author: Garvin, J. Jones, J.

text:
    Edward C. Johnson, plaintiff, vs. James Mulry, defendant.
    1. A mere entry in a book, by the clerk of the brokers of a vendor, by whom a sale of choses in action has been made, of such sale, although assented to verbally by the buyers as correct, is not a sufficient reduction of the contract to writing, or written memorandum,' or note thereof signed by the parties, within the statute of frauds,
    2. The necessity of having a contract for the sale of shares of stock reduced to writing, within the statute of frauds, is not dispensed with by the statute which provides that no such contract shall be void or voidable by reason of a want of consideration, or the pon-payment of a consideration, or the non-possession or ownership by the vendor, at the time of making such contract of the certificate or other evidence of such shares. (IV. T. Sess. Laws, 1858, oh. 134,)
    .(Before Babboue, Gaevin and Jones, JJ.)
    Heard Pecember 7, 1866;
    decided May 17, 1867.

      This was an action for the price of certain stock agreed to •be bought by the defendant. The plaintiff, through Drake Brothers, brokers, agreed to sell on the 20th March, 1865, in the city of' New York, to the defendant, 400 shares of the stock of the Cumberland Coal Company, one half at one price, and the other at another, to be delivered. This contract was made in the street, and was between a clerk of Drake Brothers and the defendant. The clerk entered it in a book ; the defendant said the entry was correct, but neither party signed it. The defendant, on the 21st March, wrote Saxton & Raymond, a letter stating that he had purchased the stock of Drake Brothers, giving the quantity and price. The stock was after-wards sold by the plaintiff for less than the purchase price, after notice to the defendant; and the plaintiff on the trial, under the direction of the court, obtained a verdict for $3500, being the difference between the contract price and what the stock brought at the sale, and the interest, to which direction the defendant excepted.
    When the plaintiff rested, the defendant moved to dismiss the complaint, on the ground that there was no proof, of a valid sale, and that the contract was void by the statute of frauds, which motion was denied, and the defendant excepted.
    The court ordered the exceptions to be heard in the first instance at the general term, and judgment in the mean time to be suspended.

      J, F. Miller, for the plaintiff.

      Townsend & Mahan, for the defendant.
   By the Court,

Garvin, J.

It is claimed in this case by the defendant, that the contract sued upon is void, under the third section of 2 R. S. p. 140, which provides that every contract for the sale of any goods, chattels, or things in action for the price of fifty dollars or m'ore, shall be void, unless, 1. A note or memorandum of such contract, be made in writing, and be subscribed by the parties to be charged thereby; or, 2. Unless the buyer shall accept and receive part of such goods or the evidence, or some of them, of such things in action ; or, 3. Unless the buyer shall at the time pay some part of the purchase money. If the purchase money is to be deemed the consideration, or a part of the consideration, then the 3d subdivision has no application to this case; the payment having been rendered unnecessary by the act to legalize the sale of stocks, passed April 10,1858, (4 R. S. Edm. ed. 110.) But the 1st and 2d subdivisions of the statute remain in force, and it remains to be seen whether either subdivision applies to this case. It is conceded that there was no note or memorandum in writing, subscribed by the parties. It has been held in the Court of Appeals, under this statute, if the memorandum in writing is relied on, it must be subscribed by both parties. (Brabin v. Hyde, 32 N. Y. Rep. 519.) The same doctrine has been held in two cases decided by this court. (Justice v. Lang, 2 Rob. 333. Marcus v. Barnard, ante, p. 220.)

It is not claimed that both the parties to this supposed contract or their agents subscribed any note or memorandum in writing. But it is insisted, that a memorandum was made by a clerk, in a book, giving the quantity, description and price of the stock, which was shown to the defendant and he pronounced it right. There is, however, no pretense that he subscribed it, or that it was subscribed by the plaintiff or by any one for either of them, but it is urged that the defendant wrote a letter reciting the contract. It is true he did; but it was not an acceptance of a proposition made in writing and subscribed by the plaintiff. He writes in his letter, of a contract he had made, which he now says is void, because it was not in writing and subscribed by the parties. Many of the cases cited by the plaintiff do not bear upon this question, but arose upon the construction to be given to other and different sections of the same statute. The 8th section (2 R. S.139) in regard to the sale of lands or any interest in lands, differs in its language from that we are now considering ; that section requires a note or memorandum in writing to be signed not subscribed, by the party by whom the land or sale is to be. made, and the case in 14 N. Y. Rep. 584, is upon that sec-, tion. The case in 6 Cowen, 447, turned upon the same question as the last case. What is a sufficient signing by the. one party by whom the sale or lease is to be made is a very-different question from that as to whether both parties have subscribed. The first is answered by the signing of the agreement by one party or acknowledging it by any other instrument, duly signed by him, and is sufficient. (Gale v. Nixon, 6 Cowen, 447. Roberts on Frauds, 121. Wellford v. Beazeley, 3 Ath. 503. 3 Bro. Ch., 318. 1 Ves. 6. 9 id. 355.) But, the last must be subscribed by the parties to be charged thereby.

A letter may be used against the writer as evidence in affirm^ anee of a contract in controversy, but that alone, without something subscribed by the other party, would not be suffU cient, to make a contract under this clause of the statute. The intent of the statute being to prevent frauds and perjuries, by either reducing the contract to writing and both parties subscribing it, or that the buyer shall accept and receive part of such goods ; or the evidences, or some of them, of such things in action. There is nothing in this case to show that any part of the stock was received or accepted. We must hold that the contract was not reduced to writing, nor was there any note or memorandum thereof made in writing signed by the parties as required by the statute.

But it is said that a contract for the sale of stocks is not within the statute, and we are referred to the laws of 1858, chapter 134, (4 R. S. Edm. ed. 110,) which provides that “ no contract for the sale of stock * * * shall he void or voidable, for any want of consideration; or because of the non-payment of any consideration ; or because the vendor at the time of making such contract is not the owner or possessor of the certificate or certificates or other evidence of such debt, share or interest.” The statute simply provides that neither a written nor verbal contract shall be void or voidable. 1. For any want of con-' •«deration, 2. Non-payment of any consideration ; or, 3. Because the vendor is not the owner or possessor of the stock at the time of making the contract. A verbal contract for less than $50 would be good without any consideration; and without the payment of any consideration, whether the vendor owned or possessed the stock at the time of the contract or not, but if of the value of $50 or more, I do not see how in any way the statute of 1858, abrogates the necessity of reducing such a contract to writing. Such a contract made in writing and subscribed by the parties, under this statute would be sustained in spite of any want of consideration, and would not be void or voidable because of the non-payment of any consideration; though the vendor was not the owner or possessor of the stock, at the time of the making the contract, but the statute requiring the note or memorandum of the contract to be in writing and subscribed by the parties is still in force. Our duty is to declare what the law is, not to legislate.

These views make it unnecessary to examine the other questions in the case, and bring us to the conclusion that the exceptions made by the defendant are well taken, and that judgment should he entered for the defendant, with costs.

Jones, J.

Unless there is a contract, or a custom to the contrary, (and there is no such contract or custom shown in this case,) a vendor cannot sustain, against a vendee, an action for damages for the breach by the latter of a contract of bargain and sale of personal property, by not accepting and paying for the property sold, without proving that at the time fixed for the completion of the bargain he was ready and willing and offered to deliver the property.

There are many reported cases which would seem to be antagonistic to this proposition; but on examination it will be seen that they merely decide what matter will be sufficient as a question of evidence to support an allegation of an offer or tender-. None of these cases are applicable to the facts of the one at bar. Here there is no evidence of any direct offer to the defendants, nor of any matters which under the decided cases are equivalent to an offer.

The offer to Saxton & Raymond is insufficient. The defendant, by his letter to them simply authorized them to act as his' agents in receiving the stock and paying for it.

They refused to accept the agency. Having so refused, they had no more connection with the defendant than a firm of brokers to whom the defendant was entirely unknown, and who were unknown to the defendant. The offer might as well be made to such other firm as to Saxton & Raymond.

If the defendant had directed the plaintiff to deliver the stock to Saxton & Raymond, the case would assume a different aspect. Rut there is no proof of any such direction.

The case as presented is simply this : one having purchased goods, requests by letter a friend to go and pay for them ; the vendor having by some means obtained knowledge of this request seeks out the friend, offers him the goods and demands payment. The friend says, yes, I received such a request, but as I received no money with it, I decline to act in the matter. To make this a good offer, it would be necessary to sustain this absurdity, that one by refusing to act as agent, becomes an agent.

Neither is the plaintiff’s note of March 23, 1865, which was left at the defendant’s residence at about 11 o’clock in the morning, during the defendant’s absence, and was first received by him at 6 p. m. of that day, sufficient 'to constitute an offer. It does not in express terms offer to deliver the stock; if any offer can be implied from it, it is a conditional one to deliver, provided the price be paid before 2 p. m. of that very day.

As the defendant did not receive the note until long after 2 p. m. he had no information of the offer until after it was too late to .comply with it, and after it had been withdrawn by its very terms. For this reason, this offer cannot be regarded as sufficient; there being nothing in the case to show that the notice was reasonable, or that the defendant should be held chargeable with knowledge of it from the time it reached his residence.

The exceptions should be sustained, and a new trial ordered, with costs to the appellant to abide the event.


source: Caselaw Access Project

author: Robertson, Oh. J.

license: Public Domain

text:
    Thomas Thacher, plaintiff and appellant, vs. John Jay Hannahs, defendant and respondent.
    1. No presumption can arise, from any commercial custom or necessity, that, if one person unlawfully possesses himself of and converts another’s property to his own use, the latter, by electing to consider it a sale, can hold as security Tor the payment of the value of such property, other merchandise then in his possession, for the purpose of being sold by him as factor of the former.
    3. "Torts are not ordinary commercial transactions, and, therefore, are not subjects of a lien. Nor can the right of election, which the law gives a party injured, to convert a tortious conversion into a contract of sale, be made use of to create a lien for the money debt thereby produced, upon goods held in pursuance of an ordinary commercial relation by contract.
    3. The doctrine of a factor’s lien for a general balance of accounts, never went so far as to embrace even the price of goods, sold by a factor to his principal, not connected with the general purposes of their relation as principal and agent. Per Robertson, Ch. J.
    4. Where the minutes of the clerk show that the exceptions taken on the trial were directed to be first heard at a general term, and the case states that the verdict was taken subject to the opinion of the court at a general term, the record will be amended, to conform to such minutes.
    (Before Robertson" Ch. J., and Barbour and Jones, JJ.)
    Heard June 13, 1866;
    decided June 30, 1866.
    This was an action claiming the immediate delivery in it of sixteen bales of hops, alleged to be the property of the plaintiff, and wrongfully detained by the defendant. Such merchandise came into the defendant’s possession as the agent of the plaintiff for the sale thereof, and was the residue of one hundred bales originally delivered to him for that purpose. The defendant claimed a lien upon them for the value of nineteen bales, previously the property of the plaintiff, for which the former had paid the price to the latter. Such nineteen bales were part of a larger lot of one hundred and forty bales, which were the property of the plaintiff, and in the possession of a warehouseman, (Spader.) -The defendant proposed to the plaintiff to sell such hops for him, as his factor or agent, and the plaintiff delivered to the defendant an order on the warehouse keeper for the same, and the defendant delivered to such warehouseman such order, and, with the plaintiff’s consent, left the hops in such store, because his own was full. Subsequently the defendant sold and delivered to a ¡purchaser, (G-. W. Rychman, Jr.) out of such lot, eighty bales, and a few days afterwards sold the same purchaser thirty-six more of such bales. Such purchaser selected and set apart such last bales at the store of the warehouseman, marking them with a letter, (Gr,) and different numbers, but left them in such store. About a month afterwards the plaintiff desired from the defendant an account of the sale of all the hops sold by him for the former, including such thirty-six bales, which account the defendant rendered, charging therein his commission on such sale, and paid exactly.the residue of the amount, by checks, to the plaintiff. Two months after this the plaintiff gave the defendant an order on the warehouse keeper for such thirty-six bales, designated as having been weighed and marked as the purchaser, (Ryqkman had marked them,) but such warehouseman delivered to such purchaser only seventeen of the thirty-six bales so marked and numbered; nineteen others not so marked, but thus delivered, were returned by the purchaser to such warehouse keeper.
    At the time of paying the plaintiff the amount due him for the hops sold by the defendant, the latter “ gave him to understand that the thing was not settled between ” the purchaser and himself, and he (the defendant) “ would settle it with him.” The plaintiff acceded thereto, “and said it was all right.” The defendant admitted on his examination as a witness, that the plaintiff “ never asked him to advance money to him on merchandise * * and he made no advances,” and the plaintiff testified that he “ never got advances from ” the defendant. That it was his “ own business to advance. Nothing was said when ” he saw the defendant “ about the payment of the sales of the one hundred and forty bales (of which the thirty-six formed part) of his (the defendant’s) advancing to” the plaintiff. And again : “Nothing was said or intimated about his (the defendant’s) advancing money. He (the defendant) told ” the plaintiff “ he had sold them and got the money for them. The sale was a cash sale.”
    Evidence was given in the case tending to show that the warehouseman (Spader) had remaining in his possession only nineteen bales of the plaintiff’s hops which were not those selected and marked by the purchaser of the thirty-six bales (Ryckman.) That seventeen only of such last mentioned number were received and retained by the latter. That the residue of the lot were delivered on the plaintiff’s orders, and that the last so delivered were shipped by his orders to St. Louis.
    The action was tried before a jury, who found a verdict for the defendant, under the direction of the court, and assessed the value of the property taken, which had been redelivered to the plaintiff in the action, and damages for the detention. The minutes of the clerk showed that the exceptions taken in such case were directed in the first case to be heard at general term. The case stated that the verdict was taken subject to the opinion of the court at general term.

      0. Fine, for the appellant, plaintiff.
    1. There is a difference between a general and special lien.
    1. A general lien is the right to retain the property of another for a general balance of accounts ; it is not favored by the law, but is taken strictly. (2 Kent’s Com. 813, 817, 7th ed. Story on Agency, § 354.) Actual, unqualified, continuous possession is necessary to sustain a lien. (2 Kent’s Com., 7th ed., 813, 817, 819. Story on Agency, §§ 357-367. McFarland v. Wheeler, 26 Wend. 467. Winter v. Coit, 7 N. Y. Rep. 288, 294.)

      2. The lien must not be inconsistent with the nature of the contract. No lien can arise where from the nature of the contract between the parties, it would be inconsistent with the terms or the intent of the contract—for example, if the goods are deposited in the possession of a party for a purpose inconsistent with the nature of a lien, as to have them delivered to another person, or the like; in such cases no lien attaches. (Story on Agency, § 362, and cases cited.)

    3. It does not attach to claims in their nature of a tortious character, but only to such claims as grow legitimately out of usual charges for commissions, storage, and the like, in ordinary and usual transactions between the agent and the principal. Generally it may be stated that the same rules are adopted in respect to the nature of the claims for which a lien may be asserted as regulate the rights of the parties, in matters of account. So if a general lien is claimed for a general balance of accounts, the debt must be a balance arising out of transactions, similar to that upon which the particular lien arises. (Story on Agency, §§ 364, 365.)
    4. A general lien does not exist in respect to torts. (Sturgis v. Slacum, 18 Pick. 36.)
    II. The defendant was not in his transactions with the plaintiff, his factor.

    L “ A factor is a person to whom goods are consigned for sale by a merchant residing abroad or at a distance from the place of the sale.” The parties, plaintiff and defendant, both resided and did business in the city of New York, and even in the same street. (See Baring v. Corrie, 2 B. & Aid. 143, per Abbott, Ch. J.) None of the hops in question were ever consigned by the plaintiff to the defendant for sale or at all, but all of the hops were stored by the plaintiff with I. V. Spader & Co.
    2. The .defendant never had possession of any of the hops until after he had sold them for the plaintiff, and never got an order for them on the plaintiff’s warehouseman, Spader, for any of them until after he had sold them, and then only for the sole purpose of delivering them to the purchaser.

      (a.) The only hops that in any way affect the questions in this case, are (1) one hundred bales which the defendant sold for the plaintiff while they were on. storage with Spader, before the defendant got an order to deliver them to the purchaser, and (2) one hundred and forty bales (also on storage with Spader) which the defendant never had in his possession at all, which he sold for the plaintiff before he got any order for them;. such order was made for the sole purpose of transferring the goods so sold from Spader’s store to the purchaser.
    (b.) Sixteen bales, (called eighteen in the complaint,) belonged to the order for one hundred bales of August 15th, 1863, eighteen bales having been rejected by the purchaser, (Mr. Ryckman,) and left at the defendant’s store, whither they had been unnecessarily taken for the mere purpose of inspection, of which two bales were afterwards sold; for the recovery of these sixteen bales this suit is brought. The nineteen bales which the defendant charges the plaintiff with having wrongfully appropriated to himself, and on account of which the defendant claims a general lien, covering and entitling Mm to retain the sixteen bales from the lot of one hundred bales, are a part of the lot of the one hundred and forty bales.
    (c.) The one hundred bales were on storage with Spader, and the defendant had no possession of them, whatever, until after he had sold them for the plaintiff, and then received the order on Spader for them, only to enable him to deliver them to the purchaser. It was not necessary, but merely accidental, that they went to the defendant’s store at all. They should have been inspected at Spader’s. The defendant, therefore, had no charge, right, or control over them, except to deliver them to the purchaser. The defendant himself says : “ The facts of my receiving the eighteen bales of hops were ; I had sold one hundred, subject to the usual conditions, if they were sound.” He took them to Ms store merely to inspect them.

      (d.) Nor had the defendant ever any possession whatever of any of the 140 bales, or even received the order on Spader by which to deliver them to the purchaser, until after he had sold them. The order for them is dated September 15, 1863. Whereas the defendant, in his answer, himself swears that the nineteen bales, which were a part of the thirty-six bales, and both a part of the 140 bales, were sold by him for the plaintiff on the 14th day of September, 1863, thus affirming what the plaintiff testifies, that he, the defendant, never even received any order for any hops until after he had sold them. The defendant’s account sales, rendered 14th October, 1863, shows the same fact. So that the defendant never had any possession of these hops at all, nor any charge or control of them, except to deliver them to the purchaser, who, in every case, was determined before the order was drawn.
    2. “A factor is an agent employed to sell goods consigned to him for that purpose; the goods so received by him are called a consignment, and the person consigning them is called a consignor.” A factor is always entrusted with the full, complete and unqualified possession and control of the goods to he sold by him. (Story on Agency, § 34.) We do not suppose that even the defendant’s counsel, as a lawyer, would call the plaintiff, in his transactions with the defendant, a consignor, the goods a consignment, and the defendant a consignee.

    3. A factor makes advances on goods consigned to him, and that is one great peculiarity of factorship. But there can be no pretense of any advances by the defendant to the plaintiff; there was nothing for the defendant to advance upon. The plaintiff was a commission merchant, and his own business was to advance on merchandise consigned to him as a factor, from out the city. The defendant never did advance to the plaintiff; the sale for the plaintiff by the defendant was for cash; he had no authority to sell otherwise. The payment of $1251.15, or $657.97, part thereof was a mere payment to the plaintiff, of money which the defendant told the plaintiff he, had received on the sale. The defendant also says he made no advances to the plaintiff.

      4. It is conceded that such an agent as is known to the law as a regular factor, has a general lien as well as a specific one, for his advances, but it is most confidently insisted that the defendant was not a factor of the plaintiff.
    II. The defendant being, in his transactions with the plaintiff, nothing more than a mixed character of broker and warehouseman, had no lien.
    1. “A broker has not usually the possession of the subject of the sale, and has no lien. (Story on Agency, §§ 28, 34.) His business consists in buying and selling goods for another. (Baring v. Corrie, 2 B. & Ald. 137, 143, 148. 1 Domat, tit. 17, § 1, art. 1. 2 Kent’s Com. p. 809, 8th ed. n.) This description of an agent suits the real character of the defendant in his transactions with the plaintiff, (a.) The 140 bales of hops, in reference to which he seeks to establish a general lien, he never had in his possession at all, never even solicited or received an order for any or either lot of hops until he had first procured a purchaser, and he did not even undertake to close a sale until he had submitted the price to the plaintiff. The defendant himself says the goods remained at Spader’s store, and that he could make a better sale of them there than in his own store. The plaintiff testified that the defendant was only his broker in selling any of these hops, and that he dealt with him as such merely. The defendant expressly repudiates ever having these goods on storage or having goods on storage at all, thereby himself denying that he ever had such possession of them as factors have. (5.) The plaintiff never intended to place any hops in Hannahs’ possession.
    2. Even with possession, the agent may sometimes be a mere broker. (1 Parsons on Cont. 84. Pickering v. Such, 13 East, 38.) A broker may be the agent for both parties, but a factor can only be the agent of the person who employs him. (1 Pars. on Cont. 84, and cases cited.) Hannahs had sold these goods before he got the order for either the 100 or 140 from the plaintiff, the sale was a cash sale, and they were actually set aside in Spader’s store at the time the order was presented, both, by the defendant and the purchaser, (Ryckman,) and actually marked by Ryckman, “ G.” The plaintiff says that the defendant, about the time the order was given for the 140 bales, actually canceled the policy óf insurance on the goods, supposing the purchaser would carry them away. If, after any of these things were done, and a complete delivery had been made to the purchaser, Hannahs exercised any control over the hops, it was as a broker and in the capacity of an agent for his friend the purchaser, of whom he testifies he was an agent.
    3. The defendant testifies that he never had any of the 140 bales of hops on storage; never had any charges against Thacher for them; never rendered him any bill for storage on them, and that it was not his business to store goods. If there were no charges against these hops, no general lien could grow out of them. A person not engaged in warehousing or storage as a business has no lien for his compensation for storage. (3 Hill, 491. 3 E. D. Smith, 267. 6 Abb. Dig. 73.) Hannahs was, in his transactions with Thacher, a mere broker, and as such had no lien whatever, either general or special.
    4. The defendant did not have such possession of the eighteen bales out of 100 first sold to Eyckman, which the defendant took from Spader’s to his own store, for the mere purpose of inspection, and which eighteen would not pass inspection, as to give him the character of a warehouseman, with respect to them. The defendant himself says: “ He did not take them on storage, and only happened to have them left at his store because the purchaser would not take them, and also that it was not his business to store goods. By thus expressly repudiating its being part of his business to store goods, as matter of law he could not have a lien on those •which he might, “as an accommodation or favor, store on any particular occasion.” (6 Bosw. 176. 3 Hill, 491. 6 Abb. Dig. 76.)
    5. A warehouseman has only a specific lien, not a general one. (2 Kent’s Com. 828, 8th ed. Story on Agency, § 353.)

      ITT. In no view of the case, then, had the defendant any lien or right to retain the sixteen bales of hops, for the recovery of which this action is brought.
    1. He cannot claim, and did not pretend to hold them by virtue of any specific lien ; for all charges, including what was called storage on these sixteen bales ($26.62,) were paid by the plaintiff before he brought this action. This, of course, discharged any specific lien, if any had existed. This, the defendant concedes, but claims to have had a right to hold the sixteen bales on the ground of a general lien, growing out of the transaction with reference to the nineteen bales, which were a part of the 140 bales, which Ryckman, had bought, September 14,1863, all at Spader’s store, except eighty. Only thirty-six bales of which would pass inspection, thereby leaving twenty-four bales at Spader’s store, rejected and still belonging to the plaintiff.
    2. On the 14th September, 1863, the defendant sold 140 bales for the plaintiff to Ryckman. On the 15th September, 1863, the plaintiff gave the defendant an order for them on Spader to enable him to deliver them to the purchaser. But the purchaser, on inspecting them at Spader’s store, would only accept 116 bales, rejecting twenty-four, which he left at Spader’s, where they remained on storage for the plaintiff. The defendant closed this transaction with the plaintiff, rendered his account on the 14th October, 1863, having on the 22d September, and on the 7th and 14th October paid the plaintiff, and told the plaintiff that he had got the money for them.
    This transaction being so closed on the 14th October, 1863, and the defendant having notified the plaintiff that the twenty-four bales were rejected, (of course remaining in Spader's store on storage for the plaintiff,) the plaintiff on the 16th of November, 1863, sold ten of these rejected bales, and gave his order on Spader for them, and on the 2d day of December, 1863, sold the remaining fourteen bales, and gave a like order for them. Those, orders were not for those marked Q, (which Ryckman had bought and so marked,) but for those rejected, marked T and H. Both the law and the custom of the trade gave the plaintiff the right to sell and draw on the warehouseman for these twenty-four rejected bales.
    3. It is now pretended .that the warehouseman made some mistake, and delivered on the plaintiff’s two orders for ten and fourteen bales, 19 out of the thirty-six, which Ryckman had bought, accepted, marked, set aside, and paid for, but which for his own convenience and advantage he permitted to remain for him with Spader. The defendant, about the 2d December, 1863, told the plaintiff, that all these thirty-six were then at Spader’s, marked Gr and a number, as set aside by Ryckman, but that Spader would not deliver them, and for his own accommodation requested the plaintiff to give an additional order for the thirty-six bales. The latter, finally, at the special request of the defendant, (who agreed that the plaintiff should incur no risk or responsibility,) drew the order for the thirty-six bales. The plaintiff having drawn an order for ten of the twenty-four rejected, on the 16th of November, 1863, which left fourteen to be drawn for, it would have been impossible for him to have got nineteen bales of any kind, on his order of December 2 for the residue (14) of the rejected bales. Spader thought the thirty-six bales were taken away from his store on the second or third of December, 1863, by Ryckman, and that nineteen of them were afterwards brought back. If Spader had made any mistake, it is sufficient answer- for the plaintiff that the latter did all in his power to rectify such mistake by affording every facility for that purpose.
    IY. The defendant had no claim against the plaintiff, growing out of the transaction with reference to the nineteen bales, much less any general lien by virtue thereof or right to retain the sixteen bales in suit.
    1. Because the thirty-six bales, of which the nineteen were a part having been accepted, marked, and even paid for, by Ryckman,' according to the testimony of Thacher, at latest before the 14th of October, 1863, they were the absolute property of Ryckman, and the defendant had nothing to do with them, at least, so far as the plaintiff was concerned. Any question about whether Spader had delivered some of them by mistake to any body else, was a question between him and Ryckman, for which the plaintiff was not accountable, and certainly gave the defendant no claim against the plaintiff, much less a right to retain other goods, on which he concedes all charges were paid.
    " 2. It was not possible that nineteen bales out of Byckman’s thirty-six bales were delivered on the plaintiff’s order for ten (of the rejected) on the 16th of November, 1863, or his order for fourteen (of the rejected) on the 2d December, 1863, for the defendant told the plaintiff that the whole thirty-six bales were there on the 2d December, 1863, and got a new order for them as “ a favor,” &c.
    3. In any case, the defendant guaranteed the plaintiff against any risk or responsibility with reference to those thirty-six bales.
    4 The defendant never was in possession of any of the 140 bales, of which the thirty-six, including the nineteen, were part. They were always at Spader’s store, and the storage paid for by the plaintiff, until Ryckman accepted them.
    5. Even if the defendant had a constructive possession of the 140 bales, or any part thereof, he parted with that possession when Ryckman accepted, marked and set aside the eighty and thirty-six bales, and even paid for them, at the latest, .before 14th October, 1863, according to the plaintiff’s testimony. Parting with possession relinquishes all lien, and right of lien, even if any ever existed, or even holding them for another. (Story on Agency, § 366. 2 Kent’s Com. 819, 7th ed.)

    6. The defendant, never having had possession of the thirty bales, or if he had a constructive possession, having parted with it, and having no charges against the sixteen bales in suit, could not retain 'these sixteen bales, on which he does not pretend to have any specific lien, on account of any alleged claim against the plaintiff with reference to the thirty-six or nineteen bales, on which he had no lien. Not having the special lien with reference to the nineteen or thirty-six bales, he cannot build the claim of a general lien upon them. There may be a special lien, without a general lien, but a general lien can never arise in reference to merchandise, on which there is no special lien. The greater may include the less, but the less cannot be made to include the greater.
    7. The transaction with reference to the- thirty-six bales or the nineteen bales of them, out of which the defendant asserts that a claim accrued to him against the plaintiff, (which is the mistake made by Spader in delivering the wrong goods to somebody, on some order, at some time,) was not a similar transaction to that in reference to the sixteen bales in suit. “If a lien (general) is claimed for a general balance of accounts, the debt must be a balance arising out of a transaction-similar to that upon which ‘the particular lien arises.” (Story on Agency, §§ 364, 365.) There is no similarity between the charges of $26.62, on the sixteen bales in suit, and the alleged claim growing out of some mistake made by Spader.
    8. If the defendant pretends that the plaintiff had any thing to do with any mistake, and was knowingly instrumental in the matter, then also no lien could arise, for the transaction would be quite dissimilar, for that with reference to the sixteen bales would be a tort. Ho lien exists with respect to torts. (Sturgis v. Slacum, 18 Pick. 36.)
    9. ' The defendant did not assign as his reason for not delivering the plaintiff the sixteen bales in suit, any claim of general lien, growing out of the alleged transaction as to the nineteen of the thirty-six bales, but on the contrary first told the plaintiff, when he demanded the sixteen bales, that he had sold them, and then that he had no hops belonging to the plaintiff, and the latter never heard of any difficulty about the nineteen bales until the suit was commenced. This of itself waives and forfeits all lien, if any ever existed. The proper cause of lien must be asserted at the time of demand, otherwise the lien is waived and the party cannot afterwards set it up as a defense in a replevin suit. (Winter v. Coit, et al. 7 N. Y. Rep. 288. Story on Agency, § —.)

      V. There was no proof or evidence of any custom or contract giving a lien, in transactions of the character of those between the plaintiff and the defendant.
    1. All general liens have their origin in the positive or implied agreement of the parties. (Story on Agency, §§ 354, 355, 375. 2 Kent’s Com. 826, 8th ed.) However custom may control the subject of lien between parties occupying the undisputed and usual character of consignor and factor, requiring no proof in the first instance of any custom or agreement, yet the relation existing between the plaintiff and defendant in this action, are so dissimilar from that existing between consignor and factor, that some proof of custom or agreement should have been required to establish the existence of a general lien which in itself the policy of the law disfavors.
    2. As in case of packers acting as factors, there is no general lien, unless there is positive or affirmative proof, produced by the party asserting the lien, of an agreement or custom implying an agreement to that effect. The burden of proof is on those who set up a general lien to establish it by clear and determinate evidence. (Story on Agency, § 384. Holderness v. Collinson, 7 Barn. & Cress. 212. 2 Bell’s Com. § 792, 4th ed.)

    VI. For the reasons above assigned, the case then should either have gone to the jury, or, upon the plaintiff’s testimony and the defendant’s admissions, the verdict should have been for the former. If any of the plaintiff’s material statements were contradicted, the case should have gone to the jury.
    VIL A new trial should be ordered for the additional reasons:
    1. The verdict should have been s.uch that the judgment would be in the alternative, allowing the plaintiff, in any case, to return the goods. (Dwight v. Enos, 9 N. Y. Rep. 470. Code, §§ 261, 277.) The clerk’s minutes must be taken as the legal and conclusive evidence of what the verdict was; for the law makes it his duty to enter the verdict, and therefore makes such entries the legal evidence of what the verdict was. (See Code, § 264.)

      2. Although an agent, in a proper case, has a lien, yet it is only to the extent of his alleged claim. He has no right to retain more property, when demanded by the principal, than is sufficient to satisfy it. (Jolly v. Blanchard, 1 Wash. Cir. R. 252, 255.) This doctrine is conceded in Fitzhugh v. Wiman, (9 N. Y. Rep. 559, 565.) In the case at bar, the defendant himself fixed his claim and lien at $657.97, (see defendant’s answers ;) the verdict was for $851.52.
    3. In no event can a counter-claim be allowed a defendant in an action for claim and delivery, for an alleged lien. (Gottler v. Babcock, 7 Abb. 392, n. De Leyer v. Michaels, 5 id. 203.)

      Eugene Smith, for the respondent, defendant.
    I. The defendant held the eighteen bales, mentioned in the complaint, in his possession, for the purpose of sale, as the plaintiff’s agent; this made him the plaintiff’s factor, and not a warehouseman ; nor, having actual possession, could he be a broker. (Russell on Factors and Brokers, 4. Story on Agency, § 34. Dunlop’s Paley on Agency, 14.)
    1. The defendant never received any hops on storage, as warehouseman, but only held them for sale on commission. He held those bales for the purpose of sale; but as the plaintiff desired him to surrender them before a sale had been effected, the defendant charged, as he was entitled to do, an item for “ storage.” That charge, made under such circumstances, could not transform the defendant from a factor into a warehouseman.
    2. The plaintiff admitted, that the defendant acted as his “ broker ” in reference to those bales, and held them as “ broker •” which means, that the defendant held them for the purpose of sale as the plaintiff’s agent, and not as a simple depositary or warehouseman.
    3. The plaintiff made a similar admission in accepting account of sale, and proceeds of sale of two of the said eighteen bales. He testified expressly that the defendant did not transgress his authority in selling said two bales.

      4. The defendant testified, explicitly, that he had possession of those bales for the purpose of sale on commission, for the plaintiff’s account; and this was uncontradicted.
    II. The defendant also acted as the plaintiff’s factor, in reference to the lot of thirty-six bales, and had constructive, if not actual, possession of the same.
    1. The plaintiff gave the defendant an unconditional order on Spader, the warehouseman, for the delivery to the defendant of these thirty-six bales (with others ;) which order the defendant immediately deposited with Spader. This vested the defendant with the possession of the hops. As a constructive possession, that was sufficient to support a lien. (Dows v. Rush, 28 Barb. 157. Dows v. Greene, 16 id. 72. S. C. 24 N. Y. Rep. 638. Holbrook v. Wright, 24 Wend. 169.) The defendant paid the storage on these thirty-six bales, and assumed all the risk—a proof of possession by him, and mark of distinction between a broker and a factor. (Dunlap’s Paley on Agency, 23 et seq. and cases there cited.)

    2. The defendant acted in his own name in all these transactions of sale, and his principal did not know the name of the purchasers—facts incompatible with the character of a broker. (Story on Agency, § 34. Russell on Factors and Brokers, 4. Dunlap’s Paley on Agency, 13.)
    3. The plaintiff admitted, by implication, that the defendant had possession of the thirty-six bales as his factor.
    He testified that he “ never intended to place any of the hops in the defendant’s possession.” Which was simply an expression of his opinion as to the legal effect of his action. But he added that he gave the defendant “ the order to deliver the hops as his factors to the purchaser.” 'Which meant that he gave the defendant possession of the hops to complete the purchase.
    4. But that possession thus given ipso facto made the defendant his factor. A broker is merely a negotiator between the parties, and does not have possession of the goods. (1 Parsons on Cont. 78, and authorities above cited.) The plaintiff, speaking of these thirty-six bales, declared to Spader that “ he had nothing more to do with them i. e. that they were in Hannahs’ possession. He also refused to pay the storage on them, saying that Hannahs would pay it. Thus he admitted that Hannahs had possession of the thirty-six bales. But the thirty-six were only a part of the 140, and Hannahs held the balance unsold of the 140 by precisely the same tenure as the thirty-six, viz. by virtue of the order.
    • III. The balance of account established in the defendant’s favor arose out of said thirty-six bales.
    1. The defendant having possession of the thirty-six bales, sold them to a purchaser, and paid in advance the full amount of such purchase to the plaintiff; but before the hops were delivered to the purchaser, the plaintiff took away nineteen bales of the thirty-six, without notifying the defendant. By so doing he became liable to the defendant for the value of the said nineteen bales which the defendant had already advanced to him. From this indebtedness arose a balance of account in the defendant’s favor, which will support a general lien. (Dunlap’s Paley on Agency, 127. Story on Agency, § 354, and cases there cited,.)

      2. The plaintiff, having placed the 140 bales (of which the thirty-six formed a part) in the defendant’s possession, and the defendant having made advances on them, had no right to take any of them away ; and in doing so, loithout notice, he acted at his peril. (Dows v. Greene, 16 Barb. 72.)
    3. This would have been the case, even had the plaintiff acted innocently in withdrawing the nineteen bales ; but after the difficulty had been fully explained to him, on December 2, 1863, he drew out fourteen of the bales upon order. (Warr v. Praed, cited in Russell on Factors and Brokers, 174.)
    IY. The defendant did not waive his lien by accepting the $26.62 in payment for storage of the eighteen bales, because at the time of such acceptance he insisted on his lien, and expressly stated to the plaintiff that he did not receive the money in full for all charges, but only on account.

      Y. There were no questions of fact to go to the jury. Whatever discrepancies appear in the testimony relate to immaterial issues.
    The following facts, which are the only essential ones in the case, are established by the evidence on both sides, or else are uncontradicted : 1. That the defendant held the eighteen bales mentioned in the complaint, for the purpose of sale on commission. 2. That the thirty-six bales (which were a part of the 140) were also placed at the defendant’s disposal for the purpose of sale on commission. 3. That the defendant having sold the thirty-six bales, paid the full amount of the purchase to the plaintiff before he had received it from the purchaser. 4. That before the thirty-six bales were delivered to such purchaser, the plaintiff took away and shipped to St. Louis nineteen of the said thirty-six bales, without any notice to the defendant.
    VI. The plaintiff having thus received from the defendant an advance of the value of the said nineteen bales, and taken also the bales themselves, became liable to. re-imburse to the defendant the amount of the value thus advanced.
    VII. This claim of the defendant, having arisen out of his employment as the plaintiff’s factor, entitled him to a general lien on the first mentioned eighteen bales which were in his possession as such factor.
    VIII. The verdict was correct. (Glann v. Younglove, 27 Barb. 480. People ex rel. Hanrahan v. Board of Police, 35 Barb. 648. Manning v. Monaghan, 23 N. Y. Rep. 543. 14 Abb. Pr. 185.)
    1. There is no conflict of evidence as to the value of the property. The only evidence upon this point is that of Mr. Eiege. The loose opinions of the plaintiff are clearly not evidence.
    2. The defendant is entitled to recover the full amount of the value of the property in dispute, (Dows v. Rush, 28 Barb. 157,) and the highest value between the commencement of the suit and the time of trial, (Romaine v. Van Allen, 26 N. Y. Rep. 309.)

      3. The court will draw, in support of the verdict, every inference from the evidence which a jury would have been justified in drawing. (Williams v. The Insurance Co. of N. A. 1 Hilt. 345.)

   By the Court,

Robertson, Oh. J.

Assuming that the nineteen bales of hops sold by the defendant and marked by the purchaser with a letter and numbers, were, after such purchase, in the constructive possession of the former or of such purchaser, although in the actual possession of the warehouseman, and were unlawfully converted by the plaintiff to his own use, I do not see how the defendant can have any lien for their value'. The admission of the defendant, on the stand as a witness, and the testimony of the plaintiff, conclusively show that neither party had the slightest idea that the money paid by the defendant to the plaintiff in rendering his account of sales, was such an advance as a factor may make to his principal on the faith of merchandise in his possession. It was the payment either of the sum due by the purchaser to the principal for the hops sold and delivered, or a discharge of the defendant’s liability as a del credere factor or for having sold contrary to instruction, which was to sell for cash. After that payment the plaintiff could have no right of action against either the defendant or the purchaser, for the price of the goods, nor . could the defendant have any right of action to recover back such sum from the plaintiff as money lent and advanced.

The attempt to convert an appropriation of the defendant’s or purchaser’s property by the plaintiff (if established) into any thing out of which a lien could arise on the sixteen bales in controversy, is still more far fetched. At most, the defendant could only elect to change such conversion into goods sold and delivered; and the sum due therefor could in no way be a mercantile advance by a factor to his principal. The. fact that the same property had originally belonged to the plaintiff was immaterial. It had been bought and paid for ; and the parties, so far as it was concerned, stood in the position of entire strangers. Ho presumption could arise from the customs or necessities of commerce, that if the plaintiff unlawfully possessed himself of the defendant’s property, the latter in exercising his right to elect to consider it a sale, could hold merchandise in his possession to be sold by him as factor of the plaintiff, as security for the payment of the value of such property. Torts are not ordinary transactions in trade and therefore not subjects of lien. (Sturgis v. Slacum, 18 Pick. 36.) Nor can the right of election which the law gives the party injured to convert a tort into a contract of sale be extended to create a lien for the money which would become due thereby upon goods held in pursuance of an ordinary commercial relation. I apprehend, that the doctrine of a factor’s lien for a general balance of account never went so far, as to embrace even the price of goods sold by a factor to his principal not connected with the general purposes of their relation as principal and agent.

The direction to find a verdict for the defendant was therefore erroneous; but a question arises as to the proper judgment to be rendered, owing to the case having been settled without the examination of the presiding judge. The clerk's minutes show that the exceptions in the case were ordered in the first instance to be heard at general term ; and not that the verdict was taken subject to the opinion of the court. The case containing the exceptions annexed to the record must be amended to conform to such minutes, and a new trial must be ordered on the present argument.


text:
    John C. Walkenshaw et al survivors of Henry A. Schlucher, on behalf of themselves, and all other creditors of the firm of John Gr. Perzel, electing to come in, &c. plaintiffs, vs. John G. Perzel, defendant.
    1. Merely borrowing money, however much, even of a special partner, by a limited partnership, for partnership purposes, or for enlarging the means of carrying on its business, does not come within the prohibition of the statute {laws of 1857, eh. 414, § 2, and 1858, c7i. 289; S M. S. 5th ed. 63, § 12,) against alterations “in the'names of the general partners, the nature of tTie business, or capital or sitares contributed by special partners ” in a limited partnership, under the penalty of making it general. Loans by special partners, upon securities or otherwise, are expressly permitted.
    2. Whenever a limited partnership is insolvent within the meaning of the statute, (1 S. S. 766, § 20,) any creditor at large is entitled to have its affairs wound up, and its assets distributed pro rata among those of its creditors who have not obtained a specific lien.
    3. It is essential, however, before taking away the control of the assets-of a limited partnership from members of the firm on the ground of insolvency, to ascertain whether all who have an interest in their retention of such control are before the court as parties.
    4. CÁ the death of a special partner in a limited partnership, which is indebted to him for money lent for the partnership business, his executors represent his individual claim for money lent, and also any interest the estate may have in carrying on the partnership. But as such interests may conflict, itis for such executors to determine, with or without the sanction of the court, whether it is most for the interest of the estate they represent, to. continue the partnership, ór urge their claim for money lent.
    5. To an action by the survivors of special partners, and all others who may come in, &c. brought against general partners in order to wind up the partnership on the ground of insolvency, and for a receiver, the executors of the special partners should be made parties; and, if they represent conflicting interests of the testator, as to carrying on the partnership business, or destroying it and enforcing the claim of the testator for advances, should be made defendants.
    6. The amendment of the law in 1857 {ch. 414, § 2,) which requires, in order to prevent the dissolution of a limited partnership by death of any of the partners, not only a specification in the articles of partnership that in such event the partnership shall continue, but also the assent of “ the heirs or legal representatives ” of the partner dying; in which event it provides that the heirs or legal representatives of such parties may succeed to his partnership rights, and continue the business, the same as if he had remained alive, requires some positive act of assent, by heirs or legal representatives, silent acquiescence is not enough. That is an additional reason for requiring the executors of a deceased special partner to be made parties to such an action.
    7. Although insolvency and inability to pay are synonymous, yet solvency does not mean ability to pay at all times, under all circumstances, and every where on demand; nor does it require that a person should have in his possession the amount of money necessary to pay all claims against him. Difficulty in paying particular demands is not insolvency.
    (Before Kobestsoh, Ch, J. at special term,
    October, 1866,
    decided November 12, 1866.)
    This is an application for a receiver of the property of a firm whose business was heretofore carried on under the name of the defendant, whereof the deceased partner of the firm of the plaintiffs (Herman A. Schlucher) was a member, and for an injunction against the continuance of the business, and disposition of) or other interference with, the assets of such firm. The prayer for relief in the complaint is, that the property of such firm be sold, and its debts, as established in this action, so far as the proceeds may extend, be paid ratably, and for a receiver and injunction. It was made on a sworn complaint and affidavits, and resisted on affidavits.
    In the year 1865, (October,) the defendant and the deceased partner of the plaintiffs, (Schlucher,) entered into articles of agreement under seal, whereby they formed a limited partnership for the manufacture of woolen goods in the city of New York, under the name of “John Gr. Perzel,” to continue for five years, or until September, 1871, unless sooner dissolved, by (six months) notice given by either party to that effect.
    The defendant, who was the general partner, agreed to contribute to the common stock, as capital, the machinery, stock and capital, then used by him at a certain place in the city of New York, (corner of Twenty-third street and First avenue,) at a price to be agreed upon or determined by appraisers, and also a patent for “ recovering wool from mixed fabrics.” The deceased, (Schlucher,) who was to be the special partner, agreed to contribute a certain sum ($20,000) as special capital. A certain.per centage (fifteen per cent) was to be allowed for depreciation of such machinery every year, in estimating the defendant’s share of the profits. Interest was to he allowed to both parties on the amount they contributed, the defendant being entitled to three-fifths of the profits, and the rest (two-fifths) went to the special partner. The defendant was to be allowed to take the machinery at its appraised value on the termination of the partnership. It was further provided therein, that notwithstanding the death of the special partner before the time fixed therein, the capital contributed by him' should remain, and the business be conducted until the partnership terminated, for the benefit of his representatives. Other provisions, not material to the questions involved in such applications, were contained in such last agreement.
    Sometime afterwards, during the same month, such firm agreed, for a certain sum, ($50,000,) to buy for its own use two pieces of land, with the appurtenances, consisting of buildings and machinery in them, in the city of Brooklyn, in William and King streets, near Van Brunt street.
    On the first of November of that year, such special partner entered into an agreement, under seal, with such firm, to advance all the money necessary to complete such purchase and pay for such lands, taking and holding, as security for his repayment, the contract and deed for such land, and giving a mortgage for such part of the purchase money as should be required. By the same agreement the firm agreed to repay such special partner the sum so advanced, on or before the termination of its partnership, and to keep such property insured, and to pay all taxes thereon, and interest of mortgages. But, it was further stipulated therein, that such land should be the property of such firm.
    On the fifteenth of the same month, (November,) the parties to such firm agreed that a certain sum ($2000) should be charged yearly to profit and loss, for dejrreciation in the value of the property so bought in Brooklyn.
    The special partner, besides the sum so advanced by him on such purchase, lent in his life to such firm large sums of money, amounting, in all, to over forty-five thousand dollars, which is still unpaid. The firm of “ Schlucher, Walkenshaw & Co.” composed of the plaintiffs and the deceased special partner in such limited partnership, also advanced thereto, at various times between the 1st of November, 1865, and the beginning of last January, a certain sum, ($13,000,) the balance of which ($5628.92) is still unpaid. The'time for which" the separate loans, by the special partner, were made, is in controversy in an action between the defendant and the executors of such partner.
    In July last the special partner of such firm departed this life, leaving a last will and testament, appointing therein, as executors thereof, Messrs. Poppenheusen and Von Ams, who have commenced an action in the Supreme Court against the defendant for the dissolution of such limited partnership. In an affidavit made by them, and used on this motion, they state that the defendant admitted to them that the duration of the loan of $45,000, made by their testator, was not fixed. Other actions have been commenced for the recovery of claims against such partnership, for nearly $5500. An attachment has been issued in some, on the ground of a removal by the defendant of goods to defraud creditors. Loans were procured on other goods by the defendant. The work in the manufactory has been stopped, and insurance companies have canceled their policies, because of the withdrawal ■ of a watchman from the premises.
    The property of such limited partnership consisted of, 1st. Their manufactory and lands used therewith, which is subject to a mortgage of $53,000. 2d. The machinery in it, which cost about $68,000. 3d. Manufactured stock and raw material on hand, and a claim for work done, estimated by the defendant at nearly $10,700, part whereof is pledged for advances thereon. The affidavit of the executor of the deceased partner stated that such manufactory is not worth more than the incumbrances upon it; that the machinery in it will not bring more than two-thirds of its cost, and the stock on hand is only available for a like proportion, making the assets about $52,000. An affidavit, produced on the part of the defendant, of a disinterested witness, (Coleman,) made the manufactory worth $75,000, being $22,000 of available valiie beyond the incumbrance; the machinery worth its full cost, or $68,000, thereby adding $22,000 more, above the estimate of such partners, being, in all, about $45,000 more, or $97,000. The amount of debts due by such firm, except those to Mr. Schlucher individually, are about $24,000.
    The executors of the special partner obtained an injunction order, restraining the defendant from interfering with the partnership property, which had been dissolved, with a privilege of renewal on new affidavits. An affidavit was read for the defendant of offer of large custom to the factory in question. Other facts appear in the opinion of the court.

      Ira D. Warren, for the plaintiffs.

      J. L. Jernegan, for the defendant.
   Robertson, Oh. J.

The death of the special partner (Schlucher) in the limited partnership in question, must undoubtedly have been the main cause of the embarrassment of the establishment it was designed to carry on. It is evident that, on the starting of such enterprise, and down to the time of his death, he made the advances he did, believing it to be profitable, and that he was amply secured. He knew that he had agreed to leave his capital in it, until the end of the limited partnership, and also to give credit on his advances for the purchase of the ground on which the manufactory stood, for the same time; and yet he advanced in addition a large amount of the funds of the firm of which the plaintiffs are members, up to within a few months of his death, and they have made advances since. He does not appear to have taken any steps to collect the amount due for such advances, or while he lived to have lost confidence in the undertaking. Whether the moneys due the plaintiffs are in danger from the insolvenéy of such firm, is the question before me.

Merely borrowing money, however much, for partnership purposes, even of a special partner, or enlarging the means of carrying on a'business, does not come within the prohibition of the statute (N. Y. Sess. Laws, 1857, ch. 412, § 2; and 1858, ch. 289; 3 R. S. 5th ed. 63, § 12,) against alterations in the names of the general partners, the nature of the business, or capital or shares contributed by special partners in a limited partnership, under the penalty of making it general. Loans by special partners, upon securities or otherwise, are expressly permitted. (Laws of 1857. Id. § 3. 3 R. S. 5th ed. 64, § 17.)

The partnership in this case, therefore, remained a limited one to the time of the death of the special partner, and if insolvent, within the meaning of the statute, (1 R. S. 766, § 20,) any creditor at large is entitled to have its affairs wound up, and its assets distributed pro rata among those of its creditors who have not obtained a specific lien. (Innes v. Lansing, 7 Paige, 583.)

It is essential, however, before taking away the control of the assets of a limited partnership from members of the firm on the ground of insolvency, to ascertain whether all who have an interest in their retention of such control, are before the court as parties. The estate of the deceased special partner (Mr. Schlucher) has two separate claims upon, and one interest in, the assets of such partnership. He is represented by the plaintiffs only as to his interest in the claims of the firm of which they are members, as his survivors. As to his individual claim, his executors represent him, and he is also represented by them as to any interest the estate may have in carrying on the partnership. But, as the last two interests may conflict, .it is for such executors to determine, with or without the sanction of the court, whether it is. most for the interest of the estate they represent, to continue the partnership or urge their claim for money lent. The provision of the Revised Statutes, as to suing the general partners or their being sued, alone, (1 R. S. 766, § 14,) does not apply to such an action. The words of the statute are “ in relation to the business of the partnership,” and refer merely to claims by or against them as a partnership. It would be manifestly unjulf to deprive the special partner of the right of being heard on the question- of breaking up the partnership. Such executors, therefore, ought to have been made parties to the action, and as they may represent conflicting interests of the testator, as to carrying on the partnership business, or destroying it, and enforcing the claim of their testator for advances, they should most properly be defendants. Of course, if they decide without the sanction of the court, which policy to pursue, they may be responsible to the next of kin or legatees of their testator, for any indiscretion in the matter. There is also another strong reason why they should be made parties, irrespective of any question of insolvency. Their testator covenanted, that the partnership should continue and the capital put in by him remain in it, for several years. Such covenants are frequently introduced in partnership articles for an enterprise of a similar kind, (Story on Part. § 199 ;) and, in general partnerships, it has been held that executors are liable to damages for withdrawal of a testator’s capital, or may be compelled specifically to perform his covenant, by allowing it to remain. (Story on Part. § 196. Coll, on Part. § 119. Balmain v. Shore, 9 Ves. 500. Crawshay v. Maule, 1 Swanst. 495, 510. Pearce v. Chamberlain, 2 Ves. 33. Gratz v. Bayard, 11 Serg. & Rawl. 41.) But, in such cases, the executor, if he received the profits as legal owner of the capital invested, might be made liable for the contract entered into by such partnership. Even a mere omission to give notice of a dissent, where the executors are vested with a discretion, may make them partners. (Coll, on Part. § 232.)

But the amendment of the law in 1857 (ch. 414, § 2) requires, in order to prevent the dissolution of a limited partnership, by the death of any of the partners, not only a specification in the articles of partnership that, in such event, the partnership shall continue, but also the assent of “ the heirs or legal representatives ” of the partner dying. In which event it provides that the “ heirs or legal representatives ” of such parties “may succeed” to his partnership rights, and “continue the business,” the same as if “ he had remained alive.” This, I apprehend, requires some positive act of assent, by heirs or legal representatives, (meaning, of course, by heirs, as in all other cases, next of kin or legatees, as there may or may not be a will,) and not mere silent acquiesence. Since it seems no more than right, that persons subsequently dealing with the partnership should know, whether the representatives of a deceased special partner elect to dissolve the partnership and become mere creditors or to carry it on. It does not appear in this case whether-the executors of the special partner have or have not assented. Their action in the Supreme Court may have been on other grounds; at all events, it seems the injunction in it was once dissolved, although liberty was given to renew.

But as the defect of parties may possibly be remediable, by continuing the injunction until they could be added, it becomes necessary to consider the question of insolvency. Upon this, as I have already suggested, it may be assumed that Mr. Schlucher, who was joint owner with the plaintiffs of their present claim, did not seem, up to the time of his death, to, nor did they in the advances they made afterwards, suspect insolvency. A large establishment like that in question, consisting of extensive buildings and grounds, valuable machinery, materials, raw and worked up, an established name, and with a prosperous business, as sworn to by Mr. Coleman, may be broken up and sold in fragments, so as to realize but little, and yet, if allowed to go on, may clear off its liabilities. In such case the appointment of a new trustee, in the shape of a receiver, in place of the defendant, who is a trustee, and not charged directly with any such misconduct as even in the case of an ordinary partnership would authorize a dissolution, should be based only on the clearest evidence of insolvency. It is true that “ insolvency ” and “ inability to pay ” are synonymous, but solvency does .not mean ability to pay at all times, under all circumstances, and everywhere on demand, nor does it require that a person should have in his possession the amount of money necessary to pay all claims against him. Difficulty in paying particular demands is not insolvency. (Cutler v. Sanger, 2 H. J. R. 467.)

The definition in Herrick v. Borst, (4 Hill, 650,) that solvent means one who has “ his property in such a situation that all his debts may be collected out of it by legal process/’ is much more exact. Even if this might, perhaps, on a strict construction, require the court to determine whether, within the time of notifying a sale on execution, the money could not be raised on such property, by sale or otherwise; the evidence in this case falls short of it. In this case, if the partnership can be continued, unless insolvent, the claims of Mr. Schlucher’s estate are not due, (except $45,000,) until 1870, and there are only $24,400 more, including those of the plaintiffs, who may be destroying their deceased partner’s interest to the extent of over $50,000, in order to collect a claim of less than six thousand. This makes a present debt of nearly $70,000, while taking Mr. Coleman’s estimate, the factory, (over and above the mortgage,) the machinery and goods on hand, exceed in value $100,000. I therefore do not find the insolvency so clearly made out as to warrant any interference.

The motion to continue the injunction and for a receiver, must, therefore, be denied, with $10 costs, without prejudice to the plaintiffs’ right to renew the motion on making the executors of Mr. Schlucher parties, and on affidavits .showing insolvency more clearly, or the dissent of such executors from carrying on such partnership.