author: By the Court. Bosworth, Ch., J.

text:
    James S. Sandford, et al., Executors and Executrix of Edward Sandford, deceased, Plaintiffs and Respondents v. Hester A. R., and James Travers, Defendants and Appellants.
    1. "In a suit to foreclose a mortgage given to secure the purchase money agreed to be paid for the mortgaged premises, where no covenant in the deed is broken and there has been nti fraud on the part of the grantors, it is no defense that a part of the premises at the time of the grant and mortgage, was encumbered by an unexpired lease thereof.
    2. Where there is a mutual mistake as to a material fact for which a court of equity would relieve, a party desiring relief on that ground must, on discovering the mistake, oiferto rescind.
    3. The purchaser in such a case, there being no fraud, cannot, if he retain the property, avoid paying the full contract price.
    4. Proof of a defense, not pleaded, cannot be received at the trial.
    5. A deed by executors, as such, with a covenant against their own acts, cannot he construed as containing an implied covenant that their testator was seized of an estate in fee simple; or a covenant on their part to put the purchaser in possession.
    6. No covenant can be implied in any conveyance of real estate, whether such conveyance contains special covenants or not.
    (Before Bosworth, Oh. J., and Woodruff and White, J'. J.)
    Heard November 15,
    decided December 29, 1860.
    This action was commenced by James S. Sandford and others, acting executors, &c.-, of Edward Sandford, deceased, to foreclose a mortgage executed to them as such executors, by the defendant Hester Ann R. Travers, December 13,1855,. to secure the price agreed to be paid by her tó them, for the mortgaged premises, according to the condition" of a bond executed by her and the defendant, James Travers. By an agreement of the same date as the mortgage, executed by said executors as parties of the first part, said H. A. R. Travers, of the second part, and James Travers, of the third part; the parties of the second and third part, as a further security for the payment of the purchase money, agreed to erect and complete, on or before the first"of October, 1856, twenty houses on said lots, according to specified plans, and one Samuel G-. Smith, entered into a bond to said executors, in the penal sum of $4,000, conditioned, that H. A. R. and James Travers, should perform last said agreement. The bond of the defendants was conditioned to pay $27,472, in five years from its date, with interest semi-annually, on the first of August and February in each year. The whole principal became payable, on a default to pay interest, and the same being in arrear for fifteen days. The mortgage was, in terms, a security for the payment of this bond, according to its condition, and for the performance of the contract to erect the twenty houses.
    The complaint alleges the non-payment of $961.50 interest, falling due August 1, 1856, and that it had been in arrear more than fifteen days, whereby the whole principal had become due.
    The answer of the defendants alleges that H. A. R. Travers purchased the premises from the plaintiffs with a view to the immediate improvement thereof; that the defendants thereupon executed said building contract, and procured Samuel G-. Smith to become security for its performance ; that shortly after the delivery of the deed, bond, mortgage, and other contracts, they discovered, and state the fact to be, that at the time of the execution of the deed to her, the premises were held adversely to said Edward Sandford, and to his executors, with claim of right and title so to do, by Thomas E. Dusenbury and others, unknown to the defendants, who then had and still have actual, possession; that these defendants requested the plaintiffs to put them in possession, which they have not done, whereby the defendants have been unable to obtain possession, or to perform their building contract. They allege that certain of the covenants in the deed to them from the plaintiffs, have been broken, and that by reason thereof, and by not being able to obtain possession of the premises and improve them, the said Hester has sustained $10,000 damages, which she demands by way of counterclaim.
    The action was referred to Henry Nicoll, Esq., as referee. On the trial, the bond and mortgage were given in evidence by the plaintiffs. The defendants gave in evidence, two deeds from Garrett S. and Jordan Mott, to Edward Sand-ford, dated January 5, 1854; also the will of said Sandford, dated July 3, 1853, containing a power in these words : “I do hereby authorize and empower my executors, or such of them as shall take upon themselves the execution of my said will, to sell all or any of the real estate of which I may die seized or possessed ;” also the deed from the plaintiffs to H. A. R. Travers; also a lease dated June 6, 1850, from the mayor, &c., of New York, demising the westerly part "of the mortgaged premises to James M. Stark, for four hundred years, and assignments of that lease to Charles E. Dusenbury.

      James Travers was then sworn as a witness for the defendants, and said, that he made the contract with the plaintiffs for his daughter; he did not search the title, “plaintiffs assuring him the premises had been two hundred years in the Striker family;” that after he had arranged to proceed with the buildings, he went to the premises and found Charles Dusenbury and others, in possession, claiming, under the corporation lease, “ that a foundation was partially digged and building materials on the ground;” that he informed one of the plaintiffs and asked him to give possession, who replied they were squatters, and when they finished painting he would turn them out; that he called several .times subsequently and stated he wanted possession ; when he last called, the papers to commence this suit were served on him; and that each house when finished, would have cost, with the lot, $6,100, and have sold readily for $8,500.
    The defendants then moved for a dismissal of the complaint, on the ground that the plaintiffs were bound to give possession, and had failed to do so. Under the counterclaim, they offered to prove that the plaintiffs who negotiated the sale, made repeated declarations that the title was good and free from encumbrances, and that defendants relied thereon and did not search the title; that they contracted with B. M. Fowler to erect the twenty houses, whereby each house with the lot, would have cost $6,'700, and that they would readily have sold for $8,500, mating a loss to defendant of $1,500 on each building. This evidence was excluded, and the defendants excepted.
    The referee found, as facts and conclusions of law, as follows, viz:
    “ That, on or about the fifth day of January, 1854, Garrett S. Mott and Jordan Mott, severally made and delivered to Edward Sandford, deceased, the testator of the said plaintiffs, indentures of deed of the premises in the complaint described, and that each of said indentures of deed contained a covenant of seizen, a covenant for quiet enjoyment, a covenant against encumbrances, and a covenant-'of, warranty.

      “ That the said Edward Sandford, deceased, in and by his last will and testament, authorized and empowered his executors, or such of them as should take upon themselves the execution of his will, to sell all or any of the real estate of which he might die seized or possessed.
    “ That on or about the 13th day of December, 1855, the plaintiffs, James S. Sandford, Halsey Sandford, and Garritt H. Striker, Junior, made and delivered to the defendant, Hester Ann R. Travels, an indenture of deed of the said premises, and that said last mentioned indenture of deed contained a covenant by and on the part of the said grantors as executors severally, and not jointly, for the quiet enjoyment of said premises by the defendant, Hester Ann R. Travers, without any let or hinderance from the said parties of the first part to the said indenture, their heirs or assigns or by or from any person lawfully claiming under them, or by or from their, said testator, the said Edward Sand-ford, deceased.

      “ That, simultaneously with the execution and delivery of the said last mentioned indenture of deed, the defendants, Hester Ann R. Travers and James Travers, made and delivered to the said James S. Sandford, Halsey Sandford, and Garritt H. Striker, Junior, the bond and mortgage in the complaint in this action mentioned, and that simultaneously therewith an agreement was made and delivered by and between the said James S. Sandford, Halsey Sandford, and Garritt H. Striker, Junior, as acting executors of the said Edward Sandford, deceased, of the first part, and the said Hester Ann R. Travers, of the second part, wherein, after reciting the aforesaid sale and conveyance, and that a portion of the security of the purchase money was to consist of buildings and improvements thereafter to be erected on the said premises, it was covenanted that the said Hester Ann R. Travers would, on or before the first of October, 1856, erect and completely finish, on said premises, twenty houses, according to certain plans and specifications in said articles of agreement particularly mentioned and referred to. And in and by said articles of agreement, the said parties of the first part thereto covenanted to release from the lein of their said mortgage, certain of the houses so to be erected, and the ground on which they should stand, when the building of all the houses should have been advanced to an extent in the said articles of agreement particularly mentioned.
    “ That, simultaneously with the execution and delivery of the said articles of agreement, one Samuel G. Smith, sealed and delivered to James S. Sandford, Halsey Sand-ford, and Garritt H. Striker, Junior, executors as aforesaid, his bond or obligation in the sum of $4,000, conditioned in case the said Hester Ann R. Travers and James Travers, should not perform and keep the covenants on their part in said articles, to pay to the said James S. Sandford, Halsey Sandford, and Garritt H. Stryker, Junior, the sum of two thousand dollars. That prior to the execution and delivery of the said indenture of deed from the said Garritt S. Mott and Jordan Mott to the said Edward Sandford, the westerly half of said premises described in said complaint, being known and distinguished on the assessment map for regulating the Ninth avenue, by the numbers 829, 830, 831, 832, 833, 867, 868, 869, 870, and 887, had been sold pursuant to the Statute in such case made and provided, for a term of four hundred years, to one James M. Stark, for the payment of the assessment unpaid upon the said premises for regulating the Ninth avenue, and such proceedings were thereupon had; that upon the 6th day of June, 1850, the mayor, aldermen, and commonalty of the city of New York, did execute to the said James M. Stark, his executors and assigns, an indenture of lease of the said premises for the term of four hundred years, and which said indenture of lease was afterwards, and on the 21st day of December, 1850, recorded in the office of the register of the city and county of New York.
    “ That, at the time of the execution and delivery of the last mentioned indenture of deed, indenture of mortgage, and articles of agreement, one Charles Dusenbury was the holder and assignee of the said indenture of lease.
    “ That default was made in .the payment of the sum of $961.82, being the interest which became due upon the sum of money mentioned in the condition of the bond before mentioned, so made by the said Hester Ann R. Travers and James Travers, on the first day of August, 1856. According to the tenor and effect of the said condition, and that the said interest remaining unpaid and in arrear for the space of fifteen days, the said plaintiffs elected that the principal sum mentioned in the condition of the said bond should be due and payable to them.
    “ Upon the foregoing facts, I do find, as conclusions of law, that the said plaintiffs are entitled to a judgment barring and foreclosing the defendants, and all persons claiming under them, or either of them, of all right and equity of redemption in the said premises, and for a sale of said premises, according to law, and for the payment of the amount due to them, with interest and their costs, out of the proceeds of said sale, and for a judgment against the defendants for any deficiency in such proceeds to pay and satisfy the above amounts, with interest and the costs as aforesaid.
    “ And I further report, that I have computed the amount due on the said bond and mortgage for principal and interest, at the date of this my report, and that the same is the sum of thirty-five thousand four hundred and eighty-four dollars and sixty cents, ($35,484.60.) All of which is respectfully submitted.
    “ Dated New York, March 31, 1860.”
    Judgment having been entered upon the report, the defendants appealed from it to the general term.

      John Anthon, for Appellants.
    1. The deed to the appellants having been made by the respondents in execution merely of a general power in testator’s will, (no estate being vested in them,) will be construed in equity as if it had recited in hosc verba, the title deed to testator, with all its covenants of seizin, warranty, &c., vesting in him a present estate in fee, the power in the will, authorizing the respondents to sell that precise estate, and the conveyance of that estate by proper words and covenants to the appellants; or as if a similar deed had been made by the testator himself, in his life time, in the strongest manner. (2 Sug. on Powers, 26 ; Griswold v. Bigelow, 6 Conn. 269 ; Middleton v. Cross, 2 Atk. 661 ; Jackson v. Veeder, 11 Johns. 169 ; Osgood v. Franklin, 2 Johns. Ch. 1 ; Doolittle v. Lewis, 7 Johns. Ch. 45 ; Jackson v. Davenport, 20 Johns. 541; estoppel, Pickard v. Sears, 6 Ad. & Ells. 469 ; Preston v. Maine, 25 Conn. 119.)
    2. The outstanding lease for four hundred years, and the possession of lessee under it, reduced the subject matter of the deed to testator, and power to executors, from a vested fee in possession, to a remainder in fee, to vest in possession at the expiration of four hundred years ; and this is all respondents could convey to appellants, who bargained for and took their conveyance for an immediate fee.

      3. The mortgage sought to be foreclosed in this case, was given by the appellants for the entire purchase money of such present vested fee. Appellants have never had possession; and a court of equity will never allow a foreclosure in such a case. (Platt v. Gilchrist, 3 Sandf. S. C. 118 ; Edwards v. Bodine, 26 Wend. 109 ; Legget v. McCarty, 3 Edw. 124 ; Wither v. Powers, 2 Sandf. C. Ch. 350, notes.)
    4. But the case presents this point in a still stronger point of view. The deed, bond, and mortgage, building contract, and surety bond for its performance, form one entire contract, requiring that respondents should give appellants immediate possession, and such duty was expressly imposed upon them by law, independent of their express promise and undertaking. The breach of contract was on the part of the respondents who had no right to foreclose the mortgage. (Stow v. Tift, 15 John. 463 ; Cornell v. Todd, 2 Denio, 130 ; Trull v. Granger, 4 Seld. 118.)
    5. The referee, on these grounds, ought to have dismissed the complaint-seeking a foreclosure.
    6. The whole case was thus, on both grounds taken, reduced to the question of the amount of damages under the counter-claim for breach of contract.
    The evidence of Travers as received, and that of Fowler offered and rejected, was proper evidence establishing a loss to the amount of $15,000. On this, he ought to have acted, and reported accordingly. (Masterton v. Mayor of Brooklyn, 7 Hill, 65 ; Caswell v. Wendell, 4 Mass. 108.)

      7. The deficiency on the sale which, from the defect of title, forming an item on the record of $30,000, would be also an item to be claimed by appellants on their counterclaim, should the foreclosure and sale be sustained.

      H. Bay, for Respondents.
   By the Court. Bosworth, Ch., J.

—The defenses set up in the answer are : 1. That H. A. R. Travers “ purchased said premises from said plaintiffs, with a view to the immediate improvement thereof;” and that the defendants made ’ the building contract, which they have been always willing and desirous to perform. That shortly after executing the mortgage, &c., they discovered, and so charge the fact to be, that at the time of executing the deed to H. A. R. Travers, the premises were held adversely to the testator and the plaintiffs, with claim of right and title so to do, by persons named, who then had and still have actual-possession thereof. That the plaintiffs promised to put defendants in possession, and have not done so.

2. That some of the covenants in plaintiffs’ deed were broken, eo instanti its execution and delivery, by reason of said adverse title and holding; and that said Hester, by reason of being unable to take ' possession and build, has suffered $10,000 damages, which she seeks to recover, as'a counter-claim.

It is to be observed, that the answer contains no allegation of any misrepresentation, concealment, or other deceit, practiced by the plaintiffs, to induce H. A. R. Travers to purchase, or either defendant to enter into any of the obligations to which they became parties.

Nor is there any averment of an offer by the defendants before suit brought to rescind the contracts; nor is such an offer, nor an offer to reconvey to the plaintiffs, made in the answer. And the defendants, instead of praying that the contracts may be canceled on a reconveyance to the plaintiffs being executed, demand damages by way of counter-claim, upon the theory of the contract being treated as operative and obligatory.

It is quite clear, that no breach of any covenant on the part of the plaintiffs contained in the- deed executed by them, has been proved. Assuming the corporation lease to be valid and in full force, the estate which the holder of that lease has, was not acquired from or through the plaintiffs, or their testator; nor has it arisen or been created by reason of any act or omission of either of them.

That lease was executed on the 6th of June, 1850, to give effect to a sale made on the 1st of June, 1848, to obtain payment of an assessment of $11.73, confirmed the 24th of April, 1847.

The testator acquired title by a deed executed to him by Garritt S. & Jordan Mott, June 5th, 1854. Hence, if the corporation lease be valid, the estate conveyed by it had been created, and existed over three years and a half before the testator acquired title.

No covenant can be implied in any conveyance of real estate, whether such conveyance contains special covenants or not. (3 R. S. 5th Edit. p. 29, § 160 ; and see Burwell v. Jackson, 5 Seld. 535 ; The Mayor, &c. v. Mabie, 3 Kern. 151, and 158.)

It does not contain an implied covenant of seizin; or against incumbrances, or of a present right of possession.

There is, therefore, no breach of any covenant, on the part of the plaintiffs, contained in the deed executed by them to H. A. R. Travers.

As to the defense first stated in the answer, it may be observed, first, that, assuming the corporation lease to be valid, it affects the title to only half of the lots conveyed, and there is no pretense that a good title to the .other half was not conveyed. Nor has the referee found that the lots covered by the corporation lease- were in the actual possession of any third person at the time the deed given by the plaintiffs was executed.

James Travers, the only witness to that point, testified, “ that after he had made arrangements to proceed with the buildings, he went to the premises, and found Charles Dusenbury and others in possession, claiming under the corporation lease to Stark; that a foundation was partially digged, and building materials were on the ground.” He does not state when this was, nor otherwise designate the time when they took possession. Therefore, not only has the referee not found the fact of there being an adverse possession at the time the plaintiffs conveyed to H. A. R. Travers, but, on the contrary, no evidence was given which would warrant such a finding.

The case, then, on the merits, stands thus: The plaintiffs, supposing, so far as the evidence warrants any conclusion as to what they supposed or believed, that their testator had title to the twenty lots, in good faith conveyed whatever estate he had in the twenty lots at the time of his decease; they practiced no fraud or deceit in mating the sale. H. A. R. Travers bought, ignorant, as were also the plaintiffs, of the existence of the corporation lease.

There was a mutual mistake as to a material matter, viz: as to the corporation lease creating an estate in half of the lots for the term of four hundred years.

When the defendants discovered this mistake they had their election, assuming the mistake to be one which would authorize a court of equity to rescind the contract, to offer to rescind and reconvey, on having their obligations canceled and surrendered, or to hold on to their bargain, .pay the contract price, and have such relief as the plaintiffs’ covenants might entitle them to demand.

This, certainly, is the most favorable rule in behalf of • the defendants ; that it is consistent with elementary law and adjudged cases, see 2 Kent’s Com. 471, 472 ; Belknap v. Sealey, (4 Kern. 143 and 158;) Tallmadge v. Wallis, (25 Wend. 107 and 114, 115 ;) Van Epps v. Harrison, (5 Hill, 63 ;) Mason v. Bovet, (1 Denio, 73, 74.)

They cannot retain their deed, and such estate as it conveys, and avoid paying the contract price, there being no fraud on the part of the plaintiffs, and none of their covenants being broken.

When this action was commenced, the case does not disclose. The complaint was verified the 21st of October, 1856, and the suit was brought by reason of a failure to pay interest falling due August 1, 1856.

Assuming" that there was no laches in not offering to rescind, so long.as the plaintiffs gave the defendants reason to expect they would be put in possession, yet it was their duty to take that' position when this action was brought, and claim that kind of relief, if they intended to take it at all, and to allege the facts and offer to do the acts which would entitle them to it.

Whether the defendants’ purchase would be a bad speculation if held to pay the contract price for a present fee in ten lots, and a remainder in the other ten, the evidence furnishes no means of determining.

If these views are correct, the first exception taken to the refusal to dismiss the complaint is untenable. It is not found as a fact, nor does the evidence tend to show that the defendants could not have taken possession of ten of the lots at any time, nor that they might not have taken possession of the whole at the time the deed to them was received and recorded.

The ground of the second exception to the refusal to dismiss the complaint does not entitle the defendants to such relief. For aught that appears, the premises were not actually occupied when the defendants received their deed, and no third person had then made any claim of title to any part of the lots, and in that condition of things there was no possession- to be given in addition to the execution and delivery of the deed.

The offer to prove that the plaintiffs represented the title to be good and free from encumbrances was properly excluded ; no such defense is stated in the defendants’ answer.

The offer to prove certain facts, by way of establishing a counter-claim, was properly overruled, because, First: There was- no proof of any breach of any covenant on the part of the plaintiffs; and, Second: On failure of title, in cases free from fraud, where the grant contains, a covenant of seizin, the measure of damages is the consideration money, if it has been paid, and interest thereon. (Peters v. McKeon, 4 Denio, 546 ; Noyes v. Anderson, 1 Duer, 342 ; Conger v. Weaver, 20 N. Y. R. 140.)

And it is a sufficient answer to all the grounds on which the court was asked to dismiss the complaint, that on no principle could the defendant, H. A. R. Travers, be permitted to retain the estate conveyed to her without paying to the plaintiffs any part of the contract price; and a judgment dismissing the complaint, after all the evidence had been given, would have effected that result.

The decision and the judgment entered thereon are, that the premises be sold; that out of the proceeds of thé sale, liens for taxes and assessments be discharged, and the plaintiffs’ costs paid ; and that the residue be applied in satisfaction of the amount due to the plaintiffs, and if ■ there be* a deficiency that the defendants pay it.

The plaintiffs offered on the argument to consent to a modification of the decree, whereby the defendants should ■ be discharged from all liability for any deficiency.

Such a decree, assuming the plaintiffs to have been the purchasers at the sale under the judgment .in this action, would, in effect, reinvest the title in the plaintiffs at their own expense, and exonerate the defendants from all liability as purchasers—and would be, in effect, a rescinding of the contract as to the sale, and purchase and conveyance of the land.

But the defendants have neither asked such relief, nor suggested that they would be content with it. On the argument of the appeal, as at the trial, they claimed no relief based on an offer, or an avowéd willingness to surrender and cancel the contracts and reconvey the land, but urge their defenses and supposed counter-claims, by virtue of their rights created by the deed, its covenants and the cotemporaneous contracts.

In this condition of things, unless they consent to a judgment releasing them from the deficiency, upon a cancellation ' of the building contracts by ‘the act of all the parties to them, the court has no right to modify the judgment as the plaintiffs consent that it may be, and as- thus modified, affirm it.

Judgment affirmed.


source: Caselaw Access Project

author: By the Court. Bosworth, Ch. J.

license: Public Domain

text:
    Ellen O’Rourke, Plaintiff and Respondent v. Henry Hart, Defendant and Appellant.
    1. Where a person eniploys another to do a piece of work, and the one so employed does it by his own workmen, using his .own discretion as to the manner of doing it, having exclusive control of the matter, and a third person is injured while the work is in progress, by the careless manner in which it is done, the contractor and his servants guilty of the negligence are alone liable for the injury.
    2. It makes no difference, in sucha case, that the work done consists in altering a public street. When the work to be done cannot itself be dangerous to others, unless it becomes so by the dangerous or unskillful manner of executing it, and is done by one contracting to do it, and having exclusive control of the men employed, and injury results from such unskillfulness, the remote principal is not liable. The liability is confined to the persons guilty of the negligence, and to their principal.
    (Before Bosworth, Oh. J., and Woodruff and White, J. J.)
    Heard November 16,
    decided December 29, 1860.
    Appeal by the defendant from the judgment, and from an order denying a motion for a new trial.
    The suit is brought to recover damages for an injury to plaintiff, occurring at the corner of Chatham and Pearl streets, in the city of New York, and alleged to have been caused by the negligence of defendant’s servants in removing an iron railing suspended above the sidewalk to support an awning, by which negligence the iron railing fell on the plaintiff as she was passing along the street, and injured her. The action was tried before Mr. Justice Moncrief and a jury, on the 25th of June, 1860.
    It appeared that the railing was taken down at ■ the instance of, and paid for by the Third Avenue Railroad Company, which had an alteration of the curb, at that corner of the street, made for its convenience in running its cars, and this alteration made it necessary to remove the iron awning posts and rails. The defendant was a director of that company, and in behalf of the company emploved one Carnley to do the job, who sent his workmen to do it. Hart was not present while the work was being done, and gave no directions as to the manner of doing it.
    The injury of the plaintiff was not a natural or necessary result of removing the awning rail, but resulted from the negligent manner in which the work was done and while it was being done.
    On the close of the evidence the defendant moved a dismissal of the complaint; the motion was denied, and he excepted. The judge charged the jury, among other things, as follows, viz:
    “That if the Third Avenue Railroad Company were the persons who contracted with Carnley to do the work in question, and were liable to him, the defendant would not be liable to the plaintiff in this case; but if the defendant employed Carnley to do the work for him, he would be responsible for the injuries which might result from any negligence on the part of Carnley’s employees. Whether the railroad company or the defendant was the principal in the contract with Carnley, was a question of fact for. the jury to determine.”
    To which the defendant excepted.
    “His Honor further charged, that if the jury found that the defendant was such principal, the jury would proceed to inquire whether the agent or workmen employed by him and engaged in doing the work, used due and proper caution, and guarded against accident, to the extent of the danger to be apprehended from the character of the work, and the place a public thoroughfare; and in case the jury should find that such agents or workmen of the defendants were not so prudent and careful, but, on the contrary, were guilty of negligence and carelessness, the jury must then inquire whether the plaintiff, at the time of the accident, was guilty of such acts or conduct as of themselves contributed to produce the injury complained of. If the injuries were the result of the carelessness and negligence of both the plaintiff and the defendant’s workmen, it could not be said that the defendant’s act alone produced the injuries, and, the defendant would not be liable. To entitle the plaintiff to recover, her fault or negligence must not concur to produce the result complained of. If the jury should find that the work was the defendant’s, issued or proceeded from him as principal, and his agents or workmen were negligent, and the plaintiff without fault, the defendant would be liable, and the question of damages must next be considered. To which the defendant’s counsel excepted.”
    The jury found for the plaintiff, and assessed the damages at $7 00. The defendant moved at special term for a new trial. The motion was denied; from the order denying it, and from the judgment entered on the verdict, the defendant appealed to the general term.

      John N. Whiting, for Appellant.

      William M Alim, for Respondent.
   By the Court. Bosworth, Ch. J.

—There can be no pretence upon the evidence given, that Henry Hart had the iron awning rail removed on" his own account. It was not done to accommodate his individual business; but to facilitate the operations of the Third Avenue Railroad Company. And even had he caused it to be done with a view to the more convenient transaction of some business, of which he was the sole proprietor, he would not be liable.

The cases of Pack v. The Mayor, &c. of New York, (4 Seld. 222,) and Kelly v. The Mayor, &c., of New York, (1 Kern. 432,) are conclusive.

The injury did not result from the work itself; that is, it was not a natural or necessary consequence of the removing of the awning rail.

It resulted from the manner in which the work was done, and from the negligence of Carnley’s men while doing it.

Hart, whether on his own account or on account of the Third Avenue Railroad Company may not be very material, employed Carnley to remove this awning rail. This rail, we must assume, might lawfully be removed; with the manner of removing it, or with the question by which of Carnley’s men the removal should be effected, Hart could not interfere; Carnley having undertaken to do the job, had the right to send such of his men as he deemed best, and to exercise his own judgment, or permit his workmen to exercise theirs, as to the best mode of executing the work.

The men whom he sent, were his servants, and not Hart’s; they were working for, and under Carnley; and not for, or under Hart.

The opinion in Storrs v. The City of Utica (17 N. Y. R. 104) reaffirms the rule as applied in the two cases first cited; and while it forcibly questions the accuracy of its application, as made in Blake v. Ferris, (1 Seld. 48,) does so upon the ground, that there, the injury was not caused by negligence in the actual performance of the work; but by leaving a ditch carefully and skilfully dug in a public street, unguarded at night, by reason of which the plaintiff’s carriage'was driven into it.

In the case before us, if the injury had resulted from some dangerous condition in which the defendant had put the street; and that condition, and not the means by which it was created, had caused the injury; then it might be said that the defendant was the author of the mischief, as he created a condition of things, which, in the very state he had contracted for, caused the injury. But when the thing contracted for cannot of itself be dangerous or injurious to others, unless it becomes so by reason of the negligent or unskillful manner in which the work is done; and while it is being done, and injury results from such negligence or unskillfulness, only the persons chargable with the negligence or unskillfulness, and their principal are liable. (Potter v. Seymour, 4 Bosw. 140.)

We have seen that the negligence in question was in the manner of doing the work, and while doing it; and that the persons guilty of it were the servants of Carnley, and not of Hart. ’ Hart was not present while the work was being done, nor did he give any directions, or in any way assent to the manner of doing it.

On the evidence given, and as it stood when both parties had rested, the defendant was entitled to a dismissal- of the complaint. It shows clearly, as we think, that the work was done solely at the instance of, and for the Third Avenue Railroad Company.

It was no more done for Hart, than it would have been done for the President or Secretary of the Company, if either of those officers had in behalf of that company done precisely what Hart did.

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

Ordered accordingly.


author: By the Court. Woodruff, J.

text:
    James H. Van Allen, Plaintiff v. The Illinois Central Railroad Company, Defendants.
    1. The defendants, an Illinois railroad corporation, intending to construct their road by borrowing money on their bonds, to be repaid out of a sale of their lands, issued proposals in London, in 1852, for a loan of $5,000,000, which stated this purpose, and that the corporation “ will create, notwithstanding, a share capital equivalent in amount to the sum raised on bonds,” * * and that “ it is proposed to give the privilege to subscribers to the loan, * * to become shareholders therein for one-half of that subscription;” * * that a banker’s receipt will he given in payment of the first deposit on the bonds, which will be exchanged for the provisional certificates (i. e. certificates entitling the holders to bonds with" coupons annexed, when the installments were all paid,) as soon as they can be obtained from America, and at the same time a further provisional certificate, entitling the bearer, in addition, to fifty per cent, on the amount of his subscription to the bonds, in the capital stock of the company, will be delivered to him,” and that “ the provisional certificates will be exchanged for scrip shares on payment of the last installment on the bonds.”
    The plaintiff made subscriptions to the amount of $250,000; paid the first installment in London, and by arrangement, the others in New York, the last one in January, 1853 (it not being payable by the terms of the loan until Octo- * her 2, 1854). He was furnished with the just number of provisional certificates, dated August 16,1852, each of which states that “ the hearer hereof will be entitled, on and after the 1st of October next, to scrip certificates ” (for one-half of the amount of the bonds referred to) in the company’s capital stock of $17,000,000 on presentation hereof,” “provided all the installments on the subscriptions for the bonds, * * shall then have been fully paid up.” At the foot thereof was the following, viz: “N. B. The exchange of the provisional certificates for the scrip certificates, is limited to 1st January, 185 .”
    On the 15th of March, 1854, defendants' board gave notice that its books would be open to January 1,1855, for subscriptions under the certificates, by publishing it in two newspapers in New York and Boston, and mailing a copy of it to the plaintiff, who did not receive it.
    On the 22d of January, 1857, the plaintiff presented his provisional certificates, (calling for 975 shares of stock,) demanded scrip shares to that amount, and offered to pay all installments and interest which had been called in on the stock. The company refused tó issue the stock to him, and thereupon he brought this suit to recover damages. Held, that the agreement, created by the proposals and acceptance of them, and by subscribing and paying the subscriptions made, was not illegal, on the ground that the subscribers acquired thereby the right to elect to take stock at any future time, without any limit to the time of exercising such election, the true construction not conferring that right.
    2. The only sense in which the provisional certificates are conditional is, that they require payment of all the installments as a condition to the right to demand stock.
    3. That condition having been fully performed, the right to demand and receive the stock continues until it has been terminated by a tender of performance by the company, and a demand of payment of any assessments then duly made, and a refusal of the subscriber to accept and pay, or by some, other act to which he is a party.
    "4. The right of the subscriber to the shares in the capital stock specified in the certificates, is subject to the duty and obligation on his part to pay the amount duly assessed thereon by the defendants’ directors.
    6. The measure of damages is the difference between the market value of the stock, at the time the demand for it was made, and the amount of the installments previously called in, and interest on such installments, with interest on such difference from the time of the demand to the day of the verdict.
    (Before Woodruff, Moncbief and Bobertsoií, J. J.)
    Heard October 5, 1860,
    decided February 9, 1861.
    Motion "by the plaintiff for judgment on a special verdict. The action is brought to recover damages for the defendants7 refusal to permit plaintiff to subscribe for shares of the capital stock, pursuant to an agreement with them, made on loaning money to them, and “provisional certificates77 issued in pursuance thereof by the defendants. The cause was tried in October, 1859, before Mr.'Justice Woonruff and a jury. The jury found a special verdict, which states that the defendants were a corporation in 1852, under a charter granted by the State of Illinois.
    That by the fourth section of the charter, its capital stock was fixed at one million of dollars, with power to increase it, from time to time, to a sum not greater than the entire amount' expended on account of said road ; the shares to be $100 each, to be issued, &c., as maybe ordered by the directors, “who shall have power to require the payment of sums subscribed by stockholders, in such manner and on such terms as they may deem proper and that in case of refusal, the shares of delinquent stockholders nlay be sold, as therein provided.
    That tiy the fifth section, all the corporate powers were vested in a board of directors, who, by the eighth section, were authorized to make all needful rules, by-laws, and regulations, &c.
    That in 1852, the defendants issued, in London, proposals for a loan to them of $5,000,000, which proposals are set forth at length in the case. They state the names and residence of the directors and other officers of the corporation; the length and locality of the road; the roads • connecting with it; the grant made by the Federal Government in September, 1850, to the State of Illinois, of over two and a half million acres of land; that in 1851, the State transferred to the defendants the benefit of this i grant; the estimated cost of the road not to be over $17,000,000, and the estimated net profits of the road $2,000,000 per annum; and that the lands granted will be saleable, when the road is completed, at $7 per acre. They contain an extract from the American Railway Journal on the -“Influence of Railroads on the Value of Land";” and declare a purpose to raise the sum necessary to build the road by the. issue of bonds ; reserving $12,000,000 for subscribers in "the United States, and inviting a loan of $5,000,000 through their agents in London on their bonds in sums of $500 and $1,000 each; “for which provisional certificates to bearer wi1! be issued on the payment of the first deposit; and on the remaining payments being completed, the provisional certificates will he exchanged for the bonds.” They proposed, as dates of payment, a deposit (specified) on the 1st of July, 1852; and a further specified deposit on the first of every following October, January, April and July, until the last one, which was to be made October 2d, 1854. They state that “the installments may be anticipated by the payment of the bond in full, which will entitle the holder to interest at six per cent, from the date of payment;” the bonds to be payable at par in London in 1875.
    The proposals further state as follows, viz :
    “ The Illinois Central Railway Company having thus decided to raise the money necessary for the construction of the railway by the issue of its bonds, secured on the land and railway, will create, notwithstanding, a share capital equivalent in amount to the sum raised on bonds, and which will be issued in 100 dollar shares, to represent the proportionate interest of the respective holders in the undertaking. It is proposed to give the privilege to subscribers of the loan of 5,000,000 of dollars now offered, to become shareholders therein for one-half of that subscription ($2,500,000); and as it can hardly be doubted that the bonds will be paid off by means of the sale of lands, there is every probability that the railroad will be constructed without any call on the share capital. A small deposit may be required on the shares ; and these shares will thus become an actual bonus, and entitle the holder to a participation in all the profits of the line.
    “A banker’s receipt will be given on payment of the first deposit on the bonds, which will be exchanged for the provisional certificates, as soon as they can be obtained from America; and, at the same time, a further provisional certificate, entitling the bearer, in addition, to fifty per cent, on the amount of his subscription to the bonds in the capital stock of the company, will be delivered him.
    “ The provisional certificates will be exchanged for scrip shares on payment of the last installment on the bonds.
    “In order to secure to the parties advancing their moneys on the proposed security the fulfillment of the conditions on which the advance is made, it is proposed that all the payments shall be made to four gentlemen in England, who shall act as trustees between the company and the bondholders; and the following gentlemen have consented.to undertake this duty, namely:
    “ William Brown, Esq., M. P., John Pemberton Heywood, Esq., Thomas Smith, Esq., and Matthew Uzielli, Esq. * * “It is arranged that the installments on the bonds shall not be paid over until the company have deposited in the hands of the trustees the necessary provisional certificates for the same, as well as the bonds themselves, and also the scrip certificates for the agreed amount of share capital.” There was annexed to the proposals the form of a “provisional certificate for one construction bond of $1,000, or, at 4s. 2d. sterling per dollar, ¿6208 6s. 8d. sterling,” to which all the provisional certificates were to conform.
    The special verdict further states that “ The plaintiff made subscriptions to the loan to the amount of $250,000, a part of which was filled by persons to whom he transferred his right. He paid the first installment of the loan in London, and the remaining installments in New York, in pursuance of arrangements made with the defendants. The last installment of the loan was paid in January, 1853.
    “Prior to November lYth, 1852, the defendants caused the provisional stock certificates contemplated in the proposals, and which were to be exchanged on the payment of the last installments on the bond and subscription for scrip certificates, to be-.prepared and sent to the trustees mentioned in the proposals in England, to be delivered to the subscribers to the loan. They were printed blanks in the following form:
    “ ‘Illinois Central Railroad. Company. Provisional certificate, No. for shares, $100 each. Subscription for ^bonds of $1,000 each, bearing interest at six per cent, per annum, Nos. This certifies, that the bearer hereof will be entitled, on and after the first day of October next, to scrip certificates, for shares, of one hundred dollars each, in the capital stock of seventeen millions of dollars, of the Illinois Central Railroad Company, on presentation hereof at the office of Messrs. Heywood, Kennards & Co., bankers, London. Provided, all the installments on the subscription for the bonds, numbered as above, shall then have been fully paid up.
    “ 1 Office of the Illinois Central Railroad Co., )
    New York, August 16, 1852, )
    President.

      Secretary.

    “1N. B. The exchange of the provisional certificates for the scrip certificates, is limited to 1st January. 185 .’
    “ These were to be filled up *by the trustees.
    “ The defendants also sent to the said trustees certificates of a sufficient number of its shares issued to the trustees, for them to transfer to the holders of the provisional stock certificates, to supply all the shares required thereby.
    “ The provisional stock certificate, issued by the trustees in London, had the blank ‘ 185 ’ in the last line filled with a 15;’ so as to make it read 11855.’
    “ The plaintiff having completed the payment in New York of all the installments upon the bonds taken by him under his subscription, the defendants’ officers delivered to him the provisional stock certificates held by him for 9Y5 shares of the stock, which are the certificates mentioned in the complaint; in none of which the blank in the- last line 1185 ’ was filled, leaving the clause at the foot of each certificate as follows:
    “ ‘N. B. The exchange of the provisional certificates for the scrip certificates is limited to 1st January, 185 .’ ”
    On the lYth November, 1852, a resolution was passed by the defendants’ directors, appropriating 21,404 shares of the stock to the London trustees, to be given on surrender of the provisional certificates.
    On the 25th February, 1854, the legislature of Illinois limited the capital to $1Y,000,000.
    On the 15th March, 1854, the defendants’ board gave a notice that its books would be open to January 1st, 1855, for subscriptions under the certificates. The notice was published in two newspapers in New York and Boston, and copies of the notice sent by mail to the plaintiff, who, however, never received the notice.
    . On the 22d day of January, 1851, the plaintiff presented his forty-three certificates for nine hundred and seventy-five shares of stock to the defendants, and demanded scrip shares to that amount, offering to pay up all installments and interest which had then been called in on the stock.
    The defendants refused to issue the stock to him.
    The market value of the stock on that day was $21.50 above par, which would make the damages $26,812.50.
    The market value sixteen days later, viz., February 2d, 1851, was $40 above par, making the damages $39,000.
    This suit was commenced May 5th, 1851, claiming damages for the refusal to issue the stock.
    The parties stipulated, that any facts which are admitted in the pleadings, and not contained in the said verdict, shall be deemed to be before the court as fully as if the same were in the verdict: And the court ordered the cause to be heard in the first instance at the general term. Other of the facts in the special verdict are stated in the opinion of the court.

      Win. M. Evarts, for Plaintiff.

      Charles Tracy, for Defendants.
   By the Court. Woodruff, J.

—The defendants, in June, 1852,, being desirous of obtaining a loan of five millions of dollars in England, as a part of an ingenious scheme by which they proposed to construct their railroad by borrowing the money therefor, to be repaid out of the .sale of their bonds pledged for the loan, and believing that the road might be so built without requiring the payment of the capital stock, issued, in England, proposals for such loan.

In those proposals, they say:

“ The Illinois Central Railway Company have thus decided to raise the money necessary for the construction of the railway by the issue of its bonds, secured on the land and railway, will create, notwithstanding, a share capital equivalent in amount to the sum raised on bonds; and which will be issued in one hundred dollar shares, to represent the proportionate interest of the respective holders in the undertaking. It is proposed to give the privilege to subscribers of the loan of 5,000,000 of dollars, now offered, to become shareholders therein for one-half of that subscription ($2,500,000); and as it can hardly be doubted that the bonds will be paid off by means of the sale of lands, there is every probability that the railroad will be constructed without any call on the share capital. A small deposit may be required on the shares; and these shares will thus become an actual bonus, and entitle the holder to a participation in all the profits of the line.
“A banker’s receipt will be given in payment of the first deposit on the bonds, which will be exchanged for the provisional certificates (i. e., certificates entitling the holders to bonds, with coupons annexed, when the installments were all paid,) as soon as they can be obtained from America; and at the same time a further provisional certificate, ; entitling the bearer, in addition, to fifty per cent, on the amount of his subscription to the bonds, in the-capital stock of the company, will be delivered to him.
'! “ The provisional certificates will be exchanged for scrip Í shares on payment of the last installment on the bonds. (Four persons in England are then named as trustees, to receive all the payments from the subscribers to the, loan, and “act between” them and the company; and the proposals then continue:)
“It is arranged that the installments on the bonds shall not be paid over until the company have deposited in the hands of the trustees the necessary provisional certificates for the same, as well as the bonds themselves, and also the scrip certificates, for the agreed amount of share capital.”

Looking to these proposals, and to an acceptance thereof by a subscription to the proposed loan, as constituting the actual contract between the company and the subscribers, it would not have occurred to me that the company thereby intended to give, or did give to those who should become parties to the loan, any unlimited option to take stock in the company or not, at whatever future time such subscribers saw fit; or that the proposed arrangement was liable to the charge of illegality, as contravening the design and object of the- charter by restraining the company from disposing of its stock and collecting such installments as it might be necessary (if any) to call in on account thereof. The charter of the company authorized the directors to issue stock to the whole amount which might be expended on account of the said road, but it made the power to issue stock, and the stock, when issued, subject to the power of the directors to require the payment of sums subscribed by stockholders in such manner and on such terms as they might deem proper.

When the proposals above referred to were issued, and the loan made, it was undoubtedly believed, as therein represented, that no payment would be required from the stockholders, save only the small deposit mentioned; but I think it must, nevertheless, be conceded that the company had no authority to enter into an agreement by which-the power tó issue the requisite amount of stock to carry out the purposes of the charter, and to call in payments from the shareholders, would be indefinitely postponed. The power was, however, expressly given to increase the stock from time to'time to the requisite amount; and to my mind, an agreement to give to one who should subscribe to a loan, and pay the installments thereof, the privilege of becoming a stockholder, is not illegal merely because until the installments of the loan were all paid it could not be certainly known whether his title to the stock was absolute, although, in the meantime, the right of the company to issue that stock to others would be restrained. Such an arrangement, obviously made in furtherance of the design and object of the charter, and in good faith to secure the construction of the railroad, and only operating incidentally for a reasonable time to make it uncertain who would be the shareholders, is, I think, free from the objection that it contravened either the express provision or the policy of the charter.

If, then, the arrangement made by the defendants, by and under their proposals above mentioned, did no more than secure to subscribers to the loan the privilege of also becoming shareholders, with a condition that if they did not advance all the installments of the loan according to the terms of their subscription, they should not be entitled to shares, I cannot regard it as illegal or beyond the powers of the defendants.

Indeed, I do not understand that, if the true construction of the arrangement be as above stated, it is claimed to be illegal. Illegality is alleged of the arrangement upon the ground that there was no limit to the option given to the subscriber to take stock at any future time he might choose. As I do not think that is the true construction of the arrangement, I have defined what I deem to be within the power of the company, and the inquiry, what is the true construction of the agreement, will now be considered.

I observe, then, that the subscribers to the loan (and of course the plaintiff,) acquired some right by becoming parties to the loan, i. e., by consenting to its terms, and agreeing to advance their money to the company; which was at or before the time of the payment of the first installment of the loan in London, in July, 1852, and before any provisional certificates, either for bonds or stock, were obtained from America.

By the terms of the proposals, what were those rights ?

1st. The company had promised them a security for the repayment of the loan in a particular form.

2d. To induce them to subscribe, the company offered them the privilege to become shareholders to the amount of one-half their subscription; and promised them provisional certificates, entitling the hearer to that amount in the capital stock.

The privilege offered, was to take stock. The subscriber was not bound to take stock, but most glowing representations were contained in the proposals, showing the value of the privilege tendered, and the certain profit he would derive from holding the stock; and the right to a provisional certificate, which should entitle the bearer to the stock named therein was absolute; the company bound themselves to deliver it to the subscriber. The shares were regarded as a “ bonus” to induce the loan, and it was not at all regarded as doubtful what would be the option of the subscriber, and hence, the proposals speak of giving “the privilege,” and whoever accepted the privilege, xvas promised a certificate, which should entitle him to the stock. But this certificate was called a provisional certificate ; it was to be a “ provisional certificate, entitling the bearer” to the stock. If the proposals had not otherwise defined it, it would be difficult to say what was meant by “provisional” certificate ; the explanation is found in the next clause; it was to be exchanged for scrip shares on payment of the last installment on the bonds. This, then xvas what xvas meant by “ provisional.” It was not to be an absolute certificate for so much stock, but a certificate which entitled the bearer to so much stock, and which would be exchanged for scrip shares on payment of the last installment on the bonds. The certificate was provisional, inasmuch as the title it conferred depended on the making of all the payments or’ advances on the loan subscribed; it was that condition and nothing else that made the certificate provisional, and that condition was created by force of the xvords “ on payment of the last installment on the bonds,” which, by just construction, import that no installment remains unpaid.

I think it quite clear, that on the issuing and acceptance of these proposals, while it was on the one hand believed that the offer to give stock was the tender of a privilege, and so there was no idea that any subscriber would decline it, yet on the other hand, as it was the mere tender of a ! privilege, any subscriber might decline it if he saw fit; and until the subscriber in some manner accepted or de- ’( dined the privilege, it remained at his option ; but when a “provisional certificate” conferring the stipulated title was obtained from America, and. was delivered to the subscriber according to the agreement, and was accepted by him, there is much ground for saying that no further option on the part of the subscriber was contemplated by the parties, and no further option existed by force of the agreement ; and -the moment the condition was satisfied by the payment of the last installment on the bonds, the title of I the bearer to the scrip was just as absolute as his title to | the bonds; and it was secured • to him in terms of precisely equivalent force.

By a previous stipulation, it was provided in regard to ' provisional certificates, which were to be issued to the subscribers as soon as they could be obtained from America,

; after the payment of the first deposit, to secure the delivery of the coupon bonds; that “ on the remaining payments being completed, the provisional certificates will be exchanged '• for the bonds.”

So in regard to provisional certificates for stock, “ the provisional certificates will be exchanged fer scrip shares on payment of the last installment on the bonds.”

Paying the last installment, and completing the remaining payments, in good sense, means the same thing; else we must say that a subscriber would be entitled to his scrip shares, although he had paid no installment but the first and last; and the title of the subscriber to his scrip was precisely the same as his title to his bond, when he had completed the payments, which constituted his loan to the company.

And this view is further sustained by the further security given to the subscribers in this, that the trustees in England, into whose hands the money was to be paid, were not to pay it over to the company, until not only the provisional certificates were received to be delivered to the subscribers, but the bonds themselves, and the scrip shares also, were deposited in their hands; thus, I think, making it plain that no further option or choice on the part of the subscriber was contemplated, but his title to scrip was placed on the same footing as his title to bonds, and rested on precisely the same condition, to wit: completing his payments towards the loan, and on the performance of the condition was alike absolute.

And now if we turn from the face of the proposals, and look at the provisional certificates which were drawn up, executed and sent to England for subscribers there, and delivered to the plaintiff here, the, foregoing views are sustained respecting the meaning and intent of the parties.

The provisional certificate for bonds, after mentioning the amount, and the dates at which installments of the loan are to be paid, with the privilege to the bearer of paying at any earlier date, certifies: “ After the payment of the last installment, these provisional certificates will be exchanged for definite construction bonds, having the half-yearly interest warrants attached.”

The provisional certificate for stock, after specifying the amount and numbers of the bonds subscribed for, “ certifies that the bearer hereof will be entitled, on and after the 1st day of October next, to scrip certificates for (a specified number corresponding with the one-half of the amount of the bonds referred to,) shares in the capital stock, * ' * * on presentation hereof at the office of Messrs. Heywood, Kennards & Co., bankers, London. Provided, all the installments on the subscription for the bonds numbered as above, shall then have been fully paid up.”

Here as before, the conditions upon which the subscribers are to have bonds, and upon which they are to receive scrip for stock, are identical in effect. Here it is after-payment of the last installment that the bonds are to be delivered, and the subscriber is to be entitled to his scrip for stock; provided all the installments were paid, and his right to' each under these certificates was alike absolute on performing the condition

In this certificate for scrip, the form used shows precisely what was meant by the term provisional, and that it was what has been already above stated, viz: provided all the installments shall have been paid; and not provided the subscriber shall on the day on which the last payment is made elect to take them.

So that the certificate for shares in this respect conforms to the proposals ; and when it was delivered and accepted by the subscriber, if it contains in itself all the elements of a contract between the parties, and is free from ambiguity, its construction must govern their rights.

I suggest this, not because I think that so far as relates to the question before us, there is any inconsistency between the certificate and the proposals; but if there was any difference amounting to a modification of the proposals, the certificate must govern, for it was made, executed, delivered and accepted, as performance of the agreement.

In two particulars, the certificate embraces provisions not included in the proposals, though not inconsistent therewith. They are not only to be deemed assented to, but both of them show in the most marked manner that the parties did not either in making or accepting the proposals, or on the delivery and acceptance of the provisional certificates for stock, contemplate as a part of the agreement any further or future exercise of option by the subscriber, to be declared and determined on payment, {i. e., at the time of payment,) of the last installment of the loan.

The first provision to which I now refer is, that the bearer would be “ entitled, on and after the first day of October next, to scrip,” &c. Here was something not included in the proposals. By them, the subscriber had the privilege of paying up the whole subscription to the loan at any time; and was to be entitled to his scrip shares so soon as the whole subscription was paid. But, by the terms of this certificate, he was not necessarily to be entitied to his scrip on paying up the loan, if that was done before the first of October. He must wait until on or after the first of October; and then he might receive his scrip. This shows that, in a class of cases provided for, the delivery of scrip shares and the payment of the last installment would not be simultaneous; and that the idea, that there should be any declaration of option at the time of paying up the loan, was not in the mind of the parties. The only condition was, that when the scrip was called for, then all the installments of the loan must have been paid ; else the scrip was not deliverable.

The other provision to which I refer is, that the bearer was entitled to scrip for the requisite number of shares, “ on presentation hereof at the office of Messrs. Heywood, Kennards & Co., bankers, London.” Here, also, is a special condition, introduced into the certificate, not contained in the proposals. The subscribers to the loan were to pay their installments to certain four gentlemen, named in the proposals (Brown, Heywood, Smith and Uzielli), who were to “ act as trustees between the company and the bondholders ;” and now, by the terms of the certificate, the subscriber was to receive scrip for shares on the presentation thereof at the office of Heywood, Kennards & Co., bankers, provided all the installments had then been paid. Nothing here suggests the idea that the payment of the installments and such presentation-were to be simultaneous. They were several distinct acts; both were to be done. The presentation, to be of any avail, must be after the payment. If the subscriber had any option to exercise, it consisted in the act of presentation; and nothing here intimates that he was to decide, at the time when he made the last payment, whether he would make such presentation or not. Nor indeed, according to my view, already expressed, did this certificate contemplate any remaining option in the subscriber to take, or decline to take, stock; it assumed that, having made his advances—having already accepted his certificates for scrip—he would of course, desire to have the benefit of the “bonus,” which had been made a prominent inducement to subscribe; and the certificate secured the scrip to him on presentation thereof at the office named. It was making the scrip deliverable on demand; hut as the company were not in England, it designated the office of their bankers as the place of demand.

Again, when the defendants declared the conditions upon which the bearer would be entitled to scrip, they did say that it should be “on and after the first day of October;” “on presentation of the certificate;” and, “provided all the installments were paid.” Expressio unius est exclusio alterius. They did not, also, declare a proviso that such presentation should be made at the time of making the last payment; nor say anything suggesting any other condition than those expressed in terms.

,If the company intended, by this certificate, to give an option to the subscriber to take or decline the scrip until the loan was fully advanced, and to limit that option to the day when the last installment was advanced, or was to be advanced, it would have been perfectly easy to so express it; and it is incredible that they would not have. done so.

My conclusion, therefore, is — upon the face of these papers, upon the proposals, and, even more strongly, upon the certificates—that the parties never contemplated the exercise of any future 'Option by subscribers after they had accepted the provisional certificates, entitling them to scrip, provided the installments of the loan were paid up. The privilege tendered by the proposals had served its purpose, been accepted; and the subscriber had his provisional certificates as evidence of his right to scrip. The parties regarded the gift of the stock as gratuity; or, at least, as a premium for having made the loan. What they aimed to secure, and did secure, was the delivery of the scrip to which the subscriber had become entitled; and they did not propose merely to secure to him a choice to be exercised at a future day. That the bearer was “ entitled to scrip ” meant something; and, in my opinion, it meant just what the words, in a certificate of stock—A B “is entitled to” ten shares of stock—mean; not that he has the privilege of taking them if he pleases. He may, or may not, upon some ground, either of fact or law, have it in his power to reject or disown them; but the import of the certificate is, that he has title to them.

I have thus far considered the subject as if the plaintiff was not only a subscriber in England, but had paid his installments, and become entitled to his scrip there; and I do not understand it to be claimed by the defendants that, in respect to any question arising on the face of the papers, his rights do not stand upon precisely the same footing as any other subscriber. The only change being that, by arrangement, all of the transactions with him, after the payment of the first installment, were transacted in the city of New York. Hence it is not claimed that it was not proper for him to demand his scrip here, or that he was bound to make presentment of his provisional certificate at the office of the London bankers, but the verdict shows the admission that his demand in New York was to have the same effect as if made at the designated office in London.

If we are to regard the special finding of the jury as determining the actual transactions between the plaintiff and the defendants, then, in addition to the considerations above suggested, we have a cotemporaneous exposition of the right of the plaintiff entirely irreconcilable with the agreement that the plaintiff was to take the scrip at the time when he paid the last installment of his loan, or that the words “ on payment of the last installment,” had the double force of a condition upon which he should be entitled to have scrip, and of a' limit to the time within which he should take it.

The special verdict finds that “ the plaintiff, having completed the payment in JYew York of all the installments upon the bonds taken by him under his subscription, the defendants’ officers delivered to him the provisional stock certificates,” &c.

It also finds that “the last installment on the loan was paid in January, 1853.”

If this be so, then the provisional certificates themselves were delivered to the plaintiff after he had paid all his installments. How, then, can it be said that by thesé certificates there was secured to him an option to take scrip, provided he elected to do so at the time he made his last payment? This would be -an impossible condition—the time for such an election was already past.

If the fact be correctly found, it is utterly fatal to the suggestion that the making of the last payment was a time limited after which the subscribers could not claim scrip for shares.

I advert to this without making it a controlling feature in the case, for I find it is stated in the complaint that' these certificates were delivered to the plaintiff on or about the first of October, 1852, and the complaint plainly imports that the plaintiff had not then paid all the installments.

Whether the special verdict should control on this point, and the complaint be conformed to the facts proved, or the complaint should be deemed to conclude the plaintiff, notwithstanding the verdict, I do not stop to inquire, because my conclusions, for other reasons above stated, would be the same regarding the true construction of the arrangement between the parties.

Does it necessarily follow from these views that the plaintiff, by virtue of the provisional certificates, was at liberty to delay the taking of the scrip, to which he was entitled, for an indefinite period, during which it would be wholly uncertain whether he would become a stockholder or not, and so the defendants be deprived of the power to give the stock to others or collect thereon such sums as might be duly called in from stockholders ?

Not at all. The plaintiff having paid his installments, had acquired' a right to scrip for the stock, and the defendants were bound to deliver to him the scrip on his demand; but ownership of the stock involved the duty of paying all installments which were called in by the board of directors according to the charter.

The postponement of the delivery of the scrip until all the installments of the loan were paid, was not for the benefit of the subscriber, but was intended as a security to the company.

The company were not bound to deliver until the installments were paid. This was not for the purpose of giving the subscriber time to consider and elect whether he would take stock, but to prevent his taking the stock and obtaining the benefit thereof, and then fail in paying the whole amount of his subscription to the loan.

The moment, then, the subscriber’s right to the scrip became perfect by the completion of his payments, the correlative right of the company arose to have from him the amount which had been assessed upon the shares and duly called in, and thenceforward, from the very nature of the subject, each party had the right to call upon the other to perform his duty in respect thereto.

The company could demand of him the assessments, and he could demand of them the scrip for the stock, to which, by paying any assessments already made, he would be entitled.

This right to scrip for stock was subordinate to the provisions of the charter, under which the board of directors had power to call in from shareholders such amounts as they might think proper; the agreement resulting from the proposals for a loan, and the acceptance thereof by the subscriber, and the provisional certificate all contemplated, the giving of the right to scrip, subject to this power in the board of directors, and of course with a resulting duty in the subscriber to pay the assessments imposed.

The consequence of this view is, that the company had the right to require of the subscriber, at any time after he had paid in the whole loan, that he pay the assessments which had been made, and the right to tender to him the stock.

It is not necessary to decide whether, if he refused on such tender, his right- even to have the stock was gone, or whether, if he refused, the company would have been compelled to resort to the proceedings prescribed by law, as for a forfeiture of stock, in order to preclude any future claim thereto; it is enough to say, that until such tender and refusal, the subscriber was in no default, and forfeited no right ; and on the other hand, the power to make such tender and demand payment of the assessments protected the defendants. But by one or other of the modes designated, I have no doubt the right of the refusing subscriber would be legally terminated.

. If,'in the conclusion that it was not intended to give by force of the proposals and provisional certificates an option to the subscriber to continue until the installments of the loan were paid, I am wrong, and the true construction be, that the subscriber had secured to him by the provisional certificate, not a title to scrip, but an option to take stock or not, then in my judgment the result above stated is equally clear. It has been I think shown that no time for the declation of that option was fixed in the certicate. The exercise of the option would involve reciprocal rights and duties. It would entitle the subscriber to receive scrip for his stock, but it would -at the same time entitle the defendants to receive the assessments which had been imposed thereon. The provisions of the charter, and the power of the directors to call in assessments from the shareholders, and the object and purpose of issuing stock, to carry into effect the purposes of the charter, forbid that the option should be perpetual, and beyond the ' power of the defendants, by a proper tender and demand, to limit it. And the very argument that it would be illegal thus to place it out of -the power of the company to call in the amount of the capital stock, .also forbids such a construction.

In such case, i. e., where an option beneficial to a party is given to him, as for example an option to purchase, which if exercised will involve the duty to pay, and no time is specified within which to elect, I apprehend the vendor may make the tender, and require the determination of the election at any time, and so, also, the option will continue, until one or the other terminates it by demand and tender of performance.

Whatever may have been the views of the defendants at the time of the original subscription, it is obvious that in March, 1854, the board of directors understood, and acted upon the assumption, that the subscribers were not only not limited to the time when they paid the last installment, in making their election, but that the option given to them was an election to become subscribers for stock, if they saw fit; and their action on that day recites that as to some of the rights of subscribers, no particular time for making such subscription or determining that option had been specified; and they recognize the duty on their own part to take some affirmative action to determine that option.

If, instead of attempting arbitrarily to fix a future day named, and declaring that no subscription should be made after that day, they had tendered to the plaintiff his stock, and demanded payment of the assessment of five dollars, and he had refused to accept the stock and pay the assessments ; there would be great force in their claim, that such refusal terminated the right of choice, or rather was an exercise of his right to choose, and ended all claim of right to subscribe at a future time.

But it is plain, I think, that no ex parte action of theirs could alter the contract with the plaintiff, affect his right to stock, or terminate his option, if this right was a right of option, instead of a title to scrip for stock.

These views make the contract between the parties in all respects reasonable and just, and well calculated to promote the objects of the charter. They show no undue restraint upon the company, in respect .of its power to issue the stock of the company and call in assessments, as they might be required. They give no unreasonable advan- . tage to subscribers to the loan, serving as a cover for “speculation upon the rise and fall of shares.” They place the company and the subscribers on an equal footing in this respect; and enable the company to terminate the option or the right to the scrip, on tender of delivery’ and demand of paymemt of the assessments, or by forfeiture, as in case of an actual subscription; while the subscriber’s right to take stock continues until he is put in some default by a refusal to accept it.

The limitation contended for, which would limit the subscriber’s right to October, 1854 (the time until which the subscribers might, if they thought proper, defer the last installment of the loan), is so inconsistent with the former suggestions, and especially with the provision that enabled any subscriber to pay as much earlier as he chose, and declared him entitled to scrip on and after October, 1852. on presentation, &c., provided all the installments had then been paid, that it does not seem to me necessary to enlarge upon it.

It is argued that the memorandum at the foot of the provisional certificate, in the words “N. B. The exchange of the provisional certificates for the scrip certificates is limited to 1st January, 185 ,” shows that a time for its exchange was in fact limited, and gave the plaintiff notice thereof; so that it became in effect the agreement of the parties.

If it showed him that it was limited, to what time did it apprise him the limit attached ? There is no proof of an actual previous agreement, other than what has been already considered. There is no proof of any action of the company by any resolution, fixing an express limit, until March, 1854; when their resolution indicates that, as to some of the subscribers at least, no limit had been fixed.

The delivery of the provisional certificates to the plaintiff, without inserting a date, would only suggest to him that whatever arrangement the defendants might make with others receiving provisional certificates, they fixed no such peremptory limit to his right; and to this, as I think, must be added, the company had no right, without . the plaintiff’s consent, to insert any such date, so as to insist afterwards that he assented to it by accepting the certificate.with the memorandum.

The considerations suggested necessarily lead to the result, that down to the 22d day of January, 1857, the plaintiff’s right to stock, or scrip for stock, continued in full force. The defendants had done nothing to terminate it, either by tender and demand of the assessments, or by any proceeding, as for a forfeiture for the non-payment of assessments.

The plaintiff had, therefore, a right to tender the amount of the assessments which had been called for, with interest thereon, and demand his scrip; and for refusing to deliver, the defendants are liable.

The only remaining 'question is, what is the rule of damages ?

The general rule is, that on the breach of an agreement to deliver goods, if the money therefor has not been paid, the measure of damages is the difference between the price and the market value on the day on which the goods should have been delivered. (Dey v. Dox, 9 Wend. 129 ; Davis v. Shields, 24 Wend. 327 ; Mien v. Dykers, 3 Hill, 593, and 7 Hill, 497 ; Beals v. Terry, 2 Sandf. 127 ; Me Knight v. Dunlop, 5 N. Y. R. 544; Billings v. Vanderbeck, 23 Barb. 546.)

This rule is applicable to the present case. The reason on which it rests is apt to the situation of these parties. The presumption is, that with the money in his own hands,the purchaser’ can, on the day the vendor was bound to deliver, purchase■ other like property; and so he has sustained no damage but the enhanced price he is compelled to pay. So here the plaintiff, on the day he demanded the stock, and when presumptively he had need of the stock, could have purchased it at its market value; and his loss would have been, and in judgment of law it was, the difference between the sum it was necessary to pay in the market to buy the stock, and the amount of the assessments and interest which he tendered to the defendants.

A refusal t°o deliver or transfer stock, which is to be paid for, is in strict analogy to the rule governing the sale of chattels, where the price has not been paid. See Allen v. Dykers, supra ; Gray v. Portland Bank (3 Mass. 364).

That in cases where the purchaser has paid his money, and so presumptively has it not' in his power to buy other like goods, &c., on the day when delivery should be made, the rule of damages is the highest market value from the day when delivery should be made, down to the time of the trial, has been repeatedly held in this' State; West v. Wentworth, (3 Cowen, 82 ;) Clark v. Pinney, (7 Id. 681;) Potter v. Hopkins, (25 Wend. 417;) and the like rule was applied to a refusal to permit a transfer of stock which the plaintiff had already bought and paid for. (Kortright v. Com. Bank of Buffalo, 20 Wend. 93, and 22 Wend. 348.) The correctness of this rule has been much questioned, and there is great conflict of authority on the subject. See the subject discussed, and the cases in England and in this country collected, Suydam v. Jenkins (3 Sandf. 614) ; Sedgwick on Dam., ch. 10, 2d ed., pp. 260-275, and notes ; Mayne on Dam., pp. 81-87.

I do not pursue that discqssion, because I think that this case is to be decided upon the rule applicable to nondelivery when the price has not been paid, as above stated; and as to that rule, the authorities are, I think, uniform.

The plaintiff is, however, entitled to interest from the day he demanded the scrip on the difference between the market value and the price he was to pay. The case of Dana v. Fiedler (2 Kern. 41), sustaining the dissenting opinion in the same case (1 E. D. Smith, 483), settles this, and affirms -the rule of damages above stated. See, also, Sedg. and Mayne, above cited, and Suydam v. Jenkins (3 Sandf. 614).

Judgment should, therefore, be entered for the plaintiff for $26,812.50, with interest from January 22d, 1857 (when the scrip should have been delivered), and his costs of suit.

Moncrief and Robertson, J- J., concurred.

Judgment for the plaintiff.


author: By the Court. Moncrief, J.

text:
    Farrel Dorrity, Plaintiff and Respondent v. John Russell and Patrick Danvers, Defendants and Appellants.
    1. Where, on the trial of an action by one of several partners who had withdrawn from the firm, against the other partners, to recover the value of plaintiff’s interest in the assets, on the 2d of April, 1856, a witness for the plaintiff (also one of the partners) testifies to his then estimate of the value of such assets in the latter part of 1855, and that he sold his interest to the defendants in November, 1855, the defendants have a.right, on the cross-examination of such witness, to prove by him for what sum he so sold such interest.
    2. The rejection of such evidence, under such circumstances, is error, for which judgment against the defendants should be reversed.
    (Before Woodruff and Moncrief, J. J.)
    Heard January 8,
    decided February 9, 1861.
    Appeal by the defendants from a judgment against them. The action wa,s tried before Mr. Justice Hoffman, without a jury, December 3, 1859.
    The parties herein had been partners, together with one William W. Vanderbilt, and had contributed equally to the partnership capital, and were to be in all respects equal partners.
    They had provided, by their partnership agreement, that either might withdraw, on six months’ notice, and that in case of such withdrawal the continuing partners might state an account, and go on with the business, and have one year to pay their balance to the retiring partner. The plaintiff, pursuant to notice served September 14, 1855, did withdraw on April 2d, 1856.
    The other partners continued the business until in November, 1855, when Vanderbilt sold his interest to the defendants. This suit was commenced in January, 1858, to recover the value of the plaintiff’s interest at the time of the dissolution (April 2, 1856).
    • The pleadings are sufficiently stated in the opinion of the court. On the trial, Vanderbilt was a witness for plaintiff, and testified to the value of the partnership property in the “latter part of 1855.” On his cross-examination, after stating that he gave this estimate of value without having before him memoranda that he had made, and that he “ sold out, in November, to Russell & Danvers,” was asked:
    “ Q. What did you sell out your one-quarter interest in this property, real and personal, for?
    “Objected to as immaterial.
    “ Objection sustained, and defendants excepted.”
    Various exceptions were taken which are not here noticed, because they are not discussed in the opinion delivered at general term. Judgment having been given for the plaintiff, the defendants appealed to the general term.

      J. T. Williams, for Appellants.

      W. W. Niles, for Respondent.
   By the Court. Moncrief, J.

—The parties to this action had been partners (together with one Vanderbilt, who assigned his interest to the defendants in the month of November, 1855). By the articles of copartnership, fifteenth provision, it was agreed “that in the event of the dissolution of the copartnership, as hereinabove provided for, any time before its expiration by its own limitation, either by the death or retirement of either or any of its members, any two or more of the parties hereto may continue a copartnership; and in case of such continuance, a full, true and accurate statement and account of the interest in, and share of the capital and assets of the copartnership at the time of such dissolution, of any or either of the parties hereto who may so die or dissolve the copartnership by giving notice as aforesaid, shall, within one month from the time, of such dissolution be made out, prepared and furnished, on demand, to the party hereto who may so dissolve the copartnership, or to the personal representatives of the party hereto who may so die; and the parties hereto who shall then elect to continue as copartners in the business of this copartnership, shall be allowed one year from the time of such dissolution within which to pay off the interest in, and share of the capital and assets of the said copartnership of the party who shall so dissolve the same, or who shall so die; and the said parties may not be compelled, until the expiration of said year, to pay the same, and interest thereon shall be allowed at the rate of seven per centum per annum, payable semi-annually.” The right to dissolve, and the actual dissolution of the copartnership, by the giving of the notice provided by the said agreement, are not questioned. The plaintiff properly dissolved the copartnership and legally withdrew from the firm on the 2d day of April, 1856.

The complaint avers “that no settlement has ever been had of the accounts of said business, or of the interest of the plaintiff therein; that the defendants have not paid him for the use and occupation of said premises, fixtures and machinery. And the plaintiff claims that he is entitled to demand and receive from said defendants such sum as shall be reasonable for the use and occupation thereof since the 2d day of April, 1856, or that he is entitled to recover the interest on the amount due to him' at the time he withdrew from said firm.”

The plaintiff, in his complaint, demanded that said defendants may be decreed to render an account of the stock, fixtures, machinery and. effects of, or belonging to said copartnership at the time the plaintiff withdrew from said firm, &c., &c.

The complaint did not aver that an account was rendered to him pursuant to the provisions of the articles of copartnership; on the contraiy, assuming the allegation above quoted to be true, the fact was that no account had been rendered, and the. complaint was filed to obtain such an accounting and for judgment thereon. The defendants admitted the making of the agreement and the giving notice of dissolution by the plaintiff to the effect as alleged in the complaint and schedule thereto annexed; the defendants denied the claims of the plaintiff, and also set up a counter-claim.

The issues, therefore, to be tried and determined embraced as a material matter of fact, among other things, the value of th'e “stock, fixtures, machinery and effects of, or belonging to said copartnership at the time the plaintiff withdrew from said firm.”

The action did not proceed upon “ a full, true and accurate statement and account of the interest and share of thó capital and assets of the copartnership at the time of such dissolution,” duly prepared, made out and furnished by the defendants to the plaintiff “within one month from the time of such dissolution.”

The plaintiff proceeded to prove the allegations in his complaint, upon the assumption that no such value as the articles of partnership contemplated should be agreed upon, had been assented to or fixed by the rendition of such a statement by the defendants.

The witness, Vanderbilt, was called by the plaintiff to prove the value of the copartnership property, (the plaintiff having previously been examined upon the same subject,) and thereupon the plaintiff rested his case.

The witness, Vanderbilt, testified, on behalf of the plaintiff, on his direct examination, that he knew the property in dispute in the latter part of 1855; that at that time the whole value of the realty and personalty was $23,000 or $24,000; the personalty about $12,000. Upon being cross-examined, and after having stated that this valuation was without the aid or the presence of his memoranda thereof, and that he sold out, in November, 1855, to the defendants, the question was put:

What did you sell out your one-quarter interest in this property, real and personal, for?

The counsel for the plaintiff objected to the question as immaterial, and the court sustained the objection, and the defendants excepted.

The matter sought to be elicited was material and important. Upon the value, as it should be found by the court, the judgment against the defendants was to be based. The question put by the defendants, although it had reference to a period of time which the court might rule was not the .proper point of time, at which to determine the value of the property, so far as the rights of the plaintiff were concerned, was yet not improper or immaterial, as it might elicit evidence tending to show that the estimate made and stated in the direct examination was totally inaccurate and unreliable. The objection should have been overruled and the answer of the witness taken. The ruling being clearly erroneous, the judgment must be reversed and a new trial ordered, with costs to abide the event.

Ordered accordingly.