author: Daniels, J.:

text:
    STEVENS VOISIN, Respondent, v. THE COMMERCIAL MUTUAL INSURANCE COMPANY, Appellant.

      Marine insurance —nonjoinder of parties — a master of a vessel, not the sole owner, may commit barratry — fraud, in valuation — a witness must speak from actual knowledge — expert evidence — a witness cannot give an opinion as to whether a delay at a port is excusable.

    In an action brought by one Voisin to recover for the loss of a cargo under a policy of marine insurance issued by the defendant, insuring his interest for account of -whom it might concern, it appeared that the bills of lading covering such cargo belonged to a firm in which Voisin was a partner, but by the terms of the policy the remaining partner was not insured.

      Held, that as the defect of non-joinder of parties was not set up in the answer, and did not appear upon the face of the complaint, it was waived.
    That Voisin, as a partner, had an insurable interest in the cargo and was entitled to recover upon the policy as a trustee, holding the goods covered by said bills as a trustee for the firm.
    That where a master enters into a conspiracy to sink his vessel at sea, subsequently abandons her at sea when leaking, in not very stormy weather, and before doing so bores augur holes in her hull to increase the flow of water, he is guilty of barratry.
    That the fact that such master owned a one-sixteenth interest in the vessel did not preclude him from committing the offense of barratry.

      Semble, that it is only a sole owner who cannot be guilty of that offense.
    That while the valuation of a cargo in a policy of marine insurance is ordinarily conclusive upon the insurer, the insurance company is still entitled to show a fraudulent over-valuation and misrepresentation of the value of the subject-matter.

      ,That-where tlie insurer charged that a part of the cargo insured was dirt, refuse and worthless articles, and witnesses were sworn by the claimant to prove the actual shipment of valuable goods, such witnesses must speak from knowledge, and cannot, upon being shown a bill, and solely upon the faith of it, testify that all the articles named therein were put on board the skip.
    That a wilnesá' cannot give an opinion that a vessel was sea-worthy at a certain time when it appears that he could not have examined her hull upon the outside below the water line, and did not examine it at all upon the inside.
    That where the insurer in such an action alleges as a defense thereto deviation by reason of an inexcusable delay at a port, it is not competent for a witness to give his opinion that, considering the weather prevailing during a certain period, the delay at the port in question was not extraordinary, and that said vessel got good despatch.
    Appeal by tbe defendant, the Commercial Mutual Insurance Company, from a judgment, entered in the office of the clerk of the city and county of New York on the 30th day of December, 1889, upon a verdict for the plaintiff for $5,056, after a trial at the New York Circuit before the court and a jury; also from an order, entered in said clerk’s office on the 31st day of December, 1889, denying the motion of said defendant for a new trial.

      Treadwell Cleveland, for the appellant.

      F. B,. Coudert and William Mitchell-, for the respondent.
   Daniels, J.:

The verdict was recovered for the amount of insurance made by the defendant upon the cargo of the bark L. F. Cann. The cargo was laden on board of the bark at Y era Cruz and Tecolutla in Mexico. The bark left Yera Cruz about the first of February, and in five or six days thereafter arrived at Tecolutla, where she remained until the last of March, when she commenced her voyage for the city of New York, and was abandoned by the master and crew as in a sinking condition on the twenty-seventh of April following. A considerable-part of the cargo was laden on board the bark at Yera Cruz for the witness Contanseau, who. received bills of lading for the same, and on the 13th of February, 1882, assigned these bills for value received unto Stevens Yoisin, the plaintiff. The portion -of the cargo mentioned in one of the bills is stated to have been insured for the sum of $7,500, and the portion mentioned in the other bill to have been in like manner insured for the sum of $8,000, and it was on tbe lOtli day of March, 1882, that the plaintiff took out the policy in question from the defendant. By this policy Stevens Voisin was insured upon the cargo for the account of whom it might concern, and in case of loss the insurance was to be paid to-him in funds current in the city of New York. By the policy the goods and merchandise insured, including the premiums, were valued at the sum of $29,500, and the issuing of the policy in this. manner to the plaintiff was admitted by the answer to the complaint. It was objected, however, as the fact was proved that the plaintiff, at the time when the policy was taken, was a partner in business-with Paul Mares, and the consignments belonged to the firm, that, the action could not be maintained in his name. There was no-defense set forth by the answer alleging the non-joinder of the other partner as a plaintiff in the action, and it did not appear on the face of the complaint, and the objection was, therefore, waived under-section 499 of the Code of Civil Procedure.

But, as a partner in the firm which did its business under the plaintiff’s name, he possessed an insurable interest in the property, for, in his capacity of a partner and in his relation to the business, he washable to be subjected to damage by the loss of the property, and that was sufficient to vest him with an insurable interest and to entitle him to take and receive the policy in the form in which it was made. (Riggs v. The Commercial Ins. Co., 125 N. Y., 7.) This subject was-considered also in Sturm v. Atlantic Mutual Insurance Company (63 N. Y., 77), where it was held by the court that a person who has the control of property, either as owner, consignee or agent, may effect an insurance upon it in his own name, and on account of whom it may concern, making the loss payable to himself, and if a-loss occurs he may maintain an action upon the policy. And the facts of the present case are sufficient to bring it within the application of that rule, for the assignments of the bills of lading were to-the plaintiff, and there is evidence that it was intended by the assignments to vest the title in the firm, and by their force and effect, as they were taken by tbe plaintiff as a member of the firm, he held the property mentioned in the bills as a trustee for the firm. And in taking out the policy from the defendant, it was issued by the company upon no other understanding or basis than that the plaintiff himself had an insurable interest in the property, and that in case of loss he should collect the amount for the benefit of himself, and whoever else* it might concern. The application for the insurance conforms to this construction and understanding, for it is stated in it that insurance was wanted by the plaintiff for account of whom, etc., loss, if any, payable to him for $3,500, on merchandise aboard bark L. E. Cann, and to be valued at $29,500. The import, as well as the effect of, the insurance obtained in this manner was to make it individually with the jDlaintiff, and to assure to him the payment of any loss for whoever it might, concern; and, having himself an insurable interest in the property, he was authorized, by this form of the contract, to maintain the action for the benefit of himself and his copartner for the recovery of the loss. The court, for these reasons, could not, at the trial, dismiss the complaint, as it was asked to do, on account of any infirmity in the right of the plaintiff to maintain'the action. Neither could the complaint be dismissed on account of any informality in the statement of the cause of action. For it sufficiently set forth the plaintiff’s case, and if it was defective in any respect, that defect was supplied by the answer. Neither could there be any well-founded objection to the right to maintain the action for the want of proof of interest or loss of the cargo, for the fact was stated in the complaint, and admitted by the answer, that such proofs had been supplied to the defendant

Evidence was given by-the master that he had entered into a conspiracy with three other persons at Yera Cruz, prior to the lading of cargo on board the bark, that it should consist in part of refuse or worthless articles which were to be shipped in the form and under the description of valuable articles of cargo, and that insurance should be obtained upon the cargo, and the vessel after-wards should be sunk by the captain to defraud the insurance companies under their policies. He states himself to have become a party to this conspiracy, and that in the lading placed upon the vessel dirt and other worthless substances were made portions of the cargo, for which the bills of lading were afterwards issued and subscribed by himself; and that the caz 'go as it was taken ozi board was worth no more than forty per cent of that which was so represented to have been shipped on the bark. This evidence exhibited the master to be a desperate, unscrupulous criminal; and standing by itself would be of little value in the determination of the rights of parties before either a court or a jury. But it was confirmed by the condition of the cargo as it was removed from the bark, after she had been found abandoned, and taken to Norfolk in the State of Virginia. For it appeared by the statement of cargo taken from the bark, which was stipulated to be correct, that there was 186 cases of dirt removed from the vessel, which had been laden upon it as a part of its cargo. This was an unequivocal circumstance, indicating’ the truth of the evidence given by the master that he had become a party to such a conspiracy. ITe stated that he had .abandoned the confederation into which he had entered after his arrival at Tecolutla, and for that reason had removed a large part of the sand ballast from her while lying at that port; but it is not probable that he stated the truth in this respect, or if he did, he changed his mind before the .bark was abandoned in what was stated to be a sinking condition. She was then off the coast of South Carolina on her way to the city of New York, and had encountered some severity of weather, but no more than might ordinarily be experienced in the course of the voyage. It was after the storm described by himself, and also by the first officer, had partially subsided, that the bark was found to be in a leaking condition ; and the statement of the master is that the pumps were tried and more water was • found in the hold than they were capable of relieving, and that the conclusion was then arrived at to abandon the bark. But before doing so augur holes were bored in the hull to increase the inward flowage of the water and more surely cause the bark to sink. This he says he did with the understanding that it was the English law or custom to put the vessel out of the way when she was in a condition requiring her abandonment. But no such law or custom was proved otherwise than by his own statement, and it is not probable that any law or custom of that description had come into existence under the sanction of the English authorities. It is much more probable that the master at this time intended by his acts to fulfill the agreement stated to have been entered into by him for the destruction of the vessel, for which he was to receive the sum of $6,500, a portion of which had already been paid. The jury certainly were at liberty to adopt that view of the effect of the ■evidence. But after she had filled with water she did not sink below her decks, and she was afterwards found in that condition by a steamer sent in search of her by the insurance companies having risks affected by her condition. She was then towed to Norfolk, in the State of Virginia, where, upon being taken out of the water, these augur holes were found in the hull and below the water-line; and when these facts came to the knowledge of the master it was very natural for him to resort to an excuse, improbable even as the one assigned by him was, for his conduct in requiring and procuring these holes to be bored in the hull of the vessel, expecting thereby to secure her disappearance beyond a contingency. Iiis acts were those of a criminal, and he intended by them to put this bark, with her cargo, out of the way, to carry out his nefarious bargain and subject the insurance companies to the payment of their risks.' That constituted what is known in marine insurance as the offense of barratry. It was a crime against the owners of the cargo .as well as the underwriters. This subject was fully examined in Atkinson v. Great Western Insurance Company (65 N. Y., 531), and, as the offense of barratry was .there described, it clearly included what was done by the master of this bark in this instance. But, as he' was himself the owner of a sixteenth interest in the bark, it was objected on that ground that he could not be guilty of the crime of barratry. And the rule is undoubtedly well settled that the owner of the ship cannot commit this offense against himself or against the owners of the cargo which he may have in charge. But the cases in which that principle has been maintained were those where the master sustained, for the time being, the relation •of sole owner to the vessel. (Marcardier v. Chesapeake Ins. Co., 8 Cranch, 39 ; Hallet v. Columbian Ins. Co., 8 Johns., 272; Cook v. Commercial Ins. Co., 11 id., 40.) And the principle was generally •stated, as it has been contended by the defendant’s counsel, that the crime of barratry could not be committed by the master, who at the time was either the owner or part owner of the vessel. (1 Phillips on Ins. [3d. ed.], 612, § 1082.) And so the law was also considered in Wilson v. General Mutual Insurance Company (12 Cush., 362). But no other authority has been found sanctioning the position that the master, when no more than a part owner ■of the ship, cannot com'mit the offense of barratry. This subject was considered in Jones v. Nicholson (10 Exch. 28; 26 Eng. Law and Eq., 542); and there it was concluded, without dissent, by the Court of Exchequer, that the master being also at the same time a. part owner of the ship could commit the crime of barratry. And it was so held, also, upon an examination of the cases in Phœnix Insurance Company v. Moog (78 Ala., 284, 304-5, and in Hutchins v Ford, 32 Me., 363, 368-9.) And the reason, as well as good sense of the principie, are clearly with these authorities, and sustain the conclusion adopted at the trial, that the master did commit the crime of barratry, if, in pursuance of an unlawful conspiracy, he endeavored to sink the ship at the time of her abandonment. And that was a loss within the language of the policy in controversy, for among the risks which the defendant took upon itself was that of barratry of the master and mariners of the bark. The court, therefore, was right in refusing to charge the propositions presented by the defendant’s counsel upon this subject, and in the charge that if the jury found that the vessel was abandoned in consequence of the barratry of the captain that it was one of the risks insured against by the policy.

The defendant’s answer set forth, by way of defense, that the cargo stated to have been laden upon the bark had not, in fact,, been placed on board, and evidence was given by the master to the effect that no more than about forty per cent of that which was stated had been placed on board the vessel; and the truth of this statement, coming as it did from this depraved witness, was, to a material extent, corroborated by the condition of the cargo as it was. removed from the vessel at Norfolk. And while the policy contained a valuation of the property insured, which would ordinarily be binding upon the insurer, this evidence was competent, and it was received, without objection, to establish the commission of a fraud upon the insurers. And while it was stated, in Sturm v. Atlantic Mutual Insurance Co. (63 N. Y., 77), that the valuation in the policy was ordinarily conclusive upon the insurer, the rule was declared subject to the qualification that the binding effect would be destroyed in case of the existence of fraud. (Id , 81.) And so the law is also generally stated in 2 Phillips on Insurance (3d ed.), 11S3, and in 1 Arnould on Insurance (2d ed.), 314, and note; and in Ocean Insurance Company v. Fields (2 Story’s C. C., 59), where-it was said that “ a fraudulent over-valuation and misrepresentation of the value of the subject-matter of insurance will avoid a policy of insurance.” (Id., IT.) And it was apparently to invalidate this valuation that this evidence was given upon the trial. But, to meet and avoid the effect of this defense, evidence was given on behalf of the plaintiff to prove the fact to be that the merchandise, as it was claimed in his behalf, was actually placed on board the vessel and formed part of her cargo. To prove that to be the case the deposition of the witness, Malpica, was read, who was a lighterman engaged in transferring the cargo to the bark at Yera Cruz. He was asked to state particularly what merchandise, and the quantity of each kind, was shipped on the bark. But it was objected, that his answer should not be received because of other answers given by him to the effect that he had no personal knowledge of the articles, or their quantity, which- were placed upon the vessel. This appeared more fully from answers to cross-interrogatories propounded to the witness, but the objection was overruled, and the counsel for the defendant excepted, and the answer of the witness-was received. This ruling cannot be justified because of any informality in the statement of the objection, for the deposition was all before the court, and the answers were readily referable to, which maintained the objection; and when an objection in this manner is made it is also to be presumed, for the purposes of the ruling; that it is capable of being maintained by the facts. (Kerr v. Hays, 35 N. Y., 331, 337.) And there was no question made at the time when the objection was presented that it was not sustained by the answers to which reference was made. But the court without qualification overruled the objection and permitted the answer to be read, and the witness therein stated that he did not recollect the items, but seeing a bill presented which was marked “ F ” he could declare that the goods named in that bill were shipped on board the L. E. Cann. A motion was then made to strike out the answer for the same reasons, and that was denied by the court; and his answer to another interrogatory was permitted to be afterwards read, in which he stated, in detail, the articles which had been shipped; but this statement, in like manner, was made from the bill marked “F,” and another marked “F” 1. This bill marked “ F” the witness stated was true and correct in all respects, but he did not appear to have that knowledge, nor that the bill had been made by him or any other person in his presence. And it was on the strength of this bill, together with the other, that his answers were given that these articles were placed upon the bark as a portion of her cargo. Similar answers were obtained from the witness Iioffman, but they were objected to for the reason that it appeared by the interrogatories that this witness had no knowledge of the articles which had been placed upon the bark, but answered wholly from his observation and acquaintance with the receipts and the bills of lading, and ■an exception was taken to the ruling of the court permitting his evidence to be received; and as his answers which were taken wholly depended upon the receipts and bills pf lading, they were, under the authority of Palmer v. Great Western Insurance Company (116 N. Y., 599), inadmissible as evidence, and so likewise were the answers obtained from the other witness Malpica, for the statements which he made were those contained in the accounts of paper’s referred to by him, the accuracy of which appears not to have been within his knowledge. This evidence affected a material part of the case, that which depended upon the existence of a fraud in the lading of the cargo upon the bark.

A further defense set forth by the answer was that the bark was in an unseaworthy condition at the time when she left Tecolutla, .and the mate whose deposition was read as part of the plaintiff’s case to disprove this defense had his attention directed to the condition of the bai’k while she lay at Yera Cruz. She was therefrom the last of November or first of December until she left in February for Tecolutla, where she remained from the first of March until tlie last of that month. And the evidence proved the fact to be that the waters of the Gulf of Mexico at these points were infested with worms, and that this vessel was neither coppered nor painted with •copper paint, and that in that condition, during the time she lay at these ports, she was liable to be seriously injured, and her seaworthy condition reduced or destroyed by the action of these worms upon the hull. And that this evidence was reliable further appeared from the condition in which the hull was found when the bark was taken out of the water at Norfolk. And that probability was indicated also by the fact that the bark was found to be in a leaking ■condition, after no severe stress of weather, before her abandonment.

This witness stated that he, together with another person, made an inspection or observation of the hull at Y era Cruz when she was not less than eight nor more than twelve feet in the water. What he states to have been done by himself and the other mate was that they went m a boat around the vessel several times and examined it and found two places that looked.as though they might leak where the plank came together, and another where a butt was found along side of a treenail, and he discovered no other defect in the hull of the boat, and these places he testified they calked and plugged. It is. clear from his testimony, as well as the answers afterwards given by him, that no observation was or could be made by him of the hull of the vessel below the water line, and none appeared to have been made by him or the other person with him, of the inside of the bark. And in this state of his evidence he was asked: “ What was the condition of the ship with respect to the staunchness of her hull, manning and general equipment.” This was objected to, but the witness was permitted to answer, and an exception was taken to the ruling; and his answer was that she was in good condition. He was then asked : “ What was the condition of the L. E. Cann with res2>ect to seaworthiness at the time she left Tecolutla? ” - Between the time of the inspection, which ivas made at Yera Cruz, which was after the cargo carried by her there' had been discharged and her departure from Tecolutla, no examination of the bark appeal’s to-have been made in any respect by the witness, and it ivas objected to his answering this question as it had been to the other, that he had not seen the vessel below the water line and had not examined her inside, and did not go over the side at Tecolutla. But the court overruled the objection, to which the defendant excepted, and the witness answered she was seaworthy. He further added in. answer to an additional question, to which the same objection and exception were taken, that he considered her seaworthy in every respect or he wouldn’t have gone to sea m her. This evidence had a material bearing upon the fact required to be established, that the bark was seawórtliy after the policy had been issued and before she proceeded finally upon her voyage, and it may have had an important eflect upon the minds of the .jurors in the verdict to which they agreed. But from the observation or knowledge of the witness he was not sufficiently acquainted with the condition of the ship, where she was liable to have .been injured by the worms, to express his opinion or judgment. All that it was competent tor him to do was to state what he had seen in the course of the observations made by him. (Avery v N Y Central, etc., 121 N. Y., 31, 43.) His answers beyond that were strictly the expression of his opinion, based upon no facts, even if his opinion would otherwise have been admissible.

This evidence consequently was erroneously received, and the extent ■to which it may have been accepted, as proof of the seaworthy condition of the bark, can be no otherwise conjectured than by the fact that the jury must have found her to be in a seaworthy condition.

A further defense, interposed in answer to the complaint, was that of deviation by reason of an inexcusable delay at the port of Tecolutla, and to avoid that a witness, who had been engaged in trade •at the ports of the Gulf of Mexico, was asked the question, taking the usual condition of weather there prevailing from the first of January until the first of April, would he consider it extraordinary, on the face of things, that a vessel was delayed by the usual course of trade as much as a month or six weeks at any one of those ports ? The objection was taken to this evidence that the witness’s opinion was incompetent and irrelevant. This was overruled by the court .and the witness answered: I should think that she got good dispatch, rather better .than ordinary, in six weeks of time; ” and then the witness added, in answer to another qnestion, his reasons for this conclusion. This was not a matter that was dependent upon the opinion of the witness. The facts themselves were those which ■could be fully described and stated by the witness and thoroughly understood and comprehended by the jury; and it was their province, rather than that of the witness, to draw such an inference from those facts as they should be considered capable of sustaining. That duty, instead of being placed upon the jury, was ascribed to the witness, and he was permitted to give his opinion, when that opinion, in view of the facts, was not admissible as evidence.

While, therefore, the plaintiff sustained such a relation to the controversy as enabled him, under the policy issued by the defendant, to prosecute the action in his own name, if a recovery could justly be had in it, and the master was chargeable with the crime of barratry, although lie was a part owner in the bark, yet on account of the answers taken from these witnesses, as to the seaworthy condition of the barlt, and tlie cargo laden upon her and lier delay at the port of Tecolutla, which were erroneously permitted to be given, the judgment and the order should bo reversed and a new trial directed, with costs to the defendant to abide event.

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

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


source: Caselaw Access Project

author: Barrett, J.:

license: Public Domain

text:
    THOMAS ROGERS, Appellant, v. ALONZO T. DECKER, Respondent.

      Societies and dubs — chap. 368, Laws c/1865 — the liability of a trustee thereunder— is upon contract — a trustee must verify his answer — Codeof Civil Procedure, sec. 523.
    The general act relative to the incorporation of societies or clubs (chap. 368, Laws of 1865) provides, in its seventh section, that the trustees of such a corporation shall be “ j ointly and severally liable for all debts due from said company or corporation contracted while they are trustees.”
    In an action brought to recover a debt owing by such a club, against a trustee thereof.

      Held, that the liability created by the statute was in its nature one on contract, and was not penal.
    That the obligation of the trustee is an original one, and is concurrent with the liability of the corporation.
    That, therefore, in such an action, the defendant is not excused from verifying his answer, under section 523 of the Code of Civil Procedure, which excuses a party from making such verification where he would be privileged from testifying as a witness concerning an allegation or denial contained in the pleading.

      Hall v. Siegel (7 Lans., 206) explained.
    Appeal by the plaintiff Thomas Rogers from an order, made at the New York Special Term on the 9th day of October, 1891, granting the defendant’s motion to compel the plaintiff to accept an unverified answer in this action.

      James G. Murray, for the appellant.

      James JB. Dill, for the respondent.
   Barrett, J.:

This action is brought against the defendant to recover a debt due by the Hoboken Turtle Club, of which he was a trustee. The club is a corporation, created under the act of 1865 (chap. 368), for the incorporation of societies or clubs .for certain social and recreative purposes.” By the seventh section of this act the trustees of any corporation organized under its provisions are made jointly and severally liable for all debts due from the corporation contracted while they are trustees, provided said debts are payable within one year from the time they shall have been contracted, and provided a suit for the collection of the same shall be brought within one year after the debt shall become due and payable. The present action is brought under this provision, and the defendant served an unverified answer upon' the theory that the action was in its nature penal. The plaintiff refused to receive this unverified answer, but the court at Special Term compelled him to do so, holding with the defendant , that the action was penal and that the plaintiff must, therefore, accept the answer. We think this view was erroneous, and that the action was in its nature ex contractuThe trustees are, by the provision to which we have referred, made primarily liable for the debts of the company. This liability is not because of any act of omission or commission on their part, but simply because they are members of the corporation and have assumed the responsibilities imposed upon such members as choose to accept the position of trustees. The nature of the liability with which the stockholders of a corporation are charged, pursuant to a somewhat similar provision in an act of corporation, was exhaustively considered in Corning v. McCullough (1 N. Y., 47). It was there held, upon cogent reasoning, that where the charter of an incorporated company provides that the stockholders shall be liable for its debts * * * such stockholders are liable in an original and primary sense, like partners or members of an unincorporated association, and their liability is not created by the statute of incorporation. The ground of the action,” as was said in that case, is the individual liability of the defendant to pay for merchandise sold and delivered to a company of which he was at the time a member.” The present act of incorporation shields all the members of the company (except those who have accepted the position of trustees) from their common-law liability as joint debtors. The members who become trustees, however, are specially ■ excepted, and as the act does not exempt them from individual responsibility, their liability is original and concurrent with that .of the corporation. This distinction between an original contract obligation and a liability imposed by statute for disobedience of its requirements is referred to in Gadsden v. Woodward (103 N. Y., 244), and was clearly pointed out in Wiles v. Suydam (64 id., 173). In the latter case Church, Ch. J., said: “ The cause of action against the defendant as a stockholder, consists of the debt and the liability created by statute against stockholders when the stock has not been paid in and a certificate of that fact recorded. In effect, the statute in such a case withdraws the protection of the corporation from the stockholders, and regards them liable to the extent of the amount of their stock as copartners.”

The case of Hall v. Siegel (7 Lans., 206), is cited as an authority for the opposite view. But the question now under consideration did not arise in that case, and was not before the court. What was actually determined in that case was that the trustees were liable only upon condition that a suit to enforce their liability should be brought within one year after the debt became due and payable. It is true that the court based this construction upon the assumption that the statute was in its nature a penal one. • But the remark of the learned justice to that effect was purely obiter, and was inconsistent with the previous observation that the trustees were made primarily liable for the debts. The affirmance of that judgment in the Court of Appeals, without an opinion (53 N. Y., 607), is authority only for what was actually decided, certainly not for mere observations which are in conflict with the deliberate judgment of the appellate court in other cases.

We think, therefore, that the defendant was not privileged, and that he could not omit the usual verification of an answer.

The order appealed from should be reversed, with costs and disbursements, and the motion to compel the plaintiff to accept the unverified answer denied, with costs, with leave, however, upon payment of these costs, to apply to the court for permission, upon such terms as may be just, to serve a verified answer, such motion to be made within ten days of service of order to be entered herein.

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

So ordered.


author:
' Daniels, J.:
     Tan Brunt,' P. J.:' Barrett, J.:

text:
    JOHN A. McNAB, Appellant, v. THE McNAB & HARLIN MANUFACTURING COMPANY and Others, Respondents.

      Corporation —■ its rate of dividend and its surplus discretionary with its trustees — estoppel of a stoclcholder — a legal investment resulting in a loss — trustees voting themselves an increase of salary.

    In an action' brought by a stockholder of a corporation, formed under the general manufacturing act of 1848, to secure, among other things, a division of its surplus, it was shown that said corporation was prosperous and paid extraordinary dividends; that its trustees had employed a large part of the surplus in question in the business of the corporation, and that such use of it was deemed by them prudent and advantageous.

      Held, that the court would not interfere.
    That the rate of dividend to be paid, and the amount of surplus to be retained by a corporation, must rest in the fair and honest discretion of its trustees.
    The company was formed to manufacture brass work, but had found it profitable, in connection with its proper business, to deal in iron pipe as well. The plaintiff had never objected to the business being carried on in this manner, and the divi-dends which had been paid to the plaintiff were in part the proceeds of the iron-pipe branch of the business.

      .Held, that his receipt of said dividends estopped him from raising the question as to whether the iron-pipe business was ultra vires.

    The company had loaned money to a foreign corporation, and this act was charged to have been ultra vires. Thereupon the president of the company offered to take the stocks and bonds which had been taken to secure this loan, and assume the indebtedness himself, to which the plaintiff refused to consent.

      Held, that the plaintiff was not, under these circumstances, in a position to maintain any suit in equity based upon the fact of such loan having been made.
    .In order to escape taxation the company, at a period some years before this action was brought, invested its moneys in United States bonds; subsequently the bonds were sold at a loss.

      Held, that as the transaction was legal and was a past one, and as it was not -claimed that it was proposed to repeat it, it afforded no ground for equitable interference.
    ‘The company had six trustees, who were the owners of almost all its stock. A meeting of five of them was held, at which the salary of each as an officer or employee was increased. Four trustees voted upon each resolution, but in no -case did the trustee profiting by the increase vote for the resolution making his salary larger. It did not appear that the salaries as increased were excessive

      Held, that their action was legal. (Daniels, J., dissenting upon the last point.)
    Appeal by tbe plaintiff John A. McNab from a judgment, entered in tbe office of the clerk of tbe city and county of New York on tbe 10th day of June, 1891, dismissing bis complaint, with costs. with, notice of an intention to bring np for review upon such appeal an order, entered in the same office on the same day, granting to the defendants an extra allowance of $250 after a trial at the New York Special Term.

      Artemus V. Smith, for the appellant.

      Frederic JR. Ooudert and Frederic G. Dow, for the respondents.
   ' Daniels, J.:

The McNab & Harlin Company, defendant, was incorporated on or about the 28th of April, 1871, under the laws of this State providing for the incorporation of manufacturing companies. Its business was declared to be that of manufacturing brass and iron goods for sale, and since its incorporation it has carried on that business. The plaintiff was the owner of eight shares of its capital stock, which consisted of 150 shares of $1,000 each, and the other defendants were officers and shareholders'in the company. After its formation, and in or about the year 1877, the company became unable to pay its debts, and a proceedipg in bankruptcy' was instituted to discharge it from its debts. Soon after the proceeding was commenced the defendant Harlin became the president of the company. He owned seventy-eight shares of its capital stock, and compromised the debts •owing to the creditors of the company. The agreement for the compromise was to pay seventy-five per cent within the period of three years. After he took charge of the affairs of the company as its president, and under his management the business became prosperous, and the seventy-five per cent was paid to the creditors, and afterwards they ivere paid the additional sum of twenty-five per cent, making payment of their demands in full. The prosperity of the company continued, owing to the judicious management of the president, and for eight years prior to the time of the trial, which took place in May, 1891, its net profits amounted to the sum of $100,000 a year, or a sum slightly in advance of that amount; and from the year 1881 to the year 1891 it made and paid a dividend on its shares amounting to an average exceeding the sum of twenty-five per cent; and in addition to the dividends made in this manner it accumulated a large surplus, which was mainly used m its business, but to the extent of about one hundred thousand dollars was in its deposit accounts. And it was stated by the treasurer in his. evidence upon the trial that there was at that time an actual surplus owned by the company amounting to the sum of $152,209, and the plaintiff, whose action was brought to secure the distribution of the surplus by way of dividends, alleged and claimed that a still larger surplus had been earned and was owned by the company; and it was one of the principal objects of the action to secure the division of this surplus by way of dividends among the shareholders. But it was proved in the course of the trial that the' surplus maintained by the company was profitably employed in purchasing the material used by it in the course of its manufactures, and that it was considered for the best interests of the company not to divide this surplus among the shareholders. The directors, in restricting the dividends as they did, seem to have been impressed with the propriety of this conviction, and the dividends were accordingly limited to such amounts, from year to year, as did not intrench upon the large surplus which had been earned and secured. In their action upon this subject the trustees appear to have exercised the judgment which they deemed to be most consistent with the prosperity and maintenance of the interests of the company; and the statute under which the incorporation took place delegated the authority to the trustees to manage the stock, property and concerns of the company (2 B. S. [6th ed.], 503, § 29), and to what amount the dividends shall be made, and the extent of the surplus which the interests of the company may require to be retained, are within this delegation of authority confided to the trustees. And it was so regarded in Williams v. Western Union, etc., Company (93 N. Y., 162), where it was said, with the apparent approval of the court, that “ when a corporation has a surplus, whether a dividend shall be made, and if made how much it shall be, and when and where it shall be payable, rest in the fair and honest discretion of the directors, uncontrollable by the courts.” (Id., 192.) And "no broader principle than this was either stated or sanctioned in Scott v. Eagle Fire Company (7 Paige, 198), or in either of the other authorities which have been brought to the attention of the court. The principle to be applied is that which shall secure the observance of good faith on the part of the directors, and this principle was neither denied nor intrenched upon in Seeley v. New York, etc., Bank (8 Daly, 400), which was affirmed in 78 New York, 603. The trustees are chosen by the shareholders, to exercise their best judgment, depending upon their knowledge of the affairs and condition •of the company, and when that has been done, the courts do not undertake to control their action, although they might differ in their views of the proper management to be adopted and followed. No reason has been disclosed by the case for doubting or impeaching .the good faith of these trustees. .Neither can it be affirmed justly, in1 view of the large business carried on by the company, that they acted unreasonably or capriciously in declining to order a larger dividend than that which was, in fact, paid to the shareholders.

It appeared by the evidence that the company during the time it had been engaged in business, and the pai’tnership which preceded it, had dealt in iron pipe. This pipe was purchased by it and .sold in the course of its business, and it ordinarily had on hand iron pipe of the value of about thirty thousand dollars. This iron pipe was purchased and sold by the company as an adjunct to its business ■of manufacturing and selling its brass work, and it was considered by the persons in charge of the affairs of the company that it was judicious to unite the sale of the iron pipe with the brass work for the purpose of fulfilling the orders received by it and completing the purchases made by its customers. The evidence proved the fact to be that the sale of the brass work and the iron pipe went very much together, and that the pipe became necessary to fill the purchases of the company’s customers; and it was stated in the evidence of Mr. Harlin, the president of the company, as a witness for the plaintiff, that this course of dealing was never objected to by the plaintiff in this suit, and that a large part of the profits of the •company was derived from the sale of the iron pipe, and that no losses had resulted to the company from its dealings in this manner; and these facts apparently deprived the plaintiff of the ground of complaint made by him against the officers of the company for dealing in this manner in iron pipe. 'Whether the dealings in the iron pipe were beyond the powers of the company, as it was incorporated, it is not necessary to inquire for the reason that the acquiescence, of the plaintiff in this part of the business, and the acceptance by him of the profits derived from it through the dividends made and received by him, and which has not béen denied by his evidence, preclude him from maintaining this part of his action. (Holmes, ete., Company v. Willard, 125 N. Y., 75.) As to these dealings he has no standing in court which will enable him to restrain the company from their continuation. They have been carried on with his implied approval too long, and the advantages from it have been enjoyed by him in too many instances to permit him to question the propriety of this part of the business.

It further appeared by the evidence that the Sumpter and Charleston Railroad Company had become indebted to the McNab, etc., Company in the sum of about one hundred and four thousand dollars for moneys which had been loaned to the president of the company when it existed under another name, and for rails and fastenings which had been sold by the McNab Company to the railroad company ; and this was made a part of the plaintiffs cause of action for the reason that the McNab Company had no authority to loan, money in this manner, or to participate in the sale of railroad rails and fastenings. And, in this respect, the plaintiff appears to be correct in the position taken in his behalf for the maintenance of so much of the action. Rut it appeared on the part of the defense, in answer to this part of the case, that Mr. Harlin, the president of the company, had offered to take the bonds and stock obtained from the railroad company for this indebtedness on his own account, and to charge himself with the amount of the indebtedness. That was stated to be sufficiently secured to render the indebtedness good, and no evidence was given which proved the fact to be otherwise; but the plaintiff did not consent to this disposition of the bonds and stock of the railroad company. He did not agree that Mr. Harlin should take them and pay the company the amount of this indebtedness; and after failing to accept this proposal, which would have thoroughly protected the McNab Company against loss, he was deprived of all ground of complaint as to this part of the case. No more could be required than that the officer, through whose management this indebtedness had been created, should take the debt from the company and reimburse it to the extent to which its moneys had been used in the creation of the debt. As to this part of the case, the plaintiff’s action has accordingly failed.

In 1887 the company purchased $350,000 of Hnited States bonds and retained them for a period of a month or upwards, when they were sold, at a loss of about fifteen hundred dollars, and this purchase is made a substantial ground of complaint by the plaintiff in support of his action; but the evidence indicates the fact to be that, these bonds were purchased to avoid taxation upon the surplus ownecL by the company, and that they were used for that object. The law-permitted the bonds to be purchased, as they were exempt from taxation, to protect the company against the payment of taxes to. that extent. The transaction accordingly was not an unlawful one,, although it resulted in failing to realize a profit to the company.. But the purchase of these bonds, as well as the dealings with the: South Carolina Railroad Company, were completed prior to the time-of the commencement of the plaintiff’s action, and it was not averred that there was any disposition on the part of the company, or of its-managing officers, to make a similar purchase in the future, or to increase the indebtedness owing to the company from the railroad company. Those were past transactions, and there was nothing of them left which required correction in any respect by the plaintiff’s, action. If the company had threatened to continue these dealings,, or to extend those with the railroad company, it would have been entirely proper for the plaintiff to intervene by his suit to prevent that repetition; but it does not appear, either by the pleadings or-the evidence, that there was any intention on the part of any person to repeat these dealings, and they, therefore, supplied no foundation for the plaintiff’s suit, which is an action in equity.

At the meeting of five of the trustees in May, 1881, resolutions were proposed and adopted increasing the salary of Mr, Harlin, the president, from five to sixteen thousand dollars, and of the defendant Kyle, from $2,500 to $6,500, and of the defendant Maclay, from the sum of $1,800 to $3,200, and also making an increase in the salary of the defendant Fiefield, but which, however, was not objected to by the plaintiff; and creating a salary in favor of the defendant Merriam in the sum of $100. The resolutions providing for these salaries, were adopted by four of the trustees, being a majority of the six trustees of the company, voting in favor of each of the resolutions,, but neither one of the trustees voted for the resolution by which he himself was to be benefited.

But as the resolutions came up for consideration the other trustees who were present voted for the adoption of each resolution. Each one of the five trustees was present at the meeting where the resolutions were proposed and adopted, and the unanimity with which they were accepted is consistent with no other view of the facts than that it had been arranged before the resolutions were proposed, that they should be proposed and adopted in favor of each one of the five trustees in this manner, and that each of the four trustees voted for the resolution in favor of the other trustee upon the understanding that a similar vote was to be given upon each resolution providing for the salary of each of the other trustees, and after the adoption of these resolutions the salaries as they were so provided were paid to and received by these trustees. If each resolution had been voted for by the person intended to be benefited by it, the proceeding would have been unauthorized and illegal (Butts v. Wood, 37 N. Y., 317; Paine v. Irwin, 16 Hun, 390; Warded v. P. P. Co., 103 U. S., 651; Atlanta, etc., Co. v. Andrews, 120 N. Y., 58; 8 N. Y. St. Rep., 157), and, in judgment of law, the case would be precisely the same if the trustees; as they appear to have done, agreed before the vote was taken that the votes should be given in this manner, and that all the trustees who were present, except the one whose salary was to be provided for, should vote for each of these resolutions. The agreement was the same in its effect as it would have been if each of the five trustees had voted for each of the five resolutions, and that the law would not sustain them in doing, for a trustee of a company cannot by his own vote benefit himself in this manner; and whether the vote was given in form or its result was provided for in a preceding agreement could not change the case. These resolutions were, therefore, unauthorized, and all the persons benefited, even though they received no more than they were entitled to have, with the exception of the treasurer, are liable to refund the excess received under the authority of the resolutions to the company. The plaintiff first discovered at the meeting in 1888 that these salaries had been advanced and provided for in this manner, and then he protested and objected to the changes which had been made; and, so far as his action has been brought to set aside these resolutions and to avoid the salary and the increased •salaries which they provided for, the action seems to have been well founded; and as the facts all appear in the conclusions reached by the court the judgment in the case should be so far modified as to declare these resolutions unlawful, and to require the officers who have received the additional salaries under them, with the exception of the treasurer; and also to require of Merriam to return the moneys received by them under' the authority ox the resolutions to the company, and with that modification the judgment should be affirmed ; but, inasmuch as this is no more than a small portion of the object of the plaintiffs action, and it cannot be sustained in other respects, the modication should be without costs.

Tan Brunt,' P. J.:'

I dissent from the conclusion of Mr. Justice Daniels that the judgment in this case should be modified. There is no evidence •whatever that the salaries proposed to be paid were in the slightest degree excessive.

The administration of the present officers of the company had been eminently successful, and merely because they were directors of the company they are not precluded from being reasonably paid for their services. I think that the judgment should be affirmed, with costs.

Barrett, J.:

I concur with the presiding justice. There was not a particle of evidence that the resolutions, increasing the salaries, were the result of a combination of any kind —■ fraudulent or innocent — or of precqncerted action upon the part of the trustees. These resolutions were adopted by trustees who were themselves stockholders, and who owned nearly the entire capital stock of the company. In fact, the plaintiff owned but eight shares out of one hundred and fifty, and he was the only complaining stockholder. It is difficult to believe that his complaint on this head was made in good faith. For it is entirely clear from the testimony that he believed that the president was most inadequately compensated, and that that officer’s .salary should be largely increased. If the action of the trustees, under all the circumstances of this case, was in this particular illegal, then it is impossible legally to afford adequate compensation to the officers of a corporation where an inadequate salary has once been fixed. The plaintiff’s objections on this head are not only untenable, but are seemingly made in a spirit of mere antagonism to the trustees resulting from differences of opinion as to the dividends, which it has been deemed wise to declare, and also from other differences of opinion as to the proper management of the company. The manner in which this company has been lifted from bankruptcy into prosperity, and its splendid condition to-day, furnish a complete justification of the course pursued by Mr. Harlin, and afford conclusive evidence of his good judgment and that of the trustees, with regard to all the matters complained of. These facts should protect them from attacks founded upon mere personal feeling.

The judgment should be affirmed, with costs.

Judgment affirmed, with costs.


author: Yan Brunt, P. J.:

text:
    JAMES FLYNN, Respondent, v. EMMA KENNEDY and Another, Appellants.

      Sale in partition set aside —premature payment of costs by the referee to the plaintiff’s attorney— the plaintiff is not liable to refund the same to the referee — the referee is entitled to his fees — costs are not proper in an inten'locutory judgment.

    A referee, appointed to sell certain premises in an action for partition, at tlie request of tlie plaintiffs’ attorney therein paid to him upon the day of sale his costs, which had been inserted in the interlocutory judgment, and took from the attorney a receipt, in which the latter promised to return said costs if the sale-was not confirmed. The payment was in no manner authorized by the plaintiffs in the action. The referee’s report was confirmed and final judgment was entered.
    Subsequently this judgment was set aside, the purchaser was relieved from his bid, and the referee was directed to restore to him the money paid upon the sale. After doing so he sued the plaintiffs for his fees and disbursements and the costs so paid their attorney.
    Held, that the referee was entitled to his fees upon the sale and to his proper disbursements.
    That the referee could not recover from the plaintiffs the costs thus paid their attorney.
    That there was no authority for inserting the costs of the action in the interlocutory judgment.
    That sections 1579 and 1580 of the Code of Civil Procedure clearly contemplated that no payments of any nature were to be made until after entry of final judgment.
    That, although the report of the referee was confirmed and final judgment was entered, the latter did not protect the referee, by whom the proceeds of sale had not been received, in Ms unauthorized payment of the costs under the interlocutory judgment.
    That the plaintiffs in the partition suit had a right, if they chose, to contest the question of the value of their attorney’s services, and could not be deprived of that right by a premature payment made by the referee to him.
    Appeal by the defendants, Emma Kennedy and Henry Kennedy, from a judgment, entered in the office of the clerk of the city and county of New York on the 25th day of July, 1891, in favor of the plaintiff upon the report of a referee.

      E. J. Dooley, for the appellants.

      E. H. Benn, for the respondent.
   Yan Brunt, P. J.:

The defendants in this action, by their attorney, brought an action in the Supreme Court for the partition of some real property in the city of New York. There was no defense, and, upon motion, the plaintiff was appointed referee to take the necessary proofs and to report thereon whether there should be a sale or actual partition.

He took the proofs and made his report, which was confirmed, and he was then appointed referee to sell the land. He published the usual notices, and such notices as the attorney for the plaintiffs directed, and paid the fees and expenses thereof, and in due time sold the land. Ou the day of sale, and after the purchaser had paid over to the referee, as such referee to sell, ten per cent of the purchase-money, he, at the request and application of the plaintiffs’ attorney, advanced or paid over to the attorney the amount of the costs which, in the interlocutory judgment of sale, had been improperly adjudged and awarded to the plaintiffs and took a receipt from said attorney for said sum, which receipt contained the following language : “Which sum I am to return to him in case the purchaser refuses to complete his purchase on or before the 2d of June, 1890.” The order confirming said sale and final judgment was made and entered in said action on the 22d of May, 1890; and such proceedings were had subsequently that, on the sixteenth of October, upon the motion of the assignee of the purchaser, an order was made relieving said assignee from the bid and purchase made at such sale, and directing said referee to pay to the purchaser or his attorney out of the moneys received by him upon said sale the costs of the motion, the ten per cent paid on said sale, the auctioneer’s and exchange fees, and the amount of the expenses of said attorney on the examination of the title; and said order provided that, in the event that said referee had not sufficient funds to make said payment in full, then the plaintiffs in that action (the defendants in this action) should pay the balance of said sum so remaining unpaid by the referee. On the 25th of October, 1890, the plaintiff, pursuant to such order, paid to the assignee of the purchaser said ten per cent which had been received by him. Thereupon this action was brought by the plaintiff herein against the plaintiffs in the partition action to recover back the costs paid by him to their attorney, the disbursements which had been made by him for publishing notices, etc., and for his fees and commissions upon the sale, the defendants having-denied liability for these sums. Upon consent the issues were referred to a referee, who reported in favor of the plaintiff for the whole 'amount, except his commission upon the sale, and from the judgment thereupon entered this appeal is taken.

We think that the referee was entitled to his fees, having performed all the services under the interlocutory decree of sale which he was called upon to perform. ITe was also entitled to recover the expenses to which he was put for advertising, etc., they having been incurred at the reguest of the defendants’ attorney in the prosecution of the action, to prosecute which he had been retained by them. But we do not see upon what theory the costs which were paid to the plaintiffs’ attorney can be recovered back by the referee. It is true that the interlocutory judgment adjudged that the plaintiffs were entitled to costs, and the amount thereof seems to have been inserted therein, but this was entirely without authority under the Code.

Bjr section 1579 of the Code it is provided that where final judgment- confirming a sale is rendered the costs of each party to the action and the expenses of the sale, including the officer’s fees, must be deducted from the proceeds of the sale, and each party’s costs must be paid to his attorney ; and by section 1580 the share of the party must be paid to him or his legal representatives, and not to his attorney of record.

It is clear from the language of these sections that it is not until final judgment confirming a sale is rendered that the costs can be awarded; and it seems equally clear that such costs cannotbe paid until the proceeds of sale are realized, because the provision is that they are to be deducted from the proceeds of sale, and after being deducted each party’s costs must be paid to his attorney. Section 1577 determines what a final judgment in a partition suit is. It provides that if the sale is confirmed by the court, a final judgment must be entered confirming it accordingly, directing the officer making it to execute the proper conveyances and take the proper securities pursuant to the sale, and also directing concerning the application of the proceeds of the sale.

Therefore, it seems to be clear that such a final judgment must contain a direction concerning the application of the proceeds of the sale, and that no distribution can be made before the entry of such a final judgment. If it is claimed that such a final judgment was entered in the case at bar, because the sale was confirmed, it may be answered that the proceeds of sale had not been received, as contemplated by the final judgment, and consequently there was nothing from which these costs and expenses could be deducted. ¥e think, therefore, that the referee stands in precisely the same relation towards these defendants as though he had not made these disbursements and was seeking to recover that which he was entitled to recover by reason of his relation to them in the partition action. For the disbursements which he had made in reference to the sale, and for his fees as referee for the services which he had performed, he had a right of action as against the defendants (the plaintiffs in the partition action). But for the costs which he paid out before he was authorized by law so to do we do not see how he has any claim against the plaintiffs therefor.

The plaintiffs had the right to contest the question as to whether their attorney was entitled to any compensation for his services, and they could not be deprived of this right by a premature payment of such costs to such attorney. That the referee looked to the responsibility of the attorney, in reference to this payment, seems to be shown by the language of the receipt, because it is a personal obligation upon the part of the attorney to return the money in case the sale should not be completed.

.Much as we would like to relieve the referee from the unfortunate position in which his good nature seems to have placed him, we do not see upon what principle a recovery for these costs paid by him, without authority, could be had.

We think, therefore, that the judgment must be reversed and a new trial,-had, with costs to appellants to abide event, unless the plaintiff stipulates to reduce the judgment by the amount of such costs; and in case such stipulation is given, the judgment, as so reduced, should be affirmed, without costs.

Daniels and Ingraham, JJ., concurred.

Judgment modified as expressed in opinion, and as modified .affirmed, without costs.


text:
    THE PEOPLE OF THE STATE OF NEW YORK ex rel. FRANK GUNTNER, Appellant, v. HENRY MURRAY, a Police Justice of the City of New York, Respondent.

      Criminal Procedure — a conviction of a prisoner as a disorderly person cannot be reviewed by certiorari' — in all criminal actions and proceedings the remedy is by appeal — Code of Criminal Procedure, sec 515.
    The writ of certioran'i is not a proper method by which to review a determination made by a police justice of the city of New York upon committing a prisoner as a disorderly person.
    The practice to be followed in such a review is laid down in section 515 of the Code of Criminal Procedure, as amended by chapter 372, Laws of 1884, and is by appeal.
    By said amendment writs of error and of certiorari were abolished, not only in criminal actions, but in proceedings, and special proceedings, of a criminal nature.
    Certiorari allowed March 25, 1891, to review the determination ■of the respondent as a police justice in the city of New York, in convicting the relator for disorderly conduct, and sentencing him as follows: “ Fined, $1,000, bonds for his good behavior for six months; imprisonment not to exceed six months. H. M.”

      John Fennel, for the relator.

      David Welch and De La/ncey Ficoll, for the respondent.
   Yan Brunt, P. J.:

It is manifest that there is no power in this court to review in the manner sought by this proceeding the action of the respondent. The very satisfactory opinion of the learned Recorder Smtth in the case of the People ex rel. Vitan v. Vitan (20 Abb. N. C., 298), shows conclusively that the only method of review is by appeal.

Our attention is called to the case of the People ex rel. Scherer v. Walsh (33 Hun, 345), in support of the jurisdiction of this court, in which it was held that by section 515 of the Code of Criminal Procedure writs of cerUorari in criminal actions as they have heretofore existed were abolished, and a review could only be had by appeal; but that the section referred only to criminal actions as defined by the Code, and that a proceeding before a committing magistrate was not a criminal action, but a special proceeding of a criminal nature, and hence section 515 did not apply, but the law remained as it existed prior to the Criminal Code.

In 1884 (chap. 372 of Laws of 1884), however, section 515 of the Code of Criminal Procedure was amended and its provisions extended to abolishing writs of error and cerUorari, not only in criminal actions, but in proceedings and special proceedings of a criminal nature entirely covering the case referred to in the case of Scherer v. Walsh (supra).

It is true that that case was decided in September, 1884, but it does not appear that the attention of the court was called to the amendment which had taken place in the Code of Criminal Procedure.

The writ should, therefore, be dismissed, with costs.

Daniels and Ingraham, JJ., concurred.

Writ dismissed, with costs.


author: Yan Brunt, P. J. :

text:
    NATIONAL PARK BANK, Respondent, v. WARREN N. GODDARD and Others, Appellants.

      Equity — irrepm'dble mischief and vexatious litigation —action by one having a general lien upon goods against parties homing liens upon different portions — directions to a receiver as to a sale — possession of property by a receiver.

    A bank, which, was a creditor of certain manufacturers of ciothing, had caused a levy to be made, under an attachment, upon their stock in trade. A number of other creditors of the manufacturers then began actions of replevin. It appeared '.that, in such actions, the claims of some creditors arose out of a sale of cloth; others had sold buttons, others linings and still others trimmings. Some of tlie stock was cloth in. the piece. There were also garments in process of manufacture. Each of these creditors based his action upon fraud, and he claimed to rescind the sale and to retake his property wherever and in whatever form he could find it.
    In an equitable action brought by the bank against all these claimants to protect its lien, and to secure an adjudication in one suit upon the conflicting claims:

      Held, that the action was maintainable, and the appointment of a receiver therein was proper.
    That, upon the facts above stated, the bank had no adequate remedy at law, and that equity would intervene to prevent irreparable mischief or vexatious litigation
    That the bank, by virtue of its general lien under the attachment, and a levy thereunder, might proceed, making the rival claimants parties, notwithstanding their replevin actions.
    That said parties to the replevin actions were not, by this action on the part of the . bank, deprived of their right to a trial by jury, since, if they had such a right, issues could be framed and the right be preserved.
    That, even though one or two of the parties bringing replevin actions claimed therein goods which were in the original packages or pieces, the court would npt restrain all other claimants and allow the particular actions of such parties to proceed.
    The court, upon an application by a reciver of the manufacturers for instructions how to proceed, directed him to sell the manufactured goods and hold the proceeds subject to its order; to complete the clothing in process of manufacture; to sell it and hold the proceeds; to store the piece-goods; to settle, in his discretion, with workmen and others claiming liens; to keep by itself the proceeds of the sale of each lot of goods replevied, and to collect unpaid claims due said manufacturers.

      Held, that the form of the order was correct.
    That the court, even if it were possible so to do, would not compel the receiver to ascertain to whom each parcel of property belonged, and to restore it to the person who sold it to the manufacturers.
    That the court was bound to keep possession of the property for the benefit of all creditors, and that if any one was entitled to certain goods, he would be entitled to payment, by the receiver, of the sum for which the particular goods were, sold by him.
    Appeal by the defendants, Emil Oelbermann and Louis F. Dommerich, composing tlie firm of Oelbermann, Dommerich & Co., George W. Bramhall and Carl R. Hieronymus, composing the firm of Bramhall Bros. & Co., and James Talcott, from an order entered in tlie office of the clerk of the county oLNew York May 23,1891, granting an injunction and appointing a receiver, and by the same and other defendants from an order in a similar action granting an injunction and other relief, entered in said clerk’s office September 22, 1891.

      E. F Dwight, for the appellant Oelbermann and others.

      Gibson Putzel, for the Raritan Woolen JVIills and others, appellants.

      Benno Loewy, for the appellant Haas and others. ■

      Butler, Stillman <& Hubbard, for the appellant Julliard and others.

      Otto Horwiiz, for the respondent.
   Yan Brunt, P. J. :

Levy Bros. & Oo. were a limited partnership engaged in the manufacture and sale of clothing in New York, and being indebted to the plaintiff in a large sum of money their property was attached at the suit of the plaintiff, by the sheriff, who took into his possession their stock of goods and some other property. At that time the defendants herein, other than the Levys and the coroner, claimed to be creditors of the insolvent firm for goods sold and delivered, but their claims had not matured.

As soon as the sheriff had levied upon and taken possession of the firm’s property these creditors, claiming that the goods sold by them to the Levys were obtained from them by fraud, assumed to rescind the sales and commenced actions in replevin to recover the goods they had respectively sold. The coroner thereupon took the goods out of the sheriff’s possession. Some forty or fifty different actions of this nature were thus commenced.

The goods sought to be replevied were cloth, linings, trimmings and other materials which had been sold, by the plaintiffs in the replevin suits, to the Levys, and which had, to a great extent, been made up by the Levys into clothing; the cloth bought from one merchant being combined with the linings bought from another, and the trimmings furnished by another to form the garment as it existed at the time of the levy on the attachment by the sheriff. Each plaintiff in the replevin suits claimed certain goods in whatever shape, he could find them, whether in the piece or made up into garments. Entire garments were claimed by the merchant who sold the buttons or linings, or who sold the cloth or furnished other parts of the material; and at the time that this action was commenced were in the act of seizing upon and taking away property, some of which had formerly belonged to them and some of which they had never owned; the claim of the plaintiffs in the replevin suits being that these goods having been obtained by fraud they had the right to follow them in any form that it might assume through the interference of others. The respondent thereupon commenced this action for the protection of its lien under its attachment, and to procure in one suit a determination of all the adverse and conflicting claims upon the attached property, and for an injunction and a receiver, averring that it was necessary for the protection of its lien that the attached property be held or sold for the benefit of all the lienors or claimants thereto. An order to show cause why a receiver should not be appointed having been made, an order was made temporarily enjoining the defendants from pursuing their actions in replevin, and the court appointed a receiver, two orders having been entered in respect thereto, and from these orders these apj>eals are taken.

It is urged, upon the part of the appellants, that the complaint does not disclose equity sufficient to authorize the relief granted by the order, and that a multiplicity of spits is not alone a sufficient ground for the interposition of a court of equity, but that there must be some additional equity of which the plaintiff is unable to avail itself at law, or which is a distinct ground of equitable cognizance, such as accident, ■ mistake, fraud or discovery; and that in any event it must be shown that there is a common right at stake among the defendants or a common property involved in dispute.

Undoubtedly a part of this proposition is well founded, but the limitation of the interference of equity to cases of accident, mistake, fraud or discovery would seem to deprive that branch of jurisprudence of the most important part of its jurisdiction. And in the consideration of the questions presented upon this appeal it may be. proper to call attention to the manner in which equitable interference has been called into existence by the necessities of the case, the cardinal principle being that the party had no adequate remedy :at law, which is the foundation of all equitable interference.

In order to obviate many defects in proceedings at law the remedy by interpleader was introduced into equity, but as it left many cases of hardship unprovided for, bills qma Umet obtained, which were essentially in their nature writs of prevention, and, therefore, instituted before the wrong has been or is actually being suffered. But as these did not afford relief, there being many cases where injury was being suffered for which the law afforded no adequate protection, as to prevent waste or destruction or deterioration of property pendente lite, or to prevent irreparable mischief (bills of peace and wrrits of injunction were resorted to). The grounds upon which the jurisdiction of courts of equity in proceedings of this character was founded arose from their ability to give a more complete and perfect remedy than is obtainable at law, in ■order to prevent irreparable mischief, or to suppress oppressive and vexatious litigations. In fact, equity has always intervened where the law cannot afford adequate relief.

The question arises in the case at bar whether the plaintiff has brought itself within the jurisdiction of a court of ■ equity by the facts developed upon the hearing of these motions. It is urged that the plaintff has no standing in court as against these parties seizing these goods under their replevin writs. But it was held in the case of the First National Bank of Oswego v. Dunn (97 N. Y., 159), that an execution creditor, if he meets with an obstruction to his levy, may, because of his general lien, proceed in equity, making all the rival claimants parties, and prevent, if need be, the transfer of the property by the plaintiff in replevin, avoid a multiplicity of suits, and so determine in one action the whole controversy. In the case .at bar the plaintiff had an actual lien upon the property, having levied thereon and being in possession of it. Its levy is obstructed by the various claimants of this property as represented in the replevin suits, and in some cases different claimants claiming different portions of the same piece of property. If these defendants are .allowed to go on, a large portion of this property upon which the plaintiff has obtained its lien will be absolutely destroyed, and if it should finally succeed in the replevin actions, it will have but a barren victory. Therefore, it has brought this action in equity, making all the rival claimants parties, and claiming the right to prevent the transfer of the property by the plaintiffs in replevin, and also claiming to avoid a multiplicity of suits, precisely within the principle of the rule cited.

In this action the rights of all the parties can be protected, and the property or its proceeds preserved for the party who shall finally be decided to be entitled to the same. Without elaborating the propositions heretofore referred to, it seems, from the facts disclosed by these papers, that, if ever there was a case in which a court of equity should intervene to prevent irreparable injury, it was under circumstances such as are disclosed in the case at bar.

The point made, that the parties in the replevin suits are by this means deprived of their right to a trial by jury, cannot have any force, because, if they are entitled, as matter of right, to a trial' by jury, issues may be framed by which tüey may be able to have the benefit of that right. But we do not intend to intimate any opinion upon that subject, because it has become familiar law that even a replevin suit may become an action in equity by an order of interpleader.

Upon the whole case, therefore, we are of opinion that it was a wise exercise of the discretion of the court to prevent the dissipation of this property and to take possession of the same itself until the determination of these rival claims and the ascertainment of the rights and interests of each.

It is claimed by. some of the appellants that their actions were brought for the recovery of goods which remained in the original packages, or in the original piece, and which were not either manufactured or in process of manufacture at the time of the issuance of the writs. There may be a few instances of that kind, but there is no sufficient reason why one or two suits should be allowed to> progress if all the others are to be enjoined.

The orders appealed from should, therefore, be affirmed, - with ten dollars costs and disbursements.

Barbett, J., concurred.

Orders affirmed, with ten dollars costs and disbursements.


author: YaN Bbuht, P. J.:

text:
    Appeal by Warren N. Goddard and others, defendants in a like entitled action, from an order entered in the office of the clerk of the county of New York July 25, 1891, which allowed the receiver appointed in said action to make up, sell and dispose of certain property and articles of clothing in process of manufacture, of the defendants, August D. Julliard and others, and to compromise the claims of lienors, the workmen.

      Gibson Putzel and Benno Boewy, for the appellants.

      George Zabrishie and Otto Horwitz, for the respondent.
   YaN Bbuht, P. J.:

In an opinion handed down herewith, the circnmstances out of which this litigation arose and the receiver was appointed have been adverted to, and it is not necessary to repeat them here.

It appears from the papers that the receiver, upon obtaining possession of the goods, found that they consisted of manufactured •clothing, goods in the piece and goods in process of manufacture; and that in respect to the manufactured goods portions of them only were claimed by the plaintiffs in replevin, and in other cases ■different plaintiffs claimed different portions of the same garments; that the season for the sale of summer clothing was nearly over, and that it was the best time of the year for the sale of winter clothing ; that the cloth in piece would sell better within a short time than if held over the summer; that the goods were expensive to •store and exposed to injury from dust, moths, etc., and it would involve heavy expenses to keep them. The receiver had also ascertained that the insolvent firm had a method of keeping an accurate record of all the goods which they bought, by which they could be traced through the processes of manufacture into made-up garments; and if they should be sold the identity of the proceeds would be preserved; and that some of the goods were cut out but not made up, and that they would sell for more than the expense of making them up if they should be completed ; and that other goods were held by workmen under claim of lien for their labor. The receiver thereupon made an application to the court for instructions how he should proceed, and upon that motion various plaintiffs in the replevin suits appeared and opposed the motion.

The court directed the receiver to sell the manufactured goods and hold the proceeds subject to the further order of the court; to complete the clothing in process of manufacture; to sell it and hold the proceeds subject to the order of the court; to store the piece goods ; to settle, in his discretion, with workmen or others claiming liens ; to keep by itself the proceeds of the sale of each lot •of replevied goods, and to collect unpaid claims held by him as receiver, due to the insolvent firm; and from this order this appeal is taken.

One of the points urged by the court, below, in opposition to the motion and now before this court, is that the court below erred in assuming that the appointment of the receiver was authorized, while the papers used upon the motion show that such appointment was unauthorized by law and void. ¥e have already reached the determination in the opinion adverted to, that, under the circumstances brought to the attention of the court on the application for' the appointment of a receiver, it was necessary that the court should appoint a receiver in order to protect the interests of all the parties.. It is also urged that the receiver should not have been instructed to-sell any part of the property in suit, for the reason that it appears-that it could be duly ascertained who was absolutely entitled to each particular parcel of property held by him, and that course should have been adopted by the court which would have compelled the-receiver to ascertain that fact, and that an order should then have-been made restoring to each party such parcel of goods as belonged to him or them.

We are not aware of any circumstances under which such a duty is imposed upon an officer of the court. If the plaintiffs in replevin r who are defendants in this action, are entitled to any relief, it. becomes necessary for them to show to what goods they are entitled, and, then, if they are entitled to the goods they will receive the proceeds of • the sales thereof. The court was bound to keep possession of the property in order to protect the interests and rights of all parties; and as it is apparent that a sale was for the benefit of all, if the court was to retain possession of the property, there-was no error in ordering such sale.

It is also urged that the order appealed from, in so far as it directs the unmanufactured merchandise to be stored and held subject to the order of the court, should be reversed, because it perpetuates an apparent injustice which was initiated by the order appointing the receiver.

This point has already been covered by the opinion in the other case, and proceeds upon the theory that certain plaintiffs in replevin are absolutely entitled to the possession of certain portions of this property because they are the only claimants. Until final judgment, property taken in replevin is supposed to be in the custody of the court. If the property has been delivered to the plaintiff in the action of replevin, the judgment of the court in that action is, that it be returned, or, in default thereof, giving a money judgment.

All that the court has done in the appointment of a receiver is to-appoint a custodian for this property pendente lite, and thus by the interposition of its equitable powers to prevent the injury which, would result by refusing to exercise that power.

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

Barrett, L, concurred.

Order affirmed, with ten dollars costs and disbursements.


author: INGRAHAM, J.: Daniels, J.:

text:
    EMMELINE C. BAKER, by WILLIAM H. BAKER, her Guardian Ad Litem, Respondent, v. THE EIGHTH AVENUE RAILROAD COMPANY, Appellant.

      Negligence — a child injured by a horse car — when a driver is not negligent.

    In an action "brought against a. corporation to recover damages alleged to have resulted from its negligence, it appeared that a child eight years old attempted, at a point in a city street where there was no established crossing, to cross the street; that the child passed behind a car going up-town and was almost instantly struck by a horse, or by the collar of a horse attached to a car going down-town, and was by this means thrown under the car.
    One witness for the plaintiff testified that just before the accident the driver was looking away from the child. At the moment of the accident the driver pulled the horses in a direction opposite to that of the child, and the plaintiff claimed that this act caused the accident
    Held, that a verdict against the corporation could not be sustained.
    That the driver had no reason to expect that a person would, at such a point, attempt to cross behind an up-town car.
    That he had to act quickly in attempting to avoid the accident, and even if by letting his horses go straight ahead it might have been avoided, it could not be said that his act in pulling his horses to one side was negligence.
    That, although 'street railway cars have a preference in streets, and must be managed with care, a pedestrian is also bound to exercise reasonable care in keeping out of their way.

      Appeal by the defendant, the Eighth Avenue Railroad Company, from a judgment, entered in the office of the clerk of the city and county of New York on or about the 18th day of February, 1891, upon a verdict for the plaintiff for $5,000, after a trial at the New York Circuit before the court and a jury; also from an order, made upon said trial on or about the 17th day of February, 1891, denying the motion of said defendant to set aside said verdict and for a new trial upon the minutes of the court.

      John M. Scribner, for the appellant.

      Jacob Fromme, for the respondent.
   INGRAHAM, J.:

A review of the evidence in this case has satisfied us that the finding of the jury that the injury was caused by defendant’s negligence cannot be sustained. There were three witnesses called on behalf of plaintiff as to the occurrence that resulted in the injury. The plaintiff herself, a child eight years of age at the time of the accident, testified that she passed behind a car going up town, and as she did so a car came down town, the horses, as she stood between the tracks, being directly in front of her: that she stood between the up-town track and the down track; that she saw the driver pull the horses away from her; as he did so she was struck by the hip of the horse nearest to her and was thrown under the car. The place at which the plaintiff crossed was about midway between two cross streets ; there was no cross-walk in that vicinity.

Haley, a witness called for the plaintiff, testified that he noticed the child pass behind the up-town car; that he sarv her struck by the collar of the horse attached to the down-town car; that at that moment the driver pulled the horses around to the west away from the child and the child was then struck by the hip of the horse and was thrown under the car. He also testified that shortly before the accident he saw the face of the driver turned toward the west.

Finnelly, a policeman, was the third witness called for plaintiff. He testified that he was on the back platform of the up-town car; saw the child pass behind the car and stand between the tracks, and that he noticed that one of the horses was outside of the rail, between the two tracks, and that the plaintiff was knocked down by the flank of the horse and her leg got under the car.

There was no reason for the driver to expect that a person would attempt to cross from behind the up-town car; there was no crosswalk at which persons were in the habit of crossing, and the mere fact that he, at that moment, turned his head away from the horses or the front of the car would not of itself justify a finding of negligence.

ITaley says that the collar of the horse striking the child was what attracted the attention of the driver. The plaintiff herself says that she was struck by the back of the horse, and Finnelly, the policeman, says that the first thing he saw was plaintiff knocked down by the flank of the horse.

It is not material which of these versions is accepted. It is apparent that the appearance of tile child so near the track, and in a place of possible danger justified the driver in taking means to avoid an accident. He had to act rapidly, with little time for reflection; and it cannot be said that because it now appears probable that, had he allowed his horses to go straight on, the child would have ■escaped, justifies a finding that he was negligent; at most it was an error of judgment as to what, under the circumstances, would most likely prevent an accident, and there is no question but what he acted in good faith, and did' what he supposed, under the circumstances, was the best thing to do.

As was said in the case of Fenton v. The Second Avenue Railroad (126 N. Y., 627): “ Street railway cars have a preference in the .streets, and while they must be managed with care so as not to carelessly injure persons in the street, pedestrians must, nevertheless, use reasonable care to keep out of their way.”

There was no reason why this child should have passed behind the car and stood so near the track of the down-town car that the horse could hit her; and the driver had no reason to expect that any person would act as the plaintiff testifies that she did. His efforts, made in good faith and in the exercise of his best judgment at the time, to avoid injury, will not justify a finding that he was negligent.

The testimony of the defendant gives a slightly different aspect to the case, but makes it only more clear that the action of the ■driver was, under the circumstances, judicious and proper.

We think, therefore, that the court should have directed a verdict for the defendant, and it follows that the judgment must be reversed and a new trial ordered, with costs to appellant to abide the event.

Yan Beunt, P. J., concurred in result.

Daniels, J.:

I think the case was not for the jury, but for a dismissal of the complaint, and, therefore, agree to a reversal and new trial.

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