author: Daneobth, J.

text:
    Edmund R. Harrington, Appellant, v. The Erie County Savings Bank, Respondent.

      It seems the rule that a trustee may not purchase or deal in the trust property in his own behalf does not render such a purchase void ah origine, but voidable only, and at the instance of the cestui que trust or of a party who has acquired the rights which belong to one in that relation. The title, even while in the hands of the trustee, may be confirmed as well by acquiescence and lapse of time as by the express act of the cestui que trust.

    The title of a subsequent bona fide purchaser for value and without notice, when there is nothing on the record to show that his. grantors had not a perfect right to convey, cannot be impeached, even in equity ; he takes the land freed from the trust.
    (Argued December 10, 1885;
    decided January 19, 1886.)
    Appeal from, judgment of the General Term of the Supreme Court, in the fourth judicial department, entered upon an order made J anuary 29, 1883, which denied a motion for a new trial and directed judgment for defendant on an order dismissing the complaint on trial.
    This was an action of ejectment.
    The material facts are stated in the opinion.

      George Clinton for appellant.
    Upon the evidence the jury might legally have concluded, either that the conveyances by which the trustee got title were made for the purpose of swindling the estate, or that the object of such conveyances was to pay the claim made against the estate by him and give him in satisfaction the property in question. In either event the conveyances would be void, and the title would have remained in the trustees (Lytle v. Beveridge, 58 N. Y. 592; Russell v. Russell, 36 id. 581; R. S., part 2, chap. 1, title 2, art. 2, § 65 [7th ed.], p. 2183; Briggs v. Davis, 20 N. Y. 15; S. C., 21 id. 57; Douglas v. Cruger, 80 id. 15; Bish. on Insol. Debt. [cd. of 1879] 311, 312; Powers v. Bergen, 6 N. Y. 358; Fitzgerald v. Tapping, 48 id. 438; People v. Building Co., 23 Hun, 274; 92 N. Y. 98; Marvin v. Smith, 46 id. 571.) The quit-claim deed, being in contravention of both the trust expressed in the deed and the power in trust in the will, is- void. The plaintiff would not be estopped by such a deed if it had been proven, either'as against the trustees or Mrs. Harrington. (Stuart v. Kissam, 2 Barb. 493; Heath v. Crealock, L. R., 10 Ch. App. 22; S. C., 11 Eng. Law Rep. [Moak] 486; Douglas v. Cruger, 80 N. Y. 15; Bigelow on Estop. 480.) The transfer of defendant was in contravention of the trust, which is expressed in the assignment, and, therefore, absolutely void under the statute as the trust was still alive. (R. S., part 2, chap. 1, title 2, art. 2, § 65; Thatcher
      v. Candee, 3 Keyes, 157; Briggs v. Palmer, 20 Barb. 392; affirmed, sub nom. Briggs v. Davis, 20 N. Y. 15; 21 id. 574; Acer v. Westcott, 46 id. 384, 392; 7 Lans. 193; Lytle v. Beveridge, 58 N. Y. 592; Bergen v. Bennett, 1 Caine’s Cas. in Error, 348; Davoe v. Fanning, 2 Johns. Ch. 204; Gardner v. Ogden, 22 id. 344; Callahan v. Cunningham, 8 Cow. 361; Perry on Trusts, § 205.) A purchaser haying knowledge of facts sufficient to put him on inquiry is presumed to have made inquiry, and is chargeable with notice of whatever he could have ascertained by the inquiry upon which the circumstances should have put him. (Reed v. Gannon, 50 N. Y. 345, Cordova v. Hood, 17 Wall. 1; Att'y Gen'l v. Biphosphated Guano Co., 27 Weekly Rep. 621; Gallatin v. Cunningham, 8 Cow. 361; Balcom v. Life Ins. Co., 11 Paige, 454; Boone v. Childs, 10 Pet. 177, 212; 2 Wait’s Act. and Def. 507; Jackson v. Matsdorf, 11 Johns. 91; Jackson v. Mather, 7 Cow. 301.)

      E. C. Sprague for respondent.
    The sale to George P. Stevenson assuming that it was bona fide, and that the estate was credited with the amount of the proceeds, was in legal effect a compliance witli the provisions of the trust deed. (Briggs v. Davis, 20 N. Y. 30, 31; Dodge v. Stevens, 94 id. 209, 214.) The ci’edit given to the trust account by Edward I. Stevens for $10,000 is equivalent to the payment by George of that amount "of money to the trustees, and is a conversion of the land into money within the meaning of the assignment. (Silverthorn v. McKinstorn, 12 Penn. St. 67; Whittington v. Roberts, 4 Monr. [Ky.] 173, 174; Livingston v. Newkirk, 3 Johns. Ch. 312, 318, Ball v. Miller, 17 How. Pr. 300; Duntz v. Duntz, 44 Barb. 461, 462; Slade v. Vanvechten, 11 Paige, 21, 22, 25; Graham, v. Dickenson, 3 Barb. Ch. 170; Wallace v. Duffield, 2 Serg. & R. 524; Rogers v. Tilley, 20 Barb. 639; Bergen v. Bennett, 1 Caine’s Cas. 18.) Whether the sale was for the full value of the land is immaterial. (Briggs v. Davis, 20 N. Y. 30-32; Shelton v. Homer, 5 Metc. 467; Dubois v. Barker, 4 Hun, 80; v. Newton, 46 Barb. 173;
      Gallatin v. Cunningham, 8 Cow. 361, 377-384.) A sale can only be deemed in contravention of the trust where it is in conflict with its terms. Where a trust deed, as in this case, directs a sale without limit as to time, price, purchase or terms," and where no conditions precedent to the exercise of the power to sell remain unfilled, the sale is valid. (Lytle v. Beveridge, 58 N. Y. 592; Russell v. Russell, 36 id. 581; Briggs v. Davis, 21 id. 574; Allen v. Dewitt, 3 Comst. 276; Rome v. Phillips, 27 N. Y. 357; Douglas v. Cruger, 80 id. 15; Powers v. Bergen, 6 id. 358; Perry on Trusts, 785; Roseboom v. Mosher, 2 Den. 61; Dubois v. Barker, 4 Hun, 80; Hancox v. Meeker, 28 id. 214; Belmont v. O'Brien, 2 Kern. 394; Jackson v. Vandalfsen, 5 Johns. 43; Jackson v. Walsh, 14 id. 407; Jackson v. Brooks, 8 Wend. 426; Silverthorn v. McKinster, 12 Penn. St. 67; 3 Ross’ Com. Law, 305, 319; Burr, on Assign. 392; 1 Perry on Trusts, 205; Taintor v. Henderson, 7 Burr. [Penn.] 48; Bradstreet v. Clark, 12 Wend. 602, 667; Dundas v. Hiscock, 12 How. [U. S.] 256, 271; Sugden on Pow. 82; 2 R. S. [6th ed.] 1109, § 73; 1119, § 164; 1130, 1; 2 R. S. 1110, § 79; Peck v. Newton, 46 Barb. 173; Gallatin v. Cunningham, 8 Cow. 361; Johnson v. Bennett, 39 Barb. 237; Hubbell v. Sibley, 50 N. Y. 71, 472, 473; Tiff. & Bull. on Trustees, 811; Dodge v. Stevens, 94 N. Y. 209; Chapman v. Delaware, etc., R. R. Co., 3 Lans. 284; 1 Perry on Trusts, 205.) All the deeds should be construed as one instrument and constitute a substantial compliance with the provisions of the will. (Cooper v. Whitney, 3 Hill, 95.) The provisions of the trust deed, and the will of Mr. Harrington construed together and in connection with the quit-claim deed of the children, the deed to Mrs. Harrington, the bond and mortgage of indemnity given by her, and the entire object of all these transactions conclusively show that the sale was a legal performance of the intention of Harrington as shown by his assignment and his will, and within the powers of the children and trustees and the executors’ clause of the will as to payment by executrix of the debts provided for by the assignment. (Lang v. Ropke, 5 Sandf. 363; Burr. on Assign. [2d ed.] 394; Merrill v. Englesby, 28 Vt. 150.) Hone of the convéyances in question aro void under the provisions of the statutes as to fraudulent conveyances. (3 R. S. [6th ed.] 224, 225, § 5.) The quit-claim deed from plaintiff and the other heirs of Harrington to Spaulding and Stevenson conveyed to them in their own right all the interests, legal or equitable, which he then had in the premises, and he has acquired no right since. (1 R. S. 748 [6th ed.] vol. 2, 1130, § 1; 2 R. S. [6th ed.] 1094, § 17; 3 R. S. [6th ed.] 225, § 2; 2 R. S. 1105, § 49; 1103, § 35; 1101, §§ 8, 9, 10, 11; 1104, § 4, 2; 1110, § 76; 4 Kent, 211, note; Tower v. Hale, 46 Barb. 361; Peck v. Mallams, 10 N. Y. 509, 537, 538; 4 Kent, 262, note; Jackson v. Walsh, 14 Johns. 407, 414, 415, 66; Jackson v. Brooks, 8 Wend. 426; Nicholson v. Halsey, 1 Johns. Ch. 417; James v. Morey, 2 Cow. 246.) The rule that the title can only be questioned in such a case by proceedings in equity is inflexible. (James v. Morey, 2 Cow. 246; Jackson v. Walsh, 14 Johns. 407, 414, 415; Shelton v. Homer, 5 Metc. 467; Bostwick v. Atkins, 3 Comst. 53, 60.) The plaintiffs are estopped by their deed from asserting a legal title to the premises in dispute, whatever may be their equitable rights to call assignees to account. (4 Kent, 98.) The defendant is entitled to protection as a bona fide purchaser of the premises. (Claflin v. Lenheim, 66 N. Y. 301; Birdsall v. Russell, 29 id. 220, 249; Welch v. Sage, 47 id. 143, 147; 2 Kent, 147; 2 R. S. 1104, § 41; Lang v. Ropke, 5 Sandf. 363; Morrison v. Brand, 5 Daly, 40; Roger v. Murray, 3 Paige, 390; Guthrie v. Gardner, 19 Wend. 414; 1 Story’s Eq. Jur., § 64, chap. 381, 410, 411; Briggs v. Davis, 20 N. Y. 23, citing Jones v. Powles, 3 M. & K. 581; Tiffany & Bullard on Trustees, 197, 198, 199, 818; Jackson v. Walsh, 14 Johns. 407, 415; Jackson v. Henry, 10 id. 185, 195; Frazer v. Western, 1 Barb. Ch. 220, 240; Mowry v. Walsh, 8 Cow. 238; Warner v. Blakeman, 36 Barb. 501, 519.) Conceding that there has been no conveyance of the premises in question by the trustees, the plaintiff cannot maintain ejectment for the reason that the legal title still remains with the trustees. (1 R. S. [1st ed.] 730, § 67; 2 R. S. [6th. ed.], 1110, § 60; Calkins v. Calkins, 3 Barb. 305; Sayre v. Wisner, 8 Wend. 661;
      Amsberry v. Hinds, 48 N. Y. 57; Satter v. Tobias, 3 Paige, 338; Ang. on Lim., § 22; Rogers v. Murray, 3 Paige, 390; Williams v. City of Oswego, 25 Hun, 36, 38; Rogers v. Leftwitch, 2 Heisk. [Tenn.] 480; Laws of 1875, chap. 545; Wood v. Mather, 38 Barb. 473; Wood v. Mather, 44 N. Y. 249; People v. Canal, 6 id. 463; R. R. Co. v. Van Horn, 57 id. 473.) The plaintiff, irrespective of his quit-claim deed, is estopped by the facts proved from asserting any claim to this property by silence while Stevenson and the defendant were erecting buildings. (Wendell v. Van Rensselaer, 1 Johns. Ch. 344; Bowen v. Bowen, 30 N. Y. 519; Niven v. Belknap, 2 Johns. 573, 589; Higenbotham v. Barnet, 5 Johns. Ch. 184, 188; Cheeney v. Arnold, 18 Barb. 434, 440; Brewster v. Baker, 16 Barb. 613, 618; Walrath v. Redfield, 18 N. Y. 457 ) Plaintiff is estopped by the receipt by the estate of the purchase-money of which the plaintiff has had the benefit, which there has been no offer to repay, and which cannot be offset or ordered to be repaid by any judgment which can be rendered in this action. (Big. on Estop. 514; Tompkins v. Hyatt, 28 N. Y. 347; More v. Smedburgh, 8 Paige, 600.) He is also estopped by lapse of time in equity and by the equitable defenses set up in the answer, and which were established by the "plaintiff’s own evidence. (Code of Civ. Pro. 1531; 2 R. S. [6th ed.] 578, § 45; Bedell v. Shaw, 59 N. Y. 46; Barney v. Griffith, 5 Sandf. Ch. 552, 558; Colburn v. Morton, 5 Abb. Pr. [N. S.] 308, 316; Peabody v. Flint, 6 Allen, 52, 57; Story’s Eq. Jur., §§ 1520, 1523; id. 81; Bostwick v. Atkins, 3 Comst. 53, 60; Tiff. & Bull. on Trustees, 146, 148; Bergen v. Bennett, 1 Caines, 19 et seq.; Cunningham v. Cassidy, 17 N. Y. 276; Hubbell v. Medbury, 51 id. 100; Fifth N. Bk. v. Hyde Park, 101 Ill. 595; Pom. on Rem. 379; Duncomb v. R. R. Co., 84 N. Y. 190, 199; Getty v. Devlin, 54 id. 403, 415; Gould v. N. Bk., 86 id. 75, 82, et seq.; Boerum v. Schenck, 41 id. 182, 196, 197.)
   Daneobth, J.

The record shows that this action was commenced' on the 19th of April, 1877, to recover possession of certain premises lying on the corner of Main and Court streets, in the city of Buffalo, then in possession of the defendant, but to which the plaintiff claimed to have title. The defendant admitted possession of the premises, and denying any title or interest in the plaintiff, among other defenses asserted a legal title in itself, acquired in April, 1865, by purchase, in good faith and for a valuable consideration, from one Edward L. Stevenson, without notice of any claim on the part of the plaintiff; facts sustaining this allegation were in evidence before the plaintiff rested, and of themselves justified the non-suit against which this appeal is taken.

It appeared that Isaac It. Harrington was the common source of title; that he died in August, 1851, leaving a will under which the plaintiff took if at all, as one of several residuary devisees. But before that, as the plaintiff also showed, his testator in November, 1817, conveyed this, with other property, -to Edward L. Stevenson and El bridge G-. Spaulding “in trust to sell and dispose of the same upon such terms and conditions as in their judgment might appear best and most for the interest of the parties concerned, and convert the same into money, and by and with the proceeds of said sales and collections, to “ pay the expenses of the trust and care of the property, and apply the balance upon debts ” named or referred to as set out therein. His wife, Amanda, joined in the assignment, and she was also the sole executrix of his will. In December, 1 So2, the assignors and Mrs. Harrington, for an expressed consideration of $10,000, conveyed the property to George P. Stevenson, and he on the 25th day of February, 1856, conveyed it to Edward L. Stevenson, who on the 10th of April, 1865, for an actual consideration of $20,000 then paid to him, executed a deed with warranty and covenants of seizin to the defendant. In each instance possession of the premises corresponded to the legal title. The' assignment and several conveyances above referred to were all duly recorded before the execution of the deed to the defendant. It vests a plain record title, and we agree with the learned trial judge and the General Term in the opinion that nothing was proven to impeach it.

Suppose we concede on behalf of the appellant that the jury might have found that the conveyance by the trustees to George Stevenson was a device to get the title into Edward, who was one of the trustees, to satisfy a claim of the latter against the estate of Isaac, the creator of the trust, and provided for in his assignment. The existence and bonafides of the claim cannot upon the evidence admit of doubt, and it was proved that by the transaction, the claim was to that extent satisfied. We are, therefore, unable to see how the act can be characterized except as one done for the benefit of the estate, apparently within the terms of the power in trust, and not in conflict with them. The appellant relies upon the well-established doctrine that a trustee cannot purchase or deal in the trust property in his own behalf, or for his own benefit, directly or indirectly. This is a rule of equity and is not to be impaired or weakened. Such a purchase, however, is not void ab origine, but voidable only, and at the instance of the cestui que trust, or of a party who has acquired the rights which belong to one in that rola- _ tian. Even while in the hands of the trustee the title may be confirmed as well by acquiescence and lapse of time as by the express act of the cestui que trust. These elements exist, but need not be considered, for a legal estate acquired by a subsequent bona fide purchaser in good faith and without notice cannot be impeached even in equity. He takes the land freed ' from the trust.

That seems to be the situation of this defendant. There was nothing on record to show that its grantor had not a perfect right to convey, and if he had not, it was owing to some undisclosed act or circumstance of which there is no reasonable ground for suspicion the defendant had notice.

We have examined the various propositions of the learned counsel for the appellant, but find none which shows error committed by the trial court in dismissing the complaint, or which, in view of the opinion above expressed by us, requires further notice.

The judgment should, therefore, be affirmed.

All concur.

Judgment affirmed.


source: Caselaw Access Project

author: Finch, J.

license: Public Domain

text:
    Robert A. Stanton, as Receiver, Etc., Appellant, v. William G. Westover et al., Respondents.
    One of two partners on retiring from the business transferred to his co-partner his interest in the firm property, each agreeing to pay one-half of its debts. The firm was solvent, but the remaining partner was in fact insolvent at the time. This, however, was not known to him or the retiring partner, and the transfer was made in good faith. In an action wherein creditors of the firm claimed a preference over the individual creditors of the remaining partner, held, that hy the transfer the title vested in the remaining partner as his own private estate; that he acquired the same dominion over it as if it had always been his own separate property free from any lien or equity on the part of partnership creditors, and that transfers by him of the property in payment of individual debts were lawful.
    (Argued December 17, 1885;
    decided January 19, 1886.)
    Appeal from judgment of the General Term of the Supreme Court, in the third judicial department, entered upon an order made July 2, 1883, which affirmed a judgment in favor of defendants, entered upon a decision of the court on trial at Special Term.
    This action was brought by plaintiff as receiver of the joint property of defendants Osmer M. and William G. Westover, who formerly composed the firm of O. M. & W. G. Westover, and of the separate property of Osmer M. Westover, j¡o set aside as fraudulent a sale of his interest in the partnership property, made by William G. to Osmer M. Westover on the retirement of the former from the business; also to set aside two chattel mortgages covering the property thereafter executed by Osmer M., to secure individual debts, and a general assignment made by him for the benefit of creditors.
    Plaintiff was appointed receiver in supplementary proceedings in an action against the two members of the firm upon a firm debt. The facts, so far as material, are stated in the opinion.

      John W. Church for appellant.
    As between a firm and its creditors the property is vested in the firm, and no individual partner has an exclusive right to any part of the joint stock until the firm debts are paid and a balance of account is struck between him and his copartners and the amount of his interest accurately ascertained. (Menagh v. Whitwell, 52 N. Y. 146, 158, 159, 161, 162, 165, 166, 167.) The equity of partnership creditors to have the partnership assets applied first to the payment of their debts is that of the partners alone, and is to be worked out through them, and they, can terminate it at will. (Sage v. Chollar, 21 Barb. 596; Ketchum v. Durkee, 1 Barb. Ch. 480; Smith v. Howard, 20 How. Pr. 121; Dimon v. Hazard, 32 N. Y. 65, 80.) The firm assets transferred to O. M. Westover by W. G. Westover and those transferred by the latter to the former were charged with a trust for the payment of the firm debts, and under the circumstances their respective assignees hold them charged with the same trust. (Morss v. Gleason, 64 N. Y. 204; Menagh v. Whitwell, 52 id. 146. Goertner v. Trustees, etc., 2 Barb. 628; Burtus v. Tidball, 4 id. 571; Wilds v. Chapman, 4 Edw. Ch. 669; Pars. on Part. 253.) The voluntary assignee was apprised of Woodman’s rights before he entered upon his duties, and no equities appear in his favor. His bona fides do not aid his title. (Young v. Hermans, 66 N. Y. 374; Griffin v. Marguardt, 17 id. 30.) The assignment from O. M. Westover to Jane was void under the statute. (2 R. S. 137, § 1; Van Nest v. Zoe, 1 Sandf. Ch. 4; Rockenbaugh v. Hubbell, 5 L. R. [N. S.] 95; Wait’s F. C., § 325; Planck v. Schemerhorn, 3 Barb Ch. 644; Read v. Worthington 9 Bosw. 628; Burdick v. Post, 72 Barb. 172; Nicholson v. Leavitt, 6 N. Y. 517; Oliver Lee & Co's Bank v. Talcott, 19 id. 149; Hyslop v. Clark, 14 Johns. 458; Grover v. Wakeman, 11 Wend. 187; Wakeman v. Grover, 4 Paige, 23; Bump, 19, 27, 263.) The fact that at the time of the transfer both parties to it were insolvent renders it illegal and void as against plaintiff, to the extent of the indebtedness of the firm to him, or the judgment creditor he represents, notwithstanding it was made in good faith. (Hard v. Mulligan, 8 Abb. N. C. 63; Fisk v. Gould, 12 Fed. Rep. 372; Wilson v. Robertson, 21 N. Y. 587, 592; Willard’s Eq. 708; Dimon v. Hazard, 32 N. Y. 65; Ransom v. Vandeventer, 41 Barb. 316; Jackson v. Cornell, 1 Sandf. Ch. 348; Deveau v. Fowler, 2 Paige, 400; Menagh v. Whitwell, 52 N. Y. 146; Hulbert v. Dean, 2 Keyes, 97; Kameth v. Bassett, 34 Barb. 31; Heye v. Bolles, 33 How. 277; Fassett v. Tallmadge, 18 Abb. 52; O'Niel v. Salmon, 25 How. 248; Forgerty v. Cullen, 49 Supr. Ct. 397; Fitzpatrick v. Flanagan, 27 Alb. L. J. 175.)

      James W. Glover for respondents.
    An assignment is to be upheld unless clearly proved fraudulent. (Bingham v. Tillinghast, 15 Barb. 620; Shutz v. Hoagland, 85 N. Y. 464; Rapalee v. Stewart, 27 id. 318; Griffin v. Marquardt, 21 id. 121.) Good faith is always presumed. Fraud must be shown affirmatively. (Townsend v. Stearns, 32 N. Y. 213, 215; Bank of Silver Creek v. Talcott, 22 Barb. 561.) When one of two partners retires from business, relinquishing to the other all his interest in the partnership property, the remaining partner acquires the same domain as if it had ever been his own separate property. (Dimon v. Hazard, 32 N. Y. 65; Iveschick v. Addison, 3 Rob. 344; Menagh v. Whitwell, 52 N. Y. 160, 167, 171; Fitzpatrick v. Flanagan, 27 Alb. L. J. 175; Sage v. Cholar, 21 Barb. 598; Field v. Hunt, 21 How. 463; Ketchum v. Durkee, 1 Barb. Ch. 480; Krib v. Schoonmaker, 3 id. 46; Corey v. Long, 2 Sweeney, 495; Smith v. Howard, 20 How. 121; Greenwood v. Broadhead, 8 Barb. 596, 597.)
   Finch, J.

The judgment in this action is fully sustained by the case of Dimon v. Hazard (32 N. Y. 65). It was there held that where one of two partners retires from business, relinquishing to the other all his interest in the partnership property, the remaining partner acquires the same dominion as. if it had ever been his own separate property; that the transfer being made in good faith, the title vests in the remaining partner as his own private estate, free from any lien or equity in favor of partnership creditors; and that such remaining partner may lawfully transfer such property in payment of his individual debts. In this case, the good faith of the transfer is abundantly proved, and found as a fact by the trial court. The partnership was perfectly solvent; its debts being only about $1,500, and its assets $9,000. The retiring partner received $3,800 in outside securities, except to the extent of $900, which was paid to him in firm notes and accounts, and agreed to pay one-half of the firm debts, the remaining partner agreeing to pay the other half. For a period of five months the situation 'remained unchanged, and the property open to levy; and during that time the retiring partner offered to pay one-half of the debt here in question upon being fully released. The creditor had a right to decline the offer, but the fact that it was made bore strongly upon the question of good faith. By force of this arrangement neither party retained any equity against the other. By their joint consent the goods became the individual property of the remaining partner, and the $900 in notes and accounts the individual property of the retiring partner, and no partnership property remained. Each by the agreement of transfer substituted for the partner’s equity the personal contract of the other to pay, and had left only the right to enforce that contract against the individual contracting. The property of O. M. Westover thus lost its character of partnership property, and became the separate property of the individual. This result is claimed to have been changed by the doctrine of this court in Menagh v. Whitwell (52 N. Y. 146). We do not so understand it. It was there distinctly said that “ there is another class of cases in which the partnership effects have been held to be liberated from liability to be applied to partnership debts, in preference to the separate debts of one partner; that is where a bona,fide, sale has been made by a retiring partner in a solvent firm of two members to his copartner, the latter assuming the debts. In such a case it is settled that the property formerly of the partnership becomes the separate property of the purchasing partner, and that the partnership creditors are not entitled to any preference as against his individual creditors in case of his subsequent insolvency. But in those cases the joint property was converted into separate property by the joint act of all the members of the firm. They had power to dispose of the corpus of the joint property, and the exercise of that power, when free from fraud, divested the title of the firm as effectually as if they had united in a sale to a stranger.” The question in the case, from which we have made the foregoing citation, was further said to be the effect upon the title of the firm, as between it and its creditors, of several transfers by the partners to third persons. Two circumstances only mark a difference in the case before us from those supposed in the doctrine thus established. Here the debts were not all assumed by the purchasing partner, and the latter was in fact insolvent as an individual at the date of the transfer. But, as we have already seen, each assumed one-half of the debts in severalty as between themselves, and in reliance upon the individual responsibility of each other; neither retaining any partnership equity since no partnership property remained. The insolvency of the purchasing partner, if known to him and to the seller, might very well be strong evidence of an intent to defraud the partnership creditors, and become conclusive upon that question if there was no explanation. But here the purchasing partner supposed himself to be solvent, .and was so believed to be by the seller. The former continued in business for five months before his failure, during which period he stood open to a levy by the firm creditors, and the offer of the retiring partner to pay the half he had assumed tended to rebut any fraudulent intent.

On this state of facts it is found .that there was no fraud, and we think correctly. The contrary could not be held as matter of law.

The judgment should be affirmed, with costs.

All concur.

Judgment affirmed.


author: Eabl, J.

text:
    John Reed, Respondent, v. George McConnell, Survivor, etc., Appellant.
    In an action to recover damages for breach of a contract to form, and continue a partnership for a specified term, the opinion of the witnesses as to the value of the contract to plaintiff, or as to what would have been his share of the profits had the contract been carried out, is incompetent and its reception error.
    (Argued December 17, 1885;
    decided January 19, 1886.)
    Appeal from judgment of the General Term of the Supreme Court, in the second judicial department, entered upon an order made September'!!, 1883, which affirmed a judgment in favor of plaintiff, entered upon the report of a referee.
    The nature of the action and the material facts are stated in the opinion.

      M. D. Grover for appellant.
    The measure of damages in every case of breach of contract is the value of the contract. The party should be made good, but speculative and contingent profits cannot be recovered or proved by opinion. (Van Ness v. Fisher, 5 Lans. 236; Griffin v. Colver, 16 N. Y. 489; Rogers v. Beard, 36 Barb. 31; Wagoner v. Corkhill, 40 id. 175; Pollett v. Long, 58 id. 35; Cassidy v. Lefevre, 45 N. Y. 562; Washburn v. Hubbard, 6 Lans. 11; Howe Machine Co. v. Bryson, 44 Iowa, 24; McWhiter v. Douglass, Cald. [Tenn.] 591; 25 Ill. 86; Bierbach v. Goodyear R. Co., 54 Wis. 208; 41 Am. Rep. 19; Masterton v. Mt. Vernon, 58 N. Y. 391; Lincoln v. Sar. R. R. Co., 23 Wend. 425; McIntyre v. N. Y. C. R. R. Co., 37 N. Y. 287; Grant v. City of B'klyn, 41 Barb. 381; Nebraska City v. Campbell, 2 Black, 590; Walker v. Erie R. Co., 63 Barb. 260; Giles v. Tole, 4 id. 261.) Damages may include gains and profits prevented as well as losses sustained, provided they are certain and such as might naturally follow the breach; but the law excludes uncertain and contingent profits. (McWhuty v. Douglass, 1 Col.; Schile v. Brokhaus, 80 N. Y. 614; White v. Miller, 71 id. 133; Walcott v. Mount, 36 N. J. 13.) A person, who is not interested in the business of a firm or in the capital invested, save that he is to receive a share of the profits as a compensation for his services, or for money loaned for the benefit of the business, is not a partner. (Richardson v. Hughitt, 76 N. Y. 55; Moore v. Huntington, 7 Hun, 426; Smith v. Bodine, 74 N. Y. 30; Cary v. Fowler, 87 id. 33; Cox v. Heckman, 84 H. L. C. 268; Everson v. Power, 89 N. Y. 527; Wolfe v. Studenbaker, 65 Penn. St. 459.)

      A. Pond for respondent;
    The contract between the parties, whatever its precise terms were, if satisfactorily established by the pleadings and evidence, must be deemed and regarded as a legal and valid contract, inasmuch as the defendant’s counsel expressly stipulated at the trial that they would make no claim that it “is void if found to be as stated by the plaintiff in his testimony or as established by the evidence in this case.” (Bommer v. Ames, etc., Hinge Co., 81 N. Y. 468.) Such stipulation is an entire waiver of such an objection, if any such previously existed thereto, an express waiver is as good as an implied one, and both exists here. (Marston v. Swett, 66 N. Y. 206; Porter v. Wormser, 91 id. 431, 450; Durham v. Cudlipp, id. 129, 134.) The referee committed no error in law in finding in favor of the testimony of the plaintiff, one party, against that of the defendant, the other party, nor indeed in finding against the uncontradieted evidence of the defendant, an interested party, if he did so find. (Gildersleeve v. Landon, 73 N. Y. 609; Kavanah v. Wilson, 70 id. 177; Elwood v. W. U. Tel. Co., 45 id. 549, 554; Russell v. Freer, 56 id. 67, 69.) Moreover if the defendants turned off the plaintiff without cause as found by the referee, and thereby prevented the latter from aiding and assisting the defendants in earning profits, and also discontinued the business so that no profits could thereby be made or earned, the defendants are now estopped from claiming that no profits could have been made in the business had it continued. (Gifford v. Waters, 67 N. Y. 80; Hand v. Campbell, 26 Mich. 239, 245; Bayley v. Smith, 6 Seld. 499; Dennis v. Maxfield, 10 Allen, 142; Leediv v. Am

      hurst, 20 Beav. 239.) The plaintiff is entitled to recover as damages for the breach of the contract what its value to him was at the time of the breach, taking into consideration what the plaintiff has lost in services and money, and the gains in the shape of profits he would have received and which he has been prevented from receiving in consequence of such breach of the contract by the defendants. (Danolds v. The State, 89 N. Y. 36, 50; Taylor v. Bradley, 39 id. 129, 144; Masterton v. Mayor, etc., 7 Hill, 61; Bagley v. Smith, 6 Seld. 489, 497, 498; Schell v. Plumb, 55 N. Y. 592, 595; Sedg. on Dam. [7th ed.] 119, 120; Hay v. Gronoble, 34 Penn. St. 9; Wolfe v. Studebaker, 65 id. 288; Garsed v. Turner, 71 id. 56; Erie & Pitts. R. R. Co. v. Donthet, 88 id. 243; Dennis v. Maxfield, 10 Cush. 138; McNeal v. Reid, 9 Bing. 68; Rhodes v. Bond, 16 Ohio St. 573; Armor v. Oakley, 131 Mass. 413; Simpson v. Lon. & N. W. R. Co., 16 Eng. Rep. [Moak] 330; Jaques v. Millar, 22 id. 728.) The only possible way to prove the value of the contract between the parties at the time of its breach by the defendants, it having been broken before any business was done under it, was by the opinions of witnesses who had the peculiar knowledge and the requisite experience in the tannery business and upon the general subject' to make them experts. (Taylor v. Bradley, 39 N. Y. 129, 114; Mitchell v. Read, 19 Hun, 419; 84 N. Y. 556, 559; Eldridge v. Smith, 13 Allen, 140; Scattergood v. Wood, 79 N. Y. 263; Harpending v. Schoenmaker, 37 Barb. 270, 289; Whitbeck v. N. Y. C. R. R. Co., 36 id. 644; Smith v. Gugerty, 4 id. 615, 625; Colwell v. Lawrence, 38 N. Y. 71, 72; Spencer v. Smith, 46 Barb. 320, 322.) The fact that it was the wrongful and fraudulent act of the defendants, in refusing to perform the contract, that creates the necessity for proving its value, estops them from objecting to the only evidence by which alone it can be proved. (Gifford v. Waters, 67 N. Y. 81, 83; Bagley v. Smith, 6 Seld. 499; Dennis v. Maxfield, 10 Allen, 112; Lord v. Campbell, 26 Mich. 239, 245; Leeds v. Amhurst, 20 Beav. 239.)
   Eabl, J.

So far as we are now concerned with this action, it was brought to recover damages for the breach of an agreement on the part of the defendants to take the plaintiff into a partnership in a tannery. The material facts as found by the referee are as follows : In the month of March, 1877, the plaintiff solicited the defendants to enter into the project of building a tannery at Oregon, in the county of Warren, in this State. He at the time owned a contract for the purchase of a site for the proposed tannery, and also a refusal or option for the purchase of fifty thousand cords of hemlock bark on the tree in the vicinity of the site. In the month of May, 1877, negotiations were entered into between him and the defendants for the purchase of the tannery site and bark by the defendants and the building of the tannery, and about the middle of that month an agreement was entered into between him and them in regal’d to such purchase, the building of the tannery and the tanning of hides thereat as follows, viz. : The defendants were to furnish to the plaintiff the money to purchase the tannery site, to erect a tannery thereon, and to supply the same with the necessary machinery, conveniences, tools, etc., to properly run the same so as to tan sole leather; the plaintiff was to negotiate such purchase and superintend the building of the tannery, negotiate for the purchase of the bark (to be paid for by the defendants) and he was to receive from them for his services the sum of $1,000 per year; on the completion of the tannery and the purchase of the bark, the defendants were to stock the tannery with hides for tanning, to sell the leather tanned therefrom, and the plaintiff was to have the superintending of the tannery and conduct the business of tanning sole leather thereat ; the profits of such business were to be distributed as follows, viz.: After all expenses in carrying on and running the tannery, interest on all capital invested at the rate of seven per cent per annum, five per cent commission for buying the hides and six per cent commission for selling the leather tanned therefrom, had been taken out by the defendants, the balance of the profits, if any, was to be divided between the parties in the proportion of one-third to the plaintiff and two-thirds to the defendants; the plaintiff in superintending the building and running the tannery was to spend only one-half of his time for which he was to receive from the defendants the sum of $1,000 per year, to be included in the running expenses of the tannery; and his board and the keeping of his horses while at the tannery were to be paid by the defendants as a portion of the expenses of building, and after the erection, of running the tannery ; the business was by the terms and conditions of the agreement to continue for the period of twelve years. Pursuant to the agreement, the tannery site, hark and bark contracts were purchased, the tannery was erected and stocked with hides and the business of tanning sole leather thereat was commenced. The defendants furnished hides to stock the tannery, and the plaintiff conducted the business of tanning and had charge of the tannery and business thereat until on or about the 1st day of October, 1878, when the defendants, without cause or provocation, and in violation of their agreemerit, discharged and removed the plaintiff from the business and the superintendency of the tannery and from all connection with the business, and then and ever since have declined and refused to employ and continue the plaintiff in the business and to pay the plaintiff any profits arising from the business, and have claimed, and still do claim and insist, that he has no right or title in the tannery building, bark or business, and refuse to carry out their agreement with him. And the referee found that the value of the agreement to the plaintiff would have been, if carried out in accordance with its terms, the sum of $12,000, and that he was, by reason of the breach of the agreement, damaged in that sum.

Upon the trial of the action the plaintiff was allowed to prove the value of his agreement and the amount of his damages hy the opinions of witnesses. He, as a witness on his own behalf, was asked this question : What, in your judgment, was the net value of your contract with the defendants, if carried out, to go into partnership with them, per annum, taking into consideration the rental value of the property, the expense of purchasing hides and sale of leather, and all the expenses connected with tanning?” To tliis the defendants objected, among others, upon the ground that the court was to determine the value from the facts found j and that such value could not be determined from the opinion of the witness. The referee overruled the objection, the defendants excepted to the ruling, and the witness answered: “ At least §3,000, per year, besides my stipulated compensation of §1,000.” Another witness was asked this question: “ What, in your judgment, is the value of a contract for tanning sole leather at Oregon tannery as follows : You are to have one-tliird of the net profits of that tannery for twelve years from July or August, 1877, to be included, in addition to the ordinary expenses of the tannery, §1,000 per year for foreman and general supervision, the interest on §20,000 at seven per cent cost of the tannery, and commissions, for the purchase of leather and purchase of hides ? ” There were the same objections, ruling and exception as before, and the witness answered: “ I think from §3,000 to §4,000 per year.” Another witness was asked this question: “ State whether or not, in your judgment, tanning could be made profitable at Oregon tannery, the tannery to have the capacity of four hundred tons a year, tanning by the non-acid process, tannery to cost §20,000, the usual commissions to be paid, five per cent for buying hides and six per cent for selling leather, the contract to continue twelve years, commencing in January or February, 1878, with a contract for fifty thousand cords of bark at fifty cents a cord on the tree, on the Griffin lands, and roads built to land; if so, how profitable?” The defendants objected to this as incompetent and not the proper measure of damage. The referee overruled the objection, and the witness answered that the tannery could be made profitable and the profit would be at least $9,000 per year*. Subsequently the same question was put to another witness and objected to upon the same grounds, and the objection was overruled, and the witness answered that a profit of $12,000 per year could be made for twelve or fifteen years.

We think these opinions were improperly received. They violated the general rule of evidence that witnesses must state facts and not give opinions, and they do not come within any of its exceptions.- There is no certain or proper basis for such opinions, and that they are of little or no value as guides to a just result plainly appears. Several witnesses of the defendants testified that the tannery, under the conditions mentioned in the contract, could make no profits, and the referee, upon the request of the defendants, found that no profits had been made in the tannery when the plaintiff left it, and that the running and operating the tannery, in a proper and workmanlike manner and with bark received under the contract with Griffin, had actually resulted in a loss down to January 14, 1880, near the commencement of the trial. The necessities of the case are not such as to justify the opinions. All the facts of any value can be stated and placed before the court, and from them the disinterested triers of fact can draw inferences and make up judgments better than witnesses generally friendly, to if not biased in favor of, the party calling them. The defendants could evidently find as many witnesses to swear that no profits could be made, as the plaintiff could to swear that profits could be made, and thus the ultimate conclusion as to profits and damages would after all have to be based upon the facts stated. In this case all the facts should be proved, and with the aid of the light which subsequent events have shed upon the value of this agreement, the trial court will be able to reach a conclusion as to such value more reliable and satisfactory than the opinions of witnesses. We refer, for a fuller statement of our views as to the proof and rules of damages, to the case of Wakeman v. Wheeler & Wilson Manufacturing Company, just decided by us. The opinion in that case is quite applicable to this and sufficient authority for the conclusion we here reach.

The judgment should be reversed and a new trial granted, costs to abide event.

All concur.

Judgment reversed.

         Ante, p. 205.


author: Huger, Ch. J.

text:
    Bertrand Clover, Jr., Respondent, v. The Greenwich Insurance Co. of the City of New York, Appellant.
    Where it affirmatively appears that an erroneous charge could not have affected the verdict it is not ground for reversal.
    A policy of fire insurance required proofs of loss to be made within thirty days after a fire, and provided that the loss should be payable sixty days after notice thereof and proofs of loss have been received by the company; it also provided that in case of differences in regard to the loss or damage they should be submitted to arbitrators. In an action upon the policy, held, that the words ‘ ‘ proofs of loss,” in the clause in regard to payment, referred to the proofs to be furnished within thirty days, and that an action brought three days after an award by arbitrators, appointed as provided by the policy, but more than sixty days after proofs of loss were served, was not prematurely brought.
    The insurance was upon plaintiff’s interest, which was an undivided half of the buildings insured. An allowance was made by the arbitrators for the expense of removing the machinery in the buildings preparatory to the work of repair. Defendant offered to prove that plaintiff’s co-tenant had received an award from other insurance companies, in which was included the expense of removing the machinery. Meld, that the evidence was properly rejected, as the proof would not affect defendant’s liability.
    The policy contained a clause providing that it should be optional for defendant to repair or rebuild within a reasonable time, giving notice of its intention so to do within sixty days after completion of the proofs of loss therein required. Defendant, on the next day after the award, refused to pay ; it offered to prove that three days thereafter it offered to repair; this was rejected. Meld no error ; that the proofs referred to in the clause in reference to repairs were the proofs required to be furnished within thirty days, not to any subsequent proceedings, to ascertain amount of loss; and that the option terminated when a right of action accrued to plaintiff upon the policy.
    The policy provided “ that the cash value of property destroyed or damaged by fire shall in no case exceed what would be the cost to the assured * * * of replacing it.” Meld, this provision assumed that the ascertainment of the cost of replacing is a legitimate method of determining the amount of damages; and that an allowance for the expense of removing machinery from the building preparatory to making repairs was proper; also, as the fact that the machinery belonged to some other person did not necessarily exempt the insured from the necessity and cost of removing it, that fact alone did not prevent such an allowance; also, that the existence of a contract between plaintiff and other persons by which h.6 could compel them to remove the machinery did not diminish defendant’s liability.
    (Argued December 18, 1885;
    decided January 19, 1886.)
    Appeal from judgment of the General Term of the Supreme Court, in the second judicial department, entered upon an order made December 11, 1883, which affirmed a judgment in favor of plaintiff, entered upon a verdict.
    This was an action upon a policy of insurance against loss by fire upon plaintiff’s “undivided one-half interest” in certain buildings used as a saw and file factory.
    The policy contained these clauses among others:
    “ The amount of loss or damage to be estimated according to the actual cash value of the property at the time of the loss, and to be paid sixty days after due notice and proof of the same, received at the office, made by the assured, in accordance with the terms and provisions of this policy, unless the property be replaced, or the company have given notice of their intention to rebuild or repair the damaged premises.”
    “ Persons sustaining loss or damage by fire shall forthwith give notice, in writing, of said loss to this company, and within thirty days after the fire a particular statement of the loss shall be rendered to this company, signed and sworn to by the assured. * * * The assured shall, whenever required, submit to an examination or examinations under oath by any person appointed by this company, and subscribe to such examinations when reduced to writing, and shall also, as often as required, produce their books of account and other vouchers, and exhibit the same for examination either at the officé of this company or such other place as may be named by its agent, and pprmit extracts and copies thereof to be made.”
    “ In case differences shall arise touching any loss or damage, after proof thereof has been received in due form, the matter shall, at the written request of either party, be submitted to impartial appraisers, whose award in writing shall be binding on the parties as the amount of such loss or damage, but shall not decide the liability of the company under this policy; and it shall be optional with the company to repair, rebuild or replace the property lost or damaged, with other of like kind and quality, within a reasonable time, giving notice of their intention so to do within sixty days after the completion of the proofs herein required.”
    “The cash value of property destroyed or damaged by nre shall in no case exceed what would be the cost to the assured, at the time of the fire, of replacing the same ; and in case of the depreciation of such property, from use or otherwise, a suitable deduction from the cash cost of replacing shall be made to ascertain the actual cash value.”
    “ It is furthermore hereby provided and mutually agreed, that no suit or action against this company, for the recovery of any claim, by virtue of this policy, shall be sustainable in any court of law or equity until after an award shall have been obtained fixing the amount of such claim in the manner above provided, nor unless such suit or action shall be commenced within twelve months next ensuing after the loss shall occur, exclusive of any time consumed in arbitration; and should any suit or action be commenced against this company after the expiration of the aforesaid twelve months, the lapse _ of time shall be taken and deemed as conclusive evidence against the validity of such claim, whether the amowit of loss has or has not been adjusted, any statute of limitation to the - contrary notwithstanding.”
    A fire occurred April 18, 1882. Plaintiff presented proofs of loss May 17, 1882. The parties not agreeing as to amount of loss, arbitrators were selected as prescribed by the policy, who, on September 5,1882, made an award. On the next day defendant’s secretary notified plaintiff’s attorney that it would not pay. On September ninth this action was commenced.
    The further material facts appear in the opinion. .

      Adrian H. Joline for appellant.
    If arbitrators take into consideration matters not submitted to them their award is void and the fact may be shown by paroi testimony, even by that of the arbitrators in an action at law upon the award. (Butler v.
      Mayor, etc., 7 Hill, 329; S. C., 1 Barb. 325; Briggs v. Smith, 20 id. 409; People, ex rel. Wasson, v. Schuyler, 69 N. Y. 242, 247; Bouvine v. Milbank, 5 Abb. Pr. 28; Morse on Arbit. and Award, 178, 181, 182, 186; 192, 213, 214; Dalrymple v. Town of Wittingham, 26 Vt. 345.) The court erred in excluding proof of the offer of the company to rebuild and plaintiff’s refusal to permit rebuilding. (Bals v. Home Ins. Co., 36 Barb. 614; affirmed, Court of Appeals, 36 N. Y. 522; Morrell v. Irving Fire Ins. Co., 33 id. 429.) In order to constitute a waiver there must be evidence justifying a finding that with full knowledge of the facts there was an intention to abandon or not to insist upon the point claimed to be waived, or that it was purposely concealed under circumstances calculated to and which actually did mislead the other party to his injury. (Devens v. Mech. & Traders' Ins. Co., 83 N. Y. 168.) Where special damages are alleged, but there is no proof of general damage, it is error to charge that the jury may give general damages. (Vanderslice v. Newton, 4 N. Y. 130.) The appraisal does not waive any of the other clauses of the policy, for it is binding only as to the amount of loss or damage. (Gilligan v. Com. Ins. Co., 20 Hun, 93.)

      A. J. Perry for respondent.
   Huger, Ch. J.

There were two items of evidence, only, upon which the verdict of the jury with respect to the amount of damages, could have been based, viz. : (1) The award of the arbitrators assessing it at $1,225, and (2) the proofs of loss in which it was stated to be $1,250. The court in charging the jury directed them to bring in a verdict for the amount appraised by the arbitrators, with interest from September 5, 1882, in -case they should find that the arbitrators had not exceeded their authority, in making the award. The jury found for that sum, and the inference is quite conclusive that their verdict was founded upon the evidence furnished by the award, and not upon that contained in the proofs of loss. It is evident, therefore, that the defendant was not injured by the charge of the trial judge to the effect, that if the jury found that the arbitrators exceeded their authority in making the appraisal of damages, the plaintiff was entitled to whatever damage he had suffered by the loss .in question. There being no legal evidence of the amount of such damages, aside from the appraisal, an exception to the charge would have been fatal to the judgment, but for the fact that it affirmatively appears that it did not influence the verdict. (Thorne v. Turck, 94 N. Y. 90.)

The objection that the action was prematurely brought is not sustainable. The policy provides that the loss shall be payable, sixty days after due notice thereof, and proofs of the same, are received by the insurers. This clause evidently refers to the proofs of loss, required by the policy to be made by the insured, within thirty days after the fire, and not to any act of the plaintiff which might, or might not, be thereafter required of him, under the policy, by the insurers. The clause providing that the one year limitation, shall run against the assured, notwithstanding the pendency of proceedings to appraise damages, might otherwise enable the insurers by inaction and delay, to retard, if not defeat, any recovery on the policy. The provision authorizing an extension of the time of payment of a loss, until after certain proofs, declarations and certificates, are produced, seems to exclude the hypothesis that the defendant was also to have sixty additional days delay, after such proofs had been made. This provision contemplates a postponement of the right to bring an action only, until such proofs are made, and rebuts the inference that any longer delay was intended.

The action was not commenced until September 9, 1882, nearly four months after proofs of loss were served, and several days after the completion of the award of the appraisers, and was not, we think, prematurely brought, if either, did the court commit any error in excluding the defendant’s offer to show that the plaintiff’s co-tenant had received an award, from other insurance companies, for a loss upon his individual interest in the property damaged, which included the expense of removing the machinery, p reparatory to the work of repairing the real property injured. That fact did not affect the liability of the defendant upon its policy to the plaintiff, and he was entitled to recover whatever it might be necessary for him to pay, in the restoration of the interest insured, to its original condition. The sole question in this case in respect to the item objected to is, whether the plaintiff might be subjected to the expense of making the removal referred to. This question was not affected by a proceeding between strangers to this action, in which the plaintiff took no part and had no interest, but was to be determined by the provisions of Ms policy.

As a defense to the action, the defendant offered to prove that on the 9th of September, 1882, it served upon the plaintiff a written offer, electing to rebuild or repair the property damaged. It then appeared in proof, that on the sixth day of September the defendant had refused to pay the award in question, and that nearly four months had elapsed since the service of the proofs of loss. The evidence was objected to and excluded by the court, to which ruling the defendant excepted. This evidence was claimed to be admissible, under the clause in the policy, providing that it should be optional with the company, to repair or rebuild the property damaged within a reasonable time, giving notice of their intention so to do, within sixty days after the completion of the proofs therein required. The proofs therein referred to are evidently the proofs of loss, unconditionally Tequired to be made by the assured, according to the terms of the policy, and do not refer to the subsequent optional proceedings provided by the policy, for ascertaining the amount of a loss, which may or may not be required to be taken, in any given case. It would be an unreasonable construction of this contract, to extend the exemption of the defendant from suit, and give it a right to defeat an action- already brought, to a period which it had the power to prolong indefinitely, even to the running of the limitation, provided by the policies in favor of the insurers. The words “ proofs ” and “ proofs of loss ” are used indiscriminately in several places in the policy, and wherever used, obviously refer to the particular statement of the loss required by the policy to be signed and sworn to by the assured within thirty days after the fire. Any other construction would involve the manifest absurdity of giving the assured a vested cause of action for his loss, and the defendant an indefinite right to defeat it, by a subsequent election to repair or rebuild the property damaged. We think this option, terminated when a fight of action accrued to the assured, upon the policy by the expiration of the sixty days period of limitation, and the other •express limitations therein provided.

The only remaining exception of any importance is that taken to the refusal of the court to direct a verdict in the defendant’s favor upon the ground that .the arbitrators exceeded their authority, in making their award. The court charged the jury that the arbitrators had no authority to go outside of the subject-matter submitted to them, and if they did so, their appraisal was not binding upon the parties. This direction was manifestly correct, unless there was undisputed evidence of an unlawful exercise of authority by the appraisers. We do not find such evidence in the case. . The proof was in some respects obscure and conflicting, but we do not find any conclusive evidence that the arbitrators included in their award any item of damage not properly chargeable under the policy, to the defendant. The award was made for a gross sum, and nothing therein, shows the detailed items, of which it was composed. This was attempted to be established by the testimony of the appraisers, and proof of admissions made by one of them. There was no item of damage questioned by the defendant which was indisputably included therein, except that of the expense of removing machinery preparatory to making repairs. As we have already seen, such removal was a necessity in the work of restoring the premises to their original condition, and an allowance for its expense is clearly contemplated by the terms of the policy, providing that the cash value of the damaged property should not exceed the cost to the assured of replacing it. This provision seems to assume that the ascertainment of the cost of replacing, is a legitimate method of determining the amount of the damage. The fact that such machinery wholly belonged to some other person, did not necessarily exempt the plaintiff from the necessity and cost of making its removal. Even if the plaintiff had the right to require the owners to effect its removal, he was under no legal duty to await their action in doing so, or to enforce such right against them for the benefit of the defendant.

The existence of a contract between the plaintiff and other persons by which he could compel such persons to effect such removal, did not diminish the liability of the defendant upon its* policy. If the removal was a necessity of the repairs required to be made, and the policy indemnified the plaintiff for the expense o.f making such repairs, it.would seem that the consideration of the amount of such expense, was within the authority conferred upon the appraisers.

The point taken upon an attempted distinction between damages to flues and chimney is not justified by the evidence. The witnesses use the words indifferently and sometimes alternately, and the evidence fails to show affirmatively that the appraisers awarded for any loss in respect thereto which was not incurred.

The judgment should be affirmed.

All concur.

Judgment affirmed.


text:
    Ferdinand Mayer, Appellant and Respondent, v. The Mayor, Aldermen and Commonalty of the City of New York, Appellant and Respondent.
    Errors and irregularities in assessments for street openings in the city of New York must be corrected and reviewed in the proceedings themselves ; they cannot be reached by a collateral action in equity. An order confirming the assessment has the force and conclusiveness of a judgment.
    The provision of the Consolidation Act (§ 897, chap. 410, Laws of 1882), declaring that no suit in equity or otherwise “ shall be commenced for the vacation of any assessment in said city,” is not limited to any particular class, but applies to every assessment.

      The expenses of opening a street were assessed partly upon the property benefited and partly upon the city at large. After the confirmation of the report of the commissioners, in which was included an item for their fees and expenses, the city resisted that claim and succeeded in effecting a settlement by which the item was largely reduced. Held, that an owner of property assessed was entitled to maintain an action in equity to compel the application, upon his assessment of a pro rata, share of the amount saved; but that he was liable to interest from the date of the assessment; this being in no manner affected as a complete and binding adjudication by the allowance, which was simply in the nature of a credit to be applied on a conceded debt.
    (Argued December 18, 1885;
    decided January 19, 1886.)
    . These were cross-appeals from different portions of a judgment of the General Term of the Supreme Court, in the first judicial department, entered upon an order made January 13, 1883, which affirmed a judgment in favor of plaintiff, entered upon a decision of the court on trial at Special Term. (Reported below, 28 Hun, 587.)
    This action was brought to compel the reduction of an assessment upon lands of the plaintiff, situate in the city of Hew York, for the expenses of widening and straightening Broadway in said city.
    The material facts are stated in the opinion.

      John C. Shaw for plaintiff.
    The commissioners appointed under the acts in relation to opening streets in Hew York city are entitled to their fees and expenses when earned, without waiting for the confirmation of their report. (In re Fourth Ave., 3 Wend. 452; Blunt v. Mayor, etc., 9 Hun, 330; In re Parade Ground, 60 N. Y. 319; In re Central Park Com’r, 63 Barb. 282.) This action for equitable relief is not within the prohibition of chapter 312 of the Laws of 1874, which provided that thereafter “ no suit or action in the nature of a bill in equity or otherwise shall be commenced for the vacation of any assessment in said city, or to remove a cloud upon title, but owners of property shall hereafter be confined to their remedies in such cases to the proceedings under the act hereby amended.” (Laws of 1858, chap. 338; In re Arnold, 60 N. Y. 26.) While an equity action can be maintained for relief against an assessment because of matter outside the assessment, it is not in such a case an action to remove a cloud on title or to vacate an assessment; it is an action to restrain the collection of an assessment. (Enc v. Mayor, etc., 68 E. Y. 214.) A bill in equity to vacate an assessment must allege some defect, either patent or latent, in the proceedings which resulted in the assessment — some act committed in the course of the proceedings which was contrary to the statutory provisions on the subject. (Astor v. Mayor, eto., 62 E. Y. 580; Nolan v. Mayor, eto., id. 472; Súrasburgh v. Mayor, eto., 87 id. 452.) The quasi judgment in the case of an assessment when it is confirmed by a judicial tribunal is subject to the same rules of equitable relief as all other judgments. (Dolan v. Mayor, eto., 62 E. Y. 472-475 ; Story’s Eq. Jur. [12th ed.], §§ 316, 1572 ; Paddock v. Palmer, 19 Yt. 581; De Colyar on Guaranties, 236; Donney v. Seely, 2 Wend. 482.) The plaintiff being entitled to a reduction of the principal of the assessment, interest can only be charged from the time when it is ascertained what amount is legally due. (Si. Joseph's Asylum, 69 E. Y. 353 ; In re Pelton, 85 id. 652; In re Miller, 24 Hun, 637; In re Lowd&n, 25 id. 434; affirmed, 89 H. Y. 548.)

      D. J. Dean for respondent.
    The confirmation of the commissioners’ report by the Supreme Court is a judgment which, remaining unreversed, concludes plaintiff from recovering under the facts alleged and proved. (Laws of 1869, chap. 890; N. Y. C. R. R. Co. v. Marvin, 1 Kern. 276; Canal & Walker Sts., 2 id. 406; Bowery Ex. Case, 2 Abb. 368; In re Arnold, 60 N. Y. 26; In re Com'rs Cent. Park, 50 id. 493; Dolan v. Mayor, etc., 62 id. 472; King v. Mayor, etc., 36 id. 182; Embury v. Conner, 3 id. 512; Astor v. Mayor, etc., 62 id. 580; Mayor, etc., v. Erben, 38 id. 311; Dobson v. Pearce, 12 id. 164; Homer v. Fish, 1 Pick. 435; Wilkes v. Mayor, etc., 79 N. Y. 621; M. E. Ch. v. Mayor, etc., 55 How. Pr. 57.) The mere fact that the city has succeeded in reducing the assessment against it does not inure to the benefit of another assessed person and entitle him to similar relief. (In re Delancey, 52 N. Y. 80; Horn’s Case, 12 Abb. 124; In re Broadway Widening, 49 N. Y. 150.) Even if the action were maintainable upon common-law principles, the court is expressly deprived of jurisdiction to administer the relief sought. (Laws of 1874, chap. 312, § 2; Laws of 1874, chap. 313, § 1; Lennon v. Mayor, etc., 55, N. Y. 366; Dolan v. Mayor, etc., 62 id. 472; Astor v. Mayor, etc., id. 580.) Chapter 312 of the Laws of 1874 applies to assessments for street openings as well as for local improvements. (62 N. Y. 591; Strusburgh v. Mayor, etc., 87 id. 455; Knapp v. City of Brooklyn, 97 id. 523.)
   Finch, J.

Both parties appeal from the order of the General Term; the city, from so much of it as applies upon the assessmént a pro rata share of the amount saved from commissioner’s fees; and the plaintiff, from that part of it which leaves interest to run from the beginning of the liability instead of from the date at which the true amount to be collected is ascertained. The plaintiff alleged that after the confirmation of the report of the commissioners, which fixed and established the assessment, partly upon property benefited, and partly upon the city at large, and in which was included an item of $165,632.40 for commissioners’ fees and expenses, the city resisted that claim and succeeded in effecting a settlement by a reduction of the charge to $97,531.82, which saving was alleged -to be two and one-fifth per cent of the aggregate assessment; ■ that the amount charged upon plaintiff’s property was $10,928, and the proper assessment payable is $10)687.59; that such sum was duly tendered and refused, whereby an invalid and improper hen remains. The specific relief sought was that the whole original assessment be modified by deducting the total amount saved; that plaintiffs assessment be reformed by deducting its pro rata share of the amount saved; that the assessment be canceled and discharged; that interest be computed only from the entry of judgment in the action; and then for further or other relief. It is evident that all the specific relief sought went upon the basis that the assessment should be vacated in whole or in part. But when confirmed it had the force and conclusiveness of a judgment, and the plaintiff alleges against it neither fraud nor mistake. (In the Matter of Arnold, 60 N. Y. 26.) In street opening cases the confirmation is by the court; and after a hearing of all parties interested, or an opportunity to be heard, it becomes in effect a judgment of the court, which cannot be attacked in a collateral action except for reasons not alleged in this action. Errors and irregularities in street opening cases must be corrected and reviewed in the proceedings themselves, and cannot be reached by a collateral action in equity. (Dolan v. Mayor, etc., 62 N. Y. 472; Astor v. Mayor, etc., id. 580.) There" is another difficulty. Section 897 of the Consolidation Act forbids a suit in equity to vacate any assessment in the city, or remove a cloud on title. Whatever may have been true of the original act of 1858, the section in question, as it now stands, is broad and unqualified, applying to every assessment in the city, and cannot be restrained or limited to a particular class. The plaintiff, therefore, was not entitled to his specific relief; but he seeks other remedy and puts his action upon another ground. Abandoning all claim to vacate or modify the assessment, and leaving it to stand as final and conclusive, he claims that he is entitled in equity to compel the application upon his assessment as pro tanto a payment of the same, of his pro rata share or proportion of the amount saved by the city. There is unmistakable j ustice in that. There was an apportionment of the entire cost of the street opening between the city and the benefited locality, the latter paying a little more than one-half. Practically this apportionment was made between the tax payers at large and those of the described locality. Any saving from the cost and expense equitably should reduce the burden of both, and there is no just reason for applying it wholly to the relief of those burdened the least. That the municipality, by the action of its officers, secured the saving does not alter the case. The city in its action was trustee for all the tax payers affected, and acted in behalf of all. This plaintiff was among them, and is entitled to reap Ms just proportion of the benefit secured by the corporate authorities, and by an action in equity may enforce the performance of that trust duty. This view the General Term adojffed ; and it follows logically from it that the plaintiff remained liable for the interest from the date of the assessment. That is in no manner affected as a complete and binding adjudication. The cases relied on by the plaintiff were all cases in which the assessment itself was modified and changed, and never became final until then; and before such final result, the tax payer could not know what the assessment in fact was; but here there never was any change in it, or any uncertainty about it. The plaintiff’s right assumes its entire validity, and rests wholly upon an after occurrence which furnishes him with a credit to be applied on his conceded debt. The sum to bo applied on plaintiff’s debt was found as a fact, and no question challenging it appears to have been raised on the trial. The tender was too small.

The judgment of the General Term should he affirmed, without costs to either party.

All concur.

Judgment affirmed.


text:
    Edward Evans et al., Respondents, v. Conrad Backer et al., Appellants.
    The omission to indorse upon a paper served the post-office address or place of business of the attorney, as required by the (general Rule of Practice (No. 2), is a mere irregularity and does not necessarily vitiate either the paper or its service.

      It seems the omission entitles the party served either to return the paper or move to set it aside, but after receiving it without objection he may not safely disregard it.
    As a general rul,e it is the office of the Supreme Court to administer its own regulations, and in its discretion to impose such penalties as may have been incurred by attorneys through neglect to comply with those regulations or to relieve therefrom.
    In an action upon an undertaking given upon appeal, the defense was that, no written notice of the entry of the order or judgment affirming the-judgment appealed from was served ten days prior to the commencement of the action, as required by the Code of Civil Procedure (§ 1309); a notice was served, subscribed, and indorsed by the attorney, but the indorsement did not state his post-office address or place of business. The appellant’s attorney received and retained the notice and admitted service thereof. Held, that a decision of the General Term to the effect that the acceptance and retention of the notice was a waiver of the irregularity was justified and was not reviewable here.

      KeUy v. Sheehan (76 N. T. 325), Kilmer v. Kathorn (78 id. 228), Rae v. Reach (76 id. 164), distinguished.
    (Submitted December 18, 1885;
    decided January 19, 1886.)
    Appeal from order of the General Term of the Supreme Court, in the fifth judicial department, made April 14, 1883, which reversed a judgment in favor of defendants, entered upon a decision of the court on trial without a jury, and which granted a new trial.
    This action was upon an undertaking given on appeal.
    The defense was that no written notice of the entry of the order, or judgment affirming the judgment appealed from, was served upon the appellants’ attorney ten days before the commencement of this action as required by section 1309 of the Code of Civil Procedure. It appeared that written notice of the entry of the judgment of affirmance, signed by the respondents’ attorney, and indorsed with his name, but without stating his ..post-office address or place of business, was served, which was .received and retained by appellants’ attorney, who gave a written admission of service. The trial court held that this was •not a legal notice, and dismissed the complaint.

      E. C. Sprague for appellants.
    The complaint was properly -dismissed, the written notice of entry of judgment of affirmance required by law not having been served. (Code of Civ. .Pro., §§ 1309, 1325, 1351; rule 2, Sup. Ct.; Roe v. Beach, 76 N. Y. 164; Porter v. Kingsbury, 71 id. 588; 1 Wait’s Pr 463; 4 id. 628.) The fact that the notice served was not subscribed or indorsed with the post-office address or place of business of the attorney, as required by rule 2, is fatal to it. (Kelly v. Shehan, 76 N. Y. 325; Kilmer v. Hathorn, 78 id. 228;
      Yorks v. Peck, 17 How. 192; Langdon v. Evans, 29 Hun, 652; Valton v. Assurance Soc., 19 How. Pr. 515; Andrews v. Durant, 6 id. 191; Dent v. Watkins, 49 id. 275; Wood v. Fisk, 63 N. Y. 250.) The defendants’ right to object to the notice as defective has not been waived. (Roe v. Beach, 76 N. Y. 164; Hatch v. Elkins, 65 id. 496; Francis v. litts, 2 Hill, 362; 4 Wait’s Pr. 623; Code of Civ. Pro., § 434.)

      George Wing for respondents.
    The defect in the notice was an irregularity which the party entitled to the notice could and did waive. (Holmes v. Russell, 9 Dowl. 487; Clapp v. Graves, 26 N. Y. 418.) The notice should have been returned at once and the defect pointed out. (Broadway Bk. v. Danforth, 7 How. Pr. 264; Sawyer v. Schoonmaker, 8 id. 198; Straub v. Parker, 9 id. 342; Corbin v. George, 2 Abb. 465.) So far as rule 2 varies or changes the rights or obligations of a plaintiff in a suit upon an undertaking from the obligations imposed by the statute, it is in conflict with the statute and consequently inoperative. (Glenny v. Studwell, 64 N. Y. 120; People v. Nichols, 79 id. 582; Gormley v. McGlynn, 84 id. 286; Kilmer v. Hathorn, 78 id. 228.) The rules of the Supreme Court are under its control and are to be enforced and administered by it. It can overlook or relieve against a violation of them or a non-compliance with them, and its determination is not under ordinary circumstances reviewable. (Martin v. Lowenstein, 68 N. Y. 456.)
   Huger, Ch. J.

The omission to indorse upon papers served or filed, the post-office address or place of business, of the attorney serving them, as required by No. 2 of the Supreme Court Hules, is a mere irregularity and does not necessarily vitiate either the paper or its service. (Clapp v. Graves, 26 N. Y. 418.) Such omission entitles the party served, either to return the paper or move to set it aside, but he cannot, after receiving it without objection, safely disregard the office, which the paper is designed to fill. In Kelly v. Sheehan (76 N. Y. 325), this court held that an omission to make such indorsement npon a notice of the entry of judgment which was intended to limit the right of appeal, rendered it ineffectual for that purpose. It was there held that a notice, upon which it was intended to build a claim, for a penalty or forfeiture, must be regular in every respect, and that in such case the party should be held to strict practice. The reason of this decision is quite obvious, and does not require the extension of its principle to cases not within its spirit. In Kilmer v. Hathorn (78 N. Y. 228, 230), the objection was described as a technicality, and its use in that case, was justified upon the ground that it defeated a point equally technical raised by the adverse party. The case of Rae v. Beach (76 N. Y. 164) is not an authority on the point. The. notice in that case did not give the information which is expressly required by statute as the condition of the maintenance of the action, viz., the entry of the order or judgment.

The Supreme Court rule in question does not prescribe the consequence or penalty for a violation of its requirements. It is peculiarly the province of the body framing them, to interpret its own enactments, and as a general rule we have considered it the office of the Supreme Court to construe and administer its own regulations, and in their discretion, to impose such penalties and relieve from such defaults as may have been suffered or incurred by attorneys, through neglect to comply with its modes of procedure. (Martine v. lowenstein, 68 N. Y. 456.)

In the exercise of their office, they have determined in this ease, that the omission to comply with rule 2 was a mere irregularity, capable of being .waived and not affecting the object intended to be accomplished, by the service of the notice in question. We are not disposed to disturb that decision of the question,

Of course, the requirement of ten days written notice of the entry of judgment, or order, affirming a judgment, provided by section 1309 of the Code of Civil Procedure, as the condition of an action against the sureties, upon an undertaking on appeal, is fundamental and cannot, in any essential particular, be safely disregarded. But this requirement has been fully complied with in this case, and the attorney has been informed of every particular contemplated by the statute. The notice served satisfied its object, and fully performed the office designed for it, and there is no justice in saying, because the attorney has disregarded a rule, intended solely to promote the convenience of the opposite attorney, and having no reference to the object of the notice, that, therefore, a meritorious action commenced and prosecuted in strict conformity to the statute giving it, shall be defeated. It would be a perversion of' its object and design, and contrary to established rules of interpretation to give it the construction claimed by the appellants. As was said in Rae v. Beach (supra), the notice of entry of judgment; being required by statute for the benefit of the party, it is not competent for the attorney to waive a compliance with it. The court rule, however, being intended for the benefit of the attorney alone, there is no reason why he may not waive its performance, and by accepting and retaining the notice we think" he has done so.

The fact that the defendants are sureties works no change in the aspect of the question. Their covenant was to perform their undertaking, upon condition that the judgment appealed from was affirmed, and ten days notice thereof should be given to the attorney for the appellants before action brought. These conditions have been strictly complied with, and they are not entitled to claim the benefit of a rule, not designed for their' protection, and in the enforcement of which they are not interested.

We have found no case in this court conflicting with the determination of the General Term, and we think it conforms = to the real meaning and intent of the rule in question.

The order of the General Term should, therefore, be affirmed and judgment absolute ordered for the plaintiffs.

All concur.

Order affirmed and judgment accordingly.