text:
    St. John, Plaintiff and Respondent, v. The Mayor, Aldermen and Commonalty of the City of New York, Appellants.
    1. The municipal corporation; the Mayor, Aldermen and Commonalty of the city of New York, although authorized by its charter to have and keep such and so many markets, at such and so many places within its corporate limits, as shall from time to time be established by the common council, cannot erect nor allow market stalls to be erected and occupied in the public streets of said city, theretofore regularly laid out and established as highways, and occupied as such, to the special damage of the owners of houses and lots fronting on such streets, without .being liable for such damage.
    2. The facts, that sheds or stalls are so erected and occupied by the permission of its commissioner of streets and lamps, and that fees, for the use of such sheds or stalls as market stands, at a fixed rate per day for a period of several months, are collected by its clerk of the market and by him paid to the comptroEer of such city, and that the erection and such occupation of such sheds prevent access to the houses fronting on such street and cause special damage to the owners thereof, are sufficient, prima facie, to establish the Eability of such corporation for such damage.
    3. The facts, that the space, (or shp so called) in and on which sheds are so erected and used, has been used as a pubEc street or highway for more than fifty years prior to such erection; and at the time of .such erection continued to be so used; that the corporation more than fifty years prior to such erection granted land bounded, on such sEp, and in the grant described said shp as a sEp “ caEed Oatharine shp as the same has been lately laid out and surveyed by” one of the city surveyors of said city; and by such grant required the grantees to erect a continuation of said slip, of a specified width, to be and remain for the free and common passage of, and a public street or way for the inhabitants of said city, in Eke manner as the other pubEc streets of the said city then were or lawfufly ought to be; and that such corporation thereafter directed said shp or street to be repaved, and assessed the expense thereof upon the owners of lands contiguous thereto, are, uncontradicted, sufficient evidence, in an action against said corporation for damages caused by obstructing the same; that such sEp is in fact and in law a pubEc street or highway; regularly established as such.
    4. A temporary interference by such corporation with, or obstruction of a street, by necessarily piling materials on a part of such street during a reasonable period for building or repairing a market, from which an incon- , verbenee may result to adjoining owners, wiE not create a EabiEty on the part of the corporation in favor of such owners. for the incidental losses consequent thereon.
    5. But such an appropriation, by the corporation, of a public street and sidewalk, (by the erection of sheds thereon and the occupation of the same for vending meats, vegetables and other articles usuaEy sold in the pubEc markets) as substantiafiy prevents access to or egress from adjoining buildings fronting on such street, and in effect deprives the occupants thereof of the capacity to prosecute their accustomed and lawful business therein, is unauthorized by law, and for the damages directly and necessarily caused thereby, the corporation is liable.
    (Before Bosworth, Hoffman and Pierrepont, J. J.)
    Heard, June 18;
    decided, August 7, 1858.

      This is an appeal by the defendants, The, Mayor, Aldermen and Commonalty of the City of New York, from a judgment in favor of George S. iSt. John, the plaintiff. The action was tried before Mr. Justice Bosworth and a jury, on the 15th day of March, 1858. It was brought to recover damages for injuries alleged to have been sustained by the plaintiff in the months of June, July, August and September, 1854, by reason of the erection of sheds, for the sale of meat, vegetables and the various articles usually sold at markets; 'in front of the plaintiff’s premises Hos. 17 and 19 Catharine slip, (between Water and South streets in the city of Hew York,) which premises were occupied by the plaintiff, as an eating and lodging house.
    It appeared from the evidence; that these sheds were built on posts set in the gutter and on the sidewalk; that the gutter was so obstructed that the water could not pass through it; and that the street or slip and the sidewalk were also thereby so obstructed that no carriages or carts could get nearer to plaintiff’s premises than the corner of South street, or the corner of Water street, and that two persons could not walk abreast, on the sidewalk.
    It was also proved that these sheds were erected by the permission and under the direction of the superintendent of streets and lamps. That the clerk of Catharine market collected rent from the occupants of these sheds, at a certain rate per day, and paid the same to the comptroller of the city.
    Evidence was also given of the loss of custom caused to the plaintiff by the erection and occupation of these sheds, during the time that they continued to be kept up and used, as market stands.
    The action was tried on the same pleadings, as on a previous trial had in January, 1856. The proceedings on the first trial are reported in 6 Duer, p. 315. The evidence given on the first trial, was given on the last. The plaintiff also proved on the last trial by B. F. Langdon, (then nearly 74years,of age), that he had known Catharine slip since he was a boy; ever since 1793; there was then there only one market from Cherry to Water streets; that Catharine slip had been always used as a public highway on both sides, except when the sheds (complained of) were built; it was filled out to South street in 1820. He also gave in evidence a deed bearing date the 9th day of September, 1772, executed by the defendants, as grantors to William Bedlow and others as grantees, of a certain lot “between high and low water mark situate, lying, and being in the outward of the city of New York opposite to the grounds of the said William Bedlow” and others; 205 feet in length on the east and west sides thereof, and in breadth along the strand and fronting the East river, at low water mark, 55 feet 10 inches, and in the rear, upon the ground of the said William Bedlow and others 76 feet 1 inch English measure, bounded “"on the west upon a certain slip there lately laid out, and called Catharine slip, as the same has been lately laid out, and surveyed by Girard Bancker, one of the city surveyors;” &c. By said deed, the grantees therein, covenanted, (in addition to making other streets) to erect and build, “ a good, sufficient and firm wharf or street of 24 feet, English measure, in breadth, on the west side of the water lot hereby granted, the whole length thereof, contiguous and adjoining to a certain street there lately laid out, and called Catharine slip ”; to keep and uphold the same in good repair, and that the same should forever thereafter continue, remain and be for the free and common passage of, and public streets and ways for the inhabitants of the said city of New York, and all others passing and returning through or by the same, in like manner as the other public streets of the same city now are, or lawfully ought to be ”; &c.
    The premises in question are situate between Water and South streets; front on Catharine slip; are thirty-four feet and eight inches in width, and are known as Nos. 17 and 19 Catharine slip.
    The plaintiff’s counsel also offered in evidence an assessment list, for repaving Catharine slip from Cherry to South streets; confirmed. The defendants’ counsel admitted that it had been taken from the street commissioner’s office, and admitted that the certificate of confirmation was signed by the clerk of the common council.
    “ The plaintiff’s counsel then offered in evidence a resolution of the board of eouncilmen, July 6th, 1854, offered by councilman Seely, for the purpose of showing that notice of the matters which the resolution recites, was brought home to the defendants.
    “ The counsel for the defendants objected to the reading of the resolution on the ground of immateriality and irrelevancy. Objection overruled, and exception taken.
    “It was then read, as follows:
    “ Whereas, Butcher-stalls have been removed flom Catharine Market to the east side of Catharine street, obstructing the sidewalk, and seriously interfering with those who occupy the basements on said street, between Cherry and South streets; therefore, be it
    “ Besolved, That the commissioner of streets and lamps be and he is hereby directed to state by whose authority the said stands were so placed in Catharine street, and how long the same will remain, and report the facts to this board forthwith.”
    David T. Valentine was then called on the part of the plaintiff, and being sworn, testified as follows:
    “ I have been clerk of common council for a good many years; General Jacob Morton was clerk in 1828; that is his signature to that assessment list; I was first connected with the office in 1821; I am familiar with the records in the office of the clerk; this paper was included in a communication to the board, and when this was passed, the clerk signed it, and it is a proof of confirmation; this is inclosed with a communication from the street commissioner, and when the list was confirmed by the board, the clerk signed this.
    “ Plaintiff’s counsel then offered to read the said assessment list in evidence.
    “ The counsel for the defendants objected to the same being so read, on the ground of irrelevancy and immateriality.
    “ The Court overruled the objection, and the same was read in evidence, and the counsel for the defendants excepted.”
    This assessment list was dated the 30th of June, 1828, and purported to have been confirmed by the common council on the 28th of July, 1828. By it, all the lots between Cherry street and South street, fronting on Catharine slip, were assessed their respective proportion of the expense “ for repaving Catharine street from Cherry street to the southerly side of South street.” When the plaintiff rested, the defendants moved for a nonsuit, which motion was denied, and they excepted.
    When the testimony was closed, the defendants requested the Court to charge, (in substance)

      1st. That the defendants, under their corporate powers, were authorized to locate the market in any part of Catharine slip that they saw fit, and, therefore, were not liable for any damage caused by erecting the sheds in question.
    2d. That although the sheds were erected by permission of the superintendent of streets and lamps, the corporation is not liable by reason thereof, unless it be shown that this officer, in giving the permission, acted under an ordinance of the common council duly passed.
    3d. That the defendants are entitled to collect market fees from those who sold within 300 yards of the market; and the collection of fees by the deputy-clerk of the market was no evidence that the defendants sanctioned the erection of the sheds.
    4th. The liability, if there be any, is that of the individuals erecting and occupying the sheds.
    5th. The jury must be satisfied that the sheds were not necessary for the occupants of the old market while the new one was being rebuilt; or were kept up for a greater length of time than was necessary to rebuild.
    6th. That there was no evidence of either fact.
    7th. That no cause of action had been shown.
    The Judge declined to charge either proposition, and the defendants excepted.
    The printed case concludes thus:
    “ The Court then charged the jury, that the plaintiff is entitled to recover in this action, and the only question is the amount of damages which you ought to find, and instructed them as to the rules and considerations by which they were to be governed, in ascertaining the amount of damages to which the plaintiff was entitled.
    “The defendants’ counsel excepted to that portion of die. charge of the said Justice, in which he instructed the jury that the plaintiff was entitled to recover.”
    The jury found a verdict in favor of the plaintiff for $2,000 damages, and from the judgment entered on that verdict, this appeal was taken by the defendants.

      B. Busked & A. B. Lawrence, Jr., for appellants.

      I. The motion made by the defendants’ counsel to dismiss the complaint, should have been granted.
    1. There was no legal evidence before the Court showing that Catharine slip, at the point referred to in the complaint, was a public street. (St. John v. The Mayor, 6 Duer, 315.) The evidence of the witness Langdon does not avail the plaintiff in this respect, because the witness, himself, admits that he had never made any measurements of the slips—that he did not know its present or its past width, and he did not pretend to state that he knew that the slip had ever been regularly laid out as a public street. It is' true that he says that the slip -was used as a public highway; but he gives no fact which justifies him in this assumption, and it is impossible from his evidence to ascertain whether the plaintiff’s premises border on the same street or slip to which he refers.
    2. Besides, it appears from Langdon’s testimony that the slip was extended to South street, in 1820; that previous to that time the slip ran only to Water street. There is no evidence showing whether the portion of Catharine slip, included between Water street and South street, was used as a street, or as a market place. The plaintiff’s premises were situated between Water and South streets.
    3. Giving the release to Bedlow and others, the most favorable construction for the plaintiff, respondent, it does not show that the slip at the point at which the plaintiff’s premises are situated was a public street or highway. The release was executed in September, 1772, and according to Langdon’s testimony, Catharine slip, between Water and South streets was not filled till 1820.
    Surely the release cannot be quoted to show for what purpose Catharine slip, between the two last named streets, was used or appropriated.
    4. Nor does the assessment made in 1828, for repaving Catharine slip, establish that the slip was intended to be or was used for a public street. It might be very proper and necessary that the passages along or through the market place should be paved, and if the defendants saw fit to order such pavement to be made, their charter powers were extensive enough to enable them to impose an assessment upon the owners of adjacent property to defray the expense thereof. It follows, therefore, that the difficulty suggested by the General Term when this case was last before it, in regard to the absence of proof that the slip in question, in front of the plaintiff’s premises, was a public street, has not been removed on the new trial.
    5. But, admitting that it was established that Catharine slip, in front of the plaintiff’s premises, was a public street, still the complaint should have been dismissed, because it was not shown that the sheds complained of were built by order or permission of the defendants.
    The witnesses Varían and Storms testify that they received permission to put up their sheds from the commissioner of streets and lamps. By whose authority or permission the other sheds were put up, does not appear; but if it be assumed that they were built by the same permission, the plaintiff is not aided. It is not part of the duty of the commissioner of streets and lamps, by the charter of these defendants, to grant permits to parties to put up sheds in streets adjoining or adjacent to a public market. (Charter, 1849, § 14; Davies’ Laws, 207.) That officer is only charged with the duty of transferring butchers’ stalls' in the public markets, and has no authority to grant licenses to parties to put up stalls outside of the public markets.
    As he exceeded his powers, the defendants are not responsible for the consequences of his act. (Boom v. City of Utica, 2 Barb., 104; Smith v. Mayor, &c., 4 Sand., 221.) There was no resolution of the common council of the defendants shown, directing the commissioner to put up the sheds, or to authorize the butchers to put them up, and the defendants cannot be held to have directed him to do so. The plaintiff failed, therefore, to prove his material allegation, that the defendants, through their agents, &e., erected, &c., or caused to be erected, &c., the stalls, &c. The allegation was material, was denied, and should have been proved.
    Again, the sheds having been erected by the butchers, without any lawful authority from these defendants, the action should have been brought against the butchers. The relation of principal and agent, or master and servant, did not exist between the butchers erecting the stalls and defendants. (Blake v. Ferris, 1 Seld., 48; Pack v. Mayor, 4 id., 222; Kelly v. Mayor, 1 Kern., 432; Stevens v. Armstrong, 2 Seld., 435; Laugher v. Pointer, 5 Barn. & Cress., 547.)

      6. Assuming, however, that the defendants are bound by the permission given by the commissioner of streets and lamps, then we say that the defendants have power to provide for the rebuilding and' repairing of the public markets, and to provide the occupants of such markets, while the same were being repaired or rebuilt, proper places for the sale of their provisions ; and the owners and occupants of premises adjoining such markets hold, in subordination to the right and duty of the defendants, to do whatever is necessary for their maintenance. (St John v. The Mayor, swpra.)

    The plaintiff should have shown, therefore, affirmatively, that the sheds in question, if authorized to be built by the defendants were unnecessary for the accommodation of the occupants of the old market during the progress of the work of rebuilding the same, or that such sheds were continued in their location for a longer time than was necessary for the rebuilding of the market. There is no evidence in the case which shows that the stalls or sheds were not necessary or proper for the use of the butchers and the accommodation of the public, while the market in Catharine slip was being rebuilt; nor is there anything which proves that they were kept in front of the plaintiff’s premises for an unreasonable length of time. (Opinion of Woodruff, J., supra; Montgomerie Charter, § 17; Davies’ Laws, 178.)
    There was, therefore, no neglect of duty shown- on the part of the defendants. The appellants insist that the learned Justice erred in refusing to dismiss the complaint.......
    H. The release to Bedlow and others was improperly admitted in evidence.
    I. From the testimony of. Langdon, it appears that Catharine slip,, at the date of such release, did not extend below Water street.
    2. The slip between Water and South streets, which the plaintiff claimed was a public street or highway, not being in existence, the release could have no bearing on the issue in the cause.
    III. The assessment list for repaving Catharine slip, &c., should have been excluded.
    1. As is shown under the first point, the fact that defendants ordered the slip to be repaved, has no bearing on the question whether the slip was a public street or highway.

      2. If Catharine slip was filled in to South street as late as 1820, the proceedings must have been taken under the acts of 1818,1816, &c., (Davies’ Laws, pp. 529, 596, 602,) and the original report of the commissioner, or a certified copy therof, was the best evidence that the slip between Water and South streets had been opened as a public street.
    IY. The resolution offered in the Board of Oouncilmen, July 6, 1854, was improperly admitted in evidence. It was not shown that the same was passed by the Oouncilmen, and until such passage it cannot be considered as expressive of the views _ of the board.
    Y. The witness Yarian’s testimony, as to the objection of the plaintiff to the stalls being erected in front of his premises, should have been stricken out. If the defendants had the right to put the sheds there, the objections of the plaintiff could of course be of no avail; and if they had not, his failure to object' would not preclude a recovery in this case. . . .
    YI. For the reasons stated in the first point, the learned Justice erred in refusing to charge as requested in the 1st, 2d, 4th, 5th, 6th and 7th propositions of the defendants’ counsel.
    YII. The learned Justice erred in refusing to charge as requested in the third proposition of the defendants’ counsel.
    1. The ordinances of the defendants subjected all parties selling meat or garden produce, to the payment of market fees. The defendants were authorized to pass such ordinances. (Montgomerie’s Charter, section 14; Davies’ Laws, p. 175.) And it was the duty of the deputy clerk to collect the fees from persons selling such articles within the prescribed limits. The collection of the fees did not, therefore, import the sanction or approval of the erection of the sheds by the defendants. If the clerk collected any thing beyond the fees, as rent, he collected it in his . own wrong; and the payment by him of the amount thus collected, does not charge the city with any liability growing out of the erection or continuance of the sheds.
    YIII. The learned Justice erred in instructing the jury that the plaintiff was entitled to recover.
    IX. The defendants insist that the 4th, 5th, 7th and 8th exceptions are well taken, and the judgment should be reversed, and a new trial ordered.

      A. J. Willard & J. Bancroft Stevens, for respondent.
    I. The evidence shows, without question, that the premises of the plaintiff were situated upon an ancient highway of the city of New York, which has been dedicated to the use of the public, and the employment of which as a market-place was subordinate and incidental to its recognized use as a public street. For the proof of these facts, we refer to—
    1. The testimony of Mr. Langdon.
    2. The deed of release from the defendants to Bedlow and others, dedicating Catharine slip, with other streets, to the use . of the public, “in like manner as the other public streets of the same city.”
    3. The evidence of the acts of the defendants in 1828, in paving Catharine slip, and assessing the expense among the owners or occupants of the houses and lots intended to be benefited by the work.
    II. The corporation are liable to the plaintiff in damages for the injury occasioned to his business by the erection and use of the sheds,upon this public highway.
    1. Mr. Glazier, the superintendent of sheds, directly permitted their erection.
    2. The corporation, through the clerk of tha market, collected rent for the use of the sheds.
    3. The evidence fully establishes that the sheds were a com- ' mon nuisance, injurious to health and business, and peculiarly to the business of the plaintiff.
    4. The corporation are responsible for the breation of a nuisance, in the same manner that private individuals are liable. (Brower v. The Mayor, 3 Barb. S. C. R., 257.)
    5. Even if the erection of the sheds by the defendants was a lawful act, they were bound at their peril to see to it that the sheds should not prove a nuisance to the plaintiff
    For the discussion of this doctrine, see Lacour v. The Mayor. (3 Duer, 406.)
    ‘ 6. And even if the defendants are not directly chargeable with the creation of the nuisance in question, they are responsible for Ailing to remove it. (Hudson v. Mayor, &c., of New York MS. opinion, Court of Appeals.)

      The judgment should be affirmed.
   By the Court.

Hoffman, J.

— This is an appeal from a judgment in favor of the plaintiff against the defendants, for the sum of $2,564.13, entered upon the verdict of a jury for $2,000, with costs and disbursements.

The case was formerly tried upon the same pleadings, and the learned Judge then instructed the jury unqualifiedly, that the plaintiff was entitled to recover, and they had only to assess the damages. The verdict being taken subject to the opinion of the Court, the case was brought before the General Term, where a new trial was ordered.

The points which were then declared to be established as facts, or settled as law, were the following:

The plaintiff’s premises were situated on a market-place having a passage along the front of the premises with a sidewalk. It was not proved, whether this passage had ever been laid out as street or highway. There was evidence however of its having been used as a street.

It was shown, that the obstruction complained of, as causing the damage to the plaintiff, arose from occupying the passage and sidewalk with stalls and sheds while the market was rebuilding. It was the duty of the defendants to rebuild, and the inference was, it was done by their authority.

The defendants had all needful authority for this purpose, and the owners of houses and lots upon a market-place, held their premises in subordination to the right and duty of the defendants, to do whatever was necessary for the maintenance of the market; and must submit to whatever inconveniences necessarily resulted from the exercise of that authority. If the rebuilding of the market required a temporary obstruction of the street or passage in the market-place; in front of the plaintiff’s premises, for a reasonable time, while the work was in progress, the public and the adjoining owners were bound to submit to the inconvenience, for the sake of the greater and paramount welfare of the public, for whose use the public markets were authorized by law to be built and maintained. The question to be determined was, not merely, whether the passage in front of the plaintiff’s house was obstructed, but also whether access to his premises was obstructed unnecessarily and unreasonably, or for an unreasonable time; and also (if the right of the defendants to cause the obstruction was conceded or appeared from the evidence then) whether the temporary erections were needlessly offensive or noxious, and whether the defendants caused the nuisance in this latter sense; or neglected any duty which they owed to the plaintiff by not abating it, if it proceeded from the acts or neglects of the tenants of the stalls or sheds.

The Judge on the present trial instructed the jury that the plaintiff was entitled to a verdict, and it was only for them to assess the damages.

The first and material question is, whether the evidence has so varied the case as formerly presented, as to show, that the open space upon which the plaintiff’s shop fronted, was in fact a public street of the city ?

The learned Judge did not submit this as a question of fact to the jury. Was this on the ground that it was fully proven, or that it was immaterial ? I presume that it was for the former reason; and I agree that the fact is made out by the testimony.

The deed of the 9th of September, 1772, from the defendants’ predecessors, conveyed, it is time, only from high water to low water-mark, that is, from Cherry to Water street. But it defines the western boundary upon a slip called Catharine slip, and the grantees “ are to erect a firm wharf or street of 24 feet width, on the west side of the water lot thereby granted, of the whole length thereof, contiguous and adjoining to a certain street there lately laid out, and called Catharine slip.”

We have therefore the street down to Water street, declared to have been laid out by the corporation itself.

There is an assessment list in evidence for paving Catharine street from Cherry to South street, dated in 1828. It came from the street commissioner’s office, and is signed by the clerk of the common council, and sufficiently proven by Mr. Valentine, the clerk. The resolution of the board of councilmen, of July 6th, 1854, is another piece of evidence to show that the defendants recognized the space as being a public street.

The parol evidence shows that it was filled up out to South street in 1820, and that it was always used as a public highway on both sides, until the sheds were built.

This street was thus opened by a continuation oí Catharine slip or street from Water to South street. It had been a public street from Cherry to Water, and for the whole of both sections, the street was laid out over vacant land under water, belonging to the corporation. ■

Ho proceedings under any statute were then necessary. The corporation dedicated it. Governor Dongan’s charter (§ 2,) authorized this. On the assumption of this fact being established, the next inquiry is, as to the law which will apply.,

. The seventeenth section of Montgomerie’s charter provided that the mayor, aldermen, &c., might have, hold, and keep such and so many other markets at such and so many other times and places, in the said city of Hew York, as shall from time to time be ordered, established, erected, and appointed by the common council for the time being.

And by an act of 1822 (Session Laws, ch. 101), the mayor, &c., “ might cause public markets to be erected and kept over the waters of the East and Horth rivers, adjoining to any of their docks and wharfs in the city of Hew York; provided they did not interfere with the flow of the waters, nor be built over the same so as to occupy a distance exceeding one hundred feet from the lines of the city, as established by law on the said rivers.”

The proposition appears to me very clear, that the power to build or to repair markets is entirely subservient to the rights conferred upon the public, by the dedication and opening of a public street by the corporation, over its own land. It follows that the occupation of such a street, and obstructing the use and enjoyment of the same for the reparation of a market adjoining to it, is, in strictness, unlawful, and a breach of the implied contract between the public and the city. It is of special consequence to the owners of houses built upon the street. An injury is, of course, more likely to arise to them than to others.

I do not deny that the corporation may temporarily obstruct a portion of a street by piling materials, or making preparations essential to repair a public market. They grant permits for a similar purpose, to individuals in relation to building or repairing private edifices. "But such a right -is widely different from the power of erecting and keeping, market sheds on a public highway, during an indefinite period and to, the manifest detriment of the owners of adjacent property.

I think it clear that the defendants are responsible, and not any subordinate agents. Their officer, the clerk of the market, collected rents from the occupants of the sheds, and paid them to the comptroller. One branch of the common council had actual notice of the obstructions, on the 6th of July, 1854. It is not a case where the liability of a principal is transferred to an agent.

The judgment must be affirmed, with costs.

Judgment affirmed.


source: Caselaw Access Project

author: Pierrepont, J.

license: Public Domain

text:
    Higby, Plaintiff and Respondent, v. The New York and Harlem Railroad Company, Defendants and Appellants.
    1. Receiving from the president and agent of a corporation, on applying to him, as such agent, for payment of a sum then due from the company; part cash and the balance in a note, at thirty days, made by a firm of which such president is a member: and the giving of a receipt that the whole sum so due has been received, will not operate as payment by the company of the sum for which the note was taken, unless it was expressly agreed at the time, that it should be received as actual payment.
    2. The fact that such president and agent was, at the time of giving the note, largely indebted to such company, and was subsequently credited by the company, in account, as having paid the whole sum due, is no answer to such an action; the company not having in fact been actually prejudiced thereby.
    3. Such a receipt will not exclude parol evidence, in an action against the company to recover the sum for which the note was given, (it not having been paid at maturity,) of what was said at the time of taking such note, to induce the creditor to take it.
    4. The declarations of the parties to the transaction, at the time of making it, are competent evidence, although one of them was the clerk of such president; he acting at the time for such president as his clerk and agent, the president not being personally present.
    (Before Bosworth, Hoffman and Pierrepont, J. J.)
    Heard, June 23d;
    decided, October 9th, 1858.

      This is an appeal by the defendants, from a judgment entered against them on the report of B. D. Silliman, Esq., as referee.
    The action is brought by William B. Higby, plaintiff, as assignee of Stewart & Baylies, against the New York and Harlem Railroad Company, defendants, to recover a balance alleged to be due from the latter, for work and labor done for them, by Stewart & Baylies, under a contract dated the 15th of July, 1853.
    By this contract, Stewart & Baylies agreed to perform certain labor for the defendants, in the construction of an additional track of defendants’ road, at an agreed price, the payments “to be made monthly on the estimate and certificate of the engineer, retaining fifteen per cent out of each certificate until the whole work is completed to the satisfaction and acceptance of the engineer, at which time the fifteen per cent thus retained shall be paid.”
    The plaintiff claimed that a balance of $3,500, with interest from the 30th of July, 1854, was due on estimate No. 10, which estimate was made June 20, 1854, and that Stewart & Baylies’ claim for such balance had been sold and assigned to him.
    That estimate was...........................$7,866 70
    Retain 15 per cent,.......................... 1,180 00
    Balance to be paid,..........................$6,686 70
    The defendants claimed that the $6,686.70 had been paid on the 27th of June, 1854, as follows: Cash $3,186.70, and the note of R. & Gr. L. Schuyler at thirty days for $8,500.00. On the trial, to prove the alleged payment, A. J. F. Vanderventer, the cashier and bookkeeper of R. & Gr. L. Schuyler, was called as a witness and testified, that Mr. Baylies, on the 27th of June, 1854, called at the office of Geo. L. Schuyler, the president of the company, “to get the money on the estimate due 20th June, 1854. The amount was $6,686.70. The amount was paid partly in cash. When Mr. Baylies came to collect the money on that estimate, there was not enough money on hand to make out the full amount. I proposed to Mr. Baylies to pay him the balance in note, as Mr. Robert Schuyler requested, which was $8,500. Mr. Baylies said he would do that, and took the note at thirty days from the 27th June, 1854. The amount paid him .in cash was $3,186.70.

      “Q. What was said at this time by Mr. Baylies on the subject of the payment of the estimate or talcing a note for part thereof? Question objected to by defendants’ counsel on the ground that Baylies’ declarations are not evidence, unless the president of the company was present. The objection was overruled, and the defendants’ counsel excepted.

      “A. Mr. Baylies said, if the company had not the money, that he would take a note for the balance with interest added.
    “ Q. Was anything said by Mr. Baylies or by you as to the kind of note or whose note? Same objection as above, overruled, defendants’ counsel excepted.

      “A. I proposed to give R. & Gr. L. Schuyler’s note to the order of Stewart & Baylies, and such note was taken by Mr. Baylies. This is the note (note produced by plaintiff’s counsel) it was filled up by me.
    “Plaintiff’s counsel then offered to surrender the note to the defendants and produced it for that purpose.”
    The note, when so produced, was indorsed thus:
    “Stewart & Baylies.”
    “Pay H. Meigs, Jr., Esq., cashier, or order.
    “W. R. Higby.”
    The defendants proved, that in the month of June, 1854, R. & Gr. L. Schuyler owed them over $200,000. That they charged to the defendants on the 27th of June, 1854, $6,686.70, as having been paid for them to Baylies & Stewart, and that such charge was contained in an account which the Messrs. Schuyler rendered to them on the 30th of June, 1854. That the defendants credited the whole charge to the Schuylers, and after such credit was made, the Schuylers remained indebted to them $278,000. Stewart & Baylies assigned their claim against the defendants to plaintiff, January 15, 1856.
    The referee reported that “he finds as matters of fact that the contract mentioned in the complaint was made between the defendants and Stewart & Baylies; that, on June 27, 1854, there was due to the latter from the defendants, on said contract the sum of $6,686.70; that, at the date last mentioned, Mr. Baylies for said Stewart &'Baylies) called for payment of the sum at the-office of Messrs. R. & Gr. L. Schuyler, one of the members of said firm was, at the same time, the President of the defendants; and that said firm, under an agreement with the defendants, kept the accounts and paid the bills for the work under said contract; that they were furnished with funds therefor by the defendants, who were largely in advance to them at the time over and above the amount of the bill, payment of which was so demanded by Stewart & Baylies.
    “The previous payments to Stewart & Baylies, under the contract, had been made by R. & Gr. L. Schuyler.
    “I find, that when Mr. Baylies called to collect the amount so due, Mr. Robert Schuyler (through his clerk, A. J. F. Vanderventer) represented to him that there was not money enough on hand to make out the full amount, and proposed to pay him three thousand one hundred and eighty-six dollars and seventy cents in cash, and to pay the balance three thousand five hundred in the note9of R. & Gr. L. Schuyler to the order of Stewart & Baylies; that Mr. Baylies then said if the company had not the money he would take the note for the balance, as proposed, with the interest added, which was, done accordingly, and the sum of three thousand one hundred and eighty-six dollars and seventy cents was at the same time paid to him in cash, and he thereupon gave a receipt in the words following:
    “ ‘Received, New York, June 27, 1854, from Greo. L. Schuyler, President N. Y. & Harlem R. R. Company, sixty-six hundred and eighty-six dollars and seventy cents for estimate No. 10, June 20, 1854, double track from Allen’s Bridge to White Plains.
    “‘$6,686.70.
    “ ‘(Signed,) Stewart & Baylies.’
    “The cash payments of three thousand one hundred and eighty-six dollars and seventy cents, and the note constituted the consideration for which the receipt was given.
    “ The note was not paid at maturity (and was produced on the trial by the plaintiff to be surrendered).

      “ The assignment of the claim on which this action is brought, was made by Stewart & Baylies to the plaintiff.”
    The report then states the opinion of the referee, in relation to the law upon these facts; cites various authorities and concludes thus:
    “ For these reasons, my conclusion of law is, that the plaintiff is entitled to recover from the defendants the sum of thirty-five hundred dollars, with interest thereon from July 30, 1854, which said sum and interest at the date of this, my report, amount to forty-two hundred and forty-five dollars and five cents, for which last mentioned sum, I direct judgment to be entered for the plaintiff and for the costs of this action.
    “ Dated, August 11, 1857.”
    To this report the defendants’ counsel excepted.
    “ First. That the referee decides wrongfully that Stewart and Baylies did not accept the note of R. & G-. L. Schuyler for $3,500 and $3,186.70 in cash, in full payment and satisfaction of the amount due to them upon estimate No. 10, mentioned in his report.
    “Second. That the referee erred in deciding that there was no evidence that Stewart and Baylies had negotiated the note of R. & Gr. L. Schuyler for $3,500.
    “Third. That the referee erred in deciding that the plaintiff is entitled to recover from the defendants the sum of $3,500 with interest from the 30th day of July, 1854.”
    From the judgment entered on the report, the defendants appealed to the GreneraFTerm.

      G. W. Sandford, for the appellants.
    I. The note was received by Stewart and Baylies as cash in payment of the estimate, and a receipt given for the whole amount to the defendants.
    Stewart and Baylies show by their receipt, that they intended to discharge the defendants, and look to the note as payment.
    IL The note was not negotiated to Stewart and Baylies by the defendants. They elected to take the note, and discharge the defendants.
    III. The referee, therefore, decided erroneously, that the note was not received in payment.

      TV. The note was indorsed by Stewart and Baylies to the plaintiff was protested while in his possession, and was produced by him on the trial. In the absence of other testimony, it is evidence of its absolute negotiation to plaintiff.
    V. The case of Tobey v. Barber, upon which the referee bases his decision, is not in point. The present suit is an attempt by the indorsee of the note (Higby) to collect a note which he took upon the credit of the drawers and indorsers from parties not upon it.
    YI. The receipt is evidence, that the note was taken in payment of the estimate,' and is not rebutted. The negotiation of the note, is conclusive evidence that they received it in payment.
    VII. The referee improperly admitted the testimony of Baylies’ declarations, and of Vanderventer’s declarations.
    VIH. The report of the referee should be set aside.

      James S. Sandford & O. N. Emerson, for respondent.
    I. The receipt of June 27th, 1854, was a technical receipt, containing not a word implying a new contract, between the party making it and the party to whom it was given; and it may be explained by parol. Had it contained words that literally implied a contract, “to discharge,” &c., still it is open to explanation and qualification, and may be set aside upon the same ground that a Court of Equity would set aside a contract for “fraud,” “surprise,” “mistake,” or “failure of consideration.” (1 Gfreenl. Ev., § 805; Fuller v. Crittenden, 9 Conn., 406; Tobey v. Barber, 5 Johns., 72; Johnson v. Weed, 9 Johns., 310.)
    II. To sustain the defense of payment by the acceptance of a noté of a third person, it must be conclusively shown:
    1. That it was the voluntary act of the creditor, made with a full knowledge of the effect of the acceptance, and not forced upon him by necessity, when nothing else could be obtained.
    2. That it was expressly agreed to be received by the creditor, as a payment, and full satisfaction. (Noel v. Murray, 3 Kern., 168, and cases cited; Johnson v. Weed, 9 Johns., 310; Owenson v. Morse, 7 Term R., 66; Puckford v. Maxwell, 6 id., 52; Graves v. Friend, 5 Sandf., 568; Whitbeck v. Van Ness, 11 Johns., 409; Waydell v. Luer, 3 Denio, 410; Arnold v. Camp, 12 Johns., 409.) The apparent conflict of the authorities in Maine and Massachusetts, with the whole current of decisions in this state, is rather apparent than real. It is rather a question of presumption, or burden of proof. (Butt v. Dean, 2 Met., 76.) In New York it has been held that the burden of proof (in the absence of evidence of an express contract, superadded to the technical “receipt of payment,”) is on the defendant, to show that the note was taken as payment, or accord and satisfaction. ( Cases cited, supra!)

    III. If this had been the note of the defendants instead of the note of a third party, it still would only have been prima facie evidence of payment, and liable to be rebutted by showing its dishonor; unless expressly received as payment, or the same was outstanding. (Rolt v. Watson, 4 Bing., 273; 2 Greenl. Ev., § 520; Butler v. Haight, 8 Wend., 535; Byles on Bills, in notes, p. 304.)
    IV. There is nothing in the form of the receipt, or in the language used by Baylies in his transaction with the clerk, or in the subsequent conduct of the holders of the note, from which an absolute discharge of the debtor corporation can be implied, much less any evidence of an “ express agreement ” to that effect.
    1. Payment under the contract, was to be made monthly, and at the solicitation of the clerk, Baylies extends the time of a portion of one payment, thirty days.
    2. It seems evidently received as collateral, and merely an extension of the time of the monthly payment.
    3. It was not, in fact, a full payment under that estimate No. 10, for 85 per cent only was provided for.
    4. It was taken to accommodate the treasury as a favor to the debtor to allow him to provide funds ; and is rather to be viewed as an adjustment and accounting upon the estimate than an accord or satisfaction.
    5. There is no evidence, that the note was ever negotiated. A blank indorsement, with possession on the part of indorser who is also payee, is only evidence of an indorsement for collection. (Story on Bills, passim!)

    V. The defendants cannot defeat the claim of the plaintiff by crediting the note to the account of the Messrs. Schuyler. It is not even pretended that plaintiff consented to such arrangement or even knew of it. In every aspect it was “res inter alios actos.” (Ohasey. Smith, 5 Vermont, 556.) And in this view, the evidence given as to the state of accounts between Messrs. Schuyler and the Company, was entirely immaterial, if not incompetent. Any conclusion derived from the state of these mutual accounts, presupposes an agreement expressly made on the part of Baylies to receive the jiote as an absolute payment, and there is no evidence to authorize such a presupposition. (Evidence of Vanderventer, passim.)

    VI. The second exception of defendants’ counsel is not warranted by a fair construction of the referee’s report. He did not decide, “ that there was no evidence that Stewart and Baylies had negotiated the note,” but that “the evidence was incomplete, and, so far as offered, was equally consistent with an indorsement for collection.” Upon a review of the evidence, this Court can draw no different conclusion. It is further submitted by plaintiff, that even if such indorsement had been made for the purpose of realizing the money upon the note (by a discount or otherwise), the fact is sufficient and controlling, that the purpose failed, and the note is offered for cancellation or for the use of defendants. (Kean v. Dupesne, 3 Serg. and R., 233.)
    VH. It is -submitted that upon the facts and the law of the case, the report of the referee should be sustained and confirmed.
   By the Court.

Pierrepont, J.

—Stewart & Baylies having done their work, the amount claimed in estimate Ho. 10 was due. It has not been paid in money, nor has it been released by any formal- instrument. . The defendants have received the consideration upon which this action is founded, and for it they have paid nothing. The fact that Schuyler charged the company with this note, makes no difference in the present case; he was their debtor to a large amount at the time, and they parted with no new consideration in consequence of such charge.

To make the receipt of Schuylers’ note operate as payment pro tanto, it was necessary for the defendants to show an agreement to take it as actual payment.

Merely taking it and giving a receipt in full is not alone sufficient to establish such agreement. (Tobey v. Barker, 5 J. R., 70; Johnson v. Weed, 9 J. R., 310; Noel v. Murray, 3 Kern., 168.) The facts, therefore, are correctly found by the referee, and he has drawn therefrom a just conclusion of law.

The receipt given did not preclude an inquiry into the agreement actually made, in respect to the terms on which the note was taken; and it follows that what Yanderventer said at the time on that point, was competent evidence. (Johnson v. Weed, supra.)

The terms of the agreement, if one was made, are to be determined upon a just consideration of what the parties to the transaction said at that time. There was no error in the admission of the evidence.

Judgment must be affirmed, with costs.

Judgment affirmed.

       See Purchase v. Mattison, ante p. 310.


author: Woodruff, J.

text:
    Archibald H. Lowery, Plaintiff and Respondent, v. John Steward and Lycurgus Edgerton, Defendants and Appellants.
    1. An instrument in the following form, viz.:
    “§500. “ Columbus, March 1st, 1853. “ Messrs. John Steward, Jr., & Co.: Please pay to the order of Archibald H. Lowery the sum of five hundred dollars, on account of 24 bales cotton, shipped to you as per bill lading by steamer Colorado, inclosed to you in letter. Strippleman & Boyce.” is a bill of exchange.
    2. An unconditional order upon A to pay a sum certain to the order of a person therein named is none the less a bill of exchange because it specifies the account which forms the consideration of the order.
    3. In the State of New York the drawee of such an order is not liable as acceptor of a bill of exchange if he have not accepted the same in writing.

      4. A letter written to the drawers of the draft above described assuring them that such draft shall be honored from the proceeds of the cotton, does not make the drawees liable as acceptors of a bill of exchange to the payee to whom it was subsequently remitted in payment of a debt due by the drawers to him.
    5. But where a shipment of cotton is made to J. S. & Co., and the bill of lading is forwarded to them in a letter advising them of the shipment and also advising them that a draft has been drawn on them for $500 in favor of A. H. L., payable when the cotton is sold; and thereupon the drawees and consignees by letter promise the drawers that the draft shall be paid out of the proceeds of the cotton, and on application of A. H. L., the same promise is verbally made to him, and such cotton is sold and the proceeds exceed the amount of the draft, the drawees are liable, without any formal acceptance, for the amount of the draft, to A. H. L.
    6. Although the drawees in such case may have a right to require the production and presentation of the draft by A. H. L., yet mere delay in its presentation will not justify them in appropriating the proceeds of the cotton to other uses, even with the consent of the consignors by whom the draft is drawn.
    7. By accepting the consignment and promising to apply its proceeds to the payment of the draft they became trustees in respect to such proceeds and bound to account to A. H. L., and the consent of the drawers will not justify a different appropriation of the fund.
    8. Although evidence is received by a referee on a trial before him which is in legal strictness inadmissible; yet if the Court can see that by no possibility it could have affected the result of the trial the judgment will not be reversed for the error committed.
    (Before Woodruff and Pierrepont, J. J.)
    Heard, March 2d;
    decided, October 30th, 1858.
    This action came on to be heard on appeal from a judgment for the plaintiff on the report of Abraham Underhill, Esq., as referee.
    The statement of the case is as follows:
    In the year 1853, the defendants, as partners, composed the firm of John Steward, Jr., & Go., in the city of Hew York. The plaintiff, Archibald H. Lowery, was also a merchant doing business in the said city. The firm of Strippleman & Boyce of Columbus in Texas, had dealings with the defendants and were also indebted to the plaintiff.
    On or before the 28th day of March, 1853, the defendants received from Messrs. Strippleman & Boyce a letter dated March 1st, 1853, inclosing a bill of lading of twenty-four bales of cotton, in which letter they say “inclosed, please find bill of lading of twenty-four bales cotton shipped to you, which you will please dispose of to the best advantage. We have written to Messrs. Archibald H. Lowery & Go., 121 Front street, New York, inclosing a draft on your house for $500, payable when the above cotton is sold.”

    To this letter the clerk of the defendants who “had charge of their correspondence” and having “a general authority to write letters” without any conversation with either of the defendants, his principals, replied by letter signed in the name of their firm, thus:—
    “Messes. Steippleman & Boyce :
    “ Dear Sirs — We are in receipt of your est’d favor of the 1st inst. with bill of lading for twenty-four bales of cotton, which shall have our best attention when it reaches us.
    “Your draft in favor of A. H. Lowrey & Co., shall be honored from the proceeds of the cotton.” . .

    A copy of this letter was retained by the defendants’ firm according to the usual course of business.
    On the next day (the 29th March,) the plaintiff received a letter from Strippleman & Boyce also dated March 1st, 1853, and addressed “Messrs. Gentry & Lowery, 121 Front street, New York,” ordering goods and saying “we also inclose draft on J. Steward, Jr., & Co., for $500 which you please credit on our note,” but no draft was in fact found in the letter.
    On the same day the plaintiff’s bookkeeper and confidential clerk, took this letter to the defendants’ store and handed it to the defendants’ bookkeeper Mills in the counting-room, in the presence of one of the defendants Mr. Edgerton. The bookkeeper handed the letter to Mr. Edgerton and he read it, and handed it again to the bookkeeper who also read it. The plaintiff’s clerk then stated to the latter “that when we opened the letter the draft was not in it, and that we supposed the draft might have been sent to them by mistake inclosed in their letter; Mr. Mills said they had not received the draft, but that they had received a letter from Strippleman & Boyce, with a bill of lading for twenty-four bales of cotton, and stating that they had drawn on them for that amount; he then said, it was all right, and that ' the draft would be paid out of the proceeds of the cotton when sold.”
    The cotton was received by the defendants, and sold. The proceeds were over eight hundred dollars after all charges, &c., were deducted.
    Ho farther application was made to the defendants on the subject until the 10th of January, 1854, when the plaintiff’s bookkeeper presented to the defendants the draft in the form following:
    “ $500.00. “ Columbus, March 1st, 1853.
    “ Messrs. John Steward, Jr., & Co.:
    “ Please pay to the order of Archibald H. Lowery the sum of , five hundred dollars, on account of 24 bales cotton, shipped to you as per bill of lading, by steamer Colorado, inclosed to you in letter.
    “ Strippleman- & Botce.”
    This delay was accounted for by sufficient proof, that the omisJ sion to send it forward in the letter, which purported to inclose it was an oversight, and the draft does not appear to have been found until about the time it was so presented, when Mr. Gentry, (who was in the plaintiff’s employ) called on Strippleman & Boyce, at their store in Texas, and after a search for it, the draft was found in a book in their safe, and was forwarded to the plaintiff in Hew York. The plaintiff’s witness, however, testified that on the 29th of March, 1853, he wrote to Strippleman & Boyce, notifying them that the draft was not inclosed in their letter received on that day.
    On its being presented on the tenth of January,, the defendants’ bookkeeper refused to pay it, stating that the defendants had parted with the proceeds of the cotton. The facts proved on that subject were, that in or about the month of August, 1853, the defendants accepted the draft of Strippleman & Boyce, for $353xfx at 8 months, upon an express understanding with them, that the proceeds of the cotton were to go to pay that acceptance; and at about the same time by their direction, applied $45 of the proceeds to the payment of a premium of insurance for their benefit. The balance of the proceeds of the cotton, $423xVo, was credited by the defendants to Strippleman & Boyce, in general account, they being indebted to the defendants in a much larger sum (about $4,000). An account was rendered to Strippleman & Boyce of the sales, and of the application made of the proceeds, and the witness testifies that no objection was made by them to the account.
    After the refusal of the defendants to pay the draft so presented, this action was brought to recover the amount with interest. It was referred to Abraham Underhill, Esq., as sole referee, who by his report found that the defendants had notice of the draft on or about the 28th of March, 1853, and promised and agreed with the drawers and also with the plaintiff, that they would pay the same out of the proceeds of the cotton.
    That the defendants sold the cotton, and on the 27th September, 1853, received for the same the net sum of $825TVo-
    That on the 10th of January, 1854, the plaintiff presented the order to the defendants for payment, which payment the defendants refused.
    He therefore found for the plaintiff the amount of the draft, $500, with interest from the 10th day of January, 1854.
    Erom the judgment entered on this report, the defendants appealed.

      Walcfo Hutchins, for the defendants (appellants).
    I. The instrument in suit is not a bill of exchange, but a mere order for the payment of money out of a particular fund.
    1. Not being a bill of exchange it operates, if at all, only as an equitable assignment of the fund in the hands of the drawee. (1 Hill, 583 ; 7 id., 577.)
    2. And it is not negotiable. It only passes by assignment, and for an adequate consideration which must be proven; and of which it is not 'prima fade evidence. (Chitty on Bills, 11 Am. Ed., p. 9, and cases there cited; 3 Caines, 287; 9 Cow., p. 778.)
    H. There is no evidence in the case that any consideration was paid for the draft by the plaintiff to the drawers. The letter of Strippleman & Boyce, is no evidence. It is not under oath, and is therefore no proof of any fact which may be stated therein, and should not have been received in evidence. Admitting, however, that the plaintiff held the note of Strippleman & Boyce, this even between the parties to the instrument, is but presumptive evidence of a debt, and so far as third parties are affected thereby cannot avail, unless the consideration is proven aliunde. (2 Kern., 215.)
    III. The fact that Strippleman & Boyce subsequently directed a specific appropriation of the fund, otherwise than to the payment of the $500 order, and to such an amount as not to leave sufficient in the hands of the defendants to pay such order, is a strong circumstance to show that Strippleman & Boyce had not received any consideration for the order, and considered themselves as the owners of the proceeds of the cotton against which this draft is alleged to have been drawn. As also the fact that the balance of the fund was carried to their credit in their general account with the defendants, without any objection on their part.
    IV. The instrument in suit is not the draft of which the defendants received notice, if they received any notice at all. That draft was drawn in favor of “A. H. Lowery & Go.” The draft in suit is drawn to the order of “A. H. Lowery.”
    This is a material variance. (8 Cow., 71; 23 Barb., 590.)

      John Sessions, for the plaintiff (respondent).
    I. The instrument in question is doubtless to be taken, not as a bill of exchange, but rather as an order operating as an assignment of a portion of the funds, when realized out of the proceeds of the sale of the 24 bales of cotton. (Morton v. Naylor, 1 Hill, 583; Banbury v. Lisset, 2 Strange, 1211.) Precisely such an instrument as was the subject of the case of Banbury v. Lisset, was held to be a bill of exchange. They were both on account of freight; the one to be paid, the other to be earned, by the drawer. It turned upon the situation of the parties, and the intent of the drawer, not derivable from the instrument. (Pierson v. Dunlop, Cowp., 571.)
    II. The instrument being an assignment of so much of the fund, it was only necessary, in order to charge the drawer with a liability to pay to the party holding the draft, that he should have notice of the fact that the title had passed. And notice or knowledge of facts to put him on inquiry, was sufficient. It was not necessary the instrument should be exhibited to him, nor any other evidence of the transfer. (Meghan v. Mills, 9 Johns., 64; Anderson v. Van Alen, 12 id., 343; Willard Eq. Jur., 460, and cases cited.) The defendants had notice (1) from the drawers, (2) from the payee. And they promised absolutely to pay.
    III. Indeed the letter to the plaintiff, purporting to inclose draft, and presented to the defendants, on the 19th of March, was sufficient to assign the fund and transfer the title to the plaintiff. It was a clear declaration of intention to complete such a transfer, and was entirely competent to bind the parties, even if the draft itself had never come to light. It operated as a delivery of the draft, whoever might have the actual possession. (Doe v Knight, 5 B. & C., 671; 12 E. C. L. R., 351.)
    TV". The prior indebtedness was sufficient consideration to support the transfer. To affirm the contrary of this, is to place an obstruction in the way—not of collecting, but of paying debts, to which the law affords every facility. Not only so, the defendants have affirmed the transfer. They were parties to the change of title, whereby new and additional rights accrued to the owner; and it would be contrary to all good faith, to equity and conscience, to suffer them—now that the plaintiff has acted upon the faith of their promise until the drawers have failed—to escape from liability. (Vide 12 Johns., 277; 12 Mass., 193, 195, 281; 14 id., 291; 1 Johns. Ca., 205.)
   By the Court.

Woodruff, J.

—The draft in question was in form a bill of exchange. It was an unconditional order upon the. defendants, to pay a sum certain therein named to the order of the payee.

Although the account to which it should be charged was mentioned, it was not, by its terms, directed to be paid out of a particular fund. Had it been accepted, it was due immediately, whether the cotton to account of which it was to be charged had been sold or not. Its terms contemplate an advance upon the shipment of cotton, or are a mere designation of the account which should form the consideration of the acceptance and payment as between the drawers and the drawees; and had the defendants accepted it unconditionally, they must have paid it whether the cotton was sold or not, and whether the proceeds of the cotton were more or less than the amount of the draft.

The draft is therefore, on its face, within the express provisions of our statute, which declares that: “ § 6. Ho person shall be charged as acceptor on a bill of exchange, unless his acceptance shall be in writing. § 7. If such acceptance be written on a paper other than the bill, it shall not bind the acceptor, except in favor of a person to whom such acceptance shall have been shown, and who, on the faith thereof, shall have received the bill for a valuable consideration. § 8. An unconditional promise in writing to accept a bill before it is drawn, shall be deemed an actual acceptance in favor of every person who,' upon the faith thereof, shall have received the bill for a valuable consideration.” (1 Revised Statutes, 768.)

It has been held that, under the seventh section, it is not necessary that he who takes a bill on the faith of a written acceptance on another paper should actually see such acceptance, it is enough that he .has knowledge of such acceptance, and receives the bill on the faith thereof. (Bank of Michigan v. Ely, 17 Wend., 508.)

The plaintiff was not shown to have had any knowledge of the defendants’ letter to Strippleman & Boyce prior to January, 1854. He cannot, therefore, claim that prior to that time he received the bill with knowledge of any written acceptance, and on the faith thereof.

He cannot claim to hold the defendants as acceptors of a bill of exchange upon a title, to the bill, acquired on the 10th of January, 1854, because the proceeds of the cotton, out of which the defendants promised to honor the draft, had already been appropriated to other purposes by direction of Strippleman & Boyce.

There never was an unconditional promise in writing to accept the bill, either before it was drawn or afterwards. The promise made by the defendants’ clerk, both by the written letter and the verbal assurance, was that the draft would be paid out of the proceeds of the cotton.

If, therefore, the plaintiff is in no other position than that of payee of a bill of exchange, relying upon the defendants’ promise to pay it, he is not entitled to recover. He has no acceptance, valid as such, under our statute, and the mere drawing and delivery of the draft gave him no title to maintain an action against the defendants, not only because before the bill was delivered to him, the funds were otherwise appropriated, with the drawer’s assent, but also because the drawing and delivery of a bill of exchange is no assignment or appropriation of the funds in the hands of the drawee, entitling the payee to maintain an action against him therefor. (11 Paige, 612; 5 Hill, 413, affirmed, 7 id., 577; 3 Comst., 251; id., 115; 1 Seld., 530; 2 id., 417.)

But we think that the judgment must be sustained upon another view of the relation of the parties to the transaction.

And, preliminarily, it is proper to observe that the evidence was sufficient to establish, prima fade, the authority of the defendants’ clerk and bookkeeper to do and write what they did.

First, as to the letter to Strippleman & Boyce. The clerk by whom it was written had charge of the defendants’ correspondence, and had a general authority to write letters, and a copy of the letter was retained. It may be reasonably presumed that the copy would and did fall under the observation of the defendants, and that it was not disapproved.

Proof of such general authority was, we think, sufficient to devolve on the defendants the duty of showing that the letter was not within the scope of the powers of the clerk. And, not having shown this, the proof in this respect is such that it was rightly held that that letter should have the same operation as if written by one of the defendants in person.

Second, as to the oral promise to the plaintiff. The conversation was in the defendants’ counting-room; one of the defendants was present; the letter of Strippleman & Boyce to the plaintiff, was shown to that defendant and he read it and handed it to Mr. Mills. He may be reasonably understood by this act to refer the subject to Mr. Mills to make a reply. Hay more. He was present during the interview and may be taken to have heard the conversation—both the application made and Mr. Mills’ reply thereto—and expressed no dissent. The promise of Mr.. Milk on that occasion must therefore we think be taken as the defendant’s promise.

And this view both of the written letter and of the oral promise involving the question of authority as a mere question of fact, may properly be regarded as strengthened by the circumstance that the defendant Edgerton though examined as a witness does not deny the authority of his clerk to write the letter, nor deny that he was present, heard the conversation and. sanctioned the oral promise made by the bookkeeper Mr. Mills to the plaintiff’s clerk.

The case then stands thus, Strippleman & Boyce sent to the defendants cotton to be sold, with notice that $500 was to be paid when the cotton was sold, to the plaintiff on their draft. The defendants wrote to Strippleman & Boyce promising that their draft in favor of the plaintiff “shall be honored from the proceeds of the cotton.”

Strippleman & Boyce at the same time notify the plaintiff that they inclose a draft on the defendants, for $500 to be credited on their note and upon the exhibition of that letter and with knowledge of the omission to inclose the draft, the defendants promise to pay the draft out of the proceeds of the cotton when sold.

After all this has transpired, the defendants receive the cotton and sell it, and it produces a net amount more than sufficient to pay the draft.

We think that the moment the cotton came to the defendants’ hands and was by them received, under the instructions of the consignors, it was held by them under an express obligation to sell it, and hold $500 of the proceeds for the use of the plaintiff. The fund had, impressed upon it, while it consisted of cotton itself and from the moment the bill of lading was forwarded by Strippleman & Boyce, a trust in favor of the plaintiff which the defendants when they accepted the consignment undertook to execute and promised both Strippleman & Boyce and the plaintiff they would execute.

The shipment of the cotton and remittance of the bill of lading were a sufficient consideration for their promise to pay $500 of the proceeds to the plaintiff. The plaintiff being a creditor of Strippleman & Boyce, had an interest in that promise from the moment he received notice and consented to the provision thus made for his benefit; and the defendants promised him that those proceeds should to the extent of that $500, be applied to his benefit So that both Strippleman & Boyce and the plaintiff had an interest that the cotton should be sold, and $500 of the proceeds be paid on account of the indebtedness of Strippleman & Boyce to the plaintiff. The cotton was appropriated by the consignors and received by the defendants for that special designated purpose. The promise of the defendants and their receipt and sale of the cotton, completed the transaction and gave the plaintiff a cause of action which was not subject to be defeated or released by any subsequent acts of Strippleman & Boyce. (Neilson v. Blight, 1 John. Ca., 205.)

It is doubtless true that before the plaintiff could recover the money he must produce the draft, or show that it was drawn according to the intention of the parties, and lost in the transmission or otherwise. The draft was intended as a voucher between the parties, and the defendants’ promise was not that they would pay whether there was such a draft drawn by Strippleman & Boyce or not. Had it turned out that Strippleman & Boyce had drawn no draft, the case would have been quite different.

But we think that the circumstances that, through oversight the drawers neglected to inclose the draft in the letter, and that some months elapsed before it was found and forwarded, did not warrant the defendants in appropriating the proceeds of the cotton, without notice to the plaintiff to other purposes, in contravention of their agreement. These views are, we think, sustained by Morton v. Naylor (1 Hill, 583), and the cases cited.

There is some variance in the description of the plaintiff in the various letters. Once he is described as A. H. Lowery & Co., once as Gentry & Lowery, and again as A. H. Lowery. There was no such firm as A. H. Lowery & Go., nor Gentry & Lowery (Gentry being merely a clerk of the plaintiff.) The plaintiff was in fact the creditor of Strippleman & Boyce, for whom they intended to provide. No one was misled or deceived by the misdescription, and no one can be prejudiced by disregarding it. It has no effect upon the rights of the parties.

The referee erred in receiving in evidence a letter written by Strippleman & Boyce to the plaintiff without date but proved to have been signed by Strippleman. It is marked Exhibit D. That letter was not competent evidence against the defendants for any purpose. It is the mere statement of Strippleman out of Court, without oath. It was no part of the res gestee, and was never the basis of any act of the defendants. It should have been rejected, and if we could see that its reception by the referee could possibly have affected the result, we should be compelled to reverse the judgment and grant a new trial. But if we can say it is clear that by legal necessity it could do no injury, the error committed does not require us to grant a new trial.

In the letter it is stated that the draft is inclosed; that it was mislaid, and by the exertions of Mr. Gentry found; the hope is expressed that the defendants will forthwith pay the amount “ as they have the proceeds of the 24 bales of cotton in their hands.”

If we are right in our views of the defendants’ liability, it was wholly immaterial whether the proceeds still remained in their hands or not; if they were there the defendants were liable; if they had been appropriated to some other purpose, still they are liable. We cannot therefore discover that any, even the least possible injury could have been caused by this error of the referee. (Forrest v. Forrest, 6 Duer, 145; 1 Comst., 519; 13 Barb., 42; 9 id., 625; 6 Hill, 292; 19 Wend,, 232; 3 Hill, 194; 16 J. R., 90; 3 Cow., 612.)

Our conclusion is that the judgment should be affirmed.

Judgment affirmed, with costs.


text:
    Obadiah Ennis, Plaintiff and Appellant, v. The Harmony Fire Insurance Company, Respondent.
    1. A complaint which alleges, that the defendant, an insurance company, by a policy of insurance made by it, insured the plaintiff, against loss or damage by fire, to a sum named, on his dwelling-house; “loss, if any, payable to E. B. Graves, mortgageea total destruction of the building insured, by fire, on the 10th of January, 1856, while the policy was in force, a promise to pay Graves the sum insured within sixty days after due notice of proof of the loss; the giving of due notice and proof of said loss on the 11th of February, 1856; demand of payment “on behalf of said Graves;" and the refusal of the defendant to pay the loss to the plaintiff or to said Graves; is defective by reason of Graves not being a party to the action.

      2. When a policy of insurance; by its terms, makes the loss payable to a mortgagee, named, of the premises insured, the party obtaining the policy cannot maintain an action in his own name, as sole plaintiff, in case of a loss, without alleging in his complaint that the mortgagee has been fully paid, and has ceased to have any interest in the policy:
    3. If the mortgage debt has not been paid, the mortgagee should be joined as plaintiff or sue in - his own name; and if he refuse to do either, on an - allegation of such facts, the insured may make him a party defendant in the action. ...
    (Before Bosworth, Gh. J., and Hoffman, Slosson, Woodruff and PlERREFONT, J. J.)
    Heard, October 16;
    decided, November 13, 1858.
    This is an appeal from an order,' made -by Mr. Justice Hoffmah, in April, 1857, sustaining a demurrer to the complaint.
    The complaint avers, that on or about the 16th day of January, 1855, “ the defendant, being a body corporate, created by and under the Laws of the State of New York, and doing business in the city and county aforesaid, did make and deliver a certain instrument in writing, commonly called a policy of insurance, wherein and whereby the said defendant, ■ the Harmony Fire Insurance Company of New York, in consideration of fourteen dollars to it paid by the insured, thereinafter named, did insure Obadiah Ennis against loss or damage by fire, to the amount of three thousand five hundred dollars, on his frame dwelling-house, filled in, with tin roof, situate at Fordham, Westchester county, nearly opposite to the college—loss, if any, payable to E. B. Graves, mortgagee. ■
    “ And the said- company did thereby promise and agree to make good unto the said insured, - his executors, administrators and assigns, all such loss or damage, not exceeding in amount the sum insured, as should happen by fire' to the property as above specified during-one year, to wit': from the 10th day of January, 1855, (at twelve o’clock at noon) until the 10th day óf January, 1856, (at twelve o’clock at noon,) the said loss or damage to be estimated according to the true and actual cash- value of the said properly, at the time the same should happen; and to be paid within sixty days after due notice and proof thereof made by the insured, in conformity to the conditions annexed to the policy.
    “ The insurance (the risk not being' changed) might be con-tinned for such further term as should be agreed upon, provided the premium therefor be paid and indorsed on the policy, or a receipt given for the same.
    “In witness whereof, the Harmony Fire Insurance Company of New York, did cause the said policy to be signed by the President, and countersigned by the Secretary thereof, as by the said policy, reference thereto being had, will more fully and at large appear.
    “And the plaintiff further says and avers, that the said policy of insurance was renewed and continued by the agreement of both parties for the further period of one year, to wit: from the tenth day of January, 1856, at noon, until the tenth day of January, 1857, at noon; and that the premium therefor was paid, and a receipt for the same given, as required by the conditions of said policy.
    . “And the plaintiff further says, that on the tenth day of January, in the year 1856, between the hours of nine and twelve after meridian, the said dwelling-house, so insured, as aforesaid, became and was'totally lost and destroyed by fire, whereby the defendant became and was liable to pay the amount so insured as aforesaid.
    “And the plaintiff further says, that in consideration thereof the defendant did afterwards, to wit: on the day and year last aforesaid, undertake and promise to the plaintiff to pay the said sum of three thousand and five hundred dollars, to the said E. B. Graves, mortgagee as aforesaid, within sixty days after due notice and proof of the said loss. And the plaintiff further says, that, afterwards, to wit: on or about the eleventh day of February, 1856, in accordance with the provision in the policy in that behalf made and provided, notice and proof of said loss was duly made to the said, The Harmony Fire Insurance Company, and demand of payment of said sum of .money was duly made on behalf of the said E. B. Graves, to whom, by the terms of said policy, the said loss was to be paid.
    “And plaintiff further says, that defendant has not paid the said sum of money, or any part thereof, to the said E. B. Graves, or to the plaintiff, although, frequently, to wit: on the said last-mentioned day, and oftentimes aftewards, requested so to do; but he has refused, and still does refuse, to pay the same, or any part thereof, to the said Graves, or to the plaintiff.

      “Wherefore, the plaintiff demands judgment against the defendant for the sum of three thousand five hundred dollars, ($3,500,) with interest, frgm the third day of May, 1856, besides the costs of this action, and a reasonable additional allowance.”
    The defendant demurred to the complaint, on two grounds:
    First. That there was a defect of parties, because the said E. B. Graves was omitted.
    Second. That the complaint did not state facts sufficient to constitute a cause of action.
    The Court, at Special Term, ordered judgment for the defendants upon said demurrer, with costs, with liberty to plaintiff to amend his complaint within ten days, upon payment of ten dollars cost. From that order, the plaintiff appealed to the General Term.

      F. B. Cutting, for plaintiff and appellant.

      T. James Glover, for defendant and respondent.
   By the Court.

Pierrepont, J.

—This Court held, in Grosvenor v. The Atlantic Fire Insurance Co., of Brooklyn, (5 Duer, 517), that the insertion in the policy of the words, “loss if any payable to E. B. G., mortgagee,” operated to give the mortgagee the same rights and interest in the policy which he would have, if, without such words in the body of the policy, the mortgagor had assigned the policy to Graves, with the express consent of the insurers. Judge Harris in delivering the opinion of the Court of Appeals in that case says, “I agree with the learned Judges who delivered opinions upon the decision of this case in the Court below, that there is no just ground for discrimination between this case, and that of an assignment of the policy to a mortgagee, to be held by him as collateral security for his debt, with the consent of the insurer.” (17 N Y. R., 395.)

There is no averment that Graves has been paid; on the contrary, it is alleged that “ demand was made on behalf of said E. B. Graves to whom, by the terms of said policy, the loss was to be paid.” It is plain, then, that Ennis alone cannot recover the amount of the loss so long as Graves, the mortgagee, remains unpaid. Graves has an absolute right to recover the amount of the loss, and payment to Ennis, without the assent' of Graves, would not discharge the liability of the company to-the mortgagee. So long as the mortgage remains unsatisfied, Graves is a necessary party to1 the action; if he refuse to unite as plaintiff or to institute proceedings in his own name, Ennis may, on allegation of such refusal, join him as defendant. (Code; §' 119.)

The order should be affirmed, with. $10 costs, with leave, however, to the plaintiff to amend his complaint, on payment of the costs of the demurrer and of this appeal. •

Ordered accordingly.