text:
    Alexander Gillespie and others, Plaintiffs and Respondents, v. Daniel Torrance, Defendant and Appellant.
    1. A defendant who by indorsing the note of a vendee becomes bound as indorser to the vendor of goods sold, cannot, when sued upon his in-' dorsement, set up and prove »as a defense that the goods sold were warranted, and that the warrantee is broken, and so by showing the damages sustained by the vendee abate from or extinguish the plaintiffs’ claim against him as indorser.
    2. The cause of action arising upon such breach of warrantee is vested in the vendee; no one can use it as a defense but the vendee unless he has assigned it; it is in the nature of a recoupment or counter-claim; and the indorser cannot use it in his own favor. This was true before the Code ; ■and it can no more be permitted under the provisions of the Code defining a counter-claim. (§ 150.)
    3. Whether an indorser for the accommodation of the maker might, in case of the insolvency of the maker, or upon any other equitable grounds be permitted to protect himself in equity by taking the benefit of such a counter-claim. Qucere.

    1. On a sale of a specified number of sticks of oak timber, warranted to be of the first quality, the timber being delivered, accepted and used by the purchaser, it cannot be alleged as a defense to a promissory note given for the price, indorsed by the defendant, that the timber was of an inferior quality, and so the consideration of the note has failed in part. Though the vendor may be liable to the vendee in such case for damages for breach of warranty, there is no failure of the consideration of the note which constitutes a defense to the indorser.
    (Before Slosson, Woodruff and Pierrepont, J. J.)
    Heard, Oct. 13th;
    decided, Dec. 11th, 1858.
    This action was tried before Mr. Justice Slosson and a jury, May 3d, 1858. The plaintiffs had a verdict, and from the judgment entered thereon the defendant appealed.
    The action was brought against the defendant as indorser of a promissory note, dated December 15, 1855, made by J. J. Van Pelt, for $1,808.80, payable five months after date, to the order of the defendant, and by him indorsed to the plaintiffs.
    The defense was that the note was given at the city of New York, to the plaintiff, by the maker, Van Pelt, in part payment for a. raft of oak and pine timber, then afloat in the North river, ■on the shore at Hoboken, New Jersey, and was indorsed by the defendant as surety for Van Pelt, for the purpose of securing payment of the price of the timber to the plaintiffs and for no other consideration.
    That at the time of the sale the plaintiffs exhibited to Yan Pelt certificates of the inspection and measurement of a quantity of oak and pine timber, which stated the number of sticks inspected and the measurements and descriptions thereof; and stated that there were in the timber so inspected 30,418 feet of first quality oak, 5,618 feet of refuse oak, 1,240 feet of first quality pine, and 85 feet of refuse pine. That the plaintiffs then represented that those certificates were the certificates of the inspection of the raft of timber then offered for sale, and contained a correct statement thereof (with the exception of 21 sticks mentioned in the certificates which were lost.)
    That it was, at that time, the usage in the city of New York, among dealers in timber, to purchase and sell timber on the faith of similar inspection certificates and by such usage, the seller of the timber is and was deemed to warrant that the timber sold should correspond with such inspection certificates in respect to the quantity, quality, description and classification of the timber; and that in case of any variance between the said inspection certificates and the timber delivered, the seller should be bound to make good to the purchaser the damage which he might sustain by reason of such variance. That Yan Pelt and the plaintiffs were both dealers in timber in said city, and had notice of such usage, and dealt in reference thereto in the sale and purchase of the said raft of timber.
    That Yan Pelt, relying on the said representations of the plaintiffs, and on the said inspection certificates and upon the said usage, purchased the said raft of timber at certain rates per foot for each description of timber, and for the purpose of ascertaining the quantity and different classes and descriptions of timber contained in the said raft, reference was had to the said inspection certificates and the amount to be paid was computed according to such certificates.
    That the terms “first quality oak,” and “refuse oak,” were and are well known in the timber trade, and denoted different descriptions of timber customarily bought and sold in the New York market, and elsewhere, by those designations.

      That the price of the said timber, so computed, amounted to $9,043.98. That Yan Pelt has paid on account thereof $7,235.18, leaving unpaid not exceeding $1,808.80, the amount of the note in suit.
    That the raft of timber was, after such purchase, delivered to Yan Pelt, and he discovered after such delivery, and the defendant alleges the fact to be, that, the inspection certificates did not contain the true measurements of the different descriptions of timber, but was erroneous in the following particulars: That, in lieu of 29,441 feet of first quality oak, there were not in the said raft over 14,720 feet thereof; and in lieu of there being in the said raft 5,523 feet of refuse oak, there were therein about 20,243 feet thereof.
    That had the price of said timber been correctly computed, the same would not have amounted to over $4,995.35.
    Wherefore the defendant alleged, that the plaintiffs have been already overpaid for the timber so sold and delivered; that there is nothing due to the plaintiffs on the promissory note in suit; and that the plaintiffs have given no consideration therefor.
    The action came on for trial on the 3d of May, 1858, before Mr. Justice Slosson and a jury.
    The defendant put in evidence a bill, in the words and figures following:
    “New York, 12th December, 1855.
    “ Messrs. J. J. Yan Pelt & Dan’l Torrance,
    “ To Gillespie, Dean & Co. “For raft of timber at Brown’s basin, Hoboken:
    29,441 feet first quality oak, at 27-|c,.............. $8,096 27
    5,523 “ second “ 13fc,.............. 759 41
    1,325 “ pine 12-|c,.............. 165 62
    $9,021 30
    J inspection at 5 per cent for M.,................. 22 68
    [Duplicate.] $9,053 98
    “Payable by J. J. Yan Pelt’s note, indorsed by Daniel Torrance, at 3, 3-|-, 4, 4-| and 5 Mos.
    “ Rec’d payment as annexed,
    Gillespie, Dean & Co. Per N. G. M. Clibborn.”

      The note in suit was admitted by the plaintiffs’ counsel to be one of the notes given in payment of the bill aforesaid; and it was also admitted that the other notes given therefor had been duly paid.
    Books admitted by the plaintiffs’ counsel “to be the books delivered with the said bill of timber, as containing the specification of the contents of the raft,” were also put in evidence by the defendant. _ ,
    They were arranged in columns of figures and at the end of each book was a summary or certificate in the following form:
    “West Troy, July 31, 1855.

      “ 122 sticks first quality oak,....................... 7153
    26 “ refuse oak,............................ 1820
    1 “ first quality pine,...................... 59
    149 “ 9032 ft.
    “ Charges $11.28.
    “Henry H. Smith, Inspector.”
    The total of first quality oak mentioned in the three was 29,441 feet.
    The defendant then proved the mode of marking timber on inspection, and that the timber in question was marked upon that “ plan.” That the “ first installment of this raft, being about one-third of the whole, was brought over to Van Pelt’s yard about February, 1856, and the sawing of it was then commenced.”
    The defendant’s counsel then put to the witness the following question: “ How did the sticks marked as first quality turn out ?”
    The question was objected to on the ground that no warranty of quality had been proved; and that no express warranty was alleged in the answer, but only “ a warranty by usage.”
    The defendant’s counsel asked leave to amend the answer by averring an express warranty.
    The Court denied the motion to amend, on the ground that the papers given in evidence were not any evidence of an express warranty; and also sustained .the objection to the question put to the witness. The defendant’s counsel excepted to each of these rulings.
    The defendant’s counsel then inquired of the witness “How did the sticks compare, as to quality of first or second class, with the specifications in the memorandum books now produced, containing inspector’s certificates, &c., as to what were the qualities of the timber ?
    This question being also objected to, the objection was sustained and the defendant’s counsel excepted.
    “ The defendant’s counsel thereupon offered to prove that the timber fell short of first quality of 14,000 feet, and that the difference in value was, at 13fc a foot, more than the amount of the note.
    “ Also, to prove that the inspector’s books are, by usage, as pleaded in the answer, delivered as evidence of quantity and quality, and that the seller is, by said usage, deemed to warrant that they correspond.
    “And that the timber was in a raft, so that the logs could not be turned over without taking the raft to pieces.”
    On the plaintiffs’ objection, the Court excluded the evidence and overruled each offer, and to each ruling the defendant excepted.
    The jury, under the direction of the Court, found a verdict for the plaintiffs for the amount of the note, with interest.
    From the judgment entered on the verdict, the defendant appealed to the General Term.

      Charles A. Rappallo for the defendant (appellant).
    I. So far as the defense rests, on the ground of a deficiency in the quantity delivered, it was not necessary to prove any warranty.
    II. So far as the defense rests, on the ground of a difference in the quality, the bill and inspection book were evidence of a warranty, and the case should have gone to the jury. (Story on Contracts, § 513; Hastings v. Lovering, 2 Pick., 214; Whitney v. Sutton, 10 Wend., 411; Chapman v. Murch, 19 Johns., 290; Carley v. Wilkins, 6 Barb., 557.)
    The timber was not in this State when purchased.
    III. The defendant should have been permitted to prove the usage set forth in the answer.

      William Stanley for the plaintiffs (respondents).
    I. The answer contains' no defense to the cause of action set forth in the complaint.

      1. It does not contain a defense on the ground of a failure of consideration.
    The raft was the consideration for the note. The only possible pretense for the failure of consideration is through the breach of warranty. (Gihon v. Levy, 2 Duer, 176.)
    2. It does not contain a defense on the ground that there was a breach of the warranty of quality or quantity.
    Such a defense would have been in an action against the maker, formerly recoupment, now counter-claim. It is not a counter-claim when set up by the indorser, because it is not between parties between whom a several judgment might be had.

      It is not a defense in any way for the indorser. A judgment between the indorser and plaintiffs could not be pleaded in an action brought by Van Pelt for breach of warranty. The original contract on the note is not rescinded. The contract of warranty is a new and independent contract made by plaintiffs with Van Pelt, and with which the indorser has nothing to do.
    II. The alleged bill put in evidence was not a contract of warranty. It was a mere receipt. (Seixas v. Woods, 2 Caines R., 48; Sweet v. Colgate, 20 Johns., 201.)
    III. The exception to the motion made to amend the pleadings by inserting an allegation of express warranty in the answer is not well taken.
    1. It was a new defense, a change of the original defense in its entire scope and meaning, and took the plaintiffs’ counsel by surprise.
    2. An amendment is a matter of discretion. The terms on which it will be permitted are discretionary. No exception will lie to a refusal to permit an amendment.
    3. The Court held correctly that the bill and books were not evidence of an express warranty, and therefore there was no need of an amendment. And if proved, it would be no defense.
    IV. The offer to prove that the seller was by a usage of trade deemed to warrant that the timber corresponded in quantity and quality with the inspector’s books was properly excluded.
    1. Because it would tend to contradict, vary and annul well settled rules and principles of law, relating to the sale of chattels, to wit:
    1st. The rule of caveat ernptor.

      2d. The rule that the warranty of articles not sold by sample must be express, and in the absence of fraud cannot be implied. This rule is laid down in Holden v. Dakin, (4 Johns., 421;) and in Sweet v. Colgate, (20 Johns., 196.)
    Such evidence is inadmissible. (Thompson v. Ashton, 14 Johns., 316; Hinton v. Locke, 5 Hill, 437; Beirne v. Dord, 1 Seld., 102; Wadsworth v. Alcott, 2 Seld., 65; Parsons v. Miller, 15 Wend., 561; Frith v. Barker, 2 Johns., 327.)
   By the Court—Woodruff, J.

There is no dispute upon the question whether the plaintiffs were entitled to recover upon the note in suit, unless the defendant established a defense. If therefore there was no error committed in excluding the evidence offered by the defendant, it was clearly proper to direct the jury to find a verdict for the plaintiffs, for the amount of the note, with interest from the maturity thereof.

The evidence, on the part of the defendant, so far as it was received, established the fact of a sale of the timber mentioned in the answer; the delivery thereof to Van Pelt; that it was paid for by notes made by J. J. Van Pelt, and indorsed by the defendant, of which the note in suit was one, and the others are paid; that memorandum books containing an inspector’s certificate of the quantity and quality of the timber, were delivered with the bill of the timber; and that the timber when purchased was bound together in a raft, and lying afloat in the North river, at or near Hoboken, in Brown’s basin.

The rulings of the Court, to which exceptions were taken, will be considered quite as favorably for the defendant as he can ask, if we treat them as they would be treated, if the amendment of the answer, which the defendant moved for had been allowed by inserting therein an allegation of an express warranty of the timber. There is some show of reason at least in so considering them, because the Court refused the amendment, on the ground that the evidence, already given by the defendant, was not any evidence of an express warranty. And the evidence, which was thereafter rejected, was offered first, to show that by the usage of the trade on a sale of timber, the inspector’s book and certificate are delivered as evidence of the quantity and quality, and the seller is deemed to warrant that the timber sold corresponds therewith; and second, that the warranty was broken in this; that a portion of the timber which on the sale in question was described in the bill of parcels and in the inspection books and certificate as “first quality oak,” was in fact ascertained after the delivery thereof to be second quality or “ refuse ” oak.

It will, however, be seen that the reasons hereinafter assigned fully sustain the ruling of the Court, in denying the leave to amend, whether the specific reason then given for such denial was sufficient or not.

Two questions, therefore, and we think only two questions, are raised by the exceptions taken at the trial.

First. Can an accommodation indorser who without consideration becomes, by indorsement, a surety for the payment of the price of goods sold to the maker of a note, allege and prove as a defense or by way of counter-claim, that the goods were warranted to the vendee, and that the warranty was broken, and by proving the damages sustained by the vendee, abate from or extinguish the plaintiff’s (the vendor’s) claim against him upon his indorsement?

Second. Was the evidence which the Court rejected competent to prove, or, if in its nature competent, would it have tended to prove any warranty of the quality of the timber by the plaintiffs on the sale of the timber to Van Pelt, to whom, as alleged in the answer, the sale was made, and for whose accommodation the defendant became indorser, as surety that he should pay the price?

I. The first of these questions is not an open question in this Court. In La Farge v. Halsey et al., decided May 2d, 1857, (1 Bosw. R., 171,) this Court, in General Term, held, that in an action against sureties, for the payment, by the tenant, of the rent reserved in a lease, the sureties could not set up, as a counter-claim, damages sustained by the tenant by reason of a breach, by the landlord, of an agreement made by him with such tenant, although the tenant if sued for the rent might have made such counterclaim.

In the present case, if a warranty of the quality of the timber was given to Van Pelt, and it was broken, there is in him a cause of action against the plaintiffs, but even Van Pelt, if he used that claim as a defense to the note would use it upon the principles governing the doctrine of recoupment. He would not be bound to set it up as a defense to the note; he might bring his own separate action for his damages.

If Van Pelt either brought his action, and now, under the Code, if he set up the claim as a counter-claim to the note, he might recover the whole damages sustained by him.

The defendant here has no control of that cause of action. Van Pelt may enforce it, or may' assign it, or may release it. He may not choose to permit the defendant to have the benefit of it. The defendant could not, under any view of the subject, make it available to effect more than an extinguishment of the plaintiff’s claim. He is not at liberty to so limit the rights of the vendee and possibly preclude his obtaining full compensation for his damages; for obviously the plaintiffs cannot be required to litigate the matter twice. The establishment of this cause of action by the present defendant, and its allowance in his favor, would not preclude an action by Van Pelt for his damages, and nothing done or proved in this action by this defendant could be permitted to defeat his recovery.

These considerations all show that an indorser in virtue of his relation to the parties as surety for the maker, cannot protect himself by any such counter-claim.

And the definition of a counter-claim in the Code, is further conclusive, on the same point. A counter-claim is another cause of action existing in favor of the defendant, as well as against the plaintiff. (§ 150.) This is not such a claim.

Whether circumstances might not be suggested which would create such equitable rights in the indorser, in case of the insolvency of the maker, as would entitle him to protection, we do not now inquire, none such appear in this case.

The defendant’s answer places his defense upon the ground of a sale and delivery to Van Pelt; his own indorsement, without consi eration received by himself, and as surety for Van Pelt. The defendant is not in a condition to set up a distinct cause of action—a breach of warranty on such a sale, whether the warranty be expressed in words, or otherwise inferrible from all ■ the circumstances—as a counter-claim nor as a defense to the action.

It was ingeniously urged on the argument, that inasmuch as, by reason of the inferiority of some of the timber sold, such portion thereof was reduced to what is called second quality oal4)Qr _ refuse oak, the defendant was at liberty to treat the deficiency in quantity, and so he insists that there was failure of the consideration of the sale resulting in an over-payment by the vendee, Van Pelt, which leaves the note now in suit without any subsisting consideration; which view of the subject if correct would show, not a set off or counter-claim, but a defense to the note itself, which will avail as well for the benefit of an accommodation indorser as for the benefit of the maker. chke as a < a

The plausibility which gives color to the argument arises from the casual coincidence that there were two qualities of oak sold, and not from any soundness in the view suggested. Had the sale described the oak as being a given number of sticks or feet of “first quality oak timber,” and the whole was delivered and accepted, and it was shown that a part of the timber was of an inferior quality, and yet the whole was retained and used by the purchaser, the defect could never be called a deficiency in quantity.

Neither can the defect be so considered with any more accuracy, where, besides such a sale, there was, at the same time and as part of the same transaction, a sale of other oak in terms described as second quality or refuse. The vendee has received the timber he bargained for; the very sticks which were contained in the raft. They may not be so good as was represented, but they are the sticks of timber which in fact he purchased.

Where the property is received and retained a defect in quality cannot be regarded as a failure of consideration. The maxim caveat emptor applies to the quality of the goods sold unless there is fraud or warranty, and if there be a warranty and it be broken the breach creates a right of action in the vendee, not a defense, (strictly so called,) to the note given for the purchase money. Indeed the goods and the warranty taken together, constitute a full consideration for the note, although the quality be of less value than it is warranted to be.

As, for example, on a sale of a horse which is warranted sound, and which is shown to have some defect not obvious to mere inspection. The consideration of a note given for the purchase money has not failed, the warranty itself (in so far as the defect impaired the value of the horse) makes up the consideration of the note, and, except upon the principle of recoupment or counter-claim, the vendee is without defense to the note.

It may be, on a sale such as it is claimed was made in the present case, where the property was out of the State, in a condition not readily accessible, and where the sale was made in reliance upon the accuracy of the certificates of inspection, that the purchaser would have a right to refuse to accept the timber if, when delivery was offered, it was found not to correspond with the certificates, but he cannot accept the delivery, retain and use the timber, and if there be no warranty, refuse to pay the consideration. If there be a-warranty then the breach of it vests in the vendee himself a right of action, which he may use as a counter-claim if he elect so to do, but which is not vested in the surety and, as already stated, cannot be used by him.

• II. The answer to the first question above proposed is sufficient to dispose of the case upon this appeal. The proof offered and rejected was not admissible because if a warranty had been proved, it would not have established nor tended to establish any defense nor any counter-claim in the defendant’s favor.

It is therefore wholly unnecessary to consider the other question. Ho determination of that inquiry could affect the result. Whether the evidence was, in its nature, competent proof of a warranty, or whether, if competent, it would have tended to establish a warranty, the proof could be of no service to the defendant. The warranty would avail him in no manner for his protection.

It would seem by the case that the reason assigned at the time for rejecting a portion of the evidence was, that there was not sufficient evidence of a warranty. The grounds upon which the offers to prove a warranty were rejected are not stated. But these considerations are wholly immaterial. On exception to a ruling, the ruling must be sustained if, in point of law, it was right, whether the appellate tribunal concur in the reasons given therefor or not. Where the true ground of the inadmissibility of material evidence offered is an objection which, had it been suggested, might have been obviated, and its rejection is placed so dis-, tinctly upon another and erroneous ground as to mislead the party offering the proof, that consideration might affect the propriety of granting a new trial, on a motion addressed, as such motions are in some degree, to the discretion of the Court.

But this case is before us on appeal from the judgment and on the exceptions only. If otherwise, no such case is presented as above supposed. The objections to the evidence could not be obviated, and, had everything been proved which the defendant offered to prove, the plaintiff would still, as matter of law, have been entitled to a verdict for the amount of the note and interest.

By this we do not design to intimate an opinion that the ruling was erroneous upon the grounds there stated; it is sufficient to say that we find an established principle which disposes of the case without further discussion. The judgment must be affirmed.

Judgment affirmed with costs.


source: Caselaw Access Project

author: By the Court—Hoffman, J.

license: Public Domain

text:
    Adolphus Mincho, Plaintiff and Apellant, v. The Mayor, Aldermen and Commonalty of the City of New York, Defendants and Respondents.
    1. Under the Ordinances of the Corporation of New York, (adopted August 11, 1851, and as amended November 14,1851,) which provide a less rate of compensation for policemen who are detailed by the Mayor or Chief of Police for special duty, than is provided for those who perform post or patrol duty; a policeman who, during the whole term of his appointment, was detailed by the mayor to serve at the Court of Sessions, is not entitled to be paid as a patrolman, although he did patrol duty a part of every Sunday, and occasionally was called out to serve at fires.
    (Before Hoffman, Pierrepont and Moncrief, J. J.)
    Heard, December 15th;
    decided, December 31st, 1858.
    This action came before the Court at General Term on questions of law arising at the trial, and there ordered to be heard at the General Term in the first instance. It was commenced in March, 1856, and was tried before Chief Justice Bosworth and a jury, on the 16th of November, 1858.
    The complaint alleges that the plaintiff “ was a policeman of the City of New York, duly appointed in and for the Sixth Ward of said city,” from on or before the 1st of September, 1851, to the 1st of January, 1853.
    That during the whole of this period “ he was duly detailed by the Mayor of said city, to attend as such policeman and perform the duties of such policeman at the Court of Sessions in his said ward, and at divers other places in the said city; and that he did during the whole of said period so attend and perform the duties of such detailed policeman.”
    That “ he did during the whole of said period exercise the office and perform the duties of a policeman of said city in his said ward.”
    That “ by an act of the Legislature of the State of New York, entitled 1 An Act authorizing the Common Council of the City of New York to regulate the salary of policemen in said city,’ passed April 10, 1850, the Common Council of said city were duly empowered and authorized to fix the compensation of policemen.”
    That “ the said Common Council, in due form of law, passed an ordinance on the 18th day of August, 1851, in the words and figures following, to wit
    “ An Ordinance.—The Mayor, Aldermen and Commonalty of the City of New York, in Common Council convened, do ordain as follows:
    “ § 1. The salary of Captains of Police is hereby fixed at the sum of eight hundred dollars per annum.
    “ § 2. The salary of the Assistant Captains of Police is hereby fixed at the sum of seven hundred dollars per annum.
    “ § 3. The compensation of Sergeants of Police, and Policemen performing post or patrol duty in their respective wards, shall be, for each and every day’s service, at the rate of six hundred dollars per annum.
    “ § 4. The salary of policemen detailed by the Mayor or Chief of Police for the performance of any special duty is hereby fixed at the sum of five hundred dollars per annum.
    “ § 5. This ordinance shall take effect on the first day of September next.”
    The complaint further alleges, that the said Common Council, on the 14th day of November, 1851, in due form of law, passed another ordinance, in the words and figures following, to wit:

      “ An ordinance amending an ordinance fixing the compensation of Captains of Police and Policemen, approved August 18th, 1851.
    “ The Mayor, Aldermen and Commonalty of the city of New York in Common Council convened, do ordain as follows:
    “ § 1. The third section of the ordinance prescribing the compensation of Captains and Assistant Captains of Police, Sergeants of Police and Policemen, approved August 18th, 1851, shall be amended by striking out the words 1 for each and every day’s service at the rate of,’ so that said section when thus amended shall read as follows:
    “ § 2. The compensation of Sergeants of Police and Policemen performing duty in their respective wards, shall be six hundred dollars per annum.
    “§ 3. This ordinance shall take effect immediately.”
    And the plaintiff further says, that the said Common Council on the 15th day of September, 1853, in due form of law, enacted as follows:
    “ Resolved, That the pay of the detailed policemen be and is hereby fixed at the same rate as all other policemen, viz., six hundred dollars per annum, to take effect from the first day of January, 1853.”
    “And the plaintiff further says, that during the aforesaid period, to wit, from on or before the first day of September, 1851, until on or before the first day of January, 1853, he received for his said services as such detailed policeman, and as a policeman in his said ward, only at and after the rate of five hundred dollars per annum; whereas, the amount actually due to the plaintiff for his aforesaid services, under the ordinances aforesaid, above what he so received, is one hundred and thirty-three dollars and thirty-three cents, besides interest thereon; which amount has been duly demanded from the aforesaid defendants, and the payment thereof unjustly refused.
    “ Wherefore the plaintiff demands judgment against the said defendants for the said sum of one hundred and thirty-three dollars and thirty-three cents, with interest from the first day of January, 1853.”
    The defendants, in their answer to the complaint,

      I. “ Deny each and every of the allegations of said complaint, except such as, and so far as the same are hereinafter admitted to be true.”
    II. “ They admit that the said plaintiff was, from on or about the first day of September, 1851, to on or about the first day of January, 1853, a policeman of the city of New York, duly appointed in and for the Sixth Ward in said city, and that during said period, he was detailed by the Mayor of said city, to attend as such at the Court of Sessions in the Sixth Ward in the said city, and that he was, during said period, entitled to the compensation or salary, provided by the ordinance of the 18th of August, •1851, in said complaint set forth, to be paid to policemen detailed by the Mayor, or Chief of Police, for the performance of any special duty.”
    HI. “ They admit the passage of the act of the Legislature of the State of New York, and the ordinances and resolution of the Common Council of the city of New York, in the complaint set forth.”
    IV. “For a further answer to this action, they say, that they have paid the plaintiff in full for the services hereinbefore admitted to have been rendered them by him, and for every other service ever rendered them by the plaintiff,” &c., &c.
    No questions arose upon, or are affected by any portions of the answer not above set forth.
    The entire testimony given, and all the proceedings had at the trial, are as follows, viz :
    Adolphus Mincho, the plaintiff, being duly sworn as a witness on his own behalf, testified as follows: “I was a policeman of the city of New York of the Sixth Ward from the first day of September, 1851, to January first, 1853, during all which tinte I performed the duty of a policeman in said ward; during all that time I was detailed and performed the duties of a detailed policeman at the Court of Sessions in said ward; I also did patrol duty in said ward for a part of every Sunday during that period, and made arrests in said ward and out of said ward, and I was sometimes called out when there was a fire; I was paid during, that period at the rate of only five hundred dollars per annum.
    Being cross-examined, the witness testified: I was detailed a year or two or more before the first day of September, 1851, I was not a member of any patrol or post squad; I appeared at the station house at muster call on Sundays in the morning; I did patrol duty during said period parts of every Sunday, also at new years’ and at riots; I cannot tell how often I was called out at riots or fires; on Sunday I was not required at the Court of Sessions; I was paid, and signed a pay roll during that time semi-monthly; I never made a demand at the time of any payment to me, or at any other time for more salary than at the rate of five hundred dollars a year; I cannot say how often, nor on what particular nights I did such night duty.”
    On his re-direct examination, the witness further states l
    “ During that time, I did some night duty; I was always called out at riots, fires and holidays.
    Spencer H. Stafford, being sworn as a witness on the part of the plaintiff, testified, that the plaintiff’s claim, from September 1,1851 to January 1,1853, is $133.33, the interest thereon from January 1, 1853, $54.83, amounting to $188-.1&.
    The plaintiff here rested his case.
    The defendants by their counsel moved to dismiss the complaint on the following ground. First—“That the plaintiff had not shown facts sufficient to constitute a cause of action against the defendants, whereupon the Court granted said motion to dismiss the complaint, to which decision the said plaintiff by his counsel then and there excepted. It was thereupon ordered by the Court that the questions of law arising on the said trial be heard in the first instance at General Term, and that the entry of judgment be suspended until the decision of the General Term.” -

      Henry L. Clinton for the plaintiff.

      Richard Busteed for the defendants.
   By the Court—Hoffman, J.

The plaintiff alleges that he was, from the 1st September, 1851, to the 1st of January, 1853, a policeman of the city of New York, duly appointed in and for the Sixth Ward in said city, and entitled to the exercise of such office of policeman. During the whole of such period he was detailed by the Mayor to attend as such policeman, and perform the duties of such policeman, at the Court of Sessions in his said ward, and at divers other places in the said city; and that he did so attend and perform the duties of such detailed policeman.

Under powers conferred by the act of the Legislature of April 10, 1850, the Common Council, by an ordinance of the 18th of August, 1851, declared, in the third section, that the compensation of sergeants of police, and policemen performing post or patrol duty in their respective wards, shall be, for each and every day’s service, at the rate of $600 per annum.

And by the 4th section, that the salary of policemen detailed by the Mayor or Chief of Police, for the performance of any special duty, is fixed at the sum of $500 per annum.

Under this ordinance the plaintiff received his appointment.

On the 14th of November, 1851, the Common Council amended the third section so that, as thus amended, it read as follows: “ The compensation of sergeants of police and policemen performing duty in their respective wards, shall be six hundred dollars per annum.” The fourth section was left unchanged.

On the 15th September, 1853, an ordinance was passed, that the pay of the detailed policemen be fixed at the same rate as all other policemen, viz.: $600 per annum, to take effect from the 1st of January, 1853.

When this ordinance went into effect, the period of service of the plaintiff had ceased.

The plaintiff, on his examination as a witness, states that he did duty as a detailed policeman, and also did patrol duty part of every Sunday in his ward, and was sometimes called out when there was a fire; that he was not a member of any patrol or post squad.

The plaintiff claims the difference between $500 and $600, for the whole period of his service, being, with interest, $188.16.

Mr. Justice Bosworth granted a motion to dismiss the complaint. An exception was taken; the exceptions to be heard in the first instance at General Term, and judgment suspended.

It is, rare that so plain a case is presented to the Court. The Common Council discriminate between classes of policemen, and ■appoint different salaries for each class. This discrimination lasts while the plaintiff serves; and he was appointed m the class which received $500 salary. If he did other duty he volunteered it, without a shadow of contract, express or legally to be implied, that he should be paid; without a pretense even that the Common Council knew of the services, much less directly, or through any authorized agent, engaged him to render them.

The order dismissing the complaint should be affirmed, and judgment ordered for the defendants, dismissing such complaint, with costs.

Judgment accordingly.

       The third, section of the ordinance of the 18th of August, 1851, fixed the compensation of policemen “performing post or patrol duty,” and the fourth section that of “detailed” policemen. The compensation prescribed for “detailed” policemen was $500 per annum; that prescribed for policemen “performing post or patrol duty” was not $600 per annum at all events, but was at that rate “ for each and every day’s service.”
      The ordinance of the 14th of November, 1851, by its terms, professed to operate upon the third section, and on that only. It amended that section so that by it, as thus amended, the compensation prescribed for policemen performing duty in their respective wards should be $600 per annum, generally and absolutely, and not at that rate “ for each and every day’s service.” The ordinance of the 14th of November, 1851, does not, in terms or by any just construction, affect the fourth section of the ordinance of the 18th of August, 3851.
      The very terms of the amending ordinance show that the whole object and purpose of amending was to eliminate from the third section the words “for each and every day’s service at the rate of”
      That such was the whole purpose of the amendment, and that it was so understood by the policemen and the defendants is shown, not only by the fact that the detailed policemen were subsequentlypaid and received $500 per annum, as being the whole compensation to which they were entitled, but also by the ordinance of the 15th of September, 1853, by which “the pay of the detailed policemen” was “ fixed at the same rate as all other policemen, viz.: §600 per annum, to take effect from the first day of January, 1853.”
      The idea that a policeman, though a “ detailed policeman” was entitled to §600 per annum, provided he performed such duty in his own ward; and was entitled to but $500 per annum if he performed such duty in another ward, can find no support from the ordinance of August 18, 1851, as amended by that of the 14th of Hovember, 1851.
      There is nothing in the evidence given at the trial to justify the presumption or inference that any of the services which the plaintiff performed while a policeman, and as a policeman were services which it was not his duty as a “ detailed policeman” to perform. They seem to have been performed as services which, according to the regulations of the police department, a “ detailed policeman” was expected and required to render, as a matter of course. The evidence given is in perfect harmony with this view of his duties. In this view, the plaintiff has been paid the full compensation to which he was entitled. The ordinance of the 15th of September, 1853, cannot aid his claim to extra compensation, as he ceased to be a policeman before the time arrived from which that ordinance was to take effect.—Sep.


text:
    James McNulty v. The Mayor, &c.
   This action involved the same question, and was decided in the same manner, at the same time, and by the same justices, as the foregoing case of Mincho v. The Mayor, &c.


author: By the Court—Pierrepont, J.

text:
    Dudley Smith v. Symmes Gardner, Survivor, &c.
    1. The makers of a promissory note, which, in terms, is payable to their own order, and is by them indorsed, thereby contract with whomsoever may be the legal indorsee when it becomes payable, to pay it to him.
    2. Such a note, though made in and by a resident of Massachusetts, and delivered by the maker to a resident of the same State, can be collected of the maker by an indorsee of it residing in Hew Hampshire, notwithstanding the subsequent discharge of the maker by the insolvent laws of Massachusetts; such indorsee having taken it for value before its maturity, and not having been a party to such insolvent proceedings.
    (Before Hoffman, Pierrepont and Moncrief, J. J.)
    Heard, December 4th;
    decided, December 31st, 1858.
    This is a motion by the plaintiff for judgment on a verdict in Ms favor taken subject to the opinion of the Court. The case presenting only questions of law, they were ordered, at the trial, to be heard hr the first instance at the General Term. The action was tried before Mr. Justice Slosson and a jury, on the 23d of April, 1857. It was brought by the plaintiff (Dudley Smith), a resident of the State of New Hampshire, to recover of the defendant, Symmes Gardner, survivor, &c., the amount of a promissory note for $1,466.20, dated 13th September, 1851, made by the firm of Gardner & Bartlett, (of whom defendant is the survivor,) payable six months after date, to their own order, and by them indorsed.
    The defendant claims the benefit of a discharge alleged to have been obtained by him under the insolvent laws of Massachusetts, on the 19th May, 1853, whereby he insists he was discharged from liability on the note.
    The material facts, as proved at the trial, are as follows:
    On or about 13th of September, 1851, the firm of Smith & Lou-gee, (composed of Frederick Smith, Jr., and Charles F. Lougee,) at Boston, in Massachusetts, where they were doing business, sold to Gardner & Bartlett, of the same place, merchandise, and received therefor the note in suit.
    Smith & Lougee sold said note before its maturity, to Frederick Smith, Sr., (an uncle of Frederick Smith, Jr.,) who received it on account of a large debt due him by Smith & Lougee.
    On or about 15th of October, 1851, the plaintiff (Dudley Smith), who, for twenty years, has resided, and still resides, in New Hampshire, at Gilford, in that State, purchased this note from Frederick Smith, Sr., and gave him therefor a note of Frederick Smith, Sr., for $814.46, dated 18th December, 1848, payable on demand, with interest, and a receipt to account to him for the balance of this note when collected, after deducting charges and expenses of collection; Frederick Smith, at the same time, guaranteeing the note.
    The record of the proceedings in insolvency, the admission of which was objected to, as not being proved by sufficient or competent testimony, purported to show, that the'original warrant in the insolvency proceedings of Gardner and Bartlett was issued on the 5th of November, 1852, and that such proceedings were thereupon had; that on the 19th of May, 1853, the commissioner granted to Gardner and Bartlett a discharge, which is set forth in the case.
    The discharge was granted under a statute of the State of Massachusetts, passed on the 23d of April, 1838, and the statutes or “ acts in addition thereto,” and in terms declares “that by force of the acts aforesaid, the said Symmes Gardner is absolutely and wholly discharged from all his joint and separate debts which have been or shall be proved against his joint or separate estate assigned as aforesaid, and from all his joint and separate debts which are provable under the said acts, and which are founded on any contract made by him within this Commonwealth or to be performed within the same, and made since the passing .of the first named act aforesaid, and from all debts which are provable as aforesaid, and which are founded on any contract made by him since the passing of said first named act, and due to any persons who were resident within this Commonwealth on the 6th day of November last, being the day of the first publication of the notice of the warrant issued for the seizure of the estate of the said Symmes Gardner, and from all demands against him for or on account of any goods or chattels wrongfully obtained, taken or withheld by him according to the form of the act aforesaid.”
    The exceptions taken to the sufficiency and competency of the evidence given to prove the proceedings in insolvency, are not stated, as the Court was of opinion that the discharge, though proved by unexceptionable evidence, was not a bar to the present action.
    The Judge directed a verdict in favor of the plaintiff for $1,915.10, subject to the opinion of the Court, and directed the questions of law arising in the case, to be first heard at the General Term. A verdict was given accordingly, and the plaintiff now moves for judgment on the verdict.

      B. W. Bonney & Alfred Roe, for the plaintiff.
    .Even if it be admitted that the discharge of the defendant was duly granted and duly proved at the trial, the plaintiff is still entitled to recover: He was never a resident of the State of Massachusetts ; and, being a non-resident creditor, his claim is not affected by this discharge. (Laws of Mass., 1838, ch. 163, § 7; Baker v. Wheaton, 5 Mass. R., 509; Watson v. Bourne, 10 id., 337; Braynard v. Marshall, 8 Pick. R., 194; Betts v. Bagley, 12, id., 572; Agnew v. Platt, 15 id., 417; Savoye v. Marsh, 10 Met. R., 594; Fiske v. Foster, 10 id., 597 ; Ilsley v. Merriam, 7 Cush. R., 242; Towne v. Smith, 1 Woodb. and Minot, 115; Donnelly v. Corbett, 3 Seld., 500; Gardner v. Oliver Lee's Bank,
      11 Barb., 558.) The plaintiff is, therefore-, entitled to judgment for the amount due on the note, as stated in the case, with interest from the time of the trial, and costs.

      John E. Parsons for the defendant.
    1. All contracts not expressly providing that they are to be performed elsewhere, are deemed to be contracts of the place where they are made.
    This note, for example, made in Boston, and payable generally, was payable in Boston.
    Its obligation, effect, and construction, therefore, are governed, and are to be determined by the Laws of the State of Massachusetts, where it was made and was to be paid. (Story’s Conf. of Laws, §§ 242, 261, 263, 266, 278a, 280, 314; 2 Kent’s Com., 459; Note to Andrews v. Herriot, 4 Cowen, 511, stating all the authorities. Vide all the cases cited below.)
    2. It follows as a part of the same rule, that a discharge which is valid by the laws of the place where the note is made, and is to be paid, is valid everywhere. (Story’s Conf. of Laws, §§ 331, 333, 335, 340, 346; 2 Kent’s Com., 459; Potter v. Brown, 5 East. R., 124; Blanchard v. Russell, 13 Mass. R., 4.)
    3. That this is so where the parties to the contract are all subject to the jurisdiction of the same State, and where the law is made by an authority common to the debtor and creditor, is abundantly demonstrated by the following authorities. (Smith v. Smith, 2 Johns. R., 240; Mather v. Bush, 16 Johns., 233; Van Hook v. Whitlock, 26 Wend., 53; Baker v. Wheaton, 5 Mass., 509.)
    4. That the residence of the parties to the contract does not vary the effect of the discharge, but that a discharge in proceedings conformed to the laws of the State where the contract was made, and is to' be performed, (the contract having been originally made between citizens of that State,) absolutely discharges all liability upon the contract, is now established to be the true rule in respect to the effect of a discharge in insolvency. Parties contract with reference to the law of the place where the contract is made; the creditor looks to the remedies which that law provides, and every assignee of a contract takes with notice of every defense to it, given as matter of course by the laws of the place where the contract was made. The true rule is that the obligation of a contract may be discharged by the same law which gave it force. (Story’s Conf. of Laws, § 340; 2 Kent’s Com.; Potter v. Brown, 5 East. R. 123, 130; Hicks v. Brown, 12 Johns., 142; Sherrill v. Hopkins, 1 Cowen, 103, 107; Blanchard v. Russell, 13 Mass. R., 1; Reviewing all the earlier cases; Ory v. Winter, 16 Martin’s (Lou.) R., 277; Stevens v. Morris, 10 N. H., 466; Hall v. Boardman, 14 N. H., 38; Brigham v. Henderson, 1 Cushing, 430.) He also cited, and commented on, (McMillan v. McNeill, 4 Wheat., 209; Sturges v. Crowningshield, id., 122; Cook v. Moffat, 5 How., 295; Ogden v. Saunders, 12 Wheat., 213; Donnelly v. Corbett, 3 Seld., 500,) and insisted that the discharge terminated all liability of the defendant, as maker of the note in suit.
   By the Court—Pierrepont, J.

The questions for consideration are: First, whether the defendant has shown a discharge under the insolvent laws of Massachusetts, by competent evidence ?

And second, whether such discharge, if proved, is a bar to this action ?

We have very grave doubts whether any discharge has been shown by legal proofs. But conceding the discharge to have been established, as claimed by the defendant, we think such discharge no bar to this action. The note was negotiable; and payable at no particular place. It was drawn to the makers’ order; by them indorsed in blank and put into the market, in payment for goods. It passed to the plaintiff, (a resident of Hew Hampshire,) before due, in the regular course of business, and for value. It was not a contract to be performed at any particular place. It was a contract to pay the holder, wherever such holder might reside, at its maturity. If the maker, after default in payment, had been found in Hew Hampshire, he could have been sued there. He was found in Hew York and is sued here. (Braynard v. Marshall, 8 Pick., 194; Savage v. Marsh, 10 Met., 594.)

He pleads a discharge from his debts under the insolvent laws of Massachusetts, to which discharge, or to any proceedings therewith connected, the plaintiff has never been a party. On the principle of comity between the States, our courts are asked to recognize this discharge as a good plea in bar to the action. I think it quite clear, from several decided cases, that if this suit were before the courts of Massachusetts, this discharge would not avail the defendant. (Dinsmore v. Bradley, 5 Gray, 487; Houghton v. Maynard, 5 id., 552; Savage v. Marsh, 10 Met., 594; Braynard v. Marshall, 8 Pick., 194.)

It would then be something more than comity, for our courts to give effect to a Massachusetts discharge, which the courts of that State would not.

Since the case of Donnelly v. Corbett, in which Judge Gardiner delivered the opinion of the Court of Appeals, (3 Seld., 500,) the question as to the effect of a discharge under an insolvent law of a sister State, has been considered settled in" New York. Corbett, a resident of South Carolina, purchased goods of Donnelly, a merchant of New'York, and gave his note for the price, payable eight months after date, at the Bank of South Carolina, in Charleston. The note was dishonored, and Donnelly recovered judgment in the State of South Carolina; a ca. sa. was issued upon the judgment, and Corbett was imprisoned. Subsequently he obtained a discharge from imprisonment, and from his debts, under the insolvent laws of South Carolina, which were passed in 1759, and perpetuated in 1783. Some two years after the discharge, Donnelly commenced suit upon the judgment, by attachment, issued out of the Supreme Court of this State. Corbett pleaded his discharge in bar. The Court held that the discharge was no bar to this action, although the place of the performance of the contract was in South Carolina, and although the law of that State, under which the discharge was granted, had been in force more than fifty years before the debt was contracted.

Judgment must be entered for the plaintiff, with costs.

Judgment accordingly.

        See Robinson’s Practice, Title “Effect of discharge under Insolvent or Bankrupt Law,” vol. 1, p. 89.


author: Moncrief, J. Hoffman, J.

text:
    Heroy, Struthers & Co., Plaintiffs and Respondents, v. Van Pelt & Smith, Defendants and Appellants.
    1. Where a firm has bought goods and is subsequently dissolved, and a new firm is formed composed of one of the former firm and of a third person, but under the same firm name; and subsequently a note in the firm’s name is given by the partner who was a member of both firms, to a vendor of goods to the old firm, and such note is not paid when due; the vendor may recover, in an action for goods sold and delivered, of the persons to whom they were sold; if it appear that when he took such note he had no knowledge or notice that it was not the note of the firm composed of the individuals to whom the goods were sold.
    2. “Was this note the note of the old firm or the new firm? ” is an improper question to be put to a witness on the trial of an action for the goods so sold.
    (Before Hoffman, Pierrepont and Moncrief, J. J.)
    Heard, December 15, 1858;
    decided, January 15, 1859.
    This is an appeal by the defendant, Smith, from an order denying a motion made by him on a case (containing exceptions) for a new trial. The action was tried before Mr. Justice Pierrepowt and a jury, on the 22d of June, 1858.
    The action was brought by James H. Heroy, Joseph Struthers and David J. Mariner, as partners, under the firm name of Heroy, Struthers & Co., against Henry Van Pelt and Nicholas H. Smith, as partners, under the firm name of “ Van Pelt & Smith,” to recover for goods (consisting of glass) sold and delivered by the plaintiffs to the defendants, between the 16th and 31st of July, 1857, amounting to $635.

      Nicholas H. Smith alone answered the complaint, and set up as a defense that he and Van Pelt dissolved on the 15th of September, 1857; and that immediately thereafter, and on or about the 15th of September, 1857, Van Pelt formed a partnership with one James B. Smith, and continued business under the firm name of “Van Pelt & Smith;” and that the plaintiffs, on the 9th of October, 1857, took a note of the new firm, dated the 25th of September, 1857, for the amount of their claim, at four months, “ in full payment and satisfaction of the claim of the plaintiffs, upon the original firm of Van Pelt & Smith.”

      At the trial, Joseph Struthers, Nicholas E. Smith, Heroy, Van Pelt, and James H. Heroy, were examined as witnesses.
    It was proved that the plaintiffs took a note, on the 9th of October, 1857, dated the 25th of September, 1857, signed “Van Pelt & Smith,” for $635, at four months, and gave a receipt, reading thus:
    “New York,.Oct. 9,1857.
    “Received from Van Pelt & Smith their note, dated Sept. 25, ’57, four months, for six hundred and thirty-five TyV dollars, in full for bill of glass to date.
    “ $635.00. Heroy, Struthers & Co.”
    The testimony of Struthers & Heroy tended to show that neither of them knew, or had reason to suspect, when the note was taken, that N. E. Smith had ceased to be one of the firm of “Van Pelt & Smith,” or that James B. Smith, had become a member of it. The testimony of N. E. Smith and of Van Pelt, on the other hand, tended to show that Heroy and Struthers both knew of the change in the firm of Van Pelt & Smith, and took the note with full knowledge of it.
    Henry Van Pelt, who was offered as a witness for the defendant, after testifying to the circumstances under which, as he represented, the note of the 25th of September, 1857, was given; the time when it was given; as to the dissolution of the firm of Van Pelt & Smith, and as to the formation of the new firm of that name; and as to the plaintiff’s knowledge of those facts when they took the note, was asked this question:
    Q. “Was this note the note of the old firm, or of the new firm ?”
    The plaintiffs objected to the question, the objection was sustained and the defendant excepted.
    When the evidence was closed, the defendant requested the Court to charge the jury, that the defendant was entitled to a verdict. The Court refused to so charge, and the defendant excepted.
    The Court “ charged the jury that if they believed from the evidence that neither of the plaintiffs knew or had notice that the note referred to was the note of the new firm when they took it, that then the plaintiffs were entitled to recover.”
    Ho exception was taken to the charge.
    The jury rendered a verdict for the plaintiffs for the amount claimed. The defendant made a case containing the evidence and the foregoing exceptions, and moved thereon at Special Term for a hew trial, which motion was denied, and from the order denying it, the defendant Smith, appealed to the General Term.
    The plaintiff’s in their complaint, alleged that such note had been given and taken; that it was given and taken as being the note of the old firm, and therein offered to surrender it at the trial, and on the trial the note was produced at the request of the defendant.

      William Stanley, for the appellant, (the defendant Smith.)

      W. W. Niles, for the respondents, (the plaintiffs.)
   Moncrief, J.

It is insisted that the Judge erred, at the trial, in refusing to allow the question:

“Was this note the note of the old firm or of the new firm?”

Some testimony had been given tending to show the circumstances under which the note was taken by the plaintiffs; whether it was the note of the old firm or of the new firm, and perhaps enough to show by which of the two firms it was in fact made. At all events, sufficient evidence had been adduced to make it proper to submit this question to the jury. The witness was asked, in effect, to state a fact which it was the province of the jury to determine, if the evidence can be regarded as conflicting. If it cannot be regarded as conflicting, then he was asked to state a conclusion of law.

The ruling of the Court was correct.

The fact that the note was made by the new firm was assumed by the Court in the charge to the jury.

The defendant also urged that the Court improperly refused to charge the jury, the evidence being closed, “ that the defendant was entitled to a verdict."

The issues made by the pleadings, presented the questions, whether the note delivered to the plaintiffs was known by them to be the note of the new firm, and whether it was taken by them in payment and satisfaction of the claim in suit. Much testimony had been introduced in reference to these questions, and the jury of right alone could determine them. The case was not of a character to be withdrawn from the consideration of the jury.

The Court properly submitted the whole case and its issues to the jury. The charge was “that if they believed, from the evidence, that neither of the plaintiffs knew or had notice that the note referred to was the note of the new firm when they took it, that then the plaintiffs were entitled to a verdict.”

No exceptions were taken to the charge of the Judge, nor was any request made to submit any matter or proposition to the jury. The defendant therefore cannot complain of the charge.

The jury found a verdict for the plaintiffs.

Upon a careful review of the whole case it cannot be said that the verdict is not well sustained by the evidence. The finding, clearly, is not against the weight of evidence.

The order denying a new trial should be affirmed, with costs.

Hoffman, J.

There was no exception to the charge. The acceptance of a note of the new firm for a debt of the old firm may, under certain circumstances, operate as a discharge; but if the creditor took a note of new parties dealing under the same firm name, from one of them who was his original debtor, and with the concurrence of the other member of the old firm no discharge of the obligation of the latter would be produced. The whole case turns upon the question whether the plaintiffs did not expect to get, and suppose they had got, the note of the old firm; and whether the present defendant, Smith, did not sanction, by his acts, this supposition. This question was fairly put to the jury, and they have answered it in the plaintiffs’ favor.

The question whether the note given, was the note of the old or of the new firm, was a complex question of fact and law, not to be put to a witness.

The order denying a new trial must be affirmed, with costs.

Pierrefont, J., concurred in the opinion that the order should be affirmed.

Order affirmed.


text:
    Lowell Holbrook v. Wm. S. Wilson and Francis Brown.
    1. Where, in an action by an indorsee against the makers of a note, the defense is that it was made and delivered to an Insurance Company, at its request, and without consideration, solely by reason of false representations made by the officers of the Company, that the Company fraudulently misappropriated it, and that the plaintiff took it with knowledge of such facts ; and it appears at the trial that the defendants made the note at the solicitation of Rich & Knowlton, who had subscribed §2,500 to “ a subscription of §400,000 in premium notes (to be given to such- Company) to be written against,” and “to be binding when §300,000 was subscribed”; to enable Rich & Knowlton to give such note to said Company in lieu of their o vvn note for that sum, in payment of a like amount of their said subscription, and that Rich and Knowlton, on soliciting and obtaining such note, stated to the defendants the terms of the §400,000 subscription, and that in procuring such note they were acting in their own behalf; evidence of the representations made by Rich and Knowlton, to the defendants, as to the condition of the Company, are inadmissible.
    2. To make them admissible, under such pleadings, it is necessary to show that Rich & Knowlton were then acting as agents of, or on behalf of said Company, -or that the latter took the note with notice of such representations-
    3. In such an action, the defendants must, at least, show that the condition, on which the subscriptions to the $400,000 subscription were to be binding, had not been complied with by a subscription of §300,000, assuming that such a defense would be equally open to them as to Rich & Knowlton, on a note given by the latter, in pursuance of their subscription.
    4. If a note be voluntarily given in payment of such a subscription before $300,000 is subscribed, and with knowledge of that fact; it cannot be set up as a defense to a suit on the note, that §300,000 was not in fact subscribed, when such note was made and delivered to the Company.
    5. The fact, that such Insurance Company, a few days after the defendants’ note was taken by it, sent to them a written receipt, (in terms like those sent to the actual subscribers,) which receipt stated that such Company had received from the defendants, the note in question “being their subscription to the Atlas Mutual Insurance Company, to be held and used by the Company for the purpose of paying the losses of the Company, or to be used in raising money to be applied to the payment of said losses. Five per cept to be paid by the Company on the payment of said note, according to the terms of the charter,” is of 'itself no defense to an action by the Company on such note; or by one to whom it has been transferred by order of the Company as security for the payment of money loaned on its credit to the Coinpanyl
    6. When there is no conflict of evidence, the question, whether the facts-' which it tends to establish constitute a- defense, it is for the Court to determine' and not the jury.
    7. The fact, that §37,000 in amount, of the $300,000 subscription, was subscribed by other insurance companies, does not tend to show a noncompliance with the condition on which the subscriptions to the §400,000 subscription were to be binding, it not appearing what the names of those companies are, and that they had not legal capacity to so subscribe.'
    8. The refusal of the judge, at the trial, to adjourn the'cause to a subsequent' day, to enable either party to obtain further testimony, cannot be made the subject of an exception.
    (Before Hoffman, Pierrepont and Moncrief, J. J.)
    Heard, November 10, 1858;
    decided, January 22, 1859,
    This case comes before the Court, on questions of law arising at the trial, and there directed to be heard in the first instance at the General Term. The action was tried on the 8th of April, 1858, before Mr. Justice Bqsworth and a jury, when a verdict was ordered in favor of the plaintiffs for the amount claimed. It' is brought by the plaintiff as indorsee of a note,-of which the de-' fendants are the makers.-
    The coinplaint (verified November 26th, 1856,) states' that-the defendants, as partners, composing' the firm of- Wilstiri & Brown, on or about the 8th of November, 1855, made their ribtfeof that date for $500, payable twelve months from its’date, tb'their own order, for value received, and indorsed it in blank, and delivered- it to the Atlas Mutual Insurance Company; that after-wards and before its maturity, the plaintiff became the lawfulholder of it for value, and still is; that it is past-due, arid wholly unpaid, and práys judgment for $500, with interest from No* vember 11th, 1855.
    The answer (verified December 26th, 1856,) first, denies that on or about the 8th of November, 1856, the defendants made or indorsed the note, or delivered it-to said Insurance Company, or that it was transferred to the plaintiff for value before its maturity, or any time, or that he-became or is the lawful holder of it."

      Second. It alleges as a separate and distinct defense, that on or about the 8th of January, 1856, the defendants executed such a note as that described in the complaint; that this was done at the request and solicitation of said Company, and the note, at the like request, was dated the 8th of November, 1855. That it was so made, and indorsed and delivered to said Company, “ upon an agreement with said Company, that said note should be held by it, and appropriated in payment of premiums upon insurance, which said Company agreed to make for these defendants, and for which policies were to be issued by said Company, and not be used or applied otherwise: that at the time said note was so made and delivered, the officers of the said Company stated and represented to the defendants that the said Company was in good condition and standing, and was perfectly solvent, and would be able to issue all the policies to which the defendants would be entitled by the payment of premiums to the amount of the said note, and to meet and pay all the liabilities they might thereby incur'; that it was entirely upon the faith of, and in full belief and confidence in the said representations, that these defendants made and delivered the said note, and they received no consideration whatever for the same.”
    That the Company was then utterly insolvent, without means to meet any of its engagements; that this was known to its officers when said representations were made; that said representations were false and fraudulent, and that solely by reason thereof the defendants were induced to deliver the note to said Company. That said Company, soon thereafter, and without having issued any policies to these defendants, suspended business, was declared -insolvent, and a receiver of all its effects was appointed. That if the note was ever transferred to the plaintiff, he took it with notice of all these facts.

      Third. It alleges as a further and distinct defense, that “ at or about the time of the'insolvency of the said Company, certain persons who were or had been trustees and officers of the said Company, in violation of law, and in fraud of the rights of the receiver of said Company, and with knowledge of the insolvency of said Company, took possession of certain notes given in advance payment of premiums to said Company, and among others the • said note of these defendants was transferred by said persons to the plaintiff. That the possession of said trustees and transfer to said plaintiff, was fraudulent and without considerationand the defendants aver that the said note is held, and this action prosecuted by the plaintiff, solely for the benefit and advantage of the said trustees.”
    At the trial, the plaintiff read the note in evidence and rested.
    William. S. Wilson, one of the defendants, testified, in substance, that the note, in suit, was signed by his partner Browm on the 8th of January, 1856, and was delivered to Mr. Hinclcley, an officer of the Company, at its office. “ When we first saw it it was all filled up, it was banded to me by Mr. Rich," of the firm of Rich & Knoiulton, “ a firm with which we had business connections."
    “Q. State whether any statements were made to you by any agent or officer of the Company as to the reason for ante-dating the note.
    A. “ When I handed the note in, I said to Mir. Hinckley I thought the notes were made too short; Mr. Rich had stated that it was ante-dated to correspond with other subscriptions; Mr. Hinckley, in answer to my remark to him, said it was made short to facilitate the operations of' the Company; the note was given to be used up in premiums and to be used by the Company, and in consideration of five per cent to be allowed to us as to other parties making subscriptions; there was no other consideration for it; no representations were made to us by any officer of the Company.”
    He further testified, that a “ few days after we gave the note ” a paper was sent to them from the office of said Insurance Company, which reads thus, viz.:
    “ Office of the Atlas Mutual Insurance Company,)
    New York, Dec. , 1855. f
    Received of -Messrs. Wilson & Brown their note for five hundred dollars at 12 months, from Nov. 8, 1855, in favor of themselves being their subscription to the Atlas Mutual Insurance Company, to be held and used by the Company for the purpose of paying the losses of the Company, or to be used in raising money to be applied to the payment of said losses. Five pel cent, to be paid by the Company on the payment of said note, according to the terms of the charter.
    Geo. H Tract, Secretary.”
    That not long after the delivery of this note to the Company, the defendants obtained a general policy from it, had four or five risks indorsed on the policy, in all about $200; soon thereafter we heard the Company was insolvent, “ and we canceled the risks and. re-insured j” we re-insured in February or March of that year. The defendants then offered to prove the representations made by Mch, relating to the Company, at the time he brought the note to them to be signed. The Court ruled, “that the witness could not state conversations between him and Rich, unless it were shown that Rich was acting in that matter in behalf of the Company ” and excluded the evidence, and the defendants excepted.
    Josiah Rich was then sworn, and testified that his partner, Knowlton, was a trustee of the Company; that his firm were original subscribers for stock to the amount of $5,000, which was increased to $10,000, which was put in two notes. Before they fell due the firm subscribed $1,000 to the $40,000 subscription. It was after that “proposed to raise, in subscriptions, $400,000 When, that was to be done, our firm subscribed for $2,500, with the understanding that we might procure other notes than our own to make it up. We got these two notes from Wilson & Brown and put them in under this understanding, that the Company would take them in place of our own notes for $1,000 of •our $2,500 subscription. I communicated to Wilson & Brown the terms of the $400,000 subscription, and the circumstances under which I asked them for their notes. (The defendant offered to prove by.this witness thé statements and representations made by Mr. Rich to the defendants, on procuring the notes.) (The Court ruled that the testimony was inadmissible, unless the defendants- should first show that the witness was acting in that matter, on behalf of the Company, and that it could not be admitted upon the evidence then before the Court. To which ruling the defendants excepted.)
    “ Q. When you went to Wilson & Brown to get them to sign these notes, for whom were you acting?

      “ A. When I saw Wilson & Brown before they gave the notes I was acting for myself and the firm of Rich and Knowlton, and so told them; I don’t remember precisely how long after this time the Company continued business; I was a trustee some time after transaction.”
    George H. Tracy was then called as a witness, and testified that he was Secretary of the Company, from May, 1852, to about February 12, 1856. He produced the book of minutes of the Company, the defendants read therefrom a resolution of the 8th of Hovember, 1855, as follows, viz.:
    “William Street, Hew York, Hov. 8, 1855.
    “ The trustees of the Atlas Mutual Insurance Company met pursuant to notice. On motion, it was resolved that a subscription of $400,000 in premium notes, to be written against, be obtained, subscription to be binding when $300,000 is subscribed, including the $40,000 already subscribed.”
    That according to his estimate, $300,000 of the $400,000 subscription was made up. When the Company got notes under it, receipts were given similar to those given to Wilson & Brown. The latter were not subscribers. “ Their notes were received on account of the subscription of Rich & Knowlton. The subscription which they signed was produced and marked  A,’ and is as follows:
    “We, the subscribers hereto, agree to give to the Atlas Mutual Insurance Company our notes, in advance of premiums of insurance at six and twelve months, for the sums set over opposite our names respectively, it being understood that in consideration thereof the subscribers are to be allowed, by the Company, at the maturity of their notes, five per cent on the amount thereof. This subscription is towards the $400,000 subscription authorized by a resolution of the Board of Trustees, of this date, and is not to be binding until the sum of $300,000 is subscribed.
    “ Hew York, Hovember 8, 1855.
    “Rich & Knowlton,......................... $2,500.”
    (This was also signed by various other persons and firms.)

      That the subscription of $40,000 was previously made, and was included in the computation made, to make up the $300,000. (It was produced and read, and marked “ B,” and is as follows:)
    “ We, the subscribers, hereby agree to give our notes for the amount opposite our names, at four months, in advance of premiums to the Atlas Mutual Insurance Company. Notes to be given when $40,000 is subscribed.
    “New Yokk, October 12,1855.”
    (It was signed by persons and firms, for amounts, footing up $40,000.)
    He further testified, that of the $800,000, other Insurance Companies subscribed $37,000. That the receipt given to Wilson & Browm was not given at its date. That no notes were received until after November 30, 1855. “Receipts of this character were given to some parties who were not subscribers. Wilson & Brown.” The receipts for the $40,000 were different, they were all written out. An injunction was served on the Company March 5, 1856. For a day or two before that, no policies had been issued. The Receiver commenced his duties about the 26th of March, 1856. The resolution of the 30th of October, 1855, was then read from the books of the Company, as follows:
    “ Tuesday, Oct. 30, 1855.
    At an adjourned meeting of the Trustees of the Atlas Mutual Insurance Company, held at office of E. B. Litchfield, the following'resolution was, on motion, adopted: That any arrangement made by the Finance Committee in paying or arranging for funds to pay the pressing liabilities of the Company, and to sustain the institution till other means can be provided, if tfyey shall make themselves liable or their friends personally liable, the same shall be considered and treated as confidential, in any event equal in all respects to the amount of $40,000 already subscribed by the friends of the Company for its relief.”
    Of the $40,000 subscription only $36,000 was actually paid. In November, 1855, Mr. Hinckley was President. Mr. Nelson, a partner of the plaintiff, succeeded him on the 29th of Decernber, 1855, and resigned on the 18th. of February, 1856. He did not take risks. Mr. Hinckley did, and so did the witness.
    Mr. Nelson attended-the meetings of the trustees, held December 29, 1855, and January 14th and 29th, and the 12th of February, 1856. None of the subscribers who subscribed to the $40,000 subscription were repaid out of the assets of the Company. “ The note of Wilson & Brown was delivered to Nelson & Sturges, as special Trustees, for the purpose of paying persons who had made loans to the Company. The trust deed was in writing; it was made under a resolution adopted January 29, amending one adopted January 14, 1856, and reading thus, viz.: “ The minutes of the last meeting being read, it was, on motion, resolved to amend by inserting the following resolution:
    “Resolved, That the officers of the Company be and are hereby authorized, to arrange with any parties in or out of the Board of Trustees, for the use of their names, either as makers or indorsers of such paper, as it will be necessary for the Company from time to time to have; and they may give any security and make such allowance as they shall think proper for the use of such paper.”
    He also testified, that the note in suit “ was delivered in pursuance of that resolution.” “ Rich and Knowlton paid $1,500 of their subscription.”
    The defendants then called the plaintiff as a witness, who testified that he bought the note from Mr. Sturges, and could not tell when he bought it .or how much he gave for it, without referring to his books; that he knew the note was one of those held by Mr. Sturges, under the trust deed and resolutions spoken of by Mr. Tracy.
    Thomas S. Nelson was next sworn as a witness for the defendants, and testified: “I was elected President of the Atlas Mutual Insurance Company on the 29th December, 1855; * * I so acted until the 14th of February, 1856; * * I acted as trustee, under the appointment of the Company; the trust was in writing; I have not got it-now with me; * * we were authorized to take advances of notes from parties, and take notes from the Company, and use them to secure those parties; Mr. Sturges was associated with me; * * this note was handed to us, with others, to secure us for the money we were raising for the Company; my partner, Mr. Holbrook, I presume knew * * that I was acting as special Trustee for those parties—twelve or fifteen—who had advanced money to the Company; the amount to be raised was about $50,000; a number of notes were collected; * * the money advanced to the Company was never repaid; some of it was collected from proceeds of these notes.”
    ‘■‘The defendants applied to the Court for an adjournment, for the purpose of bringing the trust deed spoken of by the witness into court. The motion was denied and they excepted.
    They then put in evidence the proceedings in the Supreme ■Court, by which a receiver was appointed to wind up the affairs of said Company, and rested. (Ko other witnesses were examined, and the foregoing is the substance of all the testimony given or offered at the trial.)
    “ The Court inquired of defendants’ counsel what questions of fact he desired to have submitted to the jury, and as to which there was, in his opinion, any conflict of evidence making such submission proper? to which he replied that he desired that the following questions should be submitted to the jury:
    “1. Whether the receipt given for the note in suit to the defendants, by the Insurance Company, places these defendants in a situation to take advantage of all the defenses that a subscriber to the $300,000 subscription could interpose ?
    “ 2. Whether the Company took the note with knowledge of circumstances impeaching its validity ?
    “3. Whether the plaintiff did not take it with knowledge of the circumstances under which it originated, and was delivered to the Company ?
    “ The defendants insisting that the Insurance Company was estopped to deny it was a subscription note under the $300,000 subscription, or that the defendants have not all the legal and equitable defenses of an actual subscriber. The Court stated that the evidence did not require the submission of these questions to the jury,” and thereupon directed a verdict for plaintiff.
    “ The defendants excepted to the ruling and decision of the Court, as last stated, and to every part thereof.
    “The jury, under the direction of the Court, found a verdict for the plaintiff for $546.60, being the amount of the note and interest.”

      The Court then ordered that the questions of law arising on the exceptions taken be first heard at the General Term, and that the entry of judgment be in the meantime suspended.
    The cause was submitted to the General Term without argument, on a case containing the exceptions, and on printed points. The points were as follows:

      Charles N. Emerson, for the defendants.
    I. The Court erred in instructing the jury that there was nothing for their consideration; that the facts proved did not constitute a defense.
    It should have been submitted to the jury, upon the evidence, whether the Company did or did not receive the note as a “ subscription note,” and whether the defendant did not give the note with the understanding that it was to be used and applied under the terms and stipulations of the receipt which was given to the defendants for it.
    II. The Company would have been estopped from saying that the note was not a subscription note, if the action had been in the name of the Company, or in the name of the Trustees of the Company.
    III. Had the case been submitted to the jury, all the legal and equitable defenses arising out of the illegal subscription of $300,-000, made under the resolution of November 8, 1855, would have been open to their consideration. But the Court, while admitting the defendants to offer the same defenses in this suit as would have been admissible in a suit upon the note by the Company, deprived the defendants of all benefit of this defense, by passing upon the questions of fact, independent of the jury.
    IY. The note in the hands of the Company or their Trustee was void, for non-compliance with the terms of the subscription upon which it was given, and, as the defendant claims, received by the Company through Mr. Rich. [Berry, receiver, v. Yates et al., N. Y. Times, April 25, 1857; Stewart v. Hamilton College, 2 Denio, 403; E. Anglian R. Co. v. Eastern Co. R. Co., 7 Law and Equity R., 505.
    Y. The note was given to the Company. Rich & Knowlton had made a subscription to the amount of $2,500. He, Rich, applied to defendants to assume $1,000 of that subscription, by
      their notes. It was not a loan of monej to Rich & Knowlton, but an assuming on the part of the defendants of a part of Rich & Knowlton’s liability under that subscription. And the same defense which Rich and Knowlton would have had, to a suit upon the note, was open to these defendants.
    VI. The plaintiff was a holder of the note, and received the same with full knowledge of all the legal and equitable defenses to its collection. He received it unlawfully, it being a diversion of the funds of the Company from the legitimate purpose to which they should have been applied, and also in fraud of the agreement under which the note was given, as contained in the receipt.
    VII. The Company and the plaintiff, as privy with the Company, are estopped by the receipt given for the note, to deny that it was a note suchas is. described in the receipt, “being a subscription note to the Atlas Mutual Insurance Company, to be used by the Company for the purpose of paying the losses of the Company, or to be used in raising money to be applied to the payment of said losses."

    The note was applied to an entirely different purpose. (Drury v. Fay, 14 Pick., 326; Chapman v. Searle, 3 id., 38; Tremble v. The State, 11 Blackf., 435; Love v. Kidwell, id., 553; Layoze v. Priman, 3 Miss., 529; Jackson v. Parkhurst, 9 Wend., 209; Rogers v. Haines, 3 Green, 362; Stewart v. Buller, 2 S. & R., 881.)
    A party is estopped from denying the truth of a recital, which goes to the substance of the contract or the consideration of the contract in question, upon the faith of which recital another party to the contract has acted, knowing at the same time that the other’s conduct was materially influenced by a reliance upon the truth and good faith of the recital. (Hicks v. Crane, 17 Vt., 449; Rangeley v. Spring, 8 Shep., 130.)
    VHI. On the 8th November, 1805, The Atlas Mutual Insurance Company-voted that a subscription of $400,000 be obtained in premium notes to be written against—the subscription to be binding when $300,000 is subscribed. The subscription was commenced, and these defendants, through Rich & Knowlton, on the same day, gave, the note in suit. It never became a valid note, from the non-compliance with the condition upon which it was given. $300,000 was not subscribed by persons entitled by law to subscribe, and the consideration of the note utterly failed. (See Testimony of Tracy; Berry, receiver, v. Yates, before cited, 24 Barb. S. C. R., 199.)
    The defendants submit that the direction of the Court, to the effect that there was nothing for the jury to pass upon, and that a verdict should be returned for the plaintiff, was erroneous, and that a new trial should be ordered.

      William Britton, for the plaintiff.
    FACTS.
    1. This action is upon a promissory note given by the defendants, in accordance with an agreement with Mr. Rich, acting for and on behalf of Rich & Knowlton.
    2. Rich & Knowlton induced defendants to make the note and deliver it to the Atlas Mutual Insurance Company, towards a subscription 'made by the said Rich & Knowlton, by which they agreed to give their notes, or substitutes to be procured by them in advance of premiums, and for other considerations.
    3. No representations were made by the Company to obtain the note.
    4. The Company gave a receipt for the note after delivery to them, expressing that the note was “to be held and used by the Company for the purpose of paying the losses of the Company, or to be used in raising money to be applied in payment of said losses,” and expressing its consideration, to wit, that defendants would be entitled to insure against it, and to an allowance of five per cent.
    5. Defendants did actually insure against it.
    6. The note was transferred by the Company to Nelson & Sturges, as collateral security to a loan made by them to the Company, not paid when this suit was brought.
    7. Nelson was a trustee of the Company, and acting President when the note was so. transferred.
    8. Plaintiff is partner of Nelson, and then was, and bought the note of Nelson & Sturges (the latter in person) for full value paid, with knowledge .of the circumstances under which they held it.

      POINTS.
    Ho error was committed at the trial, and judgment was properly ordered for plaintiff; for—
    I. The answer alleges (1) fraudulent representations on the part of the Atlas Mutual Insurance Company, by which they procured the note, and (2) a fraudulent misappropriation of the said note, with notice to the plaintiff.
    II. Under these issues, no error was committed in the exclusion of the representation of Rich. Rich was not acting for the Company, but for his own firm, and had no authority to, nor did he seek to bind the Company by any representations. He so stated expressly.
    IH. Ho error was committed in declining to submit to the jury the propositions requested at the conclusion of the trial to be submitted, for—
    1. There was no conflict of testimony in the case. Every witness examined was sworn on behalf of the defendants, and there was, for this reason, nothing for the jury to pass upon.
    2. The first proposition involved merely a question of law.
    The second assumes that there was evidence showing or tending to show circumstances impeaching the validity of the note in its inception, which there was not; and
    The third, if answered affirmatively, could not avail the defendants, the circumstances of its inception furnishing no defense.
    IY. Judgment for the plaintiff was properly directed; for—
    1. The note was given in accordance with an agreement made with Rich & Knowlton and for their benefit, and not for that of the Company, for Rich & Knowlton procured it to consummate an arrangement made between the Company and them, and not the defendants, and defendants gave it for a valuable consideration received by them.. (Brouwer v. Appleby, 1 Sandf. R., 158.)
    2. Defendants were therefore no parties to the agreement between Rich & Knowlton and the Company, and could not be affected by the conditions of such agreement.
    3. But if they were, there is no evidence even that the conditions of the agreement between Rich & Knowlton and the Company were not performed, or that Rich & Knowlton themselves would have had any defense if their note had been given by them, and defendants can be in no better position.

      4. The note was transferred to Kelson & Sturges by the Company, in exact accordance with the stipulation contained in the receipt given by the Company, to wit: “ to be used in raising money to be applied in payment of losses of the Company.”
    5. There is no evidence whatever of any fraud on the part of any one either in procuring or using the note.
    6. The plaintiff took the note, for value, from Kelson & Sturges, and in absence of fraud known to him, is entitled to recover.
    7. Judgment should be ordered for plaintiff in accordance with the verdict.

       The answer states that “ the officers of said Company" made certain false representations to the defendants to induce them to give the note; that they gave it, relying on the truth of those representations. The Judge excluded evidence of representations made by Rich to defendant, Wilson, “unless it were shown that Rich was acting in that matter in behalf of the Company and may have excluded it on the ground that no such defense, as was offered to be proved by Rich, had been set up in the answer. (Brazil v. Isham, 2 Kern., 9.) Wilson, before evidence of the representations made to him by Rich had been excluded, had testified “that no representations were made to us by any officer of the .Company," (Ante, p. 67.)—Rep.

   By the Court—Hoffman, J.

The defendant, Wilson, being examined as a witness, on behalf of the defendants, it was offered to prove certain representations made to him by one Rich, as to the affairs of the Atlas Insurance Company, when the defendants gave the note in question. The offer was ruled out, unless it was shown that- Rich was acting in that matter on behalf of the Company.

We think this ruling was correct. The plaintiff was making title througlithe Company. He could not be bound by declarations or statements, not made by them or their authorized agents.

The like remark applies to the next exception, to the rejection, by the Judge, of questions addressed to the witness Rich, himself, when he was produced as a witness to the same point. Rich is in no way connected with the Company so as to make his statements equivalent to their own.

To understand the exceptions as to the refusal to submit the specified questions to the jury, some facts should be noticed.

Rich & Knowlton were original subscribers to the stock of the Atlas Mutual Insurance Company. A proposition to increase the stock, having been made among the parties interested, Rich & Knowlton subscribed $2,500, with the understanding that they might procure other notes than their own to make it up. They got two notes from the defendants; one of which is that in suit. The Company agreed to take those notes in place of Rich & Knowlton’s notes for $1,000, part of the $2,500. The defendants knew of these circumstances. Receipts were given to the subscribers, similar to the one in evidence given to the defendants. By the agreement made upon the new subscription, (which was to be for $400,000,) no subscription was to be binding until the sum of $800,000 was subscribed. Testimony was, given as to this subscription being filled up to that amount. All the evidence'was produced by the defendants. The defendants contended that the subscription was not full; that their’s was a subscription note; that the condition had not been complied with; that the Company could not have collected the note; and, as the plaintiff took with knowledge, he was in no better position.

The defendants, then, must be taken to have made out, by their own uncontradicted and unquestioned evidence, the best case they were able to make; and the question, whether they have established a legal defense on that evidence, becomes a question of law. There was nothing of contradictory or discrepant testimony for the jury to weigh.

The effect of the receipt as tending to constitute a defense was of this nature: The inquiry, whether the Company took the note with knowledge of circumstances impeaching its validity, was not a question for the jury. A jury should be asked to pass upon the question of knowledge of particular facts; but whether, if known, they impeach the validity of a note, is for the Court to determine.

The third question was, in point of fact, answered in favor of the defendants, by the admission of the plaintiff and the other testimony.

None of the exceptions being tenable, the question arises upon the case, whether the judgment on the verdict ought to be for the plaintiff or the defendants. (Code, § 265.)

It has been decided in this Court that, where a note, given on a subscription like the present, had been transferred before maturity to a bank to be discounted, with other notes, for the general purposes of the Company holding it, the bank could recover, unless' chargeable with notice of an intended and actual misappropriation. (The Central Bank of Brooklyn v. Lang, 1 Bosw. R., 202.)

The Company, in the present case, knew that the note was given as part of Rich & Knowlton’s subscription, and the defendants were apprised of the nature and object of this arrangement. Nelson took the note, either as trustee for parties who had previously loaned money to the Company, or to use for the purpose of securing parties who should lend their notes as makers or indorsers, for the benefit of the Company.

I shall assume that Nelson stood in no better position than the Company; nor the plaintiff in a better one than Nelson. Then if the Company could not recover upon one of Rich & Knowlton’s notes, given for the remaining $1,500 of the subscription, the plaintiff cannot recover on the present note.

This brings us to the question: Have the defendants shown that the condition was not fulfilled ? They have given a promissory note; have failed to establish any fraudulent representations, which could defeat the Company’s claim upon it; and if they could avail themselves of an exemption arising from the failure of a condition upon which they alleged the note was given, they must make out that failure fully and explicitly. It is similar to the rule declared in The Bank of the United States v. Davis. (2 Hill, 459.)

The defendants have fallen short of doing this. The Secretary of the Company, called by themselves as a witness, states that $300,000 was made up, not including the amount marked in pencil on the subscription books. The previous subscription of $40,000 was included in this estimate. Why it should not be so does not appear. He adds, that of the amount of $300,000, the sum of $37,000 was subscribed by other Insurance Companies; but there is no evidence to show what Companies subscribed, nor that they were prohibited from subscribing, or could not lawfully do so. The witness says, also, that the $40,000 was not all paid in notes or cash; $36,000 only was. He included the $40,000 in his estimate; that it wras payable in four months; $36,000 was paid in notes.

This is the whole of the evidence; all supplied by the defendants themselves. They have not proved that the subscription was not filled up to $300,000, as required.

But again, if this were doubtful, there is another view of the case, which seems decisive against the defendants. Have not the parties waived the objection that the subscription was incomplete by giving their notes ? It may be that had they been sued for the subscription money, the defense would have availed them ; but the delivery of the notes was either a waiver of the condition or an admission that it had been complied with.

It is sworn to by Rich, that when he got the notes of the defendants, he informed them of the terms of the $400,000 subscription. The note was given and made on the 8th of January, 1856, though dated the 8th of November, 1855, and the receipt was given after the note, though dated in December, 1855. The terms of the resolution of November 8, 1855, were, that the subscription was to be binding when $300,000 was subscribed. There was nothing as to restoring notes or refunding cash if the subscription fell short; and 1 think that the giving of the notes, two months after the resolution, and with a knowledge of its terms, was an implied admission of the defendants being satisfied as to the filling up of the stock.

The plaintiff must have judgment upon the verdict.

Ordered accordingly.