text:
    Rochester and Kettle Falls Land Company, Respondent, v. R. Irving Davis, Appellant.

      Written contract — parties thereto assumed to know its contents — equitable relief.

    It must be assumed that the parties to a written contract knew what its terms were when they executed it.
    As a general rule, relief cannot be founded upon a mistake as to the legal effect of an instrument or upon ignorance of law. But where one party is induced to and does execute an instrument upon the faith of the representation that it is drawn in accordance with the understanding of the parties, when in fact it has not been so drawn, he may have relief upon the ground of fraud if nothing further appears to deny it to him.
    Appeal by the defendant, R. Irving Davis, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Monroe on the 28th day of December, 1893, upon the decision of the court rendered after a trial at the Monroe Special Term, and also from the order directing judgment, ■entered in said clerk’s office on the 28th day of December, 1893, with notice of an intention to bring up for review on such appeal the interlocutory judgment entered in said clerk’s office on the 21st day of November, 1893.

      Petrie, Timerman db Pardee, for the appellant.

      James G. Greene, for the respondent.
    Judgment appealed from affirmed, with costs, on the opinion of Bradley, J., at Special Term. ’

   The opinion of the Special Term was as follows:

Bradley, J.:

By written contract of date May Y, 1891, made by the parties to it, William C. Waite agreed to sell to the defendant a certain parcel of land situate in the county of Stevens and State of Washington, for the sum of $300, payable as follows: $100 at time of execution of the contract, $100 in six months, and $100 in one year, with interest. The first payment was made, and the purpose of this; action is to require the defendant to complete the performance of the contract.

The defendant by his answer alleges :

1. That by the terms of the contract he was permitted to abandon it by forfeiture of the sum paid upon it.
2. That prior to and on May 7,1892, the said Waite, or his agents, exhibited to the defendant a contract of which that before mentioned purported to be a copy, and fraudulently represented to him that if he would purchase the property, that by the terms of the contract he would have the right and privilege to cease making payments and to abandon the contract and be relieved from any subsequent payments thereon, and that by such representation he was induced to believe that such would be his privilege and to execute the contract.

The terms of the contract executed by the defendant do not enable the defendant at his election to abandon it and be relieved from the obligation to pay the purchase money mentioned in it as he has sought to do. The question arises whether, upon the evidence, he may be relieved from it by reason of any mutual mistake of the parties to it or fraud on the part of the vendor.

While the title to the property was in William C. Waite, it is quite evident the plaintiff was the beneficiary of the title. The plaintiff is a corporation of the State of New York, created for the purpose of “ purchasing, taking, holding and possessing real estate and buildings, and selling, leasing and improving the same,” having its principal business office in Rochester, N. Y. Mr. Waite was secretary of the company. Late in April, 1891, several persons, including some of the officers and directors of the company, the defendant and others, left Rochester on an excursion to the State of Washington to' look over the property there, and returned to Rochester on May sixteenth. The party were at Kettle Falls in that State from the second to the eleventh of May, and within that time the lot in question was examined and selected by and for the defendant. Mr. Waite was not one of the party, and the defendant had no conversation with him upon the subject of the purchase of the lot, but with Mr. Weaver, the president, and Mr. Aris, the general manager of the company, who were in the party, he did talk upon the subject, and they said in effect that whoever made a contract for the purchase of any of the land at Kettle Falls would have the right to abandon the contract and be relieved from making future payments, and on such election would forfeit the payments before then made upon the contract and any improvements in the meantime made upon the premises.

The inference is fairly justified that the defendant then understood that such would be his privilege if he entered into contract for the purchase of any of the land.

On or about the-29th day of June, 1892, the defendant received by mail at Little Falls, N. Y., his place of residence, the contract in question, executed in duplicate by William O. Waite, and he on that day executed both and returned one of them by mail to Waite, and retained the other in his possession. The contract so executed did not in its terms express or give the defendant the optional right to relief from performance which he had understood he would have, in the interview above mentioned, with the persons to the negotiation several weeks before the time of the execution of the contract. It does not appear that any representations accompanied the contract or were made to the defendant in respect to its terms at the time of its execution otherwise than they were expressed by it.

It must be assumed that he knew what were the terms of the written contract when he executed it, and it does not appear that at any time afterwards until after this action was commenced he expressed any dissatisfaction with its provisions. While this contract was not in the respect before mentioned such as the defendant may have supposed he would be called upon to execute, or such as he had promised to make, it is difficult to see any support for a conclusion that there was any mutual mistake of the parties to it in respect to its terms, or fraud on the part of the vendor in procuring; its execution by the defendant. His opportunity to examine it was ample, and he retained a duplicate of it. As a general rule, relief cannot be founded upon a mistake as to the legal effect of an instrument or upon ignorance of law. But where one party is induced to, and does, execute an instrument upon the faith of the representation that it is drawn in accordance with the understanding of the parties, when in fact it has not been so drawn, the former may have relief upon the ground of fraud if nothing further appears to deny it to him. Whatever the expectation of the defendant may have been in the present case, he was not, by any representation as to its terms other than as they appeared in the contract, induced to execute it. There was no legal obligation of the vendor to make a contract of sale upon any other terms than those expressed in it, and of them the defendant by its inspection must be deemed to have been advised when he executed it. To support a charge of fraud for relief of a party from his contract under such circumstances would be going beyond a well-established rule of law and further than it is prudent to go, to find the means of relieving -a party from his contract.

If it appeared that the defendant was by any circumstance's misled into the execution of the contract, supposing it was otherwise than it was in terms, relief may have been granted to him. Such was the case of Botsfell v. McLean (45 Barb. 478), where two of four notes on time were drawn without interest when it was evident that it was intended they should all bear interest from their date, and the party, seeing that two of them contained the interest clause, failed to observe that it was omitted in the others. It was held he was entitled to reformation of those two notes.

In Albany Savings Institution v. Burdick (87 N. Y. 40) the grantor of Mrs. Burdick drew the deed, and, contrary to the understanding, inserted a clause to the effect that she assumed the payment of a mortgage he had given upon the premises. She, having trusted to him to prepare the deed, did not examine it to see that the assumption clause was in it, and did not know it was there. The court held that she was not, under the circumstances, necessarily chargeable with negligence to defeat her claim to reformation. Those cases do not seem to support the defense in the present case. There it appeared that the payee in the note and the grantee in the deed did not know of the omission of interest on the two notes there in question, or of the existence of the assumption of mortgage clause' in the deed at the time the notes and deeds were delivered and accepted.

In the ease at bar it does not appear that the defendant - did not read tlie contract before be sigüed it, or that he did not then know its contents. He does state that upon signing the contract he relied upon the statements which had been made to him by "Weaver and Aris and supposed the contract was the same. This must have had relation to his understanding of its legal effect, as he does not say that he failed to read it and ascertain its provisions as he had the opportunity to do deliberately before executing it.

In the view taken, the defendant is not entitled to relief on the ground of mutual mistake of the parties to the contract or of fraud on the part of the vendor.

The question of title is raised on the part of the defendant. The plaintiff gave evidence with a view to support the title in Waite at the time the contract was made. Amongst other evidence in that direction was a patent of the United States under the official seal, of date December 17, 1890, subscribed by the President of the United States, by M. M. Kean, secretary, and by the receiver of the general land office, granting certain lands including that in question to Peter M. Hacking. Objection was taken by the defendant to the introduction of this instrument in evidence. It was received in evidence and the question of its admissibility reserved. The objection is overruled and exception allowed to the defendant.

There was also offered in evidence what purported to be a certified copy of a power of attorney of Kingsbury to Goss, who as attorney in fact executed a deed of the premises to Chickering, and-the question was reserved upon the objection taken to it on the ground that it was not properly authenticated. The objection is sustained. But other evidence was given of the execution of the power of attorney, and its contents were proven in support of the ■deed from Kingsbury to Chickering, and by the introduction of the patent of 17th December, 1890, before mentioned, the question arising upon reception in evidence of the certified copy of the receiver’s receipt of the purchase money from Hacking was practically disposed of as unimportant for consideration. It appeared by the conveyance put in evidence that William C. Waite had title to the premises at the time lie made the contract with the defendant. • He afterwards, in February, 1S92, conveyed the premises to George Herbert Smith, and before the commencement of this action Smith’s warranty deed with a certified copy of discharge of a mortgage was tendered to the defendant, and the payment of the residue of the purchase money demanded, all of which were refused, but the defendant did not refuse to accept the deed for want of the personal warranty of Waite, his vendor in the contract, and no such objection seemed to have been at any time made by the defendant to the conveyance offered him.

It is urged that the taking of the assignment of the contract by the plaintiff was not within its corporate power, and, therefore, no relief founded upon it was available to the plaintiff in the action. It may be assumed that the mere taking an assignment from the vendor of a contract for sale of land was not within the corporate powers of’ the defendant as it was personalty only. If, however, the defendant should take also the title to the realty the assignment of the contract would be a legitimate incident to it, and as such within the corporate purpose of the plaintiff.

But is the question of ultra vires available to the defendant as a defense? The contract of assignment by Waite to the plaintiff is an executed one. While it is true that the defendant’s contract is executory, it was not made by him with the plaintiff. It was valid in its inception, and the plaintiff’s title to the contract was perfected by the assignment, and in no sense is dependent upon performance of any executory contract.

The plaintiff is not seeking to enforce performance of any contract made by it, but a contract to which it had derived title from another. The question of ultra vires does not seem to concern the defendant, or to furnish any support for his defense. (Whitney Arms Co. v. Barlow, 63 N. Y. 62; Holmes & G. M. Co. v. H. & W. M. Co., 127 id. 252, 260.)

No other question seems to require consideration.

The plaintiff is entitled to judgment.


source: Caselaw Access Project

author: Bradley, J.:

license: Public Domain

text:
    Lucy E. Hand, Respondent, v. Charles Deady, as Sole Trustee of School District No. 5, Town of Rose, N. Y., Appellant.

      Officer defacto — xohat constitutes.

    To constitute a person an officer de facto it is essential that his acts of official character he founded upon some colorable right to the office, derived from a form of election or appointment (although by reason of some defect or irregularity the election or appointment is illegal Or unofficial), or that he has acted as such with the acquiescence of the public for a sufficient length of time to-permit the presumption of an election or appointment, which presumption arises from the reputation he thus acquires as an officer from such acts, and the-acquiescence of the public therein.
    Under such circumstances, as a matter of public policy, his acts in his apparent official capacity are not subject to collateral attack to the prejudice of others, and as to them and the public they are deemed effectual and valid. It is prima facie sufficient to establish the official character of a local officer to show that he is generally reputed to be and has acted as such.
    The mere claim of a person that he is an officer does not relieve his acts-from the character of usurpation and give him the character of an officer defacto, unless he has-openly performed the duties of the office for such length of time with the acquiescence of the public as to give him the general reputation in the official district of being what he assumes to be,
    Aureal, by the defendant, Charles Deady, as sole trustee of school district No. 5, town of Rose, N. Y., from a judgment of the County Court of Wayne county in favor of the plaintiff, entered in the-office of the clerk of the county of Wayne on the 25th day of May, 1891, upon the verdict of a jury, and also from an order entered in-said clerk’s office on the 3d day of September, 1890, denying the-defendant’s motion for a new trial made upon the minutes.
    The purpose of the action was to recover damages for the breach of a contract alleged to have been made by David Benjamin, as trustee of school district No. 5 in the town of Rose, county of Wayne, with the plaintiff, under which the latter was to teach school in that district for the term of sixteen weeks, to commence November 7,1887. A written memorandum of contract to that effect, bearing date September 30, 1887, was subscribed by David Benjamin as sole trustee, of that district, and by him delivered to the plaintiff, who was ready and offered to proceed in the performance of the contract at and from the time therein mentioned, but was not permitted by William Jordan, who was then the acting trustee of the district, to do so. The plaintiff recovered $142.60, and costs.

      T. Dobinson, for the appellant.

      Del Stow, for the respondent.
   Bradley, J.:

The question for consideration is whether David Benjamin may, as to the plaintiff, be treated as having been trustee of the district at the time he made the contract with her. The facts bearing- upon the question are that at a school meeting ' duly held in the district August 30, 1887, there were present eight men and some boys; a chairman was elected, and the district clerk was present. The trustee of the preceding year having read his report, said that the next thing in order was to elect a trustee,, and, turning to one Buckley, suggested that he act as trustee. The latter said, “No, let Dave Benjamin have it.” Some one seconded it; thereupon David Benjamin, who seems to have been somewhat under the influence of liquor, immediately jumped up and said: “ All in favor of Dave Benjamin being trustee say aye.” Some one responded aye. Then David Benjamin said, “I am trustee.” No negative vote was called for. The chairman was not requested to nor did he call for any vote on the subject. The meeting then proceeded to the election of a trustee, and James Benjamin was elected in the usual manner. He ■entered upon the duties of his office, and three days later David Benjamin called upon him, asserted his right to the office of trustee, .■and, by means of a threat, induced James Benjamin to let him take •the district books.

Thereupon he assumed to act as trustee in buying some lumber, ■some locks for doors and some brooms, made the contract with the plaintiff to teach the school, and shortly afterward ceased to act as such. It is clear that he was not a trustee de jure. And to constitute a defacto officer it is essential that his acts of official character be founded upon some colorable right to the office having the form of election or appointment, or that he has acted as such with the .acquiescence of the public for a sufficient length of time to permit tlie presumption of an election or appointment. This presumption arises from the reputation he thus acquires as an officer from such acts and acquiescence. Then, as matter of public policy, his acts' in his apparent official capacity are not subject to collateral attack to the prejudice of others, and as to them and the public they are deemed effectual and valid. (Wilcox v. Smith, 5 Wend. 231; Parker v. Baker, 8 Paige, 428; Hamlin v. Kassafer, 15 Oreg. 456; 3 Am. St. Rep. 176.) And in fact it \s, prima facie sufficient to establish the official character of local officers to show that they are generally reputed to be and have acted as such. (McCoy v. Curtice, 9 Wend. 17.)

It does not appear that David Benjamin had so acted with the acquiescence of the public as to give him in the district the reputation of trustee at the time the alleged contract was made.

He had then assumed to act as such for less than a month, and in a very few days after he entirely ceased to act as trustee.

The official acts to be performed within that time were probably few, and those he did perform were not numerous. In Wilcox v. Smith, Mr. Justice Sutherland said that “ the mere claim to be a public officer, and the performance of a single act or even a number of acts in that character, would not perhaps constitute an individual an officer de facto.”

And in Rochester & G. V. R. R. Co. v. Clarke N. Bank (60 Barb. 234) it was said that “to constitute a person an officer de facto a mere claim to be such officer, and exercising the duties of the office was not sufficient. It is well settled that there must be color for the claim, and colorable title to the office.”

In the present case, as presented by the record, the main question, therefore, is whether or not David Benjamin had a colorable right to the office, or, in other words, whbther his claim was supported by the appearance of an election or appointment.

The statute provides that the inhabitants entitled to vote, when duly assembled in any district meeting, shall have power, by a majority of the votes of those present, to appoint a chairman and to choose a trustee. (Laws 1864, chap. 555, tit. 7, § 16.) There was a meeting held in the district having the power to choose a trustee. The ludicrous occurrence referred to, in which David Benjamin was there the principal actor, was evidently treated by those present as ■a jest, as following it the meeting proceeded in the usual as well as an orderly manner to elect, and elected a trustee without, so far as appears, any assertion of claim or suggestion by David Benjamin or any other person that he had been chosen to the office.

The election of James Benjamin as trustee was entered in the minutes of proceedings kept by the clerk of the meeting. No reference in them was made to the transaction before mentioned preceding such election.

It is difficult to see in what took place at the meeting any color-able selection by it of David Benjamin as trustee. It evidently did not there and at the time have an appearance of his election as trustee, nor does it seem to be entitled to the characterization of such appearance, without which it lacked the quality essential to invest him with the color of right to the office. This was somewhat emphasized by the fact that seven of the eight legal voters at the meeting did not vote aye on the motion put by David Benjamin. But the learned trial judge, as appears by his charge to the jury, lays stress in support of his color of election upon the fact that some one voted aye, and that when David Benjamin stated that he was trustee no one raised any objection to it. There would have been more force in that fact if the meeting had not then proceeded to the election of a trustee. This indicated how the transaction appeared to' those present, and characterized the understanding of such declaration of David Benjamin as a mere naked assertion on his part to which the meeting did not accede. There must be the form of an election or appointment to an office to give a colorable claim to it; and it is then sufficient to constitute his acts, following it, as those of a de faeto officer, although by reason of some defect or irregularity the election or appointment is illegally or inefficiently made.

The difficulty with the claim in behalf of David Ben jamin is that the meeting did not give him the form of an election, nor did it recognize or acquiesce in his assertion there made that he was trustee.

The mere claim of a person that he is an officer does not relieve his acts from the character of usurpation and give him the character of an officer de facto, unless he has notoriously performed them for such length of time, with the acquiescence of the public, as to give him the general reputation in the official district of being in that respect what he thus assumes to be. Then, as before suggested, his acts as to others may be effectually characterized as official.

The view taken of the facts, as here represented, is that there was no color of election of David Benjamin at the meeting, and that he took from what occurred there no colorable right to the office. And the mere fact that he obtained the district books, whatever they were, from the person who was elected, has, of itself, no significance, although if from that time he acted with the acquiescence of the inhabitants of the district for such length of time as to raise the presumption of color of right, and thus took the reputation of being such officer, it may be seen that persons thereafter dealing with him as such could effectually assert for their protection that he was trustee. But no facts appear to justify that conclusion.

The judgment and order should, therefore, be reversed and a new trial granted, costs to abide the event.

Dwight, P. J., Lewis and Haight, JJ., concurred.

Judgment and order of the County Court of Wayne county appealed from reversed and new trial granted, with costs to abide the event.


text:
    Frances B. Scott, Appellant, v. Frances Calladine and Others, Respondents, Sarah Ann Kittle and Others, Appellants.

      Deed from a wife to her husband — void at law, sustained in equity — disability of married women — payment of a consideration by one person and a conveyance to another — common-law rule, and present law, in regard thereto,

    A quit-claim deed executed by a wife to her husband is presumptively and at law ineffectual to convey any of the land therein described, and, therefore, void, but a conveyance made directly between a husband and wife, having the support of a suitable consideration, may be sustained by a court of equity, and where the consideration for such conveyance is the execution of an equitable trust, obligating the wife to convey to her husband, although there was no trust which she could be required to execute in his behalf, the conveyance will be sustained in equity.
    The common-law disability of married women arising out of the marital relation remains as at common law except so far as removed by statute.
    Before its abrogation by the statute, the rule of the common law that the person, paying the consideration on the purchase of land took the estate by way .of a resulting trust, although, the land was conveyed to another, was not applicable to conveyances to the wife or child of the person paying the consideration, as in the case of a conveyance to a stranger. In the former case it would he deemed an advancement, and no resulting' trust would he presumed. But the presumption of advancement might he repelled by evidence that it was not so intended at the time the payment was made.
    Appeal by the plaintiff, Frances B. Scott, and the defendants Sarah Ann Kittle and others from a judgment of the Supreme Court in favor of the defendants Frances Calladme and others, entered in the office of the clerk of the county of Niagara on the 26th day of May, 1893, upon the report of a referee dismissing the plaintiff’s complaint and declaring a certain deed null and void and of no effect.

      August JBeeTcer, for the appellants.
    jP. F. King, for the respondents.
   Bradley, J.:

The purpose of the action is the partition of certain premises in the city of Niagara Falls, of which it is alleged Thomas Calladme died seized. He was the husband of the defendant Frances Calladme, and died in June, 1877. They were married prior to 1850, and came to this country from England within a few years after that time. In May, 1864, she took title in fee to the premises by deed from Jane S. Townsend, and in December, 1871, she executed and delivered directly to her husband a quit-claim deed of the premises. Presumptively and at law this deed was ineffectual to convey to him the land, and void. (White v. Wager, 25 N. Y. 328; Winans v. Peebles, 32 id. 423; Dean v. M. E. R. Co., 119 id. 540.)

A conveyance, however, made directly between husband and wife, having the support of a suitable consideration, may be sustained by a court of equity.

The plaintiff proceeded in this action upon the assumption that the deed of the wife to her husband was effectual to vest title in the latter. This is the contested proposition in the present case. "When they came to this country they had substantially no means other than their earning capacity for their support. The husband earned some money as a hotel porter and the wife took care of it. The premises were purchased for $750 ; the deed was made to the wife, and the payment of tlie consideration was secured by tbe bond for that amount, made by both, tbe husband and wife, and the mortgage of the latter to the grantor upon the premises. And the referee has found that the wife then went into possession of the premises, and has ever since been in the possession of them. The consideration, by payments from time to time made, was fully paid, and the major part of it from money earned by the husband and handed to his wife along as he earned and received it. He had knowledge of the execution and delivery of the deed and bond and mortgage, and of their terms, at the time they were made, and the payments on the bond and mortgage were made with the knowledge and approbation of the husband from such earnings, 'and such payments, or the most of them, were made by him personally. So far as appears they lived and worked harmoniously together. In 1871 the wife was quite sick for a considerable time, and her deed to her husband was then made. It expressed the consideration of one dollar, but in fact nothing was then paid. The contest here is between some of their children, of whom the plaintiff is one, and their mother. And it is urged that, because of the fact that the consideration of the conveyance to Mrs. Calladme was paid from moneys earned by her husband, she equitably, as between them, took the title as trustee for him, and, although there was no trust which she could be required to execute in his behalf, it will be recognized in support of her voluntary conveyance to him. If the facts required the conclusion that such, as between them, was the relation she assumed when she took the title, her conveyance, subsequently made to him, was entitled to supiport upon equitable considerations. (Foote v. Bryant, 47 N. Y. 544; Norton v. Mallory, 63 id. 434; Robbins v. Robbins, 89 id. 251.) The rule of the common law, before its abrogation by the statute, that the person paying the consideration on the purchase of land took the estate by way of resulting trust, although conveyed to another, was not applicable alike to conveyances to a stranger and to the wife or child of the person paying the consideration. In the latter case it would be deemed an advancement, and no resulting trust would be presumed. But the presumption of advancement might be repelled by evidence that it was not so intended at the time the payment was made. (Story Eq. Juris. § 1204; Murless v. Franklin, 1 Swanst. 13; Finch v. Finch, 15 Ves. 43; Guthrie v. Gardner, 19 Wend. 414; Watson v. Le Row, 6 Barb. 489; Welton v. Divine, 20 id. 9; Partridge v. Havens, 10 Paige, 618.)

As of the time the purchase of the premises and payment for them were made no circumstances appear to require the inference that a resulting trust to the husband was intended, and the referee has found that there was no understanding that she should hold them in trust for him. The evidence seems to support his finding in that respect.

The fact that she made the deed to him in 1871 does not necessarily import anything more than a willingness on her part then to do so. There is no evidence of any circumstances leading to it other than in the fact that she was then quite ill, and may have desired that he should have the beneficial enjoyment of the property if she did not recover. The evidence to repel the presumption of advancement must be such as to show that his intention was otherwise contemporaneously’with the purchase. He and his wife resided on the premises at the time the purchase was made, and they continued thereafter to do so until his death. In this there was nothing to necessarily indicate that he took and had possession under the conveyance, or that the wife did not have it. As they were living happily together, it is likely that no question arose as to which of them was entitled to or should be treated as having the possession. She had the title, and it may be assumed, as nothing appears to the contrary, that the title and possession were united in the same person. There is some conflicting evidence as to the declarations of the widow as to the location of the title after the death of her husband, but, in view of the findings of the referee, there is no occasion to make any further reference to that subject, as no consideration of it could affect the legal aspect of the case.

The disability of married women arising out of the marital relation, except so far as removed by statute, remains., (Bertles v. Nunan, 92 N. Y. 152.)

As a consequence, they could not at the time in question effectually at law convey land in this State directly to their husbands. And although equity may give effect to such conveyances then made, it would do so only when supported by a valuable consideration.

Upon the evidence, in view of the facts found, the conclusion was fairly 'justified that no trust within the contemplation of the husband and wife resulted to him from the payment of the consideration of the conveyance to her, and, therefore, there was none for the equitable support of her deed to him founded upon any recognition of such a trust.

There are some other considerations urged by the learned counsel for the plaintiff in his able argument, all of which have been considered. But, in the view taken of the case, it is deemed unnecessary to make special reference to them.

The judgment should be affirmed.

Dwight, R. J., Lewis and Haight, JJ., concurred.

Judgment appealed from affirmed, with costs.


author: Haight, J.:

text:
    William T. Knorr, as Administrator, etc., of Charles Knorr, Deceased, Appellant, v. The New York State Mutual Benefit Association, Respondent.

      Motion to vacate a warrant of attachment —when it may be made by a receiver — competent affidavit — a waiver of a defect in a complaint by the corporation does not conclude the receiver.

    Upon a motion to vacate a warrant of attachment it was shown that the person making such application had been appointed temporary receiver of the defendant in the action wherein the attachment had been granted, and had duly qualified by giving the security required by the order of his appointment, and filing the same in the office of the clerk, with the required oath of office, and that he . had ever since and still continued to act as such receiver.

      Held, that the interest of the receiver in the property attached was sufficiently shown to entitle him to move for an order vacating such attachment.
    Upon an application for an order vacating a warrant of attachment granted in an action, it is competent to show by affidavit that nothing has been collected by the plaintiff therein under the attachment, and that a motion had been made by such plaintiff for leave to apply the property attached in payment of his judgment, upon which an order was issued staying the proceedings until the hearing and determination of such motion to vacate the attachment, provided such, facts are within the personal knowledge of the affiant.
    Although a corporation may have waived a defect in the complaint in an action brought against it, the receiver of such corporation, representing, as he does, tie creditors thereof, has the right to allege that such complaint fails to state a good cause of action, upon a motion made by him for an order vacating a warrant of attachment granted in such action upon such complaint and the affidavits of the plaintiff and his attorney.
    • In an action brought to recover the amount of a death claim from a mutual benefit association, proof that moneys collected by such mutual benefit association to pay the death claims of members thereof, were paid out to the representatives of deceased members whose claims had matured subsequently to that of the plaintiff in such action, does not show that the association has disposed of or secreted its property with intent to defraud its creditors, and will not entitle the plaintiff to a warrant of attachment.
    Appeal by the plaintiff, William T. Knorr, as administrator, etc., of Charles Knorr, deceased, from an order of the Supreme Court, made at .the Erie Special Term and entered in the office of the clerk of the county of Cattaraugus on the 2d day of February, 1894, vacating a warrant of attachment heretofore granted in this action, and overruling the preliminary objections of the plaintiff to the granting of such order.

      William II. Henderson, for the 'appellant.

      Louis Marshall, for the respondent.
   Haight, J.:

The warrant was issued upon the ground that the defendant had assigned, disposed of, secreted, and is about to assign, dispose of and secrete, property with intent to defraud its creditors. The motion to vacate was made by one David McClure as receiver of the defendant appointed by the court in an action prosecuted by the Beople of the State to dissolve and wind up the affairs of the corporation, and was based upon the papers upon which the warrant was granted. When the motion was brought to a hearing the appellant objected upon the ground that the moving party had failed to show by any legal proof that there had not been an actual application of the attached property or the proceeds thereof to the payment of the judgment in the action prior to making the motion, and that he had failed to .show that he had any interest in or lien upon the property attached under the warrant. These objections were overruled, and, we think, properly. For it appeared by the affidavit of McClure that he was appointed temporary receiver on the 12th day of January, 1893, by the court in the action referred to; that he had duly qualified by giving the security required by the order, and filing the same in the office of the clerk with the oath of office required ; and that he had ever since acted and was still acting as such receiver. Attached thereto was a copy of the order of the court appointing him such receiver. ,

It also appears by the affidavit of Horan that nothing as yet had been collected by the plaintiff under the attachment, and from the affidavit of Marshall that a motion had been made by the plaintiff for leave to apply the property attached in payment of his judgment upon which an order was issued staying proceedings until the hearing and determination of this motion. It was competent to show these facts by affidavit provided they were within the personal knowledge of the affiants. (Delmore v. Owen, 44 Hun, 296; affd., 110 N. Y. 679; Tim v. Smith, 93 id. 87.)

It is also contended that the moving party was guilty of laches. Upon this subject the parties were permitted to present their affidavits, and although considerable time had elapsed after McClure was appointed receiver, under the facts stated by him, we think there was proper excuse for the delay.

We are thus brought to a consideration of the papers upon which the warrant was issued. It appears to have been issued upon the complaint, the affidavit of the plaintiff and of Inman, his attorney.

It appears that on the 20th day of June, 1881, Charles Knorr, the plaintiff’s testator, joined the defendant and had issued to him a certificate of membership in class A for $2,000, numbered 165, in which the defendant certified that “ This membership entitles his wife Louisa, if she survives him, otherwise his executor or administrator, upon the death, of said Charles Knorr, to such an amount as will equal one dollar collected from each member on the assessment made for the payment thereof, not, however, to exceed the sum of $2,000; said amount payable within 60 days after satisfactory proof of said death has been received by the association.” The plaintiff alleges that Charles Knorr died on the 31st of January, 1892, leaving a last will and testament, which has been duly admitted to probate, and that the plaintiff had been duly appointed administrator with the will annexed by the Surrogate’s Court of Cattaraugus county. Neither the complaint nor the affidavits make any mention of the wife of the testator, so we are not advised as to ■whether she is living or dead. If she survived the testator the money due upon the certificate from the defendant belonged to her and not to the executor or administrator of the testator. In this respect it is apparent that there was a failure to state a good cause of action. But it may be said that the defendant has waived this defect in the papers by resting upon its rights and permitting the plaintiff to enter judgment. Possibly this may be true as to the defendant, but McClure, as receiver, represents not only the defendant, but the creditors as well, and as such we see no reason why he may not avail himself of the defect unless he has waived the same because of his laohes. But assuming the papers to be sufficient so far as this question is concerned, we find further trouble in sustaining the attachment. As we have seen, it was issued upon the ground that the defendant ■ has assigned, disposed of and secreted, and is about to assign, dispose of and secrete, property with the intent to defraud its creditors.

It appears from the affidavits upon which the warrant was issued that the plaintiff presented to the defendant proofs of death ; that they were accepted and an assessment was ordered under date of July 1, 1892, for the plaintiff’s claim and that the full amount was paid into the office of said company.

It further appears from the statement of the officers of the defendant to the plaintiff’s attorney, that, instead of paying over the money to the plaintiff, that the same was paid out upon death claims of members resident in the city of Syracuse and vicinity, whose claims had matured subsequently to that of the plaintiff. Was this a disposing of or secreting the property of the corporation with intent to defraud creditors? We think not. If the money collected upon the assessment belonged to the corporation it appears that it was applied in. the payment of its debts. Its creditors, therefore, could not have been defrauded. If the money collected upon the assessment belonged to the plaintiff, as claimed, and the officers received it in trust for him and diverted or converted it, the plaintiff may have a remedy against them for so doing, but we do not understand that he would be entitled to an attachment against the corporation upon the grounds stated by reason of such conversion by the officers thereof. Whether the money so collected upon the assessment belonged to the plaintiff or to the corporation it is not necessary to now determine, for in neither event could an attachment issue upon the grounds stated in it.

The order appealed from should be affirmed, with ten dollars costs and disbursements.

Dwight, P. <L, Lewis and Bradley, JJ., concurred.

Order appealed from affirmed, with ten dollars costs and disbursements.


author: Dwight, P. J.:

text:
    The People of the State of New York, Respondent, v. Joseph S. Upson, Appellant.

      Police justice of Rochester — authority to try charges,made under section 822 of the Penal Oode — chapter 204 of 1893 a valid provision of law — chapter 14 of 1880 repealed by implication chapter 143 of 1861 •— chapters 384 of 1887 and 561 of 1890 unconstitutional— " local courts” defined — statutes, how construed.

    Under the provisions ol chapter 14 of the Laws of 1880 the police justice of Rochester has power to hold Courts of Special Sessions with the jurisdiction of those courts in respect to all those classes of offenses which are enumerated in section 56 of the Code of Criminal Procedure, but he is not by virtue of the authority conferred by said chapter empowered to hear and determine a charge against a prisoner made under section 322 of the Penal Code.
    He has authority to try and render judgment in such a case by virtue of chapter 204 of the Laws of 1893, which is a valid provision of law notwithstanding the fact that it purports to amend a statute which at the time of its enactment had no existence by reason of its previous repeal by implication, and under the provisions thereof the police justice of Rochester has authority to try and render judgment upon charges made under section 822 of the Penal Code.
    Chapter 14 of the Laws of 1880 was intended to be and was in all respects substituted for and in the place of chapter 143 of the Laws of 1861, and by virtue of the enactment of the former act the latter statute was wholly superseded and repealed by implication.
    Chapter 384 of the Laws of 1887 and chapter 561 of the Laws of 1890 are unconstitutional because they assume to give the police justice of Rochester territorial jurisdiction throughout the county of Monroe, and as the designation of the territory embraced in the jurisdiction defined therein is entire, such acts must be good as to the whole or bad as to the whole thereof, and cannot .be good as to the city of Rochester and bad as to the county of Monroe.
    The term “local courts” means courts possessing a jurisdiction localized within the territorial limits of the city or village for which each is created and by the electors of which its incumbent is chosen.

      Tliere is no recognized mode of ascertaining the intention of a legislative enactment except from the plain sense and reasonable construction of the terms employed, and by no process of construction can the “ city of Rochester ” be held to have been intended by the use of the designation the “ county of Monroe.”
    Appeal by the defendant, Joseph S. Upson, from a judgment of a Court of Sessions held in and for the county of Monroe, and entered in the office of the clerk of the county of Monroe on the 3d day of February, 1894, convicting the defendant of the crime of keeping a disorderly house, and also from an order entered in said clerk’s office on the 19th day of March, 1894, denying the defendant’s motion for a reargument of the appeal taken by him from the judgment df the police justice of the city of Rochester,

      II. B. Ilallock, for the appellant.

      II. II. Widener, Assistant District Attorney, for the respondent.
   Dwight, P. J.:

The question in the case is of the jurisdiction of the police justice of Rochester, sitting as a Court of Special Sessions, to try and render judgment in the case of a complaint under section 322 of the Penal Code.

The offenses there defined are not among those enumerated in section 56 of the Code of Criminal Procedure as being within the jurisdiction of Courts of Special Sessions, so that by virtue, merely, of an authority to hold Courts of Special Sessions, with all the jurisdiction belonging to those courts in general, the police justice of Rochester was not empowered to hear and determine the charge against the defendant upon which he was convicted in this case. If he had the authority at all it must have been by virtue of some special provision of law such as Ave might expect to find embodied in the charter of the city of Rochester. And so we do find in several successive enactments of the Legislature relating to the organization and government of that city, several provisions purporting to confer jurisdiction upon that office. Those provisions it becomes our duty to examine and to determine their effect and bearing upon the questions here involved.

The act of 1861 (Chap. 143) was entitled “ An act to amend' and consolidate the several acts in relation to the charter of the city of Rochester.” By section 245 of that act it was provided as follows: “ The police justice of said city shall have jurisdiction in suits brought for a violation of any of the city ordinances, or of the laws concerning the internal police of the State. He shall not have nor exercise any other civil jurisdiction, but shall have sole and exclusive jurisdiction, in preference to any other justice, to hear all complaints and to conduct all examinations in criminal cases except in ease of his absence from-the city or inability.” This provision, it will be seen, does not empower the police justice to hold Courts of Special Sessions, and gave him no jurisdiction to try and determine any charges of misdemeanor, but only, it would seem, to entertain complaints and conduct examinations with a view -to holding the parties charged for the action of the grand jury.

The act of 1880 (Chap. 14) was entitled “An act to further amend chapter 143, Laws of 1861, entitled (as above) and to consolidate therewith the several acts in relation to the charter of said city.” By its 1st section it was provided that “ Chapter 143 of the Laws of 1861, entitled (as before) is hereby amended so as to read as follows; ” and then follows a complete resumé and consolidation of all the acts then in force pertaining to the subject in hand, including a re-enactment of most of the provisions of the act of 1861 (supra), generally without change of language or arrangement, but incorporating with it some provisions of law enacted in the interval, and some which were altogether new, and by subdivision 2 of section 290 it was provided that “ All acts and parts of acts inconsistent with or repugnant to this act or to the charter as hereby amended are hereby repealed or declared inapplicable to the said city, but the repeal hereby of any statutory provision shall not affect any action, etc., commenced prior to the time when this act shall take effect.”

It is very apparent that the statute of 1880, thus described, was intended to be and was, in all respects, substituted for and in place of the statute of 1861, and that, by virtue of the enactment of the former, the latter statute was wholly superseded and repealed by implication. (Heckmann v. Pinkney, 81 N. Y. 211; Matter of N. Y. Inst. for the Deaf & Dumb, 121 id. 234.)

By section 265 of the act of 1880 it was provided that “ The-police justice of said city shall have jurisdiction in suits brought for a violation of any of (the) city ordinances, or of the laws concerning the internal police of the State, and is hereby empowered to hold Courts of Special Sessions for the trial of all offenses triable in a Court of Special Sessions.” Since the passage of this act there has been no question of the power of the police justice to hold Courts of Special Sessions with the jurisdiction of those courts in respect to all those classes of offenses which are enumerated in section 56 of the Code of Criminal Procedure.

.The act of 1887 (Chap. 384) consists of a single section, which purports to amend only section 265 of the act of 1880 (supra). This it attempts to do by providing that the Courts of Special Sessions held by the police justice of Rochester shall have, “ in the first instance, exclusive jurisdiction to hear, try and determine all charges of misdemeanors committed within the county of Monroe, as is now or may be hereafter provided for in relation to Courts of Special Sessions by section 56 of said Code of Criminal Procedure, and shall also have exclusive jurisdiction in like manner * * * to hear, try and determine all other charges of misdemeanors and other offenses or crimes punishable as such as are defined to be misdemeanors by sections 5 and 6 of the Penal Code or other statute now or hereafter passed.”

The definitions of sections 5 and 6 of the Penal Code include in the class of misdemeanors all crimes not felonies, and are broad enough to include the offense of which the defendant was convicted ; and here, as will be seen, was the first enactment which assumed to give ro the police justice of Rochester, sitting as a Court of Special Sessions, jurisdiction of that offense. But the provision was clearly unconstitutional, because it assumed to give to the police justice of Rochester a territorial jurisdiction throughout the county of Monroe.

The office in question finds its only warrant for being in that provision of the Constitution of the State which provides for the establishment by the Legislature of “inferior local courts of civil and criminal jurisdiction.” (Const, art. 6, § 19.) The meaning of the term “ local courts ” is well established by the authorities. It means courts possessing a jurisdiction localized within the territorial limits of the city or village for which each is created, and by the electors of which its incumbent is chosen. Such is the plain doctrine of sucli cases as Brandon v. Avery (22 N. Y. 469); Waters v. Langdon (40 Barb. 408); Geraty v. Reid (78 N. Y. 64); People ex rel. Sinkler v. Terry (108 id. 1); Curtin v. Barton (139 id. 505). In the two cases last cited the constitutionality of the enactments assailed was upheld only because, by a just construction of their terms, it was apparent that the jurisdiction of the courts created thereby was intended to be limited in the one case to the city (of Syracuse), and in the other to the village (of Canton), in which the courts were, respectively, constituted.

The suggestion of the learned Court of Sessions, that the words “within the county of Monroe” were inadvertently employed in place of “within the city of Rochester,” as intended by the Legislature, can hardly be accepted as an answer to the objection to the act in question. There is no recognized mode of ascertaining the intention of a legislative enactment, except from the plain sense and reasonable construction of the terms employed; and by no process of construction can the city of Rochester be held to have been intended by the use of the designation “ the county of Monroe.”

Neither can the contention of the district attorney be maintained to the effect that the act, though bad as to the whole of the county of Monroe, was good as to that part of it which is included within the territorial limits of the city of Rochester. The provision is single and the designation of the territory embraced in the jurisdiction defined is entire; it must be good as to the whole or bad as to the whole.

The same objection must prevail to the attempted further amendment of section 265 of the act of 1880 by chapter 561 of the Laws of 1890. It consists of a re-enactment of the section, as amended by the act of 1887, with scarcely more than a verbal amendment, which, however, serves to emphasize the intention of the Legislature to extend the jurisdiction of the police justice of Rochester over the whole of the county of Monroe.

The next attempt to amend the provision of the charter of Rochester relating to the jurisdiction of its police justice is found in chapter 204 of the Laws of 1893. This act, we may well suppose, was passed with the intention of remedying the error of the legislation of 1887 and 1890 relating to that subject. If valid legislation it would have accomplished that object, because it undertook by express provision to limit the jurisdiction in question— as it was, no doubt, impliedly limited by the act of 1880, viz., to offenses committed within the city of Rochester, and thus avoided the constitutional objection to the enactments of 1887 and' 1890.

The objection is made to this statute that it is void because it purports to amend a statute which has no existence by reason of its repeal. There seems to be no reported decision of our own courts on this question. In several of the Western States the rule has been held as contended for by the defendant. (See 23 Am. & Eng. Ency. of Law, 276, and the cases cited.) Whereas, in Massachusetts, a statute amending a section of a previous statute, which had been superseded and repealed by implication, was held to be valid on the ground that it was the evident intention of the Legislature to amend the amendatory and not the amended section. There can, of course, be no doubt of the intention of the Legislature in this case, and we are much disposed to follow the doctrine of the Massachusetts case, and give effect to the act of 1893 as a valid definition of the jurisdiction, after that date, of the police justice of Rochester, which covers the offenses of which the defendant was convicted.

Such being the case, the constitutional objection to the acts of 1887 and 1890 are avoided, and a jurisdiction was conferred upon the police justice to hear, try and determine the complaint against the defendant.

A most unquestioned case of gross violation of the law was made out against him, and that by evidence to which no objection was made.

The judgment should be affirmed.

Lewis, Haight and Bradley, JJ., concurred.

Judgment and conviction of the Court of Sessions of Monroe county affirming a judgment and conviction of a Court of Special Sessions of Rochester affirmed.


author: Bradley, J. :

text:
    The Buffalo Chemical Works, Respondent, v. The Bank of Commerce in Buffalo, Appellant, Impleaded with Others.

      Action quia timet• — ■when maintainable — when a receiver will be a/ppointed — right of a mortgagee, as against junior lienors, to enforce his lien.

    To entitle a party to maintain an action in the nature of a bill of peace to prevent a multiplicity of suits, it must be clear that there is a right claimed or asserted which affects many persons who are made parties, and for the support of an action of that character it is essential that there be in the controversy some relation, interest or question common to the parties, and which may be settled or disposed of in the action, in which case several may unite as plaintiffs or the action may be brought by one against several defendants.
    A receiver may and generally will he appointed where a plaintiff has a cause of action, and his recovery is probable, the benefit of which will he lost or greatly impaired unless a receiver is appointed.
    Except under peculiar circumstances an order will not be granted enabling those having subordinate interests in property to obtain relief, while denying to a creditor having the senior specific lien the right to execute it in the manner provided by law.
    As a general rule a mortgagee is entitled to the full benefit of the lien of his mortgage with the right to make it available without embarrassment from those having subordinate interests, other than such as arises from a defense-interposed in the action brought to enforce the mortgage by means of a judicial decree.
    Appeal by the defendant, The Bank of Commerce in Buffalo, from an order of the Supreme Court, made at the Erie Special Term and entered in the office of the clerk of the county of Erie on the 16th day of October, 1893, appointing^ receiver of the property, real and personal, of the defendant The Genesee Oil Works, Limited, restraining the prosecution of actions against it and granting other relief.
    The Genesee Oil Works, Limited, was a partnership association created pursuant to the laws of the State of Pennsylvania. It had $150,000 capital stock, and the defendants Joseph C. Bright and William H. Bright were subscribers for most of it.
    The association acquired certain real estate in the city of Buffalo, erected works thereon and proceeded in the business of refining oil and making wax and other oil products. On June 14,1893, it made a general assignment in trust for its creditors to the defendant Farnham.
    The indebtedness of the association was then large, and the plaintiff alleges that, after the assignment was made, it and nine defendants, who are creditors, commenced actions against the association to recover the amounts of their respective claims against it; that, in many of them, attachments were issued and levied upon the property of the association, and in most of them judgments were recovered for sums specifically mentioned and amounting in the aggregate to about $150,000, and that upon the judgments so recovered executions were delivered to the sheriff of Erie county and were by him levied upon its property. One of such judgments was that of the plaintiff for $1,071.73.
    The interest of defendants Mosher and Fitzpatrick was that of lienors given them by filing a lien on the property of the association for work amounting to $1,500, and the interest and claim of the defendant Stillwell, Pierce & Smith Yaile Company for $2,265 were of the same character.
    The defendants Simens and the Markle Bank and Trust Company were creditors at large of the association preferred in its assignment. The defendant Hodgson was a stockholder of the association. The defendant Columbia National Bank and the Commercial Bank were creditors at large of the association, and Beck, as sheriff of Erie county, is a party defendant.
    The plaintiff alleges that the association is indebted to the defendant, the Bank of Commerce of Buffalo, in about the sum of $200,000; that the association made to that bank two mortgages upon its real estate. One of them, of datte of August 11,1890, to secure the payment of its commercial paper, and that on which it should be liable as a party to the amount of $75,000, and the other, of date of June 13, 1893, for a like purpose and to the amount of $60,000.
    That the defendant Joseph C. Bright was an indorser of some of the paper of the association, and that in April, 1893, it made a chattel mortgage upon its personal property to a person in trust for him, and to secure him against liability on its paper, upon which he was chargeable and held by the defendant, the Bank of Commerce and others mentioned. And it is alleged that such chattel mortgage remained in escrow until a certain arrangement was made between the association and the defendants Bank of Commerce, Columbia National Bank and the Commercial Bank and particularly mentioned and which is alleged to have, if effectual, been beneficial to the defendant Joseph O. Bright; that thereupon the chattel mortgage was delivered up to the association and canceled. And that such arrangement was not observed by the defendant, the Bank of Commerce, but that in violation of it such defendant obtained from the association the mortgage for $60,000 before mentioned.
    The plaintiff also alleges that a question has arisen whether the assignment to defendant Farnliam is valid ; that a question has also arisen as to whether or not the mortgages made by the association to the defendant, the Bank of Commerce, are valid, and whether or not the defendant Joseph C. Bright is, as against that bank, entitled to have the chattel mortgage before mentioned restored and treated as an equitable lien paramount to any interest the bank can acquire to the property under the latter mortgage, and that the premises, plant and machinery and tools of the association, if sold together, will produce a much larger sum than can be realized from sale of the property separately.
    The relief demanded is that the general assignment of the association be adjudged invalid ; that the defendants, and each of them, be enjoined from prosecuting any action against it and interfering with its property; that a receiver be appointed and authorized to sell the property, and that after paying the plaintiff’s judgment the proceeds be brought into court.
    The defendant, the Bank of Commerce, by its answer, put in issue some of the matters alleged in the complaint. It does not appear by the record that any other defendant has answered the complaint. Before the order appealed from was made the Bank of Commerce had commenced an. action in this court to foreclose its two mortgages, and the plaintiff and all the defendants in this action, except Joseph C. Bright, Siinens, the Maride Banking and Trust Company and the Columbia National Bank of Buffalo, are, with others, made defendants. The Bank of Commerce in Buffalo alone appeals.

      George G Union and Adelbert Moot, for the appellant.

      Seward A. Simons and John G. Milbtirn, for the respondent.
   Bradley, J. :

It may be that a leading purpose of the action is to restrain the defendant, the Bank of Commerce, from proceeding to the foreclosure of its mortgages against the property of the Genesee Oil Works, Limited. At all events, as here treated, the main question is whether the plaintiff is fairly entitled to the order thus enjoining that defendant.

The plaintiff is a judgment creditor of tiie Genesee Oil Works, Limited, to the amount of about $1,000. Execution issued upon the judgment has heen levied upon the property of that association. And, as appears by the complaint, it is the second lien by levy upon its property. The only one prior to it,' other than certain bank mortgages, is that in behalf of another creditor for $19,000. The executions in both cases are still held by the sheriff, and the only thing in the way of realizing from the property by sale of it upon such processes is the general assignment made by the association in trust for its creditor's to the defendant Farnham. The plaintiff does not allege that the bank mortgages upon the real estate of the association are invalid.

They are prior to the lien of the. plaintiff’s judgment, and whatever rights it has taken by the levy of its attachment and execution upon the mortgaged property are subordinate to the lien of those two mortgages. Therefore, presumptively, there is no support for the plaintiff's attempt to interrupt the proceedings or action of the defendant to foreclose them.

But it is said that this action is one in the nature of a bill of jieace to prevent a multiplicity of suits. To entitle a party to maintain such an action it must be clear that there is a right claimed or asserted which affects many persons, who are made parties, and for the support of an action of that character it is essential that there be in the controversy some relation, interest or question common to the parties, and which may he settled or disposed of in the action. Then several may unite as plaintiffs or one against several as defendants. (Brinkerhoff v. Brown, 6 Johns. Ch. 139; N. Y. & N. H. R. R. Co. v. Schuyler, 17 N. Y. 592; National P. Bank v. Goddard, 131 id. 494.)

It may be seen that the creditors of the Genesee Oil Works had an interest in common in the question of the validity of its general assignment. In this question the defendant, the Bank of Commerce, concurred with the plaintiff and alleged that the assignment was made with the intent to hinder, delay and defraud the creditors of tlie assignor. And tliat defendant as a creditor, beyond and aside from tlie amount secured by its mortgages, may have an interest in being relieved from tlie effect of the. assignment. But as both of the mortgages are prior in lien to the assignment, the security given by them are not in any manner affected by it. And as the liens and interests of the other parties, so far as relates to the mortgaged property, are subordinate to the lien of the mortgages of the Bank of Commerce, there can be in the legal sense no interest of the other creditors in common or otherwise in conflict with that of the bank as such mortgagee.

It is, however, alleged that by the sale separately of the real estate covered by the mortgages and the personal property used in the business of the association for its purposes, the property as a whole will produce much less proceeds than would a sale of it all together or at one time. This may be so, and that is a question in which the other creditors have an interest in common. But is that a reason for denial to the mortgagee of its right to proceed in the foreclosure of its mortgages in the usual manner ? Although our attention is called to no cases in which for that reason support has been given to such a proposition, it is unnecessary to hold that there may not be cases where relief of that character may properly be granted.

A receiver may and generally will be appointed where a plaintiff has a cause of action, his recovery probable, and the benefit from recovery will be lost or greatly impaired unless a receiver is appointed.

As the Genesee Oil Works is insolvent, and in view of the situation the appointment of a receiver of its property and direction to sell it may, so far as relates to the property embraced within the general assignment of that association, be justified. Then the distribution of the proceeds may await the determination of the question whether it be made by the assignee as directed in the assignment, or amongst the creditors in the order of the levy of their attachments and executions or of the liens of their judgments.

This may rest upon sound reason. But none well sustained is seen for shutting off the right given to the bank by its mortgages to enforce the prior lien of them by foreclosure and thus place it in a position where it may be compelled to enter into a contest for the proceeds to which it may be entitled. It certainly would be- a remarkable case, and require a necessity which does not exist in that under consideration, which should enable those having subordinate interests in property to obtain relief which would deny to a creditor having the senior specific lien the right to execute it in the manner provided by law.

By the contract incident to his mortgage, and recognized by law, the right of a mortgagee on default in payment is to proceed to judicial sale of the property covered by it, if he is entitled to judgment to that effect, and if he is not the infirmity or limitation of it as security is matter of defense available to any party defendant or to any person who, having the right to defend, may become such party. (Hall v. Fisher, 1 Barb. Ch. 53; Savage v. Allen, 54 N. Y. 458; Town of Venice v. Woodruff, 62 id. 462.)

The jmoperty covered by the mortgages must necessarily be sold separately. And if the receiver has power or direction to sell the other property of the association he, if deemed desirable, may do so at the time the sale is made pursuant to the decree of foreclosure of the mortgages, and thus may be accomplished the result which it is claimed on the part of the plaintiff will be the most beneficial for the creditors of the association, or the receiver may be permitted to sell all of its property subject to the lien of the mortgages and without prejudice to the right of the bank to proceed to judgment of foreclosure and sale. Then, if so advised, the purchaser may be at liberty before such judicial sale to redeem the mortgaged property from the lien of the mortgages by payment, and thus perfect his title. At all events the mortgagee is entitled to the full benefit of the lien of his mortgages with the right to make it available without embarrassment from those having subordinate interests, otherwise than in the defense of the action brought to enforce it by means of judicial decree.

The order appealed from, so far as it restrains, enjoins or prevents the defendant, the Bank of Commerce, from prosecuting its or any action to foreclose its mortgages on the property of the Oenesee Oil Works, Limited, and the sale thereof pursuant to judgment which it may obtain, and so far as it authorizes or directs the receiver to sell the mortgaged property free from the lien of the mortgages, and so far as any of its provisions are consistent only with sucli authority, direction or purpose and designed to effectuate it, should be reversed, with costs, in other respects affirmed and modified accordingly.

Dwight, P. J., Lewis and Haight, JJ., concurred.

Order appealed from in the particulars designated in the opinion reversed, with ten dollars costs and disbursements to the appellant, in other respects the order is affirmed.


text:
    James M. Emens, Appellant, v. Mary E. St. John, Respondent.

      Executors’ power of sale of realty — how defeated by the devisees thereof — ma/rlcetable title to realty ■ — ■action by a real estate agent to recover his commissions — when he must show the title offered his principal to be marketable.

    As a general rule all the devisees must in some manner manifest an election to take or retain the land devised to them in order to defeat the executors’ power of sale, and the grantees of some of the devisees only would, notwithstanding such election by them, take title subject to the execution of the power.
    A title open to reasonable doubt is not marketable in the sense requisite to require a purchaser to accept it; to be marketable a title must be such as a purchaser can take without reasonable apprehension that questions may arise affecting the peaceful holding of the property, and must be one about which no reasonable doubt can arise impairing its market value.
    In an action brought by a real estate agent against his employer to recover the amount of commissions to which he alleged that he was entitled for services in making an exchange of properties, it appeared that the real estate agent, acting in behalf of the defendant, his employer, had introduced to her a person with whom she made a preliminary arrangement to exchange lands, and agreed upon the terms of exchange, both of them being willing to make the exchange if the titles to the lands were satisfactory.

      Held, that such agent must, in order to recover, show that the title offered to his employer was a marketable one.
    Appeal by the plaintiff, James M. Emens, from a judgment of the County Court of Monroe county in favor of the defendant, entered in the office of the clerk of the county of Monroe on the 17th day of January, 1894, upon the decision of the court reversing the judgment of the Municipal Court of the city of Rochester.

      Frederick, A. Mama, for'the appellant.

      W. G. Jerome, for the respondent.
   Bradley, J.:

The plaintiff, a real estate agent acting in behalf of the defendant, introduced to her Felix Wolff, with whom she made a preliminary arrangement to exchange certain lands in the city of Rochester. They agreed upon terms and both were willing to make the exchange if the titles to the lands were satisfactory. The plaintiff claims that he performed for the defendant the services which entitled him to his commission. This must be assumed if the title which Wolff offered to convey was a marketable one. The land was part of that of which Daniel Washburn died seized. His will was admitted to probate and recorded in June, 1871, and by it he directed that some of the land in question be divided into eleven equal parts, and he devised one of such parts to each one of that number of devisees named in the will. By a subsequent provision of the will he appointed certain persons executors with power to sell and convey his real estate, etc. In 1873 one of the devisees, in 1871 another, and in 1879 a third one of them conveyed their shares or interests in the land to grantees named in the deeds; and in 1881 the surviving executor made to Wolff a deed of conveyance of the land.

The devisees took by the will the title to the land, subject to the power of sale given to the executors, and three of the devisees, by their conveyances, disposed of three-elevenths of the land to their grantees, and to that extent vested title in them. It was within the power of the devisees, if they chose to do so, to elect to take the land, and thus dispense with and defeat the exercise of the power of sale. (Reed v. Underhill, 12 Barb. 113; Hetzel v. Barber, 69 N. Y. 1, 14; Prentice v. Janssen, 79 id. 478; Sayles v. Best, 140 id. 368.) It is suggested that this could not be accomplished by a portion only of the devisees. As a general rule all must in some manner manifest election to take or retain the land, as such, to defeat the executors’ power of sale. And in that view the grantees of a portion of the devisees only would take title subject to the execution of the power. (Mellen v. Mellen, 139 N. Y. 210.) And it is very likely that such was the relation which the grantees of the three devisees took to the estate conveyed to them in the premises.

The question is whether, upon the facts as they appeared, there was any reasonable apprehension that Wolff could not convey what would be deemed a marketable title. As has been observed, the testator directed that the residue of his estate be divided into eleven equal parts, and he devised to each one of that number of persons named one of such parts. The power given to the executors was a naked one of sale, without the expression of any specific purpose of its creation, hut it may be assumed that it was given to be available for the division between the beneficiaries of the devise. As the language used may not be construed as a direction to sell the land, it was not by the will necessarily converted into personalty.

And, in view of the direction to divide the land into eleven parts, the terms of the will are such as to import a devise to the devisees in severalty. No question could arise out of such construction if none of them had conveyed their shares. Three of them had done so. And, in view of the provisions of the will before mentioned, upon a construction which might be contended for it, there may be some opportunity for controversy. And it may have been reasoned with some plausibility that if the devisees held in severalty, by virtue of the provisions of the will, they in that manner elected to dispense with the power of sale. But there may be facts aliunde the records to relieve the situation of any question. It may be that the sale hy the executor was made with the acquiescence of the beneficiaries, or that the fund produced by the sale was received by them. Either would have relieved the conveyance to 'Wolff of any criticism. And it is probable that it was made with their assent and approval. But no such facts were brought to the attention of the defendant or her attorney. In case of such assent the lapse of about thirteen years from the time of the record of the will to that of the executors’ sale and conveyance could have furnished no ground of objection. Otherwise that fact might, with other circumstances, be some evidence of election of the devisees to retain the land and dispense with the power of sale. (Mellen v. Mellen, 139 N. Y. 222; Purdy v. Wright, 44 Hun, 239.)

In view of such lapse of time and of the fact that the devisees could by election, signified by them to that effect, have defeated the,^ executors’ power of sale, the inquiry whether they had done anything, and what, in that respect would be a reasonable one for a person contemplating the purchase of the premises to make, and until satisfied upon the subject hesitation in making the purchase might reasonably by him be deemed justified. It does not appear by whom the premises were or have been occupied before or since the conveyance by the executor to "Wolff. The advice of the defendant’s attorney was given in view of the doubt about the title which might arise upon the abstract furnished at the time. And the unwillingness of the defendant to make the exchange and take the property of Wolff does not seem to have been capricious upon her part, but was occasioned by her doubt about the perfection of his title. And in that respect she relied and acted upon the advice of her attorney, and being thus advised she act#l in good faith.

The question is whether there was reasonable ground to support doubt about the title to any portion of the land at the time in question.

In Moore v. Williams (115 N. Y. 586) Judge Earl said that within the meaning of the rule “a good title means not merely a title valid in fact, but a marketable title which can be sold to a. reasonable purchaser.” Many cases on the subject are there cited with approval.

A title open to reasonable doubt is not marketable' in the'sense requisite to require the purchaser to accept it.

It must be one which he can hold without reasonable apprehension that questions may arise affecting the peaceful holding of the property, and a title about which no reasonable doubt can arise impairing its market value. (Fleming v. Burnham, 100 N. Y. 1; Vought v. Williams, 120 id. 253; Ingalls v. Hahn, 36 N. Y. St. Repr. 770.)

While this case may not be entirely free from doubt, we think that as the situation of the title was presented to the defendant,, she was justified in the conclusion that it was doubtful and not marketable in the sense applicable to that term, and, therefore, she was not required to accept it.

And for that reason the plaintiff’s alleged commissions were not earned.

The judgment of the County Court should be affirmed.

Dwight, P. J., Lewis and Haight, JJ., concurred.

Judgment of the County Court of Monroe county appealed] fromi affirmed.


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    The United Glass Company, Appellant, v. Calvin P. H. Vary and Others, Respondents.

      Liability of stockholders under section 10 of chapter 40 of 1848 — when equitable relief will be granted — exhaustion of the remedy against the cmpoi'ation must bo shown — surrender of a corporate franchise — when inferred.

    In an action brought by a creditor against the stockholders of a corporation under section 10 of chapter £0 of the Laws of 1848, in behalf of itself and other creditors thereof, who may choose to come in and share the benefit, equitable relief will be granted to prevent a multiplicity of suits in a case where the stockholders have become liable under the statute, and there are several creditors. ^
    The exhaustion of remedy against a corporation as provided by the statute is a condition precedent to the maintenance of an action to charge its stockholders with the personal liability imposed by section 19 of chapter 40 of the Laws of 1848. It is similar in effect to the requirement of the entry of judgment and return of execution unáatisfied against any other debtor before proceeding by action to reach property or funds equitably chargeable with the payment of his debt, and cannot be dispensed with in any case except where its accomplishment is practically impossible. Creditors can only be relieved from the neces- , sity of that condition when it cannot be performed, as when a corporation has been dissolved, or for other cause judgment and execution cannot go against it.
    To infer the surrender of corporate franchises from insolvency and suspension for a less period than that designated by the statute to consummate it, the circumstances must be such as to make it appear that the corporation has not the power to continue or resume its business.
    The futility of the preliminary remedy against a corporation cannot, in an action against the stockholders thereof to charge them with the liability imposed by section 10 of chapter 40 of the Laws of 1848, be effectually shown otherwise than by evidence of its result.
    Appeal by tlie plaintiff, The United Glass Company, from a judgment of the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of Wayne on the 28th day ’of November, 1893, upon a dismissal of the complaint directed by the-court after a trial at the Wayne Circuit before the court and a jury, and also from an order entered in said clerk’s office on the 17th day of November, 1893, dismissing the complaint with notice of an intention to bring up for review on such appeal said order, the preliminary objections raised at said trial to the motion to dismiss the complaint, the judgment herein and the order made on the 13th day of November, 1893, requiring the plaintiff to proceed to the trial of said action.

      Charles 8. Kent, for the appellant.

      JS. A. Nash, for respondents Trotter, Reynolds and Rose.

      Horace Me Quire, for respondents Vary, Keener and Pitkin.
   Bradley, J.:

The plaintiff by the complaint alleges that the Trotter Refrigerator Company was incorporated under the Manufacturing, etc., Act of 1848 (Chap. 40), and those amendatory of it, by filing a certificate of incorporation March 19, 1890, whereby the capital stock was fixed and limited to $75,000, divided into shares of $100 each; that the 750 shares were issued as full-paid stock, but that it never was paid in full; that all the- defendants are stockholders of the company ; that in an action brought in June, 1891, in the Supreme Court, by Bitkin, against it, an order was made appointing Peter R. Sleight receiver of the corporation; that he qualified, took possession of and sequestered, as far as possible, all the goods, chattels, property and choses in action of the company; that the “ said action is now pending undetermined, and no final judgment or judicial decree of dissolution has been entered therein, and said corporation has not in fact been dissolved, though it is for all practical or business purposes dissolved;” that in September following an interlocutory judgment or order was entered in that action continuing the receiver, and that thereafter large amounts of money came into his hands and were wholly paid out upon certain executions issued upon judgments and for disbursements; that the indebted- ■ ness of the company to the plaintiff (particularly specified) was so contracted as by its terms to be paid within one year; that it has not reduced its claim to judgment, etc., “ because of the order of this court made in said action, wherein said receiver was appointed,restraining all persons and creditors of said corporation from commencing and prosecuting any action against” it, and because the plaintiff is “advised the said corporation is in fact dissolved, and all its property, of every name and nature sequestered, and in the hands of a receiver,” and that execution could not be levied upon or satisfied out of property of the corporation. And some other matters are alleged in relation to other creditors who may be permitted to come in and share the benefits of the action, and thus obviate the necessity of a multiplicity of suits, with a view to the equitable relief expressed in the prayer of the complaint.

Equitable relief of that character may properly be the purpose of an action by a creditor of a corporation against its stockholders in a case where they have become liable under the statute and there are several creditors, to prevent multiplicity of suits, and thus take an account for all of them. (Briggs v. Penniman, 8 Cow. 387; Pfohl v. Simpson, 74 N. Y. 137; Bauer v. Platt, 72 Hun, 326.)

The question in the present case is whether or not the plaintiff was in a situation to maintain the action. It seeks to charge the stockholders with liability under the statute, which provides that the stockholders of a company shall be liable to its creditors to an amount equal to that of their stock until the whole amount of the capital stock of the company shall have been paid in, and certificate thereof recorded. (Laws 1848, chap. 40, § 10.) But that no stockholder shall he personally liable for any such debt until an execution against the company shall have been returned unsatisfied wholly or partially. (Id. § 24.) This requirement, preliminary to the plaintiff’s action, is not alleged in the complaint, but, averring that no judgment has been recovered upon its debt against the corporation, and no execution returned unsatisfied, the plaintiff alleges, by way of avoidance of the necessity for it, that a receiver appointed of the corporation has sequestered its property, and that, while the cor poration has not in fact been dissolved, it is for all practical or bust ness purposes dissolved, and adds that the plaintiff has not proceeded to judgment and execution because of the order "by which the receiver was appointed restraining creditors from prosecuting the corporation.

The exhaustion of remedy against a corporation, as provided by the statute, is a condition precedent to the maintenance of an action to charge its stockholders. (Handy v. Draper, 89 N. Y. 334; Rocky Mountain N. Bank v. Bliss, Id. 338.) In that respect it is similar in effect to the requirement of judgment and return of execution unsatisfied against any other debtor before proceeding by action to reach property or funds equitably chargeable with the payment of liis debt. (Estes v. Wilcox, 67 N. Y. 264; Adsit v. Butler, 87 id. 585.) And in neither case can it be dispensed with for any cause except such as renders its accomplishment practically impossible. The death of the debtor does not permit the creditor at large to proceed in equity by what is known as a creditor’s bill, because an action can first go against the personal representative of the deceased debtor, and in such case the bill will not be supported by the fact that he died insolvent. (Estes v. Wilcox, supra.) A creditor can be relieved from the .necessity of that condition only when it cannot be performed. (National T. Bank v. Wetmore, 124 N. Y. 241.) And so, when a corporation has been dissolved or for other cause judgment and execution cannot go against it, the creditor may be relieved from the statutory requirement. (Shellington v. Howland, 53 N. Y. 371.)

In the present case there had been no judicial dissolution of the corporation nor had it ceased to have existence as such. The alleged receivership was created by an interlocutory order in a pending action against it. The purpose of that action is not alleged in the complaint, nor can it be assumed that its object was to put an end to its corporate existence. At all events, so far as appears, it still retains its corporate franchise. And it does not appear that the plaintiff could not have obtained leave of the court to bring action against it if such leave were necessary, as we may assume it to have been. There are cases to the effect that a corporation may suffer that to be done which will destroy or defeat the object of its creation, and which is equivalent to the surrender of its rights as such, and thus relieve its trustees from liability for not doing that which otherwise would be'requisite to their protection. But those cases do not necessarily determine that the trustees can be made liable to a creditor of the corporation without his having first proceeded to judgment and execution against the corporation. (Slee v. Bloom, 19 Johns. 456; reversing 5 Johns. Ch. 366; Bruce v. Platt, 80 N. Y. 379; Hollingshead v. Woodward, 107 id. 96.)

' And when that can be done no reason is seen for its dispensation by the creditor who seeks to charge the trustees.

The doctrine of those cases is that when a manufacturing, etc., corporation has encountered circumstances by which it is disabled from further proceeding in the execution of the purposes of its creation, the trustees may, without liability, omit to file certificates- or do that which otherwise is requisite for their protection.

In such case and for such purpose at least its corporate functions-would be suspended. But to infer the surrender of corporate franchises from insolvency and suspension for a less period than that, designated by the statute to consummate it, the circumstances must-be such as to make it appear that the corporation has not the power to continue or resume its business. (Bradt v. Benedict, 17 N. Y. 93.)

In the present case the facts alleged in the complaint are not such-as to show a dissolution of the corporation. (Kincaid v. Dwinelle, 59 N. Y. 548; Decker v. Gardner, 124 id. 334.)

And the futility of the preliminary remedy against it cannot effectually be shown otherwise than by evidence of its result.

If these views are correct the complaint failed to state facts sufficient to constitute a cause of action, and the judgment and order appealed from should be affirmed.

Dwight, P. J., Lewis and IIaight, JJ., concurred.

Judgment and order appealed from affirmed, with costs.