author:
Moncrief, J.
      Hoffmáít, J.

text:
    Samuel G. Ogden, Jr., Plaintiff and Respondent, v. William M. Raymond and William H. Forbes, Defendants and Appellants.
    1. Where, in an action by the indorsee of a note against the makers, the complaint alleges the making by the defendants of a note payable, by its terms, to the International Insurance Company, or order, that such Company afterwards and before its maturity “ duly indorsed the said promissory note, and the same was, thereupon, duly transferred and delivered to the plaintiff;” and where the answer merely avers that said Company never had “ any legal existence as a corporation,” and denies that “it had any legal power or capacity to transfer said note to the plaintiff by its indorsement or otherwise;” the making of the note by the defendants, and
    • its actual and due indorsement and transfer by the Company, are admitted if proof be given of the incorporation of such Company under a charter authorizing it to transfer by indorsement promissory notes which it may own.
    2. Under such pleadings the defendants cannot show that the note, with others, amounting in all to over $1,000, was transferred without a previous resolution of the Board of Directors of the Company authorizing such transfer.

      3. Nor can they under such pleadings show that some of the original subscribers, whose subscription notes were taken as the capital stock on its commencing business, were irresponsible and minors.
    4. Nor can they show under such pleadings that the corporation was dissolved and a receiver of its effects appointed, by due judicial proceedings, subsequent to the transfer by the Company of the note thus sued upon.
    5. Where, in such an action, and upon such pleadings, the pleadings alleging no other defense except that the note was an accommodation note and was known to the plaintiff to be such when he took it, and that it has been paid from other collaterals transferred with it as security for a loan made to the Company, and where it has been proved that a loan of $15,000 was made on the security of $19,000 of collaterals including the note in suit, and that only $12,000 of the loan has been repaid; it is not error to reject evidence of the whole number of collaterals; or that judgments have been obtained upon some of the collaterals, or of what securities were at any time received for the loan, or were held at the time of the trial.
    (Before Bosworth, Oh. J., and Hoffman and Monchief, J. J.)
    Heard, April 12th;
    decided, May 21st, 1859.
    This is an appeal by the defendants, (William H. Raymond and William H. Forbes,) from a judgment against them in favor of the plaintiff, rendered on a trial had before Mr. Justice SlosSON without a jury, on the 13th of May, 1858.
    The action is against the defendants as makers of a note, which, with its indorsement, reads thus, viz.:
    “ $750. Yew York, October 4, 1855.

      “ Twelve months after date, we promise to pay the International Insurance Company, or order, for value received, seven hundred and fifty dollars payable at the People’s Bank.
    (Signed) “ Raymond & Co.”
    [Indorsed.]
    “For the International Insurance Company.—M. Starbuck, President.”
    The complaint alleges the defendants to be partners, under the firm name of Raymond & Co., and that as such, they made and delivered the note to said Company; that the Company after-wards duly indorsed said note before its maturity, and the same was thereupon duly transferred and delivered to the plaintiff; that the note is past due, and no part of it has been paid, and prays judgment for the amount of it with interest.

      The answer denies (an allegation in the complaint) that said Company “is a corporation duly organized under and pursuant to the laws of the State of New York,” and avers that it “has not now or ever had any legal existence as a corporation.”
    It denies that the Company “ had any legal power or capacity to transfer said note to the plaintiff by its indorsement or otherwise.”
    It avers that said note “ was loaned to the payee thereof and was and is an accommodation note for which the defendants received no consideration whateverthat it was given on the agreement that it should not be transferred by indorsement or otherwise, “ of all which facts and circumstances ” the plaintiff had notice before he took it.
    It also alleges that plaintiff claims to hold the note as collateral security for a loan to the Company, and avers that said loan, if ever made, has been paid out of the proceeds of other collaterals placed in his hands, and denies that the plaintiff is the lawful owner and holder, or the real party in interest.
    It was proved at the trial by Charles W. Ogden, vice-president of the Company, that the International Insurance Company transacted business as such Company, in the city of New York, from May, 1855, into November, 1856; that Moses Starbuclc was President of the Company from the 6th of February, 1856; that the note in suit, with other subscription notes of the Company, amounting in all to about $19,000, were transferred on the 15th of April, 1856, to the plaintiff’s father, S. G\ Ogden, to secure a loan of $15,000, then made by him to the Company, and that only $12,000 of such loan had been repaid.
    That the indorsement of Starbuck’s name upon the note was his writing, and that the words over it were written by Leo Del Banco, the Secretary; that the President was in the habit of indorsing the notes of the Company; and that this was known to several of the Directors, and that he “generally, almost universally,” indorsed, without there being previous resolutions authorizing the transfers. To the admission of this last named evidence the defendants objected and excepted.
    A certified copy of the charter of said Company was read in' evidence. The defendants offered in evidence the original minutes of the proceedings of the Company, had on the 20th of May, 1854, and excepted to the decision of the Court excluding them. They then read the original act of April 15,1844, an amendatory act passed April 11, 1855, and a resolution of the Company to dissolve, passed February 11, 1853, and moved to dismiss the complaint, and excepted to the decision denying such motion.

      Charles W. Ogden, (who was Vice-President from the 9th of October, 1855, until a Receiver was appointed on the 16th of November, 1856,) on his cross-examination, having testified that S. G. Ogden got the note in suit “ from the International Insurance Company, he got it 15th of April, 1856,” was asked (at folio 8) these questions:
    “ Q. How did he get it?
    “ Q. How many notes were transferred to your father when this was transferred ?”
    The questions were overruled, and the defendants excepted.
    Having testified that S. G. Ogden made several loans to the Company, and “ one for $15,000, on the day the note was transferred,” that about $12,000 of the $19,000 of securities transferred had been collected, he was asked these questions:
    “ Q. Have you obtained any judgments on these notes ?

      “ Q. Was there any resolution of the Board of Directors authorizing that transfer?
    “ Q. Did your father make any prior loan to the Company?
    “ Q. Did your father at any time receive any other securities from the Company which he could hold as security for this loan?
    “ Q. What securities does your father hold now for that indebtedness ?”
    These questions were severally objected to and excluded, and the defendants excepted. (Folios 11-13.)
    The Court excluded evidence upon the question whether there were any losses, under a policy which the defendants obtained from the Company about the time the note was given, and the defendants excepted.
    The witness having testified to subscriptions, to an agreement to furnish notes as part of the capital. stock of said Company, upon condition (among others) “ that $200,000 of subscriptions shall be procured from parties satisfactory to the Company,” amounting to over $284,000, was asked, in substance, (folio 17,) whether he did not know that more than $100,000 thus subscribed was subscribed by office boys in and about Wall street, less than eighteen years old, and that such fact was not known at the time to the officers of the Company ?
    And whether, at the time the Company went into existence, there were four hundred applicants for insurance, the premiums on which amounted to $200,000, of which $40,000 was paid in cash, or notes of solvent parties founded on actual and bona fide applications for insurance ?
    And whether there were notes of solvent parties for $160,000 founded on bona fide applications for insurance, in the hands of the Company at the time they commenced business ?
    And whether, at that time, the company had a cash capital of $25,000, and eleven trustees?
    ■ These questions, on objection, were severally excluded, and the defendants excepted.
    The note in suit being offered in evidence, the defendants objected, first. That it is not proved to have been made by the defendants; second, That no resolution of the Board of Trustees authorizing the transfer has been proved; and third, Nor any by-law authorizing a transfer by the President without a resolution of the Trustees. The objections were overruled, and the defendants excepted.
    The witness, on further cross-examination, was asked these questions, viz.:
    “ Q. Did your father then (when he received the notes) know that there was no resolution of the Board of Trustees authorizing the transfer ?
    “ Q. Do you mean to say that you never knew of a transaction made by the President without the knowledge of more than two or three Trustees ?

      “A. I know but of one instance, to Mr. Regan, who was a Trustee.
    “ Q. What was the amount of these notes?”
    The two of the last three questions which are unanswered, were excluded, and the defendants excepted.
    The plaintiff having rested, the defendants moved for a non-suit, on the grounds, first, That the transfer of the note in suit was not authorized by a previous resolution of the Board of Directors of the Company; second, That it was not indorsed by the Company, nor by the President in office at the time of its transfer to S. G. Ogden. The motion was denied, and the defendants excepted.

      William H. Forbes, one of the defendants, testified that he signed the note in question, but was not shown and did not sign any subscription agreement; that the note “was loaned to Mr. Marsh, who was at that time the President of the Company, and loaned to him as the President,” without consideration; that “Mr. Marsh promised us that it ishould remain in the hands of the Company; that he would see that it remained with the Company, and that when the note came due, we should call upon the Company for a check to settle it;” that he said “ it was to go to show as part of the capital of the Company; we had an open policy issued to us afterwards; can’t say how long afterwards; but the note was issued while we were dealing with the Company ;” “we have a claim against the International Insurance Company for losses; the losses were near the amount of the note, but never were adjusted.”

      Mr. Ogden, being recalled by the defendants, testified thus: “ Before the $15,000 loan was made, I had several conversations about it with my father.”
    “ Q. Did you at that time know the condition of the Company ?
    “ A. Yes, sir; I communicated it to my father; I told him all I knew about the affairs of the Company; all the notes were in the ordinary form, with two exceptions.
    “ Q. Did your father know at the time that the parties who signed the notes did not owe the Company the amount expressed in the notes at the time of the transfer?”
    This question was objected to and excluded, and the defendants excepted.
    Evidence was offered to show that proceedings had been duly taken by the Attorney-General to dissolve said Company; that an order had been entered in them dissolving said Company; that in the course of said proceedings Mr. Scudder was appointed a Receiver of the Company, on the 1st of November, 1856, and that he then notified the defendants not to pay the note in suit to the plaintiff.

      The case states that “the said Judge thereupon found and decided as matters of fact:
    “ 1st. That. the International Insurance Company was originally incorporated by a special act of Legislature, passed on the 15th day of April, 1844, by the name of the Kings County Mutual Insurance Company. The original act of incorporation is chapter 156 of the Session Laws of 1844, page 229.
    “ (To which finding of fact the defendants, in due time and due form of law, excepted.)
    “ 2d. That under that act of incorporation, the Kings County Mutual Insurance Company organized and commenced the business of insurance, pursuant to the act of incorporation, in Brooklyn, shortly after the date of that act, and they thus continued to transact business until the 23d ■ day of May, 1854, when the Trustees and stockholders passed a resolution to dissolve the corporation, and the same was declared by a resolution adopted by the Trustees to have been dissolved, on or about the 11th day of February, 1853, in the following words, viz.:
    “ 1 The ordinary business of this corporation having been suspended for one year, it is resolved, That the corporation is dissolved, and that we, the present Trustees, will settle the affairs of the corporation pursuant to the provisions of the Revised Statutes, sections 9 and 10, first volume, page 603.’
    “ 3d. Afterwards a resolution was introduced into the Board of Trustees of the Kings County Mutual Insurance Company, that the charter of that Company be offered for sale; and after much negotiation, the same was sold to George Briggs and others for the sum of five thousand dollars.
    “ The facts contained in this and the next preceding finding, are stated by the said Justice, but they were excluded by him. He decided that they were inadmissible in this action, and he rules that they are not to be considered in deciding this action.
    “ (To which decision the defendants’ counsel, in due time and form of law, excepted.)
    “ 4th. That on the 11th day- of April, 1855, an act of the Legislature of this State was passed, which is chapter 295 of the Laws of 1855, and is in the Session Laws of that year, at page 505.
    “ 5th. On the 1st day of May, 1855, the International Insurance Company began to transact the business of insurance in the city of New York, and continued to transact such business until the 16th day of November, 1856, when, in certain proceedings taken by the Attorney-General, pursuant to statute, Henry J. Scudder, Esq., was appointed Receiver of the International Insurance Company, by an order of the Supreme Court.
    “ 6th. That the note declared on, -was made by the defendants and delivered to the International Insurance Company.
    “ 7th. It was transferred by the President to Mr. Ogden, together with other similar notes, amounting to about $19,000. No resolution was adopted by the Trustees or stockholders authorizing such transfer.
    “ 8th. Mr. Ogden advanced $15,000 on the security of such notes.
    CONCLUSION OF LAW.
    “ That the plaintiff is entitled to recover the amount of the note described in the complaint, with interest.
    “ (To which ruling and decision of the said Justice, the defendants, in due time and in due form of law, excepted.)”
    Judgment having been entered for the plaintiff, the defendants appealed from it to the General Term.

      P. Y. Outler, for appellants, (the defendants.)

      George W. Stevens, for respondent, (the plaintiff.)
    Each counsel made and argued the same points substantially as in Ogden v. Andre, reported 4 Bosw., 588.
   Moncrief, J.

The complaint alleges that the defendants as partners made the note, that the payee (The International Insurance Company) duly indorsed it, and that it was thereupon duly transferred and delivered to the plaintiff, and that it- is unpaid and became due before suit brought.

1. Denies that the International Insurance Company is a corporation duly organized, and avers that it never had any legal existence as a corporation.

2. Denies that it had any “ legal power or capacity to transfer said note by its indorsement or otherwise.”

3. It avers that the note was made for the accommodation of the payee, the latter agreeing not to negotiate it, and that these facts were known when the plaintiff took it.

4. That the loan, as security for which the plaintiff held it, has been fully paid.

The making of the note and its indorsement by the Company are therefore admitted.

The existence of the International Insurance Company as a corporation was sufficiently proved, as against the present defendants.

The remaining matters of defense are, that the note was made to accommodate the Company, that the plaintiff'knew this when he took it, that he claims to hold it as security for a loan, and that such loan has been paid. If the loan has not been paid, and if more of it in amount than the face of the note and interest is unpaid, then there is no, defense, based on the facts alleged in the answer.

How the minutes of the Company affected any of the issues raised by the answer is left to conjecture merely. The case does not disclose their contents. The rejection of them does not appear to be a matter which could possibly have prejudiced the defendants. The exception to the decision rejecting that evidence is therefore untenable.

The motion to dismiss the complaint was properly denied. Ho evidence had then been given that the note was made for the accommodation of the payees.

The questions (at folio 8) were only adapted to show that the note in suit, with others, was taken by S. Gr. Ogden to secure money lent by him, and that the plaintiff took it knowing that fact.

The question whether there was any resolution of the Board of Trustees authorizing the transfer was properly excluded, as the due indorsement of the note by the Company was admitted.

How many securities the lender held is of no moment. The material question is, had the loan been paid ? The questions in respect to those matters were properly overruled. It appeared ■ that $15,000 was lent and only $12,000 repaid. On this point there is no conflict of evidence. The exceptions (at folios 11-18) are not tenable.

There is no allegation in the answer that the defendants’ subscription was procured by fraud, and therefore the evidence offered (at folio 17) tending to show such to be the fact, was properly excluded.

The objection, to the reading of the note in evidence, and the exception to the decision admitting it are, for the reasons already stated, untenable.

The evidence admitted, as to what officer was in the habit of indorsing the notes of the Company, was immaterial and in no way prejudicial to the defendants, as the due indorsement of the note by the corporation was admitted by the answer.

As the case stands, and viewing it as one in which no issues were to be tried except those raised by the pleadings, it is simply this:

The defendants are sued as the makers of a note, and the plaintiff sues as indorsee. It is admitted that the payee, which is a corporation, duly indorsed it to the plaintiff, and that it was thereupon duly transferred and delivered to the plaintiff, with this qualification; that the defendants deny that the payee ever had a legal existence as a corporation, or “ any power or capacity ” to make any transfer of the note.

The payee was created a corporation by a special act, passed in 1844, and after that its name was changed by statute in 1855, and subsequently did business for years as a corporation, and the defendants dealt with it as such. For all the purposes of this action, its existence is fully established, and of course its capacity to indorse and negotiate any note owned by it.

The only other defense set up is disposed of. Although an accommodation note, and known to be so to the first indorsee when he took it, he was a holder for value as he had advanced on its credit and on that of other notes transferred with it $15,-000, only $12,000 of which has been repaid.

The defendants are therefore liable. The evidence justifies the conclusion that it is a business note, and upon full consideration, by force of the 11th section of the charter of the Company.

The facts as found, do not state whether it was an accommodation note, nor whether the loan had been repaid. But the facts as found, assuming them to be all the facts which the evidence given established, are sufficient, including those admitted by the pleadings, to support the judgment.

I think it should be affirmed.

Bosworth, Ch. J., concurred in this opinion.

Hoffmáít, J.

The defendants answer as follows: “And these defendants deny that the said alleged corporation, The International Insurance Company, had any legal power or capacity to transfer said note to the plaintiff, by its indorsement or otherwise.” •

Thus the allegation of an indorsement by the Company is impliedly admitted; the actual fact of indorsement, by authority of the corporation, through some competent agency, is conceded; and all that is put in issue is, a legal proposition that the Company itself had no legal capacity or power to transfer the note.

Fow, the testimony presents this state of facts: The President was proven, by sufficient evidence, to have been in the habit of indorsing the notes; the Finance Committee were made aware of this, as well as several of the other Directors: indeed, the testimony is, that the Finance Committee knew of the transaction with S. Gr. Ogden upon which this and a mass of other notes were delivered to him.

Yet it is also proven that it was not the custom of the Board to inquire into the financial matters; consequently the Board, as a Board sitting, did not know of the transaction.

Then, a question was put to the witness Ogden, Vice-President of the Company: “Did your father know that there was no resolution of the Board of Trustees authorizing the transfer?” The question was, on objection of the plaintiff, ruled out, and an exception taken.

The 8th section of the act of moneyed corporations, (1 R. S., 588,) is applicable to the present Company. The transfer of effects exceeding the value of $1,000, without a previous resolution, is void, except to a purchaser for valuable consideration without notice. The notice must be of the fact that there had been no previous resolution. The fact of notice must be positivety proven or necessarily inferable from what is proven. And here the defendants offer to prove knowledge by Ogden at the time of the transfer to him, that there was no such resolution.

See the case of Blunt v. Hanna, (reported in Cleaveland’s Banking System, p. 7, note,) before Vice-Chancellor Sandford.

I do not understand that that case, or that of Gillet v. Phillips, (8 Kern., 114,) is affected or questioned in any of its positions by the later authorities, except upon the question of a banking corporation, created under the general act,, being governed by the provisions as to moneyed corporations. (17 N. Y. R., 521.) Notice of the absence of a resolution of a Board was there chiefly deduced from the situation of the assignee as a Director.

The question, then, seems to resolve itself into this: Has the defendant debarred himself from the defense by the form of his answer ?

It is insisted that'the answer admits of the construction that the Company had no power to transfer but through a resolution of the Board; that, by this allegation, involved in the denial, they put the plaintiff to prove his title through a resolution, or through something equivalent to and a substitute for it.

But, in our opinion, the language will not justly bear such a meaning. We must construe the answer with reference to the complaint. The allegation is, that the Company duly indorsed the note, and the same was thereupon duly transferred and delivered to the plaintiff.

This fact of indorsement by the Company is met by an averment that the Company had not legal capacity to indorse and transfer the note. The defendant tenders only the issue that there was no such capacity. Presumptively, a corporation has the power to pass away notes held by it, for some purposes; and the transfer will not be assumed to be for illegal purposes. The defendant, therefore, was to show some prohibition, or fact, which destroyed this capacity in the present case. This he has failed to do; and the fact of indorsement by the Company stands conceded.

2. Another branch of the defense taken by the answer is, that the Company was never duly organized, and had not a legal existence.

The charter of the Company was produced in evidence. Proof of acts under it were given. Proof of the defendants’ dealing with it as a corporation is given, besides the note itself. Its legal existence is fully made out as against these defendants.

8. The answer next sets up that the note was an accommodation note to the Company, and this was known to the plaintiff; and, further, that the loan of the plaintiff to the Company has been fully paid.

There is no evidence of Ogden’s knowing the character of the note. There is evidence that his loan was not paid. And, in that case, even if he knew it was accommodation paper, there would be no defense on this ground.

The exceptions taken upon the trial remain to be considered.

The defendants’ counsel offered to read the minutes of the Company, which was overruled, and an exception taken. In what way these minutes bore upon any issue in the case, does not appear. The counsel did not state in his offer the object of it, nor the contents or tenor of the minutes.

'The question was asked, how Ogden got the note from the Company. It was objected to, and the question ruled out, and an exception taken. Ho question was raised by the answer as to the manner in which Ogden acquired the note from the Company—that it was in an illegal or fraudulent manner. Besides, the question seems fully answered by replies to other questions.

It was asked, how many notes were transferred to Ogden upen the transfer of this note. On objection this was ruled out, and an exception taken. This fact was immaterial to the issue. The only question pertinent to this part of the case was, whether Ogden had been paid in full. Afterwards, the fact is testified to. He got about $19,000 in notes, of which $12,000 had been paid.

The question as to the judgments had on any of the notes was equally irrelevant, and so also was the question as to the securities now held by Ogden, and that as to loss under the policy.

The inquiry as to the character of the subscribers to the stock, being office-boys, insolvent, &c., was irrelevant, when there was no allegation in the answer of the subscription of defendants being obtained by fraud.

The extent of capital and number of trustees, were facts equally irrelevant.

The judgment should be affirmed.

Judgment affirmed.


source: Caselaw Access Project

author: By the Court—Woodruff, J.

license: Public Domain

text:
    Henry W. Bates, Plaintiff and Respondent, v. Nathaniel R. Cobb and James H. Stebbins, Defendants and Appellants.
    1. A complaint which states that the defendants, as agents for the plaintiff, purchased stock, and- on a settlement of the contract of purchase the vendor was found indebted in a sum specified, for which the vendor gave notes to the defendants as such agents, which they received for the plaintiffs, and which have since been paid to them, and that they refuse to pay over the same to the plaintiff, states facts sufficient to constitute a cause of action, although it does not state how the vendor of the stock did or could become indebted to the vendee.
    2. It would, it seems, have been sufficient if it had stated that the defendants, as agents of the plaintiff, on settlement with a third person received a note for the plaintiff which was paid to them at maturity and they refuse to pay over the money.
    3. Where a party who claims a balance of account against another, and holds two notes as collateral security, assigns his account to a third person who brings an action thereon and the defendant therein claims to set off one of such notes which had been paid to the assignor, after the assignment but before the suit was brought, and afterwards the suit is settled by the payment of ten per cent of the sum sued for and costs, such settlement is no bar to an action by the defendant therein to recover from the said assignor the amount of the other note, although it was paid pending the former action and before the settlement.
    4. A settlement “in full of an account and demand sued upon in this action ” does not embrace any matter not embraced in the controversy as disclosed by the pleadings therein.
    (Before Bosworth, Oh. J., and Woodruff, J.)
    Heard, November 9th, 1858;
    decided, May 28th, 1859.
    This action was tried before William 0. Barrett, Esq., Referee, who reported in favor of the plaintiff the sum of $78.72 with interest from the 25th day of December, 1851, besides his costs, and from the judgment entered upon the report the defendants appealed.
    The complaint herein alleged three distinct causes of action, stating them separately.
    The defendants introduced their answer by insisting that the complaint did 'not, particularly in the first and second sub-divisions thereof, state facts sufficient to constitute a cause of action, and, reserving the right to move for a dismissal of the complaint on the trial of the cause, they proceed to answer each cause of action, denying the plaintiff’s allegations and also alleging matter in bar.
    The Referee reported in the plaintiff’s favor for a part only of his first alleged cause of action, and he found for the defendants upon all the other matters in issue.
    The first cause of action alleged by the plaintiff (which alone is material to the case on the appeal) is, that the defendants were stock brokers and co-partners; that they were employed by the plaintiff, and under such employment they purchased certain stock; that upon a settlement of the contract of purchase the ivendor was found indebted to the defendants as agents for the plaintiff, in the sum of $314.19, and in payment and settlement of that indebtedness • delivered to the defendants, as such agents and brokers for the plaintiff, four promissory notes made by Jacob Little & Co., dated October 23d, 1851, for $78.72 each, and payable respectively in six, twelve, eighteen and twenty-four months, which notes were received by the defendants in payment of the amount due to the plaintiff on such contract.; that such notes were paid to the defendants and they have refused to pay over the money so received to the plaintiff.
    The special matter in the answer relating to the cause of action so alleged is, that before the maturity of the said notes, in the complaint mentioned, the plaintiff became indebted to the defendants, and as collateral security for such indebtedness the plaintiff left the notes in their hands, and when the two notes, due respectively at six and twelve months, became due they were paid and credited in account, and that on the 13th of May, 1853, before the other two notes became due, the defendants assigned their account to'one Teackle with the collateral securities; that there was then due to the defendants from the plaintiff $2,582.78; that on the 18th of May, 1853, Teackle brought suit against the plaintiff, which suit was, after issue joined, compromised and settled for a sum about equal to ten per cent on the amount claimed to be due; that Teackle, by virtue of the assignment, became entitled to the notes and that they were paid to the defendants as his agents before such settlement, and were credited on such account against the plaintiff, and that the compromise and settlement was made by the plaintiff with knowledge of such payment, and that the amount had been credited and applied as aforesaid, and therefore that by means of such receipt and application of the money and the settlement of the said claim, after such receipt and application, the defendants became and are discharged from all liability to account for or pay over the moneys to the plaintiff.
    It was shown on the trial that the defendants received the four notes mentioned in the complaint as the plaintiff’s agents or brokers in settlement of a balance due to him; that when the first two became due they were paid and it is conceded that they were duly accounted for; that on the 13th of May, 1853, the defendants claiming that the plaintiff owed them a balance of $2,582.78 in account, on their transactions for him, assigned their account of such transactions to Elisha W. Teackle, who brought an action against the said plaintiff to recover such balance. The plaintiff defended that action upon various grounds not material to the present case, but he also set up in his answer a counterclaim averring that on or about the 23d of April, 1853, the present defendants had also received to the use of the plaintiff (then defendant) the sum of $78.72, that being the principal sum mentioned in the third of the said four promissory notes, which sum, with interest, he claimed to set off against the claim of the said Teackle as assignee; that action was pending until February 8th, 1855, when it was settled by the payment of ten per cent of the claim of the said Teackle and $125 on account of the costs of suit, and a receipt was given on behalf of Teackle expressing that the amount was paid and received in full of “ the account and demand sued upon ” in that action.
    During the pendency of that suit the fourth of the above mentioned notes, being also for $78.72, was on or about the 23d or 26th of October, 1853, paid to the defendants.
    The facts found by the Referee, so far as material to the present appeal, are, “ That the defendants received the certain promissory note of Jacob Little & Go., mentioned and set forth in the first cause of action, set forth in the complaint in this action as due and payable in twenty-four months after date, for account of the said plaintiff; and that the said note was paid at maturity, and the proceeds thereof were received by said defendants, and that they have never paid or accounted for the same to plaintiff; that the said last mentioned note was not embraced in the settlement between plaintiff and said Elisha W. Teackle; that said note was not held by defendants as collateral security, as alleged in the answer; and as conclusions of law from the facts found, the said Referee found that the said plaintiff was not entitled to recover against the said defendants for any part of the amount claimed in the second and third causes of action set forth in the said complaint, or any part of the aforesaid note payable at eighteen months after date; and that said plaintiff was entitled to recover the full amount of the promissory note therein referred to as payable twenty-four months after date, being $78.72, with interest from the date of the maturity of said note.”
    To which finding and decision of the Referee the defendants’ counsel duly excepted.
    Judgment for the plaintiff having been entered upon this decision of the referee, the defendants appealed to the General Term.

      J. B. Yates ■Sommers, for the defendants, (appellants.)
    I. The complaint does not state facts sufficient to constitute a cause of action, and, therefore, the Referee erred in denying defendants’ motion to dismiss the complaint.
    The first count is defective, in not showing how the plaintiff acquired title to the notes, or that he, in fact, had any title. He claims title upon an alleged indebtedness from a vendor to a vendee, when none of the facts stated by him show how such an indebtedness could exist. It might have been sufficient to have averred the existence of the indebtedness without setting forth the facts which gave rise to it; but having set forth the facts, the plaintiff’s case must fail, unless those facts justify the conclusion of indebtedness.
    II. The defendants were not simply the brokers or agents of the plaintiff. They acted for him not only in that capacity, but also in the capacity of factors—buying and selling and making advances for him, and thus having possession of his property. They transacted his business in their own names, and thus acquired rights beyond those of mere brokers. One of these rights gave them a lien on the property of the plaintiff which came into their hands, for the amount of their commissions, advances and expenses. (1 Parsons on Contracts, 84; 2 Kent’s Com., 640; Story on Agency, §§ 33, 34, 386; Bryce v. Brooks, 26 Wend., 368.)
    III. The evidence clearly shows that the plaintiff, at the time the defendants received the notes from Little & Co., was indebted to them in an amount far exceeding the amount of his claim in this action, for advances, commissions and expenses. They therefore had a right to collect the notes and apply the amount received towards liquidation of that indebtedness.
    1. Such right was incident to the lien which the defendants had upon the property.
    2. The complaint virtually admits that the defendants were authorized to collect the notes.
    3. The plaintiff himself conceded such right, for he admits that the amount of the two notes which matured before the assignment to Teackle was credited to him in his account with the defendants.
    IY. The Referee, therefore, erred in finding as a matter of fact that the defendants had no lien .on the notes, and did not hold them as collateral security for payment of the indebtedness of the plaintiff to them.
    Y. The assignment by the defendants to Teackle of their account against the plaintiff, carried with it the collateral securities in the hands of the defendants, whether they were mentioned in the assignment or not, and therefore all moneys which were collected on the notes after the assignment belonged to Teackle to the extent of the amount due upon the account.
    1. Although a lien is in some respects dependent upon possession, it is well settled that a lien may follow goods in the hands of a third person to whom they have been transferred by the party having the lien. It will always follow the property where there is a transfer or assignment of the rights of the party who acquires the lien, for in such cases the transfer operates as a continuance of the possession of the bailee. (Urquhart v. McIver, 4 J. R., 115; Nash v. Mosher, 19 Wend., 432; Story on Bailments, 216, n. 2; Edwards on Bailments, 210, 211.)
    2. The lien of the defendants was a mere incident to the debt, and the assignment of the debt necessarily carried with it all the rights and securities possessed by the assignor. (Kane v. Blood

      good, 7 Johns. Ch., 108; Green v. Hart, 1 J. R., 590; Jackson v. Blodget, 5 Cow., 206; Langdon v. Buel, 9 Wend., 80; Pattison v. Hull, 9 Cow., 747; Curtis v. Tyler, 9 Paige, 482; Bowdoin v. Coleman, 3 Abb., 431; Parmelee v. Dann, 23 Barb. S. C. R., 461.)
    YI. The settlement of the suit brought by Teackle was a settlement of all the claims of the plaintiff sued for in this action. The referee so finds in reference to all of the demands, except that arising out of the note payable twenty-four months after date. He should have so found in reference to that note for the following reasons:
    1. The defendants had, as we have already shown, alien upon the notes, and held them as collateral security for the balance of account due from the plaintiff.
    2. By the assignment of Teackle he became vested with all the rights of the defendants, in reference to the notes, and held them as collateral security for the payment of plaintiff’s debt, and had a right to collect them and apply the amount towards its liquidation.
    3. The note upon which the plaintiff has recovered judgment matured, and was paid before the settlement, and the amount had been applied by Teackle towards the payment of the debt.
    4. In the settlement, the plaintiff expressly reserved certain bank stock which he admitted was held by Cobb & Bates as collateral security, but did not claim the return of any other col-laterals.
    5. The plaintiff knew when the notes matured, and was aware of the fact that they had been paid before the settlement.
    The judgment should be reversed.

      Wm. Allen Butler, for the plaintiff, (respondent.)
    I. The Referee has found as a fact that the note (No. 4) was not held by defendants as collateral security, as alleged in the answer. This finding, upon the conflicting testimony of the parties, should be conclusive.
    The finding of the referee is supported by the weight of evidence.
    II. The note in question was not included in the assignment by defendants to Teackle of their account; and, not being, in fact, held as collateral to that account, Teackle acquired no property in it, by virtue of the assignment. It was not embraced in the settlement; and the rights of plaintiff against the defendants in respect to the note remained unaffected by bis settlement with Teackle. The Illinois Bank stock referred to in the settlement was an item in the account.
    III. The fact that defendants afterwards included the note in their general settlement with Teackle is immaterial, and does not in any manner affect plaintiff’s rights.
    The judgment should be affirmed, with costs.
   By the Court—Woodruff, J.

1. We are not able to perceive that the first count in the present complaint (upon which alone the plaintiff has recovered judgment) is defective in any substantial particular.

It alleges that the defendants were employed by the plaintiff as his agents to purchase stock for him; that they made such purchase for the plaintiff and on his account; that afterwards, an account of such purchase was stated, and a settlement thereof was made between the vendor and the defendants as such agents, by which the vendor was found indebted to them as such agents in a sum named, which indebtedness such vendor paid by delivering to the defendants, as such agents, four promissory notes of Jacob Little & Co., which notes the defendants received for the plaintiff and held as his agents, and which have been" paid to them at their maturity, and that they have not paid over the money received thereon, but refuse so to do.

This is a sufficient statement of facts, showing that the defendants have received money to the use of the plaintiff, which they are bound to pay over to him.

The criticism which the counsel for the appellants applies to this count, is in substance that it does not appear by the allegations how the vendor of stock could or did become indebted to the vendee, and therefore it does not appear that the plaintiff was, at the time of the settlement with the vendor, entitled to receive any notes or money from him, and if not, he could not be entitled to receive any from his agents in the transaction.

Several answers may be given to this objection: First. It is averred that the vendor was found indebted and actually paid the notes to the defendants, as his agents, and they received the notes for him. If so, they are liable to account for them, and for their proceeds; and the particular circumstances which formed the consideration of such vendor’s indebtedness, w'hether his refusal to deliver, or an over-payment of purchase money, or other fact, are quite immaterial. The indebtedness was conceded by such vendor, and the amount was paid to the defendants for the plaintiff’s use, and they clearly, upon these facts, have no right to retain it. Second. Under our former system of pleading, averments that the parties accounted together of and concerning dealings which they had had together, and on such accounting the defendant was found indebted to the plaintiff in a sum named, which he promised to pay, and yet neglected and refused, &c., were a good statement of a cause of action, without giving the particulars of the dealings or stating how the indebtedness arose. We incline to think such averments would constitute a sufficient complaint now, and much more are averments of such a settlement by the plaintiff’s agent with a third person, upon which such agent received money for the plaintiff, good in an action to recover the money from the agent. Third. We' apprehend that averments that a third person paid money to the defendant as the plaintiff’s agent, (or notes upon which the money was paid,) for and on account of the plaintiff, and that such defendant received it for him, but refuses to pay it over, would constitute a sufficient complaint without stating at all the consideration which moved such third person to pay over the money. If it was a mere gratuity, the defendant could not, on that ground, refuse to pay it to the plaintiff.

And finally, if any particulars were desired by the defendant, for the purpose of identifying the transaction and apprising him of the precise nature and ground of the claim, (which, however, does not appear necessary in this case,) he should have sought those particulars by motion for an order to make the complaint more definite and certain, under section 160 of the Code.

2. We do not think it necessary to consider whether the referee erred or not in finding that the defendants had no lien upon the notes in controversy as collateral security; nor whether the assignment made by them to Teackle of their account against the plaintiff, gave Teackle an equitable right to the note which at that time remained in the defendants’ hands unpaid. For in the view we take of the effect of that transaction and the settlement of the action which he brought, no determination of those questions can affect the result of this suit.

The claim of the defendants is that by the settlement with Teackle the plaintiff lost all title to the proceeds of the note now in question.

This claim is clearly no stronger than it would be if there had been no assignment of the defendants’ account to Teackle, but the defendants had themselves brought their own action to recover the balance alleged to be due, and he made the same settlement which he made. The case would stand thus:

On the 18th of May, 1853, the defendants sue the plaintiff to recover an alleged balance of account amounting to $2,582.78. The plaintiff defends on various grounds the entire claim, and alleges that on the previous 23d of April these defendants received the proceeds of the third note, and claims to set off the amount. At this time, although these defendants held in their possession another (and fourth) note belonging to the plaintiff, yet it was not due and it could not be the subject of set-off against the account sued upon. The action so brought aud defended is afterwards settled by a payment of a portion of the amount claimed which is received, not in full of all claims and demands, &c., between the parties, but in full of the account and demand sued upon.”

It seems to us hardly possible gravely to insist that this settlement embraced for any purpose anything except the matters alleged in the pleadings .in that action, even if its effect can be extended beyond the mere “account ” of the defendants.

The settlement of that action, under the circumstances stated, operated upon the other relations between the parties just as the payment of the claim in full would have done, by the very terms of the settlement the account and demand sued upon were satisfied. And to that satisfaction nothing was applied except the matters then in controversy and the further payment then made.

It follows necessarily that so soon as the account of the defendants was paid, and in like manner so soon as it was satisfied by the accounting and settlement and the payment made thereon, the present plaintiff was entitled to receive from the defendants whatever property they held belonging to him, (not included in the said account nor referred to in that action,) whether the defendants had theretofore had a lien thereon or not. And therefore if the fourth note had not been paid the plaintiff might have demanded the delivery to him of the note itself and might have maintained an action to recover it, for the plain reason that the defendants’ lien (if any they once had) was satisfied and extinguished.

The money having been received pending the former suit, and not having been taken into view or embraced in the settlement, was the money of the plaintiff held by the defendants in place of the note itself.

As above suggested, the fact that the former action was prosecuted by the defendants’ assignee does not affect this view of the plaintiff’s rights. Even if Teackle would have been entitled (had no settlement been made) to require the defendants to pay over to him the proceeds of the note by reason of a supposed lien thereon to cover the balance of the assigned account, still the note never in fact went into his possession. The money was never paid to him. By the settlement all his title to the note and to the money was extinguished if he had any. And the money remained in the defendants’ hands to the use of the plaintiff, which the defendants had no right to retain, and upon which Teackle had no claim nor any lien.

The judgment should be affirmed.

Judgment affirmed, with costs.