text:
    Conrad Geibel, Plaintiff, v. James W. Elwell, Defendant.

      Infancy — Statute of Limitations — the ‘ ‘ disability ” of an infant continues until Ms majority — action for personal injuries resulting from negligence — time to sue not slwrtened by Ms bringing an action (subsequently discontinued) during infancy.

      An infant may maintain an action to recover damages for personal injuries resulting from, negligence provided lie brings his action in one year after he reaches majority. The provisions of section 396 of the Code of Civil Procedure to the effect that if a person who is entitled to maintain an action, specified in title 2 of chapter 4 of said Code, is at the time when the cause of action accrues within the age of twenty-one years, “ the time of such disability” is not a part of the time limited in the title for commencing an action, are to be construed as meaning that the time which must elapse before a person affected by the statute reaches his majority is not to be regarded as a part of the time within which he must sue.
    Upon the trial of an action brought to recover damages resulting from inj uries caused by the alleged negligence of the defendant, it appeared that the injuries were received in April, 1884, when the plaintiff was between eleven and twelve years of age; that he brought an action by a guardian ad litem in May, 1886; that in January, 1891, the guardian died and no other guardian was appointed, and that in January, 1892, an order ivas entered, by consent, discontinuing that action; that in October, 1892, a new guardian ad litem was appointed and that the present action was commenced in December, 1892.

      Meld, that under the provisions of the Code of Civil Procedure requiring an action of this nature to he begun within three years by a person not under any disability, the present action was not barred;
    That the commencement of the action, which was discontinued, did not operate to remove the “disability” of the infant, and that the three-year Statute of Limitations did not begin to run when that action was brought;
    That the infant was under “disability” until he reached majority.
    Motion by the plaintiff, Conrad Geibel, for a new trial on a case containing an exception, ordered to be beard at tlie General Term in the first instance upon the dismissal of the complaint directed by the court after a trial at the New York Circuit before the court and a jury on the 22d day of April, 1895. Also an appeal by the plaintiff from an order of the Supreme Court, made at the New York Circuit and entered in the office of the clerk of the county of New York on the 20th day of May, 1895, dismissing the complaint.
    This action was brought to recover damages for a personal injury sustained by the plaintiff and alleged to have resulted from the negligence of the defendant.
    The injury complained of occurred on the 11 th day of April, 1881, at which time the plaintiff was between eleven and twelve years of age.'
    It appears from the record that in March, 1886, his grandfather, Philip Bender, was appointed guardian ad litem for him, for the purpose of bringing an action against the defendant to recover damages for the injury in question, and on the 6th of May, 1S86, the plaintiff commenced that action by his grandfather, as guardian ad Utern. The defendant answered in the cause, and on March 5, 1888, the case came on for trial, and at the close of the evidence a juror was withdrawn, to admit of amotion for an amendment of the complaint. In August, 1890, a motion for leave to amend the complaint was made, and on September 3, 1890, was denied. In January, 1891, the guardian ad litem died; no other guardian was appointed in that action. On January 21, 1892, an order was entered by consent discontinuing the action. On October 3, 1892, plaintiff’s uncle, Philip Bender, Jr., was appointed guardian ad litem, for the purpose of bringing this present suit, and this suit was commenced by the plaintiff by said Philip Bender, Jr., as guardian ad litem, on the 3d of December, 1892.
    Subsequently Conrad Geibel became of age and an order was thereupon entered by consent, directing that the action be continued and prosecuted in the name of Conrad Geibel personally.

      Christopher Fine, for the -appellant.

      J{. D. Benedict, for the respondent.
   Parker, J.:

The dismissal of the complaint at Circuit was upon the ground that the commencement of the first action in May, 1886, operated to remove the disability of the infant provided for by section 396 of the Code of Civil Procedure, the effect being that the three years’ Statute of Limitations began to run. If such was its effect, it necessarily follows that the plaintiff’s cause of action was barred before this action was brought in December, .1892.

The statutory provisions which control this question are as follows (Code, § 3S0): “The following actions must be commenced within the following periods after the cause of action has accrued.”

Section 383, “ Within three years * * (5) an action to recover damages for a personal injury resulting from negligence.”

Section 396 : “ If a person entitled to maintain an action specified in this title * * is, at the time when the cause of action accrued either (1) within the age of twenty-one years, or (2) insane, or (3) imprisoned on a criminal charge, or in execution upon conviction of a criminal offense for a term less than life, the time of such a disability is not a part of the time limited in this title for commencing the action, except- that the time so limited cannot be extended more than five years by any such disability, except infancy, or, in any case, more than one year after the disability ceases.”

The defendant urges, in support of the dismissal, that within the meaning of the section last quoted the plaintiff’s disability to sue ceased when his guardian ad litem, in May, 1886, commenced an action to recover the damages sustained by the infant; that it is not conceivable that a suit properly brought by plaintiff should co-exist with a disability of the plaintiff to bring such suit, and that under the statute it is not the time of the infancy that is not to bo counted, but the time of disability, which ceases when suit is brought.

The statute is not well expressed, and because that is so, there has been afforded an opportunity for debate, of which counsel have fully availed themselves.

The use of the word “disability” furnishes the basis for the defendant’s contention. It is said that the connection in which it is employed indicates that it was the legislative intent to save the bar of the statute as against a minor until he should reach his majority, and for such a reasonable time thereafter as should afford him opportunity to take action looking to indemnity for his injuries, unless before coming of age he should prosecute by guardian. But it does not seem to us that the statute can be so read. It undertakes to provide that as against persons in certain situations the Statute of Limitations shall not run. It describes the situations in which persons must be in order to stop the running of the statute as (1) within the age of twenty-one years, or (2) insane, or (3) imprisoned on a criminal charge, or in execution upon conviction of a criminal offense for a term less than life. It then continues “ the time of such a disability is not a part of the time limited in this title for commencing the action * *

What “time” is it which is thus referred to as one of “disability 2 ” It is the time which must elapse before a person affected by the statute reaches his majority, or while he is insane, or imprisoned, as the ease may be.

There is no other time or period to which it can refer, and awkwardly as it is expressed, it nevertheless seems to be clear that the words “ time of such a disability ” were used to characterize generally, and without repetition, the three conditions in which a person having a cause of action might be so placed as to need protection from the effect of the preceding sections. And in order to give to the statute a construction which starts the running of the three years’ Statute of Limitations before the minor reaches his majority, it is necessary to import into it something which we cannot say was intended by its framers.

There is certainly no occasion to strain after such a construction, for if a minor should be protected from. the running of the statute until his majority, if he cannot secure a person to act as guardian ad litem and prosecute his action, why should he not be protected if the person consenting to be his guardian ad litem, after commencing the action changes his mind and discontinues it, as in this case ?

As our conclusion is that the action was not barred, the exceptions must he sustained and a new trial ordered, with costs to the plaintiff to abide the event.

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

Exceptions sustained, new trial ordered, costs to plaintiff to abide event.


source: Caselaw Access Project

author: Parker, J.:

license: Public Domain

text:
    New York Security and Trust Company, Respondent, v. Ernst Lipman and Others, Defendants; The Hong Kong and Shanghai Banking Corporation and Others, Appellants.

      Pledgor and pledgee-—possession of indicia of title — legality of an agreement for the substitution of other property for that on deposit — antecedent debt —■ holder for value — objection that an action will not lie in equity, must be taleen below.

    [n an action brought io determine a. controversy relative to the proceeds of 200 bales of burlaps sold by tlie plaintiff under a warehouse receipt issued by the Terminal Warehouse Company to the plaintiff, it appeared that the defendants, Lipman & Co., had in the warehouse on December 1, 1891, 801 bales of burlaps and that they had previously informed ¿he warehouse company that when they called for negotiable receipts they wanted them made out without bale marks, so that, if they desired, they could substitute other bales equal in kind and quality for those in storage; that in fact substitutions were made from time to time to sncli an extent that none of the original bales in storage on December 1, 1891, remained in storage on December 15, 1892; that on December 1, 1891, Lipman <& Co., pledged to the plaintiff, for a loan of S50,000, 500 bales represented by five receipts for 100 bales each; that they reduced their debt gradually, but on December 15, 1892, they still owed the plaintiff $20,000 for which it held two receipts for 100 bales each, running to Lipman & Co., and indorsed in blank ; that upon the last-mentioned date (Lipman & Co. having failed a short time before), the plaintiff exchanged tlie receipts which it held for one receipt for 200 bales made out in its own name; that prior to such transaction andón the 8th day of December, 1892, Anlony Gibbs & Sons, through Lipman & Co. as their factors, stored with the warehouse company fifteen bales of burlap for which Lipman & Co. held hills of lading; that the plaintiff’s receipt issued December 15,1892, for 200 bales covered these fifteen bales, on which date there were in the warehouse (including the fifteen bales of Antony Gibbs & Sons) only 200 bales of burlap stored by Lipman & Co., and no more, although on Decomber eighth there had been 200 bales exclusive of.the fifteen bales of Antony Gibbs & Sons, fifteen of such 200 bales having been withdrawn, by Lipman & Co. between the eighth and the fifteenth of December; the plaintiff never saw the bills of lading or shipping documents which Antony Gibbs & Sons had sent to Lipman & Co. as indicia of title.

      Held, that it was competent for Lipman & Co. and the warehouse company to make the agreement by which receipts were to be issued without bale marks, so that other bales could be substituted for those in storage; Wiat such agreement violated no statute and was not against public policy;
    That, as Antony Gibbs & Sons had intrusted Lipman & Co. with the possession of the bills of lading for the fifteen bales, Lipman & Co. were, under the 3d section of the Factor’s Act, to be deemed to be the true owners of the merchandise so far as to give validity to a contract made by Lipman & Co. with the plaintiff for money advanced upon the faith of the merchandise;
    That the 4th section of the Factor’s Act, providing that every person, who should accept or take any merchandise on deposit from any agent or factor as security for an antecedent debt, should not acquire any greater right than the agent had at the time of the deposit, had no application to the facts of this case;
    That the plaintiff was entitled, so far as that was necessary to the full payment of its advances made to Lipman & Co., to employ the proceeds of the sale of the bales stored by Lipman & Co., as factors for Antony Gibbs & Sons, and covered by the receipt for 200 bales issued December fifteenth;
    That the surrender of the original bales by the Terminal Warehouse Company, upon the order of Lipman & Co., constituted a valuable consideration for the giving of new bales by Lipman & Co. in substitution therefor, and that the plaintiff, as pledgee, was, as to to the bales stored in substitution, a holder for value in the usual course of business;
    That where a party has not by his answer nor on the trial made the defense that the action could not be maintained in equity, he should not be allowed to raise this objection for the first time in the appellate court.
    Appeal by the defendants, The Hong Kong and Shanghai Banking Corporation and others, from so much of 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 26th day of June, 1894, upon the decision of the court rendered after a trial at the New York Special Term, as provides as follows:
    1. “ Ordered, adjudged and decreed that the plaintiff rightfully and lawfully received on January 28, 1893, the sum of twenty-two thousand eight hundred and twenty-three dollars and eighty-four cents ($22,823.84), referred to in the complaint in this action, and that the plaintiff is entitled to hold and retain personally out of that sum the sum of twenty thousand seven hundred and seventy-four dollars and seven cents ($20,774.07), as the amount due to plaintiff ■as balance of a loan by plaintiff to the defendants Lipman & Company, and for expenses incurred by plaintiff in sale of collateral to that loan, and that plaintiff’s rights and title to the sum of $20,774.07 are prior and paramount to that of any other party to this action, •and that all of the defendants are excluded from any interest in or lien upon said sum of $20,774.07, and that plaintiff, as court depositary, pay said sum to itself personally.
    2. “ Ordered, adjudged and decreed, that the surplus sum of two thousand and forty-nine dollars and seventy-seven cents ($2,049.77), with interest at six per cent from January 28th, 1893, to April 12th, 1893, a,nd with interest at two per cent from April 12th, 1893, to this date, amounting altogether to the sum of two thousand one hundred and twenty-four and eighteen one-liundredtlis dollars ($2,124.18), be disposed of and paid out by the plaintiff as a depositary of this court, as follows :
    “ The plaintiff shall pay to itself the sum of $219.87 as costs of this action. The remaining sum of $1,904.31 shall be paid by the plaintiff to the following defendants or their attorneys in the following proportions:
    “ To Cotesworth & Powell said sum, or the sum of eighty-seven dollars and seventy-one cents ($87.71).
    “Antony Gibbs & Sons $^3-rr:ffj °f said sum, or the sum of one hundred and thirty-nine dollars and fifty-six cents ($139.56).
    “ The Ilong Kong & Shanghai Banking Corporation $^JtfT:Tnr> of said sum, or the sum of two hundred and ten dollars and seyentyone cents ($210.71).
    “ Giles Loder, limited, $^f of said sum, or the sum of two hundred and ninety-four dollars and twenty cents ($294.20).
    “ Samuel W. Milbank, as receiver, the balance of said sum, or the sum of one thousand one hundred and seventy-two dollars and thirteen cents ($1,172.13).
    3. “ Ordered, adjudged and decreed, that such payments being made, each and all of the defendants herein, their agents, attorneys and servants, aro permanently enjoined from prosecuting the plaintiff for the amount received by the plaintiff from the sale of the two hundred bales of burlaps mentioned in the complaint herein, or for the bales themselves, and from bringing or maintaining or continuing any actions against the plaintiff in respect thereto, or from making any demand or application against the plaintiff in respect thereto.
    4. “ Ordered, adjudged and decreed, that upon compliance by the plaintiff with this decree all the defendants herein are barred and foreclosed as against the plaintiff of all right or interest in or lien upon the two hundred bales of burlaps referred io in the complaint, or to their proceeds.”
    Also an appeal by the defendants, David Powell and others, from so much of said judgment as provides as follows:
    1. “ Ordered, adjudged and decreed, that the plaintiff rightfully and la-wfully received on January 28th, 1893, the sum of twenty-two thousand eight hundred and twenty-three dollars and eighty-four cents ($22,823.84), referred to in the complaint in this action, and that the plaintiff is entitled to hold and retain personally out of that sum the sum of twenty thousand seven hundred and seventy-four dollars and seven cents ($20,774.07) as the amount due to-plaintiff as balance of a loan by plaintiff to the defendants Lipman & Company and for expenses incurred by plaintiff in sale of collateral to that sum of $20,774.07, is prior and paramount to that of any other party to this action, and that all of the defendants are-excluded from any interest in or lien upon said sum of $20,774.07, and that plaintiff as court depositary pay said sum to itself personally.
    2. “And further in so far as said judgment and decree provides that the surplus sum of $2,049.77, with interest as stated, be disposed of by paying to Cotesworth & Powell $^|f-f ¡jn-, or the sum of $87.71 (whereas, in any event, said defendants should receive $^°-¶-|:-|-|), and provides for the payment to Samuel Milbank, as receiver, the sum of $1,172.13.
    “And further, in so far as said judgment and decree provides as follows:
    “ 3. ‘ Ordered, adjudged and decreed, that such payments being made, each and all of the defendants herein, their agents, attorneys and servants, are permanently enjoined from prosecuting the plaintiff for the amount received by the plaintiff from the sale of the two hundred bales of burlaps mentioned in the complaint herein, or for the bales themselves, and from bringing or maintaining or continuing any actions against the plaintiff in respect thereto, or from. making any demand or application against the plaintiff in respect thereto/
    “And further, in so far as said judgment and decree provides as follows: •

      “4-, ‘Ordered, adjudged and decreed that upon compliance by plaintiff with this decree all the defendants herein are barred and foreclosed as against the plaintiff of all right or interest in or lien upon the two hundred bales of burlaps referred in the complaint, or to their proceeds.’ ”

      & Sidney Smith and Franklin B. Lord, for the appellants Antony Gibbs & Sons and The Hong Kong and Shanghai Banking Corporation.

      Michael II. (lardoso and Edgar J. Hathcm, for the appellants Cotesworth & Powell.

      William, B. llornblower and Howard A. Taylor, for the respondent.
   Parker, J.:

This suit was brought on the equity side of the court for the purpose of obtaining a determination of all controversy relating to the title to the proceeds of 200 bales of burlap which had been sold by the plaintiff under a warehouse receipt issued by the Terminal Warehouse Company. The plaintiff claimed to be entitled to the greater part of the proceeds. Some thirty of the defendants each preferred a claim to the proceeds of some portion of the 200 bales. The several claims of these appellants were as follows: Antony Gibbs & Sons assorted title to fifteen of the bales, the Ilong Kong and Shanghai Banking Corporation to twenty-two bales, Cotes-worth & Powell to nine bales, and each party claimed to be entitled to the proceeds of the sale of the several bales to which they asserted ownership.

The point is made by one of the appellants that no case was made for any relief in equity, and that the complaint should have been dismissed, citing the decision of this court in New York Security & Trust Company v. Blydenstein (10 Hun, 216). Blyndenstein & Co. opposed a motion made in this suit for a preliminary injunction restraining any .of the defendants from prosecuting any other suit against the plaintiff affecting the title to any of the 200 bales in controversy. Their opposition was unsuccessful at the Special Term, and Blydenstein & Co. appealed, which appeal resulted in a reversal of the order, so far as they were concerned, at General Term. This order was subsequently affirmed in the Court of Appeals. (139 N. Y. 657.) Had the appellant, who now makes the point, seasonably made objection that an action in equity would not lie, the decision of the court in Blydenstein’s appeal would sustain his position. But all of the defendants, except Blydenstein & Co., seem to have acquiesced in the form of the action, and this appellant did not, by his answer, raise the question whether the suit was properly brought on the equity side of the court. Nor do we find in the record that he made such an objection during the progress of the trial, it is now too late to make the objection for the first time, and as to these appellants it must be held that the form of the action is good. (Town of Mentz v. Cook, 108 N Y. 504; Ostrander v. Webber, 114 id. 95.)

After the decision of the Court of Appeals on the appeal of Blydenstein & Co., to which we have referred, they (Blydenstein & Co.) prosecuted their action in the Federal court against the trust company (this plaintiff) for a conversion of the proceeds of the bales claimed by them, and it resulted in a judgment in favor of the trust company. Subsequently this judgment was affirmed in the Circuit Court of Appeals. (07 Bed. Rep. 09.) The decision of the Special Term is based upon the decision of that court, and we should be content to rest an affirmance of the judgment upon the discussion of the court in that case were it not that the appellants apparently take a different position than did the counsel for Blydenstein & Co. in the case before the Circuit Court of Appeals. The argument of the court in .Blydenstein’s case, leading to the conclusion that these appellants had so clothed Lip-man & Co. with the indicia of ownership as to the bales of burlap in question as to protect any one who, within the terms of the Factors’ Act, dealt with Lipman & Co. upon the faith of such apparent ownership, seems to us conclusive.

The appellants have apparently reached the same conclusion, for neither of them, on this appeal, undertakes any discussion of that question. On the contrary, one of the counsel states in his brief that “ It may very well be that if Lipman & Co. had sold the goods, and had been paid for them or had pledged them to some one who had parted with something on the faith of their possession, the title of Gibbs & Sons and the Ilong Kong and Shanghai Banking Corporation would have been lost; but this would be because they would be estopped under the Factors’ Act.”

While a discussion of that question is now wholly undesirable for the reasons given, it is, nevertheless, necessary to state briefly the leading facts, in order to appreciate fully the questions which the appellants bring to our attention.

September Y, 1892, Lipman & Co. issued their note for $50,000 to the New York Security and Trust Company, the plaintiff, in renewal of a previous loan made to Lipman & Co. in .December, 1891. As security for the loan, Lipman & Co. continued the pledge made to secure the loan of December, 1891, to the trust company of 500 bales of burlap in the bonded warehouse of the Terminal Warehouse Company of New York city.

The evidence of the pledge consisted of five negotiable warehouse receipts, for 100 bales each, issued by the Terminal Warehouse Company. Each of the receipts bore the date of December 1,1891, at which time they were issued to Lipman & Co., and by them, at about that time, delivered to the plaintiff as collateral to the loan of like amount wfith that made on September Y, 1892. In October and November, 1892, Lipman & Co. reduced the amount of the loan by payments aggregating $30,000, and received from the plaintiff three of the warehouse receipts, representing 300 of the 500 bales of burlap.

The situation of the loan on December 15,1892, was that Lipman & Co. still owed the trust company on account of the loan $20,000, and its security for such balance consisted of the pledge of 200 bales of burlap, which was represented by two warehouse receipts. These receipts wore in the name of Lipman &Co., which firm, had indorsed them in blank. On the day last named the trust company presented the two receipts at the warehouse, and received in exchange a single warehouse receipt for 200 bales made out in its own name. Shortly prior to this action being taken Lipman & Co. failed, without havmg paid the $20,000 then owing to the plaintiff on account of the loan. Thereafter the 200 bales were sold, the amount realized being $22,823.84. The judgment directs the payment of plaintiff’s claim in full, and awards to the appellants a pro rata share in the sum remaining after satisfying plaintiff’s claim. The appellants severally insisted then, as now, that they should each receive the total proceeds of the bales which they claimed to own. In order to avoid confusion we shall only discuss the facts relating to the claim of Antony Gibbs & Sons. Their case is taken, rather than that of any of the other appellants, because in its facts it is at least as favorable to the position taken by the appellants as any.

The bales, claimed by Antony Gibbs & Sons, were stored in the Terminal Warehouse Company’s warehouse on the 8th day of December, 1892, three months after the loan by the trust company was made, and only seven days before it surrendered to the warehouse company the warehouse receipts which had been indorsed to it in blank by Lipman & Co., and received from the warehouse company a receipt in its own name for the 200 bales. When the last-named warehouse receipts were given there were but 200 bales of burlap which had been stored there by Lipman & Co., and included among the 200 bales were the fifteen bales of Antony Gibbs & Sons, which Lipman & Co. had stored in the warehouse seven days before. As we have already observed, the appellants in effect concede that, notwithstanding Antony Gibbs & Sons were the owners of the fifteen bales stored December eighth by their factors, Lipman & Co., still, they had so clothed Lipman & Co. with the indicia of title that had the plaintiff thereafter made a loan to Lipman & Co. upon a pledge of the fifteen bales secured by a negotiable warehouse receipt, the trust company would have been entitled to so much of the proceeds of the bales as should be necessary to satisfy the loan. In such case, say the appellants, the trust company would have been entitled to the protection of the 3d section of the Factors’ Act, which reads as follows:

“ Every factor or other agent intrusted with the possession of any bill of lading, custom house permit or warehouse keeper’s receipt for the delivery of any such merchandise, and every such factor or agent not having the documentary evidence of title, who shall be intrusted with the possession of any merchandise for the purpose of sale, or as a security for any advances to be niade or obtained thereon, shall be deemed to be the true owner thereof, so far as to give validity to any contract made by such agent with any other person, for the sale or disposition of. the whole or any part of such merchandise, for any money advanced, or negotiable instrument or other obligation in writing given by such other person upon the faith thereof.” (I R. S. [8th ed.] p. 2518.)

The advance to Lipman & Co. by the trust company having been made long before December eighth, and it appearing that the trust company never saw the bills of lading or the shipping documents which Antony Gibbs & Sons sent to Lipman & Co., furnishes the basis for the claim of the appellants that the section of the Factors’ Act quoted does not apply. They insist that it necessarily follows from such facts that the trust company did not advance any money ©r take any action upon the faith of the fifteen bales of burlap. If there were no other facts than those to which the appellants refer, tliek position wonld be well taken. (Moors v. Kidder, 34 Hun, 534, 536.)

It is further insisted by the appellants, that if it be assumed that the plaintiff received the bales of burlap claimed by Antony Gibbs & Sons through the act of Lipman & Co., they took them as security for an antecedent debt or demand, and hence are denied the right to hold them by the éth section of the Factors’ Act, which provides that “ Every person who shall hereafter accept or take any such merchandise in deposit from any such agent as security for any antecedent debt or demand, shall not acquire thereby or enforce any right or interest in or to such merchandise or document other than was possessed or might have been enforced by such agent at the time of such deposit.” (é R. S. [8th ed.] p. 2519.)

Summarized, the appellants’ position is that if there were any evidence that Lipman & Co. pledged the fifteen bales claimed by Antony Gibbs & Sons to the trust company after their storage, it was done to secure an antecedent debt, and the trust company acquired no rights thereunder; that the plaintiff advanced nothing upon the faith of the documents intrusted to Lipman & Co., nor upon the bales in the warehouse, and that such bales were not in fact pledged by Lipman & Co. to the trust company.

In taking this position the appellants ignore certain important and, we think, controlling facts. When the five warehouse receipts •were issued, December 1, 1891, there were 801 bales in the possession of Lipman & Co. and stored in the warehouse. Prior to that time the representative of Lipman & Co. had informed the officers of the Terminal Warehouse Company that when he called for negotiable warehouse receipts he wished to have them made out without bale marks, so that he could substitute other bales for them whenever he should desire to do so. So, while Gutman, the representative of Lipman & Co., testified that there was nothing said about substitution at the time he obtained the five negotiable warehouse receipts dated December 1, 1891, he also testified that when he first took out negotiable receipts “ they (the officers of the warehouse company) asked me whether I wanted any particular bales, and I said no. I wanted to have no bale marks, so that I could substitute whenever I like. But since that time, when I sent down for negotiable warehouse receipts, they always made them out the same way, so that when these particular warehouse receipts were made out there was no conversation on the subject.” ■

It further appears from his testimony that, under these negotiable warehouse receipts, Lipman & Co., from .time to time, substituted bales of burlap for others which had been taken out and sold. The absence of any special conversation on the subject at the time the warehouse receipts in question were taken out does not affect the situation, because, having informed the officers of the warehouse company that when he called for negotiable warehouse receipts he wanted them made out without bale marks on, so that lie could make substitution from time to time, the request for open negotiable warehouse receipts representing the 500 bales, and their issuance by the warehouse company was necessarily under their previous agreement, which provided for substitution in such ’eases. Each of the receipts issued exjiressed an agreement by the warehouse company to deliver to Lipman & Co.,, or to their assignees, 100 bales of burlap upon the return of the receipts. By it, the warehouse company further agreed that while the receipts were outstanding it would keep on hand ready for delivery the number of bales called for by it, but not that it would deliver bales bearing any particular marks, and, at the time of issuing the five open receipts as we have observed, there were in the warehouse 801 bales or 301 more than the amount covered by the receipts.

Lipman & Co., in accordance with the usual custom in such cases, and their agreement with the warehouse company, continued thereafter to deposit bales of burlap in the warehouse as they were received from time to time, and to sell burlap which was stored, and to call for deliveries to their purchasers, ■ the oldest bales being always held for delivery on the open receipts, and when they were delivered the next oldest bales were substituted. Thus the bales which were on hand at the time the warehouse receipts in question were given, were after a time all disposed of by this process of substitution, new bales being put in the place of the old as fast as they were taken out, so that there was always in the possession of the warehouse company a sufficient number of bales to make good the agreement, which the warehouse company expressed in its receipts. The arrangement which Lipman & Co. had with the warehouse company made it possible to take out the old bales from the warehouse, and put in new ones without the necessity of making new receipts every time there was a sale. Such was the agreement, and of its validity there seems to be no doubt. No statute was violated, nor is any reason apparent.for deeming it against public policy for a bailee to agree with his bailor that, if he (the bailor) shall at any time have on storage a greater amount of goods of the same kind and quality, he may substitute the surplus for a like quantity of that which was originally pledged. It was precisely that which the Terminal Warehouse Company and Lipman & Co. agreed should be done, and it was that which they in fact did.

Bales of burlap were never delivered upon the order of Lipman & Co., unless there were present in the warehouse other bales, apparently the property of Lipman & Co., to substitute in their place. By this process of substitution it so happened in the course of time that the entire 801 bales which were in the warehouse on the 1st day of December, 1891, were delivered to persons to whom they had been sold by Lipman & Co., and other bales stored in the warehouse were substituted in their place and stead.

On the 8th day of December, 1892, when Lipman & Co. stored with the warehouse company the fifteen bales to which Antony Gibbs & Sons claim to have the title, there were in the warehouse the 200-bales called for by the open negotiable receipt issued to the trust company. But between that date and the fifteenth of the same month tlie warehouse company delivered to purchasers, on the order of Lipman & Co., fifteen of such 200 bales, and substituted the fifteen bales in question for them, after which there was in the warehouse only the 200 bales called for by the trust company receipt.

We have already asserted that the agreement, in pursuance of which this was done, was one the jiarties were entirely competent to make, and we next observe that the surrender of the original bales of burlap covered by the negotiable warehouse receipt upon the order of Lipman & Co. constituted a valuable consideration for the giving of the new bales by Lipman & Co. in. substitution, and that the pledgee as to the latter is a holder for value, in the usual course of business.

And that ruling applies to the substitution of the other appellants’ bales, and brings the transaction within section 3 of the Factors’ Act, instead of section 4, as contended by the appellants. The bales claimed by the appellants were not taken by the trust company as security for an antecedent debt, but in consideration of the surrender of other bales on the faith of which the loan had been made by the trust company. There Avas, therefore, a present parting of value independent of the antecedent debt.

The judgment should be affirmed, with costs.

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

Judgment affirmed, with costs.


author: Patterson, J.:

text:
    Nicolas Chapuis, Appellant, v. May A. Mathot, Respondent, Impleaded with Victor Francez and Others, Defendants.

      Usury — the facts must be pleaded — corrupt intent essential to — the defense is personal to borroioers and those in privity with them— a judgment creditor' is in privity- — acquiescence in a usurious transaction is a waiver by the borrower — it concludes his judgment creditor.

    In an action based upon usury all the facts which are thought to constitute the alleged usurious character of the agreement should be stated in the complaint, so that the court can determine from the pleading whether the contract comes under the condemnation of the larv. A statement that a mortgage was given to secure a usurious contract to pay interest at a greater rate than six per cent per annum for the use of money loaned is insufficient, and a demurrer interposed to such allegations of a complaint will be sustained. It is the intent to-exact upon the one hand, and to pay on the other, more than the legal rate of interest that taints the contract, and the pleading should show all the facts constituting an actual corrupt agreement, or those from which a corrupt agreement may be inferred.
    The right to set up usury is personal, and the usurious contract is only avoidable by the borrower, and those in privity with or claiming under him.
    The right to set up usury may be ■waived by the borrower, and such waiver will cut off the rights of those in privity with him, yet, where a person in legal privity with the borrower, as, for example, his judgment creditor, has acquired rights in or under an alleged usurious instrument, before the borrower has waived its invalidity, the subsequent waiver of the borrower cannot have any effect in divesting the judgment creditor of the rights vdiicli he has acquired. Where, in the case of an alleged usurious mortgage payable on demand, the mortgagee, with the consent of (he mortgagor, has taken possession of the mortgaged chattels before a creditor of the mortgagor recovers judgment against him, the acquiescence of the mortgagor in the act of the mortgagee is a waiver of any defense upon his part to the mortgage, and the rights of the mortgagee and lender become complete and unassailable.
    Appeal by the plaintiff, Nicolas Cliapnis, from an interlocutory judgment of tlie Supreme Court in favor of tlie defendant May A. Mathot, entered in the office of the clerk of the county of New York on the 23d day of July, 1895, upon the decision of the court rendered after a trial at the New York Special Term sustaining said defendant’s demurrer to the plaintiff’s complaint, and also from an order entered in said clerk’s office on the 23d day of July, 1895, sustaining such demurrer.

      Arthur Furber, for the appellant.

      William L. Mathot, for the respondent.
   Patterson, J.:

The several matters discussed in the argument of this cause arise on appeal from an order sustaining a demurrer of the defendant May A. Matliot to the complaint herein and from an interlocutory judgment entered upon such order. The plaintiff sued as a judgment creditor of the defendant Yictor Francez. The complaint alleges the recovery of judgment, the issuance of an execution and its return unsatisfied, and then states that the defendant Francez, in 1893, was the owner of and had in possession certain personal property, upon which he made a chattel mortgage (dated October 20, 1893) to the defendant May A. Mathot, whose name was inserted as mortgagee merely “ as a cloak and cover ” for her husband, Louis Matliot, he being the real party to the transaction in which the mortgage was given; that <£ said mortgage was given to secure a usurious contract theretofore made between said Louis Mathot and said Victor Francez, to wit, an agreement to pay to Louis Mathot interest at a greater rate than six per cent per annum, for the use of money loaned and advanced by said Mathot to said Francez (Victor), and that said Louis Matliot has received large sums of money in pursuance of said agreement in excess of interest thereon at the rate of six per cent per annum.” It is further -alleged in the complaint that Francez remained in possession of the property until January 9, 1895, when Louis Mathot took it and retained it until January 30, 1895, on which day he sold it through May A. Mathot to the defendant Tripault, who gave back as part consideration a chattel mortgage on the same property for $3,350, and that Tripault had full knowledge that neither Mr. nor Mrs. Mathot had any title to the property (presumably by reason of the alleged usury) as against the plaintiff, and judgment is demanded that the mortgage from Francez to Mrs. Mathot be adjudged void and be set aside so far as may be necessary to satisfy the plaintiff’s judgment, and that it may be adjudged that Tripault holds the property for the plaintiff’s benefit to the same extent; that a sale be directed and the proceeds first applied to the payment of the plaintiff’s judgment and for further relief.

The case now before the court is between the demurrant and the plaintiff only. The learned judge at Special Term, in sustaining the demurrer, assigned two reasons for so doing: First, that the allegations of the complaint respecting the alleged usury (the existence of which is the only claimed foundation of any right of the plaintiff to relief) are altogether insufficient; and, second, that even had usury been properly pleaded the action could not be maintained. We concur in the view taken at the Special Term concerning the insufficiency of the averments of the complaint as to usury. All that is set forth is a naked statement that the original contract, pursuant to which the Francez mortgage was given to Mrs. Mathot, was as to the rate of interest usurious. The allegation is that there was ££ an agreement to pay to Louis Mathot interest at a greater rate than, six per cent per annum for the use of money loaned,” which is nothing more than a mere conclusion, omitting, as it does, the very substantial element that there was a corrupt agreement to pay more than six per cent. All the facts thought to constitute the alleged usurious character of the agreement should have been stated so that the court might determine from the pleading whether the contract comes under the condemnation of the law. The mere taking of or contracting for a sum which happens to be more than six per cent for the loan or forbearance of money is not necessarily conclusive •on the subject. Cases are frequent in which the excess over the legal rate of money paid as interest is the result of a mistaken calculation. It is the intent to exact on the one hand and to pay on the other, more than the allowed rate that taints the contract, and the pleading should show all the facts constituting an actual corrupt agreement or from which that corrupt agreement may be inferred. (Manning v. Tyler, 21 N. Y. 567.) It is not necessary to use the word “'corrupt,” nor even the word “usury,” if the facts establishing those incidents of the transaction are set forth (Miller v. Schuyler, 20 N. Y. 522); but merely ajDplying epithets or pleading a definition of usury does not constitute that “ plain statement of facts ” necessary to a sufficient pleading. The foregoing considerations would dispose of this appeal were it not that leave to amend the complaint on terms was granted in the order under review, notwithstanding the ruling of the learned judge that even under an amended complaint the plaintiff could not maintain the suit. If that ruling is correct it would be futile to change the structure of the pleading. That ruling has the full support of authority in the adjudications of the courts of this State.

The right to set up usury is altogether personal to the borrower and those in privity with or claiming under him, and the usurious contract is voidable at the election of the borrower or those in privity with him. The state of the law on the subject is summed up in Williams v. Tilt (36 N. Y. 319, 325). After referring to Dix v. Van Wyck (2 Hill, 522) and Post v. Dart (8 Paige, 639), in which it was held that a mere stranger cannot attack the validity of a usurious security, but that the defense of usury may be availed of by any one who claims under the security and who is in privity with the person who gave it, the court proceeds to say: “ This is the extent to which the cases have carried the right, and even the right of privies may be cut off by the waiver of the original party. (Sands v. Church, 2 Seld. 347.) The contract is not absolueVy void, but only voidable, at the election of the borrower or those who are privies in interest or in contract with him. Hence no other party can make the objection.” This statement is fortified by a long list of authorities cited in the opinion.

But there is another line of cases invoked by counsel for the appellant in his general contention -that the decision below was' erroneous and to which it is necessary to advert. It is argued that the judge at Special Term overlooked the fact that in contemplation of law the plaintiff is in privity with the mortgagor. In Dix v. Van Wyck (supra) it was held that a judgment creditor stood in legal privity with a party who gave a usurious security and that where goods had been sold under execution and a mortgagee thereof brought replevin for them the defendant might set up usury as a defense, but it was also held that the usurious security might be ratified. In Mason v. Lord (40 N. Y. 476, 486), at the suit of a judgment creditor, an assignment of a lease absolute on its face, but given as security for a usurious loan and in effect a mortgage, was set aside in the hands of a purchaser from the assignee with- notice. But it distinctly appeared in that case that a judgment creditor of one Lord had a lien on the property and the court recognized the fact that Lord, the borrower, could have waived the invalidity of the security had he chosen to do so and thus have defeated the judgment creditor’s suit. It is said in the opinion : “ It is claimed that Lord could waive the invalidity of the mortgage. That is true as to his own rights and the rights of all acquired from him subsequent to such waiver. But the lien of the'judgment had attached before anything done by Lord that could possibly constitute a waiver.” In the present case it does not appear at what date the plaintiff’s •execution was delivered to the sheriff so as to bind the goods of Francez, but it does appear that Mathot took possession of the mortgaged chattels under the mortgage some seventeen days before the plaintiff’s judgment was recovered, and Francez’s acquiescence in that proceeding was a clear waiver of any defense he might have had to the instrument. The mortgage as it is recited in the complaint was payable oil demand. On default it operated as a bill of sale, and possession was taken. The rights of the JMathots, husband or wife, were complete. Francez had relinquished his right to contest the instrument and none in favor of the plaintiff had intervened. It is claimed by the plaintiff that some recent decisions of the Court of Appeals, have an influence on the subject adverse to the views above expressed, and we are referred with confidence to Stephens v. Perrine (143 N. Y. 476), where it was held that a receiver in supplementary proceedings might maintain an action against a mortgagee of chattels who had taken possession and sold under a mortgage void for failure to file it as required by statute. That mortgage was absolutely void as the court held and it could not be reinstated. No question of usury, at all, was in the case, but the action arose under another special statute and it lias no analogy with this.

The order and judgment appealed from should be affirmed, with costs.

Yan Brunt, P. J"., and Parker, J., concurred.

Judgment and order affirmed, with costs.


text:
    George Coppell, as Survivor of Himself and David Dunham Withers, Deceased, Respondent, v. Frank C. Hollins and Others, Impleaded with Others, Appellants.

      Railroads — reorganization committee — -recovery of advances — termination of the trust— effect of one member failing to act.

    In an action brought by certain plaintiffs, who with the defendant Frank C. Hollinswere members of a committee of the first consolidated mortgage bondholders of t the St. Louis and Chicago Bailroad Company, for a settlement of their accounts and for reimbursement of advances made by the plaintiffs and a distribution of any surplus among the parties entitled thereto, it appeared that there were upon the property of the company two mortgages prior to that described as the first consolidated mortgage; that the holders of bonds under the second mortgage had surrendered their bonds and had accepted in exchange bonds issued under the first consolidated mortgage; that default had been made in the payment of interest upon the bonds issued under the first mortgage and upon those-issued under the first consolidated mortgage and that suits had been brought by the trustees under each of said mortgages to foreclose the same. The committee in question was formed under an agreement which contemplated that the committee should purchase the mortgaged property at the sale, for which it had been advertised, at a price not exceeding the amount due upon the first mortgage and upon the first consolidated mortgage; that the bondholders were to place their bonds at the disposal of the committee to be used in purchasing the property; that a new corporation was to be formed; that it was to issue new securities; that the»committee was to distribute them and that the expenses and liabilities of the committee were to be charged upon the bonds and upon the proceeds of the sale of the property.
    Et further appeared that Hollins undertook to make such arrangements as would enable the-committee to purchase the property and stated that certain persons and corporations would take the new securities; that the committee bid in the property upon a sale in foreclosure under the first mortgage for 8570,000 and paid in cash 857,000, which it obtained from the Holland Trust Company; that Hollins entirely failed in his efforts to negotiate the new securities; that his acts indicated that his principal object was to secure control of the new corporation which was to be formed, which resulted in a disagreement between him and his associates on the committee; that it was finally agreed that Hollins should not resign from the committee, but that he should not participate personally in its action, but should abide by the action of the person who was acting as counsel for the committee; that the time for paying the balance of the purchase price was approaching, aud that as the Holland Trust Company refused to make any further advances the committee, with its assent, applied for relief to the Central Trust Company; that the Central Trust Company agreed to make the committee a loan upon terms which, among other things, required the committee to pledge all the bonds which had been deposited with it, and the two members, other than Hollins, to assume a personal liability for the loan; that with this loan the committee were enabled to proceed and organize a new corporation; that to this new corporation the property sold in foreclosure was conveyed; that such new corporation thereupon issued the securities in question, and which had been provided for by the reorganization agreement; that the committee found it impossible to dispose of the new securities in any manner; that the bondholders rendered them no assistance in this regard, and that finally all the securities in question were sold by the Central Trust Company to secure repayment of its loan, there being included in such sale the pledged first consolidated mortgage bonds and the new securities issued through the committee; that at the sale all the securities sold were bought in by the plaintiff, David D. Withers, and by a firm of which George Coppell was a member (Withers and Coppell being two of the three members of the reorganization committee), and that at the time when the present action was begun all the securities were in the possession or under the control of the plaintiffs.

      Held, that the evidence tended to show that Coppell and Withers acted in good faith and were entitled to be allowed for the moneys advanced by them or upon their credit on behalf of the bondholders;

      'That a claim, that the action was prematurely brought, in that, as the delivery of the new securities to the old bondholders had not yet taken place, the trust had not terminated, could not be sustained, as until the committee was repaid its advances it was not called on to make such delivery to the old bondholders, who apparently were not disposed to make such repayment;
    'That if the committee were to be deemed trustees, the fact that Hollins did not act in most of the transactions was not material, in view of the fact- that the bondholders knew that he would not act in concert*with the other members of the committee, and further because he had, by consent of all parties, agreed to abide by the action of the counsel for the committee;
    That the fact that the committee applied to the Central Trust Company after the Holland Trust Company, with which they had contemplated dealing, had refused to render assistance, was not material, as the committee were not restricted as to the source from which they should obtain money, and as it did not appear that the bondholders had suffered by the change.
    Appeal by tbe defendants, Frank C. Hollins and others, from a judgment of tbe Supreme Court in favor of tbe plaintiff, entered in tbe office of tbe clerk of tbe county of New York on tbe 12th day of January, 1893, upon tbe decision of tbe court rendered after a trial at tbe New York Special Term, with notice of an intention to bring up for review upon sucli appeal an interlocutory judgment entered in said clerk’s office on tbe 13tli day of October, 1892, and ■an order made at the New York Special Term and entered in said ■clerk’s office on the 12th day of January, 1893, confirming the report of a referee appointed by said interlocutory judgment, and ■overruling the exceptions to said report.

      James W. JTawes, for tbe appellants.

      William G. Choate, for tbe respondent.
   Parker, J.:

The original plaintiffs herein, Gfeorge Coppel and David Dunham Withers, who, together with Frank C. Hollins, were constituted members of a reorganization committee of tbe first mortgage consolidated bondholders of tbe St. Louis and Chicago [Railway Company, by virtue of an agreement executed by the bondholders, instituted this ■suit for the purpose of obtaining a judicial settlement of their accounts ••as members of such committee; the sale of the securities in their hands, or subject to their control as such committee; and the application of the .proceeds: First. To the reimbursement of the plaintiff, and, secondly, to the distribution of the surplus among the parties entitled thereto.

The bondholders’ agreement, under which the plaintiffs and Hollins were appointed a reorganization committee, was executed by the holders of the bonds of the first consolidated mortgage on the property of the St. Louis and Chicago Railway Company., Upon the properties of that company there were two prior mortgages, under the first of which there were outstanding $500,000 of bonds, and under the second it was claimed there were outstanding-bonds in a like amount. Of the first mortgage consolidated gold bonds, the company authorized the issue of $4,500,000. The first bonds, numbering from 1 to 1,000, inclusive, and of the face value of $1,000,000, were reserved to take up the outstanding bonds under the first and second mortgages. The holders of the second mortgage bonds surrendered their bonds and accepted in exchange therefor the bonds issued under the first consolidated mortgage. Default having been made in the payment of interest on both the first mortgage bonds and the first consolidated mortgage bonds, suits were brought by the trustees under each of said mortgages for their foreclosure.

While the affairs of the company were in this situation steps, were taken by certain of the holders of the bonds of the first consolidated mortgage looking to the protection of their interests, but, before any agreement was reached, a decree of foreclosure and sale-was entered in the suit brought to foreclose the first mortgage,- and the property was advertised to be sold thereunder on the 4th day of' September, 1889. Prior to the day of sale, however, and about the 21st of August, 1889, an agreement in writing was entered into by certain holders of the consolidated bonds, of which $1,100,000 were outstanding, by which the original plaintiffs herein and Hollins were appointed a committee to carry out the plan provided for in the agreement. Under the second clause of the agreement the committee were authorized to purchase the mortgaged property at any sale under the foreclosure -proceedings referred to in the. agreement.

The price which they were authorized to pay was limited to a. sum not exceeding the amount due upon the mortgage . bonds and coupons secured by the first and first consolidated mortgages. respectively and interest unpaid, together with all liens, receiver’s indebtedness, taxes or claims which should be determined by the court to be prior in interest to said bonds and coupons, and interest upon such sums, and the costs and expenses of the foreclosures, including the expenses of the committee.

To enable them to make this purchase it was agreed that the bonds of the subscribers to the agreement should be placed at the disposal of the committee, who were authorized to use the same, so far as necessary, for the purpose of purchasing the property. The third clause authorized the creation of a new corporation in the event of the purchase of the property by the committee. The fourth clause provided for the distribution of the securities of such new corporation. And the fifth clause, after referring to the matter of expenses incurred and to be incurred by the committee, provided “ that such expenses and liabilities shall be a charge upon the bonds and coupons to be deposited as hereinbefore provided, and upon the proceeds thereof, or of any sale of the mortgaged property.”

The committee at once procured a postponement of the sale for the purpose of obtaining the time necessary to provide for the payment of the purchase price of the property in the event of its purchase by the committee. Shortly thereafter Hollins informed his associates that he had made such arrangements as would enable them to purchase the property; that his firm would take $200,000 of the new securities, the Holland Trust Company $200,000 and Mr. Seligman $50,000. Acting upon this understanding, the committee bid in the property on the sale under the first mortgage for the price of $570,000, and paid thereon ten per cent of the purchase price, which sum was obtained through the Holland Trust Company. There was an extension of the railroad property, however, which was not covered by the first mortgage, but was by the first consolidated mortgage, and, in order to secure title to that piece of property, judgment was taken in the action to foreclose the first consolidated mortgage, and the property sold thereunder for the sum of $50,000. The deed ■of such property was taken in the name of George Coppell, the chairman of the committee.

In the meantime a corporation had been organized, called the St. Louis and Illinois Central Railroad Company, to take the property purchased. Articles of incorporation were filed in October and Novemher, 1889, but nothing further was done to complete this organization, as some difficulty had in the meantime arisen between Hollins and his associates on the committee, due in part possibly to the fact that the articles of incorporation last filed contained the names of directors suggested by Mr. Hollins, and whom it was presumed he could control. However that may be, it appears that at the meeting of the committee held on the 21st of November, 1889, Hollins declined to state, when requested by the chairman, how he was getting on with his financial plan, and refused to deposit with the committee his correspondence with Mr. Seligman relating to his alleged agreement to take $50,000 of the bonds. A little later Hollins stated that he was prepared to take only $100,000 of the new bonds instead of $200,000, and for these he proposed to give old first mortgage bonds. The efforts of the committee to induce the Holland Trust Company to advance the amount, which Hollins reported that the company would advance, proved ineffectual. While affairs were in this condition, and on the Gth of December, 1889, a meeting of the bondholders was held, at which it was made to appear to the bondholders that it would be impossible for the original plaintiffs and the defendant Hollins to act together any further, and it resulted in a proposition by a special committee of the bondholders, which was thereafter acted upon. The proposition was to the effect that, while the defendant Hollins should not resigm from the reorganization committee, he should not attend any further meetings and should abide by whatever the counsel for the committee should approve.

The time for the payment of the balance of the purchase price, under the foreclosure of the first mortgage had, in the meantime,' been extended to January 6, 1890, but the counsel for the trustee having refused to grant any further extension, the original plaintiffs herein renewed their efforts to obtain the money necessary to complete the purchase. There is some dispute as to the character of their negotiations with the Holland Trust Company, but the trial court has found the fact to be that the Holland Trust Company-refused to advance any further sum of money until the bonds of the new company should be ready for delivery. It is said that the agreement of the Holland Trust Company was such that a further advance could have been enforced, but this was not a practical question, as there was then remaining but little over a week within which to procure tlie money necessary to complete tlie purchase, and obtain title to the property. A resort to legal proceedings was, therefore, impracticable, even could it be assumed that they would result favorably to the committee. In view of this situation it was suggested that an arrangement might be made with some other trust company, to which the Holland Trust Company assented, and subsequently an arrangement was made with the Central Trust Company. But in order to procure the loan from the Central Trust Company, Coppell and Withers were obliged to pledge all of the bonds which had been deposited with them; to advance all moneys in excess of $500,000, which might be needed for reorganization purposes, and to personally guarantee the trust company against loss on their advance of $500,000. With the funds thus obtained from the Central Trust Company, supplemented by the moneys of the said Coppell and Withers, they (the said Coppell and Withers) were enabled to pay the sum which the Holland Trust Company had advanced, together with the balance of the purchase money and such expenses as were incurred in the work of reorganization.

After this sale under the decree foreclosing the first consolidated mortgage, a new corporation called the North and South Bailroad Company of Illinois was organized through the efforts of the said Coppell and Withers, and the property which had been purchased under the several foreclosures was conveyed to the new corporation, at which time these securities, which were provided for by the reorganization agreement, were created and issued bv such company to Coppell and Withers.

Coppell and Withers found it impossible to dispose oi the new securities, and at different times they sent out circulars to the bondholders notifying them to participate in the carrying out of the plans which were suggested for relieving the situation which the said Coppell and Withers found quite embarrassing. But nothing resulted from these efforts. When November, 1890, came, the Central Trust Company informed Coppell and Withers that repayment of their advances must be made on or before the 1st of December, 1890. Of this fact, notice was given to the bondholders on the fifteenth of November, and a plan was suggested by Coppell and Withers for the taking of the new securities by the bondholders, on such terms as would accomplish the result. An answer was requested by the twenty-fifth of November, but none was received. Thereupon the trust company gave formal notice to Coppell and Withers of the sale of the securities on the tenth of December. Notices of sale were at once mailed to each of the bondholders by the chairman of the committee, but no action was taken thereon by the bondholders, and on the day appointed for the sale all of the securities which had been pledged, including the first consolidated mortgage bonds which had been deposited, and the new securities which had been issued to the committee, were bought in by the plaintiff Withers and the firm of Maitland, Phelps &.Oo., of which the plaintiff Coppell was a member. At the time of the commencement of this action all of such securities were in the possession or subject to the control of the original plaintiffs. During the pendency of the action, and on February 18, 1892, the plaintiff Withers died, and the action has been continued by the plaintiff Coppell, as survivor. The original plaintiffs in this suit made no other claim to these securities than that they were subject to a lien for the moneys advance, by them or upon their credit on behalf of the bondholders. And such claim is not unreasonable, provided, of course, Coppell and Withers acted in good faith and used such reasonable and ordinary care and caution as prudent men usually observe in the conduct of affairs of such character. It was apparently feared by'some one connected with the reorganization agreement that a situation might grow out of it in which it would be claimed that a mistake liad been made by the committee; that some other action would have been wiser, or that the securities could have been disposed of on better terms if the committee had proceeded along different lines. The result was a provision in the agreement that the members of the committee should not be personally liable for any mistake of law or fact. This provision will not be further adverted to, for, as we view it, the plaintiff is not called upon to invoke its aid in support of the judgment which has been rendered.

The charge preferred against the original plaintiff's of acting in bad faith seems to have very trifling support. It consists mainly in the fact that there were dissensions between the plaintiffs and Hollins, but for which it is suggested that the financial plan which had already been adopted would have proved successful. For these ■dissensions the defendants, among whom are Prank C. Hollins, would, hold the plaintiffs responsible.

It is assumed that the proper inference of fact to be drawn from the whole transaction is, that Coppell and Withers refused to act further with Hollins, because Hollins had so planned it that the articles of incorporation of the new corporation provided for by the bondholders’ agreement should contain only the names of directors friendly to him and presumably under his control. If such an inference of fact should be drawn it would not, when considered in connection with the other facts, support a rinding of bad faith. It is cpiite evident that Coppell and Withers were justified in asking to be relieved from the trust if Hollins was longer to continue actively with them. Down to that time he had accomplished but little in the direction of substantial benefit to the committee, but he had accomplished much towards the scheme which he apparently had in mind of controlling the management of the new corporation after the committee had done its work. At the very outset he seems to have cultivated the appearance of being the active and forceful member of the committee, so far as financing the reorganization was concerned. And this cultivation of appearances was, in a measure, temporarily successful, because it enabled him to have named in the articles of association the persons whom lie desired as directors. But it was only a partial success, for this act indicated to his associates on the committee that he had schemes in view other than those embraced within the agreement; that while working with his associates nominally he was attempting to secure some permanent or supposed advantage ■without their knowledge.

The very fact of this outside intrigue, in which he did not give his associates his confidence, was sufficient to justify them in hesitating to further act with him. But had it been the fact that the conduct of Hollins was not such as to justify the refusal of Coppell and Withers to have further personal dealings with him, it would not materially help out the charge of bad faith. There is nothing in that fact, standing alone, which would justify an inference that the dissension was occasioned by a desire on the part of Coppell and Withers to wrong the bondholders whom they represented; or that such dissension was due to a desire on their part to profit in any way out of the enterprise. On the'other hand, every act of Coppell and Withers, so far as we can see, indicated a desire on tlieir part to faithfully perform the trust committed to them. Nor does it appear, we think, that the dissensions between the original plaintiffs and Hollins have been the cause of the failure to work out the scheme of reorganization which the parties to the agreement contemplated. When the time came for action, Hollins was not prepared to take the number of bonds which he said in the first place he would take, nor was Seligman willing to take his bonds, and the Holland Trust Company did not take the bonds which Hollins said it would take. How much of real foundation there was to Hollins’ early boast, that he had provided for $450,000 of the purchase price of the property sold under the decree foreclosing the first mortgage, it is difficult to say. Its results, whatever the cause, were trifling.

The failure to negotiate enough of the securities with which to pay the purchase price was not encouraging, but, nevertheless, Coppell and Withers, by pledging their own credit, as well as the bonds intrusted to them, together with the securities of the new corporation, obtained the necessary money to complete the purchase. And when this had been accomplished they had done everything which they were called upon to do under the agreement, except the negotiation of such of the securities as were necessary to pay for the property of the new corporation and defray the expenses of the committee, and the distribution of the rest of the stock of the new corporation among the bondholders who were parties to the agreement. The failure to sell the securities does not seem to have been the fault of Coppell and Withers. There was no market for them. No one could be found who would invest in them. Not even the bondholders, who are defendants here, were willing to take them, if such taking involved the payment of the purchase price of the property of the new corporation and the expenses of the committee.

The trial judge found at Special Term that Coppell and Withers were not guilty of fraud, and that they acted throughout in good faith, and in that finding we concur.

We come now to the other questions presented by the appellants. The first is that the action was prematurely brought, the ground being that, as the delivery of the new securities to the old .bondholders has not yet taken place, the trust is not terminated, If this position be a sound one, then the present indications are that such an action as tbe one in question can never be brought. The securities cannot be delivered to the old bondholders until the committee shall have been paid for the property which they transferred to the new corporation, and upon the faith of which its securities were issued. And the action of the bondholders in the past certainly affords no assurance of a movement in that direction in the future. This statement indicates what the fact is, that the trust was practically terminated. All that the committee could possibly do, until after payment of the indebtedness, had been done. Every plan which they could think of had been suggested to the bondholders in order to obtain the money necessary for the release of the securities from pledge and their distribution among the bondholders. But all such suggestions -were without results. There was nothing, therefore, to do to relieve the situation but to bring this suit.

Appellants next say that the plaintiff, as survivor of himself and 'Withers, should not be repaid the money advanced by said Coppell and "Withers to buy the property for the new corporation out of the securities in his hands or under his control, because in nearly every one of the steps taken to bring about that result two of the members acted without notice to the third. That they did act without the third is unquestioned, but these defendants are not in a position to make the objection that the office and duties of a trustee cannot be delegated by one trustee to another, for the bondholders knew, in advance of any action being taken by two members of the committee in the absence of the third, that there was no other way by which the agreement could be carried out. And for that reason the bondholders, at a meeting held on the 6th day of December, 1889, at which the defendant Hollins had avowed his inability to provide- the means necessary to complete the purchase of the mortgaged property, appointed a special committee for the purpose of arranging a basis on which Coppell and Withers might proceed alone without the intervention of Hollins. The plan approved was that, while Hollins should not participate personally in the action of the committee, he should abide by tlie action of Mr. A. H. Joline, who had been selected by him as the counsel for the committee. This proposition was accepted by Coppell and Withers, and thereafter their action was taken accordingly, and certainly these defendants are not in a position to complain, because Coppell and Withers subsequently carried out such arrangement.

The objection taken to the substitution of the Central Trust Company for the Holland Trust Company is without force. There is nothing in the agreement expressly or impliedly forbidding it. The only provision relating to the depositing of securities is contained in the second clause, and provides that the bondholders shall “ deposit the bonds and coupons held by us, respectively, with Holland Trust Company at its office, No. 7 Wall St., New York city, to be delivered to the committee upon request, 'taking therefor its negotiable receipts, and at the same time we deposit to the order of the committee five dollars for each bond so deposited.”

While the Holland Trust Company was made the depository of the bonds and the five dollars required to be deposited with each bond, it was required to make delivery thereof to the committee on request. The plan upon which the committee were to proceed was marked out in the agreement, but in nowise were they restricted as to the source from which to obtain such moneys as they should be called upon, to borrow or raise, in order to carry out the plan.

No opportunity exists to charge that the change was capriciously made or that the bondholders have suffered thereby. Whatever differences exist between the committee and their counsel and the officers of the Holland Trust Company, as to the precise nature of the conversations between them, there is no pretense that the Holland Trust Company was willing to take the bonds that it is claimed to have promised to take. Nor is it the fact that it was willing to advance the money necessary to pay the balance of the purchase money. And at the time of the change from the Holland to the Central Trust Company, there remained only about a week within which to complete the purchase and take the first step in the plan of the bondholders and the committee.

The change was, therefore, a matter of necessity. There are several other technical objections, but they seem to us not to merit discussion.

As we view the situation presented by this record, Coppell and Withers in good faith did everything within their power to effectuate the plan of the committee. They did far more than they were called upon to do by the agreement to protect the bondholders, by advancing their own moneys and pledging their personal credit to secure moneys for the purposes of the agreement which they could not procure upon the faith of the securities which the bondholders intrusted to them. And the judgment awards to Coppell, as survivor of himself and Withers, no greater protection than is his due.

The judgment should be affirmed, witli costs.

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

Judgment affirmed, with costs.


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    Emil Slayton, Appellant, v. Hans Hemken, Respondent.

      Libel and slander — construction of a general release containing words of limitation — release, how avoided — ignorance of a particular wrong — words actionable per se — matter of inducement and innuendoes — proof of special damage.

    While all the parts of a general release are to be considered in determining its intent, the general rule of construction is that words of limitation, in order to restrict the effect of the general words, should precede and not follow the general words.
    It is not, however, an inflexible requirement that the mere order of the arrangement of the component parts of a release must necessarily control, hut the order has great significance.
    Where an instrument is in a proper form to operate as a general release, ignorance on the part of the releasor of a claim, or of a cause of action, does not impair the effect of the release at law as a bar to that claim or cause of action.
    In an action brought to recover damages for both libel and slander, the plaintiff recovered damages for a ivrong perpetra! ed on the 27th day of October, 1890. It appeared that the plaintiff and defendant had been partners in business, wmre exceedingly hostile, and that on November 5, 1890, they exchanged general releases; that this was an adjustment not only of partnership relations but of serious reciprocal charges of personal torts; that the release set up by the defendant in this action was in the usual form containing the usual general words, and that these were followed by the words “and particularly from all claims and demands whatsoever arising out of the partnership relations between said parties as members of the firm of Hemken & Slayton.”

      Held, that the release was intended to comprehend not merely commercial controversies, but also actionable personal wrongs, and ivas a bar to a recovery;
    That it included such wrongs, even though the party executing the release was ignorant of the existence of a particular wrong, unless it should be successfully attacked for mutual mistake or for the mistake of one party and the fraud of the other.

      The words complained of in tlie fourtli cause of action were “ lie (meaning tlie plaintiff) swindled and robbed me” (meaning tlie defendant).

      Held, tliat these words were slanderous per ae and imputed a crime, and that a charge submitting that question to the jury was erroneous.
    It appeared that tlie third cause of action was taken from the jury upon the ground that the words complained of were not in themselves libelous and that special damage bad been neither alleged nor proved ; but matter of inducement, clear and direct, showing the existence of circumstances extrinsic of the words, and which, when considered in connection with them, made such words defamatory, and innuendoes, applying the defamatory words to the plaintiff, were set forth.

      Held, that where such allegations were made it was not necessary to show special damage.
    Appeal by tlie plaintiff, Emil Slayton, from a judgment of tlie Supreme Court in favor of tlie defendant, entered in tbe office of the clerk of the county of New York on tlie 23d day of April, 1894, upon the verdict of a jury rendered after a trial at tlie New York Circuit, and also from an order entered in said clerk’s office on the 24th day of April, 1894, denying the plaintiff’s motion for a new trial made upon the minutes.
    Four causes of action were stated in the complaint in this action.
    The first cause of action charged the publication of a certain libelous article in the New York 1Jerald of October 28, 1890 as follows :
    “ The firm of llemken & Slayton was established at No. 14 Greene Street about a year ago, when I” (meaning tlie defendant) “came over from Germany, I put into the business $150,000. Mr. Emil Slayton ” (meaning the plaintiff) “ risked his experience only, but he valued that at a very high figure. Perhaps he imagined that I was pretty green, and that it would he a case of swapping his experience for my capital. Tlie firm imported millinery goods, gloves and small wares. I was absent in Europe four months, making purchases, and returned only a month ago. Then I discovered that in my absence Mr. Slayton had concocted a conspiracy with certain employees of the firm to defraud me. lie has a brother in Montreal, Theodore Slayton, who is in partnership with a man named Taff there. This firm did extensive business with us, and during my absence my partner had allowed them to fall into arrears to the extent of $25,000. It was part of the conspiracy, I believe. In order to protect myself at both ends of the line I went to Canada Avith my lawyer, Mr. Louis Frost, and instituted proceedings against the Montreal firm, Avliicli resulted in their making an assignment of the entire business to me, which will certainly protect me to the extent of their indebtedness to me. I returned from Montreal last Saturday, and had injunction papers served on my partner, Mr. Emil Slayton. His plan Avas to haul out of the firm on January first, and lcaAm me in a hole. Just Avliat is the size of the hole he dug for me, or, in other Avords, the exact extent of his inroads upon the capital of the firm, I have not yet been able to discover ; but after-lie got the papers ” (meaning after the plaintiff Avas served with the injunction papers) “ he didn’t sIioav up anywhere. My lawyer surmised that he had skipped to Montreal, and telegraphed to have him arrested in case he appeared there. In the absence of any exact knoAvledge as to the extent of his defalcations, the figures Avere put at $150,000, the full capital of the firm. Certainly he could not have got arvay with more.”
    The second cause of action charged that the defendant on or about the 10th day of November, 1890, maliciously and falsely published and caused tobe published certain libelous matter (being the libelous matter set out in the first cause of action) by circulating and causing to be circulated the newspaper in AAdiich AAras contained tlie alleged libelous matter.
    The third cause of action charged a similar publication and circulation by the defendant of certain other alleged libelous matter, contained in a neriodical known as the Dry Goods Economist, as folloAvs:
    “Ilans Ilemken, successor to Ilemken & Slayton, is to be congratulated upon the successful termination of his difficulties AAÚth a troublesome partner. The sympathy of the trade throughout the dry-goods and fancy-goods trade is Avith Mr. Ilemken.”
    • The fourth cause of action charged the defendant Avith malicious slander by speaking in the presence and hearing of one Jules Drevet and others of and concerning the plaintiff the false and defamatory Avords: “ He sAAdndled and robbed me.”
    At the close of the plaintiff’s case the court dismissed the first cause of action on the ground that the evidence Avas not sufficient to authorize a finding that the defendant was the person Avho had the intervieAY Avith the reporter from whose notes the article in cpiestio*. was taken, and tliat the defendant dictated the substance of the article subsequently published in the Tie-raid.

    The court also dismissed the third cause of action on the ground that the matter complained of was not libelous joer se.

    At the close of the proof of the respectivo parties the court sub’ mitted the second and fourth causes of action to the jury, which rendered a verdict in favor, of the defendant.
    The court instructed the jury that the matter contained in the second cause of action was libelous j)<yp se, and that if the jury believed that the defendant either personally or by his agents undef his authority-, purchased copies of the newspaper and caused them to be addressed aud mailed to his correspondents, that would be a publication of the libel and would entitle the plaintiff to recover such damages as he had sustained in consequence of that publication.
    The defendant’s counsel requested the court to charge:
    “ 1st. If the jury find that the copies of the Herald of October 28, 1890, containing the libel set out in the second cause of action were mailed by direction of the defendant prior to November 5th, 1890, then the liability for publishing the said libel was included in, •and released by, the release of November 5th, 1890, from the plaintiff to the defendant, and there can be no recovery upon the second cause of action.
    “ The Court— In answer to that, I say there is no evidence tending to show that those statements were made prior to that, and I am inclined to so charge you, within this request, that if you find any such testimony, then yon must exclude any ymblications prior to the fifth of November.
    “ Yr. Einstein— I take an exception to your honor’s not charging my request.
    “The Court — I charge it. I say, gentlemen, you cannot find for any publication prior to the fifth of November.”
    In regard to the fourth cause of action, the court charged the jury that if it found that the defendant had used the words complained of, and that they were such as to convey to a person understanding the relations between the parties, that the plaintiff had ionnnitted a crime, then the language used would be actionable and the plaintiff would be entitled to recover; or if the jury found that the statement was one tending to injure the plaintiff in his business or tend to prevent him from getting new employment or to make a new business, then the plaintiff would be entitled to recover.

      E. Ellery Anderson, for the appellant.

      B. F. Einstein, for the respondent.
   Patterson, J.:

The complaint herein was upon three causes of action in libel and a fourth in slander. The first and third were dismissed by the court and a verdict was rendered for the defendant on the second and fourth. We do not agree with the views of the trial justice as to the effect of the evidence of the plaintiff’s witness relating to the subject of the specific ruling by which this first cause of action was disposed of. The identification of the defendant as the person who, on the evening of the 27th of October, 1890, gave the reporter of the newspaper the defamatory statements that appeared in the article next day was sufficient, prima faeie ¡ but we are of opinion that the course taken at the trial witli respect to this cause of action was right for another and different reason; one which not only applies directly to it, but brings up the question of the correctness of the charge to the jury in submitting the matters arising in the second cause of action.

The wrong there complained of is alleged to have been committed on or about the 10th of November, 1890. There was a question of fact properly left to the jury, whether copies of the newspaper containing the libelous matter were mailed by the procurement of the defendant to divers persons before or after November 5, 1890. For some months before that date the plaintiff and defendant had been co-partners in business. Exceedingly hostile relations had sprung up between them. On the day last named releases under seal were exchanged. The court charged that the release was a bar to all right of action for anything involved in this action that occurred prior to November fifth. It was shown that on that day the parties came to an accord and settlement of all the matters in controversy between them; an adjustment of matters not only growing out of strictly business differences, but, as the record discloses, involving serious torts. The instrument was in form a general release with its customary sweeping technical verbiage followed by the words “ and particularly from all claims and demands whatsoever arising out of the partnership relations between said parties as members of the firm of Homken & Slayton.”

Kegard being liad to all the relations existing between these parties, we cannot say the instruction given to the jury was error. Something more than mere “ partnership relations ” or business demands and causes of action were in dispute. Bitter wrongs were alleged on both sides. Fraud and crime liad been imputed to the plaintiff, who in turn accused the defendant of having caused his arrest and maligned him. Personal torts were, therefore, under consideration, and what was in negotiation before the release and became effected by it was a general settlement of all the outstanding differences and an abandonment of the respective grievances, whatever they might be, of the parties. Had the release been so drawn as to indicate a purpose to reserve anything from its operation, it would certainly be strictly limited in interpreting it. The only ground upon which such a limitation is sought to be impressed upon it by the appellant is by force of the words above quoted. The rule respecting the construction of releases is that, although taken most strongly against the releasor, yet general words are to be construed by their context, and, if there appear a clear intent to make a limitation or exception, it shall be allowed. Therefore, recitals are said to control the general clause and make it special, and so-the particular subject of the dealing out of which the release arises may, if distinctly stated in the instrument before the general clause, confine the effect of that general clause to matters directly connected with that particular subject. But it is all a matter of intention. If the instrument is in a form to operate as a general release, ignorance of a claim or cause of action does not impair its effect at' law as a bar to that claim or cause of action. (Kirchener v. H. H. S. Co., 135 N. Y. 182.) But, while all parts of the instrument are to be considered in determining its intent, the general principle of construction has been that the words of limitation should precede and not follow the general words. Thus, in Jackson v. Stackhouse (1 Cow. 122,126) the court says : Where there is a particular recital and then general words follow, the general words shall be qualified by the particular recital.” It is not to be inferred from this that it is an inflexible requirement tliat tbe mere order of arrangement of the component parts of the release must necessarily control; but that order is of great significance, as is illustrated by Dunbar v. Dunbar (5 Gray, 103, 104, 105). There words of general release were followed by the words “ and particularly from the debt and costs in two actions,” etc. Shaw, Oh. J., for the court, says: “ Certainly great liberality is allowed in construing releases. The intent is to be ^sought from the whole and every part of the instrument, * * * so where certain debts, claims, and subjects of controversy are released, followed by general words, they shall be construed to be limited to the subjects enumerated, or those of a like kind and character, if such be the fair intent. (Simons v. Johnson, 3 B. & Ad. 175).” The Dunbar case seemed to turn largely upon the fact that the releasor did not first specify the particular tilings and then add the general clause, but vice versa. Here is the same description of release, using the same 'words, “ particularly from.” Obviously it comprehended something more, than mere business or commercial controversies. Actionable personal wrongs were, and were intended to be included, and, under the Kirchener case, ignorance of the existence of any particular wrong does not destroy the legal effect of the release, although it might have been attacked for mutual mistake, or mistake of one party and fraud of the other, an opportunity to do which was giren by the justice at the trial, but was not availed of. Under this construction the charge was not erroneous, and the dismissal of the first cause of action was proper, for the alleged wrong therein set forth was perpetrated on the twenty-seventh of October, and was, there fore, fully released.

The third cause of action was taken from the jury on the ground that the words complained of were not in themselves libelous, and .special damage was neither alleged nor proven. But matter of inducement, clear and direct, showing the existence of circumstances •extrinsic of the words, but which, when considered in connection with them, made such words defamatory, was plainly set forth in the •statement of that particular cause of action, and innuendoes appropriately making the application of the defamatory words to the plaintiff were also set forth. With such allegations it was not necessary to show special damage, for an action may be maintained without it, as was lielcl in the recent case in this court of Gideon v. Dwyer (87 Hun, 246). The disposition made of this cause of action at the Circuit was, therefore, erroneous.

The words complained of in the fourth cause of action are, “he (meaning the plaintiff) swindled and robbed me (meaning-the defendant).” The court left it to the jury to determine the actionable character of these words, and whether it was the intention to use them as imputing crime, or in a sense that would injure the plaintiff in his business; and, giving the words their ordinary significance, whether a person cognizant of the-relations existing between the parties and hearing the words would understand that a charge was made that the plaintiff had committed a crime. As this instruction was given it was error. The words were spoken to one Donnenberg in the hearing of the witness Ahlborn. They are plainly slanderous per se. To relieve them of that quality they must have been explained or in some way limited to particular facts, or shown to have been oj)olcen to some one having’ knowledge or information of such facts. (Hayes v. Ball, 72 N. Y. 418; Phillips v. Barber, 7 Wend. 439.) Ahlborn says the defendant explained to Donnenberg “what the trouble was between him and Mr. Slayton,” but does not recollect the explanation. Not one word other than those complained of can the witness, recall. The case is, therefore, lacking in any kind of proof of explanatory matter, and the naked defamatory words spoken to Donnenberg were alone before the court. The words “ swindled ” and “robber” each have a well-known and but one signification. A robber is a thief, and to say of a man “ you are a thief,” imputes larceny (Solomon v. Dutton, 10 Bing. 402), and to say “he robbed J. W.,” imputes crime also. (Tomlinson v. Brittlebank, 4 B. & A. 630.) So here there is a direct charge that the plaintiff robbed the defendant. It stands alone, unexplained, without evidence of circumstances showing anything from which an inference could be drawn that the words used were to be understood in any mitigated sense, or that the person to whom they were spoken, had any reason from knowledge or information possessed by him to understand them in any other than their ordinary meaning.

For the errors referred to relating to the third and fourth causes of action the judgment and order appealed from must be reversed and a new trial ordered as to such causes of action, with costs to the appellant to abide the event.

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

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