text:
    Samuel Colgate et al., Respondents, v. The Pennsylvania Company, Appellant.
    The effect of the statute (Chap. 836, Laws of 1858, as amended by chap. 853, Laws of 1859), prohibiting the delivery by a common carrier of property covered by a bill of lading, except upon surrender and cancellation of the bill, and authorizing the transfer of the property by indorsement of the bill, is to incorporate into every such instrument the statutory condition and make it an element of the contract, unless the case is brought within the exception of the statute (§ 5) by having the words “ not negotiable ” plainly written or stamped on the face of the bill.
    The remedy of the transferee of a bill of lading where the carrier has delivered the property in violation of the statute is not confined to an action for damages given by the statute (§ 7, as amended by § 3, chap. 440, Laws of 1866), but he may maintain an action for the conversion of the property, and this although the delivery was by mistake, without evil intent.
    Where, therefore, a bill of lading which ran to the consignee alone, but did not have the words “not negotiable” upon its face, was transferred by the consignee by indorsement, and thereafter the common carrier, without knowledge of the transfer, delivered the property to the consignee without production and cancellation of the bill of lading, held, that an action by the transferee against the carrier for conversion of the property was maintainable.

      Also held, that proof of a custom to deliver property to the consignee without production of the bill of lading when it was “ billed straight ” to the consignee alone, was immaterial; that the custom could not repeal the statute, or protect from a violation thereof.

      It seems that the intent of the statute itself is not to dictate the form or character of the action, but that any one appropriate to the injury was contemplated.
    (Argued March 8, 1886 ;
    decided April 13, 1886.)
    Appeal from judgment of the General Term of the Supreme Court, in the first j udicial department, entered upon an order made February 27,1884, modifying, and affirming as modified, a judgment in favor of plaintiff, entered upon the report of a referee.
    This action was for the alleged conversion of one thousand two hundred and fifty barrels of cotton seed oil.
    . The oil had been delivered in different parcels to the defend- ' ant, as a carrier of property. It was received by it at Memphis, Tennessee, and Little Bock, in the State of Arkansas, to be delivered at the city of Bew York to J. F. O’Shaughnessy, and bills of lading to that effect were made and delivered upon the receipt of the oil. These bills of. lading were transferred to the plaintiffs by delivery, for moneys advanced by them to the consignee of the oil. Before notice was given to defendant of the transfer of the bills, or any demand was made for the oil, it was, under the authority and direction of O’Shaughnessy, the consignee, delivered for him to the Hudson Oil Works in South Brooklyn. The plaintiffs afterward demanded it from the defendant upon their bills of lading, but as no delivery could then be made, they failed to obtain the oil.

      William G. Gulliver for appellant.
    Plaintiffs cannot recover unless they show conversion. (Cook v. Warren, 88 N. Y. 40.) There was no conversion by the defendant because the plaintiffs had no right of property or possession in the goods alleged to be converted. (Daniel on Neg. Inst., § 1731; Bailey v. H. R. R. R. Co., 49 N. Y. 70, 77; Dows v. Perrin, 24 id. 325, 334; Hutchinson on Carriers, §§ 129, 414; McCombie v. Spader, 1 Hun, 193; Hoyt v. Baker, 15 Abb. [N. S.] 405; Nicholson v. Connor, 9 Daly, 275; First Nat. Bk. of Green Bay v. Dearborn, 115 Mass. 219.) There was no conversion because there was no wrongful dealing with the oil 1 by the defendant. (Forbes v. B. & L. R. R. Co., 133 Mass, 157; Bassett v. Spofford, 45 N. Y. 387; Muir v. N. Y., etc., S. S. Co., 50 id. 23; Bank of Commerce v. Bissell, 72 id. 615; Merchants' Bank of Gaznada v. U. R. R. & T. Co., 69 id. 378; Alderman v. E. R. R. Co., 115 Mass. 233 ; City Bank v. R., W. & O. R. R. Co., 44 N. Y. 136, 141; Farmers and Merchants' Bank v. E. Ry. Co., 72 id. 188 ; Abbott on Shipping [12th Eng. ed.], 277.) It is as a receipt that the bill of lading is chiefly used as a “ quasi" negotiable instrument; while the carrier remains bound by it (and must have his liabilities restricted by it), as a contract. (Daniel on Neg. Inst., § 1728 ; 1 Parsons on Ship, and Adm. 190 ; Blanchard v. Page, 8 Gray, 281; Abbott on Shipping [12th Eng. ed.], 267; The Thames, 14 Wall. 98, 105, 107, 227-229; Hazard v. Abel, 15 Abb. [N. S.] 413; Libby v. Ingalls, 124 Mass. 503 ; Forbes v. B. & L. R. R. Co., 133 id. 154,157 ; Ontario Bank v. N. J. Steamboat Co., 59 N. Y. 510 ; Bailey v. H. R. R. R. Co., 49 id. 70 ; Brandt v. Bowlby, 2 B. & Aid. 932; Abbott on Shipping, 262.) The words “ to order” or “assigns” are not insignificant, and áre not carelessly used by the mercantile community. They are words, the presence or absence of which determines the negotiability of instruments. (Daniel on Meg. Inst., § 105; Parsons on Motes and Bills, 14, chap. 2, § 1; Mechanics' Bank v. Stratton, 3 Keyes, 365; Forbes v. B. & L. R. R. Co., 133 Mass. 158; 3 Kent’s Com. *207; Daniel on Meg. Inst., § 1730; City Bank v. R., W. & O. R. R. Co., 44 N. Y. 136 ; Bank of Batavia v. N. Y., L. E. & W. R. R., 33 Hun, 589; Robinson v. Memphis R. R. Co., 9 Fed. Rep. 129; Blanchard v. Page, 8 Gray, 281, 298 ; Ontario Bank v. N. J. Steamboat Co., 59 N. Y. 50; Forbes v. B. & L. R. R. Co., 133 Mass. 154.) The consignee is presumptively the owner of the goods. (Hutchinson on Carriers, §§ 130, 136; Bailey v. H. R. R. R. Co., 49 N. Y. 70; Krulder v. Ellison, 47 id. 37; Brown on Carriers, 219; Angelí on Carriers, § 497; Fitzhugh v. Wiman, 9 N. Y. 562; Everett v. Salters, 15 Wend. 475; Sweet v. Barney, 23 N. Y. 335, 337; Hotchkiss v. Artisans' Bk., 2 Abb. Ct. App. 403; O' Dougherty v. Boston & W. R. R. Co., 1 T. & C. 477, 480.) A delivery to a consignee, or by his direction, is a good delivery. (Hutchinson on Carriers, § 130 ; Sweet v. Barney, 23 N. Y. 335; Hotchkiss v. Artisans' Bk., 2 Abb. Ct. of App. 403 ; O' D'ougherty v. Boston & W. R. R. Co., 1 T. & C. 480; Bailey v. H. R. R. R. Co., 49 N. Y. 70 ; Bristol v. R. & S. Co., 9 Barb. 158; Duff v. Budd, 3 Brod. & Bing. 177; Lond. & N. W. Ry. v. Bartlett, 7 Hurlst. & Norm. 400; Krulder v. Ellison, 47 N. Y. 37.) The carrier will be liable for delivery to one who improperly holds the bill of lading. (Hutchinson on Carriers, § 129; Dows v. Greene, 24 N. Y. 638 ; Bailey v. H. R. R. R. Co., 49 id. 70.) The consignor and consignee are bound to know, and are by law presumed to know, the terms of the bill of lading, and are bound by them ; and that then’ assignees stand in the same position. (Bishop
      v. Empire Trans. Co., 33 Supr. 99 ; S. C. at Special Term, 48 How. 119; Germania Fire Ins. Co. v. Mem. & C. R. R., 72 N. Y. 90; Hill v. S. B. & N. Y. R. R., 73 id. 351; Potter v. Sharp, 21 Hun, 179, 180; F. & M. Bk. v. Logan, 74 N. Y. 568; Belger v. Dinsmore, 51 id. 166; Kirkland v. Dinsmore, 52 id. 171; F. & M. Bk. v. Atkinson, 74 id. 537; Same v. Hazeltine, 78 id. 104; Forbes v. B. & L. R. R. Co., 133 Mass. 154; McEwen v. J. M. & I. R. R. Co., 33 Ind. 368 ; Hazard v. Abel, 15 Abb. [N. S.] 413.) Even if defendant is not protected by liis contract alone, he is protected by it, together with the custom, which was shown by the evidence; and it was error not to find the custom as matter of fact, and the justification of the defendant as a matter of law. (Forbes v. B. & L. R. R. Co., 133 Mass. 154; Hutchinson on Carriers, §§ 375, 382; Ontario Bk. v. N. J. Steamb. Co., 59 N.Y. 510; Richmond v. Un. Steamb. Co., 87 id. 240 ; Sweet v. Barney, 23 id. 335 ; Van Santvoord v. St. John, 6 Hill, 157; Schroeder v. H. R. R. Co., 5 Duer, 55 ; Gibson v. Culver, 17 Wend. 305; Story on Baihn., § 543; Blin v. Mayo, 10 Vt. 56 ; Huston v. Peters, 1 Metc. [Ky.] 558 ; Dixon v. Bunham, 14 Ill. 324; Hyde v. Trent. Nav., Co., 5 Vr. 389 ; Galloway v. Hughes, 1 Bailey, 553; Chickering v. Fowler, 4 Pick. 371; Cope v. Cordova, 1 Rawle, 203 ; Garside v. Trent. Nav. Co., 4 Term Rep. 581; Angell on Carriers, § 311; Dunbar v. B. & P. R. R. Co., 110 Mass. 26 ; F. & M. Bk. v. C. Trans. Co., 16 Vt. 52; 18 id. 131; 23 id. 186 ; Richardson v. Goddard, 23 How. 28, 38; Edw. on Bailm., § 588; Walls v. Bailey, 49 N. Y. 464; Kirchner v. Venus, 12 Moore’s P. C. 361; Syers v. Jonas, 2 Exch. 111; McKinzee v. Dunlop, 2 Jur. [N. S.] 957 ; Fox v. Parker, 44 Barb. 541; Fawkes v. Lamb, 8 Jur. [N. S.] 385; Bottomly v. Forbes, 6 Scott, 866 ; 5 Bing. N. C. 121; Allen v. Sundins, 1 H. & C. 123; 31 L. J. Exch. 307; Broadwell v. Butler, 6 McLean, 296; Loveland v. Burke, 128 Mass. 139; N. Y. C. & H. R. R. R. Co. v. Standard Oil Co., 87 N. Y. 492.) Chapter 326 of the Laws of 1858 and chapter 353 of the Laws of 1859 do not render the defendant liable for damages for conversion.
      (Shaw v. R. R. Co., 101 U. S. 557; Collins v. Ralli, 20 Hun, 246 ; 85 N. Y. 637; Atkinson v. Abbott, 11 East, 135 ; Warren v. Mut. Ins. Co., 13 Pick. 518; People v. Hislop, 77 N. Y. 331; Platz v. City of Cohoes, 89 id. 221; Wood v. Erie R. Co., 72 id. 198; Robinson v. Batchelor, 4 N. H. 40.) The plaintiffs have no cause of action, because the oil was delivered to their agent. (Conard v. Atlantic Ins. Co., 1 Peters, 445.) The clause in some of the bills of lading which reads, “.there to be delivered only upon the surrender of the bill of lading,” formed no ground for an action for conversion. (Barker v. Havens, 17 Johns. 234; Gould v. Oliver, 2 Scott’s N. R. 241; Shepard v. De Bernales, 13 East; 565 ; Abbott’s Law Dict., title “ Waive ” ; Van Allen v. Farmers' Ins. Co., 4 Hun, 413; Goodwin v. Mass. L. Ins. Co., 73 N. Y. 490; Bigelow on Fraud, 82; Conkling v. King, 10 N. Y. 440 ; Goit v. Nat. Protection Ins. Co., 25 Barb. 189 ; Robinson v. Memphis R. R. Co., 9 Fed. Rep. 129.) Delivery to the consignee was made through plaintiff’s negligence. (Twinam v. Swart, 4 Lans. 263, 267; Forbes v. B. & L. R. R. Co., 133 Mass. 157.)

      William G. Wilson for respondents.
    The negotiability of a bill of lading does not in any measure depend upon its containing express terms of negotiability. The bill of lading is the symbol of the property, and its delivery, even without indorsement, operates as a symbolic delivery itself. (Conard v. Atlantia Ins. Co., 1 Peters, 445; Nathan v. Giles, 5 Taunt. 558; Bank of Rochester v. Jones, 4 N. Y. 498, 500, 502, 503; The City Bank v. R., W. & O. R. R. Co., 44 id. 139, 141 ; Nat. Bk. of Green Bay v. Dearborn, 115 Mass. 222; Hathaway v. Haynes, 124 id. 311.) The refusal of the defendant to deliver the merchandise to the plaintiffs upon demand, accompanied with the presentation of the bills of lading, was a conversion. (Merchants' Bk. v. U. R. R. & T. Co., 69 N. Y. 373; Newcomb v. B. & U. R. R., 115 Mass. 230 ; Alderman v. Eastern R. R. Co., id. 233; Libby v. Ingalls, 124 id. 503 ; Bank, etc., v. Bissell, 72 N. Y. 615; 2 R. S. [Banks Bros.’ 6th ed.] 230, § 6.) The evidence as to usage was inapplicable and inadmissible. (1 Sharswood’s Blaclcstone, *76, note; Wheeler v. Newbould, 16 N. Y. 401; Woodruff v. Merchants’ Bk., 25 Wend. 675 ; Vail v. Rice, 5 N. Y. 159 ; Perkin v. Franklyn Bk., 21 Pick. 485; Mech. Bk. v. Merch. Bk., 6 Metc. 13 ; Thompson v. Riggs, 5 Wall. 679 ; Bradley v. Wheeler, 44 N. Y. 495.) The liability of the defendant is to be determined solely by the laws of this State. (Jewell v. Wright, 30 N. Y. 264.)
   Finch, J.

Whether before the statute (2 R. S. [6th ed.] 230), the difference in bills of lading between those drawn “ to order” and those “billed straight” to the consignee alone, created a difference in the duty and right of the carrier in respect to delivery, we do not think it important to consider, since we agree wTith the courts below as to the decisive effect of the statute upon the facts in controversy. The defendant transported the oil under bills of lading, which constituted the contract between shipper and carrier, and served also as evidence of title, the transfer of which would transfer the property. That result would follow even though no words of negotiability were contained in the instrument, and its transfer, with an intention to pass the title, would give the holder an ownership of the property. By that process the plaintiffs became the owners of the oil, and, on showing that fact, by producing the bills of lading which were indorsed over to them by the consignee, they had a right to call upon the carrier for the property. The latter defends by showing a delivery to the consignee in ignorance of the plaintiff’s right, but without the production and cancellation of the bills of lading. Such delivery was in accordance with the written words of the contract, but not, according to its terms, as modified by the express command of the statute. That forbids a delivery except upon the production and cancellation of the bills of lading, and interpolates into every such instrument that imperative condition, and makes such condition an element of the contract, as perfectly as if therein written. It gave to the bills of lading, under which the oil was carried, this construction : that the carrier should deliver to the consignee provided he produced and canceled the bills of lading. The primary object of the statute was to insure delivery to the party actually entitled, and close the door upon opportunities for fraud resulting 'from delivery in ignorance of the true ownership. The carrier delivered to the consignee in disregard of the statutory prohibition, and that cannot be a good delivery which the law expressly forbids. Obedience to the statute would have prevented the injury which happened. The consignee had parted with the bills of lading and his consequent right to the property, and the delivery to him was to one not the owner and having no right to receive it. There. is no hardship in the rule. If the carrier does not desire to obey its requirements he may stamp his bills of lading with the words “not negotiable.” In that shape they warn the purchaser that the carrier will deliver to the consignee and not be bound by a transfer of the bills. But if he issues them without that warning he is bound to know that they may have passed into other hands and become the property of others than the consignee, and that his duty and his contract is to .deliver to him who produces and cancels the evidence of title.

The appellant argues that the act does not forbid delivery to the consignee where that delivery is stipulated, but aims only to protect against “ spent bills,” or such as exist after delivery, and so are suscejitible of a wrongful or fraudulent use. Doubtless the last was one of the evils sought to be prevented, but that purpose could only be effectually accomplished by forbidding a delivery, except accompanied by a cancellation of the bill. By no other mode could the existence of “ spent bills ” in a form capable of deception be prevented; for, if the carrier could deliver to the consignee without cancellation, the bill of lading would be left outstanding as a possible basis of fraud. The statute, therefore, does prohibit the delivery, except on the prescribed condition, and as the learned referee points out, a sub sequent section makes that construction inevitable. (§ 8.) The prevention of mischief from 1 ‘ spent bills ” was, however, not the sole evil to be remedied, nor the only object sought to be accomplished. The business convenience of a safe and easy transfer of bills of lading, and the danger of leaving the title they represent at the- mercy of the consignee, unless notice be given to the possibly unknown final carrier, and the importance of making the title they give secure for the purposes specified, were all subjects within the purview of the enactment, and the statute is too wise in its provisions, and too beneficent in its aim to be narrowed or weakened by any needless criticism.

The custom proved was immaterial. It .could not repeal the statute, or serve as a shield for its violation.

The argument that under the contract between plaintiffs and the consignee the transfer of the bills of lading was not intended to vest title to the oil in them has no support in the facts. The findings are to the contrary, and fully supported by the evidence.

The contention that this action for the conversion is not maintainable, because the statute gives an action for damages to the party injured by a violation of its provisions, and such action only is contemplated, has no merit. A delivery to the wrong person, to one. not entitled to the possession, is a conversion. ( Viner v. N. Y., etc., Steamship Co., 50 N. Y. 23, 21.) And this is so even if the act is done by mistake, and without a bad intent. The section of the statute referred to does not proceed upon the theory that no action could be maintained, except by its express authority. (§ 7.) It provides first for a punishment, criminally, by an indictment for a misdemeanor, and then lest that should be deemed the only consequence of a violation, it adds that the injured party may maintain “ an action at law for all damages, immediate or consequential,” which have resulted, whether the wrong-doer shall have been convicted as hereinbefore mentioned or not.” The form or character of the action is not dictated. Any one appropriate to the injury is contemplated.

The judgment should be affirmed, with costs.

All concur.

Judgment affirmed.


source: Caselaw Access Project

author: Dabfobth, J.

license: Public Domain

text:
    Nicholas Quackenbos, Executor, etc., Impleaded, etc., Appellant, v. Sophie Kingsland, Respondent.
    The will of K„ after certain specific devises and bequests, gave the residue of his estate to his son Daniel “ and to his heirs; ” then followed these words, “but in case my son Daniel should die without lawful issue, I give and bequeath it to my remaining children, share and share alike.” Daniel survived the testator. Held, that, in the absence of other words in the will showing a contrary intent, the death referred to was a death of the beneficiary during the life-time of the testator; and that upon the death of the latter, Daniel took an absolute estate.
    By a codicil the testator gave a specific bequest out of the residuary estate to his son James. Held, that this did not indicate an intent contrary to the construction above given.

      Douglass v. Ohalmer (2 Ves. Jr. 501), distinguished.
    (Argued March 10, 1886;
    decided April 13, 1886.)
    Appeal from judgment of the General Term, of the Court of Common Pleas in and for the city and co„unty of New York, entered upon an order made July 3, 1884, which reversed a judgment in favor of plaintiffs, entered upon a decision of the court on trial at Special Term, and directed a judgment for the defendant.
    The nature of the action and the material facts are stated in the opinion.

      Nicholas Quachenhos and George W. Lord for appellant,
    Mrs. Leonard and Mrs. Schuyler, upon plain language of the will, took contingent remainders which were to vest in possession upon the death of Daniel, the younger, without issue, winch interests were liable to be divested, if Daniel left issue, hut which, in default of such issue, became absolute rights and interests, which were descendible, devisable and alienable in the same maimer as estates in possession. (Fearne on Cont. Rem. [3d Am. ed. from Butler’s Lond. ed.] *364, *552, *553 ; 1 R. S. 725, § 35 ; 773, § 2; 85 N. Y. 91, 101, 102, 104.) The devise over m case Daniel died without issue referred to ' his death after his father’s decease, and upon the happening of that contingency, his sisters took the absolute estate in posses, sion. (Jackson v. Waldron, 13 Wend. 178, 192; Executors of Moffat, 10 Johns. 12-16; Anderson v. Jackson, 16 id. 382; Phillips v. Davies, 92 N. Y. 199, 201, 204; Bliven v. Seymour, 88 id. 469, 476; Pond v. Bergh, 10 Paige, 140, 152 ; 1 Redf. on Wills, chap. 9, §§ 4, 433, 436; Scott v. Gurnsey, 48 N. Y. 106, 121; Lord v. Harmoy, 72 id. 408, 414.)

      Charles E. Miller for respondent.
    Daniel Kingsland, the younger, having survived his father took an estate in fee. (Clayton v. Lowe, 5 Barn. & Ald. 636; Rogers v. Rogers, 7 W. R. 541; Humphrey v. Hawes, 1 R. & My. 639; Rheeder v. Owen, 3 B. C. C. 240; Varley v. Winn, 2 K. & J. 700 ; Gee v. Mayor of Manchester, 17 Q. B. 737; Faharay v. Holsinger, 65 Penn. St. 388; Caldwell v. Skilton, 13 id. 152; Biddle's Estate, 28 id. 59 ; Schoonmaker v. Stockton, 37 id. 461; Shutt v. Rambo, 57 id. 151; Gibson v. Walker, 20 N. Y. 476; Dooming v. Marshall, 23 id. 366 ; Ware v. Watson, 7 D., M. & G. 248; Converse v. Kellogg, 7 Barb 590 ; Livingston v. Green el al., 52 N. Y. 118-124; McLoughlin v. Maher, 17 Hun, 215 ; Kelly v. Kelly, 61 N. Y. 47; Embury v. Sheldon, 68 id. 227; Lawfield v. Stoneman, 2 Strange, 1262.) The devise over in case of Daniel Kingsland’s death with lawful issue, if it refer to his death after his father, is an executory devise. (Jackson v. Waldron, 13 Wend. 178, 192.) In case of an executory devise the words “ without lawful issue ” refer to an indefinite failure of issue, and not to want of issue living at the death of the ancestor. (Executor of Moffat v. Strong, 10 Johns. 12-16 ; Anderson v. Jackson, 16 id. 382.) In such case the limitation over is void as being too remote. (4 Kent’s Com. 274.)
   Dabfobth, J.

The plaintiffs Jane and Hannah are children, and the other plaintiffs grandchildren of Daniel Kingsland the elder. They brought this action against Sophie Kingsland, the widow of Daniel Kingsland the younger, who was a son of Daniel Kingsland the elder, to recover certain property theretofore given to her by him, but which, as, they stated, belonged to the estate of Kingsland the elder, and to which they claimed to be entitled as devisees under his will. They succeeded at the Special Term, but on appeal to the General Term, the judgment in their favor was reversed and their complaint dismissed upon the sole ground, as stated in the order of reversal, “ that they took no interest under that will.” The testator, Daniel Kingsland the elder, died April 18,1844; he left surviving, the two daughters above named, his son Daniel and his son Thorn. The will was admitted to probate May 3, 1844, and then died first Thorn, leaving four children, viz.: the plaintiffs Daniel C., Charles S., Louisa and James S.; afterward and on the 30,th of September, 1881, died Daniel Kingsland the younger. The. will of Kingsland the elder, after certain specific devises and legacies, provided as follows: “ All the rest, -residue and remainder of my estate, both real and personal, I give, devise and bequeath unto my son Daniel Kingsland, and to his heirs; but in case my son Daniel should die without lawful issue, I give and bequeath it to my remaining children, share and share alike.” By codicil a specific bequest was given out of the residue of personal estate, to James S. Kingsland, but the question upon this appeal is unaffected by it, and turns upon the true construction of the residuary clause above set out. Upon the case made by the pleadings and findings of the trial court, that question was, whether Daniel Kingsland the younger took the residue of his father’s estate absolutely. To answer it we must look for the intention of the testator, and that seems plain upon the language employed by him. It gives the remainder of his estate to his “ son Daniel Kingsland and to his heirs. ” So far absolutely, but as this interest could not vest until his death, the testator, to provide against the consequences of a lapse, says: “ In case my son Daniel should die without lawful issue,” I give the estate to my remaining children. These words we must hold, upon principle and authority, relate to the death of the testator, and upon that event during the lifetime of Daniel Kingsland, Jr., the latter became vested with the residuary estate and was entitled to its possession. This conclusion is required by the decisions of the courts in many similar cases. (Embury v. Sheldon, 68 N. Y. 227; Livingston v. Greene, 52 id. 118.) Indeed the argument of the learned counsel for the appellant seems to concede that the words of the testator, taken in their legal sense, permit no other result, and his contention is that their meaning may he modified or changed by other provisions in the will, showing a different intent. Ho doubt the whole will is to be looked at as containing the intent of the testator, and one part may be made to give way to some other controlling provision (Hoppock v. Tucker, 59 N. Y. 202), but here we find nothing to warrant a presumption against the legal meaning of the words used in the residuary clause. The testator by his will, first, sets apart a certain, sum of money in the hands of his executors, the interest of which is to be paid to his son Thorn “ during his natural lifesecond, gives to his daughter Jane a sum of money and a certain house and lot “ for and during her natural lifethird, the same amount of money and a house and lot to his daughter Hannah for and during her natural life.” . He provides also for his grandchildren an estate in presentí, in a certain farm, but in the event of their death he adds: then I give and bequeath the said farm to my son Daniel, his heirs and assigns.”

The same language is used in reference to the above bequest to Thorn; if he dies “ without having a child living, or lawful issue of them, then and in such case,” it goes to Daniel, in these instances bestowing by fit words the use or interest upon the parents, and the capital upon the children or others, clearly limiting the property in succession; but when the testator speaks in the residuary clause, he uses no such words of qualification or limitation, no words indicating a life estate. He does not give the residue of his estate to his son Daniel “ for and during his natural -life,” with remainder over to his children, if any, but unto him and “ to his heirs.” This difference in language indicates a different purpose, and supports the interpretation already given to it.

It should also be observed that under the appellants’ construction, Daniel could take nothing unless a child was born to him, for their contention is that by reason of. his death, although after that of the testator, the whole residuary estate belonged to them, and he is not otherwise directly provided for. We find nowhere in the will any evidence of a purpose to declare such result, nor any words restricting the right of Daniel, the son, to enjoy as his own, and dispose of as he thought proper, the entire residue of the estate of Daniel Kingsland the elder. Did the testator have in view the death of Daniel, with a failure of issue, at any period, however remote ? Then he may be presumed to have considered that while Daniel’s death at some time was certain, the contingency of issue could be determined only by that death, and we may assume he would have provided for the care and custody, if not the enjoyment of the residuary estate during that time, which we now see was extended to nearly forty years. Yet no life estate or other interest is given to any one. An authority upon the language of one will furnishes little aid toward the construction of another, and the cases cited by the appellant am no exception. Thus Douglass v. Chalmer (2 Ves. Jr. 501) is referred to in support of the position that the words already quoted from the codicil indicate an understanding, on the part of the testator, that the residuary devise was not absolute. In the case cited, the devise of the residue was to a daughter, and afterward by codicil, the testatrix in terms gave to that daughter a diamond ring which formed part of the residue. This specific bequest was held to be inconsistent with an intention to make an absolute gift to the same person through the residuary clause, but intelligible and natural if the residue was given for life only.

In the case at bar the codicil takes away from the residuary legatee, and indicates nothing but an intent on the testator’s p'art to bestow so much of his bounty upon another beneficiary. Uor do the cases cited upon the principal question raise any doubt that, under the language of this will, the contingency of death was death of the legatee during the life-time of the testator, and as that did not occur, the plaintiffs took nothing under the will.

The judgment of the Supreme Court was upon that exposition and should, therefore, be affirmed.

All concur.

Judgment affirmed.


author: Andrews, J.

text:
    George T. Newhall, Appellant, v. William H. Appleton et al., Respondents.

    Defendants contracted to pay plaintiff “ §4 an order,” for subscriptions obtained by him. for certain serials published by the former. In an action upon the contract defendants claimed that the orders referred to meant “proved orders,” t. orders upon which the serials subscribed for had been delivered and accepted. In support of their contention they were allowed to give in evidence their books containing accounts with other canvassers, wherein credit was given for good subscriptions only. It did not appear that plaintiff whs cognizant of the transactions indicated or knew of any usage in respect to commissions. Held error; ' that the transactions thus proved were “ res inter alios acta," and so incompetent.

      Newhall v. Appleton (17 J. & S. 238), reversed. ,
    (Argued March 10,1886;
    decided April 13, 1886.)
    Appeal from judgment of the General Term of the Superior Court of the city of New York, entered upon an order made May 25, 1883, which affirmed a judgment in.favor of defendants, entered upon the report of a referee. (Reported below, 17 J: & S. 238.)
    This action Avas upon a contract, the nature of Avhich and the facts so far as material to the question discussed are stated in the opinion.

      A. R. Dyett for appellant.
    The admission of defendants’ private books of account as evidence in their own favor was fatal error. It is clearly incompetent to allow a party to prove his own declarations while performing ail agreement, for the purpose of characterizing the agreement itself. (Reed v. U. S. Exp. Co., 48 N. Y. 468 ; Whitehouse v. Bk. of Cooperstown, id. 239; Moore v. Meacham, 10 id. 207 ; Peck v. Von Kellar, 76 id. 604; affirmed, 15 Hun, 470; Homes v. Pettingill, 60 id. 646; White v. Ambler, 8 id. 171; Gilchrist v. Grocers' Co., 57 id. 495-9; Dow v. Paine, 4 id. 248; Case v. Potter, 8 Johns. 443; Conklin v. Stamler, 8 Abb. 395.)

      Edward W. Paige for respondents.
   Andrews, J.

By the terms of the oral contract, as testified to by the plaintiff, and as found by the referee, the plaintiff was to be paid $4 an order, for subscriptions obtained by him for the serials, Picturesque Europe and Turner’s Gallery, publislied by the defendants. The plaintiff claimed that by the true interpretation of the contract, he was entitled to $4, for every bona fide subscription obtained. It was insisted on the other hand by the defendants that the contract meant that the plaintiff was to receive $4, for every good or proved subscription, meaning thereby a subscription upon which at least ten numbers of the serial subscribed for should be delivered and accepted. This question was regarded by the referee as the vital question in the case. The defendants sought to establish their interpretation of the contract by two lines of evidence, first, by showing that in the trade the words “ $4 an order ” meant $4 for a proved order, and second, that their contracts with their canvassers generally, were made with this understanding of the meaning of the phrase, and particularly that this was the understanding between them and the plaintiff. The defendants, in support of their case, were permitted to give in evidence, under objection, their books containing accounts with a ■ number of persons who had been employed as canvassers, in which the subscriptions obtained were separated into two classes, proved and unproved, or good and bad, and a credit given for good subscriptions only. This evidence was, we think, incompetent. The transactions of the defendants with other agents were res inter alios acta. The only apparent object of the evidence was to show, by inference, either what the contract with the plaintiff was or the practice of the defendants in their business in respect to compensation. On neither ground can its, admission be justified. It did not appear that the plaintiff was cognizant of the transactions indicated or knew the usage, and as to him the entries were the mere declarations of the defendants in their own favor. If the admission of the account of Taylor could be justified on the ground that it tended to impeach the plaintiff’s witness, Hall, this would not cure the error in admitting the other accounts, which were received as general evidence in the cause. For this error, and without considering the other questions argued, the judgment should be reversed and a new trial ordered.

All concur.

Judgment reversed.


author: Finch, J.

text:
    William L. Ford et al., Respondents, v. Charles J. Knapp et al., Appellants.
    A co-tenant, out of the actual occupation, asking the aid of a court of equity for partition against a co-tenant, who has made improvements upon the property, is entitled to relief only upon condition that any equities thereby arising shall be taken into account.

      It seems that in such case, where actual partition is made and it is possible so to do, the improving tenant should be awarded the portion of the land upon which the improvements have been made.
    Defendants were tenants in common with W. in a mill property and were in actual occupation, their interest being an undivided one-half. The interest of W. was sold on a judgment against him and bid in by defendants. The property was so badly run down and out of repair as to be nearly useless ; defendants, after such purchase, expended large sums in necessary repairs and in improvements, restoring it to its original usefulness and greatly increasing its value. Thereafter plaintiffs, as subsequent judgment creditors of W., redeemed and brought an action for partition, and the property was sold under judgment therein. Held, that upon division of the proceeds of sale, defendants were entitled to an allowance for the enhanced value of the property resulting from the repairs and improvements.

      Scott v. Guernsey (48 N. T. 106), distinguished.

      Also held, that the provisions of the Code of Civil Procedure (§§ 1441, 1461), fixing the power and duty of a judgment debtor in possession during the redemption period, had no application.

      Also held, that plaintiffs were entitled to an accounting of the income and profits, in which accounting defendants were entitled to a credit for taxes paid for the benefit of their co-tenants, but not for insurance paid.
    The wife of W., after the purchase by defendants and before the redemption, quit-claimed her inchoate dower right to the defendants. Held, that said dower right remained in the plaintiffs’ undivided half of the property, but was discharged as against defendants’ undivided half; and that, in distributing the proceeds of sale, the value of such dower right should be charged upon and paid for solely out of the share awarded to the plaintiffs.

      Ford v. Knapp (81 Hun, 522), reversed.
    (Argued March 11,1886 ;
    decided April 13, 1886.)
    Appeal from judgment of the General Term of the Supreme Court, in the third judicial department, entered upon an order made November 20, 1883, which affirmed an interlocutory judgment entered herein upon a decision of the court on trial at Special Term, and a final judgment entered upon the report of a referee. (Reported below, 31 Hun, 522.)

      This was an action for partition. The material facts are stated in the opinion.

      Arthur More for appellants.
    Defendants were equitably entitled to the avails of the sale after deducting costs and expenses, and the value of the premises at the time of the execution sale before the repairs and improvements were made. (Willard’s Eq. Jur. 701; Story’s Eq. Jur., § 655 ; Hewlett v. Wood, 62 N. Y. 575; Hall v. Piddock, 21 N. J. Eq. 313; Code of Civ. Pro., § 1140; Wright v. Douglass, 2 N. Y. 377; Van-Horn v. Fonda, 5 Johns. Ch. 407; Taylor v. Baldwin, 10 Barb. 632; id. 532, 592; Hitchcock v. Skinner, Hoff. Ch. 28; Story’s Eq. Jur., § 1237; Benton v. Little, 9 Bush [Ky.], 313 ; Reed v. Reed, 68 Me. 568; Pope v. Whitehead, 68 N. C. 191; Sneed v. Atherton, 6 Dana [Ky.], 281; Buchanan v. King's Heirs, 22 Gratt. [Va.] 414; Oliver v. Montgomery, 39 Iowa, 601 ; Van Santvoord’s Eq. 41; 3 Wait’s Actions and Defenses, 149 ; Phelps v. Green, 3 Johns. Ch. 302.) If improvements have been made by a tenant in common, suitable compensation will be made to him on the partition, or the part on which the improvements are made will be assigned to him. (Atha v. Jewell, 33 N. J. Eq. 421; Brookfield v. Williams, 1 H. W. Green’s Ch. [N. J.] 34; Roberts v. Beckwith, 79 Ill. 246; Paddock v. Shields, 57 Miss. 345; Splits v. Wells, 18 Mo. 471; Benton v. Little, 9 Bush [Ky.], 313; Reeves v. Reeves, 11 Heisk. [Tenn.] 669, 675.) It is not the rule that one tenant in common cannot make repairs necessary to preserve the property, save at his own expense. (Hitchcock v. Skinner, Hoff. Ch. 21.) The court erred in disallowing the defendant’s claim to be reimbursed for taxes paid. (Burhans v. VanZandt, 7 N. Y. 523; Cooley on Taxation, 346; Sedg. & Wait on Trial of Title to Land, 177; Hitchcock v. Skinner, Hoff. Ch. 21; Moak’s Yan Santvoord’s PL 400; Van Horn v. Fonda, 5 Johns. Ch. 407.)

      David H. Carver for respondents.
    Plaintiffs have pursued their legal and statutory remedy in collecting their debt, and a court of equity cannot impose upon them any other or different obligation than that imposed by statute. (Code of Civ. Pro., §§ 1446 et seq.; Elsworth v. Muldoon, 46 How. 246.) During the fifteen months allowed for redemption, the purchaser has no interest in the property except a lien upon it for the amount of his bid and interest. (Smith v. Colvin, 17 Barb. 157; Code of Civ. Pro., § 1440 ; Vaught v. Ely, 4 Barb. 159; Southworth v. Scofield, 51 N. Y. 517.) During the intermediate period the defendants occupied in place of the judgment debtor who is permitted to “ make necessary repairs to a building or other erection thereon. But this subdivision does not permit an alteration in the form or structure of the building or other erection.” (Code of Civ. Pro., § 1441, subd. 2.) The party redeeming is in no case bound to pay more than the money bid at the original purchase with the interest, added. (Van Rensselaer v. Sheriff, 1 Cow. 443.) Where the acknowledged relation of mortgagor and mortgagee in possession exists, the latter is not permitted to obstruct the right of redemption, and, therefore, will not, upon redemption, be allowed for general improvements made without the acquiescence of the mortgagor. (Mickle v. Dillaye, 17 N. Y. 80; Moore v. Cable, 1 Johns. Ch. 388; Russell v. Blake, 2 Pick. 505 ; Woodward v. Phillip, 14 Gray, 132.) One tenant in common is not entitled to compensation from a co-tenant for improvements made by the former without the assent of the latter. (Scott et al. v. Guernsey, 48 N. Y. 106; 60 Barb. 169, 179; 1 Wash, on Beal Prop. 664; " Mumford v. Brown, 6 Cow. 475.) Defendants are not entitled to be reimbursed for insurance paid by them. (Scott v. Guernsey, 60 Barb. 180 ; Wyman v. Prosser, 36 id. 368; Sanders v. Frost, 3 Pick. 257; 31 Hun, 526.)
   Finch, J.

The facts of this case develop a question not in all respects easy to answer. The defendants were tenants in common with one Whitaker of a mill property badly run down and out of repair. Their share was an undivided half. On a judgment against Whitaker his interest was sold, the defendants becoming purchasers; but subsequent judgment creditors redeemed and acquired the title of the debtor, and became by relation and"through their redemption vested with the right of the debtor from the date of the sale, and thereby tenants in common with the defendants from that date by relation, or vested with the right of such a co-tenant. During the fifteen months between the sale and redemption, the defendants expended a large amount upon the mill. They effected changes of two kinds, distinct in purpose and character. The grist-mill was originally both a custom aud merchant mill and provided with machinery for both uses. During ten years immediately preceding defendants’ ownership the latter use had been abandoned, and the machinery appropriate to it, by neglect and disuse had become practically worthless, and further passed beyond the utility of repair by new inventions and appliances which made the old antiquated and ineffective for the demands and competition of business. The machinery necessary to the use of the mill for custom work had been steadily run, but become dilapidated and inefficient. In this emergency the defendants made both repairs and improvements. The referee who inquired into the situation reported upon the basis of that discrimination. The repair of the dam, the substitution of a new water wheel, the change in the machinery necessary to make the mill do good custom work he classed as repairs; while the addition to the buildings and the introduction of new machinery and appliances for a merchant mill he classed as improvements. These repairs and improvements largely increased the market value of the property. Before they were made a generous estimate of that value did not exceed $8,000, while on the sale in partition it brought about double that amount. The proceeds of that sale are now to be divided by a court of equity in an action brought by the tenant out of the actual occupation, and the manner and proportion of that division is the question to be determined.

The execution sale, and the attitude of the defendants as purchasers under it, appear to us immaterial to the inquiry, but in some manner to have confused and complicated it. Stress is put by the General Term upon the rights of the judgment creditors, and the provisions of the Code fixing the powers and duty of the judgment debtor in "possession during the redemption period are cited as pertinent to the inquiry. (§§ 1441 and 1461.) They do not seem to us necessarily to affect it. • Section 1441 provides for the acts which the debtor in possession may do during the redemption period without being chargeable with committing waste.” The judgment debtor here was out of the actual possession, did no” acts of any ldnd, and there is no question of waste. The defendants occupied under their own title and not under the debtor’s which- they never acquired. Section 1461 provides that the sheriff, the purchaser, the judgment creditor, or a redeeming creditor, cannot by his agreement or other act in any manner impair or prejudice the right of any other person to redeem.” These plaintiffs redeemed. Ko act was done to prejudice their right of redemption. Kobody obstructed that right. They paid exactly what they would have paid if the defendants had never repaired the property, and not one farthing more on that account. So far from having been prejudiced in their right of redemption, that right has been granted to them in its fullest extent, and it stands conceded that they became vested with the full and entire title of Whitaker as of the date of "the sale. The question here proceeds on that assumption, but asks whether equities have not arisen against them by reason of their effectual and unobstructed redemption. They thereby became co-tenants of defendants as of the date of the sale by relation, or held the derivative right of a co-tenant, and it is the rights born of that relation which are the sole subjects of inquiry.

We may first approach the question on principle, and reason about it from the standpoint of justice between the parties. The courts below have denied to the defendants any allowance, either for repairs or improvements. Practically they held that the defendants were foolish and the plaintiffs entitled to a dividend out of that folly, and so that the money of the former must go into the pockets of the latter. If this be true, the situation of the defendants was a hard one, though , without their fault. They owned an undivided half of the property and that certainly was no sin. The right of their co-tenant Whitaker had been sold and bid in by them. They could not be expected to bring partition until they know that it would be needed, and for fifteen months they must allow their o\fn property to remain out of repair and growing rapidly worse; its business and custom to drift off into other hands; and suffer a severe loss without fault of their own ; or else give one-half of their expenditure, as represented by increased value, to the representatives of the party who was unfortunate. To a share of that increased value neither the debtor nor his creditors have any equitable right. They never earned it nor paid for it. If the redeeming creditors get the full one-half of the value of the property as that valué exists, unincreased by the improvements, they get every dollar to which they have a just and equitable right. The rule which takes from one co-tenant the fruit of his thrift and enterprise and adds it to the unthrift and neglect of the other ; which loads upon industry and ability the losses and burdens of idleness or ill-fortune; which ties up property from improvement and looks contented upon rot and decay, is a rule which sometimes the rigid and inelastic jurisdiction of a court of law may adopt from necessity, but is without excuse in a court of equity in which this action is pending. (Hewlett v. Wood, 62 N. Y. 75.)

Those courts almost, if not quite, without exception, have recognized the rule that a co-tenant asking their aid for a partition against an owner who has made improvements upon the property is entitled .to relief only upon condition that any equities thereby arising shall be taken into account, and that in such case, where actual partition is made and it is possible so to do, the improving tenant will be awarded the portion of the land upon which the improvements have been made. (Town v. Needham, 3 Paige, 545 ; In re Heller, id. 199 ; St. Felix v. Rankin, 3 Edw. Ch. 323; Conklin v. Conklin, 3 Sandf. Ch. 64.) Tins relief is administered not upon the ground that the improving tenant who acts without the agreement or assent of the other owners gains a lien upon the property for his advances, but stands upon the proposition that one -who seeks equity must do equity, and that the tenant out of the actual occupation who asks a court of equity to award him partition is entitled to relief only upon condition that the equitable rights of his co-tenants shall be respected. (Taylor v. Baldwin, 10 Barb. 582; Swan v. Swan, 8 Price, 518.) This doctrine is not at all disputed in Scott v. Guernsey (48 N. Y. 106), upon which the respondent mainly relies and which undoubtedly dictated the conclusion of the General Term. That case does decide that the bare fact of improvements made does not, by itself, irrespective of their character and of the circumstances under which they were made, and their effect upon the property, necessarily give a right to an equitable allowance; and to that doctrine we fully accede. Eveiy case of the kind must be determined upon its own facts and surroundings, and those may occur in which such an allowance would be unjust and inequitable. The opinion in Scott v. Guernsey points out that in the cases decided in this State there was some peculiar circumstance out of which the equity arose beyond the bare fact of improvements made. In one there was trace of a consent of the other owners; in two there was mistake as to the title, the tenant improving supposing himself to be sole owner; in a fourth the relief was against an idiot who had damaged the common property. The court then decided that in the case before them the improvements made drew with them no equitable right to compensation. They were made “ as a venture,” without necessity or adequate explanation, and purely as a new source of profit; they were made not as co-tenant, but during an estate for life' and under “a special agreement with the tenant for life;” the owner of the improvements received full compensation for his expenditures ” and did not offer to share with the co-tenants any part of the rents received. Here were reasons enough for denying any equity to the improving tenant, and the case stands solidly upon its facts and is not open to criticism. But it does not deny the duty of a court of equity in a proper case to give its relief upon condition of an allowance for improvements, and does not undertake to specify all the cases in which such equity shall be recognized, hi or shall we undertake any such dangei’ous or impossible effort. The authorities leave us at liberty to consider whether, upon the facts and circumstances of this particular case, the improving tenant .ought to be protected, and furnish us the power to grant the protection if it may justly be demanded.

We have already stated the facts. The situation of the defendants at the date of the execution sale was peculiar. They had bought one-half of what had been both a custom and a merchant mill. In both respects, the property was so utterly out of repair and so destitute of needed machinery, as to be almost useless and profitless unless serious expenditures were made. The share of the co-tenant was sold on execution, and they bid it in, but fifteén months must elapse before they could get a title. Here arose the peculiar emergency. Were they bound to leave their property idle and a prey to rust and rot, and see the business contemplated go elsewhere without possibility of reclamation ? Was anybody to be benefited by such waste and unthrift ? Or was anybody to be harmed by putting the mill promptly in repair? The defendants acted in the presence of a peculiar and unusual emergency; they acted in entire good faith; the repairs were necessary and not merely a venture or speculation, and the improvements were in the line of restoration and not of now and strange enterprise. What they did was natural and normal to the use and character of the property and such as joint owners of equal ability might be expected to join in making. They offer to share in the increased income thus secured, and in every respect appear to have acted fairly. What now is the situation of the redeeming «•editors ? The learned counsel figures out a loss to them if they do not share in these improvements. But those figures clearly indicate that the redemption never would have been made if the property had not been improved, and that the redemption was born, not of a purpose to get the debtor’s interest in the property alone, but to add to that one-half of the increased value put upon it by the other owners and profit by their folly. The plaintiffs looked on in silence while the emergency pressing upon the defendants drove them into action, and redeemed when they thought themselves sure of the improvements. If they have an equity which neutralizes that of the plaintiffs’, I am unable to appreciate it. For these reasons the case should go back for a division of the proceeds on the principles stated and for an accounting of the income and profits which the defendants offer to make. In that accounting defendants should be credited with the share of taxes paid for the benefit of their co-tenants (Hitchcock v. Skinner, Hoff. Ch. 21 ; Van Horne v. Fonda, 5 Johns. Ch. 389, 407), but not for insurance paid, unless for some reason which the case does not disclose.

The trial judge correctly held that the inchoate dower right of Mrs. Whitaker remained in the plaintiffs’ undivided half of the property, but was discharged as against the defendants’ undivided half; but in distributing the proceeds of sale the value of that remaining and undischarged dower right should be charged upon and paid for, solely out of the share awarded to the plaintiffs.

The judgment must be reversed, and a new trial granted, costs to abide the event.

All concur.

Judgment reversed.


author: Eraos, J.

text:
    Mary E. Whitehead et al., Respondents, v. The New York Life Insurance Company, Appellant.
    of the statute authorizing such insurance (Chap. 80, Laws of 1840) they acquire a vested interest in the policy at the moment of its delivery to the insured; and this although no knowledge of the existence of the policy comes to them until after his death ; their claim to the fruits of the insurance is a ratification of the act by which it was obtained. Where a husband procures a policy of insurance upon his life for the benefit of his wife, or in case of her death before his, of their children, in procuring it and in doing whatever is necessary to perfect and continue the rights of the assured, he acts simply as their agent, and by force

      The assured, therefore, acquire and hold their ownership irrespective of the question whether the policy has been actually delivered to them. Biakerton v. Jaques (28 Hun, 119), distinguished.
    The husband has no authority without the assent of the assured to surrender the policy; such an act is not within the scope of the agency inferable from the taking out of the policy by him.
    Where, however, such a policy had been forfeited by its terms, by the nonpayment of premiums, and thereafter the husband, in consideration of a sum paid, surrendered it. Held, that the forfeiture was not waived by the surrender; that the assured could not repudiate the surrender and at the same time seek a benefit under it as revival of the forfeited policy.

      Also held, that evidence was incompetent of admissions by the insurer of the existing validity of the policy where it appeared that they would not have been made except for the agreement to surrender, and were conditional thereon.
    But where f policy in full force was surrendered by the husband without the assent of the assured, and no notices were thereafter sent by the company either to the insured or the assured, held, that the subsequent failure to pay the accruing premiums did not alone work a forfeiture ; that by the agreement of surrender the insurance company did an act, the tendency and purpose of which was to prevent future payments by the parties interested, and the company cannot defend upon a default to which its own wrongful act contributed, and but for which a lapse might not have occurred ; and that the company was liable.
    The recovery upon such a policy is not limited to the surrender value of the policy ; the assured are entitled to recover the sum insured less the unpaid premiums, with interest thereon.

      It seems that the husband is the agent of the assured for the purpose of receiving notices of premiums falling due. .
    Such a notice is equivalent to a demand of the premium.

      'Whitehead v. N. T. L. Ins. Co. (33 Hun, 425), reversed.
    (Argued March 12, 1886 ;
    decided April 13, 1886.)
    Appeal from judgment of the General Term of the Supreme Court, in the first judicial department, entered upon an order made the first Monday of March, 1884, which affirmed a judgment in favor of plaintiff, entered upon a decision of the court on trial at Special Term. (Reported below, 33 Hun, 425.)
    This action was' brought to have the surrender and transfers of three policies of insurance upon the life of George Davis, the father of the plaintiffs, set aside and declared void- and to have the policies declared valid and subsisting obligations of the defendant, in full force and effect at the time of the death of George Davis, and to recover the amount of the policies, less unpaid premiums. Each of the policies specified that it was issued in consideration of a sum stated, paid by JMary A. Darns, wife of the insured, and the sum assured was to be paid to her or her personal representatives. In one of the policies, marked “policy A,” it was specified that in case she died before the insured, the insurance should vest in the heirs •of the insured. In and by the other two policies in case of such death the insurance was to vest in his children. Each of the policies contains the clause that in case Mary A. Davis shall not pay the premiums on or before the several days mentioned for the payment thereof, then the company shall not be liable for the payment of the sum insured or any part thereof, and the policy shall cease and determine. Mary A. Davis died before her husband, who, without the knowledge or consent of the plaintiffs, surrendered to the defendant all of said policies in consideration of sums paid to him upon each surrender. Policy A, previous to its surrender, had been forfeited by non-payment of premiums; the other two were in full force. Neither of the plaintiffs knew of the existence-of the policies, or of either of them, or of their surrender to the company by their father, until after his death. In October, 1879, notice was given to the company of the death of George Davis, and before the commencement of this action the plaintiffs offered to pay the premiums unpaid upon the policies, according to their terms, and to furnish the company with proofs of the death of the insured, but the company refused to accept the premiums, asserting that the policies had been purchased by them and were no longer in force.

      William B. Ilornblower for appellant.
    No ground for equitable relief from the forfeiture of the policy “A” is shown. (Klein v. Ins. Co., 104 U. S. 88 ; N. Y. L. Ins. Co. v. Statham, 93 id. 24; Thompson v. Ins. Co., 104 id. 252; Roehner v. Knickerbocker L. Ins. Co., 63 N. Y. 160, 167; Evans v. U. S. L. Ins. Co., 64 id. 304; In re Atty-Gen'l v. Continental L. Ins. Co., 93 id. 70; Wheeler v. Conn. Mut. L. Ins. Co.,
      82 id. 543, 550 ; Douglass v. Knickerbocker L. Ins. Co., 83 id. 504.) Tlie defendant did not waive the forfeiture of this policy by accepting its surrender after it had elapsed. (Robinson v. Met. L. Ins. Co., 88 N. Y. 545 ; Underwood v. Farmers' Joint-Stock Ins. Co., 57 id. 500; Ripley v. Ætna Ins. Co., 30 id. 136; Diehl v. Adams Mut. Ins. Co., 58 Penn. St. 452; Bennecke v. Ins. Co., 105 U. S. 350 ; Muhleman v. Nat. Ins. Co., 6 W. Va. 518 ; Stolle v. Ætna Ins. Co., 6 Ins. Law Jour.783 ; Baker v. United Mut. Ins. Co., 43 N. Y. 284; Mut. L. Ins. Co. v. Wolff, 15 Alb. Law Jour. [Supr. Ct. U. S.] 435.) When applied to personal property, the word “ heirs ” is usually held to be equivalent to “ next of kin,” and as thus used, it would, of course, embrace brothers and sisters in the absence of children. (Gittings v. McDermott, 2 Myl. & K. 69; In re Newton's Trusts, L. R., 4 Eq. 171; Wingfield v. Wingfield, L. R., 9 Ch. Div. 658; In re Steven's Trusts, L. R., 15 Eq. 110 ; In re Phillips' Will, L. R., 7 Eq. 151; Welsh v. Carter, 32 R. J. Eq. 177; Ferguson v. Stewart, 14 Ohio, 140; Hascall v. Cox, Mich. Supr. Ct., Oct. 1882.) Until the death of the insured, his heirs, or next of kin, had no such vested interest in the policy as to prevent him from surrendering it. (Needham v. Smith, 4 Russ. 318, 323; Teed v. Morton, 60 N. Y. 506; Delaney v. McCormack, 88 id. 174; Godfrey v. Davis, 6 Ves. Jr. 43 ; Campbell v. Rawdon, 18 N. Y. 412; Jenkins v. Freyer, 4 Paige, 47; Lorillard v. Coster, 5 id. 172; 2 Jarman on Wills, 154, 156; 2 Redfield on Wills, 10; Cushman v. Horton, 59 N. Y. 149; Norris v. Lautz, 18 Md. 260, 269 ; Vaughn v. Vanderstegen, 2 Drew. 165, 188; Musick v. Dodson, 76 Mo. 614; Robinson v. Robinson, 11 Bush, 174, 179; Huntley v. Whetner, 77 N. C. 392, 393; Baker v. Un. Mut. L. Ins. Co., 43 N. Y. 287; Brummer v. Cohn, 86 id. 14 ; Olmsted v. Keyes, 85 id. 601, 602.) The clause in the policy providing that the insurance should vest in the “ heirs of the insured,” m case Mary A. Davis should die before her husband, is void because of the absence óf an insurable interest to support it. (Eadie v. Slimmon, 26 N. Y. 17; Barry v. Equitable L. Ass. Co., 59 id. 592; Moehring v. Mitchell, 1 Barb. Ch. 264; Jenkins
      v. Freyer, 4 Paige, 47 ; Wyman v. Wyman, 26 N. Y. 255 ; Wyman v. Prosser, 36 Barb. 371.) There is no rule of law requiring the insured to continue to pay premiums on a policy. (Landrum v. Knowles, 22 N. J. Eq. 594; Bickerton v. Jaques, 28 Hun, 119;. Gambs v. Covenant Mut. L. Ins. Co., 50 Mo. 44; Rison v. Wilkinson, 3 Sneed, 565 ; Union Mut. L. Ins. Co. v. Stevens, U. S. Cir. Ct., M. D. Ill., Chicago Legal Notes, Dec. 29, 1883.) Davis having retained possession of the policies, and paid the premiums thereon, was under no legal obligation to continue to pay the premiums, but could cease to pay the premiums, and could surrender the policies to the company for their money value. (Ricker v. Charter Oak L. Ins. Co.,. 27 Minn. 193 : Foster v. Gile, 50 Wis. 603; Clark v. Durand, 12 id. 223; Kerman v. Howard, 23 id. 108; Bowers v. Parker, 58 N. H. 565; Stillwell v. Mut. L. Ins. Co., 72 N. Y. 385.) Even if the surrender of any of these policies was unlawful, they have nevertheless lapsed by their terms for nonpayment of premiums. (Att’y-Gen’l v. Guardian Mut. L. Ins. Co., 91 N. Y. 655.) A party who desires to rescind or repudiate a transaction is bound to act promptly on discovery of the facts. (2 Pars, on Cont. 681; 2 Chitty on Cont. [11th Am. ed.] 1092; Addison on Cont. [Am. ed. by Morgan], § 312; Masson v. Boret, 1 Denio, 69.) The ignorance of the plaintiff as to the policies does not relieve them from the effect of the default in payment of premiums. (Klein v. N. Y. L. Ins. Co., 104 U. S. 88.)

      C. Elliott Minor for respondents.
    Equity will give relief where a policy has lapsed for non-payment of premium in cases of fraud, accident, mistake, ignorance, impossibility or necessity. (Douglass v. Knick. L. Ins. Co., 83 N. Y. 504; Wheeler v. Conn. Mut. L. Ins. Co., 82 id. 552; Cohen v. N. Y. Mut. L. Ins. Co., 50 id. 610; Sands v. N. Y. L. Ins. Co., id. 625.) Any act of omission or commission contrary to legal or equitable duty, trust or confidence justly reposed, and which is injurious to another, although it falls short of moral fraud, is, in the sense of a court of equity, within its remedial jurisdiction. (Willard’s Eq. Jur. 147, 148; Belcher v. Belcher, 1 Yerg. [Tenn.] 121; Waterbury V. Sturtevant, 18 Wend. 353-362; Jackson, dem. Cadwell, v. King, 4 Cow. 219; Tabor v. Mich. Mut. L. Ins. Co., Law Jour. 97 ; Babcock v. Eckler, 24 N. Y. 632.) It was in violation of defendant’s duty to perform its contracts for it to purchase its own liabilities. (2 Kent’s Com. 478 ; Budd v. Monroe, 18 Hun, 316 ; Barnard v. Campbell, 55 N. Y. 457; Williamson v. Brown, 15 id. 362 ; Baker v. Bliss, 39 id. 174; Reed v. Gannon, 50 id. 350; Cambridge Bk. v. Delano, 48 id. 340; Peabody. v. Fenton, 3 Barb. Ch. 464; Reed v. Gannon, 50 N. Y. 352; N. Y. & N. H. R. R. Co. v. Schuyler, id. 83, 84; Pitney v. Leonard, 1 Paige, 461; Hawley v. Cramer, 4 Cow. 722; Voorhees v. Presb. Church, 8 Barb. 135.) A note payable upon its face to a guardian or agent affords notice that the obligation belongs to the ward or principal, and a holder can acquire no rights adverse to a ward or principal. (Bigelow on Fraud, 297; McMasters v. Dunbar, 2 La. Ann. 577; Nicholson v. Jacobs, id. 666; Louisiana Bk. v. New Orleans, 3 id. 294; Holmes v. Carman, 1 Freem. Ch. 408; Miller v. Helm, 2 L. & M. 687; Davis v. Henderson, 25 Miss. 459; Livermore v. Johnson, 27 id, 284; Cook v. Travis, 20 N. Y. 402 ; Acer v. Westcott, 46 id. 309; Ware v. Egmont, 31 Eng. L. & Eq. 77, 89; Briggs v. Davis, 20 N. Y. 15, 24; Swartout v. Curtis, 4 id. 415; Cambridge Valley Bank v. Delano, 48 id. 336.) In sales by executors, administrators or trustees there is no implied warranty of title, and the vendee buys at his peril. (Mockbee v. Gardner, 2 Har. & Gill, 176; Ricks v. Delahanty, 8 Porter, 133; Forsythe v. Ellis, 4 J. J. Marsh. 298; Prescott v. Holmes, 7 Rich. Eq. 9; Brigham v. Maxey, 15 Ill. 295; Blood v. French, 9 Gray, 197.) Where one of two innocent parties must suffer for the fraud of a third, the loss shall fall on him who has enabled such third person to do the, wrong. (Covil v. Hill, 3 Denio, 328; Root v. French, 13 Wend. 572; Tuckborrow v. Mason, 2 T. & R. [D. & C.] 70 ; East India Co. v. Tritton, 3 B. & C. 289 ; Broom’s Maxims [4th ed.], 456; Barnard v. Campbell, 55 N. Y. 462.) It is immaterial who paid the premiums. (Stillwell v. Mer. L. Ins. Co., 72 17. Y. 388; Eadie v. Slimmon, 26 id. 9; Barry v. Brune, 59 id. 587; S. C., 71 id. 261 ; Bliss on Life Ins., §§ 317, 318.) The defendant cannot succeed upon the answer that. the policies ceased and determined by reason of the non-payment of premiums, as it was its own act which prevented this being done. (Homer v. Guardian L. Ins. Co., 67 N. Y. 481; Ripley v. Ætna Ins. Co., 30 id. 136-164; Leslie v. Knick. L. Ins. Co., 63 id. 27; Howel v. Knick. L. Ins. Co., 44 id. 284; Meyer v. Knick. L. Ins. Co., 73 id. 527; Cohen v. Mut. Ins. Co., 50 id. 610; Sands v. N. Y. Ins. Co., id. 626; Leslie v. Knick. L. Ins. Co., 2 Hun, 218; Baker v. Union L. Ins. Co., 37 How. 129; Manuf. c& Traders’ Bk. v. Hazard, 30 N. Y. 226-230; Babcock v. Eckler, 27 id. 632.) Under the form of these particular policies the company could not declare them forfeited until payment of the premiums had been demanded of the beneficiaries, and not paid. (Sands v. N. Y. L. Ins. Co., 50 N. Y. 631-632; Howell v. Knick. L. Ins. Co., 44 id. 279 ; Roelmer v. Knick. L. Ins. Co., 63 id. 160; Mut. Ben. L. Ins. Co. v. French, 2 Cin., Ohio, Sup. Ct. 321; Van Rensselaer v. Jewett, 2 Comst. [N. Y.] 14.) By reason of the long-established custom of notifying each' policyholder of the amount of dividends declared in each year, it could not declare a forfeiture for non-payment of the premiums in suit until it had notified the plaintiffs of the dividends after the void surrender. (51 How. 269 ; 73 N. Y. 528; Home L. Ins. Co. v. Pierce, 5 Ins. L. J. 290.) As to the waiver of the condition of proof of death of the deceased, George Davis, the company waived all its rights under this condition by declaring that the policies had lapsed, and wore no longer in existence when notice of the death of George Davis was given them. (Goodwin v. Mass. Mut. L. Ins. Co., 73 N. Y. 480; Shaw v. Republic L. Ins. Co., 69 id. 286 ; Grattan v. Met. L. Ins. Co., 80 id. 289; Hayden v. Am. Pop. L. Ins. Co., 69 id. 439 ; Prentice v. Knick. L. Ins. Co., 77 id. 489; Dahn v. Fanners' Joint-Stock Ins, Co., 5 Lans. 275; Cornwell v. Haight, 21 N. Y. 465; Bennett v. Lycoming Co. Mut. Ins. Co., 67 id. 274; Francis v. Ocean Ins. Co., 6 Cow. 415 ; Post v. Ætna Ins. Co., 43 Barb. 365; Van Allen v. Farmers’ Joint-Stock Ins. Co., 10 Hun, 400.) Where it is the intention to have the policy issue under the act of 1840, it is not necessary that the policy should follow the language of the'act, or that the children should be named as such. (Brunner v. Cohen, 86 N. Y. 14; 2 Jarman on Wills [16th Perkins’ ed.], 23; 2 Story’s Eq. Jur., § 10655 ; Vannorsdall v. Van Deventer, 51 Barb. 137; Heard v. Horton, 1 Denio, 165 ; Scolt v. Guernsey, 48 N. Y. 106 ; Drake v. Lawrence, 19 Hun, 112; People v. Globe Mut. Ins. Co., 15 Abb. N. C. 75 ; Applegate v. Fraternal Ins. Co., 7 Ohio, 292 ; Pilcher v. N. Y. L. Ins. Co., 10 Ins. L. J. 312, April, 1881; Valley Mut. L. Ins. Co. v. Burke, 15 Repr. 572.) By treating the policy as still in force at the time of the surrender, the defendant waived any forfeiture which it might have insisted upon, and this may be inferred from the circumstances. ( Viele v. Ger. Ins. Co., 26 Iowa, 9; Viall v. Gen. Mut. Ins. Co., 19 Barb. 440; Gait v. Nat. Prot. Ins. Co., 25 id. 190 ; Bodine v. Ex. F. Ins. Co., 51 N. Y. 117 ; Boehen v. Williamsburgh Ins. Co., 38 id. 131; Washoe v. Hibernia F. Ins. Co., 7 Hun, 75; S. C., 66 N. Y. 613.)
   Eraos, J.

All three of the life'insurance policies sought to be revived and enforced in this action purport on their face to be contracts with the wife as the party assured, and not at all with the husband, who stands in the policies as simply the life insured, his conduct and death furnishing the contingencies upon which the liabilities of the insurer are made to depend. As the relation was tersely described on the argument, the contract is about the husband but not with him. He, therefore, in procuring the policies to be made, in paying the premiums, in receiving and acting upon notices, and in doing whatever was necessary to perfect and continue the rights of the assured, must stand in the attitude of an agent, acting for and representing the assured (Baker v. Union Mut. L. Ins. Co., 43 N. Y. 283); and as having no interest in the policies, unless, possibly, after the death of all of the assured. And it makes no difference that they have been kept in total ignorance of the existence of the policies for their benefit until after the death of the insured, for their claim to the fruits of the insurance must necessarily be a ratification of the acts by which it was obtained. The wife, therefore, in this case had a vested interest in the policies at the moment of their delivery to the insured by force of the statute which permitted them to be made in their existing form. (Laws of 1840, chap. 80.) Prior to that enactment and at common law it was open to question whether the wife and children had an insurable interest in the life of the husband and father (Bliss on Life Ins., § 10; Ruse v. Mut. Ben. L. Ins. Co., 23 N.Y. 516), and whether he could protect them save by taking out policies in his own name, and for the benefit of his estate which in the end would go to them. But this made the insurance liable for his debts, and left it impossible for those who needed assistance most to obtain it at all. (Ruppert v. Union Mut. Ins. Co., 7 Rob. 155, 156.) The statute was intended to and does remedy the difficulty. It expressly authorizes the wife and children to insure the life of the husband and father, and hold the provision without liability for his debts, and the policies here purport to have made exactly that contract. They created a vested interest in the wife, and one also in the children, by force of the clause providing for payment to them if the wife should die before the maturity of the policy. It is true that one of the policies, that in the case marked A., uses the word “ heirs ” instead of children, and much of the appellant’s argument is founded upon that fact. But the conclusions, which we have reached as to policy A. make that difference unessential, and permit us for the purposes of the discussion to treat the word “heirs ” as ■ meaning children, and all the policies as alike in that respect. So that the wife held the insurance for her own benefit if she survived her husband, and the children if she died before him. These persons were the assured, with whom through the husband as agent the contract was made, and they acquired and held their ownership irrespective of the question whether the policies had been actually delivered to them.

Such actual delivery, as a necessary condition of their interestand ownership, is argued here; and one case in this State is cited as authority for the doctrine. (Bickerton v. Jaques, 28 Hun, 119.) But the policy in that case was taken out by Jaques and made payable to his sister, and so was not issued under the act of 1810 and was unaffected by it; the court expressly in its opinion adverting to that fact. The interest and ownership of the wife and children in a statutory _ policy is further indicated by the law relating to its assignment; The cases which hold that the wife cannot traffic with her policy, by assignment or otherwise, go upon the basis that she is owner, but rest the prohibition upon the character of the property as a provision for orphanage and widowhood; and the statutes permitting an assignment by her, under careful and restrictive provisions, necessarily recognize her interest and ownership as supporting the transfers allowed. The case of Olmsted v. Keyes (85 N. Y. 593) recognizes this right of the wife to the fullest extent. The whole argument of that case proceeds upon the theory that the assured, when the policy is made payable to her, or, as in that case, to a trustee for her, becomes sole owner, and, but for the statute regulations, could dispose of it as she pleased. Upon her death the ownership of the pqlicy was held to vest in the husband by the usual marital right over the wife’s property, and his interest was founded upon hers. We have seen that in these eases the action of the husband is as agent, and hence a delivery of the policy to him is. a delivery to the wife for whom he acts, and the manual possession of the papers by her cannot be essential to her right.

These policies, therefore, at the moment of their execution, vested in the wife and children as the assured under the provisions of the statute. Their interest was in the whole contract and not merely from year to year, and so far only as it was executed. (N. Y. Life Ins. Co. v. Statham, 93 U. S. 24.) They had the right, if the husband failed to pay the premiums, to pay them themselves and so continue the policy in force. It is a necessary result of this ownership that the husband could not without the assent of the assured surrender the policy to the company. (Stilwell v. Mut. Life Ins. Co., 72 N. Y. 388; Bliss on Life Ins., § 348; Knickerbocker Life Ins. Co. v. Weitz, 99 Mass. 157; Chapin v. Fellowes, 36 Conn. 132.) His act in so doing is not within the scope of the authority infer-able from his taking out the policy, and is repudiated instead of ratified by the claim of the assured founded upon it. It follows that the action cannot be defended upon the ground of such surrender, or through any rights thus obtained. The plaintiffs are entitled to treat that obstacle as removed, and to have possession of their policies unless barred by some other reason.

Such other reason is alleged to be the forfeiture of the policies through non-payment of annual premiums as they fell due, and these omissions raise the remaining questions in the case. Policy A. in December, 1874, and five months before the attempted surrender, was forfeited by its terms on account of neglect to pay the annual premium then falling due. The usual notice of its amount and of the dividend which might be applied upon it was given to the insured, to whom alone it had been previously sent, and who was certainly the agent of the assured, for the purpose of receiving such notice and paying the premium about to mature. While at that time such notice was not commanded by statute, it was required by and might justly be expected from the settled custom and habit of the insurer. In exact accord with that habit and custom it was given, and if a demand of the premium was needed it amounted to such demand. There is, therefore, as to policy A., no answer to the forfeiture unless it be in the suggestion upon which the General Term relied that such forfeiture was waived by the agreement of surrender. That agreement, it was argued, treated the policy as valid and subsisting and so waived the existing default. We do not agree to that conclusion for several reasons. The plaintiffs stand here repudiating that surrender and insisting that it is fraudulent and void, and at the same ,time seeking a benefit under it as a revival of their forfeited policy. They would set it aside where it harms them and maintain it where it helps them. In so doing they utterly pervert the true nature of the transaction. That was an effort, not to revive the policy, but to kill it more effectually than ever, and so understood on both sides. It indicates no waiver by the company of existing rights, but an attempt to acquire an added right and a new and further defense against liability. The forfeiture had relieved them from liability, but the policy itself was outstanding and might expose them to the appearance of a claim and a consequent litigation, and they paid something to secure its possession as a voucher and its final cancellation. The act was not in the least inconsistent with a position held and maintained,- that the policy was valueless and unenforceable as an obligation, any more than that one who has a good title to real estate can be said to admit that he has none, because he bought in for his safety and security a possible hostile claim which he did not deem valid. There is no proof in the case that the payment made to the father was in fact, or was called or deemed, a surrender value of the policy, so as to involve an admission of its vitality, beyond a marginal note in the receipts which is purely formal and might have been explained if excluded evidence had been admitted. On the contrary our attention is called to the very smallness of the amount paid in comparison with the premiums received as indicating that a fair surrender value was not given, and that the company made a rapacious and unjust bargain; and,, as to what was said and understood at the time, the door was closed by the objection of the plaintiffs and a ruling in their favor excluding the offered proofs. We see no justification for that ruling. The evidence was not admissible on the ground of agency, but when the plaintiffs rely upon the act of the company as a waiver it is'vitally important to know just what that act in truth was, and how and why the form of receipt came to be used. In the light of this ruling we are bound to assume that the defendant company might and would have proved that* at the time of the surrender the insured was expressly told that the policy had lapsed and forfeited; that the company stood upon its rights; but that if the insured would give up possession of the policy, they would give him a certain moderate sum as an act of kindness to an old agent of the corporation, and in recognition of an imperfect moral equity incapable of enforcement, but having about it a sort of rude justice. The company was a mutual one. For many years the insured had paid his premiums until poverty and misfortune occasioned a default. Everybody feels the force with which the situation appeals to generous and kind treatment. The companies have felt it and the legislature also. The former have adopted what they call non-forfeitable policies, and the latter has legislated in the same direction. Indeed the Federal court, with some formidable dissent, have recognized that equity, where a forfeiture had occurred by reason of war making payment impossible, as sufficiently strong and definite to be enforced in the courts. (N. Y. Life Ins. Co. v. Statham, supra.) The pressure of that inchoate equity, even where the assured or their agent had been in fault through the nonpayment of premiums, the defendant might well and justly recognize ; and if it did, and paid a gratuity for that reason, the act stood expressly upon the lapse of the policy and cannot be tortured into an admission of its vitality.

It is obvions, also, that if in any sense the insurer can be said to have recognized the policy as a valid and subsisting obligation, it was a conditional and not an absolute recognition. It was conditioned upon the surrender, and made solely for that purpose. It is not in the least doubtful that, but for the agreement to surrender, no sort of admission would have been made of the existing validity of the policy. Nobody tells us what conversation occurred at the time, but the transaction itself leads to the inevitable inference that the waiver, if it can be deemed such, was conditional upon the surrender and cancellation of the policy; and the plaintiffs cannot avail themselves of the waiver which their agent secured, and repudiate the terms and conditions upon which alone he secured it. (Baker v. Union Life Ins. Co., supra.) For these reasons we are of opinion that there should have been no recovery upon policy A.

The situation as to the other two policies is different in the very important particular that neither of them were forfeited when the surrender took placo; and the failure to pay annual premiums occurred thereafter. As to these omissions, two things happened which by possibility may have prevented such payments by the assured, and for which the insurer was accountable. No notices were sent either to the insured orto the children, and the company by the wrongful possession and cancellation of the policies, and by their agreement of surrender, did an act, the tendency and purpose of which was to prevent future payment by the parties interested. If the company had refused to buy in the policies of the insured, except with the consent of the assured, one of two things would certainly have taken place. Either in view of their father’s embarrassment, the children would have consented to the surrender, taking as their own the surrender value which belonged to them, or they would have kept the policies in life by themselves paying the premiums. Such action by the company on the line of its clear duty would have left the insured without the least motive for concealment of the situation from the children, and in all human probability have given them a knowledge of their rights. But the agreement of surrender practically bought the father’s silence. The result shows it. He kept the secret during his life because he had in his pocket what belonged to his children and not to himsélf, and left the information in a letter found after his death, showing the duplicity of his dealing in the transaction. His conduct operated as a fraud upon the assured, and in that fraud the insurer participated, with a full knowledge of the probable consequences. The company cannot depend upon a default to which its own wrongful act contributed, and but for which a lapse might not have occurred. (Meyer v. Knickerbocker Life Ins. Co., 73 N. Y. 516.) The company kept the secret on its part, and now cannot set up as a defense the non-payment of premiums which it did not intend or expect to receive, and which it may justly be said to have occasioned by its own unauthorized act.

Nor should the recovery on these two policies be limited to the surrender value. That would add the sanction of the court to the unauthorized surrender, and make it valid, leaving only an action for the surrender value. More than that was the interest of the assured, and greater than that their loss by the unauthorized act. They can only obtain full redress by a recovery of the amount insured, less the unpaid premiums and interest.

The judgment should be reversed and a new trial granted, costs to abide the event, unless the plaintiffs stipulate to deduct from the judgment the amount recovered upon policy A., in which event the judgment is affirmed, without costs to either party in this court.

All concur.

Judgment accordingly.


text:
    In the Matter of the Application of William E. Haxtun, a creditor of Sarah E. Akin, deceased, for leave to mortgage, lease or sell her real estate.
    The fact that a claim against the estate of a deceased person has been presented to and rejected by the executor or administrator, does not deprive the surrogate of jurisdiction to determine the validity of the claim in proceedings instituted under the Code of Civil Procedure (§§ 3750 et seq.) upon petition of the creditor to sell the real estate of the deceased. The surrogate has jurisdiction in such a proceeding to determine the validity of all claims upon the. estate which are not already liens upon the real property, as well that of the petitioning creditor as of other creditors. The six months’ limitation within which an action must be brought against an executor or administrator upon a claim rejected by him (3 R. S. 89, § 88) does not apply to a claim presented and rejected before the amendment of the statute in 1883 (Chap. 399, Laws of 1883) where no notice to creditors was ever published by the executor or administrator.

      In re Haxtun (83 Hun, 864), reversed.
    (Argued March 15, 1886 ;
    decided April 13, 1886.)
    Appeal from order of the General Term of the Supreme Court in the second judicial department, made September 12, 1884, which reversed a decree of the surrogate of the county of Dutchess, adjudging the estate of Sarah E. Akin to be indebted to the petitioning creditor above named in a sum specified, and directing the sale of the decedent’s real estate for the payment of her debts. (Mem. of decision below, 33 Hun, 364.)
    The material facts are stated in the opinion.

      Milton A. Fowler for appellant.
    A Surrogate’s Court has jurisdiction to try a claim which has been disputed by an executor in a proceeding .instituted by a creditor to compel the mortgaging, leasing or selling of the real estate of a decedent to pay his debts. (Code, §§ 2752, 2754, 2757, 2747, 2759; Hopkins v. Van Valkenburgh, 16 Hun, 3, note to § 2742, Throop’s An. Code [ed. of 1882] ; Redf. Surr. Pr. [ed. of 1881] 57, 611.) The six months’ statute of limitation prescribed in section 1822 of the Code has no application to this case. (Tucker v. Tucker, 4 Keyes, 136 ; Whitmore v. Foose, 1 Denio, 159.)

      A. M. Oard for respondents.
    A surrogate has no jurisdiediction on the petition of a creditor to try the validity or merits of his claim when disputed by the executor. (Magee v. Vedder, 6 Barb. 352; Disosway v. Bk. of Washington, 24 id. 60; Andrews v. Wallege, 17 How. 263 ; Tucker v. Tucker, 4 Keyes, 136; Riggs v. Crary, 89 N. Y. 491.)
   Finch, J.

We must assume that the decree of the surrogate was reversed by the General Term for errors of law, since the order of reversal does not certify that it was based upon errors of fact. (Code, § 1337; Matter of Will of Cottrell, 95 N. Y. 329, 333.) The errors of law alleged are two: first, that the petitioner’s claim was disputed by the executor, arid the surrogate had no jurisdiction to determine its validity; and second, that the claim was barred because no action upon it had been commenced within six months after its rejection.

It is undoubtedly the settled rule that a surrogate may not adjudicate upon a disputed claim as between the executor and the creditor upon an accounting. That rule, however, does not reach the case of a proceeding to mortgage, lease or sell the real estate, which becomes a contest between the heir or devisee and the creditor. That is regulated by statute, which seems to us to clearly confer the questioned jurisdiction. Its commands are so plain and forcible that the respondent here is compelled to admit that some disputed claims may be tried by the surrogate, and .to limit his contention barring the jurisdiction to a case where it is the petitioner’s demand which has been rejected. No such distinction is drawn or indicated in the statute. The Code provides for a petition as the commencement of the proceeding, and dictates by whom it may be presented. (§ 2750.) The persons so entitled are the executor or administrator, “ or a creditor of the decedent other than a creditor by a judgment or mortgage which is a lien upon the decedent’s real property.” That specific class of creditors is alone excluded, and all others without limitation- are permitted to institute the proceeding. The petition is required to state “ the unpaid debts of the decedent, and the name of each creditor or person claiming to be a creditor.” (§ 2752.) If the surrogate is satisfied from the facts set forth that a resort to the real estate is necessary for the payment of debts, it is made his duty to issue a citation to the heirs or devisees, or persons claiming an interest in the property. (§ 2754.) Upon the return of the citation the surrogate is authorized to hear the allegations and proofs of the parties. (§ 2755.) A creditor of the decedent, although not named in the petition, “may present and prove his debt.” The persons interested in the real estate “may contest the-validity of the debt represented as existing against the decedent.” The recovery of a judgment against the executor has no other effect than that of presumptive evidence of the debt, and the heirs or devisees may resist the validity of the claim as if no judgment had been rendered upon it. (§ 2756.) But even if established, the costs of the judgment are to be excluded. The decree “ must determine and specify the amount of each debt established before the surrogate as a valid and subsisting debt against the decedent’s estate,” and can only be made where “ after due examination ” it has been established to the satisfaction of the surrogate,” among other things, “ tiiat the debts for the payment of which the decree is made are the debts of the decedent and are justly due.” (§§ 2758, 2759.) These provisions were taken substantially from the Revised Statutes, and the compiler, in a note to section 2742, refers to “the anomaly ” of a rule which on an accounting bars the trial of a disputed claim, but on a proceeding against the real, estate permits it, and adds that the anomaly disappears when it is considered that in the latter case the surrogate “ sits as a court of equity.” Whether that explanation is altogether satisfactory need not be considered in view of the provisions of the statute, for they inevitably contemplate a determination of all claims upon the estate not already a hen. In what respect can there be the least utility in a judicial construction narrowing the language of the statute to creditors whose claims have been admitted by the executor or established in a court of law % In either event the heir or devisee may dispute them, and the executor’s admission does not affect the contestant or benefit the creditor, and the judgment even merely raises a presumption which may -be rebutted and so the whole question be thrown open. Ho authority for such a construction is furnished; for all of the eases cited by the respondent were cases on an accounting and between executor and creditor. On the other hand, in Hopkins v. Van Valkenburgh (16 Hun, 3), and Tucker v. Tucker (4 Keyes, 136), the jurisdiction of the surrogate to try a disputed claim in the class of proceedings before us was asserted directly or by clear implication. We are of opinion that the General Term erred in denying the jurisdiction of the surrogate.

The General Term also erred in holding that the six months’ statute of limitations barred the plaintiff’s claim. Without adverting to other reasons, it is sufficient to say that, before the amendment of 1882, it was held that the statute did not apply except to claims presented after commencement of publication by the executor of the notice to creditors ( Whitmore v. Foose, 1 Denio, 159 ; Tucker v. Tucker, 4 Keyes, 136) ; that to obviate the rule thus established the amendment, of 1882 was adopted, inserting the words “ either before or ” so as to permit a presentation and effective rejection before publication (Laws of 1882, chap. 399); but by section 2 of the same chapter this amendment is not to apply to cases in which letters had been issued before the adoption of the act; that the letters in this case were issued in 1879 and the presentation of the claim itself was before the amendment was adopted ;• and no notice to creditors was ever published by the executor.

These are the only errors of law relied on by the General Term and do not justify the reversal. Other alleged errors have been examined but do not require discussion.

The order of the General Term should be reversed and the decree of the surrogate affirmed, with costs.

All concur.

Order reversed and decree affirmed.