text:
    Abraham B. Miller and others v. Nathan C. Platt and others.
    An ejectment, to recover a strip of ground, of eleven inches in width, by about twenty-eight feet in depth. The court concluded, that the grantor of the plaintiff had the title, under the conveyances in evidence, and that the j'ury must so have found, had that been the only question submitted to them.
    .The plaintiff and defendant were adjoining owners of parcels of ground, derived from a common source of title, by deeds, dated, respectively, in 1828 and 1829.
    The strip in question lay between the southerly wall of a hotel, built in 1881, by the grantor of the plaintiff, and the northerly wall of a building, called a bindery, erected subsequently (but in 1831 or 1832) by the grantor of the defendants. " But the foundation of the latter wall, below the surface, covered the strip in question, and touched the foundation-wall of the hotel Above the surface, the wall of the bindery receded, so as to leave the space in question. After being carried up some distance from the ground, the westerly wall of the bindery was built over the space, and touched the wall of the hotel; and, on the easterly side, the wall of the bindery was run across the space. There was some evidence that the roof of the latter building covered the whole of the space in question.

      This space, called an “ alley-way,’ “ drain,” or “ passage-way," had always been used by the occupants of the hotel, from. 1831 to 184Í. The opening, to the westward, into Theatre alley, was shut by a gate, erected and maintained by them, and the owners of the adjoining lot, under whom the defendant claimed,, never claimed a right to the alley, or to any interest therein, during that period.

      Held, that neither the extension of the foundation-wall below the surface, nor the running the wall, in the rear, across the strip, nor the extension of the wall over the drain in front, and the roofing over the whole, though done more than twenty years before the trial, was sufficient to constitute an adverse possession, to divest the plaintiffs’ title by deed.
    An adverse possession, to constitute a bar, must be an actual and a hostile possession, and not a mere trespass. It involves an assumption of the right to the land in question, from the time it is alleged to have commenced, and a continued holding, with such continued assertion of right. Claim of title, and exclusive claim, is essential to it.

      Held, also, that the legal owner of the strip in question, was not estopped from setting up his title, by having suffered the erection of the wall of a new building, upon the space in question, in the manner stated in the case. Bis non-interference might excuse a trespass, but could not operate to divest and transfer a title.
    The cases, upon the doctrine of estoppel, referred to; and the distinction shown between what shall take effect as a license, or take away the character of a trespass, and what shall defeat an estate.

      Held, that merely standing by and suffering another to erect a building, or wall, on land, is not effectual, in a court of law, to give a title. That a court of equity may, sometimes, in cases of this nature, be applied to, to protect an innocent party, who has been misled, and expended Ms money, in consequence of the acts or representations of the owner, when the case amounted to a fraud.
    (Before Boswokth and Woodruff, J.J.)
    Heard, January;
    decided, February, 1856.
    The case came up, on the verdict of a jury in favor of the defendants, upon a case made, with liberty to turn the same into a bill of exceptions.
    The facts are folly stated in the opinion of the couryifvt S'^

      A. H. Dana, for plaintiffs.

      E. S. Van Winkle, for defendants.
   By the Court. Woodruff, J.

This action is brought by the plaintiffs, to recover the possession of a strip of ground, situated upon the easterly side of Theatre alley, in this city, adjoining . the southerly or rear wall of the building known as the Clinton Hotel, which fronts upon Beekman street, at the corner of the said alley. Although a larger piece of ground was claimed, in the plaintiffs’ complaint, it is now conceded, that the controversy, on the trial, was confined, simply, to a space about eleven inches in width, in Theatre alley, and running eastwardly twenty-eight feet, towards Nassau street, between the southerly wall of the hotel, which was built in 1831, and the northerly wall of a building, afterwards erected, in 1831 or 1832, by the trustees of the American Bible Society, grantors of the defendants.

In 1828, the executors of Mrs. Ann White, the former owner of all the ground between Nassau street and Theatre alley, extending from Beekman street southerly of the premises in question, conveyed to Philip Hone the westwardly one half of lot No. 5, upon a map of the property of the said Ann White, and to certain persons, trustees of the Clinton Hall Association, the eastwardly one half of the same lot. On the first of May, 1829, the same executors conveyed to the trustees of the Bible Society, lots Nos. 6 and 7, upon the same map.

It appears, by the map and deeds, that the lots Nos. 5 and 6 adjoined each other, and extended from Nassau street to Theatre alley, and that the line of division is a straight line from the street to the alley.

Soon after these conveyances, the respective purchasers erected buildings upon the premises. Mr. Hone, in 1831, built the Clinton Hotel, fronting Beekman street, and running down the line of Theatre alley, to a line, which is now the northerly boundary of the strip in dispute, not covering his whole lot, but leaving a yard in the interior space, easterly-of the building.

It is now claimed, by the plaintiffs, that the building did not, in fact, extend southerly to the line of the lot No. 6, as it might have done, but that Mr. Hone left the narrow strip, of eleven or twelve inches, along the end of the building communicating with the hotel-yard, for a drain, and that it was used as such drain by the occupants of the hotel, and, in some instances, as a passage from the hotel-yard into the alley; and was used or occupied in no other manner, and by no other persons, down to 1847 or 1848, when, in consequence of the construction of a sewer in Beekman street, its use as a drain became unnecessary, and it was then closed up, permanently, at the outer end, on Theatre alley, by a brick wall.

And the plaintiffs insist, that this drain was included in the deed to Mr. Hone, from the fact of such use and occupation, and also from an alleged necessity to include that within his boundaries, in order to give him the number of feet which the deed, purports to convey to him, while, without this strip, the Bible Society have quite as many feet as the deed to the trustees purported to grant; and, especially, because, unless this strip is so included, the southerly line of lot Ho. 5, and northerly line of Ho. 6, instead of being a straight line, (as laid down on the map, by which the deeds were given,) after running westwardly, fromHassau street, about seventy feet, turns, at right angles, to the north, across this disputed strip of land, and then is continued to Theatre alley, making what is called a jog, on the northerly line of the defendants’ premises, and adding so much, at least, to the width of the lots, as described in the deeds to the Bible Society.

The testimony of the surveyor, Mr. Serrell, was, that Clinton Hall and the hotel were, architecturally, one building, and that the wall of' Clinton Hall was built along the whole of their southerly line, i. e., a little over fifty feet, of the seventy feet above mentioned. The hotel-privies were next adjoining, and they appear to have been built upon the same line, continued; and it is only necessary to add the drain in question, to the plaintiffs’ premises, to make the line, from the street to the alley, straight and continuous, as it is laid down upon the map, to which the deeds refer, and this, at the same time, leaves to the defendants the full quantity of land described in the deeds, under which they claim.

Upon a careful examination of the case, I am constrained to to say, that the evidence is convincing, that the strip of ground in question, is included in the deed to Mr. Hone, and is not embraced in the conveyance to the Bible Society, and that the jury must, upon the evidence, have so found. If, however, the case had been submitted to the jury upon the mere question whether the premises were embraced in the deed to Mr. Hone, and the verdict had been rendered against the plaintiff upon that point, it might have been difficult to say that the finding was so against the weight of evidence, that it should be disturbed.

But the case was not submitted to the jury upon that question alone.

There was evidence on the part of the defendants, that the building erected by the Bible Society for a book-bindery, on Theatre alley, was built in 1831, after the erection of the hotel; that although the northerly wall of that building above the surface of the ground did not cover the premises in question, yet its foundation wall extended underground the whole width of the disputed strip to the foundation of thB hotel wall; and that its easterly wall was also extended across the inner or easterly end of the disputed premises; and that its westerly wall, after being raised some seven feet from the ground, was carried across over the outlet of this drain or passage-way to and against the wall.of the hotel, and was so carried up to the roof. And that it being thus partially enclosed on three sides, the roof of the bindery was extended over it to the wall of the hotel. Upon a part of these claims there is conflicting evidence, but there is testimony to the effect stated.

There was evidence wholly uncontradioted, that from the time of the erection of the buildings, this strip of ground in question, (called by the witnesses “an alley way,” or “drain,” or “passage way,”) remained as it then was until 1847; that it was always used exclusively by the occupants of Clinton hotel; that it was never used by the Bible Society, nor by any person except such occupants; that its use was as a drain from the hotel, and sometimes persons passed through from the hotel yard to Theatre alley; and that the opening to Theatre alley was provided with an iron gate, and afterwards with a wooden gate, which was maintained by the occupants of the hotel, until 1847 or 1848, when, as above stated, on the construction of the sewer in Beckman street, the opening to Theatre alley was bricked up by the occupants of the hotel.

In view of these and other circumstances testified to, in respect to which there was some conflict, the jury were instructed, that if they were satisfied that the deed to Mr. Hone embraced the premises in dispute, the plaintiffs were entitled to recover, unless they are shut off by an adverse possession or by estoppel, and that in either of these ways the plaintiffs may have lost it, and then the use of the alley gave only an easement to the plaintiffs. And again, if the land belonged to the plaintiffs by deed, the enclosure by the defendants was a sufficient adverse possession, and- “ if you find that the defendants laid the foundations, built the roof and the front wall, and so took possession more than twenty years ago, then the plaintiffs, by their use, acquired an easement only.”

These instructions assume that the title was in the plaintiffs and not in the defendants, and that the defendants may acquire a title by adverse possession at the same time that the plaintiffs are acquiring a prescriptive title to an easement in their own land. This appears to me paradoxical, and inconsistent with the nature of an easement, as well as with the requisites to an adverse possession. An easement is a right, service, or privilege which a man hath in the lands of another, not in his own lands. The moment he acquires the title, his easement is extinguished. Title to an easement is founded in grant, or that prescription which presumes a grant; can the owner be presumed to grant to himself? And an adverse possession must, I apprehend, be exclusive of the owner.

Taking the facts to which this instruction relates most favorably to the defendants, the defendants’ grantors enclose the premises in part, by placing a foundation wall under the surface, erect a wall on three sides, leaving the premises open to the street, some six or seven feet on one of these sides, and extend a roof over the whole, while the remaining, or fourth side is accessible to the real owner, and the passage is in part used, and exclusively used by him, both as a passage and a drain, and the grantors of the defendants not only neither use nor occupy, but have excluded themselves therefrom. I am not able to perceive how the plaintiffs’ title can, by such a condition of things, be converted into an easement in another’s land; nor how the defendants, in such a case, can gain the title by adverse possession.

The adverse possession which constitutes a bar to a recovery, must be an actual and a hostile possession, not a mere trespass; it involves the assumption of a right to the land from the time such adverse possession is alleged, and a continued holding with the assertion of right, and it must be visible and notorious, and of such a character as excludes the exercise of the ownership by him in whom is the real title; and it must be hostile in a sense that indicates an intent to occupy exclusively.

See authorities collected in notes to Taylor v. Hurd, 2 Smith’s Lead. Cases, with Am. notes, p. 393-416; Clapp v. Bromagham, 9 Cow. 530; Jackson v. Hill, 5 Wend. 532; Id. v. Frost, 5 Cow. 346; La Frombois v. Jackson, 8 Cow. 539; Smith v. Bunting, 9 J. R. 174.

The Revised Statutes (2d vol. p. 294) plainly recognize these requisites, and make claim of title exclusive of any other right, essential to constitute such a possession as will bar the owner. I have looked in vain for any evidence that the Bible Society ever claimed title to the premises in question. The defendants’ witness, the general agent of the society, since 1836, testifies that the society never claimed any right in it, and no witness states the contrary. Another of the defendants’ witnesses, and, indeed, all who speak of its use, state that it was always used exclusively by the occupants of the hotel. It was cleaned by the latter, and the agents of the Bible Society not only did not exercise this act of ownership over it, but complained to the occupants of the hotel, if this was not done by them.

Under such circumstances, I am of opinion that the partial enclosure by the defendants, did not constitute an adverse possession as against the owners of the hotel property, and that the jury should have been so instructed. It is true, that among other things, the jury were told, that if the premises were an open passage connected with the hotel, and used exclusively by them, then the defendants have no claim of adverse possession; but they were also told, that “ if there was a foundation under, and a roof over it, and the front enclosed, as the defendants say, as far back as the erection of the Bible House,” that was a sufficient adverse possession. In the absence of any other occupation, such an enclosure would undoubtedly constitute a sufficient possession, but to make even this adverse, it must have been taken under claim of' title and have been exclusive of the owner, and cannot be adverse while the sole and exclusive occupant of the ground thus partially enclosed by the defendants, is the owner himself.

The other mode in which the jury were instructed the plaintiffs may have lost their title is by estoppel, and in explanation of that subject they were told, that if the defendant acted in good faith in erecting his new building, and if the plaintiffs stood by and allowed him to do it, without notice of their claim, they are not allowed to maintain it now. I am not 'satisfied that this instruction is correct. It is true that in The King v. The Inhabitants of Butterton, (6 T. R. 554,) Laurence, Justice, makes this observation:—“I remember a case, some years ago, in which Lord Mansfield would not suffer a man to recover, even in ejectment, where he had stood by and seen the defendant build on his land.” But I have sought in vain for any other case in England or in this state, in which it has been held that mere silence, when one was erecting a wall upon another’s land; estopped the owner to claim the title. It is not only construing silence into a license which would excuse the trespass, but is creating a new kind of assurance, resting wholly in parol, by which real estate is to be divested, and, in effect, conveyed to the occupant.

While the law requires conveyances to be by deed, under seal, or under the solemn form of records, there are estoppels by deed and estoppels by record, which conclude a party from claiming title. But in the face of the statute of frauds, which requires writing, to create or vest any interest in lands, we should be very slow to give to an estoppel in pais, (the evidence of which is to rest in mere parol, and to depend upon what the owner said, or even whether he said any thing,) to operate to defeat his otherwise established legal title. For be it observed in this case, that the jury were told that if they were satisfied that the plaintiffs’ deed called for. this strip of land, the plaintiffs may, nevertheless, have lost it by the estoppel described.

It is doubtless true that, in determining a question of boundary, where the proofs of location, the position of monuments, and other like evidences rest in parol, the admissions of a party are competent evidence; and sometimes, when relied upon by the other party, are, for certain purposes, conclusive; estoppels in pais are admissions, and nothing else.

In the cases of The Trustees v. Williams, (9 Wend. 147,) and Dezell v. Odell, (3 Hill, 215,) in which the nature and effect of an estoppel in pais are discussed, the admissions held to estop the party were in relation to matters the proof whereof lay in parol. And so also are the cases in England, Hearn v. Rogers, (9 Barn. & Cres. 577;) Pukard v. Gears, (6 Ad. & Ellis, 469;) and Davis v. Wilkinson, (10, 96, 98.) While, on the other hand, in the Welland Canal Company v. Hathaway, (8 Wend. 480,) the admissions contained in the defendant’s written contract were held ineffectual to estop him to deny the fact of the plaintiffs’ incorporation, or even to ’ dispense with proof, and it was also held, that evidence resting in records could not be supplied by proof of the admissions of the party. In Whitney v. Holmes, (15 Mass. 152,) there was a written agreement by which certain persons were authorized to survey and fix a division line, and the survey and location, in pursuance of that agreement, were held by the court insufficient to operate as a transfer of the title. The court say, no man is barred of his right by way of estoppel but by record or deed. It may operate as a Ecense and protect the defendant for an act which would otherwise be a trespass, for such a license may be by parol. In Gerrish v. The Proprietors of Union Wharf (26 Maine, 13 Shep. 384,) an agreement in writing, not under seal, was held insufficient to estop a party, and the court say, “ One cannot be barred by an estoppel of his right to an estate but by deed or record.”

Lord Coke jn commenting upon Littleton, (§ 667,) wherein it is observed that “ a man shall be estopped by matter in fact, though there be no writing by deed indented or otherwise,” says, “ there be three kinds of estoppels, viz., by matter of record, by matter in writing, as by deed indented, acquittance by deed, or defeas'ance by deed, and by matter in pais, as by livery, by entry, by acceptance of rent, by partition, and by acceptance of an estate.”

And in Brown v. Wheeler, (17 Connect. 345,) Chief Justice Williams held, that an agreement in writing that partition should be made by three persons designated, an actual division by such persons, and occupation by the parties for eighteen years conform-ably to such partition, were sufficient, within the rule stated by Lord Coke, to estop each of the parties.

In Doe v. Rosser, (3 East. 15,) a submission, under bonds to an arbitrator, and an award in pursuance thereof, concluded the claimant. In Sheperd v. Ryers, (15 J. R. 496,) in an action of assumpsit, in relation to the effect of a covenant for a division of land owned jointly, which division should be made by persons therein mentioned, coupled with an award making partition, Thompson, Chief Justice, says, “The partition made by the persons appointed for that purpose, might be considered in the nature of an award of arbitrators, which, though it might not have the operation of conveying the land, might estop the defendant from setting up his title.” And the case of Emans v. Turnbull, et al., (2 J. R. 314,) holds an agreement entered into one hundred and thirty-six years before the time of the trial, for the settlement of a controversy in regard to the title, declaring that the lands specified respectively, should be owned and held by each as therein mentioned, with an occupation in conformity to such agreement, for a period as remote as the memory of witnesses could reach, shall be deemed conclusive, though deficient in apt terms to pass a fee, the agreement ought to bind, especially after such a lapse of time accompanied by so long an acquiescence.” There is certainly no warrant in either of these cases for the proposition that the owner of the fee, by standing by and seeing his neighbors build on his land, loses his title.

It is true that, in Sayles v. Smith, (12 Wend. 57,) upon proof, among other things, that the assignor of the defendant, in ejectment, had admitted by parol, that the premises belonged to one Bradley, from whom he had agreed to purchase the same, at the time Bradley took his deed from the former owner, the court say that the defendant is, as one holding under Bradley, estopped to set up a title acquired long prior to Bradley’s purchase. But in relation to this case several observations are pertinent. What was said in regard to the estoppel was wholly unnecessary, and the case did not require any decision on the point. Nor, indeed, was it decided at all on that ground, the defendant’s title being held divested, and, in truth, vested in the plaintiff, upon other grounds. Again, it is not very clear by the report of the case, what was held to amount to an estoppel, viz., the parol admission that the premises belonged to Bradley, or the agreement which, by parol, he admitted that he made with Bradley. If the former, then there was no propriety in calling it an estoppel, for it does not appear to have come to the ear of, or to have been acted upon by any body interested in the matter; if the latter, then it does not appear that the agreement to purchase was in writing; and to hold a parol admission of a parol agreement an estoppel sufficient to bar a man’s legal title, is to give effect to a parol agreement as an estoppel barring a legal claim to land, when, by the statute of frauds, no title nor interest in land can be created by parol. And even if this case be taken as well decided, on the ground that there was an agreement which operated as an inducement to Bradley to take his deed and pay the consideration, upon which assumption alone is there any color for calling this a case of estoppel, it is obvious that such an agreement presents a very different question from the present; it is upon consideration, and is mutual, and is in its nature sufficient, if valid for any purpose, to create an interest in the land itself. But however that can be viewed, so far as it can be taken to countenance the doctrine contended for in this case, the decision of the same court in Swick v. Sears, (1 Hill, 17,) warrants us in saying that it is not law. In the latter case, the defendant in ejectment offered to show that when he purchased the premises in question, the plaintiff not only stood by and saw him purchase, and pay his money therefor, but that the plaintiff advised the purchase and the'giving the deed to the defendant, and declared that it would pass the premises and make the defendant’s title perfect, and yet the court rejected the evidence on the trial, and the ruling was sustained in the Supreme Court, who held the plaintiff not estopped, in a court of law, to assert his own title, notwithstanding these acts and clear admissions, so unequivocally made with a view to influence the defendant’s conduct, and relied upon and acted upon by him. That case is far stronger, and much more fully meets the requisites of an estoppel in pais, than the mere silence while a wall was constructed in the present case; and if the former does not bar the claim of title in a court of law, surely the latter will not.

See also, on this subject, the case of Miller v. The Auburn and Syracuse R. R. Co., (6 Hill, 61.)

The rule contended for suggests several inquiries, which, I think, show that it cannot be sustained. If standing by and allowing another to erect a building on one’s land, bars the owner’s claim, what estate is thereby acquired by the builder ? a fee, or a term to cease with the decay or destruction of the building ? What kind of a building is it, the erection of which produces this effect? a brick or stone building only, or one of wood also ? Is the rule confined to what is-in common parlance a building, or will it apply to any erection? and if so, of what height, or depth, of what materials, and of how permanent a construction ? Will it apply to a board fence, or a line of stakes driven into the ground ?

The proposal of these inquiries seems to me to suggest what there is of real foundation for this supposed rule, viz., where the acts or declarations of the owner have been such as to mislead an innocent party, who, in a reliance thereon, known to or induced intentionally by such owner, has expended his money in such wise, that to suffer the owner to falsify his own acts or declarations by asserting a title inconsistent therewith, would be to permit a fraud, a court of equity will restrain the latter just so far as is necessary to prevent the fraud and protect the innocent and otherwise defrauded party. (7 Barb. 409, 8 Barb. 102.)

This is, I apprehend, the only foundation for the supposed rule contended for. The court of equity interferes, not upon the ground that the legal title “ is lost,” as suggested in the present case, but that it is inequitable to permit the party to assert it; and such is the language of the equity cases upon the subject. (Wendell v. Van Rensselaer, 1 John. Ch. R. 34.) “If one man knowingly, though passively, by looking on,.suffers another to purchase and expend money on land, under an erroneous opinion of title, without making known his claim, he shall not afterwards be permitted to exercise his legal right against such person; it would be an act of fraud and injustice, and his conscience is bound by this equitable estoppel.” See numerous cases in equity, cited by Chancellor Kent, to the same effect; and see, also, Town v. Needham, (3 Paige, 546.) In Storrs v. Barker, (6 John. Ch. R. 166,) the same rule is established in equity, and the suggestion of Lord Mansfield, of the existence of any such rule in a court of law, is questioned. And this view of the rule is conformable to the decision in Swick v. Sears, above referred to, in which Mr. Justice Bronson, in giving the opinion of the court upon the effect of the alleged estoppel, says, “ If the defendant finds it necessary to rely upon this part of his case, he must go to a court of equity.”

The propriety and reasonableness of a resort to a court of equity appears, also, in this, that that court can adapt its restraint to the nature of the act, and to the extent of the danger of fraud, and in that, will regard the nature of the acts, done in reliance upon the admissions complained of. In case of a purchase, they may secure to the purchaser the fu.ll benefit of his purchase; (Niven v. Belknap, 2 J. R. 573-4; Hall v. Fisher, 9 Barb. S. C. R. 31; and Dennison v. Ely, 1 Barb. S. C. R. 610;) where a party has entered under a parol agreement for a purchase, and made improvements, equity may enforce the agreement, upon the principles of a part performance. (Parkhurst v. Van Cortlandt, 14 J. R. 15.) If a building be erected, they may protect the building, so long as it shall stand. If a wall be built, they may allow it to be preserved in its position, or compel the claimant to pay the expenses of its removal. But in neither of these last two cases, is it necessary, to prevent fraud, that the fee should be deemed to be lost to the owner of the land, merely because he has acquiesced in an erection of either a wall or building thereon. In such case a court of law may, perhaps, go so far as to say, that if the owner stands by, and suffers a wall or building to be so erected, he shall not afterwards maintain trespass therefor, but his acquiesence shall be deemed a license; but I am decidedly of opinion, that the court cannot say that his legal title is lost thereby. (7 Barb. 409; 8 id. 102.) If we were now disposing of the question in this case, as a court of equity, talcing into view the evidence, that by the qualifications designedly inserted in the deed to the defendant, plainly intimating a doubt of the title of the Bible Society to the land in question, the situation of the strip of land itself, from the use and enjoyment of which the society was excluded by the walls then standing thereon, and especially the evidence that the defendant’s agents were informed that the strip belonged to the hotel, we should hardly be able to say, that, by the very slight evidence affecting the plaintiffs, any estoppel, in equity, arose to the prejudice of their title. It is, at least, doubtful whether we should be warranted in saying, that the plaintiffs knew, or had reason to know, that the defendant intended to build on the eleven inches in controversy. To justify the interference of a court of equity, it ought very clearly to appear, not only that the defendant acted in good faith, and without notice, in an innocent mistake, but, also, that the owner knew that he was building upon the very ground in question. (10 Barb. 511; 28 Maine, 525, and cases above cited from this state.)

Without pursuing this inquiry, it must suffice to say, that the interposition of this court, as a court of equity, was in no wise invoked by the defendant. Doubtless, under our present system of pleading, it would be competent for a defendant to set up, by answer, his equitable claims, and if the facts proved were such as clearly to call for an injunction, they would avail to prevent a judgment inconsistent with such equity, and they might, perhaps, avail for this purpose, as a defence, even though that answer contained no prayer for injunction, or other affirmative relief. But the defendant has here presented no such equitable claim. His defence is based solely upon legal grounds, and this supposed estoppel will not, at law, avail him.

Upon this ground, .also, then, a new trial must be granted.

The costs must abide the event.


source: Caselaw Access Project

author: By the Court. Bosworth, J.

license: Public Domain

text:
    Quirk v. Rodman.
    When the owner of a bond and mortgage, made by a third person, applies to another to make a loan on the security thereof, but refuses to do so, but purchases them, at less than their face, and takes a transfer which recites a sale, at a sum named, and conveys them in pursuance thereof, the transaction will not be treated as being, in effect, a mortgage, merely because the purchaser gives his covenant to the vendor, to resell them to the latter, within a time named, and on conditions specified.
    In the absence of all evidence of the inadequacy of the consideration paid, and of any personal liability of the vendor to refund, in any event, the money received as the price of the transfer, the covenant will be treated as a conditional sale.
    (Before Oakley, Ch. J., Dueb and Boswokth, J.J.)
    February, 1856.
    This action came before the court on appeal, by the defendant, from a judgment in favor of the plaintiff. It was tried before Mr. Justice Hoffman, without a jury, on the 16th of February, 1856.
    On the 14th of May, 1849, Jas. A. Morse executed to Amos Hogins, a bond for $800, payable in one year, with interest, and he and his wife executed a mortgage upon real estate in Albany, N. Y., to secure the payment of the money. The mortgage was duly recorded.
    On the 16th of July, 1849, Hogins applied to Robert Prince, one of the executors of Abraham Cargill, deceased, for a loan of money, on the security of said bond and mortgage. Prince refused to make a loan, but suggested to Hogins that if he wished to sell the bond and mortgage, absolutely and Iona fide, for $500, he would persuade one of the heirs to such estate to buy them. As a result of the negotiations, Hogins, by an instrument of transfer, sold and assigned the bond and mortgage to Prince, as executor, for $500.

      In the afternoon of the same day, Prince executed and delivered to Hogins a paper, reciting such purchase, and containing a covenant to resell them to Hogins on the day they matured, or "within two months thereafter, for $500, and interest thereon, and to allow the amount of any interest the obliger might pay in the mean time, but stipulated that Prince should not be bound to resell, after the lapse of the specified time. Hogins did not repurchase.
    In October, 1854, the bond and mortgage were sold to the plaintiff, for $500, who then paid for the same, but the assignment of them was not executed until the 17th of April, 1852.
    On the 27th of May, 1852, the premises were sold, on the foreclosure of a prior mortgage, and bought by A. Mann, Jr., for $2,150 sufficient to pay the previous mortgage, and the amount due upon the bond and mortgage in question, according to these terms.
    The sum which the plaintiff claimed to be then due to him, was $590.89.
    The defendant, who had acquired the equity of redemption, and was, also, a subsequent mortgagee, and was entitled to any surplus there might be, after satisfying the two mortgages, insisted that the transaction between Hogins and Prince was, in legal effect, and in equity, a loan, by Prince, to Hogins, and that, after charging Prince and the plaintiff, as the assignee of his rights, with the sums paid on account of such loan, only $135.35 was due to the plaintiff.
    The defendant executed and delivered to the plaintiff, thereupon, an agreement to pay any sum which, by an action on such agreement, he should establish to have been due to him, at the time of such foreclosure and sale, upon the bond and mortgage in question. This action is brought on that agreement, to have that question adjudicated, and the balance due ascertained.
    The whole case turned upon the nature and effect of the negotiations, and transactions, between Prince and Hogins.
    • Prince was examined at the trial. As his evidence was not substantially varied by the other testimony, it is given entire, so far as it relates to those matters.
    Robert Prince testified as follows: Some days prior to the 16th July, 1849, Amos Hogins applied to me, to borrow some money on a mortgage he held of $800 from the estate of Abraham Cargill; I was one of the executors; the other executors were sons of Car-gill ; I told him there had been arrangements made between the heirs, whereby the three sons were to have the use of the personal property, and the widow the real estate, as that was to be divided ; we had no money to loan; he wished to borrow money on this mortgage in question; I told him, if he had a disposition to make a bona fide sale of the mortgage, and would sell it for $500,1 would persuade one of the boys to buy it, on his agreeing to sell it for $500 absolutely; I told them they had better buy it, and, on my advice, they agreed; I accordingly drew the assignment in my name, and Valentine Cargill, one of the executors, gave him a check for $500, on the Seventh Ward Bank. After perfecting the agreement, they did not consider they had any bargain, and I proposed if, in the time the mortgage had to run, Hogins would buy it back for the money and interest, he could do so; they consented to it, and I did it; Hogins is dead; I have never said to any one it was a loan, and I never intended it to be so; Mr. Hogins could not have understood it to be a loan; I expressly told him it was not a loan; I told him, if he wanted to sell it, I would try to find him a purchaser.
    Cross-examined.—Hogins first applied for a loan, at his dining-saloon ; he spoke two or three times before he got the money; I told him, decidedly, the first time, that he could not have the money; Hogins told me he had lent money to Morse, and Morse had made a poor man of him; had forged checks on him; I did not, at the time I agreed to buy the mortgage, also agree to resell it; the assignment by Hogins was executed in the forenoon; the stipulation to resell it was drawn and signed in the afternoon of the same day; the assignment was executed in Cargill’s store in Water street, and was delivered there; the store was in Water, near Beekman street, and Hogins’ saloon was in Beekman street, under the Fulton market; the stipulation was- drawn in Cargill’s store, at the desk; the assignment I drew the day before, at my house; the check was for $500; I went with Hogins to draw this money from the bank, and he gave me $25, for my trouble, for selling the mortgage; Morse never paid any money on the bond and mortgage that was not endorsed on the bond; Quirk did not pay me for this bond and mortgage; he gave his note to Valentine Cargill for $500 and interest, all amounting to $505.84, and payable to Valentine Cargill in two months from October, 1851; the assignment was not given to Quirk: till the following spring; I kept the assignment till the next spring; I gave Quirk the assignment when he asked for it; the note was paid to Valentine Cargill, because he was the owner of the bond and mortgage; they were charged to him in the accounts of the executors at $500; Mr. Quirk now owns the bond and mortgage; the estate of Cargill has no interest.
    The court decided, that the plaintiff was the legal owner of the bond and mortgage in question, and that the' amount due to him thereupon, on the 27th of May, 1854, was $590.89, and, deducting the $135.35, then paid .to him, there remained due, for principal and interest, the sum of $479 nnr, for which judgment was entered.
    The defendant excepted to so much of the decision as “finds that the plaintiff is the lawful holder and owner of the bond and mortgage, mentioned in the complaint herein as belonging to the plaintiff, and that there was due to the plaintiff thereon, on the 27th May, 1854, the sum of five hundred and ninety dollars and eighty-nine cents, and that there is now due thereon the sum of four hundred and seventy-five dollars and eighteen cents, and renders judgment for the plaintiff for that amount, with interest, besides costs,” and appealed from the judgment to the General Term.
    Mr. Justice Hofmait rendered an opinion in support of his decision as follows:—
    On the 14th May, 1849, James A. Morse made and delivered his bond and mortgage to Amos Hogins, for the sum of $800, payable in one year from date, with interest; on the 16th of July, 1849, Hogins transferred and assigned the bond and mortgage to Robert Prince, one of the executors of Abraham Cargill; and on the 17th of April, 1852, Prince assigned the same to the plaintiff. The property was sold upon a foreclosure of an older mortgage. The defendant claimed an interest as subsequent mortgagee; and the question is, how much must be paid out of the surplus purchase money to discharge themortgage of Moore now held by the plaintiff ? The defendant insists that the balance due is only the sum of $135.35; the plaintiff claims $479.10. The question depends upon the following instrument and facts:
    On the 16th of July, 1849, when Hogins transferred the bond and mortgage to Prince, the latter executed to him this agreement :—
    New York, July 16,1849.
    This is to certify, that I have this day purchased, (as one of the executors of the estate of Abraham Cargill, deceased,) from Am os Hogins, a certain bond and mortgage, drawn by James A. Morse and Sarah his wife, in favor of the said Amos Hogins, for the sum of five hundred dollars cash. Now this memorandum is given, to the intent, that should the said Amos Hogins desbe to repurchase from me, or either one of the other executors, acting with me as above, the said bond and mortgage, on the day it may arrive at maturity, or within two months thereafter, for the sum of five hundred dollars, and the interest thereon, at the rate of seven per cent., deducting therefrom the interest which may have been paid thereon agreeably to the conditions thereof: in such case, I hereby promise to resell the same to him, for the said sum of money and interest, as above expressed; but I am not bound to resell the same to him, the said Amos Hogins, the said bond and mortgage, unless the above conditions are strictly complied with, within the • time herein limited for the repurchase of the same.
    Signed and sealed, &c.
    Some parol testimony has been taken of what passed at the sale upon foreclosure, on the 27th of May, 1854, and touching the cfrcumstances connected with the execution of the agreement. This evidence, even if unobjectionable, does not vary the case, which must be decided by the written contract. It raises the question, whether there is here a mortgage or a conditional sale.
    The leading English cases which I have examined are, King v. Lees, 3 P. Wm. 358; Méllor v. Lees, 2 Atk. 484; Goodman v, Gierson, 2 Ball & Beatty, 274; and Williams v. Owens, 10 Simons, 386, and 5 Mylne & Craig, 306. The earlier cases are referred to by Mr. Fonblanque, (2 Tr. Eq. 261, n. s.)

      Goodman v. Gierson, (2 Ball & Beatty, 274,) has always been a leading case upon this subject. Lord Manners said, “The fab criterion to decide whether the deed be a mortgage or not, is: Are the remedies mutual and reciprocal? has the defendant all the remedies a mortgagee is entitled to ?”
    If a foreclosure and sale took place, what remedy would there be for any deficiency ? There was no covenant or bond, nor would even an implied assumpsit lie. In this case, lands were conveyed in lieu and satisfaction of a portion charged upon them, with a clause of redemption if the portion was paid within ten years. A redemption bill was dismissed. Williams v. Owens, (10 Simons, 386, and 5 Mylne & Craig, 306,)' is among the latest and most material English cases. The Vice-Chancellor held that the instruments created a mortgage. On appeal, his decision was reversed, and it was decreed that there was only a conditional sale.
    The father of the plaintiff was indebted to the defendant in the sum of $200. By an indenture, of the 14th of June, 1821, it was recited that the said father had agreed to sell to the defendant the premises in question, for the sum of $550, and the premises were then conveyed, in fee simple, to the defendant, with the usual covenants.
    On the same day (14th June; 1821) an agreement was entered into, between the defendant and the father, reciting the conveyance and describing it as an absolute conveyance, and that, upon the treaty for the sale, it was mutually agreed that, in case the father should pay to the defendant the like sum of $550, within twelve months, and $13, the expenses of the conveyance, then the defendant would reconvey the premises to the father; and it was provided that, upon such payment, the defendant would reconvey the property, or cancel the former conveyance. The defendant was to retain the rents till the time fixed for the payment, instead of interest, if he preferred this to interest.
    The defendant took possession. The plaintiff’s father lived for three years after the deed, and the plaintiff was an infant until shortly before the bill was filed. The bill was for a redemption and reconveyance.
    Lord Cottenham observed, that the court would treat a transaction as a mortgage, although it was made so as to bear the appearance of an absolute sale, if it appeared that the parties intended it to be a mortgage; but it was equally clear, that if the parties intended an absolute sale, a contemporaneous agreement for a repurchase, not acted upon, will not, of itself, entitle the vendor to redeem. He goes through the leading cases, and, among other things, says: “ If the transaction was a mortgage, there must have been a debt; but how could Owen (the defendant) have compelled payment ?”

      The principal cases in the courts of out own state are, Robinson V. Cropsey, (2 Edw. Rep. 138 ;) Glover v. Payne, (19 Wend. 518 ;) Holmes v. Grant, (8 Paige, 243;) Brown v. Dewey, (1 Sandf. Gh. Rep. 56, and 2 Barb. Rep. 28;) Henry v. Davis, (7 John. 0. R. 40';) Clarice v. Davis, (2 Oow. 324.)
    Assistant Vice-Chancellor Sandford examined the case with great care in Brown v. Dewey, and held that there was a mortgage constituted by the documents. Justice Harris, on appeal, reversed the decree, (2 Barb. 28.) In Henry v. Davis, chiefly relied upon by the counsel for the defendant, there was an accompanying written agreement to reassign upon payment of the money advanced.
    In my opinion, the weight of authority is decidedly in favor of treating the transaction, in this case, as a conditional sale, and I apprehend that the tendency of modern adjudications is, to hold parties more rigidly to the fulfilment of contracts of this character than at an earlier period prevailed.
    The amount must be adjusted according to the principles of the plaintiff, and judgment entered for that sum and interest.
    The appeal was argued by

      A. Mann, Jr., for appellant.

      F. W. Burke, for respondent.
   By the Court. Bosworth, J.

The question in this case is, was the transaction of the 16th of July, 1849, between Hogins and Cargill, a sale of the bond and mortgage made by Morse, or a transfer of them, as security for the repayment of a loan of $500, and interest ?

The instrument, executed by Hogins to Cargill, in terms, sells and transfers the bond and mortgage, absolutely, to the latter.

The instrument, of the same date, executed by Cargill to Ho-gins, gave him the privilege of purchasing the bond and mortgage, within two months after they fell due, or on or before the 14th of July, 1850, “ for the sum of five hundred dollars, and the interest thereon, after the rate of seven per cent, deducting therefrom the interest which may have been paid thereon, agreeable to the conditions” of such bond; but it was expressly declared that such privilege was not to continue beyond that time.

Looking at the terms of the instrument alone, there was first an absolute sale of the bond and mortgage, and second, a covenant of the purchaser, that he would sell it to Hogins within a period named, but not after that, for the price that had been paid for it, with interest thereon.

Whether this was all that the security might reasonably be supposed to be worth, having reference to the value of the mortgaged property, the amount of prior incumbrances, and the estimated responsibility of the mortgager, we have no means of determining, with much certainty of arriving at an accurate conclusion.

Neither Prince nor Hogins could have anticipated that the bond and mortgage would be paid when they became due, for the privilege,' given to Hogins to purchase them, was to continue two months after that time would arrive.

Hogins entered into no contract to pay Prince any part of the $500, or of the interest thereon, if he should be unable to realize it from the bond and mortgage, or to collect it of Morse.

Prince did not advance his own money, nor was he personally interested in, or to be benefited by the purchase. The money belonged to an estate, of which he was an executor. Before Prince made the purchase, he advised with the persons who would be entitled to the money, and they consented to the purchase being made. Valentine Cargill took the bond and mortgage, at the price which had been paid for them, as so much money, and they were charged to him, in the accounts of the executors.

After the purchase had been made, and the transfer had been executed, Prince, before executing the covenant giving to Hogins a right to repurchase, consulted those entitled to the moneys, belonging to the estate of which he was an executor, and obtained their assent to his giving it.

Hogins never claimed the right to redeem, and Morse never claimed that, by force of that transaction, and of the subsequent conveyance of the mortgaged premises, he was legally or equitably relieved from liability to pay interest on more than $500 of principal, or to pay less than the whole principal.

The only facts proved to overcome all this, and show that the transaction was a mortgage, and not a sale, are, that Hogins, when he applied to Prince for money, applied for a loan; and that he obtained a covenant, giving him a right to purchase from his vendee, within a time named.

It is admitted that he applied for a loan, but such application was at once repelled. There is nothing to justify the inference, that the money was a loan, or that the transaction was so regarded by the parties at the time, except the naked fact that a loan was applied for. That was refused. And Prince told Hogins, if. he would sell it, out and out, for $500, he would try and persuade one of the boys to buy it.

Unless it is a principle of law or equity, that when a loan is applied for, on the security of a bond and mortgage, made by a third person, and money is received on a transfer of them by an instrument which declares it to be a sale, and which is made in pursuance of a clear agreement to sell, it is necessarily a mortgage, provided the person advancing the money subsequently, and on the same day, agrees to resell them to his vendor, within a time named; then it will be difficult to assign any satisfactory reason for reversing the judgment appealed from.

In Brown v. Dewey, (1 Sand. Ch. R. 73,) Vice-Chancellor Sand-ford assented to the proposition, acted upon in other adjudged cases, that the absence of a personal liability, as in this case of Hogins, for the repayment of the $500, and interest, is a strong circumstance in favor of holding the paper executed by Prince, a contract to sell, instead of holding the transaction a mortgage. That such a circumstance, in connection with the adequacy of consideration, would have been controlling with him, in that case, were it not for certain strongly marked features that appeared in it. These features were, first, the reservation of $175, annual interest, while the annual rent of the land conveyed was not worth over about $115; second, an agreement of the grantor, to expend annually, besides paying such interest, $50 in permanent improvements upon the premises; and third, taking a note of the grantor, with a surety, in the sum of $200, as a security that the grantee should receive, at the end of five years, $300, in addition to the $2,500 he had advanced, and the interest thereon.

Ho such marked features are found, in this case, to.rebut the effect deemed to be due to the fact, that Hogins was not personally liable to repay principal or interest, and to the absence of evidence to show that the consideration paid, was clearly inadequate.

It may be true, as was contended on the argument, that a person may mortgage property to secure the payment of a sum of money, without being personally liable for the payment of sueh money: that is, it may be true that a party executing an instrument, which is in terms a mortgage, to secure the payment of a sum named, if it contains no covenant to pay, nor acknowledges the existence of a debt, may not be liable on an implied covenant, to pay in the absence of an actual agreement to pay. But although this may be so, it is not obvious on what principle that consideration can aid the defendant in this case in arriving at the conclusion, that the instruments in question amount, in the intendment of the parties and in equity, to a mortgage, or render the fact of the absence of all personal liability of Hogins, to pay any portion of the sum advanced to him, less significant in this case, than it has been uniformly held to be, in similar cases which have been the subject of adjudication.

The principal authorities bearing on the question presented, are cited in the opinion of the Judge who tried this action at Special Term, and we agree with him, that they sustain the proposition, that this transaction, upon the facts and circumstances disclosed by the pleadings and proofs, was a conditional sale, and not a mortgage.

The judgment appealed from must be affirmed.


author: By the Court. Oakley, Ch. J.

text:
    Charles G. Stearns v. John Tappin, impleaded with H. G. Coggeshall.
    The provision in the Revised Statutes, permitting an inquiry into the consideration of a sealed instrument, has not altered the rule of the common law, that a release under seal, although reciting only a nominal consideration, extinguishes the debt to which it relates.
    Parol evidence, to contradict the terms or legal effect of such a release, is inadmissible, and hence, evidence to show that it was founded upon any other consideration than that which it states must be rejected.
    But where the consideration of the release is nominal, the moral obligation to pay the debt remains, and is a sufficient consideration for anew promise of payment
    The effect of such a promise, however, is not the same as that of a promise to pay a debt barred by the Statute of Limitations. It creates a new debt, and in an action for the recovery of the debt, the promise by which it was created, must be stated in the complaint as the cause of action.
    When the debt released was evidenced by a negotiable note, a promise of payment to the payee does not enure to the benefit of a subsequent endorsee, for as the release extinguishes the note, its subsequent transfer is wholly void.
    Judgment for defendants, dismissing complaint, with costs.
    (Before Oakley, Ch, J., and Dueb, J.)
    February 7, 1856.
    This was an action by the plaintiff as endorsee, against the defendants as makers of a promissory note, dated Nov. 24, 1845, for the sum of $980.89, payable two months after date, to the order of Clarke & Co., signed by the defendants in their partnership name of Coggeshall & Tappin, and endorsed, without recourse, by the payees, to the plaintiff.
    The defence in the answer of Tappin, who alone appeared, was the Statute of Limitations and a release.
    The cause was tried before Campbell, J., and a jury, in May, 1855.
    The plaintiff produced, and read in evidence the note in question, and rested.
    The defendants then produced and read in evidence, after due proof of its execution and delivery, and that Samuel J. Clarke, by whom it was executed, was a partner in the firm of Clarke & Co., the payees of the note, the following release:—
    “ In consideration of the sum of one dollar to me in hand paid, by John Tappin, of the late firm of Coggeshall & Tappin, of the city of New York, I do, on behalf of the firm of Clarke & Co., of New Haven, Connecticut, hereby release, quit-claim, and forever discharge the said Tappin of and from all his debts, dues, claims, and demands, which the said firm of Clarke & Co. have against said Tappin as a member of the late copartnership firm of Coggeshall & Tappin.
    “ Dated September 18th, 1850.
    (Signed) “ Samuel J. Clabke.” [l. s.]
    The plaintiff .then offered to prove, by Samuel J. Clarke, that he executed the release at Tappin’s request; that nothing was paid or offered to be paid by Tappin as a consideration for giving such release, but that Tappin promised him if he would execute the release, he (Tappin) would positively pay the note at the expiration of two years from that time, (the date of the release;) and that on that promise, and for no other consideration, he (the witness) executed the release; that at the expiration of two years the witness called again with the note upon Tappin, in the city of Hew York, for payment; that Tappin said he could not pay it then, but would pay it at the expiration of another year; that witness called on Tappin again for payment, in the fall of 1853, when Tappin promised him that he would positively pay him the note in six weeks; and that Tappin had, in several other instances since the date of the release, when applied to by witness for payment, unqualifiedly promised to pay it.
    To all of which evidence so offered on the part of the plaintiff the defendants’ counsel objected. The court allowed the objection, and ruled, that it was not competent for the plaintiff to prove the facts so offered to be proved on his part. To which decision of the court the counsel for the plaintiff excepted. And thereupon the plaintiff’s counsel rested the case.
    And thereupon the court, on motion of the defendants’ counsel, ordered the complaint to be dismissed; and further directed that said exceptions be heard in the first instance at a General Term of this court, and that the judgment in this action be in the mean time suspended, and the motion for a new trial made herein on said exceptions be heard, and may be brought on for argument by either party, at a General Term of this court.
    17. Seely, for the plaintiff.
    The Judge erred in excluding the evidence that was offered, and we are, therefore, entitled to a new trial. The evidence would have been a full answer to the plea of the statute of limitations; and as to the release, it was void for want of a sufficient consideration. Since the Revised Statutes, (2 R. S. 564,) a seal is only presumptive evidence of such a consideration, and the proof would have repelled the presumption. But admitting the release to be good, the promise of Tappin to pay the debt was founded on a sufficient consideration; it was binding on him, and enured to the benefit of the plaintiff as endorsee of the note. As to the alleged variance between the proof offered and the complaint under the Code, it ought to have been disregarded as immaterial. The counsel cited, 1 Parsons on Contracts, 357; 12 Sergt. & Rawle, 384; 25 Wend. 384; Catlin v. Gunter, 1 Ker. 398, and other authorities.

      E. W. Stoughton, for defendants.
    The release was an absolute bar to any claim upon the note; for a release by one partner, of a partnership debt, is binding upon all. (3 John. 68 ; 14 John. 387.) The counsel for the plaintiff is mistaken in supposing that this is like the case of a debt barred by the Statute of Limitations; and that, after the release, there remained a moral obligation, which was a sufficient consideration for the promise of Tappin. The release extinguished the debt, and left no obligation of any kind to pay it, and hence the promise offered to be proved was without any consideration and wholly void. As to the release, parol evidence that it was without consideration, or was founded upon any condition or promise whatever, was inadmissible, and this all the cases show. (McCrea v. Purmort, 16 Wend. 460.) The complaint was properly dismissed, and the defendant is entitled to judgment.
   By the Court. Oakley, Ch. J.

Whatever may be the true construction of the provision in the Revised Statutes, which permits an inquiry into the consideration of a sealed instrument, it has, assuredly, never been construed, nor do we think that it can reasonably be construed, as altering the rule of the common law, by which a release under seal operates, per se, as an extinguishment of the debt to which it refers; and although liable to be avoided by proof that it was obtained by fraud or duress, is not open to contradiction by parol evidence. There is a wide distinction, as Mr. Justice Cowen, in delivering the judgment of the Court of Errors, in McCrea v. Purmort, (16 Wend. 474,) has well shown, between a release and a receipt. The first, by its own operation, extinguishes a pre-existing right, and therefore cannot be contradicted or explained by parol; the second, has never the effect of destroying a subsisting right, but is merely evidence of a fact,—the fact of payment,—and therefore, like all other facts given in evidence, may be refuted or explained. But the construction of a release that has here been contended for, would abolish this distinction. According to this construction, every release which, like that before us, is founded upon a merely nominal consideration, would be void upon its face; and every release founded upon a pecuniary consideration, less in amount than the debt it purports to discharge, would be void as to the balance it admits to be unpaid. That this would be contrary not only to the understanding of the bar, but to the uniform practice in our courts of justice during the long period that has elapsed since the Revised Statutes have been in force, must be known to all who have any experience in our profession. We doubt whether a single case has occurred in which a release, admitted in evidence as unquestionably valid, has been founded upon the actual and full satisfaction of the debt to which it related.

We have, therefore, no difficulty in holding that the release now in question, although it states only a nominal consideration, was operative and valid; and that its legal effect was to extinguish the debt and the note, as evidence of that debt, upon which this action ■ is founded. „

It follows, necessarily, that the proof that was offered, so far as it tended to show that the release was founded on any other consideration than that which it states, as contradicting both the terms and the legal effect of the instrument, was properly rejected. The offer to prove that, prior to the execution of the release, and as a consideration for its execution, Tappin promised to pay the note within two years, was plainly of this character.

The only questions, then, are, whether the defendant, Tappin, was bound by his subsequent promises to pay the note; and if so, whether, under the pleadings, evidence of these promises could properly be received, to warrant a recovery by the plaintiff in the present action.

We shall concede, without meaning to affirm, that when the consideration of the release of a debt is nominal, or less than the siim confessed to be due, the moral obligation of the debtor to pay the debt, or the residue of the debt, is exactly the same as that of a debtor who has obtained a discharge under a bankrupt or insolvent law, in which cases, it is fully settled, that the moral obligation is a sufficient consideration for a subsequent promise of payment. We shall concede that the legal effect of the promise, in all the cases, is the same, and our decision will be governed by the analogy that we thus admit to exist.

What, then, is the legal effect of the promise of a debtor to satisfy a debt from which he has been wholly discharged by the operation of a bankrupt or insolvent law? If the effect is the same as that of a promise to satisfy a debt, barred by the Statute of Limitations, it cannot be denied that the proof that was offered upon the trial ought to have been received, and if given, would have entitled the plaintiff to recover. A promise to pay a debt, barred by the statute, revives the debt; and when the evidence of the debt is a negotiable note, which is subsequently transferred, the promise, although made to the payee, enures to the benefit of the holder, and may be proved by him in an action, in which no other cause of action is stated in the declaration or complaint than the note itself.

But when the promise of the debtor is to pay a debt that has been extinguished—a debt from which he has been wholly discharged—and whether by force of a legal proceeding, or by the voluntary act of the creditor, must be immaterial, the legal effect and legal consequences of the promise are substantially different. The promise does not, then, revive the original debt, nor, where the evidence of that debt is a negotiable note, does it enure to the benefit of a subsequent endorsee. The promise is then a new contract, creating a new and distinct cause of action; and in an action upon this contract, proof of the original debt is not otherwise important than as necessary to raise the moral obligation, which is the true consideration of the promise, and alone gives it validity.

The reasons for this distinction may not be obvious, and, when stated, may be thought technical or refined; but the cases are numerous in which they have been recognized and followed, and it may be said with truth, that no distinction is more clearly and fully established. The reasons upon which it is founded are, that the Statute of Limitations acts, not upon the contract, but upon the remedy alone. The debt subsists, although the right to maintain an action for its recovery, for the time, is gone. Hence, when a new promise has removed the bar that the lapse of time had alone created, the payment of the debt, as the original cause of action, may be again enforced. But the discharge of a debtor, under a bankrupt or insolvent law, and just as certainly by a release, acts upon the contract itself, and puts an end forever to the obligation .that it created. Hence it is a new debt that, in these cases, the new promise creates; and it is upon the promise, as a distinct and original agreement, that the action of the creditor, who seeks to enforce it, must be founded. It is owing to this distinction that, while an insolvent law, applicable to existing debts, as impairing the obligation of contracts, is unconstitutional and void, a law which, in relation to such debts, only shortens the period of limitation, as affecting the remedy alone, is constitutional and valid. (Sturges v. Crowninshield, 4 Wheat. 122; Hetch v. Hotchkiss, 7 John. C. R. 296; Dean v. Hewitt, 5 Wend. 262; 2 Esp. R. 936; Cowper, 544; Douglas, 192.)

What, then, are the consequences of this established distinction, in their application to the case before us ? They are these, that as the discharge or release of a debtor, by annulling the contract, extinguishes the debt, so when a negotiable note is the evidence of the debt, it extinguishes the note. It destroys forever its negotiability, and renders its subsequent transfer wholly void. As á subsequent endorsee acquires no title, he can maintain no action upon the note itself; and, unless the new promise, creating a new debt, was made to himself, he can maintain no action upon the promise, which cannot follow, as an incident, a note that has ceased to exist.

I shall refer to two or three decisions of our former Supreme Court, as sustaining and illustrating these positions.

The action in the case of Depuy v. Swart, (3 Wend. 135,) was brought by the plaintiff, as the holder, against the defendant, as the maker of a promissory note, payable to A. Robinson or bearer, and the defence was, the discharge of the defendant under the act then in force, granting relief in cases of insolvency. To meet this defence, the discharge having been proved, the payee of the note was called as a witness upon the trial, and proved, that the defendant, shortly after his discharge, and repeatedly thereafter, while he (the witness) was the holder of the note, and before its transfer to the plaintiff, had promised to pay the debt. The evidence was objected to, but was received by the Judge, who directed the jury to find a verdict for the plaintiff.

The case was before the court in term, upon a motion to set aside the verdict, and for a new trial; and the court, holding that the plaintiff had no right to maintain the action, granted the motion.

Marcy, J., who, in a singularly able and lucid opinion, delivered the judgment of the court, after referring, as an authority, to an express decision of the Supreme Court of Massachusetts upon the same questions, (Baker v. Wheaton, 5 Mass. R. 509,) arrived at the conclusion, that the discharge of the defendant discharged the debt for which the note was given, and by destroying the legal existence of the note, put an end to its negotiable qualities.; that the plaintiff had, therefore, acquired no right, from the transfer to him, to maintain an action upon the note, and that an action upon the new promise of the debtor could be maintained only in the name of the creditor to whom it was made. Exactly the same question arose in the subsequent case of Moore v. Videle, (4 Wend. 420,) and the court, reaffirming its decision in Depuy v. Swart, held, that the negotiability of the note, upon which the suit was brought, was destroyed by the discharge of the maker under the insolvent act, and that its subsequent transfer gave no right to the person receiving it to maintain an action upon the note.

In the subsequent case of Dean v. Hewitt, (5 Wend. 257,) the action was by the endorsee against the maker of two promissory notes. The defence was, that the Statute of Limitations had attached, and this defence was overruled upon the trial by evidence of a new promise of the defendant made to the payee of the notes, before their transfer to the plaintiff, and within six years before the commencement of the action. The plaintiff, under the direction of the presiding Judge, obtained a verdict, which the court at General Term refused to set aside, and I refer to the decision as showing the existence and legal consequences of the distinction that has already been stated and explained. The counsel for the defendant, in moving for a new trial, relied upon the decision in Depuy v. Swart, and contended that it was just as applicable to a new promise to pay a debt, barred by the statute, as to a similar promise to pay a debt, barred by an insolvent’s discharge, insisting that, in both cases, the new promise is the true and sole cause of action, and should be declared on as such. The court thought otherwise, holding, that the statute applies to the remedy alone, and that it is this that the new promise continues or revives; and Marcy, J., who again delivered its judgment, said, “ that a demand, the remedy for the recovery of which has been continued or revived by a new promise, is precisely the same as before the statute had attached, and when it is evidenced by a negotiable instrument, the negotiability of the instrument is coexistent with the demand,” evidently meaning, that, in this case, the promise that revives the remedy, follows, and is attached to the instrument, and enures to the benefit of its holder.

It is needless to point out the exact resemblance between the evidence that was improperly received in the case of Depuy, and that which was offered and rejected in the case before us. It is manifest, that there is no other distinction, than that which exists between the extinguishment of a debt by a legal proceeding, and its extinguishment by the voluntary act of the creditor. It was the actual extinction of the original debt, however, that, in the cases of Depuy v. Swart and Moore v. Viele, was the sole ground of the decision, and hence, where that extinction is proved, it is plainly immaterial by what means it was effected. By whatever means it may be effected, its legal consequences must be the same. Hence, if the plaintiff, in each of those cases, had no right to maintain the action, by availing himself of a promise made to the payee of the note in suit, before its transfer to himself, it seems to us a necessary conclusion, that no such right can be field to have been acquired by the plaintiff in the present action. As the proof offered would not have shown, that the transfer of the note gave him the right, it was properly rejected.

It is true, that the cases of Depuy v. Swart, and Moore v. Viele, were decided before the Code was enacted, and, consequently, when a new debt, created by a new promise of a discharged debtor was not assignable, so as to enable an assignee to maintain an action, in his own name for its recovery; and this circumstance, it may be said, creates a distinction, that renders the decisions, in those cases, no longer applicable as authorities. But we do not think so. There is no intimation in either of the cases, that in the opinion of the court, the plaintiff, by the transfer of the note in suit, had acquired an equitable title to the new debt, which the promise of the defendant had created, so as to entitle him to bring an action for its recovery, in the name of the payee to whom the promise was made. There is no intimation, that a transfer, that the court held to be void, was yet effectual to pass the debt. Although, since the Code, the assignee of a debt, no matter how or when created, may maintain an action, in his own name, for its recovery, we do not at all understand, how the attempt to transfer a debt, that had ceased to exist, can be received as evidence of the assignment of a debt subsequently created. The transfer, if void at all, is void altogether. We have seen that a debt created by the new promise of a discharged debtor, is not an incident of a negotiable note, by which the original debt was evidenced, but is a substantive and independent cause of action, and we are, therefore, clearly of opinion, that it is only by a distinct and independent act, expressly referring to the debt thus created, that it can be assigned or transferred. In this case, no such assignment was offered to be proved, or is pretended to have been made.

But had proof of such an assignment been offered or given, it seems to us certain that it would not have enabled the plaintiff to recover in the present action. As the debt created by the promise of a discharged or released debtor, although founded on his moral obligation to pay a former, is a new and substantive cause of action, it must be stated as such in the complaint, whether the action is brought by the creditor to whom the promise was made, or by his assignee. Here, there is no such statement in the complaint, for the action is brought by the plaintiff, not as assignee of-a subsisting debt, but as endorsee of an extinguished note. His title to the note is the only cause of action stated in the complaint.

It has, indeed, been insisted, that if the plaintiff was entitled to the benefit of the promises made by the defendant to the payees of the note, the variance that would have arisen from the proof that was offered, might, under the provisions of the Code, have been justly disregarded. We cannot so hold. The only cause of action alleged in the complaint, was disproved, in its entire scope and meaning, (Code, § 191,) and the proof offered, if effectual for any purpose, would have substituted a new cause of action, which the defendant had not been required to answer, and to which the defence, in his answer, was not at all directed. Even, if the proof would have shown a right of action in the plaintiff, the Judge, under the pleadings, had no power to receive it, nor, as we think, without the consent of the defendant, could he have amended the pleadings for the purpose of its reception.

Although, as the case stood upon the trial, the jury might very properly have been instructed to find a verdict for the defendant, the Judge committed no error, which the plaintiff can allege, in dismissing the complaint, and a judgment dismissing it, with costs, must, therefore, be entered.

Judgment accordingly.

       Vide note of editor to the case of Depuy v. Swart, (9 Wend. 2d ed. 241,) where an opposite opinion as to the effect of a transfer of a negotiable note, since the Code, appears to be expressed.


text:
    Vanderbilt v. Mathis.
    To maintain an action for malicious prosecution, three facts, if controverted, must be established:
    1. That such prosecution was determined in favor of the plaintiff, before the action was commenced.
    2. The want of probable cause.
    3. Malice.
    The determination, in favor of the plaintiff, of the prosecution alleged to be malicious, is not, per se, primé facie evidence of the want of probable cause.
    The proof of malice is as essential as that of the want of probable cause. But the latter may be shown, without the existence of malice being either a consequence or concomitant. Malice, in fact, must be proved, either by direct evidence, or by circumstances connected with, or growing out of, the proof of a want of probable cause, justifying th"e inference of it, as a &et thus proved.
    There is no theoretical malice, which can satisfy the rule requiring proof of malice, and which can coexist with the established fact, that the prosecution was instituted in an honest belief of the plaintiff’s guilt, and with no other motives than to bring a supposed offender to justice.
    The question of actual malice may be a turning point in an action of this nature.
    In such a case, it must be determined by the jury, as a question of fact, and such evidence of its existence must be given as will justify a jury in finding it, as a fact proved.
    (Before Oakley, Ch. J., Dder and Bosworth, 3.3.)

    February, 1856.
    This action came before the court, on questions of law arising at the trial, and which were there ordered to be heard in the first instance by the General Term.

      It was tried before Mr. Justice Slosson, and a jury, in June, 1855.
    The action was brought to recover damages, on the allegations that the defendant, on the 27th of November, 1854, before R. E. Stilwell, a commissioner of the United States for the southern district of New York, falsely, maliciously, and without any reasonable or probable cause, complained and charged that the plaintiff had theretofore committed, perjury, by falsely and corruptly swearing that he was the true and only owner of a certain steamship, called the Adelaide; that, upon such complaint and charge, the plaintiff was arrested and brought before the said commissioner, and, afterwards, upon an examination of the matter, was fully acquitted and discharged.
    The questions decided by the General Term, relate solely to exceptions taken to the charge of the Judge, and to his refusal to charge as requested.
    Hence, as the charge is of considerable length, only those portions of it are stated which show the matters excepted to. The Judge, among other things, charged as follows:—
    “ That, in order to enable Vanderbilt to maintain his action, he must prove;
    “1. The prosecution by the defendant, the plaintiff’s arrest, and that the prosecution is ended, and the plaintiff discharged therefrom.
    “2. That the prosecution was undertaken by the defendant without probable cause.
    “ 3. That the defendant acted maliciously in the prosecution.”
    ********
    “ If the facts show that there was not probable cause for the defendant’s prosecution, then malice may be inferred.
    “ The evidence is, that the plaintiff was discharged before the magistrate. This shows prima facie, that there was no probable cause for the arrest, and shifts the burden of proof from the plaintiff to the defendant, who is bound to show, affirmatively, that there was probable cause. The actual state of the facts, apart from the defendant’s knowledge and belief of them, is not the test of probable cause. You must be satisfied that the defendant knew of the existence of the facts on which he relies to show probable cause.

      “His charge was, that the plaintiff made a false oath, in swearing that he was the owner of the vessel, and the "burden is with him to show that there was probable cause for this charge, and he can show it only by showing his knowledge of facts and circumstances, which would justify a reasonable and cautious or prudent -man in believing that the plaintiff' was not the owner.”
    “ On this question of malice in fact, you will also take into consideration the defendant’s conduct on the arrest of the plaintiff, whether or not there was unnecessary zeal and activity or eagerness on his part, all which has a bearing on the question of motive.
    “ This question of malice in fact, supposing that probable cause did not exist, is material only as affecting the question of damages; and on the question of damages, the plaintiff, if entitled to recover at all, is entitled to indemnity for the deprivation of his liberty and for the injury to his reputation, feelings and person, and also for the expenses to which he has been necessarily subjected.”
    The counsel for the defendant said he excepted to that part of the charge in which it was said, that the discharge by the commissioner was prima facie evidence of want of probable cause.
    The defendant’s counsel also asked the court to charge, “ That the discharge of Vanderbilt was not prima facie evidence of want of probable cause.” The court refused to charge, except as it had before charged, and the defendant’s counsel excepted to such refusal.
    The defendant’s counsel then asked the court to charge, “ That if the jury believe from all the evidence in this case, that the defendant acted in good faith in making the complaint, this action cannot be maintained.” The court refused to charge, except as it had before charged, and the defendant’s counsel excepted to such refusal.
    The defendant’s counsel then asked the court to charge, “ That the jury cannot find a verdict for the plaintiff unless he has proved that there was no probable cause for the complaint, and not even then, unless they believe from the evidence that in making the complaint the defendant acted from malicious motives.” The court refused to charge, except as it had before charged, and -the defendant’s counsel excepted to such refusal.

      And the jury afterwards returned a verdict for §1,000.
    And the court thereupon ordered, that the defendant have twenty days to make and serve a case, with leave to turn the same into a bill of exceptions or special verdict, and that the same be heard, in the first instance, at the General Term; and that, in the mean time, all proceedings on the part of the plaintiff be stayed.

      L. B. Shephard, for plaintiff.

      J. T. Williams, for defendant.
   By the Court. Bosworth, J.

To maintain an action for malicious prosecution, three facts, if controverted, must be established :—

1. That the prosecution is at an end, and was determined in favor of the plaintiff

2. The want of probable cause.

3. Malice.

In such an action, it is necessary to give some evidence of the want of probable cause. It is insufficient to prove a mere acquittal ; that, alone, is not prima facie evidence of the want of probable cause. (Gorton v. De Angelis, 6 Wend. 418.)

It is equally essential, that the former prosecution should appear to have been maliciously instituted. Malice maybe inferred from , the want of probable cause, but such an inference is one which i a jury is not required to make, at all events, merely because they may find the absence of probable cause.

Unless the evidence, in relation to the circumstances under which the prosecution was ended, and that given to establish the want of probable cause, justify the inference of malice, other evidence, in support of it, must be given.

Evidence as to the conduct of the defendant, in the course of the transaction, his declarations on the subject, and any forwardness and activity in exposing the plaintiff by a publication, are properly admitted to prove malice. Such evidence must be given as will justify a jury in finding the existence of malice.

The rule is uniformly stated, that, to maintain an action, for a former prosecution, it must be shown to have been without probable cause, and malicious. (Vanduzer v. Linderman, 10 J. R. 110; Murray v. Long, 1 Wend. 140, 2d Stark. Ev. 494; Willans v. Taylor, 6 Bing. 173.)

The Judge, at the trial, charged, that the fact, that the plaintiff was discharged before the magistrate, showed, prima facie, that there was no probable cause for the arrest, and shifted the burden of proof from the plaintiff to the defendant, who was bound to show, affirmatively, that there was probable cause.

He was requested to charge, “that the discharge of Vanderbilt was not prima facie evidence of the want of probable cause.” This he refused to do. To this refusal to charge, and to the charge as made, the defendant excepted.

He also charged, “that, if probable cause is made out, the question of malice becomes immaterial, except as bearing on the question of damages.”

“ This question of malice, in fact, supposing that probable cause did not exist, is material only as affecting the question of damages.”

He was requested to charge, “ that the jury could not find a verdict for the plaintiff, unless he has proved that there was no probable cause for the complaint, and not even then, unless they believe, from the evidence, that, in making the complaint, the defendant acted from malicious motives.” This the Judge declined to do, and to his refusal to so charge the defendant excepted.

Although the evidence which establishes the want of probable cause maybe, and generally is, such as to justify the inference of malice, yet we understand the rule to be, that when it is a just and proper linference from all the facts and circumstances of the case, upon all /the evidence given in the cause, “that the defendant was not actuated /by any improper motives, but only from an honest desire to bring a supposed offender to justice, the action will not lie, because such ’'facts and circumstances disprove that which is of the essence of the action, viz., the malice of the defendant in pressing the charge.”

In Bulkley v. Smith, (2 Duer, 271,) the court stated the rule to be, “ that, in order to maintain a suit for a malicious prosecution, the plaintiff is bound to prove the entire want of a probable cause for the accusation, and the actual malice of the defendant in making it. Malice is a question of fact, which, when the case turns upon it, must be decided by the jury.”

Story, J., in Wiggin v. Coffin, instructed the jury that two things must concur, to entitle a plaintiff to recover in such an action: “ The first is, the want of probable cause for the prosecution; the ' second is, malice in the defendant in carrying on the prosecution. If either ground fail, there is an end of the suit.”

In Vanduzer v. Linderman, (10 J. R. 110,) the court said: “ No action lies, merely for bringing a suit against a person, without sufficient ground. To maintain a suit for a former prosecution, it must appear to have been without cause, and malicious.”

If the charge must be understood to mean, that if the want of probable cause was established, the plaintiff was entitled to recover, although the jury should believe, from the whole evidence, that, in mating the complaint, the defendant did not act from malicious motives, then we deem it to be erroneous. This construction is the only one, of which the language of the instruction appears to be susceptible; for the Judge, in charging the jury, stated that the “ question of malice in fact, supposing that probable cause did not exist, is material only as affecting the question of damages.”

Malice in fact, is that kind of malice which is to be proved.) When malice may be, and is inferred, from the want of probable) cause, it is actual malice which is thus proved. t

There is no theoretical malice which can satisfy this rule, and-which can coexist with the established fact, that the prosecution was instituted in an honest belief of the plaintiff’s guilt, and with no other motives than to bring a supposed offender to justice.

The question of malice may be a turning-point of the controversy, in an action of this nature. \

( The want of probable cause may be shown, and yet, upon the; fyhole evidence, in any given case, it may be a fair question for j ¡the determination of a jury, whether the defendant was actuated - by malice. If the whole evidence is such, that a jury cannot j properly doubt the honesty and purity of the motive which in- j duced the former prosecution, and if they fully believe that it; was instituted from good motives, and in the sincere conviction j that the plaintiff was guilty of the offence charged, and without,, malice, the defendant would be entitled to a verdict.

The charge made, and which was excepted to, must be deemed to have been made, to give the jury a rule of action, in disposing of the case upon the whole evidence. We think it was not only calculated to mislead, but was erroneous.

A new trial must be granted, with costs to abide the event.