text:
    MARY AGNES POTTER, Plaintiff, v. THOMAS L. OGDEN and Others, as Executors of SAMUEL E. LYON, Deceased, Defendants.

      Executors and administrators — an administrator’s bond executed before the Code of Civil • Procedure — may be enforced under the Code — Code of Civil Procedure, secs. 2610, 2606 — effect of a decree against the administrator of am administrator.

    In 1872 John W Mills and Jane B. Kelemen were appointed administrators of the estate of Abigail Hall, deceased, and Samuel B. Lyon became a surety on their bond. Mills alone administered and accounted for the estate,' and in 1877 was directed to pay to himself, as general guardian of Mary Agnes Potter, a sum of money representing her share in the estate, and to retain it as guardian.
    It did not appear that Mills ever paid this money to himself as guardian. In 1882 he died and Charles A. Hall, a creditor of Mills, was appointed his administrator. In 1889 Mary Agnes Potter petitioned the Surrogate’s Court asking that Charles A. Hall account as administrator. It then appeared that Mills had died insolvent and had never paid the petitioner anything. In November, 1890, a decree was entered adjudging that Hall, as administrator of Mills, pay to the petitioner the sum in question, with interest, out of the assets of the estate of Abigail Hall, deceased.
    In an action subsequently brought by Mary Agnes Potter against the executors of the surety, Lyon, who had died, setting up Mills’ failure to pay her said sum of money;

      Held, that the estate of the surety was liable.
    That although the bond was given in 1872, the manner of enforcing the liability created by it was governed by the Code of Civil Procedure, which repealed all prior acts relative to the procedure upon such a bond.
    That the liability of the surety could not be increased by a subsequent statute, but that he had' acquired no vested right as to the method of procedure by which his liability was to be determined.
    That the last clause of section 2610 of said Code, stating that the provisions of article 5, chapter 18, shall apply to an administrator to whom letters have been issued before that chapter took effect, “except that it does not affect in any manner the liability of the sureties in a bond executed before this chapter takes effect,” had no reference to the method of enforcing such a liability, but applied only to provisions contained in the chapter concerning an extension of the liability upon such official bonds.
    That, under section 2606 of said Code, the direction in the decree requiring Hall, as administrator of Mills, to pay the sum in question out of the estate of AbigaiL Hall was proper in form.
    That such a decree against Mills’ administrator had the same effect as if an execution, issued upon a surrogate’s decree against the property of Mills, had been returned unsatisfied during his lifetime.

      Exceptions of the plaintiff Mary Agnes Potter, taken upon a trial had at the New York Circuit before the court and a jury, at which the complaint was dismissed and the exceptions of the plaintiff were ordered to be heard in the first instance at General Term, judgment in the meantime to be suspended.

      John, D. Kernan, for the motion.

      Devoid JB. Ogden, opposed.
   Van Brunt, P. J.:

This action was brought against the defendants as executors of the last will, etc., of Samuel E. Lyon, deceased, upon the bond of one John W. Mills, as administrator of, etc., of Abigail Hall, deceased, on which bond the said Samuel E. Lyon was one of the sureties.

It appeared that on the 10th of June, 1872, John W. Mills and Jane E. Kelemen were appointed by the surrogate of. Westchester county administrators of the estate of Abigail Hall, deceased, and on the 22d of May, 1872, Lyon signed the bond in suit conditional for the faithful execution of the trust of said administrators and their obedience to all orders of the surrogate. .On the 13th of October, 1873, Mills began accounting proceedings, which proceedings terminated in a decree on the 27th of May, 1877, directing Mills to pay and distribute to John W. Mills, as general guardian of Agnes Hall, $11,183.23; also that he retain in his hands, as such general guardian, the said amount adjudged to be due and payable to her. The defendants contend that thereafter Mills continued to retain and hold the same as such general guardian, and in no other capacity! There is no evidence that Mills, in fact, transferred or paid over the fund to himself as general guardian, and the plaintiff has never received anything. In October, 1882, Mills died, and in a proceeding brought by one Oharles A. Hall, a creditor of said Mills, Hall was appointed his administrator. On the 25th of September, 1889, the plaintiff petitioned that said Hall, as such administrator, be called upon to account, in accordance with which petition a citation was issued to said Hall as administrator, and in accordance therewith he rendered an account in which he states that, as he is informed and believes, said Mills, as administrator of, etc., of Abigail Hall, deceased, had in his hands on the 2d of May, 1877, the distributive share of said estate due to the petitioner; that such distributive share was never paid to the petitioner, but was due and unpaid to her; and that, as administrator of such estate of John "W". Mills, he had not been able to find any assets or property of the estate of said Abigail Hall, deceased, remaining in the hands of said Mills as administrator of her estate at the time of his decease, except some articles of furniture not exceeding fifty dollars in value. A decree was entered upon said accounting in the Surrogate’s Court on the 17th of November, 1890, adjudging that said Hall, as administrator of said John'W. Mills, pay to the plaintiff the sum of $11,183.23, with interest thereon from the 2d of May, 1877, out of the assets of Abigail Hall, deceased.

"Various other questions were raised during the progress of the trial which it is not necessary to mention here, and the court was moved to dismiss the complaint upon the ground that as the bond upon which the suit was brought was given in 1872, and that as the provisions of law then in force regulating the method of fixing the liability of sureties had not been observed prior to bringing this action, the complaint should be dismissed. This motion was granted and an exception taken.

It is urged, upon the part of the defendants, that the liability of the sureties on Mills’ bond could be determined only in the manner provided by law in 1872, when the bond was executed. If this is a correct proposition of law, then it would seem that the sureties upon the bond were absolutely absolved, because the provisions of the Revised Statutes and of the laws of 1837 relating to this subject were repealed by the repealing act of 1880, and no longer exist.

It was undoubtedly supposed that the sections of the Code relating to this matter were applicable to bonds which had been given prior to their enactment, as well as to those which should come into existence subsequently. This view we think to be entirely well founded. In the execution of the bond the sureties had obtained no vested right in the method of procedure by which their liability was to be determined. There was no power in the legislature to increase that liability in any way, but they had a right to alter the remedies by which the liability upon the bond should be enforced, and the procedure which should be observed by those seeking relief because of a breach in the condition of the bond. And this was all that was done by the repealing of the provisions of the Revised Statutes and the laws of 1837 at the time when the sections of the Code above referred to went into operation. Upon an examination of those sections it is clear that this is a correct interpretation of the legislation. Section 2610 expressly provides that “ the provisions of this article apply to an executor, administrator or guardian to whom letters have been issued, and to a testamentary trustee whose trust has been created before this chapter takes effect.” It is true that the section terminates with this clause, except that it does not affect in any manner the liability of the sureties in a bond executed before this chapter takes effect.” But it is evident that this saving clause was intended to relate to the provisions contained in the chapter relating to the extension of the liabilities of sureties upon, the official bonds of either a guardian, administrator or executor. It had no reference to the methods by which the liabilities arising from the breach of the conditions of a bond should be enforced. A change in the method of enforcing liability upon a bond in no way increases or diminishes such liability, and, therefore, has no effect upon the same. It would have been idle, if the contention of the respondent is correct, for the legislature to have enacted section 2610 at all, as the last clause would repeal the first. This view seems to have been recognized in the case of Hood v. Hayward (48 Hun, 330), which was affirmed by the Court of Appeals (124 N. Y., 1), the point in question, however, not being noticed in the latter court.

But it is urged that, even if it be held that the provisions of the Code are applicable to the case, there is no such determination of Mills’ default as is there provided for, because the decree rendered directs the administrator of Mills to pay to the plaintiff the amount of her claim out of the assets of the estate of Abigail Hall, deceased, instead of out of the estate of John W. Mills, deceased. We cannot see the force of this objection. The decree was a determination that Mills, as administrator, had not paid the money as directed by the decree of May 2, 1877, and that when he died he owed it to the plaintiff as such administrator, and had not paid it over to her or to himself, as guardian, and that at the time of his death he still held and owned the money as administrator.

It is clear that the direction that Hall, as administrator of Mills, pay to the plaintiff, out of the assets of the estate of Abigail Hall, is proper in form, because such is the procedure contemplated by section 2606 of the Oode. The administrator or executor of the deceased administrator is to account precisely the same as the deceased would have accounted had his letters been revoked by the surrogate’s decree; and it is expressly provided that a decree against a decedent’s executor or administrator rendered upon such an accounting has the same effect as if an execution issued upon the surrogate’s decree against the property of the decedent had been returned unsatisfied during the decedent’s lifetime.

It further appears from this decree that Mills died without assets of any kind or in any capacity. Hence it would appear that there had been a complete d&oastamt by the deceased administrator. And this view is recognized in the case of Perkins v. Stimmel (114 N. Y., 359).

The claim that there might be assets of the estate of Mills out of which the plaintiffs claim might be satisfied, and that the decree in its present form would be ineffectual to reach them, cannot prevail ; because the decree expressly finds that Mills died without assets of any kind.

It is further claimed that there was no default shown upon the part of Mills, as administrator, in complying with the decree of May 2, 1877. It appears that he was directed to pay to himself as' guardian, but there is not the slightest evidence that any such payment was ever made. The suggestion that the decree shows that at this time Mills had the funds in his hands to make this payment is certainly not well founded. All that the decree determines is, that he was chargeable with this amount; but that he had the funds actually in his hands was not adjudicated. The decree determines what the administrator is chargeable with and what he should pay, and directs him to pay it, and if he does not pay it, then the beneficiary has his remedies; and the wording of a surrogate’s decree upon an accounting cannot be tortured into a judicial determination that an administrator or executor has in his hands all the assets for which he is chargeable.

Without considering the other points raised, we are of opinion that there was a sufficient compliance with the provisions of the Code fixing the liability of the sureties upon the bond of the administrator, and that the only remedy which remained, and the only method of procedure, was that which was contained in the Code.

We think, therefore, that the objections should be sustained and a new trial ordered, with costs to the plaintiff to abide the event.

Patterson and O’Brien, JJ., concurred.

Objections sustained and a new trial ordered, with costs to the plaintiff to abide the event.


source: Caselaw Access Project

author: Van Brunt, P. J.:

license: Public Domain

text:
    LEVI P. MORTON, Appellant, v. THE MAYOR, ALDERMEN AND COMMONALTY OF THE CITY OF NEW YORK, Respondent.

      Nuisance — caused by the erection of a pumping station by a city — a defense that the act was permitted by statute — the rule as to such a defense — liability of a city for a, nuisance.

    The legislature, by chapter 386 of the Laws of 1878, empowered the commissioner of public works of the city of New York, when authorized by a three-fourths vote of all the members of its common council, to expend moneys in laying pipes to extend the distribution of Croton water, and in laying mains and in erecting or constructing such structures and fixtures as the commissioner might deem necessary to deliver said water at higher levels.
    Under authority of the common council there was erected, adjacent to certain houses belonging to Levi P. Morton, a pumping station containing machinery, the jarring of which caused special injury to the houses, and diminished their rental value
    In an action brought by Morton to abate the nuisance, and for the recovery of the damages sustained by him:

      Held, that the action was maintainable.
    That, in order to establish a sanction by statute, as a defense to the maintenance of what would otherwise be a nuisance, it must appear expressly or by clear implication that the legislature contemplated the doing of the very act which occasioned the injury.
    That, from the fact that the statute-authorized the commissioner to lay mains, and to erect such structures as might be necessary to deliver water at higher levels, no inference could be drawn that the legislature intended to grant immunity to the corporation to erect a structure which was conceded to be a nuisance to the adjoining owner.
    That a municipal corporation was liable for creating or maintaining a nuisance to the same extent as an individual.
    Appeal by the plaintiff Levi P. Morton from a judgment of the Supreme Court, entered in the office of the clerk of the city and county of New York on the 21st day of October, 1891, dismissing the complaint, with costs, after a trial at the New York Circuit before the court and a jury.

      Albert Boardman, for the appellant.

      G. Blancly and E. J. Freedman, for the respondent.
   Van Brunt, P. J.:

The plaintiff is the owner of three private dwelling-houses situated on the southerly side of West Ninety-eighth street; and immediately adjoining one of these houses, on the east thereof, is the Croton water high service pumping station, used in connection with the supply and distribution of Croton water at greater heights than can be obtained by the ordinary pressure of said water.

The complaint alleges that the maintenance of said pumping station by the defendant, adjacent and so near to the premises of the plaintiff, and the constant operation of the pumps and machinery, produces a continual jarring of the plaintiff’s houses, to their peril and injury, and also a great and incessant noise, all of which seriously damages the plaintiff’s property and houses, very greatly diminishing the selling and renting value thereof, and that the operation thereof constituted, and is, a nuisance to the plaintiff, whereby he has sustained damage to a large amount and claimed: judgment therefor.

The defendant admits the maintenance of the structure, but denied liability for consequential damages. Evidence having been given upon the trial tending to support the allegations of the complaint, the same was dismissed, and from the judgment thereupon entered this appeal is taken. .

It is not disputed by the defendant upon this argument that the facts proven by the plaintiff, in case the defendant had been a private individual, instead of a municipal corporation operating the pumping station under the sanction of law for public purposes, would be a nuisance; and it is also conceded that the plaintiff has suffered pecuniary damages, special to himself, as distinguished from the general public. But it is urged that the pumping station in question being erected and maintained under the direct authority and sanction of the legislature, the defendant is not responsible for the consequential damages.

In the consideration of the questions brought up by this appeal it is not necessary to enter into a disquisition as to whether the legislature may, by any legislative enactment, allow a municipal corporation to use its property in such a manner as to destroy the utility of the property in its neighborhood, because no such question seems to be involved in the case at bar. The rule is well settled that in order that exemption can be claimed from the consequences of the use of property by a corporation, it must appear that the legislature contemplated the doing of the very act which occasioned the injury. The case of Cogswell v. New York, New Haven and Hartford Railroad Company (103 N. Y., 10) lays down distinctly this principle. In the case cited the court say: The statutory sanction which will justify an injury to private property, must be express, or must be given by clear and unquestionable implication from powers expressly conferred, so that it can fairly be said that the legislature contemplated the doing of the very act which occasioned the injury. This is but an application of the reasonable rule that statutes in derogation of private rights, or which may result in imposing burdens upon private property, must be strictly construed. For it cannot be presumed, from a general grant of authority, that the legislature intended to authorize acts to the injury of third persons, where no compensation is provided, except upon condition of obtaining their consent.” And this brings us to the consideration of the question as to whether the defendant has brought itself within the rule above set forth.

Chapter 386 of the Laws of 1878 empowered the commissioner of public works, when authorized by a three-fourths vote of all the members elected to the common council of the city, etc., to expend certain sums of money in laying pipes to extend and enlarge the distribution of Croton water throughout the city, etc., and in laying mains and erecting or constructing such structures and fixtures as the commissioner might deem necessary to deliver said water at higher levels.

The commissioner of public works having requested authority to erect a suitable building, with two pumping engines and fixtures, including a tank, etc., on the lots between Ninety-seventh and Ninety-eighth streets, formerly occupied by the aqueduct, on the 3d of December, 1878, the board of aldermen passed a resolution authorizing such construction, which resolution, was duly approved by the mayor, and thereupon such pumping station was built with the results which have been above described. The question presented is whether the legislature expressly authorized the doing of the'very thing which resulted in the injury.

It is claimed, upon the part of the respondents, that the case of Atwater v. The Trustees of the Village of Canandaigua (124 N. Y., 602) is an authority in support of this proposition. But it seems to us that an examination of that case shows that it is not applicable to the one at bar. In that case, by virtue of certain powers, the trustees of the village, as commissioners of highways, ’were authorized to construct the identical and particular structure -at the identical and particular place by the legislature; and the ■coffer-dam, which was the cause of the damage to the plaintiff, was a necessary incident to that structure. The court say that the necessity for it made it lawful; and it seems to be expressly recognized in that case that if the injury was permanent a different rule might apply, but it being only temporary the necessity and the direct legislative authority were held to absolve the commissioners. It may further be remarked, in passing, that that action was an action for negligence and nothing else. It was not an action for damages "because of the maintenance of a nuisance.

It is well settled that a private individual must use his own property in such manner as not to injure the property of his neighbor ; and the same rule has been applied to the corporation of the city of New York, it having been held that it has no greater right to maintain a nuisance on its land than a private person possesses. (Brower v. Mayor, 3 Barb., 257; Griffin v. Mayor, 9 N. Y., 456.) And in the case of Noonan v. City of Albany (79 N. Y., 476), it is ■expressly held that a municipal corporation has no immunity from legal responsibility for creating or maintaining a nuisance.

It seems to us it would be a great stretch of language to hold that because the legislature authorized the laying of mams and the erection of such structures and fixtures as the commissioner might deem necessary to deliver water-at higher levels, that he, therefore, had a right to maintain any nuisance in any part of the city of New Y"ork which he might deem necessary, and the common council might approve of, to the absolute destruction of adjoining property. We can find no principle upon which it can be claimed that simply because a public service is being performed a man’s house can be shaken down about his ears and the use of his property absolutely destroyed. If the defendant’s claim is correct, then such a principle must prevail. It is undoubtedly true that the courts have gone a great way in making private rights subservient to public interests-where there has been express legislative authority for doing the very act which has occasioned the injury to such private rights; and there has been in many instances, under a fiction of law, absolute-destruction of private property without compensation. But- when such results ensue there must be no ambiguity about the legislative authority; and we search in vain for any legislation from which it, appears that the legislature contemplated 'any such results as are shown to have arisen from the operation of the pumping stations, erected by the defendant. And it is not to be presumed that the-legislature would authorize an invasion of private rights, such as has been established by the evidence in this case, without providing for compensation. It is evident from the nature of the work that, the nuisance is not temporary, but permanent, and that the plaintiff is permanently deprived of the beneficial enjoyment of his property. Under these circumstances, we do not see how the city can escape liability therefor.

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

O’Brien and Patterson, JJ., concurred.

Judgment reversed and new trial ordered, with costs to appellant to abide event.


author: Per Curiam:

text:
    ALBERT J. BECKLEY, Respondent, v. WINFIELD S. CHAMBERLIN, Appellant.

      Verification of an answer — when it is not excused —fraud — Code of Giril Procedure, secs, 523, 529.
    In an action brought by Albert J. Beckley against Winfield S. Chamberlin, a verified complaint was served in which it was alleged that Beckley had paid Chamberlin for certain shares of stock, the purchase of which had been induced by fraud. To this complaint Chamberlin served an unverified answer.

      Meld, that the answer must be verified.
    That this was not a case in which, within the meaning of section 528 of the Code of Civil Procedure, it was “specially prescribed by law" that a pleading need not be verified.
    That the portion of section 529, which provides that a verification shall not be excused in an answer to a complaint charging the defendant “ with any fraud whatever affecting a right or the property of another,” is not connected with the part of that section which precedes it, relating to fraudulent conveyances, but is an independent clause bearing upon the fraud affecting a right or the property of another.

      Mrist v. Glimm (6 Civil Pro. Rep., 30) not followed.
    Appeal by the defendant Winfield S. Chamberlin from an order of the Supreme Court, entered in the office of the clerk of the city and county of New York on the 6th day of May, 1892, denying the defendant’s motion to compel the plaintiff to receive an unverified answer.

      James P. Pill, for the appellant.
   Per Curiam:

The complaint in this action shows that it is brought to recover the consideration paid for certain shares of stock sold by the defendant to the plaintiff, which it is alleged the plaintiff was induced to purchase by reason of certain false and fraudulent representations, which are fully set forth in the complaint. The defendant served thereto an unverified answer, which was returned with a notice that it did not comply with the provisions of the Code of Civil Procedure, sections 523 and 529, which refer to the verification of a pleading. A motion subsequently made by the •defendant to compel plaintiff to receive the unverified answer, was denied upon the ground that the answer to be served must be-verified under section 529 of the Code.

We have been referred by the appellant to the case of Frist v. Climm (6 Civ. Pro. Rep., 30), as directly applying to the question here presented, and in which it was held that the defendant had the-right in such a case to serve an unverified answer. We cannot, however, after an examination of sections 523 and 529 of the Code,, agree with the conclusion reached in that case. The former section (523) provides when a pleading must be verified, and in regard to when such verification may be omitted, thus states the rule: “ In a case where it is not otherwise specially prescribed by law,, where the party pleading would be privileged from testifying as a. witness concerning an allegation or denial contained in the pleading.”'

This section contains the general rule, and was undoubtedly-intended as extending the privilege to parties of omitting to verify their pleading in cases where the same would have a tendency to-expose, them to a penal liability or to a criminal charge Rut it will be noticed that an exception has been made with respect to-cases wherein a verification “ is otherwise specially prescribed bylaw.” Such an exception to the general rule thus laid down-by section 523 is to be found in the cases referred to in section 529,, wherein the defendant is not excused from verifying his answer. In addition to actions relating to confessed judgments, fraudulent-conveyances and actions affecting specific property, the last paragraph of section 529 states that a defendant is not excused from-verifying his answer to a complaint charging him “ with any fraud whatever affecting a right or the property of another.” This, paragraph being disjunctive, is not related necessarily with the cases-enumerated in the preceding paragraphs of the section, and its language is general, applying to any case of fraud whatever, affecting a right or the property of another. So far, therefore, as an exemption is provided by section 523 in cases of fraud, section 529 must be regarded as qualifying and as constituting the exception which is otherwise specially prescribed for depriving a defendant of the privilege extended by that section of not being compelled in certain actions to verify his answer.

We think that the purpose of this section 529 was to meet a case-like the present, which, were it not for this provision of law, would enable a defendant, in a case based upon his fraudulent acts, to serve an unverified answer. We do not think, therefore, as said in Frist v. Climm (supra), that section 529 is limited simply to fraudulent transfers of property, but, on the contrary, that effect must be given to every provision of that section, and it will be entirely meaningless in its last sentence unless the interpretation now put upon it is given to the words “or with any fraud whatever affecting a right or the property of another.” And we are also of opinion that this construction given to section 529 does not entirely destroy the privilege provided for by section 523, but that, so far as section 523 extends the privilege of serving an unverified answer to eases where the party pleading would be privileged from testifying as a witness concerning an allegation contained in a pleading, such privilege was expressly taken away in actions of fraud. This would still leave the privilege provided for by section 523 to extend to all cases covered by such section, excepting those which are otherwise specially provided for by section 529, which, as we have seen, covers a case such as the present, which is an action for deceit for false representations in the sale of stock.

We are of opinion, therefore, that the order appealed from should be affirmed, with ten dollars costs and disbursements.

Present — Yak Brunt, P. J.; O’Brien and Patterson, JJ.

Order affirmed, with ten dollars costs and disbursements.


author: O’Brien, J.:

text:
    FERDINAND C. BAMMAN, Appellant, v. THERESIA BINZEN, Respondent.

      Leases — a covenant to renew or sell — when not too indefinite to enforce — which, party has the option to renew or sell — position of the tenant. |
    An action was brought to compel the specific performance of a covenant contained in a lease, which was as follows: “And the said party of the first part hereby covenants and agrees to and with the said party of the second part that she will on the expiration of the term hereby granted renew said lease, or will sell said property to the said party of the second part at its then market-value.”
    Prior to the expiration of the term Ferdinand C. Bamman, assignee of the original lessee, demanded of Theresia Binzen, grantee of the original lessor’s executors, a renewal of the lease for the same term and at the same rent, which demand was refused.

      Held, that the terms of the covenant -were not so indefinite as to preclude relief, the presumption "being that the renewal lease should be one for the same term and at the same rent as the original lease.
    That, by the covenant, the landlord agreed either to renew the lease or sell the premises, while the tenant did not agree to do either.
    That the landlord had the right to decide whether he would offer to the tenant a renewal of the lease or a sale of the premises.
    That the tenant might reject the offer, but could not compel the landlord to allow him to decide which he would take.
    That as the tenant had not made an offer in the alternative he was without remedy.
    That the action could not be maintained.
    Appeal by tbe plaintiff Ferdinand C. Bamman from a judgment of tbe Supreme Court, entered in tbe office of the clerk of tbe city and county of New York on tbe 22d day of January, 1892, dismissing the complaint on tbe merits, after a trial at tbe New York Special Term before tbe court.

      Mark Ash, for tbe appellant.

      Thomas MoAdam, for tbe respondent.
   O’Brien, J.:

Tbe action was brought to compel the specific performance of a covenant of renewal in a lease which reads as follows :

“And tbe said party of the first part hereby covenants and agrees to and with tbe said party of tbe second part that she will, on tbe expiration of tbe term hereby granted, renew said lease, or will sell said property to tbe said party of tbe second part at its then market-value.”

By assignment of tbe lease tbe plaintiff succeeded to tbe rights of tbe original lessee, as did tbe defendant, by virtue of a conveyance from bis executors to those of tbe original lessor; so that, as between tbe parties to tbe record, tbe .question is to be disposed of as though we bad tbe original parties to tbe lease before the court: Prior to tbe expiration of tbe term plaintiff demanded from defendant a renewal of tbe 'lease for another term of six years at tbe same rent, which was refused, and upon such refusal this action was brought.

"With respect to this covenant two questions are presented for determination — one as to whether, under tbe covenant, tbe option ■of the renewal of the lease or the sale of the premises rested with the lessor or the lessee; and, second, assuming it rested with the lessee, upon exercising such option for a renewal, was the covenant sufficiently definite to entitle him to a specific performance ?

Both these questions were determined adversely to the plaintiff, and in the conclusion reached by the learned judge below we concur, though upon grounds, which may be briefly stated, different from those specified by him in his opinion. He was of opinion that specific performance could not be decreed because the covenant for renewal was too indefinite in not naming the length of term or rental to be paid. This view he based upon the cases of Abeel v. Radcliff (13 Johns., 296), Duffield v. Whitlock (26 Wend., 55) and Robinson v. Kettletas (4 Edw. Ch., 67). An examination of these authorities, we think, will show that the reason for holding the covenants void for uncertainty was, that they omitted certain essential particulars regarding the terms of the renewal, which, in order to make a definite contract between the parties, would necessarily have to be supplied by the- court, which thus would present cases in which specific performance would not be decreed. The question here is, however, whether a covenant drawn in the form of this one is not sufficiently definite because implying a renewal for the same term and at the same rent.

As said in Tracy v. Albany Exchange Rank (7 N. Y., 474): There are several decisions showing that a covenant in a lease to renew it, without providing in respect to the term to be granted or amount of rent to be paid, implies a renewal for the same term •and rent.” (See, also, Rutgers v. Hunter, 6 Johns. Ch., 215, 218; Western Trans. Co. v. Lansing, 49 N. Y., 499, at p. 503; Cunningham v. Pattee, 99 Mass., 248; Rickards v. Rickards, 2 Younge & Collyer Ch. Rep., 427, 428; Prince v. Assheton, 1 Younge & Collyer Equity, 92; Willis v. Astor, 4 Edw. Ch., 594; Whitlock v. Duffield, Hoffm. Ch., 110, at p. 114; Kelso v. Kelly, 1 Daly, 419.)

Were there no other question in the case, we think that these authorities would abundantly support the view contended for by ■apjaellant, that a covenant to renew implies a renewal for the same terms and at the same rent, and would not, therefore, be void for indefiniteness, and could be specifically enforced. The other question, however, remains, which we regard as fatal to appellant’s right to maintain this action, and that relates to whether the option given by the covenant rested with the lessor or lessee.

This covenant provides that the landlord will, on the expiration of the term, renew the lease or sell the property to the tenant at its-then market-value. We think such a covenant is analogous to the common covenant, whereby a landlord agrees to renew the term or pay for the improvements on the property. Both reason and authority favor the view that such a covenant leaves it optional with the landlord as to whether he will renew the lease or purchase the buildings, By parity of reasoning, a similar conclusion, it seems to us, should flow from an Optional contract such as this,, wherein the landlord agrees to do one of two things, and where the tenant agrees to do neither. It must be remembered that the-tenant here assumes no obligation; he neither agrees to renew the term nor to purchase ; the covenant is one entirely on the part of the landlord, and it would thus seemingly be necessary that the-option should be with her. By the terms of this covenant the landlord bound herself to the tenant, but the tenant did not bind himself at all. While, therefore, it was compulsory upon the landlord either to offer to renew the lease or to sell the property, the option was with her as to which she should do, and then the right rested with the tenant of rejecting such offer. It is true that the principle' contended for by appellant is well settled, that where a covenant is-doubtful in language and susceptible of two constructions, one giving an election to the landlord and the other to the tenant, the construction must be given thereto more favorable to the tenant. Where, however, the language is fairly susceptible of but one construction, the rule for which the appellant contends is not apjdicable. Having in view the terms and conditions of the lease and the language of the covenant itself, we think ■ that it is reasonably free from doubt, admitting of but one construction, which we have already indicated, as conferring upon the landlord the option of determining which of two things she would do, to one of which,, however, she was obligated, leaving the tenant entirely free, upon the landlord’s exercising her option, to either accept or reject.

This conclusion is necessarily fatal to plaintiff’s right to maintain this action, for upon the facts appearing, he rested his whole claim upon the theory that the option rested with him, which he exercised by demanding a renewal, which was refused. Not having offered, therefore, to either lease or purchase, he was not in a position to compel the defendant to give a new lease. Had the offer to renew the lease or purchase been made by the tenant, a serious question would have been piesented, in view of - the indefinite terms of the covenant as to fixing the value in case of sale. The conclusion at which we have arrived, however, renders it unnecessary to discuss this question.

For the reasons given, we think the judgment appealed from should be affirmed, with costs.

Yan Brunt, P. J., and Patterson, J., concurred.

Judgment affirmed, with costs.


text:
    CHARLES H. BUNN, Respondent, v. MARGARET M. LETT, Appellant.

      Contract — when a demand, before suit, of the amount claimed must be alleged and proved.

    Charles H. Bunn held a bond and mortgage upon a building, in process oí construction, of Margaret M. Lett, who desired to raise more money. In order to aid her in accomplishing this Bunn agreed to surrender his bond and mortgage, allow a new mortgage to be given for $40,000, and himself táke a subsequent one for $10,000. At the same time Bunn and Lett entered into an agreement to-the effect that if, at the end of six months, Lett had not paid Bunn, he might sell the $10,000 bond and mortgage at a discount, not exceeding ten per cent, in addition to $100 for searching the title, if he found it necessary to do so, and thatLett would pay on demand the discount and the expense of searching the title.
    The amount due Bunn not having been paid at the end of six months,. Bunn sold the mortgage at a discount of ten per cent, and paid forty-seven dollars and fifty cents for the expense of searching the title.
    In an action brought by Bunn against Lett to recover these sums:

      Held, that as it was not certain that the mortgage would be sold at all by Bunn, and as it could not be determined at what price he would sell it, or what the cost of searching would be, it was necessary for him to allege and prove, before action, a demand of the amount which he claimed was due under the agreement.

      Appeal by the defendant Margaret M. Lett from a judgment of the Supreme Court, entered in the office of the clerk of the city and county of New York on the 19th day of October, 1891, upon a verdict for the plaintiff for $1,192.38 and costs, after a trial at the New York Circuit before the court and a jury; and also from an •order of said court, entered in said clerk’s office on the 12th day of November, 1891, denying a motion for a new trial made upon the usual grounds.

      George W. Wilson, for the appellant.

      George W. McAda/m, for the respondent.
   O’Brien, J.:

The number of frivolous and untenable objections raised upon this appeal for the purpose of overturning the judgment, clearly indicate to us, as they did, undoubtedly, to the learned trial judge, that the defenses interposed were without merit and the object sought delay. "VVe regret, under these circumstances, to be obliged to interfere with the judgment. But one question is presented which, though to some extent technical, can be made available in obtaining a further delay, which, apparently, is the object sought by the defendant.

From the facts it appears that the defendant owned the premises •on the corner of Kutgers slip and Cherry street. Plaintiff was a builder and had a contract for the erection of a building on the premises, with a bond and mortgage to secure the payment for the work and material to be done and furnished. In October, 1888, defendant was indebted to plaintiff in the sum of $34,401.25 and interest. The defendant desired a new loan of $40,000, and in order to get it it was necessary to have the plaintiff’s mortgage taken off the record. As a consideration for the cancellation of such bond and mortgage, an agreement was entered into whereby the plaintiff agreed to surrender his bond and mortgage and take a new one for $10,000, subordinate to the prior one of $40,000, to be made by the defendant to some third person. Such agreement contained the following clause:

“At any time after the expiration of six months * * * in •case the amount then due to said Bunn is unpaid, the said Bunn is to negotiate a sale of said bond and mortgage at a discount not exceeding ten per cent and $100 dollars for searching title, if he finds it necessary so to do, which discount and expense is to be paid by said Lett on demand.”

The testimony shows that defendant did not pay the $10,000 within the time agreed, and pursuant to agreement plaintiff sold the bond and mortgage for $ 1,000 less than its face, and allowed forty-seven dollars and fifty cents for examining title. It was to recover this amount of $1,047.50 that this action on the covenant was brought.

The claim made by the plaintiff was amply supported. The defendant sought to raise some question as to the good faith of the sale of the bond and mortgage, which it appears was made by plaintiff to his wife. But this upon the testimony was disposed of, there being no contradiction of the facts proven, that from her separate estate the wife advanced the money to purchase the bond and mortgage, and this after the defendant had been requested to procure a purchaser, and after efforts in other directions had proved unsuccessful. As stated, therefore, the plaintiff proved every fact which entitled him, in the absence of any testimony offered by the defendant, to the direction which was made by the court, with one single exception which may now be briefly referred to.

It will be noticed that in the covenant referred to, it was in effect, agreed that if Bunn should negotiate a sale of the bond and mortgage, should he find it necessary to do so, he had the right to allow a discount not exceeding ten per cent and $100 for searching the title; “ which discount and expense is to be paid by said Lett on demand.” There was no demand alleged in the complaint nor proven upon the trial. It is true that proof was furnished that a demand was made for the $10,000 mortgage debt, but there is no evidence that any demand was made after the sale of the bond and mortgage for the $1,047.50. Upon the close of plaintiff’s testimony a motion was made to dismiss the complaint upon the express ground of the absence of such an allegation of demand in the complaint and proof upon the trial, which being overruled, an exception was taken.

The question, therefore, presented is, was a demand necessary to be alleged and proved ? It is difficult to formulate a fixed rule for determining wlien a demand is and when it is not necessary as a condition precedent to maintaining an action. In respect to all instruments or agreements for the payment of a specific sum at a particular place or upon demand, it has been held that the commencement of the suit is itself a sufficient demand; that in such cases a demand is not a condition precedent to a right of recovery. As stated in Locklin v. Moore (57 N. Y., 362), “ The only benefit the defendant could get from the specification of the payment at a particular place is, that if he was ready there to pay and kept ready, he could set that fact up in his answer and then pay the money into court and allege such payment in his answer, and thus shield himself from all liability for interest and costs.” This case states the rule as follows :

“ It is the settled law of this State, announced in many decisions, that when a specific sum of money is made payable by the agreement of the parties upon demand, or at a sjiecified time at a particular place as against the original debtor, no demand at the time or place prior to the commencement of the suit is necessary. The commencement of the suit is itself a sufficient demand.” (Locklin v. Moore, 57 N. Y., 362; citing Wolcott v. Van Santwoord, 17 Johns., 248; Caldwell v. Cassidy, 8 Cow., 271; Haxtum v. Bishop, 3 Wend., 15; Nelson v. Bostwick, 5 Hill, 37; Mills v. Place, 48 N. Y., 520; Watkins v. Crouch, 5 Leigh, 522.)

Whilst, therefore, Locklin v. Moore {supra) is authority for the position that when a specified sum of money is made payable by agreement of the parties upon demand, at a specified time at a particular place, as against the debtor, no demand is necessary before suit brought, nor is it an essential part of plaintiff’s cause of action; it is also true, as said further on in the opinion in that case, that “ a contract could, doubtless, be so drawn that the demand and place of payment would become part of it so that an action could not be maintained without a demand at the place.” We think that neither this case nor the others cited by the respondent go to the extent of holding that a demand, upon the facts here appearing, which was provided for by the agreement of the parties, was not a condition precedent to plaintiff’s right to bring or recover in the action.

The necessity for a demand becomes apparent when we remember that this was not an agreement by which a specified sum was to be paid at a particular time or place. The only definite part of the agreement was that the bond and mortgage were not to be sold until after the expiration of six months. It is true that some evidence to vary this clause of the agreement was introduced, but for the purposes of the question now before us it may be disregarded, and the discussion proceed upon the theory that the contract in relation to the sale of the bond and mortgage, as it appears in the agreement, remained in full force and effect. It was not to be sold at all unless it was necessary; and, though deemed by the plaintiff to be necessary, it was still left with him as to when, after the six months, he would sell the bond and mortgage, and upon what discount, and what amount he should allow for searching the title. It will thus be seen that until notice was given by the plaintiff to the defendant, she could not have known whether or not the bond and mortgage were sold, nor for what amount; therefore, the extent of her liability was information she could only be put in possession of after the plaintiff had proceeded and sold the bond and mortgage, thus liquidating the amount which, under the covenant, the defendant was to pay him b}r reason thereof.

As stated in the American and English Encyclopeedia of Law (vol. 5, p. 527): “ It is necessary that a demand be made upon the party who is bound to discharge the obligation or perform the contract, unless, indeed, such party has incapacitated himself to discharge the one or perform the other.” And again (p. 528): “ Whenever the fact by which the defendant’s liability is incurred lies peculiarly within the knowledge and the privity of the plaintiff, notice thereof must be given to the defendant.”

Had it not been necessary for the plaintiff to sell the bond and mortgage nothing would have been due from the defendant, assuming that it was paid when, by its terms, the bond and mortgage became payable. In other words, no liability could arise until the plaintiff exercised his option and sold upon terms which should not include a loss to the defendant of more than $1,100; but how much less could only be ascertained when the plaintiff had sold the bond and mortgage and liquidated the amount. We think that, as no specified amount was to be paid, as no time or place for payment was fixed, under such a contract when the parties themselves agree that it shall not be payable until after a demand, such circumstances create an obligation and make it essential to support tlie cause of action, that a demand should be alleged in the complaint and proved upon the trial.

We are of opinion, therefore, that the failure to allege and prove such demand was fatal to plaintiff’s right to a recovery, and that the judgment, solely upon that ground, must be reversed and a new trial ordered, with costs to appellant to abide the event.

Yan Brunt, P. J., and Patterson, J., concurred.

Judgment reversed and new trial ordered, with costs to appellant-to abide event.


text:
    EUGENE O’CONNOR, Respondent, v. WILLIAM C. JONES, Appellant.

      Order ofwrrest — sufficiency of the affidavit — what constitutes a conversion — what is a diversion — rescission.

    The affidavit upon which an order of arrest was granted in a civil action stated that Eugene O’Connor, who carried on business under the name of George A. Leavitt & Co., made three promissory notes to his own order to the amount of $2,000, at four months, and indorsed and delivered them on or about August 28, 1890, to one Jones, under a written agreement by which Jones agreed to have the notes discounted and pay to George A. Leavitt & Co. one-half the proceeds, and when the notes matured pay one-half their amount; that Jones further-agreed, by said instrument, to deposit a certain certificate of indebtedness to secure payment by him of one-half of the notes, which certificate should be sold in case of his default; and, finally, that if Jones was not able to use the notes he would return them to George A. Leavitt & Co. on September 15, 1890.
    The affidavit then stated that Jones had paid O’Connor only $400; had refused to return the notes or inform O’Connor what he had done with them, and that O’Connor’s earliest knowledge upon this point was when he was sued upon the-notes by alleged bona fide holders thereof.
    It was also alleged that the stock certificate was worthless.

      JReld, that a conversion of the notes was not made out.
    That, in the absence of any proof, the court would assume that the notes were-disposed of before September 15, 1890, and that they were discounted by the persons suing O’Connor.
    That while O’Connor might have a remedy against Jones for the sum, in excess of $400, which O’Connor was entitled to upon the notes, it could not be said that there was a wrongful conversion of the notes themselves. That the agreement contemplated a joint interest and a discount for mutual benefit, and that a case of wrongful diversion was not shown.
    That as O’Oonnor had received $400 from Jones, and had not, upon his demand for the notes, offered to return the money, the order of arrest could not he maintained.
    Appeal by the defendant 'William O. Jones from an order of the Supreme Court, entered in the office of the clerk of the city and county of New York on the 28th day of April, 1892, denying defendant’s motion to vacate an order of arrest. •
    The action was brought to recover the damages resulting from an alleged conversion of certain notes made by Eugene O’Connor, who did business and signed such notes under the name of Geo. A. Leavitt & Co.

      George A. Stearns, for the appellant.

      Robert A. JB. Dcoyton, for the respondent.
   O’Brien, J.:

The ground of arrest was the wrongful conversion by the defendant of personal property consisting of three promissory notes. The motion to vacate was made upon the papers on which the order of arrest was granted. It, therefore, becomes necessary to refer somewhat at length to plaintiff’s affidavit which was used in procuring the arrest of the defendant. It therein appears that on the 28th of August, 1890, plaintiff made his three promissory notes, amounting in the aggregate to 02,000, payable to his own order, which ho indorsed and delivered to defendant under an agreement in writing as follows:

“New York, August 28th, 1890.
“ Received from Geo. A. Leavitt & Co. their notes, August 15th, 0692.20, at 4 months; August 21st, 0714.71, at 4 months, and August 25th, 0593.09, at 4 months, to their order, and payable at 787 Broadway, which notes I am to have discounted and pay over to Geo. A. Leavitt & Co. one-half of the proceeds; and when said notes mature I agree to pay one-lialf the amount of said notes, and Geo. A. Leavitt & Go. are to pay the other half. I also agree to deposit with them one thousand dollars par value of the certificates of indebtedness of the West Florida & Alabama R. R. Co. to secure tlie payment of my half of said proceeds. In case of failure on my part to pay my half of said notes when they mature, the certificates are to be sold and the proceeds applied to the payment thereof, and I agree to make good the difference. Should I not be able to use these notes, I agree to return them on September 15th to Geo. A. Leavitt & Go.
“WM. O. JONES.
Neil McCallum, Witness.”

The affidavit then avers that the notes were not sold to the defendant or delivered to him for any other purpose than that expressed in the receipt or agreement referred to; that the defendant paid to plaintiff the sum of $400, and no more, on account of the notes; that although a demand was made for the return of the notes, such demand was refused, coupled with a like refusal to inform plaintiff what had been done with them ; that defendant “ wrongfully converted and disposed of them to his own use; ” that plaintiff was unable to ascertain who held the notes until they became due, when one was presented to plaintiff for payment by one Bridgman, and the other two notes by one Aschoff, both of whom commenced suit in the City Court against plaintiff, alleging that the notes had been delivered to them respectively for value before maturity and that such actions are still pending.

"With the exception of a statement as to the certificate of indebtedness, mentioned in the receipt, being worthless, we have given all the material statements contained in the affidavit upon which the order to arrest the defendant was granted. The question is thus presented, whether these, facts are sufficient to justify a conclusion that the defendant wrongfully converted and disjiosed of the notes.

It is undoubted law that a person who diverts an accommodation note from the purpose for which it was intended is guilty of a conversion of the note. It will not, however, be presumed that one who lawfully obtains possession of promissory notes has converted the same; and to justify an arrest, the facts stated must warrant a conclusion, in order to constitute a conversion, that the notes were wrongfully or unlawfully diverted. .

The receipt given by the defendant shows under what agreement he took the notes. He was to have them discounted, pay over one-half the proceeds to plaintiff and pay one-half of the notes when they became due; and, as security for the payment of his half of the proceeds, the defendant deposited with plaintiff $1,000, par value, of the certificates of indebtedness of the West Florida and Alabama Railroad Company. This receipt further provided that upon the failure of the defendant to pay his half, these certificates were to be sold and the proceeds applied to the payment, and the defendant was to pay the difference. A further provision was that unless the defendant was able to use the notes he was to return them on September fifteenth to the plaintiff.

It will be noticed that there is no statement that the notes were not used before the fifteenth of September, or that after that time, while the notes were still in defendant’s possession, a demand for their return was made. Under the rule which requires us to assume the innocence rather than the guilt of a party, and an honest rather than a fraudulent intent, we must assume, in the absence of a statement to the contrary, that the disposition of the notes was made some time prior to September fifteenth.

Assuming, therefore, that some disposition was made of them by the defendant prior to the fifteenth, the other question remains, whether the notes were diverted by the defendant from the purpose for which they were given. Plaintiff does not state that they were not discounted; the statement is that third parties, claiming to be the holders of the notes for value before maturity, had commenced suit thereon. This again is entirely consistent with the view that they may have discounted these notes for the defendant. The conversion, therefore, in this case, if conversion it can be called, must be predicated upon the fact of the failure, after having the notes discounted, to return one-half of the proceeds to the plaintiff. Such failure may be a breach of trust or some other wrongful act on the part of the defendant, but we fail to see how, from that circumstance, the conclusion can be deduced that there was a wrongful conversion of the promissory notes themselves. The plaintiff received, presumably from the use made of the notes, $400; and the difference between that amount and the one-half of what would have been realized by discounting the notes correctly represents the interest the plaintiff would have had in the proceeds, and for which, undoubtedly, an action in some other form than one for conversion of the notes would lie in plaintiff’s favor. Having regard, however, to the interest which defendant obtained in these notes, under the agreement, by undertaking’ to procure their discount for the mutual benefit of both, his giving what was thought to be good security for the repayment of his half when the notes matured, and the intention of both parties that plaintiff should pay the notes at maturity, it would be going further than any of the reported cases to hold that the facts stated in the affidavit here made out a case of conversion.

Where a note is placed in another’s possession for a definite and specific purpose, and any other use of it is made, it is a violation of trust, and it is this abuse of trust or breach of such lawful possession, which constitutes a conversion. Where, however, one intrusts, promissory notes to another, permitting him to negotiate or us& the same for the purpose of raising money thereon for the joint, benefit of both, the parties have a joint interest in the results or proceeds of the notes, and the arrangement between the parties contemplates that the maker of the notes is to look for the whole or a portion of the proceeds to the one to whom the notes were-delivered. As was said in Decker v. Matthews (12 N. Y., 317), quoting from the charge of Judge Dube upon the trial: “Although these facts might entitle the plaintiff to recover the proceeds in a. different form of action, they amounted to a waiver of the alleged fraud, upon which the present suit (for conversion) was founded.”' The case relied upon by plaintiff, of Hines v. Patterson (95 N. Y., 1), is not in point. There the notes, for the conversion of which the action was brought, were made by the plaintiff, and were delivered by him to the defendant’s testator, under an agreement that they were to be discounted for the benefit of defendant’s testator, and the proceeds, after deducting the per cent which was to be paid to plaintiff, were to be invested in certain real estate which was to be conveyed to the defendant’s testator. The defendant’s testator, instead of having the notes discounted and investing the proceeds in real estate,, disposed of them in the purchase of personal property; and it was-held that he was guilty of a conversion of the notes. The principle of this case follows the rule laid down in many others, that a. diversion of a note from the purpose for which it was given will constitute a conversion. Here, if the defendant converted the-notes, he did so at the time he parted with their possession, and it is. nowhere stated in the affidavit that he ever parted with them unlawfully. As already shown, it does not even appear at what date he parted with them.

Under the agreement, what plaintiff vras really entitled to was one-half of the' proceeds to be realized upon discounting the notes, and there is no statement in the affidavit that he ever demanded the half of such proceeds. Upon the facts appearing, we do not think a case of ■conversion is made out, but that the most that can be claimed is, that the defendant failed to pay to plaintiff something less than $600 which he was entitled to receive according to the agreement made respecting the use of the notes. If paid at maturity, he would have had a right against the defendant for contribution, which he could ■enforce by resort to the collateral or by a proper action, or both if necessary, to obtain the one-half of the notes which the defendant agreed to pay.

The statement in the affidavit that the defendant “ refused to Inform this deponent what he had done with them, and wrongfully converted and disposed of them to his own use ” is the only statement that in any way charges or connects the defendant with the illegal or unlawful conversion of the notes, and the latter is a mere statement of a conclusion.

Apart, however, from the foregoing reasons, there is another which presents an insurmountable obstacle to maintaining the arrest. The plaintiff received from the defendant $100, and when he made a demand, as stated by him, for the return of the notes, there was no offer on his part to return the $100. It is clear that he could not obtain a return of the notes and hold the $100.

We are of opinion, therefore, that the affidavit was entirely insufficient, and that the order appealed from should be reversed, with ten dollars costs and disbursements, and the motion to vacate the order of arrest should be granted.

Yak Brunt, P. J., concurred.

Order reversed, with ten dollars costs and disbursements, and the ■motion to vacate the order of arrest granted.


author: Patterson, J.:

text:
    FIRST NATIONAL BANK OF SPRINGFIELD, Respondent, v. PETER HAULENBEEK, Appellant.

      Bills and notes— exclusion of evidence of a diversion thereof — measure of damages — effect of taking usury by a national bank — United States Revised Statutes, secs. 5197, 5198.
    A national bank, organized and transacting its business in tbe State of Masachusetts, brought an action in the State of New York upon four promissory notes made by Peter Haulenbeek, one to the order of the maker and three to the order of a company, of which one Morris was treasurer. The defendant set up as a defense the diversion of the paper from the purposes for which it was made, and. usury, alleging that he delivered one of the notes to Morris upon his promise to deliver coffee therefor before the note was used, and that he delivered the other three to Morris without consideration, to raise money upon them, but that Morris, delivered all the notes to Hotchkiss, a note broker, upon a usurious agreement under which Hotchkiss, from whom the bank bought the notes, was to receive more than legal interest. Hpon the trial evidence of these defenses was excluded.

      Held, error.
    That if there were a diversion, the plaintiff, though a bona fide holder, could only recover what it had paid for the notes.
    That if the original discount of the notes upon the sale to plaintiff, a national bank, were usurious, it thereby forfeited all the interest upon the notes.
    Appeal by tbe defendant Peter Haulenbeek from a judgment of tbe Supreme Court, entered in tbe office of the; clerk of tbe city and county of New York on the 10th day of June, 1891, upon a verdict for tbe plaintiff for $5,226.47 and costs, after a trial at tbe New Y ork Circuit before tbe court and a jury.

      Nelson Smith, for the appellant.

      Charles A. Wendell, for tbe respondent.
   Patterson, J.:

Tbe complaint in this action is upon four promissory notes made-by tbe defendant, one dated September 2, 1886, for $995.50, payable to tbe order of the maker four months after date; another dated September 27, 1886, for $1,050.05, payable to tbe order of tbe New York Textile Filter Company, payable four months after date at tbe North River Bank; tbe third dated September 80, 1886, for $1,050.40 to the order of tbe New York Textile Filter Company, payable four months afterdate at tbe North River Bank tbe fourth for $1,050, dated October 29, 1886, payable four months after date to the order of the New York Textile Filter Company, payable at the North River Bank.

The answer sets up several distinct defenses. It is necessary to consider only the second and third.

The second defense relates to the note dated September 30, 1886, and it is averred that it was made without consideration; was obtained from the defendant by one Morris, who, when he received it, promised to deliver to the defendant coffee therefor, at the market-price before the note was put in use; that Morris diverted the same from its purpose, and wrongfully delivered it to one Hotchkiss, under and pursuant to a corrupt and usurious agreement by which Hotchkiss was to be paid a greater rate of interest than six per cent per annum.

The third defense relates to the three other promissory notes, and as to them it is alleged that they were given without consideration to Morris, and for the purpose of borrowing money on them, and that instead of so doing Morris negotiated and delivered the notes to Hotchkiss under a corrupt and usurious agreement, by which Hotchkiss reserved more than six per cent per annum on the amount of the notes respectively, contrary to the statutes of this State and of the State of Massachusetts (the plaintiff is an incorporated national bank, located in Massachusetts), and of the statutes of the Hnited States, by which the plaintiff, as a national bank, was prohibited from taking interest in excess of that which was allowable by the law of the States of New York, Massachusetts and of the Hnited States.

On the trial, the cashier of the plaintiff was examined. The notes were shown to him, and he testified that he bought them before maturity of Hotchkiss, who was a note broker in the city of New York. Hotchkiss testified that he personally took the notes to Springfield, Massachusetts, and there sold them to the plaintiff. The precise amount paid for each of the notes was not proven, but Morris, to whom they were delivered by the defendant and who , gave them for sale to the broker, testified that the discount upon the notes was either ten or twelve per cent, and not less, as to either of them, than ten per cent. At the close of the plaintiff’s case the defendant was called as a witness, on his own behalf, to prove that tlie paper and all of it was diverted paper, and lie was asked to state as to the note dated September 2d, 1886, whether it had any consideration and the circumstances under which it was delivered. That was objected to and the objection was sustained, the court stating that it would allow the defendant to show that the notes were given to Morris for the purpose of having them discounted, and that they were accommodation notes, but that was not the exact aspect in which the defendant intended to present the case, for it was distinctly claimed that as to the notes of September second, September twenty-seventh and September thirtieth, that they were made without any consideration, were delivered to Morris to be discounted, and that the defendant Ilaulenbeek never received anything for them. "With reference to the note of the thirtieth of September, the offer made was to prove that that note was parted with on the promise of Morris that coffee would be furnished for it, and that the consideration had wholly failed. The learned judge excluded all the testimony thus offered, and to that an exception was taken. Thereupon the learned judge directed a verdict for the plaintiff for the 'amount of all the notes, including interest from the dates at which they respectively matured. As the case was tried, we consider these offers broad enough to cover what is contained in the second and third defenses, as they are set forth in the answer, and we are of opinion that the learned judge was in error in not allowing the testimony to be given. If proof could be made as to the three notes, that they were' given to Morris in order that money might be raised upon thém for Haulenbeeh, and instead of their being applied to that purpose they were discounted by Morris, either for himself or for the company of which he was treasurer, then there certainly was a misuse amounting to a diversion of the notes; and, under such circumstances, all that a bona fide- holder could recover would be the amount actually advanced on the notes, and there is nothing to show the exact amount the plaintiff paid. As to the third note, the diversion, if the facts appeared in evidence as they are claimed by the defendant to exist, the same rule of recovery would apply. But there is another aspect in which this testimony was material, at least to reduce the amount of the obligation of the defendant on each of the notes. If the defendant’s claim were established that all these notes were origjnally discounted at usurions rates of interest of from ten to twelve per cent, then the plaintiff, being a national bank, would not be entitled to recover any interest whatever on those notes under the statutes of the United States. Sections 5197 (U. S. Rev. Stat.), provides that an association organized under the national banking law may only take and reserve “interest at the rate allowed by the laws of the State, territory or district where the bank is located, and no more, except that where by the laws of any State a different rate is limited for banks of issue organized under State laws, the rate so limited shall be allowed for associations organized or existing in any such State under this title.” And the consequences of taking usurious interest are declared by section 5198, namely, that there shall be a forfeiture “ of the entire interest which the note, bill or other evidence of debt carries with it or which has been agreed to be paid thereon.”

We think the testimony that was offered to be given by Mr. Haulenbeek was clearly admissible, at least upon the question of the amount actually paid for these notes by the plaintiff, and also upon the question as to whether or not any interest should be charged against the defendant upon them. These items of interest amount to a considerable sum — nearly a thousand dollars; and for the error in rejecting the testimony referred to., we think that this judgment must be reversed, with costs to appellant to abide the event.

Yan Brunt, P. J., concurred.

Judgment reversed and new trial ordered, with costs to appellant to abide event.


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    JULIA A. SHAW, Respondent, v. AGNES C. BRYANT and Others, Appellants, Impleaded with Another, Dependant.

      Amendments of a complaint — what is a new cause of action — review of a decision upon an application for an amendment — infants are chargeable only for necessaries— estoppel — rules of the court — • Code of Civil Procedure, sec. 728.
    Julia A. Shaw, who claimed to have furnished certain necessaries to the children of one Bryant, brought an action to restrain a trust company, which held some trust moneys belonging to the children, from paying them to the father or to the children, and also to obtain a direction that the company pay her claim .from tlie income of tiie trust fund. The referee to whom the action was referred allowed an amendment to the complaint which charged the father with a conversion of moneys paid by the trust company to him as a supposed general guardian of his children, asserted that an individual liability existed upon the part of the father as to a part of the claim, and asked judgment to some extent against him personally.

      Held, that the effect of the amendment was to introduce a new cause of action.
    That such an amendment was improper under section 723 of the Code of Civil Procedure.
    That the proper way to review the referee’s decision upon the amendment washy appeal.
    In deciding the action the referee divided the plaintiff’s demand into three parts.
    and charged one part against each defendant, the father and his two children. Held, that this was improper.
    That it was the referee’s duty to select from the plaintiff’s bills the items which were properly and legally chargeable to the infants, and that the fact that such, a separation was difficult was immaterial.
    That the father, a general guardian appointed in another State, but who had never qualified, could not estop his children by a certificate that the final balance of the plaintiff’s account was correct.
    The rules of the court, as to putting the evidence in narrative form, etc., must be strictly followed in preparing a case on appeal.
    Appeal by the defendants, Carolan O’B. Bryant, Agnes O. Bryant and Amanda I. Bryant, from a judgment of tlie Supreme Court,, entered in the office of the clerk of the city and county of New York on the 14th day of December, 1891, in favor of the plaintiff.
    The referee to whom tlie action was referred found the following conclusions of law:
    I. That the plaintiff is entitled to judgment against tlie defendant. Carolan O’Brien Bryant for the sum of $15,000, with interest thereon from the 2d day of April, 1885, being the whole sum due the plaintiff, and amounting, at the date of this report, to $20,995, and judgment against him is directed accordingly.
    II. That the plaintiff is entitled to judgment against the defendant Agnes Clare Bryant for the sum of $5,000, with interest thereon from the 2d day of April, 1885, amounting, at the date of this report,, to $6,998.33, and judgment against her is directed accordingly.
    III. That the plaintiff is entitled to judgment against the defendant Amanda I. Bryant for the sum of $5,000, with interest thereon from the 2d day of April, 1885, amounting, at the date of this report,, to $6,998.33, and judgment against her is directed accordingly.

      But the payment of the sum of $15,000, with interest thereon from April 2, 1885, amounting, at the date of this report, to $20,995, together with the costs of this action, to. be adjusted, will satisfy aud discharge each and all of the judgments above directed.
    I further decide and determine that the plaintiff is entitled to judgment against all of the defendants, except the Farmers’ Loan and Trust Company, jointly for the costs of this action,' and judgment is~ directed accordingly.
    " George fflorris, for the appellants.

      J. A. Shoudy, for the respondent.
   Patterson, J.:

The judgment entered upon the report of the referee in this action must be reversed. There are two fatal errors pointed out by the appellants. The first consists in the allowance by the referee of an amendment which radically changed the issues raised by the pleadings and allowed a new cause of action to be set up in the amended' complaint.

As the original complaint was framed the action was for an injunction to restrain the Farmers’ Loan and Trust Company from paying over to the other defendants certain moneys therein referred to, and it was also asked that the court direct the said company to pay out of trust funds in its hands, belonging to the infant children of O. O’B. Bryant, the amount of the claim the plaintiff asserted against them for board and lodging furnished and moneys'advanced for the necessary support, maintenance, education and medical attendance of such infant defendants, for a period intermediate £he 17th of June, 1882, and 2d of April, 1885, and to require the said trust company to set apart and pay over to the plaintiff such portion of the annual income of the fund or of the securities in which it was invested as to the court might seem proper. Upon the answers interposed to this complaint the issues were referred. After much time spent in the trial of the case before the referee an application was made by the counsel for plaintiff to amend the complaint; and the referee ordered that it be amended by allowing allegations to be inserted therein, which charged upon the defendant C. O’B. Bryant a conversion of moneys paid by the Trust Company to him as the supqDosed general guardian of his infant children, to be applied to their maintenance and support, but which it was alleged he appropriated to himself; and also allegations which would devolve upon the defendant C. O’B. Bryant a personal liability for the whole or some portion of the indebtedness the plaintiff claimed to be due her; and the amended complaint asks judgment, not only that the plaintiff may have a lien upon the fund or the proceeds thereof, but also against the defendants and each of them, except the Farmers’ Loan and Trust Company, for $15,000 and interest, and in case the court should determine that the infant defendants were not liable to pay the whole of the amount claimed, that the plaintiff have judgment against them for the amount which should be paid by them, and against the defendant C. O’Brien Bryant for the remainder of the said $15,000.

The difference between the two complaints is most marked, and by the amended complaint a new cause of action was introduced, namely, one to enforce against the father personally the claim or some part of it, which by the original complaint was sought to be charged only upon the funds or securities in the hands of the Farmers’ Loan and Trust Company. By this amendment the defendant C. O’B. Bryant was called upon to litigate a matter which was not in any way connected with the cause of action as set forth in the original complaint. It was entirely beyond the province of the referee to permit such an amendment. That a court or referee has no power to permit, on the trial, an amendment to a complaint or answer which changes the cause of action or defense, or introduces a new cause of action or defense, follows from the terms of section 723 of the Code of Civil Procedure, and this view has been taken in Reeder v. Sayre (70 N. Y., 181); Gas-Light Company v. Railroad Company (51 Hun, 119); Price v. Brown (98 N. Y., 388); Freeman v. Grant (30 N. Y. State Rep., 143); Chapin v. Dobsou 78 N. Y., 74). That the amendment allowed by the referee introduces a new cause of action is beyond controversy; the original complaint being only for equitable relief and the amended complaint claiming a personal judgment against one of the defendants by reason of acts set forth in that amended complaint which would render him liable in a common-law action. Such defendant is not debarred from reviewing the decision of the referee by appeal. He could, not have moved against the order of the referee, as the proper way of reviewing the decision is by exception and an appeal from the judgment. (Quimby v. Claflin, 77 N. Y., 270.) Nor has he waived his right by answering. He did so on compulsion and under protest.

The second, and quite as serious, error appearing upon this record is the conclusion of the referee that the amount of the plaintiff’s demand should be divided upon some supposed equitable principle into three parts, and one of the three parts charged against each of the. defendants, namely, the two infant children and O. O’B. Bryant. It appears in the proofs that the father and his two infant children boarded with the plaintiff at her hotel during the whole period between the two dates above mentioned, and that during that time bills were incurred not only for the board, lodging, education, medical attendance and maintenance of the infant children, and for moneys advanced to them or for them to pay dressmakers’ and othei bills, but that during a great part of the time the father also resided there, and moneys were advanced to him, and expenses were-incurred on his account, and he became a debtor for large sums which could not be charged against the infants. The referee has proceeded in making this arbitrary divison upon the asserted impossibility of separating the items. There should be no such insurmountable difficulty in ascertaining what was chargeable exclusively against the infants. Their estate is not to be burdened with charges except such as are actually and positively proven to be properly so chargeable. All that could be recovered against them or be made payable out of their property would be such amounts as were advanced or such debts as were incurred for necessaries. And when the plaintiff undertook, upon the representations of their father, to supply them with such necessaries, and upon the undertaking that she would be paid out of the infants’ property, she was bound to know that the extent of the liability of the infants, or to which their property might be held, would be only for such things as would come within the description of necessaries for such infants, in view of their needs as affected by their station in life. It was the duty of the referee to require positive proof that each of the items sought to be enforced against either of these infant children came within the requirement stated. The certificate of their father that the final balance of $15,000 was correct, and the supposed statement of an account binding upon the infants by reason of that certificate, does not avail the plaintiff in any way, as the referee rightly held. Proof of each item was required. Manifestly, the account includes charges against the father. He had no power to give such a certificate, and it does not estop the children or their guardians ad Utem. Mr. Bryant was not a general guardian having the standing to make such a certificate; he was not authorized to receiye the money from the trust company as such guardian. He had been appointed in New Jersey by an order of the court, but had never qualified, and, as was held in Foley v. Mutual Life Insurance Company (18 N. Y. Supp., 615), he could not do anything, either in the way of the receipt of moneys or by acts, to affect the estate or property of the infants in the alleged capacity of general guardian. It would have required, perhaps, some little trouble and industry on the part of the referee to pick out from the long account rendered the various items proven to be properly charged against the infants; but that is no reason why the whole account should be massed and they held liable for two-thirds of it.

We have been compelled, in the examination of this case, to wade through a record which consists of almost 500 pages of what is simply a transcript of stenographer’s minutes, and nearly 200 pages more of exhibits, and are constrained to say that we have never had the misfortune of seeing a record more carelessly compiled, or thrown together in more utter defiance of the rules of the court relating to the preparation of appeal papers There are no less than eighty pages of this record, consisting of colloquies between counsel and the referee; of arguments and affidavits made on motions to postpone hearings; of oral arguments of counsel or incidental questions arising during the progress of the hearings before the referee, and of matters utterly irrelevant to the merits of the cause. Everything in the way of testimony is recorded by question and answer, and not in the narrative form required by the rule of the court. We would be justified in refusing to consider the case at all on this record, and in sending it back for resettlement, as was done in Meade v. Shay (26 Hun, 393) and Smith v. New York Central and Hudson River Railroad Company (30 Hun, 144), and would do so, but for tlie fact tliat the interests of the parties have been greatly compromised already by the delays had in the cause. The attention of the profession has been called time and time again to the condemnation by the courts of records on appeal prepared as this is, and there is no excuse for the violation of the rulé in this particular action.

The judgment appealed from is reversed, with costs to appellants to abide the event; but if the defendants ultimately succeed, the bill f.or printing the case and exhibits on this appeal shall not be taxed as disbursements. * A new referee must be appointed to hear and determine- the cause.

Yan Brunt, P. <L, and O’Brien, J"., concurred.

So ordered.