author: By the Court. Duer, J.

text:
    Charles G. Hart v. Henry R. Hudson and John C. Smith.
    "Where the collection of a promissory note is guaranteed, the person to whom it is delivered, if the note is unpaid at its maturity, is bound to proceed with prompt diligence to enforce its payment. This is a duty which he owes to the guarantor.
    If he neglect or violate this duty, he takes upon himself the risk of the collection of the note, and discharges the guarantor.
    He violates this duty if, after commencing a suit against the maker of the note, he discontinues it, and takes from him a new note, or other security for its amount, payable on a future day, without the consent or knowledge of the guarantor.
    If, in such a case, by an agreement between the parties a portion of the original note, when collected, is to be paid over to the guarantor, the latter has an immediate right of action for the recovery of this balance, in the same manner as if it had been in fact collected.
    A surety on a promissory note, whether as a guarantor or an indorser," is, in all eases, discharged where, without his consent or knowledge, a new note, payable on a future day, is taken from the maker.
    Although the taking of such a note may operate, as between the parties, only, as a conditional satisfaction, yet, in all eases, it suspends until maturity the right of collecting the original note, and is, therefore, in all cases, an unwarranted extension of credit, discharging a surety.
    Where the promise of a defendant is stated in the complaint as absolute, but is proved, upon the trial, to have been conditional; if it is also shown that, before the commencement of the action, the condition was fulfilled, the variance, under a reasonable construction of sections 169 and 111 of the Code, may be disregarded.
    At any rate, when the evidence showing the variance has been received upon the trial, without objection, the referee ought to disregard it, leaving to the court, in the exercise of the discretion given by § 173 of the Code, to amend the complaint, by conforming its allegations to the proof.
    Report of a referee, dismissing the complaint, set aside, and new trial granted.
    (Before Duer and Woodruff, J.J.)
    Heard, November,1856;
    decided, January, 1857
    Appeal from a judgment entered upon the report of a referee, dismissing the complaint.
    The pleadings in the case are the following:—
    The complaint in this action of Charles Gr. Hart, plaintiff, against Horace R. Hudson and John C. Smith, defendants, being copartners under the style of Hudson & Smith at the city of New York, shows—
    That on or about the third day of June, 1851, the plaintiff was the holder and owner of a certain promissory note in writing, bearing date September 9th, 1850, made by Bailey & Brothers, payable to Margaret A. Overacre one year from date, for the sum of two_ hundred dollars, with interest thereon from the date aforesaid.
    That the plaintiff was on the same day indebted to the defendants for goods and wares, before that sold and delivered to the plaintiff by the defendants, in the sum of one hundred and fourteen dollars and thirty-one cents.
    That in consideration of the premises, and of what is further hereinafter set forth, the plaintiff, on the said third day of June, 1851, at said city, sold and delivered to the defendants the said promissory note for the sum then due thereon, to wit, for the sum of two hundred and ten dollars and twenty-five cents, which sum, in consideration thereof, the defendants thereupon then and there undertook and promised to pay to the plaintiff as follows, to wit, first by discharging the plaintiff from the said claim which the defendants held against him for the said sum of one hundred and fourteen dollars and thirty-one cents; and secondly, by paying the balance to make said sum of two hundred and ten dollars and twenty-five cents, to wit, the sum of ninety-five dollars and ninety-four cents to the plaintiff within three days from the said third day of June, 1851.
    That the defendants did, on the said third day of June, 1851, discharge the plaintiff from their said claim against him for the said sum of one hundred and fourteen dollars and thirty-one cents, but that they have not paid the plaintiff the said sum of. ninety-five dollars and ninety-four cents, nor any part thereof; and—
    That the plaintiff, on the sixth day of June, 1851, and often at Other times before the commencement of this action, demanded of and from the defendants payment of the said last-mentioned sum, which the defendants refused, and still refuse.
    Wherefore, the plaintiff demands judgment against the defendants for the sum of ninety-five dollars and ninety-four cents, with interest from the sixth day of June, 1851, besides the cost of this action.
    And the said defendants, by Bell & Coe, their attorneys, answer the said complaint in this action, and admit that the plaintiff was the owner and holder of the note therein mentioned on the said 3d of June, 1851. They also admit that the said plaintiff was indebted to the defendants on the said last-mentioned day in the sum of one hundred and fourteen dollars for goods sold and delivered to him, by these defendants in January, 1851.
    And these defendants farther answering, deny that in consideration of the said indebtedness of the plaintiff to these defendants, he sold and delivered the said promissory note for the sum due thereon, to wit, the sum of two hundred and ten dollars and twenty-five cents, or that in consideration thereof these defendants then and there undertook.and promised to pay to the plaintiff the amount thereof by discharging the plaintiff from his indebtedness to them as therein set for.th, the amount of his bill, and also to pay him a balance of ninety-five dollars and ninety-four cents within three days from the said 3d of June, 1851.
    And these defendants deny, that they, on the said 3d of June, 1851, discharged the plaintiff from their claim against the plaintiff for the sum of one hundred and fourteen dollars and thirty-one cents, as therein alleged.
    And they deny that they, promised to pay him ninety-five dollars and ninety-four cents, or any other sum, on the 3d or 6th of June, 1851, or at any other time.
    And these defendants, for further answer, say, that on the 3d of June, 1851, the plaintiff was justly indebted to these defendants, in the sum of one hundred and fourteen dollars and thirty-one cents, for goods previously sold and delivered to the said plaintiff on January 15, 1851, as per schedule hereto annexed, which is a part of this their answer; and being so indebted, he assigned the said promissory note to these defendants, to be applyed to the payment of said indebtedness, which said note is in the words and figures following, to wit:
    “ Utica, Sept. 9, 1850.

      “ $200. One year from date, for value received, we promise to pay Margaret A. Overacre, two hundred dollars, with use. Barclay & Brothers. Endorsed, pay to the order of 0. Gr. Hart, Margaret A. Overacre.”
    And these defendants aver, that at the time of assigning said note, as aforesaid, to these defendants, the plaintiff endorsed thereon the following guarantee: “ For value received I guarantee the collection of the within note, to Messrs. Hudson & Smith. New York, June the 3d, 1851. 0. Gr. Hart.”
    And these defendants further show and aver, that when the said note became due and payable according to its tenor and date, to wit, on the 12th September, 1851, it was protested for non-payment, and of such non-payment, the said plaintiff was duly notified, and that the said note still remains in the hands of these defendants, uncollected, due and unpaid, which said note, these defendants produce here into court, ready to- be delivered up, as the court may direct, upon the payment of their said bill, of one hundred and fourteen dollars and thirty-one cents, with interest from 3d June, 1851, which said sum remains undischarged, unpaid and due from the plaintiff to these defendants.
    Wherefore, these defendants demand judgment against the plaintiff, for the sum of one hundred and fourteen dollars and thirty one cents, with interest thereon from the 3d of June, 1851, with costs.
    The schedule referred 'to is not necessary to be stated.
    The plaintiff, Charles Gr. Hart, to the answer of the defendants in this action, replies in the words following:
    He alleges that the promissory note, of which a copy is set'forth in said answer, is the same promissory note mentioned in his complaint in this action.
    He denies that he assigned the said note to the defendants to be applied to the payment of any indebtedness to them, otherwise than he has alleged in his said complaint.

      He denies that the said note was protested for non-payment, or that he was duly notified thereof.
    He denies that the said note still remains in the hands of the defendants uncollected, due and unpaid, as alleged in said answer.
    He alleges, according to his knowledge, information and belief that the defendants, on or about the 6th day of October, 1851, settled with and discharged Bailey & Brothers, the makers of the said note, and took in lieu and satisfaction thereof, from the said makers, their two promissory notes for the sum of one hundred and seven dollars and fifty cents each, payable to the order of the said defendants, the one at six months, and the other at eight months from the said 6th day of October, 1851, which said two notes are now held and owned by the defendants.
    And he alleges, that at the time of such settlements between the defendants and the said makers of the said notes, he, the plaintiff, did not consent to, or know of the same.
    The referee, by whom the cause was tried, after stating the evidence before him, made the following report:
    To the Justices of the Superior Court:
    I, Hamilton W. Robinson, the referee appointed in this cause to hear and determine the same, do report that I have been attended by the respective parties, and heard their proofs and allegations, and do find the following facts:
    That on the 4th day of June, 1851, the plaintiff, being indebted to the defendant in the sum of $114.31, for a bill of merchandise, transferred to them a note of Bailey & Brothers, dated September 9, 1850, for $200, payable with interest to Margaret A Overacre, one year after date. This note, although not negotiable, was endorsed with direction, signed by said Margaret A. Overacre, to “pay to the order of C. Gr. Hart,” and also with her written guaranty to him, dated May 27, 1851, of the collection of the note as against Bailey & Brothers, and on its transfer by plaintiff to defendants, was also endorsed with the written guaranty of the plaintiffs, in these words, “For value received, I guarantee the collection of the within note to Hudson & Smith. Hew York, June 3, 1851. Signed C. Gr. Hart.”
    That on such transfer, the defendants executed to the plaintiff a bill and réceipt in the words, “ Mr. C. Gr. Hart, in ac. with Hudson & Smith, Dr., to bill of merchandise,” for which a draft was accepted at 10 days’ sight, payable at Broome County Bank.
    $113 00
    Expenses, . . 15
    ■ $113 15
    $113tW.
    Rec’d, Hew York, June 4th, 1851, of C. Gr. Hart, one hundred and thirteen -nnr dollars, in full for draft sent Stone & DeForest for collection, Hart to pay expenses to Stone & DeForest.
    (Signed) Hudson & Smith.
    That the bill of merchandise mentioned in this receipt was the same first-mentioned, except an item of $1.31 omitted.
    That the defendants thereupon further agreed that they would write to Bailey & Brothers, to ascertain if they would discount said note, or if it could be discounted at the Bank of Utica, and that as soon as the defendants got the money on it, from any source, they would remit the plaintiff the surplus over and above paying the amount of his bill and interest.
    That in the beginning of October, 1851, the defendants commenced a suit on the note against Bailey & Brothers, by issuing a summons to Oneida county, where they resided, and shortly afterwards arranged with Bailey & Brothers, by taking their two notes, to wit: one, dated October 6th, 1851, payable in 6 months, for $107.50; the other, of the same date, payable in six months, for $107.50, but holding the said $200 note as collateral; but these two notes were not paid, and such note of two hundred dollars was produced by defendants on the hearing.
    From these facts, as matter of law, I do find and determine, that the plaintiff has failed to establish by proof the cause of action alleged in his complaint, and that his complaint ought to be dismissed with costs. All of which is respectfully submitted.
    April 2, 1853. H. W. Robinson, Referee.
    This report was duly excepted to, and the exceptions properly raised the questions upon which the cause was finally decided.

      jHunt, for the appellant,
    contended that the report of the referee was, in some respects, against evidence, but that, even upon the facts as found by him, the complainant was entitled to judgment, and the dismissal of the complaint, therefore, a manifest error.

      Bell, for the respondents,
    insisted that the finding of the referee, upon the questions of fact, was conclusive, and that the variance between the facts, as found by him, and the allegations in the complaint, was manifestly fatal, and the complaint, therefore, properly dismissed.
   By the Court. Duer, J.

This is a case of slight importance in respect to the sum in controversy; but it involves questions that have seemed, to us worthy of our attentive consideration.

The first of the questions is, whether, upon the evidence before the referee, and the facts as found by him, the plaintiff was entitled to recover -the sum demanded in the complaint? The second, whether, upon the supposition that he was so entitled, the variance between the proof and the complaint was such as to create a bar to his recovery in the present aotion ? Each of these questions has been determined by the referee in favor of the defendants. In relation to the first, we have come to the conclusion, for the reasons that I shall proceed to state, that it must now be determined in favor of the plaintiff.

The sum for which judgment is demanded in the complaint is, the difference between the amount of the note of Bailey & Brothers, which was transferred to the defendants, and that of the debt which, at the time of the transfer, was owing to them from the plaintiff; and the question is, whether any breach of the agreement of the parties, as found by the referee, was proved, which entitled the plaintiff to recover the whole, or any part of the sum, he demanded ?

The referee has found that, when the note of Bailey & Brothers, the collection of which was guaranteed by Mrs. Overacre and the plaintiff, was placed in the hands of the defendants, and accepted by them in payment of the debt then due to them from the plaintiff, they agreed, not absolutely to pay him the difference between the amount of their debt and that of the note, but to remit to him the surplus when collected or recovered by them, from any source; and for the purposes of this opinion, it may be admitted that this finding of the referee is justified by the evidence. What, then. are the consequences ? Plainly this, that the defendants, by accepting the note of Bailey & Brothers upon these terms, were bound, in justice to the plaintiff, to use all reasonable and legal diligence in its collection, and had no right, without his consent to extend the time of its payment, and still less to substitute any new security, payable on a future day, in place of that to which the guarantee of the plaintiff, and the prior guarantee of Mrs. Overacre, alone related. The defendants, however, instead of prosecuting to a judgment the suit which they had commenced against Bailey & Brothers, without the consent or knowledge of Mrs. Overacre or the plaintiff, divided the amount of the note they had received, with the interest accrued thereon, into two equal sums, and for each sum took from Bailey & Brothers a new note, payable, with interest, to them or order, the first note at six months, and the second at eight months from the date of the arrangement, and if this arrangement was, in judgment of law, and so far as the rights of the plaintiff are concerned, equivalent to á collection in money of the note which he had transferred, his right to maintain the action was fully established, and the conclusion of the referee, that the complaint ought to be dismissed, unless it was rendered necessary by the state of the pleadings, a manifest error.

We are clearly of opinion that the legal effect of the arrangement thus made with Bailey & Brothers, was precisely that which has been stated. The acceptance of the new notes, so far as the rights of the plaintiff are concerned, necessarily operated as a satisfaction of the old, and the defendants took upon themselves exclusively the risk of the ultimate payment of the notes they had received; they could not cast this risk, or any portion of it, upon Mrs. Overacre or the plaintiff. The effect of the arrangement was, to annul her guarantee as well as that of the plaintiff, as they had no longer any interest in the collection of the original note; in respect to them it was satisfied, and the plaintiff had, therefore, an immediate right to demand the payment of the sum which, in the event of its collection, the defendants had promised to remit. These positions we hold to be correct, both upon principle and upon the authorities.

That the defendants were bound to use all reasonable and legal diligence -in the collection of the note transferred to them cannot be doubted. Their agreement to remit to the plaintiff a portion of the proceeds when collected, implied and imposed the duty of collection. To the extent of the plaintiff’s interest they were his agents for the collection of the note, and, without his authority, could make no arrangement by which his rights as to the mode and time of its collection could be varied or affected. An agent for the collection of a debt can receive its payment only in money. He cannot release nor compound the debt, nor, by parity of reasoning, extend the time of its payment. (Todd v. Reid, 4 B. & Ald. 210; Russell v. Bagley, id. 395; Story on Agency, §§ 9, 161, 215, 413.) Hence, the defendants, in discontinuing the suit which they had commenced against the makers of the note, and in accepting their notes, payable on a future day, for the whole amount of the debt, acted at their own peril, and were guilty of a violation of duty which rendered them immediately liable to the plaintiff; just as a factor who sells upon credit the goods entrusted to his charge, and which he was authorized to sell only for money, is at once liable to his principal for their price or value. (1 Young & Jer. 389; 26 Wend. 192; 2 Will. 259; Story on Agency, § 109.)

In each case, the extension of credit without authority creates the liability. Certainly the plaintiff was not bound to wait for the balance of the original note to which he was entitled, and for which he had received no consideration, until the notes taken by the defendants from Bailey & Brothers should be paid at their maturity or otherwise. As these notes were taken without his authority or consent, he had the right to say that they were taken by the defendants at their own risk, and, therefore, to the extent of his interest in the original note, operated as an actual payment; or to express the proposition in other words, but with the same result, that the defendants, by their departure from their duty as his agents had become his immediate debtors for the sum which, on his behalf; they had undertaken to collect.

There are other views of the subject which lead necessarily to the same conclusion.

The collection of the original note of Bailey & Brothers was guaranteed to the plaintiff by the payee, Mrs. Overacre, and we are bound to presume that he relied upon her guaranty, in giving his own, and looked to her solvency as protecting him from loss, in the event of the insolvency of the makers. Hence, if the effect of the arrangement made by the defendants with the makers was to release Mrs. Overacre from all liability for their default, the character and value of the note, as a security, were so essentially changed that it was no longer the note which .the plaintiff had guaranteed, and he, as well as Mrs. Overacre, was freed from the risk of its future collection. By thus acting the defendants made the note their own sole property, and, taking upon themselves the whole risk of its collection, became at once liable to the plaintiff for his proportion of the debt it had been given to secure. They had included this sum in the notes which, without authority, they had taken, and were thus estopped from saying that it had not been collected.

That the effect of the arrangement made by the defendants with Bailey & Brothers, was to annul the guarantee of Mrs. Over-acre and discharge her from all liability, cannot be doubted. A guarantee of the collection of a promissory note, or other evidence of a debt, does not mean that it shall be paid at its maturity, but that, by a prompt and diligent use of the means which the law affords, its payment may be enforced. Hence, if the debt so guaranteed is unpaid at its maturity, the creditor, if he wishes to retain the liability of the guarantor, must, without delay, commence proceedings for its recovery, and it is only when he can show that all the remedies which the law gave him against the debtor had been exhausted, that he is in a condition to demand payment of the debt from the guarantor. If he delay, without necessity, to commence the necessary proceedings, or, when an action has been commenced, to prosecute it to judgment and execution, the delay is imputed to him as “ laches" and the guarantor is discharged. (Taylor v. Bullen, 6 Cow. 624; Compton v. McNair, 1 Wend. 455; Eddy v. Stanton, 21 Wend. 255; Moakly v. Riggs, 19 John. 69; Loveland v. Shepherd, 2 Hall, 159; Burt v. Horner, 5 Barb. 501.)

It is needless to dwell upon the application of these remarks to the case before us. It is obvious and decisive. According to the authorities to which we have referred, the abandonment by the defendants, without the consent of Mrs. Overacre, of the suit which they had brought against Bailey & Brothers, was alone sufficient to discharge her.

But we shall not stop here. The discharge of Mrs. Overacre, in the present case, does not rest merely upon the “laches" but upon the positive acts of the defendants. Hence, the same consequence would have followed, had she guaranteed the payment and not merely the collection of the original note of Bailey & Brothers, or had the note been payable to her order and she had been duly fixed as an indorser.

It is familiar law, that a surety is discharged in all cases where it appears that, without his assent, the time of payment by an agreement, binding on the creditor, was extended to the debtor, and this even when it is certain that the extension of credit worked no injury whatever to the surety, (Gahn v. Niemcewitz, 11 Wend. 312, Nelson, J.; Hoffman v. Hubbert, 13 Wend.; Hubby v. Bowen, 10 John. 70; Miller v. McCan, 7 Paige, 455; Bangs v. Strong, 10 Paige, 11, S. C. affir.; 7 Hill, 250; Boner v. Tiernan, 3 Denio, 378; Hubbell v. Carpenter, 3 Barb. 520); and it is equally well settled that the taking of a bill or note from the debtor, payable on a future day, suspends, until then, the creditor’s right of action for the original debt, and therefore operates, in all cases, as an extension of credit, by which not merely an ordinary surety, but an indorser, not assenting to the transaction, is discharged. (Putnam v. Lewis, 8 John. 389; Myers v. Wells, 5 Hill, 465; Bank of Orleans v. Barry, 1 Denio, 116; Holmes v. De Camp, 1 John. 34; Burdick v. Green, 15 John. 243; Colemard v. Lamb, id. 349; Jackson v. Hacksley, 16 John. 273; Fellows v. Prentiss, 3 Denio, 512; McLean v. La Fayette Bank, 3 McLean, 589.) In the case last cited, an evidence on a promissory note, which had been unused by all parties except himself, was held, by Mr. Justice McLean and his associate, to be discharged, upon the ground that as to him the renewal operated as a payment. (3 McLean, 620.) The case of Myers v. Welles, although differing in its circumstances, was decided by our Supreme Court in favor of an indorser, upon the same principle, namely, that by taking other notes from the makers for the same debt, credit had been extended to him, without the defendant’s knowledge or assent, and in the case of Fellows v. Prentiss, it was held, by the court of errors, that the' taking from the debtor his promissory note, payable only one day from its date, was an effectual discharge of his surety; and that parol evidence to show that the note was given merely as a memorandum of the sum due, and not as an extension of credit, as contradicting the plain meaning and legal effect of the instrument, was inadmissible.

It is therefore apparent that the cases upon which the referee, in his written opinion, seems to have relied, have no application. The cases which he has cited, only prove what, as a general r'nle, is undoubtedly true, that the taking from the debtor his promissory note for an existing debt, is not, as between the parties an absolute satisfaction of the debt; but they do not prove that in such cases the creditor’s right of action is not suspended until the note he has taken becomes due, nor consequently, that the note is not conclusive proof of an extension of credit, by which a surety or indorser is discharged. There is, in truth, no conflict in the decisions, and those to which I have referred, conclusively show that a negotiable note taken from a debtor, even as between the immediate parties, is a conditional satisfaction of the debt which forms its consideration, and that in respect to a surety, whether a guarantor or indorser, whose assent to the transaction is not proved, the satisfaction which it works and of which it is evidence, is absolute. It may be true that, had the defendants retained the possession of all the notes of Bailey & Bros., they might have had an election to sue the makers upon those last taken, or upon that which the plaintiff had transferred to them; but it is certain, that until the notes last taken were unpaid when due, the defendants had no right to sue at all, and equally so, that by this voluntary suspension of their right of action, the sureties on the note transferred to them, were wholly discharged; and it has already been shown, that this is all that was necessary to be proved to render the defendants liable in the present action.

Speaking for myself, I am convinced that, by the immediate effect of the arrangement made by the defendants with Bailey & Bros., the original note which the defendants then held, as an evidence of debt, was satisfied and extinguished. The notes taken by the defendants under this arrangement, were made payable to their own order, not to that of the payee in the original note; they were taken for the whole sum, including interest then due on the original note, and as they carried interest, they converted into principal, the interest they included. The notes thus taken, it seems to me, in their substance, as well as in their form, were a new contract, by which that then subsisting between the parties was displaced and superseded; and I observe, with gratification, that in Fellows v. Prentiss, where the notes taken from the debtor were of a similar character, Chancellor Walworth expressed an opinion to the same effect.

It is quite unnecessary, however, nor do we mean to place our decision upon this ground, since it is enough to say, that the notes thus taken were an unauthorized extension of credit, by which, as between the defendants and the sureties, the original debt was extinguished.

The referee lays stress upon the fact that the original note was not surrendered or cancelled when the other notes were taken; but as stripped of its guarantee, the original note had lost its value, as it was no longer- evidence of a subsisting debt, and no action could then be maintained upon it, either against the makers or guarantors; the fact that the defendants retained its possession is regarded by us as plainly immaterial. In Fellows v. Prentiss, and in Myers v. Welles, the creditor retained possession of the note from which the indorser was held to be discharged. Nor can we attach any importance to the fact that the defendants in their letter to the plaintiff, stating the terms of the arrangement they had made with Bailey & Bros., declared that they retained the note of Mrs. Overacre, doubtless meaning that which she had guaranteed, as a collateral security. It is manifest, that without her consent, they could not thus retain the note, and certainly, for such a purpose, the rights of the plaintiff cannot be affected by their intention to do what the law forbade them to do, namely, by a valid agreement give time to the principal debtors, and yet retain the liability of their surety.

Again, were it possible for us to hold that the notes taken by the defendants from Bailey & Bros., were taken merely as a collateral security, and had not the effect of suspending at all their right of action upon the original note, there is still another ground disclosed by the evidence upon which we should be compelled to say that the defendants had rendered themselves liable' to the plaintiff to the extent of his demand.

It was proved, and proved without objection, that before the commencement of this action, the defendants-had parted with, for value; one of the notes, which, under the arrangement with Bailey & Bros., they had received. From this time, therefore, their right to maintain an action upon the original note, if not wholly gone, was certainly suspended, and from this time, therefore, there was certainly an extension of credit, by which Mrs. Overacre and the plaintiff were discharged. These additional facts, in the opinion of my brother Woodruff, would be conclusive, if standing alone, and in that opinion, I entirely agree; but we do not mean to intimate any doubt as to the sufficiency of the reasons before given, upon which it must be understood that we rest our judgment.

Lastly, I have said, that a negotiable note taken from a debtor for a precedent debt, as between the parties is a conditional payment. In the language of Chief-Justice Spencer, in one of the cases, it is a payment sub modo. Hence, although the creditor of the note is unpaid at its maturity, and may bring an action for the original debt, yet he cannot recover unless upon the trial he produces and -cancels the note, or proves its loss, or destruction. (Holmes v. O'Camp, 1 John 24; Pintara v. Inchington, 10 John 104; Burdick v. Green, 15 John 247.) We cannot believe that the same facts which, as evidence of payment, would have discharged Bailey & Bros., had they been sued by the defendants on their original note, namely, that the notes which they had given for the same debt were outstanding and not cancelled, were just as conclusive to charge the defendants in the present action. If the original note was satisfied in respect to its makers, a fortiori was it satisfied in respect to the plaintiff?

The result is, that in our opinion, the referee drew a wrong conclusion from the facts which he states to have been proved. The true conclusion was, that the defendants, before the action was brought, in judgment of law, had collected the note of Bailey & Bros., which the plaintiff transferred to them, and the plaintiff was therefore entitled to demand and recover from them the surplus, with interest, which, in that event, they had agreed to remit to him.'

We pass to the second question. It is insisted that the agreement of the defendants, as found by the referee, is not that set forth in the complaint, and that the referee was therefore justified in holding that the plaintiff had failed to establish, by proof, the cause of action alleged in this complaint; and was justified, upon this ground, in dismissing the complaint. Although this Objection to a reversal of the judgment appealed from, has created some hesitation in our minds, we are satisfied upon reflection, that it cannot "be allowed to prevail. We aré satisfied that there was no such failure of proof as could justly be considered a bar to the plaintiff’s recovery. It is true, that the agreement found by the referee varies from that set forth in the complaint, but it does not follow that the variance was such as to render a dismissal of the complaint necessary or proper. The promise of the defendants, as set forth in the complaint, was absolute, as found by the referee, conditional; but it must be remembered, that the "condition was shown to have' been fulfilled, and the liability of the de fendants to be exactly the same as if the allegation in the complaint had been literally proved. It may, therefore, well be doubted, whether this variance, as it could not by possibility have misled the defendants, ought not, under section 169, to have been wholly disregarded. It can hardly be said that the cause of action alleged in the complaint was unproved in “ its entire scope and meaning,” and if not, there was no “ failure of proof” within the meaning of the Code. (Code, § 171.)

It is not necessary, however, to place our decision upon this ground, since there is another, upon which, with entire satisfaction to ourselves, it may be placed. The letter of the defendants, stating the terms of the arrangement which they had made with Bailey & Brothers, was read in evidence without objection, and its contents—the facts it proved—were alone sufficient to establish the right of the plaintiff to recover. It was not at all necessary to prove, in addition, that the notes of Bailey & Brothers, taken under the arrangements, had been in fact negotiated or paid; hence, the referee might, with entire safety, have rendered a decision in favor of the plaintiff upon the evidence before him, leaving it to the court, in the exercise of the discretion given by section 173, and in manifest furtherance of justice to sustain a judgment, upon his report, by so amending the complaint as to conform its allegations to the facts as proved, and such, in our opinion, is the, course that the referee ought to have followed, such the decision he ought to have made.

The judgment appealed from must, therefore, be reversed, and there must be a new trial, with costs to abide the event. If the plaintiff so elect, the order for a reference will be vacated.


source: Caselaw Access Project

author: By the Court. Bosworth, J.

license: Public Domain

text:
    Clark and McConnin v. J. Dearborn, impleaded with A. Dearborn.
    When one member of a firm makes a note in the firm’s name, and puts it in circulation, and it is shown that it was made without the knowledge or consent of the other partner, and for a matter not relating to the partnership business, an indorsee cannot recover against the latter, without proof that he took it before maturity, in good faith, and for value. Evidence that such note with others, was “passed to the plaintiffs for goods sold,” and that “these notes were left with the plaintiffs as collateral security,” is not sufficient to establish that the plaintiffs parted with the goods on the credit and security of the note.
    The same is true as to a note made by one member of a firm, in the firm’s name, after its dissolution, and lent to the payees, without the authority or consent of the other partner.
    When a note thus made comes into the hands of an indorsee for value, it is a question of fact for the jury, whether such indorsee took it with notice of the dissolution of the firm.
    The fact that an account which had been opened with a bank, in the firm’s name, during its existence, was continued in such name to the date of the note, cannot be proved by parol, without producing the books of the bank, or connecting the defendant, not signing or assenting to the note, with such subsequent transactions. The books themselves are the best evidence of the dates of the entries, and of the contents or terms of such entries.
    The jury should dispose of all controverted questions of fact, and when a verdict is taken subject to the opinion of the court at General Term, it should be on questions of law only. And although liberty be reserved to the court to find the facts, it cannot at General Term undertake, with propriety, to do so, especially if it be found in favor of a party who has been permitted to give incompetent testimony against the objection and exception of the adverse party, and the finding must be founded, in part, on such evidence.
    (Before Doer, Bosworth and Woodruff, J.J.)
    Dec. 1, 1856 ;
    Feb. 14, 1857.
    This action came before the court, at General Term, on a verdict taken, subject to the opinion of the court, for the plaintiffs. It was brought on a note alleged to have been made by the defendants, in their firm name of “ J. & A. Dearborn & Co.,” dated at the city of New York, the 28th day of December, 1853, payable four months after its date, to the order of D. 0. Ketchum & Co., for $705.31, and to have been indorsed by the payees, and to have become the property of the plaintiffs, for value naid for it. before it was due.

      The answer of John Dearborn, who alone defended, averred that the defendants did not make the note; that, at the time it was made, Alexander Dearborn, the other defendant, was not his partner, and that there was then no such firm as “ J. & A. Dear-born,” and put in issue the indorsement of the note by the payees, and the plaintiffs’ ownership for value. It also averred that the note was made by Alexander Dearborn, at the request of, and for the accommodation of the payees, and without any authority given to Alexander Dearborn to bind John Dearborn, or make him liable by reason thereof.
    The action was tried before Slosson, J., and a jury, on the 19th of March, 1855.
    It was proved that the firm of J. & A. Dearborn was dissolved on the 1st of February, 1853 ; that Alexander Dearborn made the note without consideration, and to accommodate the payees, and delivered it to D. 0. Ketchum, one of such payees. The evidence as to the transfer of it to the plaintiffs, and as to the consideration paid by them for it, was that of D. 0. Ketchum, and is as folows: He said,—
    “ I passed this note to the plaintiffs with other notes; in all, the sum of one thousand dollars, for goods sold to us by the plaintiffs.
    “ Q. Were these notes left with plaintiffs as collateral security?
    [Question objected to by the plaintiffs’ counsel. Objection overruled; and to the decision in that behalf the counsel for plaintiffs then and there duly excepted.]

      “ A. They were.”
    This was the whole evidence on that point.
    To show that the defendants had done acts, in the firm name of
    & A. Dearborn, after the 1st of February, 1853, in addition to other evidence given, the plaintiffs called, as a witness,

      Robert Leonard, who, being duly sworn, deposed as follows:—■ “I was a book-keeper in the Butchers’ and Drovers’ Bank in the year 1855, in and previous to the month of December of that year; I knew of an account being kept there of J. & A. Dear-born, but not of the firm.
    “ To how late a day did you know of such an account being kept in the bank ?
    [Objected to by the counsel for defendant John Dearborn, on the ground that the books df the bank, in which the account is kept, should be produced, and that John Dearborn should first be personally identified or connected with the account. The objection was overruled and the question allowed, and to the decision in that behalf the counsel for said defendant then and there duly excepted.]

      “A. The account was kept until the 31st day of August, 1854; it might have existed several years previous to my going there; I kept the account from July, 1853, to 31st of August, 1854; I don’t know who constituted that firm, nor can I say when the account commenced.”
    The plaintiffs were not shown to have had any dealings with the defendants’ firm, which the witnesses sometimes spoke of as J. & A. Dearborn & Co., and sometimes as J. & A.- Dearborn; and no notice of its dissolution was shown to have been published in any newspaper.
    The printed case states, that on the evidence being closed, the court directed the jury to find a verdict, by consent of parties, for the plaintiffs, in seven hundred and forty-nine dollars and eleven cents damages and costs, subject to the opinion of the court, at a General Term thereof, on the questions of law, and also as to the facts, as if they were before a jury, (except as to the fact specially found by the jury, under the question specially propounded, as to which the finding of the jury was to be conclusive) with liberty to turn the case into a bill of exceptions or special verdict.
    The court also charged the jury, and directed them" to answer the following question:
    At the time of the making of the note in question, December 28th, 1853, did D. 0. Ketchum know of the dissolution of J. & A. Dearborn & Co., and of the withdrawal of Alexander from the firm ?
    The jury answered, Yes; and thereupon found for the plaintiffs, as directed by the court, and the verdict was entered accordingly.

      Thaddeus S. Lane, for plaintiffs.

      John Graham, for defendant.
   By the Court. Bosworth, J.

The note, on which this action was brought, bears the copartnership name of “ J. & A. Dear-born,” and is dated the 28th of December, 1853. That partnership was dissolved on the 1st of February, 1853. The note was made, and the partnership name signed to it, by Alexander Dear-born, without the knowledge or assent of John Dearborn. The note was made for the accommodation of D. 0. Ketchum & Co., the payees. D. 0. Ketchum, who received it from Alexander Dear-born, and who indorsed and passed it to the plaintiffs, knew when he took it that the firm of J. & A. Dearborn had been dissolved.

H there were no other obstacle to a recovery, the plaintiffs would be required to prove, in order to maintain their action, that they took it in the regular course of business, and paid value for it. The only evidence on this point is, that “ D. 0. Ketchum & Co. passed this and other notes to the plaintiffs, amounting in all to the sum of $1000, for goods sold to his firm by the plaintiffs. These notes were left with the plaintiffs as collateral security.”

This evidence does not show that the goods were sold and delivered on the security of these notes. If the notes were transferred after the sale and delivery of the goods, as security for a pre-existing indebtedness, the plaintiffs are not holders for value, within the meaning of the rule, which protects a bona fide holder for value, against a defence based upon the fact, that the note was made by one partner without the knowledge or consent of the other, for a matter in nowise connected with the business of the copartnership.

The burthen of proof was on the plaintiffs. The facts were all within their own knowledge, and the evidence of them within their own control. The only witness examined upon the point, and he was a party to the transfer, could have testified whether the goods were, in fact, sold and delivered on the credit of the notes. All that he said is entirely consistent with the fact, that the notes were transferred after the sale and delivery of the goods, to secure a pre-existing debt. He does not say that this is hot the truth of the transaction.

He does not say the notes were received as payment. His testimony is express that they were left as collateral security. He does not testify that they were left when the goods were purchased, or that they were then agreed to be left as security for the payment of the goods, and were subsequently transferred in pursuance of that agreement. At least, that much he was required to prove, and not having proved it, he is not entitled to recover for that reason, if there were no other.

The evidence given does not justify the inference, in favor of a party who was bound to establish the fact affirmatively, that the plaintiffs parted with the property on the credit and security of the note.

But even if the plaintiffs paid value for the note, or parted with the property on the credit and security of the note, it would then become important to determine, whether they took it without notice of the dissolution of the firm of J. & A. Dearborn. The plaintiffs are not shown to have had any dealings with the firm. No notice of its dissolution was published in any newspaper. It then became important to ascertain in what manner the members of the firm had conducted after the dissolution took place. Nearly eleven months intervened between the time of the dissolution and the date of the note. The acts of the parties may have been such as to justify the inference, that the fact of the dissolution of the firm had become as notorious as that of its previous existence.

And the acts of the parties may have been such as to justify the inference, that the fact of the dissolution had not become generally known, and that knowledge of it, in all reasonable probability, was possessed by those persons only, to whom actual notice had been given.

Among other evidence, given to prove that the facts of the case were consistent with the latter hypothesis only, Robert Leonard, a book-keeper of the Butchers’ and Drovers’ Bank, testified that “ J. & A. Dearborn,” kept an account in that bank down to the 31st of August, 1854.

After he had testified that he knew an account of J. & A. Dear-born was kept in that bank, he was asked this question: “ To how late a day did you know of such an account being kept in the bank ?”

The counsel for John Dearborn objected to the question, on the ground that the books of the bank in which the account is kept should be produced, and that John Dearborn should first be personally identified or connected with the account. The objection was overruled, and the question allowed to be put, and the counsel of John Dearborn then duly excepted to the decision.

This decision, for all practical purposes, allowed parol evidence to be given of the contents of the books. The witness was, in effect, asked to state, and, in fact, did state, the dates of the entries, notwithstanding the objection that those facts could only be proved by the books themselves.

If it be assumed that competent proof of the fact of the entries would make them evidence, that such transactions as they indicated had been had between the bank and the late firm of J. & A. Dearborn, at the times the entries bear- date, without showing that the acts which they recorded had been done by one of that firm, it is quite clear, as we think, that the books were the best evidence of the date of the entries, and of the contents of the entries themselves.

The objection having been taken, that the books were not produced, and that parol proof of their contents could not be allowed, we think the Judge erred in admitting the evidence.

Even if the court would consent to find the facts, which should have been found by a jury, and if it should find that the plaintiffs, when they took the note, had no knowledge of any facts and circumstances which should have induced them, as men of ordinary caution and prudence, to. suspect that a dissolution had taken place, as such fact would be found in part upon incompetent evidence, which has been received against the objection and exception of the defendant, our judgment would be erroneous, if in favor of the plaintiffs.

Whether the plaintiffs had knowledge of the dissolution of the firm, if they had previously heard of its existence, was a question of fact for the jury.

The defendant was undoubtedly bound to show, as against the public, that notice of the dissolution had been published, or such acts as were equally well calculated to apprise the community of that fact.

As illegal evidence was admitted against the objection of the defendants, and no judgment can be given for the plaintiffs on the finding of any fact in their favor, in proof of which such evidence was admitted, the verdict must be set aside, and a new trial granted, with costs to abide the event.


author: By the Court. Woodruff, J.

text:
    George S. St. John v. The Mayor, Aldermen, etc., of the City of New York.
    The corporation of the city of New York have fall authority, under their charter, to establish public markets and market-places in any location where, in their judgment, the interests or convenience of the public will be promoted by the measure.
    The owners of houses and lots upon a market-place hold in subordination to the right and duty of the corporation, to do whatever is necessary for the maintenance of the market.
    Such owners must, therefore, submit to whatever inconveniences and losses may result to them from a just exercise by the corporation of its powers and authority.
    When the rebuilding or repairing a market requires a temporary obstruction in the street or passage in the market-place, the public and adjacent owners must submit to the inconvenience in consideration of the paramount interests of the public, for whose use public markets are established and maintained.
    An adjacent owner may be entitled to maintain an action for damages against the corporation, where the obstruction, taking into view the nature of the work to be done, and the necessity of providing in the market-place suitable accommodations for those having the right of selling provisions in the market, is unnecessary and unreasonable, or when it creates a nuisance more noxious and offensive than is ordinarily incident to a market-place when kept in proper'order and condition for market purposes, or when the obstruction is continued beyond a reasonable time; but whether, upon all or any of these grounds, the plaintiff, in such an action, is entitled to recover, is a question of fact for the determination of the jury.

      Held, that upon the trial, these questions, upon the evidence that had been given, - ought to have been submitted to the jury, and that the Judge erred in giving to the jury a peremptory direction to render a verdict for the plaintiff for the damages claimed.
    Upon the trial, evidence was admitted to show the amount of the loss Sustained by the plaintiff in his business, as the keeper of a refectory, by proving the actual diminution of his receipts, and the increase of his expenses, during the continuance of an obstruction created, by authority of the defendants, in the street in front of Ms dwelling, and by connecting the loss thus resulting with the obstruction, as its necessary or probable cause, and the Judge instructed the jury that the plaintiff was entitled to recover as part of his damages the loss thus proved, and was not bound or limited to show what particular persons had withdrawn their custom from the plaintiff in consequence of the existence and continuance of the obstruction.

      Held, that had the plaintiff made out his title to recover at all, the evidence in question was properly admitted, and the instruction given to the jury entirely correct, the case belonging to a class in which the loss of profits is a proper measure of damages, and the evidence directly tending to show the extent of such loss.
    Hew trial; costs to abide event.
    (Before Duer, Bosworth, and Woodruff, J.J.)
    December 1, 1856;
    February 14, 1857.
    Motioh on the part of the plaintiff for judgment upon a verdict in his favor, taken subject to the opinion of the court- at General Term, upon .the exceptions stated in the case, upon which the motion was made, to the ruling and charge of the Judge upon the trial.
    The nature of the action, (which was tried before Duer, J., and a jury, in January, 1856,) the tenor of the pleadings, the facts in evidence, and the questions of law arising upon the exceptions, sufficiently appear in the opinion of the court.

      A. J. Willard, for the plaintiff.

      Wilcoxson, for the defendants.
   By the Court. Woodruff, J.

The complaint herein avers that the plaintiff is the occupant of certain premises situated upon Catharine slip in this city, used as a refectory and lodging-house. That the premises are situated directly opposite to a public market and near to a public ferry, and “ that the street has been, was, and is a great public thoroughfare.” That the prosecution of the plaintiff’s business and the public health and convenience required that “ the said street” should be kept free and clear of and from all permanent obstructions of every kind.

The complaint then proceeds to charge the defendants with having erected, or caused, or permitted, or ordered and directed to be built upon and about the side-walk and street adjoining the plaintiff’s premises, divers stalls for the sale of meat, vegetables, and other articles usually sold at markets, amounting to, being, and constituting an appropriation of the public street, to the plaintiff’s injury, etc. It states the continuance of those stalls and their use for the purposes aforesaid, by various persons, from June 29th to September 25th, 1854.

That the effect was, to obstruct the side-walk, render the street inconvenient for use, collect around the plaintiff’s premises garbage and filth, offensive and injurious, etc., and in other ways stated, interfering with, suspending, interrupting, and obstructing the due prosecution of the plaintiff’s business by keeping away his patrons and visitors, etc.; whereby he lost gains, profits, etc., etc., and is damaged to the amount of two thousand dollars.

The defendants answer by a general denial of all the plaintiff’s allegations.

Upon the trial, the jury were instructed unqualifiedly in these terms: “ The plaintiff is entitled to recover,- and you have only to assess the damages.”

The defendants having put in issue all the allegations in the plaintiff’s complaint, the latter was bound, in order to entitle himself to such an instruction, to establish, by evidence uncontroverted and admitting of no reasonable doubt, every fact essential to his right to recover. We think the case, as disclosed by the evidence, did not warrant any such peremptory direction.

The evidence showed, without contradiction and without any controversy or question, that the plaintiff’s premises were situated on a market-place in the city of Kew York, having a passage along the front of the premises, and a side-walk. Whether such passage was ever laid out as a street or highway, or how or when, was in no wise proved nor attempted to be proved.

The proper inference, from the language of the witnesses is, that this passage was used as a street between the front of the plaintiff’s house and the market, and used as such not only by the plaintiff and his customers, but by passengers to and from the ferry at the foot thereof at the East River. But whether it was an ancient highway, or a street opened as such, or simply an open space appropriated for a market-place—its use as a street being only incidental and subordinate to its use for the main object to which it was appropriated, viz., the purposes of the market—the plaintiff did not show.

The evidence also showed that the reason for the temporary obstruction of this passage and side-walk was the rebuilding of the market. The defendants were the-proper party to cause such rebuilding, and whose duty it was, if the public convenience required it, to rebuild and repair; and from the authority and duty of the defendants to provide, repair, rebuild, and superintend the public paarkets, results the inference that it was done by their authority, when their ordinary agents and officers, the superintendent of streets, superintendent of markets, and clerk of the market, are shown to have been acting in the matter.

It is quite clear that under their charter the defendants have all needful authority for this purpose, and that the owners of houses and lots upon a market-place hold in subordination to the right and duty of the defendants to do whatever is necessary for the maintenance of the market, and they must submit to whatever inconveniences necessarily result from the exercise of this authority. The location selected by the present plaintiff had its advantages and its disadvantages; its contiguity to the marketplace, where 'multitudes resorted daily, rendered it valuable for the purposes of the plaintiff’s business., He suffers no wrong if, while he gathers the fruits of this incidental benefit, he also yields to the demands of the public and realizes the disadvantages of his voluntary location, when the repairs or rebuilding of the market necessarily interrupt or diminish the gains he ordinarily receives. If the rebuilding of the market required a temporary obstruction of the street or passage in the market-place in front of the plaintiff’s premises for a reasonable time, while the work was in progress, the public and adjacent owners are bound to submit to the inconvenience for the sake of the greater and paramount welfare of the same public for whose use the public markets are authorized by law to be built and maintained. (City Charter, § 17; Ordinances read in evidence; Wilkes v. The Hungerford Market Co., 2 Bing. N. C. 281.)

This view of the subject would not authorize obstructions which were not reasonable under the circumstances, taking into view the work which was to be done, and the propriety and necessity of providing within the market-place suitable accommodations for the sale of provisions during the progress of the work; nor would it authorize the defendants themselves to maintain a nuisance, in the sense of that which is noxious or offensive, beyond what is, ordinarily incidents a market-place when kept in proper order and condition for market purposes. Nor would it authorize the continuance of such obstruction for an unreasonable time.

But it may be added, that there is nothing in the proofs in the case which shows that the marketplace in question was not so-established, and of such a character that the defendants may not appropriate the whole space set apart as a market-place to use as such by the erection of stalls or market-buildings thereon, if in the exercise of their authority they determine that it is required by the public interest and convenience. And in respect to the acts or neglects of the tenants of the stalls, by which the stalls occupied by them became offensive, the question of the defendants’ liability will depend upon the inquiry, whether they have neglected any duty which they owe to the public and to occupants of the neighborhood to see to it, that the public places in the city are kept in a proper condition.

The case of Lacour v. The Mayor, etc., (3 Duer, 406,) and the authorities there cited, may be profitably consulted for the principles bearing upon this subject.

Assuming, then, that the rebuilding of the market was done by the authority of the defendants, and that during its progress any other parts of the market-place might temporarily be used for market purposes, of which we entertain no doubt; and assuming that the defendants, under the evidence, sufficiently appear to have authorized the erection and sanctioned the continuance of the sheds complained of, we think that the ruling upon the trial proceeded upon an erroneous assumption in regard to the defendants’ liability. The form in which the case is presented to us suggests that this ruling was made for the purposes of the trial in order that the question might be presented to the General Term for more deliberate consideration.

The question to be determined, was not merely whether the passage in front of the plaintiff’s house was obstructed, but also whether access to his premises was obstructed unnecessarily and unreasonably, or for an unreasonable time; and also, if the right of the defendants to cause the obstruction was conceded, or appeared from the evidence, then whether it was needlessly offensive or noxious, and the defendants caused the nuisance in this latter sense, or neglected any duty which they owed to the plaintiff by not abating it, if it proceeded from the acts or neglect of the tenants of the stalls or sheds, and the same was for these reasons needlessly injurious to the plaintiff.

During the erection of the new building, we cannot doubt the right and duty of the defendants to continue to provide proper places for the sale of provisions within the limits of the marketplace if there be space for that purpose, and. if this be done for a reasonable time only, and in a proper manner, the plaintiff and others though put to temporary inconvenience, and, perhaps, subjected to pecuniary loss, have no right of action. The very location they have selected subjects them to the consequence of a rightful exercise of the defendants’ duty and authority for the public good.

In regard to the ruling on the trial in receiving evidence to prove the plaintiff's damages, there was no error, if the defendants are liable at all, and so far as they are liable, they are bound to recompense the plaintiff for the damages even necessarily produced by their acts, under the view above suggested.

It is not denied that loss of custom is a proper ground of recovery.

To prove this was the object and direct tendency of the evidence. The plaintiff showed the actual receipts of his hotel for a year or more, previous to the obstruction complained of, the actual daily receipts during the continuance of the obstruction, and again, the actual daily receipts for some months after the obstruction was removed.

This furnished the means of computation and of satisfactorily ascertaining the diminution of receipts. He also showed that the expenses were in the same, or about the same, ratio to the receipts during the whole period. When it is borne in mind that the plaintiff kept a refectory and lodging-house, the resort of daily visitors for their various meals, and of transient persons for their lodgings, it is difficult to suggest any other mode of ascertaining the effect upon the plaintiff’s business than this. To say that he must prove what persons were prevented visiting his house, and what meals they would have taken and paid for, is to suggest a mode of proof obviously impracticable, and if it was done, it would still leave the same inquiry: what would have been the profits upon the meals they took and paid for ? which is now objected to.

The loss of custom, and the consequent loss of profits, is the very matter to be recompensed in this action, and the cases to which we are referred, in which loss of profits, it is said, cannot be recovered for, are not analogous,

In De Wint v. Wilts, (9 Wend. 325,) plaintiff recovered for loss of the rent he had been accustomed to receive for a house he had erected to be let as an inn or tavern, although in general, in actions for breach of contract, loss of profits is not recoverable. (See Blanchard v. Ely, 21 Wend. 350; Downie v. Potter, 5 Denio, 306; Giles v. O'Toole, 4 Barb. 261.)

And purely contingent or speculative profits, it is sometimes said, are not the subjects of recovery. This is a somewhat loose statement of a proposition which does not exclude all reference to probable profits. It is undoubtedly true, under some circumstances, in every sense, e. g., A agrees to let a tavern-house to B, and afterwards refuses to give a lease. The actual value of the house, contrasted with the sum paid or to be paid, therefore, is the damage sustained; and yet the elements of value consist in location, good will, if any, the long habit of travellers to resort to a well-known stand, and like circumstances, and the experience of the past must necessarily enter into the estimate of both the witnesses and the jurors. ' On the other hand, if a house be hired for a dwelling, the cost of another having equal advantages is the only guide in determining the damages.

One who falls to build and finish a house within a time specified in his contract, renders himself liable to pay what the use of the house is worth during the period of delay, and not the possible or probable profits of a business which a man may or may not, at his option, carry on within it.

Actions on the case for consequential damages, caused by the defendant’s fraud or tort, proceed upon a more liberal view of the measure of compensation; e. g., fraudulent violation of an agreement intended to preserve the good will of a business; a slander. of a man in his profession, or of a merchant in his credit, and like cases of consequential injury, in which the measure of damages is not necessarily fixed and certain.

The value of goods to be carried, at the place of delivery.

These and many other cases necessarily bring the subject of profits into view.

To illustrate this precise case, suppose a tort feasor had, on a given day, by some wrongful means, prevented any customers visiting the "plaintiff’s house, can it be doubted that, in an action for the consequential damages, he would be hable for the loss, sustained by the plaintiff thereby ? I think not; and the mode of proving the loss would be just the one adopted on the present trial.

In Finch v. Brown, (13 Wend. 601,) the Supreme Court, and, in Fitch v. Livingston, this court held that in case of wrongful collision, the party wrongfully injured could not by a proceeding by attachment, under the statute, obtain a lien for any thing beyond the actual injury to the vessel and cost of repairs; but in both cases it is suggested, that in an action on the case for consequential damages, the owner may recover for loss of earnings. See Masterton & Smith v. Brooklyn (7 Hill, 61). The right to recover profits that are the immediate and direct consequence of even a breach of contract is sanctioned.

The case of Wilkes v. The Hungerford Market Co., (2 Bing. N. C. 281,) is like the present, and warrants the recovery of the damages claimed.

Iverson v. Moore, (1 Ld Raymond, 486,) and cases therein cited, are to the like purport; and in Lacour v. The Mayor, (3 Duer, 406,) above referred to, the right to recover for similar damages is discussed and fully recognized by this court.

Upon the ground first suggested, a new trial must be ordered; costs to abide the event of the suit.


text:
    Asa Willis v. John Orser, Sheriff.
    The complaint stated that on the 15th of November, 1854, the plaintiff was the owner, as mortgagee, of certain articles of merchandise particularly described, and that these articles on the 14th of December, in the same year, were in the possession of, and in a store occupied by the mortgagor, W. B. Willis; that the sum secured to be paid by the mortgage was payable on demand, and that prior to the 14th of December, its payment was demanded and refused; the plaintiff on the trial offered to prove that the possession of the merchandise was in fact changed, on the 15th of November, by its delivery to him on that day, but the court were of opinion that the variance between the proof so offered and the allegations in the complaint, was material, and, therefore, excluded the evidence.

      Held, that there was a reasonable interpretation of the allegations in the conu plaint, by which the supposed variance would have been wholly removed, and that this interpretation ought to have been adopted on the trial; consequently that the proof offered ought not to have been excluded.

      Held, that under § 169 of the Code, the alleged variance ought not to have been deemed material, since it did not appear that the defendant had been actually misled to his prejudice, in maintaining his defence, and there was no affidavit to that effect.

      Meld, that upon the evidence in the case, the court had no right to consider the question, whether the mortgage to the plaintiff was fraudulent or not.
    New trial ordered, costs to abide the event.
    (Before Duer, Bosworth and Woodruff, J.J.)
    Heard, December 4;
    decided, February 14, 1857.
    Motion on behalf of the plaintiff for a new trial, upon a case containing exceptions that were directed to be heard, in the first instance at General Term.
    The action was brought to recover damages for an alleged wrongful seizure and sale by the defendant, under order of his office as sheriff, of certain goods and merchandise belonging to the plaintiff.
    The complaint stated that the plaintiff on or about November 15th, 1854, became the owner of certain goods and merchandise, particularly described, by virtue of a mortgage upon the same, for $1000, bearing date on the same 15th day of November, 1854, and on that day, made, executed, and delivered to the plaintiff, by one Wm. B. Willis; that the same mortgage was duly filed, and that the said articles of merchandise were in the possession of, and situated in the store occupied by Wm. B. Willis, in Spring street, in the city of New York, until on or about the 14th day of December, 1854; that the sum of money aforesaid was payable, by the terms of the mortgage, to the plaintiff upon demand, and that prior to the said 14th day of December, its payment had been demanded by the plaintiff and refused; that the defendant on or about the 14th day of December, then being sheriff of the city and county of New York, by virtue and under color of his office, forcibly and wrongfully took possession of the said goods and merchandise, and wrongfully sold and disposed of the same, although forbidden by the plaintiff, and having notice at the time of the plaintiff’s title as mortgagee and owner, and that the said goods and merchandise, were of the value of $1000, for which sum, with interest and costs, the complaint demanded judgment.
    The answer of the defendant, after denying specifically the allegations of the complaint, sets up as a separate defence, that the goods in question were rightfully seized and sold by the defendant as sheriff, under and by virtue of certain executions against W. B. Willis; that the same were then in the possession of the said Willis, and were his property, or that he, Willis, had an interest therein, liable to a levy and sale on an execution against him.
    The case was tried upon the issues made by the pleadings before Slosson, J., and a jury, at a trial term in December, 1855.
    Upon the trial, the mortgage to the plaintiff was produced and read, and its execution, delivery, and consideration proved. The mortgage was conditioned to be void if the mortgagor should pay to the mortgagee, his executors, etc., on demand, the full sum of $1000; and the mortgage also contained a provision, that, in case default should be made in the payment of the said sum, it should be lawful for the mortgagee, his executors, etc., to take and carry away the goods and chattels mortgaged, and to sell and dispose of the same.
    The plaintiff then offered to prove by Wm. B. Willis, that the possession of the property contained in the mortgage was changed from the witness to the plaintiff, on the 15th of November, 1854, the day on which the mortgage was executed. The defendant’s counsel objected to this testimony on the ground that it was in conflict with the allegation in the complaint, that the property was in the possession of Wm. B. Willis until on or about the 14th day of December, 1854. The court excluded the evidence, and the plaintiff’s counsel excepted to the decision.
    The counsel for the plaintiff then offered to put to the witness several distinct questions, all of which were overruled by the court upon the ground that the -object in each was to show that there was a change of possession on the 15th-of November. In each case .the plaintiff’s counsel excepted to the ruling of the court. The answer of the witness, to the questions proposed, would have shown the nature and character of his own possession from the 15th of November until the 14th of December.
    The counsel for the plaintiff then moved to amend the complaint by inserting an allegation, under which the evidence excluded would have been plainly admissible. The motion was denied, and the counsel excepted. No further proof being offered on the part of the plaintiff, the defendant offered to prove the judgments and executions set forth in his answer, but the Judge held the proof to be unnecessary, and upon the motion of the defendant’s counsel, dismissed the complaint with costs, directing the exceptions to be heard in the first instance at General Term.

      J. Graham., for the plaintiff,
    was now heard in support of the exceptions, and a motion for a new trial. He contended that there was no contradiction between the proof offered and excluded, and the allegations of the complaint; and that if there wás any variance, the amendment for which he had moved .ought to have been allowed, as there was no affidavit that the defendant was actually misled.

      E. W. Stoughton, for the defendant,
    insisted that the variance between the evidence excluded and the allegations in the complaint was certain and fatal, and that as the evidence, if admitted, would have changed materially the issues made by the pleadings, the Judge upon the trial, even under the liberal provisions of the Code, had no power to grant the amendment that was desired.
    The counsel also insisted, that it sufficiently appeared, from the evidence in the case, that the mortgage to the plaintiff was fraudulent and void.
   By the Court. Duer, J.

It is difficult to understand upon what ground the complaint was dismissed. In proving the execution, delivery, and consideration of the mortgage, it seems to us the plaintiff had given all the proof that in the first instance would be required to entitle him to recover. There is no pretence for saying that the mortgage was fraudulent on its face, and whether it was rendered so by the continuance in possession of the mortgagor, was a question of fact for the determination of the jury. Still, as it does not appear from the case, that there were any exceptions to the charge of the Judge on the trial, we have probably no right to place our decision upon the ground that has been stated, especially as this ground was not insisted upon by the counsel for the plaintiff upon the argument before us.

We proceed, then, to the main question actually raised by the exceptions on the trial, and to which the argument of the plaintiff’s counsel was confined, namely, whether the additional proof that was offered, on the part of the plaintiff, ought to have been excluded ? and, after much consideration, we are satisfied that the proof ought to have been admitted. We are satisfied that if admitted, so far from contradicting, it would have been entirely consistent with the allegations in the complaint reading-those allegations in their proper connection, and giving to them a fair and reasonable interpretation. The complaint avers that the plaintiff, on the 15th of November, was the owner of the property mortgaged, and the averment may well be construed to mean that he was, on that day, the absolute owner. Hence, the averment that follows, that Willis, the mortgagor, was in possession of the property from the date of the mortgage until the 14th of December, the day on which the sheriff made the levy, to render it consistent with the previous averment, may very properly be understood as referring to a possession in consistency with, and in subordination to, that of the plaintiff as owner. In other words, that his possession was merely that of a bailee, or agent, of the plaintiff. The proof that such was the true character of his possession, might very properly have been admitted, under the offer that was made, and the questions that were proposed. And had it been proved, upon the trial, that payment of the mortgage debt had been demanded, and refused, on the 15th of November; that the goods, etc., mortgaged were then delivered to the plaintiff as owner, and that he had placed the mortgagor in possession, as his agent for the sale of the goods, and that all the subsequent sales were on his account, we hold that it would be impossible to say that the proof would not have been consistent with the very words of the complaint; and it is equally clear that it would have entitled the plaintiff to recover, unless the defendant had then proved that the mortgage was fraudulent. Such, however, might have been the purport of. the evidence that was offered to be given, and which the Judge excluded.

Again, the complaint avers that the payment of the mortgage debt was demanded by the plaintiff, and refused by the defendant, prior to the 14th of December, and we see no reason to doubt that, under this averment, and the offer made on the trial, the plaintiff might have shown that the demand and refusal of the payment of the debt were, in fact, made on the 15th of November. Had this proof been admitted, it would have shown that, from that day, the right of the mortgagor to retain the possession of the property wholly ceased, and, consequently, from that day he had no longer any interest in the property that could properly be made the subject of a levy or sale, under an execution against him. Hence, the proof would have shown that the defendant, in making such levy and sale, was a mere trespasser, and, as such, necessarily liable to the plaintiff for the value of the property levied on and sold. It would, therefore, have thrown on the defendant the burden of justifying his acts, by proving the defence set up in his answer, and this he could only have done, by showing that the mortgage, as against the execution creditors, was fraudulent and void. It follows, we think, from these observations, that the supposed variance between the proof that was excluded and the allegations in the complaint, which, if it existed at all, was purely literal, might justly have been deemed immaterial, as the case stood when the evidence was offered. The plaintiff had proved all that he was bound to prove, in order to maintain his action, so that the only issue that remained to be tried, was that of the validity of the defence set up in the answer and the burden of proving, which rested solely on the defendant. It does not appear, nor can we understand how, the reception of the evidence that was excluded could here have misled the defendant to his prejudice in maintaining his defence, and no proof that he was so misled was given or offered. (Code, § 169.) We cannot assent to the allegation that the reception of the evidence would have changed materially the issues made by the pleadings. The continuance in possession of the mortgagor, even upon the supposition that it was as mortgagor that he retained the possession, was consistent with the terms of the mortgage, and, therefore, raised no presumption of fraud upon which the plaintiff could insist, or the plaintiff be called on to repel.

The learned counsel for the defendant strenuously insisted, that the dismissal of the complaint by the court, on the trial, ought to be sustained, upon the ground that it sufficiently appears, from the evidence given, that the mortgage to the plaintiff was fraudulent and void, but we are very clearly of opinion that this is not a question that can now be entertained; the mortgage was certainly valid as between the parties, and it escaped the attention of the counsel that when the complaint was dismissed there was no proof that there was any creditor of the mortgagor by whom the validity of the transaction could rightfully be questioned. In saying this we are not to be considered as intimating that the evidence which appears in the case was sufficient to raise even a presumption of fraud. Whether the continued possession of the mortgagor was of such a character as to warrant this presumption, and whether the presumption, if raised, is repelled'by evidence of the good faith of the parties, are questions of fact which, upon a second trial, it will belong to the jury alone to determine Assuredly they are not questions which we, as a court, have any right to entertain and decide. (Howland v. Willet, 3 Sand. S. C. R. 607; Stuart v. Slater, ante p. 83.)

There must be a new trial, with costs to abide the event.