author: By the Court.—Monell, Ch. J.

text:
    THE PEOPLE OF THE STATE OF NEW YORK, Plaintiffs and Respondents, v. LUCINDA STARKWEATHER, Administratrix of HENRY STARKWEATHER, Deceased, Impleaded, &c., Defendant and Appellant.
    I. REVIVOR OF ACTION.
    1. No change in law as to, since the E. S'., except an extension by the Code of a right to a revival, before as well as after trial or interlocwt®ry judgment.

      (a) Test as to whether the action can be revived.

    1. Both under the R. S. and the Code the test is whether the cause of action survives.
    H. SURVIVORSHIP OF CAUSE OF ACTION. —ABATEMENT.
    1. Test of.

      (a) Whether the action might be originally brought against the executors.
    3. What cause of action survives.

      (a) Contract. Where the cause of action is money due, or a contract to be performed, or gain, or acquisition by the labor or property of another, or on a promise, express or implied, by the deceased, there it survives.

      (b) Wrongs. Where the cause of action is for wrongs to property, rights, or interests, an action may be brought against the representative. § 1, art. 1, title 3, chap. 8, pt. 3, B. S.

    Such a cause of action survives.
    in. PEOPLE OF THE STATE OF NEW YORK, RIGHT OF ACTION IN FAVOR OF: AND SURVIVORSHIP THEREOF.
    1. Law of 1875, chap. 49 (Peculation Act), gives the people a right of action for any money or property owned officially by any municipal corporation which has without right been obtained, received, converted, or disposed of, and for any damages by reason of such obtaining.

      (a) “ Without right f effect of the words.

    1. Notwithstanding these words, the action maybe regarded as founded on an implied contract, and the people may waive the tort, and bring their action on contract; but even if it is essential under the act to bring the action in tort basing it on fraud or deceit, or on some other wrong, it would be a wrong to property, rights, or interests; and in either aspect, under above principles, the cause of action would survive, and the People would be entitled to revive against the representative of a deceased defendant.

    Before Monell Ch. J., and Sedgwick, J.

      Decided March 20, 1876.
    Appeal from an order, heard at the March general term, 1876.
    After issue joined, and before trial, the defendant died. A motion was made at special term to continue the action against his representative, which was granted, and the action was, by order, continued against Lucinda B. Starkweather, administratrix of the deceased.
    The administratrix appeals from the order.

      S. P. Nash, of counsel for appellant, urged:—
    I.—The action is a statutory one, and therefore did not survive, especially as the act creating the right to sue does not embrace the personal representatives of the defendant (Bank of California v. Collins, 5 Hun. 12 ; N. Y. Supreme, 209). That the People had no right of action before the statute, is settled in People v. Ingersoll (58 N. Y. 1). The action provides that the People “shall have a right.of action,’’ and enlarges, in respect to such right of action, the statutory limitation of six years'to ten (Laws of 1875, 43, 4). The moneys sued for do not belong to the plaintiffs. The act does not transfer to the People the title or owner-shin of the money, the want of which was held in 58 N. Y. to be fatal to an action in the name of the People. The action is maintainable since the change of the law, not because the People has the title and ownership of the money any more than it did, but simply because the act says the People may bring the action.
    II. —The action is framed as an action for fraud and conspiracy, and therefore does not survive (Zabriskie v. Smith, 13 N. Y. 322; Wade v. Kalbfleisch, 58 Id. 282). The question whether actions other than those arising on contract survive, depends upon the statute, 2 R. S. 447, § 1. ee For wrongs done to the property, rights, or interests of another, for which an action might be maintained against the wrong-doer, such action may be brought by the person injured against such wrong-doer, and after his death, against his executors,’’ &c. By the statute the right of action is made to survive in favor of the 66 person injured,” which, in this case, is not the plaintiffs herein. That the action is one for fraud is apparent from the allegations of the complaint, that Starkweather, knowing he had no right to receive the money claimed, represented that he had, and fraudulently agreed with the city authorities to pay him notwithstanding. These are substantially repeated in reference to several of the causes of action, and in reference to the first cause of action, it is alleged, in order to avoid the statute of limitation, that “ the facts constituting the said fraud ” were not discovered prior to-six years before suit brought.
    III. —But if the action is to be treated as an action on contract, and as surviving, the order to substitute the administratrix as defendant should have been on the terms of plaintiffs’ striking out all allegations of fraud. Such allegations are purely irrelevant, if they do not change the character of the cause of action. The administratrix ought not to be put to the defense of charges of this character, if they are in no way relevant to plaintiffs’ right of recovery.

      Charles S. Fairchild, attorney-general, and Francis C. Barlow, of counsel for respondents, urged:—
    I.—Section 121 of the Code provides for the revival of ' actions when the cause of action survives. There is no possible doubt that this cause of action does' survive. Every cause of action survives which is brought to recover property of the plaintiff which has been received by the defendant. It makes no difference whether it was received or obtained by fraud or wrongdoing, or under a contract. The simple test is, has the act on which the action is founded increased the assets of the estate ? It is only bare-naked torts, which have not added to the wrong-doer’s assets, which do not give a continuing or surviving cause of action. The fact that the goods were obtained by fraud does not affect the case. It is enough to say that the defendant has got the plaintiff’s money (U. S. v. Daniels, 6 Howard [ U. S. R.] 11; Cooper v. Crane, 4 Halstead [Law R.], per Ewing, C. J., 177; Hambly v. Trott, Cowper, R., per Mansfield, Ch. J., 374 and 375; Wilbur v. Gilmore, 21 Pick., per Morton, J., 252).
    II. —The defendant insists that this is an action of tort, going upon the fraud and false representations. As above explained, it would make no difference if it were ; but it is not. There are six causes of action. The only suggestion of fraud or deceit is at the close of the first cause of action, and that clause was inserted, not as a fact giving the right of action (as is shown by the fact that no such allegation is made in the other causes of action) but simply as a means of avoiding the bar of the statute of limitations which had run against the first claim.
    III. —But if it were otherwise, and the acts done were charged to have been done fraudulently and deceitfully, it would not make this action an action for a tort. The acts set forth give a cause of action, if there be any, and their legal effect is the same whether' they are charged to be fraudulent or not. Applying this adjective makes the facts neither more nor less efficient. It is mere surplusage. The point is that the acts themselves are not acts of fraud or deceit. Their character is not changed by the addition of an abusive epithet.
    IV.—But even in cases where the acts are fraudulent, and acts of deceit, it does not follow that a statement of those acts (under our present system of pleading, where forms are abolished, and only a statement of the facts is required) constitutes an action of tort. Where your money is obtained by fraud and falsehood, you may either sue directly for the money, or for damages for the fraud. See Artisans’ Bank v. Andrews, 26 N. Y. 298, and Denio, Ch. J., 300, 301; Gen. T. Supreme Court in Harway v. The Mayor, &c., 1 Hun, 628, and the cases there cited.
    V.—And lastly, even if this were an action of tort, our statute expressly provides that it shall survive. See 3 R. S., 5th ed., page 746, §§ 1 and 2. As to this statute, see Haight v. Hayt (19 N. Y. 464, and per Grover, J., 467, 468, and Brown, J., 474). The statute is also considered by the court of appeals in Wade v. Kalbfleisch (58 N. Y. 282), and in Emerson v. Bleakley (5 Abb. [N. S.] 361, 362). It was overlooked in Zabriskie v. Smith, 13 N. Y. 322 (see 25 How. 286), but the case in 13 N. Y. was a mere naked tort, which did not increase the assets of the defendant. See also Fried v. New York and Central R. R. Co. (25 Howard, 28).
    VI.—The objections from the statute of 1875 (chap. 49) are equally absurd. The act does not create any cause of action, but simply gives to one civil division (the state) the right to sue for injuries done to another. That is its sole object. The cause of action would have survived to the city under the general provisions of law before referred to, and this being so, there is not the slightest indication that the law of 1875 was intended to restrict the remedy only to the original wrong-doer. Plainly, its only object was to transfer the right of suing to the state.
    VII.—But the objection, under the law of 1875, would be equally unavailable even if the statute created the liability. Suppose it does create a liability against the wrong-doer, then, by the statute above cited, it may be brought against his executor. “ For wrongs for which an action might be brought against a wrong-doer (and unless this law be unconstitutional, it certainly authorized an action against Starkweather), such action may be brought against his executor,” &c. Those cases which hold that statute penalties do not survive, have no application. The incurring of a penalty does not increase the assets of the wrongdoer.
   By the Court.—Monell, Ch. J.

The Code (§ 121) provides that no action shall abate by the death of a party if the cause of action survive or continue ; and the only question before the special term and upon this appeal is, whether the cause of action, as stated in. the complaint, ceased with the death of the defendant.

Upon that question there has been no change in the law since the adoption of the Revised Statutes. The Code has merely extended the right to a revival of the action before as well as after trial or interlocutory judgment. Under the Revised Statutes, if the death of a sole defendant occurred before trial, the action abated, and a new action had to be commenced against the representatives.

But whether under the Revised Statutes or under the Code, the question is the same, namely, whether the cause of action survives.

This action is prosecuted under the authority of a special statute (Laws 1875, chap. 49), which provides, that where any money or property owned officially by any municipal corporation has, without right, been obtained, received, converted, or disposed of, the People shall have a right of action for the same, and for any damages by reason of such obtaining, &c.

The cause of action specified in the statute is the wrongful obtaining of the money or property of a municipal corporation: and,—leaving out the tortious taking,—is a mere action for money had and received to the use of the corporation. And the only benefit of the statute is to enable the People to maintain the action, which previously to the statute could not be done (People v. Ingersoll, 58 N. Y. R. 1).

It is not of much importance to determine whether the tortiqibs taking is or is not an essential element in the cause of action, except perhaps as it may affect the status of the plaintiffs. Money or property of a municipal corporation received by one of its officials or agents must be deemed to have been received and to be held by such agents to the use of the corporation, who, ordinarily, may maintain an action for its recovery without alleging a tortious taking. But the right of action being conferred by statute, it can not be extended beyond the cause of action specified in the statute, and probably must conform strictly with the statute.

The cause of action specified in the statute is one which does not cease with the death of the official or agent charged with having obtained the money of a municipal corporation. Whether he obtained it without right;” or having obtained it rightfully, withheld it wrongfully, it was the money of his principal, held by him to his principal’s use, and as such became assets in the hands of his representatives.

Notwithstanding the words in the statute without right, ” the action may be regarded as one founded on an implied contract, which arises from the relation of the defendant to the corporation, under which, having received the money or property of the corporation, the law will imply a promise to pay. And even, therefore, if a wrongful taking was an essential ingredient, there could be no good reason why the People might not, as in other cases, waive the tort, and demand a recovery upon the implied promise.

The test mentioned in the Revised Statutes concerning the abatement of suits (2 R. S. 387, § 3), that it shall not abate, if the action might be originally brought against the executors of the defendant, when applied to the cause of action upon or for which the People is authorized to prosecute, détermines, it seems to me, the whole question.

Can it be doubted that for such a cause of action a suit might have been originally brought against the defendant’s executors ?

The distinction between actions which survive and such as die with the person is defined in Hambly v. Trott (Comp. 371). Where the cause of action is money due, or a contract to be performed, or gain or acquisition by the labor or property of andther, or on a promise expressed or implied by the testator, the action survives ; otherwise, if it is a tort. And in Franklyn v. Low (1 J. R. 396) the distinction was preserved, and the survivorship of actions confined to actions ex contraetu express or implied.

That decision, however, was before the Revised Statutes, to which I shall presently refer.

If the cause of action mentioned in the act of 1875 is such that it would survive against the representatives of a deceased defendant,- then it remains only to see whether the cause of "action as stated in the complaint is the same.

The allegations in the complaint are, in substance, that the defendant was the head of the bureau for the collection of assessments in this city, clothed with the duty of collecting the assessments charged for the improvement of real-estate, and the paying over of the moneys collected to the city chamberlain. That, by ordinance, the collector was to receive as compensation a specified percentage of the money collected, but no moneys collected on any assessment could be retained on account of such compensation, but that such compensation should be paid on the requisition of the street commissioner to the extent of any money which had been collected and paid into the city treasury. It is then alleged that in sundry assessment-lists for improvements large amounts were charged to the city of New York, which were not such assessments as entitled the defendant to any compensation thereon. That notwithstanding, the defendant made bills or vouchers therefor, and obtained and received from the city his percentages thereon. That the officers paying such sums had no right or authority to pay, and did so in violation of law. All of which the defendant well knew. Fraud and deceit on the part of the defendant in receiving, and of the officers in paying, is also alleged.

To summarize—the action is to recover money paid to and received by the defendant, without any legal right to demand its payment, and to which he had no legal claim.

Such a statement of facts makes it a cause of action to recover money owned by a municipal corporation, which has, without right, been obtained without lawful compensation for the same being duly made, and is literally within the statute. And such a cause of action survives against the personal representatives of the deceased defendant.

But even if the fraud and deceit alleged in the complaint was an essential and necessary part of the cause of action, it would not change the result.

It is provided (2 R. S. 447, § 1). that for wrongs to property, rights, or interests, an action may be brought against the representative. And the second section explains the character of the wrongs intended by the statute.

That statute, it has been held, changed the law so far as property or relative rights are affected by the wrongful act (Haight v. Hayt, 19 N. Y. 464), and the meaning attached to the second section is, that the exceptions mentioned manifest the intention of the legislature, that all other actions founded upon tort should survive (Fried v. N. Y. Cent. R. R. Co., 25 How. Pr. 285; Wade v. Kalbfleisch, 58 N. Y. 282). fn. the latter case the statute is construed to mean wrongs which affect property or property rights and interests, or, in other words, such as affect the estate.

The object of the plaintiff is to recover from the de-. fendant money wrongfully obtained by him, and necessarily affects his property rights and interests, and upon his death necessarily affects his estate. Had the action been deferred until his death, I am quite clear that under the statute referred to (2 R. S. 447, § 1), it could have been maintained against his administratrix. Hence under the same authority it can now be revived.

The remaining reason urged by the appellants, that this being a statutory action, it does not survive, I can not appreciate the force of. The statute does not create the cause of action, but merely subrogates the People to the rights, either exclusively or co-equally, with the municipal corporation. In that respect, as well as in all other respects, the statutes and the principles of law applicable to other cases and causes of action apply to this case and govern it. This action is not penal nor of a penal nature; and, therefore, unlike the case of the Bank of California v. Collins ( 5 Hun, 209) to which we were referred.

I think the order below was right and should be affirmed with costs.

Sedgwick, J., concurred.


source: Caselaw Access Project

author: By the Court.—Sedgwick, J.

license: Public Domain

text:
    ALFRED DE WITT, et. al., Plaintiffs and Respondents, v. S. CLINTON HASTINGS, Defendant and Appellant.
    I. CORPORATION DE FACTO.
    1. What not sueeicient to establish.

      (a) The mere acting as a corporation, no matter for how long, is not of itself sufficient.
    2. What is necessary in addition to so acting.

      (a) Either a charter or law which of itself creates, upon its acceptance, a corporation.

      (S) Or, if the law provides that a corporation may be formed upon a subsequent compliance with prescribed regulations and forms, that some of those regulations and forms have been observed, although others have been omitted.
    1. How much must be done, or how much may be omitted, has not been decided.
    1. Sufficient compliance, what is; certificate

      (a) Where a statute provides that upon filing in a county clerk’s office a certificate of a specified character, and a duplicate thereof in the office of the secretary of state, the persons who shall have signed and acknowledged the certificate, and their successors, shall be a body politic and corporate in fact and in law, the filing in the office of the secretcury of state a certificate of the specified character, without any certificate whatever being'filed in any county clerk’s office, is a sufficient compliance for the purpose of, with proof of user under it, establishing a corporation de facto.
    3. User. .
    1. Character of acts necessa/ry.

      (a) Must be in their nature corporate acts, not speaking as much for non-incorporation as for corporation. Acts of individuals which would not be corporate acts if there were a charter will not be acts of user.
    1. What are not acts of user.

      (a) Those done before the doing of anything in the legal formation of the company, those not falling within the object'for which the company was to be formed, and those done by persons not acting within the scope of any authority conferred by the parties associated together in the formation of the company.
    2. Against whom user will not raise a corporation defacto.

    («) Not as against one who has not taken any part in the acts of user, when the contest is between third parties.
    S. Certificate of stock, the issuing thereof, effect of.

      (a) Not necessarily an act of user as against the party to whom it is issued.
    (1) It is not such act of user when it is an isolated act, unaccompanied by any other use of corporate powers, and cotemporaneous therewith there were acts from which a jury might find a disclaimer by the party to whom it was issued and who is sought to be made liable thereby.
    4. Articles of association naming a pa/rty as t/rustee, effect of signing try such pa/rty.

    (1) Only holds him to the obligations of an officer to carry on the corporate business, provided the articles are used to form a corporation de facto.
    II. ESTOPPEL.
    1. Certificate of stock.

      (a) Its issue to and receipt by a subscriber to the stock does not estop him from denying the incorporation.
    (1) Such Issue and receipt are to be looked upon simpl/y as hearing on the enguiry, whether in fact corporate franchises were used.

      Supra, under head “certificate 'of stock, the issuing thereof, effect of.”
    2. Articles of association, effect of.

      Supra, head “ articles of association.”
    III. MAXIMS.
    1. Locus penitentim, maxim applied,

      Before Curtis and Sedgwick, JJ.

      Decided March 20, 1876.
    Appeal from judgment.
    The complaint charged that the Pacific Beater Press Company was a corporation under the laws of New Y ork, organized under the general act for the formation of corporations for manufacturing, &c„, purposes.
    That at San Francisco, at the special instance and request of said corporation, the plaintiff laid out and expended for said corporation, in paying freight, cartage, wharfage, and dockage, upon a number of Beater presses, patterns, castings, &c., four thousand four hundred and six dollars and ninety-three cents, &c.
    That the corporation was further indebted, for work, labor, and services done and rendered by plaintiff at the request of said corporation, in storing and taking care of certain Beater presses, &c., two thousand four hundred and eight dollars and thirty-eight cents.
    That at the times aforesaid the defendant was one of the trustees of said company, and that the said company did not at any time publish or file any report of the amount of its capital stock and its existing debts, ■&c.
    The answer was a general denial, with special averments that there was no such corporation, &c„, &c.
    On the trial the following facts were testified to: Several gentlemen met in New York on Dec. 27,1864. Among them was the defendant and one Davis. The object, was stated to be the temporary organization of a stock company. The defendant moved its name should be The Pacific Beater Press Company. The meeting adjourned, to meet again on January 8, 1865, to more permanently organize the said company.
    On January 3,1865, there was a meeting of the same gentlemen and others. There were nominations for president and for secretary and treasurer, for one year. There was not an election of officers.
    It was resolved that Davis be nominated and appointed general superintendent of the affairs of the company on the Pacific side. It was resolved that the president and treasurer be authorized and empowered by the board, in the absence of a regular meeting of the same, to do anything which the board might lawfully do in and about the affairs of the company. It was further resolved that a stock assessment be made of ten per cent, on the entire capital stock of the company, for the purpose of forming a working capital of said company, for necessary expenses and for the immediate purchase of presses, patterns, and material, to be sent forthwith to California. It did not by subsequent testimony appear that this assessment was afterwards made or paid.
    On the next day, January 4, 1865, six of the gentlemen acknowledged the execution of two certificates, such as in form are required by the acts for .the formation of corporations, &c. Each certified that the subscribers had associated themselves together, under the statutes, &c., “ for the purpose of manufacturing, using, and selling to others to be used, the hay-press known as the Harris Beater Press, or other presses accomplishing a similar purpose.” The corporate name was given. The amount, viz.: one hundred and five thous- and dollars, &c., of capital stock, was specified. The objects of said company ‘ ‘ are to manufacture presses for pressing hay, straw, cotton, and other substances, for which presses are intended to be used in California, also to sell any such articles as may be pressed by said presses, which may be manufactured by them,” &c. ; and also to sell to others rights of manufacturing presses, especially the press invented by John K. Harris, &c.

      The certificates farther stated, it is understood, that of the capital stock aforesaid one hundred and fifty-shares of one hundred dollars each are to be issued, fully paid, for the conveyance to said company of the patent right to said Harris Beater Press in and for the state of California. Five directors or trustees, among them the defendant, were named for the first year. The gentleman named at the preliminary meeting as president was not named a.s trustee. It did not appear subsequently that any conveyance was made to the company of the patent-right, or that any stock was issued for a conveyance of it.
    About this time a circular was printed, headed Pacific Beater Press Company, San Francisco. Organized January 3, 1865. It stated names of officers, among them as president the gentleman nominated at the preliminary meeting, as secretary and treasurer the gentlemen nominated for these offices jointly on the same occasion, and as vice president the defendant. The circular stated the value and advantages of the Beater Press. The so-called secretary and treasurer composed and had printed this circular. There was evidence that this circular was looked at, at one of the preliminary meetings of the associates. The witnesses on this subject produced by the plaintiff had no recollection of a definite kind. There was no evidence that it was issued by the company or by any meeting of the associates. It was sent to California. There was no certain proof that the defendant had ever seen this circular. There was no evidence of the dates of these matters, but a jury might have found that they took place before February 25, 1865.
    It appeared that the defendant received certificates of stock in the company, and gave a receipt for them on the stock-book, but when was not proved.
    About this time it was learned by defendant and others that a portion of the patent-right which the company was to use, had been conveyed, so that .the company could get no title to that portion. The defendant offered to prove that upon learning of this he denounced the whole proceeding as a fraud, and upon the eve of his departure tor California, on or about March 1,1865, addressed a note to the so-called president, requesting him to inform Mr. Bobbins, hereafter mentioned, that the defendant had resigned all connection with the “enterprise.” Upon objection of plaintiff’s counsel, this offer was rejected. It is uncertain from the printed case whether the court allowed to be read from a deposition of a witness who had knowledge of the transacsactions, the following, viz. : “All contracts were then agreed to be cancelled, and were cancelled so far as I recollect, and. all stock and scrip issued were, when received, considered valueless,” or whether it was not allowed to be read, upon plaintiffs’ objection. The defendant testified that he immediately delivered one-half of the certificates received by him to C. P. Huntingdon, and deposited the other half for J. Collyer Bobbins, “they being the parties to whom I sold all my interest.” The defendant offered to show, by reading a deposition, that two stockholders, upon learning the facts, having taken stock, returned it to the parties from whom they bought, and received their money back. There was evidence which would have sustained a jury in finding that the act in relation to abandoning the association took place before February 22, 1865.
    There was testimony that on February 22,1865, the secretary of the company issued and delivered certificates of stock to Viele & Son,upon information received by the secretary that presses had been bought from that firm for the company. The secretary had no knowledge of the contract of purchase, and there was no evidence in the case as to it.
    On February 25, 1865, one of the certificates above described was filed in the office of the secretary of state. No certificate was'filed in the office of the county clerk. By whom or by whose direction this filing wás done was not shown.
    As appeared by two bills of lading in evidence, some hay presses and other packages were received on board of a ship for California, on January 12,1865, and other merchandise of the same kind on board another ship on March 18, 1865.
    The evidence showed that no meeting of trustees was held from January 3, 1865, until March, 1867. After the last date two meetings were called by the gentleman named as secretary, but no quorum appeared ; the defendant was not present and no business was done or attempted. No other business of any kind was done for the association in New York ; no capital was paid in, no by-laws were made. The only place of business of the so-called company was in the office of the secretary and treasurer. There was no certain evidence- that the company had a sign upon the office. The only books of the company were the books containing the minutes of meetings referred to, and a book for the certificates of the shares of stock.
    The only other business alleged to have been done for the company was in California. On the first Monday of January, 1865, Davis, who had been named as agent for California, went to San Francisco, where he lived. He either took to, or received in, California the circular referred to. He did nothing for the company down to August, 1865. In that month he received from the gentleman named as secretary a notice of the shipment of the merchandise specified in the bills of lading. No proof was given of the contents of that notice. The bills of lading referred to were of goods shipped by Simeon Leland (be being the gentleman named as president), to be delivered to J. C. Davis or his assigns, he or they paying freight. The consignee of the ships wrote to Mr. Davis personally that there were to his consignment certain merchandise, describing it, 1“ shipped by Simeon Leland, Hew York.” “ It was only last night, after considerable inquiry, that we ascertained your address, and now write to you hoping thereby to save you the heavy expense which will be incurred by storing your large consignment,” &c. ■ Mr. Davis answered in writing, “ I shall write to Mr. S. W. Mitchell to do the best, he can in storing any consignment of presses per ship Bengal. You will please store them as ordered by him.” There was no evidence of any statement between the parties that these shipments were on account of the company. According to the evidence of the consignees, the plaintiffs, there was a conversation soon after the letters were sent, in which Davis showed the circular and said that he expected to be in funds soon, either by sale of the presses or by funds which he expected to receive from the company east, and asked them to advance the freight and charges, that the stockholders were wealthy and would respond. Mr. Davis, as a witness for the plaintiffs, testified that the consignees requested him to call and pay freight upon the shipments, and his reply was he had no money belonging to the company, and could not pay the freight and charges upon the presses. Thereupon the merchandise was stored by plaintiffs, and the freight paid by them. The claim in this action was for the amount of' the freight and the cost of the storage.
    There was a defense in the answer of the statute of limitations. The court upon the trial, refused to submit to the jury any other question than that which arose upon the issues as to the statute of limitations. The jury found for the plaintiffs, and judgment was e.nered - for plaintiffs. The defendant appeals from the judgment.

      Gilbert & Smedley, attorneys, and D. C. Calvin
      and F. G. Smedley, of counsel for appellants, on the points considered by the court, urged, among other things :
    I. The reception of the "copy certificate under defendant’s exception was error, especially as it appeared that the certificate had never been filed, according; to the statute, in the office of the clerk of the city and county of New York (Laws of 1857, chap. 262 and its amendments; Laws of 1848, chap. 40, § 9). Under that act there was no authority to file a pretended duplicate until the certificate had been filed in the office of the county clerk (Childs v. Smith, 55 Barb. 45). This case was reversed in 46 N. Y. 34, upon a different point; but Judge Folgeb, at page 41, speaking of certain acts of the proposed corporation, says s 16 They did not show a full compliance with the statute nor establish that a corporation was duly formed.” See also N. Y. Car Oil Co. v. Richmond, 10 Abb. 185.
    II. It is insisted that the filing of the certificate, as required by the statute, is an indispensable prerequisite, and no amount of user will supply the defect. Such prerequisites are a substitute for a charter by legislative act. No amount of user will supply the place of a charter in the one case, or the making and filing the certificate in the other (Uttley v. The Union Tool Company, 11 Gray, 139). To establish a corporation de facto, it must be shown, 1st, a charter or some law by which the corporation might be created ; 2d, user by the party to the suit of the corporate powers claimed (M. E. Union Church v. Pickett, 19 N. Y., 482, p. 485). It is entirely clear that the action can not be maintained without proof of the incorpora tion, and of the company’s liability to the plaintiffs; and proof that the defendant and his associates assumed to purchase the presses in question, and ship them to California, and that their agent procured their storage, while it may make them liableo as partners or otherwise, can not create a corporation or make the defendant liable as trustee thereof. But it is submitted that the proof shows no such user as would help to create the corporation, if the defect wei'e not organic. All user, to be effective, must follow the alleged defective organization, which must- date from the filing of the certificate, February 25, 1865. And there was never a meeting held when a quorum was present or business was done after that time. And the only proof tending to show user is the pretended purchase by Leland, with the pretended stock of the company, in his own name, of the presses in question, and his shipment of them in his own name to an individual in no way legally representing the company.
    III. The pretended purchases of presses by Leland were without authority ; there was no evidence of his authority conferred by the trustees, nor of their subsequent ratification thereof. By virtue of his office as president he had no such authority, and it could only be conferred by a vote or resolution at a meeting of the trustees. The acts of a corporate officer, acting without a special authority, are binding upon the corporation only so far as they are within the scope and ordinary course of the duties of his office (Fulton Bank v. N. Y. & Sharon Canal Co., 4 Paige, 127; Boome v. City of Utica, 2 Barb. 104; Ashuelet. Manf. Co. v. Marsh, 1 Cush. 507; Ridgway v. Farmers’ Bank, 12 Serg & R. 256 ; Marine Bank v. Clements, 3 Bosw. 600 ; Dabney v. Stevens, 2 Sweeney, 415, at page 426). It is insisted that Davis’ superintendence was limited to the sale of rights to use the presses in question, and the receipt of the price (Adriance v. Roome, 52 Barb. 399 ; Ang. & Ames on Corp., § 277; Dabney v. Stevens, 2 Sweeney, at page 429).
    IV. Davis had no authority to charge the company with a claim of ownership, or admit his agency. That must be shown by the acts of the company through its trustees (1 Hun, 157; 1 Paige, 601; 23 N. Y. 439 ; 19 Barb. 310 ; Abb. Dig. Corp. 282, pl. 52, 53 ; Directors, 1 Disney, 285).
    V. There is no evidence in this case to estop the defendant from. denying the existence of the corporation in question. There is no evidence that the plaintiffs have acted upon the representations of the defendant, for he has made none. The only thing he did was to attend two preliminary meetings and sign a certificate of incorporation which never became operative; and it is submitted with entire confidence that the doctrine of estoppel has no application to such a case, and can not be made the pretext of imposing a liability in contravention of common law. Estoppel must be mutual, and only attaches where a party asserts a fact, the denial of which would injure the adverse party, who has acted upon the faith of it (Welland Canal Co. v. Hathaway, 8 Wend. 480; Lawrence Brown, 1 Seld. 394; Irvin v. Conklin, 36 Barb. 64). The case of Buffalo & Alleghany R. R. Co. v. Cary (26 N. Y. 75) does not militate against this principle.

      Goodrich & Wheeler, attorneys, and W. W. Goodrich, of counsel for respondent, submitted a brief on the facts, and among other things urged as matter of law :
    I. The defendant is estopped to plead that the Company was not duly incorporated by reason of the failure to file the certificate in the New York county clerk’s office (Eaton v. Aspinwall, 19 N. Y. 119; affirming 6 Duer, 176; Schenectady Pl. R. Co. v. Thatcher, 11 N. Y. 102; Mc Farlan v. Triton Ins. Co., 4 Denio, 392; Mead v. Keeler, 24 Barb. 20; Abbott v. Aspinwall, 26 Barb. 202).
   By the Court.—Sedgwick, J.

The court took from the jury all questions in relation to the corporate character of the Pacific Beater Press Co., and decided them adversely to the defendant. The defendant claimed that the evidence showed that the company was not a corporation defacto or de jure. It was not the latter, beyond doubt, and the most favorable view for the plaintiff would be, that there was such a user of corporate functions and rights un der color of a due organization, as a corporation, as to make what is called a de facto corporation. The cases hold that acting as a corporation, for any length of time, not being sufficient to make a corporation, it is necessary to show a charter or law which of itself creates, upon its acceptance, a corporation, or if the law provides that a corporation may be formed upon a subsequent compliance with prescribed regulations and forms, that some of those regulations and forms must have been observed, although others have been omitted. How much must be done to make/a colorable charter, or how much may be omitted, it has not been found necessary in the cases to decide. In the cases to which our attention has been called, the defect was of minor importance. Most of the steps had been taken, and it has generally been called an irregularity. What particular step in the process, designed by law to be complete wholly, is essential, and what may be deemed not essential, has not been decided. Judge Selden said, in Methodist Epis. Un. Ch. v. Pickitt (19 N. Y. 486): The rightfulness of its existence not being in issue, of course evidence of any irregularity or of defects in its organization, short of such as would show a want of good faith on the part of those concerned in the proceedings, would be wholly irrelevant. If the lawr exists, and the record exhibits a bona fide attempt to organize under it, very slight evidence of user be-, yond this is all that can be required.” In Eaton v. Aspinwall (19 N. Y. 119) the defect was not in the record, but was a want of a payment of a percentage of. capital which the law required, before the incorporation should be complete, and the court below gave importance to that. If the facts had been reversed, and the only evidence of an attempt to incorporate had been an organization of individuals, as if they were a corporation, and a payment of the percentage of capital as the capital of a corporation, I doubt if it would be deemed sufficient, even with acts of user, to make a corporation defacto.

The court further said, in the Methodist Episcopal Church v. Pickitt, that the degree of proof of user required depended, “to some extent, upon the nature of the incorporation and the law under which it is organized. Where no provision is made for any permanent evidence of the fact of organization, more proof of user would be required than where, as in this Case, the essential steps by which the organization is accomplished are required to be made matters of record.”

I have come to the conclusion that the filing in the office of the secretary of state, of the certificate- of association, was sufficient, with due proof of user, to show the corporate character of the company fór the purposes of this action. I hesitated much, because though no more is needed than mere color of an incorporation, the filing of such a certificate seems so insignificant in its character, under the statute, as hardly to be a single step towards the formation of a company. On its face and by itself, it is not anything called for by the statute. It was not, and it did not, profess to be a duplicate of a certificate filed in the county clerk’s office. Yet, unless it is treated as if it were a duplicate, the proof is, that there was nothing done towards an incorporation, and there would not be any color even of existence under an incorporation. It is, however, such a certificate as would be filed if it were a duplicate, and if there was an attempt to make an incorporation; and its contents are so expressive of such a purpose on the part of the associates, that I deem it sufficient, if there had been proof of user under it. Evidently the acts to show user must in their nature be corporate acts, or such as would be corporate acts if the attempted incorporation had been perfected, and they must be unequivocally such. The corporation de facto must be proved. The testimony to prove it must be certain, not speaking as much for non-incorporation as for corporation. In substance, user consists in an enjoyment and exercise (although not rightful) of such corporate franchises and powers as would be given by the law to an association if the attempted organization had been perfected. The contrast to that is, that acts of individuals which would not be corporate acts, if there were a charter, will not be acts of user. The acts must at least appear to be the acts of the association not rightfully incorporated, and the acts must be such as would be within the objects of the incorporation, as stated in that part of the proceedings under the statute, that have been, in fact, taken. The law does not intend, in its due protection of third parties, to encourage the existence' of associations assuming to be the grantees of the sovereign power of the state without authority of law. Third parties deal with associations which may be partnerships or may be corporations, and must depend upon the facts to show which they are, while they are not held to a close or critical examination of the efficiency of the steps taken to accomplish a legal incorporation.

And it should further be said that when the contest is between third parties, as in the present instance, and the incorporation has not been completed according to law, user will not make a corporation defacto against a person who does not take any part in their acts of user, and especially not against one who has done all in his power to prevent business being done under the illegal charter.

Excepting the issuing of certificates of stock to sev eral persons, and, among them, to the defendant, the acts relied upon to show user (at least, as the jury might have found, in those instances where the testimony was. not certain) were acts before the first and only thing was done in the legal formation of a company, viz., filing the certificate in Albany, or were acts not shown by the plaintiff to be within the objects stated by that certificate, or were acts done by persons not shown to be acting within the scope of any authority conferred by the association.

The acts, at the meetings that took place before the certificate was filed, were not done in the exercise of any pretended franchise. On their face they referred to an incorporation afterwards to be formed. They were not ratified by any action in relation to them after the certificate was filed. After that no meetings were held, and no attempt to continue any organization. These acts could have hhd in themselves no tendency to lead third parties to believe that a corporation had been formed. The supposed purchase of the presses which were sent to California was not, indeed, proven upon the trial. Whether the purchase was made by the president as an individual, or representing the company, did not in any manner appear. Granting that he had power given by the association to make purchases for the furtherance of its objects, there was no proof that he bought the presses in the exercise of that power. He had full power to purchase for himself, and not for the company. There is no proof that the articles purchased were such as could be used for any of the objects stated in the certificate. Purchasing presses was not stated to be one of the objects. Certificates of the " company’s stock were issued as if in payment of a purchase for the company. That is the single fact to show that the purchase was by the company, but no authority had been given, before or after the filing of the certificate, to use the stock for such a purpose. These presses were not shipped to California in the name of the company. Therefore I think the proof did not show that the presses were the property of the company or bought for the company, and the alleged purchase does not show any use of corporate.powers.

The gist of the cause of action is that the company requested the plaintiffs to pay freight on and to store the presses referred to. If there were such a request it was made by the mouth of Davis, in San Francisco. At the best for plaintiffs, he was then agent for the association. He had been present at a preliminary meeting in Hew York, and had there heard that he was appointed their agent for California, and at the time the presses arrived in California he had in his possession the circular, the particulars of which have been, given, and we will assume that in some way he had the powers of a general agent. It should, however, be said that there was no proof that the association at any time sent the circular to him, or directed it to be sent, or intimated to him that he was to enter upon the exercise of any powers as agent, and he never did any business of the company. There was only a resolution to appoint him agent, not thereafter acted upon. The facts were, then, that the presses did not belong to the company (or at least the jury might have so found), were not bought for the company, were not shown to be suitable to the business of the company, or to further any of its objects. Therefore any dealings in respect of them by Davis were not within the scope of any authority given to him by the association. In what way the plaintiffs or Davis' were led to believe that the presses were the property of the company is not proven. They both thought so, but not by reason of any communication from the asso- - elation, or from any one who by the testimony even assumed to act for it. There was evidence that Davis had been advised of the shipment by the gentleman named at a preliminary meeting to be the secretary and treasnzer. There was no testimony that this advice .stated that the shipment was for the company. The bills of lading stated the shipment was by Leland individually. The notice of the consignees of the ship to Davis stated the same. The answer of Davis, in writing, to that notice did not refer to the company. If, then, Davis did not act in reference to any business of the company, what he did was not an act of user by the company. The plaintiff took the usual risk in dealing with an assumed agent in respect of his act, being one of user on the part of his alleged principals, or as creating a liability on their part.

We now consider whether the issuing of certificates of stock was an act of user under the facts of this case. The time when they were issued does not appear. Neither side attempted to show the time.

In Black River & Utica R. R. Co. v. Clarke (25 N. Y. 208), the judge giving the opinion said, that a subscription to take stock in a company was, in an action upon it against the subscriber, conclusive evidence of the corporate character of the company. The court said, “he is estopped by his own acts and admissions ” from denying that corporate character. The court relied upon what was said by Thompson, Ch. J., in regard to contracts in general entered into with corpora tions, in Dutchess Cotton Factory v. Davis (14 Johns. 245), notwithstanding that this was questioned in Welland Canal Company v. Hathaway (8 Wend. 480). This decision was, in fact, also questioned in Williams v. Bank of Michigan (7 Wend. 541), by the chancellor. The court below, in Black River, &c. v. Clarke had made no ruling which called for a decision as to the conclusive character of the admission. The plaintiff below had given in evidence only the subscription paper, and the question was whether it contained enough evidence of the existence of the corporation to prevent a nonsuit. The subscription' paper stated that the company had been formed, under the law of the state entitled, &c., and that the articles of association, with the necessary affidavits, had been filed. If this was a. competent admission by the defendant of the existence of the corporation, the motion for non-snit was properly denied.

At the next term of the court of appeals, it decided Buffalo & Alleghany R. R. Co. v. Carey, 20 N. Y. 75. The action was upon a subscription by defendant’s intestate to the stock of the plaintiff. The form of the subscription paper is not given. It was probably unlike that set out in Black River, &c. R. R. Co. v. Clarke. Ho opinion of the majority in the court of appeals was given, and the opinion of the court below is published "in the report. In view of the deductions to be made from the dissenting opinion of Judge Allen, it is difficult to see on what grounds the court, of appeals went in affirming the defendant’s obligation. Perhaps the acts of user subsequent to the subscription were considered sufficient. But I can not see that the court of appeals decided that subscriptions estopped the subscribers from denying the incorporation.

In Eaton v. Aspinwall (19 N. Y. 121), while the judge delivering the opinion treated the fact as important that the defendant was a stockholder, he did so only in connection with the main ground, that there was sufficient proof of user. The defendant not only holding the stock, but receiving dividends upon it, furnished two considerations, 1st, it showed he participated in the acts of user ; 2d, it illustrated the equitable ground of the rule, that user, under- an. imperfect organization,'’might, in favor of third parties, make a corporation defacto. I can not. see that the court meant to declare as a rule, that a holding of stock formed an estoppel. If there were such a rule, it was not necessary to show any other acts of user, or any attempt at an incorporation.

The issuing of stock should be looked upon, as bearing upon the enquiry, whether in fact it shows sufficiently that corporate franchises were used. If it were issued and received in connection with other corporate proceedings, purposely taken, to exercise corporate powers under an attempted organization, the evidence given by the issuing of the stock would be strong. In the present case, the issuing of the stock, and the receipt by the defendant of a part of it, were isolated acts not accompanied by any other use of corporate powers. All that was done in respect thereto was cotemporaneous with their acts, which the jury might have found formed a disclaimer on the part of the defendant, and even of the most of the associates, of any intention to take part in the further prosecution of corporate business. And at this point we see that, on general principles, there is a Ioqus penitential at which it is not too late to stop, in order not to enter upon a violation of the law. Even if the purchase of presses had been made in behalf of the association, nothing else being done but the issuing of the stock, the manner in which that stock was dealt with, the jury might have found, was significant to show that no corporate privileges were meant to be used.

The defendant testified, that the business of the company not having begun, and, indeed, nothing having been done but the issuing of the stock to him, he expressed the determination to have no further' connection with the affair, and handed the stock to some person with whom he had had some undisclosed bargaining. The whole evidence, however, was such that the jury might have found that this act was nothing but an endeavor to do what was just, in respect of the interests of such third person, but not as recogniz ing the existence of the corporation.

The defendant having signed the articles of association which named him as trustee, only held him to the obligations of an officer to carfy on the corporate business, provided such use was made of the paper as was designated by its character, viz., that it was to be used to form a corporation de jure.

On the whole case I think there were facts from which the jury .would at least have had a right to find that there had been an intention to form a corporation, that before that was carried out, the defendant and others refused to proceed further, that thereupon certain individuals took up the affair and attempted without authority to act for the association, that, in fact, had no existence after the refusal, and that the defendant had done nothing which estopped him from denying the existence of the incorporation. On this ground, as well as on the other grounds, that the facts do not indisputably show for whose account the presses were purchased, nor that a purchase of such presses was within the objects declared in' the articles of association that was filed, or that Davis was the agent of the supposed association in the matter in dispute, I think there should be a new trial, with costs to appellant to abide event.

Curtis, J., concurred.


author: By the Court.—Speir, J.

text:
    GEORGE CAHEN, Plaintiff and Respondent, v. JOHN R. PLATT, et al., Defendants and Appellants.
    I. SALE, CONTRACT OF. '
    1. Warranty, express.
    1. Breach, waiver of; estoppel.

      (a) If the vendee receive the articles, examines them, and retains them without raising any objection on the ground of nonconformity with the warranty, and without making any offer to return them, and without notifying the vendor to take them back, he can not raise the question of non-con^ fortuity.

    3. What does not constitute an express warranty.

      (a) “Approved standard quality,” these words do not raise an express warranty.
    1. It is another expression for a merchantable a/i'Ucle.

    («) Dorence v. Dow, 57 N. J. 16, and Day v. Pool, 53' if. J., distinguished.
    3. Damages of vendor on refusal by vendee to accept.
    1. The measure is the difference between the contract price and the market value at the place of delivery.
    1. Place of delivery, what is.

      (a) When the contract was made at a certain place, say the city of New York, to which the merchandise was to be shipped from another place, and delivery was to be * made by the delivery of the invoices and bills of lading at the city of Sew York, and payment was to be made at that city, the place of delivery is the city of New York.
    1. That the merchandise is, according to usual custom, shipped at the risk of the vendee, does not alter the rule.
    H. CURRENCY, IN WHAT, DAMAGES TO BE RECOVERED.
    1. Where by the contract Vets price is to be paid in the cwrrency of a foreign government, but damages for a breach are to be measured bv the difference between that price and the market value at a

      flace loithin the United States, where there are two kinds of currency, one of gold and one of paper, the latter being the universally adopted medium, the party recovering the damages is entitled to have them estimated on the basis of the paper currency, although its value at that place is callable of being estimated in the foreign currency.
    Before Speir and Sanford, JJ.

      Decided March 20, 1876.
    Appeal by the defendants from a judgment entered in favor of plaintiff for nine thousand three hundred and thirty-nine dollars and twenty-two cents, upon the verdict of a jury.
    The complaint alleges that in September, 1872, the defendants agreed to buy from the plaintiff eight thousand single and two thousand double boxes of glass, to be shipped from a Belgium factory, in October, November, and December, 1872, and, January, 1873, at a price fixed at a specified discount from a certain- list of July 16, 1872, payable in the city of New York, in gold, on delivery here of invoice and bills of lading, the glass to be at the risk of the defendants as soon as shipped.
    The answer admits all the allegations in the complaint except the amount of damages. It alleges, however, that the glass which was delivered was not delivered within the time called for by the contract, and was of a quality inferior to that agreed for, as iiqí being of “approved standard quality,’ in accordance with the terms of the contract.
    The learned judge below charged the jury, among •other things, as follows: “ You have nothing to do with the question which has been raised here as to whether the glass corresponded with the grade called .for by the original contract between the parties, because no offer at any time has been made to return it, and no request was made to the plaintiff to take it back,” to which defendants’ counsel excepted.
    The judge further charged: “The plaintiff, Mr. Cahen, testifies that the contract price for the glass was one hundred and one thousand four hundred and ten francs and ninty-six cents., and then, in the fall of 1873, from the time that Mr. Boyd returned from Europe, and fold him that the glass could be bought at a less price in Europe, from that time up to January 1, the glass was worth sixty-six thousand one hundred and eighty-two francs and seventy-seven cents, in this market. How, that is what he testifies, and that the difference between the price at that time and the price called for upon the contract was thirty-five thousand two hu'ndred and twenty-eight francs and nineteen cents., which last sum, in currency amounts to about eight thousand dollars. That is what the plaintiff testifies to as the difference between the market value at the time of the refusal to receive the glass, and the contract price.
    There has been testimony, ■ in respect to which I shall-not detain you, as to the way in which prices are estimated on- glass, which is by a deduction from a fixed tariff. It is conceded that the six per cent, discount is an allowance for the difference between Belgium and English measurement, that the three per cent, discount is an absolute discount nominally for cash, and the fluctuating discount is the basis upon which the valuation is made. This valuation, testified to by Mr. Cahen, is made upon a basis of a fluctuating discount of fifty per cent. The defendants introduce a statement received from the plaintiff at some prior period, or about this period, made up by him upon a basis of forty-five per cent, fluctuating discount, which makes a difference of twenty-eight thousand six hundred and nine francs and ninety-two cents, calling the contract price the same,one hundred and one thousand four hundred and ten francs and seventy-six cents, and the ?alue of the goods at that time seventy-two thousand eight hundred and one francs and four cents.,; this, in American money, as testified to by Mr. Hughes, to be five thousand seven hundred and twenty-two dollars in gold. Then there is another statement of value presented for your consideration. . . If the refusal was prior to the period testified to by the plaintiff, and the market price was not as low-as the defendant fixed it, then the defendants are entitled to the difference, whatever you may make that to be. But it is for you to consider the testimony as to the value, and to determine what was the market price at the time of the refusal to receive the glass ; and that amount the plaintiff" is entitled to recover, with interest from January 1, 1874.”
    Defendants’ counsel excepted.

      Chambers, Pomeroy, and Boughton, attorneys, and William P. Chambers, of counsel for appellant, on the questions discussed by the court, urged:
    I. The court charged the jury that the defendants not having offered to return the glass, nor having requested the plaintiff to take it back, the jury had nothing to do with the question as to the quality of the glass delivered ; that plaintiff was entitled to recover, and the only question for the jury was the amount of damages. (To this defendants’ counsel excepted.) It is submitted that the foregoing exception was well taken. The court evidently regarded the contract between the parties as simply an executory contract. It is submitted that it was more: it was a sale with express warranty as to quality. The language of the contmct is, “all to be of approved standard qualities” (Day v. Pool, 53 N. Y. 416 ; Dounoe v. Dow, 57 N. Y. 16).
    II. The defendants’ counsel also requested "the court to charge the jury “ that, if the’ jury shall find that the glass delivered was, in respect to quality, conform able to the contract, the plaintiff is entitled to recover, by way of damages, the difference between the price agreed to be paid by the contract and the market value at the time and place when and where the property, by the contract, was to have been delivered;” and further, 6 £ that the place of delivery was at the pointof shipment.” The judge, on the contrary, charged that 6 ‘ the market price to be considered was that which was ruling at the city of NewYork at the time of refusal, and also charged, “ the invoices were to be sent forward to the defendants here, and the goods were to be delivered here, and the payments to be made by bills drawn as specified in the contract, and paid in gold.” Slow, by the terms of the contract the glass was “to be shipped from the manufactory of Messrs, de Looper, Haidin & Go., in Gosselies, &c„,” and the same was to be at defendants’ “risk and peril as soon as shipped.” The place of delivery, therefore, was at the place of shipment, and it was error for the court to refuse so to charge upon defendants’ request, and to charge that ‘ ‘ the goods were to be delivered here.” The invoices and bills of lading were to be delivered here, but not the glass. The rule of law is, that the market value at the place of delivery, in cases of this kind, must be shown. “Where a place is fixed on by the parties as that for delivery, it seems to be well settled that the inquiry as to prices is limited peremptorily to that particular “place” (Sedg. on Dam. (4th ed.) 317; Story on Sales (4th ed.) sec. 436, and cases cited in foot-note ; Gregory v. McDowell, 8 Wend. 435; Wemple v. Stewart, 22 Barb. 154; Lattin v. Davis, Lal. sup. to Hill & D. 12; Deifendorff v. Gage, 7 Barb. 21; Dustan v. McAndrew, 44 N. Y. 72 ; McNaughter v. Cassidy, 4 McLean, 530.)

      Man & Parsons, attorneys, and John E. Parsons,
      of counsel for respondent, urged, among other things :
    —I. As no objection is pretended to have been made to the glass until months after it was received, and as there never was any offer to return, of notice to take back, the defendants are precluded from alleging that the portion received was inferior (Reed v. Randall, 29 N. Y. 358 ; Pike v. Nash, 1 Keyes, 335 ; Hargous v. Stone, 5 N. Y. 73; Sprague v. Blake, 20 Wend. 61).
    = II.—The glass, by the terms of the contract, was to be shipped to New York. The contract was made here. The delivery was to be made by the delivery of the invoices and bills of lading, and that was to be done here. The payment was to be made here. In such a case the rule of damage is as charged by the judge: “the difference between the contract price and the market value in New York at the time of the breach, for the same description of glass, upon the same terms for delivery and otherwise, as provided in the contract” (Dana v. Fiedler, 12 N. Y. 40 ; Sedgwick on Damages, 316 ; citing Converse v. Prettyman, 2 Minn. 229; Dey v. Dox, 9 Wend. 129; Davis v. Shield, 24 Id. 322; Chitty on Contracts (11th ed.), 621).
    III.—The price was fixed in francs. The defendants insisted that the jury should render a currency verdict. It was proper that they should take the actual equivalent in currency (Bank of Commonwealth v. Van Veck, 49 Barb. 508; Rodes v. Bronson, 34 N. Y. 649, 653, 656 ; Simpkins v. Low, 54 N. Y. 173, 183-4; The Vaugban and Telegraph, 14 Wall. (U. S.) 258, 268).
   By the Court.—Speir, J.

The plaintiff delivered to the defendants under the contract all the glass except four thousand nine hundred and twenty-four boxes, and those, which were delivered, arrived on March 10 and 21, May 12, and June 23, in 1873. These were paid for. and examined in a week or two after arrival. The plaintiff’s claim is for the difference between the contract price and the market price of the four thousand nine hundred and twenty-four undelivered boxes of glass. On April 15, 1873, the defendants wrote to the plaintiff to write by the steamer which was to sail the next day, to stop all shipments for them until further notice.

The defense is, that the shipments of the glass delivered by the plaintiff differed in quality from the glass called for by the contract; that the glass called for was known as “approved standard quality,” whereas the glass delivered was a quality below that grade, and, consequently, the defendants were not bound to receive it.

It is to be observed that although the defendants’ answer states that they notified the plaintiff that the glass already delivered was inferior, as claimed by. them, there is no averment that defendants had either refused to receive, or offered to return any part of the glass delivered, or that they were ignorant of its quality at the time of its-receipt.

On the trial, the defendants proved that the glass was examined as it was received, and its quality then discovered, that no objection was then made to receive it, and that no offer had ever been made to return any portion of it to the plaintiff, and that he had never been notified to take back any part. When the defendants wrote to the plaintiff to delay shipments, two of the four shipments had been received and examined, and the request to delay was not put upon the ground of the inferior quality of the glass.

It is not easy to resist the conclusion, from an examination of the evidence, and especially that of the defendant Boyd, that at this time, there being a falling market, that the defendants then had a sufficient supply of glass at the price agreed upon between them. The market continued to fall off, and in the summer of 1873 the defendants claim they notified the plaintiff of their objection to the quality of the glass, and the plaintiff replied it was impossible there should be any difference. Defendants’ 'witness concedes that the plaintiff had never been shown any of the glass.

From the foregoing facts it is plain, 1 think, that the learned judge correctly charged the jury, “that they had nothing to do with the question whether the glass corresponded with the grade called for by the contract between the parties, and that the only question for the jury to determine was the amount of damages.”

The point taken by the defendants’ counsel is, that this was not only an executory contract, but it. was a sale with express warranty as to quality, and the two cases relied upon to sustain his position are Day v. Pool (52 N. Y. 416), and Dounce v. Dow (57 Id. 16). I do not think a warranty can be predicated upon the contract proven in this case. The goods were to be of “approved standard qualities.” When the defendants received the glass (and it was all received before any objection was made to its quality), the defendants themselves, in fact, approved the quality by receiving, examining, and retaining it without an offer to return any part of it, and without notifying the plaintiff to take it back. They have assented to the quality of the glass, and can not now revive that question. The retention of the property by the purchaser is an admission on his part that the contract has been performed. Besides, “approved standard quality’’“is only another expression for a merchantable article. The distinction between this and the cases referred to are very plain. In Dounce v. Dow (57 N. Y. 16), the court say, the contract was not merely for the delivery of iron classified and known as “ XX pipe iron,” and the iron of that designation and name, but that it should be of a quality suitable and proper for use in said defendants’ manufacturing business.” Here was an express agreement or warranty that it should be of that designated quality. The defendants, immediately after ascertaining the quality of the iron when delivered, notified the plaintiff of the deficiency in the quality and character of the iron, and requested him to take away the balance which had not been melted and mixed with other iron after the test. The quality of the iron had to be submitted to a test in order to determine its tenacity and toughness, which was particularly valuable in the defendant’s manufacturing business. It was this tenacity, toughness^ and quality of the iron which the plaintiff had expressly warranted and agreed to deliver to the defendants. An attentive examination of the case of Day v. Pool (52 N. Y. 416) will discover, I think, an equally plain distinction. The* cases which bear directly on the question before us are: Reed v. Randall, 29 N. Y. 358; Sprague v. Blake, 20 Wend. 61 ; Hamilton v. Ganyard, 34 Barb. 204 ; Shields v. Pettee, 2 Sandf. S. C. R. 262.

I can not see that the court has committed any error in his charge as to the rule of damages. The contract was made here, and by its terms the glass was to be shipped here. Delivery was to be made by the delivery of the invoices and bills of lading, and that was done here. Payment was to be made in Hew York. The defendants’ witness, Dunham, proved that the usual course of business for a sale of glass was that adopted in this case. The glass is shipped at the risk of the vendee. The court properly left it to the jury to fix the time of the defendants’ refusal to receive the goods, and to determine the market price at the time of refusal. The price was fixed in francs. It was proper that they should take the actual equivalent in currency (The Vaughan and Telegraph, 14 Wall. (U. S.) 268 ; Simpkins v. Low, 54 N. Y. 179, 188.

The judgment should be affirmed with costs.

Sanford, J., concurred.


text:
    ELIZA M. SMITH, Plaintiff and Respondent, and also Appellant, v. THE EXCHANGE FIRE INSURANCE COMPANY, Defendant and Appellant, and also Respondent.
    I. INSURANCE.
    1. Policy insuring a mortgagor of chattels against loss on the mortgaged property, loss, if any, payable to the mortgagee, issued after the mortgagee's title had become absolute at lam, by reason of the mortgagor’s failure to fulfill the conditions of the mortgage, in neglecting to pay two installments of interest, and after the filing of a copy of the mortgage setting forth the mortgagee’s interest in the mortgage as being the amount of the principal sum secured thereby, and said two installments of interest past due; the mortgagor never having taken possession, but the mortgagee having remained in undisputed and undisturbed possession of the property;
    1. What is insured by the policy.

      (a) The entwe property is, and not merely the value of the property which might be realized upon sale over and above the amount due on the mortgage.
    2. Over-valuation in proof of loss. Excessive valuation, wheS not presumptive evidence of fraudulent intent.
    1. Where the articles valued were very numerous, and had been in prior use for greater or less periods of time, and their depreciation depends on the quality of the material when new, and the skill of the workmanship in its manufacture, and upon the wear in the use, very great discrepancies in the opinions of all the witnesses, as to the value of the several items, furnishes the best proof that the claimant’s estimates, though in many respects excessive, can not be considered presumptive evidence of fraudulent intent.
    8. Valuation of numerous items.
    1. Gross and itemized, which to be taken.

      (a) The itemized valuation should be taken.
    4. Declarations by mortgagor.
    1. Made after issue of policy loss payable to mortgagee, cure not admissible as against the mortgagee.

    Before Speir and Sanford, JJ.

      Decided March 20, 1876.
    This and two other actions were brought to recover upon policies of fire insurance issued by the several companies on the shafting, belting, tools, benches, fixtures, and machinery used in a rubber factory in Water Street, Brooklyn. The party insured by the policy is Fitzhugh Smith, son of the plaintiff, but by a clause inserted in the policies subsequently to their issue, the loss or damage was .made payable to the plaintiff.
    On September 9, 1867, Fitzhugh Smith executed a chattel mortgage on the property in the usual form, whereby the title to the property was absolutely transferred to the plaintiff upon the condition : That if Fitzhugh Smith shall pay to her the sum of one thousand five hundred dollars, the interest to be paid on the same on the first days of January and July of each year, the same to remain for 'five years from date, if the interest is paid when due, then the transfer shall be void.”
    It was also provided in the mortgage that if default should be made in the payment of the said sum of money, the mortgagee was authorized to enter the place where the property might be, to take and carry the same away, and sell it in the usual manner, and until default should be made in the payment of the mortgage, Fitzhugh Smith was to continue in the possession of- the property. The installments of interest which fell due on January 1, and July 1, 1868, remained unpaid when the policy was issued, and the plaintiff filed a copy of her mortgage in the office of the Register of New York, with a statement signed by her exhibiting her interest in the mortgage as mortgagee, including, in addition to the principal, the two unpaid installments of interest.
    The plaintiff placed the value of the articles insured at eighteen thousand five hundred dollars, and the loss thereon at fifteen thousand five hundred dollars.
    On the question of the value of the insured articles two witnesses were called for the plaintiff, one of whom testified to the value of each article, making an aggregate of twenty-two thousand nine hundred and forty-three dollars ; the other testified that the damage to the property was beyond question in excess o' thirteen thousand dollars. The defendant called several witnesses, one of whom gave three general estimates, one of six thousand dollars, one of eight thousand dollars, and one of ten thousand dollars ; and in addition to this general estimate gave the value of some nine or ten items (some two hundred articles being covered by the insurance) which amounted to about eleven thousand dollars.
    The case was refere.d. The referee reported in favor of the plaintiff, against the defendant, for the sum of one thousand five hundred and forty-five dollars and fifty-seven cents, besides costs, and judgment was entered thereon. Both parties appeal from the judgment.

      W. K. Thorn, attorney, and J. Langdon Ward, of counsel for defendant, appellant, and respondent, submitted an elaborate brief in support of the proposition that plaintiff’s estimate was a fraudulent overvaluation.

      Charles M. Marsh, attorney, and of counsel for plaintiff, appellant, and respondent, submitted an elaborate brief in support of the proposition that "there was no fraudulent over-valuation, and that the referee had adopted a wrong basis of valuation, and had not awarded plaintiff the amount of damages which the correct basis would entitle him to; and also made the following points:
    I. Before the mortgage became due the entire property could undoubtedly have been insured as the property of Fitzhugh Smith (Van Deusen v. Charter Oak Ins. Co., 1 Abb. (N. S.) 350).
    II. This mortgage never had become due. (1) There was no provision in the jnortgage that the principal should become due if the interest was not paid. It provided only, “to run for five years from date, if interest is paid* when due.” It is substantially a mortgage without the interest clause. (2) If it were due, the plaintiff only had the right to so insist. She waived this right, and filed her declaration to that effect with the mortgage. The defendants, after this, by the very terms of their policy, recognize that her only interest was as mortgagee. (3) If, however, the mortgage became due it was only due on demand. This demand was never made. Until it was, the rights of mortgagor and mortgagee were as if it was payable at a definite future time (Lun v. Orser, 5 Duer, 501).

    III. Even if the mortgage were due it would be no defense. The insured still remained liable for the mortgage debt. He still had an interest in the property to preserve it, that it might be applied to discharge his liability ; and his interest was not limited to the amount of cash he would receive over and above the payment of his debts (The Buf. S. Works v. Sun Mut. Ins. Co., 17 N. Y. 401; Strong v. Man. Ins. Co.. 10 Pick. 43).
    IV. The remaining exceptions may be consider, d together, the question being, whether statements ana conversations of Fitzhugh Smith, the assured, are evidence against the plaintiff, to whom the loss had been made payable. (1) Fitzhugh Smith had at this time no interest in the policy. Such interest as he ever had, was transferred before the fire to plaintiff, by express consent of the defendant, evidenced by its agreement to pay the money to her. (2) Had Smith simply parted with his interest by assignment, 'to which defendant was no party,.his declaration would have been inadmissible in its favor against plaintiff. How much less are they, then, in a suit by plaintiff, upon defendant’s direct agreement with her (Tousley v. Barry 16 N. Y. 497). (3) When a loss in a policy is made payable to a third party, statements of the insured are not admissible in . evidence against the party beneficial interested in the policy (Rawls v. Am. Mu. Life Ins. Co., 27 N. Y. 282 ; Mullmer v. Guard. Mut. Life Ins. Co., 1 Sup. Ct. [T. & C.] 448).
   By the Court.—Speir, J.

The defendant raises two legal objections to the plaintiff’s recovery, both of which I think have been properly disposed of by the referee. The first is put upon the ground that it, in fact, only insured whatever interest Fitzhugh Smith may have had as owner of the equity of redémpton, and this was only the value of the property which might be realized upon the sale over and-above the amount due on the mortgage ; that the plaintiff’s title as mortgagee of the property has become absolute in law, because the mortgagor failed" to pay the interest which accrued on the mortgage. It seems to me the plain answer to- this objection is that the defendant agreed to pay the plaintiff as mortgagee after the two installments of interest had become due, and after a copy had been placed on file with a statement of the interest she had in the property as mortgagee. There is no room for doubt what interest the company intended to insure.

The second objection that the gross over-valuation by the claimant of the various articles destroyed or injured warrants the inference of a fraudulent intent, is, I think, in this case wholly unfounded. The loss was sustained upon machinery, tools and stocks consisting of a very great variety of items mostly known as second-hand, which had been in prior use for greater or less periods of time. The depreciation would depend upon the wear in the use and the quality of the material when new and the skill of the workmanship displayed in its manufacture. The discrepancies existing in the opinions of all the witnesses as to the value of the several items furnishes the best proof that the claimant’s estimates, though in many respects excessive, can not be considered presumptive evidence of fraudulent intent.

It appears from the record that the plaintiff ’ s witnesses, two at least, have described with much particularity and minuteness the different articles of machinery and other property claimed to have been on the premises at the time of the fire. But the learned referee seems to think that their estimates are not founded on reliable data, that no opinion has been furnished by either of them of the value of the machinery at the time of the fire, and that the witness Birbeck’s statements are of a general and vague character, and his examination of the property too superficial to justify him in attaching any great weight to the estimate he gave of the amount of the loss,

On the other hand, the defendant’s witness Davis appears from his disinterested manner to have justly acquired the confidence of the referee. The testimony of this witness was accordingly adopted by him exclusively as the basis of value. It is a general estimate of the whole property in mass, and not by items in detail. The witness gave three general estimates, first, six thousand dollars ; second, eight thousand dollars ; and third, ten thousand dollars. The latter sum was adopted by.the referee as the entire value at the time of the fire, and he fixes the value of the articles which remained after the fire at four thousand dollars; consequently the loss sustained by the defendant on the old stock amounts to the sum of six thousand dollars, as found by the referee.

This witness had been an engineer and machinist for twenty years, and his then present business was in buying and selling all kinds of machinery new and second-hand. There can be no doubt, I think, of his qualification to ascertain the true value of second-hand or injured machinery. The question is, has the proper method been adopted by the court in determining the loss sustained by the company, in view of all this witness has testified to in the case? He says: “I visited the factory within two days after the fire occurred. . . I did not take a close, but only a casual, observation of the machinery, with a view of purchasing, such as to enable me to make a value. . . . After the fire I wanted to purchase the washing-machines and three of the grinders. . . I don’t take into account the small hand-tools such as saws, but only the heavy machinery, such as calenders, heaters, washers, and shafting.”

It appears there are some two hundred and forty items contained in the schedule unquestioned as having been upon the premises at the time of the fire. Many of these lighter articles could not be seen to be valued. They were covered up by the heavy machinery and debris, as abundantly appears in the testimony. Now, this witness, in addition to his general estimate, gave the value of some nine or ten items, which amount to about eleven thousand dollars, and there are six or seven items valued by the defendant’s other witnesses, amounting :o some six or seven hundred dollars besides. Assuming, then, that the value of the old stock after theffre was worth four thousand dollars as found by the referee, there was still more than a total loss. It may be added that this result corresponds .with the general estimate made by the witness Birbeck. This witness had more than thirty years’ experience as engineer and machinist, and made three visits to the ruins at the request of an insurance agent and adjuster, to examine the amount of loss. He was informed that the insurance amounted to thirteen thousand dollars, and being furnished with a schedule list of machinery and tools, reported that the loss was greater than the insurance, and he did not therefore have the ruins cleared out to examine all the items on the list. From a careful examination of all the testimony I have come to the conclusion that an error has been made in not adopting the proper rule in estimating the defendant’s loss. Although the gross valuation made by Davis may have been satisfactory " to the referee, it is clear if the itemized value of Davis himself and the other defendant’s witness are in excess of that sum, there is error to the amount of that excess.

There is one exception taken by the plaintiff which deserves consideration. The witness Davis, on his direct examination, was asked whether he had since the lire any conversation with Fitzhugh Smith touching the value of this machinery. This was objected to, admitted, and exception taken. Fitzhugh Smith had no interest at this time in the policy. The defendant had agreed at this time to pay the amount of insurance to the plaintiff. It does not appear that Fitzhugh ■Smith had been examined at this time on the trial as a' witness. He was afterwards examined. Nor was there any evidence that the transfer of the interest to the plaintiff was colorable, or not made in good faith. A clear legal transfer was shown upon good consideration, and negative evidence was made out of entire ignorance on the part of the plaintiff that any defense existed or was claimed to exist against the transfer. The supreme court has decided that declarations are inadmissible even where.the defendant has been no party to the transfer, and that admissions of the mortgagee are inadmissible against his assignee (Booth v. Swezey, 4 Seld. 276 ; Paige v. Cagwin, 7 Hill, 361; Tousley v. Barry,. 16 N. Y. 497). In this case the defendant made a positive agreement with the plaintiff. Statements of the insured are not admissible in evidence against a party beneficially interested, where a policy is made payable to a third party. Where a party whose declarations are sought to be proved is dead it affords no ground for the admission of such declarations. Here the party was living. It seems to me to be an attempt to prove a fact by the declaration of a person not a party to the action, and the evidence ° was hearsay and secondary (Rawles v. American Life Insurance Co., 27 N. Y. 282; Mulliner v. Guardian Mut. Life Ins. Co., 1 N. Y. Supreme Court R. 448).

The judgment must be reversed and the order of reference discharged.

Sanford, J., concurred.