author: Daottorth, J.

text:
    The Bank for Savings in the City of New York et al., Respondents, v. William R. Grace, Mayor, etc., of the City of New York, et al., Appellants.
    “ City stock ” of the city of Hew York, held by the commissioners of the sinking fund, is not an indebtedness of the city within the meaning of the constitutional provision (State Const., art. 8, § 11), which prohibits a city of over one hundred thousand inhabitants, whose present indebtedness exceeds ten per centum of the assessed valuation of its real estate subject to taxation, from becoming indebted in any further amount. The indebtedness referred to is one to be met in the future by taxation, and city stocks so held are not debts which the municipality can be called upon to pay. (§ 9, chap. 99, Laws of 1812; chap. 225, Laws of 1845, §§ 102, 119, chap. 335, Laws of 1873; chap. 383, Laws of 1878.)
    The history of the municipal legislation in said city in respect to the sinking fund given.
    (Argued March 23, 1886;
    decided April 30, 1886.)
    Appeal from judgment of the General Term of the Court of Common Pleas in and for the city and county of New York, entered upon an order made February 1,1886, affirming a judgment in favor of plaintiffs, entered upon an.order overruling a demurrer to the complaint herein.
    This action ’ was commenced by certain individuals and moneyed corporations, citizens and tax payers of the city of New York, and holders of bonds and stocks issued by it. They sue on behalf of -themselves and all others similarly situated, and by their complaint show that the assessed valuation of real estate of the city, subject to taxation for the year 1884, was $1,119,761,597, and for the year 1885, $1,168,443,137, and that ten per cent of these valuations is respectively, $111,976,160, and $116,844,314; that its funded indebtedness is already upwards of $126,000,000, and, therefore, as they allege, in excess of the indebtedness allowed by law; but it also appears by the complaint that upwards of $34,000,000 of this indebtedness is held by “ the commissioners of the sinking fund for the redemption of New York city stock,” and that the balance of indebtedness is at either estimate at least $19,000,000 less than ten per centum of the valuation of real estate above referred to; that the defendants, other than the mayor, compose the commissioners of the sinking fund, and are about to issue bonds of the city to the amount of $2,000,000 for the purpose of raising money for the dock department. The plaintiffs prayed that the defendants be enjoined from issuing these bonds or doing any thing to increase the debt or liability of said city. A preliminary injunction pursuant to that prayer was obtained. The defendants demurred to the complaint on the ground that it did not state facts sufficient to constitute a cause of action. The Special Term continued the injunction and overruled the demurrer. Its decision was affirmed by the General Term, and the present appeals were then brought.

      E. Henry Lacombe and Charles E. Miller for appellants.
    The assets of the city are not to be deducted from the apparent gross total of indebtedness in determining whether its indebtedness is in excess of the constitutional limitation. (Scott v. City of Davenport, 34 Iowa, 208 ; City of Council Bluffs v. Stewart, 51 id. 385.) The word “ indebtedness ” in the constitutional amendment is to be taken in its ordinary significance or meaning. (Concurrent Resolution, Statute Book of 1884, 739, Worcester’s Diet.) A debt is a sum of money due from or owing by one person to another. (3 Bl. Com. 154; Newell v. People, 3 Seld. 124; Leggett v. Bk. of Sing Sing, 24 N. Y. 283; Jacob’s Law Diet., word “ Debt.”) Although the purchased stocks may be held by the commissioners of the sinking fund as collateral security, nevertheless they do not thereby constitute an indebtedness. (Colebrook on Coll., § 2; In re Loder, 4 Ben. 305, 328.)

      Simon Sterne for respondents.
    ' The sinking fund commissioners are trustees of an express trust, who, in contemplation of law, hold in their hands money, proceeds of revenues assigned and pledged to such trustees. (Laws of 1812, chap. 99, § 9; 2 Hoffman’s Laws relating to the city and county of New York, 754,759; Corporation Ord. Revision, 1845, p. 211; Rev. Ord. 1859, 190 et seq.; Rev. Ord. 1866, 200 et seq. ; Rev. Ord. 1880, 31 et seq.) All the purchases of stock by the sinking fund commissioners are investments, be they city stock, United States stock or State stock, and are to be treated upon the same basis. (Bouvier’s Law Diet. [15th ed.] 642; Worcester’s Diet., “ Sinking Fund.”) The purchases of city bonds or stock by the sinking fund commissioners are not ex-tinguishments, cancellations or redemptions of such stock or bonds, but are held for investment of the fund. (Laws of 1878, chap. 383; Laws of 1882, chap. 410, §§ 171-177, 191-2, 144, 146.) The property in the hands of sinking' fund commissioners, such as the sinking fund commissioners of the city of Mew York, is clothed with the character of private property, and is juridically disassociated from and to some degree adversely to the creator of the trust. (20 Parl. Reg. 1786 ; Price on the Public Credit [7th ed. 1812], 303, 314; 3 Works of Alexander Hamilton by J. 0. Hamilton, 1851, 503 ; 2 Executive Doc’ts, 28th Congress, 1st Session, 275, prepared by Jonathan Elliott; 4 Max Wirth National Ockonomie, 678; Garnier’s Traite de Finances, 1862, 247; People, ex rel. Hopkins, v. Bd. Sup'rs of Kings Co., 52 N. Y. 563.) The sinking fund of the city of New York is not only a fund for the redemption of the city debt in the hands of trustees by an express trust, but it is a fund which is mortgaged and pledged in various orders of priority, to different creditors, and is, therefore, inviolable, in every sense, and not available for any purpose, by the city of New York, except in the strict fulfillment of this pledge. (Bd. of Liq. of City Debt v. Mun. No. 1, 6 La. Ann. 21; Brooklyn Park Com'rs v. Armstrong, 45 N. Y. 246; Ogden v. Saunders, 12 Wheat. 213; Green v. Biddle, 8 id. 84; Van Hoffman v. City of Quincy, 4 Wall. 552 ; Bronson v. Kinzie, 1 How. 316; Pallairette's Appeal, 67 Penn. 479.) Payment of money into a sinking fund is not pro tanto payment of the debt, for which the sinking fund is provided. (Un. and C. P. Sink. T. Cas., 99 U. S. 700, 718, 719.) The constitutional amendment of January 1, 1885, does not in terms, nor by any reasonable interpretation, permit the amount held by the sinking fund commissioners to be deducted from the city debt, even if the court were to hold that the property of the sinking fund were an asset of the city. (City of Council Bluffs v. Stewart, 51 Iowa, 385; Scott v. City of Davenport, 34 id. 208; Gatch v. City of Des Moines, 63 id. 721; French v. City of Burlington, 42 id. 498, 614; Sackett v. City of Albany, 88 Ind. 473; S. C., 45 Am. Rep. 467; Prince v. City of Quincy, 105 Ill. 138; S. C., 44 Am. Rep. 785; Grant v. City of Davenport, 36 Iowa, 196; City of Springfield v. Edwards, 84 Ill. 626; Dively v. City of Cedar Falls, 27 Iowa, 227; Nat. State Bk. v.
      2nd. Dist. No. 39, 39 id. 490; McPherson v. Foster, 43 id. 48 ; Mosher v. Ind. School Dist., 44 id. 122 ; Cummings v. Fitch, 40 Ohio St. 56; City of Erie, 91 Penn. 398; Law v. People, 87 Ill. 385 ; Prince v. City of Quincy, 105 id. 138, 215 ; Buchanan v. Litchfield, 102 U. S. 278; Litchfield v. Ballou, 114 id. 190 ; Un. P. R. 22. Co. v. Buffalo Co., 9 Neb. 453; Sackett v. New Albany, 88 Ind. 473 ; 45 Am. Rep. 467; Bk. of Columbus v. Hines, 3 Ohio St. 1; 1 Banks’ Rev. St. [5th ed.] 936.) Any interference with the right of the use of private property is as much the taking of private as the actual appropriation would be, and without compensation, as provided by the Constitution, is an act of spoliation. (People v. Marks, N. Y. Week. Dig., Oct. 16, 1885, 122.) It was the clear intent of the people and of the legislature, in enacting the constitutional amendment of January 1, 1885, to limit the city debt, without reference to the amount held by the sinking fund commissioners. (Haworth v. Overod, 6 Q. B. 307; 1 T. R. 52; Buchanan v. Litchfield, 114 U. S. 190; Potter’s Dwarris, 215.) The plaintiffs have sought the proper remedy to protect their rights’ against the act threatened by the sinking fund commissioners and the officers of the city government in impairment thereof. (Laws of 1881, chap. 531; Code of Civ. Pro., § 1925 ; Sackett v. City of Albany, 45 Am. Rep. 472 ; Dill. Mun. Corp., § 914; City of New London v. Brainard, 22 Conn. 552; Webster v. Town of Harwinton, 32 id. 131; Colton v. Hanchett, 13 Ill. 615; Barr v. Deniston, 19 E. H. 170; Mayor v. Gill, 31 Md. 375; Merrill v. Plainfield, 45 N. H. 126; Roberts v. Mayor, etc., 5 Abb. 41; Willard v. Comstock, 58 Wis. 568; S. C., 46 Am. Rep. 657; Att'y-Gen'l v. Wilmington, 2 Del. Ch. 576.)
   Daottorth, J.

■ The question to be determined is, whether or not the u stock or fund created by the corporation of the city of New York,” and held by “ the commissioners of the sinking fund,’’ can be brought within the purview of that provision of the Constitution on which alone the plaintiffs rely, and which declares that no" city ‘ ‘ of over one hundred thousand inhabitants, whose present indebtedness exceeds ten per centum of the assessed valuation of its real estate subject to taxation, shall be allowed to become indebted in any further amount, until such indebtedness shall be reduced within such limit.” (Art. 8, § 11, N. Y. Const, as amended November 4, 1884.) We think it plain that the indebtedness here referred to is an indebtedness to be met in the future by taxation, for (1) before its possible limit can be defined, the value of the , real estate subject thereto must be ascertained. (2.) By the express words of the provision, water bonds issued for a' fixed term are not to be included, but a sinking fund must be created “ for their redemption.” (3.) So the issue of certificates of indebtedness or revenue bonds in anticipation of, and payable out of the taxes for the current year, is permitted. The mischief to be prevented was the creation of. an excessive debt for local improvements, or public works, or the loaning of municipal credit, so payable that the burden should not fall upon those who contracted the obligations, or on their revenues, but on posterity. The judgment appealed from stands upon the idea that the debt of the city of- New York is already in excess of the measure allowed by the Constitution, and it must prevail if the city stocks held by the commissioners of the sinking fund are so circumstanced that their satisfaction can directly or indirectly involve taxation, or, putting the proposition in another form, if the city stocks held by the commissioners are debts which the municipality can be called upon to pay. This depends upon the construction and effect of the' statutes and ordinances relating to the sinking fund. The first to which our attention is called is a statute entitled “ An act to regulate the finances of the city of New York,” passed June 8, 1812. (Chap. 99, § 9.) It authorized the city of New York to create a sinking fund to pay the principal, and pledged the credit of the State to provide for the interest, of a public debt. This was followed by an ordinance of the mayor, etc., of the city of New York, passed August 9, 1813 (page 105, quoted as from the manuscript ordinances of New York, passed during the mayoralty of DeWitt Clinton), entitled a law making provision for the redemption of the New York city stock.” The preamble, which in this case at least may be said to state the ground and cause of making it, and to be a key to open the minds of the makers of the act,” so that what was really intended by it may be seen, declares that: Whereas, it is highly useful to establish a fund out of which purchases of the New York city stock may, from time to time, be-made whenever the same can be done at par or the true value thereof, whereby the said stock will be prevented from depreciating, and the redemption of the same will be regularly progressing, and then enacts that all moneys derived from certain specified sources, “-and all such other sources of revenue or sums of money as the said corporation shall hereafter think proper to appropriate to that purpose, shall and hereby are firmly and inviolably pledged, appropriated and applied to and constitute and form the fund for the purpose aforesaid until the final redemption of the whole of the said stock.”

Whether we give these words their ordinary and common meaning, or define the completed act according to its legal signification, it is difficult to find that those who used them had any other object in view than the extinction of the stock, to the purchase of which the funds were to be applied. The fund was established by the party who created or made the stock; the utility anticipated by that party was, first, redemption so far as the money in hand would go, and, second, the maintenance of the market value of the unredeemed stock. Re-purchase of notes or other evidences of debt, by the issuer from the holder, is redemption, and is equivalent to and has the force of payment. Here the whole fund is to be so applied until final redemption of the whole stock — which in this connection means until the maturity of the stock, when by its terms it is no longer an executory obligation. We find nothing in the other provisions of the statute to conflict with this view. The purchases were to be made under the direction of the mayor, recorder, comptroller, and treasurer of the city, and the chairman of the finance committee, for the time being, who are denominated as the “ commissioners of the sinking fund for the redemption of the New York city stock.” They were authorized to invest all the moneys of the fund in the purchase of the city stock, or if that could not be had, then as they may see fit, in the stock of the United "States or in bank stock, but these last were to be sold and the proceeds invested in city stock ” when, in the opinion of the commissioners, it could be "done without in jury. In the meantime the moneys constituting the fund were to be deposited in the treasury to their credit, “kept separate and distinct from other moneys of the corporation,” and to be drawn on their warrant when required “ for such purchase and investments.” These stocks of whatever kind, when purchased, were to be transferred to the treasurer of the city “ in trust for the sinking fund for the redemption of the city stock,” to be held by him until its final redemption, and the interest of the stock so purchased is “at each quarterly payment thereof, and the interest and dividends on the other stocks to be carried to the credit of the sinking fund,” and thereafter to form part of it.

In 1817 (Ordinances, p. 69) a similar ordinance was enacted, with some change in the detail, but none in the preamble or the expression of its general purpose. It did not allow the purchase of bank stock, the treasurer was no longer to act as trustee, but the city stock bought by the commissioners “ was to be held by them until the final redemption of the city stocks.” In 1821 (Ordinance, chap. 32) the commissioners were allowed to invest in State stocks, or stock of the United States, but preference was at all times to be given by them to the purchase of Hew York city stock, if it could be obtained at a reasonable rate. Although ordinances under the same title were enacted in 1823 (Chap. 31), in 1827 (Chap. 31), no material change was made. In 1834 (Chaps. 9, 10) the clauses of former ordinances were rearranged, and it was declared that the powers conferred on the commissioners should be so construed as to render it imperative on them at all times to give preference to the purchase of the city stock, if it could be procured at a reasonable rate, and they were permitted in their discretion to sell such stock of the United States, or of this State, as they held, and purchase any of the city stock at such prices as they might judge best for the public interest.

In 1839 the law was re-enacted and a clause added, by which the terna city stock,” therein used, was declared to mean any stock or fund created by the corporation of the city of Hew York. (§ 11, tit. 1, chap, xvii, of Corporation Ordinances.) Up to and including this ordinance it was made the duty of the commissioners to hold the city stock purchased by them until its final redemption. In 1844 (Corporation Ordinances, p. 211) these provisions and some additional features were included in a new ordinance then passed, section 4 of which (Tit. 4) declares that the "commissioners shall,- from time to time, invest the moneys which shall constitute the sinking fund' for the redemption of the city debt, or as much as they can, in the purchase of stocks created by the corporation of the city of Hew York, at the market price, not exceeding the par value thereof; and if, at any time, such investments cannot be made at par, then the said commissioners shall be authorized to invest the said moneys, or such part thereof as they may see fit,- either in • the purchase of the said stock, or the stock of the State of Hew York, or the stock of the United States, notwithstanding' such stocks may be above the par value thereof.”

Section 5 makes it imperative to give preference to city stock if it can be procured at a reasonable rate.

Section 6 permits them to sell the United States or State stock and invest the proceeds in city stock, and section 7 provides that if they “ shall have invested any part of the said fund in the purchase of city stock, and shall at any time thereafter be enabled to purchase any of the city stock which shall be by its terms redeemable at an earlier day, they may forthwith sell the same and invest the net proceeds in such other city stock, if in their opinion such exchange shall be desirable and beneficial to the public interest,” and it also declares (§ 10, id.) that “the city stock which shall be purchased by the commissioners shall not be canceled by them until the final redemption of the said stock, and all interest accruing thereon shall regularly be carried to the said sinking fund for the redemption of the city debt.”

We are referred to no ordinance of later date which in any material particular changes the scheme which the ordinance of 1844 re-enacts or establishes; but before considering the effect of these provisions, it is important to look at subsequent statutes which bear upon this matter. In 1845 (Laws of 1845, chap. 225) it was declared that the ordinance last referred to — that of 1844 — should not bé amended without the consent of the legislature, except by appropriating to and for the purpose of the sinking fund additional revenue, and that it should “remain in full force until the whole of the debt created for the introduction of the Croton water into the city of New York should be fully redeemed.”

The provision of section 7 (supra) of that ordinance, taken in connection with section 10 (supra), is cited by the respondent as having a material bearing upon the question before us. It is said, however, for the appellant, that so far as the ordinance (§ 7) confers power upon the commissioners to sell stock after its- purchase by them, it was repealed by the Laws of 1873 (§ 102, chap. 335), which declares “It shall be lawful for the commissioners of the sinking fund of the city of New York in their discretion, and they are hereby empowered in such discretion to cancel any portion of the indebtedness of the said city held by them, whióh is by law redeemable from the sinking fund, and to sell any stocks and bonds which they may hold that are not payable from said fund, and with the proceeds of such sale of stocks and bonds to buy any other stocks and bonds which are payable from said fund.”

We shall refer again to the clause permitting cancellation, but upon the proposition just referred to it is not material, for no act of that kind has been attempted. Nor can we give to the other branch of the sentence the effect claimed for it by the learned counsel for the appellant. The act of 1873 (supra, § 119) expressly declares that the ordinances of the common council of the city of New York then in force should so continue, The ordinance of 1844 was one of them. It was, as we have seen, rendered inviolable by the act of 1845 (supra), and we can discover no intention in the act of 1873 to derogate in any way from the power conferred by the ordinance. The contention of the learned counsel is that' all city bonds and stock are payable from the sinking fund, and as the statutes permit the sale of such only as are not payable from the sinking fund, the permission to sell, given by the ordinances, is repealed. It might be conceded that if the assumption of fact and its application be as claimed, the authority given by the ordinance and the authority given by the statute cannot co-exist. The ordinance permitting the sale of any city stock, when that redeemable at an earlier date can be purchased, while the statute takes no notice of this distinction, but allows only such stocks or bonds as are not payable from the fund, to be sold. We cannot learn from the complaint that there are no city stocks or bonds other than those payable from the sinking fund. A repeal by implication can only be presumed in a clear case, and upon the statement in the complaint we cannot say that effect could not be given to the ordinance and also to the statute. It seems apparent then that the stock of the city, when issued, represents an indebtedness of the city; while held by the commissioners it is the basis of increase by interest computed thereon, which must be regularly carried to the sinking fund, and the stock may again be put upon the market, where it becomes a valid obligation, even if it had for a time ceased to be a debt of the city. From the time of its inception then to its final redemption it is the subject of sale; at all times the basis of interest, and, in the hands of all owners save the commissioners, a part of the apparent indebtedness of the city. When then is it to be deemed paid ? Although, as I have already suggested, the necessary consequence of purchase was extinguishment of the debt, we find in 18iá a prohibition against cancellation of the evidence of it, accompanied by permission, for a certain purpose, to put it again in circulation. The statute last cited, however (that of 1873), becomes very important, not only in removing the prohibition against cancellation, but as disclosing the legislative understanding as to the true condition and character of the stock while in the hands of the commissioners. By that act it was made lawful for them, without the application of any fund or the interposition of the city treasurer or other financial agent of the city, without new consideration, in form or substance, but in their mere discretion, to cancel, that is, to wipe out any portion of the indebtedness of the city held by them which is by law redeemable from the sinking fund, and that in view of the provisions of the ordinance of 1844 (supra), includes all of it. Clearly the legislature looked upon the stock so held by commissioners as already redeemed or paid, and while it is difficult to see why its cancellation' should have at any time been prohibited, it is made apparent by this statute that the purpose was one of form only and not of substance. Its actual cancellation deprived it of no efficacy, for by redemption it was already for all practical purposes extinguished.

But notwithstanding all this we cannot overlook the fact that if the ordinance of 1844 (§ 7) is still in force, the commissioners may, in the exercise of a like discretion, sell the city stock at any time held by them. This is permitted, however, for a single purpose — to buy with .the proceeds of such sale other city stock redeemable at an earlier day, and the character of the transaction is indicated by the terms on which alone it may take place, viz.: if in the opinion of the commissioners “ such exchange shall be desirable and beneficial to the public interest.” This word exchange ” declares the nature of an act, the result of which does not enlarge the body or amount of indebtedness for which taxation is possible. Stock of the State, or of the United States, may be sold. City stock may be exchanged ” by the commissioners, and the annual report of their proceedings must specify the disbursements, purchases, ' ‘ exchanges ” and sales made by them. (§ 15 of same ordinance.)

The view already expressed as to the effect of purchase, and the meaning of the word redemption,” as used in the sinking fund ordinance, finds confirmation in the statute of 1878 (Chap. 383), which provides that “ the fund known as the sinking fund of the city of New York, for the redemption of the city debt,’ shall be continued, and any excess there may be in said fund, after providing for the payment of the bonds and stocks of said city, payable therefrom, as provided by law, shall form a fund for the payment of other bonds and stocks of said city and county, as by this statute provided,” and declares that the moneys and revenues of the city, constituting the sinking fund, shall continue to be appropriated to the fund, until all of said bonds and stocks of the city shall be fully and finallyredeemed. Indeed in all the statutes and ordinances relating to the sinking fund, we find the words “ purchase,” “redemption” and “payment” used interchangeably, evidently referring to an act which in ordinary transactions, when performed by the debtor or the agent of the debtor, operates to discharge or extinguish a debt or obligation.

The argument of the respondent has been instructive. Its object is to show that the city stocks purchased by the commissioners are held by them as an investment, to be applied ultimately indeed in payment of the city debt, but not immediately, or by the act of purchase. That by it, provision merely is made for payment of the city debt, and that until the period of final payment arrives, the stock remains a debt of the city in all respects as it was before. If that be so, the sinking fund would seem to have been established for no purpose; that although many millions of money belonging to the city have been paid out of it in order that, according to the law of its creation, “ the redemption of the Hew York city stocks may be regularly progressing,” no progress has been made. The entire debt exists, but as to part a change of creditors only. But the object of every sinking fund is to diminish the debt whose existence warranted its foundation, and this general principle lies at the foundation of the scheme provided for the city of Hew York. The construction we give .to it cannot lead to a diversion of the fund, but to the accomplishment of its object.

It satisfies also the intent of the constitutional prohibition. That is aimed at an actual, not a theoretical indebtedness — at a substantial liability which can be discharged only by the enforcement of a tax or an assessment which, when levied, will be a charge upon the tax payer and a burden for him to remove — not a formal obligation which may remain as evidence of a once existing debt, but which can in no way be regarded as a present debt to be enforced, and which, if not' before canceled in the discretion of the commissioners, becomes waste paper by the mere efflux of time.

We hold that the stock purchased is not a debt against the city within the meaning of the constitutional prohibition. Nevertheless payment of interest upon it may be compelled, because for that purpose the ordinance expressly enacts that all interest accruing upon the purchased stock shall regularly be carried to the sinking fund for the redemption of the city debt. It is by force of the ordinance that interest is to be credited, not by reason of the contract or the terms upon which the stock was issued. Nor could that interest or other money be applied in payment of the stock held by the commissioners. That was paid by the purchase, yet if the argument of the respondent should prevail, it must be paid again before its ex-tinguishment.

The question, then, really comes to this: What amount would be required to pay off the city debt if it all came pres*, ently to maturity? Only one answer seems possible—■ $92,000,000, or so much as is equal to its bonds or stock, not including that held by the sinking fund. . The theory of the respondent is that the commissioners would even then be required to exact payment from the city. We find no foundation or reason for the argument. A debt once paid has no existence, and it is impossible that taxation should be resorted to in order to meet a fanciful objection, or an obligation which by redemption is in the hands of the debtor. Such may be the apparent, it is not the real debt. The result reached by us in no respect impairs the validity, or diminishes the usefulness of ' the sin king fund. It will still serve the purposes for which it was created, in securing the redemption of the city stocks and the upholding of its credit.

We have not overlooked the provisions of the act of 1878, upon which much reliance is placed by the learned counsel for the respondent, especially section 4, which enacts that “ between, the city and .its creditors, holders of its bonds and stocks as aforesaid, there shall be, and there is hereby declared to be a contract that the funds and revenues of the city and the funds to be collected from assessments as aforesaid, by this statute pledged to the sinking fund for the redemption of the city debt, shall be accumulated and applied only to the purposes of said sinking fund, until all of said debt is fully redeemed and paid as herein provided.”

It relates to the funds and revenues of the city, and to the management of the sinking fund itself, and not to the effect of purchase upon the city stock bought by its moneys. That stock can in no sense be regarded as security. Its extinguishment increases the value of the stock or city debt held by its creditors.

We are unable to -agree with the learned court below upon the only question presented by this appeal. Its judgment should, therefore, be reversed. It follows that the injunction order should also be reversed, and as the point upon which the demurrer turns cannot be obviated by an amended pleading, the complaint should be dismissed, with costs, and in this court with costs of one appeal.

All concur.

Judgment accordingly.


source: Caselaw Access Project

author: Andrews, J.

license: Public Domain

text:
    Henry Stedeker, Respondent, v. Henry O. Bernard, Impleaded, etc., Appellant.
    The common-law rule that in an action against several defendants upon an alleged joint contract, the plaintiff must fail unless he establishes the joint liability of all the defendants is no longer the rule of procedure in this State.
    Under the Code of Civil Procedure (§ 1205), and it seems under the former Code of Procedure (% 274), where in such an action a separate liability of one or more of the defendants is established on the trial, judgment may be taken against such defendant or defendants.
    Where in such an action one of the defendants, while denying m his answer the joint liability avers facts which show that the plaintiff is entitled in any event to a separate judgment against him, the plaintiff may before trial of the issue so made apply for judgment against him. In an action upon a check signed in the name of a firm, of which defendants were the individual members, defendants joined in an answer which denied that the check was executed by the copartnership, but averred in substance that it was made by defendant B. for his own purposes and not in the business of the firm, which was known to plaintiff when he received it. Held, that plaintiff was entitled to, and might apply to the court before trial for judgment upon the pleadings against B.
    (Argued April 14, 1886;
    decided April 30, 1886.)
    Appeal from judgment of the General Term of the Court of Common Pleas, in and for the city and county of Hew York, entered upon an order made June 25, 1883, which affirmed a judgment against defendant Bernard, entered upon an order of Special Term.
    The complaint in this action alleged in substance that defendants were copartners doing business under the firm name of H. 0. Bernard & Co.; that said firm executed and delivered to plaintiff a check for $5,000, which was dishonored on presentation to the bank upon which it was drawn.
    The answer denied that the check was made on behalf of or by the firm, or in its business," but averred in substance that it was executed by defendant Bernard individually in his private business, all of which was well known to plaintiff when he took it. On motion by plaintiff for judgment against the defendants on account of the frivoloushess of the answer, the court gave judgment against Bernard and directed that the action be severed and prosecuted against the other defendants with leave to them to amend their answer.

      James M. Smith for appellant.
    If the answer was good as to one defendant, it was good as to all. (Thompson v. Erie R. Co., 45 N. Y. 468, 472, 474; 481.) If either of the defenses set up in the answer is available it cannot be stricken out as frivolous. (People v. McComber, 18 N. Y. 326.) The answer was not frivolous. (Thompson v. Erie R. Co., 45 N. Y. 468, 474; Munger v. Shannon, 61 id. 251; Briggs v. Bergen, 23 id. 163; Youngs v. Kent, 46 id. 672; Strong v. Sproul, 53 id. 498 ; Cook v. Warren, 88 id. 39 ; Dixon C. Co.
      v. N. Y. Steel Works, 57 Barb. 447.) The action being a joint, and not a joint and several action as against the defendants, it was error to enter a separate judgment against one of the defendants without an amendment of the complaint. (Perry v. Chester, 53 N. Y. 242; Marks v. Mead, 1 Abb. 63 ; Newdecker v. Kohlberg, 81 N. Y. 301; Wright v. Delafield, 25 id. 226; Tooker v. Arnoux, 76 id. 307; Brown v. Ryckman, 12 How. Pr. 313; Kelly v. Barnett, 16 id. 135.) The notice given to defendant, that the answer was not properly verified, is not available for the plaintiff. He did not comply with the requirements of the law. He should have specified the particular defects complained of. (Snape v. Gilbert, 13 Hun, 494; Chemung Bk. v. Judson, 10 How. 133 ; Broadway Bk. v. Danforth, 7 id. 264; Sawyer v. Schoonmaker, 8 id. 198.) The verification is not insufficient. It is a substantial compliance with the requirements of the Code. (Wilken v. Gilman, 13 How. Pr. 227; Nienberger v. Webb, 24 Hun, 347.) A denial upon information and belief is not frivolous. (Nieuberger v. Webb, 24 Hun, 347; Cook v. Warren, 88 N. Y. 37.) Where the complaint charges a joint liability and the answer puts that question in issue, the issue must be disposed of by á trial and not upon expo/rte affidavits. (Fielden v. Lahens, 2 Abb. Ct. App. Dec. 111, 115, 118; Wright v. Delafield, 25 N. Y. 268, 270 ; Kay v. Whittaker, 44 id. 565, 571; Thompson v. Erie R. Co., 45 id. 472, 473; Youngs v. Kent, 46 id. 674.)

      John Graham for respondent.
    A judgment may be directed where an answer is frivolous. (Code of Civ. Pro., §‘537.) When several defendants are sued and one interposes a frivolous defense or makes default, a separate judgment may be taken as to that one. (Code of Civ. Pro., §§ 1204, 1205, 1206 ; Fielden v. Lahens, 6 Abb. Pr. [N. S.] 341; McIntosh v. Ensign, 28 N. Y. 169 ; Harrington v. Higham, 10 Barb. 524; Parker v. Jackson, 16 id. 33 ; Brumskill v. James, 1 Kern. 294.) The answer was ineffective for any purpose. (Fleischrman v. Stern, 90 N. Y. 110, 114.) Where a party elects to take judgment against one of several liable upon the same security, the security becomes merged in the judgment. (Candee v. Smith, 93 N. Y. 349 ; Davis v. Mayor, etc., 14 id. 506.)
   Andrews, J.

There is no denial in the answer, of the averment in the complaint that the defendant Bernard, executed the check in the firm name of H. O. Bernard & Co. Regarding the answer in the light most favorable to the defendant, it simply denies that the check was made by the copartnership, and this denial is coupled with the averment that it was made by the defendant Bernard, for his own purposes, and not in the business of the firm, which was known to the plaintiff when he received it. Upon the pleadings the defendant Bernard, by his own showing, was in any event liable upon the check. • If the action had gone to trial upon the issue presented, and it had been found in favor of the defendants, the plaintiff would nevertheless have been entitled to judgment against Bernard individually. The common-law rule' that in an action against several defendants upon an alleged joint contract, the plaintiff must fail unless he establishes the joint liability of all the defendants, is no longer the rule of procedure in this State. By the former Code (§ 274) the court was authorized in an action against several defendants, to render judgment against one or • more of them, leaving the action to proceed against the others, whenever a several judgment was proper. The court in construing this provision, did not limit its application to cases of joint and several liability, but considered it as authorizing a separate judgment where a separate liability of some of the defendants was established on the trial, although the cause of action, as alleged in the complaint, was joint only. (McIntosh v. Ensign, 28 N. Y. 169; Fielden v. Lahens, 2 Abb. Ct. App. Dec. 111.) Section 1205 of the present Code is quite as comprehensive as section 274 of the former Code, and requires the same construction. The plaintiff, however, was not, we think, bound to await the trial of the issue before applying for judgment against the defendant Bernard. He, not having denied that he made the check, but on the contrary having alleged under oath, in his joint answer with the other defendants, that it was his individual obligation, and not that of the firm, cannot object if the plaintiff takes him at his word, and elects so to consider it. We perceive no good reason why the plaintiff may not in a case like this, apply to the court before the trial of the issue, for judgment against the party, who, in his answer, while denying the joint liability, at the same time avers facts which show that the plaintiff is entitled in any event, as against him, to a separate judgment. We are not concerned with the position in which the other defendants will be placed by the separate judgment against Bernard. They do not appeal, and whether the judgment against Bernard merges and extinguishes any remedy against them, it is unnecessary to consider. (See Candee v. Smith, 93 N. Y. 349.)

The judgment should be affirmed.

All concur.

Judgment affirmed.


author: Earl, J.

text:
    Rome Savings Bank, Respondent, v. John Krug, Impleaded, etc., Appellant.
    Plaintiff, a savings bank, in 1871 loaned upon a note signed by twenty-one persons $3,000, and upon another signed by thirteen $2,000. The loans were for the benefit of a church, but to and on the credit of the makers. In 1874, to pay the balance due on the notes and to take up the same, defendants, forty in number, gave their note payable on demand. In an action upon the note, held, that conceding the bank had no authority, under its charter (Chap. 324, Laws of 1851), to loan its moneys upon the original notes, and that they “ were void as securities ” (as to which qumre), yet it could recover against the makers the moneys loaned, and having taken the note in suit in satisfaction of that' cause of action, and having surrendered the notes which were the evidence thereof, it was founded on a good "consideration, was in no sense unlawful, and was enforceable against the makers; also that as the note in suit was made, at least in part, by strangers to the former notes, it could not be said that it was taken simply in exchange for them.
    (Argued April 15, 1886;
    decided April 30, 1886.)

      Appeal from judgment of the General Term of the Supreme Court in the fourth judicial department, entered upon an order made April 5, 1884, which affirmed a judgment in favor of plaintiff, entered upon a verdict. (Reported below, 32 Hun, 270.)
    The nature of the action and the material facts are stated in the opinion.

      William Kernan for appellant.
    By the act creating the plaintiff and the amendment thereto, the plaintiff was not authorized to loan any of the money deposited with it upon the promissory notes of individuals, and was prohibited by law from making such loans ; therefore the two notes in exchange for which the note in suit was given werp void; and the note in suit was and is likewise void and furnishes no ground of action against the appellant, (N. Y. Fireman's Ins. Co. v. Ely, 2 Cow. 678, 682; People v. Utica Ins. Co., 15 Johns. 383; Bk. of Salina v. Alvord, 31 N. Y. 474; 1 R. S. 600, § 4, tit. 3, chap. 18; 1 R. S. 712, §§ 3-5 ; N. Y. St. L. & Tr. Co. v. Helmer, 77 N. Y. 64; Pratt v. Short, 79 id. 437, 443 ; No. R. Ins. Co. v. Lawrence, 3 Wend. 483; Laws of 1851, chaps. 100, 138, 245, 293, 469; Laws of 1875, chap. 371, § 27; Annual Report Banking Dept, for 1878, 45, 54; Payne v. Barnum, 59 How. Pr. 303 ; Laws of 1839, chap. 242; Laws of 1842, chap. 304.) The cause of action, if one existed, for money loaned to, or had or received by the defendant, was a separate and direct cause of action from the note, and before it could be enforced or tried, it was necessary to allege it in the complaint. (Ferguson v. Ferguson, 2 Comst. 360; Kelsey v. Western, 2 id. 506; N. Y. C. Ins. Co. v. Nat. Ins. Co., 20 Barb. 473; Rome Exch’ge Bk. v. Eames, 1 Keyes, 592; N. Y. L. & Tr. Co. v. Helmer, 77 N. Y. 64-72.) The appellant never had the money or any part of it, and was not liable for it, and no recovery could be had against him for it. ( Utica Ins. Co. v. Cadwell, 3. Wend. 296, 302; Pennington v. Townsend, 7 id. 276, 281.)

      II. E. Sickels for respondent.
    The taking of the note by • the savings bank was .not contrary to any statute prohibition, nor was it even ultra vires in any sense, or without statutory authority, but was in strict conformity to its charter, and the plaintiff had a perfect right to take, hold and collect it. (Laws of 1851, chap. 324, § 6 ; Laws of 1857, chap. 136, § 1; Laws of 1865, chap. 150.) Even if it were ultra vires, or beyond the power of the corporation to loan money on personal security, or even though- it were expressly prohibited; still the loan and the security would be valid, unless the statute declared it to be void. Even when the statute declares a discounted note to be void, any security taken as collateral to it is valid. (U. S. R. S., § 5200; Stephens v. Monongahela Nat. Bk., 32 Am. Rep. 438, 444; O'Hare v. Second Nat. Bk. Titusville, 27 P. F. Smith, 96 ; Gold Mining Co. v. Nat. Bk., 96 U. S. 640, 642; Pangburn v. Westlake, 36 Iowa, 546; Viming v. Bricker, 14 Ohio St. 331; Mott v. U. S. Trust Co., 19 Barb. 568, 571; Hurd v. Green, 17 Hun, 327; Hurd v. Kelly, 78 N. Y. 588; Rider Life Raft Co. v. Roach, 97 id. 378.) Even where the statute declares a discounted note to be void, the court will hold the loan made upon it to be valid, and will enforce the payment out of any collateral security. (Pratt v. Eaton, 18 Hun, 293; 79 N. Y. 449; N. Y. State L. & Tr. Co. v. Helmer, 77 id. 64; 32 Hun, 270.) The plea of ultra vires, as a general rule, will not prevail, whether interposed for or against a corporation when it will not advance justice," but will, on the other hand, accomplish a legal wrong. (Whitney Arms Co. v. Barlow, 63 N. Y. 63, 68, 69, 71; Alger v. Miller, 56 Barb. 227, 232; State of N. Y. v. City of Buffalo, 2 Hill, 434; In re Patterson, 18 Hun, 224; Bissell v. Mich. So., etc., R. Co., 22 N. Y. 269, 270, 271, 272; At. St. Bk. v. Savery, 82 id. 306, 307; Bk. R. & U. R. R. Co. v. Clarke, 25 id. 208; Steam Nav. Co. v. Weed, 17 Barb. 368; Parish v. Wheeler, 22 N. Y. 494; Rider L. Raft Co v. Roach, 97 id. 378.) The note in suit having been given as part of the consideration for the surrender of the original notes, it was founded on a good consideration and was not unlawful. (Pratt v. Short, 79 N. Y. 437; Pratt v. Eaton, id. 449.)
   Earl, J.

The plaintiff is a savings bank organized under the act chapter 324 of the Laws of 1851, by which it was empowered to receive on deposit money and invest the same in securities or stocks of this State or of the United States, or -in the stock or bonds of any city authorized to be issued by the legislature, or in such other manner as was authorized by the act. The act further provided that no money deposited in the bank should be invested except in the securities or stocks mentioned in opposition to the vote of any trustees, but that by the consent and approbation of all the trustees present at a regular meeting, amounts not exceeding $3,000, to any individual, might be loaned On unincumbered productive real estate worth, exclusive of buildings thereon, at least double the amount to be secured thereby; and that it should -be the duty of the trustees to invest, as soon as practicable, in public stocks or public securities, or in bonds and mortgages, as provided for in the act, all sums received by them beyond an available fund of not exceeding $25,000, or not exceeding one-third of the total amount of deposits,” at the discretion of the trustees, which they might keep to meet the current payments of the bank, and which might by them be kept on deposit, on interest or otherwise, or in such available form ” as they might direct.

In 1871 the bank loaned $3,000 upon a note signed by twenty-one persons, and $2,000 upon a note signed by thirteen persons. Those loans were made for the benefit of St. Joseph’s Church at Borne, but upon thecredit of the makers of the notes to one of whom the money was delivered. On the 1st. day of July, 1874, the bank still held those notes, upon which there remained due $3,500, and to pay that sum and to take up the notes it took the note in suit for $3,500, payable, to it on demand and signed by the defendant and thirty-nine other persons. The note not having been paid, this action was commenced against all the makers thereof, and the defendant Krug interposed as a defence that the note was not one of the securities which the bank was authorized to take and invest in, and that it was, therefore, unlawful and void. Judgment was rendered against him and the other defendants and upon appeal therefrom to the General Term it was affirmed. It was. there held that the available funds which the bank was required to keep to meet its current payments could be invested upon personal security, payable upon demand with interest; and hence that this note was not illegal or unlawful. It was also held that the taking of the note was not an immoral act; that even if the bank was not authorized by the statute to take it, it was not declared void; that, therefore, the taking of the note was at most ultra vvres on the part of the bank, and the defendants having received the consideration for the note could not set up the want of power to shield themselves from a just liability.

We do not deem it important to determine whether these views which entered into the judgment of the General Term were sound or not, for there is another ground for the affirmance of the judgment stated in the opinion there pronounced which seems to us to be clearly valid, and upon that we will base our judgment.

Even if it be assumed that the bank had no right to loan its money upon the two notes which it first took, and that those notes as securities to it were wholly void, yet it could recover" against the makers of the notes the amount of the money loaned. The money was not loaned to the church and it did not become liable therefor. As between the bank and the "makers of the note, they were the borrowers and became liable to the bank for the money obtained from it, and it matters not whether they appropriated the money to their own use or for the benefit of the church. The illegal action of the officers of the bank (if it was illegal) in thus investing its funds did not work a forfeiture of the money loaned, and it had a cause of action for the money, even if the notes were void. (N. Y. State Loan and Trust Co. v. Helmer, 77 N. Y. 64; Pratt v. Short, 79 id. 437.) Therefore, on the 1st of July, 1874, having a valid cause of action against the makers of those notes for the money obtained thereby, the bank took the note in suit in satisfaction of that cause of action, and surrendered up those notes which were" the evidence thereof.

It cannot be said that this note, made, at least, in part by strangers to the prior notes, was taken by the bank simply in exchange for the pieces of worthless paper which it" before held. It was manifestly taken, not as collateral security for, but in satisfaction of, the prior debt, and operated as such.

Thus the note in suit is founded upon a good consideration, and is in no sense illegal or unlawful. The bank could have sued the makers of the first two notes and obtained judgment against them for the money loaned, and, in satisfaction of such judgment, it could have taken any property or thing of value, or any security which it could have obtained without violating any law. So without suit it could take in payment of its debt any property or any security which it could obtain, and was not confined to the securities mentioned in the act under which it was incorporated; and this it Could do without transcending its powers or violating the prohibition of any statute.

Therefore, upon this ground, there was no error in the court below -in holding that the note sued upon was a valid, lawful security, and enforceable against the makers thereof.

W"e reach this conclusion the more readily as it is manifestly just that the bank should recover the money loaned. The statute meant for its protection should not be so applied as to work it mischief, unless the law and the facts absolutely require it.

The judgment should- be affirmed.

All concur.

Judgment affirmed.


author: Eakl, J.

text:
    The Union National Bank of Rahway, New Jersey, Appellant, v. Howard S. Underhill, Impleaded, etc., Respondent.
    Where one member of a firm has a transaction which is neither apparently nor in reality within the scope of the partnership business, the firm is not bound by his declarations or his acts in the transaction, and such, declaratians are not evidence against the firm or the other partner. In such a case, the third person has notice that the transaction is outside of the partnership business, and he cannot rely upon the partnership credit.
    (Argued April 13, 1886;
    decided June 1, 1886.)
    Appeal from judgment of the General Term of the Supreme Court, in the first judicial department, entered upon an order made May 9, 1884, which affirmed a judgment in favor of defendant Underhill, entered upon a verdict.
    The nature of the action and the material facts are stated in the opinion.

      Robert 8. Green for appellant.
    Plaintiff being the holder of the paper, regular on its face as partnership paper, with no notice of any defect, was a holder in good faith. (Magee v. Badger, 34 N. Y. 247; Belmont Bk. v. Hoge, 35 id. 65; Welch v. Sage, 47 id. 143 ; Seybel v. Currency Bank, 54 id. 288; Chapman v. Rose, 56 id. 130; Murray v. Lardner, 2 Wall. 110; Goodman v. Simmonds, 20 How. [U. S.] 452.) Proof of the existence of facts and circumstances, even if calculated to excite suspicion, will not deprive a party of the right to be considered a bona fide holder of negotiable paper. (Parker v. Connor, 93 N. Y. 127.) A party acting in good faith on the declaration or representations of one of the partners of a firm is protected, and he is not bound to inquire and ascertain at his peril whether the transaction is not only in appearance, but also in fact, within the authority of the partner. (Griswold v. Havens, 25 N. Y. 595 ; Winship v. Bk. of U. S., 5 Peters, 529; Mich. Bk. v. Eldred, 9 Wall. 544 ; N. Y. & N. R. R. R. v. Schuyler, 34 N. Y. 30; Bush v. Crawford, 9 Phila. 392; Whitaker v. Brown, 16 Wend. 505; Swan v. Steele, 7 East, 210.) If a partner gets paper indorsed, or obtains a loan on the representation that it is a firm matter, a party is not chargeable with notice of any fraud in accepting firm paper in place of the partner’s individual paper. (Coll. on Part. 650; Pars, on Part. § 130; Winship v. Bk. of U. S., 5 Peters, 529; Whitaker v. Brown, 16 Wend. 505 ; Catskill Bk. v. Stall, 18 id. 465.) So if a partner borrow money on Ms own paper for the use of the firm, it is no fraud for him to afterward substitute the note of the firm for Ms own, and the firm will be bound. ( Un. Bk. v. Eaton, 5 Humph. 499 ; Parsons on Partnership, § 130; Davidson v. Kelly, 1 Md. 501.)

      Hamilton Odell for respondent.
    The authority of one partner to bind Ms copartners is strictly and without exception limited to transactions within the scope of and pertaimng to the business of the partnersMp. ( Wells v. March, 30 N. Y. 344; Cockroft v. Claflin, 64 Barb. 464; Elliott v. Dudley, 19 id. 330 ; Pinckney v. Keyler, 4 E. D. S, 471; Story on Part. 193 ; Geery v. Cockroft, 1 J. & S. 156; Thomas v. Stetson, 62 Iowa, 537.) To constitute the transferee of negotiable paper, wrongfully made, accepted or indorsed by one partner in the firm name, a holder in good faith, he must receive it in the ordinary course of busmess, and without knowledge or notice, actual or constructive, of its character. (Tanner v. Hall, 1 Penn. St. 417; Elliott v. Dudley, 19 Barb. 330; Kenneys v. Richards, 11 id. 312; Wilson v. Williams, 14 Wend. 146; Bendel v. Hettrick, 3 J. & S. 406 ; Stainer v. Tysen, 3 Hill, 282; Byles on Bills [4th Am. ed.J, 34, marg., and note w; Calkins v. Smith, 48 N. Y. 618; Gansevoort v. Williams, 14 Wend. 138; Johnson v. Hersey, 70 Me. 74; Mecutchen v. Kennedy, 37 N. J. L. 230.) Ho transferee of partnership paper who knows, or from any circumstances has reason to believe, that it was issued by. one partner for Ms individual benefit, or in a transaction outside of the partnership business, is a bona fide holder of such paper. (Stall v. Catskill Bk., 18 Wend. 478; Bk. of Vergennes v. Cameron, 7 Barb. 150; Fielden v. Tokens, 3 Trans. App. 220 ; Osgood v. Glover, 7 Daly, 371; Smyth v. Strader, 4 How. [U. S.] 404, 416.) He cannot enforce it against the other partners' without showing their authority or assent. ( Williams v. Walbridge, 3 Wend. 415; Joyce v. Williams, 14 id. 145 ; Laverty v. Burr, id. 526 ; Rust v. Hauselt, 9 J. & S. 467; Butler v. Stocking, 8 N. Y. 410 ; First Nat.

      Bk. v. Green, 43 id. 298; Austin v. Vandermark, 4 Hall, 261; Hayes v. Baxter, 65 Barb. 181.) Plaintiff having taken the notes in suit with knowledge that the firm name was being used by one partner for his own purposes in the adjustment of a claim which the plaintiff held against him individually, was not a holder in good faith or for value. (Atlantic Bk. v. Lavery, 82 N. Y. 299 ; Comstock v. Hier, 73 id. 269; Phœnix Ins. Co. v. Church, 81 id. 221; 21 Hun, 178.) One partner cannot render his copartners liable on a note given for his individual debt by including in it a small indebtedness due from the firm. (King v. Faber, 22 Penn. 21.) A firm cannot be máde liable for .money borrowed or goods bought by one partner before the formation of á partnership, although borrowed or bought for the purposes of, and actually contributed to, the partnership stock. (Brook v. Evans, 5 Watts, 196 ; Baxter v. Plunkett, 4 Houst. 450; Nat. Bk. v. Ingraham, 58 Barb. 608; Oliphant v. Mathews, 16 id. 608; Nat. Bk. v. Thomas, 47 N. Y. 15; Peterson v. Roach, 32 Ohio St. 374.)
   Eakl, J.

The plaintiff commenced this action against tne defendants Cheney and Underhill, to recover against them upon three promissory notes dated July 27,1877, payable to the order of B. A. Yail, and made by Jesse S. Cheney & Co., a firm composed of the two defendants. The three notes amounted to about $5,700, and were at or about their date indorsed by Yail, and delivered to the plaintiff. The defendant Under-hill alone interposed an answer, in which he alleges that these notes were made by Cheney without his knowledge or consent and delivered to the bank in payment of Cheney’s individual debt, and that the plaintiff knew this. After hearing the evidence the court sustained Underhill’s defense and directed a verdict in his favor; and the main question for our determination is whether there was any evidence which required the submission of the case to the jury.

We think it was clearly established that these notes were made by Cheney in the name of the firm without the knowledge or consent of his partner; that they were delivered to plaintiff for the purpose of paying the individual debt of Cheney; that the plaintiff knew that Cheney was issuing this partnership paper to pay his individual debt, and it was bound to kno'w that he had no right to use it for that purpose without the consent of his partner, and was chargeable with knowledge that the notes were wrongfully made and issued. Each member of a firm is the general agent of the firm in relation to all the business of the firm, and can bind the firm in what he says and does in such business. But when one partner has a transaction with a third person which is neither apparently nor really within the scope of the partnership business, the partnership is not bound by his declarations or acts in the transaction. He cannot by his declarations make that a partnership transaction which does not appear to be such and which is apparently and really an individual transaction. In such a ease the third person has notice that the transaction is outside of the partnership business and he cannot rely upon the partnership credit. (Byles on Bills [7th ed.], 48 ; Pars. on Part. [2d ed.] 116; Rogers v. Bachelor, 12 Pet. 221; Mecutchen v. Kennady, 27 N. J. L. 230; Wilson v. Williams, 14 Wend. 146 ; Thorn v. Smith, 21 id. 365 ; Kemeys v. Richards, 11 Barb. 312; Elliott v. Dudley, 19 id. 326 ; Farmers & Mechanics’ Bk. v. Butchers & Drovers’ Bk., 16 N. Y. 125.) In Byles on Bills it is said: “ The taking a joint security for a separate debt raises a presumption that the creditor who took it knew that it- was given without the concurrence of the other partners.” In Parsons on Partnership it is said, that “ whenever a party receives from any partner, in payment for a debt due from that partner only, whether the debt be created at the time or before existing, or by way of settlement of, or security for a debt, or indebtedness, an obligation of the firm in any form, the presumption of the law is, that the partner gives this and the creditor receives it in fraud of the partnership and has consequently no demand upon them.” In Farmers & Mechanics’ Bk. v. Butchers & Drovers' Bk., it is said that “ each of the partners is the 'agent of the partnership as to all matters within the scope of the partnership business, and can bind the firm by making, indorsing and accepting bills and notes in such business; but he has no more authority than a mere stranger to execute such paper in his own business or for the accommodation of others. If he gives the partnership note or acceptance for his own debt, it is void in the hands of any party having knowledge of the consideration for which it is given.”

Cheney, for some time prior to the giving of these notes, had been dealing with the plaintiff. He drew checks in his own name on the East Hi ver Bank of Hew York, and procured them to be cashed by the plaintiff, and these checks for the security of the bank were indorsed by Tail. At one of the times when he procured the plaintiff to cash a check, he said to its president, my partner has or should have the money for this to-day, but he has not got it, or cannot get it, and we want this amount.” . It is how claimed on the part of the plaintiff that this gave it the right to suppose that the money which was.given to Cheney upon his check was for the benefit of the partnership, and hence that the check was in the partnership business. Subsequently other checks.were drawn by Cheney and cashed by the plaintiff, and paid by the bank upon which they were drawn. Finally a chock for upwards of $5,000 was drawn by Cheney, indorsed by Yail and cashed by the plaintiff, which was protested for non-payment, and these notes were given to .take up that check. We do not think that what was said by Cheney to the plaintiff’s president under the circumstances authorized an inference that he was procuring the money for the firm or in its business. All of the checks were his individual checks and not the firm checks, and the bank had no reason to infer that he was drawing his individual checks in the firm business, or to procure money on the firm account or firm credit. The money was loaned on his individual check and on the credit of Cheney and the indorser, and not on the credit of the firm. It was in form and in fact Cheney’s check, and the president of the bank testified that he cashed the check on the responsibility of Fail, the indorser, We-do not think that it is a just inference, from the language said to have been used by Cheney, that the checks were made in the business of the firm. But the declaration of Cheney made in a transaction which was really as well as apparently his individual transaction, outside of the firm business, could not make .evidence against the firm or his partner. In Hickman v. Reineking (6 Blackf. 387), where A., being in partnership with B., collected a sum of money in his individual capacity for 0., and afterward executed to the latter a note in the name of the firm for the amount, and a suit was commenced against the firm on the note, the plaintiff offered to prove that A., during the existence of the firm, had declared that the money had been used by him and his partner in the partnership business, and it was held that the evidence was inadmissible. In Thorn v. Smith (supra), it was held that it was not competent for one partner by his declarations, even during the existence of the partnership, to change what, on the face of the transaction, appeared to be his individual debt into a debt against the firm.

During the progress of the trial Tail, called as a witness for the plaintiff, was asked this question : “ Did you ever have any conversation with Mr. Cheney in reference to his partnership in connection with indorsing checks or paper ? ” Counsel for Underhill objected to the question as incompetent as against him, and the objection was sustained and counsel for plaintiff excepted. Then this question was asked-: “Was any representation made by Mr. Cheney to you that any of this money which was to be raised on checks indorsed by you was for the purpose of the business of the house?” Underhill’s counsel objected to this question as incompetent as against him, and the objection was sustained, and plaintiff excepted. It is now claimed that the rejection of this evidence was error. We do not 'think that what Cheney said to Tail, not communicated to the plaintiff, was competent or material. The declarations sought to be proved were made when Cheney was engaged in a transaction both apparently and really without the scope of the partnership business, and hence for reasons already stated were incompetent as against Underhill.

The plaintiff did not take these notes as assignee of Vail or from Vail in such a sense that it can stand in his shoes, bnt the notes were made and delivered to Vail, and by him delivered for Cheney to the bank to satisfy Cheney’s debt to the bank, and they had no" inception until their delivery to the bank.

The mere fact that Cheney could not testify that some small portion of the money obtained by him of the plaintiff was not used for the firm was of no importance. The debt was in form the debt of Cheney, and if plaintiff claimed that it, or any part of it, was created for the benefit of the firm, it was incumbent upon it to prove that. The mere inability of Cheney to testify that no part of the money was used for the firm proved nothing.

We are, therefore, of the opinion that the judgment should be affirmed, with costs.

All concur.

Judgment affirmed.


text:
    In the Matter of the Application of the Thirty-fourth Street Railroad Company for the Appointment of Commissioners.
    The fact that the State Constitution (Art. 3, § 18) prescribes conditions upon which street railroads may be constructed does not exclude the legislature from imposing conditions other than those so prescribed.
    Except as restrained by the Constitution, the legislative power is untrammeled and supreme, and a constitutional provision which withdraws from the cognizance of the legislature a particular subject, or which qualifies or regulates the exercise of the legislative power in respect to a particular incident of that subject, leaves all other matter and incidents under its control.
    The provision of the “ Street Surface Railway Act” (§ 14, chap. 353, Laws of 1884), imposing as a condition to the construction, extension or operation of a street railroad in a street or highway in which another street railway has been lawfully constructed, that the consent of the company owning and maintaining such other road shall be obtained, is not a delegation of legislative power to the company whose consent is required, and is constitutional and valid.

      Ba/rto v. Emvrod (8 N. T. 483), distinguished.

      Upon application for the appointment of commissioners as authorized by said constitutional provision, and as provided for by said act, where the consent of the requisite number of property-owners cannot be obtained, the court is not vested with any discretion to grant or deny the motion upon a consideration of the question of the utility or necessity of the proposed road : nor has it the power to den'y the application because of failure of the applicant to procure the requisite consent of another company. Inability to obtain the consent of property holders is the only prerequisite to the application.
    Where a case is presented, contemplated by the Constitution, the court is bound to exercise the power conferred upon it, which is a mere naked power of appointment, and, it seems, the question as to whether the proposed road ought to be constructed is to be determined, in the first instance, by the commissioners so appointed, and the power of the court to pass upon it arises only after they have made their report and returned the evidence taken by them.

      In re Thirty-fourth St. R. R. Go. (37 Hun, 443), reversed.
    (Argued March 16, 1886 ;
    decided June 1, 1886.)
    Appeal from order of the General Term of the Supreme Court, in the first judicial department, made July 17, 1885, which denied an application on the part of the petitioner above named, the nature of which, as well as the material facts, are stated in the opinion. (Reported below, 37 Hun, 442.)

      Joseph S. Auerbach for appellant.
    The court erred in holding that it was empowered on the return day of the petition and before appointing the commissioners to take evidence and try the question whether the railroad’s consent could or could not be obtained. (In re Gilbert El. Ry. Co., 70 N. Y. 375; 77 id. 255, 256.) If the court of appointment determines that the statutory case has arisen, then the appointment of commissioners is a duty, although the statutory words are not mandatory in their nature. (Aldermen Blackwell's Case, 1 Vernon, 153; State v. Newark, 4 Dutch. 491; Phelps v. Hawley, 52 N. Y. 27; 72 id. 536; 68 id. 119; MacDougall v. Paterson, 11 C. B. [73 Eng. Com. L.] 772.) The evidence did not show that the consent of the railroad companies could not be obtained as the statute requires, but showed only that their consent had not been obtained without stating when, how or why. (Laws of 1884, chap. 252, § 10.)

      Horace Russell for respondent.
    The statute and the Constitution confer upon the General Term, of the Supreme Court discretionary power to grant or refuse an application for the appointment of commissioners. (Laws of 1884, chap. 252, § 4; Const., art. 3, § 18; Settle v. Korea, 49 N. Y. 280 ; Countryman v. Horton, 21 Hun, 19 ; People v. Williams, 24 N. Y. 409; Bishop on Written Laws, § 90 ; In re N. Y. C. & H. R. R. R. Co., 64 N. Y. 60 ; In re N. Y., L. & W. R. R. Co., 29 Hun, 604; affirmed, 93 N. Y. 384; In re P. P. & C. I. R. R. Co., 13 Hun, 345; In re Rhinebeck & Conn. R. R. Co., 67 N. Y. 247; In re B., N. Y. & R. R. R. Co., 32 Hun, 289 ; Speers v. Mayor, etc., 72 N. Y. 442; People, ex rel. D. W. & P. R. R. Co., v. Batchellor, 53 id. 128 ; Ludlow v. Ludlow, 1 South. [N. J.] 387; Matter of Kings Co. El. R. R., 82 N. Y. 95 ; Matter of City of Buffalo, 64 id. 547.) If the Supreme Court had a judicial or discretionary power to deny the application its discretion is not reviewahle here. (Code of Civ. Pro., § 1337; Direct U. S. Cable Co. v. Dom. Tel. Co., 84 N. Y. 154; Fisher v. Gould, 81 id. 228.) It was proper for the Supreme Court to take into consideration, upon this application, the fact that four-fifths of the route proposed by the petitioners was already occupied by street surface railway companies, which declined to give their consent to the com struefcion of this proposed road. (Laws of 1884, chap. 252, § 14; Thirteenth and Fifteenth St. R. R. Co. v. City of Philadelphia, 13 W. N. Cas. 487.) It is not a valid objection to an act complete in itself that it does not go into effect until the happening of a contingency, certain or uncertain. (People v. Fire Ass'n Philadelphia, 92 N. Y. 316 ; Bk. of Chenango v. Brown, 26 id. 467 ; Bk. of Rome v. Vil. of Rome, 18 id. 38 ; Starin v. Town of Genoa, 23 id. 439 ; Gould v. Town of Sterling, id. 456; Grant v. Courier, 24 Barb. 232 ; Clarke v. Rochester, id. 446; affirmed, 23 N. Y. 605 ; Corning v. Green, 23 Barb. 33; Barto v. Himrod, 4 Seld. 483 ; Lothrop v. Stedman, 42 Conn. 584; Northern Cent. R. R. Co. v. Mayor, etc., 21 Md. 94; City of Philadelphia v. Street R. R. Co., 4 Brewst. 14, 18 ; State, ex rel. Morgan, v.
      Monmouth Plankroad, 26 N. J. L. [2 Dutch.] 99; Currier v. West Side El. R. R. Co., 6 Blatchf. C. C. 489, 493.) The legislation under discussion is no more a delegation of power than is that requiring the consent of property-owners before a railroad could be built in cities. (Laws of 1854, chap. 140 ; 2 R. S. [7th ed.] 1584.) A question as to the consent was raised proper to be determined on the application for the appointment of commissioners. It was not premature and it was properly raised by affidavits. (In re City of Buffalo, 64 N. Y. 546, 550 ; 68 id. 167; Cal. Pac. R. R. v. Cent. Pac. R. R., 47 Cal. 543.) The question as to whether there are legal obstacles against a proposed route is for the court alone to decide. (In re L. S. & M. S. B. Co., 89 N. Y. 442.) It was within the power of the court below to determine how that question should be raised. It could be done by affidavits. (Matter of El. R. R. Co., 70 N. Y. 357 ; Matter of City of Buffalo, 64 id. 547.) The Supreme Court did not abuse its discretion in denying the application. (Code of Civ. Pro., § 1703; 3 Abb. Ct. App. Dec. 585.)
   Andrews, J.

The order of the General Term, from which this appeal is taken, denied the application of the Thirty-fourth Street Railroad Company, a corporation organized under the Street Surface Railway Act, passed May 6, 1884, for the appointment of commissioners to determine whether the proposed road of the petitioner ought to be constructed. The petition upon which the application was made, avers the incorporation of the petitioner under the act of 1884 ; that its route extends from the ferry on Hudson river, at Forty-second street in the city of New York, to Tenth avenue, and thence to Thirty-fourth street, and through Thirty-fourth street from the Hudson river to the East river; that it had obtained the consent of the mayor, aldermen and commonalty of the city of New York, to the construction and operation of its road, but had been unable, after diligent effort, to obtain the requisite consent of the owners of property bounded on that portion of the street upon which the proposed road was to be constructed; that due notice of the application had been given pursuant to the fifth section of the act, and concludes with a prayer for the appointment of commissioners under its provisions. The granting of the application was resisted by the owners of abutting property on Thirty-fourth street, on two grounds: First. That the route of the proposed road of the petitioner is coincident in part with the routes of existing surface street railroads in actual operation, constructed prior to the passage of the act of 1884, whose consent to the construction of the petitioner’s road had not been obtained, but had been refused, and second, that the proposed road would greatly damage property abutting on the streets through which it was to be constructed, and that neither public necessity nor convenience required the construction of a street railroad on the route of the petitioner. On the hearing of the application the petitioner proved the substantial averments of the petition, and on the part of the contestants it was shown that the part of the petitioner’s route on Forty-second street and Tenth avenue, comprising about three-fifths of its whole line, was coincident with the route of other street railroad corporations, who had constructed and were operating roads thereon under their several franchises, and that these corporations had refused to consent to the construction of the road of the petitioner. The contestants also gave evidence tending to show that the proposed road would seriously impair the value of private property on Thirty-fourth street, and that no public interest required its construction. The majority of the judges of the General Term concurred in opinion that the authority vested in the court by the act of 1884, to appoint commissioners to determine whether a proposed surface street railroad ought to be constructed and operated, in case the requisite consents of property-owners could not be obtained, was discretionary, and not imperative, and that as it had been made to appear that the consent of the other railroad companies operating coincident routes, could not be obtained, and as under the act the obtaining of such consent was a condition precedent to the right of the petitioner to proceed with the construction of its road, the application should be denied in accordance with the maxim, Lex neminem cogit ad vana. One of the two judges who concurred in the decision, was of opinion that the application should be denied upon the further ground that it appeared by the affidavits on the part of the contestants, that the property abutting on Thirty-fourth street, on the line of the proposed road, would be greatly depreciated in value by its construction and operation. We cannot review an order resting in the discretion of the court below, and the point to be determined is, whether upon the case presented, the petitioner was, as matter of law, entitled to an order appointing commissioners pursuant to the application. The determination of this question involves a consideration to some extent of the legislative scheme embraced in the act of 1884. The legislature in dealing with the subject of street railways, was under certain restrictions imposed by article 3, section 18, of the Constitution. It is sufficiently exact for our present purpose to state that under the constitutional provision, authority to construct and operate street railroads must be conferred by general laws, and then only on condition of obtaining the consent of the local authorities, and also of the owners of one-half in value of the property bounded on that portion of the street or highway upon which the proposed road is to be constructed, or in case" the consent of property-owners cannot be obtained, the section declares that “ the General Term of the Supreme Court, in the district in which it (the railroad) is proposed to be constructed, may, upon application, appoint three commissioners, who shall determine whether such railroad ought to be constructed or operated, and their determination, confirmed by the court, may be taken in lieu of the consent of the property-owners.” The act of 1884 is a general law for the construction of surface street railways, and embodies the constitutional conditions of consent by the local authorities and of the property-owners, with the proviso, also authorized by the Constitution, for a determination by commissioners to stand in lieu of the consent of property-owners, in case such consent cannot be obtained. In addition to the constitutional conditions, the act annexes a third condition not enjoined therein, viz. : that no surface street railroad company shall conduct, extend, or operate its road or tracks in that portion of any street, avenue, road, or highway in which a street railroad is or shall be lawfully constructed, except with the consent of the company owning and maintaining the same, with a qualification not material to the present inquiry (§ 14). The fourth and fifth sections of the act are framed to give effect to- the last clause of article 3, section 18 of the Constitution, relating to the appointment of commissioners. The fourth section authorizes the company, in case the consent of property-owners required by the act cannot be obtained, to apply to the General Term of the Supreme Court “ for the appointment of three commissioners, to determine, after a hearing of all parties°interested, whether such railroad ought to be constructed and operated.” The fifth section directs that notice of the application shall be given, and served upon the non-consenting property-owners, and that the General Term to which the application shall be made, upon due proof of the service of the notice, “ shall appoint” three disinterested persons to act as commissioners. The sixth section declares that the commissioners shall determine, after a public hearing of all the parties in interest, whether the proposed railroad ought to be constructed and operated, and shall make a report thereon, with the evidence, to the General Term, and that the determination of the commissioners that the road ought to be constructed and operated, confirmed by the said court, “ shall be taken in lien of the consent of the property-owners.” The right of the Thirty-fourth Street Bailroad Company, under the act of 1884, to construct and operate its road, was subject, therefore, to three precedent conditions, the consent of the local authorities, the consent of property-owners, or, in lieu thereof, the determination of commissioners in its favor, and the consent of the companies having coincident routes. It is clear that all these conditions must be performed before any right to proceed with the construction of the road, or any part thereof, can be exercised. This proposition, however, assumes that the condition requiring the consent of railroad companies having coincident routes was lawful. This point was considered by the General Term, and the power of the legislature to annex this condition, was affirmed, and we concur in the conclusion of the court below upon this branch of the case. The opposite view is urged upon two grounds, first, that the Constitution has prescribed the- conditions upon which street railroads may be constructed, and by implication excludes the imposition by the legislature of conditions other than those prescribed therein, and second, that a condition requiring the consent of existing railroad companies, to the construction or operation of another road, is a grant of legislative power to the company whose consent is required, and is therefore void. The first contention proceeds upon a misconception of the object of the constitutional provision, and of the rules governing the interpretation of constitutional restraints upon legislative power. The plain purpose of the Constitution in requiring the consent of the local authorities and of property-owners to the construction of a street railroad, was the protection of public and private interests against hostile and injurious legislation, and to prevent the appropriation of highways to railroad uses by legislative grant, without consulting the interests of the locality. The consent of the local authorities and of property-owners was therefore made necessary, but to meet the contingency of an unreasonable opposition on the part of property-owners, a tribunal was authorized to be created to determine whether the public interests required the construction of the proposed road, whose determination in its favor, when confirmed by the court, was to stand as a substitute for such consent. But the Constitution, neither by express language nor by implication abridges the legislative power over the subject outside of the matters particularly enumerated. It needs no citation of authorities to sustain the postulate, that except as restrained by the Constitution, the legislative power is untrammeled and supreme, and that a constitutional provision which withdraws from the cognizance of the legislature a particular subject, or which qualifies or regulates the exercise of legislative power in respect to a particular incident of that subject, leaves all other matters and incidents under its control. Nothing is subtracted from the sum of legislative power, except that which is expressly or by necessary implication withdrawn. The legislature is prohibited from granting a franchise to construct a street railroad, except upon certain specified conditions. But it is not prohibited from annexing further conditions not inconsistent therewith, and whether other conditions are necessary or proper, is a matter resting in the wisdom and discretion of the legislature. The claim that the provision in the act of 1884, requiring a company organized thereunder, whose route is coincident with that of another road, to obtain the consent of the latter to the construction of the new road, before it can proceed to construct or operate the same, constitutes a delegation of legislative power, is not we think well founded. The act of 1884 was complete and operative from the moment of its passage. The franchise acquired by a company organized under its provisions, is perfect according to the nature of the franchise intended to be given, from the moment the corporation comes into existence. The legislative grant was conditional, and not absolute. The consent of another company in a case where such consent is required, confers no franchise upon the company by whom it is obtained. The consent simply meets one of the conditions prescribed by the statute upon which the right of the company to construct and operate its road depends. If consent is refused, the law is not defeated, but remains perfect and complete as before. The company upon consent being refused, is not deprived of its franchise. A failure to obtain such consent simply puts in abeyance its right to proceed with the construction of the proposed road until the obstruction is removed, and this precise situation was within the contemplation of the legislature when the act was passed. The legislature imposed the condition in its discretion, for the protection of existing companies. It may hereafter in its discretion remove the restriction and abrogate the condition. But its right to impose it is unquestionable. Whether the legislature in creating this condition, proceeded upon public reasons, or had in view the protection of private interests only, does not affect the question of legislative power. The legislature by the act of 1884, in substance determined that it was inexpedient to permit a competing street railroad to be constructed on the line of another road, unless the existing road should consent. This was a contingency subject to which the petitioner acquired its franchise. The existing company, whether it consents or refuses to consent, neither creates the franchise, nor defeats it, and whether it consents or not, there enters into its' decision no element of legislative power. In the legislation considered in Barto v. Himrod (8 N. Y. 483), the vice consisted in the legislature remitting to the decision of the people at a popular election, the question whether a certain enactment should have the force of law. The legislature in that case abdicated its - function as the law-making power, and in substance proposed a law for enactment or rejection by the people. The law now in question contains no such element, and there are numerous precedents of analogous legislation to be found in our statutes. (See Matter of New York Elevated Railroad Co., 70 N. Y. 343 ; Matter of Gilbert Elevated Railroad, id. 374; Bank of Rome v. Village of Rome, 18 id. 38 ; City of Phila. v. Street R. R. Co., 4 Brewst. 14; State, ex rel. Morgan, v. Monmouth Plankroad, 2 Dutch. 99.) The grounds upon which the decision at General Term mainly proceeded in denying the application, viz.: that the appointment of commissioners would be futile by reason of the non-consent of the other roads occupying coincident lines, and that the construction of the petitioner’s road would occasion great injury to private property, remain to be considered. We think it cannot be justly claimed that, under the Constitution, the court, on the application for the appointment of commissioners, is vested with any discretion to grant or deny the motion upon a consideration of the question of the utility or necessity of the proposed road. The act of 1884 is to be construed in the light of' the scheme of the Constitution, with reference to which the act was passed. The Constitution declares the general principle, that street railroads shall not be constructed without the consent of property-owners interested. But it recognizes that there may be a conflict between public and private interests, and that the public convenience may require the construction of a street railroad in a case where the consent of the property-owners cannot be obtained. To meet this contingency it creates a tribunal to determine this question, consisting of commissioners to be appointed by the court. The language of the Constitution, that the court upon application may appoint commissioners, does not confer upon the court a discretion to appoint, or not, as it shall deem just or discreet. It confers authority to appoint when a case is presented, contemplated by the Constitution. When either by the Constitution, or by statute, jurisdiction is conferred upon a court,, the court cannot entertain or decline jurisdiction in.its discretion. It is bound to exercise it when the case arises and its exercise is invoked by a party interested and having the right to make the application. (See Macdougall v. Paterson, 11 C. B. 755, 772; Queen v. The Tithe Com'rs, 14 Q. B. 620.) The constitutional scheme contemplates that the determination whether a proposed railroad ought to be constructed in case the consent of "property-owners cannot be obtained, shall in the first instance be decided by commissioners. We concur on this point with the view of the learned judge who dissented in this case that the Constitution confers upon the court primarily a mere naked power of appointment, and that it gives no power to the court to hear, try or determine in the first instance, the question that is to be sent to the commissioners. The power of the court to pass upon the merits of the application arises only after the commissioners have made their report and returned the evidence taken by them, and this power, though not expressly given, is implied from the provision that the determination of the commissioners, “confirmed by the court,” may be taken in lieu of the consent of the property-owners. While on the one hand, the decision by the court in the first instance, that the proposed road ought to be constructed would not satisfy the constitutional provision and justify the construction of the road, on the other, a contrary determination cannot deprive the applicant of the right to have the question determined in the first instance by the tribunal designated in the Constitution. We find nothing in the act of 1854, in conflict with the plain sense of the Constitution. It is supposed that the provision in the fifth section, requiring notice to be given of the application, to non-consenting property-owners, implies a right on their part to be heard on the question of the propriety or necessity of the proposed road, and to have the question decided at that stage of the proceedings. It is not necessary to attribute this purpose to the legislature in requiring notice to property-owners. The requirement of notice enables property-owners to appear on the hearing and oppose the application- on the ground that the petitioner is not in.a situation to make it, and also to be heard in respect to the selection of commissioners. It cannot be assumed that the legislature intended by the provision for notice, to confer upon the court a power inconsistent with the scheme of the Constitution. The ground that the appointment of commissioners would be futile by reason of the fact that other companies had refused their consent to the construction and operation of the road of the petitioner, is not, we think, a sufficient answer to the application. Inability to obtain the consent of property-owners, is, under the statute, the only pre-requisite to the application for the appointment of commissioners. . The consent of other railroad companies having coincident routes is another, but independent condition for which the statute provides no alternative or substitute. Nor does it prescribe the order in which the several consents shall be obtained. It may be granted that if it had been made to appear that an insurmountable difficulty stood in the way of the construction and operation of the road of the petitioner, and not a mere present obstacle to the exercise of the franchise, the court would not have been bound to grant the application. But the fact that the other companies had prior to the application, refused the-consent, does not show that the appointment of commissioners would be a vain and useless proceeding. The decision of the ¿ompeting roads was in its nature revocable. The question on their part was one of prudence and policy, and it is quite conceivable that circumstances might subsequently arise, which would lead to a reversal of the prior decision, and to the giving of a consent, which had been previously withheld. The determination of commissioners that the proposed road ought to be constructed, if sanctioned by the court, might itself operate as a reason for changing the prior decision. The petitioning company could not safely enter into engagements with other companies for the acquisition of the right to construct its road on the street occupied by their tracks, so long as it remained uncertain whether it could obtain a favorable determination of commissioners as a substitute for the consent of property-owners. We are of opinion that the court erred in refusing to appoint commissioners, an.d that the order appealed from should, therefore, be reversed, and the case remitted to the General Term for further proceedings.

All concur.

Ordered accordingly.