author: Tan Brunt, P. J.:

text:
    Francis D. Carley, Appellant, v. J. Kennedy Tod and Others, Respondents.

      Private hanker — application of chapter 409 of 1883 — obligation of a pa/i'ty to a contract to show that it is fair.

    Tbe provisions of the Banking Act (§§ 68 and 69, chap. 409, Laws of 1883) in regard to usury, apply to private bankers, and not alone to that class of bankers whose business is similar to that of a National or State bank.
    The burden is not imposed upon a party to a contract to establish that it was a fair and equitable contract, and that no undue advantage was taken of the other party thereto in exacting it from him, even where the other party to the contract was at the time that it was made in a necessitous condition.
    Appeal by the plaintiff, Francis D. Carley, from a judgment of the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of New York on the 11th day of January, 1894, upon the decision of the court, rendered after a trial at the New York Special Term, dismissing the plaintiffs complaint upon the merits.

      Geo. G. Holt, for the appellant.

      Stephen H. Olm, for the respondents.
   Tan Brunt, P. J.:

Prior to December, 1888, the plaintiff, who had been residing in Louisville, Kentucky, was the president of two Kentucky corporations— The Kentucky Union Land Company and the Kentucky Union Railway Company. The land company was the owner of large tracts of land in southeastern Kentucky, and the railway company was organized to construct a line of railroad from Lexington, Kentucky, to a point in the vicinity of these lands, a distance of about 100 miles. The stock of the railway company was owned by the land company. The construction of the railroad had been commenced, and fourteen or fifteen miles of road had been substantially completed. In December, 1886, the plaintiff entered into certain negotiations for the furtherance of the enterprise in which he was interested with the defendants J. Kennedy Tod & Co., who were bankers doing business in the city of New York.

In the concise statement of the facts which it is considered neces sary to insert in this opinion it has not been deemed advisable ta refer to all the negotiations which led up to the various agreements of these parties, nor particularly to refer to agreements which were subsequently abandoned, except so far as such agreements may tend to illustrate the position and rights of the parties as affecting the questions to which the adjudication in this action relates.

As the result of the negotiations between the plaintiff and the defendants Tod & Co., various arrangements were made in the month of January, 1889, some of which were abandoned, and finally, on the twenty-third of January, propositions in writing were submitted by the defendants Tod & Co. to the plaintiff and accepted by him, by which the defendants Tod & Co. agreed to purchase certain securities of the railway company, guaranteed by the land company, subject to examination and approval. The propositions of the defendants Tod & Co. were, on the 24th of January, 1889, accepted by the plaintiff, and contemporaneously with these agreements in respect to the purchase of the securities of the railway company as an independent transaction Tod & Co. agreed to purchase $500,000 of the capital stock of the land company, the entire proceeds of which were to belong to and be placed in the treasury of the land company. On the 9th' of February, 188.9, the defendants Tod & Co. accepted without reservation the propositions of sale of the railway company bonds upon the terms stated in the letter above referred to of the 23d of January, 1889. They thus became obligated to take from the plaintiff $1,000,000 of the railway company bonds and $200,000 of the five per cent preferred stock of the company at ninety-two and a half per cent of the par value of said bonds and accrued interest, less a commission of one per cent of the par value of the bonds. The stock and bonds were to be delivered, $500,000 of the bonds and $100,000 of the preferred stock, on the 1st of April, 1889, and $500,000 of the bonds and $100,000 of the preferred stock on the 1st of June, 1889. The defendants Tod & Oo. also had an option to purchase from the plaintiff on the same terms as to price additional amounts of said bonds and preferred stock as follows: $500,000 in bonds and $100,000 in preferred stock- on the 1st of July, 1889; the same amount on the 1st of September, 1889 ; the same amount on the-1st of November, 1889, and the same amount on the 1st of January, 1890. It was further agreed that the due payment of the principal and interest on said bonds and the dividends on said preferred stock should be guaranteed by the land company.

On the 23d of February, 1889, a further agreement was entered into between the defendants J. Kennedy Tod & Co. and the plaintiff, by which the defendants agreed, in consideration of two promissory notes, each for $10,000, to take from the plaintiff $850,000 of the railway company bonds, at the rate of ninety-two and one-half per cent of the par value of the bonds and accrued interest, in monthly installments, from the 1st of July, 1889, to November 29, 1890, it being expressly declared, however, that if the defendants Tod & Co. exercised the option which they held of purchasing from the plaintiff $500,000 of the railway company bonds and $100,000 of preferred stock on the 1st of July, 1889, the exercise of such option should be held as part fulfillment of this agreement. ‘ And there was the same declaration in reference to the option maturing on the 2d of September, 1889. , In February, also, the defendants Tod & Oo. purchased of the plaintiff 1,000 shares of the stock of the land company at thirty-three.

On the 23d of March, 1889, an agreement was entered into between the railway company and the defendants Tod & Oo. to the same effect as the agreement of February 23, 1889, between Tod & Oo. and the plaintiff.

The defendants Tod & Oo. exercised the first two options. The two promissory notes of $40,000 each were paid by the plaintiff in October, 1889. The two remaining options, each to take $500,000 of the railway company bonds and the accompanying guaranteed preference stock, were extended, the first, which was due on November 1, 1889, to not later than May, 1890, and the second, which was due January, 1890, to not later than August 1, 1890.

On the fourth of November the plaintiff wrote to the defendants Tod & Oo. a letter, in which he says : “ Assuming that our financiering, as you understand it, in regard to the railway completion will take care of that branch of the business, I think we ought to turn our attention to the interests of the land company. If we can arrange with those holding the $800,000 of IL U. land bonds to surrender them and take instead a like jjortion of a new first mortgage IL IT. land bond, say $2,000,000, could you not form a syndicate which would take a few bonds of this new issue, say 250,000, with an option for a like amount every few months ? * * *

With the completion of the road assured, as it certainly now is, so far as necessary for the development of most of our properties is concerned, and with the study given to the lumber business by Mr. Baring, it occurred to me you would feel sufficiently assured of the income of the land company from lumber, cannel coal and sale of lauds to speak of this new bond in such confidence that a syndicate would take hold of it. We need money for the land company at many points.”

On the 17th of January, 1890, the plaintiff wrote'to Tod & Oo. as follows: “ The temporary delay in the operation of the mill is working no injury, because we will be able to get fully ready for the opening of the spring trade, which commences in March.And then, after speaking of the great advantages which they would derive from , quarter-sawed oak and such kinds of wood, he says: “ Meanwhile, the road is phshed to the utmost capacity of our cars, with the business forced upon us by the public, the construction business and- the movement of. logs. As I wrote you before, there will not be a week in its history when it will not earn its fixed charges on the number of miles in operation. In fact, the spring months will show such large earnings that I fear we will hesitate to make them public on account of the interest which will be held by the counties of Fayette and Clark and city of Lexington.”

On February 13, 1890, he writes to the defendants, and after speaking of the fact that it was not proposed at present to make public the earnings of 'the road and the condition of certain other enterprises connected therewith, he says: “ The freight on these logs and the freight on our sawed lumber, both logs and lumber being at this moment where you can put your eyes on them, will give the road so much freight that we would not need but a small portion of what the public will do to earn the fixed charges. Your Mr. Tod will be pleased with the situation when he comes here. I do not intend to call him out here, however, until the dry kilns and planing mill are in operation.”

On the 14th of February, 1890, the plaintiff writes that “ these bonds should be brought out sometime along say about the first day of April or the fifteenth day of March, with the simple statement that this road, although new, has already passengers and traffic earnings which will provide for its fixed charges, and that you should be able to make this statement from the investigating trip which you will make in two or three weeks.”

On the fifteenth he writes, amongst other things : Glad to report that I have arranged for our payments for .this month, and feel everything is encouraging as far as I know, that we will earn by the twentieth of March $200,000 and be in funds again.”

On the 19th of February, 1890, J. Kennedy Tod writes to the plaintiff acknowledging the receipt of the letters of the thirteenth and fourteenth of February, above mentioned, and telling him that he would come to Kentucky when the plaintiff thought the proper time had arrived, but he would like a week’s notice, and that he would bring with him some friends. He states that he could not concur in the views of the plaintiff upon the subject of the issue of bonds, and then gives his reason for such non-concurrence, and proposes a plan in reference to the issue of preferred stock by the land company, being evidently a counter proposition to that which was sent to Tod & Co. by the plaintiff on the 4th of November, 1889, above mentioned.

On the twentieth of February the plaintiff writes : “ Fortunately we have only good news in regard to railroad construction, and it seems to be the conviction of the contractors and the railroad men that they will get through in time for the first $50,000.” He then speaks of an interview he had had with Mr. Spencer, of the firm of Drexel, Morgan & Co., and says: “ I think after I have been in Clay City a few days, and put everything in fine trim, that you will come there and be convinced that you can make your issue of bonds on the statement of the two companies that the net earnings of the railway company, or the net earnings of the land company, either of them, is sufficient to pay the fixed charges of the road. I shall be prepared to make this statement after the middle of March, or the first day of April, and I think you will be prepared to accept it as true. Of course I mean I will be using the present tense as to its-net earnings, and not the past.”

On the fifth of March the plaintiff writes to Tod & Co. that he had been to their office to' give them prompt notice that he was in negotiation with another banking house “in order to provide for-those of our interest in regard to which you hold us in long uncertainty,” manifestly endeavoring to egg on the defendants by the assertion that unless they were more speedy in their conclusion they would lose all the profits which might arise on the transaction.

On the seventeenth of March he finishes his letter as follows : “ My most extravagant prophesies have been realized, and I now calculate that the profits of the K. U. Land Company will be, the next twelve months, not less than $800,000. Sales are being made and contracts closed which warrant these figures. We are getting benefits from the boom, but are allowing no boom prices or excitement, as our whole endeavor is to turn the excitement and speculative feeling of the; people into permanent developments and manufacturing and town developments along the road.”

In the latter part of March, about the twentieth, Mr. Northcote, a member of the firm of J. Kennedy Tod & Co., a Mr. Menzies, a-Scotchman, and Mr. Oyens, of Amsterdam, went to Louisville, and thence traveled over the property; and between Mr. Northcote, these gentlemen and the plaintiff, certain negotiations were had as to what should be done in the future. It is claimed by the plaintiff in this action that an agreement was entered into whereby the defendants exercised the option which did not become due until the 1st of May, 1890, for the talcing of the bonds and stock; and that it was also agreed that the land company should obtain authority from the Legislature to issue $2,000,000 of preferred stock; that $1,600,000 of such preferred stock should in fact be issued, half of which should be taken by Oarley and the other half by Tod & Go., and that Oarley should with his $800,000 of preferred stock take up all of the outstanding $800,000 of land company bonds with the exception of about $100,000 of said bonds, which Tod & Co. had sold to their customers, and which it was claimed Northcote agreed that Tod & Co. should take care of; and that Tod & Co. should be paid $40,000 in cash for taking the $800,000 of preferred stock. This alleged agreement it is admitted was subject to the provision that Oyens and Menzies were to go over the property and should approve it. There were various other details relating to this alleged agreement which it is not necessary to mention. Northcote, Oyens and Menzies left Louisville and went over the property, and, it is claimed by the plaintiff, upon their return, were satisfied with the arrangement. But we have searched the record in vain to find, even from the testimony of Oarley, that any agreement such as is claimed, was made. These negotiations undoubtedly took place, and propositions such as were testified to by Oarley were made; but there is no evidence whatever that they were understood to be in the form of an agreement, or that Tod & Co. waived their right to refuse to exercise their option on the 1st of May, 1890. It is said that it was agreed that Tod & Go. should be paid $40,000 in cash for talcing the $800,000 of preferred stock. But we fail to find any evidence of any such agreement. It is- true Tod & Co. claimed a commission of five per cent, amounting to $40,000, but that there was any binding agreement to pay such commission nowhere appears in the record so far as we have been able to find. It is true that Oarley in his testimony speaks of this agreement and that agreement in connection with this transaction ; but when he gives that which actually took place, it is evident that no agreement was entered into between the parties — th'at it was all tentative, and that there was no intention upon the part of Tod & Go. to waive their right to refuse to take the bonds on the 1st of May, 1890.

It is true that the plaintiff thereupon went to work in Kentucky and procured the passage of an act of the Legislature authorizing the land company to issue preferred stock; that he saw all the Kentucky holders of the land company bonds, endeavoring to arrange for their taking preferred stock in place of their bonds, and where they refused, himself purchasing their bonds for cash; and that he issued various notes and commercial paper payable at the office of Tod & Co. on the 1st of May, 1890, the date fixed for Tod & Co. to exercise the option in reference to the $500,000 of railway bonds, and when it was understood that the final arrangements in regard to the preferred stock of the land company were to be carried out. But all these things were based upon the assumption that it was for the interest of Tod & Co. to carry out this proposed agreement. In fact, the learned counsel for the plaintiff argues that Tod & Co. were in such a position that although they probably had the legal right to refuse to take any additional installment at any time if they saw fit, they never would do so and allow another banking house to purchase these bonds and put on the market a portion of this issue, and offer them for sale in competition with their own bonds. He says: “ The provisions in the contracts made by Tod & Co. for options to take additional amounts of bonds in installments, while it probably conferred upon them the legal right to refuse to take any additional installment at any time if they saw fit, was, however, simply a provision for their protection in case of any unexpected developments substantially justifying a rescission of the contract; and it never could have been the intention of any of the parties, when Tod & Co. started to form a syndicate, take those bonds and build this railroad, that they should not, in substance, take the whole issue of bonds. Mr. Carley and everybody else who had put money into the enterprise had a right to rely upon and put confidence in the good faith of Tod & Co. in the administration of the financial affairs of the enterprise, and Tod & Co. had no more right when the enterprise got into financial difficulties to take an oppressive and unconscionable advantage of the situation to compel exactions from the other gentlemen interested in the enterprise than one partner has to take advantage of his co-partner under such circumstances.” In other words, that although Tod & Co. had an option to take these bonds, yet, because people had been acting upon the assumption that they had got their feet so deep in the mire that they could not get them out without sacrificing everything they hád put into the enterprise, if they chose to make this sacrifice they should not be allowed to do so. We cannot understand that this was the position of Tod & Co. It is true that they were already possessed of a large amount of the securities and that they had this option. And this argument upon -the part of the counsel for the plaintiff was probably the argument which brought the plaintiff to believe that he had an agreement with the defendants in regard to this land company business, and that they had. agreed to exercise their option on the 1st of May, 1890. But as already stated, there is no evidence whatever of any agreement entered into by Tod & Co. which was binding upon them, nor any waiver of their rights to take the $500,000 in bonds and the stock on the 1st of May, 1890.

Without laying any stress upon the letters of the plaintiff which have been offered in evidence, and which contain expressions inconsistent with the idea that there was an agreement, let us come to the interview of the 1st of May, 1890, in which the defendants are alleged to have exercised their brutality as against the plaintiff. The plaintiff came to New York, to the office of Tod & Co., in reference to carrying out these preliminary agreements and securing the taking of the bonds in respect to which Tod & Co. held an option. Claims were made upon the part of Tod & Co. that their bookkeeper, who had been sent to Louisville to examine the accounts there, had reported that the obligations of the company largely exceeded those which had been reported by the plaintiff, and the plaintiff asserted that certain assets of the land company had not been sufficiently considered by the accountant; and then the bargain was made between the plaintiff and Tod & Co., which the plaintiff claims was exacted from him by his necessities, and letters were signed in the form of agreements embodying these contracts. It is true that the plaintiff claims that he protested against being compelled to accede to the terms which were offered him and that the conduct of the defendants was brutal. But he nowhere claimed, as he now claims upon this appeal, that there was any binding agreement made prior to the 1st of May, 1890, which was contrary to this new arrangement. The plaintiff did claim that the defendants were driving the hardest kind of a bargain, to which his necessities compelled him to accede, because the notes which he had issued were becoming due, and it was impossible for him to pay them unless ' Tod & Co. exercised their option to take the bonds and thus provide the funds. But it nowhere appears that any claim was made at this time that there was any binding agreement as between these parties. In fact, we find from the evidence that in April the form of an agreement to be entered into to carry out the intention of the parties was being considered, and that the plaintiff made amendments thereto, and suggested in a lengthy memorandum in his own handwriting what should be the form of such agreement — a condition of affairs entirely inconsistent with the idea that there had been any definite agreement made in the March previous. Because, if such an agreement had been entered into, why should they be negotiating in regard to the terms of an agreement in April, and finally signing an agreement in May.

On the 13th of JVIay, 1890, notwithstanding the brutality and amazing cruelty with which lie had been treated by the defendants on the first, the plaintiff writes: “ I send certificate to the amount of $100,000 face value of the common stock of the Kentucky Union Land Company, which I am arranging to sell in this market * * * as explained below. * * * Kindly attend to this at once, as the market is ripe here for the stock, fifty-five having been bid here to-day) ” five per cent higher than the stock was valued at in the arrangements between the defendants Tod & Co. and the plaintiff.

On the sixteenth of May one of the defendants writes to the plaintiff: “We note from your letters with great pleasure that the land company’s1 common stock is quoted at 55 per cent. This, as you advised us formerly, is no doubt due to the present improved financial standing of the company, brought about by the sale of the preferred stock. We have 4/TO shares of common stock for sale at not under 50 per cent, and we fear that were we to proceed with its sale our interests might conflict in the market. We, therefore, suggest that you proceed with a sale on a three-thirds account; that is, in all sales made up to 1,210 shares you give us a one-third interest. Kindly advise ns if this meets your views, and call upon us for our proportion of the stock as.it may be required.”

On the twenty-second of May the plaintiff writes: “ I have your note of the 16th of May, and cannot work the stock matter exactly as you suggest. I explained to Mr. Nortlicote what I am trying to do, and that is to place the stock that I bought from you around in the State of Kentucky, and get larger holding here, and more interest in the property. I am not selling any of my own stock, except as I bought it from you, and I have already arranged with the syndicate of Kentuckians to work this matter. I do not wish to approach these men about other stock until they are nearly through with the first lot. If you will give me a refusal of the 470 shares I will, as soon as I can do it, turn it over to them at cost, say at 50 cents, and let the syndicate make the difference if they can. This is what I have clone with the $100,000 bought from you. Of course the syndicate must make five or ten points for us to work it. They are the most influential men I could find. If you -will refer this to Mr. North-cote he will explain more fully, as I showed it up to him.”

On the 30th of May, 1890, the plaintiff, who had been so brutally treated by the defendants, writes to them : “ Possibly it might interest you to know the feeling of the people here about our enterprise as reflected in the inquiries for the common stock. There are all sorts of bids made for the stock between 55 and 65, according to the eagerness of the buyer, but there is absolutely no stock offered. If my associates care to do so they could apparently sell their holdings very rapidly. There is a universal conviction throughout the State that this enterprise is destined to furnish the most substantial securities ever in the State.” '

The plaintiff having demanded a statement of his account on the 23d of May, 1890, Tod & Co. inclosed a statement of the account, showing, first, a note of the securities which they held against his account; and, secondly, a statement of the account to date, showing a nominal balance. in his favor of $13,913.38. Attention is also called to the fact that they held a demand note of the plaintiff for $90,000 advanced on the eleventh of April.

On the 28th of May, 1890, the plaintiff wrote to the defendants as follows : “After surrendering my note for $90,000 and interest ■ and taking a new note for $50,000, dated May 1st, as arranged for the purchase of- $100,000 common stock, and assuming that the Mechanics’ Trust Company will remit $19,800 for the 198 shares K. U. preferred stock with interest, I will then be in your debt for immediate payment something over $6,000. Be kind enough to make up the account on this basis.” On the same day he wrote : “Please send to the Mechanic Trust Company of Louisville the 198 shares of Kentucky Union Land Company preferred stock, writing them that I have asked you to send it to them, and to return to you, as it is sold, paiv and 6 per cent interest from May 1st. The president of this company is' one of our little syndicate and the plan will be to work this off at earliest convenience.”

On the fourth of June the defendants replied that they had sent the 198 shares to the Mechanic Trust Company for sale at par and seven per cent interest, instead of six per cent interest, as mentioned by him. They also say : “ We have made up your account upon the lines indicated by you as far as possible, but we cannot, of course, anticipate the sale of the Land Company stock. We inclose a statement herewith showing a balance in our favor of $26,898.62.

“ We also enclose herewith a note for $50,000 at six per cent interest, due 1st November next. Please sign it and return it to us at your earliest convenience. This note is secured by 1,000 shares of Kentucky Union Land Co. stock, and by any other securities which we may hold for you. The balance of our advance, as arranged by you, would be secured upon the Land Co. Preferred stock without any margin. We have, therefore, decided to hold the Railway Co. Guaranteed Preference stock. After the explanations and assurances given to us when you were here, we must decline to believe that you are encountering difficulties in financing.”

On the twentieth of June Tod & Co. wrote to the plaintiff, asking for a return without delay of the note for $50,000. On the twenty-first of June the plaintiff writes Tod & Co.: “Having received only $10,000 from the $300,000 subscriptions, I have found it necessary to make two or three checks dated in July and payable at your office, for which, of course, you are not resjoonsible. I am positive that I can have the funds there by that time.”

On the 23d of June, 1890, the plaintiff writes to the defendants : “ Ih reference to the proposed note for $50,000, I do not see how I could pay it. My securities are so hypothecated that they are not available. When this transaction was pressed on me I stated that I thought I could dispose of it within six months, but the fact that the company is so largely in debt renders it impossible to sell here at this time. I make the proposition to you to exchange $50,000 of my preferred stock for this $100,000 of common stock. * * * I beg you to realize that this company is carrying a large floating debt, and while I am endorsing all its notes, it is not possible in so small a place as Louisville to make a market for this company’s stock until we have our financial affairs in better shape.”

On the twenty-sixth of June Tod & Co. replied to this letter. They say: “ Your apprehension of difficulty in meeting the promised note when it falls due constitutes no valid reason for neglect hitherto to sign and deliver it. Surely our treatment of you in the past would justify on your part some belief that we could grant indulgence when it was deserved and sought in good faith. 'We take exceptions to your remarks that the transaction was ‘ pressed ’ upon you. It was an ordinary business transaction, in which both you and we were free agents, and at the time it was entered upon you were confident the stock acquired by you could be sold readily at a good profit to the syndicate you proposed to create in Louisville. That you¡* expectations have so far been disappointed we regret very much, but we are simply amazed when you inform us that this is due to the fact that the company (we presume you mean the Land Co.) is so largely in debt.’ We do not suppose debt now exists of which you did not know during your recent negotiations with Mr. Oyens and ourselves, and we are, therefore, at a loss to understand you.”

On the same day the plaintiff writes to Tod & Co. : “I am pained to write that our financial position is in a climax. When Mr. Church balanced our books as of the first of April he found we would have a floating debt, after the preferred stock was taken, of something over $400,000, as you stated in your office on the morning of the first of May. The fears that you then expressed have been verified. The vouchers for grading and masonry for April, May and June, the bills from the country people for ties and trestle timber, the collection of small bills for supplies and iron fixtures, the back percentage of contractor's and other accounts for the railroad have brought this indebtedness to at least $100,000, and by July fifteentb it will be at least $750,000, and will probably cost at tlie lowest calculation still another hundred thousand to get the property in operation. * * * We cannot keep from protest longer than ten days, and this will precipitate ns into chaos.” Tie then states that he has talked the matter over for hours with the directors, and they could not see anything to relieve them except to make the best security the two companies could jointly make and try to realize among their friends as much as they could. • lie then asks the defendants to come there for a meeting which they would have on Thursday, or if they could not come on that day to put it off until Friday or even Saturday.

On the twenty-eighth of June the plaintiff writes a personal letter to the defendant J. Kennedy Tod: “ I addressed you a letter to-day as President which tells all there is to say about our unfortunate condition. I now wish to write to you a personal letter to say that I appreciate to the "fullest degree your unfortunate position in this matter and that I will do all I can as I always have done to protect the credit of the road or of your relations to it, and to urge upon you the necessity of cordial co-operation with us to do what can be done, because I have the firm belief that if you help me to sustain the credit of the Company with our associates here and in this community that I can float some security here which will pull usjhrough.” And again: “ You may be very positive that if I had believed the situation would come up as it is, I would not have put up my ,'$600,000 on preferred stock in that position, nor would I have been :a party to selling Mr. Oyens the common stock at 50, nor would I 'have hesitated a moment over declining to buy it myself at 50. * * Now, if you do not wish to be a party to this new security I will cheerfully stand up for its responsibility, and will make such explanation in regard to the extra cost on the road as I best can in order to account for the language of a letter which I never should have signed. When I wrote that I believed the Land Company had realizable cash assets, I believed that by sacrificing myself or my securities I could make such1 securities as the Land Company had available to carry that floating debt or to balance it. I was mistaken, honestly mistaken, and you were more nearly right than I when you expressed the fear you did. * * * If you wish to throw the responsibility entirely on me you need not come, and we will -use the best security we can, and, of course, offer it to all stockholders alike, and I feel confident I can place some securities here if we can keep our credit as it now stands. I would much prefer for you to come here; but if you think best not to come, we will go on as best we can, and in that event I will prepare letter for Oyens and others explaining extra costs of R. R., etc.”

On the thirtieth of June J. Kennedy Tod replies to this personal letter of the plaintiff : “ I received your personal letter of the 28th current this morning, and I telegraphed you that I would meet you in Louisville on Thursday as requested. The extraordinary situation which your letter records baffles me when I attempt to deal with it by letter, but there are some things you say which I desire to answer by record.

“ My brother did not, as you say, write that he declined to believe that you were in need of collateral.’ "Wliat my firm did say was that After the explanations and assurances given to us when you were here, we must decline to believe that you are encountering difficulties in financing.’

“ Had we known then, as we know to-day, for the first time, that large sums of indebtedness were concealed from our expert accountant, we would have understood your difficulty. * * * I protest against and resent your remark that if I do not give you more money ‘ we will both fall into positive disgrace in the eyes of the world.’ Knowing the facts as you do, it is simply silly. Having in good faith invested my own and my friends’ money in your enterprise, it is no more than my plain duty to come at once to Louisville and see what, if anything, can be done in a business-like way to protect them and myself, but I do not come to share any responsibilities which are primarily and exclusively yours, and I resent your seeming attempt to involve me in them.”

On July third the plaintiff wrote in answer to this letter: “ I regret very much to have used the word disgrace ’ in regard to you and myself in my personal letter of the 28th. I did not give the meaning to the word which you seem to take. I should have used the word ‘ humiliating,’ as you will readily see when you remember that I apply the same word to myself. In any event I regret to use the word, and assure you I have no meaning in it but that of humiliation from what I feared would be a calamity to both.”

In August the plaintiff made additional application for money, trying to borrow $200,000 for bimself, which was refused, and also applying to borrow money for the land company. Finally, on or about the 5th of September, 1890, it was agreed, after considerable negotiations, that Tod & Co. should advance the money, the plaintiff pledging certain securities and agreeing that all the money borrowed should be advanced by him to the land company. It was also agreed that the plaintiff should have an extension of time on his personal account, the amount of such personal account being calculated at $70,533.11, being made up of the $50,000 claimed to be due from the plaintiff for the common stock of the land company, which he had taken on the first of IVIay at fifty, and the amount of $19,500, being the balance of the $200,000 of land company preferred stock which the ¡Dlaintiff had been unable to sell, and which the defendants charged to him as upon a sale of stock with accrued interest. It was also agreed that the plaintiff should have his securities back, provided he paid within one year any notes outstanding of the land company, being part of said $200,000, and his note for $70,533.47, which he had given, dated September 9, 1890, to represent that amount and the additional sum of $50,000. The transaction was agreed upon on that basis, and subsequently an agreement embracing the same was signed sometime in November, 1890.

In 1892 this action was brought to set aside this transaction of September, 1890, upon the ground that the transfer of the securities by the plaintiff to Tod & Go. was without consideration, and was extorted by said Tod & Go. from the plaintiff by compulsion and duress, and by the pressure of the circumstances under which they were executed, and were usurious and invalid and void.

The defendants answered, denying the extortion and usury, and counterclaiming the amount of the notes held by them against the plaintiff.

Upon the trial the court held that the contract referred to was not without consideration and was not extorted; neither were the notes extorted from the plaintiff; and that although said agreement of September 8, 1890, and the said notes dated September 9, 1890, were affected by usury, they were not void on account of such usury or any other ground alleged in the complaint, but that said notes were enforcible only to an amount in the aggregate of $69,500, and from this judgment the plaintiff appeals.

It is urged upon the part of the plaintiff that the transaction should’ be set aside by a court of equity as inequitable and oppressive, and as extorted by Tod & Co. from Carley under the pressure of his financial difficulties; and it is claimed that the contract in question will be set aside as so oppressive and rapacious that it cannot be tolerated by a court of equity. .

It may be a question, upon a consideration of the whole of this evidence, as to who lias been the greatest victim under the arrangement. There is no doubt that the plaintiff is of the opinion that Tod & Co.-drove a hard bargain with him because of his pecuniary necessities. But it may be equally well claimed upon the part of the defendants that the plaintiff had made misrepresentations to them in regard to the success of the enterprise, and had concealed the true condition of its indebtedness in order that he might induce them to embark their moneys therein. The correspondence shows that glittering promises were held out by the plaintiff to these defendants to induce them to go on with the enterprise, and then its sudden collapse occurred because its indebtedness was so much greater than that which the plaintiff had represented. The argument of the plaintiff in support of his contention seems to be based upon the claim that because the defendants had large pecuniary interests in this enterprise, therefore they were bound to go on advancing money upon terms to be dictated by the plaintiff in onder that they might not both be involved in the common ruin. In all these transactions the plaintiff was a free agent, and the necessitous condition in which he found himself seems to have been largely due to the fact of his shutting his eyes to circumstances in respect to which he had full knowledge, and of which the defendants were not made aware. Necessitous situations upon the part of a borrower always enable a lender to make a hard bargain, and the defendants, in their negotiations in May and September, 1890, seemed to have availed themselves of their situation. But there was nothing in their conduct which would enable the court to say that they had been guilty of fraud or of such conduct that they should be required to lose the money which they had advanced to this plaintiff and his enterprises in good faith.

It is claimed that the burden of proof was upon the defendants to establish that this contract was fair and equitable, and that no undue advantage was taken of the plaintiff in exacting it from him. And this proposition is sought to be upheld upon the ground that the relations between these parties were those of trust and confidence ; that they were partners in this enterprise; that Tod & Co. were trustees and that the plaintiff was a cestuÁ que trust, and that, * therefore, they occupied fiduciary and confidential relations to each other. But even if this claim should be admitted there is no doubt that Carley deceived the defendants in regard to the situation of this property, and the results of that deceit were the placing of the enterprise in the necessitous straits which brought about these demands for additional loans. If the defendants occupied a trust relation to the plaintiff, certainly the plaintiff occupied a trust relation to the defendants, and he was bound as well as they to the utmost good faith in respect to the transactions which were undertaken between them. Now, he admits in his own letter that he had misrepresented the situation of this property, and that their accountant was right in regard to its financial condition, which he denied in May at the interview when he was desirous of getting the defendants to continue their advances in order that he might meet the obligations of his company. But there was no such relation. The parties were dealing at arms’ length. The defendants were making the best bargain they could in their dealings with the plaintiff, and the plaintiff was making the best bargain he could with them, even inducing them, by his concealment of the condition of the company, to make the advances which they did,- believing, as is argued by his counsel, that they were so deep in this enterprise that they could not withdraw. But the fact that they were in so deep and could not get out without loss was certainly no ground, as is claimed by counsel, which justified the plaintiff in claiming that they must necessarily go on and that they were estopped from not putting additional money into the enterprise.

It is to be observed in regard to the transaction of the 1st of May, 1890, that continuously thereafter in all his intercourse with the defendants, there is no word of complaint in regard to that arrangement or agreement. The first time that the plaintiff made any complaint was on the 23d of Tune, 1890, when he wrote to the defendants tbat the transaction was pressed on him, Tod & Co. talcing exceptions to the remark and calling attention to the fact that it was an ordinary business transaction in which they both were free agents, and at the time it was entered upon by the plaintiff he was confident that the stock acquired by him could be sold rapidly at a good profit to the syndicate he proposed to create in Louisville. And then the defendants called attention to the fact that they regretted that his expectations had been disappointed, but that they were amazed when he informed them that the land company was largely indebted, and that he must have known its condition when he induced them and their associates to make the additional advances of money,, etc.

The plaintiff was at perfect liberty to decline these negotiations, but he was fearful lest Tod & Co. should not exercise their option and disaster result; and he used all his efforts to induce them to go further into the enterprise, and, if they desired additional profit, it is not uncommon practice amongst money lenders. If negotiations of this kind between grown-up men are to be set aside, upon the ground that a man sells too cheap because he wants to realize the money, and the other man will not give, him more for his property because he knows that he is in necessitous circumstances, commercial transactions might as well cease, because it would be impossible to tell when contracts were made whether they would not be set aside upon the ground that one party had taken advantage of the other.

It is further urged that the notes given by the plaintiff to Tod & Co., dated September ninth, aggregating $10,533.47, were without consideration. But this claim is dependent upon the proposition that Tod & Co. were already bound to do everything which they did do on the 1st of May, 1890, and that agreements had been made between the plaintiff and the defendants definite in their terms, by which they were bound to exercise their option on the 1st of May, 1890, and to do various other things not necessary to specify. As already shown in the statement preceding this discussion, there is no evidence of any agreement entered into at the time of Northcote’s visit to Louisville. It was all tentative; propositions merely. It is true the plaintiff went on to prepare himself to carry out such an agreement if entered into, but there is no evidence that any binding agreement was made in March, or at any time prior to the 1st of May, 1890, between these parties in respect to the matters which formed the subject of the agreement of that date. It is.true the plaintiff speaks of agreements, but when he goes on to state what took place the evidence of agreement vanishes. It was simply his construction. It is inconceivable that in April they should be negotiating in regard to the terms of an agreement to be executed in May, if such an agreement had already been entered into verbally and its terms were definitely understood. We find, as already stated, negotiations being had between these parties in April in reference to the form of agreement and suggestions made by the plaintiff in his own handwriting as to what the agreement should contain. He seems to have come to New York in April for that purpose and to have stayed some time. He then comes back in May, 1890, it being absolutely necessary for the safety of the enterprise that the defendants should exercise their option on the first, and then the bargain is made which is now impeached — a bargain which resulted in the owing of the amount which formed the basis of the notes. As an additional evidence of the fact that there was no previous agreement, and that all that was done on the first of May was not without consideration, the fact apjiears that when Tod & Co. demanded their note for $50,000, which was agreed to be given, the plaintiff did not say he did not owe it, but simply that he could not pay it, and, therefore, he did not want to give the note.

It is further urged that the contracts of September 8, 1890, were void because the circumstances under which they were entered into amounted to duress. What has already been stated upon the subject of duress in respect to the agreement of the 1st of May, 1890, is equally applicable to that of September 8, 1890. The plaintiff wanted $200,000. It was absolutely necessary for this enterprise that he should obtain that money, and he agreed to pay for it, and to give pledges for its repayment he put up his securities as collateral to this advance and to pay the seventy odd thousand dollars and a bonus of $50,000. As the court says, there is no question about the fact that this transaction was usurious, and that so far as the interest and usury were concerned no recovery could be had ; but that the defendants could recover the $69,500 which the plaintiff owed to them growing out of the transaction of the 1st of May, 1890.

Tbe learned counsel for respondents claims that tliere was no usury in respect to this transaction, but it seems to us that it stands out upon the transaction as prominently as any agreement in it, and no proof of its existence is necessary but the agreement itself; and that the defendants were so advised clearly appears by the evidence. The court, however, held that these transactions were not void for usury because of the provision of the Banking Act (§§ 68 and 69, chap. 409, Laws of 1882) applicable to this case, the defendants being private bankers, an<J the law as it existed at the time of these transactions exempting private bankers from forfeiture of principal on account of usury. That the act in question "applied to ■private bankers seems to have been decided in the case of Perkins v. Smith (116 N. Y. 444), and the learned counsel for the appellant .admits that if this decision of the Second Division of the Court of Appeals is conclusive upon this court, it is unnecessary to discuss it here; but he submits, if this court can consider the question, that “the act never could have been intended to apply to a mere private banker, but was intended to apply to that class of bankers whose husiness is similar to that of National or State banks. In answer to “this suggestion we may say that as we entirely approve of the decision of the Second Division of the Court of Appeals upon this point we shall deem it conclusive upon us. The language of the act seems to be too plain to admit of discussion.

The judgment should be affirmed, with costs.

PARKER and O’BrieN, JJ., concurred.

Judgment affirmed, with costs.


source: Caselaw Access Project

author: O’BeieN, J.:

license: Public Domain

text:
    Moffett, Hodgkins & Clarke Company, Respondent, v. Peoria Water Company, Appellant.

      Motion to dismiss an action on the ground of the plaintiff’s laches — decision thereof not disturbed — questions that will not be considered before the pleadings are served.

    "Where a motion to dismiss an action is predicated upon the laches of the plaintiff therein, which the plaintiff endeavors to explain upon the motion, the determination whether such explanation is sufficient rests in the discretion of the court in which the motion is made, and its conclusion will not, ordinarily, he disturbed.

      Upon a motion made by the defendant in an action to dismiss the same, the court, until it is in a position to know just what the action is about, and what objections there may be thereto, is under no obligation, where no complaint has been properly served, to determine the questions which properly arise on the pleadings.
    Appeal by the defendant, the Peoria Water Company, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 31st day of October, 1894, granting the defendant’s motion to dismiss the action, unless the plaintiff serve a cojiy of its complaint, and substituting the plaintiff’s receivers as parties plaintiff.

      John, M. Shedd, for the appellant.

      Joseph A. Arnold, for the respondent.
   O’BeieN, J.:

The motion was made by defendant to dismiss the action and the-summons herein, which was granted, “unless the plaintiff serve-upon the attorney for the defendant a copy of its complaint, substituting the Receivers of the plaintiff as parties,” and upon payment of costs, and leave was granted to the receivers to be substituted in the place and stead of the above-named plaintiff.

The appellant insists that the motion should have been granted absolutely and unconditionally because of the laches of the receivers-of the plaintiff in the prosecution of the action.

It appears that the summons was served on April 6, 1893, and that thereafter the defendant ‘duly served its notice of appearance. By failing properly to serve an order extending the time to serve a-complaint the plaintiff was in default, and, notwithstanding such default, served a complaint, which was promptly returned. Between the service of the summons and the time of the default receivers, of the plaintiff were appointed in this State, and a receiver of the defendant corporation appointed in the State of Illinois. On the motion, the plaintiff presented an affidavit explaining the laches, and asking that if in default such default should be opened, and that the complaint already served, but returned by the defendant, be permitted to stand, or that it should be allowed to serve a new complaint.

The motion to dismiss having been predicated upon the laches of the plaintiff, which it endeavored to explain, it was a matter within the discretion of the court to determine whether such explanation was sufficient, and we do not think that the conclusion reached should be disturbed.

This would dispose of the appeal were it not for an objection made by the appellant, whose principal grievance is that, inasmuch as by the affidavit used on this motion it is alleged that at the time of the commencement of the action both plaintiff and defendant were foreign corporations, and that the action itself was not one which under section 1780 of the Code of Civil Procedure is allowable, this consideration, going to the jurisdiction of the court to entertain the action, should have been controlling upon the judge at Special Term in having him dismiss the action absolutely and without conditions.

As the case stood, no complaint was duly served, and all that was properly done in the action was the service of a summons ; and upon a motion of this kind, until the court is in a position to know just what the action is about, and what objections there may be thereto, it is under no obligation, in the absence of the pleadings, to determine questions which properly arise thereon. By permitting the substitution of the proper parties plaintiff and the service of a complaint by the receivers, the defendant has lost no rights or defenses. What the court did was to dispose of the question of whether or not the action should be dismissed for laches, bringing in the proper parties plaintiff, and directing them to serve their complaint, reserving to the defendant all its rights and defenses, which in a proper way can be presented, when, with the complaint or pleadings before the court, it can dispose in an orderly manner of any questions then raised.

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

YaN BkttNt, P. J., and Pabeeií, J., concurred.

Order affirmed, with ten dollars costs and disbursements.


author: BbowN, P. J.:

text:
    Jacob A. Perkins, Respondent, v. The City of Poughkeepsie, Appellant.

      Negligence — evidence as to the condition of a street subsequent to an accident— judgment not reversed where the ground of competency of rejected evidence is not stated.

    Upon the trial of an action brought to recover damages resulting from personal injuries sustained by the plaintiff in the month of August, 1892, while riding in one of the public streets of a city, by reason of the alleged negligence of such city in allowing a hole to remain in such street, the condition of the street at the time of the accident was a question in issue.

      Held, that testimony offered by the defendant to show the condition of the street in April, 1893, was inadmissible in evidence.
    Upon excluding such evidence the court said that if there had been any testimony given on the direct examination of any of the plaintiff’s witnesses as to the condition of the street in 1893 the evidence would be admitted, and it appeared upon appeal that one of the plaintiff’s witnesses upon her direct examination testified that the hole existed in 1893.

      Held, that the judgment rendered in favor of the plaintiff should not be reversed because thereof.
    The defendant claimed that the testimony offered was admissible for the purpose of contradicting the plaintiff’s witnesses.

      Held, that he should have called the court’s attention, when the ruling was made, to the fact that such evidence had been given by the plaintiff’s witness upon the trial.
    Appeal by the defendant, The City of Poughkeepsie, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Dutchess on the 27th day of June, 1894, upon the verdict of a jury, rendered after a trial at tbe Dutchess Circuit, and also from an order made on tbe 20th day of June, 1894, and entered in said clerk’s office, denying tbe defendant’s motion for a new trial made upon tbe minutes, witb notice of an intention to bring up for review upon sucb dppeal all questions of fact and law arising upon tbe trial, tbe judgment and tbe motion for a new trial.

      O. B. Herrick, for tbe appellant.

      Frcmk B. Bown, for tbe respondent.
   BbowN, P. J.:

This action was brought to recover for injuries received by tbe plaintiff while riding on one of the public streets of tbe city of Poughkeepsie.

'While being conveyed to his home a hired cab in which be was riding was driven into a bole, and the plaintiff thrown from bis seat and so jolted and shaken as to inflict serious injury upon him. There was evidence from which tbe jury were permitted to find that the hole had existed for a long time previous to the accident, and the negligence of tbe city in reference to it was established.

The principal question of fact litigated upon tbe trial was as to tbe existence of tbe bole. The plaintiff supported his allegation by his own testimony and that of the cab driver and several other witnesses. Opposed to this testimony was that of fifteen residents upon the street, among them several who drove over it, and all of whom had opportunity to observe its condition, that they never had seen tbe bole described by plaintiff’s witnesses. Tbe accident happened in tbe month of August, 1892.

Tbe defendant called a witness to prove tbe condition of tbe street in April, 1893, which evidence the court excluded upon the plaintiff’s objection. This evidence was clearly inadmissible as it bad no tendency whatever to show that tbe hole did not exist in August, 1892.

In excluding it, however, tbe court said that if there had been any testimony given upon the direct examination of any of tbe plaintiff’s witnesses as to tbe condition of tbe street in 1893 be would admit tbe evidence. ,

It is apparent from the ruling of the court that it was not aware that any such testimony had been given, and the plaintiff’s counsel was evidently of the same opinion, as his ground of objection was that he had been restrained from proving the existence of the hole in 1893.

The counsel for the appellant now calls our attention to the testimony of Mrs. Baker and Mr. Mills that the hole existed in 1893. The fact was called out from the latter witness on cross-examination and does not aid the defendant’s contention, and in reference to Mrs. Baker’s testimony, if the counsel claimed that the evidence he offered was admissible to contradict her, he should have called the court’s attention to it when the ruling was made. The court distinctly stated that it would admit the evidence if any of plaintiff’s witnesses had testified in the direct examination to the condition of the street in 1893, and the defendant, by failing to call the court’s attention to Mrs. Baker’s evidence, must be deemed to have waived that ground for its admission.

The point in the case was as to the condition of the street at the time of the accident. Its condition in the spring of 1893 had no relevancy on that issue, and the ruling of the court was right.

. No other question requires discussion, and the judgment and order should be affirmed.

Dykman and Cullen, JJ., concurred.

Judgment and order affirmed, with costs.


author: Brown, P. J.:

text:
    Jacob Hauptmann and Another, as Administrators, etc., of John Hauptmann, Deceased, Respondents, v. The First National Bank of the City of Brooklyn, Appellant.

      Bank deposits from two or more sources- — payments therefrom, how chan'ged — right of a sole executor and legatee to a deposit in his testatrix’ name — such right vests in his administrator —recovery of a deposit from a bank— burden of proof— prima facie case.

    If, in an action brought against a bank for money bad and received, tbe object of which is to obtain tbe payment of a debt alleged to be due tbe plaintiff from tbe defendant, tbe account to which the money sought to be recovered was credited by the bank is made up of deposits from two or more sources, tbe title to only one of which is questioned, the law applies the payment, made by tbe bank, of checks drawn upon such account to the reduction of that part of the account which is made up of deposits not in dispute, and leaves those deposits which are in question so far as practicable unimpaired.
    The executor and sole legatee of a testatrix has the legal title to the whole beneficial interest in the deposit of moneys of the testatrix in banks, subject only to the payment of debts of the testatrix; and upon the death of such, sole executor and legatee, the title to the fund passes to his administrators.
    The burden of proof rests upon the plaintiffs, in an action brought to recover of a bank the amount of a deposit standing in the name of a third person, but a prima facie case is made out if it appears that one-half of the fund had, previous to the death of the plaintiffs’ intestate, been deposited in a savings bank by the intestate and stood in his name, and that the intestate had acquired title to the other half under the will of another person, and that the money was in his possession at the time of his death, but subsequently thereto had been deposited in the name of a third party in the defendant bank.
    Appeal by the defendant, The First National Bank of" the Oity of Brooklyn, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of Kings on the 21st day of February, 1894, upon the verdict of a jury rendered after a trial at the Kings County Circuit, and also from an order, entered in said clerk’s office on the 20th day of February, 1894, denying the defendant’s motion for a new trial made upon the minutes.

      Joseph A. Burr, for the appellant.

      George U. Pettit, for the respondents.
   Brown, P. J.:

The complaint in this action, after setting forth the incorporation of the defendant, the death of John Hauptmann and the appointment of the plaintiffs as the administrators of his estate, alleged that one John Ernst had deposited with the defendant the sum of §15,000 with instructions that the same should be held for the account of the Church of the Annunciation, a domestic corporation, and that defendant had received said sum of money and placed it to the credit of said church.

That said money was the property-of said John Hauptmann in his lifetime and was a part of his estate, and that the title thereto was vested in the plaintiffs as his administrators.

It further alleged that plaintiffs had notified defendant of their ownership of said fund, and had demanded payment thereof, which had. been refused, and contained the usual prayer for judgment for the sum named with interest.

The answer put in issue the death of John Hauptmann and the appointment of the plaintiffs as administrators of his estate, and the ownership of said money by Hauptmann in his lifetime and the plaintiffs’ title thereto.

As a further defense it alleged the deposit by Ernst and instructions to credit the same to the account of the .Church of the Annunciation, and the payment of checks and drafts to the amount of $8,289.42, drawn by said church upon the defendant before it was notified of the ]ilaintiffs’ claim.

It appeared upon the trial that, prior to the demand of the plaintiffs upon the defendant, there were other deposits made by said church, and credited generally to its account upon the defendant’s books, and that the fund deposited by Ernst had not been specially appropriated to the payment of the drafts aforesaid, but they had been charged generally to the account of the church, and that, after deducting them from the total credits, there remained a balance to the credit of said church of $12,032.J8.

The identity of the money held by the bank at the commencement of this action with the original deposit of $15,000 is of no importance in this controversy.

The action is for money had and received. Its object was to obtain payment of the debt due to the plaintiffs from the defendant. But it is of an equitable character, and when the account is made up of deposits from two or more sources, the title to only one of which is questioned, the law applies the payments made by defendant of checks drawn upon the account to the reduction of that part which is made up of deposits not in dispute, and leaves those deposits which are in question, so far as practicable, unimpaired. (Importers & Traders' Nat. Bank v. Peters, 123 N. Y. 272.)

The defendant would have been fully justified in making such application of the payments itself, and in so doing would not have violated any rule of law or equity, nor impaired the rights of the church, and if it had chosen so to act the case would have been one in which an order of interpleader would have been proper, and the defendant might have relieved itself from liability by depositing the balance of the account in court, and left the title to the fund to have been determined in an action between the plaintiffs and the Church of the Annunciation. It elected, however, to defend the action against the plaintiffs’ claim, and if it now finds that it is liable to an action by the church for the same fund its embarrassment is the result of the course it pursued.

Upon the pleadings the only issue was one of fact, and the material question was whether the money deposited by Ernst belonged to John Hauptmann at the time of his death.

We are of the opinion that the evidence made a case for the jury.

Father Hauptmann died on June 10, 1891. For twenty-seven years prior to his death he had been the pastor of the Church of the Annunciation. Up to June 4, 1891, he had on deposit in three savings banks in the city of Brooklyn, in six separate accounts, the sum of $18,000.

One-half of this amount, or three of the accounts, had originally stood in the name of Maria Hausman, who had been a housekeeper for the deceased, and who had inherited some property from her relatives.

She died in October, 1889, leaving a last will and testament, by which she appointed Father Hauptmann sole executor, and bequeathed to him all her property.

Father Hauptmann, soon after the admission of the will to probate, had one of the accounts, amounting to-$3,000, transferred to his name, and at the time of his death the other two stood in his name as executor. The other three accounts had always been in Father Hauptmann’s name.

On June 4, 1891, all the money on deposit in the several banks to the credit of the six accounts was paid to John Ernst upon drafts drawn by Father Hauptmann and payable to bearer. At that date Hauptmann was sick, and on the following day he went to Hurley-ville, in Ulster county, where he died on June tenth.

Ernst was an assistant to Hauptmann, and his account of the transaction was that Hauptmann said the money all belonged to the church, and directed him to deposit it immediately to the credit of the church in the Manufacturers’ Bank.

This he neglected to do, and it remained in Father Hauptmann’s house (about $6,000 of it in a drawer in his sleeping room and the balance in a bookcase) until after liis death, when Ernst deposited $15,000 with the defendant. Of the balance, $2,000 was paid to a monastery in Pennsylvania for masses, and $1,000 for a vault for the interment of Hauptmann’s remains, both of these payments having been made by Hauptmann’s direction.

It would serve no useful purpose to discuss here the evidence in detail. Discussion of testimony in a j udicial opinion is seldom profitable, and we shall attempt only to state our conclusions from a careful reading of the case.

In reading the evidence two facts are prominent: First. There is absolutely no ground for the claim that the whole fund deposited in the several banks was the property of the church.

Hauptmann’s direction to pay from it $3,000 for masses and for a vault for his body is conclusive that he claimed ownership of a part of it.

Second. There is no reasonable doubt but that a very substantial part of the fund belonged to Hauptmann.

Nine thousand dollars came to him through Maria Hausman’s will. In that instrument the testatrix mentioned specifically “ all my money in the banks.” The will bears date August 12,1874, and at that date the testatrix had on deposit in two of the savings banks about $5,500. After the date of the will the accounts increased by small deposits and credits of interest to the sum of $9,000.

There is no testimony that even suggests that the church had any interests in these deposits, or that Maria Hausman’s interest therein was other than an unqualified ownership thereof.

As executor and sole legatee Father Hauptmann had the legal title to the whole beneficial interest in the-several deposits, subject only to the payment of the debts of the testatrix (Blood v. Kane, 130 N. Y. 517), and upon his death the title to the fund passed to his administrators.

"With reference to- the fund deposited in Hauptmann’s individual name, the evidence that any of it was the property of the church is of a meager character.

It consists wholly of alleged admissions by Hauptmann that it was church money. But no statement to that effect was ever made by Hauptmann to any person entitled to. inquire for the church, or who represented it in any way, and none of. the alleged admissions were of such a character that they would work an estoppel against him.

The cashier of one of the banks testified to the deposit of church moneys to the individual credit of Hauptmann and of his.advising him to separate the church funds from his own money, and it appears that he followed this advice as to money belonging tó three church societies.

The cashier does not, however, identify any deposit as that of church money, and his testimony is of little value in substantiating the claim that any of it was the property of the church.

An unsigned memorandum in Hauptmann’s handwriting was produced by the defendant’s counsel that tends to identify two deposits in the Dime Savings Bank of the dates of December 29, 1881, and January 10, 1888, amounting to $900, as being church money.

But no explanation of this paper was offered. "We are not-informed as to its history or where it was found or how defendant became possessed of it. 1

Of course it was not conclusive. The jury were entitled to consider it, and give it such weight as it deserved. "We attach little importance to it.

The case is, however, more suggestive in what the defendant omitted to prove than in what it did prove.

Of course it was not necessary to its defense to show that the fund belonged to the church. It could rest its case on the weakness of the plaintiffs’ evidence. The burden of proof rested upon the plaintiffs to show that the money belonged to Hauptmann at his death. But a prima faoie. case was made when it appeared that one-half of the fund had been deposited in the savings bank by Hauptmann and stood in his name, and that he had acquired title to the other half under Maria Hausman’s will, and that the money was in his possession at the time of his death.

The presumption of ownership from these facts was not at all weakened by the fact that the fund had been on deposit with defendant in the name of the church for more than a year before this action was commenced.

That deposit was shown to have been made after Hauptmann’s death by Ernst., who in no respect represented his estate, and who had no authority to dispose of the money.

The conclusion to be drawn from Ernst’s evidence ivas that the possession of the money after it was drawn from the bank was in Hauptmann and not in Ernst, and all instructions as to depositing it which had been given to Ernst were nullified by Hauptmann’s death.

The plaintiffs had, therefore, made a case upon which the conclusion was permitted that the money, at the time it was deposited with defendant, belonged to Hauptmann.

• The only other possible theory under the pleadings and evidence was that it belonged to the church.

It appeared that there were books of account of church funds, and that they had been delivered to the pastor who succeeded Hauptmann. Ernst had taken possession of all of Hauptmann’s papers.

"Why were not these books or papers produced ? If the church possessed any money of which Hauptmann had been the custodian there surely must have been some record of it, or there must have been some officer or trustee who had some knowledge of it. But no record of the church was produced, and no witness connected with it was called, and the omission of all evidence from such sources is suggestive of the fact that none existed, and that the claim that the money belonged to the church was a sham. It is impossible to believe that if Hauptmann had several thousand dollars belonging to the church in his possession at the time of his death some other person connected with the corporation would not have known of it. And it is equally incredible that, if such evidence was available to the defendant, as it must have been if the claim of the church was well founded, it would not have been produced upon the trial.

¥e are of the opinion, therefore, that the verdict has ample support in the testimony.

There is in the evidence a suggestion of a gift of the fund to the church. I understand any such claim to be now abandoned by the learned counsel for the appellant.

But the question was submitted to the jury, and they have found against it.

The court instructed them that, if the money belonged to Father Hauptmann, and was drawn from the savings banks and Ernst, instructed to deposit it in the Manufacturers’ Bank for the church, and if it was deposited pursuant to that direction, tbe plaintiffs could could not recover.

The defendant has no reason to complain of this instruction.

I do not think the evidence would support the claim of a gift. There was no delivery to the church or to any one in its behalf. It was not delivered to Ernst for the church, and if not to him, then in legal contemplation it was always in Hauptmann’s possession.

Ernst testified on this subject as follows: “ When I got back to the house with the money I handed it over to him (ITauptmann), and he said, ‘Well, where will we put it; where will we put it in order that it may be safe ? ’ And he put some in his bookcase and some in a regular drawer where money was left. * * * These places had a lock and key; the key w’as placed somewhere where I knew — I didn’t have the key in my possession.”

The money remained thus until Hauptmann’s death.

Upon this evidence there could be no question but that it was under the control of Hauptmann and subject to his direction, and this disposition of the fund negatives any idea of a delivery to the church.

The judgment appealed from is not binding upon the church, and if it has any valid claim to any part of this fund, it may be hereafter presented to the administrators and determined in the manner provided by law for the adjustment of claims against the estate of deceased persons.

We have examined the exceq>tions taken upon the trial, and there are none which call for a reversal of the judgment or which require to be noticed.

The judgment must be affirmed.

DyKmaN and CulleN, JJ., concurred.

Judgment and order affirmed, with costs.


author: BeowN, P. J.:

text:
    Thomas I. Storm and Others, as Trustees of School District No. 5 of the Town of East Fishkill, Respondents, v. New York and New England Railroad Company, Appellant.

      Eminent domain■ — equity action to restrain a railroad company from, maintaining’, its tracks on plaintiff’s land —findings as to the difference in mine of land with^ and without the raib'oad — judgment for da/mages modified.

    The answer in an action, brought in equity against a railroad company to restrain it from using its tracks laid across land claimed to be owned by the plaintiffs, to compel the removal of the same and to recover damages for the trespass, prayed that, in case the complaint was not dismissed, the court would fix the amount which the plaintiffs were entitled to recover for past and future damages, and that on the payment thereof the plaintiffs should be decreed to deed to the defendant the land occupied by it — the subject of the action.

      JBeld, that a finding by the court, that the difference in the value of the land, with and without the railroad, was a certain amount, was within the issue formed by the pleadings ;
    That a judgment rendered in such action, in favor of the plaintiffs for that amount, with a provision that if that amount was not paid the plaintiffs might bring an action of ejectment against the defendant for the recovery of the land, would, upon an appeal therefrom, be modified by tlie General Term so as to provide that upon payment of the damages within thirty days after service of a copy of the judgment, the plaintiffs should convey to the defendant the land occupied bjr it by deed to be approved by a justice of this court, and that in case the damages were not paid in that time the plaintiffs should have leave to maintain an action of ejectment to recover the land.
    Appeal by tbe defendant, tlie New York and New England Railroad Company, from a judgment of tbe Supreme Court in favor of the plaintiffs, entered in the office of tbe clerk of tbe county of Dutchess on the 29th day of December, 1893, upon the decision of the court rendered after a trial at the Dutchess Special Term.
    The judgment in this case directed that the plaintiffs recover from the defendant the sum of $1,500 damages, besides the sum of $215.35 costs as taxed, making in all the sum of $1,715.35.
    . It was further ordered and adjudged tliat if this judgment was not paid by the defendant, that the said school district or the trustees of said School District No. 5 of the town of East Fishkill were authorized and empowered to bring and maintain an action of ejectment against the defendant for the land unlawfully taken and occupied by tbe defendant for its tracks and for tbe purposes of its railroad.

      Walter O. Anthony, for tbe appellant.

      Haekett (& Williams, for tbe respondents.
   BeowN, P. J.:

Tbis action was brought in equity to restrain tbe appellant from using its tracks across land claimed to be owned by the plaintiffs, and to compel tbe removal of tbe same, and to recover damages for tbe trespass.

In its answer tbe defendant prayed that, in case tbe complaint was not dismissed, the court would fix tbe amount which plaintiffs were entitled to recover for past and future damages, and direct that on payment thereof the plaintiffs be decreed to deed to defendant tbe lands occupied by it, and which were tbe subject of tbe action.

Tbe case was brought‘to trial at Special Term, and tbe court found that tbe difference in tbe value of the land, with and without tbe railroad, was $1,500, and it awarded plaintiffs judgment for that sum and costs, and provided that, if it was not paid, tbe plaintiffs might bring an action of ejectment against defendant for the land.

Tbe appellant does not now dispute tbe plaintiffs’ title or claim that tbe damages are - excessive. Its claim is, that tbe court should have assessed the damages as for a trespass solely, and that tbe award of tbe value of tbe land taken was erroneous. The facts decided by tbe court were within tbe issue made by tbe pleadings, and if tbe proper judgment bad been rendered tbe appellant would have no cause for complaint. Tbe court has power, upon tbis appeal,, to modify tbe judgment and conform it to tbe facts proven, and this should now be done. Tbe judgment should be modified so as to provide that, upon payment of tbe damages within thirty days after service of a copy of tbe judgment, plaintiffs convey to tbe defendant by deed, to be approved as to form by a justice of the court, tbe land occupied by it, and that in case tbe damages are not paid within the time aforesaid, that plaintiffs have leave to maintain an action in ejectment to recover tbe land, and, as so modified, the judgment should be affirmed, without costs of appeal.

DyKMAN and CulleN, JJ., concurred.

Judgment modified so as to provide that, upon payment of the damages within thirty days after service of a copy of the judgment, plaintiffs convey to defendant the land occupied by it by deed, to be approved by a justice of this court, and in case the damages are not paid within thirty days, plaintiffs have leave to bring an action of ejectment. So modified, the judgment is affirmed, without costs.


author: Brown, P. J. :

text:
    George Pearson and Another, Respondents, v. George H. Germond and Another, Appellants.

      Summary proceedings to recover the possession of real estate — counterclaim of dmnages to stock in trade, through landlord!s negligence.

    The injury to a tenant’s stock in trade, sustained by reason of the failure of the landlord to promptly repair the leased premises in conformity with the provisions of the lease thereof, cannot be made a subject of counterclaim in summary proceedings brought to remove the tenant for the non-payment of rent, although it might be made the subject of counterclaim in an action brought to recover the rent.
    Tenants have their election either to pay the rent or to restore possession of the demised premises when demanded, and the question to be determined in summary proceedings brought to recover the posssesion of real property, the answer to which controls the decision of the court, is, is there any rent due under the lease, and if there is, no matter how small the amount, then the landlord -is entitled to the xsossession of the premises. ■
    Appeal by the defendants, George H. Germond and another, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of Rockland on the 2d day of July, 1894, upon the decision of the court, rendered at the Rockland Special Term, reversing the judgment of a justice of the peace of the town of Orangetown, Rockland county, with notice of an intention to bring up for review upon such appeal the order of reversal entered in said clerk’s office on the 29th day of May, 1894.

      Arthur 8. Torrvpkins, for the appellants.

      Ohas. P. <& William W. Buckley, for the respondents.
   Brown, P. J. :

This was a summary proceeding commenced before a justice of the peace to dispossess the appellants from the possession of real estate for the non-payment of rent.

The justice dismissed the proceeding and the landlord having appealed, the case came into this court, on account of the disqualification of the county judge to hear it, where the judgment of the justice of the peace was reversed.

The appellants occupied property under a written lease at a yearly rent of $800, payable quarterly in advance on the 1st days of January, April, July and October. The petition alleged non-payment ■of the rent due October 1, 1893. The answer denied that any rent was due, and pleaded a clause in the lease, which provided as follows:

And the said parties to these presents further agree to and with ■each other, that in case of any damages to the greenhouses on said premises, which shall be'caused by.storm or fire, and which shall ■exceed the sum of fifty ($50) dollars, the said parties of the first part ■shall be bound to repair the same as expeditiously as possible, or deduct rents for the house damaged until the same shall be properly repaired by them.”

And the appellants alleged that on or about April 20, 1893, the said greenhouses had been damaged by rain and wind to an extent •in excess of fifty dollars, and that the landlord had neglected to Repair the injury.

They also alleged that owing to the failure of the landlord to repair said houses they had suffered damages by reason of injury to their stock of plants in excess of $200, and that by reason of those facts no rent was due under the lease.

The injury to the appellants’ stock of plants and flowers sustained by reason of the failure of the landlord to promptly repair the greenhouses, could not be made a subject of counterclaim in this proceeding, although it might be such in an action to recover the rent.

When tenants have taken possession of demised property and become vested with the term, they cannot refuse to pay the rent and retain possession of the premises against the claim of the landlord.

They have their election to pay the rent, or restore the possession when demanded. (People ex rel. Ward v. Kelsey, 38 Barb. 269.)

The question in a proceeding of this character, the answer to which controls the decision, is, was there any rent due under the lease ? If there was, no matter how small the amount, then the landlord is entitled to the possession of the premises.

In this proceeding it appears that the greenhouses were damaged in April, 1893, and were not fully repaired on October first, but with the exception of what is called the mushroom house, and the packing shed, all repairs had been made before October sixth. This proceeding was commenced in December. Upon these facts it is. impossible to see how it can be successfully claimed that there was no rent due when this proceeding was commenced.

The demised premises consisted of eight greenhouses and the' mushroom house. One of the greenhouses was not injured at all, and all were repaired before the proceeding was commenced.

The rent was payable quarterly in advance. The lease does not provide that the rent shall abate if any part of the property was. injured. It is very doubtful if it is susceptible of the construction that it abated at all. But it is not necessary to decide that question. The covenant is that the landlord will make repairs, or deduct, rents for the house damagedP This clearly had reference to the deduction of rent for a particular house that might be injured, and not to the whole rent reserved in the lease. The rent was not apportioned on the several houses, and the lease made no provision for apportionment in case of an injury to any single house. There was, therefore, no way in this proceeding by which the provision in question could be applied in case the tenant claimed a deduction in the rent for failure to make repairs to any one or more of the greenhouses.

The fact appears that one of the greenhouses was not injured at all, and that all had been repaired' long before this proceeding was commenced. By the plain and explicit terms of the lease, rent was, therefore, due to the landlords, -and they were entitled to its payment, or to have the possession of the premises restored to them.

The judgment must be affirmed, with costs.

Dykman, J., concurred; Cullen, J\, not sitting.

Judgment affirmed, with costs.


text:
    Merritt A. Jones, Respondent, v. Charles H. Butler, Appellant.

      Interlocutory judgment sustaining a demurrer to an answer — costs allowable.

    Upon tlie entering of an interlocutory judgment sustaining a demurrer to an answer, with permission to plead anew, the costs of the plaintiff should he limited to those allowed for proceedings after notice and before trial and a trial fee.
    Appeal by the defendant, Charles H. Butler, from an interlocutory judgment of the -Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Kings on the 2d day of March, 1894, upon the decision of the court, rendered after a trial at the Kings County Special Term, sustaining the plaintiff’s demurrer to certain paragraphs in the defendant’s answer, and also from an order made at the Kings County Special Term and entered in the office of the clerk of the county of Kings on the 28th day of February, 1894, sustaining the plaintiff’s demurrer to certain paragraphs in the defendant’s answer, and also from an order made at the Kings County Special Term and entered in said clerk’s office on the 28th day of March, 1894, denying the defendant’s motion to review the taxation of costs or to direct a retaxation of costs on said interlocutory judgment.

      Geo. O. Holt, for the appellant.

      Henry L. Promt, for the respondent.
   Brown, P. J.:

The questions raised by the demurrer in this action were decided by this General Term adversely to the defendant’s contention in Jones v. Mail & Express Publishing Company (80 N. Y. Supp. 335 ; 80 Hun, 368).

"We are of the opinion, however, that in the taxation of costs the plaintiff was improperly allowed the item for proceedings before notice of trial.

The judgment is interlocutory and not final. The defendant is allowed to amend his answer. "When the ease is finally determined, if plaintiff succeeds he will be entitled to that item. But upon sustaining a demurrer with permission to plead anew, costs should be limited to tliose allowed for proceedings after notice and before trial and a trial fee. (Kniering v. Lennon, 51 N. Y. St. Repr. 907; Thompson v. Stanley, 22 N. Y. Civ. Proc. Rep. 348.)

There is a conflict of authority on this question, but we approve the ruling in the cases cited.

The judgment should be affirmed, with costs, with leave to the defendant to amend his answer in twenty days on payment of costs. And the order denying a retaxation should be reversed, with ten dollars costs, and the clerk directed to retax the costs by striking out of the plaintiff’s bill the item of twenty-five dollars for proceedings before notice of trial.

Dykman, J., concurred; Cullen, J\, not sitting.

Judgment affirmed, with costs, with leave to defendant to amend his answer in twenty days on payment of costs. Order denying retaxation reversed, with ten dollars costs, and clerk directed to retax costs by striking out the item of twenty-five dollars for proceedings before notice of trial.


text:
    Charles W. Gibbs, Appellant, v. The Long Island Bank, Respondent.

      Certificate of stock in an association organized under chapter 260 of 1838 ■ — - lien of the corporation thereon — what puts a purchaser of the stock upon inquiry as to the articles of association.

    The provision on the face of a certificate of stock, in an association incorporated under chapter 260 of the Laws of 1838, that the fiares therein referred to are held “subject to the conditions and stipulations contained in the articles of association above mentioned,” is sufficient notice to put a purchaser of the shares represented by such certificate upon inquiry to ascertain what such conditions and stipulations are; and in an action brought by the purchaser of such stock against the association to compel the transfer thereof to him upon the books of the association, where the defense is interposed that the former owner of such stock is indebted to the association, and that the articles of association of the company prohibit a transfer of the stock until such amount is paid, the plaintiff must be presumed either to havé made such inquiry and to have ascertained the rights of the association, or else to have been guilty of such negligence as is fatal to his claim to be treated as a bona fide purchaser of the stock.

      Such, an agreement between the shareholders of the association is valid and effectual, and binds every holder of the corporate stock. It is not prohibited by statute nor is it inconsistent with public policy, and every prospective purchaser of shares of stock in such an association, represented by certificates containing such notice, is bound to examine the articles of association, and cannot plead his ignorance thereof in order to defeat the lien of the association upon such shares of stock.
    Appeal by the plaintiff, Charles "W. Gibbs, from -a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Kings on the 15th day of May, 1894, upon the decision of the court rendered after a trial at the Kings County Special Term dismissing the plaintiff’s complaint upon the merits.

      Pdtoard P. Lyon, for the appellant.

      H. D. Van Orden, for the respondent.
   Brown, P. J.:

The facts of this case are not in dispute. As determined by the court they are as follows :

On January 26, 1881, the defendant issued to Delia P. Ducker a certificate for forty shares of its cajDital stock, which certificate was as follows :

“Long Island Bank.
“Brooklyn, New York.
“Established under the General Banking Law of the State of New York, passed April 18th, 1838.
“No. 1062.
Associated by articles recorded in the office of the clerk of the county of Kings, State of New York, June 16th, 1845.
40 Shares.

“ Be it known that Delia P. Ducker is entitled to forty shares of the capital stock of the Long Island Bank of fifty dollars each, and holds the same subject to the conditions and stipulations contained in the articles of association above mentioned, save that the notes of said bank shall be issued subject to the provisions of the Constitution and laws of the State of New York now existing, or which may hereafter be enacted, which shares are transferable on the books of the association by the said Delia P. Ducker or her attorney on the surrender of this certificate.

“ In witness whereof the President and Cashier of the association have hereto subscribed their hands in the city of Brooklyn this 26th day of Jan’y, A. D., 1881.

“ Shares $50 Dolls.
J. SNIFFEN, Jr.,
“John H. Ditmas, President.
“ Gashier.”

On December 11, 1882, Mrs. Ducker contracted a loan with the Brooklyn Bank upon her ’promissory note, and assigned said certificate to said bank as collateral security for the payment thereof. The loan not having been paid, the bank sold said stock to the plaintiff, pursuant to the terms of its contract with Mrs. Ducker, and the plaintiff thereby became vested with such right and title as Mrs. Ducker had thereto.

In June, 1893, the plaintiff presented to the defendant the original certificate of stock issued to Mrs. Ducker with a transfer thereof to himself, and demanded that the said forty shares be transferred to him on the books of the defendant and a new certificate therefor issued to him. At that date Mrs. Ducker was indebted to the defendant in the sum of $2,338.85, and it refused to transfer said shares to the plaintiff unless said debt was paid.

The defendant was incorporated in the year 1845 under chapter 260, Laws of 1838. The articles of association, which were duly filed in the clerk’s office of Kings county, provided that “ no shareholder of the Association shall be permitted to transfer his shares or receive a dividend or interest thereon who shall owe to the Association a debt which shall have become due until such debt be paid, unless by and with the consent of the Board of Directors of the Association.”

In reference to Mrs. Ducker’s indebtedness to the defendant, it appeared that it first began in February, 1881, and although the particular debt then contracted was subsequently paid, there was no time from that date to the commencement of this action when she was not a debtor to the bank in excess of the value of the said shares of stock.

This case differs from Leggett v. The Bank of Sing Sing (24 N. Y. 283) only in respect to a single fact. There the court found that the provision in the articles of association, that shares of stock should not be transferable until all debts due by the holder thereof to the association were discharged, was known to the plaintiff. In this case there is no evidence that the plaintiff or his transferor, the Brooklyn Bank, liad any actual knowledge of the limitation put upon the transfer of shares of stock by the articles of association of the defendant. But we are of the opinion that the provision on the face of the certificate, that the shares in question were held subject to the conditions and stipulations contained in the articles of association above mentioned,” was sufficient information to put a purchaser of the shares upon inquiry to ascertain-what the conditions and stipulations were, and that in this action the plaintiff must either be presumed to have made such inquiry and ascertained the rights of the defendant, or else he was guilty of such negligence as is fatal to his claim to be treated as a bona fide purchaser of the stock.

The agreement between the shareholders contained in the articles of association was valid and effectual, and bound every holder of the stock. It was not prohibited by any statute nor was it inconsistent with public j)olicy. It was intended exclusively for the benefit and protection of the bank. It was referred to upon the face of the certificate, and the date and place of record of the articles of association stated. Every prospective purchaser of shares of the capital stock was thereby-informed that the shares were held subject to some condition therein contained. Having such information, a purchaser must be deemed to have had notice of those facts which, if he had used ordinary diligence, he would readily have ascertained. (Williamson v. Brown, 15 N. Y. 354-360; Baker v. Bliss, 39 id. 70.)

He was bound to examine the articles of association and cannot plead his ignorance thereof to defeat the defendant’s lien.

The learned counsel for defendant has referred us to many cases holding that certificates of stock are to be treated as having elements of negotiability, and that the corporation is estopped from asserting its-claim against a bona fide holder for value. None of the cases cited have any application to the facts before us. No question arose in any of them as to the effect of an agreement between the stockholders qualifying and limiting the transferability of the stock.

The certificates there considered were not different from those in general use, and the questions related to the rights, as against the corporation, of bona fide purchasers thereof.

The defendant’s rights here rest upon the agreement between the shareholders, and the case is, therefore, entirely outside of the general rule applied in the cases referred to.

We need not inquire what the result would have been had the defendant had notice of the assignment to the Brooklyn Bank before it made the loan to Mrs. Ducker, out of which its present claim arose. No element of that kind exists in the case. The defendant appears to have dealt with Mrs. Ducker upon the faith of her apparent ownership of the stock and in reliance upon the agreement contained in the articles of association, and it does not appear to have known of the claim of the Brooklyn Bank or of the plaintiff’s ownership until demand was made for the transfer in June, 1893. . Under these facts the lien upon the stock existed for the debt outstanding at that date.

The judgment is sustained by numerous authorities, and should be affirmed, with costs.

Dykman and Cullen, JJ., concurred.

Judgment affirmed, with costs.