text:
    Giles E. Leach and Another, Plaintiffs, v. Charles F. Linde, Defendant.

      Action upon a judgment of another State — proof of its la/ws, of the jurisdiction of the court — complaint —pcvrties.

    In an action brought upon a judgment recovered in another State, the complaint embodied the complaint in the original action and thin pleaded the judgment, stated that such judgment was duly given upon certain findings of the jury in the original action, which findings seemed to refer to some of the facts so previously set forth; but the complaint did not say that the judgment was recovered upon the preceding facts.

      Held, that it was apparent that the pleader meant to aver the exact facts upon which judgment was recovered in another State, and then to plead the judgment as duly recovered upon such facts; that whether he succeeded in this was immaterial, it being sufficient that he had properly pleaded the judgment and had a good cause of action thereon.

      That if the facts which preceded the averment of the judgment were to be treated as, in themselves and apart from the judgment, constituting an independent cause of action, the defendant should have applied to have such cause of action separately stated .and numbered; that such preceding facts did not affect the cause of action upon the judgment;
    That if, however, they were to be treated as mere matter of inducement leading up to the judgment, or as surplusage, the action was still upon the judgment.
    The defendant moved to dismiss the complaint upon the ground that the action was brought upon a contract to which a third person was a party, and that such third person was not a party to the action, and a defect of the parties defendant was set up in the answer.

      Held, that there was nothing in this point, as the judgment sued on was against the defendant alone.
    The judgment sued on was recovered in the Superior Court of Wake county, North Carolina. Upon the trial the defendant objected to the introduction of two printed books which were offered to prove the Code of North Carolina, upon the title page of which was a statement to the effect that the volumes were prepared by William T. Dortch, John Manning and John S. Henderson, under chapters 145 and 315 of the Laws of 1881 and under chapter 191 of the Laws of 1883, and on the next page were the words: “Copyright 1883 by William L. Saunders, Secretary of State, for the benefit of the State of North Carolina.”

      Held, that the books purported to be published by the authority of the State of North Carolina, and that they were, therefore, presumptive evidence of its laws.
    By the laws of North Carolina, as so proved, the Superior Court of Wake county was shown to be a court of original jurisdiction in all civil actions whereof exclusive jurisdiction was not given to some other court.

      Held, that this proof was sufficient prima faaie; that it was for the defendant to show that exclusive jurisdiction of such an action as that in question was given to some other court.
    That jurisdiction having thus been shown, the law conferring it must be presumed to exist until proved-to have been changed.
    Testimony of the defendant, which tended to disprove either the fraud and deceit charged in the original action or that charged in the present action was' excluded.

      Held, that in either case the ruling was correct.
    Motion by the defendant, Charles F. Linde, for a new trial upon exceptions taken by the defendant, npon a trial at the New York Circuit, which resulted in a verdict for -the plaintiffs by direction of the court, ordered to be heard at the General Term in the first instance, by an order made and entered on the 16th day of December, 1892.

      Lorenzo Semple, for the plaintiffs.

      Edwwrd S. OlAmeh, for the defendant.
   Barrett, J.:

This action is upon a judgment of the Superior Court of Wake county, North Carolina. The pleader' took the complaint in the North Carolina action, and embodied it almost m totidem verbis in the complaint here. He then pleaded the judgment, but did not say that it was recovered upon the preceding facts.

The only connection which is suggested in the complaint between these pr&ceding facts and the judgment as pleaded is the statement that such judgment was duly given upon certain findings of the jury in the North Carolina action, which findings seem to refer to some of these facts.

Comparing the record in the North Carolina action with the facts thus loosely inserted in the present complaint, there can be no doubt of what the pleader designed. He meant to aver the exact facts upon which judgment was there recovered, and then to plead the judgment as duly recovered upon such facts. Whether he has succeeded in this is immaterial. It is sufficient that he has properly pleaded the judgment, and that he has a good cause of action thereon.

If the facts which precede the averment of the judgment are to be treated as, in themselves and apart from the judgment, constituting an independent cause of action, the defendant should have had such cause of action separately stated and numbered. Such preceding facts do, not affect the cause of action upon the judgment. If, however, they are to be treated as mere matter of inducement leading up to the judgment, or as surplusage, the action is still upon the judgment. (Krower v. Reynolds, 99 N. Y. 245.)

The question, therefore, is whether the verdict for the amount of the judgment was properly directed.

When the plaintiffs rested, the defendant moved to dismiss the complaint upon two grounds: First. “ That the cause of action set forth in the complaint had not been proved. Second. That the action is brought upon a contract to which Bichard B. Lawrence is a party, and that he is not a party to this action, and that a defect of parties defendant is set up in the answer.” There is nothing in the latter point, as the judgment is against Linde alone. As to the first point, the defendant did not contend that the plaintiffs had averred the fraud and deceit for which the North Carolina judgment was obtained, and that the complaint should be dismissed because of a failure of proof on that head. We may say, however, that even if this point had been taken, and it had been conceded that the North Carolina action was founded upon the fraud and deceit averred in the present complaint, the record in that action conclusively establishes the fraud and deceit, so averred. The verdict of the jury was specific upon these charges.

The sole question then is whether the foreign judgment was properly proved. The defendant objected to the introduction of two printed books which were offered to prove the Code of North Carolina. We think these books purported to have been-published by the authority of that State, and were presumptive evidence of its laws. Upon the title page we find a statement to the effect that the volumes were prepared by William T. Dortch, John Manning and John S. Henderson, under chapters 145 and 315 of the Laws of 1881, and under chapter 191 of the Laws of 1883. The reasonable inference is that these persons were commissioners appointed under the.laws so specified, and that these laws were laws of the State of North Carolina. On the page next to the title page are the words : Copyright 1883 by William L. Saunders, Secretary of State, for the benefit of the State of North Carolina.”

It is also a reasonable inference that Mr. Saunders was the Secretary of State of North Carolina.

By section 922 of the laws thus proved, the Superior Court of Wake county was shown to be a court of original jurisdiction in all civil actions whereof exclusive jurisdiction was not given to some other court. That proof was sufficient prwna faoie. It was for the defendant to show that exclusive jurisdiction of such an action as that in question was given to some other court. Jurisdiction having thus been shown, the law conferring it must be presumed to exist until proved to have been changed. (Raynham v. Canton, 3 Pick. 293.)

But these negative objections were not specifically taken by the defendant at the trial. If they had been, the plaintiffs might have accepted the burden of showing affirmatively the continued existence of the law, and the fact that exclusive jurisdiction of such actions as that which was brought against the defendant in the Superior Court of Wake county had not been given to any other court.

There is also an exception to the exclusion of the defendant’s testimony. This testimony either tended to disprove the fraud and deceit charged in North Carolina, or the fraud and deceit charged in this action. In either case the ruling was correct. The fraud and deceit charged in North Carolina were conclusively established by the judgment there. If the fraud and deceit charged here are to be deemed the same as charged in the North Carolina action, the lite rule applies. But if not, and if treated independently, there was nothing to disprove, for there was nothing proved.

The exceptions should be overruled, and judgment rendered for the plaintiffs upon the verdict, with costs.

Van Brunt, P. J., and Follett, J., concurred.

Exceptions overruled, and judgment rendered for the plaintiffs upon verdict, with costs.


source: Caselaw Access Project

author: Barrett J.:

license: Public Domain

text:
    In the Matter of the Application of Thomas F. Ryan, as Receiver of C. A. Wyatt & Co., as to Reference as to Disputed Claims; Rawitser & Brother, Claimants, Appellants; Henry G. Newhall and Thomas F. Ryan, Receiver, Respondents.

      Receiver of a partnership — reference of disputed claims — nemo trial on the ground of newly-discovered evidence— terms imposed.

    When, in a proceeding before a referee appointed to pass upon disputed claims presented to the receiver of a partnership, a regular trial is had and the referee makes a report against a claimant, which is confirmed, and the claimant then , appeals from the order of confirmation, and while such appeal is pending and undetermined, the claimant makes a motion for a new trial on the ground of newly-discovered evidence, the new trial should not be granted except upon reasonable indemnity being secured to the party who, without fault, is deprived of the fruits of success.
    On the motion of a claimant for a new trial on the ground of newly-discovered evidence, made under the above circumstances, the court granted the motion on condition that the claimant pay to the receiver the amount of his disbursements for referee’s fees on the first trial, and to a member of the partnership §250 as counsel fee before the referee in opposing the claim, and costs of the motion.

      Held, that the imposition of these terms was proper.

      Appeal by tbe claimants, Rawitser & Brother, from an order of the Supreme Court, made at the New York Special Term at Chambers and entered in the office of the clerk of the city and county of New York on the 19th day of January, 1893, granting their application for a rehearing and a new trial of their claim against the receiver of the limited partnership of C. A. Wyatt & Co., upon certain terms.

      Korwitz d¿ Kershfield, for the appellants.

      JDurnún & Kmd/ricks, for the respondent Ryan.

      Kellogg, Rose <& Smith, for the respondent Newhall.
   Barrett J.:

The motion for a new trial was upon the ground of newly-discovered evidence. One would suppose from the elaborate discussion in the briefs of counsel as to the effect of the newly-discovered evidence, that the learned judge at Special Term had denied the motion. We find, however, that the motion was granted, and that the appellants’ present complaint relates solely to the terms imposed upon them. The appellants seem to think that their motion should have been granted unconditionally. The propriety of the terms in detail is not discussed, and their last point is that the order should simply be modified so as to relieve them from these terms.

We think the terms imposed were just and reasonable. This proceeding had all the attributes of an equitable action. There was a regular trial before a referee, to whom the matter was sent to hear and determine. After such full trial the referee’s report was against the claimants, and that report was confirmed. The claimants then appealed from the order of confirmation, and while that appeal was pending and undetermined, they made this motion.

It is obvious that a new trial should not be granted under such circumstances except upon reasonable indemnity to the party who, without fault, is deprived of the fruits of success.

Even in cases where a new trial is granted because the decision or verdict is against the weight of evidence, it is usually upon payment of the costs of the former trial. (Benedict v. Johnson, 2 Lans. 97; Kennedy v. The Harlem Railroad Co., 3 Duer, 659; Overing v. Russell, 28 How. 151.)

Here there were two parties who were before the court substantially as defendants. One was the special partner, Newhall, and the other was the receiver, Ryan. They were both entitled to costs, but the court awarded no costs to the receiver. He was simply reimbursed for a single item of outlay — namely, the referee’s fees upon the former trial. That this item was somewhat large resulted from the appellants’ vigorous but unsuccessful efforts to sustain their claim against the estate in the receiver’s hands. The respondents are surely not responsible for the amount of this disbursement, and it would have been an extraordinary exercise -of discretion to set aside what was in effect a judgment, and thus favor-.the claimants with a new txial, without reimbursing the estate evert for the disbursements of its successful defense. •

The coxxx’t allowed the other paxdy, Newhall, costs of the motion and a counsel fee of $250. The sum thus awarded was entirely reasonable. In fact, it was plainly but a partial indemnity for the expense to which Mr. Newhall had been put by the previous proceedings. No costs were awarded in terms, except the costs of the motion, nor were the other disbursements of the proceedings, such as stenographers’ fees, allowed to either party. It comes to this, that one party entitled to indemnity, was allowed the moderate sum of $250 and the other party, equally entitled to indemnity, was allowed but a single disbursement. There was in this no abuse of discx’etion, but a reasonable exercise thereof.

The leaxmed judge treated the proceedings as analogous to an action in equity, and doubtless intended to allow Mr. Newhall a sum which would in some measure represent the costs of the trial of such an action, with possibly a small extra allowance.

The order should be affirmed, with ten dollars costs and the usual disbursements.

Van Brunt, P. J., and Follett, J., concurred.

Order affirmed, with ten dollars costs and the usual disbursements.


author: Barrett, J.:

text:
    Bank of New York, National Banking Association, Plaintiff, v. American Dock and Trust Company, Defendant.

      Spurious warehouse receipt, made by an officer of a company in his own fa/oor — notice.

    When what purports to be the contract of a company shows upon its face the use by an officer of the company of his official position for his own benefit, everyone to whom the contract comes is put upon inquiry.
    When an officer of a warehouse company, having general authority to sign warehouse receipts, makes out and signs, as such officer, a warehouse receipt for goods in his own name, a person to whom such receipt is presented on an application, and as security, for an advance of money thereon for the personal benefit of such officer, knowing that the person in whose favor the receipt is drawn is the same person who signed it, is put upon inquiry and is bound to verify the genuineness of the receipt in some proper way; reliance upon the representations of the officer himself will not place him in the position of a bona fide holder and enable him to hold the company liable for the receipt in case it is spurious.'
    Motion by tbe plaintiff, tbe Bank of New York (National Banking Association), for a new trial, upon exceptions ordered to be beard at tbe General Term in tbe first instance, upon a dismissal of tbe complaint at tbe close of tbe plaintiff’s evidence, on a trial at tbe New York Circuit on tbe 16tb day of January, 1893.
    Tbe action was brought to recover from tbe defendant, a domestic corporation, damages sustained by tbe plaintiff bank through discounting, for Medad W. Stone, a promissory note made by him, upon tbe collateral security of a warehouse receipt of tbe defendant company, in favor of Stone, which was in fact spurious and fraudulent.

      John B. Whiting, -for tbe plaintiff.

      Thaddeus D. Kermeson, for tbe defendant.
   Barrett, J.:

The main question here is whether tbe plaintiff is to be treated as a bona fide bolder of tbe warehouse receipt, upon tbe faith of which it advanced money to tbe defendant’s president, Stone. This warehouse receipt was signed “ M. ~W. Stone, Prest.,” and it acknowledged tbe receipt on storage at tbe American docks, for account of M. ~W. Stone, of 162 bales of cotton. This acknowledgment was false. The company had received no such cotton. Stone had simply prepared and signed the paper to raise money thereon for his own private purposes.

There is no question here of general authority. Both the president and the treasurer were expressly authorized by the board of directors to sign warehouse receipts. If, in the present case, therefore, this particular receipt had been made out in the name of some one disconnected with the company, and the plaintiff had innocently and in good faith advanced money to such person thereon upon the strength of official representation, a recovery could doubtless have been had. There is ample support for this proposition in the case of Fifth Avenue Bank v. Forty-second Street and Grand Street Ferry Railroad Company, decided by the Court of Appeals, and reported in 33 North Eastern Reporter, 378, and 137 N. Y. 235. But here the receipt was made out in the name of the president and was signed by him. The plaintiff knew that the Stone named in the receipt was' the same person who, as president, had signed it. The implication was that the defendant’s president had attempted to contract with himself as an individual. The instrument not only acknowledged the receipt of the goods, but specified the terms and conditions of the pretended bailment. Upon the presentation of such a document, to be used for Stone’s personal benefit, the plaintiff was at once put upon inquiry, and was bound to verify its genuineness in a proper way. It certainly could not rely upon the representation of the officer, whose very appearance in the transaction was what called for the inquiry. Any representation that he made would necessarily have been individual and not official. The law does not recognize his acting in the dual capacity. He cannot at the same moment borrow the money as an individual and as an officer represent the genuineness of the security.

The case on this head is directly within the principle enunciated in Manhattan Life Insurance Co. v. Forty-second Street & Grand Street Ferry R. Co. (19 N. Y. Supp. 90), and in Moores v. Citizens' National Bank of Piqua (111 U. S. 164).

There is a plain distinction between the present case and those cases where the instrument simply acknowledged the officer’s inter-. est in the company. This distinction was pointed out in Titus v. The President, etc. (5 Lans. 250; S. C., 61 N. Y. 237), and the rule laid down in Claflin v. The Farmers and Citizens’ Bank (25 id. 295), was not questioned. That rule, in substance, is, that when what purports to be the company’s contract shows upon its face the officer’s use of his official position for his own benefit, everyone to whom the contract comes is put upon inquiry. (See, also, Nuendorff v. World Mutual life Insurance Co., 69 N. Y. 389; Pratt v. Dwelling House Mutual Life Insurance, 53 Hun, 101; Farrington v. The South Boston R. R. Co., 150 Mass. 406).

The plaintiff'was permitted to show the actual transaction between it and Stone; that is, the loan of the money relying upon the warehouse receipt and in ignorance of its character. What were excluded were Stone’s representations. But these representations, as we have seen, were not official. The representations were made at the bank when Stone applied for the loan, and were simply his individual statements with regard to his own private business.

Even if admitted they would not have helped the plaintiff, for nothing that Stone could have said at the time and under the circumstances would have absolved it from the duty of further inquiry. And no other inquiry was made.

The exceptions should be overruled and the judgment ordered dismissing the complaint, with • costs of this application and of the trial.

Yan Brunt, P.' J., and Follett, J., concurred.

Exceptions overruled and judgment ordered dismissing the complaint, with costs of this application and of the trial.


text:
    William F. Smith, Respondent, v. John T. Ijams and Others, as Executor and Executrices, etc., of Phœbe Smith, Deceased, Appellants.

      Sale of a business by a son to Ms mother, since deceased — liability ofherr executors— forgiveness and cancellation of an indebtedness of the son to the mother — notes payable “ one day after demand ” — counterclaim and equitable set-off.

    In an action brought by a son against tbe executors of his deceased mother, to recover the price of a business alleged to have been sold to the decedent, the defendants’ answer denied the sale, but admitting that the business had been transferred to the decedent, claimed that the transfer was to the decedent as a creditor and not as a purchaser, by reason of an indebtedness then existing from the plaintiff to the decedent on account of advances which she had made to him for the purposes of the business; the answer then set up by way of counterclaim promissory notes given by the plaintiff for these advances, and asked judgment for the total amount thereof.
    The plaintiff replied, reaffirming his allegation of a sale and pleading the Statute of Limitations against the notes, and claiming that the decedent had canceled his indebtedness to her and discharged him from all liability thereunder, including the notes in suit, by her will, which contained the following provision: “ To my son, William F Smith (the plaintiff) I have given him during my lifetime all I ever intended to give him, so by the conditions of this will he inherits no further portion than that which he has already enjoyed.”
    The plaintiff was permitted to testify to the transaction with the decedent, and testified that she agreed to pay for the business whatever was realized after the accounts were collected and the obligations owing to different merchants paid, but that her account representing the indebtedness in question was to be excluded from consideration, and was so excluded. There was no direct evidence that the indebtedness was forgiven, and in fact the notes were not given up or physically canceled, and it appeared that six months before the sale the decedent agreed verbally not to sue her son upon these notes for ten years; the defendants, under these circumstances, contended that the plaintiff’s indebtedness remained in full force.
    The plaintiff recovered a verdict for the amount realized by the decedent upon the alleged sale.

      Held, that the plaintiff had established the sale averred in his complaint;
    That, in view of the fact that no other money had been given by the decedent during her life to the plaintiff than the advances represented by the notes, and of the other circumstances of the case, the indebtedness represented by the notes sought to be counterclaimed or set off must be regarded as having been forgiven by the decedent and the notes canceled ;
    And hence that the judgment upon the verdict for the plaintiff should be affirmed.

      Certain of the notes in question were payable “ one day after demand,” but no demand was pleaded or proved; tbe defendants claimed that a demand was . unnecessary for tbe purposes of an equitable set-off, in view of tbe plaintiff's insolvency;

      Held, (by Barrett, J.), that even if tbe notes sought to be counterclaimed or set-off were not canceled, they were either outlawed or unmatured, and a legal counterclaim could not be maintained upon them;
    And that an equitable set-off bad not been pleaded nor, upon tbe facts, bad a case of equitable set-off been made out.
    Appeal by the defendants, John T. Ijams and others, the executor and executrices of Phcebe Smith, deceased, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the city and county of New York on the 22d day of December, 1892, upon a verdict rendered at the New York Circuit, and from an order denying the defendants’ motion for a new trial.

      Frcmois Bynde Stetson, for the appellants.

      A. Britton Hmens, for the respondent.
   Barrett, J.:

This action was brought against the executor and executrices of Phoebe Smith, deceased, to recover the price of a certain business, which the plaintiff alleges that he sold to tbe decedent (who was his mother),. in the month of December, 1884. The defendants, in their answer, deny the sale, but admit that the business was turned over to the decedent. Prior to the transfer, the decedent had advanced large sums of money to the plaintiff (and his partners) for the purposes of the business, and at the time of the transfer he was indebted to her in the amount of these advances. And the defendants claim that the transfer was to the decedent as a creditor, but not as a purchaser. The answer then sets up by way of counterclaim the promissory notes given by the plaintiff and by his firm for these advances, and asks judgment for the total amount thereof. The plaintiff replies to the counterclaim reaffirming his allegation of a sale and pleading the Statute of Limitations as against the notes. He also claims in his reply that, by her will, the decedent canceled his indebtedness to her and discharged him from all liability thereupon, including these notes. And in support of this claim he sets forth the following provision of the will:

Sixth. To my son, William F. Smith, I have given him during my lifetime all I ever intended to give him, so by the conditions of this will he inherits no further portion than that which he has already enjoyed.”

Upon the trial, the defendants permitted the plaintiff to testify without objection to the transaction with his mother.

He accordingly narrated all the facts which he recalled with regard to the agreement. His testimony abundantly supported the averments of the complaint upon that head and he was corroborated in several particulars by other witnesses. There was clearly enough to go to the jury and to support their verdict on the issue with regard to the sale.

The real question is, whether such agreement included the forgiveness and cancellation of the plaintiff’s indebtedness upon the notes set up in the counterclaim. The amount of this indebtedness was nearly $100,000. The plaintiff testified that his mother agreed to pay for the business whatever was realized after the accounts were collected and the obligations owing to different merchants paid, but that her account representing the indebtedness in question was to be excluded from consideration. The net amount ultimately realized from the business was $28,986.23, while the actual amount realized by Mrs. Smith was but about $22,000. For it seems, that after taking the business and receiving therefrom less than $2,000 in cash, she in a short time turned it over to another son. But the consideration given by this other son was his own note for $20,000, which has never been paid. The verdict was for $22,000 and interest, so that the jury treated this latter sum as what Mrs. Smith “ realized ” within the meaning of the agreement.

The defendants’ contention is that the plaintiff’s existing indebtedness remained in full force notwithstanding the sale and that it still exists, subject only to a credit for $22,000 so realized.

On the other hand, the plaintiff contends that, in excluding the existing indebtedness from consideration at the time of the sale, the intention was to wipe it out as an obligation.

These varying contentions present an interesting question, but, upon the whole, we think the circumstances were such as to justify its presentation to the jury. The defendants rely upon the consideration that there is no direct evidence that the indebtedness was forgiven; that, as matter of fact, the notes were not given np or physically canceled; and that some six months prior to the sale, Mrs. Smith agreed verbally not to sue her son upon these same notes for ten years.

But, while there was no direct evidence of cancellation, there were strong circumstances from which forgiveness of the indebtedness might properly be inferred. In the first place, the relations between the parties were not those of ordinary debtor and creditor. Mrs. Smith was the plaintiffs mother. She had derived from her husband a fortune which was largely accumulated in the conduct of this very business. After the death of the husband, the business was continued by the plaintiff, his brother Clarence and the decedent’s son-in-law, Loeser. But the capital, which, in the father’s lifetime, was between $300,000 and $400,000, was now reduced to $15,000. Mrs. Smith assisted the new firm from time to time, with advances, which finally amounted, as we have seen, to nearly $100,000. But, seemingly, the business did not prosper. First Loeser retired, then Clarence. And in December, 1884, the plaintiff found himself alone with a business worth less than $29,000. It is evident that Mrs. Smith’s advances had meanwhile been sunk, and that her efforts to assist her sons to follow in their father’s footsteps had failed. She had nothing to show for her loans except unsecured acknowledgments of indebtedness in the shape of notes. These notes she never used in any manner, nor did she demand payment thereof at any time during the eight years they were in her possession. In fact, she never acted in anywise as a creditor with regard to these obligations. She seems rather to have looked upon them as representative of advancements made to her sons of their share of her estate. If she did not look upon them in this light, the provisions of the will are worse than meaningless and her agreement to pay for the business seems quite unaccountable. Why, indeed, should she exclude her account from the consideration to be given for the business, unless she treated her son’s indebtedness merely as a mother’s advancement to be charged against him in the ultimate disposition of her property ? Why should she pay him presently whatever might be realized from the business, if tins indebtedness was vital ? Why not simply credit upon the larger indebtedness to her the amount to be so realized ?, It is no answer to this to say that she realized little or nothing because Clarence did not pay his $20,000 note. The question is, why did she agree to jocvy, whatever might be so realized ? And why, when the plaintiff, from time to time, demanded this agreed consideration did she put him off upon the plea that Clarence had not paid her ? The evidence on this head is clear and conclusive.

The bookkeeper, Powell, testified that before the sale Mrs. Smith told him that she was going to purchase the plaintiff’s interest, and requested him to go over the books and make an estimate of the value of the business including her account. Clarence testified that on one occasion his mother told him that she was going to pay the plaintiff what the business was worth. Another son, Isaac, testified to a conversation with her in which her purchase of the business from the plaintiff came up. He wanted to borrow some money from her and she told him she could not lend him any money as she owed the plaintiff too much and it would take all she had to pay him.

But for another circumstance, it might be said that all this was consistent with an intention to keep the indebtedness alive, but not to press yet awhile for payment. That other circumstance, however, points conclusively to a gift and to the consequent exclusion of the indebtedness from consideration, at a time and under circumstances when, if deemed existent, it would naturally have been adverted to and utilized. We refer to the provision of Mrs. Smith’s will, already quoted. It should be observed that a precisely similar provision is made with regard to Clarence, and that substantially the whole estate, amounting to over $200,000, is given to the two daughters.

The evidence shows that Mrs. Smith had never given anything to the plaintiff except the advances in question. Nor to Clarence, unless the business. itself, which was turned over to him for his $20,000 note, be considered an additional gift. This provision then written, we are told, by her own hand, was either a declaration that she had given the plaintiff these advances or it was a piece of solemn mockery. Surely this mother was not, at so serious a moment, guilty of flippant indecency. She never could have meant to say that she had given her son during her lifetime all she ever intended to give him, to wit, nothing; that that nothing was his “ portion; ” and “ so he inherits no further portion than the nothing he has already enjoyed.”

No. The reasonable construction of her words, the only construction consistent with respect, is this: I have given to my son, during my lifetime, all I ever intended to give him, to wit, the advances evidenced by these notes. That gift is his “ portion.” That he has already enjoyed, and “so” he inherits no “further portion.”

Thus, after death, she speaks as a mother to a son with regard to his share of her estate, and not as a creditor to a debtor with regard to a debt due to her.

"We think the learned judge at Circuit could not, upon these facts, have properly taken the case away from the jury and directed a verdict for the defendants. The question was fairly and clearly put to the jury; and the verdict is, in our judgment, conclusive.

But even if these notes were not forgiven or canceled, we do not think the defendants have established their counterclaim thereon. It may be true that the plea of the Statute of Limitations cannot avail as against the notes that were payable “ one day after demand.” The statute runs immediately against notes payable on demand. In that case, the word demand is not treated as part of the contract, but is used to show that the debt is due. (McMullen v. Rafferty, 89 N. Y. 459.) But, if payable at any period of time after demand, the weight of authority would seem to favor the doctrine that an actual demand must be made to fix the period of maturity when the statute commences. (Wenman v. Mohawk Insurance Co., 13 Wend. 267; Little v. Blunt, 9 Pick. 488; Codman v. Rogers, 10 id. 112; Richman v. Richman, 5 Halst. [N. J.] 114; Daniels on Neg. Inst. § 1215; and see Brehm v. The Mayor, 104 N. Y. 192.) The basis of the latter rule is given by Nelson, J., in Wenman v. The Mohawk Insurance Co. (supra).It is obvious,” said that learned judge, “ from the terms of the contract, an actual demand was contemplated by the parties before the note should become due.” It may be questioned whether the present case comes within the reason of this rule. Did the parties here contemplate an actual demand before these notes should become due ? Some of them are payable “on demand,” others “one day after date,” still others “ one day after demand.” These phrases seem to have been used indiscriminately and without any special meaning or technical purpose. There was clearly no intention to put the notes .in circulation or to give them any. commercial status. They were simply acknowledgments of advances and evidences of indebtedness therefor. There was no greater reason for an actual demand in the one case than in the other. If the notes in question had been made payable in six months or one year after demand, there would have been a suggestion at least of intended variation. But one day after demand probably meant no more to the plaintiff’s mother, under the circumstances disclosed, than one day after date : or, for that matter, than an “ I. O. U.”

This rule, too, may cause great inconvenience if extended so as to permit the creditor, in all cases where the note is made payable shortly after demand, to choose his own time for its maturity and thus to prevent the debtor from paying his debt for an indefinite period. Unless delay is contemplated by the express terms of the contract, it would seem that a demand should at least be required within a reasonable time, and that the statute should commence to run at the expiration of the prescribed period thereafter. (See Palmer v. Palmer, 36 Mich. 487, 494; Morrison v. Mullin, 34 Penn. St. 12; Lower v. Miller, 66 Iowa, 408; First Nat. Bank of Garrettsville v. Greene, 64 id. 445; Rhines v. Evans, 66 Penn. St. 195.)

"What, however, may safely be asserted in the present case is that if the statute did not run as to those notes payable one day after demand, it was because an actual demand was contemplated before they should become due. Now, such demand was neither pleaded nor proved. It is clear, therefore, either that these notes were outlawed or that they have not matured. In either case they cannot be sustained as counterclaims against the plaintiff’s demand.

The defendants meet this view of the case by the contention that a demand was unnecessary for the purposes of an equitable set-off in view oí the plaintiff’s insolvency.

There are several answers to this position. In the first place, an equitable set-off is not pleaded. The answer sets forth simply a common-law counterclaim, and demands judgment affirmatively for the full amount of the notes. It was not until the plaintiff was about to rest upon the trial that the defendants stated that they asked no affirmative judgment, but merely claimed an offset. Even then, no attempt was made to amend the answer in this particular. And it was not until the case was closed, their motion for a direction denied, and the learned judge was about to charge the jury, that they ashed to amend their answer so as to set up the plaintiff’s inability to pay the notes.

This amendment was ashed “ to conform the answer to the proof in a single particular,” and there the case rested. It is quite evident that this legal counterclaim was not thus turned into the equivalent of a complaint by the defendants against the ulaintiff for an equitable set-off.

But if there had been a proper pleading and trial in equity no case was made out for an equitable set-off. The insolvency of the plaintiff did not change the character of his obligation nor could it vary the items of his contract. "Whether solvent or insolvent, his agreement was to pay one day after demand. The right of a solvent creditor to set off his own unmatured obligation in the hands of his insolvent debtor, against the latter’s matured obligation in his, the creditor’s, hands, rests upon such creditor’s privilege to waive the period of credit given him by his contract. (Hughitt v. Hayes, 136 N. Y. 163.) But it is one thing for him to waive his own right and another to abridge his debtor’s right. This latter power has, doubtless, been asserted by courts of equity in some- cases, but the question is not absolutely settled in the court of last resort. It must be conceded that in that court the right of the solvent creditor to set off his insolvent debtor’s unmatured debt against his, the creditor’s, matured obligation is, at least, questionable. (Richards v. La Tourette, 119 N. Y. 59.) As was said by Peokham, J., in the latter case: Whether it be equitable or not, the power of a court might well be doubted to absolutely change a contract entered into by the parties, without the consent of the one who was to make the payment at the time in the manner prescribed by the contract.” (See, also, Bradley v. Angel, 3 N. Y. 475.)

This doubt, however, is solved in the present case by the' defendants’ own attitude. Thejr whole case rests upon the contention that these notes have not matured. It is by holding the plaintiff strictly to that view of his obligation, that they seek to avoid the running of the statute. How, then, can they assert for one purpose, that the .demand was necessary, and for another, that it was not ? To save themselves from the effect of the statute, they say that the notes had not matured. That is a claim of strict law. Then, to effect the set-off, they say that the notes had matured. That is, that they are to be treated as though they had. That is a claim of equity. In one case, they insist upon the period of maturity. In the • other, they insist upon abridging it. This latter, it is quite clear, cannot, under the circumstances, be done. The contract to which they have held the plaintiff for one purpose, should not, without his consent, be changed for another purpose.

But this is not the only difficulty with the defendants’ case. Their sole equity is the plaintiff’s inability to pay these notes. That inability is what they pleaded and proved. There was no other or general insolvency. But this inability to pay these particular notes has existed throughout. Mrs. Smith knew it when she agreed to pay for the business. A bill for an equitable set-off on this ground, could, therefore, have been filed at any time after the consideration for the business had become due and payable. But no such set-off was sought during all these years. And then, too, there was at all times a perfect remedy at law, for Mrs. Smith had only to make a demand to effect the maturity of the notes. They would then have been the subject of a legal offset or counterclaim. Her representatives cannot now found an equity upon her laches.

The power of equitable set-off “ should,” as was said in Armstrong v. McKelvey (104 N. Y. 185), “ be very cautiously exerted, and only in a case where the equity invoked is entirely clear and certain. It is never justified save where other remedies are impossible, and where the demand allowed is put beyond reasonable doubt.”

Upon these principles, we think the set-off was clearly inadmissible, and that the plaintiff was entitled to recover the agreed price of the business, without deduction.

Our conclusions upon the whole ease are : Finest. That the plaintiff has established the sale averred in his complaint. Second. That the indebtedness represented by the notes sought to be counterclaimed or set off was, as a matter of fact, forgiven by the decedent and the notes canceled. Third. That even if these notes were not canceled, they are either outlawed or unmatured, and a legal counterclaim cannot be maintained upon them. Fowrth. That an equitable set-off upon these notes has not been pleaded, nor upon the facts has a cause of equitable set-off been made out.

There was no error in the admission or rejection of evidence which could have prejudiced the defendants, and the judgment should, therefore, be affirmed.

Van Brunt, P. J., concurred on first and second grounds mentioned in opinion.

Follett, J., concurred in result.

Judgment affirmed.


text:
    In the Matter of the Application of Thomas F. Ryan, as Receiver of C. A. Wyatt & Co., as to Reference as to Disputed Claims; Rawitser & Brother, Claimants, Appellants; Thomas F. Ryan, Receiver, and Henry G. Newhall, Respondents.

      Pa/rtnership — a new firm the successor of a prior fvrm — liability for consigned goods converted by the old firm.

    A special partnership, organized as the successor of an individual who had conducted business under a firm name, is not liable for the debt of its predecessor' on account of goods previously consigned to him for sale on commission, where the goods were hypothecated by him and thus converted, and neither the goods nor any of the moneys received upon such hypothecation ever came into the possession of the new firm, and neither the new firm nor the new (a special) partner ever agreed to assume the liabilities of the old firm or to guarantee the payment of its debts.
    Such new firm will not be bound by a stock account rendered, after its formation, to the consignor of goods hypothecated by its predecessor, indicating the possession by the new firm of the goods which had been hypothecated, but which is in fact a false and unauthorized statement made by the general partner who was the predecessor in the business of the new firm, without the knowledge of the special partner; nor will the new firm be estopped thereby from showing that the goods were not in its possession and never had been.
    Declarations made prior to the formation of a firm, by a person who becomes a special partner in the firm on its formation, have no binding effect upon the firm, then only in contemplation.
    Acceptances given by a firm, which fall due after the formation of a new firm as its successor and are paid by the new firm as a payment pro tanto upon a debt of the old firm, cannot thereafter be credited on an indebtedness of the new firm.
    Appeal by tbe claimauts, Rawitser & Brother, from an order of tbe Supreme Court, made at tbe New York Special Term and entered in tbe office of tbe clerk of tbe city and county of New York on. the 30th. day of November, 1891, confirming the report of a referee to whom the disputed claim of Rawitser & Brother against Thomas F. Ryan, as receiver of the firm of C. A. Wyatt & Co., a limited partnership, was referred to hear and determine.
    The facts appear from the following portion of the opinion of the referee, William N. Armstrong, Esq.:
    “For some time previous to November 1, 1888, C. A. Wyatt did business as a commission merchant under the name of C. A. Wyatt & Go. He had, however, no partner. Rawitser Brothers had from time to time consigned goods to him, the value of which, about November 1, 1888, was over $40,000. The agreement between the consignor and consignee was that the latter should sell the goods and return the proceeds to the consignor, deducting from the sales the amount of his commissions. He had no power to make any other disposition of them than to sell and réturn the proceeds. It appears, however, that instead of selling all of the goods so consigned, he hypothecated them with the firm of Linde & Co., received advances upon them, and made no mention of this fact to the consignors. The sums obtained by hypothecation he used for his own purposes, and did not remit them to the" consignors.
    “ This disposition of the goods was an act of conversion.
    “ An agent intrusted with property to sell is liable for conversion if he sells and violated the orders of his principal. (Comley v. Dazian, 114 N. Y. 161; citing Seyds v. Hay, 4 T. R. 260, where it is said that ‘it is conversion for one who is intrusted with the goods of another, to put them into the hands of a third person, contrary to orders.’ Also, Laverty v. Snethen, 68 N. Y. 522.) Rawitser Brothers neither authorized thic disposition of the goods or confirmed his acts when they were informed of them.
    “ On November 1, 1888, Wyatt formed a partnership with New-hall, the latter becoming under the statute a special partner, with $50,000 capital, and the firm name was C. A. Wyatt & Co. It continued the business of commission merchants as carried on by O. Wyatt, until February, 1889, when it failed, and Wyatt disappeared.
    “ Rawitser Brothers continued to consign goods to the new firm in the same manner as they had consigned to Wyatt before November 1, 1888, when Wyatt did business under the name of C. A. Wyatt & Co.

      “ A receiver having been appointed of the assets of C. A. Wyatt & Co., Rawitser Brothers present a claim of $62,000 against the firm, which is disputed both by the receiver on behalf of the other creditors, and by the special partner, Newhall, on the ground that the claim of Rawitser Brothers is only valid, to a large extent, against C. A. Wyatt individually, and that the firm of C. A. Wyatt & Co. cannot be held responsible for it.
    “ It is claimed by Rawitser Brothers that the new firm of C. A. Wyatt & Co. assumed to pay the obligations of Wyatt contracted by him before November 1. The receiver, on the other hand, claims that no such assumption was ever made either in fact or in law.
    “ In the month of September, previous to the formation of the new firm, Mr. Louis Rawitser testifies that he saw Mr. Newhall, and in several conversations the latter informed him that he was about to join the firm of C. A. Wyatt & Co., with $50,000 capital, and that he, in reply to a statement of Rawitser that his firm had large quantities of goods in Wyatt’s hands, replied that all would be quite safe; that all was straight; they should go right along and not lose anything ; that there wag a great deal of money back of the concern; that the new concern would take the old firm’s business, in the same way in which the old firm had been doing the business ; take the accounts, the merchandise and everything; that upon the further statement of Mr. Rawitser that his firm had consigned goods to Wyatt amounting in value to $40,000 or $50,000, Newhall replied that this would be taken care of. In addition to this evidence, it appears that Wyatt & Co., the new firm, rendered an account to Rawitser Brothers on December 31, 1888, in which the goods consigned to Wyatt previous to November 1, appeared as goods then on hand.
    “Neither Rawitser Brothers, nor, so far as the testimony shows, did Newhall know at the time of this conversation in September, that Wyatt had converted the goods consigned to him, nor would this conversation have taken place if either of them had been aware of Wyatt’s acts.
    “ The conversation assumed that the goods consigned by Rawitser were properly taken care of by Wyatt, and it referred generally to what the course of business would be under the new firm. At that time the new firm had not been formed. Newhall could not bind it in any way as a new firm. If the firm had then been formed, New-hall, as a special partner, could not transact any business on account of the firm, or be employed to transact business as an agent, attorney or otherwise. (Sec. 17, chap. 414, Laws of 1857.) The promise which the consignors now claim is binding on the new firm was a promise by a person, proposing to become thereafter a special partner in a firm, that the firm would, when organized, assume the debts and obligations of a person who proposed to become the general partner of the firm. Such a promise would not bind the firm, as there was no authority to mate it; and none could be given because the firm did not exist. If it was a valid obligation, it was in the nature of a guaranty by Newhall that the new firm would assume the obligations of Wyatt, and such a promise is required to be in writing, and no writing to that effect exists.
    “As Wyatt had already converted Rawitsers’ goods, the promise, if made, was, in legal effect, an • agreement that the new firm would pay to Rawitsers the value of the goods converted by Wyatt. If the firm had been in existence, such a promise made by a general partner would not be binding on the firm, as it would not be within the scope of the partnership business, unless a sufficient consideration appeared.
    “ It is not necessary to consider the exact nature of the agreement between Rawitser and Newhall in September, because if one was made, as claimed by Rawitser, it was void for want of an instrument in writing. Both parties were in ignorance of the facts as they existed at the time of the conversations, and both parties evidently assumed a condition of things which did not exist.
    “ It is also claimed by Rawitser Brothers that the rendering of an account to them by the new firm in December, 1888, in which the goods consigned to Wyatt, and converted by him before the new firm existed, were declared to be on hand, was, in fact, an agreement by the new firm to assume the payment of Wyatt’s obligations. This account does not, in words, state that the firm agreed to pay these obligations. It is a statement that Wyatt & Co. are in the possession of the goods, and hold them for the account of the consignors. As Wyatt was the only general partner, it is to be presumed that he directed it to be made out and sent. It did not state the truth, because not only the goods consigned to him individually had been hypothecated, but those consigned to the new firm had been disposed of in the same way. He certainly could not bind the firm to assume the payment of the value of goods which he had individually converted. It was not within the scope of the partnership business. There is no proof, or offer of proof, that Newhall, as special partner, knew of the rendering of this account. If he had been a general partner, some presumption might possibly arise that he had knowledge of the act. But no such presumption would arise in the case of a special partner who was excluded by law from any active interest in the business. Nor can the account so rendered by the firm be construed into a guaranty of Wyatt’s individual obligations. I am, therefore, of the opinion that the claim of Rawitser Brothers should be disallowed, so far as- it included the value of the goods consigned to Wyatt before November 1, 1888.”
    The claim of Rawitser & Brother included goods which had been consigned to the new firm, as well as those consigned to the old firm. The referee found that the new firm had paid the claimants $12,500, on account of goods consigned to it, and that there remained due from it to the claimants the sum of $15,729.11.
    The fourth point made by Mr. Hofwitz, the claimants’ attorney, referred to in the following opinion, was as follows:

      “ The exception to finding No. 22, that the new firm of C. A. Wyatt & Company has paid to Rawitser & Brother the sum of $12,500, is well taken, and the order confirming the report should be reversed upon this exception. The referee found that the new firm of C. A. Wyatt & Company had paid to the firm of Rawitser & Brother the sum of $12,500 on account of the indebtedness of that firm to the firm of Rawitser & Brother. This is an error, as there is no evidence showing that any such sum was paid by the new firm on account of any indebtedness contracted by it and due by it to the firm of Rawitser & Brother. What the evidence does show is that five acceptances or drafts made by the old firm of O. A. Wyatt & Co. at different periods prior to the 1st day of November, 1888, upon four months’ time, which acceptances, and each and every of them, matured after the .1st day of November, 1888, were taken up and paid after the formation of the new firm of C. A. Wyatt & Company and credited upon the old account due to Rawitser & Brother. This appears from the testimony of Louis F. Rawitser upon cross-examination by counsel for the receiver. In answer to a question as to the amount that his firm actually realized on drafts given by the firm of O. A. Wyatt & Company that were neither renewed nor paid by Rawitser & Brother the witness answered as follows : ‘ The number, date and amount of each of the acceptances which were paid by Wyatt & Oo. from January first up to date are these: There was paid on June 6th, $2,500; June 12th, $2,500; July 1st, $2,500; July 6th, $2,500; July 11th, $1,650; July 20th, $1,100; July 24th, $1,650; September 11th, $2,500 ; September 24th, $2,500 ; November 16th, $2,500-; November 23d, $2,500 ; May 10th, $2,339.25; May 11th, $2,018.63; May 23d, $1,882.12, and a note of Nowell & Presby, due June 1th, $1,521.84; January 15th, 1889, he joañd $2,500; Jtmua/ry 21st, $2,500 ; February 7th, $2,500. Then he decamped and paid no more.’
    “ ‘ Q. Go back over this same list again of acceptances that have been paid by Wyatt & Oo., of which you have received the benefit, and give me a date when they were made or received by you ?
    A. February 3d, 9th, 28th. February 3d that is five months’ time. March 14th, 11th and 21st. May 14th, 21st. July 13th, 20th. January 1th, 14th, ,20th, 1888. September 12th, 18th. October 4th. I don’t know how they were paid. The bank paid them. They were none of them renewed, and all of them paid on account of goods consigned to Wyatt & Oo.’
    “ This testimony is undisputed and indisputable, and establishes beyond doubt that the dates of the five acceptances are all prior to November 1, 1888; that they were given by the old firm for the old firm’s business, but happened in the ordinary course of events to mature and be paid after the formation of the new partnership.
    “In addition to this testimony, by a reference to Exhibit No. 14, if further appears that on July 25th two acceptances at four months’ time were given, dated respectively July 13th and July 20th,.for $2,500, each of which acceptances matured respectively on November 16th and November 23d, 1888. On September 18th two more acceptances are credited to the account of Wyatt & Co., dated September 12th and September 18th, having four months to run, due January 15th, 1889, and 21st, 1889, respectively, each acceptance being for the sum of $2,500, and on October 12th another acceptance is credited to the account of Wyatt & Co., dated October 4th at four months, due February 7th, 1889, also for the sum of $2,500. It, therefore, appears that these five acceptances, aggregating in amount $12,500, which were paid after the formation of the new firm of C. A. Wyatt & Co., were acceptances given by C. A. Wyatt individually, for goods consigned to the old firm of Wyatt & Go. prior to November 1st, 1888, and sold by that firm, and that these acceptances, though they did fall due after the formation of the new partnership, and were paid as they matured by the new partnership, were not paid for any indebtedness of the new partnership to the firm of Rawitser & Brother. The referee, in allowing this payment as a payment of the new firm, was evidently misled by the fact that these acceptances matured after the formation of the new partnership, and were paid by the new partnership in settlement of a debt contracted by the old firm and due by the old firm, and overlooked the fact that they had nothing whatsoever to do with any indebtedness of the new firm to the firm of Rawitser & Brother. There was nothing in the testimony to show that the new firm paid a dollar for any of the consignments sent by Rawitser & Brother to it. A further reference to Exhibit No. 14 will show that all acceptances given by the new firm for goods consigned to it were the following: One acceptance on November 13th, - dated November 9th, due March 12th, 1889; one acceptance dated November 12th, due March 15th, 1889; one acceptance dated December 1st, due April 4th; one acceptance dated December 5th, due April 8th : each for $2,500. These acceptances all matured after the 1st of February, 1889, which was the date on which Wyatt disappeared, and after which date nothing was paid.

      “ This sum of $12,500, which the referee finds to have been a payment by the new firm on account, is shown by reference to Exhibit No. 14, to have been charged to the account of Rawitser & Brother in the account current, and, after allowing the same, the balance in favor of C. A. Wyatt & Co. is shown to be $28,734.69. This account, according to the testimony of Rawitser, ‘ does not contain any credit due us for the merchandise on hand; that remains still to be credited as against this balance; no part of the item of merchandise sold by onr firm to C. A. Wyatt & Co. enters into this account at all; that is purely the credits and debits on the consignment account for moneys paid to our firm on the one side, and sales reported to our firm for our consigned goods on the other side; moneys and acceptances by our firm; that is, C. A. Wyatt & Co.’s acceptances of our drafts. It has reference only to consigned goods disposed of, and undisposed consigned goods do not in any way at all enter into that account.’
    “ Furthermore, the claim of Rawitser offered in evidence at the reference marked ‘Exhibit A,’ August 31st, 1891, gives Wyatt & Go. due credit for this sum of $28,734.69, leaving a balance due to Rawitser & Brother, as appears by that exhibit, of $62,418.38. Rawitser & Brother credited to the old firm this amount of $28,734.69, took it off the old account, as is shown by ‘Exhibit A,’ and made it no part of their claim, yet the referee, by the error he has made, in charging the $12,500 paid after November 1st, 1888, though given for merchandise consigned to the old firm and given by the old firm, is in reality charging this $12,500 against Rawitser & Brother a second time. In finding No. 21 the referee finds that Rawitser & Brother have been paid by both firms upon account of the claim made in this proceeding the sum of $16,234.69. He arrives at this conclusion in the following manner: He finds that a balance is due from Rawitser & Brother of $28,734.69, as is shown by Exhibit 14. He credits the new firm with a payment of $12,500 of this amount, and he credits both firms with the difference, which, in exact figures, is $16,234.69. He again falls into the error of charging this sum of $16,234.69 as a credit to both firms; whereas, the sum is an offset against the old firm only, and not against the new firm’s account. In allowing the firm of Wyatt & Oo. a credit of $28,734.69, Rawitser & Brother have given Wyatt & Co. a credit for $16,234.69 and for this $12,500.
    “ These errors are all mathematical errors, and are capable of precise demonstration to be such errors, as an examination of the figures enumerated by us will disclose, and the reference to the figures on the exhibits as pointed out by us will conclusively confirm.
    “ The referee has fallen into these errors by being confused by the dates of the maturity of the five acceptances already spoken of, which all matured after the 1st day of November, 1888, but which were dated at different dates, long prior to November 1, 1888. In thus disregarding the dates when the drafts were dated and given, as shown by the evidence, and as shown by the exhibits, he has lost sight of the fact that these drafts were all given for consignments made prior to the formation of the new partnership, given in the usual way on four months’ time, and did not mature until after the formation of the new partnership.
    “ The referee finds that there is now due from the new firm of C. A. Wyatt & Co. to Rawitser & Brother on account of the claim filed with the receiver, the sum of......................... $15,729 41
    “With interest from January 1, 1889. Fie arrives at this sum in the following way: Fie finds that there is due from the new firm of C. A. Wyatt & Co. for goods consigned after November 1, 1888, the sum of................................. $12,727 62
    “He further finds that there is due for a bill of overcoatings sold to the new firm the sum of.... 14,010 66
    “He finds that there is due for goods consigned and sold in January by the new firm the sum of..... 1,432 76
    “And the further sum of...................... 58 37.
    “ Which makes a grand total of............. $28,229 41
    “Of this amount he credits Wyatt & Co., erroneously, of course, as we have already demonstrated, with the sum of...................... 12,500 00
    “ Leaving a net balance due, according to the referee’s figures, of...................... $15,729 41
    “ It, therefore, appears that according to the referee’s own conclusions and findings that there, has been an error made by him to the extent of more than $13,000, and that the claim of Rawitser & Brother should be* according to the referee’s findings and own figures, as follows: For goods consigned by Rawitser & Brother to the new firm of C. A. Wyatt & Co. after November 1, 1888.................................... $12,727 62

      “ For the overcoating bill sold to the new firm after November 1, 1888..........................* 14,010 66
    “For goods reported as sold in the month of January, 1889.................................. 2,828 55
    “ And for a bill of January 4,1889.............. 58 37
    “ Which makes a grand total of............. $29,625 20”
    The facts relating to this receivership appear very fully in Clark v. C. A. Wyatt & Co. (68 Hun, 1).

      Otto Horwitz, for the claimants-appellants.

      JDurrmb dh Hendricks, for Ryan, receiver.
    Kellogg, Rose & Smith, for Henry Gr. Newhall.
   Barrett, J.:

But little need be added to the opinion of the learned referee in this matter. Hpon the main question his findings of fact are justified by the evidence, and his conclusions of law are properly deducible from the facts so found.

We think it clear that the claim made by Rawitser & Brother against the special partnership is not sustained. A discussion of the abstract question, when and under what circumstances a new firm organized as the successor of an existing firm will be held liable for the debts of its predecessor, would be quite unprofitable.

For,'’upon the facts, there is no basis for the application of any known rule of law under which the present claim could possibly be sustained. The referee has found that neither the new firm nor the new partner ever agreed to assume the liabilities of the old, or to guarantee the payment of its debts;- that the goods which the claimants had consigned to the old firm never came into possession of the new; that such goods were hypothecated by the old firm and thus converted; and that none of the moneys which were received by tbe old firm upon such hypothecation ever came into the possession of the new. These facts are conclusive against the present claim in any view of the law.

The claimants rely mainly upon the fact that, after the formation of the new firm, a stock account was rendered to them indicating the possession by the new firm of the very goods which had been previously hypothecated. This, however, was nothing more than a false and unauthorized statement made by the general partner without the knowledge of the special partner. The firm was certainly not bound thereby. Nor was it estopped from showing the real fact, which was that the goods were not in its possession and never had been.

Some loose declarations of the special partner, Mr. Newhall, made prior to the.formation of the new firm, were also given in evidence, but they were far from constituting a contract or agreement, even individually, to guarantee or become responsible for the debts of the old fum. They could have no binding effect upon the new firm, which was then only in contemplation. Mr. Newhall could not then contract on its behalf and he did not profess to do so.

Upon the main question the order is clearly right and should be affirmed.

. We think, however, that the learned referee erred in deciding that the new firm paid to the claimants the sum of $12,500, for which it should have credit. Without going over the figures and testimony in extenso, we think it apparent that the learned referee was misled by the fact that five acceptances which were given by the old firm, but which fell due after the formation of the new, were paid by the new. These acceptances were the obligations of the old firm and not of the new. Their payment, therefore, was a payment pro tanto of the debt of the old firm, 'and was not a payment made by the new on account of its own obligations and conceded indebtedness. We think Mr. Horwitz has clearly and ably demonstrated this in his fourth point.

But we do not agree with Mr. Horwitz’ analysis of the referee’s twenty-fifth finding, and we find nothing in the evidence nor in the finding itself to justify his criticism thereupon.

The report should be modified by finding that Rawitser & Brother have proved their claim against the assets in the hands of the receiver to the amount of $28,229.41, and, as so modified, it should be affirmed, without costs.

Van Brunt, P. J., and Follett, J., concurred.

Order modified as directed in opinion, and, as modified, affirmed, without costs.


author: Van Brunt, P. J.:

text:
    Robert H. Weems, Respondent, v. Michael Shaughnessy, Appellant, Impleaded with John M. Moore.

      Accommodation note — right of an assignee after matwity, from a bona fide hold&r before maturity, to recover of the maker.

    When the payee of a note, made for his accommodation, indorses and delivers it before maturity to a third party, receiving from the latter the surrender of an old note of his own for a smaller amount and the balance in cash, such third party is thereby constituted a bona fide holder of the note, and his right to recover on the note as against the maker will pass to his assignee thereof after maturity.
    It is immaterial, so far as the maintenance of an action on the note by the assignee against the maker is concerned, how much the assignee may have paid for the note or whether he paid anything therefor.
    Pleadings will not be conformed to the proof for the purpose of reversing a judgment.
    Appeal by the defendant, Miebael Shaughnessy, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the city and county of New York on the 18th day of October, 1892, upon a verdict directed by the court at the New York Circuit.

      G. Fine, for the appellant.

      O. A. B. Pratt, Jr., for the respondent.
   Van Brunt, P. J.:

This action was brought to recover upon a promissory note made by the defendant Shaughnessy to the defendant Moore, and which note was indorsed by the defendant Moore to the firm of Donnell, Lawson & Simpson for value and before maturity, and was subsequently assigned and delivered by Donnell, Lawson & Simpson to the plaintiff.

The answer of the defendant and appellant Shaughnessy admitted the making of the note, denied that it was delivered for a valuable consideration, denied any knowledge or information sufficient to form a belief as to whether the defendant Moore delivered the note to the firm of Donnell, Lawson & Simpson, and by a similar averment denied that the note was duly assigned and delivered by Donnell, Lawson & Simpson to the plaintiff.

The answer further alleged that the note was made and delivered without any consideration whatever, and solely for the accommodation of the defendant Moore, and that the plaintiff had knowlege of that fact at the times mentioned in his complaint. Then follows an allegation that the plaintiff is not the real party in interest in said action.

Upon the trial it was shown that the firm of Donnell, Lawson & Simpson received the note in question from Moore before maturity, and at the time surrendered to him an old note of Moore for $3,000 and interest, and paid to him the balance in cash; and that subsequently and after maturity they transferred the note to the plaintiff.

Some .evidence was introduced tending to show that the appellant had given the note to Moore, to be used by him in releasing a mortgage on his home in Orange, N. J., he having stated that he wanted it for that purpose, and that the appellant had received nothing from Moore at the time of the giving of the note.

Upon the close of the evidence, the defendant moved for the direction of a verdict upon the ground that the evidence showed that the plaintiff had parted with no value. The court having announced its determination to direct a verdict for plaintiff the counsel for the defendant asked to go to the jury upon the question whether the plaintiff parted with any value at all for this note, and whether Donnell, Lawson & Simpson were not in law and- in fact the real owners of the note.

This motion was denied and the defendant excepted and the court directed a verdict in favor of the plaintiff, to which an exception was taken.

It is claimed upon the part of the appellant that the court erred in directing a verdict for the plaintiff, because he was not a bona fide holder, he having received the note after it had matured, not having parted with any valuable consideration, and that in any event he should not have recovered more than the amount of cash paid by Donnell, Lawson & Simpson at the time they took the note, they having taken it in part payment of an old debt, and that the question as to whether Donnell, Lawson & Simpson were bona fide holders by the surrender of the precedent note to Moore should have been left to the jury for their determination, and furthermore that the note was diverted, and although the answer did not claim any diversion there was evidence to that effect and the court should upon appeal make the answer conform to the proof.

It seems to us that in all these objections the defendant has lost sight of the proposition that it is entirely immaterial what the plaintiff paid for the note in question. Donnell, Lawson & Simpson might have given it to him, and he would have a right to recover, if they had a right to recover. And the evidence is uncontradicted that upon the receipt of the note in suit, Donnell, Lawson & Simpson paid $1,900 in cash, and gave up to Moore his note, which constituted them bona fide holders.

The allegation in the answer is that the note was given for the accommodation of Moore. If he could not use it, and confer a good title upon the persons to whom he transferred it, the making of the note was no accommodation whatever. It has been endeavored to twist this defense into an allegation of diversion; bnt although 'pleadings are sometimes made to conform to the proof in order to support a judgment, we have not yet heard of a case where such a practice was resorted to for the. purpose of reversing a judgment.

The court was right in holding that if Donnell, Lawson & Simpson eould recover, the plaintiff could recover, no matter whether he was a holder for value or had acquired title after maturity or not.

There are no other exceptions to which it is necessary to call attention.

The judgment must be affirmed, with costs.

Follett and Barrett, JJ., concurred.

Judgment affirmed, with costs.


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    James K. Ford and Another, as Administrators, etc., of Benjamin Page, Deceased, Appellants, v. Charles O. Livingston and Others, Respondents.

      Money paid for easements in a lunatic’s real estate passes to the lunatic’s heirs.

    Money paid fay an elevated railroad company to the committee of a lunatic, in pursuance of the judgment of a court, as “fee damages” and as the price of a conveyance of the easements appurtenant to the lunatic’s real estate taken by the railroad, is to he deemed real estate as long as the owner’s incompetency exists, and in case he continues a lunatic all his life, it passes, on his death, to his heirs and not to his personal representatives.
    Appeal by the plaintiffs, James K. Ford and another, as administrators of the estate of Benjamin Page, deceased, from a judgment of the Supreme Court rendered at the New York Special Term after a trial and decision by the court, and entered in the office of the clerk of the city and county of New York on the 17th day of February, 1893.

      S. A. Forster, for the appellants.

      W. F. Wyatt, for the respondents.
   Van Brunt, P. J.:

In 1851, one Benjamin Page became seized in fee of the premises 88 and 40 West Broadway, by devise from his grandfather, Jokn R. Livingston. In 1876, Page, still seized of these premises, .was declared to be a lunatic, and Stephen H. Olin was duly appointed committee of his person and estate. Page continued a lunatic all his life, and said Olin was his committee at the time of his death.

In 1877 the Metropolitan Elevated Railway Company commenced the erection of the Sixth Avenue Elevated railroad in front of 38 and 40 West Broadway, and shortly after the railroad and its equipments were leased by the Manhattan Elevated Railway Company, which has operated it ever since, and thereby greatly impaired the value of said premises. In October, 1888, Olin, as such committee, began an action in the Superior Court to restrain the railroad company from operating its railroad in front of said premises and for past rental damages. And on the 13th of December, 1890, a judgment was entered enjoining the maintenance and operation of said railroad unless the railroad company paid to said Olin, as committee, $4,000, with interest from tire date of the judgment as fee damages, as they have been termed, and requiring him in that event to execute to the said companies conveyances or releases of the easements taken by them. In January, 1892, the elevated railroad companies proposed to compromise by paying $4,000, but without interest as the judgment required. And on the 25th of January, 1892, Olin presented a petition to the Court of Common Pleas, asking leave to execute releases and conveyances to the companies of the easements taken by them upon receiving the sum of $4,000, although the judgment of the Superior Court required the payment of $4,000 with interest. Upon the same day the court made an order granting leave to Olin, as committee, to execute such releases and conveyances upon receipt from the elevated companies of $4,000. Olin, as such committee, executed and delivered to the railroad companies a release of all claims and ■causes of action arising out of the operation and maintenance of the railroad, and a conveyance of all the interests and easements which he as committee had in and to West Broadway in front of the premises in question taken by the railroad, as then constructed and ■operated, and on the same day the companies paid to him as committee $4,000 for fee damages and $2,000 for rental damages and certain costs.

On the 20th of February, 1892, Page died intestate, and in April, 1892, the plaintiffs were appointed administrators. ' Olin, as committee, turned over to the plaintiffs the moneys in his hands belonging to Page at the time of his death, except the sum of $4,000 paid to him for fee damage and $1,000 rental damage. The plaintiff having brought an action against Olin to recover the $5,000 so retained by him, an order of interpleader was made which directed the present defendants, the heirs at law of Page, to be substituted as defendants in place of Olin. Upon the trial of the action of interpleader, these facts appearing, the court adjudged the $4,000 fee damage to be real estate, and it was awarded to the defendants after deducting a proportionate amount of the costs allowed to Olin upon the granting of the interpleader, and the $1,000 rental damage, after similar deductions, was awarded to the plaintiffs as assets of the estate. From the judgment thereupon entered this appeal is taken.

The sole question presented is whether this $4,000, which was the price paid by the railroad company for the easements taken by them from the lunatic was real estate or assets of the deceased lunatic belonging to his administrators.

After a careful examination of the elaborate brief upon the part of the appellants, we do not see, in view of the practice of the courts under similar circumstances, and which had been long established prior to the time of the passage of any statute upon the subject, that there can be any doubt but that the proceeds of the real estate of a lunatic, disposed of no matter how (unless perhaps pursuant to some authority coupled with an interest given by the lunatic while sane), remain real estate so long as his incompetency exists.

It is not necessary to discuss the proposition that the right to bring actions for fee damage is vested in heirs and not in personal representatives, and, therefore, that which is taken by such an action is to be considered as real estate, and the amount paid therefor to be deemed as real estate.

It was well settled, long prior to any provisions of our statutes, that the proceeds of real estate sold by the court belonging to lunatics and infants, should be considered real estate so long as the incompetency continued. The theory upon which this rule is based is an eminently just one, viz., that the character of one’s property should not 'be changed without his consent. And a lunatic in consequence of his mental condition, and an infant in consequence of his incapacity from want of age, not being able either to consent or object to a change, it was held that the proceeds of the sales of such estates should retain their character until the owner had become entitled to the absolute possession of the same.

This principle is recognized in the case of Horton v. McCoy (47 N. Y. 21), and has also become engrafted upon our statutes, in almost all proceedings for the sale of real estate of' incompetent persons. But this regulation of the statutes was not the adoption of a new policy in respect to these matters, but was. simply, placing upon the statute book a rule which the court long previous thereto had recognized.

The counsel for the appellants claims certain irregularities in the proceedings in pursuance of which the committee assumed to execute the conveyance to the elevated railroad company.

We do not see that that has anything to do with the question before us. If the railroad companies were content to take it, that was a question for them to decide, and the personal representatives of the lunatic have no interest therein. It is not at all necessary, therefore, to consider the points which have thus been raised. The money was paid for the easements; if they were not conveyed, the' title still remains in the heirs of the lunatic. But we imagine that after they have received the proceeds of the sale such a- claim would not avail them much even if it had any foundation.

The judgment should be affirmed, with costs.

Follett, J., concurred.

Judgment affirmed, with costs.


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    Maggie Fox, Respondent, v. The Mayor, Aldermen and Commonalty of the City of New York and the City of Brooklyn, Appellants.

      Negligence — continued use of a railroad structure hawing a considerable space between the platform, and the cars.

    A structure not obviously dangerous, which has been in daily use for years and has uniformly proved adequate, safe and convenient, may be continued in use without the imputation of negligence.
    In an action brought to recover damages for a personal injury sustained by a passenger in alighting from a Brooklyn bridge car, by reason of his falling into the space between the car and platform, the plaintiff claimed that the opening was of an improper and dangerous width. The platform was on a curve, and the evidence in reference to the space between it and the cars was conflicting, that on the part of the plaintiff being that it was from eighteen to twenty inches at the ends of the car and from four to seven inches at the center, while the evidence on the part of the defendants was, that the space was eleven and one-half inches at the ends of the car and one inch at the center.
    The platform and cars had been in constant use in the same position for many years by thousands of passengers, who had passed over the intervening space without accident, and the arrangement had always, until the plaintiff’s injury, been found to be a safe one.

      Held, that under these circumstances the mere existence of the opening between the platform and cars was not of itself negligence, and that the construction of the platform and cars formed no ground for a recovery.
    The application of the rule in reference to the maintenance of a structure which has proved safe and convenient was sought to be overcome by the plaintiff by showing that, upon the elevated railways in New York city, certain means had been resorted to by which the space between the cars and j>latform was bridged over under certain circumstances, but there was no evidence that any such appliance was in general use.

      Held, that there being nothing to call the attention of the defendants to the fact that the structure as it stood was insecure or unsafe, there was no duty imposed upon the defendants to adopt the peculiar device which, so far as appeared, was only used by one corporation.
    The plaintiff claimed that she was jostled as she was leaving the car, and thus fell into the opening.

      Held, that this in no way established the existence of negligence on the part of the. defendants, in maintaining the cars and platform in the condition which for a large number of years had proved to be a sufficient provision for the safety of passengers.
    The accident occurred about half-past six in the afternoon in January, and the plaintiff claimed that the platform was improperly lighted at the time. The evidence on this point was conflicting, that of the plaintiff being that it was so dark that one could not see on getting off the cars, while the evidence on the part of the defendants was that the platform was brilliantly illuminated by. electric lights.

      Held, that the only evidence in the case upon which a recovery could be had was the evidence tending to show that the platform was not properly lighted.
    Appeal by the defendants, the Mayor, Aldermen and Commonalty of the City of New York and the City of Brooklyn, from a judgment of the Supreme Court in favor of the plaintiff:, entered in the office of the clerk of the county of New York on the 22d day of June, 1892, upon the verdict of a jury, rendered at the New York Circuit, and from an order denying the defendants’ motion for a new trial made upon the minutes.
    The action was brought in November, 1890, against the corporations of the cities of New York and Brooklyn, as the co-joint owners of the Brooklyn bridge and its appurtenances, having control and management, as common carriers, of a cable railroad for the transportation of passengers upon the bridge.

      T. Cormoty, for the appellants.

      J. D. Bell, for the respondent.
   Van Brunt, P. J.:

This action was brought to recover damages for injuries alleged to have been sustained by the plaintiff upon alighting from one of the cars running over the Brooklyn bridge.

It appears from the evidence that the plaintiff was a passenger upon the cars of the bridge upon the 24th of January, 1890, having boarded the cars about half-past six in the afternoon, and as she was about to step off tlie car on its arrival and stoppage at Brooklyn, she received a shove, and fell into the open space between the car and platform, and was thereby injured.

Evidence tending to show that the platform was improperly lighted, was given upon the part of the plaintiff, and it was also claimed that the opening between the platform of the car and the bridge was of an improper and dangerous width.

It was shown that the bridge opposite to the platform of the car where the car stopped was on a curve and that necessarily the center of the car was much nearer to the platform than the two ends. It further appears that for a considerable period of time the plaintiff had been accustomed to cross the bridge daily. But it was claimed by the plaintiff that upon previous occasions she had got off the middle of the car which was necessarily nearer the platform than the end from which she alighted at the time of the happening of the accident in question. Evidence in reference to the distance from the ends of the car to the platform was' conflicting, and also as to the condition of the lights, the testimony upon the part of the plaintiff being that the ends of the car were from eighteen to twenty inches from the platform, and the middle from four to seven inches, whereas upon the part of the. defendant the evidence was to the effect that the ends were within eleven and one-half inches of the platform and the center within one inch thereof. With respect to the lighting also, the evidence of the plaintiff was that it was dark so that you could not see on getting off the cars, and upon the part of the defendant that the platform was brilliantly illuminated by electric lights. The defendant showed that a large number of persons had both boarded and alighted from the cars under the conditions existing at the time of the happening of the accident, and that no one had ever been injured from a similar cause.

The court thereupon submitted the question of the liability of the defendant to the jury, who found a verdict in favor of the plaintiff, and denied a motion for a new trial. And from the order and judgment thereupon entered, this appeal is taken.

It has not been considered necessary in the foregoing statement of facts, to enter into an examination of the details of the testimony, but simply to present the salient features which bring up the question which it is considered necessary to review; which is whether there was any evidence upon which negligence could be predicated against the defendants because of the distance between the cars and the platform upon which the passengers alighted.

This question has been considered upon various occasions by the courts; and the rule which has been adduced therefrom is that a machine or structure not obviously dangerous, which has been in daily use for years, and has uniformly proved adequate, safe and convenient, may be continued in use without the imputation of negligence.

Applying this rule to the case at bar it would seem that in view of the large number of persons passing over the Brooklyn bridge upon the cars running thereon, who had alighted from those cars without accident, the mere existence of an opening of the width described by the witnesses, was not of itself negligence. That some opening had to exist is manifest, because the car and the platform could not possibly make a perfectly close connection. The force of this rule was sought to be overcome by showing that upon the elevated railways in this city certain means had been resorted to by which this space was bridged under certain circumstances. But there was no evidence that any such appliance was in general use ; and there being nothing to call the attention of the defendants to the fact that the structure as it stood was insecure or unsafe, there was no duty calling upon the defendants to adopt this peculiar device, which, so far as appears, is only used by one corporation.

The principles laid down in the case of Ryan v. Manhattan Ry. Co. (121 N. Y. 126), seem precisely to cover the questions involved in the ease at bar. In that case the ground upon which a recovery was claimed was that the defendant had left an improper and dangerous opening in the pathway of its passengers, without any necessity therefor— the court stating that the question presented was whether the opening into which the plaintiff stepped was or was not wider than necessary, so much so as to produce danger to the passengers. After alluding to the peculiar conditions attending the case then under discussion, the court said: “ Thousands upon thousands of passen-> gers, often in a hurry, and thronging in crowds, had stepped over this opening without harm or danger.” And the court asked the question : “ How is it possible to say that an opening thus tested by years of use was negligent in its origin or its maintenance? Indeed the plaintiff herself adds to the force of this fact. She had taken the cars at that point a hundred times or more, stepping across the opening without trouble or danger, and gives unconscious testimony to its safety by seeking to show that on this one occasion a change had occurred, and the opening was wider than usual. Her whole case depends upon that allegation, the burden of which rested upon her. She meets it by a guess. In her testimony she estimated by the eye that the width of the opening was fourteen to fifteen inches. She did not notice the opening at ail, until, just as she was lifted out of it, and was looking straight at the car and not at the opening, when she stepped in. This was contrary to her habit, and without any apparent reason. No one else stepped into the opening. The other passengers seem to have found no difficulty, and encountered no risk. She alone, paying no attention to her steps,' went blindly into the opening. If she had exercised even ordinary care, there is no reason to suppose that her safety would have been endangered.”

It is sought by the evidence in the case at b^r, to vary it from that of the case cited, by the claim that the plaintiff was jostled as she was leaving the car, and thus fell into the opening. Rut this in no way makes the act of the defendants negligence, in maintaining the cars and platform in the condition which for a large number of years had been found to be a sufficient provision for the safety of passengers. Thousands had passed over this opening without .the slightest inconvenience; and, as every passenger upon alighting from the car is bound to know that some space must exist between the platform and the car, it is their duty to take some precautions in order that they may not step therein.

It would seem, therefore, that the construction of the platform and cars formed no ground for a recovery; and the only evidence upon which a recovery could be had, was that the platform was not. properly lighted, bringing the case within that of Boyce v. Manhattan Ry. Co. (118 N. Y. 314).

The defendants requested the court to charge that if the jury believed that the platform was lighted on the night of the accident with electric lights, as testified to by defendants’ witnesses, the verdict must be for the defendants. The defendants also requested the court to charge that there was no evidence that the space between' the platform of the car and the station was unnecessarily wide, and that the only question which the jury might consider was whether it was properly lighted.

It was error for the court to refuse these two requests, as it left the jury to speculate upon the duties of the defendants in regard to the construction and lighting of their platforms, which questions should not have been left to it.

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

Follett and Barrett, JJ., concurred.

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