author: Kellogg, J.:

text:
    Charles O. Barber, George E. Barber and Herbert Barber, Respondents, v. George W. Palmer, Frances L. Palmer, Frank Palmer, Defendants; Edwin G. Moore, as Trustee, etc., and Others, Appellants. First National Bank of Champlain, New York, Respondent, v. George W. Palmer, Frances L. Palmer, Defendants; William M. Foote and Others, Appellants.

      Mortgage given by one pa/>'tner on Ms undivided interest in the firm real estate— subordinate to a subsequent mortgage by the fi/i'm — a mortgage by the firm covers all the interest of each partner.

    The lien of a mortgage made by one copartner upon his interest in copartnership real estate attaches only to the surplus after all the copartnership debts are paid.
    A mortgage upon real estate belonging to a copartnership, signed by all the members of the copartnership, is entitled to preference over a prior mortgage given by one of tbe partners purporting to cover an undivided interest in such land.
    A partner bolding, as mortgagee, a mortgage lien created by one of bis copartners upon Ms individual interest in tbe real estate owned by tbe partnersMp, who subsequently unites with bis copartners in executing a mortgage upon sucb copartnership property, thereby gives a preference to the mortgage executed by all the copartners over the prior mortgage upon the undivided interest in the property held by himself.
    The change in tbe common-law rule, which declared tbe title in tbe realty vested in the mortgagee, to the present holding of the courts that the title remains in the mortgagor, does not prevent the interest of a prior mortgagee in an undivided part of premises owned by a copartnership being subordinated to tbe lien of a subsequent mortgage given by tbe copartnersMp in which such mortgagee, one of the copartners, joins.
    A mortgagor, who is part owner of the fee and also the owner of an interest in tbe same lands as mortgagee, when be executes his mortgage, presumably includes in sucb mortgage, unless an intent is apparent to exclude such interest, all bis interest, legal and equitable, including his interest as mortgagee.
    Appeal by tlie defendant, Edwin G-. Moore, as trustee for E. Gr. Moore & Co., J. W. Tuttle & Co., Nichols & Co., W. B. Mooers & Co., and William M. Foote, Wallace H. Foote and Philip V. N. MacLean, as executors of the last will and testament of Isabel MaeL. Foote, from a judgment of the Supreme Court, entered in the office of the clerk of the county of Clinton on the 15th day of March, 1S92, in the first above-entitled action, brought for the foreclosure ox a mortgage given by the defendants, George W. Palmer, Frank Palmer, Owen A. Palmer and Charles G, Palmer, in which their respective wives joined, to Charles O. Barber, George E. Barber and Herbert Barber, to secure the promissory notes of the above-named mortgagors.
    Also an appeal by the defendants, William M. Foote, Wallace H. Foote and Philip Y. N. MacLean, as executors of the last will and testament of Isabel MacL. Foote, deceased, and Edwin G. Moore, as trustee of E. G. Moore & Co., J. W. Tuttle & Co., Nichols & Co. and William B. Mooers & Co., from a judgment of the Supreme Court, entered in the office of the clerk of the county- of Clinton on the 17th day of March, 1892, in the second above-entitled action which was brought for the foreclosure of a mortgage given by the mortgagors above mentioned, and their respective wives, to tlie First National Bank of Champlain, to secure the notes of the above-named mortgagors.

      O. McLecm and Hemry E. Bwrncvrd, for the appellants.

      D. F. Dobie, for the respondents.
    Present — Mayham, P. J., Putnam and Herrick, J.
    Affirmed, on the opinion of court below.
   The following is the opinion of the court below:

Kellogg, J.:

The two actions above entitled were tried together, the issues being practically the same and the material evidence the same.

These actions are brought to foreclose mortgages; one made by G. W. & F. Palmer & Go. to Charles O. Barber and others; one made by the same party to the First National Bank of Champlain. Both mortgages are signed by George W. Palmer, Frank Palmer, Owen A. Palmer and Charles G. Palmer, being all the copartners in the firm of G. W. & F. Palmer & Co.

The defendant Edward G. Moore, as trustee, etc., makes answer that he is the owner of a mortgage given in 1887 for $1,000 by Owen A. Palmer to Frank Palmer, on an undivided one-twelfth of this land covered by plaintiffs’ mortgage, and the lien of this mortgage upon the fractional part must take precedence to plaintiffs’ lien.

The defendants William M. Foote and others, executors, answer also that they are the owners of a mortgage given by Charles G. Palmer to Frank Palmer, in 1887, for $1,000, on an undivided one-twelfth of the land covered by the plaintiffs’ mortgage, and that the lien of this mortgage must also take precedence of the lien of plaintiffs’ mortgage.

These two mortgages set forth in the answers of these defendants antedate the mortgages of the plaintiffs in both of these actions, and they were both recorded in Clinton county clerk’s office before either of the mortgages here sought to be foreclosed was given.

In the mortgage running to the plaintiff, the First National Bank of Champlain, reference is made to the fact of the existence of such mortgages, but the language used is simply declaratory of the fact which the record makes constructive notice of, and the fact being declared in the mortgage neither adds to nor detracts from the-rights of parties.

"We are of the opinion that the contention of the defendants cannot prevail, for the reasons:

First. It is undisputed that this copartnership was formed in June, 1879. That at that time the lands, in question became, with other lands, the property of the copartnership, and formed the staple of their stock in business. The business of the copartnership was the making of iron, using charcoal in Catalan forges, and covering a large wooded territory, of necessity. It makes no difference in whom the title to the realty stood, so long as it was conceded to belong to the copartnership. It is clear from the evidence, indeed is undisputed, that at the organization of this company in June, 1879, the land became the property of the company and was ever afterwards used in its business. It is hardly worth while to inquire what the interest of each copartner was at the date of the organization. And in view of the fact that these copartners, George W. Palmer, Frank Palmer, Owen A. Palmer and Charles G. Palmer, at that date agreed upon the terms of the copartnership, and the business and the property which should belong to it, and agreed that the lands in question, with other lands, should belong to the company so formed, and from that date such lands were used and treated always as the property of the copartnership, it is hardly worth while to inquire upon what terms the said Owen and Charles were to increase their shares in the copartnership by acquisition from either of the other partners. Whatever changes were contemplated or afterwards carried into effect by original agreement, or otherwise, the ownership of the property never cliangéd, it was always the property of the copartnership. While the interest of each copartner might increase or diminish at any time by agreement among themselves, the copartnership remained intact. Any deed or other evidence of transfer from one to the other, did not affect the company, or the title of the company, as a whole, to the assets, real or personal. The effect could only be to determine, as between themselves, the rights to profits or liability for losses, and the share of each in the surplus after the company’s debts were discharged and the copartnership equities adjusted.

The claims of these defendants, therefore, that the mortgages given by Owen and by Charles to Frank Palmer were the outcome of an agreement between these parties, made at the organization of the copartnership, or later, to purchase a portion of the interest of Frank Palmer in the business, or the property of the copartnership, and by so much increase their holding and diminish the holding of Frank Palmer in such copartnership, has no bearing to detract from, or give additional force to the lien of such mortgages.

It must be considered at this date almost elementary law that the lien of a mortgage made by one copartner upon his interest in copartnership property attaches only to the surplus, after all the copartnership debts are paid. (Menagh v. Whitwell, 52 N. Y. 146.)

Rarallo, J., says, page 154: “Assuming, however, that the mortgages were intended to pass merely the individual interests of the mortgaging partners, * * * it is clear that the remaining partner was entitled to the control of the firm property so long as he retained his interest, and to apply it to the firm debts, and that the mortgagees acquired only a right to the surplus, if any, which would be found to belong to the mortgagors on the settlement of the accounts.”

The suggestion here occurs, what would have been the effect upon the interest of George W. Palmer, in the copartnership, if the contentions of the defendants were sound in law ? George ~W. Palmer it seems, under the copartnership agreement, owned two-sixtlis of the business and property of the copartnership, and was not a party to the deal between Frank Palmer and Owen and Charles. His interest was created when the copartnership was created. It was then definitely determined that these lands were copartnership lands, and liable as a whole to company disposition, and for use in the company business. Could Frank Palmer, through his mortgages from Owen and Charles, take out of the copartnership these lands, one-sixth of the company property, and leave the whole interest of George W. Palmer liable for the company’s debts ? Obviously not.

In Tarbell v. West (86 N. Y. 286), Justice Andrews says: “ It is now well settled that a purchaser from one partner, of his interest in the partnership, acquires no title to any share of the partnership effects, but only his share of the surplus, after an accounting, and the adjustment of the partnership affairs.”

In the case last cited, the title to the lands was not in the company, but in a third person, but the court held that a third person holding title would not improve the mortgage if the mortgagee had notice that these wore company lands, and he would take by his mortgage a lien only on the surplus, after all the partnership debts were paid.

This cannot be otherwise, on the theory that a copartnership is an entity, and deals as such with all the world. The property of the company is held “pro indiviso,” by all the partners, and in trust, responsible for the debts of the partnership, and subject, after debts paid, to division. And while a partner may mortgage and sell his interest in the partnership, whether to purchase an increased interest or otherwise, or whether to a partner or a stranger, such mortgage or sale affects only the surplus after debts are paid, and the equities of partners are settled. If it were otherwise, the rights of the other partners and of creditors would be always in peril, and practically under the control of a single partner.

The copartners can unitedly dispose of the corpus of the partnership property for any purpose, when not insolvent, and when enough is retained to satisfy creditors, but no individual partner can divest himself of his interest, or in any manner incumber it to the injury of the copartner or creditors. And this is the reason that mortgages by an individual copartner are interpreted as attaching only to the surplus after debts are paid, and the equities of partners are settled.

For such reason, the mortgages given to Frank Palmer must be construed to attach only to the surplus after payment of the company’s debts, and subject to the mortgages given by all the partners uniting in security for partnership debts.

The other reason why the contention of the defendants cannot prevail, would be operative if the foregoing were insufficient. The defendant, Frank Palmer, was the owner of these two mortgages, and mortgagee named in them when the mortgages were executed by the comjsany to the plaintiffs in each of these actions. He was also an owner, as one of the copartners of an undivided interest in all the lands. He knew that the land was the property of a copartnership. Pie knew the property was in equity first liable for partnership debts. He knew that after the partnership property was applied, he was individually liable for the claim of plaintiffs in each case. He, without reservation, executes these mortgages which are here sought to be foreclosed. From these facts, the inference is natural and imperative that he intended, when he joined the other copartners in the execution of these mortgages, that they should embrace all the interest he had in the property, whatever that might be, whether as owner or mortgagee. So that if it becomes a matter of interpretation or construction founded on intention, he must be concluded by the findings which the court is impelled to make upon this point.

The philosophic reasoner may urge that because of the change in the common-law rule, which declared the title in the realty vested in the mortgagee, to the present holding of the courts that the title remains in the mortgagor, that, therefore, the mortgagee takes no interest in realty which he can affect by subsequently joining in a mortgage upon the same property. But the reasoning is specious, and rather a play upon terms and words than a sensible dealing with the substance.

The mortgagee takes some substantial interest in the realty covered by his mortgage. The words used are apt and sufficient for a grant of the fee. A seal is necessary to a valid mortgage of real estate, because some interest in the real estate is taken through the mortgage. The law applicable to the recording of deeds and conveyances of any real estate interest is held to be applicable to mortgages. That such an instrument, intended to convey some interest in realty as security, is held not to convey the title, but only the right to reach the title in case of default, is no warrant for holding that such an interest is not a substantial interest in the realty. The mortgage given to secure a note, or any other promise to pay, is not different from one given without any promise to pay by the mortgagor. But when a mortgage is given without a promise to pay, all the mortgagee can do is to resort to the land in case of default. Ruger, J., in Spencer v. Spencer (95 N. Y. 353), says: “ The mortgagee should look to the premises mortgaged.” Surely, some interest must have been vested in the mortgagee through his mortgage in such a case. Some substantial interest in the realty, though he may be forced to take steps to make such interest ripen into a fee. Why, then, is not such an interest mortgagable in equity % Any interest whatever in realty may be in equity mortgaged. Whether such interest be a contract interest, an interest in remainder, an interest in equity, where the title is actually vested in another (86 N. Y. 280), or any other conceivable interest, legal or equitable, it may, as well as the fee itself, be the subject of a mortgage. And when the mortgage contains language found in the two mortgages herein sought to be foreclosed, to wit: “ Have granted, bargained, sold, conveyed, and by these presents do grant, bargain, sell and convey * * * (description of land) * * * am,d all the estate, title cmd interest of said party of the first part therein,” it would be absurd to say that the mortgagors meant to limit the subject-matter mortgaged to the fee simple. The mortgagor says he meant to mortgage not the fee only, but “ all the estate, title and interest ” which he possessed. He could hardly have employed language which would embrace more clearly every equitable interest which he owned.

In the mortgage to the plaintiff, the First National Bank of Champlain, in addition to the language above quoted, is found this language, describing the lands, etc., mortgaged : “'All that portion of lot 110 (the land covered also by defendants’ two mortgages) * * * which was purchased by G. W. Palmer & Co., and is now owned by said G. W. Palmer & Co., or by any of the members of said company, which company is composed of the male persons named as parties of the first part herein,” such persons being the same named also in the findings of the court herein as forming such company. • Here also is an express declaration at the time the mortgage was given, and $2,000 in money, a new loan, was obtained by the company, that such lands were company lands, and purchased by that company presumably, as the evidence in the case discloses, at the date of formation of the copartnership, in June, 1879. There is no evidence of any purchase since.

While this view is supported by every reason, and appears to be the only aspect in which the subject is capable of being viewed without wholly overlooking general principles universally recognized, we are not left entirely without judicial declaration for our guidance. That a mortgagor who is also part owner of the fee, and also owner of an interest in the same lands, as mortgagee, does, when he executes his mortgage, presumably include in such mortgage (unless an intent is apparent to exclude such interest) all his interest, legal and equitable, including his interest as mortgagee, is fully supported by Chancellor Walworth in Williams v. Thorn (11 Paige, 464, 465). He says: “ In other words a mortgagor of premises, who himself held a mortgage thereon at the time he mortgaged his interest in the premises to another, cannot set up such prior mortgage or any interest he has acquired under the same, against his own mortgagee,, or any person claiming under him. And a purchaser under a foreclosure of the mortgage given by Strong, will take the premises discharged of any incumbrance thereon, which Strong, either as mortgagee, or otherwise, held at the time he mortgaged such premises.”

No different adjudication has been made since this decision on the subject. It is true cases may be found in which the court has relieved a wife from the effects of this legal principle, holding that she having no interest in the land, except an inchoate right of dower, and no interest in the object of the mortgage itself, her intention was manifestly only to subject her inchoate right of dower.

In Gillig v. Maass (28 N. Y. 210), "Wright, J., says: “ Of course, a mortgagor of premises who himself holds a mortgage thereon at the time he mortgages his interest in the premises to another, cannot set up such prior mortgage or any interest he has acquired under the same against his own mortgagee or any person claiming under him.”

I find no authority equal to this which seeks to at all qualify this plain declaration of a principle — a principle which ought to commend itself to any judicial mind by reason of its sheer common sense.

I have no comment upon the claim of defendants that the collateral interest which the Merchants’ National Bank of Plattsburgh had in the two mortgages now owned by defendants at the time of the execution by the mortgagee, Prank Palmer, of the two mortgages here sought to be foreclosed, prevent such mortgages from being affected thereby. I see no force in the claim, since the claim, if of any value, could only be made by such bank. As the bank has been satisfied, and the collateral released to Prank Palmer, himself, the claim ceased to exist, if any there ever was, the moment of such release by the bank, and that moment the claim of these plaintiffs extended over and absorbed all the interest the bank possessed; and any subsequent transfer by Palmer must be held subject to plaintiffs’ superior liens.

The bank holding the mortgages as collateral could not assign the mortgages to Theodora Palmer or any other person so as to convey any title thereto. The bank could only release, or else it must also transfer the notes for which the mortgages were held as collateral security in order to convey the slender interest it held in the mortgages.

For the reasons stated the defendants cannot in this action set up either of their said mortgages against the mortgages of plaintiffs.


source: Caselaw Access Project

author: Putnam, J.:

license: Public Domain

text:
    The People of the State of New York ex rel. The Postal Telegraph Cable Company, Relator, v. Frank Campbell, as Comptroller of the State of New York, Respondent.

      Corporation tax — revision of the Comptroller’s decision — constitutionality of the tax — no real, estate deduction.

    Since chapter 542 of the Laws of 1880 has been amended by the acts, chapter 501 of 1885 and chapter 463 of 1889, the Comptroller of the State is required under section 20 of the first-mentioned act to include in his return to a writ of certiorari the accounts and all the evidence submitted to him: but the decision of the Comptroller as to an assessment and taxation under that act will not be disturbed unless it is clearly shown to be erroneous. Hence, a party seeking a revision or readjustment of a tax settled by the Comptroller under section 19 of that act must produce evidence showing the error of such settlement.
    The provisions of chapter 542 of the Laws of 1880 and of the acts amendatory thereof and supplemental thereto, are not in conflict with either the State or Federal Constitutions; nor is the act of the Comptroller in imposing the tax prohibited by the enactments relating to interstate commerce.
    The Comptroller in estimating under the provisions of that act the amount of capital stock employed by a corporation within the State, is not obliged to deduct real estate subject to local taxation, although an assessment under this act may result in an unequal or double taxation.
    Certiorari issued out of the Supreme Court and attested March 29, 1892, directed to Frank Campbell, Comptroller of the State of New York, commanding him to certify and return to this court all and singular the reports, proceedings, decisions and actions, documents, records, evidence, accounts and papers before him, touching or concerning the valuations, assessment and taxation of capital employed and used by the relator within the state of New York, and his valuation and assessment for taxation for the year ending November 1, 1891, of the capital of the relator employed in the State of New York, etc.

      H. B. Guernsey, for the relator.

      S. W. Rosendale, Attorney-General, and John W. Hogan, Deputy Attorney-General, for the respondent.
   Putnam, J.:

"We are called ujDon in this case to review the action of the Comptroller in declining to revise the tax settled against relator, under the provisions of chapter 542, Laws of 1880, and acts amendatory thereof and supplemental thereto.

The relator suggests that since the amendatory acts of 1885 and 1889, under section 20, the Comptroller is required to return to a certiorari the accounts and all the evidence submitted to him, and his decision, if found to be erroneous in fact or law, must be corrected by this court. This position is well taken ; but it is held that the decision of the Comptroller as to assessments and taxation unless clea/rly shown to be erroneous will not be disturbed. (People ex rel. A. C. & D. Co. v. Wemple, 129 N. Y. 558; People ex rel. Osgood et al. v. Commissioner, 99 id. 154.) Hence a party who seeks a revision or readjustment of a tax settled by the Comptroller, Under section 19 of the act, must prod/uce evidence showing the error of such settlement.

Therefore, the question for our consideration is whether the evidence, accounts and papers submitted to the Comptroller, on the motion for a revision, which he was obliged under section 20 of the act to return to the certiorari, shows an error in his original determination as to the amount of the capital stock of relator employed within the State.

The relator in its return estimated the amount of its capital stock employed within the State at $153,500. The Comptroller, however, settled it at $419,965, on which the tax was $629.98.

The relator made the following report:

Capital employed within the State.
Amount thereof in real estate (poles and wires)... $115,000.00
“ Yalue of shares of stock...................... 30 per cent.
“Dividends on stock........................... None.
“ Average monthly bank balance................. $14,114.51
“ Amount paid for rent within the State........... $52,997.11
“ Amount paid for salaries, expenses, etc., within the State....................................... $321,254.16.”

It also appears that the amount of its capital stock was $10,000,000, divided into 100,000 shares of $100 each, and that 86,000 shares worth thirty dollars per share, had, on November 1,1890, been issued. The total wire and pole mileage in the United States in November, 1890, was 79,489, of which 7,378, or nearly one-tenth, was in the State of New York. The company held stock in subsidiary telegraph companies, the par value of which is $5,649,020.

The questions involved have been so often passed upon and are so well settled, that an extended discussion will not be required.

It is settled that the provisions of chapter 542, Laws of 1880, and of the acts amendatory thereof and supplemental thereto, are not in conflict with either the State or Federal Constitutions. (People v. The Home Ins. Co., 92 N. Y. 328; The Home Ins. Co. v. New York, 134 U. S. 594; People v. The Gold & Stock Tel. Co., 98 N. Y. 67; People v. Horn Silver Mining Co., 105 id. 76.) And this is the case although an assessment under the act may result in an unequal or double taxation. (People v. The Home Ins. Co., supra; People ex rel. Penn. R. R. Co. v. Wemple, 51 N. Y. St. Repr. 702-704.)

The opinion in the case last cited, after referring with approval to the doctrine stated in People v. The Home Ins. Co. (supra), contains the following language: “ The tax when imposed on a domestic corporation, is a tax on its corporate franchises ; when imposed on a foreign corporation is a tax on its business; a distinction based on the fact that corporate franchises are only taxable within the jurisdiction which creates them, and where alone they can be said to have a situs.”

Hence if a portion of the capital stock of relator employed within the State. was real property subject to local taxation, the Comptroller, in estimating under the provisions of the act of 1880 the amount of relator’s capital stock employed within the State, was not compelled to deduct therefrom the real estate so locally taxed. In People v. The Home Ins. Co. (supra), a portion of the capital of the company was invested in bonds of the United States not taxable — but it was held that such bonds could be properly considered in determining the amount of capital stock of the company. So, in the case under consideration, the Comptroller could, to determine the amount of the relator’s property employed in the State, take into consideration its real estate though subject to local taxation.

The act of the Comptroller in imposing the tax in question was not prohibited by the enactments as interstate commerce. The case of The People ex rel. The Penn. R. R. Co. v. Wemple (51 N. Y. St. Repr. 702), referred to by the relator, does not apply. In that case, the relator, a railroad company, whose lines extended over Pennsylvania, New Jersey and other localities, had no property in this State except that used solely for interstate commerce. It carried on no business within the State except that of interstate commerce. If, besides landing its passengers and freight in New York city, that railroad had extended its lines into the State of New York, or elsewhere, the pase would have been more like the one under consideration. In the opinion in the case cited, the following language occurs: “ There would seem to be no question that domestic corporations, engaged -in both State and interstate commerce, may lawfully be subjected by the State to a franchise tax, measured by its whole capital or business, or in any other way in the discre-' tion of the Legislature, without taking notice of the part of its business arising from interstate commerce, providing no hostile discrimination is made against such part. Nor would there seem to be any valid reason why a foreign corporation, engaged both in the business of State and interstate transportation in this State, should not be subject to a taxation in common with domestic corporations.”

Therefore, the Comptroller could properly impose the tax in question upon relator, although it was engaged in both State and interstate commerce.

The act of the Comptroller in imposing the tax in question on relator, not being prohibited by the State or Federal Constitutions, the only question remaining to be considered, is whether there was error in determining the amount of capital employed by relator within the State.

The learned counsel for relator contends that the Comptroller erred in considering the amount of relator’s average monthly bank balances, the gross amount paid for salaries, wages, labor, etc., and the total amount paid for rent. He suggests that this plan was first adopted and erroneously approved by this court in People ex rel. A. C. & D. Co. v. Wemple (60 Hun, 225). But the determination of this court in the case cited, was sustained by the Court of Appeals (129 N. Y. 558, 565, 566). It is, therefore, unnecessary to consider the argument of the learned counsel in support of his said contention. (See, also, People ex rel. S. C. O. Co. v. Wemple, 131 N. Y. 68.)

The authorities last above cited hold that the amount of capital that any corporation employs within the State is generally a question of fact to be determined by the Comptroller. Also, as above suggested, that the determination of the Comptroller will not tie disturbed, unless clearly shown to be erroneous. As we have seen, it was for the relator, on its motion for a revision, to produce evidence showing that the Comptroller erred in determining the amount of its capital stock employed in the State to be $119,965. After a careful examination of the papers, we are unable to hold that the relator succeeded in showing any such error.

.It does not appear by what method of computation the sum of $119,965 was settled upon as the amount of relator's capital stock used-within the State. But it was shown that 86,000 shares of its stock had been issued, worth thirty dollars per share ; that the wire and pole mileage of the company in this State was 7,378 miles; amount invested in poles and wire in the State, $175,000; its monthly bank balance, $11,711.51; amount paid for rent, $52,997.77; for salaries, expenses, $327,251.76. The company also holds stocks in subsidiary telegraph companies of the par value of $5,619,070. The relator was a New York corporation with its principal place of business in that State. From that place of business its operations were conducted. The Comptroller had all these facts before him in determining upon $119,965 as the amount of relator’s capital stock employed in the State. We are unable to say that on the application for a revision it was made to appear that the Comptroller erred in his conclusions on the question submitted to him. The Comptroller having the facts above set out before him, as held in People ex rel. A. C. & D. Co. v. Wemple (129 N. Y. 566), there was sufficient evidence upon which he could act in finding a basis for assessment.

On the application for revision the burden was on the relator to show the Comptroller’s error, if any. We think it failed to do so, and hence that the decision of the Comptroller should be confirmed, with costs.

Mayham, P. J., and Herrick, J., concurred.

Decision of Comptroller affirmed, with costs.


text:
    Warner E. Sprague, Respondent, v. William B. Cochran, Appellant.

      Statute of Limitations — a bar to an action, brought after ten yearrs, to reform a mortgage — equitable mortgage by pan'dl.

    An action brought to reform a mortgage falls within the bar of the ten year Statute of Limitations.
    Where the parties have reduced a mortgage to writing, although it is claimed by one of them to be erroneous by reason of a portion of the real estate, intended to be included therein, having been omitted therefrom by mistake, such party cannot fall back upon the original agreement by which, in consideration of money advanced to him, the mortgagor agreed to execute a mortgage upon all of his real estate, and claim that such agreement created a mortgage in equity, and that there was, therefore, no necessity of reforming the written instrument. The parties having reduced their agreement to writing must, subject to its being reformed, be governed thereby.
    Appeal by the defendant, William B. Cochran, from so much of a judgment of the Supreme Court, entered in the office of the clerk of Sullivan county on the 19th day of May, 1892, as decrees a reformation of the mortgage set out in the complaint, and also from an order made at the Ulster County Special Term granting the plaintiff leave to amend the complaint so as to claim a reformation of said mortgage entered in the clerk’s office of Sullivan county on the 4th day of June, 1892.
    The action was tried before a referee, upon whose report judgment was entered adjudicating the rights and interests of the several parties to the action in certain pieces of real estate, and providing for a foreclosure of a mortgage and determining the disposition of the proceeds thereof.
    The bond and mortgage in question bore date February 9, 1876, and this action was commenced in September, 1887.

      T. F. Bush, for the respondent.

      George 3, Oa/rpenter, for the appellant.
   Putnam, J.:

The only matter necessary to be considered by us is whether plaintiff’s right to a reformation of the mortgage in suit was barred by the Statute of Limitations, and, if so, whether such a reformation was necessary to sustain the judgment rendered.

It is suggested that the question involved has not been passed upon by the Court of Appeals. But there are several well-considered cases in this court holding that an action to reform a deed must be brought within ten years, and we deem it right to follow those decisions. (Hoyt v. Putnam, 39 Hun, 402; Oakes v. Howell, 27 How. 145; Cramer v. Benton, 4 Lans. 294.) Burnett v. Wright (44 N. Y. St. Repr. 14), was an action to foreclose and reform a' mortgage drawn on one of the usual blanks, the scrivener omitting to insert in the defeasance clause the amount of the mortgage debt. It read thus: “ This grant is intended as security for the payment of ,” without inserting ary amount. The action was brought nineteen years after the execution of the instrument.

This court held that it was a case where it was necessary to reform the mortgage and that the action for the reformation must be brought within ten years. The judgment was reversed by the Court of Appeals (135 N. Y. 543) on the sole ground that no reformation was required. That the mortgage had as much force as if drawn in the form of a deed, and that a defeasance need not ever be in writing, but may be shown by parol. The Court of Appeals' did not overrule the doctrine declared by the General Term that an action to reform a deed must be brought within ten years, but apparently acquiesced in that regard in the decision of the court below. Hence the case cited is an authority that the. ten years’-limitation applies to an action to reform a mortgage.

I am unable to concur in the view stated in Syms v. The Mayor (50 N. Y. Super. Ct. 289-294), as applicable to such ,a case as this. The error in the description of the mortgage in suit was caused by a mutual mistake, as found by the referee. There was no fraud, actual or constructive. Hence the provisions of subdivision 5, section 382, Civil Code, are not applicable. The cause of action accrued on the delivery of the mortgage, over ten years prior to the commencement of the action. It is a case where the provisions of section 388 apply. The case of Welles v. Yates (44 N. Y. 525), was a case of fraud, and hence not similar to the one under consideration. We, therefore, conclude that the right to reform the mortgage was barred by the Statute of Limitations.

But the learned counsel for plaintiff claims, as I understand his position, that the agreement of defendant in consideration of the $3,000 advanced to him, to execute a mortgage wpon all of his real estate, was in equity a mortgage thereon, and that a portion of the said real estate being omitted by mistake, and not included therein, will be treated in equity as being embraced therein, and that hence, in fact, no reformation of the instrument was necessary. That there being a valid equitable mortgage upon all of defendant’s premises the action thereon is not barred while the bond remains in force. This position is a novel one, and, we think, cannot be sustained. The parties having reduced their contract to writing, the writing, unless reformed, must govern. Doubtless, if the action had been been commenced in time, equity could have reformed the contract and made it conform to the real agreement of the parties. But the right to reform having been lost by the lapse of time, the written contract must govern.

In Burnett v. Wright (supra), it did not apparently occur to the members of the court, at General Term or in the Court of Appeals, that the mortgage in that case was an equitable one, and was, to all intents and purposes, as valid as though the agreement of the parties had been wholly embraced therein. The General Term in effect held a contrary doctrine, and the Court of Appeals decided that it was not an equitable but a legal mortgage. In that case, had the mortgage only covered a part of the premises agreed to be covered, I infer from the opinion that the Court of Appeals would have held a reformation necessary.

Our conclusion is that the order allowing an amendment should be reversed, and the motion denied, and the judgment should be modified in pursuance of this memorandum, with costs to the appellant.

Mayham, P. J., and Herrick, J., concurred.

Order allowing amendment reversed, and motion denied, and the judgment modified in pursuance of' memorandum, costs to the appellant.


author: Per Curiam : Kellogg, J.:

text:
    Orrando P. Dexter, Appellant, v. William Dana Dustin and Others, Respondents.

      Judgment roll — the amended (not the original) answer should he inserted in — an order allowing the amendment and the original answer not considered on appeal if not proved on the trial.

    Where an amended answer lias been served to a complaint in an equity case tbe original answer should not be inserted in the judgment roll as filed with the county clerk; nor should the order allowing such amended answer to be served.
    The fact that an order, by which an amended answer is substituted for the original answer, has a clause saving the rights of the plaintiff to the costs or disbursements which may have been occasioned by reason of the original answer, and that this saving clause in the order has not been taken into consideration by the justice, before whom the issue created by the amended answer was tried, in determining the question of costs, can only be presented to the appellate court after such order and original answer have been put in evidence upon the trial of the action.
    The contents of the original answer and of the order in such a case are facts which should be brought to the knowledge of the trial justice by presentation and proof, and where they are not so presented and proved they constitute no part of the case and are improperly attached to the judgment roll.
    Appeal by tbe plaintiff, Orrando P. Dexter, from an order of tbe Supreme Court, entered in the office of tbe clerk of tbe county of Franklin on tbe 14th day of January, 1893, directing tbe said county clerk to strike from tbe judgment roll filed in bis office in this action tbe original answer served herein, verified tbe 29th day of May, 1890, and tbe order of this court granted tbe 3d day of February, 1891, or copies thereof, and that neither of said papers or copies thereof be incorporated in tbe judgment roll herein.

      John P. Padger, for tbe appellant.

      John P. Pellas, for tbe respondents.
   Per Curiam :

We are of opinion that tbe order in question in this case should be affirmed on tbe opinion of tbe court below. (See Brown v. Saratoga Railroad Co., 18 N. Y. 495; Thornton et al. v. The St. Paul & Chicago R. R. Co., 6 Daly, 511.)

Present — Mayham, P. J., Putnam and Herrick, JJ.

Judgment affirmed, with costs, on opinion of court below.

The following is the opinion of the court below:

Kellogg, J.:

A motion is made herein to strike from the judgment roll as filed with the clerk of the county of Franklin, where this action was tried, the original answer, and the order of the court directing that' the amended answer be received and treated as the answer in the case.

The simple question is whether, as a matter of practice, the original answer, which has been superseded by an amended answer, is properly a part of the judgment roll, and whether the order directing the substitution is also a proper part of the judgment roll. I think not. The original answer can no longer affect the merits, nor can the usual order of substitution affect the merits of the action. The merits of the action must be discovered from the issues raised by the complaint and the amended answer, where the amended answer is a substitute for the original answer. The trial of the action is a determination of the merits appearing from the issues formed by the complaint and the amended answer only. This being an equity action, the plaintiff claims that although the determination of the merits was in plaintiff’s favor, the court refused to grant plaintiff costs of the action, and that plaintiff has appealed, or is about to appeal, on that ground. He also claims that the order substituting the amended answer for the original answer, had a clause saving the rights of plaintiff to costs or disbursements which may have been occasioned by reason of the original answer, and that this saving clause in the order should have been taken into consideration by the justice before whom the action was tried, in determining the question of costs. It is difficult to see how the existence of this order, or this provision in the order, could be brought to the knowledge of the trial justice on any presumption that he was bound to know of the existence of such- an order on file in the office of the clerk of the county of Franklin; and it would be absurd, it seems to me, to now claim — without having brought this order to the knowledge of the trial justice — that counsel for plaintiff should ask that it be considered by the General Term as weighing upon the question of an abuse of discretion upon the part of the justice, on the subject of costs. This would be presenting a different case to the appellate court from that which was presented upon the trial before the trial justice. There was one plain way in which the matter might have been brought to the knowledge and notice of the trial justice. If the plaintiff desired any facts should have been presented to him, other than the facts developed upon the trial, it would have been an easy matter to have also presented this order and the original answer as a part of his evidence, claiming that it had a bearing on the discretion of the justice in determining whether the plaintiff was entitled to costs, and how much, if any. In what way the contents of the original answer, which had been relegated out of the case by the order, or in what way the provisions of the order itself could be considered by the trial justice without being presented to him, is not clear. Certainly the justice cannot be presumed to know the contents of such an answer which is not within the case, or the provisions of an order on file in the county clerk’s office, although such an order may have been made in the case. This order is not an order affecting the merits. It relates solely to the costs; and costs can never be considered, even in equity cases, as coming under the head of merits, as understood in the practice. The contents of this original answer, after it was removed from the case, and the contents of this order on file in the county clerk’s office, were facts which could be brought to the knowledge of the trial justice only on presentation and proof. This appears not to have been done in this case. They are consequently no part of the case, and are improperly attached to the judgment roll. For these reasons, it. is ordered that they be stricken therefrom.


text:
    Peter J. Smith, Respondent, v. John Mack, Appellant.

      Change of venue — the affidavit need not state that the witnesses a/re “necessarry”— nor the source of the affiants information.

    On an application made by a defendant to change tbe place of trial on the ground of the convenience of witnesses, if the moving affidavit states that each and every of the witnesses mentioned are material witnesses for the deponent on the trial of the cause and that without the testimony of each and every one of them the moving party cannot safely proceed to trial, as he is advised by his counsel and believes, he shows that the witnesses are necessary as well as material, although the word “necessary” is not used in the affidavit.
    It is not necessary that it should be stated in the moving affidavit what information the affiant had, which enabled him to state that the several persons named as necessary witnesses would testify to the facts as set forth in the affidavit.
    Appeal by tbe defendant, John Mack, from an order of tbe Supreme Coru't, made at tbe Albany Special Term and entered in tbe office of tbe clerk of tbe county of Columbia on tbe 21st day of February, 1893, denying a motion for an order changing the place of trial of tbe action from tbe county of Columbia to tbe county of Albany for tbe convenience of witnesses.

      Ed/ward J, Meegcm, for the appellant.

      Chancellor Hcrnver and Eugene BwrUngmie, for tbe respondent.
   Putnam, J.:

Appeal from an order of tbe Albany Special Term denying a motion made by defendant to change tbe place of trial from tbe county of Columbia to that of Albany.

Tbe plaintiff insists that tbe defendant’s moving affidavit is fatally defective in omitting to state that the witnesses named are not only material but also “ necessary.” The part of tbe affidavit referred to after stating tbe names and residences of each of tbe witnesses, is as follows : “ Are each and every of them material witnesses for this deponent on tbe trial of this cause, as be is advised by said counsel, and verily believes; and that without tbe testimony of each and every of said witnesses deponent cannot safely proceed to tbe trial of this cause, as be is also advised by said counsel, and verily believes.” Plaintiff’s contention is that tbe affidavit should have contained tbe words “ and necessary,” between “ material ” and witnesses.”

It will be seen that tbe form of tbe moving affidavit is tbe same as that set out in tbe note in Brittan v. Pedbody (4 Hill, 66). In tbe form therein given tbe word “ necessary ” is not used. In tbe note in tbe same case (4 Hill, 65), the following doctrine is laid down : It must be shown, moreover, that they are each and every of them material to tbe defense (or for tbe defendant) (Anonymous, 1 Hill, 668), as tbe defendant is advised by bis counsel, and verily believes. (Anonymous, 3 Wend. 425; Anonymous, 1 Co wen, 102.) They must appear to be necessary also, as well as material (Satterlee v. Groot, 6 Cowen, 33; see Young v. Scott, 3 Hill, 32-35), and for this purpose, the affidavit adds that without the testimony of each and every of the witnesses, the defendant cannot safely proceed to the trial of the cause, as he is advised by his counsel, and believes. (Satterlee v. Groot, 6 Cowen, 33; Anonymous, 7 id. 102; Anonymous, 3 Wend. 425.)”

We think it appears from the above quotation and the authorities therein cited, that on the motion to change the place of trial for the convenience of witnesses, while it is necessary to show the advice of counsel, that the witnesses are material and necessary, if the affidavit states that each and every of the witnesses mentioned are material, and that without the testimony of each and every of them, the moving party cannot safely proceed to trial, as he is advised by his counsel and believes, he does show that the witnesses are necessary as well as material.

The respondent also claims that the moving affidavit is defective in not alleging what information the affiant had which enabled him to state that the several persons named as necessary witnesses would testify to the facts as set forth in the affidavit. As the General Term of this district, in Myers v. The Village of Lansingburgh (54 Hun, 623), has held that such an allegation is unnecessary, this objection need not be considered.

The action was brought to recover $1,888 from defendant as a stakeholder for wagers made with him in the city of Albany between November 1, 1891, and February 5, 1892. There were 214 different bets set out in the bill of particulars and all made in the city of Albany. We do not deem it necessary to discuss at length the affidavits of the parties read on the motion. But all the transactions set out in the pleadings occurred in the city of Albany, and from that fact, as well as from said affidavits, we think it appears that the convenience of witnesses will be pronioted by a change of the place of trial from the county of Columbia to the county of Albany. The papers show a greater number of witnesses in the latter county. In such a case as this, it is well settled that the place where the transactions between the parties occurred is an important element in determining where the trial shall be had. (Maynard v. Chase, 30 N. Y. St. Repr. 348; Trope v. The Saratoga Association, etc., 36 id. 127, 128.)

The order should be reversed, with ten dollars costs and disbursements, and the motion to change the place of trial granted, with ten dollars costs to abide the event.

Mayham, P. J., and Herrick, J., concurred.

Order reversed, with ten dollars costs and printing disbursements, and motion to change the place of trial granted, with ten dollars costs to abide the event.


author: Herrick, J.: Kellogg, J.:

text:
    The Board of Education of Union Free School District No. 1 of the Town of Waterford, Appellant, v. The First National Bank of Richfield Springs, John D. Henderson, as Receiver, etc., Richard J. Williams and Edward Manogue, Appellants; and Alexander G. Cunningham, Respondent, Impleaded with John Brown and Others, Defendants.

      Building contract — a/rchitects estimate — non-negotiable chose in action— equitable estoppel.
    A building contract, for the erection of a school building for the board of education of a union school district, provided that “ in the event of any doubt or question arising respecting the true meaning of drawings or specifications reference shall be made to the architects, whose decision thereon, being just and impartial, shall be final and conclusive.” The contract price to be paid as follows: “ On or before the 10th day of each month ninety per cent of the work done and material furnished during the month previous; the full amount of work done and material so furnished to be ascertained by the estimate of the architect.”
    The specifications provided that the work should be done to the satisfaction of. the architect and building committee, and that “ any disagreement that cannot be settled by the architects or building committee shall be settled by three disinterested arbitrators.”

      Held, that while, under these provisions, the contractors before they could demand monthly payments were required to obtain, if practicable, the architect’s estimate, yet that it was apparent that the parties contemplated that in case either the contractors or building committee were dissatisfied the disagreement should be settled by arbitration, and that this provision precluded the conclusion that the architects were made final arbitrators or umpires or that their decision was final and conclusive as to monthly estimates of the value of the work done and material furnished during the progress of the work.
    When a paper claimed to be an architect’s estimate of work done under a building contract, which by its terms does not make such an estimate conclusive even when honestly made, purports simply to be an “ approximate ” estimate and is shown to have been made in bad faith, evidenced by mistakes so gross as to characterize the estimate as a fraudulent one, it is worthless for any purpose in the hands of the contractors.
    Nor does such an architect’s estimate have any greater force in the hands of an assignee thereof from the contractors, on the ground of equitable estoppel as against the party obligated to pay for the work done under the contract, where the estimate was not intended to influence the conduct of any outsider, and the building contract did not clothe the architect with any authority to make any statement to any third party or to the public at largo, and it was not contemplated by the building contract or by any previous dealings between the parties that the estimate should be put upon the market or be used as negotiable paper or security or be dealt with in any manner by the public or by any member of it.
    Such assignee thereof stands in the shoes of the contractors to whom the estimate was furnished, and holds the claim subject to all the defenses and equities which might be urged against the contractors.
    Appeals by the plaintiff, tbe Board of Education of Union Free School District No. 1 of the town of Waterford, and by the defendants, the First National Bank of Richfield Springs, John D. Henderson as receiver, etc., Richard J. Williams and Edward Manogue, from a judgment of the Supreme Court, entered in the office of the clerk of Saratoga county on the Jth day of January, 1893, upon a decision of the court rendered after a trial before the Saratoga Circuit Court without a jury.

      O. O. Ormsby and J. W. Houghton, for the plaintiff appellant.

      James W. Yerbeóle, for the First Nat. Bank, Williams & Manogue and Henderson, defendants appellants.

      Smith & WelVmgton and Edgar T. Brackett, for the respondent.
   Herrick, J.:

From an examination of the evidence in this case I am satisfied that there is evidence tending to establish the facts found by the trial court, and I do not feel that I would be justified in saying that such facts are not supported by the evidence in the case.

The facts found by the court not being disturbed the conclusions of law found naturally follow.

The opinion of the trial court is in the main satisfactory, and I see no reason to write another.

Judgment should be affirmed, with costs.

Mayham, P. J., and Putnam, J., concurred.

Judgment affirmed, with costs, on the opinion of court below.

The following is the opinion of the trial court:

Kellogg, J.:

This action is brought, as appears by the complaint, to have determined to whom, among the defendants, plaintiff should pay money in its possession, and the amount to be paid to each. The apparent theory is that a certain sum of money is, by order of the court, deposited with the county treasurer, subject to distribution among the defendants by judgment of this court, the plaintiff being only interested in properly and safely being rid of the money and all liability to any defendant; that the defendants should litigate among themselves their rights thereto. The answer of the several defendants, and the course the litigation has taken, develops a somewhat different theory, which may also be considered consistent with plaintiff’s right to maintain the action, viz.: To whom among defendants is plaintiff indebted, and in what sum or sums ? Various independent claims have by the several defendants been made upon plaintiff, all growing out of a single transaction. One suit is pending by defendant Cunningham against plaintiff, claiming the entire sum in plaintiff’s possession. Another is threatened by defendant, the Richfield Bank, claiming a portion of such money, and sundry proceedings supplemental to execution in favor of other defendants are also pending, liable to ripen into several actions in the name of the receiver of John %id Charles Brown (two other defendants) against the plaintiff. And while the sum of plaintiff’s total indebtedness is conceded to be a limited sum, and its present obligation to each and all of the defendants is based on a single contract made with defendants John and Charles Brown, and not upon its separate dealings with other defendants, yet the plaintiff is in peril from these various claims, and I think properly brings into court in one suit all these defendants, and is entitled to judgment here determining all questions raised. Objection is made by no defendant except defendant Cunningham, to this mode of procedure. There is no difficulty in making a full determination of all the questions in a single action. In such an action all matters of fact might properly be left to a jury, if a jury were insisted upon"; and even if a jury trial were denied, I am of the opinion that that theoretically great injustice to the litigant is outweighed by the threatened vexatious litigation and expense attending a denial to plaintiff of standing in court in such an action.

The whole controversy grows out of a contract made by plaintiff in March, 1891, with defendants John and Charles Brown, to build a school building in the village of Waterford for $32,000. The contract is in writing. The contractors entered upon performance promptly, but before completion, and on November, 15,1891, abandoned the work, and without excuse or pretense of excuse refused to further perform. And defendant Cunningham, who was one of the sureties on the contractors’ bond, and was also assignee of the contract from John and Charles Brown after the abandonment, completed the building after the manner prescribed by the contract. The contract stipulated for payments of ninety per cent monthly as the work progressed. At the time of the abandonment by the Browns they had been paid in money by plaintiff $23,271.54. Extra work had been done of the value over certain proper deductions, of $256.17; and after the above-named payments the plaintiff at time of abandonment had in hand to pay for balance of work and material to complete the building exactly $8,984.63. This was what plaintiff would have to have paid the Browns had they gone on and completed the building. About this there is no dispute ; and this was known to Cunningham when he took his assignment from the Browns of the 'contract, and when he first began work after Brown left. It is clear, I think, from the position taken by Cunningham from the beginning, that he never had other expectation than to be paid out of that balance in plaintiff’s hands, and no sum in excess of it, however much the completion of the building might cost him. This, from his actions and conversations, the plaintiff had a right to understand. And the claim of counsel for this defendant made at the close of this case that the facts warrant a judgment upon a qucmfy.t/m meruit for the value of labor and materials in completion of the building by Cunningham and in excess of the sum in. hand, and without regard to the contract or to the payments actually made to the Browns, is untenable.

If Cunningham were the only party in interest here obviously all that would be necessary in disposing of the case would be the ascertainment of the sum in the hands of the plaintiff unpaid upon the contract, and direct the payment of such sum (with interest from the time wheu due) to him; but the interest of the other defendants, if any they have, is in the sum due the Browns at the time of abandonment. over and above the sums paid to them by plaintiff, and the plaintiff not seeking to claim any forfeiture by reason of the abandonment, investigation was largely directed to the determination of this question, to wit: The actual value of the labor and materials furnished by the contractors, John and Charles Brown.

The testimony is practically undisputed that the contract price, $32,000, was a fair and reasonable estimate of the cost of construction of the building in accordance with the terms of the contract. It may also be regarded as undisputed that the actual and necessary cost of finishing the building after the Browns left it was $10,941.09. Evidently the only accurate test of the value or cost of the unfinished building at the time the contractors left it, is the contract price less cost of completion. This test is eminently more satisfactory than any judgment of architects or builders as to value of work and materials furnished by the Browns prior to their departure. - From this it appears beyond question that instead of there being anything owing the Browns when they left, that they had been largely overpaid in money by the plaintiff for all they had furnished and done. This proof also established that after Cunningham is paid, there will be nothing in plaintiff’s hands for the Browns or any of the defendants claiming under them, or either of them; for this cost of completion in the sum of $10,941.09 was wholly borne by Cunningham.

It is contended, however, by the defendant, the Richfield Bank that plaintiff is estopped from denying that it owed to the Browns on November 15, 1891, in excess of the money already paid them the further sum of $3,500, and this contention is based upon these facts, viz.:

The written contract for the construction of this building possesses the following language : -

“ Tlie contractors shall and will well and sufficiently perforin finish under the direction and to the satisfaction of said George O. Adams and W. P. Regan, architects, as aforesaid (acting as agents of said owners) all the work included in the specifications * * * according to the true intent and meaning of said drawings and specifications and-of these presents. * * * and in the event of any doubt or question arising respecting the true meaning of drawings or specifications, reference shall be made to the architects, whose decision thereon, being just and impartial, shall be final and conclusive * * * (the contract price, $32,000) to be paid as follows: On or before the 10th day of each month ninety per cent of the work done and material furnished during the month previous. T he full a/mo%mt of work done cmd material so furnished to he ascertained hy the estimate of the cvrchitectP

The specifications provide that the work faction of the architect “ and building committee ” and “ any disagreement that cannot be settled by the architects or building committee shall be settled by three disinterested arbitrators.”

It is the contention of counsel for the bank that the -architects or architect were made by this language final arbitrators or umpires, and that their decision on any matter was final and conclusive, and that this is especially so as to monthly estimates of value of work done and material furnished during the progres's of the work. 3Nithout doubt the contractors before they could demand monthly pay were required to obtain (if practicable) the architect’s estimate. (Wyckoff v. Meyers, 44 N. Y. 145.) But I think it is contemplated by the parties that in case either the contractors or building committee were dissatisfied, the “ disagreement shall be settled by arbitration,” and this provision destroys the claim of conclusiveness to such estimates, in any event. It appears that on the 15th of November, 1891, the architect Regan made what purported to be an estimate of all the work done and material furnished up to that time from the beginning. That such estimate was made under the supervision of John Brown, the contractor; and, in addition to showing the value,of such work and materials to be $29,252.51, also showed the amount paid Brown, viz., $19,111.54; and after deducting ten per cent, found a balance due of $7,155.72. This pretended estimate is all in the handwriting of one Carroll, clerk of the contractors, and has across its face tbe name of “ W. P. Regan,” signed by the architect. This estimate purports on its face to be an approximate estimate for work done on Waterford school to date.” When made, the paper was handed by the architect to John Brown, who took it on the same day (November fifteenth) to the chairman of the building committee, Mr. Ford, who immediately expressed dissatisfaction, and declared the estimate grossly excessive, and refused to pay more than $3,500 thereon. Such sum was paid to and received by Brown, and the paper left with Ford for the plaintiff. This seems to have been a settlement of this dispute without the intervention of arbitrators.

It is shown upon the trial that this estimate was, as stated by the building committee to Brown, grossly excessive; that the error was so great as to characterize it as made in bad faith, and fraudulent. That instead of the value of the work and material being $29,252.51, its value was not, in fact, over $21,058.91. After receiving the $3,500 on this estimate from the building committee, Brown returned to the architect, Regan, and procured from him another paper, similar in all respects to the one left with the building committee, except across its face was written by Regan: “ The above is approved by George C. Adams and W. P. Regan, architects, per W. P. Regan, Lawrence, Mass.”

This was signed by Regan, at Brown’s solicitation, after being told of the conclusion of the building committee, and of the refusal to pay the full sum of $7,155.72; and so signed to enable said Brown to procure the money elsewhere, and not for the information of either the plaintiff, its building committee or the contractors, or to ■enable the contractors to procure money from the plaintiff under the terms of the contract. It cannot be claimed, nor does counsel for the bank claim, that such a purpose (the issuing of estimates to procure money elsewhere) was contemplated by the parties in the language of the contract, or through any dealings between them thereunder.

This second paper was, taken by Brown to the defendant — the Richfield Bank — a long distance from Waterford — and on the 17th of November, 1891, after the contract had in fact been abandoned, and used with said bank as collateral security to a note; and a loan of $3,500 was procured from the bank thereon. The bank made no inquiry of anyone but Brown; bad no knowledge of tbe terms of tbe contract, or of tbe authority of tbe architect, or tbe reasons of refusal of payment by plaintiff. Tbe plaintiff knew nothing of this transaction, and was ignorant of tbe acts and intentions of tbe architects and said Brown respecting tbe second paper.

It is under this state of facts that tbe bank now claims that tbe plaintiff is estopped from denying that it owed this $3,500 to Brown on November 15, 1891.

In tbe bands of tbe contractors, it needs no argument to convince that this paper purporting to be an estimate would have been valueless as tbe basis of a claim against tbe plaintiff. Tbe architect’s estimate is not conclusive under tbe terms of this contract, even when honestly made; and when it purports'simply to be an “ approximate ” estimate, it does not profess to fix tbe exact amount; and when tbe “ approximate ” estimate is made in bad faith, evidenced by mistakes so gross as in this case as to characterize tbe estimate as a fraudulent one, it is sufficient to destroy it for any purpose in tbe bands of tbe contractors. (Kihlberg v. U. S., 97 U. S. 398; U. S. v. Robeson, 9 Pet. 319; Smith v. Briggs, 3 Den. 73; McMahon v. N. Y. & E. R. R. Co., 20 N. Y. 464; Smith v. Brady, 17 id. 174; Butler v. Tucker, 24 Wend. 447; Whitemam v. Mayor, 21 Hun, 118.)

As an “ award ” tbe essential elements are lacking, authorization, exactness and honesty.

In tbe bands of tbe defendant, tbe Richfield Bank, it is difficult to see bow this paper can have greater value than if possessed by the Browns, or bow tbe principle of equitable estoppel can be invoked in its aid. When a person has made a deliberate statement with a view to induce another to act, be may not be at liberty to deny tbe statement so made, but it must be a statement to or some neglect of duty to tbe person led into that bebef, or, what comes to tbe same thing, to the general public, of whom tbe person is one, before tbe benefit of the doctrine of estoppel can be claimed. "When tbe declaration or statement is not made to tbe person directly, it must have been made under such circumstances as to indicate that it was intended to reach third persons, or the community at large. And tbe person claiming tbe benefit of tbe principle must show that be has acted in tbe transaction in which be was deceived with ordinary caution.

The plaintiff liere made no statement to the bank directly, nor any statement to the general public. It did not clothe the architect with any authority to make any statement to any third person or to the public at large. It is 'not contemplated by the contract or by any previous dealings between plaintiff and the contractors that the estimate should be put upon the market, or be used as negotiable paper or as security, or that they should be dealt with in any manner by the public or by any member of it. These estimates were simply to be used as the.measure of money to be handed out from the school board treasury monthly to the contractors on presentation, when the correctness of the estimate was not disputed. These estimates were never intended to influence the conduct of any outsider; and any such made and jjaid out by the aid of the architect were unauthorized and not the act or declaration of the plaintiff.

In Mechanics’ Bank v. N. Y. & H. H. R. R. (13 N. Y. 600), certificates of railroad stock issued by the transfer agent of the company were held not to partake of the character of negotiable instruments, and must be taken subject to all equities existing against the assignor, and as to such the doctrine of estopj)el in pais was not applicable.

The same was held respecting a chose in action not negotiable in Bush v. Lathrop (22 N. Y. 535). The same in effect is held in Bank of Batavia v. N. Y., L. E. & W. R. R. Co. (106 N. Y. 195).

This was a delivery by the agent of a common carrier of a bill of lading. The court places great stress upon the fact that.bills of lading not stamped non-negotiable ” were declarations by the common carrier to the general public, and any person might safely rely upon the statements therein contained. That this was so understood by the common carrier, and by the consignor and by the business world, and it was because of this recognized element in bills of lading that the court held that the principle of estoppel applied when these fell into the hands of innocent parties.

The reasoning of Selden, J., in Farmers & M. Bank v. Butchers & D. Bank (16 N. Y. 141), is to the same effect.

Statements may be made by a party which are not intended to influence the actions of others or intended to be communicated to them, and in such case the doctrine does not apply. (See Reeves v. Kimball, 40 N. Y. 311; Mayenborg v. Haynes, 50 id. 675.)

Here it was held tbat a declaration of A. to B., not made for the purpose oi being communicated to C., constitutes no estoppel, although O. hears of it and acts upon it.

To the same effect is Maguire v. Selden (103 N. Y. 642).

As to such statements it was here held, that however understood, (they) could not be extended beyond the party to the ^transaction in relation to which they were made.”

It is unnecessary to continue citations of cases in the courts. The bare statement of the facts is sufficient when once the principle of estoppel here invoked is clearly understood. "Without doubt the Bank of Richfield must stand in the shoes of its assignor of this chose in action, and hold the claims subject to all the defenses and equities which might be urged against the Browns.

That the other defendants can have no claim against the plaintiff, since it was found that there was nothing due the Browns at the time of the abandonment of the contract, is too plain for argument. They possessed no legal or equitable claim upon this sum in the hands of the plaintiff, all of which was required to complete the building. They made no contract with plaintiff, and must be relegated to the persons with whom they dealt — the contractors, John and Charles Brown.

The plaintiff contends that it should not be chargeable with interest or costs. The justice of this claim I do not fully see. Nor do I regard the nature of this action so far a presentation of equitable claims as to be addressed to the equity side of the court wherein costs may be a matter of discretion ; and if it were I see no propriety or justice in the retention of the money which should have been promptly paid for the completion of the building. The facts of this case do not press the court with any considerable force to the conclusion that plaintiff was justified in not paying over the money to Cunningham promptly, and in accordance with the terms of the contract. This might have been done safely, and it was clearly plaintiff’s duty to have done it. In no respect is Cunningham at fault; and why he should suffer this delay and lose both interest and costs after a long and expensive struggle, is not quite plain, and the justice of this claim of plaintiff does not gain weight upon reflection that really there has been nothing to struggle over. Tbe whole claim of Cunningham has been conceded from the beginning except the amount, and a proper resort to the eon-tract and the architect at the time might have obviated any disagreement, and the amount have been promptly determined through means in plaintiff’s reach.

The delay caused by plaintiff to the completion of the building was, in the light of this trial, wholly inexcusable. The plaintiff was called upon to decide, and to act promptly. It had open to it two courses. It might declare the contract forfeited, and assume the completion itself, or it might recognize the contract as continuing, and accept the offices of the surety, or accept the assignment as satisfactory, and recognize him. It did neither. Cunningham acted only the part of a prudent man, spending so much time in seeking recognition, and seeking so to avoid the peril of doing his work for nothing. This delay must be charged to plaintiff, and since it was sufficient to excuse the delay in completion of the building beyond April first, it must be sufficient to relieve from the stipulated forfeiture.


author: Herrick, J.:

text:
    Louisa Freeman, as Administratrix, etc., of George N. Freeman, Deceased, Appellant, v. The Glens Falls Paper Mill Company, Respondent.

      Employer and employee — negligence—failure to provide an cmtomatie door for cm elevator shaft — risk assumed by the employee.

    In an action brought to recover the damages resulting'from the death of the plaintiffs intestate, alleged to have been caused by the negligence of the defendant, the owner and operator of a mill in which the deceased was employed, the evidence showed that the defendant’s mill, which was several stories high, stood on a steep bank, the upper story being on the street level and communicating with the lower stories by means of an elevator passing through a shaft; there was no trap or other door to close the shaft on the upper floor, but in place thereof there was a movable bar, with fastenings provided to place across the opening, which the defendant’s employees were instructed to place in position after passing to or from the elevator. The deceased, who was well acquainted with the condition of the upper floor and the elevator opening, descended therefrom to a lower floor, without replacing the bar across the opening, and while engaged in loading the elevator on the lower floor was Struck and killed because of one of several empty barrels, permitted to stand temporarily on the upper floor, being disturbed by tbe jarring of tbe mill machinery, so as to roll into the shaft on the upper floor and fall through upon him; which would have been prevented had the bar been replaced by the deceased across the opening, in obedience to the instructions which he had received.

      Held, that the evidence warranted a verdict in favor of the defendant, on the ground that the deceased contributed to the accident which produced his death;
    That in such an action founded upon the defendant’s alleged negligence, the fact that the defendant failed to maintain a trap or automatic door at the elevator opening, as prescribed by section 8 of chapter 462 of the Laws of 1887, did not release the plaintiff from the burden of showing that there was no contributory negligence on the part of the deceased;
    That as the deceased knew of, and was instructed what to do with, the device that took the placó of a door, it must be held that it was satisfactory to him, and that he waived the full and complete performance of the duty which the defendant owed to him;
    That the deceased voluntarily ássumed the risk incident to the absence of the automatic door, and in taking that risk waived the benefit of the statute ;- and, hence, that as to him, its provisions were not to be considered.
    Appeal by the plaintiff, Louisa Freeman, as administratrix, etc., of George N. Freeman, deceased, from a judgment of the Supreme Court in favor of the defendant, entered.in the office of the clerk of Saratoga county on the 2d day of November, 1891, upon a verdict rendered at the Saratoga Circuit, and from an order denying the plaintiff’s motion for a new trial made upon the minutes.

      T. F. Hamilton, for the appellant.

      Hvng c& Ashley and J. 8. JDAmoreaux, for the respondent.
   Herrick, J.:

The defendant was the owner and operator of a paper and pulp mill. The mill was three stories in height and stood upon a steep bank; the upper story of the mill was on a level with the street; communication between the different stories of the building was had by means of an elevator passing up and down through a shaft or well. There was no trap or other door, at the time of the accident, to close the well on the upper floor, through which the elevator-passed ; on the upper floor, this well was closed on three sides; on the remaining side were two bars; the upper bar was fastened to the posts of the well; the lower bar was one that could be moved backwards and forwards through clasps attached to the posts of the well, and wben in position was about twenty-four inclies aboye the level of the floor at one end, and about twenty-five and one-half at the other.

The plaintiff’s intestate had been in the employ of the defendant about two months before the happening of the accident for which this action was brought, and used the elevator several times each day. There was evidence that instructions were given by defendant to its employees that when they passed through these bars to and from the elevator, they should close the lower bar after their passage ; that such instructions were given to plaintiff’s intestate; it is in evidence that on the day of and prior to the accident, plaintiff’s intestate, upon entering the elevator to descend, left the lower bar out; that his attention was called to it by defendant’s foreman, who told him that the bar must be kept in place.

That it was the custom of defendant to keep, temporarily, machinery, barrels and other movable articles on the first or upper floor. At the time of the accident, there were one or more empty barrels upon the first or upper floor. There is evidence to show that, just prior to the happening of the accident, the plaintiff’s intestate, with two or three other workmen, went down the elevator; that the last person to enter the elevator was plaintiff’s intestate; that, as they descended the elevator, the bar was not put in place, and that the elevator did not come back again to the upper floor, until after the accident; that about fifteen minutes after the elevator went down this last time the plaintiff’s intestate, with others, were engaged in placing on the elevator, on the lower floor of the building, a large grindstone, using a stone boat to move the stone to and upon the elevator; while endeavoring to adjust the roller under the stone boat his head projected beyond the line of the well; an empty oil barrel upon the first or upper floor rolled from its position, apparently put in motion by the vibrations of the mill, caused by the Workings of the powerful machinery, into the open well, and fell upon his head, causing his death. To recover the damages resulting from such death this action was brought.

Upon the first trial the plaintiff was nonsuited; she appealed to this court, where the judgment of nonsuit was reversed. (61 Hun, 126.)

The case being again tried was submitted to the jury, who found for the defendant, whereupon the plaintiff appeals to this court for a new trial. IJpon this last trial the court submitted four propositions of fact to the jury, as follows:

First. Did the deceased know the manner in which the first or street floor was used, and the purpose for which it was used ? Answer. Yes.

Second. Did the deceased know that any empty barrels were permitted to stand temporarily on the street or first floor ? Answer. Yes.

Third. Did not deceased on the day of 1¡he accident at any time see the empty oil barrel standing on the box by the post near the elevator ? Answer. Yes.

Fourth. If the lower bar had been in position across the elevator well would the barrel have fallen in ? Answer. No.

There is evidence to sustain all these findings by the jury; they relieve the case of a number of the questions presented when it was formerly before this court.

The uncontradicted evidence shows that the intestate must necessarily have known that there was no door to the well of the elevator on the first or upper floor; the evidence also shows that he was warned by the defendant’s foreman of his duty to put the bar in place after entering, and before descending upon the elevator.

The jury have expressly found from the evidence that if the bar had been in place the barrel would not have fallen down the elevator well, and there is evidence from which the jury could well find that the last time the elevator'went down before the accident, where it remained until after the accident, the intestate was the last man to enter it; that neither he nor those with him put the bar in its proper place upon descending, so that I think the jury could fairly find that the intestate contributed to the accident which produced his death. If the failure of plaintiff’s intestate to obey the rules of the defendant, or the direction of its foreman, caused or contributed to the accident, the plaintiff cannot recover. (La Croy v. N. Y., L. E. & W. R. R. Co., 132 N. Y. 570.)

The appellant strenuously insists that the judgment should be reversed, and a new trial granted by reason of an alleged error of the court in its charge to the jury as to the fact of the non-observance of section 8, chapter 462 of the Laws of 1887, which provides in substance that the owners, agents or lessees of buildings having elevators, must provide trap or automatic doors to sucb elevators, so constructed as to open and close by tbe action of tbe elevator iu ascending and descending.

In relation to tbat statute, tbe court charged as follows: This statute itself has no sort of bearing upon tbe case, if you come to tbe conclusion, and I charge you, as matter of law, tbat you mu§t come to tbe conclusion, tbat plaintiff’s intestate did know that this elevator was not provided with tbe automatic doors. So tbat I apprehend, when you come to tbe discussion of this case, you will lay aside tbat provision of law, because it lias no bearing and cannot lead you to any proper conclusion, and ought not to have any weight in the jury box or jury room; it is not an element in this case. It is an undisputed fact in tbe case that deceased did know the manner in which the elevator was constructed; he knew what protection there was and he accepted the situation, accepted the employment, and did what he was doing on the day he was killed with the full knowledge of those things, so far as the protection against danger, which defendant had made to the elevator, is concerned.”

I do not think this charge constitutes reversible error; in substance, it states the rule applicable to this case correctly. The statute was enacted for the benefit of employees; anyone injured in consequence of its not being complied with has undoubtedly a right of action therefor. (City of Rochester v. Campbell, 123 N. Y. 405-414; Willy v. Mulledy, 78 id. 310.)

The action is not brought upon the statute, but is founded upon defendant’s alleged negligence. The violation of the statute by not furnishing doors to the well hole is undoubtedly evidence of the negligence charged, but it does not follow Rom that, that the charge was erroneous.

The duty prescribed by this statute is not more or greater than the common-law duty of an employer to his employees to provide a safe place in which, and proper machinery with which, to work. And the defendant’s liability to the person injured by reason of the statute not being complied with, is not an absolute one, but is subject to the same limitations and restrictions as is the common-law liability for not furnishing a safe place and proper machinery.

The defendant’s non-compliance with, the statute would not relieve the plaintiff from the burden of showing a lack of contributory negligence on the part of the intestate. (McRickard v. Flint, 114 N. Y. 222-221.)

The duty imposed by the statute was for the benefit, among others, of plaintiff’s intestate; it was one that could be waived by him, so far as he was concerned, in accepting employment of the defendant. (Willy v. Mulledy, 78 N. Y. 310-315.)

The absence of a door from the well was apparent, and must have been well known by plaintiff’s intestate; he worked there for weeks before the happening of the accident, used the elevator daily and several times a day; he knew of and was instructed what to do with the device that took the place of a door; it must be held that it was satisfactory to him, and that he waived the full and complete performance of the duty which defendant owed to him, and that he voluntarily assumed the risks' incident to the absence of the door. (Gibson v. Erie Railway Co., 63 N. Y. 449; De Forest v. Jewett, 88 id. 264; Anthony v. Leeret, 105 id. 591-600; Hickey v. Taaffe, Id. 26-35; Shaw v. Sheldon, 103 id. 667; Appel v. B., N. Y. & P. R. Co., 111 id. 550; Fredenburg v. N. C. R. Co., 114 id. 582, 584; Williams v. D., L. & W. R. R. Co., 116 id. 628; Odell v. N. Y. C. & H. R. R. R. Co., 120 id. 323; Davidson v. Cornell, 132 id. 228-234.) And in taking that risk he waived the benefits intended by the statute, and as to him its provisions are not to be considered.

The court was correct also in charging the jury that they must come to the conclusion that plaintiff’s intestate did know that the elevator was not provided with automatic doors.

That it was not so provided was perfectly obvious and apparent, uncontradicted and undisputed. It was a matter the plaintiff’s intestate could not lieljo knowing, and a specific finding to the contrary by the jury would have been properly set aside by the court as one not only contrary to the evidence, but wholly without evidence to support it.

The findings of the jury were sustained by the evidence, and the case was properly submitted by the court, and the judgment should, therefore, be affirmed, with costs.

Mayham, P. J., and Putnam, J., concurred.

Judgment affirmed, with costs.