text:
    Robert K. Dow, Appellant, v. Iowa Central Railway Company, Edward H. Perkins, Jr., and Others, Respondents.

      Specific performance — agreement for exchange of railroad stocks on reorganization — failure to pay assessments — right to privileges lost.

    A party seeking to enforce specific performance of a contract must prove that he has complied with the conditions therein provided to be performed by him.
    On the sale of a railroad in mortgage foreclosure proceedings, which cut off the interests of stockholders, the property was purchased by a reorganization committee, under an agreement made by the bondholders, which empowered the committee to give to the holders of stock in the original company the privilege of exchanging the same for stock in the reorganized company, on the payment of certain assessments, and provided that if any holder of stock should decline or fail to pay his assessments, the privilege of receiving new stock should be ratably distributed among the holders of debt certificates and of stock, who should have paid their assessments, and in case such persons did not accept the privilege, the same should be allotted by the committee in their discretion to other persons who might make the required payments.

      The committee provided for the payment of the assessment in installments. One of the stockholders having paid the first installment, his stock certificate was thereupon indorsed with a receipt therefor and with an assent to the bondholders’ agreement. This stockholder thereafter died without having made any additional payment, and the committee sent a notice to the representatives of his estate, calling for the final payment of the assessments upon the decedent’s, stock, which stated that, unless payment was made by a day named, the holder of the stock would forfeit all right to participation in the reorganization.
    No further payment was made, and some time after the date named in the notice, the plaintiff purchased the decedent’s stock and received his stock certificate, made a tender of the overdue assessments, and demanded of the committee an apportionment of the new stock, which was refused on the ground that the time had passed for receiving assessments; whereupon he brought an action to-compel the committee to deliver new stock to him.

      Reid, that the action being one for specific performance, the mere fact of the existence of the default in the payment of assessments precluded a recovery;
    That it required no proceedings on the part of the reorganization committee to terminate the rights of a defaulter under the agreement for the exchange of stock,-
    That the conditions of the agreement executed themselves, and the moment a holder of the old stock made default, the rights of others intervened, which, could be enforced and which the committee could not ignore.
    It appeared that as late as and even after the-date when'the plaintiff tendered the assessment upon the stock which he represented, the reorganization committee received payments of assessments from other persons; but it also appeared that notes for these payments had been given at a prior time and accepted by the committee.

      Reid, that whether the committee had. the right to accept such notes or not was a question with which the plaintiff had nothing to do and which need not be decided; that the fact that the committee might have failed in their duty in one instance, did not give the court power to compel them to violate their duty in another.
    Appeal by the plaintiff, Robert K. Dow, from a judgment of the Supreme Court dismissing the complaint upon the merits, entered in the office of the clerk of the city and county of New York on the 13th day of February, 1893, upon a decision of the court rendered after a trial at the New York Special Term.

      Leopold Wallaeh, for the appellant.

      James Thomson, for the respondents.
   Van Brunt, P. J.:

This action was virtually an action for specific performance, although other relief was asked.

The facts in the case appear to be substantially as follows:

In 1887, the Central Iowa Railway Company had made default in payment of interest upon its mortgage bonds and upon its car trust certificates secured upon its rolling stock, and proceedings were commenced for the foreclosure of its mortgages. In these circumstances the bondholders and the holders of the car trust certificates of said company entered into an agreement, in writing, among themselves, under date the 12th of May, 1887, looking to the purchase of the railroad and properties of said company. By said agreement they appointed the individual defendants in this suit a committee to carry out the plan of reorganization therein provided for, who duly accepted. The agreement contemplated a purchase of the property and a reorganization of the same in the interest of the bondholders and holders of the car trust certificates, and of such of the stockholders, preferred and common, of the old company, as might go in and assent to the said agreement upon the terms therein stated. The various portions of the roads were after-wards sold under decrees of foreclosure entered in the Circuit Courts of the United States for the southern district of Iowa and the northern district of Illinois, and bought in for the said committee, who thereafter caused to be organized the defendant corporation, Iowa Central Railway Company, and conveyed the property so purchased by them to it. Among the provisions of the bondholders’ agreement is the following: “ The said committee are empowered to give to the holder of each share of common stock of the present company one share of common stock of the reorganized company, upon like payment by such holder to the committee of fifteen dollars upon each such share,” to be used by the committee as provided in the third article of said agreement; that is to say, for payrolls and supply bills, secured claims, repairs and improvements upon the road and property, expenses of the committee, including counsel fees, and compensation to the members thereof and other disbursements needed to effectuate their trust. The surplus of the funds arising from assessments was to be paid over to the reorganized company.

It is further provided, “ should any holder of * * * common stock decline or fail to pay the assessments * * * of fifteen dollars, the privilege of receiving such common stock of the reorganized company upon making such payment shall be ratably distributed arnong the holders of debt certificates and of preferred and common stock who shall have paid their assessments, and in case they do not accept such privilege the same shall be allotted by the committee, in their discretion, to other persons who may he willing to-accept the privilege and make the requisite payments. Holders, of such * * * common stock whose address is lodged with the committee or noted upon the stock ledger of the company, shall he deemed to have declined to avail of the said privilege after twenty days’ written or printed notice, mailed to such person at such address. * * * All persons making said payments * * *" as shall he required by the committee, will be entitled to receive for the amount thereof certificates of indebtedness of the reorganized company, which certificates will bear no interest, and the time for payment of the principal shall be at the option of the company,, but the principal thereof shall be convertible into preferred stock of the company.”

Under the provisions of the agreement the committee fixed the.installments in which the fifteen dollars per share on common stock should be paid at seven in nmmber; six of two dollars each and the. last of three dollars. At the date of this agreement John M. Rickins owned 1,000 shares of the common stock of the old company, represented by ten certificates, each certificate being for 100-shares. He paid the installment of two dollars per share and his. certificates were thereupon indorsed as follows:

“Assent to agreement of May 12, 1887, with Edward H. Perkins,. Russell Sage, Giles E. Taintor, Simon Borg, Edmund E. Chase,, Charles C. Allen, James Thomson, Horace J. Morse, Committee.. First instalment two 'dollars per share paid.
“ For the Committee.
“ (Signed) MERCANTILE TRUST CO. OF NEW YORK.
“ By C. Hunter, OashierP

Almost immediately afterwards Rickins died, and when the- time fixed by the committee for the payment of the second installment of two dollars arrived, in January, 1888, the stock was. held by the public administrator, Mr. Morrison, as administrator of Rickins’ estate, and was so held by the public administrator until some time: in December, 1891. During the period that the stock was so held by the administrator, notice of the various installments called for by the committee were mailed to the public administrator and to one Mr. Owen Murphy at Toronto, who seemed to be looking after the interests of the next of kin of the decedent. Both Mr. Murphy and Mr. Arnold, the assistant of the public administrator, had interviews with Mr. Morse, the secretary of the committee, and were aware of the provisions of the bondholders’ agreement and knew that assessments were due and unpaid, and also that the administrator had no funds with which to make payment. None of the assessments were paid by the administrator. The committee, about April 28, 1889, issued the following notice, which was mailed to the administrator:

“Final Notice.
“ Holders of coupon debt certificates 1st and 2nd preferred and common stock who have not paid full assessments on the same, must do so on or before Wednesday, May 29th, or forfeit all participation in the reorganization.
“This notice is peremptory and no further extension of time will be made.”

The remaining installments, other than the first, which was paid by Rickins, were not paid by the administrator, and the stock was, “ some time after April, 1890,” purchased by the plaintiff and the certificates delivered to him, with the indorsements aforesaid thereon, for about $276. ' /

In the latter part of December, 1891, the plaintiff tendered the amount which was due upon the various assessments upon the stock in question, which was declined upon the ground that the time had passed for the receiving of assessments.

Whereupon, this action was commenced to compel the delivery of the stock. Upon the trial the complaint was dismissed, and from the judgment thereupon entered this appeal is taken.

The learned counsel for the appellant, throughout the whole of his argument, seems to claim that it was necessary that some action should be taken upon the part of the bondholders’ committee .(because it is to be observed that the agreement for reorganization was a bondholders’ agreement and a bondholders’ agreement only) to forfeit tlie rights which the owner of the stock whom he now represents had in that reorganization agreement.

But it seems to us that this is an entirely mistaken view to take of the relations of the parties. As already observed, the reorganization agreement was one of the bondholders only,_ and when the mortgages to secure these bonds had been foreclosed, and the property purchased by the reorganization committee, the holders of the stock had no interest in such property, having been cut off by the foreclosiire proceedings.

This being the condition of affairs, under this reorganization agreement, the committee were empowered to give to the holders of stock in the prior organization certain privileges in the corporation to be formed under the reorganization scheme. These privileges were to be acquired by the payment of certain assessments, and might be withheld entirely by the bondholders’ committee. By this agreement it was further provided that should any holder of stock decline or fail to pay his assessments, the privilege of receiving such stock in the reorganized company should be ratably distributed amongst the holders off debt certificates and of stock who should have paid their assessments, and in case such persons did not accept the privilege the same should be allotted by the committee in their discretion to other persons who might be willing to accept the privilege and make the required payments. And the agreement further provided that the holders of stock whose address was lodged with the committee or noted upon the stock ledger of the company should be deemed to have declined the offer of such privilege after twenty days’ notice mailed to such persons at such address.

After the committee had called for these assessments upon the stock represented by the plaintiff, after the time had elapsed, and after the rights of other parties had intervened by reason of the terms of the agreement, the plaintiff seeks to compel the delivery of this stock. It seems to us there is no question but that the holders of debt certificates and of stock who had paid their assessments, became entitled as matter of right to claim this stock upon payment of the assessment, where the holder of the original stock had failed to do so pursuant to the terms of the reorganization agreement.

It required no proceedings upon the part of the reorganization committee to terminate the rights of a defaulter under this agreement. The conditions of the agreement executed themselves. The moment the old stockholders made default, the rights of others intervened which they could enforce, and which the committee could not ignore.

But it is said that as late, and even after the plaintiff tendered the assessment upon the stock which he represented, the committee received payments from other persons.. Upon an inspection of the record, it would appear that although the payments were actually received at that time notes had been given at a prior time and accepted by the committee for assessments which were not paid until about the time of the plaintiff’s tender. Whether the committee had the right to accept these notes or not, is not a question which it is necessary for us to determine. That is a question between them and those whom they represent, with which the plaintiff has nothing to do. Because the committee may have failed in their duty in one instance, does not give the court power to compel them to violate their duty in another.

It has already been said that this action was for specific performance, and this designation of the action was made advisedly, because that seems to have been the actual scope of the action — to compel the committee to deliver this stock which had been agreed to be delivered upon the payment of the assessments under the agreement. Now, the one principle which underlies the enforcement of all contracts is that the plaintiff shall prove that he has performed all the conditions of the contract upon his part, and if he fails to do that he cannot maintain an action for specific performance. It is a familiar principle that a party seeking to enforce a contract must allege and prove that he has performed its conditions upon his part, unless the other contracting party, having the power so to do, has waived these conditions. It does not require any action upon the part of the other contracting party to preclude a recovery upon a contract, where the party seeking to recover is in default. The mere fact of the existence of the default precludes such recovery. The reorganization committee are not insisting upon a forfeiture. They are asking nothing. But the plaintiff seeks to be relieved from a default and to have the same rights as though he had performed his contract. We are not aware of any branch of equity jurisprudence which authorizes the 'court to insist that one party shall perform the contract, and to relieve the other party from its obligations.

The opportunity to enter into this new organization, after foreclosure of the mortgages and the purchase of the property by the reorganization committee, was a privilege extended to the stockholders. As already intimated, their rights in the property which their stock was supposed fo represent had been cut off by the foreclosure. They were entitled to nothing, and this option or privilege was offered to them, and they had a right to accept or reject it as they saw fit. The holders of the plaintiff’s stock having accepted, but failed to comply with his contract of acceptance by making the payments which were conditions precedent to his right to receive the stock sought to be recovered iñ this action, it is difficult to see upon what basis the plaintiff could possibly succeed. All argument is a mere restatement of the proposition that a party seeking to enforce a contract must prove that he has complied with the conditions therein contained to be performed by him, and this the plaintiff certainly has not done.

We think, therefore, that the judgment should be affirmed, with costs.

Follett and Barrett, JJ., concurred.

Judgment affirmed, with costs.


source: Caselaw Access Project

author: Van Brunt, P. J.:

license: Public Domain

text:
    Andrew Freedman, as Temporary Receiver of The Manhattan Athletic Club, Plaintiff, v. J. Chester Chamberlain, Defendant.

      Social athletic chib — semi-annual dues papable in advance — payment of such dues in arrears to a receiver.

    The Manhattan Athletic Club, organized, under chapter 267 of the Laws of 1875, for the particular purposes of encouraging athletic exercises and games, and promoting social intercourse among its members, and having a club house equipped for those purposes, being financially embarrassed, its trustees, on January 28, 1893, applied for a dissolution of the corporation, and obtained the appointment of a temporary receiver. On February twentieth, following, the club house was closed.

      The by-laws of the club provided for annual dues from the members, payable semi-annually in advance on the first days of January and July of each year, and also provided a system of posting and expulsion in case of non-payment.
    Many members having failed to make the advance payment of dues on January 1, 1893, a case was submitted on an agreed statement of facts, betwen the receiver and a member of the club, calling for the decision of the question whether the member could be compelled by law to uay the twenty-five dollars semi-annual advance dues payable on January 1, 1893.

      Held, that the receiver was entitled to judgment for twenty-five dollars.
    Submission of a controversy upon an agreed statement of facts.
    It appears from the agreed statement of facts, dated April 19, 1893, that the Manhattan Athletic Club was organized in 1878, under the authority of chapter 267 of the Laws of 1875, entitled “An act for the incorporation of societies or clubs for certain lawful purposes,”
    ’ The particular objects of the club, as organized under said law, were the practice and encouragement of gymnastic and athletic exercises and games, and to promote social intercourse among its members.
    The club adopted a constitution and by-laws, acquired a valuable club house on Madison avenue, in New York city, elaborately equipped as a club house and gymnasium combined; also an athletic field at One Hundred and Fifty-fifth street and Eighth avenue; and a well-equipped boat house on the Harlem river.
    Membership in the club carried with it the use of such property.
    The defendant herein became a resident, active member of the club in 1890, paying his initiation fee and all dues to January 1, 1893.
    The annual dues for such a member were fifty dollars, payable, according to section 1 of article 8 of the by-laws, twenty-five dollars in advance, on the first days of July and January in each year.
    Section 3, article 3 of the by-laws provided, however, that the treasurer should, within five days after dues were payable, mail a bill for the same to each member, whereon should be printed, article 8 and article 16, sections 3 and 4 of the by-laws, and that thirty days after such dues were payable, and within thirty-five days thereafter, he should mail another bill, stamped “ Duplicate, -Second Notice,” and that he should post on the club bulletin the names of all members who were sixty days in arrears for dues, with amounts due set opposite then names, and that such names should remain posted until the expiration of thirty days, unless the indebtedness be sooner paid.
    Sections 3 and 4 of article 16, which were required to be printed upon the bill for dues, were as follows: “ Section 3. When any member shall be in arrears for sixty days in the payment of dues, it shall be the duty of the treasurer to post his name on the bulletin of the club house, with a statement of the amount such member is in arrears.” “ Section 4. If a member fails to pay the regular dues within ninety days from the time they become due, he shall, by that failure, cease to be a member of the club, and the board of governors must, at their next regular meeting held after the expiration of said ninety days, and on the report of the said treasurer in writing that such default has continued for that period, declare him expelled, and strike his name from the list of members; provided, that the board of governors, by a two-thirds vote, shall have power to reinstate such an expelled member, upon such terms as it may impose, if application for such reinstatement is made within a reasonable time.”
    Section 5 of the same article provided that “ The account of every' member who is indebted to the club in any amount for house credit, shall, with a copy of this section, be sent to him by mail at his last known address, on or before the fifth day of each month. The name of every member who shall have failed to pay such indebtedness by or before the fifteenth day of the month, shall, on that day, be conspicuously posted in the club house, and shall so remain until the account is paid. No member while posted shall receive further credit.”
    Section 6 provides that “ Any member who shall be in arrears for house rent may be suspended by the governors, from the privileges of the club, until such arrears are fully paid, or shall cease to be a member of the club, in the discretion of the governors, by a vote of at least seven members of the board, and he may be reinstated by a like vote on payment of arrearage. Notice of any such action shall be posted on the bulletin board.”
    Section 7 provides that “ The house committee may at any time limit or suspend the credit of any member, but notice of such action shall first be given to such member in writing.”

      In January, 1893, the club had become financially embarrassed, and the plaintiff was appointed temporary receiver in dissolution proceedings, upon the petition of a majority of the directors and trustees, but without the actual knowledge or actual consent of defendant.
    The unsecured liabilities of the club were over $300,000, and the secured indebtedness over $750,000. The whole amount of advance semi-annual dues, payable on January 1, 1893, by article 8 of the by-laws, was $48,071. The amount of such dues unpaid on January twenty-eighth, when the temporary receiver was appointed, was $23,883.24. The amount of such dues remaining unpaid upon the submission of this case was $18,029.23.
    The credit system mentioned in sections 5, 6 and 7 of article 16 of the by-laws, and which had been in vogue, was suspended on January 31, 1893, and the members were thereafter required to pay cash for all purchases, and such privileges for which a fee was chargeable. In other respects the club house was kept open till February 20, 1893, when the club was closed because the expense of running it exceeded the revenue derived from the patronage of the members, and no other club house or quarters with such club privileges have been provided.
    The first mortgage upon the club property, amounting to $400,000, is under foreclosure, and all the property of the club is advertised by the temporary receiver to be sold at public auction.
    The defendant has not paid his membership dues to the club, payable in advance on January 1, 1893, as provided in the by-laws, although the same has been demanded by the receiver.
    The bills heretofore mentioned provided to be sent by the treasurer to members, were mailed, but the defendant’s alleged indebtedness for dues was not posted in the club house, as provided by the by-laws.
    The question submitted to the court was as follows :

      “ Is the defendant liable for his semi-annual membership dues to the Manhattan Athletic Club, which, by the terms of the by-laws, were and are declared to be payable January 1, 1893 ?

      “ If this question be answéred in the affirmative, then judgment is to be rendered in favor of the plaintiff and against the defendant for the sum of twenty-five dollars ($25), without costs.

      “ If the question be answered in the negative, then judgment is to be rendered in favor of the defendant and against the plaintiff, without.costs.”

      G. E. Bushmore, for the plaintiff.

      A. B. Ha/oens, for the defendant.
   Van Brunt, P. J.:

Judgment should be rendered in favor of the plaintiff for twenty-five dollars; but as costs on the submission- of a controversy are always in the discretion of the court, I do not think costs should be directed in favor of the defendant.

Follett and Barrett, JJ., concurred.

Judgment for the plaintiff for twenty-five dollars, without costs.


text:
    David A. White and Another, Respondents, v. Wilson Reid, Appellant.

      Judgment of (mother State —fraud, as a defense to its enfoi'cement in this State.

    The defendant, in an action brought in the State of New York upon a judgment recovered against him in another State, is not precluded by the fact that he appeared and set up a defense in the action in which the judgment was obtained, from attacking and avoiding the judgment on the ground of fraud, in that the plaintiff, by fraudulent representations and assurances that such action would be discontinued, induced him to abandon his defense and not to appear further therein.
    Appeal by the defendant, Wilson Reid, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the city and county of New York on the 3d day of March, 1893, upon a verdict rendered by direction of the court at the New York Circuit.

      B. B. Sherman, for the appellant.

      J. S. Meloher, for the respondents.
   Van Brunt, P. J.:

This action was brought upon a judgment recovered by the plaintiffs against the defendant in the Superior Court of the Commonwealth of Massachusetts. The defendant, in his answer, admitted the bringing of the suit and that he appeared therein and set up his defense, and that judgment was thereafter entered in said suit as alleged in the complaint. In order to avoid the effect of this admission, the defendant, further answering, alleged that he had and now has a good and valid defense to said action, and the plaintiffs had no valid cause of action, and that in November, 1890, said judgment being entered on the oth of January, 1891, the defendant was induced by fraudulent representations and assurances of the plaintiffs, made to the defendant and one of his co-defendants, and upon which he relied, to the effect that said action would be discontinued, to abandon his defense to said action and not to apjjear further therein, and that the plaintiffs fraudulently, and without the knowledge of the defendant, procured the judgment mentioned in the complaint to be entered against him.

Upon the trial a verdict was directed in favor of the plaintiffs upon the pleadings upon the ground we imagine which is urged before this court, viz., that the fraud for which a judgment may be avoided must be such as prevented the defendant from ever appearing in the suit, and that when the defendant has appeared and set up his defense in the foreign State all subsequent proceedings in that suit, including the judgment, are conclusive upon him, because he has had his day in court and should not be allowed to try the issues again.

This we think is an entirely erroneous view to take of the sanctity of the judgment of a sister State.

The Constitution of the United States provides that full faith and credit shall be given in this State to the public acts, records and judicial proceedings of every other State. But such provision does not give greater force to the judgment of a sister State than that which obtains in our own State. Many cases have occurred in our own State where the validity of judgments has been attacked upon the ground of fraud, and where the defendant has been deprived of his defense by the fraud of the plaintiff with the connivance of his attorneys, and we are somewhat surprised that the jurisdiction of the court in this respect should be questioned. That such jurisdiction exists is expressly recognized in Mayor v. Brady (115 N. Y. 617); Pomeroy’s Equity Jurisprudence, 400 ; and in United States v. Throckmorton (98 U. S. 61), where the court, speaking of the existence of this power, defines it as follows: “ If the court has been mistaken in the law there is a remedy by writ of error. If the jury has been mistaken in the facts the remedy is by motion for a new trial. If there has been evidence discovered since the trial a motion for new trial will give appropriate relief. But all these are parts of the same proceeding. Relief is given in the same suit, and the party is not vexed by another suit for the same matter. So in a suit in chancery on proper showing a rehearing is granted. If the injury complained of is an erroneous decision an appeal to a higher court gives opportunity to correct the error. If new evidence is discovered after the decree has become final, a bill of review on that ground may be filed within the rules prescribed by law on that subject. Here again these proceedings are all parts of the same suit, and the rule framed for the repose of society is not violated. But there is an admitted exception to this general rule, in cases where, by reason of something done by the successful party to a suit, there was in fact no adversai-y, trial or decision of the issue in the ease. Where the unsuccessful party has been prevented from exhibiting fully his case by fraud or deception practiced on him by his opponent, as by keeping him away from court; a false promise of a compromise; or where the defendant never had knowledge of the suit, being kept in ignorance by the act of the plaintiff; or where an attorney fraudulently or without authority assumes to represent the party, and connives at his defeat; or where the attorney regularly employed corruptly sells out his client’s interest to the other side — these and similar cases which show that there has never been a real contest in the trial or hearing of the ease, are reasons for which a new suit may be sustained to annul the former judgment and decree, and open the case for a new and a fair hearing.”

We think, therefore, that the court erred in directing judgment upon the pleadings, as seems to have been done, upon the ground that the defendant having appeared in the action in Massachusetts, his defense could not be sustained.

This being the only question presented upon this appeal we think that the judgment should be reversed and a new trial ordered, with costs to appellant to abide the event.

Follett and Barrett, JJ., concurred.

Judgment reversed and new trial ordered, with costs to appellant to abide the event.


text:
    Charlotte E. Patten, Respondent, v. United Life and Accident Insurance Association, Appellant.

      Life insur ornee — rescission of reinstatement of policy — rescission for fraud— knowledge of falsity of representations.

    When a policy of life insurance has been reinstated after default in the payment of a premium, upon representations, the truth of which is not guaranteed or made a part of the contract, the insurance company can avoid its agreement to reinstate the policy only on the ground of fraud, and to constitute fraud, it must be shown that the insured, at the time he made the representations for the purpose of procuring reinstatement, knew, or had cause to know, or was necessarily presumed to know, that his statements were false.
    Appeal by the defendant, the United Life Insurance Association, sued as the United Life and Accident Insurance Association, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the city and county of New York on the 30th day of January, 1893, upon a verdict rendered at the New York Circuit, and from an order denying the defendant’s motion for a new trial, made upon the minutes,

      JE. Oldham, for the appellant.

      J. A. Shoudy, for the respondent.
   Van Brunt, P. J.:

This action was brought to recover $1,000 upon a policy of insurance issued by the defendant upon the life of Jarvis Patten for the benefit of his widow, the plaintiff. The defense set up by the answer was, that by the express provisions of the policy, Jarvis Patten was obliged to pay to the defendant within certain times, sums ' of four dollars, and that upon default in payment of any of said sums within the times mentioned in the contract, the policy should lapse and be void; and that he did in fact default in the payment of one of these installments, which became due and payable to the defendant under the terms of the contract of insurance; and that on or about April 23, 1888, Patten induced the defendant to reinstate him as a member, and to reinstate his policy, by stating and representing to the defendant, in writing, that he was in good health, and that no material facts regarding his past health or present condition had been omitted. The answer then alleged that the defendant, relying upon the truth of said statements, and induced thereby, received and accepted from said Patten a payment theretofore due, and reinstated him as a member, upon the terms and conditions previously existing; and further, that since the death of Patten, defendant had been informed, and verily believed, that the statements and representations of Patten were false and untrue, and were known by him at the time he made them, to be false and untrue; and that in truth and fact, said Patten then well knew that' his health was bad; and that defendant had rescinded said contract or policy, and had duly tendered, and in said answer offered to return the sum of four dollars so paid, received and accepted on the false statements and representations of Patten, as before alleged.

Upon the trial, evidence was given upon the part of the plaintiff and defendant, and the case was submitted to .the jury, and the only questions raised are those of exceptions to the charge.

It is urged that the court erred in charging that, to sustain the defense, it was necessary for the defendant to prove that Patten knew the statements made by Mm touching his health on the 19th of April, 1888, were untrue. We think that the court committed no error' in thus holding. This was the issue tendered by the answer. The agreement to reinstate the policy was sought to be rescinded upon the ground of fraud; and unless Patten, at the time he made the representations in question for the purpose of procuring the reinstatement of the policy, knew, or had cause to know, or was necessarily presumed to know, that his statements were false, then he certainly was not guilty of fraud. The whole ground upon which this claim of rescission rests, as already stated, is that of fraud. And it is difficult to see how a party can be guilty of fraud when he does not know, has no reason to believe, and cannot be presumed to know, that his representations are false.

The question as to misstatements in the application to reinstate the policy in the case at bar is entirely different from that which would have arisen had there been misstatements in the application for the policy itself. In such case, if the truth of the statements is guaranteed by the provisions of the contract itself, they enter into the essence of the contract and form a part thereof. But upon the application to reinstate in the case at bar, there being no such guaranty, the company can only avoid its action by showing the existence of fraud. And the authorities cited by the learned counsel for the appellant all relate to false representation of material facts in the application for a policy, which policy contained a guaranty, and not for a reinstatement thereof, in which such guaranty was absent.

The court did charge that if the jury found that Patten was not in good health on the 23d of April, 1888, the date at which the policy was reinstated, their verdict must be for the defendant. This, we think, was giving to the defendant a more favorable rule of law than legal principles required.

The judgment should be affirmed, with costs.

Follett and Barrett, JJ., concurred.

Judgment affirmed, with costs.


text:
    Dennis Moloney, Respondent, v. Samuel Nelson, Appellant, Impleaded with Others.

      Mortgage to indemnify bail in a criminal action — enforcement of.

    A mortgage, given to indemnify the mortgagee for whatever he should be required to pay by reason of his having become bail for a third party under a criminal charge, is not enforcible, if at all, in an action brought for its foreclosure, where it appears that the mortgagee has paid nothing as bail, although the bail bond may have been forfeited before the commencement of the foreclosure action, and the mortgagee’s property may have been thereafter levied upon to satisfy a judgment recovered upon the bail bond,
    Appeal by the defendant, Samuel Nelson, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the city and county of New York on the 23d day of February, 1893, upon a decision of the court rendered after a trial at the New York Special Term.
    The action was brought to foreclose a mortgage executed by the defendant, Samuel Nelson, to the plaintiff, the condition of which was the same as that of the bond, as set forth in the following opinion. The case was tried at Special Term, upon issues raised by the answer of the defendants, Nelson and Adams, and resulted in a judgment of foreclosure and sale.

      J. M. Smith, for the appellant.

      A. J. Hose, for the respondent.
   Van Brunt, P. J.:

It appears that prior to the 16th of October, 1891, one Thomas O’Brien had been indicted by the grand jury of Albany county, and on his arrest had been held to bail to answer such indictment in the sum of $10,000. Yarious efforts were made to procure bail for said O’Brien, in which benevolent enterprise the defendant seems to have interested himself. And on the 16th of October, 1891, lie went to Albany, and thence to the office of the counsel of O’Brien, and was there told that such counsel would get some one to go on the bond with him, and that it was necessary that the gentleman he was to get to sign the bond should be indemnified in such a way as to guarantee the presence of O’Brien, and in case of default, the bond should mature. The defendant at first refused to give such guaranty, but later in the day he appeared and said it was all right and for the counsel to go ahead. Subsequently the plaintiff and the defendant became bail for O’Brien and he was discharged. After such discharge the parties went to the office of O’Brien’s counsel, and there the bond and mortgage in suit was drawn up by the defendant Nelson and delivered to the plaintiff.

The condition of this bond was that: “Whereas, the said Moloney has signed as one surety a bond or recognizance in the penal sum of ten thousand dollars that Thomas O’Brien shall appear to answer the charge against him in whatever Court it may be prosecuted and shall at all times render himself amenable to the orders and process of the Court, and if convicted shall appear for judgment and render bimself in execution thereof, and which bond or recognizance was entered into this day before Hon. Jacob H. Clute, Albany County Judge, now, therefore, if there shall be no default in the said bond or recognizance so signed by said Moloney, then this obligation to be void otherwise to remain in full force and virtue.”

When the case of The People v. O’ Brien was called at the court for trial O’Brien did not appear, and the bail bond given for his appearance, on which Nelson and Moloney, the parties to this action, were sureties, was forfeited, and this action was commenced.

After the commencement of the action a suit was brought on the bail bond and judgment recovered against Nelson and Moloney, which judgment is yet unpaid, the execution thereon having been returned unsatisfied as to the defendant Nelson, and property of Moloney being under levy and advertisement for sale.

Hpon these facts the court directed judgment in favor of the plaintiff, and from the judgment entered thereon this appeal is taken.

Yarious grounds are urged in support of this appeal — that the contract was one to indemnify the plaintiff and against public policy ; that there was no consideration for the obligation, and, also, that it was error to refuse certain requests.

It seems to us that it is not necessary to consider the question as to whether a contract of indemnity is against public policy in a criminal action or not. It is perfectly apparent that the giving of this bond and mortgage was intended to indemnify Moloney for whatever he should be required to pay by reason of his having-become bail for O’Brien. If such was not the contract, then the bond is utterly without consideration, because it is conceded that the plaintiff paid nothing at the time of the execution of the bond. On the contrary, the only person who got any money appears to have been the plaintiff, who got $1,000 for becoming the bail of O’Brien.

The plaintiff, therefore, certainly has no right to recover, as he has paid nothing upon his bail bond, has suffered no damage as yet, and there is nothing in respect to which he is to be indemnified. If, as already stated, this bond and mortgage was not given as an indemnity, then it, was absolutely without consideration.

The result of the decree of foreclosure in this action as against Nelson, shows at a glance that the plaintiff, in the present condition of affairs, can have no right to recover. Suppose that Moloney receives $10,000 upon tbe foreclosure of tbis property and never pays any part of tbe bail bond — is never required to pay any part of tbe bail bond, and Nelson is required to pay tbe whole of it, tbe result would be that Nelson would be paying $20,000 upon an obligation of $10,000 and Moloney would be $10,000 in pocket.

Tbe mere statement of tbis proposition shows tbat tbe claim advanced upon tbe part of tbe plaintiff cannot be maintained.

It is perfectly clear tbat at tbe time of tbe commencement of tbis action Moloney bad no claim whatever. His contract of indemnity bad not then been violated, and if there was no contract of indemnity be' bad no claim, and if be bad such contract of indemnity, such contract not having been violated no claim existed.

It seems to be clear, therefore, that tbe judgment was erroneous and must be reversed, with costs to appellant to abide event.

Rollett and Barrett, JJ., concurred.

Judgment reversed, with costs to appellant to abide event.


text:
    Patrick J. Quinn and John Gault, Appellants, v. Spencer Aldrich, Respondent.

      Building loam, contract — order drenen in famor of a third pwrty — rights acquired , thereunder.

    An owner of land had a building loan contract with one Yandewater, which provided that the money to he paid for a building was to be advanced by the owner, as the building progressed, in fifteen payments of §10,000 each, no part being payable until after the production to the owner by Yandewater of the certificate of one Rider that the work had progressed to the points mentioned in the contract and had been constructed as therein required; the contract also provided that the owner might at his option advance money at other times than as specified.
    Fandewater having given to third parties an order upon the owner to pay §500 out of the ninth payment when that payment became, due and payable, this order was presented to the owner, who acknowledged its receipt, stating that when Yandewater was entitled to the ninth payment, he would reserve $500 out of that payment with which to pay the order.
    The owner thereafter paid Yandewater $6,500 on account of the ninth payment, and $500 on the tenth payment; and the holders of the order thereafter brought an action against the owner to recover the §500 represented by their order.

      Held, tliat the plaintiffs could not recover, in the absence of proof that Yandewater had become entitled to the ninth payment by having completed the preliminary steps required by the contract.
    Appeal by tbe plaintiffs, Patrick J. Quinn and John Gault, from a judgment of the Supreme Court, entered in the office of the clerk of the city and county of New York on the 31st day of August, 1892, upon a dismissal of the complaint at the New York Circuit.

      A. O. Thomas, for the appellants.

      W. B. Dali, for the respondent.
   Van Brunt, P. J.:

The defendant had a building loan contract with one Vandewater which provided for payments, fifteen in number, each in the sum of $10,000.

Among the other payments provided for by said contract was the ninth payment, called the “brown mortar rough plumbing boilers payment,” and the tenth payment, called .the “ white mortar, and iron stairs payment,” in the pleadings.

The contract also provided that if the builder should proceed to and erect the buildings as in said contract agreed and should produce to the defendant the certificate of ~W. J. Rider that the work thereon had progressed to the points in said contract mentioned, and that the same had been in all respects constructed as therein required, the defendant would advance to said Vandewater said loan, no installment or part thereof being payable until forty-eight hours after the certificate of said Rider should have been furnished to defendant.

It also provided that if at any time that said house should have progressed so far that an installment of said loan was payable, there should be any lien thereon other than the lien of certain mortgages therein mentioned, the said installment should not be advanced until said lien was removed; and also that the defendant might at his option advance money at other and different times than was specified, and when so advanced the same should be considered as an advance upon the installment or installments next thereafter to become due.

It appears that Vandewater on the 23d of March, 1890, gave to the plaintiffs an order upon the defendant to pay them $500 out of the ninth or brown mortar, etc., payment, when said payment became due and payable. This order was presented to the defendant, who acknowledged its receipt and returned the same, having had a copy made for himself, the defendant stating that when Yandewater was entitled to said ninth payment he would reserve the said $500 out of said ninth payment with which to pay the said order. The defendant paid to Yandewater, after notice of said order, on account of said ninth payment, sums amounting to $6,500, and also paid $500 on the tenth payment. And this action was brought to recover the $500 represented by said order.

It is urged upon the part of the appellants that the order in question was an assignment of the moneys thereafter to become due to Yandewater on the ninth or brown mortar payment, and constituted a first lien thereon. Rut it is insisted upon the part of the respondent that the plaintiffs, as equitable assignees of Yandewater, had no greater or other rights than their assignor.

In considering the rights of the parties it may not be amiss to examine the terms of the acceptance of the order by the defendant, and also the claims which such order gave the plaintiffs upon the defendant.

The agreement of the defendant was to pay when Yandewater was entitled to the ninth payment under the contract.

It seems to be clear that there was no promise upon the part of the defendant to pay until the builder was entitled to the ninth payment according to the terms of the contract. There was no evidence that Yandewater was ever entitled to the ninth payment, he never having completed the preliminary steps to entitle him to such payment. The mere fact that the defendant chose to advance to Yandewater certain moneys on account of that ninth payment, leaving sufficient due thereon to meet the order given to the plaintiffs, does not justify the plaintiffs in claiming that he has been defrauded of any of his rights. He is only entitled to claim against the defendant when the builder is entitled to the ninth payment, and that has never been shown. And it is entirely immaterial what arrangements the defendant and Yandewater made between themselves in reference to this payment. The defendant had a right to give Yandewater any money that he pleased, or as much as he pleased, or on what account he pleased. But when Yandewater or his assignee comes to claim as a matter of right, money from the defendant, he must show that he has fulfilled his contract, and has done those things which the contract requires to be done, before he can insist upon such payment. This the plaintiffs have not done. They have not shown that the work was completed which entitled Yandewater to the ninth payment. Neither have they produced the required certificate.

As to the claim made by the plaintiffs that they are entitled to the first money paid upon the ninth payment, there seems to be no foundation therefor. They were to be paid when the ninth payment was due, and it is entirely immaterial whether it was the first or the last that they got. Until that whole payment was due they were not entitled to anything.

"We think, therefore, that the learned court below was right in dismissing the complaint, as no cause of action was made out, and the judgment should be affirmed, with costs.

Follett, J., concurred in result.

Judgment affirmed, with costs.


author: Van Brunt, P. J.: Barrett, J.

text:
    John P. Kelly, Appellant, v. The Mayor, Aldermen and Commonalty of the City of New York, Respondent.

      Dismissal from, office in a municipal depa/i'tment— suspension — right to salarry.

    On August 24, 1888, the plaintiff was appointed by the aqueduct commissioners of the city of New York, an inspector of masonry on the new aqueduct, at a monthly salary; he entered upon his employment, and discharged its duties until November 16, 1888, when he received this notice: “Owing to lack of work, * * * you are hereby suspended from November 16, without pay, until such time as your services may he required.”
    On February 6, 1889, the commissioners passed a resolution that owing to the near completion of the work, the services of certain inspectors, including the plaintiff, would he no longer required, and they were, therefore, dismissed from the employment of the aqueduct commissioners.
    The plaintiff thereafter brought an action against the city to recover his salary from November 16, 1888, to February 12, 1889,

      Held, that the suspension of November 16, upon the ground of lack of work, showed an intention to dismiss, and not merely to suspend the plaintiff, and was a declaration that the plaintiff’s services were no longer desired, and was, there fore, equivalent to a'dismissal, and deprived the plaintiff of his right to a salary; that the effect of this notice of November 16 was not qualified by the subsequent action of the commissioners (Barrett, J., dissenting )
    Appeal by the plaintiff, John P. Kelly, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the city and county of New York on the 1st day of February, 1893, upon a dismissal of the complaint at the New York Circuit, and from an order denying a motion for a new trial. -

      L. E. Wcvrren, for the appellant.

      S. J. Oowen, for 'the respondent.
   Van Brunt, P. J.:

This action was brought to recover salary alleged to be due to the plaintiff. On the 24th of August, 1888, the plaintiff was appointed by the aqueduct commissioners ah inspector of masonry, to supervise and inspect the work of the construction of the new aqueduct, on a salary of $120 per month. Plaintiff entered upon his employment, and continued to discharge the duties of his office from that date to the 16th of November, 1888, when he received the following notice : “ Owing to lack of work, as reported by Division Engineer G-owan, you are hereby suspended from November 16, without pay, until such time as your services may be required.” On the 6th of February, 1889, about three months afterwards, the commissioners passed a resolution that owing to the near completion of the work, the services of the following inspectors would be no longer required, and they were, therefore, dismissed from the employment of the aqueduct commissioners. The list included the name of the plaintiff.

This action was brought to recover salary from November 16,1888, the time of the alleged suspension, to February 12, 1889; and is based upon the authorities of Gregory v. The Mayor (113 N. Y. 416), and Emmitt v. The Mayor (128 id. 117), in which it was held that parties holding offices in the various departments could not be suspended without pay, but in order that their right to salary should be terminated they should be dismissed. The full force of these decisions, however, seems to have been modified by subsequent cases in which the intent of the parties and their understanding seem to control the language of the alleged suspension. For example, in the case of Lethbridge v. The Mayor (133 N. Y. 233), it was held that a suspension in consequence of insufficient appropriation, and a necessary reduction of force, was equivalent to a dismissal.

So in the case at bar, it seems to us that a suspension upon the ground of lack of work shows an intention to dismiss, and not merely to suspend. And the action of February 6, 1889, does not, in our judgment, in any way qualify this construction. Such action was undoubtedly caused by the fact of the condition of the decision in Gregory v. The Mayor, which had been decided by the General Term in October 1887, and was pending in the Court of Appeals, and actually argued on the 28th of March, 1889, the resolution in question being passed in order to prevent any possible continuance of liability upon the part of the city if a mistake had been previously made.

We think a reasonable construction of the suspension was that the plaintiff’s services were no longer required; and that has been held equivalent to a dismissal.

The claim made upon the part of the counsel for the respondent, that there was no proof of the proper appointment of the plaintiff to his position as inspector, comes with rather ill grace in view of the fact that such appointment is admitted in the pleadings.

The judgment should be affirmed, with costs.

Follett, J., concurred.

Barrett, J.

(dissenting):

I cannot distinguish this case from Gregory v. The Mayor (113 N. Y. 416), and Emmitt v. The Mayor (128 id. 117), while I think it is plainly distinguishable from Lethbridge v. The Mayor (133 N. Y. 232), and Wardlow v. The Mayor (33 N. E. Rep. 140).

The intention was not to dismiss but to suspend. This is clearly evidenced by the tenor of the notice. “ You are hereby suspended,” it reads, without pay until such time as your services may be required.” This meant that meanwhile he remained an inspector under his appointment, but an inspector without pay. When his services were required he was not to be reappointed, but was to recommence work under Ms original and existing appointment. But that was just wbat the Court of Appeals held in the cases cited could not be done without paying the officer his current salary. That this was tlie construction placed upon the notice by the commissioners themselves, is evidenced by the subsequent dismissal. This latter was clear and unequivocal. Nor did the plaintiff consider himself dismissed by the suspension. He knew that he was deprived of work and pay. But how l By a notice which plainly told him that his official relations with the commissioners were not finally severed. He never asked to be reappointed. What he asked was to be sent back to work or reinstated in active duty, not in office. The reason assigned for the suspension is immaterial as it does not affect the real Mtention as clearly evidenced by the rest of the notice and the subsequent dismissal.

The real intention was because of the lack of work to do somethmg which was not authorized, namely, to suspend instead of something which was authorized, namely, to dismiss. I think the judgment should be reversed, and a new trial ordered.

Judgment affirmed, with costs.


author: Follett, J.:

text:
    Cornelia R. Kane, as Executrix, etc., of William H. Kane, Deceased, Appellant, v. Robert Lenox Belknap, Respondent.
    , . , , Payment of a loan by making an investment for the lender — evidence as to whether the investment was actually made.

    In an action brought by the executrix of William H. Kane, against an attorney in fact of her testator, to recover $5,000 alleged to have been received by the defendant from Kane and not invested as it was his duty to do, it appeared that the defendant had received the money in a manner which amounted to a call loan from Kane, and the defendant claimed that he repaid it by investing it for Kane in a “Grant &Ward contract,” it appeared that he had authority from Kane to make an investment of that nature, and the question was whether or not he actually made it.
    The defendant testified that the investment was made, and an account was put in evidence in which Kane was charged with an investment of $5,000 on the day the investment was claimed to have been made, which Kane had acknowledged by letter to be correct.
    The plaintiff called as a witness a bookkeeper of the defendant, who kept Kane’s account, and who testified that he personally made the investment; the plaintiff sought to raise a doubt as to the correctness of this testimony by producing Kane’s check book, which at the time in question was kept by the witness, this showed a check on Kane’s bank for §5,000, payable to the witness’ order, and signed with Kane’s name by the defendant as attorney; the check was attached to a stub on which was written “ for investment G-. & W.” This check had not been used and the signature was canceled, and the witness testified that it was not used so as to avoid two unnecessary transactions and entries, to wit, the drawing of a check by the defendant on his bank account in payment of the loan from Kane and depositing it to his credit, and then the use of the check in question in payment for an interest in a Grant & Ward contract purchased by the defendant for Kane on that date.

      Eeld, that there were no such suspicious circumstances connected with the transaction as to make it necessary to submit to the jury the undisputed testimony of the witness that the investment was actually made, and, hence, that a verdict for the defendant was rightly directed,
    Appeal by tbe plaintiff, Cornelia R. Kane, as executrix, etc., of William H. Kane, deceased, from a judgment of the, Supreme Court in favor of the defendant, entered in the office of the clerk of the city and county of New York on the 22d day of April, 1892, upon a verdict for the defendant rendered by direction of the court at the New York Circuit, and from an order denying the plaintiff’s motion for a new trial.

      John M. Bowers, for the appellant.

      Robert W. Weeks, for the respondent.
   Follett, J.:

This action was brought to recover $14,000 on account of the following sums of money received by the defendant from the plaintiff’s testator at the following dates: December 20, 1883, $5,000; December 27, 1883, $10,000 May 1, 1884, $5,000. It is admitted that $6,000 of this sum was subsequently paid. The complaint contains two causes of 'action : (1) Charging the defendant with negligence in investing these sums in Grant & Ward contracts. (2) With not having invested said sums as was his duty to do.

On-the 1st day of October, 1873, the plaintiff’s testator executed and delivered to the defendant a power of attorney, which is in its terms broad enough to authorize the investment by the defendant of the sums mentioned, in the way-in which he claims to have invested them. This power remained, in force until the death of William H. Kane, which occurred in December, 1886.

The defendant in Ins answer admits that he received the foregoing sums of money belonging to the testator at the dates mentioned, for investment, and alleges: “ That he invested the same pursuant to the directions of said Kane, and pursuant to the general authority and discretion given to him, and has since fully accounted therefor and paid over the entire proceeds thereof.” The plaintiff admits on this appeal that, as to the first and second items, it was right to direct a verdict for the defendant, but insists that it was error to refuse to submit to the jury the question as to the plaintiff’s right to recover for the $5,000 received May 1, 1884.

There was an entire failure to sustain the first "cause of action, for the evidence furnished by the testator’s letters and the testimony of Stevenson established, beyond doubt, that the testator authorized the defendant to invest in these so-called contracts. May 9, 1884, the defendant wrote Kane, stating that he had invested these sums in Grant & Ward contracts, and informed him of the failure of that firm. On the twenty-sixth of the same month, Kane replied, saying, among other things relating to the same subject: “I do not blame you at all, as I gave you my consent to your loaning it to them before I left last fall.” Stevenson, a witness called by the plaintiff, testified that he heard Kane direct the defendant to invest $20,000 of his money in those contracts. In addition to this, the statements rendered by the defendant to the plaintiff, from time to time, showed that such investments had been made, and the sums allowed as profits had been credited to Kane.

The sole question left in the case is- whether the defendant on the 1st day of May, 1884, actually invested $5,000 with Grant & Ward for Kane.

That he had authority to make such investment is established beyond question, and it is also conclusively shown by the correspondence between them subsequent to the failure of Grant & Ward, that the defendant reported that he had invested that sum with them, and that Kane acknowledged his right to make the investment. Did the defendant make a misstatement in regard to having made the investment ? If he 'did, he'is liable. Was there sufficient evidence to make this a question of fact for the jury ?

It is claimed that the investment was effected through the following transactions:

March 13,1884, the defendant drew a check on the bank account of Kane for $5,000, which was deposited to the credit of the defendant’s bank account. This was in effect a call loan made by Kane to defendant through the agency of the latter. It may be that the terms of the power of attorney are not broad enough to authorize the defendant, as agent, to borrow for himself the money of his principal. However, this point is not raised, and it appears from the evidence that defendant had previously borrowed money of Kane in the same manner, and had made loans to Kane by checks drawn upon his account, which were deposited to the credit of Kane’s bank account. This seems to have been a mode adopted of keeping their bank accounts good.

' The defendant insists that he paid this loan May 1, 1884, by investing $5,000 in a Grant & Ward contract, and by depositing to the credit of Kane’s bank account a check for thirty-three dollars and thirty-three cents, interest on the loan at the rate of five per cent. Kane’s bank account is in evidence, in which there is this entry: “ May 1,1884, call loan of March 13th pd. and Int. 5$ $33.33.” An account showing this item was rendered by the defendant to Kane July 10,1884, who acknowledged its receipt by a letter dated August first, in which he says that the account is correct. In the same account Kane is charged with an investment of $5,000 on that date, which is the item claimed to have been invested in a Grant & Ward contract.

The assertion of the defendant is that instead of drawing a check against his own account and having it credited to Kane’s bank account, that he paid the loan by investing the sum as before stated. The plaintiff, to establish his cause of action, called Mr. Stevenson, defendant’s bookkeeper, who also kept the account of Kane while he was absent in Europe. He testified positively that the defendant, on the first of May, paid the loan by investing $5,000 in a Grant & Ward contract, and that he personally made that investment. The plaintiff seeks to raise a doubt as to the truthfulness of this testimony by producing Kane’s check book, which during the early part of 1884 was kept by Stevenson. In this book there is a check and a stub, of which the following are copies :

This check has never been used, and the signature has been canceled. Stevenson, who drew the check and made the investment as the agent of the defendant, testified that the check was not used so as to avoid two unnecessary transactions and entries, to wit: The drawing of a check by the defendant on his bank account in pay-, ment of the loan from Kane, and depositing it' to his credit, and then the use of the check above set forth in payment for an interest in a Grant' & Ward contract, purchased by the defendant for Kane on that date.

This was positively testified to, and we are unable to see any suspicious circumstances connected with the transaction, making it necessary to submit to the jury the question of the truthfulness of the undisputed testimony of Stevenson. More than this, after Kane’s return from Europe, this check book was returned to and used by him, and the transaction was never repudiated nor questioned by him.

If, as the plaintiff asserts, the defendant did not make the investment, and his claim to have done so was a fraudulent afterthought, it is difficult to see why no attempt was made to conceal this so-called evidence of guilt, as there was ample opportunity for doing so.

We think the check and stub, in connection with the circumstances, sustain rather than discredit the testimony of Stevenson, and that a verdict was rightly directed for the defendant, and that the judgment should be affirmed, with costs.

Yan Brunt, P. J., concurred.

Judgment affirmed, with costs.


text:
    The New York Security and Trust Company, Respondent, v. Benjamin W. Blydenstein and Others, Appellants, Impleaded with Ernest Lipman and Others.

      Restraint of the prosecution of sepan'ate actions by the claimants ofpa/rts of a fund— restraining parties (non-residents qf the State) to an action in the United States court.

    The New York Security and Trust Company, holding warehouse receipts for 200 bales of burlaps, on which it had made advances to Lipman & Co., was notified by eight different parties that 109 of the bales had been pledged or sold to them; all the bales bore distinctive marks and none of the parties claimed the same bales.
    The trust company entered into an agreement with certain of these claimants, including Blydenstein & Co., who claimed thirty-eight bales, by which it was agreed that the bales claimed by each should be sold by the trust company, which should hold the net proceeds arising from the sales of the specific bales claimed by each, subject to the same rights that the claimants would have in the bales.
    The trust company thereafter sold all the 200 bales and credited the avails upon its account with Lipman & Co., whereupon Blydenstein & Co., who were nonresidents, brought an action in the United States Circuit Court against the trust company for the recovery of the specific net proceeds of the sale of the thirty-eight bales claimed by them.
    The trust company thereupon commenced an action in the Supreme Court of the State of New York to restrain the prosecution of the Blydenstein & Co. suit and all other actions which might be brought by the several claimants of the different bales of burlaps, on the ground that each of the claimants claimed an interest in the fund arising from the sale of the 200 bales, and that, consequently, the rights therein could not be determined in separate actions.
    A temporary injunction was granted and continued, and Blydenstein & Co., who had not been served or appeared generally in the action, appealed from so much of the order continuing the injunction as restrained the prosecution of their action in the United States court.

      Held (without deciding whether the court had jurisdiction to restrain the prosecution of an action in the United States Circuit Court, by persons who are neither citizens nor residents of this State, and who have not appeared or been served with process in the action in which the injunctive relief was sought), that the facts showed that the action sought to be restrained was upon an independent cause of action as to the distinct specific bales claimed by Blydenstein & Co., in which the other claimants had no interest; that it appeared that there was no confusion of goods or interests, unless caused by the trust company itself, the agreement between it and the claimants not having been joint, and hence that the injunction, so far as it restrained the prosecution of the Blydenstein & Co. action, should be vacated,

      Appeal by tbe defendants, Benjamin W. Blydenstein and others, from so much of an order of the Supreme Court, made at the New York Special Term, and entered in the office of the clerk of the city and county of New York on the 12th day of April, 1893, “ as directs a continuation of the injunction granted herein by his Honor Justice Abraham R. Lawrence, on March 20,1893, against the defendants Benjamin W. Blydenstein, Adrianus J. Brink and Jacob Yan Essen, composing the firm of B. W. Blydenstein & Co., or their agents, attorneys in fact and at law, and servants, and an injunction pendente lite against the defendants Benjamin W. Blydenstein, Adrianus J. Brink and Jacob Yan Essen, composing the firm of B. W. Blydenstein & Co., their agents, attorneys in fact and at law, and servants, and an injunction during the pendency of this action against the defendants Benjamin W. Blydenstein, Adrianus J. Brink and Jacob Yan Essen, composing the firm of B. W. Blydenstein & Co., their agents, attorneys in fact and at law, and servants, from continuing the prosecution of their action in the United States Circuit Court for the Southern District of New York, against the plaintiff herein.”
    December 1, 1891, the Terminal Warehouse Company issued to Lipman & Co. five negotiable warehouse receipts, numbered 3450, 3451, 3452, 3461 and 3462, each being for 100 bales of burlaps. September 7, 1892, Lipman & Co. borrowed from the plaintiff $50,000, which they in writing promised to pay four months after date, and as security for the performance of their promise pledged and delivered to the plaintiff these receipts. Between October 31, 1892, and November 4, 1892, Lipman & Co. paid $30,000 on the sum loaned, and received from the plaintiff three of these receipts. Between September 7, 1892, the date of the loan, and December 15, 1892, some of the bales covered by the receipts were withdrawn from the warehouse, and other bales of burlaps of equal value substituted, for which new receipts were given and turned over to the plaintiff. December 15, 1892, the plaintiff surrendered the receipts remaining in its hands to the Terminal Warehouse Company, and received from it in lieu thereof a new receipt issued directly to the plaintiff for 200 bales of burlaps. Afterwards and before this action was begun eight firms and corporations, represented by the defendants, notified the plaintiff that 109 of the 200 bales had been pledged or sold to them. The appellants claim thirty-eight bales; the Manchester Trust Company (Limited), fourteen bales; Levita & Co., three bales; Colesworth & Powell, nine bales; Brown Brothers & Co., one bale; the Merchants’ Banking Company (Limited), seven bales; Hong Kong and Shanghai Banking Corporation, twenty-two bales; Antony, Gibbs & Sons, fifteen bales. All of these hales bore distinctive marks and none of the firms claim the same bales. After these claims were presented, agreements were entered into between the plaintiff and the firms of B. W. Blydenstein & Co., Levita & Co., the Merchants’ Banking Company (Limited), and the Manchester Trust Company (Limited), by which it was agreed that the bales claimed by each should be sold .by the plaintiff, which should hold' the net proceeds arising from the sales of the specific bales claimed by each, subject to the same rights that the claimants would have in the bales. In pursuance of this agreement the plaintiff, January 28, 1893, sold said thirty-eight bales, claimed by B. W. Blydenstein & Co., the net avails of which were $4,347.98.
    The net avails arising from the sale of the 200 bales were $21,793.51, at which date there was due the plaintiff on the loan $19,743.74, which, deducted from the net amount received from the sales, leaves $2,049.77 in the hands of the plaintiff belonging to Lipman & Go., their transferees or creditors. This balance has been attached by the sheriff of the city and county of New York in actions brought by creditors of Lipman & Co. February 21, 1893, Blydenstein & Co. brought an action against the plaintiff herein in the Circuit Court of the United States for the southern district of New York, for the recovery of $4,347.98, the net avails arising from the sale of the thirty-eight bales, alleging that they were the owners of those bales, which the trust company had converted to its own use. It is set out in the complaint in the Circuit Court that the bales had been sold by an agreement with'the trust company and only the net proceeds of the sale is claimed, with interest from the date of the sale.
    The plaintiff brings this action for the purpose of restraining the prosecution of the suit in the United States Circuit Court, and of all other actions which may be brought by the firms and corporations claiming some of the goods. No other actions have been begun, but it is alleged that: “ The plaintiff verily believes that other actions of similar nature will be begun against it, threats having been made to it so to do. It is impossible or extremely difficult for plaintiff to set up in each of these separate actions the facts constituting its defense against the right in each of them of their«respective plaintiffs to recover the full balance now in the possession of the plaintiff herein. The plaintiff herein, having paid out in one of these actions the full balance in his hands, will be without remedy in another similar one. Unless the title to all these goods or their proceeds be settled in one action, plaintiff’s rights will be irreparably and inequitably destroyed.”
    With the summons and complaint in this action, a preliminary injunction was granted restraining the defendants, their agents, attorneys and servants from bringing, maintaining or continuing any action for the recovery of the sums claimed by them and especially enjoining the appellants, their agents, attorneys and servants from prosecuting the action they had begun in the United States Circuit Court.
    Upon the order to show cause, at a Special Term of this court, contained in the preliminary injunction, why it should not be continued pending the action, it was ordered that the injunction be continued and that the firm of B. W. Blydenstein & Co. be restrained from continuing the prosecution of their action in the United States Circuit Court. From so much of this order as restrains the firm of B. W. Blydenstein & Co. from prosecuting their action in the United States Circuit Court, the defendants, constituting said firm, have appealed.

      Antonio Kncmth, for the appellants.

      'William B. HornMower, for the respondent.
   Follett, J.:

All of the defendants have appeared in this action except the appellants, who are citizens and residents of foreign countries, and they have not been served with process, nor have they appeared in the action, except specially for the purposes of this appeal. Briesen & Knauth, as attorneys for B. W. Blydenstein & Co., brought the action in the United States Circuit Court, and they bring this appeal. This injunction seems to have been granted and continued on the theory that each of the eight firms and corporations claimed an interest in the fund arising from the sale of the 200 bales; but the exact reverse appeal’s by the complaint in this action, wherein it is alleged that every one of the firms and corporations claim a definite number of the bales, or the avails thereof, which bales were identified by distinctive marks. By the suit being prosecuted in the United States Circuit Court, B. W. Blydenstein & Co. do not seek to recover an interest in the entire sum realized upon the sale of the 200 bales, but simply demand a judgment for the net avails realized from the sale of thirty-eight specific bales, of which they claim to be the owners, and to which the other defendants make no claim. By the contract entered into between the plaintiff and B. W. Blydenstein & Co., it was agreed that the former should sell the thirty-eight bales and that the claim of the latter should be limited to the net avails arising from their sale. In pursuance of this agreement the plaintiff sold the bales and realized a sum, the amount of which is not in dispute. The fact that the plaintiff on the same day chose to sell seventy-one other bales which were claimed to be owned by other firms and corporations (no firm or corporation claiming the same bales), and ninety-one bales to which no one claims any interest adverse to plaintiff, and to credit the avails arising from the sale of all the bales to one account, does not give any one of the firms an interest in the fund. The four firms and corporations who entered into agreements with the plaintiff for the sale of the bales claimed by each and limiting their claims to the net amount realized upon the sale, have no claim in the entire fund, but simply to recover of the plaintiff a sum equal to the net amount realized upon the sale of the bales which they claim. The four other firms who did not contract that the bales claimed by each of them might be sold, have no claim whatever to the funds realized upon the sale of the 200 bales. Their claim, if any, is for the recovery of the value, or of their interest in the value, of such of the bales as each asserts title to or an interest in. The claims of these eight firms and corporations and the defenses thereto are as distinct and several as though they had been made under eight independent contracts, each contract relating to a single ship, no two claiming an interest in the same ship. In such a case the fact that a person should claim all of them under one contract with a third person, and should sell the vessels and deposit the avails in a distinct account, would afford no reason for restraining actions brought by the several firms and corporations for the alleged conversions. Nothing that the converter could do by mingling the avails arising from the sale of the ships would affect the right of each claimant to prosecute his individual action. Had there been a joint agreement between the eight firms and corporations or between any of them and the plaintiff for the sale of the bales and for holding the avails as a single fund, or had there been cross interests in or claims to the bales, the case would have been quite different.

The case at bar is much stronger for the appellants than the one supposed, for the plaintiff expressly contracted with them that the thirty-eight bales should be sold and their recovery, in case they established a prior title to them, should be measured by the amount of the net avails of the sale, which is precisely what they seek to recover in the United States Circuit Court. "We see no ground in such a state of facts, for the equitable relief sought, or for the injunctive relief granted. The case at bar does not fall within the principle of the National Park Bank v. Goddard (131 N. Y. 494), which arose over a confusion of goods, and of interests caused by others than the plaintiff and for which it was in no wise responsible. Nor does it arise out of a joint contract nor out of an act or acts participated in by the defendants. "Whatever of confusion there may be, arises from the plaintiffs’ acts, and affords no ground for restraining the appellants from prosecuting an independent cause of action, if they have one, in which no one but the plaintiffs and defendants claim an interest.

The view which we have taken of the right to maintain this action renders unnecessary a discussion of the question whether the court has jurisdiction to restrain the prosecution of an action in the United States Circuit Court, by persons who are neither citizens nor residents of this State, and who have not appeared nor been served with process in the action in which the injunctive relief is sought.

The part of the order appealed from should be reversed and the injunction restraining the appellants from the prosecution of their action vacated, with ten dollars costs and printing disbursements, and tbe motion to continue tbe temporary injunction against tbe appellants denied, with ten dollars costs.

Yan Brunt, P. J., concurred.

Order reversed and tbe injunction restraining tbe appellants from tbe prosecution of tbeir action vacated, with ten dollars costs and printing disbursements, and tbe motion to continue tbe temporary injunction against tbe appellants denied, with ten dollars costs.