author: Slosson, J.

text:
    Anastasia L. Hearne, (Administratrix of Patrick L. Hearne, deceased,) Plaintiff and Appellant, v. Laura Keene, Defendant and Respondent.
    1. A merely voluntary payment by a party, though for the benefit of another, creates no right of action against the- latter unless the latter acquiesces in or adopts the act.
    2. But if such a payment is made by request of the agent for the defendant, the latter is liable for the money, provided such agent had either a general or special authority to borrow.
    3. Where the- authority of an agent was general in respect to a particular business, (the management of a theatre), carried on by the defendant, and it appeared' that, .according to the habit and course of business, his agency embraced the receipt and disbursement of the moneys of the theatre, and the raising of money to carry it on when required: Held, that the defendant is liable for money paid by the request of such agent for the rent of the theatre in which her business was carried on, and for which she was liable a» lessee.
    (B'efore Hoffman, Slosson and Woodrüff, J. J.)
    Heard, November 9th;
    decided, December 31st, 1859.
    Appeal from judgment for the defendant on the decision of Murray Hoffman, Jr., Esq., Referee.

      The action was brought to recover the sum of $400 and. interest paid by the plaintiff, Patrick L. Hearne, to the owner of the Metropolitan Theatre for the rent thereof for one week, while it was in the use and occupation of the defendant, under a hiring at that rent, payable weekly.
    The money is alleged to have been paid by the plaintiff at the defendant’s request. The proof showed, without contradiction, that it was paid by the plaintiff and for the defendant’s benefit, but the defendant claimed that it was either a voluntary payment for which no recovery could be had, or it was an advance to one John S. Lutz on the credit of the latter, and that Lutz had no authority to borrow money for the defendant. The report and decision of the Eeferee was, so far as it is material to state, as follows:
    “ That on the 24th of December, 1855, the plaintiff paid to the owner of the Metropolitan Theatre the sum of four hundred dollars, being rent then due by the defendant, who was lessee of the theatre.
    “That this payment was made at the request of John S. Lutz, who was at the time the agent of the defendant, for sundry purposes, and the agent of the theatre, receiving and paying out moneys.
    “ That this advance was not made by the plaintiff exclusively or chiefly on the credit of the defendant.
    “ That there is not sufficient evidence to clearly establish the fact that said agent was authorized to borrow in the defendant’s name or engage her credit, either generally or on this particular occasion; and that there is no such clear and distinct evidence of her assent to and acquiescence in this transaction, with knowledge of the circumstances, as that such authority may be inferred or a ratification implied.
    “ That there is no clear and distinct evidence that the defendant knew of the application to the plaintiff, or to any one, to make this payment for her or on her credit, or that the same had been made by the plaintiff before the commencement of this suit.
    “ That the existence of an authority in the agent to borrow money in the defendant’s name and engage her credit, is not to be inferred from the nature of the agent’s duties and the fact that .the money was paid to the use of the principal.

      “ That, in. view of the circumstances under which the money was advanced, the plaintiff is to be held to strict proof of the agent’s authority.
    “ That the facts established by the evidence are not sufficient to render the defendant liable.
    “That the defendant is entitled to judgment.”
    The evidence upon which the plaintiff relied, and which he claimed to entitle him to judgment, is chiefly recited in the opinion of the Court.
    Judgment having been entered for the defendant upon the decision of the Referee, the plaintiff appealed to the General Term.
    Pending the appeal the plaintiff died, and an order was made continuing the action in the name of his administratrix, Anastatia L. Hearne.

      M. Campbell, for plaintiff, (appellant.)
    I. The Referee erred in not finding that the defendant was bound by the act of Lutz as her agent.
    It clearly appears from the testimony of John S. Lutz that Lutz was the agent of the defendant for all business purposes relating to the theatre. E. L. Hearne swears that a part of Lutz’s business was to raise whatever money was required for the theatre. Lutz nowhere denies this.
    It is also undisputed that the identical $400, for which this suit is brought, was paid by the plaintiff to the agent of John La Earge for the rent of the defendant’s theatre, at the request of' the defendant’s agent, Lutz.
    This $400 E. L. Hearne paid for the plaintiff to defendant’s lessor. Lutz says that he does not remember telling plaintiff that this money was for the theatre. Plaintiff swears he did tell him so; and E. L. Hearne swears he gave Lutz the receipt after he had paid it, which Lutz does not deny.
    The rule is well settled, that an agent, for-a particular purpose, has authority to do all necessary or proper acts for the accomplishment of the end. (Story on Agency, § 60.)
    Besides, the evidence of Lutz shows that he was the defendant’s general agent for all business purposes. (Anderson v. Conley, 21 Wend., 279.)

      . II. The Referee found, as a question of fact, that the plaintiff made this loan at the request of Lutz, defendant’s agent, and on the credit of the defendant; but that there was not sufficient evidence that sffid agent was authorized to borrow in defendant’s name, &c. '
    Lutz swears, “Iam her agent to this time for all business purposes.” E. L. Hearne swears that 'Lutz was defendant’s agent= for “ raising whatever money was required.” Neither Lutz nor the defendant deny this. The evidence is direct, explicit and uncontradicted. Lutz was the .defendant’s general agent. (2 Kent, 9 ed., p. 835.)
    Therefore we say the Referee erred in finding, as a matter of fact, that there was not sufficient evidence of the authority of Lutz to borrow for the defendant, and as a matter of law that the defendant was not liable.
    Lutz was the defendant’s agent for paying the rent, 'and for all business purposes. Plaintiff paid it at Lutz’s request for the defendant, which: Lutz had notice of. This was notice to the defendant. (Story on Agency, § 140.)
    III. The' Referee erred in finding, as a conclusion of law, “ that the existence of an authority in the agent to borrow money in the defendant’s name, is not to be inferred from.the nature of the agent’s duties, and the fact that the money was paid to the use of the principal.”
    The only way to ascertain an agent’s authority is- from the nature of his duties and employment, in the absence of specific evidence. (Paley on Agency, by Lloyd, pp. 189, 207; Story on Agency, §§ 55, 56, 58, 83; 2 Kent, 9 ed., p. 832.)
    In this case there is direct and positive evidence, wholly uncontradicted or impeached, that Lutz was ■ the defendant’s: agent for raising money -for the theatre.
    IV. It appears that the money sued for was used to pay the second week’s rent of the defendant’s theatre in 1855; the defendant must have known this; she does not offer herself to swear she did not; she never repudiated the loan; and, after the lapse of four years, the Court is bound to presume, in the absence of proof to the contrary, that she ratified the act of her agent Lutz for her benefit.

      1 ‘ Where the unauthorized act is apparently for the benefit of the'principal, a very slight matter will serve to make out a ratification.” (Commercial Bank of Buffalo v. Warren, 15 N. Y. R., 579 ; Tradesmen's Bank v. Astor, 11 Wend., 87.)
    “ Silence-always affords a strong presumption of ratification.” (Story on Contracts, § 161, and cases cited.)
    Y. The report of the Referee, and the judgment thereon, was clearly against evidence, and the conclusions of law from the evidence were erroneous and should be set aside, and a new trial ordered.

      William D. Booth, for defendant, (respondent.)
    I. The evidence showed that the loan was not made to the defendant, but to Lutz, on his sole responsibility and credit.
    II. The evidence failed to show that Lutz had authority to borrow money for the defendant. His being her agent for matters connected with the theatre did not import this authority. It was not “ within the ordinary scope of the business.” (1 Parsons on Contracts, 41, n. f.)
    To the powers of a general agent there is this restriction, he cannot borrow money for his principal. (Hawtayne v. Bourne, 7 M. & W., 595; Dunlap’s Paley on Ag., §192, and notes.)
    IH. The money having been borrowed without the authority of the defendant, she is not liable for it. The fact that it was paid in discharge of her debt', does not affect the question. (Davidson v. Stanley, 2 Mann. & Grang., 721; Jacques v. Todd, 3 Wend., 94.)
    She has neither authorized nor ratified the act. (7 M. & W. 595, supra; 5 J. R., 176; 11 Wend., 87; 6 Hill, 318; Pentz v. Stanton, 10 Wend., 271.)
    Nor is any authority to borrow implied in the nature of Lutz’s agency.
    IY. The report of the Referee is as conclusive on the questions of fact as a verdict of a jury. (Foster v. Colman, 1 E. D. Smith R., 85; Schwart v. Taylor, 7 How. Pr. R., 251; Durkee v. Mott, 8 Barb., 423; Woodin v. Foster, 16 id., 146; Watkins v. Stevens, 4 id., 168; Green v. Brown, 3 id., 119; Van Sleenburgh v. Hoffman, 15 id., 28; Spencer v. Utica & Schen. R. R. Co., 5 id., 337; Leach v. Kelsey, 7 id., 466.)
   Slosson, J.

A right to recover, by action, money paid to the use of another can only arise where the plaintiff has paid it under some legal obligation or necessity to do so, or has done it at the request of the defendant. A mere voluntary payment by a party, though for the benefit of another, creates no right of action against him, unless the latter acquiesces in or adopts the act.

The plaintiff in the present case was under no legal obligation or necessity to make the payment in question. He made it, not at the personal request of the defendant, but of her agent; yet, if the agent had authority to make such a request, in other words, to borrow the money on her credit, she is answerable in this action.

The Referee has not found whether, when Lutz, the agent, applied to the plaintiff for the money, he told the plaintiff it was for Miss Keene, the defendant. The plaintiff swears he did do so, and Lutz swears he did not, but he subsequently qualifies his assertion by saying that he did not remember saying what he borrowed the money for, though he was prepared to swear that he did not borrow it expressly for that purpose, (f. e., the use of the theatre.) I shall assume that the plaintiff’s recollection on this point was the most reliable, especially as he adds that Lutz promised to pay him out of the receipts of the theatre of the following week, and that he loaned the money in consequence of that assurance, knowing him to be the agent of the defendant in matters connected with the theatre, and Lutz does not contradict this latter statement. This disposes also of the question whether the money was loaned on the individual security of Lutz only. On this evidence, it clearly was not.

What, then, was the nature and extent of this man’s authority ? Was it sufficient to cover this transaction?

That there was any express authority or power conferred on Lutz by the defendant to borrow money on her credit, is not pretended. If any existed, it was as incidental to his general authority.

The witness, Ed. L. Hearne, (the plaintiff’s brother,) through whom this loan was effected, was the defendant’s counsel in effecting the lease of the theatre, and employed as her counsel by Lutz. He swears that he knew him to be her agent in all matters relating to her payments and receipts connected with the theatre; that his business was to receive moneys at the office and disburse them, and raise whatever money was required; that he knows it was his business to raise money when required, and that he knew this as counsel to the theatre and from conversations with him. Lutz himself does not contradict the statement of Ed. L. Hearne. He swears that he had been the agent of Miss Keene from the time she took the theatre; that he was her agent for business purposes all the time she was lessee of the theatre; that he attended to all the money business of the theatre, paid out money and received it; and that he was her agent up to the time of the trial for all business purposes. It appears that the rent was payable weekly in advance. Punctual payment was a condition of-the continuance of the lease, and the defendant was personally bound to pay it; and it is not unreasonable to hold that if Lutz was the defendant’s agent for “ all the money business of the theatre,” “for all business purposes” whatever, he had the right, in virtue of such agency, to raise money, on the credit of his principal, to meet such payments, if short of funds.

Incidental powers may be deduced from the character of the agency, (Story on Ag., § 100;) and where that is as broad as this is, and necessarily involving the duty of seeing the rent promptly paid each week in advance, I see nothing unreasonable in holding that he has power, as incidental to his general authority, to anticipate, if necessary, a week’s receipts and borrow money to meet the rent on the credit of the theatre.

It is a material consideration that the defendant got the full benefit of the loan—it having been applied in payment of the rent, for which she was legally liable.

This bears on the question of authority.

In Bolton v. Hillersden, (1 Lord Raymond, 224,) Lord Holt held that if a master has never intrusted a servant to charge him by signing of notes in the master’s name, yet if the money for which the note is signed comes to the use of the master, such note will bind the master.

In Davidson v. Stanley, (2 Mann. & Grang., 721,) while the Court held that a general agent had no power as such to draw and indorse bills in the name of his principal, they approved the charge of the Judge who tried the cause, (Rolfe, B.,) and who, among other propositions, told the jury that such authority might be circumstantial only, as where the principal profited by the transaction. In that case the money does not appear to have gone to the use of the principal. “ The fact of articles purchased having come to the use of the master,” says Paley, (Paley on Agency, under head of “implied authority,”) “is prima facie sufficient to make him liable, and he can only discharge himself by showing either that the credit was really given to the servant, or that he always gave the servant ready money to pay for the articles bought, and had not, therefore, authorized him to buy on credit.”

There is another consideration which is of great weight with me. The defendant is eventually liable for this money. If Lutz has to pay it, then she is liable over to him, notwithstanding he borrowed it of the plaintiff. His having borrowed it, puts him in no worse position in respect to his right of reclamation on his principal, than though he had himself advanced it out of his own pocket in a case of necessity. The nature of his agency required him to attend to the payment of the rent as well as all other disbursements. The defendant then being ultimately liable, why should the plaintiff be turned over to an action against the agent, which would render another action necessary in order to reach the principal ?

In Pentz v. Stanton, (10 Wend., 271,) it was held that though the defendant was not liable on a bill of exchange drawn by his agent on the purchase of goods for the defendant’s use, by reason of his name not appearing on the bill, yet he was liable under the common counts, though there was no evidence that the name of the defendant had been disclosed at the time of the purchase. The plaintiff knew that he was selling to an agent for some one, as the bill was signed by the party in his own name as agent, and though the jury did not pass on the question of whether the goods were sold exclusively on the credit of the agent and the bill or not; yet the Court considered it would not be unreasonable “ to hold that the plaintiff did not rely exclusively on the agent’s credit," but had regard to the eventual liability of the principal, whoever he might be, if it should become necessary to resort to him, and they held that even if the plaintiff should fail in the action against the principal, on the ground that the credit was given exclusively to the agent; still, as the agent could, if obliged to pay the debt himself, recover it back from his principal as money paid to his-use, there was no legal objection to a recovery against him in this action on the common countsand the Court refused to disturb the verdict, which was for the plaintiff.

The equity is all with the plaintiff. He advanced his money, without consideration, to preserve the defendant’s lease, and to discharge a debt for which she was legally liable, and she has had the benefit of the payment, and ought in good conscience to pay it.

There must be a new trial, costs to abide event.

Ordered accordingly.


source: Caselaw Access Project

author: By the Court—Bosworth, Ch. J.

license: Public Domain

text:
    The New York and Harlem Railroad Company, Plaintiffs and Respondents, v. Alexander Kyle, Jr., and Justus Earle, Defendants and Appellants.
    1. In an action against two defendants to set aside a deed of land from one to the other as a fraud upon the plaintiffs as creditors of the vendor; the record of a judgment by the plaintiffs against such grantor, is conclusive evidence against him that he owed the amount of it when the suit was brought in which it was recovered.
    2. It is also prima facie evidence of the same fact against such vendee, upon proof being made of the facts stated in the complaint in such action, as the cause of action therein; and an admission in the answer of the vendee in the suit against him and his grantor of the facts constituting such cause of action is sufficient evidence thereof.
    3. The record of such recovery against such vendor, although recovered in an action in which said vendee was named as defendant in the summons and complaint therein, and although the complaint therein stated the -same facts to impeach the good faith and validity of said deed as the complaint in the last action, is of no effect as evidence for either party upon the question of the validity of such deed, such vendee not having been served with the summons, nor appeared in the first action.
    4. A deed by one who at the time of making it is largely in debt, made with intent to defraud his creditors, is void as against them, when executed without consideration, though executed to a person ignorant of the fact that such grantor was insolvent and unable to pay his debts.
    (Before Bosworth, Oh. J., and Hoffman and Moncrief, J. J.)
    Heard, December 13;
    decided, December 31, 1859.

      This is an appeal by Alexander Kyle, Jr., and Justus Earle, (the defendants,) from a judgment in favor of the New York and Harlem Railroad Company, (the plaintiffs,) rendered on a trial had in June, 1857, before Mr. Justice Hoffman, without a jury-
    The action is one by the plaintiffs, as judgment and execution creditors of Kyle, to set aside a deed from Kyle to Earle, dated July 6, 1854, as fraudulent and void as against the plaintiffs and other creditors of Kyle.
    At the trial the plaintiffs put in evidence the record of a judgment recovered by them against Kyle, April 11,1855, for $206,-624.50. It was recovered in an action in which Kyle and Earle were named as defendants, and which was commenced by the service of the summons on Kyle alone on the 19th of July, 1854.
    The complaint in that action states, as a cause of action against Kyle, that he, being Secretary of the plaintiffs, fraudulently filled up and issued certificates of the stock of the plaintiffs amounting to over $240,000, and applied the moneys received therefor to his own use; and also alleges the fact of the said conveyance to Earle, and that it is fraudulent, and prays (inter alia) for an injunction and receiver, and for a judgment against Kyle for the amount received by him on the stocks so transferred by him. Kyle alone was served with the summons or appeared in that action, and the judgment recovered in it, is merely one against Kyle for $206,550 damages for the stock so fraudulently issued and applied by him to his own use, and costs , of the action, in all $206,624.50.
    The issuing of an execution on that judgment and the return of it unsatisfied prior to bringing this suit, was admitted.
    The defendants then moved to dismiss the complaint, on the ground that the record so given in evidence shows “ that the matters in issue in this action formed a part of the cause of action in the action in which that judgment was rendered, and that these matters were res adjudicata by that judgment,” which motion was denied and they excepted to the decision.
    Further evidence was given, some of which (and some parte of the pleadings) are stated in the opinion of the Court.

      When both parties had rested, the defendants renewed their motion to dismiss the complaint on the ground before stated, and on the further grounds,
    1st. That there was no proof of any fraud in the conveyance from Kyle to Earle, sought to be set aside, or that said conveyance was fraudulent as against the plaintiff.
    2d. That the judgment roll produced was, as against Earle, only proof that the plaintiffs were judgment creditors of Kyle on the 11th day of April, 1855, and not proof of the facts stated in the complaint in the action in which the judgment was rendered, and consequently as against Earle there was no proof of the facts stated in that complaint, or that the plaintiffs were creditors of Kyle at the time of the conveyance.
    The motion was denied and they excepted. The Judge found as facts, the execution and delivery of the deed of July 6, 1854, and set forth a copy of it, which purported to be made for the consideration of $7,000.
    “ That such deed was duly acknowledged and recorded in the office of the Register of the city and county of New York on the 7th day of July, 1854.
    “That at the time of the said conveyance the plaintiffs were creditors of Alexander Kyle, Jr., to the amount of their claim, as established by the aforesaid judgment.
    “ That the said Kyle, prior to such conveyance, had defrauded such Company, and out of such frauds the debt arose which resulted in such judgment; and that such conveyance was made by him after the discovery, by some one or more of the officers of such Company, of the existence of such frauds.
    “ That the defendant Earle is not proven to have had knowledge, previous to said conveyance, of any of the fraudulent acts of the defendant Kyle charged against said Kyle in the complaint and in the judgment aforesaid.
    “ That the said defendant Earle, for some time previous to and at the time of said conveyance, was reputed to be worth no property, and to be wholly insolvent.
    “ That no valuable consideration was paid by the said Earle to the said Kyle for such conveyance.
    “ That from all the facts aforesaid I find, as a conclusion of fact, that the conveyance from Kyle to Earle was fraudulent' and void-as against the plaintiff, and made by Kyle to Earle with intent to defraud the plaintiff his. .creditor.
    “And the Court’s conclusions of law-thereupon were,' that the judgment in the action upon which -the judgment was recovered by the plaintiff against Kyle only, as above stated, was not a bar to this action, and that the plaintiffs were - entitled to the judgment rendered in this action.”
    • The' defendants duly excepted to the - several conclusions of the Court, and from the judgment entered on the decision, appealed to the General Term.

      A. R. Dyett, for appellants.
    I. Insisted that, the record produced was a bar to the relief claimed in this action; that it is of no consequence that the facts in issue in this were not directly passed upon in that action; it is enough that they, might have been. (3 Comst., 311; 16 J. R., 136; 10 id., 365; 13 id., 227; 1 J. C., 492; 8 Wend., 9; 5 id., 245;.2 Barb. S. C. R., 586; 7 id., 226.)
    . H; That such record was not evidence-of any of the. facts therein averred; was void on its face because Earle was a party, and was not served and did not appear in it;- (5 Wend., 162; 12 J, R., 434;) that it was not evidence against Earle because-he was not served with process in it, (1 Paige, 35;) and therefore there was no .evidence that Kyle had defrauded the' plaintiffs, or was their-debtor when the deed was given.
    IH. There - was no proof, of fraud in the conveyance from Kyle to Earle; the deed purports to be made for value and was produced by the plaintiffs; the Court -found as a fact, that Earle was not cognizant of the frauds of Kyle upon the • plaintiffs; the testimony that Earle was reputed’ to have no. property-. is - insufficient to repel the presumption of consideration furnished by the deed; the deed was in no sense voluntary.'. The mere fact that it was without consideration is not enough to set -it aside; there was evidence of services rendered by Earle for Kyle sufficient to. form a consideration; it. was not necessary for the defendants to prove there was a consideration. (1 Barb. Ch. R., 220; 4 Wend., 300; 7 id., 437; 8 id. 9; 18 id., 375; 8 Cow., 406 id., 496; 6 Paige, 526.)

      IV. Upon the facts found, the Court should have dismissed the complaint, and this Court will now do so.

      Chas. W. Sandford. for respondents.
   By the Court—Bosworth, Ch. J.

The judgment in favor of the plaintiffs, against Kyle, for $206,624.50, and the record of such judgment, establish prima facie, as against both Kyle and Earle, that the former were creditors of Kyle to that amount at the time that action was commenced. •

The complaint in that action alleges, as the grounds of' Kyle’s indebtedness, that while he was Secretary of the plaintiffs' Company, he fraudulently sold and assigned shares of its stock, and converted the proceeds to his own use. That action was commenced on the 19th of July, 1854. As a matter of legal necessity, it • must be prima facie true that Kyle had done these acts prior to the 19th of July, 1854.

The complaint in the present action alleges that Kyle was such Secretary from the year 1847 until the beginning of July, 1854, and the answer of Earle admits “that Kyle was the plaintiffs’ Secretary as stated in the complaint.” The complaint in this action also alleges that during this period Kyle “ fraudulently filled up, sold and negotiated a large amount of the certificates of the capital stock of the said plaintiffs, and received the proceeds thereof and applied the same to his own use, to an amount exceeding $200,000 and upwards, for which said judgment was renderedthat after the discovery of said fraudulent transfers, the conveyance in question was made.

The answer of Earle admits his belief “ that Kyle, towards the latter portion of the period of his secretaryship, did, in connection with one Robert Schuyler, the President of the plaintiffs’ Company, fraudulently fill up and -negotiate certificates of the stock of the Company,” but denies any information as to the amount or value of such certificates.

The answer admits enough to support the conclusion- of fact that Kyle, prior to making the conveyance in question, “had defrauded such Company, and that out of such frauds the debt arose which resulted in such judgment, and that such conveyance was made by him after the discovery by some one or more of the officers of such Company of the existence of such frauds.” The Court, at Special Term, found the fact to be so. The testimony of S. M. Blatchford and Charles Denison, as to the time of the discovery of Kyle’s frauds, tends to support this finding. The judgment record, which was produced in evidence, establishes conclusively as against Kyle, and at least prima facie against Earle, the amount and value of the certificates thus fraudulently issued.

The conveyance by Kyle to Earle, which the judgment appealed from declares to be fraudulent, was made on the 6th of July, 1854, and the action, in which the plaintiffs recovered judgment against Kyle, was commenced on the 19th of said July, as is shown by the record of that judgment.

We think it sufficiently proved that Kyle had committed the frauds for which that judgment was recovered, prior to the 6th of July, 1854, and that the plaintiffs were then his creditors to the amount of the value of the stock which he had thus fraudulently transferred, and the proceeds of which he had applied to his own use, and that he made the deed of that date with intent to defraud the plaintiffs and prevent their reaching the property conveyed by that deed.

We think the evidence also supports the further conclusion of fact found by the Court at Special Term, “ that no valuable consideration was paid by the said Earle to the said Kyle for such conveyance.”

It was proved that Earle is the father-in-law of Kyle, and assisted Kyle while the latter was Secretary of the Company; that prior to his beginning to render such assistance he had failed in business, and that subsequently thereto he was out of business until he commenced assisting Kyle; that while so assisting him he lived with Kyle, and the Company paid him nothing; that when he went to live with Kyle, his family was broken up and his wife went to live with her father; that he had no visible means of support, and it was generally reported that Earle was worth nothing.

It is therefore established that the plaintiffs were creditors of Kyle prior to the 6th of July, 1854; that Kyle, after he knew that his frauds, out of which said indebtedness arose, had been discovered, made the conveyance of the 6th of July, 1854, with intent to defraud the plaintiffs, and made it to his father-in-law without consideration, and that the latter was not a man of any property.

Such a conveyance is void as between Kyle and the plaintiffs, and as between the latter and Earle. Where a person owing $200,000, created by his fraudulent acts, as soon as his frauds are discovered, conveys without consideration the only property that he owns, and the value of which does not equal the one-twentieth part of his indebtedness, such conveyance is void as against those who were creditors at the time it was made. (2 Kent’s Com., 440-443, and notes.)

We cannot assent to the proposition that the record of the judgment recovered by the plaintiffs against Kyle, shows that the question of the validity of the deed of the 6th of July, 1854, was determined in that suit, either in fact or in intendment of law.

That question could not have been litigated in that suit, even if Earle had been served with process in it. (Reubens v. Joel, 3 Kern., 488.)

The terms of the judgment do not import that it was considered. On the contrary, it recites that Earle was not served with process, and did not appear in the action. In substance and effect Earle was no more a party to it than if he had not been named in it.

We conclude, therefore, that there was no error committed at the trial, and that the facts found entitled the plaintiffs to the relief granted to them by the judgment appealed from.

Judgment affirmed.


author: By the Court—Hoffman, J. Slosson, J.

text:
    The New York Exchange Company, Plaintiffs and Respondents, v. David R. De Wolf, Defendant and Appellant.
    1. Where it is set up as a defense to a note that the maker had with others subscribed in advance of premiums to be earned by an Insurance Company, upon condition that the subscription should not be binding until the sum of $300,000 was subscribed, and that the note in suit was afterwards given for his subscription by the defendant, induced Iby a false and fraudulent representation that the whole amount had been subscribed, the burden is upon the defendant of showing that such subscription had not been made.
    2. In such case, where the defendant produces several of the original subscription books, and the proof is clear that one book used in taking subscriptions is not produced, and other proof shows that, according to computations made at the time, a greater sum than $300,000 had been subscribed, it is not error to charge the jury that there is no sufficient proof that the subscription was not made up, to the required amount.
    3. Where the resolution of the Insurance Company, under which the subscription was taken, expressly includes in the $300,000 a previous subscription of $40,000, made, but not paid in, and the agreement, signed by the defendant, refers to such resolution, that is notice to the defendant of its contents, and it is no defense that $300,000 was not subscribed after the resolution was passed^ and that the $40,000 are necessary to make up the amount.
    4. Where some of the subscriptions were by other Insurance Companies, the Court cannot, without the production of their charters, pronounce such subscriptions unauthorized and void.
    6. The agreement for the subscription being in writing, whereby the subscribers promise to advance their notes, and the defendant having subsequently given his notes for the amount subscribed, he cannot prove as a defense that the persons who solicited the subscriptions verbally promised some of the subscribers that they should not be bound thereby to give their notes, or that they should have the privilege of substituting other notes, or other similar parol promise. (Slosson, J., dissented.)
    Whether, if proof of such parol promise were otherwise admissible in the face of the written subscription, the defendant could give such evidence under an answer, which alleged no such facts, but only that the requisite amount had not been subscribed, Qucere f

    (Before Hoffman, Slosson and Woodruff, J. J.)
    Heard, November 11th;
    decided, December 31st, 1859.
    Appeal from a judgment rendered on a verdict for the plaintiff. The action was brought to recover the amount of a promissory note for $500, dated Novembers, 1855, made by the defendant, payable to the order of the Atlas Mutual Insurance Company, and indorsed to the plaintiffs.
    The answer set up as a defense, in substance, that the officers of the Atlas Insurance Company proposed to- raise $300,000 by obtaining notes to that amount for premiums in advance from persons who would receive their Policies, they agreeing to insure such persons until the premiums should amount to the sum of the notes given; that such officers applied to the defendant to subscribe, and represented the Company to be in good condition and prosperous; that the defendant subscribed $1,000 towards the amount to be raised, but it was agreed that the subscription should not be binding until the whole $300,000 should be raised; that in fact the Company was then insolvent, and this was known to the said officers, and the aforesaid representations were false and fraudulent; that having been informed that the Company was in an unsound condition, and believing it to be insolvent, the defendant refused to give his said notes on that ground, and also on the ground that the whole $300,000 had not been raised, until afterwards the President assured the defendant that the Company was solvent, and would go on with its business, and promised that the notes of the defendant should not be used for any purpose unless and until the whole $300,000 should be made up, and the notes to that amount paid in, and until the Company should be secure and able to go on successfully with its business; that upon that condition, and the further condition that the notes should not be used for nor applied to the payment of old debts of the Company, and should be returned to defendant if the whole $300,000 was not made up, and the notes therefor paid in, or if the said Company should not go on with its business, the defendant gave his two notes, one of which is the note m suit, but such notes, though dated in November, were not given until February, 1856; that the Company was in fact then insolvent, and this was known to the officers and to the President, and the obtaining of the notes was a fraud,, and the- notes were obtained with the intent to use them in violation of the conditions on which they were obtained, and in violation of such conditions the note in suit was soon transferred, and the same was transferred to the plaintiffs on account of a prior indebtedness in fraud of the defendant’s rights; that the $300,000 had never been made up, nor notes therefor- given, and' the Company was not placed on a secure basis, and was unsound, insolvent and unable to go on with its business, and in March, 1856, suspended its business, and a Receiver thereof was appointed; and that no Policies were ever issued' to the defendant on or in pursuance of the agreement to insure, and the notes are without consideration and void.
    The action was tried on the 14th day of January, 1859, before Mr. Justice Woodruff and a jury.

      It appeared on the trial that the plaintiffs received the note in suit from the Atlas Insurance Company on the 1st of March, 1856, to be credited to the account of that Company against the bills of the plaintiffs for the rent of their office for the quarter ending February 1st, 1856.
    Testimony was given on both sides bearing on the question whether ‘the note in suit was obtained by fraud or false representations. But the contest on the trial related mainly to the inquiry whether the whole subscription of $300,000 in aid of the Company was in fact made up.
    It appeared that on the 12th of October, 1855, several parties had subscribed an agreement binding themselves to give notes to the Company for the amounts respectively specified at four months in advance of premiums, and this subscription amounted to $40,000.
    On the 8th of November following, at a meeting of the Trustees, it was resolved, “ that a subscription in the sum of $400,000 in business notes to be written against, be obtained; subscriptions to be binding when $300,000 is subscribed, including the $40,000 already subscribed.”
    Under the same date, the Trustees themselves agreed to subscribe the sum of $50,000, on the same conditions set forth in the resolution, to be paid in cash or notes at thirty, sixty, ninety days, or four months, provided the amount of $300,000 is subscribed under that resolution,
    Subscription books were thereupon prepared, containing copies of the $50,000 subscription, of the $40,000 subscription, and a subscription agreement to be signed by others who should consent to become subscribers. The books contained as follows:
    “New York, November 8, 1855.
    “ The Trustees of the Atlas Mutual Insurance Company, in order to show their desire and determination to place the Company in an independent position, do subscribe the amount set opposite their names, on the same conditions set forth in the resolution of the Board of this date, to be paid in cash or notes at thirty, sixty, ninety days, or four months; provided that the amount of three hundred thousand dollars is subscribed under ■that resolution.

      “ J. S. Stages,
    J. S. Whitney,
    S. Knowlton,
    Snow & Burgess,
    Edward A. Lambert,
    J. E. Southworth,
    Marcellus Massey,
    E. A. Crocker,
    J. Boynton,
    L. R. Cheesbrough,
    E. B. Litchfield, ) $50,000. J. Collins,
    T. C. Durant,
    “ We, the subscribers, 1 amount opposite our names, at four months, in advance of premiums, to the Atlas Mutual Insurance Company. Notes to be given when $40,000 is subscribed. hereby agree to give our notes for the
    “NewYork, October 12, 1855.
    “ Arthur Leary, $5,000,” and twenty-nine others, whose aggregate subscriptions amounted to $40,000.
    “We, the subscribers hereto, agree to give to the Atlas Mutual Insurance Company our notes, in advance of premiums of insurance, at six and twelve months, in equal amounts, for the sums set opposite our names respectively, it being understood that, in consideration thereof, the subscribers are to be allowed by the Company, at the maturity of their notes, five per cent on the amount thereof.
    “ This subscription is towards the $400,000 subscription authorized by a resolution of the Board of Trustees of this date, and is not to be binding until the sum of $300,000 is subscribed.
    “NewYork, November 8, 1855.”
    With the subscription books thus prepared, the friends of the Company proceeded to obtain subscriptions; and the defendant became a subscriber to the amount of $1,000.
    After a few weeks the subscription books were collected, and the officers footed up the subscriptions and announced that upwards of $300,000 (including the $40,000) had been subscribed, and the Trustees passed a resolution “ that the officers commence at once to collect the notes to that amount, and proceed in liquidating the liabilities of the Company therewith.”
    The defendant gave his two notes, for. $500 each, for the amount of his subscription, one of which was transferred to the plaintiffs, and is the note in suit.

      On the trial, some of the original books of subscription were produced, and a book which appeared to have been copied from some of the books; but it appeared, by distinct, uncontradicted evidence, that one of the books in which subscriptions were taken was missing, and no copy was produced, nor was any evidence given showing the amount of the, subscriptions in that missing book.
    It also appeared that, among the subscriptions, were several which were made by other Insurance Companies, or by their officers, and, that the amount of such subscriptions was $37,000.
    The defendant’s counsel offered in evidence a resolution of the Trustees passed October 30, 1855, in the following words:
    “ That any arrangement made by the Finance Committee in paying, or arranging for funds to pay, the pressing liabilities of the Company, and to sustain the institution till other means can be provided, if they shall make themselves or their friends personally liable, the same shall be considered and treated as confidential in any event, equal in all respects to the amount of $40,000 already subscribed by the friends of the Company for its relief.” '
    The plaintiffs objected to the evidence, and it was rejected by the Court, and the defendant excepted.
    The Court allowed evidence to be given of the state and condition of the Company, and the amount of its liabilities when the subscription was taken up, and when the defendant’s notes were given, but rejected evidence to show the amount of its liabilities when it suspended in March, 1856, and the defendant excepted.
    Questions were put to several of the witnesses to show that, at the time they respectively signed the written subscription, there was some parol agreement that they should not pay it, or that they should have a privilege to substitute other subscribers in their place. To these and some other similar questions the plaintiffs objected, and the objection being sustained, the defendant excepted. ■
    In relation to the subscriptions by other Insurance Companies, their charters were not produced, and there was no evidence in relation to the authority under which the subscriptions were made, except that one, by a Philadelphia Insurance Company, was made by an agent, with the approval of its President, and another, by a Company in this State, was subscribed by the Vice-President, without any resolution of the Board of Directors.
    After the case was summed up by the respective counsel, the defendant’s counsel requested the Judge to charge the jury:
    1st. That the $40,000 subscription, of date of October 12,1855, was a separate subscription’ independent of the $400,000 subscription of the 8th November, 1855, and not entitled to be included in the sum of $300,000, which, by the terms of said subscription of the 8th November, 1855, was to be subscribed before the same should be binding.
    2d. That the subscriptions of the Insurance Companies that subscribed to the said subscription of November 8, 1855, were void, because they had not power or authority to make such subscriptions.
    3d. That even if such Insurance Companies had the power so to subscribe, such of their said subscriptions as were made were void, because they were not authorized by their respective Boards of Directors.
    But, except so far as the matters aforesaid are contained in the instructions given to the jury, as hereinafter stated, the Judge refused to charge the said propositions; and the defendant’s counsel excepted.
    The Judge charged the jury as follows:
    “ The 12th section of the charter of the Atlas Mutual Insurance Company reads as follows:
    “ 1 The Company, for the better security of its dealers, may receive notes for premiums in advance of persons intending to receive its Policies, and may negotiate such notes for the purpose of paying claims or otherwise in the course of its business; and on such portions of said notes as may exceed the amount of premiums paid by the respective signers thereof at the successive periods, when the Company shall make up its annual statement, as hereinafter provided for, and on new notes taken in advance thereafter, a compensation to the signers thereof, at a rate to be determined by the Trustees, but not exceeding five per cent per annum, may be allowed and paid from time to time.’
    “ The Company, by the 12th section of the charter, was authorized to receive agreements for insurance and notes in advance, and allow five per cent to persons making such advance, and to use such notes in payment of losses, &c.
    “This note now in suit was given under an agreement, and in advance of premiums.
    “ The Company had a right to use such notes, and the plaintiffs, receiving one of such notes in payment of rent, stand, prima facie, entitled to collect it.
    “If, however, it was obtained by fraud and misrepresentation of existing facts, the defendant is not bound to pay it.
    “ 1. Was it given under false representations that the $300,000 subscription was made up ?
    “ 2. Was it given upon false representations that the Company was in good condition ?

      “First. The defendant has the burden of showing that the $300,000 of subscriptions was not made up. Has-he shown it?
    “ If there are subscription books, or a subscription book, which is not produced, nor its contents proved, then you have not the means of knowing the amount subscribed; and there is no sufficient proof that the subscription was not made up. (To this the defendant’s counsel excepted.)

      “Second. As to the actual condition of the Company. If fraudulently represented solvent and sound when it was not so, and the defendant’s subscription was obtained by that means, and was given in reliance on that representation, and the note was also procured for such subscription in pursuance of such fraud, the defendant is not liable.”
    Tire jury thereupon found a verdict for the plaintiffs for the amount of the note, with interest, $593.55.
    The defendant moved for a new trial: the motion was denied; and j udgment was entered for the plaintiffs. From the j udgmentf and also from the order denying a new trial, the defendant appealed.

      F. 8. Young, for appellant.
    I. The Judge erred in refusing to charge the jury that the $40,000, of the date of October 12, 1855, was a separate subscription, independent of the $400,000 subscription of November 8, 1855, a-nd not entitled to be included in the sum of $300,000 which, by the terms of the subscription of 8th November, 1855,

      was to be subscribed before the same should be binding. (Berry v. Yates, 24 Barb., 199.)
    TT. The Judge also erred in refusing to charge the jury that the subscriptions of the Insurance Companies that subscribed to the said subscription of 8th November, 1855, were void, because they had not power or authority to make such subscriptions. (Berry v. Yates, and cases there cited.)
    III. The Judge also erred in refusing to charge the jury that even if such Insurance Companies had the power so to subscribe, the said subscriptions made by them were void, because they were not authorized by their respective Boards of Directors.
    IY. There was error in that part of the charge to the jury ■ which was to the effect that there was no sufficient proof that the $300,000 subscription was not made up. The evidence upon this question should have been left to the jury.
    Y. There was also error in disallowing the question as to the amount of the liabilities of the Atlas Mutual Insurance Company at the time it suspended in March, 1856.
    YI. The resolution of the Board of Directors of said Insurance Company, dated October 30th, 1855, was competent evidence, and should have been received.
    It was competent as showing, by action of the Board of Directors, that the $40,000 subscription was confidential, and not on the same footing with the other subscriptions, and consequently not entitled to form a part of the $300,000 requisite to make the subscription of 8th November binding, and also as tending to show fraud in the subscriptions.
    YII. There was error in disallowing proof of a parol arrangement between the witness, on behalf of the International Insurance Company, and the Atlas Mutual Insurance Company, in reference to the subscription of the International Insurance Company, and the notes to be given therefor.
    The object of the defendant’s counsel in asking the question, was not to show some other valid agreement, varying the terms of the subscription, but to show an arrangement connected with said subscription, and the notes to be given, which«would be a fraud upon the other subscribers, and rendering the subscription itself void. It was competent to show any.fraud connected with the subscription. (Greenl. on Ev., vol. 1, § 284.)

      VIII. The question, as to whether the notes of the International Insurance Company were given in pursuance of the subcription, should have been allowed.
    The answer sought by the question was material as an item of evidence tending to show that the subscription was fraudulent.
    IX. The question as to whether any, and if so what, inducements were held out to witness for him to subscribe, was proper, and should have been allowed.
    The procuring of the witness’ subscription, in the manner offered to be shown, was fraudulent as to the other subscribers, and the Company could not have enforced the subscription against the witness.
    X. - There was similar error in disallowing proof of other parol agreements with subscribers.
    Subscriptions made under the circumstances offered to be shown were not valid. (Stewart v. The Trustees of Hamilton College, 2 Denio, 403, 418.)
    XI. The verdict of the jury was against the weight of evidence.

      John H Parsons, for respondent.
    I. The defendant undertook to show the condition of the Company when it suspended in March, 1856. It appeared by defendant’s witnesses, that the Company’s losses in January and February, 1856, were very large. However this might be, evidence of the pecuniary condition of an Insurance Company in March, would not bear upon its condition in January or February, and such evidence was properly rejected. Evidence of its condition when the defendant gave the note in suit was admitted and was given, and this was all that was material.
    II. The resolution of October 30th, 1855, offered by the defendant, and excluded by the Judge, had nothing to do with the subscriptions—was irrelevant and immaterial; amounted to a mere declaration on the part of certain of the Company’s Trustees, and could not affect the subscriptions, which made no reference to such resolution—were absolute in terms and binding in favor of the Company, as also of the subscribers.
    III. The Judge excluded evidence by which the defendant sought tó show arrangements made by the Company with certain of the subscribers, tending to vary the obligation of their subscriptions. The subscription was a written agreement between the Company and the subscribers, and between the subscribers themselves. Parol evidence to vary its terms was properly refused.
    Besides, the answer set up no such defense.
    TV". The Judge properly refused to charge that subscriptions by other Insurance Companies were void for want of authority, and because not authorized by the Boards of Directors of such Companies.
    The defendant had the burden of showing that the $300,000 of subscriptions was not made up. To do this he showed certain subscriptions, and claimed that they did not amount to $300,000. It appeared, however, that one subscription book was lost, and there was no evidence of its contents. Without this evidence, the j ury had not the means of knowing what amount had been subscribed, and it therefore, as it was impossible to find the $300,000 not made up, was immaterial whether the Insurance Company subscriptions were authorized or not.
    Again, the defendant put such Insurance Company subscriptions in evidence. To avoid them, the onus was on him of showing them unauthorized. He offered no evidence with such view. Ebr could such want of authority be shown without the production of their charters.
    Y. A subscription of $40,000 was got up under date of October 12th, 1855. This was written in all the subscription books, including the one signed by defendant, before any subscriptions were obtained. The resolution of the Company, of November 8th, 1855, referred to in the body of, and so made part of, the subscription of that date, was offered in evidence by plaintiffs to connect these two subscriptions, and it became by reference part of the agreement of subscription which the defendant signed. It was, therefore, properly included in the amount of $300,000.
    The other ground for refusing to charge that the $40,000 should not be included, was the immateriality of such request, for the reason that by the loss of one subscription book, and failure to prove its contents, there was no proof to go to the jury that the subscription was not made up.
   By the Court—Hoffman, J.

The appeal of the defendant from the judgment, brings up, first, the question whether the charge of the Judge was erroneous; second, whether he was bound to charge anything which he was particularly requested to charge, and refused to do; third, as to his rulings upon matters of evidence.

1st. The portion of the charge excepted to is as follows: If there are subscription books, or a subscription book which is not produced, nor its contents proved, then you have not the means of knowing the amount subscribed, and there is no sufficient proof that the subscription was not made up.”

James Smith had sworn, that he was a Director, and had obtained subscriptions for the Company. That there was one book missing; the one in which he obtained subscriptions.

Books Hos. 2 to 9 had been produced and authenticated by Tracy, the Secretary. Each book contained some original subscriptions, and some not original, copied from the originals in other books. The books were in the hands of different parties. He transcribed into one book, all the names he knew to be genuine, and also the names and amounts of those he otherwise knew had subscribed. The amount of the subscriptions footed up $300,000.

Ho. 1 is the book thus referred to. The witness did not know that what were produced were all the subscription .books used. He got some information from the parties or others as to some subscriptions. $300,000 could be made up from the books by any person without any duplicity.

Sturges states that he footed up the subscriptions, and they amounted to considerable over $300,000. Chesebrough’s was over $13,000. After the computation was made, the books went out again.

Tracy, in his computation of the amount, took Chesebrough’s subscription at $6,500.

It is shown that book Ho. 1 was not a full statement of the whole of the subscriptions, and nothing else in evidence professed to be so. The book missing may have contained subscriptions to a heavy amount, enough to cover all subscriptions objected to, even if the objections were tenable. The Judge was right in saying that the defendant had not shown what he was bound explicitly to do; that the $300,000 subscription was not made up; the burden of proof was on the defendant to avoid his note on that ground. “ Aj .1 .Hi vlí wh&sought

2d. The Judge refused to charge that the $40,000 subscription of October 12th was not to be included in the sum of $300,000.

The terms of the subscription of the 12th of October were unconditional. The resolution of the 8th of November expressly includes the $40,000 as part of the $400,000 to be raised, the subscriptions not to be binding until $300,000, including such $40,000, was subscribed. The defendant subscribed book No. 3 with the names of the subscribers to the $40,000, and a copy of their subscription in it. There was scarcely ground for leaving the question to the jury of its inclusion. This was not asked, but a peremptory exclusion of what was rather matter of fact than of law, had the evidence been uncertain. Besides, the agreement signed by the defendant declares his subscription to be towards the subscription authorized by a resolution of the Board of Trustees of that date (Nov. 8th.) And that resolution in terms includes the $40,000 in the $300,000 to be subscribed before the subscriptions should be binding. By such reference the defendant had notice of the terms of the resolution, and the resolution became incorporated in the defendant’s agreement.

So that including the $40,000 in the computation, to show that $300,000 had been subscribed, was in exact conformity with the agreement of the parties, for the resolution in pursuance of which the defendant’s subscription was expressed to be taken declares that it shall be so included.

The second request to charge was refused properly. We have decided that the burden of showing that a Company has not the power of subscribing must be clearly made out by production of its charter, or some general law.

As to the third request, proof was made, that subscriptions were not authorized by the Board of Directors of the International Insurance Company; and as to the Philadelphia Insurance Company, there is no proof on that point. As to the former,

Ogden says there was no resolution authorizing the subscription, but the Company knew of its being made. The principal members of the Board knew it; the members of the Finance Committee knew .it.

The defendant has not proven enough in this instance. He should have shown that the power rested only in the Board.

So in the case of the Philadelphia Company, the President approved of the subscription, and we know nothing of the charter of its incorporation, its prohibitions, or delegation of powers.

3d. As to the exceptions relating to the rulings upon evi-’’ dence.

The exclusion of the resolution of the 30th of October, 1854, was proper. Whatever privileges had been given to the sub-. scribers for the $40,000 were extended to every subscriber towards the $300,000. By the resolution of the 8th of ISTovember the $40,000 was expressly declared to be part of the $300,-000. The resolution of the 30th of October comprehends all the arrangements which might be made by the Finance Committee for paying the pressing liabilities, and would be equally available to all the subscribers. So that if there was anything confidential in the advance of the $40,000, it was extended to all the subscribers. Besides, the defendant had notice that the $40,000 subscription was included with his own to make up the $300,000, and was so constructively notified of its terms and conditions ; and if it was affected by the resolution of the 30th of October, he had such notice thereof before he subscribed. So that in neither aspect could that resolution affect his liability on his note.

The most important of the exceptions refer to the refusal of the Judge to permit evidence to be given of a parol agreement with various subscribers, made at the time, by which their respective subscriptions should not be absolute as they purported to be, but upon stipulations which would discharge them, or materially modify them, so that the $300,000 was not in truth fairly subscribed.

It seems to me impossible that evidence to an arrangement of this nature can be allowed. The subscriptions, or the notes given in pursuance thereof, were clear, definite and unconditional. I cannot believe that one of the subscribers could have set up with success a defense based upon such a contract, when sued by the Company. (Hoare v. Graham, 3 Camp., 57; Hogg v. Snaith, 1 Taunt., 347; Eaves v. Henderson, 17 Wend., 190; 5 Pick., 506.)

In the case of Stewart v. The Hamilton College, (2 Denio, 403,) the resolution which qualified the apparent subscription was in writing.

In Acker v. Phoenix, (4 Paige, 305,) a composition deed was signed by the defendants among other creditors of the plaintiffs. They agreed to take certain securities to the amount of twelve shillings in the pound in full; on condition, however, that all the creditors united in the deeds. The plaintiffs sought to enforce the agreement for compounding, and alleged that it was Understood and agreed at the time that certain creditors, known as confidential, were not to sign but were to be paid first. On demurrer the bill was held bad; the complainants were attempting to vary the effect of the written agreement in a very essential point, by an allegation that there was a parol understanding at the time of the execution of the deed that a certain class of creditors were not to join. This was wholly inadmissible.

In the late case of Humfrey v. Dale, in the Queen’s Bench, (38 L. & Eq. R., 120,) Lord Campbell in delivering the opinion of the Court, which was particularly connected with the admissibility of the proof of usage, stated a rule which appears to me -of very general application to all questions of this nature. “Can the two parts of the alleged contract” (that which is written, and that proposed to be proved) “have full effect given to them, if both were written down without making it insensible or inconsistent.”

This rule will show the true principle of the important case of Chester v. The Bank of Kingston. (16 N. Y. R., 336.) Parol evidence was admitted to prove that a bond for the payment of money absolute in its terms, was delivered under an agreement by which it was to be held by the obligee as collateral to the debt of third parties, and to be canceled upon payment being had, frpm them.

If the case of proof converting an absolute deed into a mortgage is not strictly within the distinction and rule thus stated, it' may be treated, as it has always been, as exceptional (Despard v. Walbridge, 15 N. Y. R, 374.)

Again, the answer avers that $300,000 had not been subscribed. It may be a question whether under this averment it was competent for the defendant to prove that although the amount had been subscribed, there had been made concurrent parol agreements with some subscribers to the effect sought to be proved.

There are a few other exceptions to be noticed.

The question whether the notes of the International Company were actually given is clearly immaterial. The subscription of the defendant was not on condition that the other subscribers should pay their subscriptions.

So was the question as to the indebtedness of the Atlas Company to the Philadelphia Company.

The exception as to Chesebrough’s subscription is not intelligible to me, and no notice of it is taken on the points.

The amount of the liabilities of the Company in March, 1856, cannot properly bear upon any of the issues.

The judgment must be affirmed, with costs.

Slosson, J.

The charge of the Judge, in respect to the effect upon the defendant’s liability, of false statements, if there were such, as to the pecuniary condition of the Company, made at the time of procuring his subscription and notes, was as favorable as it could well have been for him; and unless the verdict on that question is clearly against the weight of evidence, there is no reason for disturbing it. Such, in my opinion, is not the case; and, in so far as this appeal involves that consideration, it is unnecessary to add anything more.

• The only serious questions in the case arise under the refusal of the Judge to charge the requests submitted to him; his charge as to the effect of the absence of the missing subscription book, and of the proof of its contents; and his rulings on the trial, especially that which excluded evidence offered to show that a fraud had been practised upon the subscribers by secret arrangements between some of them and the Company, by which they were to be favored in respect to their subscriptions, in some way or manner not common to all the subscribers.

. First. The Judge refused to charge, as requested, that the $40,000 subscription of October 12, 1855, was a separate subscription, independént of the $400,000 subscription of the 8th November, 1855, and not entitled to be included in the sum of $300,000 which, by the terms of the subscription of 8th Novem-

her, was to be subscribed before the same should be binding. I think the reference to the resolution of the Board of 8th November, contained in the agreement prefixed to the defendant’s subscription in the subscription book, - adopted that resolution as part of his contract. This agreement is the language of the subscribers, and the reference to the resolution is their own reference; and the contents of the resolution must be presumed to have been known to them. As, by this resolution, the $40,000 subscription is expressly to be included in the $300,000 subscription, and to go to make up that amount, the_ Judge properly refused to charge in respect to it as requested. (Coddington v. Davis, 1 Comst., 192.)

I am aware that a different view has been entertained on this subject by one of the learned Justices of the Supreme Court in this district, sitting at Special Term, in the case of Berry v. Yates, (24 Barb., 199,)—an action brought by the Receiver of the Company against one of these subscribers; but my own convictions will not allow me to acquiesce in his conclusions.

The Judge very properly refused to charge that the subscriptions by the Insurance Companies were void because they had no power or authority to make such subscriptions, and also to charge that, if not void for that reason, they were void because not authorized by their respective Boards of Directors, for the reason that the charters of such Companies were not produced, whereby the Court might judge whether they had such power or not; and no presumption can be entertained that they had not the power.

Second. The Judge charged that, if there were subscription books, or a subscription book which was' not produced nor its contents proved,- then the jury had not the means of knowing the amount subscribed, and there was no sufficient proof that the subscription of $300,000 was not made up. It was proved that one of the subscription books was missing. Whether its contents were proved was left to the jury, and there was evidence that the original subscriptions made in one book were copied into the others, to show who had subscribed; and the same witness who proved this, (Tracy, the Secretary of the Company,) also proved that he drew off from the different books the amounts of the subscriptions into another book, as also the names and amounts of all which he knew had subscribed otherwise than from the books, and that the amount of the subscriptions so collected footed up $300,000, and he says that he knew that the names and amounts contained in the subscription books were all actual subscriptions, from his knowledge that the handwriting was genuine.

It is true he said, on his cross-examination, that he did not carry into this book all the subscriptions which he found in the subscription books; but he swears that $300,000 could be made up by any person from the books without duplicity.

This book, so made up by the Secretary, was before the jury, and it is fair to presume that they considered it as evidence, to some extent, of the contents of the missing book.

One of the Directors of the Company swears that he was present when the computation or summing up of the amount of subscriptions was made, and that there was something more than $13,000 over the $300,000 subscribed. One of the Trustees swears that he footed up the subscriptions, a few days after the meeting of 30th November, (when it was understood that the subscriptions had been completed,) and that they amounted to considerably over $300,000, excluding the special subscription of $50,000; and another Trustee swears substantially to the same thing.

Under all this evidence, the jury were justified, I think, in assuming, not only that the whole amount had been subscribed, but that that result had been ascertained by reference to all the subscription books.

But if this were otherwise, then, as the burden of showing that the whole amount of the $300,000 had not been subscribed was clearly on the defendant, it was true, as a legal proposition, that, if one of the subscription books was missing and its contents not proved, the defendant had failed to show affirmatively that the whole amount had not been subscribed.

Third. A more important question arises under the exclusion of evidence which was offered with a view to show that a fraud had been practised upon the subscribers by some secret arrangement between some of them and the Company, and I shall group together the offers of testimony made and questions put on that subject, so as to embrace them all in one discussion.

The defendant offered in evidence, from the minutes of the Board of Directors, a resolution adopted by the Board, dated the 30th October, 1855, as follows:

“ That any arrangement made by the Finance Committee in paying or arranging for funds to pay the pressing liabilities of the Company, and to sustain the institution till other means can be provided, if they shall make themselves or their friends personally liable, the same shall be considered and treated as confidential in any event, equal in all respects to the amount of $40,000 already subscribed by the friends of the Company for its relief."

At the meeting at which this resolution was passed were present thirteen Directors or Trustees, of whom nine appear to be-subscribers to the $40,000 subscription, and the same number were subscribers to that for $50,000. This evidence, on objection being made, was excluded, though the ground of the objection is not stated in the Case.

On the examination of Mr. Ogden, the Vice-President of the International Insurance Company, and who had subscribed for that Company, the following question was put:

“ At the time of such subscription, was there any arrangement made with you by the Atlas Mutual Insurance Company in reference to said subscription, and the notes to be given under that subscription; and if so; state what it was ?”

This question was objected to, on the ground that the testimony would tend to vary by parol the terms of the subscription; and upon the Judge asking the defendant’s counsel if he proposed to show a parol arrangement, he stated that he did, and thereupon the Judge excluded the testimony.

The defendant’s counsel then asked the witness whether the notes of the International Insurance Company, in pursuance of said subscription, were given to the Atlas Insurance Company ; and on objection being made, this question was excluded.

The counsel then put this question to the witness: “State whether any, and if so what, inducements were offered you to induce you to make such subscription ?” The counsel stated that he proposed to prove that there was a parol arrangement, amounting in effect to an agreement that he need not give his notes for his subscription; upon objection being made, the evidence was excluded.

■ On the examination of Mr. Whipple, Marine Agent of the Philadelphia Insurance Company, and who had subscribed for that Company, this question was put:

“Was there any particular arrangement between you and the Atlas Mutual Insurance Company in reference to that subscription; and if so, state what it was ?”

This question was objected to so far as it was sought to alter the subscription by proof of a parol arrangement, and the Judge sustained the objection, and excluded the testimony.

The question was then put, “ whether the Atlas Mutual Insurance Company was indebted to the Philadelphia Insurance Company at that timé?” and this question, on objection, was-overruled.

On the examination of Mr. Arrowsmith, one of the subscribers, this question was put by the defendant’s counsel:

“ State whether your subscription was a subscription substituted in the place of another party?” The counsel stated the object of the question to be to show that some of the sums were subscribed by the Trustees themselves, with a parol privilege reserved of- procuring other subscribers subsequently in their place, and that the witness's subscription was one which was so substituted. The question, on objection being made, was disallowed. .

If all or any of these questions, or the evidence offered and rejected, tended to show that any portion of the subscriptions that enter into the aggregate of the $300,000, were made under an arrangement with the Atlas Insurance Company, securing to those subscribers an advantage not shared in by, or common to, the other subscribers, or that any such advantage was given to them by any subsequent arrangement between them and the 'Company before the defendant’s subscription was obtained, it would be a fraud upon him and a perfect defense to this action. The principle applicable to the cases of composition deeds 'between debtors and creditors, or between a single debtor and creditor, where the former brings in a surety on a compromise agreement with the creditor to take a part of the debt for the whole, and in which some secret arrangement is made between the debtor and the creditor, not communicated to the surety, or between the debtor and some of the creditors signing the com-.position deed, not made known to the others, by which the creditor in question is to receive some benefit for his acquiescence in the compromise not shared in by the others, is applicable to this case. In such a case even the party who is to receive the benefit cannot enforce it against the debtor, because it is a fraud on the surety or the other creditors. (Cecil v. Plaistow, Anst., 202; Weed & Weed v. Bentley, 6 Hill, 56.) The principle has been applied to a case very analogous to the present, (Stewart v. Trustees of Hamilton College, in error, 2 Denio, 403,) in which the Trustees sued Stewart upon a subscription made by him and others to raise a fund for the college. None of the subscriptions were to be binding unless the aggregate of all amounted, by a certain day, to $50,000; previous to that day certain individuals entered into an agreement to make good any deficiency that might appear in the amount of the subscriptions on the last day before that in which the aggregate was to be completed, and it was contended by the Trustees that this agreement, with the subscriptions already obtained, was a fulfillment of the condition upon which the subscriptions were to become binding; but it appeared on the trial, that when that agreement was signed the Trustees passed a resolution by which they pledged themselves to continue to raise subscriptions and contributions after the day stipulated for the completion of the aggregate amount aforesaid, to save harmless those persons who might pledge themselves to make good the deficiency. The Trustees obtained judgment, but the Court of Errors reversed the judgment on the very ground that this undertaking to-indemnify those who had guaranteed against a deficiency was a fraud on the other subscribers. “ The essence of every agreement of this kind,” said the Chancellor who gave the opinion of the Court, “is that there should be perfect equality among the subscribers as to the nature and extent of their respective liabilities, for the several sums subscribed by them respectively.”

Every subscriber is entitled to insist that every other subscription shall be as bona fide and as binding as his own.

Did any of the evidence ruled out in this case tend to establish a fraud of this description ? and first as to the resolution of 30th October.

That resolution was to the effect that if the members of the Finance Committee or their friends should make themselves personally liable in paying or arranging for funds to pay the pressing liabilities of the Company, and to sustain the institution till other means could be provided, such liabilities should be treated and considered as confidential, in any event equal in all respects to the amount of $40,000 already subscribed by the friends of the Company for its relief.

I think the obvious meaning of this resolution is to place the members of that committee and their friends who might, through their influence, be instrumental in raising funds for the relief of the Company on some footing of confidential preference which the subscribers to the $40,000 tund already enjoyed. What mode of raising funds was contemplated, is not so obvious, but I think it is fairly to be inferred from the phraseology of the resolution, that it was by means of subscriptions. It would perhaps be forcing the construction of the resolution, to say that it had reference to the subscriptions for $400,000 which were subsequently authorized by the resolution of November 8, but that is not of vital importance. It is enough that the resolution recognizes the $40,000 subscription as already a confidential one, and that can have no other meaning than that some arrangement had been made in favor of that class of subscribers, which was in ■some event or under some contingency to give them an indemnity for their subscriptions, or some peculiar preference in respect to reimbursement out of the assets of the Company. In what respect does this differ in principle from the resolution of indemnity in the case of Stewart v. Trustees of Hamilton College, above cited?

In any aspect in which I can view it, it was some evidence to go to the jury in respect to some beneficial arrangement between- the Company and a very important class of the subscribers, having respect to their liability as subscribers, which was not shared in by the others, certainly not by the defendant.

Without this $40,000 the $300,000 of subscriptions could not manifestly be made up, and if the subscribers to that fund were entitled to any benefit in respect to their liability, by virtue of an arrangement with the Company, entered into before the other subscriptions were solicited, and not communicated to and assented to, or shared in by the others, it was a fraud upon them.

If it be said that by reason of the absence of the missing book it cannot certainly be said that the whole $300,000 may not have been made up without the aid of this particular amount, the answer is, that the whole evidence is opposed to such an idea; and if it were not, this amount could not be separated from the rest; it would still remain true that some portion of the subscribers, whose aggregate constituted the $300,000, had a private beneficial arrangement with the Company, which the others did not, if this testimony could establish it. If it tended to establish it, it should have gone to the jury.

The resolution of 30th October was contained in the book of minutes of the Board of Directors. No objection was made to the competency of the proof, nor that the book was not identified, and there is nothing to raise a presumption that it was not a regular official act.

In respect to the questions above quoted and overruled, and the offer of testimony also overruled, it may be observed that all of them, in a greater or less degree, tend to prove some secret arrangement between the Company and some of the subscribers, by which they were to be favored, in respect to their subscriptions, in some manner not common to all. The question put to Mr. Ogden, Vice-President of the International Insurance Company, in respect to his subscription, was a competent and proper question if the object was to call out the existence of such an arrangement, and there could have been no other; but it was ruled out on the ground that it tended to vary, by parol, the terms of the subscription.

The question to same witness, whether the notes of that Company had been given in pursuance of the subscription, was immaterial and improper, except in connection with the other object, and as bearing on that may have been pertinent.

The question to the witness Bainbridge, one of the subscribers, as to whether any and what inducements had been offered to him to make his subscription, was accompanied with an avowal that the counsel proposed to prove that there was a parol arrangement amounting in effect to an agreement that he need not give his notes for his subscription; yet it was ruled out.

The question to Whipple, the agent of the Philadelphia Insurance Company, was directly to the point, whether any particular arrangement existed between him and the Atlas Insurance Company in reference to his subscription, and if so, what; but it was objected and ruled out, on the same ground as the others, that it sought to vary the terms of subscription by proof of a parol arrangement.

The question to the same witness, whether the Atlas Insurance Company was indebted to the Philadelphia Insurance Company, was perhaps properly ruled out—certainly it had no significance, as the previous question had been overruled, and yet, as bearing on the main question of fraud, might have been a very pertinent inquiry if that question had been allowed.

The question put to Arrowsmith, a subscriber, whether his subscription was one substituted in the place of the subscription of another party, was made with the avowed object of showing that some of the sums were subscribed by the Trustees themselves, with a parol privilege reserved of procuring other subscribers subsequently in their place, and that the witness’s subscription was one which was so substituted. Such an arrangement would give the parties with whom it was made an opportunity of relieving themselves wholly from their subscriptions, if they could procure others in their place. The substituted ones may have been less responsible; at all events it was an advantage which they had which the others did not possess.

It is said, however, that this evidence is all inadmissible, as it tends to contradict the terms of the subscription, which is a written contract.

This objection does not apply to the resolution of 30th October, but if it did my opinion would still be the same. The subscription was not under seal, and parol evidence is always admissible, on the part of the injured party, to show that such an instrument was procured through fraud, where the controversy is between the original parties or those affected by their equities. Even in the case of a deed a parol trust or agreement inconsistent with the face of it, may be proved by a creditor assailing the deed for fraud. Even the parol declarations of a party in possession of land, showing that the deed he holds under is void for fraud, are admissible in an action of ejectment by him against his tenant. A surety in a bond may show he signed it on condition that others should sign it also, and that they did not. (11 Peters, 86.)

It is, in my opinion, no answer to say that the parties who were to be benefited by the secret agreement could not themselves set it up to defeat their own contract, and that therefore it is a mere nugatory agreement. Such a proposition is not universally true.

A party to a note may allege in his defense that it was given to the plaintiff in fraud of a surety, who had become responsible for him on another note given as a compromise of his debts, and which the surety was induced to indorse on the supposition that it was to be in full of the plaintiff’s claim against his principal. This was held a perfect defense in Weed v. Bentley, (6 Hill, 56,) even in favor of the debtor who was a party to the fraud.

The arrangement by which the note sued upon was given, in addition to the note indorsed by the surety, (and contrary to the assurances made to him that the note he indorsed was to be in full of the debt,) must have been proved by parol.

The cases on this whole subject are very numerous. (Cow. & Hill’s Notes, n. 967-969; 1 Phil. Ev., 551; 1 Greenl. Ev., § 284; Chitty Con., 113; 16 Mass., 278; 11 Wend., 533.)

The position that a party to a written contract (executory and not under seal) cannot set up a secret agreement between some other parties to it and the party to whom the obligation is given, and which operates as a fraud on his rights, unless the agreement be also in writing, I do not assent to. Such a rule would always exclude parol evidence of a fraud in such cases.

In Cecil v. Plaistow, (1 Anst., 202,) cited by the Chancellor in Stewart v. Trustees Hamilton College, at page 419, (2 Denio,) the point of the decision was not that the creditor had got an additional bond, (in fraud of the other creditors,) which he could sue upon, but that there was a secret understanding with his debtor that he should retain the whole original claim, provided he would sign the composition deed for one-half, and thereby induce the other creditors to do the same; and hence the Chancellor says, “ Any private agreement or understanding ” between the debtor and any particular creditor in a composition deed, &c., shall be void as a fraud on the other creditors. Such secret understanding can only be proved by parol.

The point of the fraud in such cases consists not in the fact that a particular creditor has secretly got another security which he may enforce, but that the complaining creditor has been induced to come into a legal obligation under a suppression or misstatement of facts, which he ought to have been apprised of, and which, if he had known according to the truth of the case, it is fair to presume he would not have entered into the obligation.

In my opinion, some or all of these questions .should have been allowed, and the resolution of October 80 admitted in evidence, and it was error to exclude them. If I am right a new trial ought to be granted.

A question was put to the witness Tracy, the Secretary of the Company, as to what was the amount of the Company’s liabilities when it suspended in March, 1856, which was objected to and ruled out. The object of it was to show that the Company must have been insolvent in February preceding, when the defendant’s subscription was procured. Had the question been allowed, I should not have deemed it error, nor am I willing to say that it was erroneously excluded. The time within which an inquiry of that nature must be limited, is necessarily a matter of discretion with the Judge.

It was perhaps unnecessary, under the view I have taken in respect to the evidence offered to show fraud on the defendant, to have discussed the other exceptions, but I have done so in order that the counsel may have the benefit of the views of the Court on another trial.

I have not adverted to the question of the plaintiff’s title as a lone, fide holder for Value, this Court having already decided in General Term, in April, 1858, on an appeal from the decision of the Referee who first trjed it, that the terms of the receipt given for this and the other two notes turned over to them at the same time, did not warrant the Court in holding that the notes were received in absolute payment for the rent, and the evidence on the second trial did not on this subject materially differ from that which was adduced on the first. The case is therefore fairly open to the defenses which were interposed on the trial, and have been discussed herein.

In my opinion there should be a new trial.

Woodruff, J., concurred in the conclusion of Mr. Justice Hoffman, that the judgment should be affirmed. •

Judgment affirmed.