source: Caselaw Access Project

author: By the Court—Woodruff, J.

license: Public Domain

text:
    Thomas S. Nelson and James S. Sturges, Trustees, &c., Plaintiffs, v. Isaac B. Wellington, Defendant.
    1. Where an Insurance Company, .in order to raise money for the immediate purposes of its business, borrowed notes from its friends and they yere discounted and the money paid over and so used, and by the agreement the Company were to pay such notes and to secure that payment were to deposit and did deposit with tire plaintiffs, as Trustees, certain negotiable notes received in its business as collateral security, with authority to sell such collateral securities or any portion thereof at public or private sale at the option of the Trustees: Held, that a sale was not the only mode in which the securities could be rendered available. The power so given was not exclusive of every other authority. The Trustees had a right to receive payment of such collateral notes and to enforce payment by action.
    2. Where promissory notes are pledged as security, the transaction ex vi termini imports authority to collect. Superadding a power to sell, which without express agreement would not exist, does not take away the right to receive and to compel payment.
    3 Where negotiable notes are by express agreement pledged as collateral security to secure the payment of money by the pledgor which he agrees to pay, the pledgee may sue in his own name on such notes, although the indorsement made thereon to carry the agreement into effect is in terms “pay to A. B.” (the pledgee) “for account of 0. D.” (the pledgor.) Such an indorsement is not inconsistent with the lien of the pledgee and the right of the latter to collect the notes and to apply them to the account of the pledgor by discharging the debt they were pledged to secure.
    4. Where a note is given to an Insuranie Company for the nominal premium upon an open policy, which policy was to attach to all risks that might thereafter be indorsed thereon and risks on which the agreed premium amounted to one-third of the note were so indorsed, and afterwards another risk at an agreed rate of premium on all goods shipped by the maker by a vessel named and for a specified voyage, was indorsed on the policy, the maker agreeing afterward to report the amount of the invoice; such note is a note for valuable consideration, and in the absence of any evidence of the amount of the shipment last mentioned the maker is liable for the full amount of the note.
    5. A transfer by a moneyed corporation of negotiable notes, as collateral security to secure a present loan to be used in due course of business, is not a transfer with intent to give a preference to one creditor over others, within the act forbidding such transfers by a moneyed corporation when insolvent. And therefore upon that state of facts it is not error to reject evidence that at the time of the loan the corporation was insolvent.

      6. See decision in Holbrook v. Basset, (ante p. 147,) which involved many points also decided in this case.
    (Before Bosworth, Oh. J., and Woodruff and Moncrief, J. J.)
    Heard, June 15;
    decided, July 9, 1859,
    This action was brought to recover from the defendant, as maker, the amount of a promissory note dated November 24th, 1855, for $351.25, payable eight months after date, to the order of The Atlas Mutual Insurance Company. And the plaintiffs sued as Trustees of an express trust under the agreement made on the 15th of January, 1856, between the Company and Nelson, Sturges, Massey, Smith and others, set out in the foregoing report of the case of Holbrook v. Basset, (pp. 152,153,) and averred that the parties to that agreement made and loaned their notes to the Company which were used as required in the agreement, and that the note in suit was transferred to the plaintiffs as collateral security in pursuance of that agreement. That before the maturity of the notes loaned by the parties thereto, the Company failed and became insolvent and did not pay or take up the same, and that there is still due to the said parties and unpaid a sum-greater than the amount of the note of the defendant in suit.
    The defendant by bis answer denied that the plaintiffs are lawful holders and owners, and all allegations in relation to the trust, and denied that anything was due or unpaid by the Company as alleged.
    For a further answer he alleged that the note in suit was given to the Company “as a memorandum of premiums in advance upon an open policy of insurance ” upon merchandise to be shipped from New York to San Francisco, when said risks should be thereafter reported to the Company and indorsed on the policy or otherwise accepted; and that after the policy was issued no premiums were earned and the same was and is without consideration, of which the plaintiffs had notice when they took the note. And further that the Atlas Insurance Company was insolvent when the plaintiffs received the note, and the transfer was made in violation of the statute to prevent the insolvency of moneyed corporations, and with a view to give a preference to Massey and other officers and creditors of said corporation over other creditors of the corporation.

      The cause was tried on the 21st day of October, 1858, before Mr. Justice Woodruff and a jury.
    It appeared, on the trial, that the plaintiffs acquired title to the note under the same agreement and by the same action of the Board of Directors as are fully stated in the report of the case of Holbrook v. Basset, (ante 147, et seq.) That agreement was produced and admitted in evidence, by consent, in the terms there stated. But the note itself was given to the Atlas Insurance Company for the nominal premium upon an open policy. That the course of dealing and understanding in such cases was, that the open policy covered risks which were indorsed thereon. When application was made for an indorsement, sometimes the amount of the goods covered was stated and the premium settled, and so the precise amount of premium earned ascertained. And sometimes the amount of the goods was not stated, but the name of the vessel, the nature of the cargo, and the voyage, were stated, and the rate of premium was fixed; in which case, the whole invoice of the shipment by that vessel would be covered. And afterwards, when the insured ascertained the amount of the shipment by that vessel, he would report it to the Company, and the amount of the premium earned could then be computed.
    That the defendant had indorsed on his open policy two risks, the premiums on which amounted to $102.75, and a third risk on a shipment “per Beporter,” from New York to San Francisco, at three and a half per cent premium, 27th November, 1855, the amount of which shipment the defendant had never reported to the Company.
    On the trial, the defendants’ counsel inquired, “ Does the Company owe Mr. Wellington for losses now?” This was objected to, the objection sustained by the Court, and the defendants excepted.
    The defendants also put several questions respecting the solvency of the Atlas Insurance Company on the 15th of January, 1856, with a view to prove its insolvency at that time; which were also objected to and excluded, and the defendants excepted.
    When the note in suit was produced by the plaintiffs and read on the trial, the indorsement of the payees thereon appeared in the following form:

      “ Ray................... for account of the Atlas Mutual
    Insurance Company.
    “ George H. Tract, Secretary

    The defendant moved for a nonsuit on the following grounds:
    1 1st. That the plaintiffs have no right to sue.
    2d. That the transaction, as it appears, was contrary to the statute.
    3d. That it was not within the powers of the corporation to make such a trust as this one on which plaintiffs rely.
    4th. That, by the indorsement on the note, no title passed.
    The motion was denied, and the defendant excepted.
    When the parties respectively had closed, (but under what instructions, by way of charge, the Case does not state,) the Court directed the jury to find a general verdict, and also to find a special verdict; and the jury thereupon rendered a general verdict for the plaintiff for $404.55; and they found specially as follows:
    “ The jury find specially the amount of premiums earned upon the open policy upon which this note in question was given and indorsed on such policy, with the interest thereon, is $118.80. They also find specially that on the 27th November, 1856, the Atlas Insurance Company agreed further to insure and did insure a shipment of goods made by the defendant from New York to San Francisco, at the rate of three and a half per cent premium upon the amount of the shipment, which insurance was indorsed on that date upon the said policy, upon the agreement that the defendant would, as soon as his account of the shipment was made up, report such amount to the Company, and the amount of the premium should then be fixed by computation, and that the defendant never reported the amount to the Company, and there is no evidence that the amount was ever demanded of him. Under the proofs given in relation to the. facts thus specially found, and all other matters in issue, they find for the plaintiff, and assess his damages at the sum of $404.55.”
    The parties respectively in open Court stipulating and consenting that the General Term shall dismiss the complaint, if of opinion that the defendant’s motion therefor at the trial ought to have been granted, or reduce the amount of the verdict to $118.80, if of opinion that the plaintiffs are entitled to recover that sum only —the Court ordered the exceptions to be heard at the General Term in the first instance, the judgment to be in the meantime suspended.

      G. Dean, for defendants.
    I. The same question arises in this case that was argued in Holbrook v. Basset and others, as to the validity of the transaction called the trust, of which the plaintiffs were the special Trustees, and the points urged in that case are here insisted upon. (Ante, p. 166.)
    TT, The indorsement on this note was restrictive, and passed no title to the note in suit.
    III. The plaintiffs being Trustees of the Atlas Insurance Company, and having advanced no money on this note, can recover only the earned premium, if entitled to recover.
    1. This was $102.75.
    2. The premium on the shipment by the “ Reporter” cannot be charged against this note, because there is no data for calculating its amount.
    3. Plaintiffs could have called on defendant for amount, or could have examined him as a witness. It is a clear case of “ not proven.”
    TV. The Court erred in excluding the testimony in reference to the insolvency of the Atlas Insurance Company.
    The complaint should now be dismissed, with costs.

      W. Britton, for plaintiffs.
    I. The motion to dismiss the complaint was properly denied; for,
    1. Plaintiffs sue as Trustees of an express trust, and had a right to sue as such; for,

      (a.) The indorsement, together with delivery by virtue of the trust agreement of January 15, transferred the note to the plaintiffs, for the purposes of the trust. The indorsement, whether restrictive or otherwise, gave the right to collect, and the agreement made plaintiffs the real parties in interest till they were paid the amount of their loan. (Brouwer v. Hill, 1 Sandf., 648.)

      (5.) The right, expressly given by the agreement, to sell does not exclude the right to collect. The latter right is incident to the note itself—to its very nature; and it cannot be presumed to have been the intention of the parties to divest the plaintiffs of the right implied by the very nature of the note itself, without an express declaration to that effect. The object evidently was to give the additional right to sell, &c., which, without express agreement, the plaintiffs could not have had. (Wheeler v. Newbould, 16 N. Y. R., 392.) The right to present for payment, and receive the money when due, it will hardly be contended, was not in plaintiffs, and this right is not expressly given. The right to collect and receive without suit would seem to imply the1 right to collect by suit. It is merely a mode of collection. “Expressio unius eccclusio alteriusf does not apply to such a case. (Smith’s Com., 655.)
    The sale of the note without the right to collect in the purchaser, would be an absurdity, and no right of collection would have been in the purchaser from plaintiffs, as such purchaser could have taken no rights which the plaintiffs did not have. Moreover, the indorsement in writing was made at the same time, and that is to be taken as part of the contract, and, clearly, authority to collect is given by its terms. (Waldron v. Willard, 17 N. Y. R., 467.)
    2. There was no violation, on the part of the Company, of part 1, chapter 18, title 2, article 1, section 8 of the Revised Statutes; for,
    (a.) That section is in conflict with the 12th section of the charter of the Atlantic Company, made a part of the charter of the Atlas, and the charter having been last enacted, the Revised Statutes must yield. (Howland v. Myer, 3 Comst., 293.)

      (b.) But if that section of the Revised Statutes does apply,
    ' the resolution passed January 14, (appearing in minutes of 29th,) authorized the transaction.

      (c.) If not authorized by the resolution, it is only invalid as against the Company, its Receiver, or judgment creditors; defendant is not in a position to set it up. (Nelson v. Eaton, 15. How. Pr. R., 305; Tracy v. Talmage, 4 Kern., 162; Curtis v. Leavitt, 15 N. Y. R., 242, 106, 107; City Bank of Columbus v. Bruce, 17 id., 515.)

      {d.) Moreover, the Company, by accepting the benefits of the transfer, ratified the act, which ratification, in its legal effect, is equivalent to previous authority. (Curtis v. Leavitt, 15 N. Y. R., 48-50; Reuter v. Electric Tel. Co., 88 C. L. R., 341; Palmer v. Yates, 3 Sandf., 138.)
    3. The transaction of January 15 was valid; for,

      (a.) It was but a loan by the parties thereto, for whom Nelson & Stages acted, to the Company, and taking collateral security thereto, which was clearly legal. (Charter Atlas Co., §12, “Atlantic;” Barker v. Mechanics' Ins. Co., 3 Wend., 96; Munn v. Commission Co., 15 Johns., 44; Attorney-General v. Life Ins. Co., 9 Paige, 470; Moss v. Oakley, 2 Hill, 265; Barry v. Mer. Ex. Co., 1 Sandf. Ch., 280; Beers v. Phoenix Glass Co., 14 Barb., 358; Curtis v. Leavitt, 15 N. Y. R., 62-65; King v. Merch. Ex. Co., 1 Seld., 547; Furniss v. Gilchrist, 1 Sandf., 53.)
    (6.) If a trust by the Company, it was competent for the Company to make such a trust. (Angell & Ames on Corp., § 241; Curtis v. Leavitt, 15 N. Y. R., 62-65; De Ruyter v. St. Peters Church, 3 Comst., 238; Nelson & Sturges v. Eaton, 15 How. Pr. R., 305; Barry v. Merch. Ex. Co., 1 Sandf. Ch., 280; Leavitt v. Blatchford, 17 N. Y. R., 534, et seq.)

      {c.) If not valid in toto, there is no invalidity in any portion under which plaintiffs claim. The maxim, “ void in part, void in toto," is not, in general, law, and this is not an exceptional case. (Curtis v. Leavitt, 15 N. Y. R., 96, 97.)
    IT. The ruling by the Court, excluding the questions by defendant, was proper; for,
    1. Whether the Company owed defendant for losses, on the day of trial, was wholly irrelevant. (Furniss v. Gilchrist, 1 Sandf, 53.)
    2. The balance of the questions were put with a view to prove insolvency on the 15th day of January, 1856, when the trust agreement was made, and are summed up in the last. Whether the Company was solvent or not was wholly immaterial; for,
    (a.) Part 1, chapter 18, title 2, article 1, section 9 of the Revised Statutes does not apply. This transfer was not “with the intent of giving a preference to any particular creditor, but was to secure a loan, made at the time, of money used in the regular and legitimate business of the Company. (Curtis v. Leavitt, 15 N. Y. R., 109, 139, 198; Leavitt v. Blatchford, 17 id., 525.)

      (5.) If it does apply, defendant could take no advantage of it. Pla.-mt.vffH would be obliged to account to “ its creditors, stockholders or trustees,” and them only. Defendant is in no position to set it up.
    (c.) At common law, the Company, whether insolvent or not, would have an undoubted right to pay any creditors whatever until declared insolvent or enjoined by a competent Court, or a right to transfer its assets, as collateral to a loan. (Barry v. Mer. Ex. Co., 1 Sand. Ch., 280; Curtis v. Leavitt, 15 N. Y. R., 52-65.)
    III. The judgment should be for plaintiffs for the full amount found by the jury; for,
    1. It is clear that $118.80 was earned and adjusted.
    2. The premium on the risk taken by the Company on the 27th November, 1855, in the absence of any proof as to its amount, should be computed at the amount of the balance of the note; for,

      {a.) It being clear that a risk was actually taken, it was the duty of the defendant to report such amount, which the Company could only know through him, and on failure to perform that duty it should be presumed most strongly against him.
    (5.) It was competent for the defendant to have shown the amount of the premium at the trial, which was a fact within his exclusive knowledge, and his silence on the subject raises the presumption against him.
    IV. Nor does the 7th section of the statute, “relating to moneyed corporations,” defeat this action; for,
    1. The section, if applicable to this Company at all, has no application to a transaction of this nature. The notes borrowed by the Company were not “ effects ” within the meaning of the statute; and if they were, no such consequence follows, as that this note, transferred by the Company as collateral to those loaned to it, and on which the Company received the money, which was applied to the payment of its just debts, becomes void in the hands of the plaintiffs. There is no failure of consideration, and no maldfides.

    2. But if it does apply, this defendant cannot set it up. The note has been used precisely for the purpose for which he gave it to the Company—to pay its just debts; it has been converted into money, which money has been so used. No equities are

      pretended, and defendant has been in no respect prejudiced. (Aspinwall v. Meyer, 2 Sandf., 180, 188; affirmed, 3 Comst., 290.)
    3. The charter of the Company provides that “ all the corporate powers of the Company shall be exercised by a Board of Trustees, and such clerks and agents and other persons as said Trustees may appoint from time to time.” (Charter Atlantic, § 3.)
    Nelson & Sturges were “ such agents or other persons.” (4 Duer, 1.) ,
    The plaintiffs should have judgment on the verdict.
   By the Court—Woodruff, J.

So far as the questions involved in this case were considered in Holbrook v. Basset et al., now decided, the opinion of the Court in that case may be taken as our opinion in this. We there hold that the agreement, in pursuance of which the plaintiffs received a transfer of the note in question, is not void as a violation of the statute forbidding a transfer of effects for the use or benefit of a moneyed corporation, unless it be made to the corporation directly and by name; that the due transfer of collateral securities, valid in the hands of the Company, made to the plaintiffs in performance of that agreement, was good, and entitled the plaintiffs to collect the same; that a transfer of collateral security, made in good faith to secure a present loan to such a corporation, to be used, and in fact used, in due course of business, is not a transfer with intent to give a preference within the act (§ 9) forbidding transfers when insolvent with intent to give a preference to one creditor over another; that such transfer in the present case was not void for want of power in the Atlas Insurance Company to borrow the notes to secure the payment of which the transfer was made; and that the transfer was not void on the ground that it was not sufficiently authorized by the Board of Directors.

Other considerations, which were not suggested by the facts in the former case, are urged in this. In the present action, as in that, the note in suit was a valid, binding note, in the hands of the Atlas Insurance Company, subject only to the question whether any greater sum than the amount of the premiums for risks indorsed on the defendant’s open policy could be collected by the Company thereon. In this case, moreover, I think it must be conceded that the plaintiffs took no better title than the Company itself had, as they were themselves officers or trustees of the Company, and must be deemed to have had knowledge of the title of the Company to the note.

1. It is suggested that, as the agreement in pursuance of which the transfer was made gave the plaintiffs authority to sell the collateral securities, or any part thereof, at public or private sale, the plaintiffs had no authority to use them in any other manner, or attempt, by any other mode, to make them available for the purpose for which they were transferred, and that, therefore, they have no power to sue for and collect them; that the agreement Raving pointed out a mode in which those collateral securities may be appropriated so as to indemnify those who were secured thereby, there is, by construction, an implied exclusion of any other power or control over those securities.

We think this is doing violence to the evident intent and meaning of the agreement. The liability of the parties was to be fully secured by collateral securities placed in the hands of the plaintiffs. The deposit of promissory notes for such a purpose in its nature imports authority to receive payment thereof, if payment be offered, and to collect them if not voluntarily paid. Such authority and power is incident to the very nature of the transaction or implied in it. A power to sell such securities, however, is not implied "in any such deposit: on the contrary, that no such power exists is settled. (Brown v. Ward, 3 Duer, 660; Wheeler v. Newbould, 5 id., 29, affirmed, 16 N. Y. R., 392.) Hence, for the more effectual and easy indemnity of the parties, an express power to sell was inserted in the agreement under consideration, not for the purpose of restricting or curtailing the authority of the plaintiffs, but of enlarging it—not for the purpose of making the hypothecation less advantageous, but of making it more effectual.

2. It is urged here that the indorsement upon the note in suit was such that it does not entitle the plaintiffs to sue; that they have acquired no title to the note by such an indorsement; that an order by the Atlas Insurance Company on the maker to pay to................... for account of the Atlas Insurance Company, does not divest their title. It is quite clear, we think, that, before the adoption of our Code of Procedure, no such objection to a plaintiff’s right to sue would have been seriously suggested. The holder is at liberty to insert his own name in the blank, and the legal title is thereby vested in him. Before the Code, any mere holder, if the form of indorsements on the note was such as to enable him to assert a legal title, could maintain an action on a negotiable note, and, notwithstanding he held it for collection merely for the account of another party who was the real owner, it was enough that the plaintiff showed a legal title. Mere possession, with the owner’s consent to the collection, was often sufficient to enable him to maintain the action in his own name. What, then, is the substance of the present objection? The Code requires that every action be prosecuted in the, name of the real party in interest, except that trustees of an express trust are still authorized to sue in their own names. The real nature and character of the transfer is to be gathered from the agreement in pursuance of which it was made; and that declares that the transfer is to the plaintiffs as trustees, to secure the payment of the notes lent by the various parties thereto. If, therefore, there had been no indorsement whatever upon the defendant’s note, and it had been merely delivered to the plaintiffs in performance of that agreement, they would have acquired an equitable title to the note, and would, in equity, have been entitled to hold and to collect it for the purposes for which it was placed in their hands. The special indorsement put upon the note does not impair that title. It is an express order on the defendant to pay the plaintiffs the amount. Its further statement, that such payment is to be for account of the Atlas Insurance Company, is to be construed with reference to the purpose for which it was transferred to the plaintiffs, and in subordination to the agreement for such transfer already considered; and, in the light of the transaction between the Company and the parties to that agreement, the meaning of the indorsement is entirely consistent with the clear right of the plaintiffs, both as against the Company and the defendant, to have the note paid to them as ordered. Sundry parties had lent their notes to the Company under an agreement that they should be folly secured. The Company had agreed to pay those notes, and agreed to deposit, and did deposit, with the plaintiffs, the note in question, and others, to secure their performance of the agreement. Now, if the Company did not otherwise pay those borrowed notes, the collection of the note in suit, and its application to such payment by the plaintiffs, would be in exact conformity with the rights of the parties under the agreement; and yet, the payment of the note in suit to the plaintiffs would be, in a just sense, a payment to them for account of the Company, because the proceeds were to be immediately applied to discharge an express obligation of the Company. The payment, therefore, by the defendant was to be (whether so in terms expressed in the indorsement or not) a payment for account of the Company; but the Trustees were to make the collection as a security to those who had lent their notes, to the end that the proceeds, though applied for account of the Company, should be applied in a particular manner agreed upon, which should operate to relieve them of liability upon the lent notes.

In short, the indorsement expressed no more than may truthfully be expressed whenever the payee of a note indorses it as a security for the payment of his own debt to another person. He appoints the payment to such other person, but for his own account, because it is both the right and duty of the indorsee to apply the proceeds directly and immediately to the discharge of his indebtedness. So a lien may be created upon promissory notes and bills of exchange deposited for collection, in such manner that although every note or bill may be made payable and may be paid “for account of” the depositor, still that lien may entitle the Bank to require the payment, and make the application of the moneys received for account of the depositor, so as to discharge the lien. The plaintiffs were created Trustees for the very purpose of carrying into effect the arrangement which could not otherwise be conveniently managed, by reason of the number of parties interested.

We are clear not only that the form of indorsement presents no obstacle to the recovery herein, but that it is not inapt to express the relation of the parties to the subject, in entire consistency with the trust vested in the plaintiffs, to be executed for the benefit of all the parties.

3. It is claimed that the whole consideration of the note was not earned, and therefore the note was without consideration. The jury found specially that the note was given as and for the premium upon an open policy of insurance. This, then, is consideration enough to sustain the note., So long as the Company was able and willing to insure according to the terms of the policy, the defendant could not demand a return of his note without making a surrender of his policy. But, conceding that the plaintiffs are in no better position than the Company itself were in this respect, and also that the maker of a noté for the premium, upon an open policy, may lawfully refuse to pay such proportion thereof as by the indorsements on his policy appears not to have been used, (Elwell v. Crocker, 4 Bosw., 22,) still, in this case, the defendant fails to show that he is not liable for" the full amount. So far as risks have been actually assumed, and indorsed upon his policy, the defendant is liable, and would be liable if the Company were^plaintiff. The jury find that the amount of $118.80 is due fór risks indorsed and premiums earned, and that a further insurance is indorsed, which was made in all respects binding, at the rate of three and a half per cent upon a shipment, the amount of which he agreed to report to the Company.

Neither by report to the Company, nor by any proof on the trial, did he show that the premiums upon that risk did not more than equal the residue of the note, and we are clearly of opinion that the plaintiffs, under those circumstances, have-a right to rely on the note itself as due in full. If the plaintiffs have not a right to collect the note, whether the consideration has been earned or not, (vide, Central Bank of Brooklyn v. Lang, 1 Bosw., 202,) we are clear that they showed enough, by producing the note, to put the defendant to show that it was without consideration, or to what extent the consideration was deficient, and that he not only failed to do this, but the proof warranted the presumption that the full amount was earned.

4. It only remains to notice the exceptions to the rejection of testimony. As to the inquiry whether anything was due from the Atlas Insurance Company to the defendant, at the time of the trial, for losses, it is obvious that no answer to that question conld affect the right to recover. If a set-off could be permitted, it must have been set up in the pleadings. No such claim is made in the answer. Besides, the note in suit was transferred to secure parties actually advancing their notes upon the faith and credit of that transfer. No set-off arising after that transfer could affect them or the right of the plaintiffs to collect - the full amount of the note. It is not by this disposition of the exception intended to admit by implication that any set-off could have been allowed to the defendant, if pleaded, whensoever it accrued to him, the plaintiffs having received the note before its maturity, and to secure the parties who, at the time, advanced their notes, as already stated.

The other exception arises on the exclusion of evidence designed to show that the Company was insolvent when the agreement was made, in pursuance of which" the note was transferred to the plaintiffs. Such proof would not invalidate the transfer. No statute and no rule of law forbids a moneyed cor- ■ poration to transfer a note merely because it is insolvent. If we understand the claim of the defendant’s counsel, he does not insist that mere insolvency makes such a transfer invalid. The only provision which can be supposed to be material to the question, is the one already noticed as section 8 of the statute, forbidding a transfer with intent to give a preference to one creditor over another. Here the transfer was not for the purpose of giving any preference to anybody; it was to secure the repayment of a then present loan. The money was thereby raised and received by the Company. Such a transfer could not operate as a preference. The Company borrowed the money and secured its repayment, and that is all.

If it were material to inquire what use the Company made of the money so obtained, the proof is unqualified and uncontradicted that “ it was used by the Company in its general business, the payment of losses and expenses.” So that if it had been shown that in truth the Company was at that date insolvent, it could in no wise affect the validity of the transfer. So far from any preference being gained by the transfer of the notes under the agreement, the parties lending their notes thereby assumed a hazard of loss in the very transaction itself, without the chance of gain. It seems to us that discussion cannot make it more plain that such a transfer was not, and could not be, from its very nature, a transfer with intent to give a preference to one creditor over another. Until after the transfer, the parties were not creditors.

Had there been any claim that the money was raised and applied in order to pay favored creditors, and that the whole arrangement to raise money was entered into with that view, there might be some plausible foundation for insisting that it might be shown that the plaintiffs were parties to the scheme, and so the whole transfer was invalidated; but no such claim was made; no such purpose or design appeared at the trial, and if the state of the pleadings would admit of such proof, none such was proposed or offered.

The plaintiffs should have judgment upon the verdict for the amount of the note and interest.

Judgment for the plaintiff accordingly.


author: By the Court—Hoffman, J.

text:
    Scott, Plaintiff and Appellant, v. The Ocean Bank, Defendant and Respondent.
    1. Where a person having an account with a Bank, and being at the time its creditor, remits to it a bill of exchange “for his credit,” such person having prior thereto made remittances to the Bank and drawn drafts upon it, and, by arrangement between them, was to be allowed interest at the rate of four per cent on his average balances;, such Bank does not by the mere receipt of such bill become the owner of it, in such sense that it can divest the remitter’s title, by transferring it as security for a precedent debt.
    2. Although, by making such a transfer of it, the Bank may be charged by the remitter for its amount, still he is at liberty to pursue it and recover its proceeds from any one to whom it has been paid, and to whom it was transferred by such Bank as mere security for a precedent debt.
    3. Such a transferree is not a holder for value, within the commercial meaning of that phrase, so as to have a right to retain the proceeds against the •true owner, notwithstanding it may have been taken without notice of any defect in the title of the Bank.
    (Before Hoffman and Pierrepont, J. J.)
    Heard, May 2;
    decided, July 28, 1859.
    This is an appeal by William D. Scott,' the plaintiff, from a judgment in favor of the Ocean Bank in the city of New York, the defendant, rendered on a trial had on the 21st of June, 1858, before Mr. Justice Slosson, without a jury.
    The action was brought by the plaintiff as assignee of one James L. Lyell, to recover the proceeds of a bill of exchange remitted by the latter in August, 1857, to the Ohio Life Insurance & Trust Company at its office in New York, for the credit of said Lyell, and transferred by said Trust Company to the defendant, and by the latter collected.
    The bill of exchange was received by said Company in New York on the 20th of August, 1857. It was presented for acceptance and accepted the same day. It was dated August 17,1857, was drawn by the “Bank of British North America,” for $2,000 payable at three days’ sight “ to the order of E. Ludlow, Cashier,” and was directed “to Messrs. R. Bell and J. H. Grain, New York,” and was accepted by them August 20th, 1857, “payable at Merchants’ Bank.”
    The bill of exchange was forwarded to said Company in a letter reading thus:
    “ Bank of British North America,
    “ London, C. W.,' 17th August, 1857. “E. Ludlow, Esq., Cashier:
    “Dear Sir—I beg to inclose draft on Bell & Grain for $2,000, for credit of James L. Lyell, Esq., in Detroit.
    “Yours, &c.,
    “ G. Taylor, Manager.”
    The Judge found as facts:
    “ That the said James L. Lyell was a banker at Detroit, in the State of Michigan, and kept an account with the Ohio Life Insurance and Trust Company, at its office, in the city of New York; that from time to time, between June, 1857, and the 24th day of August, 1857, he made remittances to said Company, and drew drafts upon it; that he was a large depositor with said Company, of moneys and bills, and that there was an arrangement between him and said Company, that he should be allowed interest, at the rate of four per cent per annum, on his average balances.
    “ That on the said 24th day of August, the said Company failed and suspended payment.; that on said last mentioned day, the said Lyell had standing to his credit on the books of said Company, exclusive of the bill of exchange mentioned in the complaint, a cash balance of $108,483,56.
    “ That on the 20th day of August, 1857, the said Company, in the usual course of business, received for account of said Lyell, the draft set forth in the complaint, which draft was remitted directly to said Company, by order of said Lyell, in the letter accompanying the same, which was given in evidence; that said Lyell had been in the habit of remitting to said Company, in this way; that on the 20th day of August, said draft was presented by said Company to the drawees, for acceptance, and by them accepted and returned to said Company, in whose possession it remained, and was held until said 24th day of August; that it was known to some of the officers of said- defendant the day before its failure, that said Company would probably fail; and that some of the officers of the defendant were invited to be present, and negotiations were had to which they were privy, to see if said Company could be savéd from failing.
    “That on the morning of said 24th day of August, when said Company failed, but before its failure was actually announced, the President of said defendant went to said Company, and received from it a batch of securities, to secure the indebtedness of said Company to the defendant, and among them the draft set forth in the complaint; that the defendant neither advanced nor paid any new consideration on receipt of said draft, but the same ■was taken as security for an antecedent indebtedness; that defendant received the proceeds of said draft at maturity; that said Lyell was not credited with said draft by said Company, before it was passed to "the defendant.
    That said Lyell, on the 24th"day of December,- 1857, duly assigned to the plaintiff all his claim - and demand against the defendant for ór on account of said draft, or the proceeds thereof, as set "forth in the complaint.
    “ That after said draft had been collected by the defendant, said Lyell applied to the Company, and 'ascertained the facts in relation thereto.
    “ That after the said assignment to the plaintiff, and before suit brought, the plaintiff made a demand on the defendant for the proceeds of this draft; that this action was commenced on the 5th day of January, 1858 ; that the President of the defendant did not know, on the morning of the 24th of August, that said Company would fail; that its officers stated to him that they expected to go through, and he believed it; that the proceeds of said draft were applied by the defendant, by giving said Company credit in. account therefor, in extinguishment of so much of the defendant’s account against said Company,, which was more than the amount of such proceeds.
    “ That after the stoppage of said' Company in New York, it continued to do business at Cincinnati!, Ohio; and that said Lyell drew his drafts on said Company,, from time to time, during the month of September, 1857, to the amount of $98,236.81.
    “ That the defendant, when it received said draft, knew nothing of Lyell’s claim to it; and that it first heard of such claim through the demand of his assignee,, the plaintiff, in December, 1857.

      “ That after the commencement of this action, but without the knowledge of said Lyell or the plaintiff, the book-keeper of the assignees of said Company credited the said Lyell, in his account therewith, with the proceeds of said draft.”
    The Judge held::
    “ First. That, as. matter of law, the ordinary relation of debtor and creditor existed between the Ohio Life Insurance and Trust Company and Lyell, in respect of the account of said Lyell with said Company,.including the $2,000 draft in question; that said Lyell was entitled to have a credit in said account for the amount of the draft, on the receipt thereof by said Company; and that said draft and1 the proceeds thereof, received thereon, became, as between it and Lyell, the property of the Company, and could be used by it as its other funds were used. The Ohio Life Insurance and Trust Company was entitled, and had a right, to pass said draft to the defendant in part payment, or as collateral security for its. own indebtedness to the defendant; and that neither the said Lyell nor the plaintiff had any right to pursue or reclaim the proceeds of said draft in the hands of the defendant; and that said defendant was entitled to retain the same.
    “ Second1. That, upon the facts above found, the said plaintiff was not entitled to maintain his action; and that the defendant was entitled to judgment, dismissing the complaint with costs.”
    The plaintiff duly excepted to each of said conclusions of law.
    Judgment having been entered upon the said decision,, the plaintiff appealed from it to the General Tferm.

      F. F. Marbury, for appellant.
    I. There was no agreement, and no understanding or mode of dealing, between Lyell and the Ohio Life Insurance and Trust Company, by which he had a right to draw, and the Company was bound to accept, otherwise than upon cash to his credit.
    In this case, Lyell never drew, nor was entitled to draw, by arrangement, except upon -his own proper moneys on deposit.
    It appears distinctly in this case how the account of Lyell with the Ohio Life Insurance and Trust Company stood on the 24th August, 1857, namely, he had, on that day, a balance to his credit of over $100,000 in cash, and, certainly, had no occasion, then or at any other time, so far as appears, to seek or require any favor or assistance from the Company.
    This, unlike the case of Clark v. The Merchants Bank, (1 Sand. S. C., 498, and 2 Comst., 380,) is a case of a customer with a banker. The parties are not exchange brokers, receiving funds, and making drafts upon each other, with the right, on the part of each, to have credit for paper remitted, and to draw thereon, whether collected or not. Uothing of the kind existed in this case. The Ohio Life Insurance and Trust Company was simply the agent and depositary of Lyell, to receive his moneys and pay his drafts thereon, when requested.
    In this case, there is not a particle of evidence to indicate that the acceptance of Bell & Grain was to be passed to Lyell’s credit until collected. It was not so passed. The right of the Ohio Life Insurance and Trust Company, as Lyell’s agent, to receive payment at maturity, gave it no right to transfer the acceptance before maturity, on account of a precedent debt of its own.
    II. An examination of the note 3 to section 228 of Story’s Agency, and of the cases cited therein, to which Justice Gabdineb refers, will demonstrate, beyond any peradventure, that if the facts in Clark v. The Merchants' Bank had been like those in the present case, the Court of Appeals would never have reversed the judgment of this Court.
    To those cases may be added the recent case of ex parte Bark-worth in re Harrison, (4 Jurist, E. S., 547,) where the whole subject is discussed with great clearness. (See, also, Lawrence v. Stonington Bank, 6 Conn., 521; McBride v. Farmers' Bank of Salem,
      25 Barb., 657; Van Amee v. The Bank of Troy, 8 id., 312; Haynes v. Foster, 2 Cromp. & Mees., 237; 1 Arch. N. P., 194.)
    III. The defendant can make no pretension to the character of being a bona fide holder for value, without notice. - (Youngs v. Lee, 2 Kern., 555.)
    If the Ohio Life Insurance and Trust Company would not have been justifiable in withholding this acceptance from Lyell, if he had demanded it specifically on the 24th day of August, 1857, as it clearly would not have been, the defendant having no better title than the Trust Company, cannot retain the proceeds against the true owner. The judgment should be reversed, and judgment rendered for the plaintiff for the amount claimed, with interest and costs.

      F. L. Fancher, for respondent.
    I. The draft, in question was not sent forward “ for collection merely,” but was intended as a deposit for the credit of Lyell.
    1. Lyell was a general creditor of the Ohio Life Insurance and Trust Company. When that Company failed, he had no right to withdraw any specific assets, and did not assume to have. He had a general deposit with the Company, precisely as any dealer has with a Bank.
    2. When he deposited, by cash or receivables, it became the property of the Bank, and the dealer Lyell became the creditor of the Bank for the amount. Lyell had the right to check for this money at any time, and exercised that right until long after this transaction.
    II. Lyell was a dealer with, and depositor in, the Trust Company : when he remitted or delivered to the Company his receivables, they were treated as cash, and he had credit therefor. The Trust Company were not to. remit the proceeds of the bill to Lyell, but to give him credit for them. He drew, not for the specific proceeds, but generally, treating the Company as his debtor.
    III. This relation of debtor and creditor had long been recognized, and is unequivocally admitted. The allowance of interest on his deposits shows this, and establishes the right of the Company to the money. (Clark v. Merchants' Bank, 2 Comst., 380; Chapman v. White, 2 Seld.. 417.)

      IY. Lyell was a creditor of the Trust Company for a large amount, and, as such, drew his checks or drafts on his general balance for nearly a.month after this transaction.
    Large payments were made on account of that indebtedness, as well on account of this draft and its proceeds as of any other deposit.
    To allow the plaintiff, now, to recover the specific proceeds of this draft, or their equivalent, would be unjust, and would, in effect, make a new contract for the parties. Non constat all the other indebtedness stands in the same category, and other plaintiffs may spring up with assignments of similar claims.
    Y. Lyell never had the legal title to this draft. It was a voluntary deposit in the Bank of British North America for the credit of the Trust Company.
    Even if it had been a draft forwarded by Lyell for collection only, it has been well decided that the Ohio Life Insurance and Trust Company are the agents of the Bank of British North America, and not the sub-agents of Lyell; and, therefore, not answerable to him. (Allen v. Merchants' Bank of New York, 22 Wend., 228; Montgomery County Bank v. Albany City Bank, 3 Seld., 459; Commercial Bank of Pennsylvania v. Union Bank of New York, 1 Kern., 203.)
    But here the ownership was in the Trust Company, from the time that Lyell deposited the money. This money was, in effect, deposited in the Trust Company at the date of the draft, and he could not, after that, control it: certainly not after it reached the Trust Company.
    YI. The Ocean Bank are holders for value. The Bank-took it on account of a debt. If this draft had been supposed not to belong to the Trust Company, the Ocean Bank could have applied for another in its place. And a debt, when thus paid, pro tanto, by a bill or note, is a sufficient consideration. (Bank of Salina v. Babcock, 21 Wend., 499.)
    The claim of the Bank is, therefore, more meritorious than the claim of the plaintiff. The judgment of the Special Term was correct, and should be affirmed, with costs.
   By the Court—Hoffman, J.

The defendants cannot, in my opinion, under the decision in Stalker v. McDonald, (6 Hill, 96,) even as modified or explained in White v. The Springfield Bank, (3 Sandf. Sup. C. R., 222,) be treated as purchasers for value, so as to hold the acceptance or its proceeds against a real owner, who had never parted with his property in it. The defendants did not, when they took the acceptance, by any unequivocal act, treat it as extinguishing so much of the debt of the Company. They only credited the Company in general account, upon a previous indebtedness, after they had collected the amount. It was the proceeds which they so applied. (Youngs v. Lee, 2 Kern., 555.)

The case, therefore, appears to depend upon the point chiefly contested by counsel, viz.: Whether the Ohio Trust Company was not, in point of law, the real owner of the draft, and as such transferred a good title to the defendants. The first conclusion of law of the learned Judge states the point, and contains the proposition that the draft was actually the property of such Company.

On the 20th of August the draft was received; on the same day it was presented and accepted. It was never passed to the credit of Lyell until after this action was commenced.

On the 24th of August it was delivered to the defendants, and on the 26th was paid.

This dealing with the acceptance by the Company may have made it responsible to Lyell for the amount on the 24th of August, as absolutely as if they had received and credited that amount; yet it does not necessarily follow that the right to pursue the acceptance is lost by a right to recover from the Company.

Again, it is very difficult to conclude from the facts in this case, th.at the Company was bound to credit even an acceptance, in account with Lyell, so as to require it to honor his drafts before its payment. “ He had been in the habit of remitting in this way.”. He was a large depositor with the Company of money and bills.” “ This draft was sent to the Company in the usual course of business.” “ He was to be allowed interest at four per cent on his average balances.” He had a cash balance to his credit on the 24th of August of over $108,000. He proceeds to draw upon this during the month of September, to the amount of over $98,000, and his drafts are paid at the office in Cincinnati'.

I find it difficult to concur with the learned Judge, “ that Lyell was entitled to have a credit in account for this draft on its receipt by the Company.” The habit of remitting and depositing money and bills does not necessarily imply this. The habit of business is as consistent with meeting drafts on actual funds, as upon acceptances or securities unpaid; and there is no previous established' habit proven to define its nature. The allowance of interest would naturally be on actual cash balances only.

In the decision of Clark v. The Merchants' Bank, (2 Comst., 880,) no fact was considered as of higher importance than this: “ Whether the draft there in question was to be credited to the plaintiff, when received by Smith & Company, whether "collected or not ?”

When that draft was sent it was accompanied with notes to the amount of $2,496.08 expressly for collection, and with $17,975.62 (including the $7,000 draft in question) in notes, bank bills, &c., per account No. 1. The amount was $20,471.70, and with the remittances, advice was given of drafts on the fund for $20,832.26. “As the mode of dealing had been continued for years, and was perfectly understood by all parties, the plaintiffs had a right to draw against the funds remitted, and Smith & Co. were bound to accept. The whole fund was, by the course of dealing, treated as cash.”

Again, it is observed by the Court “ that the case is much stronger than that of a customer with a banker. The parties were exchange brokers, mutual correspondents, receiving funds for and making drafts upon each other. Unquestionably it was their intention to keep each other in funds to answer the bills drawn by them respectively. Bqt in case the paper transmitted should be unavailable, a principal object of the arrangement was to prevent these drafts being returned dishonored, by making it the duty of the correspondent to accept and pay notwitstanding." No such mutual account and dealing is found in the present case.

The authorities cited by Justice Sandford, when Clark v. The Merchants' Bank was in this Court, (1 Sandf., 498,) show how clearly the rule is that the property in notes or bills, transmitted to an agent or banker, vests in him only when he has become absolutely responsible for the amount to his customer. Unconditional liability and ownership become correlative. How the former is made out, is matter of evidence; but the principle and good sense of the law seems to be that an owner does not lose his property, the possession of which is committed to another, unless he has chosen to constitute that other his debtor for it, and that other has assumed the liability, and both facts are satisfactorily established, or unless an authority is sufficiently established under which the holder was entitled to use the security for his own business purposes, and thus confer a valid title upon another, even for an antecedent debt.

In ex parte Barkworth in re Harrison, (4 Jurist, N. S., 547,) the question was as to short bills, and the Court say that the point was whether there had been any agreement between the customer and the bankrupt, that the bills should be the absolute property of the bankers. The banker was in the habit of crediting unpaid bills transmitted to him by the customer directly as cash, not carrying them short. But there was no evidence that the customer knew of this or drew upon the fund on the ground of such credit. Upon the bankruptcy of the banker, there were bills in his hands of the customer not due, and a cash balance also in his favor. It was held that the customer had a right to the bills as against the assignees. There was not evidence to show that the bills constituted an immediate debt from the banker to the customer.

The present case does not in my opinion fall within the liberal rule of The Bank of the Metropolis v. The New England Bank, (1 How. U. S. R., 240; 6 id., 212,) but is governed by the principle of the case of Lawrence v. The Stonington Bank. (6 Conn. R., 521.)

The Ohio Company did not so place themselves in the situation of an absolute debtor to Lyell, as to make themselves owners of the draft. There is no evidence to prove that Lyell had given any authority for the use of his securities transmitted to the Company for their own purposes.

There is no course of business or dealing proven from which such a power can be deduced. The Company took the draft for collection mereljr. It was Lyell’s property in their hands when they transferred it to the defendants, and the defendants, upon the facts as to such transfer, acquired no better title than the Company possessed.

We think that the judgment must be reversed and a new trial had, with costs to abide the event.

Ordered accordingly.


text:
    Dibble et al., Plaintiffs and Respondents, v. Corbett et al., Defendants and Appellants.
    1. Where a person contracts to purchase goods, which, at the time, hre on board of a vessel at sea, and expected to arrive, it is his duty to receive such goods within a reasonable time after notice of their arrival, and a ten-, der of the goods at the place designated by him for the delivery of them.
    2. Where such purchaser refuses to accept a delivery within a reasonable time, he is liable to the vendor for the damages necessarily caused by such delay.
    3. Although the contract be made in such form that the title to the property does not pass until the goods are delivered, yet the contract being valid and obligatory, and the purchaser having accepted the goods under it, it is no answer to the claim for damages for delaying an unreasonable time to receive them, that the title of the purchaser does not become vested until the goods are delivered and accepted.
    (Before Hoffman, Woodruff and Pierrepont, J. J.)
    Heard, May 9;
    decided, July 28, 1859.
    This is an appeal by John A. Corbett and Andrew Johnston, who are the defendants, and compose the firm of Corbett & Co., from a judgment in favor of Calvin B. Dibble and Jonathan E. Bunce, who are the plaintiffs, and compose the firm of Dibble & Bunce. The action was commenced in October, 1856, and was tried before Mr. Justice Woodbuff and a jury, o.n the 28th of May, 1858. The plaintiffs recovered a verdict, and from the judgment entered on that verdict, the present appeal is taken.
    The complaint states that on the 2d of August, 1856, the plaintiffs bargained and sold to the defendants, who purchased of the plaintiffs certain goods then on board of the schooner F. A. Godwin, which goods the plaintiffs agreed to deliver, and the defendants to accept, on the arrival of the schooner at the port of ISTew York; that she arrived there on the 5th of said August; that the plaintiffs were then ready and offered to deliver the goods, and requested the defendants to receive them; that they neglected and refused to receive them until the 15th of August, in consequence of which neglect and refusal the plaintiffs were obliged to and did stow and keep the goods on board of said schooner, at a great loss and damage, whereby they sustained loss and damage to the amount of $200; and prays judgment for that sum, with interest from the 15th of August, 1856.
    The answer denies that the plaintiffs agreed to deliver, and the defendants to receive the goods, on the arrival of said schooner, but avers a readiness to receive them on such arrival, and that the delay in receiving them arose from the fact that the defendants also purchased of the plaintiffs other goods on board of another schooner, viz., the Ocean Wave; that the goods could not be received from both schooners at the same time, and by permission of the plaintiffs they first received those on board of the Ocean Wave; that the delay was not unnecessary; and that as soon as the goods were received, the defendants paid and satisfied the plaintiffs therefor.
    Before any evidence was given, the defendants moved a dismissal of the complaint, on the grounds, (1.) that the action is for or in the nature of demurrage, and cannot be sustained, except upon a contract expressed or implied, and that no such contract is stated in the complaint; (2.) that such an action will only lie in favor of the owners of a vessel, and against the freighter or consignee, and that the complaint does not state that the plaintiffs are owners, or the defendants freighters or consignees ; (3.) that the complaint does not show that the plaintiffs were compelled to pay demurrage, which the defendants should refund; (4.) that the ultimate acceptance of the goods by the defendants, and receipt by the plaintiffs of payment therefor, is an answer to any claim for damages from delay in receiving the goods. The Judge refused to dismiss the complaint, holding that it was good in substance, and the defendants excepted.
    J. B. Bunce, one of the plaintiffs, testified, without objection, that they “ sold a quantity of rosin to Corbett & Co., to arrive, and to be delivered afloat on the arrival of the vessel. Edward C. Cartwright effected the sale as broker.”
    The plaintiffs offered to read the broker’s note of the contract of sale. The defendants admitted its due execution, but objected to its being read, “ on the ground that there is nothing in the complaint to sustain it.” The objection was overruled, and they excepted. It was then read in evidence, viz.:
    “Few York, August 2d, 1856.
    “ Messrs. Dibble & Buses:
    “ Sold for your account, to Messrs. Corbett & Co., 1,265 barrels common rosin, a $1.55 per 310 lbs., delivered afloat, and i weighing 1 c. jier brl., to arrive per schooner F.- A. Godwin.”
    “ Edward C. Cartwright,

      “ Broker in Faval Stores and General Merchandise.

      “ Cash Brokerage, 1 c. per brl.”
    He further testified that the schooner E. A Godwin arrived on the 5th of August, 1856 ; that the defendants were notified of it on the same day, and instructed the plaintiffs to send her alongside of the ship Valleyfield, at Pier 50, East River, which was done, and that the discharge of the schooner was completed on the 15th of August; that the plaintiffs were ready, on the morning of the 6th, to discharge her, and kept men on hand for the purpose every da)r, until she was discharged; that the discharging was commenced about the 12th of August.
    The plaintiffs offered in evidence copies of three letters written by them to the defendants. The defendants admitted due notice to produce the originals, but objected to copies being read “ as not being admissible under the complaint.” The objection was overruled, they excepted, and the copies were read in evidence.
    That of the 6th of August states that the “Schooner Ocean Wave is lying idle alongside ship. * * The schooner cannot be thus detained without demurrage. Schooner E. A. Godwin is also waiting. We look to you for all damages we sustain by this delay of the two schooners.”
    That of the 7th of August states, that “The schooners F. A. Godwin and Ocean Wave are lying idle alongside of ship to which they were sent. We are liable for demurrage on each of thirty dollars per day, which please note, as we look to you for all damages we sustain.”
    That of the 9th of August states, that “ Schooner F. A. God-win continues to lie alongside ship where sent, at Pier 50, idle, and on demurrage, while the Valley field is taking in some other freight.”
    Each of these notes was delivered to the defendants, on the day of its date.
    The defendants objected to evidence of a “ reasonable time for discharging the rosin from the schooner,” “on the ground that the complaint does not state what is a reasonable time, nor that the defendants delayed the vessel unreasonably,” and excepted to the decision admitting it.

      Q. “ Was the keeping of the rosin, during the period of delay, attended with any expense ?”
    Objected to by the defendants on the ground that there is no allegation in the complaint to warrant any such evidence. Objection overruled and exception taken.

      A. “It was attended with expense.” Q. “What was the expense?” A. “ The actual expense was $25 a day.” Q. “What for?" A. “ The hire of the vessel and storing of the goods, the wages of the men that we sent up there to discharge the rosin, and the captain, and the hiring of the vessel.”
    The witness also testified that “besides the F. A. Godwin there was the ‘Ocean Wave; * * this is the sale note of the Ocean Wave. The Ocean Wave unloaded first; they were both to be delivered alongside of whatever vessel the defendants designated.”
    The sale note of the Ocean Wave was read in evidence, viz.:
    “ New York, August 2d, 1856.
    “ Messrs. Dibble & Dunce :
    “ Sold on your account to Messrs. Corbitt & Co., 1085 brls. common rosin a $1.55 per 310 lbs. delivered and 1 weighing 1 c. per brl. to arrive per. schooner Ocean Wave.
    “ Edward 0. Cartwright, “Broker in Naval Stores and General Merchandise.
    “ Cash Brokerage, 1 c.”

      This and other witnesses were examined upon the questions, when each schooner began to be discharged; the time necessary and actually occupied for the purpose ; and whether both schooners could have been discharged at the same time; and as to the per diem expenses from the delay.
    When the plaintiffs rested, the defendants moved to dismiss the complaint, because, (1.) the proof differs materially from the allegations in the complaint; (2.) the plaintiffs have'not proved they owned the schooner, and that the defendants freighted or chartered it; (3.) nor that there was unreasonable delay after the schooner came alongside the ship; (4.) the contract does not authorize a recovery for the damages claimed; (5.) the plaintiffs have not shown payment by them of the amount sought to be recovered. The motion was denied and the defendants excepted.
    The defendants produced receipts of the plaintiffs for payment of whole amount “ of bill of rosin,” for the rosin covered by both contracts, the last receipt being dated August 28th, 1856. The evidence tended to show that the discharging of the Ocean Wave was commenced on the 6th and completed on the 11th of August, and that the defendants urged the captain of the Valley-field to receive the cargo of the schooners as fast as he could, and that the plaintiffs as soon as the schooners were discharged presented-to the defendants a bill for the damages claimed.
    When the testimony was closed, the defendants requested the Judge to charge “ that no demurrage can be recovered by the plaintiffs in this action, nor any damages in the nature of demurrage.”
    He charged (among other things) “ that it was the duty of the defendants, under these contracts, to be in readiness to receive the goods, upon notice that the vessels had arrived in port, and of plaintiffs’ readiness to deliver, and if the defendants desired the delivery of the goods alongside any particular vessel, then it was their duty, on receiving notice of the arrival, to designate the place to which the schooner should be taken for the purpose of the discharge.
    “ That it was the duty of the plaintiffs to notify the defendants, that the schooner was ready to deliver the goods, and to be in readiness to discharge them from one vessel to the other.

      “ That it was the defendants duty to attend to the reception of the goods, and to receive them within a reasonable time. .
    “ That it does not excuse the defendants for delay in receiving the goods, that their vessel was not in readiness to receive therm If the defendants designated the Valleyfield as the ship to receive the goods, and that vessel was not ready, it was their duty to find another, or receive the goods at some other place.
    “ That the plaintiffs should not be compelled to wait beyond a reasonable time, because the defendants’ vessel was not in readiness to receive the goods; that it was not the plaintiffs’ fault that the defendants’ vessel was not in readiness, but the defendants’ misfortune only.
    “ And that the defendants are responsible for whatever damages the plaintiffs necessarily sustained, by reason of an unreasonable delay of the defendants in receiving the goods.
    “ That if two cargoes come in at the same time, the defend ants have a right to proceed and discharge one vessel first, and then to discharge the other. This is reasonable.
    “ That the defendants’ counsel are right in saying, that it is the plaintiffs’ duty to present their vessels in readiness to discharge the cargo.'
    “ That the rule of damages, in this case, does not depend upon the charter party of the schooner, but the plaintiffs are to have simply the necessary expenses of taking care of the property, and keeping it during the period of unreasonable delay, and nothing more can be recovered.
    “ The necessary expenses incurred during the period of the delay, beyond a reasonable time to receive the goods, is the rule of damages, and it is not necessary for the plaintiffs to show that the money has been actually paid by the plaintiffs before suit, but it is sufficient to show that the expenses have been necessarily incurred.
    “To each and every of which propositions of said charge, the said defendants’ counsel did then and there, separately and specifically, except.
    “And the Judge further charged the jury—
    “That the plaintiffs cannot recover demurrage; they were not bound to keep the schooner here, and the defendants cannot be affected by any contract between the plaintiffs and the owners of the schooner, entitling such owners to demurrage.”
    The jury, under said charge, retired, and afterwards returned a verdict for the plaintffs of $196.85.
    The defendants moved, on a Case containing the exceptions, for a new trial, and the motion was denied. Judgment having been entered on the verdict, the defendants appealed from it to the General Term.

      H, Z. Hayner, for defendants, (appellants.)
    I. On the trial, the Judge in his charge in terms met the motion for a dismissal of the complaint, (but had before disregarded the rule in the admission of testimony,) in the following particulars, viz.:
    1. That the action for demurrage, or in the nature of demur-rage, could not be sustained except upon a contract, express or implied. (Abb. on Ship., 804; Horn v. Bensusan, 9 Carr. & P., 709.)
    2. That an action for demurrage can only be sustained by the owner of the vessel. (Clendaniel v. Tuckerman, 17 Barb., 184; Evans v. Forster, 1 Barn. & Ad., 118; Brouncker v. Scott, 4 Taun. R., 1.)
    8. The action for demurrage will only lie against the freighter or consignee, and only for unreasonable delay occasioned 'by defendants, and properly alleged in the complaint. (Abb. on Ship., 304; Horn v. Bensusan, 9 Carr. & P., 709.)
    IL The Judge, before his charge, had admitted evidence, under exceptions, in direct conflict with his charge.
    III. The defendants agreeing to purchase .certain goods (the rosin) of plaintiffs, to arrive, and pay therefor on the delivery thereof, the plaintiffs, by delivering the same, and accepting the pay therefor, waived and precluded themselves from all claim for damage for the delay or neglect on the part of the defendants in accepting the delivery thereof, when first requested by plaintiffs.
    IV. The plaintiffs did not sustain the relation of bailees to bailors to the defendants, whereby they would be enabled to sustain this action against the defendants.

      Y. The charge of the Judge was erroneous—as he assumed that the plaintiffs held the relation of common carriers to the defendants as owners or consignees of the goods.
    "VI. The sale and purchase were not completed, nor did the title of goods pass from the plaintiffs to the defendants until the delivery of the same; at any time before that, it was only an agreement to sell and deliver the goods on the-part of the plaintiffs, and an agreement on the part of the defendants to accept them, and pay therefor on delivery. (Chapman v. Lathrop, 6 Cow., 110; Clarkson v. Carter, 3 id., 84; Leven v. Smith, 1 Denio, 571; Conway v. Bush, 4 Barb., 564.)
    VII. The weight of the barrels was also to be ascertained before delivery, for each of the parties agreed to pay one-half of the expense of weighing. (Rapelye v. Mackie, 6 Cow., 250; Outwater v. Dodge, 7 id., 85; Fitch v. Beach, 15 Wend., 221; Russell v. Nicoll, 3 id., 112.) o

    VIII. The plaintiffs still, owning the goods, the title thereto not having passed to the defendants, have no right to charge for the expense of storing or keeping their own goods, to the defendants.
    1. By subsequently delivering the goods the plaintiffs waive the right of considering the offer to deliver, as the time of delivery.
    . By that act the plaintiffs waived the right to consider the date of offer as the time for the completion of the contract.
    2. The charges or expense of storing or keeping the goods between the time of the offer to deliver and the actual delivery were also waived.
    3. Story on Sales, (§ 394,) has the dictum, “ if between the sale and delivery, the vendor be put to charge in preserving and harboring the goods, the vendee is bound to reimburse him therefor.” (Story on Sales, § 394.)
    4. Also, section 404: “It is the duty of the vendee to take the goods within a reasonable time, or he will be 'liable to the vendor for warehouse rent and other expenses growing out of the-custody of them,'or even to an action for not removing them in case the seller is prejudiced by his delay.” (Story on Sales, § 404.)

      The authorities he- quoted for the doctrine are: Brown on Sales, (§§ 497, 498,) Greaves v. Ashlin. (3 Camp. R., 426.)
    5. The rule is correct with this limitation, that-it applies, only to.perfected sales, and where the title to the goods has passed from the- vendor to the vendee, and the possession thereof still remaining in the hands of the vendor. Such were the following cases.: Greaves v. Ashlin, (3 Camp., 426,) Sands v. Taylor, (5 Johns. R, 395,) Maclean v. Dunn, (4 Bing. R., 722,) S. C., (1 M. & P., 761.)
    6. The doctrine is laid down in- Parsons on Contracts, .as follows, viz.:
    “ That the vendee is bound to receive and pay for the thing sold at the time and place expressed or implied in the contract of sale, and to pay all charges for keeping it after sale and delivery.” (1 Parsons on Con., 447.)
    7. If,-, after the title passes to the vendee, the goods are left in the hands or possession of the vendor, he then no longer holds them under the contract of sale as vendor, but as bailee. And all the. duties and liabilities of.bailor forthwith attach-to the vendee.
    8. But, before the title passes, no such consequence can follow from the possession of the goods by the vendor.
    9. In the case of Cole v. Kerr, (20 Vt. R., 21,) it-was held there was no implied contract, upon the sale of personal property, that the vendee shall pay the vendor-.for any services in relation to the property previous to the completion- of the sale by delivery. (Cole v. Kerr, 20 Vt. R., 21.)
    10. Why- not as well for sacking the wool, as for storing the goods?
    .1 am at a loss -to discover a reason for the difference.
    . 11. The Judge’s charge was therefore clearly erroneous.
    IX. If the plaintiffs, under the law and evidence of the case, were entitled to a verdict, the damages-are clearly excessive. •
    Wm. E. Curtis, for plaintiffs, (respondents.)
    - The action is brought to recover for the expenses growing out of the custody of certain goods which the defendants, the vendees, neglected to take until after the expiration of the time within which they were to be taken.

      The defendants, for answer, set up that the plaintiffs consented to the delay, and also that there was no delay. The jury found for the plaintiffs a verdict for $196.85.
    I. The right of the plaintiffs to recover in an action of this nature is well settled. (Story on Sales, §§ 394, 404, 436.)
    “ If the buyer does not carry away the goods bought within a reasonable time, the seller may charge warehouse room, or he may bring an action for not removing them, should he be prejudiced by the delay. But the buyer’s neglect does not entitle the seller to put an end to the contract.” (Greaves v. Ashlin, 3 Camp., 427.)
    II. The evidence clearly shows a delay beyond a reasonable time to receive the goods, and that such delay caused necessary expenses tobe incurred by the plaintiff.
    The evidence shows that the goods were kept waiting on board the schooner from August 5th to August 15th,. being ten days, and all the witnesses agree that two or three days-is a sufficient and reasonable time for their discharge. The judgment should be affirmed, with costs.
   By the Court—Hoffman, J.

The contract between the parties clearly imported, that the defendants should be prepared, promptly to take the rosin from the hands of the plaintiffs, upon their being apprised of the arrival of the schooner, and upon the plaintiffs following their directions as to the place of delivery, and using proper diligence in facilitating the discharge and reception of the goods.

Under the charge of the Judge, the jury have in effect found that the plaintiffs were faultless, and the defendants negligent.

It is perfectly settled that it is the duty of the vendee to take the goods within, a- reasonable time, or he will be liable to the vendor for warehouse rent and other expenses growing out of the custody of them, or even to an action for not removing them, in case the seller is- prejudiced by his delay. (Story on Sales, § 404.)

It is insisted bv the learned counsel of the defendants, that this rule is only applicable when a sale is so perfected as that the-property has passed to the vendee, and possession remains in the vendor.

If it were necessary, in order to support the plaintiffs’ claim and the verdict, that such a transfer of property should be made out, our impressions would be that the right of property did actually pass upon the arrival of the schooner, so that in England; under an act of bankruptcy, the goods would pass to assignees, they paying the price; and so that the defendants •could sustain trover for them against others. The weighing of the rosin under this contract may have been as much intended to be done by the purchasers as by the sellers. (Ross on Venders, 82; Law L., vol. 12, p. 17, and cases; Ward v. Shaw, 7 Wend., 404.)

But whether this is so in all respects or not, when the defendants completed the purchase, took the rosin, and paid the price, they may be treated as purchasers and owners from the date of the contract which they acted under and fulfilled. When they began to unload and take the rosin about the 11th of August, the title then at least became vested in them as owners, and from the time of the contract. They could have recovered any advance of price beyond the amount to be given as fixed on .that day. They claimed to be owners and got the property by virtue of this contract; and then by relation, for the purposes of this 'question at least, they must be treated as owners from its date.

Now,'if a buyer’s neglect of this character does not entitle the seller to put an end to the contract, (3 Camp., 427,) he has no redress for the injury done him, and expenses incurred by him through the purchaser’s fault, but by an action of this nature; and to hold that the subsequent performance of the bargain which he could not prevent, shall rob him of this redress, would be a conclusion as manifestly unjust as we think it is untenable.

There is nothing before us on which we can pass upon the question of an excess of damages.

The observations above made dispose of the motion to dismiss the complaint which was made before the plaintiffs had given evidence and was renewed upon ’his resting.

The copies of the plaintiffs’ letters to the defendants upon the subject of the vessel’s arrival, and urging a prompt discharge, were given in evidence, after an admission of a notice to produce the originals. The admission was excepted to. On what ground ,we are at a loss to understand. No point as to this admission is now made. To have set these letters out in the complaint would have been pleading matters of evidence.

The same remarks apply to the admission of the conversation of the witness with the defendants, upon the same subject of the discharge of the rosin.

The exceptions as to the inquiry, -what would be a reasonable time for discharging the rosin, are clearly untenable. Those as to the expense of keeping the rosin and schooner are equally so.

The judgment must be affirmed.

Judgment affirmed.