author: By the Court. Slosson, J.

text:
    Charles Goodyear, and others v. Horace H. Day and Edwin M. Chaffee.
    This case turned entirely upon the construction of certain agreements between the plaintiff Goodyear and the defendant Chaffee, and the court held that, by the true construction of these agreements, the plaintiff Goodyear was entitled to the relief sought.
    Judgment, overruling demurrer to the complaint, affirmed, with costs.
    (Before Oakley, Ch. J., Duer and Slosson, J.J.)
    June Term, 1856.

      Appeal, by defendants, from a judgment at Special Term, overruling demurrer to complaint.
    As the judgment of the court, at General Term, proceeded entirely upon the construction which it gave to certain agreements substantially between the 'plaintiff Goodyear and the defendant Chaffee, nothing more will be necessary to a proper understanding of the grounds of the decision, than a literal transcript of those agreements, all the material facts bearing upon their construction and upon the relief desired by the plaintiffs, being sufficiently set forth in the opinion of the court.

      First Agreement.

    “ This agreement, made by and between Edwin M. Chaffee and Charles Goodyear, witnesseth, that the said Chaffee for, and in consideration of, the sum of three thousand dollars, to be paid to him as hereinafter described and specified, hath sold, assigned, and set over, and by these presents doth hereby assign and transfer all his right, title, in and to the improvements or invention of compounding and mixing gum-lac or shellac with india-rubber, either with or without sulphur, or other ingredients, and heat. And the said Chaffee further agrees to apply with, or in behalf of, said Goodyear for patents in the United States for said invention, at the expense of said Goodyear.
    “ Said Chaffee further agrees that the said Goodyear may proceed to take out patents in all foreign countries, for his, said Goodyear’s benefit, said Goodyear paying the expenses of the same, for said improvements in shellac, and said Chaffee agreeing to execute the necessary papers therefor.
    “ The said Goodyear, on his part, agrees to pay to the said Chaffee the sum of three thousand dollars upon the following terms, viz.: one-half of the aforesaid sum, or fifteen hundred dollars, at the time of the issuing of a patent for said improvements in the United States, or if a patent should be previously granted as a renewal of his, said Chaffee’s, patent for india-rubber machinery, then the aforesaid sum of fifteen hundred dollars shall be paid to the said Chaffee, upon the assignment of said patent for said machinery to said Goodyear, the remaining one-half of said three thousand dollars to be paid within one year from the date hereof.
    “ In the event of neither of the aforesaid patients being obtained} then the first-named sum of fifteen hundred dollars is to be paid within one year from the date hereof.
    “ The said Chaffee upon his part agrees further, that upon the issuing of one or both of said patents for shellac and machinery, he will immediately assign them to the said Goodyear.
    “ And it is further mutually agreed that if at that time the aforesaid three thousand dollars shall not have been paid, the said Goodyear shall make such alien, transfer, or conveyance of his right, title, and interest in said patents to said Chaffee, as shall prevent any valid transfer of any rights or interests in said patents by the said Goodyear, until said three thousand dollars shall be paid by said Goodyear.
    “It is further understood, that said Chaffee may reserve to himself the right to use the said india-rubber machinery in any business which he may hereafter carry on; and it is further understood, that if the said patent for india-rubber machinery is not extended, then the whole sum of three thousand dollars shall be paid for, or secured upon, the patent and improvement on shellac.
    “ In witness whereof, we have hereunto set our hands and seals, this twenty-third day of May, one thousand eight hundred and fifty. “ Charles Goodyear,
    “James A. Dorr, Witness.” “Edwin M. Chaffee.”

      Second Agreement.

    “ Whereas, I, Edwin M. Chaffee, have lately procured an extension of my patent, dated August 31, 1836, for seven years from the expiration thereof, the expenses of which have been large, by reason of the opposition thereto—but which expenses have not yet been ascertained, and cannot be at present;
    “ And whereas, said patent, at the time it was extended, stood in the name of Charles Goodyear, and was held for his benefit, and the benefit of those who had a license or who had a right to use his metallic or vulcanized india-rubber, or india-rubber prepared and cured according to, and under his patent, dated June 15,1844, and re-issued December 25, 1849;
    “ And whereas, said Charles Goodyear agreed with me, for himself and others using my said patent under him, that they would be at the expense of applying for said extension of said patent, and make me an "allowance for the use thereof; in case the same should be extended, at and after the rate of twelve hundred dollars per annum, to commence on the 31st of August, 1850, and payable quarterly, that is to say, three hundred dollars on the first days of December, March, June, and September, in each and every year during the present or any further extension of said patent, and during any re-issue of the same, and until said patent or any re-issue thereof, shall be set aside as void in the highest court to which the same can be carried;
    “ And whereas, William Judson, Esq., has had the management of said application for said extension, and has paid and become liable to pay the expenses thereof, and agreed to guarantee me the payment of said sums of money, according to the terms, and at the times above specified.
    “ Kow, I do hereby, in consideration of the premises, and to place my patent so that, in case of my death, or other accident or event, it may enure to the benefit of said Charles Goodyear and those who hold a right to the use of said patent, under, and in connection with, his licenses, according to the understanding of the parties interested, nominate, constitute, and appoint said William Judson my trustee and attorney irrevocable, to hold said patent, and have the control thereof, so that no one shall have a license to use said patent or invention, or the improvements secured thereby, other than those who had a right to use the same when said patent was extended, without the written consent of said Judson first had and obtained.
    “ And said Judson, for himself and those interested, agrees with me, said Chaffee, my executors, administrators, and assigns, that the expenses of extending said patent, shall all be paid without charge to me; and further, that I shall be paid said sums of money at the times and according to the terms above recited; and said Judson, and those for whom he acts, are to be at all the expense of sustaining and defending said patent, without any charge to me. And it is further expressly understood and agreed, that I am to have the right to use said patent and improvement in any business which I may carry on.
    “ As witness my hand and seal, this 5th of September, 1850.
    “Edwin M. Chaffee.”
    “Witness, George Woodman.”

      Third Agreement.

    “ Whereas, it was agreed'by and between William Judson and E. M. Chaffee, by an article under hand and seal, and dated the fifth day of September, 1850, which agreement was recorded at the Patent Office, September 11th, 1850, on what terms said Chaffee would continue to hold said patent, for the benefit of said Judson and Charles Goodyear, and his licensees;
    “And whereas, in said agreement there was an omission to state, that if said licensees continued to use the improvements in said patent named, they should each one contribute and pay said Judson his proportion of the expenses and services expended in obtaining the renewal of said patent, which it was intended that said licensees should pay under said Judson, in case they continued the use of the said improvements for which said patent was issued, after the extension thereof;
    “And whereas, there was no such direct absolute stipulation, on the part of said Judson, to pay said Chaffee the sum of fifteen-hundred dollars per annum, in quarterly payments, on the usual quarter days, as said Chaffee claimed, and now insists shall be inserted in said agreement;
    “And whereas, it is now agreed by said Chaffee and said Judson, that said agreement shall be so modified as to secure the objects more fully intended to be secured by said agreement.
    “ How it is agreed, that the said licensees shall each pay his share of the services and expenses to said Judson, as the condition on which they shall have' the license of said Judson to use said improvements ; and that on the payment of his or their share, ox proportion of the services and expenses aforesaid, said Judson shall be authorized to give each a license to use said improvement, on their paying as aforesaid, severally each for himself, or his firm or company. And said agreement is further so altered that said Judson hereby agrees to pay said Chaffee fifteen hundred dollars, in quarterly payments each year, on the usual and customary quarter days, at the time set forth in the agreement aforesaid, to which this is an addition and alteration, commencing the quarterly payments on the first day of March next. And I agree with said Judson that he may use my name in the commencement and prosecution of all suits he may have occasion to commence, to sustain said patent or recover damages for any infringement or infringements thereof, or for any other purpose in relation to the same, or the use thereof, he holding me harmless from any costs, by reason thereof, and he to have all the benefits which may be derived from such suits.”
    William Judson, [seal.]
    Edwin M. Chaffee, [seal.]
    Sealed and delivered this 12th day of November, 1851, in the presence of
    Benjt. H. Jarvis,
    Received and recorded Nov. 27, 1851.

      J. T. Brady, for plaintiffs.

      J3. W. Stoughton and Richardson, for defendants.
   By the Court. Slosson, J.

If the plaintiffs are entitled, on the allegations in this complaint, to any relief against the defendants, or either of' them, the demurrer as to such defendants is not well taken, and was properly overruled.

To determine this question, it is necessary, in the first place, to ascertain what rights in the case, as made by the complaint, Goodyear or Judson acquired under the agreements of the 23d of May and the 5th of September, 1850, and the 12th of November, 1851, and whether the interference of this court is necessary or proper to protect or perfect those rights.

These instruments should be read in the light of facts averred in the complaint, and admitted by the demurrer to be true.

When the agreement of the 23d of May was executed, Goodyear was the owner, by purchase, of Chaffee’s original patent, and had long been in the use of it, by giving to the licensees of his own patent the privilege, without additional cost, of using it in connection with his own patent. Chaffee was, at this time, in Goodyear’s employ, and continued so until after the extension of the patent was obtained.

Judson was, at this time, the attorney, counsel, trustee, and managing agent for Goodyear and his licensees, and had an interest in the latter’s patent for vulcanized rubber. He had also in his hands a fund, contributed by Goodyear’s licensees, to defray the expenses attending the extension pf the latter’s patents, and out of which it was understood by Chaffee, Judson, Goodyear, and his licensees, that the expenses of procuring the extension of Chaffee’s patent should also be paid.

Chaffee’s original patent was to expire on 31st of August, 1850.

Goodyear, Judson, and the licensees having concluded to apply for an extension of Chaffee’s patent, Goodyear and Chaffee entered into the agreement of the 23d of May, 1850, and Judson then made the application, acting, as Chaffee well knew, for Goodyear and his licensees.

This agreement recites the sale by Chaffee to Goodyear for $3,000, payable as thereinafter provided, of an invention of his in respect to the mixing of shellac with india-rubber, &c., and stipulates for an application with, or on behalf of, Goodyear, for a patent for such invention, at Goodyear’s expense. The $3,000 was to be paid as follows: $1,500 when the patent for the shellac invention should be issued, or, if the extension of Chaffee’s patent for the india-rubber machinery should be granted before that of the shellac invention, then the $1,500 was to be paid on the assignment to Goodyear of the said patent for machinery, and the other $1,500 within one year from the date of the instrument; but if neither patent should be obtained, (meaning, probably, within the year,) then the payment of the first $1,500 is also deferred to the end of the year.

Chaffee then covenants absolutely, that upon the issuing of one or both of the aforesaid patents for shellac and machinery, he will immediately assign them to Goodyear; and it is then provided that if, at the time of the assignment of said patents, or either of them, (as I understand the expression, “at the time aforesaid,”) the $3,000 shall not have been paid, the amount shall be secured by a lien on the patents, if both were obtained, or wholly on that for shellac, if the patent for'the machinery should not be extended, such lien to be created by a transfer, by Goodyear to Chaffee, of his interest in the patent, so that he, Goodyear, could not give licenses until the whole amount was paid.

It is then provided that Chaffee might reserve to himself the right to use the india-rubber machinery in any business which he might thereafter carry on.

I have recited this instrument somewhat in paraphrase, but strictly according to my interpretation of its meaning.

It is a remarkable circumstance, that the $3,000 seems to be treated in this instrument as the consideration for the assignment of the shellac patent only, and is agreed to be paid for that patent whether the patent for the machinery was extended or not, though the periods of payment are regulated in respect to the time when the extension of the latter patent might be procured. Were not the instrument under seal, a question might be raised, whether there was any consideration to support the covenant to assign, which is a covenant to convey a valuable right and property wholly belonging to Chaffee, and in which Goodyear could acquire no interest, except as purchaser, since it is well settled under the law of 1836, that the right to the extension belongs solely to the original patentee, and not to his assignee of the first patent, whose rights terminate with the termination of the original term. The extension is for the benefit of the patentee, and, in every sense, is a new patent. Wilson v. Rousseau, 4 Howard, 646.—(Woodworth’s patent.) Curtis on Patents, § 118.

The instrument is, however, under seal; and, apart from that, I am not prepared to say, in view of the inartificial and confused form of the instrument, that the consideration expressed in it was not intended by the parties to apply to both patents, and, in the consideration of the case, shall assume that it was.

What, then, are the rights created by it in Goodyear ? Clearly a right, as purchaser, though resting in covenant, to the extended patent when obtained. There are no words of conveyance in presentí, because the subject was not in existence, but there is a clear and absolute covenant by Chaffee to make an immediate assignment of the patent whenever it should be issued.

This operated, in equity, to transfer the whole of Chaffee’s interest in the anticipated patent, to Goodyear, saving only the right reserved to the former to use it in his own business; and if the rights of the parties depended now solely on that instrument, a court of equity would compel a specific performance of the covenant, if it became essential to the protection of Goodyear’s rights, that he should be invested with the legal title to the patent. (2 Story’s Eq., § 722; Field v. Mayor, &c., of New York, 2 Seld., 179.)

The agreement of the 23d of May was in force at the time the extension of the patent was obtained, (31st of August,) and when the agreement of the 5th of September was executed.

The new patent was, of course, in the name of Chaffee, arid he was its legal owner. Judson called upon Chaffee, on the return of the latter with the new patent Rom Washington, and, without the knowledge of Goodyear at the time, procured Rom him the agreement of September the 5th, being a deed-poll by Chaffee under seal.

How are Goodyear’s rights affected by this instrument? As he was no party to it, it is clear that they could not be affected at all, except by his 'subsequent acquiescence in it, and then the nature and conditions of that acquiescence became material.

But, apart Rom his acquiescence, are his rights varied or affected by the terms and stipulations of the agreement itself?

This instrument reveals the existence of another agreement between Chaffee and Goodyear, which does not appear to have been in writing, and which probably was subsequent to the agreement of the 23d of May, by which Goodyear was to be at the expense of applying for the extension, and was to mahe an allowance to Chaffee for the use of the patent, if extended, at the rate of $1,200 a year, payable quarterly, during that or any future extension. It recites this outside agreement with Goodyear, and then Chaffee, in consideration of it, and also in consideration that the expenses attending the procuring the extension had been large, and could not then be ascertained, and in consideration that the patent, when extended, (that is, the original patent,) stood in the name of Goodyear, and was held for his benefit, and that of his licensees; and in consideration that Judson had had the management of the application for the extension, and had paid, and became hable to pay, the expenses thereof, and had agreed to guarantee to Chaffee the payment of the annuity at the quarterly periods mentioned in the agreement, and with the declared intent to place the patent so that, in case of his (Chaffee’s) death, or other accident or event, it might enure to the benefit of Goodyear, and those who held a right to the use of said patent under and in connection with his licensees, according to the understanding of the parties, nominates, constitutes, and appoints Judson his trustee, and attorney irrevocable, to hold the patent and have the control thereof, so that no one should have a license to use said patent or invention; etc., other than those who had a right to use the same when said patent was extended, without Judson’s written consent. Judson then, for himself and those interested, (which expression can have reference only to Goodyear and his partners in interest and licensees,) agrees with Chaffee that all the expenses attending the extension shall be paid without charge to him, and that the annuity shall be paid as before stipulated; and that he, (Judson,) and those for whom he was acting, (none other than Goodyear and his licensees, etc.,) should be at all the expense of sustaining and defending the patent; and then follows the reservation stipulated for in the agreement of the 23d of May, to wit, that Chaffee was to have the right to use the patent and improvements in any business which he might carry on.

It cannot be denied that this instrument .is, on its very face, a full and clear recognition by Chaffee and Judson of the right of Goodyear, as subsisting and paramount, and to be secured in all events.

It changes the consideration from $3,000, as an out-and-out payment, to an annuity of $1,200, and this is expressed to be for the use of the patent. Does that change Goodyear from a purchaser to a mere licensee ? I speak now upon the face of the instrument. If by the words, according to the understanding of the parties interested,” in the clause declaring the intent of the instrument, among other things, to be, that in the event of Chaffee’s death, etc., the patent should enure to the benefit of Goodyear, etc., be meant the agreement of the 23d of May, (and there is no evidence of any other understanding,) then clearly Goodyear is recognized in this instrument as still invested with all the rights he acquired under the former agreement, and there are other clauses which favor the same view. Then how does it stand on Goodyear’s acquiescence in this agreement?

When first informed of the execution of the instrument, a few days afterwards, Goodyear objected to it, and only assented to it upon the assurance, by both Chaffee and Judson, that it was to operate as a fulfilment of (if not a substitution for) the agreement of the 23d of May, and to secure the extension to Goodyear and his licensees, etc., according to the design of the agreement of the 23d of May, and he then acquiesced in it as a substantial, though not literal, performance of that agreement.

In what respect, then, are the rights of Goodyear affected by this agreement, as thus assented to ?

I answer, only as to the mode of enforcing and securing them.

He cannot, perhaps, now ask for the transfer of the legal title to the patent directly to himself, as he might have done under the agreement of the 23d of May.

A trustee, or a person designated by that title, has intervened, and the next question is, What title the trustee has, and whether Chaffee’s rights are perfectly secured under the instrument as it stands, and which both Chaffee and Judson declared to Goodyear was intended to secure him his rights, under the agreement of the 23d of May?

The legal title is not in terms transferred to Judson, yet he is declared to be a trustee to hold the patent, so that in the event of Chaffee’s death, or other accident, it might enure to the benefit of Goodyear. Judson is to have the control of the patent, so that no one could obtain a license without his written consent. From this restriction, however, is excepted Goodyear, and his licensees, who had the right to use the same when the patent was extended, and to whom the instrument concedes the right to continue the use without a fresh license.

I consider the intention of the agreement of the 5th of September to be, to secure to Goodyear the benefit of the agreement of the 23d of May, but in a different form than that contemplated by the last-named agreement, to wit, by the interposition of a trustee, or person clothed with that character, instead of by a direct assignment of the patent to him; that an additional motive for this intervention of a trustee was, to give Judson, who was responsible for the expenses and annuity, a control over the granting of the licenses, for his own protection, and that the legal title was to be reserved in Chaffee, as a security, in addition to the personal undertaking of Judson, for the payment of the annuity and expenses.

This instrument is not, as is contended by defendants, a power of attorney merely, and revocable at pleasure; the intent of the instrument would be fully expressed, though perhaps not effectuated, without the words “ attorney irrevocable.”

Yet the words are not without significance; as it was intended that Judson should act as trustee, yet without the legal title, a power to act is superadded, and perhaps necessarily so, but the power follows the nature of the intended trust, and is auxiliary to it and in aid of it, so that if the trust is irrevocable the power is equally so. Moreover, Judson was personally responsible for the payment of the expenses, and the annuity, and this instrument was, in one sense, a security to him in respect to those obligations on his part; this would make it, viewed as a power of attorney strictly, apart from the trust, a power coupled with an interest, and being by its terms declared “irrevocable,” it becomes in fact so. (Story’s Ag. §§ 476-7.)

In no respect,- therefore, was this a revocable power, at the pleasure of Chaffee, nor, in my judgment, was it revocable, by reason pf any stipulations contained in it, in the nature of conditions precedent or subsequent; the payment of the expenses and annuity was a personal obligation on the part of Judson, and his failure to comply with the stipulation in that respect certainly could not, of itself, give to Chaffee the right to abrogate the contract on his own motion. What a court of equity might have done on an application to it, founded upon the default, is another question.

We have,- then, this singular state of things under the agreement of the 5th of September: the legal title in Chaffee, the equitable title or beneficial ownership in Goodyear, and some kind of title, either as trustee or attorney irrevocable, for the purposes of a trust, in Judson, with a power on the part of Chaffee and Judson to grant the licenses.

Are Goodyear’s rights secured under this instrument according to the declared intent of the instrument itself, and of the parties when his assent to the instrument was procured, or is the instrument, in its present form, inadequate to such declared intent, oris any other instrument or transfer necessary to effect it, and which it is in the power of this court to award?

These are questios to be hereafter considered.

Before proceeding, however, to that subject, it is necessary, as bearing upon the plaintiff’s rights, to consider the agreement of the 12th of November, 1851.

This, also, was entered into between Judson and Chaffee without Goodyear’s knowledge, or, as far as appears from the complaint, without his having in any way acquiesced in it, other than as. a recognition of the agreement of the 5th of September.

The agreement of the 5th of September had provided for the payment of $1,200 per year to Chaffee, as the consideration for the use of the patent, but, in fact, he had" been paid $1,500 a year from that time, and one object of the November agreement appears to have been to modify the prior agreement in this particular, and to bind Judson personally to its payment. Another ob-. ject was to enable Judson to exact from Goodyear’s licensees a proportional payment of the expenses of procuring the extension of the patent; and a third was to authorize Judson to use Chaffee’s name in suing for infringements, which would seem to be necessary from his retaining the legal title; but such suits were to be at his, (Judson’s,) expense, who was to hold Chaffee harmless from the costs, and was to have all the benefits derived from the litigation. The whole agreement is a mere modification of that of September the 5th, which it distinctly recognizes, and in no way impairs, or undertakes to impair, the rights of Goodyear, which it, on the contrary, expressly alludes to as subsisting, and in fall force.

These are all the instruments which go to create or affect the rights of the plaintiffs in this extended patent, and what is the effect of the whole ?

My conclusion is:—

1st. That Goodyear, for himself and his licensees acquired, under the agreement of the 23d of May, the entire beneficial interest and equitable title to the extended patent, and that that interest has been in no degree divested or impaired by the subsequent agreements, and that under that agreement standing alone, he would have been entitled to have compelled, in this court, an assignment directly to himself of the patent when extended, upon the tender or offer to pay the $1500.

I do not consider his right to an assignment to have been lost or impaired by his not having made such tender. The assignment and payment were, by the terms of the agreement, to have been made simultaneously on the procurement of the patent, which was on the 31st of August; but before this could be done, or at any rate, before Goodyear could within a reasonable time have made the tender, the agreement of the 5th of September, between Chaffee and Judson, was entered into, by which a new mode of payment was adopted, if, in fact, it was not adopted earlier by the agreement referred to in that of 5th September.

2d. 'That under the agreement of the 5th of September assented to by him, he has a right, through the medium of Judson as trustee, to have the rights acquired by Mm under the agreement of the 23d of May as effectually secured to Mm as they would have been by a direct assignment of the patent to himself, consistently with the security created by said agreement m favor of Chaffee for the payment of the expenses and annuity, and in favor of Judson in respect to his personal undertaking for the same expenses and annuity.

To recur, now, to the facts of the case. It appears from the complaint, that Judson, after the 1st of December, 1852, suspended the payment of the quarterly proportions of the annMty stipulated for in the agreement of the 5th of September, (and payable first of March, June, September, and December,) with the Mtention of inducing Chaffee to renounce his connection with Bourne and Brown, partners of his, under the firm of E. M. Chaffee & Co., and who, it is alleged, were infringers of Goodyear’s patent for vulcaMzed rubber.

On the 18th of June followmg, (1853,) a suit was commenced against this firm on behalf of Goodyear. On the 23d of June, the same month, Judson wrote to Chaffee to draw on him for the arrears of the quarterly payments which the latter did not avail himself of. Chaffee was apprised of the commencement of tMs smt, and, as it is alleged, then colluded with Day, defendant M this action, to sell to him the title to the patent.

On the 1st of July following, Chaffee formaEy, by letter to Judson, revoked the letter of attorney (so called by Mm) of the 5th of September and 12th of November, on the ground that he, Judson, had failed to perform and keep Ms part of the agreement, and on the 1st and 6th of July, two mstruments were executed between himself and Day, being m substance a purchase from, and sale and transfer by, Chaffee to Day, for $11,000, of the Mvention and patent for the residue of the seven years.

In the Mstrument of the 1st of July, which is the agreement of purchase, the parties expressly recite that they both “ claim and believe that Judson, by default on his part, had waived and surrendered all rights, if any, that he might have had, under any and all contracts made with Chaffee.”

On the 2d of July, Day gave notice of his purchase to Judson, and after the formal transfer to him of the 6th of July, (how soon after does not appear,) commenced over a dozen smts against Goodyear’s licensees for infringement of Chaffee’s patent, the defence of which, at great expense, devolves on Judson.

• It is alleged that Day purchased with notice of all three agreements, and fraudulently, and it is contended by the complaint, that the utmost he acquired by the purchase was Chaffee’s right to the annuity.

If the allegations of this complaint are true, and they must, under this demurrer be held to be so, so far as they are material, there can be but little doubt that the whole transaction between Chaffee and Day was collusive and fraudulent as against Goodyear and Judson.

We now come to the question which must determine the sufficiency of this demurrer. Does the complaint make out a case which, in any aspect of it, entitles the plaintiffs to the protection or interference of this court? Are Goodyear’s rights, as thus shown to exist, sufficiently protected and secured under the agreement of the 5th of September as it stands, without the aid of any additional muniment of title or other protection, and have the plaintiffs any rights, as against Day, as an interloping purchaser with knowledge of, and in fraud of the rights of Goodyear and Judson which this court can enforce ?

The question is not what relief ought to be administered in the case, which can only be determined on the final hearing, but what relief may be administered on the facts shown and admitted by the demurrer; and I do not think it need take long to answer the question.

And, first, I consider the transfer to Day as utterly void, as against Judson and Goodyear, and his licensees, and that it is competent and proper for this court so to- adjudge it, and to require the instrument of transfer to be cancelled, or a release executed by him, unless the right to the annuity shall be deemed to have passed by it; and, in that case, to restrain by injunction the exercise by Day of any right of license, or any other right, under the transfer, other than the right to receive the annuity.

This outstanding title in Day constitutes a cloud on Goodyear’s title, may be used to his abuse, impairs the value of his rights, subjects him and his licensees to perpetual litigation, and it ought, in conscience, to be put out of the way, or restricted in its exercise by the injunction of the court. (2 Story’s Eq. §§ 694-5.)

In the second place, I consider on the case as made, that Goodyear has the right to call on this court, in case the transfer to Day should be wholly set aside, to compel a transfer by Chaffee to Judson, with or without Day as a party, as the court may be advised, of all his remaining interest in the patent, so that Judson’s title as trustee for Goodyear’s benefit shall be perfected, on such terms and with such provisions as shall give to Chaffee and Judson all the security which the agreement of the 5th of September was intended to give them, in respect to the expenses and annuity; nor am I prepared to say that the court may not decree an absolute transfer of the whole legal title to Goodyear himself on such terms of security, as to the annuity and expenses, as may be deemed proper, in case, in its judgment, that should be the most effectual mode of securing the rights of Goodyear, provided Day shall not, by the transfer to him, have acquired the right to the annuity. We fully concur in most of the views expressed by Hoffman, J., in giving his judgment at Special Term, and affirm his judgment, overruling the demurrer, with costs.

I do not wish to be understood that both my brethren concur in all the views I have expressed, in respect to the construction of the instruments in question, especially that of the 5th of September ; but in the result, as to the rights of Goodyear under the instruments, and the allegations in the complaint, and the relief to be administered by the court, they do concur.

The judgment at Special Term must be affirmed, with costs.


source: Caselaw Access Project

license: Public Domain

text:
    Esther Payne v. William Woodhull and Joseph S. Ridgway.
    By the true construction of the act of July 29, 1848, and of other acts of Congress, a widow to whom a pension has been granted for the services of her husband cannot pledge the certificate by anticipation to an agent employed to obtain the pension, to secure to him a compensation for his services.
    Such a pledge, no matter to whom made, or for what purpose, is wholly void.
    Hence, if the agent refuse to deliver the certificate, upon request, he is liable in an action for the recovery of its value or of damages resulting from its detention.
    Judgment, sustaining a demurrer to the answer of the defendant Ridgway, afiirmed with costs.
    (Before Oakley, Ch. J., and Slosson, J.)
    General Term,
    October, 1856.

      Appeal, by the defendant Ridgway, from a judgment entered upon the decision of Justice Hoffman at Special Term, on the 6th of March, 1856, in favor of the plaintiff.
    The case arose upon a demurrer by the plaintiff to the answer of the defendant Ridgway.
    The following are the pleadings:—
    The complaint of the above-named plaintiff respectfully shows that the defendants have become wrongfully possessed of, and wrongfully detain from the plaintiff, a certain certificate, the property of the plaintiff, dated the ninth day of June, in the year 1853, issued to the plaintiff by the government of the United States, for a pension of three hundred and three dollars and thirty-three cents per annum, under an act of Congress relating to pensions, of the third day of February, 1853.
    And this complaint further showeth, that said pension certificate is of value to the plaintiff; that said pension is payable semi-annually; and the plaintiff, in consequence of the detention of said certificate from her, has been, and is compelled, as each installment of pension becomes payable to her, to forward proof in writing, and by her affidavit, to the commissioner of pensions at the city of Washington, of said detention, in order to draw such installment, in the absence of said certificate, thereby being put to inconvenience, delay, and expense.
    Wherefore the plaintiff demands that the defendants may be adjudged to deliver to the plaintiff the said pension certificate, and to pay .to the plaintiff damages for the detention thereof, to the sum of two hundred dollars, with costs of this action, and that said pension certificate may be forthwith delivered to the plaintiff.
    Yajst Schaick & Devekeux, plaintiff’s attorneys.
    The answer of Joseph S. Ridgway, one of the defendants above named, by David P. Hall, his attorney, to the complaint in this action respectfully shows to this court:
    That the said defendant answering, admits that he has become possessed of a certain certificate, mentioned and described in the complaint herein; but this defendant, further answering, avers that he became possessed thereof in his professional capacity of attorney, and alleges that some time in the autumn of the year one thousand eight hundred and fifty-two, this defendant was employed by William Woodhull, one of the defendants above named, then acting as the attorney in fact for the above-named plaintiff, as hereinafter set forth, to procure for the said plaintiff a pension from the government of the United States; that said William Woodhull had been, prior to the time of such employment as aforesaid, to wit: on or about the seventh day of February, one thousand eight hundred and fifty-two, appointed by said plaintiff her attorney, for the purpose, among other things, of obtaining for the said plaintiff a pension from the government of the United States, and that he acted in the premises as such attorney as aforesaid, under and by virtue of a power of attorney in writing, duly made and executed by the said plaintiff on or about the day last aforesaid; and that until the aforesaid certificate was received by the defendant, as hereinafter stated, the said power of attorney continued and remained in full force and effect, not revoked or annulled; that this defendant, in pursuance of such employment, thereafter in the month of April, one thousand eight hundred and fifty-three, presented the claim of said plaintiff for a pension, under the act of Congress, approved February 3, 1853, and that the said claim was allowed, and the aforesaid certificate issued and transmitted by the commissioner of pensions at Washington, B. C., to this defendant at the city of 2ÑTew York, at which last-mentioned place said certificate was received by this defendant, on the thirteenth day of June, one thousand eight hundred and fifty-three, and of which said receipt of said certificate, said plaintiff was within a few days thereafter notified; that there remains due and unpaid to this defendant, on account of his services in the premises, the sum of fifty-five dollars, payment of which has been demanded of and from said plaintiff, and refused; and that this defendant claims as attorney, as aforesaid, to have a hen upon the aforesaid certificate therefor, and the right to retain said certificate in his possession until said sum, with interest, shall have been paid.
    And this defendant further answering, denies that he wrongfully detains from the said plaintiff the said certificate, but on the contrary avers that at or about the time the claim of said plaintiff for a pension was presented as aforesaid, it was agreed by and between William Woodhull, attorney for said plaintiff as aforesaid, and this defendant, that inasmuch as said plaintiff was, as it was at the time represented, in reduced circumstances, and unable to advance an amount of money sufficient to defray the actual and necessary disbursements consequent upon said application, this defendant should and would advance the same, and that'in the event of said claim being allowed, that this defendant should retain in his possession the certificate issued thereupon, until the amount of said disbursements and the fee of this defendant in the premises should have been fully paid and satisfied.
    And this defendant, further answering, avers that said certificate remained in the possession of this defendant, and as he is informed and believes, with the knowledge and assent of said plaintiff, from the time it was first received by him as aforesaid, until the seventh day of September, one thousand eight hundred and. fifty-three, when this defendant delivered the same to the plaintiff; that the said plaintiff thereupon on the day last aforesaid, made and executed a power of attorney, authorizing William Woodhull, one of the above-named defendants, to receive from the United States Pension Agent, in the city of Hew York, the installment of pension due to the plaintiff on the fourth day of said September; and that the said plaintiff thereupon, on the same day, returned said certificate to this defendant. And that the said plaintiff then and there agreed to and with this defendant, that out of the installment so to be received, said Woodhull should pay a portion of the amount due this defendant; for the services and disbursements in the premises, and that this defendant should retain in his possession the said certificate, until payment and satisfaction of the entire amount thereof, had been made by the said plaintiff to this defendant.
    And this defendant further answering, admits that the said certificate is of value to the plaintiff, and that the said pension is payable semi-annually.
    And this defendant further answering, avers that he has no knowledge sufficient to form a belief whether the said plaintiff, in consequence of such alleged detention, is or has been compelled, as each installment of pension becomes payable, to forward proof in writing, and by her affidavit to the Commissioner of Pensions, at the city of Washington, of said alleged detention, in order to draw such installment in the absence of said certificate as in the said complaint it is alleged, or whether the said plaintiff has been, or is thereby put to inconvenience, delay, and expense, as is also in said complaint alleged, and he therefore denies each and every of said allegations. Thereupon, this defendant prays judgment that the said complaint be dismissed, with costs.
    The plaintiff demurs to the separate answer of the defendant Ridgway, because the same is insufficient. °

      D. P. Hall, for appellant.

      Devoreux, for respondents.
   By the Court. Slosson, J.

The question is, Whether a widow, entitled to a pension under the act of February 3d, 1853, (10 U. S. Stats, at large, 154,) can pledge her certificate to the person who acted as her attorney in procuring the pension from the government, as security for the payment of his compensation for such service ?

The act of 1853 merely declares that the widows of officers, etc., who were married subsequently to January, 1800, “ shall be entitled to a pension in the same manner as those who were married before that date.”

The only previous act which regulates pensions to widows, in respect to the period of their marriage, is that of July 29th, 1848, (9 Stats, at large, 265,) which secures the right to widows who had been married before 1st of January, 1800.

By this act, (§ 2,) “ any pledge, mortgage, sale, assignment, or transfer of any right, claim, or interest, in any way granted by this act,” is declared to be “ utterly void, and of no effect,” and it is further provided, that the annuities or pensions granted by the act “ shall not be liable to attachment, levy, or seizure by any process of law or equity, but shall come wholly to the personal benefit of the pensioner or annuitant entitled to the same.”

The defendant contends that the plaintiff having obtained her certificate from the government, it is “property,” and, as such, is distinguished from a “ right, claim, or interest” in or to a pension, and that being the plaintiff’s property, she had as much right to dispose of it by way of pledge, as she would have to dispose of the money when received upon it; and he claims that this construction is apparent from the language of this and other acts on this subject. Thus, while the act of 1848 declares void any pledge of a right, claim, or interest, in a pension, it exempts from attachment, levy, and seizure, the pension itself. So in the act of July 7, 1888, (5 Statutes, at large, 303), a pledge of any right, claim, or interest in a pension, is declared to be invalid, while the pension itself is declared not to be liable to levy, etc.; and the defendant contends that Congress intended a distinction between the right to an interest in a pension and the pension itself, and that the policy and intention of the Pension Statutes was to protect persons entitled to pensions from their own acts, only during the time in which their right to the pension should remain unascertained, and afterwards from the acts of other parties only.

A careful examination and comparison of the various statutes on this subject has led us to a different conclusion.

Provisions, substantially similar to those contained in the acts .of 1838 and 1848, both of which are confined to the case of widows, are to be found in almost all the pension acts, and to our minds it is very apparent that Congress intended, in all these cases, to secure the benefit of its bounty to the pensioner personally, and to place it wholly not only beyond the reach of creditors, but beyond the consequences of any act of his own to which he might be tempted from necessity, weakness, or improvidence. Thus, in the first of the pension acts, 23d March, 1792, (1 Statutes, at large, 245,) it is declared that “no sale, transfer, or mortgage of the whole, or any part .of the pension, or arrearages of pension, payable to any soldier, or before the same shah become due, shall be valid; and every person claiming such pension, or arrearages of pension, or any part thereof, under a power of attorney or substitution, shall, before the same is paid, make oath that such power or substitution is not given by reason of any transfer of such pension or arrearages of pension and it is declared to be perjury to swear falsely in the matter.

A similar provision is found in the act of April 10, 1806, (2 Statutes, at large, 376, 5, 8.) So by section 4 of the act of March 18, 1818, (3 Statutes, at large, 410,) it is provided that “ no sale, transfer, or mortgage of the whole, or any part of the pension, payable in pursuance of the act, shall be valid.”

So by section 4 of the act of May 15, 1828, (4 Statutes, at large, 269,) it is provided that “the pay allowed by the act shall not im any way be transferable or liable to attachment, levy, or seizure, by any legal process whatever, but shall come wholly to the personal benefit of the officer or soldier entitled to the same by the act.”

So by section 4 of the act of July 4, 1836, (5 Statutes, at large, 128), providing for half-pay to widows of officers, or who have died in the United States service since 1818, it is declared that any pledge, mortgage, sale, assignment, or transfer, of any right, claim, or interest (the words used in the act of 1848) in any money or half-pay granted by the act, shall be utterly void and of no effect;” and then it is provided, that where the application for the money is made by the attorney, such attorney, before a warrant shall be delivered to him, shall make oath that “he has no interest in said money by any pledge, mortgage, sale, assignment, or transfer, and that he does not know or believe that the same has been so disposed of to any person whatever.”

So by the act of July 7, 1838, before referred to, it is declared that a sale or pledge of any right, claim, or interest, in any pension or half-pay, is invalid, and the pension and half-pay are declared to be exempt from any liability to levy, etc., but to come wholly to the personal benefit of the pensioner or annuitant; and where the pensioner applies for payment by attorney, such attorney is to make oath “that he has no interest in said money by any pledge, surety, transfer, agreement, understanding, or arrangement, and that he does not know or believe that the same has been so disposed of to any other person.”

We think these various provisions speak a very plain and intelligible language, and indicate a uniform and consistent policy in the legislature which enacted them; and when it is considered that these pensions are payable annually, and designed for the benefit of a needy, aged, and in many cases, feeble and helpless class of persons, it is quite apparent that Congress never intended, in these various provisions, any such distinction between the right to a pension to be granted and the pension itself when granted, as is contended for, and that the words “right, claim, or interest,” are to be taken in a distributive sense, and to mean that no portion or share of, or interest in a pension already granted, as well as no right in a pension to be granted, shall be sold or hypothecated by the beneficiary. Indeed, the language of the act of 1848 seems to admit of no other construction; it is, that ne pledge, etc., of any right, claim, or interest, in any way granted by this act, shall be valid. The right granted is to receive so much money a year by way of pension, and the interest of the annuitant in the grant is the property which he has in such right, that is, in the pension itself. The right to have a pension declared in her favor, as coming within the class of pensions described in the act may be included, but to restrict it to that would, in our judgment, be doing violence to the good sense and evident policy of the statute itself.

On the whole, we think clearly that the agreement, by way of pledge, set out in the answer, comes within the prohibition of the statute, and that the demurrer was, therefore, well taken.

Judgment at Special Term affirmed.


author: By the Court. Oakley, Ch. J.

text:
    Orasmus Eaton, Uri Gilbert and Edward O. Daton v. William H. Aspinwall.
    Under the act of April 12, 1852, for the incorporation of ocean steam companies, it is not a pre-requisite that the payment of the ten per cent should be stated in the certificate which is to be filed It is a matter to be proven, when necessary, as a fact.
    It was found, as a fact in the case, that the ten per cent, had not been paid in, upon the incorporation of The Mexican Ocean Mail and Inland Company. It was also found, that the seventh section, directing a certificate to be filed within thirty days after the last installment had been paid, had not been complied: with.
    Upon the testimony in the .cause, it was concluded that the defendant had avowed himself to be a stockholder in the company above named, had registered him-, self as such upon the books, and taken part in the management.

      Held, that it was not competent for him to allege against a creditor, that the company had never been legally constituted, by reason of the omissions or default above noticed.
    A debt was incurred by such company, to .the plaintiffs, during the period that the defendant was a stockholder. A judgment against the company was obtained, and execution returned unsatisfied.

      Held, that the defendant was liable forjihe demand, and that his liability was not restricted to the amount unpaid upon his stock, but was, under the 6th section of the act, for the whole amount of the stock held by him,, for all debts contracted until the certificate has been filed.
    (Before Oakley, Ch J., Hoffman and Slosson, J.J.)

    General Term,
    October, 1856.

      Appeal from a judgment, entered upon the report of a referee, in favor of the plaintiffs.
    The cause having been at issue upon the complaint and answer, an order of reference was made to a referee to hear and determine the whole action.
    He found, by his report, the following facts and conclusions: That on the eighth day of January, one thousand eight hundred and fifty-three, seven persons filed in the office of the clerk of the city and county of Hew York, and a duplicate thereof in the office of the secretary of state, under and in pursuance of an act of the people of the state of Hew York, entitled “ An Act for the incorporation of companies formed to navigate the ocean by steamships, passed April 12th, 1852,” a certificate made and signed by themselves and others, and acknowledged before a commissioner of deeds by themselves, stating, among other things, that those who signed said certificate did thereby form themselves into a corporation to be called the Mexican Ocean Mail and Inland Company, for the purpose of building for their own use, equipping, furnishing, fitting, purchasing, chartering, navigating, and owning vessels, to be propelled solely or partially by the power or aid of steam, or other expansive fluid or motive power, to be used in lawful commerce and navigation upon the ocean and seas, and for the transportation of passengers, freight and mails, and for holding other property. The principal office for managing the affairs of the company being the city of Hew York, and stating particularly the ports between which such vessels were intended to be navigated ; and that the capital stock of the company should be one million five hundred thousand dollars, to be. divided into fifteen thousand shares of one hundred dollars each; that the term of the existence of said company was to be twenty years from the first day of January, one thousand eight hundred and fifty-three; that there were to be nine directors, and stating their names, who should tiianage the concerns of said company for the first year.
    The undersigned has also found, as matter of fact, that ten per cent, of the capital named has not been paid in:
    That said company elected officers, hired an office, and went into operation in January aforesaid:
    That on the twenty-eighth day of March, one thousand eight hundred and fifty-three, the defendant became the owner of two hundred and fifty shares of the stock of said company:
    That in April of the said year the said company employed the plaintiffs, who were copartners doing business at the city of Troy, under the firm name of Eaton, Gilbert & Co., to furnish coaches and fixtures for said company, which were made and delivered to said company by said plaintiffs, for which said company, by its company name, and by its president, gave the plaintiff two promissory notes, each for the sum of twelve hundred and twenty-one dollars and thirty cents; one dated September 17, 1853, payable four months after date, and the other dated September 22d, 1853, payable six months after date; and a third promissory note for the sum of $1214f¡n¡, dated September 22d, 1853, payable five months after date:
    That a judgment was obtained upon said notes in the Supreme Court of this state, in favor of said plaintiffs, against the Mexican Ocean Mail and Inland Company, on the thirtieth day of June, one thousand eight hundred and fifty-four, for the sum of three thousand seven hundred and fifty-eight dollars and eighty-three cents:
    That on the last-mentioned day an execution was issued, upon the said judgment, to the sheriff of the county of New York, which was returned, wholly unsatisfied, on the fifteenth day of July, one thousand eight hundred and fifty-four:
    That the certificate required by the seventh section of said act of April 12th, 1852, has not been made, signed, sworn to, or recorded :
    That the defendant continued to be a stockholder in said company, and the owner of said two hundred and fifty shares of stock,during the period when the above-named liabilities in favor of plaintiffs were contracted and accrued, and as such stockholder has taken part in the management of the company:
    That as matter of law, the omission to pay in ten per cent, of the capital stock of said company is not a defence to the defendant, in the action against the claim of the said plaintiffs:
    That the said plaintiffs are entitled to recover from the defendant the amounts of the said several promissory notes, with interest from the time when they respectively became due; amounting altogether at the date of this report, to the sum of four thousand and ninety-eight dollars and thirty-four cents, besides their costs of this action.
    In addition to the facts thus found, the following are of importance: The seventh article of the association provided, that it should be the duty of the secretary or treasurer, under the direction of the directors, to issue scrip to those who shall be entitled to stock in the company, when ten per cent, upon the whole amount of capital stock subscribed shall have been paid in thereon, which scrip shall be signed by the resident presiding officer of the company, and countersigned by the secretary or treasurer. /
    The eighth article provided that it should be the duty of the secretary or treasurer to endorse upon the scrip, which shall be held by any stockholder, every sum which shall be paid thereon, and whenever the capital stock of the said company shall be paid in, certificates of full stock shall, in like manner, be issued, according to the by-laws of the company, and the scrip aforesaid shall be cancelled.
    The articles of association were dated the 1st of January, 1853, and the certificate filed the 8th of that month.
    Various provisions of the statute, under which the association became a corporation, are noticed in the opinion of the court.

      Van Vorst, for the plaintiffs and respondent,

      Evarts, for defendant and appellant.
   By the Court. Oakley, Ch. J.

The articles of association, under which The Mexican Ocean Mail and Inland Company was formed, were dated the 1st of January, 1853, and a copy of such articles was filed in the office of the clerk of the county of New York, and a certified copy of the same was filed with the secretary of state on the 25th of January, 1853.

This was a sufficient compliance with the first section of the act of April 12, 1852, directing the filing of a certificate in writing, in order to the incorporation of ocean steam companies.

But by the second section of such act it is provided, “That when the certificate shall have been filed as aforesaid, and ten per cent, of the capital named paid in, the persons who shall have signed and acknowledged the same, and all others who may thereafter be holders of any share or shares of said capital stock, and their successors, shall be a body politic and corporate in fact and in name, by the name stated in such certificate, and shall have and possess all the powers, etc., etc.”

It is to be observed that the first section does not require that the certificate shall state the payment of the ten per cent. The strict letter of the second section imports that the corporate character does not arise until the ten per cent, is paid; but then that may be a fact to be ascertained by testimony.

In connection with this section of the statute, the seventh article of the association should be noticed. Scrip was to be issued when ten per cent, had been paid in. Each successive payment was to be endorsed on this scrip, until the whole was paid up, when certificates of Ml stock were to be issued.

The fourth section authorizes successive calls, by the directors, for payment of installments on the stock; and the seventh section directs a certificate to be filed within thirty days after the last installment has been paid, stating the amount of the capital paid in. This was not done, as the referee finds.

The referee also finds that the ten per cent, was not, in fact, paid in. A witness swears positively that all the stock had been paid up, and much testimony was taken as to the mode in which this was accomplished, We do not propose to enter upon this question, or to scrutinize this transaction. We shall decide the case upon the assumption that the ten per cent, had never been paid in.

There are two prominent facts to be noticed.

First, There is an allegation in the complaint, and an admission in the answer, of no slight consequence. The plaintiff avers that the defendant was a stockholder, and owner of two hundred and fifty shares of stock in the said corporation, to the amount; of $25,000, at the time the coaches were manufactured for, and delivered to, such company, and at the time the notes were given. The defendant admits that he is owner of two hundred and fifty shares of the full shares of said alleged corporation, but puts in issue the allegation of his being such when the debt was contracted.

Next, upon the 28th of March, 1853, the defendant has a transfer made to him, on the stock ledger of the company, by which Rankin, president, transfers to him two hundred and fifty shares. This book was kept by the company, as the law prescribed. A certificate was on the same day issued and delivered to him, and a receipt given by the defendant for it, to the president.

The tenth section of the statute of 1842, directs a book to be provided, in which shall be entered the names of the original stockholders, and of all transferees, with their residences. This book is to be open to public inspection. In all proceedings under the provisions of the act, such book shall be presumptive evidence of the truth of the contents thereof, but such presumption may be repelled by evidence by any party or person interested in doing so.

There are other pieces of testimony tending to show recognitions, by the defendant, of his character as a stockholder of the company. But we think those we have referred to are enough to raise the legal question. That question is, Whether one who has openly avowed himself a stockholder of a company, registered himself as such upon its books, and as a stockholder taken part in its management, can be allowed to say, as to third persons, that the corporation was never lawfully created ?

We answer this question in the negative. We so answer it with greater confidence, when the defect is the omission of an act to be proven by testimony to have been performed, not a pre-requisite to be publicly declared and recorded, before the corporation can acquire a legal entity.

The cases referred to determine, that neither a stockholder who has acted as a director, nor a party incurring a debt to a company can set up as a defence, an irregularity which might show that the corporation never existed, or had incurred a forfeiture. (McFarlan v. The Triton Ins. Comp., 4 Denio, 392; The Sch. and Sarat Plank Road Comp. v. Thatcher, 1 Kernan, 108; Lawrence v. Palmer, 3 Sand. Rep.; All Saints’ Church v. Lovett, 1 Hall, 191.)

The principle of these cases must control the present. If a party may not controvert the legality of a corporation when it is enforcing a contract avowedly made with it, he cannot be allowed to defeat a creditor of the company wholly ignorant of the defect or error.

There is a class of authorities decided in England upon the ob ligations of members of joint-stock associations, which may be usefully noticed. (Manderby v. Le Blanc, 2 Carr. & Payne, 409; Harvey v. Ray, 9 B. & Cress. 356; Ellis v. Schmoeck, 5 Bing. 521 ; Doubleday v. Mushell, 7 Bing. 110, 4 M. & S. 750.)

In these cases, the prevailing principle is, whether the parties have heldthemselves out as possessing the character, which involves the responsibility ? In one case, letters of the defendant, in which he admitted himself to be a shareholder, were held sufficient.

The defendant takes another defence, which should be noticed. The 6th and 7th of his printed points are to the effect, that the liability imposed by the statute is, that each stockholder should be responsible for his contributory share of the capital, and must respond to creditors only for what he has not paid in, and that the defendant had wholly paid up for the stock he held.

But the 6th section of the act of 1852 is express, that the stockholders shall be severally individually hable to the creditors of the corporation to an amount equal to the amount of stock held by them respectively for all debts and contracts made by such corporation, until the amount of its capital shall have been paid in, and a certificate thereof shall have been made and'recorded or presented in the next (the 7th) section. That section directs the filing of the sworn certificate thirty days after the whole of the installments have been paid up. This was wholly omitted as before stated.

. It seems, to us plain, that even if a stockholder has fully paid up his subscription, or is an assignee of fully paid stock, he is responsible, up to the entire amount he holds, for all debts contracted while he owned the stock.

The case appears to us a clear one, and the judgment must be affirmed, with costs of the appeal.


author: By the Court. Hoffman, J.

text:
    George R. Bowdoin, Jeremiah Larocque, and others v. Thomas J. Colman and James McGregor, Jr.
    An assignment by a defendant, who prevails in an action of claim and delivery, of the judgment recovered by him, and all moneys to be obtained by means thereof, or by any proceedings to be had thereon, transfers to the assignee any undertaking executed in the action upon requisition made for the delivery of the property to plaintiff; and the assignees may maintain an action upon such undertaking.

      Where, in action upon an undertaking given on the part of plaintiff in an action of claim and delivery, by an assignee of defendants, the undertaking is produced upon the trial, a delivery of it to the promisee pursuant to section 423 of the Code may be presumed.
    Upon appeal to the General Term, the court may treat the pleadings as having been amended so as to conform to the facts proved, in any respect in which the court ought clearly to allow an amendment upon application at Special Term.
    Tn an action brought upon an undertaking given upon a requisition in an action of claim and delivery by assignees of only a portion of the original promisees, there is a defect of parties; all the promisees should be represented. But the objection to such defect is taken too late, if raised for the first time upon appeal from a judgment upon a verdict for plaintiffs.
    (Before Oakley, Ch. J., Hoffman and Slosson, J.J.)
    General Term,
    October, 1856.
    Appeal from a judgment entered upon a verdict in favor of the plaintiffs.
    The complaint set forth, that on the 3d of June, 1850, at the city of New York, the defendants executed their certain undertaking in a certain action in the Superior Court, wherein John H. Keyser was plaintiff, and William H. Harbeck, John H. Harbeck, Samuel Ward, Rodman M. Price, and Louis Dietz were defendants, in the following words and figures :—
    “Superior Court oe the City op New York.
    “ City and County of New York.

    John H. Keyser v. William H. Harbeck, John H. Harbeck, Samuel Ward, Rodman M. Price, and Louis Dietz. Undertaking of plaintiff’s sureties on claim and delivery of personal property-
    “Whereas the plaintiff in this action has made an affidavit, that the defendants therein wrongfully detain certain personal property in the said affidavit mentioned, of the value of eight thousand and fifty dollars, and the plaintiff claims the immediate delivery of such property as provided for in the second chapter of the seventh title of the second part of the Code of Procedure;
    “ Now, therefore, and in consideration of the taking of the said property, or any part thereof, by the sheriff of the city and county of New York, by virtue of the said affidavit and of the requisition thereupon endorsed, we, the undersigned James McGregor, Jr., of the city of Hew York, patentee, and Thomas J. Colman, of the same place, broker, do hereby undertake and become bound to the defendants in the sum of sixteen thousand one hundred •dollars,' for the prosecution of the action of the plaintiff, in the Superior Court of the city of Hew York, against the defendants for wrongfully detaining the said property, for the return to the defendants of the said property, or so much thereof as shall be taken by virtue of the said affidavit and requisition thereupon endorsed, if a return thereof shall be adjudged, and for the payment to them of such sum as may for any cause be recovered against the plaintiff in this action.
    “Dated Hew York, 3d June, 1850.
    (Signed) “ T. J. Colman,
    “ James McGregor, Jr.”
    The defendant Dietz was not served with a summons, and never appeared in that action.
    The firm of Harbeck & Co., appeared and put in a separate defence ; and-the same was done by Ward & Price. A verdict was taken for the plaintiff Keyser, subject to the opinion of the court at General Term, and that court set aside the verdict and ordered judgment for the defendants. It was then adjudged “that the defendants William H. Harbeck and John H. Harbeck, recover against the plaintiff their costs and expenses, adjusted at the sum of $382.17; and that the defendants Ward and Price recover against the plaintiff their costs, adjusted at $395.30, and that the said defendants respectively have execution therefor.”
    It' was admitted, on the trial, that this action (of Keyser v. Hwrbeck, and others,) was the action in which the undertaking was executed. The undertaking was produced in evidence by the present plaintiff, and it was further admitted by the plaintiffs’ counsel, that an action had been brought upon it by William H. Harbeck and John Harbeck, who recovered a judgment. for $474.88 in March, 1855, against the defendants in this action, which judgment the defendant Colman had paid.
    In August, 1854, an execution was issued in favor of the original defendants, Ward & Price, against Keyser, for the amount of $395.30, the costs adjudged to them, and returned unsatisfied.

      On the 21st of March, 1855, Ward & Price executed an instrument of assignment to the present plaintiffs, reciting that they had recovered a judgment on the 17th of July, 1854, against John Keyser for the sum of $395.50, and assigning and transferring to them “ and their assigns the said judgment, and all sum and sums of money that may be had or claimed by means thereof, or on any proceedings to be had thereuponconstituting them lawful attorneys to sue out executions and take all lawful ways for the re • covery of money owing, or to become due on the said judgment; and, on payment, to acknowledge satisfaction or discharge of the same. When the plaintiff rested, the defendants’ counsel moved to dismiss the complaint on the grounds sufficiently stated in the opinion of the court. The motion was denied, and the counsel excepted; no testimony being given on the part of the defendant, Mr. Justice Slosson directed the jury to find a verdict for the plaintiffs. To this direction the defendants’ counsel excepted. The cause was now heard upon a case containing the evidence and exceptions.

      M Pierrepont, for the defendants, appellants.

      J. Larocque, for the plaintiffs.
   By the Court. Hoffman, J.

There are three questions involved in this case :

1st. Whether the right of Ward and Price to sue upon the undertaking passed to the plaintiffs in this action by the assignment of the 21st of March, 1855 ?

2d. As to the sufficiency of the complaint, and whether the alleged defect can now be taken advantage of?

3d. Whether Ward and Price could have sued the defendants upon the undertaking separately? This question involves, that of the effect of the action by John and William H. Harbeck.

I. We think it clear that Rodman and Price, having in fact a distinct judgment for a separate sum, with an award of execution in their favor separately, could assign, and have assigned, this right to the plaintiffs. As against Keyser, the benefit of the judgment passed to them, with every right to recover the demand from him by execution or supplementary proceedings. (Code, § 274.)

We think, also, that the assignment is sufficient to transfer any right which Ward and Price had under the undertaking, that provided for the payment of such sum as may for any cause be recovered against the plaintiff. The sum of $395.50 is adjudged to be paid to these defendants by the plaintiffs. The assignment transfers that debt which the parties have covenanted to pay. It is a sum of money claimed by means of the judgment assigned, although in form claimed upon the undertaking. When the debt is assigned, the security incidental to it, and given to meet the contingency of its accruing, must follow the debt. The principle is found in those cases which hold that the assignment of a debt secured by a mortgage, passes the mortgage, and in other authorities establishing a similar doctrine in other instances. (Curtis v. Tyler, 9 Paige, 432; 10 Smedes & Marshall, 631.)

We conclude, that if the undertaking had been executed to Ward and Price alone, the assignment of the judgment to the plaintiffs would have vested them with all rights under the undertaking.

II. The second question relates to the sufficiency of the complaint. It is objected, that there is no averment of the plaintiff’s title to the undertaking, or of their right to bring the action, no averment or proof of a consideration for the undertaking, no averment of a delivery to the assignors, and no averment of facts stated to show that the action in which the undertaking was given, was within the statute.

The decision of the Common Pleas in the case of Slack v. Heath (1 Abbott’s Pr. Rep. 334), which has been cited, is almost precisely in point, and would settle these questions against the defendants. Mr. Justice Woodruff, however, dissented. Ho proof had been given at the trial, but the case came up on a motion to dismiss the complaint, as not showing a good cause of action, which motion had been denied, and the jury directed to find for the plaintiff. The learned Judge who dissented, stated the question to be, “ Whether the Judge was warranted in charging the jury, that upon the admitted facts stated in the complaint, and without even the production of the alleged undertaking, the plaintiff was entitled to recover?” “It seems to me plain, that unless there be enough to show, on the complaint, that the undertaking was given and received under the 211th section of the Code, the plaintiff has failed to show a cause of action.” The defect was in not averring that the bond was taken in and for the prosecution of an action of replevin, now claim and delivery.

Without expressing an opinion upon the point as it was nakedly presented in Slack v. Heath, this case presents facts which may authorize a decision consistently with the dissenting opinion. The undertaking was produced at the trial by the plaintiffs; and here a section of the Code, not noticed in the argument, is of some moment. The 423d section directs that an undertaking in cases of claim and delivery, shall be delivered by the sheriff to the parties respectively for whose benefit they had undertaken. A delivery enjoined by law may be inferred. This meets one of the defendants’ points.

Again, it was admitted on the trial, that the action in which the undertaking was given, was the action of Keyser v. Harbeck and others; and the pleadings, proceedings, and judgment in that action are in evidence here, that that was an action of claim and delivery. The case, then, as made upon, the evidence combined with the complaint, answers the objection in point of fact, assuming it to have been a valid one upon demurrer. The 173d section of the Code appears, then, to apply, and to sanction an amendment so as to confirm the pleading to the proofs. We Cannot doubt that if the plaintiff had applied at the trial to amend his complaint by inserting an allegation, that the undertaking was given in an action of claim and delivery commenced under the 206th section of the Code, and was given pursuant to the 209th section, the Judge would have been bound to permit it. The question is, Whether, on appeal, the General Term may not order it or treat it as done ?

The 173d section of the Code provides that the court may, before or after judgment, in furtherance of justice, and on such terms as may be proper, amend any pleading or proceeding by, etc., or when the amendment does not substantially change the claim or defence, by conforming the pleading or proceeding to the facts proved.

Raynor v. Clarke and Lawrence (7 Barb., 582), and Clark v. Daly (20 Barbour, 67), are instances in which the power of the General Term to amend was asserted and exercised.

In Bate v. Graham (1 Kernan, 137) the court says: “ If the complaint had been demurred to for not stating facts sufficient to constitute a cause of action, we do not see how it could have been sustained.” The defect was, that a creditor brought an action to set aside an alleged fraudulent sale of personal property by a testator, without averring that the executor refused to impeach or support it. The answer of the executor supplied the defect, insisting that the sale ought not to be set aside; and the Court of Appeals held, that the defect should be deemed supplied under the 173d section, on the ground that the court below should have permitted or ordered an amendment.

In Brown v. Colie (1 E. D. Smith’s Rep. 270) the Court of Common Pleas express the opinion that the General Term, as a mere appellate tribunal, ought not to order amendments of this nature, and this in a, case in which it thought that an application at Special Term, after a referee’s report, would have been successful ; and this we understand was its general rule.

The 148th section of the Code, indeed, permits an objection that the complaint does not state facts sufficient to constitute a cause of action, to be taken in some other way, and at some other state of the cause, than upon demurrer or answer; the omission so to take it is not a waiver. It might' have been taken formerly by motion in arrest of judgment. This proceeding is not now allowable in practice; but we will assume that it is an objection which may be taken on appeal from a judgment (7 Barbour, 582).

We may also notice the 172d section, by which, after the decision upon a demurrer, either at General or Special Term, the court may allow the party to amend upon terms.

The general tenor of the Code, undoubtedly, is, to consider, upon an appeal, the General Term as simply a revisory tribunal, to act upon the record or case as it finds it; and to affirm, reverse, or modify the judgment or order in the respect mentioned in the notice of appeal, and as to any or all the parties. It possesses, also, the additional power of reviewing any intermediate order involving the merits and affecting the judgment.

But the decision of the Court of Appeals seems to warrant this court, as it would that court, to consider the amendment suggested as in fact made, or to disregard the defect. If the counsel of the plaintiffs considers himself safe under that authority, he may take an affirmation of the judgment at once. We do not consider ourselves as warranted in reversing it upon the ground suggested. If the counsel should deem it prudent .to apply for an amendment at Special Term, he can do so, and have the affirmance of the judgment here suspended.

The next question is, Whether the plaintiffs can sue upon this undertaking without making the other obligees or promisees parties ? The leading cases upon this point, irrespective of the Code, are as follows:—Engs v. Donnithorne (2 Burr. 1190); Forsbie v. Park (12 Mees & W. 146); Knightly v. Watson (3 Ex. Rep. 716; Shepard’s Touchstone, by Preston, 166); Ehle v. Purdy (6 Wend. 629); Dean v. Hitchcock (2 Com. 388). See, also, the authorities cited in Platt on Covenants, 123, et seq. Lord Mansfield, in the case from Burrows, says, “ The language of severalty or joinder, and not the interest, is the test of the quality of the covenant quoad covenantors.” And the same rule governs as to covenantees. “ It has been held in a series of cases,” says Mr. Parsons, “ that the interest which the covenantees take by the covenant, quite irrespective of the words severalty and joinder, is the decisive test.” But the correct rule, as stated by Mr. Preston, is that by express words, indicative of the intention, a covenant may be joint, or joint and several, to or with the covenantors or covenantees, notwithstanding the interests are several. Where the words are ambiguous, they will be construed according to the interest.

In Knightly v. Watson (3 Ex. Rep. 716) Pollock, Baron, said: “ The rule is, that a covenant cannot be treated as joint or several at the option of the covenantee. If a covenant be so constructed as to be ambiguous, that is, so as to serve either the one view or the other, then it will be joint if the interest be joint, and it will be several if the interest be several. On the other hand, if it be in its ternas unmistakably joint, then, although the interest be several, all the parties must be joined in the action. So if the covenant be made clearly several, the action must be several, although the interest be joint. It is a question of construction. See also, Ehle v. Purdy (6 Wend. 629). In Pearce v. Hitchcock (2 Com. 388), upon an attachment under the absconding debtor act, the defendant executed to the plaintiffs, and Peter Y. Lane, William B, Guild, and Ziba N. Kitchen, (three other creditors who had come in under the attachment,) a bond in double the amount sworn to by all the attaching creditors, and conditioned to pay to each of the attaching creditors the amount justly due to him from said Condit and Peck; the declaration set 'forth the indebtedness of these parties to the plaintiffs, and concluded with the usual averments of the forfeiture of the bond, etc. On demurrer for non-joinder of all the attaching creditors, the Common Pleas, on the authority of Arnold v. Talmadge, (19 Wend. 527,) held the objection fatal. On appeal, Chief-Justice Jewett said, that at the common law the objection would be decisive. He states that the correct rule was laid down by Gibbs, Ch. J., in James v. Emery (5 Price, 533), with the qualification stated by Mr. Preston: “ That rule is, that a covenant will be construed to be joint or several according to the interest of the parties appearing upon the face of the deed, if the words are capable of that construction; not that it will be construed to be several by reason of several interests, if it be expressly joint. I think that is the true distinction. In this case, although we can see from the recitals in the bond that the obligees had separate and distinct interests, yet it is expressly joint, and the words of it will not admit it to be construed as a several bond. Therefore, by the rule of the common law, the action could not be sustained, if all are living, in the names of any member of the obligees less than all.” He then proceeds to determine that the statute (2 R. S. 12, § 57) created an exception to the rule, and enabled the plaintiffs to sue for their separate interests. Arnold v. Talmadge is overruled.

Mr. Justice Bronson dissented as to this latter point, but repeated the rule as stated by the presiding Judge, with equal precision. The covenant will be construed to be joint or several according to the interest of the parties appearing on the face of the deed, if the words are capable of that construction;-but it cannot be construed to be several by reason of several interests, if it be expressly joint.”

I assume, therefore, that upon demurrer to this complaint, the objection would be good. The whole frame of the undertaking is a responsibility to the five defendants named in the title, without a word to import a separate interest, and to treat it as on its face a disjunctive liability, as facts might afterwards occur, would be contrary to sound rules of pleading.

But the objection is one of a non-joinder of proper parties, and admitting it to have been ground of arrest of judgment before the Code, yet sections 144, 147, 148, apply, and settle that it is too late now to take the objection, as it does not go either to the jurisdiction or to show the entire want of a cause of action.

The remaining point on the part of the defendants, is the effect of the judgment in favor of the Harbecks upon the undertaking, and payment of the amount recovered by them. This is set up in the answer of the defendant Colman as a bar.

If plead as a former judgment, the answer to its availability is, that it is not between the same parties, nor in point of fact for the same cause of action. That cause of action was separated by the judgment of the General Term, and made distinct for one sum in favor of the Harbecks, and for another in favor of the present plaintiffs.

Hor can it be set up as a payment or satisfaction, for the same reason. Another reply is, that had the action been brought in the names of all the promisees in the undertaking, and upon answer or evidence, all the facts now developed had been made out, the judgment could have been in favor of some of the plaintiffs, namely, those recovering, and against the others. (Code, § 274.) The result which would then have been reached is precisely the same as is attained in the present suit.

We consider that the judgment must be affirmed, with costs on the appeal, but the plaintiffs may apply as before suggested, if so advised.


text:
    David R. De Wolf v. The State Mutual Fire and Marine Insurance Company.
    Action upon a policy on freight. The cargo was salt in sacks, and a large portion of the contents was washed out by an accident attributable to the perils of the sea. The sacks were delivered, some entirely, and others partially empty.

      Seld, that upon the principles of Nelson v. Stephenson, (May Term, 1866,) the freight was lost to the ship-owners; that it was nearly an universal rule, that when freight could not be recovered from the shippers, it could be from the underwriters, in a policy.
    That salt and sugar were to be deemed soluble articles within the case referred to.
    (Before Oakley, Ch. J., Hoffman and Slosson, J.J.)
    General Term,
    October, 1856.

      The action was brought upon a policy of insurance, executed in favor of the plaintiff, by the defendants, upon freight to the amount or sum of $1,500, upon all kinds of lawful goods or merchandise laden, or to be laden, on board the good British bark Bessie, on a voyage from Liverpool, Great Britain, to Alexandria. The policy is in the usual form against “ the seas, men-of-war, etc., and all other perils, losses, and misfortunes whatever, whereby the said freight, or any part thereof, shall be lost.”
    The cargo consisted of three hundred and fifty-four tons of common salt, contained in three thousand five hundred and forty sacks, which were shipped in Liverpool, at the rate of twenty-eight shillings a ton for freight, and five per cent, primage.
    The vessel arrived in the Potomac, about twenty-five miles from Alexandria, her destined port, and was there so cut and damaged by the ice that she filled, and lay on her beam ends, when the water flowed in and through her, and a large part of the salt was washed out of the sacks. She was ultimately raised and taken to Alexandria. It was there found that two thousand seven hundred and ninety of the sacks were entirely empty, four hundred and thirty-two were delivered with some salt in them, and three hundred and eighteen were totally lost and destroyed, the sacks themselves not being delivered.
    The sum of $226.88 was paid for the freight of the salt actually delivered, and payment refused for the rest. About thirty-two tons were delivered.
    The bill of lading was dated in Liverpool, on the 30th of November, 1854, and was in the usual form.
    Judgment was rendered by Justice Hoffman, at Special Term, in favor of the plaintiff for $1859.07, the amount adjusted by the parties, from which the present appeal is brought..

      Young, for the plaintiff-
    Moultrie, for defendants.
   By the Court. Hoffman, J.

In the case of Nelson v. Stephenson, (May Term, 1856,) this court examined the subject of the relative rights and obligations of shippers and ship-owners as to freight of liquids contained in casks, etc., which have leaked out in whole or in part. The following were the conclusions arrived at:

1st. The owner of liquids shipped in casks of any description is, in the first instance, chargeable with the duty of supplying proper casks, and would presumptively be responsible for a loss arising from their insufficiency or defects. The effect of an unqualified bill of lading is to transfer this presumptive responsibility to the captain and owner of the vessel. They acknowledge by it the good condition of the casks upon their reception on board, and engage to deliver them and their contents as described, in the same condition.

2d. That when the case presents nothing else, if the casks be delivered empty, or nearly so, and the actual cause of the leakage be unknown or conjectural, the owners of the vessel lose the freight for the portion not delivered. They have not performed their engagement. The loss, in these cases, is legally attributable to defective stowage, or some other cause over which the master had control, and for which he has engaged to be responsible.

3d. As, however, a bill of lading, treated as a receipt, is not conclusive, it is open to the ship-owner and master to prove explicitly that the casks were, in fact, unsound or badly made, and, in such a case, the original responsibility of the owner for their condition is restored, and he is bound to pay the freight.

It is an obvious conclusion, from the principles thus laid down, that when the loss of liquids - arises solely from the perils of the sea, although the casks are delivered, and it is the case of an ordinary bill of lading, the ship-owner must lose his freight. It is this point which we consider was settled in Frith v. Barker, (2 John. Rep. 334).

We consider the principles applicable to all soluble articles, such as sugar and salt. The present case is governed by them.

It was clearly a loss by perils of the sea, attributable solely to that cause, and without a fault of the shipper. The freight was not earned, and could not have been recovered.

It follows, as nearly an invariable result, that if freight cannot be recovered from the shipper or -his agent, it is to be recovered from the insurers. It is the contingency covered by the policy. Justice Nelson, in Hugg v. The Augusta Ins. Co., (7 Howard, 604,) thus states the rule: “ The contract of insurance upon freight is, that the goods shall arrive at the port of delivery notwithstanding the perils insured against, and that if they fail thus to arrive, and the owner is thereby unable to earn his freight, the underwriter will make it good.”

The counsel insists that the character of the goods to be taken on board was unknown, and had they been known, the risk would have been declined, or the premium increased. The answer is, that the general words of the policy cover the goods in question, and the underwriters could have controlled the nature of their risk, and amount of premium, by special clauses.

It is also urged that doubts may arise as to what are soluble articles, or where the line shall be drawn between articles delivered in specie, though deteriorated in quality, and articles entirely wasted away. The court will be competent to meet these difficulties when they arise. In the mean time nothing is more apparent than that experienced underwriters can readily frame, what the counsel says the court will have to do, a specification of articles of this description, and a tariff of the rates of premium at which they will consent to take such risks.

We consider that the plaintiff was clearly entitled to the judgment he obtained, which must, therefore, be affirmed with costs.

       Reported 5 Duer, 588.