author: By the Court. Bosworth, J.—The

text:
    The United States Trust Co. of N. Y., Receiver of The Empire City Bank, v Dennis Harris.
    When the jury, in an action for the recovery of money, in addition to answering special questions submitted to them by the Court, find a general verdict for the defendant, and the Court at the trial directs the questions of law arising on the trial to be first heard at the General Term, and judgment to be there applied for in the first instance, the plaintiff cannot have a judgment, unless the facts specially found are inconsistent with the general verdict, and entitle him to such judgment.
    And though the Court, in charging the jury, instructs them, .in addition to answering the special questions, to find a general verdict for the plaintiff, yet, if they find a general verdict for the defendant, and the Court thereupon, against the objection and exception of the defendant, directs such general verdict for the defendant to be changed to a general verdict for the plaintiff, subject to the opinion of the Court at General Term, on the idea or assumption that the general verdict, as the jury gave it, is inconsistent with the finding, upon the questions submitted, the Court at General Term must give such judgment as ought to have been given, if the general verdict, actually rendered, had not been changed by the order of the Court. The Court, at the trial, has no power to order a verdict for one party to be changed to a verdict in favor of the other party, on any such ground.
    When personal property is purchased, upon a misrepresentation of its value, but such representation is made in good faith, and in an honest belief of its truth, the purchaser must pay a note given by him for its price, he having retained the property bought, although it may have been worthless at the time of the purchase. To constitute a defence to an action to recover the contract price of property sold, it is necessary to prove more than that the vendor expressed an erroneous opinion of its value, in which the purchaser chose to confide, instead of exercising his own judgment, exclusively, or consulting others more competent to judge than himself, when the opinion was honestly expressed, and no deceit was practised to put him off his guard.
    A note given to a bank by a purchaser of its stock, which the bank owns, is not made illegal and void, by Sub. 3 of g 1 of 1 E. S., part I. title 2, eh. 18, art. 1. That section applies to an original subscriber for stock, and to the payment of the sum so subscribed.
    The portion of the capital stock of a bank, which the bank owns by virtue of a purchase of it, it may sell on credit, and a note is not void merely because it was given to the bank, on such.purchase, for the contract price of the stock, nor because it was discounted by the bank, to enable such purchaser to pay for the stock so bought.
    The maker of a note given to a bank, when sued by a receiver of its property and effects, cannot enforce, as a counter-claim against the note, a demand against the bank not due, either when the note matured, or the receiver was appointed.
    (Before Bosworth and Woodruff, J. J.)
    Argued, June 8th, and decided,
    October 17th, 1857.
    This action was tried in October, 1856, before Mr. Justice Duer and a jury.
    It was commenced by the United States Trust Company of Hew York, as Receiver of the Empire City Bank, against Dennis Harris, as maker of a note for $10,122.50, dated October 31,1854, payable 60 days after its date, to the defendant’s order, and by him indorsed.
    The complaint alleged the making, indorsement and delivery of the note, by the defendant, to the Empire City Bank, a banking association under the Act of the 18th of April, 1838, and the Acts amending the same; the non-payment of the note at maturity; that the said bank had been declared insolvent by the Supreme Court, and that the plaintiff had been appointed receiver of its property, and owns said note; and prayed judgment for the amount of the note, with interest from its maturity. The complaint was verified on the 16th of May, 1858.
    The defendant answers:—■
    I. That no “ good, valuable or lawful consideration” was ever given, or paid, for the note, by the bank; but it was obtained by the bank from the defendant “ fraudulently,” “ without paying any consideration therefor.”
    H. That “the officers of the bank solicited the defendant to become a stockholder therein, and made false representations as-to the value of the stock; and, relying upon it, the defendant bought 400 shares of the stock, and gave the note therefor; that the officers knew, and the fact was, that the stock was worthless.”
    III. That “ the Empire City Bank, at the time of its receiving the said note, was a moneyed corporation, carrying on its business in the City of New York, under and by virtue of an Act, entitled “An Act to authorize the business of banking,” passed April 18th, 1838, and the several Acts amending and in addition to the same; and that the said note was taken and received by the said bank, for the amount of the stock of the said bank issued to the said defendant, and was discounted, by the said bank, contrary to the provisions of the first section of the first article of the second title of the 8th chapter of the first part of the Revised Statutes of the State of New York, entitled “ Regulations to prevent the insolvency of moneyed corporations, and to secure the rights of their creditors and stockholders;” and that “the receiving of the said promissory note in manner aforesaid is thereby prohibited, and was unlawful and void, and the said note was also void.”
    IY. That, “ on his consenting to take or purchase” $10,000 “ of the stock of the said Empire City Bank, on the representations of its officers that it was worth over par, the defendant,” “ to secure the payment” of said $10,000, assigned to Isaac O. Barker, a director of the bank and chairman of its finance committee, a bond and mortgage for $12,933, made by one George Birkbeck, and, “for the accommodation and at the request of the said bank, he also made and gave to the bank the note” sued on, “ for the amount of said stock,” and said bond, and mortgage, and note were transferred .to the plaintiff at the same time, and are now in its possession, as receiver; that such assignment of the bond and mortgage was unlawful and void, and the note is also void. He denies that the plaintiff is the lawful owner of said note.
    V. The answer alleges, by way of counter-claim, that, on the 13th of November, 1854, at the request of, and to accommodate said bank, he made and delivered to it his seven promissory notes, amounting to $20,000; that, in an action pending in this Court, (when this suit was commenced,) between the plaintiff and this defendant and others, this Court decided, in August, 1855, that the plaintiff should surrender to the defendant so many of 'such n'otes as had come to the hands of the plaintiff; that three of said notes. had been negotiated by the bank before the plaintiff was appointed receiver—one for $2024.80, being held by the Bull’s Head Bank, and one for $5062.01, being held by Beebe & Co.— and that they are still outstanding against the defendant. In November, 1854, after the defendant was a director, at the request of the bank, he lent it his note, at 30 days, for $2000, which is past due, unpaid and outstanding.
    “ And the said defendant further states, that,- on or about the first day of November, 1854, the said Empire City Bank hired a banking house of the said defendant for the period of two years, at the rate of $2,000 per annum, and on the first day of May, 1855, the sum of $1,000 for such rent was in arrear and unpaid by the said Empire City Bank, and the same still remains due and unpaid to the said defendant; which said several items the defendant will insist upon and give in evidence at the trial of this cause, by way of set-off or counter-claim to the demand of the said plaintiffs in this action.
    “ Wherefore, the defendant demands judgment, that the said complaint be dismissed, with costs.”
    The answer was verified on the 2d of January, 1856.
    The plaintiff served a reply, putting at issue the material allegations of the counter-claim.
    On the trial of the issues, the plaintiff read the note described in the complaint in evidence, and produced an exemplified order of the Supreme Court, dated January 29,1855, declaring the Empire City Bank insolvent, and appointing the plaintiff receiver of its property and effects, and rested. •
    The defendant gave testimony, tending to show that, in October, 1854, there was an interview or negotiation between Abraham M. Bininger and the defendant and others, of the one part, who were arranging, as associates, to organize a bank, to be called the National Exchange Bank; and William Adams, Jonathan Purdy and Leonard H. Church, on behalf of the Empire City Bank, of the other part, in relation to the defendant and his associates becoming stockholders and officers in the Empire City Bank; that the inquiry was made, whether this bank was solvent. One witness, Mr. A. M. Bininger, said that “ Creamer represented to us (viz., the defendant and his associates) that the stock was worth 114 on the books, and that it was worth cash 104, and we told them, (viz., Adams, Purdy and Church,) if what Mr. Creamer had represented was true, we were willing to come in, and the committee, as I understood it, assented to it.”
    Defendant and his associates then agreed to take $75,000 of the stock of the Empire City Bank; and the bank was to be removed to the corner of Greenwich and Duane streets, to a banking house owned by the defendant. Bininger was to be president, Creamer cashier, Church, who was then cashier, was to be vice-president, and Harris, Mabee and Dorr, to be directors.
    Mabee & Dorr paid cash for their stock. Harris, the defendant, took stock to the amount of $10,000. Bininger was elected director and president on the 23d of October, 1854. The bank suspended payment on the 9th of December, 1854.
    Evidence was given, by both parties, as to what was said at the interview before referred to, and as to the actual value of the stock at that time. Bininger, on his cross-examination, among other things, said, as follows:—
    “We had no proposition from the Empire City Bank when we met their committee, unless the proposition of Creamer was made by their authority; the committee were, Mr. Adams, Mr. J. Purdy and Mr. Church; I do not know that any representations were made by the committee, except that myself and Mr. Harris stated that Creamer had made representations that the stock was worth 114 on the books, and 104 cash, and they assented to the statement; Mr. Adams stated to us that the proper mode was for us to make an examination of the books ourselves; he thought it was hurrying up the matters too much; I think Mr. Harris stated the price was 98 in the market.” . . . “ I was a witness upon the proceeding before Judge Roosevelt, in relation to the insolvency of the bank, in January, 1855 ; that proceeding resulted in declaring the bank insolvent; I made an estimate of the value of the stock, and stated on oath before Judge Roosevelt, that I thought the stock was worth 70 per cent.” .... “Harris’s note was taken after I became president; the note was presented for discount ; I do not know that it was discounted by the board, but think it was referred to the finance committee, consisting of the defendant and Isaac 0. Barker; the $75,000 of stock was not taken; including Harris’s stock there was about $12,000 only taken.”

      Isaac 0. Barker, “sworn and examined- on the part of the plaintiff, said:—I was one of the directors of the Empire City Bank, and for a short time vice-president; Harris requested us to discount his note for the stock he was to take; we refused, and he then offered the note in this action, and a bond and mortgage of Birkbeck, as collateral security; we took it and discounted the note; the bond, mortgage, and assignments, now produced, are the papers referred to.”
    - “It was proved that two of the notes of Dennis Harris, mentioned in the answer, and on which a counter-claim was made— one amounting to $5062.01, and the other for $2,000—held by Bee-bee & Co., had been paid out of the proceeds of a mortgage foreclosed in this Court under a decree of this Court, but that the costs of Beebe & Co. in suits brought on the notes had not been paid; and Goodman, the attorney of Messrs. Beebee & Co., testified that the suits on those notes were still pending, and that he intended to prosecute the same for the recovery of his costs thereon, if he could.”
    Some other items of the evidence are stated in the opinion of the Court.
    The case on which the cause was heard at the General Term, concludes thus, viz.:—
    “ When the testimony was closed, the cause was summed up by the counsel for the respective parties, and the counsel- for the defendant requested the Judge to charge:—
    I. That the note on which the suit was brought, was without consideration and void.

      H. That the defendant gave the note, under false representations, of the officers or directors of the bank, as to the value of the stock.
    NI. That the note was received and discounted, in violation of the statute; that the issuing of the stock, which was issued and transferred to the defendant for the note, was illegal, and the note was void.
    TV. That there was nothing due from the defendant to the plaintiff, even if the note had been valid; and that the defendant had a just counter-claim, or set-off, equal to the whole amount of the note; which said several points, the Judge stated he should refuse to charge, and should overrule for the purposes of this trial, and should reserve all questions of law for the General Term; to which ruling of the Judge, the counsel for the defendant then and there excepted; and then the Judge charged the jury, and stated to the jury that there were certain.questions of fact, which it was proper for them to decide, and to find specially, and he thereupon submitted to them the following questions, viz.:—
    I. Were the shares of the capital stock of the Empire City Bank entirely worthless on the 23d day of October, 1854 ?
    II. Did any of the officers of the bank, on or before that day, represent to the defendant that the said shares were worth par or more than par ?
    III. If you answer yes, to the last question, did the defendant, upon the faith of such representation, agree to purchase the shares of the stock which, soon thereafter, were transferred to him?
    IV. If such representations were made, were they made in good faith—that is, in the honest belief of their truth ?
    On the first question, the Court charged, among other things, that, as all the assets of the bank had passed into the hands of the receiver, the best evidence of their value that had been given, was that of the secretary of the receiver, from which it appeared that, at present, the stock was worthless.- The burden of proof was, "therefore, upon the plaintiffs, to show that, on the 23d of October, the time of the union of the two banks, the stock was worth more than it is at present, and that it had depreciated since that time; and, if the jury did not consider that the plaintiffs had shown such depreciation since that time, they should answer the first question in the affirmative. To which charge of the Judge, the counsel for the plaintiffs then and there excepted.
    The Court directed the jury to answer the said questions specifically, and to find a verdict for the plaintiffs for the full amount claimed, subject to the opinion of the Court at General Term, on a case to be made, and subject to adjustment.”
    The jury brought in a sealed verdict, and answered the questions submitted to them, as follows:—
    I. “Were the shares of the capital stock of the Empire City Bank entirely worthless on the 23d day of October, 1854 ?
    A. Yes.
    II. Did any of the officers of the bank, on or before that day, represent to the defendant that the said shares were worth par or more than par ?
    A. Yes.
    III. If you answer yes, to the last question, did the defendant, upon the faith of such representations, agree to purchase the shares of the stock which, soon thereafter, were transferred to him ?
    A. Yes.
    IV. If such representations were made, were they made in good faith—that is, in the honest belief of their, truth ?
    A. Yes.
    And the jury also find a verdict for defendant; but the Court, deeming the verdict to be inconsistent with the special finding of the jury upon the questions submitted to them, set aside the same, and ordered a verdict for plaintiffs for $11,397.91, subject to the opinion of the Court at General Term, upon exceptions taken upon the trial, and also upon the case to be made, and also subject to adjustment as to the amount.
    To which action of the Judge, in directing the verdict to be changed as aforesaid, the counsel for the defendant then and there excepted.”

      John M. Mason, for plaintiff.

      Gerardus Ciarle, for defendant.
   I. The note in question was given without any good or valuable consideration, and is therefore void. The ostensible consideration was a certain amount of the capital stock of the said bank, which the jury have found was entirely worthless when the bargain was made. The capital of the bank was entirely gone. And where the article sold turns out to be of no value, it is not necessary to show it was returned.

II. The defendant entered into the contract, and gave the note, under a misrepresentation of the officers of the bank as to the value of'the stock; and the jury have found that fact, and that the defendant was induced thereby to enter into the contract. This rendered the contract fraudulent and void. And where the representations are false, and the defendant is injured thereby, the sale will be voidable, although the vendor did not know whether they were true or not. And if there be misrepresentation, without any fraudulent intent, it is still a fraud in law, and will vitiate the contract. And even if the officers of the bank believed in the truth of their representations, it will not exonerate the bank; if such representations were false, it will still be a fraud in law. If the ignorance of the officers, who made the representations- as to the condition of the bank, arose from the unquestionable negligence of such officers, it is as fatal as if the falsehood was intentional.

III. The alleged consideration was illegal, and therefore void. It appeared that the stock transferred to the defendant for the note was (wholly, or in part) stock which the bank had caused to be purchased at auction, and stood in the name of Elijah F. Purdy, one of the directors, in trust for the bank, in violation of the statute. (1 R. S., 589, 3, 1; 3 Corns. 479, 485, 486, Gillet v. Moody; 5 Barb. R. 12, Leavitt v. Blatchford.)

1. The condition of the bank was such as to preclude the idea that such stock was purchased with surplus profits: it was purchased in order to prevent the stock being depressed below a certain figure. 2. And it was illegal to have such stock purchased, or held, in the name of any person in trust for the bank. 3. And if any part of the stock transferred to the defendant, under the contract, was stock thus purchased and held in trust for the bank, (and therefore an illegal consideration,) it rendered the whole contract void ; it being an entire contract, if any portion of the consideration was illegal, the whole contract was void. A contract is entire, whenever the consideration agreed upon is single and entire.

IV. If the contract or act of the "bank, in buying in their own stock and selling it again, was illegal, then the securities taken for it are void. And the bank’s buying the stock in the name of Purdy cannot legalize the transaction.» When a statute prohibits an act, on the part of a corporation, that act cannot be legalized by being done indirectly. (9 Cowen, 463, McCarthy v. Orphan Asylum; 3 Coms. 487, Gillett v. Moody.)

V. The bank practised a deceit upon the defendant, as to the kind of stock they transferred to him, which rendered the contract void. The defendant contracted with the bank to take $10,000 of their original stock, the object evidently being to increase the capital of the-bank, and not to afford individual directors an opportunity to sell portions of their stock at par, when it was selling at auction at a greatly reduced price, even if it could be sold at all. But the bank did not transfer to the defendant any original stock, but, partly, stock which they had illegally purchased at auction much under par, and, partly, stock claimed to be owned by one of the directors. 1. If such stock was held in trust for the bank, the trust was illegal and void, as already shown. (1 R. S. Part 1, Tit. 2, Ch. 18, Art. 1, § 7.) 2. If it was the property of such director, then the bank had no title nor right to sell it, and the sale was void. (1 R. S., 3d ed., in respect to sale of stock not owned by the seller. See also 2 Kent’s C. 603, last ed., note b.)

VI. The note is void, by reason of its having been received and discounted in violation of the statute. (1 R. S. 589, Part 1, Tit. 2, Ch. 18, Art. 1, § 1.) In this case, the evidence is, that the note was received by the bank in payment for stock which the defendant agreed to subscribe for, or take, and that it was discounted. There was, therefore, an entire violation of the provisions of the statute in this respect; and any securities taken contrary to the positive provisions of a statute are void. (2 Kent’s C. 597, 598, 599, last ed.; Chitty on Con. 570.) And a party to such contract may take advantage of such illegality. (Chitty on Con. 570, 571, note; Id. 576, last ed.)

VII. There was error in" the Judge’s directing the general verdict, found by the jury in favor of the defendant, to be changed into a verdict for the plaintiff. It being an action for the recovery of money only, the jury had a right to find a general verdict. (Code, § 261, (216,) p. 274, last ed.) And, as the special finding of facts was not inconsistent with the general verdict, the Judge had no authority to change it under § 262 of the Code.

VIII, It was part of the arrangement, between the bank and the defendant, that the former should hire the banking house of the defendant, at the corner of Greenwich and Duane streets, for two years, from the 1st of November, 1854, at the rent of $2000 per annum, as will appear by the minutes of the board of directors. The bank took possession of the banking house, under the agreement, and transacted their business there, but failed in about thirty days thereafter. The building was not otherwise rented or occupied during the two years, and the bank is indebted to the defendant for the two years’ rent, amounting to $4000.

IX. Upon the whole case, the defendant is entitled to judgment.

By the Court. Bosworth, J.—The

cause of action, stated in the complaint, is a promissory note for $10,000, made by the defendant, dated the 31st of October, 1854, payable 60 days after its date, and alleged to have been made and delivered by the defendant to the bank.

The answer sets up four defences:—

1. It alleges, generally, that the bank paid no value for the note, and obtained it fraudulently from the defendant.

2. That the note was given to the bank for shares of its stock, amounting to $10,000, which stock the defendant bought of the bank, by reason of false and fraudulent representations of its officers, that the stock was worth above par, when, in truth, it was worthless and of no value.

3. That the note was received by the bank, “ for the amount of the stock of the said bank issued to the said defendant, and was discounted by said bank, contrary to the provisions of the first section” of the article of the Revised Statutes of New York, entitled, Regulations to prevent the Insolvency of Moneyed Corporations, and to secure the Rights of their Creditors and Stockholders,” whereby, it is insisted, that such reception of the note was unlawful, and that the note is void.

4. That on defendant’s consenting to purchase $10,000 of the stock of the bank, at the request of its officers, and on certain representations made by them as to its value, he, at the request of the bank, to secure the payment of said $10,000, assigned to one of its directors a bond and mortgage, made by one Birkbeck, for $12,933, and at the request, and for the accommodation of the bank, he made the note in question for the amount of the stock, and gave it to the bank, and that the note and bond and mortgage were transferred to the plaintiff at the same time, and are in its possession, as receiver.

It insists that this assignment of the bond and mortgage, and also the note, are void.

The answer then sets up a counter-claim, the particulars of which need not be stated.

When the evidence was closed, the defendant requested the Court to charge several propositions, which “ the Judge stated he should refuse to charge, and should overrule for the purposes of this trial, and should reserve all questions of law for the General Term.” To which ruling of the Judge, the defendant’s counsel then excepted.

The Judge then submitted four questions of fact specially to the jury, and directed “ the jury to answer the said questions specifically, and to find a verdict for the plaintiff for the full amount claimed, subject to the opinion of the Court, on a case to be made, and subject to adjustment.” Fo exception was taken to this form of submitting the cause to the jury, or to the instruction to find a verdict for the plaintiff, except such as may be involved in the previous exception to the refusal of the Court to give the instructions requested.

The jury answered each of the four questions. The case further states, “ that the jury also found a verdict for the defendant; but the Court, deeming the verdict to be inconsistent with the special finding of the jury, upon the questions submitted to them, set aside the same, and ordered a verdict for plaintiff for $11,397.91, subject to the opinion of the Court at General Term, upon exceptions taken upon the trial, and also upon a case to be made, and also subject to adjustment as to the amount.”

To which action of the Judge, in directing the verdict to be changed as aforesaid, the counsel for the defendant then and there excepted.”

In our view of this case, in the form in which it is presented, it becomes necessary to determine whether the Court at General Term must treat it as one in which a general verdict has been rendered for the defendant, whereby all controverted facts have been determined in his favor, except those found in answer to the questions specially submitted.

If that view of the case should be taken, the plaintiff cannot have judgment in its favor, unless entitled to it upon the facts found in answer to the four questions, although all the other material facts in issue should be found in favor of the defendant.

In such a view of the case, it would be improper for the Court to look into the evidence, to be influenced by its own conclusions of fact, as it would form them upon the evidence. It can only look at the facts established by the general verdict, and those found in answer to the four questions submitted.

If the latter are consistent with the former, a general verdict for the defendant would entitle him to a judgment. If inconsistent with the general verdict, the special findings must control it, and such a judgment be given as they require.

The Court, at the trial, could not have ordered a general verdict for the plaintiffs, unless of the opinion that, upon the evidence, all the controverted facts, except those embraced in the questions submitted, were clearly with the plaintiff.

It is the province of a jury, in every action for the recovery of money which may be submitted to them, to find either a general or special verdict. (Code, 261.)

The jury were instructed to find a general verdict for the plaintiff, but they disregarded the instruction and found one in favor of the defendant.

According to the case, we are not at liberty to conclude, that on rendering their verdict, the jury were reminded that they had probably forgotten the direction to find a verdict for the plaintiff for the amount of its claim, and that thereupon the jury corrected an unintentional error, and gave a general verdict for the plaintiff.

The case states that the Court set aside the verdict, and ordered one in favor of the plaintiff, because the general verdict was deemed to be inconsistent with the special finding upon the questions submitted. >

It could not be set aside for any such reason, even if the fact was as the case states it was assumed to be. Judgment might be given for the plaintiff, notwithstanding, if the facts specially found warranted it, but the general verdict would remain on the record in the form it was rendered.

Although the general verdict was vacated at the trial, we do not feel at liberty, in disposing of the motion before us, to decide the case otherwise than as we should deem it our duty to do, if the verdict had been left as the jury rendered it.

In this view, the defendant has recovered a general verdict in his favor, and certain facts have been specially found.

Do the facts, thus specially found, entitle the plaintiff to a judgment, although all the other material facts, put at issue by the pleadings, are to be deemed to have been found for the defendant ?

As to the first and second defences, it is enough to say, that the jury have found that the defendant purchased $10,000 of the capital stock of the bank; that, although its value was misrepresented, the representations made were merely expressions of an erroneous but honest opinion. Its value was a matter of estimate and opinion, and there can be no pretence that any thing was done to mislead the defendant. He was invited to examine the condition and assets of the bank, and had an opportunity to do so.

The special finding negatives the defence of fraud, and .the stock, although found to be worthless, had enough of value to uphold a promise to pay the stipulated price. To constitute a defence to an action to recover the contract price for property sold, it is necessary to prove more than that the vendor entertained and expressed an erroneous opinion as to its value, in which the purchaser chose to confide, instead of exercising his own judgment exclusively, or consulting the opinions of others more competent to judge of it than himself. He must show that some deceit was practised, to put him, off his guard. (McCracken v. Cholwell, 4 Seld. 133; Johnson v. Titus, et al., 2 Hill, 606; Fay's Adm. v. Richards, 21 Wend. 626; Van Epps v. Harrison, 5 Hill, 63-69.)

Although the jury have found the stock to have been worthless at the time of the defendant’s purchase of it, the evidence is clear that it was sold at auction in the following November, at 82 and 82 per cent.; and that the defendant, in fact, actually sold $2000 of it, in amount, and transferred the other $8000, as security for a loan. It had enough of value, in the absence of all fraud or deceit in the sale, to make the purchaser of it liable to pay the contract price.

With reference to the fourth defence, it is obvious, inasmuch as that asserts that the defendant purchased the stocks, and as the jury have found that it was, in fact, purchased, and without any fraud practised by the bank or its officers, that the defendant should pay the note, as he gave it to the bank for the amount of the stock, although the bank requested, as an accommodation to itself, that this evidence of liability for the purchase should be given. On the theory of the fourth defence, the stock was the consideration for the note, and the note was given for the stock, and this particular obligation was given to accommodate the bank—the accommodation consisting in its having the defendant’s note, which it might possibly use, while the credit was running, instead of the transaction being left to result in a mere claim for stock sold and delivered.

The third defence is the one of most difficulty. That asserts, that the note in question “was taken and received by the said Empire City Bank, for the amount of the stock of the said bank issued to the said defendant, and was discounted by the said bank, contrary to the provisions of the first section” of the article of the statute referred to.

We think it just to hold, that the defendant meant to be understood as alleging that this note was given and received for the stock so issued, or was discounted to furnish the defendant the means to pay for the stock.

We therefore assume, as the most favorable view for the defendant of which the terms of this part of the answer admit, that the note was delivered and received in payment for the stock, or that the note was made and discounted to furnish means to the defendant with which to pay for the stock.

These were the facts which the defendant attempted to establish at the trial; and, on the argument before us, it was contended by the defendant that such facts were sufficiently proved.

Sub. 3 of the 1st section of the article of the Revised Statutes, which is alleged to have been violated, declares it not to be lawful for the directors of any moneyed corporation to discount or receive any note “in payment of any instalment actually called in and required to be paid, or with the intent of providing the means of making such payment.”

This language clearly refers to an original subscriber for stock, and to the payment of the sum so subscribed. The object of this statute is, to require an actual cash payment of the whole subscription ; and sub. 4 is designed to prevent the withdrawal of any part of it, by discounting any note of such stockholder, with intent to enable him to withdraw it.

It becomes material, therefore, to ascertain in what sense the word “ issued” is used in setting up this defence.

The second and fourth defences describe the transaction as a purchase by the defendant of the capital stock of the bank.

The third, fourth and fifth of the defendant’s printed points, presented on the argument of the present motion, assert, that the stock which the defendant purchased, and for which the note in suit was given, was stock which the bank had previously bought at auction, for its own benefit, which purchase is alleged to be illegal, because, as it is insisted, the bank could have had no surplus profits with which it could purchase or pay for it.

The jury have found, in answer to the third question submitted, the fact of an actual purchase of the stock, and of the transfer of it to the defendant.

We think it just to conclude, that the word “issued,” as employed in stating the third defence, was employed as synonymous with transferred or assigned; and that no more was meant to be affirmed, than that the bank had sold and transferred $10,000 of its capital stock, and taken this note in payment, or had discounted the note to furnish means to the defendant to make such payment.

We have not been referred to any statute declaring it to be unlawful for a bank to sell, on credit, shares of its stock which it may have previously purchased, or to take a note for the amount, payable at the expiration of the stipulated credit. Unless such a statute exists, the fact of such a sale, on credit, and receiving the purchaser’s note for it, would not render the note void.

The fact that the bank had previously purchased this stock at auction, and paid for it out of its capital, instead of its surplus profits, is not alleged in the answer; and that fact, if it were so, would not prevent its acquiring title to the stock so purchased, as between itself and its vendor. To what consequences or penalties the directors, consenting to such a transaction, might be subjected, is a question which does not now arise.

The bank having become owner of the stock, and having sold and transferred it to the defendant, he is liable to pay for it the price at which he bought it.

We conclude, therefore, that there is nothing stated in the third defence, after conceding the fact to be, as the jury have found, that the stock alleged to have been “ issued” was stock transferred” to the defendant, on a purchase of it by him from the bank, which can exempt the defendant from liability to pay the note which he gave for it.

If we look into the evidence, with a view to ascertain whether the trial proceeded on the theory of the third defence being such as we have construed it to be, we shall find that it is free from doubt, that the defendant purchased this amount of stock from the bank, after it had been organized and was in full operation.

It was not attempted to be proved that the defendant was an original subscriber. It also appears that the stock was paid for in money. The note was, in fact, discounted; but the evidence is entirely satisfactory, that the bank refused to discount it, to furnish the defendant means with which to pay for the stock, and that after such refusal, it was discounted, upon the collateral security of a bond and mortgage for its payment at maturity; and the evidence is quite strong, that the stock was paid for, by a check drawn on another bank.

As to the supposed counter-claim, we think that none is stated.

It consists of a claim for rent of a building, hired of the defendant for two years from the first of November, 1854, at a rent of $2,000 per annum.

The receiver was appointed the 29th of January, 1855, the note in suit fell due on the 2d of that month, and no rent would be due until November, 1855. Such rent could not be set off in this action.

We think there is nothing in any of the defences alleged, assuming so much of them to be true as stated, as is not negatived by the facts specially found, which can impair the legal effect of the facts established; viz., that the defendant purchased stock of this bank to the amount of $10,000, and agreed to pay that price for it, and that he was not induced by fraud to make the purchase; and, having taken a transfer of the stock on such a purchase, he is liable to pay the contract price. And, if we must assume that the note was given for the stock, we think it is valid, and that judgment should be entered for the plaintiff on the verdict.

Judgment was entered accordingly.

        The City Sank of Columbus v. Bruce & Fox, (17 N. Y. R. 507.)

        The City Bank of Columbus v. Bruce & Fox (17 N. 7. R. 507).


source: Caselaw Access Project

author: By the Court. Woodruff, J.

license: Public Domain

text:
    Barbara Burger, by her next friend, plaintiff and respondent, v. Thomas White, et al., defendants and appellants.
    It is within the discretion of the Court, after the evidence is stated to he closed, to open the case, and permit further evidence to be given.
    When a party, moving for a new trial, is not entitled to it, as a matter of right, he can not, on an appeal by him from an order granting it on terms, procure its reversal by reason of such terms. They are matters resting purely in discretion, and are not reviewable on appeal.
    Where a husband does nothing for the support of his wife, and she, having a separate property, employs herself in trading therewith, with his knowledge and assent, he neither assisting nor interfering therewith, such property does not become, in equity, liable for his debts. It remains, with its proceeds and profits, her sole and separate property. Freeman v. Oner, (6 Duer, 476,) commented on, and distinguished from this case.
    (Before Bosworth and Woodruff, J. J.)
    Heard, June 17th; decided,
    November 7th, 1857.
    This action comes before the Court, at General Term, on an appeal by the defendants from an order granting a new trial, in respect to the question of damages, on terms, and also from the judgment entered on a verdict in favor of the plaintiff.
    It was tried in June, 1855, before Mr. Justice Bosworth and a jury. The plaintiff is a married woman.
    The action was brought by her, January 3d, 1855, against the defendants, for taking and carrying away, on the 30th of December, 1854, and converting to their own use certain meats and other provisions, being the stock in trade of a butcher’s stall, which she claims as her separate property.
    The defendants justify the taking, under an execution against Michael Burger, (husband of the plaintiff,) and deny that the goods, etc., taken, were in the possession of the plaintiff, or were her property.
    The evidence given on the part of the plaintiff, on the trial, tended to show, that in 1850 or in 1851, or in both years, the plaintiff, by inheritance, and as next of kin, became entitled to a share in the estate of her father, and that, about that time, it was collected by her brother-in-law, Charles Burger, under a powerof attorney, and brought to this country, to the amount of several thousand dollars.
    That, for several years past, her husband has passed his time about porter-houses, leading an idle life—doing nothing for the support of his wife.
    That in October, 1854, prior to the taking complained of, the plaintiff purchased, with a portion of the money received from the estate of her father, a butcher’s shop in the First Avenue, in this city, and stocked it with meats, employing her brother-in-law, Charles Burger, to make the purchases, kill the cattle and collect bills.
    That she devoted her own time and labor, daily, to the business, superintending the shop, etc., employed another assistant and paid him, and carried on a “large business.” There was evidence that her husband knew of this, and he was sufficiently shown to have assented to it.
    The goods taken were the meats, etc., in the shop so occupied by her. Whether the business was profitable or not does not distinctly appear, and it is impossible, from the evidence, to say whether any portion of the property taken was obtained by investing profits previously accrued. Some of the evidence would indicate, that the principal moneys invested were greater in amount than the value of the property found as damages by the jury.
    On the other hand, there was evidence tending to impair the credibility of Charles Burger, the plaintiff’s principal witness, and some evidence that the plaintiff’s husband sometimes assisted his wife in the shop.

      The defendants’ counsel requested the Judge to charge the jury, that, in case either Jacob Burger (the husband) or the plaintiff bestowed their daily labor in and upon the business carried on, and “ such labor was a part of the avails with which the property in dispute was purchased, then, in that case, the plaintiff could not recover.”
    The Judge charged, among other things, that a married woman, having no property of her own, cannot carry on business, and, by purchasing in her own name, or on her own credit, become the owner of the property so used, nor of property purchased with the profits resulting from such business. That, in judgment of law, such property is the property of her husband, and may be taken on an execution against her husband. But that she may buy, with her separate estate, any property she pleases, and it will be hers, and cannot be taken on such execution, and she may sell any property which she has so bought, and the consideration received will be hers.
    That the husband is entitled to the services of his wife, and is bound to provide for her support.
    That, in this case, the practical question is, did she (the plaintiff) purchase this property exclusively with her own money, and carry on the business without any assistance from, or interference of her husband. If she did, and. if he did nothing for her support, she is entitled to recover, notwithstanding she bestowed her labor and services in and about the business, and thus added, to the extent of their value, to the profits of the business; but if she allowed her husband to interfere with the business, or to control it, or if he labored in it in carrying it on, it must be treated by you (the jury) as his property, and the defendants will be entitled to your verdict.
    To the refusal of the Judge to charge as requested, and to that portion of the charge which stated that, notwithstanding she bestowed her labor, etc., she might recover, if her husband did nothing for her support, etc., as above recited, the defendants excepted.
    On the trial, after the parties had both rested, and the summing up was begun, the Judge opened the case to permit proof of the value of the property taken; and it being stated by the defendants that their witnesses on that subject had left court, the Judge gave the defendants until the next morning to produce their witnesses on that subject.
    A motion was made for a new trial, upon what precise grounds it does not appear, but the Judge at Special Term, apparently, thought that the defendant may have been surprised by this course of proceeding, in regard to the question of the value of the property, and made an order permitting a new trial, if the defendants would confine the inquiry, on such trial, to that sole question.
    The defendants appealed, as well from the order made on the motion for a new trial, as from the judgment entered upon the verdict.

      J. M. Eager, for respondent (plaintiff).

      A. L. Pinney, for appellants (defendants).
   By the Court. Woodruff, J.

There was no sufficient ground for ordering a new trial, as upon a verdict against evidence. The testimony is, in some degree, conflicting. That of the plaintiff’s principal witness, Charles Burger, is, in some particulars, contradictory of itself. The credibility of some of the” testimony was in question, but, after a careful examination of the evidence, as it appears on paper, we are clear that the verdict of the jury must stand. Even though we were suspicious of the truth of the plaintiff’s case, we should be constrained to say, that, with the witnesses before them, the jury were better able to dispose of the questions of fact, amid inconsistencies, contradictions and questions of integrity in the witnesses, than we are; and as the case now appears, on paper, we cannot say that a preponderance of evidence is not in the plaintiff’s favor.

As to the qualification, annexed by the Judge at Special Term, it must suffice to say, that the granting of the new trial was not a matter of right, if the verdict was not against evidence, and no rule of law was violated; and upon this view the Judge at Special Term appears to have acted. No error was committed by the Judge at the trial, in opening the case, after the parties had rested: it was entirely discretionary with him to do so or not.

The permission, therefore, given at Special Term to the defendants to try the question of value further, was a mere privilege—it was not a right.

If, therefore, no error in law was committed at the trial, the judgment and the order appealed from must both be affirmed.

Whatever subdivisions may be made of the subject, there is, in ' truth, but one question, viz.: Where a husband does nothing for the support of his wife, may she employ her separate property in trade, bestowing therein her own time and labor, and yet retain the capital and profits as her separate estate? or does the fact, that her services are devoted to the prosecution of the business, make the whole property her husband’s, or subject it to the payment of his debts?

The jury, in this case, must be taken to have found, that the property, employed by the plaintiff in her business, was purchased by her, with her separate estate received by her from her father.

That her husband is, what the witnesses have described, in terms of marked significance, an idle fellow;—

That he has, for some years, passed his time around porterhouses and beer-cellars, and does nothing for the support of his wife.

That, left in this way to provide for her own support, she has -occupied herself in conducting a meat shop, and invested therein her own separate property; and if any profits have been derived from this employment of her separate property, combined with her labor, both capital and profits, now, consist in the meats which the defendants have seized, as the property of her husband, and applied to the payment of a judgment against him.

The case of Freeman v. Orser, decided at the General Term of this Court, in March, 1866, must be taken to decide, that where a married woman having a separate property engages therewith in trade, and she and her husband unite their labor and services in carrying it on, living together, apparently, out of the proceeds of the business so jointly conducted, and the profits of such business are added to the capital employed, the whole property loses its separate character, and ceases to be exempt from liability for the husband’s debts.

With this rule, as applied in the case then before the Court, we do not deem it necessary to contend.

Nor do we deem it necessary to refer to the authorities discussed in the opinion of Mr. Justice Slosson in that case, nor to repeat the able argument by which the conclusions are sustained.

If, in the progress of those arguments, propositions are stated which are in conflict with the right of the plaintiff to retain her verdict in this case, we think they should be understood with reference to the state of facts then before the Court, and should be limited to the circumstances to which they are applied.

With the statement of the general rules applicable to the separate estate of a married woman, and her power over it, we fully concur.

The general rule, that a husband is entitled to.the services of his wife, is not abrogated by the Statutes of 1848 and 1849. But it may be plausibly, and, we think, justly insisted, that those statutes, in conferring upon her the power to receive, hold and dispose of property, as if she were a feme-sole, have, by necessary implication, authorized her to devote so much of her time to her separate estate as may be necessary for its care and disposal. A power to receive, hold and dispose of property, would seem to imply the right to employ therein so much of her time and labor as may be necessary, to enable her to avail herself of the benefit of the statute.

Again, the general rule, that a married woman is not competent to make contracts binding herself personally, is not altered by the statutes referred to. But, on the other hand, she could, in equity, charge her separate estate, before these statutes were passed; and she certainly has no less power, in that respect, under the acts referred to.

A married woman could not, as a general rule, become a sole trader, and enjoy the proceeds and profits of a business carried on by herself, except in virtue of a valid arrangement, amounting, in substance, to a settlement assented to by her husband. But, under such an arrangement, she would be protected in equity, and the profits of the business would be deemed her separate estate, and would not be liable for the debts of the husband. Such an arrangement was, ordinarily, effected by the intervention of trustees, and, now, it may, no doubt, be effected without that intervention.

An agreement, made by the husband, in articles executed before marriage, in consideration of marriage, that she might carry on business on her sole account, would secure to her, her earnings in such trade, as her separate property, and those earnings would, in equity, be protected. Under the statutes referred to, trustees being dispensed with, she may, under such ante-nuptial contract, employ her separate estate in business so carried on.

A settlement, made by a husband after marriage, though binding on himself and his representatives, may be impeached by his creditors as a voluntary settlement, unless it be made upon valuable consideration. But it is not clear, that, under all circumstances, the assent of the husband to her employing her own time, in the care and management of her own separate property, is to be deemed a gift to her which creditors of the husband may impeach ; still less does it follow, because her services have been so devoted to the management of her property as to have added thereto, that, therefore, her husband’s creditors may treat the whole as the property of the husband, and seize it for his debts. We are not aware that the existence of the conjugal relation gives to the husband’s creditors such a right to her services, that the assent of the husband may not permit her to employ them, for her own benefit, in any manner she may choose. The argument is, that, though her husband’s creditors cannot compel her to labor for their benefit, still, if she do labor, and her labor is productive, although her husband assent to her enjoyment of the fruits of her labor, his creditors may dissent, and may take those earnings, in spite of both.

But there is a consideration, connected with the case before us, which may, and ought to affect the rights of the present plaintiff, in a manner not forbidden by the principles above adverted to, nor by the case of Freeman v. Orser.

The title of a husband to the services of his wife, is connected with his correlative duty to support her. The wife is entitled to her support, and, if her husband do not furnish it, she may earn it for herself. To this we apprehend there will be no dissent.

Again, under a statute, giving to her the right to hold, and enjoy, and dispose of her own property, and the rents,.issues and profits thereof, as if she were a feme-sole, she has the clear right to invest that property as, in her discretion, she sees fit; and if such investment be productive of profits, the profits are her own; and we think it equally clear, that she may intrust it to a third person to trade therewith, and account to her for the profits.

And if her husband do not support her, and she is, therefore, put to the necessity of employing her own labor to obtain a support, we perceive no reason, in equity, why she may not devote that labor to the care and management of her separate property, making it thereby productive for her own maintenance.

This is no new doctrine. Though a husband could not, after marriage, make a voluntary settlement of property upon his wife" which creditors might not impeach; yet, it is said, that if a husband agree, in articles before marriage, that his wife may carry on business on her sole account, or if he permit her to do so afterwards, what she earns will be her sole and separate property, subject only to such demands arising in the trade which should properly be charged upon it. And the case of a married woman deserted by her husband, seems to us to be, in principle, like the present; for, surely, in a court of equity, it can make little difference whether a husband departs, abandoning his wife altogether, or neglects his duty to support her, spends his a time at porterhouses and dram-shops, virtually abandoning her, and adding to her trial the mortification of sharing in some degree his disgrace.

The case of Cecil v. Juxon, (1 Atk. 278,) is an example of desertion. The husband deserted his wife and children, and went abroad. Her friends provided her with goods with which to carry on business as a milliner, and permitted her to take the profits. Out of her savings, she lent money and received notes. After an absence'of some years, the husband returned, possessed himself of the goods used in her trade, and of the notes received for her loans. The Court of Chancery, on her application, declared, that she was entitled to them, as her separate property, and decreed accordingly.

See this subject discussed, and other cases referred to, 2 Roper on Husband and Wife, p. 171-2, etc.

We conclude, with saying, that this case is distinguishable from Freeman v. Orser, in this, that there the business was carried on by the husband and wife jointly, though in the wife’s sole name. The earnings of the wife were not distinguishable from those of her husband; it was impossible to identify her sole and separate property; it had been absorbed in the business, and blended with his and her earnings.

We think, that where a husband does nothing for the support of his wife, and she, having separate property, employs herself in trading therewith, with his knowledge and assent, he neither assisting nor interfering therewith, such property does not become, in equity, liable for his debts. It remains, with its proceeds and profits, her sole and separate property.

This Court, being bound by the rules of equity, as well as of law, are bound to recognize the equitable rights of the plaintiff in this respect.

It follows, in our judgment, that there was no error in the Judge’s charge, of which the defendants can complain. The Judge went very far in their favor when he said, that, “ if she allowed her husband to interfere with the business,” the property must be treated as his property.

The judgment and order appealed from must both be affirmed.

        Freeman v. Orser (5 Duer, 476).,


author: By the Court. Duer, Ch. J.—We

text:
    Levy v. Cavanagh, Receiver, etc.
    When the owner of goods delivers them to an auctioneer to be sold on his account, being, at the time, a clerk and book-keeper of the auctioneer, and the auctioneer, with the knowledge of such, owner, and without objection from him, de- ■ posits, from time to time, the proceeds of such sale, and the proceeds of sales for others, and all moneys he receives, to his general credit in bank, and draws, from time to time, against such deposits, checks to pay debts owing to his customers, and his general expenses, such owner will be deemed to have assented to that course, and he will become a general creditor of the auctioneer, having such rights as the other general creditors, and no greater.
    A receiver of the property of such auctioneer, duly appointed, in proceedings against him supplementary to execution, will, as such, be vested with the legal title to the moneys on deposit, and be entitled to payment of them by the bank, in preference to the creditors owning the goods, the proceeds of which have been so deposited.
    A check drawn by such auctioneer, in favor of such owner, on such bank, for the amount of the proceeds of his goods, after such appointment of the receiver has been perfected, and notice thereof given to the bank, and an assignment of an amount of such deposit equal to the amount of such check, will give such owner no right of action against the bank, nor any right to the moneys on deposit, they having been paid into court, to abide the result of a suit to determine the relative right of such owner," and of such receiver to them.
    When such owner, in an action against the receiver to enforce his claim to, and to recover such moneys, as part of the case made by his complaint, states the drawing of the check and the making of such assignment, and a demand of the ( moneys by virtue thereof, and proves such facts by such assignor on the trial, is the plaintiff in the judgment on which, and for whose benefit such receiver was appointed, admissible as a witness, in such action, for such receiver ?
    (Before Duek, Ch. J. and Woodruff, J.)
    Heard, October 6,
    and decided November 14,1857.
    This action comes before the Court, at General Term, on a verdict ordered to be taken in favor of the plaintiff, for the amount of his claim, subject to the opinion of the Court on a case to be made, and directed, at the trial, to be heard in the first instance at the General Term. It was tried in December, 1855, before Ch. J. Oakley, and a jury. The action was commenced against the - Union Bank, as defendant.
    The plaintiff seeks to recover the amount of a check, drawn by Edward Schenck, on the Union Bank, for the sum of $138, and dated January 23d, 1855. It was presented on that day to the bank for payment, which was refused. Schenck then executed a written assignment to the plaintiff of the check, and of a like sum standing to his credit on the books of the bank, reciting, that this amount was due for goods of the plaintiff, which Schenck had sold as auctioneer, and the proceeds of which he had deposited in such bank. The said check and assignment were both presented, and payment again demanded and refused. On the 18th of said January, the defendant, on proceedings supplementary tó execution against said Schenck, was duly appointed a receiver of all his property, and, on the 20th of said January, gave notice thereof to the Union Bank. On petition of the Union Bank, Cavanagh, as such receiver, was substituted as defendant, and answered the complaint, claiming the moneys on deposit, as such receiver. The complaint alleged the making and presentment of the check, the execution of the assignment, and presentation of that; a demand of payment on each occasion, and a refusal to pay it. On the trial, Edward Schenck was sworn, as a witness on- the part of the plaintiff. He was objected to as incompetent, on the ground that the action was brought for his immediate benefit, which objection was overruled, and the defendant excepted. He proved the check and assignment, and they were read in evidence. That, being a licensed auctioneer, he sold, during January, 1855, various articles for the plaintiff, the whole amount. being $138. That the check and assignment were given for this $138. That these moneys, and the other moneys which he received in the prosecution of his business, were deposited, promiscuously, to his general credit in the Union Bank. Such deposits, commencing on the 2d of December, 1854, and continued to a date subsequent to the deposit of the moneys received on the sales of the plaintiff’s goods, were twenty-seven in number, and amounted to $8,457.89. The smallest deposit made in January, 1855, was $109.40, and the next smallest was $183. The plaintiff frequently went to the bank with Schenck’s bank-book, and made the deposits. He was, at the time, in the employment of Schenck, as book-keeper. Schenck, from time to time, drew against such deposits, to pay his customers and his personal expenses.
    "When the plaintiff rested, the defendant moved for a dismissal of the complaint, on the grounds, that neither the check nor the as signment, nor both together, gave to the plaintiff a right to the money; and that the deposit of the moneys received for the plaintiff’s goods, being a general one, and the moneys being thereby mingled with other moneys, their identity was lost, and could not be traced so as to entitle the plaintiff to recover. The motion was overruled, and the defendant excepted.
    The defendant then proved his appointment as such receiver, by an order dated the 18th of January, 1855, and the service of a certified copy thereof on the Union Bank, on the 20th of January, 1855, with a notice, in writing, that it was such a copy, and demanding payment to him, as such receiver, of the moneys deposited by Schenck with the bank, to the amount due to the plaintiff in the action in which he was such receiver, being about $550, including interest and costs.
    Patrick Monaghan, such plaintiff, was then offered as a witness for the defendant, and was rejected, as being the party for whose immediate benefit this action was defended. The testimony being closed, the defendant renewed his motion to dismiss the complaint, which was denied, and he excepted. A verdict was then ordered for the plaintiff, as already stated. On a case showing these proceedings to have been had, the action now comes before the Court, at General Term, for its judgment.

      E. Pierrepont, for plaintiff. •

      F. Byrne, for defendant.
   By the Court. Duer, Ch. J.—We

are clearly of opinion, that, upon the evidence given on the trial, the plaintiff was not entitled to recover, and that when the parties rested, the complaint ought to have been dismissed, or the Judge should have instructed the jury to render their verdict for the defendant.

It may be admitted, that the moneys arising from the sale of the plaintiff’s goods, so long as they remained in the hands of Schenck, the auctioneer, and could be identified, were as much the property of the plaintiff as the goods of which they were the proceeds. But, if the plaintiff permitted Schenck to treat the moneys as his own, by blending and mixing them with his own funds, or those belonging to other persons, so that they could no longer be traced and identified, he thereby gave credit to Schenck for their amount, and from that time his claim against the latter was in no respect distinguishable from that of an ordinary creditor.

It became, in effect, a loan to Schenck of the sum received by him, payable on demand.

We think that the proof in this case was conclusive, to show that such were the facts. The plaintiff made no demand of the proceeds of his goods when they were received. He was in the employ of Schenck, not merely as his clerk, but as his book-keeper, and sometimes went with the bank-book to make deposits on his account. He, therefore, knew that it was the custom of Schenck to deposit in his own name, and to his own credit, all the moneys that he received from sales, including his own commissions, and to draw upon this common fund, not only for payments to his customers, but for his own personal expenses. With this knowledge he must be deemed to have assented, by his silence, to the deposit that was made of his own funds; and there is no pretence for saying, that the deposit so made created any privity, in law or y in equity, between him and the bank. Its only effect was to make Schenck the creditor of the bank, and himself the creditor of Schenck.

When an auctioneer sells the goods of a principal, under an immediate duty, to pay over the proceeds, if, without the knowledge or assent of his principal, he deposits those proceeds in a bank to his own credit, we do not doubt that a court of equity would interfere and restrain the fraudulent agent from applying the funds to his own use, and would even hold, that the principal was entitled to receive them in preference to other creditors. But where there is no allegation nor proof of fraud, and, a fortiori, when the proceeds of a sale are so deposited with the knowledge and assent of the principal, there is no precedent nor principle that could justify such an interference of a court of equity on his behalf. •

We have, therefore, no difficulty whatever in holding, in the present case, that the whole fund, including the deposit of the moneys of the plaintiff standing to the credit of Schenck on the books of the Union Bank, on the 11th day of January, constituted a debt due to him from the bank, and that the whole title to this debt, both in law and equity, was transferred to, and became vested in the defendant on that day, by force of his appointment as receiver. Notice of his appointment was given to the bank on the 20th day of January; and consequently, if, after that day, the bank had paid to the plaintiff, as holder of the check, or as assignee of Schenck, the sum which he demanded, the payment would have been made, in its own wrong, of money belonging to the defendant and the creditor whom he represents.

We add a few words, to guard against a conclusion, that might otherwise possibly be drawn from our decision. We are not to be understood as saying, that when an auctioneer deposits in a bank, in his own name, the proceeds of goods entrusted to him for sale, with the mere intent, and as the mode of providing for their, safe keeping until their payment shall be demanded, a court of equity would not protect the entire fund for the benefit of the owners of the goods, not only against its misapplication by their agent, but against the claims of other creditors. But where, without any fraudulent intent, or violation of instructions, the moneys are not only placed to the credit of the agent in his general account, but that account embraces as well the moneys used by him for his own personal expenses, as the proceeds of goods sold; and all the moneys received by him, from whatever source, are mixed and blended together in their mode of deposit. The sole relation in which he then stands is, that of creditor of the bank, and of debtor to the owners of the goods. Nor have those owners any remedy against him or the funds deposited, except such as may belong to them in common with all other creditors, or may be acquired by their superior diligence.

It remains, only, to notice the exceptions that were taken to the admission of Schenck as a witness, and the rejection of Monaghan, the judgment creditor, upon whose application the defendant was appointed receiver. The first exception is so plainly untenable, that it requires no observations; and we think that the second, for, the reasons that I shall briefly state, was also groundless.

The defendant asserts his title, as receiver, for the sole benefit of Monaghan. His relation to Monaghan is that of an agent, acting under an immediate duty to pay over to him, as principal, the moneys which, as receiver, he is authorized to collect. It is true, he acts under the authority, and subject to the control of the Court or Judge by whom he was appointed; but the right of Monaghan, as the judgment creditor, upon whose application he was appointed to receive the moneys he may collect, is indisputable. Monaghan was, therefore, offered as a witness to prevent the recovery of money to which, if the legal title is adjudged to belong to the defendant, he, as a sole cestui que trust, will be immediately entitled. He was, therefore, properly rejected, according to the decisions in this Court, in Catlin v. Hansen, (1 Duer Rep. 329,) and St. John v. The American Mutual Life Insurance co., (2 Duer, 419).

It is, perhaps, doubtful, from the form of the case, as before us, whether we have authority, now, to render judgment for the defendant, dismissing the complaint. We think the safest course will be, to set aside the verdict, and order a new trial; but if, upon a second trial, no additional and material facts shall be proved on the part of the plaintiff, the defendant will be entitled to judgment.

New trial ordered; costs to abide the event.

       Is it clear, that Monaghan was rightly excluded as a witness, even conceding that the action was defended for his immediate benefit. If Schenck, a witness for the plaintiff, is the assignor of a thing in action, and that thing in action was the subject of the action, then Monaghan could have been examined in his own behalf, unless he is to be excluded merely because he is not, nominally, a party to the action. If an actual party to the action, and the only person interested as a-defendant, he could have been examined, simply, because the plaintiff had examined the assignor of a thing in action, in a suit to recover the thing so assigned, or its equivalent. (Code, § 399.) But, by § 396, Monaghan’s right to be examined was as perfectas if he had been a party to the action. The plaintiff sought to recover, partly, by force of the check’s operating as an assignment, and by force of the assignment of $138 of the moneys on deposit, actually made. He gave both in evidence, and proved them, by Schenck, his assignor. Unless it can be said, that he rested his right to recover, solely or substantially, on the ground, that the moneys deposited, to the amount of $138, were his property, because they were the proceeds of his goods, and no claim was made, based on the fact of the assignment, then it would seem that his examination was that of an assignor of a thing in action, and that such examination gave the right to Monaghan to be examined, in his own behalf, to the same matters to which Schenck had been examined. It is proper to observe, however, that there is nothing, in the printed points, furnished to the Court on the appeal, which indicates that any of the views here presented were suggested to the Court on the argument.


text:
    Taylor and others, Plaintiffs and Appellants, v. The Atlantic Mut. Ins. Co., impleaded, etc., Respondents.
    When a vessel, along-side of a public pier in the city of New York, is, accidentally and without fault of her owner, burned, and sinks to the bottom, near the mouth of the slip or basin, thereby so obstructing the slip and bulkhead as to prevent other vessels celling in; those entitled to the slippage, or wharfage, cannot recover for the loss thereof, caused by such obstruction, from the owner of such vessel, without showing that such owner, by due care and attention, could have removed the wreck, or, at least, have shifted its position so as to prevent its being a cause of injury, and that he is in default for not having done so. Held, that the allegations of the complaint in this action did not show any such ability, on the part of the owner, or any such default.

      Held, also, that an insurance company, which had insured an undivided interest in such vessel, and had accepted an abandonment, made by such insured owner, after the vessel was so burned and sunk, was not liable for loss of slippage, or wharfage, caused by such obstruction, it not being alleged that, by due care and attention, it could be removed.
    Such piers and bulkheads are open to the common use of the public, for any purposes connected with the loading, unloading or repairing of vessels, and securing their cargoes, whether in vessels afloat or sunk, not prohibited by statute or the lawful ordinances of the Common Council. And such a use, when it neither incumbers the bulkhead or pier, so as to incommode the loading or unloading of vessels, or the passing or repassing of carts, nor in any way injures the structure itself, gives no right of action to the party entitled to slippage and wharfage.
    Hence, a use of the slip in attempting to raise the vessel and recover the property-in it—especially as such attempt was made at the request of the plaintiffs—was held to create no liability to make compensation for such use, as no facts were stated showing such use to be wrongful, or an invasion of the plaintiffs’ rights, or a violation of any duty which the defendants owed to them.
    (Before Duer, Ch. J, and Bosworth, and Woodruff, J. J.)
    Heard, October 24th;
    decided, November 14th, 1857.
    This action comes before the Court at General Term, on an appeal by the plaintiffs, from an order made by Mr. Justice Hoffman, on the 8th of January, 1857, sustaining a demurrer interposed by the Atlantic Mutual Insurance Company, to their complaint, and directing judgment to be entered in favor of the defendants so demurring, with liberty to the plaintiffs to amend their complaint, within twenty days after notice of such order. Moses Taylor and others are plaintiffs, and The Atlantic Mutual Insurance Company, and six other insurance companies, which are named in the body of the complaint, and Loftis Wood, Richard Eccles and William H. Webb are the defendants. The complaint and demurrer, exclusive of the title of the action, are as follows:—
    “ The complaint of the above-named plaintiffs states, that the pier, No. 29 East River, in the City of New York, was, on the 26th of December, 1853, and still is, owned, one undivided half part thereof by the plaintiffs, and the other undivided half thereof by the Corporation of the City of New York. That the plaintiffs are the owners of the bulkhead or wharf, and water-right, on the west side of said pier No. 29. That, by an agreement between the plaintiffs and said Corporation, prior to the date last mentioned, the plaintiffs above named were, thereafter, and still are, entitled to receive all the wharfage, slippage, advantages, or revenues derivable from the west side and half of said pier, and from said bulkhead, and the said Corporation, of the east side and half of said pier. That, on the west side of said pier, is a slip or basin extending out from said bulkhead about 470 feet, of which the plaintiffs have been, and still are entitled to the free and unobstructed use, where vessels of all sizes have been accustomed to enter and remain along the west side of said pier, and along said bulkhead, and receive and discharge cargoes, being liable to pay* wharfage to the plaintiffs, and. the plaintiffs being authorized to charge and collect wharfage at fixed rates, according to the tonnage of the vessel. That the ship Joseph Walker, in the usual course of business, for several days prior to the date aforesaid, had been made fast along the west side of said pier, and had been receiving on board a cargo, composed mostly of cotton, resin and grain, being liable to pay to the plaintiffs a per diem wharfage. That, on the night of the said 26th day of December, 1853,.the said Joseph Walker was, in a few hours, accidentally burnt to the water’s edge, and sunk, in her position along the west side of said pier, near the mouth of the slip or basin, in about thirty feet of water, at medium tide, carrying down with her a large part of her cargo, spars, etc., and so obstructing the slip and bulkhead as to prevent other vessels from coming in. That several of the owners of the Joseph Walker, and who, in the aggregate owned f-§ parts thereof, had insurance on their interests in said ship, as follows:—in the Atlantic Mutual Insurance Company, $ on ■If parts of the ship; in the New York Mutual Insurance Company, $ on -Jfe parts; in the Eeliance Mutual Marine Insurance Company, $ on parts; in the Astor Mutual Marine Insurance Company, $ on part; in the Bun Mutual Insurance Company, $ on part; in the Union Mutual Insurance. Company, $> on -fo parts; in the Mercantile Mutual Insurance Company, $ on A parts; and that the remainder of said Joseph Walker was not insured, and was owned as follows:— Loftis Wood, Eichard Eccles and William H. Webb, each owned ■gs parts thereof. That, immediately upon ■ the sinking of the Joseph Walker, the owners who were insured as aforesaid abandoned the wreck, so far as they were concerned, to the above-mentioned underwriters, who thereupon accepted of the abandonment in due form, so as to vest the ownership of the property so insured in said underwriters. That, after several weeks of unnecessary and unreasonable delay, and while said wreck was so sunken, as aforesaid, the defendents agreed, with one Captain Bell, to raise and recover the said wreck and property so sunk, or such part thereof as he could, for the benefit of the defendants, and to remove the same; and that he should have from them, as compensation therefor, 75 per cent, of what the property recovered might bring at auction sale, the defendants to have the balance. During the spring, summer and autumn of 1854, various efforts were made by him in pursuance of the agreement, and others who who acted under said agreement, and at the instance of the defendants, to raise and secure the said wreck and property of the defendants; that, as a means for so doing, they brought into the said slip, and kept there, for several months, three or four other • vessels, or hulks, and various machinery and fixtures, so as almost wholly to close up the slip and bulkhead, and encumber said pier, and render said slip, and pier, and bulkhead nearly valueless to the plaintiffs, during the time, for the usual purpose of wharfage or revenue, or for other purposes, some of which other hulks, machinery and fixtures have also been sunk in said slip, when so employed, where they yet remain in the way also of vessels; that the wreck of the Joseph Walker, and said other obstructions still remain sunken on the bottom, in said slip, near said west side of said pier, and to the great injury of the plaintiffs ; that the defendants have not attempted to remove the said wreck, as they were in duty bound to do, and as the plaintiffs have often requested them to do, from the said slip, but have wrongfully, and in violation of the plaintiffs’ rights, made use of the said slip, and pier, and bulkhead as a working place, when they could raise, the said wreck so as to enable them to secure and remove the spars, rigging, iron, timbers and other such property connected with said wreck; that the defendants, as the legal, owners of the said wreck, have been guilty of great and unreasonable negligence and delay in the removal of the said wreck and obstructions, whereby the plaintiffs’ accustomed revenue derivable from the said pier and dock, or basin, has been greatly interfered with and injured, and has been greatly lessened from the fair and usual amount thereof, and the plaintiffs have suffered great and lasting injury and damages, to the amount' of ten thousand dollars. The plaintiffs, therefore, demand judgment against the defendants, in the sum of ten thousand dollars, besides interest and costs of action.”

      Demurrer.
    “ The defendants, The Atlantic Mutual Insurance Company, demur to the complaint, and specify the grounds of objection to the complaint—1. That there is a defect of parties. 2. That the Mayor, Aldermen and Commonalty of the City of Hew York are necessary to be made parties to the action as defendants. 3. That the complaint does not state facts sufficient to constitute a cause of action. 4. That the complaint does not show any obligation, or duty, in these defendants, for the non-performance of which these defendants are liable. 5. That the complaint does not show any fault of these defendants, in the sinking of the ship Joseph Walker and cargo where she was sunk, or in preventing the plaintiffs from removing the same, if they desired. 6. That the complaint does not show that these defendants were in the possession, or control, of the ship Joseph Walker, or could have removed the same. 7. That, from the complaint, it appears that the duty of removing the obstruction to the wharf and slip, by the sinking of the Joseph Walker, in law, rests on the plaintiffs or on the Mayor, Aldermen and Commonalty of the City of Hew York, and not on the owners of the said ship Joseph Walker, or on these defendants, in whole or in part. On all which grounds of demurrer these defendants insist that the complaint should be dismissed, with costs and a proper allowance to these defendants.”

      M. Merrill, for plaintiffs and appellants.
    ,, Daniel Lord, for defendants and respondents.
   By the Court. Bosworth, J.—The

complaint does not allege that the wreck of the sunken vessel can be removed. It states, that various efforts have been made to raise it, and that some of the hulks, machinery and fixtures, employed in the efforts made to raise it, have also been sunk, in the slip, while so employed. It is not alleged that the hulks, machinery and fixtures were sunk by reason of any negligence or want of skill, in the persons employed, nor that they were not appropriate instrumentalities for the removal of the wreck.

In White v. Crisp, (26 Eng. Law & Eq. R. 532,) the Court con- " strued the allegations of the complaint to mean, that, up to and at the time of the injury complained of, “ the defendants, to whom the sunken ship had been transferred, exercised the possession, control, and management, and direction thereof.”

Of that construction, the Court remarked: “Now, we understand by this, that the defendants had it in their power, -by due care and exertion, to have altogether removed this vessel, or to have shifted, at least, its position, and so might, reasonably, have been able to have prevented the injury. If these words do not mean, this, we think there was no liability on the part of the defendants.” We consider this a correct statement of the rule of liability, in a case like the present, and that none of the cases cited conflict with it.

There are no words, in the complaint in this action, which can be deemed to import, that the defendants could have raised or removed the wreck of the Joseph Walker, unless the averments, that, “ during the spring, summer and autumn of 1854, various efforts were made by him,” (Captain Bell,) “and others who acted under said agreement, at the instance of the defendants, to raise and secure the said wreck,” imports it. But the complaint, while it does not allege that these efforts were not as well devised and efficient as any that could, reasonably, be made, also states, that this vessel sunk in about thirty feet of water, at medium tide, and still remains sunken on the bottom, with the hulks, machinery and fixtures, which were also sunk, in the efforts made to raise her. These statements do not favor an inference that the wreck could be removed.

The complaint further states, that “the defendants have not attempted to remove the said wreck, as they were in duty bound to do, and as the plaintiffs have often requested them to do, from the said slip.” But no facts are stated, as creating a duty to remove the wreck, except that the vessel was burned, by accident, and sunk to the bottom, and that various unsuccessful efforts had been made to raise it. The allegation, that it was their duty to remove the wreck, is of no importance, in the absence of averments, that it could be removed by the defendants, and that they retained the control and management of it.

There is no allegation, in the present complaint, in those terms, or of that import. The plaintiffs’ request, that the defendants should remove the wreck, would not, of itself, create a duty or liability.

We think the complaint does not state facts enough to show' that the vessel could be removed, and, consequently, not enough to make it the duty of the defendants to remove it.

For these reasons, the further allegations, “that the defendants, as the legal owners of the said wreck, have been guilty of great and unreasonable negligence, and delay, in the removal of the said wreck and obstructions, whereby,” etc., neither of themselves, nor in connection with the preceding averments relating to the same point, constitute a cause of action. Negligence in not removing, or delay in removing that which it is not shown can be removed, cannot be imputed to the defendants.

It being affirmed that the vessel was burned by accident, and sunk to the- bottom, the defendants, to whom she was subsequently abandoned by her insured owners, are not liable to the plaintiffs for any loss of wharfage which they have consequently suffered, until the defendants are shown to be under an obligation to remove the vessel, and to be in default for .not having done so. There are no facts, stated in the complaint, sufficient to support either of those conclusions. Hancock v. The York and C. Railway, (10 Com. Bench Rep. 349.)

No fault can be imputed to either of the insurance companies, arising from, or which caused, the sinking of the vessel. They had no agency in producing that result, and were not interested in the vessel, as part owners, until after she had been abandoned to them by the owners of parts 26/32 thereof, and subsequently to her being sunk.

The only other allegations, which it can be pretended constitute a cause of action, are to the effect that the defendants “ have wrongfully made use of said slip, and pier, and bulkhead, as a working-place when,” (or whence,) “they could raise the said wreck, so as to enable them to secure and remove the spars, rigging, iron, timbers, and other such property connected with said wreck.”

It will be observed, that this clause of the complaint characterizes the use made of the slip as being as truly wrongful as that made of the pier and bulkhead. The wreck could not be removed or raised without using the slip. Whether it could be done, if at all, without using the pier and bulkhead, the Court cannot so clearly see. It is not affirmed that proper efforts could be made as efficiently, without using the pier and bulkhead as with using them, nor that effectual efforts could be made without using both. The complaint states, that the plaintiffs have often requested the defendants to remove the wreck from the slip, and that, during the spring, summer and autumn of 1854, Capt. Bell, and others, acting under the agreement made between him and the defendants, and at the instance of the latter, made various efforts to raise the wreck.

Such a request gave the defendants the right to employ all means to raise the wreck which they, in the honest exercise of their discretion, deemed best adapted to ensure success, and to make any use of the slip, pier and bulkhead which they deemed necessary, and to which means and use the plaintiffs tacitly assented, by not objecting to it.

The piers and bulkheads are open to the common use of the public, for any purposes connected with the loading and unloading of vessels, the repairing of vessels, and the unloading and securing of their cargoes, whether they be in vessels afloat or sunk, not prohibited by statute, or the lawful ordinances of the Common Council, in relation to the manner of using them. Even if it cannot be, justly, said that the rights of the owners of wharves and piers are created by statute, it may be said that they are dependant upon statutory law, which defines and regulates these ^rights with great minuteness and detail.

The owners of piers and bulkheads have the right to demand wharfage, slippage and cranage from vessels having the use, which, by statute, makes them liable to pay. (Davies’ Laws, p. 551, §§ 212, 213, 215, 218, 224, 228, 230 and 231.)

For discharging “any ballast, consisting of earth, gravel or stones into a dock, or on a wharf, without the consent of the owner thereof, a penalty is given by statute, and when it has been so discharged, without consent, if it is not removed, after the receipt of a written notice to remove it, the owner of the vessel from which it was discharged is liable to pay the same wharfage, daily, as such vessel would be liable to pay.” (Davies’ Laws, p. 558, § 233.)

If any wharf shall be encumbered with lumber or other prop-erty, so as to incommode the loading or unloading, of vessels, or the passing or repassing of carts, the owner is required to give written notice, to the owner of the lumber or other property, to remove it in a reasonable time; and if they be not removed, the owner of the wharf may remove them, and keep them in his custody until the charges of removal and storage be paid. (Id., §^235, and see § 234.) All the statutes, in relation to wharfs and piers, import a right to the public to use their top surface, without charge, for any purpose necessarily or properly connected with the loading, unloading or repairing of vessels, without being liable for such use, when it is a use not prohibited by statute or the ordinances of the Common Council.

It is the right of the owners of the sunken wreck to recover and remove so much of their property as they may be able. The fact, that the slip, pier and bulkhead are used for that purpose, is not, of itself, wrongful, nor does it, as a matter of course, entitle the owners of the wharf and pier to be paid for such use.

In order to understand what wreck the defendants have attempted to raise, and in which attempt it is alleged they have wrongfully made use of the slip, pier and bulkhead, and in what manner it is charged that said use has violated the plaintiffs’ rights, we must look at the other parts of the complaint.

In looking at the other parts of the complaint, with this view, we find it stated, that this wreck was sunk, by accident, in water thirty feet deep at medium tide, and remains on the bottom; that it is sunk near the mouth of the slip or basin, and so obstructs the slip or bulkhead as to prevent other vessels from coming in, and, of course, rendering it impossible for the plaintiffs, while that obstruction continues, to entitle themselves to wharfage from other vessels; that the defendants were often requested to remove the wreck from the slip, and that various and unsuccessful efforts to raise it were made during the spring, summer and autumn of 1854.

The use alleged to be wrongful, and in violation of the plaintiffs’ rights, is a use of the slip, pier and bulkhead as a working place, so as, and with intent, to secure and recover the property. It is not charged, that this use incumbers the bulkhead or pier, so as to incommode the loading or unloading of vessels, or the passing or repassing of carts; nor that any notice to desist from such use, or to remove from the bulkhead and pier the property or articles pilaced on them, in connection with using them as a working place, if any have been so placed, has been given.

The complaint, in its specification of the consequences of all that the defendants have done or omitted to do, concludes by charging, that “ the defendants, as the legal owners of the said wreck, have been guilty of great and unreasonable negligence, and delay, in the removal of the said wreck and obstructions, whereby the plaintiffs’ accustomed revenue, derivable from the said pier and dock, or basin, has been greatly interfered with and injured, and has been greatly lessened, from the fair and usual amount thereof, and the plaintiffs have suffered great and lasting injury and damage, to the amount of $10,000.”

On the whole complaint, it must be deemed to be true, that the use of the pier and bulkhead as a working place, to raise the wreck and recover the sunken property, has neither prevented the plaintiffs from earning wharfage, nor diminished their revenues from that source. This must be deemed to be true, because the complaint states, that the sunken wreck so obstructs the pier and bulkhead “ as to prevent vesselsefrom coming in.”

It is not alleged that the use of the bulkhead and pier, as a working place, incommodes the passing or repassing of carts, or the loading or unloading of any vessel that may have been fastened to the end of the pier, or to any part of the bulkhead or pier which may be accessible to any vessel liable to pay wharfage.

We are of the opinion that the defendants have a right to use the pier and bulkhead to recover their sunken property from the slip. That the mere fact of using them, irrespective of the character and extent of the use, is not wrongful, nor a violation of the plaintiffs’ rights. And that unless it be made to appear that the use made of them incommodes the loading or unloading of vessels, or the passing or repassing of carts, or injures the pier or bulkhead itself, no right of action can be based on such use. And inasmuch as the complaint shows that there is an obstruction in the slip, for the existence of which the defendants are not responsible, and which prevents vessels from entering the slip, and thus establishes that it is impossible for either the pier or bulkhead to earn wharfage, it fails to establish, by means of the allegations now under consideration, a cause of action.

A use of the slip under such circumstances, and for the purpose ' for which the complaint states it was used, being lawful, something more is essential, to a good complaint, than an averment that it was used wrongfully, and in violation of the plaintiffs’ rights.

The idea of the pleader seems to have been, that the use itself was wrongful, and in violation of the plaintiffs’ rights, merely because it was used as a working place, for the purpose of recovering the property, and not of removing the wreck.

But a use in that way, for such a purpose, violates no right of the plaintiffs, and the allegation that it was wrongful, and in violation of the plaintiffs’ rights, is not an allegation of a fact, but is the pleader’s view of the nature of the acts which he describes.

We think the order appealed from should be affirmed, with costs.