author: Haight, J.: Dwight, P. J.

text:
    James Baldwin, Appellant, v. Isaac June and Lucretia C. June, Respondents.

      ■Conveyance in fraud of creditors — retention of the subject-matter thereof as security to the grantee for the consideration paid by him.

    When a conveyance made by a judgment debtor is set aside as in fraud of creditors, in an action in the nature of a creditors’ bill, it should be retained as security to the grantee (although said grantee is affected with knowledge of the fraudulent intent with which it was executed), for so much of the consideration therefor as is represented by land conveyed to the grantor in exchange therefor, which by reason of such conveyance to the judgment debtor is made subject to, and the proceeds of which are applicable in satisfaction of, plaintiff’s judgment (Dwight, P. J., dissenting).
    Such security, however, is not to be extended to an antecedent indebtedness of the grantor to the grantee, included in the consideration for the conveyance.
    When the grantee in such a case has had the use and profits of the premises covered by the conveyance, he is not entitled to interest on the amount of the consideration for which the conveyance is retained as security.
    Appeal by the plaintiff, James Baldwin, from a judgment of the Supreme Court, entered in tlie office of tbe clerk of Steuben county on the 6th. day of June, 1892, upon a decision of the court, rendered at the Steuben Special Term.
    The plaintiff as a judgment creditor of Isaac June, brought this •action to set aside as fraudulent, a deed from the defendant, Isaac June to the defendant, Lucretia C. June, his wife, dated December 19, 1887, conveying a house and lot in the village of Addison, Steuben county, known as the Tuscarora street house. On the same day the defendant Lucretia, in consideration therefor, conveyed to the defendant Isaac a house and lot known as the Hollis house. In making the trade they valued the Tuscarora street lot at $3,000 and the Hollis lot at $2,000. The balance was made up by canceling an indebtedness for borrowed money, etc., which Isaac was owing to Lucretia.
    The trial court found as facts that the value of the Tuscarora street place was $3,500, and of the Hollis place but $1,500 ; that the ■consideration paid by the defendant Lucretia for the Tuscarora street place was inadquate and unfair, and that defendant Isaac consented to receive said consideration for the purpose of defrauding his creditors out of the amount in which the value of the Tuscarora street house exceeded the consideration which was paid therefor,” and that Lucretia was aware of such intent. Judgment was awarded setting aside the conveyance of the Tuscarora street house, but retaining it as a security to the defendant Lucretia for the value of the Hollis lot and for the money owing her by her husband.

      D. M. Darrin, for the appellant.

      A. 8. Kendall, for the respondents.
   Haight, J.:

This appeal comes here on exceptions taken to the conclusions of law. The evidence is not returned, and we' must, therefore, assume that it fully sustains the findings of fact. The appellant, by bringing up the record without the evidence, accepts the findings of fact as correct, but he contends that under the facts as found the conveyance to Lucretia should have been absolutely set aside and not retained as a security for any sum whatever.

It is true, as we have seen, that the court has found that the defendant Lucretia was aware of the fraudulent intent of her husband in making the conveyance. This makes her a party to the fraud, and she must submit to such a judgment as the plaintiff is entitled to. The plaintiff, as a judgment creditor of the defendant Isaac, had a right to have the value of the Tuscarora street house applied upon his judgment. In. awarding judgment, it was the duty of the court to see that this is fully done, and the plaintiff protected to the same extent that he would have been had the conveyance not been made.

The trial court has found as a fact, as we have seen, that the defendant Isaac made the conveyance of the Tuscarora street house, and received a consideration ther.efor, “ for the purpose of defrauding his creditors out of the amount which the value of the Tuscarora street house exceeded the consideration which was paid therefor.” Under this finding the plaintiff was defrauded only to the extent of the difference between the value of the two places. It must be assumed that the evidence supports this finding. To sustain it, it must have appeared that the plaintiff’s iudgment had become a lien upon tbe Hollis house and lot, and that it bad been, or be was entitled to bave it sold and tbe value thereof applied upon bis judgment, otherwise be would bave been prejudiced by tbe fraudulent conveyance to tbe extent of the value of the Tuscarora street place, instead of tbe difference in tbe value of the two places. Under this finding be is fully protected by a judgment which preserves tbe deed of tbe defendant Lucretia as a security for tbe value of tbe Hollis lot, for on a sale of that lot be would obtain tbe value thereof to apply upon bis judgment, and by a sale of tbe Tuscarora street bouse tbe amount thereof, less tbe value of the Hollis lot, to also apply upon bis judgment, thus preserving all of the rights which be would bave bad had not either conveyance been made. (Hamilton National Bank v. Halsted, 134 N. Y. 520.)

I am aware that it has frequently been held that payments made by a fraudulent vendee upon tbe purchase of property, cannot be recovered back or be allowed to him in a judgment setting aside a conveyance which was fraudulent; that be, being a guilty participant in tbe fraud, was entitled to no relief from the court. But these decisions are founded upon tbe theory that the rights of tbe creditors would be impaired by tbe allowance of such payments.

In tbe case of the Hamilton National Bank v. Halsted (supra), Parker, J., in delivering the opinion of the court, says: “ If A. convey to B. bis farm, worth $5,000, with intent to defraud bis creditors, B. paying him one thousand dollars at tbe time of tbe delivery of tbe deed, the court, in tbe decree setting aside tbe conveyance, will refuse to grant him relief, not as a proper punishment for tbe offense, but because the creditors bave an equity equal to tbe value of tbe property granted, which should be fully protected against him who fraudulently sought to despoil it. But for the conveyance the entire property would have been applicable to the payment of tbe creditors. By tbe fraud it was put beyond the reach of an execution. Because of it a court of equity declares tbe deed void. And to tbe request of B. that be be allowed tbe one thousand dollars paid to bis fraudulent grantor, a court of equity refuses to listen, because tbe equity of tbe -creditors embraces the whole of tbe property, including necessarily the interest represented by tbe one thousand dollars paid to A., and it cannot be cut down or interfered with by any payment constituting a part of tbe fraudulent transaction. But for the* misconduct of B. the creditors presumably could have reached the entire interest; therefore, the result of it must be borne by him and not by the innocent party.”

The refusal to reimburse for moneys paid in such a case is not for the purpose of punishing a party because of his wrongdoing, but is for the purpose of preserving the rights of the creditors to the extent that they would have been, had the conveyance not been made.

In the case of Loos v. Wilkinson (113 N. Y. 485), the action was to set aside a conveyance of real estate made by a judgment debtor in fraud of the rights of creditors. In that case the grantee was a guilty participant in the fraud and it was so adjudged, yet it was held he should be protected for payments made by him to an amount exceeding $20,000, for interest, taies, repairs, fees of agents, etc. In that case the grantee had been ordered to account for rents received by him.

Earl, J., in delivering the opinion of the court, says: “ And what does such an accounting mean % Does it mean that he shall pay for more rent than he has received or could have received, for more profits than he has made or could have made ? Shall he account to the creditors for more rents than they could have received if they had had possession of the real estate ? If the grant be of a waste piece of land which the grantee has improved so as to make rent possible, shall he account for gross rents without any allowance for his improvements % If the fraudulent conveyance be of a vessel, unseaworthy, and the vendee makes her, by repairs, seaworthy, and then charters her, shall he be required to account for the gross charter money % Or, in the cases above cited, where the fraudulent vendee of slaves was compelled to account for their hire, would an allowance for their maintenance while they were working for hire have been denied ? To answer these queries in the afiirmative would, even in a court of equity, be a wide departure from the rule of compensation. It would be spoliation, not justice or equity. A court of equity does not sit for punishment of criminals. If a fraudulent grantee has violated the criminal law, he may be prosecuted and punished in the criminal courts. While such a grantee will not be allowed for permanent' improvements made upon the granted property to suit his fancy or simply to promote his supposed interests, when the creditors of the grantor come into a court of equity seeking to compel him to account for rents and profits, the accounting must be upon equitable principles, and when he has been compelled to surrender the property conveyed to him, and to account for all the profits he has made, or could have made, or ought to have made therefrom, the ends of justice have been completely and exactly attained.”

It is said that the defendant Lucretia does not come into court with clean hands, that she knew of the fraudulent intent of her husband. She does not come into court, she is .brought in as a defendant, and the plaintiff is asking a judgment against her. The question is, what judgment is. he entitled to ? As we have shown, he is entitled to be made good for all that he lost by the fraudulent conveyance, fully that and nothing more. It is not his privilege, or that of this court, to punish her, or enforce forfeitures against her, only in so far as to preserve the rights of the plaintiff as they existed prior to the conveyance in question. The lien of the plaintiff’s judgments immediately attached to the lands conveyed by her to her husband. It was not a payment to him in money that he could pocket or secrete, so as to keep it from his creditors, but was-a payment in real property which the plaintiff could sell and apply the proceeds upon his judgments.

The provision in the judgment in reference to the money owing her by her husband stands upon a different footing; it was an antecedent debt. Whilst I do not question the right of a diligent creditor to secure the amount of his claim by judgment, deed or mortgage, he must, however, not be guilty of wrongdoing in procuring the same. If he procures the conveyance of the property for his antecedent indebtedness he must allow fair value therefor, and not unnecessarily prejudice the rights of other creditors. He cannot join with the grantor in a scheme to defraud them and still be protected to the amount of his indebtedness. (Stevens v. Brennan, 79 N. Y. 254.)

In this particular I think the judgment is wrong. The defendant Lucretia should be permitted to hold the deed upon the Tuscarora street house as a security for the sum of $1,500, the value of her Hollis house and lot, and not for the amount of the antecedent, indebtedness owing from her husband to her.

The defendant Lueretia has the possession of the Tuscarora street house until the same is sold, and, therefore, has the benefit of the rents, issues and profits thereof. She should not, therefore, have interest on the $1,500.

The judgment should be modified accordingly, and as modified affirmed, without costs of this appeal to either party.

Lewis and Macomber, JJ., concurred.

Dwight, P. J.

(dissenting):

The action was in the nature of a creditor’s bill, to set aside a deed of a house and lot in the village of Addison in Steuben county, made by the defendant Isaac to the defendant Lueretia, his wife, as being in fraud of creditors. The appeal is on the judgment record alone, the appellant relying for the facts of the case upon the findings of fact made by the court, and his contention being that those findings are not only inconsistent with the conclusions of law and the directions for judgment, but that they entitle the plaintiff to the judgment asked for in this complaint.

After the formal findings of indebtedness and insolvency of the defendant Isaac June, the recovery of several judgments against him by the plaintiff, the return of executions thereon, unsatisfied,, and the relationship of the defendants,-the court finds that the transfer assailed was made in the exchange of property between the judgment debtor and his wife; that the house and lot known as the Tuscarora street house, conveyed by the former to the latter, was of the value of about $3,500, and the property conveyed by the wife to the husband, known as the Hollis house, was of the value of about $1,500; whereas the exchange was made at a valuation— agreed upon between the parties — of the Tuscarora street property at $3,000, and the Hollis property at $2,000, the difference between those valuations being made up to the husband by crediting to him an alleged indebtedness from him to his wife, of a like amount, for money loaned, goods sold and money had and received. The court found that the amount of such indebtedness did not precisely appear, and the reference was ordered to ascertain the same.

But the court also found as facts, in terms, as follows:

That the said transfer was made by said Isaac June to secure for himself and his family the use and occupation of the Tuscarora street house and lot, and to prevent his creditors from taking the same to apply upon his debts, and the same was received by Lucretia June for the purpose of securing the said Tuscarora street house to her as a residence, and obtaining payment of the moneys due from Isaac June'to her.

“That the consideration paid by the said Lucretia June for the Tuscarora street house and lot was inadequate and unfair, and that the said Isaac June consented to receive said consideration for the •purpose of defrauding his creditors out of the amount which the value of the Tuscarora street house exceeded the consideration which was paid therefor by said Lucretia June, and that the said Lucretia June was aware of said intent.”

And, therefore, the court found as conclusions of law, that the plaintiff was entitled to judgment setting aside the conveyance of the Tuscarora street house and lot by the defendant Isaac to the defendant Lucretia, “ so far as the same is an obstruction to the levying of executions to be issued upon his said judgments ; ” but that the defendant Lucretia was entitled to hold that conveyance as security for the actual value of the Hollis house and lot, and the amount of the indebtedness actually due from the defendant Isaac to her, at the date of the conveyances, and judgment was directed to be entered giving leave to the plaintiff to sell the • Tuscarora street house and lot on his judgments against the defendant Isaac, with the same force and effect as if the conveyance to Lucretia had not been made, but providing that such sale should be subject to the lien of Lucretia, as the same should be fixed after the coming in of the report of the referee.

An interlocutory judgment was entered accordingly, a hearing was had before the referee, and on the coming in of his report, the amount for which the defendant Lucretia should hold the conveyance to her as security, was fixed by the court at the sum of $2,111.04, with interest from the date of the conveyance, and a final judgment was directed and entered accordingly. It is from that judgment that this appeal is taken, with notice that with it the interlocutory judgment would be brought up for review.

. Upon the case thus made, by the findings of the leaimed court at Special Term, I can have no doubt that the contention of the appellant is fully sustained to tlie effect that the judgment is erroneous in so far as it adjudges the defendant Lucretia entitled to hold the conveyance to her as security, and gives her a lien upon the property conveyed for the amount of the consideration rendered by her therefor. That conclusion does violence to the elementary principle that every contract, transfer or transaction which is vitiated by fraud, is vitiated altogether; that the leaven of fraud leavens the whole lump. Here is the unequivocal finding that the conveyance was made with the intent on the part of the grantor to defraud his creditors, and that the grantee was aware of such intent. This takes the case out of the saving clause of the Statute of Fraudulent Conveyances, which provides that “ the provisions of this chapter shall not be construed in any. manner to affect or impair the title of a purchaser for a valuable consideration, unless it shall appear that such purchaser had previous notice of the fraudulent intent of liis. immediate grantor,” etc. (2 R. S. p. 137, § 5; Birdseye, p. 1237, § 23.) The first section of the title pronounces its absolute condemnation upon every conveyance “ made with the intent to * * * defraud creditors,” without any mention of the intent with which such conveyance is received or of the consideration paid therefor; and section 5 {supra) saves from such condemnation only those conveyances which are made for a valuable consideration and to purchasers who are without notice of the fraudulent intent. So that the statute itself makes a perfect case against the conveyance in question. And such is the doctrine of all the authorities. (Starin v. Kelly, 88 N. Y. 421; Dewey v. Moyer, 72 id. 70; Billings v. Russell, 101 id. 226; Baldwin v. Short, 125 id. 553; Van Wyck v. Baker, 16 Hun, 168; approved in Davis v. Leopold, 87 N. Y. 620; Baldwin v. Short, 54 Hun, 473; Babcock v. Jones, 42 N. Y. St. Repr. 318.)

The only contention made by the respondents against the application of the statute to this case, is an attempt to limit its operation to cases in which the grantee was not merely cognizant of, but an active participant in the fraud. It is clear that the limitation cannot be upheld. It has no warrant in the statute itself, nor in any authoritative decision. The dictum of the Commission of Appeals in Dudley v. Danforth (61 N. Y. 626), which is apparently favorable to such contention, was altogether oh%ter, since the referee in that case found, expressly, that both purchase and sale were made in good faith; while in Inglehart v. Thousand Island Hotel Co. (109 N. Y. 462), the referee not only did not find, but refused, on request, to find, fraud either in fact or in law. The case of Boyd v. Dunlap (1 Johns. Ch. 418), which affords an early precedent for the relief granted by the judgment appealed from, was one in which the Chancellor held the conveyance assailed not fraudulent, either actually or constructively, but only given under suspicious and inequitable circumstances. (See Bigelow v. Ayrault, 46 Barb. 143.)

But it is quite unnecessary to discuss the question here, whether the fact of knowledge, by the grantee, of the fraud intended by the-grantor, is sufficient to avoid the conveyance in toto, without a finding of active participation in the fraud, because such participation, is clearly made out by the findings in this case. The fraud, as. found, consisted chiefly of a fictitious valuation of the two properties for the purposes of the exchange; and in this false valuation, the court finds that the defendant Lúcretia participated, with knowledge that the purpose of it was to defraud the creditors of her husband out of the amount by which the relative value of the property conveyed by her was thereby enhanced.

Moreover, she was the beneficiary and the sole direct beneficiary of the fraud. She was to have the benefit of every dollar fraudulently withheld from the creditors of her husband. The Tuscarora-street property was to come into her hands for a consideration of $1,000 less than its true value as known to her, and — as she knew —- for the purpose of fraudulently defeating the remedy of her husband’s creditors by that amount. Clearly, when she became a party to the fictitious valuation of the properties transferred, and a party to the exchange based upon the fictitious valuations, with knowledge: of the fraudulent purpose of both, she became a party to the fraud, and amenable'to its consequences.

In my opinion, the judgment should be modified by striking out. the provision for security and a lien, in favor of the defendant. Lucretia, upon the property conveyed to her, and inserting a pro. vision for the application of the- entire proceeds of the sale of the Tuscarora street property, or so much thereof as may be necessary to the payment and safcisfactiomof the executions to be issued on the< plaintiff’s judgments. Also, by striking out the provision for costs in favor of -the defendant Lucretia, and substituting therefor a provision for costs in favor of the plaintiff, against both defendants.

Judgment appealed from modified as indicated in opinion of Haight, J., and as modified affirmed, without costs of this appeal to either party.


source: Caselaw Access Project

author: Lewis, J.:

license: Public Domain

text:
    Henry J. Negus, Respondent, v. Louis W. Becker and Thomas Maney, Appellants.

      Pwrty wall— liability for damages caused by increase of height.

    One who, in building upon a party wall already in usé, increases its height, does so at his peril and is absolutely responsible for any damage thereby occasioned to the adjoining building, without regard to the question of negligence on his part or that of a contractor.
    When the owner of one of two adjoining lots builds an original party wall, under a contract with the owner of the other lot which requires the wall to be of sufficient strength to support a building of a certain height, and the owner of such other lot thereafter erects a building which increases the height of the party wall, but not beyond the specified height, and the wall as so increased falls, the original builder will be estopped from claiming that the wall was overweighted and that the addition made it fall for that reason; but he may recover damages from the builder of the addition when the fall of the wall was caused, not by any inherent defect, but, e. g., by a severe or unusual wind.
    Appeal by the defendants, Louis W. Becker and Thomas Maney, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of Cattaraugus county on the 1st day of March, 1892, upon the verdict of a jury rendered at the Cattaraugus Circuit.

      William H. Henderson, for the appellants.

      Hudson Ansley, for the respondent.
   Lewis, J.:

The plaintiff and one Andrew H. Krieger owned respectively adjoining lots of land in the village of Salamanca on the 1st day of June, 1886, and on that day they entered into a written contract, Negus agreeing to erect a party wall of stone and brick upon the line of the lots, of sufficient size- and dimensions to sustain a three-story brick building.

Krieger was to pay one-half of the cost of the wall, and it thereafter was to be owned jointly by the parties as a party wall.

Negus built the wall, and Krieger paid him one-half the cost thereof as agreed.

Krieger thereafter conveyed his lot, including his interest in the party wall,'to the defendants, and they thereupon proceeded to erect upon the lot a three-story brick building.

They let the contract for constructing the building to one EL O. Robinson.

Robinsdn carried up the party wall some fifteen to eighteen feet higher than the wall built by Negus, and while thus engaged in building the wall a severe wind storm arose which caused the wall to fall upon the plaintiff's building and seriously damaging it.

The amount of the plaintiff’s damage was conceded by the defendants to be $1,156.49.

At the close of the evidence the parties asked for a direction of a verdict in their favor respectively. The court denied the defendants’ motion and directed a verdict for the plaintiff for the amount of his damages, as stated.

The defendants duly excepted to the refusal of the court to grant their motion, and also to the direction of a verdict for the plaintiff.

The defendants’ counsel claims that a cause of action was not made against his clients, for the reason that the wall was being built by a contractor and not by the defendants personally; that the relation of master and servant did not exist between the defendants and the contracter, and that, therefore, the contractor’s negligence could not be imputed to the defendants.

This claim is made upon the assumption that the cause of action stated in the complaint is for the negligence of the defendants. We do not so understand the complaint.

The defendants’ right to use the wall as they did is not questioned, but it is claimed that they built upon it at their own peril, and became responsible for any damage which its use occasioned the plaintiff, without regard to the question of negligence in the manner of doing the work, and so the rule of law is laid down in Brooks v. Curtis (50 N. Y. 639), and in Schile v. Brokhahus (80 id. 619).

Judge Rapallo says in Brooks v. Curtis (supra), that either of the adjacent owners of a party wall has a right to increase the height thereof if it can be done without injury to the adjoining building, and the wall is clearly of sufficient strength to safely bear the addition, but in making such addition, he does it at his peril, and if injury results, he is liable for all damages.

He must insure the safety of the operation. The party making the change is absolutely responsible for any damage which it occasions.

Our attention is called by the appellants’ counsel to the clause in the contract requiring the plaintiff to build a party wall of sufficient strength to support a three-story brick building, such as the defendants were building when the wall fell, as bearing upon the right of the plaintiff to complain of the addition made to the wall by the defendants.

We do not see that this clause cuts any figure in the case, for it is conceded the wall was of ample strength to sustain the addition made to it by the defendants, and it did not fall from any inherent defects, but was blown over by a severe and unusual wind.

The contract estopped the plaintiff from making the claim that the wall was overweighted, and that the addition made to it fell for that reason, and that would seem to be the only effect of the clause mentioned.

The cause of action was established, the case was properly disposed of at the Circuit.

W e find nó reason for disturbing the verdict.

The judgment appealed from should be affirmed.

All concurred.

Judgment appealed from affirmed.


text:
    Samuel H. Morgan, as Executor, etc., of Priscilla Freeborn, Deceased, Respondent, v. Maybell Freeborn and Mermie Freeborn, Infants, by their Guardian ad litem, Appellants, Impleaded with Helen Hills and Justin Hills.

      Mortgage, found amiong paper's of a deceased mortgagee — defense of satisfaction.

    The evidence given on the trial of an action brought to foreclose a mortgage found among the papers of the mortgagee, on her decease, not satisfied of record, examined, and held, insufficient to establish the defense, set up by the infant children of the deceased mortgagor, a son of the mortgagee, that at the time the mortgage was executed it was agreed between the parties thereto that the mortgagor should not be required to pay it and that it should be canceled and satisfied during the lifetime of the mortgagee or at her death; and that it was so satisfied and canceled before the death of the mortgagee.
    On the mortgage in question there was indorsed a statement of the receipt of the amount of the principal thereof, signed by the Ifusband of the • mortgagee, but the evidence failed to show any authority on his part to satisfy or discharge the mortgage.

      Held, that this receipt written upon the mortgage, having never been delivered to the mortgagor or his representative, but having been retained by the mortgagee, did not operate to satisfy or discharge the mortgage, even if authorized by the mortgagee. '
    Appeal by the infant defendants, Maybell Freeborn and Mermie Freeborn, from a judgment of the Supreme Court, rendered at the Allegany Special Term on the report of a referee, and entered in the office of the clerk of Allegany county on the llth day of October, 1892.
    The action was brought by the executor of the estate of Priscilla Freeborn, deceased, to foreclose a mortgage executed by Eugene Freeborn to Priscilla Freeborn on the 28th day of February, 1882, for the sum of $2,000 and interest.
    The mortgagor was a son of the mortgagee, and both had died before the commencement of the action.
    The appellants are the children of the mortgagor.

      D. D. Diclcson, guardian ad litem, for the appellants.

      F. M. Todd, for the respondent.
   Lewis, J.:

■ This action was brought to foreclose a mortgage upon real estate in the county of Allegany.

The complaint was in the ordinary form in foreclosure actions.

The answer of the guardian ad litem did not contain a denial of any of the allegations of the complaint, but set up as an affirmative defense, that at the time the mortgage described in the complaint was executed, it was distinctly understood and agreed by and between the parties, that the mortgagor should not be required to pay the mortgage ; that it was given for the purpose'of preserving and protecting the real estate mortgaged from unwise speculations and imprudent transactions on the part of the mortgagor, and that it was understood and agreed at the time of the making of the mortgage, that it should be canceled and satisfied during the lifetime of the mortgagee, or at her death, and that it was so satisfied and canceled before the death of the mortgagee.

The infants were the only defendants who appeared in the action.

The issues were referred to a referee, and at the opening of the trial the plaintiff moved for judgment upon the pleadings on the ground that the allegations of the complaint were not denied and were, therefore, admitted by the answer of the guardiam ad litem.

The motion was denied. The plaintiff rested his case without offering any evidence.

The defendant thereupon entered upon the defense, and evidence was introduced in behalf of both parties which tended to establish all the material allegations of the complaint.

The principal part of the evidence was produced by the defendants, and consisted of the declarations of the mortgagee to the effect that her husband, during his lifetime, transacted her business ; that he had canceled the mortgage before he died.

Justin Hills, one of the defendants, testified: “ I remember of hearing a conversation between Mabel Freeborn and Priscilla Freeborn in relation to this mortgage and property. I don’t remember when it was. It was as much as four or five years ago.

“ I didn’t take any part in this conversation. Mabel asked grandma, Why don’t you give up this mortgage ? ’ She said that 4 there was no mortgage.’ She said that pa had canceled the mortgage so that it can’t make you any trouble.’ ”

Other conversations with the testatrix were testified to in which she stated that she intended to cancel the mortgage; that she was retaining the mortgage so that if she needed it at any time she could have it to use in her old age, but that she intended to have it canceled.

The mortgage was found among the papers of the testatrix after her death by the executor, and was read in evidence.

It was in form an ordinary real estate mortgage under seal. It was executed and acknowledged by the- mortgagor and was duly recorded.

.It contained a clause to the effect that it was given to secure the payment of the purchase money of the premises mortgaged.

There was written on the face of it, immediately following the description of the premises, in the handwriting of Rodman Freeborn, the following:

“ $2,000.

“ Received on the within mortgage two thousand dollars.

“No receipt given.

“ Belfast, Jwie 21, 1882. “ RODMAN FREEBORN.”

Rodman Freeborn was the husband of the mortgagee.

The mortgagor was her son. They both died before the death of the mortgagee.

The referee found that the mortgagee retained possession of the mortgage; that she had never authorized nor ratified the said indorsement to be made upon the mortgage, and that the principal sum secured by the mortgage, with the accrued interest thereon, was due and unpaid, and that the plaintiff was entitled to judgment of foreclosure and sale of the premises.

The evidence failed to show any authority on the part of -the testatrix’s husband to satisfy or discharge the mortgage.

There was no evidence that there had ever been anything paid upon the mortgage. The receipt written upon it, even if author, ized by the plaintiff, did not operate to satisfy or discharge it.

The evidence failed to establish a gift of the mortgage, for neither the receipt nor the mortgage was ever delivered to the mortgagor or his representative, but as we have seen, they were retained by the testatrix and found among her papers after her. decease.

The defendants failed to establish any defense and we fail to find any reason for a reversal of the judgment.

It should be affirmed, with costs of the appeal.

All concurred.

Judgment appealed from affirmed, with costs.


text:
    Alpha Roberts, Respondent, v. Alanson Derby, Appellant.

      Reformation of a written contrast — damages for a breach, — an equitable action cannot be changed into one at lane.

    To entitle one party to a written contract to a reformation thereof by the insertion of an additional provision, he must prove, by a preponderance of clear and satisfactory evidence, that the defendant not only agreed to the subject-matter of the provision sought to be inserted, but that it was agreed that it should be incorporated into the written contract, and that by the mutual mistake of the parties it was omitted therefrom.
    When a party has elected to bring an equitable action for the reformation of a written contract and for damages for a breach thereof as reformed, and has recovered a judgment accordingly, he cannot, on appeal, claim to convert the action into one at law, and in case it is decided that he was not entitled to a reformation of the contract, obtain an affirmance on the ground that he was entitled to recover as in an action for damages for breach of a parol agreement.
    Appeal by the defendant, Alanson Derby, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of Cattaraugus county on the 5th day of May, 1892, upon the report of a referee. *

      Fred J. JSlaekman, for the appellant.

      J. M. Gongdon, for the respondent.
   Lewis, J.:

This action was brought to obtain reformation of a written contract, and damages for a breach thereof as reformed.

The learned referee to whom the action was referred found that by the mutual mistake of the parties the contract failed to express their actual agreement, and he directed judgment for the plaintiff reforming the contract, and for damages for the breach thereof; .and the question presented for our decision is, whether the evidence .sustains his findings.

The defendant Derby was the owner of a farm in the town of Persia, Cattaraugus county, on which was a considerable quantity of hemlock and other timber. He purchased the farm of Franklin D. Locke, of Buffalo, and Mr. Locke held a purchase-money mortgage thereon of $1,900.

The defendant was desirous of selling the timber on the farm with a view of applying the money obtained therefrom in part payment of the Locke mortgage.

Plaintiff owned a portable steam sawmill, and wished to purchase the timber for the purpose of converting it into lumber and marketing it. Negotiations were had between the parties, which resulted in a verbal agreement for the sale of the timber to the plaintiff for the sum of $1,000.

Plaintiff testified that while negotiating for the purchase of the timber, he stated to the defendant 'that he knew what the labor of ■converting the timber into lumber and marketing it would cost, with the exception of the cost of skidding the logs to the mill, and that the defendant thereupon said that I|e would do or cause to be done that part of the labor for one dollar per thousand, and that he told defendant if he purchased the timber he should have the job of skidding the logs.

Plaintiff -further testified that he was to have a week’s time to determine if he would make the jiurchase, and that at the end of the week he informed the defendant that he would take the timber, and that they agreed to go to Buffalo and see Mr. Locke, and arrange the terms of the contract, and have Mr. Locke put it in writing, and that they met Mr. Locke, and Derby stated to him the bargain, .and all about it, and that Mr. Locke drew the contract, and read it over to the parties, and they executed it. No mention was made in the contract about skidding the logs.

Plaintiff claims that by the mutual mistake of the parties that part of the agreement was omitted from the written contract.

The plaintiff and his hired man, McMillan, testified that the defendant agreed to skid the logs for one dollar per thousand.

. The defendant admitted that he told the plaintiff during the negotiations that he thought the work could be done for a dollar a thousand, but that he was so busy with other work that he could not do it, but would assist the plaintiff in finding some one to do the work, but he denied that he agreed to do the work.

The facts and circumstances tend to a considerable extent to corroborate the defendant’s contention.

Concededly nothing was said about skidding the logs to Mr. Locke.

The contract contains everything Mr. Locke was told to put in it. It bears date on the 20th day of May, 1890, and provides that Mr. Derby, party of the first part, shall proceed with reasonable diligence to fell all the hemlock timber upon the premises which is fit for cutting into timber, and shall peel the bark therefrom, which he reserves to himself; that Roberts, party of the second part, shall forthwith erect upon the premises a steam sawmill, and with due diligence proceed in the work of sawing into lumber and timber all the hemlock and other timber upon the premises aside from the beech and maple ; that as rapidly as the timber is sawn it shall be marketed by the plaintiff as the agent of the defendant, and that out of the purchase money the plaintiff may retain three dollars per thousand feet, and pay the remainder to Mr. Locke to be applied upon the mortgage until the sum of $1,000 and interest thereon from that date is paid, that the surplus received from the timber shall belong to the plaintiff.

It is further provided that the title to the timber and lumber shall remain in the defendant until the $1,000 are fully paid; it contains other provisions carefully guarding the defendant against loss from the inability of the plaintiff to pay for the timber.

The plaintiff is required to commence operations by the 10th day of July, 1890, and complete the work of marketing the lumber and timber by the 1st of February, 1891.

Skidding the logs at one dollar per thousand would have amounted to $500 or $600. Plaintiff testified that nothing was said as to how or when he was to pay the defendant for his labor for skidding the logs.

After having so carefully protected the defendant in the written agreement against loss by plaintiff’s failure to pay for the timber, it is a significant fact, if such an agreement was made, that the terms of payment for the work were not mentioned.

If plaintiff’s version of the contract is correct, the defendant was obligated to do the work and wait for his pay until the job was entirely completed. The record shows that plaintiff was pecuniarily irresponsible.

Plaintiff testified that 'on their way home from Buffalo after executing the contract, he and defendant had a conversation about skidding the logs, and defendant said he would not do the work for three dollars a thousand, for the reason that he had so much other work to do, and that he would have to give up the job ; that he told Derby he supposed he had the job.

No suggestion was made by the plaintiff that the agreement for skidding the logs had been by mistake left out of the written contract, and there is not in the entire case any direct evidence that it was ever agreed or suggested that that part of the agreement was to be included in the written contract. It could properly have been put in the writing, or allowed to rest in parol.

The contract obligated Derby to fell the trees and strip the bark.

It is quite remarkable, if the plaintiff understood that the agreement to skid the logs was to be included in the contract, that he did not suggest it to Mr. Locke when he heard the clause read requiring defendant to fell the trees and strip the bark

If he is right in his contention he was at liberty to refuse to perform the contract when Derby informed him that he would not do as he had agreed; and instead of so 'doing, very shortly after signing the contract, he entered into negotiations with other people to do that woi’kj and finally agreed to pay one dollar and fifty cents to one dollar and eighty-five cents a thousand therefor.

He testified that when he was negotiating with some parties to skid the logs, the defendant was present, and that he called him one side, and privately inquired of him if he intended to do that work, and that defendant refused (this interview was denied by the defendant), and that thereupon he let the contract to another, without making any complaint, or suggesting that the defendant had made such an agreement and refused to perform it.

Plaintiff testified that the defendant admitted he had agreed to do the work, but gave as an excuse for not performing that he supposed when he agreed so to do, that the work could be done through the following winter ; that he did not suppose the plaintiff was to saw the timber so soon; and yet at the time this admission was alleged to have been made they both knew that the contract required the plaintiff to commence doing the work by the tenth of July, and to have it completed by the first day of February.

To entitle the plaintiff to a judgment reforming this written instrument, it was incumbent upon him to prove by a preponderance of clear and satisfactory evidence, that the defendant not only agreed to do the work, but that it was agreed it should be incorporated into the written contract, and that by the mutual mistake of the parties it was omitted therefrom.

A person who seeks to rectify a deed on the ground of mistake, must establish in the clearest and most satisfactory manner that the alleged intention to which he desires it to be made conformable continued concurrently in the minds of all parties down to the time of its execution, and also must be able to show exactly and precisely the form to which the deed ought to be brought. (Bispham’s Principles of Equity, § 469; Stockbridge Iron Co. v. Hudson Iron Company, 107 Mass. 290.)

~We think the plaintiff came far short of making such a case; on the contrary, the preponderance of the evidence tended to establish the defendant’s contention.

'The plaintiff elected to bring an equitable action for the reformation of this contract, and it was tried as such.- It is too late upon appeal to seek to convert it into a law action.

Although the distinctions between actions at law and suits in equity are abolished, the distinguishing features of the two classes of remedies, legal and equitable, are as clearly marked and rigidly observed as they ever were. (Chipman v. Montgomery, 63 N.Y. 230.)

If a party brings an equitable action when the same court administers both systems, he must maintain his action upon equitable grounds or fail, even though he has a good action at law on the trial. (Mann v. Fairchild, 2 Keyes, 111; Bockes v. Lansing, 74 N. Y. 437; Oakville Co. v. The Double-Pointed Tack Co., 105 id. 658.)

Had the plaintiff brought his action to recover damages for' the breach of a parol agreement, the defendant would have been entitled to a jury trial.

The judgment appealed from should be reversed and a new trial granted, with costs to abide the final award of costs.

All concurred.

Judgment appealed from reversed and a new trial granted, with, costs to abide the final award of costs.


text:
    Simon Paltrovitch, Respondent, v. The Phœnix Insurance Company of Hartford, Conn., Appellant.

      Mre insurance policy — certificate of “ the magistrate or notary living nea/rest the place of the fire.”

    A condition in. a policy of fire insurance that “the insured should, if required, furnish a certificate of the magistrate or notary living nearest the place of the fire, stating that he has examined the circumstances, and believes, the insured has honestly sustained loss to the amount that such magistrate or notary public shall certify,” should receive a practical, reasonable construction; and when the insured, after a fire, in a large city, has in good faith obtained a certificate from a notary residing and doing notarial business near the place of the fire, being the nearest official he can find after diligent search, and has voluntarily sent such certificate to the insurance company, with his proofs of loss, and the company, after retaining it some twenty days, has returned it, with a notice that the insured was required to furnish the certificate mentioned in the policy, and that the company refused to accept the certificate which had been sent, because it was not made by the magistrate or notary nearest the x>lace of the fire, but not informing the insured of any nearer oficial, the company is to be deemed to have waived a literal compliance with the condition.

      Inman v. Western Mre Ins. Go. (12 Wend. 452), and Gilligan v. Commercial Mre Ins. Go. (20 Hun, 93), distinguished.
    Appeal by the defendant, the Phoenix Insurance Company of Hartford, Conn., from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of Erie county on the 25th day of February, 1892, upon the verdict of a jury rendered at the Erie Circuit, and from an order denying the defendant’s, motion for a new trial, made upon the minutes of the court, entered in said clerk’s office on the 15th day of April, 1892.

      G. M. Bushnell, for the appellant.

      Moses Shire, for the respondent.
   Lewis, J.:

Defendant issued two policies of fire insurance to the plaintiff.

One of them covered the stock of goods of plaintiff in his store, for the amount of $2,000.

The other was for $1,100, and covered his household furniture, clothing, etc.

The property insured was in plaintiff’s building upon "Williams street in the city of Buffalo.

A fire occurred on the 11th of May, 1891, which totally destroyed a portion of the insured property, and damaged other parts thereof, and this action was brought to recover $2,525.J5.

The jury rendered a verdict for the plaintiff in the sum of $1,100.

If the plaintiff was entitled to recover, the defendant has no cause for complaint as to the amount of the verdict.

The serious question presented by this appeal arises under a condition of the policies providing that the insured “shall also, if required, furnish a certificate of the magistrate or notary public * * * living nearest the place of fire, stating that he has examined the circumstances, and believes the insured has honestly sustained loss to the amount that such magistrate or notary public shall certify.”

Proofs of the loss were made out in due form and served upon the company June 15, 1891. Accompanying the proofs was the certificate of A. J. Boehner, a notary, in form as required by the policies, to the effect that he was acquainted with the character and circumstances of the insured, and believed that he had without fraud or evil practice sustained loss and damage on the property insured to an amount mentioned, which was larger than that claimed by the plaintiff in his complaint.

The proofs, including the certificate, were retained by the company until the 8th day of July, 1891, when they were returned to' the plaintiff, with a written notice to the effect that he was required to furnish to the company the certificate mentioned in the policy, and the notice further stated that the company refused to accept the certificate of Mr. Boehner, voluntarily served by the plaintiff, on the ground that he was not the nearest magistrate or notary to the place of the fire.

The company had not theretofore required the plaintiff to furnish any certificate.

The plaintiff testified that after the fire occurred he made search for the nearest notary to the place of the fire ; that he inquired in a good many places, and the people said they did not know of any notary nearer to the place of the fire than Mr. Roehner; that Mr. Roehner resided on Broadway, a block or a block and a half away from the place of the fire (the distance from the' fire being 1,155 feet); that he was a real estate and insurance agent, and had a notary’s sign out at his place j that Mr. R ehner had made out the proofs of loss for the plaintiff; that he supposed and believed, after making these inquiries, that he was the nearest notary to the place of the fire.

The defendant introduced evidence showing that there were three notaries whose residences .were nearer to the place of the fire than that of Mr. Roehner.

None of them were housekeepers, but all boarded and lodged with their parents in the neighborhood of the fire.

Neither of them had any notarial sign at his residence.

Two of'them testified that they never did any business as notaries at their residences.

The other one testified that he did sometimes accommodate his neighbors at his home by taking their acknowledgment or an affidavit.

They were all lawyers, having their offices in the business part of the city, from a half to three-quarters of a mile from their residences

This provision of the policy should receive a practical, reasonable construction. Its purpose is to protect the company from fraudulent claims made against it

It was said by Ch. J. Nelson, in Turley v. North American Fire Ins. Co. (25 Wend. 378), in speaking of a similar clause in a policy, “ This clause of the contract of insurance is to receive a reasonable interpretation; its intent and substance, as derived from the language used, should be regarded. There is no more reason for claiming a strict, literal compliance with its terms than in ordinary contracts. Full legal effect should always be given to it for the purpose of guarding the company against fraud or imposition. Beyond this we would be sacrificing substance to form, following words rather than ideas.’’

In speaking of the facts of the case the judge continues:

“ The magistrate, it appears, resided some three or four blocks north of the place of the fire, and kept his office or place of business two or three blocks south, usually passing it several times daily. A case can scarcely be imagined where the locality of the officer would afford a better opportunity to acquire knowledge of the facts to which the certificate relates. An alderman of the city resided across the street and nearer to the fire than Judge Lansing; but whether nearer than his office is not stated. The latter place may be regarded in ascertaining the magistrate most contiguous within the meaning of the condition. His business relations arising out of his official and professional pursuits transacted there will be presumed to afford the requisite information as far as locality is concerned. Por all the purposes of the condition it is the place most favorable to the company.

“ It seems the residence of a notary happens to be a few feet nearer the fire than the office of the judge, and we are asked to go into a nice calculation of distances and settle the point upon the laws of mensuration. De minimis, etc., is a sufficient answer to this objection. The spirit of the condition requires no such mathematical precision from the assured. Its object is completely secured by the proximity of the certifying magistrate.”

It was incumbent upon the plaintiff to use due diligence to find the nearest notary to the fire and obtain his certificate, as required by the policy.

The policy calls for a certificate from a notary or magistrate living nearest the place of the fire.

If the word “living” is used as synonymous with “residing” then it is certain the certificate was not made by the nearest notary.

If the purpose of the provision is to secure a certificate from a notary whose place of business is nearest to the fire, an officer who ■could be found during business hours, then Mr. Eoehner was the nearest notary.

So far as appears from the case, Eoehner’s certificate was as effectual a protection to the company against fraud as the certificate of either of the other notaries would have been.

The company having ascertained that there were notaries residing nearer the fire than Eoehner, after retaining the proofs for some twenty-three days, returned them to the plaintiff, as above stated.

The notice failed to give the plaintiff the information the company had obtained.

If a certificate from Mr. Schattner, who was the notary residing-nearest the fire, was really desired by the company, his certificate would probably have been furnished, if the plaintiff had been, informed of the facts.

The notarial certificate, as we have seen, was furnished by the plaintiff voluntarily, the company not having called for it.

If it had been made by the nearest officer to the fire, the company , would not have been justified in calling for a new certificate.

Had the new certificate demanded been furnished, it would have had the effect to extend the time for the payment of the loss, twenty-three days.

A month or more after the return of the proofs of loss, the-defendant, under a clause in the policy permitting it, required the-plaintiff to appear before a referee and submit to an examination as to his loss.

It is claimed by the respondent that this was a recognition of the-validity of the policies, and that defendant thereby waived its previous right to insist upon a forfeiture, and we are referred as authorities for this claim to the cases of Titus v. Glens Falls Ins. Co. (81 N. Y. 418, 419); Carpenter v. German-American Ins. Co.. (47 N. Y. St. Repr. 865).

The policies, however, in those cases did not contain the provision found in this policy, to the effect that the requiring of such an. examination should not waive a forfeiture.

The jury found, upon evidence sustaining their finding, that the-plaintiff in good faith obtained the certificate from the nearest officer he could find after diligent search, and that by so doing he complied with the provisions of the policy in that regard; and we think in view of this finding, and the retention of the proofs of loss, including certificate, by the company for so long a time, and the failure of the company to advise the plaintiff of the information it had obtained as to the residences of the notaries residing nearer the fire than did Eoehner, it should be held to have waived the literal compliance with the condition in question.

.The facts of the case of Gilligan v. Commereial Fire Ins. Co. (20 Hun, 93), relied upon by the appellant, are unlike the facts here. The property insured in the Gilligcm case was in the small village of Fairhaven, Yt., where the residences and places of business of all the magistrates and officials, we must assume, were well known to the plaintiff. He failed to furnish a certificate from the nearest magistrate, and no excuse appears in the case for his failure so to do.

An objection was made to the certificate for that reason by the insuring company and the plaintiff failed to furnish another certificate.

The decision in that case was placed upon the authority of Inman v. Western Ins. Co. (12 Wend. 452).

Justice Learned, in his opinion, says, that while it seemed to him iniquitous for the company to insist on the letter of such a provision, he felt bound by the decision in the Inman case. The policy in the Inmcm case provided that, “The assured sustaining a loss or damage by the fire shall forthwith give notice thereof to the insurer.”

The fire occurred or. the twenty-third day of February, and notice of loss was not given until the second day of April following, and the court held that the insured had failed to comply with the provisions of the policy in giving the notice, and put its decision upon that ground.

The case at bar, we think, can be distinguished from these cases.

The judgment and order appealed from should be affirmed.

All concurred.

Judgment and order appealed from affirmed.


author: Lewis, L:

text:
    Valentine Fromm, Respondent, v. Daniel Ide, Appellant.

      Damages for negligence in the performance of a contract — defective ditch on a highway — wm'k done by a highway commissioner under a contract with a landowner— damages.

    Liability for damages resulting from negligencé is not avoided by the fact that the negligent act was done in the course of carrying out a contract.
    In an action for damages for so negligently constructing a ditch as to bring water upon the plaintiff’s land, it appeared that the defendant, who was a commissioner of highways, had done the work complained of under a contract which he had made with the plaintiff to construct a ditch which should conduct water away from the plaintiff’s land; that the defect in the ditch could have been remedied at slight expense, but that it existed in the highway on the land of a third party, under the defendant’s control, but where the plaintiff had- no right to enter to make repairs.

      Held, that the plaintiff was entitled to maintain an action of tort for the damages resulting from the defendant’s negligence, and was not confined to an action for breach of the contract;
    That as the defect was on the land of another, and was one which it was the defendant’s duty to correct, the plaintiff's damages were not to be limited to what it would have cost to remedy the defect;
    That defendant was not chargeable, however, with any injury resulting from water that would have been upon the plaintiff’s premises if the work had not been done.
    Appeal by the defendant, Daniel Ide, from a judgment of the Monroe County Court in favor of the plaintiff, entered in the office of the clerk of that county on the 16th day of February, 1892, upon the verdict of a jury, and from an order entered on the 20th day of May, 1892, denying the defendant’s motion for a new trial made upon the minutes of the court.

      John D. Lynn, for the appellant.

      Ivan Powers, for the respondent.
   Lewis, L:

The cause of action as alleged in plaintiff’s complaint is ior damages sustained to his premises situated in the town of Irondequoit, by the negligence of the defendant in so constructing a ditch in the highway as to cause the surface water to flow upon the plaintiff’s premises and thereby rendering them unfit for occupation.

Plaintiff was the owner of five acres of land in the said town, with a dwelling house thereon, in which he resided with his family. The land was low, portions of it had theretofore been during the rainy seasons covered by water. Ditches had been constructed in the highway for the purpose of draining the lands. The defendant wasi the highway commissioner; he entered into an agreement with the plaintiff and two of plaintiff’s neighbors, whose lands were similarly situated, to lower and extend the ditches in the highways so as to relieve their lands of the water, the plaintiff and his neighbors agreeing to pay the defendant for the work the sum of seventy-five dollars The agreement required him to so construct the ditches that they would drain the plaintiff’s land along the highway in an easterly direction

The defendant so carelessly and negligently did the work that the ditches, instead of draining the water off from the plaintiff’s land, gathered the surface water and emptied it upon his land. The easterly end of the ditch, instead of being as it was agreed it should be, lower than its westerly end, was left higher. The result was that the plaintiff’s and the adjoining lands were, in the rainy season, submerged with water, the water remaining thereon and becoming stagnant and foul, rendering the plaintiff’s premises unliealthful and unfit for occupation 01 cultivation. There was evidence tending to show that immediately after the defendant had completed the work, he was informed of the defect in the sewer and was requested to remedy it, but he neglected and refused so to do, and the situation thus remained foi three years, when the plaintiff himself completed the ditch by deepening its easterly end, and thereafter his lands were properly drained. The expense of completing the ditch was trifling, amounting to about ten dollars. Plaintiff recovered a verdict for $175 damages

It is the contention of the appellant that the plaintiff was only entitled to recover in an action for breach of contract. "While he could have brought his action in that form, he was at liberty to bring his action in tort tc recover his damages sustained by defendant’s negligence.

The defendant left the ditch in such a condition that it collected the surface water and emptied it upon the plaintiff’s land.

Had the work been done by the defendant voluntarily and not under a contract' with the plaintiff, liis liability for damages sus: tained by tbe plaintiff would be conceded.. Causing tbe water to be emptied upon tbe plaintiff’s land was not necessarily connected with tbe performance of tbe contract. One who, while performing a contract to transport goods or passengers for hire, negligently destroys tbe property or injures the person of tbe passenger, is guilty of a tort, and liable in an action for negligence, notwithstanding tbe negligent act was performed while carrying out a contract. Had tbe defendant contracted to put a roof upon tbe plaintiff’s bouse and had performed tbe work in such a negligent and careless manner as to cause tbe plaintiff’s property in tbe bouse to be injured by rain, he would be liable in an action for tort.

Plaintiff’s right of action did not depend on tbe existence of a contract between himself and tbe defendant, but upon tbe fact that tbe defendant wrongfully and negligently did an act which injured the plaintiff’s property.

Defendant owed a duty to tbe plaintiff not to injure bis property by any wrongful or negligent act of bis while performing the contract. That duty did not necessarily depend upon or grow out of tbe contract. (Bickford v. Richards, 154 Mass. 163; Stock v. City of Boston, 149 id. 410.)

Counsel for tbe appellant claims that it was tbe duty of the plaintiff to remedy tbe defect in tbe sewer, and that bis damages should be limited to tbe cost of domg tbe work, and that be was not justified in allowing tbe defect in tbe sewer to continue for three years. Tbe evidence tends to show that tbe defect could have been remedied easily and at very slight expense, but tbe defect in tbe ditch was in tbe highway at a point several hundred feet easterly of tbe plaintiff’s premises upon the land of another person.

Tbe plaintiff had no right or authority to enter upon tbe land of another for tbe purpose of deepening tbe ditch. Tbe defendant, as we have seen, was tbe highway commissioner, and as such bad control and supervision of tbe highways of the town. He was notified by tbe plaintiff of tbe defect in the ditch and it was his duty to correct bis own error. He refused so to do. Had tbe defect in tbe ditch been upon tbe premises of tbe plaintiff, tbe rule contended for by tbe defendant would obtain, but has no application in such a case as this.

"We have examined the exceptions of the defendant, and the only-one meriting attention is his exception to the refusal of the court to charge the jury that in no event could the defendant be charged with any injury resulting from any water that would have remained on these premises if the ditch had never been built.

It appeared upon the trial that the plaintiff’s premises were, prior to the performance of the work upon the ditches by the defendant, during the rainy season, to some extent, covered with water, and unquestionably the defendant was not chargeable with any injury resulting from any water that would have been upon the premises if the work had not been done, but by referring to the charge of the court, .we find that the jury had been correctly instructed upon that point, although not in language as clear and direct as was the request to charge mentioned.

The jury having been substantially charged as requested, it was not error, we think, to refuse,the request. '

The judgment and order appealed from should be affirmed.

Dwight, P. J., Maoomber and Haight, JJ., concurred.

Judgment and order of the County Court of Monroe county appealed from affirmed, with costs.


author: Lewis, -J.:

text:
    Rudolph Hoffeld, Respondent, v. Jacob Zeuzius, Appellant.

      Interest clause in a contract for the sale of real estate, construed.

    The words “interest thereon” in the clause “the said party of the first part agrees that whenever there shall have been paid upon the purchase price of said premises the sum of $20,000 and interest thereon,” etc., in a contract for the sale of real estate, held, on construing the whole instrument, to refer to the $20,000 and not to the amount for which the property was sold.
    Appeal by the defendant, Jacob Zeuzius, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of Erie county on the 28th day of April, 1892, upon a decision of the court at the Erie Special Term.

      George Wadsworth, for the appellant.

      Moses Shire, for the respondent.
   Lewis, -J.:

• The defendant, being the owner of a parcel of land in the city of Buffalo, on the 25th day of March, 1884, entered into a written agreement, under seal, with one Baptiste Kahabka, by the terms of Which the defendant agreed to sell to Kahabka said land for the sum of $25,000, upon the terms and conditions stated in the contract.

Thereafter, and on the same day, another agreement was executed between said parties materially changing the terms and conditions of the first agreement.

The agreements were read in evidence, and marked Exhibits “ A and “B.”

Exhibit “ B ” recites, “ that whereas said (Jacob Zeuzius) party of the first part, has this day agreed for the sum of $25,000, to convey to-said (Kahabka) party of the second part, or to such person, persons or association as said second party may hereafter designate, certain real estate, situate in said city of Buffalo, and more particularly referred to in said agreement to sell; and whereas the said Baptiste Kahabka has performed certain services in the sale of said lots, and has-assumed certain obligations, and agreed to perform certain services in disposing of said land and collecting the payments thereon; now, therefore, this agreement witnessetli, that in consideration of the premises, and of one dollar to him duly paid, said party of the first part hereby agrees that whenever there shall have been paid upon the aforesaid contract of sale, the sum of $3,000, said party of the first part will thereupon pay to said second party, or his assignees, for his services, the sum of $150, which shall be next thereafter received on said contract of sale, and thereafter so often as said party of the first part shall receive the sum of $3,000 on said contract, the next $150 received thereon shall be paid to second party, or his assigns.

“ Said party of the first part further agrees that when there shall have been paid to him on said contract of sale the sum of $20,000, and interest thereon, according to the terms of said contract, over and above such sums as shall have been paid to said second party or his assigns, as hereinafter provided, said first party will thereupon assign to said second party, or such person as he may designate, said contract of sale, and all sums due or to grow due thereunder.

“ Should said party of the first part, under the covenants contained in said contract of sale, hereafter give a deed of the premises mentioned in said contract, and take a mortgage on said premises to Secure the unpaid portion of the purchase price, then the said party of the first part agrees that whenever there shall have been paid upon the purchase price of said premises the sum of $20,000, and interest thereon, according to the terms of said contract of sale, he will then assign to the second party, or to such person as he may designate, said mortgage, and all sums due or to grow due thereon.”

Kahabka sold the land, and the defendant, after receiving a portion of the purchase price, executed a deed of the land, and received from the purchaser a purchase-money mortgage for the sum of $16,000.

This mortgage more than covered the amount coming to the defendant; and thereafter, and on the 28th day of August, 1890, the mortgagor, desiring to pay the mortgage, requested the defendant to receive the amount of the unpaid principal and allow the interest on the $5,000 ($924.90), which the premises sold for in addition to the '$20,000 to be paid to the plaintiff.

The defendant demanded that the said sum of interest should be paid to him, and received the same, and in violation of the terms of the agreement, satisfied and discharged the mortgage of record.

Kahabka had theretofore assigned his interest in the contract to the plaintiff.

The plaintiff thereupon demanded of the defendant that he pay to him the said sum of $924.90, which the defendant refused to do, the defendant claiming and contending that he was entitled to receive the entire proceeds of the farm, including interest thereon, less the sum of $5,000, and the plaintiff’s contention being that all that defendant was entitled to receive was the sum of $20,000, and interest thereon, and that he, as assignee of the claim, was entitled to receive the balance of the purchase price with the accumulated interest thereon.

The trial court sustained the contention of the plaintiff, and held that he was entitled to recover of defendant the said sum of $924.90, with interest from the day the same was paid to the defendant.

"We agree with the construction given to the contract by the learned trial court. „ We think that the words interest thereon ” refer to the $20,000, and not, as claimed by the defendant, to the ■amount for which the property was sold.

By the agreement, Exhibit B,” the defendant agreed to receive as his portion of the proceeds of the sale of the farm, the sum of $20,000, and interest on that sum, and agreed that Kahabka should receive for his services and expenses in selling the property, all that should be realized over and beyond the $20,000, with the interest on that sum. There is nothing in the contract limiting Kahabka’s •compensation to the exact sum of $5,000.

The claim of the plaintiff is not to recover interest on the commissions of Kahabka; it is to recover of the defendant the sum of $924.90 received by the defendant belonging to the plaintiff.

That was the amount „due to the plaintiff over and above what Fad already been paid to Fim and Fis assignor, Kahabka.

The defendant neglected and refused, after receiving the amount coming to him, to assign the bond and mortgage as he had agreed to do in his contract. The damages the plaintiff was entitled to recover was the value of such bond and mortgage after the defendant had received the money due him.

The defendant received and collected $924.90 which belonged.to the plaintiff, and that sum the plaintiff was entitled to recover of the defendant.

It was stipulated upon the trial that the only question in the case is, who is entitled to the interest upon $5,000, provided in the contract of sale.

A statement of the plaintiff’s claim, including computation of interest, was, by agreement of parties, received in evidence.

It showed the balance due acccording to the claim of the plaintiff.

We see no reason for reversing the judgment appealed from.

It should be affirmed.

Dwight, P. J., Macomber and Haight, JJ., concurred.

Judgment appealed from affirmed.


text:
    John M. Bedford, Plaintiff, v. Durfee A. Sherman and Others, Defendants.

      Limited business corporation — individual liability of the directors, on a failure to-file the annual reports — debt created by notes of the corporation —warehouse receipts —fraudulent withdrawal of grain — remedy of the wao-ehousemen, on payment of the notes to the pledgees of the warehouse receipts — assignment of the claim.

    A limited business corporation, organized under chapter 611 of the Laws of 1875, to deal in grain, made-its promissory notes and procured them to be discounted by certain banks, on the collateral security of warehouse receipts for grain, issued by an association of elevator companies to the order of the limited corporation; the corporation thereafter fraudulently removed from the elevators, and converted to its own use the grain represented by the warehouse receipts, and the banks called upon the warehousemen to make good their receipts, which they did by paying the banks the amounts due on the notes for which, the receipts were pledged.
    The banks thereupon indorsed the notes in blank and delivered them, with the1 warehouse receipts attached, to the stockholders of the elevator companies, who thereafter, for the purpose of bringing an action thereon, assigned the-legal title in the notes and receipts to an individual, who thereupon brought suit upon the notes against the persons alleged to have been directors of the-corporation at the time of the above occurrences, claiming that they were individually liable for the indebtedness of the corporation upon the notes by reason of a failure to file the annual reports required by section 18 of the act of' 1875.
    It appeared that the defendants had, before the making of the notes in suit, been elected directors of the limited corporation “ until the next annual election,” and that no election of directors had been held thereafter; and it also appeared, that the corporation had been dissolved, in an action brought in the name of The People for that purpose, after the transfer of the notes and warehouse receipts by the banks to the plaintiff’s assignors, but before the assignment, thereof to the plaintiff.

      Held, that the action was well brought, and that a recovery by the plaintiff against the defendants for the amount due upon the notes should be sustained. ‘ '
    The entries in the books of a business corporation, during the period of his. directorship, are admissible in evidence against one who has been a director of the corporation and who took part as such in its affairs.
    ■When the plaintiff has obtained the legal title to the claim in suit, the defendant is not concerned to inquire as to what consideration he may have paid^ therefor.
    The assignment of a debt, though made after the liability-of directors for failing to file an annual report has accrued, carries with it a cause of action for the penalty.

      Motion by tbe defendants, Durfee A. Sherman, Stephen F. Sherman and Henry L. Fish, Jr., for anew trial, upon exceptions ordered to be heard at the General Term in the first instance upon the direction of a verdict in favor of the plaintiff at the Erie Circuit, on the 13th day of May, 1892.

      Tracy O. Beclcer, for the plaintiff.

      •,Sewa/rcL A. Simons, for the defendants Sherman.

      Martin Ola/rlc, for the defendant Henry L. Fish, Jr.
   Lewis, J.:

In the year 1883, Sherman Brothers & Company (Limited) was incorporated under chapter 611 of the Laws of 1875 of the State of New York relating to the organization and regulation of business corporations.

The defendants, in March, 1886, were elected directors of said corporation for the term “ until the next annual election.”

They accepted the trust and entered upon the discharge of their duties as directors. No election of directors was thereafter had.

In July, 1889, an action was commenced in behalf of the People of the State of New York to dissolve said corporation; a temporary receiver was appointed in July, 1889.

The action came on for trial in January, 1890, and a decision was made that the corporation should be dissolved.

Final judgment of dissolution was entered in January, 1890, the temporary receiver was made permanent receiver. The affairs of the company were closed on the 15th day of January, 1891, and the receiver discharged.

Sherman Brothers & Company (Limited) was engaged in buying and selling grain and doing a general brokerage and commission business in the city of Buffalo.

There were, during these years, three corporations in the city of Buffalo engaged in the business of elevating and storing grain, viz.: “ International Elevating Company,” “ The Buffalo Elevating Company ” and The Lake Shore Elevating Company.”

These several corporations formed an association known as “ The Associated Elevators.”

The business of this association was elevating and storing* grain in the elevators of these three corporations.

The association issued warehouse receipts for grain delivered to and stored in said elevators respectively.

The defendant Stephen F. Sherman, during all the times mentioned was the general manager of the individual elevators and of said association of elevators, and as such had authority to issue warehouse receipts for grain received and stored therein.

Sherman Brothers & Company (Limited), from time to time, during the years 1888 and 1389, for the purposes of its business, made its promissory notes and procured them to be discounted by the American Exchange Bank of Buffalo or the Merchants’ Bank of Buffalo; and the said Stephen F. Sherman, as such manager, issued, or caused to be issued by the associated elevators, warehouse receipts for grain stored in said elevators, subject to the order thereon of Sherman Brothers & Company (Limited), and the company pledged said warehouse receipts to said banks as collateral to its notes, discounted by said banks as aforesaid.

The company suspended payment on the 8th day of July, 1889, and at that time there were held by the banks the promissory notes of said corporation, amounting to some $213,000.

Said banks also held as collateral to said notes the warehouse receipts of said associated elevators, issued and pledged as aforesaid, calling for grain exceeding in value the amount of the notes thus held by them.

Intermediate the time of the issuing of the said warehouse receipts respectively and the suspension of Sherman Brothers & Company (Limited), said corporation had fraudulently removed from the said elevators, and converted to its own use, substantially all the grain represented by said receipts.

Said notes matured, and not being paid, the holders appropriated and sold all the grain in the elevators, and applied the proceeds upon the said notes, and thereupon called on the said associated elevators to honor their receipts.

The stockholders of said elevators, finding that the banks held such receipts calling for grain, exceeding in value the amount due upon the notes, paid the amount due thereon, and the banks indorsed the notes in blank, and delivered them, with the warehouse receipts, to said stockholders.

The receiver thereafter paid upon said notes their percentage of the assets of Sherman. Brothers & Company (Limited), leaving due from the company, on account of said promissory notes, a sum which, with interest to the time of the trial, amounted to $268,516.78.

Thereafter, and before the commencement of this action, the stockholders, individually, and the elevator companies composing said association, by proper instruments in writing, assigned, transferred and delivered to the plaintiff said promissory notes and said warehouse receipts, and by. said instruments constituted and appointed the plaintiff their attorney, in their names or otherwise, to take all legal measures for the recovery and enjoyment of the assigned premises.

The plaintiff thereupon commenced this action against the defendants to recover the amount of said indebtedness, with interest, basing his claim upon the failure of the said corporation and the defendants, its directors, to make and file the annual report required by section 18 of chapter 611 of the act of 1875. ■ ,

At the conclusion of the evidence the plaintiff and the defendants requested the court to direct a verdict in their favor respectively.

The defendants’ motion was denied and proper exceptions were taken. The court thereupon directed a verdict in favor of the plaintiff against the defendants for $268,516.78, and directed the defendants’ exceptions to be heard at the General Term in the first instance.

There was evidence tending to show that defendant Henry L. Fish, Jr., was elected a director of Sherman Brothers & Company on the 1st day of March, 1886 : his term of office was for and until the next annual election.

As we have seen, no other election of directors was thereafter had.

Being a director and taking part as such in the affairs of the corporation, the entries in its books during the period of his directorship, were properly admitted in evidence against him. (Huntington v. Attrill, 118 N. Y. 379, 380; Blake v. Griswold, 103 id. 434.)

Two reasons are urged by the counsed for the defendants Sherman, why the plaintiff was not entitled to a direction of a verdict-against them.

First. That the banks used the property of Sherman Brothers- & Company (Limited) to pay the notes, and, consequently, the debt-having been discharged, the simple transfer of the evidence of indebtedness vested no right of action in the transferee of the notes.

. The argument being that the warehouse receipts, being payable to the order of the company, represented property in store belonging to that corporation, and that the transfer of the certificates to the banks carried with them the ownership of the property represented by the receipts; and that when the stockholders of the elevators paid Sherman Brothers & Company’s debt to the banks and received the notes and warehouse receipts, the notes were in effect paid, and no right of action passed to the transferee.

No account is taken in the counsel’s argument of the important circumstance that his clients had fraudulently removed from the elevators and converted to their own use the grain called for by the warehouse receipts.

The holders of the notes not being able to find the grain, called upon the warehousemen to make good their receipts; they did so by paying the amounts due the pledgees, the banks; the banks indorsed the notes in blank and delivered them with the receipts attached to the representatives of the elevators who had paid them the money; they thereby, we think, became the creditors of Sherman Brothers & Company, and as such had the right to maintain an action against the defendants to recover the penalty provided by the act of 1875 for the failure of the directors to make their annual] report.

It is further contended by appellant’s counsel that the plaintiff never became the creditor of the corporation so as to entitle him to> sue for the penalty, for the reason that at the time he took title to the notes, the corporation of Sherman Brothers & Company (Limited) had been by the judgment of the court dissolved and was no. longer in existence.

As we have seen, for the purpose of convenience, by proper instruments in writing, the legal title to the notes and receipts was. put in the plaintiff.

As between plaintiff and the elevators, and their stockholders, the evidence tends to show he occupied the relation of trustee.

He testified that he paid nothing for the notes or the stock.

He had acted for the stockholders in settling their affairs with Sherman Brothers & Company, and he took an assignment of the claim for the purpose of bringing the action.

The indebtedness to the banks was incurred in 1888 and 1889, before the corporation was dissolved.

The notes were transferred to the stockholders of the elevators by the banks in September, 1889 ; they were assigned to the plaintiff on the 17th day of March, 1891, after ' the dissolution of the corporation.

It is provided by section 39 of the act of 1875, that “ the dissolution of the corporation shall not take away or impair any claim or remedy existing against the corporation, its stockholders or officers, for any liability incurred previous to its dissolution.”

The claims were unquestionably valid in the hands of the transferees of the banks, and no reason is apparent why they could not transfer their claim to the plaintiff.

It has been held that a naked transfer of the penalty cannot be made without a transfer of the claim, but the penalty is an incident of the claim and passes to its transferee.

The notes indorsed in blank were delivered to the plaintiff, accompanied by written transfers in form sufficient to pass the title, and this gave the plaintiff valid title as against the assignors.

The defendants would be protected, should they pay to the plaintiff any judgment which he might recover thereon; plaintiff’s assignors would be estopped from thereafter making any claim against the defendant.

The plaintiff having obtained the legal title to the claim, the defendants are not concerned to inquire as to what consideration he may have paid therefor. (Sheridan v. The Mayor, etc., 68 N. Y. 30.)

The assignment of a debt, though made after the liability of directors for failing to file an annual report had accrued, carnes With it a cause of action for the penalty. (Pier v. George, 20 Hun, 210; Boland v. Crosby, 49 N. Y. 183; Blake v. Griswold, 103 id. 435.)

"We think the plaintiff was entitled to the verdict as directed.

The motion for a new trial should be denied and judgment ordered for the plaintiff as directed at the Circuit.

All concurred.

Defendants’ motion for a new trial denied, with costs, and judgment ordered for the plaintiff on the verdict.


text:
    Dudley H. Beadle, Respondent, v. Henry A. Monroe, Appellant.

      Lease of land on a lake shore construed — rent regulated by the number of boats using the premises.

    A clause in a lease of land on a lake shore was to the effect that the lessee should pay ten dollars annually ‘ ‘ for every boat on said premises engaged in the net-fishing business.”

      Held, that this was unambiguous and plainly obligated the lessee to pay for all the boats which, with his consent, occupied the premises for net fishing, no matter who owned them.
    On the trial, in a Justice’s Court, .of a summary proceeding instituted by the lessor, for the possession of the land and for rent, the defendant, the lessee, was permitted to testify that he did not owe the rent claimed by the plaintiff.

      Held, that this evidence was incompetent and improper, and probably influenced the jury in finding a verdict for the defendant.
    Appeal by the defendant, Henry A. Monroe, from a judgment of the County Court of Chautauqua county, entered in the office of the clerk of that county on the 23d day of April, 1892, in favor of the plaintiff, reversing, on appeal, a judgment in favor of the defendant rendered in a Justice’s Court.

      8. W. Mason, for the appellant,

      3. G. Kingsbury, for the respondent.
   Lewis, J.:

The plaintiff, by a written agreement, leased to the defendant a lot of land in Chautauqua county, having a frontage of sixty feet upon Lake Erie, and extending back a sufficient distance to accommodate the tenant’s business of storing and selling ice and the business of net fishing, including accommodation for fishing boats.

The tenant agreed to pay for the use of the premises twenty-five dollars a year in case he was able to secure ice for public patronage, •and in addition thereto ten dollars annually for every boat on said premises engaged in the net-fishing business.”

The controversy between the parties is over the clause of the lease relating to the use of the premises by boats.

The tenant failed to obtain ice, and, therefore, did not use the premises for that purpose.

The evidence tended to show that he occupied the lot with but one boat belonging to himself; the owners of the three other boats engaged in net fishing, however, occupied the lot from time to time with their boats, and for drying their fishing nets, with the knowledge and consent of the defendant.

The defendant purchased the fish which the owners of these three boats caught that season.

The defendant paid ten dollars for the use of the lot for his own boat, but refused to pay for the use of the lot by the three boats-belonging to the other fishermen, and the plaintiff instituted summary proceedings to recover the possession of the lot and the thirty dollars rent.

The defendant was called as a witness, and offered to testify to a. conversation he had with the plaintiff at the time the lease was-executed, with a view of showing what the parties intended by the clause in the lease relating to the use of the premises by the boats.

The plaintiff objected, the objection was overruled, and the witness testified that when the plaintiff read the lease to him, before it was executed, he objected to this boat clause, and informed the plaintiff that he had but one boat, and that he did not like the clause in reference to pay for the use of the lot by boats engaged in fishing • but notwithstanding his objections, signed the lease.

He testified that he used the lot for but one boat that he owned, or had any interest in.

This evidence in no manner tended to alter or explain the lease.

The lease stated in plain and unambiguous language that the-defendant was to pay ten dollars rent for every boat on the premises engaged in the net-fishing business.

This obligated him to pay for all the boats which occupied the lot. with his consent, no matter who the owner was.

■ The defendant was permitted, over the objection of the plaintiff,, to testify that he did not owe the rent claimed by the plaintiff.

This evidence was incompetent and improper, and quite likely influenced the jury in finding a verdict for the defendant. The-evidence quite clearly established the plaintiff’s claim, and we agree with the County Court that errors were committed upon the trial before the justice, requiring a reversal of the justice’s judgment.

The judgment of the County Court appealed from should be affirmed, with costs.

All concurred.

Judgment of the County Court of Chautauqua county appealed from affirmed, with costs.