgment in favor of plaintiff.

      The defendants are the executor and executrix of Rtihert Hi. Arlcenburgh, deceased. In November, 1878, the decedent, the plaintiff, Jeanette A. Allen, Robert H. Kinsey, Thomas J. Kinsey and Elizabeth J. Adams each owned an undivided one-fifth interest in certain property in the city of Rahway, N. J., as tenants in common. The decedent was the uncle of the plaintiff and the other parties named. Thereafter a suit was begun in the court of chancery of New Jersey to partition the property, and in July, 1885, a decree was entered directing a sale of the premises. Elizabeth J. Adams died prior to this decree, and her interest descended to Robert H. A. Adams, an infant, who was represented by Mr. Arlcenburgh’s son, the present defendant executor, as guardian. At this time circumstances were such that a sale would have been at a great sacrifice, and the decedent made a certain verbal agreement respecting the premises which is the basis of the present suit. The facte are all undisputed. But two witnesses wére called at the trial, both in favor of the plaintiff. They were the defendant Oliver M. Arlcenburgh, and Joseph W. Allen, the plaintiff’s husband. Mr. Arlcenburgh testified: “I know the premises described in the complaint, and had a conversation with my father about them the latter part of January, 1889, at his office, No. 78 Broad street, this city, at which the plaintiff’s husband, Joseph W. Allen, and Robert H. Kinsey were also present. Ho said that, if the Kinseys would not bid on the property that was put up by the master at the sale that was about to take place, he would buy it in, and would pay all the assessments and taxes on it, and that he would ask simply to have his money refunded, with interest, and his one-fifth which he owned in it. The balance he would give to the parties in interest. Mr. Kinsey said he was satisfied to put himself in the hands of his uncle, and I, representing my nephew, Adams, was perfectly willing to do the same. Mr. Allen represented the plaintiff, and said he thought the plaintiff would be satisfied. My father and I went to Rahway, Eebruaryj 2, 1889, and had a meeting at Mr. Allen’s house, where he, Mr." Arkenburgh, the plaintiff, Mr; Allen, my nephew, Adams, and: myself were present. This was about two hours before the sale. At this "meeting my father said that he would buy the property and do all he could to reduce the assessments on it, dividing any surplus after he was reimbursed, and after the interest was taken out, among his nephews and nieces,—to the plaintiff one-fifth, Thomas J. Kinsey one-fifth, Robert H. Kinsey one-fifth, and Robert H. A. Adams one-fifth. My father and I attended the sale by the master. The premises were sold, and I bid them in for my father. The title was taken in his name. There were present at the sale all the Kinseys, including the plaintiff, and a Mr. Vail, a gentleman named Woodruff, and quite a number that I did not know at all. There was no bid for the property other than mine. I paid the master in chancery $150.” Mr. Allen testified: “I was present at the conversation with Robert II. Arlcenburgh, now deceased, at my house, there, February 2, 1889. He stated that he came there to buy a piece of property advertised for sale, and it was a point to look out for the interest of his sister's-heirs, Ms sister’s children. He spoke of their several interests, ,Q. Did he request the other persons in interest not to bid at the sale? A. Yes. Q. Did you go to the sale? A. I did. Q. Did anybody bid there except Mr. Arkenburgh? A. Ho, sir.”' The property thus obtained was held by Mr. Arkenburgh until his death, wMch occurred on the 20th day of September, 1890. Thereafter his will was admitted to probate, and letters were duly issued to the defendants. Since then the defendants fully recognized the agreement. On this head the executor testified as follows: “I told Mr. Allen that I proposed to carry out my father's-agreement to the letter. By ‘agreement,’ I referred to what I ■have testified to above. I had a conversation with the Kinseys to-the same effect. Afterwards, when I found a customer for the property, I saw all the Kinseys, and got their consent to the sale of it. I also had a conversation with my codefendant (the executrix) prior to the sale of the property. She said she wanted the ¡property sold, and the Kinseys to have their share of it, and I told her I thought it should be sold and settled up. I think there was-'another conversation with my mother about the property when Robert H. Kinsey was present, at 78 Broad street, when she spoke to the same effect,-—that she wanted them to have their share of ¡the property when sold.” The property was sold on the 20th of July, 1894, nearly four years after Mr. Arlcenburgh’s death, . under a power of sale contained in his will. The executor in Ms-answer admits the trust alleged in the complaint. The executrix in her answer ignores it.
    C. E. Souther, for app’lt; Frank W. Arnold, for resp’t.
   BARRETT, J.

The question presented is whether the circumstances attending the agreement in question are such as to impress a trust upon the land which will entitle the plaintiff and the other interested parties to share in the proceeds. The defendant executrix relies upon the statute of frauds, while the plaintiff' claims that Mr. Arkenburgh took the property as a trustee for all the tenants; and she invokes the doctrine that the statute may not he used to shield a fraud. It is conceded that the mere breach of a verbal agreement is not, ordinarily, such a fraud as is contem-. plated by the doctrine last stated. Levy v. Brush, 45 N. Y. 589; Wheeler v. Reynolds, 66 id. 227. It is not enough that one person has relied upon the promise of another with regard to the purchase of a piece of property. The party seeking relief in such a case must go further, and show a change of position on his part, due to such reliance. He must prove, in fact, the elements of an estoppel in pais. As was said in Wheeler v. Reynolds:

“The promisee must have been induced, at the instance of thepromisor, to incur some expense or perform some act which he otherwise would not have done.”

But this rule applies in its full force only where the parties sustain no trust or confidential relations to each other, or where they are simply contracting parties in the ordinary sense. It does not apply where there is a trust or confidential relation with regard to the property itself, where there is a community of interest between the owners, and where the promise of one relates to the vested interests of all. The plaintiff here had a vested interest in the property in question, and so had the deceased. So, too, had' the other tenants in common. There was a community of interest upon the part of all concerned. It was with reference to this community of interest that the agreement was made. The deceased did not assert his independent right to purchase the property for his own benefit, but avowed his purpose to buy it for the benefit of all parties in interest, including himself. That was what he offered, and that was what they accepted; and he coupled this offer with the suggestion that they should not bid against him .at the sale. In other words, he avowed a trust relationship Avith regard to the property, based partly upon community of interest, .partly upon ties of blood. It Avas a plain acknowledgment that there was, as said by Miller, J., in Rothwell v. Dewees, 2 Black, 619, “a community of interest in a common title, Ayhich created such a relation of trust and confidence” between him and his nephews and nieces, one of them an infant, that it would be inequitable to permit him to “do anything to the prejudice of the others in reference to the property so situated.” The authorities make this clear distinction between the purchase of property by ordinary contracting parties, and the acquisition of joint or common interests, already vested in several persons, by one of their number for the benefit of all.

In Van Horne v. Fonda, 5 Johns. Ch. 407, Chancellor Kent said:

“Community of interest produces a community of duty, and there is no real difference, on the ground of policy and justice, whether one co-tenant buys up an outstanding incumbrance, or an adverse title to disseise and expel his co-tenant. It cannot be tolerated, when applied to a common subject, in which the parties had an equal concern, and Avhich created a mutual obligation to deal candidly and beneAÚdently Avith each other, and to cause no harm to their joint interests.”

The learned chancellor admitted that there might be a particular case in which a tenant in common could buy in an outstanding title for his own benefit, but held that this could not be done where two were in possession under an imperfect title, derived by devise from a common ancestor.

Mitchell v. Reed, 61 N.Y. 123, was an action between partners, but the rule there laid doAvn was held to be applicable to tenants in common. Speaking of the rule which declares a partner to be a trustee as to the reneAvals of a lease for a term commencing after the dissolution of the firm, Dwight, C., said (pages 138, 139):

“On principle, in many cases it is of hut little consequence whether the partnership is dissolved or not before the renewal, since, if the former partners become tenants in common, the result is the same.”

And, in summing up his conclusions, he says (pages 139, 140):

“It cannot necessarily he assumed that the renewal can he taken by an individual member of the firm, even after dissolution. The former partners may still he tenants in common, or there may be other reasons of a fiduciary nature why the contract cannot be entered into.”

In Knolls v. Barnhart, 71 N. Y. 474, Chief Judge Church stated the facts and the principle application thereto as follows:

“The possession of the widow as dowress and as guardian in socage of the minor children was as tenant in common with all the heirs. She could not buy in the contract or title for her individual benefit. She occupied a fiduciary relation to the heirs, which would prevent her purchasing for her individual benefit. The ¡general rule is that one tenant in common cannot purchase in an outstanding claim or title to the exclusion of his co-tenant.”

In Carpenter v. Carpenter, 131 N. Y. 101; 42 St. Rep. 718, the defendants, who were tenants in common with the plaintiffs, instigated the foreclosure of mortgages on the common property, although they had in their hands funds sufficient to pay the interest due, and bought in at the sale. It was held that they were trustees for all interested. Andrews, J., said (pages 109, 110; 131 N. Y., and 42 St. Rep. 718):

“If the foreclosure of the mortgages was a proceeding hostile to the defendants, and they had not been in default, and their purchase was made of necessity, to protect their own rights, with full knowledge of the situation on the part of the plaintiffs, the moral, and perhaps the legal, aspect of the case would he altered. But to permit the plaintiffs, all but two of whom, were infants, to he cut •off by a proceeding instigated by the defendants for that very purpose, and in the absence of any effort on their part to avert the danger, and when they were in. actual possession of the common property, receiving the rents and profits, is not a mere ethical grievance, hut one which the law will recognize and redress.”

On the other hand, Streeter v. Shultz, 45 Hun, 406; 10 St. Rep. 115 (affirmed without opinion in 127 N. Y. 652), upholds the right of the tenant in common to deal with the property, under the special circumstances therein disclosed. There the defendant bought in the property at a foreclosure sale under a mortgage executed by the plaintiff alone prior to the defendant’s acquisition of his interest. “There was no arrangement between Shultz and plaintiff that Shultz was to buy for joint benefit.” 45 Hun, 407; 10 St. Rep. 115. The sale was open and public, and defendant paid a fair price. There was not a fact or circumstance in the pase, except the joint relation, upon which to found the action. It was held that the relation of tenants in common is not such a strict trust relation as would incapacitate one tenant from purchasing for his individual benefit. The application of the rule may vary with the variation of the facts, but the general rule may well be stated, in the language of Judge Story, in Baker v. Whiting, 3 Sumn. 475; Fed. Cas. No. 787, that a court of equity would indulge the presumption that a tenant in common acted as a common agent for the common benefit of all the proprietors, since, in that way, he may promote the true interests of all. “Indeed,” as that learned judge further observed, “all acts done by one tenant in common are presumed to be done for the interest of- all the tenants, and in conformity to their rights, until an adverse claim is notoriously set up, and established by competent proofs.”

When, in addition to this presumption, we have the ties of blood, and the distinct promise that the uncle tenant in common1 would purchase for the benefit of the nephews and nieces tenants, in common, and would protect his junior and infant relatives, there can be no doubt of the propriety of applying the trustee rule. It would be grossly unconscionable to permit the trustee-tenant in common, under such circumstances, to keep the property, and deprive the cestuis que trustent tenants in common of all interest therein. It is sufficient, to effect the trust purchase, that is was not made independently, in the right of the purchaser-tenant in common, but was made in the interest and for the benefit of all who were possessed of the community of interest. The community of interest principle is, however, here accentuated by the family relationship. We must not treat the case as though it rested independently upon this blood relationship. It is enough-that that relationship colors and gives added force to the other doctrine. Y7hen combined, the trust result is conclusively established, and we may apply to the exceptional facts the rule which was laid down in Wood v. Rabe, 96 N. Y. 414, and followed in Goldsmith v. Goldsmith, 145 N. Y. 313; 64 St. Rep. 675, that:

“Where a person, through the influence of a confidential relation, acquires title to property, or obtains an advantage which he cannot conscientiously retain, the courts, to prevent the abuse of confidence, will grant relief.”

If Mr. Arkenburgh had 'asserted his right, and expressed his intention, to purchase upon his own individual account, a different question would be presented. That would have been “candid” but not “benevolent.” If he had remained silent, and simply purchased for himself, still another question would have been presented. That would neither have been candid nor benevolent. The precise question with which we have to deal is whether he can secure the property for himself, to the exclusion of his co-tenants and of his sisters’ children, by a pretense of both candor and benevolence. There can surely be but one answer to such a question. Equity will not permit it.

There is still another fact which entitles the plaintiff to relief. The trust was executed by Mr. Arkenburgh’s representatives. They were fully aware of the agreement, and they distinctly recognized it as binding upon them. They did not sell the property in the right of the heirs, but in the right and interest of the tenants in common. They sought the consent of these tenants in common before they made the sale, and throughout the entire transaction they treated their power as impressed with the trust. Under such circumstances, equity will impress a lien upon the proceeds of the sale, which, being personalty, are exempt from the operation of the statute. Bork v. Martin, 132 N. Y. 280; 43 St. Rep. 938. In the case cited the defendant came into the possession of real property upon a parol agreement to hold it subect to plaintiff’s direction. He was requested to convey to third parties, and refused, unless he should receive the purchase money. Thereupon the plaintiff advanced the amount, paid it to the defendant’s wife, and the defendant gave a deed. The plaintiff at once sue for and recovered the amount of the payment. Landon, J., speaking for the court, said:

“Assuming that the land was conveyed to the defendant upon an oral trust, invalid under the statutes of frauds and of uses and trusts, yet it was lawful for him to perform it, and he has performed it so far as it required him to dispose of the land. Equity approves his performance, so far as it has performed, and, as the statutes referred to no longer apply, there is no law which he can invoke to shield him from the full performance of his duty.” Pages 284, 285,132 N. Y., and 43 St. Rep. 938.

The exigencies of the present case do not require the application of the extreme doctrine enunciated in that case. There, indeed, the court held that the disposition of the property was an execution of the trust, even when the alleged trustee ex maleficio insisted that the property was his own, and that the sale was for his own sole use and benefit. Here we have the reverse of this assertion. Here the trustee’s legal representatives recognized the ¡trust, and executed it loyally. They had a right to thus recognize at, and they have done their duty in its execution.

The trust, therefore, having been fairly and frankly executed, and the proceeds of its execution being in the hands of the defendants for distribution, such distribution was properly decreed. It follows upon both grounds, that the judgment should be affirmed, with costs.

VAN BRUNT, P. J., and O’BRIEN and INGRAHAM, JJ., concur; RUMSEY, J., concurs in result.