author: By the Court—Moncrief, J.

text:
    James W. Wiltsie v. William L. Northam.
    1. Where, by an agreement between L. & A., of the one part, and the defendant N., of the other, the former sell their fixtures, &c., in a tioal-yard occupied by them, for a specific sum, and take N.’s negotiable note, and also sell to N., for other consideration, a lease of said yard, and guarantee its renewal on certain terms, and agree, if a renewal be not procured, “ to refund the dne-half the loss on such fixtures,” and no renewal can-be procured, and a suit is brought on such note by one who is an indorsee of it after its maturity, and there is no fraud in procuring the note or in the transaction on which it is founded, the most that the defendant can have deducted from the recovery on the note is one-half of the difference between the value of such fixtures for the purposes of use under a renewed lease and the value thereof for the purpose of removal.
    2. The plaintiff shows a sufficient title to the note to maintain an action on it, although he bought it by giving his own note for it, and, before the second trial of the action, took up his own note by assigning a judgment recovered in the action itself on a former trial of it, (which judgment was reversed and a new trial ordered,) and notwithstanding his vendors of the note and his assignees of such judgment are the persons to whom the note was originally given.
    (Before Hoffman, Pierrepont, and Moncrief, J. J.)
    Heard, October 31;
    decided, November 26, 1859.
    This action comes before the Court upon questions of law arising at the trial, and there ordered to be first heard at General Term. It was tried before Mr. Justice Hoffman and a jury, on the 24th of November, 1858.
    The complaint is upon a note, dated November 16,1855, made by the defendant, for $1,648.28, payable twelve months after its date, to the order of P. H. Lalouette, by him indorsed to Lalouette & Ashfield, and alleged to have been indorsed by them to the plaintiff, who is averred to be the lawful owner and holder of it.
    The answer denies the indorsement to the plaintiff, or that he is the lawful owner and holder, and states, as a defense, that, in Fovember, 1855, Lalouette & Ashfield sold to him their “ stock, fixtures and lease of - a certain coal-yardthat the agreement was in writing, and a copy of it, dated Fovember 16, 1855, is set forth, which states that, in consideration of the note, Lalouette & Ashfield sell to the defendant “all fixtures and appurtenances in, upon and appertaining to the coal-yard,” and described in a schedule annexed to the agreement; and also, in consideration of one dollar, sell “the present lease of said yard, which has about two years to run, at its present rent, and do guarantee to him a renewal to him of said lease for five years at a yearly rent of not exceeding $200, advance, per annum, and at as much less as can be, and also the free privilege to remove all said fixtures at its expiration. If a renewal is not given, then Lalouette and Ashfield are to refund the one-half the loss on said fixtures and “ further, in consideration of a note” made by defendant for $3,791.79, at six months, they sell to defendant “ all the coal in said yard, being about 700 tons.”
    The answer states that, to induce the defendant to enter into said agreement, L. & A. represented that they held a lease which then “ had two years or thereabouts to run,” and that, by its terms, they “ were entitled and privileged to remove all of said fixtures at the expiration of said two yearsthat, relying on these representations, he entered into said agreement, and gave the note in suit, and, to secure it, executed a mortgage on real estate in Sacramento, and entered into the possession of the premises, fixtures and coal, and carried on business there until about the 1st of May, 1857, when he was obliged to quit and abandon all of said fixtures and appurtenances, excepting a horse and cart, worth about $200.
    That, after entering into possession, he discovered that L. & A. had no lease, but occupied under one A. Ashfield, who had a lease which expired April 1, 1857; that L. & A. notified him they could not procure a renewal of said lease upon the terms they had agreed to do, and the owner notified him that he must pay an advance of $1,600 or quit,” and “ that he must not remove any of the fixtures or appurtenances;” and that defendant, on the 1st of May, 1857, “quit and surrendered the said premises and fixtures.” It avers that L. & A. knew they had no lease, and that, by the lease under which they occupied, “they had no right to remove the most valuable portion of the fixtures and appurtenances, * * for which said note for $1,600 was given,” and also avers great damage to defendant “in his said business” by reason of said misrepresentations. It alleges that defendant established a business which he was obliged to abandon; that he was obliged to remove his coal at great expense, and “ also to abandon all the fixtures and appurtenances belonging to said yard,” to his damage to an amount beyond that of said note; that the consideration of the note has entirely failed, and that, on the 10th of June, 1856, he brought a suit in the Supreme Court against L. & A. to recover damages for the breach of said agreement and to procure said note to be canceled and delivered up; that L. & A. appeared in said action on the 24th of said June ; that it is at issue and pending; that L. & A., and not the plaintiff, “ are the real parties in interest in this actionand it prays a dismissal of the complaint, and “that this defendant may have such affirmative relief in the premises as to this Court shall seem proper.” The plaintiff first called,. as a witness, Alfred Ashfield, who testified that the firm of Lalouette & Ashfield consisted of Paul H. Lalouette and Henry Ashfield; that Henry Ashfield is his son; that the note in suit was transferred to the plaintiff about the time the defendant sued L. & A., in the Supreme Court; that in that suit it was decided that the note should not be given up, but that defendant should have judgment for $1,127.60 damages; that the plaintiff bought the note in suit by giving his own note for it; and that the plaintiff, having recovered in this action on a former trial of it, he took up his own note by “ an assignment of the judgment so recovered.”
    The plaintiff having rested, the defendant moved for a nonsuit, because the evidence showed that the plaintiff was not the lawful owner and holder of the note, and upon the evidence he could not recover on the cause of action stated in the complaint; which motion was overruled, and the defendant excepted.

      The defendant was then sworn in his own behalf; produced the agreement of November 16, 1855, described in his answer; and testified that the note in suit was the one named in said agreement—its amount being larger than the sum there named, by reason of the addition of interest; and also produced a lease which he said “is the lease referred to in the agreement.” That lease is dated the 3d of March, 1851; is from John Targee to Alfred Ashfield, for the term of five years from the 1st of April, 1852, at a rent of $700 per annum, payable quarterly. It contained a covenant of the lessee not to assign or underlet without the written consent of the lessor: it contained no covenant for a renewal: it contained a covenant to surrender the premises at the end of the term in as good condition as they then were, ordinary wear and tear alone excepted; and also an agreement that the lessee or his assigns might erect an office on the premises and remove it on or before the expiration of the term. It had a written consent on it,'that the lessee might underlet. The defendant further testified that he first discovered, about nine months after he went into possession, that L. & A. had no lease: on conversing with Lalouette, he said he thought there would be no difficulty in procuring a renewal; defendant told him unless he pledged himself to withdraw the note from the bank he would advertise it; that he withdrew the note. He was informed in September, 1856, the lease would not be renewed; that he left the middle of April, 1857; left “ the old fixtures in the yard;” removed a horse and cart, worth about $150; expenses of removing were about $100; lost many of his customers, and his business was deranged; and he testified as to the value of the fixtures, if to be used as they were, and their value to be removed.
    Mr. Ashfield being recalled, said he took the lease for Lalouette because the owner said he would let to him cheaper than to any one else,- and offered to transfer the lease to Northam when the agreement.of November 16, 1855, was made; that the lease was then in the room where the parties were; that he first took a lease in 1837, and' the present lease is a renewal of that; it has always been in his name; was present when the agreement of November 16, 1855, was signed; “ told Northam he could see the lease if he wished; he said he was in a hurry, and didn’t care to see it;” that the office was built in 1837; the addition in 1849; the new fence was built before the present lease was made by Lalouette; he occupied two or three years before the last lease was made.
    Northam, being recalled, said he did not aslc to see the lease, nor was there any offer to show it to him.
    There was no evidence of any representations by L. & A. to induce the making of the agreement of November 16, 1855. There was evidence on both sides as to the value of the different articles, denominated fixtures and appurtenances, their value for continued use on the premises, and their value for the purposes of removal. Northam, on his cross-examination, said: “ The fixtures were abandoned by me; some one came for me to take away the fixtures ; spoke of the paving stones; the owner-came and told me to remove the fixtures or he should send them to the public yard; I remember that circumstance now.”
    The fixtures and appurtenances are described in the schedule annexed to the agreement of November 16,1855, as being “two offices, brick; one office desk; one sofa; chairs, washstand, scale and weights; two carts and harness; one horse; one safe, screens and shovels; one sleighbells ; sheds; fence around yard; paving; sections; iron rods; hydrants; shop corner Division and Ridge streets.”
    The Judge charged that the plaintiff “had shown a sufficient title to the note to maintain this action thereon;” ordered a verdict for the amount claimed, subject to the opinion of the Court at General Term, and directed the jury to answer these two questions, viz.:
    “ 1. What was the value of the fixtures on the 1st of April, 1857, viz., two offices, fence, paving, hydrant?
    “ 2. What was the damage to the defendant from the lease having less than two years to run from the date of the agreement, viz., increase of rent, expenses, (breaking coal,) cartage ?”
    The defendant excepted to the charge, and claimed the right to go to the jury on the question of ownership of the note and its transfer to the .plaintiff. The Court restricted the summing up to the questions specially submitted to the jury, and the defendant excepted.
    The jury rendered a verdict for the plaintiff for $1,882.12, and answered the questions submitted thus:

      11 First. Answer,.......................$702 00

      “Second. Answer,.........................;____$300 00
    Increase of rent,........................ 73 84
    Expenses, breaking coal,................. 20 00
    Cartage,................................ 18 00
    $411 84”
    The plaintiff now moves for judgment on the verdict, and the defendant for a new trial.

      A. Wakeman, for plaintiff,
    Contended that there was no fraud; that the agreement fixed as the damages to be paid, (if there should be no renewal of the lease for that cause,) one-half of the loss on the fixtures, which the jury found to be worth, April 1,1857, $702; that according to the evidence they were worth half that to remove, viz., $351, and one-half of this loss would be $175.50; and that on the view most favorable to the defendant, only this sum could be deducted from the verdict.
    And that the allegation in the answer, that he was obliged to abandon the fixtures, was untrue, the proof showing on the contrary ; not only that he had full liberty to remove them if he saw fit, but that by the law of landlord and tenant he had a legal right to remove them without asking permission. (Taylor’s Land, and Ten., §§545, 546; Van Ness v. Pecard, 2 Pet., 137 ; King v. Wilcomb, 7 Barb., 263; Dubois v. Kelly, 10 id., 496; Lawrence v. Kemp, 1 Duer, 363; note to Elves v. Mawe, 2 Smith’s L. C., 99, 115 ; Amos & Ferard on Fixtures, 32.)
    Also that the plaintiff had shown title to the- note in suit. It is not necessary for an indorsee to prove that he paid value for the note. (James v. Chalmers, 5 Sand., 52; 2 Seld., 209.)

      A. McGue for defendant.
    I. The defendant’s motion for a nonsuit should have been granted.
    The plaintiff, when he rested, had not shown a bona fide ownership of the note.
    II. The Court erred in not permitting the defendant to go to the jury upon the question of the bona fide transfer of the note and its ownership by the plaintiff. This was a question of fact clearly put in issue, and it was the right of the defendant to have it determined by the jury.
    It is clear that the transfer was merely, colorable and made for the convenience of Lalouette & Ashfield, they still retaining their actual interest and ownership. (Killmore v. Culver, 24 Barb., 656; Andrews v. Bond, 16 Barb., 633; Bell v. Drew et al., 4 E. D. Smith, 59.)
    III. The plaintiff not being the real party in interest cannot maintain the action. (§§ 111 and 113 of the Code.)
    IV. The Court erred in submitting question No. 1 to the jury. The question was improper, both in form and substance.
    The question should have been, “ What was the value of the fixtures at the time the agreement for the purchase of the same was made?”
    1. Because the damage which defendant sustained accrued immediately upon the breach of the warranty as to title. If Lalouette & Ashfield had no title to these fixtures at the time they attempted to sell and transfer the same, it follows that the use of these fixtures passed with the lease and the value of their use was covered by the rent reserved.
    2. The question was improper in substance. The lease was dated March 3, 1851. The fence, offices, paving, hydrant, &c., were all on the premises at this date, and passed under the lease.
    And if there were any doubts as to the intention of the parties, the covenant that Alfred Ashfield might erect and build an office on the premises and remove the same, shows that it was not intended that any other improvements should be removed. No office was built under this privilege. The lease expressly recognizes the existence of the office.
    V. The second question was also improper. The plaintiff having taken the note after maturity, took it, subject to all the equities between the original parties; and the defendant had a right to set off against any recovery by L. & A. if they had sued the note, all damages sustained by him by the deceit and fraud.
    The measure of damages was too restricted. The defendant should have been allowed for actual damage to his business.
    The plaintiff is not entitled to any judgment, but there should be a new trial.
   By the Court—Moncrief, J.

The action was upon a promissory note, made by the defendant, bearing date 16th November, 1855, whereby twelve months after date he promised to pay to the order of P. H. Lalouette, for value received, the sum of $1,648.28.

The complaint alleged an indorsement by the payee to Lalouette & Ashfield, and by the latter to.the plaintiff.

The answer admitted the making of the note and the delivery thereof to Lalouette & Ashfield, but denied the indorsement by them to the plaintiff, and also 'denied that the plaintiff was the lawful owner and holder of the note, &c., &c.

To entitle the plaintiff to recover'it was only necessary to produce the note at the trial, and prove the indorsements; possession of the note was prima facie evidence that he was the lawful owner-and holder of it.

The plaintiff, when he rested, had shown a tona fide ownership of the note, and the exception taken by the defendant was therefore untenable.

There was no question of fact to be submitted to the jury. It was conceded at the trial that the plaintiff became possessed of "the note after maturity; any defense, therefore, that could be urged against other parties to the note, might be maintained against the plaintiff. It was immaterial what consideration was given by him for the note; it was perfectly competent for Lalouette & Ashfield to give it to him.

To my mind it is quite clear that the only consideration for the note was the sale and delivery by Lalouette & Ashfield to the defendant of “ all fixtures and appurtenances in, upon and appertaining to the coal-yard, known as 441 Grand street, and now (then) occupied by said Lalouette & Ashfield, and described in the annexed schedule.”

The lease, which had “ about two years to run,” was sold for the consideration of one dollar. It contained “ a free privilege to remove all the said fixtures at its expiration.”

There is no difficulty in the present case arising from a refusal by the lessor to permit the fixtures to be removed; whether or not he could successfully have resisted the claim of the defendant to remove them can in no way be invoked; (Ombony v. Jones, 19 N. Y. R. 287; Amos & Ferard on Fixtures, 8;) the defendant was desired to remove them; no one prevented him. * The landlord requested him to take them away; and the defendant did take some of the things specified in the schedule.

By express agreement if a renewal of the lease was not given Lalouette & Ashfiejd was to refund the one-half the loss on said fixtures.

The jury found, and upon the evidence it could not be questioned, that the value of the fixtures was $702."

It is quite clear that the fixtures were worth one-half that sum if removed and taken away. Thus it is evident that the only damage which the defendant could have sustained, was $851; the extent of the liability of the defendants on that account by agreement, being the one-half of this latter sum, is the sum of on hundred and seventy-five dollars and fifty cents.

.The plaintiff should be permitted to enter judgment for the amount of the verdict, less the sum of $175.50.

Ordered accordingly.


source: Caselaw Access Project

author: Moncrief, J. Woodruff, J.

license: Public Domain

text:
    Henry D. Brookman et al., Plaintiffs and Appellants, v. Benjamin E. Metcalf, Defendant and Respondent.
    1. A Mutual Insurance Company, for the purpose of increasing its available means, took up a subscription by which its friends agreed to give their notes for premiums in advance of insurances to be effected by them, the subscription not to be binding until §300,000 was subscribed. When the subscription was understood and believed to be made up, no fraud being practised on the defendant, he gave Ms two notes for $500 each for the amount of his subscription, and he effected actual insurance to an amount for which the premiums were over '$900, which was charged to him against his said two notes, and he, in addition thereto, took an open policy upon wMch the premium considerably exceeded the remaining $100, but no other risks were indorsed thereon except those included in the $900: Held, that the two notes for' $500 each were valid binding notes, although it afterwards appeared that the whole $300,000 subscription was not made up; the notes having been voluntarily given and there being no fraud on the part of the 'Company or its Agent.1
    1 Holbrook v. Wilson,{i Bosw„ 64;) Holbrook v. Basset, {ante, p. 147.)

      2. A resolution of. the Board of Directors directing the officers to proceed with certain notes, mentioned, to liquidate the indebtedness of the Company, is a sufficient authority to warrant.the officers in settling an indebtedness to the plaintiffs by paying a part, appropriating an indebtedness from the plaintiffs not yet payable, in further payment, and transferring to them a .portion of such notes as security for the balance on their agreeing to givo further time of payment.
    3. Such a transaction makes the plaintiffs Iona fide holders for value in such sense that the transfer to them is valid, even without a resolution of the Board of Directors, though it exceeds $1,000, if they have no notice of the want of such resolution.1
    4. In such case the maker of the note cannot use as a defense by way of set-L off or .counterclaim, an indebtedness by the Company to him for losses which did not become payable until after .the transfer of his notes to the plaintiffs.
    (Before Woodruff, Pierrepont and Moncrief, J. J.)
    Heard, February 10th;
    decided, December 10th, 1859.
    Action on a promissory note, dated November 8th, 1855, for $500, made by the defendant payable to his own order, six months after date, and by him indorsed in blank.
    The answer set up as a defense, that the note was given to the Atlas Mutual Insurance Company in pursuance of a subscription made by the defendant and others, by which they were to give their notes when $300,000 was subscribed, and that the Company obtained the note from the defendant by fraudulently representing that the .amount had been subscribed when in truth it had not. Also that the Company was insolvent when the note was transferred to.the plaintiffs; that the plaintiffs took the note with knowledge of the circumstances and of the insolvency of the Company,: and received it as collateral security for a preexisting indebtedness and parted with no value therefor, and are not the lawful and bona fide holders or owners, of the note for value paid before maturity.
    The answer then -avers that the Company are indebted to the defendant in the .sum of $2,300 for losses on property insured, &c., which sum the defendant will set up by way of set-off and counterclaim.
    The issues were referred to Murray Hoffmah, Jr., Esq., upon whose decision judgment was rendered for the defendant.
    He found the following facts, viz.:
    1 Scott v. Johnson, (ante, 213:) Smithy. Ball, (ante, 319;) Boughtony. Dodge, (post,)

      “ That the defendant made his promissory note in the pleadings mentioned, dated November 8th, 1855, for §500, payable six months after date, to his own order, which was by him indorsed and delivered to the Atlas Mutual Insurance Company, in the manner and at the time hereafter stated.
    “ That the said Atlas Mutual Insurance Company, a corporation created under the laws of this State, caused to be circulated among its friends and customers a subscription, dated 8th November, 1855, whereby the subscribers agreed to give to the Company their notes in advance for premiums of insurance, payable at six and twelve months, in equal amounts, for the sums set opposite their names respectively, it being understood, that in consideration thereof, the subscribers were to be allowed by the Company, at the maturity of the notes, five per cent on the amount thereof, and that such subscription should not be binding unless $300,000 were subscribed. That the defendant, at or about that time, subscribed $1,000, the plaintiffs subscribed $2,000, and many others subscribed different amounts.
    “ That having so subscribed, the defendant afterwards, and on or about the 12th day of November, 1855, effected a special insurance with the Company, and received a policy therefor, bearing date, the day and year last aforesaid, the premium whereof amounted to the sum of $401.25. That, afterwards, and on the 24th of November in the same year, he obtained an open policy from the Company, the premium whereof amounted to $500, on which the premiums of insurances subsequently taken out by the defendant amounted to $113.63; and that afterwards, and on or about the 1st December, 1855, he effected another special insurance with the said Company, and received a policy therefor, dated the day and year last aforesaid, the premium whereof amounted to the sum of $386.25. That the defendant did not pay the premiums aforesaid, but the same were charged to him in account.
    “That at a meeting of the Board of Directors of the Company, held on the 30th November, 1855, a resolution was adopted, whereby, after reciting that it was understood that $300,000 had been subscribed, it was resolved that the officers commence to collect the notes to that amount, and proceed in liquidating the liabilities of the Company.

      “ That the defendant, after the insurances had been effected by him as aforesaid, was called upon for his premium notes, whereupon he gave the Company his two promissory notes for $500 each, one of which is the note in controversy in this suit. That the defendant was charged in the books of the Company with the aforesaid premiums of insurance, and credited, with the notes last mentioned.
    “ That on the 10th December, 1855, the Company was, and for more than a month previously thereto had been, indebted to the plaintiffs in this action upon three several promissory notes, amounting to the sum of $10,139.27, two of which notes, amounting together to $5,574.56, were then past due, but the third had not yet matured.

      “ That the plaintiffs received from the Company, at that' time, in payment of the two notes which had so matured, $2,000 in cash, with a credit for their subscription-of $2,000, and .the Company’s note, payable in four months from date, for-$1,751.95, being the balance of the said two notes, together with the defendant’s two notes, so given by him as aforesaid, as collateral security for the payment of the Company’s new note for $1,751.95 above mentioned, and thereupon the plaintiffs gave up to the Company the said two notes which had so matured as aforesaid.
    “ That the Company’s note for $1,751.95, so given to the plaintiffs as aforesaid, has not been paid, nor have the plaintiffs collected the amount thereof from the securities aforesaid, and the note is still held and owned by the plaintiffs.
    “ That there was no resolution of the Board of Directors authorizing such transfer of. the notes to the plaintiffs, except what is contained in the aforesaid resolution of the 30th November, 1855, at which meeting four of the five directors constituting the Finance Committee were present and voted in favor of the resolution.
    “. That this transaction was conducted in good faith on the part of the plaintiffs, and under the belief that the notes were valid, and that the' Company had power to make a valid transfer of the same to the plaintiffs for the purposes intended, and neither the Company nor the Receiver thereof has hitherto, in any way, repudiated the transfer thereof

      “That the subscription of $300,000 was not full at the time the defendant gave his notes, nor has that amount been subscribed in binding subscriptions.
    “ That the Company having failed, an injunction was served on its officers the 5th of March, 1856, and a Receiver thereof was appointed on the 21st of the same month.
    “ That on the 28th of the same month of March the defendant entered into an agreement with the said Receiver to cancel the two special policies which had been issued to him on the 12th November and 1st of December, as before stated; and by an indorsement in writing on the back of each of the said policies, signed by the Receiver, it" was declared that the said policies were thereby canceled; and the defendant was entitled to the amount of return premium thereon specified, “to be paid to the holder out of the assets of the Company, ratably .with all legal claims for losses.” And there is also a balance to the credit of the defendant in his account with the Company of $98.87, being the amount of the said two notes left after charging against them the premiums of the two special policies, and the premiums actually earned on one open policy of $500.
    “ That the defendant is the holder of the said two several policies, and entitled to such return premium.
    “ That the Company is also indebted to the defendant to an amount exceeding that due on the note in controversy, for losses which occurred after his notes were transferred to the plaintiffs, as above stated, but before and were payable before their maturity.
    “Upon the foregoing facts I do find, as conclusions of law:
    “ That as the subscription for $300,000 was not filled, the Company could not have demanded from the defendant notes in pursuance thereof; but inasmuch as the Company had issued policies to the defendant, and as he had become, and was at the time the notes were given, a debtor for the premiums thereon, the notes were founded upon a good and valid consideration, and were valid notes in the hands of the Company.
    “That the notes were transferred by the Company to the plaintiffs, in contravention of the provisions of the Revised Statutes; and that the plaintiffs are not purchasers for valuable consideration.

      ■ “That, therefore, there was no valid transfer of the said note to the plaintiffs, and that by reason of the offsets the defendant would have against the Receiver of the Company, if the suit were prosecuted by him, he can set up this defense. • That if the said note was legally .transferred to the plaintiffs, yet, as no value was given therefor, the defendant -is entitled to set off in this-action the several losses mentioned in his account, and also the amount of return ¡premium ($454.50) .so adjusted with the Receiver-as aforesaid, and the said balance- of $98.87, which- sums I have allowed; and exceeding,.as they do, the plaintiffs’ claim, Ido find .and decide that there is nothing due from the defendant to the plaintiffs in this action.
    . “Bated New.Yokk, July 30, 1858.”
    . On the trial, besides the proof stated by the Referee, "the bylaws of the Company were produced, and-the tenth and twelfth thereof read as follows:
    “By-Law X.—The President or -Vice-President, with the advice and consent of the- Finance Committee, ora majority of' them, shall have authority to assign, transfer, or otherwise validly dispose of any bond and mortgages, stocks, bills receivable,' or any assets of-the same, in order to convert the-same into money, or to secure the repayment of money, borrowed by-the Company through them, the payment of losses,, or other-purposes that shall have been sanctioned by the-Finance Committee.
    “XII. Immediately on the. adoption of these by-laws, and annually thereafter, at the first meeting -of the Board after each' annual election of Trustees, the President, or, in his absence, the Vice-President,, shall .nominate, and the. Board appoint, three Standing Committees, viz.: :
    - “ First.—A Finance Committee of five Trustees, three of whom shall constitute a. quorum; said Committee, or-a-majority of them, shall have power -to loan, invest or otherwise dispose of the-cash funds, stocks and assets of the-Company, in any-way they may -deem conducive -to the interests of the Company, in accordance with the charter and by-laws. They-shall also examine the" statements of the affairs of the-Company from time to time, together with .the assets,, and compare the same with the books, and,.-in general, exercise supervision--over all the-financial affairs of the Company/

      It should also be stated that no part of the amounts due to the defendant from the Company became due until some time after the note in suit was transferred to the plaintiff.
    Exceptions were filed to the decision of the Referee, and from the judgment entered on his decision the plaintiffs appealed,.

      M H. Owen, for plaintiffs, (appellants.)
    I. The note in suit was founded upon a good and valuable consideration, and was valid in the hands of the Company at the time of its transfer to the plaintiffs. In this respect the Referee-has decided correctly, because:
    I. At the time the defendant gave the note, he was justly indebted to the Company for premiums in an amount exceeding the note in question.
    It is not pretended that the subscription was obtained by fraud. It was fairly obtained, although it was not to be binding unless the amount specified should be subscribed.
    The insurances which the defendant afterwards effected, and for the premiums on which he became indebted, were likewise made in good faith, without any condition or qualification; and it is not pretended that there were any representations or other acts, which in any way invalidate the same; whether, therefore, the subscription which was then in circulation, was or was not full, is immaterial as regards the indebtedness fór such premiums.
    II. The note was given and received in settlement pro tanto of such indebtedness.
    In the absence of any proof to the contrary, this would be the legal inference. Giving the note is prima fade evidence of an accounting and of the defendant’s indebtedness. (Lake v. Tysen, 2 Seld., 461 ; Defreest v. Bloomingdale, 5 Denio, 304.)
    3. There was no fraud in obtaining the notes, nor anything connected therewith which rendered them invalid, even in the hands of the Company.
    ■ While there was nothing wrong either in obtaining the subscription, or effecting the insurances, yet it is alleged that when the defendant was called upon to give the notes, - he was told that the subscription had been filled, whereas, in fact, it not so. was

      It does not, however, appear that the defendant gave the notes relying solely upon the truth of such representation. On the contrary, it appears that he made inquiries of various subscribers, and finding that some had given their notes, and others were about giving them, he gave the notes in question.
    H. The note in • suit was legally and properly transferred to the plaintiffs before maturity, and they are the lawful owners and holders thereof for value.
    Having been indorsed in blank, it was negotiable and transferable without any other act of the Company than the mere delivery with intent to pass the title thereto.
    Such transfer and delivery was not in contravention of any provision of the Revised Statutes, and the Referee has erred in deciding to the contrary.
    The provisions of the statutes referred to (1 R. S., p. 591, §§ 8, 9,) are not applicable to this case, because:
    I. The plaintiffs were purchasers for a “ valuable consideration and without notice,” and therefore within the exceptions of the 8th section.
    There is no evidence of notice that a previous resolution (which is the “ notice ” referred to in that section) had not been passed.
    The Referee has, in effect, found that the transaction was conducted in good faith, and under the belief not only that the notes were valid, but that the officers had power to make a valid transfer thereof to' the plaintiffs. (Howland v. Myer, 3 Comst. R., 290.)
    The plaintiffs settled with the Company, paid their subscription before maturity, gave up and extinguished the notes upon which they had an immediate right of action, and extended the credit for a portion of their demand, which was a “ valuable consideration ” within the authorities upon that subject. (White v. Springfield Bank, 3 Sandf., 222 ; Youngs v. Lee, 2 Kern., 551; Gould v. Segee, 5 Duer, 260; Goodman v. Simonds, 20 How. U. S. R., 343, 370; Hart v. Hudson, 6 Duer, 304; Story on Prom. Notes, §186; Finley v. Pritchard, 2 Saund. R., 151; Stalker v. McDonald, 6 Hill, 93.)
    As pledgees, the plaintiffs, on default of payment of the principal debt, were entitled to sue the collaterals. (Wheeler v. Newbold, 5 Duer, 29; S. C., 16 N. Y. R., 392.)

      2. If the 8th section would have otherwise applied, still the charter of this Company has created an exception, rendering such previous resolution unnecessary.
    The 12th section of the charter of the Atlantic Mutual Insurance Company, (Laws 1842, chap. 217, § 12,) which, by the 8th section of the charter of this Company, is incorporated therein, (Laws 1843, chap. 92, § 8,) authorizes the Company to “ receive notes for premiums in advance,” and to negotiate such notes for the purpose of paying claims, “ or otherwise in the course of its business.”
    If, therefore, the notes in question fall within the class, referred to in the charter, (as they may under the circumstances,) then no resolution was necessary.
    If the 8th section conflicts with the charter, the former must yield to the latter as the last expression of the legislative will. (Howland v. Myer, 3 Comst., 290.)
    3. Regarding the notes, however, as ordinary “premium notes,” and not of the kind referred to in the charter, still it was not indispensable to the legality of such transfer that a previous resolution of the Board should be passed authorizing the same.
    Any approval of such transfer, however manifested, whether before or after the transaction, would be sufficient authority. (Curtis v. Leavitt, 15 N Y. R., 11.)
    Such authority and approval were given and manifested.

      {a.) By the by-laws, (authorized by charter,) appointing a Finance Committee, President and Vice-President, with power, under the advice of such committee or of a majority, to transfer or otherwise dispose of notes, &c.
    (5.) By a resolution of the Board, passed 30th November, 1855, at which a majority of the Finance Committee were present, authorizing the officers to collect the notes and proceed in “ liquidating the liabilities of the Company.” And,
    (c.) By the acts of the Finance Committee and officers, and their and the Receiver’s entire acquiescence in the arrangement.
    III. The defendant is not entitled to set off in this action his alleged claim against the Company, for—
    1. If the transfer was legal, and the plaintiffs be considered bona fide holders of the note for value, without notice, then no

      claims of the defendant against the Company, however valid, can be set off. (Code, § 112 ; 2 R. S., 354, § 12, subd. § 9; Beckwith v. Union Bank, 4 Sandf., 604; S. C., 5 Seld., 211; Spencer v. Babcock, 22 Barb., 335.)
    2. But if otherwise, and if the defendant (as was decided by the Referee) is entitled to set off any claim, which he might have done if the action had been brought in the name of the Receiver, still he was not entitled to set off either the return premiums or the losses claimed, because neither was in existence at the date of transfer, and therefore not the subject of set-off. (Furniss v. Gilchrist, 1 Sandf. R., 53.)

      (a.) As to the return premiums, they were to be paid in a special manner “out of the assets of the Company ratably, with all legal claims for losses,” and in no other way.
    The Receiver was not required to cancel the Policies, (2. R. S., 470, § 85,) and instead of doing so, he might have suffered the risks to continue, in which case the insolvency of the Company would not have furnished any defense to an action upon the notes given for the premium. (Hone v. Boyd, 1 Sandf., 481.)
    (5.) The losses should not have been allowed,.because
    Neither of them was due or payable when the transfer was made, nor even when the Receiver was appointed, and not then a valid set-off.
    The Receiver was appointed the 25th March, 1856. The “papers,” i. e., the preliminary proofs, were left with the Company for “ adjustment,” in one case on the 8th, and in the other on the 21st of February of that year; such losses were, by the terms of the Policies, not payable until thirty days thereafter, which would be after the appointment of the Receiver, and therefore not susceptible of set-off as against him. (Haxtun, Receiver, V. Bishop, 3 Wend., 13; Furniss v. Gilchrist, 1 Sandf., 53.)
    The judgment should be reversed, and a new trial ordered.

      G. Dean, for defendant, (respondent.)
    I. The plaintiffs were not entitled to recover, because the proof did not sustain the allegations of the complaint.
    They were not the absolute owners, but held the notes in trust, and, when paid, the right to possession would revert to the Atlas Insurance Company.

      This action is prosecuted for the benefit and on account of the Atlas Insurance Company.
    It is questionable whether the plaintiffs can sue even as Trustees, inasmuch as the instrument under which they were transferred gives them liberty only to “ dispose of them for account of the Company.” (Nelson & Sturges v. Eaton, 7 Abb. Pr. R., 305; Albany Fire Ins. Co. v. Bay, 4 Comst., 9 ; Waldron v. McComb, 1 Hill R., 111; S. C., 3 id., 361.)
    II. The fact found by the Referee, that this transfer or trust was in violation of the statute, and therefore void, because not authorized by a previous resolution of the Board of Trustees, is supported by the evidence, and disposes of the whole case.
    In the case of Howland v. Myer, (3 Comst., 290,) the plaintiff was a bona fide holder, and the decision is put on that ground.
    The resolution of 30th November is not an authority for - this transaction; because it was founded in an error of fact, if not in a fraudulent misrepresentation. And also it does not authorize the liquidation of the liabilities with the notes.
    But if it did, the President was not thereby authorized to deposit with creditors assets of the corporation to an unlimited extent on such trusts as he should choose to create.

      Palmer v. Yates, (3 Sand., 152,) and Curtis v. Leavitt, (15 N. Y. R., 9,) are cases where the parties came within the exception to the 8th section.
    III. The defendant was in a position to avail himself of this defense, because he was a creditor and member of the corporation.
    1. A corporation, or its stockholders, or Receiver, may in every case impeach any contract made by Directors or other officers or agents, in the name and professedly by such corporation, by showing that such contract was made in a manner or for a purpose not authorized by its charter or the laws of the land. (Hodges v. The City of Buffalo, 2 Denio, 110; McCullough v. Moss, 5 id., 567; 3 B. & Ald., 1; 1 Hill, 11; 4 id., 442; 3 Comst., 430; 1 id., 19.)
    2. The transfer being contrary to law and public policy, is void, and there is defect of title in the plaintiff. (Johnson v. Bush, 3 Barb. Ch. R., 207; Code, § 111.)
    IV. As there had been no valid transfer of the title to this note, the defendant had a right to avail himself of any defense which, he could have made, if the action had been brought by the original holder, viz.:
    Want of consideration; fraud in obtaining it. (Stewart v. Trustees of Hamilton College, 2 Denio, 403.) Set-off under the statute. (2 R. S., 354, §12, subd. 10; 1 Sandf., 53; id., 257.) Counterclaim under sections 149 and 150 of the Code. Any matter constituting a defense. The right of the defendant is expressly reserved by section 112 of Code.
    V. Defendant’s demands consisted of a loss adjusted in February, and therefore liquidated and due.
    Of claims for return premiums. Of $97.87, the balance of the two notes after charging against them all premiums. It is insisted that under the finding of facts these constituted a defense to the notes. (Holbrook v. Receiver Am. Ins. Co., 6 Paige, 222, 228; in the Matter of the Receiver of the Globe Ins. Co., 2 Edw. Ch. R, 625.)
   Moncrief, J.

The note was valid in the hands of the Company.

The Referee so found, and correctly. (16 N. Y. R., 324.) In respect to creditors of the Company, in good faith and in the usual' course of business, it was payable absolutely and in full. There was an actual loan of money at the time of transfer in this case. (Ogden v. Andre, MS.; heard, April, 1859; decided, May 21.)

The transfer to the plaintiff was made in good faith.

The Referee so found, and, I think, correctly. Neither the Receiver of the Company nor any of its officers has ever demanded or claimed the return of this note. The Referee so found.

There was no offer to show that the plaintiffs had any reason to suppose there was no resolution of the Board of Trustees authorizing the transfer. The fact that the plaintiffs received the note from the officers of the Company did not charge them with such notice. All dealings with a Company are done with its officers.

Such a resolution is not, under all circumstances, indispensable to a valid transfer. In Howland v. Myer, (3 Comst., 290,) the plaintiff dealt directly with the officers of the Company, and that case decides the precise point' that the absence of a resolution would not defeat a recovery.

The Company had power to make the transfer. (3 Comst., 290.) The power was sufficiently exercised to pass the note to the plaintiffs.

The resolution of November 30,1855, was passed at a meeting of the Board of Trustees, (eleven members being present, and four of the Finance Committee,) and it directed “ that the officers commence at once to collect the notes to that amount, ($300,000,) and proceed in liquidating the liabilities of the Company therewith.”

By-law X expressly authorizes the President or Vice-President, with the advice and consent of the Finance Committee, or a majority of them, to assign, transfer, or otherwise validly dispose of, bills receivable, or any assets, to secure the repayment of money borrowed by them,.the payment of losses, or other purposes, that shall have been sanctioned by the Finance Committee.

The two notes, held by the plaintiffs past due, were pressing for payment. They probably were for losses. It was an undisputed claim against the Company. •

At the meeting of the Board of Trustees on the 7th November, all of the Finance Committee were present, when the “ Committee appointed to settle with Mr. Brookman, (plaintiff,) reported that they had not yet completed the settlement.” (The pro-gramme for procuring the necessary means had not yet been matured. The subscription list is dated the next day, the 8th.)

At the time of the transfer, December 10th, the President, Vice-President, and two of the Finance Committee were present. (Probably others sanctioned it.) It required but three members to constitute a quorum of the Finance Committee, a majority of whom could transfer, &c., &c. The transfer has never been repudiated, and no question ever raised as to the proper transfer to the plaintiffs, except by the defendant.

Gardiner, J., (3 Comst., 292,) says: “I apprehend that the Company were not restricted by the statute to a negotiation for the purposes of payment exclusively. They might procure the note to be discounted, and apply the avails in discharge of their responsibility for losses incurred; or, if this could not be done, the same result might be obtained by a transfer of the note to the plaintiff, upon the indorsement of the Company—the creditor giving time until the securities matured.”

It will be borne in mind that the note in that case was transferred by the President as collateral security. The point is expressly taken, (2 Sandf., 180-183;) and it is at least doubtful whether the loss was contingent or absolute for which it was given to secure the payment. It is questionable whether anything was given up at the time of receipt of the note.

In the present case, an absolute liability of the Company existed. - Two notes of the Company, over due, were in the hands of the plaintiffs, and they were pressing payment. The claim was indisputable. The amount was $5,574.56. The Company, at the time of the transfer of this note to the plaintiffs, paid them $2,000 in cash, and the plaintiffs permitted the Company to charge them their subscription of $2,000 as cash, thus leaving due to them, at the time of the transfer, the sum of $1,574.56 and interest.

. Upon receiving the note of the Company for the balance due on those two notes—$1,574.56 and interests $1,751.95—and the note in suit, with others, as collateral, the plaintiffs gave up the existing liability of the Company. The two notes were given up.

It seems clear to my mind that the present is a stronger case than Aspinwall et al. v. Myer, (2 Sand., 100,) and is embraced and determined by the principle laid down in 3 Comstock, 290.

Again, I do not see how it can justly be said that this transaction conflicts with section 8 of the statute. The act was passed to prevent insolvency. The arrangement entered into with the plaintiffs assisted the statute, in enabling the Company to continue its business, and actually did earn for the defendant a large amount of premiums which he did not pay to the Company.

. In my opinion the Referee erred, and a new trial should be directed, &c.

Woodruff, J.

The defendant had by a subscription with others agreed to give to the Atlas Mutual Insurance Company, notes in advance for premiums to the amount of $1,000. He did so. in two sums of $500 each. The condition of the subscription was that it should not be binding until the sum of $300,000 .was subscribed, and if it had never been subscribed the Company could not have required the defendant to give the notes; but on the other hand he could waive the condition and if he afterwards gave the notes and no fraud upon him is shown, he must be deemed to have waived the condition by voluntarily giving the notes to the amount of such subscription; and on this ground alone'I regard the notes as valid, binding notes even in favor of the Company, although the fact be taken to be as the Referee has found, that the $300,000 subscription was not made up. If it were material, the correctness of that finding upon the evidence might be questioned. But still more clearly is the defendant bound in this case, for after his subscription he took out policies of insurance, the premiums upon which (exclusive of unearned premiums on his open policy) was nearly equal to the amount of his two notes. As that open policy was taken in pursuance of his subscription and in performance of his agreement, I apprehend the Company were entitled absolutely to require that the whole amount of the premium be paid. It was not the ordinary case of an open policy, on which premiums can only be collected to the amount of the risks indorsed thereon.

After not only giving his notes but actually receiving policies for the amounts, and more than the amounts of his notes, it is too late for him to say, in the absence of any fraud, that the $300,-000 subscription was not made up. (Holbrook v. Wilson, November Term, 1858; Holbrook v. Basset, July, 1859. )

The defendant had agreed to gives notes in advance.

The note in question was therefore not only a note given for value in due course of business, but it was also a subscription note given in advance for premiums under the 12th section of the charter of the Company.

By the terms of that section, the Company were authorized to negotiate such note for the purpose of paying claims or otherwise in the course of its business.

It has often been held that such notes are valid binding notes, founded on sufficient consideration, and subject to transfer as business notes.

By the tenth of the by-laws of the Company the President or Vice-President, with the advice and consent of the Finance Committee or a majority of them, has authority to transfer bills receivable to secure the payment of losses or other purposes that shall have the sanction of the Finance Committee.

On the 30th of November, 1855, the Board of Directors, after reciting the subscription which the defendant and others had made in advance of premiums, resolved “ that the officers commence at once to collect the notes * * * and proceed in liquidating the liabilities of the Company therewith.”

The Company was at that time indebted to the plaintiffs in a large amount.

On the 10th of December, two notes of the Company, amounting to $5.574.56, were past due.

The statute authorized the Company to transfer the note in question for any lawful purpose in due course of business.

The Board of Directors, by a specific resolution, authorized the officers of the Company to proceed at once in liquidating the indebtedness of the Company with this and other notes mentioned.

Here was authority enough, in my opinion, for the action of the officers.

Thereupon, a settlement was made with the plaintiffs in which they accepted $2,000 in money; consented to apply $2,000 of the money due to them on a subscription also in advance of premiums, thus accepting as cash a subscription for which, they were entitled to give notes on time; and agreed to give time for the payment of the residue of the sum then due to them for four months; in consideration of which the officers transferred to them the note in question as security for the payment of such residue at the end of such four months.

I think this was a valid transfer, authorized and upon sufficient consideration and in no wise inhibited nor invalidated by the statute.

If this be so the decision of the Referee was erroneous. At the time of the transfer to the plaintiffs, there was nothing due to the defendant, and therefore there was no right of set-off which can defeat the plaintiffs’ recovery.

If there be no existing debt due to the defendant, at the. time of the transfer of his note, he cannot set off a debt subsequently becoming due as against the assignee, although the assignment be made to secure an antecedent debt. In other words, an assignee, although he takes a note to secure a precedent debt, if there be no fraud, can collect such note notwithstanding his assignor may, by debts becoming due after the assignment, owe the maker of the note the same or a greater amount.

Besides, in this case, the plaintiffs received the note, as already stated, for a sufficient consideration in the consent to allow as cash a subscription for which they had a right to give notes on time, and in the forbearance of the residue of the debt due them.

It is claimed, that inasmuch as the receipt given by the plaintiffs for the note in question, as collateral security to the note of the Company, contained a reservation of authority to sell the notes, if the note of the Company was not paid, that therefore a sale was the plaintiffs’ only remedy. That they are mere trustees to sell for account of the Company, and cannot sue on the notes. This claim is groundless. They received the notes as security, and have the legal title. They can, therefore, sue and collect the note. They have also the equitable title, holding the note as security they have a right to retain the money collected, and the circumstance that when collected it will go so far towards discharging the debt of the Company is only what is always true when the holder of such securities collects them. In that sense only the collection is for account of the principal debtor. (Nelson v. Wellington, July Term, Superior Court, 1859.)

I concur, therefore, in the result to which Justice Moncrief has arrived.

The judgment must be reversed, and a new trial ordered. Costs to abide the event.

Ordered accordingly.

       Since reported, 4 Bosw., 583.

       4th Bosworth, 64.

        Ante, p. 147.

        Ante, page, 178.


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

text:
    Joseph T. Gilbert et al, Plaintiffs and Appellants, v. Theodore Beach, Defendant and Respondent.
    1. The owner of a lot of ground, who has contracted with masons, carpenters and other mechanics of competent skill, for the erection of a building thereon, in a safe and proper manner, is not responsible to third persons for injuries caused by the mere negligence of the contractors’ servants in the prosecution of the work.

      2.-Where, by the contract with the carpenters, (in such case,) they had agreed to construct a suitable gutter to receive the water falling upon the roof, and a leader running down t.o-the basement, where it was .to be connected with a main pipe leading into the sewer, and the carpenters had left the leader unfinished over the Sabbath, not extending within twelve or fifteen feet of - - the ground, and negligently omitted to provide effectual means of carrying . off the water,, in consequence of which, during a storm, the water flowed , through the leader to . the ground, and thence into, the premises of the plaintiffs next adjoining, and caused injury to their goods: Held, that the owner is not hable for the damages.
    3. Held, also, by the Superior' Court, that the neglect of the plumber, who was to fhrnish and introduce the main pipe leading to the sewer, to intro- •' duce it-in due season and before the storm, was no excuse to the carpenters . for not extending the leader down-to the basement, and did not make the owner-liable. -:But held, in the Court of Appeals, that if the neglect to put in. the main pipe caused the accident, it was the duty of the owner to cause it to be done, and he is not excused by reason of his having .contracted with the plumber to do it.
    '-'-(Before Hoffman, SuossoN-and Woodruff, J. J.)
    Heard, November 7th;
    decided, December 10th, 1859.
    This action was brought to recover damages from the defendant for injury to the goods of the plaintiffs from water which flowed from the defendant’s lot into the lower story of the store of the plaintiffs, and for the expense of removing the water. At the time of the injury, a building was in course of erection on the defendant’s lot, and during a heavy rain, at night, the water flowed from the roof through a leader in the rear, which reached to within about twelve or fifteen feet of the ground, and in consequence of the insufficient precautions used by the persons employed in erecting the building, it then fell to the ground and flowed into the adjoining store belonging to the plaintiffs.
    The cause was tried in May, 1854, and a verdict for the plaintiffs was taken, subject to the opinion of the Court, and upon a hearing in General Term,- in March, 1855, judgment was ordered for the defendant. The pleadings and a statement of the facts proved are contained in the report of the case in General Term.
    (4 Duer’s R., 423.) On appeal to the Court of Appeals, the proceedings were held a mistrial, and the judgment was reversed upon that ground. (16 N. Y. R., 606.)
    The case was again brought to trial on the 7th day of April, 1859, before Mr. Justice Slossoh and a jury, and upon a state

      of facts, in substance such as contained in the former report of the case in 4th Duer, the Judge instructed the jury that the defendant was entitled to their verdict, which being rendered, and judgment thereon entered, the plaintiffs appealed to the General Term.
    The only fact not stated in the former report which it seems material to mention, is, that it having been shown that the owner of the lot (the defendant) had made contracts for the erection of the building, and by his contract with the carpenters, they had agreed to supply and put up a leader to extend from the gutter at the roof down to the basement, there to be connected with the main water pipe running into the sewer, and that the leader had not been brought down to the basement, nor lower down than within twelve or fifteen feet of the ground, by reason of which the water flowed into the store adjoining; proof was given tending to show, on the one hand, that the defendant was himself to furnish the main water pipe in the basement; and, on the other, that one McKensie, the plumber, had contracted to furnish and introduce it, and that he had improperly delayed doing so. And it was claimed that the want of the main pipe in the basement delayed the extension of the leader and the making the required connection with the sewer; and on the other hand it was insisted that the leader should have been continued down to the basement, whether the connection could then be formed or not, and that the negligence of the carpenters in not doing this, was the sole cause of the flowing of the water into the plaintiffs’ store.

      E. W. & G. F. Chester, for plaintiffs, (appellants,)
    Urged the same arguments in substance stated in the former report, (4 Duer, 426,) and cited additional authorities. (Kelly v. The Mayor, 1 Kern., 432; Pack v. The Mayor, 4 Seld., 222; Hutson v. The Mayor, 5 id., 163; Storrs v. City of Utica, 17 N. Y. R, 104.)
    Also that the building, in the condition it was on the night of the storm, was a nuisance, and the defendant, as owner, was liable on that ground.
    Also, that inasmuch as the carpenters could not complete the leader until the main pipe was introduced into the basement, they were not in fault.

      That the defendant was responsible for the delay, and even if he had contracted with McKensie, that did not relieve him,

      John E. Parsons, for defendant, (respondent,)
    Urged the points made on the former argument, and also that as the érection of the building was a lawful act, the owner is not responsible for the negligence of the contractor in the manner of doing the work, or in the condition in which he carelessly leaves the building during the erection, provided the contract calls for the erection in a proper manner, and guards against such accidents. (Vaughan v. Menlove, 3 Bing. N. C., 468; Reedie v. London & North, Western R. R. Co., 4 Welsb., H. & Gord., 254.)
    Also that the defendant is not liable on the ground that the condition of the building constituted a nuisance. The overflow happened only on a single occasion. It was not continued. He had no notice of the unfinished state of the leader. (4 Welsb., H. & Gord., 254; Fish v. Dodge, 4 Denio, 311; Penruddock's case, 5 Coke R., 100.)
   By the Court—Hoffman, J.

The propriety of the direction given by the Court, at the trial of this cause, depends upon the applicability of the rule laid down in Blake v. Ferris, (1 Seld., 48,) as the same is analyzed and explained in Storrs v. The City of Utica. (17 N. Y. R., 104.) We infer from these cases, and from those cited in the opinions therein, that, if the party sought to be charged had no direct participation in the act or default which caused the injury, if his immediate agents or servants had no such participation, and if the persons who caused such injury were the servants of another who possessed the whole selection, control and direction of them, that party cannot be rendered liable.

The question, whether the owner of real estate is liable, at all events, for injuries to third persons, happening through the negligence of those who may, for the time being, be in the charge thereof or engaged in making an erection thereon, we do not consider, with us, an open question. The opinion pronounced by Oakley, Oh. J., upon the merits of this case, after what has been pronounced a mistrial, (4 Duer, 423,) shows, we think, that the decisions of the Court of Appeals, as well as the Courts of England, (if the principles propounded in the opinions delivered are to be adhered to,) forbid us to hold that the defendant here is liable as owner of the premises upon which the negligence occurred which caused the damage to the plaintiffs, irrespective of the questions whether the negligent parties were his servants, and whether there was any negligence or misconduct on the part of the defendant himself. Until the principle stated in Blake v. Ferris, (supra;) Stevens v. Armstrong (2 Seld., 435;) Pack v. The Mayor, (4 id., 222;) Kelly v. The Mayor, (1 Kern., 432,) and Storrs v. The City of Utica, (supra,) shall undergo some further modification, we must regard those questions as material, and the answers thereto as decisive in determining the liability.

As stated in the opinion of Chief Justice Oaklet, the liability of the owner of real estate for erecting or maintaining a nuisance upon his own land is not doubted; but we are forbidden to apply that principle to a case in which the owner has contracted for the erection of a suitable building in a proper manner, and with a person or persons of .competent skill, so that, if what is done is done according to the contract, no injury will happen to third parties, and he has no such notice of the omission or neglect of the contractors endangering others as requires him to interfere.

On these points, therefore, the opinion before given properly governs us on this appeal, if the facts proved on the trial bring the defendant within the rules there stated.

The defendant had contracted with Young & Yreeland, carpenters, and with sundry other mechanics, for the erection of the building in question. It is not denied or questioned, that the contracts made were with persons of proper skill, or that the contracts did not provide in all respects for a building which the defendant had a right to erect upon his own lot, and which would be safe and proper; or that the manner in which it was to be erected was not in all respects, safe, prudent and proper; or, in short, that, if all had been done in the manner in which the defendant contracted that it should be done, no nuisance would have been created, and no injury would have happened to the plaintiffs. If this be so, it seems necessarily to result that the only question before us is this: Is the defendant responsible for the manner in which the contractors perform their work, or for the negligence of the workmen in carrying it on? And, in considering this, it is to be observed that the testimony is distinct and uncontradicted that Young & Yreeland, the carpenters, during that stage of the work in which the injury complained of occurred, had the custody and control of the building; their foreman had the keys, locked it at night, and opened it when he commenced work in the morning; .and that, although the defendant was at the building three or four times a week, he gave no directions.

The contract between the defendant and Young & Yreeland, so far as it is pertinent to the present question, called for “ a copper gutter of at least eight inches in diameter, put on the top of the rear wall, shaped so as to form the crown moulding of the cornice, well braced, and connected with the leader in a good manner; a five-inch double cross tin leader, with a square basin of twelve inches on the top to receive the water, running down to the basement, where to be connected with the main water-pipe running into the sewer p another copper gutter, of four inches diameter, to be'put on the first story rear extension wall, well braced .and made tight,, connected with a three and a half inch leader running through the rear wall into-the basement, where it is also to be connected with the main pipe.”

It is not questioned that the leaders so provided for were entirely sufficient- to conduct all the water from the defendant’s building into the- basement thereof, and that,, if the leaders had been brought down to that basement on the night of the storm, the injury to-the plaintiff’s goods could not have happened.

It is. quite clear that the terms of this contract with Young & Yreeland required that the leaders be brought down to the basement, with a view to their being there connected- with the main water-pipe.

But the leader from which, on the night in question-, the water flowed, causing damage, was-only brought down to within-about twelve or fifteen feet from the rear area, and from ten to- fifteen feet from the rear window of the counter cellar of the defendant’s store, and a temporary and insufficient arrangement was attempted by which to conduct the water from the lower end of this leader into the basement or counter cellar, which, if it had been successful, would have prevented the accident. A gutter, formed of boards nailed together, was placed at the end of the leader, and passed through the basement window and downward into the cellar. But the prostration of this temporary gutter, by the force of the fall of water through the leader, left the water to flow to the pavement and thence to the rear'of the plaintiffs’ store, and was thus the immediate cause of the damage sustained by them. And this was owing to the insufficient manner in which the temporary gutter was secured, or to its inadequacy to carry off the water, and not at all to any inadequacy of the protection to the plaintiffs, if, in fact, the water had been conducted into-the defendant’s basement or counter cellar.

The immediate cause of the accident was therefore the fault and neglect of Young & Yreeland. First, in leaving the leader twelve or fifteen feet above the area instead of bringing it down to the basement as their contract required,, and second in- not suitably guarding it by of her means for- carrying off the water while it was left in that state. Had the leader been brought down to the basement, the water would have flowed into the defendant’s premises and there is no pretense that the plaintiffs could have been injured whether the water had remained in the defendant’s cellar or been led off to the sewer. Young & Yreeland had no right to so endanger the plaintiffs’’ property by not bringing down the leader to the basement, , as by their contract they were bound to do. The thing they had contracted to do, and which alone the defendant had authorized them to do, was safe and proper, and it was agreed to be done, and- alone authorized to be done, in a safe and proper manner. The defendant had given them the custody and control of the work, and he neither interfered with the manner of the performance nor had any control over their agents or servants in the management thereof.

The view, therefore, suggested above, recurs; the injury has happened, not by the defendant’s fault or neglect; not because he has done, or authorized to be done, anything which if done, and as authorized by him to be done, was injurious or dangerous, but because the servants or agents of the contractors were negligent in the manner of doing it, and contrary to the contract left a portion of the work over Sunday in such a condition as to cause the damage.

Unless, then, the views expressed upon the former hearing, and what are understood to be the principles of the cases above referred to, are to be rejected by us, the liability for this accident rests on Young & Yreeland and not on the defendant, if the facts proved do not. furnish to them some excuse which shifts the responsibility.

An attempt was made to show such an excuse, and by reason thereof, to charge the defendant with default which would deprive him of the exoneration to which upon the grounds above suggested he would .be entitled. Proof was given tending to show that it was the duty of the defendant, as between him and Young & Yreeland, to put in the iron pipe which was to conduct .the water to the sewer in the street.

All that can properly be meant by this is that Young & Yree•land were not bound to put in the iron pipe, and therefore if the defendant wished to have the water conducted from his cellar to the street, he must provide for it. And it is not obvious that, if the defendant was willing that the water which was to be conducted into Ms cellar should remain there, Young & Yreeland would have any cause to complain of Mm if no iron pipe was furnished at all.

But it appeared that the defendant had contracted with one McKensie to put in 'the iron pipe, and it was claimed that he had improperly delayed Ms work and the pipe was not there on the night of the accident. It might be suggested that where two or more proper persons exercising their several independent employments are respectively employed to do the work of erecting and completing a building, the improper delay of one furnishes no excuse to another for leaving his own work in a condition dangerous or injurious to third persons, and therefore McKensie’s delay was no excuse to Young & Yreeland for the negligence of their servants in leaving the leader in question in the state and condition in which it was.

But a clear, and it seems to us a conclusive, answer to all this suggestion of excuse to Young & Yreeland, is that the neglect to put in the iron pipe into the cellar to-carry away the water, could not prevent or hinder Young & Yreeland in the doing of what they had contracted to do, viz.-: bring the leader down into the basement. As already stated, if the defendant did not in some manner provide for the removal of the water it might remain there, but that did not concern Young & Yreeland. The defendant had done nothing to .interfere with or modify his contract with them; it was their duty to extend the one leader into the basement, and to conduct the other through the rear wall into the basement or cellar, and with the iron pipe or other means of carrying off the water they had nothing to do. Had they done what they agreed to do, and what alone the defendant authorized them to do, they would have continued the leaders into the basement and the accident could not have happened. We can say and must necessarily say, that the want of an iron pipe in the cellar was not, and as matter of law could not be, a reason for leaving the leader unfinished at a height of fifteen feet outside of the defendant’s building, so as to discharge water upon the area and upon the plaintiffs’ premises. In order to subject the defendant to liability founded on any omission to see that the iron pipe was introduced, it should be true that the leaders could not be brought down to the basement until the iron pipe was there, which not only is not true but the suggestion is so obviously absurd as not to warrant any doubt on the subject. The proposition is this: because an iron pipe has not been introduced into the cellar to carry off the water, therefore, Young & Vreeland could not extend the leaders down far enough to conduct the water into the cellar. It seems to us that there is not and cannot be any legal or necessary connection between the two things, and it might as well be said that the leader in the rear was left fifteen feet high because the vaults under the front sidewalk were not white-washed.

If the complaint had been that the water was not carried off from the cellar, or that the leader was not properly connected with an iron pipe or other conduit in the cellar, there would be some force in the suggestion that the defendant or McKensie was in fault, and that fault caused the accident. But not so: had the leader led down to the basement, the accident could not have happened. So far as the plaintiffs were concerned, all would have been safe. On this point, there is no conflict of evidence.

Being, therefore, wholly unable to see that, upon any legal view of the subject, the omission to-introduce an iron pipe into the cellar to carry off the water could possibly have caused the omission to extend the leaders down to the basement so that the water should flow into the cellar; and in the absence of any evidence that the defendant consented, in any manner, that Young and Yreeland should not perform, their contract so to extend the leaders, or prevented their doing so, or altered or modified his contract with them in any particular; we do not perceive that there was any question to submit to the jury. The accident was caused, and wholly caused, by the neglect of Young and Yreeland, or their servants, to do that for which, the possession and control of the building was given to them by the defendant, and do it in a safe and proper manner.

The judgment should be affirmed.

Judgment affirmed.

The plaintiffs in the foregoing case appealed from the judgment .to the Court of Appeals, and the judgment of this Court was reversed. The questions involved are of such general interest, and have so often of late years been the subject of discussion, that it seems advisable to insert the opinion pronounced in that 'Court, with the statement of the views of the Judges, as furnished by the Reporter.

IN THE COURT OF APPEALS. BEACH.

Clerke, J.

Undoubtedly, whenever injury to the person or ■property of any one arises from a nuisance in the building or .land of another, the owner is responsible for the damage. And this is so, not only where he has demised the property to another with the nuisance upon it and reserved a rent, but where the erection was made by another upon his land, and where he has no right to enter for the purpose of removing it. This was decided in Bush v. Steinman, (1 B. & P., 404,) where the owner .of a house, who had contracted with a surveyor to put it into ■repair for a stipulated sum, was held answerable to a third person who had suffered an injury in consequence of the improper act of one of the workmen in making the repairs, although the work■man was neither his servant nor under the control of the owner of the house. It is expressly held, in The Mayor, &c., of New York v. Bailey et al., (2 Denio, 433,) that the owner of real estate is responsible for the negligent acts of persons employed in making erections upon it for his benefit, though the relation of master and servant does not exist between the owner and the person so employed.

The former case, however, has been seriously questioned, if not overruled, in the English Courts; and both, I think, are entirely at variance with the principle adopted by this Court in Blake v. Ferris, (1 Seld., 48,) and the cases quoted by the Judge who delivered the opinion of the Court. That principle is, that unless the relation of master and servant exists between the party charged and the person who has done the injury, the act of the latter creates no liability in the other. I cannot conceive that it makes any difference, when the injury happens to have been committed on the premises of a person sought to be charged, if he had no direct agency in the commission of it, or has not sanctioned it in any way. If the person doing the injury is not his servant, but the servant of another, there is no better reason why the latter should be relieved from the responsibility than if the injury was committed in the street. It is the act of a person done in the course of his employment, and he is bound to obey his own master and not the employer of his master: otherwise, if a man, employed by a contractor in erecting a building, carelessly lets a brick fall on the head of a person passing by, the owner of the building is liable, and not the contractor. This, I think, could never be held; and yet it would be the legitimate consequence of the position that a man is answerable for every damage which arises from any injurious act committed on his premises.

But, in the present case, some evidence was introduced at the trial at least tending to show that the defendant himself undertook to furnish the iron pipe to be connected with the tin pipe, and that the accident would not have occurred if it had been furnished in time. It was no excuse for the defendant to say that he had contracted for the iron pipe with McKensie, who delayed the work. McKensie is not answerable to the plaintiffs for this delay; and it was the defendant’s duty either to procure one from some one else, or to make some temporary arrangement which would protect the plaintiffs from damage. If he modified the contract with Young & VreelancL to this extent, -he should not have left it to their foreman to fix the wooden trough, which he did so imperfectly as to cause the injury.

I think, therefore, that the Judge erred at the trial.

Comstock, Oh. J., Seldeh and Wright, Js., (if not others,) dissented from that part of the preceding opinion which denies the liability of the defendant, on the broad ground of his ownership of the premises; but all the Judges concurred that the judgment must be reversed, on the special ground stated by Clerks, J., in the last paragraph of the preceding opinion.

(Copy.) E. PESHINE SMITH, State Reporter.


author: By the Court—Hoffman, J.

text:
    Joseph Agate, Plaintiff and Respondent, v. James N. Richards, Defendant and Appellant.
    1. Where, in an action on contract for the sale of goods, wares and merchandise, a former recovery upon the same cause of action in a suit between the same parties is set up as a defense; a record of a recovery in a former suit in favor of a plaintiff and against a defendant of the same names, where the complaint in each suit alleges, as the only cause of action stated, the sale of goods, wares and merchandise by the plaintiff to the defendant during periods ending on the same day, and claims the same sum to be due, íurnishes prima fade evidence of the truth of the defense.
    2. Identity of names in connection with the same or the like subject matter is presumptive evidence of identity of person.
    (Before Hoffman and Woodruff, J. J.)
    Heard, November 10th;
    decided, December 10th, 1859.
    This is an appeal by James N. Richards, the defendant, from a-judgment, in favor of Joseph Agate the plaintiff, rendered on a trial had before Mr. Justice Pierrepoht, without a jury, June 27th, 1859.
    The summons is dated April 27th, 1858, and states that judg-' ment will be taken for $72.50, with interest from January 1st, 1858.
    The complaint alleges a sale for cash, of goods, wares and merchandise, by the plaintiff to the defendant, between the 23d

      of May, 1855, and the 25th of December, 1856, consisting of “ colored linen shirts, silk cravats, suspenders, &c.,” of the value of $72.50; that such sum is due with interest from the 1st of January, 1857, and prays judgment for that sum and such interest, with costs.
    The answer avers a former suit in this Court, by the plaintiff against the defendant, for the same cause of action, and a recovery by the plaintiff therein on the 29th of December, 1857, on said cause of action for $90.43 and that such judgment is in full force.
    At the trial, the defendant, to prove such defense, introduced the record of a judgment in this Court, in favor of Joseph Agate as plaintiff against James N. Richards as defendant. The summons in it was dated November 21st, 1857; was served on the 24th of said November, .and states that judgment will be taken for $72.50, with interest from the 1st of January, 1857. The complaint in it, states a sale by plaintiff to defendant of goods and merchandise, consisting “of shirts, hose, suspenders, &c.,” between the 9th of November, 1854, and the 24th of December, 1856, of the value of $122.50; that $72.50, with interest from January 1st, 1857, is due, and prays judgment for that sum and such interest, with costs. Judgment in it, was perfected, for want of an answer, December 29th, 1857, for amount claimed,.. $72 60
    Interest,........................................ 4 83
    Costs,.......................................... 13 00
    Total,...................................... $90 43
    The Judge held, that there was not sufficient proof given of
    the identity of the parties and of the cause of action in the two suits, and gave judgment for the plaintiff for $85.13, (the amount claimed, with interest;) the defendant excepted to the decision and appealed from the judgment.

      0. Bainbridge Smith, for appellant.
    1. It appears by the judgment roll in the former action, and the complaint in this, that the causes of action were between the same parties, for the recovery of the same kind of merchandise; that they accrued during the same periods, and that judgments were demanded for the same amounts. This constituted a defense, and judgment should have been rendered for the defendant. (Marston v. Lawrence, 1 Johns. C., 397; Beals v. Cameron, 8 How. Pr., 414; Averill v. Patterson, 10 id., 85; Swart v. Borst, ,17 id., 69.)
    II. The former judgment was conclusive upon the parties, not only as to the matter actually determined, but as to every other .matter which might have- been litigated therein. (Bendernagle v. Cocks, 19 Wend., 207; Embury v. Conner, 3 Comst., 511, 522; Doty v. Brown, 4 id., 71; Sheldon v. Carpenter, id., 579.)
    III. The fact of the names of the plaintiff and defendant being identical in both suits, was prima facie evidence that they were the same persons in both actions. (Hatcher v. Rocheleau, 18 N. Y. R., 87.)
    The j udgment should be reversed.

      Wm. M. Niles, for respondent.
    I. The appellant does not allege any other defense than a prior judgment for the same identical cause of action. We suppose that in a city of eight hundred thousand inhabitants, the mere production of a judgment roll against a defendant of the same name, is not sufficient evidence that it is the same defendant, .especially if the name be John Smith.
    II. Even if that were not so, the case in judgment is not “ identical ” in a single particular with that in suit.
    One is for sales between May 23d, 1855, and December 25th, 1856; the other is for sales between November 9th, 1854, and December 24th, 1856. One is for colored linen shirts, cravats, &c.; the other is for colored linen shirts, hose, &c. One is for sales to amount of $72.50; the other for sales to amount of $122.50. One is alleged to have been sold for cash; the other is not alleged to have matured before January 1st, 1857.
    One claims judgment for $72.50. The answer sets up a judgment for $90.43, and no attempt to identify parties, goods, times or anything else, except by throwing up to the judge a paper purporting to be a judgment roll, and asking hiip to deprive the plaintiff of a claim sworn to as now existing, and admitted by defendant.
    III. The “ answer is controverted as upon a direct denial.” That is, we deny that any judgment was recovered against this defendant, and we deny that any judgment of this Court is for this identical cause of action. (Code, § 168.) Both then must be proved by the defendant, (1 Phil. on Ev., 2 ed., p. 6,) and the papers prove nothing on either of those points. Besides, the judgment roll produced is a mere nullity on its face. It does not show any appearance by defendant, and does not show a service within the j urisdiction. Perhaps the summons was handed to Richards in Australia, and then, he not appearing, the Court had no jurisdiction. (Code, §§ 33, 138.) And lastly, if all this were not so, the judgment is not properly pleaded. Defendant alleges a public record on information and belief.
    The judgment should therefore be affirmed.
   By the Court—Hoffman, J.

The defendant set up in his answer a former judgment recovered against him for the same demand by the same plaintiff. The whole question is as to the identity of person, and cause of action.

The parties, plaintiff and defendant, have the same names in each suit, and not names of very ordinary occurrence. The complaint in the first action asks for judgment in the sum of $72.50, with interest from the 1st of January, 1857. The complaint in the second action is in this respect the same. The summons in each action is, in this particular, also alike.

The complaint in the present suit states sales of linen shirts, silk cravats, suspenders, &c., between the 23d of May, 1855, and the 25th of December, 1856. The complaint, in the former action, states sales between the 9th of November, 1854; and the 24th of December, 1856, of shirts, hose, suspenders, &c., to the amount of $122.50, and then avers that the defendant remains indebted to the plaintiff in the sum of $72.50,-with interest from the 1st January, 1857, on account of said goods and merchandise.

We think that there was enough presented to raise a presumption of identity and support the answer. The plaintiff should have been driven to repel this presumption. (18 N. Y. R., 89.)

Judgment reversed, new trial ordered, costs to abide event.