author: Freedman, J.

text:
    BENJAMIN F. BUTLER, Appellant, v. ALPHONSE DUPRAT, Respondent.

      Declaration of ti'ust.—Equitable assignment—Kow constituted—When irrevocable.—Remittance of funds.—Corporation—Power of officers.

    To constitute a declaration of trust, the acts or words relied on must be unequivocal. The question is mainly one of intent.
    As a rule, a remittance of funds with instructions to pay them over, will not be construed as constituting an irrevocable trust, so long as the funds are at the risk of the remitter.
    The treasurer of a corporation cannot so remit funds as to constitute an irrevocable trust without special authority.
    Funds remitted to a trust company, with instructions to pay them to the holder of a negotiable obligation of the remitter, which is by its terms payable there, remain at the latter’s risk.
    An appropriation not amounting to a declaration of trust will not be held irrevocable, except to protect some one who has parted with value on the faith of it.
    Funds drawn out of bank by the treasurer of a corporation, on express authority of the board of directors, and thereafter held by him apart from his own funds, cannot be considered as held by him personally, but they are to be considered as in the possession of the corporation or of himself as treasurer of the corporation.

      Decided December 1, 1884.
    Rogers Locomotive Works i>. Kelley (88 If. T. 234), distinguished.
    Before Sedgwick, Ch. J., Van Vorst and Freedman, JJ.
    Appeal from judgment of the special term, dismissing plaintiff’s complaint on the merits, with costs.
    This action is brought to follow what was claimed to be a fund held by defendant in trust for plaintiff.
    Henry B. Hammond, as treasurer of the Colorado Cattle Company, on June 26, 1880, remitted $11,672.50 to the Union Trust Company, with the intention thereby to provide for the payment of certain coupons falling due July 1, 1880. This intention was understood by the Trust Company, but no words were used by either party importing an irrevocable direction to that end. Hammond wrote :
    1 ‘ The semi-annual interest on the bonds of the Colorado Cattle Company will be due on the first day of July next, and I enclose check for the amount.” The Trust Company replied : “Tour favor of the 26th, with inclosures amounting to $11,672.50, is received, and the amount placed to the credit of the Colorado Cattle Company’s coupon account.” These coupons were obligations of the Cattle Company, in terms payable at the office of the Trust Company July 1, 1880. There is no entry of any authorization, touching this deposit or remittance, upon the minute-book of the Cattle Company’s directors, but it appears that the Cattle Company, by resolution of its directors, raised these moneys, on its notes, for the purpose of paying the coupons. The Trust Company credited the amount, to Colorado Cattle Company coupon account.
    Thereafter defendant succeeded Hammond as treasurer of the Cattle Company; the Trust Company between June 26, 1880, and January 26, 1881, applied in payment of such coupons all these moneys save $490, which represented the amount due upon fourteen coupons (embracing the ten in suit), which had not then been presented for payment. On January 24, 1881, defendant was authorized by the board of directors to draw the balance of the coupon account, 8490, out of the Trust Company. Enowing the purpose for which the original deposit was made, he drew a check for the amount in the name of the Cattle Company to his own order, and collected it through his bank, the Trust Company honoring the check. He thereafter held the $490 in his own safe, but as treasurer of the Cattle Company, separate and apart from his own funds, the sum being in an envelope, marked “Colorado Cattle Company.”
    Plaintiff, during all these times, was owner of some of the coupons of July 1, 1880, which, was intended to provide for this by remittance to the Trust Company. Plaintiff demanded payment of them, both from the Trust Company and from defendant on October 23, 1882. Payment being refused, he brought this suit in December, 1882. At this time defendant still held the $490 as treasurer of the Colorado Cattle Company in the maimer above stated, and continued to so hold it, until after January, 1883.
    Duprat, as treasurer, never held or had within reach any other funds of his company than the $490 so drawn out. Prior to October 23, 1882, he had paid by check from his private funds more than $490 on account of the company, viz. : $70, to another coupon-holder and $448.55 for legal expenses in a suit in which the company was interested, and reimbursed himself from the $490. He had not heard from plaintiff as to these coupons prior to making such payments.
    Further facts appear in the opinion.

      De Kay & Hardy and W. J. Hardy, for appellant.
    I. The deposit of these moneys created a simple trust for the benefit of the holders of the coupons, which the depositary accepted and undertook to perform ; and thereafter, such trust could not be revoked or canceled without the knowledge and consent of the beneficiaries, the coupon-holders (Rogers Locomotive Works v. Kelly, 88 N. Y. 234 ; Cunningham v. Freeborn, 1 Edw. Ch. 257 ; 2 Pomeroy Eq. Jur. §§ 1009, 573 ; Martin v. Funk, 75 N. Y. 134 ; Lowery v. Steward, 25 N. Y. 239 ; Watts v. Shipman, &c., 21 Hun, 598 ; Matter of Le Blanc, 14 Hun, 8). The withdrawal of the deposit by the Colorado Cattle Company is not legitimate evidence that it did not intend when the deposits were made to create a beneficial trust for the beneficiaries named. If done with intent to ignore the trust, and to convert the moneys to its own use, it might be competent evidence of a change of purpose, but it throws no light on the original transaction (Mabie v. Bailey, 95 N. Y. 211). And the company may not have been aware that it had no right to withdraw the trust fund ; but that fact would not take away the character which it had given to that fund (Willis v. Smyth, 91 N. Y. 301).
    II. The fund may be followed into the hands of the defendant. He was a volunteer. He also knew the terms of the original arrangement between the parties, and that there were fourteen unpaid coupons outstanding when he withdrew the moneys (2 Perry on Trusts, §§ 828-831 ; Munger v. Shannon, 61 N. Y. 251; Cunningham v. Freeborn, supra, and on appeal, 11 Wend. 240).
    III. The doctrine of laches cannot be invoked in this case (Baker v. Union L. Ins. Co. 43 N. Y. 283; Rogers v. Kelly supra; Re Le Blanc, supra).

    IV. It was made a point in the case below, and a basis of a finding by the justice, that there was no resolution of the board of trustees of the Colorado Cattle Company, directing the deposit of these moneys, and that consequently its treasurer was not authorized to deposit these funds “in an irrevocable trust for coupon-holders,” and that it was not “ in the contemplation of any of the parties that the deposit should constitute a trust fund, applicable to said purpose alone, regardless of future instructions on the part of the Colorado Cattle Company.” The evidence is conclusive that the deposit was made by the company, and that in making the arrangement, the treasurer was acting as its agent. A contract purporting to be made by a corporation is binding until impeached by contrary evidence (N. E. Iron Co. v. Gilbert E. R. Co., 91 N. Y. 164), and here no contrary evidence has been offered. And ratification is inferred from acquiescence (Hoyt v. Thompson, 19 N. Y. 218). It does not he in defendant’s mouth to say that the original deposit of the fund by the treasurer of the company was unauthorized by resolution of the directors to that effect, when his own appropriation of the fund was equally without any such authorization. The answer admits that the “ Colorado Cattle Company deposited certain moneys with the Union Trust Company of New York, . . . with the intention of providing thereby for the payment ” of these coupons. The deposit of the funds by the company for the purpose of ■ paying its coupons, constituted it an “irrevocable trust;” and it was wholly immaterial that “it was not in the contemplation of the parties that the depost should constitute a trust fund,” or “ an irrevocable trust for coupon-holders ” (Willis v. Smyth, supra).

      Burnett & Whitney and Edward B. Whitney, for respondent.
    I. The transactions connected with the remittance in question did not constitute a trust—that is, a technical or irrevocable trust.
    Whether a remittance of funds with instructions h> pay to a third party constitutes a revocable appropriation or an irrevocable trust is a question of intent (2 Pomeroy on Equity Jur. § 1009 ; Young v. Young, 80 N. Y. 423 ; Martin v. Funk, 75 Ib. 134).
    As a rule such a remittance will not be construed as. constituting an irrevocable trust so long as the funds are at the risk of the remitter, not of the intended payee (2 Story’s Eq. Jur. § 1045).
    The funds are at the risk of the remitter, not of the intended payee, until the latter assents to the appropriation (2 Story’s Eq. Jur. §§ 1045, 1046 ; Story, J., in Tiernan v. Jackson, 5 Pet. 580).

      An appropriation not amounting to a declaration of trust will not be held irrevocable by equity unless made for valuable consideration (Tallnan v. Hoey, 89 N. Y. 537). Care should be had to distinguish between trusts, in the strict use of the term, and the various quasi-trusts generally called equitable assignments, or agreements “in the nature of a declaration of trust” (Nesmith v. Drum, 8 Watts & Ser. 9). Trusts are irrevocable, and need not rest upon any consideration; some equitable assignments are revocable, and all must rest upon valuable consideration. Equitable assignments from A. to B. of funds in the hands of C. may be divided into three classes : (1) Those where all parties have been notified of the appropriation and have assented to it. Here, of -of course the assigmnent is complete, irrevocable, and binding upon all parties. (2) Those where the beneficiary has been notified of the appropriation, and has assented to it, although the depositary has not yet been notified. Here the appropriation is irrevocable by the assignor, although the depositary, of course, is not yet bound. As to first two classes (See Jones v. Mayor, 90 N. Y. 387 ; Dannat v. Comptroller, 77 Ib. 45 ; Hunger v. Shannon, 61 Ib. 251; Canfield v. Monger, 12 Johns. 346 ; Watts v. Shipman, 21 Hun, 598). (3) Those where tho depositary has been notified, but the beneficiary has not assented. Here the appropriation is still revocable, although for many purposes the deposit resembles a trust fund (3 Pomeroy’s Eq. Jur. §§ 1280, 1281; Morrell v. Wootten, 16 Beav. 197 ; Cowperthwaite v. Sheffield, 3 N. Y. 243; Kelly v. Roberts, 40 Ib. 432 ; Ætna National Bank v. Fourth National Bank, 46 Ib. 82 ; Rodick v. Gandell, 1 De G. M. & G. 763 ; Nicholson v. Crook, 56 Md. 55). In all of the above cases the original debt, to meet which the appropriation is made, forms a sufficient consideration to uphold a suit to follow the fund appropriated, as between the equitable assignee and the possessors of the fund. In cases (1) and (2) there is a new consideration for the appropriation itself, as well as the consideration for the original debt: namely, the novation by which the equitable assignee takes the risk of the solvency of the depositary. In case (3) there is no new consideration for the appropriation itself as between the equitable assignee and the depositor, the latter being just as much hable afterwards as before. Equity, like the common law, favors the principle of consideration, so characteristic of our jurisprudence. This we believe to be the base of the distinction made by the courts in these cases.
    In particular, a sum deposited to meet coupons, remains at the risk of the depositor until the coupon-holder assumes the risk; and this, although the coupons are by their terms payable at the office of the depositary, although the sum deposited is just enough to meet them, and although its appropriation is express (Williamsport Gas Co. v. Pinkerton, 95 Pa. St. 62 ; Adams v. Hackensack Impr. Comm. 44 N. J. Law, 638 ; Ward v. Smith, 9 Wall. 447). In New York this exact question does not seem to have come up as to coupons, but the law is well settled to the same effect-as to promissory notes, and coupons are subject to the same rules as promissory notes (2 Daniel Neg. Instr. §§ 1490, 1507 ; Evertson v. National Bank of Newport, 66 N. Y. 14 ; Wolcott v. Van Santvoord, 17, Johns. 248; Caldwell v. Cassidy, 8 Cow. 271 ; Hills v. Place, 48 N. Y. 520 ; Salt Springs National Bank v. Barton, 58 Lb. 435 ; see also Ruggles v. Patten, 8 Mass. 480 ; Fenton v. Goundry, 13 East, 473 ; Turner v. Hayden, 4 B. & C. 1). Nor is the rule confined to negotiable paper, but it applies, with few exceptions, to all promises of payment at a particular place (Locklin v. Moore, 57 N. Y. 360). Even if the bank fails, with the funds in its hands, this is no defense to the note (Indig v. National City Bank, 80 N. Y. 100).
    There is, therefore, in this case no consideration for the appropriation, as between the depositor and the coupon-holder.
    The parties in this case did not intend to constitute an irrevocable trust. The mere form of the credit is imrnaterial (Morgan v. Lariviere, L. R., 7 H. L. 423). Practice of the parties under an agreement shows forcibly what then intent in making the agreement was (Forbes v. Watt, L. R. 2 Sc. & D. 214 ; Pollock Contr. 392 ; Wharton Contr. § 653 ; Foster v. Goldschmidt, 21 Fed. Rep. 70, 74). The Cattle Company also showed, by drawing the money out, what its construction was.
    Hammond had no authority to constitute an irrevocable trust and, therefore, no such trust can have been constituted through him.
    The recent New York cases in which sums deposited have been held or said to be trust funds irrevocable, are not in point here. In Rogers Locomotive Works v. Kelly (88 N. Y. 234), the Mississippi Central and one other railroad had, by consolidation, become the New Orleans, St. Louis & Chicago Railroad Co., and the latter had assumed the payment of the former’s bonds. On May 1, 1875, the assistant treasurer of the consolidated Company deposited with the defendants Kelly and Alexander 825,000 and took a receipt in the following form : “ Received, New York, May 1, 1875, from J. M. C. Rodney $25,000 in trust to apply the same to an equal amount of the coupons .... of the Mississippi Central Railroad Company, .... the said money not to be subject to the control of said company otherwise than for the payment of said coupons as above described.” Andrews, Oh. J., said : “ The intention of the corporation to devote the fund deposited with Kelly and Alexander exclusively to the payment of the coupons, and to place it in their hands as trustees for that purpose is clearly indicated in the receipt.....The corporation parted with all control of the fund inconsistent with the trust declared in the receipt.” The savings bank deposit cases also depend upon the use of technical words from which, by their settled meaning, is conclusively presumed an intent to divest the depositor of all beneficial' interest in the fund deposited (Martin v. Funk, 75 N. Y. 134 ; Willis v. Smyth, 91 Ib. 297). An examination of the papers on - appeal in Matter of Le Blanc (14 Hun, 8 ; aff’d, without opinion, 75 N. Y. 598), shows that the court of appeals did not necessarily decide, and probably did not intend to decide, as would at first appear. Neither the appeal papers nor the appellant’s counsel disputed that the deposit had been so made as to constitute a trust. The petition alleges that the deposit “became the property of the holders of the stock upon which the said dividend was declared,” and in part of the petitioner. The answering affidavit does not deny this, but sets up that the smn drawn out had been paid away by the Erie Railway Company before the receiver was appointed, and did not, therefore, come into his hands. The brief of the appellant’s counsel (the case was submitted without argument) makes only the points that the fund had not come into the receiver’s hands, having been paid away by the company before his appointment; and that, anyway, there was a prior Hen upon the fund. In Watts v. Shipman (21 Hun, 598), it appeared that plaintiff received a check from defendant’s assignor, Duncan, Sherman & Co., “upon the assumption that it would be paid by the National Bank of the State of New York, pursuant to the arrangement between Duncan, Sherman & Co. with such bank.” This arrangement was that the bank should pay all such checks, being amply secured. The securities were therefore equitably assigned to the checkholders.
    II. Even were the remittance a trust fund, this action should have been brought against the Colorado Cattle Company, not Duprat. The fund could not more distinctly have been in the possession of the corporation. There could be no purpose for which, more emphaticaHy “ the officer is the corporation ” (Episcopal Church v. Varian, 28 Barb. 644 ; Carpenter v. Farnsworth, 106 Mass. 561 ;Pollard v. Vinton, 105 U. S. 7). That after the commencement of this action Dupart transferred the $490 to-his own pocket cannot, of course, avail the plaintiff. The plaintiff, in order to be entitled to a judgment, must have the right to recover at the time when he commences his suit (Tiffany v. Bowerman, 2 Hun, 643 ; Royer Wheel Co. v. Fielding, 31 Ib. 274).
   By the Court.

Freedman, J.

The theory of the .action is that the deposit of the sum of §11,672.50, by the treasurer of the Colorado Cattle Co. with the Union Trust Co., to be applied in payment of the coupons of certain bonds of the Cattle Company, then outstanding, amounted to the creation of an irrevocable trust; that part of the trust fund came into the hands of the defendant; and that defendant took it as a volunteer and with notice of its character.

Whether a remittance of funds, with instructions to pay to a third party, constitutes a revocable appropriation or an irrevocable trust, is mostly a question of intent. To create a trust, the. acts or words relied upon must be unequivocal (Young v. Young, 80 N. Y. 422). As a rule such a remittance will not be construed as creating an irrevocable trust, so long as the funds are at the risk of the remitter, and not of the intended payee (2 Story’s Eq. Jur. § 1045).

.From the words of the coupons in question it appears that the coupons are payable to bearer at a specified time and place, and that consequently they are negotiable promises for the payment of money and that as such they are subject to the same rules to which promissory notes are subject (Evertson v. The National Bank of Newport, 66 N. Y. 14).

As to promissory notes it is well settled, in this state, at least, that “ funds in bank ” is no defense available to the maker of a note payable at the bank, to an action upon the note, except (if the amount be paid into court), as to interest and costs. In other words, a deposit of money in bank to meet a note payable there, is not a payment, but only a tender (Wolcott v. Van Santvoord, 17 Johns. 248 ; Caldwell v. Cassidy, 8 Cow. 271; Hills v. Place, 48 N. Y. 520 ; Salt Springs Nat. Bk. v. Burton, 58 Ib. 430).

Even if the bank fails with the funds in its hands, this is no defense to the note on the part of the maker (Indig v. The National City Bank, 80 N. Y. 100).

In the case at bar, it was specifically found by the learned judge below, as matters of fact, that in the making of the deposit by the treasurer of the Colorado Cattle Co. with the Union Trust Co., it was not in the contemplation' of any of the parties to the transaction that the deposit should constitute a trust fund applicable to the purpose of the payment of the coupons alone, regardless of future instructions on the part of the Cattle Co., and that the then treasurer of the Cattle Co. was not authorized to deposit funds with the Union Trust Co. in an irrevocable trust for coupon-holders.

Upon a careful review of the evidence, no reason appears for disturbing these findings. The present case is therefore clearly distinguishable from the case of the Rogers Locomotive Works v. Kelley (88 N. Y. 231), in which the stipulation was that the money deposited should not be subject to the control of the company which made the deposit otherwise than for the payment of the coupons.

No trust having been created in the case at bar, the plaintiff, in order to maintain his action, was then at least bound to show that he parted with a valuable consideration on the faith of the deposit, for an appropriation not amounting to a declaration of trust will not be held by equity irrevocable, unless made for a valuable consideration (Tallman v. Hoey, 89 N. Y. 537). But the plaintiff gave no such proof.

The plaintiff having failed to establish either a trust or an equitable assignment, and it having been made to appear that, after the lapse of some six months and prior to any demand made by the plaintiff for the payment of his coupons, the defendant, as treasurer of the Colorado Cattle Co. and under and in pursuance of express authority from the board of directors of said company, withdrew from the Union Trust Co. the balance then remaining unexpended by the latter on account of the deposit, the learned judge below was right in holding, that the sum withdrawn from the Union Trust Co. as aforesaid, was, at the time of the beginning of this action, in the possession of the Colorado Cattle Co., or of the defendant as treasurer of said Cattle Co., and not of the defendant personally, and that no cause of action against the defendant had been made out.

The views so far expressed render it unnecessary to pass upon plaintiff’s exceptions in detail.

The judgment should be affirmed, with costs.

Sedgwick, Oh. J., and Van Voest, J., concurred.


source: Caselaw Access Project

license: Public Domain

text:
    THOMAS M. NICHOLS, Appellant, v. GILMER A. LUMPKIN, Respondent.

      Pleading—Information and belief—When demurrer to answer proper.— Gaming contracts—Statute against.

    As to whether or not a defendant can properly plead a denial of knowledge or information sufficient to form a belief as to an allegation in the complaint concerning a matter which must necessarily be within his knowledge, quaere.

    But such question may not be raised by demurrer, for § 494 Code, only allows a demurrer to a counter-claim or defense consisting of new matter.

    The answer to a complaint on promissory notes alleged to have been made in Boston, Mass., set forth that defendant at the time of giving them was engaged in an illegitimate business in Boston, known as the “ bucket shop ” business, consisting of the purchase and sale of stocks, in fractional quantities, on margins, without an actual delivery at any time; that plaintiff was a customer of defendant therein, and the transactions resulting in the giving of the notes, were to plaintiff’s knowledge gambling transactions therein, and illegal and void; that the notes were without other consideration, and therefore illegal and void, and plaintiff knew it, etc.

      Held, on demurrer, that though the defense be inartistically drawn and the statements improperly made, yet they must be taken as admitted allegations of fact, and as such are sufficient under 110 U. S. 499; also that defendant must show on the trial that the transactions were void in Massachusetts,

      Decided December 1, 1884.

      Further held, that though under the statutes in regard to betting and gaming, plaintiff may recover his money, this he can do only under the statute, and by disaffirming the contracts,—i. e., the notes.
    Before Sedgwick, Ch. J., Van Vorst and Freedman, JJ.
    Appeal from order and from the judgment entered thereon, overruling plaintiffs demurrers to two separate defenses in defendant’s answer.
    The facts appear in the opinion.

      Roger Foster, for appellant.
    A. defendant cannot properly plead a denial of knowledge or information sufficient to form a belief as to an allegation in the complaint concerning a matter which must necessarily be within his knowledge (See Field's Essay on Reforms under the Old Constitution, A. D. 1847, 1 Field's Works, 260 ; and First Report Practice Comm. February 29, 1848 ; note to section 118 ; Practice Comm. December 31, 1849 ; note to section 652, 1 Field's Works, 302 ; Hull v. Wood, 1 Paige 404 ; Scotts v. Hume, Litt. Sel. Cases, [Ky.] 379 ; Taylor v. Luther, 2 Sumner, 228, 331; Harrison Ch. Pr. 181, 102; Cooper's Eq. Pl. 314 ; Nichols v. Jones, 6 How. 355 ; Bliss on Code Pleading, § 326; Maynard v. New York Central Mills, 10 How. Pr. 19 ; Fales v. Hicks, 12 Id. 153 ; Richardson v. Wilson, 4 Sand. 798 ; Edwards v. Lent, 8 Id. 38; Hance v. Remsen, 1 Code R. 204; Robelin v. Long, 40 How Pr. 28 ; Fallon v. Durant, 60 Id. 178 ; Webb v. Foster, 45 Super. Ct. 310). The same rule has been established in other states (San Francisco Gas Co. v. City, 9 Cal. 453 ; Wing v. Dugan, 8 Bush [Ky.] 583).
    The apparent conflict among the authorities can be easily explained. Some of the earlier cases, e. g. Fleury v. Roger (9 How. Pr. 215) ; People v. McComber (15 Id. 186 ; S. C., affirmed, 18 N. Y. 315 ; S. C., 27 Barb. 632); held, that a denial of this sort might be stricken out as sham ; and even that a positive general denial might be thus stricken out, provided it could be shown by affidavits that it was clearly false. Although the reasoning of these cases seems logical, and supported by analogy and authority, they were overruled by Wayland v. Tyson (45 N. Y. 281). The ground of the decision in this case was : That the granting of such a motion would be tantamount to denying the defendant’s right to a trial by jury. This case has been followed as to a motion to strike out as sham an answer like the one in the case at bar (Roby v. Hallock, 5 Abb. N. C. 87). It has, however, been distinguished and limited by Kay v. Campbell (10 Abb. N. C. 85). But the cases holding that an objection to the form of denial, raised by the proper motion or demurrer, will be sustained, remain unshaken. The only case apparently in direct conflict with those authorities that we have been able to find is Snyder v. Bedsell (10 Rep. 217). Only an abstract of that case is given in the report. It appears to have been a special term decision of the city court of Brooklyn. As the facts are not stated, the case as reported has little weight as an authority. In Livingston v. Hanner (7 Bos. 670), although some of the dicta in the opinion seem unfavorable, as judgment was finally ordered in favor of the plaintiff, the judge’s language cannot be considered as overruling the adjudged cases. Grocer’s Bank v. O’Rourke (6 Hun, 18), merely holds that such a denial cannot be stricken out as sham, and that part of an answer camiot be stricken out as frivolous.
    A demurrer was the proper remedy in this case (Fallon v. Durant, 60 How. Pr. 178).
    II. The allegations “that said contracts and transactions were illegal, void and gambling contracts and transactions,” and “that said bills were illegal and void,” are mere conclusions of law, and, therefore, to be disregarded upon the argument of this demurrer (Blake v. Griswold, 68 N. Y. 294).
    The defendant does not state that the money was advanced for gaming purposes. Defendant admits that the transactions contemplated were purchases and sales of stocks. The true test is not whether actual delivery was contemplated, but whether the transaction was a sale or a bet upon prices at other sales (Irwin v. Willar, 110 U. S. 499). But at all events, the law regulating the sale of shares of stock must necessarily be different from other personal property. Shares of stock are intangible, and as such incapable of delivery (Brown v. Bushwick R. R. Co., 75 N. Y. 211). The only delivery that can be made under such a contract is a delivery of certificates. But the legislature has enacted (L. 1858, ch. 134, § 1) that “no contract . . . for the purchase, sale, etc., of any certificate or other evidence of debt due by or from the United States, or any separate State, or of any share or interest in the stock of any bank, or of any company incorporated under any law of the United States, or of any individual State, shall be void or voidable for any want of consideration, or because of the non-payment of any consideration, or because the vendor at that time of making such contract is not the owner or possessor of the certificate or certificates, or other evidence of such debt, share, or interest.” Subsequently sections of this statute repeal the Stock Jobbing Act (1 R. S. 710, §§ 6, 7 and 8). Moreover, it has been held that a broker who carries stock for a customer upon margin can recover his advances and commissions ; even though it have been mutually agreed that no delivery of the certificates be made to the customer, and that the latter should be hable only for the differences (Earl v. Howell, City Ct., G. T., June 30, 1884 ; Thacker v. Hardy, 4 Q. B. D. 685).
    But even conceding that the contracts were void as gambling. contracts, the defense is still bad. The return of this money thus deposited “upon margin,” is merely what the defendant would have been compelled to do, even had no promissory notes been paid (2 R. S. 662, § 9). That we do not refer in our pleading to the statute does not impair our rights. Our acceptance of the notes, thus extending his time to pay this debt, was a valid consideration for his promise to pay their amount. That the transactions are claimed to have taken place in Massachusetts makes no difference. (1) That does not distinctly appear in the answer. (2) There is no allegation in the complaint that such statute was not in force in Massachusetts. (3) But if it be assumed that there is no such statute there in force, it must necessarily follow that the common law prevails there. By the common law gambling contracts were valid (Good v. Elliot, 3 T. R. [D. & E.] 693 ; Hussey v. Crickitt, 3 Camp. 168 ; see also Ormes v. Dauchy, 82 N. Y. 433). (4) But assuming that the contracts were illegal by the laws of Massachusetts, the plaintiff could still maintain this action. He had a right to repudiate the contracts if illegal, and to recover back the money paid in part performance of them (2 Comyn on Contr. 261; Spring Co. v. Knowlton, 103 U. S. 49).

      Lionel J. Noah and George F. Gardiner, for respondent.
    I. A general denial is not demurrable. This is true whether the denial is absolute or whether it is made on information and belief. A party has no right to interpose an unqualified denial in a verified answer, unless it is founded upon personal knowledge, but when he has no personal knowledge, but has knowledge sufficient to form a belief, he is not only permitted, but bound at his peril, to deny upon information and belief (Brotherton v. Downey, 21 Hun, 436). Where a complaint alleged the execution by the defendants of an agreement, of which a ' copy was given (not so in this case), they answered that they had no knowledge or information sufficient to form a belief whether or not they executed the agreement. Held, “That the denial was good in form.” See also Snyder v. Beddell, 10 Reporter, 217; Livingstone v. Hummer, 7 Bosw. 670 ; People v. McCumber, 15 How. 186 ; affirmed, 18 N. Y. 315 ; 27 Barb. 632 ; Caswell v. Bushnel, 14 Ib. 393 ; Thorne v. N. Y. Cent. Mills, 10 Hun, 19.
    II. Even were the first defense to the first and second causes of action open to criticism standing alone, it is not so considering the answer as a whole. The second defense to the first and second causes of action is explanatory of the first, and qualifies and explains why the first defense was not positively made. This form of denial has been often approved.
    III. The question is not whether the facts stated in that portion of the answer which is demurred to are properly or improperly stated, whether the answer is artistically or in artistically drawn, whether there are too many or too few facts stated, but simply is whether the facts as stated being true, or any of them constitute a defense.
   By the Court.

Freedman, J.

The complaint contains three causes of action : two upon promissory notes, and the third upon an account stated.

The answer sets up two distinct and separate defenses to the first two causes of action, and denies the account stated.

The plaintiff separately demurred to each of the defenses to the first two causes of action for insufficiency, but no question was raised as to the sufficiency of the defense to plaintiff’s third cause of action.

The demurrers of the plaintiff were overruled with costs, and from the order and judgment entered thereupon, the present appeal is taken.

Each of the first two causes of action proceeded upon a promissory note alleged to have been executed by the defendant to the plaintiff as payee at Boston, Mass., on the 8th day of October, 1879.

The first defense to both of said causes of action is as follows, viz : “First, That he (viz., the defendant) has no knowledge or information sufficient to form a belief as to whether he made the promissory notes as alleged in the first and second causes of action in said complaint contained, or any promissory notes.”

By demurring to this defense on the ground of insufficiency, the plaintiff sought to raise the question whether under the Code of Civil Procedure a defendant can properly plead a denial of knowledge or information sufficient to form a belief as to an allegation in the complaint concerning a matter wMch must necessarily be within his knowledge.

The authorities upon this point appear to be conflicting, and the probabilities are that the question will remain in doubt until it is settled by an express adjudication of the court of appeals. This being so, I feel reluctant to pass upon the point, unless to do so is absolutely necessary.

In my judgment no such necessity exists. Section 494 of the Code of Civil Procedure, which confers upon a plaintiff the right to demur, provides as follows : “The plaintiff may demur to a counter-claim or a defense consisting of new matter, contained in the answer, on the ground that it is insufficient in law upon the face thereof.” It is not every defense, therefore, to which a plaintiff may demur, but only to a defense consisting of new matter contained in the answer. The words “consisting of new matter ” are words of limitation.

As the defense now under consideration does not consist of new matter, but of a denial, the plaintiff mistook his remedy by demurring, even if his contention as to the insufficiency of the denial should be otherwise well founded.

The same rule prevailed prior to the Code of Civil Procedure. Under the Code previously in force it was repeatedly held, that an answer which set up no new matter, but merely denied the allegations of the complaint, was not demurrable, no matter how defective the form of the denial was (Smith v. Greenin, 2 Sandf. 702 ; Maretzeck v. Cauldwell, 2 Rob. 715 ; Ketcham v. Zerega, 1 E. D. S. 553 ; Lund v. Seaman’s Savings Bank, 37 Barb. 129 ; Rice v. O’Connor, 10 Abb. 362).

Plaintiff’s demurrer to the first defense to the first two causes of action was therefore properly overruled.

The second defense to the notes sued on, consists of a statement of facts setting forth the transaction and the circumstances upon which, and under which, the notes (believed to be the notes sued upon, but which the answer styles due bills), were made by defendant to plaintiff ; that the defendant at that time was engaged in an illegitimate business in the City of Boston, called the bucket-shop business, consisting in the purchase and sale of stocks, in fractional quantities upon margins, without an actual dedelivery of the stocks at the time of the purchase or sale thereof, or at any other time ; that in said business the plaintiff was a customer of the defendant; that the transactions resulting in the giving of the notes were, to the knowledge of the plaintiff, gambling transactions in the course of such business, and illegal and void ; that the notes were without any other consideration, and therefore illegal and void, and that plaintiff knew it, &c.

This statement must be accepted as containing allegations of matters of fact which stand admitted by the demurrer, and the question therefore is, not whether the facts are properly or improperly stated, or whether the defense is artistically or inartistically drawn, but whether the facts as stated, taken together and treated as true, constitute a defense.

In my judgment they are sufficient to constitute a defense within the principles laid down in Irwin v. Williar, (110 U. S. 499), and cases there cited. If upon the trial it should become necessary for the defendant upon whom the burden of proof in this respect rests, to establish the illegality of the notes under the laws of the state of Massachussetts, he must do so by competent proof as to what, as matter of fact, the law of that state governing the case is.

The plaintiff insists, however, that even if the contracts which resulted in the giving of the notes, were nuff and void, the defense is still bad, because under the statute of New York concerning betting and gaming (1 R. S. 662, § 9 ; 6th Ed. vol. II. p. 918), the money invested by the plaintiff with the defendant might be recovered back. Several answers may be made to this proposition. It is sufficient to say, however, that in such a case the plaintiff was bound to disaffirm the contracts and to sue under the statute. This he has not done. The action proceeds upon the notes which were received in furtherance of illegal and void contracts, and consequently is in affirmance of the contracts.

For the reasons stated, plaintiff’s demurrer to the second defense to the first two causes of action was also properly overruled.

The judgment and order appealed from should be affirmed, with costs, with leave, however, to the plaintiff to withdraw the demurrers upon payment of the costs of the judgment and of this appeal.

Sedgwick, Ch. J, and Van Vorst, J., concurred.


text:
    HENRY BEROLZHEIMER, et al., Appellants, v. WILLIAM STRAUSS, et al., as Executors, &c., Respondents.

      Decided December 1, 1884.

      Plea,ding—representative capacity, how alleged.—Partnership)—when action will lie between pm'tners without accounting.

    Where the body of the complaint shows that the two plaintiffs, both as surviving partners and as individuals, are entitled to over fifty per cent, of all the assets of the firm between them, and they claim that defendants, the legal representatives of a deceased partner, should be compelled to restore to the partnership, and for copartnership purposes, certain patents conceded to .be copartnership property, which the deceased having held in his own name for the benefit of the firm, had agreed to transfer to the copartnership.

      Held, on demurrer that an equitable cause of action by plaintiffs jointly, is shown, and that the suit need not bo for an accounting, even though defendants occupied the position of partners as fully as their decedent did.

      Further held, that plaintiffs need not, in the title of the action, describe themselves as survivors, though they may maintain it as survivors, as the averments, frame and scope of the complaint affix to them a representative character and standing in the litigation.
    Before Van Vorst and Freedman, JJ.
    Appeal by plaintiffs from judgment dismissing complaint upon demurrer, with costs, and from the interloeutory judgment and order sustaining demurrer to complaint.
    The facts appear in the opinion.

      Stine & Caiman, for appellants.

      Charles F. MacLean, and E. W. Crittenden, for respondents.
   By the Court.

Freedman, J.

Omitting from the complaint all matters that appear to be immaterial to any cause of action, there remain the allegations :

I. That about January 1, 1881, the plaintiffs and one Reckendorfer entered into a copartnership agreement to do business under the firm name of the Eagle Pencil Company.”

II. Reckendorfer in the course of the business of the copartnership and as sole manager of said business during his lifetime, took out in his individual name, but for the use of the firm, which still is the sole beneficiary, certain patents, etc., purchased with the funds of the firm, and agreed to assign the same to the firm.

III. Reckendorfer died about July 7, 1883, and the defendants are the executors of his will.

IV. By the provisions of the copartnership agreement and of agreements thereunder, between plaintiffs and defendants, the plaintiff Henry Berolzheimer, was, upon the death of Reckendorfer, appointed sole manager of the co-partnership business.

V. By the provisions of the copartnership agreement the plaintiffs, Henry Berolzheimer and Martin Berolzheimer are respectively entitled to 33-J- and 25 per cent, of all the assets of the firm, and are respectively the owners of one undivided third and one undivided fourth interest in and to all of said patents, etc.

• VI. About January 28, 1884, the plaintiffs duly served on the defendants a written demand in the name of the Eagle Pencil Co., and of themselves as surviving copartners, that the defendants assign to the firm, or to the members thereof, all the patents, etc., held by said Reckendorfer in his individual name which are the property of the firm;. and on January 23, and 25, 1884, the plaintiff’s ■ duly served on the defendants a written notice demanding that they assign to the respective members of the firm their respective shares in such patents, etc.

VII. Defendants refused and still refuse to make any such transfer or assignment; and that since the death of Reckendorf er it is essential and necessary that said patents, etc., be transferred to the name of the true proprietor, the Eagle Pencil Co.

Wherefore plaintiffs demand that defendants execute and deliver good and sufficient assignments of each and every patent, etc., belonging to said firm ; that defendants be enjoined from making any other disposition of the same, etc.

To this complaint the defendants demurred on the grounds: I. That there was a misjoinder of parties plaintiff ; and II. That the complaint did not state facts sufficient to constitute a cause of action.

In my judgment neither ground is tenable.

Por the purposes of the demurrer the allegations of the complaint stand admitted, and none of the equities claimed on behalf of the defendants in the brief of the learned counsel can be considered, unless their existence is fairly apparent or deducible from the complaint.

As to the first ground, it is insisted that, in as much, as the plaintiffs did not in the title of the action describe themselves as survivors, the action cannot be considered as one by survivors, and upon this point Merritt v. Seaman (6 N. Y. 168), has been cited. But that case decides only that an executor can maintain a suit, either in his own name or as executor, upon a note given to him as executor for a debt due to the testator at the time of his decease; and that, where in the beginning of the complaint, he is described as executor, and then a cause of action is set forth in his favor without reference to his representative character, the action will be regarded as his private action, and the words executor, etc.” as a mere descriptiopersones and surplusage.

It may be conceded, however, that a party cannot sue in his own right, if he can recover only in a representative capacity. But under this rule it is not necessary, though it certainly is the better practice, that the representative capacity should be expressed in the title. If the averments, frame and scope of the complaint affix to the plaintiff a representative character and standing in the litigation, it is sufficient (Beers v. Shannon, 12 Hun, 163 ; affirmed on this point though reversed on another, in 73 N. Y. 292 ; Stilwell v. Carpenter, 2 Abb. N. C. 238 ; S. C., 62 N. Y. 639).

In the case at bar the body of the complaint shows that the plaintiffs, both as surviving partners and as individuals entitled to 58| per cent, of all the assets of the firm between them, claim that the legal representatives of a deceased partner should be compelled to restore to the co-partnership and for copartnership purposes certain patents conceded to be copartnership property which the deceased had agreed to transfer to the copartnership.

This is a joint cause of action, though, in addition and perhaps solely by way of abundant caution, the plaintiffs severally and individually joined in the prayer for relief. There can be no objection to this in a comí of equity. But if there were, and it is not intended here to decide the point, the complaint would still have to be sustained against the first objection specified by the defendants in then* demurrer, if, after rejecting all the plaintiffs claim severally and individually as surplusage, the remaining allegations sufficiently show a joint cause of action of some sort, and this they do, so far as the first ground of the demurrer is concerned.

There being no misjoinder of parties plaintiff, the next question presented by the appeal is, whether the complaint sets forth facts sufficient to constitute a joint cause of action in the plaintiffs. .

A contract of copartnership is a personal contract, and does not extend beyond the life of the contracting parties except by express terms. There is no proof here of such express terms. True, the complaint avers that by the provisions of the copartnership agreement and of agreements thereunder between the plaintiffs and the defendants, the plaintiff Henry Berolzheimer was, upon the death of Eeckendorfer, appointed sole manager of the co-partnership business. ' But whether this was done for the purpose of continuing the business or of winding it up, it is not stated. Assuming, however, that it was done, as the defendants contend, for the purpose of continuing the business, the averment is not equivalent to an allegation that the original contract of copartnership provided for a continuance of the business after the death of Eeckendorfer in such a way as to make the defendants partners in the place of Eeckendorfer. This, even upon the assumption stated, leaves the plaintiffs presumptively as surviving partners, with the right as such to continue the copartnership business for an indefinite period of time with Henry Berolzheimer as sole manager. As such, they are presumptively entitled to the possession of the property and the assets of the copartnership.

But even if the defendants occupied the position of partners as fully as Eeckendorfer would fill it, if he were still alive, it would not follow from that alone, that the plaintiffs upon the facts set forth can only sue for a dissolution and an accounting. A dissolution is the most far-reaching and radical remedy between partners, and a court of equity will not force partners into a dissolution, if justice can be done without resorting to this extreme step (Traphagen v. Burt, 61 N. Y. 30 ; Collyer on Partnership, 339, § 345 ; Lindley on Partnership, 152,153).

In Crater v. Bininger (45 N. Y. 545), it was even held that if the obligation or contract, though relating to the partnership business, is separate and distinct from all other matters in question between the partners, and can be enforced without going into the partnership accounts, an action at law will lie by one partner against his copartner.

The case therefore comes down to this : The plaintiffs, as surviving partners, and having as such by special contract the right to continue the copartnership business for an indefinite period of time after, and notwithstanding the death of Reckendorfer, show' that Reckendorfer, the deceased partner and former manager, acquired in his lifetime, the title to certain patents with moneys of the co-partnership, and for the use of the copartnership ; that he held such title for convenience sake in his individual name, that he agreed to assign the same to the firm, that he died without having done so, that upon his death the said title went to the defendants, as his executors, who have no right to retain the same, or to participate in the management of the business ; that an assignment of said title to the firm was duly demanded by the plaintiffs from the defendants, and refused, and .that such assignment is necessary.

This constitutes a good equitable cause of action. If it were necessary, which I do not think it is, for the complaint to set forth facts and circumstances which show affirmatively that some interest of the plaintiffs jointly, or of the firm, is, or is likely to be, affected by the title being in the defendants as executors rather than in the firm, then the death of Reckendorfer and the continuation of the business and the devolution of the management thereof, as above stated, would of themselves be enough. They would of themselves furnish a sufficient reason why the defendants should be compelled to carry out the agreement which not only was positively made by their testator, but which the law would imply if it had not been expressly made. The case as presented by the complaint does not involve a mere question of possession. It involves the question of title.. Defendants do not only hold the possession of the patents, but the sole and exclusive title to them. A patent is a species of property the title to which is documentary and of record. It cannot pass by mere delivery, but a change in title must be by deed of assignment. As the patents in question now stand, though they were purchased with the moneys of the firm and for the use of the firm, the defendants wrongfully retain the title to them in their individual names, and can at any time deprive the plaintiffs of all their rights therein by an assignment. This is a sufficient equity calling for the interposition of the equitable powers of the court because no adequate remedy for its protection exists at law. The complaint demands an assignment of the patents, etc., only to the firm. In investing the firm with the title, the defendants only place it where it belongs and where it will be held for the benefit of the estate they represent, as well as for the benefit of the plaintiffs.

In every aspect that may be taken of the complaint, a joint equitable cause of action is sufficiently set forth. If there are facts by which it can be shown that the demand made by the plaintiffs upon the defendants for assignments, etc., as pleaded, and which is sufficiently pleaded, was after all not a proper or sufficient one, because under the peculiar circumstances of the case the plaintiffs should have had the assignments, etc., prepared, and then tendered them for execution, such facts and circumstances should be pleaded by way of answer to the complaint. On a demurrer which admits the allegations of the complaint, they cannot be anticipated.

Both grounds of the demurrer having been found to be untenable, the judgments and the order appealed from should be reversed with costs, and the plaintiffs should have judgment upon the demurrer with costs, with leave, however to the defendants to answer upon payment of all the costs aforesaid.

Van Vorst, J., concurred.


text:
    ROBERT J. DEAN, Respondent, v. DAVID M. CORBETT, et. al., Appellants.

      Decided December 1, 1884.

      Trial—Manner of adducing proof. —Promissory notes.— Usury.—Pleading. New trial.

    This action was on two promissory notes, one for $275 and one for $250, both made by defendant Muchmore and indorsed by defendant Corbett. The complaint further states that plaintiff and one Seaver were copartners, engaged in loaning money for banks, including the Importers’ and Traders’ Bank ; that defendant Muchmore, with knowledge of said business, requested a loan through them of $500, which loan the firm procured ; that defendant agreed to pay the firm such interest as the bank should charge, and a commission for their services as brokers; that the notes in suit were delivered to the firm upon which to procure the loan ; and that thereafter plaintiff purchased the notes from the bank. The answers, in addition to certain denials, set forth that the indorsement by defendant Corbett was without consideration; that defendant Much-more negotiated the discount of the notes with said firm upon a usurious agreement, to wit: that the firm demanded and received from Much-more $25 for discounting the notes, being interest at the rate of 10 per cent, per annum. On the trial, plaintiff put the notes in evidence and rested. Defendants moved for a dismissal of the complaint, contending that the cause of action set forth therein, had not been proved, but a different cause of action.
    Held, on appeal from an order denying the motion to dismiss, that plaintiff proved aprima facie case within the complaint. That he then rested to see what defendant would make out by way of affirmative proof, and reserved the balance of his proof for purposes of rebuttal, was not objectionable practice, if defendant was not misled or surprised thereby.
    Upon the denial of the motion for a dismissal of the complaint, defendants proved all they could, and plaintiff in rebuttal adduced proof in support of all the allegations of the complaint, and thus the question whether the firm of Seaver & Dean bought the notes on their own account, or as brokers for the bank, was squarely litigated.

      Held, that the authorities, in such a case, even go to the extent of holding that a judgment will not be reversed for the refusal to grant a non-suit, though the plaintiff had at the time failed to prove his case, if the necessary evidence was supplied afterwards by either party.
    Before Sedgwick, Ch. J., Van Vorst and Freedman, JJ.

      Appeal by defendants from a judgment entered upon the verdict of a jury in favor of the plaintiff, and from an order denying defendants’ motion upon the minutes for a new trial.
    The facts appear in the opinion.

      Charles H. Jordan, Charles W. Klebisch and Henry Wehle, for appellants.
    I. No device will be allowed to protect usury, and courts will examine into the real nature of the transaction. If there be, in fact, a usurious loan, no device will protect it (Spaulding v. Bank of Muskingum, 12 Ohio, 544).
    II. The defendants were entitled to a dismissal of the complaint when plaintiff rested, (a) The plaintiff did not make out his case by simply producing the notes. The plaintiff’s cause of action as set out in the complaint is not upon the note. The theory of the complaint is that but for the fact that the notes were discounted by a National bank and that Seaver & Dean acted as brokers or agents for Muchmore, the notes would be void for usury. (6) The allegations that Muchmore employed Seaver & Dean as agents for him,' is a material allegation and must be established by proof, (c) The plaintiff by producing the note made out a cause of action but not the cause of action averred in the complaint. (cZ) There was a fatal variance between the allegations of the complaint and the proof.

      Edward S. Hatch, for respondent.
    I. The plaintiff proved a prima facie cause of action. The possession and production of the notes referred to in the complaint and answers is evidence of ownership, delivery and non-payment (Sawyer v. Warner, 15 Barb. 282; Howell v. Van Siclen, 6 Hun, 115 ; Bedell v. Carll, 33 N. Y. 581). The making, indorsement and non-payment of the notes is admitted in the answers and it was unnecessary to prove it (Fleischman v. Stern, 15 W. Dig. 274 ; Levy v. Bond, 1 E. D. S. 169). No affidavit of non-protest was attached to the answer or served, and the notary’s certificate of protest was sufficient proof, no evidence being offered to contradict it (Code Civ. Pro. § 923 ; Dunn v. Devlin, 2 Daly, 122 ; Gawtry v. Doane, 51 N. Y. 84), and is presumed to be in proper form, although not set out in full on the record (Crocker v. Crane, 21 Wend. 211).
    II. The cause of action, as alleged in the complaint, was substantially one upon the two notes, and the defendants did not claim to be misled or surprised by the proof offered, or that such proof was at variance from the alleged cause of the action, therefore they cannot, upon this appeal, avail themselves of those points, even if they could have done so at the trial (Code Civ. Pro. % 539 ; Chapman v. Carolin, 3 Bosw. 456 ; Trowbridge v. Didier, 4 Duer, 448 ; Catlin v. Gunter, 11 N. Y. 368). If the facts are sufficiently alleged to constitute, a single cause of action the mere fact that they might be in the' form of two causes will not make the complaint for more than the one cause (Welch v. Platt, 19 W. Dig. 265). A plaintiff is not bound to prove all of the allegations of his complaint; and where first, as in ibis case, he proves substantially the cause of action, and the record does- not show any claim on the part of the defendant that he was suprised or misled to his injury, the proof is sufficient, and the objection to the alleged failure of proof will not be sustained (Howell v. Gridley, 54 Barb. 542; Bedell v. Carll, 33 N. Y. 581).
    III. In order to constitute a failure of proof under the Code, the complaint must be unproved in its entire scope and meaning, and not in some particulars only (Code Civ. Pro. § 541; Knapp v. Roche, 5 J. & S. 395 ; Fay v. Grimstad, 10 Barb. 321; Chapman v. Carolin, 3 Bosw. 456). Defendant Corbett stood in the same position as Muchmore toward plaintiff, and was not entitled in this action to any other relief (Hager v. Worrall, 69 N. Y. 310).
   By the Court.

Freedman, J.

The action was brought on two promissory notes, one for $275, and one for $250, both made by defendant Muchmore and both indorsed by defendant Corbett.

The complaint alleges : That the plaintiff and one T. Mortimer Seaver are copartners in business, and engaged in loaning money for national banks, including the Importers’ and Traders’ National Bank of the City of New York; that about August 19, 1880, defendant Muchmore, with full knowledge of the business of said firm, applied to them for the purpose of obtaining through them a loan of $500, and that at the request of Muchmore the firm did obtain the loan of $500, and that the defendants agreed to pay Seaver & Dean such interest as the bank should charge, together with a brokerage for their services ; that the defendants delivered to Seaver & Dean as such agents the two promissory notes upon which to procure the loan ; that thereafter the plaintiff purchased the notes from the bank, and that the two notes were protested for nonpayment.

The defendants, answering separately, deny specifically every allegation in the complaint except the making, indorsement, and non-payment of the notes, and set up the following affirmative defense : 1st. That the indorsement of defendant Corbett was without consideration ; and 2d, That the defendant Muchmore negotiated the discount of the notes with said Seaver & Dean upon a usurious agreement, to wit, That the said Seaver & Dean demanded and received from Muchmore $25 for discounting the notes, which was interest at the rate of 16 per cent, per annum.

Upon the trial the plaintiff offered in evidence the notes, and rested. Defendants moved for a dismissal; this was denied, and defendants excepted.

In arguing in support of this exception, the counsel for the defendants concedes that, the making, indorsement and non-payment of the notes having been admitted by the answer, the plaintiff, by producing and offering the notes made out a prima facie cause of action, but he insists that it was not the cause of action averred in the complaint, and that for this reason the defendants were entitled to a dismissal of the complaint. In the supplemental points handed up by him, the counsel states the point he desires to make, as follows: “The appellant’s contention is not that he was misled by the proof offered, nor that one cause of action was alleged and two causes proven. The appellant’s contention is that the plaintiff’s complaint was unproven in its entire scope and meaning, although another and entirely different cause of .action was fully proven. ”

In this the counsel is clearly mistaken. The complaint did not remain unproven in its entire scope and meaning, nor was it a case of variance. By the course pursued the plaintiff proved a prima facie case within the allegations of the complaint. He then rested to see what the defendants would make out by way of affirmative defense, and reserved the balance of his proof for purposes of rebuttal. This is done quite frequently and the practice is not open to objection, so long as the defendant is not misled or surprised thereby.

Thus, in Bedell v. Carll (33 N. Y. 581), in which case the making of the note by the maker and its non-payment were admitted by the pleadings, the plaintiff produced the note at the trial, proved the indorsement of her father, from whom she had obtained it, and then rested. The court of appeals held : “ This was enough. The possession of the note at the trial, indorsed in blank by the payee, was prima facie evidence of title, and certainly, to enable the plaintiff to' recover, she was not required to show affirmatively the way in which she became the owner. It is true, she alleged in her complaint that she acquired the title by gift ; but this allegation was unnecessary, and did not cast on her the burden of proving it, or repel the presumption of ownership arising from her possession of the note. In this view of the case, as no evidence was offered to sustain any defense, and the plaintiff had made out her case, prima facie, the judge was right in directing a verdict in her favor. ”

H it were necessary, a long line of similar decisions could be cited.

So it is now firmly established that where a complaint alleges a conversion in such a way as to set forth at the same time sufficient facts showing an action on contract, the plaintiff, on failing to prove the conversion, may waive the tort and fall back upon the remaining allegations, and, upon proving them, recover upon contract.

There are also a large number of cases in which it was distinctly held that, where the complaint sets forth facts which make out a cause of action, ex contractu, the presence of averments of fraud in the complaint does not necessarily make the action one ex delicto.

But there is no necessity for multiplying citations, especially as not a single case has been cited, which on examination will be found to hold a contrary doctrine. The defendants in the case at bar were not misled or surprised, as they concede, nor did they refrain from giving evidence. Upon the denial of the motion for a dismissal of the complaint, they proved all they could prove, and then the plaintiff, in rebuttal, adduced proof in support of all the allegations of the complaint. Thus the question was squarely and sharply litigated whether Seaver & Dean purchased the notes from the defendant Muchmore for their own account, as claimed by the defendants, in which case the defendants were entitled to a verdict, or whether Seaver & Dean acted as brokers for the Importers’ and Traders’ National Bank, as the plaintiff claimed, in which case the plaintiff was entitled to recover.

In such a case, the authorities even go to the extent of holding that a judgment will not be reversed for the refusal to grant a non-suit, though the plaintiff had at the time failed to prove his case, if the necessary evidence was supplied afterwards by either party (Schenectady & Saratoga P. R. Co. v. Thatcher, 11 N. Y. 102 ; Kent v. Harcourt, 33 Barb. 491 ; Colvin v. Burnet, 2 Hill, 620 ; Hearsey v. Pruyn, 7 Johns. 179).

In no aspect of the case, therefore, can the exception taken by the defendants to the refusal to dismiss the complaint be sustained.

The exception taken to the denial of the motion to direofc a verdict for the defendants is equally untenable. At that time the case presented a conflict of testimony upon the main question in dispute, which could only be determined by the jury.

The exceptions to the admission of evidence are without any merit whatever.

The questions in dispute were fully and fairly submitted to the jury under a charge that carefully guarded all the rights which the defendants, or either of them, had. A thorough examination, made by me, of the exceptions taken to the charge as delivered, and to the refusals to charge as requested, failed to disclose any tangible ground for reversal. Upon the whole case the verdict of the jury ought not to be disturbed.

Defendants’ motion upon the judge’s minutes for a new trial was properly denied. .

The judgment and order appealed from should be affimed, with costs.

Sedgwick, Oh. J., and Van Vorst, J., concurred.


text:
    THE HEALTH DEPARTMENT OF THE CITY OF NEW YORK, Appellant, v. JAMES PURDON, et al., Respondents.

      Constitutional law of U. S.—Sanitary laws New Torlc state.—Functions of state and, federal governments.

    By the constitution of the United States the power to regulate commerce with foreign nations, and among the states, is conferred upon congress, and while a state may enact sanitary laws, and establish quarantine and reasonable inspection regulations, it cannot, beyond what is absolutely necessary for self-protection interfere with the powers of congress.
    Though there are many jDOwers conferred upon congress, which, until exercised by it, are regarded as dormant, and which therefore may be exercised by the states within their limits in the meantime, yet it is not enough that there is no express prohibition upon the states; it must also appear that there is no repugnancy or inconsistency in the exercise of the power by the states.

      Decided December 1, 1884.

      Accordingly held, that an injunction will not lie under the state sanitary laws to restrain the sale of imports of teas in original packages, though such teas be adulterated, unless they be shown to be unwholesome or deleterious to health; that the exercise of the power contended for by plaintiff, would conflict with the policy of the United States government in allowing the importation of the teas in question and collecting the duties thereon ; and further, that congress has acted in the premises by Act March 2, 1883, entitled, “Act to prevent the importation of adulterated and spurious teas,” by winch statute congress decided that teas actually on shipboard might be imported, and the power to import includes the right to sell.
    Before Sedgwick, Ch. J., Van Vorst and Freedman, JJ.
    • Appeal from judgment in favor of defendants.
    The facts appear in the opinion.

      W. P. Prentice, for appellant.

      George H. Foster, for respondents.
   By the Court.

Freedman, J.

This is an appeal by the plaintiff from a judgment in favor of the defendants dismissing plaintiff’s complaint upon the merits. The action was brought to restrain defendants from offering for sale, or selling or disposing of three thousand five-hundred and sixty-three packages of Pingsuey teas which have been placed by the defendants Purdon & Wiggin, with John PI. Draper & Co., auctioneers, for sale, at .public auction.

Upon the trial some evidence was given showing adulterations in said teas, but upon the evidence given on both sides, the learned judge who tried the cause made, and the judgment rendered wholly rests upon, the following finding of fact, viz.: “I find that sufficient evidence has not been produced before me to prove that the said tea is, by reason of said adulteration or otherwise, dangerous to human life or detrimental to health and unwholesome, or that the injunction prayed for is needed to prevent serious danger to human fife or detriment to health, or that the said teas or the selling or offering for sale of the same is a nuisance.” Upon the whole case as presented, this finding cannot be disturbed. If it could be disturbed, it would have to be done for reasons which more or less apply to all green teas imported into this country.

The burden of proof was on the plaintiff to show that the teas complained of were, in point of fact, unwholesome or deleterious to health, and in the absence of such proof the learned judge below could not extend the statutes of this state under which the plaintiff proceeded, so as to reach imports of merchandise offered for sale in original packages. By the constitution of the United States, the power to regulate commerce with foreign nations, and among the .several states, is conferred upon congress, and while a state may enact sanitary laws, and for the purpose of self protection, establish quarantine and reasonable inspection regulations, it cannot beyond what is absolutely necessary for self-protection, interfere with the powers of congress. Neither the limited powers of a state to tax, nor any of its large police powers, can be exercised to such an extent as to work a practical assumption of the powers conferred by the constitution upon congress (Railroad Co. v. Husen, 95 U. S. 465 ; Low v. Austin, 13 Wall. 29 ; Henderson v. Mayor, 92 U. S. 259 ; Chy Lung v. Freeman, 92 Ib.275 ; People v. Compagnie Generale Transatlantique, 107 Ib. 59.)

It is true, as has been affirmed on several occasions, that there are many powers conferred upon congress which until exercised by it, are regarded as dormant, and which may therefore be exercised by the states within their limits in the meantime (People ex rel. Barlow v. Curtis, 50 N. Y. 321 ; Phelps v. Racy, 60 Ib. 10). But this doctrine is subject to the qualification which has always been recognized, that it is not enough that there is no express prohibition upon the states, but that it must also appear that there is no repugnancy or inconsistency in the exercise of the power by the states.

Under the circumstances of the case at bar the exercise of the power contended for by the plaintiff would conflict with the policy of the government of the United States in allowing the importation of the teas in question and collecting duties thereon. Moreover congress has acted in the premises by passing the act of March 2, 1883, entitled An act to prevent the importation of adulterated and spurious teas.” By that statute, congress decided that teas actually on shipboard might be imported. The power to import includes necessarily the right to sell.

The plaintiff having failed to establish by preponderance of evidence that the teas complained of were in point of fact, unwholesome or deleterious to health, the judgment appealed from must be affirmed with costs.

Sedgwick, Oh. J., and Van Vorst, J,, concurred.


author: O’Gorman, J.

text:
    JULIUS POLLOCK, Respondent, v. GOUVERNEUR MORRIS, Appellant.

      Award to unknown owners—action for—jurisdiction—superior court.—■ Deed of land abutting on highway—when fee of highway passes.

    An award for certain lands taken by the city of New York for streets, under L. 1813, was made to unknown owners, and the plaintiff sued the city therefor, whereupon the present defendant, also claiming to own the award, on application of the corporation counsel, was substituted in place of the city, and the latter discharged from all liability on paying the money into court. Held, that the action was maintainable between the parties, under the doctrine of Fisher v. Mayor (57 H. 7. 344); and Spears v. Mayor (87 H. 7. 359). Further held, that the superior court has jurisdiction of such an action.
    An intent to exclude the highway will not be presumed, but must appear from the terms of the deed, as illustrated by surrounding circumstances, where lands are granted hounded on a highway. Unless by the terms of the grant or by necessary implication, the highway is excluded, title will pass to the center thereof.
    It is not enough to exclude the highway, that the grant is made with reference to a plan annexed, the measuring or coloring of which would exclude it, or by lines and measurements, which would only bring the premises to the exterior line of the highway, or that they are bounded by the line of the highway, or by any similar expression.

      Decided December 1, 1884.
    Where the description begins and ends at the corner of a certain specified lot, and the first line of the description runs “ along” the highway in, question, and it appears by the map on which said lot is laid down, and to which reference is made in the deed, that the lot is bounded by said highway,—it will not be held the intention of the grantor to exclude the-highway. English ®. Brennan (60 W. T. 609), distinguished.

      It seems, that the presumption that the owner of the land abutting on- a, highway, owns to the center thereof, is much less strong in-a large city than in the country.
    Before Sedgwick, Ch. J., Freedman and. In-graham, JJ.
    Appeal from judgment in favor of' the plaintiff against the defendant for §713.28. Also appeal from order denying defendant’s motion as to the taking and using of defendant’s deposition. Also appeal from order refusing a postponement of the trial.
    The facts appear in the opinions.

      W. Stebbins Smith, for appellant.

      James R. Marvin, for respondent.
    The following opinion was delivered at special term.
   O’Gorman, J.

This action, in its present form, is brought by plaintiff against the defendant, for the purpose of ascertaining which of them is legally entitled to an award of §326 made to unknown owners, in a proceeding for widening the Boston road in the Twenty-third ward of this city. The money is in the hands of the city chamberlain abiding the result of this action.

The case was tried before me without a jury by consent, and I shall state briefly the conclusions at which I have arrived and my reasons therefor.

The prehminary objection taken by the defendant to the jurisdiction of this court, is in my opinion, not well taken.

The deed from the defendant Morris to Hyde executed September 8, 1848, and recorded December 29, 1849, conveyed to Hyde the lot as described and numbered on the map of the village of Morrisania made by 'Morris, and also the fee of the adjacent highway, called. “Spring Place.” up to the center, subject to an easement in the public as long as it continued to be used as a public highway. The grantor, Morris, was, at the time of the execution of this deed, owner of a large tract of land including said lot and said adjacent highway called “Spring Place.” The description in that deed is as follows : “ Southerly by the Post road leading from ÍSTew York to Boston, or Morse Avenue, as laid down on said map, one hundred and eighty-five feet; southwesterly by Spring place as laid down on said map, one hundred and seventy-five feet; northwesterly by lot number one hundred and thirty-nine on .said map, one hundred and eighty-five feet; northwesterly by lot number one hundred and thirty-seven on said map, ■one hundred and eighty-five feet, containing seventy-six hundredths of an acre -tVtr more or less.” The deed was a warranty deed with full covenants. There was nothing in the description of the lot, excluding or showing any intention to exclude the highway from the land conveyed, and under the controlling decisions in this state, the description in the deed did cover the adjacent highway to the center. The general principle of the law on the subject is this : An intent to exclude the highway will not be presumed, but must appear from the terms of the deed as illustrated by surrounding circumstances, where lands ■are granted, bounded on a highway. Unless by the terms of the grant, or by necessary implication, the highway is excluded, a title will pass to the centre of the highway (Mott v. Mott, 68 N. Y. 246; Kings Co. Ins. Co. v. Stephens, 87 Ib. 281).

It is not sufficient to exclude from the operation of the grant, the soil of the highway up to the center, that the grant is made with reference to a plan annexed, the measuring or coloring of winch would exclude it, or by lines and measurements which would only bring the premises to the exterior line of the highway, or that they are bounded by the line of the highway, or by any similar expression (White’s Bank v. Nichols, 64 N. Y. 65 ; Story v. E. R. R. Co., 90 Ib. 180, et seq.).

In Bissell v. N. Y. C. & H. R. R. R. Co. (23 N. Y. 61), the court says : The idea of an intention in a grantor to withhold his interest in a highway to the middle of it, after parting with all his right in and title to the adjoining land, ought never to be presumed, and all courts hold that in such a case it requires some declaration of such intention in the deed, to sustain such an inference.”

Hyde, therefore, under his deed took to the center of Spring Place, and no seizin, right, interest, or reversion therein remained in the defendant, Morris.

The next question is, what are the rights of the plaintiff Pollock in this strip of land. On October 1,1849, Hyde conveyed to one Kubler, a part of the lot 138, as known and designated on said map, and the part conveyed him was described as follows : ‘Beginning at the southeasterly corner of said lot number 138, and runs thence northwesterly along Spring Place twenty-five feet; thence northeasterly on a line parallel with Morse avenue (the Boston Road) one hundred feet; thence southeasterly on a line parallel with Spring Place, twenty-five feet to Morse avenue, thence southwesterly along said Morse avenue one hundred feet to the southeasterly corner of the said lot at the place of beginning.” This was a warranty deed with full covenants, and was recorded on October 27, 1849. On May 5, 1883, Kubler conveyed the premises last named to one Meunel, describing them as being, the same as were conveyed by Hyde to Kubler, and as 1 f beginning at the southeasterly corner of said lot number 138 and running thence northwesterly along Spring Place twenty-five feet to Morse avenue ; thence southwesterly along said Morse avenue one hundred feet to the southwesterly corner of said lot at the place of beginning.” This deed was also a warranty deed and was duly recorded on June 6, 1853. On February 21, 1857, said Meunel conveyed to the plaintiff the said part of lot numbered 138 on said map and following the same description as in the deed from Kubler to Meunel. This deed was also a full warranty deed and was recorded on February 24, 1851.

In 1813, the department of public parks reduced by 40 feet the width of Spring Place, which had heretofore been 100 feet in width, excluding from it twenty feet on each side. Thus the public use of a strip twenty feet wide, and adjacent to the plaintiff’s lot became discontinued, and the question now is what interest has the plaintiff, as abutting owner, under the deed from Meunel to him, in that strip.

An attentive consideration of the Meunel conveyance and of the surrounding circumstances as tending to show the intention of the grantors, lead me to the opinion that the plaintiff, before the narrowing of Spring Place, and under his deed from Meunel, was the owner in fee, of the adjacent highway up to its centre, and on the narrowing of it, the strip over which the public use was discontinued, became vested in him in possession, free from the public easement. The description in the deed from Hyde to Kubler, from Kubler to Meunel, and from Meunel to the plaintiff are, no doubt, materially different from the description in the original deed from Morris to Hyde, and there are cases which hold that a description similar to that in the said several conveyances, does not give the fee in the adjacent highway to the grantee of the lot. See English v. Brennan (60 N. Y. 609).

There, the description of a lot in the city of Brooklyn was as follows : “Beginning at the southwest corner of Flushing and Claremont avenue, running thence westerly along Flushing avenue twenty-five feet; thence southerly seventy-nine feet to a point distant forty feet westerly from the westerly side of Claremont avenue.” Held, that the title of the grantee under that deed went to the side, not the center of that street. The court, however, say that the presumption that the owner of land abutting on a highway owns to the center is much less strong in respect to lots in large cities ; and Spring Place, at the time of the conveyance to Hyde and to plaintiff, was a country highway.

The question is always one of intention, and it is difficult to imagine any motive which could have led Hyde to reserve the fee in the highway conveyed to him by Morris, which fee, charged as it was then by the public easement, could have had no appreciable value. The difference in the mode of describing the external boundaries, hi the deed from Hyde to Rubier, may here naturally be attributed to the fact that only a part of lot 138 was conveyed, that a new and different description, in some respects, was necessary, and that the draftsman, without consideration of what might be the possible legal effect, altered the whole.

In my opinion, the plaintiff, through mesne conveyance from Hyde, obtained all the right in fee of the strip of highway, Spring Place, adjacent to his lot, as far as said lot abutted on said highway.

It is contended by the learned counsel for the defendant that, before the execution and the recording of the deed from Morris to Hyde, Morris had parted with his right in the lot in question. In support of this position, he offered in evidence a contract between Morris and McG-raw and Houghton, whereby he agreed to sell the tract, including the lot in question, to them. This instrument was not recorded until June, 1850, and Hyde, the grantee of Morris, under deed recorded December 29, 1849, had no constructive notice, and there is no evidence that he •had personal notice of this agreement. The same rule applied to an instrument dated November 8, 1848, in which the last mentioned contract is recited. Morris further therein agrees to convey the streets, avenues, &c., to whomsoever may be authorized to receive deeds for the benefit of the inhabitants of the village of Morrisania. This instrument was not recorded until June 27, 1850.

An instrument in writing is also offered in evidence by the counsel for the defense, dated November 8, 1864, whereby said Morris quit-claims to the board of trustees of the town of Morrisania all the streets, avenues, &c., as designated on the said map, and also Spring Place, one hundred feet wide. This paper was not recorded until January 18, 1865.

The instruments were only admissible in evidence in so far as they might tend to show an intention on the part of Morris, known to Hyde, to reserve the fee in Spring place, or to convey it to others.

In my opinion, they failed of attaining that result.

Let findings be prepared and submitted to me by the plaintiff’s counsel, in accordance with this opinion.

There should be judgment for the plaintiff.

By the Court. Freedman, J.—Under the circumstances disclosed by the whole case, no error appears to have been committed by the court below in refusing a postponement of the trial, or in denying defendant’s motion to have his deposition taken.

The controversy between the present parties to the action arises out of their respective claims to an award made by commissioners of estimate and assessment to unknown owners of a strip of land, the title to which was acquired by the corporation of the city of New York. Under the act of 1813, § 184 (re-enacted as § 993, ch. 410 of Laws 1882), the city might have paid the money representing the award into the supreme court, but this was not done. An action was then brought against the mayor, etc., of the city of New York, and at the commencement of said action the money was yet in the hands of the comp-' troller. Upon the application of the corporation counsel, the present defendant was substituted as defendant in the action, and the action against the may or, etc., discontinued, and the city discharged from all liability in the premises upon paying the money into this court subject to the further order of this court. Morris then made and served his answer herein as such substituted defendant, in which he denied plaintiff’s right to said money, and claimed the same as the owner of the fee of the premises, but in which he at the same time denied the jurisdiction of this court in the premises.

Under the circumstances stated, the action could be maintained between the parties within the principles laid down in Fisher v. Mayor (57 N. Y. 344); and Spears v. Mayor (87 N. Y. 359). Of such an action the superior court of the city of New York has jurisdiction (Art. 6 of Const. as amended in 1869, § 12 ; Laws 1873, ch. 239 ; Code Civ. Proc. § 263, and notes, &c.)

The merits of the case have been so fully and ably discussed in the opinion filed by the learned judge below that a repetition of the points made by him would be a work of supererogation. It should be noticed, however, that in the case of English v. Brennan (60 N. Y. 609), cited by him, the description commenced at the corner of the avenues, and not at the corner of the lot, and that consequently that case did not involve the principle of construction applicable to the case at bar.

The exceptions taken by the defendant to the exclusion of evidence, and to the refusals to find as he requested, have also been carefully examined, but they disclose no error constituting ground for reversal.

The judgment and orders appealed from should be affirmed, with costs.

Sedgwick, Ch. J., and Ingraham, J., concurred.

       Tne omission of lines in this description was not a point of serious contention.


text:
    STEPHEN R. KROM v. ASHER KURSHEEDT.

      Security for costs—Non-residence, what is. under statute—Liability of attorney.

    Under § 3278, Code Civ. Proc.,—making the attorney liable for costs to the extent of $100, where security has not been given on behalf of a non-
    . resident plaintiff,—if the plaintiff and his family are domiciled in another state, he is deemed a non-resident, though at the time the action was begun, and for many years previous hewas engaged in business in New York city.
    That the attorney brought the action in good faith, supposing plaintiff resided here, is no defense to his liability, nor is the omission of the defendant to demand security during the pending of the action, a defense.
    Before Sedgwick, Oh. J., Van Vorst and Freedman, JJ.

      Decided December 1, 1884.
    Appeal from order.
    The facts appear in the opinion.

      A. B. Moore, for appellant.

      M. A. Kursheedt, for respondent.
   By the Court.

Freedman, J.

This is an appeal by George F. Wellman, the attorney for the plaintiff, from an order requiring him as such attorney, to pay to the defendent the sum of $100, on account of the costs awarded to the defendant in the action. At the time of the commencement of the action, the plaintiff resided with his family at Plainfield, New Jersey, and he still continues to reside there.

By section 3268 of the Code of Oivil Procedure, the defendant may require security for costs to be given where the plaintiff was, when the action was commenced, a person residing without the state, and by section 3278 the plaintiffs’ attorney in such a case is made liable for the defendant’s costs to an amount not exceeding $100, until security is given as prescribed, although the defendant has not required such security to be given.

It is claimed, however, by the appellant that because it was made to appear by affidavit that, at the time of the commencement of the action, the plaintiff had been engaged in business in the city of New York for about sixteen years, he was not a non-resident wdthin the meaning of section 3268, though he and his family were domiciled in another state.

After a careful examination of the cases cited to illustrate the distinction between residence and domicile, and conceding that a person can have a residence in one state and his domicile in another, I fail to see how the appellant can be relieved. Mere presence in the state during business hours has never yet been held to constitute residence. On the contrary, in the enforcement of our attachment laws against non-residents, it has repeatedly been held that presence during business hours in this state does not amount to residence (Wallace v. Castle, 68 N. Y. 370 ; Chaine v. Wilson, 1 Bosw. 673 ; Barry v. Bockover, 6 Abb. 374).

In the absence, therefore, of a statutory provision making presence during business hours in this state equivalent to residence in the construction of section 3268, the order appealed from was fully warranted by the facts shown to the court below.

It is no answer, under section 3278, that the appellant ' commenced the action in good faith and in the belief that the plaintiff and his family were domiciled in New York. Nor does the omission of the defendant to demand security for costs during the pendency of the action affect the attorney’s liability (Matter of David Levy, 10 Daly, 391).

There being no merit in any of the points raised by the appellant, the order appealed from should be affirmed with costs, &c.

Sedgwick, Ch. J., and Van Vorst, J., concurred.