author: Van Brunt, P. J.: Daniels, J.: Barrett, J.

text:
    OLIVER W. BARNES, Appellant, v. JESSE SELIGMAN, JAMES SELIGMAN and DAVID SELIGMAN, as Executors of the Last Will and Testament of JOSEPH SELIGMAN, Deceased, and GEORGE H. BROWN, Respondents.

      •Contract to deliver stock — value of the stock, how determined on a breach, thereof— amendment of complaint to conform to proofs, not proper when the admission of the proofs in evidence has been objected to — allegation as to the insolvency of the survivors in a suit against the representatives of deceased joint-debtor.

    ■Where a contract provides for tbe delivery of certain corporate stock, and tbe party obligated to deliver the same refuses to do so, the measure of damages is not what tbe stock would be worth to tbe party entitled thereto after be had procured it, but what it would cost him to procure it.'

      Where it appeared that the only way in which such stock could be procured was by the payment oí the face value thereof into the treasury of the company, and causing it to be issued by the corporation, the party entitled thereto undeithe contract is entitled to recove’ as damages its face value, although such stock may, in fact, be worthless.

      Kirschniann v. Leclicml (61 Barb., 573) distinguished.
    Where the stock has a market-price, the measure of damages is determined thereby; but if it has no market-price, the damages are determined by the cost of' procuring it, if it is possible to do so; and proof as to what the party entitled under his contract could sell the stock for, if it has no market-value, is. immaterial. (Barrett, J., dissenting.)
    A complaint cannot be amended to conform to the facts proved, where an objection has been taken in time to the proving of the facts, because of the insufficiency of the pleading.
    The rule which requires, in a suit against the legal representatives of a deceased joint-debtor, an allegation in the complaint of the insolvency of the survivors,, is not limited to cases of partnership contracts. In the absence of an allegation as-ta the insolvency of the survivors, no action can be maintained against the representatives of the deceased joint-debtors.
    Appeal by tbe plaintiff from a judgment, entered, upon tbe report of a referee, in tbe office of tbe clerk of the county of New York, on tbe 19th day of May, 1886, for tbe sums of $2,361.51 and $2,364.02, respectively; and also from an order made at a. Special Term held in the county of New York, and entered in the' office of tbe clerk of tbe county of New York on May 5, 1886, granting defendants’ motions for, and awarding an extra allowance of, $1,000 to tbe defendants Seligman. and an extra allowance of $1,000 to tbe defendant Brown.

      E. tí. James, for tbe appellant.

      Hamilton Oilell, for tbe defendant Brown.

      O. W. Seligman, for tbe defendants Seligman.
   Van Brunt, P. J.:

In tbe statement of facts upon which the legal questions which are to be discussed arose it will not be necessary to advert to but. a few of those found by tbe referee.

This action was brought to recover $200,000, with interest from the 16th of May, 1872, as damages for tbe breach of a contract dated tbe 26th day of March, 1872, made by Joseph Seligman and George II. Brown with tbe plaintiff in the following language:

“ Oliver W. Barnes having, by instruments bearing even date herewith, assigned and transferred to us, George II. Barnes and Joseph Seligman, all claims and demands against the New York City Central Underground Railway Company, and his title to certain subscriptions to the capital stock of said company, and also any interest he may have in a certain alleged contract made with the said company by Francis P. Byrne, and having also transferred sixty shares of stock in said company.
“Now,, we, George H. Brown and Joseph Seligman, do hereby, in consideration of the premises, and of one dollar to us paid by the said Oliver ~W. Barnes, agree that we will, upon certain amendments to the charter of the said New York City Central Underground Railway Company, now pending before the legislature of the State of New York, becoming a law, pay or cause to be paid to the said Oliver ~W. Barnes his representative and assigns, the sum of twenty-seven thousand five hundred dollars in currency of the United States, being the amount of certain advances made and services rendered by the said Barnes to the said railway company. And .also that we will cause to be delivered to the said Barnes or his assigns, at the time of the j)ayment of the said money, two thousand •shares of the capital stock of the said railway company, which said stock is to be full paid stock.
“And we further agree with the said Oliver ~W. Barnes, his representatives and assigns, that in the event of the said amendments not becoming a law at the present session of the legislature, we will either cause said money to be paid and said two thousand shares of stock delivered to the said Barnes or his assigns, or have reassigned to the said Barnes or his assigns the claims, demands and rights so assigned to us, and transfer to him or his assigns the said sixty shares-■of stock so transferred to us the next day after the close of the present session of the legislature of New York. And we further agree that not more than one hundred additional shares of the stock of said company shall be issued until the said payment be made and stock delivered without the consent of the said Barnes, and that so much of said one hundred shares as shall be issued shall be transferred to the said Barnes, if we do not exercise our option of paying said twenty-seven thousand five hundred dollars and delivering said two. thousand shares on the failure of the said amendments to become at law at the present session.
“ And we further agree that no contract for the construction of' the railway of the company shall be entered into without the consent of the said Barnes, until the said money shall be paid and the stock delivered.
“ In witness whereof, we have hereunto set our hands and seals; this twenty-sixth day of March, in the year one thousand eight hundred and seventy two.
“ GEORGE H. BROWN, [l. s.]
“ JOSEPH SELIGMAN.” [l. s.]

Prior to and at the time of making said contract, the said plaintiff' owned and had claims and demands against the New York Central Hnderground Railway Company, and a title to certain subscriptions-to the capital stock of said company and an interest in a contract made by one Byrne, and sixty shares of the capital stock of said company. At the date of the contract only 117 shares of the-capital stock of the company had been paid in or issued, of which the plaintiff held sixty-three shares. On the day of the date of the-contract 100 additional shares were issued, and no further or other-issues of full-paid stock were ever made. The plaintiff performed, the said contract on his part to the satisfaction of said Joseph Seligman and George II. Brown, and duly transferred the property-mentioned in said contract. The amendments to the charter of said company referred to in said contract did not become a law at the session of the legislature mentioned in said contract, and the said session closed and adjourned sine die on or about the 14th of May,. 1872. Neither Brown nor Seligman either reassigned or caused to-be reassigned or retransferred to the plaintiff or to any jierson on, his behalf the claims, demands and rights assigned to them by said agreement of March 26, 1872, or have transferred to him or his-assigns the said sixty shares of stock transferred to them or any part; of said property, or made any offer so to do.

On the second day after the adjournment of the legislature the- ■ plaintiff demanded from Seligman and Brown the payment of the cash and delivery of the stock which said contract called for. Brown and Seligman, notwithstanding the failure of the passage of the proposed amendments to the charter, elected to keep the property-transferred to them by the plaintiff and to perform their contract with the plaintiff, and they subsequently paid to the plaintiff the sum of $27,500 mentioned on said contract. But they never delivered or offered to deliver the 2,000 shares of full paid stock mentioned in the contract.

The referee found that the plaintiff had sustained no actual damage by the failure of Brown and Seligman to deliver to him the 2,000 shares of said stock, such finding being based upon proof that the stock had no actual value. He also found that the complaint should be dismissed as to the executors of Seligman in that the action was commenced after the death of Joseph Seligman against his executors, and the complaint did not contain any allegation of the insolvency of Brown. He further found that the plaintiff was entitled to judgment against the defendant Brown for nominal damages, six cents. Hpon application, orders were made granting extra allowances, and from the judgment and orders thus made this appeal is taken.

The appellant founds his appeal upon the claim that the learned referee erred in the measure of the plaintiff’s damages, and this is the most important question involved. There is no dispute about the main facts of the case. The plaintiff and the defendant Brown and Seligman entered into the contract to which attention has been called. The plaintiff performed his part of the contract and assigned the property therein mentioned to Brown and Seligman as therein required to do. Brown and Seligman accepted this property, and, after it had been ascertained that the amendments which were then pending before the legislature, and referred to in the contract, had not been passed, elected to keep that property and perform the contract upon their part, and paid the plaintiff $27,500 in cash, by the contract required to be paid. They attempted to deliver to the plaintiff the stock provided for in the contract, but this stock was not of the character required by the contract to be delivered to him, namely, it was not full-paid stock; which the plaintiff, upon discovery of the fact, tendered to them back, demanding the full-paid shares to which he was entitled under the contract.

It was also proven that the stock, if it had been delivered to the plaintiff, would, probably, have been valueless in his hands for the purposes of sale; and it was in view of this fact that the referee found that the plaintiff was only entitled to recover nominal damages. It is sought to support this finding by reference to the principles laid down in Sedgwick in discussing the measure of damages in actions on contracts, at page 200, in which it is said: “ The two cardinal principles which will be found to pervade and regulate this branch of our subject are, first, that the plaintiff must -show himself to have sustained damage, or, in other words, that actual compensation will only be given for actual loss; and, secondly, that the contract itself furnishes the measure of damages.” And again, at page 203, it is said: “ Where the contract is one by which the plaintiff is to receive, not money, but the transfer of certain property or services, then the value of the original consideration is not to be inquired into, but the value of the property or services is the measure of damages, because this is the remuneration fixed by the agreement.”

So, if the contract is to pay for services in property, the value of the property is the correct measure of damage. We are also referred to the case of McKnight v. Dunlop (5 N. Y., 537), which was an action to recover damages of a vendor for the non-delivery of a quantity of malt, and it was held that the plaintiff was entitled to recover the difference between the contract-price and the market-value of the malt at the time of the refusal to deliver. The same rule was laid down in Pollen v. Leroy (30 N. Y., 549) and Windmuller v. Pope (107 id., 674).

Indeed, it is needless to cite authorities upon this proposition, because it is a rule which has long obtained and is well settled. But there is another principle which is equally well established, namely, that the law will not permit a party to realize a profit by the breach of his contract. As was said by Judge Robinson in Frankinstein v. Thomas (4 Daly, 258): “ A contrary rule would offer to thieves and wrong-doers a premium for speculating upon a possible verdict of a jury founded upon the opinion of experts.”

In the cases to which attention has been called the rule of damages was plain, because the articles which were dealt in were capable of procurement in the open market. There was no difficulty in supplying the deficiency, and no difficulty in determining what-the difference of value was at the time the contract was made and at the time when it should have been fulfilled. . The party could go into the open market and indemnify himself by the purchase of the articles which were not delivered, and thus fix the amount of damages. And hence the rule which was established in the case of Wright v. The Bank of the Metropolis (110 N. Y., 237), in which it was held, where a pledgee of corporate stock converted it by an unauthorized sale thereof, and refused to purchase it upon demand, that it was the duty of the owner to replace it himself within a reasonable time, and the proper measure of damages. is the highest market-price during such reasonable time; in other words, what it would cost him to procure the property so as to put himself in the same position that he was before the conversion .affords the measure of damages.

The measure of damages, therefore, does not seem to be what the .article would be worth to the party after he had procured it, but what it would cost him to procure it. It appears from the evidence in the case at bar that the only way in which this stock could be procured was by payment of the face value of that stock into the treasury of the company and causing it to be issued by the corporation. There was no way in which the plaintiff could get possession of the 2000 shares of stock which Brown and Seligman had agreed to give to him, except by paying $200,000 into the treasury of the •company and causing the stock to be issued, and there was no other way in which Brown and Seligman could procure that stock for the purpose of carrying out the provisions of their contract. Now, under the principles to which attention has been called, the measure •of damages is the amount of money which it would take the plaintiff to put himself in the condition he Avould have occupied had the contract been fulfilled. It is idle to say, in answer to this proposition, that the proof is that the stock would have been worthless in the hands of the plaintiff so far as money-value was concerned. That is not the question. Brown and Seligman had agreed to give Barnes, in exchange for the property which he transferred to them, 2,000 full-paid shares of said stock. If he could have gone into the market .and bought this stock, clearly his damages would have been what it would have cost him to procure it. It was not necessary that he should actually purchase it. That has never been- held; but the .rule is that the amount of damage is measured by what it would have cost him to replace the article which the parties contracting agreed' to deliver.

Now, the proof is without dispute that it would have cost Mr. Barnes $200,000 to have procured this stock, because it could only be procured in one way. Brown and Seligman knew this when they entered into this contract; they knew this fact after there had been a failure to pass the amendments to the charter in the legislature and the legislature had adjourned, and when they had an opportunity to recede from the contract and transfer to the plaintiff' the property they had received from him, and end their obligation to pay any money or déliver any stock to him. But with these-facts staring them in the face they chose to confirm the contract to keep his property, and to pay him the $27,500 in cash required by the contract. And they attempted to defraud him by delivering-stock under the contract which in no manner fulfilled its requirements, which, upon discovery, the plaintiff returned, demanding the-full-paid stock called for by the contract. At the time when Brown and Seligman confirmed the contract they thought it was to jheir advantage to keep the plaintiff’s property and obligate themselves to carry out the provisions of the contract upon their part. Now, can they be heard to say, after having got the plaintiff’s property, “ What we have agreed to give you would have been worthless if you had got it, and, therefore, we will not pay you anything foiwhat we received from you.”

It is clear that no such rule of damages can possibly prevail. Om-attention is called, in support of the proposition made by the defendants, to the case of Kirschmann v. Lediard (61 Barb., 573). In that case the defendant had agreed to organize a stock company for the manufacture of articles under letters-patent owned by plaintiff; the plaintiff agreed to transfer the letters to the company when formed, and he was to receive therefor from the defendant-some cash and $50,000 in the capital stock of said company. The defendant failed to organize the company and plaintiff sued foidamages. The court directed a verdict for the plaintiff for $50,000, the nominal par value of said stock. This was overruled by the-General Term. “ The plaintiff,” the court said, “ was entitled to-damages for a breach of the contract. The amount depended on the value of the stock after the corporation was formed, to be-proven by showing what such value would have been if the company had been formed, talcing into consideration the property that was to be transferred, and also the fact that by the breach of the contract the plaintiff was released from the obligation to transfer’ his property. It may be that the stock would have been valuable- or it may be that the damage would be only nominal.”

It is apparent, upon a consideration of the facts in the case cited and those in the case at bar, that it is no authority for the proposition claimed upon the part of the defendant. In the case cited nothing-had been done under the contract. The plaintiff had his property and the defendant had not organized the company, and the question of damage was affected by the fact that the plaintiff was released from the obligation to transfer the property.

In the case at bar the plaintiff had transferred the property. The-defendants had it, and when they had an opportunity to return it refused to do bo, preferring to confirm their contract — an entirely different condition of affairs, even if the case of Kirschmann v. Lediard is to be considered as an authority upon this proposition as to the measure of damages. There is another circumstance to be-considered in determining that question. There was no possibility whatever of the defendants in that case being able to procure the-$50,000 worth of stock. The company never was organized; they could not get the stock; no money could procure it, and, consequently, there was no way of determining what it would have cost to-furnish the stock under the contract.

In the case at bar it was entirely different. The property could be procured; it was only a question of paying the par value of the-stock in order to obtain these shares. These two features clearly distinguish the cases and it cannot be considered as an authority in favor of the proposition that a party to a contract is to be allowed, to make money out of its breach.

It is only necessary to call attention to the principles laid down in the case of Bruce v. Welsh (52 Hun, 524), where it is distinctly-held that good morals certainly forbid that a man should be allowed to derive benefit from a violation of his obligations to others; and the question is asked : Does the law permit a wrong-doer to retain to himself advantages thus gained as against the person whom he-has wronged ? ”

In tlie case at bar tlie adoption of any other rule of damages would enable these defendants to keep the property which had been •transferred to them without paying a cent for it, because the payment of the $27,500 has nothing to do with the question now under consideration. Their rights would have been precisely the same had no such sum been mentioned in the contract and they had not been required to pay the same. Entirely in harmony with this proposition is the case of Johnson v. Hathorn (2 Abb. Ct. of App. Dec., 465).

It seems to us that the only rule which can be adopted as applicable to cases of this description is that the damage which the party sustains by reason of the breach of that contract, if the property has a market-price, is the market-price for the property, or if it has no market-price, what it would cost to procure the same if it was possible to do so. Any other rule of damages would relegate us to the realms of speculation alone. There would be no certainty, and it would be a violation of the rule to which attention has been •called, viz., that the law will not allow a party to make a profit out •of the violation of his contract to deliver certain articles which he is able to procure, but which he says it would be expensive for him to procure, and which, if he had procured them, would not have been of any use to the other contracting party. Of what avail the ownership of that stock would have been to the plaintiff we are not aware. It may have been of value to him outside of the mere question of market-value. Tie may have had projects for the successful prosecution of which the ownership of this stock was necessary, and is it to be said that where a man bargains for a particular piece of property which, he deems, is absolutely necessary for himself, but which may be worthless for anybody else, that he has no remedy because that piece of property, however valuable to himself, is worthless to others. We think, therefore, that an entirely erroneous rule was adopted as to the measure of damages, and that the proof as to what the plaintiff could- have sold this property for was entirely immaterial. If it had no market-value, if it was not to be procured in the open market, then what it would Tiave cost to procure it seems to be the only rational rule which •could be adopted.

Another question which is involved is the referee’s ruling dismissing the complaint as to the executors of Seligman. Seligman had died before the action was commenced, and the suit was brought against Brown and the executors of Seligman without any allegation whatever as to the insolvency of Brown. It seems to us that the want of this allegation was fatal to the right of the plaintiff to recover as against the executors of Seligman. The contract sued upon was a joint obligation. It is clearly so from its language, and the general rule which prevails in reference to a contract is that, if sevei'al persons agree to perform a particular act, they are bound jointly and not severally in the absence of express words creating a. several liability. This being a joint contract, at common law the death of Seligman freed him from the joint liability and absolutely discharged his estate. Equity, however, in order to prevent hardships of this kind arising from the technical rule of law, permitted the estate of a joint obligor to be sued on the allegation that the creditor coxdd not obtain satisfaction from the survivor because of his insolvency or otherwise. This rule of equity has been adopted in this State and is part of its settled law.

It is urged, however, upon the part of the appellant, that there never having been any demurrer in this case, it has been held sufficient to prove the survivor’s insolvency at the trial, in which case the complaint should be amended to conform to the facts proved.

It is a familiar rule that a complaint cannot be amended to conform to the facts proved where an objection has been taken in time to the proving of the facts because of the insufficiency of the pleadings, and the cases of Van Riper v. Poppenhausen (43 N. Y., 68), First National Bank, etc., v. Morgan (73 id., 593) and Pope v. Cole (55 id., 124) in no way conflict with this proposition. The questions decided in those eases were, that where proof was given of the insolvency under proper averments a recovery might be had against the representatives of the deceased partner.

It is further sought by the appellant to limit this doctrine to cases of partnership contracts. But we see no reason for the limitation. In fact, in the case of Pope v. Cole the contrary doctrine is expressly recognized, although, perhaps, the question was not involved in the case. But the principles upon which those cases proceed, and the right to pursue the personal representatives rests, certainly make no such distinction as is claimed by the learned counsel; and that there is no distinction between the cases is apparent from the fact that it ia not a legal right which is attempted to be enforced, but an equitable ■one. It was because equity intervened for the purpose of relieving from the hardship which arose by the discharge of the estate of a joint obligor who died, that any right of recovery whatever exists ; .and, in order that the hardship should exist, it is necessary that the impossibility of collecting the debt from the surviving obligor should .appear. And hence arises the rule that upon showing the insolvency ■of the surviving obligor the estate of the deceased obligor may be ■called upon to pay. It being thus an equitable right simply which is enforced, the right to recover does not depend upon a question of partnership, but simply upon the fact that, in law, the estate of the .joint obligor is discharged upon his death from any obligation under the contract.

We think that, without the allegations as to the insolvency of Brown, it is clear that no action could be maintained against the ■estate of Seligman. The sections of the Code, to which attention lias been called, do not seem to apply to the question here, this action being brought against a survivor of two joint obligors and the representatives of one who is dead.

The question is also raised as to the refusal of the referee to allow the complaint to be amended. It is claimed by the counsel for the appellant that the referee refused to amend upon the ground that it was immaterial, and then excluded the evidence offered because ■such an allegation was not contained in the complaint. An examination of the record, however, does not support this proposition. It does not appear upon what ground the referee refused permission to amend. It is true that the amendment was objected to upon various grounds, among which was the one that it was wholly immaterial. The motion to amend was denied and the objection sustained and an exception taken, but upon what ground the motion was denied does not appear. The referee states in his opinion that he deemed it a matter of discretion, and there is nothing in the record which controverts this proposition. We do not think, under the circum.stances, that the referee ivas bound to allow this amendment upon the trial. If the parties desired to make a more formal application than could be made upon the trial, they had the opportunity to resort to the court, when the court could impose such conditions upon the allowance of the amendment as in its judgment might be necessary. But the referee was not compelled, in view of the situation of this •case, to allow this allegation to be inserted as a matter of right; and having no power to impose terms which would protect the rights of the defendants who were to be brought in, we do not see that there was any abuse of the discretion of the referee in this respect which could furnish any ground for a reversal of the judgment as to the defendants Seligman.

There are also appeals from the orders granting extra allowances in this case. An extra allowance of $1,000 was granted to each of the defendants. Of course, this order must fall with the reversal •of the judgment as to the defendant Brown, and we think that, in view of the circumstances of this case, such allowance as to the •defendants Seligman was improvidently granted. The defendants .Seligman had an opportunity to raise by demurrer the objection which they did raise on the trial. They neglected so to do, preferring to go on and raise the objection upon the trial. They should not-be allowed, in view of this condition of affairs, to get more costs, which are within the discretion of the court, than they would have got had they interposed a demurrer.

We think, therefore, that the order granting them an extra allow.ance should be reversed, with ten dollars costs to the appellants, and that the judgment in favor of the defendants Seligman should be reduced to the su ' of $1,361.51, and affirmed for that amount, without costs, and tk. the judgment as to the defendant Brown should be reversed and a new trial ordered, with costs to appellant to abide the event.

Daniels, J.:

It is not deemed absolutely necessary to add anything further for the disposition of this appeal to the reasons assigned by the presiding justice, whose opinion has concluded for the reversal of the judgment affecting the right of the plaintiff to maintain the action. But some further observations are deemed to be appropriate for the purpose of sustaining one of the conclusions which in- that opinion has been reached. As to the disposition of so much of the principal appeal as relates to the liability of the executors nothing further is designed to be stated. But the more imjiortant feature of the litigation is that which includes the plaintiff’s right to substantial damages for tlie non-performance of the agreement or covenant made with him by the defendant Brown and Josejih Seligman, the testator. When this agreement was made the plaintiff was the president of the New York City Underground Railway Company, and prior to that time he owned and had claims against the company, and a title to subscriptions to its capital stock and an interest in a contract made with Francis P. Byrne, and owned sixty-odd shares of the capital stock of the company. These interests the defendant Brown and the testator were desirous of acquiring, and the object of their transaction with the plaintiff was their assignment and transfer to them.

At the time when the .agreement was entered into there had been issued no more than 117 shares of the stock of the company. Other shares had been subscribed for, not exceeding sixty in number, and the defendant Brown and the testator were familiar with and informed of the affairs of the company prior to the making of-this contract, and they then knew the fact to be that no more than 117 shares of the stock of the company had been issued, and that the stock subscribed for and not issued did not exceed sixty shares. It was in this condition of the affairs of the company, known to the defendant and the testator, that the contract was entered into by them with the plaintiff, and its construction and effect accordingly are to be ascertained, as far as they may be affected by those circumstances, with this knowledge existing in the minds of the defendant Brown and the testator. It was in consideration of the assignment and transfer of the interests, and the sixty shares of stock already mentioned to them, by the plaintiff, that their agreement, which is the foundation of the action, was made and entered into. At that time an act, affecting the charter and rights of the company, was before the legislature, and it was covenanted and agreed by this defendant and the testator, for the consideration already mentioned, that upon the amendments then pending before the legislature becoming a law they would pay, or cause to be paid, unto the plaintiff, his representatives or assigns, the sum of $27,500, being the amount owing for advances made and services rendered by him to the company, and that they would cause to be delivered to him or his assigns, at the time of the payment of that sum of money, “ two thousand shares of the capital stock of the said railway company, which said stock is to be fully paid stock.”

The agreement further provided that in the event that the amendments should not become a law at that session of the legislature, that the defendant Brown and the testator would either cause this sum of money to be paid and said 2,000 shares of stock delivered to the plaintiff or his assigns, or they would reassign to him or his assigns the claims, demands or lights so assigned to them, and transfer to him or his 'assigns the sixty shares of stock transferred to them, and that this should be done on the day succeeding the close of the legislature of that year.

The bill containing these amendments did not become a law, but it was rejected by the legislature. The defendant Brown and the testator did not, however, on that account, transfer back to the plaintiff the rights and interests acquired through.the assignment from him, or the sixty shares of stock received by them, but they elected, as they were entitled to do so, to retain the stock and interests assigned to them, and to deliver to the plaintiff the 2,000 shares of the capital stock of the company mentioned in the agreement. They did pay to him the sum of money, which, in the event arising, they had become obligated to pay, but they did not deliver to the plaintiff the 2,000 shares of paid-up .stock mentioned in the agreement. But after they had elected to retain the rights and interests and stock transferred to them, and to pay the money and deliver the 2,000 shares of paid-up stock to the plaintiff, they obtained from the company 2,000 shares of its stock and delivered that to him as paid up stock. No part of this stock, however, had been paid for in any manner to the -company, and when that fact was ascertained by the plaintiff he disaffirmed this part of the transaction by tendering and offering to return these 2,000 shares to the testator, the defendant Brown being at that time absent from the United States, and he then demanded the 2,000 shares of fully paid-up stock which he had become entitled to receive under the obligation created by the agreement. This tender and demand was made in 1874, and it was repeated again in December, 1884, when the plaintiff was informed by the testator that he understood from Mr. Brown’s counsel that all engagements with the plaintiff had been properly fulfilled; and no further notice was taken of his demand and request. Upon the trial of the action the plaintiff offered to surrender these shares of stock as not being those he was entitled to under the agreement, and demanded judgment for so much money as would enable him to obtain 2,000 shares of the paid-up stock of the company.

It appeared upon the trial that the debts owing by the company greatly exceeded its assets, and that none of its stock was on the market for sale, and it had no marketable or actual value, and for that reason the referee; by his decision, limited the right of the plaintiff to recover against Brown, the surviving party who had executed the contract, to the sum of six cents. This limitation of the plaintiff’s right to damages is deemed to be unwarranted by the contract, construed, as it should be, in the light of the circumstances attending its execution and delivery. At that time it was known to the defendant and the testator that the stock, in the event of their electing to abide by their right to make its delivery to the plaintiff, could not be obtained by purchase in the market, but must be procured from the company itself. This resulted from their knowledge and familiarity with the affairs and condition of the company, and it is furthér indicated by the obligation created in the agreement that no more than 100 additional shares of stock should be issued by the company, without plaintiff’s consent, which consent, in fact, was not obtained; and that such shares as should be so issued should be transferred to the plaintiff, if they did not exercise their option of paying the $27,500, and delivering the 2,000 shares, on the failure of the amendment to become a law. This 100 shares was afterwards immediately issued to John S. Schultze for an indebtedness of the company to him, but no other shares of stock were issued by the company than those which have already been mentioned. There was no source, therefore, from which the 2,000 shares which these persons had become obligated to deliver to the plaintiff, could be obtained but from the company itself, and they could only be obtained from it by payment of the amount for which the company was authorized to issue the shares.

There was no other way or manner in which these shares could be obtained, and the defendant Brown and the testator were fully apprised of this fact, and yet their obligation was positive and explicit, in the event which has taken place, to deliver the 2,000 shares of paid-up stock to the plaintiff. He became absolutely entitled to these shares, and they as absolutely obligated themselves to deliver the shares; aud as they were to be no otherwise obtained than from the company itself, they as clearly assumed the obligation to obtain the shares from the company and pay the amount which would be necessary for that purpose and then deliver them to the plaintiff. In these respects the obligation which was created materially differs from contracts ordinarily entered into for the sale and delivery of property. And the defendant Brown, as the surviving party, whose liability alone is to be disposed of in this action, for the fulfillment of the agreement, was bound to obtain the stock from the company and deliver it to the plaintiff, or pay him so much money by way of damages as would enable him to secure it for himself. That was the clear intent of the agreement.

What the law generally requires the party in default to do, for the satisfaction of a contract or obligation, is to pay to the other party so much money as will secure to him the ability to place himself in the position which, by the terms of the agreement, he was entitled to occupy. In ordinary cases that would be, where the consideration for the property had been paid, so much money as would enable the party not in default to purchase and acquire the property entitled to be received by him under the terms of the agreement. That would fully indemnify him for the loss to which he would be subjected by the failure of the other party to perform the agreement. But that rule is inapplicable to this case, for the article which was to be delivered was not one which was dealt with in the market. It could not be obtained by purchasing it from others. But the only manner in which it could be secured was from the company itself, and then only by paying to it the par value of the shares. The circumstances in this respect were peculiar. For the party not in default could in no other way obtain the benefit and advantage of the contract made with him than by obtaining these shares from the railway company; and where that is the nature of the agreement, there the ordinary rules applicable to the adjustment of differences are not to be followed. (Ormsby v. Vermont, etc., Co., 56 N. Y., 623.)

What the law designs to secure to the party entitled to the performance of a contract made with, him is such a measure of indemnity as will place him in the same position that he would have been in if the contract had been' observed and performed by the other party.

This subject was quite at large considered in Baker v. Drake 53 N. Y., 211). And it was there conceded, in deference to the early English authorities, that in an action on a bond conditioned for the return of government stocks, the party entitled to them should be fully reimbursed for the expense of obtaining them himself. And Gruman v. Smith (81 N. Y., 25) and Colt v. Owens (90 id., 368), are in harmony with this right. And so the law was declared to be in Dana v. Fiedler (12 N. Y., 41). That was a contract for the sale and delivery of “madder,” and it was said in the decision by the court that “ in a suit by the vendee against the vendor for non-delivery, his complete indemnity is to receive that sum which, with the price he had agreed to pay, would enable him to buy the article which the vendor had failed to deliver.” (Id., 48.)

And in Wright v. Bank of Metropolis (110 N. Y., 237), the right of the plaintiff to recover was permitted to extend so far as to include the cost of replacing the article in dispute. And this rule also has the support of Milliken v. McLean (17 Week. Dig., 278) and Scattergood v. Wood (14 Hun, 269).

Cases have been cited and relied upon which were considered by the counsel to restrict the rule of damages so far as to limit the plaintiff to the market-value of the stock now in dispute. But the facts in each of these cases are entirely at variance with those controlling this controversy. And in each of them the rule applied afforded the party not in default all the indemnity he had become entitled to, while in the present controversy that rule would be entirely inadequate for the attainment of this result. Here the obligation assumed by the defendant Brown and the testator, with full knowledge of all the facts, was to deliver to the plaintiff 2,000 shares of paid-up stock of this company. There was no other possible mode of obtaining that stock than from the company itself. The knowledge of that fact by the covenantors is clearly evinced by all the circumstances surrounding the making of the agreement. And it must, therefore, have been intended that the shares should be obtained from that source for the performance of the obligation. The necessity for so obtaining them was known to these individuals, and with that knowledge they positively incurred the obligation to deliver these shares to the plaintiff. That they have not done, and no other rule will suffice to place him in the position in which, by the agreement, these persons obligated themselves to place him, than that which will require the payment to him of so much money as he will be obliged to pay for the shares to the company, and in that manner supply himself with the articles he became entitled to receive under the express language of the agreement.

For these reasons, as well as those which have been stated at large in the opinion of the presiding justice, the law requires this judgment, so far-as it is in favor of the defendant Brown, to be reversed and a new trial ordered.

As to the other matters which have been brought into discussion by the appeals taken in this action, they have been fully and completely disposed of in the opinion already mentioned, and as to them the directions suggested appear to be those required by the law to be made.

Barrett, J.

(dissenting) :

I find myself unable to concur with the presiding justice in his view of the measure of damages. His opinion is an exceedingly forcible exposition of the theory upon which alone the plaintiff can hope to recover the par value of the shares in questien, and it is, therefore, with great diffidence and a due sense of what is needful to answer such vigorous thought convincingly, that I venture to present the opposite, and, as I conceive, correct view. I cannot, however, believe that any just legal principle requires us to mulct these defendants in the sum of $200,000 for the breach of a (partly executed) contract to deliver to the plaintiff a piece of paper representing 2,000 shares of full-paid, but utterly worthless, stock. For that is precisely what it comes to. The underlying thought which pervades the presiding justice’s opinion, and which seems to have led to his ultimate conclusion, is, that unless the defendants are required to pay to the plaintiff this enormous sum, they will be permitted to profit by their own wrong. I have no fault to find with the principle which prevents such unrighteous profit, although I agree with Mr. Sedgwick that the motives of the defaulter are not to be taken into view.” The principle itself is just and well settled, but, as I conceive, wholly inapplicable to the special facts of this case. It was formulated and well illustrated in Suydam v. Jenkins (3 Sandf., 620), where Duer, J., observed “ that the owner to whom compensation is due must be fully indemnified, and the wrong-doer must not be permitted to derive any benefit or advantage whatever fróm his wrongful act.” Judge Duer’s opinion in this case received the most unqualified approval from the Court of Appeals in Baker v. Drake (53 N. Y., 220), where Rapallo, J., pointed out the true measure of damages in all actions, whether founded upon contract or tort, always excepting the special cases where punitory damages are allowed. ‘‘ The law,” he says, “ awards to the party injured a just indemnity for the wrong which has been done him, and no more, * * * and the inquiry must always be what is am, adequate indemnity to the party injured.” ,

Now, the principle enunciated by Judge Duer, in Suydam v. Jenkins, and emphasized in Bruce v. Welch (52 Hun, 524) seems to me to have no possible application to the case at bar for the simple and obvious reason that the benefit or advantage which the defendants derived from their wrongful act was not such as could or should, under any circumstances, have enured to the benefit 'or advantage of the plaintiff. That would have been the case only where the defendants had procured the stock at par and sold it, in disregard of their bargain, at a higher price. The benefit or advantage which the defendants derived from their failure to purchase the stock was such as would have enured solely to the benefit of the company, and, indeed, the latter and its creditors were alone substantially interested in the specific performance of this part of the defendants’ contract.

Now, the benefit or advantage contemplated by the principle in question is not the saving by the wrong-doer of what would otherwise be lost to him, but the actual gain which has gone into his pocket as the fruit of his injustice. It must not be lost sight of that the cardinal principle is indemnity, pure and simple, and that this principle has never been extended one hair’s breadth beyond the refunding of actual gain, which otherwise would■ or should home gone into the pocket of the wronged party. This profit, as Judge Duer remarked, the wrong-doer “ must in all cases be compelled to refund.”

The doctrine necessarily contended for by the plaintiff, however, is not that the defendants here must refund, for they have gained nothing by the use or conversion of the property which should have been delivered to the plaintiff, and, consequently, have nothing to refund, but that they must add to the sum required for his indemnity a further sum equal in amount to that which it was their contract duty to lose. In other words, as the defendants had agreed to deliver a valueless thing, which they did not possess, they were bound to secure it at all hazards or cost; and the measure of damages for .failure to so obtain and deliver it is the sum for which alone such valueless thing could have been procured. Certainly this expenditure was not required for the purpose of indemnifying the vendor, nor to prevent the vendee from profiting at the vendor’s expense by his own wrong. If, therefore, the amount which the plaintiff insists should have been thus expended is awarded to him as damages, such damages are simply and distinctly punitive. The defendants are punished for their refusal to engulf $200,000 in the company’s treasury by a fine of .that precise sumpayable to the plaintiff’. This is worse even than would be a decree for specific performance, for there the money would have to be paid into the company’s treasury; and the plaintiff would only receive, in specie, the worthless though full-paid stock. It is apparent, then, that this sum of $200,000 has no relation to indemnity. The latter is measured by the real value of the stock, and can be measured by nothing else.

Then, as to profiting by the breach, what benefit have the wrongdoers here derived from their own injustice? Have they sold the 2,000 shares for more than the six-pence awarded ? Have they ever had it in their power to do so? Not at all. Now this, as we have seen, is the nature of the profit which the law will not permit the wrong-doer to retain. This is clearly illustrated by Judge Duer in the following language: “ Even where the market-value of the property, when the right of action accrued, would more than suffice to indemnify the owner, it is not, in all cases, that the liability of the wrong-doer should be limited to that amount. It is for the value that he has himself realised or might realise that he is bound to account, and for which judgment should be rendered against him. Hence, should it appear in evidence upon the trial that he had, in fact, obtained, xopon a sale of the property, a la/rger priee than its value when he acquired the possession, or that he still retained the possession, and that am, advance price could then be obtained, in each case the increase upon the original value (which otherwise would remain as a profit in his ha/ndi) ought to be allowed as cumulative damages.” (P. 624.) Such, too, was the nature of the benefit which the landlord was not permitted to retain in Bruce v. Welch (supra).

It is characterized in like manner by Mr. Sedgwick. “ It may, undoubtedly, be urged,” he says, “ and with force, that the contract being violated by the defendant, the retention of any part of the plaintiff's money is against conscience.” (Sedg. on Damages [2d ed.], 274.) Indeed, as already pointed out, the principle of adding what Judge Dueb called “cumulative damages” has never been extended beyond the direct pecuniary gain derived by the wrongdoer from the act of conversion or derivable from the continued possession of the property. It is said that the adoption of any other rule than that which allows the plaintiff as “ cumulative damages ” the sum which it was the defendants' duty to lose in the faithful performance of their contract, would enable the latter to keep the plaintiff’s property without paying for it. But not so, for there can be no doubt that, with such a contract as the present, and under the circumstances surrounding it, the plaintiff could have returned the $27,500 of cash and the 2,000 shares of stock which were not full paid, and recovered back their property or its full value. If, however, after the defendants’ refusal to deliver full-paid stock, the plaintiff chose to retain the cash, was not that plainly an election to treat his property as well sold at $27,500, plus ihereal value of 2,000 shares of full-paid stock? Not plus its par value, nor plus the sum required to procure it, where such sum had no possible relation to its true or actual value, but plus the value of a due proportionate interest in the capital, property, assets and franchises of the company, measured by the bearing of 2,000 shares to the entire capital stock.

It is also claimed that when the defendants refused to deliver the stock the plaintiff had a right to procure it, and to charge the defendants with the cost. Assume that the plaintiff had this right, and it is a mere assumption, how is the situation altered ? In the first place, the plaintiff did not do this. But had he done it, the situation, so far as he is concerned, would have been unchanged. He would have squandered $200,000 upon a worthless piece of paper, not as argued, upon something which subsequently became valueless, but which was then, and ever since has been, valueless. He would have, pro tanto, supplied a bankrupt treasury and enabled the company to pay about one-half of its debts, thus benefiting the defendants, who awe creditors of the company. For it must not be overlooked, although the fact may have no special significance, that a part of the very property turned over to the defendants by the contract in question consisted of a claim of the plaintiff against this very company for some $12,000. Now, if the plaintiff upon paying this $200,000 into the company’s treasury, and taking the full-paid stock therefor, could have recovered from the defendants the amount so paid, how would he have been the gainer ? The recovery would simply have offset the payment, and, in the end, the plaintiff would have found himself in the possession of 2,000 shares of full paid but valueless stock. Thus, at last, he would have had what that stock was worth, and nothing more. Hltimately, therefore, he would have come into the inevitable six-pence. It comes to this, that in no way, manner or shape could the plaintiff have obtained from his contract aught save the full paid shares or the intrinsic value of such full-paid shares.

The plaintiff, undoubtedly, saw where the execution of this idea with regard to procuring the stock would lead, for he falls back upon the proposition that the rule of damages is the same whether he purchased the stock or not. In other words, he can recover, he thinks, the $200,000 although he has never paid a penny into the treasury of the company or otherwise obtained the stock. The fallacy of this position plainly consists in treating the stock called for by the contract as issued stock, purchasable in the market. There the stock has a market-value, and the wrong-doer can be charged with the sum required to replace it, within a reasonable time. (Wright v. Bank of Metropolis, 110 N. Y., 237.)

Thiá rule as to replacing, however, is predicated upon the idea of value — market-value — throughout. The wrong-doer, where there has been a conversion, may be chargeable with the sum realized thereupon, or with a larger sum, if such larger sum is necessary to replace the stock within a reasonable time. But even in that case the replacing rule only applies to such replacing in the market or at market -rates and value. If there is no market-value, the injured party cannot rejilace. He must, then, resort to proof of actual or intrinsic value, or to special damages resulting peculiarly to him from the want of the thing converted. If, for example, the entire stock of a particular company, including the shares converted, have fallen into the hands of one man, who has withdrawn the stock from the market, it might well cost the injured party millions to replace what ordinarily would be worth no more than'$10,000. But who would dream of his recovei’ing the millions from the wrong-doer, especially if he had never paid them ? There is really no difficulty on this head when we keep clearly in view the fact that here the contract contemplated unissued stock, and the procurement of such stock by original subscription and purchase from the company. The replacing rule is necessarily inapplicable, simply because the stock is not upon the market and has no market-value. The sum necessary to be paid to the company to procure it is no more the criterion of damages than the millions necessary to be paid to the monopolist, who has bought up the entire capital stock of a particular company and made his own prices.

The nominal par value may be less than the intrinsic value, and less than the market-value after the stock has been issued and put upon the market. On the other hand it may be greater. The criterion must be either market or intrinsic value. All else is either fanciful, arbitrary or punitive. Look where the plaintiff’s view would lead. The $200,000 are to go into his pockets and not into the treasury of the company. That is leading us away from the contract, which calls for the putting of the cash in the company’s treasury in any event, whether the shares are subscribed for and purchased by the defendants in execution of their contract, or (upon their failure) by the plaintiff to procure what the contract failed for. In either case the defendants, as creditors of the company, would be entitled to share in the. sum realized into the treasury. Now, however, the company is to get nothing, the plaintiff everything, and the defendants, as creditors of the company, are not even to have a dividend out of their own money in the plaintiff’s pockets. All this is to happen because the company is and has ■been from the beginning utterly insolvent, substantially dead in its birth and its stock of the value of waste paper. And the conelusion, from which. I dissent, while it undoubtedly proceeds from a natural sense of equity, is not, in my judgment, controlled by the guiding principle of indemnity. It results rather from a determination in some way to sjjecifically enforce that part of the defendants’ obligation which is disadvantageoris to them, though not appreciably advantageous to the plaintiff.

The stock, of course, had no market-value, because it had not been issued. It had no intrinsic value, because the company had no property of any value, and was over $300,000 in debt. These 2,000 shares of unissued stock simply represented one-fiftieth part of the capital, property, assets and franchise of the company, in effect, one-fiftieth part of what was $300,000 worse than nothing. In no view of the pleadings and proofs, therefore, could the plaintiff recover substantial damages. If the stock had neither market nor intrinsic value, it might still, it is true, have had some special value to the plaintiff; and if special damages were sustained by reason of the plaintiff’s non-possession of the stock, they were recoverable. (Scattergood v. Wood, Hun, 274; Suydam v. Jenkins, supra, 615, 620; Sternfels v. Clark, 2 Hun, 122.) But he was bound to allege such special damages in his complaint and prove them upon the trial. (Parsons v. Sutton, 66 N. Y., 96.) He has done neither.

While I agree, therefore, that if the stock was specially valuable to the plaintiff, though valueless to others, he could recover appropriate damages, still it cannot be doubted that the burden of showing such special value was upon the plaintiff. “Any other rule of damages,” to quote an expression of the presiding justice, and to apply it in this connection where, in my judgment, it properly belongs, “ would relegate us to the realms of speculation alone.”

Having failed in showing market-value, intrinsic value, or value special to himself, the plaintiff’s proposition that he is still entitled to $200,000, nominal par value, seems to me to be a most extraordinary one. It is nothing more nor less than a demand of exemplary damages. In my judgment, there was nothing left upon the facts found by the referee, facts which were so found upon competent evidence, than an award of nominal damages.

There are two minor considerations advanced by the plaintiff which should, perhaps, be briefly noticed. One is the suggestion of an analogy between the rule he contends for and the principle which, governs with regard to agreements to deliver bonds and notes. There is here no real analogy, because the company, by the issue of its stock, makes no agreement to pay any specific sum. But if it did, the result would be the same. For while it is conceded that the measure of damages upon failure to comply with such contracts is prima facie the face of the obligation, yet it is equally well settled that the insolvency of the obligors or makers may be shown in mitigation, and the damages thus reduced to a nominal sum. (Thayer v. Manley, 73 N. Y., 308, and cases there cited.)

The remaining consideration is the plaintiff’s reference to that class of cases where the purchase-price is specified in money, payable, however, in stock or some commodity; such, for instance, as in Johnson v. Hathorn (2 Abb. App. Dec., 465). A different rule there applies, for the reason that the promise is to pay a fixed sum in a particular manner, not, as here, merely to deliver a specific thing. The present contract cannot well be tortured by any subtlety of construction into an agreement to pay $227,500 in any form or manner.

Upon all the other questions discussed I agree with the presiding justice, and although I am in favor of affirming the judgment as to Brown, I think the order granting him an extra allowance should be reversed, without costs. It is not a case where the plaintiff should be burdened any more than the law requires.

The judgment as to Brown should, therefore, be reduced to the sum of $1,364.02 and affirmed for that amount, without costs.

Order granting extra allowance to defendant Seligman reversed, with ten dollars costs to appellant. The judgment in favor of defendant Seligman to be reduced to $1,361.50 and affirmed for that amount, without costs. Judgment as to defendant Brown reversed and a new trial ordered, with costs to appellant to abide event.


source: Caselaw Access Project

author:
Barrett, J.: Yan Brunt, P. J.:
      Bartlett, J.: Barrett, J.: Barrett, J.:

license: Public Domain

text:
    CHRISTIAN VON HESSE, as Sole Acting Executor of the Last Will and Testament of JAMES MACKAYE, Deceased, Respondent, v. MARIE LOUISE MACKAYE, Appellant, Impleaded, etc.
    Attachment— levy upon a debt evidenced, by negotiable bonds, how made — service by publication on Tion-o'esident.

    The levy of an attachment, under section 649 of the Code of Civil Procedure, must be made, in the case of a negotiable instrument, by taking the instrument itself into the sheriff’s actual custody.
    The obligation of a corporation cannot be separated from the negotiable bonds given by it as the evidences of the debt, and in order that a levy should be made the bonds themselves must be actually within reach of the court.
    An intangible obligation, evidenced by a tangible bond, is not, apart from the instrument, specific personal property within the meaning of that phrase as used in section 649 of the Code of Civil Procedure.
    In such a case, unless the bond itself is within the State, the court cannot order service to be made by publication upon a non-resident interested therein.
    Appeal by the defendant Marie Louise Mackaye from an order made at a Special Term held in the county of New Tork, and entered in the office of the clerk of the county of New Tork on the 23d day of May, 1889, denying a motion to vacate an order of publication made in the above-entitled action.
    Also an appeal by the same defendant from an order made at a Special Term held in the county of New Tork, and entered in the office of the clerk of the county of New Tork on the 18th day of July, 1889, granting a motion to continue a temporary injunction restraining the defendants, the Northern Pacific Railroad Company, the Union Pacific Railroad Company and the Chicago, Milwaukee and St. Paul’s Railroad Company, from paying the principal of, or coupons on, certain bonds mentioned in the complaint in this action during the pendency thereof.
    The action was brought to recover the possession of some sixty railroad bonds of the defendants, the Northern Pacific Railroad Company, the Chicago, Milwaukee and. St. Paul Railroad Company and the Union Pacific Railroad Company.
    The complaint alleged that James Mackaye departed this life at the city of Paris, France, possessed of said bonds; that thereafter the firm of Morton, Rose & Oo., without lawful authority, delivered the said bonds into the possession of the defendant Marie Louise Mackaye, who took the same into her possession, wrongfully and without lawful authority so to do, and continued in the possession thereof until shortly after the 27th of April, 1888, when she delivered the same into the possession of the firm of Hottinguer & Co., which latter firm, as the plaintiff was informed and believed, still retained possession of the same at the time of the bringing of the action; that Morton, Rose & Co. held the said bonds in custody, as agent of said James Mackaye, and had no right or authority to deliver the same to the defendant Marie Louise Mackaye.
    An order directing service to be made upon Marie Louise Mackaye by publication was granted, and a temporary injunction was granted restraining the defendants, the railroad companies, from paying any portion of the principal or interest on the bonds in question until the determination of the action.

      Noah Dawis, for the appellant.

      George 3. Stawr, for the respondent.
   Barrett, J.:

This is not an action in personam against Mrs. Mackaye to recover “a sum of money only,” as damages for a breach of contract or for the wrongful conversion of, or other injury to personal property. It is, consequently, not an action in which she could be proceeded against by attachment as a non-resident. The case for publication, therefore, depends upon subdivision 5 of section é38 of the Code of Civil Procedure; and the question is, does the complaint show a sufficient. cause of action against Mrs. Mackaye with regard to “ specific personal property within this State ? ” The subject of the action is sixty coupon bonds of certain foreign corporations. The plaintiff claims these bonds as part of the estate of his testator, James Mackaye. He avers that they are also claimed by Mrs. Mackaye, the appellant, under an alleged gift from her husband, the said James Mackaye, made in his lifetime. Mackaye died a resident of Paris, Prance. In the codicil to his will, executed on the 20th day of April, 1887, he declared Paris his residence. The complaint states that he died in that city, and the plaintiff, in the affidavit upon which publication was ordered, says that he “ had spent most of his time there for some years prior to his death.” Mrs. Mackaye resided in Paris with her husband, and still so resides. The bonds are in Paris in the possession of bankers there named ITottinguer & Co. There is no allegation or proof that the bonds were ever in this State or that they are payable here. It appears that the plaintiff and Mrs. Mackaye are' now litigating their respective claims to these bonds before the French courts. The plaintiff admits that he has intervened there, and it seems to be undisputed that the foreign tribunal has acquired full jurisdiction over the parties and the subject-matter. What, then, it may well be asked, is the plaintiff .doing here ? His complaint is framed as a bill in equity. The foreign corporations, the foreign bankers and Mrs. Mackaye are made parties defendants. The prayer is that these foreign corporations, who are said to have offices here for the regular transaction of business, refrain from paying the principal or interest of the bonds; that a receiver be appointed to collect such principal and interest; that Mrs. Mackaye be required to interplead concerning her claims, and that it be adjudged that the bonds belong to the estate of the plaintiff’s testator. Distrust of the French courts seems to be one of the alleged equities of this bill. The plaintiff, in substance, avers that if the proceedings in France terminate unfavorably to his contention, and if Mrs. Mackaye should thus obtain possession of the bonds, he, as executor, might be remediless, and be unable to recover the possession of such bonds for the estate of James Mackaye; and, further, that if the corporation, should pay her either principal or interest, that, too, might be lost to the estate. It is not necessary to consider whether this complaint shows any cause of action against Mrs. Mackaye entitling the plaintiff to the relief demanded. The jurisdiction of the court as to non-residents, proceeded against otherwise than for a money demand on contract, or for specific pecuniary damages, is quasi m rem, and the complaint must not only show a sufficient cause of action generally, but a sufficient cause of action with regard to “ specific personal property within the State." Indeed, the learned judge at Special Term conceded, and correctly so, that the order of publication could not be upheld if the sixty bonds in Paris were to be treated as the subject of the action. He sustained the order solely upon the ground that the bonds were only evidences of debt, and that the obligation of the corporations to pay the principal and interest was the real subject of the action. That obligation he held to be “specific personal property within the State,” because the corporations had offices here for the regular transaction of business, and because process had been served upon their agents here, resulting in their general appearance in the action. Thus he necessarily held that the situs of the corporate obligation was not the locality of the corporate being, but followed its agencies wherever established, and was inseparable, so to speak, from the debtor’s person. The underlying objection to this view of the case is, that the bonds, though evidences of corporate obligation, are themselves essentially personal property. They are such both at common law and by statute. Trover could be maintained for their conversion. They could be specifically replevied. They were accounted part of the movable estate of a deceased owner. (Erskine Inst., B. 3, tit. 9, § A) IVIoney could be borrowed and liens effected upon them. They passed from hand to hand, upon purchase and sale, by mere delivery. The Code declares them to be “ personal property capable of manual delivery,” and as such the subject of attachment, the sheriff being required to take them into his actual custody. (Code of Civ. Pro., § 619, subd. 2.) They can be attached in no other manner, being expressly excepted from the provision whereby other obligations, not similarly evidenced, may be attached, namely, by leaving a certified copy of the warrant, and an appropriate notice with the person against whom such demand exists. (Id., subd. 3.) And, further, “ evidences of debt ” are expi’essly defined to be “ personal property” by the seventh subdivision of section 3343. Then, too, such negotiable instruments are plainly contemplated by the phrase in the section under consideration, “ specific personal property,” the title to which may be affected by the action. That section speaks of a demand of judgment “ excluding the defendant from a vested or contingent interest or lien v/pon ” this specific personal property within the State; a judgment enforcing, regulating, defining or limiting such an interest or lien in favor of either party, “ or otherwise affecting the title to such property.” The purpose of this legislation is apparent, and it produces a reasonable and harmonious system. There is no attempt to drag non-residents into our jurisdiction in money actions, or with regard to pecuniary demands of a strictly personal character. Jurisdiction over pi'operty within the State is asserted and provided for. If the property of a non-resident is here, it may be attached in an action in personam, for money or damages. There the action itself has no relation to the property, yet its sole purpose is the subjection of the property to the demand. If, however, there be no such demand, then the court may proceed quasi in rem, though in form in personam, to adjudicate upon conflicting interests in specific real or personal property within the jurisdiction. But clearly the corpus must be within the State, the actual thing upon which the judgment can properly and adequately act. It seems clear that this “ actual thing ” in the case at bar is not the intangible obligation which lies behind the bonds, the mere jus incorporate, but the bonds themselves. It is the title to these bonds which the complaint questions,'not the title to the jus incorporate. "With regard to the corporate obligation to honor its bonds, there is no possible controversy. The corporations do not dispute that obligation, and they are ready to meet it upon the production of the true subjects of the controversy. In our judgment, then, an intangible obligation (evidenced by a tangible bond) is not, apart from the instrument, specific personal property within the meaning of that phrase as used in the section in question. It is the tangible bond, and that alone, which constitutes such property, and unless that is alleged to be within the State, the court is without jurisdiction to order publication against a non-resident claimant.

It is not necessary, therefore, to determine whether an ordinary debt, evidenced by no written instrument, follows the situs of the debtor, and, so following it into this State, comes within the expression specific personal property, as used in this section. Still less is it necessary to determine that question when applied to the situs of a foreign corporation. Doubtless, such debts may ordinarily be attached by the service, in a proper case, of a certified copy of the warrant, with a notice showing what is attached upon the debtor. But that is a very different thing from asserting jurisdiction over conflicting claims of title to the debt, and, for that purpose, treating it as specific personal property within the State under section 438. How can the court lay hold of the corpus of such a debt. How enforce interests therein or liens thereon. The respondent proceeds upon the notion that the body of the debtor is the corpus of the debt, or rather, in the present case, the body of the debtor’s local agent.

The debt has no corpus until collected or otherwise reduced to possession. By a legal fiction it is given a situs for the purpose of regulating transmission and fixing the rights of creditors and others. But it is a mere chose in action. Any one claiming to own the debt may, it is true, sue the debtor wherever he finds him, but can he follow him in his travels and file a bill in a locality which is neither the domicile of the debtor nor of the rival claimant to the debt, to have it determined who is entitled to be paid, and, when that is so determined, to enforce such payment in favor of the adjudicated owner % To this question should be added the possibility of the debtor’s denying that he owes the money to either party and contesting with both.

These suggestions suffice to indicate that, if the question depended upon our treating the corporate obligation, which is evidenced by these bonds and not the bonds themselves as the specific subject of the action, it would be by no means free from doubt. The illustration serves to show that the corpus of the property must be actually within reach of the court to be dealt with as the facts and circumstances demand. Our views are fortified by the principle enunciated in Bryan v. University Publishing Company (112 N. Y., 382). The case there made for jurisdiction was, in our judgment, stronger than that presented by the facts now before us. The order tif publication was vacated, although Earl, J., stated in his dissenting opinion that “ some of the property at least is within this State.” The opinion of the majority, delivered by Dankorth, J., proceeded upon the ground that, as an assignment of copyrights to a citixen of Massachusetts could not be effectually set aside as fraudulent by the courts of this State, “ the impropriety of issuing an order which, if it leads to a judgment, would operate on nothing in the State, and be regarded by nobody out of it, becomes apparent; ” and that the defendant “ was entitled to make the motion rather than submit to the hardships of coming into this State to defend the action.” The same doctrine applies here. The court could not compel the corporations to pay the principal or interest of their bonds to a plaintiff who had not possession of them. The bonds could be delivered to Mrs. Mackaye by the French courts regardless of oúr decree, and she could transfer them to a purchaser who would be entitled to principal and interest, equally regardless of our decree. Thus our decree would operate on nothing in the State, and be regarded by nobody out of it. Here there is no question whatever of any part of the property being within the State, and our conclusions aro fully supported, even by the dissenting opinion of Earl, J.

The order appealed from should, therefore, be reversed, with ten dollars costs and the usual disbursements, and the motion to vacate the order of publication granted.

Yan Brunt, P. J.:

It seems to me that the fact that, if the plaintiff was proceeding against the defendant herein to recover a debt, he could not reach by attachment the debt due from the foreign corporation to the holder of the bonds, the subject-matter of this action, shows conclusively that the title to these bonds cannot be litigated in the courts of this State under the circumstances disclosed in the case at bar.

Section 649 of the Code provides how property is to be attached. It says that a levy under a warrant of attachment must be levied upon a bond, promissory note or other instrument for the payment of money by taking the same into the sheriff’s actual custody. The debt represented by those instruments, therefore, cannot be recovered, disregarding these evidences of the debt. That such must be the rule is apparent when we consider the position of the debtor. Suppose he pays a debt represented by a negotiable instrument, as are the bonds in question, even in pursuance of a judicial decree, and a holder of the evidence of the debt having acquired the same before maturity and in good faith, presents the evidence of debt for payment when it falls due, is there any doubt.'but that the holder of such evidence of debt could enforce payment, and that the payment pursuant to a judicial decree would be no defense ? If there is any doubt as to this proposition, then the doctrine that the rights of a Iona fide holder of a negotiable instrument acquired before maturity are unassailable does not exist, and no person in dealing with such instruments can be sure that he gets any rHit because of their possession. It is because, in the case of a negotiable instrument for the payment of money, the evidence of the debt and the debt cannot be separated (except, perhaps, while the instru-. ment is in the hands of the original party and is offered to be surrendered), that the Code requires the levy to be made by the taking of tho instrument into actual custody.

If jurisdiction can be acquired in the case at bar because the debtor, the foreign corporation, has an agent here for the transaction of its business, then such jurisdiction can be acquired in a case where two residents of England, neither of whom had ever been in this country, were having a dispute about the ownership of certain bonds issued by an English corporation, which bonds had always been in England, and which dispute arose out of transactions, the whole of which took place in England, simply because the corporation had an agent here for the transaction of its business. The resident of England, without ever having been or being in this country, could cause a suit to be commenced in the courts of this State against his English adversary to determine their dispute as to the title of these evidences of debt, and simply by serving a summons upon the agent of the English corporation in this State, and serving his adversary by publication, confer jurisdiction upon the courts of this State to determine the dispute, as between these two Englishmen, as to the title to these evidences of debt, and thus compel his adversary to submit their controversy to the courts of this State. It is evident that no jurisdiction can be acquired under such circumstances. It may be claimed that the facts above stated are not parallel to those existing in the case at bar, in that the plaintiff herein is a resident of this State. Jurisdiction is not claimed because of the residence of the plaintiff, but because service can be made upon the agent of the debtor; and this element, the only essential one to give jurisdiction in this case, is present in both cases. The debtor is not, in any respect, a necessary party to an action such as this, as the title to these bonds can be determined as well without its being made a party defendant; and it would be singular could the court acquire jurisdiction because the plaintiff had made an unnecessary defendant a party and procured service upon him.

It seems to me that Justice Barrett has clearly reached a correct conclusion.

Bartlett, J.:

I concur in the views as to the jurisdictional question in this case expressed by the presiding justice and Mr. Justice Barrett, and agree that the order appealed from must be reversed.

Order reversed, with ten dollars costs and the usual disbursements, and the motion to vacate the order of publication granted.

Motion to dismiss appeal from order denying defendant’s motion to vacate an order of publication.

Barrett, J.:

The plaintiff moves to dismiss this appeal upon two grounds: First. That Mrs. Mackaye has virtually appeared in the action and submitted to the jurisdiction of the court. Second. That her objections to the jurisdiction should be taken by answer or demurrer.

As to the first ground, it is only necessary to say that the court at Special Term, upon due notice to the plaintiff, has extended Mrs. Mackaye’s time to appear until after the decision of her appeal from the order upholding the publication. If Mrs. Mackaye had appeared generally in the action, the plaintiff should have opposed that application on the ground upon which he makes the present motion.

The order exuending the time to so appear, made after the acts which the plaintiff now claims constituted a general appearance, is conclusive upon that head. But, further, it is entirely clear that none of the acts specified by the jilaintiff amounted to a waiver of the objection to the jurisdiction. The Code provides that the defendant’s appearance must be made by serving upon the plaintiff’s attorney a notice of appearance, or a copy of a demurrer or of an answer. (Code Civil Pro., § 421.) Nothing of the kind was here served, nor did the defendant take any step which could be construed as equivalent to the statutory method of appearance. Indeed, she has protested against the assumption of jurisdiction throughout the proceedings. It is not even pretended that her attorney had authority to appear for her generally. His authority seems to be limited to appearing for the sole purpose of denying the jurisdiction, which he has done at every step in the cause.

As to the second point, the case of Bryan v. University Publishing Company (112 N. Y., 388) is conclusive. The court there held that the defendant “ is entitled to make the motion rather than submit to the hardship of coming into this State to defend the action.”

The motion should, therefore, be denied, with ten dollars costs.

Yan Brunt, P. J., and Bartlett, J., concurred.

Motion denied, with ten dollars costs.

Appeal from an order of the Special Term granting an injunction pendente lite.

Barrett, J.:

The opinion delivered upon the appeal from the order denying Mrs. Mackaye’s motion to vacate the publication proceedings is decisive of this appeal. Ve have there endeavored to show that the court is wholly without jurisdiction in this action so far as Mrs. Mackaye is concerned. We have also decided that the subject-matter is not within the State of New York. The papers upon this appeal supplement some facts which were wanting upon the application to set aside the order of publication. They show, for instance, that some of the bonds in question were payable in the city of New York. But there are no facts which can give vitality to the order of publication, which was made without authority, and is consequently void. Apart from this question of jurisdiction, the plaintiff’s papers make out no case for an injunction. He has submitted himself to the jurisdiction of the courts where the property is situated.

If the proceedings already instituted in the foreign tribunals are technically insufficient to settle the question of right upon the merits, the plaintiff is at liberty to institute fresh proceedings specially directed to that end. His suit here is, upon the facts disclosed in his qwn papers, unnecessary and oppressive. It is wholly without merit in its present aspect; and the attempt, by bringing in and enjoining the corporations, to force Mrs. Mackaye into a jurisdiction foreign to her domicile and foreign to the situs of the property cannot be commended.

The order appealed from should be reversed, with ten dollars costs and the usual disbursements, and the injunction dissolved.

Yan Brunt, P. J., and Bartlett, J., concurred.

Order reversed, with ten dollars costs and usual disbursements, and the injunction dissolved.


author: Barrett, J.:

text:
    MORRIS STEINHARDT, Respondent, v. EDWARD CUNNINGHAM, Appellant.

      —when a trust is attached to the executorial office — a deceased trustee represented by the survivor — an acceptance of the proceeds of a judicial sale estops a party from setting up its invalidity —- selling more property than is necessary to release the debt.

    A. testator, by his will, provided as follows: “ Item five. I give to my said trustees, executor and executrix, full power and authority to sell any or all of my real estate at private or public sale, and invest the proceeds thereof, or to let or lease the same, as they may deem best for the interest of my family.” The testator’s wife and one Heller were appointed executor and executrix and guardians of the persons and estates of the children. The wife alone qualified. There was no evidence that Heller, who died in 1887, had ever accepted the office of trustee, or performed any act as such.
    A mortgage which antedated the will, covering certain property of which the testator died seized, was foreclosed in 1884. The wife was made a party individually and as sole acting executrix, as were also the children and the legatees named in the will of the testator.
    An objection was made to the title acquired under this foreclosure, on the ground that Heller was not made a party thereto, and that a valid trust was created by the will in the wife and in Heller, as individuals, apart from the executorial office, and that, consequently, Heller’s equity of redemption was not cut off by the foreclosure.

      Held, that this objection could not be sustained.
    That the trust, if any existed, was attached to the executorial office, and, under the circumstances, Heller was not a necessary party to the foreclosure suit.
    That, even if a valid trust were created, distinct from the executorial office, and the fee of the real estate were vested in the wife and Heller, as individuals, the title acquired under the foreclosure would not be impaired by reason of the failure to make Heller a party defendant, as by the death of Heller the wife became sole surviving trustee.
    That the title was further sustained by the fact that the wife and all the children, being of full age, consented that the surplus money arising upon the foreclosure be paid to the executrix, which was done; after which the children and legatees, who were paid therefrom by the executrix, could not be permitted to question the validity of the foreclosure proceedings.
    That the fact that the referee in the foreclosure suit sold more property than it was necessary to sell in order to pay the plaintiff therein the amount due to him did not present an objection to the title, which the purchaser of the property under an executory contract for the purchase thereof could raise.
    Appeal by the defendant from a judgment, entered in the office of the clerk of the county of New York on the 27th day of July,1889, by which it was adjudged that the plaintiff recover from the defendant the sum of $1,076.14, together with interest, and together with the further sum of $141.29, costs and disbursements.
    The action was brought to recover back money advanced under an executory contract for the purchase of land, and the expenses attendant upon the examination of the title thereof, on the ground that the defendant was unable to give a good title thereto.

      Hoofer O. Van Vorst, for the appellant.

      Jacob Steinhardt, for the respondent.
   Barrett, J.:

We are unable to see what difficulty there was with the defendant’s title. The questions which were raised hy the plaintiff seem, upon the particular facts of the case, to be purely speculative.

Solomon Freedman died seized of one undivided half of the premises in question, subject to a mortgage. Freedman left a will which attempted to create a trust. His estate, real and personal, was thereby devised and bequeathed to his wife, Rosa, and to his friend Heller, in trust to pay legacies to his children. This was followed by a power in these words:

Item 5. I give to my said trustees, executor and executrix, full power and authority to sell any or all of my real estate at private or public sale, and invest the proceeds thereof, or to let or lease the same as they may deem best for the interest of my family.”

His wife and Heller were also appointed executor and executrix and guardians of the persons and estates of the children. The will was proved, but Heller did not qualify. Mrs. Freedman, however, took out letters; this was in 1877. Heller died in 1887, and there was no evidence that he ever accepted the office of trustee, or performed any act as trustee or executor. . The mortgage already referred to as antedating the will was foreclosed in 1884. Mrs. Freedman was made a party individually and as sole acting executrix. So were all the children of Solomon Freedman and the legatees under his will. A decree of foreclosure followed in due course, and the defendant’s title is derived from the sale under that decree.

The principal objection made to this title is that Heller was not a party to the foreclosure suit. The plaintiff bases this objection upon tlie theory that a valid trust was created by Solomon Freedman’s will in Mrs. Freedman and Heller, as individuals, apart from the executorial office, and, consequently, that Heller’s equity of redemption was not cut off. In our judgment this objection is without merit. It is exceedingly doubtful whether the trust was valid as an express trust to sell, mortgage or lease land for the benefit of legatees. To hold it to be valid by implication, from all the language used in the will, would require the coupling of the power with the language previously employed to create the trust and the treatment of the power as imperative. (Cooke v. Platt, 98 N. Y., 35.) The power, however, stands by itself, and does not, in terms, apply to the trust purposes. It is also, in a measure, discretionary. The trustees, executor and executrix,” may sell or lease, not as they may find one course or the other most expedient to effect the payment of the legacies, but “ as they may deem best for the interest of my family,” thus covering even the residuary legatee and her interests.

But even if the trust is valid, it is plainly attached to the executorial office and requires the performance of the most ordinary executorial duty. It is true that the devise is nominally to Mrs. Freedman and Heller as individuals, but all the trust duties are imposed upon them as executor and executrix. Indeed, the words trustees and executor and executrix are used throughout in the same sense and as equivalent expressions.

These trust duties consist exclusively of the payment of legacies to the testator’s children; such legacies are to be paid as the children respectively attain their majority, and, in the meantime, the proper sums are to be safely invested on interest by the “ executor and executrix, trustees and guardians.” In another connection the phrase is used, shall, by my said executor and executrix, be placed at interest.” This is still further emphasized by what the testator styles Item 4,” as follows:

“Item 4. In regard to the bequests of five thousand dollars to each of my said sons, as provided in section 2 of this will, I ordain that if, in the opinion of my said executor and executrix, the conduct or position in life of my said sons, or either of them, should not be satisfactory, my said executor and executrix may, in their discretion, withhold the payments of sneh bequest, or any part thereof, until, in the opinion of my said executor and executrix, they, my said son or sons, may be worthy of the same, and, if such bequests be withheld, then, and in that case, such beneficiaries shall only receive during my said wife Rosa’s lifetime the interest on such bequests.”

Then follows “ Item 5,” already quoted, conferring the power to sell or lease upon his “ trustees, executor and executrix.” It is thus entirely plain that the trust duty is not only in itself, that is, in its very nature executorial, but is throughout imposed in express terms upon the executor cmd executrix as such. It would be quite absurd, therefore, to imply an intention upon the testator’s part to vest the fee in Mrs. Freedman and Mr. Heller as individuals. He could not have intended to so vest the fee upon trusts to be performed, not by the individual devisees, but by the executor and executrix, and with a power of sale granted to them as executor and executrix as well as trustees. That would not only be absurd, but fatal to the plaintiffs contention of a valid express trust. If, then, the trust power was attached to the executorial office, its execution devolved upon Mrs. Freedman, who alone qualified and acted. (Ogden v. Smith, 2 Paige, 195; In re Stevenson, 3 id., 420; Meakings v. Cromwell, 2 Sandf., 512; Dominick. v. Michael, 4 id., 375; Conover v. Hoffman, 1 Bosw., 214.) In Domimich v. Michael, Judge Duer said that “ when a power to sell lands, whether coupled with cm estate or a naked power, is given to several persons as executors, it may, doubtless, be executed under the Revised Statutes by those who take upon themselves the execution of the will, without the concurrence of those who neglect or refuse.” (See 2 R. S., 70, §§ 15, 16; Id., 109, § 55; Code Civ. Pro., § 2642; Laws 1883, chap. 401; Roseboom v. Mosher, 2 Denio, 61; Sharp v. Pratt, 15 Wend., 610.)

It follows, as a logical sequence, that Heller was not a necessary party to the foreclosure suit, and that the appearance therein, as a defendant, of Mrs. Freedman as sole executrix was sufficient to render the proceedings regular and the decree valid. Indeed, a finding that Heller had actually refused to accept the position of executor or trustee would have been justified by his failure to take out letters, and his complete non-action for some seven years after Mrs. Freedman had duly qualified.

But even if the trust was valid and the fee vested in Mrs. Breed-man and Heller as individuals, we still think that the defendant’s title is not impaired or affected by the failure to make Heller a party defendant in the foreclosure suit. For there is no one who could possibly clabn an equity of redemption in tbe premises or enforce tbe trust to sell for tbe benefit of tbe legatees. Still less is there any one wbo, in case tbe trust be deemed invalid, could compel tbe execution of tbe trust power. Heller died before tbe contract between tbe plaintiff and tbe defendant was entered into. Thus Mrs. Freedman became sole surviving trustee. She certainly could not as such trustee question tbe validity of tbe foreclosure decree nor attempt a sale of tbe premises in hostility thereto. Her equity of redemption and all her rights, whether as an individual or as executrix, were cut off by tbe decree. So, too, were any possible rights as trustee, for she was fully apprised by the papers served upon her of tbe nature and object of tbe suit; and tbe case is thus brought within tbe distinction suggested in Landon v. Townshend (112 N. Y., 99).

Tbe children and legatees were in like manner cut off. They were necessary and proper parties (Buchan, v. Sumner, 2 Barb. Ch., 174; McGown v. Yerks, 6 Johns. Ch., 450; and see Wood v. Williams, 4 Mad., 186; Lowe v. Morgan, 1 Bro. Ch. 368); and thus they have bad their day in court. Neither tbe children as heirs, nor the children as legatees and cestui gue trust, nor tbe widow as individually vested with the remainder, nor tbe widow as sole executrix, made any objection to tbe proceedings or decree in tbe foreclosure suit. Nay, more, there was an express recognition by all these parties, and, as we have seen, they were all of full age, of Mrs. Freedman’s right as executrix to tbe share of tbe surplus moneys coming to tbe estate of tbe testator, Solomon Freedman. For it appears that, upon tbe consent of these very children, legatees and ■ cestui gue trust, such surplus moneys were paid to her as such executrix. Now, these moneys in her bands at once became applicable to tbe payment of tbe legacies, and it is to be presumed that they were so appbed in accordance with tbe provisions of tbe will.

It is entirely clear that, after such affirmative acts, the children and legatees could not be permitted to question tbe validity of tbe foreclosure proceedings, nor could they require tbe execution of the trust or of the power of sale. They elected to accept the fruits of a judgment which purported to cut off all equities of redemption and all right, title and interest which they and all persons claiming under them had in the mortgaged premises. Having done so, they cannot now cpmpel the surviving trustee to execute a trust or power to sell the same premises for their sole benefit; nor could such surviving trustee convey any valid title in execution of such trust or power. Neither could the trustee or the cesPai que trust redeem.

It follows that the failure to make Heller a party defendant, or to name Mrs. Freedman as a trustee (in addition to naming her individually and as sole executrix in the foreclosure proceedings), did not, upon the facts before us, affect the defendant’s title or render it doubtful or unmarketable. There is nothing in the point that the referee in the foreclosure suit sold more property than was required to pay the plaintiff. The plaintiff here cannot1 now question the sale for that reason or because of that fact.

As was said in McBride v. Lewisohn (17 Hun, 527), “ the owner of the equity of redemption was the only person having any right whatever to question it, and by omitting to take any action with regard to the alleged improper sale, and by permitting the proceedings to go on in reference to the surplus occasioned by the sale, she has waived all right to any consideration on that subject and is estopped.” To the same effect is Andrews v. O'Mahoney (112 N. Y., 571; and see cases there cited, Wolcott v. Schenck, 23 How. Pr., 385; McBride v. Lewisohn, supra; De Forest v. Farley, 62 N. Y., 628). The other objections to the foreclosure proceed ■ ings are trivial. The report of sale was duly confirmed and all parties to the action were thereafter fully bound. (Bechstein v. Schultz, 45 Hun, 191; Everson v. Johnson, 22 id., 115.)

It follows that the judgment appealed from should be reversed and a new trial ordered, with costs to the appellant to abide the event.

Yan Brunt, P. J., and Daniels, J., concurred.

Judgment reversed and new trial ordered, with costs to the appellant to abide event.