author: By the Court.—Sedgwick, J. Freedman, J.—[Concurring.]

text:
    HENRIETTA C. HAVEMEYER, Plaintiff and Respondent, v. JOHN C. HAVEMEYER, et al., Defendants and Appellants.

    I. POOLING AGREEMENT.
    1. Construction of.—Rights and duties of parties under.

      {a) Defendants, owning and controlling a certain amount of a certain stock, and plaintiff, with others, owning a certain other amount of the same stock, entered into an agreement, whereby it was agreed that neither quantity of stock should be sold, unless it was in a sale that included the other, and whereby defendants authorized plaintiff’s agent to sell to P. the stock which defendants owned and controlled, for 75 per cent, of its nominal value, and certain bonds owned by them for 90 percent-. of their nominal amount in cash, if P. should put his offer to pay that in writing; and whereby defendants further agreed that during the negotiation they would neither buy stock, nor do anything else to interfere with the negotiations.
    Held,
    1. That upon the evidence, taking it most favorably for the plaintiff, the negotiations referred to in the agreement were only those for a sale to P. on the terms specified in the agreement.
    2. That upon P.’s declination to purchase on the terms specified in the agreement, and the communication to defendant, by plaintiff’s agent, of such declination, with no intimation that he (plaintiff’s agent), was about to go on with negotiations with P. to effect a sale to him, the negotiations, pending which defendants agreed to inaction were at an end; and defendants were at liberty thereafter . to make such purchases as they might desire.
    3. If it is claimed that a purchase by defendant of a quantity of the stock pending the negotiations is a breach, plaintiff should show,

      (a) That such purchase did interfere with the negotiations.
    (5) The damages resulting from the effect of that breach. The damages recoverable would be proportioned to the proved effect of the breach.
    4. A letter sent by plaintiff’s agent to P., and answered by P. before the making of the agreement (defendants being ignorant of the letters), in which letter plaintiff’s agent stated to P.: “I desire to work in your interest, and not in the interest of those who have the present control. I desire to sell the stock I control, and though I cannot commit myself just yet, I would sell it, at the average price you pay for the balance, which, with mine, would give you a majority of it. I advise you of this, that you may feel assured that if you contemplate purchasing the road, you may depend on the 10,000 or 12,000 shares I hold. . . . I would willingly assist you, if you think I can, in getting the majority of the entire stock ”—P. in answer says: “Thanking you for kind offers of assistance, we will, if necessary, make use of them ” (the offer contained in the letter of plaintiff’s agent not having been withdrawn) —absolved defendants (who were included among those in control), from any duty or obligation they might otherwise be under in respect of the clause for inaction.
    5. The negotiations with P. for a sale on the terms stated in the agreement, having come to an end, nothing remains of the agreement, except the provision that neither lot should be sold without the other.

      (a) This part of the agreement (the others having ceased to be operative), could be terminated by either party on notice to the others, and the plaintiff’s request for leave to sell separately, acceded to by defendants, annulled the agreement in this respect.
    1. This, though plaintiff, at the time of the request, was not aware that defendants had purchased a large quantity of stock, which, with that before held by them, constituted a majority.
    II. Damages, measure of.
    1. Combining stock, damages for breach of agreement to.

      (a) Value of stock before breach—charge as to.
    1. Although the price paid on a sale, which is claimed to constitute a breach of an agreement for a combination of stock, is competent evidence of the value before breach, and the judge charged the jury that in determining the market value at the time of the breach, they were at liberty to consider the price paid on the sale claimed to constitute the breach, but were not concluded by it, but should consider it in connection with the other evidence on the subject, yet it appearing that the sale was one which gave to the purchaser a majority of the stock, and the complaint stating that the person who became the purchaser, in making" the purchase, desired to control a majority of the stock, and for that purpose would pay a larger price than after bis purchase could be obtained, and there being evidence tending to prove that without a combination, which would constitute a majority, there was no market value for the stock, and that on a combination of a majority of the stock, a higher price could be obtained, a refusal''to charge “that in estimating damages the jury cannot take into account any mere chance of making uncertain profits, nor any speculative value arising from or depending upon the possibility of the plaintiff combining her stock with that of other persons.”
    Before Sedgwick, Speir and Freedman, JJ.

      Decided December 1, 1879.
    Held,

      sufficient cause for a new trial.

    Appeal by defendants from judgment and from order denying motion for a new trial.
    The complaint stated that Albert Havemeyer died possessed of certain shares of stock of the Long Island Railroad Company. That his administrators, acting by one of them, Henry O. Havemeyer, agreed, in April, 1875, with the defendants, who owned other shares of the stock of the same railroad, that “neither the defendant’s stock nor the Albert Havemeyer stock should be sold, or should unite in a sale which should not include the stock of the other party, unless with the consent of that party that in August, 1875, the Albert Havemeyer stock was partly divided among the distributees of his estate, one of them being the plaintiff, and the administrators continuing to hold certain shares which the intestate had held in trust.
    That in November, 1875, the said Harry O. Havemeyer, acting for the parties in interest, secured definite proposals from one Poppenhusen for a purchase of the whole of the stock. “He immediately communicated with the defendants on the subject; thereupon the agreement that neither lot of stock should be sold without the other was reiterated between the parties ; and it was further agreed that the said Harry O. Havemeyer, acting as aforesaid, should proceed with the negotiation for a sale to Mr. Poppenhusen ; that the defendant should aid by obtaining the union of other holders, and that if Mr. Poppenhusen were willing to pay at the rate of seventy-five per cent, of the par value, a sale should be made, and that the defendants would.join.”
    The breaches of their alleged agreements are that about December 14, 1875, “ an offer was obtained from Mr. Poppenhusen which would have secured to the defendants, and the parties represented by them, at the rate of seventy-five per cent for- their stock. This was communicated to the defendant, and thereupon the defendants, in violation of their agreement previously made, declined to join in the sale.”
    Another allegation, which may be taken to be a charge of a breach, wras that subsequently, and on or about January 26, 1876, the defendants did sell to Mr. Poppenhusen, including their own stock and the stock of other parties, making altogether about thirty-five thousand shares, leaving out the Albert Havemeyer stock.
    Further allegations, containing matters upon which the plaintiff, at trial, relied, as making a breach, were that while the defendants were professing to co-operate, and werd thus preventing the parties interested in the Albert Havemeyer stock from acting independently to effect a sale, they were themselves using the time to, and they did, make an arrangement with holders of stock, with whom they volunteered to communicate for the common benefit, so as individually to represent and control their stock, and particularly the stock which had belonged to Mr. Charlick, “ which was not in the arrangement previously referred to. They thus secured the control of a majority, exclusive of the Albert Havemeyer stock: this enabled them to, and they used it, to defeat a sale, which should include the Havemeyer stock, thus causing to the parties interested in that stock the very loss and jury which it had been the object of the arrangement and agreements between them and the defendants to prevent.”
    On the trial, Harry O. Havemeyer, a witness for the plaintiff, who was her agent through the transaction, testified as follows: “in April, 1875, I stated to defendant (J. C. Havemeyer), that I wished to combine it (that is, the Albert Havemeyer stock) with his, with the view of selling it at the earliest possible time, that there was no market for it unless it was combined with enough of the stock to form a majority, and I wished to combine, so that his stock should not be sold without mine, and my stock should not be sold without his, as our influence together was sufficient to control the other fifteen thousand shares so as to form a majority. He stated that he was perfectly willing to enter into such a combination, provided the management of the road should go into their hands.” On his direct examination, he was asked, “ Will you state all that was said on the subject of an arrangement to unite the stock which you represented with any stock which John C. Havemeyer stated he or the defendants represented or controlled, .in that interview % ” His answer was, “We were to unite the stock; I said that I wished to combine my stock with his and the stock he repfésented in these fifteen thousand shares to oust Mr. Charlick from the management of the road, to combine it, and that neither part of the stock should be sold without including in the sale the other, to combine it so that when an opportunity offered for its sale, that a majority of the entire road could be sold, and thereby bring a higher price. He said that he was perfectly willing to enter into such a combination, provided I gave him the management of the road. . . .' I said I would consent to that.”
    The witness stated that he began negotiations for a sale of a majority of the stock to Mr. Poppenhusen, that in the course of them the defendants had expressed their willingness to sell their stock at seventy-ñve per cent, and certain bonds of railways they owned at-ninety per cent. He said he began these negotiations in September, 1875, and continued them down to December 15, 1875. He further said that on November 24, 1875, he had an interview with the defendants, and that “ I told John I had called to renew our agreement, and that I wanted him to state again, that he would sell his stock at seventy-five cents and his bonds at ninety cents, and I wanted also his brother Henry to say so : that the negotiations had reached a point where they were to be consummated, and I did not wish to have any misunderstanding about it. , . . I said then, John, you authorize me to sell a majority of the stock at seventy-five cents and the bonds at ninety cents. He said he did. I addressed the same question to Henry, and he said yes. I said this is a transaction, that involved $1,250,000 and they must pledge themselves not to have any transaction in the stock in any way ; that they must neither buy nor sell; that the position must remain exactly as it was as in the event of its not being sold, the position was to remain unchanged . . they stated that they would . . all this was acquiesced in.”
    The question was then asked, on the direct examination, “ At that interview, were the terms of what you call the agreement repeated, and if so, what was said upon the subject of what the agreement was ? You said, you wished to renew the agreement ?” The witness answered, “I recall that John stated, 1 Suppose you cannot get the price, suppose the negotiations fall through V and I stated that the affair was to remain as it was, until some arrangement is made, and he stated that was all right.” The witness testified that the defendants required that Poppenhusen’s proposition to buy must be in writing’.
    In a deposition taken in another action the witness testified in reference to the interview of November 24: “John G. Havemeyer said that pending the negotiations with Messrs. Poppenhusen, they would have no transactions in the stock in any way, shape or manner, neither buy nor sell, nor do anything to depreciate. I stated the same, that I did not wish to have anything transpire that would interrupt the negotiations, neither were to buy or sell or have anything to do, the situation should remain just as it was. Q. What, if anything, was said about how long any such arraagement should continue; what was said about time in that interview ? A. Pending the negotiations nothing was to be done, no stock was to be bought, no stock was to be sold. Q. Was any period of time mentioned in the interview having reference to any matter; was anything said about time that you now recall in that interview ; I mean about some time in the future ? A. In the event of the sale not being consummated, we were to meet and decide what to do with the stock. Q. I wish to know whether, in reference to any subject mentioned in that interview, you talked over any fixed and definite period of time or number of years, during-which anything was to continue ? A. Nothing was to be done pending the negotiation, that is a matter of time; in the event of their not being successful the situation was to remain, as it always had been, until some other arrangement had been made ; that was the understanding. Q. With reference to that, was any number of years spoken of? A. Three, I think. Q. If it was said in that interview what was to be done or what was not to be done for three years or any other number of years, I want you to state to the jury what was said. A. I recollect of something being said about three years. I don’t exactly recollect what it was.’’ On the present trial, the witness was not able to testify that a period of time of the kind referred ,to had been mentioned, or if it had been, to what it was applied.
    The testimony in reference to supposed breaches of agreement, by defendant, was in substance, that on ¡November 19, one of the executors of Charlick, on request of defendant, called at the house of defendant Henry H., in reference to the Charlick stock. There was another interview on ¡November 26, or 27. The definite purpose of these interviews, or what was done at them, is not disclosed by the evidence. The plaintiff read as evidence on her own behalf, from the deposition of one of the defendants on this point the testimony: “ We went to learn, first, whether they had been approached for the sale of their stock ; second, what the feeling of Mr. Charlick was toward us, whether friendly, and whether they were willing to sell, and if so, at what price.,” The stock of Charlick’s executors was, after several other interviews, purchased by the defendant on December 11. On Debember 15, plaintiff’s counsel wrote to defendant: “To prevent the possibility of misunderstanding, I think it better to put in writing what passed between us, this morning. What I asked was, whether you desired to join in the sale of the L. I. E. E, Co. Your answer was you did not.” To this one of the defendants made a memorandum: “I declined to join in further negotiations for the sale of the L. I. stock I hold and control.”
    About January 25, 1876, the defendant sold the stock they owned and controlled to Poppenhusen, for 75 cents on the dollar.
    The testimony on which the defendant relied as showing that, if there were an agreement of the kind testified to by the plaintiff’s witness, the plaintiff had committed the first breach, was in substance as follows. Before the interview of November 24, the plaintiff’s agent, H. 0. Havemeyer, had written to Mr. Poppenhusen the following letter :
    “Dear Sir :—A Mr. Godefroy has had some conversation with me, regarding the stock held by the estate of the late Albert Havemeyer. Will you be kind enough to inform me, if you contemplate purchasing a controlling interest in the Long Island Railroad? Not knowing Mr. Godefroy, I am not sure that he is authorized to represent you in tipis matter.
    “ What you choose to tell me, will be regarded strictly as confidential, as in this matter I desire to work in your interest, and not in the interest of those who have the present control. I desire to sell the stock I control, and could sell it, though I cannot commit myself just yet, at the average price you pay for the balance, which, with mine, would give you a majority of ib. I advise you of this, that you may feel assured, that if you contemplate purchasing the road, you may depend upon the 10 or 13,000 shares I hold.
    “The sale of this stock is of such importance to the persons I represent that I would willingly assist you, if you think I can, in getting the majority of the entire stock. An early reply will oblige.
    “ Yours truly,
    “H. O. HAVEMEYER.”

      On the same day, and before the interview with the defendant on that day, Mr. Poppenhusen wrote to Mr. H. O. Havemeyer:
    “In reply to your favor of to-day I beg to say, that Mr. Grodefroy is authorized to act for us, in the matter of L. I. R. R. stock.
    “Thanking you for kind offers of assistance in the matter, we will if necessary make use of them.”
    The defendants were not informed of this letter or answer.
    The explanation by Mr. H. O. Havemeyer of his letter was, that shortly before his writing it he had been told by Mr. Grodefroy, that the defendants would be treacherous to him, and he wrote this letter, that he might proceed to sell the Albert Havemeyer stock, if they were treacherous, or, as stated by the learned counsel for plaintiff, “ he explains that the reference was to the agreement between him and the defendants, which made it impossible for him to sell, and that the letter was written on an apprehension that the defendants intended to act treacherously, so that if they did, he might be in a position to protect himself so far as possible.”
    Prom November 24, Mr. H. O. Havemeyer proceeded to negotiate with Mr. Poppenhusen for a sale of the stock and bonds, on the terms limited by the defendants. On December 2, Mr. Poppenhusen wrote to Mr. H. 0. Havemeyer, ‘ ‘ I beg to inform you, that your proposition of yesterday, made to me verbally, cannot be accepted, but that we should be willing to close the matter on the basis submitted to you this morning.”
    On the same day, December 2, Mr. H. 0. Havemeyer wrote to the defendants :
    “The proposition for the sale of the L.. I. stock and bonds to Mr. Poppenhusen has been declined by him, and he has submitted one in return, which I have not submitted to you, for the reason that yon expressed no desire to entertain anything different froth that agreed upon, viz., cash.”
    After that time, the defendants gave no authority to Mr. H. O. Havemeyer to sell the stock held or controlled by them, but he made some negotiations with Mr. Poppenhusen on the subject, and received an offer upon terms which the defendants had not agreed to take.
    Before the letter of plaintiff’s counsel, written. December 15, Mr. II. O. Havemeyer, on December 14, saw one of the defendants and said, “I have sold the road.” He referred to a sale which he supposed Mr. Poppenhusen would make on other terms than those that had been agreed to by the defendants. The defendant answered, “ Ido not wish to sell.” I remonstrated with him. He said, “I don’t wish to sell.” I said, “Do I understand you to say yon will not sell? ” He said, “I will not sell.” Then I said, “I suppose I am at liberty to sell my stock.” He said, “ You are.” Then I left him. That was the last conversation he ever had with the defendants.
    Immediately thereafter, Mr. H. 0. Havemeyer endeavored to sell the Albert Havemeyer stock, irrespective of the defendants’ stock.
    At the request of the plaintiff’s counsel, the court charged: “First. If the jury find, from the evidence, that before the election of April 13, 1875, there was an agreement between the defendants and Harry O. Havemeyer, he acting for the parties interested in the Albert Havemeyer stock, by the terms of which the stock represented by Harry 0. Havemeyer and that which the defendants represented that they owned and controlled, should be combined for the purpose of improving its value by a change in the management of the road, with a provision that neither stock should be sold without including the other—that such agreement was made in view of the danger that either lot of stock might unite in a sale to Poppenhusen, leaving out the other, and that thereby the other would lose the benefit of a sale at a full price, and might become largely depreciated in value ; that in pursuance of such agreement the management and control of the road passed into the hands of the defendants ; that this agreement was renewed in the fall of 1875, after the division of the Albert Havemeyer stock, and the transfer to the plaintiffs of the nine hundred and twenty-six shares, Harry O. Havemeyer still continuing to represent the Albert Havemeyer stock, and that a further agreement was then made, that if a sale could be effected at seventy-five cents on the dollar, the defendants would include the Albert Havemeyer stock and the stock which they owned and controlled, and that the negotiation of such sale should be put in the hands of Harry O. Havemeyer, with a further provision that, during the negotiation, the defendants should neither buy stock, nor do anything else to interfere with negotiations ; and if the jury are further of the opinion that such agreement was broken by the defendants,—then they are responsible in damages for the loss which thereby resulted to the plaintiff. Second. If the jury find, from the evidence, that, while Harry O. Havemeyer, and the parties represented by him, were acting according to the provisions of such agreement, and were negotiating for a sale, the defendants were engaged in making preparations to enable them successfully to break it, and to defeat a sale of plaintiff’s stock ; that, for that purpose, they procured the undivided control of some seven thousand shares of stock held in Philadelphia, that they purchased the Charlick stock, consisting of some nine thousand and odd shares at sixty-five ; that as soon as they felt themselves strong-enough to defeat the agreement they refused to unite in the sale, but, instead, made arrangements with other stockholders, by which they were enabled to combine a majority of the stock, excluding the Albert Havemeyer stock, but including the defendants’ purchased stock; that they then sold to Mr. Poppenhusen at seventy-five cents on the dollar ; then the plaintiffs are entitled to recover the difference between the fair cash and market value of the plaintiff’s stock at the time of the breach, and the amount to which the value was reduced by the action of the defendants, with interest.”
    The court also charged : “ Th.e plaintiff also claims that on November 24, 1875, after the division of the Albert Havemeyer stock among the next of kin entitled thereto, and the transfer to the plaintiff of her nine hundred and twenty-six shares of stock, the agreement of February, 1875, was renewed, in so far as it-prohibited those interested in the stock derived from Albert Havemeyer and the defendants from selling ox-uniting in a sale which should not include the stock of the other parties, unless with the consent of the other party; that it was further agreed at that time, between Harry O. Havemeyer, as the representative of the Albert Havemeyer stock, and the defendants, that if sale could be effected at seventy-five cents on the dollar, the defendants would include the Albert Havemeyer stock and the stock which they themselves owned and controlled; that the negotiation should be put in the hands of Harry O. Havemeyer, with a further proviso, that pending the negotiation for a sale, the defendants should neither buy stock nor interfere with the negotiation.” And that, “if it be px-oved by the evidence, that such an agreement was actually entered into by the defendants with those who owned and had the right to control the disposition of the Albert Havemeyer stock, and such agreement had not been abandoned by the parties, and was subsisting and in force, when the defendants purchased - the Charlick stock in December, 1875, and sold their stock to Poppenhusen in January,'1876, and such purchase and that sale was made without their consent, then there is such a breach of the agreement as will entitle the plaintiff to recover damages.”
    The j ury found a verdict for plaintiff.

      G. W. Bangs, attorney, F. N. Bangs and John K. Porter, of counsel, for appellants.

      J. Hampden Dougherty, attorney, and John E. Parsons, of counsel, for respondents.

       On a previous appeal (43 N. Y. Super. Ct. 506), it was urged that such an agreement as the one in question was illegal and void as contravening public policy; the court, however, sustained the agreement. On that appeal, other questions were also presented, which are not presented by the present appeal book. The questions here presented and decided were not presented on the former appeal.

   By the Court.—Sedgwick, J.

An outline of the case is that the plaintiff, and others, were the owners of a quantity of the shares of the stock of the Long Island Railroad Company. The defendants owned and controlled another quantity of that stock. The plaintiff and her associates, acting by an agent, and the defendants agreed that neither quantity of stock should be sold, unless it was in a sale that included the other quantity, and the defendants then authorized plaintiff’s agent to sell to Mr. Poppenhusen the stock which defendants owned and;' controlled, for seventy-five per cent, of its nominal value, and certain bonds owned by them for ninety per cent, of their amount, in cash, if Mr. Poppenhusen should put his offer to pay that in writing. The defendants further agreed that during the'negotiations for the sale, they would neither buy stock nor do anything else to interfere with the negotiations.

Plaintiff’s agent then began negotiations for a sale-on these terms. While they were on foot, the defendants had interviews with the executors of Mr. Charlick, to learn if they would be willing to sell to the defendants stock of the same railroad owned by the executors, and on what terms. On December 2, the plaintiff’s agent wrote to the defendants, that Mr. Poppenhusen had declined the proposition for the sale of the stock and bonds, but had submitted5 one in return, which the agent did not submit to the defendants, for the reason that they had expressed no desire to entertain anything different from that agreed upon, viz.: cash. On December 11, the defendants bought from the executors of Charlick, their stock, at sixty-five per cent, of the nominal value. On December 14, the plaintiff ’ s agent, in ignorance of ,the purchase of the Charlick stock, obtained from the defendants leave to sell the stock in which plaintiff was interested, by itself, and proceeded to attempt to sell it without including defendants’ stock.

On January 26, 1875, the defendants sold to Mr. Poppenhusen the stock owned and controlled by them for seventy-five per cent, in cash. The plaintiff claimed that the purchase from Charlick’s executors and the sale to Mr. Poppenhusen, were violations of defendants’ obligations to plaintiff.

After all the evidence was in, the defendants’ counsel moved to dismiss, upon several grounds. One of them was that “even if the pretended agreement was made, continuing and valid, the purchase by the defendants of the Charlick stock on December 11 (the negotiation for a joint sale, pending on November 24, having ended on December 2), was not a breach of such agreement.” They also asked the court to charge, that 1 ‘ the evidence conclusively shows, that on or about December 14, 1875, and before the sale to Poppenhusen, which is complained of by the plaintiff, the plaintiff was by the consent of the defendants released from any further obligation, to hold her stock or keep it out of the market.”

A further request to charge was, that the conduct of the parties after" December 14, 1875, as established by undisputed evidence on the part of the plaintiff and given by the witness, Parsons, is inconsistent with the theory, that after that date there was any binding contract or obligation in force between the parties. They also asked the court to charge, that “ the purchase by the defendants, at the time and under the circumstances given in evidence, of the stock known as the Charlick stock, was not a breach of any contract established by the evidence to have been made at any time between the plaintiff and the defendants also, that “ upon the whole case, the defendants are entitled to a verdict.”

Beyond controversy, the complaint does not set out any contract of which the purchase of the Char-lick stock was a breach.

The court instructed the jury to find whether the parties, before April, made any arrangement with a provision “ that neither lot of stock should be sold without-including the other,” and whether this agreement “was renewed in the fall of 1875;” “and a further agreement then made, that if a sale could be effected at seventy-live cents on the dollar, the defendants would include the Albert Havemeyer stock, and the stock which they owned and controlled, and that the xiegotiation for such sale should be put in the hands of Harry O. Havemeyer, with a further provision that during the negotiation, the defendants should neither buy stock nor do anything else to interfere with negotiation.”

Of course, the purchase of the Charlick stock did not violate the provision, “ that neither lot of stock should be sold without the other.” Was it a violation of the other provision, that “during the negotiation the defendants should neither bay stock nor do any- • thing else to interfere with the negotiations ?” By the charge (and upon it the jury found for the plaintiff), the negotiations, during which the defendants agreed not to buy stock and not to do anything to interfere with negotiations, were “the negotiations for such sale.” The sale referred, to was one to be made for cash, at seventy-five per cent, for the stock, and ninety per cent, for the bonds, if a written proposition to buy on those terms should be made by Mr. Poppenhusen. The evidence shows that such was the sale, although the charge refers to it as a sale for seventy-five per cent, for the stock alone. The evidence, by the construction most favorable to plaintiff, shows that defendants’ promise referred only to negotiations for a sale of the kind that has been described. The witness, on this point, for plaintiff, was her agent, and he testified: “I told John . . I wanted him to. state again that he would sell her stock at seventy-five cents, and his bonds at ninety cents, and I wanted also his brother Henry to say so ; that the negotiations had reached a point where they were to be consummated.” After testifying to defendants’ consent to this, he continued, “ that they must neither buy nor sell, that the position must remain exactly as it was, as in the event of its not being sold, the position was to remain unchanged.”

It should be here observed, that the complaint did not state or base any claim, upon an agreement “that the position was to remain unchanged.” The plaintiff on the trial did not make any claim upon it; nor did the charge of the court leave it to the jury, or in any way refer to it. Its significance here, is to show, that the negotiations referred to were those for the specific sale mentioned in the testimony.

The witness proceeded to say, “I recall that John stated, ‘ Suppose you cannot get the price; suppose that negotiations fall through,’ and I stated then the affair is to remain as it was, until some new arrangement is made.”

The testimony of the witness on another trial, read on this was, “ I stated to John, that my negotiations for obtaining a bid for seventy-five for the stock, and ninety for the bonds would probably be successful, and, in connection with that,” John C. Havemeyer said that, pending the negotiations with Messrs. Poppenhusen, they would have no transactions in the stock in any way, shape or manner; neither buy nor sell, nor do anything to depreciate; I stated the same, that I did not wish to have anything transpire that would interrupt the negotiations.”

The next question is, did the evidence incontrovertibly show that the negotiations had ended, before the defendant bought the Charlick stock on December 11. On December 2, the witness wrote to the defendant this letter. “ Dear sir : The proposition for the sale of the Long Island stock and bonds to Mr. Poppenhusen has been declined by him, and he has submitted one in return, which I have not submitted to you, for the reason that you expressed no desire to entertain anything different from that agreed upon, viz: cash.” It must be seen, that the defendants were notified, that the negotiation for seventy-five cents for the stock, and ninety cents for the bonds in cash, had been ended by Mr. Poppenhusen declining to make the purchase, and making a counter proposition, which plaintiff’s agent did not think worth while even to describe to the defendants.

The letter gives no intimation to the defendants, that the agent was about to go on with negotiations. If he did so, they were new negotiations, for himself, and not authorized by defendant. There is no proof that before December 11, he ever informed defendants that he was continuing negotiations with Mr. Poppenhusen. He testified that he had one interview with the defendants between November 24 and December 14. He dbes not fix the date of this interview, or describe its contents, so that it would appear to refer to negotiations after December 2. On the other hand, his testimony was, that it might have occurred on the Monday after November 24. If there were in fact any negotiations of any kind, after December 2, there was no testimony that they were for a sale on the terms prescribed by «defendants, for, whenever the negotiations took place, the only testimony as to their character was such as •could be inferred from their consummation, viz., a written offer by Mr. Poppenhusen to buy on terms, which had not been acceded to, and which the defendants were not bound to accept as the court upon the trial charged. In this way it appeared on the trial by evidence, against which the jury could not find, that the negotiations referred to in the promise, had ended on December 2, and also that the agent of plaintiff had informed the defendants and led them to believe that they had ended. From this time, the defendants were not bound by any agreement to refrain from buying stock.

There was no proof that the purchase of the Char-lick stock, or the bargaining with the Charlick executors for its purchase “ interfered with the negotiation,” to use the words of this charge. No proof was given on the subject. Least of all, was there anything tending to show that this purchase or bargaining had the effect of influencing Mr. Poppenhusen to decline the defendant’s terms. If this had been a ground of a recovery by plaintiff, it would have been necessary to tell the jury that the plaintiff could recover for such damages only as the evidence showed she had suffered from that breach. The damages would have been proportioned to the proved effect of the breach.

Moreover, if the liability of defendant arose from their having “interfered with the negotiations,” the just conclusion from the evidence is that the conduct of plaintiff’s agent was such that the agreement on this point ceased to be binding upon the defendants before any alleged breach by defendants. On the day of the alleged agreement, and before it was made, the plaintiff’s agent wrote to Mr. Poppenhusen the letter of November 94, and also received an answer to it. The defendants made the agreement in ignorance of these letters.

The agent of plaintiff testified that that part of the letter which stated “ I cannot commit myself just yet,” referred to his being at that present time bound to sell the stock, inrespect of which he was agent, with the defendants’ stock, and not separately, and that he wrote the letter from a fear that the defendants would be treacherous, and would endeavor to sell their stock apart from plaintiff’s stock. Whatever was the1 motive, and if good or otherwise, the letter informed Mr. Poppenhusen that in case the plaintiff’s agent ceased to be committed, he would sell to Mr. Poppenhusen the large amount of stock he controlled, which was, in fact, about one-third of a majority of the stock, and would assist him in getting enough besides to make a majority, and would act against “those in control,” which phrase included»the defendants. He knew the fact, that it was in Mr. Poppenhusen’s power to release him from his committal to defendants, by refusing to buy on the terms which defendants had prescribed, and whicli he Avas about to present. He thus influenced Mr. Poppenhusen’s mind against agreeing to defendants’ proposition. He presented a motive that was unfavorable to deféndants, and Mr. Poppenhusen’s answer, that if necessary he would act upon the kind offer, shows the effect.

In substance, the agreement of defendants to allow the plaintiff’s agent to negotiate for a sale of defendants’ stock, was, as argued by the counsel for defendants upon the trial, “a mere authority to Henry O. Havemeyer.” Its tenor professed or purported no more. There was no antecedent obligation of defendants to sell their stock, or to place it in the hands of plaintiff’s agent for sale. The plaintiffs agent or the plaintiff had no interest in the subject matter of the authority ; that is, the defendants’ property. In this way the plaintiff’s agent became defendants’ agent to negotiate, and was bound to the utmost fidelity to defendants, and could not rightfully continue to be agent after a violation of any of his obligation. The plaintiff was bóund by his acts.

If the arrangement be considered as an agreement, its promises were mutual. The letter referred to was a first violation of the agreement, and was such a breach that, thereafter, the agreement came to an end, and therefore the defendants ceased to be bound by it. Or if it be considered only as an authority to an agent, his violation of his duty as agent terminated his power to bind his principal, or to continue to act for him.

It was suggested that, as the letter was sent and answered before the arrangement of November 24, it could not be a violation of the agreement then made. But the effect was operative, after the negotiation began, as the answer to the letter shows. It is for the effect that there was responsibility. The offer contained in the letter was not withdrawn, but, as it contemplated, remained in the hands of Mr. Poppenhusen, to await the result of the negotiation of defendants’ proposition.

After the arrangement in respect of the sale, on defendants’ terms, ceased to bind the defendants of the so-called agreement, remained only the provision that neither lot of stock should be sold without the other. This did not forbid any purchase that either party chose to make. Either party might bring it to an end at pleasure, before a breach. Giving to it the greatest force that can be claimed for it, either party could end it by notice. Its benefit to the parties was, that it tended to give an opportunity for the sale of the two lots of stock together ; but it did not bind either party to make a sale. Either party- could obtain the power to sell separately, by a notice ending the agreement. Without going into the question of whether the arrangement possessed the constituents necessary by law to a contract, or, particularly, of whether there was sufficient consideration, it will not be doubted that the only consideration that sustained the contract was the mutual promise not to sell separately. When the promise ceased to be mutual, the contract ceased. By the undisputed testimony, plaintiff’s agent had failed to bring about any arrangement which could include defendants’ stock, upon the terms which the defendants rightfully demanded. There was no prospect of future co-operation. All efforts had been exhausted. On December 15, the agent acting for plaintiff asked defendants if he were at liberty to sell, separately, the stock he acted for. The defendants, by assenting, gave the liberty. This was nothing else than an annulling of plaintiff’s promise, which was the consideration to 'defendants. It, in. fact, annulled the agreement, for that was a mutual promise. It was not less than a notice by plaintiff that the mutual understanding was to end, and as to defendants, the parties to whom the notice was given, they might treat the agreement as then ended.

It was argued that such a construction should not be given, because, at the time, the plaintiff’s agent did not know that the defendants had bought the Charlick stock. It cannot, however, be inferred that, if he had known it, it would have made him the less desirous to have the power of acting apart from the defendants. But, without going further in this direction, it is sufficient to say that, from views already expressed, it results that the defendants were under no obligation to inform plaintiff’s agent of the Charlick purchase. After plaintiff’s agent had received permission to sell her stock, he attempted to sell it by a negotiation, and in a manner that was inconsistent with the existence of an agreement, that the two parcels of stock should not be sold separately. As the agreement came to an end on December 14, the defendants could rightfully sell, on January 27, ■ to Mr. Poppenhusen, their own stock, without including the plaintiff’s.

I am further of opinion, that the court should have charged, as requested by defendants’ counsel, that “in estimating damages, the jury cannot take into account any mere chance of making uncertain profits, nor any speculative value arising from or depending upon the possibility of the plaintiff combining her stock with that of other persons.”

The court charged, in accordance with the former decision of the general term, that the measure of damages would be the amount in which the market value of the plaintiff’s stock was lessened by a breach of the contract by defendants. The general term expressed the opinion that the defendants’ sale to Poppenhusen was some evidence of market value. And on this trial the court said to the jury : “ The measure of damages for a breach by defendants of this contract, if there was such an agreement, would be the amount of any depreciation, in the fair cash and market value of the plaintiff’s stock, occasioned by the breach. You are to determine, from the evidence, what was the market value at that time, and you are at liberty in this connection to consider the price paid by Poppenhusen, as bearing upon that subject. ' You are not, however, concluded by such a price in estimating the value, but you may consider it, in connection with the other evidence on this subject.” It stood then, in this wise: the jury was charged that they might find, if the evidence justified it, that the sale to Poppenhusen ivas a breach; that they must find what was the market value before the breach, taking as some evidence the price paid by Poppenhusen, and then what the market value was after the breach.

This sale, as some evidence of market value, was evidently of serious practical importance. It had a tendency to increase the amount of damages to the extent that the price paid represented in the minds of the jury—real market value. If that price paid was, in fact, above market value, the jury should have disregarded the excess. If there were facts tending to show that this sale was brought about by considerations on the part of Poppenhusen, which could not have influenced the market generally, the jury should have taken those facts, in connection with their conclusion from the evidence, as to the probability of the plaintiff having been able to make a sale, of a kind like the one to Poppenhusen. The jury should have found whether it was probable that the plaintiff, or those associated with her, could have procured a sufficient amount of the stock to be a majority of the stock ; and also to what extent the price given by Poppenhusen was influenced by the sale being of a majority. If the evidence satisfied the jury that Poppenhusen would not have paid the price he did, unless for a majority of the stock, and it was only possible that the plaintiff could have procured a majority, or her chance to do it was only speculative, the jury, in using the sale as evidence, should not have enhanced the market value by such part of the price paid, as came from the fact that a majority was sold. In other words, to the extent that it was only possible or speculative whether the plaintiff could have made a sale like the one to Poppenhusen, the jury should have disregarded the price paid by Poppenhusen.

Some facts that appeared in the case may be adduced here. The complaint stated that it was well known by the parties “that one Adolph Poppenhusen and others co-operating with him, desired to purchase a majority of the stock of the company, and that he would pay for a majority a much larger price than after liis purchase could be obtained for the other stock,” and further, “that by the action of the defendants, the Albert Havemeyer stock has been placed in a minority of the stock of the company and its market value has been made worth, not to exceed twenty per cent, of its par value, instead of seventy-five per cent., at which it could have been sold if the defendants had not been guilty, &c.” The plaintiff’s agent' gave testimony of the market value before the agreement which was applicable by the jury to the time immediately before the breach. He testified that he told the defendants, that without a combination, there was no market value for the stock ; and again, that there was no market for it, unless it was combined with enough- of the stock to form a majority ; and. again, that a majority of the entire road could be sold and thereby bring a higher price.

There was, therefore, some evidence for the jury, that to get the price afterwards paid by Poppenhusen it was necessary to secure control of a majority, and it would have been a substantial aid to the jury to instruct them, that the damages were not to be founded upon a speculative chance that the plaintiff might have been able to offer a majority for sale.

For these reasons I am of opinion that there should be a new trial.

Judgment reversed, and new trial with costs of the appeal to the appellant to abide the event.

Speir, J., concurred.

Freedman, J.—[Concurring.]

I concur in the reversal upon the ground last stated in the opinion of Judge" Sedgwick, viz. : that it was error to refuse to charge, as requested by defendants’- counsel, “that in estimating damages, the jury cannot take into account any mere chance of making uncertain profits, nor any speculative value arising from, or depending upon the possibility of the plaintiff’s combining her stock with that of other persons.”


source: Caselaw Access Project

author: By the Court.—Sedgwick, J.

license: Public Domain

text:
    ALBERT SCHULTE and JOHN A. SCHULTE, Plaintiffs and Appellants, v. JAMES ANDERSON, Defendant and Respondent.
    I. Partnership agreement.
    1. CLAUSES.
    1. One providing that one of the partners shall contribute towards .the capital the assets of a former firm represented on the books of that firm as bills due, or to become due (nothing being said in the agreement about the value of said assets—their nominal value however, was $16,169.36, and real value but $3,876.75), and that the other partner should put in $14,000 (in fact he only contributed $11,848.90)."
    3. One providing that the profits should be shared, and all losses borne and paid equally.
    3. One providing that each partner might draw weekly a certain specified sum for his own use (each drew in excess of the specified sum).
    4. One providing that at the termination of the partnership, the remaining assets should be divided between the partners, to each his proper and respective proportion, reference being had to the capital stock put in and invested by them respectively.
    3. ACCOUNTING UNDER SUCH AGREEMENT, ON ITS TERMINATION.

      (a) Principles, where there has been a loss.

    1. The amount of capital which plaintiffs failed to put in should be treated as assets.
    3. The excess drawn by each partner, for his own use, should be treated as assets.

      Before Sedgwick, Speir and Freedman, JJ.

      Decided December 1, 1879.
    3. The amounts collected by each partner, and retained by him, should be treated as assets.
    4. The amount of the losses (no part thereof having been paid back into the firm by either partner), should be treated as assets.
    5. The sum drawn by one partner for his own use, in excess of that so drawn by the other, cannot be charged against the former, in favor of the latter, for equalization.
    6. The partner putting in the assets of the former firm, must be regarded as having contributed to the capital stock only the actual value thereof.
    7. The total amount of assets (including therein the first four items above mentioned) should be divided between the parties in the proportions, as §14,000 is to §3,876.75, and each party should be considered as having received, on account of his share, the amount he had omitted to pay over under his obligation to share equally the losses, i. e., one-half of the losses.
    Appeal from j udgment entered on report of referee.
    This action was brought for the adjustment and settlement of partnership accounts of the firm of James Anderson,& Co. The complaint averred, and the answer admitted, a dissolution of the firm. A receiver was appointed in the action. An order was made, referring the action to a referee, to take and state the accounts. The referee made his report, upon.which judgment was entered in conformity therewith, in favor of defendant against plaintiff, for $864.68, besides costs, &c.
    Plaintiffs appealed. The apjieal came before the court upon the report and exceptions thereto only.
    The partnership agreement, in addition to what is set forth in the report, provided as follows:
    “And it is further agreed by and between the parties to these presents, that the said James Anderson, party hereto of the first part, may draw from the cash of the joint stock the sum of $50 weekly, for his own use, and at the expiration of each year, the sum of $2,000, the same to be charged to his account; and that the said Albert Schulte, party hereto of the second part, may draw from the cash of the joint stock the sum of $25 weekly, for his own use, the same to be charged to his account; and also that the said John A. Schulte, party hereto of the third part, may draw from the cash of the joint stock, the sum of $25 weekly, for his own use, the same to be charged to his account; and the said Albeit and John A. Schulte may, at the expiration of each year, draw jointly the sum of $2,000, to be charged to their accounts in equal portion, and neither of them shall take any further sum for his own use, without the consent of the other parties hereto, to be signified in writing.”
    The referee found as matters of fact:

      “First. That on or about the twelfth day of April, 1875, the plaintiffs and defendant entered into a co-partnership agreement in writing to carry on the business of produce commission merchants, at the city of New York, under the name or firm of James Anderson & Co., to commence on the first day of May thence next ensuing, and to continue for three years thereafter.
    ‘ ‘ Second. That in and by said agreement the defendant herein, party thereto of the first part, agreed to put in and contribute towards the capital of said firm all the assets of a certain former firm, of which he had been a member, but then lately dissolved, known as Dunn & Anderson, and represented on the books of said firm as bills due or to become due (except $1,500 thereof reserved to defendant), as his share of the capital stock of said firm of James Anderson & Co., and said plaintiffs, the parties of the second part to said agreement, therein and thereby agreed to put in jointly the sum of fourteen thousand dollars, which, with the contribution aforesaid of defendant, should form and constitute the capital of the said copartnership ; it was also agreed therein that all the profits and losses of said copartnership should be shared and borne one-half by the plaintiffs ánd one-half by the defendant, but at the end or sooner termination of said copartnership, the remaining assets should be divided between the partners, reference being had to the capital stock put in and invested by them respectively.
    ‘1 Third. That said firm commenced business on said first day of May, 1875, as required in and by their said copartnership agreement.

      “Fourth. That said defendant, pursuant to said agreement, put in and contributed towards the capital stock of said firm all the aforesaid assets of said Dunn & Anderson, less said $1,500 thereof.

      “Fifth. That said plaintiffs, in pursuance of said agreement, put in jointly towards said capital stock the sum of eleven thousand eight hundred and forty-eight dollars and twenty cents in cash, to wit: said plaintiff, Albert Schulte, $6,848.20 thereof, and plaintiff John A. Schulte, $5,000 thereof:
    “ Sixth. That said plaintiffs never put in the balance of the fourteen thousand dollars agreed by them as aforesaid to be contributed towards said capital stock, and amounting to $2,151.80, and they remain indebted therefor to said firm.
    “ Seventh. That on or about the first day of March, 1876, said partnership of James Anderson & Co. was dissolved by mutual consent of the members thereof.
    ‘ ‘Eighth. That said firm, during the aforesaid period of its existence, made no profits, but, on the contrary thereof, did a losing business, and sunk all but a fragment of its capital, as hereinafter more particularly stated and set forth.

      “ Ninth. That during the existence of said firm, the plaintiff, Albert Schulte, drew out from said
    Capital stock for his personal use, $1,717.75
    During the same time, plaintiff John A. Schulte, drew out therefor, . . . . ■ 1,819.00 $3,036.75
    Defendant during same period drew out therefor, . . 2,625.28
    Defendant since the dissolution has collected and appropriated to his use, . . .. 208.42 2,833.70
    Defendant has drawn out of the firm less than plaintiffs have, and to which he is entitled by way of equality before the final division of the remaining assets of the firm, ... , 203.05

      “Tenth. That at the time of the dissolution of said copartnership, the whole assets thereof (irrespective of the indebtedness of the plaintiffs thereto for the aforesaid deficiency of their capital stock) amounted nominally to the sum of, . . $10,372.22
    Out of which has been realized only the following sums, viz.:
    Collected by plaintiffs, . $3,662.99
    “ “ defendant, . . 208.42.
    Isaac Newton, receiver, net, . . 81.07 3,952.48

      “Eleventh. That said firm at the time of its dissolution owed the sum of $3,125, which sum plaintiffs have’ since fully paid and discharged, and said co-partnership now owes no debts whatever.

      “ Twelfth. That all the assets collected by the plaintiffs as aforesaid, and amounting as aforesaid to $3,662.99, have been kept and appropriated by them, first, to the payment of the firm debts as aforesaid, and the balance to their own use; also, that the sum of §208.42, collected by defendant as aforesaid, has been appropriated by him to his own use.
    “Also that the receiver herein has in his hands net assets,........§81.07
    “ Thirteenth. That the nominal value of the assets so contributed, as aforesaid, by said defendant, as and for his share of the capital stock of said firm, was §16,169.36, but that only §3,876.65 was ever collected or realized therefrom.
    1 ‘ Fourteenth. I further do find that the distributive balance of the assets of the said firm of J. Anderson & Co. amounts to . . . . . . §2,695.16
    viz. :
    Collected by plaintiffs, §3,662.99
    “ “ defendant, . 208.43
    3,871.41
    Am’t capital unpaid by plaintiffs, 2,151.80
    6,023.21
    Deduct debts paid by plaintiffs, 3,125.00
    2,898.21
    Amount charged to plaintiffs supra for equality, .... 203.05
    '§2,695.16
    2,695.16
    “ Fifteenth. That defendant, just before executing the partnership agreement, and during the negotiations' which led thereto, represented to plaintiffs the said assets of Dunn & Anderson to be good and collectible, and worth then the nominal value of $16,169.36, and plaintiffs entered into said partnership, believing and ■relying upon said representations ; but the greater part thereof were worthless and uncollectible, except to the .amount of §3.876.65 as aforesaid.

      '•'•Sixteenth. That defendant, after the execution of said agreement, and on the morning of the day of the commencement of the said business of the copartnership pursuant thereto, made a like representation to plaintiffs, and verbally agreed that same might be re-charged to him if not collected.
    “ Seventeenth. There is no evidence that defendant knew or believed, at the time of making said representations, the same would prove to be otherwise than he so represented.
    “ Eighteenth. There was no consideration whatever to defendant for said agreement, either of benefit to him or of loss to plaintiffs.
    “ Nineteenth. That, just prior to such dissolution, the defendant, James Anderson, verbally agreed with the plaintiffs that such of the aforesaid assets contributed by him as had proved to be worthless and uncollected, should be charged back upon the books of the firm to his private account, and the same were accordingly so charged back to him.
    “ Twentieth. There was no consideration to the defendant whatever for said agreement, whether of. benefit to him or loss to plaintiffs.

      “Twenty-first. That, shortly after said dissolution, defendant disaffirmed said agreement, and refused to be bound thereby.”
    And as conclusions of law, from the facts so found :

      “ First. There being no allegations of fraud or deceit in the complaint, the representations made by defendant to plaintiffs, before the formation of the partnership, were but a mere expression óf his opinion of the value of the qssets, and does not enter into or effect the partnership agreement afterwards executed.
    “ Second. For like reasons the similar representations of defendant, subsequently made on the day said firm commenced business, were but a like mere expression of liis opinion, and the verbal agreement that same might be recharged, if not collected, with no consideration therefor, was a mere nudum pactum. .

      “ Third. That the subsequent verbal agreement made just prior to dissolution, authorizing said uncollected assets to be charged back to plaintiff, and being without any consideration, was also a mere nudum pactum. Defendant did not sufficiently long acquiesce in the so charging back of said assets to him to be bound thereby.
    “ Fourth. That the business of said firm of James Anderson & Co. has not been profitable, but, on the contrary, it has lost most of its capital, and that its entire assets amount to but the sum of $2,695.16.
    11 Fifth. That the division of said remaining assets among the parties should be in proportion to the amount of their respective contributions to the capital stock of said firm—to wit:
    To the plaintiffs,.....$2,033 63
    “ defendant, , . . . 661 63

      “Sixth. That defendant is entitled in addition thereto to aforesaid sum mentioned in the ninth finding of fact, viz., . . 203 05
    “ Seventh. That all the said residuary assets are in plaintiff’s possession, none of them being in possession or control of defendant.

      “Eighth. That the sum of $193.70 now held by the receiver herein, should be paid over to defendant by him, less the sum of $112.63 for his commission and charges as such receiver, and said receiver is not entitled to any other or further sum ; the balance so to be paid over by said receiver is $81.07.

      “Ninth. That said balance in the hands of the receiver belongs to the parties hereto, in proportion to their aforesaid contributions to the capital stock, as follows, viz.: to plaintiffs, $58.25, to defendant, $22.82, and that said defendant on receiving said balance shall credit said sum of $58.25 on the judgment to be entered herein against plaintiffs.
    “ Tenth. That defendent is entitled to judgment against plaintiffs for the sum of $864.68, besides costs of this action, in which costs should be taxed the charges andcommissions of the receiver aforesaid.”

      Edward P. Wilder, attorney, and of counsel, for appellants, among other things, urged:
    I. The Referee has apparently omitted to make any apportionment of the losses of th'e firm, or else has done it on the theory that defendant has contributed and lost $16,169.86, the nominal value of those “ assets” of the old firm of Dunn & Anderson, instead of $3,876.65, their real value. An arithmetical calculation based upon his own “findings”' will speedily demonstrate the actual loss of the firm..
    Plaintiffs contributed cash, . •. . $11,848.20
    Defendant contributed “assets” which realized, cash, . . . . 3,876.65
    Total capital stock, =.....$15,724.85
    All of this, he finds, was lost and sunk “ but a fragment,” and he furnishes' us the figures whereby to determine that fragment.
    Plaintiffs, he says, drew during the co-partnership, .....$3,036.75
    Plaintiffs, he says, have collected since the dissolution $8,662.99, from which they have paid the debts of the firm, $3,125, leaving in their hands, . . . 537.99
    Total saved by plaintiffs, . . . $3,574.74
    Defendant, he says, drew during the copartnership, ......$2,625.28
    Defendant, he says, has collected since the dissolution,..... 208.42
    Total saved by defendant, . . . $2,833.70

      Besides these sums, the receiver, he says, holds in his hands, subject to proper charges, $193.70.
    These three sums, then, comprise the aggregate of the “fragment” saved from the wreck of this firm’s capital, and the total loss, therefore, may be summarized as follows : 1

    Capital invested,....."$15,724.85
    Saved by plaintiffs, who are chargeable therewith, . $3,574.74
    Ditto by defendant, . . 2,833.70
    Held by receiver (subject to charges), .... 193.70
    6,602.14
    Total loss sustained by the firm, . $9,122.71
    Of this loss, according to the partnership agreement, the plaintiffs shall bear one-half and defendant one-half, i. e., each party shall bear $4,561.35. In point of fact, the parties have borne the loss in the following ratids :
    Plaintiffs have paid in, ... $11,848.20
    “ “ drawn out and collected, 3,574.74
    Actual loss borne by plaintiffs, . . $8,273.46
    From which may be deducted the sum held by the receiver, . . . 193.70
    $8,079.76
    Defendant has paid in, . $3,876.65
    “ “ drawn out, &c., 2,833.70
    Actual loss borne by defendant, ,........ 1,042.95
    Making the total, as before, . . . $9,122.71
    It is obvious that these losses can be equalized only by the defendant paying to the plaintiffs the difference between Ms actual loss, $1,042.95, and the sum of §4,561.35, which, as seen above, is his just apportionment of the firm’s total loss, $4,561.35 — $1,042.95 = §3,518.40. It is clear, then, that if we give plaintiffs the whole of the $193.70 in the hands of the receiver, the plaintiffs would still be entitled to a judgment against the defendant for the sum of $3,518.40.
    III. To credit the defendant with the face value of a lot of worthless and uncollectible book accounts would be grossly unjust to the plaintiffs, who have paid in their cash. The referee apparently reconciles it by saying that defendant contributed certain “ assets,” whose nominal value was $16,169.36; that his representations in regard to them were “without consideration,” the mere expression of his “opinion,” and that plaintiffs took them, as it were, for better or worse. But he also finds that plaintiffs entered into the co-partnership, and put in their money “believing” in his representations ; also, that the defendant himself recognized their binding force upon him at the dissolution of the partnership, by agreeing that the great uncollected and worthless majority of them be charged back to his personal account; that they actually were so charged back. And yet he says all this must go for nothing, and defendant must be credited as if he had actually contributed and lost $16,169.36. The proposition is too absurd for serious refutation. The referee himself repudiates it when called upon to divide the “remaining assets,” and apportions the major part of them to the plaintiffs; whereas, to be consistent, he should have awarded the greater sum to the defendant, in the ratio of $16,169.36 to $11,848.20. The pittance in the hands of the receiver is again divided in the same way.
    IV. The articles provide that plaintiffs and defendant shall share equally the losses. How, what are the losses of this firm ? Clearly, it cannot have lost what it never had. Those uncollected accounts of the old firm of Dunn & Anderson were, and still remain, mere claims, choses in action—blank paper. Defendant, when he transferred them to the books of the new firm, agreed to take them baqk if not collected, and he took them back. The new firm never had the money represented by them. It never “lost” that money. It was not sunk in any business or venture of the firm. Whether there was “consideration” or not for defendant’s agreement that his worthless contribution to the capital stock of the firm be charged back to him, that it was so charged back is an accomplished fact on the. referee’s findings. To the extent to which he took back his contribution, he withdrew his capital, and the capital so withdrawn by the consent of all the partners cannot be deemed a “loss ” incurred in the business of the firm. The firm simply did not acquire that money.
    V. We have another basis for ascertaining the loss sustained by the firm :

      (a) Plaintiffs have drawn for their use, . $3,036.75
    Defendant has drawn for his use, . . 2,625.28
    Plaintiffs’s overdraft, therefore, = $836.75
    Defendant’s overdraft, therefore, = 425.28
    Owed to the firm, therefore, by the parties, .... $1,262.03
    (5) In the next place, the moneys of the firm collected by the parties since its dissolution, constitute a part of its ‘ ‘ assets.” Defendant has collected $208.42. Plaintiffs have collected $3,662.99, from which they have paid out all the debts of the firm, $3,125..
    Leaving in plaintiffs’ hands,' $537.99
    “ in defendant’s hands, 208.42-
    “ in hands of receiver, 193.70 = $940.11
    To. which add the over-drafts {supra), ..... 1.262.03
    Total remaining assets of the firm,. $2,202.14.

      NOW.
    Capital cash contributed by plaintiffs,..... $11,848.20
    Capital “assets” contributed by defendant, . 3,876.65
    Total investment, . . $15,724.85
    Drawn legitimately by plaintiffs, •......$2,200.00
    Drawn legitimately by defendant, -..... 2,200.00 7 7

    Present assets (including overdrafts, collections, &o.,' . 2,202.14 6,602.14
    Actual loss of the firm, . . . $9,122.71
    Thus verifying the conclusion reached {supra) in Point I. The reasoning there pursued sufficiently demonstrates that plaintiffs are entitled to judgment against defendant for $3,518.40. This result, it will be remembered (Point I., supra) was reached by assuming that all of the money held by Isaac Newton, the receiver, should be paid to plaintiffs, and their actual loss was, in the calculation, diminished by said sum of $193.70. Whatever remains, therefore, of this sum, after allowing the proper charges of the receiver, should be ordered to be paid by him to the plaintiffs.

      L. B. Bunnell, attorney, and of counsel, for respondent, urged:
    I. The theory adopted by the referee was correct. There can be no pretense that the articles of agreement do not express the intention of the parties. Representations made before they were executed cannot avail to change the agreement,' nor could subsequent acts, unless acquiesced in sufficiently long to amount to an intention to change its terms. “A written agreement cannot be enlarged or altered in its operation, by evidence of other prior oral agreements, in consummation of which the written agreement is alleged to be erroneously or deficiently executed” (Peet v. Cowenhoven, 14 Abb. Pr. 56). “ When the terms of an instrument are plain and unambiguous, the intention of the parties is to be learned therefrom'” (Westcott v. Thompson, 18 N. Y. 363). “ The rights of the parties must in general be determined by the language of the contract” (Newton v. Woodruff, 2 N. Y. 153). “The intention of the parties is to ascertained, except in cases of latent ambiguity, by a development of the circumstances under which the instrument was made” (Reynolds v. Commercial Fire Ins. Co., 47 N. Y. 597). The referee had the parties before him, heard all the circumstances in detail under which the agreement was executed, and has found, as matter of fact, that the agreement clearly expresses the intention of the parties. The appellants concede that the referee found correctly as to the facts. So far as the written contract is clear, either in particular words or upon a consideration of its legal effect, no evidence extrinsic of the writing, can be received to contradict or explain its meaning (1 Cow. & H. Notes to Phill. on Ev. 468, 470). Evidence of declarations made at the time of executing an instrument to show that the instrument was executed upon a condition not expressed therein, is incompetent (Van Bocklin v. Tyler, 62 N. Y. 105). Representations made before the agreement was made are immaterial (lb.). The referee was therefore right in disregarding testimony tending to show that the parties contemplated something not expressed in the agreement. In respect to the representations made after the agreement was -executed, there are still weightier reasons for disregarding them. Anderson’s verbal agreement to assume the payment of the uncollected accounts, and allow them to be charged to his private account, could' not avail to alter or change the articles of copartnership or the relation of the parties to each other, for ; 1. It was .not in writing. 2. After the old assets of Dunn & Anderson had become part and parcel of the capital of James Anderson & Co., they did not belong to Anderson, but to his firm, and such an agreement would be, in effect, an undertaking to pay the debt of a third person, and hence void under the statue of frauds. 3. It was without consideration. The mistake under which the learned counsel for the plaintiffs has all the while labored, is in assuming that Anderson’s capital was represented by dollars and cents instead of property. It was not cash, and never so considered. It was to the capital stock what any other property would have been which belonged to the firm, but was lost or destroyed by fire, or had otherwise become inconvertible into cash. As it was, he contributed it as his share of the capital stock. It was not his fault that so small an amount was realized there from. The loss, from whatever cause, was a firm loss, and must be treated as such. Now the articles of agreement provide, that after payment of the debts the assets remaining shall be divided—one-half to the defendant, and one-half to the plaintiffs, reference being had to the capital actually contributed. We have then, as found by the referee, the following data from which to determine what each partner shall receive.
    1. Partners were to contribute capital in full, to wit: the defendant agreed to contribute old assets and plaintiffs agreed to contribute §14,000.

      2. Defendant contributed all.
    Plaintiffs contributed only, §11,848.20
    Amount realized from old assets, 3,876.75
    3. Plaintiffs drew out, . . 3,036.75
    Defendant drew out, . . 2,625.28
    4. Plaintiffs collected, .... 3,662.99
    Defendant collected, .... 208.42

      With these data the referee makes distribution.
    This brings us to the second question.
    II. Admitting that the articles of copartnership require the referee to take the amount realized from the old assets as one of the data for' computation, instead of one-half the entire capital, the referee was right in the mode of distribution, for we have now the amount of capital contributed in actual cash by plaintiffs, $11,848.20, and by defendant, $3,876.75, making a total capital of $15,724.95.
    How we have,
    1. By the terms of the partnership, profits were to be divided equally. There were no profits.
    2. Partners were to pay contributions to capital stock in full.
    Plaintiffs did not by $2,151.80..
    They were, therefore, indebted to the firm in that sum.
    3. Plaintiffs collected, dr had of the assets at dissolution, . . . . $3,662.99
    The defendant had, . 208.42
    $3,871.41
    The plaintiffs paid debts, , . 3,125.00
    $746.41
    Add unpaid capital, • • 2,151.80
    $2,898.21
    Plaintiffs drew out, $3,063.75
    Defendant drew out, $2,625.28
    Collected since, 208.42 2,833.70
    Plaintiffs’ overdrafts, . , $203.05
    5. To equalize the parties, give the defendant $203.05. That is to say, take from the assets $2,'898.21, that sum, and we have $2,695.16, which is the sum to be distributed.

      The matter is now one simply of proportion: $15,742.95 : $11,848.20 :: $2,695.16 : $2,033.53, plaint-. iff s’ share.
    $15,724.95 : $3,876.75 :: $2,695.16 : $661.63, defendant’s share.
    In the same way the amount in the hands of the receiver gives, for plaintiffs’ share, $58.25 ; defendant’s share, $22.82. Except as to these amounts, the assets were in the hands of the plaintiffs. In order to get the assets actually on hand, the overdrafts of the plaintiffs, which were given to Anderson to make his drafts equal to the plaintiffs’, are taken out, to wit, $203.05. But this was only constructively given to Anderson ; and in order to reach the sum he ought to receive, we must add it to the sum found above, $661.63. This gives us $864.68. The judgment should be affirmed.

       The application of the principles laid down in the opinion to the case at bar, will lead, it would seem, to a judgment in favor of plaintiffs against the defendant, for about the sum claimed by the appellant’s points.

   By the Court.—Sedgwick, J.

The agreement of the parties states, specifically, their obligations and their interests in the capital and profits.

The plaintiffs were bound to contribute $14,000.in cash to the capital. The defendant was bound to put in “all the assets of the firm of Dunn & Anderson represented on the books of said firm, as bills due, ór to become due, except the sum of $1,500.” Assuming that the defendant was not bound to make the real value of these assets equal to their nominal value, the agreement, after providing that profits and losses were to be shared and borne equally, has the reasonable and equitable provision that at the “end, or other sooner termination-of their copartnership,” the copartners will make a final account, and all and every the stock, and stocks, as well as the gains and increase thereof, which shall appear to be remaining, either in money, &c., debts or otherwise, shall be divided between. them, to each his proper and respective proportion, reference being had to the capital stock put in and invested by the respective parties.”

It is seen, at once, that Anderson, not having invested as much as the Schultes, inasmuch as his contribution proved to be of the value of only $3,876.65, while they had contributed $11,848.90, it was their right and interest to have the accounting include, as assets, all that had been drawn out for the personal use of the partners above what they were entitled to draw out. What was properly drawn out was to be equally shared by the parties, while, if what was improperly drawn out was returned, as it should be, to the firm, the plaintiffs would be interested in it, to a far greater extent than the defendant.

The referee proceeded upon the position that the respective proportions of interest in the assets at dissolution, were represented by $11,848.20, the cash put in by plaintiff, and $3,876.75, the cash value of the assets put in by the defendants. I think this was erroneous in making the proportion of the plaintiff too small. For, the assets were increased by charging the plaintiffs with the amount of their capital which they liad failed to contribute as they agreed. That is, the assets were supposed to include this amount, viz. : $2,151.80. It was in effect proposed to consider it as cash. If the plaintiffs had to bear this burden, they could not be deprived of the advantage of its being part of capital contributed by them. And then, the proportion would be as $14,000 is to $3,876.75.

Again, I think there was a mistake in the mode of ascertaining the assets.

In the course of the business, as is stated above, the plaintiffs and defendant had drawn from the firm more money than was allowed by the partnership articles.

The plaintiffs had drawn, . . . $3,036.75

The defendants had drawn, . . 2,625.28

The referee finds that it was the right of the defendants to draw from the estimated assets, $203.05, to .equalize the amount drawn by him and the amount drawn by plaintiffs, and afterwards, at the end of the accounting, the plaintiffs were held liable to pay the whole of this $203.05. I think there were two errors. 1st. The defendant was not entitled to draw from the assets this sum, because he was entitled to have only the proportion; this has been already stated. 2d. There is no provision of the articles that permit him to draw any amount for the purpose of equalizing his drafts with plaintiffs. Each was entitled to draw but $50 a week for the forty-four weeks they were in business—that is, $2,200. All above that sum should have remained undrawn, and the plaintiffs should return to the assets,.....$836.75 And the defendant also, .... 425.28 The assets should, in view of the referee, be increased by the amount of the capital which plain tiffs should, but had not contributed, viz.,......2,151.80 The plaintiffs had in their possession money collected by them,..... 537.99 The defendants,....._ 208.44 Cash in receiver’s hands, .... 81.07

The sum total should be divided according to the proportions in which each was entitled to share in the assets, and that result would show what each had the right to have. If one had received an amount of the assets actually, which, with any sum they had not paid to the firm, but should have, would exceed the amount they wrere entitled to, out of the assets, the excess should be paid to the other party, and this excess would be the correct amount of the judgment.

So far, no attention has been paid to the effect upon the result of a correct application of the provisions of the articles, that provided that the loss should be borne equally. As soon as a loss occurred, the only way that each could actually bear it equally, would be to pay one half of its amount back into the firm, or, in case it was not paid, to be charged with the one-half, in his individual account, and then, at a later time, to perform the obligation expressed by such a charge. This not having been done before the close of business and the final accounting, these charges in gross, viz., the whole of the losses, should be treated as the plaintiffs’ deficiency of capital was treated, and should increase what was called the assets of the firm, exactly the same as if third persons had promised to bear the losses, and the assets so increased should be divided in the proportions above specified, and each party should then be considered as having already received on account of his share the amount he had omitted to pay over, under his obligation to share equally the losses, i. e., one-half ol the losses.

The result of this would be so different from the result of the accounting below, that there should be a new trial and a new accounting, with costs to the plaintiff to abide the event of the accounting.

Judgment reversed.

Speir and Freedman, JJ., concurred.


author: By the Court.—Freedman, J.

text:
    WALTER STRUSBURGH, Plaintiff and Appellant, v. THE MAYOR, ALDERMEN, AND COMMONALTY OF THE CITY OF NEW YORK, Defendants and Respondents.
    Assessments—assessors, jurisdiction of—character of their ACTS, AND HOW THE SAME MAY BE REVIEWED.
    Assessors, having jurisdiction, act judicially in fixing the amount to be imposed upon the property benefited, and such an assessment is in fact a judgment.

      Before Curtis, Ch. J., and Freedman, J.

      Decided December 1, 1879.
    Such an assessment may be reviewed:
    1. By the body or board who laid the same, upon a hearing of objections made thereto;
    2. By the court, on certiorari; and,
    3. By the court, on petition, in certain cases in the city of New York, for fraud or irregularity under Laws of 1858, c. 338.
    Such an assessment cannot be questioned in a collateral action. As long as it stands unreversed or unvacated, money collected under it, by the defendant, cannot be recovered back by action of the party against whom the assessment was made, and by whom it was paid (Swift v. City of Poughkeepsie, 37 N. Y. 511).
    In the following cases, action for recovery, &c., was brought after the assessment was vacated, or it was declared absolutely void for want of jurisdiction, in the action brought for such recovery: Bank of Commonwealth v. Mayor, &c., 43 N. Y. 184; Peyser v. Mayor, &c., 70 Id. 497; Newman v. Supervisors of Livingston Co., 45 Id. 676; Chapman v. City of Brooklyn, 40 Id. 372.
    In the case at bar, the complaint fails to show that the judgment recovered by the defendant against the contractor H. (for overpayment beyond the contract price), declared or made the assessment invalid, but that it determined simply the fact of overpayment to H. and defendant’s right to recover the sum overpaid. Such a judgment furnishes a reason or ground for the reduction of the assessment upon a proper application, but is not tantamount to a reversal or vacation of the assessment.
    Had the complaint further alleged that the judgment of the defendant against the contractor, H., had been collected, or that the latter was solvent, and the judgment was collectible, and that it remains uncollected through the fault of the defendant, this action (under the doctrine of Eno v. Mayor, &c., 68 N. Y. 214), could perhaps, to some extent, be sustained, upon the equity arising upon the right of the plaintiff to share in the fund collected, or to be collected; but in the absence of any such allegation, the complaint is clearly defective in not stating a cause of action.
    Appeal from judgment sustaining demurrer to plaintiff’s complaint.

      The facts alleged in the complaint are:
    1. That the defendants-have become liable to respond for all the debts and liabilities of the town of Morrisania.

      2. That the plaintiff owned in fee certain lands in said town at all the dates hereinafter named.
    3. That on September 17, 1872, the Board of Trustees of Morrisania confirmed an assessment for grading Willis avenue, of an aggregate amount of $20,348.75, of which the land of the plaintiff was assessed. $3,092.00.
    4. That the assessment was valid on its face.
    5. That the assessment was illegal, because the contractor had been overpaid beyond the contract price of the work done, to the amount of $6,666.50, through the negligence or carelessness of said trustees.
    6. That on July 2, 1873, the said trustees commenced an action against the contractor to recover back the sum of money overpaid to him, and the defendants having been substituted as plaintiffs in that action, they subsequently recovered judgment therein on November 17, 1876, in the sum of $6,076.42.
    7. That on October 15, 1872, the plaintiff paid the assessment of $3,092.
    8. That such payment included $1,030.60 of the overcharge for the overpayment to the contractor.
    Plaintiff demands judgment in this action, declaring such assessment invalid to the extent of such overpayment, and reducing the same by deducting such amount, and for judgment in hi.s favor for the sum of $1,030.60, being plaintiff’s proportionate share thereof,.
    The defendants demur upon the grpund that no cause of action is alleged.
    The demurrer was sustained, and plaintiff appealed.

      Alexander B. Johnson, for appellant.

      William C. Whitney, counsel to the corporation, and D. J. Dean, of counsel, for respondents.
   By the Court.—Freedman, J.

The specific reason for which the plaintiff in his complaint claims that the assessment, as made, is illegal and void, do not negative the jurisdiction of the assessor to assess plaintiff’ s property for a proper proportion of the expense of the improvement. On the contrary, their jurisdiction is impliedly admitted. The case, therefore, falls within the well settled rule that assessors, having jurisdiction, act judicially in fixing the amount of the assessment to be imposed upon the property deemed benefited, and that such an assessment is in effect a judgment. Such an assessment may be reviewed :

1. By the body or board that made the assessment upon a hearing of objections thereto ;

2. By the court, on certiorari; and,

3. In certain cases in the city of New York, by the court for fraud or irregularity on petition under chapter 338 of Laws of 1858.

But in a collateral action, such an assignment cannot be questioned, and as long as it stands unreversed or vacated, money collected under it, can no more be recovered back by action, than can a suit be sustained and money recovered which has been collected upon the erroneous judgment of any court of competent jurisdiction (Swift v. Poughkeepsie, 37 N. Y. 511.)

In Bank of Commonwealth v. Mayor, &c. (43 N. Y. 184) judgment vacating the tax was obtained upon certiorari before the action for the recovery of the money was instituted.

In Peyser v. Mayor, &c. (70 N. Y. 497) the plaintiff first reversed and vacated the assessment in a direct proceeding, by petition under the act of 1858, and then brought his action.

Newman v. Supervisors of Livingston Co. (45 N. Y. 676) and Chapman v. City of Brooklyn (40 Id. 372), do not establish a contrary doctrine. In both these cases the action was'sustained upon the ground that the assessment proceedings were absolutely void for want of jurisdiction'.

In the case at bar the complaint, even upon the most liberal construction, fails to show that the judgment recovered by the defendant’s against Handibode, the contractor, declared or made the assessment, invalid. ■That judgment determined, as between the parties, simply the fact of overpayment, and defendant’s right to recover the sum overpaid, and such determination furnishes a reason or ground for a reduction of the assesment upon a proper application, but is not tantamount to a reversal or vacation of the assessment. This being so, the action as brought does not lie.

If the complaint alleged, in addition to the matters set forth, that the judgment against Handibode has been collected, or that he is solvent and the judgment collectible, and that it remains uncollected through the fault of- the defendants, the action, under the doctrine of Eno v. Mayor (68 N. Y. 214), could perhaps to some extent ,be sustained, upon the equity arising upon the prospective right ef the plaintiff to share in the fund collected, or be collected, but in the absence of any such averment the case clearly falls within the general rule above stated.

The judgment should be affirmed with costs.

Curtis, Ch. J., concurred.


text:
    BENJAMIN L. LUDINGTON, Plaintiff and Appellant, v. AMOS C. BELL, Impleaded, &c., Defendant and Respondent.
    Before Curtis, Ch. J., and Freedman, J.

      Decided December 1, 1879.
    Discontinuance of action.

      When the court will permit a pilaintiff to discontinue without costs.

    Where a defendant pending the action has obtained a discharge of his debts for insolvency, or in bankruptcy, this court, in the exercise of its discretionary power, will permit the plaintiff to discontinue without costs; but where the plaintiff, knowing of the defendant’s discharge, nevertheless goes on with the action, he will be required to pay costs on a discontinuance (See cases cited in the opinion of the court).
    The plaintiff in such cases must come to the court, upon all the facts disclosed, and it must appear equitable and just that he should be relieved. If it conclusively appears that he never had a cause of action, the case does not fall within the general rule, unless the plaintiff also shows that he was misled, by appearances created by defendant, into bringing the action.
    In the case at bar, the application for leave to discontinue the action without costs does not commeud itself to the favorable consideration and discretion of the court.
    Appeal from order denying plaintiff’s motion for leave to discontinue action without costs.

      Martin Conway, attorney, for appellant; Lucien Birdseye, of counsel.

      H. T. Cleveland, attorney, for respondent; E. H. Benn, of counsel.
   By the Court.—Freedman, J.

As a general rui- . when a defendant, pending the action, obtains an u solvent’s discharge, or a discharge in bankruptcy, the court, in the exercise of its discretionary power, will permit the plaintiff to discontinue- without costs (Hart v. Story, 1 Johns. 143; Merchants’ Bank v. Moore, 2 Id. 294; Case v. Belknap, 5 Cow. 422; Labron v. Woram, 5 Hill, 373).

But where the plaintiff, knowing of the defendant’s discharge, nevertheless goes on with the suit, he will be required, if he afterwards discontinue, to pay the costs to which the defendant was subjected after the discharge (Ludlow v. Hackett, 18 Johns. 252; Merritt v. Arden, 1 Wend. 91; St. John v. Hart, 16 How. Pr. 192).

In granting the motitin for leave to discontinue without costs, the court does not proceed on the idea that the defendant may defeat the plaintiff by pleading his discharge, but on his plain inability to pay, evidenced by the discharge, on account of insolvency or bankruptcy,, the debt which otherwise he would be bound to pay (Honeywell v. Burns, 8 Cow. 121).

But the plaintiff must come with good grace, and upon all the facts disclosed it must appear to be equitable and just that he should be thus relieved, or the court will not interfere. If it conclusively appears that he never had a cause of action, the case does not fall within the rule, unless he shows that he was misled by appearances, created by the defendant, into bringing the action.

In the case at bar the defendants, Amos C. Bell and Jared W. Bell, were partners. As such partners they gave fhe plaintiff their promissory note for $4,000. Afterwards they dissolved partnership. After the dissolution the plaintiff agreed with Amos C. Bell that if. the latter would pay one-half of the note, he should, be entirely released and discharged. Amos C. Bell did so, paying part in cash and giving his notes for the balance, which he afterwards paid. The plaintiff then, in violation of his agreement, sued him jointly with the other partner to recover the balance of the firm’s indebtedness. The court .of appeals .decided that the individual notes of Amos C. Bell, so given, constituted additional security ; that their execution and delivery conferred an advantage and benefit upon the plaintiff, constituting a sufficient consideration for the agreement ; that the agreement was valid and legal, independently of .the act of 1838 relating to compromises by partners and joint debtors; and that, in view of the existence of a new and sufficient consideration in fact, the rule that a release of one of several joint debtors must be under seal had no application to the case. This decision conclusively establishes that,' upon the facts as they have been disclosed, and which were well known to the plaintiff before the commencement of the action, the plaintiff should never have brought the action. The court of appeals also awarded costs to Amos C. Bell to abide the event.

On the motion below, this state of 'facts was not changed. It appeared, however, in addition, that the petition of Amos 0. Bell in bankruptcy was filed December 1, 1877; that on February 17, 1879, the plaintiff and all the creditors of- the said Bell were notified that the application for a discharge would be heard March 2, 1879, and that on April 1,1879, the discharge was granted. The appeal to the court of appeals was perfected in March, 1878, by the giving of an undertaking executed by Thomas H. Greer, as one of the sureties, and while the appeal and the bankruptcy proceedings were pending, Thomas II. Greer purchased the judgment against Bell from the plaintiff, and indemnified the plaintiff, and employed a new attorney, and through him opposed the appeal of his principal. The plaintiff had claimed that his claim against Bell was secured by a former assignment and was not affected by the proceedings in bankruptcy, and he evidently expected to be successful in the court of appeals and have the benefit of the security on .the appeal. Greer, when he became the purchaser, acted upon the same idea with the view of fastening a liability upon his co-surety.

The appeal in the court of appeals was argued on both sides, April 7, 1879, and the decision rendered April 25, 1879. After the remittitur had been filed, Greer, in the name of the plaintiff, made the motion for leave to discontinue without costs. Messrs. Birdseye, Cloyd gnd Bayliss, who acted as attorneys for Greer on that motion, had been the attorneys for Amos C. Bell on his application for a discharge in bankruptcy, and they had also been the attorneys and cousel for Greer in proceedings taken against him by the plaintiff during the pendency of Bell’s proceedings in bankruptcy, and under their advice Greer purchased plaintiffs’ claim.

It therefore appearing, not only that the action was originally brought on a claim which had no, existence, and that Amos 0. Bell is not responsible, by the creation of false appearances, for the bringing of it, but also that the plaintiff has no further interest in the claim, and that Greer purchased it on a speculation and with knowledge of at least the pendency of Bell’s application for a discharge, and upon, as must be assumed, a calculation of the apparent chances in his favor, the application for leave to discontinue without costs does not commend itself to the favorable consideration of the court.

The order appealed from should be affirmed with costs.

Curtis, Ch. J., concurred.