text:
    SAMUEL SCHUYLER and Others, Appellants, v. THE PHŒNIX INSURANCE COMPANY OF BROOKLYN, NEW YORK, Respondent.

      Insurance company selling an insured and injured vessel — presumption of acceptance of abandonment, how dispi-oved.

    Where an underwriter proceeds to sell a vessel, even with an express protest against acceptance, and with a declaration that he does it for the benefit of the owners, his acts conclusively bind him as to his liability under the policy and his acceptance of the abandonment of the property insured; but this rule does not apply to a case Where, by the express terms of the policy, the insurance company is required to take possession, and where the policy provides: “ Nor shall the acts of the insurers or their agents in recovering, saving or disposing of the property hereby insured be considered a waiver or an acceptance of an abandonment, nor as affirming or denying any liability under this policy, but such acts shall be considered as done for the benefit) of all concerned without prejudice to the rights of either party.”
    Appeal by tlie plaintiffs from a judgment, entered in the Albany county clerk’s office on the 21st day of February, 1889, dismissing the plaintiffs’ complaint upon the merits, with costs to the defendant.

      Worthington Frothingham, for the appellants.
    Glinton, Glark & Ingram, for the respondent.
   Mayham, J.:

The plaintiff in his complaint seeks to recover on two causes of action set out and alleged therein. First upon a policy of insurance whereby defendant insured the plaintiff in the sum of $1,200, against such perils of navigation in the Erie canal and Hudson river upon a cargo of corn, as might arise between the 19th of November, 1887, and the conclusion of the voyage mentioned in such policy, which was being shipped on the canal-boat, IT. I). Taft, alleging a loss on said policy, and charging a liability upon the defendant therefor. The second cause of action charged, in substance, the policy as in the first count a loss, and a conversion of the cargo by the defendants. The answer contained substantially the following:

First. That the policy does not insure against damage by ice, and that the damage was done by ice.

Second. That the risk terminated under the policy upon the day of the official closing of the canal, which occurred on the day of the loss.

Third. That under the policy damage occasioned, by want of ordinary care and skill is excepted from the .risk, and that the loss was occasioned by want of ordinary care and skill.

Fourth. Justifies taking possession of the cargo under the terms of the policy.

Fifth. By denials, puts in issue the other allegations of the complaint.

The issue was tried by a referee, who by his report directed judgment dismissing the plaintiff’s complaint, and from the judgment entered upon that report the plaintiff appeals.

The judgment-roll and the exceptions appearing therein constitute the appeal book on this appeal, no case and exceptions having been made herein. This court on the appeal must, therefore, assume that the facts are correctly, found by the referee; and if the conclusions of law are supported by the facts found, then the judgment must be affirmed. (Gardiner et al. v. Schwab et al., 110 N. Y., 650; Tomlinson v. The Mayor, etc., 44 id., 601; Burrows v. Dickinson, 22 N. E. Rep., 569.)

The referee found' as facts that the plaintiffs were the owners of a cargo of 8,000 bushels of corn, shipped from Buffalo on the canal-boat H. D. Taft, on the Erie canal bound for Albany.

That on the 19th of November, 1887, the defendant, a duly incorporated insurance company, wrote its policy on such ’cargo, insuring the plaintiffs on said cargo “ in the sum of $4,200 against the adventures and perils of the seas, canals, rivers and fires, and all other perils, losses or misfortunes that should come or happen to the hurt, detriment or damage of the said cargo on the voyage or trip aforesaid, excepting perils, losses and misfortunes arising from or caused by ice, or from a want of ordinary care and skill (such as is common in said navigation) in lading or navigating said boat.”

The referee further found “that it was also provided, in and by said certificate and policy of insurance, that, in case of loss or misfortune, it should be the duty of the captain and crew of said boat, or those having command, to use the utmost diligence and attention to save the property until some agent of the defendant should arrive, and upon his arrival to assist him in the care and saving of the property ; and that neglect so to do should render said policy void; that there could be no abandonment of the subject insured, and that the acts of the insurers or their agents in recovering, saving or disposing of the property insured thereby should not be considered as a waiver or acceptance of an abandonment; or as affirming or denying any liability under said policy, but that such acts should be considered as done for the benefit of all concerned, without prejudice to the rights of either party.”

The referee also found that the policy “ did not cover any damage from ice; and that if the voyage should be suspended or interrupted in consequence of ice for three consecutive days or more the trip risk should cease and terminate at and from twelve o’clock at noon of the day the boat should be stopped by ice; and that in case the navigation of the canal should, during the trip, be closed officially while the boat should be on the canal, the risk under said policy should cease on the day the canal should be thus closed; that three days next succeeding such stoppage and closing should be allowed to discharge cargo, but that any resumption of the voyage during the same season, or the spring following, should not revive the risk nor restore the liability of the defendant under said policy.”

The referee also found “ that the defendant, in and by said policy and certificate, undertook and agreed to make good and satisfy unto the said insured all such loss or damage on said cargo so laden as aforesaid, not exceeding in amount the sum insured thereon, as should happen or arise from any of the aforesaid causes or casualties, not excepted as aforesaid, and to pay the same within sixty days after notice, and proof of the loss and’ interest therein should be made by the insured.”

The referee also found that the canal-boat, after the issuance of the policy, proceeded on its voyage with the cargo, and on the 1st day of December, 188T, reached Hoffman’s Ferry, ten miles from Schenectady, and left that point for Schenectady about 3 p. m. of that day, not leaking, with the cargo dry ; that just previous to that time the canal had been covered with ice from one and one-half (1&) to two (2) inches thick, which had, just before the starting of the boat from that point, been broken to the width of twenty (20) feet by the government ice breaker, which had proceeded through the canal from Schenectady to the ferry, and returned to Schenectady in advance of the canal-boat Taft.

The referee also found that the canal-boat was forced through the channel opened by the ice-breaker in which the broken ice floated, the edges of which channel was jagged and uneven, and was also forced through unbroken ice over one hundred (100) yards, immediately before arriving at the place where she finally stopped.

That the ice through which the boat was forced cut and gouged out portions of the outside planks, and made a hole or opening therein at about the water-line thereof, through which water from the canal leaked into the boat; that the leakage commenced before the boat reached her final stoppage, and continued to leak until about eleven o’clock in the evening of the first of December, when water had accumulated therein to the depth of about sixteen (16) inches.

The referee also finds that the water was taken from the canal where the boat lay and the breach repaired, but that the moistened corn commenced swelling, and by reason thereof the hull of said boat was burst, making a leak through which the water of the canal entered said boat, wetting all of the cargo except 1,239 bushels.

The referee further finds that, on the second day of December, the defendant’s agents and servants took possession of the boat and cargo and removed the 1,239 bushels of dry corn, which they delivered to the plaintiff, who accepted the same, and on the third day of December, late in the afternoon, the defendant sold the remaining 6,761 bushels of wet corn lying in the boat at thirty-two and one-half cents per bushel, which was the best price defendant could obtain for the same, and which amounted in the aggregate to $2,197.75.

The referee also finds that the defendant paid over to the plaintiff the amount realized on the sale of the damaged corn, less certain charges, claimed to be deducted as pro rata freight and expenses of saving and caring for the cargo.

The referee also found as a fact that whatever the defendant did in caring for, saving and selling the cargo was assumed by it to be done under and by virtue and in pursuance of the provisions of the policy and for the benefit of all concerned.

Upon these facts the referee found as conclusions of law:

That the defendant is not liable under said policy for the loss upon said cargo, caused by the wetting thereof as aforesaid.

“ That the taking possession of said cargo, or the sale thereof by the defendant, after it had been informed and notified that such loss had been caused by and was in consequence of ice does not estop the defendant from availing itself of the defense that such loss was caused by and in consequence of ice.

“ That the provisions contained in said policy, in the words following, to wit: * * * authorized and justified the sale of the wetted portion of said cargo by the defendant, as hereinbefore found, as the agent of the plaintiffs, and for the benefit of all concerned.

“ That the plaintiffs have failed to establish either of the causes of action alleged in the complaint herein.”

The plaintiff excepts to the findings of facts, but, as we have seen, there is no evidence before us, and we are forced to the conclusion that the evidence supports the findings of fact.

The case on this appeal must, therefore, be disposed of upon the plaintiff’s exceptions to the referee’s conclusions of law upon the facts found; and the exceptions of the plaintiff to the refusals to find his proposed conclusions of law upon these facts.

The plaintiff excepts to the conclusions of law found by the referee : That the defendant is not estopped from denying its liability under the policy by taking possession of the cargo after being informed and notified that such loss had been caused by ice.

As this policy expressly excepts the defendant from all liability from perils, loss and misfortunes arising from ice, and as the referee has found that the ice through which the canal-boat passed cut and gouged out portions of the outside planking and made a hole or opening through which the water from the canal leaked into the boat, thereby causing the injury to the cargo, the defendant would not, under the policy, be liable for such loss or injury, unless it did some act amounting to a waiver of that condition, or by its act in taking possession and selling the cargo, is estopped from denying its liability.

The plaintiff insists by taking possession of and selling the cargo, with the notice or knowledge that the damage was by ice, it waived that exception and became liable for all loss on the cargo.

The general rule seems to be that “ If he (the underwriter) should proceed to sell the vessel with an express protest against the acceptance and a declaration that he did it for the benefit of the owner, his act would conclusively bind him. (Peele v. Mer. Ins. Co., 3 Mason, 27; 2 Phillips on Ins., § 1693.) But this rule has not, in any case to which our attention has been called, gone so far as to hold the insurers liable where, by the express terms of the policy, they were required on authority to take possession as in this case. Here the policy provides: “ Nor shall the acts of the insurers or their agents, in recovering, saving or disposing of the property hereby insured, be considered a waiver or an acceptance of an abandonment, nor as affirming or denying any liability under this policy, but such acts shall be considered as done for the benefit of all concerned, without prejudice to the rights of either party.” It is, undoubtedly, the duty of the court to give effect to this provision in the policy.

If the contentions of the plaintiff were carried out to their legitimate sequences, it would put the insurers at their peril, if they undertook to interfere with the cargo, before the ultimate rights of the parties were determined; and if they assumed to take possession of the vessel, they would thus be acknowledging their liability; such a construction would effectually nullify this provision, in the policy.

We think the fair construction of this clause in the policy is to give the parties thereto the fullest opportunity to preserve the injured or imperiled property from further loss and destruction, without by that act fixing or settling the ultimate rights of the parties, leaving those rights to be adjusted after a full and fair examination into the circumstances of the loss.

Of course, it cannot be urged from this condition in the policy, that it makes the defendant perfectly lawless, and enables it wantonly or negligently to destroy the insured property, to the injury of the plaintiff. But the insurer may, under that clause, take possession of and dispose of, and, as in this case of perishable property, we think sell the same, and not thereby waive the right to insist, on a further examination, that it was not liable under the policy. The plaintiff relies in support of his contention on Carr v. Security Insurance Company (109 N. Y., 504). The policy in that case insured against “ actual total loss only.”

In that case the insurers took possession of a stranded vessel, which was still afloat, or it was possible to put her afloat, and contracted with a wrecking company to bring her to port, which the wrecking company did, and the underwriters refused to pay the salvage for which she was sold under a decree in admiralty.

It was held that by that act the insurers had made her an “ actual total loss,” and were liable on the policy. That case seems clearly distinguishable in principle from the one at bar.

It was manifest, in that case, that the vessel was not au “actual total loss,” on the contrary, it was afloat, but the insurers, by taking control of her and subjecting her to the expense of removal by the wrecking company, by which she was lost to the assured — as to him, she became, by the act of the defendant, a “ total loss,” and the company was held liable.

In Titus v. Glens Falls Insurance Company (81 N. Y., 419), the court lays down the rule that if the company, after knowledge of the forfeiture, by any negotiations, recognize the continued validity of the policy, or require the insured to do some act or incur some expense, the forfeiture is waived. But the facts found in this case do not show any such recognition of liability by the defendant. All it did, as appears from the findings, was to take care of and dispose of the property, as provided in the policy, “ for the benefit of ail concerned,” which was expressly declared in the policy not to be a waiver. A waiver cannot be inferred from silence. The company was not bound to do or say anything to make the forfeiture effectual.

It may wait until the claim is made under the policy and then allege the forfeiture in defense of a suit on the policy. (Titus v. Glens Falls Ins. Co , 81 N. Y., 419.)

It can hardly be maintained, I think, that by taking possession of the property for the benefit of all concerned, the defendant can be charged with importing into the contract a provision, in effect insuring against damage by ice, when the policy expressly exempts the insurers from liability resulting from that cause.

If there is any mistake or carelessness of the agent in holding this property, it is not available in an action to enforce this policy. ¥e see no principle in the doctrine of estoppel which made the defendant liable for damage by ice, which is, by the policy, expressly exempted from the risk, simply because it took possession and disposed of tliis cargo for the benefit of all concerned, under tlie language of tlie policy. (Sanders v. Cooper, 115 N. Y., 288.)

™ Nor do we think the defendant, under the findings and exceptions in this case, can be charged with a conversion- of this cargo, or a wrongful retention of the same, under the second cause of action set out in the plaintiff’s complaint.

The referee finds that it was provided in the policy of insurance that in case of loss or misfortune, it should be the duty of the captain and crew of the boat, or those having command, to use the utmost diligence and attentiou to save tlie property, until some agent of the defendant should arrive, and upon his arrival to assist him in the care and saving of the property, and that negligence so to do would render the policy void; that there could be no abandonment of the subject insured, and that the acts of the insurers or their agent in recovering, saving or disposing of the property insured thereby, should not be considered as a waiver or acceptance of an abandonment, or as affirming or denying any liability under said policy, but that such act should be considered as done for the benefit of all concerned, without prejudice to the rights of either party.

The referee finds that the plaintiff was present when the defendant took and disposed of the cargo, and made no objections, and that whatever the defendant did in caring for, saving and selling the cai’go, was assumed to be done by virtue, and in pursuance of the provisions of the policy and for the benefit of all concerned. It will be seen that the right and duty of the defendant to take and dispose of the cargo did not alone depend upon the defendant’s liability as insurers for the value of the cargo, but that right attached in case of loss or misfortune to the cargo.

Thus, while the ultimate rights and liabilities of the parties under the policy remained undetermined, the defendant was charged with the duty of recovering, saving and disposing of the property insured for the benefit of all concerned.

This clearly gave the defendant the right of possession, and, under the exercise of that right, he took possession of and delivered to the plaintiff the uninjured part of the cargo, which was accepted, the balance of the cargo, the referee finds, and we think properly, the defendant sold under and in pursuance of the authority given in the policy, of saving or disposing of the property, and that in doing that the defendant acted as the agent of the plaintiff.

We find no error committed by the learned referee in his conclusions of law from the facts found.

The judgment must, therefore, be affirmed, with costs.

Learned, P. J., and Landon, J., concurred.

Judgment affirmed, with costs.


source: Caselaw Access Project

author: Mayham, J.:

license: Public Domain

text:
    LEVI S. NOYES, Appellant, v. ABRAM V. MORRIS and Others, Respondents.

      Dismissal of the complaint in an equity case — the direction of the judge constitutes a sufficient finding of facts and conclusion of lato — the signing of the direction hy the clerh is sufficient — declaration of a vendor, not evidence.

    Where an equity case is tried before the court, no jury being hnpanneled for the purpose of passing upon the disputed facts, if, on the whole evidence, the judge determines that the plaintiff has failed to make out a case, his decision dismissing the complaint is such a finding of facts and determination of the law arising upon them, as, together with the signing of such decision by the clerk, to be a substantial compliance with the provisions of section 1022 of said Code.
    Declarations of the vendor, after the sale and delivery of possession of the property sold, are not, in the absence of proof of conspiracy, competent evidence against the vendee in an action in which the sale is attacked on the ground of fraud.
    Appeal by the plaintiff from a judgment entered, after a trial at the Montgomery Circuit before tlie court and a jury, on the 18tb day of November, 1889, in the office of the clerk of the county of Montgomery, at which trial the court directed that the plaintiff’s complaint be dismissed, with costs.

      E. E. Bullard, for the appellant.

      M. L. /Stover, for the respondents.
   Mayham, J.:

Appeal from a judgment entered upon the dismissal of the plaintiff’s complaint at the trial. The action was brought to set aside certain deeds of conveyance of real estate made by Adam W Kline and Bata A. Kline to Abram Morris, and by Morris to Robert Felthousen, also to set aside a general assignment by Bata Ann Kline to Julius Vasserman for the benefit of creditors. On the trial the plaintiff put in evidence a deed from Bata A. Kline and Adam V. Kline, her husband, to Abram Y. Morris, dated December 8, 1883, conveying the premises described in tlié complaint, reciting a consideration of $15,000, and subject to a mortgage of $2,500.

Plaintiff also read in evidence the record of a deed, dated December 8, 1883, from Bata A. Kline and Adam V. Kline her husband, to Thomas Biddle, conveying the factory property in Amsterdam, reciting a consideration of $40,000, subject to a mortgage of $25,000 to be deducted from consideration as expressed.

Plaintiff also puts in evidence an assignment for the benefit of creditors, executed by Bata Ann Kline to Julius Vasserman, dated December 10, 1883, which directed the assignee to pay the debts of the assignor in classes as therein specified. The plaintiff also put in evidence three judgments against the defendant Bata A. Kline in favor of John Consalus, one entered July 24,1883, for $2,762.26, on which an execution had been issued and returned unsatisfied January 24, 1884; also a judgment against B. A. Kline, entered January 5, 1887, on four notes dated, respectively, August 8, 1883, September 1, 1883, September 14, 1883, and October 25, 1883.

Plaintiff also put in evidence a judgment for $6,309.63, roll filed January 10, 1884, in favor of John Consalus against Bata A. Kline, being for the amount of four notes made by B. A. Kline, dated, respectively, September 8, 1883, September 11, 1883, September 20, 1883, and September 12, 1883.

The plaintiff also put in evidence an assignment, executed by John Consalus to this plaintiff of each of the above mentioned judgments, dated July 28, 1883.

The plaintiff also read in evidence a deed from A. Y. Morris to the defendant Felthousen, dated April 22, 1884, recorded May 17, 1886, conveying the premises described in the complaint, expressing a consideration of $15,530.

The plaintiff also put in evidence the testimony of Bata A. Kline, taken before a referee in proceedings supplementary to execution February 24, 1884. This evidence was objected to by the defendant, and received by the court against Mrs. Kline only. There was some evidence given by the plaintiff tending to show that the premises conveyed to Morris was worth at the time of the conveyance $22,000 to $23,000.

The plaintiff, upon this evidence, rested his case, the defendant’s counsel moved to dismiss the complaint upon the following grounds:

First. That there was no evidence of fraud on the part of any one in the transaction.

Second. That plaintiff had failed to prove any facts upon which fraud could be predicated.

Third. That plaintiff had failed to prove the cause of action set forth in the complaint.

Fourth. That there was not sufficient evidence on the question of fraud to authorize the submission of the question to the jury.

Fifth. That plaintiff had no right to maintain the action.

Sixth. That under the statute of 1858 this action could only be maintained by the assignee.

The court held that there was no evidence of fraud, and declined to rule that the onus was upon Feltliousen to show that he purchased in good faith, and that the fact that there was no change of possession throws the onus upon the grantee.

The court held that there was no evidence in the case to show that he did not purchase in good faith and declined to hold otherwise, and dismissed the complaint.

There was no request to submit the question of fraud to the jury, but the plaintiff requested the court to rule and decide that if Mrs. Kline intended to commit a fraud by giving the deed, the onus was upon Morris and Feltliousen to show that they bought in good faith.

So far as we can see, there was no evidence offered in the case that could sustain the allegation of fraud, if we exclude the testimony of Bata A. Kline taken before the referee on proceedings supplementary to execution.

That evidence was excluded except as against her, and was not before the court for consideration as against the grantees, and it is, therefore, insisted by the plaintiff that its exclusion was error.

The rule seems well settled that the acts or declarations of a grantor after the grant, in the absence of proof of a conspiracy between the grantor and grantee or assignee, are not competent as against the grantor or assignee in ¡jossession to invalidate the grant or assignment.

In Cuyler v. McCartney (40 N. Y., 226), the Court of Appeals, by "Woodruff, J., uses this language: “ I concur fully in the proposition that after the execution and delivery of an assignment for the benefit of creditors, and the entry of the trustees upon the performance of the trust, * * the assignor cannot, by his declaration or admissions out of óourt, invalidate the trust.” * * * “ On such, evidence the assignees may legally say, as to us, the allegation is wholly unproved.”

Declarations of a vendor after sale and delivery of possession are not competent evidence against a vendee in an action wherein the sale is attacked for fraud. (Burnham v. Brennan, 74 N. Y., 597; see, also, Jacobs v. Remsen, 36 id., 670.)

Declarations of parties at the time of a transaction are usually receivable as part of the res gestae. But declarations of one of the parties at another time, and in the absence of the other, are not admissible. (Ogden v. Peters, 15 Barb., 562.)

“All the cases agree that declarations made by the person under whom the party claims, after the declarant has parted with his rights, are utterly inadmissible' to affect any one claiming under him.” (3 Phil. Ev. [Cow. & Hill’s Notes], part 1, p. 276.)

This rule seems so universal as not to require further citations of authorities. It is elementary and founded upon most obvious reason and propriety. To this rule there is an exception when the grantor remains in possession; after the grant his declarations are sometimes competent to prove fraud. But before such declaration can be received for that purpose, it must appear distinctly that the declarant is an occupier at the time. (Pickett v. Pickett, 3 Dev., 6; 3 Phil. Ev. [Cow. & Hill’s Notes], part 1, p. 275.)

This is not in conflict with Loos et al. v. Wilkinson et al. (110 N. Y., 210). In this case plaintiff was permitted to prove declarations of the grantor while in possession, the possession being established beyond question, and that rule was sustained on appeal. But the court put their ruling expressly tipon the ground that at the time of the declaration the grantors were in possession and the deed was purposely kept from record.

In the case at bar no such facts are proved; the allegations in the complaint that the grantor retained the possession of the premises after conveyance are denied in the answer, and the plaintiff offered no evidence upon that subject, except that of witness Flansburgh, who says : They continued to occupy the same for several years, I think.” This evidence does not come up to the rule as laid down in Pickett v. Pickett (supra). Nor is it sufficient to bring the case within the rule stated in Loos et al. v. Wilkinson et al., above cited.

If the above conclusions are correct, then the evidence fails to establish fraud and the plaintiff could not legally recover. This bring us to the consideration of the remaining question raised in this action. Had the judge in this class of cases a right to dismiss the complaint summarily upon the trial, or should he have formulated findings of fact and conclusions of law upon which a decree could have been entered ?

The action was purely an equitable action, .and all the relief asked for was of an equitable nature or character; it was, therefore, an action triable by the court, and neither party was entitled to a trial by a jury, (MacNaughton v. Osgood et al., 114 N. Y., 577; Code of Civil Procedure, § 968.) The questions of fact arising upon the issue might have been directed by the court to be tried by a jury (Code, § 971), but no issues were framed and no question formulated for the jury; and even if the issues had been framed and heard by a jury, the court would have been called upon to pass upon, and might have adopted, rejected or modified their verdict. In such case the action would have to be brought to a hearing before the court; and the decision made in wilting in the same manner as if there had been no verdict of the jury on the issue.

But the practice has been settled that where an equity case is tried by the court, with a jury impanneledfor the purpose of passing upon such disputed facts as the court may submit to it, if on the whole evidence the judge determines that the plaintiff has failed to make a case, his decision dismissing the complaint is such a finding of facts and determination of the law arising upon them, and the signing by the clerk was a substantial compliance with the provisions of section 1022 of the Code of Civil Procedure.

In Rousseau v. Bleau (8 N. Y. Supp., 824) the court, Landon, J., in discussing this question uses this language : The signature of the clerk is the signature of the court. The judgment is equivalent to a finding of fact by the court that the testimony adduced by the plaintiff did not, taken in the aspect most favorable to him, establish the case alleged in his complaint. It is also a finding that the court did elect not to submit any question to the jury. The direction for judgment finds that on the merits the plaintiff is not entitled to recover.”

If the court had awarded affirmative relief, it would have been proper to have made out a decision setting forth the facts with conclusions. But the necessity for setting forth findings of inconsequent facts, and then formally finding, as a conclusion of law, that they are inconsequent, is not so obvious. We think that a judgment, signed by the clerk, in a case in which the result is a dismissal of the complaint upon the merits, a sufficient compliance with section 1022.

The case of MacNaughton v. Osgood does not hold otherwise. There is no difficulty in reviewing upon appeal such a case. It will be seen that the proceedings of the trial court upon this point was not irregular, and that a valid judgment might be entered upon the decision of the trial judge dismissing the complaint in an equity action.

The judgment must be affirmed, with costs.

Learned, P. J., and Landon, J., concurred.

Judgment affirmed, with costs.


text:
    EMILY B. BARTLETT, Appellant, v. T. ROMEYN BUNN, Respondent.

      Privileged communications to an attorney — token made with intent that they be communicated to another they cease to be privileged.

    In an action to recover for mcmey liad and received it appeared that the defendant had applied the money to the payment of taxes upon land of which the plaintiff, the defendant and others, were tenants in common, and to prove his authority to do so he called one Stevens, an attorney-at-law, who was employed by the plaintiff in the business of the settlement and management of this joint estate, and asked him whether the plaintiff had directed him (Stevens) to tell the defendant to pay the taxes in question.
    This was objected to by the defendant on the ground that it was a privileged communication.

      Held,, that as the communication was made for the purpose of being communicated to another it necessarily lost its privileged character; and as it was designed by the author for that purpose, she had expressly waived her right to object thereto as she would otherwise have been authorized to do by section 886 of the Code of Civil Procedure.
    Appeal by the plaintiff Emily B. Bartlett from a judgment and order entered, on the 21st day of October, 1889, in the office of the clerk of Montgomery county, after a trial in the Montgomery County Court on, appeal by T. Romeyn Bunn, the defendant, from a judgment rendered on the 6th day of May, 1889, by a justice of the peace of the city of Amsterdam, in said county, for twenty-three dollars and fifty-seven cents damages and costs in favor of the plaintiff, which judgment of the justice of the peace was reversed by the County Court, with costs.

      JE. J. Maxwell, for the appellant.

      G. S. Nisbet, for the respondent.
   Mayham, J.:

The action was for money had and received by defendant for the plaintiff. The answer was a denial, and a further allegation that all the money received by defendant for plaintiff was paid out by defendant, at plaintiff’s request, on his liabilities.

On the trial the plaintiff introduced evidence tending to show that the defendant had harvested and sold hay from lands of which the plaintiff, defendant and others were tenants in common, and that all the proceeds of the hay the defendant had paid out in taxes on the common property and insurance on the ha)', except sixteen cents. The plaintiff contested the defendant’s authority to pay the tax, on the ground that she had not authorized such payment.

To prove authority in fact from plaintiff to defendant, the defendant called one L. A. Stevens, who, as an attorney-at-law, was doing some of plaintiff’s business in the settlement and management of this joint estate. The defendant then asked the witness, in various forms, if plaintiff had directed him to tell defendant to jiay the taxes out of the proceeds of this hay. This was objected to by the plaintiffs, on the ground that it was privileged, and the objection was sustained and the answer excluded.

The justice rendered judgment in favor of the plaintiff and against the defendant for eighteen dollars and fifty-seven cents, and costs. The County Court reversed that judgment, and from the judgment entered upon such reversal the plaintiff appeals to this court. .

Whether the defendant Avas authorized to pay the taxes on this common property out of the share of the proceeds of the hay belonging to the plaintiff was a material question in this cáse; and as the testimony offered bore directly upon that point, if competent, its exclusion was error, for which the County Court properly reversed the judgment of the justice.

The rule at common law Avas well settled that confidential communications made to an attorney by a client relating to a matter in which he was employed, or acting as an attorney, was privileged and could not be given in evidence. The substance of this rule was that all communications made by a client to his counsel for the purpose of professional advice or assistance are privileged, whether they relate to a suit pending or contemplated, or to any other matter proper for such advice and aid (Williams v. Fitch, 18 N. Y., 551); and whenever the communication made relates to a matter so connected with the employment as to afford presumption that it was the ground of the address by the client, then it is privileged from disclosure (Britton v. Lorenz, 45 id., 51; Bacon v. Frisbie, 80 id., 394); so a conversation heard by an attorney between his client and another relating to the business in which the attorney is engaged for his client is privileged. {Root v. Wright, 84 N. Y., Y2.) And the substance of this rule is enacted in section 836 of the Code of Civil Procedure as follows: “ An attorney or corinselor-at-law shall not be allowed to disclose a communication made by his client to him, or his advice given thereon, in the course of his professional employment.” But this prohibition may be waived by the client, and when the communication is made for the purpose of its publication or communication to another it necessarily loses its privileged character, and section 836 of the Code provides expressly for such waiver.

It follows, therefore, that when from the very nature of the communication it was designed by the author for another, and to be communicated to such other, it loses its character as privileged.

In the Matter of the Will of Colman (111 N. Y., 220), where the attorney who drew a will was requested by the testator to subscribe it as a -witness, it was held to be a waiver of the privilege, for the reason that by the very nature of the communication made by the testator, he had made it the duty of the attorney to disclose the communication made to him on the probate of the will.

In the ease at bar the question ¡Dropounded, the answer to which was excluded by the justice, related to a communication required by the plaintiff to be made public, at least to be communicated to the defendant, and if we should assume that the witness was the attorney for the plaintiff in this matter (which, by the evidence, is by no means certain), still it is quite clear that whatever obligation to secrecy might be imposed by that relation, it was expressly waived when the communication was directed to be made to the defendant.

The learned county judge was right in reversing the judgment for the rejection of this offered evidence, and the judgment of the County Court must, for that reason, be affirmed, with costs.

Learned, P. J., and Landon, J., concurred.

Judgment of County Court affirmed, with costs.


author: jVEayham, J.:

text:
    JAMES M. MARVIN, Respondent, v. BYRON J. TOWN, Receiver of Taxes and Assessments for the Town and Village of Saratoga Springs, and the VILLAGE OF SARATOGA SPRINGS, Appellants.

      Assessment —insufficient designation of land — not sustained as a personal assessment■ — failure to object on grievance day, not a waiver — jurisdiction, how acquired ■ — presumption of regularity creates a cloud on the title.

    Under tlie provisions oí the charter of the village of Saratoga Springs, which provide that the cost of constructing sewers shall be assessed by the board of trustees upon the property adjoining, and along the line of the same, etc., an assessment for the construction of a sewer was laid in the form of a warrant directing the tax receiver to levy and collect from the several persons, firms and corporations named in the list of assessments, the amounts set opposite their respective names:
    NAMES. Marvin, James M . Street. Benefits. Church. .$160 00

      Held, that the vague and indefinite language used by the trustees in making this assessment could not be so construed as to make it a charge upon any specific piece of land.
    That the assessment could not be sustained as a personal assessment.
    That the fact that the party assessed appeared before the board of trustees on grievance day and made objection only to the amount of the assessment, which was afterwards modified, was not a waiver on his part of the other irregularities existing in the assessment, and that he was not precluded by such appearance from thereafter objecting to the assessment because of such irregularities.

      Hilton v. Fonda (19 Hun, 191) distinguished.
    That the trustees of tlie village and receiver of taxes must, in such a proceeding, acquire and maintain jurisdiction of the property by virtue of the statute, and could not obtain the same by the appearance of the party assessed before them on grievance day.
    That, as by the provisions of the statute (sec. 8 of chap. 68 of 1880) the sale by the tax receiver, and the execution after two years of a deed to the purchaser, were “presumptive evidence that the sale and all the proceedings prior thereto, from and including the assessment of the lands, were regular,” the sale would constitute a cloud upon the title of the party assessed, which, in a proceeding for its removal, would require proof aliunde the record, and that an action to have the assessment set aside as a cloud upon title and declared void was therefore maintainable in this case.
    Appeal by the defendants from a judgment, entered in the office of the clerk of the county of Saratoga on the 6th day of February, 1890, after a trial at a Special Term held in Saratoga county before the court without a jury, at which a decision was rendered in favor of the plaintiff, adjudging that the assessment against the plaintiff by the trustees of the village of Saratoga Springs in 1888, mentioned and set forth in the complaint, was unauthorized, illegal and void, and vacating and setting aside the same and enjoining the defendants from taking any proceedings to collect or enforce the same.

      Edgar T. Eraokett, for the appellants.

      Gharles A. Lester, for the respondent.
   jVEayham, J.:

This action was brought by the plaintiff, who was a resident of the village of Saratoga Springs, to set aside an assessment levied by the trustees of the village to pay for the construction of a sewer known as Church street sewer in said village, and to enjoin the defendants from selling the property of the plaintiff described in the complaint to pay such assessment.

The complaint set out alleged illegalities and irregularities in making the assessment, and in the acts of the tax receiver in proceeding to sell.

The defendants answer separately, the village alleging its power and authority to construct the sewer, and to assess the benefits on adjacent lands, and alleging, among other things, that the plaintiff appeared before the board of trustees on the day for hearing grievances, and only objected to the amount of the assessment, and that the same was subsequently reduced; the answer also denied some of the allegations of the complaint.

The defendant Byron J. Town, the tax receiver, answered separately, alleging that he was acting under the authority of the warrant issued by the board of trustees, and in a general way alleging the duty of the board of trustees to make the assessment and issue their warrant, and his duty to collect the amount of the same, and alleging the proceedings by him in pursuance of that duty.

On the trial the learned judge held that the assessment by the trustees was a personal tax. That no real estate was charged by such assessment-roll. That the real estate of the plaintiff not being described in the assessment-roll was not charged by the assessment. That such assessment was unauthorized, illegal and void as against the plaintiff, and that the warrant issued thereon was unauthorized and void, and conferred no right upon the receiver of taxes, described in his advertisement of sale. That the receiver of taxes had no authority under said assessment aiid warrant to describe and sell the lands of the plaintiff. That the assessment should be vacated and the receiver of taxes enjoined from selling such property or any part of the same, and directed judgment accordingly.

Judgment was entered according to the direction of the trial judge, and the defendants appeal to this court.

The trial court held that the assessment in this case was a personal assessment against the plaintiff, and was not a compliance with the provisions of the charter of defendants, which provides specially for assessments for the purpose of construction of sewers and drains in such village.

The village of Saratoga Springs, through its board of trustees, assume to have made this assessment under the provisions of chapter 136 of the Laws of 1887. Section 72 of that chapter provides that “the cost of constructing such sewers, drains and conduits shall be assessed by the board of trustees upon the property adjoining and along the line of the same, and such other property as the board may deem to be benefited thereby, or may at any time enjoy the use thereof, and in proportion to such benefit, as the same shall be determined by said board of trustees.”

The only assessment which appears to have been made by the board of trustees in this case is in the following form of a warrant directed to the tax receiver. “ You are hereby commanded to levy and collect, from the several persons, firms and corporations named in the foregoing list of assessments, the amount set opposite their respective nam.es in the manner provided for in the act creating the office of Receiver of Taxes and Assessments in the town and village of Saratoga Springs, and the several acts amendatory thereof.” This warrant was signed by the president and board of trustees.

The list referred to in this warrant consisted of a number of names arranged as follows, among which was the plaintiffs:

NAMES. Street. Benefits.

Marvin, James M. Church... $160 00

The trial judge finds that the clerk (without any official act of the trustees authorizing him so to do) before delivering to the receiver of taxes a copy of this assessment-roll, added to the name of the plaintiff, as it appeared in the assessment-roll, these words, “ Sagar & Richards occupants, Church St.” No description of plaintiff’s lands sought to be assessed for this sewer appears anywhere in the assessment-roll, except as above. But plaintiff admitted on the trial that Sagar & Richards occupied, at the time of the assessment, his premises on Church street, described in the complaint. The form of the tax receiver’s notice, or advertisement of sale, does not appear in the record.

It is difficult to see how it can be maintained that the vague and indefinite language used by the trustees in making this assessment can be understood as a charge upon any sjiecific piece of land. The assessment does not, in the list or warrant, purport to lie a proceeding in rem. It describes not, even in the most general way, any particular-piece of land, nor does it mention land at all. It purports to levy a tax against the plaintiff in person ; true, it locates him on a particular street and describes the tax as benefits, and if we were permitted to guess, we might, by taking this tax, in connection with the fact of the construction of a sewer, suppose it to be a tax assessed against plaintiff’s land. But the court is not permitted to guess or speculate in this class of cases. The levying of this class of taxes is purely a statutory proceeding, in which the plaintiff’s property is to be taken or incumbered in derogation of his common-law rights, and the provisions of the statute must be strictly pursued.

Even the authorities cited by the learned counsel for the defendants concede that land sought to be reached in this class of assessments must be described with reasonable certainty. In Pink v. Barberi (17 Week. Dig., 521), cited by the defendant, the court says: “ Property must be described in such a way that it can be known upon the books or a reference given by which it can be determined.” That cannot be done in this case from the assessment alone, as it seems to be conceded in this case that the defendant, the receiver of taxes, in his description in the notice of sale embraced a piece of property belonging to TIenry B. Hanson. The receiver of taxes is not authorized to sell lands for a personal tax. Section 2 of chapter 68 of Laws of 1880, under which the receiver assumed to act, provides: “ Whenever any tax charged on real estate * * * shall remaid unpaid, * * * the receiver shall proceed to advertise and sell such real estate.”

But the defendants insist that, even if this is a personal assessment, and the lands not sufficiently described in it to create a charge upon them by virtue of the assessment alone, still that the appearance of the plaintiff before the board of trustees on grievance day, and objecting only to the amount of the assessment, was a waiver of the alleged irregularities of the defendants in the assessment, and that the plaintiff cannot now be heard to object, and the case of Hilton v. Fonda (19 Hun, 191) is relied upon as establishing that proposition. But we think that case clearly distinguishable from this.

In that case the plaintiff, who sued the assessors in trespass for the sale of his property on a personal assessment against him while he claimed to be a non-resident of the town, had appeared before the assessors and submitted to their determination whether -or not he was, in fact, a non-resident, and the assessors were held not to be trespassers in making the assessment upon the authority, in part, of Lange v. Benedict (73 N. Y., 12), where the court say: “Whether or not the defendants’ proceedings were so strictly regular that a sale of the land would have conveyed a title is not the question. The question is simply whether the defendants were utterly without jurisdiction and, therefore, liable.” Thus clearly distinguishing between a case where title to property is affected and a case charging the officers with a personal tort.

The trustees and tax receiver must in this case have acquired and maintained jurisdiction of tlie property by virtue of the statute, if at all, and not by the appearance of the plaintiff' before them on grievance day. Put the defendants insist that even if the proceedings of the tax receiver are irregular and invalid, still the assessment should be upheld. W e have already seen that the irregularity of the assessment, in that it is a personal assessment, and not an assessment against the property, is a radical defect in the defendants’ proceedings, which defeat the assessment. The assessment being void, the plaintiff was right in bringing his action to restrain the defendants’ proceedings in the enforcement of this tax. Section 8 of chapter 68, Laws of 1880, provides that a sale by the tax receiver, and the execution after two years of a deed to the purchaser, shall be “ presumptive evidence that the sale and all proceedings prior thereto from and including the assessment of the lands were regular; ” this would be a cloud upon the plaintiffs title, and would call upon him, if he attacked the sale, to rely upon extrinsic proof aliunde the record to defend, his title. The same section authorizes any person interested in the property upon which an assessment has been made to bring an action to restrain the sale. The action was, therefore, properly brought, and, as we think, properly disposed of by the learned justice at the trial.

The judgment must be affirmed, with costs.

Learned, P. J., concurred; Landon, J., not acting.

Judgment affirmed, with costs.


author: Yan Brunt, B. J.:

text:
    GEORGE RICE, Respondent, v. JOHN D. ROCKEFELLER and Others, as Trustees of the Standard Oil Trust, Appellants.

      Voluntary association — rights of one purchasing the interest of a beneficiary in the association to admission thereto — equitable relief, when denied.

    An action was brought to compel the transfer, upon the books of the trustees of the Standard Oil Trust, of certain shares thereof, for which the plaintiff had purchased a certificate, which provided as follows: “This is to certify that L. B. Mallaby is entitled to five shares in the equity to the property held by the trustees of the Standard Oil Trust, transferable only on the books of said trustees on surrender of this certificate. This certificate is issued up on condition that the holder, or any Iransferree thereof, shall be subject to all the provisions of the agreement creating said trust, and of the by-laws adopted in pursuance of said agreement, as fully as if lie had signed the said trust agreement.”
    The power of attorney contained in the transfer on the back of this certificate was “to make the necessary transfer upon the books of said trust in accordance with the regulations thereof, and upon the conditions expressed on the face of this certificate.”
    It appeared that the plaintiff was a competitor of the Standard Oil Trust, which was a voluntary association organized by parties engaged in mining and dealing in petroleum; one of the objects of the trust being to secure to the trustees the general supervision of the affairs of corporations, parlnershijis and manufactories adopting said agreement, by electing directors and officers thereof; that the trustees held certain stocks or bonds, for which they issued to the parties transferring the same Standard Oil Trust certificates, so-called, transferable upon the books of the trustees.

      SeUl, that the plaintiff was not entitled to the transfer asked for.
    That the certificate did not purport to be a certificate representing shares of stock, but simply a certificate of interest in the equity to certain property.
    That, in order that a person should be a transferree, so as to constitute him a beneficiary under the trust, it was necessary that the certificate should be transferred on the books of the trustees, and the mere holding of a certificate in no way conveyed such a title to the holder as to make him a beneficiary of the trust.
    That the provisions of the certificate and the transfer thereof which required that the authority to make the necessary transfer upon the books of the trust should be in accordance with the regulations thereof, in the absence of any evidence as to what these regulations were, placed the plaintiff in the position of one who, having bought a certain interest in the equity in property held by the association. of which the defendants were the trustees, sought to be admitted into the association without proof of any right to such admission under the terms of the articles of agreement of said association.
    That it was necessary for the plaintiff to show affirmatively that he had the right to be admitted before the court could complete his admission by directing a transfer of his shares in interest upon the books of the trustees.
    That merely acquiring by assignment the interest of a previous beneficiary conferred no legal right upon such assignee to be admitted as a beneficiary under the trust, as a matter of course.
    That as there was nothing in the complaint which showed that this association exercised any of the rights of a corporation, or was subject to any of the restrictions governing corporations, the plaintiff did not stand in the position of a stockholder of a corporation.
    A voluntary association has the right to provide for the assignments and transfers of interests; for the admission of the holders of interests into the association, and for the keeping of the record of the same upon the books of the association, without exercising any corporate right.
    That as it appeared that the plaintiff had purchased the certificate with a hostile motive, the court would not intervene to compel the admission of an enemy into the ranks of a voluntary association.
    That as the trust and the trustees thereof were financially responsible, and the legal remedies of the plaintiff entirely adequate, and as the shares in question had a market-value and could be sold, a court of equity, under the circumstances of this case, was not called upon to compel the admission of the plaintiff into the association represented by the defendants.
    Appeal by the. defendants from a judgment, entered in the office of the clerk of the county of New York on the 14th day of January, 1890, after a trial before the court at Special Term, at which it was adjudged that the defendants, as trustees of the Standard Oil Trust, do forthwith perform each and every act necessary to transfer to the plaintiff on the books of the said trustees the stock mentioned in the judgment, and to constitute said plaintiff a record certificate-holder in said Standard Oil Trust, as the owner of six shares, etc.

      Joseph 71. Choate, for the appellants.

      Edwcurd T. Bartlett, for the respondent.
   Yan Brunt, B. J.:

This is an action in equity brought to compel the transfer, upon the books of the trustees of the Standard Oil Trust, of six shares now held by the plaintiff.

It appears that the plaintiff purchased a certificate of five of these shares in October, 1889, paying therefor $190 per share, and that the plaintiff received as a dividend one other share of said trust, thus making six shares owned by him ; that the Standard Oil Trust was created by an agreement in writing dated January 1, 1882, as modified by a supplemental agreement dated J anuary 4,1882; that the principal office of said trust was in the city of New York; that by the terms of the agreements the trust was vested in nine trustees; that said agreements were adopted by all the stockholders and members of certain corporations and limited partnerships therein named, or who might thereafter join in the same at the request of said trustees, and also by certain individuals and portions of said stockholders and members of certain corporations and limited partnerships therein named, or who might join in the same at the request of said trustees; that said stockholders and most of the individuals making or adopting said agreement were interested, directly or indirectly, in the mining, manufacturing, refining and dealing in petroleum and its products; that by and under said trust said trustees received from all. or certain of said parties, certain bonds and stock in trust, and issued therefor to the parties so transferring the same Standard Oil Trust certificates, transferable only on the books of said trustees; and that one of the objects of said agreements, creating said trust, was to secure to the said trustees the general supervision, so far as practicable, of the affairs of the various corporations, limited partnerships and manufactories making or adopting.said agreements, .by electing the directors and officers thereof; that by virtue of said agreements the said parties receiving the said certificates became the beneficiaries of said trust, as did the transferrees of said certificates; that over ninety millions par value of said certificates have been issued from time to time by the said trustees, and that considerable amounts thereof are at the present time, held by many persons who are transferrees thereof, and not parties to the said agreements; that the plaintiff demanded of the defendants a transfer of said shares upon the books of the said trustees, which the defendants have refused to do.

It further appears that the plaintiff ivas a competitor and rival of the Standard Oil Trust and of the defendants as trustees, and down to the time of the beginning of this action the plaintiff had been uninterruptedly prosecuting or aiding in prosecuting a series of litigations and proceedings in the courts and before the Interstate Commerce Commission, and before an investigating committee of congress, for the purpose of securing, as he claims, from the railroad companies what he considers equal rates with said trust for the carrying of his products, and at the same time helping his own interests as a rival of said trust; and that from time to time, during the period of several years prior to the beginning of this action, the plaintiff has offered to sell his refining property to the defendants as such trustees, and to retire from his position as a rival and competitor of said trust upon the payment to him at first of the sum of $250,000, and, subsequently, of the sum of $500,000, both said sums being greatly in excess of the true value of said property.

The plaintiff thereupon commenced this action to compel the transfer of said shares, and the defendants justify their refusal upon two grounds : First. That the plaintiff has not established his legal or equitable title or right as a certificate-holder, under the terms of the agreement, and of the by-laws under which the trust was formed, to become a beneficiary of that trust hy means of a transfer; and, second, upon the' ground that there exist such equities against the plaintiff as will necessarily prevent a court of equity from granting him any relief whatsoever in this action.

The learned court below directed judgment for the transfer of these certificates upon the books of the trustees, and from such judgment this appeal is taken.

There being no proof upon the trial, of the agreement under which the Standard Oil Trust was formed, our sole knowledge as to the position and duties of the defendants, the trustees under said trust agreement, is derived from the allegations of the complaint so far as they were admitted by the answer. The Standard Oil Trust Association was created by agreements made in January, 1882; the principal place of business of the trust was the city of New York, and the trust was vested in nine persons as trustees, the defendants being the present trustees thereof. These agreements were made and adopted by the persons hereinbefore named, all of whom were engaged in mining, manufacturing, refining and dealing in petroleum, etc. One of the objects of the trust was to secure to the trustees the general supervision, so far as practicable, of the affairs of said corporations, partnerships and manufactories making or adopting said agreement, by electing the directors and officers thereof. ¥e are ignorant as to what were its other objects.

Under said agreement said nine trustees received from the parties assenting thereto certain stocks or bonds, for which they issued to the parties transferring the same to them Standard Oil Trust certificates, so-called, transferable upon the books of the trustees. The parties so surrendering their stocks and bonds for said certificates, together with the transí errees of said certificates, became the beneficiaries under the trust. At the time of the trial these certificates had a regular market-value of $170 per share, and were dealt in in the open market of the city of New York, and are held at present by a considerable.number of persons who are transferrees thereof, and not parties to the agreements.

In considering the main question raised upon this appeal, it is necessary to call attention to the form of the certificate, of which the plaintiff was a purchaser, and the notice which he received thereby. This certificate reads as follows:

[Shares $100 each.]

STANDARD OIL TRUST.

Number 1987. . Shares, 5.

This is to certify that. L. B. Mallaby is entitled to five shares in the equity to the property held by the trustees of the Standard Oil Trust, transferable only on the books of said trustees on surrender of this certificate. This certificate is issued upon condition that the holder or any transferree thereof shall be subject to all the provisions of the agreement creating said trust, and of the by-laws adopted in pursuance of said agreement, as fully as if he had signed the said trust agreement.

Witness the hands of the president, secretary and treasurer of the -board of trustees, this 25th day of August, A. D. 1885, at the city of New York.

WM. ROCKEFELLER,

V. President.

J. F. FREEMAN,

H. M. Flagler, A. Treasurer.

Secretary.

(The following appears on the back of said certificate:)

For value received, I hereby sell and transfer to George Rice, of Marietta, Ohio, five shares of the Standard Oil Trust standing in my name on the books of said trust.

And I hereby irrevocably appoint said George Rice my attorney, to make the necessary transfer upon the books of said trust in accordance with the regulations thereof, and upon the conditions expressed on the face of this certificate.

L. B. MALLABY.

Dated August 26, 1885.

In the presence of:

O. F. Streightoff.

It appears upon the face of said certificate that it does not purport to be a certificate of shares of stock, but simply a certificate of interest in the equity of certain property held by the defendants as trustees of the Standard Oil Trust, and that this interest was transferable only on the books of the trustees on the surrender of the certificate. In other words, in order that a person should be a transferree so as to constitute him a beneficiary under the trust, it was necessary that the certificate should be transferred on the books of the trustees, the language of the certificate being transferable only on the books of the trustees on surrender of this certificate.” That the person became a transferree only by having the certificate transferred on the books of the company is further apparent by the subsequent language of the certificate, which is as follows : This certificate is issued upon condition that the holder or transferree shall be,” etc., making a manifest distinction between the person who may be a holder of this certificate and the one to whom the shares therein represented should be transferred upon the books of the trustees. Both the holder and any transferree thereof were subject to the provisions of tlie agreement creating the trust, and the by-laws adopted in pursuance thereof. But under the allegations in the complaint which were admitted by the answer (which is the only source of knowledge which we have upon this appeal), the beneficiaries of the trust were only the transferrees, and the mere holding' of a certificate in no way conferred such a title upon the holder as to make him a beneficiary of the trust.

It further appears by the power of attorney, upon the back of the certificate, that the authority to make the necessary transfer upon the books of the trust was that it should be in accordance with the regulations thereof, and upon the conditions expressed on the face of this certificate. It nowhere appears what these regulations are. Neither does it appear that there are no regulations governing the transfer, and there is no allegation and no proof that there has been any compliance with these regulations. The position of the plaintiff, therefore, is that of a person having bought a certain interest in the equity in property held by an association of which the defendants are the trustees, who seeks to be admitted into this association without proof of any right to such admission according to the articles of agreement under which said association was formed. We do not see how such a claim can be enforced. It is necessary for the plaintiff to show affirmatively that he has the right to be admitted, before the court can compel his reception by decreeing a transfer of his shares of interest upon the books of the trustees.

It might be very well said that, in the absence of all proof upon the subject as to whether there had been a compliance with the requirements of the articles of association or not, or proof that no requirements existed, the plaintiff had not made out a case. But in the action at bar, it appears affirmatively that there are certain regulations governing the transfer of these certificates, as in the power of attorney signed by the transferree of these shares and indorsed upon the certificates, the power to transfer is dependent upon compliance with the regulations of the association as well as with the conditions expressed upon the face of the certificates. The mere acquirement by assignment of the interest of some previous beneficiary conferred no legal right upon such assignee to be admitted as a beneficiary under the trust as a matter of course. The parties forming this association might agree that such assignee might become a beneficiary under the trust under such regulations, and subject to such restrictions as they might see fit to impose. The presence of such an agreement and compliance with its terms is necessary to be shown in order to entitle a party to compel such admission.

It is sought, upon the part of the counsel for the respondent, to liken the rights of the plaintiff to those of a stockholder of- a corporation, and this suggestion seems to have been adopted by the court below. But there .is nothing in the allegations of the complaint which tends to show that this association exercises any of the rights of a corporation, or is subject to any of the restrictions governing corporations. In fact, we know little or nothing of the internal arrangements or constitution of this association, and cannot, therefore, determine the rights of parties interested in these certificates. It is urged that this association is to be treated as though it were a joint-stock association. But even if that were the case, it would not help in any respect the position of the plaintiff, because even in a joint-stock association, in order to entitle a purchaser of stock to be admitted into membership, it is necessary that the articles of association should so provide. 'The association in question does not seem to issue even shares of stock, but simply certificates of interest in the equity of certain property held by these trustees.

The ground upon which the court below based its decision seems to have been that, because an equitable action will lie to compel the transfer upon the books of the corporation of shares of its capital stock to the owner, unless such interference would be against equity or good conscience, therefore, the plaintiff is entitled to the same relief, although the Standard Oil Trust is a voluntary association, basing its opinion upon the alleged fact that the association has sought to exercise the ordinary powers of a corporation in selling its stock upon the open market to the general public, making it transferable on the books of the trustees.

The learned judge has fallen into a manifest error in this respect, beqause there is no evidence whatever that this association has sold a share of its stock in the open market to the general public or to anybody else, the only proof being that these certificates are dealt in in the open market in the city of New York, and are held by many persons who are transferrees thereof, and not parties to the original agreement.

There is no proof whatever that the association attempts to exercise any of the powers of a corporation, or, as lias already been stated, has sold a share of its stock upon the open market. On the contrary, it would seem, from the very necessities of the case, that whatever sales were made, were made by the owners and holders of these certificates, and not by the association. The mere fact of making the certificates transferable upon the books of the trustees was in no manner the exercise of a corporate right. A voluntary association has the right to provide for the assignment and transfer of interests and for the admission of the holders of interests into the association, and for the keeping of a record of the same upon the books of the association without exercising any corporate right whatever.

Ye think, also, that the compelling of a transfer of this certificate would, under the circumstances disclosed upon this trial, be against equity and good conscience. It is true that the learned judge found that, because the plaintiff had sworn that when he purchased these shares he did so without any hostile intentions towards the trust, and that his only desire was to enjoy the ordinary legal rights of a stockholder; that, therefore, he was actuated by no motives hostile to the interests of the association. But we think that the evidence establishes, beyond question, that there was no other motive but a hostile one which actuated the plaintiff in the purchase of these certificates of shares. lie had been in active hostility to the trust, and they had been active competitors in trade. He had expressed himself as hostile to the association, and stated upon the trial that it was his opinion that the trust ought to be broken up, and in a general way that they ought not to exist, and that his disposition towards the trust since its formation had undergone no particular change.

In view of this testimony, it is apparent that he intended to create a false impression, and that his only purpose in attempting to force himself into the association was, if possible, to compel the association to purchase his property at the exaggerated price which he had placed upon it. Whether or not this Standard Oil Trust is an association which, in the eye of the law, ought to be broken up, because its operations are against public policy, we are ignorant, because we are not in possession of the facts in order to pass judgment upon that proposition. Whether any of its practices are in hostility to the law, or its objects are contrary to public policy, we are ignorant, and, therefore, we cannot assume that the object which the plaintiff had in the purchase of these certificates, for the purpose of fighting his own battles, with reference to his competition with this trust within its own borders, was such as the law would regard as meritorious. Whatever may be the rules affecting the transfer of stock of a corporation, certainly a court of equity will not intervene to compel the admission of an enemy into the ranks of a voluntary association.

It appears from the evidence that the shares in question have a market-value and can be sold. There is no claim but that this trust and the trustees thereof are perfectly responsible, and that the legal remedies of the plaintiff are entirely adequate, and he having bought this interest for the manifest purpose already expressed, we do not see that a court of equity is called upon to further his plans by compelling his admission into the ranks of the association.

Upon the whole case, therefore, we think that the plaintiff was not entitled to the relief given in the court below, and that the judgment should be reversed and a new trial ordered, with' costs to appellants to abide event.

Brady and Daniels, JJ., concurred.

Judgment reversed and new trial ordered with costs to the appellants to abide event.


author: Daniels, J.:

text:
    FREDERICK A. STOKES and Others, Appellants, v. FRANK ALLEN and JOEL P. WHITE, Respondents.

      Tnule-numii in the title of a publication — what constitutes an infrinyement thereof.

    In an action brought to restrain the use oí the word “life,” upon a book published and sold by the defendants, it appeared that the plaintiffs were engaged in publishing an illustrated book called "The Good Things of Life,” which consisted of pictorial illustrations taken from a serial publication known as “Life/’ together with brief sentimental dialogues. The defendants’ book was designated “The Spice of Life,” and consisted of illustrated pictorials and short dialogues which were taken, not from the serial called “Life” but from a German paper called “ The Fliegende Blaolter.” Upon the cover of the plaintiffs' book the word ‘‘life” was included within quotation mai’ks, but these marks were not used upon the defendants’ cover, neither was the color of the lettering similar. The similarity of the books consisted wholly in their size and the color of their binding; in other respects, including their contents, they were wholly different.

      Held, that as the use oí the word “ life ” on the plaintiffs’ book indicated that what was intended to be referred to as “The Good Things” were obtained from a particular source, while no such limitation affected the use of the word by the defendants, that the sense in which the word was used in the two publications was dissimilar, and the use of the word by the defendants in no x’espect infringed upon its employment by the plaintiffs.
    That it was not sufficient to maintain an action to show that purchasers, through inattention, might accept the defendants’ publication in the place of that of the plaintiffs ; that it was necessary to show that the defendants had employed the word “ life” with the same significance, in whole or in part, as that with which it had been employed by the plaintiffs.
    Words of common use may be so employed as to acquire a limited additional significance by way of designating a particular article of manufactui’e or production, and in that sense may be entitled to the protection of the court against an infi’ingement upon such use by others, but when the words signify a fact which others may by the use of them express with equal truth, such others have an equal right to use them for that purpose.
    Appeal by the plaintiffs from a judgment, in favor of the defendants, entered in the office of the clerk of the county of New York on the 18th day of November, 1889, after a trial before the court at Special Term, upon a decision directing that the complaint be dismissed upon the merits, with costs to the defendants and with an extra allowance.
    The action was brought to restrain the defendants from publishing and selling a book or publication entitled “ The Spice of Life,” upon the ground that it was an imitation and an infringement upon the rights of the plaintiffs in a similar publication entitled “ The Good Things of Life,” which title was claimed by plaintiffs to have been adopted as a trade-mark for their publication.

      George W. Miller, for the appellants.

      Elihu Root and Samuel R. Clark, for the respondents.
   Daniels, J.:

The plaintiffs were engaged in publishing and selling an illustrated book called “ The Good Things of Life.” This book consisted of pictorial illustrations taken from a serial publication known as “ Life,” together with brief sentimental dialogues under the illustrations themselves. • This publication was at first made when the two defendants were partners with the plaintiff Frederick A. Stokes. It was a publication of the plaintiffs John A. Mitchell and Andrew Miller, and the right to dispose of it by way of sale was secured to Stokes and the two defendants. It was published and sold in this manner by Mitchell and Miller, and the firm of White, Stokes & Allen, from May, 1884, until the firm of White, Stokes & Allen was dissolved in April, 1887. And by the articles of dissolution the property, business and good will of the firm was transferred by the other two partners to Frederick A. Stokes. And the other plaintiff Horace Stokes joined his brother, Frederick A. Stokes, as a partner in this business in the fall of 1887. The pictorial illustrations contained in the volume designated “ The Goods Things of Life ” were compilations wholly taken from the paper called “ Life.” After the dissolution of the firm of White, Stokes & Allen, White and Allen carried on business for themselves as partners, and published a book in its size and color of binding quite similar to the book called “ The Good Things of Life.” But the defendants’ book was designated “ The Spice of Life.” This book consisted of illustrated pictorials and short dialogues, and sentiments referring to or explanatory of the illustrations. But these illustrations and sentimental statements were not taken from the serial called “ Life,” but they were rejiroductions from a German paper called “ The Fliegende Blaetter.” Upon the cover of the plaintiffs’ book the word “ life ” was included within quotation marks, but these marks did not attend the use of the word “ life ” on the defendants’ book. Neither was the color of the lettering similiar upon the defendants’ book to that employed in coloring the lettering on the plaintiffs’ book. And additional embellishments upon a gilt groundwork were given upon the cover of the latter beyond and different from those made upon the cover of the former. The similarity of the books consisted wholly in their size and the color of the binding. In other respects they were different, including their contents.

The action brought by the plaintiffs was to restrain the use of the word “ life ” upon the book published and sold by the defendants. And it was held at the trial that the plaintiffs had no such title to the use of this word as would authorize them to maintain the action. And it appears by the proof that the use to which the word has been applied upon the defendants’ publication, differs from its employment from that made of it on the plaintiffs.

The letters forming the word are nearly, if not quite, double the size on the plaintiffs’ book of those used in the formation of the word upon the defendants’ book. And the quotation marks employed by the plaintiffs, as attendants of the word “ life,” indicate that what was intended to be referred to as “ The Good Things ” were obtained from some particular and specific source, while no such limitation affects the use of the word by the defendants, but it has been employed in its general sense without restriction or qualification. And it is evident from these dissimilarities that the plaintiffs have employed the word “ life ” in a sense differing from that in which it has been employed by the defendants. And the use of it by the latter in no respect infringes upon its employment on the book of the former. The plaintiffs have employed it to indicate and include selections from the serial known as “Life.” The defendants have employed it to indicate pictorial illustrations and sentiments of an entirely distinguishable character, illustrative of comical and sentimental representations of life in general. And as this was a word of popular use and significance, there seems to be no substantial legal reason which would stand in the way to prevent the defendants from employing it in this manner.

^jtt may properly be conceded that words of common use may be so employed as to acquire a limited additional significance by way of designating a particular article of manufacture or. production, and in that sense be entitled to the protection of the court by way of injunction against infringement by another person or persons. (Royal Baking Powder Co. v. Sherrell, 93 N. Y., 331; Taylor v. Gillies, 59 id., 331; Hier v. Abrahams, 82 id., 519.) But the lawlias not been, neither does nor could it practically be, extended any farther than that. And it, therefore, has been held that “ words are but symbols. When they are used to signify a fact, or when, with what purpose soever used, they do signify a fact which others may by the use of them express with equal truth, others have an equal right to them for that purpose.” (Caswell v. Davis, 58 N. Y., 223, 235.)

And this was followed in Colman v. Crump (70 N. Y., 573). And the rule applicable to this class of cases was subjected to the same qualification in Manufacturing Company v. Trainer (101 U. S., 51). It was there said, with the approval of the court, that a person has no right to appropriate a sign or symbol which, from the nature of the fact it is used to signify, others may employ with equal truth, and, therefore, have an equal right to employ for the same purpose.” (Id., 5é.) And as much as that was conceded by the plaintiffs’ counsel upon the trial, for it was stated by him that “ we do not claim any exclusive right to the use of the "word life.” And that concession was substantially a concession that the plaintiffs had no substantial ground to stand upon in the maintenance of their action. For while they used the word “life” for one object, the defendants, without intrenching in the least degree upon that use of it, emqiloyed it for another and a different object. By the plaintiffs it was used in a specific and limited sense, while the defendants used it in its general sense, each ex]jressive of a work having no. common origin, compiled from different sources and illustrated by different jnctorials and sentiments.

It is not sufficient to maintain the action that purchasers inattentively might accept the defendants’ publication in place of the plaintiffs. But it is necessary to maintain their action that the defendants should have employed this word “ life ” with the same significance, in whole or in part, as it has been employed by the plaintiffs. And that, from the proofs, it is clear they have not done. They were, therefore, entitled to have the disposition made of the case which was directed at the trial,

An exception was taken to a question asking the witness Scannell for his opinion as to the effect of the resemblance between the books. But it is not necessary to decide whether the question was a proper one or not, for no evidence or answer was obtained from the witness which was in the least degree objectionable.

The judgment from which the appeal has been brought was sustained by the evidence, and it should be affirmed, with costs.

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

Judgment affirmed, with costs.