text:
    Geffcken v. Slingerland & McFarland.
    G-., on the application of N"., agreed to discount a note made by S. & McF., for $1283 27, on being furnished with collaterals, being told at the time by N. that he wished to procure the discount for a friend who was not named, the friend being S. & McF.; and the latter thereupon delivered to N"., as such collateral, anote which they owned, for $2,000, made by R. and M., and N". delivered it to G., as such collateral, telling him that as the $2,000 note first matured, “to collect it and credit it in our account,” by our account meaning the account of a firm of which-N. was a member; and thereupon G. procured the note of $1283 27 to be discounted at bank, on the security of the note for $2,000 left with such bank as collateral, and the $2,000 note was paid at maturity. G. has no right, as against S. & McF., to use such moneys to take up another note made by N.’s film, then running to maturity, and which he had endorsed and procured to be discounted for such firm. Such a use and application of the proceeds of the $2,000 note would be a fraud on S. & McF. G. knowing, when he discounted the note for $1283 27, that N. was acting for a friend, knew that he was the agent of such friend, and that the $2,000 note was the property of the latter, and was furnished by him as security for the payment of the note to be discounted, or, at all events, he knew enough to put him on inquiry.

      The relative rights of G. and of S. & McE. are not affected by the fact that the latter paid at hank the $2000 note, pursuant to an arrangement between themselves and the makers of such note, by which the makers were to have a renewal for $1500 of its amount on payment of $500 in cash (the balance of it) to S. & McE., which balance such makers so paid to S. & McE., and gave them a renewal note for §1500. Hor are such relative rights varied by the farther fact, that S. & McE., before they paid the $2,000 note, were informed by N. “what had passed between him and G. in relation to it,” it not appearing that S. & McE. ever sanctioned or intended to sanction the application of the $2000 note to any other purpose than to pay or secure the note for $1283 2*7.

      Held, further, that the payment of the $2000 note, and the receipt and use of its proceeds by Gr., operated, as between him and S. & Me. E., as a payment of the note of $1283 21?, and made him their debtor for the difference; and, therefore, Gr. could not recover of S. & McE. the amount of the note for $1283 21 (that being the note on which this suit is brought), but that the latter were entitled to a judgment against him for the difference between the amount of such two notes, with interest, the right to such excess being set up as a counter-claim, on a proper allegation of the facts in that behalf.
    Judgment ordered accordingly.
    (Before Bosworth and Woodruff, J.J.)
    Heard, June 2d;
    decided, June 27th, 1857.
    This action comes before the Court, at General Term, on a verdict taken for the plaintiff, subject to the opinion of the Court. The plaintiff is Adolph Geffcken, and the defendants are William J. Slingerland and Luther W. McFarland, composing the firm of “ Slingerland & McFarland.” The action was tried before Ch. J. Oakley and a jury in April, 1856.
    The complaint avers the partnership of the defendants, and the making by them of a promissory note, of which the following is a copy:
    $1,283 27. New York, 15ih Dec. 1853.
    Six months after date, we promise to pay to the order of ourselves, twelve hundred and eighty-three 27-100 dollars, at the Mechanics’ Banking Association, value received.
    (Signed,)
    Slingerland & McFarland.
    That the defendants, before its maturity, endorsed it, and “ delivered the samethat the plaintiff “ is the lawful owner and holder of the said note for valuethat it is due and wholly unpaid; and prays judgment for its amount, with interest from its maturity.
    The answer denies that any sum is due on this note, and avers, that when the defendants delivered that note they delivered with it, as collateral security for .the same, another note, which they held and owned as endorsees, made by Ryder & Malony, for $2,000, dated February 20, 1854, at three months; and that the same were so taken by the plaintiff, with knowledge of the facts.
    That said collateral note was paid at maturity, and that the plaintiff was bound, after applying sufficient of the proceeds to satisfy the first note, to refund the balance to the defendants, and the answer makes a counter-claim therefor.
    The reply puts in issue the fact that the Ryder & Malony note was given merely as collateral, or that the plaintiff so received it, and avers that he received it from Gildemeister & Meustaedter as collateral for the payment of their note for $2,226 40, and for the note in suit, both of which he had endorsed and procured to be discounted for them; that the proceeds of the Ryder & Malony note were applied by him to the payment of the Grildemeister & Meustaedter note, winch he had been obliged to pay as endorser, without notice of any of the facts set up in the defendants’ answer.
    The printed case, after setting forth the evidence given and proceedings had at the trial, concludes thus:'
    “ The Court, by consent of the parties, ordered a verdict to be taken for the plaintiff for two thousand dollars, subject to the opinion of the Court upon the questions of law and fact, upon a case to be made and to be heard in the first instance at the general term, with liberty to the Court to turn the same into a special verdict for the defendants, and adjust the amount. Judgment to be suspended until the decision of the general term, and with liberty to either party to turn the case into a bill of exceptions.”
    When the case was moved at General Term, the Court, on opening the papers, suggested that it was not properly before the Court, as the disputed questions of fact had not been determined by the jury.
    But the counsel of both parties insisting that there was not, and could not be any dispute as to the facts proved; that, in reality, the case presented only questions of law, and expressing an earnest desire that it should be heard and decided, without subjecting the parties to. the delay and expense of another trial, the Court consented to hear it. The facts established by the evidence are as-follows, viz.:
    “ About the first of May, 1854, the defendants borrowed of the firm of Gildemeister & Ueustaedter the sum of one thousand dollars, to be returned in a week. Before the money became payable, the defendants applied to that firm to get a note discounted, and upon the suggestion of Gildemeister that he had a friend who could get a note discounted if defendants had any collateral security, the defendants placed in his hands the note now in suit, dated December 15, 1853, made by the defendants for $1,283 27, payable six months after date, to the order of. themselves (the defendants) and delivered to Gildemeister as collateral security for its payment a note for two thousand dollars, dated Eebruary 20th, 1854, at three months made by Ryder and Malony to the order of G. S. Mott, and by him endorsed to the defendants.
    Gildemeister took the note in suit to the plaintiff, and asked him to get it discounted, and told him that he wanted it for a friend, but without stating for whom.
    The plaintiff told Gildemeister in reply to the application that if he would get some collateral security, he, the plaintiff, would get the note discounted. Gildemeister then gave him the note in suit, and in accordance with the plaintiff’s requirement that he should “ get ” some collateral, gave him also the two thousand dollar note, made by Ryder and Malony, which he had received from the defendants, as collateral security for the note in suit.
    As the note of Ryder & Malony would become due before the other note matured, Gildemeister told the plaintiff to collect it and credit it in his account with Gildemeister & Heustaedter.
    The plaintiff then took the two notes to the Bank of the Republic and leíi the note in suit for discount with the Ryder & Malony note as collateral security, and it was discounted by the bank, on the 12th day of May, and the proceeds were paid over to Gildemeister.
    On the 23d day of May (twenty-four days before the note in suit became due,) the $2000 note of Ryder & Malony was paid at the Bank of the Republic, and the plaintiff drew a check for the money. It does not appear that at that time, or at the time the notes were delivered to the plaintiff, or at any intermediate time Gildemeister & Neustaedter owed the plaintiff in account anything. But in the previous April the plaintiff had procured a note of Gildemeister & Neustaedter for $2,226 46, to be discounted with his endorsement at the same bank, and that note would become payable on the 5th of June, then ensuing. On the day the $2,000 note was paid, or on the following day, May 24th, Gildemeister & Neustaedter failed; and on the 24th of May the plaintiff, by arrangement with the bank, took up the $2,226 46 note, although not yet due, applying -towards its payment the $2,000 paid in upon the note of Byder & Malony, and the note in suit not being paid at maturity the plaintiff has brought this action against the defendants to collect that also.
    It further appears that shortly before the note of Byder & Malony became due, they made an arrangement with the defendants for a partial renewal of this note, and they paid to the defendants five hundred dollars and gave a new note for fifteen hundred dollars, whereupon the defendants agreed that they would take up the $2,000 note and restore it to the makers. In pursuance of this arrangement the defendants, in fact, paid the two thousand dollar note at the Bank of the Bepublic when it became due, and before they did so one of the defendants “was informed by Mr. Gildemeister of what had passed between him and the plaintiff in relation to it.” But there is not in this or in anything else testified to, any satisfactory proof that the defendants ever sanctioned or intended to sanction the application of this note to any other purpose or indebtedness, except to the note now in suit.

      Jer. Larocque, for the plaintiff,
    moved for judgment on the verdict, and contended, 1. That the plaintiff having received the Byder and Malony note from Gildemeister and Neustaedter, with authority to collect and credit it in account, and having had no notice until long after he had applied its proceeds to the payment of the $2,226 40 note, of any equity in favor of the defendants, or that they had ever held the Byder & Malony note, had clearly the right to apply the proceeds of the Byder & Malony note as he did apply them.

      2. If Eyder & Malony had themselves paid their note at its maturity, the transaction would have been the same as if they had paid it to Gildemeister & Heustaedter, to whom Slingerland & McFarland had transferred it, and Gildemeister & Heustaedter had then paid over its amount to the plaintiff, in part payment of the $2,226 40 note.
    S. The Ryder & Malony note did not bear the name of the defendants in any form. Gildemeister & Heustaedter were its lawful holders by delivery from the defendants themselves, and with the right to collect it and transfer it. That was the intention of the transaction, as it matured before the note in suit. There is no question, therefore, in the case of a conversion of property, such as arose in the cases of Stalker v. McDonald, and Coddington v. Bay, cited by the defendants’ counsel.
    4. There was no mistake or ignorance of fact on the part of the defendants when they paid the Eyder & Malony note. On the contrary, it was with full notice from Gildemeister that Gildemeister & Heustaedter had delivered it to the plaintiff to collect and credit it in theiraccount. It was, therefore, a voluntarypayment by the defendants themselves; and the defendants, after having paid it, are not at liberty to contest the right of the plaintiff which they thereby admitted. (Clark v. Dutcher, 9 Cowen, 674, and cases cited; Oakley v. Crenshaw, 4 Cowen, 250; Walker v. Ames, 2 Cowen, 428; Sprague v. Birdsall, 2 Cowen, 419; Hogan v. Weyer, 5 Hill, 389.)
    5. Even if the payment of the Eyder & Malony note could be considered, pro tanto, as a payment of the note in suit, the defendants had no right of action against the plaintiff, after such voluntary payment, to recover the balance; and, having no right of action, cannot recover that balance by way of counter-claim.
    6. The plaintiff is entitled to judgment.

      Joshua M. Van Cott, for the defendants, argued the following points.
    I.—The note in suit was paid out of the proceeds of the collateral note, which matured first, (20 J. R. 646, Bay v. Coddington; 6 Hill, 93, Stalker v. McDonald; 2 Kernan, 313, Decker v. Mathews.) The plaintiff is not a bond fide holder of the collateral note, except to the extent of the principal note. II.—The doctrine of estoppel has no application to the case.—3 Kernan, 316,1 Greenl. Ev § 207; 8 Wendell, 483; 2 E. D. Smith’s R. 14; 4 Barbour, 495; 5 Denio, 154; 3 Hill. 219; 2 Kernan, 100. (1.) It was a condition of the discount of the principal note that the plaintiff should hold, and of course be paid, the collateral; and the bank had a clear right to have it paid.—(2.) As between plaintiff and defendants, the collateral was paid by its makers. They in fact paid it, a part in cash and part by a new note. The mode of doing it was of no consequence, and did not affect the original transaction or the rights of the parties to it.—HI. The plaintiff held the balance of the proceeds of the collateral note, subject to the order of the defendants; who, upon the principle of the first point, are entitled to recover it on their counter-claim. IY. Under the power reserved to the Court, judgment should be rendered for such balance, with interest and costs.
   By the Court. Woodruff, J.

If the General Term will suffer their duties to be so far extended that, by consent of the parties, they will assume to determine all questions of fact and law, their labors will not only be greatly complicated, but will embrace a class of duties which the law has devolved upon others. We are called upon, on this occasion, to review the evidence taken, at what it would be a misnomer to call a trial, and to find the facts which, in general, it is the duty of the jury to find, and then to decide the law applicable to those facts. And this we are to do without having the witnesses before us, or any opportunity to judge of their intelligence, or, from their manner, to estimate the degree of confidence which ought to be reposed in the language they use.

We have, nevertheless, addressed ourselves to the subject, and if we should err in our conclusions of fact, we should regret more deeply than we now do, that the facts were not determined by the jury, who were empannelled for that express purpose.

(The opinion, after recapitulating the facts as above stated, proceeds as follows:)

Although the plaintiff was not (on the 12th of Hay, 1854) informed of the names of the defendants, he knew that Gildemeister was acting in this matter as the agent of the friend for whom he desired to procure the discount, and he received the notes and procured the discount with that knowledge.

And although the agent, Gildemeister, told him, “as the $2,000 note of Ryder and Malony fell due before the other, to collect it and credit it in our account” (i. e. Gildemeister and Eeustaedter’s account), yet it does not appear that thi§ was for any other purpose than as security for the note so to be discounted. There was no express authority to apply the money which would be paid in, to any other indebtedness—nd other indebtedness then existed. As the note was made by third parties, who in due course of business might be expected to pay the note at its maturity, nothing was necessarily implied in this instruction but what it would be the plaintiff’s duty to do, and his right to do, if he retained possession of the two notes. And in view of the other testimony to the acts and admissions of the plaintiff, in relation to the notes in question, the just conclusion is, that he received and held the $2,000 note as collateral security for the note now in suit, and as security for that alone, and that ■ this was the actual understanding of the parties at the time. It was all that he required as a condition of getting the note discounted. It was all that there was any motive to offer him. It was all that Gildemeister could offer him, without practising what in judgment of law would be a fraud upon the. defendants. And the plaintiff having notice that Gildemeister was procuring the discount for a friend, knew, or had reason to know, that the securities offered belonged to the friend for whom he was acting, and he therefore knew that any application of the $2,000 note to any other debt would be a violation of the rights of such friend; at all events, there was enough to put him on enquiry.

The better conclusion is, that neither he nor Gildemeister contemplated any fraud; it is rather to be presumed that they did not; and the whole evidence, taken together, is not only in harmony with, but sustains the conclusion that the $2,000 note was received by him and held as collateral security for the note in suit, and for that only. He so treated it; he himself endorsed it with the term “ collateral.” He so used it, delivering it to the bank as security for the note in suit.

The conclusion is irresistible that the application of the proceeds of the $2,000 note to the note of Gildemeister and Ueustaedter, discounted the previous April, and not yet due, was an expedient resorted to by the plaintiff upon the failure of that firm to divert a security, held for a different purpose, to a use to which it was not designed, and to which he had no right to apply " it, and to which he knew he had no right to apply it.

If this conclusion rested upon otherwise nicely balanced testimony, it would be greatly strengthened by the suspicious manner, out of the usual course of business, in which it was done. Applying it to a note not due for some eleven days thereafter, as if apprehensive that the friend for whom the note in suit was discounted would seek to arrest the money in that stage of the transaction; for at that time the plaintiff had no reason to suppose that the note was not paid in due course by the Messrs. Ryder and Malony.

The $2,000 note belonged to the defendants. It was placed. by them in the hands of Gildemeister as security only for the note in suit. It was placed by Gildemeister in the plaintiff’s hands for that purpose.

Gildemeister had no authority to use it for any other purpose.

The plaintiff made no advance upon it except to procure the discount of the note now in suit.

If Gildemeister attempted to authorize the plaintiff to apply its proceeds to any other debt, it was a fraud upon the defendants, and the plaintiff could only hold it for the amount of his advances or liabilities incurred upon the faith thereof.

But in truth the'whole evidence does not warrant us in finding that Gildemeister ever agreed that it might be applied to any other debt, or that the plaintiff received it upon that understanding, or condition, or that the defendants sanctioned such an application of it.

It is strenuously insisted that the payment of the $2,000 note, by the defendants themselves, pursuant to their’ arrangement with Ryder and Malony, was a voluntary payment to the use of the plaintiff, which placed the whole of the money at his free disposal, to be applied, if he thought proper, to the note he had endorsed and procured to be discounted for Gildemeister and Neustaedter.

The payment ought not to be so regarded. It was according to the intention of the parties, when the note was delivered (as security for the note in suit), that it would and should be paid at maturity. It was according to the natural, usual, and regular course of business, that it should be so paid. The payment was in discharge of an express understanding with Ryder and Malony, that the defendants would pay it, and restore it to them. It was, therefore, their duty to pay it, as they did, without involving Ryder and Malony in any question or controversy on the subject.

The utmost that can reasonably be inferred from what may properly be regarded as a consent that the plaintiff credit the proceeds is, that he was to retain them until the note in suit became due. This is entirely consistent with the testimony of Grildemeister, and with the other evidence that the Ryder and Malony note was received by the plaintiff as collateral security for the note in suit only, and, when so understood, it was proper, and in accordance with an honorable regard to that understanding, for the defendants to pay in the money, as it was upon other grounds, above suggested, their duty to do.

It follows, from these views, that the plaintiff has not only been paid the amount of the note in suit, but he has also received the difference between the amount of that note, $1,288 27, and $2,000, which difference is the defendants’ money. This difference they demand, by way of counter-claim, in this action, and should be allowed to recover.

It seems to us, that under the view we have taken of the facts proved, there are no legal principles involved in regard to which there is doubt, or respecting which there was any difference between the counsel on the argument. It was rather the application of obvious and well settled rules, to the proofs, that was the subject of contention.

That, Grildemeister had no right to appropriate the note to his own debt, even if he attempted to do so, is quite clear, and that the plaintiff taking it in fraud of the defendants’ rights, could only claim to the extent of his advances upon the faith thereof, is not, since the case of Stalker v. McDonald, 6 Hill 93, open to discussion.

And, on the other hand, that money voluntarily paid to one who claims a right to receive it for his own use, and paid with knowledge of all the material facts, cannot be recovered back, is equally well settled. The cases cited by the plaintiff’s counsel are full to that effect.

But in our judgment the facts proved in this case do not admit of the application of this latter principle.

Our conclusion is, that the defendants should have judgment for the sum of §716 73, with, interest from the time of the application of the money, May 24th, 1854, with the costs of the suit.


source: Caselaw Access Project

author: By the Court. Slosson, J.

license: Public Domain

text:
    Charles A. Manning v. Patrick Monaghan, John Cavanagh, Leonard Gosling, and Edward Schenck.
    A Receiver, under supplementary proceedings, as a general rule, has no right to take possession of and sell the goods and chattels of the debtor which he knows are covered by a prior mortgage, unless he can show that, as against the judgment-creditor, the mortgage was fraudulent and void.
    If, by the terms of the mortgage, the debtor has a temporary right of possession, the Receiver, if authorized to sell at all, must limit the sale to such temporary right, and is bound to declare, that it is made subject to the mortgage.
    Nor has he any right, in such a case, to sell the mortgaged property in parcels, but is bound to sell the whole together, so as to enable the mortgagee to follow it in the hands of the purchaser.
    Where the Receiver makes the sale unlawfully, he is liable to the mortgagee for the amount of the mortgage debt and interest, provided such was the value of the mortgaged property; and in case he acts with the knowledge and by the direction of the plaintiff in the suit in which he was appointed, such plaintiff is equally liable. It is doubtful whether a Receiver can sell mortgaged properly at all, unless by an express order of the Court appointing him.
    When mortgaged goods are unlawfully sold by a Receiver, a purchaser who has no knowledge, actual or constructive, of the mortgage, as a hondfide purchaser is not liable to the mortgagee. See note f, post, p. 467.
    Judgment against defendants Monaghan and Cavanagh. Complaint dismissed as to the defendant Gosling.
    (Before Duer, Slossoít, and Woodruff, J.J.)
    Heard, April 6 ;
    decided, June 20, 1857.
    This action comes before the Court at General Term, on questions of law arising at the trial, and which were there ordered to be heard, in the first instance, at General Term. It was tried in November, 1856, before Mr. Justice Bosworth and a jury. It was brought by Charles A. Manning, as plaintiff, against Patrick Monaghan, John Cavanagh, Leonard Gosling, and Edward Schenck, as defendants.

      The complaint avers that the plaintiff, on the 5th of October, 1854, loaned. $1,000 to the defendant Schenck for one year, and took his note of that date, payable one year thereafter, for $1,070, and a chattel mortgage, executed by Schenck, upon his household furniture, as security for the payment of such note, which mortgage was duly filed on the 11th of October, 1854.
    That on the 5th and 8th of October, 1855, when the note became due, the plaintiff demanded payment of Schenck, who was then and since has been insolvent, and who did not then pay, and since then has not paid any part of it. He then demanded of Schenck the mortgaged property, and found that the other defendants had seized said goods,-in payment of a claim due them, or to one of them, from Schenck. That said other defendants, in the spring of 1855, seized said goods, then being in the possession of Schenck, and sold the same to divers persons unknown to the plaintiff, received the price thereof to their own use, and that they refuse to pay it to the plaintiff, or to give to him the possession of the goods, and that Gosling claims to have bought some of said goods from the other defendants, and refuses to give up possession of them.
    That, prior to such seizure and sale, the defendants knew of the plaintiff’s rights as such mortgagee, and in defiance thereof, did the acts before stated, and “have thereby deprived the plaintiff of all security for his said money, and of all power to obtain possession of said goods, or to sell the same, or to cause the same to be applied, in any manner, to the payment of said note, which is wholly due and unpaid.” It states a demand made upon Monaghan, Gavanagh and Gosling for the goods, and a refusal by them to deliver any part of the same, and that the plaintiff, in “consequence of the unlawful acts of, (Monaghan, Gavanagh, and Gosling,) has thereby sustained loss to the full amount of $1,070, besides interest, since the 8th of October, 1855, ” for which sum it “prays judgment against the defendants.”
    Monaghan, Gavanagh and Gosling put in separate answers. The printed case does not show that Schenck put in an answer, nor whether he had been served with the summons. The contents of the answers interposed by the other defendants, are not stated, as no question arose upon them.

      The material facts, proved on the trial, exclusive of those found by the jury, are as follows, viz:
    “The plaintiff held a chattel mortgage executed by Schenck for $1000, dated the 5th day of October, 1854, and payable at the expiration of one year with interest, ..the mortgage was upon furniture in Schenck’s house. It was duly filed on the 11th day of October, 1854, but a copy of the mortgage and a statement of the mortgagee’s interest were not filed within the year after the first filing, pursuant to the statute, nor were they filed at all. The mortgage was executed to secure the payment of a note, of the same date as the mortgage, for $1,070, payable one year after its date, and given by Schenck, for money lent to him, by the plaintiff.
    On the 27th day of Hovember, 1854, Monaghan recovered a judgment in the Marine Court against Schenck for $492 on which an execution was issued, after a transcript of such judgment had been filed and the judgment docketed in the office of the clerk of the city and county of Hew York.
    Ho levy however was made on this property, but the execution was returned unsatisfied, and supplementary proceedings were thereupon instituted, under which Oavanagh was appointed a receiver of Schenck’s property.
    Oavanagh, as receiver, applied to a judge of the Court of Common Pleas for an order, directing Schenck to show cause why he should not deliver to him the mortgaged property, at the return of which Schenck appeared by counsel, but the Judge refused to make the order for such delivery. Oavanagh thereupon, at the instance and by the direction of Monaghan, forcibly took the property, embraced in the mortgage, (with other property) from Schenck’s house, in his absence, and without his consent.
    This was in February, long before the mortgage fell due.
    Manning thereupon immediately applied to a Judge of the Court of Common Pleas, of the city and county of Hew York, and obtained an order that the receiver show cause why the property should not be returned to Schenck or to Manning, and in the mean'time, and until the final disposition of the motion, the receiver was restrained from selling or disposing of it.
    This order was returnable on the 3d day of March.

      Cavanagh appeared by attorney at the return of the order, and the motion was adjourned to the 7th day of March, and after-wards to the 10th day of March.
    Between these two dates a consent was drawn up, by the counsel of Monaghan and Cavanagh, and handed to the counsel of Manning, assenting to the sale of the property, &c., the proceeds to be deposited, to abide the order of the Court. It was . signed by Manning, but not by the defendants, or either of them, and it never was delivered, or exchanged between the parties.
    Ko further hearing was had in respect to the injunction, and no further order made thereon.
    The property when taken from Schenck was removed to an auction store, in Canal street, and there retained until the 21st day of April, when it was taken to the auction store of Mr. ' Irving, in Pine street, where it was sold'at public auction with a variety of other property. The property mortgaged, produced at such auction sale the sum of $674.44 over and above all expenses of the sale and all charges of the receiver in relation to such property.
    Gosling became a purchaser, at this sale, of a portion of the property and paid for it.
    When the note, which the mortgage was made to secure, fell due, Schenck was insolvent, and since then has been insolvent.
    When Monaghan and Cavanagh took the property they had notice of the mortgage and of the plaintiff’s claim, and had a copy of the mortgage with them, and Cavanagh acted under the direction of Monaghan.
    The only demand, made by the plaintiff of Gosling, that he should give up the possession of the goods he bought, was made in January, 1856.
    The Judge submitted certain questions, in writing, to the jury to be answered by them, saying that he should order the legal questions which might arise on such special verdict, and upon the facts proved, which were not the subject of dispute, and 1 upon such exceptions as were taken to the decisions of the Court on said trial, to be heard, in the first instance, at the General Term.
    The questions, so submitted, and the answers of the jury thereto, are as follows, viz:

      1st Q. Was the mortgage in question, which was executed by Schenck to Manning, made in good faith, and without any intent to hinder, delay or defraud the creditors of Schenck ?
    A. Yes.
    2d Q. What was the fair value of the mortgaged property taken by Cavanagh at the time it was removed from Schenck’s house by Cavanagh ?
    A. Twelve hundred dollars.
    3d Q. How much would its value be depreciated by a careful use of it, as it is customary to use such property, between the time Cavanagh took it and the 8th of October, 1855 ?
    A. Seventy-five dollars.
    4th Q. Was the property damaged between the time Cavanagh took it and its sale by Irving, in consequence of any misuse of it, or a failure to take proper care of it by Cavanagh or his agents ?
    A. Yes.
    Q. If it was so damaged, to what amount?
    A. Two hundred dollars.
    5th Q. If it was so damaged, was the misuse or failure to take care of it, caused by the conduct of Cavanagh acting solely upon his own sense of duty as receiver, or by conduct of Cavanagh caused by his acting in pursuance of and in conformity with the requests or directions of Monaghan ?
    A. By directions of Monaghan.
    6th Q. Did the plaintiff consent that the receiver Cavanagh might sell the mortgaged property free and discharged from the lien of his mortgage and all claims under it?
    A. No.
    7th Q. What was the fair value of that part of the mortgaged property bought by Mr. Gosling at the time he bought it?
    A. One hundred and forty-three dollars and twenty-five cents.
    8th Q. How much would a careful use of it, (as it is customary to use such property), up to the 8th of October 1855, depreciate such value.
    A. Twenty dollars.
    9th Q. Had Mr. Gosling any knowledge or notice before he paid for the property bought by him of the existence of the mortgage in question?

      A. Ho.
    10th Q. How much has Monaghan received as and from the proceeds of the sale of the mortgaged property, over and above the amount of his judgment and interest thereon and expenses of the receiver in relation to such property?
    A. One hundred and thirty-four dollars and twenty-two cents.
    The Court thereupon directed the questions of law arising in the case to be heard in the first instance at the General Term, that judgment be there applied for in the first instance, and that the entry of judgment in the meantime be suspended.”
    On the 6th of April, 1857, the plaintiff moved the Court, at General Term, for judgment for the amount of his claim, secured by the said mortgage.

      Edwards Pierrepont, for the plaintiff.

      F. Byrne, for defendants, Monaghan and Cavanagh.

      J. Dimmick, for defendant, Gosling.
   By the Court. Slosson, J.

Unless the receiver in the present case stands in the position in which the Sheriff would have stood, had he levied upon, taken possession of and sold the property under an execution, his sale, especially in the manner in which it was conducted, was a wrongful act, to the injury of the rights of the plaintiff, and for which both he and Monaghan are liable as trespassers.

In the case of Hull v. Carnley, (1 Kernan’s Rep. 501,) on which these defendants rely, the complaint was that the Sheriff by levying upon and taking the property in the hands of the mortgagor, who was in possession under a similar license or authority to that contained in the mortgage in the present case, and by selling it without referring to, or recognizing the plaintiff’s lien on it by virtue of the mortgage, had illegally deprived the plaintiff of its possession. The property, (in that case,) was sold all together, and no injury was shown to have accrued to the property itself. The Court held, that as the mortgagee, the plaintiff had, at the time of the levy, taking and sale, no right of possession, no injury was done to the plaintiff by the act of the Sheriff, and that he was justified in what he did by his process, and this, notwithstanding the Sheriff had full notice of the existence of the mortgage, and that nothing had been paid on it.

In the case at bar, the receiver after the refusal of the Judge to grant an order directing Schenck to deliver over the property to him, forcibly, and without Schenck’s consent, and in his absence, took it away from his dwelling house, and afterwards, and while an injunction against its sale was pending, and unrevoked, sold it at public auction, in parcels, to different parties, at a sale where other articles were also sold indiscriminately with them, and without giving any notice of the mortgage, or of the nature of the interest which he was selling, though he had full knowledge of the mortgage and its contents. He not only acted,, without any authority from the Court which had appointed him, b]¿t in express violation of its order. His office clothed him with no such power.

Strictly, the act of taking and selling was not an injury to the plaintiff’s right of possession, for at that time he had no such right, and could not then have maintained trover for the property, whatever right, if any, Schenck might, under .the circumstances, have had to such an action. But the receiver had no right to sell more than Schenck’s temporary right of possession, if he had any right to sell at all, and he was bound to sell the property all together, so that when the mortgage fell due, the plaintiff might, if his debt was not paid, find the property and take possession of it.

If he had a right to take the property, he could not lawfully do anything with it, which should defeat or impair this ultimate right of the plaintiff.

But in truth, the taking and sale were both unjustified, and as respects the receiver, wholly illegal and void, as against the plaintiff. The receiver acted on his own motion, under direction of Monaghan throughout, and the consequence of his acts to the plaintiff, has been the loss of his security under the mortgage.

What would have been the Receiver’s position had he acted-under the authority of the Court, it is needless to enquire. It is enough for the present case to know that he acted not only without such authority, but in express violation of an order of the Court which had enjoined him from selling. He has no such justification of process, as the Sheriff had in the Hull and Carnley case.

The action is not brought for an injury to a right of possession in the plaintiff at the time the property was taken and sold, but to recover damages for the illegal and wrongful act of the Eeceiver and Monaghan, in taking and selling the property without reference to or recognition of his rights under the mortgage, in consequence whereof he has lost his security.

If the Eeceiver can in any sense be said to be justified in taking the property, he was bound to keep it until the mortgage became due, or if he sold it, to sell only the right of Schenck in it, which was a mere right of temporary possession, with an equity of redemption. He could have or acquire no better or greater right in the property than Schenck had, and is as much a trespasser as Schenck would have been, had he then undertaken to sell the property in parcels and appropriate the proceeds.

We are clearly of opinion that the plaintiff is entitled to recover against these defendants, as damages, the full face of his mortgage and interest, with interest on the aggregate amount from the time it became due. '

In respect to the defendant Gosling, the only demand made of him for the delivery of the property purchased by him was made in January, 1856, some three months after the mortgage fell due.

Gosling was a bond fide purchaser without notice of the existence of the mortgage.

It is contended, on his behalf, on the strength of Gregory v. Thomas (20 Wendell Rep. 17), that as a copy of the mortgage was not refiled within the 80 days before the expiration of the year after the first filing, which was on the 11th day of October, 1854, the mortgage as against him had ceased to be valid. (2 E. S. 136, marg. § 11.)

In the case relied upon, a first mortgagee who had neglected to refile his mortgage, took possession of the property some three months after his mortgage fell due, and the Court held that his mortgage would have been void as against the plaintiff who was a subsequent mortgagee of the same property if it had not been proved, that when he took his mortgage, he had actual notice of the existence of the first (defendant’s) mortgage, and the Court held by reason of such actual notice he was not a subsequent mortgagee “in good faith ” within the meaning of the. Statute.

In the present case Gosling was a purchaser without notice, and therefore a purchaser “in good faith,” and I do not see why the principle of that decision does not fully protect him, unless the fact that in that case the goods when taken were in the actual possession of the mortgagor and had been so for the whole period after the mortgage fell due, and in the case at bar, the property had been long taken from the mortgagor’s possession, shall be held to constitute a controlling difference.

The statute (section 9,) requires the mortgage to be filed in all cases where the property remains in the hands of the mortgagor, as was the case in the present instance.

Section 11 provides, that “ every mortgage filed in pursuance of this act shall cease to be valid as against the creditors of the person making the same, or against subsequent purchasers or mortgagees in good faith after the expiration of one year from the filing thereof, unless within .thirty days next preceding the expiration of said term of one year a true copy,” &c., be again filed, &c.

The necessity for the original filing having once existed, and the mortgage, in consequence, having once been filed, I do not see how we can hold that the fact, that before the year expires the property has been taken from the possession of the mortgagor, relieves the mortgagee from the necessity of refiling a copy, if he wishes to retain his lien as against a subsequent purchaser or mortgagee without violating the letter of the statute.

We think therefore that as against Gosling the complaint should be dismissed, and judgment rendered in his favor.

Judgment was ordered in favor of the plaintiff against the defendants, Monaghan & Cavanagh, and the complaint, as to the defendant Gosling, was dismissed.

       Was the mortgage void as against Gosling, merely because it was not refiled within thirty days before the expiration of a yeaf from the filing thereof with such a statement as the statute prescribes? Must'he not have been a purchaser after the expiration of the time for the refiling of the mortgage, to enable him to say it had become void as to him, as a subsequent purchaser in good faith? Does not the word “subsequent,” as used in the act of 1833, p. 402, mean subsequent to the time when the mortgage should have been refiled? See Meech et al. v. Patchin, 14 New York R. 71.

       At the November General Term, 1857, on the authority of the decision in this case, it was also held by this Court in Goulet v. Asseler & Meyer, that a sale of per
        aortal properly, covered by a valid chattel mortgage, in parcels, out and out, to different purchasers, in disregard of the mortgagee’s right, subjected the execution creditor of the mortgagor, by whose direction such sale was made, in an action by the mortgagee brought after the mortgage became due, to damages equal to the value of the property, less such deduction for its use during the time the mortgagor had a right to possess and enjoy it, as was just. In the opinion delivered in that case, Mm el al. v. Balleston et al, 8 Eng. L. and Eq. 483, was cited as a case in point, and appears to be a decision of the precise question. Since then Hull v. Carnley, after a second trial had in this Court, has been a second time before the Court of Appeals. (17 N. Y. R. 202.)
      On the second trial it was proved, that although the Sheriff sold the property in parcels and absolutely, instead of merely selling the mortgagor’s interest, it was all sold to one person, and it appeared that all of the prd^erty was in the possession of the mortgagor when the action was commenced, he having hired the use of it from the purchaser.
      The Court of Appeals, held that the Sheriff was not liable as a trespasser for seizing the property, nor for a conversion of it, although he sold it absolutely in parcels, on the ground that, at the time of such seizure and sale the mortgagee was neither in possession nor entitled to the possession of the property. The opinion of the Court concludes thus: “We would not be deemed as holding, at this time, that a mortgagee has any action at law against the Sheriff, in such case, but if he has any, it would be for consequential damages for the injury to his lien; and if such an action had been brought it could not have been maintained in this case, for the reason that, although sold in parcels, it was all bid in by one man, and remained in the possession of the mortgagor at the time of the commencement of this suit. It is manifest, therefore, that he sustained no actual damage.”—III. 204-205.
      Whether a mortgagee, who has been wholly deprived of his security by reason of a sale and delivery of the mortgaged property to different purchasers, under such circumstances that the mortgagee is unable to find it, and compel its application to the payment of the mortgage debt, is a question that may be regarded as not affected by the decision last made by the Court of Appeals, in Bull v. Carnley (17 IT. T. B. 202).
      And the question remains, whether Cavanagh, as receiver, considering the circumstances under which he seized and sold the property, is entitled to the protection which the law extends to a Sheriff in executing a valid process, which it is his duty to execute?
      The question of Cavanagh’s liability to the mortgagee, for impairing the value of his security by an abuse ofthe mortgaged property, is not affected by the decision in Bull v. Carnley. Whether Monaghan, or Cavanagh, as against the plaintiff, can, in any event, retain the excess for which the property was sold, over and above the amount of Monaghan’s judgment against Sehenek, may be a question of some importance, when properly presented for the judgment of the Court.


author: By the Court. Bosworth, J.

text:
    Seth Grosvenor v. The Atlantic Fire Insurance Company of Brooklyn.
    Eugene W. McCarty, being the owner of a dwelling house, (covered by a mortgage owned by the plaintiff,) insured the same against loss by fire; the loss, if any, being, by the terms of the policy, made payable to “Seth Grosvenor” (the plaintiff), “ mortgagee.” In an action by the plaintiff upon the policy, this Court, holding in obedience to The Traders' Ins. Co. v. Robert, and to Ttttou v. Kingston Mu. Ins. Co. that, no acts of the mortgagor, done after the issuing of the policy, could affect the rights of the mortgagee under it, or to recover upon it; also held, that the admission of evidence that, when the defendants were applied to, to issue the policy, they were told that the interest of the mortgagee was to be insured, and they advised, as the best mode, the insertion of his name in the policy, as it was done; could not prejudice the defendants, and was not, therefore, an error entitling them to a new trial: The mortgage, owned by the plaintiff) being one that the insured had executed to E. Kellogg, and the latter had assigned to the plaintiff, at the same time guaranteeing its payment; it was also held that Kellogg was, under the code, a competent witness for the plaintiff: The action cannot, by reason of Kellogg having given such a guaranty to the plaintiff) be said to be prosecuted for the immediate benefit of Kellogg. At most, he is merely interested in the result.
    The fact, that the mortgage has been foreclosed, and the mortgaged property sold, and a part of the mortgage debt thereby paid, cannot be made available to the insurer, as a partial defence to an action on the policy, when no such defence is set up in his answer.
    (Before Bosworth and Woodruff, J.J.)
    Heard, June 2;
    decided, June 27, 1857.
    This action, comes before the Court, at General Term, on a verdict for the plaintiff, taken subject to the opinion of the Court, on a question of law, arising at the trial, and there directed to be heard at the General Term, in the first instance. It was tried before Mr. Justice Bosworth and a jury, on the 6th of November, 1856.
    The complaint states, that the defendants, by a policy, dated the 14th of November, 1853, for a certain premium paid by, or on behalf of the plaintiff, insured the plaintiff as mortgagee, against loss or damage by fire, on a three story brick dwelling house, (described in the complaint,) for one year, from the date of the policy, to the amount of $7,000; the destruction of the building by fire, on the 24th of February, 1854; that at the time the policy was executed, and at the time of the fire, there was due to the plaintiff as mortgagee, $6,250, with interest thereon from the 1st of November, 1853: that notice, in writing, of such loss by fire, was given to the defendants as soon as possible, to wit on the 10th of March, 1854, with the proper preliminary proofs required by the policy; and also avers due performance by the plaintiff of all the conditions on his part, contained in the policy, wherefore, as it alleges, the defendants became liable to pay to the plaintiff the said sum so due to him as such mortgagee.
    The complaint then states, that the defendants, by their policy, dated on the 14th of November, 1853, for a certain premium paid, did “insure Eugene W. McCarty upon his three story brick dwelling house,” ¿ce., against loss or damage by fire, to the amount of $7,000.
    That McCarty on the day of the date of the policy, to secure the plaintiff the payment of the money due on a mortgage of the premises, made by McCarty, and a bond accompanying the same, then held and owned by the plaintiff, did, by, and with the consent of the defendants, assign the policy to the plaintiff, and direct that the money, payable in case of any loss under the policy, should be paid to the plaintiff. It then states, as before, the total destruction of the building by fire, the like amount to be due to the plaintiff as mortgagee, notice of the loss, and service of preliminary proofs, and due performance by him of the conditions on his part pursuant to the requirements of the policy, whereby the defendants became liable, to pay to him, on the 11th of May, 1854, $6,388 15, and prays judgment for that amount, with interest from that date.
    The answer denies that, the defendants insured the plaintiff as mortgagee, or that he was ever mortgagee of said premises, or that they are indebted to him, in any sum whatever. It tíren admits that they insured McCarty as alleged, and puts at issue the allegations that he assigned the policy to the plaintiff, or that they consented to any such assignment, and avers that, if it was assigned.; that fact, by the terms of the policy, avoids it. It avers that no proofs of loss were ever served on them by McCarty, that this was required by the policy, even though he had assigned it; also, that McCarty, before the fire, sold and conveyed all his interest in the premises, to D. A. Bostwick, without the consent of the defendants, and thereby avoided the policy. That, although the policy was issued to the said Eugene, yet he was only a trustee of one John McCarty, in regard to the policy and the building thereby insured, and that John McCarty was the real owner thereof, and caused that policy with five other policies, on the adjoining buildings, to be issued in the name of Eugene, but fraudulently, for his own benefit; and that, with intent to defraud, he also caused all the said buildings to be mortgaged to divers persons for sums exceeding their value, and the said buildings to be further insured for large amounts by other Insurance Companies, and to amounts far exceeding their value, to cover last said mortgages, in addition to the said $7,000, so insured by these defendants, well knowing that the buildings were not worth near the sum for which they were so insured or mortgaged.
    Also, that he caused said buildings, including those referred to in the complaint, to be set on fire and consumed, that he might falsely and fraudulently claim the said insurance for his own benefit or to pay said mortgages, and that while the title stood in the name of Eugene, and afterwards in the name of Bostwick, the said John was largely interested therein, and by his said fraudulent acts, he, and Eugene, and the plaintiff have forfeited all claims to indemnity under either of said policies.
    On the trial, the plaintiff’s counsel offered to read in evidence a policy of insurance executed by the defendant in favor of Eugene W. McCarty, dated November 1st, 1853. The defendants’ counsel objected thereto, on the ground that it was no evidence of a contract between the plaintiff and the defendants in this action. The said justice overruled the objection, and the defendants’ counsel excepted to such ruling.
    The said policy was then read in evidence, and commences as follows:
    “By this policy of insurance, the Atlantic Fire Insurance Company of Brooklyn, in consideration of thirty-two dollars to them paid by the insured hereinafter named, the receipt whereof is hereby acknowledged, do insure Eugene W. McCarty against loss or damage by fire, to the amount of seven thousand dollars, on his three story brick house, with metal roof, &c., loss, if any, payable to Seth Grosvenor, mortgagee.”
    The plaintiff’s counsel next put in evidence certain preliminary proofs of loss, required by the policy, and made by the plaintiff: The defendants’ counsel admitted that said proofs, with notice of a loss, had been served on the company on the 8th of March, 1854, and also that the premises had been partially consumed by fire on the 24th day of January, 1854, but objected to the admissibility of such proofs as evidence in this action, inasmuch as they had not been made by Eugene W. McCarty, with whom alone the contract of insurance was made. The justice overruled this objection, and the defendants’ counsel excepted to his ruling. The said proofs were then read, in evidence.
    The preliminary proofs stated, inter alia, that the insured premises were mortgaged by Eugene W. McCarty, and wife, to Edward Kellogg, by three several mortgages, each dated November 1, 1853, and conditioned to pay $6250, with interest, at seven per cent., and that Kellogg assigned said mortgages to the plaintiff on the day of their date, and guaranteed the payment of the amounts secured thereby.
    The plaintiff’s counsel next read in evidence the bond and mortgage on the premises, made by McCarty and wife to Edward Kellogg, for $6250, dated 1st November, 1853, together with an assignment of the same to the plaintiff, bearing the same date, containing a guarantee by said Kellogg of the payment of said principal and interest, according to the condition of the said bond and mortgage; and then called as a witness:

      Edward Kellogg, who being sworn, said, he was the assignor of the bond and mortgage in question; that at the time the policy was taken out, the bond and mortgage had been assigned to the plaintiff, and the witness effected the insurance at McCarty’s request; and stated to the company that the plaintiff held the mortgage, and that his interest was to be insured; and the company advised, that the best way was to put his name in the policy, as was done, instead of the more formal mode of assignment.
    The defendants’ counsel duly objected to all evidence of this witness’s statements to the company, and of the company’s advice to him ; but the Justice overruled the objection; and the defendants’ counsel excepted.
    This witness further said, he had guaranteed the payment of the said bond and mortgage, and had received the consideration of the assignment from the plaintiff at various times, but had not received more than two-thirds of it at the date of the assignment; but that before the assignment was delivered by him, which was on or about the 14th November, 1853, he had had a settlement with the plaintiff, and received the whole of the said consideration. The mortgage has since been foreclosed with two other mortgages on adjoining property, and that he had purchased in the whole of the three lots; and the net proceeds of the sale were $4854 13; that he had not paid any of the purchase money, but had settled with the plaintiff for it by giving him other securities; that this suit is carried on by the plaintiff, but if he collects the money, he supposes it will go to the benefit of witness; he has had no understanding with the plaintiff as to prosecuting it; the plaintiff would have brought the suit any way.
    The defendants’ counsel then moved to strike out the testimony of this witness, forasmuch as it appeared that the action was prosecuted for his benefit; and the Justice overruled the motion; and the defendants’ counsel excepted to such ruling.
    The plaintiff’s counsel then offered testimony tending to show that it would require from 5000 to 6000 dollars to repair the damage done to the premises by the fire, and rested.
    The defendants’ counsel then moved to dismiss the complaint on the grounds:
    1st. That the facts of the case, as shown by the plaintiff, do not constitute a cause of action against the defendants; the plaintiff having failed to prove an insurance to himself of the mortgage interest stated in the complaint.
    2d. That there was no sufficient proof of any money due on the mortgage, or to the plaintiff as assignee of the mortgage.
    3d. That there is no proof that Eugene W. McCarty had any interest in the insured property, at the time of the loss, nor that he had sustained any injury by the fire, nor had he ever made or presented any proof of loss.

      4th. That the mortgage interest of the plaintiff had been paid by the foreclosure of the mortgage and sale of the property, and the payment to him of the amount of the substituted securities.
    But the said Justice overruled the defendants’ objections, and refused to dismiss the complaint; to which the defendants’ counsel excepted.
    The defendants’ counsel then offered to prove, and the plaintiffs’ counsel admitted it to be true, that in January, 1854, one month before the fire, Eugene W. McCarty, the person named in the policy as the insured, sold and conveyed the property referred to in the policy, to one David A. Bostwick.
    The said Justice ruled such evidence inadmissible; to which ruling the defendants’ counsel excepted.
    The defendants’ counsel next offered to show, that the property, when insured, and at the time of the fire, actually belonged to one John McCarty, for whom Eugene W. McCarty held the title, and that he combined with said Eugene, and with said Bostwick, and wilfully caused the said premises to be set on fire, for the purpose of defrauding the defendants, and of obtaining the insurance money in this action; and that this was the fire which caused the loss now claimed.
    The said Justice ruled such evidence inadmissible; to which the defendants’ counsel excepted.
    The defendants’ counsel then offered evidence tending to show that the premises injured by the fire could be repaired and put in. as good condition as they were before the fire, for from $3,500 to $3,750, and rested.
    The defendants’ counsel then requested the said Justice to charge the jury, that from the amount of damage by fire, which they might find the plaintiff entitled to recover, the defendants were to be allowed a deduction of one-third of the net proceeds of the sales on the foreclosure of the mortgage. The Justice declined so to charge, but said he would reserve that question for the fip.tenniua.tion of the Court at General Term, and it was accordingly reserved.
    The Justice thereupon charged the jury, that the plaintiff was entitled to recover an amount sufficient to make good the total loss or damage he had sustained by fire, which was wjiat it would cost to replace the building in the same condition it was in before the fire,' with interest after the expiration of 60 days from the time the proofs of loss had been served on the company; and that the jury would not allow the defendants any deduction for the proceeds of the mortgage sale received by the plaintiff.
    To which charge of the said Justice, and every part thereof, the defendants’ counsel excepted; and the jury thereupon found a verdict of $6,168 70 for the plaintiff, subject to the opinion of the Court at General Term, whether the defendants were to be allowed a deduction by reason of the sale of the lot covered by said mortgage, upon a case to be made; with liberty to either party to turn the case into a bill of exceptions.

      Daniel Lord and JR. Goodman, for the plaintiff,
    moved for judgment on the verdict, and argued the following point:
    The defendants are not entitled to deduct the proceeds of the foreclosure sale of the lots.
    1. No such defence is set up in the answer.
    2. As between the mortgagee plaintiff and the company defendants, the former is entitled to receive the whole amount of the damages.
    3. There is no evidence that the damages recovered and the net proceeds of the lot, would exceed the amount due.
    4. If there had been, still the defendants would be bound to pay the plaintiff his damages, and their only remedy for any surplus is an action by way of subrogation to the mortgagee’s claim, to which McCarty, the assured, should be a party.
    Wm. Curtis Noyes and John N. Taylor, for the defendants,
    made and argued the following points:
    I. The first, second and third points on the motion to dismiss the complaint, having been ruled against the defendants, on the decision of a prior cause between these parties, they are only renewed on this argument, in order to preserve the right to present them to the Court of Appeals, should the same become necessary.
    II. The evidence of Edward Kellogg, to show by parol what the understanding or agreement was, when the policy sued upon was applied for, to control its plain, .written language, was wholly inadmissible. (Greenl. Ev. §§ 275, 281; 2 Arnould, 1316, § 462; Bell v. West. Mar. & F. Ins. Co., 5 Rob. La. R. 423.)
    HI. Kellogg was an incompetent witness, the action being prosecuted for his “immediate benefit.” (Code, § 339, sub. 1; Howland v. Willetts, Ct. Ap. 1 Duer, 325; Catlin v. Hanson, Id. 309; St. John v. Am. M. Ins. Co., 2 Id. 419.
    IV. In any event, the defendants were entitled to have one-.third of the price for which the premises sold, on the foreclosure, being $4,854 13, deducted from the amount of the verdict.
    1. The plaintiff, as mortgagee, could only insure his mortgage interest; else the policy would be a wager policy and void. (St. John v. Am. M. Ins. Co., 2 Duer, 419; Parsons’ Mer. Law, 412-13; Buchanan v. Ocean Ins. Co., 6 Cow. 318; 1 R. S. 662, §§ 8, 9, 10; 1 Arnould on Ins. 251-2.)
    2. The legal effect of the policy (as declared by this Court in the preceding case) is, that the lien created on the premises by the mortgage, is insured, that being the only interest which the plaintiff had in the premises, and the only proper subject of insurance.
    3. Prior to the case of King v. The State Mutual Ins. Co. (7 Cush. 1), it was the settled law in Massachusetts, and in this State, as well as in England, that on the underwriters paying the loss on a policy insuring such an interest, they were entitled to be subrogated to the mortgage, or other security of a similar character, and such is still the law; that case being opposed to sound principle, to well considered adjudications, and to the elementary works. (2 Phil on Ins. 3d Ed. § 1712; Parsons on Mer. Law, 412-13, 443, 535; Carpenter v. Wash. Ins. Co., 16 Peters, 495; Tyler v. AEtna Ins. Co., 12 Wend. 507; S. C. 16 ; Id. 385, 399; Atlantic Ins. Co. v. Storrow, 5 Paige R. 285, 290, 294; Hart v. Western R. R. Cor., 13 Met. 99; 22 Eng. Law & Eq. 73.)
   By the Court. Bosworth, J.

The decision of the General Term, in April, 1853, made in an action between the parties to the one now before us, has disposed of most of the questions presented by this appeal, 5 Duer, 517.

That decision determines that the plaintiff can maintain this action, and that no acts of the mortgagor, subsequent to the issuing of the policy, can affect the plaintiff’s right to recover. 0

The exception to the testimony of Kellogg, in relation to the conversation between him and the company, at the time he applied for the policy, cannot be of any avail to the defendants.

The construction given to the policy, by the decision previously referred to, made it an insurance protecting the interest of the plaintiff, as mortgagee. If that is the legal effect of the policy, the testimony excepted to could not, possibly, have prejudiced the defendants in the decision, of any question, made by the Court, or submitted to the jury. This testimony established that the company had express notice at the time of issuing the policy, of the interest of the plaintiff, and that the insurance of his interest was an object sought to be secured by the policy which the company was solicited to issue. Although such notice cannot alter the clear meaning of any word contained in the policy, yet, the evidence places the Court in the position which the parties occupied at the time they contracted, and enables it to construe the policy, in the light of the facts and circumstances existing and present to the minds of the parties at the time it was made.

If the Court has not erred in its construction of the policy, the defendants have not been prejudiced by the decision admitting the evidence. A new trial cannot be granted, because such evidence was admitted.

The objection to the decision refusing to strike out the testimony of Kellogg, is not well taken. The action was not prosecuted for his immediate benefit, and mere interest in the event would not exclude him. It was not prosecuted for his “ immediate benefit,” within the meaning of those words as used in § 399 of the code.

Unless McCarty, whose bond and mortgage Kellogg had transferred to the plaintiff, with a guarantee of payment of the amount secured by them, had become irresponsible so that the amount could not be collected of him, Kellogg can hardly be said to be interested, m a legal sense, in the event of this action. There is no evidence that McCarthy is unable to pay. If he has means sufficient to pay, which can be reached by due course of law, then Kellogg will sustain no actual loss, if the plaintiff should fail in this action.

It is not a case in which Kellogg has a right to receive the verdict if collected.

A recovery of it, and an application of it, upon the bond and mortgage assigned, will satisfy Kellogg’s guaranty pro tanto, and extinguish, to a corresponding amount, the liability of McCarty. And Kellogg may be benefited by being saved the necessity of advancing the money to the plaintiff, and of then resorting to McCarty for reimbursement.

Butler v. Patterson, 3 Kern. 292, seems to approve of the decisions of this Court, which are cited in it, and which are sufficient to dispose of the question. (Freeman v. Spalding, 2 Kern. 373.)

Kellogg is not a witness who would gain, even indirectly, to the extent of the verdict, if the plaintiff recovered, and lose a corresponding amount if the plaintiff should be defeated. As the facts before us exhibit the witness, he was, at most, merely interested in the event, and his testimony could not be excluded on the ground on which its rejection was asked.

Heither is the defendant entitled to have one-third of the price, for which this and two other lots were sold on the foreclosure, deducted from the verdict.

It does not appear that the foreclosure occurred before this action was brought.

Ho such claim is set up in the answer.

It is not unreasonable to conclude, that the evidence in relation to the foreclosure of the mortgage was given to make such a case, as would show that Kellogg was an incompetent witness. Hence, when his testimony was concluded, the defendant moved that the whole of it he stricken out, “forasmuch, as it appeared, the action was prosecuted for his benefit.” The facts proved in relation to the foreclosure of the mortgage, were not embraced within any issue made by the pleadings, and, therefore, cannot properlv be made the basis of any affirmative or special relief. Code, § 275.

Bruzill v. Isham and Earle, 2 Kern. 9.

If the defendants are entitled to all the security which the plaintiff holds, or to one third of the whole proceeds of the sale of the three lots, or to the proceeds of the sale of the lot on which the insured building stood, the nature and extent of the defendants’ rights cannot be completely determined, except in an action to which Kellogg and McCarty are also parties.

But without placing our decision upon this ground, we think it sufficient to say that no deduction can be made in this action, for the reason that no such claim is asserted, or alluded to in the answer. It does not contain any allegations, which, if proved, would support such a claim.

It is by no means clear that the Court, at the trial, could have ordered an amendment authorizing a new and distinct defence. It might amend so as to obviate such a variance between an allegation by which it was attempted to set up a defence, and the proof, as would not actually mislead the adverse party, to his prejudice, in maintaining his action. Code, § 169.

Facts constituting a distinct defence occurring after answer put in, or of which the defendant was then ignorant, should be set up by supplemental answer—on a motion, for that purpose-Code, § 177.

But permission to amend the answer was not asked.

We think the plaintiff should have judgment on the verdict.

        McKyring v. Bull, 16 N. Y. R. 297.

         In. a case between these parties, on a policy, in terms, like the one in question, decided in April, 1866, this Court held, that no discrimination could be made “ between the rights of a, mortgagee, situated, with respect to an insurer, as the present plaintiff is, and those of a mortgagee to whom a policy, in precisely the same words (with the exception of the words, ‘loss, if any, payable to Seth Grosvenor, mortgagee,’) has been assigned, with the express assent of the insurer, evidenced as the policy requires.” 5 Duer, 511, 532, and 531, and id. 524-5.
      This Court also held, that, inasmuch as it had been decided in The Traders' Ins. Co. v. Robert, 9 Wend. 404; and in Tillou v. Kingston Mu. Ins. Co., 1 Seld. 405, that, after such an assignment of a policy to a mortgagee, no subsequent acts of the mortgagor could operate to prevent a recovery upon the policy by the mortgagee, in case of a loss by the perils insured against; this plaintiff was entitled to the application of the same rule, and that his right to recover was not affected by any acts of the mortgagee subsequent to the issuing of the policy. The case, (reported in 5 Duer, 517,) was carried, by appeal, to the Court of Appeals, and decided by that Court at its June Term, 1858. 17 N. Y. 391.
      That Court held, as this had, that no discrimination could be made between the rights of Grosvenor, and of Robert, as mortgagees. (17 N. Y. 395.)
      But that Court being of the opinion, that The Traders' Insurance Company v. Robert,
        “was decided upon mistaken views of the law, applicable to the question involved, and that the decision of the Supreme Court never had the sanction of the Court for the Correction of Errors,” and that the case of Tillou v. The Kingston Mu,. Ins. Co., was determined by the Court of Appeals, “upon a misapprehension of what had been before adjudicated,” (id. 400,) regarded the question as yet open for the consideration of that Court, and overruled those two decisions,* and reversed the judgment of this Court which conformed to them: they being decisions, which it was the duty of the Court to follow.
      In The Buffalo Steam Engine Works v. The Sun Mutual Insurance Company, 17 N. Y. R. 401, the Court of Appeals decided, that where a policy of insurance is assigned, with the consent of the insurer, to a mortgagee of the property insured, the assignee takes subject to the conditions imposed by the terms of the contract upon the person insured, and such assignee’s right to recover, in case of a loss, is barred by a breach by the assignor of such conditions, subsequent to the assignment. That Court so held, where the owner of a vessel procured a marine policy upon her) the insurer knowing at the time that the owner was indebted to the plaintiff for an engine furnished the vessel; that he was to mortgage the vessel to secure such debt, and that his object in obtaining the policy was to assign it, as security for the debt. The policy contained permission to insure $40,000, and to assign the policies. After assigning the policy, the mortgagor effected an over-insurance, and this was held fatal to a recovery by the assignee.


author: By the Court. Hoffman, J.

text:
    Cleu et al. v. McPherson et al.
    On the 7th of April, 1855, the plaintiffs, (then being in expectation of receiving a large quantity of French walnuts, by the ship, Helen E. Miller, which ship was, at that time, on her passage from Havre, in France, to the port of New York), contracted to sell to the defendants who agreed to buy, “twenty-five bales of French walnuts, at 7 cents per lb., to arrive per Helen E. Miller, less 3 per cent, cash.”

      Meld, that said contract was executory, and that the plaintiffs, by its true import and meaning, undertook that, the walnuts should be merchantable) and in quality, substantially such, on their arrival and on the tender of them to the defendants, as are known in the trade, as French walnuts.
    The jury having found, .in answer to questions specially submitted to them, that, the walnuts in question, when they arrived and were tendered to the defendants, were not merchantable as French walnuts, and were then worth only two and one half cents per pound, and that the article known in the trade as French walnuts, in the condition in which they generally arrive in the New York market, were worth at the time of said arrival and tender, six and a half cents per pound, it was also held that, the defendants were under no obligation, by reason of their said contract, to receive and pay for the walnuts so tendered to them by the plaintiffs.

      The expressions, “The article undefined,” “not defined,” and “undetermined," commented on by Hofmax, J.
    (Before Duer, Ch. J., & Hoffman, J.)
    Heard, May 26;
    decided, July 11, 1857.
    This action comes before the Court at General Term, pursuant to an order made at the trial thereof, that, the questions there arising, being questions of law, should be heard in the first instance, at the General Term, and the entry of judgment, in the mean time, be suspended. It was tried in June, 1856, before Mr. Justice Bosworth, and a jury. John E. Cleu & Ceasire Court, compbising the firm of J. F. Cleu & Co. are the plaintiffs, and Reuben McPherson, H. N. Eye, & J. C. Quick, composing the firm of McPherson & Co. are the defendants. Both firms resided and did business in the citia of New York, when the contract in question was made, ana it was made in that city.
    The complaint states that on or about the 7th of April, 1855, “ the plaintiffs, being in expectation of receiving a large quantity of Erench walnuts, by the ship, Helen E. Miller,’ which was then on her passage from Havre, France, to the port of New York, at the special instance and request of the defendants, agreed to sell, and the said defendants then and there, in due form of law, and by a valid contract in writing agreed, in substance and effect, to purchase from the plaintiffs twenty-five bags of the Erench walnuts so expected to arrive as aforesaid, for the price or sum of seven cents for each and every pound of net weight contained in the said twenty-five bags; and did then and there agree to accept and receive the said walnuts upon the arrival thereof at New York, and to pay the plaintiffs for the same at the rate aforesaid, in cash upon delivery, deducting three per cent, from the amount of the bill.”
    It also states that the vessel arrived at New York with the said walnuts on board, on the 20th of April, 1855, and that the walnuts were landed and ready for delivery on the 27th of that month: a tender and offer to deliver 25 bags of said walnuts, and a demand of payment of the contract price, and the refusal of the defendants to receive the walnuts or pay for them: that they amounted at the contract price to $174,03, and that on the defendants’ refusal to accept, and pay for them, the walnuts were afterwards sold at public auction, on due notice to the defendants of such sale, for the net sum of $57,62, and for the balance, being $116,41, with interest from the 5th of May, 1855, the complaint prayed judgment.
    The defendants, in their answer, say that, “ they admit that the said plaintiffs agreed to sell to them, and that these defendants agreed to purchase, twenty-five bags of French walnuts, expected to arrive at the port of Hew York, for the price or sum of seven cents for each and every pound of net weight contained in the said twenty-five bags, and upon the arrival thereof at the port of Hew York to pay the price aforesaid, deducing three per cent, from the amount of the bill. But these defendants allege, that it was also then and there understood, expressed and agreed, that the said nut^vere to be sound and merchantable, and if not found so to be, on the arrival thereof at Hew York, there was to be no sale of the same to these defendants, and they were not to accept the same, and the said agreement to purchase and sell were to be of no effect. And these defendants deny that there was any agreement or contract in writing for the sale or purchase of said nuts ever made by these defendants with the said plaintiffs, or that they ever agreed in writing in any form to purchase the same.”
    The answer farther alleges that, the walnuts, so offered and tendered to the defendants, “ were not sound and merchantable, but were unsound, damaged and injured, and were not according to the agreement made by the said plaintiffs with these defendants.” It denies that anything was due to the plaintiffs from the defendants, and puts at issue the allegations, as to a sale at auction. As a separate defence, it alleges that, “no note or memorandum in writing was made of such contract, and subscribed by these defendants, or either of them; and that they did not receive or accept any part of the goods for which this action is brought, or pay any part of the purchase money; and that the said contract is void in law.”
    On these issues, the action was brought to trial.
    On the trial, Francis A. Paddock, a witness for the plaintiff, testified, that he was one of the firm of “Bennett & Paddock,” brokers, and that, in April, 1855, he “sold some French walnuts to the defendants, for the plaintiffs.” Being shown a note of sale, which was produced by the defendants, he said, “ This is one of the notes of that sale: one note of the sale was delivered to each of the parties.” The note of sale so produced reads thus, viz.
    “New York, April 7th, 1855.
    “ Sold for account of Messrs. J. F. Oleu & Go,,
    “ To Messrs. McPherson & Co., .
    “ Twenty-five bales French walnuts, at 7 c.
    “To arrive per ‘Helen E. Miller,’ less 3 per cent. cash.
    “Bennett & Paddock, Brokers,

    “100 Wall street.”
    He further testified thus: “I was employed by plaintiff to sell the nuts; I had no orders to buy for the defendants. I cannot state to which of the defendants the sale note was delivered.” * * *
    “ We sell fruit for the importers and call upon the buyers. I was employed by Cleu & Co., and called on the defendants; they agreed to buy the nuts, and the sale note was thereupon made out and delivered to the parties, in accordance with such agreement.”
    The defendants’ counsel then asked the witness the following question:
    Please relate the whole conversation between you and McPherson & Co., when you offered the nuts for sale. The plaintiffs’ counsel objected to this evidence. The defendants’ counsel stated that it was offered for the purpose of proving that the witness acted only as the agent of the plaintiffs, and also for the purpose of proving that the witness represented the nuts to be of a good and merchantable quality, and in a good condition; to which question plaintiffs’ counsel objected, on the ground that the witness was in law the agent of both parties, and also upon the ground that the contract being in writing, parol evidence was inadmissible to vary or contradict the written contract.
    The Court overruled the objection, and decided that it would hear evidence upon the question of the agency of the witness, and the nature of it; and admitted the question; to which decision and ruling the plaintiffs’ counsel duly excepted. The "witness, in answer to said question, further testified as follows :
    “ I told McPherson & Co. that I had some nuts for sale for Cleu & Co., and that I was authorized to sell them; I stated the ship and the price, and they then authorized me to buy them from Mr. Cleu at his price.”
    The defendants’ counsel then asked the witness the following question:
    “ On what terms and conditions did the defendants authorize you to buy?”
    The plaintiffs’ counsel objected to the question, which objection was overruled by the Court, to which decision and ruling the plaintiffs’ counsel duly excepted. The witness then, in answer to the question, further said: “ Cleu & Co. told me to sell the nuts for good nuts, and McPherson told me if they were good nuts to buy them.
    “ I stated the price, terms, &e., to the defendants, and that the nuts were of a good quality, and they authorized me to buy them on those terms.”
    The direct examination being resumed, the witness further testified as foEows:
    • “ The sale was made on the 7th of April, 1855; the sale note sent to the defendants’ office, and was never returned to me. I sent one, also, to Mr. Cleu, and he did not return it.
    “ I have been a broker two years. There were, I think, 180 bags of walnuts on the two ships. I sold 80 of them."
    It did not otherwise appear, than is shown by the evidence above quoted, what was the form of the sale note which the brokers sent to the plaintiffs.
    Evidence was given in respect to the article known, in the trade, as French walnuts, as to the condition of the article as it usuaEy is when it arrives at the port of Kew York, and as to the condition of the walnuts in question, on board of the Helen E. MiEer, on her arrival.
    The sale of the walnuts in question, at auction, after the defendants’ refusal to accept and pay for them, and after due notice of such sale to the defendants, was proved, and also that they brought, as of May 2, 1855, the net sum of $57 62, and that at the contract price they would amount to the sum of $174 03.
    After the testimony was closed, and the cause had been summed up to the jury, “ the Court directed the jury to answer the following questions, to wit:
    “ 1st. What were these walnuts worth per pound at the time they arrived and were tendered to the defendants ?
    “ 2d. What was the article known in the trade as French walnuts worth, per pound, at the same time, in the condition in which they generally arrive in this market?
    “3d. Were these walnuts, when they arrived and were tendered, merchantable, as that word is understood by the trade with reference to such articles?
    “4th. Were these walnuts, when they arrived and were tendered, in as good condition as the average of that article is, as they arrive in this market ?
    “The plaintiffs’ counsel duly excepted to the said charge of the Court, directing the jury to answer the said questions, and to each and every of the questions respectively.
    “ The jury having deliberated thereon, rendered their verdict as follows:
    “ In answer to the first question they say, ‘ two and one-half cents per pound.’
    “In answer to the second question they say, ‘six and one-half cents per pound.’
    “ In answer to the third question they say, 1 no.’
    “In answer to the fourth question they say, ‘no.’
    “ The Court thereupon ordered that the questions of law arising in the case be heard, in the first instance, before the Court at General Term, with leave to the Court at General Term to enter judgment in accordance with the facts, and the entry of judgment to be in the mean time suspended.”
    On the 20th of May, 1856, the plaintiffs moved the Court at General Term, for judgment on the facts conceded by the pleadings and admitted at the trial to have been established, and on the special verdict.

      Gilbert Dean and James R. Vose, for the plaintiffs.

      A. R. Dyett, for the defendants.
   By the Court. Hoffman, J.

The first question is, whether the sale note, of itself, and without any extrinsic testimony, implies a representation and condition that the walnuts were and should be merchantable.

The next question relates to the admissibility of the evidence as to the terms of sale.

1. It is not to be denied that the rule of the common law, caveat emptor, is adopted in this State in its utmost strictness, as to all executed sales. The case of Hart v. Wright (17 Wendell, 267, and 18 Wendell, 449) has fully settled this point.

Yet this rule, as enforced in our tribunals, is not without exceptions. Thus if goods are ordered from a manufacturer to be made for a special purpose, there is an implied engagement that they shall answer such purpose. And so when provisions are purchased for consumption, and not for sale as merchandise, their proper quality is guaranteed.

2. But the contract in the present case was conditional and executory. It resembles in this particular, the case of Shields v. Bettie (2 Sand. 262; 4 Comstock, 122). There the article to be sold was “ 150 tons of Gartshemi pig iron, No. 1, at $29 a ton, on board the Siddons.” The vessel was then at sea. The iron turned out, on its arrival, not to be of the quality described. The Court below held that, the contract was to sell and deliver iron to arrive; that is, it was an agreement to deliver Gartshemi pig iron, No. 1, if any iron of that description arrived in the ship Siddons, on the voyage she was then making. It was settled that such a contract was conditional.

That proposition is substantially repeated in the opinion of Hurlbut, Justice, in the Court of Appeals.

' In Howard v. Hoey (23 Wendell, 350), the contract was for ale, to be sent to the South, and to be good and merchantable, without any warranty against sourness. It was brewed after the contract, and sent South, where it proved ropy, sour, and wholly unfit for use.

The Court considered that had it been brewed, and specifically sold, an express warranty would have been necessary. ( Wright v. Hart, 17 Wendell, 267; 18 Ibid. 449.) Justice Coweh then proceeded to state the rule: That where the contract is executory, or, in other words, to deEver an article not defined at the time, on a future day, whether the vendor has an article of the kind on hand, or it is afterwards to be procured, or manufactured,, the promisee cannot be compelled to put up with an inferior article. The contract always carries an obEgation that it shaU be at least merchantable; at least of medium quaEty or goodness. The learned Judge proceeds with a critical examination of numerous authorities, and concludes: That as to executory contracts, it may be said, that the English law, and therefore our own, agrees with the Continental or Roman law, the rule of which, in regard to all sales, both executed and executory, is “ Caveat Venditor,” not “ Caveat Bmptor”

In Hargous v. Stone (1 Selden, 86), Justice Raise, in deEvering the opinion of the Court, observed: “Executory contracts of sale do not depend upon the same principles as executed contracts of sale. The doctrine of impEed warranty has properly no appEcation to the former. Where a contract is executory, that is, to deEver an article not defined at the time, on a future day, whether the vendor has at the time an article of the kind on hand, or it is afterwards to be procured or manufactured, the contract carries with it an obEgation that the article shaE be merchantable, at least of medium quality or goodness.” (Citing 23 Wendell, 351; 17 WendeH, 277; Chanter v. Hopkins, 4 Meeson & Welsby, Exch. 399.) “But, if the article is, at the time of the sale, in existence, and defined, and is specificaEy sold, and the title passes in presentí to the vendee, the transaction amounts to an executed sale; and, although there is no opportunity for inspection, there wiE be no impEed warranty that the article is merchantable.”

There are other authorities which may be usefully referred to.

In Bridge v. Wain (1 Starkie, 504), an order was given for a quantity of “ scarlet cuttings,” to be shipped on the purchaser’s account, to China. An inferior article was sent on board which was unsaleable in China, and did not correspond with the article known in the trade as scarlet cuttings. The purchaser was held entitled to recover damages, on the ground of the impEed warranty, which the acceptance of his order involved.

This case is, indeed, open to the observation that the tradesman, like a manufacturer, knew the nature of the article he sent, and that the purchaser trusted to him.

Gardiner v. Gray (4 Campbell, 144). A purchaser bought in London twelve bags of waste silk,” then on its way from the Continent, and directed it to be sent to Manchester. It was held that there was an implied undertaking to furnish an article fairly corresponding with the description; and an action was sustained for damages, by reason of the article being an inferior commodity, not saleable in the market, under the denomination of waste silk.

I cite this case as bearing upon the present question, notwithstanding the severe criticism of Mr. Justice Cowen upon it in Hart v. Wright (17 Wendell, 272). It has not been noticed that the article was, at the time of the sale, on the way from the Continent.

Laing v. Fidgeon (6 Taunton, 108), is fully approved in Jones v. Bright (2 Moore & Payne, 155). Saddles were ordered as “ goods for North America, 3 dozen single flap saddles, 24s, to 26s, with cruppers, &c.” It was proved that they were of very inferior quality, and unmerchantable. It was held, that though there was no express contract that the article should be merchantable, it resulted from the whole transaction that it was to be so.

In the ease of Hyatt v. Boyle (5 Grill & Johnson, 110), treated by Justice Cowen as a well considered case (17 Wendell, 274), the Court say: “ The exception to the rule of caveat emptor, arising from the want of opportunity to inspect, does not apply to cases like the present, but to those where the examination at the time of sale is, morally speaking, impracticable, as where goods are sold before their arrival on landing.”

It is true, Justice Cowest doubts as to even this relaxation of the rule. But he is speaking of executed contracts of sale, for he himself laid down the law as to executory contracts, in Howard v. Hoey, 23 Wind. 350. Indeed he concludes his judgment in Hart v. Wright (supra) as follows:

“ A contract to deliver goods generally of a certain description, is another matter. There the contract is executory, and the vendee may take his ground on a defective article being tendered. He has doubtless a right to insist that it shall be merchantable; and if it prove not to be so, after he shall have taken a reasonable time to inspect it, he may return it.”

What is the meaning of the phrase used by both Justice Cowem and Justice Paige, “the article undefined,” “not defined,” or, “undetermined?”

The case of Field v. Moore, (Lailor’s Supplement to Hill & Denio, p. 418) furnishes.a satisfactory explanation. The sale was of 1000 flour barrels at 22 cents. The purchaser was shown barrels in the warehouse of the seller, of different kinds, and one pile of about 2000 barrels in a particular spot. It was signified that he would take the barrels out of this parcel. The question was whether the title to any one thousand barrels had passed.

Beardsley, Justice, said, “Identity in the subject of a sale is indispensable. A sale is an executed contract by which the right of property is transferred from the seller to the buyer. The thing sold must, therefore, be specific, ascertained, and identified. Where the thing agreed to be sold is not thus ascertained, and identified, but is thereafter to be selected and delivered, there is not strictly speaking, a sale, but a special agreement to be executed in future. Such a contract conveys no present title or property to the one who agrees to purchase; his whole right is in action.”

In the present case the complaint states that the plaintiffs, being in expectation of receiving a large quantity of French walnuts, by the ship Helen C. Miller, agreed to sell 25 bags of the walnuts so expected; and this part of the complaint may be treated as admitted. The witness Paddock states that he showed the defendant McPherson, the whole pile of nuts on the wharf, landed from the vessel; that there were one hundred bags of them, and told him he could have any he wished.

The case is then made out of a contract of sale purely conditional and executory; of the sale of an article then about being shipped at a foreign port, or then upon the seas; of a sale of a parcel or number out of an aggregate larger mass, not specifically defined and determined.

In such a case we are of opinion that there is an implied engagement in the contract itself, that the article shall be merchantable. It may be more appropriate to say that this is a condition of the agreement for a sale, than an implied warranty.

It.may also be, that the rule can be carried farther, and applied to a case, where the article is specific and defined; but it is needless to go to this length for the decision of the present cause.

The great distinction between the civil and common law upon this subject, is referred to in the leading authorities, and the learning upon it need not be stated. The rule which we recognize and now apply, forms an important exception to the doctrine of the common law, and appears to have sprung from a consciousness o.f the superior morality of the principle of the civil law. The philosophical and able treatise of Mr. Verplanck has illustrated that principle with ample learning, and with that rare precision and felicity of diction which distinguish the productions of his mind. The reasoning which long was characterized as the speculation of a legal visionary, has become a guide to one great innovation upon the common law, and a marked advance in the foot-prints of the civil code.

The views thus stated are sufficient to decide the cause without adverting to the question of the admissibility of the evidence as to the verbal representations and statements of the parties.

The judgment must be for the defendants.