author: By the Court—Woodruff, J.

text:
    Robert Crosbie et al., Plaintiffs and Respondents, v. Arthur Leary, Defendant and Appellant.
    1. The agent in this country of a merchant in Liverpool, was notified of the assignment hy his principal of all his estate to the plaintiffs, in proceedings in bankruptcy, in trust for the benefit of creditors. The assignees continued ■ to employ the same agent in effecting insurance on property, and receiving and collecting moneys forming part of the assigned estate, and he performed those services for them, and therein he received payment of all that was due to him by the bankrupt at the date of the assignment. In an action by bis principals to recover from him further moneys received by him, such agent cannot prove as a defense that the assignment was fraudulent and void, as to the creditors of the bankrupt, nor insist upon such fact as a defense, although the assignment appear on its face to contain provisions which render it illegal and void as to such creditors. Nor is it any excuse to him for not paying over the money, property and choses in action in his hands that the assignment, though prepared to be signed by all the creditors of the bankrupt, was only signed by the assignor, assignees and a portion of the creditors.
    2. Such an agent cannot in such an action setoff, against the plaintiff’s claim, debts due to him by the bankrupt, arising after such assignment was made.
    3. In an action to compel an agent to account and pay over moneys received, and to deliver up the securities or choses in action not then collected, if an accounting be directed it is proper to include therein and give judgment for any moneys received by the agent, (by collection of the securities,) down to tire time of stating the account, though collected after suit brought.

      4. It is not error to reject evidence offered by a defendant which contradicts the defendant’s admissions in his answer.
    5. When a defendant alleges that a bill of exchange drawn by him, in favor of a payee named therein, was lent to such payee for his accommodation, and claims the amount as a charge against the payee, the burden of proof is on such drawer to prove the want of consideration, otherwise the legal presumption is that it was given for money due to the payee.
    6. The declarations of a defendant are not evidence in his own favor, unless the plaintiff by giving in evidence a part of his statements, or facts raising some presumption from his apparent silence has made the declarations admissible as part of the conversation, or as a reply to the circumstances out of which such presumption arises.
    (Before Hoffman and Woodruff, J. J.)
    Heard, November 17th, 1859;
    decided, March 10th, 1860.
    Appeal by the defendant from a judgment against him for $18,397.85, damages and costs, and that he deliver and assign to the plaintiffs certain policies of insurance and documents relating thereto, which was rendered on the decision of William Kent, Esq., Referee, before whom the action was tried.
    The action is brought by the plaintiffs, who are the assignees of one Edward Oliver, under an assignment of his property, made in England, October 7,1854, to recover a balance of account rendered to the plaintiffs by the defendant, who, prior to the assignment, was agent for the said Oliver in effecting insurances, and was thereafter employed by the plaintiffs, and also moneys collected by him since the account was rendered, and for an accounting respecting his receipts and collections for them, and also to compel him to assign and deliver to them the policies of insurance effected by him as their agent, and all vouchers and documents relating thereto.
    The answer of the defendant admitted that he had been, prior to October 7, 1854, the agent of Edward Oliver in effecting insurances on ships and vessels of the said Oliver; denied the assignment by Oliver to the plaintiffs, and their employment of the defendant; admits he, at the request of Oliver, sent an account to H. B. & Co., of Liverpool, agents of the plaintiffs, but such account did not embrace all the unsettled accounts between him and Oliver; that, prior to October 7, 1854, he advanced, by way of loan, to Oliver, and without consideration, a bill of exchange for £4,132 5s. 5d. sterling, which Oliver, after he had become insolvent, and after he and his agents were forbidden by defendant to negotiate it, they did pass it away, and suit is now pending thereon against defendant by other parties claiming to be holders for value, by reason whereof Oliver is indebted to the defendant for the amount; that he is not indebted to Oliver or the plaintiffs, but a balance will be found due to him, on an adjustment of the accounts, of more than $10,000. By a further answer, the defendant alleged that Oliver is indebted to him for moneys paid and liabilities incurred, to the amount of $100,000, and that the pretended assignment to the plaintiffs is fraudulent and void as to him. .
    The report of the Referee states the facts found, and his conclusions of law thereon, as follows:
    “ I, the undersigned Referee, appointed by this Court to hear and determine the action, do report—

      “ That I have been attended by the counsel of the respective parties, and have heard their proofs and allegations; and I do find and report as follows:

      “ That the defendant was, previous to the 7th of October, 1854, employed by Edward Oliver, of Liverpool, as an insurance agent, at the city of New York, and in that character effected marine insurances in different insurance companies in the United States, on the ships and vessels of the said Edward Oliver; that, on the 7th of October, in the year 1854, by a certain deed of assignment, bearing that date, the said Edward Oliver transferred and assigned to the plaintiff, for the benefit of his creditors, all the estate and effects of the said Edward Oliver, including all the said policies of insurance, and all sums of money due and to become due thereon.
    “ That, immediately after the said assignment, the plaintiffs entered upon the execution of the duties thereof, of which the defendant was notified, and they continued to employ the said defendant in receiving and collecting the sums secured or payable under the said policies of insurance, and in effecting further insurances on the ships and vessels so assigned to them, which, the defendant undertook to do, and to account to them for the proceeds.
    “ That, previous to the 9th of September, 1856, the said Arthur Leary had been,, by and in the course of said business, fully repaid all the advances, charges and commissions due him upon, or by reason of, the said insurances so made, including the insurances made by him since the date of the said assignment, for the said assignees; and on the said 9th of September, 1856, he rendered to the said assignees his account current, showing a balance payable to them, as such assignees, over and above all disbursements and charges, of four thousand six hundred and sixty-nine dollars and twenty-five cents, amounting, with interest, to the date of this report, to five thousand five hundred and twenty-three dollars and fifty-four cents.
    “ That between the date of said account and the commencement of this suit, the said Arthur Leary had made further collections on the said policies of insurance, to the amount of eight thousand one hundred and fourteen dollars and ninety cents, over and above charges and commissions, amounting, with interest to the date of this report, to nine thousand five hundred and sixty-four dollars and seventeen cents. And that subsequent to the commencement of this suit, and prior to the 3d of June, 1858, the said Arthur Leary has made further collections on the said policies to the amount of two thousand five hundred and fifty-one dollars and fifty-eight cents, amounting, with interest to the date of this report, to the sum of two thousand six hundred and ninety-three dollars and ninety-seven cents, which amounts remain due to the plaintiffs.

      “ That prior to the commencement of this suit, the plaintiffs had requested the said defendant to account with and pay over to them the amount so recovered and collected on account of the said policies and proofs appertaining thereto, which the defendant neglected and refused to do.
    The plaintiffs’ counsel produced at the trial, and offered to cancel and surrender the dishonored bill of A. Leary, for four thousand one hundred and thirty-two pounds five shillings and five pence, in favor of Edward Oliver, in the answer mentioned, and offered to the defendant’s counsel therewith, the consent of the plaintiffs’ attorney in the suit thereon, that the .same be discontinued.
    “ I further find, that no evidence (besides the bill itself) was offered as to the consideration or purpose for which said bill was remitted to said Oliver.

      “That the defendant appeared in said suit on said bill by his attorney, but that the cause was not put at issue, and that, in February, 1855, the plaintiffs gave notice tó the defendant that no further proceedings would be had in the suit on said bill, but that the suit was not discontinued of record, nor the costs paid up to the time of the said offer of the plaintiffs’ attorney herein.
    “ And I therefore find, as conclusions of law, that the deed of assignment of October 7th, 1854, took effect as an absolute and valid transfer to the plaintiffs of the claims and policies of insurance on the ships of the said Oliver, as between the parties, subject only to any existing charges of the defendant for his advances and commissions thereon, and that upon the repayment to the defendant of such charges and commissions, the plaintiffs become absolutely entitled thereto.
    “ That the defendant, having assented to the said assignment and continued to act in the employment of the assignees in the business of the assigned estate, was liable on his promise to account to them for his collections.
    “ That the transactions of the defendant with Edward Oliver since the date and notice of the assignment or judgments against him, arising out of such subsequent transactions, were not admissible in evidence as against the plaintiffs.
    “ That the dishonored bill of the defendant in favor of Edward Oliver, for four thousand one hundred and thirty-two pounds five shillings and five pence, was not available by the defendant as a defense against the plaintiffs’ claim in this suit.
    “ And 1 do therefore find that the plaintiffs are entitled to judgment against the defendant for the sum of seventeen thousand seven hundred and eighty-one dollars sixty-eight cents, the amount so due as aforesaid, including interest, together with the costs of this action, to be taxed.
    “And that said judgment should further provide and require that the defendant deliver to the plaintiffs, or their attorney herein, all policies of insurance effected by defendant on the vessels of Edward Oliver, or effected for and at the request of the plaintiffs, together with all protests, vouchers and documents pertaining thereto.”
    The assignment by Edward Oliver, of Liverpool, England, to the plaintiffs, in trust, for the benefit of his creditors, dated October 7, 1854, made in certain proceedings in bankruptcy, in England, to the plaintiffs, as parties to the second part, and to which those of Oliver’s creditors who signed it were described as parties of the third part, named in a schedule of creditors annexed, was produced; its execution by the parties of the first and second parts had been duly proved by the subscribing witness, and certified before the American Consul at Liverpool, and the signature of the other witness to the execution by the same parties was proved on the trial. It purported to be signed and sealed by the creditors named in the list, and the proof of the signatures of several, but not of all of them was given. The reading of the assignment was objected to, the objection overruled, and defendant excepted. It is not necessary to state the provisions of the assignment. The defendant claimed that it was fraudulent and void by reason of various provisions therein, which, on the other hand, the plaintiffs insisted were legal under the laws of England, which, however, were not produced or proved. The Court did not pass upon the question, whether it was valid or not, as against judgment creditors of Oliver.
    The defendant’s motion for a nonsuit, urged on the grounds that the plaintiffs being foreign assignees, could not sue here, nor in their own names, and that the assignment was void, was overruled, and he excepted.
    The defendant offered to prove by Edward Oliver, various facts tending to show that the assignment by him was fraudulent and void as against creditors, and to the rejection of the testimony, defendant excepted.
    The defendant offered a judgment record, letters and other evidence, showing that since the assignment by Edward Oliver to the plaintiffs, he (Oliver) had become largely indebted to the defendant. To the rejection of this evidence, the defendant excepted. He also offered evidence to show that the credits to the plaintiffs in the account rendered by him, on the 9th September, 1856, were in part made up of notes therein credited as cash, and that such notes had in fact never been paid to him. To the rejection of this evidence he excepted. He also inquired of the plaintiffs’ witness, Foster, (who had testified that he notified the defendant of the assignment by Oliver to the plaintiffs, and requested him to furnish accounts and statements of any property or assets of Oliver in his hands.) What the defendant replied, when he, the witness, demanded of the defendant any policies or documents belonging to Edward Oliver ? On objection, the question was disallowed, and defendant excepted.
    The plaintiffs produced on the trial and offered to cancel the bill of exchange described in the defendant’s answer, and a written consent of the attorneys in the suit thereon, that such suit be discontinued. The defendant’s counsel objected to and declined the offer, because no actual discontinuance* had taken place, no costs had been paid, and that the defendant could not now be deprived of his defense.
    The defendant took due exceptions to the findings and decision of the Referee.

      C. C. Egan, for the defendant (appellant).
    This action is brought by the plaintiffs, as assignees, under a statutory assignment executed in England, all parties to it residing there. As such assignees the plaintiffs cannot sue here.
    Because they have no standing in Court, by right, and are not permitted to have by courtesy, especially as the interests of the defendant, a citizen, are injuriously affected by such suit. (Willink v. Renwick, 23 Wend., 63, and cases cited; 20 John., 346; Hoyt v Thompson, 1 Seld., 346, Opinion of Paige. As to statutory assignment, see 12 and 13 Vict., chap. 106, § —.)
    The plaintiffs cannot maintain this action in their own name.
    Because a right to sue (chose in action) cannot, by English law, be transferred by assignment. (Sewell v. Moxsy, 12 Eng. Law & Eq. R., 304; Scholey v. Daniel, 2 Bos. & Pull., 541; Coke’s Litt., 14, a, note; 2d Bl. Com., 442; Edwards on Bills, 55.)
    Because, by the terms of the assignment, they are provisional assignees only, and have not shown a compliance with the conditions of the assignment from which alone they derive power to bring this action.
    Because the execution of the assignment by the assignor, was in itself an act of bankruptcy, without proof of the compliance with the statute. (12 and 13 Vict., ch. 106, § 68.)
    And it appears by the certificate annexed to the assignment, that proceedings were taken against the assignor in the court of bankruptcy, and in the absence of proof to the contrarjq on the part of the plaintiffs, this Court is to assume that the assignor’s estate became subject to the Bankrupt Court, and that official assignees were appointed superseding the plaintiffs.
    The assignment was improperly admitted in evidence, because there was no proof of the execution thereof by all the parties of the third part thereto.
    The assignment is void as against the defendant, who was a creditor of the assignor at the time of the execution thereof.
    The fact of the defendant being a creditor at that time is not disputed. (3 R. S., 5th ed., p. 221, § 1; 4 Comst., 211.)
    The laws of a foreign country are presumed to be the same as ours, unless the contrary is shown. (Wright v. Delafield, 23 Barb., 498; Monroe v. Douglass, 1 Seld., 448.)
    The assignment is void against a subsequent creditor of the assignor under section 1, page 221, 3 Revised Statutes, 5th edition, which is as follows:
    “All deeds of gift, all conveyances, and all transfers or assignments, verbal or written, of goods, chattels, or things in action, made in trust for the use of the person making the same shall be void, as against the creditors existing or subsequent of such person.”
    A surplus is contemplated by the assignment, which is made in trust for the assignor. (Leitch v. Hollister, 4 Comst., 211; Van Nest v. Yoe, 1 Sandf. Ch. R., 4; McLean v. Button, 19 Barb., 450; Barney v. Griffin, 2 Comst., 365; Goodrich v. Downs, 6 Hill, 438; Mackie v. Cairns, 5 Cow., 547; Fiedler v. Day, 2 Sandf., 594; 2 Seld., 510, 522; 12 Barb., 168; 19 id., 450; 17 id., 301.)
    It is sufficient that the defendant is a simple contract creditor. It is only necessary to be a judgment creditor where it is sought to set aside the assignment for fraud by direct suit, in order to get the assignees before the Court.
    Here they come voluntarily into Court.
    The assignment is void against a subsequent creditor of the assignor.
    Because it authorizes a sale of the assigned property upon credit. (2 Seld., 510, 522.)
    Because, while proposing to assign all the property of the assignor for the benefit of creditors, it reserves a part thereof to the assignor. (Curtis v. Leavitt, 15 N. Y. R., 144.)

      Because it allows the assignees to purchase the assigned property.
    Because it exonerates the assignees from all liability in the management of the assigned estate arising from their own acts. (Litchfield v. White, 3 Seld., 438.)
    Because it provides a compensation to the assignor and his family. (McLean v. Button, 19 Barb., 450.)
    Because it allows the assignor to retain the use of the assigned property.
    If the defendant is a creditor of the assignor subsequent to the assignment, then for the above reasons the assignment is void as to him, and the Referee erred in excluding the proof of the indebtedness of the assignor to the defendant existing at the commencement of this action.
    For the same reason the Referee erred in rejecting the certified copy of the judgment roll, of a judgment in favor of the defendant against the assignor for $12,655.98.
    For same reason the Referee erred in rejecting the transcript of judgment in favor of the defendant against the assignor for $14,695.74. (1 R. S., 5th ed., p. 868, §121; 3 id., p. 545, § 282; id., 639, § 13.)
    To entitle the plaintiffs to recover, they must show that the assignment is valid and authorized by the laws of England, where made. (Thatcher v. Morris, 1 Kern., 437.)
    The illegality of the transaction through which the plaintiffs derive their title as assignees, is a defense to the defendant. (Dewitt v. Brisbane, 16 N. Y. R., 513; Johnson v. Bush, 3 Barb. Ch. R., 207; Talmage v. Pell, 3 Seld., 328; Green v. Seymour, 3 Sand. Ch. R., 285; Leavitt v. Palmer, 3 Comst., 19; Story on Prom. Notes, § 193; Merchants' Bank v. Spalding, 5 Seld., 52; Hyde v. Goodnow, 3 Comst., 266; Nellis v. Clark, 4 Hill, 424; Babcock v. Booth, 2 Hill, 181; Bolt v. Rogers, 3 Paige, 154.)
    The Referee erred in denying the motion for nonsuit.
    The Referee erred in excluding the testimony of Edward Oliver, offered on the trial.
    An assignor of a deed in trust, for creditors, is a competent witness for a creditor seeking to avoid the deed or assignment for fraud. (Seymour v. Wilson, 14 N. Y. R., 567; 11 Wend., 241; 3 R. S., 5th ed., pp. 224, 225, §§ 1, 4.)

      The Referee erred in not allowing the witness Foster to answer the question put by defendant’s counsel.
    When you demanded of the defendant any policies or documents belonging to Edward Oliver, what reply did he make to that demand?
    The Referee erred, in not allowing the defendant to show the admission of De Wolfe, one of the plaintiffs, as to the invalidity of the assignment.
    The Referee erred, in allowing the plaintiffs’ counsel to withdraw the objection to the examination of Edward Oliver, as a witness.
    The Referee erred, in refusing defendant’s motion to strike out the withdrawal of the objection to the examination of Oliver.
    The Referee erred, in rejecting the proof offered by the defendant that the notes of various parties were credited as so much cash in the account rendered by the defendant, and that such notes have never been paid to the defendant.
    The suit pending against the defendant by the Liverpool Borough Bank, upon the bill for £4,132 5s. 5d. remitted to E. Oliver, and by him passed to said Bank, was a defense to the defendant in this action.
    The Referee erred, in allowing the offer of the plaintiffs’ counsel to cancel and surrender the bill of £4,132 5s. 5d., and to deliver to defendant’s counsel a consent for the discontinuance of the suit against the defendant upon such bill.
    Because the suit upon such bill has not been discontinued.
    No order of discontinuance has ever been entered, filed or served therein.
    No costs in such suit have ever been paid or tendered.
    No costs in this action had then or ever have been paid or tendered in this action.
    Such offer made at that stage of this action without the payment or tender of the defendant’s costs herein, up to the time of such offer, cannot deprive the defendant of a defense valid and effectual at the time this action was commenced and set up in the answer.
    The Referee erred, in allowing to the plaintiffs the amount of the notes, and the interest therefrom from September 9th, 1856, received by the defendant, and credited in his account as so much cash, which remain unpaid by the makers thereof, viz.: H. T. Chambers, $148.25 ; Vallance & Berlley, $300; Fisher & Milliken, $501.25; John M. Mayo & Company, $801.25.
    The Referee erred, in allowing to the plaintiffs any amounts received by defendant after the commencement of this action, which by his report appears to be the sum of $2,693.97.
    The objection to the introduction of the letters, of defendant, to Harmood, Banner & Company, was well taken.
    The Referee erred, in rejecting the letters of Edward Oliver offered by the defendant.
    The judgment should be reversed, with costs.

      Joshua Coit, for the plaintiffs (respondents).
    I. The execution of the assignment by Edward Oliver, and
    by assignees, is duly proved by the subscribing witness before the American Consul. (1 R. S., § 4, ¶ 2; Laws of 1829, ch. 222.)
    II. The execution of the assignment by several of the creditors, if that is considered necessary, is proved by the witnesses. (Burrill on Assignments, pp. 310, 315; Harris v. Sumner, 2 Pick., 129; Hastings v. Baldwin, 17 Mass., 552, 556.)
    III. The assignment operates as an actual transfer of the claims, debts, and policies of insurance of Oliver, as between the parties. It cannot be impeached by a debtor or a holder of the securities assigned. Nor by a creditor until he has recovered a judgment against the assignor, and had an execution returned. (Bishop v. Halsey, 13 How. Pr. R., 154; Waterbury v. Westervelt, 5 Seld., 598, 605; Hastings v. Belknap, 1 Denio, 190, 198.)
    IV. The provisions of the English bankrupt act of 1849, making certain provisions in relation to arrangements by deed, (§§ 224-229,) relied on by the defendant have no bearing on this case. These provisions are analogous to our “ two-thirds act,” and provide for an absolute discharge of the debtor from all his debts, on obtaining the assent of six-sevenths of his creditors, and complying with certain other provisions of the act.
    Whether these have or have not been complied with is immaterial here. (Drew v. Collins, 4 Eng. Law & Eq., 540; [contains the clauses of the act in question;] Tetley v. Taylor, 8 id., 370;
      S. C., 12 id., 469; Stewart v. Collin, 10 Com. Bench, [J. Scott], R., 70 E. C. L R., 634.)
    The assignment was valid by the laws of England. (Pickstock v. Lyster, 3 Maule & Sel., 371; Janes v. Whitbread, 5 Eng. Law & Eq., 431; Coate v. Williams, 9 id., 481; Curtis v. Leavitt, 15 N. Y. R., [1 Smith,] 9, 114, 295.)
    V. The assignment was assented to by the defendant, and has continued to be acted upon him till the commencement of this suit.
    1. An assignment cannot be impeached by a creditor assenting to it, and acting under it. (Burrill on Assignments, p. 317, and cases cited; Henriquez v. Hone, 2 Edw. Ch. R., 120; 13 Wend., 240.)
    2. Not only has the defendant assented to the assignment, but he has continued to be employed by the assignees as their agent in effecting the insurances and making the collections in question.
    3. The whole amount now claimed is a balance of a new account opened with the assignees, and is less than the amount directly advanced the defendant by the plaintiffs in the course of the agency. (Story on Agency, §§ 54, 55.)
    VI. The dishonored bill of Leary set up in the answer is no evidence of a debt due by Oliver.
    The presumption in the absence of proof, is that it was given for an amount due by the drawer.
    In any event, it is sufficient that the plaintiff produces the bill at the trial, or shows it in his possession. (Chit, on Bills, p. 197, 9th Am. ed., and cases cited.)
    VII The accounts rendered the plaintiffs taken in connection with the correspondence, are conclusive that the defendant was indebted to the plaintiffs, in the amount claimed, at the time of the bringing of the suit. (1 Story’s Eq., § 526; Bruen v. Hone, 2 Barb. S. C. R., 586; Leaycraft v. Dempsey, 15 Wend., 83.)
    VIII. The judgment by default of February 12,1859, against Edward Oliver and James Henry, is no defense to the claims of the defendants, and was properly excluded by the Referee. It is between different parties. (1 Cow. & Hill, Phil. on Ev., 326.)
    It was obtained pending the trial of the cause before the Referee.

      It appears on its face to have grown out of transactions long subsequent to the assignment of Oliver and to the defendant’s assent thereto. (Code, § 112; Beckwith v. Union Bank, 4 Sand., 604.)
    The transcript from the docket, of March 17, 1859, is no evidence in itself. It is only made by statute authority to the county clerk to docket the judgment so as to bind the real estate of the defendant. (2 R. S., p. 361, § 18, ch. 386 of 1840, § 26.)
    IX. The plaintiffs are entitled to recover:
    1. The amounts stated in the account of September 9, 1856.
    2. The subsequent collections to date of report, with interest, respectively.
    3. The delivery of the policies and documents.
    The Code, section 167, authorizes the joinder of an equitable, with a legal cause of action.
    The complaint prays an account against an agent.
    Where accounts are ordered to be brought in, they are to be stated up to the time of filing. (1 Barb. Pr., 506 to 508; Seaton’s Decrees, p. 42; Bell v. Read, 3 Atk., 592; id., 582.)
    The judgment should be affirmed.
   By the Court—Woodruff, J.

The Referee finds in this case that down to and prior to the 7th of October, 1854, the defendant was employed by one Edward Oliver as an insurance agent, and that in that character he effected marine insurances in various companies on ships and vessels of the said Oliver.

That on the 7th of October, 1854, the said Oliver assigned all his estate (including the policies for the said insurances, and all moneys due or to become due thereon,) to the plaintiffs for the benefit of his creditors.

That the defendant was immediately notified of the assignment, and the plaintiffs entered upon the execution thereof, and they continued to employ him in receiving and collecting the sums payable by virtue of the said insurances, and also in effecting further insurances on the ships and vessels assigned, and that the defendant undertook to do this, and to account to them for the proceeds.

That prior to September 9th, 1856, the defendant had been repaid all his advances made to Oliver prior to such assignment, and all his advances made in his said employment by the plaintiffs, and on that day rendered them an account, showing a balance due to the plaintiffs of $4,669.25, over and above all charges.

That subsequently and prior to the commencement of this suit, he had made farther collections on the said policies of insurance to the amount of $8,114.90, over and above all charges and commissions.

That after the commencement of this suit and before the accounting had before the Referee, the defendant had made further collections on the said policies to the amount of $2,551.18.

These sums, with interest, the Referee reported due to the plaintiffs, and for the amount so found due, the judgment was entered from which the appeal was taken.

It is not insisted that the facts so found are not warranted by the evidence. If such claim were made, we should be constrained to say that in our judgment the proofs fully sustain the findings of the Referee in these respects.

Two main objections are urged to the recovery upon the facts proved: First, that the assignment by Edward Oliver was fraudulent and void by reason of provisions which, on its face, render it illegal; and second, that the plaintiffs cannot recover in this action for moneys collected after the action was commenced.

1. The complaint alleges the dealings between Oliver and the defendant. The assignment by Oliver; the continued employment of the defendant, Leary, by the plaintiffs; his receipt of moneys and his rendering the accounts on the 9th of September, 1856, showing the balance due to the plaintiffs of $4,669.25; his continued possession of the policies of insurance; further collections thereon; his refusal to render an account thereof; the plaintiffs demand of the outstanding policies, &c. And the. complaint prays an account of all his acts and of all moneys received, and that he pay over all moneys due, and give up the policies of insurance, with the proofs, vouchers and documents relating thereto.

The answer simply denies that Oliver assigned to the plaintiffs, or that the plaintiffs continued to employ him, but admits that he continued to make collections till he had repaid himself the moneys he had expended for Oliver prior to October 7, 1854.

The defendant also admits that he rendered the account of September 9, 1856, which was an account of certain collections of money: that, by the account, it nominally appeared that the sum stated as the balance thereof, $4,669.25, was due by the defendant, but alleges that that sum was not in reality due, because it did not embrace all the open and unsettled transactions between him and Oliver. That, prior to October 7, 1854, the defendant had remitted to Oliver a draft for £4,132 5s. 5d. sterling, which was without consideration, and was a loan to Oliver, which draft Oliver and the parties having the management of his estate after his failure, and notwithstanding notice from the defendant prohibiting the same, negotiated and received the amount thereof, and parties claiming to be holders thereof for value are now prosecuting a suit thereon against the defendant.

The defendant, also, by an amendment, called a further answer, set up that Edward Oliver, on the 7th of October, 1854, was indebted to the defendant for moneys paid out, &c., in $100,000, which has not been paid.

Taking the facts found by the Referee to be true, here is an endeavor by an agent, who has been paid in full all claims due to him by his principal, accepting employment by the assignees of such principal, continuing to manage the business as their agent and collecting moneys, but, when called to account, alleging that the assignment is void as against the creditors of the assignor, (for it is this only which is claimed of the assignment in question,) and refusing, on that ground, to account to his actual employers, or to pay over moneys received by their direction.

This, we think, he cannot do. It is his business to pay over the moneys he has received, and it will be the plaintiffs’ duty to answer, if any creditor of Edward Oliver should impeach the assignment, for the property which comes to their hands, whether through the agency of this defendant or otherwise.

So that we do not deem it necessary to discuss the question whether the assignment is, or is not, valid as against the creditors of Edward Oliver. Under the English statutes referred to, we incline to think it is perfectly valid and binding; and, if so, then the whole pretense is groundless.

The assignment was clearly valid as between the parties to it. The assignor is bound thereby: his agent cannot impeach it.

It is not denied in the answer that the defendant had actually received all the moneys which appear by the account rendered September 9, 1856, to have been received by him. The answer admits that he had collected and paid himself all moneys which he had expended for Edward Oliver prior to the assignment, and all moneys which he had been obliged to pay on account of liabilities incurred for Oliver prior to such assignment.

2. As to the second objection above mentioned, it must suffice to say, that this is an action not merely to recover a sum of money alleged to be due to the plaintiffs, but it is brought for an accounting and settlement between principals and their agent. It seeks not only the payment to them of such moneys as have been collected, but also the surrender of the securities in his hands.

On the taking of the account it was in all respects proper to ascertain not only what the balance was when the action was commenced, but also to ascertain what securities the defendant held, which he should be adjudged to deliver to the plaintiffs.

The defendant in such a suit could not defeat the plaintiffs of their title to relief, nor deprive them of any part of such relief, nor drive them to a new action, by converting the securities or any part of them into money, by collecting them or otherwise, while the action is pending. If on the accounting it appeared that he had done so, he was bound to account for the money and pay it over in lieu of the securities which he would have been bound to surrender if he had not collected them.

The parties did not, it is true, in the form of proceeding in this action, follow the former practice in Chancery by bringing the cause to a hearing on the question, whether the defendant was liable to account, and on a decree for an accounting go to a Master or Referee to have the account taken. They mutually consented to refer the whole of the issues to a Referee, in the first instance, and it was proper that he should, if he found the defendant liable to account, proceed with the accounting as he did without objection.

3. It is insisted that the Referee should have received proof of the transactions between Oliver and the defendant, subsequent to the assignment to the plaintiffs, October 7, 1854, ana charged to the plaintiffs what was due to the defendant from Oliver.

The views above expressed in relation to the effect of the assignment to the plaintiffs, dispose of this objection. The judgment record offered in evidence by the defendant, showed on its face that it was recovered for an indebtedness arising out of transactions, subsequent to the assignment, and between April, 1855, and December, 1857, and in a suit not commenced until one year after this action was brought.

4. We have examined the exceptions taken to the rulings of the Referee on the trial, admitting or rejecting evidence. We think none of them well taken. Some of them are in effect disposed of by what has already been said. Of the others we think extended notice is not here necessary.

Two or three of them perhaps require that we should say, that the offer of the defendant to show that in the account rendered September, 9, 1856, credit is given for certain notes as cash, which notes have not been paid, was an offer to contradict the admission in the defendant’s answer, and was properly rejected on that ground if on no other. That answer expressly admitted it to be an account of moneys collected, and assigned only specific reasons for alleging that the balance thereby appearing was not due, and no such ground was intimated as the defendant now offered to prove. Uor was it suggested that there was any error or mistake therein, but only that there were other transactions not embraced therein.

The short answer to the claim of the defendant that the question put to the witness Foster, should have been allowed is this: The question assumed that the witness had testified, that he had made a demand on Foster for the policies of insurance and documents. He had not so testified, but on another ground it was not admissible, it was an endeavor to make the defendant’s own declarations evidence in his own favor. This he could not do unless the plaintiff had given evidence of a part of the conversation, and so raised some presumption which the reply would explain or rebut, or render the whole conversation admissible by proving a part. Here the plaintiff had proved no such demand as the question assumed.

The other exception, is to the ruling of the Referee, permitting the plaintiffs to produce and surrender the defendant a bill of exchange for £4,132 5s. 5d, which was we think plainly correct. If that bill was, as the defendant alleged in his answer, an accommodation bill without consideration, then it being produced in the plaintiffs’ hands unpaid, and the surrender thereof left the account between the parties in the same state as if it had never been drawn. If it was a bill valid in the plaintiffs’ hands, upon sufficient consideration, then both that and the balance of account were due. No proof as to the consideration was given by the defendant. Thejpnmct facie import of the bill was, that that sum was due to Edward Oliver from the defendant, or was received by the defendant from Oliver, when the bill was drawn. In respect to this, no error was committed by the Referee of which the defendant can complain.

The judgment should be affirmed.

Judgment affirmed.


source: Caselaw Access Project

author: By the Court — Woodruff, J.

license: Public Domain

text:
    Alexander M. Lawrence, Receiver of The General Mutual Insurance Company, Plaintiff and Appellant, v. Nathaniel L. McCready, John W. Mott, and James H. Brundage, Jr., Defendants and Respondents.
    1. In the absence of any statute, or provision in the charter, authorizing an Insurance Company to receive notes in advance of premiums to be earned by the Company by insuring the maker, or defining the rights and liabilities of the parties when such a note is given, the mere facts that the maker united with several others in giving such notes to an Insurance Company upon an understanding that the notes should be renewed from time to time for such amounts as should not be earned, and that the makers should be allowed five per cent on the amount of premiums earned, as a compensation for the advance, do not make the makers liable to the Company so that, upon its insolvency and discontinuance of its business, the Receiver can collect thereon any greater sum than the Company has earned.
    2. It seems that such a note would be good and collectible in the hands of an indorsee for value.
    3. Whether the Company, if it had continued solvent and able and ready to continue to insure the maker, could, under the circumstances stated, collect the whole amount of the note, by requiring the maker to suffer them to earn the whole ? Qucere.

      i. Such a note is not, under the circumstances stated, a “ subscription note,” properly so called, under various special charters and under the general insurance law, in which certain notes are made valid and binding, whether the premiums for which they are'prospectively advanced are ever earned or not, according to numerous decisions in this State.
    5. Such a note may be surrendered by the Company, and, an open policy being issued, the note given for the nominal premium may be taken in substitution, and, if done in good faith, the transaction is valid, even though it afterwards appear that the Company was insolvent at the time: And this is even more clear, when they obtain thereby the responsibility of an additional person as maker of the substituted note.
    6. On a note given for the nominal premium on an open policy to cover risks to be afterwards indorsed thereon, the premiums upon which are to be settled and the terms of insurance fixed when the indorsement is made, neither the Company nor the Receiver of the Company, if it become insolvent and cease insuring, can recover any sum greater than the1 premiums on risks actually taken under the policy.
    7. But, to the extent of premiums upon risks actually taken, the Company, or its Receiver, may recover on such a note; and, if the Company become insolvent, and a Receiver is appointed, the makers having consented, with the Company, to a cancellation of the open policy, on an agreement to return the premium of a particular risk not earned, “to be paid ratably out of
    ■ the assets of the Company, when divided,” the Receiver is entitled to collect the premium on such risk, and the defendants must look to the dividends for reimbursement.
    (Before Hoffman, Woodruff, and Moncrief, J. J.)
    Heard, January 8th;
    decided, March 17th, 1860.
    Appeal from a judgment entered on the decision of E. P. Cowles, Esq., to whom the cause was, by consent of parties, referred, to hear and determine.
    The action was brought by Mortimer Livingston, as Receiver of the General Mutual Insurance Company, to recover from the defendants the amount of their promissory note, dated January 5th, 1854, for $1,368.09, payable seven months after date to their own order, and indorsed to the said Company. The Company, on or before the 14th day of January, 1854, ceased to insure and became insolvent; and afterwards, in December, 1854, by proceedings on a petition filed March 18th, 1854, the said plaintiff was appointed Receiver of their assets, and among other assets he received from the Company the note of the defendants on which this action is brought.

      The answer of the defendants, so far as it is material to state its contents, 1. Averred that the note was without consideration. 2. That the General Mutual Insurance Company, on the 5th day of January, 1854, issued to the defendants an open policy of insurance, whereby they agreed to insure the defendants to the amount of $68,404, on freight and merchandise, on any and all vessel and vessels which the defendants might require and report to the Company, the premium on such risks to be fixed at the times of the indorsement of the risks on the said policy, and such clauses to apply as the Company might insert as the risks are successively reported. That the note in suit was given for the nominal premium on the amount of such open policy and in consideration of the risks to be thereafter earned upon risks which should thereafter be taken under the said policy; and that before any premium had been earned, and before any of the orders in the complaint mentioned, the Company canceled the said policy and all outstanding risks. 3. The defendants counterclaim several sums, being due for return premiums on canceled policies, and several losses under policies issued by the said Company.
    It appeared on the trial, that on the 6th day of January, 1853, the firm of N. L. McCready & Company, which was composed of two of the defendants only, to wit, Nathaniel L. McCready and John W. Mott, gave to the General Mutual Insurance Company the note for $3,000, mentioned in the findings of the Referee, and that the note on which this action is brought dated January 5th, 1854, was given by McCready, Mott & Company, a new firm formed by the taking of James H. Brundage into the copartnership with McCready & Mott.
    The other material facts appear by the finding of the Referee, as set forth in the case on appeal, as follows, viz.:
    “And the said Referee, upon said testimony, did find as matters of fact:
    “ First. That Mortimer Livingston, the plaintiff named in the original complaint, was duly appointed Receiver of the General Mutual Insurance Company, and after the commencement of this action departed this life, and that Alexander M. Lawrence, • the present Receiver was duly appointed in his stead. The petition for the dissolution of the Company and appointment of the Receiver, was filed March 10, 1854.
    “ Second. That the defendants, with many other parties, set forth in their bill, Book C, on the 6th January, 1853, made and delivered to the General Mutual Insurance Company their promissory note for $3,000, termed a subscription note, payable at twelve months, being in the usual form and with the usual incidents to a subscription note, five per cent commission being allowed on the amount used. That this note fell due in January, 1854, when the amount used, including five per cent commission, amounted to $1,729.75, and the balance unused was $1,368.09. That the note for $3,000 was paid in full by defendants at the bank, who received the check óf the Company for the balance unused as above. That defendants then gave their note (upon which this suit is brought) at seven months; the open policy (Exhibit, Mo. 1,) having been issued at the same time, and of the same date.
    “ That this was according to the practice of the Company in renewals of subscription notes where there was a balance due and unused, except that the note in suit, instead of being taken at twelve months as the balance of a subscription note, was in the usual form of an ordinary premium note on which the open policy was issued, and that such note was for the premium on such open policy; the practice not being to issue an open policy on the renewal of a subscription note.
    “ Third. That under said open policy risks were entered upon which the premiums amounted to $139.50, according to the indorsement on said policy, and that said policy was subsequently canceled, and that an indorsement of said cancellation was made on said policy as follows:
    “ It is agreed to return premium, $139.50, allowed under this policy to be paid ratably out of the assets of the Company when divided. This policy is hereby canceled from 20th of January, 1854, including all undetermined risks.

      “ Alfred Ogden,
    “Prest”

      “ And that all the risks indorsed on said policy were at that time undetermined.

      “ Fourth. That said Company ceased to insure, and stopped business on the 14th January, 1854, and at that time were insolvent.
    “ Fifth. That said Company were, at the date of filing of said petition, (10th March, 1854,) indebted to the defendants as follows :
    For return premium on policy, schooner “ Jos. Green,”............ $20 88
    With interest on same from 10th January, 1854.
    Return premium on policy, schooner “ Moses Taylor,”............. 51 50
    With interest on same from 9th July, 1854.
    Return premium on policy, Jas. S. Loffland,..................... 20 13
    Return premium, schooner “Kensington,”....................... 61 36
    Partial loss on schooner “ Kensington,”......................... 316 50
    Return premium on policy, “John A. Taylor,"................... 96 25
    With interest on said three last sums from 12th January, 1854.
    And for total loss on the barque “ John A. Taylor,” the sum of.... 3,500 00 With interest from October 8th, 1854.
    A consent and admission of the defendants’ attorney was submitted as follows:
    11 SUPERIOR COURT.

    “It is stipulated and agreed that the fact that the original subscription note given in evidence on the trial, was made by N. L. McOready & Company, a firm composed of McOready & Mott only, while the note on which this action is brought was made by McOready, Mott & Company, a firm composed of McOready, Mott and James H. Brundage, Jr., is to have no effect upon the decision of this case, except so far as it may tend to show the purpose for which the note sued upon was made and delivered.
    M. G-. Harrington.

      Defendants' Attorney.

    “ And the said Referee did further decide and determine as matters of law:
    “1st. That the plaintiff was not entitled to recover in this action upon the note set forth in the complaint.

      “2d. That plaintiff was not entitled to recover, under the indorsement of the cancellation of the policy, the premiums, or any part of them, on the risks indorsed thereon.
    “ 3d. That the defendants were entitled to be paid by said Receiver the aforesaid sums of money for return premiums and for total loss, with interest from the dates above set forth, to be paid to said, defendants ratably with other creditors of the General Mutual Insurance Company, from the funds in the hands of the said Receiver, upon the distribution of the assets of said Company, and accordingly found that judgment should be rendered in favor of the defendants for the sum of $5,177.32.”
    Judgment was éntered in conformity with this decision, and directing that the said sum of $5,177.32, be paid by the plaintiff to the defendants, ratably with other creditors of the said Company, out óf the fund in his hands as Receiver upon the distribution thereof.
    The plaintiff, having excepted to the decision of the Referee, appealed to the General Term. Some of the proofs given on the trial are mentioned in the opinion of the Court.

      Alexander Hamilton, Jr., for the plaintiff (appellant).
    I. It is beyond doubt, as found by the Referee, that the note in question, for $1,368.09, represented, on the 5th January, 1854, the balance unused of a subscription note for $3,000, given by the defendants, with many other parties, on the 6th January, 1853.
    II. On the 5th January, 1854, the sum of $1,368.09 was absolutely due from defendants to the Company, and was subject to no contingency whatever, and did not depend upon the fact that any value or consideration had been received.
    Repeated decisions in this and other Courts of this State have wisely established that, in cases of insolvency, all the creditors of a Company have a right to look to the subscription notes, or those of that character, given to create a capital and furnish credit and stability to the Company. (White v. Haight, 16 N. Y. R., 310; 1 Sandf., 53, 158, 171, 177, 629; 3 id., 176; 1 Comst., 371; 3 id., 290; 4 id., 50; 4 Seld., 312.)
    III. The Company, on the 5th January, 1854, being insolvent, it. was not in the power of the officers of the Company, by any change in the form or evidence of the debt, to affect or destroy its character, nor to convert an absolute into a contingent liability, and thereby relieve the defendants at the expense of other creditors of the Company.
    1. Here the sum due was the balance of a subscription -note, which defendants must pay in any event.
    2. The note given for such balance should have been taken at twelve months, though it was in terms made payable at seven months, and an open policy issued with it.
    3. It cannot be pretended, upon the evidence in this case and the facts found by the Referee, that there were two independent transactions; but, on the contrary, it appears that the arrangement was confessedly to convert the balance of a subscription note into an open policy premium note.
    IV. The Referee, in deciding that the plaintiff (the Receiver) was not entitled to recover upon the note sued upon, places his decision on the purely technical ground of the form of the action, and the pleadings in the cause; because,
    1. The complaint set forth the note, and claimed that the defendants were indebted for the amount stated in it.
    The note, on its face, was an obligation for the payment of a certain sum; the defendants have recourse to matters dehors the note, and in explanation of it they resort to the open policy. The plaintiff, on the other hand, insists that this note being shown to represent the debt due on the subscription note, any attempt to change its character was unauthorized and void, as against the creditors of the Company, by reason of its insolvency. (17 John. R., 321, as to “value received.”) .
    2. The defendants, in their answer, do not deny making and delivering the note, but set up as a defense that it was without consideration.
    3. This was the issue raised by the pleadings, and the plaintiff, to rebut this defense, showed conclusively, as found by the Referee, that this note was given for the balance of the subscription note.
    4. The real issue is fairly made on the pleadings, nor was it necessary or proper for the plaintiff to anticipate any defense the defendants might interpose. The note, on its face, imported a consideration, “ value received.” The defendants denied the consideration, and the plaintiff established its real character.
    V. If any doubts could be raised as to the right of the Company to take subscriptions notes under their charter, they would be disposed of, and the defendants estopped on the ground that they had united with many other parties in creating a fund and giving credit to the Company by giving notes, having all the characteristics and privileges incident to subscription notes. (Deraismes et al. v. The Merchants’ Mutual Insurance Company, 1 Comst., 371.)
    VI. The only real question in this case is, whether the officers of a Company, though acting in good faith, can, in case of insolvency, change the evidence of a debt, or convert an absolute into a contingent liability to the diminution of the fund and the injury of the creditors.
    It is submitted that under the statutes and authorities, such acts are wholly void as against the creditors and Receiver who represents them. (Deraismes et al. v. The Merchants’ Mutual Insurance Company, 1 Comst., 371; Brouwer v. Appleby, 1 Sandf. S. C. R., 159; Brouwer v. Hill, id., 629.)
    It is inaccurate to say, in this case, that one contract is declared upon and a recovery sought upon another.
    The complaint is upon a promissory note for the payment of a certain sum; it imports a consideration upon its face “ value received.”
    The answer denied a consideration, and averred certain other matters to establish a want of consideration; it then alleged certain offsets or counterclaims.
    As these were not disputed, no reply was necessary, and the question of consideration was at issue.
    VII. It is submitted that the complaint is sufficient to sustain a judgment for the plaintiff upon the facts proved; and that, in any event, the Court, at General Term, can treat the pleadings as having been amended so as to conform to the facts proved in any respect in which the Court ought clearly to allow an amendment at Special Term. (Bowdoin et al. v. Colman et al., 6 Duer, 183.)
    VIII. The Referee erred in deciding that, under the indorsement of cancellation, nothing was due. That indorsement imported an agreement, assented to by defendants, that they should pay the premium, in full, and receive the return premium ratably. Judgment should therefore have been given for such premiums in favor of the Receiver.
    The judgment should be reversed, and judgment given for the Receiver for the amount of the note sued upon, with interest and costs.

      E. W. Stoughton, for the defendants (respondents).
    I. The action was brought solely upon the note mentioned • in the complaint, and the plaintiff cannot be permitted, whatever may be his right as to the balancé of said note for $3,000, to recover the same in this suit.
    II. The said note for $3,000 was not a subscription note, and, therefore, the makers thereof could only have been made liable thereon to the extent of premiums which might be thereafter earned and become due unto the said Company. (See Act of Incorporation, passed May 25, 1841.)
    III. If the said note for $3,000 was a subscription note, the Company had power to cancel and surrender the same "unto the makers, who, if they practised no fraud upon said Company in obtaining such note, would be entitled thereto.
    In this case no such fraud was practised, nor did the officers, in surrendering such note, act under any mistake of facts, by them material to be understood. (Hyde, Rec'r, &c., v Lynde, 4 Comst., 387; Curtis v. Leavitt, 15 N. Y. R., [1 Smith,] 108, 139, 198.)
    IV. It is clear upon the evidence, and the Referee has so found, that the note in suit was given in consideration of the open policy issued at the time it was made, and for the purpose of securing the payment of such premiums as might be earned upon risks to be written upon the said policy. That the Company had power to take such premium notes, and in consideration thereof, to issue such policies, no one will deny; and that the transaction in question was real, and was acted upon by the parties, cannot be disputed.
    It appears from the evidence, that upon payment of the premium notes, no commission was allowed to the makers, whilst upon the payment of what were called subscriptions notes they were entitled to fifteen per cent on the sum paid.

      Different rights and obligations were therefore created by the execution of these two instruments; and it clearly appears from the evidence that both parties intended—and so expressed their arrangement in form—that the note in suit should be a premium note, and not what they called a subscription note.
    V. Even assuming the defendants to be still liable to pay the balance of the note for $3,000, such liability is quite consistent with the fact that they are liable upon the note in suit only as makers of an ordinary premium note.
    VI. The Receiver succeeds only to such rights as the Company might themselves have enforced. The note for $3,000 was canceled without fraud or mistake. After such cancellation, the Company could not' have recovered against the makers thereof, and hence the Receiver cannot. (4 Comst., 337; Curtis v. Leavitt, 15 N. Y. R., [1 Smith,] 12-152.)
   By the Court — Woodruff, J.

I am disposed to concur m the views expressed by the Referee in relation to the $3,000 note given by RT. L. McCready & Company to the Insurance Company, whose rights and interests are represented by the plaintiff.

There is nothing, I think, in the proofs given on this trial which shows that RT. L. McCready & Company were bound'on the 5th day of January, 1854, to pay to the Insurance Company any greater sum than had been earned for insurances made for the makers.

The witnesses, it is true, speak of this note as a subscription-note, but upon what terms it was given, for what especial purpose, and under what agreement, was not shown, except perhaps in one particular, viz., that to the extent that N. L. McCready & Company should insure and make payments on that note, to that extent N. L. McCready & Company, the makers, were entitled to five per cent for having advanced the note to the Company. And it may reasonably be inferred, that if that note had, before its maturity, passed by lawful transfer to the hands of a bona fide holder for value, the makers, being then bound to pay the whole note, might perhaps be at liberty to claim from the Company five per cent for having made the advance.

But as between the Company and the makers no agreement is shown which, in terms or by implication, bound the makers to pay any greater amount than was earned in premiums; or in other words, which would preclude the makers from alleging and showing that, except to the extent of premiums earned, the note was without consideration, and that they were to pay to the Company no sum greater than the amount of such premiums.

And so the note was in fact treated by the Company when it became due, i. e., while the makers paid it in full, the Company refunded so much of the consideration as had not been earned.

The plaintiff in this action assumes that what the witnesses call a subscription note, has the character and involves all the obligations which attach to a note given under the 12th section of various acts incorporating other insurance companies, which notes are by statute made valid binding notes, whether the premiums of insurance for which they are prospectively advanced are ever earned or not, according to the construction given to that section in numerous cases. (1 Sand., 159; id., 629; 3 id., 176; 1 Comst., 371; 4 Seld., 312; 3 Comst., 290; 4 id., 51.)

And a like effect is given to notes advanced to make up the capital of Insurance Companies organized under the general Insurance Act of April 10, 1849. (Laws of 1849, ch. 308, § 5, p. 442; White v. Haight, 16 N. Y. R., 310; Elwell v. Crocker, 4 Bosw. R., 22.)

But the act incorporating the General Mutual Insurance Company contains no such section as the twelfth section above referred to; and the note was not shown to have been given to make up a capital for the Company, or to be used as the basis of credit. The Company was incorporated in 1841, (Laws of 1841, p. 229 ; id., 1842, p. 138;) and the so-called subscription note was not given until January, 1853.

The former President of the Company, in his testimony on the trial, describes the arrangement under which it was given thus: “ I know that a subscription note for $3,000 was given by H. L. McCready & Company, in advance of premiums, with a good many other notes by other parties of different amounts: they were given in January, 1853, and were due in January, 1854.” * * “ The subscription notes are given for premiums to be earned by the Company on risks effected with the Company.” * * The usual mode of settling subscription notes was to renew the balance of the note, (the difference between the premiums given the Company and the note,) for twelve months,” ** * “ the makers having been credited, in account, with five per cent on the amount used. That allowance of five per cent was made on all subscription notes: that was part of the agreement made with the parties.”

• In the absence of any statute applicable to the taking of notes by this Company; and in the absence of other or further proofs in relation to the arrangement under which these notes were given, or the purposes to which they were to be applied; the transaction so described indicates an advance of notes for the accommodation of the Company which they might no doubt use for the purposes of their business, but which they were to earn by the premiums of insurance which the makers might effect with them, and which were subject to renewal to the extent or amount unearned at the time the notes became due; and for this accommodation the makers were to receive five per cent on such sum as was received in premiums and paid by the makers.

Under such an arrangement it is by no means clear that the Company could collect on such notes any greater amount than was earned in premiums; and if it be conceded that the Company might insist that the makers were bound to insure from time to time until the whole amount had been in fact earned, still, if the Company became insolvent while holding the note, and so became unable to fulfill its part of.the agreement, the consideration would fail; and, as between the immediate parties, (the Company and the makers,) we perceive nothing in the arrangement to prevent the makers from insisting on an exoneration from any liability beyond the amount earned.

Still less do we discover in this arrangement anything which could prevent the Company and such makers, acting in good faith, from making any new and substituted agreement to which both should assent, especially if it was made upon a distinct consideration moving thereto.

It is found by the Referee, and the proof clearly shows that this was done. A new note was given for the balance of the note not earned, in which a third person, not before in any manner bound, (the defendant Brundage,) joined, at the expiration of the first twelve months, i. e., at the maturity of the note for $3,000. This new note was made payable at seven months. It was expressly understood that it should be what is termed an open policy note, or a note for the unearned premium of an open policy issued at the same time to the makers. The $3,000 note was paid, and so much thereof as had not been earned was refunded.

It is difficult to see that there was in this anything which was not within the clear authority and power of the Company to do, if they saw fit. They were not under any obligation arising out of any statute, or implied in the original arrangement, as testified to, to retain the $3,000 note, or to insist upon its full payment, even if it were conceded that they might have done so, offering at the same time to give insurance to a corresponding amount.

They obtained thereby the obligation of a new partner (in the firm of McCready, Mott & Company.) A policy was issued to such new makers. Insurances were entered thereon, and the whole transaction bears the mark of good faith, and we are not able to see in it, upon the case as presented to us, any ground for impeaching it as fraudulent or illegal. And therefore, if the question before us was, whether the original makers of the $3,000 note still remained liable, notwithstanding this substituted transaction, we should find it difficult, upon any proofs in the cause, to say that they were not fully exonerated from any liabilty except according to the tenor and effect of the new arrangement.

It is quite clear that the defendant, Brundage, never was liable on the $3,000 note, and therefore that he is not liable, unless he is bound to pay the note now in suit. The stipulation contained in the case admits that the $3,000 note was made by McCready and Mott only, while the note in suit was made by the three defendants, but that this fact “is to have no effect upon the decision of the case except so far as it may tend to show the purpose for which the note sued upon was made and delivered.”

We are somewhat in doubt as to the proper construction to be given to this stipulation. The fact that a note executed by a new firm was given is (as already noticed,) a significant one as showing not only that a mere renewal of the unearned portion of the $3,000 was not all that the parties contemplated, but also that a new consideration existed for making the substituted arrangement; and further, it served to characterize the new transaction as made in good faith, and as the basis of further new relations between the parties under the open policy then taken out and the insurances entered thereon.

We can hardly think the stipulation was intended to mean that judgment may be entered against Brundage, if McCready & Mott should be deemed liable for the unearned balance of the $3,000 note. The Referee does not appear to have so understood the stipulation — and the power of the attorney to make such a stipulation is not free from doubt.

The utmost that it can reasonably import is, I think, that if upon any grounds, McCready & Mott are liable upon the note in suit, Brundage is conceded to be liable with them.

It has been very decidedly intimated that after the taking up of the $3,000 note the makers thereof were only liable according to the terms of the new arrangement, and if so, the construction of the stipulation-is not material, for if, in that view, it be held to mean that if McCready & Mott are liable upon any ground in this action, judgment may be pronounced against Brundage also; still, the liability of the parties must depend on the nature and legal effect of the new arrangement.

By that arrangement an open policy was issued, and a note executed for the premiums for the risks to be thereafter indorsed thereon.

Upon a note, so given, it has been repeatedly declared that the liability of the makers only extends to the premiums for the risks actually taken by the Company. This subject was fully discussed in this Court in Elwell v. Crocker, decided, December, 1858, and the cases on the subject are there referred to. (4 Bosw. R., 22; 1 Sandf., 53, 184, 640, 641; 1 Comst., 371; 16 N. Y. R., 310.)

The cpmplaint herein proceeds solely upon the alleged liability of the defendants upon the note in suit. And if the defendants are not liable upon that, it would be changing the cause of action entirely in its scope and meaning, if the plaintiff were permitted to convert an action brought on a promissory note made by the three defendants, and proved to be so made, into an action founded on a liability of two of the defendants upon a previous note made by them and given up and canceled. So that if we were of opinion that the $3,-000 note was improperly surrendered, or that the Company or the plaintiff were not bound by the substituted arrangement, we incline to the view taken by the Referee, that there could be no recovery in this action, but that the failure of the plaintiff to establish a right to recover on the note in suit must be deemed not “a case of variance, but a failure of proof.” (Code, § 171.)

This consideration, however, in the view we have taken of the plaintiff’s rights, does not arise, for there is, we think, a ground of recovery, which appears to have been overlooked by the Referee, entitling the plaintiff to a portion of the amount of the note. And if so, the plaintiff does recover upon the very cause of action which he has alleged, and being entitled to recover upon that cause of action, the impropriety of permitting the plaintiff also to recover upon a cause of action not alleged, and upon grounds not set up in the complaint becomes even more obvious.

The amount of insurance under this open policy actually effected entitled the Company to premiums to the amount of $139.40; and, even though the Company had continued perfectly solvent, that sum is all which could have been collected upon the open policy note against these defendants. Of such a note, Mr. Justice Sandford says, in Brouwer v. Hill, (1 Sandf., 641,) the makers “ are not responsible thereon beyond the amount of premiums actually earned by the Company; and the dealer has a right to cancel such a policy at any time and receive back his note, deducting the amount of earned premiums.”

In this case, when risks had been indorsed entitling the Company to $139.40 for premiums, the policy was canceled by mutual consent. The Company was discharged from all liability upon its policy, and the defendants consented to look to .the dividends which might ultimately be made to its creditors for their return premium. In this transaction there was a distinct recognition of the right of the Company to have that amount, $139.40, as premium on risks taken, and a like clear right in the defendants to have that sum returned upon the cancellation of the policy and the release of the Company from the insurance. Now, if the' Company had at that time been solvent, it would have been, in all respects, right and proper for the one claim to be setoff against the other. But it was not inequitable for the officers of the Company to insist upon receiving payment of this premium as a part of the fund to be distributed ratably among all the creditors, and to require the defendants to take their chance, as creditors, of receiving back their return premium out of the general fund. And this was made a condition of the cancellation, and conforms to the proper construction of the indorsement then made on the policy.

The plaintiff was, therefore, entitled to recover from the defendants the $139.40; and, on payment of that sum, the defendants become creditors to that amount, in addition to the amount to which the Referee declared them to be creditors on other grounds. That sum, and that only, is due on the note, and for that the plaintiff was entitled to a judgment; while, on the other hand, the judgment should declare the amount due to the defendants, and upon which they are entitled to dividends, to be greater by a corresponding addition.

There must be a new trial, with costs to abide the event, unless the plaintiff elects to make the judgment conform to the views last above expressed, in which case the judgment may be to that extent affirmed, without costs to either party on the appeal.

Ordered accordingly.


author: Hoffmah, J. Moncrief, J. (Dissenting.)

text:
    Robert Higgins and Augustus G. Gould, Plaintiffs and Appellants, v. George Moore, Defendant and Respondent.
    1. An unconditional and unrestricted authority given to an agent to sell goods, implies authority to receive payment for the goods sold.
    2. Where the plaintiffs, residing at Albany, sent a cargo of rye to the city of New York for sale, and one of the plaintiffs, being in New York, requested S., a broker, to take charge of the same and sell it, and he sold a part thereof to M. & E., and another part to the defendant, and, after the delivery of the part sold to M. & E., the plaintiff directed S. to collect the money from them, and said that the plaintiffs would draw on him therefor; and such plaintiff thereupon returned' to Albany and subsequently drew on S. for that money, and he, having rendered a bill and collected the amount, paid the draft; and afterwards, the delivery of the rye sold to the defendant being completed, S. rendered a bill therefor to the defendant, and received payment in full; and where it also appeared that it is the usage and custom of the trade, where grain is sold by brokers for non-resident owners, for the broker to sell and render the bill of sale in his own name and collect the amount: Held, that such payment by the defendant was a valid payment, although the defendant, when he made the payment, was aware that the plaintiffs were the owners of the rye so sold. (Monorief, J., dissented.)
    (Before Hoffman, Woodruff and Moncrief, J. J.)
    Heard, January 11th;
    decided, March 17th, 1860.
    This is an appeal by the plaintiffs from a judgment for the defendant, entered upon the report of Livingston Livingston, Esq., to whom the action was, by consent, referred, and before whom it was tried on the 29th day of December, 1858.
    The action was brought to recover the price of 3,426§£ bushels of rye sold to the defendant on the 27th day of August, 1858, at seventy-five cents per bushel.
    The answer of the defendant denied any purchase from the plaintiffs; averred that the purchase was made from J. 0. Sayles, and payment to Sayles therefor; and, further, that, if the plaintiffs had any interest in the rye, the said Sayles was their agent to sell the same and receive payment therefor, and that the defendant purchased the same from or through him, and paid him in full therefor.
    On the trial it appeared that the plaintiffs reside and do business at Albany; that a cargo of rye, belonging to them, was sent by them to New York for sale, and arrived here on the 21st of August, 1858; that the plaintiff Higgins came to New York, and was here when the rye arrived; that he employed John 0. Sayles, a broker, who sometimes acted as a commission merchant, to sell the rye: and Sayles testified that Higgins requested him to take charge of and sell the rye. On the 24th or 25th, Sayles sold the rye by sample to the firm of Manly & Embree: the delivery thereof was begun, and 1,649§§ bushels were delivered, when they objected that the bulk did not correspond with the sample, and refused to receive any more. The plaintiff Higgins was still in New York, and was informed by Sayles of this refusal, and, with his assent, Sayles proceeded to find another purchaser. The measurer’s return of the measurement of the rye delivered to Manly & Embree described the rye as measured for account of Sayles; and this return Higgins saw as early as the 26th, and made no objection to its form. On Friday, the 27th, or Saturday, the 28th, Sayles sold the residue of the rye, 3,426f£ bushels, to the defendant, at seventy-five cents per bushel, (there having been a previous agreement for a sale at seventy-six cents, which, on examination of the rye, was abandoned.) Before the consummation of the sale, Higgins had one or more interviews with the defendant; and the fact that the plaintiffs were the owners of the rye thus became known to him.
    On Saturday the 28th, before the delivery of the rye to the defendant was completed, the plaintiff Higgins returned to Albany. Before he left, in reference to the refusal of the former purchasers to take the rye, he wrote to Sayles “if you are compelled to put it on market to-morrow, I am persuaded it will sell at the going rates.” Expecting to return to Albany on Friday the 27th, he spoke to Sayles in relation to calling on Manly & Embree, to obtain payment, but did not go as it was deemed too late in the day. Sayles then said to him, “ I will get their check and you can draw on me if you want to,” to which he replied “very well.” Hot leaving town that night, he called on Sayles on Saturday, and went with him to the office of Manly & Embree to obtain payment, but they did úot find them in, and Higgins told Sayles he would have to draw on him and he must get the check. The testimony of Sayles on this transaction was, that Higgins called and asked him if he, Sayles, had collected that bill, that he expressed a desire to have the money to take or send to Albany, and asked him if he thought that he, Sayles, could collect it; that he told Higgins it was not usual to collect bills the same day of sending them in, but he “ would make the bills right out and go and see.” They then went -together but did not find Manly & Embree in. That the bill was made out in his (Sayles’) name, and Higgins saw it and made no objection. Higgins on his examination positively denied that he saw the bill.
    Higgins thereupon (on Saturday the 28th) returned to Albany, and remained there till Friday the 3d of September, on the morning of which day he again reached Hew York. Meantime Sayles had collected the amount due from Manly & Embree, and on the 30th, at Albany, the plaintiffs drew on him for the amount, and his draft was paid by Sayles.
    Before Friday, the delivery of the rye sold to the defendant was completed, and Sayles received the measurer’s return of quantity, (which was also made out as a measurement for his account,) and made out a bill in his own name against the defendant for the rye so delivered, and received payment therefor.
    On the plaintiff’s (Higgins’) arrival in Hew York on the 3d of September, he called on the defendant and was informed that Sayles had received such payment. Sayles used the money for his own benefit, and has not paid the plaintiffs therefor.
    Much testimony was given on both sides to show on the part of the defendant, that, according to the general and uniform usage and custom of the trade, brokers who sell grain for nonresident principals render the bills of sale in their own name and collect the amounts, and on the part of the plaintiffs to show that there is no such general or uniform custom. The testimony was quite conflicting on this subject.
    The report of the Referee was as follows, viz.:
    “ And I find and report as matters of fact, that on or about the 27th day of August, 1858, at the city of Hew York, the plaintiffs sold to the defendant, 3,426|| bushels of rye, at seventy-five cents per bushel, that such sale was made to the defendant by John 0. Sayles, as the broker for the plaintiffs, and who was duly authorized by said plaintiffs as such broker, to sell the same; that at the time of such sale, the defendant did not know who was the owner of said rye, but that before said rye was delivered, the defendant knew that the plaintiffs were the owners thereof. That the said rye was delivered to the defendant on the 30th day of August, 1858. That the plaintiffs resided in the city of Albany, and were dealers in grain. That Robert Higgins, one of the plaintiffs, was in the city of Hew York, at the time of the sale of the said rye, that said Higgins remained in the city of Hew York, until August 29, 1858; when he returned to Albany; and that said Higgins was not in the city of Hew York, from the 29th day of August, 1858, until the 3d day of September, 1858. That the said defendant paid to the said John 0. Sayles, the broker of the said plaintiffs, prior to the said 3d day of September, 1858, the sum of $2,578. T°W6W, for the said rye, so delivered to defendant, as aforesaid.

      “ And I further find and report as matters of fact, that there is a custom or usage of trade in the city of Hew York, where grain is sold by brokers, for the brokers to have the bill for the grain, sold by them, made out in the name of the brokers, and for the brokers to collect the money for the grain sold, from the purchasers, where the seller resides out of the city of Hew York; and that the defendant paid to the said John 0. Sayles, as the broker for the plaintiffs, for said rye, according to the usage of trade in the city of Hew York, and that said defendant is not indebted to the said plaintiffs in any sum of money whatever.”
    Erom the judgment entered upon the report, the plaintiffs appealed to the General Term.

      John Graham, for the plaintiffs (appellants).
    I. The rule of law as to brokers, is this: “ A broker has, ordinarily, no authority to receive payment for property sold by him, and if the purchaser make payment to him, he does so at his own risk, unless, from other circumstances, an authority to receive it can be inferred.” (1 Story on Contracts, [4th ed.,] § 348; Story on Agency, § 109.)
    The report of the Referee in this case, repudiates the idea of authority, from the plaintiffs to Sayles, to receive the money for the rye.
    It did not find the existence of the usage or custom, as the Referee found it in Brower v. Peabody. (3 Kern., 121.)
    II. The elements of a usage in reference to which parties are presumed to contract, are, that it be uniform, general, universal. (1 Story on Contracts, § 14.)
    A usage must be reasonable, or it will not be admitted in explanation of a contract. (2 id., § 650, a.)
    It must not be narrow, local, and confined, nor must it be the private opinion of a few, but it must be so uniform and notorious and of such long standing, as to afford a presumption that the parties contemplated it as a part of their contract. (Id., § 650, b.)
    If the evidence for the defendant, in this case, is examined, it will not stand the test of these principles, as to the alleged usage or custom.

      III. The Referee in reporting his conclusion of law, that judgment should be entered for the defendant with costs, does it upon the “ said facts so found,” (i. e.,) the facts stated in his report.
    They are manifestly insufficient to sustain his legal conclusion. He could well have found such a custom or usage as he has stated, without, being willing to say that it was up to the standard of the second point, or that the parties contracted in reference to it.
    IV. The defendant parted with his money to Sayles upon pretenses, almost, if not certainly, criminal. He has the right to avail himself of stringent remedies, to try and get it back, of which the plaintiffs could not avail themselves. He is in a better position than they would be, were they compelled to resort to Sayles.
    The judgment in question should be reversed, and a new trial ordered, &c.

      John E. Parsons, for the defendant (respondent).
    I. That there is such a custom as the Referee has found, is a matter of fact, the Referee’s conclusion as to which, the Court will not disturb. The fact, however, was sustained by the evidence of the witnesses, Cutting, Stutzer, Bell, Witherspoon, Lord, Davett and Ketcham, who are proved to be the largest grain dealers in the city. There was no evidence against this. The witnesses, Herrick, Knight, Wild and Carmichael, all swear that they don’t know what the custom is, where the seller resides out of the city of New York, and they are contradicted as to their statement, that where the seller resides in New York, it is the custom for him to collect, by the very parties upon whose transactions they base their knowledge of the custom, and who swear that in such cases the broker makes out the bill in his own name, and collects.
    That Mr. Higgins knew of such a custom, is evident. One thousand six hundred and forty-nine bushels of the same cargo of rye were sold in a similar way through Sayles to Manly & Embury, paid for to Sayles, and drawn for on Sayles by plaintiff Higgins, who, though he never saw Manly & Embury, or made them out a bill, or gave Sayles any authority to collect from them, assumes that they will pay Sayles, without any order from Mm on them, or other act on Ms part, and arranges to draw on Sayles for the very amount.
    II. Payment to an agent is good in all cases where the agent is authorized to receive, either by express authority, or by that resulting from the usage of trade. (Story on Agency, § 429, and cases cited; Paley on Agency, 278; 1 Livermore on Agency, 226. [Ed. 1818.] Capel v. Thornton, 3 Carr. & Payne, 352.)
    The judgment should be affirmed.
   Hoffmah, J.

1. In my opinion, an unconditional, unrestricted authority given to an agent to sell goods, contradistinguished from a mere power to negotiate a sale, such an authority as will bind the owner to deliver the goods, implies the power to receive payment.

Lord Tenterden, in Capel v. Thornton, (3 Carr, and Payne, 352,) laid down that rule at nisi prius. (Pickering v. Busk, 15 East., 38,) almost establishes it. The sale was by a broker, but the principal was unknown, and the broker had possession. (Favenc v. Bennett, 11 East, 36,) involves the same rule when there is an agency known, and the principal unknown.

In Ireland v. Thomson, (4 Com. Bench R., 149,) the case of Mynn v. Jolliffe, (1 M. & Rob., 326,) is recognized as settling that an agent to sell real estate is not of course empowered to receive the purchase money. But it was considered clear, that there was such a power in the case of the sale of a vessel made by the master abroad.

■ In Gross v. Haskins, (13 Yt. R., 536, 540,) the Court say: “ "When the plaintiff employed an agent to sell hats, he was authorised to receive payment; and all who purchased of and paid him in good faith, are protected, notwithstanding he appropriated the avails to himself, especially when the purchaser knew nothing of the agency.”

Hackney v. Jones, (3 Hum. R., 612,) is an express authority that a general unqualified power given to an agent to sell goods, involves the right to receive payment, so as to protect the purchaser.

The case of Pinckney v. Hagadorn, (1 Duer, 89; approved and said to have been affirmed, 14 N. Y. R., 584, 590,) determined that an auctioneer empowered to sell real estate, and by the terms of sale to receive ten per cent on the day of sale, could receive it on a subsequent day, and bind the principal. (Story on Agency, § 98; Paley on Agency, 278.)

The authority conferred upon Sayles, the agent of the plaintiff in this case, to sell, is found by the Referee.

I do not think that actual knowledge of the name of the owner is sufficient to vary this rule, any more than knowledge of some one else being an owner, implied in the fact of dealing with an agent or broker, would be sufficient.

2. If the proposition thus stated were, in my opinion, questionable, I should think the present case not so, because the plaintiff knew on the day of the sale that Moore, the defendant, was the purchaser, as the defendant knew that the plaintiff was the owner. This knowledge was acquired on Saturday, the 28th day of August. With this knowledge, the plaintiff returns to Albany; and although it was a cash sale, which (even as interpreted by the alleged custom,) justified the presentment of a bill on Monday, the 30th of August, takes no step himself, or by any one else, to obtain payment, nor inquire as to the transaction until the 3d of September. He refrained from giving notice not to pay Sayles, or to pay himself only.

I do not doubt the right of the General Term to look into all the evidence, and sustain a judgment upon it, even if the facts are not deduced, by the Court or Referee, from the evidence. The serious difficulty upon an appeal to the Court of Appeals, may require a new trial, and this the 28th rule of 1858 seems intended, but imperfectly, to remedy.

3. The Referee has explicitly found that there is a custom or usage of trade in New York, when grain of a non-resident owner is sold by brokers, for the brokers to have the bill made out in their name, and to collect the money; and that the defendant paid Sayles according to that usage. The evidence of such custom is not very satisfactory to my mind, but I do not think that we are warranted in saying that the Referee was clearly wrong in his conclusion.

I think the judgment should be affirmed.

Woodruff, J., concurred with Mr. Justice Hoffman, that, upon the proofs and report of the Referee, due authority to make payment to Sayles, the plaintiff’s agent, was sufficiently established, and that the judgment should be affirmed.

Moncrief, J. (Dissenting.)

Assuming, for the present purpose, that such a usage, or custom of the trade, as the Referee has stated, was sufficiently proven to admit the finding of fact to be correct, the material question arises, whether, under such circumstances, the conclusion of law thereon, as found, can be sustained.

The custom, or usage, was in no wise material, or necessary or proper, to explain or give character or meaning to the power actually bestowed upon the broker. The words are clear, plain, and unambiguous. The plaintiffs authorized the broker to sell the grain, and nothing more. The authority, of and in itself, neither by express terms nor by any implication, gave to the broker the right to treat the rye as his own property, make out a bill therefor in his own name, collect the money, or receipt for its payment. The broker, as such, had no such authority. A sale being made, his duty, office and function was at an end. His name is indicative of restricted authority: he is the negotiator, or middleman (2 Barn. & Ald., 137, 143, 148.) It was not sought to show that a usage or custom of the trade existed, of which, it being general, the plaintiffs might be presumed to have knowledge, and have given the employment intending and implying the power to receive payment. Nor was it proven that either the defendant or the plaintiffs knew of such a custom or usage, and therefore could be assumed to act with such intent in the sale and purchase of the grain. The plaintiffs were not acquainted with such a usage or custom. The defendant said he had paid the money “in the usual course of businessnot that he knew or believed a usage or custom existed to pay the broker the avails of the plaintiffs’ rye. The defendant was told by the broker, at the time of the payment to him, that the plaintiffs “had drawn for the amount.” If this statement was true, and the defendant, believing in its truth, in good faith had paid the money, the payment was made, not in the usual course of business, perhaps, as arising from a usage or custom to pay the broker, as for his own goods, but from an implied authority to the broker as an agent to collect the money to meet the draft of his principal. And this was the case with the other lot of rye sold by this broker for the plaintiffs, in which an implied authority to pay him was found by the Referee. The defendant knew the plaintiffs were the owners of the rye. No other than these two transactions were shown to have been made by the broker for the plaintiffs. There was, therefore, no implication of authority from previous transactions. It does not appear that the plaintiffs ever ratified the payment: on the contrary, they claimed to recover from the defendant, made out a bill, and demanded the money. Comstock, J., in 3 Kernan, 632, says: Á principal is bound only by the authorized acts of his agent. The relation of principal and agent may be proved by the instrument, (or verbal commission,) which creates it; and beyond the terms of the instrument, or of the verbal commission, it may be shown that the principal has held the agent out to the world in other instances as having an authority which will embrace the particular act in question. ITcnow of no other mode in which a controverted power can be established.”

The proposition, that persons, engaged in a particular trade, at a particular place, can, by the custom or usage adopted and regulated by themselves, create a power beyond what is actually conferred or necessarily implied, depriving an owner of'his property, the possession of which he had not parted with until a sale to the purchaser, seems to me to be so fraught with mischief, as well as unsoundness, as to require only its announcement to meet with repudiation. The grain was not delivered to the broker. The custom or usage would transform him into a factor in possession of the goods, or with the indicia of title or ownership. (2 Barn. & Ald., 137, 143, 148.)

I think the Referee erred in his conclusion of law upon the facts found by him. A new trial should, therefore, be directed, &c.

Judgment affirmed, with costs.