author: Robertson, J. Bosworth, Ch. J.

text:
    Robert C. Wright et al., Plaintiffs and Respondents, v. The Orient Mutual Insurance Company, Defendants and Appellants.
    1. Where a ship, soon, after sailing on her voyage, becomes so leaky or disabled as to be incapable of proceeding upon it, and this cannot be ascribed to any violent storm or extraordinary peril of the seas, the fair and natural presumption is that it arose from causes existing at the time she sailed, and that she was then unseaworthy.
    2. A verdict in favor of the assured, found upon evidence raising this presumption of unseaworthiness, will be set aside as contrary to the evidence.
    (Before Bosworth, Ch. J., and Robertson, J.)
    Heard, February 13th;
    decided, March 10th, 1860.
    Appeal by the defendants from an order denying a motion made by them for a new trial. The action was tried before Mr. Justice Pierrepont and a jury, on the 8th of June, 1859.

      The defendants insured the plaintiffs on one-third of their interest in a cargo of coffee from Rio de Janeiro to Charleston, in the barque Susan.
    The ship sailed from Rio October 10th, 1855, and shortly after leaving port met with stress of weather, sprung a leak, and put back to Rio. The cargo was discharged, the vessel was surveyed, and, pursuant to the recommendation of the surveyors, was sold. The coffee was stored at Rio, and reshipped in the brig Julia for Charleston, and arrived there January 8th, 1856. This action was brought to recover the defendants’ proportion of the general average charges and expenses consequent upon the return of the Susan to Rio in distress, and the transhipment of the cargo, and the increased freight thereon, &c. The plaintiffs obtained a verdict. The only question presented by this appeal is, whether the Susan was seaworthy when she sailed from Rio.
    The Captain of the vessel testified thus: The barque Susan “ sailed from Rio on the 10th of October, 1855; * * the steamboat towed me to sea, not far from 7 o’clock in the morning; * * when the steamer left us, we made all sail to the southward, off shore by the wind; there was a heavy swell heaving in from the southward; the ship behaved well when we made sail; the wind was light under the land; as we drawed off shore, the wind increased suddenly on us with a sea; the sea increasing at the same time, it caused her to labor heavily and jump into the sea; we took in sail and reduced the canvass as we got off shore; after the barque labored in this way and jumped into the sea, we tried the pumps and found the barque making water; after we tried the pumps, we did not succeed in freeing the vessel; then we sounded the pumps, and found two feet of water in the hold; we then continued to shorten sail; kept serving the pumps; the leak remained about the same after shortening sail; we had taken everything off her but two topsails, and then we freed her; we wore ship and stood in shore, after the men refused to go any further off shore; * * I concluded to return to Rio, as the nearest port I could get to; * *• I was from twenty-five to thirty miles from the coast when I determined to put back; the steam-tug took me about four miles outside the harbor; * * before I turned to go back, it blew a strong double-reefed topsail breeze.” At 9, A. M., of the 10th of October the steam-tug was discharged, and the barque proceeded to sea; at 1, p. M., she was put back for the port of Rio.
    This is the substance of all the evidence given as to the fact of the barque’s encountering perils of the sea, and the nature and extent of such perils.
    A motion to dismiss the complaint, on the ground that the vessel was unseaworthy when she sailed from Rio, was denied; and the defendants excepted. The Judge, (inter alia,) charged the jury as follows:
    “In this case, gentlemen, the evidence is clear and uncontradicted, that this vessel laden with a valuable cargo of coffee, left the port of Rio, between nine and ten o’clock in the morning of the 10th of October, and that in a few hours after she was left by the steamer that took her out, she encountered some heavy seas, but no storm; she met with no accident, she ran into no vessel, none into her, and she touched her bottom nowhere; but in the course of these few hours when she came into the heavy sea she began to pitch, and a sudden wind springing up, (not a storm,) she sprung a leak. That very soon after, she turned about and made for the port she had left a few hours previously. All this occurred in the space of some four or five hours from the time she left Rio. It is then quite clear, that on the 10th of October, in the afternoon of the day she left port, when she put back, she was unseaworthy, and that brings the case into a very narrow compass. Was she seaworthy at nine o’clock when she left' port ? And, in considering whether she was seaworthy at the time she left port, you will consider the length of time she was out, and the accident that befell her; it being perfectly plain that when she got back she was unseaworthy, and the coffee was transhipped to another vessel..
    “At one o’clock it is conceded on all hands, that she was unseaworthy, and if so—if she was seaworthy at nine o’clock in the morning, she became unseaworthy between the hours of nine and one. She having left the port in smooth water and fair weather, at nine o’clock in the morning, it is for you to determine in your own minds from the evidence before you, whether the peril which she encountered was such as is known as a peril of the sea, which caused her such damage as rendered her unseaworthy, of whether beforeshe left she -was in. such a condition that she was unfit for such a voyage, and therefore unseaworthy. If when she left the port she was unfit to perform the voyage which she undertook to perform, and was unseaworthy, it is not a matter of the slightest consequence how faithful the captain was, how ignorant of her condition,, or how concealed the condition of the vessel was at the time he left port. It is not the business of the Insurance Company in any such case to determine whether the vessel is seaworthy or hot.' It is the business of the captain when he commands the vessel, to determine that question, and if through negligence or from the fact that she was eaten by worms, or from any other .cause she was in fact unseaworthy, it is a matter, of no manner of consequence whether the captain knew it or not. If she was unseaworthy, and the captain supposed her a seaworthy vessel, still she was just as much unseaworthy as though ■ he had known it. In fact if she was an unseaworthy vessel at the time she' left this port, it'.ends this case, and the defendants are entitled to your verdict. •
    “ They have not on either side given you the smallest light as to what was the- matter with her. They all admit she leaked; at one o’clock was unseaworthy and could not proceed on the voyage; and after all this thorough overhauling, examination and condemnation, they have not told us' where the leak was — what caused the leak, nor how it was finally stopped, or how she was repaired as far as related to her leak. Therefore, it is left for you to find out if you can, from the evidence that is given in this case, and determine in your own minds if she was seaworthy when she left port, and if so, what it was that made her unseaworthy at one'o’clock; whether in fact she did become so, by any action or perils of the sea, which were more than common ordinary perils of the sea. The ordinary winds of the sea are not perils against which the policy provides. It don’t provide for a vessel that starts upon her voyage and encounters no storm or no gale;° meets with no accident by touching her bottom, or by collision, but is only exposed to the ordinary waves of the sea and becomes unseaworthy. If the vessel is in an unseaworthy condition when she leaves port, she is not guaranteed by the insuree to pass safely the ordinary waves of the sea. And if it turns out that the vessel was injured when she encountered only the ordinary waves of the sea, it would be conclusive evidence that she was not then in a seaworthy condition.”
    The jury in answer to a question specially submitted, found that the barque was seaworthy when she left Rio, at nine o’clock in the morning of the 10th of October, 1855, and rendered a general verdict in favor of the plaintiffs.

      Alexander Hamilton, Jr., for appellants.
    I. The evidence as to the prominent facts, as stated by the Court in the charge to the jury, “is clear and uncontradicted.”
    This evidence, indeed, comes from the protest, and the testimony of the captain of the barque:
    At nine o’clock on the morning of October 10th, 1855, this barque left Rio, bound for Charleston, South Carolina, with a cargo of coffee, valued at about $64,000.
    She met a heavy swell, and as soon as she jumped into the sea, she was found to leak. At 12 M., it was found the barque was making much water. At one o’clock, there being two feet of water in the hold, the crew refused to go any further, and the barque put back to Rio.
    II. The implied warranty on the part of the assured was that at nine in the morning this vessel was seaworthy; able to resist the ordinary waves and winds of the sea on the voyage of several thousand miles o.n which she had entered.
    So soon as she begins to labor in the swell, she begins to leak; and though the sail is shortened, and the pumps are worked, the vessel is not freed from water; and at one o’clock, four hours after starting, the vessel puts back to port.
    III. This uncontradicted state of facts, presented by the assured, establishes, conclusively, the unseaworthiness of the vessel at one o’clock, or before it; and is strong prima fade evidence that she was unseaworthy at nine—four hours previously— as she had encountered nothing more than the ordinary winds and waves, which she was warranted, at nine o’clock, as able to. meet and resist.
    IV. The prima fade evidence is not met or rebutted in any way by the plaintiffs; although the facts upon which it rested came from their own agents, and being within their knowledge, called upon them for more than mere formal proof of seaworthiness at the outset of the voyage.
    The only direct evidence as to the barque’s condition before sailing, is the captain’s statement: “ When we pumped her, we would get about a bucket-full every twelve hours.”
    This would only prove that she was seaworthy in port, ánd satisfy that part of the policy.
    The assured were under a much higher engagement in regard to this vessel at sea, which she manifestly did not fulfill.
    V. The uncontradicted testimony of the master establishes not only a prima, facie case of unseaworthiness at the outset, but considered carefully, furnishes direct proof of the fact:
    It is to be remembered that at one o’clock—four hours after sailing — the crew had virtually mutinied, and the voyage was abandoned as hopeless, after various efforts by shortening sail, and continued pumping to relieve the vessel.
    The captain states, that as they drew off shore, and came into the sea, the barque labored heavily, and jumped into the sea; after the barque labored it was found she was making water; in other words, so soon as she encountered that ordinary peril of a pitching motion, which she was at that time warranted as able to encounter, she failed in the test.
    Nor was this inability of a temporary character; the leak continued to increase in spite of all efforts to control it, and the crew, in yielding to their alarm, and insisting upon -the return of the vessel at one o’clock, did so, as is shown by the captain, after they had been exerting themselves for some time to correct the evil.
    The evidence of the captain shows, that the barque leaked badly after she returned to port, and even while aground in the mud discharging.
    He also states the extensive repairs required and the long time to make them, which justified a condemnation.
    VI. It seems a palpable contradiction on its face, to say that at nine o’clock the vessel was able to meet the ordinary waves of the sea, when, perhaps, at half-past nine, or so soon as she did meet them, she became leaky and unseaworthy. The learned Judge in his charge to the jury, evidently considered that nothing but ordinary perils were apparent upon the evidence.

      VII. In looking over the earlier cases in this State in which the Courts have held that unseaworthiness existed as an inference of law, it is believed none will be found more clear, if as much so, upon the undisputed facts, as this one. (See among others, Talcot v. The Commercial Insurance Company, 2 John., 124; Judge Spencer’s Opinion, id., 128; Warren v. United Insurance Company, 2 John. Cas., 231; Myers v. The Girard Insurance Company, 2 Casey, Penn. State R., 192.)
    VIII. It is submitted with some confidence, that this is a proper case for the exercise of the discretion of the Court, to correct the errors of a jury by granting a new trial.

      H. G. De Forest, for respondents.
    I. The seaworthiness of a vessel is in all cases a question of fact, and is peculiarly a question for a jury to pass upon. (1 Arnould on Ins., 689; Foster v. Steele, 3 Bing. N. C., 892; Snethen v. Memphis Ins. Co., 3 La. R., 474; Rugely v. Sun Mut. Ins. Co., 7 id., 279; Patrick v. Hallett, 1 John., 245.)
    II. It appears that the leak was occasioned by stress of weather; that while the vessel was under all sail, the wind increased suddenly with a sea, and the sea increasing at the same time, it caused her to labor heavily and jump into the sea, and during this period the leak commenced.
    Its effect was such that the foremast, main-topsail-yard, and other spars, were sprung, &c.
    One of the head-knees was started, and one sprung.
    The charge of the Judge was sufficiently favorable to the defendants, and was not complained of. The order should be affirmed.
   Robertson, J.

The expenses sought to be recovered in this case, for transhipping and carrying to its destination the cargo which formed the subject of insurance, grew out of - damage to the vessel carrying such cargo on the voyage insured. Such damage appears to have been occasioned by a leak created during the first four hours of such voyage; after which time she returned to port. The answer sets up unseaworthiness in the vessel at the time of her leaving port on such voyage, and denies the loss by perils of the sea insured against, as alleged in the complaint.' On the trial, a motion to dismiss the complaint, on the ground of a-want of seaworthiness and a- failure to prove a loss by. perils insured against, was denied, to which an exception was taken. 5?he question of seaworthiness, as well as loss by proper perils, was. .left to the jury, who found, on a special quéstion to that effect,: that the vessel was seaworthy when she left port.

.. The inadequacy of the perils encountered to produce the sea-damage in question to a seaworthy vessel, was relied upon by the defendants to establish unseaworthiness, to which, they added evidence of age and the character of the materials of which the vessel was built, and of worm-holes in her planking above the copper. The plaintiffs established the thorough repair of the vessel at the port which she left on her previous voyage to the port from which she sailed on the voyage in question ;■ also her sound appearance and tightness before starting;, and claimed from that, with the perils encountered as described by her Captain,. and the damage thereby done to her masts .and spars,' indicating their violence, to have established injury by extraordinary perils, to a seaworthy vessel. It will thus be seen that the degree of. violence of the perils is material to either view, and, in effect, the essential point of the case, as there is no direct evidence of unseaWorthiness. If she was unseaworthy, the leak may be .fully accounted for without extraordinary perils: on the other hand, if the perils were extraordinary, the deduction of unseaworthiness from the facts proved is not necessary-to account for the leak.

From these views it results that the exception to the refusal to dismiss -the complaint covers the same ground as the objection made to the verdict, that it is against the weight of evidence or without evidence; for if the evidence was such, as that the jury might find a verdict therefrom against the defendants, it would be error to set, aside their verdict upon the ground of being without or against evidence, when there is no conflict of testimony,- as to the perils encountered or their result. This brings us to the question whether the evidence offered by the plaintiffs of extraordinary perils, such as those insured against, was enough to go to the j ury upon the question of unseaworthiness as well .as of such perils.

The question of unseaworthiness, which has been sometimes said to be a question of law, was determined in this Court in the case of Sherwood v. Ruggles, (2 Sand. S. C. R., 55,) to be a question of fact; still as a fact, it may require control by the Court of the evidence to sustain it. It has been supposed that the cases in the House of Lords in England, of Watson v. Clark, (1 Dow., 344,) Parker v. Potts, (3 id., 23,) and Douglas v. Scougall, (4 id., 269;) as well as that of Cort and another v. Delaware Insurance Company, (2 Wash. C. C. R., 375,) in a Federal Court, and of Talcot v. Commercial Insurance Company, (2 John., 124, 467,) in our own courts, support the doctrine of seaworthiness being a question of law, although in the last case a verdict by a jury was finally sustained. It is true, that the fact of the Courts undertaking to inquire in those cases into the character of the perils proved, and their determination that they were not sufficient to have injured a seaworthy vessel, may be construed into a decision that seaworthiness is a question of law; but no such principle is declared. It is not claimed in any of them that the Court is to be deemed possessed of sufficient knowledge of nautical matters to instruct a jury in all cases whether the perils proved were within the policy and could produce the damage complained of to a seaworthy vessel, it is only assumed that the Court possess sufficient knowledge to be able to say that the perils proved to have been encountered in some cases were not sufficient to injure a seaworthy vessel; as it is matter of almost common knowledge that even the winds, necessary to carry a vessel on her voyage, which are ordinarily encountered, produce some commotion, and perhaps enough to terrify a landsman, even by description. Lord Eld on, in the case of Watson v. Clark, appeals, I may say, to his own ignorance of nautical matters, for he frankly confesses his want of skill in them when he says that “ he should not he much afraid though he heard seamen talking of ” such perils as were testified to in that case, viz., “ fresh gales and squally weather.” I can see no reason why Courts which are every day called upon to pass upon questions of collision, freight, salvage and marine insurance, may not be presumed to have some knowledge of the nature-of the elements, which are the instruments and subjects of such torts and contracts; particularly when they are merely called upon to intercept immaterial evidence upon its passage to the jury, who being engaged in different occupations, may not have any knowledge of what is or is not an extraordinary disturbance of sea and air, and to whom even the perils testified to in the cases I have cited might seem unduly great.

. It may be contended that it is impossible to draw the boundary line between extraordinary and ordinary perils of the ocean, and the Court cannot so define it as to guide the jury. The same difficulty however exists in many questions arising in litigated cases, such as reasonableness of time or distance, the sufficiency of the reason for not delivering chattels mortgaged or sold, and probability of cause for a complaint before a magistrate; in such cases it is easy to define the extremes which are of one or the other classes, but within them when the cases, come down to doubtful ones, they should be left to the jury. In this division, hfiwever, of perils, there is always a resource in cases in which the Court is doubtful, as experts may be called in to pass upon those proved, to assist the jury in coming to a conclusion. An extreme case will test the principle. Ho one will contend that the fact of a vessel merely going to sea, and having a propelling breeze to drive her on her course, would be evidence to go to the jury, of perils sufficient to cause her to spring a leak, if so the degree of violence of the wind at which such evidence may be allowed to go to a jury, must be regulated by the Court.

The perils relied upon in this case are clearly described. The leak and its commencement during such perils, are clearly given. Other injuries to the mast, spars and rigging, discovered after the return of the vessel into port, are all in evidence and before us, and there is no conflict of testimony in regard to them. So that there is no difficulty in determining whether the facts thus proved could establish perils insured against, encountered by a seaworthy vessel in this case.

The vessel in this case returned into port, after going about twenty-five to thirty miles to sea, during four hours, and arrived in port three days after she sailed; the character of the weather and her action on her return are not given. She started under full sail, while a heavy swell was heaving in from the southward, '“ but the wind increased suddenly, and the sea increasing at the same time, caused her to labor and jump into the sea ”; this apparently immediately followed the increase of wind and waves, but how .long.such “ labor ” .and. “jumping” continued does not appear. After it, the vessel was found to take in water. Sail was then taken in, and the canvas reduced, until only two topsails remained; but when, during what time or why, does not appear. A leak then began; when, does not appear, but which remained about the same after shortening sail; the place of that leak was never found, notwithstanding three surveys, after her return. There is a singular want of definiteness, minuteness and particularity, in the description by her captain, the only witness examined as to the perils, of what occurred during the four hours before the vessel changed her course back. Ho account is given when or how her masts were sprung, or to what extent shé labored or jumped. The wind is described as being merely a strong, double-reefed topsail breeze,” not a gale or a storm; the very fact of calling it a breeze, and giving it a special character, goes to show that it was one of not an uncommon kind; and that it was one which was taken advantage of, although with diminished canvas. All the cases I have cited show greater perils than these, and no one can doubt that the ocean has been traversed, myriads of times, in perfect safety with such a breeze; and few seamen would hesitate to encounter a similar one on every voyage. But it may be said, the springing of the foremast maintopsail-yard and maintopmast-fid, stranding of top-gallant-backstays and loss of tressle-trees, with the starting of a head-knee, prove the violence of the wind, which would be true, if they occurred before her changing her course towards the port of departure, and before the leak, which was as violent at the beginning as at the end of the blow. We have no information as to the state of the weather on her return to port. Such injuries might have been the result of having old timber, spars or rigging, the rusting of bolts or fastenings, or a heavily-laden vessel, with a leak, at the rate of twelve inches an hour, pitching and rolling .in the trough of the sea. The leak is the turning point in the history of the vessel; if the violence of the winds and waves was sufficient to have created it in a seaworthy vessel, the plaintiffs are entitled to recover; but there is no evidence to prove it. I do not think, therefore, it is any stretch of the prerogative of the Court to assume to know enough of nautical matters to hold that such a leak could not be created, by such a breeze, in a seaworthy vessel, and that there was no evidence of such perils as were insured against.

The judgment, therefore, must be reversed, with costs; leaving the defendant the right to a new trial.

Bosworth, Ch. J.

I understand the rule to be as stated in Arnould, (vol., l,p. 686, §255,) that where a ship becomes so leaky or disabled as to be unable to proceed on her voyage, soon after sailing on it, and this cannot be ascribed to any violent storm, or extraordinary peril of the seas, the fair and natural presumption is, that it arose from causes existing before her setting out on her voyage, and consequently that she was not seaworthy when she sailed.

In this case no violent storm or extraordinary peril was shown.

The jury found specially that the vessel was seaworthy for her proposed voyage, when she left Bio, at 9 o’clock in the morning.” This was so found, contrary to the evidence and to the conclusion which the law draws from it.

As I read the charge, I infer that the Judge, before whom the action was tried, had a very clear opinion that the defendants were entitled to a verdict; and that any one hearing the charge could not fail to discover that such was his opinion.

In this view the verdict is against evidence, contrary to law and the charge of the Court. It should be set aside, and a new trial granted, with costs to abide the event.

Ordered accordingly.


source: Caselaw Access Project

author: By the Court—Hoffman; J.

license: Public Domain

text:
    Howard Banking Company, Plaintiff, v. Frederick W. Welchman, Defendant.
    1. The bona fide indorsee of a bill of exchange received by him for value, without notice when so received that it is accepted for the accommodation of the drawer, has the right to treat the parties thereto as liable to him in the manner and order and to the same extent as is prima facie the legal import of their several positions upon the bill.
    2. Hence, a release or discharge of the drawer by such indorsee will not affect the liability of the acceptor.

      3. Such release of the drawer will not discharge the acceptor, although the indorsee when he gives the release has knowledge that the bill was accepted without consideration, for the accommodation of such drawer.
    4. It seems that such release of the drawer would not discharge the acceptor even though the indorsee knew when he received the bill, that it was accepted without consideration, for the drawer’s accommodation.
    And that the fact that as between drawer and acceptor, the latter has the rights of a surety for the former, in no manner affects the rights of the holder of a bill, or the liability of the parties respectively to him.
    (Before Hoffman and Woodruff, J. J.)
    Heard, November 17th, 1859;
    decided, March 10th, 1860.
    This case was brought to a hearing upon exceptions taken by the defendant on the trial thereof before Mr. Justice Slosson, on the 22d day of June, 1859, which exceptions were ordered to be heard in the first instance at the General Term, the judgment to be in the meantime suspended.
    The action was brought by the plaintiff as indorsee of a bill of exchange drawn by Robert Ayres, residing in Boston, Massachusetts, upon the defendant in New York, payable to the order of Benjamin B. Pool, accepted by the defendant and by the payee indorsed before its maturity to the plaintiff, of which the following is a copy :
    “$4,290.00. “Boston, March 30,1857.
    “ Four months after date, pay to the order of Mr. Benjamin B. Pool, forty-two hundred and ninety dollars value received, which place to account of, Yours, &c.,
    “R. Ayjres.
    “To F. W. Welchman, New York.”
    The pleadings and the proofs given on the trial sufficiently appear by the following statement:
    The plaintiff is a Banking Corporation, in Boston, Massachusetts. The defendant resides in New York. On the 30th March, 1857, Robert Ayres of Boston, Massachusetts, drew his bill of exchange on defendant for $4,290, payable four months after date, to the order of B. B. Pool, which bill the defendant accepted, for the accommodation of Ayres, and upon the agreement that Ayres should pay it at maturity. Ayres delivered the bill to Pool, (the payee,) in part payment for beef purchased from him, and Pool, on 20th May, 1857, indorsed and delivered the bill to plaintiff, who discounted it, and paid him the money therefor.
    This action was commenced in August, 1857. Defendant on the 17th September, 1857, put in his answer, (of which a copy was served in the city of New York on plaintiff’s attorney in the action,) and therein, among other things, averred “ that he accepted said hill of exchange, without any consideration whatsoever, for the benefit and at the request of the said Ayres.”
    On 3d August, 1857, Ayres, (the drawer of said bill,) at Boston, in Massachusetts, petitioned for a discharge, under the insolvent law of that State, and, on the 18th February, 1858, such discharge was granted.
    The plaintiff, on the 11th February, 1858, proved, a debt against Ayres’ estate, in insolvency, for the amount of this bill in question, and afterwards received- a dividend thereon, amounting to $339.02, which is indorsed and credited on the bill.
    After said claim was proved and allowed against the estate, plaintiff on or before the 12th of February, 1858, voluntarily assented to Ayres’ receiving his certificate of discharge; and the Court of Insolvency thereupon, in accordance with the laws of the said State of Massachusetts, granted to him an absolute discharge from all his debts which had been or should be proved against his estate, and from all which are provable under the laws of that State, which are founded upon any contract made therein.
    No point was taken on the trial that this discharge was not in conformity with the laws of Massachusetts, or that it was not operative and legal to discharge Ayres from any liability to the plaintiff upon the said bill.
    On 27th May, 1858, defendant put in a supplemental answer, stating the above-mentioned facts, in relation to said proceedings, and the discharge of Ayres, under said insolvent law, alleging that plaintiff, at the time of receiving said bill of exchange and at the time of proving said claim, had notice that defendant accepted said bill without consideration, and for the accommodation of Ayres, and insisting that, by reason of the matters so pleaded, defendant was discharged from all liability to plaintiff on the bill, as acceptor thereof, or otherwise.

      The insolvent laws of Massachusetts were put in evidence, and the aforesaid proceedings in insolvency, and the discharge of the said Ayres upon the assent of the plaintiff and certain other of his creditors, without which assent it is conceded no such discharge could have been granted by the Court.
    The insolvent laws of Massachusetts under which the discharge was granted, provide “ that no discharge of any debtor under this act shall release or discharge any person who may be liable for the same debt, as a partner, joint contractor, indorser, surety, or otherwise, for or with the debtor.”
    As evidence, that when the plaintiff assented to the discharge of Ayres, the plaintiff had notice that the bill in suit was accepted by the defendant for the accommodation of Ayres, (the drawer,) and without consideration, the defendant relied upon the original answer in this action, and the service thereof in the city of Mew York on the plaintiff’s attorney herein on the 17th of September, 1857, before such assent was given; in which answer the fact was averred, as above set forth. Mo other evidence was given or offered, that the plaintiff, at the time of discounting the bill, or at the time such assent to Ayres’ discharge was given, had any knowledge or notice that the bill was an accommodation bill, or that it was not accepted upon full consideration received by -the defendant.
    There was no conflicting evidence, and the Judge charged the jury,
    That it appeared,
    1. That the bill in question was accepted by the defendant for the accommodation of Robert Ayres, who was bound, as between himself and Welchman, to protect and take it up.
    2. That said bill was received by Benjamin B. Pool, the payee therein named, for full and valuable consideration by him paid to said Ayres therefor.
    3. That said bill was, by said Pool, indorsed and delivered to the plaintiff before it was due, for full and valuable consideration then paid by the plaintiff to him therefor; and that as matter of law, for the purpose of this trial and with a view to an adjudication of the question by the General Term, he should charge:
    1st. That by, under or in consequence of the proceedings taken by Ayres under the insolvent laws of Massachusetts, the consent of the plaintiff to his discharge and the discharge granted under such proceedings,.the defendant was-not discharged or released from, his liability to pay to. the plaintiff the amount remaining due and now .claimed to be recovered on this Bill of Exchange.'
    (To which decision and charge, the counsel -for the defendant excepted.)
    2d. That the plaintiff was entitled to recover in this action against the defendant, the amount appearing-to be due on said Bill of Exchange, and now claimed. ($4,508:48.)
    (To which last decision and charge, the counsél for the defendant excepted.)
    - The jury, under said charge and instruction of the Court, found a verdict for the plaintiff, for four thousand five hundred and eight dollars and forty-eight cents. ($4,508.48.)' .

      E. W. Stoughton, for the defendant.
    I. As between the defendant and Ayres, the latter was the acceptor, and primarily liable to pay the bill, whilst the former occupied the relation of drawer merely. Ho authority need be cited to sustain this proposition.
    II. It is well settled, that a discharge of acceptor or maker by the holder of a bill or note, without the consent of the drawers or indorsers, operates to discharge the latter also. (Mottram v. Mills, 2 Sandf. S. C. R, 189.)
    And the fact that such assent is given to a discharge, under the insolvent laws of a State, does not prevent this result. (Lynch v. Reynolds, 16 Johns., 41.)
    III. It is admitted that the holder may discharge the indorser of a bill, without affecting his right to resort to the acceptor; and that he has, in the absence of notice to the contrary, a right to presume that the actual relation of the parties to a bill, is that which is indicated by the positions upon it of their respective names.
    In this case, however, the plaintiff had notice before signing the petition or assent to the discharge of Ayres, that he was in fact the acceptor of the bill, and from thenceforward the plaintiff had no right as holder thereof to assent to such discharge. (Seymour v. Minturn, 17 J. R., 169; Laxton v. Peat, 2 Camp. N. P., 185; Collott et al. v. Haigh, 3 id., 281.)

      IV. If it is urged that the plaintiffs, when they received the bill, did so upon the faith that the liability of the parties thereto was in factsuch as it appeared to be upon the face of the instrument, and that therefore the holder had a right to deal with each upon this footing until the bill should be paid, we answer, that the assent to the discharge of Ayres in this case, which was the act of the party and not of the law, did not in the least add to the amount which the plaintiffs were entitled to receive out of his estate. (Insolvent Laws of Massachusetts, p. 106, § 9.)
    And that, therefore, to hold that they had no right, under the circumstances to give such assent, is quite consistent with the rule that they should not be deprived of any advantage which they could have derived from the parties to the bill, upon the assumption that their real liability was truly indicated by the position of their respective names.
    V. It will probably be insisted that the proviso contained in section 7 of the act, declaring “ that no discharge of any debtor under this act, shall release or discharge any person who may be liable for the same debt as a partner, joint contractor, indorser, surety, or otherwise, for or with the debtor,” preserves to the plaintiff, unimpaired by the discharge, their right to recover against the defendant.
    This proviso can have no such operation.
    The bill was accepted, and payable in the city of New York, by the defendant, who resided there. His rights and liabilities are therefore to be determined and controlled solely by the laws of this State. (Springer v. Foster, 2 Story’s C. C. R., 383; Betts v. Bagley, 12 Pick., 572; 8 id., 194; 15 id., 417; see § 7 of Book, pp. 35, 36; Van Hook v. Whitlock, 26 Wend., 43.)
    This proviso, therefore, has no other or greater operation than the same language would have if incorporated into a discharge executed by the holder of a bill or note to the acceptor or maker; and this Court has decided that in such cases a reservation of liability is inoperative, and cannot prevent the discharge of the acceptor from operating to discharge the drawer and indorsers also. (Mottram v. Mills, 2 Sandf. S. C. R., 189.)
    The verdict should be set aside, and a new trial granted.

      Benjamin W. Bonney, for the plaintiff.
    I. The statement by defendant, in his first answer, that he accepted said bill without consideration, is not sufficient to charge plaintiff with notice of that fact. There is no pretense that plaintiff ever saw that answer, or any copy of it, or was informed of its contents; and service of the answer on plaintiff’s attorney in the action is not notice to plaintiff, or any other person, of any fact stated in the answer, except for the purposes of the trial of that cause.
    II. When this bill was proved as a debt against the estate of Ayres, in insolvency, and the consent given to his discharge, plaintiff had no knowledge or notice that defendant accepted the bill for Ayres’ accommodation, and consequently the defense wholly fails.
    III. But even if the plaintiff had received notice, at the time of discounting the bill, that defendant accepted it for the accommodation of the drawer, Ayres, the defense would still fail, because,
    1. The insolvent laws of Massachusetts, under which the discharge was granted, provide “ that no discharge of any debtor under this act shall release or discharge any person who may he liable for the same debt, as a partner, joint contractor, indorser, surety, or otherwise, for or with the debtor.” (Laws of Mass., 1838, ch. 163, § 7; Insolvent Laws of Mass., p. 38.)
    2. The holder of a bill or note has the right, in all cases, to treat the parties thereto as liable to him in the same manner and-order, and to the same extent, whether he knows the paper to be accommodation paper or not: as to him, all the parties stand liable as they appear on the paper. (Story on Promissory Notes, 2d ed., §§ 418, 423, 424, 426; Story on Bills of Exchange, 2d ed., §§ 425, 430; Bank of Montgomery Co. v. Walker, 9 Serg. & Rawle, 229; 12 id., 382; Commercial Bank v. Cunningham, 24 Pick., 270, 275; Murray v. Judah, 6 Cow., 484; Seymour v Minturn, 17 John., 169; Fentum v. Pocock, 5 Taunt., 192; Carstairs v. Rolleston, 5 id., 551; Clopper v. Union Bank, 7 Harris & John., 92; Yates v. Donaldson, 5 Maryland R., 389; Dunn v. Sparks, 7 Ind. R., 490; Manley v. Boycot, 18 Eng. Law & Eq. R., 351.)

      3. The discharge of Ayres can in no way affect the claim of defendant against him for the amount of the bill in question, if the same shall be paid by defendant.
    His claim will be, not on the bill, but for money paid for the use and account of Ayres after his discharge, and to such claim the discharge will be no defense. (Murray v. Judah, supra; Bush v. Cooper's Adm'rs, 18 How. U. S. R., 82; Leighton v. Atkins, 35 Maine R., 118; Dunn v. Sparks, supra.)

    The plaintiff is entitled to judgment for the amount of the verdict, with costs.
   By the Court—Hoffman; J.

I pass over the consideration of several questions which have been raised by counsel. There is one upon which the case must, I think, be decided for the plaintiffs.

The proposition is stated with precision in one of the points: “The holder of a bill or note has the right, in all cases, to treat the parties thereto as liable to him in the same manner and order, and to the same extent, as they appear on the instrument, whether he knows the paper to be accommodation paper or not. As to him, all the parties stand liable as they appear on the paper.”

If this proposition is correct, then, as to the present plaintiff, the discharge of Ayres, under the insolvent law of Massachusetts, with the consent of the plaintiff, was the discharge of a surety. In the strongest form, it amounts to the release of a drawer of a bill, or indorser of a note. It is ineffectual to impair any right against the defendant, the acceptor and principal.

The English cases cited by the counsel for the plaintiff, (Fentum v. Pocock, 5 Taunt., 192; Carstairs v. Rolleston, id., 551; and Manley v. Boycot, 18 Eng. Law & Eq. R., 351,) support this conclusion.

In the case of Harrison v. Courtauld, (3 Barn. & Adol., 36 Eng. Com. Law R., vol. 23, p. 25,) the authorities were reviewed upon a case sent to the King’s Bench from Chancery, for the purpose, it seems, of ascertaining whether Fentum v. Pocock was considered as law by the Court.

The case was this: P. accepted a bill for the accommodation of B., the drawer, who indorsed it over as security for a debt, and afterwards became bankrupt. The indorsee entered into an agreement with the assignees for purchasing part of the bankrupt’s property, and for the arrangement of some claims which he, the indorsee, had upon the estate; and he afterwards gave the assignees a release of all demands, no mention being made, during the transaction, of the bill which had been dishonored. The indorsee knew when he made the agreement, but did not know when he took the bill, that it was accepted for accommodation.

The four Judges of the King’s Bench certified that the holder was entitled to recover from the acceptor.

It would be difficult to find a case more exactly parallel with the one before us.

This rule is recognized in Jones v. Broadhurst, (9 Com. Bench R., 173,) and to some extent in Hartley v. Manton, (5 Q. B. R., 247,) as also by Parke, J., in Price v. Edmonds, (10 Barn. & Cress., 578,) who speaks of the decision in Fentum v. Pocock “as good sense and good law.”

In Murray v. Judah, (6 Cow., 484,) the Court recognize Fentum v. Pocock, and Carstairs v. Rolleston.

In Seymour v. Minturn, (17 John., 170,) a note of the plaintiff was lent to the defendant and his partner, who indorsed it, and it was discounted by the Bank of Eew York for the accommodation of the Minturns, the Bank not knowing its character. The Bank had released the Minturns. It was held that the compounding with the indorser, with the consent of the drawer, did not discharge the latter. This was the main point decided.

Judgment should be entered for the plaintiff.

Ordered, judgment for the plaintiff on the verdict, with his costs.


text:
    Simon H. Colgrove, Plaintiff and Respondent, v. Samuel W. Tallmadge, Defendant and Appellant.
    1. In an action wherein the complaint alleges a purchase by the defendant of a firm’s property, on a promise to prosecute business with it for a year, then sell it, and apply the proceeds and the profits of such business to pay all of said firm’s creditors equally, and that one of said firm, at defendant’s request, subsequently gave his individual notes to one of such creditors on a compromise of his claim against the firm, and on the defendant’s promise to pay such 'notes, that he had failed to do so, and the maker had been compelled to pay them, (the plaintiff suing as the assignee of such maker,) it appearing on the trial that there was a written agreement between the parties declaring the terms of such purchase, it is error to admit parol evidence to establish the allegations, by proving that the contract actually made was different from that expressed in the written agreement.
    2. Nor can a party on a complaint containing only such allegations, and on proof of all the facts aheged, except those of the making of said notes at defendant’s request and on his promise to pay them, (which he fails to prove,) recover, though it be proved that the profits of said business and the proceeds of the property itself, were sufficient to pay all the creditors of said firm in full.
    3. To recover on such a state of facts as last stated, an action in which all the creditors of the firm are parties, is necessary.
    (Before Bosworth, Ch. J., and Robertson, J.)
    Heard, February 14;

    decided, March 10, 1860.
    This is an appeal by the defendant from, a judgment entered on the report of John M. Eager, as Referee.
    The complaint, verified February 7th, 1857, states that about February 11, 1852, Henry 0. Bowers, Ralph L. Howell, and John J. Tallmadge, owned the Western Lake-Boat Line of Canal Boats, and the Oswego and Western Line of Canal Boats, and composed the firms of Bowers, Tallmadge & Company, and R. L. Howell & Company. That on that day, being embarrassed and unable to prosecute the business of said Canal Boat Lines, they sold and assigned all the property of said firms to the defendant “upon the conditions and for the uses and purposes," that he should take the property at a valuation of $23,000, prosecute the business through the season of 1852, then sell the property to the best advantage; divide the proceeds of it and the profits of the business equally among the creditors of said firms, the defendant agreeing to perform said services without charge, in consideration of love and natural affection for his brother, John J. Tallmadge. That the defendant took possession of all of said property, and carried on the business during 1852, and then sold the property to the best advantage. That the proceeds of it and the profits of the business was more than enough to pay all of said creditors in full. That the Suffolk County Mills had a claim against Bowers, Tallmadge & Company, for about $2,500, and brought suit thereon in Jfine, 1852. Before it was tried, and before the defendant sold the assigned property, he and said firm settled said claim. That Bowers, at the instance and request of the defendant, gave his two notes to the Suffolk County Mills for $275 each, dated the 17th of February, 1854, in compromise and settlement of said claim; and that the defendant then and there agreed to pay the same out of the assets and profits aforesaid, and which he had wholly failed and refused to do, and that Bowers was compelled to pay and did pay the same in full, on or about February 17, 1855, amounting to $578.87, and that on or about the 28th of January, 1857, Bowers sold and assigned “ the aforesaid demand to the plaintiff in this action,” and prays judgment for $578.87, with interest from February 17, 1855, and costs.
    The answer denies all the material allegations of the complaint ; avers that Bowers prior to January 80, 1852, sold and transferred all his interest in said property to said J. J. Tallmadge ; that the latter on that day became sole owner thereof, and on the 11th of February, 1852, sold and transferred the same to the defendant absolutely and unconditionally. That the claim of the Suffolk County Mills was settled by each member of the firm of Bowers, Tallmadge & Company, paying or securing his one-third of the sum agreed to be taken as a compromise, and denies that the notes given by Bowers were given at defendant’s request, or that he ever promised to pay them as alleged or otherwise.
    The Referee found the facts, substantially as stated in the complaint, except that he did not find that the two notes of $275 each were given at the defendant’s request, or that he ever promised to pay them. He found that the suit brought by the Suffolk County Mills “was settled by said Bowers, J. J. Tallmadge and Howell, by said Bowers giving to said Mills his two notes for $275 each, in discharge and release of his liability thereon; and that defendant gave his note for $500, to procure the individual discharge of said J. J. Tallmadge therefrom, and said Howell gave his note for $300, for the purpose of procuring his individual discharge therefrom,” and that defendant “ advised said Bowers before said Bowers gave his notes, that he could procure his individual discharge from the debts of Bowers, Tallmadge & Company.” He also found that the transfer of the property to the defendant, was made February 11th, 1852, by a paper writing, (marked Exhibit D.,) and that defendant did not pay the consideration money therein mentioned, “in the capacity of vendee, if at all.” He found, as conclusions of law: First, that the plaintiff is subrogated to all the rights of his assignor in the claim, for the recovery of which this action is brought. Second, that he is entitled to recover from defendant the amount which said Bowers paid upon said two notes and the interest thereon, to wit: the sum of $703. toV”
    The assignment by Bowers to the plaintiff is, in terms, of “ a certain debt due me (Bowers) from Samuel W. Tallmadge, amounting to the sum of $550 for money paid at the special instance and request of said Samuel W. Tallmadge to the Suffolk County Mills.
    The transfer to the defendant of the property mentioned in the complaint was by an instrument in writing, dated February 11, 1852, (marked Exhibit D.,) and purported to be made for the sum of $23,000, in hand paid. By this paper the property is sold and transferred unconditionally. By written contract dated February 11, 1852, reciting the transfer of said property to the defendant, the latter agrees to pay the $23,000 in his notes, “ for such sums as they ” (Bowers, Tallmadge & Co.,) “ should desire and upon request ”; one-half of the aggregate amount to be payable in one year, and the other half in two years, without interest. The defendant, produced evidence tending to show that all of such notes had been given by him on or before April 30, 1852, and that he paid the same.

      He also proved written agreements between himself and George W. Rogers, dated February 11, 1852, by which defendant sold to Rogers an equal undivided half of said property for $11,500: to be paid by Rogers furnishing the funds to pay at maturity one-half of the purchase money notes given by Tallmadge, and by which the two agreed to prosecute with said property and as partners, the transportation business, during the year 1852, and also proved that they did so prosecute it.
    The defendant produced and proved a written agreement between himself and said Bowers, dated March 20, 1852, by which Tallmadge agreed to pay him ten sixty-ninths of all the profits he should “ realize from the purchase, year’s business and sale of the assets” aforesaid, provided Bowers “shall render me such aid as is reasonable and equitable under the circumstances, in conducting the year’s business and settling the affairs” of his said late firms.
    The Referee, against the objection and exception of the defendant, allowed parol evidence of the actual agreement on which the properly was transferred to the defendant, and that such agreement was as the complaint alleges. The verbal testimony in support of the alleged agreement was mainly that of said Bowers. The details are not here stated; the view taken of its effect is stated in the following opinions. Exceptions to the report of the Referee were duly served. The case contains written and oral evidence covering over one thousand folios, which have no bearing upon the questions decided on the appeal; and do not impair the force of that previously stated.

      S. W. Tallmadge, appellant (in person).

      Wm. C. Hornfager, for respondent.
   Robertson, J.

The foundation of the argument of the plaintiff’s counsel, was a charge of fraud against the defendant in obtaining from a partnership composed of the assignor of the claim in controversy to the plaintiff and two others, an assignment of their assets, upon trust or condition of compromising or paying their debts, which were far less than the amount realized therefrom, and refusing to pay notes given by such assignor in compromise of a claim; no such fraud is charged in the complaint or made the ground of the defendant’s liability; but a distinct contract is sued upon, made upon the giving of such notes, which is neither established by the evidence nor found by the Referee. It is true he finds all other facts alleged in the complaint but that, and makes the defendant liable upon two conclusions of law applied to such findings, to wit: that if the plaintiff’s assignor had not made the assignment, he would have been entitled to recover the amount awarded, and that the plaintiff is subrogated to all the rights of such assignor. As the Referee does not furnish us with the intermediate steps or principles of law, by which he arrives at such a result; it is difficult for us to conjecture them.

The plaintiff does not represent, or profess to represent, any creditor of the partnership in question, but merely a claim of one of the members against the defendant. He is not, therefore, entitled to recover by reason of any supposed right of a creditor of such firm to compel the defendant to carry out the purpose of the original transfer to him: if he were, he could only enforce such claim by an action making all the creditors parties, and founded expressly on it; besides which, the right of which the plaintiff is assignee, and for which alone he can sue, is a debt due to his assignor from the defendant for moneys paid by the former to an alleged creditor of his, at the request of the latter. Nor can it be contended, in this case, that the plaintiff has been subrogated to any rights of his assignor, acquired by paying a debt which the defendant, as assignee,-should have paid, in consequence of becoming the principal debtor as between such assignor and the defendant; for it is neither alleged nor proved that the Suffolk County Mills, whose claim was compromised, was, in fact, a creditor of the partnership, or one whose claim was to be paid by the defendant. On the contrary, the claim, which was for $2,500, was resisted by a suit, and finally compromised for half the amount, of which the plaintiff paid a little less than half. I do not see, therefore, by omitting the express promise alleged in the complaint, how any case can be made from the pleadings and proofs so as to sustain this as an action by a second assignee of a creditor as a cestui que trust proceeding against an assignee of the debtor in trust to pay such creditor, for an account and payment of his debt, which is the only view of the law which could by possibility sustain the judgment of the Referee upon the facts found by him, even if we could apply any other conclusions of law than those stated by him.

This brings us to an examination of what is the case presented by the pleadings. The complaint alleges the holding, by the Suffolk County Mills, of a claim against three persons composing a partnership, in the year 1852, known by two different names; the commencement of a suit against them by such corporation; the giving of two notes in settlement of such claim by one of the partners at the request of the defendant, and upon his promise to pay the same out of certain assets of the partnership long previously assigned to him, and the profits made by him out of the employment of such assets; the payment of such notes by the maker, and his assignment of his claim to the plaintiff. Any condition or trust imposed upon the defendant at the time of the assignment of such assets, although alleged in the complaint, appears to me to be wholly immaterial. The request of the defendant, and his promise to pay the notes, are put in issue by the answer, and neither of them has been found by the Referee, unless “advice” is tantamount to them, nor was any evidence offered of any such request or promise.

Even if the promise, as alleged, had been found by the Referee, some doubt might be entertained whether an action could be maintained upon it. No new consideration is alleged for it. It is true the notes were given by Bowers, but it was to settle a claim against himself; and if he were not to pay them, it is difficult to say what he parted with, or was to do, as a consideration. It is even left in a state of uncertainty whether Bowers had been or not previously bound to pay the claim for which the notes were given as a compromise. The novel position of a stranger promis-' ing a debtor that, if he would pay his own debts, such third party would reimburse him, requires some prejudice or benefit to some one to sustain it. The already executed transfer of the assets of th.e partnership, under which the rights of every one were already fixed, or any preexisting promise by the defendant to pay all the debts of the firm in question, including that of the Suffolk County Mills, unless modified for the defendant’s benefit or the injury of Bowers, which is not pretended, could not form a new consideration.

The plaintiff’s case, as presented by the pleadings and evidence, has therefore failed; and, notwithstanding the voluminous testimony, oral and documentary, introduced to establish a parol condition to vary the terms of the original transfer of assets to the defendant, and the amount realized by him therefrom, it has become entirely useless, from the want of proper pleadings and findings, to sustain any case which might be made out; nor do I see how the pleadings could be moulded to fit any case made by the evidence or found by the Referee, without changing the nature of the action.

The judgment appealed from should be reversed, and the report of the Referee set aside and a new trial granted, with costs to abide the event.

Bosworth, Ch. J.

Exclusive of the matters stated by way of inducement to the special promise set forth in the complaint as the ground of direct personal liability to the plaintiff’s assignor, the gist of the case alleged is, that Henry C. Bowers, “ at the special instance and request” of the defendant, gave to the Suffolk County Mills his two notes of $275 each, and that “the defendant then and there agreed to pay the same out of the assets aforesaid and profits aforesaidthat he failed and refused to do so; that Bowers was compelled to pay, and did pay, the same; and that Bowers has “ sold, assigned and transferred and set over the aforesaid demand to the plaintiff in this action.”

The assignment from Bowers to the plaintiff is of “ a certain debt due me (Bowers) from Samuel W. Tallmadge, amounting to the sum of five hundred and fifty dollars, for money paid at the special instance and request of said Samuel W. Tallmadge to the Suffolk County Mills.”

The defendant, in his answer, denied that the two notes were given at his request, or that he ever promised to pay them from any source.

The Referee has not found that these two notes were given by Bowers at the request of Tallmadge, or that he ever promised to pay them either personally or out of any specified funds, or at all.

The defendant, then, if he is to be charged at all, cannot be charged on any special promise to pay these two notes.

It was proved that the property and effects of the firms of “ Bowers, Tallmadge & Company,” and of “R. L. Howell & Company,” were sold and transferred to the defendant, by a written transfer, dated February 11, 1852, (marked Exhibit D.,) for the price of $23,000.

This paper D., is, in terms, an absolute and unconditional sale to the defendant, of this property at that price.

The Referee, against the objection and exception of the defendant, allowed the plaintiff to give parol evidence to prove, that exhibit D., “was executed and taken upon the verbal trusts and conditions, that the defendant should take the assets therein mentioned, and continue the transportation business during the season of 1852, and at the close of the year, dispose of the assets, and collect such debts .as might be collectible, and the profits of the business of the year 1852, (if any,) and distribute the avails equitably among the creditors of Bowers, Tallmadge & Company, and R. L. Howell & Company, subject to the expenses of such sale, collection and year’s business.”

He also found, that the Suffolk County Mills was a creditor of Bowers, Tallmadge & Company, that such creditor’s claim was settled, by Bowers giving his two notes for $275 each, “in discharge and release of his liability thereon,” and that he paid such notes at maturity, out of his own funds, and before the commencement of this suit “.assigned to the plaintiff his demand against defendant for the amount so paid on said notes,” and that defendant realized sufficient funds from said assets and profits, after deducting expenses, to have paid all the debts of Bowers, Tallmadge & Company, and R. L. Howell & Company; and on these facts, he held as conclusions of law:

1. “ That the plaintiff is subrogated to all the rights of his assign- or in the claim, for the recovery of which this action is brought.

2. “ That he is entitled to recover from defendant, the amount which said Bowers paid upon said two notes, and the interest thereon, to wit, the sum of $703. Ty¥.”

There are several peculiarities in the rulings in this case, in support of which no authority is cited; and it does not occur to me that any can be.

The Referee allowed the plaintiff to prove verbally that the actual contract of February 11, 1852, was in every respect, different from what the parties by the writing signed by them declared it to be. A formal, clear written contract is permitted to be contradicted by parol, and the parol contract found to have been made, is enforced according to the Referee’s views of the equitable rights of the parties, under such verbal contract.

This kind of proceeding is allowed, at the suit of a person who alleges that his assignor gave certain notes at defendant’s request, and on his promise to pay them.

Had the suit been brought by a judgment and execution creditor of the assigning firms, charging a fraudulent transfer, in order to reach the property and the profits made from its use; he would have been permitted to show if he could, that the transfer was made with a fraudulent intent, and if he established that, he might reach the property and any profits realized from it.

But no fraud is alleged in the complaint, and this suit is not brought by a creditor of the assigning firm, nor by an assignee of any such creditor.

As the case stands, even on the facts as found, Bowers, “ in release and discharge of his liability” to the Suffolk County Mills, as a member of the firm of Bowers, Tallmadge & Company,” voluntarily paid §550. The Suffolk County Mills did not assign to him any claim or demand, which, as such creditors, they had against the defendant or the property in his hands.

Conceding it to be true that the defendant took the property named in Exhibit D., upon such trusts as the Referee has found, and that the defendant realized enough from the assigned property to pay all the creditors in full, the several creditors could not each maintain an action at law against the defendant to recover the amount due from the assigning firms. (Dias v. Brunell's Executor, 24 Wend., 9.)

The plaintiff, in his complaint, has alleged facts which, if proved, would, according to Dias v. Brunell, (supra,) and Weston v. Barker, (12 John., 276,) entitle him to recover. The only relief prayed is a “judgment against the said defendant for the sum of $578.87, with interest thereon from the 17th of February, 1855, besides the costs of this action.” To that relief the plaintiff was entitled on the facts stated in his complaint. The complaint could not be demurred to.

But omitting the averments, that the two notes were made at defendant’s special instance and request, and on his promise to pay them, the complaint would have been demurrible. The only remedy, if the plaintiff has any rights, would have been a suit in equity for an accounting as Trustee, and a distribution of the assets among the creditors entitled to them. To such a suit, all the creditors would be necessary parties.

So that we have this result. A suit is instituted which, on the facts alleged, was well brought. But enough facts were not proved to maintain it, and the Referee has given a judgment in such an action on a finding of facts, which, had they been stated as he has found them, in a complaint at the suit of this plaintiff alone, in which the defendant was the only party, would have failed to make a complaint which could have been upheld on a demurrer to it. (Dias v. Brunell, supra.)

And he has reached this result by admitting parol proof of the defendant’s contract, in contradiction and utter disregard of the written contract itself.

The evidence on which he has found that the defendant took a transfer of the property on the verbal trusts and conditions stated, consists of loose declarations and certain acts of the defendant, not necessarily inconsistent with the written contract. The Referee has so found, mainly on the testimony of the plaintiff’s assignor. He has so found in opposition to the written contract, (Exhibit D.,) and to the intent of the defendant as thereby manifested, and as manifested by the fact that the defendant, on the same 11th of February, 1852, sold and assigned to George W. Rogers, of Buffalo, an equal undivided half of all this property, upon an agreement between the two to transact business as carriers with such property during the year 1852, at their equal profit and loss.

His finding is opposed to the fact, that Bowers, (the plaintiff’s assignor,) on the 20th of March, 1852, made a written agreement, by which Bowers was to render such services as was reasonable and equitable under the circumstances, in conducting the year’s business and settling the affairs of their late firms,” and by which the defendant agrees to pay to Bowers “ ten sixty-ninths of all the profits that I (the defendant) realize from the purchase, year’s business and sale of the assets of Bowers, Tallmadge & Co.”

Hence, if it be true, that the defendant received a transfer of the property upon the verbal trusts and conditions found by the Referee, then it is also true that on the day of the transfer to him he sold absolutely an undivided half of all of it, and contracted that such purchaser should have half of the profits, (if any,) that might be made from such purchase, and the year’s business; and on the 20th of March following contracted to pay to Bowers, for certain stipulated services, of all the profits which the defendant should individually realize.

The finding is clearly contrary to the evidence, treating Exhibit D. merely as evidence of the contract, and not as the contract itself not open to be contracted or varied by parol, except upon proper allegations of fraud or mistake, at the suit of persons entitled to relief on one or the other of those grounds.

I think the decisions of the Referee are clearly erroneous; and that the judgment should be reversed, and a new trial granted, with costs to abide the event.

Ordered accordingly.


author: By the Court—Woodruff, J. Bosworth, Ch. J. (Dissenting.)

text:
    Robert B. Williams, Jun., and Horace C. Hall, Plaintiffs, v. John S. Birch, Lucius B. Nutting, William G. Nutting, Benjamin B. Tilt, Thomas Thorp and Solomon Newman, Defendants.
    1. Where goods are purchased by means of fraudulent representations by the vendee and the goods are delivered to him by the vendor, the latter may reclaim the goods from such fraudulent vendee; but one who in good faith, without notice of such fraud, receives such goods from the vendee on consignment for sale, and advances money to the vendee thereon, acquires a valid lien, and such original vendor cannot reclaim the goods from him without repaying his advances.
    2. In such case a purchaser in the like good faith from the consignee acquires a good title to the goods. But it seems that if he have not paid for the goods, Ms title to retain them against the defrauded vendor, will depend upon the validity of the consignee’s title to hold and sell under the consignment.
    3. In an action by the original vendor against such consignees, and a purchaser from them to recover the goods, in which, after a statement of the fraud of the vendor, the only allegation is that the consignees received the goods knowing the circumstances of such fraudulent purchase and “ without paying any consideration therefor,” the plaintiff is not at liberty (when the receiving the goods on consignment without notice, and the making of advances thereon have been proved;) to show that those advances were made upon an agreement by which usurious interest for the advance was reserved to such consignees. (Bosworth, Ch. J., dissenting.)
    3. Although in the course of the trial and in the course of the proofs relating to the advance on the goods by the consignees an account of the advances and of sales by the consignees is produced and read in evidence, and it appears by one of the entries therein, that usurious interest was charged by such consignees, the plaintiff cannot, under such pleadings, recover the goods from the consignees on the ground that such advance was usurious. (Bosworth, Ch. J., dissenting.)
    4. A consignee who makes an advance in good faith on goods consigned to him by a firm which has been in a habit of dealing with him, cannot be prejudiced by proof that one of the partners had withdrawn from the firm
    • before the consignment was made, and a claim thereupon that the goods belonged to all the partners, and the remaining members had no authority to pledge them.
    5. Where propositions submitted to the Court by counsel with a request that they be given as instructions to the jury, are charged in all their just sense and meaning, it is no ground for setting aside the verdict that the Judge did not adopt the very words of the requests. It is enough if the instructions given do clearly and intelligibly embrace the whole rule on the subject.
    (Before Bosworth, Ch. J., and Woodbuff and Moncrief, J. J.)
    Heard, December 12th, 1859;

    decided, March 17th, 1860.
    This case came before the Court to be heard on exceptions taken by the plaintiffs on the trial thereof, before Mr. Justice Slosson and a jury on the 12th day of May, 1859, on which trial the jury rendered a verdict for the plaintiffs for $4,877.48 against the defendants, John S. Birch, William G. Hutting and Lucius B. Hutting, (who composed the firm of John S. Birch & Co.,) and against the plaintiffs in favor of the defendants, Tilt, Thorp and Hewman. Such exceptions having been ordered to be heard in the first instance at the General Term.
    The action was brought to recover six bales of silk or the value of any of them which could not be returned, alleged to have been purchased on the 26th April, 1857, from the plaintiffs by fraudulent representations by John S. Birch & Company, which silk the purchasers afterwards consigned to the defendant Tilt for sale, and obtained advances to the amount of $3,800 thereon, the defendant Thorp being the agent of Tilt;, and Thorp, as such agent, sold four of such bales to the defendant Newman, but the latter had not paid the price at the time this suit was brought.
    The complaint averred in relation to Tilt, Thorp and Newman, that 11 John S. Birch & Co. put the silk in the hands of the defendant Thorp, acting as the agent of the defendant Tilt, but that Thorp and Tilt received the same, knowing that it had been obtained under the ” fraudulent “ circumstances ” in the complaint before “ mentioned, and without paying any consideration therefor.” And that Thorp and Tilt still retain two bales, and “ have transferred four bales thereof to the defendant Newman, who was also cognizant of the facts above stated, and paid no consideration for the goods.”
    It was proved on the trial that after the purchase of the silk, William G\ Nutting retired from the firm of John S. Birch & Company, and that they published a notice which is stated in the opinion of the Court. Proof was given on behalf of Thorp, Tilt and Newman, that the silk was consigned to Tilt on the 27th May, 1857, by the remaining partners, and advances thereon obtained to the amount of $3,800, Thorp acting as agent of Tilt. Thorp, when on the stand as a witness, produced an account of the sales of the silk and of the charges and advances thereon by Tilt, which the defendant Birch testified was made up in accordance with the contract between Birch & Company and Tilt, and in that account was a charge of interest at one per cent per month on Tilt’s advances.
    The plaintiffs submitted requests for instructions to the jury stated in their points on the argument of the appeal, and discussed in the opinion of the Court which also recites the facts proved on the trial, and the charge to the jury, as given, so far as material to show the decision made in General Term. The jury rendered their verdict as above stated, and the plaintiffs having taken exceptions, the exceptions were ordered to be heard in the first instance at General Term, and the judgment was in the mean time suspended.

      David Dudley Field, for the plaintiffs (appellants).
    I. The Court erred in refusing to charge that Thorp and Tilt acquired no title from Birch & Company, unless they obtained the goods in “ the usual course of business, and without notice of any circumstances sufficient to put them on inquiry as to Birch & Co.’s title;” and in charging that “Tilt and Thorp were Iona fide purchasers, if they paid value, &c., without notice,” and that the plaintiffs are mistaken, &c. (Snow v. Peacock, 3 Bing., 406; Baynes v. Foster, 4 Tyrw., 65; Pringle v. Phillips, 5 Sandf. S. C. R., 173; Wardell v. Howell, 9 Wend., 170; Saltus v. Everett, 15 id., 475; S. C., 20 id., 277; Exchange Bank v. Monteith, 17 Barb., 177.)
    II. The Court erred in refusing to charge that “ a pledge or consignment upon a usurious advance is not a valid contract,” and that “ the account rendered by Thorp to Birch & Co. is presumptive evidence of a usurious advance,” and in charging that “usury does not arise in this case.”
    1. The account is presumptive evidence of a usurious contract. The interest is expressly charged at one per cent a month. Thorp says this was the account rendered by him, and Birch says it was in accordance with the contract between him and Thorp.
    2. A pledge on a usurious advance is not a valid contract, and the question of usury does not arise here.
    HI. The Court erred in refusing to charge that, after the dissolution of the firm of John S. Birch & Company, the remaining partners had not the power to pledge the property in order to raise money for their own purposes. (Story on Part., §§ 322, 328, 372; Goertner v. Trustees of Canajoharie, 2 Barb., 625; Sanford v. Mickles, 4 John., 224; 3 Kent’s Com., §43, p. 63, 2d ed.)
    A new trial should be granted.

      Luther R. Marsh, for the defendants Tilt, Thorp and Newman (respondents).
    I. The defendant Thorp must, of course, be considered out of the case. He might have demurred to the complaint: it did not charge him as principal.
    The averment in the complaint is, that he acted as agent of Tilt, the mere clerk of his principal; and the evidence shows that this averment was true.

      II. Usury. Plaintiffs’ counsel requested the Judge to charge “that a pledge or consignment upon a usurious advance is not a valid contractand the Judge refused, and the plaintiffs now claim that this refusal was error. We reply:
    I. We deny the proposition as an abstract one.
    2. There was no evidence to justify any such request or charge.
    3. Usury was a subject foreign to the issue.
    As to the defendant Tilt, the principal, the issue was, whether he received the goods, knowing the alleged fraud of Birch & Company, and without paying any consideration therefor. The jury have found these issues in his favor. No other question could be presented.
    This is the plaintiffs’ proposition on this subject, viz.: “We sued you, Mr. Tilt, for having received these silks from Birch & Company, knowing at the time that Birch & Company had obtained them from us by fraud, and you so received them without paying any consideration whatever for them. You, by your answer, denied this. We went to trial, and it there appeared not only that you did not know anything about the alleged fraud of Birch & Company, but that you actually advanced upon them, as a commission merchant, $3,800, being more than the goods produced. But now, being defeated on the issue joined between us, we claim, though we did not allege it, nor offer to do equity and repay your advance, that there was usury in your advance, and ask the Judge to charge the jury so.”
    We believe that, since the case of McKyring v. Bull, (16 N. Y. R., 297,) pleadings are of some consequence, even under the Code. But if, on the issue here, you may try usury, you may as well retain the inconvenience of pleadings no longer, but sweep them out of existence.
    4. Even if there was usury between Birch & Company and Tilt, the plaintiffs cannot take advantage of it.
    HI. The plaintiffs’ counsel asked the Court to charge “ that after the dissolution of John S. Birch & Company, by the retirement of William Gr. Nutting, the remaining partners had not the power to pledge the property in order to raise the money for their own purposes.” We answer:

      1. That, also, is a question outside of the issue. No intimation of any such question is suggested in the pleadings. Is one issue to be joined, and another tried? Are pleadings under the Code intended to mislead, to induce a defendant to think that he is to try a certain issue, whereas any other question the plaintiff pleases may be sprung upon him?
    2. That the proposition which the Judge was desired to charge was not in itself, as an abstract proposition, true.
    The remaining and continuing partners had a right to sell the goods on consignment, or otherwise.
    3. Eo notice to defendant, Tilt, of any withdrawal from the firm of Birch & Company, is pretended.
    IV. The Judge then proceeded to charge the jury on the real issue raised by the pleadings.
    The plaintiffs’ counsel did not except to what the Judge did say on this subject, but excepts to what the Judge did not say. The question is, whether the charge fairly covered the case.
    We submit that the charge not only was in exact accordance with the law on this subject (Beavers v. Lane, 6 Duer, 232; Smith v. Lynes, 1 Seld., 41,) but that it embraced every proposition that the Judge could be called on to submit to the jury.
    The two requests to charge on this subject are mere attempts to put the language of counsel into the mouth of the Judge, and insist upon his uttering it. It denies all right to the Court to use its own language. All of those requests, so far as applicable to the case, are contained in the charge actually given.
    What right, for instance, has the plaintiffs’ counsel to insist, as he does by his fourth request, that the Judge should call this consignment for sale of goods by Birch & Company to Tilt, and on which Tilt made an advance, “ a pledge ? ”
   By the Court—Woodruff, J.

The complaint herein alleges .that the defendants, Birch, L. B. Nutting and Wm. G. Nutting, under the name of John S. Birch & Company, on the 26th April, 1857, induced the plaintiffs, by false and fraudulent representations, to sell and deliver to them six bales of silk. That the fraudulent purchasers “ put the said silk in the hands of the defendant Thorp, acting as the agent of the defendant Tilt, but that Thorp and Tilt received the same, knowing that it had been obtained under the circumstances above mentioned, and without paying any cons'ideration therefor.”

That Thorp and Tilt have transferred four bales to the defendant Newman, “ who was also cognizant of the facts above stated, and paid no consideration for the said goods.”

The complaint alleges demand and refusal to deliver, and prays judgment that the defendants deliver to the plaintiffs all of the said silk in their possession, and pay to the plaintiffs the price of all the goods not so returned, together with damages, &c.

The defendants all, in some form, deny the fraud in the purchase. The answers of the defendants, Tilt, Thorp and Newman, so far as is material to the exceptions to be considered, allege that Tilt made an advance on the silk consigned to him by Birch & Company, for sale, the repayment to be made out of the proceeds of sale. That neither he nor Thorp had any knowledge that the silk had been obtained under the circumstances alleged in the complaint, or under any circumstances of fraud or false or fraudulent representations whatever; and they deny that they were received without any consideration therefor. And Thorp avers “ that the said goods were received by him as the agent of said Tilt, in good faith, and as a fair business transaction.”

Newman on his part denies that he received the silk from Thorp and Tilt, with knowledge of any fraud or without paying any consideration therefor.

There are other denials in the answers, but the questions to be considered arise out of the issues above stated.

The jury found a verdict on the trial, against the defendants John S. Birch & Company; and it is therefore to be regarded as established, that those defendants procured the sale and delivery to them by fraud, and therefore as against the plaintiffs had no title.

For the purposes of the questions before us, it is moreover to be taken as proved that on the 30th of April, 1857, William G. Nutting retired from the firm of John S. Birch & Company, under some arrangement of which the following notice was published by that firm: “Copartnership notice—The interest of William G. Nutting in the firm of John S. Birch & Company expires by limitation this day.” That on the 27th day of May, 1857, the remaining partners obtained from the defendant Thorp, as the agent of Tilt, an advance of $1,000 on a promise to consign the silk to the said Tilt for sale upon receiving another advance of $2,800, and on the 28th of May the silk was delivered to Tilt and Thorp, and the said advance of $2,800 was obtained. Four of the bales of silk were sold by the consignees to the defendant Newman, but he had paid nothing thereon at the time the action was commenced, and the case went to the jury under an explicit instruction that his defense depended entirely upon the title acquired by Thorp and Tilt; that he “ must stand or fall with Thorp and Tilt,” and the case must now be considered on the assumption that this direction was correct under all the circumstances proved affecting him.

What then was the issue made by the pleadings, as against the defendants Thorp and Tilt? Laying out of view, for the purposes of the discussion, the admitted fact that Thorp was a mere agent, that the goods were consigned to Tilt and the advances were made by Tilt, and assuming that Thorp and Tilt are in the same liability, if either is liable, the question raised was this: Did Thorp and Tilt receive the goods from Birch & Company knowing that they had been procured by fraudulent representations, and without paying any consideration therefor ? They did receive the goods. There was not the slightest proof that either of them had any knowledge of the circumstances under which the goods were procured by Birch & Company, or that Birch & Company were not owners in good faith, guiltless of any fraud or unfairness. It only remained to inquire whether Thorp and Tilt paid any consideration for the silk. The charge in the complaint was that they did not. This charge was denied; and the proof showed, without any contradiction, that Tilt advanced $3,800 thereon, or more strictly $1,000 oma promise to consign, and $2,800 upon the consignment of the silk to him for sale.

- It seems to us, that the result was inevitable and the defendants, Thorp, Tilt and ¡Newman, were entitled to the verdict which the jury rendered in their favor, upon the very issue tendered by the complaint.

But in the progress of the trial, an account was produced by the- defendant, which, in connection with the statement of one of the witnesses that it was in accordance with the contract between the consignors and Tilt, tended to show that the advances made by Tilt were usurious. That he was to charge, and did charge, one per cent a month for his advances on the silk in question.

Upon this proof the plaintiffs insisted that the consignment was void, and asked the Court to charge that the pledge or consignment upon a usurious advance is not a valid contract.

To the refusal of the Judge, to charge as requested, the plain-, tiffs excepted. We think the Judge was right in holding that no question of usury had been raised in a manner entitling the plaintiffs to any such instruction. They had brought their action and rested their claim upon a totally distinct ground. The questions were, whether the defendants, Thorp and Tilt, were cognizant of the fraud or had paid any consideration for the goods. Because proof incidentally appeared on the trial of those questions tending to show, that though an advance had been made, it was under a usurious agreement that was not a point in issue. The plaintiffs had not alleged it. The defendants did not come to trial to meet it, and unless we are prepared to say that the Court are at liberty to disregard the pleadings altogether, we think that incidental proof could not avail anything in the plaintiffs’ favor.

This we believe to be the just conclusion from the case of Brazill v. Isham, (2 Kern., 9,) where it was held, that although a valid award of arbitrators upon a cause of action is a bar to a suit thereon, the defendant could not insist upon it if not set up as a bar in his answer, even though the plaintiff himself proved that such an award had been made. McKyring v. Bull, (16 N. Y. R., 297,) and Saltus v. Genin, (3 Bosw., 250,) are also cases which support the principle. The latter is very closely analogous. All the facts alleged in the complaint, and upon which the plaintiffs relied to affect the title of Thorp and Tilt, were disproved; and yet they sought to recover upon a ground not alleged, and which was inconsistent with what was alleged. The allegation was, that the defendants, Thorp and Tilt, had paid no consideration. The claim to recover is, that they did advance a consideration, but that the proof shows it was usurious.

It was further insisted hy the plaintiffs that after William Gr. Hutting had retired from "the firm of John S. Birch & Company, the remaining partners had no power to pledge the property to raise money for their own purposes.

To this there are several answers: 1st. It appeared by the evidence that John S. Birch & Company were dealers with Tilt prior to the withdrawal of Wm. Gr. Hutting. It was not shown that Tilt had any notice of that withdrawal. He therefore had a right to act in his dealings as if the firm continued unchanged, and is to be protected in so doing; and it appears that he did so, as his accounts are rendered in the name of the same firm down to at least October 1, 1857, long after this advance was made.

As against Tilt, therefore, or Thorp, his agent, this objection, if the proposition on which it rests were sound, could not prevail. 2d. The proof showed that Wm. Gr. Hutting’s interest in the firm had expired. If so, the remaining partners had the right to dispose of the property of the firm as they saw fit. Upon the face of the advertisement given by the plaintiffs in evidence, that is, the presumption and no evidence was given, tending to show that the interest of Wm. Gr. Hutting had not-wholly ceased.

Again, the plaintiffs asked the Judge to charge that if Birch & Company acquired no title as against the plaintiffs, the other defendants acquired no title from Birch & Company, unless they obtained the goods by a valid contract for a fair consideration in the usual course of business, and without notice of any circumstances sufficient to put them on inquiry as to Birch & Company’s title.”

In so far as this request had any reference to a supposed invalidity of the transaction on the ground of usury, it has been considered.

As to all the residue of the proposition we think it was charged, though not in the very words of the request, yet in terms expressive of the whole rule on the subject. Thus, the Judge said:

If Thorp and Tilt are in the position of bona fide purchasers of the silks from Birch & Company, they will be entitled to retain them, notwithstanding the purchase by Birch & Company from the plaintiffs was procured through fraud. They are bona fide purchasers if they paid value for the property by making advances thereon on the faith of Birch & Company’s title, and without notice of their fraud. It is not necessary that they should have had actual notice of the fraud. If they had notice of such facts and circumstances as would lead a man of ordinary care and caution to suspect that Birch & Company had not come honestly by the goods, it is equivalent to actual notice of the fraud; for they were, under such circumstances, bound to have made inquiry.” The Judge then adverted to the circumstance which, as the plaintiffs insisted, was an unusually large advance upon the goods, and added, that, “to constitute the defendants bona fide purchasers, within the rule, so as to protect their title as against the plaintiffs, it is enough that they made actual advances on the credit of Birch & Company’s title to the goods, and without actual notice of anything to impeach or throw doubt on that title, or notice of any facts or circumstances which should have led them, as men of ordinary prudence and caution, to suspect the good faith of Birch’s title, and thus have imposed on them the obligation of further inquiry. If such facts and circumstances did exist in the .present case, and it is proved to your satisfaction that they had notice of them, then Thorp and Tilt are not protected by their having made advances.” He then instructed them that he should not withdraw from their consideration the fact that Birch applied for so large an advance; and “ if that fact, under all the evidence, was enough to have awakened in the mind of a prudent man suspicions of Birch’s title to the goods, then the application for such an advance was a fact which should have put them on inquiry.” ?

We think the Judge, in the fullest manner, satisfied the request which was submitted, and that the plaintiffs have no cause of complaint on that subject.

Judgment should be ordered in accordance with the verdict.

Bosworth, Ch. J. (Dissenting.)

Assuming that it was prima facie established, that the advances made by Thorp for Tilt, to John S. Birch & Company, were usurious, and that the latter obtained the goods by fraud; and that before suit brought the defendants, Tilt, Thorp and Newman, were informed of the fraud, and were required to deliver the goods to the plaintiffs, but refused to do so; then it will follow that the plaintiffs were entitled to recover, unless they are precluded by the pleadings from availing themselves of the fact, that the advance was usurious.

A person from whom chattels have been obtained by fraud, may follow them into the hands of any one not being a bona jide purchaser for value; or not holding under the rights of such a purchaser; and after a demand of them and a refusal to deliver them, may sue such holder and recover their value, or maintain replevin in the detinet. (Ely v. Ehle, 3 Comst., 506; Caldwell v. Bartlett, 3 Duer, 341; Beavers v. Lane, 6 id., 232.)

The plaintiffs alleged in their complaint, that the goods were obtained from them by the fraud of John S. Birch & Company, and'so the jury found.

To make their complaint sufficient as a pleading, they alleged that Tilt and Thorp received the goods from John S. Birch & Company, with notice of the fraud, “ and without paying any consideration therefor.”

The latter allegation, however brief it may be, was sufficient to apprise the defendants, Tilt and Thorp, that one of the grounds on which the plaintiffs would seek to charge them was, that they were not bona jide holders for value paid. To hold that the words, “without paying any consideration therefor,” merely imports that they had not actually parted with value; and if they had, that no question was to be made whether in judgment of law it constituted any consideration which would protect them in their possession is rather technical, as it seems to me, than substantial.

Tilt and Thorp state in their answer, that the two sums of $1,000 and $2,800, were advanced on the security of the goods, and Thorp “ alleges that the said goods were received by him as the agent of said Tilt in good faith, and as a fair business transaction.”

Before the Code abolished a reply to an answer setting up new matter constituting a defense, the plaintiffs might have replied that these advances were made upon an agreement that Tilt should be paid one per cent per month on the sum so advanced.

Thus the issue would have been made, in terms, by the pleadings which, in this case, the Judge at the trial held, did not exist.

. But by section 168, [144,] of the Code, as it now reads, “ the allegation of new matter in the answer, not relating to a counterclaim, * * is to be deemed controverted by the adverse party as upon a direct denial or avoidance as the case may require.”

It was new matter, that the money was advanced and the goods received “in good faith, and as a fair business transaction,” unless the allegations of the complaint import, that no part of such matter is true; and in either aspect it was open to the plaintiffs to prove, that the consideration which the defendants paid, the law does not recognize as a consideration; and that the transaction on which they rest their defense, as being a fair business transaction, was prohibited by law, and absolutely void.

In the admission of such evidence, the right to recover is not only not placed on any ground inconsistent with the case made by the complaint, but on the contrary is placed on the very ground taken in it; that the defendants, Tilt and Thorp, parted with nothing on the credit of the goods which the law regards as a consideration, or which can clothe them with the character of bona fide purchasers,

If the defendants deemed this allegation so uncertain, that the precise nature of the charge in this behalf was not apparent, their remedy was under section 160 of the Code.

But their answer indicates that they understood the pleader as questioning the fact of their having paid any legal or valid consideration ; and hence they state what the consideration was, and affirm that they acted in good faith, and that the transaction was a fair business transaction.

Under such circumstances, and having regard to the plaintiffs’ rights as the complaint stated them, and to the substance and good sense of the issues presented by the pleadings under that provision of the Code which controverts the allegations of new matter in an answer, as upon a direct avoidance of them, I think the Judge erred in holding that the plaintiffs were precluded from availing themselves of proof that the advances were usurious, and from insisting on such proof that Tilt was not a bona fide purchaser for value. (Seeley v. Engell, 3 Kern., 548; [II.;] The People v. Ryder, 2 Kern., 441, 442.)

It does not present the case of a variance between pleadings and proofs by which the objecting party has been misled to his prejudice; nor of a failure of proof of the alleged cause of action in its entire scope and meaning; but a case in which evidence of a fact has been rejected, which fact, being established, shows that in judgment of law, Tilt paid no consideration, (as the complaint avers,) and also that the answer is untrue in its averment, that the advances were made in good faith and in a fair business transaction; averments, which, in common parlance, are equivalent to the allegation that Tilt was a bona fide purchaser for value, within the adjudged meaning of that phrase.

I think the judgment should be reversed as to Tilt, Thorp and Newman, and a new trial granted as to them, with costs to abide the event.

Judgment for the respondents on the verdict.