text:
    RODMAN M. PRICE, Plaintiff, v. ERASMUS D. KEYES and EDMUND SCOTT, Impleaded with THEODORE PAYNE and SQUIRE P. DENY, Defendants.
    Shxeptions— how heart'd—agent, when liable for sale of principal's property — damages— how determined.

    Where exceptions are taken at the trial, the Code has provided three different modes of reviewing them : by an appeal from the judgment; by a motion for a new trial upon them at the General Term, when the judge before whom the cause was tried directs that they be heard in the first instance at the General Term; and by a motion for a new trial at the Circuit or Special Term.
    The Special Term cannot hear a motion for a new trial, while an order, directing the exceptions to be heard in the first instance at the General Term, continues in force.
    In an action brought to recover damages for the wrongful sale and conversion of a large amount of real estate, owned by the plaintiff and sold by the present defendants ks his agents, held, that the defendants were not liable for any error of judgment on their part, or for injudiciously malcing the sale in order to avoid the effect of an attachment law taking effect the next day, under which the plaintiff’s non-resident creditors could attach and seize his property, but that they could only be held liable for designedly selling his property for their own benefit or for the purpose of depriving him of the benefit of it.
    The defendants being jointly charged with a fraudulent sale of plaintiff’s property, the court decided that all evidence, competent-for any purpose, against either defendant, should be received ard afterward distinguished and applied as the case should require. Reid, that this was a proper rule to adopt.
    To constitute a ratification by means of acquiescence or the omission to make the unauthorized act of the agent the subject of objection, .the principal must have information giving him notice of what may have been done to his prejudice, and, without such information there can be no ratification where the principal received nothing from the transaction and no part of the proceeds have been applied, with his assent, to his benefit.
    Where a person tortiously disposes of another’s property, he cannot discharge himself from the consequences of his act by applying the proceeds in payment of its owner’s debts, without his authority or assent.
    The property was sold by the defendants on the 30th of June, 1853, and the court allowed the jury to regulate the amount of their verdict according to the value of the property during the residue of the year. Reid, that this was proper. The owner should be allowed the fair value of the property, wrongfully taken from him, to be ascertained according to its market price, within a reasonable period after the commission of the wrong; and where it consists of a number of parcels, amounting in value to a large sum, a period of six months is not unreasonable.
    This case was tried before a jury, at the New York circuit, on the 23d of May, 1864, and a verdict rendered against the defendants for $129,699.15.
    Exceptions having been taken to questions of law arising during the progress of the trial, the court directed the exceptions to be heard in the first instance at the General Term, and that in the meantime the judgment be suspended. The facts are stated in the opinion.
    Fullerton, Knox ds Crosby, for defendant Scott,
    insisted that the court erred in leaving to the jury the question whether or not Price’s instructions to Keyes to sell in parcels ever came to Scott’s knowledge. (Harris v. Wilson, 1 Wend., 511; Small v. Smith, 1 Denio, 586 ; Storey v. Brennan, 15 N. Y., 526.)

      John Ohebwood, for defendant Keyes,
    insisted that the four years’ silence of Price, after being advised of the sale, was a .conclusive answer to the action. (Dunlap’s Paley on Agency, 3d Am. from 3d Lon. ed., p. 31, side paging; Story on Agency, §§ 255, 258; Cairnes v. Bleecker, 12 Johns., 300 ; Berwick v. Dusenberry, 32 How. Pr., 348; Bridenbecker v. Lowell, 32 Barb., 19 ; Prince v. Clark, 1 B. & Cress., 186; Smith v. Cologan, 2 T. R., 188, in note.) That the rule of damages laid down by the court was wrong. (Suydam v. Jenkins, 3 Sandf., 614; Jegon v. Vivian, L. R [6 Ch. Ap.], 760; Bartholomew v. Jackson, 20 Johns., 28.) The charge that if the plaintiff had acquiesced in the payment of his debts, a deduction should be made to that amount from the damages otherwise recoverable, was erroneous; such an acquiescence would have ratified the whole transaction, including the sale itself. (Benedict v. Smith, 10 Paige, 130 ; Wilson v. Poulter, Strange, 859; Story on Agency, §§ 239, 250; Moss v. Rossie Co., 5 Hill, 143; Bristow v. Whitmore, 9 Clark’s House of Lords Cases, 404; 408, 413 ; Gresley v. Mousley, 3 De G., Fisher and Jones, 445, 446; Clark v. Perier, Freeman’s Chy., 48; S. C., 2 Eq. C. Abr., 707.)

      Ashbel Creen and J. S. L. Cummins, for plaintiff,
    insisted that the Special Term had no power to entertain the motion for a new trial. (Hoxie v. Greene, 37 How., 97; Cronk v. Canfield, 31 Barb., 171; Dickinson v. Wason, 48 Barb., 413; Purchase v. Matteson, 25 N. Y., 211; Taylor v. Harlow, 11 How., 285; Morange v. Morris, 20 How., 257; Hotchkins v. Hodge, 38 Barb., 119.)
   Daniels, J.:

When the trial of this cause was completed at the circuit, the learned justice who presided ordered the exceptions, taken by the defendants, to be first heard at the General Term, and judgment to be in the meantime suspended. The order in this respect was strictly in conformity with the provision made by section 265 of the Code of Procedure, and it was probably made, as such orders usually are, as a matter of practice, at the instance or solicitation, and to promote what may at the time have been considered the convenience, of the defendant. It is not important for the disposition of the case whether that was the fact or not, because the consequences of the order would be the same, even if it had been made at the instance of the learned justice himself; but such orders are not usually made in that way, particularly where the defeated party manifests any disposition to withhold his assent. Ho such dissent appears to have been indicated in the present case, and it is to be presumed that none existed.

By the order made, the case was, in effect, sent to the General Term for two purposes. First, to enable the defendants to move for a new trial upon their exceptions; and secondly, for judgment to be pronounced there in case the motion should prove unsuccessful.. Where exceptions are taken, the Code has provided for three different modes of reviewing them: it may be done by an appeal from the judgment, by a motion for a new trial upon them at the General Term, under such an order as was made in this case, and by a motion for a new trial at the circuit or Special Term. In the latter instance, an application may also at the same time be made for a new trial, because of the misdirection of the court, or for the reason that the verdict has been rendered either without evidence or against the evidence appearing in the case. This court has always possessed that power, and there is nothing in the Code by which ithas either been abrogated or abridged. A different view of the law was suggested by the judge who delivered the opinion in Parker v. Jervis, but it was not necessary for the decision of the case, and probably was not concurred in by the other members of the court. Several years after the order was made, directing the exceptions in this cause to be first heard at the General Term, such an application was made to the Special Term by the present defendants; it was opposed because of that direction, but the objection was overruled by the court, and the application was formally heard and denied. Both parties have appealed from the order which was then made, the plaintiff claiming that the application should not have been heard at all, on account of the direction which was given to the case at the circuit, and the defendants insisting that the verdict should have been set aside and a new trial ordered.

While the unqualified power to hear a motion for a new trial after verdict, has been given to the Special Term, its exercise has not been reserved in a case where a previous direction has been made that the motion shall be heard on the exceptions, in the first instance, at the General Term. Such an order, as well as the provision of the law allowing it to be made, contemplates a different course of proceeding after it has been made, and that is, that the motion must be first heard at the General Term and the judgment on the case be there pronounced. The provision of the Code, contained in the section already referred to, is mandatory on this subject. And yet, if the Special Term can entertain and dispose of a motion for a new trial while an order continues in force, sending the exceptions in the first instance to the General Term, the force and effect of that provision can be at once defeated. For, if the verdict can be set aside by the Special Term, the exceptions cannot be heard at the General Term, and judgment cannot be given there, if the case proves to be in such a condition as to require that disposition to be made of it. In that way, the practice devised by the Code for one purpose, could be made the means of nullifying its provision for another. That could not have been the design of any part of the system created by it. By giving the court the power to send the ease on the exceptions, in the first instance, to the General Term, it must have been intended, when such a direction should be given, that the entire case, so far as it might involve a review of the trial, would be there considered and disposed of. This necessarily follows' from the nature of the direction given, and the disposition to be made upon the hearing of the case, unless a new trial be ordered; then judgment must be ordered upon the verdict. This operates as a restriction on the general power conferred upon the Special Term to hear and determine motions for a new trial. That allows that practice to be pursued except when such an order has been made as was directed in this case, and then the implication is clear that the case must be heard and disposed of by the General Term. The Special Term, therefore, should have dismissed the appplication made to it for a new trial, instead of hearing and denying it.

The only remedy available to the defeated party, where an order has been made, sending the case, in the first instance, to the General Term, while that direction remains undisposed of, is. to bring on the motion for a new trial before that court. And that, from the nature and terms of the direction, must be heard only upon the exceptions taken during the trial. The right to move in the first instance at the General Term is reserved exclusively to a class of cases dependent solely upon the law. For it is only legal points which can be raised and presented by exceptions; and it is the exceptions, and nothing beyond them, which the court is permitted to order to be first heard at the General Term. They are the subjects which that court is required to hear, and upon their being found to be well taken a new trial must be directed, while if they are unsustained the court must pronounce judgment in favor of the successful party. Exceptions can be taken only to rulings made by the court during the progress of the trial. They cannot be presented to the conclusions of the jury, and do not bring up the point for consideration, whether or not the verdict has been rendered either without or against the evidenee. Upon the healing of the exceptions, in the first instance, by the General Term, that point cannot be brought-before the court.

The action was brought to recover damages arising out of the wrongful sale and conveyance of a large amount of real estate, owned by the plaintiff, and disposed of by the present defendants, as his agents. The property sold and conveyed, consisted of nineteen different lots or parcels of land, and an undivided half of two other parcels of land. It was incumbered by mortgages upon a portion of it, and by judgments which were liens upon all of it, to an amount exceeding the sum of $100,000, and it was sold, in one mass, for the nominal sum of $135,000, but in reality for the sum of $140,000, the additional $5,000 being added for the payment of commissions. The sale was made by the co-operation of both the present defendants, and the title conveyed by the defendant, Scott, under a power of attorney given by the plaintiff to him on the 3d of December, 1852, empowering him to sell any real estate owned by the plaintiff in the State of California. In the submission of the case to the jury, the court instructed them that the defendants could not be held liable for any error of judgment on their part or the part of either of them, or for injudiciously making the sale in order to avoid the effect of an attachment law taking effect the next day, under which the plaintiff’s non-resident creditors could attach and seize his property for the non-payment of their debts, but that they could only be held liable for designedly selling his property for their own benefit, or for the purpose of depriving him of its benefit. This, though not in the terms, was the substance of the charge, so far as it presented the mere point of liability.

When the plaintiff rested his case, each of the defendants moved for a dismissal of the complaint. The motion was denied and the defendants severally excepted. No reason was specified for which a dismissal was claimed to be proper. But, without any doubt, the point should be regarded as taken, that the evidence was not sufficient to warrant a recovery upon the theory alone on which the action was rendered dependent; and that was whether these defendants had sold and conveyed the plaintiff’s property for the fraudulent purpose of despoiling him of it, and for the promotion of their own personal interests as distinguished from his. To that extent, the exception taken requires the consideration of the effect of the evidence then before the court, but no farther. For whether the ruling was proper or not as to the other defendant, who was one of the two joint purchasers of the property, it is not necessary to inquire, as the verdict of the jury was in his favor.

Before the power of attorney was given to the defendant, Scott, and in the month of September, 1851, another was given by the plaintiff to the other defendant, Keyes. This was not quite as extended in its authority as the one delivered to Scott, for the power it gave to sell was confined to any part or parcel of the plaintiff’s real estate situated in the State of California. The contract for the sale was made and executed on the'last day of June, in the year 1853. During the early part of the preceding month, and for some time before that, the defendant, Keyes, was in and about the city of New York, and represented to the plaintiff that his creditors were generally well disposed toward him; substantially, that he had nothing to apprehend from them so far as this property was concerned, and that his prospects in its management and final sale were promising. Before this defendant left the city of New York, on his return to San Francisco, and by a letter written and sent during his passage, he solicited from the plaintiff a power of attorney more complete in its authority than the one he then had. Such a power was afterward executed and sent by mail to this defendant, but it was not received by him until after the contract for the sale of the plaintiff’s property had been made. And there is reason for believing that the contract was made by'the defendant Scott, instead of the defendant Keyes, with whom the plaintiff’s relations seem to have been more intimate and confidential, for the reason that his power of attorney was broad enough to sanction a sale of the property in one mass, while that to Keyes would not do that. By the contract made for the sale of the property, its entire price was appropriated to the payment and extinguishment of the incumbrances upon it, except the sum of $10,000, for the obligation to pay the other $5,000 was not inserted in it, and that difference, after being received by Scott, was paid to Keyes as commissions and afterward divided between them both. In afterward accounting for the sale and the disposition of the $10,000 received from its proceeds, that was simply shown as having been received by Scott and then paid over to Keyes, without any explanation or allusion whatever to the other $5,000. But three debts, not liens upon the property at the time of the sale, are mentioned by Scott in a letter, not in the case, but referred to by the justice in his charge, and probably accompanying the account, as having been compromised by Keyes for $5,000, paid by himself apart from any money due on the sale ; while Keyes, in his letter of the thirty-first of July, stated that he understood these debts had been settled, but did not know how it had been done. These inconsistencies in their statements were calculated to throw very grave suspicions over the defendants’ conduct in making the sale, and suggest the probability that they had been guilty of some undisclosed misconduct. And when added to the representations which Keyes made before he • left for California, his solicitude for a broader power of attorney, and the circumstance that the plaintiff was not and could not be possibly benefited by the sale, and that the two agents concurred in making it, and dividing the only money derived from it between them, it would seem to be entirely sufficient for the 'consideration and action of the jury, upon the inquiry whether the defendants were not guilty of the misconduct with which they were charged by the plaintiff. There was nothing, therefore, in the exceptions taken to the refusal to nonsuit, and they must accordingly be overruled.

The witness, Van Nostrand, was allowed to state what was the value of this property in 1849, against the objection of the defendants that it was irrelevant. This followed the statement made by the same witness, that an offer of $300,000 was then made for the property, and Keyes disapproved of selling for that amount. The answer was, that the property was then worth that amount. And it was not irrelevant, because the condition and value of the property was generally traced down to the time of the sale, and evidence was given as to the extent to which it was improved by the plaintiff" in the meantime. This evidence, though remote, had some bearing upon the inquiry as to the value of the property when the sale was made, particularly as it was situated in a thriving, prosperous city where property was inclined .to advance rather than recede in value.

The court did not hold that the evidence, admitted against the other defendants, was admissible against the defendant, Scott. But the ruling was, that all letters and conversations prior to the sale were competent evidence, without specifying as to whom it should apply; and that, when competent for any purpose, it should be received, but whether it should finally be considered as testimony proper to be submitted against all the defendants, would depend upon what had or should transpire before the evidence closed. There could be no impropriety in this course, as the defendants were jointly charged with a fraudulent sale of the plaintiff’s property. It was not held that evidence, not admissible against either defendant, could be received; but that, so far as the evidence was proper against either, it should be received and afterward properly distinguished and applied by the court, as the case proved should require that to be done. Neither defendant could be injured by that course in the end, and it was the most convenient that, under the circumstances, the court could adopt.

Other exceptions were taken to the ruling of the court on the subject of receiving and rejecting evidence. But they are not relied upon in support of the present motion, and if they were, no reason appears for doubting the correctness of the decisions by which they were disposed of by the court.

Evidence was given during the progress of the trial from which the plaintiff claimed that the fact was established that he requested the defendant, Keyes, to have his property sold in parcels and not as one mass. The defendant, Scott, requested the- court to instruct the jury that there was no evidence that this instruction ever came to his knowledge. That the court declined to do, leaving the question to the jury. And the defendant, Scott, excepted to that disposition of the point. As the case is now presented to the court, there is no direct evidence contained in it that this instruction was communicated to the defendant, Scott, before the sale was made. But this court cannot say there was no such evidence, because the case contains no statement that all the evidence was inserted in it; while the charge of the court shows that an important letter, received from Scott soon after the sale, and containing some reference to it, was used as evidence on the trial, which the case does not contain. Even this letter may have contained something from which it might be inferred that Keyes did communicate to Scott the instructions received by him from the plaintiff. It did appear, during the trial, that the relations existing between these two defendants were probably friendly and confidential, and that they certainly were engaged in the common enterprise of disposing of the plaintiff’s property, not for his, but rather for their own exclusive benefit. And if the jury believed that to be the fact, as they clearly might under the circumstances, then the inference would not be strained nor unnatural, that Keyes, before the sale, communicated everything to Scott which had transpired between himself and the plaintiff, having anything to do with the success of the undertaking by which he was to be deprived of his property for the purpose of securing the payment of their commissions as his agents. There was no error in leaving the inquiry, whether this was so or not, to the decision and determination of the jury. It was the inference of one fact which might reasonably be drawn from others, and for that reason strictly within their province.

Upon the subject of the defendants’ liability, after directing the jury that the defendants could only be held liable for intentional misconduct in'the disposition which was made of the plaintiff’s property, the learned justice was asked to charge, that if the defendants, Keyes and Scott, believedj at the time of making the sale in question, that such sale was best for the interest of the plaintiff, lie: cannot recover in this action. The justice responded that the proposition was, in the main, true, but added that if the motive which operated on these men was not an honest discharge of their duty towards the plaintiff—if they were moved upon by the consideration of obtaining this $13,500 or $18,500 to themselves, or a smaller portion to one of them and a larger portion to the other, and that was their object in selling, then- the action can be sustained against them. This proposition was right, for it rendered the liability of the defendants dependent upon the fact that they sold the plaintiff’s property—nob for him, but for themselves. In other words, that they could only be held to be liable in case they appeared to have appropriated his interest in the property to their own use and- benefit. That proposition, certainly, must be sound; otherwise, the- agents could appropriate their principal’s property to their own use, and escape all liability for the wrong they should do him. There was no substantial difference between this ruling and the principle mentioned in the charge, by which the plaintiff’s right to recover was made to depend upon the fact that the defendants must be found to have intentionally wronged him in the sale made of his property. It, as well as the entire charge, was as favorable to the defendants as they had any reason to require or expect.

The learned justice was also requested to. hold and charge, that the plaintiff had so long acquiesced in this transaction before bringing this suit, that he should be precluded from bringing it, and should be held to-have acquiesced and to have been satisfied with what all the defendants had done: He responded that he held the contrary of that, and added, that if the- jury found that the fraud was perpetrated, and this action, was maintainable at any time, if he had chosen to bring it in two months or six months after the transaction came to his knowledge, he had just the-same right in six years afterward; and it could not be held, that he acquiesced in any such sense as to prevent the remedy which.the law would give him, if his rights had been assailed or injured by any fraudulent sale by these parties. The same proposition was- again repeated in nearly the same; terras, after, the. charge had. been, delivered: He was then. requested to hold that Price’s delay, after the receipt of the account current and the knowledge of the sale, was an acquiescence in the sale, and that therefore, as matter of law, the plaintiff cannot recover anything beyond the value of the property,' deducting the moneys paid out by Scott and Keyes for his benefit. The justice declined to charge these propositions, as well as the one first presented on the same subject, and held in substance, in the course of his charge, that the rule which would conclude a principal as to the correctness of an account rendered, was not applicable to this transaction, unless he knew of it in time to prevent its consummation, and to prevent himself from being divested entirely of the legal title to his property. The defendants excepted to the refusal of the learned justice to charge as requested, and also to the propositions held by him to be the law.

There can be no doubt as to the correctness of the refusals, because the requests required him to hold that there had been such acquiescence, as matter of fact, as would prevent the plaintiff from maintaining the action. No such fact was established by the evidence, and it could not, therefore, be properly regarded as proved in the case. The learned justice was also right in holding that the law, relating to the effect of an account stated, had no application in this case. For, although an account had been rendered to the plaintiff, it contained so little of this transaction as to give no adequate idea of what had been done; while the letters of the defendants, mentioning it, simply showed that a sale had been made for $135,000, and that Scott had received and paid over to Keyes $10,000 of the price, the residue being applied to the extinguishment of incumbrances. Nothing was stated of the receipt and disposition of the other $5,000. And the important fact that the defendants had made the sale simply to obtain their commissions, and had divided the amount received between them, was not disclosed, but concealed under the assurance that the property had been disposed of for the plaintiff’s benefit. There was, evidently, nothing in the case from which the plaintiff could be said to have approved, at any time, of that disposition of his property.

The evidence of Dewey showed that the $5,000, paid beyond the amount mentioned in the contract of sale, did. not go into the hands of either of the defendants. It was not paid by either of them upon his debts, but by the purchasers, with the defendants’ assent, to relieve the property sold ■ from attachments served upon it after the delivery of the contract of sale, and that the purchasers seem to have insisted on, as one of the terms on which they were willing to till the contract and take the property. The court held that if the plaintiff acquiesced in that, the amount paid should be deducted from what the defendants might otherwise be liable for. That, certainly, was making a very liberal application of the rule defining the effect of acquiescence; since there was no evidence before the jury, showing that even that disposition of the $5,000 had been brought to the plaintiff’s knowledge, and there was none from which he could infer that the debts were paid out of any part of the $10,000; because Scott’s letter, as related without objection by the judge in his charge, stated that they were paid by Keyes “ apart from any money due by Payne & Co.,” who were the vendees of the property. To constitute a ratification by means of acquiescence, or the omission to make the unauthorized act of the agent the subject of objection, the principal must have information giving him notice of what may have been done to his preju. dice. This rule is well settled, and, without such information, there can be no ratification in a case like the present one, where the plaintiff received nothing from the transaction, and no part of the proceeds have been applied, with his assent, to his benefit.

The plaintiff, in this case, never appears to have approved of the act of the defendants in selling this property, or in the act of the purchasers in appropriating any part of its proceeds to the payment of his debts, and has, in fact, derived no benefit from either act in any other way. His claim for redress is predicated on an unauthorized, unapproved wrong, for which, if it really existed, his right to satisfaction has in no way been relinquished.

The refusal of the court to give the jury absolute direction, that the defendants should be credited the amount paid out of the proceeds of the sale, upon the verdict they might otherwise render in the ease, was strictly conformable to the rule settled upon that subject in this State. According to that rule, a person, who tortiously disposes of another’s property, - cannot discharge himself from the consequences of his act by applying the proceeds in payment of its owner’s debts without his authority or assent.

The debts, which this portion of the charge referred to, were simply those that were satisfied by the $5,000 which the purchasers at first agreed to pay toward the defendants’ commissions and afterward used to compromise and remove the attachments sued out and levied under the law of the State, which took effect on the first of July. These attachments were not upon the property when the contract for its sale was entered into, and for that reason, probably, subordinate to the rights of the purchasers under it. And they were therefore not within the provision made in the contract of sale, allowing them to discharge the incumbrances out of the purchase money. The court did not hold that the plaintiff could recover the value of the property without' first excluding the incumbrances upon it at the time of the sale. The proposition held, was that the debts, paid by the defendants out of its proceeds, could not mitigate the amount of the recovery unless the plaintiff had acquiesced in the act of payment. And it must have been understood by the jury, for the amount of their verdict was $129,699.16, which was $10,000 less than the purchase price of the property. And this verdict was rendered nearly eleven years after the sale was made of the property, and probably included a proper allowance of interest. The debts mentioned in the charge, the payment of which was not allowed to reduce the verdict unless the plaintiff acquiesced in such payment, must necessarily therefore have been understood not to include the incumbrances by mortgages and judgments on the property. This view is further fortified by the evidence given upon the trial concerning the value of the property; for that ranged between the sums of $135,000 and $495,000. And it appeared that the purchasers sold portions of it, soon after the sale, at an important advance beyond the price they paid for it.

The sale was made on the 30th of June, 1853, and the court allowed the jury to regulate the amount of their verdict according to the value.of the property during the residue of that year. This property was held by the plaintiff for sale, and there is very little probability that it would have all been disposed of before the expiration of that time if it had remained in the plaintiff’s hands. It might have been sold under the incumbrances upon it, or under proceedings taken under the attachment law, which went into effect on the first day of July, in that year; but that was by no means certain, if the defendant, Keyes, before the sale, truly represented, in what he said, the friendly nature of the plaintiff’s creditors toward him. If it had been sold under either, the evidence tended very satisfactorily to show that he would have had six months’ time to redeem after the sale, and that would have given him the chances of the market for all the year 1853, after the date of the contract of sale. The market was an advancing one for real estate. That clearly appears from the evidence, and the plaintiff would have been in the condition, in some way, to have enjoyed its advantages if his property had not been improperly disposed of by his agents. The law, in providing relief for a party, tortiously deprived of property, held for sale, by the act of another, designs to compensate him for the loss this wrong may appear to have occasioned him; and that can only be adequately done by allowing him to recover the amount of his actual loss, including the profits he has been deprived of by means of the wrong. Limiting the recovery to the precise period of the commission of the wrong, would often result in depriving the owner of the redress he should justly receive for the loss of his property. The rule would often prove a source of profit to the wrong-doer. It would usually be so where property should be misappropriated during the time of a rising market. To avoid that result, the owner should be allowed the fair value of the property wrongfully taken from him, to be ascertained according to its market price, within a reasonable period after the commission of the wrong; and where it consists of the number of parcels sold by the defendants in this case, amounting to so large a sum in value, a period of six months, the time allowed by the court in this case, does not appear unreasonable or improper. The' state of the market during that time would justify the jury in awarding him no more than what a proper and just rule would seem to require he should be allowed to have; and there is nothing in the recent decisions of the courts, depriving him of that measure of compensation, as long as the jury were satisfied that the defendants had been guilty of the misconduct upon which alone any recovery in .the .plaintiff’s favor was allowed by the court to be had. In Scott v. Rogers, four months for the disposition of the property by the owner, was not considered unreasonable as the time within which its value could be awarded by the recovery; and in Matthews v. Coe, the value, at the time when it was designed by the owner the property should be sold, was considered to he reasonable in determining the amount of the recovery. If the defendants had not deprived the plaintiff of the opportunity, by means of their sale of his property, there is very good reason for believing that he would have enjoyed all the benefits of the advancing market for real estate during the whole of the time allowed by the court within which its value was to be ascertained by the jury, in case their verdict was found in the plaintiff’s favor. The range given was reasonable, just and proper under the circum stances of the case and the state of the market.

No other exceptions have been urged in support of the defendants’ motion for a new trial, and as those considered have been found to be without foundation, the motion must be denied, and. the plaintiff must have judgment upon the verdict, with costs. The motion for a new trial at the Special Term, should not have been heard and decided by the court, as long as the case was sent in the first instance, for a similar application, to the General Term, and was required by law to be there heard and decided. The order of the Special Term should, therefore, be modified so as to direct a dismissal of that application, and, as so modified, affirmed, with ten dollars costs. '

It was suggested upon the argument, that the defendant, Scott, had departed this life since the verdict in the case was rendered; for that reason, the order and judgment should be entered of some date subsequent to the verdict, and preceding the death of this defendant.

Davis, P. J., concurred; Donohue, J., dissented.

Order of Special Term modified, and, as modified, affirmed.

Judgment for plaintiff, with costs.

       Code, § 265 ; Macy v. Wheeler, 30 N. Y., 231.

       3 Keyes, 271.

       Smith v. Ætna Ins. Co., 49 N. Y., 211, 216.

       Beattie v. Niagara Savings Bank, 41 How., 137.

       Devoe v. Hackley, 3 Robertson, 679; Morange v. Morris, 20 How., 257, 263.

       Code, § 265.

       Hoxie v. Green, 37 How., 97; Cronk v. Canfield, 31 Barb., 171; Hotchkiss v. Hodge, 38 id., 117; Dickerson v. Wason, 48 id., 412; Sheaf v. Utica & Black R. R. Co., 2 N. Y. Supreme Court Reports, 388.

       Cox v. James, 45 N. Y., 557.

       Justice v. Lang, 52 N. Y., 323.

       Story on Agency, §§ 239, 242; Moss v. Rossie Mining Co., 5 Hill, 137; Brass v. Worth, 40 Barb., 648; Murray v. Bininger, 3 Keyes, 107; Keeler v. Salisbury, 33 N. Y., 648.

       McKnight v. Dunlop, 1 Seld., 537, 544.

      Hanmer v. Wilsey, 17 Wend., 91; Otis v. Jones, 21 Wend., 394; Hopple v. Higbee, 3 Zabriskie, 342; 1 Seld., 544, supra.

       Griffin v. Colvin, 16 N. Y., 489.

       Suydam v. Jenkins, 3 Sand. S. C. Rep., 614; Scott v. Rogers, 31 N. Y., 676; Matthews v. Coe, 49 N. Y., 57; Baker v. Drake, 53 N. Y., 211, 219.


source: Caselaw Access Project

author: Daniels, J.:

license: Public Domain

text:
    JAMES A. McCOMBIE and others, Respondents, v. JEREMIAH V. SPADER, Impleaded with WALTER S. HICKS, Appellant.

      Warehouse receipt—fraudulent sede—rights of bona fide purchasers.

    Where a warehouseman gives a receipt for property fraudulently purchased, some of which, at the time of giving the receipt, has not been, but subsequently is, received by him, a person, making advances to the fraudulent purchaser on the strength of th; receipt, without notice of any fact calculated to awaken suspicion, and to whom it is transferred, is entitled to hold so much of the property as was in the warehouse at the time the advances were made.
    The plaintiffs claimed that the defendant Spader gave a receipt for some flour before it had all been received by him ; the defendant testified that he did not give the receipt until the flour was received ; the plaintiffs were allowed to prove that the defendant had, upon another occasion, given a receipt for flour before it was received; held, that the evidence was improper, as the transaction had no possible connection with the one in controversy ; it did not tend to prove that the receipt given in this case was issued before the flour was in the warehouse.
    Appeal from a judgment in favor of the plaintiffs, entered upon the verdict of a jury, and from an order of the Special Term denying a motion for a new trial. The facts are stated in the opinion.

      Andrew Boardman, for the appellant.

      A. J. Ya/nderpoel, for the respondents.
   Daniels, J.:

This action was brought to recover possession of 261 barrels of flour, sold and delivered by the plaintiffs, to Walter S. Hicks on the 8th of May, 1860, and detained from them by the defendant. Evidence was given tending to show that the sale was procured by the fraud of the purchaser; but before any action was taken by the plaintiffs for its disaffirmance, the flour was delivered to the defendant, as a warehouseman, who issued a receipt, stating that he had received it in store, and held it for account and risk, and subject to the order of Thomas & Benham.

The flour was delivered to him on the 9th day of May, 1860, and the receipt was issued that day. During the same day, Hicks transferred the receipt to Thomas & Benham, and. received from them, by their check paid that day, an advance of four dollars per barrel upon 214 barrels of the flour, and six dollars per barrel on the other fifty barrels.

The evidence tended to show that the flour was delivered at the defendant’s warehouse before the hour of three o’clock in the afternoon, and that the advance was made upon the receipt by Thomas & Benham sometime before noon; but the defendant testified that he did not give the receipt until the flour was received. If he was right in that statement, then the transaction, so far as himself and the persons making the advance upon the receipt were con-, cerned, seemed to be legal and regular. Whether he was or not, under the evidence, was a question of fact for the jury to decide. Upon this subject the plaintiffs were allowed to show, by one of the witnesses, that the defendant, upon another occasion, had given a receipt for other flour before it was received at his warehouse. Before this evidence was given, the defendant objected to its reception, and excepted to the ruling allowing it to be given. As that transaction had no possible connection with the one in controversy, it could not properly tend to prove the fact that the receipt, on which the advance was made, was issued before the flour was in the warehouse. And yet it is manifest that the jury would be very likely to use it for that purpose; they would be disposed to infer from it that the defendant was in the habit of carelessly issuing receipts in that manner, and that he, therefore, probably did so in the instance in suit. This would directly prejudice the defendant in his defense, when really it could not strictly be used for any such purpose.

The evidence was clearly improper, and a general objection was sufficient to present the point based upon the. ruling admitting it. And, as the evidence had some bearing upon one of the points in issue, the ruling admitting it cannot be disregarded.

In any view taken of the evidence, some of the flour must have been received at the defendant’s warehouse at the time when the money was advanced to Hicks, upon the' transfer by him of the receipt to Thomas & Benham. If the defendant’s evidence was true, it was all there; and yet the court held that, if the receipt was issued by the defendant before all the flour was received at his warehouse, the defendant could not hold it for the persons making the advance upon it, even if they made it upon the credit of the receipt, without notice of the purchaser’s fraud, or notice or knowledge of any fact or circumstance which ought to have put them on their guard, as men of ordinary prudence. Under this ruling, even if every barrel of the flour was in the warehouse before the advance was made upon the receipt, and the persons making it acted in the most perfect good faith, they could not hold the flour as security for the advance.

The court also held that the receipt was void, if issued prior to the whole of the flour being actually received in store or on the defendant’s premises, and that he could not justify the detention of the property under it, even though Thomas & Benham made an advance on its security. If the receipt was issued as this proposition contemplated it might have been, there can be no doubt but that the defendant. was guilty of a crime in issuing it under the statute forbidding that to be done, where the property mentioned in it shall not be, at the time, in store.

The object of this statute was to prevent the issuing of such instruments before the property was received, in order to protect persons dealing with them in good faith, and confiding in the truth of their statement, from loss; and it should be so applied as to correct that abuse, as far as that can practically be done. It was no part of its purpose to increase the jeopardy of innocent dealers in personal property. And that would very clearly be done by holding the receipt ineffectual because the property was not all in store at the time when it was issued.

Receipts of this description are treated, in commercial transactions, as the representatives of the property mentioned in them, and are dealt with, under the sanction of the law, as muniments of the title. They are substitutes for the property, affording important facilities for its transfer, either absolutely or by way of security. And the statute was enacted for the purpose of increasing, instead of diminishing the security of persons dealing in property by means of them.

It should be so construed as to promote that end.

But that would not be done by holding them void because the property was not all received when they were issued.

As between the maker and the person receiving such a receipt, knowing its unlawful character, it would undoubtedly be entirely • inoperative as long as that state of things continued.

But to extend that consequence so far as to defeat the rights of. an innocent purchaser, after the property wholly or partially had been put in store under it, would be characterized by a degree of harshness which the statute has nowhere required to be applied.

A person who, in good faith, became the purchaser of such a receipt, either absolutely or by way of security for a valuable consideration advanced upon the faith of it, was always protected before the enactment of the statute, when it truly represented the property mentioned in it, against a claim of title like that relied upon by the present plaintiffs.

That protection resulted from the fact that the property was actually, at the time of the transfer, in store, as the receipts stated it to be.

And it reasonably resulted from the circumstances, that, by the storage of the property and the receipt issued for it, the person having title to the latter, could, by means of it, dispose of the former precisely the same as if the property itself were manually passéd over to the person buying or making advances upon it.

The ability was thereby secured of selling or hypothecating the property, simply by transferring the receipt.

And all that was required for that purpose, was that the person proposing to dispose of the receipt, had, at the time, the property in store according to its terms, with the legal authority to transfer the title to it.

It was simply a substituted mode of selling property which the vendor had the right to dispose of.

And the power to do it existed, if the property was in store, with the right to transfer the title at the time of the sale; under those circumstances, the seller could dispose of it either by delivering the property over under the terms of his sale, or by construction, by doing it by transferring the receipt.

In either case it would be the fact that he had the property in store at the time he proposed to dispose of it; that would enable him to render the sale complete either by delivery in fact or by a transfer of the receipt as representing it.

And that would be exactly the same whether it was issued before the property was all in store or afterward, provided that affected by the sale was there at the time of making it.

Ho reason existed requiring any change in this mode of selling property when the statute was passed, and it contains nothing appearing to have been intended to produce any change in it.

The object _ which the legislature seems to have designed to accomplish, by its enactment, was to render it more certain than it previously had been, that the receipt should represent the property offered for sale, or by way of security for advances, at the time when the party proposed to make such a disposition of it.

And no good reason appears for making any distinction in this respect between transactions occurring before and since the statute.

The receipt still continues in the same manner to represent the property, if the party has it in store when he proposes to dispose of it, and the effect of the transfer of it is the same as a constructive delivery of such property as may at the time be represented by it.

And the appearances inducing the confidence of the party proposing to act upon it, and the reasons requiring him to be protected, are in no sense changed by anything which the statute contains.

At the time when the advances were made to Hicks upon this receipt, it not only professed to represent property in store, but to a certain extent, at least, that representation was true, for some of the flour was then at the defendant’s warehouse; and so far, but no farther than that, it entitled the persons to protection who made the advances, provided they did so without notice of any fact calculated to awaken suspicion of the existence of the plaintiffs’ rights.

A fraudulent purchaser of another’s property, may transfer a good title to it to a bona fide purchaser, for, value, where the purchase is made before the seller' has taken any step to disaffirm the salé on account of the fraud. And the sale may be rendered as effectual by properly passing to the purchaser the legal evidence of title and possession, as by actually handing over the articles themselves which may be the subject of it.

This principle includes all transactions affecting the title to personal property, whether it be absolutely transferred or only by way of security for advances made upon it. The effect is the same, whether the transfer is completed by passing the articles sold from hand to hand, or by a delivery of the document representing it, which the law has sanctioned as constructively doing the same thing. Either, in a case like the present one, is sufficient to bring the transaction within the salutary rule so frequently repeated and applied, that where a loss must be sustained by one of two innocent persons on account of the fraud or misconduct of another, it must be borne by the one who -supplied him with the means and ability of producing it.

The judgment and order denying the motion for a new trial should be reversed and a new trial ordered, with costs to abide the event.

Davis, P. J., and La whence, J., concurred.

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

       Merritt v. Seaman, 2 Seld., 168.

       Worrall v. Parmelee, 1 Com., 519, 521.

       3 N. Y. Statutes at Large, 667.

       Wilkes v. Ferris, 5 John., 335; Gibson v. Stevens, 8 How. [U. S.], 384, 399; 3d R. S., 5th ed., p. 76, § 3; Cartwright v. Wilmerding, 24 N. Y., 521; City Bank v. Rome, etc., R. R. Co., 44 id., 136.

       Crocker v. Crocker, 31 N. Y., 507; Rawles v. Deshler, 3 Keyes, 572.


author: Davis, P. J.:

text:
    BARNABAS HAMMETT et al., Respondents, v. JOHN T. BARNARD et al., Appellants.

      Promissory note—consideration—failv/re of.

    Where a contract for the sale and purchase of merchandise is entered into, and, thereafter, a hill of lading is delivered to the purchaser, differing in its provisions from the terms of sale agreed upon, and the purchaser, on receiving it, gives his note for the amount appearing due thereby, the question whether the note was given with knowledge of the alteration of the terms of the contract appearing in the bill of lading, is properly submitted to the jury, and their finding is conclusive.

      Appeal from a judgment in favor of plaintiffs and from an order denying a motion for a new trial.
    The facts are stated in the opinion.

      Mr. Benedict, for the appellants.

      Mr. B. H. Huntley, for the respondents.
   Davis, P. J.:

This action is brought on a promissory note made by the defendant, John T. Barnard, to the order of all the defendants in their firm name, and by them indorsed to the plaintiff. The making and indorsement of the note are admitted by the answer, and the defense set up is a failure of consideration. The answer alleges that before the making of the note, the defendants had bought, and the plaintiffs, by their agent, had sold and agreed to deliver to them a cargo of coal; that defendants were applied to by the agent of plaintiffs to give them said note for said coal, and, although the coal was not then delivered, the defendants, on such request and for the purpose of accommodating plaintiffs, gave the note in question; that plaintiffs did not deliver the cargo of coal or any part thereof, wherefore the consideration of the note wholly failed.

It will be observed that the only issue between the parties was whether the coal had ever been delivered. The contract of purchase and rate was admitted by the answer, and no question was made by the pleadings as to its validity, either by denial or by direct averment. The issue to be tried was, whether there had been a delwery according to the terms of the contract.

It appeared substantially, on the trial, that a broker applied to the defendants for an order for a cargo of coal. The defendants, after some negotiation, gave him an order for a cargo of the coal dealt in, and to be shipped by plaintiffs at five dollars and seventy-five cents per ton, to be delivered in their carts as convenient as practicable to their coal-yard. The broker took the order to plaintiffs, who refused to sell the coal otherwise than to be delivered on board the boat which would transport the same from Hoboken across the river to Hew York. The freight being fifty cents per ton, plaintiffs proposed to the broker to accept the order at five dollars and twenty-five cents per ton on board, and the broker consented to this change; the order was altered accordingly. The coal was subsequently shipped, and a bill of lading was made out, which recited that the coal was shipped by plaintiffs in good order on board the barge called the McGurkey, to be delivered in like good order to the defendants at Gouverneur street, East river, they paying freight for the same at the rate of fifty-five cents per ton.

The barge arrived with the coal and was made fast to the wharf at Gouverneur street, which arrival seems to have been made known to the defendants.

The bill of lading was sent to the defendants, and on the twelfth of October the plaintiffs sent to the broker a bill for the coal at five dollars and twenty-five cents on board, from which the broker made out a bill in his own name, stating in substance that the defendants bought of him the coal (sold for account of plaintiffs) per barge McGurkey, “ 202 tons, Thomas Stoor, $5.25 on board, $1,060.50, advance freight $12.12. Or. by cash $12.12, 3 months’ interest $18.56, making a debit of. $1,079,06.”

The defendants gave the note for the balance of debit as shown by this bill.

On the part of defendants, evidence was given tending to show that the note was given without noticing the words “ on board” in the bills, or the alteration as to price, and that the broker requested the note to be given because one of plaintiffs was about leaving for Philadelphia, and wished to take the note with him, and that defendants gave same to accommodate plaintiffs, protesting -that the coal had not yet been delivered.

The broker testified that the note was given in settlement of the bill delivered by him, and that he delivered the note to plaintiffs.

The barge was, by some accident, after the note had been given, broken away from the wharf and carried up the river and sunken, with her cargo, which was lost. The court submitted the question to the jury, and charged, in substance, that if the jury found that the defendants had notice of the change in the contract, by the reason of the bill having been rendered by the broker for and on account of plaintiffs, and assented to the change, and gave the note accordingly, the plaintiffs were entitled to recover; but if they believed that at the time the defendants made the settlement, the contract was that the coal should be delivered in their carts, and did not waive that condition of the contract by their action, then the defendants would be entitled to their verdict.

The jury found for the plaintiffs. Various questions were raised in the form of requests to charge, touching the validity of the contract under the statute of frauds, and the sufficiency of acceptance under that statute, and exceptions were taken to the rulings of the judge.

We do not think there was any error in the rulings; but, under the pleadings, the contract of sale and purchase being admitted, those questions were not within any issue presented. The defendants, having admitted by their answer the contract of sale and purchase, took the affirmative on the issue whether there was a delivery of the coal pursuant to the contract, and plaintiffs, under the admission of the answer, were entitled to a verdict on the note, unless the defendants should establish the alleged failure of consideration by reason of non-delivery of the coal.

The question, therefore, whether the defendants, by settling and giving their note for the bill, as presented by the broker, for coal at five dollars and twenty-five cents, delivered “ on board,” assented to the alteration which the broker had made with plaintiffs, or were still at liberty to insist that, by the terms of the contract, the coal was to be delivered in their carts ” at five dollars and seventy-five cents, was one which, under all the circumstances, belonged to the jury. We do not think we should be justified in interfering with their verdict.

The judgment should, therefore, be affirmed.

Daniels and Westbrook, JJ., concurred.

Judgment affirmed.


text:
    JOHN E. RISLEY, Respondent, v. THE INDIANAPOLIS, BLOOMINGTON and WESTERN RAILWAY COMPANY, Appellant.

      Ultra vires— acts of officer of corporation, whom.

    It cannot be inferred, from the simple fact that a person is the president of a corporation, that he has authority to contract on its behalf.
    Before one act can be accepted as the ratification or confirmation of another, the party acting must have some knowledge or information, at least, of its existence.
    A president of a corporation, taking an assignment of a contract, theretofore entered into between the corporation and a contractor for constructing its road, etc., acts as trustee of the corporation and its stockholders, and not as the contractor’s assignee.
    Appeal from a judgment of the Supreme Court, entered in favor of the plaintiff, on the report of a referee.
    The action was brought by the plaintiff, to recover a fee of $50,000, for alleged services in obtaining for, and introducing to, the Danville, Urbana, Bloomington and Pekin Railroad ' Company, contractors who would undertake to build its road, and for the conversion , of certain municipal bonds, alleged to have been agreed to be delivered by said company in payment for said services.
    The defendant is a corporation, formed in 1869, under the general laws of the States of Indiana and Illinois, by the consolidation of the Indianapolis, Crawfordsville and Danville Railroad Company, and the said Danville, Urbana, Bloomington and Pekin Railroad Company. By the' act of consolidation, the corporation, defendant, assumed all the liabilities of the constituent roads.
    Samuel C. Wilson was president of the Indiana, and a director of the Illinois corporation, and Clark, R. Griggs, president of the latter, and subsequently of the defendant. Wilson appears to have conducted the negotiation between the plaintiff and Griggs, the president of the Illinois corporation, and, by authority of Griggs, offered to the plaintiff the $50,000, for the recovery of which this action was brought.

      Edmund Wetmore, for the appellant.
    An agent can only bind his principal by his acts, when he is authorized to act. (Mechanics’ Bank v. N. Y. & N. H. R. R. Co., 13 N. Y., 599, 632.) The power given to a board to manage the affairs of a corporation, is exclusive in its character. (McCullough v. Moss, 5 Denio, 575.) The president of a corporation is not, vvrtute officio, empowered to contract for the corporation. (Dabney v. Stevens, 10 Abbt. Pr. [N. S.], 39; Adriance v. Roome, 52 Barb., 399; Marine Bank v. Clements, 3 Bos., 600; Soper v. Buffalo & Roch. R. R. Co., 19 Barb., 310 ; Nat. Bank v. Norton, 1 Hill, 572; Jackson v. Campbell, 5 Wend., 572; Hoyt v. Thompson, 5 N. Y., 320.) The contract of the president can only bind the corporation when authorized or approved by it. (Olcott v. Tioga R. R., 27 N. Y., 546; Mech. Bank v. N. Y. & N. H. R. R. Co., 13 N. Y., 632; N. Y. & N. H. R. R. Co. v. Schuyler, 34 N. Y., 30.)

      James Clark, for the respondent.
    That the contract in this case was valid and binding on the corporation. (Supervisors v. Schenck, 5 Wall., 784; Knox Co. v. Aspinwall, 21 How. [U. S.], 539; Bissell v. Jeffersonville, 24 How., 288 ; Gelpcke v. Dubuque, 1 Wall., 203.) If the act is incident to the duties with which the officer is charged, the company is bound. (Pratt v. Hudson R. R. R., 21 N. Y., 305.) Those who created the trustee and clothed him with power, should suffer. (Far. & Mech. Bank v. Drov. Bank, 16 N. Y., 133; also 4 Duer, 219; Wetland Canal Co. v. Hathaway, 8 Wend., 480.)
   Daniels, J.:

The application for the removal of the cause into the Circuit Court of the United States, was properly denied, because it was not shown by the petition, that the parties were citizens of different States at the time when the action was commenced, and the defendant, being a corporation, was not entitled to such removal upon any other ground.

The contract, on which the decision of the referee allowed the plaintiff to recover the judgment appealed from, was made with the president of the Danville, Urbana, Bloomington and Pekin Railroad Company, a railroad corporation at that time existing under the laws of the State of Illinois. This contract, as it was found to be proven by the evidence, was made on or about the 15th day of July, 1861.

It stipulated for the payment, by the company to the plaintiff, of the sum of $50,000, for procuring contractors, who entered into a contract to construct and equip its railroad. At the same time, an order was drawn upon the president of the company by the contractors, in the plaintiff’s favor, for county, city and township bonds, amounting to the sum of $36,666.66, bearing ten per cent interest, and accepted by the president, which the referee found was delivered to the plaintiff as security for the payment of the amount claimed to be due him under the agreement.

The company made default in the payment of the bonds, upon the order, and the judgment was directed for that default as well as the non-performance of the contract. ■

But the whole amount of the recovery does not exceed the sum unpaid upon the order. If the judgment can be sustained on either demand, it is right and must be affirmed. ■

The defendant, which, by the consolidation of the railroad company named and another having its terminus at the same place, succeeded to all the rights and assumed all the liabilities of those two companies, claims, in support of the present appeal, that it can be sustained upon neither ground, for the reasons which will now be considered.

The president, with whom the contract for the payment of the plaintiff was made, had no special or direct authority from his company to enter into any agreement of that kind. And no evidence was given, from which it could be inferred by the plaintiff that the company, whose officer he was, had either held him out, or permitted him to represent himself, as having authority of that kind.

The circumstance that he was president of the company, was not of itself evidence of the existence of such authority, for it does not ordinarily appertain to the duties of persons acting in that capacity.

He was at most the agent of the company, created and existing under a special legislative act defining the rights and privileges of the body, and the manner in which they should be enjoyed. This, the plaintiff is to be regarded as knowing. For all persons, dealing with the officers or agents of corporations, are bound to know that they act either under its charter or by-laws, or the usages which may be shown to exist, defining the extent of their authority.

They must, in doubtful cases, acquaint themselves with the extent of that authority, or otherwise submit to the consequences resulting from their omission to do that.

The charter of the company gave the immediate government and direction of its affairs to a board of thirteen directors, having power to elect one of their number president, a majority of whom constituted a quorum for the transaction of business.

But it conferred no authority on the person who should be elected president, to bind the company by his contracts.

His power, in that respect, appears to have been defined exclusively by the by-laws enacted by the company. And it was restricted to the management of all negotiations with other corporations, companies or individuals, touching their mutual interests and the claims of either party on the other, and to entering into or concluding all such agreements or contracts, with any of such parties as should be approved by the board of the executive committee. This entirely withheld the power to make contracts binding on the company, unless the approval of the executive committee was first obtained for that purpose.

And it deprived him of the power of entering into the agreement which the referee, upon sufficient evidence, has found was made by him with the plaintiff for the payment of the $50,000. The case of the Merchants’ Bank v. State Bank, was relied upon as sustaining the validity of all contracts entered into by officers of corporations.

But it clearly could not have been intended by that decision, to sanction so broad an extension of the law affecting transactions of this description.

Very broad propositions, it must be confessed, were stated in the opinion, but perhaps none too much so for the facts and evidence in the case which the court then decided.

The one chiefly relied upon to sustain the contract in this case, states the law to be, that where a party deals with a corporation in good faith, the transaction not being utbra vires, and he is unaware of any defect of authority or other irregularity on the part of those acting for the corporation, and there is nothing to excite suspicion of such defect or irregularity, the corporation is bound by the contract, although such defect or irregularity in fact exists.”

But even this does not extend as far as the purposes of the plaintiff’s case require, in order to sustain his recovery, for the president of the company was not invested with a defective or irregular authority to bind the company by his contracts. He had no authority whatever for that purpose.

And where that is the case, and the officer has not been permitted to act as though he had the- authority, there is nothing in that decision holding that he can bind the company.

But this proposition is inapplicable to the present case, because there was a circumstance brought to the plaintiff’s knowledge, according to his own evidence, which ought to have excited his suspicions that the president had no power to hind the company by the agreement; for he says that Griggs, the president, and Wilson, one of the directors acting with him, had not brought with them proper evidence of their authority to contract for the building of this and the other road, and it was decided that the execution should be adjourned over for them to go home, convene their hoards of directors, and get them to do whatever was necessary to be done about the contract for building the roads. r If they could not, for want of power, enter into contracts for the construction of the road, which was a substantial part of what the corporation was created to do, it is difficult to see how it could, with any propriety, be assumed that the power existed without any action of the board, which would authorize the president to make the contract with the plaintiff upon which he has been allowed to recover.

The fact that the president could not, without specific authority, bind the company by one agreement, should have been accepted as quite conclusive evidence of the same want of authority to render the other obligatory upon it.

One was a fair inference from the other.

And the plaintiff should be strictly held to all its legal consequences, because, as a lawyer, he may be deemed to be familiar with all legal rules applicable to his case.

The plaintiff, however, insists that the making of the contract for the construction of the road, and with the authority afterwards conferred for that purpose by the company, in effect adopted and ratified the agreement which the president made with him for the payment of the $50,000.

But that cannot be so, because there was nothing in the agreement made for building the road, by which even the existence of the one made with him, was assumed.

It, in no way, entered into the agreement for the construction of the road, and was not brought to the notice of the board of directors in any way whatever.

And they cannot, with any propriety, be held to have adopted or ratified, by that act, another of an entirely different nature, which they knew nothing about.

The fact that it was brought to Wilson’s notice, at the time when the agreement with the plaintiff was made, was not notice to the company, or the board of directors, for any such purpose.

The board was the body which acted, and no notice was given to it of the president’s attempt to bind the company for the payment of the money to the plaintiff.

Before one act can be accepted as the ratification or confirmation of another, the party acting must have some knowledge or information, at least, of its existence.

Another circumstance relied upon as a ratification of the act, by which the agreement with the plaintiff was made, is the admission contained in the answer, that the order received by him was accepted by the company. But this admission is not sufficient for that purpose, because it in no way concedes that the order had any connection with the agreement.

It is not admitted that the order was drawn, accepted or received to secure the performance of the agreement, or that it had any relation whatever to it, or that the company knew anything of it.

The admission is that it promised, at the request of the contractors, to deliver the plaintiff the bonds, provided they became entitled to them by the performance of their contract; certainly no ratification of the agreement with the plaintiff, can be inferred from such a promise.

And there is nothing in the evidence extending its effect in that respect.

The order was drawn by the contractors who agreed to build the railroad, and it requested and directed the delivery to the plaintiff of a portion of the bonds which they were, by their contract, to receive by way of compensation for what they were to do in its performance.

It indicated a payment by them upon some obligation they had incurred to the plaintiff, instead of the securing or settlement of a demand existing in favor of the plaintiff against the railroad company.

Neither by the import or terms of the order, could the company have inferred from it, that it was given or accepted to secure any debt the plaintiff claimed to have against the company.

And for that reason, as long as the company, or its board of directors, had no notice that it was to be held by the plaintiff as security for the payment/Of his demand, its acceptance, or the promise admitted in the answer, constituted no ratification or confirmation of that demand.

The circumstances under which the order seems to have originated, exclude the presumption that notice of its purpose or use, could have been given to the board of directors.

Wilson, who aided the plaintiff in procuring the contractors who were to build the road, and received an order himself for $10,000 of the county, city and town bonds, and who evidently had no motive to misrepresent the facts, was sworn and examined as a witness on his behalf.

And in the course of his evidence, he stated that the contractors agreed at first to build the railroad for $5,000 per mile, in county, city and town bonds, in addition to the other compensation it was agreed they should receive.

And after that, without making any reduction in the other amount, the payment in those bonds was increased to $6,500 per mile.

This, he said, was done at the instance of Clark R. Griggs, who was the president of the company.

And the object was to charge the excess upon the company for building its road, and through the contractors to divide that excess between himself, Wilson, a director and president of the other railroad company, the plaintiff, and the contractors.

And he stated that the division was so far made, at that time, as to have orders drawn for $120,000, in round numbers, by the contractors, one being in his own favor for $10,000, and the residue for equal amounts, one in favor of the president of the company, another in favor of Wilson, one of its directors, and the other in favor of the plaintiff.

And these orders were then accepted by Mr. Griggs, and delivered to the persons who were to receive them, he receiving the one intended for himself.

This witness was corroborated in this statement, by the evidence of the defendant’s witness, Alton, who was one of the contractors.

For he says that the price in bonds was first fixed at $5,000 per mile for building the road, and afterward advanced, on the contractors’ learning that the work would probably prove more expensive than at first it was supposed to be, so that they should receive $200 or $300 more per mile in bonds.

Then he said, that Griggs said, they could raise $6,500 per mile. That he understood how much the contractors were to have net, and that they were to pay a certain amount for himself, the plaintiff and others, of the bonds, as a commission or brokerage.

And that it was arranged between Griggs, Wilson and Risley, that a certain portion was to be allowed to them.

He then added that he was very confident, that, in the arrangement he had with Griggs, it was not spoken of, until it was arranged between them how it was to be divided.

To carry it out, he stated that an order was first drawn for the entire $120,000, and accepted by Griggs. But that was afterward divided into the four orders mentioned by Wilson, so that each could have his own share at once, without being at all dependent upon the honor which is supposed to exist in such cases, but, nevertheless, has sometimes proved to be disregarded. The circumstances very decidedly sustain the probabilities of these statements. For, the orders were all made out by the plaintiff, signed by the contractors, accepted by Griggs, and distributed in the manner mentioned at the time when the contract was entered into..

The plaintiff, though afterward on the stand as a witness, made no attempt to deny these statements, but simply left the case upon his former evidence, in which he said that he did not know whether the contractors received any consideration for drawing these orders; and Griggs, while he denies being a party to any such arrangement, still admits that the orders were drawn, accepted and divided as the others stated they were, and that he received one for between $36,000 and $37,000.

■ He also says that he did not inform the board of directors that he had received such an order, neither was the counsel of the company, who was with him in the city attending to the completion of the contract to build the road, informed of it, or of the arrangement made for this division of $120,000 of the bonds.

In view of the great improbability that the contractors would voluntarily have proposed to give away so large a portion of their compensation, if it had ever been designed they should receive it as such, and the reasons which must "have operated upon Hr. Griggs, by way of inducing him to deny his complicity in this piece of inexcusable knavery, the direct evidence of the two witnesses, swearing to the contrary, and the inherent probability of the truth of their statements, no reliance can be placed upon his denial.

The whole weight of the case is against him on this subject, and it must be concluded, that, for a consideration he provided the contractors with, he enabled them to compensate himself and Wilson for a shameless violation of the duties which the confiding stockholders and directors had intrusted them with performing.

After .being implicated in that misconduct, no reason could exist for supposing that he would so far explain the matter to the board of directors as to secure any action of theirs amounting to a ratification of that portion of the transaction in which the plaintiff was allowed even the appearance of profiting.

And, certainly, his own acceptance of the orders, as president of the company, could be attended with no such result.

For, as long as he had no authority to make the agreement to pay the plaintiff the $50,000 for procuring the contractors, he was equally without authority to bind the company bv a ratification of it.

The remaining question in the case is, whether the company was shown to be liable to the plaintiff upon its admitted promise to pay the bonds on the order.

The answer denies that liability. By the contract, the $1,500 per mile, which was added to the first amount which the contractors were to receive in bonds, did not become payable until the ties and iron were laid upon the road. And the bonds, payable by the terms of the order, were to be paid “ out of the $1,500 per mile,” which, pursuant to the contract, “ was to become due and payable to the contractors upon laying the iron on the railroad.”

This order, with its acceptance, was conditional upon the per- . formance of the contractors, extending so far as to lay the ties and iron upon the road.

It was for the payment of the amount mentioned in it, out of the sum to become due and payable to the contractors who drew it, when they laid the iron upon the road.

That, the proof showed, they never did. And the amount, stipulated for that service, accordingly, was never earned by them.

Soon after they took the contract, they failed in its performance, and surrendered and assigned it to Mr. Griggs, the president of the company, and he afterward went on and performed it.

This performance was not made in their interest, or for their account, but entirely independently of them, and for his own benefit, so far as that could be done by hiih as an officer of the company whose interests he was bound to promote and protect.

They were not entitled to any part of the compensation earned by this performance, and the plaintiff as their assignee under the order, stood in no better situation.

For he was only to receive, according to the terms of the order, a portion of what should become due and payable to the contractors, pursuant to their contract, when the iron should be laid upon the track.

And, as nothing ever did become due or payable to them for that, on account of their failure to perform, or to procure the performance by any other person in their behalf, the plaintiff has no valid claim against the company under the terms of the order received by him.

And besides that, as the assignment of the contract was made to the president of the company, and he afterward constructed the railroad under it, while occupying that position, he did it substantially as the company, and not as the contractors’ assignee; what he did, was as a trustee for the company and its stockholders.

They, and not he, were entitled to the profit of what he did while acting as a director of the company and the president of its directors.

And it .can make no difference in the plaintiff’s favor if this officer, in the end, so far sacrificed his duties to his interests as to secure from the company, for what he did, the unlawful stipend of bonds, put into the contract at his instigation and in part for his profit.

For the plaintiff has shown no title to them, and no right to require compensation for the amount of his order from the company.

He may be entitled to a reasonable compensation for his services and advice in aiding the president of the company, as his counsel, in making the contract executed by the contractors and approved by the company, but that cannot sustain the present judgment, for it forms no basis of its recovery.

As the case now stands, there seems to be no theory upon which this judgment either can or ought to be sustained.

It should, therefore, be reversed and a new trial ordered, with costs to abide the event.

Davis, P. J., and Lawbbucb J., concurred.

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

       Holden v. Putnam Fire Ins. Co., 46 N. Y., 1; Plehner v. Phœnix Ins. Co., 6 Lansing, 411; Cooke v. State National Bank of Boston, 52 N. Y., 96.

       Angell & Ames on Corps., 4th ed. (S. S.), 291, 297; North River Bank v. Aymar, 3 Hill, 262 ; Mechanics’ Bank v. New York & New Haven R. R. Co., 3 Kernan, 599, 631, 634; McCullough v. Moss, 5 Denio, 567 ; Adriance v. Roome, 52 Barb., 399; Dabney v. Stevens, 40 Howard, 341, 345, 346.

      10 Wallace, 604.

       10 Wallace, 644.

       Brass v. Worth, 40 Barb., 648; Hays v. Stone, 7 Hill, 128, 131, 132; Keeler v. Salisbury, 33 N. Y., 648; Smith v. Tracy, 36 id., 79.

       Marsh v. Fulton County, 10 Wallace, 676.

       Butts v. Wood, 37 N. Y., 317 ; Coleman v. Second Avenue Railroad Co., 38 id., 201 ; Ogden v. Murray, 39 id., 202.

       Hooker v. Eagle Bank of Rochester, 30 N. Y., 83.


author: Per Curiam.

text:
    ISAAC T. HUNT and others, Appellants, v. MATTHEW T. BRENNAN as Sheriff, etc., Respondent.

      Notice of appearance—withdrawal of—when allowed.

    Brown, Hall & Vanderpoel, being authorized to appear for the defendant in all actions regularly commenced against him and none other, appeared as attorneys for him in this case, believing at the time they did so, that the summons had been personally served upon him, while in fact it had not; the defendant did not know of an appearance until after the service of the complaint; on the application of the defendant, an order was made permitting him to withdraw the notice of appearance ; held, that this was proper.
    Appeal from an order.
    On the 17th of January, 1874, on affidavits presented to Mr. Justice Lawrence, an order was granted at Special Term, requiring the plaintiffs to show cause why a notice of appearance, theretofore served in the action, of Brown, Hall & Vanderpoel, as attorneys for the defendant, should not be countermanded and withdrawn. The affidavits showed that the summons, which was in an action for an escape, had never been served on the sheriff, and that he had not directed or authorized any one to appear for him in the action, and that the notice of appearance was inadvertently served, under the erroneous supposition that the summons had been served personally on the defendant, the summons having been delivered to the attorneys by a subordinate in the sheriff’s office, without informing them that the same had not been served on the sheriff. That the attorneys were authorized to appear for the sheriff, in all actions regularly commenced against him in his official capacity, and none others. It further appeared that the defendant did not know of the appearance, until after the service of the complaint; and that the fact that the summons was not personally served, was not known to the attorneys, until after the complaint was served. An order was made, directing the withdrawal of the notice of appearance, from which the plaintiffs appealed.

      Gonvers dk Lyman, for the appellant.

      Brown, Hall d¿ Yanderpoel, for the respondents,
   Per Curiam.

The decision of this motion in favor of the sheriff, was predicated of the fact that the notice of appearance, served on his behalf, was inadvertent and a clear mistake, no authority having been given therefor by him. The proofs submitted upon the hearing, fully j ustify this conclusion, and the order appealed from, is right. It may be that the process should have been served upon the sheriff; but if that ceremony was not necessary, and a service upon the under-sheriff was sufficient, no injury results to the plaintiff. Whatever rights he secured by that proceeding remain. In the case of Becker v. Lamont the decisions bearing upon the exercise of the power to relieve a party from an appearance, put in on his behalf, are collated and criticised; and it will be found that the courts have exercised the authority vested in them, even in relation to stipulations made in open court.

The order appealed from, seems to have been made on proper and sufficient grounds, and it should therefore be affirmed.

Ordered accordingly.

      13 How. Pr., 23.

       The Hiram, 1 Wheaton Rep., 440; 1 Hoff. Ch. Practice, 28, 29.


author: Davis, J.:

text:
    In the Matter of the Final Accounting of OBADIAH N. CUNNINGHAM, Executor of Daniel Cunningham, Deceased.

      Executor—Accounts.

    The executor presented a claim against the estate, for money paid and advanced for divers family expenses, such as rent and other necessaries, and for expenses in taking the testator to the asylum, and for his clothing, nursing and medical attendance, amounting to $871. The surrogate refused to allow the claim, as all of the disbursements were made during the lifetime of the testator; held, that the claim should have been allowed.
    Appeal from a decree of the surrogate of the city of New York, made on the final settlement of the accounts of the executor.

      F. (t. McDonald, for the executor, appellant.

      Edviard F. Brown, for the respondent.
   Davis, J.:

The questions raised are chiefly of fact, and grow out of conflict- • ing evidence. It was not disputed that the executor received from the wife of the testator, some time before his death, a number of government bonds, which he converted into money. The controversy in respect to the bonds, was whether the executor paid the proceeds to his testator in the lifetime of the latter. The auditor, upon conflicting evidence, has found that he did not, and has charged the executor with $350, the value or proceeds of said bonds, and with interest thereon, amounting in the whole to $497. The learned surrogate has confirmed the finding of the auditor. We do not think the finding so palpably against the weight of evidence, that an appellate court would be justified in reversing it. The executor proved that in the lifetime of the testator, and while the latter was confined in the lunatic asylum on Blackwell’s Island, he paid and advanced for divers family expenses, such as rent and other necessaries, and for expenses in taking the testator to the asylum, and for his clothing, nursing and medical attendance, sums amounting to $371, the account for which he presented as a claim against the estate, upon and as part of his accounting. The auditor rejected this claim on the ground, as stated in his findings of fact, that the executor did not disburse the various sums as charged in schedule D of his account, and amounting to $371, being the whole amount included in schedule D, as executor, on account of the estate of the deceased,” from which finding he finds as a conclusion of law, “ that no part of schedule D should be allowed to the executor, as all of the disbursements, as therein charged, were made during the lifetime of the deceased.”

Of course, this account should not be allowed as disbursements made by the executor. The account did not purport to be of that character. Schedule D recites distinctly, that the claim is for sums of money advanced while the testator was insane, with the consent and at the request of his wife, for his and her support and comfort, such sum being actually necessary for their maintenance. Ho good reason exists to prevent the executor from bringing in and establishing this account, and being allowed the same as an offset against the indebtedness of himself to the estate. The auditor found him to be indebted to the estate, for the proceeds of the bonds above mentioned and interest, to the amount of $497. He also found, substantially, that an indebtedness from his testator existed in his favor, for moneys advanced and paid out in the lifetime of the latter, in the sum of $371. Both of these were debts existing before the testator’s death, and, assuming that to be the case, there was no reason why the one should not have been allowed to apply against the other, as justice and equity seem to require, so that the actual indebtedness, for which the testator should be charged, would be, in respect to the proceeds of the bonds, the difference between the two amounts. Of course, it would come to the same thing, if, after ascertaining the balance due on the accounting, the surrogate had allowed, as a payment to the executor, the sum due him on his account, set forth in schedule D. Neither of these things was done; and, as it is, the executor, who under the decree is bound to pay out and invest the whole balance found against him, according to certain specific directions, is subjected to the loss of his entire claim against the estate. We think it proper that the error should be corrected by a modification of the decree, so as to allow the sum of $371, upon which no claim for interest was made by the executor, to apply upon, and be deducted from the sum which the executor is directed to invest, after paying expenses of the accounting.

The decree should be modified, and affirmed as modified, without costs of this appeal to either party.

Daniels and Lawrence, JJ., concurred.

Ordered accordingly.