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    The Merchants’ National Bank of Binghamton, N. Y., Appellant, v. Benjamin F. Tracy and Frank B. Tracy. Respondents.

      Action, on a check — what is not a mistrial — a bank is changeable with the knowledge of its cashier — renewal check tainted with the original fruud- — return of the former check unnecessary — rescisión of contract — courts will not protect a person from the consequences of his own dishonesty.

    The trial of an action was commenced before a jury which passed on the several questions submitted to it, and thereafter further findings of fact were made by the court.

      Held, that it must be assumed that there was not a mistrial; that it was in substance a trial by the court without a jury, and a decision upon the whole evidence, with the aid of the jury as to the questions of fact submitted to it.
    The evidence considered and commented upon which is insufficient to establish, as a matter of law, that a person is a bona fide holder without notice of a check, and under which a finding of fact that he is not a bona fide holder is not against the weight of evidence.
    A person had been acting for some time as the cashier of a bank, having supervision of its affairs and charge of its discounts and collections, and, as such cashier, had charge of the discount of a check, a recovery upon which it was sought to defeat, upon the ground that it was obtained by fraud.

      Held, that the cashier’s acts were binding upon the bank, and that it was chargeable with his knowledge or the notice he had in relation to the matter.
    A post-dated check was delivered to the cashier of a bank, which upon the maturity of the check had not acquired a bona fide ownership thereof. Upon the trial of an action brought to recover the amount of a check given by its maker in renewal thereof, it appeared that the cashier of such bank co-operated with the person who procured such check to be discounted to obtain an extension of time or a renewal of the check.

      Held, that, as the bank did not have title as a bona fide holder of the first check, it had no valid claim against the maker of the second check, which was tainted with the original fraud.
    "Where a "bank, holding a note with indorsers vitiated by fraud of which the bank had knowledge, takes a new note in renewal thereof, surrendering the first note, it cannot set up as an answer to the defense of fraud, interposed to an action on the second note, that the first note has not been returned to it, where it appears that the indorsers on the first note could not be held by the bank for its payment. *

      Semble, that the first note would be of no more value to the plaintiff than a note from which the name of the maker was stricken, leaving only the names of the indorsers thereon.
    It is unnecessary for a party to a piece of fraudulent paper to return it to a person, not entitled to enforce it because of such fraud, as a condition precedent to the right to defeat a recovery upon another piece of paper given in substitution therefor, in continuation of the fraud, and as a part of the same fraudulent scheme, which defeats the right of recovery against the makers of it.
    In cases of the rescisión of a contract, the rule is that the party shall not retain the thing which is the subject of the contract.
    If a fraudulent purchaser of property suffers what is due to his own fraudulent and dishonest act, the court will not strive to protect him from these consequences of his own dishonesty.
    Appeal by the plaintiff, The Merchants’ National Bank of Binghamton, N. Y., from a judgment of the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of Broome on the 20th day of March, 1893, upon the decision of the court, rendered after a trial at the Broome Circuit, dismissing the plaintiff’s complaint upon the merits.
    The trial commenced May 23, 1892, in the Circuit Court before a jury, and-continued until the twenty-eighth of May, when a jury trial was waived by both parties, and by their consent the following questions were submitted to the jury, which .were answered in the affirmative :

      “First. Was the check of date dune 15th, obtained by Gregg from Frank Tracy by fraud, in pursuance of a fraudulent conspiracy between Gregg and Fredei'ick Ross to sell the stock of the Hydraulic Power Company at a fictitious value ? (Answered — Yes.)
    “ Second. Did Gregg procure Frank Tracy to apply for the surrender of the first check, and for the substitution of the second, in furtherance of such conspiracy and for the purpose of making more certain the defendants’ liability? (Answered — Yes.)
    “ Thwd. Was the participation of Frederick Ross in such conspiraey, if one existed, in the interest and for the benefit of the Merchants’National Bank as well as his-own interest? (Answered— Yes.)”
    Thereafter the court made twenty-three findings of fact and three conclusions of law.
    Plaintiff’s complaint alleged that on the 1st day of July, 1889, the defendants made their check in writing, which was in the following words and figures:
    “ Owego, N. Y., July 1, 1889.
    “ Owego National Bank, pay to the order of F. E. Ross, cashier, four thousand and eleven 75 ---dollars ($4,011.75).
    “ (Signed) B. F. TRACY & SON.”
    The answers of the defendants set up failure of consideration, fraud and fraudulent representations made to induce the execution and delivery of the cheek.
    It was found as a fact by the court that on the 30th of May, 1889, “ Dudley W. Gregg was the manager of a corporation organized and doing business under the laws of the State of New York, and known as the Binghamton Hydraulic Power Company. That upon said date one Frederick Ross was the cashier of plaintiff, and so continued till the time of the trial of this action.”
    “ Fifth. That upon said 30th May, 1889, said Gregg procured, from said Frank B. Tracy, acting for and by authority of said firm, a check for $4,000, dated June 15th, 1889, to the order of Dudley ~W. Gregg; said check was drawn upon the Owego National Bank, and signed 1B. F. Tracy & Son.’

      “ Sixth. That said check was afterwards indorsed by said Gregg and by the Binghamton Hydraulic Power Company, and discounted by plaintiff, acting through said cashier, and the proceeds thereof were, at the request of said Gregg, placed to the credit of the Hydraulic Power Company.
    “ Seventh. That upon said 15th June said check was duly presented for payment at the Owego National Bank and payment demanded, which was refused, and of which refusal due notice was given to the makers and indorsers thereon.
    “ Eighth. That on or about the 18th day of June, 1889, at the request of the defendants, plaintiff surrendered the said check dated June loth, with its indorsements thereon, and in place thereof took defendants’ cheek for $4,011, dated 1st July, 1889, made payable to the order of Fred Ross, cashier, and drawn upon the same bank as was the prior check, and signed B. F. Tracy & Son; that said check was discounted by said plaintiff and duly presented when due, and payment refused; that this action is brought to recover upon said check.
    “ Ninth. That said check of date June loth was given as a partial payment upon certain stock of the Binghamton Hydraulic Power Company, which the said Gregg then contracted to sell to the defendants.
    “ Tenth. That at the time of the giving by the defendants of the said check of date June 15th to the said Gregg, the said Gregg represented to the said defendants that the said Hydraulic Power Company was in a prosperous condition; that when engines were sold by the said company drafts were always drawn on the customers to whom the said engines were sold, and the said drafts were always paid, and the said engines had always given satisfaction to the parties using them; that the company was organized under the laws of the State of New York with a full paid-up capital stock of $50,000.

      “ Eleventh. That said representations were, and each one thereof was, false and untrue; that the said company was not in a prosperous condition; that drafts drawn upon customers when engines were sold were not always paid; that the engines had not always given satisfaction to the parties using them, and had seldom given satisfaction, if at all, to any parties using them; that the said company was not organized with a full paid-up capital stock of $50,000, and that a very small part of the said capital stock of $50,000 was actually paid by the stockholders therein.
    “ Twelfth. That said representations when made by the said Gregg to the defendants were known by the said Gregg to be false and untrue, and they were made by the said Gregg with intent to deceive the said defendants, and to induce them to purchase the said stock, for which the aforesaid check of June 15th was given as a partial consideration.
    “ Thirteenth. That the aforesaid representations were material representations, and were representations of material matters to be considered in the purchase of the said stock ; that the said defendants believed them to be true, and were induced thereby to make the contract for the purchase of the said stock and to give the afore-' said check of date June 15th in partial payment thereof.
    “ Fourteenth. That the check upon which this action is brought, of date July 1st, was, upon the 18th day of June, 1889, given in consideration of and as a substitute for the said check of June 15th; and at the time of the giving of the said check by the said defendants, they were still ignorant of the falsity of the representations made by the said Gregg, and by means of which the said check of June 15th was from them obtained.” This action was commenced on or about the 17th day of August, 1889.

      “Sixteenth. That after the commencement of this action the defendants for the first time discovered that the aforesaid representations by the said Gregg were false and untrue, and for the first time discovered the fraud practiced upon them by the said Gregg in the procurement from them of the said check of date June 15th, and in their answer they have set forth the facts constituting the fraud, and have offered to return upon the trial whatever the court shall say they are not entitled to retain.

      “ Seventeenth. That upon the trial of this action the said defendants, in open court, tendered to Dudley W. Gregg the stock which was delivered to them as a part consideration for which the said check of June 15th was given, and also a note which was given by the said Gregg to the said defendants to assist the said defendants in raising money with which to pay the said check before the discovery by the said defendants of the aforesaid fraud.

      “Eighteenth. That the making by the said Gregg of the said fraudulent representations, by which the aforesaid check of June 15th was obtained from the defendants, was in pursuance of a fraudulent conspiracy between the said Dudley "W. Gregg and the said Frederick Ross to sell the stock of the Hydraulic Power Company at a fictitious value.
    “ Nineteenth. That the said Gregg procured the defendants to apply to the said Frederick Ross, as cashier of the plaintiff bank, for the surrender of the first check, to wit, that of date June 15th, and for the'substitution therefor of the second.check, to wit, that of date July 1st, in furtherance of such fraudulent conspiracy,’and for the purpose of making more certain the defendants’ liability thereupon.

      “ Twentieth. That the participation of Frederick Ross, in such, conspiracy was in the interest and for the benefit of the Merchants’' National Bank, as well as in his own interest.

      “ Twenty-first. That the Merchants’ National Bank at the time! of the discounting of the first check, to wit, the check of June 15th,, had full knowledge of the fraud of the said Gregg, aforesaid, by which said check was procured.

      “ Twenty-second. That the said Merchants’ National Bank in discounting the said first check acted in bad faith, and did not become-a bona fide holder thereof.

      “ Twenty-third. That the said Merchants’ National Bank in substituting the second check, the one upon which this action is brought,, for the first check, acted with full knowledge of the fraud by which the said first check was obtained, and with full knowledge of the fraud by which the said second check was substituted therefor, and received the same in bad faith, and did not become a bona fiideholder thereof.”
    The court found as conclusions of law, viz.:
    “ First. That the defendants are entitled to rescind the said contract under which was given the first check, to wit, that of date June 15th, by reason of the fraud practiced in -the procurement of the same. .

      “ Second. That the defendants are entitled to rescind the contract by which the said second check, which is the'one' upon which this action is brought, was substituted for the first check, by reason of the fraud practiced in the procurement of the same, and also by reason of the fraud practiced in the procurement of the first check, for which the said second check was substituted.

      “ Third. That the defendants are entitled to a judgment dismissing the plaintiff’s complaint upon the merits, with costs, which judgment is directed accordingly.”

      Fd/m,und O’ Connor, for the appellant.

      George B. Curtiss, for the respondents.
   Hardin, P. J.:

Although.the trial of this action was commenced before a jury,, and the jury passed on the several questions submitted to them, and their further services in the case were waived by consent of both. parties to the action, and further findings' of fact were made by the court, it must be assumed there was not a mistrial. A somewhat similar course was adopted in Carr v. Carr (52 N. Y. 252), and in the course of the opinion delivered in that case, which was decided by the court after the findings made by the jury, it was said: It was in substance* then, a trial by the court without a jury, and a decision upon the whole evidence with the aid of the finding of the jury upon two questions of fact.” (Opinion of Allen, J., page 255.)

(2) It is insisted on behalf of the plaintiff that it paid full value for the check in question, and became a bona fide holder for value. In considering this question it is appropriate to recall some of the leading features of the evidence bearing upon the question of the ownership by the bank of the first and second checks. From the evidence it appears that in the fall of 1886, F. E. Ross and Gregg had become instrumental in organizing and bringing into existence a gas machine company; a patent had been issued for a gas machine which was owned by one Hanford, and a one-half interest therein was purchased by Ross for some $1,000, and that patent was put into the company, which was capitalized at $25,000,- and the stock was issued to Ross and Hanford, each taking one-half in the concern, which commenced business and began to borrow money of the plaintiff. This company apparently continued until early in July, 1888, when it was embarrassed and its stock became of little or no value. The gas machine did not' prove of much value. Frederick E. Ross was president, and Clinton Ross, a brother, was treasurer, and Gregg acted as secretary, and they were directors. In June, 1887, Fred Ross, Gregg, Clinton Ross and others initiated and organized a company known as the Binghamton Hydraulic Power Company. One Yan Deusen had obtained a patent for a water motor. It was first proposed to organize the company with a capital of $15,000; subsequently Fred Ross and Gregg concluded to capitalize it at $25,000. Steps were taken to organize the hydraulic company, and the stock thereof was to be divided among them — Ross, $6,000; Gregg, $6,000; Clinton Ross, $6,000; andYanDeusen, for his patent, $5,000; and Scott was to receive $1,500 for some tools and Grift, $500 — thus the stock, 250 shares, was distributed. Fred Ross, Clinton Ross and Gregg received their stock from the company without paying any money to the company; and the company set out in business by borrowing from the plaintiff some $750. Its directors were, Clinton Ross, president; Scott, vice-president; Gregg, secretary and general manager. In bringing into existence these two companies Fred Ross and Gregg were active instruments; and in January, 1888, efforts were made to consolidate the two companies, and changes were made in the certificates of stock of the hydraulic company so that there was inserted in the certificates the words “ Fully paid capital stock $50,000,” instead of the words “Fully paid capital stock $25,000.” From about that period of time it would seem that the gas machine company was regarded as dormant, and was abandoned; the shares of stock that had been issued in the gas machine company apparently were attempted to be extinguished by the issuance of shares in the hydraulic company. After these changes were made in a somewhat irregular manner it appears that Erastus Boss became the owner of some twenty shares of the hydraulic stock, and Fred Ross of some 200 shares, and Clinton Ross of some seventy shares, and Gregg of about 160 shares, and, apparently, the hydraulic company was supposed to assume the debts •of the gas company. The banking business of the two companies was transacted with the plaintiff. Erastus Root was its president, and F. E. Ross was, its cashier, and Clinton Ross was a director, and they owned a large portion of the stock of the plaintiff. It was conceded on the trial that no certificate was ever filed stating that the hydraulic power company’s stock had been paid for in full, and that no annual report was ever made. It appears that a meeting of the directors of the Automatic Gas Machine Company was held on May 5, 1887, “at the Merchants’ National Bank,” at which all the directors were present excej>t Mr. Hanford, and that a motion was there adopted “ That this company pay a royalty or license fee of fifty per cent upon the selling price of such motors and blowers machines which have been or may be used by them, said royalty to be paid to Mr. Frederick E. Ross and Mrs. Anna C. Gregg ” (she being the wife of D. ~W. Gregg). It appears that on January 28, 1889, Gregg sold ten shares of the stock for twenty-five cents on a dollar. In May, 1889, the plaintiff held notes of the hydraulic company amounting to some $21,000, and the plaintiff held drafts which it had discounted and which had not matured, something over .$9,000; and evidence was given tending to show that the liability of the company exceeded their nominal assets by some $12,000. Other evidence was given tending to show that the hydraulic company was insolvent in the month of May, and that its stock had little or no intrinsic value; and that the sales of the company fell off from some $4,200 in January, to some $1,200 in the month of May; and that in the month of May their expenses were more than their receipts, and that their sales in the month of April were but a small sum above the actual expenses of operating the company; and that during many of the days in the month of May their account was overdrawn at the bank of the plaintiff, to wit, on the twentieth day of May the account was overdrawn $3,599 ; on the twenty-first, $2,356 ; on the twenty-fourth, $YY4; on the twenty-fifth, $2,533; on the twenty-seventh, $9Y1; on the twenty-eighth, $1,5Y6; on the twenty-ninth, $1,809; and that the president and cashier of the plaintiff in the early part of 1889 had become somewhat alarmed, restive and impatient with the situation of the financial affairs of the hydraulic company, and were taking measures to have the indebtedness of the hydraulic company to the plaintiff reduced and reinforced; and such solicitude and action of the officers of the plaintiff were communicated to Gregg, and he was urged to devise some means by which the desired result could be accomplished. Apparently, he set out with a view of selling some of the stock of the company held by him and Cashier Ross, and with that end in view he obtained an option from Cashier Ross, and armed with that he commenced negotiations 'for the sale of the stock of the hydraulic company, some of it standing in the name of the cashier, and some of it standing in his name, and apparently some of the stock of the company had been hypothecated to the plaintiff. On the 20th of May, 1889, the defendant Frank Tracy went to the office of the hydraulic company to buy an oil machine, and while there observed that he was out of active business. Thereupon Gregg commenced a negotiation with him, and made statements as to the situation and condition of the affairs of the hydraulic company; that was followed by other interviews; and subsequently Frank Tracy, whose relations with Fred Ross had been somewhat intimate, although he did not know that the Rosses were connected with the company, visited the plaintiff’s bank, going directly from the hydraulic company’s office to see Fred Ross,. and while at the bank asked him if he knew anything about the Binghamton Hydraulic Power Company, and he testifies that Ross replied: “ The company is all right, and if properly managed, will make $30,000 a year.” On the thirtieth of May, Gregg, in accordance with a telephone message sent to Frank Tracy, went to Apalachin, and Mr. Tracy met him there and drove him over to his farm, where he renewed his solicitations to young Tracy that he come into the company and buy some of the stock; and in the course of the interview it was learned that Richards held a contract with the company for the right to manufacture the engine under the patent for two years, and when making some objection to that, Gregg immediately said that Richards was willing, provided Tracy would come-into the company, to make an agreement with the company to manufacture the engine during the life of the patent, “ for the entire world.” Thereupon a proposition in writing to that effect was-drawn and signed by Richards, who shortly thereafter left, and Gregg continued his negotiations with Tracy, who assured Gregg-that he would not “ come into the company without first consulting his father.” Upon representations further made in the course of that interview, Frank Tracy was induced to and did prepare two checks, one for $1,000 and one for $4,000, and delivered them to-Gregg, and at the same time took from him a receipt in the following language:

“ Binghamton, May 31 si, ’89.
“ Received of Frank B. Tracy his check dated June 1st, amt. one-thousand dollars ($1,000). This sum to be applied on the fifty shares-of stock owned by F. E. Ross, he to give an option on his fifty shares-for ten days from June 1st, and incase Mr. Tracy does not purchase-the balance of the fifty shares, to return the check or its equivalent. Also his check for four thousand dollars ($4,000), dated June 15th, for which I agree to deliver on June 15th ninety-six shares of Binghamton Hydraulic Power Company’s stock. In case said Tracy should not come into the company, said check or its equivalent to be-returned, and the ninety-six shares returned to me.
“(Signed) D. W. GREGG.”

Gregg and Frank then agreed to go to "Washington and have an interview with the senior Tracy, and they were to meet in Brooklyn on the morning of June first, and before they parted Frank testifies that he said to Gregg: “ Under no condition must those checks be-used until you hear from me.” On the following day Gregg sent the certificates for ninety-six shares of stock by a messenger to Frank Tracy. On the morning of May thirty-first Gregg saw Frank Ross at the Merchants’ National Bank, and he had the two checks with him at the time he went to the bank, and he handed both checks, one for $1,000, first to Cashier Ross, and “told him that was his check for his option on the fifty shares,” and thereafter handed him the check for $4,000, and “told him it was for 96 shares of my stock, and that I was depositing it to the credit of the Binghamton Hydraulic Power Company.” Gregg testifies that he told Ross that he was selling it to the Tracys at par, and he adds in his testimony: “I think I told him the agreement. I cannot recollect the full conversation; I remember telling him that Frank was going to investigate the company, and see his father, and that I was going to Washington with him to see his father in regard to raising the balance of the money, and I thought he would go that very evening, and perhaps I should go with him, and that is about all I can remember.' I think I said that Mr. Tracy was going to Washington that night to see his father in regard to raising the money to come into the company, but nothing was said in regard to investigating it that I remember, not at that time.” Gregg presented to Cashier Ross the paper which he had heretofore received from him, giving him an option, and took a receipt for the $1,000 on the back of it, which option bore date May 22, 1889. We are of the opinion that the evidence, although conflicting, warranted a finding that the scheme which was on foot to obtain from the Tracys money for the stock at par was fraudulent, and was known to be so by Gregg and by Ross, and that when Gregg received the check of $4,000, it was with an understanding that it was not to be used until after a conference was had with the senior Tracy, and a determination made to purchase greater interest in the hydraulic company, and that the check of $4,000 was diverted from its proper use by Gregg when he delivered it to the cashier, and that it was a breach of the agreement made with Frank Tracy, as shown by the quotation made. Gregg testifies that he communicated the agreement to Cashier Ross at the time he delivered the $4,000 check; while this fact may be said to be disputed by the testimony of Ross as a witness, it was for the trial court to determine whether faith and credence should be given to tlie testimony of Ross, situated as lie was, 'largely interested in the financial affairs of the plaintiff, and charged with the perpetration of a wrong upon the defendants. According to the tenor of the opinion delivered by Ruger, Ch. J., in C. N. Bank v. Diefendorf (123 N. Y. 191), his testimony might, in accordance with the rule laid down in that case, be disbelieved. In accordance with what was said in that case, the onus was on the plaintiff to establish that it received the $4,000 check in good faith. Ve think the trial court was warranted in finding that the plaintiff did not acquire in good faith title to and ownership of the check of $4,000 delivered to it on the 31st day of May, 1889, under the circumstances disclosed by the evidence. (C. N. Bank v. Diefendorf, supra; Vosburgh v. Diefendorf, 119 N. Y. 351.)

With the antecedent knowledge of the affairs of the hydraulic company and with the negotiations that had been initiated between Gregg and Frank Tracy on the twentieth of May, with the circumstance of the knowledge that two days thereafter, to-wit, on the twenty-second of May, Fred Ross gave an option to sell fifty shires of his stock at par, with the facts relating to the obtaining of that option, and the facts testified to by Gregg in respect to the negotiations with Tracy and all the features of the case, we are unwilling to . say that the court committed. any error in disregarding the testimony of Ross upon the subject of want of knowledge or notice of the qualified rights of Gregg in the check of $4,000. It may be observed that the check, although delivered on the thirty-first of May to the bank, was post-dated to the fifteenth of June, and that circumstance is suggestive of the idea that for some reason the party presenting the check was not entitled to receive the proceeds thereof until that lapse of time, and that is a circumstance, coupled with the testimony of Gregg, worthy of some consideration in determining the conflict found in the testimony between the version given by Ross as a witness and the other evidence before the court relating to the subject of the bona fide ownership by the plaintiff of the check of $4,000. We think the contention of the plaintiff that it was a bona fide holder, without notice, of the check for $4,000 must fail.. We are also of the opinion that upon all the evidence it was a question of fact to be determined as such and not a question of law. (Franc v. Dickinson, 34 N. Y. St. Repr. 864.) And we are further of the opinion that the finding is not against the weight of evidence. (Bullion v. Bullion, 73 Hun, 437.)

(3) It is contended in behalf of the appellant that, although Fred Ross was guilty of a conspiracy with' Gregg, the bank is not affected by his knowledge and acts and co-operation in carrying out the fraudulent scheme. The evidence discloses that he was and had been for some time acting as the cashier of the plaintiff, having supervision of its affairs, and that he had charge of the.discounts and collections in behalf of the plaintiff, and it also discloses that when he received the check of $4,000 he was acting in his capacity as cashier and his acts were binding upon the 'plaintiff, and the plaintiff is, therefore, chargeable with knowledge or the notice that Ross had in the premises.

This case differs from Mayor v. Tenth National Bank (111 N. Y. 457), referred to by the appellant. In that case the directors, who were conspirators, did not represent the bank in the transactions, and in the opinion, at page 457, it is said: The sole agent and representative of the bank was Bliss, its president, and he was entirely innocent of any wrong. The knowledge these conspirators had while engaged in their fraud for their own benefit could not, therefore, be attributed to the bank; and to this effect are all the decisions.” Atlantic State Bank v. Savery (82 N. Y. 307) is also distinguishable from the case before us. Nor do the cases of Casco N. Bank v. Clark (139 N. Y. 307) and Merchants' National Bank v. Clark (Id. 314) support the contention of the appellant. We think this case is more like Holden v. New York & Erie Bank (72 N. Y. 286), where it was held: “ Where an agency is continuous and made up of a long series of transactions of the same general character, knowledge acquired by the agent in one. or more of the transactions is notice to the agent and the principal, which will affect the latter in any other transaction in which the agent, as such, is engaged, and in which the knowlege is material.”

In Cragie v. Hadley (99 N. Y. 134) it is said : But the general rule is well established that notice to an agent of a bank or other corporation intrusted with the management of its business, or of a particular branch of its business, is notice to the corporation, in transactions conducted by such agent, acting for the corporation, within the scope of his authority, whether the knowledge of such agent was acquired in the course of the particular dealing or on some prior occasion.”

In the course of the opinion delivered by Mason, J., in Davis v. Bemis (40 N. Y. 454, note), he said: “ For it is a general principle of law that the principal is held liable to the public or third persons in a civil action for the frauds, deceits, concealments, misrepresentations, torts, negligence and other malfeasances in the course of his employment, although the principal did not authorize or justify or participate in it or indeed know of such conduct.”

In Garner v. Mangam et al. (93 N. Y. 642) it appeared that defendants by means of false representations induced plaintiff to purchase 120 shares of stock which was utterly worthless ; each of the defendants contributed forty shares, and all were parties to the fraud. In the course of the ojdnion it was said that one of the defendants could not receive the fruits of the bargain without being responsible for the fraud through which it was effected.”

It seems to follow from what has already been said that when the check which was delivered to the plaintiff dated the 15th of June, matured, the plaintiff had not acquired an ownership thereof in good faith; and it appears by the evidence that its cashier co-operated with Gregg in a scheme to procure an extension of time or the renewal check which is made the basis of this action. There is testimony to the effect that Gregg prejiared a letter to be addressed to the cashier with a view of securing an extension of time for the payment of the first check% Inasmuch as the plaintiff did not have title as a bona fide holder of the first check, it had no valid claim against the defendants by reason of the check given in renewal thereof, which was tainted with the fraud relating thereto. It is, however, contended in behalf of the appellant, that because the first check was not returned to the plaintiff, before the commencement of this action, that it is in a situation to recover on the second check. In dealing with that question it is to be observed that the first check was made payable to the order of Gregg, indorsed by him and also by the hydraulic power company. Gregg was an officer of the hydraulic power company, and through him it derived knowledge of the fraud being perpetrated by him, and his knowledge is imputable to that company.

In Putnam v. Schuyler (4 Hun, 166) it was held to be error to exclude evidence showing that notes were obtained by fraud and that they were without consideration in an action against the defendant who had guaranteed the payment of them; and in the course of the opinion it is said: “ If, in the principal obligation, there is essential vice which may annul it, as if it has been contracted by force, if it is contrary to law, or to good manners, if it be foxmded only on a fraud, or on some error which may suffice to annul it; in all these cases the obligation of the surety is likewise annulled.” It does not seem too much to say that if the bank held a fraudulent piece of paper with notice of the fraud, indorsed by one of the parties perpetrating the fraud and by another party having knowledge of the fraud and after such knowledge received moneys wrongfully thereon, then the holding of such paper by the plaintiff wouid not give it any additional right of recovery against the indorsers of the paper. Besides it seems anomalous to require of a party to a piece of fraudulent paper to return it to a person not entitled to enforce it, because it is tainted with fraud as a condition precedent to the right to defeat a recovery upon another piece of paper given in substitution therefor in continuation of the fraud, and as a part of the scheme fraudulent in itself, which defeats the right of recovery against the makers of it. Such a piece of paper would seem to be of no more value to the plaintiff than one where the name of the drawer of a check was stricken therefrom, leaving only the indorsements thereon. The defendants are in a position of asserting that the contract for the purchase of the stock was fraudulent and void and of repudiating that contract, and whatever the defendants received under that contract they offered to return at the trial, to wit, the surrender of the shares of stock which were delivered to the defendants on the first of June. Surely the defendants have acquired nothing more of value to them, and if the observations already made are correct they have received nothing under the contract, which they repudiate, of any value to the plaintiff. In this case the defendants are seeking to withhold their moneys from the payment of a check that is tainted with fraud. They allege and furnish evidence indicating that the first check was obtained and diverted by fraudulent representations, and that, in continuance of the fraud and scheme in which the conspirators were engaged, the second check was obtained from them in furtherance and con* tinuation of the fraud attempted to be perpetrated upon them. When they surrendered the certificates they surrendered all that they had acquired in the premises.

In cases of rescission of a contract the rule is, “ that the party shall not retain the thing which is the subject of the contract.” (Harris v. Equitable Life Ins. Co., 64 N. Y. 200.) It may be said the respondents’ defense is both legal and equitable, and as said by Boardman, J., in Green v. Smith (29 Hun, 168): “ If the plaintiff suffers it is due to his own fraudulent and dishonest act, and courts will not go to the romantic extent of striving to protect a fraudulent purchaser of property from the consequences of his own dishonest act.”

In Masson v. Bovet (1 Den. 74), in the course' of the opinion delivered by Beardsley, J., he said, in speaking of a person who had perpetrated a fraud, that If, therefore, he has so entangled himself in the meshes of his own knavish plot, that the party defrauded cannot unloose him, the fault is his own; and the law only requires the injured party to restore what he has received, and, so far as he can, undo what had been done in the execution of the contract. This is all that the party defrauded can do, and all that honesty and fair dealing require of him. If these fail to extricate the wrongdoer from the position he has assumed in the execution of the contract, it is in no sense the fault of his intended victim, and upon the principles of eternal justice, whatever consequences may follow they should rest on the head of the offender alone.”

Assuming, as I think we should, upon the whole evidence that the second check was obtained by means of fraudulent representations and in furtherance of the scheme to defraud the defendants, probably the plaintiff is entitled to recover damages against Gregg and the hydraulic company by reason of the fraud which induced it to part with its moneys to the hydraulic company irrespective of that indorsement upon the check which was fraudulent in its inception, and to which, as before seen, the plaintiff did not acquire title in good faith.

The foregoing views lead to the conclusion that the decision made at the Circuit, and the judgment entered thereon, should remain.

Martin and Merwin, JJ., concurred. .

Judgment affirmed, with costs.


source: Caselaw Access Project

author: Hardin, P. J.:

license: Public Domain

text:
    William H. Kirk, Respondent, v. The Village of Homer, Appellant.

      Injuries resulting from an alleged defective condition of a village street — contributory negligence — cha/rge as to the duty of the village — to be construed as a whole,

    A municipality does not perform its whole duty in respect to keeping its streets in a safe condition for travel by instructing its subordinates to ascertain the facts in regard to their condition and report thereon.
    Upon the trial of an action brought against a village to recover damages received from a fall, caused by the alleged defective condition of one of its streets, the court, among other things, charged the jury that it was the absolute duty of the defendant, through its officers, to see to it that the public streets and sidewalks maintained by it were put and kept in a reasonably safe condition with reference to public travel, and that they were kept reasonably ■ and suitably safe for persons who desired to pass over and along the same. The court also charged that a village might or might not construct a sidewalk, but that, having constructed one, it was its absolute duty to see that such sidewalk was at all times, both night and day, reasonably safe and suitable for foot passengers ; that if such village had discharged its duty in that respect with such vigilance as the law required, it was exempt from liability for any accident which might occur; that the village was not an insurer against accident, but that its officers, in taking upon themselves the responsibility of the government of the affairs of the municipality, say to those who are invited along and upon their walks and streets, that they may go there lidth the assurance that the corporation and its officers have performed their duty in all respects as to keeping the sidewalks in suitable and safe repair.
    The counsel for the defendant excepted to that portion of the charge in which it was stated that an absolute duty rested upon the defendant to see that its streets and sidewalks were put and kept in a reasonably safe condition for public travel, and safe for people to pass over them, and also to that portion of the charge in ' which it was stated that the obligation rested upon such municipality to keep its sidewalks in repair, and that it must see to that duty, and that it was an absolute duty.
    The court stated that it did not say that it was an absolute duty to keep its sidewalks in repair, but that such municipality owed an absolute duty to the public to keep its sidewalks in a reasonably safe and proper state of repair.
    The counsel for the defendant then stated that he excepted to the proposition as then charged, and also to that portion of the charge in which it was stated that when a village had once constructed a walk it was its business to see that such walk was kept reasonably safe for persons to pass over it all the time, so that those who were invited to travel along its walks and streets might go there with the assurance that the municipality had kept them safe and in repair.

      Held, that the language used by the trial judge in the body of his charge and in response to the defendant’s exceptions construed as a whole was proper.
    In construing, upon an appeal, the charge of a court to the jury, isolated portions thereof should not be singled out, but the whole charge should be considered together.
    Appeal by the defendant, The Village of Homer, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Cortland on the 12th day of January, 1893, upon the verdict of a jury rendered after a trial at the Cortland Circuit, and also from an order entered in said clerk’s office •on the 26th day of December, 1893, denying the defendant’s motion for a new trial.
    This action was brought to recover damages for injuries sustained by the plaintiff in passing along Hudson street, one of the principal streets, which had been used for many years, in the defendant’s corporation. A sidewalk had been built and used many years on the south side of the street, and on Sunday evening, June 8,1890, plaintiff attended the Baptist church and was returning therefrom when he received the injuries complained of. He was walking “ right along at a good gait ” when he came to a small bridge composed of two stones which covered a sluiceway under the sidewalk. The stone lying on the north side was about two feet wide on the west end and about two and a half feet wide on the east end as it lay over the sluiceway, and the stone on the south side was about two feet wide on the east end and a little less on the west end. The sluiceway was made by the corporation to carry off the surface water, and the sluice varied in depth from a foot at one end to a foot and a half at the other, and was about eighteen inches wide. The plaintiff, while passing over the bridge made by the placing of the stones over the sluiceway, stepped into the hole between the two stones, and his foot caught between them and he was thrown down, falling against the fence, and l’eceiving the injuries complained of. He was assisted by some gentlemen who came along and obtained a conveyance and removed him to his home. The night was quite dark; there was no moon, and there was no light upon the street in that locality. It appears he was unable to use his leg for five or six weeks; it was painful and the knee was swollen; the muscles and ligaments of the knee were quite severely strained, and there was some evidence that the lubricating waters of the knee were lost, and his knee, according to the evidence, was still stiff and lame at the time of the trial, and there was some evidence that his injury may be permanent.

      Kellogg V. Van Jloesen, for the appellant.

      J. da T. E. Courtoey, for the respondent.
   Hardin, P. J.:

Appellant was incorporated in 1835 by a special act of the Legislature, chapter 290 of the Laws of 1835, and amendments were made by chapter 181 of the Laws of 1837, chapter 58 of. the Laws of 1887, and chapter 386 of the Laws of 1889. Under the several acts the village is a highway district and its trustees are made commissioners of highways and are given such powers and duties as commissioners of highways in towns, except as otherwise limited, and they are authorized to appoint a superintendent of highways. It was conceded on the trial that the village had a duly appointed and acting street commissioner of the village of Homer for one year prior te the time of this accident and down to that time.” Defendant, moved for a nonsuit at the close of the plaintiff’s evidence, on the ground that he had failed to show any negligence on the part of the defendant, and also on the ground that he had failed to bring notice or knowledge of the existence of any defect in this walk to the defendant; and at the close of the whole evidence the motion was renewed upon the further ground That it now affirmatively appears, that the walk was repaired and put in reasonably safe condition on. Wednesday or Thursday prior to the accident, and that the defendant cannot be charged with negligence if it got out of repair after that, unless it had notice of its condition and that it was out of repair after that time; and that the evidence fails to show that it had any notice of its defective condition after that time; ” also, That if it was out of repair after it had been repaired on Wednesday or Thursday prior to the accident, it was not out of repair for a period of time long enough to charge the defendant with constructive notice of its condition.” The motions were denied, and the defendant took an exception. Defendant’s witness, Porter, gave evidence to the effect that he had repaired the bridge on Wednesday or Thursday and left it in a good condition. Several witnesses. were called in behalf of the plaintiff, wrho testified that the walk, for a week or more before the accident, was in precisely the same condition that it had been for a year or so previous, and, after considering the cross-examination of Porter, the witness produced by the defendant, and all the evidence offered by the plaintiff relating to the condition of the walk, we think it was a question of fact whether the repairs were made as testified to by Porter, and, if repairs were made as he testified, whether they were properly made, and whether the walk was out of repair a sufficient length of time after the repairs were made by him, were questions of fact for the consideration of the jury, and we think that the trial court committed no error in refusing to take the case from the jury in respect to the question of the defendant’s negligence in the premises. (Pomfrey v. The Village of Saratoga Springs, 104 N. Y. 459.) Eugene Kirk testified that he passed the sluiceway on the afternoon of Sunday, the day of the plaintiff’s receiving the injuries, and that he observed the condition of the bridge. He says : “ The north stone was a big stone, and the south stone was smaller, and was kind of jagged on the north side of the south stone where they came together, and the crack between was from two to five or six inches where they were separated; they were further apart, I think, on the east side than on the west.” After the method of repairs detailed by Porter was, by the evidence, before the jury, and after it appeared that the stones which formed the bridge over the sluice were supported by cobbles, it was for. the jury upon all the evidence, to determine, first, whether the repairs were sufficient and adequate for the purpose of retaining the stones in position, and, secondly, whether they were placed in fact in close proximity so as not to leave the opening which was found by the witness whose testimony has just been quoted, and which was observed by other witnesses who testify upon the subject. That the bridge was in an imperfect and defective condition at the time the plaintiff received the injuries is scarcely denied by the evidence, and it was for the jury, under ail the circumstances disclosed, to determine how long the bridge had been in a defective and dangerous condition ; and to determine, from all the evidence, whether it had been left in an improper condition for such a length of time as to properly challenge the notice of the defendant’s authorities. (Kunz v. City of Troy, 104 N. Y. 344; Foels v. Town of Tonawanda, 75 Hun, 363.) We are of tlie opinion, after a careful consideration of all the evidence bearing upon the two questions of fact, that it wTas proper lor the jury to consider whether the plaintiff was free from contributory negligence on the occasion, and that the evidence warranted a finding that he exercised reasonable care and was not guilty of contributory negligence, and, secondly, that the evidence tended to establish the fact that the defendant was guilty of negligence in leaving the walk in the condition in which it was at the time the plaintiff received the injuries alleged, and that the finding on that subject is not against the weight of evidence; on the contrary, we are of the opinion that the verdict is rational which establishes the fact that the defendant was guilty of negligence in leaving the walk in the condition in which it was at the time the plaintiff was injured.

The case of Bernstein v. Dry Dock, etc., R. Co. (72 Hun, 46) is quite unlike the case before us. In that case it appeared that the defendant while in the hospital admitted that he jumped off the car when it was in motion; and other evidence was found in the case quite strongly indicating that the plaintiff was guilty of contributory negligence. We are of the opinion that the weight of the evidence is not so distinctly preponderating in favor of the defendant that the verdict ought to have been set aside by the trial judge, and that it was not his duty to grant a nonsuit. The case, therefore, before us does not fall within the rule laid down in Linkhauf v. Lombard (137 N. Y. 426). It was for the jury to determine what credence should be given to the testimony of Porter on the subject of the repairs referred to in his evidence. (Roseberry v. Nixon, 58 Hun, 121; Goldsmith v. Coverly, 75 id. 48; 56 N. Y. St. Repr. 859, and cases there cited.)

In Goodfellow v. Mayor (100 N. Y. 18) the court repudiated the doctrine that a municipality “performs its whole duty in respect to keeping the streets in'safe condition for travel by instructing its subordinates to ascertain the facts and report.”

(2) In the course of the charge submitting the question of negligence to the jury the learned judge observed : “ It is the duty of the defendant, through its officers, to see to it that its public streets and sidewalks, which are maintained by the village, and this duty, gentlemen, is an absolute duty on the part of the village, to see that its streets and sidewalks are put and kept in a reasonably safe condition with reference to public travel; that they are kept reasonably and suitably safe for persons who desire to pass over and along upon them.” And he also said later on : “ They may construct or they may not construct a sidewalk; but, having constructed it, having made a way and invited the public upon it, they must see to it, and that duty becomes an absolute duty, that it is made at all times, night and day, reasonably safe and suitable for foot passengers. Have they’ performed that duty in this case ? ” and after stating to the jury that if the officers of the municipality have discharged their duty in that respect with such vigilance as the law requires, they are exempt from all liabilities from any accident which occurs, he added: “And that is upon the theory that the village is not an insurer. Its officers do not say to any person, ‘ You walk along upon our streets, and you are assured and guaranteed against falling or against accident,’ but they do say in taking upon themselves the responsibility of the position of the government of the affairs of the municipality— they do say to those who are invited along and upon their sidewalks and streets that they may go there with the assurance that the corporation and its officers have performed their duty in all respects as to keeping the sidewalks in suitable and safe repair. * * *” At the close of the charge the defendant’s counsel said: “We desire to except to that portion of your honor’s charge in which you say that it is an absolute duty resting upon the defendant to see that its streets and sidewalks are put and kept in a reasonably safe condition for public travel, and safe for people to pass over them.” It is to be observed that this exception is broad and covers some language which the judge had used and which unquestionably was in accordance with the law, and, therefore, the exception may be regarded as too broad, as some portion of .the language which was used was correct. The counsel continued in taking his exceptions and said: “Also to that portion of the charge in which you say that the obligation rests upon the defendant to keep its walks in repair, and it must see to that duty, and it is an absolute duty.” In response thereto the court observed: “ I did not say to the jury that it was an absolute duty to keep it in repair; I said they owe an absolute duty to the public to keep their sidewalks in a reasonably safe and proper state of repair.” Thereupon the defendant’s counsel observed: “We except to the proposition as now charged, and also to that portion of the charge in which you say that when they have once constructed a walk, then it is their business to see that it is kept reasonably safe for persons to pass over all the time; so that those who are invited to travel along their walks and streets may go there with the assurance that they have kept them safe and in repair.” The response of. the court was: Take an exception to whatever I said.” We think the exception is somewhat indefinite. (Ellis v. The People, 21 How. Pr. 356.) Doubtless the trial judge intended to lay down the. rule approved in Turner v. City of Newburgh (109 N. Y. 305), and we are inclined to think the language used by the trial judge in the body of his charge and in response to the exceptions proposed by the defendant when construed as a whole does not transcend the .rule found in the case of Turner v. City of Newburgh. In the course of the opinion in that case Gray, J\, says: “ Municipal governments owe to the public the specific, clear and legal duty of putting and maintaining the public highways which are in their care, or under their management, in a good, safe and secure condition, and any default in making them safe and secure, or in so maintaining them, if occurring through the negligence of the officials, upon whom a duty is devolved by law, will render the city liable. Where the unsafe condition occurs through some other agency or instrumentality, negligence is not imputable until a sufficient time has elapsed to charge the city officials with notice. Where a street is thrown open for the public use, those who travel upon it have' the right to assume that it is in a reasonably safe condition, and if, without fault of their own, or without knowledge of some existing obstruction, they are injured while lawfully using the street, the city is liable, unless the defect which has caused the injury has existed for so short a time that the city officials, by the exercise of reasonable care and supervision, could not have known of it. The city is not an insurer of the safety of those who travel upon its highways, and those who do so are bound to use their faculties and are held to the exercise of ordinary care and prudence. The duty of the city to keep its streets in a safe condition for public travel is absolute, and it is bound to exercise reasonable diligence and care to accomplish that end.” The language used by the trial judge is so like that used by the Court of Appeals in the case cited, that under the circumstances we do not incline to hold that the trial judge was in an error. (See Pettengill v. City of Yonkers, 116 N. Y. 558.) Without picking out isolated parts of the charge, which we ought not to do, but considering the whole charge together, we think it was sufficiently favorable to the defendant. (Caldwell v. New Jersey Steamboat Company, 47 N. Y. 282; Losee v. Clute, 51 id. 494; Crist v. The Erie Railway Co., 58 id. 638.)

Defendant contends the damages awarded were excessive. After the injuries a physician was sent for by the plaintiff and he attended the plaintiff for several days and examined the knee and ligaments of the knee and ankle, and apparently the pain was so great that the physician administered morphine hypodermically and bandaged the knee with hot poultices and cloth bandages, and that the plaintiff was obliged to remain upon a couch some two weeks before he sat up in a chair, and in about three weeks commenced using a crutch. The plaintiff testified that his knee pained him more or less every day and every night and that if he walked a good deal it pained him more than it would if he didn’t do anything; and he testifies that the pain kept him awake nights and restless. The physician seems to have attributed the injuries to the synovial membrane and ligaments, and although no bones were broken he testifies that the injuries were along the muscles and membranes and soft tissues of the joint of the knee; and there was some evidence tending to raise the question whether the injuries would produce a rheumatic condition from which suffering would ensue. We are not prepared, upon a full consideration of the evidence, to say that the jury committed an error in awarding damages, or that the trial judge was in error in refusing to reduce the damages.

Some other exceptions are found in the case to which attention has been given, but we have discovered no error requiring us to interfere with the verdict of the jury.

Martin and Merwin, JJ., concurred.

Judgment and order affirmed, with costs.


author: Per Curiam :

text:
    The John Church Company, Appellant, v. George H. Clarke, Respondent.

      A counterclaim must be alleged to home existed when the action was commenced — scope of, and evidence receivable under, a general denial.

    In an action brought on contract, the right to set up and prove as a counterclaim any other cause of action on contract, depends upon the existence of such counterclaim at the time of the commencement of the action, and an answer setting up a counterclaim which fails to show that it existed at the time of the commencement of the action is demurrable.
    Under a general denial, in an action on contract, a party may controvert by evidence anything which the other party is bound to allege and prove in the first instance to make out his cause of action, and anything which he is permitted to prove for that purpose.
    Appeal by the plaintiff, The John Church Company, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Chemung on the 20th day of March, 1893, upon the verdict of a jury rendered after a trial at the Chemung Circuit and also from an order entered in said clerk’s office on the 21st day of March, 1893, denying the plaintiff’s motion for a new trial made upon the minutes.

      Moumcms, Moss dh Knypp, for the appéllant.

      Reynolds, Stanehfield c& GolVm, for the respondent.
   Per Curiam :

On the trial the plaintiff offered to prove that the defendant was not, at the. commencement of the action, the owner of the demand set up in his answer as a counterclaim. This evidence was excluded upon the ground that it was not admissible under the pleadings. The reply consisted of a general denial of the matters set up as a counterclaim.

The correctness of this ruling is challenged by the appellant, and presents the only question involved on this appeal. The Code, so far as applicable.to the question, provides that in an action on contract any other cause of action on contract, existing at the commencement of the action, may be set up as a counterclaim against the plaintiff. (§ 501.) Thus, the right to set up and prove such a claim depends upon its existence at the time the action was commenced. It has been held that an answer setting up a counterclaim which fails to show that it existed at the commencement of the action is demurrable. (Moody v. Steele, 11 N. Y. Civ. Proc. Rep. 205; Mayo v. Davidge, 44 Hun, 342; Rice v. O’Connor, 10 Abb. Pr. 362; Van Valen v. Lapham, 5 Duer, 689; Abbott’s Trial Brief on the Pleadings, 400, § 481.)

Thus, it would seem that the defendant must not only prove, but must also allege, that' the counterclaim in his favor existed when the action was commenced. Such being the case, it must follow, we think, that the plaintiff, under the general denial contained in the reply herein, was entitled to prove that no such claim existed in the defendant’s favor when the suit was begun. . Under a general denial, in an action on contract, a party may controvert by evidence anything which the other party is bound to allege and prove in the first instance to make out his cause of action, and anything which he is permitted to prove for that purpose. (Milbank v. Jones, 141 N. Y. 340.)

These considerations lead to the conclusion that the court erred in excluding the evidence offered by the plaintiff, and that for such error the judgment should be reversed.

Present — Hardin, P. J., Martin and Merwin, JJ.

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


text:
    First National Bank of Lowville, Respondent, v. George D. Moffatt and Others, Appellants.

      Fraudulent conveyance — when a transfer of property is rega/rded as a suspicious transaction — equitable relief.

    Upon the trial of an action brought to set aside a conveyance-, on (.he ground that it was fraudulent as to the creditors of the grantor, the law looks with suspicion on a transaction wherein one who is indebted to others conveys his property, or a part of it, to his sons for a pre-existent indebtedness.
    Courts of equity have power to grant such relief as the exigencies of the case require.

      Appeal by the defendants, George D. Moffatt and others, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Lewis on the 31st day of May, 1893, upon a decision of the court rendered after a trial at the Lewis Special Term, and from the whole of said judgment, except that portion adjudging a mortgage held by the defendant Hannibal Smith to be a valid lien upon the premises described in the complaint.
    The judgment in this action adjudged that certain deeds executed by the defendant George D. Moffatt and his grantees should be set aside, except as to the defendant Smith, and that the mortgage held by the defendant Smith upon such property was a valid security. It directed, upon the payment to the defendant Smith of the amount due upon his mortgage, and the costs allowed him on redemption, that he should deliver to the plaintiff the mortgage and the notes which the same were given to secure together with an assignment thereof. It was further adjudged that the plaintiff recover of the defendant Charles Moffatt the sum of $300, to be applied on its judgment, and that it recover of the defendant Alvinza Moffatt the sum of $279.22 besides the costs of the action against the defendants George L)., Alvinza and Charles Moffatt.
    Upon an indebtedness which arose in October, 1886, the plaintiff recovered a judgment December 1, 1891, for $1,747.09. George D. Moffatt when he became indorser in 1886 of the note which is the foundation of the indebtedness held by the plaintiff, was the owner of forty-eight acres of land free from incumbrance, worth about $1,400, and when pressed for a settlement of the indebtedness held by the plaintiff in July, 1889, he executed to his sons a conveyance of the property, which, at the Special Term, was found to be fraudulent, and made with intent to hinder and delay the plaintiff in the collection of its debts.

      Sammnbal Smith, for the appellants.

      Qha/rles S. Mereness, for the respondent.
   Hardin, P. J.:

Plaintiff, as a judgment creditor of George D. Moffatt after execution returned wholly unsatisfied, brings this action to set aside conveyances of land described in the complaint, alleging that the conveyances were fraudulent. The trial court has found as matter of fact that when the debt due the plaintiff was contracted by the debtor in 1886, he was the owner in fee simple of the real estate described in the complaint, being a farm of forty-eight acres, with farm buildings, which the debtor occupied then, and has continued to occupy down to the time of the trial. The value of the property was from $1,200 to $1,400. On the 11th or 12th of July, 1889, an agent of the plaintiff had an interview with the debtor with a view of obtaining payment of the debt due the plaintiff, or a mortgage from the debtor on his farm, and the debtor left his deed of the lands with the agent, and promised to see him again and arrange the matter ; instead of doing so he returned from Lowville to his home in Montague, and formed a plan to convey the land to his sons, and in pursuance of that plan returned to Lowville, and had a deed drawn and executed on the 13th of July, 1889, by means of which he conveyed and transferred to his sons all his property. He was careful to disregard the arrangement made with plaintiff’s agent, and to keep the knowledge of his conveyances from the agent and from the plaintiff on the occasion of the execution of the deed to his sons. The trial court has found that the deed “ was made, executed and delivered by the grantor therein, and accepted by the grantees therein with intent to hinder, delay and defraud the creditors of the said George I). Moffatt, especially the plaintiff in this action.” There was evidence tending to support the finding, and as it was a question of fact we are not inclined to disturb the finding, inasmuch as the evidence supports the conclusion reached by the trial court. (Scofield v. Spaulding, 54 Hun, 527, and cases cited in the opinion; Partridge v. Stokes, 66 Barb. 586.)

In Allen v. McLendon (N. C., 18 S. E. Rep. 206) it was said: “ It is proper to instruct the jury that the law looks with suspicion on a transaction wherein one indebted to others conveys his property, or a part of it, to a brother-in-law, for an alleged pre-existing indebtedness.” We see no reason why the same rule should not obtain where a conveyance is made by a father to his sons.

(2) George D. Moffatt was called and sworn as a witness in behalf of the defendants and gave material evidence upon the vital issues in the case. When the case was under consideration by the trial judge, lie ruled that the evidence of Bush, which had been received and as to which the ruling had been reserved, was admissible, and the defendants have taken an exception to that ruling and now claim that the court erred. "We think the ruling was correct. Bush’s evidence was admissible for the purpose of contradicting and qualifying the evidence of Moffatt, and it also furnished some evidence of the acts and conduct of Moffatt tending to support the contention of the plaintiff that the conveyance made by him was fraudulent.

In Wright v. Nostrand (94 N. Y. 41), where a similar question was presented, the court said the “ evidence was competent not only for a limited purpose as against him (the debtor) as an admission in the case made by one of the defendants therein, but was also competent at the time it was offered as against all the defendants for the purpose of affecting the credibility of the testimony given by such witness for them on the trial.” (See Scofield v. Spaulding, 54 Hun, 527; Loos v. Wilkinson, 110 N. Y. 211.) The case of Vidvard v. Powers (34 Hun, 221) is distinguishable from the case before us. The declaration of Hedden was made after the transaction which was involved in the issue, and no conspiracy was “shown or alleged.”

In Petrie v. Williams (68 Hun, 597) the evidence offered of the declarations of Breen was taken subsequent to the transfer of the notes, and it was admitted as against Williams as affirmative proof, the vendor not having been sworn as a witness. The case does not support the contention of the appellants here.

We find nothing upon the appellants’ brief submitted to us adverting to or discussing the ruling made at folio 159, when the deposition of Alvinza Moffatt was offered in evidence. Perhaps if we were to follow Cummings v. Morris (3 Bosw. 578) and Mayor, etc., v. Hamilton Fire Insurance Co. (10 id. 538; S. C. affd., 39 N. Y. 45) we might assume that the exception taken to the ruling then made was waived. However, it may be observed that the objection taken to the deposition was “ that it is incompetent, being no part of a transaction.” It is not improbable that the trial judge was of the opinion that it was not necessary that the deposition, in order to be competent evidence, should be a “ part of a transaction,” and, therefore, overruled the objection. No request at a later stage of tlie ease seems to have been made that the deposition be regarded simply as evidence against Alvinza Moffatt and not evidence against the other defendants. After a careful inspection of the testimony found in the deposition, and a comparison of the same with the testimony given by Alvinza Moffatt when uj>on the stand as a witness, it is not apparent that there was any grave difference between the utterances of the witness when giving the deposition and the utterances of the witness upon the stand. We think the judgment ought not to be disturbed because of the ruling we have been considering.

(3) Courts of equity have power to award such relief as the exigencies of the case require. (Valentine v. Richardt, 126 N. Y. 272.) The Special Term did not exceed its jurisdiction and powei-s in awarding relief, and its judgment should remain.

Merwin, J., concurred; Martin, J., not voting.

Judgment so far as appealed from affirmed, with costs.


text:
    Levi M. Algase, Respondent, v. Horse Owners’ Mutual Indemnity Association of Rochester, N. Y., Appellant.

      Insurance on the life of a horse — evidence as to a mortgage of the horse — letter of an officer of the company as to proof of loss, admissible — effect of a release by the owner to the party hilling the horse.

    Upon the trial of an action brought on a policy of insurance, it is proper to receive in evidence, on the part of the plaintiff, portions of the defendant’s answer.
    In an action brought on a policy of insurance issued by the defendant upon the life of a horse, where the answer alleges that a loan was made by the plaintiff (the assignee of the policy) to the owner of the horse, and that a chattel mortgage was given upon the horse to secure its repayment, it is proper to receive evidence that the plaintiff held as security for the indebtedness due to him from the owner of the horse a mortgage upon the horse, and also to receive evidence as to the extent to which it remained unsatisfied and unpaid.
    When, upon the trial of such an action, evidence has been introduced tending to show that proofs of loss have been furnished to the insurance company, it is proper to receive in evidence, in corroboration thereof, a letter of an officer of the company, which contains the statement that the company has “ once decided against the claim as being one oí gross and willful carelessness,” and which further states "I shall advocate its payment.”
    A corporation issued its certificate of indemnity and entered into a contract to pay a certain sum in case of the death of a horse, unless “caused by willful neglect or carelessness.” The death of such horse was caused, without the negligence or carelessness of its owner or his assignee, by the negligence of a railroad company, to which company the owner of the horse, subsequent to the assignment and prior to the commencement of the action brought by his assignee upon the certificate of insurance, had given a release.

      Held, that the obligation assumed by the insurance company in its certificate at the time of the death of the horse could be enforced against such company by the assignee of the beneficiary named therein, in the absence of proof that such assignee aided the owner of the horse in presenting his claim to the railroad company or in obtaining a settlement with it for the damages which he had sustained, or had in' anywise consented to a discharge of the mortgage which he held upon the horse, or to a liquidation of the certificate of insurance which was collateral thereto.
    Appeal by the defendant, the Horse Owners’ Mutual Indemnity-Association of Rochester, N. Y., from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Broome on the 9th day of November, 1893, upon the report of a referee.
    Bdbooók, Sperry dé Van Olrne, for the appellant.

      W. J). Edmister, for the respondent.
   Hardin, P. J.:

On the 16th day of June, 1891, the defendant issued a policy of insurance or indemnity to John T. Brooks upon his horse, wherein the defendant agreed, “ upon receiving'satisfactory proofs of the death of said animal by disease, accident or broken leg, to pay to the said insured, executors, administrators or assigns, the sum of one hundred dollars from its mortuary fund, within sixty days after the approval of the claim by its executive board.” It is averred in the complaint and proven on the trial that on the 13th day of August, 1891, Brooks, by a written indorsement upon the certificate, transferred and assigned to the plaintiff all his right, title and interest in this certificate, and to all advantages to be derived therefrom,” which assignment was in writing and bears date the 13th day of August, 1891, and was executed in the presence of a witness, and thereafter, on the 15th day of August, 1891, the assignment was approved by Elsbree, the general manager of the defendant. It is averred in the complaint that the plaintiff became the owner and holder of the certificate. The answer of the defendant alleges that at the time of said alleged indorsement upon said certificate the said plaintiff in this action loaned to the said John T. Brooks the sum of fifty dollars; that as security for the said loan the said John T. Brooks executed and gave a chattel mortgage or bill of sale of or upon said horse mentioned in said certificate, and upon other property, to the said Levi M. Algase, for the purpose of securing the payment to the said Levi M. Algase of said loan of fifty dollars; that for the purpose of further securing the said Algase for said loan said alleged assignment of said certificate was made ; that said consent given by defendant to said indorsement upon said certificate was so given for the purpose and to the extent only of permitting said insurance or certificate of indemnity to continue upon said insured property after the giving of such chattel mortgage or bill of sale, and for no other purpose was such consent given.” When the hearing commenced before the referee the defendant’s counsel moved to dismiss the complaint on the ground that it does not state facts sufficient to constitute a cause of action. ” The motion was denied and an exception was taken. It is to be observed that the defendant in its motion in no way pointed out any specific defect in the complaint; and we are of the opinion that, considering the allegations of the complaint in connection with the allegations found in the answer, it appeared that a sufficient cause of action was stated, and, therefore, the motion was properly overruled.

In Olmsted v. Keyes (85 N. Y. 598) it was said: “ A life insurance is not like fire insurance, a contract of indemnity, but a mere contract to pay a certain sum of money on the death of a person in consideration of the due payment of a certain annuity for his life. * * * Like every other contract to pay money, such a policy is a chose in action, with all the ordinary incidents of every other chose in action.” Upon the hearing before the referee the plaintiff offered in evidence that portion of the defendant’s answer which alleged That at the time of said alleged indorsement upon said certificate the said plaintiff in this action loaned to the said John T. Brooks the sum of fifty dollars; that as security for the said loan the said John T. Brooks executed and gave a chattel mortgage or bill of sale of or upon the horse mentioned in said certificate.” The defendant objected to the admission of the answer in evidence; the objection was overruled and the defendant took an exception.

In Mott v. Consumers’ Ice Company (73 N. Y. 543) it was held: “ Where a party gives in evidence an admission in the pleading of his adversary, he is not estopped from questioning a portion thereof which is against him; he is at liberty to use the admission so far as it makes in his favor, and to disprove the residue.”

In Holmes v. Jones (121 N. Y. 461) it was held: “ Statements, admissions and allegations in pleadings are always in evidence for all the purposes of the trial; they are before the court and jury, and may be used for any legitimate purpose.” In the course of the opinion it was said: “ They are made for the purpose of the trial, and are before the court and jury, and may be used for any legitimate purpose.”

Our attention is called to Quinn v. Neeson (21 N. Y. Supp. 106) by the appellant, but the case does not aid its contention, because it appears in the opinion that it was expressly charged that the answer might be considered by the jury as evidence in the case,” although it had not been offered in evidence. We are of' the opinion that no error was committed by the referee in receiving that portion of the answer of the defendant in evidence which was offered at the hearing, nor in overruling the defendant’s motion to dismiss the complaint on the ground stated. Williams v. Ins. Co. of North America (9 How. 365); Peabody v. Washington Co. Mutual Ins. Co. (20 Barb. 341); Fowler v. N. Y. Indemnity Ins. Co. (26 N. Y. 422) are not applicable to the case before us, as they were cases where the question presented to the court arose upon demurrers.

(2) We are of the opinion that no error was committed in receiving evidence that the plaintiff, at the time of the death of the horse, held security upon the horse for the indebtedness due to him from Brooks. The defendant in its answer had alleged the loan by the plaintiff to Brooks, and the giving of a chattel mortgage upon the horse in question, and it was competent for the plaintiff to prove that the security thus referred to remained “ unsatisfied and unpaid ” to the extent of fifty dollars, which is the amount awarded by the referee. The case differs from Thomas v. The Montauk Fire Ins. Co. (12 N. Y. St. Repr. 738).

(3) Evidence was given that the horse died in November, 1891, after receiving injuries at the railroad crossing of the Delaware and Hudson Canal Company. Immediately after the injuries information thereof was communicated to Mr.' Fisher, the agent of the defendant, who went with a veterinary surgeon to see the horse and to take charge of the horse, and the agent continued to visit the horse every day until he died, on the twenty-third day of November ; and after the death of the horse Fisher furnished blank proofs of death to Brooks, and they together went to the defendant’s attorney’s office, and the proofs, after being made out, were left with the agent of the defendant, having been filled out by its attorney, who was the man that done the -business all the way through.” The proofs were retained by the defendant, and in the answer of the defendant it is admitted that about December 1, 1891, “ defendant was notified of the death of said horse; that about the same day papers purporting to be proofs of loss were given to this defendant, which said defendant still retains.” We think the proof relating to the circumstances attending the making out of the proofs and delivery of them to the defendant were properly received, and that the court properly overruled the objection that “ there is no proof of any proofs having been submitted to this company.” Prior to the commencement of this action application was made to the defendant in respect to the loss claimed to have been sustained, and in reply to the application an officer of the defendant wrote a letter on March 24, .1892, in which it was stated that the company had “ once decided against the claim as being one of gross and willful carelessness,” although the officer writing the letter volunteered the statement in the following language: “ I shall advocate its payment.” We think no error was committed in receiving the evidence, as it tended to corroborate the evidence already before the referee to the effect that proofs had been submitted, and to establish the fact that the defendant had refused to. make payment of the claim before the suit was brought.

(4) The circumstances attending the injuries to the horse and the cause of its death were fully detailed in the evidence, and after consideling tliem, the referee, upon the evidence relating to that subject found “ that such injury to said horse was caused by negligence of the president, managers and company of the Delaware & Hudson Canal Co., and without any neglect or carelessness on the part of the said John T. Brooks, who was driving said horse at the time of said injury; that at the same time the harness and wagon of said Brooks were broken and injured by the negligence of said company.” We think the evidence warranted the finding made by the referee; it being a question of fact, upon which there was some evidence, we are not disposed to disturb the conclusion reached by the referee in that regard. Nor are we inclined to hold that the fact that Brooks presented a claim to the railroad company for damages sustained by reason of its negligence in injuring his. horse, harness and wagon, and gave a release to the railroad therefor,, furnishes a defense to the defendant. It had issued its certificate, of indemnity, entered into a contract to pay in case of the death of the horse, if not “caused by willful neglect or carelessness,” and as the injury and death of the horse wfere caused without the negligence or carelessness of plaintiff or Brooks, the obligation of the. defendant assumed in its certificate, so held by the plaintiff at the time of the death of the horse, should be enforced against the defendant. It does not appear from the evidence that the plaintiff' aided Brooks in presenting his claim to the railroad company, or in obtaining a settlement with it for the damages which he had sustained, or in any way consented to a discharge of the mortgage which he held against the property, or to a liquidation of the certificate which was collateral thereto, and in our opinion the evidence, fails to establish any ground upon which the plaintiff should be prevented from a recovery upon the contract entered into by the defendant and held by the plaintiff at the time of the death of the horse. (Hathaway v. Orient Ins. Co., 134 N. Y. 409; Kellogg v. N. Y. C. & H. R. R. R. Co., 79 id. 77; Winne v. Niagara Falls Ins. Co., 91 id. 192; Dakin v. Globe Ins. Co., 77 id. 600.) It is apparent from the pleadings and from the evidence, as well as from the findings of the referee, that the defendant had notice of the assignment of the certificate to the plaintiff and all his interest therein prior to the death of the horse, and it appears that no act of the plaintiff has .occurred which should deprive him of the interest. acquired by him in the certificate. After the assignment the obligation of the defendant ran to the plaintiff, and he cannot be deprived of his interest in the certificate of insurance without his consent. (Cromwell v. Brooklyn Ins. Co., 44 N. Y. 42.)

Martin and Merwin, JJ., concurred.

Judgment affirmed, with costs. ■


text:
    In the Matter of the Application of Daniel De Camp, Respondent, to Lay Out a Highway in the Town of Lansing and the Assessment of Damages Therefor; Edwin B. Weeks and Others, Appellants.

      Chapter 568 of 1890 — proceedings thereunder to determine us to the necessity of a highway — decision of the Oounty Gourt therein, final.

    In. proceedings taken under the provisions of chapter 568 of the Laws of 1890 to determiners to the necessity of a proposed highway, and to assess the damages caused by reason of the laying out and opening of the same, the decision ■of the County Court, if a new hearing is not ordered, is final, and there can be no appeal therefrom.
    Appeal by the contestants, Edwin B. Weeks and others, from an ■order of the County Court of Tompkins county, entered in the •office of the clerk of the county of Tompkins on the 10th day of November, 1893, modifying the findings and report of commissioners, with notice of an intention to bring up for review on such appeal the report of the commissioners dated July 11, 1893, and all other proceedings in the application.
    In May, 1893, Daniel De Camp signed and verified a petition to the commissioner of highways of the town of Lansing in the county ■of Tompkins, asking to have laid out “ a highway in said town, commencing about twenty-five rods east of Henry Houser’s residence, at or near the foot of the hill, which proposed highway will pass through the lands owned and occupied by John H. Miller, Jane Miller, Dennis Kelly, William Patterson, Stephen Malone, Perry Ross and Edwin Weeks. * * * This proposed highway runs in a northeasterly direction on the east bank of the creek or swamp, so called, to and connecting with the road leading to Locke, running in the same direction.”

      In June, 1893, De Camp prepared a petition, which was addressed to the County Court of Tompkins county, reciting a petition made to the commissioner and stating that the commissioner had not laid out said highway pursuant to section 80 of the Highway Law, and praying that three commissioners be appointed pursuant to section 84 of the Highway Law to determine upon the necessity of the proposed highway and to assess the damages occasioned by reason of laying out and opening said highway.
    On the ninth day of June the application was presented to the County Court, the petition read, and, pursuant to section 84 of the Highway Law, three commissioners were appointed, and on the fourteenth of June a notice was prepared and signed by the applicant stating the time and place where the commissioners would meet to hear the highway commissioner and all other persons interested, which was served, and a notice posted of the time and place for such meeting and hearing, and the parties appeared before the commissioners after the commissioners had, on the 13th day of June, 1893, taken an oath of office, and after hearing all parties interested and taking all the evidence, the commissioners certified that, in their opinion, “ it is necessary and proper that the highway be laid out and opened pursuant to the said application of Danel De Camp, dated the 25th day of May, 1893, and we have assessed the damages required to be assessed by reason of laying out and opening such highway as follows: John H. Miller and Jane Miller, $50.00; * * * Edwin Weeks, $70.00.”
    Thereafter the appellants gave notice of a motion “to vacate and modify the decision of the commissioners herein.” The motion was brought on to be heard at the County Court on the 18th day of September, 1893, upon papers and affidavits prepared and used in the proceedings, and the several parties in interest were heard, and the court made an order which contained the following, to wit: “ That the decision of said commissioners be, and the same is, hereby modified by assessing the damages to said John II. Miller and Elizabeth Miller, by the laying out of said highway, at the sum of one hundred dollars, and the said motion, except as the said decision is modified as above stated, is in all things denied, and said decision as modified is hereby confirmed.”
    From that order the appellants, on the twenty-third of November, appealed to this court, and “ from each and every part of said order upon questions of fact as well as upon questions of law, and will bring up for review the report of the commissioners, which was dated July 11, 1893, and all other proceedings herein.”

      William W. liare and T. E. Coxortiiey, for the appellants.

      J. E. Oropsey, for the petitioner, respondent.
   Hardin, P. J.:

Chapter 568 of the Laws of 1890, known as “ The Highway Law,” contains the provisions under which the proceedings were prosecuted, and in section 89 it is provided that any party interested in the proceedings “ may apply to the court appointing the commissioners for an order confirming, vacating or modifying their decision, and such court may confirm, vacate or modify such decision. If the decision be vacated the court may order another hearing of the matter before the same or other commissioners. If no such motion is made, the decision of the commissioners shall be deemed final. Such motion shall be brought on upon the service of papers upon adverse parties in the proceeding, according to the usual practice of the court in actions and special proceedings pending therein; and the decision of the County Court shall be final, excepting that a new hearing may be ordered as herein provided. If the final decision shall be adverse to the applicant no other application for laying out, altering or discontinuing the same highway shall be made within two years.” No provision is found in the statute inconsistent with the idea that it was the intention of the Legislature to provide in an unqualified manner that “the decision of the County Court shall be final,” unless that court shall order a “ new hearing.”

Appellants have called our attention to Matter of Ryers (72 N. Y. 1); in that case it was said that the act of 1869 gave an appeal on questions of law from the decision of the county judge to the Supreme Court; and that the act of 18Y1 gave a similar right of appeal. No such provision is found in the Highway Act; we should, therefore, follow the doctrine laid down in People ex rel. Schuylerville & U. H. R. R. Co. v. Betts et al. (55 N. Y. 600).

Matter of Swan, (97 N. Y. 492) is consistent with the views already expressed.

We think the decision made by the County Court was final, and that an appeal therefrom does not lie to this court.

Martin and Merwin, JJ., concurred.

Appeal dismissed, with ten dollars costs and disbursements.,