author: Pütnam, J.:

text:
    THE PEOPLE OF THE STATE OF NEW YORK ex rel. EDISON ELECTRIC-LIGHT COMPANY v. EDWARD WEMPLE, Comptroller of the State of New York.

      ■Corporations —tarnation on business or franchise — when capital stock is “employed, within this State" — an investment of it in patents and in stock of foreign companies is not “employing" it — Laws of 1880, chap. 542, secs. 1 and 3; 1881, chap. 361; 1882, chap. 151; 1885, chap. 501.
    Under tlie corporation tax laws a corporation is liable to pay a tax upon its franchise or business, to be computed upon tlie capital stock as valued; and the amount of said stock which forms the basis of the tax is “ the amount of capital stock employed within this State.”
    •Substantially all the capital slock of an electric-light company was invested in patent-rights, and ih the slock of various Stale and foreign corporations, received from them in return for the right to use its patents.
    The electric-light company did not itself employ those patent-rights in the furnishing of light, but, so far as appeared, only sold, them at its office in the State of New York, and whatever use was made of them was by its licensees. Nor did it furnish light in any of the various places where the licensed corporations did business.

      Held, that all the capital stock of the corporation was "employed within this State.”
    That by the word "employed” was meant employed by the corporation.
    That the investment of its capital stock in the securities of other foreign companies was not employing it. That employing' it meant keeping it at work.
    That, so far as the capital stock was invested in patent-rights, co-extensive with the United States, it was still subject to tax in the State of New York.
    That the tax was upon the franchise or business, and that the manner of investment did not relieve the corporation from the tax.
    That a proceeding by certiorari was a proper method by which to review a determination of the State Comptroller as to such taxes.
    Certioeari to review the determination of Edward Wemple, as Comptroller of the State of New York, in imposing taxes upon the business or franchise of the relator for the years 1889 and 1890, under sections 1 and 3 of chapter 542 of the Laws of 1880, as amended by chapter 361 of 1881; chapter 151 of 1882, and chapter 501 of 1885.

      Eugene II. Lewis, for the appellant.

      8. W. Eosenxlale, attorney-general, for the respondent.
   Pütnam, J.:

This is a proceeding by certiorari to review the action of the comptroller in imposing a tax upon the relator for the years ending November 1, 1889 and 1890, under the provisions of chapter 542, Laws of 1880, as amended or added to by chapter 361, Laws of 1881; chapter 151, Laws of 1882, and chapter 501 of Laws of 1885.

The substance of the provisions of said act, as far as they bear upon the questions involved, are as follows:

Section 1 provides that certain corporations shall make annual reports to the comptroller on or before November fifteenth of the amount of capital stock paid in, etc.; and in cases where no dividends are made, or dividends less than six per cent, that the officers of the corporations shall, between the first and fifteenth of November in each year, appraise and estimate the value of the stock of said corporations and furnish the comptroller a certificate of the said value of such stock, under oath, of its officers. Under section 3, “ Every corporation * * * incorporated * * * in this State * * * shall be subject to and pay a tax, as a tax upon its corporate franchise or business, into the treasury of the State, annually, to be computed as follows: * * * Tlie tax to be at the rate of one and one-lialf mills upon each dollar of a valuation of the said capital stock, made in accordance with the provisions of the first section of this act.” Section 2 of said act, added by Laws of 1882, as amended by chapter 501 of Laws of 1885, provides that “ the amount of capital stock, which shall be the basis of the tax under * * '* section 3, * * * shall be the amount of capital stock employed within this State.”

It will be seen, therefore, that where no dividends are made, as in this case, the tax is to be imposed by the comptroller upon the value of that part of the capital stock of the corporation employed within this State.

The Edison Electric-Liglit Company was incorporated on December 31, 1886, under the laws of this State, having its office in the city of New York, with a paid-up capital, in 1889, of $1,500,000, and, in 1890, $1,600,000, divided into shares of $100 each, the value of which the comptroller finds, in 1889, was $135 per share, and in 1890 was $170 per share, although no dividends had ever been paid

The capital stock of the corporation was used" in purchasing patents, defending the same in litigations, experimenting and exploiting. In fact, substantially the whole capital of the relator was invested in its patents extending over the United States and other countries. It had, in 1889 and 1890, received income from the sale of licenses under its patents in various cities and villages in this and other States. The system adopted by relator in the transaction of its business was as follows: It procured the formation of local corporations in desirable localities, and conveyed to such local corporations the right to use its patents over certain territory, and in payment of such conveyances took the stock of such local companies.

In 1889 it held of such stock of various local corporations in this State, $556,700, and in those outside of this State $1,456,673, amounting in all to $2,010,373. In 1890 the relator owned in stock of companies in this State, $1,399,950, and in those outside of the State, $1,757,531, amounting to $3,157,481.

In the years 1889 and 1890, therefore, the Edison Electric Company’s capital was invested in local stock of various corporations in the State <?f New York and elsewhere to the amount as above specified, represented, we may properly assume, by certificates of stock in possession of relator at its office in New York, and also in its patent-rights extending over that part of the United States, and over other countries where it had not, by any conveyances, sold its right to such patents.

The capital of the company being invested as above, its business in the years mentioned was the selling of the rights to use its patents to local corporations, formed or being formed, for a consideration which the relator received in the stock of such local companies.

The question to be determined in this case is, did the comptroller reach a correct conclusion in holding that in the years 1889 and 1890, the whole capital stock of the relator was employed within this State.

He so.held and fixed the value thereof at the sum as above specified. Assuming that he reached the correct conclusion in determining that all of said capital stock was employed in the State, his finding as to the value of such stock should be deemed conclusive. (People ex rel. Am. C. and D. Co v. Wemple, 42 N. Y. St. Rep., 404.)

The relator claims that not more than $50,000 of its capital is employed in the State of New York. That the value of its patents for the State of New York does not exceed one-twentieth of its entire value. That its capital invested in letters-patent for all the territory other than that of New York is not employed within the State. Also, that where it has sold licenses for a local territory out of the State and taken stock in the local corporation it has, as to each of those places, invested a part of its capital represented by such stock, which cannot be deemed capital employed in this State.

It is now settled that the action of the comptroller in such a case as this can be reviewed by certiorari under section 463 of the Laws of 1889. (People ex rel. American C. and D. Co. v. Wemple, 42 N. Y. St. Rep., 401.) And, therefore, the question submitted by the parties, and above stated, is properly before us and can be examined on its merits.

If the Edison Electric-Light Company, during 1889 and 1890, had been engaged in furnishing electric light at the various places outside of the State where the local corporations were formed, instead of said corporations, no doubt would exist that it would in that case have been engaged in a business outside of the State, and that a part of its capital was employed in such business. In such a supposed case the company would have occupied the same position as the relator in People ex rel. American C. and D. Company v. Wemple (supra). But no such state of facts exists here as in that case. This company’s only connection with business carried on outside of the State was to convey to local corporations, formed for the purpose of using its patents, the right to use the same for a limited territory, receiving in payment for such right, instead of money, the stock of such corporations. The relator might be deemed a wholesale dealer in electrical patents, doing business in New York, where it is incorporated, selling to local corporations all over the United States the right to use its patents, and taking in payment the stock of such corporations, evidenced by certificates of stock, which, we may assume, are held by it at its office in New York. The cases of People v. American Bell Telephone Company (117 N. Y., 241) and United States v. American Bell Telephone Company (29 Fed. Rep., 44) determines that the Edison Electric Light Company is not doing business in the various places outside of the State where it has licensed local companies to use its patents. Those cases hold that the owners of a patented article, who have simply licensed the use of it to any other party for the purpose of carrying on a trade or business, cannot be deemed liable to taxation on the theory that “ it is canying on the business.” Under the authority of the said cases the relator, during the years of 1889 and 1890, only carried on a business in the State of New Tork, and did not carry on any business outside of that State. This being so, was any part of its capital employed out of the State %

The claim of relator is, that in every place where it has licensed local corporations, it has invested a part of its capital, conveying a part of its patent-rights, and taken in return for such investment certificates of stock evidencing and representing the same; and the letters-patent owned by Edison Electric-Light Company are property invested and employed by it in territory co-terminous with the territory for which said letters-patent were issued.

As Ave have seen, the statute under which the comptroller acted authorizes him to leAy a tax on the franchise or business of the company at tlie rate of one and one-lialf mills on tlie value of its corporate stock employed within the State. It will not be doubted that, unless some part of its capital stock is employed out of tlie State, all will be deemed, under the act in question, so employed within the State where the company is incorporated, has its office and does its general business. It is important to determine what meaning shall be given to the word “ employed,” as used in the statute in question. Doubtless it should be construed to mean employed by the relator. Also, the statute does not mean invested. It means used, kept at work or busy by the relator. It is not enough for the company to show an investment by it of a portion of its capital stock in the stock of a foreign corporation. It must also show that that part so invested is employed by it out of the State. Suppose that the $2,010,373 owned by it, in 1889 of local corporation stock and $3,157,401 in 1890, had been held in bonds of foreign States received in payment for its conveyance of patent-rights, it would not be deemed to have that part of its capital employed out of the State of New York. So, the amount invested in the stock of the local corporations in various parts of the country is to be deemed a mere investment. The amount of the relator’s capital so invested is not employed out of the State. The doctrine laid down in the case of People v. American Bell Telephone Company (supra), determining that the relator is not engaged in any business, in the various parts of the country outside of New York, where it has licensed local corporations to use its patents, necessarily determines that the relator lias not any capital employed where those local corporations exist. Unless the relator is engaged in the business carried on by said corporations it cannot be said to have its capital employed where said corporations are located. The effect of the holding in the above cited cases is to determine that the relations of the relator to the local corporations using its patents is that of a mere investor in the stock of such companies. It is not engaged in the business of such corporations, and hence it has not employed its capital therein. Such capital may properly be deemed employed in the State where the company is located.

But relator insists that “ from the very nature of patent-rights, it is self evident that the capital of the relator invested in letters-patent for a territory other than tliat of this State, is not and cannot be employed within the State.” And counsel quotes an expression made by Mr. Justice Cuetis in Stevens v. Gladding et al. (17 How. [U. S.], 451), that “these incorporeal rights do not exist in any particular State or district, they are co-extensive with the Hnited States.”

In other words, a corporation like that of the Edison Electric-Light Company, who organize in this State with a capital of $1,500,000, paid up in cash under the act of 1880, as amended, might in the first instance be taxed by the comptroller for the whole amount of its capital stock. But the moment it purchased with its capital patent-rights, although doing its entire business in New York city, it can only be taxed, under the act in question, for the proportionate value of said patent-rights for the State of New York; that only such proportionate part of the value should be deemed employed in this State.

The answer to this proposition is that although relator owns patent-rights extending over the United States and over other countries, it is a New York corporation only doing business in this State, and that, therefore, it does not employ its capital except in this State. A sale in New York of 'the patent-right for South America, or other territory outside of this State, is doing business in New York, and not in South America or such other territory.

Under section 3 of the act of 1880, the tax imposed is not on property, but a tax upon the corporate franchise or business of the corporation. (People ex rel. American C. and D. Co. v. Wemple, 42 N. Y. St. Rep., 403; People ex rel. Southern Cotton Oil Co. v. Wemple, 42 id., 634; People ex rel. Edison Ill. Co. v. Wemple, 39 id., 608; 61 Hun, 53.) In the case last cited the court remarked: “Although apart of the relator’s capital stock was invested in patent-i’ights, no deduction should be made from the tax upon that account. The tax is declared by the statute to be upon the corporate franchise or business. * * * It cannot be affected in any way by the character of the property in which the capital stock was invested.” (See, also, People v. The Home Ins. Co., 92 N. Y., 328.) In People ex rel. Edison Electric Illuminating Company v. Wemple (supra), I infer that no deduction was made for the proportionate value of that part of the patent out of the State. In People ex rel. American Bell Telephone Company (supra), although the point cannot be deemed decided, I infer from the language of the learned judge who delivered the opinion of the court, that he considered the amount of the capital of the Bell Telephone Company invested in patents employed in Massachusetts where that company was located. (117 N. Y., 255, 256.)

In my judgment, a corporation chartered under our laws and doing its entire business in our State is liable to pay the license tax, under the act of 1880, on its whole capital, whether invested in patents or otherwise.

As we have said, and as was held in People ex rel. Edison Electric Illuminating Company v. Wemple (39 N. Y. St. Rep., 608), the comptroller could levy a tax under the act of 1880, though relator’s capital was invested in patent-rights. Those rights, it is true, extend over the United States and over other countries, authorizing the patentee or its grantees to use the patent inventions over all such territory. But the relator never did use or employ its patent-rights outside of this State.- The aforesaid local corporations, its licensees or grantees, only, used said patent-rights.. The only way that relator employed its capital so invested in patents was to sell patent-rights at its office in the State of New York, and, therefore, it employed its whole capital at that place.

Counsel for relator cites the case of People ex rel. American C. and D. Company v. Wemple (42 N. Y. St. Rep., 403), above referred to. That case is not similar to the one we are considering. There the relator was engaged in an actual business outside of the State. In fact, the greater part of its business was without the State. If the Edison Electric-Light Company were engaged in actually doing the business now carried on by the various local corporations to which it has sold licenses, this case would be similar to the case so cited.

The several authorities to which our attention is called, where the Pacific Mail Steamship Company was relator against the commissioners of taxes, I do not regard as parallel to this case. Without attempting to discuss those cases at length, it is sufficient to say that they arose under a different statute. The taxes there held illegal were taxes against property, and not, as under the law of 1880, a tax ón the franchise or business of the corporation. The same may be said as to tbe case of the People ex rel. Trowbridge v. The Commissioners of Taxes (4 Hun, 595), and People ex rel. Panama Railroad Company v. Commissioners of Taxes (104 N. Y., 240). As stated in People ex rel. Edison Eliminating Company v. Wemple (supra), tbe tax being upon a corporate franchise is not affected in any way by the character of the property in which the corporate stock is invested.

The burden was upon the relator in this case to show that the tax imposed by the comptroller, of which it complains, ivas not authorized by the act of 1880. It must affirmatively establish that proposition. (People ex rel. Brush Illuminating Electric Company v. Wemple, 39 N. Y. St. Rep., 616.) I think it has failed to do so, and hence that the action of the comptroller should be confirmed and the writ of certiorari granted herein be quashed, with fifty dollars costs and disbursements against the relator.

HerrioK, J., concurred; Mayham, P. J., not acting.

Determination of comptroller confirmed and writ of certiorari quashed, with fifty dollars costs and disbursements.


source: Caselaw Access Project

author: IIeeeioic, J.:

license: Public Domain

text:
    THE PEOPLE OF THE STATE OF NEW YORK ex rel. JOHN A. ROEBLING’S SONS COMPANY, Plaintiff, v. EDWARD WEMPLE, Comptroller of the State of New York, Defendant.

      Corporations — taxation — when a foreign corporation is “manufacturing within, tMs State” — determination by the comptroller as to the amount of a tax — Laws a/1880, chap. 542, see. 3; 1881, chap. 361; 1885, chap. 359.
    Under section 3 of chapter 542 of the Laws of 1880, as amended, every foreign corporation which does business in the State of New York is subject to a tax, except “ manufacturing corporations carrying on manufacturing within this State. ”
    In a proceeding to enforce this tax it appeared that the corporation proceeded against, manufactured in a neighboring State, iron, steel, wire and wire ropes: that the wire was shipped in coils to New York city, where it was made up into ship-rigging and other articles, some of it being fitted with blocks, pulleys and other attachments. It further appeared that the total value of the stock in trade manufactured in the State of New York seldom exceeded one per cent of the value of tlie total product manufactured by tbe corporation, and that tbe yearly sales made in tbis State were about ten times tbe value of stock manufactured in this State.

      Held, that,- within tbe meaning of tbe statute, tbe corporation did not manufacture within tbe State of New York and was liable to tbe tax.
    That it was the intention of tbe statute to encourage manufactures within the State of New York, and in that view a corporation seeking exemption must show that some substantial portion of its business of manufacturing was done in that State.
    That tbe determination of the comptroller as to tbe amount of such a tax, unless shown to be clearly erroneous, would not be disturbed.
    Ceetioeaei to review tbe decision of Edward Wemple, as comptroller of tbe State of New York, in assessing taxes upon the relator for the years 1880 to 1889, inclusive. The taxes were assessed under section 3 of chapter 542 of the Laws of 1880, as amended by chapter 361 of the Laws of 1881, and chapter 359 of the Laws of 1885.

      Oharles Ilolclane Johnson, for the relator.

      S. W. JRosendale, attorney-general, for the defendant.
   IIeeeioic, J.:

The relator is incorporated under the laws of the State of New Jersey for the purpose of carrying on a manufacturing business. The certificate of incorporation provides: “ That the borough of Ohambersburgli, in the county of Mercer and State of New Jersey, is the place where the principal part of the business of the said company is to be carried on. That the city of New York, in the county .•and State of New York, is the place where said company may have .an office and store for the sale of their manufactured goods, and for the transaction of other business connected therewith.” There is no dispute but that the relator is doing business within this State, and hence subject to its laws in regard to taxation; but the relator claims that during the years for which the taxes were levied in this case it was doing a manufacturing business within this State, and hence comes within the exception mentioned in section 3 of chapter 542 of the Laws of 1880, which section provides that “ eveiy corporation * * * incorporated by any other State or country, and doing business in this State, except * * * manufacturing corporations carrying on manufacture within this State, shall be subject to and pay a tax,” etc.

Tlie relator alleges that it is carrying on a manufacturing business witbin tlie State of New York.

The defendant, in his return to the writ of certiorari herein,, specifically denies that the relator is carrying on a manufacturing business within this State. The relator is incorporated for the purpose of manufacturing, buying and selling iron, steel, wire, wire ropes; and all other materials used in connection therewith. And the relator states in the affidavit filed in its claim for exemption : That the said corporation manufactures wire at the said factory at Trenton,, New Jersey. That wire is shipped in coils to the New York factory ; and that, at the said New York factory, the said raw material is made up into ship rigging, endless elevator chains and other useful articles. That the said wire is fitted with blocks, pulleys and other-attachments at the said New York factory, and is thus converted into useful and complete articles, ready for market.”

The defendant, in his return to the writ herein, alleges that the premises in the city of New York, used and occupied by the relator,, are not used and occupied as a factory; that they are used for its-offices and place of business and for. the storage of its goods; and that on each of the storage floors two or three men are employed by the relator in adapting the manufactured articles of the company for such purposes as may be required, such as attaching loops to-wire ropes for use as switching rods; attaching hooks and loops to wire cables for various purposes; and that no wire or wire ropes, or any other article is manufactured at its place of business.”

This statement of the defendant may be taken as not in conflict with the affidavit of the relator, but as an explanation of what the. relator described as the making up of the raw material and converting it into useful and complete articles, ready for the market. The process of treatment is not described by the relator, so that, from its statement alone, it cannot be determined whether it is in truth a manufacturing business that is being carried on in the State of New York or not; the relator’s affiant says it is, but does not so describe it as to enable the court to determine whether he is correct or not. As explained by the defendant, it does not seem to me that it is. manufacturing within the meaning of the statute. What it did in the city of New York was but an incident of its business, not the business itself; it was not manufacturing, but the putting together articles manufactured elsewhere; the cutting'into lengths coils of wire can hardly, it seems to me, be the manufacturing of wire ropes, cables or rigging. “ The definition of the terms manufacturing corporations ’ and ‘manufactures,’ as derived from some decisions and statutes to which our attention has been called,'is of little service in the construction of the language of this act. These terms must be construed in view of the general purposes of the acts in which they are used, and the general phraseology found in connection with them. To give effect to the legislative instruction, their ordinary meaning may be enlarged or restricted.” (People v. Horn Silver Mining Co., 105 N. Y., 76-82.)

Rut assuming that in a sense, or technically speaking, that the acts or processes described is manufacturing, still I think it is not within the spirit or intent of the statute; it is not a carrying on manufactures within this State within its meaning.

In determining whether a given case is within a clause in a statute exempting certain property or interests from taxation, “ the policy of the law in making the exemption must be considered and should have great weight.” (People ex rel. Brush Electric Ill. Co., 42 N. Y. St. Rep., 272-276.)

The terms used must be construed in view of the general purposes of the act;. one of those purposes was to encourage manufactures within the State; and the facts in this case would seem to indicate, that a ruling that corporations doing business in the manner the relator has been, are exempt from taxation, ■would rather discourage than encourage the growth of manufacturing interests in this State. The great proportion of relator’s manufacturing is done outside the State; the proportion inside, if it be considered manufacturing, is so small that it would almost appear that it was done here merely for the purpose of relieving the business from taxation.

To secure exemption under this act some substantial portion of the manufacturing business of the corporation should be done here, it should not be a mere incident of the business or done in connection with the main business, it is the manufacturing business that is to be exempted, not the business that any one chooses to establish in connection with manufacturing, and the manufacturing must be real, not colorable. It appears from the reports of the relator made to the defendant, that the value of the entire manufactured product of the relator during the years for which the taxes in question have been levied is as follows:

1880......... $1,768,994 59
1881........... 1,559,968 08
1882........... 1,969,422 64
1883........... 1,920,339 15
1884....... 1,785,121 65
1885........... 1,430,041 21
1886........... $2,094,379 36
1887........... 2,835,523 15
1888........... 3,004,609 61
1889........... 3,303,450 56
1890........... 5,347,270 55

The total value of the stock in trade the relator claims to have manufactured within the State of New York during the same years is as follows:

1880.............. $22,900 00
1881:............. 17,520 00
1882.............. 21,739 90
1883.............. 13,925 00
1884.............. 36,650 76
1885.............. 15,965 00
1886.............. $17,155 28
1887.............. 35,490 36
1888.............. 40,135 12
1889.............. 28,650 26
1890.............. 43,196 80

The sales by the relator, by its agents and officers in the State of New York during the same years, were as follows:

1880............. $252,804 39
1881............. 174,117 42
1882............. 197,636 88
1883............. 174,402 50
1884............. 305,423 77
1885............. 145,136 44
1886............. $245,075 47
1887............. 332,846 02
1888............. 333,626 85
1889............. 319,214 02
1890............. 421,698 99

Comparing the amount claimed to have been manufactured in the State of New York with either the total amount manufactured or with the amount sold within the State seems to me would bring one to the conclusion that to exempt the business done in this State, because of the manufacturing done within the State, would be very far from encouraging the growth of manufacturing industries here; and unless the words of the statute can be construed in no other wray the relator should not be relieved. It would be a plain case of the letter of the statute killing its spirit.

It seems to me that the manufacturing done by the defendant in this State is colorable merely, and does not come within the exemption of the statute. (People ex rel. Seth Thomas Clock Co. v. Wemple, 42 N. Y. St. Rep., 60; People ex rel. v. Horn Silver Mining Co., 105 N. Y., 76.)

Being subject to taxation, the determination of the comptroller as to the amount, unless clearly shown to be erroneous, will not be disturbed. (People ex rel. Seth Thomas Clock Co. v. Wemple, 42 N. Y. St. Rep., 60; People ex rel. American C. and D. Co. v. Wemple, Id., 400, 404.) And the determination of the comptroller not being clearly shown to be erroneous in this case should not be disturbed.

The determination of the comptroller is affirmed, with fifty dollars costs and printing disbursements.

Putnam, J., concurred; Mayi-iam, P. J., not acting.

Determination of the comptroller confirmed and writ of certiorari -quashed, with fifty dollars costs and disbursements.


author: Per Curiam :

text:
    THE ST. LAWRENCE WHOLESALE GROCERY COMPANY v. HOWARD H. HOBSON

      Order of Special Term staying argument at the General Term of the Supreme Court impi'oper.

    It is essential, to tlie orderly transaction of business at the General Term of the Supreme Court, that that court should retain exclusive control of its own calendar, and any application to stay the argument of a case upon the General Term calendar, or to put the case over the term, must be made to the General Term, and not at the. Special Term of the Supreme Court.
    Order made, on the attention of the General Term being called, to an order which had been made at the St. Lawrence Special Term in the above-entitled action:
    The order made at Special Term, after reciting the reading and filing of certain papers, upon which a motion was noticed to be heard to resettle an order made March 8, 1892, changing the place of tidal in the above-entitled action from St. Lawrence to Franklin county.
    Ordered, That the argument in tlie General Term, * * 'x" upon the appeal in the above-entitled action from an order granted -x- -x- Max-ch 8, 1892, is hereby stayed, and that said argument be and the same is hereby jiut over until the next term of the General Term * * * appointed to be held at Saratoga on the second Tuesday of September, 1892.

       This order was made at the May Term, 1893.

   Per Curiam :

An appeal has been taken in the above-entitled action to this court, such appeal is regularly upon the calendar, and noticed for argument at this time.

An application has been made to a Special Term at chambers, and an order granted staying the argument upon appeal, and putting the same over until the next term of this court, a copy of the order served upon the clerk of this court, and upon tlie attorneys for the adverse party. Such practice cannot be tolerated.

Attorneys practicing in this court and having cases upon its calendar, if they' desire to stay proceedings therein, or to defer arguments thereon, or to have the same put over the term, must apply to the General Term, and not to single justices of the court.

It is necessary, for the orderly transaction of its business, that the court should retain exclusive control of its own calendar, and it cannot tolerate any interference therewith; and attorneys must not apply elsewhere for any relief desired by them as to the disposition of any case pending therein upon appeal; and when, by inadvertence or oversight, any judge has granted an order interfering with the argument or disposition of a case on the calendar of this court, such order will be diáregarded.

The Special Term order herein referred to is hereby vacated and set aside, and the case will be disposed of when reached in its regular order upon the calendar.

Present — Mayham, P. J., Putnam and Herrick, JJ.

Ordered that order of Special Term staying appeal be vacated and set aside.


author: Andrews, J.:

text:
    CHAUNCEY ST. JOHN, Respondent, v. HOWARD W. COATES and Another, as Executors of GEORGE H. PECK, Appellants.

      Statute of limitations — who are partners — who are tenomts in common — aniaumn t remedies at lam and in equity — the statute of limitations at law governs — when it begins to run — the husband as agent — a stale demand.

    In 1866 George II. Peck, and others not parties to the litigation hereinafter mentioned, purchased at a sheriff’s sale part of an oil farm in Pennsylvania, by a deed which conveyed the premises to the grantees in certain fractional parts described as undivided portions, and in]866 Peck purchased a further interest in the farm from one Perry and wife. The conveyances made to Peck were taken by him for himself and certain associates, among whom was Rhoades Cole, who stated to Peck that Lewis St. John was interested with him in his share, and in 1867 Peck convoyed a part of the farm to Lewis St. John. Oole took the care and management of the farm as superintendent, received the rents and royalties, and remitted a portion of them to Peck for division between Peck and liis associates. In 1868, as claimed by the executors of Peck, since deceased, Cole admitted to Peck that ho and Lewis St. John had taken moneys due Peck and his associates, and Oole agreed that, until this defalcation should be made good, all moneys thereafter sent by Cole to Peck should belong to the latter and his associates. It was also claimed that Lewis St. John acquiesced in this agreement.
    In 1870 Cole ceased to be superintendent; in 1876 Lewis St. John and also the wife of Cole, to whom Lewis St. John alleged that he had conveyed a part of his interest, assigned their rights in the premises to one Chauneey St. John, who, in 1877, brought an action against Peck for moneys alleged to be due from him.
    All the remittances by Cole to Peck, except one, were made‘prior to 1872.
    The complaint was in the form'of a complaint in an action at law, but it demanded an accounting.

      Held, that the action could not be maintained.
    That the foregoing facts did not show that Peck and his associates, including Lewis St. John, were partners, and the effect of the deeds was to make the parties tenants in common.
    That as there wras no allegation in the complaint of a partnership, and no evidence of an express agreement for one, the court would presume that none existed. That the six years’ statute of limitations applied.
    That the demand in the complaint for an accounting did not affect the question, because as tenant in common the plaintiff could have maintained an action at law, under section 1666 of the Code of Civil Procedure, to recover any moneys due his assignors, Lewis St. John and Mrs. Cole.
    That, apart from the remedy under the Code, an action at law could be maintained’ by the equitable owner of moneys in the hands of another upon an implied promise to pay it over to the person beneficially entitled.
    That where there is concurrent jurisdiction to entertain an action in equity foían accounting, and an action at law to recover the same debt, the statute of limitations applicable to actions at law, and not that relating to suits in equity, controls.
    That the statute began to run in favor of Peck from the time when he received the moneys alleged to belong equitably to the plaintiff, as assignee of Mrs. Cole and Lewis St. John.
    That as the payment by Cole to Peck, in 1872, was less than the amount due from Cole, by reason of the defalcation and the subsequent agreement as to the manner in which it should be made good, there could, for that reason, be no recovery. That Mrs. Cole was bound by her husband’s acts in making the agreement, his authority to so act sufficiently appearing.
    That the court would not be strenuous to aid a plaintiff in establishing a stale claim for which he had paid nothing.
    Appeal by the defendants, Howard W. Coates and Benjamin C. "Wetmore, executors of the last will and testament of George H. Peck, deceased, from a judgment of the Supreme Court, entered in the office of the clerk of the county of New York on the 22d day of April, 1891, upon a recovery by the plaintiff, on a hearing at Special Term, and after a trial at the New York Circuit before the court and a jury, to which special issues were sent; and also from an order made upon the trial of the special issues in the action entered in said clerk’s office on the 27th day of May, 1891, denying a motion to set aside the verdict of the jury and grant a new trial of the special issues.

      John II. Post, for the appellants.

      Lockwood (& Post, for the respondent.
   Andrews, J.:

This action was commenced on October 3, 1811, against one George II. Peck, now deceased. The allegations of the complaint are, in substance, as follows:

That, in 1866, the said Peck conveyed to one Lewis St. John by deed an undivided 20f/-96 of a certain farm of land, containing about one hundred acres, situated in Yenarigo county, Pennsylvania, called the Hooker Farm ; that said farm contained oil wells, and that the same having been leased for a percentage of the oil produced, large sums of money were realized from the sale of such oil, and large profits were also realized from the letting of portions of said farm for building lots; that said Lewis St. John was entitled to 20f/96. of said rents and profits; that said Peck received large sums of money as manager of the said property, which belonged to said St. John, but neglected to pay over the same; that said Lewis St. John conveyed by deed to one Ellen Cole an undivided ten-ninety-sixths of said farm, for which proportion said St. John thereafter was bound to account to said Ellen Cole (the deed to her not having been recorded); that said Lewis St. J ohn and said Ellen Cole assigned to the plaintiff all their interest in the premises; that the plaintiff demanded of said Peck that he render an account of the moneys received and paid by him for said Lewis St. John, but that he did not do so. Therefore, plaintiff prays that an accounting may be taken of such moneys, and that the defendant may be adjudged to pay to the plaintiff anything which shall, upon the taking of such account, appear to be due to the plaintiff.

The answer denies that the defendant conveyed a portion of said farm to Lewis St. John; or that said Lewis St. John was entitled to 20f/96 of the rents and profits; or that said Peck received any money belonging to said Lewis St. John, or that Lewis St. John ever assigned, to the plaintiff any part of his interest in the premises; also alleged that Lewis St. John, for the previous two years, had been of unsound mind and incapable of making any such assignment; also set up the six years’ statute of limitations, and an affirmative defense in tbe nature of a set-off, upon the ground that one Cole was agent of the property, and with said Lewis St. J ohn wrongfully retained, appropriated and converted to their own use large sums of money due to the defendant, the amount of which exceeded the share or interest alleged in the complaint to have been assigned to the plaintiff by said Lewis St. John.

A trial of the action was commenced at Special Term in 1878, and was concluded before a referee, who found for the plaintiff. Peek died soon after the trial on November 1,1879, and the present defendants were substituted in his place. On appeal the General Term reversed the judgment and directed that a special issue be framed as to the mental capacity of said Lewis St. John.

Subsequently an order was entered, in 1883, at Special Term settling eleven special issues to be tried by jury. Upon the first trial of these issues the jury disagreed as to some of them. Upon a second trial all but three of said issues were stricken out by the court, and the jury returned a verdict as to those. On. appeal the order of the Circuit Court striking out a part of the issues was reversed by the General Term. Subsequently an order was entered by the Special Term, in 1890, striking out the same issues, and this order was affirmed by the General Term. Upon another trial of the issues, as resettled, the jury found-(1st) that Lewis St. John was mentally competent to make the assignment in question; (2d), that the defendants’ testator had made a deed to Lewis St. John conveying 20f/96 of the Booker Farm; (3d), that the deed from Lewis St. John to Ellen Cole for was bona fide.

Subsequently the action was brought to trial at Special Term, and such trial resulted in a judgment for the plaintiff for the sum above mentioned. From this judgment, and from an order denying a motion for a new trial of said issues, made upon the judge’s minutes, the present appeals were taken,

The transactions out of which this action arose are as follows: On August 30, 1866, the sheriff of Yenango county, Pennsylvania, deeded to said Peck and others a tract of land in said county known as the Booker Farm. The deed conveyed the property in the following proportions: To one Perry, ; to said Peck, ff-; to one Bates, ; to one Baum, ; to one Austin, ; to one Matthews, ; and to one Graves and Seager, jointly, ^; all expressed to be in undivided portions; and the deed was recorded September 6, 1866. On October 1, 1866, said Perry and liis wife conveyed said -f-jj- to said Peck, and the deed was recorded October 10, 1866. It appears that Joseph H. Godwin and Augustus A. Conover and Rhoades Cole were interested with Peck in the purchase of such of the farm, and Cole stated to Peck that one Lewis St. John (plaintiff’s assignor), was equally interested with him in a fractional share thereof. Cole went to the farm and acted as superintendent, under a power of attorney from Peck and the other owners, collecting the rents and royalties, pajdng expenses and remitting to Peck what purported to be -|f- of the net income.

The money so received Peck distributed in the proportions above indicated to Godwin and Conover, retaining his own share, and paying to St. John, by Cole’s direction, the joint share of Cole and St. John, Up to June, 1868, Peck had received from Cole $33,750, which had been so distributed. It is claimed by the defendants that about this time Cole confessed to Peck that he and St. John had been sinking oil wells in Pennsylvania, on their own private and joint accounts, and that Cole had taken moneys from the income of the Rooker Farm, which should have been remitted to Peck, and had used the same on his own and St. John’s account in sinking such wells ; that said Cole then agreed that until such misappropriations were made good, all moneys sent by him to Peck should belong to and be divided between Godwin, the personal representative of Conover (who had died prior to February, 1867), and Peck ; and that St. John consented to such agreement; that from that time on Peck distributed the moneys received by him in accordance with said agreement.

In .April, 1870, the production of oil having greatly diminished, Cole returned to New York and resided there from that time to the time of the trial. It is also claimed by defendants that during the ensuing years, until the end of 1876, Peck and St. John lived in New York, meeting occasionally, and that Cole had been there since April, 1870, frequently calling at Peck’s office, but that no claim was ever made by Cole or St. John upon Peck for any moneys accruing from said farm, or that there were any unsettled matters between them.

It appears by a stipulation made in the action, that subsequent to June 30, 1868, Peek received of tlie productions of said farm tlie following sums : February!, 1869, $800 ; July 20,1869, $1,912.50; May 22, 1870, $1,200; December 8, 1870, $1,500; April 28, 1871, $600; April, 1872, $541.50.

It is strenuously insisted upon tliis appeal, by counsel for tlie defendants, tliat many errors were committed upon tlie trial of the issues at circuit in the admission and exclusion of evidence; also, that the evidence did not justify the findings of the jury, nor those made at the Special Term, as to the mental capacity of Lewds St. John to make the assignment, or as to the making of a deed by Peck to St. John conveying 20§/96 of said farm, or as to the bona fides of the deed from Lewis St. John to Ellen Cole.

It is not, however, necessary to consider the points raised as to these matters, because, even if we accept the view of the facts most favorable to the plaintiff, and assume that the findings of the jury and of the court, upon these matters, were correct, still we are of the opinion that the judgment must be reversed upon other grounds viz., that a recovery of all the amounts paid to Peck, except the last one of $541.50, was barred by the statute of limitations; and, secondly, that no recovery could be' had as to that item because of the misappropriations of money by Cole for the benefit of himself and St. John, and the subsequent agreement of Cole, consented to and acquiesced in by St. John, that the moneys paid over to Peck should be divided by him between Godwin, Conover’s estate and himself until such misappropriations were paid.

Plaintiff’s counsel claims that the relations between Peck and the other owners of the seventy-five ninety-sixths of the farm -were those of partners, but we do not think that this claim is well founded. In the first place, the complaint contains no allegation that such relation of partnership existed between Peck and the other owners of such seventy-five ninety-sixths. The allegation is that Peck conveyed an undivided 20f/96 to St. John, and that St. John conveyed an undivided ten ninety-sixths to Ellen Cole. This amounts to an allegation that Peck, St. John and Ellen Cole were tenants in common. There is no allegation or suggestion to be found anywhere in the complaint in regard to such alleged partnership. According to the complaint the right of plaintiff to recover is placed solely upon the fact that the parties were tenants in common, and that Peck, one of such tenants, had received rents and profits, of which a portion rightfully belonged, to St. John and Mrs. Cole. Moreover, the only allegations in the complaint, upon which a claim for equitable relief can be founded, are those in which it is alleged that plaintiff had demanded an account of Peck, which demand had not been complied with, and the prayer for relief that such account be taken. The complaint has not been amended, nor does it appear that any application to amend it was made, and it would seem that the idea of a partnership was an afterthought, put forward to meet the exigencies of the case. If the owners of such seventy-five ninety-sixths of the farm were partners, they, or their representatives, should allkave been made parties to this action ; and the fact that they were not tends to support the conclusion that it was not intended by the draughtsman of the complaint to rest the claim of the plaintiff upon the- ground that the owners of such seventy-five ninety-sixths were partners.

Moreover, the evidence in the action does not establish such partnership. According to the agreement of the plaintiff, at the time said payments were made to Peck, the title of the property stood as follows: 10f/96 in St. John, by virtue of Peck’s conveyance to him; •$■{}■ in Ellen Cole, by virtue of St. John’s conveyance to her; 54^/96 in Peck, by virtue of the conveyance to him from the sheriff of Venango county and Perry; which 54J/96 belonged in equal parts to himself, Godwin and the heirs of Con-over ; and f jf- in the various other parties above mentioned.

Cole went to Pennsylvania and acted as superintendent. His testimony as to what he did is as follows: “ I never had but one power of attorney from Mr. Peck; it was a power of attorney to act for George H. Peck for -g-§ of the farm, and collect the moneys; while I was out at the farm I collected the rents — royalties — for the oil sold, and paid the money to the different parties for the interest I held a power of attorney for; I sent -g-| of the profits to Mr. Peck; the expenses were deducted by myself; I sent them the balance of the moneys after deducting expenses; of the remaining 'interest, -g-f were owned by one William A. Bates; ^ by Bond; -fa by Graves and Seager; I collected these; I had a power of attorney from them, and remitted them the money; I held a power of attorney from all parties; I remitted to Peck and the balance to the other parties; my position was superintendent.” * * *

“ The income came from the production of the farm, the royalties of the wells and rents. * * * My duties as superintendent were to lease the farm in half-acre plots for half royalties — the usual way of the oil business. I collected the royalty and gave -f-f-of it to Mr. Peck, and the other twenty-one shares were owned by others. I deducted the expenses. Wliat I sent to the owners was the net product. * * * I might have received instructions from other persons, but I didn’t act upon any instruction or order of any other person than Peck with respect to the -|f.” The situation, therefore, was as follows: Peck, St. John and Mrs. Cole (the wife of Cole, the superintendent), and other parties were tenants in common of this farm; Cole stayed at the farm, received royalties and rents, and, after paying expenses, sent seventy-five ninety-sixths of the net balance to Peck for distribution. These facts do not establish a partnership between Peck, St. John and Mrs. Cole, but merely that Peck, being a tenant in common with them, received certain moneys, which, it is claimed, it was his duty to pay over to them.

Partnership, as between the partners, is a matter of agreement, and, so far as concerns the partners only, whether such agreement was made must depend upon the intention of the parties. There is no evidence whatever of any express agreement for a partnership between Peck and St. John or Mrs. Cole, or any of the other persons who were interested in the property. Peck and Godwin both testified that there was no partnership, and Peek testified that he never knew anything about St. John’s having an interest in the property except what Cole told him; and it certainly is difficult to understand how Peck can be regarded as having formed a partnership with Mrs. Cole, simply because St. John conveyed ten ninety-sixths of the property to her.

We are of the opinion that, assuming that Peck made the conveyance to St. John, and St. John to Ellen Cole, as claimed in the complaint, the relations between Peck, St. John and Mrs. Cole were not those of partners, but of tenants in common, and that the six years’ statute of limitations applies, notwithstanding the fact that the complaint prays for an accounting, because the plaintiff could have maintained an action at law to recover any moneys due him, as assignee of his brother, Lewis St. John, and Mrs. Cole.

Section 1666, of the present Code, provides that a tenant in common of real property, or his executor or administrator, may maintain an action to recover his just proportion against liis co-tenant, who has received more than his own just proportion, or against his executor or administrator. If Peck, being a tenant in common with Lewis St. John and Mrs. Cole, had received more than his proportion of the rents and profits of the farm, they, or their assignee, could, under this section of the Code, have maintained an action to recover their proportion.

Moreover, indejiendently of this provision of the Code, an action at law might have been maintained by Lewis St. John and Mrs. Cole, or the plaintiff, as their assignee, to recover money had and received for their benefit, if it was true that Peck had received from Cole moneys which it was his duty to pay over to Lewis St. John and Mrs. Cole.

“ Money in the hands of one person to which another is equitably entitled, may be recovered in a common-law action by the equitable owner, upon an implied promise arising from the duty of the person in possession' to account for and pay over the same to the person beneficially entitled. The action for money had and received to the use of another is the form in which courts of common law enforce the equitable obligation. The scope of this remedy has been gradually extended to embrace many cases which were originally cognizable only in courts of equity.” (Roberts v. Ely, 113 N. Y., 131.)

“ When money is received by one to and for the use of another, under such circumstances that it is his duty at once to pay it over, then an action for money had and received may be brought to recover it without any demand, and in such a case the statute of limitations begins to run from the day of the receipt of the money, -x- -x- -x- Even if an accounting was necessary to determine the amount due from him to his brother the account could be taken in an action at law as well as in an action in equity, and in whatever form the action was commenced the legal rule of limitations would be applicable. * * * All the relief asked for in the complaint is an accounting and a judgment for a sum of money, and no other relief was needed or possible upon the facts established. * * * It is said, however, that 'the defendant was, in some sense, a trustee •of the moneys received by him, and hence that the statute of limitations could not begin to run in his favor until he repudiated the trust. But the defendant was not a trustee in the sense contended for. He had received money belonging to another and became a debtor for the same, and he is in no other sense a trustee than every one is who receives money to and for the use of another. There was no actual express trust as to these moneys created by the act of the parties. * * * If the defendant was, in any sense, a trustee of the moneys received by him, it was simply an implied trust which the law would raise for the purposes of justice; and as to the liability growing out of such a trust, the ordinary rules of limitation apply. (Mills v. Mills, 115 N. Y., 80, 85, 86.)

“In cases of implied trusts in relation to personal property, or the rents and profits of real estate, where persons, claiming in their •own right, are turned into trustees by implication, or by operation of law, it is a general rule that the right of action in equity will be considered as barred in six years in analogy to the limitation at law.” (Hawley v. Cramer, 4 Cow., 717.)

In Smith v. Bodine (74 N. Y., 30, 33), where a claim was made for a portion of the profits of the business, as compensation for services rendered in it, the court said: “ The fact that a statement of .an account between him and the defendants was necessary to establish his claim did not require an equitable action; and the nature of the action was in nowise changed by the introduction of evidence showing how the accounts stood; ” and, also, that: “An accounting is proper in the action at law.”

Under these circumstances, the jurisdiction of the court to entertain this action for an accounting in equity was concurrent with its jurisdiction to entertain an action at law to recover the amount alleged to be due from the defendants to the plaintiff, and, upon all the authorities where such concurrent jurisdiction exists, the six years’ limitation applies. (Kane v. Bloodgood, 7 Johns. Ch., 121; Bertine v. Varian, 1 Edw. Ch., 345; Atwater v. Fowler, 1 id., 422; Loder v. Hatfield, 71 N. Y., 103; Roup v. Bradner, 19 Hun, 517; Matter of Neilley, 95 N. Y., 390.)

In Kane v. Bloodgood (supra), the court said: “ Courts of equity are bound to yield obedience to the statute of limitations upon all legal titles and legal demands, and cannot act contrary to the spirit of its provisions. I understand this proposition to mean that if the party has a legal title and a legal right of action, and instead of proceeding at law, resorts to equity; instead of bringing his action of account, or detinue, or case, for money had and received at law, files liis bill for an account, the same period of time that would bar him at law will bar him in equity. This is the principle that pervades the cases.”

In Loder v. Hatfield (supra) the court said: “An action at law might have been maintained against him therefor, if the cause of action had accrued before his death ; or against his executors after his death. * * * So that equity had not exclusive cognizance of the demand. In such case the same law of limitation of actions applies in both cases.”

In Roup v. Bradner (supra) the court said: “Assuming that there-was a trust, which a court of equity would have enforced, there was-also a concurrent remedy at law, upon the agreement, and the six years’ limitation applies.”

In the Matter of Neilley (supra) the court said : “ When the complainant has a concurrent remedy in a court of equity and in a court of common law, time is as absolute a bar in equity as it is at law * * * and in such cases the limitation as to actions at law applies.”'

In Butler v. Johnson (111 N. Y., 204) the whole subject of the application of the statute of limitation to actions, in which there is concurrent jurisdiction in law and equity, was elaborately considered, and the court held as follows: “We think that in causes of action which, before the adoption of the Code, the two courts had concurrent jurisdiction over, or, in other words, where the subject of the action was the same in both courts, and the remedy only was different, such actions are included in and provided for by the sections preceding the above-mentioned seventy-seventh section, and hence are not included in that section as within the ten years’’ statute.”

In the case at bar, if the original defendant, Peck, received from Cole moneys which equitably belonged to St. John and JVIrs. Cole, it was his duty to have paid them over at once, and the statute of limitations began to run from the time he received the moneys. In point of fact, no accounting was necessary, for it appears by the testimony that, before tbe action was brought, Cole visited said defendant Peck and examined his cheek-book, and ascertained that the amount which it is alleged Peck ought to have paid over to St. John, for the benefit of himself and Mrs. Cole, was the sum of $1,925; and that was the consideration named in the assignment from Lewis St. John to the plaintiff; and it was to recover that sum of money only that this action was brought. Not only was no accounting necessary, but, as a matter of fact, no accounting was had upon the tidal.

We think it is clear, upon the facts proved in this case, that if Peck was indebted to the plaintiff, as the assignee of his brother, and Mrs. Cole, the plaintiff might have maintained an action for money liad and received, and that the six years’ statute of limitations applies to all of said payments, except the payment of $541.50, which was made on April 15, 1872.

We are, moreover, of the opinion that the plaintiff cannot recover the said last item of $541.50, because the evidence establishes that Cole, while acting as superintendent, misappropriated moneys which he should have paid over to Peck, and that he subsequently agreed that the proceeds of the farm should be distributed between Peck, Godwin and the estate of Conover until the amount of the misappropriation was made good; and that St. John consented to this arrangement.

The ascertained amount of such misappropriation was, if Cole w-as entitled to a salary, $4,418.68. If he was not entitled to a salary, such misappropriations amounted to $11,710.35. The evidence tends strongly to establish the fact that he was not entitled to a salary. But it is not necessary to determine that question, because we consider that the statute of limitations bars a recovery as to all payments except the last, which was $541.50; and if the misappropriation was no more than $4,418.68, such sum of $541.50 could not be recovered, if Cole and St. John agreed that the proceeds should be distributed between Peck and Godwin, and the estate of Conover, until such sum of $4,418.68 was made good.

We think that the evidence fully establishes that the misappropriation by Cole did amount to said sum of $4,418.68, and that Cole made the agreement in question. It is objected, however, that such agreement did not bind Cole’s wife, to whom it has been found by the jury that St. John made a bona fide conveyance of ten ninety-sixths of the property.

"We think, however,'that the evidence shows that Cole was the agent of his wife, and had full authority to act for her in making such agreement, and that such agreement was binding upon her. Peck testified that St. John consented to this agreement; and the conduct of Cole and St. John, after 1868, tends strongly to prove that such agreement was made by both of them. Por more than eight years after Cole’s confession to Peck in regard to the misappropriation of the money, and for more than six years after his return to New York, Cole never made, or caused to be made, any claim upon Peck for any moneys alleged to be due to Cole’s wife; nor was any claim for such moneys made on her behalf by any one. St. J ohn lived continuously in New Y ork, and transacted business un ti 1 October, 1876, and between 1868 and 1876 had interviews with Peck about matters relating to Pennsylvania oil interests, but during all this time made no claim to Peck that the' latter had received any money from the Booker farm which it was his duty to pay over to St. John or to Mrs. Cole. In the meantime at least two-thirds of the money received by Peck after 1868 had been paid over by him to Godwin, and the personal representatives of Conover, in reliance upon the agreement of Cole and St. John, that the net proceeds should be distributed between Godwin, Conover’s representatives and Peck, until the misappropriation had been made good. Under these circumstances, it certainly would be a great hardship if Peck or his personal representatives, the present defendants, should be required to pay over to the plaintiff moneys paid out by Peck under such circumstances.

The plaintiff is not entitled to any especial consideration in a court of equity. It seems that in the fall of 1876 Lewis St. John had a stroke of apoplexy, and that his mind was somewhat affected thereby. The assignment of his alleged claim against Peck to his brother, the plaintiff, was made after he had only partially recovered from such stroke of apoplexy, though the jury has found that he had sufficient mental capacity to make such assignment. It appears, however, that the plaintiff paid nothing for the claim, but took it on account of an alleged antecedent debt. It, appears also by the testimony that Cole was active in promoting this stale claim against tlie original defendant Peck. Lewis St. John, who had made no diaim on his own account for over eight years, was induced to execute the assignment to his brother, the plaintiff, and thereupon Mrs. Cole also executed to plaintiff an assignment of her alleged interest in such claim. The plaintiff therefore represents the alleged interest of his deceased brother, for which he paid nothing, and also the interest of Mrs. Cole, who is the wife of Cole, whose misappropriation of moneys led to all the trouble. "We think the evidence establishes the misappropriation by Cole, and the agreement by himself on behalf of his wife, which was consented to and acquiesced in by St. John, that until the misappropriation was made good, Peck should distribute the moneys in the manner above specified; and, even if the consideration -of all the testimony in the case had led to a doubt upon these points, as the burden of proof was upon the plaintiff to establish his case by a preponderance of evidence, we should think that the defendants ought to have the benefit of any •such doubt.

Upon the whole case we think that the judgment should be reversed, and a new trial ordered with costs to appellants to abide event.

Van Brunt, P. J , concurred.

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


author: O’Brien, J. :

text:
    WILLIAM M. HALL, Respondent, v. SUSAN L. ROBERTS and Another, Executors of MARSHALL O. ROBERTS, Appellants.

      Statute of limitations — notice of a sale to be given — when the statute begins to run — personal transactions with a deceased person — the presumption of pa/yment — the statute of limitations distinguished from it— Code of Oivil Procedure, sec. 829.
    The complaint in an action alleged tliat Marshall 0 Roberts, by an agreement under seal made in 1864, acknowledged himself to be indebted to one William M Hall in the sum of $80,000, to be paid when a steamship should be sold, and not before; and in the event of a sale Roberts agreed to notify Hall of it and within ten days thereafter pay him the money. The steamship was sold in 1864; Roberts died in 1880. The plaintiff alleged that he was .never notified of the sale, and only learned of it in 1887 when he brought his action. The agreement was lost.

      Held, that Roberts was bound to notify Hall of the sale, and that the statute of limitations did not begin to run against the demand until, in 1887, Hall learned of the sale.
    That it was error to allow the plaintiff to testify that he never heard of the sale, from any source, until 1887, seven years after Roberts’ death.
    That this was proving- by indirection that Roberts never notified him of the sale, and was objectionable under section 829 of the Code of Civil Procedure.
    That the statute of limitations, and the presumption arising from lapse of time, are separate and distinct principles of law.
    That, as a presumption of law to be submitted to the jury, the defendants, the executors of Roberts, were not entitled to a charge that the law presumes, after a lapse of twenty years, that the obligation of the defendants’ testator, if any there ever was, had been performed, which presumption, unrebutted, was conclusive.
    That, upon the question of payment, the defendants were entitled to have the jury consider, in view of all the circumstances of the case, the presumption of fact which they might indulge of payment, from the lapse of twenty-three years since the execution of the agreement.
    Appeal by the defendants, Susan L. Roberts and John F. Patterson, surviving executors of Marshall O. Roberts, from so much of an order, entered in the office of the clerk of the county of New York on the 12th day of June, 1891, as denied their motion for a new trial, after a trial at the New York Circuit before the court and a jury.
    The order denying the motion for a new trial directed that the exceptions of the defendants be heard in the first instance at General Term.

      Almon Goodwin, for the appellants.

      George F. Betts, for the respondent.
   O’Brien, J. :

This case has previously been before this court on an appeal by the plaintiff from a judgment against him, which was reversed and a new trial ordered. (Hall v Roberts, 58 Hun, 539.) That decision, so far as it may be applicable to the facts presented upon the trial, is controlling, regardless of what, if the questions were presented for the first time, would be the individual views of the members of this General Term.

The action is brought upon the following instrument under seal, which is alleged in the complaint to have been executed by Marshall O. Roberts and delivered by him to the plaintiff for a good and valuable consideration:

“ Know all men by these presents: That I, Marshall O. Roberts, of the city, county and State of New York, hereby acknowledge myself .indebted to William M. Hall, of Brooklyn, Kings county, and State of New York, in the sum of thirty thousand dollars, which amount will be due and payable to the said Hall, his heirs, executors or assigns, when the steamship Illinois,’ of twenty-five hundred tonsburthen, which is in the market, shall be disposed of by sale, gift or loss, and which is held by me to sell and dispose of, and from the proceeds to pay said Hall the amount above named ; and
“ It is agreed and understood between the aforesaid Roberts and Hall that neither the whole or any part of the above sum of thirty thousand dollars will be due or payable until a sale and transfer of the said steamship ‘ Illinois ’ is perfected; in which event I hereby promise and agree to notify said Hall of her disposal, and within ten days thereafter- pay the full amount in the lawful currency of the United States as stipulated above.
“MARSHALL O. ROBERTS, [seal.]
“ Witness: Theodore E. Tomlinson.
“New York, February 10, 1864.”

The making of this agreement is denied by the defendants.

The complaint further alleges, and the answer admits, the death of Roberts on September 11, 1880, and the qualification of the-defendants as executors on October 8,1880; that the said steamship “ Illinois ” was sold and transferred by said Roberts on or about the 29th of October, 1864, but that the plaintiff did not learn of .such sale and transfer until on or about the 10th day of November, 1887; that said Roberts did not notify the plaintiff of such sale during his lifetime; that the said sum of $30,000 has not been paid, and that the defendants are indebted to the plaintiff in the sum of $30,000- and interest, and demands judgment accordingly.

The trial upon the evidence presented, resulted in a verdict in favor of the plaintiff in the sum of $77,365.

To secure a reversal of the judgment, the appellants rely upon three principal grounds which may be stated as follows:

Fwst. The statute of limitations.

Second. Admissions over the objection of the defendants of incompetent evidence, and evidence of transactions between the plaintiff and the deceased, contrary to the provisions of the Code.

Th/wd. A refusal to charge, as requested, in regard to the presumption of law and fact arising from the long lapse of time in favor of the payment or other discharge of the written obligation sued upon.

Considering these in their order, as -we have already stated, being controlled by the former decision of this General Term, we are of opinion that under that decision, as applied to the facts now proven, the statute of limitations is not a bar. It was therein held, construing, it is true, the instrument hereinbefore set forth in full, that the money was neither due nor payable until the expiration of ten days after the plaintiff had received notice of the sale of the vessel, and that the statute of limitations had not begun to run until the plaintiff ascertained, in 1887, that the vessel had been sold.

Much stress in the opinion was placed upon that part of the instrument by which Roberts bound himself to notify the plaintiff of the sale of the vessel, and within ten days thereafter to pay the full amount; and while we are not now considering wliat was alleged in the complaint, but what was proven upon the trial, yet I think we shall reach 'the conclusion that, though there is a variance between the allegations of the complaint and the proof, it does not change the principle upon which the former adjudication as to the statute of limitations was founded.

The witnesses Winslow and Hayden, who alone gave secondary evidence as to the terms of the agreement (the instrument itself having been lost), did not testify as to any time after the sale of the vessel within which Roberts agreed to notify the plaintiff or pay the money, yet both of them did testify that Roberts agreed to notify and pay the plaintiff when the vessel was sold. Although, therefore, prominence was given to the ten days’ requirement in the former decision, its reasoning applies with equal force to notification,” if the ten days’ clause is omitted. As is there stated, the statute of limitations had not begun to run at most until Mr. Hall ascertained, namely, in 1887, that the vessel had been sold, the obligation to give notice resting upon Mr. Roberts and his representatives.

It will tlrus be seen that in the former decision, as in the proof offered here, there were two elements or incidents that were controlling ; one that Roberts would hold the $30,000 of the proceeds of the Illinois when sold, and the other that he would notify Hall of the sale.

The second ground relied upon relates to exceptions taken by the defendants to the admission of certain evidence.

¥e seriously question whether the plaintiff should have been allowed to testify that he showed the alleged agreement to one Starr, who was subsequently allowed to testify that the name of Roberts was signed to that paper, although Starr admitted he was not familiar with Roberts’ handwriting, as such testimony at least tended to establish the contract or agreement between the plaintiff and the deceased Roberts which would seemingly be controlled by section 829 of the Code.

But the objection taken to the testimony permitting the plaintiff to state that the first he heard from any source of the sale of the vessel was, in the year 1887, seven years after Roberts’ death, was clearly well founded, for section 829 not only prohibits direct testimony of the survivor as to a personal transaction, but also any attempt by indirection to prove a like transaction.

In Clift v. Moses (112 N. Y., 426) the rule is thus stated: “ It has been held, with general uniformity, that the section prohibits not only direct testimony of the survivor, that a personal transaction did or did not take place, and what did or did not occur between the parties, but also every attempt by indirection to prove the same thing, as by negativing the doing of a particular thing by any other person than the deceased, or by disconnecting a particular fact from its surroundings and permitting the survivor to testify to what on its face may seem an independent fact, when, in truth, it had its origin in or directly resulted from a personal transaction.”

The testimony given by the plaintiff, that he had never heard of the sale of the vessel from any source until 1887, was equivalent to permitting him to testify that he had never received any notification from Roberts during his lifetime, which, if he had attempted to prove directly, would have been clearly inadmissible and within the inhibition of the Code.

As to the third ground relied upon, namely, the refusal of the learned trial judge to charge certain requests of the defendants, we think that the exceptions to certain of the' refusals were good, and entitled the defendants to a new trial.

It is unnecessary for us to notice all of these requests, as they are of the same general character, having relation to the rule of law in regard to what presumptions, if any, arise by lapse of time.

For the purposes of this appeal, although there were many of these requests, we shall refer to two only, namely, the first and second, which will enable us to call attention to the distinction, which seems to have been lost sight of, between presumptions of law and presumptions of fact, and the bearing of this distinction upon the facts presented upon this appeal. They are as follows:

First. After a lapse of twenty years the law presumes the payment of bonds and judgments and the due execution of covenants and agreements.

Second. In the present case more than twenty years having elapsed after the sale of the steamship “ Illinois,” and before the commencement of this action, the law presumes that the obligation of the defendants’ testator, Marshall O. Roberts, if any there'ever was, has been performed, which presumption, unrebutted, is conclusive.

The first of these requests .was clearly unobjectionable. The second asked for as a presumption of law, and, therefore, conclusive, was properly refused.

This, however, and similar requests, were so framed as to give the defendants the benefit .of the presumption of fact which arose from the lapse of time. The learned trial judge based his refusal to charge such propositions so as to give the defendants the benefit of the presumptions upon the former decision of this General Term. That decision, as we read 'it, had reference only to the statute of limitations, and did not decide anything as to the rule of presumptions, which was the one the defendants sought by their requests to invoke. The statute and the rules of presumption are based upon two sejiarate and distinct principles. (Macauley v. Palmer, 6 N. Y. Supp., 404) Upon the affirmance of the case cited, the Court of Appeals said (125 N. Y., 744): “ One of the grounds upon which the General Term affirmed the judgment of nonsuit was, that there was a presumption of payment arising from the lapse of time wholly independent of the statute of limitations. This presumption, however, is not one of law that is available to a defendant as a bar to the action on the claim, but one of fact for the jury. Under the defense of payment the lapse of time may be considered in connection with all the facts and circumstances of the case, and it may sometimes, with the other circumstances, warrant the inference that the claim was paid. The nonsuit in this case cannot be upheld upon the ground that from lapse of time there is a conclusive presumption that the claim was paid. * * * The most that the defendant was entitled to on the question of the lapse of time was to have it submitted to the jury as evidence in support of the defense of payment. (2 Phillips on Ev. [4 Am. ed.], 171; 1 Greenl. on Ev. [13th ed.], § 39; Jackson v. Sackett, 7 Wend., 94; Bean v. Tonnele, 94 N.Y., 381; Parker v. Foote, 19 Wend., 309; Wood v. Squires, 1 Hun, 481; Miller v. Smith, 16 Wend., 443; Jackson v. Hotchkiss, 6 Cow., 401; Mayor v. Horner, 1 Cowp., 109; Darwin v. Upton, 1 Sandf., 175.) ”

Under the rule thus laid down, and giving due weight to the testimony of Jackson, one of plaintiff’s witnesses, in regard to the conversation which he overheard between the plaintiff and Roberts in 1870, it was still error for the court not to give the defendants the benefit of the presumption of fact which could properly be drawn by the jury from the circumstances of the case.

In respect, therefore, to such requests as sought to have the court Charge that a presumption of law which would be available to the defendants as a bar to the action existed the refusal of the court was right. But as to such of them as required the court to present the question as one of fact for the jury, it was error to refuse to charge as requested. The defendants were entitled to the benefit of this presumption of fact created by lapse of time, upon which to a great extent their whole defense rested.

Such rulings, therefore, having been erroneous and duly excepted to, require that a new trial should be had.

The exceptions should be sustained and the order denying the motion for a new trial should be reversed, and a new trial granted, with costs to appellants to abide event.

Yan Brunt, P. J., concurred iu the result.

Exceptions sustained and order denying motion for a new trial reversed, and new trial granted, with costs to appellants to abide event.


author: Patterson, J .: O’Brien, J.

text:
    WINTHROP S. GILMAN and Another, Plaintiffs, v. FIRST NATIONAL BANK OF THE CITY OF NEW YORK, Defendant.

      Mils and notes — payment by mistake — right to recover — protest is necessary to hold the drawer.

    In an action brought to recover money paid by mistake on a foreign bill of exchange, it appeared that a Mrs. Cockran had deposited with a bank in Cadiz, Ohio, a Kansas bond for collection; that the Cadiz bank forwarded the bond to a Kansas bank, which collected it; that the Kansas bank, on or about January twenty-third, drew a sight draft on the plaintiffs, their New York correspondents, in favor of the Cadiz bank for the amount thus collected, and sent it tó that bank; that the latter bank received the draft on February eighth; that, in the meantime, on February sixth, the Cadiz bank had notified the plaintiffs of the existence of the draft and requested them to hold moneys sufficient to pay it; that, on February ninth, the plaintiffs telegraphed the Cadiz bank that the Kansas bank had( not sufficient funds to meet the draft; that the Cadiz bank replied requesting the plaintiffs to apply to the payment of the draft such moneys of the Kansas bank as it had; that the draft was forwarded, and was, on February tenth, paid in full by the plaintiffs to the defendant.

      JBeld, that a case of mistake was not made out, and that there could be no recovery, for the amount paid beyond the funds of the Kansas bank in the. plaintiff s’ hands.
    That the draft was paid in full, in the usual course of business, when the plaintiffs knew that they had not sufficient funds of the Kansas bank to enable them to make full payment.
    That a protest was necessary in order to enable the defendant or the Cadiz bank to hold the drawer, and that the payment by the plaintiffs prevented protest. (O’Brien, J., dissenting.)
    Exceptions of the plaintiffs, Winthrop S. Gilman and Theodore Gilman, directed to be heard in the first instance at General Term, the complaint having been dismissed after a trial at the New Yorlc Circuit before the court and a jury.
    The action was brought to recover an amount claimed to have been paid by mistake upon a draft.
    This draft the Cadiz bank received on February 8,1891, was dated January 23,1891, and was in the following form:

      FARMERS’ STATE BANK OF AUGUSTA.
    $638.60. Augusta, Kansas, Jan. 23d, 1891.
    Pay to the order of D. B. Welch, Pres., six hundred and thirtyeiSht tVt dollars. e. R GRANT,

      Gashier.

    To Gilman, Son & Go., New York.
    Written across face: “ Gilman, Son & Co. Paid Feb. 10, 1891. 62 Cedar St., N. Y.”
    Indorsed: Pay E. Scofield, cashier, or order, for collection account of First National Bank of Cadiz, O. I. C. Moore, Cashier. First Natl. Bank, N. Y. Feb. 10, 1891. Paid.

      II. B. Glosson, for the plaintiffs.

      Fisher A. Baher, for the defendant.
   Patterson, J .:

This is an appeal from a judgment entered on the dismissal of the complaint at circuit. The action was brought to recover back a sum of money which the plaintiffs claim was paid by mistake on a draft or bill of exchange presented to them by the defendant and paid on the 10th day of February, 1891. There is no dispute as to the facts, which are, in brief; that a Mrs. Cockran, living at Cadiz, in Ohio, deposited for collection, with a bank located and doing business at that place, a bond of a Kansas township. That bond was sent by the Ohio bank to a Kansas bank, which collected its amount on the 23d of January, 1891. The plaintiffs were the New York correspondents of the Kansas bank, and on the day last named that bank, by its cashier, drew a sight draft on the plaintiffs, which was, after some delay, received by the Cadiz bank, and was forwarded by that bank to the defendant for collection. Meantime, and on the sixth of February, the Cadiz bank notified the plaintiffs of the existence of the draft and requested them to hold moneys of the Kansas bank sufficient to meet it. On the ninth- of February the plaintiffs telegraphed the Cadiz bank that the drawer had not sufficient funds to meet the draft. On the same day the Cadiz bank, in reply to the telegram last referred to, requested, by telegraph, the plaintiffs to apply to the draft what funds they had of the Kansas bank. There is nothing in the case to show the exact state of the account between the drawing bank and the plaintiffs, but there were several transactions had between them, intermediate the twenty-third of January and the tenth of February. On the last-named day, and, as appears from the letter and telegrams above referred to, the plaintiffs, with full knowledge of the fact that there was not enough money in their hands to the credit of the account to which the draft was to be charged, paid it in full to the defendant. The next day the plaintiffs made reclamation, not of the whole amount-paid, but only of the amount of the deficiency in the account of the Kansas bank. There is nothing in the testimony to establish mistake of the plaintiffs. The only witness who testified on that subject is Burnham, the-plaintiffs’ cashier, and he says he did not know what the balance on hand was to pay the draft until after the payment was actually made. His principals did, however. In the absence of any other testimony, it is quite clear this draft was paid-in the usual course of business, and notwithstanding the plaintiffs knew it was not good in full on the day preceding its payment. We do not think a case of mistake was made out, such as would entitle the plaintiffs to recover, and more especially as it is clear that by reason of the payment a protest of the paper was prevented. It was a foreign bill. (Commercial Bank v. Varnum, 49 N. Y., 275 ) The act of payment, of course, prevented the protest, and before an action- could be maintained against the drawer on the draft protest was necessary. (2 Daniel on Neg. Inst., § 926.)

We think the complaint was properly dismissed and that the judgment should be affirmed, with costs.

Yan Brunt, F. J., concurred.

O’Brien, J.

(dissenting):

The action was to recover money paid by mistake by the plaintiffs to the defendant upon a draft presented to them for payment. Although the amount involved is not large, the principle is important as determining the rights and duties of drawers, indorsers and drawees upon a foreign bill of exchange; and as the facts are not disputed, and may be briefly stated, it will serve the purposes of clearness to set them forth.

In January, 1891, a Mrs. Cocieran, of Cadiz, Ohio, had deposited with the First National Bank of Cadiz, for collection, a bond of the township of Augusta, Kansas. That bank sent the bond for collection to its correspondent, the Farmers’ State Bank of Augusta. The Farmers’ Bank collected the amount, and on January twenty-third its cashier drew a sight draft on the plaintiffs, their New York correspondents, in favor of the Cadiz bank for $638.60.

It did not appear whether or not the balance of the Augusta bank, with the plaintiffs when it drew, was then good for this amount or not. There were subsequent drafts upon them, presented, however, before this, which reduced the balance; but, on the other hand, deposits may have been made in the meantime.

This draft the cashier of the Augusta bank forgot to mail to the Cadiz bank, being just then about to abscond. He did abscond and his bank failed. Hearing of this the Cadiz bank telegraphed to Augusta for news of the bond, with the result that the draft in question was found and mailed to the Cadiz bank as it Was advised by wire. Thereupon, on February sixth, before receiving the draft itself, the Cadiz bank wrote to the plaintiffs asking them to hold .an amount to cover the draft, but before receiving the reply they paid' the amount of the draft to their customer. When received they mailed the draft to their New York correspondent, the defendant. The plaintiffs, after the payment to the depositor by the Cadiz bank, replied that the account of the Farmers’ Bank was not good for the amount of the. draft. Thereupon the Cadiz bank telegraphed the plaintiffs to apply any amount in their hands on the draft, and to the defendant to accept partial payment thereof.

This draft, however, having been presented with some thirty others by the defendant to the plaintiffs, and the plaintiffs’ cashier, having overlooked the fact that there was not sufficient funds in hand for the purpose, paid the draft in full. On the next day the mistake was discovered, and a demand was made upon the defendant for the return of the amount of the overdraft, which was refused.

There can be no question upon the evidence but that the payment of the draft W'as not a voluntary payment, but was made by the plaintiffs under a mistake. Unless, therefore, there is some other ground or principle that would prevent a recovery the plaintiffs were entitled, as against the defendant, who was the mere agent of the Cadiz bank, and against tbe Cadiz bank itself, to recover tbe money tlius paid by mistake.

The ground upon which the complaint was dismissed was that the plaintiffs sue upon the bill of exchange which they failed to protest, on the day when the demand was made, and that by reason of that failure to protest the defendant has lost its claim against the drawer. We shall confine our attention to a determination as to whether this ruling was correct; for though some question is made as to the strength of the plaintiffs’ case upon the theory of the payment of the money by mistake, had this latter ground been relied upon, it might under permission, to be obtained from the court, have been strengthened by other testimony. In other words, we think that this nonsuit must be sustained, if at all, upon the ground upon which it was asked, and granted unless there was some other ground upon which it would have been impossible for the plaintiffs, if their attention had been called to it, to obviate it by further proof.

We have been referred to no such other ground, and, as stated, it remains but to consider whether the ground relied upon for the nonsuit, viz., that the failure to protect the bill on the day the demand was made, will prevent a recovery. As the plaintiffs were the drawees of the bill of exchange, there was not, under the law governing commercial paper, any obligation upon them to protest the paper at all, and their failure to protest is, therefore, no bar to their recovery.

It may, however, be insisted, inasmuch as the defendant, for the purpose of charging the drawer, would undoubtedly have been required to protest the paper, that the payment of the money and the situation in which the defendant was thus placed, by the possession which the plaintiffs had of the draft prevented it from discharging its duty to protest the draft. This presents the question upon which we think the rights of the parties depend. And at the outset we do not agree with the claim of plaintiffs, that the fact that there were not funds sufficient in their hands to pay the draft in full would have relieved the defendant from the obligation of protesting it in order to hold the drawer.

It is only in cases where there are, to the knowledge of the drawer, no funds, or where, subsequent to the drawing of the draft, the funds are taken out, or it is clear that the drawer has no reasonable expectation that the draft will be accepted, that presentation and protest may be unnecessary. The reason for this is that the' act of the •drawer is a fraud.

The rule is stated in Chitty on Bills (444) as follows : “ If at any time between the drawing of the bill and its presentment and dishonor, the drawee had some effects or property of the drawer in his hands, though insufficient to pay the amount, he will, nevertheless, in general, be entitled to notice of the dishonor, and the laches •of the holder will discharge him from liability.” (12th Am. ed.)

Assuming, however, that the obligation rested upon the defendant of protesting the draft, it remains to be determined whether the mistake prevented the defendant from discharging this duty, which, if it did, by relieving the drawer, would prevent the plaintiffs from recoveiing the overdraft from the defendant.

We shall consider, therefore, the motion for a nonsuit as though made upon the ground that the plaintiffs, by their delay in discovering the mistake, had made it impossible for the defendant to protest the draft, and that the defendant would, therefore, become answerable in damages to the Cadiz bank if they had returned the money. The answer to this claim is, that the situation was in no way changed by the failure of the plaintiffs to discover their mistake until the morning of the day following the presentment of the draft. If the defendant had then acceded to the demands of the plaintiffs, and returned the payment as made by mistake, they could have protested the draft, and notified the drawer equally as well as on the day before.

We assume that the principle will not be disputed that the protest of a bill can always be made on the business day next succeeding that of presentment. (Smith v. Poillon, 87 N. Y., 590; Farmers' Bank v. Vail, 21 id., 485; Burkhalter v. Second Nat. Bank, 42 id., 538.) Under the authority of these cases, as the draft was ■only received by the defendant on the tenth, it could, on returning ■on the eleventh the payment made by mistake on the tenth, again have presented the draft for payment, and on its being refused immediately have protested it and given notice to the drawer, and it would thereby have been duly charged.

Where, as here, therefore, the mistake was discovered in time to enable the defendant to correct the same and discharge its duty to its principal by protesting the draft as against the drawer, it should not be allowed to take advantage of the fact that tbe draft by being paid was in the possession of the plaintiffs, because such possession could have been recovered by the repayment of the money when demand was made therefor.

In our view upon the facts, the discharge of the drawer from liability because of the non-protest of the bill is not chargeable to the plaintiffs, but is directly the result of what must be considered the indefensible position assumed by the defendant’s principal, the Cadiz bank, who, with full knowledge of all the facts that there was not money sufficient to pay the same, had instructed the defendant to receive partial payment, and when, through a mistake, it had. obtained possession of the whole amount, insisted on retaining the same illegally and unjustly as against the plaintiffs.

This circumstance alone, that the Cadiz bank had requested the-plaintiffs to make, and the defendant to accept partial payment, would absolve the defendant from the obligation of protesting. Such a request was inconsistent with the right to require protest of the draft, and must be considered as an express waiver of it. The-Cadiz bank knew that in the regular course of business the draft would be protested, and notwithstanding this they telegraphed to the plaintiffs and defendant to make and accept partial payment,, after which it would, of course, be impossible to protest the draft for the reason that the mercantile law knows no such thing as protest after partial payment of commercial paper, or the protest of partially paid negotiable paper.

The defendant owed a duty simply to the Cadiz bank, and to no-one else, and-the Cadiz bank had the right to instruct the defendant,, as its agent, to pursue a course which, while it might release the drawer, who at the time was known to have failed, would at the. same time secure the partial payment of the draft.

Under these circumstances, it would be impossible, it seems to us,, for the Cadiz bank to maintain an action for damages against the defendant if it had returned the money which it had received by mistake.’

Our conclusion, therefore, is that the ground upon which thenonsuit was placed, viz., the failure of the defendant to protest the draft, there being no such duty upon the plaintiffs, as drawees, is untenable; and that the other theory upon which it is sought to justify the nonsuit, viz., that the release of the drawer was due to the mistake of the plaintiffs, thus barring a recovery, is not supported by the facts in the case or by the authorities bearing upon the subject.

"We think, therefore, that the exceptions should be sustained and a new trial ordered, with costs to the plaintiffs to abide the event.

Judgment affirmed, with costs.