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    ALBERT G. WOODRUFF, and others, Plaintiffs and Appellants, v. JOHN R. TERRY, Defendant and Respondent.
    I. Bankruptcy proceedings.
    1. Composition meetings of creditors.
    (a) General meeting of creditors, for the purpose of varying the original resolution of composition, and of allowing the debtor to correct his original statement of creditors, by including other pa/rties.

    1. Power op meeting, as to consenting to the addition of others to the original list of creditors, and binding those so added by a resolution extending the term named in the first resolution for the payment of the composition amounts thereby fixed.
    1. It has such power, subject to the approval of the bankrupt court.
    3. Banh'upt court.

      (a) Jurisdiction op, as to composition resolutions.
    1. As to both original cmd additional resolutions, it is vested with jurisdiction upon a certain notice to creditors to inquire and determine whether such resolutions have been passed in the manner directed by law.

      Before Sedgwick and Van Vorst, JJ.

      Decided April 7, 1879.
    1. Attacking jurisdiction collaterally.
    1. It cannot be attacked by evidence showing that the creditors who passed the second resolution were not creditors, because they had received the composition given by the first resolution ; nor by evidence that there was no time to be extended (the resolution being one of extension), because all the composition amounts had already been paid, nor by evidence that an omission to place in the list' of creditors certain creditors (the resolution being one of correction in this respect), was not a mistake inadvertently made ; because all these matters must be regarded as having been passed on judicially by the bankrupt court, when it ordered the resolutions to be recorded.
    (5) Notice, jurisdiction depending on.
    1. If the proper notice is given, jurisdiction is gained, although the park/fails to appear.

    1, Conditions imposed on appearance.
    The imposing by the register, as a condition of being allowed to appear, that the party should prove his claim, does not destroy the jurisdiction gained by the service of notice.
    8. Debts bound, by composition.

      (a) One which became due after a resolution of composition, but before a resolution extending the time to pay the composition amounts specified in the first resolution, and correcting the first list of creditors, by adding the name of the party holding the claim, such pa/rty having due notice of the second meeting, is bound.
    Appeal from judgment for defendant, on verdict directed by the court.
    The action was against the defendant, as indorser of two promissory notes. The first of these notes fell due January 15,1877, and the second, April 15, 1877.
    The defense was, that these debts had been discharged by the effect of a composition made under the bankruptcy act of the United States, in a proceeding in which the defendant had been adjudged a bankrupt.

      The testimony showed that composition proceedings were beguri under section 17 of bankruptcy act of June 22, 1874, which ended in the district court in bankruptcy ordering the resolution to be filed, and the statement of debts and assets to be filed. The plaintiffs’ names as creditors had been omitted. All the other creditors received the amounts provided by the resolution to be paid to them. After this, steps were taken by which a general meeting of creditors was held, for the purpose of varying and adding to the original resolution, by extending the time 'for the payment of the amounts, and also to allow the debtor to correct his first statement by including the names of plaintiffs. This was corrected, and the resolution was varied. Thereupon the' district court ordered the additional resolution to be recorded, and the corrected statement to be filed.
    The court upon this proof directed a verdict for the defendant.

      John Brooks Leavitt, of counsel for appellants, on the points considered by the court, urged, among other things:
    I. (1.) There being confessedly no jurisdiction over us at the outset, none could be afterwards .obtained, because the section points out only a single way in which it could be got, viz., upon a notice of the first meeting “to each known creditor, of the time, place and purpose of such meeting, such notice to be personal or otherwise, as the court may direct.” This must then be followed up by the placing of the credit- or’s name on the statement presented at such meeting. These must both concur. The creditor is, in theory, brought into court by serving the notice by mail or otherwise—whether he receives it is immaterial; if sent, the court has obtained a provisional jurisdiction, which it loses if the name is left off the statement. The proceeding may well be likened to our State court obtaining a provisional jurisdiction, by the granting of a provisional remedy, which jurisdiction is finally ripened by the service of the summons. The analogy is an apt one, for, suppose a judgment entered, showing no service of summons, would such judgment have any force % In the present case, neither notice was sent, nor were we named. Jurisdiction was not obtained over us, and the section provides no other process or way that it may be obtained. (2.) To this it will be answered—the only answer that can be made— the section does provide, there is a clause which gives the court jurisdiction in just such a case, viz., that any mistake in the statement may be corrected. To this we submit.: (a) The clause was not intended to apply to such a case. (5) Even if it were, it has never been acted on in such a way as to give the court j nrisdiction to enter its final order of August 16, so as to bind us. (a) It does not apply. This is not a mistake, it is an omission, a word of wholly different derivation and import. Congress has used both words, and provides for each case. For a mistake it provides relief. For an omission it adjudges a penalty. Here, the mistake of not naming a creditor is specially before comprehended and provided for by itself, so that the subsequent general provision as to the class is not to be stretched to this. Again, there is no provision by which jurisdiction can be obtained over us by the service of a notice for the second meeting. 1. What we did under that notice does not constitute an appearance which will give jurisdiction. It may be said that because these plaintiffs appeared before the register, and again before the court, that for that reason they are bound. The register answers this, he ruled that they were not in court till they proved their claim in the composition proceedings. The practice in the United States courts is to require creditors to prove their debts in the composition proceedings, whether they have proved them in the bankruptcy or not. Until they do so prove in composition they cannot vote, or take part in any way (Blumenstiel Bankruptcy, 412; In re Keller, 18 N. B. R. 332; In re Mathews, 17 Id. 225; In re Scott, 15 Id. 73). This they did not do. They refused to do that which would have waived their rights. So again before the court. Having no standing before the court, they had no right to appear, and the permission of the court to allow their counsel to talk could not give it jurisdiction over them. A court must obtain jurisdiction by the service of some process, authorized by some law, or such an appearance by the party as waives the service of process. In this case, plaintiffs’ first' knowledge of the composition proceedings was the notice served on them. Whether that was proper process is the very point for this court to decide. When they went to the register’s office to find out what it meant, the register himself ruled that they were not before him, unless they acknowledged his jurisdiction by proving their claim; and non constat but that Mr. Justice Blatohfobd held the same way. Now, while we concede that where a court has jurisdiction over the subject matter, and obtains it over the person, many mistakes which may thereafter happen, pending the administering its relief, may be corrected ; yet we dare to affirm, that it has never yet been held, that the correcting of a mistake can give jurisdiction, for the vital reason that there is no jurisdiction to correct. If an attachment is fatally defective, a judgment upon it is equally so, nor can it be made valid by the amendment of the attachment, because the latter must uphold the former. A summons which is void cannot afford jurisdiction to the court ex-y arte to correct it. Atlas may uphold the world, the world cannot uphold Atlas. The case of Thurber v. Blanck (50 N. Y. 80), is an instance of this reasoning. (5) Even if this clause does apply, it has never in fact been applied. There has never been any meeting of creditors, at which this so-called mistake was corrected. Why ? There were no creditors. They had all been paid. They were creditors no longer. Again, it is said that the additional resolution must be passed in the same way as the original one (In re Remsen, 11 N. B. R. 21; In re Asten, 14 Id. 7). Now, a resolution, until formally ordered to be recorded, has no validity. Therefore, it cannot be pretended that we were parties to this proceeding until August 16, the date when this additional resolution was ordered on file. But that was the last order in the premises. On that day, be it conceded, we became parties thereto. The bankrupt should then have called a meeting of creditors to consider his proposition. If they wanted to pass upon it, they must have refunded, and then the proceedings be gone all over again de nono. For we were not bound till we were made parties, and when we were made, we had all the rights which the statute gives to those who are parties. Being brought in by amendment, the case would have to be tried over again as to us. It never has been. Will this court determine that the trial binds us ex post facto f Lastly, conceding everything that defendant may claim as to the clause about a mistake applying to such a case as this, yet, where a composition has been passed, and the payment as therein provided made, and the time within which it was to be made has elapsed, so that the whole thing is out of court, it is then too late to allow the amendment. The court has no longer, even if it had up to then, the power to grant the relief. Mr. Justice Blatchford, in In re Hinsdale (16 N. B. R. 550), says that the proceeding is pending until the time to pay the compromise expires ; thereby admitting, that when that time arrives the cause is ended. Ex parte Mathews (10 L. R. Ch. App. 304), Mellish, J., in speaking of just such a case, says: “It is too late for the court to allow him to have it now.” (This was'in that case really an obiter dictum, but we submit is entitled to great weight.) And he adds: “There is no section of the act that deprives [the creditor] of his rights, and he is therefore entitled to pursue his ordinary remedies as a creditor.”
    II.- We beg to place, what we cannot but think must be a controlling consideration, in a point by itself, though really belonging in Point I. The act says that (upon certain notice) at a certain place, at a certain point of time, if, upon a certain statement, a creditor is named, he is bound ; if not, he is not. That certain point of time in this case was March 1, 1877. That certain place was Register Fitch’s office; that certain statement was a piece of paper, with certain names thereon written. Plaintiffs’ names were not thereon ; and they are not on it to this day. A certain other piece of paper—an additional statement—was, by order of August 16, ordered to be recorded, but that statement was not in existence at this certain place, on this certain day. That additional statement was not the statement presented to the meeting of creditors on March 1. And no order of any court can make that additional statement the one presented to that meeting on March 1. You may pile Ossa upon Pelion; you cannot make a fact, nunc pro tunc, by any subsequent proceedings, order or decree. Not even—if with all reverence we may be allowed the expression—not even the Most High Judge Himself can do that. This court is called upon to examine this certain statement, presented on a certain day, at a certain place, to certain people. It inspects that statement—it finds that our names are not upon it. No further evidence.is material. The act says we are not bound. This is the whole gist.of the case in a nutshell.. The statement is so clear that we should apologize to the court for the length of our argument, and that apology is that the case is one of first impression, and due respect to the court requires its candid submission upon every point that may possibly arise.
    TTT The refusal to direct a verdict for plaintiffs on the second cause of action was error, and the exception thereto was well taken. The resolution accepting the compromise was on March. 1,1877, and was recorded March 16, 1877. The second note did not fall due till a month after, April 13. Defendant’s liability was as indorser. In his petition in bankruptcy he only prayed (he could only pray) for a discharge from his provable debts. A discharge in bankruptcy only affects provable debts (U. S. Rev. Stat. tit. Bankruptcy, § 5119). And where a liability is contingent, like that of an indorser—a liability which may never become fixed, for the contingency may never happen—it is not a provable debt until the event happens, and unless that event happens before the final dividend is declared (U. S. Rev. Stat. § 5069; In re Loder, 4 N. B. R. 190). How, it will be said that there has been no final dividend declared in this case, because the proceedings in bankruptcy were superseded by the proceedings in composition (In re Becht, 12 N. B. R. 201), therefore, the debt was provable ; therefore, it is affected. The answer is obvious. If, as is held in the case just cited, and in a number of others, that proceedings in composition take the place of proceedings in bankruptcy (which we do not deny, for in composition no certificate of discharge is given or is necessary, In re Becht, 12 N. B. R. 201); then there must be some criterion to determine what debts are or are not provable in composition, so as to be affected by the composition proceedings, and as the amendment of the bankrupt act providing for composition does not, in terms, provide what debts shall be provable in composition, it must be deemed that those debts which are provable in bankruptcy shall be, and none other, provable in composition (Lowell, J., In re Trafton, 14 N. B. R. 507, says : “ The word creditor, here plainly means all who have debts provable in bankruptcy”). And analogy then steps in and says that what the final dividend is to bankruptcy, the resolution of compromise of the creditors is to the composition. Because by that resolution is declared what the dividend shall be, and by its very effect it is a final dividend. This must be so. Otherwise, how could an offer of compromise ever be intelligently acted on % The creditors ought not to be compelled to wait five, ten months, ten years for the happening of an event which may not happen. Estates must not be tied up. The very policy of the act forbids this. But the proportion which a debtor can pay and what is the interest of the creditors to accept, could not be determined if that proportion is to be varied by subsequent events. Their resolution, then, is pro Tiac vice the declaring of the final dividend. The same result is reached from another point. Suppose, in this case, that we had been named, and had appeared at the meeting to vote on the resolution, March 1. We could not have proved this second note under section 5069. We could only have been reckoned as creditors for $256.99, in determining the amount in value of the creditors necessary to pass that resolution. As to our ¡second note, we would be unheard. And yet that second note, if provable, might be sufficient to prevent the resolution from being passed by the requisite number of creditors in value. Would not the bankrupt and the other creditors very justly oppose that note being reckoned % They would say, and say truly, it is not a provable debt, it cannot be reckoned. Bow, then, can the bankrupt turn round and say now, it was provable ? But if not provable, it had no standing; if it had no standing, it is unaffected. If unaffected, we must recover on it now. For the only defense to it is certain proceedings, which do not affect it. It is no answer to say the bankruptcy court has passed on this,'for it was never before the court. It is a question which can only be raised in the court where suit is brought, and whether a debt was a provable debt or not, must always be decided in the court where the discharge or composition is pleaded (see In re Halford, 19 L. R. Eq. 436).
    Chamberlain, Carter & Eaton, attorneys, and F. K. Pendleton, of counsel, for respondent, urged:
    I. (A) On behalf of the plaintiffs, it is claimed that the proceedings were irregular.

      First. The creditors, having received the dividend under the first composition, were not entitled to vote. The decision of the bankrupt court, overruling the objection, was correct. I. A discharge in bankruptcy only relieves the debtor from personal liability. The debt is not extinguished (Bowery Savings Bank v. Clinton, 2 Sandf. 117; Storm v. Waddell, 2 Sandf. Ch. 525). A discharge only affects the remedy, and must therefore be specially pleaded (Bircham v. Creighton, 10 Bing. 11). For the same reason an express promise to pay revives the liability (Stern v. Nussbaum, 5 Daly, 382). Proceedings in composition are an alternative method of effectuating the purposes of the bankrupt law (In re Lytle, 14 N. B. R. 458; In re Becket, 12 N. B. R. 201; Mason & Hamlin Organ Co. v. Bancroft, 1 Abb. N. C. 415). They must be specially pleaded (In re Tooker, 14 N. B. R. 35). A composition by a principal debtor does not discharge the surety (Mason & Hamlin Organ Co. v. Bancroft, 1 Abb. N. C. 415). II. The word “ creditors ” in the bankrupt act designates those entitled to share in the estate, without reference to whether the liability of the debtor has been determined or not (U. S. Rev. St. §§ 5092, 5093, 5094, 5096, 5097, 5039). III. The composition under the first resolution was not completed at the time the additional meeting was held. Although the order directing the recording of the resolution and the filing of the statement of debts and assets had been made, the estate still remained in the hands of the assignee, under the control of the court, no final order directing it to be turned over to the bankrupt having been made. Under section 17 of the amendatory act the court had power to set aside the composition. If this had occurred, assuredly these creditors would have been entitled to share in the estate, had any additional dividend been realized.

      Second. That the case at bar is not within the meaning of the clause allowing the statement of debts to be corrected, or an additional resolution, varying the terms of a composition, to be passed. This involves the interpretation of the act itself, and the powers therein granted. I. The bankrupt act is not a penal statute •; on the contrary, it is remedial in its nature, and should be liberally interpreted with a view to effect the purpose contemplated (In re Brentano, 3 N. B. R. 329; In re Silverman, 4 N. B. R. 532). The strict rules of construction which are applied in cases where a special statute gives to a court a power to do a particular act, have no application to a case where general jurisdiction over an extensive subject is given (In re Cal. Pac. R. R. Co., 11 N. B. R. 193). The composition clause, in the first place, provides that it shall only be binding on the creditors named in the statement. This is to prevent a fraudulent omission of any creditor. It is not meant to give to the creditor the advantage of every inadvertence. Hence the act provides that such a mistake may be corrected, when the rights of the other creditors will not be thereby injuriously affected. II. The only limitation to the power to vary the original provisions. is, that such variation shall be without prejudice to any “ person” taking an interest thereunder. The word “person” in the above limitation does not include “creditors” (In re Glover, 43 Law Journal, Bankruptcy, 4). III. The statute contemplates that the correction shall be made after the order confirming the composition (In re Scott, 15 N. B. R. 87; In re Glover [above]). IV. The provision that the composition shall not affect the rights of creditors omitted from the statement of debts was not meant to nor does it in any way qualify the provisions allowing a variation of the terms of a composition and the correction of a mistake in the statement; they relate to entirely different matters. The former limits the effect of a composition completed. The latter regulate the proceedings to effect a composition.

      Third. That jurisdiction of the person of the plaintiff was not acquired. I. The plaintiffs appeared generally in the proceedings in the bankrupt court by filing a proof of debt. II. By the terms of section 17 of the amendatory act every additional resolution must be passed and proceeded with in the same manner and with the same consequences as the original resolution. It is evident that it is an entirely new and independent proceeding, not relying for its validity on anything which has gone before. That the plaintiffs received due notice of the proceedings to pass the additional resolution, and attended at the meetings called for that purpose, is undisputed. It is by the composition accepted by the additional resolution that the plaintiffs are barred. III. The jurisdiction of the district court of the United States is presumed until the contrary is shown. In that respect it stands on the footing of a court of general jurisdiction (Chemung Canal Bank v. Judson, 8 N. Y. 254). Having general jurisdiction of the subject-matter and of the bankrupt, actual notice is not necessary to give the court jurisdiction of the creditors. It is well settled that the omission to give notice to the creditors does not render a discharge void; although a fraudulent omission would sustain direct proceedings to set the same aside (Platt v. Parker, 13 N. B. R. 14; Stern v. Nussbaum, 5 Daly,
      382). By a parity of reasoning, creditors properly described in the statement of debts are concluded by a composition, although they received no notice of the proceédings. In case of a fraudulent omission the proper remedy is by direct proceedings, to set the composition aside (In re Reiman Friedlander, 13 N. B. R. 128). (B) Each and every of the foregoing questions was raised and passed upon in the bankrupt court. That decision is conclusive on these parties. It cannot be attacked collaterally. I. That an adjudication by a court of competent jurisdiction is conclusive on the parties as to every question of law and fact directly involved, is well established, whether the adjudication be by judgment, order or decree (Dwight v. St. John, 25 N. Y. 203). II. The final order in composition is an adjudication, within the above rale, and cannot be called collaterally in question (Beebe v. Pyle, 1 Abb. N. C. 412; Smith v. Engle, 14 N. B. R. 481). III. Where a court, having general jurisdiction of the subject-matter, and the parties appearing, is obliged in the course of regular proceedings before it to pass upon the question of its own jurisdiction in the particular case, such adjudication is within the above rule, and can only be called in question by direct proceedings for review. For all the purposes of the rule the court has jurisdiction (Fisher v. Hepburn, 48 N. Y. 41; Rusher v. Sherman, 28 Barb. 416; Monnell v. Dennison, 17 How. 422; Price v. Peters, 15 Abb. Pr. 197; King v. Poole, 36 Barb. 242; McMahon v. Mutual Benefit Life Ins. Co., 12 Abb. Pr. 28). The adjudication of the district court as to whether it had acquired jurisdiction of the plaintiff, involving, as it does, the interpretation of the bankrupt act, is peculiarly within the rule'of the above cases. The plaintiffs, having taken no step to review that decision, are concluded by it in this court. Was defendant’s liability on the second note discharged by the composition? I. The plaintiffs are concluded by the adjudication in the district court. Beebe v. Pyle (1 Abb. N. C. 412, and 71 N. Y. 20), holds that as to all questions touching the indebtedness, the composition proceedings are an adjudication not to be questioned in another court. If the claim on the second note is not within the effect of the composition proceedings, the. plaintiff should have raised that objection at the time. (a) An adjudication is conclusive between the parties on all questions involved, whether raised or not (Smith v. Eagle, 14 N. B. R. 481). (b) The question was distinctly before the court. It appeared in the proceedings that the debt was due at the date of the meeting at which the correction in the statement was made. By allowing the correction, the bankrupt court in effect held it was not necessary that the liability of the defendant as indorser should have become fixed at an earlier date in order to be discharged by the composition. < It cannot be supposed that the court allowed a correction for the purpose of inserting a claim which would not be discharged. II. Assuming that a composition by analogy to the rule in ordinary proceedings discharges provable debts only. The debt of an indorser may be proved at any time after his liability becomes fixed, and before the final dividend is declared (U. S. Rev. Stat. § 3069). The defendant’s liability on the second note became fixed on April 13, 1877. The meeting at which the additional resolution was passed was held May 4, 1877. The time fixed for payment by the first resolution was April 16, 1877. (a) Payment of the composition corresponds to declaring the final dividend in the ordinary proceedings, (b) The composition accepted at the additional meeting does not relate back to the original proceedings. It is in no proper sense an amendment. It supersedes the former proceedings as completely as if they had lapsed. III. The bankrupt act distinctly specifies what debts shall be discharged by the ordinary proceedings in bankruptcy. The composition clause provides generally that the same shall be binding on all creditors described in the statement of debts. Bamberg v. Stern (Daily Register, January 11, 1878), holds that a debt contracted in fraud, although not discharged by the ordinary proceedings, will be by a composition, if included in the statement of debts (In re Shafer, 17 N. B. R. 116; In re Rogers, 18 Id. 252; Wells v. Lamprey, 16 Id. 205). To the same effect.' The court, commenting on the composition clause, says: “It will be observed that the statute under consideration does not exempt from its operation any class of debts. It in terms declares that the composition settlement shall be binding on all the creditors whose names and the amount of whose debts are mentioned in the statement produced at the meeting at which the resolution has been passed.” In re Haskell (11 N. B. R. 164), holds that the fact that a bankrupt gave a preference is not a reason for refusing to grant the final order in composition, although it would prevent a discharge in the ordinary proceedings. That congress could provide for the discharge of all claims of every kind, by composition or the ordinary proceedings, is evident. The statute expressly limits the effect of a discharge to certain claims. Are these limitations to be considered applicable to composition proceedings? The above cases show—I. That section 5117 of the Revised Statutes, excepting certain provable debts from the effect of a discharge, does not apply to a composition. II. That the causes specified in section 5110 of the Revised Statutes, although they prevent a discharge, are no reason for refusing to confirm a composition. The claim against an indorser, even before the maturity of the note, is a debt, and the holder thereof a creditor within the meaning of the words. So it is held that persons liable for another as indorser or surety, are creditors, and an assignment for the benefit of creditors preferring such claims is not void, although the obligation had not matured at the time the assignment was made (Cunningham v. Freeborn, 11 Wend. 240; Read v. Worthington, 7 Bosw. 628; Hendricks v. Robinson, 2 Johns. Ch. 304; Brainerd v. Dunning, 30 N. Y. 211). If, then, the word “provable” were omitted from section 5119, Revised Statutes, such claim would be discharged. Does section 5119, Revised Statutes, limiting the - effect of a discharge to provable debts, apply to composition proceedings? In re Bailey (2 Wood, 222), Bradley, J., seems to hold that a demand, although not provable, would be discharged by a composition. I. The grounds upon which sections 5117 and 5110 have been held not to apply to composition, would seem equally strong in this case, viz.: The composition clause contemplated leaving all questions to the decision of the creditors. II. The omission to specifically extend its application to cases of composition is significant. III. The limitation should not, by implication, be extended to composition cases, in the absence of a very clear intent to that effect. It will render the resort to composition proceedings impossible in a large number of cases. IV. There would seem to be many reasons for excluding from a share in the bankrupt estate claims of uncertain value. The expense and delay caused to the other creditors if the bankrupt court were obliged to assess the amount of such claims. The opportunity thereby offered for establishing fraudulent and fictitious claims against the estate, to the detriment of the other creditors. From the different nature of the two proceedings, these considerations have much less weight in composition proceedings.
   By the Court.—Sedgwick, J.

The composition, on which the defense relies, is contained in the additional resolution, varying and adding to the resolution passed at a first meeting. If that additional resolution has validity under the bankruptcy act, the plaintiffs are bound by its terms. There had been a former resolution, duly recorded and filed. The additional resolution extended the time' named in the first resolution, for the payment of the composition- amounts, and by force of the act had reference to the statement of debts ordered by the court to be filed, and which was made by the debtor, at the meeting when the second resolution was passed. The statement of debts made for the purposes of the first resolution did not contain the names of the plaintiffs as creditors ; but at a general meeting of creditors, called for the purpose, and which was ■ the same meeting called to vary and add to the first resolution, the statement was corrected by inserting plaintiffs’ names. The additional resolution had reference to the corrected statement.

By section 17 of the bankruptcy act of June 22, 1874 (§ 5103, A), “ The provisions of a composition, accepted by such resolution, in pursuance of this section, shall be binding on all the creditors whose names and addresses, and the amounts of the debts due to whom, are shown in the statement of the debtor produced at the meeting at which the resolution shall have been passed, but shall not afféct or prejudice the rights of any other creditors.” This section clearly' embraces a resolution made by varying or adding to a former resolution.

The statement was corrected by the addition of plaintiffs’ names, under that part of the same section which says, “ Any mistake made inadvertently by a debtor in the statement of his debts, may be corrected upon reasonable notice and with the consent of a general meeting of his creditors.”

The appellants contend that the bankruptcy court had no jurisdiction to order the additional resolution to be filed and recorded. The claim is that the jurisdiction was dependent upon the existence of certain things in fact, and that the court could not gain jurisdiction by adjudging that the facts existed, or, in substance, that actual facts were conditions precedent of the rightful jurisdiction. These facts are, that to vary or add to a composition already made, the resolution must be passed by persons who are then creditors, the words of the section being: “ The creditors may by resolution .... add to or vary the provisions of any composition previously accepted by them that those who passed the additional resolution were not creditors, inasmuch as they had received the amounts under the first resolutions, and thenceforth ceased to be creditors. Also, that extending the time of payment of amounts already paid, did not add to or vary the provisions of the composition previously accepted by them, especially as the statement of debts, although corrected as to plaintiffs’ names, was not a part of the resolution. Also, that the provision “ that any mistake made inadvertently, by a debtor, in the statement of his debts, may be corrected,” does not and was not meant to refer to the omission of a name of a creditor.

The issue is to be determined by ascertaining what the bankruptcy act meant should be presented for adjudication, and its meaning is conclusive. When the terms and true construction show that the court is called upon to examine and decide a particular matter, the court then obtains jurisdiction as to all matters which are involved in the examination, and its decision cannot be re-examined collaterally.

In the proceedings in question, the first steps are taken by creditors and the debtor, and these steps do not, of themselves, involve any adjudication by the court. But a resolution having been passed, the act declares, by a provision that is applicable to both resolutions and additional resolutions : “ Such resolution, together with the statement of the debtor as to his assets and debts, shall be presented to the court, and the court shall, upon notice to all the creditors of the debtor, of "not less than five days, and upon hearing, inquire whether such resolution has been passed in the manner directed by this section, and if satisfied that it has been so passed, it shall, subject to the provisions herein contained, and upon being satisfied that the same is for the best interest of all concerned, cause such resolution to be recorded, and statement of assets and debts to be filed, and until such record and filing shall have taken place, such resolution shall be of no validity.”

This language plainly calls upon the court to pass judicially upon the sufficiency of the preliminary steps, to give a right to have the resolution recorded and therefore made valid. The intent of the act is made more apparent by the consideration that the terms of the act, as to what is necessary to perfect the-composition, are to be construed in their relation to the policy of the whole act, and it must have been meant that the*-district court should have exclusive judicial power in this regard. If this be not so, the district court could be ousted of jurisdiction by any other court, that, upon its own interpretation, should decide that some of the terms now referred to did not have the meaning given to them by the district court.

I. therefore, am of opinion that the district court possessed jurisdiction to determine the validity, under the act, of the rei ipsm of the additional resolution, and also to determine that such resolution was to be applied to “ the statement of assets and debts” that the court ordered at the same time to be filed.

I do not see that the court assumed a jurisdiction not conferred, when it decided that the omission of the plaintiffs’ names from the first statement was ‘ ‘ a mistake made inadvertently by a debtor in the statement of his debts.” The argument is, that the act meant a mistake of a different kind from an omission that resulted in the persons omitted not being bound by the composition. A conclusive answer to this is, that if the position is supposed to be correct, nevertheless, it only shows that an error was made—not. that the court was -without jurisdiction. But to my mind it is not sound, because the provision as to who shall be bound is intended to become operative after the court has exerted its due powers as to an additional statement and resolution. If the omission were a mistake, and has been corrected, then the provision as to who shall be bound does not operate in plaintiffs’ favor.

The general result is, that the court in bankruptcy competently passed upon the matters which the learned counsel for the appellant has maintained could be examined collaterally in this action.

I have not, as yet, intended to embrace the claim that the plaintiffs did not have the notice, which the bankruptcy act provided for them, and therefore that they are not bound by the composition. This may be settled, however, by adverting to the proposition already discussed. Not keeping out of sight that, so far as the first resolution was concerned, the plaintiffs were not bound, it is the fact that they had due notice of the proceedings which ended in the additional resolution, and were therefore bound by the competent action of the court in respect thereto. Their relation to the controversy was the same as it would be if a debtor were allowed to bring an action to establish the validity of a composition agreement against the plaintiffs as creditors, and they, being served with process to answer as defendants, were bound by the result of the litigation, whether they defended or refused to defend. The process having been served, the court could competently require of them, that, before opposing, or as part of their defense, they should make due proof, according to the practice of the court, of their being creditors in fact. Having received due notice, their omission to prove their debt, as ordered by the register, was voluntary on their part, but had no reference to the question of jurisdiction.

I am further of opinion, that the second promissory note, that fell due after the first resolution, but before the meeting for the additional resolution, was bound by the composition. On the literal meaning of the act, and in respect of the assets of the bankru2>t that would go to an assignee, it fell due before any dividend. As to the composition proceeding, it fell due before the opportunity had passed for the plaintiffs receiving an amount in composition, in proceedings that were competently held to be valid. From what has been said, it follows that the plaintiffs are bound by the specification of the amount of indebtedness due to them, as made in the statement presented by the debtor. The plaintiffs had an opportunity to have the amount increased by the small sum which makes the difference, and voluntarily omitted to object. This brings them within the spirit and letter of the provision, that the composition shall be binding on all the creditors whose names and addresses, and the amounts of the debts due to whom, are shown in the statement of the debtor, produced at the meeting at which the resolution shall have been passed.

Judgment affirmed, with costs.

Van Vorst, J., concurred.


source: Caselaw Access Project

author: By the Court.—Sedgwick, J.

license: Public Domain

text:
    JAMES J. THOMSON, as Receiver, Plaintiff, v. CHARLES McGREGOR, Defendant.
    Before Sedgwick and Speir, JJ.

      Decided April 7, 1879.
    I. Receiver's bond.

    1. Sureties’ liability.

      (a) Non-payment by receiver, pursuant to order, made after receiver’s removal ordering him to pay a certain sum, “being balance of trust funds in his hands.”
    1. The surety is liable for the amount ordered to be paid, although not a party or privy to the proceeding resulting in the order.

    1. Defense, what is not. The surety cannot defend, either wholly or in part, on the ground that the receiver before the execution of the bond, had disposed of, or since its execution had properly disbursed the whole of the trust funds, or of a part thereof, so that the whole of the sum mentioned in the order was not at its date in his hands. The order is conclusive on him.

      (a) Condition of bond in this case. “Now the condition of this bond is such that if the said . . . shall henceforth faithfully discharge the duties of his trust as said receiver, then this obligation to be void, otherwise to be in full force and effect.”
    8. Plaintiff, who may be.
    A. One authorized by the court to sue; the bond running to the People of the State of New York.
    B. A receiver appointed in the place of one removed, may sue on the bond, given by the removed receiver; he is the party in interest.
    H. Bond to the people, who may sue on.

    1. See supra.

    Exceptions directed to be heard at general term, in first instance, after verdict directed for plaintiff.

      The complaint, after sufficiently alleging that one Biker had been appointed by the court of common pleas, in an action there pending, receiver of all the property, &c., of a certain firm, further alleged that, in pursuance of an order set out, the defendant here joined in a bond with the receiver, conditioned that if the said Biker ‘ ‘ shall henceforth faithfully discharge the duties of his trust as such receiver, then this obligation to be void, otherwise to be in full force and effectthat by a certain order, &c., afterwards made, the receiver “ was removed from his position as said receiver, and ordered to pass his accounts,” and the plaintiff was thereupon appointed receiver, &c. ; that in the accounting by said Biker, “ an order was, &c., duly made by said court in said action, adjudging that there was a balance then in the hands of him, said Biker, of the trust funds, that he had received as said receiver, &c., of $2,099.27, with interest from, &c., and directing said Biker to forthwith pay said sum to this plaintiff, as receiver, as aforesaid;” that on, &c., the plaintiff duly demanded payment of said sum, &c.
    The answer, in substance, alleged that the said Biker had, from the time of the execution of said bond, in all things faithfully discharged the duties of his trust as receiver ; that defendant was not a party to the proceeding for the accounting by Biker, and had no notice or knowledge of its pendency ; and further, by special averments, that Biker had not violated any duty of his trust.
    On the trial, the plaintiff proved the allegation of the complaint above stated.
    The defense proved that the defendant was -not a party to and had no notice of the proceeding in which the order was made that found the balance against the receiver.
    The defendant further offered to prove by facts specially stated, such as payments made by the receiver before, and proper payments made after, the execution of the bond, that the receiver had performed his duty! The court refused to allow the testimony offered, and exception was taken.
    There were other exceptions noticed in the opinion.
    The court directed a verdict for plaintiff, and further, that the exceptions be heard, in the first instance, at general term.

      Andrew Gilhooly, attorney, and of counsel, for plaintiff, urged:
    I. The bond is to be construed and the rights of the parties to be determined as if the bond had been conditioned in express terms that said Hiker shall henceforth obey all orders of the court, touching the trust fund ; and the order directing payment is conclusive (Schofield v. Churchill, 72 N. Y. 565; Thomas v. Hubbell, 15 Id. 407.) These cases “ are not departures from, or exceptions to the general rule, that a judgment concludes only parties and privies, but do not fall within that rule at all, being dependent only on the principle that one may contract to be answerable to another upon such lawful conditions as he pleases ” (Thomas v. Hubbell, supra). The following cases illustrate the distinction: Douglass v. Howland, 24 Wend. 35; Rapelye v. Prince, 4 Hill, 119, 122.

      W. U. Northrop, attorney, and of counsel, for defendant, urged:
    I. The defendant’s bond was executed more than six months after Riker began to discharge his trust as - receiver, and such being the fact, the wrord “henceforth” was interlined in the condition, so that the obligation was simply that he would, from that time, faithfully discharge his trust. Under this restriction, the defendant executed the instrument, and bound himself only for the faithful discharge of his trust in the future. The court, therefore, erred in ruling that the bond covered all the acts of the receiver before the execution thereof. It is a fundamental principle that “a surety can only be charged where the case is brought within the precise terms of his contract.” “ Thus, the condition of a bond may be considered to explain the obligatory part” (2 Parsons on Cont. 503; Birckhead v. Brown, 5 Hill, 634, 640, 641; McCluskey v. Cromwell, 11 N. Y. 598; Willet v. Kipp, 12 Hun, 476). In the case of Bissell v. Saxton (66 N. Y. 60), the court of appeals say that “the engagement of the surety is for his future, and not his past conduct; and it would be a gross imposition upon them, in the absence of a special stipulation to that effect, to import into their undertaking responsibility for prior delinquencies. ■ This has been frequently recognized” (citing Myers v. United States, 1 McLean, 493; Farrar v. United States, 5 Pet. 372, 389; United States v. Boyd, 15 Pet. 187; Vivian v. Otis, 1 American R. 199; Willet v. Kipp, 12 Hun, 474). The case of Schofield v. Hustis (9 Hun, 157), is clearly distinguished from defendant’s case. The bond filed in that case was conditioned, among other things, that the executor “ shall obey all orders of the surrogate, touching the administration of the estate committed to him.” The court say, “ the bond was not conditioned, that defendant Churchill would account for all moneys received thereafter; it was that he should obey all orders of the court, touching the estate.”
    II. To the accounting of Hiker the defendant was not a party, but an entire stranger, having no knowledge of it until payment of the alleged deficiency was demanded of him. It is therefore submitted that he is in no manner bound or concluded by the order of the court of common pleas on said accounting. Being a stranger to that proceeding against Hiker, he had no opportunity to examine witnesses, or to defend himself, or to appeal from the order (1 Phillips Evidence, 2 ed. 326, 327; 2 Cowen & Hill's Notes to Phillips Evidence, 815, 816, note 569). The case of Hotchkiss v. Platt (7 Hun, 56), by implication, sustains the principle that no one who is not a party to the proceeding can appeal from an order to which he was a stranger, and therefore he is not bound by it, except in certain cases, by the terms of the contract, cited in the 3d point (Swartwout v. Payne, 19 Johns. 294; Bartlett v. Campbell, 1 Wend. 50; Douglass v. Howland, 24 Id. 35, 52-59; Clark v. Montgomery, 23 Barb. 464).
    III. The following cases established the principle that where the surety has notice and acts upon it; or where, by the terms of the contract, he-waives notice of adjustment of his liability; or consents to an ex parte adjustment of the sum he is obligated to pay ; he will be bound to pay the amount fixed upon. This is the essence of his contract, except when he acts on notice (Blasdale v. Babcock, 1 Johns. 518; Kip v. Brigham, 6 Id. 159; Poillon v. Volkenning, 11 Hun, 385; Hotchkiss v. Platt, 7 Id. 56; Methodist Church v. Barker, 18 N. Y. 463; Cuddeback v. Kent, 5 Paige, 92, 97, 98).
    IY. It is submitted that inasmuch as the bond only covered future breaches of trust, and that the defendant was not concluded or bound by the proceedings in the accounting, that the plaintiff should have alleged in his complaint a specific breach of trust, after the execution of the bond, and also the precise amount of damages for which the defendant was liable for Hiker’s dereliction of duty after the bond was given, and should have shown affirmatively a case, under such pleadings, against the defendant. Hence the court erred in denying the defendant’s motion to dismiss the complaint, on the ground that it does not contain facts sufficient to constitute a cause of action. And fcr like reason the court erred in denying the motion to dismiss the complaint on the ground that the plaintiff had not established a cause of action.
    V. The motion made by defendant to dismiss complaint because it did not state facts sufficient to constitute a cause of action should have been granted, on the grounds: 1st. The complaint alleges that the bond upon which the action is brought was given to the people of the State of New York, and not to the plaintiff, and it does not appear from the complaint that he has any interest in it, by assignment or otherwise; hence he cannot maintain this action (Annett v. Kerr, 28 How. 324). Section 814 of Code of Civil Procedure, relates only to a bond given as prescribed by law. There is no law requiring a receiver of copartnership property to give a bond; it is discretionary with the court whether such bond shall be required or not, hence this bond is not such a bond as is provided for by that section. 2d. Complaint alleges that Biker was appointed receiver, &c., July 9, 1874; that the bond was given January 30, 1875, for the faithful performance of his duties after that time, but contains no allegation that Biker did not faithfully perform his duties as receiver, after the giving of said bond; or any allegation showing any liability on the part of defendant, and no liability can be inferred against a surety.
    VI. But if the introduction of the order made by the court of common-pleas established a prima facie. case against the defendant, but which is not conceded, the court erred in holding it conclusive for the sum demanded, and in excluding the testimony of Biker, which was offered by the defendant, to show that no breach of his trust had been committed after the execution of the bond.
   By the Court.—Sedgwick, J.

The most important question is whether the refusal of Biker to pay the amount which the order directed him to pay was a breach of the condition of defendant’s bond. The condition was, “that if the said Biker shall henceforth faithfully discharge the duties of his trust as such receiver, then this obligation to be void, &c.” The only omission to discharge faithfully his duty was the refusal to pay as commanded by the order.

There is no doubt that the order was competently made, and was binding upon Biker ; but the appellant claims that it does not show or prove, as against the defendant, who was not a party or privy to the order, that Biker did not faithfully discharge the duties of his trust. But there seems to be no room for doubt, if it were a duty of the receiver’s trust to obey the order, and the refusal to pay was the reverse of a fai thful discharge of duty ; the condition of the bond was broken. In such a case, the defendant has contracted that the receiver will pay, and the order and the proceedings leading to it do not comprise something that is binding upon the defendant as an adjudication, but are evidence of the facts as to violation of duty' in obeying the order.. Of course, if they were to be used as evidence of some former misappropriation of money, and the defendant was to be bound only if such a misappropriation were shown, they would be incompetent against the defendant.

The cases against sureties upon executors’ or administrators’ bonds are not precedents here, for such bonds, following the statute, specifically provide in the condition that the principal shall obey the orders of the surrogate. Judge Cowen, who delivered the opinion in Douglass v. Howland (24 Wend. 35), in deciding Jackson v. Griswold (4 Hill, 531), gave an illustration which is in point here. He said that the case of Willey v. Pault, 6 Cow. 74), was not cited by counsel in Douglass v. Howland, and was overlooked by the court. “The action was against the surety, in a probate bond conditioned, among other things, that the executor should settle the estate according to law. The evidence offered was a judgment against the executor, an execution and demand of payment, which the executor refused to make, though he had assets. The judgment was held to be conclusive. With deference, it seems to me that a judgment against the executor and a refusal to pay, the estate having assets, were, per se, within the terms of the condition. The test of a failure to settle according to law was an unpaid judgment, and the case was therefore the same in effect as if the condition had said, we will abide all judgments that shall be obtained against the executor.” I cannot think that there has been a faithful discharge of duty by a receiver, when he refuses to account and pay as directed by an order, which specifically designates his duty in that respect.

It is urged as a ground of reversal, that in the exact ■construction• which it is claimed is due to a surety’s contract, a recovery here, on the ground that has been stated, cannot be maintained, for the reason that, before the order, the principal had been removed from the receivership, and thenceforward his act or omissions could not be the violation of the duties of a trust, which could only exist when the receivership was in existence. I think the proper construction is, that the defendant was to be bound, so long as there was any duty of his principal’s trust to be performed, and that included a duty of the trust yet to be performed after his expulsion from the office. The trust and the duty springing from it remained.

I am also of opinion that the order permitting the plaintiff to prosecute the bond, authorized him to bring this action. The people of the State had no property interest in the chose in action. By due authority from the people, the court had used their name as the obligee, that the real party in interest or bene-" ficiary, according to circumstances, might have the benefit of the contract. It is as if the name of the clerk or of a third party had been competently used for the purpose. A formal assignment was not necessary. The circumstances were equivalent to that, even if, under the Code, the plaintiff had not an absolute right, as a party in interest, subject to the direction of the court. The court has ordered that the plaintiff prosecute the bond, and for formal purposes may be deemed authorized by the obligee to make such order.

The plaintiff, as receiver appointed to succeed Biker, is the party in interest, and the measure of damages is the amount he would have received if the duty of paying the sum named in the order had been performed.

The defendant’s exceptions are overruled, and judgment ordered for plaintiff, on verdict, with costs.

Speir, J., concurred.


text:
    THE AMERICAN NATIONAL BANK OF NEW YORK, Plaintiff and Respondent, v. WILLIAM A. WHEELOCK, Defendant and Appellant.
    I. Evidence.
    1. PRESUMPTION FROM WITNESS’S OWN TESTIMONY THAT FACT IS THE REVERSE OF THAT WHICH HE TESTIFIES IT TO HAVE BEEN, WHEN IT DOES NOT ARISE.

      (a) When a plaintiff, to fasten a liability on a defendant by reason of an act done between a persofi acting on behalf of the plaintiff, and the defendant, calls as a witness he who acted on plaintiff’s behalf, who testified that the act done (to wit, the payment of a sum of money) was done under such circumstances as not to fasten a liability on the defendant (to wit, as compensation, pursuant to an agreement between plaintiff and defendant, of which the witness had no personal knowledge, for services rendered- by the latter to the former), and who, upon a further examination by plaintiff, in the nature of a cross-examination, allowed on the assumption that he was an adverse witness, gives evidence tending to show that his first statement as to the circumstances under which the act was done was incredible (viz.: an inability to state what the services were for which the payment was made, or to show how and why it was that all the services which the witness had detailed were not fully compensated under an agreement between the parties, without the payment in question), it cannot be inferred, that the transaction must have been of a kind that made the defendant responsible.
    1. If the examination, in the nature of a cross-examination, successfully showed the first statement to be incredible, the whole account of the witness must go for nothing, as not shown by a credible witness.
    3. ADMISSION OE EVIDENCE PROPER AT THE TIME WHEN GIVEN.

      (a) Cause for reversal, when.
    1. Where, under one of the aspects of the case as presented by the complaint, evidence -was given (under objection as to its relevancy) as to a transaction between a plaintiff or his agent, and a third person named in the complaint, tending to show a great wrong committed on such third person, with a view of sustaining a charge made in the complaint, of a conspiracy between the defendant and such third person, and no evidence is subsequently given connecting the defendant with such transaction, and the case is submitted to the jury in an aspect to which the evidence so given has no relevancy, and there is conflict of evidence as to those facts which are relevant to the aspects in which the case was put to the jury, the fact that such evidence may have injuriously affected the defendant in its effect on the jury, as tending to excite sympathy for one side and animosity to the defendant, calls for a new trial,
    1. A fortiori, when the wrong as to which the evidence iscgiven is of a character entirely different from the conspiracy alleged in the complaint.
    S. IMPROPER, EEFEOT OE, WHEN NOT OBVIATED BY CHARGE.
    (a) Although the case is put to the jury in an aspect on which the evidence has no possible bearing, yet if it is calculated to prejudice the jury against the party as against whom it was received and against whom the jury found, on a conflict of evidence as to the facts which do bear on the case in the aspect in which it was put to the jury, its effect is not obviated by the manner of the submission.

    II. Money had and received.
    1. AGENT, ACTION LIES AGAINST HIM ALTHOUGH HE HAS PAID OVER TO HIS PRINCIPAL, WHEN.

      (a) When an agent of a bank, without authority, either because the authority has not been conferred by the bank as a fact, or because it has no power under its charter to confer such power, pays away its money to an officer and agent of another bank for his bank:, and such officer knows that there is no authority to pay the money and that his bank has no right to take it, he is liable personally for the money, whether or not he is paid it over. This is the general rule.
    Query. Whether he would be liable, if the payment was made to satisfy a claim made bona fide, although its character be such that in a case made between the principals it might turn out to be unfounded.
    2. Forms op complaint in.

      (а) A form in substance like the former common count, alleging money had and received by defendant to and for the use of plaintiff, is sufficient.
    1. Insufficiency under the form. A complaint merely alleging that defendant, without any consideration therefor, did obtain the money from plaintiff, is insufficient. It is not equivalent to stating that the money was received for the use of plaintiff.

      (a) Effect of previous allegations. When the complaint contains allegations showing the manner in which the money was obtained, the allegation of no consideration must be considered as made in reference thereto, and as being substantially an allegation that by reason of the matters so alleged there was no consideration.
    (б) The complaint may set forth the special circumstances which create the liability.
    (c) Effect of form of complaint as controlling evidence.
    1. Under the first form, any special circumstance which creates the liability may be proved.
    2. Under the second form, the plaintiff is confined to proof of the special circumstance alleged.

      Before Sedgwick and Van Vorst, JJ.

      Decided April 7, 1879.
    m. Evidence.

    1. Controlled by form of complaint.
    (í$) See money had and received, supra.

    Appeal from judgment entered upon the verdict of a jury, and from an .order denying a motion for a new trial.
    The complaint alleged the plaintiff, on,. &c.,was, &c., an incorporated national bank, and that the defendant was president of the Central National Bank ; that at the times, &c., an association of banks known as the Clearing-House, existed, for the purpose of facilitating the settlement of exchanges and balances between the members of the association ; that the plaintiff was not a member ; that the Central Bank was ; that it was essential to the credit of the plaintiff that its exchanges and balances should be settled at the Clearing-House.
    That this plaintiff, desirous to secure these advantages, prior to the year 1869, entered into an agreement with, the said, the Central National Bank of the city of New York, by which it agreed, for the consideration hereinafter mentioned, to loan its credit and money to this plaintiff, sufficient to enable it from time to time, through said last-named bank, to effect the settlement of its exchanges with other banks, and its clearances through the medium of said association ; in consideration whereof this plaintiff agreed to keep or deposit with the said last-named bank the sum of $50,000. That said parties acted under said agreement for several years, including the years 1869 and 1870, the said defendant during that time being president as aforesaid. That previous to, and during said last-named years, the said plaintiff was financially embarrassed and in impaired credit, and unable, without great effort and sacrifice, to maintain itself, and pass the examinations from time to time made by the bank examiners, appointed by the comptroller of the currency of the United States under the laws of Congress. That at the times aforesaid, Charles Callender was such bank examiner, having visitorial power over the banks located in said city under said laws. That the said Charles Callender and the said defendant, prior to July 29, 1869, oppressively and unlawfully conspired together to extort money from this plaintiff, by taking advantage of the embarrassed condition of this plaintiff, and by threats that the said Charles Callender would use his power as such bank examiner to expose said condition of this plaintiff, and subject it to the custody of a receiver, under the laws of Congress in that behalf,-and by threats to withdraw the aforesaid aid of the Central National Bank of the city of New York, whereby this plaintiff would be disenabled, from the settlement of its exchanges and accounts with other banks of said city, in the mode requisite for the maintenance of its credit and business through said Clearing-House ; and thereafter the said defendant, by the means aforesaid, and the use of such threat, and without any consideration therefor, and with intent to extort money from this plaintiff, did, on or about July 29, 1869, obtain from this plaintiff the sum of $5,000 ; and on or about July 6,1870, did, by the same means, obtain the further sum of $500 ; and said sums were, at-the dates aforesaid, under the circumstances aforesaid, paid by this plaintiff to the said defendant, and said defendant has not since repaid the same, or any part thereof.
    The answer admitted the relation of the two banks to the Clearing-House; that the plaintiff’s bank was financially embarrassed; denied the allegation as to the fraudulent and oppressive means of obtaining the money, and that the defendant obtained the money, and proceeded:

      “ And for a further answer, this defendant says:
    “That the Central National Bank of the city of New York rendered services to the plaintiffs, on various days, between June 1, 1867, and July 29, 1869, which said services were of great value to the plaintiffs, and that, in consideration of such services, and as a compensation therefor, the plaintiffs paid to said Central National Bank, on July 29, 1869, the sum of $5,000.
    “ That the plaintiffs paid the same voluntarily, and without demand from the said Central National Bank of the city of New York.
    “That the said sum of money is the same sum of money and the same payment, falsely alleged in the complaint to have been made to this defendant on the date aforesaid.
    1 ‘ And for a further answer, defendant says:
    “ That on July 6, 1870, Joseph Poole was the president of the plaintiffs.
    “That said Joseph Poole, on said last mentioned date, paid to the Washington Heights Presbyterian Church, of which church this defendant was the treasurer, the sum of $500, and that said sum of $500 is the same sum of money and the same payment falsely alleged by the plaintiffs in their complaint to have been made to this defendant on the date aforesaid.”
    The facts, that refer to the exceptions passed upon on the appeal, sufficiently appear in the opinion of the court.

      Martin & Smith, attorneys, and Aaron Pennington Whitehead, of counsel, for appellant, urged:
    Officers of a corporation are its agents, and the relation between the corporation and its officers is that of principal and agent (Field on Corp. § 184; Angell & A. on Corp. c. 9; Story Agency, §§ 16, 52, 53). The defendant acted as agent of the Central National Bank in receiving the $5,000, and as agent of the Washington Heights Presbyterian Church in receiving the $500. The general rule of law is, that if the principal is liable, the agent is not; and if the agent is bound, the principal is not (Field on Corporations, § 211). It is the well-settled law of this State, that a known agent receiving money for his principal, without fraud, duress or. mistake, is not liable to an action on behalf of a third person, who is ultimately entitled to the money, for neglecting to pay the same upon a request, even although he has not paid it to his principal (Calvin v. Holbrook, 2 N. Y. 126; Hall v. Lauderdale, 46 N. Y. 70). But where money has been paid to an agent, for the use of his principal, under such circumstances that it can be recovered back from the principal, and the agent has paid it over, it is the unquestioned law that he is no longer liable to an action to recover it back by the party making the payment (Mowatt v. McLelan, 1 Wend. 173; Duff v. Buchanan, 1 Paige, 453; La Farge v. Kneeland, 7 Cow. 456; Costigan v. Newland, 12 Barb. 456; Stephens v. Badcock, 3 B. & Ad. 354; Sims v. Brittain, 4 Id. 375; Pinto v. Santos, 5 Taunt. 447; Snowdon v. Davis, 1 Id. 359). And in the execution of a contract, where the purpose to act for a corporation is manifest, and where it does not appear that there is an intention to assume personal responsibility, the corporation, and not the officer, will be bound thereby (Field on Corporations, § 197, and cases there cited; Dillon on Municipal Corporations, § 376; Story on Agency, § 154, p. 212, note; Bank of the Metropolis v. Guttschlick, 14 Pet. 19; Denny v. Manhattan Co., 2 Den. 115; affirmed, 5 Id. 639).
    III. The moneys were paid for a good and valuable consideration.
    v IV. If the payment of these moneys be regarded as a gift, they cannot be recovered, upon the principle. that in the absence of fraud, executed gifts inter vivos are irrevocable.
    A gift, once executed, is irrevocable and binding, as concerns the parties thereto, and the executors, administrators and others who derive title through either, or stand as mere representatives, unless such mental incapacity, fraud, force or other error may be set up on behalf of the donor or donee as will usually invalidate contracts.
    Of course, so far as concerns the donor’s creditors and subsequent bona fide purchasers without notice, or in case of a gift of that which one does not own, the transfer cannot operate to the extent of defrauding one whose right is thus paramount to that of the donee, and such persons, under suitable limitations, may impeach the gift accordingly (2 Schouler on Personal Property, 114; Clarke v. Dutcher, 9 Cow. 674; Mowatt v. Wright, 1 Wend. 355; Supervisors of Onondaga v. Briggs, 2 Den. 26; Wyman v. Farnsworth, 3 Barb. 369; Mut. Life Ins. Co. v. Wager, 27 Id., 354; Sprague v. Birdsall, 2 Cow. 419; New York & Harlem R. R. Co. v. Marsh, 12 N. Y. 308).
    The fact that in this.case the donor was a corporation, and that its charter did not authorize such a gift, would not vary the principle of law (Angell & Ames on Corporations, note a, p. 243). The question is very fully discussed in Bissell v. Michigan Southern & Northern Indiana R. R. Co., 22 N. Y. 258. To the same effect, see opinion óf Comstock, Ch. J., in Parish v. Wheeler, 22 N. Y. 494.
    Y. There was manifest error in admitting the testimony of conversations and transactions between Charles Callender and the president of the American National Bank, at which conversations the defendant was not present, and with which transactions he had no connection whatever. Such testimony was calculated to prejudice the minds of the jury. The claim of the plaintiffs was that Callender and the defendant had conspired to extort money from the plaintiffs. But anything which transpired between Callender and the president of the plaintiffs, in the absence of the defendant, without his knowledge, is not admissible, upon any principle of law.
    In view of the fact that there is not a scintilla of testimony in the case tending to show any conspiracy between Callender and the defendant, of what possible consequence was it, whether there were any transactions, lawful or unlawful, between the president of the plaintiffs and Callender % The object of the plaintiffs’ counsel, evidently, was to create confusion in the minds of the jury, and to induce them to believe that the defendant was in some way mixed up with what took place between Callender and the president of the plaintiffs. The verdict should be set aside upon these exceptions, if for no other reason.

      Beach & Brown, attorneys, and Wm. A. Beach, of counsel, for respondent, among other things, urged:
    I. Although the complaint alleges that the moneys sought to be recovered were oppressively extorted from the plaintiff by means of a conspiracy between the defendant and the bank examiner Callender, proof of the combination was not essential to a recovery. It is sufficient if it appeared that defendant had obtained the property of plaintiff without consideration and tortiously. This would be so had several been joined in the action as co-conspirators. No confederacy being proved, a recovery could be had against a single defendant, against whom a tort was proven, with damage to plaintiff (Hutchins v. Hutchins, 7 Hill, 104; Savarty v. Vanarsdale, 65 Penn. 507; Jones v. Baker, 7 Cow. 445; Gardiner v. Pollard, 10 Bosw. 674, 687; Patten v. Gurney, 17 Mass. 182, 186; Sheehan v. Shanahan, 5 How. Pr. 461; Conaughty v. Nichols, 42 N. Y. 83; Austin v. Rawdon, 44 Id. 63). Besides, the complaint charges that defendant obtained the moneys without consideration, and with' intent to extort, by means of threats to withhold the aid of the Central Bank, in making plaintiff’s exchanges.
    II. If, therefore, there was-sufficient in the proof to justify the jury in finding that defendant became wrongfully possessed of the funds of plaintiff, he was liable; especially if it appeared that defendant, for that purpose, used his position as president of the Central Bank to terrify plaintiff with threatened withdrawal of its aid under the contract.
    III. It is no answer for defendant, that he received the money as an official, and profited nothing by the extortion. He was the actual recipient. He solicited the smaller sum donated to the church, and knew that plaintiff’s officers had no power thus to appropriate it. If the jury believed Mr. Poole, the benevolence was a pious, fraud to cover usury. In either alternative, defendant was a wrong-doer and liable. So too, as to the $5,000; defendant received it, knowing it was transferred without consideration; in the language of his answer “voluntarily and without demand from the said Central National Bank.” He knew that_the officers of plaintiff, had no right to squander its funds by gratuities of this character. He was a participant in both wrongs, with full knowledge. The jury had the right to say, under the evidence, that he was the efficient actor in committing both. Occupying that position, he could not defend upon the plea that he exacted or received the moneys for others. He was their agent and colleague in the wrongful act. Indeed, he was the power accomplishing the act. The wrong was his, not excused by his folly in sinning fór the good of his bank, or his. church (Pease v. Smith, 61 N. Y. 477; White v. Mechanics’ Bank, 4 Daly, 225; Guille v. Swan, 19 Johns. 381; Bishop v. Ely, 9 Id. 294; Olmstead v. Hotaling, 1 Hill, 317; Lansing v. Montgomery, 2 Johns. 382).
    IY. Mr. Poole, the president of plaintiff, was but its agent, and was himself liable for an abuse of trust, in the misappropriation of its funds ; and so with its other officers (Austin v. Daniels, 4 Den. 299; Grocers’ Bank v. Clark, 48 Barb. 26). Their liability arises out of their wrongful disposition of a trust fund. That is a willful violation of duty, and tortious. Every particeps criminis is likewise liable. Hence the defendant receiving money wrongfully diverted from a trust fund, with full knowledge of the wrong, became a tortfeasor, and, like all such, is responsible jointly and severally (Hill on Trust. 520; 1 Story Eq. § 422; 2 Id. § 1258; see supra, Point III).
    Y. The evidence fully justified a finding by the jury, that the moneys sought to be recovered were extorted from plaintiff, through a conspiracy between defendant and Bank Examiner Callender. It is not, however, necessary to discuss that proposition under the charge of the court below. If the points already argued are tenable, the charge was erroneous.
    YI. It cannot be said that the declarations and acts of Callender were inadmissible until the conspiracy was shown. Whatever might have been the rule formerly, it was within the discretion, of the trial court to admit them' at any stage of the trial (Place v. Minster, 65 N. Y. 89; Bruce v. Kelly, 7 Jones & S. 27; Ormsby v. People, 53 Id. 472; Adams v. People, 9 Hun, 89). All this class of objections was, however, avoided by the mode in which the case was submitted to the jury. By the charge of the court the issue of conspiracy was withdrawn from the case. If defendant was liable as a wrong-doer without proof of it, all the evidence given in support of it was needless and harmless.
    YU. The proposition by the appellant, in his second point, that defendant acted as a known officer and agent, in the receipt of the moneys claimed, and cannot, therefore, be held personally responsible, is sound in the abstract, but entirely inapplicable. First.—The doctrine 'only applies to causes of action ex contractu. It has no application to those arising ex delicto. The authorities cited in its support recognize the distinction.' In Frye v. Lockwood (4 Cow. 454) the distinction is very clearly declared. Hecker v. De Groot (15 How. Pr. 314) is equally explicit.
    VIII. It is respectfully urged that the court below erred in holding, substantially, that an action would not lie against one conspirator for a wrong done by several in pursuance of it (Moon v. Tracy, 7 Wend. 229; Forsyth v. Edminston, 11 How. Pr. 408). The ruling was harmful only to the plaintiff. It eliminated that right of action from the case, but it left the evidence in support of it pertinent and influential in support of the quo animo imputed to defendant. It was effectual to relieve defendant of his disguise of innocent agency.
   The points fully presented in other respects the views of the respective counsel on the questions considered by the court.

By the Court.—Sedgwick, J.

The testimony did not tend to show that the defendant was guilty of any of the tortious acts alleged by the complaint. There was no proof of any conspiracy, or threats, or extortion. The case, however, proceeded, down to the charge of the learned court, as if the cause of action on which the plaintiff rested for a recovery was as stated by the complaint, the defendants obtaining the money by the conspiracy, threats, and extortion alleged. In the course of the testimony, it appeared that a former president of the plaintiff had paid to the defendant, who was president of the Central Bank, and for that bank, $5,000. The witnesses had testified that it was paid as a compensation to the Central Bank, for the services of the latter in making clearances through the Clearing-House for the plaintiff. The main witness for the plaintiff was its former president. He testified, in answer to questions put by the counsel for the plaintiff, that the money was paid as compensation, under an arrangement made between the banks. He testified, of his own knowledge, to what it was paid for, although he had had no knowledge of the arrangement at the time it was made. The terms on which the Central Bank was to act at the Clearing-House for the plaintiff had been settled by a former president of the bank. Upon its being assumed that the witness was hostile to the plaintiff, there was given the privileges of a cross-examination. The actual examination was of a kind that is used to destroy the credibility of a witness. The witness having testified to a transaction that would not have made the defendant liable as to the $5,000, he saying that it was paid as compensation to the defendant’ s bank, many questions were put to him, tending to show that he could not explain how the money could have been properly paid as compensation. He was pressed to let the jury know what the services were for which compensation was pretended to be made, and to show how and why it was that the services were not compensated fully by the terms of the arrangement, of which the witness had no knowledge, and which terms, it was assumed, were the whole of the understanding or agreement between the banks.

The burden of proof was upon the plaintiff to show, by credible witnesses, that the circumstances under which the $5,000 were paid gave the plaintiff a right of action. The mere payment did not give a right of action to recover it back. If the cross-examination had successfully shown that the plaintiff’s witness could not make his aqcount consistent with an assumed, or even proved, state of facts, the account must go for nothing, as not shown by a credible witness. But it would be an injustice to a defendant to support an inference that, because the account given by the plaintiff’s witness was not credible, therefore the transaction must have been of a kind that made the defendant responsible. I do not mean to say that the answers given by the witness were inconsistent, but only to determine the utmost effect of the testimony, after supposing that the cross-examination was successful.

The defendant, as a witness, testified that the money was paid to him for the Central Bank, on account of services rendered to the plaintiff. If his account was true, the plaintiff’s bank was indebted to the Central Bank for services. No witness in the case proved that the arrangement between the banks was of such a nature, that the plaintiff was not indebted for services rendered in acting for plaintiff at the Clearing-House. I repeat, the burden of proof was on the plaintiff to show, at least, that the money was not due. The defendant put in evidence a resolution upon the minutes of the plaintiff’s board of directors, in these words: “On motion, the president was authorized to pay W. A. Wheelock, president, $5,000, on account of loan made to this bank, by the Central National Bank.” The defendant swore that he did not know of the terms of the resolution before he received the $5,000, and this was upon the trial assumed to be true. It» is manifest that if he did not then know of the terms, they did not at all contradict his account of the transaction.

The testimony of the only other witness in the case is not of sufficient importance to the merits of this appeal to be stated, especially as he had no knowledge of the relations of the bank before 1869, and the alleged services were principally before that time.

Before the judge charged the jury there had been no intimation that the plaintiff abandoned any part of his complaint, or meant to claim a recovery upon any other ground than of some tort stated in it. He was not bound to make any declaration on that subject, unless required to, in response to some demand of defendants. No such demand was made. But silence, under these circumstances, leaves his claim as he had made it in the complaint, and had used it for the admission of evidence.

The judge charged “that it was not necessary, therefore, that the plaintiff should prove these allegations,” referring to the combination and conspiracy stated in the complaint. “ If it appear upon the complaint that there is enough to show that the defendant has obtained the funds of the plaintiff wrongfully and without consideration, the complaint will be sustained. ’ ’ And ,he further charged, that a party who obtains funds without consideration, with full knowledge of the circumstances under which they have been obtained—knowing where they came from, and that they have been paid over without consideration, becomes liable to answer for those funds, whether he has disposed of them or kept them.” The defendants’ counsel requested the court to charge “ that there is no evidence whatever of any conspiracy, combination or collusion between defendant and any other person, to obtain or extort money from the plaintiff.” To which the court answered: “As to that, I have sufficiently spoken about the question of conspiracy. I cannot charge this request.”

I do not propose to pass upon any exceptions that were made in respect of the matters that have been stated, but have made the statement for the purpose of examining some exceptions that were taken to the admission of testimony.

When the former cashier of the plaintiff was on the stand as plaintiff’s witness, the plaintiff asked this question, “Did you, on January 4, 1870, and on February 1, 1870, deliver to Mr. Callender $3>000 at each date ?” The person named was the Callender mentioned in the complaint as bank examiner. The witness answered that he did, upon the direction of the board of directors. A question was then put, “ Show me any direction of the board of directors to pay that sum.” A resolution was shown “ that the bank pay Charles Cal-lender $6,000 for services rendered this bank, outside of his official duties.” To another question, the witness answered, “ the services varied—-borrowing, money for the bank, helping it through its troubles, going out of his official duty to keep the bank from going into the hands of a receiver.” Several other questions were put on the same subject, one of them to show that Callender was bank examiner at the time.

In this way, the jury had before it an account of a great wrong on the part of Callender, given as evidence against the defendant, after the defendant had objected that it was not evidence at all against him, and was irrelevant 'to the issue.

It certainly was not evidence. Not a jot of evidence was given to connect the defendant with Callender’s misconduct. As irrelevant testimony, it confused the jury in passing upon a case where great discrimination was called for. Given as evidence against the defendant, it- tended to excite sympathy for one side, and animosity to the defendant. And this was the more likely to hurt the defendant as the complaint charged a conspiracy between the defendant and Callender, to obtain money wrongfully from the bank, although the conspiracy charged was of an entirely different character from the offense of Callender, and from first to last, no testimony tended to show that the defendant had conspired as stated in the complaint. And should the case be taken as one where the defendant had received the money wrongfully, so that he was liable for it, although the .wrong was not the wrong stated in the complaint, the defendant would be grievously injured by the recital of such things as evidence against him.

The same injustice was likely to occur as to the $500, although the testimony as to this gives rise to considerations different from those that regard the $5,otib. As to the $500, the judge finally left it to the jury to say whether the testimony given by the defendant on this point, or that of plaintiff’s witness, was true. The former testified that Poole, the former president of plaintiff’s bank, brought the money, and subscribed the amount to the church, as if it were the personal property of Poole himself. Poole testified to what may be here deemed sufficient to show that defendant must have known that it was money belonging to plaintiff’s bank. It was assumed on the trial, at least by the charge that to make the defendant liable for this $500, it was necessary to show that when he received it he knew, or believed that it was the bank’s money. In this conflict the evidence given as to Cal-lender’s misconduct might have turned the scales against the defendant, when the jury was weighing his testimony.

For these reasons I think there should be a new trial, but it is expedient to proceed to some questions based upon the form of the pleadings.

I think it is clear, that in a case where it appears that the agent of a bank, without authority, either because the authority has not been conferred by the bank as a fact, or because the bank has no power under its charter to confer such authority, pays away its money to an officer and agent of another bank for his bank, and such officer knows that there is no authority to pay the money, and that his bank has no right to take it, he is liable personally for the money, whether or not he has paid it over. This is the general rule. The arguments on this appeal did not discuss specifically what were the limitations, or exceptions. It would not, therefore, be satisfactory to decide in the present case what degree of knowledge or belief the agent receiving must have on the subject of the unauthorized payment to make him personally liable, or whether he would be liable if the money were paid to satisfy a claim made ~bona fide, although its character is such that in a case made between the principals it might turn out to be unfounded. Such considerations are the more important -in respect of the $5,000. For I take it to be clear that if the defendant knew that without authority $500 of the plaintiff’s bank had been given to him for a charity, he would be liable, even if he had parted with the money. I do not know that the learned counsel for the respondent maintains that there would be personal liability if the defendant did not know that it was the money of plaintiff.

A plaintiff has therefore the right to allege the special circumstances that create the liability, or allege that the defendant had and received money to the use of the plaintiff, and prove it by the special circumstances. If the special circumstances are alleged they must be proved, and no other special circumstances materially different can be proved to sustain the complaint.

In the present case there was an entire failure to prove the special circumstances alleged as conspiracy and threat, and intent to extort. The allegations are, “ the said defendant, by the means aforesaid and the use of such threat, and without consideration therefor, and with intent to extort money from this plaintiff, did on, &c., obtain from this plaintiff the sum of $5,000.” It is claimed that the unproved allegations may be rejected as surplusage, and there is enough left to make an action. Admitting that such rejection is proper, but not deciding that it is, all that would be left is “ that the defendant, without any consideration therefor, did obtain the money from the plaintiff.” This states no cause of action. It does not state as a fact that the money was received by the defendant for the use of the plaintiff. It would be proved by showing that the defendant, as a bank officer, took money from the plaintiff to be deposited in the bank. In that case there is no consideration given by the bank or the officer acting for it, in the depositing or obtaining. Whatever may be the implications of law in respect of the facts existing, after the obtaining of a deposit, no consideration is necessarily given by the depositary before and upon the “obtaining.” Certain duties arise, but not such as are based upon the existence of a consideration at the time of parting with the money.

The same propositions apply to the allegations as to the obtaining the $500.

On the other hand, I am of opinion that the phrase “and without any consideration therefor” is not severable from the other allegations of the complaint so as to allow it to stand as a substantive statement of the cause of action intended by the pleader. It is really descriptive of the transaction, more specifically described in the other allegations. The statement is, substantially, there was no consideration from the defendant connected with his threat and conspiracy and extortion. This is no notice that the plaintiff relies upon anything but the obtaining by threat, &c.

If this be the true construction of the complaint, the motion should have been granted to dismiss the complaint on the ground “that the complaint is not made out, and that no case whatever has been made against any one, upon the papers.”

Judgment and order appealed from reversed, with costs to the appellant to abide the event of the action.

Van Vorst, J., concurred.