author: By the Court. Hoffman, J.

text:
    Frederick V. D. Horton v. Henry T. Morgan.
    A, residing in the country, employed a stock broker, in New York, to make purchases of stock on his account; and for that purpose deposited with him $3,600. He afterwards directed him to take “ Parker Vein stock,” at a certain rate, adding, “ Whatever excess it may cost, over and above my deposit in your hands, I shall very probably be glad to have you carry till sold again, if you raise no objection.” The defendant purchased 200 shares of such stock, and the excess of the cost was $349.'?6. The purchases were made and paid for by the 6th of September, 1863. Transfers were made to the defendant, and ultimately to his clerk, with full powers to him, so as to retain the control. No certificates were taken out at the time.
    Between September, 1863, and June, 1854, the plaintiff had dealings in other stocks, with the defendant as his broker, and, in several letters, recognized the Parker Vein stock as in his hands, and did not demand a transfer to himself, or direct a sale, nor proffer the balance due on the purchase.
    The defendant had at all times, within the period mentioned, more than sufficient stock in his own name, or the name of Ms clerks, and under his control, to respond for the 200 shares.
    In June, 1854, the company having exploded, certificates were taken out, dated the 18th and 20tlr of May, 1854. On the 13th of June, 1854, the account current was sent, and the plaintiff paid the balance of $349.Je. On the Wth of June, in consequence of the plaintiff’s request, the certificate being in the name of the clerk, with regular powers of attorney from him, were transmitted to the plaintiff, who refused to receive the same, and brought Ms action for the amount of $3,600 deposited, and the balance of $349.'76 paid. •

      Held, That the defendant had a right to deal with this stock as he chose, he being always ready and able to transfer an equal number of shares. That he was not bound to take out certificates in his own, or the plaintiff'sname, and to identify and retain them. That the transaction was a speculation, for buying and selling the stocks, and not of the nature of a regular deposit of stock, as security upon a loan, for a definite period.

      Semble, That evidence of the usage of 'brokers, in a case like the present, is admissible,
    (Before Oakley, Ch. J., Hoffman, and Slosson, J.J.)
    Heard, May;
    decided, June, 1856.

      The action was brought to recover the sum of $3,600, and also the sum of $349.76, alleged to be due from the defendant to the plaintiff. The complaint states, as the causes of action, that the plaintiff, about the 8th of August, 1853, had loaned to the defendant the sum of $3,600, to be repaid on demand, with interest at 6 per cent.; that'a demand had been made, and refused. Next, that, about the 13th of June, 1854, the defendant represented to the plaintiff that he had purchased, on his account, two hundred shares of Parker Vein Company stock, and that there was a balance due from the plaintiff of $349.76; whereupon, the plaintiff, relying upon the truth of such statements, paid such alleged balance on the 15th of June, 1853; that the defendant had not purchased such shares, or any number of shares of such company, nor was any balance due'him on account of any such purchase; that he had demanded repayment of the said sum of $349.76, which had been refused. Judgment is then prayed, for the aggregate amount of $3949.76, with interest as specified.
    The cause was tried before Campbell, J., and a jury; and after the testimony on both sides had been closed, the complaint was dismissed, and the plaintiff duly excepted. Liberty was given to the plaintiff to be heard, in the first instance, at the General Term, upon a bill of exceptions, which has accordingly been made.
    All the material facts are stated in the opinion of the court.

      Nash, for the plaintiff.

      Marbury, for the defendant.
   By the Court. Hoffman, J.

Prior to the 11th of August, 1852, the plaintiff had deposited with the defendant the sum of $3,600, for the purpose of investing the same in stocks.

On that day the plaintiff wrote to the defendant, instructing him that when he could buy Erie R. R. shares at 70 or 71, he would be glad to have him take all he was willing to carry, with the margin” left in his hands by R. Talcott, for his (plaintiff’s) account, say $3,600.

This was answered on the 13th of August, suggesting some objections to the purchase, on the terms and prices named.

On the 26th of August, the plaintiff wrote that the news received here (Skaneatlas) did not seem to promise very well for Parker Vein at 17½. If you in Wall street feel impressed the same way, I shall be glad to have you take two hundred shares Parker Vein for me at once, at the lowest market offered..

August 27th, the defendant replied, that he thought it best to hold back; that Parker Vein was up to 18J a 18£.

On the 2d of September, the plaintiff writes, that he was still inclined to take Parker Vein at the lowest market offered; if it can be taken below cash figure by giving seller option of ten or fifteen days, would do so. “Whatever excess it may cost over and above my deposit in your hands, I shall very probably be glad to have you carry till sold again, if you raise no objection.”

The defendant answered on the 3d of September, that the favor of the 2d was received, and he bought for him 100 Parker Vein 19-J-, of Clerke & Co., and 50 Parker Vein 19% of H. R. Parker. That he should probably get the other 50 on Monday.

On the 5th of September (Monday), he writes that he had bought 50 Parker at 19%, making 200 shares, for which I charge you at 19%, $3,900, brokerage $50, $3950.

In a letter of the 28th of September, the plaintiff says: If you will consider my Parker Vein stock in your hands sufficient margin, I shall be glad to have you take for me 150 or 200 shares of Cumberland Coal, buyer 60 days.”

On the 29th of September the defendant replied that he had bought 100 Cumberland at 38f, buyer 60 days, and would close up the other 100 to-morrow. On the 30th he writes, that in consequence of bad news, he had deferred purchasing the balance of Cumberland. By a letter of the 1st of October, the plaintiff leaves this purchase to the discretion of the defendant; and by another of the 4th of October, he informs the plaintiff that he had done nothing further for him, as money was stringent, and stocks could not go up.

On the 23d of November, the plaintiff proposes an arrangement to the defendant for the latter’s carrying his stocks, and speaks of his 60 days (on Cumberland purchase) as being ndarly expired. The defendant, on the 25th of November, declines the arrangement, and states, that the 100 Cumberland will be due on Monday, “ when I am to sell it at current rates as I understand.” On the 28th of November, he apprises the plaintiff of a sale of the 100 Cumberland, and incloses an account showing a balance due him of $413.50 on this transaction, which the plaintiff remits on the 2d of December, and in his letter of that date, says: “Can you advise me with regard to Parker Vein; is there any probability of its ever being worth what it cost me ?” In reply, the defendant, under date of the 3d of December, says: “ There appears to be a general impression that Parker Vein has little intrinsic merit. . . It is one of those uncertain fancies that may take a sudden turn upward one of these days.”

The testimony is explicit that the several purchases of Parker Vein stock were actually made, and paid for by the defendant, and transfers were made to him in the books of the company. It is also in. evidence that the stocks held by defendant for others, and among them these parcels of Parker Vein were transferred by him to clerks, who gave him a power of attorney to cover them, and always treated them as belonging to him and under his control. It is also proven that the lowest number of shares which stood in the names of the two clerks, and of the defendant from the 4th of September, 1853, to the closing of the books, was 240 shares. Usually the amount was much greater. There was no time when the defendant could not have transferred to the plaintiff 200 shares of such stock.

On the 13th of June, 1854, the defendant enclosed his account current as to the Parker Vein stock and the Cumberland stock, to the plaintiff, showing a balance due of $349.76. The account as to the Parker Vein alone shows a balance of $349.81. On the 15th of June, the plaintiff remits that balance, and asks that his certificates of the stock be sent to him. On the 17th of June, the defendant enclosed two certificates for 100 shares, each Nos. 4080 and 4103, given to D. H. Westerfield, one of the clerks before-mentioned, with a regular power of attorney in favor of the plaintiff attached to each. The certificates were dated May 18th and 20th, 1854.

On the 19th of July, 1854, the plaintiff apprises the defendant that he considered the certificates of May, 1854, as not representing his stock which should have been standing in his name in September, 1853. The defendant answers on the 20th of July, that the stock was bought for him, and paid for on the 5th and 6th of September, and transferred to him; that as he had not paid in full, I held the stock in my name, or, rather, that of my clerk, and he held it along with stock bought for other customers without taking certificates.

The plaintiff, on the 28th of July, 1854, writes that he returns the certificates, and states the position he has taken, which is the ground of the present suit. He insists, that he was entitled to a legal title to 200 shares of the stock vested in him at the time, and evidenced by certificates then legally issued to him.

The testimony also establishes a custom among brokers, that when they are requested to convey stock bought by them for customers, if the stock is not paid for, they deal with it as they think proper, and respond in an equal amount when called upon. If it is paid for, they keep it on hand in their own name, or under their control. If there was a deposit, it would depend how close the amount came to the price, whether they would do with it as they pleased, or hold it specifically. There was no fixed rule.

From this statement of the facts of the case, it is apparent that the plaintiff had no intention, in purchasing the stock in question, of making an investment and becoming a stockholder. It was a naked stock speculation upon the chance of profit by a rise of the market. He has characterized it himself in his letter of the 23d of November, 1853, stating that “his gambling so far had not been productive of very good results.” With notice given on the 5th of September of the purchase on his account of the two-hundred shares and the prices, he treats them on the 28th of September as property in the defendant’s hands, telling him that if he considered the stock a sufficient' margin, to purchase Cumberland Coal stock for him. On the 2d of December, 1853, he asks for advice as to'its disposition; and thus he allows it to rest until June, 1854, when the explosion of the company, and the transmission of the certificates open to his view the scheme of saving himself at the expense of his agent.

Hnder such circumstances, it appears to us that the plaintiff placed himself under the law and custom of brokers, and was chargeable with knowledge of what that usage was, and intended to be bound by it. Indeed, his familiarity with the language of the profession warrants the belief that he actually knew it. It would be gross injustice to allow him now to reject it.

Unless, then, the decided cases expressly require a different conelusion, we cannot hesitate in denying to the plaintiff the relief he seeks.

The case of Nourse v. Prime (4 John. Ch. Rep. 490; 7 id. 69) appears to us so applicable to the present, that it must determine it, unless it has been impaired as an authority by other cases. The shares had been transferred to the defendants, and were then agreed to be held as collateral security, and were mingled with the other stock of the defendants, without certificates taken out; at all times they had in their names an amount equal to those deposited. The case of Allen v. Dykers, (3 Hill, 593, and 7 Hill, 497,) in fact affirms the principle of Nourse v. Prime. The stock was pledged under an express agreement, contained in the stock note, to sell the same in case the note was not paid at maturity. There was no right to sell before. The amount was two hundred and fifty shares. It was carried to the broker’s name on the books, where it stood in common with other stock of his. He transferred all that he had, except seventy-two shares, before the note matured; and after-wards sold the seventy-two shares at a much less price, and applied the proceeds on the note. It was held, that he was responsible for the highest price at which he had sold stock during the running of the note for all the shares except the seventy-two, and his sale of these was ratified. Thus, they were held to be the shares of the plaintiff, although wholly undistinguished, and were so held upon the doctrine of Nourse v. Prime.

The court expressly distinguish the case before it on the ground that, in Nourse v. Prime, the party had, at all times, sufficient stock under his control to enable bim to replace the deposited shares.

With respect to the question of the admissibility of evidence as to the custom of brokers, as to which an exception was taken at the trial, in Allen v. Dykers it was ruled out expressly on the ground that it would be in direct contradiction to the fair and legal import of a written contract. But the Chief-Justice says, “ it may not be necessary to determine what effect would be due to such proof, in the case of a simple pledge as collateral security, without any further agreement. Possibly the known usage, in like cases, might be considered as attaching itself to the transaction, and constituting a part of it.”

In the court of errors (7 Hill, 497) the expressions of Chancellor "Walworth and of Senator Wright, although somewhat more general, place the inadmissibility of the evidence on substantially the same ground: it would contradict the written agreement. Perhaps they meant to be understood, that the usage should not be allowed to control the general law in the case of a mere pledge as security, without an agreement. But this may properly be limited to such a case as the one before them, where there was a loan to be repaid in a definite period and security deposited.

It is not essential whether this evidence is admissible or not, although our impressions are it was so. The case can be decided against the plaintiff without such evidence. There was nothing in the relation of the parties requiring that certificates should be taken out identifying the stock, and retained, subject to the plaintiff’s order, upon his paying the balance. The defendants were only bound to have enough of the stock on hand to make an immediate transfer, on demand. There was no such agreement as in Allen v. Dykers, making the right to sell dependent upon the failure to pay; or which, in the language of Senator Wright, “expressly prohibited the sale of the stock before the time limited for payment of the money.” The whole object and intention was, that the defendant should purchase the stock, should hold it, and should sell it. A transfer to the plaintiff was not, then, contemplated.

It has been urged, that without the taking of certificates, and their identification, the plaintiff would have been subject to the loss of his stock; in case of death or bankruptcy, it would have gone into the general mass of his estate.

It might be sufficient to say, that he assumed this risk when he entered into the transaction; but, in the case as presented, it would not exist. There being stock enough held by the defendant to answer this, and all similar demands, there can be little doubt that it would be selected from the mass of the estate, and appropriated to the use of those for whose account, and with whose funds, it had been purchased.

We consider that the dismissal of the complaint was right, and judgment must be entered accordingly.


source: Caselaw Access Project

license: Public Domain

text:
    Sylvanus B. Stilwell and Nathaniel Montross v. John N. Staples.
    A lot of cloth was delivered to the plaintiffs by the defendant to be manufactured into clothing. While in their possession it was destroyed by fire. The plaintiffs were insured to the amount of $27,600. Their own stock exceeded that amount considerably, and they recovered the sum of $27,000 on the policies. The goods of the defendant destroyed were of the value of $885. The policies contained the following clause: “ The-Insurance Company doth hereby insure Stilwell and Montross against loss or damage by fire to the amount of $-, on their stock of ready-made clothing, and other hazardous merchandise the property of the insured, or held by them in trust or on commission, or sold but not delivered, contained in the building No. 112 Fulton-street, in the city of New York.” The action was to recover the amount for making and trimming the cloth.
    By another clause, the property held in " trust or on commission, must be insured as such, otherwise the policy will not cover such property.”

      Held, that the goods of the defendant were goods held in trust by the plaintiffs for his use; that they were covered by the policy; that the phrase embraced and designated goods, the possession and custody of which was in the party effecting the insurance, and the actual ownership in the party, (the defendant here), who had delivered them, and that the defendant was entitled to offset his proportion of the insurance money against the plaintiffs’ demand for manufacturing the cloth.
    The words in the policy were sufficient to cover the defendant’s goods; it was a just presumption that they were used to protect goods so situated; and hence the burden was on the plaintiffs, the factors, to show that they employed them in a restricted sense, as goods for which orders to insure had been received.
    (Before Oakley, Ch. J., Hoffman and Slosson, J.J.)
    Heard, May;
    decided, June, 1856.
    Case upon a verdict taken for the plaintiffs for the sum of $832.97, subject to the opinion of the court at General Term, and to be heard there in the first instance as to the defendant’s claim of set-off, with liberty to the court to ascertain by reference the amount of such claim if allowed; and also, with liberty to modify the verdict, and to give judgment for the defendant, if entitled thereto, by reason of the set-off. The following are the material facts as established by the evidence on the trial:—
    The defendant in December, 1851, delivered to the plaintiffs a lot of goods of the value of $2,700 or $2,800, to be made into clothing. The plaintiffs manufactured and delivered a part of this lot, the making and trimming of which amounted to $656.76. The defendant, on the 29th of March, 1852, paid the plaintiffs $1,000 on account. The balance of the lot of goods sent to the plaintiffs, of the value of $885.14, was, while in their possession, and on the 23d of January, 1852, destroyed by fire. The plaintiffs were insured against loss by fire to the amount of $27,500; and their own stock, which was destroyed, and covered by the policies, was, according to their own estimate, of the value of $34,585.41; and it was admitted that they received within sixty days after the fire, of' various insurance companies, the sum of $27,000. The policies of insurance on which the plaintiffs received that sum, were upon “their stock of ready-made clothing, and other hazardous merchandise, the property of the insured, or held by them in trust or on commission, or sold but not delivered, contained in the building, Ho. 112 Pulton-street, in the city of Hew York.” The policies were dated in May, 1851. The action is for the balance of the bill for making and trimmings, viz., $656.76.
    It was proved that the plaintiffs had at the time of the fire, no other goods in the store than those of the defendant and their own. It was also proven that the goods of the plaintiffs which were burnt had not been manufactured. The policies in this case have also the following clause among the conditions: “ Property held in trust or on commission must be insured as such, otherwise the policy will not cover such property; and in case of loss the names of the respective owners shall be set forth in the preliminary proofs of such loss, together with their respective interests therein. Goods on storage must be separately and specifically insured.”
    There was also a clause in the body of the policy, “ that the loss or damage by fire was to be estimated according to the true and actual cash value of the said property at the time the same shall happen.” It is contended by the defendant' that his goods were embraced within the policies, and that, inasmuch as the money paid by the insurance companies was paid, as much on his goods as on those of the plaintiffs’, they cannot separate and apply it exclusively to themselves; and that the plaintiffs should allow him a pro rata share of the amount so received. This is set up specifically among the defences in the answer, as a counter-claim and set-off to the plaintiffs’ demand. The court refusing to submit the case to the jury, a verdict was taken by consent for the plaintiffs for the sum of $832.97, the balance of their account and interest, subject to the opinion of the court, with liberty to ascertain by reference, (if the defendant were entitled to a set-off),the proper amount, and to modify the verdict and give judgment for the defendant.
    The other material facts are stated in the opinion of the court.

      JD. D. Field, for the plaintiffs.

      O. B. Smith, for defendants.
   By the Court. Hoffman, J.

Theplaintiffs were manufacturers of cloths. It was part of their business to receive cloths from others, make them up into wearing apparel, supply the trimmings, and transmit them to the owners. They had received goods of the defendant for this purpose to a large amount. The right of property was undoubtedly in the defendant as owner, subject to a lien for the labor and expenditure of the plaintiffs. The answer and reply sufficiently show the ownership. By the policies taken out, the plaintiffs insure their stock of ready-made clothing, and other hazardous merchandise contained in the building Ho. 112 Fulton-street. And they insure goods specified as of four classes: 1st, goods their own property; 2d, goods held on commission; 3d, those sold but not delivered, where, for example, by the sale the right of property would be transferred; and 4th, goods held by them in trust. The question is, whether we can consider these words to have been used in such a sense as will cover goods in the situation of those of the defendants ?

1st. The business of the plaintiffs was that of dealers in cloth, and manufacturers of it into ready-made apparel. They manufactured their own cloth, and the cloth of others, thereby adding trimmings as well as labor. They also, it is alleged, sold on commission cloths, manufactured or otherwise.

The goods in question were part of a quantity of cloths received before the fire, and were on hand at the time of the fire, not manufactured. They were the property of the defendant, with a lien for any expenses of storage or otherwise which the plaintiffs had incurred.

It is an admitted rule, that an insurance may be effected so as to protect an interest undefined, and an interest of parties not designated, or unknown.

In Finney v. Bedford Commercial Insurance Co. (8 Metcalf, 348) this rule was recognized; but it was held that there must be words used in the policy sufficient to cover the interest unknown, or of persons unknown to the assurers. The appropriate form of the policy in such a case is, “for himself and other owners,” or, “for whom it may concern,” or other words indicating that the insurance is to embrace an interest beyond that of the party in whose name the policy is issued. Such words, or equivalent ones, being introduced into the policy, the rules of law then authorize extrinsic evidence as to the persons who are parties in interest, and who may enforce their claims upon such policy though not particularly named therein.

In Forest v. The Fulton Ins. Co., (1 Hall Rep. 84), Justice Oakley says, that the words in a fire policy, “ held in trust or on commission,” are equivalent to the words “for whom it might concern,” in a marine insurance. See, further, 2 Duer on Insurance, § 21.

There is one proposition, the truth of which, if established, will go far to settle the case in favor of the defendant. Suppose that,. at the time of the fire, there had been no goods in the store but those of the defendant, would not the plaintiffs have been entitled to recover the amount of their loss ? If they would have been so entitled, must they not necessarily have recovered the amount for the use of the defendant, deducting their own claim for work or charges ?

It seems to me the first proposition, and of course the last, must be answered in the affirmative. •

I do not propose to examine any other case to prove this than that of De Forest v. The Fulton Fire Ins. Co. (1 Hall’s Sup. Court Rep. 84.) I have not found that the principle of this case has ever been shaken. The action was there against the company, by the party in whose name the policy was made.

In the first place, every clause which is material in the present policy is' contained, in almost the identical language, in that in the case referred to. The clause as to goods, “ the property of the assured; or held in trust by them, or on commission,” was identical. A clause in the latter case was, “goods held in trust, or on 'commission, are to be declared as suchin the present case it is, “ property held in trust, or on commission, must 'be insured as such; otherwise it will not be covered by the policy.”

Next, at the trial under the direction of the court, three schedules of property were made out; one showing the property absolutely owned by the plaintiffs, in the store, at the time of the fire; another showing the goods insured by express orders of the owners; and a third of the goods held by the plaintiffs, for sale on commission, and for which no orders had been received to insure.

The counsel of the defendant admitted a right of recovery for all the goods, the absolute property of the plaintiffs, and those for which insurance had been ordered. They allowed a right to recover, also, upon the other goods, to the extent of the plaintiffs’ liens, but denied a right to recover for any value beyond that amount, that is, the value of the goods to the consignor.

The court decided that the plaintiffs could recover this value.

The case involves these points: 1st. An insurance, in a running policy against fire, is available for any goods in the store insured at the time of the fire, even if none, or more, or less, or different goods were in it, at the date of the policy. No one will contest the truth of this proposition, in the absence of different express stipulations.

2d. That as it is not essential to have had the goods specified, so it is immaterial to have the owners designated. Whatever goods were in the store on consignment, at the time of the loss, were covered, to whomsoever they belonged; and the successive owners of such goods were respectively covered, while they were in the store, although not one of them was known or named. I apprehend that this proposition, also, may be abundantly proved by other cases.

3d. The consignees for sale had a right and power to insure, without orders from the principal for what was his interest in those goods, beyond their own interest for advances and charges.

And lastly, that the fact of a policy covering, in terms, goods held on consignment, and that, at the time of the loss, some goods were so held, enabled the consignees to recover their whole value in their own action. And I deduce, from a careful study of this case, that the decision was reached without any dependence upon the usage to insure in Hew York, which the jury found, and that it would have been precisely the same if not a word of evidence as to such usage had been given. Justice Oakley expressly says, “ that in the view he had taken of the case, the usage found by the jury had no material bearing upon it.”

Again, the case is decisive of the present as to the third clause of this policy. The third clause of that policy was exactly the. same in meaning. It was fulfilled by the general language in the body of the instrument, “ goods, as well the property of the assured, as held by them in trust or on commission.”

The language of Mr. Justice Oakley is, “ the whole tenor of the policies shows that all goods covered by them were considered to the same extent, and, for all the purposes of the insurance, as the property of the assured.”

When I closely apply this decision to the present case I confess my inability to distinguish them. The goods here were in the possession of the plaintiffs, with a qualified interest in them up to the amount of any charges respecting them. Beyond this the entire ownership was in the defendants. In the case of De Forest the goods were in the possession of the consignees, with a qualified interest in them for advances and charges, and then an entire interest in others. The goods there were covered for an interest in others in which the nominal insured had not the slightest participation ; the goods here are exactly in the same position. The goods there were comprised in the policy, though unknown and without specification, and though the owners were unknown and unnamed, their interest was represented by the nominal assured; the interest of owners of goods held in trust in the present case is also thus represented.

Upon the proposition now discussed, there would then remain one single point to be determined to render De Forest v. The Fulton Company perfectly applicable and decisive. It is, have we a right to say, that goods in the store of the plaintiffs, and held or possessed by them under the circumstances in which the defendant was possessed, were goods held in trust within the sense of the policy ? It is to be admitted that the defendant here is to sustain the affirmative of this proposition.

The sense which a legal mind attributes to the term trustee and trust estate, in connection with real property, is forced and unnatural, when applied to parties in their present relative position in this suit. To suppose that a merchant, when he speaks of goods held in trust by him, means that he has the absolute legal title, and so.me one else an absolute right to the interest, profits, or avails, seems to me simply preposterous. Much the most natural meaning is, that he refers to goods of which he has the possession or control, and some one else the ownership. But such a meaning, and its application to particular cases, would much depend upon the nature of the merchant’s business.

We may not discard these terms from the policy. We have a right to assume that the parties intended something by using them. What was it that they intended? It was not to cover goods consigned to them for sale; it was not goods their own property previous to a sale, but sold and not yet delivered; and it was not goods their own absolute unqualified property. They intended to cover goods held in trust; and goods held in trust did not fall within either of these classes. What goods, then, were held in trust by them at the date of the policy, at the time of the loss, and through the intermediate period ?

The case of Siter v. Morse (1 Harris, 218) is expressly in point. The action was to recover a proportionate amount of a loss recovered from one insurance company. The policy was on $10,000, upon merchandise generally, and without exception, their own or held in trust, or on consignment, contained in the brick building, &c.

The defendants received goods in boxes, said to contain furniture, apparel, and books; and, at the time of the fire, held these on deposit, subject to the plaintiff’s order, and had in the warehouse other merchandise, their own and on consignment, to the value of $12,026.25.

The action for a proportionate amount, $1000, was sustained.

Stroud, J., said “ the expression ‘ held in trust,’ to say nothing of the broad term, ' on consignment,’ seems to me to comprehend and protect the plaintiff’s goods.” He quotes the definition of a bailment by Sir William Jones and Justice Story, and holds that it was goods in the possession of the plaintiffs at the time of the fire. That the trustee may insure and recover the amount, for the benefit of the party really interested, has long since ceased to be an open question. De Forest v. The Fulton Insurance Company is cited and relied upon. Why, having provided for their own property, and property held on consignment, was that held in trust mentioned? What else does it mean in this connection but property, the custody and possession of which was in themselves, but the actual ownership in others ?

This opinion was adopted by the court above. Watkins v. Devana, (1 Porter, Alabama Rep. 251), was in some respects similar. The owner of goods placed in defendants’ store, to be sold at auction, had a right to adopt the insurance against the underwriters, and no less against the trustee or agent who received the money, and this after the loss. It is true the agent had inserted the goods in his schedule rendered,to the insurers.

It remains but to add, that the defendants in this case were warranted in adopting the insurance as made on their own account, even after the loss. Mr. Duer has collected the authorities both foreign, English, and American, (2 Duer on Insurance, § 24.) The rule was expressly recognized in the late case of Mittenberger v. Beam, (9 How. 198.)

The words then being clearly sufficient to cover the defendant’s goods, it being a just presumption of law, that they were used by the plaintiffs and inserted in the policy to cover goods so situated, the burden was on the plaintiffs to show that they did employ them in a restricted sense; as, for example, only to cover goods held in trust for which orders to insure had been received. Lee Ins. Co. v. Updegrast, (21 Tenn. Rep. 513).

In our opinion there is no reason to change the result at which the court before arrived.

Judgment in favor of the defendant for the offset claimed. The amount will be adjusted by one of the Judges.

In the opinion delivered by me in May Term, I treated the evidence of witnesses, as to the acceptation of the terms used, as admissible. A custom, it seemed to me, whether as to acts, or meaning of language, is but an aggregation of the practice of individuals, and if this is deposed to - without objection, as in the present case, it might be considered in the court above, although certainly the proper question would have been, what the custom of those engaged in such busiu was ? My brethren are not to be understood as concurring ’ these views, and find it unnecessary also to express a decid dissent from them.

The decision rests upon the general ground stated.

Note.—Since the decision of this cause, I have met with the case of Waters v. The Monarch Life Ins. Corp., (5 Ellis & Blackburn, 872; 2 Br. 1856.) The question was similar in ever- particular, except that the amount of insurance covered the factor’s goods and left a surplus. The decision was, that the policy covered goods held like the present.


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

text:
    John Hall v. Joseph Naylor.
    Upon a credit purchase of goods,the insolvency of the purchaser, and his concealment of the fact, is not of itself sufficient to vacate the purchase for fraud.
    The best inquiry is, did the party purchase the goods with the intention not to pay for them ?
    If actual insolvency is proven, and a transfer of property to pay creditors speedily follows the transaction, evidence may be admitted of representations of solvency made upon other purchases about the same period, from other persons.
    And such evidence may, in that case be given, although no representation of solvency was made in the case before the court.
    (Before Oakley, Ch. J., Hoffman and Slosson, J.J.)
    Heard, May;
    decided, June, 1856.
    Appeal from a judgment, a bill of exceptions being made at the trial.
    The action was to recover the possession or value of a lot of hosiery and embroideries, worth $6293^-, delivered by the plaintiff, an importer in New York, to Adam Kerr and Charles W. Adams, composing the firm of Kerr & Co., retail dry goods merchants, doing business at No. 767 Broadway, on the 25th and 31st days of March, 1854, which they fraudulently pretended to buy on a credit of eight months. Fourteen days afterwards, they made a general assignment of all their goods to the defendant Naylor, in trust for creditors. Under this assignment, Naylor claimed possession of the property in question.
    The plaintiff demanded it of him, and he refused to deliver it. This action was brought April 26, 1854, and requisition made to the sheriff to take possession of the property for the plaintiff. On the 28th of April, (before the sheriff had gotten physical possession of all the property, having yet picked out only those of value, $522frj,) Naylor gave the undertaking for that purpose required by law, and thereby claimed to have all the property mentioned in the complaint returned to him. The undertaking of Naylor, executed by himself, recited that the sheriff had taken all the property. The sheriff thereupon delivered back to Naylor the property he had taken, and made return to the plaintiff’s requisition that he had taken all the property from the defendant, and upon the giving of the defendant’s undertaking, and the justification of sureties, had delivered all the property back to the defendant.
    The complaint averred, among other things, a delivery before suit of all the property mentioned in the complaint to Naylor. The answer of Naylor denied every thing except this delivery of the property in question to him, and denies specially any such delivery only from the plaintiff.
    Upon the trial, the case having been summed up, the defendant’s counsel duly requested the Justice to charge the jury as follows:
    1st. That if no representations were made to the plaintiff by said Adam Kerr & Co., at the time of said purchase of said goods and merchandise, the defendant is entitled to recover.
    2d. That if no representations were made by said Adam Kerr & Co. to the plaintiffs at the time of said purchase, proof of nearly contemporaneous fraudulent representations to other persons does not show that the said purchase was fraudulent.
    3d. That defendant under no circumstances can be held liable for more than the amount of goods and merchandise which actually came into his hands, and that there is no evidence that more than $522.51 worth of goods ever came into his hands.
    4th. That there is no evidence to show that there was a relation of spe.cial confidence or trust between the plaintiff and Kerr & Co., which imposed upon Kerr & Co. the legal obligation to disclose their pecuniary circumstances to the plaintiff, or which made the purchase fraudulent in consequence of the omission.
    5th. That it is not enough for the jury to find that Kerr & Co. had reason to know they were insolvent in order to make the purchase fraudulent. They must find that they actually bought the goods and merchandise with the predetermined intention not to pay for them.
    Thereupon the said Justice charged the jury as requested by defendant’s counsel in his fifth proposition, with the modifications contained in the charge, but declined charging the jury as requested in his first, second, third, and fourth propositions, to which decision upon each of said propositions the counsel for the defendant did then and there duly except.
    Thereupon the said Justice proceeded to charge the jury as follows :
    The question in this case is, whether there was fraud in the purchase of these goods? This is a question for the jury. Did Kerr & Adams, when they bought these goods, buy them with intent not to pay for them ? If so, the purchase was fraudulent and void, and the plaintiff is entitled to recover. In passing upon this question, the jury must look at all the attendant facts and circumstances calculated to throw light upon the motives of Kerr & Adams in procuring the goods in question of the plaintiff. Mere insolvency is not, of itself, conclusive evidence of fraud; the party may not know or believe himself to be insolvent. If he does know it, and conceals the fact from the party with whom he deals, he acts fraudulently. Where a merchant is insolvent, and knows it, and goes into the market and buys of a party who has no reason to suppose that he is not solvent, and makes no disclosure of his real condition, or represents himself to be solvent, it is a fraud, and the presumption is, that the party purchased with an intent not to pay for the goods, especially if such purchase is followed by an immediate assignment. In this case no representations are shown to have been made to the plaintiff. If a man, applying to buy goods under circumstances requiring him to tell the truth, as where he is in fact insolvent, and knows it, and expects to fail, and to be unable to pay for the goods, omits to tell the truth and suppresses it, with fraudulent intent, and the goods are delivered to him in reliance upon his integrity and solvency, he is equally guilty of fraud in procuring the goods as if he made a direct false representation. A suppression of facts, material to be made known by a man applying to another for credit on a sale of goods, is as fraudulent in intent, and as injurious in its consequences, as direct falsehood, and the fraudulent intent may be inferred from the fact of the suppression under such circumstances. If Kerr & Adams knew of their insolvency, and concealed it from the plaintiff to induce him to part with his goods, and thus procured the goods of the plaintiffs with intent not to pay for the same, it was a fraud, and the jury must find for the plaintiff. If the jury find, however, that they procured the goods of the plaintiff without such fraudulent intent not to pay for them, they must find for the defendant.
    If the jury find for the plaintiff, they will find specifically.'
    1st. The value of all the property mentioned in the complaint at the time the suit was brought, April 26th, 1854.
    2d. The value of that portion picked out by the sheriff or the plaintiff’s agents.
    3d. The value of that portion not shown to have been thus identified by the sheriff, or the plaintiff’s agents..
    4th. The damages the plaintiff has sustained by the detention of the goods since suit brought. The interest on the whole value is a proper measure of such damages.
    It was, thereupon, agreed by the counsel for the respective parties, that the property had been consumed, and a redelivery thereof could not be had.
    The jury rendered a verdict for the plaintiff, which is filed and made part of the judgment roll. Whereupon, on due notice, judgment was entered for the plaintiff in conformity therewith.
    The jury also answered the questions specifically, which answers it is not necessary to state.

      A. Matthews, for the plaintiff.

      J. Woodbury, for defendant.
   By the Court. Oakley, Ch. J.

The following propositions involve all the material points raised in the case, and decide the exceptions.

We are of the opinion that it is not enough, in order to avoid a credit purchase of goods, that it turns out the purchaser was insolvent at the time, and had ground to suppose himself insolvent. The proposition that a purchaser upon credit stands in a confidential relation to his creditor, so as to bind him to disclose his sitúation, without any inquiry by the seller, is not sustained by any sufficient authority.

If, at the time of a credit purchase, the party is hopelessly insolvent, and knows it, and such purchase is speedily followed by a transfer of all his property for the payment of his debts, evidence may be admitted of other transactions with, or other declarations to different parties, about the same period, tending to the-conclusion of a general design to defraud creditors by fraudulent purchases.

The test inquiry in such cases is, did the party purchase the goods in question with an intention not to pay for them ? and the seller, after making such a case as is above stated, may introduce evidence of representations of solvency and credit to other persons about the same time.

It makes no difference, in the application of this rule, that no positive representation of solvency was made in the case before the court.

The last two clauses of the charge of the Judge submitted the case to the jury, with the point of law correctly stated. Even if previous parts of the charge admit of a construction not strictly accurate, we are of opinion that such parts are to be controlled by the subsequent clauses.

Applying these principles to the facts of the case, we have no doubt that the judgment should be affirmed.

Order accordingly.


author: By the Court. Slossow, J.

text:
    John J. Godin v. The Bank of the Commonwealth.
    Although the date of a hank check is not material to its validity, it determines the time of its payment. Hence, the payment, by a bank, of a post-dated check before the day upon which it is dated, is a payment in its own wrong, and the money so paid remains to the credit of the drawer.
    The assignee, in good faith, of this fund, may maintain an action against the bank for its recovery.
    A Judge is not bound to submit a question of fact to the jury, when their verdict, if contrary to his views of the testimony and its legal effect, would be certainly set aside, as against law and evidence.
    (Before Oakley, Ch. J., Duer and Slosson, J.J.)
    June Term, 1856.
    Appeal from a judgment at Special Term in favor of the plaintiff, and denying a motion for a new trial.
    The action was brought to recover the sum of $90, the amount of a check drawn by Shufeldt Brothers & Co., in favor of the plaintiff, upon the defendant, and dated the 14th of July, 1855. The plaintiff also claimed to recover by virtue of an assignment made to him, by Shufeldt Brothers & Co., on the 13th of July, 1855, of all the moneys then due to them from the bank.
    The answer denied generally the allegations of the complaint, and set up, as a separate defence, that on the 12th of July, 1855, there had been a final settlement of all accounts between the firm of Shufeldt Brothers & Co. and the bank; that upon this accounting the sum of $10.21, and no more, was found to be due to the firm, which was then paid to them, and accepted by them, in full satisfaction and discharge of all their claims; and that, at no time after the 12th of July, had the bank in its possession any money or funds belonging to Shufeldt Brothers & Co.
    Upon the issue raised by the pleadings, the cause was tried at a Trial Term in December, 1855, and the following were the proceedings on the trial.
    The plaintiff called as a witness George A. Shufeldt, Jr., who was sworn, and testified: That he was a member of the firm of Shufeldt Brothers. That in July last that firm kept an account with the Bank of the Commonwealth. That account was balanced on the 11th or 12th of July. I think the 12th.

      A young man came on that day from the bank between two and three o’clock in the afternoon, handed me the pass-book and some vouchers, and said the bank wished to close the account. I told him that I did not transact the business of the firm, and knew nothing about it. There were six checks returned at the time with the pass-book. I did not examine the account or vouchers while the young man was there. About an hour after I found that two of these six checks, each for $45.31 were dated the 25th day of July, and that they had been paid before they were due. The next day I sent these two checks to the bank. Mr. Winne took them for me. He returned without the money. I then executed an assignment to Godin.
    The following is a copy of the account, as it appears in the passbook, from the 7th of July, 1855, inclusive;
    Shufeldt Bros. & Co.

    On the 14th Mr. Winne went again with a check, drawn by Shufeldt Brothers, for the balance.
    Being cross-examined, the witness says:
    I signed the check for $10.21 now shown to me—
    No. New York, July 12, 1855.
    Bank of the Commonwealth,
    Pay to or Bearer,
    Ten 21-100 Dollars.
    $10.^r Shufeldt Bros. & Co.
    (Endorsed)
    Geo. A. Shufeldt, Jr.

      —when the young man from the hank handed it to me, and he gave me the money for it.
    Plaintiff then called Richard Winne, who was sworn, and-testified:
    T took, at the request of Mr. Shufeldt, these two checks for $45.31 each to the Bank of the Commonwealth on the 13th or 14th:

    Endorsed.
    Charles Broome.
    Pay to the order of H. Meigs, Esq., cashier, or order.
    James T. Hull.
    The writing across the checks, stating that they were cut by error, was not on them when I took them to the bank. I presented these checks to the paying teller of the bank, and asked for the money. He said they had been paid. I then called his attention to their dates. He referred me to the cashier. The cashier took them, and went to the bookkeeper and looked at the books, came back and stated that they had been collected through the Metropolitan Bank. The clerk came back and said the Metropolitan Bank would not pay them. The cashier of the Bank of the Commonwealth then refused to pay the checks, or either of them, to me when he returned; then the words “out by error,” were written across the face of the checks; they were not written there when I gave them to the paying teller. I then told the cashier that Shufeldt Brothers would sue the bank for the amount of the checks.
    The next day I presented the check drawn by Shufeldt Brothers & Oo. to Godin, at the bank, and they told me that Shufeldt Brothers had no account there. I made this last demand of the bank at the request of Mr. Godin, the plaintiff.
    The following is a copy of the check:—
    New York, July 14th, 1855.
    Bank of the Commonwealth.
    Pay to John T. Godin, or order, $90—Ninety Dollars.
    Shufeldt Brothers & Co.
    Endorsed " John T. Godin.
    Collect, ' Geo. A. Shufeldt, Jr.
    Plaintiff next offered the assignment in evidence, the execution and delivery of which had been before proved.
    “ Eor good and valuable considerations we hereby assign, transfer, and set over to John T. Godin all claims and demands which we now have or hold against the Bank of the Commonwealth, in the city of New York, and particularly the sum which we deposited with, and now remaining in said bank.
    “New York, July 18th, 1855. Shufeldt Bros. & Co.”
    Plaintiff here rested the case.
    Whereupon defendants’ counsel moved for a nonsuit on the ground—
    Eirst. It appeared that the account of plaintiff with the bank was closed by mutual arrangement before the check was drawn to the order of the plaintiff.
    2d. That the plaintiff had settled the account by receiving the balance of $10.21.
    3d. That the two checks for $45.31 each had been rightfully paid.
    Defendants’ motion was overruled, and his counsel thereupon excepted.
    Defendants’ counsel then called

      James E. Tompkins, who, being sworn, said: That he was the porter .of the bank; that on the 12th day of July the bookkeeper handed him the pass-book of Shufeldt Brothers with the bank, and some cancelled checks, also the check for $10.21 already produced in evidence, and that sum in money, and instructed him to take them to Shufeldt Brothers and state that the bank wished to close the account: that he did this; went to the office of Shufeldt Brothers and found one of the firm, to whom he delivered the pass-book and vouchers, and requested him to sign the check for $10.21, and that witness would hand him the money, as the bank wished to close the account. That thereupon Mr. Shufeldt took the pass-book and vouchers, and signed the check for $10.21, and witness paid him that sum in money. That witness knew the place, and had been there frequently before to inform the firm that their account was overdrawn.
    The defendant here rested.
    The testimony being closed, the court charged the jury that there was but one question of fact for them to determine, and that was, whether the assignment by Shufeldt Bros. & Go. to the plaintiff was a bona fide assignment, or merely colorable ? and as to that fact, the defendant had introduced no testimony to impeach the assignment, that if they should find that the same was a mere sham, and only colorable, they should find a verdict for the defendant, otherwise for the plaintiff.
    To which charge the counsel for the defendants excepted.
    Whereupon the jury rendered a verdict for the plaintiff for principal, $90.62, and interest, $2.59: the whole amounting to $93.21.
    A motion for a new trial upon the case and exceptions was denied at a Special Term in March, 1855.

      H. Q. Be Forrest, for the defendants, appellants.
    The judgment ought to be reversed, and the complaint be dismissed, or a new trial ordered.
    We insist that a bank has a legal right to pay post-dated checks whenever they are presented, and to charge them at once to the account of their drawers. The body of the check requires payment on presentation, and its actual delivery and negotiation by the drawer repels any inference to he derived from its date. The true date of a check is presumptively that of its delivery, and its actual date is wholly immaterial, except when referred to in the body of the instrument, and conceding that a bank may decline to pay a post-dated check before the day of its date, it is not bound to do so. It may elect to pay the check when presented, and the payment so made is, therefore, valid.
    Again, even if the checks were improperly paid by the bank, the acceptance by the plaintiffs of the balance standing in their passbook, and the agreement to close their account, was a ratification of the payment and a conclusive waiver of any adverse right. In any event, the defendants had a right to go to the jury upon other questions of fact than the mere validity of the assignment, and especially whether the Shufeldts had not ratified the payment of the post-dated checks by acquiescing in the account as stated in the pass-book.

      J. 0. Dimmick, for the plaintiff, respondent,
    Insisted that there was no other question in the cause than that of the right of the bank to pay the post-dated checks before their maturity; that the payment was wrongfully made, it seemed to him, was a self-evident truth. The only object for post-dating a. check must be to postpone its presentation and payment, and that' such is the intention, and, therefore, the direction of the drawer," must be known both to the receiver of the check and the bank, upon which it is drawn. He has, therefore, no right to present,: and the bank no right to pay. The counsel demanded that the! judgment should be affirmed, with costs.
   By the Court. Slossow, J.

Whether the plaintiff could have maintained this action upon the non-refusal of the bank to pay the $90 check is a question it is unnecessary to decide, since of his right to maintain the action, as assignee, we have no doubt, and it was only upon this ground that be recovered.

The only questions to be considered, therefore, are

1st. Was the bank justified in paying the post-dated checks before their maturity ?

2d. Ought any other question of fact to have been submitted to the jury than that which was submitted?

Though the date of a note, bill, or check, is not material to its validity, it is so in respect to its period of payment. It may be ante-dated or post-dated, without affecting its legal character, as an obligation, but the date determines the time when it becomes payable. (Parsons v. North, 13 East. 516; Brewster v. McCardle, 8 Wend. 478.)

The checks in question, which were paid by the defendants on the 10th of July, were not payable until presentation on the day of their date, 25th July, and the defendants, therefore, paid them in their own wrong. They had, at the time, funds of the drawers, Messrs. Shufeldt, in hand exceeding the amount of the two checks by $10.21. This excess was paid to the drawer, two days after the payment of the checks, on what the defendants intended to be a closing of the drawer’s account with them; and their defence to this action is, that they had accounted with the drawers, and paid them this balance due them. The evidence, however, falls far short of showing such an accounting, as that the maker of the checks acquiesced in the account made up by the bank, in which these two checks were charged.

This account is contained in the pass-book, in which these checks are charged as “ cash” merely, with no designation of date other than that of the payment, (10th July.) There was nothing, therefore, on the face of the account, to apprise Messrs. Shufeldt that those were the two checks in question. He appears to have signed the check for the balance ($10.21) as soon as it was handed to him, and without examining the pass-book or returned checks. About an hour afterwards, in examining the returned checks, he discovered the mistake, and that the bank had charged these two checks as cash paid 10th July, and the next morning he returned the checks to the bank for payment, which was refused. The bank, however, wrote over the face of the checks, “cut by error.” Checks are cut, at a bank, when paid, and the account closed or balanced; writing these words was probably intended by the defendants to protect themselves against any conclusion against themselves in their claim on the Metropolitan Bank, from which they had received them; it was equally an admission in favor of Messrs. Shufeldt on the question of payment. If, on this evidence, the Judge who tried the case had left it to the jury to say whether the Messrs. Shufeldt had acquiesced in the bank account as an account liquidated and adjusted, and had ratified the payment of the two checks on the 10th of July, and they had found that question in the affirmative, the verdict could not have been sustained. He was right, therefore, in withholding the question from them.

It follows, then, that the amount of the two checks was never, in contemplation of law, withdrawn from the bank; and when the check in suit for that amount was subsequently made, on 14th July, in favor of the plaintiff, and the drawer’s claim on the fund in bank formally assigned to him, the defendants became bound, on presentation of it, to pay it, and having refused to do so, are 'liable in this action.

.Judgment at Special Term, denying motion for new trial, affirmed.