author: By the Court.—Ingraham, J.

text:
    WILLIAM H. RUTTY, Appellant, v. AUGUSTINE E. PERSON, et al., Respondents.

      Equity—Account stated, when opened and set aside—Costs, to whom awarded.

    An account which has been settled and stated, will be opened in equity-only on clear proof that the settlement was induced by fraud, mistake or manifest error, and never where it appears that at the time of the settlement, both parties had full knowledge of the facts in relation to the charges, and after mutual concessions, agreed that the account should be a stated account.
    In an action to open and set aside an account stated, and for an accounting as to the whole period of the business dealings of the parties, where plaintiff fails in setting aside the account, but is found entitled to an accounting as to transactions subsequent thereto, and judgment for a certain sum, and it does not appear that before the trial, defendants offered to allow judgment to be taken for that amount, in the exercise of a sound discretion, costs should be awarded to plaintiff.
    Before Sedgwick, Oh. J., O’Gorman and Ingraham, JJ.

      Decided July 28, 1885.
    Appeal by the plaintiff from a judgment entered on report of a referee.
    Action to re-open and set aside certain statements of account between partners, and for an accounting.

      The plaintiff by his action, sought a judgment that all the statements and accounts theretofore rendered by the defendants, be declared opened, unadjusted, and unsettled, and that the defendants account in respect to all the business in the complaint mentioned, from the commencement thereof to its close, a period of several years. This relief was sought on the ground that the statements made false representations of the facts respecting the dealings ; that the plaintiff assumed them to be correct, and had no knowledge to the contrary, or means of verifying them accurately. In these respects plaintiff failed, but the referee found that he was entitled to an accounting as to a sum of money left with defendants as security for plaintiff’s share of the debts, and -to a judgment thereon for $507.4:2. The referee awarded costs to the defendants.
    Further facts appear in the opinion.

      John E. Eustis and Eugene II. Pomeroy, for appellant.

      KobbéBrothers and Stephen P. Nash, for respondents.
   By the Court.—Ingraham, J.

By the agreement under which the business carried on by the parties, and known as the glove business, was transacted, the' defendants were to be allowed a selling and guaranty commission of five per cent., and were to pay clerk hire and traveling" expenses in the United States. Plaintiff was to be allowed five hundred dollars in gold for each voyage he should make to Europe, and any profit or loss remaining, was to be equally divided'between the plaintiff and the firm composed of the defendants. This, I think constituted a co-partnership between the parties to the agreement.

The accounts of the business were, from time to time, delivered to and received and retained by plaintiff without objection. On January 14, 1882, when the copartnership was finally terminated, the defendants delivered to plaintiff a general account of the transactions of the copartnership, containing the balances of the accounts formerly rendered, and an account of the sales and expenses from the date of the last account, a statement of the amount due plaintiff for his share of the profits of the copartnership, and the amount due from plaintiff to the defendants for the purchase by plaintiff of the balance of the copartnership stock. After the receipt of the account, plaintiff by a letter of the same date, acknowledged its receipt and accepted the account as a final settlement. Up to this time plaintiff had not been deprived of any right to examine the books of the copartnership, nor is there any evidence to show that he was induced to accept the account by any representation or inducement of the defendants.

On these facts the referee found as conclusion of law, that on January 14,1882, the accounts between the plaintiff and the defendants were stated and adjusted and became settled accounts. In this the referee was clearly right, and I do not understand it to have been disputed by the plaintiff. The plaintiff, however, asked to open the accounts so settled, on the ground that several distinct sets of charges in the accounts rendered for money alleged to have been paid by defendants, were false and excessive. There are four series of charges that are objected to by plaintiff. Only two of these were relied upon on this appeal, namely; the charges for custom house expenses and the charges for marine insurance. As to the custom house charges, the referee found, as a fact, that prior to October, 1880, it was agreed between the parties that the charge to be made by defendants to said business, for entering goods at the custom house, including the expenses of their removal to defendants store or place of business, should be five dollars per case, and in October, 1880, it was agreed between the parties that such charge should be three and one-half dollars per case from October 1, and that the prior charges therefor should stand. In June 1881, it was further agreed that such charges thereafter should be three and one-half dollars per case for the first case of any shipment and one dollar per case for every additional case of such shipment. After an examination of the testimony, we are of the opinion that this finding was sustained by the evidence. It therefore appears that the custom house charges complained of, were adjusted in 1880, and that in consideration of the reduction for future charges, it was agreed that the charges before made should stand, and this after plaintiff had discovered that the charge was higher than that made by others in the same business.

As to the marine insurance, it appears that in November, 1880, the letter (Exhibit 40) was delivered to plaintiff. In that letter it was stated that the amount that had been paid for marine insurance was five-eighths of one per cent, and in some instances as low as one-half of one per cent. With this information before him plaintiff saw fit to settle his account with the defendants in which the further charge for marine insurance complained of, was made.

The fact that the information contained in the letter was true, and that he had been charged more than was actually paid, would not justify the court in opening the accounts. Courts of equity have always been reluctant to open accounts that have been settled and become stated accounts, and such settlements have only been opened on clear proof that the settlement was induced by fraud, mistake or manifest error, and never where it appeared that at the time of the settlement of the accounts both parties had full knowledge of the facts in relation to the charges, and after mutual concessions had agree that the account should be a stated account.

In Harley v. Eleventh Ward Bank (76 N. Y. 618), the court held that an account stated can only be opened where the party objecting shows clearly that he has been misled by fraud, mistake or ’manifest error, and from the facts found by the'referee, it cannot be said that the plaintiff in this case, when he assented to the accounts, was so misled. Having come to this conclusion, it is evident that the refusal to compel the production of the books in accordance with the stipulation was not error. The parties had stipulated that such books should be produced before the referee, as the course of the hearing might render material, with the same effect as if produced on subpoena. When it appeared, however, that the settlement between the parties was made with full knowledge of the facts, or the charges complained of were made under an express agreement between the parties that the amount charged should be the proper charge for the services rendered, it is evident that the books or the contents of the books were entirely immaterial, and even if they had shown the charge, as made in the account, was in excess of the amount actually paid by the defendants, it would not have changed the result.

None of the exceptions to the admission or rejection of evidence were insisted on, on the argument, and so far as appears no error was committed by the referee that requires a reversal' of the judgment.

I think, however, the referee erred in awarding the defendant costs against plaintiff. It is true plaintiff failed to have the accounts opened, but it appeared on the trial that plaintiff was entitled to an accounting, and a judgment against the defendants for $507.42. Defendant did not, before the trial, offer to allow plaintiff to take judgment for that amount, and under all the circumstances, I think the referee should have awarded costs to the plaintiff, and not to the defendant.

The judgment should, therefore, be modified by awarding plaintiff judgment for the sum of $507.42, with costs, and as so modified, affirmed without costs to either party on this appeal.

Sedgwick, Oh. J., and O’Gorman, J., concurred.


source: Caselaw Access Project

author: By the Court.—Sedgwick, Ch. J.

license: Public Domain

text:
    THE BANK OF MONTREAL, Appellant, v. CARL L. RECKNAGLE, et al., Respondents.

      Letter of credit, proposal for, telegram as to, to be const/rued together—condition precedent, construction as to—draft to be drawn against bills of lading of particular article—non-liability to reimburse if the bills of lading do not purport to be of that article.

    Defendants, on December 1, 1881, requested plaintiff’s agent to telegraph authority to Vogel & Co., Hong Kong, at six months, to draw for their account against consular invoice and full set of bills of lading of 2,500 bales of manila hemp, per “ Robinson.” Accordingly, plaintiff’s agent, on the same day, telegraphed Vogel & Co., at Hong Kong, “ Credit 608 six-months, issued Recknagei . . documents 2,500 bales manila hemp, per Robinson . . Bank of Montreal.” The next day, a letter of credit, dated December 1, 1881, was made out by plaintiff’s agents, authorizing Vogel & Co., of Hong Kong, to value on plaintiff at London, against goods shipped per Robinson, for a specified sum, to be used as they might direct, for invoice cost of 2,500 bales of manila hemp, at four pounds per bale, on a basis of eight shillings sterling freight filled up in the bill of lading. The letter of credit required advices of the bills to be given in original and duplicate, and accompanied by bill of lading filled up to. order of agents of Bank of Montreal, New York, with abstract of invoice indorsed thereon for the property shipped as above. A note at the foot required the invoice of shipments to be accompanied by U. S. consul’s certificate. Defendants, by letter dated December J, 1881, agreed “to provide for all bills which shall be drawn and accepted under ” the letter of credit, “by payment of the amount thereof to you in New York.” The letter of credit was sent by mail to Vogel & Co. Before receiving the letter of credit, Vogel & Co. drew their bills on plaintiff at London. Each draft stated on its face that it was drawn against bales of manila hemp, was accompanied by bills of lading for bales of merchandise, and a letter of advice describing the shipment referred to in the draft as of “bales of hemp.” On each bill of lading was indorsed what were called abstracts of invoices describing the shipment as of manila hemp. On these documents plaintiff’s agent in London honored the three drafts. The shipment represented by one of the bills of lading against which one of the drafts was drawn, was'in fact of a requisite number of bales of manila hemp. As to this draft, no question arose. The shipments represented by the other bills of lading were in fact of matting. The questions in the case arose as to the drafts drawn against these latter bills of lading. It appeared that the abstract of invoices endorsed on the bills of lading was made by Vogel & Go., after the bills had been signed and delivered to them by the captain and without his knowledge or consent. It also appeared that the size, outward appearance and packing of matting, and of manila, were entirely dissimilar, and the two were easily distinguishable.

      Held, that defendants’ request, the telegram, and the letter of credit must all be considered together to know the agreement. So considering them, the agreement called, among other things, for bills of lading of manila hemp, as a condition precedent to the payment of bills drawn under the agreement, and the responsibility of defendants rested solely upon whether this condition precedent had been complied with; That the nature of the relation between Vogel & Co. and the defendants, or of the interest of defendants in the hemp, is therefore immaterial; so, also, is the fact that Vogel & Co. committed the fraud of shipping matting instead of hemp, the agreement providing in substance for defendants’ protection against the acts of their agents, if Vogel & Co. were agents ; That it followed, since the bills of lading, against which the two drafts in question were drawn, were simply of “ bales of merchandise,” and since the shipments represented by such bills of lading were in fact of matting and not manila hemp, whereby a loss ensued, that plaintiff was not entitled to be reimbursed by defendants the money paid on such drafts.
    Before Sedgwick, Ch. J., and Van Vorst, J.

      Decided December 7, 1885.
    Appeal by plaintiff from judgment entered upon findings, &c., of judge at special term.
    The complaint demanded judgment that defendants pay to plaintiff the amount of two acceptances, made by plaintiff, under a letter of credit issued by plaintiff at request of defendants, and paid by plaintiff, the defendants having promised to indemnify the plaintiff ; and that a pledge of certain certificates of shares, as security for defendants’ performances of their promise, should be enforced by sale, &c.
    Further facts appear in the opinion.

      Lord, Day & Lord, attorneys, and George De Forest Lord, of counsel for appellant, argued:
    I. The telegram and the letter of credit are in no sense separate contracts. Circumstances, however, may make it necessary to consider what the respective rights and obligations of the plaintiff and defendants are with reference to each of these instruments taken by itself. 1. The plaintiff and defendants clearly intended only to make one contract between themselves. The existence and employment of these two instruments in these transactions, must therefore produce the following effects upon the mutual relations between the parties t (a) If the conditions on which Vogel’s authority to draw, as stated in the telegram, were less stringent than those stated in the letter of credit, holders of drafts so drawn would be entitled to acceptance, notwithstanding the more stringent terms of the letter of credit might not have been complied with; and the defendants would be bound for reimbursement to the plaintiff. (5) But if the terms of the letter of credit were less stringent than those of the telegram, the plaintiff would still be bound, as between itself and the defendants, to accept all drafts which should comply with these less stringent terms, even though the holders of the drafts might not have complied with the more stringent requirements of the telegram. These distinctions are not fanciful, and may become very important in considering this case. In order that the court may easily determine the effect of them, the following differences between the two instruments are pointed out. 1. The telegram gives authority to draw against “documents 2,500 bales manila hemp.” This is the only condition which it imposes. 2. The letter of credit authorizes Vogel & Oo. to draw “ against goods shipped per Robinson. . . for any sum or sums not exceeding the aggregate £10,000, to be used as they (i. e., Vogel &Co.,) may direct for invoice cost of 2,500 bales manila hemp, &c.” As the drafts in question were actually drawn and negotiated before the letter of credit reached China, the discussion should properly turn first upon the effect of the telegram.
    II. The construction of the two instruments should lean, if anything, towards protecting persons who have honestly parted with their money upon the faith of the instruments; and if anything in them is doubtful or ambiguous, parties acting in reliance upon them should have the benefit of any reasonable interpretation of which they are capable. A letter of credit bears a strong analogy to a guaranty, and in making the following citations, anything said concerning guaranties is considered as. applying a fortiori to letters of credit: Douglas v. Reynolds, 7 Pet. 123 (1833) ; Lawrence v. McCalmont, 2 How. Sup. Ct. 449 (1844); Drummond v. Prestman, 12 Wheat. 515 (1827); Gates v. McKee, 13 N. Y. 235 (1855) ;White’s Bk. v. Myles, 73 N. Y. 341 (1878); Gelpcke v. Quentell, 59 Barb. 264 (1871); Drummond v. Prestman, 12 Wheat. 515 (1827); Bell v. Bruen, 1 How. Sup. Ct. 169 (1843); Dobbin v. Bradley, 17 Wend. 422. In. applying to these two instruments the rules of construction thus laid down, the court should ask itself the following questions, viz.: 1. Considering the nature of the-transaction in hand, and also the conditions and circumstances under which it was to be carried out, what must, the parties be supposed to have intended by the language, used in these instruments ? 2-. Is the language, so interpreted, fairly capable of the meaning evidently put upon, it (a) by the persons who purchased the drafts in China, and (b) by the plaintiff when it accepted the drafts in London? If .it is, then the parties who have advanced their money on the faith of that meaning should be protected.
    III. The language of the telegram fully justified parties in China in purchasing these drafts upon the documents presented by Vogel & Co., therefore the plaintiff was bound to accept the drafts, and the defendants were bound to reimburse plaintiff. The documents so presented came fairly and reasonably within the description contained in the telegram, viz.: “ documents 2,500 bales manila hemp.” Purchasers of drafts were entitled to have them honored. The documents upon which these drafts were actually negotiated are all before the court, and do reasonably come within that description. They were as follows, viz.: bills of lading for certain “merchandise ”—the marks and numbers of bales of which are duly specified; invoices signed by Vogel & Co.; letters of advice, also signed by Vogel & Co. No other “ documents” ever accompany drafts drawn under such credits. In these Vogel & Co., in every paper emanating from them, viz.: invoices, drafts, and letters of advice, have unequivocally stated the property to be “manila hemp.” The only papers in which it is not thus specifically described are the bills of lading signed by the ship-master. The defendants’ contention here is, that because the bills of lading only acknowledged the receipt of “ merchandise,” without stating that such merchandise was manila hemp—therefore these documents were not “ documents 2,500 bales manila hemp ” within any fair and reasonable meaning of the telegram. This contention is not sound if the court considers that the parties intended or expected the drafts to be negotiated on the faith of Vogel’s statements as to the nature of the property shipped. They have again and again declared it to be manila hemp. It involves the assumption that both parties to this credit transaction—the defendants and the plaintiff—intended to rely, in the most important matter connected with it, not upon the statement of Vogel & Co., whom they both knew, and whom the defendants were entrusting with the use of the money, but only upon the statements of the master of the. ship “R Robinson,” whom they probably had neither of them heard of before. Vogel & Co. had purchased and shipped the property on Recknagle’s behalf—and they distinctly declared it to be manila hemp. The shipmaster described the property in property in general terms which in no way contradicted this statement. Why should not such statements as to the nature of the shipments be satisfactory ? Indeed, when these documents are all taken together—each filling out and explaining the other—would not any merchant or banker reasonably and fairly consider them to be “documents” for 2,020 bales manila hemp ? Everybody to whom they have been presented has so considered them —the purchasers of the drafts in China—the bank in London who accepted the drafts—and the defendants in New York, who receipted for them and entered the property as manila hemp. The improbability that the parties intended that the master’s statement as to the nature of the shipments should be alone, or even chiefly, relied on by purchasers of the drafts, is increased when it is considered (a) that it could not be certain that the master would be willing to state in a bill of lading the character of the merchandise, and (6) that whatever statement he might make would necessarily be so qualified and restricted as to furnish no real protection to either the plaintiff or defendants. It can hardly, be presumed that the plaintiff and defendants intended to insist—as a condition to the negotiation of those drafts—upon the giving of a bill of lading in a form which any prudent shipmaster would refuse to give, at least without so guarding it that no practical benefit would be obtained from it. The following citations from authorities are pertinent here : Leggett on Bills Lading, 13; 1 Parsons on Shipping, 191; Nelson v. Stephenson, 5 Duer, 549. Suppose, therefore, in the case before the court the master had refused—as in fact he may have done—to commit himself as to the nature of the property entrusted to him by any description of the contents of the bales, he would have been acting quite within his rights, as is well known to all the commercial world. Can the defendants, therefore, reasonably insist that persons dealing with Vogel on the faith of that telegram should have known that they were only to take the drafts when accompanied by bills of lading in a form which the master might refuse to sign, and that they were not to take them if the bills of lading were in the only form which Vogel & Co. could properly demand from the ship % But even if the master had described this property not as “ merchandise ” but as “manila hemp,” he would only have done so in a way which would have furnished no protection to the defendants ; for he would surely have added qualifying words such as “said to be, &c.,” or “weight and contents unknown”; the effect of which would be to deprive the previous description of all value. The latter expression appears, in fact, in these very bills of lading, And where such words "appear neither the master nor the ship are bound by such a description (Lebeau v. Gen. Steam Nav. Co., 42 L. J. (N. S.) C. P. 1; Jessell v. Bath, 36 L. J. (N. S.) Exch. 149). If the master in this case had used the expression “said to be manila hemp,” even the defendants could not have questioned the regularity of the bills of lading. Tet that would only have been a repetition by him of "Vogel’s statements to the same effect. But if intending purchasers of these drafts would be authorized to act upon such a repetition of Vogel’s statements coming through a third party, why should they not act upon Vogel’s direct statements to the same effect as contained in all the other documents ? Again, therefore, it is insisted that any interpretation of this telegram' which should make such a valueless statement a condition precedent to the negotiation of drafts drawn under it is unreasonable and absurd (Lebeau v. Gen. Steam Nav. Co., 43 L. J. N. S. C. P. 1, 1872; Clark v. Barnwell, 12 How. Sup. Ct. 272).
    IV. But the parties who purchased these drafts in China upon these “documents” would be entitled to hold the bank and Becknagle for their payment—not only because such documents might farly be considered such as the bank and Becknagle intended to have them rely upon, but also because Vogel & Go., being Becknagle’s agents for the purchase and shipment of the hemp, their statements in that regard would be blinding upon Becknagle. This" would be apparent, even to persons who might see only the telegram. But the letter of credit—by which especially the mutual relations between the plaintiffs and defendants are to be governed—is still more explicit. Assuming, therefore, that Vogel & Co. were Racknagle’s agents to purchase and ship these goods, their statements as to what they had purchased and shipped bind the defendants (Merchants’ Bk v. Griswold, 72 N. Y. 472, 1878 ; North River Bk. v. Aymar, 3 Hill, 262, 1842 ; Farmers’ & Mechs. Bk. v. Butchers’ & Dr. Bk., 16 N. Y. 125, 1857; Griswold v. Haven, 25 N. Y. 595, 1862).
    V. But assuming that the relations between the plaintiff and Recknagle & Co., except so far as they may be fixed by obligations which both may have assumed to strangers, under the telegram, are contained in the letter of credit alone, the acceptance of these drafts is fully justified. This has been sufficiently discussed. The written words in the letter of credit “for invoice cost of 2,500 bales of manila hemp ” are not attached to, and form no part of, Vogel &. Co.’s authority to draw, but only restrict their use of the money. They were authorized to draw against goods, but were charged to use the money in purchasing hemp. That is all. The defendant seeks to interpret this letter of credit as though it had read “ to draw against 2,500 bales manila hemp, etc.” The instrument itself reads otherwise.
    VI. 1. Everything which the letter of credit imposes as a condition of acceptance has been complied with. With the single exception that the property was described as “merchandise” instead of “'manila hemp” in the bills of lading, the defendants even cannot claim a deviation from the strictest regularity. It is respectfully insisted that this was no irregularity. 2. But the case of the bank under the letter of credit is quite as strong in another light. They were bound only to the exercise of proper mercantile caution in accepting these bills. If to a careful business man the documents which accompanied these drafts might fairly be considered to represent 2,020 bales manila hemp, then the bank was authorized to accept, ■ and the defendants must bear the consequences of their agent’s fraud. It appears in this case that even the defendants themselves, when they took these very bills of lading from plaintiffs’ agents in New York, receipted for them as 2,020 bales manila hemp. Why should they now complain of the plaintiff for doing the same thing ? 3. Again, the plaintiff’s position under the letter of credit was one of great responsibility, involving not only its own credit, but that of Vogel & Co., and of the defendants here. If, therefore, there was any ambiguity, either in the letter of credit or in the documents presented, and the plaintiff has acted honestly and reasonably, in view of all the circumstances, it should be protected. Who will say, on reading the letter of credit, that drafts drawn against “ merchandise ” were not regular, under an authority to draw against “goods.” So also, who would venture to say that bills of lading for “ merchandise ” accompanied by other genuine documents stating it to be manila hemp, did not represent such hemp within the legitimate meaning of the letter of credit. As matter of fact, one of those bills of lading did represent hemp. Suppose they had all represented hemp, like this one, would not the plaintiff have been hable, if it had refused acceptance ? But if it would have been liable for refusing, then it was justified in accepting.
    VII. But the following adjudicated case seems to completely cover the case at bar, and to establish the principle which is conclusive in plaintiff’s favor : Woods v. Thiedemann (Exch.) 1862, 1 Hurlst. and Cottmann, 478.

      Blatchford, Seward, Griswold & Da Costa, attorneys, and Charles M. Da Costa, of counsel for respondents, argued:
    I. The question is narrowed to the consideration of the telegraphic credit, because the drafts were drawn solely under the telegraphic credit, and no drafts were ever drawn under the letter of credit.
    II. The inquiry is, now, pertinent—a. What telegraphic credit did Messrs. Becknagle & Company request the Bank of Montreal to send to Vogel & Co., and, b. How did the Bank of Montreal comply with such instructions ? The evidence is uncontradicted. It is in writing. The word “documents,” used in the plaintiff’s dispatch, was a short way of expressing the words, “against consular invoices and full set bills of lading,” used in the request of the defendants. The evidence is uncontradicted, that the plaintiff did not observe all the terms upon which the credit was opened, because it accepted and paid drafts which were not accompanied by bills of lading for bales of manila hemp, but only for “bales of merchandise.” The departure from such instructions relieved the defendants from any liability, if such departure has caused the loss. There can be no dispute that such departure did have that result.
    III. The law simply utters the suggestion of common justice and common sense in declaring that: “ When one of two innocent persons must suffer from the treacherous act of a third, he who gave the aggressor the means of doing the wrong, must bear the consequences of the act.” The bank gave the aggressor the means of doing wrong, by accepting drafts, which it was not bound to accept, because not accompanied by the documents on which the acceptance was promised.
    IY. Neither the plaintiff nor the plaintiff’s New York branch ever sent a copy of the telegraphic credit to the manager of the plaintiff from or at London, or informed him of its contents. If, then, the terms and conditions of such letter of credit are at variance with the telegraphic credit, it is clear that the loss arising from the negligence of the plaintiff’s agents in New York, in not sending to London a copy of the telegraphic credit, and in themselves determining that the letter of credit was the exact equivalent of the telegraphic credit, must be visited upon it.
    Y. The rule is elementary that : “If the guaranty propose a credit, that particular credit must be granted, or the guarantor will not be bound ” (Daniel on Negotiable Instruments, § 1756 ; Walrath v. Thompson, 6 Hill, 540 : Ulster Co. Bank v. Mcfarlan, 3 Den. 553). Loeb v. Hellman, 45 N. Y. Super. Ct. 336 ; aff’d, 83 N. Y. 601, is instructive on this point. Nor are there wanting analogies in the law (Lovatt v. Hamilton, 5 Mees. & W. 639 ; Johnson v. Macdonald, 9 Id. 600 ; Welsh v. Gossler, 89 N. Y. 540, 545, 548 ; Bowers v. Shaw, L. R. 2 App. Cas. 455, 480 ; Borrowman v. Drayton, L. R. 2 Exch. Div. 15).
    VI. The defense interposed by the defendants herein is not technical, but meritorious and substantial. They knew the character and appearance of bales of manila hemp. They knew, therefore, that no shipmaster would sign a bill of lading for bales of manila hemp, when other merchandise was shipped in its stead. No master could be misled, for the evidence is uncontradicted that manila hemp is always shipped uncovered, so that it cannot pass for any other merchandise. It is true that the bills of lading contained the words “ weight and contents unknown,” but that expression would only qualify the words “bales of manila hemp” (had they been inserted in the bill of lading), if manila hemp were covered so that the master could not see for- himself whether it was manila hemp or not (Miller v. Hannibal & St. Jo. R. R. Co., 90 N. Y. 430). “Contents unknown,” when applied to a species of merchandise which can be determined by the eyes by inspection, without opening, is practically meaningless. Again, the defendants were entitled to the observance of the condition that the bills'of lading should be for manila hemp, because it afforded them protection against any wrong-doing ; for if the master issued bills of lading for manila hemp, when other merchandise was actually shipped, and money was advanced on the strength of the recitals contained in the bills of lading, both the master and the ship would be responsible (Myer v. Peck, 28 N. Y. 598, and cases cited ; Bank of Batavia v. N. Y., L. E. & W. R. R. Co., 33 Hun, 589). Whatever doubt there may be, in view of the decisions in Schooner Freeman v. Buckingham (18 How. 182), and Pollard v. Vinton (105 U. S. 7), of the right of the defendants to proceed against the ship, on a bill of lading fraudulently issued by the master, the remedy therefor against the master and his share of the ship, if any, is undoubted in all jurisdictions.
    VII. It was intimated by the plaintiff’s counsel on the trial below, that it was not bound to greater diligence than the defendants were, and that, as the defendants executed, on the surrender to them of the bills- of lading, a trust receipt, specifying 2,020 bales of manila hemp, it showed that the plaintiff, in accepting the drafts on the same documents, had equal reason to believe that the shipments were of manila hemp. The argument is entirely fallacious, (a) - The liability of the defendants to respond to the. plaintiff’s demand cannot be determined by a subsequent act of the defendants, entirely disconnected with, and having no relation to, the incurring of their obligation to the plaintiff. However negligent the defendants may have been in giving to the plaintiff in New York such trust receipt, that would not relieve the plaintiff from the result of its negligence and improper acts, committed nearly three months before, in London, in their accepting the drafts without the proper accompanying documents. (&) Besides, the defendants had been thrice informed by the plaintiff that—■“ documents in order,” and had a right to rely on such statement, (c) Again, the defendants acted in the usual way. The trust receipt was filled in at the defendants’ office, and sent through their custom-house clerk to the plaintiff, and the bills of lading in exchange for such receipt were delivered to such clerk, and thereupon the clerk immediately took the documents to the custom-house for entry. As matter of fact, therefore, the defendants never saw the bills of lading until after the discovery of the fraud.
    VTII. The true rule applicable in this case may be thus stated, viz.: All that a banker is bound to do when he issues a credit against documents, is to see that bills of lading, professing on their face, in the ordinary form, to represent a consignment of the specific merchandise, under which he has authorized the advances, accompany the draft, and that the draft is not in excess of the proper amount. If the banker adheres to that rule, he will have discharged his duty, even if it should turn out that the bills of lading were forgeries. But if he disregards the requirements of this rule, and loss happens, the banker must bear such loss (Young v. Lehman, 63 Ala. 524; Woods v. Thiedmann, 1 Hurlst. & Colt. 478, and Ulster Bank v. Synnott, 5 Ir. Eq. 595).
    IX. Should it, however, be held that the letter of credit directed to the plaintiff’s branch in London, and not the telegraphic credit, is the instrument which is to be the controlling one in this case, then it is submitted that, even in that view, all the foregoing suggestions áre alike applicable, and equally result in supporting the decision below, for—a. The letter of credit is on one of the usual printed forms of the plaintiff. b. The printed words (which are not usually followed by written ones), are “against goods shipped.” c. In the case at bar, these printed words are followed, and are necessarily qualified and controlled, by the subsequent written words, viz., “invoice cost of 2,500 bales manila hemp at £4 per bale, on a basis of 8s. sterling freight filled up in bill of lading, or at a proportionate reduced rate of advance if freight is higher.”
   By the Court.—Sedgwick, Ch. J.

On December 1, 1831, the defendants made written application to plaintiff’s agent in New York. It was as follows : “December 1, 1881, Please telegraph authority to Vogel & Co., Hong Kong, to draw at six months, for our account, against consular invoice and full set bills of lading of 2,500 bales manila hemp, p. Eobinson, at the rate of £4 per bale, pn a basis of 8s. sterling, freight filled up in bill of lading reducing advance if freight higher.”

In the evening of that day, the plaintiff’s agent sent to Vogel. & Co., the following telegraphic dispatch: “ Vogel, Hong Kong. Credit 608, six months, issued Becknagle ten thousand pounds, documents 2500 bales manila hemp, per Robinson, at £4 per bale, if freight eight shillings or reduced advances if freight higher.”

On the next day, December 2, 1881, a letter of credit was made out and delivered to defendants. It was dated December 1, 1881, and addressed to the agents of the plaintiff in London. It authorized Messrs. Vogel & Co., of Hong Kong, “ to value on you as follows, that is to say, against goods, shipped per Robinson, via Cape of Good Hope, at six months sight; for any sum or sums not exceeding in the aggregate £10,000 sterling, to be used as they may direct, for invoice cost of 2,500 bales of manila hemp at £4 per bale, on a basis of 8s. sterling freight filled up in bill of lading, or at a proportionate reduced rate of advance if the freight is higher, to be purchased for account of Recknagle & Co., New York, or whom it may concern and to be shipped to New York. . . The bills must be drawn in Hong Kong prior to the 1st day of June, 1882, and advice thereof given to you in original and duplicate, such advice to be accompanied by bill of lading, filled up to order of agents of the Bank of Montreal, New York, with abstract of invoice indorsed thereon, for the property shipped as above. All the bills of lading issued except the one mailed to us and the one retained by the captain of the vessel carrying the cargo, are to be forwarded direct to you. The original invoice, properly certified, to be also forwarded to us. . . And we hereby agree with the drawers, indorsers and bona fide holders of bills drawn in comph'ance with the terms of this credit, that the same shall be duly honored on presentation at your office in London.” To this was added a note, “ Please sign bills as drawn under Credit No. 608, dated December 1, 1881.” On the margin was written : “This credit opened by cable direct, December 1, 1881.”

This letter of credit was delivered to the defendants, and they by letter addressed to plaintiff’s agents in New York, and dated December, 1881, agreed “to provide for all bills which shall be drawn and accepted under ” the letter of credit “ by payment of the amount thereof to you in New York.”

The letter of credit was sent to Vogel & Co., on December 13, 1881. It was not sent before, because the first China mail from New York went on that day.

Vogel & Co., in Hong Kong, drew three bills, upon plaintiff at London, at six months, to their own order—the first, on December 3, was for £2,400; the second, on December 6, for £2,000 ; the third, on December 13, for £3,680. On the face of the drafts it was respectively stated that they were drawn against six hundred, five hundred, and nine hundred and twenty bales of manila hemp.

These drafts were forwarded to plaintiff’s agents in London. The draft for £2,400 was accompanied with a bill of lading for six hundred bales of merchandise ; that for £2,000, with a bill of lading for five hundred bales of merchandise ; and that for £3,6S0, with two bills of lading for nine hundred and twenty bales of merchandise. Each draft was accompanied with a letter of advice, describing the shipment referred to in it as of “ bales of hemp.” On each bill of lading was indorsed what were called abstracts of invoicés, and which described the shipment as of “manila hemp.” These indorsements were made by Vogel & Co. after the bills of lading had been signed and delivered to them by the captain, and without his knowledge or consent.

The bills of lading acknowledged the shipment of “ bales merchandise being marked and numbered as in the margin,” “weight and contents unknown.”

The plaintiff’s agents, upon the arrival of the ship in New York, delivered the documents that had accompanied the drafts, upon acceptance in London, to the defendants in trust. They gave a receipt which termed the property, “two thousand and twenty bales hemp.” They entered the goods at the custom-house and paid the duties, before inspecting the goods. In fact, there was of hemp in the various shipments, only five hundred bales. It is agreed that this accompanied the bill of lading for the draft of December T, for £2,000. All the other packages were of matting—an article of much less value than manila hemp.

The judge found, on the evidence before him, that “a roll of matting is a round cylindrical bale or roll, weighing about forty-five or fifty pounds and covered with a grass mat. A bale of of manila hemp, weighs, within a few pounds of three hundred, is square, like a cotton bale, and of not much less size. It is not covered by any matting or other covering. It is compressed and very hard, and strings of manila hemp are laid round it, as fastenings. On each bale of manila hemp, a patch is sewed, on which to put the mark; otherwise it has absolutely no covering.”

The matting was sold by agreement, and the proceeds of sale were about $2,000.

The plaintiff claims that the defendants are liable, under their agreement, for the amounts paid upon the acceptances of £2,400 and £3,080, and the complaint asks judgment for those amounts, together with judgment that certain security given by the defendants be sold, etc.

The defendants claim that their liability under their agreement is “to provide for all bills which shall be drawn and accepted under” the letter of credit, and that the drafts upon which the plaintiff now claims were not drawn and accepted under that letter; because, first, the bills were drawn under the telegraphic despatch, and, second, the plaintiff, in accepting the bills, did not observe the conditions upon which the defendants were to become liable, under either the telegraphic dispatch or the letter.

I am of the opinion, that the various instruments, that is, the original request of the defendants, the telegraphic despatch induced by it, sent to Hong Kong, and the letter of credit, have such intrinsic or expressed reference to each other, that they must all be considered at one time, to know the agreement.

It appears from them, that defendants’ responsibility to plaintiff was not to be based upon the nature of the relation between Vogel & Co. and the defendants, or the interest of the defendants in the hemp, but upon the character of certain instruments. If the instruments had the character described in the agreement, there was liability, otherwise, none. It is immaterial that Vogel & Co. committed the fraud of shipping matting and not hemp; for, assuming that they were agents of defendants, the agreement was that the acceptance and payment of the drafts should not create responsibility on the defendants’ part, unless the documents were of a certain kind. There was provision, in substance, for a protection of defendants against the acts of their agents, if Vogel & Co. were agents.

It is clear that the document most important to the interests of both parties was to be the bill of lading. There might be a controversy as to whether the letter of credit required that a consular invoice should accompany the draft; but it and the despatch and the written request, call for a bill of lading, The request refers to “bills of lading of 2,500 bales of manila hemp.” The despatch includes bills of lading when it refers to “ documents 2,500 bales of manila hemp.” The letter of credit requires the delivery of “bill of lading . . for the property ship-. ped as above; ” that is, the 2,500 bales of manila hemp mentioned above. And in truth, all the other documents—the invoice, the consular copy of it, the letter of advice—were of inferior importance, because they were of such slight import as to the fact of hemp being shipped and not something else.

The important question is, what kind of a bill of lading was intended by the parties ? At the present point of time, the interest of the plaintiff is to make the kind of bill less stringent than the defendants now insist upon. When the contract was made, it was the interest equally of both parties, to have the bill of the utmost significance practicable, as to the assurance from it that hemp was the article shipped. They evidently, as the learned counsel for appellant claims, referred to the contingencies of actual shipment, and not to such a bill of lading as a master would have the right to refuse to sign.

The respondents do not claim that.they were not to be liable if in fact hemp was not shipped, without regard to the character of the bill of lading. They do claim that the bill should specifically refer to the shipment as one of manila hemp.

Both parties desired a bill of lading that it was possible for a shipper to procure' if he shipped hemp. And they wished it be of such a kind as from its effect as evidence, and its guaranties of certain rights in an action against the master, the owner, or the ship, would lessen the chances that the shipment might be something other than hemp. In other words, the bill of lading was to be such as a shipper of hemp, using his legal rights under the law merchant, according to the custom of merchants, could procure, and which, on its face, would show, as far as possible, as against the shipper and the master, that the shipment was of hemp. The right of the shipper would be correlative to the right of the master to limit responsibility under the bill to a lawful extent.

It was suggested that bills of lading seldom referred to the quality of the shipment. Oases reported, however, show otherwise. The old form in" Abbott on Shipping (ed. of 1856, 235), is a bill of lading for “twenty bales containing one hundred pieces of broadcloth marked and numbered per margin.” Smith Mercantile Law, 376, repeats this form. The Oolumbo (3 Blatch. 521) refers to a bill of lading of casks “ containing bristles.” The Bellona (4 Ben. 503) refers to a bill of lading that described the shipment of “ boxes of raisins.” Lebeau v. Gen. Steam Nav. Co. (8 L. R. C. P. 88), contains a bill of lading of “linen goods.” Fassett v. Ruark (3 Ann. La. 694) concerned a bill of lading for “thirty-three bales and twelve cases domestics.”

Much does not seem to be said in the books specifically of a right of a shipper to have the quality of the goods shipped described in the bill of lading, but the principles given as to the rights of the master to limit responsibility, imply much on this subject.

In Abbott on Shipping, 252 (ed. of 1856), is a statement of the law that implies that a shipper has a right to some sort of description of the quality, if that quality can be known by the master. “If there is any dispute about the quantity or condition of the goods, or if the contents of casks or bales are unknown, the words of the bill of lading should be varied accordingly.

“By the French ordinance it is required that bills of lading should contain the quality, quantity and marks of the merchandise, &c. It is obvious that the quality, and frequently also the quantity of the goods, must be unknown to the master ; and the commentator (Valin) on the ordinance informs us that by the quality, the exterior and apparent quality is only meant, and further, that it is usual for the master to insert words denoting that the quality and quantity are only according to the representation of the merchant, of which practice he' approves, &c.”

In Parsons’ Maritime Law, 143 (ed. of 1859), it is said : “ The bills of lading are evidence against the master or the owner of the ship, not only as to the reception of the merchandise, but as to any material fact stated in them, respecting the quantity or quality or any other element in the description of the goods. It is, therefore, usual to describe them only as so many boxes or bales, or parcels numbered and marked as per margin. Sometimes the words contents unknown, or said to contain, &c. are added, and if the words ‘ containing, &c.’ are added, which is also not unusual, the master and ship are held only to deliver the boxes as they were received by them.”

It is evident, that customarily the shipper and the master, at the time of forming the bill of lading, have their attention fixed upon what statement shall be made in it as to the quality of the merchandise. It seems to be a reasonable demand of the shipper, that so far as the quality is disclosed by the external appearance of the shipment, that quality shall be given in the bill of lading. The object in part of any statement as to the shipment, is that of identifying the latter, and there is no reason for refusing to do that by description of quality when it-appears.

The master, it is true, may add the words that were added in this case, “ contents unknown,” in a proper-case ; that is, when the contents do not appear. But-should there be a statement of the quality of the shipment, these added words will not neutralize the statement, but only qualify it, so that the whole will be considered to mean that the external appearance, if there be an. external appearance, was of the quality specified.

The cases cited in Lawson on Contract of Carriers,, § 207, support the statement of the law on this point: “ Value and contents unknown.’ These words exclude-the inference of any admission by the carrier as to the-quantity or quality of the contents of the package of the-time of delivery, beyond what is visible to the eye or-apparent from handling it. Nothing is implied but the-receipt of the property in good order externally, and the-carrier may show by parol that the value and contents were below the estimate placed upon them by the shipper (The California, 2 Sawy. 12 ; The Columbo, 3 Blatchf 521; Clark v. Barnwell, 12 How. [U. S.] 272).” A receipt-for boxes of raisins would imply the receipt of “boxes-filled with raisins ” (The Bellona, 4 Ben. 503 ; 2 La. Ann. 694; Lebeau v. Genl. Steam Nav. Co., L. R. 8 C. P. 88).

In the present case, the evidence is convincing that if' the shipment had been of manila hemp, it would have-had the external appearance of that article, and that a shipper, in the ordinary course of trade, might have procured a bill of lading, which, in appropriate words, would have signified that fact.

Practically, both the parties to this action would have had, in such a bill of lading, and in the circumstances which would give rise to such a bill, an important guard against the fraud that was practiced. For, on the facts, it would have been much more difficult to make a bale of something comparatively without value, that would have the external appearance of hemp, and in bales of the usual shape in trade, than to commit the fraud disclosed by this case. This, however, is not a test of the rights of the parties. The question is, was the bill of lading of the kind intended by the agreement of the parties ?

It was argued that the intention was to describe documents that, taken together, would import that the shipper had shipped hemp, and that such was the import of the documents generally, although one of them, in the bill of lading, used the word merchandise. As to this, it may be said that the documents were to be such as would be in London before the plaintiffs were to accept the bills of exchange, and that in fact there was in London, only the bills of lading, and an indorsement upon their backs of “abstracts of invoices.” These abstracts were no part of the bills of lading, were not supposed to be presented to the master, and had nothing to do with the identification of the kind of shipment that was in fact made. The security consisted of the bills of lading, and the intention was they should be of “ manila hemp.”

My opinion on the whole case is that the parties intended that the bill of lading should refer to manila hemp specifically. It is unnecessary to decide what form should have been adopted. If the form were “bales of manila hemp, contents unknown,” or “said to be,” or “having the appearance” of manila hemp, the parties would have had an assurance that is absent from the case.

Judgment affirmed, with costs.

Van Vorst, J., concurred.


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    THOMAS C. CLARK, Appellant, v. JOSEPH BLUMENTHAL, et al., Respondents.

      Trial forum—at special term or by jury—test of.—Reformation sealed contract.

    The test as to the kind of trial to which plaintiff is entitled, is the nature of his demand. If, upon any supposed state of facts set out in the complaint, he claims to have a right to equitable relief, he has a right to a trial at special term. This, though it be perceived that the complaint is clearly insufficient to sustain the demand for equitable relief.
    Where a demand is made for damages, and such demand is secondary to the primary demand for equitable relief, notwithstanding such joinder, the plaintiff is still entitled to have the case tried at special term, at least primarily.
    Where the right to recover damages, as prayed for, depends on the reformation of a sealed contract, as prayed for, the plaintiff is entitled to a trial at special term, at least primarily.
    Before Sedgwick, Oh. J., Van Vorst and Freedman, JJ.

      Decided December 7, 1885.
    Appeal by plaintiff from order striking the case from the calendar of issues of fact at special term, and directing that the issues be tried before a jury.
    The complaint contained, among others, the following averments : that the defendant, Weinberg, held the legal title of certain real estate, but “solely as the repository or trustee of the defendant, Blumenthal, and without any personal pecuniary interest therein whatever,” and that, at all the times referred to, “ the said Blumenthal received and appropriated to his own use, the entire rents and profits thereof, to a large amount;” that defendant Blumenthal negotiated and made an agreement with the plaintiff, “to convey said real estate to the latter, and received from him $1,000 on account of the purchase money;” that “in pursuance of such agreement, the plaintiff and defendant executed each to the other an instrument under seal;” that this instrument, on its face, was made between the defendant, Weinberg, and the plaintiff, and was for the sale by the former and purchase by the latter of the real estate specified, and was executed by Jacob B. Weinberg (the defendant) under his seal, “per Joseph Blumenthal,” the other defendant; that at the time of the execution of the instrument, defendant Blumenthal represented to plaintiff that Weinberg (defendant) was “the true, lawful and equitable owner of the said premises;” that before the date fixed for the performance of the agreement the defendant, Blumenthal, “sold and procured defendant Weinberg to convey the premises to one Goldstein;” and that defendant, Blumenthal, received and appropriated to his own use $18,000, paid by Goldstein to him, said Blum.enthal, as, and for, the consideration of the sale; that the plaintiff had sustained damages in the sum of $19,000, in the manner particularly alleged in the complaint, &c.; . . . “Wherefore the plaintiff demands judgment that the before-mentioned agreement,”. . . “be reformed by inserting the name of Joseph Blumenthal, as party of the first part thereto, in place of the defendant, Jacob B. Weinberg, or that the defendant, Blumenthal, be adjudged to be the true party in interest and individually affected by the said agreement and the covenants of the party of the first part therein specified; that the plaintiff recover from the said Joseph Blumenthal the aforesaid sum of $19,000 with interest.”
    After answers were served, the plaintiff placed the cause upon the special term calendar for the trial of issues of fact. Upon defendant’s motion, the cause was stricken from that calendar, and the order then made directed that the issues be tried before a jury.
    The present appeal is by plaintiff from this order.

      T. M. Tyng, attorney, and of counsel for appellant,
    argued :—I. This is purely an equitable action and triable by the court at special term without a jury. The action is brought to reform-a sealed instrument by making the defendant Blumenthal the real party of the first part thereto ; or to charge him, in equity, with responsibility for the performance of the covenants therein. The equitable relief demanded in the first prayer of the complaint is of the essence of plaintiff’s recovery; and, unless that is awarded him, the action must fail of result (Carroll v. Deimell, 65 N. Y. 252). No action at law could be maintained against Blumenthal on this sealed instrument (Briggs v. Partridge, 64 N. Y. 357; Story on Agency, §§ 160, 162, 422, 450, 451, 452). Full and adequate relief can be given in a trial at the equity term. A court of equity, having acquired jurisdiction of an action for the reformation of a contract, has power to proceed and award damages in the contract as reformed (Maher v. Hibernia Ins. Co., 67 N. Y. 283; Andeson v. Metro. L. Ins. Co., 18 Week. Dig. 192: Seeley v. N. Y. Nat. Bank, 8 Daly, 400 ; 78 N. Y. 608).
    II. The court below erred in awarding costs upon this motion. ' This was not a motion made upon notice, but a suggestion made without notice at the commencement of a trial, and we submit that sections 3236 and 3251, subdivision 3, provide simply for “ motions in the action,” regularly noticed and brought on for hearing pursuant to section 780.

      Joseph Tillman, attorney, and of counsel for respondent Weinberg, argued:
    I. This defendant is entitled to a jury trial. The complaint sets forth a cause of action against him (if at all) for damages for breach of a written contract to convey land. No allegations entitling the plaintiff to equitable relief against this defendant are made, and no equitable relief is demanded. Even if it had been, the defendant “cannot be deprived of a jury trial in a proper case, because the plaintiff has demanded equitable instead of legal relief ” (Davison v. Associates, 71 N. Y. 340).
    II. Nor can this defendant be deprived of that right by the joinder of an equitable cause of action against other defendants (Wheelock v. Lee, 74 N. Y. 495).

      III. This defendant has pleaded a counter-claim which is purely legal and not equitable in its nature, and which he is entitled to have tried by jury.

      Simson Wolf, attorney, and Joseph Ullman, of counsel for respondent Blumenthal, argued:
    I. The complaint demands “judgment for a sum of money only,” and the defendants are therefore entitled to a trial by jury (Code Civ. Pro. § 968). If there is any claim for equitable relief in the complaint (which this defendant denies) it is merely auxiliary to the main cause of action. In such a case, there must be a jury trial (Penny v. Gillett, 7 Week. Dig. 101; Ice Co. v. Insurance Co., 20 How. Pr. 424; Wheelock v. Lee, N. Y. 500).
    II. There is no equitable feature in the case. The suit is not for reformation of a contract. A contract cannot be reformed by adding parties to it. A court of equity cannot reform an agreement except between the original parties (Cady v. Potter, 55 Barb. 463 ; 5 Wait's Actions & Defenses, 451, § 8 ; Adams’ Equity, 349, 6th Am. ed. 1873). There is absolutely no authority for an action to reform a written instrument by including a new party. The only case cited below was Bartholomew v. Insurance Co. (34 Hun, 363), where the court expressly declined to pass upon the question. This action, therefore, it is insisted, is not for the reformation of the contract, notwithstanding the use of that word in the complaint.
    III. The action, as against this defendant, is simply one against an undisclosed principal, which is purely a common-law action. The judgment demanded is damages for breach of a written agreement, this defendant being alleged to be—not the party named in the agreement—but his undisclosed principal.
    IV. It was argued below that the appellant had no remedy at law. That is no reason why he has one in equity. He must first show a right. His action is for damages for breach of contract—purely a common-law action. If he has no remedy at law, he certainly has none in equity. The court, however, is not concerned with the question , whether there is a remedy elsewhere or not. The cause of action disclosed by the complaint being one for a jury, the equity term could not retain it, and properly struck it from its calendar.
   By the Court.—Sedgwick, Ch. J.

Section 968 of the Code of Civil Procedure is, that in an action in which the complaint demands judgment for a sum of money only, an issue of fact must be tried by a jury, and also in actions of ejectment, for dower, for waste, for a nuisance, or to recover a chattel. Section 969 is, “An issue of fact not specified in the last section must be tried by the court.” It is at once perceived that the test of the kind of trial is not the legal conclusion from the facts averred in the complaint, but is the nature of the demand. If, upon any supposed state of facts set- out in the complaint, the plaintiff claims he has a right to equitable relief, he has the right to present the claim for adjudication to the court at special term, and is not forced in the first instance to a trial by a jury. He has a right to the judgment of the court, and if it be unfavorable to him, then to the advantages of appeal from the judgment. Even if it be perceived that the complaint is clearly insufficient to maintain his demand for equitable relief, he still has the right to have that determined by the special term.

It is suggested in this case that the real substantial demand is for a judgment for a sum of money only. So far as defendant Blumenthal is concerned, it will be necessary for the plaintiff to have the contract reformed by making Blumenthal a party to it, before the claim for damages can be considered against him, and therefore the money demand is secondary to the primary demand for reformation. As to Weinberg, the complaint makes no personal demand, other than such as may be connected with his right to resist the placing of Blumenthal in the contract in his stead. I am of opinion that the plaintiffs had a right to have the issue tried, at least primarily, at special term.

It was asserted that the order appealed from, was made at special term after the case had been called for trial. The printed papers disclose an order made without reference to the case actually being on trial. The court, therefore, had the power to impose costs of motion, without any controversy as to what would have been its power if the order were made in the course of the trial.

The order appealed from should be reversed, with $10 single costs, and the motion below denied, with $10 single costs, and the order entered should provide that the case be placed on the special term calendar for trial.

Van Vorst and Freedman, JJ., concurred.


text:
    THOMAS MacKELLAR, Respondent, v. GEORGE W. ROGERS, Impleaded, &c., Appellant.

      Mortgage—covenant for the appointment of a receiver.

    A defense that the mortgage was given to secure advances to be used in the erection of buildings on the mortgaged premises; that the mortgagee failed to make the advances as required by the mortgage, in consequence whereof the mortgagor was compelled personally to advance a large sum to complete the work, and then, to save his credit, to sell the houses erected at a large reduction from their actual value, is not a good objection to the granting a motion made, pursuant to a covenant to that effect in the mortgage, for the appointment of a receiver.
    Before Sedgwick, Oh. J., Van Vorst and Freedman, JJ.

      Decided December 7, 1885.
    Appeal from an order appointing a receiver of the rents and profits of the mortgaged premises during the pendency of the action to foreclose the mortgage.
    The motion was founded upon a covenant in the mortgage, that after default in payment of principal or interest, the mortgagee or his assigns should be at liberty, immediately after any such default, upon a complaint filed on the foreclosure of said mortgage, to apply for, and should be entitled, as a matter of right, and without regard to the value of the mortgaged premises, or the solvency or insolvency of any owner of said premises, or of the mortgagors, and on ten days’ notice to the mortgagors, to the appointment by any competent court of a receiver of the rents, issues and profits of said mortgaged premises.

      Martin J. Keogh, attorney, and of counsel for appellant,
    after citing as to the general principles appertaining to the appointment of receivers when there is no covenant in the mortgage, the cases of Sea Ins. Co. v. Stebbins, 8 Paige Ch. 565 ; 1 Hillard Mort. 467, and cases cited; Shotwell v. Smith, 3 Edw. Ch. 588 ; Warner v. Gorman’s Executors, 1 Barb. 36 ; Callanan v. Shaw, 19 Iowa, 183,—argued :
    A valid defense to this action interposed by sworn answer, and not met by affidavits affirming the validity of the mortgage and denying the truth of the facts set-forth in the answer, and opposing affidavits, even where the mortgage contains a stipulation that a receiver shall be appointed as a matter of right, is a sufficient and controlling reason for not disturbing the possession of the mortgagor and denying this motion (Knickerbocker Life Ins. Co. v. Hill, 2 Hun, 680; Hollenbeck v. Donnell, 94 N. Y. 342).

      George M. MacKellar, attorney, and of counsel for respondents,
    cited : Jones on Mortgages, § 1516 ; Quincy v. Cheeseman, 4 Sand. Ch. 404 ; Shotwell v. Smith, 3 Edw. 588 ; Bank of Ogdensburgh v. Arnold, 5 Paige, 40 ; Hollenbeck v. Donnell, 94 N. Y. 342.
   By the Court.—Sedgwick, Ch. J.

Practically, the parties by contract have made the rents and profits of the kind referred to in the order appointing a receiver, a part of the security for the payment of the amount of the bond and its interest. Unless the receiver asked for should be appointed, the mortgagee would not get the lien upon the rents that the contract intends he should.

Possibly an answer supported by affidavits, that the mortgage itself and the covenant referred to, had never been made, and were, if made, void or invalid for a sufficient reason, might justify the denial of such a motion. In this case, however, the objection to the motion is, “that the mortgage was one given for a builder’s loan ; that the mortgagee omitted and failed to advance the moneys represented by the mortgage ; and that, in consequence of that default of the mortgagee, the mortgagor had been compelled to personally advance $30,000 to com-' píete the work, and then, to save his credit, to sell at a large reduction from their actual value the houses so erected.” The affidavits to support this objection are vague, and it is impossible to extract from their general statements enough of particular fact to enable a court to say that the defense is valid, and will probably succeed. If the court should hold that the mere possibility of success is .reason for denying the motion, the plaintiff might be deprived of all benefit of the covenant.

My opinion, however, is that such a defense is not in its nature a good objection to the appointment of a receiver. The covenant means that the mortgagee shall have the benefit while the litigation is pending, down to the only sufficient and competent mode of deciding the issues of an action.

The order should be affirmed, with $10 costs.

Van Vorst and Freedman, JJ., concurred.


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    HENRY DAY, Appellant, v. THE BANK OF THE STATE OF NEW YORK, Impleaded with THE MUNICIPAL GAS LIGHT CO. OF NEW YORK, Respondent.

      Joinder—Causes of action—Owner of stock against possessor of the certificate and the company.

    An owner of stock of a company, from whom the certificate thereof has been, taken wrongfully and without his knowledge, and delivered to a third party, cannot unite a cause of action or claim against said third party, with a cause of action in a claim against the company, unless the allegations of the complaint show that the several claims are parts of a single claim or cause of action.
    Allegations that plaintiff is the owner of certain stock of a company ; that the certificate thereof was wrongfully, and without his knowledge, taken from his possession, and delivered to a third party, having on it a power to transfer, the plaintiff’s name to which was forged; that said third party refused to return the certificate, and claimed to the company that the certificate had been duly assigned to him, and that he was the lawful holder thereof; and that in consequence the company, although requested, had refused to recognize the plaintiff as the owner of the shares; coupled with a demand for judgment that plaintiff be adjudged to be the owner of the shares, and that the company may be compelled to recognize him as such, to act accordingly, and to account for dividend.—Held, on demurrer, to be insufficient, under the above rule.
    Before Sedgwick, Ch. J., Van Vorst and Freedman, JJ.

      Decided December 7, 1885.

    Appeal by plaintiff from judgment entered upon order and interlocutory judgment sustaining defendant’s demurrer to complaint on the ground that it improperly unites causes of actions.
    The complaint averred that the plaintiff is the owner of certain shares of the capital stock of the defendant, The Municpal Gas Light Company, and was formerly in possession of the certificates for the shares ; that the said certificate was wrongfully, and without his knowledge, taken from his possession and delivered to the defendant. The Bank of the State of ¡New York, having upon it certain instruments purporting to authorize the transfer of the shares, and to be signed by plaintiff ; that plaintiff’s name had been forged upon the instruments ; that the plaintiff had requested the bank to return the certificate to him, and that it had refused to do so, and has claimed and does claim to, among others, the defendant The Municipal Gas Light Company, that the certificate has been duly assigned to it, and that it is the lawful holder thereof; that in consequence the defendant, The Municipal Gas Light Company, although requested, has refused to recognize the plaintiff as the owner of the shares ; and it demands judgment that the plaintiff may be adjudged to be owner of the said shares; that the Municipal Gas Light Company may be compelled to recognize him as such owner and to act accordingly ; to account for dividends already declared, which have not been paid to him, &c.
    The defendant, The Bank of the State of ¡New York, demurred on the ground that causes of action had been improperly united.
    The demurrer was argued at special term before Ingraham, J., who delivered the following opinion :
    “ It is rather difficult to determine from the complaint what cause of action the plaintiff has against The Municipal Gas Light Company. It is not alleged that the plaintiff’s shares of stock in The Municipal Gas Light Company have been transferred on the books of the corfrpany. It is not alleged that dividends have been declared on the said shock which the company refused to pay, or that The Municipal Gas Light Company has done any act inconsistent with plaintiff’s ownership of the shares of the stock.
    “ The general allegation that The Municipal Gas Light Company, although requested, has refused to recognize the plaintiff as the owner of the stock, is simply a conclusion and not a fact.
    “ On the transfer of the shares of stock of the company to the plaintiff, he became a member of the corporate body, and thereby became entitled to partake in the surplus profits of the corporation, and ultimately, on the dissolution of the corporation, to so much of the capital of the corporation as was not required to pay its debts (Burrill v. Bushwick R. R. Co., 15 N. Y. 216). And the owner of such shares in the stock of the company can, under some circumstances, maintain an action to compel the corporation to issue and deliver to him the written evidence of the existence of such shares, and of the ownership of them—a paper usually called a stock certificate.
    “The plaintiff in this action alleges that such a stock certificate has been issued by the corporation to him, and that such stock certificate is still outstanding.
    “ The mere declaration of a dividend by the defendant, which the defendant refuses to pay to the plaintiff, the lawful owner of the stock, would not justify this action, for by a declaration of such dividend the corporation becomes a debtor of the stockholder for the amount of the dividend declared, and for such debt he may maintain his action (Williams v. Western Union Tel. Go., 93 N. Y. 192).
    “ The mere possession of the written evidence of the ownership of the shares of stock by the defendant, The Bank of the State of New York, does not, as between itself and the gas company, give the bank the right to participate in the management, profits, or property of the defendant corporation. In order to vest the bank with the title to the shares of stock, as between it and the plaintiff, it is necessary that the plaintiff should have assigned by an instrument in writing his interest» in the stock of the corporation, and it is necessary to a valid transfer that the assignment and power of attorney to make all necessary transfers, should be executed by the owner of the stock (McNeil v. Tenth Nat’l. Bank, 46 N. Y. 330). But as between the purchaser and the corporation, until a transfer on the books has been made, he is not a stockholder, and has rio claim to act as such, but possesses merely a right to make himself a stockholder by the prescribed form (N. Y. & New Haven R. R. Co. v. Schuyler, 34 N. Y. 80).
    “The complaint does allege a good cause of action against The Bank of the State of New York for the recovery by plaintiff of the stock certificates.
    “In some cases an action in equity for the specific delivery of papers wrongfully detained can be maintained (Hammond v. Morgan, 51 Super. Ct. 478). This cause of action for the recovery of such certificate is entirely separate and distinct from any claim that the plaintiff might have against the corporation for the refusal to pay him dividends or allow him to participate in the management of the corporation; and while it might be, in an action brought by a shareholder of the corporation, to compel such corporation to issue to him evidence of his ownership of the shares of stock belonging to him, or to allow him to participate in the management of the corporation, that a third party claiming to own. some interest in the stock claimed by the plaintiff would be a proper party to such action, the facts as alleged in this complaint do not make out such a cause of action.
    “The controversy as to the ownership of the stock certificate is between the plaintiff and the bank only, and with that controversy The Municipal Gas Light Company has nothing to do, and the recovery, by plaintiff, from the bank, of the stock certificate and instrument purporting to be an assignment and power of attorney annexed thereto, will, so far as appears, be all the relief to which, from the facts alleged, plaintiff is entitled, and will vest the plaintiff with full title to the stocks.
    “ The demurrer must therefore be sustained, with leave to plaintiff to amend the summons and complaint on payment of costs.”

      Franklin Lord, attorney, and John E. Parsons, of counsel for appellant, on the questions considered in the opinion, argued:
    I. It is respectfully submitted that a good cause of action was alleged as to the gas company, and that to the action the respondent was a proper party. (1) The certificates of the gas company’s stock were issued by the company to Mr. Day. As a stockholder, he was entitled not only to dividends, but to all the other rights which belong to the ownership of stock, including a participation in management, the important right to vote at stockholders’ meetings, to examine books, to have dividends declared to his name, so as to be able to collect or transfer the right to them without impediment, etc. (2) If the gas company refused to recognize Mr. Day as a stockholder, he had a cause of action to compel it to do so ; and it was not necessary for him to wait until a dividend had been declared to another name, or a stockholders’ meeting had been had, at which his vote was- lost, before applying to a court for relief. An absolute refusal to recognize Mr. Day as a stockholder, put, too, upon the alleged transfer of his stock, justified an immediate action by him. -
    II. That a stockholder of a corporation, whose certificates have been wrongfully taken from his possession, and gone into the possession of third parties with forged transfers, may in equity sue his company if it claim that the stock has been transferred, and refuses to recognize him, and that to such an action the third party, whose wrongful possession of the certificates creates the difficulty, may be joined as a party, is settled by authority (Cottam v. Eastern Counties Ry. Co., 1 Johns. & Hem. 243 ; Johnson v. Renton, L. R. 9 Eq. 181, 188 ; Denny v. Lyon, 38 Pa. St. 98 ; Tayler v. Great Indian Ry. Co., 4 De Gex & J. 559 ; Lowry v. Commercial Bank, Taney G. C. Dec. 310, 399 ; Pollock v. National Bank, 7 N. Y. 274 ; Pomeroy on Remedies, &c., § 455 ; Cahoon v. Bank of Utica, 7 N. Y. 486 ; Reed v. Stryker, 4 Abb. Ct. App. 26 ; Lattin v. McCarty, 41 N. Y. 107 ; Meyer v. Van Collem, 28 Barb. 230 ; Palen v. Bushnell, 46 Ib. 24; Richtmyer v. Richtmyer, 50 Ib. 59 ; Hammond v. Cockle, 2 Hun, 495).
    Were there not direct authority, true principles of law would cover the case. Where the original certificates of stock are outstanding in third hands, it is reasonable and proper that the right of such third party shall be determined in the action brought by the stockholder, thug protecting the company from a double claim. It is in consequence of the claim of the respondent that the gas company refuses to recognize Mr. Day as a stockholder. To establish Mr. Day’s right, the substantial controversy is with the respondent. That being settled in this action, judgment against-the gas company will go as a necessary consequence. Were Mr. Day to be driven to the necessity of first suing the respondent in equity for his certificates, the gas company might still continue its refusal, and thus force Mr. Day to a second suit. The whole subject is one and should be disposed of in one action.

      Shipman, Barlow, Larocque & Choate, attorneys, and Joseph Larocque, of counsel for respondent, argued:
    I. The complaint states two causes of action : 1. A cause of action against the gas company to recover dividends, past and future, on shares standing in the plaintiff’s name, and to compel his recognition as a member of that corporation. 2. A cause of action against the bank to recover certain certificates of stock and assignments attached thereto, of which the plaintiff claims to be the owner, and entitled to the immediate possession.
    II. These two causes of action so united do not both belong to either one of the subdivisions of section 484. 1. The cause of action stated against the gas company, so far as it relates to dividends, falls under subdivision 1. It is a cause of action arising “upon contract, expressed or implied.” When a dividend is -declared by a corporation, the stockholder becomes the creditor of the corporation in respect of such dividend, and may maintain an action for its recovery. 2. The cause of action stated against the bank is for the recovery of chattels, viz., certain instruments described as stock certificates, with assignments and powers óf attorney attached, and this cause of action falls within subdivision T of section 484.

      III. The said causes of action are improperly united, in that they do not each affect all the parties to the action. 1. So far as the cause of action stated against the bank is concerned, the gas company is not affected by it, and is in no sense a necessary party to its determination. The two corporations are strangers to each other. The issue presented by that cause of action is as to the ownership and right to the possession of the certificates, assignments and powers. 2. So far as the cause of action stated against the gas company is concerned, the bank is not affected by it. The bank does not claim to be a member of the gas company, and until duly admitted to such membership, would not be heard to assert any right to any dividends declared on the shares in question, or to exercise any right of membership (Equitable Life Society v. Schermerhorn, 60 How. 377).
    IV. Neither can subdivision 9 of section 484 be successfully invoked to sustain the joinder of these causes of action, because : 1. As before shown, they respectively fall under different subdivisions preceding subdivision 9 ; and, 2. Because they do not arise out of the same transaction or transactions connected with the same subject of action, (a.) The transaction out of which the plaintiff’s cause of action against the gas company arises, occurred many years ago, when the plaintiff was admitted as a member of the gas corporation, (b.) The transaction out of which the alleged cause of action against the bank arose, is a recent transaction, with which the gas company had nothing to do, and relates to the acquisition by the bank of the possession of certain certificates, with powers of attorney and assignments thereto attached (McDonald v. Kountz, 58 How. 152 ; Thompson v. St. Nicholas Bank, 61 Ib. 163 ; Wiles v. Suydam, 64 N. Y. 173 ; Equitable Life Assurance Soc. v. Schermerhorn, 60 How. 477 ; Keep v. Kaufman, 56 N. Y. 332).
    V. The English authorities relied upon by the learned eounsél for the plaintiff below, and the cases arising in other states to which he refers, it is respectfully submitted, throw no light upon the questions presented in the case at bar. These questions are controlled by the provisions of section 484 of our Code, and by the decisions of our tribunals giving construction to that section, and though the books are full of cases in which the provisions of this section have been construed, no authority in them can be found in conflict with the views expressed by this court at special term, in sustaining the demurrer in the case at bar.
   By the Court.—Sedgwick, Ch. J.

I think there can be no doubt that the complaint sets out such facts as would be the foundation of two separate actions, one against each defendant. On a demui'rer of this kind, it is not a question as to whether the statement of facts is sufficient to show that the causes of action exist. Only the natures of the causes of action are to be considered. If there be no other consideration to be invoked, then, under secti'on 484 of the Code, the complaint is defective, because each cause of action does not affect both defendants.

But it must be apparent that this does not of itself necessarily decide the controversy. For there may be a narration in a complaint, which sets up causes of action severally, and yet may also show what may be called another or third cause of action, which is but a single cause, embracing the two other causes. Such pleading occurs generally in an action to enforce an equity remedy. A familiar example is a judgment creditor bringing an action to compel payment of his judgment out of property that has been conveyed, as alleged, in fraud of creditors, by separate transfers to some or all of the defendants severally. In such an instance, the plaintiff might proceed against the defendants severally, and it would appear on the face of the complaint that there were several causes of action. Tet in fact the complaint would set out but one cause of action, which would be the right to pursue the whole of the debtor’s property as a totality, and the several transferees, as claiming parts of the whole, would be competently made defendants to allow the plaintiff’s remedy to be enforced.

It must then be asked, what remedy beside the two causes of action just alluded to, does the plaintiff claim, which embraces the two, or to enforce which completely, it will be necessary or important to plaintiff to enforce the two.

Looking first at the claim against the bank, it will not be necessary to enlarge the proposition that all of the plaintiff’s right as against it could be fully enforced without the presence of the gas company as a defendant. The gas company is not averred to have or claim any interest which, if setup, would appear to affect the plaintiff’s claim that the bank should deliver up the certificates.

The next basis for an equitable single cause of action to be examined is the plaintiff’s claim against the gas company. What is that claim ? The complaint states, that the bank is in possession of the certificates of shares, and claims to be the holder of them, through transfers to which plaintiff’s name had been placed, by forgery, and has claimed to the gas company “ that by reason of the said papers, the said stock has been duly assigned to it, and that it is the holder thereof.” The complaint then avers: that “in consequence, the defendant, The Municipal Gas Light Company of New York, has refused to recognize the plaintiff as the owner of the said shares of stock.” It is very important to discover what fact is pleaded in the phrase, “has refused to recognize.” The complaint does not aver that the gas company has transferred to the bank upon its books the shares, or has declared any dividend to shareholders, or has even threatened to transfer to the bank. These things, not being pleaded, are presumed not to exist. If the plaintiff claimed against the defendant gas company, that it had transferred the shares to the bank, and that it should replace them in the name of the plaintiff, it might plausibly be argued that the bank could be made a party as an adverse claimant. . Such is not this case. The refusal to recognize, &c., can amount to nothing more than the expression of what may be called a judgment of the gas company, as to the rights of plaintiff. As there is no demurrer to the sufficiency of this as a statement of the cause of action, the question is not whether there can be judgment for it, but it is whether the claim of the bank, as set up in the complaint, has any relation to the position of the gas company, which would deprive the plaintiff of the advantages of the judgment he claims against thé company. It does not seem to have any relation. It seems that the refusal to recognize was the consequence of the bank making the claim set out in the complaint, upon certain assertions of fact, in the nature of evidence ; but that would be immaterial to the plaintiff obtaining judgment for a recognition, if the plaintiff could furnish sufficient evidence that the assertions of fact were untrue. The plaintiff could enjoy such a judgment to every extent, and the claim of the bank would not be an incumbrance upon it, or impair or diminish its advantages. It could be obtained with the certificate in the hands of the bank ; for on the pleadings it is still plaintiff’s property, and the apparent assignment upon it is really a nullity. I do not, therefore, see that the claim against the bank has any connection with that against the gas company.

Nor do I perceive in the complaint any claim of the plaintiff of which the several claims against the defendants are parts or branches. So far as it may be the right to obtain a delivery of the certificate from the bank, the refusal of the gas company to recognize the plaintiff is immaterial. There is no claim to obtain title or possession of which it is averred the plaintiff has been wrongfully deprived. The complaint shows that both are perfect in plaintiff. The claims are several in their nature, and have no bearing upon a common subject-matter, unless it be that of possession or title, and for neither of these is the action brought. I am of opinion that the case was correctly decided below.

Judgments and orders appealed from affirmed, with costs.

Van Vorst and Freedman, JJ., concurred.