author: Mayham, P. J.:

text:
    THOMAS LANIGAN, Respondent, v. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, Appellant.

      Life insurance — an untrue answer in an application as to prior insurance— not made a warranty — when a company is estopped.

    A person applying for life insurance in an insurance company staled in liis application for the policy that he was not insured in the company, which was untrue, as he was, at the time of the application, already insured in that company. It was agreed in such application that the answers to the questions in such application should form the basis of the contract between the insured and the corporation. A policy was issued, pursuant to such application, to the applicant, which provided that it should be void while there was in force a prior policy issued by the company upon the same life unless the corporation consented thereto in writing.
    There was no provision in the application or policy which made the answers to the application warranties; and there was no positive evidence that the insured knew of the former policy, or that the company knew of it wdien the new policy was issued.
    In an action brought upon the policy issued upon such application, to recover for a loss thereunder:

      Held, that as no fraud was shown the company must be presumed to have knowledge of the issuing of the prior policy, the existence of which was shown by its own records, and that by delivering and receiving payment for the second policy it was estopped from sotting up a breach of the condition forbidding prior insurance except by its consent.
    Appeal by the defendant, the Prudential Insurance Company of America, from a judgment of tlie Albany County Court, entered in tlie clerk’s office of said county on the 2Yth day of November, 1891, affirming a judgment in favor of the plaintiff for thirty-nine dollars and fifty cents damages, and seven dollars and fifty cents costs, rendered by a justice of the peace.

      Hem'y J. IfeOormick, for tlie appellant.

      P. P. Niver, for the respondent.
   Mayham, P. J.:

On the 30th day of June, 1890, the defendant issued a policy on the life of Martin Dooley for $158, on his written application therefor, and on that day Dooley, by an instrument in writing, in accordance with the forms issued by the defendant, directed that the payment of the benefits specified in such policy be paid to the plaintiff, he claiming to be equitably entitled to the same for money paid and expenses incurred by him for the assured. On the 2d day of January, 1891, the assured died of consumption, and the plaintiff, after proving the death and demanding the amount due upon the policy, brought this action.

The defendant, in its answer, alleges that the assured, in his application, made certain representations as to his physical condition which were untrue, and also represented and warranted that he was not insured by the defendant under any other policy of insurance, which warrantees the defendant alleged were false and fraudulent.

On the trial the plaintiff proved the policy, its assignment to the plaintiff and the death of the assured. The defendant put in evidence the application for the policy, and also proved that there was, at the date of the application, another policy issued by the defendant on the life of the appellant.

The defendant also proved that the health of the appellant, soon after the issuance of the policy, was impaired; and that he suffered from hemorrhage from the lungs, and that he died of consumption in less than one year, but more than six months after the issuance of the policy. At the conclusion of the testimony the defendants moved to dismiss the plaintiff’s complaint, which motion was denied and judgment was given for the plaintiff for the amount estimated due upon the policy by its terms.

The County Court, on appeal, affirmed that judgment, and the defendant appeals to this court. The defendant urges two principal grounds for the reversal of this judgment.

First: That the application of the assured in relation to his health was untrue.

Second. That liis statement in the application, that he had no other insurance policy on his life issued by the defendant, was false, and that the policy for these reasons was void.

Upon the subject of the assured’s physical condition at the time of making • the application, there was clearly such a conflict as to make it a question of fact; and as the justice found with the plaintiff upon, that question, we should .not disturb his findings on that subject.

On the subject of the time of his cough and the hemorrhage, some of the witnesses say that he was sick nearly all summer with a cough, others say he did not cough more than three months before his death. Some of the witnesses think the hemorrhage occurred" in June, some fix it as late as July or August.

As to the question of another policy on the assured’s life in the defendant’s company, there is no conflict in the evidence. There was another policy on his life at the time of this application. The question propounded in the application and answered by the assured on this subject is as follows: “ Is life proposed, now insured in this company? If so, state numbers and amounts of policies.” The answer written in the application to this question is “No.” This application also contains this provision. “ I agree that said answers with this declaration shall form the basis of a contract of insurance between me and the /Prudential Insurance Company of America, and that the policy which may be granted by the company, in pursuance of this application, shall be accepted subject to the conditions and agreements contained in such policy.”

The policy contains this provision.

“Fourth. This policy shall be void if the insured shall, without, the written permission of the president or secretary of the company, engage in either of the occupations excepted in the foregoing section, or while there is.in force upon the life of the insured a policy previously issued by this company, unless the policy first issued 'contains an indorsement signed by the president or secretary, authorizing this policy to be in force at the same time.”

But there is no provision in the application or policy which renders the policy void for a breach of any warrantee contained in the application.

, It is insisted, on the part of the respondent, that the defendant waived the condition in the fourth subdivision of the policy above quoted by accepting the premiums and issuing a policy on this application, especially as the defendant presumably had knowledge of the existence of a previous policy issued by it on the life of the assured at the time of the issuance of the policy in suit.

• It is true, as a general rule, that a general warranty does not protect the one to whom it is given against facts known to and understood by him; and this rule has been applied in certain cases to insurance policies.

In Short v. Home Insurance Company (90 N., Y. 19) the condition in the policy was that if the premises became vacant or unoccupied to the knowledge of the assured the policy should be void; and the case showed that the premises were, at the time of issriing the policy, vacant, and remained so until destroyed by fire, and the court held that if the defendant knew that fact at the time of issuing the policy it was deemed to have waived that condition, and was estopped from setting that up, as a breach of the assured’s engagement, to defeat the policy.

So in Woodruff v. The Imperial Fire Insurance Company (83 N. Y., 133), when the applicant was required to state for what purpose the building was used, and he answered a dwelling,” and the same was at the time unoccupied, the assured was not held to the statement as a warranty. So in Van Schoick v. Niagara Fire Insurance Company (68 N. Y., 434), the application required that, if the building was located on leased land, it must be stated, and although that was the case, to the knowledge of the assured and the agent of the company; held, that as the defendant had notice of the fact, it did not vitiate the policy.

But all of these cases, and others to the same effect of a kindred character, turned upon the question of knowledge in the company or its agent.

In the case at bar there is no direct evidence that the company knew at the time of issuing this policy that there was another outstanding policy of this company on the assured’s life. Is it chargeable with such knowledge from the fact of the existence of the policy issued by it, and the record of which was in its possession ? It is quite true, as claimed by the appellant, that insurance contracts must, like other contracts, be construed according to their terms. (Dwight v. Germania Life Ins. Co., 103 N. Y., 311.) But it is also true that the provisions of an insurance contract may be waived by the parties, or become inoperative by operation of law as in other contracts. In Short v. Home Insurance Company (supra) the condition of the policy was that, if the premises became vacant or unoccupied without notice to and the consent of the company in writing, the policy should be void. The premises were unoccupied at the time that the policy was issued, and so continued until destroyed by fire. This was held to be a breach of the condition, but the court held that it was presumed to have been waived by the company, that the company was estopped from setting up the breach, as a contrary inference would impute to the company a fraudulent intent .to deliver and receive pay for an invalid instrument. That case, however, proceeded upon the theory that the company had knowledge of the fact that the building was unoccupied. In the case at bar we think it may be assumed that the justice found, from the fact that the defendant was a party to the prior insurance from having issued its policy, and that having such knowledge, and with it accepting the premiums and issuing its policy, it was estopped from insisting upon the forfeiture, especially as there does not seem to be any claim that there was a fraudulent misrepresentation by the assured. The proof shows that his actual statement to the agent of the defendant at the time of the application was, that he was not insured in defendant’s company that he knew of,” and there is no positive evidence that he had such knowledge.

The defendant being in a position to have had actual knowledge, the presumption that it did possess the same is quite as strong or stronger than.any that can be indulged in as to the assured.

While the case is not free from doubt, we are inclined to sustain the Justice and County Court in holding that the defendant must be charged with knowledge of the existence of a former policy issued by it, outstanding at the time of issuing the policy in suit, and that that condition was, therefore, waived, and cannot, for that reason, be urged as a ground for reversal of this judgment.

The judgment of the Justice and the County Court affirmed, with costs.

Putnam, J., concurred; ITerriok, J., not voting.

Judgment of Justice and County Court affirmed, with costs. •


source: Caselaw Access Project

author:
Tappan, J.
      Herrick, J.:

      Mayham, P. J.

license: Public Domain

text:
       WILLIAM O. DOUGLASS, Respondent, v. PETER FERRIS, and ABBIE A. PROUTY, as Executrix of RODNEY SARGENT, Deceased, Appellants.

      Guardian and ward — dishonest settlement — liability of sureties upon the guardian’» bond — notice of the guardian’s default— laches — indulgence.
    In 1872 the general guardian of an infant executed a bond with sureties in the ordinary form. In 1879, and soon after reaching majority, the infant and the guardian had a voluntary settlement and accounting, and the guardian paid to the infant the sum found to be due him, part of which payment was made in a security which the guardian knew to be worthless.
    In January, 1880, the Surrogate’s Court passed the guardian’s accounts, and discharged him as such guardian.
    In November, 1880, the infant discovered that he had been defrauded by means of the worthless security, rescinded the settlement and at once demanded payment of the amount claimed by him to be still due, which the guardian promised to pay, and on account of which he finally made a partial payment in February, 1882.
    In October, 1882, the infant began an action against the guardian, and in February, 1885, recovered judgment for the balance due, from which judgment the guardian appealed to the General Term, where the judgment was affirmed in June, 1885, and thereafter, some time in 1885, the guardian became insolvent.
    In October, 1885, the infant brought an action against the sureties upon the bond given by the guardian to recover the sum for which he had obtained the judgment against the guardian.

      Held, that he was. entitled to recover.
    That it was the duty of the sureties to see that the guardian accounted honestly with his ward.
    That it was not necessary that the ward, in order to hold the sureties, should notify them of the guardian’s dishonesty.
    That the settlement between the guardian and ward, when the latter became of age, did not release the sureties.
    That the time during which his suit against the guardian was pending was no part of the time of which laches could be predicated.
    That if the ward waited nearly two years for payment by the guardian, there being no extension of time or release to the guardian, it amounted only to an indulgence to the guardian which did not discharge the sureties. (Mayham, J., dissenting.)
    Appeal by the defendants, Peter Ferris, and by Abbie A. Prouty, as executrix of Rodney Sargent, deceased, from a judgment of the Supreme Court, entered in tlie office of the clerk of the county of Clinton on the 15th day of January, 1891, upon a recovery by the plaintiff of $4,714.04 and costs, after a trial at the Clinton Circuit before the court without a jury.
    The action was brought to charge the sureties upon the bond of a guardian, who, after a voluntary settlement with his ward, was discharged by the Surrogate’s Court January 12, 1880.
    The following opinion was delivered hy the trial court:

      8. A. Kellogg, for the plaintiff.

      Siohard L. Hand, for the defendants.

       The decision in this and the following cases in the Third Department (except St. Lawrence Wholesale Grocery Company v. Hobson, decided May 5, 1892) were handed down April 4, 1892.

   Tappan, J.

The facts f'bund are contained in the decision, and need not be repeated further than is necessary to state clearly the points involved in the decision.

The bond sued upon is joint and several. Before section 75 G of the Code of Civil Procedure was amended September 1, 1877, the death of a joint surety discharged his estate from all liability upon such contract. The bond in suit was given in 1872. The death of Rodney Sargent January 28, 1887, discharged his personal representative from the joint liability of her testator upon such bond. (3 R. S. [5th ed.], 669, § 1; Getty v. Binsse, 49 N. Y., 385; Wood v. Fisk, 63 id., 245; Risley v. Brown, 67 id., 160; Hauck v. Craighead, id., 432.)

September 1, 1877, section 756 of the Code of Civil Procedure was amended so as to read, that the estate of a person or party jointly liable upon contract, with others, shall not be discharged by his death, but the court may make an order to bring in the proper representative, when necessary to do so. This amendment did not affect the bond in suit, which htid been given before it became the law. No act of the legislature could alter the effect of this bond to the prejudice of either party. The law as it stood when the bond was given, is considered a part of the written condition thereof. (U. S. v. Price, 9 How. [U. S.], 83; Fielden v. Pickersgill, 6 Blatchf., 524; Randall v. Sackett, 77 N. Y., 480; Smith v. Osborne, 31 Hun, 390, 392.)

The action was revived under the provisions of section 454, Code of Civil Procedure, which provides that “ two or more persons, severally liable upon tlie same written instrument, * * * may all or any of them be included as defendants in the same action at tlie option of the plaintiff.” Under this section the plaintiff had the right to join the original defendants in the action; to discontinue the action as to the defendant Gilletta Low, and at the death of Rodney Sargent, to revive the action against the defendant Abbie A. Prouty, as personal representative of said deceased defendant, and to continue the same to judgment against the present defendants, talcing a personal judgment against the defendant Peter Perris, and a judgment to be collected by due course of administration against the defendant Abbie A. Prouty, sole executrix of Rodney Sargent, deceased. (Churchill v. Trapp, 3 Abb., 306; Eaton v. Alger, 57 Barb., 179; S. C., on appeal, 47 N. Y., 345; Hauck v. Craighead, 67 id., 432, 436.)

The condition of the bond in suit is, that Edwin B. Low shall well and faithfully in all things discharge the duty of guardian of the plaintiff, his ward, according to law, and render a just 'and true account of all moneys and property received by him, and of the application thereof, to and before any court having cognizance thereof, when thereto required.

The case presented by the evidence shows that the guardian, soon after his ward attained his majority, rendered a correct account, showing the true balance remaining in his hands, but did not pay such balance, but, by fraudulent representations, induced his ward to receive in' payment a worthless note and mortgage, taking from him a discharge and authority to enter a decree with 'the surrogate of Essex county; who had appointed the guardian, judicially settling his account and discharging him and his sureties upon the bond in suit.

As the guardian rendered a correct account, showing the true balance, it is insisted by the counsel for the defendants that the fraud committed by the guardian in making the payment was not part of his conduct as guardian, but was the individual fraud of the guardian, and not within the condition of the bond.

The condition that the guardian shall in all things faithfully perform his duty according to law requires him not only to render a correct account, but to actually pay over the balance to the ward when he is entitled to receive it. Any colorable payment made with counterfeit coin, spurious bills, or checks drawn upon a bank in which there were no funds to pay, or any payment received by the ward because of the fraudulent representations of the guardian, does not operate as payment in fact, and does not discharge the sureties upon the guardian’s bond. (Bank v. Buchanan, 87 Tenn., 32; S. C., 10 Am. S. R., 617, note at p. 619, and cases there cited.)

The undertaking of the surety that the guardian shall actually pay protects the ward against any fraud of the guardian committed in the attempt of the latter to make payment or obtain satisfaction or discharge of the debt due by the guardian, as such, to the ward. Until the guardian had paid the ward the money, or property which was a just equivalent for it, he had not faithfully performed his duty as guardian.

After such payment has once been made the liability of the guardian, as such, and of his sureties ceases. Further dealings of the guardian whereby he defrauds the ward is pei’sonal fraud, not involving his conduct as guardian, for which the sureties upon his bond cannot in any manner be made liable. The release and discharge from plaintiff to Edwin B. Low, his guardian, having been declared void for fraud by a court of competent jurisdiction, the liability of the defendants, as sureties upon the bond of the guardian, if not affected by laches, remains the same as though the release had never been given. (Parr v. State [Md.], 17 Atlantic Rep., 1020; Am. Dig., 1889, 1722.)

The attempted payment by Edwin B. Low, as guardian, to the plaintiff, his ward, and the discharge given therefor, and the decree in the Surrogate’s Court based thereon, having been set aside for the fraud of such guardian, and it having been affirmatively adjudged in an action brought in this court by the plaintiff against Edwin B. Low as guardian, that said Low, as such guardian, pay a sum of money to plaintiff, for which he is liable as guai’dian, such judgment and decree obtained in the manner and under the circumstances detailed in the findings of fact, is evidence against the sureties upon said guardian’s bond and is prwia facie binding upon them. (Rockfeller v. Donnelly, 8 Cow., 623; Thayer v. Clark, 48 Barb., 243; Binsse v. Wood, 37 N. Y., 526; Gerould v. Wilson, 81 id., 573 ; Scofield v. Churchill, 72 id., 565; Casoni v. Jerome, 58 id., 315; Harrison v. Clark, 87 id., 572; Heard v. Lodge, 20 Pick., 53; S. C., 32 Am. Dec., 197, and note, p. 202; Parr v. State [Md.], 17 Atlantic Rep., 1020; Am. Dig., 1889, 1722.)

There being no evidence in any manner rebutting the reasonable inference to be drawn from the judgment-roll in that case, it is proof of the fact of the liability of Low as guardian to the plaintiff, and is competent evidence of the guardian’s fraud. (Thomas v. Hubbell, 15 N. Y., 405; Lee v. Clark, 1 Hill, 56; Bridgeport Ins. Co. v. Wilson, 34 N. Y., 275; Conner v. Reeves, 103 id., 527; Heard v. Lodge, 20 Pick., 53; S. C., 32 Am. D., 197, 202; Gillett v. Wiley, 126 Ill, 310; S. C., 9 Am. S. R., 587.)

The judgment before mentioned determined that there was a sufficient rescission of the attempted payment with a proper offer to restore the note and mortgage, and the same have always since remained at the disposal of Low, and were ready to be delivered to him at the trial.

The note and mortgage were taken as actual payment, and except for the fraud of Low would have operated as payment of the amount due from him to the plaintiff; as the attempted payment was set aside for fraud it did not operate to extend the time of payment of the original indebtedness.

It does not appear that there was any irregularity in the entry of final judgment in the action between the plaintiff and Low. An irregularity of the kind claimed could only be corrected by proper motion. (Wright v. Nostrand, 94 N. Y., 32.)

It is insisted by the counsel for the defendants that such laches on the part of the plaintiff are shown that the sureties upon the guardian’s bond are released.

The fraud of Edwin B. Low, the guardian, was committed May 14, 1879. It was discovered by plaintiff in November, 1880, and was by him immediately communicated to Low, and the plaintiff then demanded that the transaction respecting the note and mortgage, by which the fraud was committed, and all proceedings which had been taken under the discharge and decree of the surrogate, should be canceled and treated as void, and that said Low, as guardian, pay the $3,200 and interest, for which the note and mortgage had been substituted, to which Low assented and promised to make such payment, and in February paid $800.

In April, 1882, Low transferred Iris real estate to Ms wife, and made no further payment upon the amount acknowledged by him to be due to the plaintiff.

In October, 1882, plaintiff commenced the action against Low, his guardian, in which judgment was entered in February, 1885, vacating the attempted payment by the note and mortgage, and setting aside the discharge and the decree of the surrogate based thereon, and giving judgment in favor of the plaintiff against Low for the amount due by him as guardian. •

On June 9, 1885, the judgment had been affirmed by the General Term and final judgment was entered. On June 15, 1885, executions on the judgments were issued and returned unsatisfied.

This action was brought October 31, 1885, and then the sureties first became aware of the fraud of Low/ and of the proceedings taken by the plaintiff in consequence of such fraud.

On June 27 1885, Low was and since then has been insolvent.

It is fairly to be inferred that the assent of Low and his promise to pay in November, 1880, and afterwards often repeated, and his payment in February, 1882, was the cause of plaintiff’s failure to prosecute an action against Low until October, 1882. From that time until the commencement of this suit plaintiff was prosecuting 'the suit against his guardian to avoid the effects of his fraud, and to put himself in condition to prosecute the sureties, the guardian during all the time unjustly defending and interposing obstacles for delay.

Under the circumstances, did the plaintiff owe any duty to the sureties which he omitted ? They undertook, as has been shown, to guard and protect him against the fraudulent conduct of his guardian. Fie had undertaken to settle with this guardian when he attained his majority and to obtain payment. In the attempt to pay him the guardian had cheated and defrauded him, and in that way had obtained his discharge. Until such payment and discharge had been set aside for the fraud, plaintiff could not call upon the sureties, and he had the right to take the proper proceedings for that purpose; whatever time was necessarily taken for that purpose plaintiff was entitled to. The guardian was not faithfully performing his duty when he committed the fraud, nor was he when he resisted proper legal proceedings to vacate and set aside what he had gained by his fraudulent conduct as guardian.

Rieha/rd L. Hand, for the appellants.

Royal Corbin, for the respondent.

The delays were caused by the fraudulent and improper conduct ■of the guardian as such, against which the sureties had undertaken to guard the plaintiff.

The sureties were bound to know that any transaction between plaintiff and Low, by which he defrauded plaintiff in paying over such money, was liable to be set aside for such fraud, and that nothing short of actual payment would release the guardian or his sureties.

It was their duty to protect themselves by such inquiries as to payment as would have put them into possession of the facts. The plaintiff was in the neighborhood and they could have made inquiry of him. Without such inquiry he had no occasion to communicate with the sureties.

The plaintiff having acted reasonably under the existing circumstances, and the delay in calling upon the sureties having been caused by the fraudulent and dishonest conduct of the principal, the guardian who the sureties had undertaken should, as guardian, act honestly and without fraud, such delay does not constitute laches which will discharge the sureties. (Gillett v. Wiley, 126 Ill., 319; S. C., 9 Am. State R., 587, note and cases cited.)

I see no reason why the plaintiff should not recover the cost and expense in undoing the fraud of the principal, and in securing an honest accounting.

Judgment is ordered against the defendants for $3,509.74 and interest thereon from February 16, 1885, to April 8, 1889, and for $193.63 and interest from the same time, and for $72.50 and interest from June 9,1885, to April 8,1889, amounting, to the time of trial, to the sum of $4,714.04, said judgment to be entered against the defendant Peter Ferris, personally, and against the defendant Abbie A. Prouty, as sole executrix of Rodney Sargent, deceased, to be paid by due course of administration.

Plaintiff is entitled to costs of this action, with an additional allowance of five per cent upon the amount of the recovery aforesaid.

Judgment is ordered accordingly.

Herrick, J.:

For the reasons set forth in the opinion of Mr. Justice Tappan in the court below the judgment appealed from should be affirmed. In addition to, but in harmony with, the views expressed by the trial court, the following suggestions are made: It seems to me that, it was not necessary for the plaintiff to notify the sureties of the dishonesty of his guardian in order to hold them to the obligation of their bond. They owed more than a passive duty; they should see to it that their principal discharged his duty; if they neglected it they did so at their peril. (Forester v. State, 46 Md., 154-161; Gillett v. Wiley, 126 Ill., 319, 327, 328.)

A guardian’s duty does not end as soon as his ward becomes of age; he must then make a settlement with his ward, and honestly account and pay over what is coming to him, and the sureties- are responsible that he does so. I cannot assent to the idea that because when the ward became of age he has legal capacity to act for himself, that the sureties are no longer responsible for the transactions between himself and his guardian in settling the estate. One of the most important duties the guardian owes to his ward is an honest, accounting and settlement with him, and that necessarily cannot, take place until,he is of age; and instead of being in any sense released by the transactions of the ward with his guardian, it seems-to me it is just the time when, if ever, the sureties owe an active duty to see that their principal acts, as they have bound themselves, he would act, as an honest man.

In my opinion the defendants are in a somewhat different position from an indorser upon a note or a guarantor of a bond, or any surety who merely bonds himself to pay a sum of money or fulfill a contract if his principal does not. Here the sureties guaranty the fidelity and honesty of the guardian; the obligation is that the principal “ shall well and faithfully in all things discharge the duty of guardian.” If he fails in that, they are responsible for the damages the ward suffers through that lack of fidelity. It is something more than warranting his pecuniary responsibility, where, if he does not-comply with his contract to pay, and the creditor by his delay suffers-him to become impecunious so that the sureties cannot collect from him, the creditor by his laches has placed the sureties in a position where they cannot make themselves good. Here, as we have seen,, the bond was for fidelity and honesty. Acting promptly would not have made him honest. Delay has not made him any more dishonest than he was before.

Honesty and fidelity are the main things guaranteed, not pecuniary responsibility. But even upon the ground of delay, I do not ,see that the defendants have any sufficient reason to be released. The delay caused by the legal proceedings cannot be considered on the question of laches. Laches can only be predicated upon the time that elajised from the discovery of the fraud until the commencement of the suit against the principal.

No inflexible rule can be laid down as to what constitutes laches; it depends upon the circumstances in each particular case. The evidence in this case is not before us, but it is fairly to be inferred from the facts found, that there, were negotiations between the plaintiff and his guardian, and promises to pay by the guardian, so that the plaintiff was kept in constant hope and expectation of a settlement, and a part payment was made.

Plaintiff first became aware of the fraud in November, 1880, and immediately made demands upon his guardian for payment; this was promised, but not fulfilled. In February, 1882, a part payment was made, and no further payment being made, in October, 1882, he commenced his action against his former guardian. I do not think that the delay under all the circumstances constituted laches that would release the defendants.

There was no extension of the guardian’s time or valid release of him by the plaintiff, by which the plaintiff was prevented from prosecuting him upon his obligation to make an account; the fraud practiced vitiated the -whole proceeding and settlement so that it in no Avay acted as an extension of time or stay of proceedings. (Lowman v. Yates, 37 N. Y., 601.)

Mere indulgence or delay by the creditor to prosecute the principal debtor will not release the surety. (Albany Dutch Church v. Vedder, 14 Wend., 165; Supervisors v. Otis, 62 N. Y., 88; Powers v. Silberstein, 108 id., 169; Howe Machine Co. v. Farrington, 82 id., 121, 131; Bostwick v. Van Voorhis, 91 id., 353.)

The judgment should be affirmed, with costs and printing disbursements.

Putnam, L, concurred.

Mayham, P. J.

(dissenting):

This action was brought against Peter Ferris and Rodney Sargent, upon a bond executed by them and Gilletta Low as sureties, for Edwin E. Low, upon his appointment as the general guardian of the plaintiff,William O. Douglass, by the surrogate of Essex county.

The bond was dated on the 28th of March, 1872, and letters of guardianship were issued to the guardian on the 29th day of March,, 1872. The plaintiff arrived at the age of twenty-one years on the 26th day of March, 1879. On the 14th. of May, 1879, after becoming-twenty-one years df age, the plaintiff and his guardian had a voluntary settlement or accounting and settled and fixed the amount of the guardian’s liability to the plaintiff on account of such guardianship at the sum of $4,363.10, and the guardian thereupon paid to-the plaintiff the sum of $1,163.10, leaving a balance due from the guardian to the plaintiff of the sum of $3,200j and in settlement or payment of that balance the guardian turned out to the plaintiff the promissory note of his insolvent brother, Charles W. Low, payable to the order of the plaintiff March 1,1881, with semi-annual interest, and a mortgage on real estate in the State of Minios executed by Charles W. Low to the plaintiff to secure the payment of the same, which mortgage was falsely and fraudulently represented by the guardian to be good security for the same.

At the time of the consummation of the settlement plaintiff gave to his attorney written authority to appear for him before the surrogate of Essex county and discharge the guardian from all liability on account of such guardianship.

Pursuant to such settlement and authority the guardian and attorney for the plaintiff so authorized and empowered by him, without personal notice to the plaintiff, on the 12th day of January, 1880, appeared before such surrogate and such proceedings were, thereupon had, by and before him, that a decree of final judicial settlement and accounting of such guardian’s accounts were had,, and the surrogate, then and there, among other things, “ ordered, adjudged and decreed that the said account be, and the same hereby is, finally settled and allowed as filed and adjusted; and it is further-adjudged and decreed that nothing remains in the hands of the said guardian as such, or due from him to said ward.” The decree was duly entered of record on that day in the office of the surrogate.

The case shows that the real estate mortgage, given as collateral to the note taken by plaintiff on the settlement, was not adequate security for the note, and that the plaintiff discovered that he had been defrauded in the settlement with his guardian, 'and that the mortgage and note were not security for the amount found due the plaintiff on that settlement; and the plaintiff in November, 1880, discovered that fact, and in February, 1882, the guardian seems to have conceded that fact, and then paid the plaintiff $800 on account of the $3,200, but failed to pay the balance; and in October of that year the plaintiff commenced an action in the Supreme Court for the same against the guardian alleging the guardianship; the settlement between the plaintiff and guardian after plaintiff became of age; the amount found due from the guardian; the giving of the note and mortgage in satisfaction of the same; the decree of the surrogate thereon discharging the guardian, alleging that the settlement was procured by fraud, and asking that the decree of the surrogate be vacated for fraud, and that the guardian be adjudged to pay the balance found due on the settlement. The defendant demurred to the complaint, and judgment was given for the plaintiff on the demurrer, which was affirmed on appeal and judgment ordered against the guardian for the balance and costs.

To recover that balance and the cost of that litigation the plaintiff brought this action against the sureties on the guardian’s bond, and on the trial the plaintiff recovered judgment for the amount, the $3,200 and interest from date of settlement, less the $800 paid by the guardian after that date, and also the plaintiff’s expense in the action against the guardian, and the cost of this action, in all $5,555.22.

■The first, and, perhaps, most important, question raised by the appellants on this appeal is, whether the sureties upon this bond are not discharged by the settlement of the plaintiff with the guardian after arriving at his majority, and accepting of the guardian, in satisfaction of his claim, the note and mortgage of Charles "W. Low, payable nearly two years after the date of such settlement, upon which a decree discharging the guardian was entered by the surrogate.

If the plaintiff, by this settlement, deprived the sureties of any of their legal advantages in protecting themselves from the obligation they assumed as sureties on this bond to their prejudice, it is difficult to see liow lie can, in tliis action, enforce its obligation against them for bis own protection and to tbe prejudice of tbe sureties.

Tbe capacity of tbe plaintiff to make a settlement with bis guardian after becoming of age cannot be doubted, and it can hardly be claimed that tbe defendants, by their bond, undertook to protect tbe plaintiff from tbe consequences of bis improvident dealings with bis guardian after be is clothed by law with authority to act for himself, in tbe absence of any collusion between tbe sureties and tbe principal in tbe bond, unless by its terms the sureties contracted to protect tbe obligee against tbe consequences of bis acts after arriving at bis majority.

Tbe condition of this bond was: “ That if the above-bound Edwin B. Low do and shall well and faithfully in all things discharge tbe duty of guardian to tbe above-named minor according to law, and render a just and true account of all moneys and property received by him, and of tbe application thereof and of such guardian, in all respects, to and before any court having cognizance thereof, when thereunto required, then this obligation to be void, otherwise to be and remain in full force and virtue.”

Tbe obligation of tbe guardian was to account for all money and property to and before any court having cognizance thereof, and that course would have afforded a complete protection to tbe ward, and to tbe sureties as well, and could, at tbe time of making this voluntary settlement, have been compelled by the plaintiff or tbe sureties on this bond.

The making of this voluntary settlement by the plaintiff with bis guardian, and the entering of a decree thereunder and in pursuance thereof, while the same was voidable for fraud, bound all the parties until rescinded; and thus suspended the right of the plaintiff and these sureties to take any proceeding in court to compel an accounting by the guardian before the surrogate, as the decree entered in the matter was in that court, until vacated or reversed, a complete bar to any other proceeding in that court for an accounting. (Sanders v. Soutter, 126 N. Y., 193). This settlement between plaintiff and bis guardian was in May, 1879. In November, 1880, plaintiff knew of the alleged fraud, and waited until October, 1882, before he commenced bis action against the guardian to set aside the accounting; and it does not appear that the defendants were apprised of any alleged fraud in the accounting or in the manner in which the balance found due the plaintiff was paid or secured until September, 1885. During all that time the defendant, so far as this case discloses, had a right to rely upon the recorded decree of this surrogate that the guardian had performed his whole duty and was discharged from all liability to the plaintiff on account of such guardianship. The plaintiff having the power to make this settlement with his guardian, he, and he alone, had the power to rescind it for fraud; and the defendants in this action were powerless and unable to take any steps against their principal in this bond so long as this settlement remained unrevoked. During the interval between the making of this settlement and the rescission or revocation of the same, the guardian, who was the principal in this bond, became insolvent.

I am inclined to the opinion that this voluntary settlement with the guardian by the plaintiff so far affected the rights, powers and privileges of the defendants as sureties on this bond as to release ■them from all obligations to the plaintiff thereunder.

By this settlement the right of the sureties to pay this balance to the plaintiff and sue the principal was clearly suspended during the period that this settlement and decree remained unrescinded and in force. This was such an interference with the rights of the defendants as sureties on this bond, without their knowledge or notice to them, as to release them from liability to the plaintiff. In Paine v. Jones (76 N. Y., 278), Danforth, J., in discussing this subject, says: u The holder of the security had notice of the deed and its covenants, and was bound by this relation, and under an equitable obligation, to do nothing to affect or alter the rights of the surety.” In Calvo v. Davies (8 Hun, 222) the court says : “ The rule is absolute that there shall be no transaction with the principal debtor without .acquainting the person who has a part interest in it.”

In Kane v. Cortesy et al. (100 N. Y., 132) it was held that the defendants, sued upon a guaranty upon a bond and mortgage, were released from their obligation upon their guaranty by plaintiff’s acceptance of a chattel mortgage as additional security, and agreeing with the mortgagor, without the consent of the guarantors, to extend the time of payment of the bond and mortgage; and although the chattel mortgage contained the usual danger clause, and authorized the mortgagee to foreclose it in case he deemed himself insecure, yet that did not defeat the operation of the extension of the real estate mortgage; and Earl, J., says (p. 137): “It gave no rights to the defendants as sureties for the debt, and they could not, by virtue of that clause, pay the real estate mortgage and take an assignment thereof and enforce the same before the extended time of payment had arrived; and as the extension of time was thus effectual against the sureties, it discharged them notwithstanding the clause mentioned.”

In Calvo v. Davies (73 N. Y., 216) Andrews, J., says: “ And the doctrine that a surety is discharged by dealings between the creditor and principal debtor, inconsistent with the rights of the surety, has been applied, although the creditor did not know, in the origin of the transaction, that one of the parties was a surety.”

In Brinagar’s Administrator v. Phillips (1 B. Mon., 283) Marshall, J., states the rule as follows: “ The plain principle to be deduced from these discussions and decisions is, that the surety is released, when, by an arrangement between the creditor and principal debtor, without his consent, his right to compel the creditor to the immediate coercion of the debt from the principal, or what is the- same thing, in effect, his right to make immediate payment to the creditor, and in his name and right to coerce payment from the principal debtor, is impaired.”

The rule seems universal that when the surety is deprived by the act of the creditors and principal debtor, without his consent, of any right or remedy which he might otherwise have to protect himself from loss, he is thereby discharged from his liability to the creditor; and I find no case where that rule is relaxed by reason of fraud practiced upon the creditor by the principal debtor, when the creditor has voluntarily, and without the consent or connivance of the surety, entered into contracts or speculations with the principal debtor not expressly provided for in the bond, and against which the surety has made no express guaranty.

The contract of a surety being strietissimi juris, it cannot be enlarged or changed without his consent. (McCluskey v. Cromwell, 1 Kernan, 598.) In Hancock Mutual Life Insurance Company v. Lowenberg (120 N. Y., 44) the court says: “ The rule is that a surety is entitled to a strict construction of the bond, under which it is sought to make him liable, and that it cannot be enlarged by implL cation to cover anything which was not in contemplation of the parties at the time the bond was executed.” (Bigelow v. Benton, 14 Barb., 123; Barns v. Barrow, 61 N. Y., 39; Schwartz v. Hyman, 107 id., 562.) Applying this rule to the case at bar, I do not see how the sureties on this bond can be held as liable for fraud practiced upon the plaintiff in transactions voluntarily entered into by him, not embraced in the provisions of the bond, and against which the bond furnishes no express guarantee.

The appellants also insist that the sureties on this bond are discharged by reason of the laches of the plaintiff in disaffirming and repudiating this settlement for fraud after the discovery by him of its existence. If this settlement had not delayed the defendants in enforcing their remedy against the principal, then the defendants-could not urge the plaintiff’s laches as an excuse for their failure to-respond after the default of their principal, the bond would then be a continuous obligation, and the sureties would at any time be liable for default of the principal, until barred by some statute of limitation. But when by the act of the creditor and principal debtor the sureties are delayed or hindered in their ability to protect themselves from loss, then the laches pf the creditors to restore them to their original rights would furnish good grounds for their discharge.

In McMurray v. Noyes (72 N. Y., 523) the guarantor of the mortgage was held to be released by the laches of the holder of the same, in delaying foreclosure for fourteen months after the same became due, when at the time of its maturity the property was good security, but before foreclosure it became worthless by destruction by fire (Craig v. Parkis, 40 N. Y., 181; Hancock v. Wilson, 46 Iowa, 352; Toles v. Adee, 91 N. Y., 562); and it has been held that long acquiescence by a ward in a settlement which was procured by the fraud of his guardian practiced upon him, would relieve the sureties from liability. (Aaron v. Mendel, 39 Am. Rep., 248.)

If we' are right in the above conclusion, then there was no breach of the bond as to the sureties. They had not covenanted to protect the plaintiff against the fraud practiced by Edwin B. Low upon the plaintiff in a transaction between him and Low after he had arrived at full age; and while such fraud might, and did, restore the liability of Low to the plaintiff: growing out of that fraud, it did not, it seems to us, re-establish the liability of the sureties on his bond, as guardian, under the circumstances of this case, when, as we have seen, the plaintiff by his own act and laches had deprived the defendants of rights which they had, and could have maintained, against their principal, but for the obstruction put in their way by the acts of the plaintiff without their knowledge or consent.

They assumed no such obligation in their bond, and cannot be held liable in this action, unless, as is insisted by the plaintiff, then-liability is established in the action by the plaintiff against the .guardian to which they were not parties, and in which they were in no way before the court or called upon to defend. In People v. Chalmers (60 N. Y., 158), Church, Ch. J., says: “ It is a familiar rule that sureties can only be charged when the case is brought within the very terms of their contract (5 Hill, 635), and that the obligation of sureties is not to be extended by construction to embrace purposes and objects not contemplated by the parties.” It would be going too far, I think, to hold that the sureties, when they signed this bond, had in contemplation the protection of the plaintiff against fraud practiced upon him when he voluntarily undertook to deal with his former guardian after he became of age, and in the eye of the law stood upon an equality with him, especially when for years he carried on a contract with him without their knowledge and authority.

But it is insisted that the defendants cannot now be heard to contest their liability in tliis action, as the judgment against their principal fixes their liability as sureties on this bond.

The general doctrine is that a decree against the principal liquidates .and fixes the amount of his liability and affords prima fade evidence of the correctness of that amount in an action against the •sureties; but I find no case which goes to the length of holding that the liability of a surety is so fixed that he cannot defend where he has a good and valid defense to his liability upon the bond, especially where he is not a party to the action or proceeding in which the amount of the liability of the principa? is settled. In Annett v. Terry (35 N. Y., 256), the court says: “It is true that -the decree is prima fade evidence of the amount due from Kerr, and its recovery, on his admission, arising from his default binds the sureties in the absence of fraud or collusion.” But this case does not hold that the sureties are bound as to their liability on the bond, and concluded from making a defense to the same if they have a, valid defense thereto. In Harrison v. Clark (87 N. Y., 575), the-court says: The sureties are bound because, by their contract,, they are privy to the proceedings against their principal, and when the principal is concluded, they, in the absence of fraud or collusion, are concluded also.” But that case did not arise where the sureties interposed-an independent defense to the bond upon the merits. It can hardly be claimed that the defense of forgery of the names of the sureties, or their release by their principal, could not be set up by the persons sued as sureties on the bond when the liability of the principal to the bond had been established in a separate action against him.

In the interlocutory judgment in the action by the plaintiff against his guardian, these defendants were not before the court, and none of the questions raised by them on this trial were or could have been raised on the trial of that demurrer.

The effect of overruling the demurrer in that case was that the allegations of the complaint as to that defendant were true, and judgment, therefore, went against him, establishing, as to him, the truth of the allegations of the complaint.

In Girvin v. Hickman (21 Hun, 318), cited by the respondent, the court hold that the guardian and ward may settle the account as between themselves, and in that way dispense with an accounting-in court, and upon that subject the court uses this language : “An accounting by the guardian serves to show the extent of his liability but it is not conclusive on the sureties. If there is anything wrong about it, they may show it in their own defense.” It is true that where nothing has occurred that can operate as a release or discharge of the sureties, they may be deemed bound by a judgment against the principal, because, by their contract, they are deemed privies to the principal. (Harrison v. Clark, 87 N. Y., 576.) But this rule does not extend to cases where the same would operate as a fraud upon the sureties, or subject them to liabilities from which they have been exonerated by the acts of the obligee in the bond to which they have not assented. In this respect I think this case clearly distinguishable from the case of Harrison v. Clark (supra).

I am, therefore, clearly of the opinion that the judgment in the action against the guardian in this case does not conclude the defendants in this action, if, as we have seen, they were discharged from their liability to the plaintiff by his voluntary acts or omissions after he arrived at his majority.

That action does not assume in terms to adjudicate the liability of these defendants as sureties, and while, as we have seen, it would under certain circumstances, be prima facie evidence of the extent of the liability of the sureties on the bond, I do not think that it is binding upon them in this case. There are other questions in the case raised by the appellant, one of which is as to the extent of the liability of the defendant Ferris, and of Prouty as the personal representative of Sargent, if the defendants are liable in this action. But, from the view I have taken, those questions need not be discussed here. For the reason above stated, I think there should be a new trial.

Judgment reversed, new trial granted, costs to abide the event.

Judgment affirmed, with costs.


author: Matham, P. J.:

text:
    In the Matter of the Final Judicial Settlement of the Account of Proceedings of WORTHINGTON FROTHINGHAM and Another, as Executors of JAMES McCLURE, Deceased.

      Will — what words cut down a fee to a life estate — all clauses to be given effect— provisions inconsistent with absolute ownership.

    A testator made a will which contained, among other provisions, the following.
    “ First. After all my lawful debts are paid and discharged, I give and bequeath unto my beloved wife, Mary I. McClure, all my real estate owned by me of every name and description; also all my personal property of every kind and nature; also my life insurance, stocks and mortgages, to have and to hold, with full power to collect all rents and income from, the same, she to keep in repair and pay all taxes and insurance on the same, with full power to sell any or all such real estate, with the consent of my executors, should it be thought best for the estate; should she marry again, then her right of dower only in my estate.
    “ I recommend she appoint a good agent to take charge of my real estate. I also give her discretionary power to give such sums of money to any, as she may think prudent, of my relatives.”

      The testator appointed his wife and another person executors of the will. In a proceeding- taken to settle the accounts of the executors;

      Held, that the widow took only a life estate in the personal property, with a power of sale as to the real estate, subject to the consent of her co-executor, and a limited right to dispose of the personal property in accordance with the last clause of the will.
    That effect should be given, if possible, to all the provisions of the will, and none should be rejected because of repugnancy where it was possible to reconcile the clauses which were supposed to conflict.
    That where the provisions of a will operated upon personal and real property alike, the court might, in determining the proper disposition of the personalty, look also at those provisions which concerned the real estate.
    That the authority to collect rents was, while not inconsistent with an estate in fee, entirely consistent with the beneficial enjoyment of the estate by a life tenant
    That the provision requiring the payment of taxes was consistent with a life estate, but not with a grant of the fee.
    That the provision requiring the consent of her co-executor to a sale of the real estate was a restraint upon alienation which indicated that it was not intended that the widow should take a fee.
    That the clause which prevented the -widow from giving money to persons other than the testator’s relatives was also a prohibition inconsistent with absolute ownership.
    ■ Appeal by Edward McClure, Charles McClure, Mary F. McClure, Jennie McClure and James McClure, heirs-at-law and next of kin of James McClure, deceased, by Francis H. "Woods, their special guardian, and by Francis H. Woods, as. such special guardian, from a decree, entered in the office of the surrogate of the county of Albany on the 30th day of October, 1891, among other things, ordering the executors of James McClure, deceased, to transfer to his widow all his remaining personal property then in their hands, with notice of an intention to bring up for review upon such appeal the decision of the surrogate of Albany county upon which the said decree was entered.

      Frcwnois H. Woods, for the appellants.

      George H. Stevens, for Mary J. McClure, as executrix, etc., respondent.
   Matham, P. J.:

The testator made the will in question on the 9th day of November-, 1888, and died on the 11th of October, 1889, at the age of seventy-five years, leaving him surviving his widow, the respondent on this appeal, and three children of full age, and five grandchildren, who were the children of two deceased sons of testator, all of whom are infants, and the appellants on this appeal.

The deceased left real estate valued at about ninety-six thousand dollars, and personal property valued at about sixty-eight thousand dollars.

The will was drawn by the testator in his own handwriting, and in it he nominated and appointed his wife as executrix, and W. Frothingham as executor, both of whom qualified and entered upon their duties as such at the time the will was admitted to probate. No mention is made in the will of the children or grandchildren of the testator, and the sole beneficiary named therein is the wife of the testator.

On the application of the executors for a final judicial settlement before the surrogate, the appellants filed an answer to their petition alleging that the true interpretation and legal effect of the will of James McClure are doubtful, in that it does not clearly appear from said will whether the testator intended thereby that his widow should take a life estate in the personal property therein disposed of, or whether he intended thereby that she should take the property absolutely.

Upon the issue thus made the question was litigated before the. surrogate, who, among other things, adjudged and determined that, under the will, the title to all the personal property of which the testator died seized and possessed was vested in and belonged to his widow absolutely, and decreed that it be transferred to her after deducting therefrom the legal expenses of the executor and executrix, and the expense of the accounting.

From this determination and decree of the surrogate the appellants appeal. On the part of the appellants it is insisted that the whole will, taken together and read and construed in the light of surrounding circumstances, clearly establishes the intention of the testator to give to his widow only a life estate in both his real and personal property.

On the part of the respondent it is contended that, by the clear and unequivocal language of the will, the testator devised and bequeathed all of his estate, real and personal, to his widow absolutely.

- The main and only question raised on this appeal is as to the true intent and meaning of the testator in and by his will. Did he give only a life estate to his widow, and die intestate as to the remainder after her death or her marriage, or did he devise and bequeath all of his estate, real and personal, to his widow in fee and absolutely ?

The provisions of the will over which the controversy arises are as follows:

“First. After all my lawful debts are paid and discharged, I give and bequeath unto my beloved wife, Mary I. McClure, all my real estate owned by me of every name and description, also all my personal property of every kind and nature, also my life insurance, stocks and mortgages, to have and to hold, with full power to collect all rents and income from the same, she to keep in repair and pay all taxes and insurance on the same, with full power to sell any or all such real estate, with the consent of my executor, should it be thought best for the estate; should she marry again, then her right of dower only in my estate.
“ I recommend she appoint a good agent to take charge of my real estate. I also give her discretionary power to give such sums of money to any, as she may think prudent, of my relatives.”

It is a cardinal principle in the construction of wills that the intention of the testator must control if ascertainable from the will itself, when the language of the will is clear and free from ambiguity or repugnance; but if not free from ambiguity or repugnance, effect is to be given, if possible, to all of its provisions, and no claim is to be rejected or interest, intended to be given, sacrificed on the ground of repugnance when it is possible to reconcile the provisions which seem to be in conflict.

Tested by this rule, it becomes necessary to inquire whether there is anything in this will which is inconsistent with the theory of an absolute devise and bequest of all of this property, real and personal, to the respondent.

One of the essential qualities of an absolute devise and bequest is the complete and absolute power of voluntary disposition of the property so devised and bequeathed by the devisee and legatee; but if the devise or bequest is absolute, so as to convey the absolute title to the devisee or legatee, and a condition is annexed in restraint of alienation, the condition is sometimes held repugnant to the grant, and void. In this case it seems to be conceded by the appellants that the language employed by the testator at the commencement of his will would, if not qualified or restricted by the subsequent provisions, vest in the respondent the absolute title to the entire estate.

The language as to which this concession is made is as follows: “I give and bequeath to my beloved wife, Mary I. McClure, all my real estate, owned by me of every name and description, also all my personal property of every kind and nature, also my life insurance, stocks and mortgages.”

But it is insisted that this language and its effects are qualified by the provisions which follow, and that such qualifying language explains the meaning of the preceding part of the instrument and is not repugnant to it; and, when read as a whole and construed in reference to the circumstances of the testator and the natural objects of his bounty, proves that his intention was to vest in the widow only a life estate. It is quite apparent from the provisions of this will that the testator intended its provisions to operate alike on his real and personal estate; and in determining whether the bequest of the personal estate was absolute, we may look at all the provisions of the will relating to both the real and personal property.

Looking at the will as a whole, we are to endeavor to so construe it as to give effect to all of its provisions. In Taggart et al. v. Murray et al. (53 N. Y., 236) ANDREWS, J., lays down this general rule: But in the construction of wills, as of other written instruments, the intention is to be ascertained by the consideration of the whole instrument, and the construction is not to be made upon a single or isolated clause detached from its ’relation to those with which it is associated. If, on a comparison of the different provisions of a will, it is found to contain dispositions which are repugnant to each other, then it is the office of judicial interpretation to preserve, if consistent with the rules of law, the paramount intention of the testator as disclosed by the instrument, although in so doing it may defeat his purpose in some subordinate and less essential particular.

“ It is, however, a primary rule in the construction of wills that effect is to be given, if possible, to all its provisions, and no clause is to be rejected and no interest intended to be given is to be sacrificed on the ground of repugnancy when it is possible to reconcile the provisions which are supposed to be in conflict. - In accordance with this rule, it is held, that subsequent clauses in a will are not incompatible with, or repugnant to, prior clauses in the same instrument, where they may take effect as qualifications of the latter without defeating the intention of the testator.”

In Norris v. Beyea (13 N. Y., 284) Deoto, J., says: “ But there is, in truth, no repugnancy in a general bequest or devise to one person, in language which would ordinarily convey the whole estate, and a subsequent provision that upon a contingent event the estate thus given should be diverted or go over to another person. The latter clause in such cases limits and controls the former, and when they are read together it is apparent that the general terms, which ordinarily convey the whole property, are to be understood in a qualified and not an absolute sense.”

But in the cases cited, and others of a similiar character which might be cited, the testators of the wills disposed of the property to some other legatee or devisee after the happening or failure of the contingency upon which the right of the first takers depended.

In the case at bar, if it be held that the respondent takes only a life estate under this will, then, as to the remainder, the testator died intestate.

, While it is true that, where a testator makes a will assuming to dispose of his property, the law does not favor intestacy, and the presumption is that he intended to dispose of all of his property, yet that presumption may be overcome and does not prevail where, by the terms of the will, it is apparent that the testator, intended that his estate should ultimately be disposed of under the laws of distribution and descent.

In this case it seems that the testator by his will imposed conditions upon his property, and its future occupancy and control by his widow, inconsistent with an absolute estate in her, and entirely in harmony with the estate for life.

The express authority to collect rents given in the will, while it is not inconsistent with an estate in fee, was wholly unnecessary, if the testator intended by bis will to vest in bis widow the title in fee, but is entirely consistent with the beneficial enjoyment by the life tenant.

Again, the direction in the will that testator’s widow shall keep in repair and pay the taxes and insurance on the property is imposing an obligation on' her inconsistent with the idea of absolute title in her, and entirely in harmony with the theory of a life estate. If the testator intended to preserve this estate for the benefit of his heir and next of kin, he might properly impose upon the life tenant the duty of preventing it from sale for taxes, and its protection from destruction by fire, and decay by the ravages of time. But no such obligation could be imposed by a grantor or devisor upon the owner of an estate in fee.

Again, if his widow should marry again, her estate, by the terms of the will, would be cut down to her dower interest, and in that event, clearly, as to the real estate, the testator would die intestate, and must have so intended, as that would be the clear legal effectof the will.

Again, the limitation imposed by the will upon her power of sale of the real estate is not in harmony and cannot be reconciled with the idea of an absolute estate in her in fee simple. She can only sell with the consent of her co-executor. There must be a concurrence and consent by the executors before she can alienate this property. The testator could impose no such restraint upon alienation if she had the title in fee. But he had the power to impose such restrictions upon alienation when the right to sell was derived from the power of sale in the will, and in that case it was clearly in the power of the testator to require a concurrence of both executors, and when such restrictions are imposed in the power of sale, it can only be exercised according to the delegated power. (Hyatt, Exr., v. Arguero, 14 N. Y. Civ. Pro. Rep., 286 ; 17 N. Y. State Rep., 146.)

Again, the provisions of the will wherein he says: “ I also give her discretionary power to give such sums of money to any, as she may think prudent, of my relatives.” If this was an absolute bequest of all of his personal estate to his wife, and so intended and understood by the testator, he would not have attempted to impose a restraint upon her of making his relatives the sole object of her gratuities. The authority to sell the real estate, with the consent of the executors, and to make gifts to his relatives, necessarily exclude, by legal implication, the power to sell without such consent, or give personal property except to his relatives. The maxim expressio unius est exelusio alter'ms applies to these provisions. All of these qualifications and exceptions are consistent with the testator’s intent to create a life estate in all of his property in his widow, and may, within the rules of interpretation above referred to, operate as qualifications of the language of the provision first employed in it; but if we give that language the force of an absolute bequest of the personal and a devise in fee of the realty, then we must treat these latter provisions as repugnant, and in violation of the rule we have quoted from Taggart v. Murray (supra); that in the construction of a will effect is to be given, if possible, to all its provisions, and no clause is to be rejected * * * on the ground of repugnancy when it is possible to reconcile the provisions which are supposed to be in conflict. We think the case differs essentially from Clarke v. Leupp (88 N. Y., 230). In’ that case the will imposed no condition on the devisee and legatee in the use or disposition of the property to whom she pleased, and without the consent of any co-executor or any other person.

So, in Campbell v. Beaumont (91 N.Y., 467), the court held that the devise and bequests were absolute to the wife without any words of qualification, and that the bequest that the remainder should be preserved for his step-son did not divest the widow of her-absolute estate.

But the will contained no such restraints and qualifications as are found in the will under consideration, and the case is, therefore, distinguishable from this. So, in Lawrence v. Cooke (104 N. Y., 636), the will contained ’an absolute and unconditional devise under which the title passed to the devisee without any charge upon it except in the discretion of the devisee, but contained no condition by which the estate of the devisee could be lessened or impaired, •and no restraint on the alienation of the same by the devisee, and .seems, therefore, to be clearly distinguishable from the case at bar. Nor do I find any case cited by the learned counsel for the respondent ujion this point which is not distinguishable upon principle from the one under consideration.

The case of Van Horne, Executor, v. Campbell (100 N. Y., 287), holds that an absolute power of disposition annexed to a primary devise in fee is deemed conclusive of the existence in the devisee of an absolute estate. But we have seen that the will under consideration in this ease does not give the devisee an absolute power of disposition. The right to dispose of this real estate depends upon the volition of the two executors, and is not an absolute power in the devisee or in her as executrix without the concurrence of her co-executor. Nor has she the power of absolute disposition of the personal property. The will confines her m the disposition of it to the relatives of the testator.

And the rule is the same as to the bequests of personal property as it is to devises of real estate. (Van Horne v. Campbell, supra.) In the case last cited the authorities are examined at great length, and the distinction carefully noted between an absolute devise or bequest, when the first taker acquires, under the will, an absolute estate not capable of being defeated by an executory devise over which is repugnant to the first devise, and the cases where such subsequent provision qualifies, limits or controls the first provisions; and the rule seems settled that when the will gives the devisee or legatee unrestrained power of disposition, the title is absolute, but when there is a restriction upon the power of alienation or disposition the title is qualified and may be bound or controlled by the subsequent provisions of the will. Applying that rule to the will under' consideration, and looking, as we may, at the circumstances and surroundings of the testator, the amount of the annual income of the estate, the age of the respondent, and the children and grandchildren of the testator, all of which circumstances and surroundings may be taken into consideration as circumstances reflecting some light upon the question of the intention of the testator in making this will, we are inclined to the opinion that the respondent took under this will only a life estate, with a qualified power of sale of the real estate and a limited right of disposition of the personal property, or a portion of the same, in accordance with the provisions of the will.

The decree of the surrogate must, therefore, be reversed, and the case remitted to the surrogate to make a decree in accordance with the provisions of the will as determined on this appeal, with costs to the appellants out of the estate.

PutNAM, J., concurred; IIerRICk, J., not voting.

Decree of the surrogate reversed, case remitted to surrogate tO' make a decree in accordance with the provisions of the will as determined by the opinion.


author: PüTNAM, J. :

text:
    MARCUS G. CUNNINGHAM, Respondent, v. MASSENA SPRINGS AND FORT COVINGTON RAILROAD COMPANY, Appellant.

      Corporations — liability on ultra vires contnwt — estoppel—abandonment of the work —use of a memorandum — evidence of authority to act for a corporation.

    One Cunningham brought an action against a railroad company to recover for work done, etc., in constructing a part of its track under a verbal contract made with Foster, its president and general manager. The original oral contract was afterwards in part reduced to writing.
    It appeared that the work was done with the knowledge and consent of the company's officers.

      Held, that, in order to make a corporation liable upon contract, it was not necessary to show an express resolution passed at a meeting of its directors.
    That where a party does work or furnishes materials to a corporation, under a contract with one assuming to act as its agent, to the knowledge of its officers, without dissent on its part, the corporation will be held to have ratified the contract.
    That where the main issue was whether Foster had authority to bind the corporation, it was proper to show that at the time the work was commenced a meeting of the directors was held, and that Foster pointed out to them the plaintiff as the contractor who was to do the work.
    That where a contract has been in good faith fully performed by one of the parties to it, and the corporation has had the benefit thereof, it is estopped to set up the plea of ultra vires as a defense to a suit brought to recover the value of the services thus rendered.
    That where a payment has been made upon a contract which is ultra vires, it cannot be recovered since both parties are in prn'i delicto.

    That a party contracting with a corporation is justified in abandoning the work in the contract provided to be done, where he is informed upon the part of the corporation that there is no money to meet the payments due him.
    That a memorandum showing the amount of the work done, made at the time of its completion, may be used by a witness who cannot remember the facts independently of the memorandum, and be put in evidence.
    That where only a part of a contract is reduced to writing parol evidence is admissible to show details of the work intended to be done under it.
    Appeal by the defendant, the Massena Springs and Fort Covington Railroad Company, from a judgment of the Supreme Court, entered in the office of the clerk of the county of Franklin on the 22d day of August, 1891, upon the report of a referee awarding to the plaintiff $7,243.30 and costs.

      On the trial one James M. Shanly, wlio was an engineer in the employment of the railroad company, was allowed, in testifying, to use a memorandum which he had made showing the amount of the work done by the plaintiff.

      William T. Ocmimell, for the appellant.

      Matt G. Ransom, for the respondent.
   PüTNAM, J. :

Plaintiff brought this action to recover a balance claimed to be due for constructing a portion of defendant’s railroad, under a verbal contract alleged to have been made with one Foster, president and general manager of defendant, and which contract Aras afterwards in part reduced to writing. The case was tried before a referee, who found in favor of the plaintiff. The defendant insists that the referee made various errors in his rulings in the course .of the trial and in his findings upon the facts and law, for which the judgment should be reversed.

First. Defendant claims that the referee erred in finding that there was a valid contract entered into between the defendant, through Foster, and plaintiff on the 23d of October, 1884, with the terms and conditions as stated in his report. That the evidence does not sustain such finding.

Plaintiff testified to the making of the contract with Foster. It was shown by several witnesses, without objection, that Foster, who was president of the defendant, was also its general business manager. After the contract it appears that, in the presence of twelve or fifteen of the defendant’s directors, ground was broken and the work was commenced by the plaintiff, and that Foster then and there pointed him out as the contractor who was to build the road. Plaintiff went on with the work in pursuance of the contract made with Foster, and the defendant not only furnished materials necessary to be used in said work, but made payments thereon to a large amount. The testimony indicates that plaintiff, under the contract with Foster, performed the work Avitli the knowledge and consent of defendant’s officers. lie Avas also recognized as a contractor by a resolution passed at a meeting of defendant’s directors.

A corporation may become bound by a contract, express or implied, under tlie same circumstances as an individual. To make a corporation liable, it is not necessary to sliow an express resolution passed at a meeting of its directors. Where a party does work or furnishes materials to a corporation under a contract with one assuming to act as its agent, to the knowledge of its officers, without dissent on the part of the corporation, it will be held to have ratified the contract, and to be liable thereunder. (Lee v. Pittsburgh Coal and Mining Co., 56 How., 373; Wilson v. Kings Co. El. R. R. Co., 114 N. Y., 487; Howell v. The Joseph Edwards Dredging Co., 36 N. Y. St. Rep., 803; Marine Bank of Buffalo v. The Butler Colliery Co., 23 id., 318; Martin v. Niagara Falls Paper Mfg. Co., 44 Hun, 130.)

The evidence given in the case amply sustains the finding of the referee in the regard above mentioned. And also his finding that said contract was subsequently and on or about January 21, 1886, partially reduced to writing.

Second. But the defendant says that, although Foster might be authorized to make a contract with the plaintiff to construct the road on defendant’s line, he' was not authorized to contract for the building of a bridge and a piece of road beyond defendant’s line. That such a contract was tdtra vires. Foster could not make it under the authority conferred upon him by defendant’s directors, and the defendant itself could not legally enter into such an agreement.

It was shown on the trial that, under the contract with Foster, plaintiff built a pile bridge and a small piece of road adjoining, but beyond defendant’s line. It also appears, and the referee found, that plaintiff, while constructing said bridge and piece of road, supposed it to be a part of defendant’s line, and did the work in good faith. Defendant furnished a large part of the materials for the bridge and made payments thereon, and liad the benefit of the bridge and road. Defendant so furnished materials and made payments on the bridge to the amount of $1,857.49. The referee made no allowance to plaintiff for work on said bridge over said payments. Practically he determined that plaintiff built the bridge and defendant paid for it. Whether the contract with Foster to build the bridge and the small piece of road at the end of and beyond defendant’s line was, or was not, beyond defendant’s po-wer, having been executed by plaintiff in good faith, and the bridge and piece of road having gone into defendant’s possession, the plea of uUi;a vires cannot be sustained. “A corporation cannot avail itself of the defense of ultra vires when the contract lias been in good faith fully performed by the other party, and the corporation has had the full benefit of the performance and of the contract.” (Whitney Arms Co. v. Barlow, 63 N. Y., 70; Bissell v. The Mich. S. and N. I. R. R. Co., 22 id., 259; Woodruff v. Erie R. R. Co., 93 id., 618; The Rider Life Raft Co. v. Roach, 97 id., 381.)

Were it otherwise, however, if plaintiff could not enforce the contract as to the bridge, because beyond the power of defendant to make it, yet defendant having paid $1,857.49 on the illegal contract, could not recover said sum of the plaintiff. (See Knowlton v. Congress and Empire Springs Co., 57 N. Y., 531, 532; Nellis v. Clark, 4 Hill, 424.) “No case can be found where, when money has been actually paid by one of two parties to the other, ujion an illegal contract, both being partioeps crimmis, an action has been maintained to recover it back again.” lienee, if it were the fact that, for want of power to make the contract on the part of defendant, plaintiff could not recover a part of the sum allowed by the referee, it would only be the amount allowed for the small part of defendant’s road between the bridge and defendant’s line •— two or three hundred dollars.

For the reasons above stated, however, I think plaintiff was entitled to recover the value of his work upon the bridge, and also upon this small piece of road.

Third. The claim of defendant, that plaintiff cannot recover in the action because he abandoned the work and failed to fully perform the contract, is not sustained by the evidence. There was evidence given in the case which justified the finding of the referee that the plaintiff ceased work at the suggestion of defendant’s president and manager; that there was no money to go on with and that as soon as defendant collected the money for that purpose plaintiff would be informed; that plaintiff was always ready and willing to continue the work, but never received any such notice.

Also, the evidence is clear that defendant could not meet the payments as provided in the contract, and failed to pay plaintiff according to its terms, and for that reason plaintiff could properly refuse to continue the work. (Strack v. Hurd, 41 N. Y. St. Rep., 777.)

It is insisted by defendant that the referee erred in not allowing defendant four items of credit amounting to $1,0/T9.9'T, which it claimed were established by the evidence on the trial. I will not undertake to discuss the testimony given in regard to those items, but I have read and considered it all carefully. There was conflicting evidence given in the case as to the said items, and I think the findings of the able and experienced referee on the questions of fact submitted to him should not be disturbed. The same may be said as to the item for work on the “ abandoned line,” and the item for plaintiff’s services.

It is suggested that the referee erred in overruling the objections to the introduction of the memorandum made by Slianly. Slianly testified that as the work progressed he measured it from time tO' time, and when finished made a memorandum of the whole work done. He did not remember, independently of the memorandum ; that it was correct. I think, under well-settled rules, the memorandum was properly received in evidence. (Wilson v. Kings Co. El. R. R. Co., 114 N. Y., 498.)

Paper “ A ” was also competent evidence. It was properly received as tending to show that defendant, through Shanly, its employee, took charge and control of the pile bridge in question and finished the same. The defense of ultra vires asserted by defendant upon the trial, and the claim of the lack of authority of Poster to make the contract with plaintiff, rendered this evidence proper.

The evidence of plaintiff of his conversation with Poster when the work began, and about the bridge, etc., were also properly received by the referee. Although there was a written contract between the parties the writing only contained part of the contract, and hence the conversation between the plaintiff and Poster was competent. I also think that the referee did not err in overruling the objections to that part of plaintiff’s evidence detailing what occurred at a meeting when work was commenced on the road by plaintiff. At that meeting a large number of defendant’s directors were present. Tlie question was raised on tlie trial as to Foster’s •authority to Contract with plaintiff. Foster, in the presence of defendant’s directors, pointed out the plaintiff as the contractor who was to do the work of the road. The work was commenced at this time in the presence of Foster and defendant’s directors and of plaintiff. The evidence tending to show the knowledge and assent -of defendant’s officers to the contract made by Foster with plaintiff.

There are various other exceptions made by defendant to rulings <of the referee on the trial, and to his findings, which I do not deem it necessary to discuss here. I have examined them all with care and am unable to find any exception which, in my judgment, Requires discussion, or which should lead to a revei’sal of the judgment.

The questions involved in the case are mostly those of fact. I think the findings of the learned referee should stand, and that •the judgment should be affirmed, with costs.

Mayham, P. J., and Herrick, J.-, concurred.

Judgment affirmed, with costs.