author: By the Court—Monell, J. Robertson, J.

text:
    Isaac M. Milbank et al., Plaintiffs and Appellants, v. Alexander Dennistoun et al., Defendants and Respondents.
    1. The duty of a factor to employ proper diligence and skill in the sale ot merchandise intrusted to him for that purpose, is properly discharged by its sale by him for its fair market value at the time thereof, being a higher price than that for which he sells some of his own about the same time, while other large holders of similar merchandise are selling it freely at the prevailing price, and there are indications of a speedy prospective superabundant supply of the'market with such merchandise, the general opinion of dealers in it, at the time, being against the probability of an immediate rise in its price. If such merchandise be flour, the factor is not bound in the discharge of such duty to anticipate any extraordinary rise in the price of breadstuffs which might subsequently occur; even if owing to an injury to the potato crop by disease, weather unfavorable to growing grain crops, and an unexpected demand for flour from abroad, known to such factor at„ the time of such sale; provided the influence of such causes upon the demand for flour were not so far developed at the time of such sale as to affect its market price, and nothing but extraordinary sagacity could divine it.
    2. A factor, whose discretion as to making sales is not limited by instructions, is not, by selling forthwith, made liable for misfeasance, in consequence of overlooking or not giving due weight to events known to him as having occurred, or which he had every reason to believe might occur, and which were calculated to enhance prices in the course of time; especially where it appears that he acted in consonance with the general opinion of dealers in the same article at that time. {Per Robertson, J.)

      3. In such an action, evidence of, an expression, by the defendants to the plaintiffs, after the sale in question, of hopes to do better with another cargo of flour, which the plaintiffs, had consigned to them at about the same time, together with evidence of the times and prices at which they sold such second cargo, is not admissible.
    4. Evidence of the original cost of the flour is also inadmissible.
    5. Proof that the defendants took a newspaper, which, immediately before, the sale in question, contained an article calculated to put its readers on inquiry as to the existence of causes likely to produce a rise in prices, is not admissible, unless it be proved that they saw the particular article in question.
    6. Letters from the plaintiffs to the defendants, written after the sale, are not admissible on their own behalf.
    7. Testimony of a witness that after the sale he had heard, at the place of sale, that the potato blight was the subject of general conversation among merchants there, previous to the time of the sale, is inadmissible as being mere hearsay evidence. But the testimony of witnesses qualified to testify on the subject, of their own knowledge and opinion of the causes which affected the price of flour at that time, is admissible.
    (Before Robertson and Monell, J. J.)
    Heard, March 16, 1863;
    decided, March 28, 1863.
    The exceptions taken on the trial of this case were directed by the Court to be heard in the first instance at the General Term..
    The action was brought by Isaac M. Milbank, .Robert W. Milbank, anti Jeremiah Milbank, against Alexander Dennistoun, John Dennistoun, William Wood, William Cross, William O. Mylne and Thomas Sellar, to recover damages from the defendants for selling contrary to plaintiffs’ instruction, and without due care, a cargo of flour which the plaintiffs, being American merchants, had consigned by the ship Nicholas Biddle, to the defendants, their factors, at Liverpool, and which was sold by the defendants on the 4th, 5th and 7th of August, 1846, shortly before a sudden and great rise in the price of flour.
    On a former trial the plaintiffs recovered judgment, which on appeal to the Court of Appeals, was reversed and a new trial ordered, (21 N. Y. B., 386,) that Court holding that the instructions given did not limit the defendant’s discretion at the time the sale was made; and, also, that there was not sufficient .evidence of negligence in the sale to sustain the verdict on that ground.

      The cause came on to be tried on the third day of March* 1862, before Mr. Justice Bosworth and a Jury. The facts proved on the former trial are fully stated in the report in 21 E. Y. R. Substantially the same evidence was given on the present trial as before; and the following additional particulars are all that is necessary to an understanding of the decision of the Court.
    The plaintiffs’ counsel offered evidence of the shipment and sale of a second cargo of flour by the Georgiana, another vessel, and of conversation between the defendants and one of the plaintiffs, after the sale of the Biddle flour, in reference to the expectation of a better sale of the Georgiana flour at a subsequent day, as going to the question of good faith, and rebutting the excuses made by the defendants for selling the Eicholas Biddle flour. This evidence the Chief Justice excluded, saying: “You are entitled to all that bears upon the Biddle flour. There is no complaint as to what was done with the Georgiana flour; what prices it brought, and what he encouraged the parties to hope from it, does not tend to elucidate the question of fraud or good faith in relation to the sale of the Biddle flour.
    “Anything said as to expectations or hopes of profit that might be realized by the sale of the Georgiana flour, I do not think admissible. If there is anything other than a statement of encouraging hopes, or expectations that tend to illustrate the questions made in issue, or either of them, you may draw the attention of the witness to it.” To this ruling the plaintiffs’ counsel excepted.
    In the course of the examination of one of the plaintiffs as a witness on their behalf, the plaintiffs’ counsel proposed to show the number of correspondents of their house in Liverpool, engaged in the flour and provision trade, men familiar with the condition of the market, and familiar with the condition of the potato blight and of the crops; to show who they were; that the witness went to see them on his arrival in Liverpool in August, a week or fortnight after the sale of the flour, and that the subject of the potato blight and the bad weather were things of general notoriety in Liverpool as early as the last of July; and not only so, but likewise in the newspapers. The Court sustained the defendant’s objection to this as being information obtained from third parties, and the plaintiffs excepted.
    On the former trial there was evidence that the flour "was heated or soured, and the Court of Appeals, in their opinion, allude to this circumstance as one reason justifying the defendants in selling without further delay. Upon this trial one of the plaintiffs testified that he examined part of the flour and that it was not sour but sweet and in good order.
    The plaintiffs’ counsel offered in evidence letters from the plaintiffs to the defendants, dated 15th of August and 3d of September, 1846. This was objected to by defendants’ counsel, as not written or received until subsequent to the sale, and was excluded, to which plaintiffs' counsel took an exception.
    The plaintiffs’ counsel also put in evidence a letter of October 31, 1846, from J. & R. Hilbank & Co., to A. Dennistoun & Co., in which they said: “ We have been long looking for ac. sales flour pr. N. Biddle that we might see precisely the condition of the sale, &c., and hope soon to hear from you on that subject. Our R, W. Hilbank, as you are aware, made known to you that he took exceptions to the sale, as reported; and your house here were duly informed that we also excepted to the sale as reported. We trust that, after viewing the case, you have determined to furnish such sale and acs. as will conform to our instructions when shipping. These we hope soon to receive.”
    Other witnesses, shown to be dealers in breadstuffs in the English market, were permitted to testify as to the effect of the corn law, the potato blight, and the weather, in that year, upon the prices of flour; and what the general opinion was as to the probable yield of the harvest during the season in which the sale was made. The substance of the testimony on these points is stated in the opinion of Robeetsok, J.
    One of the plaintiffs being upon the stand as a witness, the plaintiffs’ counsel produced copies of Wilmer & Smith’s European Times, a newspaper published in London on the 20th and 25th of July and the 4th of August, and offered to show that a copy of the paper bearing that name, and of the dates mentioned, came to the possession of such witness; that those so offered were copies of the same papers, and that he was a regular subscriber. This was excluded, and plaintiffs’ counsel excepted.
    One of the defendants being subsequently examined by the plaintiffs’ counsel, testified that the paper in question was taken by their house, but was not regarded by them as an authority upon the prospects of the market, and that he did not read the paper, nor did the members of his house, so far as he knew. The contents of the articles contained in this paper, which the plaintiffs’ counsel relied on, are sufficiently stated in the opinion of Robeetsok, J.
    The question to a witness, Would not any prudent man in Liverpool, holding flour to sell for a consignor, have been led to make inquiry into the state of the weather, and the state of the crops? was objected to, the_Oourt sustained the objection, and the plaintiffs’ counsel excepted.
    At the close of the evidence the counsel for the defendants - moved for a nonsuit or dismissal of the complaint. The Oourt granted the motion, to which the plaintiffs’ counsel excepted. The Oourt thereupon ordered that all the exceptions in. the cause be heard in the first instance at the General Term.

      Edwards Pierrepont, for plaintiff.
    I. It was an error to take the case from the Jury. The main questions involved were exclusively for the Jury.
    II. The Oourt of Appeals sent the case down for a new trial on questions of fact; it was error to refuse to allow those questions to be submitted to the Jury. The questions of negligence and of bad faith were the especial questions upon which the Jury should have passed.
    III. Much new evidence was added bearing upon the negligence and bad faith of the defendants, and we-submit that it is wholly unprecedented to take such a case from the Jury. Even when the evidence is substantially the same on questions of fact, it is customary on a new trial being ordered to submit such questions of fact again to the Jury, and the cases are numerous where, after successive verdicts, on substantially the same evidence, the Court have surrendered their judgment to that of the twelve Jurymen, and refused to disturb that verdict again, however much they might differ iu opinion from the Jury. Such should be the rule, and such has been the rule.
    The Jury are to determine the facts—not the Court. (Fowler v. Etna Ins. Co., 7 Wend, 275; 4 Burr., 2108 ; 1 Str., 692; 3 Taunt., 232; Silva v. Low, 1 Johns. Cas., 337; Exp. Baily, 2 Cow., 483; Astor v. Union Ins. Co., 7 Cow., 203; Feeter v. Whipple, 8 Johns., 369; Gilligan v. N. Y. & H. R., 1 E. D. Smith, 453; Cohen v. Dupont, 1 Sandf., 262.)
    IV. The Court of Appeals sent the case back to be tried by the Jury, and we insist that the refusal to submit the questions of fact to the Jury, with all the new evidence, is erroneous.
    V. When the Court of Appeals ordered this cause back for a new trial, Judge Deítio, who delivered the opinion, said, “the flour was a damaged article,” and laid great stress upon what he supposed to be true, namely—that the potato blight had not occurred, and that the weather, at the time of the sale, promised a good harvest. (See Opinions, 21 N. Y. R., 397.)
    On this trial the aspect of the case was changed upon this point, and it was proved by positive evidence that the flour was perfectly sound and sweet, that the weather was bad, that the po’tato blight had occurred before the sale, and that this had been published in the newspapers of the day, and that the defendant took the very papers containing the publications. All this evidence was entirely new in the case, not a word of it being before the Court of Appeals.
    VI. A factor is bound to obey the instructions of the prinoipal, and the expression of a desire, in such a case, is an instruction. (Marfield, v. Goodhue, 3 Comst., 62; Bell v. Palmer, 6 Cow., 128; Lafarge v. Kneeland, 7 Cow., 456; Coursier v. Ritter, 4 Wash. C. C., 549; Hays v. Stone, 7 Hill, 128.)
    VII. The defendants, being factors of the plaintiffs, disobeyed their instructions.
    VIII. The defendants sold before the results mentioned in the letter of instructions of 27th June had happened. The first result, to wit, the glut of the market, had happened ; but the second result, to wit, a reduction and consequent rise of price, by which the plaintiffs were to be benefited, and which had been clearly pointed out, had not happened.
    This question was expressly submitted to the Jury on the former trials. (Milbank v. Dennistoun, 1 Bosw., 278.)
    IX. The defendants failed to exercise proper care and diligence in the sale of this flour, which was also submitted to the Jury on the former trials.
    The defendants were clearly chargeable either with gross negligence or bad faith:
    1st. When the sales were made, they knew that the flour had been selected from the best mills and shipped with the greatest care directly from the boats; that it was insured at $4 per barrel, and that it cost upwards of a dollar more per barrel to ship it from Hew Orleans and place it in store at Liverpool.
    2d. They knew that the plaintiffs’ limit was 22s. in bond on arrival, before any expenses had been incurred, and they knew that R. W. Milbank was expected to confer with them in person before sales were made.
    3d. They sold it with full knowledge" that there had been no reduction, but that, on the contrary, the amount had been constantly increasing, and that the quantity in market on the days they sold was greater than ever before in any human recollection.
    4th. Every excuse given by the defendants for selling the Biddle flour at the time they did, applies equally to the Georgiana flour; and if they were right in selling the one, they ought to have sold the other. Both of such cargoes of flour arrived at about the same time, and were precisely the same in quality and condition.
    5th. Each and every statement and assertion made by the defendants, in excuse for sacrificing the flour as they did, was untrue in point of fact.
    X. The defendants violated the instructions of the plaintiffs.
    1st. The plaintiffs on the first notice repudiated the sales, and called upon the defendants for an account conforming to their instructions, and called upon the defendants at the time, to give their construction to the plaintiffs’ orders.
    2d. A principal may vary his instructions from time to tipie, and the factor is bound to obey them as so modified, though he may have made advances, unless the principal, after due notice, neglect to reimburse his factor. (Story on Cont., § 359; Marfield v. Goodhue, 3 Comst., 62; Evans v. Root, 3 Seld., 186; Bell v. Palmer, 6 Cow., 128.)
    XI. The case was fairly submitted to a Jury on the former trial, and they found upon the several questions submitted.
    XII. As to the exceptions taken at the trial the Judge erred in the admission and exclusion of evidence.

      L. B. Woodruff, for defendants.
    I. The plaintiffs were not entitled to recover upon the ground that the defendants had sold contrary to the orders alleged and set forth in the declaration.
    Ho violation of orders was proved. The appellants, as / factors for sale, had the right, and it was their duty to sell the flour, upon its arrival in Liverpool. Instructions, in order to modify or suspend this right, should be special and definite; otherwise the factor is bound to execute his commission, Iona fide, and to the best of his judgment. If the orders be ambiguous or doubtful, and the agents have acted in good faith, they are not liable to their principals, although their interpretation of the orders was different from what the latter intended. The former are entitled to the benefit of any doubt which arises as to their meaning. (Le Roy v. Beard, 8 How. U. S. R., 451, 466, 468; Very v. Levy, 13 How. U. S. R., 345, 358, 359; Moore v. Mourgue, Cowp., 479; Story on Ag., §§ 74, 161, 199, notes; Russell on Factors, 19; 2 Pars. Cont., 80.)
    And upon the evidence' given by the plaintiffs, it was the duty of the Court to declare the law applicable to the case. (Rhett v. Poe, 2 How. U. S. R., 457; Burckle v. Eckart, 3 Denio, 279.)
    H. Even if the declaration counts upon a cause of action founded on fraud, or on negligence and want of care, the evidence was insufficient to- entitle the plaintiffs to maintain the action.
    I. There was no evidence of fraud on the part of the defendants. On the contrary, the case showed the most perfect good faith.
    2. There was no evidence that the defendants had been guilty of negligence, or had failed to exercise proper care and diligence. The reverse was proved by strong and conclusive evidence, given by the plaintiffs. (Chapman v. Walton, 10 Bing., 57, 63, per Ch. J. Tindal, (as to what is due diligence;) 1 Pars, on Cont., 79.)
    3. There was no question upon the evidence which ought properly to have been left to the Jury. (Rhett v. Poe, 2 How. U. S. R., 457; Gaither v. Myrick, 9 Md. R., 118.)
    III. The only evidence given by the plaintiffs on the last trial by which they sought to vary the case from the proofs as passed upon-in the Oourt of Appeals in no wise altered the plaintiffs’ ease, or warranted the submission of the questions in issue to the Jury.
    IV. None of the plaintiffs’ exceptions to the rulings of the Chief Justice on the trial, in the admission or rejection of evidence, are well taken
   By the Court—Monell, J.

The only question in this case not disposed of by the Court of Appeals, (21 K. Y. B., 386,) is whether the sale of the flour was made by the defendants in good faith, after the exercise of that prudence and skill which agents to whom the property of others is intrusted are always obliged to employ. Whether the defendants violated the written instructions of the plaintiffs is res adjudicata.

Upon the facts presented to the Court of Appeals, that Court held, that the evidence did not establish bad faith or want of skill or prudence on the part of the defendants ; on the contrary, “ that there was not the slightest reason on the evidence to impute blame to the defendants, and that there was nothing for the Jury to deliberate upon.”

Unless upon the last trial, the plaintiffs have varied the facts, and shown by additional evidence that blame was imputable to the defendants, the Justice committed no error in dismissing the complaint.

The new and additional facts relied on by the plaintiffs, as furnishing evidence of bad faith or want of prudence on the part of the defendants, are: that the flour when shipped at Kew Orleans was sweet and in good condition; that from ten to twenty barrels of it were examined about the 1st of September, by one of the plaintiffs, in Liverpool, and found to be sound, sweet and in good condition; that a newspaper, called “ Wilmer & Smith’s European Times,” published in London, was taken by the defendants’ firm, and that an article appeared therein, under date of July 25, 1846, which spoke of the appearance of the potato disease in Ireland, and of rumors of its appearance in England and on the continent.

Mr. Wood, one of the defendants, testified in respect to the newspaper, that it was not considered authority, and was not read by him. There was no evidence that it was ever seen or read by any other member of the firm.

If it was material, as bearing upon the question of good or bad faith on the part of the defendants, whether the flour was sweet or sour, or heated, or was “ a damaged article,” there*was probably sufficient conflict of evidence on that subject to have made it proper to have submitted it to the Jury. But in the view taken by the Court of Appeals, and the view which I take of the effect to be given to the new evidence furnished by the plaintiffs, it does not become a material inquiry whether the. flour, on its arrival at Liverpool, or at the time of the sale, was or was not damaged. The object of the evidence of the condition of the flour, was doubtless to avoid or overcome the remark of the learned Judge who delivered the opinion of the Court of Appeals, that “ the plaintiffs’ flour was a damaged article, and liable to further depreciation if kept on hand,” and the plaintiffs’ counsel insisted that in so far, the case was now varied, and that the question, whether the flour was or was not a damaged article, should have been submitted to the Jury.

But it must be observed that the remark quoted was one, only, of several reasons furnished by the learned Judge, in support of his view that there was no evidence to impute blame to the defendants. He says it was proved that all the large holders of flour were freely selling at the price that then prevailed; that the defendants themselves, sold on the 6th of August, three thousand barrels of their own flour, for a less price than that which they obtained for the plaintiffs; that all the indications were in favor of an abundant domestic harvest; that no immediate improvement in prices was looked for among the dealers in bread-stuffs in that market; that the prices obtained were the market prices prevailing at the time of the sales, and for sometime afterwards, and that the subsequent extraordinary rise was owing to causes wholly exceptional in their character, which were not so far developed when the sales took place as at all to influence the market, and could not have been anticipated with any degree of sagacity.

If it was necessary to take all these reasons in the concrete, and to hold that if any one of them was unsustained by the evidence they all must fail, there would be some pertinence and materiality in the testimony directed to that subject. But I apprehend that the fabric will stand, although one of its supports is taken away.

Assuming that it was proved that the flour was not a damaged article, then that reason of the learned Judge would be gone, but all the others would remain unaffected by any of the new evidence in the case. There was no violation of the written instructions to the defendants, and the burden of proving that the sales were not made in good faith, was upon the plaintiffs. The obligation of the defendants to exercise skill and prudence was the same, whatever was the condition of the flour; and although, if damaged and depreciating in value, the sale might thereby have been hastened, yet proof that the flour was not damaged would not outweigh and overcome all the other and most satisfactory reasons for making the sales at the time they were made. If the plaintiffs were bound to hold the flour, if sound and sweet, then it might be material to inquire how that fact was. But no such obligation rested upon the defendants. They had a right to sell, whether damaged or otherwise, and so long as they can furnish satisfactory reasons for selling, it is quite immaterial what was the condition of the flour at the time.

There was no evidence that “ Wilmer & Smith’s European Times ” was ever read hy any of the defendants. The only one of them examined testified that he never read it, and that, it was not considered authority as to the state of the market. If the article from this newspaper, given in evidence, was calculated to have put the defendants upon inquiry, had they seen it, of to induce the belief that the market was likely to undergo a change, and prices advance, the plaintiffs, nevertheless, cannot have the benefit of such an effect, as indicating a want of good faith by the defendants, without showing that the article, for which such an effect is claimed, came under their observation. The mere circumstance that they were subscribers for and took the papers, is not sufficient to sustain a charge of bad faith. Besides, there was nothing in the article- either to excite the alarm or to change the purpose of any prudent man. It was a communication written at Liverpool for-the paper, and was published at London, on the 4th of August, the day the first sales were made by the defendants. It communicated the fact of the appearance of the potato disease in Ireland, and rumors of its appearance also in England and on the Continent; but in another column of the same paper, the editor speaks satisfactorily of the new wheat crop, and says “ in the meantime large quantities of wheat and flour continue to arrive from the United States and Canada which keep down prices, and render the trade inactive.”

Upon the whole, I have been unable to discover any material variation of the facts proved on the last trial from those which were before the Court of Appeals, and hence there was no error in dismissing the complaint.

Hone'of the exceptions to the rejection or admission of evidence were, well taken. The flour by the Georgiana was not in dispute, and the evidence relating to it or of conversations connected with it were properly excluded. The plaintiffs were seeking to recover for a loss on the flour by the Biddle only, and what was said or done with respect to the Georgiana flour was wholly immaterial. The price of flour in Hew Orleans was unimportant. Its only effect would be as tending to show that the flour was sound and sweet, which, as I have already shown, was of no consequence upon the question at issue.

The letter of the plaintiffs to the defendants of the 15th August, 1846, -was written after the sale, and could have no bearing upon the question of good or bad faith of the defendants, and was properly excluded, as was also the offer to prove by the witness, Robert W. Milbank, that in September, 1846, he learned in Livérpool, that in duly previous the subject of the potato blight was the subject of general conversation among the merchants of Liverpool. It was, at most, mere hearsay evidence, and inadmissible.

The proof offered by the defendants and admitted by the Justice, of the opinions of witnesses as to the effect of the corn law, and of the probable yield of the new wheat crop iipon the price of flour, was proper. The defendants had a right to show any reasons which would tend to justify the sale of the flour, and the opinions of persons competent to judge was calculated to have a marked influence on the minds of those who might be affected by changes in the market. These opinions were drawn out from the witnesses themselves, and the inquiry, therefore, was different from that sought to have been proved by the hearsay testimony of the witness, Robert W. Milbank.

As no error was committed at the trial, the exceptions must be overruled, and the defendants must have judgment, dismissing the plaintiffs’ complaint, with costs.

Robertson, J.

The Court left two questions to the Jury, in this case, on the former trial of it, (1 Bosw., 270,) one was the disobedience by the defendants of the plaintiffs’ instructions in regard to the sale of the flour in controversy ; and the other, the degree of care and diligence exercised on such sale; and the Jury found on both against the defendants. The Court of Appeals, on an appeal from the judgment of this Court, at General Term, held that the facts being undoubted and there being no-conflict of evidence, both such questions were questions of law, and pronounced the defendants, on the evidence, blameless as to both. (21 N. Y. R., 397.) In regard to the first question, that of disobedience of instructions, the testimony was the same on this as on the former trial, and this Court is bound to pronounce upon it as matter of law, that the defendants are equally innocent. The only question before us is whether additional evidence introduced on the trial, having reference to the remaining question of care, diligence or good faith, tends to establish facts calculated so to derange the circumstances from which the Court of Appeals drew its legal conclusions of proper care, diligence and good faith on the former trial, and to add such others, as to leave the whole a proper question for the Jury. Those circumstances, then, were cotemporaneous sales by large holders of flour, including sales by the defendants of their own; indications of an abundant harvest; the opinion among dealers of there being no prospect of an immediate rise; the fairness of the prices obtained; the absence of any such development, at the time of the sale, of the exceptional causes which produced the subsequent rise, as to influence the market, as well as the impossibility of anticipating them by any sagacity. To these was added a danger of depreciation of the flour from its damaged state. ' .

The additional evidence offered consisted of the testimony of two of the plaintiffs, (Eobert and Jeremiah Milbank,) one of the defendants, (William Wood,) the contents of certain circulars of the defendants, and two newspaper paragraphs, contained in a newspaper taken by them. That testimony, it is claimed, showed that the flour was sound, and not damaged; that the weather was so bad as to affect, injuriously, the coming grain crop, and that the potato disease had been known by the defendants to have advanced so far in its career as to be likely to affect the price of flour, of which they were warned by announcements in the newspapers in question.

Ho evidence was adduced on the trial to establish the actual occurrence of weather unfavorable to grain crops likely to produce such injury to the harvests, at the time of the sale by the defendants, as to have induced a man of ordinary forethought to expect such a dearth as to raise the price of flour, or induce dealers in it to expect such rise, although it is well known that very slight elevating or depressing causes are sufficient to affect the price of an article of such certain and universal consumption as bread-stuffs. The plaintiffs never made a failure by the defendants to appreciate the effect of the particular causes, which, subsequent to the sale in question, produced such rise in the price of flour, a subject of complaint until the trial in this action, as will appear by an examination of their conduct, dealings and correspondence with the defendants. They never appear to have stated anything, until this action was brought, but disobedience of such instructions a ground of dissatisfaction.

Kothing in the correspondence of the defendants as introduced by the plaintiffs in evidence, shows any knowledge by the former of weather unfavorable to crops, until their letter of the 18th of August, 1856, after the sale in question, when they state that, “on the 11th or 12th instant a great change for the worse took place in the weather, and the potato crop was completely blighted.” This plainly referred only to the unfavorableness of the weather to the potato crop; but in the circular accompanying such letter they say that, as it has been “wet and unfavorable for securing the wheat crop, we must quote higher prices,” and again, “ the bulk of the new wheat will be of poor quality, and indifferent, if not in bad condition, owing to the wet weather which has been prevailing for the last fortnight.” This, however, would carry the beginning of such wet weather back as far as the 4th of August, when the first sale in question of flour was made by the defendants. In an answer by the plaintiffs subsequently, on the 31st of October, to a letter of the defendants of the 3d of the same month, in which the latter claimed that, when they made the sales in question, “the prospect of a good harvest was before” them, the former not only fail to controvert such statement, but with full information as to the state of the weather, the crop, and the potato blight in August previous, wholly omit to charge any neglect or fraud against the defendants in not perceiving their effect and acting accordingly. They only call for an account therein, not according to subsequent prices, as produced by such bad weather, scanty crops and blight, but according to instructions. This tends strongly to show the charge of misfeasance from such supposed oversight or disregard of the probable effect of such causes to have been an afterthought.

In the letters of the defendants of the 18th of July and 3d of August, they speak of the weather as being favorable to grain crops, and of the harvests as already commenced, or to begin in a week or two, and of the prospects of the effect of such forward state of the crops on the. price. A phrase in the letter of the 3d of August that the “market has been at a stand for some days; but, as the last two or three days have been unsettled, there may be possibly some activity to-morrow,” is shown to refer to the state of the market only, and not the weather, by a statement in the circular accompanying it, “that the weather has been remarkably favorable for the grain crops for the last fortnight.”

The information contained in the copies of “Wilmer & Smith’s European Times,” of the state of the weather on the 25th of July and 3d of August, 1846,' produced on the trial, consists of notifying their readers, at the former date, that “the atmosphere had not been unfavorable to the ripening of the crops, which, in that neighborhood, looked well and promised to be abundant,” notwithstanding numerous showers of rain and cool weather; and at the latter date, that although “the weather had been variable,” and “the crops in several parts of the country had been beaten down and injured by’’showers, “no general result could be arrived at, and that arrivals from abroad kept down prices.” Hone of such information would be likely to induce a prudent dealer to await the result of such a harvest in order to obtain better prices.

But there was no evidence of not only the occurrence of any such bad weather in England, before the sales in controversy, as to warrant an expectation in Liverpool of vital injury to the crops in question, but even of any apprehension thereof sufficient to affect the grain market. The existence of fine weather, until about the time of the sale, is testified to by two witnesses, (Harnett and King,) and a favorable prospect of the crops at the same time by one of them, (Harnett,) and one other, (Goodwin,) and there is no conflicting evidence. Hor was there even evidence that any failure or deterioration of crops contributed to produce the rise in the price of the flour, which took place a week after such sale, unless the expression of Mr. Goodwin, as to the defective produce of food in England, is to include grain crops. Every other witness attributed the rise, in his opinion, to the universal devastation produced by the potato disease; and that was admitted by such first witness to be one of the causes. Indeed, there is no evidence before us that there ever was any such apprehension or belief in Liverpool, or elsewhere, at any time, of such a wide-spread destruction of' grain crops as to affect the price of flour in that city. So far as the question of diligence or prudence in the sale was concerned, there was, therefore, clearly no such evidence in the case as to allow, the effect of the bad weather and the failure of crops upon the flour market in Liverpool to go to the Jury upon the points of the failure of the defendants in their duty.

It is, however, also claimed, that on the same point of the prudence of the sale, the case should have gone to the Jury upon the evidence of the existence of a disease in potatoes, and knowledge of it by the defendants at the time of the sale in controversy. The first evidence of any mention of it in this case, is contained in the circular accompanying the letter of the defendants of the 3d of August, 1846, one day before their first sale of any of the flour in question. In it they allude only to the accounts of it from Ireland, which they declare to be alarming, without specifying as to what, but only speak of its commercial effects as having increased the demand for Indian corn. It is very evident they did not infer anything thereby as to its effect upon the. price of wheat flour. And it is very evident that according to the natural course of events, in case of any scarcity arising in the cheapest article of food, its consumers are driven to buy that next above it in price, and so on until those of the most expensive kind are affected. Until the proportion of the supply of Indian corn, or any breadstuff of similar low price, to any demand for it, .increased by the addition of the previous consumers of potatoes, or the diminution of such supply, so enhances the price of it as to induce previous consumers of it to purchase a more valuable article of bread-stuffs, wheat flour would not necessarily feel the effects of a diminution of the potato crop, particularly if only in one country. Even then increased shipments in anticipation of a rise might keep the price the same as stated in the European Times of the 4th of August, already referred to.

The next mention of the potato rot in evidence, is contained in the issue of the European limes on the 25th of July, which is of course not evidence of the facts stated in it. That also alludes to it in Ireland only, giving an extract from a Oork paper which describes its ravages in the county of that name, although it cautiously adds: “ there are complaints of its appearance in England and on the Continent.” By such statement the defendants were surely not bound to know that the extent of the disease in Ireland, England, and on the Continent, was such that it would necessarily affect the price of all kinds of grain successively, until it reached wheat flour, which was certain to rise in price; if they were, they were guilty of imprudence in the sale. To establish that, however, it was necessary to establish three propositions equally important to make out a want of common prudence by the defendants, namely: First, Such destruction of the potato crop, generally, as to compel its consumers to look to Indian com or other cheap grain for a substitute; Second. An insufficient supply of such cereal to meet the wants both of its ordinary consumers and those so driven to its consumption by the scarcity of potatoes, and consequently an inducement held out to some of them to procure as expensive a breadstuff as wheat flour instead; and, lastly, such an insufficient supply of wheat flour to meet the wants of such additional consumers as to raise its price. Hone of these things were shown to have existed at the time of the sale, and the defendants are not chargeable, therefore, with imprudence for not having taken the information given by the Times of the 25th of July, into account. In regard, to the reliability of such information, one of the defendahts, who was a witness for the plaintiff, testified that the paper which contained it was not reliable as to the state of the market, but only for advertisements, and in that point he was not contradicted.

The defendants are not proved to have had any more knowledge -of the extent of the potato disease than was displayed in theip letters. That was not more definite than was already known to the public; and yet all the evidence clearly establishes that it had no effect on the price of flour until the middle of August. The lower priced cereals, such as Indian corn, would, as I have stated, be naturally first and most effected, as is shown by the letters of the defendants of the 3d, and circulars of the 18th of August, 3d and 11th of September, and 3d of October, put in evidence by the plaintiffs. One witness (Goodwin) testified that it appeared at various times, in different districts, and that it occurred late in the autumn of 1846 ; the first rumor of it in Liverpool was at the end of August. Another witness (Harnett) says it began to produce an influence from the 16th to the 20th of August. A third (King) says' that it was known in Liverpool in the middle of August. All concur in fixing the sudden rise in the price of flour at about that time, and attribute it to the disease of the potato. The defendants admit and state that as early as the 11th or 12th of August a great change had taken place in the price of flour, which they also attributed to the same cause. The progress of such events as described seems to be natural. The glut in the flour market first kept prices down, every holder probably struggling to free himself from his load, until the news of the potato disease began to have a slight effect on Indian corn ; the disease, however, remained undeveloped until the bad weather fully disclosed and increased it, when it became widely known. Indian corn rose from thirty shillings a quarter on the 3d of August,, to thirty-three on the 18th.; then sprang to thirty-seven on the 3d of September, and finally culminated in forty-four shillings on the 11th. On the 11th of August, wheat flour first felt the effects of the destruction of the potato, suddenly, other causes perhaps uniting therewith, particularly as previous sales had lightened the market, while the latest holders reaped the benefit of a shorter supply, with a diminished crop of both grain and potatoes.

The additional evidence does not, therefore, vary the view taken of that adduced on the former {¡rial by the Court of Appeals, that the rise in the price of flour subsequent to the sales by the defendant, resulted from exceptional causes, which were not so far developed at the time of the sale as to influence the market, and could not have been anticipated by any degree of sagacity. Of course it will not be contended that knowledge of the appearance of the disease in Ireland alone, or of its devastating effects in one country, and of mere1 rumors of its appearance in England or on the Continent, without any information to its extent, should induce the defendants, as prudent men, to withhold the sale of two cargoes of flour consigned to them in an overstocked and falling market, until the extent of the disease ‘ and its effect on such market should be determined.

After the rise became known, even with the suggestion to the plaintiffs, by the defendants, in their letters, of the potato disease as the cause of the rise, the former still adhered to disobedience to instructions as the sole ground of complaint, and did not impugn the defendants' diligence or prudence by not withholding the sale until the effect of the potato disease was knoAvn, although one of the plaintiffs visited Liverpool and probably investigated the subject; and so little did they dream of fraud that they left a second cargo in the hands of the parties whom they now charge with having sacrificed the first.

The evidence in this case of the quality of the flour, its cost, good stowage, rapidity of transportation and smallness of its product, is immaterial on the question of prudence or negligence in its sale. So also is the amount of expenses incurred, and. the right to have such flour stored for an additional month without any additional expense. Such considerations might weigh with the owner, but would be no justification for delay to sell by a factor. Such charges, if improper, might be resisted. More than one-half of them was for freight, two-sevenths for duties, and four per cent for a commission. They would have been the same on any sale. The flour actually brought within a shilling sterling per barrel ot the very first limits set by the plaintiff’s, and which they subsequently removed.

In reference to the condition of the flour at the time it was sold, one of the plaintiffs (B. Milbank) who, after merely looking at several hundred barrels, only examined from ten to twenty, and tasted and smelled some only of the flour, testified that it was sweet, not sour. The broker who sold the flour, and carefully inspected and examined all of it, declared it to be sour and heated, not fit for baking, and if kept in the condition in which it was when he saw it, likely to deteriorate. The only conflict of testimony seems to be as to the sweetness or sourness of the flour actually tasted by the plaintiff or examined by him; there is none as to the rest being heated, or liable to deteriorate. The Court of Appeals speak of it as being damaged or liable to depreciate; it is immaterial, therefore, whether it was sour or only heated. The evidence does not show these two defects to be the same, and the conflict is not on the point of the liability of the flour to grow more unmarketable, but merely as to the defect which would make it so. The flour was proved to have been sold, in the usual way, in open market, by a broker, who testifies, that “the prices obtained for it were as “ much as it was really ivorth according to the prices of “the day,” on which point he is not contradicted. The presumption of a fair sale is therefore in favor of the defendants. Until that is displaced by circumstances of suspicion, no other evidence of due diligence is necessary. The necessity of a hurried sale, as well as the sale by the defendants of their own flour, on which stress has been laid, are merely rebutting circumstances, and are not rendered indispensable to establish prudence and attention, éven by the occurrence of a subsequent rise of price, unless there was proof also that such increase ought to have been expected by every dealer who paid any attention to occurrences affecting the value of the commodity in which he dealt.

But I do not construe the decision of the Court of Appeals as conceding, or assuming, that when a factor’s discretion in selling goods intrusted to him is unlimited, the mere oversight by him of, or his neglect to give proper weight to, circumstances known to him as having occurred, or which there was reason to believe might occur, sufficient to induce an intelligent and prudent man to delay selling until such circumstances had developed their effect, would alone be evidence of either imprudence or want of diligence. Occurrences happen daily which, ultimately, have an effect upon prices, and which might reasonably be supposed, when known, to be capable of producing such effect, yet, in regard to their probable effect before it is actually produced, great difference of opinion is entertained by equally prudent men. A factor would never dare sell, if a Jury, or even a Court, might subsequently pronounce that he ought to have formed a different judgment as to the future effect of certain occurrences known to him at the time of the sale. Something beyond bad judgment—something not, perhaps, a matter of judgment at all—is necessary to establish fraud or neglect. Undoubtedly, if all the dealers in a commodity abstained from selling in consequence of a universal belief that a certain event had occurred, or would occur, and, in the latter case, a belief upon sufficient grounds, and that it would affect the price of it favorably, it would certainly be the act of a prudent man to wait for its results before selling, and he would be justified in so doing. But it is difficult to perceive that there .could be in contemplation of law any such invincible connection between any event and a future increase of the price of a commodity as to warrant considering a disregard of ifc as an act of imprudence. At all events, it could only impose on a factor the burden of proving his good faith and diligence by the general opinion of dealers. Events have often happened which, when generally known, or while there exist the strongest grounds for a general belief that they would occur, are not believed by any dealer in a particular commodity, or even any of the community, to be likely to affect its price, and which do not immediately have that effect, yet which ultimately produce it. After they have done so every man easily concludes that they naturally would do so, because then they are able to trace the natural and undisturbed course of events. A factor, however, who, in such case, had sold or neglected to sell could surely not be deemed imprudent or negligent. Even the most prudent man will sometimes omit to discover or take into his calculations very disturbing causes in regard to prices. It would, therefore, be clearly unjust to factors for Courts to hold, or allow a Jury to decide, that a connection between any occurrence, or expectation of an occurrence, and a rise in the price of a commodity is so inevitable and universally perceptible by every rational and prudent man as to render any action by him counter to that supposition imprudent or negligent. A sale- made pursuant to the views of all the dealers in an article must certainly be held to be prudent, however imprudent, in the opinion of others, such sale may be, and however contrary to an apparently well founded expectation of a future rise in price. Perhaps extreme cases may be imagined of such great want of judgment as to? leave no room for doubt as to some misconduct having-been committed.

In this case the Court of Appeals, however, held that the sales by the defendant being for the prevailing prices, at which all large holders were selling, including the defendants themselves, with every indication in favor of an abundant harvest, and no immediate improvement,in prices looked for among dealers, (particularly as the flour was likely to deteriorate,) was conclusive evidence of good faith, diligence and prudence in the sale, notwithstanding the occurrence of unusual events, the effect of which on prices was not so far developed at the time of sale as to have influenced the market, and could not have been anticipated by human forethought. The tendency of a commodity to deteriorate would alone justify a sale, notwithstanding the probable future effect on the market for such commodity if it were sound, of the raising of the price subsequently by some other cause. But the state of thing's in this case, whatever was the condition of the flour, was equally conclusive as to the prudence of the sale, and should be held to be so, if the principle of the decision of the Court of Appeals, is to be adhered to.

Being satisfied; therefore, that there was no new evidence in this case bearing on the question of due diligence# and prudence in the sale which at all altered the aspect of the case from that which it bore on the former trial; that there was evidence neither of such bad weather before the sale as to have required the defendants to infer the failure of crops; nor of such knowledge by them of such failure, or of the probable destruction of the potato crop, as to have required them to foresee that prices in the flour market would rise, and to act accordingly; and that the condition of the flour was immaterial on the question of the liability of the defendants; and that they are not proved otherwise to have acted imprudently or negligently; I think the judgment at Special Term should be sustained..

In regard to all other matters but those before treated •of, the evidence has not varied since the former trial, and the decision of the Court of Appeals must, therefore, govern.

Evidence was given on the trial, of the times and prices of the sale of other flour by another vessel (the Georgiana,) for the plaintiffs by the defendants, after that in controversy was sold by them. One of the plaintiffs. (E. Mil-bank) testified that shortly after his arrival in Liverpool, in September, 1846, one of the defendants, (Sellars,) in a conversation with him, regretted the sale, stating it was unfortunate, and hoped the holding of the Georgiana lot and its sale, would bring up the average. The witness then undertook to state something in regard to the last mentioned flour, which he was prevented from stating by the Court, if it only related to expectations or hopes, and not to any reason or explanation of the sale at the time it was made. The plaintiffs’ counsel then offered to prove by the witness that the defendant said that the flour not sold would so bring up the average; that he hoped the witness would assent to the sale of the flour in question which had been so unfortunately made; which was excluded under an exception. Subsequent questions of the same purport were also excluded under a like exception. I do not think there was anything in the evidence offered, bearing on the propriety of the sale in controversy, and it was therefore properly excluded. Proof of the original cost of the flour was immaterial, and properly excluded; notice was given of its value in a letter by the plaintiffs, dated June 30, 1846. Proof that the plaintiffs took the European Times, was immaterial; so also was a question put as to whether a prudent consignee of flour for sale would be led to inquire into the state of weather and crops. That was either a question of law as to his duty, or a conjecture of the witness as to the probable course of a prudent man, neither of which are relevant as' evidence, and the question was properly excluded. Proof of the holding of other consignments by other persons for a better market was not relevant evidence in regard to the propriety of the sale in controversy, and was properly excluded.

Proof on the part of the defendants, that the rise in price of flour, after the sale in question, was not the result of the new corn law, was pertinent on the question of violating instructions. Evidence of the goodness of the prospect of the incoming crop at the time of the sale ; of the time of the knowledge in Liverpool of the potato disease ; of the conformity of the defendants’ conduct to the general opinion and course of dealing in that market; of the full market price obtained; of the anxiety of all holders to sell; were all relevant on the question of prudence and diligence in the sale. Testimony to that effect was therefore properly admitted, and the exceptions to it properly overruled.

The motion for a new trial on the exceptions must be denied, and the defendants allowed to ónter up their judgment, with costs.


source: Caselaw Access Project

license: Public Domain

text:
    David G. Scott, Plaintiff and Respondent, v. C. B. Guthrie et al., Defendants and Appellants.
    1. An assignment for the benefit of creditors is not necessarily fraudulent and void because of an omission to annex or acknowledge a schedule enumerating preferred creditors, to which the assignment refers for the names of such creditors and the amount due them, respectively. The assignment may be valid, and the trust capable of execution, in part. (Per Monell, J.)
    2. "Under the act of 1860—requiring assignments for the benefit of creditors to be acknowledged and schedules to be annexed—it is not essential that the schedule be separately acknowledged. If it be securely attached to the assignment, and referred to as a part of it, an acknowledgment indorsed on the assignment, and before the schedule, is sufficient.
    3. It does not follow, that because the omission to do any or all of the acts * required by the Law of 1860 may render an assignment inoperative and void, that it is thereby rendered fraudulent also.
    4. Under that statute an assignment may be made by persons doing business and having their property in this State, although they are not residents of it.
    5. The provision of the statute, which requires assignments to be recorded in the county in which the assignors reside, is satisfied in such a case by recording the assignment in the county in which the assigned property is situated.
    6. A partnership creditor cannot avoid an assignment for benefit of creditors, made by the firm indebted to him, on the ground that it contains a provision calculated to defraud individual creditors of members of the firm.
    7. An assignment of partnership property for the benefit of creditors which, after providing for partnership creditors, contains a provision which assumes to appropriate the residue of the assets to the use of one of the grantors, by paying indiscriminately therefrom the individual debts of both jointly, in contravention of the statute restricting trusts for such use, (2 R. S., 137, § 1,) is not therefore wholly void. The statute annuls only such provision. (Per Robertson, J.)

      8. An assignment containing a provision calculated to hinder, delay or defraud some of the assignor’s creditors, contrary to the statute of frauds, (2 R. S., 135, § 3,) is void only as to the creditors who are thus prejudiced. Their right to avoid the assignment, as regards themselves, does not necessarily make it an instrument of hindrance to, or fraud upon, the other creditors, so as to enable them to avoid it. (Per Robertson, J.)
    (Before Robertson and Monell, J. J.)
    Heard, March 16, 1863;
    decided, March 28, 1863.
    This was an appeal from a judgment recovered by the plaintiff in a creditor’s suit against the defendants, O. B. Guthrie, Elwood Byerly and Allston Allen.
    The plaintiff was a judgment creditor of the defendants Byerly and Allen. His judgment was recorded against them as copartners and joint debtors, in December, 1861, for $1,467.76, and an execution was issued and returned unsatisfied. The plaintiff now brought this action to set aside an assignment they had made and to have the assets applied to the payment of his judgment.
    On the 24th of October, 1860, Byerly and Allen, being then copartners, made a general assignment of all their property to the defendant Guthrie. The assignment, after directing the payment of certain preferred debts named in a schedule annexed, and then of all other partnership debts of the assignors, in full, if the assets were sufficient for that purpose, and if not then to pay the same pro rata, further provided as follows:
    “ Fourthly. By and with the residue and remainder of said net proceeds and avails, if any there shall be, the party of the second part shall pay and discharge all the private and individual debts of the parties .of the first part, or either of them, whether due or to grow due, provided such remainder shall be sufficient for the purpose, and if insufficient, then the same shall be applied pro rata, share and share alike, to the payment of said debts, according to their respective amounts; and,

      Lastly. If there should be any surplus remaining after the payments and disbursements above provided for, the same shall be returned to the parties of the first part, their executors, administrators or assigns.”

      The act of 1860, in reference to assignments for benefit of creditors, which was relied upon by the plaintiff, provides, among other things, that every such assignment “ shall be duly acknowledged before an officer authorized to take the acknowledgment of deeds, and the certificate of such acknowledgment shall be duly indorsed upon such conveyance or assignment before the delivery thereof to the assignee or assignees therein named.” (% 1.) It also requires the assignors, at or within twenty days after the date of the assignment, to make and deliver to the County Judge an inventory, containing, among other things, a list of the creditors, the sums due, &c., and the assets and incumbrances. {% 2.) And it also provides that “ every conveyance or assignment made by any debtor or debtors under the provisions of this act, shall be recorded in the Clerk’s office of the county in which such debtor or debtors resided at the date thereof. (§ 6.)
    The assignment in this case was acknowledged by the assignors before a Commissioner of Deeds, and the Commissioner’s certificate was indorsed upon the assignment.
    The schedule which was referred to in the assignment enumerating the preferred debts, was on a separate sheet of paper, but securely attached to the assignment at the time of its execution, and had the signature of the assignors and w,as of even date with the assignment. Within twenty days after the making of the assignment the debtors made and filed their inventory. Some objections were taken to the sufficiency of the inventory, which, however, are not noticed in detail in the opinion of the Court.
    Byerly and Allen, at the time of the assignment, were residents of the State of Hew Jersey, but transacted their business and kept them place of business in the City of Hew York.
    The assignment was recorded with the Clerk of the City and County of Hew York.
    The assignors each owed, at the time of the assignment, individual debts to different persons, the aggregate amounts of which due by them respectively, were unequal.

      The case .was tried, on the 20th of May, 1862, before Mr. Justice Bobebtsox, without a Jury, who having found that the assignment was fraudulent and void, and was made to hinder, delay and defraud the plaintiff, adjudged that the defendant, Guthrie, pay, out of the assigned property, the plaintiff’s judgment, with interest and costs.
    The defendants excepted, and appealed to the General Term from both the interlocutory and the final judgments. %

      John N. Whiting, for defendants, appellants.
    I. There is no proof that the copartners were individually insolvent, nor is there any fact proven tending to show that they are unable to pay their individual debts in full.
    H. The plaintiff is in no position to avail himself of the alleged defect in the assignment.
    He is not a creditor of either of the assignors as individuals. He is a copartnership creditor. (Curtis v. Leavitt, 15 N. Y. R., 9, 123; Morrison v. Atwell, 9 Bosw., 503; Cox v. Platt, 19 How. Pr., 121; Smith v. Howard, 20 Id., 121. The cases of Leitch v. Hollister, 4 N. Y. R., 211, and Wilson v. Robertson, 21 N. Y. R., 587, have no application to this case.)
    III. The fact that the assignees were temporarily nonresidents of the State of Hew York, while their daily occupation and all their interests were within this State, and subject to its jurisdiction and laws, forms no ground for invalidating the assignment.
    IV. The fact that the certificate of acknowledgment preceded the schedule of preferred debts, ought not to invalidate the instrument.
    A certificate of acknowledgment may be properly “annexed” to a deed, and a strict indorsement is not necessary. (Thurman v. Cameron, 24 Wend., 87. See also Clark v. Mix, 15 Conn. R., 152; Keyes v. Brush, 2 Paige, 311; Kellogg v. Slauson, 15 Barb., 56.)

      C. H. Hunt, for plaintiff, respondent.
    I. The assignors, besides their partnership debts, owed, severally, individual debts of unequal amounts. Yet the assignment devotes the property to a pro rata distribution among the creditors of both. This is a plain fraud upon the creditors of one or the other, and is void by two separate statutes.
    1. It was made with the intent to hinder, delay and defraud the creditors of either one or the other of the assignors. If, after paying partnership debts, there should be left $1,000 for each partner, and if one of them owed individual debts amounting to $1,000, while the other owed $10,000, the fund of one which should pay his creditors in full would be distributed pro rata among them and the creditors of the other. The intent to do this renders the assignment void under 2 B. S., 137, § 1. (Gartside v. Walton, Evg. Post of Dec. 6th, 1861; Smith v. Howard, 20 How. Pr., 121.)
    2. Such an assignment is necessarily “made in trust for the use of the person making the same,” and is, therefore, void under 2 B. S., 135, § 1, as against any creditor whatever. (Wilson v. Robertson, 21 N. Y. R., 587.)
    It is obvious that the creditors of either Byerly or Allen are provided for out of any share of the property belonging to the other. While one owes a large and the other a small amount, the property of each is devoted to the indiscriminate satisfaction of the separate debts of both. This kind of equality is not equity. The trust is to discharge one by an application of the property of the other; as both make the assignment, it is “ made for the use of the person making the same.” (Smith v. Howard, 20 How. Pr., 121; Leitch v. Hollister, 4 Comst., 211.)
    II. The assignment is void, because not executed in the way provided for all such instruments by the act of April 15, 1860.
    1. It was not duly acknowledged ; an essential and substantial part of it—the names of the preferred creditors being on a separate paper not marked or identified by the commissioner, or even by the subscribing witnesses, and all evidence of the fact, whether or not it was attached, when the acknowledgment was made, being left to presumption or parol testimony.
    The provision requiring acknowledgment is a matter of substance and a leading feature of the act. It is the only mode given of proving the execution of the instrument and the whole instrument.
    Probably an assignment might be so framed that the bulk of its essential provisions would appear in schedules annexed. But then the schedules should be separately attached or identified, so as to make the certificate of acknowledgment the proof that they were annexed at the time, and formed part of the instrument. The act of 1860 will not leave that to inference or to parol.
    The fact that the schedule here was annexed at the time of execution, if assumed, necessarily rests entirely upon inference or parol. The most material and important provisions are in the schedule. Without it, the assignment is insensible. Upon its face there is no evidence that it was in existence at the time of the acknowledgment. It was not made public by recording till a month later.
    How, how are we to know the fact that this schedule was attached or present at the time of the acknowledgment, or that there was not an entirely different one then annexed and attested before the Commissioner; or that the assignors did not change the schedule a dozen times between the acknowledgment and the recording ?
    The certificate of acknowledgment contains no light upon these points. How then, shall we ascertain that the schedule formed part of the instrument when the acknowledgment took place ? Why, obviously, if at all, by presuming it or treating it as an open question of fact, and subjecting the parties to some rule as to the burden of proof. Of course the fact would then be established or refuted by parol.
    All this is exactly what the provision was framed and enacted to avoid. The act intends that the proof of execution shall rest in the certificate of acknowledgment alone. It was passed to no purpose if a failing debtor may practically evade it by acknowledging a part of Ms assignment, and leaving the remainder to inference, presumption or oral testimony.
    This act of 1860 is another statute of frauds and perjuries. . The decisions under the old statute of frauds upon analogous questions are therefore in point here. (See Brodie v. St. Paul, 1 Ves., Jun., 326; Thurman v. Cameron, 24 Wend., 87-93; Parkhurst v. Van Cortlandt, 1 Johns. Ch., 281; Church v. Brown, 21 N. Y. R., 315; Tonnele v. Hall, 4 Comst., 140; Smart v. Prujean, 6 Ves., 560.)
    If an ordinary instrument, which does not, in its general scope and design, run athwart any public policy, contains distinct provisions, some of which are void at common law, while others would not be so if by themselves, it is a rule to defeat the bad provisions and enforce the good.
    But when any instrument contains a trust which is void, as contravening an express statute, the rule is difieren,t. The illegal provision then infects the others and destroys the whole instrument. (Sedgw. on Stat. and Const. Law, 396.)
    Especially does this distinction hold good when applied to a class of instruments which it is the settled policy of the law to treat with disfavor, as, for example, these preferential assignments, which have only been tolerated, not encouraged in this.State. This doctrine has been more than once applied to this class of instruments, by the highest judicial authority of the State. (Hyslop v. Clarke, 14 Johns., 458 ; Austin v. Bell, 20 Id., 449; Mackie v. Cairns, 5 Cow., 580.)
    The statute allows thirty days to intervene between the execution and the recording of an assignment. If an assignor acknowledges the instrument, and only subscribes the schedule which is to point out the destination of all the property, he practically reserves the power to change the whole scope of the trusts and the destination of all his property for thirty days, and such a reservation renders the assignment fraudulent and void. (Averill v. Loucks, 6 Barb., 470; Barnum v. Hempstead, 7 Paige, 568; Boardman v. Halliday, 10 Id., 223.)
    III. The assignors (and judgment debtors) were both non-residents of the State of Hew York, and, therefore, incapable of making a valid general insolvent’s assignment-under the act of 1860. (Laws of 1860, p. 594.)
    This statute has limited the right of making such assignments to residents of this State. There is no reason why foreigners, or persons who transact business here while they choose to reside elsewhere, should enjoy the privilege of making such dispositions of their property, especially with preferences among their creditors.
    At all events the Legislature meant to exclude this class of persons from that power, as appears from the absolute language of the requirements as to recording in the county of residence.
    An exception, if intended, in the case of non-residents, would have been provided for by the statute. This is-plain from the practice of the Legislature in analogous eases— as, for instance, the statute providing for the filing of chattel mortgages. (2 R. S., 136, § 10.)
    The assignors here reside in a State whose laws do not permit preferential assignments at all.
   By the Court—Monell, J.

Hone of the objections to the assignment arising under the act of 1860 (Laws of 1860, ch. 348) are well taken. The acknowledgment by the assignors was in due form, and properly indorsed. Whether the schedule was properly annexed or sufficiently acknowledged does not seem to me to be material in this case. If omitted entirely, or wholly unacknowledged, the assignment would not therefore be fraudulent and void. It might be, in part, incapable of execution, and the preferred creditors might lose their preference; but the assignment would be valid and the trusts capable of execution, though not precisely in the form designed.

There is nothing in the act which requires schedules to be annexed in any particular manner, nor that they shall be separately acknowledged. It was, in this case, firmly attached to the assignment, and thus, forming a part of the assignment, was introduced in and covered by the aekn owledgment.

It does not follow that because the omission to do any or all of the acts required by the law of 1860, may render an assignment inoperative and void, that it is thereby rendered fraudulent also.

Nor is the right to make an assignment limited to residents of this State. The section of the act which requires that assignments shall be recorded in. the clerk’s office of the county where the assignors resided at the delivery of the assignment, must receive a liberal construction. It should not be interpreted so as to exclude a non-resident from the right to make an assignment of property within the State, merely because he is a non-resident. The purposes of the statute, in such case, are answered by recording the assignment in the county where the assigned property is

The only remaining question to be examined is whether the assignment is fraudulent and void as to the plaintiff, by reason of the direction in it, after paying all the partnership debts, to pay all the private and individual debts of the assignors, in full, if sufficient, and if not sufficient, then to pay them ratably.

The assignors were partners; they assigned all their property, individual as well as partnership, and directed first the payment of all their partnership debts, and then, if anything remained, the payment of their individual debts. The plaintiff is a creditor of the firm, and his debt is included among those which are to be paid in full, before the individual creditors get anything.

I can discover nothing upon the face of the assignment which would render it fraudulent and void. Partnership property must be devoted to the payment of partnership debts; so individual property must be applied to the payment of the individual debts. Any diversion from these rules would, at the instance of a creditor deprived of his equitable right, render the assignment void. (Wilson v. Robertson, 21 N. Y. R., 587.)

The assignment in question does not disclose whether the assignors had or not any individual property. The inference, if we are permitted to infer anything, is that their whole property consisted of partnership effects, and these were appropriated to the payment of the partnership debts. If individual property did in fact pass to the assignee, it would be difficult to see wherein the plaintiff, a creditor of the firm, could be defrauded by such an increase of the fund, out of which were to be paid the partnership debts.

, The only evidence outside of the assignment which it is claimed evinces a fraudulent intent is, that the assignors, at the time of the assignment, each owed, individually, debts to different persons, the aggregate amounts of which due by them respectively were unequal. In other words, the individual debts of one of the assignors were larger than the other.

Except so far as the rights of creditors are concerned, partners and individuals have the right to do as they please with their property; and, if they chose one to make a gift to the other, and to apply his property towards the payment of a debt for which he was in no way- liable, no one beside his creditors can object.

The priuciple established by Collomb v. Caldwell (16 N. Y. R., 484) is decisive of this case. There both copartnership and individual property of the assignors was assigned. The assignment, after providing for the payment of the partnership debts, directed the surplus to be returned to the assignors, without providing for their individual creditors. It was held that the assignment was void as to the individual creditors. Comstock, J., says, “The Caldwells, being insolvent, assigned the estate which they owned together, to pay debts which they jointly owed; but one of them also owed debts individually, which were entitled to be paid out of the residue of his share iu the fund assigned. Instead of making provision for these individual debts, the whole fund was tied up under a trust, and after the particular trust should be satisfied, the residue was reserved to the assignors. * * * * *

The real estate assigned * * * was held by them as tenants in common. The interest of each was therefore his individual property, as much so as his separate estate. Thus, they had no right to convey in trust with a reservation in their own favor, leaving their individual creditors unprovided for.”

So far as I can judge by an examination of the assignment, I am unable to discover any fraud in law, and the proof received on the trial does not show any in fact. It was therefore error to adjudge the assignment fraudulent and void, and made with intent to hinder, delay and defraud the plaintiff.

The judgment must be reversed, and a new trial granted, with costs to abide the event.

Robertson, J.

I am not prepared to say how far a reference, in an assignment to pay creditors, to a schedule annexed, which never was annexed, in the absence of proof that it was present at the execution and intended to be annexed, but omitted by an accident, may make it void. Therefore, while concurring with my brother Monell in his other views, I am not prepared to say that it may not. But I am satisfied, as I was at Special Term, from inspection of the papers and fastening, that there was prima facie evidence of the annexation of the schedule in question, before execution, and no rebutting evidence. Since this case was before me at Special Term, another case (Morrison v. Atwell, 9 Bosw., 503,) has been decided at a General Term of this Court, which involved the question of the validity of a partnership assignment of partnership property, by which individual creditors of each assignor were made to partake, pro rata with those of the other, of their separate interest in such partnership property and its proceeds. The question was then fully argued, and it was held that it was not to be considered invalid as to preferred partnership creditors. In the present case I overlooked the fact, which was not called to my attention, that the plaintiff was a partnership creditor, and it was not made a point before me on the trial that he could not raise an objection to the assignment on that score. I participated in such decision, after fully examining the question, and coincided in the views of the Court. And it appears to me proper, in uniting to reverse my own decision in the present case, that I should give my reasons therefor.

The plaintiff is a partnership creditor of the firm of Byerly & Allen, and as such, preferred in their assignment. The fourth clause of that instrument provides for applying the interest of one partner in the surplus of partnership property, to pay another partner’s debts. Such clause undoubtedly renders it voidable, as against such property, by the individual creditors of the former. (Collomb v. Caldwell, 16 N. Y. R., 484; Wilson v. Robertson, 21 N. Y. R., 587; Gartside v. Walton, Mss. in Supr. Ct., Dec., 1861.) But the question still remains, whether it can be avoided for that reason, by preferred partnership creditors, such as the present plaintiff. That will be found to depend upon a further question, namely, whether the right of creditors to avoid an assignment by their debtor is derived from the statutory provision which, as to creditors, annuls transfers of goods and chattels alone, by such debtor, in trust for himself, (2 R. S., 135, § 1,) or that which avoids conveyances of either lands or goods, made'with intent to prejudice a certain class of persons as against such persons, (2 R. S., 137, § 1,) which materially differ in form, object and substance. If from the first, it must be determined whether the whole instrument or only the offending clause is avoided; if from the second, whether any other persons can object than those whom alone such clause could prejudice, and, inferentially, whether the right of such persons to object may, by embarrassing other parties who have no such right directly, give the latter indirectly the same privilege.

In the case of Wilson v. Robertson, just referred to, {ubi. sup.,) the assignment in controversy was of the property of a partnership to pay certain creditors of one of the partners (Crocker) jointly with partnership creditors. The Court seems to place the right to object wholly upon the statutory provision first alluded to. “ It may be seriously doubted,” they say, “ whether the assignment should not be regarded * * as void under the statute declaring ‘ all transfers, &c., made for the use of the person making the same, void as against the creditors of such person.’ The assignment is made for the benefit of Crocker, as its purpose is to liquidate and discharge his individual debts. The transfer may therefore be said to be made in trust for the use of one of the assignors. This is the spirit of the transaction if not its legal effect.” The same reasoning, of course, is equally applicable to an instrument whereby, after an application of the joint property of joint debtors to pay their joint debts, the residue is applied to their several debts promiscuously and pro rata.

It is" of course unnecessary that joint debtors should, by the same instrument, apply their joint property to pay both their joint and several debts; after securing the payment of the first by an assignment, the appropriation of the interest of either in the residue to pay the several debts of the other, could not prejudice, in any way, their joint creditors. The question then arises, whether by making such appropriations in such order of payments in the same instrument, the whole is infected by the vice of the last appropriation. In Curtis v. Leavitt, (15 N. Y. R., 116,) in the Court of Appeals, (in which the prior case of Barney v. Griffin, (2 N. Y. R., 365,) in the same Court, is discussed and disapproved of,) Justice Comstock disposed of such question in a decisive manner. - After laying down the general rule as being the principle that where a statute simply declares voidness without, in the strictest terms, embracing the whole instrument, a particular provision may be inoperative and the others good, he argued that “ trusts in personal estate, for the use of the person who creates them, are not illegal or criminal, unless made with fraudulent motives. In themselves they are entirely innocent. They are simply declared inoperative' and void as to creditors.” In answer to the .question, whether it was a necessary construction of the statute that valid trusts must fail because contained in the same instrument in which some were void, he unhesitatingly responds in the negative, stating that “ a single deed-may have a conveyance, a transfer or an assignment upon a valid trust, and another upon avoid one,” and adding that “the terms [used in the statute] do not, by inevitable construction, apply to the instrument. * * * - They are satisfied by applying them to the inoperative provision only.” As authority for that doctrine, he relied upon the case of Doe v. Pitcher, (6 Taunt., 363,) in which the effect of a statute (9 Geo. II, ch. 36) declaring “all gifts, grants, conveyances, appointments, assurances, transfers and settlements of lauds” for charitable uses void, unless made in a prescribed special form, was involved, and a deed containing a clause for a charitable use in a different form from that so prescribed, was held not to be void. In that case, Gibbs, Oh. J., said, “I cannot find in this act any words which make the entire deed void.” Such statute is full as comprehensive as that under consideration. Although, therefore, the fourth clause of the present assignment may create a trust for the grantor’s use, and thus avoid that provision, it does not necessarily avoid the whole instrument, which has nothing to do with such trust.

But it is urged that such fourth clause of the instrument in question contains evidence on its face of an intent thereby to “hinder, delay or defraud creditors” of one or both of such assignors, in two modes. First, that such instrument is an entirety, and an intent to accomplish any wrong by any part of it to any one, makes it wholly void, and secondly, that the privilege of the parties intended to be defrauded to assail it, may prejudice the rights of the parties not intended to be so defrauded, by hindering them in reaching the property by execution. And that, therefore, it is entirely void under the second statutory provision before referred to. (2 R. S., 137, § 1.)

The language of that provision is, “every conveyance * * of any interest in lands or in goods * * made with intent to hinder, delay or defraud* creditors or other persons of their lawful * * demands, * # as against the persons so hindered, delayed, and defrauded, shall be void.” It is a transcript of a prior one in the Revised Laws of 1813, (1 R. S., 75, § 2,) which again is condensed from an English statute. (13. Eliz., eh. 5.) The language of that is, “Every feoffment * * of lands * * and chattels * made for any intent before declared and expressed, shall be, as against that person, * * whose action * # are, or might be in anywise disturbed, * * utterly void.” The intent so referred to is contained in the recital of such, enactment, and described as “malice, * * to delay * * creditors or others of their lawful actions.” Three provisions in the same chapter, prior to that under consideration, declare conveyances and transfers having certain defects to be void as against the creditors of their grantors or makers. (2 R. S., 135, § 1; Id., 136, §§ 5-9.) The first of such defects is that already referred to as being for the grantor’s use; the second is an omission to change or continue the change of possession; and the third is a failure to file a mortgage of chattels in the proper office. In each of those cases such transfers are said to be void as against “all the creditors” of the party executing them.

The statute of Elizabeth, before referred to, is stated in the case of Pauncefert and Blunt (referred to in Twyne's Case, 3 Rep., 80, and therein said to be found in Lane, pp.. 44,45,) to have merely “ expounded that this was the common law before,” referring to the use therein of the term “ declare.” And in Cadogan v. Kennett, (Cowp., 436,) Lord Mansfield said, “that the common law would have attained -every end proposed by ” such statute. The language of that statute is very emphatic in confirming the voidability of the conveyances intended to be reached by it, to “ that person ” in the singular number. And although our statute, by inserting the intent in the body of it, instead of leaving it in a recital, is compelled to use the plural; the change of phraseology from that used in the preceding sections just referred to, namely, of “ all creditors ” generally, to those “ hindered, delayed and defrauded” by the particular conveyance, shows an intent thereby to limit the classes of persons who could avail themselves of such objection.

Moreover, the intent with which instruments were executed, which were voidable by creditors, was made, for the first time, exclusively a question of fact, without any presumption of law, except in case of non-delivery of possession, and not a question of law, by the Eevised Statutes. (2 E. S., 137, $ 4.) And although Courts continue to assert the right to pronounce conclusively upon the fraudulent intent of a particular provision in an assignment, and its effect on the 'whole instrument, they have never gone so far as to hold, in the face of such statutory enactment, that an intent apparent on the face of a particular provision in an instrument by means of it to defraud particular creditors, should be construed to be the object of other provisions in no wise connected therewith, which merely have the misfortune to be in the same instrument. There is no such presumption that if an assignor intends to accomplish an illegal purpose by one provision in an instrument he necessarily intends to do so by every one of "the others which are wholly disconnected therewith. The language of the statute of 9 Geo. II, ch. 36, held not to refer to the whole instrument, in Doe v. Pitcher, already referred to, (libi sup.,) was fully as broad enough to cover it, as the provision under consideration.

It appears to me, therefore, perfectly clear that in regard either to the class of persons entitled to attack the assignment in question, if any part of it has a fraudulent purpose to subserve, or the right to impute such fraudulent purpose to the whole of it merely because one of its provisions has such fraudulent intent as to one class of persons, there is nothing in the statutory provision last referred to directly authorizing the plaintiff in the case to attack it. I am aware that it has been assumed in several cases, from that of Hyslop v. Clarke, (14 Johns., 458,) down to that of Wakeman v. Grover, (4 Paige, 23, affirmed 11 Wend., 187,) and of Goodrich v. Downs, (6 Hill, 438,) that a fraudulent intent manifest in one provision was a fraud affecting all. But in none of such cases has it been discussed or held that an assignor could not have an illegal intent as to one provision in an instrument and an honest one in all the others; or that the former tainted the whole. In most of them the fraudulent provision affected all the creditors and appeared to be part of a general purpose on the face of the instrument. In the case of Feedler v. Day, (2 Sandf. S. C., 594,) decided in this Court, the assignment was held entirely void, solely upon the ground that a fictitious debt preferred therein would have defrauded all the creditors of the assignor.

It is claimed, however, that although, primarily, an intent to injure particular creditors by a particular provision in an instrument is not equivalent to a direct intent to injure others, and therefore only the parties particularly intended to be injured could complain of it, yet that a party must be presumed to have intended the natural consequences of his acts, and that the power of such special creditors to interfere with such instrument becomes a means of embarrassing other creditors preferred in it, which makes such result the intent in law of such provision. This highly artificial reasoning derives some countenance from the language of Gardiner, J., in Litch v. Hollister, (4 N. Y. R., 211,) and of the opinion given in Smith v. Howard, (20 How. Pr., 121.) The former says, an assignment, “when executed, must bind-all or none of the creditors of the assignor; otherwise the condition of one for whom provision was made by a fraudulent trust, without his 3’ency, would be worse than if he had been excluded (together.” But this was said of an assignment to credit-rs directly, to secure their debts, without any provision for the surplus, after their payment, and in order to sustain it, so as to take the case out of the rules established in Goodrich v. Downs, and Barney v. Griffin, before referred to, (ubi sup.) No explanation was given how “ the condition” of a person provided fot would be “worse” than “if excluded altogether.” And certainly the apprehension of such a result was not necessary to render a mortgage directly to creditors to secure them, valid as against other creditors. It is fully established that mere injury to a particular creditor by a particular sale, does not make such sale fraudulent. (Holbird v. Anderson, 5 T. R., 25; Pickstock v. Lyster, 3 M. & S., 371.)

It was argued in Smith v. Howard, (20 How. Pr., 121,) in regard to an assignment containing a clause somewhat similar to that under consideration, “that a creditor would be more effectually defrauded if his hands could, against his will, be thus tied, while other creditors were avoiding the assignment and securing the application of the assigned estate to the payment of their debts, to the exclusion of his.” This reasoning does not embrace the fact that the parties attempted to be defrauded, and who alone were primarily entitled to overthrow any part of the assignment, were separate creditors of separate partners. It overlooks the equitable rule that partnership property must first be applied to pay partnership debts, and individual property to individual debts, (Wilder v. Keeler, 3 Paige, 167,) that such rule is for the benefit of the partners, and not of the creditors, (Robb v. Stevens, Clarke, 191; Ketchum v. Durkee, 1 Barb. Ch., 480; Kirby v. Schoonmaker, 3 Id., 46,) and that if individual creditors 'should succeed in overthrowing the whole assignment for the attempt to defraud them, they would get nothing until the debts of the preferred partnership creditors were all paid. So that the only effect of setting aside such assignment at the instance of the former would be to derange the order of payment among the latter. A novel result, whereby the party endeavored to be injured can only repel the injury for the benefit of others, and a party benefited can only acquire further benefits through the medium of the attempted injury to the former. The probability of an attempt by such individual creditors for such purpose to overthrow the whole assignment, unless absolutely necessary to destroy that of the surplus, after paying partnership creditors, could hardly be contemplated as part of a fraudulent purpose by the assignor, hostile to the latter.

But, in fact, the order of equities of partnership and individual creditors in partnership funds, virtually divides them in two parts; one being so much as is necessary to pay the former, and the other the residue subject to equities between the partners for over contributions in paying debts, or over drafts of their shares of the profits. They are as distinct in their nature as two kinds of property, and although joined in an assignment of them, for different purposes, by one instrument, motives in regard to the disposition of one thereby cannot be made to operate on the disposition of the other, in regard to which no such or similar motive exists. The error arises from considering the property assigned entire, the creditors of the firm and individual partners as one body having equal rights, the instrument as one, and the purpose as to the whole, single.

Moreover, the mere operation of law by which a preferred creditor may be postponed, to one who is not, or, vice versa, even if contemplated by an insolvent debtor in mak~ ing an assignment, does not necessarily make it void on account of a fraudulent design, provided thereby all his property is relinquished to his creditors, without any reservation for his own benefit directly, by provisions to that effect, or indirectly, by delaying the collection of all their debts, or coercing or alluring them into an abandonment of part of their claim. So far as partnership creditors were interested, nothing of either kind was attempted, and so far as individual creditors were concerned, they were deprived of no rights by the trust, in favor of the former, and should not, therefore, upon any principles of justice, be allowed to disturb it. Ho statutory provision, except requiring it in the clearest and most express terms, could be coustrued to produce such a result; and as has already been seen, that last referred to (2 R. S., 137, § 1) does not demand any such interpretation, but on the contrary, was intended to give a party wronged only the power of redressing his own'wrongs, and not those of others.

There was no evidence in this case that the assignors had any other but partnership property, and it does not appear, therefore, on the face of the assignment that there was any other which passed under it, as it did in the case of Collomb v. Caldwell, (16 N. Y. R., 484.) But in that ease it was held that the reservation of a surplus of individual property, after applying it indiscriminately with partnership property to paying partnership debts alone, made the assignment void as to individual creditors. That, so far as such individual creditors were concerned, violated the equitable rule before alluded to. They were entitled equally at least with such partnership creditors to seize such individual property to satisfy their claims, and creating a trust for the use of the debtor which prevented it, ' violated the statute before alluded to. Such reservation made such assignment, therefore, as to such individual property clearly void. The mingling of such property with partnership property, in a common fund, may have made the whole assignment void, certainly as to individual creditors, who would be, even in such case, obliged to yield to the prior rights of partnership creditors as to partnership property. The Court of Appeals, in fact, recognizes in that case both the principles now presented, by confining the avoidance of the assignment to individual creditors, and by conceding that a reservation of a surplus . of partnership property to assignors, after paying partnership creditors, instead of appropriating it to separate creditors, was not fraudulent.

I feel, therefore, fully satisfied that the assignment in question is not void as ágainst the plaintiff, under either statutory provision before referred, and I concur in the views taken by my brother Mohell as to the statute of 1860. I therefore unite in the reversal of the judgment appealed from, and the order for a new trial.