text:
    LOUISE ROBERTSON, Respondent, v. THE METROPOLITAN LIFE INS. CO., Appellant.

      Insurance policy—waiver of forfeiture.

    A statement made by a duly authorized agent of an insurance company, to the assured, who called the next day after the semi-annual premium upon her policy fell due, for the purpose of paying the same, that “Mr. R. (upon whose life the policy was given, and who was the husband of the assured) had attended to it himself,” furnishes sufficient evidence to submit to the jury the question whether the company thereby intended to waive the forfeiture incurred by the non-payment of the premium upon the day it fell due.
    Before Speir and Freedman, JJ.

      Decided June 6, 1881.
    Appeal from a judgment for $4,191.48, entered on a verdict in favor of the plaintiff, and also from an order denying defendant’s motion for a new trial.
    In 1868, the defendant issued to the plaintiff a policy of insurance for $5,000, on the life of her husband. The premium was made payable semi-annually, one-half in cash and one-half in a loan, with thirty days’ grace. On February 9, 1877, when the thirty days’ grace expired, the plaintiff did not pay the half-year’s premium then due. Upon the trial plaintiff gave evidence tending to prove that on the following day, plaintiff’s agent went to the company’s office prepared to pay the premium, and was told by an authorized agent of the •company that the insured had “attended to that himself.” The court submitted to the jury the question whether there was a waiver of the forfeiture, and the jury found in favor of the plaintiff.
    Arnoux, Mitch & Woodford, attorneys, and Wm. Henry Arnoux, of counsel, for appellant.
    Goodrich, Beady & Platt, attorneys, and Wm. W. Goodrich, of counsel, for respondent, cited:
    Insurance Co. v. Wolff (95 U. S. 329); Goit v. National Ins. Co. (25 Barb. 189); Carroll v. Charter Oak Ins. Co. (38 Barb. 407); Shearman v. Niagara Ins. Co. (46 N Y. 526); May on Insurance, § 143; Titus v. Glenns Falls Ins. Co. (8 Abb. N. C. 315); Insurance Co. v. Norton (96 U. S. 234); Prentice v. Knickerbocker Life Ins. Co. (77 N. Y. 483), and the cases there cited.
   By the Court.—Freedman, J.

Upon full examination, I have arrived at the conclusion that under the doctrine of waiver, as applicable to insurance companies, to prevent the strict enforcement of conditions contained in their policies, and especially in view of the principles laid down in Insurance Co. v. Norton (96 U. S. 234); Prentice v. Knickerbocker Life Ins. Co. (77 N. Y. 483); and Titus v. Glenns Falls Ins. Co. (81 N. Y. 410), the plaintiff made a sufficient case to entitle her to go to the jury upon the question whether or not the company had elected to treat the policy as in force on February 10, 1877, and by such election had waived the forfeiture. If I am correct in this, no ground for reversal exists, for the question was fairly submitted to the jury and their finding should not be disturbed.

The judgment and order should be affirmed, with costs.

Speir, J., concurred.


source: Caselaw Access Project

author: By the Court.—Freddman, J.

license: Public Domain

text:
    ERASTUS D. BENEDICT, Appellant, v. COURTLANDT P. DIXON, et al., Respondents.

      Removal to United States court—power of State court thereafter to modify order of discontinuance previously entered as to certain defendants.

    Where an action in a State court is discontinued as to certain defendants, and is thereafter removed, as to the remaining defendants only, to a Unites States court, the State court in which the action was originally brought, and in which the order of discontinuance was entered, has power and jurisdiction to modify such order, by a provision reserving the rights of the defendants, as to whom the action was discontinued, on an undertaking given by plaintiffs on obtaining an injunction.
    Before Speir and. Freedman, JJ.

      Decided June 6, 1881,
    Appeal by plaintiff from order, made on motion of defendants Dixon and Learned, modifying order of discontinuance.
    The facts appear in the opinion.

      Lawrence & WaeJmer, for appellant.

      Albert BticJcney, for respondents.
   By the Court.—Freddman, J.

This action was originally brought by the plaintiff against Dixon, Learned, Knox, Williams and Kernochan as defendants. Knox did not appear. The other defendants did, but before service of any answer or demurrer, the plaintiff discontinued the action as to Dixon, Learned and Knox, and an order of discontinuance was entered to that effect. Thereafter, the action, then standing against only Williams and Kernochan as defendants, was, on plaintiff’s motion, duly removed to the United States circuit court in and for the Southern District of New York. The original petition and accompanying bond, and the order of removal made thereon, which are on the files of this court, show that no removal was contemplated, asked, or had, against Dixon and Learned, and that the suit, which had been discontinued as against them and Knox, was removed only as to the remaining defendants. Under these circumstances this court retained full power and jurisdiction, notwithstanding such removal, to modify the order of discontinuance as against Dixon and Learned, as justice might require ; and the modification by which it was provided that the order of discontinuance should be without prejudice to the rights of Dixon and Learned on the undertaking given by the plaintiff on obtaining an injunction, was made in furtherance of justice.

The order appealed from should be affirmed, with costs.

Speir, J., concurred.


author: By the Court.—Speir, J.

text:
    WILLIAM S. WILLIAMS, Appellant, v. THE WESTERN UNION TELEGRAPH CO., THE UNION TRUST CO., et al., Respondents.
    ' Order for examination of party before trial—when not granted to entibie plaintiff-to make and serve amended complaint—application for examination of corporation, what must be alleged.— General Buie 83.—Code Oivil Procedure, § 872.
    Where it does not appear that it is necessary to the prosecution of plaintiff’s right, so far as the form of his complaint is concerned, that it should be made more definite and certain, an order for the examination of defendants before trial, to enable plaintiff to serve a complaint amended in that regard, will not be granted.
    Whether this would be so, if a motion had been made, or an order granted, that the complaint be made. more definite and certain, quaere.

    The moving affidavit, upon application for examination of a corporation as a party, must state the name of the officer, or director, whose testimony is necessary and material.
    Before Speir and Freedman, JJ.

      Decided June 6, 1881.
    Appeal by plaintiff from an order vacating an order, granted ex parte, for the examination of the defendants.
    The action was brought upon allegations of an unlawful combination of the defendants, &c., to restrain the defendants, and particularly the Union Trust Co. from issuing to the stockholders of the defendants or any of them, $15,526,590 of the capital stock of the Western Union Telegraph Co., alleged to be in excess of its authorized capital, until such stock should be fully paid for ; and to restrain the defendant directors from voting in favor of such increase ; and for other relief in case such increase should be effected.
    Plaintiff’s affidavit, upon which the discovery order was granted, contained allegations, among others, as follows:
    “ That this deponent has served his complaint in this action, but he is not able from the facts in his possession; to state particularly the names of the defendants who are actually engaged in the plot for the purchase of such property, at such largely enhanced value ; but the defendants above named, whom this deponent desires to examine, are in full possession of all the facts concerning the same, and this deponent can obtain the facts necessary to enable him to frame and serve an amended complaint in this action, wherein he shall set forth with particularity all the steps which have been taken in the conspiracy charged in the complaint, by their examination.

      “Further, this deponent shows that the sum proposed. to be paid by the Western Union Telegraph Co. to the Atlantic and Pacific, is largely in excess of the value of the property which it receives therefor, but how much in excess and what the particulars of such excess are, and what the particulars of such property is, this deponent is unable to state with definiteness and particularity, but, upon the examination of the defendants above named, whose depositions it is here sought to obtain, this deponent will be able in that respect to frame an amended complaint, wherein shall be set forth with greater particularity, averments respecting the value of said property, and who of the defendants are engaged in the conspiracy to issue the stock of the Western Union Telegraph Co. therefor, at very much more than the value of such property.
    “ This deponent further shows that it is charged in the complaint, that the Western Union Telegraph Co. intends to divide fifteen million five hundred twenty-six thousand five hundred ninety dollars of the capital stock of said company among the stockholders, without any compensation therefor being' given to the company, upon the pretense that within the last sixteen years said company has invested of its earnings in new lines, plants and machinery and patents and other property, that amount of money. This deponent is informed and believes that this pretext is a fraud ; that no such sum has' been invested, but that on the contrary thereof, the investments have been largely made to keep up the efficiency of the lines, and were in the nature of repairs and not for the construction of new lines.
    “Deponent further shows, that during the last few* years, over seven millions of capital stock have been divided among the stockholders of said company, and he will be able to show with definiteness and exactitude by the examination of the foregoing parties, or some of them, just what dividends have been made within the last sixteen years by the Western Union Telegraph Co. to its stockholders, of stock and cash, and the value of the property acquired during that time by the company, and “which among the defendants are engaged in the fraudulent scheme of issuing such stock in violation of law.
    6‘Deponent further states that he desires to examine the Western Union Telegraph Co.—that ISTorvin Green is the president, and the other defendants herein are directors'therein, and particularly he desires to examine the books and papers of said company, especially the construction accounts and the income accounts and dividend accounts of such company, and the book of minutes of such company, to the end, that he may be able to obtain information as to whether any such dividend as is here proposed to be made, has been earned by said company, or whether the pretexts of the defendants in that particular, are true or not.
    “And deponent further desires to examine the defendant, the Union Trust Co., of which Edward King is president, to ascertain what certificates of stock have been delivered to it, and what is the purport of such certificates, and to obtain copies thereof, and how many such certificates have been delivered by it, and to whom; and to that end to examine all books of account of said Union Trust Co., containing entries of any and all transactions in relation to the trust of which it is the trustee of certain stock of the Western Union Telegraph Co., all of which is necessary and material to deponent in the prosecution of this action.”
    An order vacating the discovery order was granted at special term upon the following opinion :
    “ Sedgwick, Ch. J.—Although the examination of O’Connor v. United States Life Ins. Co. was asked and given, for the purpose of the plaintiff framing an amended complaint, yet there was no reference in the arguments to the purpose, or to what, to justify the examination, must be the necessity of amending the complaint. 0
    “In the present case it does' not appear that it is necessary to the prosecution of plaintiff’s rights, so far as the form of his complaint is concerned, that it should be made more definite and certain. It is not demurrable for indefiniteness or uncertainty.
    “Until the defendants attack it on these grounds,the plaintiff’s present complaint will, entitle him to all the relief that his proven cause of action under it will call for. If he were obliged, under stress of an order, or, perhaps, a motion to amend, by making more definite and certain, another case might, perhaps, be presented.
    “ The present motion will be denied on the. ground that the examination is not necessary for the purpose of making the complaint more definite.
    “Nor do I think that the papers show that the plaintiff needs an examination to discover the names of persons that may be made defendants. His rights, as claimed, can be fully asserted without more defendants. Motion granted, with $10 costs.”

      John Sessions, attorney, .and Robert Sewell, of counsel, for appellant.

      Lord, Bay & Lord, for respondent, B. D. Morgan.

      Man <6 Parsons, for respondent, N. G-. Hunt.
    Porter, Lowrey, Soren & Stone, attorneys, and John 'K. Porter, of counsel, for respondent, The Western Union Telegraph Co., urged:
    I. It did not appear that the depositions of the defendants were material for any purpose other than framing an amended complaint, and for that purpose they were plainly immaterial, no objections having been taken to the complaint, and the plaintiff having already obtained an injunction—the only relief he demanded.
    II. The procedure under this provision of the Code rests in the sound discretion of the judge (Glenny v. Stedwell, 64 N. Y. 120).

    III. The plaintiff failed to make a case entitling him to this provisional remedy (Levy v. Loeb, 5 Abb. N. C. 157-160; Corbett v. De Comeau, Id. 169). 1. The pendency of other proceedings to enjoin the defendants is ground for disallowing examination (Wetmore v. Hegeman, 3 Abb. N. C. 123). 2. The plaintiff did not comply with' section 872 Code, subds. 2 and 4, and general rule 83 (Winston v. English, 35 Super. Ct. 513). 3. He stated nothing to judicially satisfy the court that the application is in good faith for a discovery material to the statement of his cause of action. (Schepmoes v. Bousson, 1 Abb. N. C. 481). 4. He assumed to substitute therefor his own judgment, and that of his attorney (Robertson v. Russell, 20 Hun, 243-245; Greer v. Allen, 15 Id. 432-436). 5. Material allegations of plaintiff’s affidavit are on information and belief (Tilton v. United States Ins. Co., 1 Abb. N. C. 348). 6. The pretense of the plaintiff is that some of the defendants were engaged in a criminal conspiracy (2 R. S. 691, § 7, subd. 6). 7. The proceeding is compulsory, and it cannot be resorted to for the purpose of criminating the witness (Phoenix v. Dupuy, 2 Abb. N. C. 146; Corbett v. De Comeau, supra; Leggett v. Postley, 2 Paige, 599, 601, 602; Taylor v. Bouer, 2 Barb. Ch. 304). 8. The affidavit shows no purpose to use the depositions on the trial'.

      Miller & PecTcham, attorneys, and Wheeler H. PecTcham, of counsel, for respondent, The Union Trust Co., among other things, urged:
    affidavit does The not comply with subdivision 7 of section 872 of the Code, as amended by chapter 536 of the Laws of 1880, in that it does not mention the name of the officer or director of the trust company whose testimony is necessary and material.

       General Term, Second Department, February, 1877.

   By the Court.—Speir, J.

The object stated by the plaintiff in his affidavit in making this motion is, to procure materials which shall enable him to make an amended complaint. The defendant’s motion to vacate the order of examination was granted chiefly upon the ground that it did not appear that it was necessary to the prosecution of the plaintiff’s rights, so far as the form of his complaint was concerned, that it should be made more definite and certain ; that the form of his complaint will entitle him to all the relief that his proven cause of action under it would call for; in short, that the moving papers did not conform to Buie 83 of general practice, in that it shows no facts or circumstances as to the materiality or necessity of the examination.

These are sufficient grounds for the vacation of the order. So far, however, as the defendant, the "Union Trust Company, is affected by the motion, the affidavit is defective in another material matter. It does not mention the name of the officer or director of the trust company whose testimony is necessary and material. By the seventh subdivision of section 872 of the Code, an officer of a corporation defendant could not be examined as a party (People v. Gas Light Co., 74 N. Y. 434). This is now permitted by chapter 536 of the Laws of 1880, but as a condition it is enacted that the affidavit must state the name of the officer or director whose testimony is necessary or material. The moving affidavit contains no such statement.

The order must be affirmed, with costs.

Freedman, J., concurred.


text:
    FLORENCE H. MANNING, Respondent, v. DAVID H. GOULD, et al., Appellants.

      Undertaking on appeal—liability of sureties—waiver.—Code Civil Procedure, §§ 815, 1351.
    The sureties upon an undertaking on appeal are liable thereon, though' they have refused and failed to justify, after having been duly excepted to.
    The provision for justification being for the benefit of respondent, he may waive it.
    The sureties are liable, though there be a change of parties; e. g., by the death of their principal and the revival of the action against his representative.
    Before Sedgwick, Ch. J., and Speir, J.

      Decided June 6, 1881.
    Appeal by defendants from judgment.
    The facts appear in the opinion.

      James It. Carmichael, for appellant Gould, and AT, W. Newhall and Franklin Bien, • for appellant King, among other things, urged:
    The exception to the sureties was never withdrawn. Section 1335 of the-Code provides that “ . . . The effect of a failure so-to justify (after exception), and to procure an allowance, is the same, as if the undertaking had not been given I

      Frederick M. Littlefield, for respondent, among other things, urged:
    The undertaking is good', and the sureties are held by it when-the appellant has had the benefit of the consideration of it, namely, a stay of proceedings until the decision and judgment of the general term of this court was given, which was had in the action in which this undertaking was given..
   By the Court.—Speir, J.

The point in the case is, whether the defendants can be released from their liability upon their undertaking as sureties upon an appeal to the general term of this court, upon the ground that they failed to justify after being excepted to by the plaintiff.

The understanding is a contract made by the defendants, based upon a sufficient consideration to uphold it. They “jointly and severally, without any conditions, pursuant to the statute in such case made and provided, undertake that the appellant will pay all costs and damages which may be awarded against the appellant on said appeal, not exceeding five hundred dollars,” “and also they will pay the amount directed to be paid by the said judgment” (judgment appealed from), if it be affirmed, “and all damages which shall be awarded against the said appellant.”

The complaint alleges that, thereafter, and on or about November 3, 1880, the said judgment appealed from was affirmed, and that the sum of $98.6 costs, damages and disbursements of said appeal, was duly entered against the said appellant, and that the appellant had paid no part of such moneys.

The contract was clearly broken, and the plaintiff had a right of action to recover the amount of the judgment appealed from, and the costs of the appeal, unless it is necessary that the complaint should allege-that the sureties should actually justify after the plaintiff had given them notice so to do. The sureties accompanied their undertaking by their affidavits, severally specifying that they were each worth twice the sum named in their undertaking.

It was competent for the plaintiff to waive the justification of the sureties after he had excepted to their sufficiency, as that is a matter required for his protection, and not for that of the appellant or her sureties (Ward v. Whitney, 3 Sand. 399). Even if no affidavit of the sureties had been served with the undertaking, is it a nullity ? Security is not required to perfect the appeal; but, except when it is otherwise specially prescribed by law, the appeal does not stay the execution of the'judgment or order appealed from (Code Civ. Pro. § 1351). The excuse given by the sureties for refusing to justify was the death of the defendant after the undertaking and affidavits had been executed and served. By section 815 of the Code this undertaking was not affected by a change of parties. It may be said, I think, that the sureties are, in law, liable upon the proper execution and delivery of the undertaking, all else in regard to. it is simply matter of practice.

Judgment must be affirmed, with costs to the plaintiff.

Sedgwick, Ch. J., concurred.


author: Per Curiam.

text:
    DANIEL LE ROY, as Trustee, &c., Respondent, v. ANDREW J. MATHEWSON, Appellant.

      Bents collected ~by real estate agents—when their property, as to general creditors.—Partnership—ichat not individual property of pa/rtner, as against firm creditor.

    Where a firm exclusively engaged in the collection of rents of real property, deposit the same, as collected, in a bank account standing in the name of one of the partners, from which account parties for ■whom rents have been collected are paid by the check of such partner, the fund so constituted is copartnership property, as to a plaintiff who has recovered a judgment against the firm for rents collected by them, and seeks to reach said fund by a creditor’s bill against a surviving partner of the firm. This, though the evidence show such fund to be wholly made up of rents collected for different persons, and it does not appear how much of plaintiff’s said rents are included therein, nor that the firm’s commissions therein contained equal the amount of plaintiff’s said judgment.

      Where the commissions on the rents so collected and deposited, are, under the copartnership agreement, the sole property of .the partner in .whose name the account stands, they do not, by such deposit, become the individual property of such partner, as against a firm creditor.
    Before Speir and Freedman, JJ.

      Decided June 6, 1881.
    Appeal by defendant from a judgment adjudging a certain fund that stood in the Greenwich Bank in the name of John Mathewson at his decease, to be the property of the firm of J. Mathewson & Son, and directing the same to be paid to the plaintiff and applied upon a judgment recovered by Mm against the defendant, Andrew J. Mathewson, as surviving partner of said firm.
    The facts, as found by the court below, are as follows:
    John Mathewson. died September 26, 1878. For many years prior to .that time he and the defendant, Andrew J. Mathewson, as copartners under the firm-name of J. Mathewson & Son, had been engaged in business as collectors of rents for various parties on commission. The son testified that he did not receive, and was not entitled to receive, any portion of the commissions earned by the firm, but it appeared that he and Ms father held themselves out as copartners; that all the business was done under this firm-name, and that he was actively engaged with his father in the affairs of the firm business.
    ¡No bank account was ever kept in the firm-name. As rents were collected by the firm in the course of its business they were deposited in an account kept in the Greenwich Bank in the name of John Mathewson. The parties for whom rents were collected were always paid by checks drawn on this account by or in the name of John Mathewson. John Mathewson also drew checks on this account for other purposes than the payment of rents collected. The firm, prior to the death of John Mathewson, collected about $2,000 of plaintiff’s rents, and deposited them in this account. At the death of John Mathewson there was $2,500 on deposit in this account.
    Plaintiff having obtained judgment against the surviving partner, and issued execution thereon, which was returned" unsatisfied, brought this action in the nature of a creditor’s bill, to have the said fund on deposit in the Greenwich Bank declared the property of the firm and applied on his judgment.
    The court also found that the money on deposit in the Greenwich Bank consisted “exclusively of rents collected by said firm in the course of its business, and including said rents collected for plaintiff, or some portion thereof, but there is no evidence to show definitely how large a sum collected for plaintiff was on deposit in bank. No individual property of said John Mathewson was intermingled with said moneys so deposited, but there were also on deposit in said bank moneys collected for other persons than the plaintiff.” And further, that “ The said fund on deposit in the Greenwich Bank was, and is, the property of the firm of J_ Mathewson & Son. Since the death of said John, Mathewson it has constantly remained in said bank. Said Andrew J. Mathewson has had the title of said account changed, and said account now stands in said bank in the name of Andrew J. Mathewson, administrator of the estate of John Mathewson, deceased.”
    The court below awarded judgment to plaintiff, as above stated, delivering the following opinion :
    “Sedgwick, Ch. J.—The counsel for the defendant, Mathewson, argues that the only cause of action that the plaintiff can ever claim under the proof, rests upon the position that the account in bank actually represents the money of certain persons (of whom the plaintiff is one) whose money was deposited in bank by John Mathewson to his own credit. Therefore, the plaintiff affirmatively shows that the fund he is following is the property, not of himself solely, but of those whose moneys compose it. This does not seem to me to be a valid argument. The plaintiff is not bound to treat the fund as equitably the property of the persons referred to. He may confine himself, at-his option, to such rights as issue from his relation of creditor, whose contract has been put in judgment. The evidence satisfies me that the following facts existed: John Mathewson and Andrew J. Mathewson were partners, as to third persons and inter sese. They were partners inter sese, because of the contract between them that they should be partners. This contract made a partnership, although it was the fact that Andrew J. Mathewson was not to be paid any part of the profits. The money collected by the firm was deposited to the credit of John Máthewson in the account in question. As a result of the whole testimony, I find that there is no individual property or money of John Mathewson intermingled with the partnership property. The commissions that are supposed to be in the account have not been so separated from the other firm property as to become John Mathewson’s individual property. In this condition of things there is a characteristic of the funds in question which should be used as a test of the plaintiff’s rights. The plaintiff has a judgment against Andrew J. Mathewson as partner, and the latter was in fact a member of the partnership. Andrew J. Mathewson has a right to insist that the partnership property shall be used to relieve him of individual responsibility as far as possible. And he cannot refuse as against plaintiff to avail himself of this right, or, as it is sometimes said, the plaintiff can act through the equity belonging to Andrew J. Mathewson. The other ground, however, is sufficient; the plaintiff has a right to the appropriation of the firm property to pay the judgment against the firm.”
    “ The plaintiff should have judgment.”

      John P. Nagle, attorney, and Stephen N. Olin, of counsel, for appellant, among other things, urged:—
    The fund legally belonged to John Mathewson’s estate. Equitably it belonged to certain persons for whom it was collected. The plaintiff has no right to treat it as the property of John Mathewson & Son (Falkland v. St. Nicholas National Bank, 84 N. Y. 145).

      Richard L. Sweezy and John H. Glover, for respondent.
   Per Curiam.

The judgment should be affirmed, with costs, upon the opinion delivered by the learned chief judge, at special term.


text:
    THOMAS MURTHA, Respondent, v. MICHAEL CURLEY, Impleaded, &c., Appellant.

      Conspiracy to defraud judgment creditor, by fraudulent chattel mortgage on debtor's property—remedy for.

    An action at law, for damages only, cannot be maintained upon proof that defendant conspired with plaintiff’s judgment debtor to defraud plaintiff of his debt, by taking and foreclosing a fraudulent chattel mortgage upon the debtor’s property, and selling the property covered thereby, before the issue of execution on such judgment. It must appear that plaintiff had, at the time of the alleged wrongful acts, some interest in, or lien upon the property, which could be the subject of damage.

      It seems, that the proper action, in such case, is in the nature of a creditor’s bill to set aside the mortgage, and that the judgment therein should direct that defendant account for the property mortgaged, or its proceeds.
    Before Sedgwick, Oh. J., and Freedman, J.

      Decided February 7, 1881.
    Appeal from judgment, that plaintiff recover from defendants the sum of $753.26, and costs.
    Also appeal from order denying defendant’s motion for new trial on ground of surprise and newly discovered evidence.
    The complaint charged that the defendant Doyle, in 1872, was indebted .to plaintiff, in a sum specified; that while he was so indebted, he conspired with defendant Curley to defraud plaintiff, by removing his property out of the reach of process, which plaintiff might thereafter cause to be issued to collect the indebtedness ; that in pursuance of such conspiracy, the defendant Doyle gave to the defendant Curley certain chattel mortgages, upon his personal property, to secure payment to Curley of more than $5,000; that in fact, Doyle was not indebted to Curley in a greater sum than $500; that on October 10, 1875, the plaintiff recovered judgment against defendant, Doyle, and issued execution thereon; that on or about October 10, 1878, the defendant Curley foreclosed said chattel mortgage, and sold said property; that thereby said plaintiff ‘1 has been deprived of the power of securing or collecting his claim, and that said Curley has, by this scheme of fraud and deceit, maintained control of all the assets of said Doyle, from the year 1872, and has finally seized and sold the same, and converted the proceeds to his own use; and that thereby, plaintiff has been damaged to the extent of his entire claim and interest.”
    On the trial, it appeared that the plaintiff obtained judgment against Doyle by confession. It was not shown that the defendant Curley sold the goods under the chattel mortgage after execution on the judgment was issued. It is to be inferred that the contrary was the case. The plaintiff did not ask for judgment declaring the chattel mortgage void as against him, or that defendant Curley account for the proceeds, nor was the value of the goods at the time of issuing the execution shown. The plaintiff asked for a money judgment, only. The court, after finding that the chattel mortgage was fraudulent and void against the plaintiff, ordered that this money judgment be entered.

      Starr O. Hooker, attorney, and George H. Starr, of counsel, for appellant.

      Henry B. Hathaway, for respondent.

      Adolphus J). Pape, for other creditors of defendant Doyle.
   Per Curiam.

It does not appear that the action were tried as if it were on a creditors bill to set aside the chattel mortgage. If it had been, the appropriate judgment would have been that the defendants account for the property mortgaged, or its proceeds. The appellant would not, in any event, have been liable for any greater sum, than the value of the property, or the proceeds obtained by him. If such were the action, it might in some cases be proper simply to set aside the judgment, and to declare the proper judgment, the action then to be remitted for further proceedings. Such a disposition would not be proper in this case, as the defendant did not offer testimony below, for sufficient reasons, and further evidence might affect the findings, as to the fraudulent character of the mortgage.

But it would appear that the action, was brought as one at law, for damages, a jury trial being waived by the appellant. On that position, the plaintiff had no cause of action at law. At the time that the alleged wrongful act was done, the plaintiff had no lien upon the property mortgaged by execution issued or any interest in the property, which could be the subject of damage (Adler v. Fenton, 24 How. [ U. S.] 408; Moran v. Dawes, Hopk. Ch. 415 [365]; 13 N. Y. 488 ; 32 N. Y. 457). For this reason, the judgment should be reversed, with costs of appeal to appellant, to abide the event of the new trial, which is ordered.

There was also an appeal from an order denying defendant’s motion for a new trial, on the ground of surprise, and of newly discovered evidence. The discretion of the court bn this subject is best exercised by affirming the order, without costs to either party.


author: By the Court.—Sedgwick, Ch. J.

text:
    MARIA H. WHITNEY, Respondent, v. JOHN MARTINE, et al., as Executors, &c., Appellants.

      Action to recover from agent amount improperly invested on loortliless second mortgages—proof necessary—form of judgment.

    In an action brought against the executors of deceased to recover from his estate a sum of money alleged to have been invested by him, as agent and trustee of plaintiff, in worthless second mortgages, evidence showing that the securities were second mortgages, and •were insufficient, and that the deceased, under some kind of employment, not defined, took some part, not defined, in the transaction, is not sufficient to place upon defendants the burden of showing that the action of deceased was proper,—the evidence not showing that the parties were not on equal ground, nor that the plaintiff reposed any confidence in deceased, nor that their relations were such as to imply confidence.
    Plaintiff in such a case is not entitled to have a money judgment for the full amount of her investment, without proof that she has tendered to defendants the bonds and mortgages, the bonds not having been proved to be worthless.
    Whether such proof would be sufficient, qumre.

    The judgment should, at least, provide for the delivery of the bonds and mortgages to the defendants, in the proper contingency.
    Before Sedgwick, Ch. J., and Freedman, J. .

      Decided February 7, 1881.
    Appeal by defendants from judgment in favor of plaintiff, entered upon decision of a judge at special term.
    The action was begun against defendants’ testator in his life-time. The complaint averred that about March, 1873, she.met the defendant, who represented to her that he was an attorney at law; that the plaintiff, relying upon such representation, told defendant that she had $8,600 which she desired to invest; that a certain investment had been proposed to her; that the defendant then said that the proposed investment was unsafe, and advised the plaintiff not to make it, and that he could and would invest the money on good first-class security, if she would intrust the same to him, for that purpose; that the plaintiff thereupon accepted the services and advice of the defendant, for the purpose of making a loan and investment; that after-wards the defendant represented and stated to her that he had found an opportunity to invest said sum of money, on good first-class security, on bond secured by mortgage; that the plaintiff then intrusted to the defendant the sum of $6,000, as her trustee, agent and lawyer, for the purpose of being invested as aforesaid. That, thereupon, the defendant delivered to her two bonds, secured by mortgage, and each in the sum of $3,000, and the defendant then and there stated that said money was securely and properly invested ; that the defendant never was ah attorney at law, and all statements and representations made by him, as aforesaid, in that behalf, are and were wholly false and untrue, and made for the purpose of deceiving and defrauding the plaintiff; that the sum of $6,000, so invested as aforesaid, by the said defendant, was unsafely, improperly, wrongfully and fraudulently invested; that the persons who executed the said bonds were, and now are, unable to pay the same, all of which was and is well known to the defendant; that the said two mortgages . . . are second mortgages; that there are upon the property mortgaged, two prior mortgages in the sum of $10,000 each, and the same are now due and wholly unpaid; that the property mortgaged was insufficient security for the payment of the said sum of $6,000, or any part thereof, as was well known to the defendant; that the defendant wholly concealed from her the fact that they were second mortgages, and that the bondsmen were irresponsible, and that there were incumbrances on the said two lots, and she delivered to him the said sum of $6,000, in entire ignorance of these facts, and relying upon the statements and representations of the defendant that has said money was securely and safely invested, and that the security was first-class. “Wherefore the plaintiff demands the judgment of the.court, that the defendant be declared to have acted in all the matters set forth, as the trustee of the plaintiff, and as such, performed the duties which devolved upon him, improperly and fraudulently; that the said investment was insecurely and fraudulently made; that the defendant account for the said sum of six thousand dollars, and that he pay the same to her; that the plaintiff have the right and be empowered to foreclose said mortgages, and to collect so much as she may be able to collect, by reason of said bonds, and charge the defendant with any deficiency in the sale of the property in said mortgages described, in "case the defendant does not pay the said sum and interest; that on such payment in full by the defendant, the plaintiff transfer such bonds and mortgages to him.”
    The answer denied the material allegations of the complaint. •
    There was, on the trial, no proof to show that James Henderson, one of the obligors of the two bonds made to plaintiff, was not pecuniarily responsible; or that the bonds and mortgages had ever been tendered to the defendants’ testator, nor did the judgment rendered in the case provide for any transfer or delivery of the bonds and mortgages to the defendant. The judgment was simply that the plaintiff recover judgment for the sum of $5,600 and interest. This amount was the principal sum of $6,000, less certain amounts that the plaintiff had received in the course of the transaction.
    It appeared that during the pendency of this action, the first mortgage of $10,000, had been foreclosed, and that there was a judgment for deficiency against Greorge Hanson, the co-obligor with James Henderson in the two bonds delivered to plaintiff.

      Charles A. Jackson, for appellant.

      G. W. Cotter ell, for respondent.
   By the Court.—Sedgwick, Ch. J.

On the trial, both of the parties suffered the serious disadvantage that resulted from the death of defendants’ testator, before trial. The plaintiff was, for that reason, shut off from proving any communications with the deceased, and the defendants could not have the benefit of giving the deceased knowledge of the transaction. The most of the allegations of the complaint necessarily depended upon oral statements, made to and by the deceased. There was, therefore, no direct proof of any part of the case, as stated by complaint, that is, of the employment of the deceased, of his promises, or declarations, or representations. Of course, it was clearly proven that the mortgages were second mortgages, and there was enough evidence to sustain the finding that these mortgages were not good. and sufficient securities. There was matter enough in the answer, if not in the evidence, to show that the de-. ceased had, in some part of the transaction, acted as agent or broker for the plaintiff, and, as such, had brought to plaintiff’s knowledge the fact that such an investment might be made for her. But there was no evidence to show what was the character of the employment, how broad it was, how much of confidence and trust was reposed in the deceased, or how much was left to his discretion. It might have been simply an employment to bring to her attention any opportunity for an investment, as to which she was to use her own discretion. There was no proof in the case as to plaintiff’s knowledge of what made or did not make good security, or that she could be imposed upon, or improperly induced, or that she in fact was induced to take the mortgages by anything said or done by the deceased. There was no proof that she was not able to competently judge for herself of the extent to which a security would be affected by the fact that it was a second mortgage. There was no proof from her that she did not know, at the time of the investment, that the mortgages were second mortgages. On her examination her attention was called to this by pointed questions of counsel on both sides. She either could not, or did nob wish to give definite information on the point. Her own counsel asked her this question: “You were asked when you first learned that the bonds and mortgages were second, and you said you first learned it after the bonds and mortgages were executed.” Her answer was : “About that, Mr. Theodore Martine (the deceased) informed me, they were second mortgages.” This rather supports than negatives the idea that she knew they were second mortgages, from the deceased, at the time the investment was made.

The only other testimony that was relied on to show that the deceased did not inform her of the fact at the time, was an admission, gathered from his silence, in a conversation that was testified to by a third party. This gentleman testified that the plaintiff was a guest in his residence, at a time three years after the transaction ; that, in the middle of the afternoon, he went into his breakfast-room for a glass of water; that he there saw the plaintiff and the deceased talking; he apologized for interrupting them ; the plaintiff introduced him to the deceased, “ and I says, I believe I met you before once,” and I reminded him at the time where it was; they were then talking about these mortgages ; as I passed through, I heard Mrs. Whitney speak to Mr. Martine, and say she was very sorry that things were in the shape that they were. I said to Mr. Mar-tine, that I thought he had done very wrong in making these mortgages second mortgages, without consulting Mrs. Whitney before he had done so, and he said he was very sorry that he had had anything to do with it.” The witness testified that the deceased was rather feeble, that is, he showed signs of it. The circumstances of this interview show that the conversation was casual, and fail tó show that the deceased, at the time, was likely to be conscious that, unless he entered into an explanation with the gentleman then introduced to him, it would be an admission on his part, of the truth of what was said to him, and his answer indicated an avoidance of discussion. This scintilla of evidence should not have the weight of solid proof, especially when considered with plaintiff’s testimony, that, about the time of the execution of the mortgages, the deceased did tell her that they were second mortgages.

This leaves, as the sole ground of recovery, the fact that the security was second mortgages, and that the deceased, under some kind of employment that is not defined, took some part that is not defined, in the transaction.' The learned counsel for the plaintiff argues that this throws the burden of proof irpon the defendants to show that the deceased’s action was proper. This does not seem to be valid, for, at least, it does not appear that the parties were not on equal ground, nor that the plaintiff reposed any confidence ,in the deceased, nor that the relations of the parties were such that they imply that confidence was reposed in, or trust devolved upon the deceased.

Whatever may be the hardships of the particular case, or the suggestions from slender testimony, that it is possible, or even likely, that the plaintiff may have some cause of action, she ought not to have a judgment in her favor that does not rest upon sufficient proof.

I am also of the opinion that the plaintiff was not entitled to have a money judgment for the full amount of her investment, without proof that she had tendered to the defendants the bonds and mortgages. The former were not shown to be worthless, if that were sufficient, in a case where she seeks to make the defendants liable for the amount alleged by her to have been placed in the hands of the deceased as her trustee. Under any circumstances, the judgment in the case should have provided for the delivery of the bonds and mortgages to the defendants, in the proper contingency (Lewis’ case, 4 Edw. Ch. 622, 634).

Judgment is reversed, and a new trial ordered, with. costs of the appeal to the appellant to abide the event,

Freedman, J., concurred.


author: By the .Court.—Sedgwick, Ch. J.

text:
    MARY BOWMAN, Plaintiff, v. ANDREW G. PURTELL, Defendant.
    I. Complaint, construction op, on appeal.
    1. TWO CAUSES OF ACTION—CONTRACT AND TORT— WHEN NOT REGARDED AS CONTAINED IN; BUT AH CONTAINING A SINGLE CAUSE OF ACTION IN TORT.

      (a) Where there are averments which, taken by themselves,, would constitute a cause of action based, on contract, but not stated as constituting a separate cause of action, but, on the1 contrary, so intimately interwoven with other averments as to show that the whole theory of the action was based on tort, the averments in the complaint showing a cause of actionin’ tort; and, upon a motion being made after all the evidence-was in, for a dismissal of the complaint, on the ground that the evidence did not sustain the cause of action in tort alleged in the complaint, the plaintiff made no claim to recover on a cause-of action upon contract claimed to be set forth in the complaint; and the court granted the motion, to which plaintiff' excepted; and the court ordered the exceptions to be heard! in the first instance at general term:
    Held,
    that the complaint must be regarded as containing but a: single cause of action, viz.: one on tort, and that plaintiff could not sustain his exception on the ground that the evidence sustained those averments in the complaint, which, if taken separately, might be deemed to state a¡ cause of action on contract.
    1. Sparman v. Keim, 44 27. 7. Super. Ct. 198,—its principle in this respect followed.
    2. Sparman v. Keim, 83 27. 7. 245 (reversing 44 27. 7! Super. Ct.),—distinguished.

      Before Sedgwick, Ch. J., Fkeedman and Tbuax, JJ.

      Decided June 18, 1881.
    Exceptions of plaintiff ordered to be heard in first instance at general term, upon dismissal of the complaint at trial term.
    The facts sufficiently appear in the opinion.

      J). 8. Riddle, attorney and of counsel, for plaintiff, after contending that there was sufficient evidence of the fraud, urged :
    I. Aside from fraud, the plaintiff had proved sufficient allegations to entitle her to a verdict. In each cause of action set out in the complaint, it is alleged, that at defendant’s request, she gave or loaned him the money named, and at the end of the complaint it set forth that these various sums-are not paid. Each of these allegations was proved. As to non-payment, her testimony is : “I let Purtell have the money. The stock was sold for his benefit. It is the money I am looking for now which is equivalent to say he has not paid. At least, this was sufficient to go to the jury for them to say whether he had paid her back. But payment is a defense, and nonpayment need not be proved by the plaintiff (Keteltas v. Myers, 19 N. Y. 231; Halsman v. De Gray, 6 Abb. Pr. 79; Denmark v. Denmark, 13 How. Pr. 372). And it was not necessary to prove the allegations of fraudulent representations. They do not constitute the gravamen of the causes of action ; they are mere inducements. The gravamen of the action is the loaning and the non-payment of the money. It would be extraordinary to turn the plaintiff out of court after she has proved that the defendant got from her on various pretenses over $18,000, which he still has (Graves v. Waite, 59 N. Y. 156, 160-161). There was a reargument, in which the court was urged to apply to this case the decision made in Ross v. Mather, by the commission of appeals, 51 N. Y. 108, but the court unanimously declined (Elwood v. Gardner, 9 Abb. Pr. N. S. 99 ; Byxbie v. Wood, 24 N. Y. 607, 610; Ledwich v. McKim, 53 Id. 307, 316 ; Neftel v. Lightstone, 77 Id. 96; Knapp v. Roche, 37 Super. Ct. 395). In all the cases where the court held that, if the complaint alleges fraud or deceit the plaintiff could not recover on simply proving a cause of action on contract, either the complaint did not set up allegations constituting a cause of action on contract beside the allegations of fraud, like in Barnes v. Quigley, 59 N. Y. 265; Degraw v. Elmore, 50 Id. 1; Sager v. Blain, 44 Id. 445 ; Walter v. Bennett, 16 Id. 250 ; Dudley v. Scranton, 57 Id. 24; or the allegations on contract were so coupled with the allegations of fraud as to be an inseparable part of the charge of fraud ; as in Ross v. Mathers, 51 N. Y. 108. But in the case at bar there is no such connection. The case materially differs from Ross v. Mathers, supra. The only case which is against the plaintiff is Peck v. Root, 5 Hun, 547. This is a decision of two judges only—the third justice dissents and agreed with the judge at circuit. That is, two judges were opposed tó two judges. This last decision was based on Ross v. Mathers, 51 N. Y. 108, which the court in Graves v. Waite, 59 Id. 156, refused to follow.
    II. The gravamen of an action is the substantial! cause of the action. If fraud or deceit in this complaint is the gravamen of the action, then all other allegations are mere surplusage, and may be stricken out. But if you strike out here the allegations constituting an action on contract, and which the plaintiff proved, no cause of action will remain in the complaint. On the contrary, if you strike out all the allegations of fraud and deceit, the allegations on contract —her loaning the defendant the moneys on his request—remains, and constitute a complete cause of action. Is it not plain, therefore, that the loaning of the moneys to defendant constitutes the gravamen of the action, and not the fraud, since the former constitutes a cause of action while the latter by itself does not ?
    III. On the motion for dismissal of the complaint, the defendant did not claim, and it is not pretended that the allegations of fraud and deceit in the complaint misled him-. His answer is a general denial. He therefore denied the allegations of loaning him the moneys at his request as well as the fraud, and to succeed in his defense he would have been bound to prove that he did not receive any of the moneys, as well as that he made no fraudulent representations. He seeks to prevail on a technicality which worked him no wrong or inconvenience.
    IV. Nor is it an objection that upon the complaint an execution against the person might be issued although no fraud was proved upon the trial (Woods v. Henry, 40 N. Y. 124; Elwood v. Gardner, 45 Id. 349).

      Reddy & Fromme, attorneys, and Jacob Fromme and Samuel Jones, of counsel, for defendant, urged:—
    I. The whole frame work of the complaint is in fraud, deceit and false pretenses made by the defendant to obtain these various sums of money. Fraud, deceit and false pretenses are the substantial causes of action. Therefore the complaint was properly dismissed (Peck v. Root, 5 Hun, 461; Combs v. Dunn, 56 How. Pr. 169; McMichael v. Kilmer, 75 N. Y. 40 ; Barnes v. Quigley, 59 Id. 265; Ross v. Mather, 57 Id. 108, 111, 121; Degraw v. Elmore, 50 Id. 45).
    II. The allegations of fraud were not surplusage. Upon the face of the complaint the plaintiff, if she recovered, was entitled to an execution against the defendant’s person, without obtaining an order to arrest in the action (Code, § 549, subd. 2; Id. § 1487, subd. 1).
   By the .Court.—Sedgwick, Ch. J.

The learned counsel for plaintiff, appellant, in his argument says : “The complaint alleges the different loans made at defendant’s request and their non-payment. It also sets up certain statements and representations made by defendant to induce her to let him have these moneys, that they were false, and she was induced thereby to give him these moneys.” The complaint shows that the plaintiff claimed that these representations were of matters of fact, and that they were made falsely, knowingly and. fraudulently by the defendant. There can hardly be a doubt that the complaint contained statements of causes of action in tort from false representations. ' There are in the complaint allegations of ten causes of action of this kind, set out in twenty-two paragraphs. The twenty-third paragraph alleges ‘ ‘ that the defendant promised at the time he obtained the aforesaid sums of money respectively, to repay the same to the plaintiff, and he received the same upon such promise.”

On the trial, after plaintiff’s case was in, the counsel for defendant moved to dismiss the complaint on the grounds “ that the gravamen of the whole of the complaint is fraud, deceit and false pretenses, and that no evidence tending to show either fraud, deceit or false pretenses has been produced. That the plaintiff has failed to prove her causes of action alleged in the complaint.” The record states that the motion was granted and plaintiff’s counsel excepted.

On the argument of this appeal the counsel for appellant did not take the position that the complaint did not state causes of action-in tort. He argued that it did, and that there was sufficient proof to sustain .them. He also argued that the complaint stated a cause of action on contract.

At every stage of the case these claims were inconsistent. The plaintiff could not in one breath claim for both in one action. Necessarily she should have chosen one to the exclusion of the other. On the trial the counsel for the defendant asserted that the gravamen of the complaint was in tort. And it was exactly true, that the action was quite as much in tort as it was in contract. If you suppose that the plaintiff’s counsel claimed that the complaint did contain a cause of action on the promise, nevertheless there is no intimation that he claimed to recover upon that. The correct inference is that he claimed to recover in tort. By doing that he abandoned the other inconsistent claim, as has been already stated. Even on the appeal, he did not abandon the tort, but claimed an alternative right.

I am of the opinion that the testimony did not sustain the action for false representations stated in the complaint, and that, as the case was tried-as one in tort, the action of the judge in dismissing the complaint should be dismissed.

The case of Sparmann v. Keim (44 N. Y. Super. Ct. 163) was reversed in the court of appeals. The case there has not been reported, but a manuscript copy of the opinion shows that the reversal was placed upon the ground that the complaint did not state any cause of action for fraud.

Exceptions of plaintiff overruled, with costs, and judgment for defendant directed.

Freedman and Truax, JJ., concurred.

       Reported 83 N. Y. 845.


text:
    JOHN V. FARWELL and others, Respondents, v. THE IMPORTERS’ AND TRADERS’ NATIONAL BANK, Appellant.
    I. Marshalling of assets.
    1. PLEDGE OF NOTES OF THIRD PARTIES AS COLLATERAL TO A LOAN.

      (а) Collection of.
    1. Who entitled to collect. The pledgee is entitled to collect ' as and when they fall due.
    (б) Application of peoceeds.
    1. Pledgee's right to make.

    Has no right to apply the proceeds to the payment of his-loan until after default in its payment.
    (c) Makes of collatebal note wrongfully pledged.
    1. Bights of, as against pledgee who has not acquired, before notice of the facts, any rights or interest other than those springing out of the contract of pledge.
    1. Possession of the note. If, before its payment, the pledgee has received from other collaterals sufficient to satisfy the loan, the maker is entitled to the possession.

    2. Proceeds of the note. If the note, falling due before sufficient collections to meet the loan have been made on the other collaterals, is thereupon paid to thepledgee, and subsequently collections are made on such other collaterals, so that either none, or only a part of the proceeds of a note pledged without authority is required to satisfy the loan, the maker of such note is entitled to recover from the pledgee so much of the proceed# of his note as was not, after the application of the proceeds of the other notes, required to satisfy the loan.
    1. Trustee quasi. The pledgee, as to such proceeds, is quasi trustee for the maker of the note.
    Before Sedgwick, Ch. J., and Freedman, J.

      Decided June 13, 1881.
    Appeal by defendant from judgment entered upon decision of a judge sitting at special term.

      The defendant, a banking corporation, lent, in September, 1873, to one Farnham, a clerk of Berry & Heiser, $50,000, payable whenever the defendant should request payment, the loan being what is usually called a loan on call. As security for payment Farnham pledged with the bank seventeen promissory notes, amounting on their face to the sum of $59,726.88. Berry & Heiser guaranteed payment of the loan. One of these notes had been made by the plaintiffs and had been by them delivered to Berry <& Heiser as brokers, to be sold in the market at a discount of not more than •8 per cent. The plaintiffs received no part of the loan and did not know that their note had been pledged until after the loan was made. Before the maturity of the note the plaintiffs notified the defendant of the facts and claimed that they were entitled to any surplus remaining from the notes pledged after the payment of the loan of $50,000.
    The plaintiffs’ note matured on December 8, 1873 ; at that time nine only of the notes pledged had matured. They had been collected by the defendant. The sum collected was $29,633.40. The plaintiffs paid their note at its maturity. On January 24, 1874, the defendant had collected from the notes pledged, exclusive of plaintiffs’ note, a sufficient amount to fully pay the loan of $50,000. The plaintiffs claimed in the action that the defendant was bound to repay to plaintiffs the amount paid by the latter, on their note at its maturity.

      R. W. Townsend, attorney, and A. R. Dyett, of counsel, for appellant, on the questions considered in the opinion, urged:
    I. The transaction between plaintiffs and Berry '& Heiser was with the latter as owners of the commercial papers set forth in the complaint and the agreement was, in fact, the loan of $50,000 arn^ interest, to be paid by the proceeds of those notes as and in the order in which they fell due, if paid as they fell due ; and that plaintiffs’ note should be applied to make that payment, because it was so dated and fell due at such a time in reference to the other notes, that its proceeds would be needed and used for such payment before the other notes which fell due afterwards ; and it was, in fact and law, then agreed that the proceeds of the notes thereafter due should be applied on the other indebtedness of Berry & Heiser to defendant. This, being an agreement in relation to commercial paper' apparently belonging to Berry & Heiser, was lawfully made, and bound the plaintiffs’' note and its proceeds, and separated the note and its proceeds from the notes subsequently falling due, and left them to be operated on separately by the Berry & Heiser agreement of 18th of April, 1873, and gave defendant the right to apply their proceeds, as it offered to prove that it did—and to the exclusion of which offer an exception was taken—to and upon the indebtedness of Berry & Heiser, other than the $50,000 loan. The law itself applied the money received by the defendant in payment of the plaintiffs’ note towards the payment of the $50,000 loan. All the notes, amounting to $59,726.88, were pledged intact and simultaneously as collateral for the payment of the $50,000 loan. The defendant could not sell them (Wheeler v. Newbold, 16 N. Y. 392); but could collect them only, and as they fell due respectively. And as they were all paid at maturity, and when the plaintiffs’ noté fell due, less than $30,000 of the notes had fallen due, the proceeds of plaintiffs’ note could be applied only toward the payment of the $50,000. There was no pretense of any agreement between Berry & Heiser and the defendant to apply it in any other manner; and not only in the absence of such an agreement would the defendant have had the election as to its application, but, we repeat, by the law itself it was applicable only to the payment of that loan of $50,000. The plaintiffs’ notice of November 23, 1879, while it gave us notice of their rights, could not create any new right in them, nor deprive us of any right which we then had, and as fixed on the 11th September previous, and by the agreement of April 18,1873, nor could it change the contract which the law made then between Berry & Heiser and the defendant. We may, therefore, safely concede that after that notice no act of the defendant could deprive the plaintiffs of any right, but at the same time, by a parity of reasoning, the notice could not deprive the defendant of any existing rights, and one of those rights was the legal right to have the proceeds of the plaintiffs’ note applied, as the law itself directed, to the payment of the $50,000 loan, which was not yet paid, as we have shown. Let us test this: Suppose the plaintiffs’ note had fallen due the last, and before it fell due the defendant had received from the Other notes enough to pay the $50,000 and interest, and had made no actual application of the money received. The defendant could not have applied any part of that money to the prior indebtedness of Berry & Heiser so as to require the proceeds of the plaintiffs’ note to pay' the $50,000 loan. Those proceeds must be applied to that prior indebtedness under the agreement of April 18, 1873. But the reason why this is so, and the only reason, is, that the law itself applied the proceeds of the note, as collateral, to the payment of the $50,000 loan until that was paid. And for that very reason the proceeds of the plaintiffs’ note, when received, were so applied, as the defendant had not yet received $30,000 on that loan. The plaintiffs have no right or equity to control the creditor’s right (Munger on Application of Payments, 75, 151; 5 Denio, 470, 476 ; 3 Id. 284 ; 15 Wend. 20; Harding v. Tifft, 8 N. Y. Weekly Dig. No. 12, June, 1879). In this case of Harding v. Tifft, there was no application by the law itself of the payment, as there-is in this case. The application was made by the simple act and will of the' creditor. A fortiori, the plaintiffs cannot alter or control the application of these proceeds as a payment which is made by the law itself..
    II. The plaintiffs concede and the court- found that the defendant had a right to demand and receive payment of their note when they did so. When the defendant received the proceeds of the plaintiffs’ note, eo instante, that amount of the $50,000 was paid and extinguished, and irrevocably so. The liability of Berry & Heiser, therefore, could never possibly be revived; certainly not without the consent and concurrence of Berry & Heiser (Marvin v. Vedder, 5 Cow. 691; Champney v. Cooke, 34 Barb. 539 ; Truscott v. King, 6 N. Y. 147-449 ; Banlo v. Garmo, 1 Sandf. Ch. 383).
    III. The payment by the plaintiffs of their note was a voluntary one. There was no compulsion. In order to make it a compulsory payment, there must have been at least a judgment or its equivalent, though an execution was not necessary. A protest is of no consequence (Fleetwood v. Mayor, &c., 2 Sandf. 475 ; Forrest v. Mayor, &c., 13 Abb. Pr. 350; N. Y. & H. R. R. Co. v. Marsh, 12 N. Y. 308).
    IV. But the plaintiffs claim that the defendant received the proceeds of their note in trust, provided'they subsequently received sufficient from the other notes to pay the balance of the $50,000 loan. Let us examine this- claim. They concede the right of defendant to demand and collect their note, when it fell due. This being so (apart from our position that the proceeds were applied by law to, and became, per se, and eo instante, a payment of so much of the loan of $50,-000), it follows that the defendant had a right then to the money, and as an incident to use it—to spend it. This being so, how can a trust of the proceeds coexist with the right to use the money % It is this very right to use the money of the depositor that makes a depositor in a bank a simple creditor at large (17 Wend. 94 ; 1 Paige, 249), or an agent or consignee, with a similar right, a simple debtor, and not in a fiduciary capacity (McBurney v. Martin, 6 Robt. 508, 509, and cases cited ; Stoll v. King, 8 How. Pr. 300, 301: Bussing v. Thompson, 15 Id. 97). Surely the plaintiffs do not claim to have, and they cannot have, any lien upon or claim to the proceeds of the other notes. Unless, therefore, they can impress a trust upon the very proceeds of their note, they must fail.
    V. If the plaintiffs ever had any right, legal or equitable, in conflict with the rights of the defendant, acquired by him as against Berry & Heiser by the agreement of April 18, 1873, and the pledge of the $59,000 and odd notes on September 11, 1878, on the loan of the $50,000, those rights and equity of the plaintiffs existed when their note fell due, and before they voluntarily paid it. If the defendant could collect and hold the proceeds thereof in trust only as contended, they had no absolute right to collect the note, certainly not to use the money. And this being so, the plaintiffs had the right to invoke the aid of a court of equity then, and before paying the money to the de- * fendant, to declare and establish this alleged trust and their equitable right, and to permit them either to pay the money into court or to a receiver. A court of equity has power over every sort of trust, express, resulting, or implied. Or the plaintiffs might have asked a court of equity for permission to pay to the defendant the balance of the loan of $50,000, and thus, redeem their note from the pledge and be subrogated to the rights of the defendant. -Neglecting to do either, and having voluntarily paid the money to the defendant, they have no redress. They could not make the defendant their trustee, nolens miens.

    VI. The defendant, in any aspect of the case, is a
      bona fide holder of the plaintiffs’ note for value. Assuming that the defendant had taken this note entirely on account of the previous indebtedness of Berry & Heiser, the plaintiffs’ note was received September 11, and was not due until the early part of December, and the defendant must necessarily wait until its maturity for so much of that prior indebtedness, the payment pro tanto of which was extended accordingly by operation of law; and the defendant therefore, is a bona fide holder for value (Lewis v. Rogers, 34 Super. Ct. 64; James v. Patten, 6 N. Y. 9).

      Martin & Smith, attorneys, A. P. Whitehead and ■ M. W. Divine, of counsel, for respondents, on the questions considered in the opinion, urged:
    I. The defendants are not entitled to retain plaintiffs’ note or its proceeds. (1) Berry and Heiser delivered to defendants' two different funds as security for the payment of the loan of September 11, 1873. 1st. Sixteen notes-(their own property), aggregating $53,205.58. 2d. One note (the property of plaintiffs), amounting to $6,521.30. They did not assume to sell those notes to defendánt-s, nor did defendants acquire any right of ownership in the notes ; they simply, as plaintiffs con-, cede, held a lien on them to secure the payment of the. loan. “ The general principle is, that if one party has a lien on or interest in two funds for a debt, and another party has a lien on or interest in only one of the funds for another debt, the latter has a right in equity to compel the former to resort to the other fund in the first instance for satisfaction ” (Story Eq. Juris. § 633; Exp. Alston, In re Holland, Eng. L. R. 4 Ch. App. 168; Broadbent v. Barlow, 3 De Gex, F. & J. 570 [64 Eng. Ch. Am. ed. 570]; Ingallsv. Morgan, 10 N. Y. 178). On November 25, 1873, thirteen days before-the maturity of plaintiffs’ note, defendants were notified of plaintiffs’ claims and rights in respect to it; defendants then knew that the securities held by them for the loan, consisted of the two funds above mentioned, and they knew that plaintiffs’ note had been wrongfully pledged with them by Berry & Heiser. Having this knowledge, they must be presumed to know that it was their duty to resort, in the first instance, to the fund or securities which belonged to Berry & Heiser, and to resort to plaintiffs’ note and its proceeds, only in the event that the Berry & Heiser fund proved insufficient to reimburse them. The Berry & Heiser fund having produced more than sufficient to pay defendants’ loan in full, we submit that plaintiffs’ note and its proceeds have been released and discharged from defendants’ lien, and that plaintiffs are entitled to have the same returned to them. (2) The deposit by Berry & Heiser, with defendants, of plaintiffs’ note for $6,521.30, in legal effect, constituted plaintiffs sureties to that extent for the repayment of the loan, and the loan having been fully repaid from the other securities, plaintiffs are now entitled to the return of their note or its proceeds (Gould v. Central Trust Co., 6 Abb. N. C. 381, and the other cases above cited). (3) Even if Berry & Heiser bad sold the notes to defendants the latter could not, under the circumstances of this case, confer any title except as to the portion owned by them, namely, $53,205.58. Regarding the case from this point of view, it may be said that defendants paid $50,000 for notes amounting to $59,726.88, but they realized from them $59,726.88 ; they, therefore cannot be regarded as having paid anything for plaintiff’s note, and cannot be entitled to apply that note or its proceeds towards the payment of that antecedent indebtedness of Berry & Heiser. The defendants, on the other hand, claim that when they collected the note on the 8th of December, 1873, they had a right then to apply its proceeds to the payment of the loan, and certain authorities have been cited by defendants’ counsel in support of this proposition. We have examined these authorities with care, and respectfully submit that they have no application whatever to the facts of this case.
    II. (1) Plaintiffs’ note matured December 8, 1873 ; at that time collateral notes to the amount of only $29,633.40 had matured, audit was, of course, uncertain whether the total amount of the loan could be realized from the collateral notes belonging to Berry & Heiser. Under the circumstances, defendants were entitled to enforce the collection of plaintiffs’ note and retain its proceeds for their indemnity until that matter was determined ; it was beyond the power of plaintiffs to refuse to pay their note, and they cannot be said to have paid it of their own volition, but because the law compelled its payment (Haynes v. Rudd, 17 Hun, 477; Gilmour v. Thompson, 49 How. Pr. 198 ; Smith v. Cuff, 6 Maule & S. 160.) (2) When the note was paid, plaintiffs did not and could not know whether the other collateral notes would be paid ; that knowledge was necessary to enable them to determine whether or not they would be liable to pay the note in question, and defendants having remained silent after the service on them of the notice of November 25, 1873, plaintiffs xvere entitled to assume that defendants, in presenting and collecting the note from the bank, would hold the proceeds as security in place of the note itself, the final disposition and application of those proceeds to depend upon the payment or nonpayment of the loan out of the proceeds of the Berry & Heiser fund or securities (Watson v. Cabot Bank, supra). (3) It will be observed that in this case, as in that .of the Cabot Bank, the payment of the note was made not by plaintiffs themselves, but by their bank out of their funds, and that defendants, when they applied for and obtained that payment, had notice of plaintiffs’ claims and rights to the note.

      III. Defendants did not do anything to alter their position towards Berry & Heiser. There is no evidence to show that defendants parted with any of their rights against Berry & Heiser. They did not give up any securi ty, nor make any extension of credit, nor release Berry & Heiser from any obligation. Mo portion of Berry & Heiser’s indebtedness to defendants was extinguished. Under these circumstances the cases are unanimous, that defendants cannot be held to be holders for value (Wardell v. Howell, 9 Wend. 170; Rosa v. Brotherton, 10 Id. 86 ; Smith v. Van Loan, 16 Id. 659; Goldsmid v. Lewis Co. Bank, 12 Barb. 407).
   By the Court.—Sedgwick, Ch. J.

The loan made upon the pledged promissory notes, was not to be paid in parts or installments, from time to time. A legal and fixed characteristic of the loan was that it was to be paid or demanded, altogether, at one time.

The defendant, as the pledgee, had power to collect the notes as they respectively fell due (Wheeler v. Newbould, 16 N. Y. 392; Nelson v. Eaton, 26 Id. 410, 417). But this power of itself did not imply an accompanying power, to apply the proceeds of the collection to the satisfaction of the loan. To apply the proceeds, it was at least necessary that default should have been made in payment of the loan. The loan, however, was not payable at the time the defendant collected plaintiffs’ note, which formed part of the pledge. Indeed, before the defendant as pledgee would have power under the contract of pledging to apply the proceeds, it was necessary that notice should have been given to the pledgor to redeem (Lewis v. Varnum, 12 Abb. Pr. 305 ; Wilson v. Little, 2 N. Y. 443).

In the words of Chief Justice Thompson in Garlick v. James (12 Johns. 148): “The authority of the defendant, with respect to the note, could extend no further than to receiving the money due upon it, without first calling upon ‘ the pledgor ’ in some way to redeem. The money when received would be a substitute for the note and to be held upon the same terms and subject to the same rights and duties as the note.”

In January, 1874, the money collected upon the notes pledged, exclusive of the proceeds of plaintiffs?' note, were sufficient to pay the loan. At that time the' defendant had not called the loan or given notice to redeem. The plaintiffs before they paid their note notified the defendant of the facts and of their right; of course, this notice could not have diminished any previous right the defendant possessed ; on the other hand, however, it prevents the defendant from claiming that it gained any new right of application from the plaintiffs. The pledgors did not interfere, in any way, with the disposition to be made of the proceeds of plaintiffs’ note. The defendant received neither from the plaintiffs nor pledgors any implied authorization to-apply the proceeds as it pleased. The proceeds of all the notes therefore remained in defendant’s hands to bez applied as a pledge to the payment of the loan.

The plaintiffs’ note had been used as a pledge, without authority from them. If the pledgee was not a bona fide holder, the plaintiffs would have been entitled to recover possession of the note. Equitably, the proceeds of the note in the hands of the defendant stand in the place of the note (Blydenbnrgh v. Thayer, 3 Keyes, 293). Equitably, it was entitled to retain these proceeds only so far as was necessary to repay the- loan, the advance of which made it a bona fide holder. As it appeared that the defendant had no right to make an application of the proceeds of this note, before a time, when sufficient had been collected from the other notes to repay the loan, the plaintiffs were entitled to the proceeds of their note.

' It is claimed, however, that as the plaintiffs paid the note in regular course of business, it was such a voluntary payment that it cannot be recalled. To preserve the plaintiffs’ rights, it is not necessary to think of the payment as being affected or recalled, but only that the right of the defendant to the money paid, is shaped by the right the defendant had in the note. That is, the defendant did not take the proceeds of the note as absolute owner of the note, but as pledgee, having certain rights to the proceeds, to the extent that it was a bona fide holder. The loan had been made upon all the notes. These notes in solido were primarily security for repayment. There was no advance upon this note by itself. Until it should appear to what extent the other notes could be collected, it could not be determined to what extent it was necessary to resort to the proceeds, of this note to protect the defendant as bona fide holder.

I am of opinion that the judgment should be affirmed, with costs. '

Freedman, J. concurred.


author: By the Court.— Sedgwick, Ch. J.

text:
    JOHN McGINN, Respondent, v. DAVID W. KOEHLER, Appellant.
    I. Bankruptcy.

    1. Assignee in.

      (a) Actions against, springing out of the taking by the marshal from the possession of a third party, under a warrant in bankruptcy proceedings, property of which he claims to be the owner, but which the marshal claims constitute assets belonging to, and distributable as, part of the bankruptcy assets.
    1. Defenses of assignee.
    1. That the property was transferred by the bankrupt to said third person in fraud of creditors or on a forbidden preference, or in violation of a provision of the bankrupt act.
    2. That he did not aid in or instigate the acts of the marshal, but acting as assignee he merely received the property from the marshal Iona fide, and that no demand for its return had been made.

    2. Liability of assignee.
    1. Semble: He is liable for such acts of the marshal not justified by the warrant held by said marshal, as were done by bis aid and instigation.
    Before Sedgwick, Ch. J., and Freedman, J.

      Decided June 13, 1881.
    Appeal by defendant from judgment entered upon verdict of jury.
    The complaint averred that the defendant entered upon certain premises, which were in the lawful possession of plaintiff, ejected him by force and violence therefrom, and took, carried away and converted to his own use, property of the plaintiff of the value of $3,000, &c.
    The answer contained a general denial and further averred that the defendant was the assignee in bankruptcy of one Bray, that within six months before the filing of the petition in bankruptcy, Bray fraudulently, and in fraud of creditors, procured certain judgments to be entered against him in favor of plaintiff, and that on the sale, under executions upon such judgments, the plaintiff bought the property in question, with the intent and design to evade the bankruptcy act and in fraud of the creditors, of Bray. On the trial it was shown that the plaintiff had bought part of the property in question at execution sales under judgment obtained by him against the bankrupt Bray. The counsel of defendant proceeded to examine the plaintiff as to the notes upon which he obtained the judgments.
    This was objected to, as attempting to assail the title to the leasehold property, without showing the parties to be in a position to attack it, and the objection was sustained. Defendant’s counsel afterwards offered competent evidence of the petition and the further proceedings in bankruptcy against Bray, and the assignment in bankruptcy to the defendant as assignee, for the purpose, as he said, of showing defendant’s title to the property in question. This was objected to and the objection sustained.

      Frederick SmytTie, attorney, and David McClure, of counsel, for appellant, as bearing on the questions considered in the opinion, urged:
    I. The testimony excluded was the affirmative defense pleaded by the defendant in his answer ; it was offered to show that Martin Bray, who had held the lease of the premises in question, being insolvent, was duly adjudged a bankrupt February 28, 1873 ; that the United States marshal entered into the possession of the premises thereunder prior to March 31, 1873, and was in actual possession thereof on that date; that on that day the estate and property of the said bankrupt was assigned by Register Dayton to the defendant as assignee ; that the plaintiff was not in possession at that time, and that the said marshal alone was ; that the possession of the premises in question and the property in question was received by the defendant, as such assignee, from the said marshal; that his possession thereafter was that of an officer of the court, as such assignee. If permitted to prove these facts, the defendant’s defense would have been complete, and no recovery could have been had by the plaintiff. The court, by its action in excluding this testimony, and each part of it, practically denied the defendant his right to a hearing and justification of Ms acts. It was not permitted to the defendant to show that his action was any other than that of an individual, and the shield which the law throws around its officials and servants was denied to him. In all of the actions against assignees reported the courts have upheld the principle of their right to show that their acts were done as assignees (see Esman v. Apgar, 76 N. Y. 362). The bankrupt act ( U. S. Stat. at L. 522, § 14), among other things, provides that as soon as the assignee is appointed and qualified, the register shall, by an instrument under his hand, assign and convey to the assignee all the estate, real and personal, of the bankrupt, with all his deeds, books and papers relating thereto, and that such assignment shall relate back to the commencement of said proceedings in bankruptcy, and thereupon, by operation of law, the title to all such property shall vest in said assignee. Upon the defendant’s appointment as assignee of Martin Bray, it was his duty as such assignee to take possession of all property of which the bankrupt appeared to be the owner (Esman v. Apgar, 76 N. Y. 361; Buchanan v. Smith, 16 Wall. 301). Whether the acts done were done as assignee, is to be determined by the evidence (Esman v. Apgar, 76 N. Y. 363). It' was the defendant’s right, in order to protect himself from liability as a trespasser, to show that he came to the possession of the property for a lawful purpose and in perfect good faith, by delivery from the wrong-doer (Ely v. Ehle, 3 N. Y. 509). And the defendant must plead his cause of justification or excuse. The receipt of the possession and property by defendant from the United States marshal protected him from being held liable as trespasser or for conversion, as well as his official position as assignee, and even if the marshal obtained the possession wrongfully. Trespass will not lie against a person receiving goods illegally taken by the sheriff, and by him delivered, because he obtained the possession lawfully (Barrett v. Warren, 3 Hill, 350, and.cases cited).
    II. There was error in the court’s refusal to dismiss the complaint at end of testimony. The defendant was not liable in damages for conversion of any of the goods of plaintiff unless upon demand made therefor, and the demand must be alleged (Gurney v. Kenny, 2 E. D. Smith, 133 ; Barrett v. Warren, 3 Hill, 350; Whitney v. Slauson, 30 Barb. 276, and cases there cited; see Wells v. Kelsey, 38 Id. 242 ; Lockwood v. Bull, 1 Cow. 330; Fuller v. Lewis, 13 How. Pr. 220). The proof was of failure to make demand. '

      John McGinn, in person, attorney, and Albert Mathews, of counsel, for respondent, urged:
    I. The attempt to justify the wrongful acts of defendant, by “ offers to show ” that on the day of the first trespass complained of (March 31,1873) the defendant was appointed assignee in bankruptcy of Martin Bray, and that defendant’s acts of violence were done by virtue of that instrument, was properly over-ruled. As such assignee he had no right vi et armis to take the execution of the law into his own hands. The plaintiff being legal owner, and actually in possession of the property in question, (a small portion thereof under a ' judicial sale and the major part thereof from private purchase) he could not be forcibly ousted therefrom, or deprived thereof, except by due process of law. The defendant was a naked trespasser, and the acts of his agents rendered him liable for all their doings in the premises (Brown v. Gilmore, 16 How. Pr. 527 ; Leighton v. Harwood, 12 Nat. Bankr. Reg. 360 ; In re Holland, Id. 403; Gates v. American, 14 Id. 141 ; Cooke v. Whipple, 55 N. Y. 166, 167; Whele v. Butler, 61 Id. 248 ; Ottis v. Williams, 70 Id. 208 ; Deutch v. Reilly, 57 How. Pr. 75 ; Snuth v. Mason, 14 Wall.
      430 ; Marshall v. Knox, 16 Id. 556; O’Brien v. Weld, 2 Otto, 83). (1) The “ offer to show ” fraud in the judgment would not, in itself, have been broad enough, even if otherwise admissible. Guilty collusion alone (under the bankrupt act) will invalidate a preference obtained by a creditor under judicial process (Wilson v. City Bank, 17 Wall. 473 ; Clark v. Ireland, 21 Id. 360 ; Michaels v. Post, Id. 427).
    II. The attempt to discriminate between those acts of defendant alleged to have been done under cover of. the United States marshal, and those of the defendant done through his other agents, like the endeavor to justify the latter as done by defendant as assigneeunder the alleged authority of the former, was a shallow subterfuge, and properly overruled. The marshal himself does not appear to have had any semblance of authority. ' The pretended authority of both the marshal and defendant appears to have begun contemporaneously with the date of the alleged assignment (March 31, 1873); and in point of fact, either Sewards (the agent of the defendant), or defendant personally, directed the entire series of trespasses from the beginning, both before and after the date of the pretended authority under which the defendant attempted to justify his misconduct. Proof that the-marshal, without semblance of lawful authority, and without pretense of process of law, had forcibly seized the plaintiff’s property and delivered it to the defendant (even if admitted in evidence), would have-been proof of conspiracy, and rather matter of aggravation than of defense. They were alike co-trespassers ab initio, and jointly and severally responsible. Nay, the defendant undeservedly escaped a heavier verdict, by the mistaken clemency of the court, in charging the jury that they need not mulct him in damages for the unlawful acts of the marshal in the premises (Doyle v. Sharpe, 74 N. Y. 157-159). (1) The court charged the jury not only that the defendant was “not liable for the wrongful acts committed by the marshal with which he had nothing to do,” but also that “the marshal was alone responsible for his own wrong-doings” and the defendant “was not to be charged with anything properly chargeable against the marshal.” (2) The entire charge of the court was more favorable to the defendant than was warranted by the evidence (Aldridge v. Sturtevant, 1 Hall, 210 ; Schile v. Brockhane, 80 N. Y. 614). (3) The acts of the defendant being wanton and unjustifiable, the plaintiff was even entitled to a verdict for exemplary damages ¡(Walker v. Wilson, 8 Bosw. 586).
    III. The “offer to show” that the United States marshal got possession of the plaintiff’s property, and •delivered possession thereof to the plaintiff, was •also properly overruled. There was no valid “offer” to prove that the property seized was not plaintiff’s property in fact. The mere matter of possession was immaterial, and not in itself enough to justify defendant’s acts. Whatever possession the marshal had ¡gotten was already conclusively shown to be in itself tortious and unlawful. The “ offer,” to have been, .available for any purpose, should have been made to prove some facts showing a lawful possession of the property by the United States marshal.
    IV. The defendant, as the mere assignee in bankruptcy of Bray, having forcibly taken from the plaintiff the property in question, to which plaintiff claimed title, had not the same rights of defense for his acts of violence as a judgment creditor, seizing property under lawful process by an officer duly authorized, to assail the title of the plaintiff, derived from the sale under execution against Bray, upon a judgment against him, as respects even that small portion of the property taken which had originally belonged to Bray (Brown v. Gilmore, 16 How. Pr. 527; Elias v. Warden, 17 Wall. 248; In re Collins, 12 Nat. Bankr. Reg. 382 ; In re Holland, 12 Id. 403 ; Thurber v. Blanch, 50 N. Y. 86 ; Cooke v. Whipple, 55 Id. 166, 167; Whele v. Butler, 61 Id. 248 ; Woodin v. Frazee, 38 Super. Ct. 193).

       The court does not hold that this would not be a defense if the marshal acted without warrant; it would seem to be equally a defense whether the marshal acted without, or -when he acts under, a warrant.

   By the Court.— Sedgwick, Ch. J.

Section 5128 of the bankruptcy act declares that the therein specified unlawful preferences shall be void and the assignee may recover property obtained by the preference or the value of it, from the person receiving it. .

The next section, 5129, declares that any payment or transfer, made to violate the bankruptcy act or to evade any of its provisions, shall be void and the assignee may recover the property or the value thereof as assets of the bankrupt. The formal operation of these sections, by which the transfer from the bankrupt is avoided, at least on the election of the assignee, leaves the property transferred in the bankrupt, and the property would therefore pass to the assignee by virtue of the assignment to him, as well as by the specific intent of the two sections.

And section 5046 declares, that all property conveyed by the bankrupt in fraud of his creditors shall in virtue of the adjudication of bankruptcy and the appointment of his assignee at once vest in such assignee.

Upon the defendant proving that he was duly appointed assignee in bankruptcy of Bray, and further showing that the property was transferred by Bray to the plaintiff, in fraud of creditors or on preference, or in violation of a provision of the bankruptcy act, it would result that title to the property here referred to at the time it was taken from the plaintiff by the defendant was in the defendant and not in the plaintiff. Plaintiff could not rightfully recover the value of such part of the property as he unlawfully received from Bray, the bankrupt (Sharpe v. Doyle, 102 U. S. [12 Otto] 686; reverting Doyle v. Sharpe, 74 N. Y. 154).

The case cited is important on this point. The plaintiff below had sued the defendant for trespass, in taking his property. The defendant pleaded that he was United States marshal, and as such, by virtue of a warrant duly issued to him in bankruptcy proceedings, against certain involuntary bankrupts, had taken possession of the property, and that the property had been theretofore transferred to the plaintiff by the bankrupts in fraud of the bankrupt law.

The warrant was such as is provided by section 5024, viz. : “if it shall appear that there is probable cause for believing that the debtor is about to leave the district or to remove or conceal his goods and chattels or his evidence of property, or to make any fraudulent conveyance or disposition thereof, the court may issue a warrant to the marshal of the district, commanding him to arrest, &c., the debtor, and forthwith to take possession* provisionally of. all the property and effects of the debtor, and safely keep the same until further order of the court.” The question was, whether it was the intent of the act, that the warrant issued under the special circumstances, should take any property that had already gone from the possession of the bankrupts into the possession of third person, even through a fraudulent transfer. The justice delivering the opinion of the court, said the decision depended upon the authority conferred on the marshal by the provisional warrant of seizure. It was held that the marshal might, by the proper construction of the act, take property that had been transferred by the bankrupt in fraud of the' bankruptcy act, and in an action against him might prove that the plaintiff was not the lawful owner of the property by showing that it had been so transferred.

The opinion says the marshal must “of course prove that the plaintiffs were not the lawful owners of them. In other words, that the right of the assignee in bankruptcy, whose right he represented in that suit, was superior to that of plaintiff’s,” and elsewhere that the marshal would “ill perform that duty if he should accept the statement of every man in whose custody he found property, which he believed would belong to the assignee when appointed, as a sufficient reason for failing to take possession of it.” The opinion ends with the conclusive statement that “to hold that the plaintiffs, by reason of their bare assertion of ownership connected with possession, must recover of the marshal the value of the property, and that the assignee could then have sued the plaintiff and recovered it from them, is a mode of doing justice that does not commend itself to our judgment, even if the assignee could be sure to find a responsible defendant when they come to sue.” The reporter makes a head-note of Sharpe v. Doyle, “that the goods were subject to seizure under the warrant, if they were the property of the person against whom the proceedings in bankruptcy was taken.” The general tone of the opinion seems to recognize the theory that the marshal might show that title passed or might pass to the assignee. There is some doubt on this point however. The opinion, at one part, states that “ the case was tried by a jury, the defendant’s plea being that the goods were the property of the bankrupts.” Another part states that the defendant asserted a right to them, under the laws of the United States, on the ground that the pretended. purchase was a fraud upon the bankrupt law and passed no title ; that the ownership was by virtue of the. bankruptcy proceedings in the assignee.” If such be the power of a marshal before an assignee is appointed or it is even certain that an assignee will be appointed, a fortiori, can the assignee as defendant contest the title of property, transferred in fraud of creditors or of the bankrupt act. I am, therefore, of opinion that the defendant should have been permitted to give proofs that he was assignee and that the property had been fraudulently transferred to the plaintiff.

This does not include all the property in controversy according to plaintiff’s claim, but it of course calls for a new trial.

I am of opinion, that in case the act of the marshal in taking the goods was unlawful, because there was no defect in plaintiff’s title, and the defendant, acting as assignee, merely received the goods from the marshal, bona fide, an action for them or their value would not lie, unless a demand for their return was made by the plain tiff. It would be otherwise, however, if the original taking by the marshal was at the personal instigation of the defendant.

On the new trial, it would be best not to give evidence of such acts of the marshal or his deputies, not justified by the warrant, that the testimony does not affirmatively establish were done by the aid or instigation of the defendant.

Judgment reversed, new trial ordered, with costs of appeal to appellant to abide event.

Freedman, J., concurred.