author: INGRAHAM, J. : Yan Brunt, P. J.:

text:
    THE PEOPLE OF THE STATE OF NEW YORK ex rel. JOHN W. GOODWIN, Respondent, v. CHARLES F. MacLEAN and Others, Police Commissioners of the Police Department of the City of New York, Appellants.

      The proceedings of a body acting judicially cannot be reviewed by mandamus — resignation of a police officer.

    Tlie proceedings of an officer or a body, acting judicially, cannot be reviewed upon an application for a mandamus.

    A police officer of tlie city of New York was compelled to resign from the force by tlie threats of a police sergeant, and his resignation was accepted by tlie police commissioners of that city. Subsequently he withdrew his resignation- and demanded that lie be reinstated. This was refused.

      Held, that the court could not review, on an application for a mandamus, the determination of tlie police commissioners in refusing to reinstate him.
    Appeal by Charles F. MacLean, John McClave, John E. Yoorhis and James J. Martin, composing the Board of Police of the Police Department of the City of New York, from an order, entered in the office of the clerk of the city and county of New York on the 1st day of July, 1891, directing that a peremptory writ of mandamus issue directed to said commissioners, commanding them to reinstate the relator, John W. Goodwin, to the position which he held, at the time when they accepted his resignation.

      Edward H. Havrfce, Jr., for the appellants.

      Lewis J. Grant, for the respondent. •
   INGRAHAM, J. :

Tlie case of the respondent presented in these proceedings is one-that appeals strongly to the sympathy of the court, and would induce us to grant him the relief asked for and affirm the order, if we could do so without violating established legal principles.

The jury having found, upon the trial of the issue raised by the-return to the alternative writ, that the respondent was, on the 13th day of August, 1889, a member of the police force of the city of New York; that he did, oil that day, tender to the police commissioners his resignation from the force; and that, on the 14th day of August, 1889, the police commissioners accepted such resignation at a meeting of the board; that such resignation was not obtained by any coercion, fear, duress, or force used and brought to bear upon him by the police commissioners, and was obtained from the respondent by coercion, force, fear and duress used and brought to bear upon him by his superior officer, Richard F. IVIagan, a sergeant of police.

The facts alleged in the alternative writ, admitted by the return,, and as found by the verdict of the jury, must determine the right of the respondent to the relief which was granted by the court-below.

The sergeant who obtained the resignation was not acting under the order of the appellants, but was the respondent’s superior officer,, and it cannot be said that the resignation was, when given, void. Assuming that it was voidable at the election of the respondent, it-was only void when he elected to disaffirm it, and, until such election, the appellants were justified in acting on it. Upon the presentation of the resignation to the commissioners it was their duty to either accept or refuse to accept it, such action being required by section 273 of the consolidation act; and it having been thus presented to them, regular in form, signed by the respondent, and not repudiated by him, their action in accepting it was within the powers-conferred upon them,.and was legal, and the respondent ceased to be a member of the force. (See People ex rel. Tuck v. French, 108 N. Y., 109.)

Does the fact that the respondent elected to disaffirm the resignation after the board had accepted it, and thus legally terminated his-connection with the force, so that he was no longer an officer of the city, invalidate the official action so as to make the acts of the board, ■public officers, valid at the time of performance, invalid, and reinstate the respondent as a member of the police force ? It seems to me clear that such an election does not have such an effect.

When the respondent had determined to disaffirm the resignation he could have presented the case to the board with a statement of the circumstances which induced him to sign the resignation, and a request that they would reconsider their official act in accepting his resignation. It would then have been their duty to ascertain whether the respondent had truly stated the facts, and to determine whether or not their action should be reconsidered and the respondent reinstated.

It seems that this view of the duty of the respondent was adopted by this court in the certiorari proceedings to review the action of the appellants in accejiting the respondent’s resignation, where JSeady, J., says: If the charge can be made against any member ■of the force, whoever it may be, whether captain or sergeant, that the relator was forced to resign, that would doubtless furnish a good •and sufficient reason why he should be reinstated on a proper appli ■cation to the respondent for that purpose.”

■It is alleged in the alternative writ that the respondent demanded that the appellants forthwith reinstate him to said office, and that the appellants have refused, and this is not denied by the return ; but the refusal of the appellants to reinstate the respondent did not have the effect of rescinding the acceptance of the resignation so as to reinstate the respondent as a police officer. It does not appear that when that demand was made the circumstances under which the resignation was executed were brought before them as a reason why he desired to be reinstated, and there is no allegation that there was any action of the board that could be reviewed by the ■court.

It is not alleged that the appellants have refused to entertain the respondent’s application to be reinstated, but simply that they have refused to reinstate him without the presentation to them of any facts which would justify such action on their part.

It is well settled that the proceedings of an officer or body, where the ■acts are judicial, cannot be reviewed on an application for a mandamus. In the case of People ex rel. Francis v. Common Council (78 N. Y., 39), Batallo, J., says: “ Tlie office of tbe writ of mandmnus is, in general, to compel tbe performance of mere ministerial acts prescribed by law. It may also be addressed to subordinate judicial tribunals, to compel tliem to exercise tbeir functions, but never to require them to decide in a particular manner. It is not, like a writ of error or appeal, a remedy for erroneous decisions. This principle applies to every case where tbe duty, performance of which is sought to be compelled, is, in its nature, judicial, or involves the exercise of judicial power or discretion, irrespective of the general character of the officer or body to which the writ is addressed. A subordinate body can be directed to act, but not how to act, in a matter as to-which it has the right to exercise its judgment. The character of the duty, and not that of the body or officer, determines how far performance of the duty may be enforced by mandamus.

“ Where a subordinate body is vested with power to determine a question of fact, the duty is judicial, and, though it can be compelled by mandamus to determine the fact, it cannot be directed to decide in a particular way, however clearly it may be made to appear what the decision ought to be.”

Applying this principle to the case here presented, it was the duty .of the appellants to determine whether or not they would rescind their acceptance of the resignation and reinstate the respondent. Whether they should reinstate him depended upon the circumstances-under which the resignation was executed.

Their refusal to grant the demand of the respondent could not, under any circumstances, have any greater effect than a determination of the facts against him, and that determination we have no-power in this proceeding to review or reverse.

It follows, therefore, that the order appealed ' from must be reversed and the proceedings dismissed.

DaNibls, J., concurred.

Yan Brunt, P. J.:

I concur in the result of Mr. Justice Ingraham’s opinion. If the proper question had been presented upon the mandamus proceedings, a different result might have been obtained. If' the so-called resignation was altered and added to,'as is claimed by the relator, it was no Resignation at all; as such alterations were fraudulent and could not alter tlie character of the paper, and, in fact, ■destroyed whatever vitality it might'have possessed.'

The order appealed from does not follow the alternative writ; for that reason, if for no other, it should be reversed.

Order reversed and proceedings dismissed.


source: Caselaw Access Project

author: Ingraham, J.:

license: Public Domain

text:
    WILLIAM H. KNAUSS, Appellant, v. GOTTFRIED KRUEGER BREWING COMPANY, Respondent.

      Principal and agent —■ agent talcing commissions from both parties — his duty to state it to his principal.

    A broker, wlio was employed to sell a brewery, went to a person who intended to purchase and secured from him an agreement that he should be paid a certain sum if the sale was consummated, concealing from each party his agreement with the other.

      Held, that although a sale was made he could not recover for his services from the owner of the brewery.
    That the relation of principal and agent was one requiring the fullest good faith, and the omission of an agent to disclose to his principal the existence of any interest likely to influence his conduct as an agent was a fraud upon the principal and prevented any recovery from him by the agent.
    Appeal by the plaintiff William H. Knauss from a judgment, ■entered in the office of the clerk of the city and county of New York on the 30th day of January, 1891, dismissing his complaint, with costs, after a trial at the New York Circuit before the court and a jury.

      Andrew Wesley Kent, for the appellant.

      Samuel Untermeyer, for the respondent.
   Ingraham, J.:

The complaint in this action alleges that plaintiff is, and for many years has been, a broker engaged in the business of buying and selling real and personal property. That on or about the 2d of February, 1889, in the city of New York, he, at the defendant’s request, introduced one Gottfried Krueger, then and now the president of the defendant, to one Robert Bliss, for the purpose of effecting a sale of the brewery of defendant, and that on the same ‘day, in the city of New York, the defendant agreed with plaintiff that if said Bliss, or his assigns, purchased defendant’s brewery and business, defendant would pay plaintiff for his services as broker the usual commissions therefor; and that during the months of February, April, May, June and July, 1889, the plaintiff rendered to defendant, at defendant’s request, services, in the city of New York and elsewhere, as defendant’s broker, in effectuating such contemplated sale, which was, on or about the fifteenth of July, consummated by the purchase of the said brewing business by the United States Brewing Company, and that the plaintiff’s services were reasonably worth the sum of $45,500, for which sum plaintiff demands judgment.

The plaintiff by his complaint thus establishes, for the purposes of this action, his relation to the defendant. lie alleges that he was a broker; that he rendered services to defendant, as its broker, in effectuating the sale, and that such services were reasonably worth the sum for which he demands judgment; and to entitle him to recover in this action he must prove that he was employed by defendant as its broker, to render services as a broker; that he rendered such services, and that the value of such services was the sum for which he seeks to recover judgment. He cannot ask to recover upon the pleadings for any other or different service rendered to defendant, or for services rendered in another or different relation than that which he alleges in his complaint did exist.

In his testimony, to support his cause of action, the jfiaintiff testified that he told defendant that he was a broker, and that there were parties in New York, who represented English money, who were desirous of getting good breweries,- and that they would pay good prices for them; that plaintiff had spoken to them about his, the defendant’s, being the best, and that subsequently he, the plaintiff, introduced the president of the defendant to a Mr. Bliss, who acted as a representative of the American Brewing Company, who subsequently became the purchaser of the defendant’s breweries.

The only express agreement as to plaintiff’s compensation was a conversation which he had with the president of the company, at which he said: “Now, you will have another interview with Mr. Bliss; if there is any price named, as you know what the regular commissions are; but I want to arrange it so I get a liberal commission on this matter,” and lie, the president of the defendant, said: “ That is all right, Mr. Knauss, if we make any deal that is all right.” This testimony sustains the allegation of the complaint, that the relation of the plaintiff to the defendant was that of a broker engaged in an endeavor to effectuate a sale of the defendant’s property.

The rules of law that ajiply where a broker claims commissions from his principal must govern in the determination of this action. The complaint alleges, and the evidence proves, that on or about the 15th of July, 1889, the sale was consummated by the execution and delivery of a conveyance of the defendant’s property to the United States Brewing Company ; the conveyances, however, being dated the 1st of April, 1889. .

It appealed on the trial that on March 29,1889, the plaintiff and Mr. Bliss, who had been acting for the purchasers, made an agreement whereby Mr. Bliss agreed to pay to plaintiff, for services rendered in regard to the purchase of the defendant’s property and the Knauss property, the sum of $2,500, and that subsequently, on the 25th of July, 1889, the said sum of $2,500 was paid to the plaintiff by Bliss in pursuance of such agreement.

It was thus established by the evidence, and conceded by plaintiff, that at the time of the negotiation and the sale of this property by defendant, and during the time the plaintiff claimed to be acting as the broker of the defendant, and was engaged in rendering the services to the defendant as such broker for which lie seeks to recover in this action, he had made an agreement, with the purchaser of the property, whereby he was to receive from such purchaser for the services rendered in negotiating the sale of the said property the sum of $2,500, and which sum was subsequently paid to him by such purchaser; and the fact of the making of such contract with the purchaser, or that he was to receive compensation from the purchaser, was not communicated to the defendant. That the making of an agreement whereby the plaintiff was to receive compensation from the purchaser precluded him from recovering any compensation from defendant, as a broker in the transaction, is settled in this State. This rule has been applied in many cases.

In the case of Murray v. Beard (102 N. Y. 507), the court says: “An agent is held to be 1 uberrima fides' in his dealings with his principal; and if he acts adversely to his employer in any part of the transaction, or omits to disclose any interest which would naturally influence his conduct in dealing with the subject of the employment, it amounts to such a fraud upon his principal as to forfeit any right to compensation for.services. It is an elementary principle that an agent cannot take upon himself incompatible duties and characters or act' in a transaction where he has an adverse interest or employment. In such a case he must necessarily be unfaithful to one or the other, as the duties which he owes to his respective principals are conflicting and incapable of faithful performance by the same person.” (Carman v. Beech, 63 N. Y., 100 ; Martin v. Bliss, 57 Hun, 159.)

In this case the plaintiff went to the defendant, representing' himself as a broker, and obtained employment as a broker to act for the defendant in effecting a sale of the defendant’s property, and then went to the intended purchaser and secured from him an agreement to be paid by him for rendering the same services, concealing from each of his principals his relations to the other. That the officers of the defendant relied upon plaintiff appears from plaintiff’s testimony, when he says he (the defendant’s president) desired not to go into the matter, that is,- present the matter to others, unless he knew they were responsible persons, and I assured him that this party was a direct representative of the capitalists.” The .defendant, therefore, entered into the negotiations relying upon the assurances of the plaintiff as to the responsibility and character of those with whom he was to deal. It is clear, therefore, that, applying the principles which we have seen established in this State, the plaintiff was entitled to no compensation from defendant. The claim by plaintiff that he acted as a mere middleman, and not a broker, is negatived by his own complaint and by his own testimony upon the trial.

Without considering the other questions presented in this case, we are of the opinion that for the reasons above stated the complaint was properly dismissed, and it follows, therefore, that the judgment; appealed from should be. affirmed, with costs.

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

Judgment affirmed, with costs.


author: Barrett, J.:

text:
    WALTER SCOTT and Another, Appellants, v. HOMER J. BEAUDET, Respondent.

      Attachment — affidavit as to non-re&idence of the defendant made on information— excuse for not producing the affidavit ofthepa/rty giving the information.

    An attachment was granted upon an affidavit of one of the parties bringing an action, which stated “that the defendant is a non-resident of this State (as deponent has been informed by Mr. Hutchinson, defendant’s'bookkeeper, and verily believes), and resides in the State of New Jersey. ”

      Held, that the affidavit was sufficient.
    That the rule of practice required that upon such applications the moving party should show why a fact slated upon information was not proved by the affidavit of the person giving such information, but that the court would not insist upon such proof where it appeared that the informant was the bookkeeper of the defendant, to whom it would presumably be dangerous for plaintiff to apply for an affidavit adverse to the interests of his employer.
    Appeal by the plaintiffs, Walter Scott and Albert E. Scott, from an order, entered in the office of the clerk of the city and county of New York on the 31st day of August, 1891, vacating an attachment heretofore granted in this action.

      A. G. N. Vermilya, for the appellants.

      J. H. V. Arnold, for the respondent.
   Barrett, J.:

The attachment was vacated upon the ground that the fact of non-residence was not sufficiently proved.. The plaintiff Scott states in his affidavit as follows:

“ That the defendant is a non-resident of this State (as deponent lias been informed by Mr. Hutchinson, defendant’s bookkeeper, and verily believes), and resides in the State of New Jersey.”

The rule, undoubtedly, is, that where facts are stated on information, the affidavit should show its sources; that the affiant believes such information, and that the informants are absent, or that their depositions cannot be obtained. The affidavit in the present case concededly compiles with all these requisites except the last. It gives the name of the informant and states that the affiant “verily believes ” the information. But it fails in terms to state that the informant’s deposition cannot be obtained. We think, however, that the latter fact may reasonably be inferred from the business relation which the informant bears to the defendant. "When the affiant tells us that his informant is the defendant’s bookkeeper he states a fact which, of itself, furnishes a reasonable ground for not applying for an affidavit. The law should not require so dangerous a formality as an application, which might readily result in frustrating the object of the plaintiff.

A person in the defendant’s employ, especially one so close to him as his bookkeeper, could scarcely be expected to make a hostile •affidavit against him; that, too, for the purpose of tying up his ■employer’s property. The request for such an affidavit would, in the nature of things, be communicated to the defendant and give him time to conceal or dispose of his property before it could be reached by attachment. If the affiant here had said that the reason Mr. Hutchinson’s affidavit could not be procured was because he was the defendant’s bookkeeper, and affiant believed that he would refuse to make such an affidavit, and affiant also believed that the mere request therefor would be communicated to the defendant, and thus defeat the attachment, the rule would surely have been •sufficiently complied with. Tet the affiant’s belief and fears on that head would avail only because founded upon Veason, namely, upon the fact stated that the informant is the defendant’s bookkeeper, a fact fully justifying such belief and fears. Now, the statement of the fact carries with it the impress of such belief and fears quite as distinctly as though they had been mentioned in terms. "W e think, therefore, that the affiant has given a sufficient reason for the non-production of Mr. Hutchinson’s affidavit, and that, upon the whole, Mr. Scott’s affidavit was sufficient to justify the granting of the warrant. There is no force in the further objection that the information may have related to a past period, and not to the time when the attachment was granted. The affiant speaks of the defendant’s non-residence as of the present time, and the fair implication is that such was his information.

The order appealed from should be reversed, with costs and the usual disbursements, and the attachment reinstated.

VaN IjRUNt, P. J., and Ingraham, J., concurred.

Order reversed, with costs and usual disbursements, and the attachment reinstated.


author: Van Beunt, P. J.:

text:
    EDWARD S. JAFFRAY and Others, as Surviving Partners of the Firm of E. S. JAFFRAY & CO., Appellants, v. SAMUEL GOLDSTONE, as Surviving Partner of the Firm of S. DAVIS & CO., Respondent.

      Costs — a reversal by the Court of Appeals, with costs to abide event — discontinuance — costs and an extra allowance imposed as a condition thereof — dismissal, if the plaintiff fails to pay them, improper.

    In an action for goods sold the plaintiffs recovered a judgment against the defendant, which was affirmed at General Term. On an appeal to the Court of Appeals the judgment was reversed, with costs to abide the event. Subsequently the plaintiffs made application for leave to discontinue the action, and as a condition thereof the court imposed full costs of all courts, and also granted an extra allowance.

      Held, that the terms of the reversal by the Court of Appeals carried full costs, and the case being a proper one therefor the extra allowance was right.
    That, upon such an application to discontinue, the fact that the extra allowance to the defendant was not made by the judge who tried the case at circuit was not material, and that the plaintiffs could not take advantage of it.

      Semble, that the court had no power to make an order that the action should be dismissed unless the plaintiffs paid said costs and extra allowance.
    That, upon a failure to pay the same its power was limited to denying the motion to discontinue.
    Appeal by the plaintiffs, Edward S. Jaffray, Howard S. Jaffray, John R. P. Woodriff and Charles J. Hadfield, as surviving partners of the late firm of E. S. Jaffray & Co., from an order, dated May 8, 1891, allowing the defendant an extra allowance and the same costs as those to which he would have been entitled had the complaint been regularly dismissed upon a new trial; ■ and also' from an order, dated May 22, 1891, denying a motion made by the plaintiffs for a retaxation of costs.

      I. Q. Miller, for the appellants.

      W. A. Abbott, for the respondent.
   Van Beunt, P. J.:

This action was brought to' recover a balance alleged to be due to> plaintiffs from defendant for goods sold and delivered. Judgment was rendered in favor of the plaintiffs, which judgment was affirmed by the General Term, but was reversed by the Court of Appeals and a new trial ordered, with costs to abide event, and judgment was entered upon the remittitur. When the case was about to appear upon the day calendar for retrial the plaintiffs obtained an order for the defendant to show cause why the action should not be discontinued, without costs,.or why the plaintiffs should not have such other relief as might be just, and staying defendant’s proceedings. The defendant thereupon applied to the same judge, who granted the previous order to show cause, for an order requiring the plaintiffs to show cause why an order should not be made granting the defendant an allowance of five per cent upon the value of the subject-matter involved in the action and discontinuing the action, with costs, in favor of defendant- against the plaintiffs, and vacating the stay to the extent of permitting the defendant to make this motion. The two motions coming on together the court made the following order:

Fwst. That the motion of plaintiffs, for leave to discontinue this action without costs, be and the same hereby is denied.

Second. That on the said motion of the defendant, the defendant is hereby allowed the sum of two hundred dollars ($200) by way of additional costs, said action being a difficult and extraordinary case.

Third. That the defendant is entitled to recover of the plaintiffs the full costs which he could tax if the complaint had been regularly dismissed upon a new trial on the merits.

Fourth. That this action be dismissed, .unless the plaintiffs pay said sum of two hundred dollars ($200) and said costs within ten (10) days after the taxation thereof.

The defendant thereupon taxed his costs, including a trial fee, for the first trial, four term fees and the costs of appeal before the General Term, to all of which items the plaintiffs objected and made a motion for retaxation, which was denied, and from the two orders above mentioned this appeal is taken.

it is urged by the appellants that the granting of costs and extra allowance is adding to the judgment of the Court of Appeals; and that thq sole duty of the Special Term was to enter exactly the order which the Court of Appeals directed, and that it should neither add to nor take away therefrom; and that all that by the judgment of the Court of Appeals the defendant recovers are costs of the appeal, and not general costs of tbe action; nor is be entitled to an extra allowance.

In the case of Franey v. Smith (126 N. Y., 658), to which this, court has already had occasion to advert, the Court of Appeals laid down distinctly what, in their judgment, reversing an order, with costs, means, arid what they intend when they reverse the judgment, of the court below, and grant a new trial, with costs to abide the event, which is the case at bar. They there state: “ "Where we reverse the judgment of the court below and grant a new trial in either an equitable or legal action, with costs to abide the event, all the costs of the action up to that time are intended.”

Therefore, if the plaintiffs had failed to succeed upon a new trial, the defendant would have been entitled to tax all the previous costs, together with the cost of the appeal and the costs of the new trial. Now, prior to the actual taking place of the new trial the plaintiffs make an application for leave to discontinue, without costs, or for such other relief as they might be entitled to, and the court denied their motion to discontinue without costs, and granted the motion of the defendant for an extra allowance, and found that the defendant was entitled to the full costs which he could have taxed if the complaint had been regularly dismissed upon a new trial upon the merits, and then that the action should be dismissed unless the1 plaintiffs paid such allowance and costs.

It was undoubtedly the opinion of the court that the plaintiffs should not be allowed to retire from this litigation without paying the costs which had accrued, and an extra allowance because of the character of the action. The court had the right to determine upon what terms the plaintiffs should be allowed to do this ; and if the-plaintiffs were not satisfied with the terms they could either appeal from the order, as they have done in this case, or they could go on with the action refusing to accept the terms.

That the defendant upon the dismissal of the complaint would have been entitled to full costs under the decision we have already referred to needs no comment; and that where an answer is put in the plaintiffs cannot retire without making themselves subject'to the payment of an extra allowance is also equally well settled. And the rule that the motion for an extra allowance should have been made to the judge who tried the case has no application to a case of the character now before the court. Without any motion upon the part of the defendant the court would have been entitled to impose an extra allowance as a condition of permitting the plaintiffs to discontinue.

But, although no question in respect thereto has been presented upon this appeal, we do not think the fourth paragraph of the order appealed from can be affirmed. The court had no power upon this motion to direct that the action be dismissed in default of the payment of costs. All that it could do, under those circumstances, was to deny the motion for discontinuance.

We are of opinion, therefore, that the order appealed from should be modified by striking out the fourth paragraph and affirmed as to the rest of the order, without costs of this apjieal.

BaRREtt, T., concurred.

Order modified as directed by opinion, and, as modified, affirmed, without costs of this appeal.


author: DaNiels, J.:

text:
    JAMES MOORE, Appellant, v. ARTHUR D. WILLIAMS, as Receiver of the ELECTRIC SUGAR REFINING COMPANY, Respondent, Impleaded with others, Defendants.

      Implied trusts in personalty — fiduciary obligation — following a fund — rescinding ' a sale — its effect.

    A company was incorporated to refine sugar under an alleged secret electric process said to have been discovered by one Friend. The president and secretary of the company induced certain persons to buy from them certain shares of its stock upon the faith of a promise to employ the moneys realized from such shares to buy such electric process from the wife of Friend, who was dead. In. fact, although this was not known to any of the parties at the time, there was no such process.
    The stockholders paid for their stock, and the sums paid in were deposited by the treasurer of the company in a bank. When the fraud was discovered certain of the stockholders gave notice of their intention to rescind the agreement, and a receiver was appointed, who received what remained of the fund realized from the sale of the stock to such stockholders.
    In an action brought to enforce the claims of such stockholders against the fund, in the hands of the receiver:

      Held, that the representations and agreements of the president and the secretary, that the money should he used to buy the secret process, imposed upon them a fiduciary obligation so to employ it.
    That this obligation was impressed upon the fund which the plaintiff had a right to follow; that there was no solid distinction, so far as the right to follow the fund was concerned, between the case of a technical trust and the existence of a fiduciary obligation.
    That, although the moneys of said stockholders were deposited in bank, and were .mingled with other moneys, and wore, in part, checked out, yet as the evidence showed that some of the money could be identified the plaintiff could recover it in the hands of the receiver. '
    'That although it appeared that the plaintiff represented but fifty-seven out of ninety-six shares, yet, since the holders of the other shares had not rescinded the agreement, the plaintiff might recover all the fund in the hands of the receiver, its amount not being equal to the cost of the fifty-seven shares.
    Appeal by tbe plaintiff James Moore from so much of a judgment, entered in tbe office of tbe clerk of tbe city and county of New York on tbe 24th day of October, 1890, as dismissed the complaint upon tbe merits as to tbe defendant Arthur D. Williams, as receiver of tbe Electric Sugar Refining Company, after a trial at tbe New York Special Term; also from so much of an order, made on the 20th day of October, 1890, as denied a motion for a reargument of that part of tbe decision of tbe trial justice which dismissed the ■complaint as to the receiver.

      Everett P. Wheeler, for tbe appellant.

      R. Burnhwm Moffat, for tbe respondent.
   DaNiels, J.:

Tbe defendant, in whose favor tbe action of the plaintiff was dismissed, is tbe receiver of tbe Electric Sugar Refining Company, a corporation formed under tbe laws of this State in the year 1884. And tbe defendants who were sued with him were tbe ju-esident :and secretary of tbe corporation. Tbe business for which the company was incorporated was the refining of sugar by a process claimed to have been invented or discovered by Henry C." Friend, and to which, upon his decease, it was claimed that bis wife had succeeded. 'Shares of stock of tbe company were issued and exchanged for the process or invention rejDresented to have been made. And 4,750 shares of such stock bad become tbe property of the defendants, Robertson and Coterill, prior to tbe 1st of December, 1888. What this process was, did not become known, either to these officers or to any of the shareholders of the stock of the corporation, until early in the year 1889, when it was discovered to be an entire imposition without any possible foundation to rest upon. The organization of the company and the issuing of the stock was what may be properly designated as a complete and unqualified fraud. But before this became known, and in December, 1888, it was proposed by the two defendants already named to make sale of 100 shares of the stock of the company to obtain money to be paid for the disclosure of the process represented to have been- invented for the electrical refining of sugar. And a proposal was made by them, through an agent in Liverpool, to make the sale of such shares, in the market at that city, for the price of sixty pounds, English currency, per share. He brought this proposal to the attention of persons residing in or near Liverpool, who were stockholders in the company, and they agreed to purchase the 100 shares offered for sale, which were to be divided among these individuals in certain proportions, by which each person agreed to take a specified number of the shares. Five of these individuals agreed to take in all fifty-seven shares of the stock in this manner offered for sale, three of them each agreeing to take ten shares, one of them.seven .and the other twenty, and also ten additional shares, which never were paid for and need no special consideration in the examination •of this case. When the fraud was discovered these persons severally elected to rescind the purchases which they had made of these .shares of stock. And the two defendants from whom they were purchased were at once notified of that election, and the money which had then been paid for the shares was demanded, but its return was refused by these defendants. And after that these individuals assigned their claims and rights of action, arising out of their purchase of these shares and the existence and discovery of this fraud, to the plaintiff in this suit. And he brought it to set aside the purchases of' the shares made by these individuals, and for the restoration to him as their assignee of the moneys which they had parted with in the fulfillment of their agreement to purchase the shares. Hpon the trial the action was sustained against the two -defendants who were the president and treasurer of the corporation, but it was dismissed as to the receiver. And whether that dismissal of tb8 action was justified under the circumstances is the question presented by this appeal, which has been taken upon the judgment record containing the decision and the exceptions to it, and the requests and refusals to find other matters than those contained in the decision. It appears .by die findings in the decision that the object intended to be secured by the sale of- the 100 shares of stock in Liverpool was to raise the money required to be supplied to obtain a knowledge or disclosure of the secret or process which it was claimed had been invented for the refining of sugar by electricity. And information of this purpose was disclosed to-the persons who were applied to for the purchase of these shares. Each of the persons concerned in the offer, sale and purchase of the-shares had full faith in the existence and genuineness of this alleged process. And no means had been afforded to either of them at that time for discovering that the representations concerning the process were false, and the process itself did not exist. To induce these purchasers, and others who agreed to take the residue of the 100' shares, to receive and pay for them, it was represented to them that about thirty thousand dollars were required to complete the necessary funds to obtain immediate possession of the knowledge of this secret process. It was further represented by these officers of the corporation and defendants in the action, through their agent in Liverpool, that ■ a special arrangement was completed for insuring-the speedy patenting of the process, and that the money to be raised by the sale of these shares would enable these two-defendants to close the contract with Mrs. Friend, and that the money would be paid to her in exchange for the specifications of' this procees. And it was agreed between them and the purchasers of the shares that the moneys to be paid by them should be handed to Mrs. Friend in exchange for the documents containing this secret process. And these two defendants also represented to the assignors of the plaintiff in this manner that the oirly purpose the money was required for was the payment to be made to Mrs. Friend to obtain the possession of the knowledge of this process. And the purchasers of the shares were induced to buy and pay for the stock by means of these representations, and relied upon them when they contracted to buy their shares. These facts are all distinctly found by the court in the decision which was made after the trial, and they were-sufficient to create the obligation on the part of the' defendants, Robertson and Coterill, to use the money paid for the shares only in this manner. And the fact that the money was also paid as the price of the shares to these two defendants did not relieve them from the existence of that obligation and the duty to use and apply this money in that manner. ■ For the persons who purchased the shares under these representations and promises did so for a twofold consideration. The one was to acquire the title to the shares-themselves, and the other to obtain a knowledge of the procees alleged to have been discovered, and to secure to the corporation the exclusive right to use that process-by virtue of a patent to be issued for its protection. Without the disclosure and patenting' of the process the company was not in a condition profitably to carry on its-business and secure its protection against the rivalry or competition of other parties in case the process really had any existence. And a controlling object of the purchasers of the shares, in taking and paying for them as they did, was to obtain the advantages expected to be derived from the disclosure and patenting of this alleged process. And when the two defendants, Robertson and Coterill, obtained the money under these representations and promises, they became obligated to use that money to secure this result. Sales under similar circumstances and upon like representations of other shares-of the stock were made to other persons, by which the one hundred ■ shares -were agreed to be disposed of, and were, in fact, disposed of,, with the exception of four of these shares. There was in this manner realized from the sale of the. shares the sum of £5,L60. That money passed into the hands of the defendants, Robertson and Coterill, as the vendors of the shares, and also as the officers of this corporation; and on the 31st of December, 1888, they charged themselves, in the books of the company with the sum of $28,108.80, which was the equivalent in American currency of the sum of ¿£5,^60 pounds English currency, and on the same day a credit was made in the loan account of the company to one of these persons, who was the treasurer, for the same sum, representing it to be the proceeds of ninety-six shares of - the electric sugar stock sold by him upon the Liverpool market between the 21st and 24th of December, 1888; and in December, 1888, and before this credit had in this manner been made, Robertson, tlie treasurer of the company, deposited this sum to his credit in the National City Bank, of the •city of New York, where he mingled it with his own funds, but he made no payments on account of the company until after the discovery of the fraud.

In January, 1889, the sum of $10,000 was drawn against this credit in favor of the company and sent by it to the State of Michigan, where it was deposited as security for a person who had become surety on the issuing of attachments against the personal property [claimed to belong to Mrs. Friend and another person, and as security for costs in suits commenced, and to be commenced, in behalf of the company, or of these two defendants, and which money was to be returned when all such liabilities should cease. The residue of the $28,108.80 was drawn from the bank for different objects, with the exception of the payment of a balance owing to the bank itself. And in that manner the entire proceeds derived from the purchase of the ninety-six shares of stock were disposed of. And that reduced necessarily the claim of the plaintiff to this sum of $10,000, so far as the identity and following of the fund has been presented by the case.

That the representations and agreement made by these two defendants with the persons who purchased these shares created a trust for the disposition of the proceeds of their sales, or, at least, imposed upon these individuals a fiduciary obligation to fulfill their representations and agreement, seems to be reasonably the result of what is shown to have.taken place. For, without the assurance on their part that this money would be used and employed to obtain the process alleged to have been discovered for the refining of sugar by electricity, it is clear that these purchasers would not have parted with their money or taken the title to these shares. And under this ■state of the case the defendants who obtained the money in this manner became obligated so to use it. What they represented and agreed to do were sufficient to create this obligation.' For, as it was said in Day v. Roth (18 N. Y., 448): “A written agreement is not necessary to create a trust in money or personal estate. Any declaration, however informal, evincing the intention with sufficient clearness will have that effect. Such declarations stand on somewhat peculiar grounds. They are not to be regarded as admissions merely of some .antecedent fact in relation to the subject, but are to be looked upon and received as constituting the very trust which they acknowledge. The doctrine of equity is, that by their own force they impress the fund with a peculiar character, and hence they are receivable on the same grounds as a precise and formal agreement. A person in the legal possession of money or property, acknowledging a trust, becomes from that time a trustee, if the acknowledgment is founded on a valuable or meritorious consideration.” (Id., 453.) And the obligation which was incurred by these two defendants through their representations and agreements was founded upon a meritorious consideration. For, without that, there is not the least reason to suppose that this money would have been parted with by the persons who took these shares, and so speedily, upon the discovery of the fraud, endeavored to rescind their purchases and secure a return of their money.

It has been supposed, inasmuch as this money, the proceeds of the sales, was deposited in the bank by the treasurer of the corporation, with other moneys standing there to its credit, that the power of following it was thereby extinguished. And .upon an examination of the cases In re West of England, etc., Bank (L. R., 11 Ch. Div.,. 772), that was considered to be the law, upon a review of the antecedent authorities, where no actual trust attached itself to the fund, but, at most, the obligation was one of a fiduciary character. But-this decision, upon a further examination, was overruled in the case of' In re Hallett's Estate (L. R., 13 Ch. Div., 696). And it was held, m substance, that there was no solid distinction, so far as the right to-follow the fund should be in controversy, between the case of a technical trust and the existence of a fiduciary obligation. And that has been considered to be a true exposition of the law as it has been administered in this State, and also in the Supreme Court of the United States. (Importers and Traders' National Bank, etc. v. Peters, 123 N. Y., 272, 278, 279; National Bank, etc. v. Insurance Co., 104 U. S., 54, 67-69.) And the correctness of this principle was fully held and enforced in Newton v. Porter (69 N. Y., 133, 139) and in Ferris v. Van Vechten (73 id., 113) and Baker v. New York National Exchange Bank (100 id., 31).

That the money obtained from the sale of the fifty-seven shares now in suit went into the account of JRobertson and Coterill on the books of the company, and to the credit given to Robertson, as its treasurer, and into the New York City National Bank, and was then, in part, and to the extent of $10,000, drawn out and sent to the State of Michigan, for the purposes already mentioned, where it now remains in that manner, are facts clearly found and declared by the decision of the court. And that certainly entitled the plaintiff, as the assignor of these purchasers, to follow, at least, so much of their money as went into this sum of $10,000. That it was made up to over six-tenths of the amount by their funds appears to be free from any substantial controversy. And to that extent the plaintiff is entitled to reimbursement out of this sum of $10,000. And they should, at least, have been permitted so far to maintain their action .against the receiver of the company. F.or neither the company nor the receiver jiarted with any consideration whatever for the money received by it, and which has been deposited, to the extent of $10,000, in the State of Michigan. And under the case of Bank, etc. v. Peters (supra), it may very well be 'held, inasmuch as the other persons who purchased the residue of the ninety-six shares have taken no measures to rescind their purchases, that this entire sum of $10,000, subject to the obligations to which it has been subjected as security in the State of Michigan, should be recovered by the plaintiff in this action.

The facts upon which drat right depends have all been found in the decision of the court, and they not only warrant, but require, a judgment to this extent to be ordered in favor of this plaintiff. It is not necessary, therefore, to consider the appeal from the order denying the plaintiff’s motion for a reargument, for, upon the case .as it is presented, the plaintiff is entitled to maintain this action for the recovery of this money. As to its identity there is no possible ground of doubt, and the judgment should, therefore, be reversed and judgment ordered for the plaintiff, with costs of the action and costs of this appeal, to be settled as to its terms upon notice to the counsel for the receiver, and the appeal from the order should be dismissed.

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

Judgment reversed and judgment ordered for the plaintiff, with costs of the action and costs of this appeal to be settled as to its terms upon notice to the counsel for the receiver, and the appeal from the order dismissed.


author: Learned, P. J.: Landon, J.: Mayham, J.

text:
    THE A. C. NELLIS COMPANY, Appellant, v. ARTHUR C. NELLIS, Respondent.

      Estoppel■ — -loan, forbidden by statute, made by a corporation to a stockholder — sale of collaterals not an estoppel or ratification — not inconsistent with an action for conversion — Laws of 1848, chap. 40, sec. 14.
    The president, who was a stockholder and practically controlled the management of a corporation, organized under chapter 40 of the Laws of 1818, induced the treasurer of the company to loan to him, upon liis notes secured by the pledge of his stock in that company as collateral thereto, moneys belonging to the corporation, in excess of the value of the stock so pledged. The treasurer of the corporation had been authorized by.the board of trustees thereof to loan its surplus moneys to its advantage, raking good and sufficient security for such loans.
    By section 14 of the act of 1848 the corporation was forbidden to loan its money to a stockholder thereof; and subsequently to this loan having been made to the president, who was a stockholder of the company, the loan was called in and the stock pledged as collateral thereto was sold, the amount realized therefrom representing less than fifteen per cent of the amount of the loan.
    In an action brought by the company against its president to recover the amount of such loans, less the amount obtained, by the sale of the stock, it was alleged in the complaint that he had illegally converted to his own use the moneys which had been so loaned to him:

      Held, that the loan was illegal, being forbidden by the statute. '
    That what the trustees could not lawfully do they could not subsequently ratify.

      That their sale of the hypothecated stock, made to reduce their loss resulting from the defendant’s unlawful conversion of their property, was not a ratification of the loan and that it did not estop them from suing for such conversion.
    That the trustees were not bound to restore the stock before action, for the defendant was, in any event, bound to return the money of the company whether he had obtained it in defiance of the statute or as an ordinary borrower.
    That such sale of the stock had not injured the defendant or altered the position of the parties, and that the company had not thereby elected to adopt a remedy inconsistent with the present action. (Mayham, J., dissenting.)
    Appeal by the plaintiff, tlie A. C. Nellis Company, from a judgment, entered in tlie office of tlie clerk of tlie comity of Montgomery on the 24th day of February, 1891, dismissing tlie complaint, witli costs, after a trial at tlie Montgomery Circuit before tlie court and a jury.
    This action was prosecuted to recover ten thousand dollars ($10,000) for the alleged wrongful conversion by the defendant of certain moneys belonging to the plaintiff.
    The complaint alleged the incorporation of the plaintiff, under the act authorizing the formation of corporations for manufacturing, mining, mechanical and chemical purposes, and that the defendant was a trustee and stockholder in such corporation, and charged that, in violation of his duty as such trustee and stockholder, and without lawful authority therefor, the defendant took, received, fraudulently misapplied and converted to his own use tlie money of the plaintiff, in the aggregate to tlie amount of $7,150.
    Tlie answer admits the existence of tire corporation, and that defendant was a trustee and stockholder in the same, and alleges that the plaintiff loaned tlie money specified in the complaint to the defendant, took and held his notes for the same, with 1,200 shares of stock in the company belonging to the defendant as collateral to such loan, and that the defendant had paid the interest' and part of the principal on such loan, and that before the commencement of the action plaintiff had called such loan and advertised and sold the stock held as collateral to such, loan, and had received and retained the proceeds of the sums realized on such sale.
    The evidence disclosed that the defendant had held a majority of all of the stock of the company, and was, at the time of the alleged taking of the money, the president of the company and a member of the board of trustees. That before the receipt of the money by the defendant the board of trustees, by resolution, authorized the treasurer to loan the moneys of the corporation held in bank on good security. This resolution was passed July 23, 1886, and the treasurer of the corporation thereafter, and on or prior to July 21, 1886, loaned to the defendant $6,000, taking his note, dated on that day, payable on demand, and on return of the collaterals, and at the same time received as collateral to such loan 1,000 shares of the capital stock of this company; and on the nineteenth day of August the treasurer, upon a like note and 200 shares of the capital stock as collateral thereto, made another loan to the defendant of $1,150. The money was drawn by the defendant on the check of the treasurer for the amount of these loans. For the conversion of the money represented by these transactions this action was brought. Upon these undisputed facts the trial judge dismissed the complaint.
    Bacon, Leeds do Van Steenbior’gh, for the appellant.

      Wilmot d¡ Gage, Z. 8. Wesibrooje and II V. Borst, for the respondent.
   Learned, P. J.:

This is an appeal by plaintiff from a judgment dismissing the complaint before the conclusion of the plaintiff’s testimony. The plaintiff is a corporation, under the act of 1818, for carrying on the seed business; capital, $50,000, divided into 2,000 shares, twenty-five dollars each. The defendant originally had 1,200 shares. The biddings were destroyed by fire in June, 1886, and about $23,000 was received in cash from the insurance thereon before the annual meeting in July, 1886.

There was evidence that prior to this meeting the defendant had agreed to make one ILowland and, one Dunning trustees, and to. make Howland treasurer at a salary of $7,000; that Howland was. to lend money to defendant, “ and fix it in such a way that it would not be visible on the books and still appear to be all legal.” At this meeting defendant stated that he liad been obliged to raise; money and had sold some stock to Howland and Dunning on condition tlTat they should be made trustees. This was done. The business was moved to New York, and from that time defendant was the active manager, or, as the trustees said, “he was the company in effect.”- At a meeting of the trustees in New York, July 23,1886> defendant was present, and was elected president; Howland, treasurer. It was voted : “ There being a larger cash balance in the bank than will be required to be used in the business for a long time, resolved, that the treasurer be authorized to loan such surplus as in .his judgment is to the advantage of the company, taking good and .sufficient collateral security for the amount so loaned.” Howland, as treasurer, gave defendant checks of the company as follows : July twenty-fourth, $2,000; July twenty-eighth, $1,000; August fourth, •$3,000; August nineteenth, $1,150. These checks were drawn to ■order of cash. The stub was marked on account of loan; ” the name of the borrower not given. On the books the amounts are charged to cash for bills receivable, from whom is not stated. July 21, 1886, defendant made his note to plaintiff’s order for $6,000, stating that there was deposited as collateral 1,000 shares of the stock of the company. August 19, 1886, he gave another similar note for $1,150, reciting the deposit as collateral of 200 shares of the same. This is all the stock defendant had ever held. 'There are other circumstances tending to characterize the transactions as fraudulent.' This pretended loan to defendant was plainly not authorized by the vote of the board. This was not a loan on good and sufficient security ; and defendant must have known this, as is evidenced by the concealment of the transaction- and other proof. In April, 1889, some of the stockholders having heard of these transactions had an interview with defendant, in which he admitted the transactions and produced the notes from an iron box in the safe, which was locked, and to which he only ‘ had a key. In June, 1889, a meeting of the trustees was held, at which defendant and Howland were present. It was, “ liesolved, That the treasurer of this company be directed to call the loan made to A. C. Nellis, and solicit cash offers for the hypothecated stock and to ■report to the next meeting.” Pursuant thereto the stock was sold at auction and brought about $520, which went into the treasury.

This action is brought to recover the money received by defendant on the ground that it was unlawfully converted. The learned justice dismissed the complaint on the ground that by foreclosing and selling the hypothecated stock the plaintiff had satisfied the loan and could not now claim that the transaction was illegal The 'defendant claims, as we understand, tliat if the plaintiff would recover against the defendant for the wrongful taking of its money, it must first surrender to him the security which lie gave for the money thus wrongfully taken; that when one, under the pretense of borrowing, obtains by fraud money from, another, and pledges security therefor, the lender cannot keep the security and enforce it and recover for the fraud.

"We do not know whether the defendant would insist that if no security had been given, and if he had afterwards made a payment on his note, the reception of the money so paid would have prevented a recovery for, the fraud. If a thief steals money, and afterwards returns a part, does the acceptance of that part prevent a suit for the conversion ? There can be little doubt that this money was wrongfully taken. The statute forbids a loan to a stockholder. (Laws of 1848, § 14, chap. 40.) The fact that there is, by that section, a special liability of the officers to creditors does not take away the prohibition. And the facts of this case are sufficient to satisfy a jury that the transaction was a fraudulent conversion. Indeed, this was not denied on the nonsuit.

It is not disputed that the trustees who voted at the meeting of June, 1889, knew then of the original .transaction, and knew that the stock was by defendant attached to his notes as collateral t’hereto; and the question is whether selling that stock estops the ■company from treating defendant’s acts as a conversion. It is plain that a board of trustees cannot ratify an act which they could not lawfully do in the first instance. The statute says: “No loan of money shall be made by any such company to any stockholder therein.” The principal object of that provision is to prevent a Reducing of the capital under cover of loans to stockholders. It is intended for the protection of creditors. Now, if Howland, the treasurer, was forbidden to make these loans to defendant, so were the trustees. But that which they are, by the statute, forbidden to do they cannot ratify after it has been done. If any authority is needed for this, see Peterson v. Mayor (17 N. Y., 449); Brady v. Mayor (20 id., 312).

"Whether, under the decision in Billings v. Trask (30 Hun, 315), this transaction with defendant was a loan, so that the officers would be liable to creditors, we need not inquire. In that case there was plainly no loan,. But the defendant urges that the plaintiff by selling the stock has ratified the contract in spite of the statutory prohibition. He cites the familiar doctrine stated, with numerous authorities, in Baird v. Mayor (96 N. Y., 599, etc.): “ The law not only requires a disaffirmance of the contract at the earliest practical moment after the discovery of the cheat, but a return of all that has been received under it, and a restoration o,f the other party to the condition in which he stood before the contract was made. To retain any part of that which has been received under the contract is incompatible with its rescission.” This doctrine was there applied to executory contracts for the sale of personal property ; and the question related to the rescission of the contract, not to a case where the transaction was the fraudulent obtaining of property from the plaintiff. The defendant here took plaintiff’s money. 'Whether he took it lawfully or unlawfully, in either case it was his duty to repay it; and it was right for him to secure that repayment whether he was a mere borrower or a fraudulent converter of plaintiff’s property. Perhaps the obligation was even stronger in the latter case. Why, then, should not the plaintiff avail itself of these securities whatever was the nature of the transaction? It is true, as held in Terry v. Munger (121 N. Y., 161), that where personal property has been converted, if the owner sues for the value on an implied contract to pay for the goods and recovers judg_ ment, lie treats the title as having passed to the defendants, and, therefore, he cannot in another action recover damages for the conversion. The taking of money is not entirely analogous with the taking of chattels. There was no specific money taken in this case, and no question could arise as to the title to specific property. Even if plaintiff had recovered on defendant’s notes it could not be considered, as in the case referred to, “ as having, in effect, sold this very property.” That is to say, a recovery on the notes would not, in effect, be a sale of the money taken by defendant. It would be a decision that the money had been either borrowed or unlawfully taken. But whatever might be the effect of a judgment upon the notes, or even of a suit commenced thereon (Conrow v. Little, 115 N. Y., 387), neither exists in this case. The plaintiff has only enforced these securities in order to collect what the defendant ought to pay it: what he ought to pay the plaintiff if he legally borrowed the money, and what he ought to pay it if he unlawfully took it.

Let us suppose that defendant had taken an amount of cash in bills from the drawer of the company, and had left in place thereof certain securities, might not plaintiff have sold .those securities and then sued defendant in tort to recover the balance ? And might it not have done this if he had pinned his promissory note to such securities ?

We see no injustice in the view we have taken. The defendant has had the plaintiff’s money and ought to, restore it, It seems to us that there was evidence on which it might be found that he took it unlawfully. The sale of his securities has in no way injured him, and has in no way affected his position towards the plaintiff. So far as the avails have gone his liability is reduced. His unlawful a'ct, however, remains, and for it he should answer. The remedy which the plaintiff took in selling this stock is not inconsistent with the position that he unlawfully and fraudulently took its money. There is no election of a remedy inconsistent with this action, unless it be held that one who takes money unlawfully cannot give security for its return.

The judgment should be reversed, new trial granted, costs to abide event.

Landon, J.:

I concur with the presiding justice. It might have been found as a fact that the defendant had for a short time the practical control of the corporation, and did then abuse his temporary ¡jower by converting its funds to his own use under the guise of a loan, color-ably secured by inadequate collaterals. The corporation subsequently did try to mitigate its loss by selling these collaterals. But this was no ratification of the transaction. An individual, competent to contract, may be beguiled and cheated, and subsequently ratify the voidable contract he was thus induced to make. But in this case when the defendant took the money he did not beguile or deceive the corporation ; he effaced its power and will and capacity to act for itself; he held its hands and despoiled its treasury. Such a transaction cannot be ratified since it never could have been originally authorized. After applying the proceeds of the collaterals the balanee unsatisfied represents tlie damages sustained by the corporation from defendant’s wrong, and, upon the case assumed, plaintiff ought to recover these damages.

Mayham, J.

(dissenting):

If this action were prosecuted between individuals competent on both sides to contract the transactions upon which this action was-brought would not amount to a conversion of these funds, and an action for conversion of the same would not be sustained, and a-complaint sounding in tort would be properly dismissed. (Allen v. Allen, 52 Hun, 398.) In that. case it was held that in a complaint sounding in tort the tortious act must be proved to entitle the plaintiff to recover, and that proof of a breach of contract, was not sufficient to justify a recovery, and the complaint was dismissed by the trial judge, and that determination was sustained on appeal. But it is insisted that the transaction in this case was tortious from the beginning; that the plaintiff by its trustees had -no power through its treasurer to make such contract as was made with the defendant, and that they were alike incapacitated from ratifying such a contract after it was made; and that the defendant-is not, therefore, protected from the charge of a wrongful conversion by the contract, and by the giving of his note with the collaterals; and that the adoption of that act by the plaintiff, by receiving the interest paid and the payments on the principal, and finally by the foreclosure of the lien on the stock pledged as collateral to this advancement to the defendant, did not estop or preclude them from treating the contract as absolutely void, and as if it had never been made, and holding the defendant liable as for a wrongful taking and conversion of this money.

This contention is based on the provisions of section 14 of chapter 40 of -the Laws of 1848, which provides as follows: “Nothing but money shall be considered as payment of any part of the capital stock, and no loan of money shall be made by any such company to any stockholder therein; and if any such loan shall be made to a. stockholder, the officers who shall make it, or who shall assent thereto, shall be jointly and severally liable to the extent of such loan, and interest, for all the debts of the company contracted before the repayment of' the sum so loaned.”

While the statute prohibits the stockholders and officers of this company, which was organized under the provisions of the chapter above referred to, from loaning its funds, it does not, in express terms, declare that such loan shall be void, but it imposes upon a stockholder or officer, taking part in such unauthorized loan, a liability for all of the debts of the corporation contracted before such loan is. paid. This is, in effect, a recognition of the validity of the loan, and imposing a penalty for the illegal act upon the officers or stockholders making such loan. The act itself furnishes a remedy for its violation by giving to the creditors a claim against the trustees and officers who loan the money in violation of its provisions.

If the statute made the transaction void, then there could be no. loan in fact or in law; and that part of section 14, which provides a. remedy in case of a loan in violation of its provision, would, in all cases, be wholly inoperative, because in no ease could there be a loan to a stockholder, as the void act would not be a loan. In Billings, Receiver, v. Trask and Robinson (30 Hun, 317) it was held that the provisions of this section applied only to cases where there was a loan in law, or in fact, in violation of its provisions, and the court says: “ It is clear that, to establish a right of action under the statute, on behalf of creditors, it is necessary to show that the transaction, out of which it is claimed to have arisen, was, both in law and in fact, c a loan of money; ’ and what is meant by those words, is an actual loan of money in such form as to create an indebtedness to be at some time repaid, so that a liability for payment by the borrower is created.”

This reasoning of the court, clearly establishes the legal proposition, that a binding contract can be made between the company and the stockholder to whom a loan was made; and if such a contract can be made, then the borrower in this case got the money under a contract, and his possession of it was not a conversion, and an action cannot be maintained against him for a wrongful conversion. It is quite true that this manner of loaning the plaintiff’s money is condemned by the statute, and the parties who participated in it are subject to the liabilities imposed by the statute, and become personally liable to the creditorsbut there seems to be no authority for holding that the contract for the loan was so far void, as to the plaintiff, that an action for the conversion of these funds may be maintained by it on tbe grounds tliat tbe loan conferred no title in tbe borrower, and at tlie same time valid as a loan of money for tbe purpose of making tbe parties personally liable for all debts of tbe company contracted before the repayment of the money loaned.

But it is insisted by the defendant that the plaintiff, by its present board of trustees, ratified this act of its treasurer and the defendant, by accepting the stock hypothecated as security, and foreclosing its lien upon the same, and retaining and appropriating to its own use •the proceeds thereof. To this proposition the plaintiff makes answer -that the trustees of a corporation can no more ratify an illegal act of its officers than it can perform the original illegal act. The contention of both parties upon this subject may, under certain conditions, be sound in the abstract, but not when applied to the same state of facts. We have seen that the loan to a stockholder did not render the act absolutely void. It being in violation of law, it might have been voidable if the company had moved promptly and tendered back the collaterals and notes, and demanded the return of the money, but as no such course was pursued, it is not necessary to determine that question here; but the plaintiff elected to retain the notes and collaterals and realize on the securities held as collaterals, after full knowledge of the illegal acts of the defendant and the treasurer of the plaintiff in making this loan; and we think that by that acquiescence, coupled with the benefits which they received and retained under this contract, they are estopped from now claiming that the contract was void ccb initio, and from recovering against tbe defendant in an action for the wrongful conversion of the money loaned. Herman, in his Law of Estoppel, lays down the rule that corporations, as well as individuals, may be estopped by their acts.

“ A corporation may become bound and estopped otherwise than under a corporate seal, and their undertakings and admissions may be evidenced otherwise than by records, resolutions, by-laws, ordinances or other written documents. Technical, as well as equitable, estoppels apply to corporations as well as to individuals. The ratification of a contract by a corporation may be inferred from facts attending the transaction; and where persons, assuming to act as agents of a corporation, but without legal authority, make a contract, and the corporation receive the benefits of it, and use the property acquired under it, such acts will ratify the contract and render the corporation liable thereon.” (Herman’s Law of Estoppel, [1st eel.], § 555, p. 522; [2d ed.], vol. 2, p. 1367, § 1223.)

It is true that where the illegal act complained of affects third persons not parties to the act, and who are injuriously affected thereby, a subsequent ratification of the parties to the original illegal act will not bind such third persons so injured. (Brady v. The Mayor of N. Y. 20 N. Y., 319.) But this case does not, we think, go to the extent of holding that a private corporation cannot, by adopting and appropriating to its own use the fruits of an illegal contract, with full knowledge of the facts, treat the contract as valid for the purpose of retaining the benefits to be derived from it, and at the same time repudiate it as to the other contracting party so as to hold him responsible for the wrongful conversion of the property received by him under the contract, which the other contracting party seeks to affirm as to itself, and repudiate as to him. I have found no case where the directors or trustees of a private corporation have been permitted to affirm an illegal contract so as to retain the benefits of it to the corporation, and at the same time repudiate it as to the other contracting party, and hold him liable for the conversion of the property received by him under it. If we would hold this transaction to be a contract between the plaintiff and defendant, the rule is elementary that even if it may have been fraudulent it cannot be rescinded, and the consideration recovered back by the party defrauded, until the party seeking to rescind restores, or offers to restore, all he received under it. In Cobb v. Hatfield (46 N. Y., 533, 537) the rule is very distinctly laid down that to retain any- part of what has been received upon a contract isin compatible with its rescission; and to the same effect is Masson v. Bovet (1 Denio, 69). And in Gould v. Cayuga County Bank (86 N. Y., 75, 79) the court held : “ One who seeks to rescind a compromise of a disputed claim on the ground of fraud must promptly, on the •discovery of the fraud, restore, or offer to restore, to the other party whatever he has received by virtue of it, if of any value, in full; the tender must be without qualifications or conditions.” Within these •cases we think the plaintiff has not put itself in a position to treat this transaction as void from the beginning, and hold the defendant .as guilty of a conversion of these funds.

We are referred by tbe plaintiff to Thomson v. Sanders (118 N. Y., 252) as an authority that restoration was not necessary to entitle a plaintiff to recover. But that was an action for damages, for fraud, and not an action for a wrongful conversion, and, as we think, stands upon a different principle.

On the whole case I think the learned trial judge was right in. holding that this action, in the form in which it was prosecuted, cannot, under the facts pro-ved/,011,this trial, bfe maintained, and that the nonsuit was properly ¡^rantech 1 '■ • ’■ 1

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


author: Landon, J.: Mayitam, J.: Learned, P. J.

text:
    JENNIE K. HAMILTON, Respondent, v. EDWIN L. PATRICK and Others, Appellants.

      Specific pmfm'rmnce — modification of a contract — admission that the contract as modified was executed — withdrawal of- a proposal — effect of a sale of the premises ’to another person.

    On January fourteenth Jennie K. Hamilton sent to Edwin L. Patrick, by one Truesdell, a proposed contract, signed by her, for the sale to her of lands belonging to said Patrick, which provided that a deed of said lands should be executed by Patrick and wife and be delivered on or before March first, at which date the purchase-price was to be paid. Patrick did not sign the contract underneath the signature of Hamilton, but below it wrote and signed the following: “ I sign this contract with the consideration that you agree to build all the line fence on said south line running from said road described above to the shore of Lake George, so that I have no expense.”
    Hamilton never signed this modification, nor did Truesdell assent to it upon her part. In February. Hamilton’s husband wrote to Brown, a surveyor, asking him. to survey the land and draw a deed to the vendee, have it executed and hold it in escrow. The surveyor showed the letter to Patrick, who consented to the survey, but also said he would not sell unless Hamilton made the line fence. Patrick and wife executed a deed, and notified Brown and Truesdell before March first that it was ready for delivery. Patrick never tendered the deed or demanded of ITn.i-nilt.mi performance of the contract. On April thirtieth Patrick sold the premises to a third party. After May first Hamilton assented to the modification relative to a line fence, and in the same month demanded a deed of the premises. In July she tendered the purchase-money and interest to Patrick.
    In an action brought by her for specific performance:

      Held, that it should not be decreed.

      That while it was not necessary for Hamilton to sign the modification made by-Patrick to the contract, it was necessary that she should assent to it in some way and communicate such assent to Patrick within a reasonable time, and that she had not done so.
    That, inasmuch as Patrick upon the trial expressly objected that the contract was void for want of mutuality, his admission in his answer that he had executed the contract in question could not be taken as an admission of anything more than the execution of the paper. (Learned, P. J., dissenting.)
    That the letter written by Hamilton's husband to the surveyor, and by him shown to Patrick, was not the act of the plaintiff, and that, in any event, the transaction at that time did not constitute an acceptance of the modification, but showed that certain matters were left in abeyance.
    That when Patrick added his modification the whole contract became his proposal, purely voluntary, and requiring an acceptance before it was withdrawn, which the proposer might do at any time.
    That said proposal was clearly not to remain open after March first.
    That by selling to a third person Patrick decidedly indicated that the proposal was withdrawn; and that as Hamilton did not act until - after she had knowledge of such sale their minds did not meet and no contract could result.
    Appeals by the defendants, Sarah Gr. Tremain and Edwin L. Patrick, from a judgment, dated March 7, 1891, and thereafter entered in the office of the clerk of the county of Warren, decreeing specific performance of a contract for the sale of certain real estate also from an order of the same date, and entered in the same office, denying a motion for a new trial, after a trial by the court at the Warren Circuit.

      Charles E. Patterson and John S. Diurand, for the appellants.

      A. P. Wait, for the respondent.
   Landon, J.:

We think this judgment must be reversed because no contract, was ever completely made between the plaintiff and the defendant Patrick for the purchase and sale of the premises. On the lfith of January, 1885, the plaintiff sent by one Truesdell to the defendant Patrick a writing signed by herself as follows: “ I, Edwin L. Patrick, hereby agree to sell and Jennie K. Hamilton agrees to buy for two hundred dollars the following described premises, located in the town of Caldwell, county of Warren and State of New York, viz (Here follows a description.)

u A deed of said jn'emises with the usual full covenants of warranty, etc., in which deed the wife of said Edwin L. Patrick shall join, is to be executed and delivered to said Jennie K. Hamilton on or before March 1, 1885, at which date said money shall be paid. This contract is to bind the heirs, executors and administrators of

■each party. « JEmIE K HAMILTON.

“Hated January 14, 1885.”

The defendant Patrick received the writing, and added thereto ■at the bottom thereof the following, and signed the same and delivered it to Truesdell for the plaintiff :

“ I sign this contract with the consideration that you agree to build all of the line fence on said south line running from said road •described above to the shore of Lake George, so that I have no expense.

“E. L. PATRICK”

This additional paper was never signed by the plaintiff. Truesdell sent the paper to the plaintiff. The plaintiff resided in New York, the defendant Patrick at Lake George. The land in •question is situate on the west shore of Lake George. Truesdell had acted for the plaintiff in the negotiations with Patrick, but did not •assume to give her assent to the modification added by Patrick. The plaintiff did not communicate to Patrick her acceptance of the terms •added by him until after May first following. On February 2, 1885, plaintiff’s husband wrote a letter to Brown, a surveyor at Lake George, extracts from which are hereafter set forth, enclosing a copy of the alleged contract, requesting him to survey the land, draw a deed of it to plaintiff and have Patrick and his wife execute it, and, if Patrick consented, hold the deed in escrow until he should forward a check. Brown read the letter to Patrick, who 'told him to make the survey, and also that he would not sell the land unless the plaintiff would make the line fence. Brown made the survey February seventh, drew the deed, omitting reference to the line fence, and handed the deed to Patrick. February eighteenth, Patrick asked Brown if he had received the check and Brown replied he had not. February twenty-fourth, Patrick and wife executed and acknowledged the deed, and Patrick notified both Brown and Truesdell before March first that it was ready for •delivery. He retained it and never tendered it to plaintiff or asked performance. The plaintiff did not demand the deed or tender performance until July following. The parties did not further communicate with each other respecting the matter until after the plaintiff learned that Patrick had sold the premises to the defendant, Mrs. Tremain. Negotiations between Patrick and Mrs. Tremain commenced about March thirteenth, and Patrick delivered the deed to her April 30, 1885. Three days prior to that date the plaintiff, then being at Lake George, at the house of Truesdell, and near to Patrick’s house, heard that Patrick had sold the premises to Mrs. Tremain. On May 6, 1885, the plaintiff asked Patrick for the deed of the premises, and in July following tendered him $200, with interest thereon from March 1, 1885,,and demanded the deed and Patrick refused.

It was not necessary that the plaintiff should sign the contract, as-modified by the addition made to it by Patrick (Justice v. Lang, 42 N. Y., 493; McCrea v. Purmort, 16 Wend., 465), but it was-necessary that the plaintiff should, in some way, assent to it in its modified form, otherwise there would be no meeting of the minds of the parties; and it was necessary that she should communicate that assent or acceptance to Patrick within a reasonable time, or place the notice of assfent or acceptance in the proper way of reaching him within a reasonable time. ( White v. Corlies, 46 N. Y., 467.) The court said in the case cited : “ Where an offer is made by one party to another when they are not together, the acceptance of it by that other must be manifested by some appropriate act. * * *• But a mental determination, not indicated by speech or put in course of indication by act to the other party, is not an acceptance which will bind the other.”

An acceptance not thus communicated to the proposer or his agent does not make a contract. (Chicago and G. E. R. R. Co. v. Dane, 43 N. Y., 240; Pollock on Contracts, 26; MeIver v. Richardson, 1 M. & S., 557; Mozley v. Tinkler, 1 C. M. & R., 692; Russell v. Thornton, 4 H. & N., 788.)

Where the parties are together and the proposal, as written and signed, is delivered and received as a completed contract, the assent thereto of the non-signing party may be inferred from the transaction. Here the plaintiff was in New York and the defendant Patrick at Lake George, and until the plaintiff should communicate or transmit lier acceptance to Patrick there would be no actual meeting of the minds of the parties.

The appeal book recites: The contract (that is the writing) was put in evidence, its execution being admitted. Marked, Plff- 24.” This was an admission of the execution of the paper, but no admission of anything else. Certainly not that its effect was increased or augmented beyond its terms. Practically the same admission was made in the answer of the defendant Patrick, and the same effect should be given to it. The defendant Patrick expressly took the point on the trial that no mutual contract had been made between him and the plaintiff.

The letter written by plaintiff’s husband to Brown, the surveyor, and Brown’s communication of its contents to Patrick was not the act of the plaintiff. But if it had been, it fell short of an acceptance; it was rather an act showing that acceptance was held in abeyance. The letter stated: “¥e desire to have included in the piece of land as much of the shore as can fairly and properly be done under the contract, and as many of the trees as can fairly be-included within the lines. If there is any vagueness or error in the description, I hope you will confer with Dr. Patrick and have it made right. I drew the description in the contract £ A ’ without being on the spot, and for that reason it may need correcting.” Nothing was said in the letter about the line fence, but Patrick, at the time, told Brown that he would not sell the land, unless plaintiff would build the line fence. Thus the plaintiff’s husband clearly intimated his fear that the “ contract ” was inadequate to secure to him all the land he wanted, and Patrick was still uncertain as to whether his proposition about the line fence was acceptable or would be accepted. One party kept aloof from closing the contract until the survey should prove satisfactory, and the other kept aloof until the line fence should be brought within the agreement. They never by mutual acts came any nearer together.

A proposal may by its terms limit the time for acceptance. Especially is this so in the sale of an option, or where the contract embraces one. In such cases the right of acceptance is a contract right, and the proposal cannot be revoked otherwise than within the terms of the -contract. When no limitation is expressed in terms in cases where the right of acceptance is a contract right, the rule is that the acceptance must be made within a reasonable time, and what is a reasonable time depends upon the circumstances. (Fitzpatrick v. Woodruff, 96 N. Y., 561; Wooster v. Sage, 67 id., 67.)

When Patrick made the addition to the plaintiffs proposal the whole paper became Patrick’s proposal. It was not founded upon any consideration. Patrick proposed in anticipation of receiving an acceptance, not in consideration of any present promise or benefit. His proposal, therefore, vested no contract right in the plaintiff. The only right she had was to accept the proposal while it was open. As it was a purely voluntary proposal, Patrick could withdraw it at his pleasure. It is plain that he kept it open until the first day of March had passed. It is not clear that he kept it open any longer. The proposal itself implies the necessity of acceptance on or before that day. It is therein proposed that the deed should be executed and delivered to the plaintiff “on or before March 1,1885, at which date said money shall be paid.” Acceptance must precede any obligation to perform, and, of necessity, must be made so as to admit of performance as proposed. Any1 subsequent acceptance would imply a contract different from the terms proposed. Such a change cannot be unilateral, but must be mutual. Patrick could not be forced by the plaintiff to- make any change, however slight. Parties may be as unreasonable as they please about entering into a contract. The equitable rules which the court sometimes resort to in construing a contract, after it is made, cannot be resorted to to compel a party to adhere to his voluntary proposal to make one. A proposal may.be revoked’at anytime before acceptance. (Quick v. Wheeler, 78 N. Y., 300.) It is plain that an offer to sell, made without consideration, is a nudum paotaom, and, therefore, the }Droposer may change his mind; if the other party accepts after such change, their two minds do not meet, and hence no contract is made. It will not, however, be presumed that he has changed his mind within the time obviously allowed for acceptance, unless he does some act indicating' such change. Suppose that, notwithstanding March first had passed, Patrick still kept the proposal open for a time; on the thirtieth of April he conve3red the land to the defendant, Mrs. Tremain ; he thereby indicated in the most decisive manner that he had finally changed his mind. The plaintiff had meantime done nothing to raise any equities in her favor. She learned the fact of this conveyauce, and afterwards gave Patrick notice of lier acceptance. She then knew that the proposal to her was withdrawn; that their minds could not meet; that no contract could be made. In Dickinson v. Dodds (2 Ch. Div., 463 [16 Moak, 864]) it was held that an offer to sell property may be withdrawn before acceptance without any formal notice to the person to whom the offer is made; that it is sufficient if that person has actual knowledge that the person who made the offer has done some act inconsistent with its continuance, such as selling the property to a third person. The court adopts the line of reasoning which we have set forth. It seems to be conclusive.

The learned trial judge was of opinion that the tender of performance by the plaintiff in July, and the subséquent commencement of this action, constituted such an adoption by the plaintiff of the proposal as rendered the remedies between the parties mutual. This would, no doubt, be true as between Patrick and the plaintiff, if Patrick had elected so to treat it. But he did not so elect. Such an acceptance was too late to bind him against his will; and even if he had elected to be bound, it was too late for him to change his position with respect to his grantee, the defendant, Mrs. Tremain, so as to impair the title he rightfully conveyed to her.

The defendant, Mrs. Tremain, urges further grounds for reversal based in part upon facts touching the good faith of her }3urchase from Patrick. As the judgment must be reversed for the reasons above considered, we do not deem it needful to set forth such facts or prolong this discussion.

The judgment should be reversed, new trial granted, costs of this appeal to abide event.

Mayitam, J.:

I do not think the answer in this case was such an admission of the terms of the contract, as alleged in the complaint, as to justify the plaintiff’s recovery upon the pleadings alone. The proof at the trial fails to show that the minds of the parties met upon the proposition as to building the fence imposed by the defendant as a condition of signing the proposed contract.

Learned, P. J.

(dissenting):

The complaint alleges that, by a writing dated January 14, 1885, signed by plaintiff and defendant, Edwin L. Patrick, the said defendant contracted to sell a certain lot of land to plaintiff for a certain price, and that a copy of the agreement is annexed, marked “A.” That subsequently she caused the land to be surveyed and a description made; and that the same was submitted to Patrick and approved by him, and that it was agreed that the land should be conveyed by that description.

The answer of defendant Patrick admits tha\ at the time of the execution of the agreement referred to in the complaint he owned the land, that the agreement referred to in the complaint was signed by himself and plaintiff and was similar to Schedule A, but he cannot state whether said copy is an exact copy of the agreement or not. He avers that by the terms of the agreement the purchase-price was to be paid on delivery of the deed. He admits the making of the survey and the description, and avers that he and his wife did, on or before March 1, 1885, execute and tender to plaintiff a deed substantially according to said description.

He avers that on and for a long time prior to the 1st of March, 1885, and at all times, he was ready and willing and able to perform said agreement with plaintiff until plaintiff failed and refused to perform it on her part, and that she failed to perform it on her part for many weeks after March 1, 1885.

On the trial the original contract wTas putin evidence and its execution admitted. It agrees with Schedule A attached to the complaint.

Now, upon these pleadings, I do not see how it can be in the power of Patrick to claim that a valid written contract was not made. His defense rests on his readiness to perform, and the refusal of plaintiff to perform on her part.

It is true that the contract consists of an agreement in an ordinary form for Patrick to sell and plaintiff to buy the land at a certain price. This is signed by plaintiff. Below it is the following: I sign this contract with the consideration that you agree to build all of the line fence,” etc. At. the foot is the signature of Patrick.

The plaintiff alleges that she made this contract, giving a copy of the whole, including the clause underneath her signature. Patrick admits the making of the contract, although he cannot say whether the schedule is a correct copy. The original is proved to liave been, executed, and corresponds with Schedule A. Patrick’s answer is an admission that the written contract was executed. ITe evidently includes in that admission the paragraph between plaintiff’s signature and his own. So that we have the statement of both the parties that this contract (probably including that paragraph), was their written agreement. I think it is not open for Patrick, ■on these pleadings, to show that no contract was made. That was not a matter. in issue between the jiarties. Patrick admitted the ■contract; averred that he had made. and tendered a deed in compliance therewith, and that plaintiff had refused to perform. "Whether or not he could have successfully denied the execution of the contract by botli parties, certainly he did not. And it is not in his power at this time to say that the evidence failed to prove a contract. It is not necessary, therefore, to consider whether the circumstances testified to on the trial established a binding agreement between the parties. The defense of defendant Patrick, as set forth in his answer, is the failure of plaintiff to perform a contract which he says he was willing and offered to perform.

If, then, this written contract was binding, its terms were that Patrick and his wife were to execute and deliver the deed to plaintiff on or before March 1, 1885, at which date the money was to be paid. The defendant Patrick and his wife executed the deed about February twenty-fourth. No doubt existed in their minds at that time that Patrick had contracted, in writing, to sell the land to plaintiff. And he supposed that, unless plaintiff paid him the money by March first, the contract was at an end, and he might make a better bargain if he could. It- is evident from the letter of Patrick that, in his view of plaintiff’s right’s, she slept on her privilege,” and, by neglecting to tender him the $200 on or before March first, lost all claim to the land. In that belief, he proceeded subsequently to sell it to Mrs. Tremain, one of the defendants.

The delivery of the deed and the payment of the money were to be cotemporaneous. If either party, therefore, would put the other in default, he must tender performance and demand performance from the other. Time is not generally regarded in equity as of the essence of the contract. (Duffy v. O'Donavan, 46 N. Y., 223; Hubbell v. Von Schoening, 49 id., 326; Edgerton v. Peckham, 1 L Paige, 352.)

From the time of making the contract equity regards the vendee as the owner of the property and the vendor as a creditor for the purchase-money, with security therefor on the land. (Lewis v. Smith, 9 N. Y., 502.) Hence it comes that as the vendor is treated as, equitably, a mortgagee, the vendee is not to lose his equitably mortgaged land by mere non-payment of the debt at the law day. The rules on this point are well settled in Webb v. Hughes (L. R., 10 Eq., 281), where it is said: “A purchaser may, by the terms of the agreement, make time the essence of the contract. But it requires a very strict stipulation to effect that object.” (3 Pomeroy’s Equity, § 1408 ; 2 Story’s Equity, § 776.)

Now, it appears, from the testimony of. defendant Patrick that he heard that plaintiff and her husband were sick; then that they were getting better; and it came so near the first of March that he felt anxious about the money. He did not, however, write to plaintiff, who was then in New York, nor did he tender, or cause to be tendered, to her the deed. His daughter, about the twenty-fifth of April, told him that plaintiff considered the contract good, and that she, the daughter, was afraid he would have trouble. He said he would risk all trouble. And on the thirtieth of April he conveyed the land in question to defendant, Mrs. Tremain. It is evident, then, that defendant Patrick put himself on the ground then, as he did in his answer in this case, that because plaintiff had not tendered him the money on or before March first he was free from all obligation to her. I do not think this was correct. At the very time when he delivered the deed to Mrs. Tremain the plaintiff was staying at the next house to him. He might have tendered plaintiff the deed and demanded the money without any difficulty.

I think that the finding of the court, that defendants, Mr. and Mrs. Tremain, had notice of plaintiff’s contract with Patrick before the deed was delivered to Mrs. Tremain, is sustained by the evidence. Mrs. Tremain drew up the deed to herself from the dictation of Patrick. He read from the deed which he had executed to plaintiff and told her what that deed was. She said she was astonished, and that if plaintiff had any rights she, Mrs.. Tremain, would have nothing tó do with it. Patrick said plaintiff had none, and Mrs. Tremain said she would take his word for it. A letter of Patrick to Mrs. Tremain, of March twelfth, refers to the contract.

It is not necessary to repeat the other testimony tending to show either actual notice or facts sufficient to put Mr. and Mrs. Tremain upon inquiry. They did not inquire of the persons who could have told them, their near neighbors and old friends, plaintiff and her husband. (Reed v. Gannon, 50 N. Y., 349.)

In my opinion the judgment of the court below was right ^and should be affirmed, with costs.

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