source: Caselaw Access Project

author: Per Curiam :

license: Public Domain

text:
    Leo Stirn, Appellant, v. Hans Hemken et al., Respondents.

      A firm formed by two of the three members, and continuing the business, of a dissolved firm is not liable upon the latter’s obligations — limitation of the time during which a person may compel an accounting by a dissolved firm.

    A firm organized, immediately after tlie dissolution of a former firm, Tby two of tlie three members thereof and engaging in the same business, is not liable upon the obligations of such former firm in respect to commissions to be paid upon certain goods used in the business done by it.
    A firm bound itself to pay commissions to a person, upon certain goods to be imported- and sold, by an agreement dated January 30, 1888, for a term of five years, and immediately thereafter imported and sold certain of the goods therein mentioned, and rendered an account to such person of his share of the profits, and paid him the amount thereof, informing him at the same time that the firm would discontinue dealing in such goods. Thereafter, in September, 1889, the firm was dissolved by the retirement of one of its members, and the two remaining partners formed a new firm and continued the business, under a different firm name, until 1890, when one of the remaining partners retired and the third partner continued the business in his own name.
    In an action brought by such person against the three members of the first firm, to compel an accounting under such agreement, there was no proof that, subsequent to March, 1888, any of the articles mentioned in the contract were imported or sold by the defendants.

      Held, that the plaintiff was only entitled to an accounting up to the date of the dissolution of the first firm.
    Appeal by the plaintiff, Leo Stiru, from an interlocutory judgment of the Supreme Court, rendered at the New York Special Term and entered in the office of the clerk of the city and county of New York on the 19th day of April, 1893, adjudging that the defendants account to the plaintiff for the importations and sales by them of certain goods, and that they pay over to the plaintiff the amount found to be due him, such accounting to be limited to the date of the dissolution of the defendants’ firm in September, 1889.

      Charles 81/rauss, for the appellant.

      BVu/menslAél c§ BTirsoh, for the respondents.
   Per Curiam :

This action was brought to compel defendants to account under an agreement by which they, under the firm name of Ilemken, Slayton & Co., bound themselves to pay commissions on certain goods to be imported and sold. The agreement was for a term of five years, and was dated <Tanuary 30, 1888. The defendants, having immediately thereafter imported and sold the goods therein mentioned, rendered an account in March, 1888, for plaintiff’s share of the profits, and jiaid him the amount, informing him at the same time that the firm would discontinue dealing in such goods. Subsequently, and in September, 1889, the firm dissolved by the retirement of Toeplcen, one of the members, and thereafter the remaining partners formed a new firm under the name of Ilemken & Slayton, and continued the business until 1890, when Slayton retired, and the defendant Iiemken thereafter conducted the business in his own name.

Upon such facts the trial judge decided that plaintiff was entitled to an accounting, hut limited the date of the accounting to September, 1889, which was the date of the dissolution of the firm with which the contract was made. And it is from such limitation that this appeal is taken, the appellant contending that he was entitled to have an accounting from each and all of the defendants for the •entire period of five years.

The difficulty with this contention, however, is that there is no proof in tbe case tliat subsequent to March, 1888, any of the articles mentioned in the contract were imported or sold by the defendants. But apart from this, we think the trial judge properly limited the account to the date when the firm was dissolved. The fact that another firm was organized did not impose upon such firm all the obligations of a former firm with which some of-its membars may have been connected. Of course, there are cases which are authority for the position that, had the new firm assumed the obligations of the contract, or if it had been proven that they continued the importation and sale of these goods, thus reaping the benefits under the contract, some basis might have been laid for an accounting beyond the date of the dissolution of the first firm. But, in the absence of such evidence, we think that the conclusion reached by the trial judge was as favorable to the plaintiff as the facts warranted.

The judgment appealed from should, therefore, be affirmed, with costs.

Present — O’Brien, Follett and Parker, JJ.

Judgment affirmed, with costs.


author: Yan Brunt, P. J".:

text:
    Simon Wormser and Isidor Wormser, Appellants, v. John Nicholas Brown and Others, Trustees, etc., and Another, Respondents.

      Statement of a, want of evidence is not a finding of fact — right of cm abutting owner on a street to light and air — interference therewith — interference with the view gives no right of action — a pa/rty completes a thing, against which an injunction is sought, at his peril.

    A mere statement by a trial court of a want of evidence, although included in the findings of fact, is not a finding of fact established by the evidence, and ought not to be included therein.
    The Legislature has no power to permit any structure for private use to be erected within the lines of a street which would substantially interfere with the light and air coming to any house.
    Where it appears that a street in the city of New York was opened, under the act (Chap. 115) of 1807, and certain premises thereon were assessed for the benefit accruing thereto from such opening, which consisted of the additional light, air and access which would be enjoyed by such premises, resulting from such opening, the levying of such assessment and its payment give the owner of such premises and his successors in title the right to the enjoyment of such light, air and access which they have paid for, and it cannot be taken from them for private use at all, and for public use only upon compensation being made.
    Upon the trial of an action brought to restrain the defendants from completing certain bay windows, and permitting them to remain on the front of their house, it appeared that the plaintiffs were the owners of a lot of land in the city of New York fronting on Fifth avenue between Sixty-fourth and Sixty-fifth streets, distant fifty feet five inches from the corner of Fifth avenue and Sixty-fifth street, on which there had been erected for a number of years a building-used and occupied by the plaintiffs as a residence; that the defendants owned a lot fronting on Fifth avenue, lying between the plaintiffs’ lot and Sixty-fifth street. The bay windows in question extended about six feet beyond the building line, and were some little distance from the plaintiffs’ windows. The trial court found, as a fact, that the erection of such bay windows interfered to a substantial degree with the light and air coming to the plaintiffs’ house, and affected the view from the windows of the plaintiffs’ house towards Central Park and the surrounding property.

      Held, that the interference with the plaintiffs’ view gave no right of action to him, and that, under the circumstances, there was not and could not be any serious interference with the light and air.
    A party who, in the face of an action promptly brought for an injunction, goes on and completes the thing against which an injunction is sought, and which infringes on the plaintiff’s rights, does so at his peril, and he may be compelled to undo that which he has done in defiance of the plaintiff’s rights and with a full knowledge of his attempts to enforce them.
    Appeal by the plaintiffs, Simon "Wormser and Isidor Wormser, from a judgment of the Supreme Court in favor of the defendants, rendered at the New York Special Term and entered in the office of the clerk of the city and county of New York on the 5th day of April, 1893.
    This action was brought to restrain the defendants from making, erecting, completing- or maintaining any projections from the front of their premises heyond the building line.

      Edgar' If. Johnson, for the appellants.

      John L. Oackoalader, for the respondents.
   Yan Brunt, P. J".:

Upon the trial it appeared that the plaintiffs were owners of a lot of land in the city of Néw York fronting on Fifth avenue, between Sixty-fourth and Sixty-fifth streets, twenty-five feet front and one hundred feet deep, and distant fifty feet five inches from the southeasterly corner of Fifth avenue and Sixty-fifth street.

That upon this lot of the plaintiffs there had been erected for a number of years a four-story building used and occupied by the plaintiffs for a residence.

That the defendants’ trustees are the owners of the lots fronting-on Fifth avenue lying between plaintiffs’ lot and Sixty-fifth street.

That Fifth avenue was duly opened as a street 100 feet wide, and the land owned by the plaintiffs was assessed for the benefit arising from such opening.

That said Fifth avenue is the easterly boundary of Central Parle, which was laid out according to law, and the premises of the plaintiffs were assessed for the benefit arising from such laying out, and such assessment was duly paid.

Section 688 of the Consolidation Act of 1882, which was a re-enactment of a portion of chapter 850 of the Laws of 1873, is as follows:

§ 688. The determination of the lines of curb and other surface constructions, in all the streets and avenues within the distance of three hundred and fifty feet from the outer boundaries of any public park or place which is now, or hereafter may be, under the control and management of the department of public parks, is vested in the said department, and the said department shall also have power to plant trees and to construct, erect and establish seats, drinking-fountains, statues and works of art, whenever they may deem it for the public interest so to do, on the said parts of said public streets and avenues ; and the said parts of said public streets and avenues shall at all times, as the same are opened, be subject to such rules and regulations in respect to the uses thereof, and erections and projections thereon, as the said department may make therefor ; nothing in this section contained shall be construed to authorize the said department to do any work in the matter of regulating,' grading, paving, sewering, curbing and guttering any of the streets or avenues herein mentioned, which the department of public works is authorized by law to do.”

In or about February, 1892, an application was made on behalf of the defendants to the commissioners of the department of public parks of the city of New York for a permit for the erection of two bay windows to be attached to the building which they were about to erect upon the lot owned by them.

The department of- parks in May, 1892, gave their consent to. such erection, and the defendants’ trustees thereupon in June, 1892, proceeded with the construction of their building and of the bay windows, which extended about six feet beyond the building' line, until on or about November 1, 1892, when, upon the application of the plaintiffs, without any notice to or hearing of the defendants, the said park commissioners revoked the permit theretofore granted, pending investigation and until further order of the board. At this time the bay windows were nearly finished, only two or three days more of work being required to complete their construction.

In November, 1892, the defendants’ trustees, upon notice, to the plaintiffs, made an application to the said park board to rescind the resolution of said board revoking said permit, and the said board, after having heard both parties, on the 23d of November, 1892, rescinded said resolution of revocation, and reaffirmed said permit and granted leave that the work might he completed under the permit originally issued.

On or about the 11th day of November, 1892, and sxfbsequent to the resolution of revocation, and prior to the rescission of the revocation, this action was commenced to restrain the defendants from completing said bay windows, and from permitting said bay windows erected in front of defendant’s house from remaining thereon. The court found, as a fact, that the erection of the said bay windows interfered to a substantial degree with the light and air coming to^ the plaintiffs’ house, and affects the view from the windows of the plaintiffs’ house towards Central Park and surrounding property.

The court stated in the findings that no evidence was offered on the trial by either party as to any laches of the plaintiffs, or the acquiescence of the plaintiffs in the construction of the windows, and that no evidence was offered as to the various separate defenses set up in the answer of defendants.

It is difficult to see how this statement;, although included in the findings of fact, can be considered as such, as it is a mere statement of a want of evidence, and is not a finding of a fact established by the evidence, and, therefore, ought not to have been included in the findings of fact.

TJpon the trial the court dismissed the complaint, and from the judgment thereupon entered this appeal has been taken.

In the determination of this appeal it does not seem to me to be at all necessary to determine what powers were conferred upon the department of parks by section 688 of chapter 410 of the Laws of 1882.

It also seems to me that if the finding of the court below, that the-erection of the bay windows interfered to a substantial degree with the light and air coming to the plaintiff’s house, and affects the same, is sustained by the evidence, that the plaintiffs were entitled to relief in this action, and that the Legislature had no power, even if they attempted to do so, to permit any structure for private use to be erected within the street lines which would substantially interfere with the light and air coming to the plaintiffs’ house.

It appears that Fifth avenue was opened under the act of 1807 (Chap. 115) and the plaintiffs’ premises were assessed for the benefit accruing thereto from such opening, which consisted of the additional light, air and access which would be enjoyed by said premises resulting from such opening. The levying of such assessment and its payment gave the owner of the plaintiffs’ premises, and his successors in title, the right to the enjoyment of such light, air and access which they had paid for, and it could not be taken from them for private use at all, and for public use only upon compensation being made.

This principle was first enunciated in the case of Story v. N. Y. Elevated R. R. Co. upon its affirmance by the General Term of the Court of Common Pleas (11 Abb. N. C. 241), and carried to a much greater extent than the said court had sanctioned by the Court of Appeals in its decision of that case, reversing the General Term of the Court of Common Pleas.

But we do not find the evidence justifying this conclusion of fact.

The bay windows undoubtedly interfere with the view from plaintiffs’ windows, but such interference forms no ground of action by them. There is not and can be no serious interference with light and air. The projections are not sufficient to cause such an interference. The nearest one to plaintiffs’ premises is at some little distance from tlie plaintiffs’ windows, and does not obscure such windows at all.

This being tlie case, even if the building of the bay windows into the street was unauthorized, the pfiaintiffs suffering no special' damage therefrom, cannot maintain any action for the removal of the same, whatever might be the right of the municipal authorities under such circumstances.

The claim of the defendants, that no relief could be granted to the plaintiffs, because the windows had been finished, even if this action had been commenced as soon as their construction had been begun, citing decision in case of Fire Department v. Zeigler to that effect, cannot be sustained.

A party who, in the face of an action promptly brought for an injunction, goes on and completes the thing against which an injunction is sought, and which infringes a plaintiff’s right, does so at his peril, and he may be compelled to undo that which he has done in defiance of a plaintiff’s right and with full knowledge of his attempts to enforce them.

I am of the opinion that the judgment appealed from should be affirmed, with costs.

Follett and Parker, J J., concurred.

Judgment affirmed, with costs.


author: Parker, J.:

text:
    Thomas Maddock, Respondent, v. Henry A. Root, Appellant.

      Action for goods delivered to a third person at the request of defendant — whether there was a promise, and if so, whether it loas an original undertaking or a guaranty is a question for the jury — evidence.

    On tlie trial of an action brought to recover the value of goods manufactured by the plaintiff and delivered to a certain corporation, it was alleged on the part of the plaintiff that the goods were manufactured and delivered at the special instance and request of the defendant. This was denied by defendant, his contention being that he was an officer of such company, and in that capacity, as tlie plaintiff well knew, he ordered the goods of him. He denied having made any promise to personally pay for the goods, and insisted that the promise referred to in the plaintiff’s testimony was a promise only to answer for a third person, was not in writing and subscribed by Mm, and, therefore, was void under the Statute of Frauds. The defendant’s denial of the promise was contradicted by the plaintiff and his son.
    The account was kept in the name of the company on the plaintiff’s books. It had been kept in that way when the plaintiff relied for payment for goods furnished to the corporation, upon the written guaranty of one Covington, and the form of keeping the account was not changed after the agreement with the defendant. The goods were to be delivered to the same party and place as before. Bills were rendered to the company at its place of business where the goods were also delivered to it by the direction of the defendant. No bill or account was ever presented to the defendant in which he was named as the debtor. There was never any dispute about the amount due to the plaintiff, the defendant having promised after the goods wore delivered to pay or see that they were paid.
    The plaintiff testified that when ho first began to manufacture the goods he did so upon the written guaranty of Covington, who paid the bill for a time and then withdrew his guaranty. The plaintiff, having refused to furnish any more of the goods, was subsequently taken by a person who was styled the president of the company to the defendant, and there such conversation was had, if the plaintiff’s version of it was true, as created an agreement by which the defendant became bound to pay for the goods to be delivered by the plaintiff to the company. This testimony was in some measure supported by letters written by the defendant to the plaintiff, and by the fact that the payments thereafter made were by means of the defendant’s individual checks.

      Held, that it was for the jury to say whether the defendant made any promise at all to pay the plaintiff, and if he did, whether his promise was an original undertaking to become solely responsible for such goods as the plaintiff should thereafter deliver to the company, or a promise intended and understood by the parties to be collateral to the principal contract, the company to be the principal debtor and the defendant a guarantor of performance on its part.
    Upon the trial the court received in evidence, against the defendant’s objection, a letter in the handwriting of a clerk of the defendant as follows :

      “Dec. 17th, 1880.
    ■“Dear Sir — Why don’t you send me the report of liow many machines you have in process of construction ? Please put in works at once 1,000 more generators. ■ Tours truly,
    "II. A. BOOT,
    "Mr. Thomas Maddock. Per Connolly.”
    It had been made to appear, when the letter was received in evidence, that Connolly was, at the time of its writing, the defendant’s clerk, accustomed to write letters by his direction, but that he had no recollection of special direction to write the letter in question. There were other letters in evidence containing orders in the defendant’s handwriting and, by a subsequent letter in his own handwriting, which continued the correspondence upon the lines of the letter of December seventeenth, the defendant appeared to have recognized the letter in question.

      jHeld, that the letter of December seventeenth was properly received in evidence;
    That the evidence that it was written by the defendant’s directions was sufficiently convincing to make it necessary for the defendant to show that it was not his. act, if such was the fact.
    The court excluded the answer to an interrogatory which was “If your answer to the last interrogatory should be yea, state where said company did business; whether it was organized as a corporation, and if so, under the laws of what State.”
    Prior to the reading of the interrogatory, the location of the company’s business had been established by proof. The objection taken was that it was not a proper method of proving the organization of the company.

      Held, that the court properly excluded the answer to the interrogatory, as the fact of incorporation, when material and not merely collateral, cannot be proved by parol testimony;
    That if the answer to the question had been that it was not a corporation, but a voluntary association, such an answer would not have been responsive.
    Appeal by the defendant, ITenry A. Root, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the city and county of New York on the 15th day of .December, 1892, upon the verdict of a jury at the New York Circuit, and also from an order entered in the office of the clerk of the city and county of New York on the 16th day of December, 1892, denying the defendant’s motion for a new trial.
    This action was brought to recover the value of certain ozone generators alleged to have been manufactured by the plaintiff at the special instance and request of the defendant, and delivered by his direction to the United States Ozone Company.

      Hatch <& Wiclces, for the appellant.

      Albert H Atterbury, for the respondent.
   Parker, J.:

The judgment under review awards to the plaintiff the value of ozone generators, which it is alleged he manufactured at the special instance and request of defendant, and delivered by his direction to the “ United States Ozone Company.” Defendant does not dispute that plaintiff manufactured the goods, and delivered them to the “ Ozone company,” or that they were not in number or of the value averred in the complaint, but he did deny, both by his pleading and his deposition read on the trial, that the goods were purchased by him individually, his contention being that he was an officer of the United States Ozone Company,” and in that capacity, as the plaintiff well knew, ordered the generators of the plaintiff. While he denied making any promise whatever to personally pay for the goods, he insisted that the promise which the testimony on the part of the plaintiff tended to prove, was a promise to answer for the debt of a third party, not in writing and subscribed by him, and, therefore, void because in contravention of the “ Statute of Frauds.”

• But the evidence was not of such a character as to have warranted the court in dismissing the complaint at the close of plaintiff’s case, or after the testimony was all in, on either ground.

Defendant’s denial of a promise to pay plaintiff was contradicted by the plaintiff and his son ; therefore, as to it, a question of fact was presented.

Nor could it properly have been determined as a matter of law, that the promise alleged to have been made was in violation of the statute.

There were circumstances tending to show that the plaintiff regarded the United States Ozone Company ” as the principal debtor.

(1) The account was kept in the name of the “ Ozone company ” on plaintiff’s books.

(2) Bills were rendered to the Ozone company ” at their place of business, where the goods were also delivered.

(3) No bill or account was ever presented to “ Boot ” in which he was named as the debtor.

On the other hand, plaintiff testified that when he first began to manufacture the generators, he did so upon the written guaranty of one Covington,” who paid the bills for a time and then withdrew his guaranty.

Plaintiff having refused to furnish any more goods, he was subsequently taken by a person who was styled the president of the United States Ozone Company,” to the defendant, and there such conversation was had, if plaintiff’s version of it be true, as created an agreement by which defendant became bound to pay for generators to be delivered by the plaintiff to the company.

This testimony has some measure of support in letters, subsequently written by Root to the plaintiff, and also from the fact that the payments thereafter made were by means of Root’s individual checks.

As to the circumstance of keeping the account in the name of the company, instead of Root’s, it is urged by way of explanation that plaintiff kept the account in the name of the company when relying for payment upon the written guaranty of Covington, and the form of keeping the account was not changed after the agreement with Root, as the goods were to be delivered to the same party and place as before.

There seems to be no explanation of plaintiff’s having rendered his bills to the company, other than that Root directed him to deliver the goods to it, and have bills made out and sent to correspond.

The reason assigned for not sending the bills to the defendant, in which he was personally charged as the debtor, is that there was never any dispute about the amount due to the plaintiff, defendant having promised, after the goods were all delivered, to pay or see that it should be paid.

From the brief reference to the evidence which we have made, it is apparent that it was for the jury to say :

First. Whether defendant made any promise at all to pay the plaintiff.

Second. If he did, whether his promise was an original undertaking to become solely responsible for such goods as the plaintiff should thereafter deliver to the company, or a promise intended and understood by the parties to be collateral to the principal contract — the company to be the principal debtor — and the defendant a guarantor of performance on its part.

These questions were clearly submitted to the jury, in a charge to which no exception was taken.

There remains, therefore, for further consideration, only the exceptions taken to the rulings of the court in the admission or rejection of evidence.

We shall discuss the questions presented by two of them.

Against the defendant’s objection the court received in evidence the following letter in the handwriting of “ Connolly,” a clerk of defendant:

“Deo. 11th, 1880.

Dear Sir — Why don’t you send me the report of how many machines you have in process of construction? Please put in works at once 1,000 more generators.

“ Yours truly,

“ÍI. A. ROOT,

“ Mr. Thomas Maddock. Per Connolly.”

When received it had been made to appear that Connolly was, at the time of its writing, Root’s clerk, accustomed to write letters by his direction, but had no recollection of special direction to write this letter.

Defendant complains that by it there was placed before the jury as a fact that defendant made orders on his own account, and not as treasurer of the “ Ozone company.” There were other letters containing orders confessedly in the handwriting of Root, signed by him individually, and so it is not likely that the result was affected by its admission.

But it was not error to admit it. In addition to the fact to which Connolly testified, that he had been for a number of years, and was at the date of the letter, in Root’s employ, and accustomed to write letters by his direction, there were other circumstances, to one of which we shall allude, which, considered in connection with the direct proof of authority, was sufficient to establish prima facie that the letter was sent by the direction of defendant.

The defendant appears to have recognized the letter by a subsequent one in his own handwriting, which continues the correspondence upon the lines of the letter of December seventeenth. That letter, as we have observed, asked for a report of the number of machines in process of manufacture. Apparently it was replied to, for the day following defendant sends a letter, in his own handwriting, in which he says: I am in receipt of your favor of yesterday. You are increasing the number it is true, but not sufficiently. Prom your letter it seems that there are about 500 now making. We want all told 1,000 as soon as possible.”

The evidence that the letter of the seventeenth was written by defendant’s direction was sufficiently convincing to make it necessary for the defendant to show that it was not his act, if such was the fact.

At that stage of the proceeding the occasion was presented for him to inform the court that it was his purpose to make it appear that the letter was not written by his direction. Had this been done, the opportunity would doubtless have been afforded him to challenge the proofs presented by the plaintiff on that subject, before the admission of the letter in evidence.

He elected to stand on the insufficiency of plaintiff’s proof and without possible injury to his defense unless he could have proven that the letter ivas not sent by his direction.

The court excluded the answer to the fourth interrogatory, which was: “ If your answer to the last interrogatory should be yea, state where said company did business; whether it was organized as a corporation, and if so, under the laws of what State.”

No injustice was done the defendant by excluding the answer to so much of the interrogatory as called for the location of 'the company’s place of business, for that had been established prior to the reading of the interrogatory.

The only part of it which could possibly be of moment was the inquiry whether organized as a corporation, and if so, in what State.

Appellant now contends that the question calls for something more than proof of incorporation ; that it may,well have been that the answer was that it was not a corporation, but a voluntary association, doing business under the name of the “ United States Ozone Company.”

As we have not the answer before us, we cannot tell whether, by its exclusion, testimony tending to show a voluntary association was rejected.

Such an answer would not have been responsive to the question, which inquired whether it was organized as a corporation (not whether it was a voluntary association).

On the trial defendant’s counsel, as well as the court, apparently . understood that the' defendant was attempting to prove incorporation, for the objection taken was that it was not a proper method of proving the organization of the company. The court having indicated an intention to sustain the objection, defendant’s counsel said: “ The organization of a company is proved in that way every day in court.”

The question which the court passed upon, and which counsel for botli parties assumed was the only question before tlie court, was, whether tlie fact of incorporation, when material and not merely ■collateral, can be proved by parol testimony.

The court rightly held it could not be.

The judgment should be affirmed, with costs.

O’Brien and Follett, J'J., concurred.

Judgment affirmed, with costs.


author: Van Brunt, P. J.:

text:
    William H. Flandrow v. Henry B. Hammond.

      Representations in an agreement as to the validity of a judgment and the levy of an attachment thereunder — insufficient proof as to a levy made under the attachment haring been defective.

    Upon tlie trial of an action brought by Wm. H. Flandrow to recover from one Hammond the amount of a j udgment theretofore obtained by the Marine Bank of Chicago against one Tunis Van Brant, it was shown that an agreement was entered into between the plaintiff and defendant, reciting that the defendant had recovered a judgment against the Marine Bank of Chicago (in which action an attachment was issued and levied by the sheriff, upon a judgment recovered by such bank against Tunis Yan Brunt), and that the plaintiff was desirous of legally acquiring the judgment against Van Brunt, and in consideration of the sum of §260, paid the defendant by the plaintiff, to cover sheriff’s fees and other charges, it was agreed that the defendant should issue an execution upon the judgment recovered by him against the Marine Bank, and direct the sale by the sheriff thereunder of the judgment against Yan Brunt; that the defendant, at the plaintiff’s risk, should bid in the said judgment upon said sale for the whole amount of his own judgment with interest, and immediately thereafter should transfer all the interest which he should acquire in the said judgment to the plaintiff, on payment to him by the plaintiff of the further sum of $1,372.86.
    Thereafter, upon the defendant’s application, the court directed the sheriff to sell the judgment against Yan Brunt at public auction, and it was subsequently sold to the defendant for the sum of §1,372.36, which amount was paid the defendant by the plaintiff.

      Held, that under the agreement there was a representation on the part of the defendant that he had a valid judgment against the Marine Bank of Chicago, and also a valid attachment which had been levied upon the judgment obtained by such hank against Tunis Yan Brunt.
    The plaintiff further introduced in evidence the proceedings upon the accounting of the estate of Tunis. Van Brunt. There was no evidence that these representations contained in the agreement were untrue, or that no levy was made, or that an attempt to levy had been so informal that the defendant acquired no lien upon the judgment against Yan Brunt. An affidavit, made by a sheriff’s deputy in another court and proceeding, wherein he stated a manner of making-a levy not in accordance with the mode pointed out by the Court of Appeals, was in evidence, but it was not shown that other proceedings were not taken by which a valid levy was acquired.
    The trial court dismissed the complaint, which ruling was excepted to, and the exception was ordered to be heard in the first instance at the General Term.

      Held, that the complaint was properly dismissed ;
    That for the plaintiff to succeed in the action, he was required to show that the representations contained in the agreement were untrue, and that, in respect to the existence of the levy, he did not support his allegation with proof which necessarily led to the conclusion that no valid levy had ever been made.
    Motion by tbe plaintiff, William H. Flandrow, for a new trial, on a case containing exceptions ordered to be beard at tbe General Term in tbe first instance by an order made upon the dismissal of the complaint at tbe New York Circuit on tbe 23d day of March, 1893.

      A. Illvng, for the motion.
    W. S. Spencer, opposed.
   Van Brunt, P. J.:

In May, 1871, the plaintiff and defendant entered into tbe following agreement:

“ We, tbe undersigned, Henry B. Hammond and W. H. Flandrow, do agree as follows:

“ Whereas, said Hammond recovered a. judgment against tbe Marine Bank of Chicago, in tbe Sujireme Court on November 2, 1870, for $1,282.62, in which action an attachment was issued and levied by tbe sheriff of New York county, upon a judgment recovered by said Marine Bank of Chicago, against Tunis Van Brunt, on March 1,1867, for $6,858.12, which last-named judgment said Flandrow is desirous of legally acquiring; now, tbe said Hammond, in consideration of $260 to be paid to him by said Flandrow to cover sheriff’s fees and other charges, consequent upon tbe following promises and further covenants following, doth hereby agree to issue execution forthwith upon tbe judgment recovered by him against said Marine Bank, and direct tbe sale by said sheriff thereunder of said judgment levied under said attachment within ten days,, or as soon thereafter as said sheriff can legally sell the same. And further, that he, said Hammond, will, at said Flandrow’s risk, bid in said judgment upon said sale for the whole amount of his own judgment, with interest, and will immediately thereafter transfer all the interest which he shall acquire in said judgment under said sheriff’s sale to said Flandrow on the payment to him by said Flandrow of the further sum of one thousand three hundred and seventy-two dollars forthwith.

“Provided, hoioever, that in case the sheriff shall receive and accept a higher bid at said sale than that of said Hammond, then this agreement shall be void and said Hammond shall at once repay to said Flandrow said sum of two hundred and sixty dollars. And further provided, that in case said Flandrow shall fail to carry out the provisions of this contract he shall forfeit to, and said Hammond shall retain, said sum of two hundred and sixty dollars as part of his damages.

“ Witness our hands and seals, this 5th day of May, 1871.

“ (Signed.) HENRY B. HAMMOND, [l. s.]

“ (Signed.) W. H. FLANDROW. [l. s.] ”

Subsequently, upon the application of said Hammond, the court directed the sheriff to sell at public auction, under execution to him issued, the said judgment so levied upon in said warrant of attachment, and on the 30th of May, 1871, the sheriff sold to said Hammond for the sum of $1,372.36 the said judgment, and the plaintiff in this action paid to said Hammond said sum of $1,372.36 and $260, making in all $1,632.36.

The plaintiff further introduced in evidence the proceedings upon the accounting of the estate of Tunis Yan Brunt, the judgment debtor in the action of the Marine Bank of Chicago against him, upon which judgment it was claimed that the attachment in the action of Hammond v. The Marine Bank had been levied.

The court dismissed the complaint, which ruling was duly excepted to, and the exception ordered to be heard in the first instance at the General Term.

We are of opinion that under the agreement entered into between the parties to this action, which has been heretofore referred to, that there was a representation upon the part of the defendant that he had a valid judgment against the Marine Bank of Chicago, and also a valid attachment which had been levied upon the judgment obtained by the Marine Bank of Chicago against Tunis Van Brunt, and that the whole of the agreement rested upon these representations, and if it had appeared in the action that no such levy had been made, but that the attempt to levy had been so informal that the defendant Hammond acquired no lien upon said judgment, there was a failure of consideration for the payments made under the ■agreement and the plaintiff ought to 'have been allowed to recover the amount of such payment.

But we have examined the record in vain to find any evidence ■showing the invalidity of this levy, or that these representations were untrue. The record, it is true, contained an affidavit made by the sheriff’s deputy in another court and another proceeding, wherein he does state the manner of making a levy, and which is not in accordance with the mode pointed out by the decision of the Court of Appeals ; but there is nothing tending to show that this was the only levy attempted to be made, or that other proceedings may not have been taken by which a valid levy was acquired.

The plaintiff, to succeed in this action, was required to show that the representations contained in the agreement were untrue ; and in respect to the existence of the levy he does not seem to have supported his allegation with proof which necessarily led to the conclusion that no valid levy had ever been made. And it seems, therefore, that there was a deficiency in the establishment of the facts necessary to constitute a valid cause of action. It would seem, from a reference to certain cases which have been decided in the Court of Appeals, involving the validity of this levy, that probably such was the fact; but it has not been proven in the case at bar.

The exceptions, therefore, must be overruled, and judgment ordered for the defendant upon the dismissal of the complaint, with •costs of this application and in the court below.

Follett and Parker, JJ., concurred.

Exceptions and judgment ordered for the defendant upon the dismissal of the complaint, with costs of this application and in the court below.


author: Follett, J. :

text:
    Engelbert Hardt and Others, Respondents, v. Theresa Schwab and Joseph Lillienthal, Appellants, Impleaded with Others.

      Fraudulent assignment for creditors — judgments by confession against the assignor* — a just claim used to defraud creditors.

    Upon the trial of an action brought to set aside an assignment as fraudulent and. void as to creditors, and also to set aside four certain judgments entered upon, confession by the assignor, on the ground that they were made with intent to-cheat and defraud creditors, it was shown that Emanuel Schwab and JacobSchwab had been partners, transacting business under the firm name of Schwab- & Son; that, prior to November 25, 1887, Jacob Schwab died, leaving Emanuel Schwab the surviving partner of that firm; that, on the 25th day of November, 1887, Emanuel Schwab confessed four judgments; one lor §2,021.47 in favor of Levi J. Gazan, which was entered and docketed at eleven o’clock A. M.; one for 85,053.97 in favor of Joseph Lillienthal, which was entered and docketed at eleven o’clock and one minute a. m.; one for $4,857.97 in favor of Theresa Schwab, which was entered and docketed at eleven o’clock and two-minutes A. m.; and one for $751.89 in favor of Meyer Guggenheim, which was. entered and docketed at eleven o!clock and three minutes a. m. ; that executions were immediately issued upon such judgments and a levy was made thereunder upon all of the leviable assets of Emanuel Schwab.
    That on the same day, Emanuel Schwab, as surviving partner and individually,, executed a general assignment for the alleged benefit of creditors, which was-recorded at eleven o’clock and thirty minutes a. m. of -said day, immediately after the sheriff had taken possession of the assignor’s property under the-executions. On the 6th day of September, 1887, the property levied upon by the sheriff was sold under execution for $13,748.68, of which Joseph Lillienthal purchased to the amount of §4,147.09, J. Frank to the amount of $6,358.87, J. Gazan to the amount of §764.72, and James Dreyfuss to the amount of' §622.87. The same person was the attorney for the plaintiffs in the actions in which the judgments were confessed, and also for the assignor in the making of the assignment and in the matters connected therewith.
    None of the property purchased by the above-mentioned persons was removed from the place where it was sold, which was the place of business occupied by Schwab & Son at the date of the assignment, but was left there and taken possession of by a new firm known as Schwab Brothers, composed of two-brothers of the assignor, the judgment debtor. This firm' employed the assignor as general manager of the business of the new firm at a. salary of fifty dollars per week, and thereafter the business of Schwab Brothers was continued on the same premises occupied by the former firm of Schwab & Son. with the property purchased at the sale, no money being invested in the business by the new firm.

      The trial court found that the assignment was fraudulent and void, and that the judgments were recovered, the executions issued and the sale made with intent to delay, cheat and defraud the creditors of Emanuel Schwab.

      Held, that the judgment was supported by the weight of evidence;
    That a decision in favor of the defendants would have been set aside as against the weight of evidence.
    A creditor having a just claim against a failing debtor must not use it for the purpose of placing the property beyond the reach of other creditors, and for the benefit of the failing debtor, and if he does, he is liable to refund any sum that he has acquired by such action.
    Appeal by tlie defendants Theresa Schwab and Joseph Lillienthal from an interlocutory judgnient of the Supreme Court in favor of the plaintiffs, rendered at the New York Special Term, and entered in the office of the clerk of the city and county of New York on the 13th day of May, 1890, adjudging a general assignment made by the defendant Emanuel Schwab to be fraudulent and void, and adjudging two out of four certain judgments entered against the assignor upon confession fraudulent and void, and of no effect as against the plaintiffs, and appointing a receiver of the property, and ■the proceeds thereof adjudged to have been fraudulently transferred ; and from a final judgment of the Supreme Court in favor of the plainti&s, made at the New York Special Term, and entered in the office of the clerk of the city and county of New York on the 9th day of November, 1892, directing that the receiver appointed by the interlocutory judgment recover of the defendant Theresa Schwab $6,177.72, and of the defendant Joseph Lillienthal, $6,126.97, with notice of an intention on the part of the appellants to bring up for review on such appeal the interlocutory judgment entered herein.

      Jolm II. V. Arnold, for appellant Schwab.

      Samuel Oreenbtmm, for appellant Lillienthal.

      BlmnensUel & Hirsc\ for the respondents.
   Follett, J. :

For some years prior to November 25, 1887, Emanuel Schwab and Jacob Schwab were partners in the city of New York under the firm name of Schwab & Son. Before the date last mentioned Jacob Schwab died, leaving Emanuel Schwab the surviving partner of that firm.

On the 25th day of November, 1887, Emanuel Schwab confessed four judgments; one in favor of Levi J. Gazan for $2,021.47, which was entered and docketed at eleven o’clock a. m.; one in favor of Joseph Lillientlial for $5,053.97, which was entered and docketed at eleven o’clock and one minute a. m. ; one in favor of Theresa Schwab for $4,857.97, which was entered and docketed at eleven o’clock and two minutes a. m. ; one in favor of Meyer Guggenheim for $751.89, which was entered and docketed at eleven o’clock and three minutes a. m. Executions were immediately issued upon said judgments, and prior to the filing of the general assignment hereinafter mentioned, were levied upon all of the'leviable assets of Emanuel Schwab.

On the same day, Emanuel Schwab, as surviving partner and individually, executed a general assignment to Herman Erohman for the alleged benefit of creditors, which was recorded in the office of the clerk of the city and county of New York at eleven o’clock and thirty minutes a. m., immediately after the sheriff had taken possession of the assignor’s property under the aforesaid executions.

On the 6th of December, 1887, the property was levied on by the sheriff and was sold under said executions for $13,748.68. Of the property so sold, Joseph Lillientlial purchased to the amount of $4,147.09 ; J. Erank, $6,358.87; J. Gazan, $764.72; James Dreyfuss, $622.87.

Leopold Wallach was the attorney for the plaintiffs in these actions and also for the assignor in the making of the assignment and matters connected therewith. None of the property purchased by the above-mentioned persons was removed from the premises where it was sold, being the place of business which Schwab & Son had occupied to the date of the assignment, but ivas left thereat and taken ' possession of by a new firm known as Schwab Bros., composed of two brothers of the assignor and judgment debtor. This firm employed the assignor and judgment debtor as general manager of the business of the new firm at a salary of fifty dollars per week, and thereafter the business of Schwab Bros, was continued on the same premises occupied by the former firm of Schwab & Son with the property purchased at the sale, no money being invested in the business by the new firm. The foregoing facts are not disputed; and from these and many other incriminating facts and circumstances the court found that the assignment was fraudulent and void, and that the judgments were recovered, the executions issued and a sale made with intent to delay, cheat and defraud the creditors of Emanuel Schwab. The appellants do not assert that any error was committed in the admission or exclusion of evidence on the trial, but insist as their sole ground for a reversal that the decision is contrary to the weight of evidence. This contention cannot be sustained. The evidence that these parties entered into a conspiracy to transfer the title to these goods to third parties to put them beyond the reach of creditors and for the benefit of Emanuel Schwab is overwhelming, and it is quite useless to enter into a discussion of it. We think that the judgment is not only supported by the weight of evidence, but that a decision in favor of these appellants would have been set aside as against the weight of evidence. A companion case (Abegg v. Schwab, 31 N. Y. St. Repr. 139) has been before the court. That was an action to set aside the assignment as fraudulent. In that case as in this the defendant sought to reverse the judgment upon the ground that it was not sustained by the evidence. In discussing the question the court said: “ The debtor simply kept the property under the weak device of a partnership) between a couple of his clerks (who, as we have seen, were his brothers), and agreed, nominally through these brothers, to pay the judgment creditors as he realized from the goods. There was a pretense that the judgment creditors bid at the sheriff’s sale to protect their judgments. But that was a very shallow pretense, for there was ample property to cover their judgments, and besides, the biddings had no relation to the judgments. In fact, this pretense was worked out in a singularly inartistic and slovenly fashion, reflecting but little credit upon the directing mind.” This language is as applicable to this case as to the one then under consideration. It is urged that it is established beyond doubt that the debts for which these judgments were recovered were just ones, due and owing from the judgment debtor to the judgment creditor. This may be true, but a creditor having a just claim against a failing debtor must not use it for the purpose of placing the property beyond the reach of other creditors and for the benefit of the failing debtor. If he does he is liable to refund any sum that he has acquired by such attempt, and if it results in a loss of his claim it is not too severe a punishment for the offense.

The judgment should be affirmed, with costs.

O’Brien and Parker, JJ., concurred.

Judgment affirmed, with costs.


author: .Follett, J".:

text:
    Roderick W. Cameron v. Charles H. Tompkins.

      A promissory note, given as the consideration of an agreement void under the Statute of Frauds, is urithout consideration — vwiance between pleading and proof.

    In an action brought to recover the amount due on a promissory note, it appeared that the defendant had sold to the plaintiff certain shares of stock in a mining company, which the plaintiff paid for, and that subsequently the defendant ■ agreed orally to take back the stock and repay the purchase price at some future day; that the plaintiff wrote to the defendant asking him to take back the stock, to which the defendant answered that he would do so on or before a date mentioned. This he failed to do, and at a later date executed the note in suit and delivered it to' the plaintiff.
    No mention of the price of the stock appeared in the letters or note, nor did it appear that the note was given in payment for the stock. No part of the stock ■was delivered when the note was given and never has been, but it was tendered when the note became due, and payment thereof was demanded.
    The defendant claimed that the note was without consideration, and that the agreement upon which it was founded was void under section 8 of the Statute of Frauds.
    The plaintiff in his reply admitted an allegation of the answer that the stock had not been tendered by him, but was allowed to prove on the trial, over the defendant’s objection, that he had tendered it when the note came due.

      Held, that the agreement to repurchase the stock, which was the consideration for ' the note, was void under section 3 of the Statute of Frauds (2 R. S. 136);
    That the letters and note did not contain all the material provisions of the agreement, and did not constitute a “note or memorandum” within subdivision 1 of section 3 of that statute;
    That it was error to allow the plaintiff to prove tender of the stock in the face of the admissions in his reply.
    Motion by the defendant, Charles IT. Tompkins, for a new trial upon exceptions ordered to be heard at the General Term in the first instance on a verdict directed for tbe plaintiff at the New York Circuit on the 5th day of October, 1892,

      Peter B. Obi&ij, for the plaintiff.

      Burton JV. Harrison, for the defendant.
   .Follett, J".:

At the close of the trial the plaintiff asked the court to direct a verdict in his favor, and the defendant moved that a verdict be directed in his favor. The court granted the plaintiff’s motion and the defendant excepted, and thereupon the defendant’s exceptions were ordered to be heard at the General Term in the first instance.

This action was brought on a promissory note of which the following is a copy :

“ $5,027.50. New Yoeic, 14iA Mw'ch> 1890.

Fifteen days (without grace) after date, I promise to pay to tha order of Sir Roderick W. Cameron......Five thousand & twenty-seven 50 |-Dollars at Hanover National Bank, New York. Yalue received.

“ C. H. TOMPKINS.”

The defendant admitted the making, delivery and non-payment of the note, and alleged that it was given in consideration of an oral agreement between the litigants that the defendant would, on the 29th. of March, 1890 (the date when the note fell due), purchase of the plaintiff certain shares of stock on delivery of the certificates properly signed, which, it is alleged, the plaintiff did not do, and that the oral agreement was void under the Statute of Frauds, and the note was without consideration. This note arises out of the following transaction: The defendant was the owner of shares or was engaged in procuring subscriptions for unissued shares of the Idaho Mining and Irrigation Company, a domestic corporation, and on the 18th of November, 1889, the plaintiff acquired from or through the defendant 784 shares of the stock for $5,000, and on the same day a certificate for 484. shares was issued to R. W. Cameron & Co., and another certificate for 300 shares to R. McLeod Cameron, the plaintiff’s son. The agreed price of the shares was paid on or about the date of the certificates. In January, 1890, the defendant orally agreed that be would at some future date take back tbe shares and repay the purchase price.

On the 24th of January, 1890, the plaintifE wrote the defendant as follows:

“ R. W. Cameron & Co.,

“23 South William Steeet,

“New Yokk, 24 January, 1890.

“ General O. W. Tompkins :

“ Dear General — Agreeably with your considerate promise to relieve me of my subscription to the Idaho Irrigation Co., I ask you to make an entry of it in your Journal and kindly write me a reply, naming a date on which you will repay me the amount. I do not seek any interest on the amount paid, but if you will include my son’s subscription also it would be a favors

“ Your proposition was 30 days from the 7th instant, but if you prefer to extend the time you can make it from this date. I am

“ Faithfully yours,

“ R. W. CAMERON.”

The defendant received the letter and indorsed thereon, “ Replied Jan. 30, ’90, agreeing to take stock by 24 Feby.” The following is a copy of the defendant’s answer :

“ No. 15 OoRTLANDT STREET, )

“New York, 30iA Jany., ’90. )

“ Dear Sir Roderick :

“ I beg to acknowledge your favor of 24th inst., and in reply to state that I will undertake to accede to your request to relieve you and your son of your subscriptions to the stock of the Idaho Mining & Irrigation Co. on or before Feby. 24th, 1890.

“ Yery truly yours,

“ C. II. TOMPKINS.

“ Sir Roderick Cameron.”

The shares were not taken back on the 24th of February, 1890, and other conversations were held on the subject between that date and March 14, 1890, when the parties met and the note in suit was executed and delivered. The certificates for the shares were not present when the note was executed and have never been delivered to the defendant, although they were tendered at the Hanover Bank on the day tbe note fell due and payment demanded. The principal question presented on this appeal is, was there a sufficient memorandum in writing to save the contract from the condemnation of the 3d section of the Statute of Frauds which provides :

§ 3. Every contract for the sale of any goods, chattels or things in action, for the price of fifty dollars or more, shall be void, unless,

“1. A note or memorandum of such contract be made in writing, and be subscribed by the parties to be charged thereby ; or,

“ 2. Unless the buyer shall accept and receive part of such goods, or the evidence, or some of them, of such things in action; or,

“ 3. Unless the buyer shall, at the time, pay some part of the purchase money.”

A contract to sell shares of stock in a private corporation is within the 3d section of the Statnte of Frauds of the State of New York. (Johnson v. Mulry, 4 Robt. 401; affd., 51 N. Y. 634 ; Baltzen v. Nicolay, 53 id. 461-470; Brownson v. Chapman, 63 id. 625 ; Dos Passos S. & S. 765 ; Cook S. & S. § 339; Reed St. Fr. § 234.)

The defendant did not accept the certificates for all or any of the shares, nor were they, or any of them, assigned to him at the date of the agreement to sell, nor at any time thereafter; nor were they, or any of them, transferred to him on the books of the corporation, and no part of the purchase money was paid by him. The contract is not valid under the second or third subdivision of the section, and the defendant cannot be held liable to pay for the shares unless there is a sufficient note or memorandum in writing to satisfy the requirements of the first subdivision. The only memoranda relating to the sale which were introduced in evidence are the letters before quoted and the note on which the action was brought. The letters referred to each other and may be read together, but it will be observed that the price at which the shares were sold is not stated in either letter. The promissory note is not referred to in the letters, and there is nothing in them or in the note showing that the sum for which the note was given represents the price of the shares; or, indeed, that the note arose out -of the transaction. The only way in which we are informed that the note was given for the agreed price of the shares is by the testimony given on the trial. It was not competent for the plaintiff to show by oral evidence that the note was given for the purchase price of the shares, and though that fact was proved without objection and also by tbe defendant, it did not validate the contract, and the defendant, having pleaded that the contract out of which the note arose was void by the Statute of Frauds, he is in a position to take advantage of the fact. In order to satisfy the requirements of the 3d section of the Statute of Frauds, all of the material provisions of the contract must be contained in some note or memorandum, and in case any material provision is omitted from the writing or writings, its terms, or the nature of the provision, cannot be established by testimony. ( Wright v. Weeks, 25 N. Y. 159 ; Stone v. Browning, 68 id. 598; Drake v. Seaman, 97 id. 23d; Hentz v. Newwitter, 122 id. 491.)

As before stated, the price at which the shares were sold is not disclosed by the memoranda, which is a material provision of a con-, tract for the sale of goods or choses in action.

In case goods or choses in action are sold at an agreed price of fifty dollars or more, the memorandum of sale must disclose the price at which sold, in order to satisfy the requirements of the 3d section of the Statute of Frauds. (Stocker v. Partridge, 2 Robt. 193; German v. Machin, 6 Paige, 288-292; Newbery v. Wall, 65 N. Y. 484-488; Stone v. Browning, 68 id. 598-604; Williams v. Morris, 95 U. S. 444-455; Smith v. Arnold, 5 Mason C. C. 414; Johnson v. Buck, 35 N. J. Law, 338-343; Welsh v. Bayaud, 21 N. J. Eq. 186 ; Carr v. Passaic Land Imp. Co., 19 id. 424; Elmore v. Kingscote, 5 B. & C. 583 ; S. C., 8 D. & R. 343; Acebal v. Levy, 10 Bing. 376 ; Hoadley v. McLaine, Id. 482 ; Goodman v. Griffiths, 1 H. & N. 574; 1 Renj. Sales [Corbin’s ed.], §§ 249-251; Black. Sales [2d ed.], 59; 1 Reed St. Fr. § 417; Rrowne St. Fr. §§ 381 et seq.) "When a price is not agreed on, the circumstances may be such as to justify the assumption that the goods were to be sold or the work to be done at a reasonable price, but this rule does not 'apply to a case where the price was agreed on. (Argus Co. v. Mayor, etc., 55 N. Y. 495, and the authorities above cited.)

The contract proved, which was the consideration for the defendant’s promise, was void under the Statute of Frauds, and the plaintiff, under the evidence contained in this record, was not entitled to recover.

The answer contains this allegation: “ Defendant further alleges that the plaintiff did not on said 29th day of March, 1890, demand of defendant that defendant make such purchase, and that plaintiff did not on said day tender to defendant said shares of stock, or the certificate or certificates by said corporation theretofore issued for and representing said shares, and then held by plaintiff; and that plaintiff did not on said day offer to deliver said certificate or certificates to defendant, properly indorsed for transfer.”

This allegation is contained in the defendant’s second defense. The plaintiff served a reply which contains the following denial: “The plaintiff denies each and every allegation contained in the defendant’s second and separate defense, the counterclaim herein, except that portion thereof wherein defendant alleges that on the 29th day of March, 1890, plaintiff did not demand ‘ of defendant that defendant make such purchase, and that plaintiff did not on said day tender to defendant said shares of stock, or the certificate or certificates of said corporation theretofore issued for and representing said shares, and then held by plaintiff; and that plaintiff did not on said day offer to deliver said certificate or certificates to defendant, properly indorsed for transfer.’ ”

On the trial the plaintiff was permitted to prove that he tendered the certificates for the shares at the Hanover National Bank, March 29, 1890, when the note fell due and was presented for payment. The defendant objected to this testimony on the ground that it contradicted the reply, which objection was overruled and an exception was taken. The plaintiff did not ask to amend his reply nor that he be relieved from his admission. The defendant had the right to rely on this admission, and he was under no obligation to be prepared with evidence to meet this question. The reception of this testimony was error.

■ The defendant’s exceptions must be sustained and the verdict set aside and a new trial granted, with costs to the defendant to abide the event.

VaN Brusít, P. J., and Pariíer, J., concurred.

Defendant’s exceptions sustained and verdict set aside and new trial granted, with costs to the defendant to abide the event.


author: Pollett, J.:

text:
    Thomas H. Unckles, Appellant, v. Romulus R. Colgate and Others, Respondents.

      Trust, contrary to public policy — an action for an accounting by stick trust will' not lie on behalf of a certificate holder — courts will not enforce an accounting among the parties interested in an agreement contrary to public policy.

    In an action brought by the hoi der of certain certificates issued' by the National Lead Trust to compel the defendants, as trustees thereof, to account, the complaint did not allege that the plaintiff’s certificates were issued to represent the stock of one of the constituent companies, which had turned in their assets and stock to the trust, or for value paid the trust, and it was conceded by the plaintiff that the trust, was against public policy, and the agreement creating it unlawful.
    On appeal from a judgment sustaining a demurrer interposed to the complaint, on the ground that it did not state facts sufficient to constitute a cause of action, and because of a defect of parties,

      Held, that a court of equity would not interfere to determine the rights of parties arising out of an unlawful agreement, and that this suit was based on such an agreement;
    That tills action would not lie to recover value paid on account of an unlawful executory contract, as the complaint did not allege that any such value had been paid to the defendants.
    Appeal by tlie plaintiff, Thomas H. TJnckles, from a final judgment of tlie Supreme Court in favor of tlie defendants, entered in tbe office of tbe clerk of the city and county of New York on the 6th day of February, 1893, and from a decision made at the New York Special Term on tbe 19tli day of December, 1892, and an order made at the said Special Term and entered in said clerk’s office on tlie 3d day of February, 1893, sustaining the defendants’ demurrer to the complaint, and directing a final judgment.
    On the 1st day of October, 188T, certain manufacturing corporations, their shareholders, and certain firms then engaged in manufacturing and selling lead and all of its products, entered into a written agreement, of which tlie following is a copy of the material parts:

      “ "Whekeas, It is designed to form a trust, known as the National Lead Trust, for the purpose of securing intelligent co-operation in the business of smelting, refining, corroding, manufacturing, vending and dealing in lead and all its products, and carrying on all other business incident thereto:

      “ Therefore, It is mutually agreed by all who may sign this agreement, or become at any time the holders of the certificates of trust herein provided for, as follows:
    “ First. The trust herein created shall be vested in nine trustees.

      “Second. Henry Hentz, W. IT. Thompson, C. E. Wells, are hereby appointed trustees, to hold their office until the first Wednesday in February, A. D., 1888.
    “ Third. J. A. Dean, D. B. Shipman, S. Beymer, are hereby appointed trustees, to hold their office until the first Wednesday in February, A. D., 1889.

      “Fourth. S. R. Bradley, A. T. Goshorn, W. H. Pulsifer, are hereby appointed trustees, to hold their office until the first Wednesday in February, A. I)., 1890.
    “ Fifth. The trustees shall prepare certificates which shall show the interest of each beneficiary in said trust, and deliver them to the pei’sons entitled thereto. The certificates shall be divided into shares of the par value of one hundred dollars each, and shall be known as the National Lead Trust certificates. The trustees shall have power to agree upon and direct the form and contents of said certificates, and the mode in which they shall be executed, attested and transferred. The certificates shall contain an express stipidation that the holders thereof shall be bound by the terms of this agreement and by the by-laws herein provided for.
    “ Sixth. No certificate shall be issued except for bonds and stocks as herein provided. The certificates shall be the best evidence of the aittount of interest of the beneficiaries in this trust. No duplicates shall be issued by the trustees except upon surrender of the original certificate for cancellation, or upon satisfactory proof of the loss thereof and the giving of satisfactory bond of indemnity.
    “ Seventh. Each subscriber hereto agrees to assign and transfer to said trustees the number of shares of capital stock of the particular corporation or corporations indicated by the memorandum accompanying his signature hereto, in consideration of which said trustees do hereby agree to execute and deliver to each subscriber trust certificates as above specified, for the number of shares the par value of which shall represent the agreed value of the stock so delivered. The value of the capital stock of any corporation whose stock shall be assigned to said trustees shall be first agreed upon between said trustees and stockholders willing to transfer the same, and after it is agreed upon there shall be no discrimination in the purchase price thereof as between stockholders of the same corporation transferring their shares at the same time.
    “Eighth. This agreement shall take effect as soon as those holding a majority of stock in the following corporations, to wit:
    “ Anchor White Lead Co.
    “ The Bradley White Lead Co.
    “ St. Louis Lead & Oil Co.
    “ St. Louis Smelting & Refining Co.
    “ Brooklyn White Lead Co.
    “ Jewett White Lead Co.
    “ D. B. Shipman White Lead Works.
    “ The J". II. Morley Lead Co.
    “ Beymer-Bauman Lead Co., hare subscribed to this agreement to transfer the same to said trustees. Thereafter the said trustees and their successors shall have power to purchase other stocks and bonds of the same companies, or of companies organized for -conducting the same business or any of the businesses hereinbefore specified, and may issue therefor certificates of trust equal at par value to the agreed value of the stocks or bonds so purchased.

      “ Ni/nth. All stocks and bonds sold and transferred to said trustees shall be held by them and their successors for the benefit of all the owners of said trust certificates. No stocks so held by said trustees shall be sold or surrendered by said trustees during the continuance of this trust without the consent of a majority, in number and value, of the holders of trust certificates; provided, however, that said trustees may, from time to time, assign such shares of stock as may be necessary to qualify any person or persons chosen, or desired to be chosen, as directors of any companies the stocks of which are held by said trustees.

      “ Bonds held by said trustees may be sold by them.
    “ Tenth. The said trustees shall have power to cause corporations to be formed for the purposes, and with all or any of the powers, specified in section first of this agreement; provided, that the stock of such corporations shall be issued for casli, or for property at cash value, and shall be issued to, or be purchased by, said trustees in the manner provided in section eight of this agreement.

      “Eleventh. Said trustees shall receive and safely keep all moneys received from dividends or interest upon stocks, bonds or moneys held in trust, and shall distribute the same, as well as moneys received from sales of trust property, by declaring and paying dividends upon said trust certificates, as funds accumulate which are not needed for the uses and expenses of the trust. The trustees shall, however, keep separate accounts of receipts from dividends and interest, and of receipts from sales of trust property, and in declaring any dividend in which moneys derived from sales of trust property are included, shall render the holders of trust certificates a statement, showing what amount of the fund distributed was derived from such sales or transfers.
    “ Twelfth: The trustees shall render to the holders of trust certificates, at each annual meeting, a statement of the affairs of the trust. They shall also, when demanded by 67 per cent in value of the holders of trust certificates, furnish a true and perfect inventory and appraisement of all property held in trust, and a statement as full as possible of the financial affairs of the various companies whose stocks are held in trust.
    “ Thirteenth. Said trustees shall exercise supervision, so far as their ownership of stocks enables them to do, over the several corporations or associations whose stock is. held by said trustees. As stockholders of said corporations they shall elect, or endeavor to elect, honest and competent men as directors and officers thereof. They may elect themselves as directors and officers, and shall endeavor to secure such judicious and efficient management of such corporations as shall be most conducive to the interest of holders of trust certificates.
    “ Fourteenth. All the powers of the trustees may be exercised by ' a majority of their number. They may appoint from their own number an executive committee, and may appoint other committees composed wholly or partly of persons not of the board of trustees, and may delegate to such committees such of their powers as they may deem advisable. A majority of such committees may exercise all the powers conferred upon such committees. * * *
    “ Twenty-sixth. The trust shall continue for twenty-one years from this date, and shall thereafter continue until the termination by a vote of 67 per cent in value of the holders of trust certificates, at a meeting called for tbe purpose. After 67 per cent in value of the holders of trust certificates shall vote to terminate the trust, as. aforesaid, they may, at the same meeting, or at a subsequent meeting called for that purpose, decide, by a vote of 51 per cent of their number, the mode in which the affairs of the trust shall be wound up, and whether the trust shall be distributed, or whether it shall he sold and the value thereof distributed, or whether part, and if so, what part, shall be divided, and what part shall be sold, and whether-such shall be private or public. The trustees who .shall continue to-hold their offices for that purpose shall wind up the affairs of the. trust in the mode agreed upon by the holders of trust certificates as aforesaid.”
    The omitted articles, fifteenth to the twenty-fifth inclusive, related to the trustees and their mode of selection.
    It is alleged that after the execution of this agreement, the shareholders in various other corporations and partnerships, aggregating-thirty in number, became parties thereto, and that a majority, if not all, of the shareholders in the various corporations mentioned, transferred and delivered to the trustees all of the stock owmed by them, for which trust certificates were issued.
    It is also alleged that the corporations and partnerships which became parties to this agreement “ produce the largest part of the-white lead used and consumed within the State of New York and that part of the United States lying east of the Eocky Mountains,, and although the operation of the said business as conducted and carried on by said trustees, their successors, including defendants, under said agreement or scheme has ever been a monopoly and inimical to the best interests of the public at large, yet a continued interruption or cessation of said productions would decrease the supply and correspondingly increase the cost of manufacturing white lead to the said public and cause irreparable loss and injury to the people, of this State and of the United States.”
    It is also alleged that a large amount of property has accumulated under said trust agreement, the extent, nature and value of which is unknown to the plaintiff, but aggregating many thousands of dollars, and for which the trustees have not accounted. The plaintiff alleges that he now is, and since May 22, 1889, has been, the owner•oí 700 shares of the certificates oí trust issued by the trustees under said agreement.
    It is also alleged that the defendants and their predecessors carried •on the business organized under the trust agreement under the name ■of the National Lead Trust until December 12,1891, and since that •date under the name of the National Lead Company, a corporation •organized by the defendants and others for that purpose under the ■statutes of the State of New Jersey, to which corporation, on or ■about that date, the trustees transferred the property received and ■accumulated under the trust agreement.
    The plaintiff demands a judgment requiring that the defendants be required to account for the property in their hands ; that it be sold, and the avails thereof distributed among the holders of the trust certificates. To this complaint the defendants demurred upon the grounds: (1) That the complaint does not state facts sufficient to eonstitute a cause of action; (2) that it appears upon the face of the complaint that Charles 0. Bowen and the National Lead Company are necessary parties to this action. Both grounds of ■demurrer were sustained by the Special Term and a judgment ■ordered dismissing the complaint, with costs.

      Thomas AlUson, for the appellant.

      Elihu, Boot, for the respondents.
   Pollett, J.:

This action is not prosecuted by a former shareholder in any one of the constituent corporations of the National Lead Trust to compel a return and reassignment of shares assigned to the trust by the plaintiff, or by his predecessor in interest, nor by a shareholder or the successor of a shareholder of any one of the constituent corporations, to compel the defendants to restore to the corporation the ■specific property received by the defendants or their predecessors from said corporation, upon the theory that the defendants are mere agents or depositories of said property; but the action is prosecuted in behalf of the holder of trust certificates upon the theory that the so-called agreement is the measure of his rights and of the defendants’ liabilities. Whether an action can be maintained by the holder of the certificates to compel the defendants to restore the specific shares and .property which they have received from the corporations and their shareholders, is a question not involved in this case.

The plaintiff alleges in his complaint, and his counsel concedes in his brief, that the trust was organized aud carried on for the purpose.of monopolizing the business of producing and selling various important products of lead, and that the objects sought to be attained by means of the trust agreement were and are contrary to public policy, and that the agreement is void under the laws of this State. Entering into and carrying on this combination is an indictable misdemeanor (Penal Code; § 168), and was at common law.

The learned counsel for the plaintiff seeks to avoid the class of decisions holding that a court of equity will not determine the respective rights and interests of persons arising out of an unlawful agreement, by citing cases holding that when money has been paid or property delivered upon an unlawful executory contract, an action may be maintained under certain circumstances to annul the contract and recover the money paid or property delivered. This action does not fall within that class of cases for the reason that it is not alleged that the plaintiff ever delivered any property or paid any money to the defendants, or to their predecessors. If it be said that the person to whom plaintiff’s certificates were first issued must have done so, the answer is that it is not alleged by what corporation the shares exchanged for plaintiff’s certificates were issued, there is. no identification of the property, and there are no appropriate allegations in the complaint for the recovery of the original consideration, whatever it was, for these certificates. This action plainly proceeds upon the theory that the plaintiff’s rights are to be determined by the trust agreement, and that it is necessary, in order to determine those rights, to have an accounting of all the transactions of the defendants and of their predecessors in carrying out this unlawful agreement. 'This is precisely what a court of equity will not do. This proposition has been so many times decided by the courts of this State that a citation of many authorities and a discussion of the reason of the rule would be a work of supererogation. ( Woodworth v. Bennett, 43 N. Y. 273; Knowlton v. Congress de Empire Spring Company, 57 id. 518 ; Arnot v. Pittston & Elmira Coal Co., 68 id. 558; Leonard v. Poole, 114 id. 378; Cray v. Oxnard Brothers Co., 59 Hun, 387.)

The case last cited was brought by the receiver of the North River Sugar Refining Company to compel an accounting of the sugar trust. It was held in that case that the combination represented by the defendants and entered into between the parties was unlawful, and for that reason the plaintiff was not entitled to the aid of a -court of equity to compel the defendants to account. We think that case is not distinguishable in principle from the one at bar, and is controlling upon this court. Both actions are for the same purpose ; to recover the amount which the plaintiff may be entitled to on an accounting of the transactions had under an unlawful contract. It is urged that it is a hardship to leave the persons who have entered into this combination without any remedy in the courts. The answer is, that if the courts take an accounting and attempt to do justice as between the wrongdoers, a precedent will be,set and judgments declaring such contracts illegal will be without any deterrent effect, because it will be known that if the enterprise is declared to be contrary to law, that, notwithstanding, all of the rights of the participants therein will be protected by the courts.

We think the complaint -does not state a cause of action, and on that ground, without considering the question of parties, the judgment-should be affirmed, with costs.

O’Brien and Parker, JJ., concurred.

Judgment affirmed, with costs.