text:
    EMMA A. PORTH, Respondent v. THE MANHATTAN RAILWAY COMPANY, et al., Appellants.

      Issues, as to what falls within—Wooden elevated railroad stations in the streets, when unauthorized.—Public nuisance, an unauthorized erection in the streets is—Abatement of public nuisance by injunction at the suit of an individual.

    The complaint set forth (among other things) in the eighth paragraph, that defendants wrongfully and without legal authority entered upon Second avenue in front of plaintiff’s premises for the purpose of constructing thereon an elevated railway and did construct thereon an elevated railway. It then alleged:
    “ IX.—That thereafter, in or about the month of October, 1881, the said defendant again entered upon the said Second avenue, in front of the plaintiff’s premises aforesaid, and erected thereon an elevated station building between the easterly and the westerly tracks of said railroad structure, which building, with its platform and stairways, extends from a point opposite No. 1433 Second avenue northerly across Seventy-fifth street, immediately in front of plaintiff’s said apartment dwelling-house, about on a level with the top of the windows of the first apartment floor thereof. That the said station building and platform is a wooden shed with a floor of boards fitting closely together, which floor is on a level about twenty-five feet above the level of the street below, with a tin-covered roof rising about twelve feet from the level of the floor. That from about the middle of the said station building a wooden stairwáy descends to the sidewalk on the westerly side of said ^Second avenue, occupying a space about four feet in width of such sidewalk.
    “ X.—That the stairway aforesaid is constructed in front of plaintiff’s said premises in such a manner that persons ascending to the said station and descending therefrom look directly into the windows of the first-floor apartment of plaintiff’s said building, and otherwise cause annoyance and discomfort to .the tenants of said building; that twice in each day dust a,nd dirt are swept from such platform and stairway, and-enter upon and into said premises; and that until recently the light and air of said premises ' was further obstructed by large signs fastened to the railings of said platform and stairway.
    “ XII.—That by the construction and maintenance of the said elevated railway structure, and by the operation thereof, and particularly by the construction and maintenance of the elevated station, platform and stairway hereinbefore described, the defendants have unlawfully appropriated, impaired, abridged, and otherwise interfered with plaintiff’s rights and easements in said Second avenue, and particularly have greatly interrupted and intercepted the air and light of the building on plaintiff’s said premises, and the convenient access thereto, and have caused noise, stench, cinders, smoke, dust, ashes, steam and noxious gases to enter into and upon said building, and have otherwise interfered with the privacy and convenience thereof, and the uses to which the said building is best adapted.
    “XIII.—That each and every of the aforesaid injurious acts has been and is now done wrongfully, and against the will and without the consent of the plaintiff herein.”
    The answer denied all the above allegations contained in the ninth, tenth and thirteenth paragraphs; also denied that defendants wrongfully and without legal authority entered upon Second avenue as alleged in the eighth paragraph of the complaint, and alleged that by virtue of Acts of the Legislature of the state of New York, to wit, chapter 606 of the Laws of 1875, chapter 885 of the Laws of 1872, chapter 837 of the Laws of 1873, chapter 275 of the Laws of 1874, and the acts amendatory thereof and supplemental thereto, and by virtue of the authority and consent of the state of New York and of the corporation of the city of New York granted to and conferred upon the defendants, as aforesaid, these defendants were and are duly authorized to build the foundations, superstructures and all other structures built by them, or either of them, and described in the complaint herein.
    Evidence to the effect that plaintiff had suffered special damages by construction of the station was given.
    Held,—That the pleadings raised the issues as to whether the station was constructed as alleged in the complaint, and, if so, as to whether it was so constructed without authority of law and by reason thereof a public nuisance. That the structure being of wood the defendants had no authority to construct it under any of the statutes relating to elevated railroads; and it was a public nuisance. Tliat being a public nuisance a Court of Equity had power to abate it by injunction at the suit of an individual who sustained thereby a special damage different from that sustained by the general public. That the plaintiff had suffered such special damage.
    Before Freedman and Ingraham, JJ.

      Decided November 3, 1890.
    Appeal from judgment entered upon the findings of the court on a trial by the court without a jury.
    The facts sufficiently appear in the head-notes and the opinion.

      Davies & Rap alio, attorneys and of counsel, for ap pellants, on the questions considered in the opinion and the results arrived at therefrom argued :—
    I. The learned trial court erred in granting an absolute injunction against the maintenence and use of the station. It has been held by this court that the practice of allowing the defendants in an action of this character to avoid the operation of a judgment of injunction by the payment to the plaintiff ’of a sum of money fixed by the court as the value of the plaintiff’s easements, is not a matter of right on the defendants’ part, but rests in the discretion of the court. Eno v. Metropolitan Elevated R. Co., 56 N. Y. Super. Ct., 313 ; Carter v. N. Y. Elevated R. Co., 28 N. Y. St. Rep. 381. This discretion has, however, been exercised in a substantially uniform manner, and this form of judgment has become well recognized as the fairest and most convenient method of adjusting the rights of the parties and reconciling them with the rights of the public. Henderson v. N. Y. Central R. Co., 78 N. Y. 423 ; N. Y. Natl. Exch. Bank v. Met. El. R. Co., 53 N. Y. Super. Ct., 511.; Kearney v. Met. El. R. Co., 14 N. Y. St. Rep. 854 ; Pond v. Met. El. R. Co., 112 N. Y. 186 ; N. Y. El. R. Co. v. Fifth Natl. Bank (U. S. Supreme Court, May 5th, 1890). This course was adopted by the trial court in the case at bar with respect to the tracks and main structure of the railroad. The failure to make such a provision with respect to the station appears from the proceedings on the trial to be due to the claim on the part of plaintiff and the conlusion on the part of the trial judge that the plaintiff had a right to proceed against the station as a public nuisance by reason of the fact that it was not constructed of the material required by the specifications of the rapid transit commissioners. That the learned trial court erred in awarding an absolute injunction on this ground appears, we submit, from the following considerations “ (1) The complaint did not ask for relief on the ground of any violation of the rapid transit commissioners’ requirements, but solely for interference with plaintiff’s private property.” The defendants were not prepared to try such an issue and they protested against its introduction into the case as is above shown. Under the pleadings, as they now stand in the judgment roll, no such issue arose. The principle of law involved is familiar, and a single citation will suffice to show the importance which is attributed to it by the Court of Appeals. Southwick v. First Nat. Bank of Memphis 84 N. Y. 420. “ (2) The requirement as to the material of which the station was to be constructed was not imposed for the benefit of the plaintiff, nor has the plaintiff suffered any special damage by the violation of it.” It was held by Chancellor Kent in a celebrated case that an injunction would not be granted to prevent the violation of a purely public duty. Attorney-General v. Utica Ins. Co., 2 Johns Ch. 371. We believe it to be well settled that in order to the enforcement in an action by a private individual of any requirement of law or statutory duty, it is necessary to prove two things : (a) that the requirement was made or the duty imposed for the benefit of the person complaining ; and (6) that the person complaining has suffered a special injury through the violation of the requirement or statutory duty. Neither of these elements has been found to exist in the case at bar, and there is no evidence which would support such a finding if it were made. There is, and was at the time of the erection of the structure a general law applicable to all buildings within the city of New York, forbidding the erection of wooden structures. Laws of 1871, ch. 625, § 24 ; Consolidation Act, § 495. This requirement exists for the purpose of guarding against fire. The execution of the law is intrusted to the fire commissioners, and the power to make exceptions to the rule is also intrusted to them. Laws of 1871, ch. 25, §§ 24, 31 ; Consolidation Act, §§ 495, 501. When this general requirement was extended by the commissioners to the stations of the proposed railway it is absurd to suppose that they had any other object in view than that which called into existence the original law, viz., to guard against fire. There is another.and equally fatal objection to this theory of the plaintiff’s action and that is that the plaintiff suffers no special damage by reason of the material of which the station is composed. The disadvantages of the station are enumerated at great length by the plaintiff’s witnesses, and every one of them would certainly result as well from an iron station as from a wooden one. The special damages found by the court to result from the station are the obstruction of access to the store by the stairway ; that light and air are intercepted by the station; that it cuts off the view of the property from Second avenue ; that dust and dirt are swept from the station in such a manner as to enter the premises in question ; that the sidewalk has been cracked by the weight of the stairway ; that the privacy of the first floor of the premises in question is interfered with by persons looking in from the stairway of the station. These are substantially all the disadvantages mentioned by the witnesses. It is apparent that none of these disadvantages arises in the least degree from the material of which the station was constructed. Therefore, because the plaintiff was not especially injured by the violation of the requirement we submit that the court erred in permitting her to use it as a pretext for obtaining an injunction ' against the station as a public nuisance. The propositions of law upon which the above argument is based are abundantly sustained by authority. Gorris v. Scott, L.R., 9 Exch. 125 ; Atkinson v. Newcastle Waterworks Co., L. R., 2 Ex. D. 441 ; Strong v. Campbell, 11 Barb. 135 ; Taylor v. L. S. &. M. S. R. Co., 45 Mich. 74 ; Eames v. Salem, &c., R. Co., 98 Mass. 560 ; McDonald v. Pittsfield, &c., R. Co., 115 lb. ; Phila., &c., R. Co. v. Steffing, 62 Md. 504 ; Hayes v. Mich. Central R. Co., 111 U. S. 228 ; Fort Plain Bridge Co. v. Smith, 30 N. Y. 44 ; Doolittle v. Supervisors, 18 lb. 155 ; Lansing v. Smith, 8 Cow. 146 ; Dougherty v. Bunting, 1 Sandf. S. C. 1. “ (3.) The Metropolitan Elevated Railway Company had authority under its original charter to construct and maintain the station in question.” Chapter 885 of the Laws of 1872, which constitutes the original charter of the Metropolitan Company, prescribed the character of the railway proper as a tubular way according to Gilbert’s improved plan, but left the character of the stations entirely to the discretion of the railway company. Section 2 of the Act merely says : “ The corporation may make the necessary depots along the route, &c.” Chapter 606 of the Laws of 1875, did provide for a change in the character of the railway proper, through the instrumentality of the rapid transit commissioners, but this was a mere model change and not the creation' of a new franchise and it was on that ground that the constitutionality of the act was upheld. Matter of Gilbert Elevated R. Co., 70 N. Y. 311. The original franchise still continues and all the condemnation proceedings of the Metropolitan company as the successor of the Gilbert Company are still taken under the original charter contained in the Acts of 1872, 1873 and 1874. Under that charter no conditions were imposed as to the material of which the stations should be constructed. It does not appear that any such condition has since been imposed upon the Metropolitan Company by authority of law. The finding of the learned trial judge is that the Gilbert Company in order to secure the laying out of route by the rapid transit commissioners, coincident with its original route, “ engaged to submit to such conditions and requirements in respect to structure or otherwise as might be imposed by the said board of commissioners.” If the Metropolitan Company has in any manner broken this engagement the effect can be no more than to invalidate whatever rights it may have obtained under the contract of which the agreement formed part. The engagement cannot be given the force of an express statute, and the breach cannot turn into a public nuisance a structure which has express authority of law for its construction and existence. As one of the defendants, therefore, had legal authority to construct and maintain the station, the conclusions of law of the learned trial judge are clearly erroneous.
    II. The learned trial judge should in any event have left the defendant’s right to maintain the station to be determined in a condemnation proceeding.

      James B. Ludlow, attorney and of counsel, and Lewis L. Delafield of counsel, for respondent, argued, on the questions considered in the opinion:—
    I. The construction and maintenance of the wooden station and stairway complained of are unauthorized by law. Such station and stairway are a common nuisance. As regards the plaintiff, their continued maintenance is a continuing trespass. It may perhaps be conceded that under its original charter the Gilbert Company was authorized to construct wooden stations. It is undoubtedly true that it was possessed of a certain route, and that upon this route it was authorized to construct an elevated railway above the middle of the streets, supported by columns in the curb lines of the streets. It had no authority, however, to erect any other form of structure. This was the situation at the time of the passage of the Rapid Transit Act (ch. 606, Laws 1875). Section 36 of this act provides that ‘6 whenever the route or routes determined upon by the said commissioners coincide with the route or routes covered by the charter of an existing corporation * * * such corporation shall have the like power to construct and operate such railway or railways, upon fulfillment of the requirements and conditions imposed by said commissioners as a corporation especially formed under this act.” When, therefore, the commissioners appointed under the act located a route coinciding with the original route of the Gilbert Railway, the effect upon that corporation was twofold : (1.) It prohibited the company from erecting a railway upon its route except in accordance with such requirements as might be imposed by the rapid transit commissioners, thus restricting its charter powers ; and (2.) It conferred upon the company the rights of a “corporation specially formed under this act,” namely, the right to construct any form of railway “in accordance with the plan adopted by said commissioners,” (§ 26, subd. 5), subject, however, to the obligation of the company to fulfill the requirements and conditions imposed by the commissioners. The company availed itself of this right by building a railway supported by columns resting in the roadway of the streets, which it had no power to do under its original charter. But the important point is that the conditions and requirements imposed upon the company by the rapid transit commissioners had the force of law, and modified the powers conferred by its original charter. Applying the rules laid down in Gilbert Elevated R. R. Co. v. Anderson, 3 Abb. N. C. 434, and Brooklyn Steam Trans. Co. v. Brooklyn, 78 N.Y. 534, to the case at bar it will be found that the Gilbert Company was divested by the resolution passed by the rapid transit commissioners on October 4, 1875, of all authority which it may have possessed under its original charter to construct wooden stations and stairways, and that its rights and powers were thereby limited to the construction of iron stations and stairways as prescribed by such resolution. Hence it follows that the Metropolitan Company was wholly without authority to construct the station and wooden stairway complained of, and that the construction and continued maintenance of such wooden station and stairway, being without authority, is a common nuisance.
    II. Although the station and stairway complained of are a public nuisance, their maintenance can be enjoined in this suit. It is a perfectly well-established principle that equity will grant relief against, a public nuisance at the suit of a private individual where the bill alleges and the proof establishes, that the injury suffered by the suitor is greater in degree or of a different kind than that suffered by the public at large. This principal is so generally recognized, and has been so frequently applied, that the citation of authorities upon this point would be a work of supererogation. Equity will relieve against a common nuisance, at the suit of a private individual, when it is alleged and proved that the plaintiff is damaged thereby to a greater degree or in a different manner, than the community at large. Francis v. Shoellkoff, 53 N. Y. 152 ; Milhau v. Sharp, 23 lb. 611, at 625 ; Doolittle v. Supervisors, 18 lb. 160; Morgan v. Binghamton, 82 Hun, 604 ; Hardy v. Brooklyn, 7 Abb. N. C. 403.
   By the Court.—Ingraham, J.

We are of the opinion that the facts alleged in the complaint were sufficient to authorize the relief granted by the court in this action.

The complaint alleged, that the defendants, in the years 1879 and 1880, wrongfully and without legal authority entered upon Second avenue and constructed an elevated railway, and that thereafter and about the month of October, 1881, the defendants again entered upon Second avenue and erected an elevated station building of wood with a' wooden stairway descending to the sidewalk of Second avenue.

This structure is alleged to be an unlawful appropriation of plaintiff’s property ; and a part of the relief demanded is that the defendants be compelled to take down and remove the elevated railroad structure and station building on Second avenue.

The defendants in their answer allege that they erected the elevated railway structure under authority of the laws of the state of New York, with the consent of the city of New York,-and that the said structure was constructed according to law.

The plaintiff thus alleged that the station of the defendants was unlawful ; the defendants deny that allegation and alleged that it was authorized by law, and it was this issue that the court found in favor of the plaintiff.

We are also satisfied that the defendants were not authorized to erect a wooden station in any of the streets of New York. The original authority given to the Gilbert Elevated Eailway Co. to build a railroad in Second avenue was never acted on by the company. No railroad was ever built under that charter. In 1875 the act called the Eapid Transit Act was passed. Under the provisions of that act the defendant, the Metropolitan Elevated Eailway Co. was authorized to construct in Second avenue a different structure from that authorized by the original charter, and it is upon the authority conferred by that act that the defendants entered upon Second avenue and built the railway structure now operated by them.

It cannot be claimed that the structure as built was authorized by the original charter, and the defendants must found their authority to build and maintain their railroad structure under the act of 1875, if it exists. It is clear that the defendants acquired no authority under that act to build wooden stations. The commissioners appointed under the act of 1875 authorized the defendants to build the structure of iron, and provided that the “ stairs and all parts of the stations, except the platform, doors, windows and inside sheathings, and except the tread of the stairs, shall be of iron. The structure as thus prescribed by the commissioners was expressly accepted by the defendants, and it was this structure and this structure only that defendants were authorized to build in Second avenue. When, therefore, the defendants built and maintained a station of wood in. Second avenue, a public street, they did what was unauthorized by law, and were guilty of maintaining a public nuisance.

It is well settled in this state that a court of equity will abate a public nuisance at the suit of an individual who sustains thereby special damage different from that sustained by the general public. Callanan v. Gilman, 107 N. Y. 370.

We think, therefore, that the judgment directing the removal of the unlawful structure was right. The other questions presented in this case have been settled by repeated decisions of this court adversely to the appellant. We think no error was committed on the trial, and that the judgment should be affirmed, with costs.

Freedman, J., concurred.


source: Caselaw Access Project

author: By the Court.—Ingraham, J.

license: Public Domain

text:
    CHARLES S. HINE, Respondent v. THE MANHATTAN RAILWAY COMPANY, et al., Appellants.

      Errors, not so prejudicial as to call for a reversal, instances of.

    Where the main issue in an action in equity was whether the plaintiff was entitled to an injunction restraining a continuing trespass by the defendants on certain premises, and the evidence'justified a judgment for injunction, and the court, at defendants’ request, undertook to ascertain the value of the premises so that on payment of such value the injunction could be dissolved, and in so doing erroneously, under defendants’ objection, admitted evidence of offers made for the property, such error is not cause for reversal of a judgment adjudging that defendant be perpetually enjoined until the payment of the amount found and adjudged to be the value of the premises, which amount was abundantly sustained by competent evidence. One of plaintiff’s witnesses, under defendants’ objection, testified that a certain piece of property sold for $29,000; afterwards defendants’ witness testified in chief that it sold for $29,500.
    Held,—the admission of the testimony given by the plaintiff’s witnesses was not cause for reversal.
    Before Freedman and Ingraham, JJ.

      Decided November 3, 1890.

      Davies & Rapallo, attorneys, and Brainera Tolies of counsel, for appellants.

      Arnoux, Ritch & Woodford, attorneys, and Wm. H. Arnoux of counsel, for respondent.
   By the Court.—Ingraham, J.

The appellants relied on two exceptions taken to the admission of evidence.

The first exception is to the ruling of the court overruling an objection to a question asked of the plaintiff as to offers that he had received for the property in 1871, or 1872. That this evidence was incomplete to prove the value of the property is clear, but the value of the property in 1871 or 1872 was not the main issue involved in the case, and while we think it was error to overrule the objection it does not follow that the judgment should be reversed. As was said in McGean v. The Manhattan R. R. Co., 27 State Reporter, 339. “ The court must be satisfied upon an examination of the whole case that the appellant was prejudiced by the admission of the evidence to warrant a reversal.”

This was an action in equity for an injunction to restrain-a continuing trespass. The evidence justified the judgment for an injunction, and at the request of defendants the court undertook to ascertain the value of the premises appropriated by the defendants, so that on the payment of the value of such property the injunction could be dissolved. The amount which the court fixed as the value of the property appropriated by the defendants was abundantly sustained by competent evidence. An examination of the case has convinced us that the defendants were not prejudiced by this- testimony.

The same may be said of the other testimony, an exception to the admission of which, the defendants rely on. The defendants’ witness Hawes also testified to the sale ; there was a difference between them of only $500, Martine saying it sold for $29,000, and Hawes, the defendants’ expert, saying that it sold for $29,500. Whether it was one or other was evidently immaterial. The question as to the right of the defendants in a street opened during the occupation of this city by the Dutch is settled in this court, and we have nothing to do but follow former decisions.

On the whole case we think that no error was committed which calls for a reversal, and the judgment should be affirmed with costs.

Freedman, J., concurred.


author: Fbeedman, J.

text:
    SCOTT STAMP AND COIN COMPANY, Limited, Plaintiff v. THE J. W. SCOTT COMPANY, Limited, Defendant.

      Trade-mark—Firm or business Same, when parties will be protected in its use—Proper and improper use of a name or title in business.

    In the case at bar plaintiff asks judgment that defendant be restrained and enjoined from using the name of “ J. W. Scott Company, Limited,” in the business of buying and selling, coins, postage stamps, albums, catalogues, curiosities and antiquities, or under any name in which the word “Scott ” appears.
    Prior to December, 1885, John W. Scott was engaged in such business under the name of “ J. W. Scott & Co., or Scott & Co.” in the city of New York, and was one of the most prominent and best known dealers in the articles mentioned, and about that time he agreed to sell to Gustave B. Caiman, his business. It was contracted and agreed between them that a corporation should be formed under the name of Scott Stamp and Coin Company, to whom, with some exceptions, the business and business property, copyrights, trade-marks, good will and firm najne, and the devices and designs owned and controlled by J. W. Scott, under the name of J. W. Scott and Company, should be conveyed, transferred and pass, and that part of the consideration for the same should be paid to Scott in the capital stock of the corporation. This contract further provided, that J. W. Scott should help Calman and the corporation in the business so long as he (Scott), should continue to be a stockholder in the corporation, and that J. W. Scott should not engage, directly or indirectly, in any business of the same kind in the United States, for the period of two years from the date of the contract. After three years had elapsed from the date of the contract, and after Scott had sold to Caiman his stock in the company, J. W. Scott engaged in the same business again, and gave the use of his name to defendant, under the name of “ J. W. Scott Company, Limited.” The plaintiff never did any business under this name, nor under the name of J. W. Scott & Co., or Scott & Co., but always under the name and title of the corporation plaintiff, “ Scott Stamp and Coin Company, Limited.”

      Held, that the provisions of the contract fully establish that, after the lapse of two years, J. W. Scott might engage in the same or a similar business. This he had the right to do under his own name, provided he did it honestly and fairly. That every man has the absolute right to use his own name in his own business, even though he may thereby interfere with and injure the business of another bearing the same or a similar name, provided he does not resort to any artifices, or do any act calculated to mislead the public as to the identity oi the establishments and thereby produce injury to the other beyond that which results from the similarity of names. It is only where a man uses his own name in such a way as to wrongfully appropriate and convert the business and reputation of another bearing the same or a similar name. Inasmuch as J. W. Scott, after the lapse of two years, had the right to engage in a business similar to that of plaintiff, under his own name, he had a right to give his name and its use to the defendant; and the fact that mistakes are made by customers, and that confusion arises, does not give to the plaintiff any right to an injunction, and thereby prevent and enjoin the right to such use by the defendant. The present case really turns upon the question Has the defendant company made an improper use of its name to the prejudice of the plaintiff ? The evidence does not warrant an affirmative answer to that question, and upon the whole case defendant is entitled to a judgment of dismissal of the complaint.
    At Equity Term.
    Before Fbeedman, J.

      Decided November 5, 1890.

      Stine & Caiman, for plaintiff.

      Butler, Stillman & Hubbard, for defendant.
   Fbeedman, J.

The plaintiff asks judgment that defendant be restrained and enjoined forever from using the name of “ J. W. Scott Company, Limited,” in the business of buying and selling coins, postage stamps, albums, catalogues, curiosities and antiquities, or under any name in which the word “ Scott ” appears.

Prior to December, 1885, John W. Scott was engaged in such business under the name of J. W. Scott & Co., or Scott & Co., in the city of New York. He was one of the most prominent, and indeed the best known, dealer in the articles mentioned. About the 10th of December, 1885, J. W. Scott agreed to sell to Gustave B. Caiman the business so conducted by him at No. 721 Broadway in the city of New York. It was agreed that a corporation should be organized, under the name of “ Scott Stamp and Coin Company, Limited,” that the property should be conveyed to such company, and that part of the consideration should be paid in the stock of the company. Accordingly, a contract was made on the 17th of December, 1885, a copy of which is annexed to the answer.

The contract provided, among other things, that the copyrights, patents, trademarks, devices and designs owned or controlled wholly or in part by J. W. Scott, the lease of No. 721 Broadway, the fixtures and office furniture, and the good will and firm name of Scott & Company should pass to the new corporation. But the following exceptions were made, viz.: “ Excepting always the private collections and library of said Scott ; the collection known as “ Sandford’s collection,” which said Scott now has in his possession for the purpose of sale only ; and three other collections, all in the possession of said Scott as collaterals for loans, which loans and collections are to remain the property of said Scott ; and excepting also all private and personal papers of said Scott, all of which said Scott may remove. The object of this agreement is to sell all the property of any kind of said Scott & Company, and no other ; all other property of said Scott to remain his exclusively, and not to be covered hereby.”

The contract further provided that J. W. Scott should help Calman and the corporation so long as he should be a stockholder in the corporation, and that J. W. Scott should not engage, directly or indirectly, in any business of the same kind in the United States for two years from the date of the contract.

These provisions fully establish that the parties contemplated that, after the lapse of two years, J. W. Scott might engage in a similar business. More than three years having elapsed since the date of the contract, and J. W. Scott having sold to Caiman his stock in the plaintiffs company, which had never done business under the name of Scott & Company, but always under the title “Scott Stamp and Coin Company, Limited,” J. W. Scott became desirous of engaging in business again. This he had a right to do under his own name, provided he did it honestly and fairly.

Every man has the absolute right to use his own name in his own business, even though he may thereby interfere with and injure the business of another bearing the same name, provided he does not resort to any artifice, or do any act calculated to mislead the public as to the identity of the establishments and to produce injury to the other beyond that which results from the similarity of the names. Meneely v. Meneely, 62 N. Y. 427 ; England v. The N. Y. Publishing Co., 8 Daly, 375. It is only where a man. uses his own name in such a way as to thereby appropriate the reputation of another bearing the same name that a court of equity will interfere. Many cases belonging to this class will be found referred to in Cottrell v. Babcock Printing Press Mfg. Co., 8 Eastern Reporter, 463 ; in Rogers Co. v. Rogers Co., 11 Fed. Rep. 495, and in an article contained in the 25th of Albany Law. Journal, pp. 203-205. See also Devlin v. Devlin, 4 Hun, 651, affirmed 69 N. Y. 212.

The case at bar does not fall within the class of cases last referred to. In this instance the man with the reputation, viz., J. W. Scott, is with the defendant and has no longer any connection with the business of the plaintiff.

Neither do the cases cited by the learned counsel for the plaintiff, to the effect that an intention to defraud is not essential, and that the test is whether there is apt to be a confusion, apply to the present case. On examination they will be found to apply only where the plaintiff has established an exclusive right to a name or trade-mark.

Inasmuch, therefore, as J. W. Scott, after the lapse of two years, had the right to engage in a similar business under his own name, he had a right to give his name to the defendant corporation, and the mere fact that mistakes are made by customers and that confusion arises does not give to the plaintiff any right to an injunction, Employers’ Liability Assurance Corporation v. the Employers’ Liability Ins. Co. of the U. S., 24 Abb. N. C. 368 ; Blakslee Mfg. Co. v. Blakslee’s Sons’ Iron Works, Decided July 23, 1887. The opinion of Barrett, J., in the case last referred to makes this so clear that it is not necessary to do more than reiterate his language which is directly applicable here. He says : “I see no reason to believe that Mr. E. G. Blakslee, in forming the defendant corporation, sought to deceive the public or to wrong the plaintiffs. The intention has been legitimate, namely to disclose the truth and not to conceal it. Mr. Blakslee had a perfect right to let the public know that, although his name was being used as part of the plaintiff’s corporate title, he had no connection with the plaintiff. He and his sons had also a right to transact lawful business under their own names, so put forward as to indicate the simple truth and not to deceive any one. The character of the business is such that there can be but little confusion as to the names, and that little only on the part of inattentive persons. Those ordinarily dealing with the plaintiffs can experience no difficulty and will simply know that Mr. Blakslee is no longer connected with .the plaintiff, but has undertaken, in connection with his sons, a similar enterprise. If the sons, wittheir father, could do business lawfully under the defendant’s name, there is no good reason why that same name given to a corporation should be unlawful; It is still their own name applied as the law permits, and so long as there is no deceit or fraud they cannot be restrained from transacting, in what is substantially their own names, their lawful business.”

The case of Holmes, Booth & Hayden v. Holmes, Booth & Atwood, 37 Conn. 278, is no authority to the contrary. It is clearly distinguishable, for at page 292 the court says : “ The petitioners insist that if the respondents are permitted to continue their business as heretofore, their goods will be sold in market as the goods of the petitioners. This claim is not seriously controverted, &c.”

The present case, therefore, really turns upon the question whether the defendant company has made an improper use of its name to the prejudice of the plaintiff. The evidence does not warrant such a finding. The office of the plaintiff was orginally at No. 721 Broadway, and was afterwards moved to No. 12 East 23rd Street. The office of the defendant was opened at No. 163 Fulton Street, and for a long time thereafter the advertisements and notices published by the defendant stated specifically that the defendant had no connection with the plaintiff company. The name adopted by the defendant differs from that of the plaintiff essentially, and it does not indicate that the defendant deals in stamps or coins. The defendant’s signs are not calculated to mislead. In no way did the defendant make use of its name to deceive. True, there has been some confusion, but it has been mainly on the part of inattentive persons. The nature of the business is peculiar. The customers of both plaintiff and defendant are either large collectors or boys. The general public do not buy the articles. Collectors are well acquainted with the trade, while, on the other hand, it has been shown that the trade with boys is of relatively small importance. The same confusion would exist if J. W. Scott were doing business in his own name as an individual. But whatever confusion there was, was shown not to be of sufficient importance to call for the interposition of a court of equity. The same remark may be made concerning a few isolated occurrences which the plaintiff has pointed out and the defendant has explained.

Upon the whole case the defendant is entitled to judgment dismissing the complaint upon the merits with costs.


author: By the Court.—Sedgwick, Ch. J. Ingraham, J.—(dissenting).

text:
    CLARK R. GRIGGS, Appellant v. MELVILLE C. DAY, and Another as Executors of Cornelius K. Garrison, Deceased, Respondents.

      Sale and purchase, a transaction held to be such and not an exchange of commodities—Entries in books, evidence against party whose books they are as admissions by him,, although the party who claims the benefit from them was ignorant of them—Seduction of judgment, when judgment affirmed upon its being consented to.

    Defendants’ testator held sundry promissory notes to the amount cf $1,623,-667.60, made by the Wheeling and Lake Erie Railroad Company to the plaintiff’s order as collateral security for advances made by him to the plaintiff. He also held divers other similar notes as collateral for advances; the notes so held with interest aggregating on May 1, 1S83, $2,062,643.13. Defendants’ testator on April 19th,presented these notes, with other matters, aggregating with interest up to May 1, 1883,. $2,449,912.68, to the railroad as claims existing against it in his favor, and pressed for a settlement. On April 19, 1883, defendants’ testator, at a meeting of the directors of the company held on that day at which both he and plaintiff were present, proposed verbally to accept second mortgage bonds of the company at the rate of seventy-five cents on the dollar in partial liquidation of the claim presented by him, and thereupon at that meeting the following resolution was passed :—
    “ Moved by Mr. Wickham, that the president of this company be authorized to sell and deliver to C. K. Garrison, second mortgage bonds to the amount of $2,280,000 at the rate of seventy-five cents on the dollar and interest accrued from March 1,1883, the same to be delivered in part payment of his claim against this company amounting to $2,449,912.68 as this day specified in his communication to this company, seconded by Mr. Warwick and carried without dissent.”
    Shortly after this defendants’ testator received from the company 2,280 of said second mortgage bonds of the par value of $1,000. each at the rate and price of seventy-five cents on the dollar, which price (including $26,000. for ■ interest on said bonds from March 1, 1883, to May 1, 1883,) amounted to $1,736,000, and delivered to said company in part exchange and payment therefor the said notes aggregating said $1,623,667.60.
    The testator kept the usual set of books and in them there appeared an account with the plaintiff. In the ledger account plaintiff was charged with the advances made to him, and for part of which the promissory notes in question were held as collateral. In this account plaintiff after the receipt by the testator of above mentioned bonds was, on May 1, 1883, credited with $1,546,982.35. The journal entry of this credit stated the whole amount of the notes and interest at $2,062,643.13 and then “ taken from contractor at seventy-five per cent, $1,546,982.35.” On the same day the railroad company was charged on the testator’s books with the whole amount of the notes and interest and credited with seventy-five per cent .of the value of the 2,280 bonds. There were other entries relating to the transaction. It appeared that plaintiff had no knowledge or notice of these entries. Many other facts appear in the opinions.

      Held, among other things, that in this case there was a distinct and substantial difference between exchanging the bonds for the notes or the notes for the bonds, and the buying of the bonds by defendants’ testator and paying for them by delivering notes belonging to the plaintiff. Ingbaham, J., dissenting.
    That the transactions between the defendants’ testator and the company was a purchase by the former of the bonds for his own individual benefit, he giving in payment therefor the notes held as collateral. Ingbaham, J., dissenting.
    That such would be the result whether the consent and approval of the plaintiff, found by the referee to have been given, was a consent to and approval of the resolution passed by the directors of the railroad company, or of the actual transaction had under it or not. Ingbaham, J., dissenting.
    That the entries in the books of defendants’ testator were properly received in evidence, and as evidence were admissions by him that the'facts described therein occurred. These entries established so far as defendants’ testator was capable of affecting a taking by him for his own use of the notes at seventy-five per cent, and as he held the relation to the plaintiff of a trustee, the plaintiff could affirm his conduct and take advantage of it; and this although the plaintiff knew nothing of the entries, and although they were not the result of an agreement between the parties. Ingbaham, J., dissenting.
    That the transactions involved, among other things, defendants’ testator taking in place of the plaintiff the railroad company as his debtor for the advances to the plaintiff. Ingbaham, J., dissenting.
    That as a result from these views the notes in question, upon their delivery by defendants’ testator to the railroad company in part payment of the bonds delivered to him by that company, became extinguished, and the debts for which they were held as collateral were thereby extinguished to the extent of the face value of the notes, and consequently plaintiff, upon an accounting between him and the defendants, was entitled to be credited with their par value and the interest thereon. IngbahAm, J., dissenting.

      That although there was error in not allowing such credit to the plaintiff yet, as there was a judgment m favor of defendants in excess of such face value and interest, it was not cause for reversal if defendants consented to make the reduction required to remedy it.
    Before Sedgwick, Ch. J., Freedman and Ingraham, JJ.

      Decided December 1, 1890.
    Appeal by plaintiff from judgment entered upon the report of a referee. The facts sufficiently appear in the head notes and the opinions.

      John McDonald, attorney, and Robert G. Ingerso'll of counsel, for appellant.

      William R. Bronk, attorney, and Melville C. Day of counsel, for respondents.

      Note.—The points of the respective counsel are able and exhaustive. A condensation of them within reasonable limit would be of but little benefit to the profession, and would not do justice to the able counsel. They can be found in the library of the court.—Beptrs.

   By the Court.—Sedgwick, Ch. J.

The action was for an accounting in respect of mutual dealings between the parties that concerned the construction of a railway for the Wheeling & Lake Erie Railroad Company. The answer averred that there had been a final settlement in respect of the dealings, and that if there were a new accounting the plaintiff would be found to be largely indebted to the defendants. The referee held that there should be an accounting and proceeded to take it.

The referee found that, about September 24,1879, a contract was made between the plaintiff and the Wheeling & Lake Erie Railroad Company.

It is not at present necessary to give all the provisions of the contract. For the purpose of the contract, it declared that the railroad to be built should be deemed to consist of three divisions. The plaintiff agreed to do everything necessary to the beginning and completion and operation of a railroad over the first and second divisions, and over so much of the third division as thereafter should be found to be expedient. The company agreed to pay to the plaintiff, from time to time,.certain amounts of fully paid for shares of stock and of bonds of the company.

The company further agreed to furnish to the plaintiff, $4,000 a mile of the first and second divisions, to be applied to obtaining the right of way, to bridging and tieing, and to use its best endeavors to furnish like money for the third division. The plaintiff was not required to begin or continue the work until he had received from the company notice that it was ready to furnish the money as it had agreed..

It was further agreed that the company should issue to trustees, for the use of the contractor, the plaintiff, $3,500,000 of its first mortgage bonds and $3,500,000 of fully paid for shares of its capital stock, and that upon the completion of each section of five miles the trustees should deliver the bonds and stock to the plaintiff at the rate of $15,000 of each mile of track. .

It was further agreed that upon the written consent of the president of the company, the contractor, the plaintiff, should be -allowed to draw bonds from said trustee for the purpose of buying iron, material and rolling stock for any division of the railroad, or of hypothecating the said bonds for that purpose to an amount equal to those he would be entitled to upon the completion of a division, with the understanding and agreement that the title of the property so procured shall vest at once in the company and not in the contractor.

After the execution of the contract the company executed and delivered to The Farmers’ Loan & Trust Company, $3,500,000 of shares of stock and 3,500 of its bonds for the payment of $1,000 each and a mortgage to secure the payment of the bonds.

About July 10, 1880, the company gave to the plaintiff the notice that it had means to pay him, under the contract, for the grading, bridging and tieing of the road.

Before December 17, 1880, the trustees had delivered, as provided in the contract, 3,307 of the bonds of the company.

In November, 1880, the original defendant, C. K. Garrison, who since his death is represented by his executors, the defendants in this action, lent $15,000 to the plaintiff, upon his note and 100 of said bonds as security for its payment. In December, C. K. Garrison lent to the plaintiff $45,000, and as security for the re-pavment of it, plaintiff transferred to Garrison the 3.307 bonds above referred to. The writing which the plaintiff gave upon receiving the loan declared, “ I further authorize the sale of all or any part of said bonds at eighty-five per cent, net, and for every $15,000 of bonds sold by said Garrison or myself, or any other person, I agree to transfer to said Garrison, and authorize him to retain from any stock to be received under said construction contract, $7,000 of full paid stock over the amount of loan and interest to be paid. For a long time after this transaction Garrison furnished to the plaintiff large sums of money as means to the plaintiff of performing his obligation under the contract to construct and equip the railroad.

The company did not furnish, as it had agreed to furnish, money to the amount of $4,000 per mile wherewith to acquire a right of way and to grade, bridge or tie any part of any of the divisions of the railway, and Garrison promised to plaintiff to advanee, and did advance for such purposes and from time to time, large sums of money.

On the 20th of December, 1881, the board of the trustees of the company adopted certain resolutions. They recited that the company had failed to comply with the agreement to furnish the plaintiff with means to acquire the right of way, and to bridge, grade and tie, and it authorized the plaintiff to make the necessary advances for such purposes in the future as he had in the past, and they authorized the president of the company, upon the report of a committee then appointed, to issue to the plaintiff or the assignee of his contract, for such amounts as he may have advanced for the right of way, &c., “ non-negotiable certificates of this company bearing interest at the rate of six per cent, payable sixty days after issuance.”

About January 1, 1882, the company issued, under this resolution, thirteen notes to the plaintiff. They amounted in gross to the sum qf $1,234,177.33. About the time they were issued to the plaintiff he transferred them to Garrison as security for advances made by him to and for the plaintiff. About February 20, 1883, the company issued to the plaintiff, under the resolution, eight other notes, for the aggregate amount of $715,533.39. The plaintiff transferred to Garrison these notes also as security. These twenty-one notes were for the amount in all of $1,949,710.72. The whole of that sum, excepting $175,000, had been advanced by Garrison to the plaintiff. The latter sum represented a compensation of ten per cent, which the contract had provided should be paid to the plaintiff.

The referee finds that it was “ understood and agreed by the parties that these promissory notes * * * * should be issued as a temporary expedient for the purpose of stating the accounts, and that, thereafter, as soon as practicable, second mortgage bonds should be issued to secure or provide for said indebtedness and to take the place of said notes so temporarily issued.”

I do not think that the testimony shows that before April 19,1883, the parties had a definite understanding that second mortgage bonds should take the place of the notes. The whole of the understanding' was, that in some way, then not particularized, the second mortgage bonds should be used, e. g. to retire the notes, either by raising money upon the bonds and paying the notes with that money, or exchanging the bonds for the notes. The latter alternative would substitute the bonds as collateral security for the notes.

In the month of May, 1881, Garrison had purchased of the plaintiff 1,907 of the first mortgage bonds and gave the plaintiff credit in the account for the purchase price thereof, to wit, the sum of $1,620,950 and for the accrued interest. This is found in the 13th finding.

In the 25th finding it was found, that about April 1, 1882, “ the said Garrison gave the plaintiff credit in his accounts for 550 of the said first mortgage bonds at the rate of eighty-five per cent, of their par value, amounting to the sum of $467,500,” and also for the accrued interest.

On April 19, 1883, there was a meeting of the board of trustees of the company. The following letter was presented to the board :

“ New York, April 18th, 1883.
“ To the President and Directors of the Wheeling & Lake Erie B. E. Co.
“ Gentlemen :
“ As the contractor intends to turn over the road to the company on the 1st of May, 1883, I have to ask you to settle with me for the cash advances which I have made for your company, viz.:
“ For" fire insurance on depot "building, rolling stock, &c., for one year 3,991 12
“ Coupons uncancelled (1st Mtg. Bonds)
“ Due May 1st, 1881.....$2,490 00
“ Interest.......... 297 80
“ Due Nov. 1st, 1881 ..... 60,000 00
“ Interest.......... 5,400 00
“ Due May 1st, 1882 ..... 76,500 00
“ Interest.......... 4,590 00
“ Due Nov. 1st, 1882 ..... 76,500 00
“Interest.......... 2,295 00
“'Due May 1st, 1883 ..... 76,500 00
304,572 80
“ Fornotesof the company.. 1,949,710 72
“ Interest......... 112,932 41
“ For notes of Co. to receive
about......... 78,705 63
2,141,348 76
“ Total amount due May 1st, 1883 . . . $2,449,912 68 “ For which I respectfully ask a settlement.
“ (Signed) C. K. Garrison.”

The referee finds (38th finding) that “ both the plaintiff and said Garrison were present at said director’s meeting, and said Garrison proposed, verbally, to accept- second mortgage bonds of the said railroad company at the rate of seventy-five- cents on the dollar in partial liquidation of the claim presented by him and set forth in the said communication, and thereupon the following action was taken by the said directors, as appears by the minutes of said meeting,” as follows : “ Moved by Mr. Wickham, that the president of this company be authorized to sell and deliver to C. K. Garrison second mortgage bonds to the amount of $2,280,000 at the rate of seventy-five cents on the dollar and interest accrued from March 1,1883, the same to be delivered in part payment of his claim against this company, amounting to $2,449,912.68, as this day specified in his communication to this company. Seconded by Mr. Warwick and carried without dissent.”

The 39th finding is “ Soon thereafter the said Garrison received from the said railroad company 2,280 of the said second mortgage bonds of the par value of $1,000 each at the rate and price of seventy-five cents on the dollar, which price (including $26,000 for interest on said bonds from March 1, 1883 to May 1, 1883) amounted to $1,736,000, in exchange and payment for which the said Garrison delivered to said railroad company a portion of the said promissory notes.

The 41st finding is “ The remainder of the said promissory notes,.that is to say, those not exchanged for second mortgage bonds, amounting to the sum of $326,043.12, were, on or about the first day of May, 1883, surrendered or delivered to said railroad company by said C. K. Garrison, without consideration, and- were cancelled by said company. The value of said notes, when so surrendered, was the sum of $239,046.55.”

The 40th finding is “ The said exchange of said promissory notes for the said second mortgage bonds of said, railroad company was made with the knowledge, consent and approval of the plaintiff, and the said Garrison received and held the said bonds as collateral security in the place and stead of said promissory notes. The said 2,280 second mortgage bonds are still held by the defendants Day, Forrest and D. E. Garrison, the executors of the said Cornelius K. Garrison, now deceased.”

The referee held on this subject, that the taking of the second mortgage bonds did not satisfy or extinguish the original indebtedness for which the notes were given as collateral security. And it did not if it is assumed that the second mortgage bonds were merely exchanged for, or substituted for, the notes. In the latter case,however,the defendants would be liable for the conversion of the second mortgage bonds, for there can hardly be a doubt that his claim, persisted in in the pleadings and at the trial, that they were not held as security but were his own by assignment from plaintiff, coupled with his dealing with them as his own property, as appears by his books in the statement of his assets, and then assigning them to Mr. Terry, for the benefit of his creditors, made a conversion. But the argument of the appellant did not claim anything on this score.

The appellant, however, claims that the transaction did result in the extinguishment of the original indebtedness wholly, and if not wholly atleastpartly, and to an extent which requires the reversal of the judgment. If the “exchange” said in the 40th finding to have been made with the knowledge, consent and approval of the plaintiff, refers to the actual transaction described in the 39th finding as distinguished from the agreement in the form and intrinsic character of the transaction, as disclosed by the testimony, to which attention will be given, Garrison took the notes as his own as if by sale from plaintiff, and used them to satisfy his personal obligation to take from the company 2,280 bonds of the company at seventy-five. The knowledge, consent and approval of the plaintiff to such a transaction, would not deprive him of the benefit of the actual transaction which would be the extinguishment of the original indebtedness at least to the extent of the consideration which he, Garrison, named in his books as that for which he bought the notes from the plaintiff

If the “ exchange ” which the plaintiff approved was such as was described by the terms of the resolution in the 38th finding, that must be construed as a contract, would be according to unambiguous terms or its terms if ambiguous as determined by extrinsic circumstances. Referring now to but one of these circumstances, namely, that afterwards iif the transaction, Garrison took these bonds for himself and not for the plaintiff, it seems that the agreement was that the bonds were sold to Garrison, individually, and not acting for the plaintiff as he would act in the mere substitution of the bonds for the notes. If the bonds were to be delivered in part payment of the claim contained in the letter, this would imply, as between all the parties, for by the finding the plaintiff approved, that the claim -was to be deemed extinguished for Garrison’s benefit. This enures to plaintiff’s benefit. Such an extinguishment would discharge his original indebtedness.

Under the circumstances disclosed there was nothing at variance with Mr. Garrison’s former conduct. He had before taken first mortgage bonds at eighty-five cents on the dollar, crediting the plaintiff with that amount. He repeated the operation in kind excepting that he paid less. The evidence shows that he or his agents thought the bonds a better form of security than the notes, The plaintiff, as defendants’ pleadings insist, was without pecuniary responsibility, and there was a certain advantage in not leaving the plaintiff the owner even of a second encumbrance upon the property, as he would have been left if Garrison should hold the bonds simply as a security

The 40th finding, after finding that the “said exchange” was made with the approval of plaintiff, finds that “the said Garrison received and held the said bonds as collateral security in the place and stead of said promissory notes.” It is not found that this receiving and holding by Garrison was with the plaintiff s approval,but there is no doubt that such a finding should be considered as intended.

The testimony does not show that plaintiff ever assented to an arrangement by which, as between himself and Garrison after Garrison had bought the bonds for his own benefit, Garrison should hold the bonds as colleteral security, or in other words that the purchase of the bonds should be formally in Garrison’s name. At the most, plaintiff’s agreement before the resolution was passed, and his presence when it was passed, and his approval then, bound him to nothing more than to the terms of the resolution and to its execution afterwards. By those terms and that execution, Garrison extinguished the collateral notes for his own benefit, and that extinguished the debt for the payment of which the col-laterals were held.

The difference in this case between exchanging the bonds for the notes or the notes for the bonds, and the buying of the bonds by Garrison and paying for the bonds by delivering notes belonging to the plaintiff, is distinct and substantial. The two cases have, in common, nothing more than that physically the two sets of papers are exchanged.

The manner in which the arrangement proposed by the resolution was carried out, according to evidence which the defendants cannot controvert, shows that, so far as Garrison was concerned, and so far as he could bind the plaintiff by his acts, he bought the notes of the plaintiff and then used them to buy the bonds for his own and individual benefit.

It is argued against this position that, for a purchase of the notes, in reality, it was necessary that the plaintiff should have been a cognizant and assenting seller. This will be farther alluded to when the facts are stated, and yet on this point it may be noticed that the justification of Garrison’s conduct in respect of the notes is placed by the learned counsel for the respondent, upon the following positions. He argues that a transfer of interest, proven in the case, which in fact included these notes, and which the referee on the trial held was made as collateral security, although unconditional on its face, “ did have a purpose, and that this was to impart to Garrison unlimited power to use and manage the interests assigned in such manner as he should deem for the best intérests of all the parties.” And again “that Garrison did not hold the notes or any of the other collateral securities upon a strict pledge but that he had full power of using or disposing of them as he deemed proper.” If such were the powers communicated to Garrison, his use of them would bind the plaintiff at least to the extent that such use was beneficial to the plaintiff in extinguishing his prime indebtedness.

It appeared in evidence that Garrison kept a usual set of books of account. In them was an account with “ O. E. Griggs, contractor,” and in it Griggs, or the plaintiff, was charged with the advances made to him by Garrison and which were represented by the promissory notes. Of course, while the notes remained as security only for the payment of the advances, they would not be placed in the account as a credit to plaintiff. They would appear as a credit only when they should yield cash or be treated as cash in payment between the parties.

On May 1, 1883, the plaintiff was credited in the account with $1,546,982.35. The journal, pp. 670, 1616, in explanation of this credit, states the whole amount of the notes andinterest, $2,062,643.13, and then “ Taken from contractor at 75 per cent., $1,546,-982.35”, and this last sum was the above credit in the ledger. There could not be a clearer statement of a sale of the notes by the contractor to Garrison. But the next entry in the journal shows the disposition of the difference in the amounts. It is in the interest account. The difference, namely, $515,-. 660.78, is credited to that account, for the discount on the above notes $2,062,643.13, and that difference is further appropriated to Garrison by crediting it to the profit and loss account, and in a subsequent statement of Garrison’s assets the indebtedness of Griggs was stated at a sum which excluded the amount of indebtedness, that on the books was cancelled by the credit of $1,546,982.35.

On the same 1st of Mayt 1883, The Wheeling & Lake Erie Railroad Co., is charged with the whole amount of the notes and interest $2,062,643.13, and credited with seventy-five per cent, of the par value of the 2,280 bonds.

It may be observed here, that this operation gave Garrison the benefit of twenty-five per cent, on the notes and of twenty-five per cent, on the bonds.

It is said that the plaintiff should not have the advantage of the actual transaction proved by the entries in the books, because he knew nothing of the entries and they were not the result of agreement between the parties. It would appear from the findings that the plaintiff knew and approved of the exchange set forth in the findings, but I think it must be considered that the referee meant that this should be taken with a special finding of fact that the plaintiff knew nothing of the making of the entries and that, therefore, he could take nothing by reason of their admission in evidence. As evidence the entries are admissions by Garrison that the facts described by the entries occurred. These admissions are not explained in the evidence. So far as Garrison was capable of doing what he in fact effected, there was a taking of the notes at seventy-five per cent. He had legal power, or the appearance of it, to do what he effected, while at the same time he held the relation to the plaintiff of a trustee. And this relation permits the plaintiff to affirm the conduct of his trustee and take full advantage of it.

In substance, as I think, the transaction involved, among other things, Garrison taking as his debtor for the advances, the railroad company in the place of the plaintiff. This extinguished plaintiff’s indebtedness, at least to the extent of the credit that has already been described. Smith v. Miller, 43 N. Y. 174, citing Southwick v. Sax, 9 Wend. 122 ; Hawks v. Hinchcliff, 17 Barb. 492 ; Gage v. Punchard, 6 Daly, 229.

This result is corroborated by the facts upon which a claim for a further credit than appears on the books is made by the appellant.

The plaintiff’s account in the ledger was, on August 28, 1883, credited with $575,600. This credit as first made was explained by the journal as follows “ Interest account. Dr. to O. E. Griggs, contractor, for the discount of twenty-five per cent, on the amount of the notes of the Wheeling & Lake Erie Co., and interest, May 1, 1883, amounting to $2,062,643.13, which makes up the face value of the notes with interest.” And then were added “ Above entry null and void having been made without proper directions from Mr. O. K. Garrison.” Then a red line was drawn through the figures that stated the amount of the credit, both in the ledger and the journal. It is evident from this that after the former credit was made, Garrison had weighed its significance and in his own mind re-asserted it. As the referee has found substantially that the second credit was inadvertent and not authorized by Garrison, there is sufficient evidence to support it, and the appellant is not entitled to the credit upon the mere fact that it had once appeared in the books and was immediately cancelled.

While I think that, at least, the plaintiff was entitled to be credited in the accounting before the referee with the amount of the first credit and interest to the date of the accounting, I also am convinced that the testimony incontrovertibly showed that the plaintiff was f entitled to a larger credit.

In my opinion the resolution and the subsequent fact, shows a purchase by Garrison of 2,280 second mortgage bonds for his own benefit and not as a substitution for the notes at seventy-five cents on the dollar. If this had been carried out he would have been obliged to pay the company from his own money $1,710,000, but it was further provided that the delivery of the bonds should not be on the receipt of the consideration in money, but to pay in part what was called “ his ” claim against the company. The claim could be “ his” only by considering that the plaintiff had ceased to own it. In reality the claim upon which the notes was founded was money of Garrison, expended upon the railroad. That is, the notes pro tanto were used as money belonging to Garrison. Upon actual delivery for the bonds they became extinguished for Garrison’s benefit in the result to the value of the money that Garrison would otherwise have owed the company for the bonds.- To the extent the collateral security was extinguished the original indebtedness for which the security had been given was extinguished, and for this reason the plaintiff should have had on the accounting a credit of seventy-five per cent, on the par value of the bonds, or, if my calculation be correct, $1,710,000 and interest from May 1, 1883.

The transaction is the same as if the plaintiff had received, as collateral for, or payment of, his advances to the company, bonds of-the company and had then sold them to Garrison at seventy-five cents on the dollar, with consent of the company.

I do not think that any other exception of the plaintiff calls for a direction to correct the account in any other particular. The defendants’ exceptions of course have not been heard on the plaintiff’s appeal.

In consideration of the exhaustive examination of the case by the referee, and the great ability used by him, I have hesitated in coming to the result that has been announced.

The judgment should be reversed and a new trial ordered, and the order of reference vacated with costs to abide the event, unless the defendants by stipulation consent to a deduction from the amount of the judgment recovered by them against the plaintiff of $1,623,667.60 with interest. If such stipulation be given, the judgment is affirmed for the reduced amount, without costs.

Freedman, J., concurred.

Ingraham, J.—(dissenting).

I am unable to agree with my associates in the determination of this appeal. A consideration of the testimony forces upon me the conclusion that but little reliance should be placed upon the evidence of the plaintiff; he first testified during the lifetime of the defendants’ testator ; after his death, when there was no one living who had anything to do with the transaction between the parties, he was recalled as a witness several times. At each time he remembered new conversations with the defendants’ testator and his son, who was also dead, such conversations never having been in the presence of any living person, and evidently furnished for the purpose of meeting some emergency of his case as it developed.

It would appear as if section 829 of the Code had been systematically disregarded in the admission of the evidence. The fact that Garrison before his death had answered certain interrogatories without being sworn in another action, and that such answers were, read by defendants upon the trial of this action, would not make the plaintiff’s testimony of anything that subsequently happened, competent. It is only “where the testimony of the deceased person is given in evidence concerning the same transaction or communication,” that the evidence of the other party as to the transaction or communication can be received, and as to many of the communications to which plaintiff was allowed to testify, the deceased had given no testimony. This, however, is an appeal by the plaintiff, and as the defendants’ objections to the admission of testimony are not stated in the case, it is impossible to say that any objection was taken to the admission of the evidence. The nature of the testimony is adverted to, as upon such evidence it would be manifestly improper to reverse the finding of fact of the referee.

By the 22nd finding of the fact the referee finds that the notes therein referred to were issued under an agreement between all the parties, “ as a temporary expedient for the purpose of stating the accounts, and that thereafter, and as soon as practicable, second mortgage bonds should be issued to secure or provide for such indebtedness and to take the place of said notes so temporarily issued.”

And by the 40th finding of fact the consummation of that agreement by the sale and delivery of the bonds to Garrison..

I am satisfied that these findings' were sustained by the evidence, but, upon the undisputed testimony, I think the referee was clearly right in the conclusion to which he arrived.

A very brief review of the facts that are substantially undisputed will be useful in determining the question. It is found by the referee, and for the purposes of this appeal must be taken as established, that the plaintiff had assigned to Garrison his contract with the railroad company as security for advances made by Garrison and used by plaintiff to carry out the contract. Garrison had also advanced to plaintiff certain moneys which had been expended for the benefit of the company, and the company was indebted to plaintiff for that money so expended. The company thus made its promissory notes to plaintiff, who endorsed them and delivered them to Garrison. It is not claimed by either party that these notes were delivered to Garrison in payment of plaintiff’s indebtedness to him, but plaintiff claims that Garrison had held them as security for advances made by him to plaintiff. Garrison holding these notes, and having other claims against the company presented an account to the company which included the notes in question and demanded a settlement, and the directors of the company passed a resolution whereby the president was authorized to sell and deliver to Garrison, second mortgage bonds to the amount of $2,280,000 at the rate of seventy-five cents on the dollar in payment of part of this claim so presented against the company. This was passed with the knowledge of plaintiff. This being the situation, Garrison, with the plaintiff’s knowledge and consent, delivered the notes to the company and received therefor bonds of the company at the rate of seventy-five cents on the dollar, secured by a second mortgage on the company’s property.

It is clear that as between Garrison and the company this was nothing more than a change of the form of the company’s indebtedness. Garrison had obligations of the company which were presently due and enforceable. The company were willing to fund such obligations and give in exchange therefor bonds secured by a mortgage upon the property, payable at a future time. There was no present consideration that passed from Garrison to the company ; and although the resolution speaks of the transaction as a sale of the bonds, it was really an issue of bonds in part payment of its debt to Garrison. It owed Garrison before the issue of the bonds, it owed him after the issue of the bonds, the form of the obligation was changed. But whatever change there was in the form of the obligation of the company, as between plaintiff and Garrison, there was no change in their relation. Garrison had held certain notes of the company which belonged to plaintiff. He had with the assent of plaintiff delivered those notes to the maker and received in lieu thereof their obligations secured by a mortgage on its property. The only change in the securities was to give to the substituted obligation a lien by way of mortgage upon the debtor’s property and to increase the face value of the obligations twenty - five per cent. Those bonds were held by Garrison in place of the notes and were still in the possession of his executors at the time of the trial.

The evidence clearly established that before this transaction was completed, the notes of the company were worthless, and the bonds issued in lieu thereof, worthless. Plaintiff had not in reality advanced one dollar of this amount represented by those notes. Every dollar had been paid by Garrison. Garrison had certainly never received a dollar of the money so advanced and had never agreed with plaintiff to purchase the second mortgage bonds. If the bonds had subsequently become valuable securities, could Garrison have refused to account to plaintiff for their proceeds ? Clearly no, for the plaintiff had never parted with whatever interest he had in them, and to say that plaintiff is entitled to a credit for the face value of the worthless notes because his bailee had with his consent changed them into higher and better securities of the maker, under circumstances which would have made the bailee responsible to the bailor for the substituted securities, would be imposing on the defendant a liability far in excess of that prescribed by any rule of law with which I am acquainted. The full discussion by the referee in his opinion renders a further examination unnecessary.

As considerable stress has been laid upon credits in Garrison’s books, it may be said that they were not shown to have been made by direction of Garrison. The plaintiff had no knowledge of such entries, and the parties never acted on thejn. So far as appears, plaintiff did not claim, during Garrison’s lifetime, that the second mortgage bonds had been purchased by Garrison individually, and there is no evidence that the parties ever acted upon the assumption that any such sale had taken. place. At this time and for a long time prior thereto plaintiff had been unable to furnish money for the completion of his contract. In fact it does not appear that he ever did furnish any money, but Garrison furnished all that was expended. Plaintiff had been for years in receipt of an annual allowance from Garrison for his services, and it is clear from the correspondence and the acts of the parties that plaintiff considered that he had no real interest in the contract. It could not under such circumstances be said that the entry in the books of the parties should be given the same effect as if the agreement between the parties were still understood to be existing and in force.

Assuming, however, that the plaintiff should have been allowed the face value of the notes transferred to the company, it does not follow that the judgment must be reversed.

It appears that the total amounts of the notes of the company delivered by plaintiff to Garrison was $1,949,710.72 of this amount $326,043.12 was not delivered to the company in payment of the bonds of the company. Such notes amounting to $326,-043.12 were charged against Garrison by the referee, having been subsequently delivered by him to the company, leaving $1,623,667.60, as the notes given by Garrison in payment of the second mortgage bonds. This amount, under the rule as stated in the opinion of the Chief Judge, should have been charged against Garrison. This amount with interest can now be deducted from the amount of the judgment awarded against the plaintiff, and as thus modified the judgment affirmed without costs of this appeal; this modification to be made upon defendants’ consent thereto.


author: By the Court.—Freedman, J.

text:
    MARY MARSHALL, Appellant, v. THE WOMEN’S MUTUAL INSURANCE AND ACCIDENT COMPANY OF AMERICA, Respondent.

      Life Insurance.—Forfeiture, waiver of,

    The life of Charles Marshall, the plaintiff’s husband, was insured by defendant, but the policy was forfeited for non-payment of arrears, and plaintiff sought a renewal and reinstatement. At the time of her application Charles Marshall was lying sick in the hospital with the disease of which he subsequently died. Plaintiff concealed the fact of his illness from defendant.

      Held, that such concealment avoided whatever was done towards reinstatement or renewal. Upon the whole case there was not sufficient evidence upon which the jury could have found that the defendant waived the forfeiture clause.
    Before Sedgwick, Ch. J., Freedman and O’Gorman, JJ.

      Decided December 1, 1890.
    Appeal from judgment entered upon a dismissal of the complaint at the trial, and from an order denying plaintiff’s motion for a new trial on the minutes.

      Charles A. Lovett, attorney, and Abel Crook of counsel, for appellant.

      John A. Kamping, for respondent.
   By the Court.—Freedman, J.

This action was brought on a certificate of membership. The evidence is uncontradicted that, when the plaintiff took certain steps to have Charles Marshall, whose life had been insured, reinstated, the said Marshall was lying sick in the hospital with the disease from which he subsequently died. That fact was concealed .from the defendant. Such concealment avoided whatever was done towards a reinstatement. Upon the whole case there was not sufficient evidenc upon which the jury could have found that the defendant waived the forfeiture' clause.

The complaint was properly dismissed, and the judgment and order should be affirmed, with costs.

Sedgwick, Ch. J., and O’Gorman, J., concurred.