author:
O’Brien, J.:
      YaN Bbukt, P. J.:

text:
    The People of the State of New York, Plaintiff, v. The Saint Nicholas Bank, Defendant. Hugh J. Grant, as Temporary Receiver, Appellant, In re Petition of Levi C. Lathrop and Others, Appellants.

      Relation between a bank and its depositor — effect of the certification of a check— title to a deposit — rescinding a contract for fraud- — -knowledge by a bank’s officers of its insolvency — debts of a bank exceeding its assets- — -special deposit, how proven — trust fund to pay a check— Clearing House, functions thereof — temporary receiver —jurisdiction of General Term to give instructions — right of appeal under section 1294 of the Code of Civil Procedure.

    When checks are deposited in a bank in the ordinary course of business and credit is given therefor upon the pass book of the depositor, the relation of debtor and creditor arises with regard to the sum so credited.
    'The legal effect of certifying a check is to transfer the obligation of payment to the bank certifying the same, which, without regard to the state of the depositor’s account, becomes a debtor to the holder of the check, and its debt to the depositor is correspondingly reduced.
    Upon a deposit being made by a customer in a bank in the ordinary course of business, of money or of drafts or checks received and credited as money, the title to the money or to the drafts or checks is immediately vested in and becomes the property of the bank.
    ■One who has been induced to part with his property by the fraud of another, under the guise of a contract, may, upon discovery of the fraud, rescind the contract and reclaim the property, unless it has come to the possession of a bona fide holder.
    From the-circumstance that the Superintendent of Banks properly closed a certain bank on a certain day, no inference can be drawn of knowledge on the part of the officers thereof of the bankrupt condition of the institution which ■would make it a fraud for them to receive deposits.

      A general allegation that the debts and liabilities of a bank exceeded the total amount of its assets and the value of its property by over $150,000 (taking into account the fact that its capital stock was $500,000), would mean simply that there was an impairment of its capital stock to the extent mentioned, still leaving a surplus of §850,000 over and above what it owed to its depositors.
    To prove that deposits were special, so as to create a trust or an appropriation as between the parties, requires no further evidence than that the intention and desire were communicated by the depositor to the bank, and that the latter agreed, or is estopped from denying that it agreed, to so apply the deposits ; and when a trust or special deposit is found, upon facts legally sufficient to authorize the finding, then the contract is established and effect must be given to it.
    Unless, by an arrangement between a bank and its depositor, there is a setting apart or appropriating of particular property or a fund for a particular purpose, no trust is created as between them, their ordinary relation being that of debtor and creditor, it being necessary to constitute a trust that there should be a specific appropriation of a particular fund for the payment of a particular claim.
    By the certification of a check, or the issuance of a certificate of deposit, a bank becomes the debtor to the holder of such check, and is not obliged to set apart anjr portion of its assets as a particular'fund to pay the same.
    The transaction of making a deposit, drawing checks and having some of them, certified, is not of itself, and irrespective of any other transactions, considerations or agreements, a contract, the effect of which is to take the moneys represented by the certified checks out of the general property of the bank, as well as out of the account of the depositor, nor under any principle of the law merchant can such a transfer operate as an assignment of the deposits to the payees of the certified checks; there is no special or trust relation created thereby between the parties as the result of the deposit and the drawing of the checks, certified or uncertified.
    An ordinary uncertified check upon a general account is neither a legal nor an. equitable assignment of any part of the sum standing to the credit of the depositor, and confers no right upon the payee that he can enforce against the-bank.
    A clearing house furnishes but a convenient method to banks of making their collections and payments as between each other, and an outsider, not a member thereof, is not to bo benefited or injured by the action of such banks as between themselves. The knowledge of such usage which a depositor must-have is that banks use the Clearing House as a convenient method of making their own collections and their own payments, and that they do not send the deposits of one day against the checks of the same day, nor do they send specific funds to meet spebific certifications. They simply send all their checks, drafts and obligations of every kind, and offset against the same ali other checks and other obligations of any kind at any time issued by them, or properly drawn on them, and which may happen to be presented at a specified date.

      The relation between a bank and the payees oí cheeks drawn thereon is controlled by settled principles of law, and the customs prevailing in the Clearing House can in no way alter or modify the law merchant in regard to checks or commercial paper. Its usages and rules may bind its members in the same way that a general usage of trade may bind those who deal with reference to it, but those who are not bound by such usages, and have not contracted with reference to them, have no right to avail themselves of them to create an obligation against those who are parties to their adoption and bound by them inter sese only.
    The sending of checks through the Clearing House on a certain day for collection, does not effect an appropriation of such checks as a specified fund for the payment of checks, certified or uncertified, drawn by the bank’s customers on the previous day ; such checks are sent for the purpose of collection, and not of appropriation.
    A temporary receiver, as an officer of the court, has a right, pursuant to the provisions of the Code of Civil Procedure, to apply from time to time to the court for instructions, and its discretion, which is vested in the Special Term, can also be exercised by the General Term upon an appeal to it by such receiver.
    Where creditors of an institution, and not its temporary receiver, apply for summary relief, and it is granted, notwithstanding the opposition of the receiver and the interests which he represents, such receiver is, within the meaning of section 1294 of the Code of Civil Procedure, a party aggrieved, and has the right of appeal to the General Term. (Van Brunt, P. J., dissenting.)
    Cjross-appeals by Hugh J. Grant, as temporary receiver of the St, Nicholas Bank, and Levi C. Lathrop and others, petitioners, from an order made at the New York Special Term, and entered in the office of the clerk of the county of N.ew York on the 14th day of February, 1894, directing the said receiver to pay to Levi C. Lathrop and others the sum of $74,741.80, denying the prayer of the petitioners in all other respects, and vacating an order entered in said clerk’s office on the 5th day of February, 1894.
    The petition upon which the order is founded recites that the petitioners, who are bankers and brokers, for some years had an account with the St. Nicholas Bank, and that on the morning of December 20, 1893, they had on deposit to their credit in such bank $279,255.32; that on that day they delivered to the bank in checks for deposit to the credit of their account the sum of $86,324.46, and on the same day drew for presentation to said bank, for payment or certification, checks to the amount of $86,200.80, the certified checks alone amounting to $74,741.80.

      That the St. Nicholas Bank did not open its doors for business on the 21st day of December, 1893, though it sent to the Clearing House for collection all the checks deposited by the petitioners; and the checks drawn against the deposits of the petitioners, including those certified and uncertified, were sent by the holders thereof through their banks to the Clearing House, the intent being on the part of the St. Nicholas Bank, and of the other banks holding checks of the petitioners, that the checks deposited by the other several banks should be paid by the checks belonging to the petitioners, drawn by ■ other j>arties on other banks and delivered by petitioners to the St. Nicholas Bank, and by that bank to the Clearing House, for that specific purpose, the effect of which would and should have been a mutual exchange, satisfaction and settlement of obligations.
    That is, the checks would have been cleared, and the checks drawn by the petitioners on said bank, to the order of other parties and deposited by them in their various banks for collection, would have been paid by the checks of still other parties, to the order of .the petitioners, -which the St. Nicholas Bank had sent to the Clearing House for that purpose before the Superintendent of Banks had closed the doors and taken possession of said bank.
    The petitioners allege that the checks referred to were their property, delivered to the bank in trust for the specific performance of the above trust.
    But the petitioners show that, instead of such exchanges, satis-., faction and settlement of said respective classes of checks being permitted, as the petitioners are informed and believe, an individual member of the Clearing House, without law or right or the authority of his associates, at the time wrongfully interposed and prevented the performance of said act and trust, and took and received said checks from the Clearing House in the Gallatin National Bank, in trust for the Superintendent of Banks, and, as the petitioners are informed and believe, has delivered the checks to the temporary receiver of said bank, without the authority or consent of petitioners, and against their written protest, to the Gallatin National Bank, forbidding it to so deliver said checks, and requiring it to hold and apply said checks- for the specific purpose for which they were so deposited.
    The petitioners further show that the Clearing House thus wrongfully refused to effect the exchanges of the said the St. Nicholas Bank on that day, which exchanges the petitioners are informed and believe showed a credit in favor of said bank in the sum of over $50,000, and that the bank was wrongfully closed on the morning of December 21,1893, pending examination, and forbidden to transact business by order of Charles 1VI. Preston, Superintendent of Banks, of which action neither any officer of said bank nor any of the petitioners had notice beforehand.
    The checks that were certified as above are all now in possession of the petitioners. They either retained the possession of all such checks, or took them up for full value, from the persons to whom they had delivered them.
    The affidavit in support of this petition states “ that neither said examiner nor said Superintendent of Banks at any time announced to the public, or to any depositor, shareholder, director, officer or employee of said bank, his purpose at any time preceding the 21st day of December, 1893, of closing said hank, nor did either said ■examiner or superintendent announce to any such person, or to deponent or deponent’s firm, that he would close said bank before the morning of December 21, 1893, or that the capital of said bank was in any way supposed or alleged to be impaired, or of any other condition of said bank other than that of entire solvency, and that the hank would resume and continue business on the 21st day of December, 1893, and thereafter uninterruptedly as it had hitherto done and in the usual course of business.” That, misled by such conduct and silence on the part of the Superintendent of Banks and the examiner, the petitioners made the large deposits of money stated.
    By the answering affidavit it is shown that $178,725.88, consisting of all the checks, drafts and notes which the St. Nicholas Bank had on hand, were sent in the usual course of business to the Clearing House for collection; that deposits were received on the 20th by the bank, and checks certified in the same manner as it had been the custom to do ever since the organization of the bank.
    The relief asked was, that all deposits of checks made by the petitioners on December 20th, or the proceeds thereof, be returned, or that the receiver he directed to pay checks, certified and uncertified, which had been drawn by the petitioners on said day. Belief was accorded to the extent of directing that the receiver pay the amount of checks certified on the 20th, and which were presented to the Clearing Plouse on the 21st, and denied as to the uncertified checks.
    Prom such denial the petitioners appeal, and from so much of ,the order as directs payment of the amount of certified checks the receiver appeals.

      John M. JBowers, for the receiver.

      Frcmli J. Mather, for the petitioners.
   O’Brien, J.:

The respondents claim that, upon the facts, the bank derived no legal title to any of the deposits of December 20, 1893, and that neither the checks nor their proceeds ever became the property of the bank. "We think the reasoning in the opinion of the court below disposes of this contention. As therein said:

“ There can be no doubt that the checks deposited by the petitioners on the 20th day of December, 1893, became the property of the bank. Credit was given therefor in the petitioners’ pass book, and thereupon the relation of debtor and creditor arose with regard to the sum so credited. Nor can there be any doubt as to the relation of the parties with regard to certifications made by the bank upon the same day. The legal effect of such certifications was to transfer the obligation of payment to the bank. The latter then became debtor to the holders of the checks, and its debt to the depositors was correspondingly reduced. It is true that these certifications created a legal obligation upon the part of the bank without regard to the state of the depositors’ account.”

This is a correct statement of the legal relations of the parties, and there is nothing in the case referred to by respondents of Cragie v. Hadley (99 N. Y. 131) which in any way destroys its accuracy. In that case, as shown by the opinion, the drafts, for the proceeds of which the action was brought, were deposited with the bank between -'two and three o’clock in the afternoon of April 13, 1882, and were credited in the plaintiff’s pass book and on the books of the bank to their account. The bank closed its doors at the usual hour on that day and never opened them afterward. It turned out that the bank was irretrievably insolvent, owing debts to the amount of one million three hundred thousand dollars, with assets not exceeding in value forty per cent of its debts, and had been so insolvent for months before its failure,” of which fact the president had full knowledge, and presumably its other officers and agents. Upon these facts, and while recognizing the general doctrine “ that upon a_ deposit being made by a customer in a bank, in the ordinary course of business, of money or of drafts or checks received and credited as money, the title to the money or to the drafts or checks is immediately vested in and becomes the property of the bank,” the opinion says: The further rule that one who has been induced to part with his property by the fraud of another, under the guise of a contract, may, upon discovery of the fraud, rescind the contract and reclaim the property, unless it has come to the possession of a bona fide holder, is equally well settled.” And upon the ground of fraud on the part of the bank in receiving, under the circumstances, the deposit, it was held that the depositor was entitled to rescind the contract which was implied from the deposit, and to reclaim the property which the bank had obtained by fraud.

Here not a single fact is presented to support the charge of insolvency, or to show that the officers had knowledge that the bank was insolvent, the only fact in this connection being that the Superintendent of Banks closed this bank on the morning of the 20th of December, 1893. While such action of the ’ superintendent may have been perfectly proper, from this circumstance no inference can be drawn of knowledge of the bankrupt condition of the institution on the part of the officers, which would make it a fraud for them to receive the deposits. And the case relied upon of Cragie v. Hadley (supra), (as well as other cases that might be cited, wherein the reclamation of checks or drafts deposited shortly prior to the failure of a banking situation had been sustained) is placed on the ground of fraud on the part of the bank in receiving deposits after its insolvency was known to its officers. It may transpire that on December 20th this bank had .sufficient assets to meet its deposits, and that there was merely an impairment of capital, which, while requiring the intervention of the State and the initiation of proceedings to wind up the bank, would not necessarily constitute the kind of fraud which the courts say justifies the reclamation of deposits. A general allegation that the debts and liabilities of the defendant exceed tlie total amount of the assets and the value of all its property by over $150,000 (taking into account the fact that its capital stock was $500,000) would mean simply that there was an impairment of its capital stock to the extent mentioned, still leaving a surplus of $350,000 over and above what it owed to its depositors. The condition of the bank, whether solvent or not, is as yet undetermined, the present receiver being but a temporary one, and the final judgment not having as yet been entered. That no fraud was attempted is apparent from the conduct of the bank and its officers in having made provision to meet all the checks which were presented on the 21st to the Clearing House in the ordinary course of its business, and without having up to that time been guilty of any act indicative of open or covert insolvency.

What facts must appear to justify a reclamation of a deposit when once made has been many times stated. Thus, St. Louis & San Francisco R. R. Co. v. Johnston (133 U. S. 566, head note) states: When a hank has become hopelessly insolvent, and its president knows that it is so, it is a fraud to receive deposits of checks from an innocent depositor, ignorant of its condition, and he can reclaim them or their proceeds.”

The court below, as shown by the opinion, did not base its order upon this theory, hut thought that the strict legal relations of the parties were affected'by a custom in regard to clearances, by force of which “ there was an appropriation of these checks [of depositors sent by the hank to the Clearing House] to the payment of their obligations maturing that day and payable through the Clearing House. The checks and the certifications were to offset each other ; ” and that by this act of appropriation the creditor obtained an equitable right to the application of the property, which was not to be affected by the failure of the Clearing House to apply them as intended.

In this we think the learned judge fell into two errors, one, in basing the right of recovery upon the theory of the misconduct of the agent; and again, in assuming a custom of which there is no evidence in the papers and of which we think there is no existence in fact. If the right to an equitable lien or preference is to be accorded the petitioners here, it cannot, for obvious reasons, be put upon the ground of agency, but must, under well-settled equitable principles, be based upon tbe theory of a trust. If the checks ■which the bank received from its depositors on December 20th and sent to the Clearing House on the 21st, constituted a trust fund for the purpose of meeting the checks certified on the 20th, then the receiver, standing in all respects in the bank’s stead, would have the same duty and obligation of carrying out the trust — a duty which equity could compel him to perform.

That deposits may be special, so as to create a trust or an appropriation as between the parties, is evident. To prove that requires no more than evidence that the intention and desire were communicated by the depositor to the bank, and that the latter agreed, or is estopped from denying that it agreed, to so apply the deposits. When the trust or special deposit is found upon facts sufficient legally to authorize the finding, then the contract is established and effect must be given to it. Upon such an inquiry, as said in Straus v. Tradesmen's Nat. Bank (122 N. Y. 382): “ The question [is] whether the Tradesmen’s Bank was entitled to retain from the fund [claimed to be a special deposit] the amount so due it from Dixon [a depositor]. This was dependent upon the nature of the credit to Dixon, and the character in which the bank was a,t liberty to assume that the deposit furnishing the credit was made. As a rule, a deposit made in a bank by a person on general account becomes its fund, and the relation between the depositor and the bank is that of debtor and creditor, and, in the absence of any agreement to the contrary, the bank is at liberty to apply the money upon a demand due to it from the depositor.”

In People v. City Bank of Rochester (96 N. Y. 32) a note was outstanding, and petitioners, wishing to anticipate payment on a certain day, informed the bank in regard to the note, and then gave and the bank received them check for the amount of the note, less rebate of interest, in these words :

“Pay to our note, due January 6th, 1883, or bearer, two thousand, nine hundred and sixty-three T2^- dollars.

“ SAPTWELL, HOUGH & FOKD.”

Danforth, J., writing the opinion therein, says: “ The transaction in question was not between the bank and Sartwell, Hough & Ford (petitioners), in their relation of debtor and creditor, nor in their relation of bank and depositor. The object of the latter was to provide a fund for the payment of specific notes, and the engagement of the former was to apply that fund to such payment. * * * (Libby v. Hopkins, 104 U. S. 303; In re Le Blanc, 14 Hun, 8; 75 N. Y. 598.) These cases stand upon the ground of a specific appropriation of a particular fund for the payment of the claim there brought in question. So does the one at bar.

That fact is lacking in the case of People v. Merchants & Mechanic Bank (78 N. Y. 269). * * * The checks of petitioners were money assets in the hands of the bank, and were so treated by all parties; they were delivered to it with explicit directions to apply the proceeds on payment of the notes; those directions were assented to by the bank officer. * * * It assumed a duty, and the receiver, as its representative, is bound by it. * * * The checks were impressed with a trust.”

In addition to these cases many others could be cited wherein the distinction is clearly pointed out, that, unless by an agreement between the parties there is a setting apart or appropriating of particular property, or a fund for a particular purpose,- no trust is present as between a bank and its depositors, the ordinary relation between whom is that of debtor and creditor, it being necessary to constitute a trust that there should be a specific appropriation of a particular fund for the payment of a particular claim. (Libby v. Hopkins, 104 U. S. 303; People v. Merch. & Mechanic Bank of Troy, 78 N. Y. 269; Cavin v. Gleason, 105 id. 256.)

That there was a special appropriation by express arrangement or agreement of the parties is not claimed, but, as we understand, it is insisted that by force of the custom governing clearances as bearing upon the payment of certified checks, there was created an appropriation of deposits made on the 20th and sent to the Clearing House on the 21st for the specific purpose of paying the certified Checks of the 20th. We are no. longer speaking of the right to a return of the deposits, but of the right of a holder of a check, certified on the 20th, to claim an appropriation or setting aside of a specific fund by the bank, out of which he is equitably entitled to a preference.

As said in Cook v. State Nat. Bank of Boston (52 N. Y. 114): “ Tlie certification of a check, if written out, would contain a statement that the drawer had funds sufficient to meet it in the bank, applicable to its payment, and an agreement on behalf of the bank that these funds should be retained and paid upon the check whenever it was presented.” And as said by Sapallo, J., in speaking of the nature of the contract that a bank makes on certifying checks (Thomson v. Bank of B. N. A., 82 N. Y. 6): “ The bank has given a negotiable obligation to the holder of the check which is ecpivalent to a certificate of deposit. If the holder of the certified check should lose it, he would still have .his remedy upon it against the bank, but could not have recourse against the drawer, whose funds had thus been locked up or transferred to the credit of another party.”

The contract, therefore, that a bank makes when it certifies a check is in effect an acceptance. There is no trust relationship between such bank' and the holder of the check, nor is the bank bound to set apart from its other funds a particular sum for its payment. (First Nat. Bank v. Leach, 52 N. Y. 350; Lynch v. First Nat. Bank of Jersey City, 107 id. 179; Goshen Nat. Bank v. Bingham, 118 id. 319.) These cases are authority for the proposition that by the certification of a check or the issuance of a certificate of deposit a bank becomes debtor to the holder of such check, and is not obliged to set apart any portion of its assets as a particular fund to pay such check.

The petitioners here, not claiming to have made a deposit of checks on the 20th as a special fund to pay the checks, certified or uncertified, drawn on that day, hut having, in the usual and ordinary way, made a deposit, and having drawn checks, some of which were certified and some not, it cannot he said that the latter were certified or drawn against the amount deposited on that day, because such statement is unsupported by any facts. Nor do we think the transaction of making the deposit, drawing checks, and having some of them certified, of itself and irrespective of any other transactions, considerations or agreements, was a contract, the effect of which was to take the moneys represented by the checks so certified out of the property of the bank as well as of the depositor, or that under any principle of the law merchant such a transfer can operate as an assignment over' of the deposits to the payees of the certified checks. On the contrary, there was no special or trust relation, upon the facts appearing, created between the parties as the result of the dej>osit and the drawing of the checks, certified or uncertified, because, as between the bank and the payees of the certified checks, the relation was that of debtor and creditor; and, as said in O’Connor v. Mechanics’ Bank, (124 N. Y. 331) respecting “ an ordinary uncertified check upon a general account,” it “ is neither a legal nor an equitable assignment of any part of the sum standing to the credit of the depositor, and confers no right upon the payee that he can enforce against the bank.” ■

In the case of Attorney-General v. Continental Life Ins. Co. (71 N. Y. 325), where, from the circumstances under which the check was issued, it was claimed that the intent was to transfer and assign to the holder a like amount of the fund on deposit in a trust company, it was said:

“ The petitioner was a creditor of the insurance company upon a claim upon a life policy. When she received the check she was a creditor still, the claim not having been paid, but only liquidated. "When the company failed and went into the hands of a receiver, the rights of all the creditors to all the assets became fixed by statute, and the petitioner, not having acquired any lien upon any of the assets, occupies the position of a general creditor. The necessary delay in transmitting the check for her indorsement, and in returning it, was unfortunate, because, in the meantime, the statute had seized the assets and provided for their distribution among all the creditors, and both precedent and reason have clearly defined and well established the general rule to be applied, and courts ought not ■to depart from it to meet a particular case of supposed hardship.”

So, we can say here, the act of the Clearing House, or one of its officers, in not making the clearance, was unfortunate, because before the mistake could be rectified the receiver took possession of the assets under the statute, for all the creditors, and no legal or equitable right to a preference in payment being made out, the general rule firmly established should be adhered to, which secures equality of payment among creditors.

This brings us finally to a consideration of the effect upon the relations between the parties of the transmission of checks, etc., by the bank to tbe Clearing House, and of the relation which the holders of checks, certified or uncertified, bear to the Clearing House.

That the Clearing House furnishes but a convenient method to banks of making their collections and payments as between each other, and that an outsider, not a member thereof, is not to be benefited or injured by the action of such banks as between themselves, becomes evident, we think, upon reflection.

As clearly stated by the appellant, the precise nature of the transactions of the Clearing House are these: Take the case of the intended action of the St. Nicholas Bank on the morning of the 21st day of December, 1893. It sent to the Clearing House all checks, drafts and other obligations held by it on other members of such Clearing House. These checks were accompanied by a statement headed “ Saint Nicholas Bank, Settling Clerk’s Statement, Dec. 21, 1893.” It contained a list of the different banks, members of the Clearing House, by their numbers; .opposite such numbers were the names of the banks, and still opposite the names of the banks was the entire amount of all checks drawn on such particular bank. Then all the checks held by the other banks, members of the Clearing House Association, on the St. Nicholas Bank, are presented to it at its desk in the Clearing House, and are footed up by its settling clerk. On the balance being thus fixed, if a debit balance, the St. Nicholas Bank pays the same in cash y if a credit bank, it receives the same in cash. All that the Clearing House does is to distribute these payments for differences. The liability of the Clearing House, if any, does not commence till these differences are settled by the banks. The St. Nicholas Bank, however, on the morning of the 21st day of December, 1893, was bound to offset, as against its claims on the other banks, just as much by checks certified by or drawn by it days, weeks or months previous, as by checks certified by it or checks drawn on it the day previous. It is impossible to incorporate into this Clearing House business any custom which inures to the benefit of a depositor and permits a general belief that his certifications will be paid by the bank remitting his deposits to the Clearing House the next morning for the express purpose of meeting such certified checks. It is also impossible to incorporate into the business of such Clearing House any custom on which a depositor can rely that his dejiosits will be remitted to meet in the Clearing House the next morning all such checks as he may draw .against them, whether certified or uncertified. The precise custom and the precise knowledge that the depositor must have is that the banks use the Clearing House as a convenient method of making them own collections and their own payments, and that they do not send the deposits of one day against the checks of the same day. Nor do they send specific funds to meet specific certifications. That in simple truth they send in all their checks, drafts and obligations •of every kind and offset against the same all other checks and other obligations of any kind at any time issued by them or properly drawn on them, and which may happen to be presented at a •specified date.

Had there been no Clearing House, the St. Nicholas Bank would Lave collected from each of the banks on whom checks received by it were drawn, by sending to such banks and demanding payment thereof, and would likewise have paid on demand all other banks who held checks drawn on it, whether certified or uncertified. Doubtless the St. Nicholas Bank would have effected the exchanges itself with each of the other banks by simply paying from day to day the difference between checks held by the respective banks. If, for the convenience of these banks, they all meet at a certain place and hour and make payments and agree upon offsets, it certainly makes no change in the legal status of the transaction and does not carry rights to dejtositors not otherwise belonging to them.

The entire amount that was collected by the Superintendent of Banks and turned over to the temporary receiver, upon the checks that were sent by the St. Nicholas Bank to the Clearing House on the morning of the 21st day of December, 1893, was the sum of $412,928.79 Why should this be used up in favor of the certified checks that went through the Clearing House that morning alone? Why should it not be applied with just as much force to certified checks of the 19th of December, 1893, or certified checks of the 9th of December, 1893, or certified checks of any other date that happened to go into the Clearing House that morning ? Why should it not be just as much applied to uncertified checks ? Why, in short, if the court should give, any preference in the matter, should not that preference be directed to carrying through the transaction that would Lave taken place at tlie Clearing House on that morning bad tlie St. Nicholas Bank been in a position to carry on its ordinary business ?

In tlie not improbable case that the checks and drafts that were presented against the St. Nicholas Bank in the Clearing House on the 21st day of December, 1893, exceeded the checks and drafts it sent there, liow will the court discriminate as to which of the holders of such checks shall be paid ? In short, the moment that the supposed equity created by the assumed custom is permitted,, the temporary receiver and the court find themselves surrounded by a maze of difficulties, the end of which cannot be foreseen.

But whatever the custom or manner of dealing between the several banks and the Clearing House, how can this be said to affect, the relations of a particular bank to the payees of checks certified by it, or uncertified and drawn iqion it % The relation between the bank and such payees is one controlled by settled principles of law. It can matter little to the latter what customs prevailed in the. Clearing House, nor are they in any way interested whether the-bank against which the certified checks held by them are drawn makes its settlements through the Clearing House or by messengers* sent around to each bank. As said in Overman v. Hoboken City Bank (1 Vroom, 61): "Where there is no claim [that the association called the “ clearing house ” is an institution authorized by special legislation, or any authority existing in such association, in any way, to alter or modify the law merchant in regard to checks or commercial paper, such association cannot be held to have power to make-usages or rules to bind those who are not parties to its organization. Its usages and rules, if not in conflict with law, may, by the implication of tacit adoption in the contracts of members, bind them in. the same way that a general usage of trade may bind those who-deal with reference to it, and who are, therefore, held impliedly to adopt it. But those who are not bound by such usages, and have not contracted with reference to them, have no right to avail themselves of them to create an obligation against those who are parties-to their adoption and bound by them inter sese only]. And we agree with what was said in Merchants’ Bank v. Bank of the Commonwealth (139 Mass. 518): “ To the regulations of this association the customers of the banks are not parties, and whatsoever effect is, -to be given to them as between the banks, their customers are not in a situation to claim the benefit of them, nor are they liable to be injuriously affected by them.”

The sending, therefore, as a matter of convenience, of checks through the Clearing House on a certain day for collection, does not, by any custom known to us or established by the moving papers, effect an appropriation of such checks as a specific fund for the payment of checks, certified or uncertified, drawn by the bank’s ■customers on the bank’s customers on the previous day. And that «checks so sent are for the purpose of collection, and not of appropriation, becomes evident when we remember that it is entirely proper and right, if more convenient, for the bank to make its own 'Collections of such checks outside the Clearing House and through its own agents.

"We have considered this subject as though the determination had been reached in an action after a trial, and the discussion into which we have been drawn, and the difference between the views which we entertain and those held by the learned court below, as to the «custom prevailing among banks dealing with the Clearing House, -will show, as was held in The Matter of the North River Bank (60 Hun, 91), that “the practice of deciding such claims upon sum-, mary applications is to be discouraged, and the claimant should .ordinarily be remitted to his action at law.”

Considering the amount of. money here involved, the facts upon 'which the right to the relief was based, the absence of any authoridative decision upon the question, and the condition of the receiver■ship, we think it would have been a proper case for the court to refuse to entertain a summary application and remit the claimants -to their remedy by action. But that the court had the right and power to entertain the application was decided at the last term in -•the case of People v. St. Nicholas Bank, In re Kurzman (76 Hun, 522). It was therein held that a temporary receiver, as an •officer of the court, had a right, pursuant to the provisions of the Code of Civil Procedure, to apply from time to time to the court for instructions. In referring in that decision to the court, we meant, not simply, the Special Term, nor any other branch, but the entire court, made up of its various branches, including the General 'Term. It having been held, therefore, that the receiver, as an officer of the court, bas a right to apply to the court for instructions, the discretion which is vested in the Special Term can also be exercised by the G-eneral Term upon the receiver taking an appeal. Whether he would be justified in taking an appeal to the Court of Appeals is a question for that court. In this case it was not the receiver applying to the court for instructions, but depositors who have brought the receiver into court to obtain a direction that he pay a large sum to such, claimants out of the moneys in his hands. Under such circumstances, where the claimants, and not the receiver, apply for summary relief, and this is granted, notwithstanding the opposition of the receiver and the interests which he represents, we fail to see why the receiver is not, within the meaning of section 1294 of the Code, a party aggrieved, and thus having the right to appeal to the General Term.

To recapitulate, we think, upon the undisputed facts, that the application should have been in all respects denied, for the reasons :

(1) That upon the petitioners having made a deposit it became the property of the bank, and no fraud having been shown, such deposit was not subject to reclamation.
(2) That as there was no agreement or arrangement, express or implied, that such deposit should be specifically appropriated or applied to the payment of any particular check or claim, there was no trust relation created between the parties.
(3) That with respect to certified checks, the payees thereof acquired no special lien upon or equitable assignment of any special fund or particular portion of the assets of the bank.
(4) That any portion of the deposits of December 20, 1893, which became the property of the bank, was not, by the fact of its being transmitted to the Clearing House for collection, appropriated to the payment of checks certified on the twentieth.
(5) That the relation between the payees of the checks and the bank is controlled by rules of law, and not by any supposed custom, which may affect the members of the Clearing House, but to which such payees are strangers.

The order appealed from, therefore, in so far as it directed the receiver to pay over the moneys, should be reversed, and in other respects affirmed, with costs.

Follett, L, concurred.

YaN Bbukt, P. J.:

Under the principles declared in the decision of the case of The People v. St. Nicholas Bank, In re Kurzmam (76 Hun, 522), decided at the last term of this court, I am unable to perceive how the receiver has any standing in this court as an appellant. In that case it was decided that the receiver was not a trustee for the creditors, but was the mere hand of the court to execute the directions and obey the orders given to him by the court. The receiver, therefore, representing nobody but the court, wlren directed by an order of the court to do a certain thing, is certainly not aggrieved by such an order, and the provisions of section 1294 of the Code, which regulate the right to appeal, are that a party aggrieved may appeal, and no authority to appeal is given to anybody else. In the case at bar, however, notwithstanding this position, an appeal is entertained upon the part of a receiver, representing, as above stated, nobody but the court — in fact, the hand appealing against the directions of the brain. It is apparent that if the receiver, the hand, had not taken the unwarrantable liberty of disputing the directions of the brain, according to the result of the opinions in this case, over $130,000 would have been misappropriated because of the entertainment by the court of applications for the disposition of property in the receiver’s hands in individual cases of a like character to those in which the court held in the case above cited that such direction should be given. If the receiver had obeyed the order he certainly would have been protected by the direction of the court, and thus, it seems to me, we have at once a striking illustration of the evil results almost necessarily attending the entertainment of proceedings of this character on behalf of and against the receiver.

It is urged in respect to the decision in the case cited, that “ in referring in that decision to the court, we meant not simply the Special Term, or any other branch, but the entire court made up of its various branches, including the General Term,” and that “ it having been held, therefore, that the receiver, as an officer of the court, has a right to apply to the court for instructions, the discretion which is vested in the Special Term can also be exercised by the General Term upon the receiver taking an appeal.”

It is further stated that “ in this case it was not the receiver applying to the court for instructions, but depositors who have brought the receiver into court to obtain a direction that he pay a large sum of money to such claimants out of the moneys in his hands. Under such circumstances, where the claimants and not the receiver apply for summary relief, and this is granted notwithstanding the opposition of the receiver and the interests which he represents, we fail to see why the receiver is not, within the '«meaning of section 1294 of the Code, a party aggrieved, and thus having the right to appeal to the General Term.”

"What' difference it can make as to the relations of the receiver to the court, as to who is the cause of the giving of the direction to the receiver, I cannot imagine. According to this theory, if the receiver asks the court for instructions, he is entitled to them and must act upon them; but if he gets them without asking for them, he may contest them, a conclusion the mere statement of which seems to carry with it its refutation.

It is said that because instructions are opposed by the receiver and the interests he represents, that he is a party aggrieved within the meaning of section 1294 of the Code.

In the case cited the decision was founded upon the assertion that the receiver represented nobody but the court; that he was the mere hand of the court, and, therefore, entitled to directions from the court, a position which shows clearly that the receiver is not a party aggrieved. A principal (the court) can give his agent (the receiver representing the court only, as held) any instructions it pleases, and the agent cannot be aggrieved. According to the view advanced in the case at bar, it depends upon whether the instructions suit the receiver’s taste or not, whether they shall be obeyed. If he is indifferent or even careless, the receiver is protected by the order, no matter how harmful to the interest of those whom the-court représents.

But it is said that the receiver is entitled to the instructions of the whole court made up of its various branches, including the General Term, and that when instructions have been given by one branch of the court the direction vested in that branch may also be exercised by another branch, viz., the General Term, uj>on the receiver taking an appeal. Whatever may be the powers of the General Term in the cases of original applications made to it, it is clear that it can review the action taken by the Special Term only in the manner provided by the Code, and that is by an appeal by a party aggrieved. But as a temporary receiver, as was held in the Kurzman case, as has been above shown, represents nobody liut the court (the court in this instance being represented by the Special Term), he certainly has no grievance against his principal which can possibly bring him within the category of an aggrieved party, and entitled to appeal.

There can be no doubt but that the only proper practice is to have all such questions determined when the persons whose rights may be ultimately affected are before the court, so that they can be heard before such rights are adjudicated upon. Differing as I do with the views of the majority of the court in the case cited, I concur in the result arrived at by Mr. Justice O’BeibN.

It has been the well-established doctrine for a long period in the history of adjudications in this State that upon a deposit being made by a customer in a bank, in the ordinary course of business, of money, or of drafts or checks received and credited as money, the title to the money, or to the drafts or checks, is immediately vested in and becomes the property of the bank. (Commercial Bank of Albany v. Hughes, 17 Wend. 94; Metropolitan Nat. Bank v. Lloyd, 90 N. Y. 530; Cragie v. Hadley, 99 id. 131.) And this rule was in no respect infringed upon by the decision of the case of The People v. City Bank of Rochester (96 N. Y. 32) and kindred cases.

In the cases at bar there is attempted to be established a claim that the deposits which were made upon the day that the checks of the petitioners were certified were specially devoted to the meeting of such certified checks. There does not seem to be a particle of evidence to sustain any such proposition, which was the ground upon which the case of The People v. The City Bank of Rochester, last cited, was decided. In the cases at bar deposits were made generally, and certifications were made generally, the depositors in every instance having balances to their credit at the time the deposits on the day in question were made, in some instances in excess of the checks drawn and certified, and in others such balance not being sufficient (excluding the deposits of the day) to meet such drafts.

T3ie certification of a check bj a bank is a statement, upon the part of the bank, that the drawer has sufficient funds to meet it in the bank applicable to its payment, and an agreement on behalf of the bank that these funds will be retained and paid upon the check when it is presented. It may further be said that, as far as the holder of the check was concerned, it is immaterial whether such statements, in respect to the amount of money which the depositor had in the bank, is true or not; there is an obligation upon the part of the bank to pay that check when presented. Therefore, the certification of the check is simply an acceptance by the bank of a draft upon it by which it becomes primarily liable to the holder to pay. Now, such being the undertaking of the bank upon certification of the check, where is there any promise or understanding, or agreement upon the part of the bank, that the money last received shall be appropriated to meeting that obligation? Upon the contrary, applying the ordinary rule in respect to credits, where payments are made upon general account, the bank, in the payment of such an obligation, would be presumed to use the money which had first been deposited, and not that which had been last deposited. This rule has been repeatedly applied in respect to the application of payments, where the Statute of Limitations has arisen, where the question has been as to the payment out of particular moneys, and in kindred cases. (Clayton’s Case, 1 Mer. 572; Walden v. Davison, 11 Wend. 65; Allen v. Culver, 3 Den. 293; U. S. v. Kirkpatrick, 9 Wheat. 720; Bixby v. Drexel, 56 How. 478; Sheppard v. Steele, 43 N. Y. 52.) Therefore, the claim that these certifications were made, based upon the deposits of the day, or were to be deemed as an appropriation of these deposits to the payment of these checks by the bank, seems to have no foundation.

The only ground upon which the petitioners can establish any right to the application of any particular moneys to the meeting of these checks and certifications, is that by the sending of the checks to the Clearing House to be exchanged with the various banks upon which they were drawn, the Clearing House was created a trustee for the purpose of the application of the proceeds of the checks deposited to the payment of the checks certified and drawn.

If this rule is to be adopted, however, it does not limit itself to the checks drawn and certified on the day of this deposit, but applies to all checks, no matter when drawn nor when certified, which were presented at the Clearing House on the morning of the day subsequent to this deposit; because if any trust was created, it was for the benefit of all who had claims upon the bank, which were presented at the Clearing House on that' day. And this suggestion seems to me to show the; fallacy of the position that there was any trust created which gave the holders of these certified checks or the checks drawn upon the day when these deposits were made, the right to claim payment out of the proceeds of the checks depoéited, which were sent to the Clearing House.

The learned court below placed its decision upon the ground of agency ; that the Clearing House was the agent of both parties in respect to the exchanging of the checks in question. But it seems to me that in the case of the mere failure of an agent to do his duty, the party in respect to whom I have directed my agent to do something which he has failed to do does not get any vested right in its performance. The failure of my agent to follow my directions is precisely the same as though I had failed to act myself. Suppose, for example, I had sent my clerk with the money to pay a debt which I owed. He went to the place, but for some reason did not pay the debt and returned, and the sheriff, having an attachment against me, issued at the suit of another creditor, serves it upon my clerk with my money in his possession.. Would the first-named creditor have any claim uqion that money? Would not the attaching creditor be able to hold it under his attachment? There would be no change of title; it would be in me ail the time.

So it was in respect to this failure to carry through the exchanges at the Clearing House on the morning after the deposit. The agent did not do what it was instructed to do. There was no change of title. That remained precisely the same as though this abortive effort to effect the exchange had not been made. From the course of business in the Clearing House it would appear that that institution is a mere exchange where the various banks meet for the purpose of exchanging their obligations and paying their debts ; that it is the place of meeting of the various banks to effect their exchanges under the direction of the managers of the Clearing House. And I am unable to see that the Clearing House got any title to or control over the property of any of these banks. The one bank exchanges obligations with tbe other, and the debtor bank pays to tlie creditor bank in cask. And that is all. Where is there anything in such a transaction tending to show that the ClearingHouse was created a trustee for the purpose of paying obligations of this bank out of the property of the bank ? It seems to me that this being the course of business, this property belonged to the St. Nicholas Bank until its agent parted with it in the effecting of the exchanges.

It is a familiar principle that with the inability of a principal to act because of legal incapacity, the right of the agent to act fails. So in the cases at bar, when this bank ceased to do business, whatever uncompleted work its agents had on hand, such agents had no power to finish it, because their power ended with the incapacity of the bank. And this court has no power to complete that which was incomplete, unless some person has acquired a vested right in such completion. This, we have seen, the holders of these checks have not acquired, there being no appropriation- of any particular money of the depositor to the meeting of these obligations, and no right acquired to any such application.

I am, therefore, of opinion that the order was ill-advised, and that such applications should not be entertained by the court, since, as has already been shown, they are apt to lead to results disastrous to those who may be finally entitled to the residuum of the wreck.

Order appealed from, in so far as it directed receiver to pay over moneys, reversed, and in other respects affirmed, with costs.


source: Caselaw Access Project

author: O’BbieN, J.:

license: Public Domain

text:
    United States Trust Company of New York, Appellant, v. The Mayor, Aldermen and Commonalty of the City of New York, Appellant.

      Assessment of a tax against a corporation— “ erroneous ” and “ illegal ” assessments, distinguished — remedy, by certiorari, by action to recover back the tax — jurisdiction of assessors — 'payment of tax under protest.

    A manner of ascertaining the value of the capital stock of a corporation to be assessed as provided by chapter 456 of the Laws of 1857, by taking the value of the share stock, instead of the capital owned by the corporation, is erroneous, and in taxing corporations under such act the subject of valuationand assessment is never the share stock but always the company’s capital and surplus, which should be assessed at its actual value when it is known or can be ascertained.
    An erroneous assessment is one where the officers making the assessment have power to act, but err in the exercise of their power, and an illegal assessment is one where such officers have no power to act at all, and they are not aided by their decision that they have.
    If the amount of a tax is simply erroneous, and its payment has not been compulsory, the exclusive remedy is by certiorari, and a person who fails to avail himself of such proceeding is without remedy, but where an assessment is illegal and void, or where one pays money upon an illegal or erroneous assessment, to prevent an illegal seizure of his person or property by one claiming authority to seize the same, the amount thereof may be recovered back in an action on the ground that the payment was compulsory, or by duress or extortion.
    If commissioners of taxation have jurisdiction over the person and subject-matter, the fact that they proceeded upon a wrong basis, and thus made an erroneous assessment, as distinguished from an illegal one, will not render the assessment void.
    Assessors cannot acquire jurisdiction to make assessments by determining that, they have it, and their authority to act must always depend upon the existence of the jurisdictional facts described in the statute.
    In a case where assessors have jurisdiction to impose a tax, which is paid, it cannot be recovered back by the taxpayer, without first setting aside the assessment, and where, without first taking proceedings for such purpose, a voluntary payment is made, no recovery can be had, even though it be held that the. assessment was excessive and erroneous.
    A tax voluntarily paid cannot, as a general rule, be recovered back, and it is. immaterial that it has been illegally laid, the presumption being that all payments are voluntary until the contrary is shown.
    A suit to collect a tax levied by the assessors of the city and county of New York does not lie until proper demand has been made therefor.
    Where there is compulsion, actual, present, potential, in inducing the payment of a tax by force of process available for instant seizure of person or property, and tlie demand is really illegal, then the party, by giving notice of the illegality, and of his involuntary payment, can recover back the money so paid in an action brought for that purpose. Where the payment is voluntary a protest with notice of an intent to reclaim is not sufficient to sustain a recovery in .an action brought to recover back the amount thereof, as the voluntary character of the payment still remains, notwithstanding the notice, and is fatal to the action.
    Cross-appeals by the plaintiff, the United States Trust Company of New York, and by the defendant, The Mayor, Aldermen and Commonalty of the City of New York, from a judgment of the Supreme Court, entered in the office of the clerk of the county of New York on the 18th day of October, 1893, upon the decision of the court, after a trial at the New York Special Term, adjudging and decreeing that the taxes assessed upon the plaintiff’s capital and surplus by the defendant for the years 1888, 1889 and 1890 and paid could not be recovered back, and granting the plaintiff judgment for the amount of the taxes assessed against and paid by it for the year 1887.
    The action was brought to recover $139,765.71, being the aggregate amount paid for taxes in each of the years 1887, 1888, 1889 and 1890, on the ground that the assessments were void and the payment of the taxes was induced by duress and made under a mistake, and to cancel the assessments themselves.
    The plaintiff is a domestic corporation transacting business as a trust company in the city of New York. In each of the years mentioned plaintiff was assessed for taxation on its capital stock, pursuant to the provisions of the act of 1857, relating to taxing incorporated companies. (§ 3, chap. 456, Laws of 1857.)
    In each instance plaintiff furnished the commissioners sworn statements showing its condition in those years for the purpose of assessment, and through its officers or attorneys appeared before the commissioners, while the books were open for correction, and applied for cancellation or reduction of the assessment. The grounds of application for cancellation or reduction of the assessment in each year was, that according to these statements the plaintiff had no personal property subject to taxation, except for the year 1890; but the commissioners, instead of canceling, reduced the assessment. The result of these proceedings was, that the assessments were confirmed for amounts in each year the tax on which in the aggregate make up the sum for which a recovery is sought in this action. ,
    Plaintiff took no proceedings by certiorari to review any of the assessments, but paid the taxes as levied, either with interest accrued at the time of payment, or less the rebate allowed by law for prompt payment.
    In the years 1888, 1889 and 1890 the taxes were paid (excepting a small portion of the taxes of 1890) during the first weeks that the books were open, and in each of said years plaintiff received a rebate of interest, this being one of the inducements stated by the president of plaintiff for the early payments of taxes in these years.
    In the year 1887 payment of the tax was deferred until December twenty-ninth, on which day payment was made, with interest, and at the same time a written notice was served, either upon the mayor, or comptroller, or the receiver of taxes of the city, in the following form:
    “ The United States Trust Company of New York being informed that you claim that it is indebted to you to the amount of $37,231.77 for a tax on personal estate of the said Trust Company, and in response to your demand therefor, it hereby pays the same under protest, reserving all rights to recover the amount so paid under protest, or any part thereof, believing the tax above referred to to have been unlawfully assessed, and the demand for the payment thereof to be unlawful.
    “UNITED STATES TEUST CO. OF NEW YORK,
    “ By J. S. ClabK,

      “ 2d Vice-Prest.

    To the Mayor, Aldermen and Commonalty of the City of New York; the Comptroller of the City of New York; the Receiver of Taxes of the City of New York.”
    No proof was offered of an actual demand by the receiver of taxes on the plaintiff for the amount of the tax laid in 1887. The person who paid the tax on behalf of plaintiff had died before the trial of this case, and the receiver of taxes was also then deceased. Upon whom the notice of protest was served, or the manner of its service, is not made to appear.
    It does not appear that any officer of the defendant had authority at tbe time of payment of the tax of 1887 to enforce collection, of the same, or that any officer threatened to enforce the same, or had made any attempt to seize the property of the plaintiff under color of law or otherwise.
    The court at Special Term held that the tax of 1887 was paid under duress, and that the amount so paid might be recovered back in this action, and that the taxes for the other years could not be so recovered. Judgment was entered accordingly, and both parties have taken appeals to this court.

      Edward W. Sheldon, for the plaintiff.

      George S. Ooleman, for the defendant.
   O’BbieN, J.:

Upon the part of the plaintiff it was contended that the disputed taxes were imposed without jurisdiction and were void, and to support this argument it is insisted, upon the authority of People ex rel. Union Trust Co. v. Colemam, (126 N. Y. 433), that the plaintiff’s capital stock was not taxable.

In that case the question of the right to fix the tax in the manner In which it was done by the commissioners here was directly involved, and upon the merits, if plaintiff is in the position to avail itself of the rule of law in that case, it would be conclusive upon the rights of the parties, because it was therein held that the manner of ascertaining the value of the capital stock to be assessed as provided by the act of 1857, by taking the value of the share stock instead of the capital owned by the corporation, was erroneous, and that in taxing corporations under said act the subject of valuation and assessment is never the share stock, but always the company’s capital and surplus, which should be assessed at its actual value when that is known or can be ascertained. There the question was raised by the Union Trust Company by certiorari, unlike the present action, which is brought directly to recover back moneys paid after the plaintiff had neglected to avail itself of proceedings by certiorari.

It is insisted that the present suit, unlike the case cited, involves a collateral attack upon assessments for taxation made by the proper authorities having jurisdiction of the person and subject-matter, and that it, therefore, cannot be maintained. This argument, of course, is supported bj the contention that, the plaintiff having omitted to avail himself of the full and adequate remedy provided by law for the review of illegal assessments, it cannot now be heard to question either the legality or the amount of the tax.

The determination of this contention must necessarily turn upon the point as to whether or not the assessment was illegal or merely erroneous.

As said in Nat. Bank of Chemung v. Elmira (53 N. Y. 49): “ It is conceded that the plaintiff is entitled to recover if the assessment is to be regarded as illegal, and not simply erroneous. * * * The distinction is between an erroneous and an illegal assessment. The former is when the officers have power to act, but err in the exercise of the power; the latter where they have no power to act at all, and it does not aid them to decide that they have.”

This distinction is also pointed out in Dillon on Municipal Corporations (4th ed., p, 1146, § 941), wherein it is said: “Accordingly, an action lies against a municipal corporation to recover the amount of taxes compulsorily collected by it upon an illegal assessment in respect of property not liable to taxation. So an unlawful tax for„a local improvement exacted by the city under color of process, and paid to the city’s officers under protest, may be recovered, with interest. The tax or assessment must be illegal or void, and not simply irregular, as, for example, an irregularity in mode of assessment, overvaluation, etc., to authorize i'ts recovery back.”

Many other authorities might be cited for the proposition that if the amount is merely erroneous, and its payment has not been compulsory, then the .exclusive remedy is by certiorari, and one who fails to avail himself of this proceeding is remediless. "Where, however, the assessment or tax is illegal and void, or where one pays money upon an illegal or erroneous assessment, to prevent an illegal seizure of his person or property by one claiming authority to seize the same, such may be recovered back in an action, on the ground that the payment was compulsory or by duress or extortion.

Here, therefore, if the plaintiff’s claim is right, that the assessment was void, then the failure to proceed by certiorari is no bar to the maintenance of this action.

What the commissioners, as shown, undertook to do was to assess the capital stock under the act of 1857; and what they did was, in fixing the value of the capital stock for the purpose of taxation, to erroneously take the value of the share stock instead of the capital of the company and its surplus. If the commissioners had jurisdiction over the person and subject-matter, then the fact that they proceeded upon a wrong basis and thus made an erroneous assessment, as distinguished from an illegal one, would not render the assessment void. We think that here the commissioners had jurisdiction of both the person and subject-matter. They were authorized to fix a tax on the capital stock, and in ascertaining the value thereof they erroneously determined it by taking the value of the share stock, and not that of the capital and surplus of the corporation. Their jurisdiction over the person is not denied, and it seems equally clear that they had jurisdiction of .the subject-matter, but by taking a wrong basis of valuation they assessed the plaintiff too much, and hence were guilty, not of an illegal act, but of an erroneous valuation of plaintiff’s property subject to taxation.

In all the cases to which we have been referred by plaintiff, and wherein the assessment was held to be void, it will be found that the decisions proceeded upon a finding that the assessors had no jurisdiction either over the person or the subject-matter, and as illustrating this we may refer to but one or two cases. Thus, in Nat. Bank of Chemung v. Elmira (supra) an attempt was made to tax the stock of a National bank, which was not the subject of taxation. And In re Catholic Protectory (77 N. Y. 342) the real estate was exempt from taxation, and the commissioners of taxes were, therefore, without jurisdiction to assess it.

In McLean v. Jephson (123 N. Y. 143) it is said : In view of the fact that the authorities on this joint are all uniform, we will only refer to In re N. Y. Catholic Protectory (77 N. Y. 342), because it recognizes as an established principle that the determination by assessors that a person or his property are taxable, is jurisdictional, and that an error made by them in such determination against the taxpayer is fatal to the validity of the assessment.”

That very case (McLean v. Jephson) was one where the assessors had no jurisdiction over the person, and as therein said : Assessors cannot acquire jurisdiction to make such assessments by determining-that they have it, and their authority to act must always depend upon the existence of the jurisdictional facts described in the statute.”

We think we have indicated with sufficient clearness the opinion we entertain that this is a case of an erroneous, and not an illegal, assessment.

The plaintiff, anticipating that the decision might be against it upon its claim that the assessment was void, further contends that though it should be held to be an erroneous and not an illegal ■assessment, still it was not confined to its remedy by certiorari, but can maintain an action such as this to recover it back. Support for this position is claimed to be found in the case of People ex rel. Warren v. Carter (119 N. Y. 557), wherein the court say: ■“Where, however, one pays taxes imposed under an assessment which is not void, but simply excessive and unequal, and.gives notice of his proceedings to review and correct the same, thus indicating that he intends to reserve his rights and does not intend to waive or abandon his proceedings, we know of no principle of law npon which such a payment under protest can be set up as a bar to the further prosecution of the proceedings. By such payment he waives no rights, and he does no wrong and creates no embarrassment to the municipality or officer taking his money, and he cannot be estopped thereby.”

This does not change the rule which has been held in the other ■cases to which reference has been had, because in the case last cited, unlike the one at bar, the payment was made under protest after the writ of certiorari was issued and while such proceedings were pending. And if here the plaintiff had taken the proceeding given by law to test the amount of the assessment by certiorari, and thereafter had had it canceled on such proceeding, then undoubtedly it could recover even though the money had been paid. But in a case where the assessors have jurisdiction to impose the tax, which is paid, it cannot be recovered back by the taxpayer without first setting aside the assessment. (Trimmer v. City of Rochester, 130 N. Y. 401.) And where, without first talcing proceedings for such purpose, a voluntary payment is made, no recovery can be had, even though it be held that the assessment was excessive and erroneous. That this is true can be well illustrated by taking the case of two who are claimed to be severally liable upon an instrument upon which, judgment is rendered against them. If one after demand should pay, and the other appeal and upon such appeal succeed, could it be argued that the former would be entitled to recover the moneys which he had voluntarily paid? We think under the authorities that this could not be done. And yet that is the position of the plaiiitiff here.

After making some futile protest with respect to the tax of 1887, voluntary payments were made in the succeeding years, during which the Union Trust Company was proceeding by certiorari to test the manner in which the assessment was levied upon its capital stock. If solely because the latter succeeded in having the assessment canceled, the plaintiff were permitted to recover in this action, then all the cases which make a distinction between voluntary and compulsory payments would be overturned. We do not think that where, as here, all the taxes, except for the year 1887 (which we will consider separately), were voluntarily paid, and the amount so paid has been appropriated by the city to meet its obligations, both State and municipal, that return thereof should now be had at the expense of the other taxpayers, unless such return is justified in law.

The general principle tj^t a tax voluntarily paid cannot be recovered back, we regard as elementary, and that it is immaterial that it has been illegallyllaid, the. presumption being that all payments are voluntary ^ijtil the contrary is shown. (Cooley on Taxation [2d ed.], 809.)

These conclusions would result in affirming the decision of the. learned trial judge respecting the taxes paid in 1888,1889 arid 1890, and leave for determination the question as to the tax for the year 1887.

It is insisted that this tax was paid under duress or compulsion, and many authorities are cited in this State and in others as defining-what constituted compulsion, duress or coercion with respect to the collection of a tax. Eor example, the case of Boston & Sandwich Glass Co. v. City of Boston (4 Metc. 181, 187, 190). But in relying upon those cases, counsel overlooks what must always be considered, and that is, the difference in the laws of different States, relating to the enforcement of taxes and the proceedings that may be taken in determining the question whether there is coercion or duress. Thus, as shown by the language of the opinion in the case last referred to, which arose under the laws of Massachusetts, the payment was held not to be voluntary. It was therein said: “ It arises from the power and authority placed in the hands of a collector of taxes, by virtue of his warrant, to levy directly upon the property or person of every individual whose name is borne on the tax list in default of payment of the taxes. * * * 'Such warrant is in the nature of an execution running against the property and person of the party, upon which he has no day in court, no opportunity to plead and offer proof and have a judicial decision of the question of his liability.” That being the state of the case, the payments made to a collector of taxes may be considered compulsory and made under such circumstances as would authorize the party paying the money to recover it back if the tax were illegally assessed. •

No such features appear in the case at bar, because when the tax of 1881 was paid in December of that year, the receiver of taxes had no authority to take any hostile proceedings against the plaintiff, nor could he authorize any such proceedings until after the fifteenth of January following. There is no proof that the receiver had made a proper demand of the tax, without which even a suit to collect the tax would not lie. (Consol. Act [Chap. 410 of 1882], § 848; McLean v. Manhattan Medicine Co., 54 N. Y. Super. Ct. 371.) As correctly urged by defendant, even if a lawful demand had been made, the receiver of taxes was then powerless to enforce it. Tie could not issue his warrant to the sheriff or city marshal until January 15, 1888. (Consol. Act, § 853.) Even if the receiver had had the power to issue his warrant, he was not compelled to resort to force, nor did he threaten to do so. The authority to proceed by distress and sale is permissive, not mandatory. (McLean v. Myers, 134 N. Y. 480.) In the absence of any power or authority to compel payment on December 29, 1887, and of any threat to do so, and of any seizure of person or property, or of any irreparable injury reasonably to be apprehended, there was no compulsion to render the payment involuntary. And the mere fact that a written protest was served on some one or in some way — or even if it had been properly served — would not prove coercion.

“ "Where there is compulsion actual, present, potential, in inducing that payment by force of process available for instant seizure of person or property, and the demand is really illegal, then the party, by giving notice of the illegality and of his involuntary payment, can recover back the money so paid in an action brought for that purpose. "Where the payment is voluntary, as in this case, a protest with notice of an intent to reclaim is not sufficient to sustain a recovery. The voluntary character of the payment still remains, notwithstanding the notice, and is fatal to the action.” (Peebles v. City of Pittsburgh, 101 Penn. St. 304, 309 ; Railroad Co. v. Comrs., 98 U. S. 541.)

That none of these features was present in any proceedings taken to enforce the law of 1887 we think clearly appears, and*the payment made should be held to be voluntary.

The application of this rule of voluntary payments to the plaintiff is not harsh. It had several remedies open, and it might either have waited, or, if it deemed that improper because not desiring to have a ctaim against it unpaid, which in some way might affect its standing, it could have taken jjroceedings by certiorari, as was done in the case of Warren v. Carter (supra), and after obtaining the writ, could have paid the amount and gone on with the proceeding.

Notwithstanding the written protest, our conclusion is that no ¡coercion or duress having been applied as against plaintiff to «enforce payment, such payment was voluntary and cannot be recovered back in this action.

In our opinion, therefore, the judgment, in so far as it permitted the recovery for the tax of 1887, should be reversed, and in other •respects affirmed, with costs and disbursements to the defendant.

YaN BeüNt, P. J"., and Pollett, J., concurred.

Judgment reversed, in so far as it permitted recovery for the tax of 1887, and in other respects affirmed, with costs and disbursements to defendant.


author: Van Brunt, P. J.:

text:
    Alfred H. Smith and Another, Appellants, v. The American Turquoise Company, Respondent.

      Defense — cannot be determined to be bad on a motion ■ — the remedy is by demurrer.

    Whether a defense to an action set up in an answer is or is not had, cannot he determined on a motion; the proper remedy is hy demurrer.
    Appeal by the plaintiffs, Alfred H. Smith and another, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the l^th day of January, 1894, denying the plaintiffs’ motion to strike out certain parts of the defendant’s answer as irrelevant and immaterial to the issues.

      F. Bien, for the appellants.

      I). MoOlivre, for the respondent.
   Van Brunt, P. J.:

It would seem from an examination of the papers upon this appeal that the plaintiffs seek upon this motion to test the sufficiency of a defense set up in the answer. It is true that the motion is directed to a paragraph of the defense; but it is evident that in this attack upon this paragraph it is sought to have it adjudged that the defense set up is bad. If we understand the theory of the Code, such an issue must be disposed of upon demurrer, and cannot be determined by motion.

If the defense set up is available, the paragraph objected to cannot be considered to be either irrelevant, redundant or scandalous ; and it is only upon the theory that the defense cannot prevail that the paragraph becomes irrelevant.

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

Eollett and PaeKee, JJ., concurred.

Order affirmed, with ten dollars costs and disbursements.


author: Follett, J.: Yan Brunt, P. J.:

text:
    Bernard Wintermeyer, Respondent, v. Mary E. Sherwood, as Executrix, etc., of Henry A. Sherwood, Deceased, Appellant.

      Claim, against an estate — rejection of part thereof— rejection by the attorney — short Statute of Limitations —publication of notice to creditors— as to what claim, unnecessary — finding against evidence — giving a check does not import a loan.

    In case a claim which consists of independent items is presented to the representative of a decedent, one item may he admitted and the remainder rejected, so as to set the short statute running as to the items rejected.
    The object of the publication of a creditors’ notice by executors or administrators is to advise claimants when and where claims may be presented, and to enable estates to be promptly settled, and to protect their representatives in payments which may be made, and when a claim has been presented and rejected there is no occasion for a notice to the creditor who has presented it, and the short statute begins to run as to it, although no notice to creditors has been published.
    Where upon the trial of an action brought against an executrix three witnesses, not interested in the result thereof, testified that the items embraced in the cause of action were disputed or rejected by the attorney of the defendant more than six months before the action was commenced, and but one witness, the plaintiff, testified to the contrary, and he admitted that the defendant refused to pay the same, and returned' to him his claim with his vouchers more than six months before the action was begun, a finding that such items were not disputed nor rejected six months before the commencement of the action, is against the weight of the evidence.
    When the representative of an estate directs an attorney to reject a particular claim, the rejection thereof by the attorney on behalf of the representative is as effectual as though the representative had personally notified the claimant of the rejection.
    The presentment and rejection of a second claim containing items similar to those of a prior claim is not a waiver of any rights acquired by the first rejection, and lapse of time thereafter.
    It is error upon the trial of an action for the referee before whom the same was tried to assume that the giving of a check imported a loan.
    Appeal by the defendant, Mary E. Sherwood, as executrix, etc., of Henry A. Sherwood, deceased, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 8th day of November, 1893, upon the report of a referee, and also from an order entered in said clerk’s office on the 15th day of November, 1893, granting costs and allowances to the plaintiff.
    This action was begun November 18, 1891, to recover $1,448, with interest from June 1, 1890, alleged to have been paid out by the plaintiff at the request and for the benefit of defendant’s testator, between January 1, 1890, and June 1, 1890, and $3,921.32, with interest from May 17, 1890, alleged to have been loaned by the plaintiff to defendant’s testator between January 8, 1889, and May 17, 1890. The money paid out is alleged as the first cause of action, and the money loaned as the second «cause of action. The defenses interposed in the answer are (1) a general denial, (2) payment, (3) the short Statute of Limitations, section 1822 of the Code of Civil Procedure.
    On the 1st of June, 1890, Henry A. Sherwood died, leaving a last will and testament, which was duly probated August 1, 1890, and letters testamentary were issued thereon to the defendant, who immediately entered upon the discharge of her duties. The referee found .that the items embraced in the first cause of action were not paid for the testator’s benefit, but were expended by the plaintiff in the reparation of two houses owned by him. The referee found in respect to the second cause of action that at various dates between April 14,1889, and April 22, 1890, the plaintiff drew fourteen checks to the testator’s order, amounting to $2,261.70, which were indorsed by him or by his directions, and were paid to him as loans from the plaintiff to the testator. The referee rejected fifteen of'the items, amounting to $1,599.62. It is stated in the complaint that the items of the second cause of action amount to $3,921.32, but the items in the bill of particulars of that cause of action amount only to $3,861.32, so that the items established and rejected equal the amount of the bill of particulars. The referee also found that- between J une 10, 1889, and May 16, 1890, defendant’s testator paid the plaintiff $1,275, which, being deducted from $2,261.70, leaves $986.70 due the plaintiff, besides $231.86 interest, amounting to $1,218.56, for which a judgment was ordered, and entered, with costs.

      James R. Ma/rwm, for the appellant.

      Joseph G. Rosenbaum, for the respondent.
   Follett, J.:

The plaintiff’s second cause of action embraces twenty-nine independent items for money loaned on different dates, every one of which is contained in claim No. 1, Exhibit C, presented by the plaintiff to the defendant in September or October, 1890. This claim also included a promissory note for $500 given by the testator to some person other than the plaintiff (which he had acquired), and other items not embraced in claim No. 2, which was presented September 30, 1891. It is undisputed that in October or November, 1890, the defendant offered to pay the note and afterwards did pay it, buLrefused to pay the other, items, of the claim. Notwithstanding the refusal to pay these items the referee refused to find the following request preferred by the defendant:

Seventh. After the production of those checks, Mr. Marvin, in behalf of the defendant and by her instructions, in the fall of 1890, informed the plaintiff personally that defendant, as executrix aforesaid, rejected his claim and refused to pay it, and the claim was then disputed and rejected by defendant.”

Construing this refusal by the referee’s opinion, as this court may, it is plain that the request was refused on the theory that part of the claim could not be admitted and paid and the remainder of the items rejected so as to set the short statute running as to items so Rejected. The referee said in his opinion:

The facts, so far as they relate to the short Statute of Limitations, are in substance as follows: In or about September, 1890, the plaintiff presented an account, unverified and without vouchers, to James R. Marvin, who was the attorney and counsel of the defendant and the estate she represented. Thereafter Mr. Marvin asked the plaintiff if he had any vouchers. In response to this inquiry the plaintiff produced a number of checks and left them with Mr. Marvin. Included in this original claim of the plaintiff was a note for $500, which has become known in the case as the ‘Hopfner’ note. Some time in October, 1890, Mr. Marvin informed the plaintiff that he could do nothing with the account; that the defendant disputed, and rejected it. At the same time it appears that Mr. Marvin informed the plaintiff that the defendant would pay the Hopfner note. * * *
The difficulty in this case, so far as the defendant is concerned, is, that the whole claim originally presented was not rejected or disputed, the defendant conceding a part of it to be just, and offering at all times to pay it. To invoke the statute as to the original claim the defendant should have absolutely disputed and rejected the whole claim and then left the plaintiff to such remedy as he might see fit to pursue, and she should not on the second presentation of a claim have entertained it at all and again rejected it. Not having done so, and having testified to a willingness at all times, down to the presentation o.f the claims in Sejitember, 1891, to pay the $500 note included in the first claim presented in 1890, the time within which the action might be brought had not run when the action was commenced.”

The conclusion of law of the referee follows the opinion, and holds that the statute did not begin to run until September 30,1891. The holding that in case a claim which consists of independent items is presented to the representative of a decedent that one item cannot be admitted and the remainder rejected, so as to set the short statute running as to those rejected, does not seem to this court to-be sound. .Such a rule would be inconvenient to claimants and to representatives, and would often prevent the former from being promptly paid demands conceded to be just, and, on the other hand,, would expose estates to suits which could be defended only in part. If some of the independent items of a claim cannot be admitted and paid and others rejected, so as to set the statute running as to the latter, the final settlement of estates can be indefinitely postponed by the presentation of claims partly just and partly unjust which would necessarily delay final settlements until the six years’ statute had applied as a bar to the rejected claims, and defeat the very purpose of the short statute which was passed to facilitate the early settlement of decedents’ estates. The record does not show whether the defendant has or has not published a notice to creditors to present their claims, and it was held in Salomon v. Heichel (4 Dem. 176) that,, under section 1822 of the Code of Civil Procedure, the short statute does not run against a rejected claim unless the notice to present claims has been published. This seems to us to be a -misconstrucr tion of the section. The object of the publication of a creditor’s, notice is to advise claimants when and where claims may be presented, and to enable estates to be promptly settled and their representatives protected in payments which may be made. If this section is to be literally construed the statute would not run against a claim presented while a creditor’s notice was being published. It reads: “ Where an executor or administrator disputes or rejects a, claim against the estate of the decedent, exhibited to him either before or after the commencement of the publication of a notice requiring the presentation of claims.” When a claim has been presented and rejected there is no occasion for a notice to that creditor, and the shout statute begins to run as to it though no notice has been published. (Field v. Field, 77 N. Y. 294; Code Civ. Proc. § 1822.) Three witnesses not interested in the result of this action testified that the items embraced in the second cause of action were disputed or rejected by the attorney of the defendant more than six months before this action was begun, and but one, the plaintiff, testified to the contrary, and he admitted that the defendant refused to pay those items and returned to him his claim with his vouchers more than six months before the action was begun. It seems to this court that the finding that the items recovered in this action were not disputed nor rejected in October or November, 1890, is against the weight of evidence, and that a new trial should be had to the end that it may be found not merely whether or not the entire claim originally presented was rejected, about which there is no dispute, but whether any or all of the items which this action is brought to recover were disputed or rejected in October or November, 1890. When the representative of an estate directs an attorney to reject a particular claim, as in the case at bar, the rejection by the attorney for the representative is as effectual as though the representative had personally notified the claimant of the rejection. (Selover v. Coe, 63 N. Y. 438.) The presentment and rejection of the second claim on the 30th of November, 1891, more than six months after the rejection of some of the items in the first one, was not a waiver of any rights acquired by the first rejection and the lapse of time.

The judgment should be reversed on the law and the facts, with costs to the appellant to abide the event, and a new trial ordered before a referee, to be appointed by the court upon the entry of the order anew.

O’Bbien, J., concurred.

Yan Brunt, P. J.:

I concur and think that the judgment should also be reversed because the referee assumed that the giving of a check imported a loan. Sternfeld’s evidence is conclusively shown to be utterly unreliable. The referee also erred in granting costs.

Judgment reversed on the law and the facts, with costs to appellant to abide event, and new trial ordered before a referee to, be appointed by the court upon the entry of the order hereon.


author: Follett, J.:

text:
    Samuel Cole, Plaintiff, v. Samuel B. Sanford and Others, as Executors, etc., of J. Monroe Taylor, Deceased, Defendants.

      handlord and tenant — when a lease is presumed to he renewed■ — ■unlawful emotionp no defense to rent already due — effect of payment of rent after emotion — complaint, not evidence of its allegations.

    Wbere a landlord permits a tenant to occupy the leased premises after the expiration of the term and accepts a month’s rent from him at the rate stipulated in the lease, a rebuttable presumption is raised that the lease has been renewed for another year.
    An unlawful eviction is not a defense to an action brought for the recovery of the rent due and payable before the eviction.
    The fact that a tenant after his eviction paid rent up to the date thereof does not rebut the presumption that he was entitled to occupy the premises for another year, arising from the landlord permitting him to hold over and accepting rent from him.
    A complaint in one action, put in evidence in another action, is not evidence in the latter action of the truth of the allegations therein contained.
    Motion by the plaintiff, Samuel Cole, for a new trial on a case containing exceptions, ordered to be heard at the General Term in the first instance, after the decision of the court, dismissing the plaintiff’s complaint upon an admission of facts, at the New York Circuit before the court and a jury on the 5th day of June, 1893.
    In April, 1886, Jefferson M. Levy and Henry L. Clinton were the owners of the fee of Nos. 39 and 41 Cortland street, and remained so until 1887, when they conveyed it to J. Monroe Taylor, who remained the owner until May, 1892, when he died leaving a last will and testament, which was duly probated June 7, 1892, and letters testamentary thereon were issued to the defendants. On April 24, 1886, Levy and Clinton leased the second, third, fourth and fifth stories of the premises to the plaintiff for three years from May 1, 1886, for a yearly rental of $3,800, payable in advance, $316.66 on the first day of every month. The lease contained a covenant that it might be renewed for two years from May 1, 1889,, for a yearly rental of $1,000, payable monthly in advance, $333.33 on the first day of every month. May 1, 1886, the plaintiff, as lessee, entered into possession of the leased premises, and occupied them as a hotel. When the premises were conveyed to Taylor he took an assignment of the lease from the lessors, and the plaintiff attorned to him. Taylor, defendants’ testator, renewed the lease for two years at the stipulated rent of $1,000, which term ended May 1, 1891. The plaintiff continued to use the premises for the purpose of a hotel until July 16, 1891, when he was forcibly evicted by the defendants’ testator.. The defendants concede that the rent was paid to June 1, 1891, and that September 11, 1891, Taylor, the assignee of the lessors, began an action in the City Court of Brooklyn, to. recover $500, the rent from June 1, 1891, to July 16, 1891, at the rate of $1,000 per year, and $106.10 Croton water tax, Avliich, it is alleged, the lessee agreed to pay. September 30, 1891, the plaintiff herein paid the rent to July sixteenth, together Avith the costs of the action, which was discontinued. This action was begun August 11,1891, to recover the damages sustained by the eviction. The defendant answered, and after his death the action was revived and continued against the present defendants, his executors.

      Benjamm, Scha/rjps, for the plaintiff.

      De Witt G. Brown, for the defendants.
   Follett, J.:

The right by which the plaintiff claims to have occupied the premises is not set forth in his complaint, but it appears by the answer and the concessions on the trial that he was a lessee. By these concessions it appears that his lease expired on the 1st day of May, 1891, and that he paid, and Taylor accepted, $333.33, the rent for that month, but the circumstances under which the payment was made are not disclosed by the concessions nor by the evidence.

The landlord having permitted the tenant to occupy the leased premises after the expiration of the term, and having accepted a month’s rent from him at the rate stipulated in the lease, a presumption is raised that the lease had been renewed for another year. (Clarke v. Howland, 85 N. Y. 204; Schuyler v. Smith, 51 id. 309; Laughran v. Smith, 75 id. 205; 4 Kent’s Comm. [13th ed.] 114, note x; Wood’s Landl. & Ten. 76.)

The complaint in the action for rent brought in the City Court of Brooklyn contains allegations which, if they had been established, would have constituted a defense to this action, provided the eviction was effected at the proper time and in the proper manner, but that complaint, though introduced in evidence, is no evidence of the truth of the allegations therein contained. The rent for June and July, 1891, fell due on the first days of those months, so there was, by the terms of the lease, two months’ rent due when the tenant was evicted, and it is well settled that an unlawful eviction is not a defense (we are not speaking of counterclaim to an action brought for the recovery of the rent due and payable before the eviction). (Giles v. Comstock, 4 N. Y. 270; O'Brien v. Smith, 37 N. Y. St. Repr. 41.) And the fact that the tenant after his eviction paid rent up to the date thereof does not rebut the presumption that he was entitled to occupy the premises for another year. The presumption that the lease was renewed for another year, arising from the landlord permitting the tenant to hold over and accepting rent from him, is a rebuttable one, and it may be that the defendants on a new trial will be able to show that the plaintiff held over under terms justifying their testator in evicting him, but nothing of the kind was shown on this trial, and the plaintiff’s exceptions must be sustained, and his motion for a new trial granted, with costs to him fo abide the event.

Yan Brunt, P. J., and Parker, J., concurred.

Exceptions sustained and motion for new trial granted, with costs to appellant to abide event.