text:
    ALFRED A. COHEN, Appellant, v. JOHN W. ELLIS and Others, Respondents.

      Rescission of a contract — the party seeking it must he prepared to return the property received by him under it.

    Where a purchaser of mortgage bonds, owing to the insolvency of the company issuing them, and a foreclosure of the mortgage, given to secure them, by the trustee named in it,has been induced to exchange such bonds for new bonds issued to him at the rate of fifty cents for each dollar of the bonds so exchanged, he is not in a position to insist upon a rescission of the contract originally made for the purchase of the bonds so exchanged. Nor is he entitled, on tendering the bonds accepted in the place of those originally purchased, to recover of the party selling the latter to him the purchase-money paid therefor; notwithstanding the fact that the representations made by such seller, at the time of the purchase of the original bonds, were such as would entitle the purchaser thereof to rescind the original contract made for their purchase had he retained in his hands the original bonds, and although such new bonds are of much greater market-value than the original bonds for which they were exchanged would have been if they had been retained by the purchaser.
    a contract is not permitted to deal with or change the nature of the property received by him, and then insist upon his right to rescind by returning the new article which has in that manner come into his possession.
    Appeal by the plaintiff from an interlocutory judgment, sustaining demurrers interposed to the complaint, rendered at the New York Special Term, and entered in the New York county clerk’s office, July 8, 1887.

      William Q. Ohoate, for the appellant.

      Joseph JI. Choate, B. II. Bristol, Howard Mansfield, Hugh I. Cole and William C. Gullwer, for the respondents.
   Daniels, J.:

This action was before this court on a preceding appeal from a judgment overruling a demurrer to the original complaint. That judgment was considered to be erroneous for the reasons at the time assigned, and it was reversed with liberty to the plaintiff to amend the complaint and bring in another party. (Cohen v. Ellis, 4 N. Y. State Rep. 721.) It was then considered that the representations relied upon and set forth would entitle the plaintiff to rescind the contracts made for tbe purchase of the bonds. But as the defendants acted as agents for the construction company, that company, or its receiver, should be brought into the action in order to entitle the plaintiff to maintain it. Since that decision was made the complaint has been amended, and the North River Construction Company, the party at that time omitted, together with its receiver, have been added as defendants in the action. In this manner the objection which was then found to exist to the right of the plaintiff to maintain the action has been removed, but another and different objection is now presented to the ability of the plaintiff, or of his executrix, he having died since the judgment, to maintain this action.

The bonds, which were purchased by the plaintiff, were issued by the New York, West Shore and Buffalo Railway Company. After their purchase default was made by the company in the payment of its secured debts, and an action was commenced by the trustee named in the mortgage given to secure the bonds, to foreclose.the mortgage and sell the mortgaged property. While this action was pending a scheme was set on foot through which the railway property should be sold for the benefit of the owners of the bonds, and a new company organized to take the property under the sale from the committee appointed to purchase it, and this new company should issue bonds not exceeding in amount $50,000,000, bearing interest at four per cent, and $10,000,000 of capital stock, and such bonds should be secured by a mortgage upon the property and guaranteed by the New York Central and Hudson River Railroad Company, which company should take a lease of the property sold for a long term of years. Under this arrangement or plan the railway property incumbered by the mortgage for the security of the bonds issued by the New York, West Shore and Buffalo Railway Company, was sold and purchased by the committee acting for the bondholders.And under their agreement and authority the West Shore Railroad Company was organized, the property conveyed to it, and the fifty millions of bonds issued by it. The lease agreed upon was also executed to the New York Central and Hudson Rivej.- Railroad Company and- that company guaranteed the bonds of the West Shore Railway Company. These bonds issued and guaranteed in this manner were, under the scheme which had been adopted and acted upon, to be exchanged at the rate of fifty cents on the dollar for tbe bonds of tbe New York West Shore and Buffalo Railway Company. And a time was prescribed within which the exchange should take place and after which it was not to be permitted.

This exchange was to be made by a deposit of the bonds of the old company with Drexel, Morgan & Co., and a sufficient number of bonds were so deposited to entitle the plan or scheme to be carried into execution. A circular was issued by this firm in July, 1885, informing the bondholders of the reorganization plan, and of the necessity for depositing their bonds to receive in exchange this percentage of the new bonds of the West Shore Railroad Company. After this circular was received and the plaintiff had obtained information concerning the terms which had been prescribed, he did deposit his 200 bonds of $1,000 each with Drexel, Morgan & Co., and received from them 100 bonds of $1,000 each, issued under the new organization and guaranteed by the New York Central and Hudson River Railroad Company. These newly-issued bonds are stated to be of the value of $103,000, while the 200 bonds issued by the New York, West Shore and Buffalo Railway Company would be of no greater value, in any event, than the sum of $46,000. And it is proposed, in order to entitle the plaintiff to maintain this action, that the new bonds shall be surrendered up and accepted by the defendants in place of the 200 old bonds received under the original contracts for their purchase, and those contracts shall be rescinded and the plaintiff permitted to recover the amount paid by him for the bonds and the stock delivered to him accompanying the bonds. 6

It will be seen, from this statement, that the bonds which the plaintiff was induced to purchase by the fraudulent representations made the subject of the complaint have been wholly surrendered and passed beyond his control under the arrangement made to complete the foreclosure and form and oi’ganize the new company to take and operate the railway, which was incumbered as security for those bonds. They are no longer in his hands or under his control, but have been retired and extinguished as existing demands. And the point, therefore, arises whether he may still insist upon the rescission of the two contracts made for the purchase of these bonds by returning the newly-issued bonds, and recover from the defendants the purchase-money paid for the old bonds. In alnswer to this position, which has been taken and maintained with great zeal and ability on the part of the plaintiff, the legal rule has been relied upon that, to entitle a party to rescind a contract because of the fact that he was induced to enter into it by means of false and fraudulent representations, he must first return, so far as he may not be prevented from doing so by the act of the defendant, whatever he has received through the performance of the contract. This rule has been repeatedly asserted and often acted upon in litigations of this description by courts of justice; and, with unexceptional unanimity in all well-considered cases, the courts have adhered to the rule that before an agreement which the party may be entitled in this manner to rescind can be rescinded, he or it must offer or tender, by way of return to the other party, all that has been received under or as fruits of the contract. (Cobb v. Hatfield, 46 N. Y., 533; Sharpley v. Louth, L. R., 2 Ch. Div., 663, 685; Grymes v. Sanders, 93 U. S., 55; Graham v. Meyer, 99 N. Y., 611 ; Neblett v. MacFarland, 92 U. S., 101; Gould v. Cayuga Bank, 86 N. Y., 75.)

The party proposing to rescind is not permitted to deal with or change the nature of the property received by him, and then insist upon the right to rescind by returning the article in that manner coming into his possession. This was considered in Sheffield Nickel etc., Co. v. Unwin (L. R., 2 Queen’s Bench Div., 214), where the contract was not allowed to be rescinded, although it might have been done if the property to be returned had not been changed by tlie act of the plaintiff. The samo rule was followed in McCrillis v. Carlton (37 Vt., 139), when the defendant was not allowed to rescind a contract for the purchase of butter, after he had sold the article so purchased. In Scovil v. Wait (54 N. Y., 650) a quite similar decision was made in this State. And so it was in Snow v. Alley (144 Mass., 546). This last case underwent an elaborate examination, and the conclusion already mentioned was reached and sustained by the court. And in Francis v. New York and Brooklyn Elevated Railroad Company (108 N. Y., 93) the plaintiff had received shares of stock from the defendant, which he afterwards surrendered, and new certificates were issued at his request to each one of his three minor children. And it was held by the court that this prevented him from rescinding the transaction. And it was there said that “ the theory of a rescission is that tbe party proceeded against shall be restored to his original position. The plaintiff cannot rescind if he retains in himself, or withholds through another, any fruit of the contract.” (Id., 97.) • It is no answer to the objection made that the bonds now offered to the defendants are more valuable than those held by the plaintiff at the time of the commencement of tins action, for they are not the bonds received by him under his contracts of purchase, and the defendants have entered into no obligation whatever to accept the new bonds in the place and stead of those originally issued.

Allegations were made in the complaint to relieve the case of this disability. They consist of statements that it was at the instigation and request of the defendants .Winslow, Lanier & Company and the construction company and the defendant Green, that the circular of Drexel, Morgan & Company was issued to him containing the information relative to the reorganization, and the surrender and change to be made in the bonds; and that he, believing that the defendants Winslow, Lanier & Company had advised the exchange, was induced to make it. But these allegations are inferential in their nature, not supported by any facts permitting them to be made. The facts, on the contrary, are, that the plaintiff wrote to these defendants, stating that he should deposit the old bonds received from them, unless, by the 20th of August, 1885, he was advised that a greater sum could be realized for them than by the acceptance of the new bonds. To this they did not reply, with the exception of one of the firm, and liis answer was, that any deposit which should be made by the plaintiff of the 200 bonds would be entirely on his own responsibility, and without any authority or consent on the part of this member of the firm. Neither of the others answered the letter written to them by the plaintiff, and neither consented in any manner to the exchange in the bonds for the purpose of affecting the relation in which they stood to the plaintiff in this action. What was done, and all that appears to have been intimated, proceeded upon the fact that the plaintiff was the owner of the 200 bonds, and that it would be for his advantage, as such owner, and not as plaintiff in this action, to make the exchange and receive the new bonds. It appears from the complaint, that these defendants ■ have throughout denied all liability and all accountability to the plaintiff, as well as his right to rescind the original purchases and in that manner entitle himself to the recovery of the money he had paid for the bonds. Their action, so far as he was to be affected, was the same as it was with reference to the other owners of bonds issued by the New York, "West Shore and Buff alo ’.Railway Company. They were all alike supplied with the same information for them to act upon in making the proposed exchange, presenting the advantages expected to arise from that exchange. Nothing whatever is shown to have transpired through what in this manner was done and accomplished, from which it can be assumed that these defendants consented that the new bonds might be taken under the reorganization and those new bonds presented to the defendants or used by the plaintiff for the purpose of bringing about a rescission of the original purchases. In this respect the case presented by the complaint appears to be radically defective, disabling the plaintiff, as the facts have been made to appear, from rescinding the original purchases in the manner in which it is proposed that shall be done; and entitling himself to a recovery of the moneys paid for the original bonds.

The judgment, accordingly, should be affirmed, with costs, but with leave to the executrix, who has now been made a party to the action, to amend the complaint within twenty days on payment of the costs of the demurrer and of this appeal.

Beax>y, J., concurred.

Judgment affirmed, with costs, but with leave to the executrix, who has now been made a party to this action, to amend the complaint within twenty days on payment of the costs of demurrer and of this appeal.


source: Caselaw Access Project

author: Van Brunt, P. J.:

license: Public Domain

text:
    THE MAYOR, ALDERMEN AND COMMONALTY OF THE CITY OF NEW YORK, Appellant, v. MATTHEW H. MOORE, TIMOTHY DONOVAN and THOMAS McMANUS, Respondents.

      Notice to terminate a city contract — may be served by learning it at the contractor’s house.

    In an action, brought upon a bond of the defendant Moore, upon which the defendants Donavan and McManus were sureties, for the faithful performance of a contract for the construction of a sewer in the city of New York, it appeared that the contract contained a provision that if the contractor should abandon the work, or if at any time the commissioner of public works should be of the opinion, and should so certify in writing, that the work, or any part thereof, was unnecessarily delayed, or that the contractor was willfully violating any of the conditions or covenants of his contract, or executing the same in bad faith, the commissioner should have the pow'er “to notify the aforesaid contractor to discontinue all work, or any part thereof, under this contract, and thereupon the said contractor ” should discontinue the work and the said commissioner should have the power to complete the work and charge the cost of the completion against moneys due, or thereafter to become due, to the said contractor.
    Upon the trial evidence was offered by the plaintiff which tended to prove that a written notice of forfeiture of the contract had been left at the house of the defendant Moore with a woman of mature age, who answered the bell when the person having the notice to serve went to his house for that purpose.
    Upon an appeal from a judgment, entered upon an order dismissing the complaint upon the ground that the plaintiff had not proved notice to the contractor to discontinue the work:
    Meld, that the judgment should be reversed.
    That as it had been held, in the case of MeOoy v. Mayor (46 Hun, 269), that the service of a notice by mailing the same in a post-paid envelope raised a presumption of service sufficient to present a question of fact upon which to go to the jury, the evidence in this case showed that all that could have been done, had the letter been deposited in the post-office, had been done, and that, therefore, the evidence of the service of the notice was as sufficient as if the same had been deposited in the post-office.
    Appeal from a judgment, rendered in favor of tbe defendants upon a trial at tbe New York Circuit, dismissing tbe complaint as to all tbe defendants, wbicb was entered in tbe office of tbe clerk of tbe city and county of New York on April 19, 1888.

      D. J. Deany for the appellant.

      L. Laflin Kellogg, for the respondents.
   Van Brunt, P. J.:

This action was brought upon a bond conditioned for the faithful performance of a contract for the construction of a sewer in the city of New York. The defendant Moore, the contractor’, is the principal of the bond and the defendants Donovan and McManus are the sureties.

The contract, for the faithful performance of which the bond was given, contained the following provisions: “ The said party of the second part (meaning the contractor) further agrees that if the work under this agreement shall be abandoned, or if at any time the said commissioner shall be of the opinion, and shall so certify, in writing, that the said work, or any part thereof, is unnecessarily delayed, or that said contractor is willfully violating any of the conditions or covenants of this contract, or executing the same in bad faith, he shall have the power to notify the aforesaid contractor to discontinue all work, or any part thereof, under this contract, and thereupon the said contractor shall discontinue said work, or such part thereof, and the said commissioner shall have the power to complete the contract and charge the expense of the completion against such moneys as may be then due or may at any time thereafter grow due to the said contractor under and by virtue of this agreement, or any part thereof. And in case such expense shall exceed the sum which would have been payable under this contract if the same had been completed by said contractor, he shall pay the amount of such excess to the parties of the first part on notice from the said commissioner of the excess so due. ”

Upon the trial the complaint was dismissed upon the ground that the plaintiff had not proved notice to the contractor to discontinue the work. The evidence which the plaintiff offered on this point tended to prove that a written notice had been left at the house of the defendant Moore with a woman .of mature age, wlio answered the bell, when the person having the notice to serve went to the house of Moore, the contractor, for that purpose.

The service of this notice seems to have been entirely ample under the case of McCoy v. The Mayor (46 Hun, 269). In that case it was beld tbat the service of a notice by mailing the same in a postpaid envelope raised a presumption of service sufficient to raise a question of fact upon which to go to the jury. This presumption was . based upon the principle settled in many well adjudicated cases, resting upon the fact that the postal service is a governmental agency adopted by the goverment and the people as a means of communication, and, therefore, a means of communication known to all; and, as the government is supposed to do its duty, it is presumed that a letter placed in the mail is properly sent and properly left at the place to which it was directed. The case at bar is sought to be distinguished from the one cited by the fact that the plaintiff has proved more than he would have been required to prove had the notice been served by mail. He has not limited his proof by evidence that a letter has been deposited in a mail box and then rested upon the presumption that the government officials have done their duty, but he has shown that the notice had been delivered to a person in the house occupied by the defendant, and that all has been done that could have been done had the letter been deposited in the post-office, and proof given that the government had done its duty instead of relying upon the presumption. Under these circumstances, therefore, the evidence of the service of the notice was clearly sufficient if a deposit in a post-office was sufficient; and it is a somewhat significant fact that, although the defendant was put upon the stand, yet he was not asked by his counsel whether he had received the notice or not. It was urged upon the argument that this is a circumstance to be taken as against the plaintiff. The plaintiff was not bound to ask this question and make the defendant its witness upon this point, giving him credit which he would not otherwise receive.

Objection upon this appeal has been taken to the sufficiency of the notice. There may be some question in that regard; but this question of the sufficiency of the notice does not seem to have been taken upon the trial below, and it is possible that had such an objection been taken, the service of the previous notice would also have' been proved upon the part of the plaintiff. The sole question upon which the case seems to have been determined was that the proof of the service of the notice of the forfeiture of the contract was insufficient, no question being raised as to the form of the notice itself. In this we think the learned court below erred, and for that reason the judgment should be reversed and a new trial ordered, with costs to appellant to abide the event.

Beady and DaNiels, JJ., concurred.

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


text:
    In the Matter of the Judicial Settlement of the Accounts of SAMUEL D. BABCOCK, GEORGE F. De FOREST and DANIEL LORD, Executors of CHRISTIAN E. DETMOLD.

      Duty of executors to pa/y taxes, under am, assessment levied, upon the testator’s real estate and made during Ms life, from principal.

    Christian F. Detmold died in the city of New York on July 2,1887, leaving a will which was shortly thereafter admitted to probate. By this will the testator, after making some bequests, devised, subject to an annuity to his wife, all his estate to two daughters, who were infants, for life, with the remainder to their issue.
    On June 29, 1887, three days prior to the testator’s death, the commissioners of taxes and assessment certified the assessment-rolls of the real and personal estate in the city of New York for the year 1887, and delivered the same before the first Monday of July to the board of aldermen, on which rolls the premises, Nos. 557 and 559 Broadway, New York city, were assessed to the testator, as owner, at a valuation of $250,000; the amount of taxes imposed being the sum of $5,400.
    On an appeal from an order of the Surrogate’s Court of the county of New York, adjudging that such taxes were payable out of the income and not from the principal of the estate:

      Held, that as the assessment-rolls had been completed and delivered prior to the death of the testator, there was a personal liability upon the part of the testator to pay the taxes because he was the owner of the property at the time the assessment-roll was made out.
    That the amount of the taxes was a debt, and that the executors were hound to pay it out of his estate and could not charge it against any of the devisees.
    Appeal from an order of a Surrogate’s Court of the county of New York, entered in the office of the clerk of the surrogate on December 14, 1888, which directed the payment of the taxes for the year 1887 on certain real estate of the testator, Christian E. Detmold, out of the income and not out of the capital of the testator’s estate.

      Charles E. Miller, for the executors, appellants.

      James W. Perry, special guardian for infant remaindermen, the respondents.
   Van Brunt, P. J.:

The testator died in the city of New York on the 2d of July, 1887. His will was shortly thereafter admitted to probate and the executors duly qualified. By the provisions of his will, the decedent, after some bequests, devised, subject to an annuity to his wife, all his estate to his two daughters for life, with remainder to their issue. The remaindermen are infants and are represented by their special guardian appointed by the surrogate. The executors in the account of their proceedings charged the annual taxes for the year 1887 against the capital or corpus of the estate, and hence, in effect, against the parties in remainder. The special guardian objected to this charge on behalf of the remaindermen, claiming that the tax should be borne by the life tenants and paid out of the income. A statement of facts was agreed upon and a hearing before the surrogate had thereon. This statement shows that on the 29th of June, 1887, three days prior to testator’s death, the commissioners of taxes and assessments' certified the assessment-rolls of the real and personal estate of this city for the year 1887, arid delivered the same before the first Monday of July to the board of aldermen. The premises Nos. 557 and 559 Broadway were assessed on such rolls to the testator, as owner, at a valuation of $250,000, of which premises he was, up to the time of his death, the actual owner. The amount of the tax for the year 1887 was imposed at the sum of $5,400. On the hearing before the surrogate the objection of the special guardian, that the charge by the executors of this annual tax to the capital of the estate was improper, was sustained. The surrogate held that the tax must be charged against the income and be borne by the tenants for life. An order was entered in accordance with such decision, and from such order this appeal is taken.

There is no question but that the annual charges and taxes imposed on property must always be borne by the life tenants upon the theory that each estate must bear its own burdens. But upon ' an examination of the facts in this case it appears that this rule is entirely inapplicable for the reaspn that the corpus of an estate must bear tbe burdens of its debts, and at tbe time of tbe testator’s death he had become personally liable for the payment of this tax entirely independent of the question as to whether it was or was not a lien upon the real estate. And it is here that we think the learned surrogate has overlooked the fact that the liability of the testator to pay this tax does not depend upon any special statutory provision in respect to the payment of taxes levied against the estates of decedents, but rests upon the broad principle that the testator’s estate is liable for the payment of his debts. Therefore, if this tax, at the time' of his death, was a liability against him, his estate was bound to pay it, and it could not be charged against the life tenant. In fact, it appears that the testator did not die until half the year 1887 had passed. The tax was for the whole year, and there does not seem to be any justice in charging the life tenant with a tax for the whole when they get only the income for the half, unless we are required to do so on principles, the authority of which should not be interfered with. But it seems to us that the question is not open to discussion. In the case of Rundell v. Lakey (40 N. Y., 513), it was distinctly held that the owner was legally liable to pay a tax which was in precisely the same condition as the one at bar. In the case cited the action was brought to recover the amount of a certain tax assessed against the defendants, and paid by the plaintiff at the request of the defendants, under an agreement that they would refund the amount to him in case they “ were legally liable to pay it.” On September 1, 1860, the defendants sold and conveyed to the plaintiff by deed, with the usual covenants for peaceable and quiet possession, a farm in the town of Manchester, and the plaintiff took possession. The county and State taxes for that year had been assessed to the defendants. The assessment-rolls were completed before August first; the annual meeting of the supervisors was held in November, when the tax in question was extended upon the rolls, and became a lien upon the real estate. On the 14th of February, 1861, the plaintiff paid the tax upon the agreement stated, and it was held that the vendee could maintain an action against the vendors upon the agreement, and also that there was a personal liability of the defendants for the payment of the tax, and that after the completion and delivery of the assessment-roll, there was no power to alter or change it. This case established the personal liability of the defendants for tbe payment of the tax, because they were the owners of the property in question at the time the assessment-roll was made out. But it is claimed that this case is no authority in respect to the question in the ease at bar, because the controversy was over the rights of vendors and vendees, while in the case under consideration as between life tenants and remaindermen, the rights of the respective parties are different.

Our attention is called to the case of Barlow v. St. Nicholas Bank (65 N. Y., 399), where it was held that there was not a breach of the covenant against incumbrances unless the tax had been con-finned so as to be a lien upon the land prior to the execution of the deed ; and that case was distinguished from the case of Rundell v. Lakey, in that the only point involved and decided was as to there being a breach of the covenant against incumbrances, whereas in the case of Bundell the question was whether the previous owner was legally liable to pay the tax. In the case at bar, the assessment-rolls had been completed and delivered prior to the death of the testator. There was, therefore, a personal liability upon the'part of the testator to pay the tax, because he was the owner of the property at the time the assessment-roll was made out; and it being a debt, the executors were bound to pay it out of his estate, and could not charge it against any’ of the devisees, the distinction between the time at which the personal liability to pay the tax accrues and the time at which such tax becomes a lien upon the lands being very apparent.

We think, therefore, that the learned surrogate erred in charging this tax against the life tenant, but that the executors should have paid the tax, it being a debt for which the testator had become personally liable during his lifetime.

The order should be reversed, with ten dollars costs and disbursements, and the case remitted to the surrogate for further action.

Brady and Daniels, JJ., concurred.

Order reversed, with ten dollars costs and disbursements, and the case remitted to the surrogate for further action.


author: DaNiels, J.:

text:
    THE NORTHAMPTON NATIONAL BANK, Respondent, v. W. GILL WYLIE, Appellant, Impleaded, etc.

      Attachment — sureties upon an unclertaMng for.

    The sureties upon an undertaking, given upon procuring an attachment, are not liable for general counsel fees incurred or for witness fees expended in tbe conduct of tbe action in wbicb tbe attachment is issued.

      Qumre, whether such counsel fees are recoverable against sureties where they are incurred in direct proceedings taken for the purpose of vacating or setting aside ■ the judgment.
    Where the attachment is levied upon a fund deposited in a bank, and the plaintiff does not succeed in the action, the owner of the fund thus deposited is entitled to recover such an amount as represents the excess of interest which he could ' have obtained for the money so levied upon, over and above the amount of interest allowed by the bank in which the deposit was, and where it remained during the time of the continuance of the levy.
    Appeal by tbe defendant W. Gill Wylie from a judgment rendered upon tbe decision of tbe court, upon a trial before tbe court without a jury at a Circuit Court in tbe county of New York, and entered in tbe clerk’s office of that county on tbe 18th day of April, 1888.

      George JT. Adams, for tbe appellant.

      Peekham & Tyler, for tbe respondent.
   DaNiels, J.:

• Tbe plaintiff is a national banking association, created under tbe laws of tbe Hnited States, located and carrying on its business in tbe State of Massachusetts. Tbe defendant commenced an action against it in tbe Superior Court of tbe city of New York, and obtained an attachment in that action wbicb was served upon tbe First National Bank in tbe city of New York. This bank was the depositary and correspondent of tbe plaintiff, and by tbe attachment $12,000 of tbe deposits was seized and held by tbe sheriff. Tbe money was not paid over by tbe First National Bank, but it was charged against tbe plaintiffs’ account as so much money subjected to tbe attachment. Tbe plaintiff appeared in that action and answered tbe complaint, wbicb was for tbe loss of bonds deposited •with it for safe-keeping by tbe plaintiff in tbe action in which tbe attachment was issued. Tbe bank appears to have been robbed and these bonds taken by the thieves, and they thereby have become lost to the owner. The bank, by its answer, put in issue the charges upon which its liability was made to depend, and defended the action without moving to vacate the attachment. Such a motion, however, would then probably have proved ineffectual for the reason that it was held by the courts of this State that the property, within this State, of a national bank, created and located in another State, might be seized under an attachment issued against it as a non-resident by virtue of the laws of this State. (Robinson v. National Bank of New Berne, 19 Hun, 477; affirmed, 81 N. Y., 387.) And that continued to be the exposition of the law in this State until after the trial of the action brought against the plaintiff. Since then, however, full effect has been given to the language of the act of congress, in the case of the Pacific National Bank v. Mixter (124 U. S., 721), which has so restrained the State attachment laws as to exclude the right to issue an attachment under them against a national bank, located and doing business in any State.

After the^ suit had been commenced against the plaintiff in this manner, it was removed into the Circuit Court of the United States, at its instance, and upon a trial in that court a verdict and judgment was recovered in favor of the bank, and that was affirmed upon a writ of error taken to the Supreme Court of the United States. And it was after that affirmance that this action was brought by the Northampton Bank against the sureties in the undertaking, given upon the issuing of the attachment, to recover the damages which the bank had sustained by reason of the attachment. The undertaking was in the form prescribed by section 640 of the Code of Civil Procedure, and the costs recovered by the bank by means of the judgment have been paid. The undertaking conformed literally to this section of the Code, and the sureties undertook and obligated themselves, in case the defendant in the attachment recovered judgment, or if the warrant was vacated, that the plaintiff in that action would pay all costs which might be awarded to the defendant therein, and all damages sustained by reason of the attachment, not exceeding the sum specified in the undertaking. This section of the Code very plainly includes two subjects, clearly distinguishable from each other; one is the obligation to pay the costs awarded to the defendant, tbe other to pay the damages which may be sustained by reason of the attachment. TJpon the trial it was proved that the plaintiff, as defendant in that suit, had incurred and paid out considerable sums of money by way of expenses, in obtaining the attendance and evidence of witnesses in its behalf, and for counsel fees for the services of counsel rendered in the course of the litigation. The legal fees, however, of the witnesses, as well as of the deposition taken in the State of Massachusetts, were included in the costs and paid as a part of the sum recovered by the judgment.

Upon this part of the case, accordingly, the inquiry is limited to the right of the bank to recover against the sureties in the undertaking for any part of the moneys incurred and paid for counsel fees and these other expenses in the course of the litigation. The case of Northrup v. Garrett (17 Hun, 497) has been cited and was followed at the circuit as an authority authorizing such a recovery against sureties in the undertaking. But that case was not so far extended as to sanction and support such a recovery. The attachment there had been issued in the court of a justice of the peace, and the obligation arising upon the bond was very much the same as that entered into by the sureties in this undertaking. But all that was there recovered was the costs which had accrued in the action before the justice, and upon the prosecution of a writ of certiorari brought to review it in the County Court. They were held to be a proper charge against the surety in the bond; and, so far, the ease has followed the preceding authority of Ball v. Gardner (21 Wend., 270), where it was held that all the costs included in the judgment might be recovered against the surety in the attachment bond.

But this term costs as it was used in the preceding statute, and has been employed in this section of the Code, has never been attended with that degree of significance as to allow it to include counsel fees incused and expended in the litigation. It includes the numerous items designated in the statute as costs, together with the fees of officers and witnesses, which may be recovered under its settled and well-defined provisions as a part of the judgment in favor of the successful party. Counsel fees are separate and distinguishable items from those entering into the signification of the word costs, as it has been employed in those and other statutes. And as part of the ■costs of tlie action these counsel fees form no charge whatever against the sureties in the undertaking. Neither is the bank entitled to recover them as damages sustained because of the attachment for the reason that the counsel fees were in no degree incurred in any proceedings taken for the purpose of vacating or setting aside the attachment. As the law stood at the time no such proceeding could be successfully prosecuted, and the bank probably understanding that to be its position, acquiesced in the regularity of the attachment, made no effort or motion whatever to vacate or' set it aside. But its resistance was wholly directed to defeat the action itself by establishing the result that the plaintiff in the suit had no legal claim against the bank arising out of the abstraction and loss of the bonds. The services of counsel rendered and bestowed in the litiga^ tion were for this end entirely ; they were to support and maintain the position taken by the answer that the plaintiff, under the law, was exonerated from liability for the loss of the bonds. It is true that this resulted in vacating the attachment, but not from any effort or .attempt to set it aside, but because the action itself failed by establishing the truth of the answer and exonerating the bank from legal ability. Under this state of the case, which is fully sustained by the proof, as well as by the findings of facts, it can in no legal sense be affirmed that any part of these counsel fees, or other expenses, were incurred by yray of damages occasioned by the issuing and service of the attachment, and, so far as they have been included in the judgment recovered by the defendant, it is erroneous and should be reversed and set aside.

It appeared by the evidence that the bank kept on deposit with the First National Bank of New York a much larger amount than was subjected to the attachment, and that upon its deposits with the First National Bank it was entitled to interest at the rate of two and a half per cent when they exceeded the sum of $5,000. They did exceed that amount during the pendency of that action, and interest to tlíat extent was allowed upon the deposits to the Northampton Bank, while the $12,000 were held subject to the attachment. But it appeared by the evidence, as the fact might also be inferred from the statute of the State, that the moneys were capable of being used in discounting first-class paper, securing a return in the way of interest at the rate of six per cent. That was the rate both in Massachusetts and in this State for prime commercial paper during the year 1882. It is to be inferred from this evidence that if the bank had not been restrained from using this $12,000 by the attachment, that it might have secured this rate of interest for the use of its money. It would not have been obliged to have left it on deposit with the First National Bank, but might have withdrawn it and used it in the course of its own business, if it had not been for the restraint of the attachment. That it was prevented in this manner from doing, and there is reason to believe, therefore, that it lost interest at the' rate of three and a half per cent on this sum of $12,000 for the time it was kept in the First National Bank in subjection to the attachment. For that, under these circumstances, it was considered by the court, at the trial, that the bank was entitled to recover as interest in this action upon this sum; and the decision, to that extent, conformed to the obligation with which the. sureties charged themselves under this section of the Code of Civil Procedure, as well as the authorities before that, and the eases since then decided in this court. (Dunning v. Humphrey, 24 Wend., 31; Groat v. Gillespie, 25 Wend., 383.) To that extent the bank did sustain damages by reason of the attachment. It tied up the fund and disabled the bank from using it, as it otherwise might have done, and from earning by its use this legal rate of interest. But, as already observed, as no part of the counsel fees and other expenses were incurred or expended, otherwise than in defense of the action and to support the position taken by the answer in exoneration of the bank from liability, the bank was not entitled to any allowance by reason of such expenditures, or because of ,a larger than the legal rate of expenditures in obtaining its evidence in the State of Massachusetts, or securing the attendance of witnesses from that State upon the trial. The amounts so incurred and paid were neither costs in the action nor damages sustained because of the attachment; and as the costs themselves were fully paid, the extent of the liability of the sureties in the attachment is for this rate of interest down to the time when it was discharged on the 1st of February, 1883.

The judgment should, accordingly, be reversed and a new trial ordered, with costs to the appellant to abide the event, unless within twenty days after notice of this decision the bank shall stipulate to reduce tlie recovery to tbe sum of $425.OT and interest thereon from February 1, 1883. And in case the stipulation shall be given, then the judgment will be modified by reducing the recovery to that sum, and the allowance to five per cent upon the amount, without costs of the appeal to either party.

Yan Brunt, P. J., and Brady, J., concurred.

Judgment accordingly. ,


author: Daniels, J.:

text:
    CHRISTOPHER A. BROWN v. THE A. B. C. FENCE COMPANY.

      Employee of a coiporation — who is, under chapter 376 ¿j/' 1885.
    A person employed to assist tlie general manager of a corporation in keeping its hooks and to clean the office and show-room of the corporation, and to assist in putting together, taking apart and shipping wire wicket-fence and weaving machines, is an employee within the meaning of chapter 376 of the Laws of 1885.

      Krauser v. RucJcel (17 Hun, 467); Bean v. Be Wolf (16 id., 186); Hill v. Spencer (61 N. Y., 374); 'TVaJcefeld v. Fargo (90 id., 313) distinguished; Gurney v. Atlantia, eta., Railroad Company (58 id., 358) followed.
    Under the provisions of that act it is the duty of the receiver- of a corporation, created under the laws of this State, to pay from the moneys that shall first come into his hands the wages of such employee.
    Appeal by Edward Cundell, one of tlie judgment-creditors of tbe above-named defendant, from an order made at a Special Term of the Supreme Courf, and entered in the office of the clerk of the county of New York on the lYth day of November, 1888, denying a motion of said Cundell that the receiver of said defendant be directed to pay said Cundell’s claim in full under the provisions of chapter 376 of the Laws of 1885 providing for the payment of the wages of employees.

      James M. Baldwin, for the appellant Cundell, a creditor.

      Thomas Darli/ngton, for the receiver respondent.
   Daniels, J.:

By the two affidavits made in support of the motion, it appeared that the appellant had been employed to assist the general manager of the company in keeping its books and to clean the office and show-room of the company, and assist in putting together, taking apart and shipping the wire wicket-fence and weaving machines, at the salary or wages of forty dollars a month, payable in four installments of ten dollars each, and that these services had been performed by the appellant until there became due to him therefor the sum of $325.97.

In the affidavit of the president of the company, used to oppose the motion, it was stated that the services rendered by the appellant were those of a bookkeeper and general clerk. But from the other affidavits it may reasonably be inferred that the applicant was employed in the manner substantially stated by himself and rendered the services which he has mentioned. But in that respect the difference between his own affidavit and that of the manager of the business and the affidavit of the president is not very important. For by the affidavit of the latter he appears to have rendered some services in addition to those of bookkeeper and general clerk. The court, after hearing the motion, denied it without drawing any distinction or difference between the statements of these three affidavits. And whether the denial is supported by the law depends more upon the construction which is to be given to chapter 376 of the laws of 1885 than on a critical construction of the affidavits. This chapter has declared that the receiver of a corporation created or organized under the laws of this State, and doing business here other than insurance, and than that of moneyed corporations, shall prefer and pay from the moneys which shall first come into his hands, the wages of the employees, operatives and laborers thereof. The application for this payment, made on behalf of the appellant, seems to have been denied on the ground that his case was not brought within this statute, and authorities have been cited which were considered by the counsel to sustain this construction. But these cases are all distinguishable from that of this appellant.

For in Krauser v. Ruckel (17 Hun, 467) the action was to enforce payment from the stockholders of a mining company, and its successful prosecution depended upon the ability of the plaintiff to prove himself to have been a laborer, servant or operative of the company; that he failed to do, for the reason that his position was that of general superintendent. The case of Dean v. De Wolf (16 Hun, 186), was that of an assistant of the general superintendent of the company, who 'was employed at a fixed salary of $700 a month, and it failed of success for the like reason; that he was not a servant or laborer within the meaning of the statute rendering ■stockholders liable for their wages. Hill v. Spencer (61 N. Y. 274) was a like action brought by a party who was the agent of the company employed to take charge of its mines in another country. The case of Wakefield v. Fargo (90 N. Y., 213) was to enforce a like liability, and the court held that a bookkeeper and general manager was not within the protection of the language used in the statute creating this liability of stockholders. These cases all arose under an entirely different statute, more limited in its language than the act under which this application has been made. For this act not only includes operatives and laborers, but also employees, which latter term is of broader signification in its general acceptance, and includes all persons employed, but restricted, as it should be, to the general description of persons who may be designated as laborers, operatives and employees. The statute, as so restricted, appears to be broad enough to include the case of this applicant, and it is not controlled by anything which was decided in People v. Remington (45 Hun, 329), where the claims which were rejected were made in behalf of the superintendent and attorney of the company, who were higher in their grade of services then the persons described by this language of the statute.

The signification of the term “employee” was considered in Gurney v. Atlantic, etc., Railway Company (58 N. Y., 358). There it had been used in an order declaring it to be the duty of the receiver of the company to pay arrearages owing to the laborers and employees of the corporation for labor and services actually ■done in connection with the company’s railways. Under this phraseology a claim was made for the sum of $5,000 for the services of counsel, and it was held by the court that he was entitled to be paid by the receiver under this general language. The court, there probably gave the term, then standing by itself, a broader signification than it would be inclined to place upon it, as it has been used in this statute; for it was said that “ none are excluded in terms or by implication, and all who came within tké description are entitled to the benefit of the order. In the absence of any intent, apparent on the face of the order, to discriminate between different classes of employees or different kinds of service,” the court cannot confine it to a particular class or to a’ particular service. The term “ employee ” is the correlative of “ employer,” and no other term has, either technically or in general use, a restricted meaning by which any particular employment or service is indicated. (Id., 471.)

Under this construction of the language the applicant would be clearly entitled to the order for which he applied, and so he seems to have been even if a more limited effect shall be given to the -words which have been employed in the enactment of the statute than was placed upon this word in that order. For an assistant, bookkeeper, a part of whose duty it was to render the other services, for which the applicant was employed, and which were performed by him, will fairly be included as an employee within the description of persons to be in this manner paid by the receiver under the enactment of this statute.

The order should be reversed, with ten dollars costs and also the disbursements, and an order entered directing the receiver to pay to •the applicant the sum owing to him for his services, excluding, of course, the additions made to it by the judgment he is stated to have ■ recovered..

Van Brunt, P. J., and Brady, J., concurred.

Order reversed, with ten dollars costs and disbursements.


text:
    ESTHER C. ROSE, Respondent, v. WARREN H. ROSE, Appellant.

      Action by a wife for divorce for cruel and inhuman treatment — the conduct of the wife must be considered— the husbcmd may prove the reasons foi' his conduct.

    In an action, brought for a limited divorce on the ground of the alleged cruel and inhuman treatment of the plaintiff by her husband, the defendant, it appeared by the defendant’s testimony that he strongly objected to his daughter keeping company with a young man named Forshaw; that he repeatedly urged these objections to both the plaintiff and his daughter, but that his daughter still continued to meet Forshaw, and received his visits clandestinely, and that the-plaintiff, to tlie extent of Jier power, aided and encouraged her daughter in her conduct in this respect.
    The defendant’s counsel offered evidence to show improper conduct between his daughter and said Forshaw, and that he had just and reasonable grounds for his objections to him, and that these reasons were also known to the plaintiff. Upon the objection of the plaintiff’s counsel the court excluded all this evidence.

      Meld, that the court erred in so doing. '
    That it has always been deemed important in actions of this character, in deciding-the question whether it is a proper case for a decree of separation, for the court to know what has been the conduct of the wife towards the husband as well as-what his conduct has been towards her.
    That the defendant had a right to show that his objections did not arise because-of caprice or without a just cause, but that in directing his family hot to receive-the visits of the objectionable visitor he had good grounds for his objection.
    That the defendant, when called upon to answer for his conduct towards his. children, was entitled to prove all the circumstances attending his conduct, and the reason for it, in order that he might justify it.
    That a husband is not bound to keep a wife in his house under all conditions and. no matter what her conduct may be.
    Appeal by the defendant from a judgment rendered upon the trial of this action at a New York Special Term, by the court without a jury, which was entered on the 10th-day of May, 1888, in the office of the clerk of the city and county of New York; and,, also, from an interlocutory judgment entered in this action on the-4th day of June, 188J.
    This action was brought to obtain a limited divorce on the ground of alleged cruel and inhuman treatment. IJpon the trial it appeared from the defendant’s testimony that he strongly objected to his-daughter keeping company with a young man named George Forshaw ; that he repeatedly urged these objections to both the plaintiff and his daughter, but that his daughter continued to keep Forshaw’s company, receiving his visits clandestinely; and that the plaintiff, to the extent of her power, aided and encouraged her daughter in her conduct in this respect, disregarding and defying the defendant’s-objections. On the trial the defendant’s counsel offered evidence-tending to show improper conduct between his daughter and Forshaw; and that he had just and reasonable grounds for his objections to him ; and that those reasons were also known to the plaintiff. This evidence was all objected to by the plaintiff’s counsel, and excluded by the court under exceptions by the defendant.

      O. JET. Hoffmcm, for the appellant.

      George E. Horne, for the respondent.
   Van Brunt, P. J.:

It will be necessary to reverse this judgment upon the ground of ■errors in the rejection of testimony. The learned court below ■■seems to have been of the opinion that the defendant had no right to prove any facts in justification of any acts of violence which it might be claimed he had committed towards the plaintiff. In other words, that the wife might, by her own misconduct, provoke- ill-treatment upon the part of the husband, and then claim rights because of such ill-treatment which had been caused entirely by her own provocation. ~We know of no such rule of law. It has always been deemed important for the court to know what has been the conduct of the wife towards the husband, as well as what his conduct has been towards her, in deciding the question whether it is a proper case for a decree of separation. (Hopper v. Hopper, 11 Paige, 46.) And this seems to be a self-evident proposition, Pecause the question whether treatment is cruel and inhuman, and is of such a character as to render it unsafe for the wife to live with the husband, depend very largely upon the circumstances which gave rise to such ill-treatment. If it should appear that, had the wife performed her duties towards her husband, she would have suffered no ill-treatment at his hands, it is difficult to understand upon what principle a court of equity could grant her relief.

The evidence in this case shows that the defendant sought to prevent the visits to his house of a person who was obnoxious to him, .and that in this respect his wife and his daughter seem willfully and persistently to have disobeyed his injunction. Although it is conceded upon the part of the respondent that the husband has the right to dictate who shall visit at his house, yet it is claimed that he has no right to prove, upon a trial where he is accused of cruel and 'inhuman treatment, arising apparently out of the disregard of his injunctions, that he had reasonable grounds for his prohibition, and, therefore, it is sought to, justify the rulings made by the court that, whatever his reasons were they were entirely immaterial. In this we think there was a fatal error. The defendant had a right to show that his objections did not arise because of caprice or without just cause, but that in directing his family not to receive the visits of the objectionable visitor, he had good grounds for his objection.

In the case at bar, when asked for the reasons which he assigned to his wife and daughter for his refusal, this evidence was objected to and excluded. It was claimed upon the part of the plaintiff that the conduct of the defendant toward his daughter formed part of the cruel and inhuman treatment, in respect to which there is a finding made by the learned court; and when the defendant sought to prove the cause for this treatment, his mouth was shut under an objection and he was prevented from showing circumstances which^ if true, certainly justified, upon his part, the severest of discipline towards this child. It seems to be assumed that the conduct of the wife and child may be of any character that they choose to make it, and the husband is bound to submit. This, however, does not seem to be the rule of law, nor is it the rule of good morals; and a husband, when called upon to answer for his conduct towards his. children, is entitled to all the circumstances attending this conduct and the reasons for it, in order that he may justify it. In the case at bar the defendant was refused this right both in respect to the plaintiff and to his child. A husband is not bound to keep under his roof a wife, no matter what her conduct may.be; nor is he bound to leave his house or submit to her conduct, whatever it may be.

In the case at bar it seems to us that a very different aspect might, have been put upon the evidence had the defendant been allowed to prove the conduct of his wife and daughter towards him, and the reasons for his prohibitions against their visitors, which prohibitions, seem to have been totally ignored both by the wife and daughter.

It is not necessary, in view of the conclusion at which we have, arrived upon the main body of the case, to consider the question in regard to the amount of alimony which has been awarded in this, case; but, upon an examination of the record, it would appear that the court had been more liberal than the evidence in the case justified.

The judgment should be reversed and a new trial ordered, with costs to appellant to abide the final event.

Brady and Daniels, JJ., concurred.

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


author: Macomber, J.:

text:
    JULIA RHINELANDER DODGE and GEORGE J, GREENFIELD, as Trustees Under the Last Will and Testament of PHILIP R. PAULDING, Deceased, Appellants, v. MARY L. GALLATIN, BARTHOLOMEW DONEGAN and JAMES REILLY, Respondents.

      Equitable estate in real propei'ty — when a devise of the testator’s residuary estate will convey a legal title acquired after the execution of the will.

    In 1797 Frederick Rhinelander applied to the corporation of the city of New York for a grant of lands under water abutting upon his upland. The common council directed the grant to be made, but the clerk of the board neglected to deliver the written grant.
    In 1798 the legislature, on petition of the city, passed a statute granting riparian owners the fee simple of lands under water, abutting upon their uplands to be filled in by them. Frederick Rhinelander improved and filled in file land to West street, and in 1805 died intestate. His widow and daughter released and conveyed to his remaining child, William Rhinelander, Jr., all their interest, legal and equitable, in this property, and he entered into possession of the premises, and in 1807 renewed the application to the common council and asked that the grant should be delivered to him. The grant was accordingly executed - and delivered to him on November 16, 1807.
    By his will, executed in February, 1807, William Rhinelander, Jr., in terms devised the residuary estate of which he was seized or possessed at the time of making such will, or of which he should be seized or possessed at the time of his death, to an ancestor of the defendants.
    In this action, brought to recover the premises in question, the plaintiffs claimed that the property conveyed by the city of New York to William Rhinelander, Jr., was acquired by him after the execution and publication of his will, and that, under the laws then existing, it passed to his heirs-at-law and not to his devisee, under whom the defendants claimed title to the property.

      .Held, that at the time of making his will the testator had an equitable estate in the premises which passed by his will, and that the claim of the plaintiffs that William Rhinelander, Jr., having died prior to the revision of the statutes in 1830, died intestate as to these premises, was untenable.
    Appeal by tbe plaintiffs from a judgment entered upon tbe report of a referee, in tbe office of tbe clerk of tbe city and county of New York on September 26, 1887, adjudging that tbe complaint herein be dismissed on tbe merits of tbe action. Tbe action was brought to recover from tbe defendants tbe possession of lands known as Nos. 229 and 230 West street, between Beach street and North Moore street, in tbe city of New York.

      William, G. Bussey and Edward Stevens, for the appellants.

      Henry H Anderson, for tlie respondents.
   Macomber, J.:

Tlie plaintiffs seek to recover the possession of the property in question as the heirs-at-law of William Rhinelander, Jr., who died in the city of New York in the year 1809.

The defendants claim the right to withhold the possession of tin's property by virtue of the last will and testament of the same William Rhinelander, Jr., which was executed on the 3d day of February, 1807. The foundation of the legal demand made by the plaintiffs is the allegation and contention that the property in question was acquired by William Rhinelander, Jr., after the execution and publication of Ms will, and hence that it passed to his heirs-at-law, and not to his devisees. Though the will did, in precise terms, attempt to devise not only the lands which the testator then owned and possessed, but all which he should thereafter acquire, yet the property embraced in this action, if acquired subsequently, would be divided among the heirs-at-law under the laws as they stood prior to the revision of the statutes in the year 1830. (Lynes v. Townsend, 33 N. Y., 561.) The deed from the city of New York to WiMam Rhinelander, Jr., was executed on the 16th day of November, in the year 1807. If this deed were the beginning of the title or right of possession in William Rhinelander, Jr., the contention in behalf of the plaintiffs would, in the absence of other defenses, undoubtedly prevail.

The principal question, therefore, is, had the defendants’ testator, at the time that he made the will (February 3, 1807), any title or right of possession to these lands? It is to be observed that the deed from the city of New York to William Rhinelander, Jr., among other things, confirms unto the said party of the second part, in his actual possession now being, and to his heirs and assigns the lands in question. This was a clear admission, on the part of the city of New York, that William Rhinelander, Jr., had been in possession of the premises for some length of time prior to the execution of this deed. Did he have, at the time the will was made, an eqMtable estate in the premises ? If he had, such estate, whatever it was, passed by tbe t§rms of Ms will and lias been acqmred by the defendants.

In May, 1797, Frederick Rhinelander, the father of William Rhinelander, Jr., was an abutting owner of the premises in suit; being such, he applied to the corporation of the city of New York for a grant of these lands which were under water. His petition was referred to the street committee of the common council; they reported May 29, 1797, that the grant ought to be made and the common council directed it to be made. The clerk of the board, however, neglected to deliver the written grant. In 1798 the legislature, on petition of the city, passed a statute granting riparian owners the fee simple of lands to be filled in by them. Frederick Rhinelander went on to and improved the property under the terms of the city grant of 1797 and the legisla^ tive grant of 1798, and, at great expense, filled in the land from high-water mark east of Washington street to West street. In the year 1805, while in the actual possession of the premises and exercising ownership and control over them, he died intestate. His widow released her dower to the son, William Rhinelander, Jr., and her daughter Maria .subsequently conveyed to the son William Rhinelander, Jr., all her interest, legal and eqmtable, in the property of her father. Hence it will be seen that William Rhine-lander, Jr., had come into possession of this property in the year 1805. He was knowing to the previous application of his father, as riparian owner, to the use of these lands under water. He renewed the application to the common council early in the year 1807, setting forth in his petition the well-established facts of his father’s previous application and the resolution of the common council acceding to his prayer, and asking that the grant should be delivered to him as the sole riparian owner. This was accordingly done on the 16th day of November, 1808, by the deed above mentioned.

As the referee has properly found, both under the Dongan charter ..of 1686 and the Montgomerie charter of 1730, the fee of the land under water abutting the upland, for a distance of 400 feet beyond low-water mark of the Hudson river, was vested in the mayor, aldermen and commonalty of the city of New York, and that the corporation of the city of New York uniformly made grants of the land under water, owned by it, to tbe riparian owners abutting such land under water.

Tbe resolution of the common council, in the year 1797, above mentioned, granting to Frederick Rhinelander the land under water mentionéd in his application, was sufficient to give him an equitable estate in the lands, if followed by an acceptance of the same and an expenditure of moneys by him, acting upon' the faith thereof and relying thereon. That the city agreed to make the grant and proposed to charge for that part of it lying between high and low-water marks, the sum of £4:00, New York money, or $1,000, its equivalent; and that the part beyond low-water mark was to be given on reservation of the usual quit rents, is abundantly established by the evidence in the case. It follows, therefore, that the claim of the plaintiffs that William Rhinelander, Jr., died intestate as to these premises, is untenable, and the referee was correct in dismissing their complaint.

The judgment should be affirmed, with costs.

Yan Brunt, P. J., and Brady, J., concurred.

Judgment affirmed, with costs.


text:
    JOHN I. D. BRISTOL, Appellant, v. THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, Respondent.

      Suggestion of a new system of soliciting life insurance— when it does not possess a/ny property rights protected by law.

    An action was brought to obtain an accounting from the defendant and a recovery of a suitable sum of money to compensate the plaintiff for indicating to tbe defendant, through its president, a new system of soliciting life insurance which, after a confidential disclosure thereof to the president of the defendant, the complaint alleged had been adopted by the defendant. The details of the new scheme or system of transacting the business of soliciting life insurance was contained in a letter, annexed to the complaint as an exhibit, which was addressed to the president of the defendant. After stating at some length the success of the plaintiff’s new system in other States and with other companies, the letter stated, in substance, that underlying the whole system was a common-sense plan oí advertising by calling the attention of large insurers to the company and the policies issued by it, and inducing business men to insure largely even when naturally opposed to life insurance; that many agents had tried to work the lllaintiff's method from reading letters or circulars, but that very few of such attempts were successful; and also added, that if “the Equitable would adopt ^ this system, and the writer with it,” he thought a marked increase of business would inevitably follow.
    It did not appear that the plaintiff had copyrighted the above idea and confined it to a definite and certain combination of words or phrases which might be printed and publicly declared to be his own system of business, nor that he had patented or registered the mode of introducing the matter of life insurance to the public.
    Upon an appeal from a judgment sustaining a demurrer to the plaintiff’s complaint:

      Held, that the ideas disclosed by the complaint, and the letter attached thereto as an exhibit, did not possess any property rights which were susceptible of protection under our system’ of law.
    Appeal from a judgment dismissing the complaint herein, entered in the office of the cleric of the city and county of New York on April 9, 1888, ujion an order made at the New York Special Term sustaining a demurrer interposed to the complaint, on the ground that the same did not state facts sufficient to constitute a cause of action.

      Raphael J. Moses, Jr., for the appellant.

      O. B. Alexander and E. Z. Richards for the respondent.
   Macomber, J.:

The complaint is filed to obtain an accounting from the defendant and a recovery of a suitable sum of money to compensate the plaintiff for communicating to the defendant, through its president, a new system of soliciting life insurance, which, after a confidential disclosure thereof to the president of the defendant, was alleged in the complaint to have been adopted by the defendant. The details of the new scheme or system of transacting the business of soliciting life insurance is said, by the complaint, to be contained in Exhibit A, which is annexed thereto, and, consequently, for a thorough examination of the case, that document requires close inspection.

This exhibit consists of a letter (dictated) bearing date February 1, 1885, addressed to the president of the defendant. After stating, at some length, the success of the plaintiffs new system in other States and with other companies, it says:

“ Underlying the whole system of work is a common-sense plan of advertising (without which nothing really succeeds in this country), calling the attention of large insurants to the company and the policies issued by it, and indxxcing business men to insure largely, even when naturally opposed to life insurance. Of course, this system takes some money, but this can be partially taken from the ordinary advei'tising expenses — newspaper advertising and tons of printed matter, much of which is really useless. Capital and intelligence is the basis of every large application. The commercial agency reports, etc., are the guides to these men. A letter worded just right and not too long, mailed from the right pilace, from a party having just the right title, and written on a letter-head arranged in just the proper way, is the greatest advertisement a company can possibly have, if carefully followed up. They do not attract the attention of rival agents, interest just the proper party, and a thousand dollars expended in this way will secure many times the amount of business that any other method of advertising possibly can, especially as it is only the preliminary work for an agent’s call.” * * * “ propositions follow under this method: An agent calls, is received by a gentleman like a gentleman, and a very large application is frequently written on the first interview. The insurant becomes a friend'of the company and of the agent. The ratio of losses on such business is small, and untaken policies a rarity, from the reason that the applicant has not been c bored ’ into taking what he does not want,, but has been carefully worked so as to desire what he has received; a dignity is thus given to the business that no other method gives, and men of dignity and character can follow it with pleasure and satisfaction. Many agents have tried to work my methods from seeing letters or circulars, but very few such attempts have been successful. Prom a thousand letters for dates of birth, for instance, they have received less than three or four per cent of replies, and many of these have been jokes,’ but when I have carefully instructed the agents how to use a series of letter blanks for responses, etc., a very different result immediately manifests itself. I inclose, as proof of this, a couple of letters from the Cleveland general agent of this company, A stronger commendation of my methods of work coxxld not be well given; you will notice from the spelling of these letters that the agent is not highly educated, which is still stronger proof that agents can successfully work these plans after being taught.” * * * “ When the applicant is not secured on the first interview or attempt, and had been given up for the time, another opportunity comes with every year on ‘change of age.’ This takes another complete system of work, and the results have been in. every way favorable ; a very large proportion of the business at my general agency being now secured in this way. Sometimes a circular to fit peculiarities of the business is necessary. I have written a great many, and inclose one of which over a million and a half have been printed. They have been extensively used by many of your general agents. If the Equitable would adopt this system, and the writer with it, I think a marked increase of business would inevitably follow. It'would be necessary that 1 should be some sort of an officer of your company on a salaried position, with, perhaps, a percentage on the work secured under my schemes. Perhaps that $75,000 per year you mention could be realized. Would not care to take a general agency, as I have a very nice business under way now. You can think this all over, and when you see me return the inclosed letter and tell me what your insurance intuitions indicate. I am to call for the photo of Dr. Bristol, you know, and that will give you. an opportunity to do this. In the meantime I need hardly to say that this letter must be considered of the most confidential nature.

“ Yery respectfully yours.

“JOHN I. D. BRISTOL.”

It does not appear that the plaintiff has copyrighted the above idea and confined it to a definite and certain combination of words and phrases which might be printed and publicly declared to be his own system of business, nor does it appear that he has patented or registered the mode of introducing the matter of life insurance to the public. He stands, therefore, solely upon the proposition that he is the possessor of an idea which, when combined with skill in any soliciting agent, with or without a disposition on the part of the persons solicited to be insured, is of great value to the party to whom it may be divulged.

The learned counsel for the plaintiff takes this view of the case, for he says in his brief “We possess as absolute a right over our thoughts as we have over the brain cells whose rhytUm gives to the sensational impulses the thought form, and whether we use the thought form to mold words with our mouth or bricks with our hands, the product is equally our property.” If this proposition were perfectly sound, there would be no occasion for the existence of either copyright or patent-right law, which is designed to secure, not the ideas but the products of ideas of inventive genius, and that, too, for only a limited period.

It is difficult to conceive how a claim to a mere idea or scheme, unconnected with particular physical devices for carrying out that idea, can be made the subject-matter of property. So long as the originator of the naked idea, whether, germinating under the laws of metaphysics, it bé regarded as Platonic or Cartesian in its make-up, keeps it to himself, it is his exclusive property, but it ceases to be his own when he permits it to pass from him. As the ingenious counsel for the defendant say, it is like commercial paper, it passes by delivery. ' Ideas of this sort in their relation to property may be likened to the interest which a person may obtain in bees and birds, and fish in running streams, which are- conspicuous instances of ferae natures. If the claimant keeps them on his own premises, they become his qualified property, and absolutely his so long as they do not escape. But if he permits them to go he cannot follow them. It is not necessary to cite authorities under this head because the principle is elementary.

It is evident, however, that it was not to the defendant alone that the plaintiff made a disclosure of his ideas, for he says: Many agents have tried to work my methods from seeing letters or circulars, but very few such attempts have been successful.” It seems, therefore, that it is not the use of the plan adopted, but the successful use of it, upon which the plaintiff relies for a cause of action. If the defendant, in adopting this system, had taken its author with it, as the plaintiff proposed, then his scheme of exploiting life insurance would have -assumed a tangible form, and, in the absence of an agreement fixing the value thereof, he would be entitled to such compensation as his services were actually worth; but that indispensable part of the scheme or system was not adopted by the defendant, and hence no cause of action has accrued to the plaintiff.

On the whole, we do not think that the ideas disclosed by the complaint and the exhibit thereto possess any property rights which are susceptible of protection under our system of law. And yet, though it is clear that we have no statute or common law which prohibits the plaintiff from inducing business men to insure-largely, even when oppossed to life insurance,” if considerations of public policy are to be regarded, the plaintiff, while violating no law, would render himself open to the criticism of the Augustan poet — Irwitwm, qui served, idem faeit oeeidenbi.

The judgment should be affirmed, with costs.

Van Brunt, P. J., concurred.

Judgment affirmed, with costs. •


author: Yan Brunt, P. J.:

text:
    JAMES GAMBLE, Respondent, v. THE QUEENS COUNTY WATER COMPANY, ROBERT F. MULLINS and Others, Appellants.

      Issue of stock and bonds by a corporation — when the court will restrain it.

    In. an action, brought to enjoin the defendants from carrying out a resolution directing the issuing of stock and bonds with which to purchase property proposed to be sold to the defendant, The Queens County Water Company, a corporation incorporated under the general manufacturing act, it appeared that the property was to be sold by one Robert F. Mullins, who was a trustee thereof, and that the resolution provided for the issuing of $50,000 of stock and $60,000 in mortgage bonds for property, the value of which was not over $65,000.

      Held, that as the stock must be treated as cash, and had to betaken at its par value of $50,000, it would leave, to be paid by these bonds, the balance of the value of this property, viz.,'$15,000, which would be an issue at the rate of twenty-five cents upon the dollar of the bonds, which would be secured by a mortgage upon the identical property sold.
    It was claimed that as a majority of the stockholders of this corporation, including Mullins, consented to the arrangement, the plaintiff could not maintain' this action.

      Held, that although, in all matters of administration, the wishes of the majority-must control, yet where such administration tends to fraudulently deprive the minority of their rights and interests in the corporation the courts will interfere for their protection.
    That the issuing of these bonds at twenty-five cents on the dollar, under the facts disclosed in this case, would be such a wanton waste of the property of this corporation as called upon a court of equity to intervene for the protection of the stockholders who were to profit by this extraordinary transaction.

      Van Qott v. Van Brunt (82 N. Y. 540) distinguished.
    Appeal from a judgment entered, upon the trial of the action at a New York Special Term,on May 11, 1888, in the office of the clerk of the city and county of New York, enjoining the carrying out of a resolution of the stockholders of the defendant corporation authorizing the issuing of certain stock and mortgage bonds for the purpose of an extension of the water-works mentioned in the complaint.

      W. B. JBornblower, for the appellant.

      James W. Perry, for the respondent.
   Yan Brunt, P. J.:

Were it not for the claims made by the appellants, because of the decision in the case of Van Cott v. Van Brunt (82 N. Y., 540), in which the principle that a purchase of property from a trustee by his cestui que trust is presumed to be fraudulent seems to have been disregarded, we should be entirely content to leave the disposition of this case upon the opinion written by the learned judge who heard the case in the court below.

There are various grounds upon which the decision in the case cited may be distinguished from the case at bar. In the first place, in that case all the stockholders consented to the transaction, and it does not appear that, at the time of the transaction, there were any creditors of the corporation, or that there were any parties who could be affected adversely by this remarkable contract. In the next place? as far as the issue of stock was concerned, the rights and obligations of the appellant corporation were very different from that of the corporation mentioned in the ease cited, the one being a corporation formed under the general railroad act, and the other under the provisions of the general manufacturing act, the provisions in the two acts in relation to the issue of stock béing essentially and fundamentally different.

The trustees of a company formed under the manufacturing act may purchase property necessary for their business, and issue stock to the amount of the value thereof in payment therefor, otherwise the stock must be paid for in cash. This valuation of property must, be a fair valuation, considering the purposes for which the property is to be used and the nature of the business, and although an honest over-valuation will not of itself subject the owners of stock to personal liability, yet where it appears that property, the value of which is well known and understood and capable of being ascertained, is purchased at a price far beyond its real value, this raises a presumption of fraud, and, unless rebutted by evidence explaining this apparent bad faith, the transaction is fraudulent in law and the holders of the stock are liable for the unpaid portion thereof.

In the case at bar the contract, the execution of which is sought to be restrained, provided for the issue of $50,000 of stock and $60,000 in bonds for property, the value of which was not over $65,000. It is true that it is sought to prove that for this stock and these bonds $65,000 would not be an inadequate price, but no such test can be applied. The stock must, at least, be treated as cash. Under the circumstances, it is clear that the stock which it is proposed shall be issued far exceeds, at its par value, the fair valuation of its'proportion of the property to be purchased. It is urged, however, that the corporation has the power to sell its bonds at any price which it might see fit. It is true that there are many authorities which go to sustain, to a certain degree, this proposition. But no case has been cited where the sale of the bonds has been at such a low rate as would raise the presumption of fraud in the transaction. In the case at bar, assuming the stock to be taken at its par value of $50,000, it would leave these bonds to pay the balance of the valuation of this property, namely, $15,000, which would be an issuance of the bonds at the rate of twenty-five cents upon the dollar, and which would be secured by a mortgage upon the identical property sold. A transaction of this kind shows itself to be fraudulent upon its face,'and it would require the clearest proof that a sale of bonds at twenty-five cents on the dollar, when the stock was taken at par, could be said to be made in good faith. A transaction of this kind, undertaken for the purpose of evading the statute, cannot be supported, and this construction of the contract is evidently resorted to for the purpose of such evasion. But it is claimed that as a majority of the stockholders of this corporation, including Mullins, consented to this arrangement, that, therefore, the ordinary rules applicable to such a transaction cannot be made available to the plaintiff upon the ground that in a corpora, tion of this description the minority of the stockholders have no rights which the majority need respect. It is undoubtedly true that such is the rule to a very great degree in such corporations. But, under its protection, the courts will not allow the majority to fraudulently deprive the minority of their rights. Although, in all matters of administration, the wishes of the majority must rule, yet where such administration tends to fraudulently deprive the minority of their rights and interests in the corporation the courts will interfere for their protection.

In the case at bar, as already suggested, the very transaction itself .shows a fraudulent design, and no explanation has been given by the evidence offered which relieves the transaction of the conclusion necessarily forced upon us by its terms. The issuance of these bonds at twenty-five cents on the dollar, under the facts disclosed in this case, would be such a wanton waste of the property of this corporation as would call upon a court of equity to intervene for the protection of the stockholders who are not to profit by this ■ extraordinary transaction.

The judgment must be affirmed, with costs.

Bradt and Macomber, JJ., concurred.

Judgment affirmed, with costs.


author: Macomber, J.;

text:
    WILLIAM A. BAEDER and H. R. KERN, Respondents, v. CHARLES B. BAEDER and Others, Appellants.

      When an injunction will be granted to restrain the use of a ti'ade-mar'k.

    Appeal from an order of the New York Special Term, entered in the office of the clerk of the city and county of New York on July 26, 1888, continuing a preliminary injunction restraining the defendants from selling the goods manufactured by themselves as. and for the goods manufactured by the plaintiffs, and from using, printing or stamping on any flint or sand-paper manufactured by them, or on the packages or coverings thereof, the words “ Baeder’s Flint Paper,” or any words having such a resemblance to the words adopted by these plaintiffs as their business, name and trade-mark, and means of describing the first quality flint paper manufactured by them, to wit, “Baeder’s Flint Paper Company,' New York Flint Paper.”
    The court at General Term said: “ The affidavits show that large sums of money have been expended by the plaintiffs in establishing the reputation of their flint paper, and that they have adopted for that purpose as a trade-mark the words ‘ The Baeder Flint Paper Company, New York.’ Their first quality of flint' paper bears the uniform stamp or mark of ‘ Baeder’s Flint Paper Company Flint - Paper,’ and is well recognized in the market as paper of first quality and of established reputation.
    “The defendants also manufacture flint paper in the city of Philadelphia under the name of Baeder, Adamson & Go. It is shown that there is a practice prevalent among manufacturers to brand the first quality of their paper with the firm name and thus identify themselves with such superior products, while the second quality of flint paper commonly bears a different designation, such as star paper and the like. Some time prior to the month.. of March, 1888, the defendants Baeder, Adamson & Co. had marked’ their second-rate paper as flint paper manufactured at Riverside Flint Paper Mills, Philadelphia, with the cut of a star under the words ‘flint paper.’ At or about the last-mentioned time they changed such designation of their second-class paper so it should read as follows: ‘ Baeder’s Flint Paper % Manufactured at Riverside Flint Paper Mills, Philadelphia, No. 1, Warranted.’
    “ It is asserted on the part of the plaintiffs, and the affidavits in their behalf support such contention, that this close imitation of the plaintiffs’ trade name and their mark upon their goods was adopted for the purpose of deceiving the public and turning off upon purchasers a second-class paper which should appear to have been made ’ by the plaintiffs themselves as their first-class paper.
    “ This is the view taken by the learned judge' at Special Term in denying the motion to dissolve the injunction; a perusal of the affidavits satisfies us that a proper case was made by the plaintiffs to restrain the defendants in conducting their business in the manner, as is above enjoined, until the trial of the action.
    “It follows-that the order appealed from should be affirmed, with ten dollars costs and disbursements.”

      John E. Parsons, for the appellants.

      Mason W. Tyler, for the respondents.
   Opinion by

Macomber, J.;

Yan Brunt, P. J., and Brady, J., concui’red.

Order affirmed, with ten dollars costs and disbursements.


author: Daniels, J.;

text:
    JOHN A. WILSON, Respondent, v. GEORGE DRAKE SMITH & COMPANY (Limited), and GEORGE DRAKE SMITH, Appellants, Impleaded, etc.

      YaMdity of a mortgage— given to the owner of land, who subsequently, and a year thereafter, conveys the pi'operty to the mortgagor', with, covenants of seizen, against ineumbramces and of warranty —as against judgment-creditors of the mortgagor.

    Appeal by the defendants from a judgment recovered at the New York Special Term, and entered in the office of the clerk of the county of New York, August 11, 1888.

      The judgment recovered is for the foreclosure of a mortgage •executed by the defendants, James A. Willoughby and Charles Willoughby, to the plaintiff, to secure the sum of $10,000, with .interest. The property described in the mortgage was a certain factory, with the machinery and improvements contained therein, lying and being at Fordham, in the city and county of New York, and known and designated on a certain map of property at Fordham by Nos. 483 and 484, on the easterly side of Hoffman street, 183 feet south of Pelham avenue. The building is then stated to cover two lots, owned by John A. Willoughby, and the mortgage to be given to secure the payment of a part or a portion of the purchase-money for the premises and the machinery. The title to these two lots was in the plaintiff when the mortgage was executed and delivered to him, and after that time, and over a year subsequent to the record of the mortgage, the plaintiff executed and delivered to James A. Willoughby, one of the mortgagors, a conveyance of this property, and in the conveyance covenanted that he was lawfully •seized of an absolute and indefeasible estate of inheritance in fee. simple of the premises conveyed; and that the same were free and clear of incumbrances, grants, titles, charges, estates, judgments, taxes •and assessments, and this was followed by a covenant for quiet possession.
    The appellant, George Drake Smith & Company (Limited), .■advanced money to the mortgagors, for which judgments were confessed by them; and these judgments, under the circumstances, were relied upon as being prior liens upon the property to the plaintiffs mortgage. But it appeared by the proof that the agreement and understanding of the parties was that the plaintiff should •convey this property to the mortgagors and receive the mortgage •executed and delivered to him, as security for its purchase-price, and the advance of money made by him to them, and it was to carry out this understanding that both the mortgage and the deed were afterwards executed and delivered.
    The court at General Term said: “When the mortgage was made the title of the plaintiff to the property was recognized and conceded in it. And while the language contained in the deed was very broad as to the title and incumbrances upon the property, it is not to be construed, and was not intended, to exclude or supersede this mortgage, which was given to secure their obligations to. the plaintiff. These features of the case place it within the decision which was made in Judd v. Seehms (3 N. Y. Sup. Ct. [T. & C.], 266 affirmed, 62 N. Y., 266), sustaining the validity of the mortgage.”
    [The balance of the opinion was taken up with the discussion of" the weight of evidence on the subject of notice. — Hep.]

      jS. F. Kneeland, for the appellant.

      James F. Higgins, for the respondent.
   Opinion by

Daniels, J.;

Yan Brunt, P. J., and Brady, J'.,, concurred.

Judgment affirmed, with costs.