text:
    Emma Condit Smith, Respondent, v. Isabella H. Fisher, Appellant.

      Action to reform, a contract and a deed — money judgment in an equitable action.

    The complaint in an action alleged that a certain contract entered into between the' plaintiff and defendant had been procured by the fraud of the defendant, and that such contract, together with a certain deed, constituted a mortgage; the relief asked for was that such instruments be reformed so as to express the terms of the real contract between the parties, and that the right of the defendant in the premises might be foreclosed and sold. After the commencement of the action and before its trial, a prior mortgage on the premises was foreclosed and the property was sold.
    A judgment was rendered in the action in favor of the plaintiff, enjoining the assignment of a certain bond and granting a money judgment for the amount which was due from the defendant to the plaintiff.

      Held, that, as the court was prevented from giving all the equitable relief to which the plaintiff had shown herself entitled by her proof, it was proper to give such equitable relief as it was possible to give under existing circumstances, and in addition to give a money judgment to the plaintiff;
    That the defendant, by her acts of omission or commission, in the matter of the foreclosure of the first mortgage, could not deprive the court of the jurisdiction' to grant such relief as the necessities of the case required.
    Appeal by the defendant, Isabella H. Fisher, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 16th day of January, 1895, upon the decision of the court rendered after a trial at the New York Special Term.
    There were originally two parties plaintiff, one of whom died while the action was being tried.

      E. MacKinstry, for the appellant.

      Alexander Thain, for the respondent.
   Van Brunt, P. J.:

The complaint in this action alleged that on or about the 30th day of December, 1892, the defendant was the owner of certain premises in the city of New York, and, designing to mislead and wrong and cheat and defraud the plaintiffs, made certain representations in respect to the house erected upon said premises; that the plaintiffs, relying upon these representations, on the 30th of December, 1892, entered into a contract, in writing, with the defendant, whereby the plaintiffs undertook and agreed to purchase the premises, upon certain terms therein named, the deed to be delivered on or before the 10th day of March, 1893; that for the purpose of giving the plaintiffs immediate possession of said premises, pending the delivery of the deed mentioned in said contract, the defendant, simultaneously with the execution of said contract, executed to these plaintiffs a lease of said premises bearing the same date as said contract, in and by which lease defendant rented the said premises to these plaintiffs for the term of two months and eleven days from the 30th of December, 1892, and that the plaintiffs thereupon paid to the defendant the sum of $500, required to be paid by said contract, and entered into possession of said premises, and that at various times up to and including the 30th day of March, 1893, they made further payments to the defendant amounting to $3,000.

The complaint further alleged that during the occupation of said premises by the plaintiffs from the 30th of December, 1892, to the 10th of March, 1893, they discovered that the representations made by the defendant to the plaintiffs in respect to the construction of said house were untrue, and that various and grievous defects existed therein, and that thereupon the defendant agreed with the plaintiffs to cancel said contract and to return the payments made by the plaintiffs as aforesaid, but represented to the plaintiffs that she was at that time unable to return to the plaintiffs the moneys .advanced to her on the faith of the representations aforesaid, and requested the plaintiffs to forbear urging for a time the return of the said moneys, and the defendant made the request that the plaintiffs should advance and loan to the defendant a further sum of money to aid the defendant in improving certain lots, etc.; that thereupon the defendant proposed that the plaintiffs should in form carry out the contract of the 30th of December, 1892, and that the defendant should execute to the plaintiffs a deed of said premises, .and that there should then be given bade the bond of the plaintiff Emma Condit Smith for the sum of $12,500, to be secured by a mortgage on said premises, and that the plaintiff should then .advance to the defendant the sum of $4,000, and the defendant should contract and agree with the plaintiffs that if the plaintiffs should, on or before the 30th day of December, 1893, conclude to retain said house and accept the deed, the same should stand as a •conveyance of said premises and the advances aforesaid apply on the purchase money, the defendant further agreeing that if the plaintiff Emma O. Smith decided to keep said house then the defendant was to make certain improvements and repairs in said house, and that should the defendant begin such repairs the contract for the repurchase of said premises by the defendant should become null and void, and that the .act of the defendant in beginning said repairs was to be deemed an acquiescence by the plaintiff Emma Condit Smith as indicating that •she was to retain the house, etc., but that in the meantime the transaction should be deemed a loan of the amount of said advances by the plaintiffs to the defendant, and that the plaintiffs should continue in the possession of said premises and should hold the same and the deed of conveyance of said premises and the contract to repurchase the same as security for the payment of said moneys on the 30th ■day of December, 1893.

The complaint further alleged that the plaintiffs then proposed that the advice of a lawyer should be sought to draw the papers, but the defendant represented that she was not acting under legal advice, and that it would only complicate matters if the plaintiffs •employed counsel; that it was better for all parties that counsel should not be employed, and thereby induced the plaintiffs to refrain from having the papers which they were called upon to execute examined by competent counsel.

The complaint further alleged that on the 15th of October, 1893, for the purpose and with the intent of forestalling plaintiffs and foreclosing and cutting off their right to treat the said conveyance, and the contract to repurchase and the possession of said premises by the plaintiffs, as security for the return of said advances made to the defendant, notwithstanding the previous announcement by the plaintiffs to the defendant that they had decided not to keep the house, and not to treat said deed of conveyance as other than a mortgage security for said advances, the defendant by her agents forcibly entered said premises without the knowledge or consent of the plaintiffs and undertook to repair said house and to put in a new furnace so that said contract for repurchase should thereby become null and void; that on or about the 29th of December, 1893, the plaintiffs again elected not to keep said house, but to treat said conveyance, and the possession of said premises and the contract toreconvey the same, as security for said advances, and offered to reconvey said premises to the defendant, and on the 30th of December, 1893, the plaintiffs notified the defendant that they were about to vacate said premises and tendered a surrender of the same to the defendant and offered to reconvey the same to the defendant and demanded the return of the advances aforesaid, but the defendant refused to receive possession of said premises or to accept a reconveyance thereof.

The complaint then alleged, upon information and belief, that defendant had been trying to negotiate said $12,500 mortgage which had been given by her upon the conveyance .of said premises to her, and alleged further a willingness upon the part of the plaintiffs to convey said premises to the defendant upon the repayment of said advances.

And judgment was thereupon demanded that the deed of conveyanee executed by the defendant to the plaintiff Emma Condit Smith, and the contract for the reconveyance of said premises, might be adjudged to be a mortgage to secure the plaintiffs for the advances made by them to the defendant, and that the instruments might be reformed so as to express the terms of the contract between the plaintiffs and the defendant; that the right, title and interest of the defendant in the premises, or of any other person therein, acquired after the commencement of the action might bo foreclosed and sold, and that out of the proceeds there should be paid to the plaintiffs the amount of their advances with interest and the costs of the action; and that the defendant should be enjoined from assigning the mortgage executed by the plaintiff Emma O. Smith to the defendant, etc.

The defendant by her answer admitted the allegations of ownership, leasing and payment of the $500 upon the contract; and denied the allegation of fraud and that the arrangements entered into with the plaintiffs were intended as security for the advances which had been made by the plaintiffs.

The defendant further alleged that the plaintiffs had not performed the covenants contained in the contract of December 30, 1892, in that they had failed to make the payments provided for in said contract; and alleged affirmatively that the defendant began and made certain repairs specified in the agreement of April 12, 1893, and that such agreement by its terms thereby became void.

The defendant further alleged that said agreement of April 12, 1893, was by its terms optional and not absolute; and further that-said agreement was and is not a valid contract at law.

Subsequent to the commencement of this action, and prior to its trial, an action was commenced to foreclose the first mortgage upon the premises, and the same were sold under a decree of foreclosure entered in said action to one Richard Deeves on the 12th of June, 1891, for $27,000. He thereupon assigned his bid to the defendant, and on the 13th of June, 1891, the premises were conveyed by the referee to the defendant by a deed which expressed the consideration last mentioned. On the same day the defendant executed and delivered to the Liverpool, London and Globe Insurance Company, the plaintiffs in the foreclosure suit, a new mortgage for $25,000, the amount of the original mortgage. Before the commencement of the trial the attorney for the defendant stated that unless the plaintiff proved fraud he should move to dismiss the complaint on the ground that a court of equity had no jurisdiction of the action, it being merely a legal light of action, and claimed that the defendant had a constitutional right to trial by jury unless the plaintiff succeeded in establishing fraud.

The trial then proceeded; the learned court made certain findings and gave the plaintiff a judgment enjoining the assignment of the bond of $12,500 referred to in the complaint, and a money judgment for the amount which was due from the defendant to the plaintiff ;. and from this judgment this appeal is taken.

It is claimed upon the part of the defendant that the plaintiff having failed to maintain her action on equitable grounds, the complaint should have been dismissed. The learned counsel urges that the defendant gave notice at the opening of the trial that she objected to proceed with the trial in a court of equity on the ground that a court of equity has no jurisdiction unless it could be sustained on the ground of fraud on the part of the defendant. He then contends that this action was begun and tried as an action in equity,, seeking upon various allegations equitable relief only, viz., reformation and foreclosure. The action proceeded on the theory of fraud and resulted in an award of damages therefor, which is an action. for the recovery of money only.

This position seems to be somewhat contradictory. In the first paragraph the counsel asserts that a court of equity had no jurisdiction unless the action could be sustained on the ground of fraud. He then alleges that because a recovery was had upon that very ground, he was entitled to a jury trial because it was an action for the recovery of money only.

It is further urged that in the form in which the action was brought it was triable by the court only, and unless the plaintiff sustained her cause of action, as set out in the complaint, she must fail; that the defendant had no alternative, and had no right to object to the trial of the cause by the court in the form in which it was brought; and that if the plaintiff could recover at all she must recover under the relief prayed for, to wit,’reformation and as incidental thereto foreclosure and cancellation, and on the face of the complaint there was no other ground for her cause of action; that the case presented no cause of action for damages, and no damages were prayed for, and the defendant went to trial to meet that precise claim. The counsel further alleges, as already stated, that, damages being recovered, the defendant was entitled to a trial by jury.

We think that the learned counsel has entirely mistaken the relief which has been granted. lie concedes that the judgment proceeds upon the tbeorv that, fraud was established, which is clearly the case. There is no question, as stated by the court below, but that this was a scheme upon the part of the defendant and her husband to get possession of the plaintiff’s money and then to cheat her into a ratification of her contract of purchase and alleged acceptance of the deed. The evidence is conclusive that when this arrangement was entered into on the 12th of April, 1893, at which time the plaintiff accepted the deed and the defendant made the contract to repurchase, it was the intention of the parties that these instruments should operate as security for the money which the plaintiff had advanced, the defendant being in hopes that the plaintiff might still ratify the contract and take the premises. The correspondence referred to by the learned court below clearly indicates that the agreement and the understanding between the parties was that the plaintiff was to hold these premises merely as security, unless she should elect to accept the deed on the 30th of December, 1893. The proof showed a refusal by the plaintiff to accept such deed and an insistance upon her security. "When the action was commenced the right to foreclosure and the right to the relief which was asked for in the complaint existed. But in consequence of the foreclosure of the first mortgage permitted by the owner of the premises, which resulted in a sale of the premises and in the buying in thereof by the defendant, the court was prevented from giving all the equitable relief to which the plaintiff had shown herself entitled by her proof. The court thereupon gave such equitable relief as the proof showed the plaintiff to be entitled to under existing circumstances, and in addition thereto gave a judgment for the repayment of the money which the plaintiff had advanced to the defendant upon this alleged purchase. The defendant, by her acts of omission or commission, could not deprive the court of the jurisdiction to grant such relief as the necessities of the case required, simply by permitting this first mortgage to be foreclosed. It might very well be inferred, without doing violence to the conceded facts of the case, that this foreclosure was part and parcel of the scheme of this defendant to defraud the plaintiff of the money which she had advanced, and of the security which the defendant had given her therefor.

It is further urged that the judgment is not consistent with the case made by the complaint and embraced within the issue. It is undoubtedly true that the court could not give all the relief which was prayed for, namely, the foreclosure and sale of the premises in order to repay the money advanced by the plaintiff to the defendant, because the premises had already been foreclosed and sold under a prior mortgage; but it gave other relief, namely, a judgment for the deficiency in the amount for which these premises had been given as security, and it also gave injunctive relief against the negotiation of the plaintiff’s bond which the defendant had secured by her fraudulent contrivances.

It is further urged that neither fraud nor surprise is established by the evidence. It seems to us from a consideration of the evidence, as it did to the court below, that the case is reeking with fraud from beginning to end ; that the whole scheme was conceived in fraud, and all the acts of the defendant to the very end were endeavors to cheat and defraud the plaintiff out of the moneys which she had in good faith advanced, relying upon representations which were beyond question untrue; and that the defendant and her husband were endeavoring to entrap her because of her inexperience, and they, therefore, resorted to this clumsy device, apparently making her an absolute' purchaser of these premises when it is manifest that all that she intended to do was to attempt to secure that which she had already in good faith advanced.

"W e not only see no reason for interfering with the judgment which has been appealed from, but we cannot imagine how the ' court below could have come to any other conclusion.

The judgment should be affirmed, with costs.

Follett and Parker, JJ., concurred.

Judgment affirmed, with costs.


source: Caselaw Access Project

author: Van Brunt, P. J.:

license: Public Domain

text:
    Wilford Linsly, as Executor, etc., of John H. Linsly, Deceased, Plaintiff, v. Stephen G. Bogert, as Trustee, etc., of Richard J. Morgan, Deceased, and Others, Respondents; Ann Augusta Linsly, Appellant.

      Life tenant, entitled to the “incs'ease” of a trust fund — at what time the “increase” is to he determined.

    Where by the terms of a will the life tenant of a fund thereby created is entitled to the increase realized on the principal of the fund, it does not accrue to her nor to her estate until the expiration of her life tenancy, before which time it would he impossible to ascertain the amount of the increase or the existence of'any.
    Si such case all the gains when realized on the trust fund do not immediately belong to the life tenant, nor should all losses be charged to the corpus of the trust fund.
    Appeal by tbe defendant, Ann Augusta Linsly, from that portion of a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 12th day of December, 1894, upon the report of a referee, which adjudges that the appellant is not entitled to receive under the eighth clause of the will of Richard J. Morgan, deceased, any portion of the sum of $36,427.68, increase or profit realized by the trustees upon the sale of certain securities, and which adjudges and decides that such increase or profit shall be held and retained by the said trustees as an accretion to and increase of the corpus of the trust estate.

      Ira D. Warren, for the appellant.

      W. V. Rowe, for the respondents.
   Van Brunt, P. J.:

We might very well rest our decision in affirming the judgment appealed from upon the exceedingly satisfactory opinion written by the learned referee upon the decision of the question involved before him. It may be well, however, to revert to one or two points in addition to those which have been considered by the referee.

If the tenant for life as a matter of right is entitled, as is claimed by the appellant, to the increase resulting from the rise in price of the securities in which the trust fund was invested, then it would, seem to be a right existing in the life tenant at any time when such premiums existed to compel a sale of the security in which such, trust fund was invested in order that she might realize such increase. It is apparent that no such right exists in the life tenant. Such a-power would enable the life tenant to compel the trustees to speculate in securities and change investment at her pleasure, and thus-deprive the trustees of the ordinary powers which are supposed to-be vested in them. It has been well observed by the referee in his opinion that even if by the terms of the will the life tenant was-entitled to the increase realized on the principal of the fund, it. could not accrue to her or her estate until the exjnration of her life-tenancy, as before that time it would be manifestly impossible to-ascertain the amount of such increase or even the existence of any. The present transactions may show a gain, but the next investment may be unfortunate and involve a loss. It is manifest that it was-not the intention of the testator that all gains when realized should belong immediately to the life tenant and that all losses should be^ charged to the corpus of the fund. It is apparent that the testator-intended the provisions of the will under consideration for the benefit of a tenant for life, to be enjoyed during such life, and not for the benefit of the personal representatives of a pei’son who has been-a tenant but whose term must be ended by death before the question, of whether there is an increase or not can be determined.

We think, therefore, that the judgment appealed from should be affirmed, with costs.

Follett and Parker, JJ., concurred.

Judgment affirmed, with costs.


author: Per Curiam :

text:
    Edith Mason Faxon, Respondent, v. John Mason, Appellant, Impleaded with Another.

      Motion papers to be definitely specified in the order — rule 8.
    It is necessary, in order that there should not be confusion and dispute as to the' papers used upon a motion, that they should be so definitely specified that they can be easily identified.
    This is the requirement of rule 8 of the General Buies of Practice in respect to-orders entered on non-enumerated motions, and the words “and on all the: papers and proceedings herein ” are too indefinite to comply with such rule.
    Appeal by the defendant, John Mason, from an order of the Supreme Court made at the New York Special Term and entered in the office of the clerk of the county of New York on the 14th, day of March, 1895, denying his motion to resettle an order of the-Supreme Court, made at the New York Special Term on the 5th day of February, 1895, and entered in said clerk’s office, by striking from such order the words “ and from all papers and proceedings herein.”'

      Franklin Bien, for the appellant.

      Howard A. Taylor, for the respondent.
   Per Curiam :

Upon settling the order upon the motion in question there was a-recital of certain papers used upon such motion, together with a-statement in this general language: And on all the papers and proceedings herein.”

This language is so indefinite and uncertain that it is impossible-for the court to determine what papers were before the court and considered by it upon the hearing of the motion. It is necessary, in order that there should not be confusion and dispute as to the papers used upon a motion, that they should be so definitely specified that they can be easily identified and that there may be no confusion or dispute in reference thereto. This is manifestly the requirement of rule 8 of the General Rules of Practice, which requires that, in every order entered on a non-enumerated motion, all the papers used or read on the motion on either side shall be specified in the order.

The words objected to are too indefinite and do not comply with the rule.

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

Present — Van Brunt, P. J.; O’Brien and Follett, JJ.

Order reversed, with ten dollars costs and disbursements.


author: Per Curiam : Beekman, J.:

text:
    The Union Insurance Company of Philadelphia and Another, Respondents, v. The Central Trust Company of New York and Another, Appellants, Impleaded with Another.

      Submission to arbitration — damages on its revocation — damages, how paid— Code of Civil Procedure, § 2884.
    Certain parties, having differences, entered into an arbitration agreement which, among other things, provided that the compensation and expenses of the arbitrators and the expenses of witnesses should be borne to the extent of one-quarter by each of the four parties to the arbitration, and that no part of the costs and expenses of the arbitration or of witnesses should be recovered by the prevailing party or parties, or be entered in the judgment upon the award.
    Subsequently, the submission was revolted by one of the parties to it, and thereafter two of the parties to it brought an action to recover the general expenses of the arbitration from a fund of indemnity created by the articles of submission.
    Upon an appeal from a judgment in their favor,

      Meld, that the revocation of the submission destroyed the stipulation that each party should pay one-quarter of the expenses, and that, under section 2384 of the Code of Civil Procedure, the party revolting, and any sureties upon an undertaking collateral to the submission, became liable, by virtue of the statute, for all costs and other expenses, and for all damages incurred in preparing for the arbitration and in conducting the proceedings to the time of revocation;
    That such expenses and damages should be paid from the fund.
    Appeal by the defendants, The Central Trust Company of New York and another, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of New York on the 21st day of February, 1895, upon the decision of the court rendered after a trial at the New York Special Term.
    The fund sought to be reached in this action was created by the ■following provisions in the submission:

      “ It is further agreed that at or before the execution and delivery of this agreement there shall be deposited with The Central Trust Company of the city of New York security satisfactory to the parties of the first and second part (the plaintiffs in this action), to the amount of fifty thousand ($50,000) dollars, to secure the payment, performance and satisfaction of any award in favor of said parties of the first and second parts, or either of them, that may be made against said Dimick in said arbitration by said arbitrators or a majority of them, payment and satisfaction of said award up to said amount of fifty thousand ($50,000) dollars to be paid upon demand by said Central Trust Company of New York in accordance with any judgment that may be entered upon said award.”
    Lorenzo Dimick, the person mentioned in this clause, effectually revoked the submission to which he was a party.
    The clause above quoted was held by the General Term, upon a former appeal (36 N. Y. St. Repr. 435), to be an agreement of indemnity.
    Five hundred shares of the capital stock of the New York and Harlem railroad were deposited with the Central Trust Company of New York as satisfactory security for the $50,000 provided by the above clause.

      William, Allen Butler, for the appellants.

      Treadwell Cleaveland, for the respondents.
   Per Curiam :

Judgment affirmed, with costs, on the opinion of the Special Term, and on the opinions reported in 36 New York State Reporter, 435, and 13 New York Supplement, 17.

Present — Van Brunt, P. J., Follett and Parker, JJ.

Judgment affirmed, with costs.

The opinion of the Special Term was as follows:

Beekman, J.:

The complaint in this action was demurred to on the ground of insufficiency by the defendant corporations, and the demurrer was overruled at Special Term, where it was tried before Mr. Justice Van Brunt. On appeal to the General Term the judgment entered upon the decision below was affirmed. ( Union Ins. Co. v. Central Trust Co., 36 N. Y. St. Repr. 435.) The demurrants, availing themselves of permission so to do, thereupon interposed answers to the complaint, and the issues thus joined have now been brought to trial. The evidence offered sustains all the allegations of the complaint, and the case, therefore, presents the same legal aspect it had when the demurrers were tried. In view of this no other course is opon to me except to direct judgment for the plaintiffs upon the basis of a controlling decision which has declaimed the law of this .case. It is contended, however, that there is one question which .affects the extent of the plaintiffs’ recovery that was not passed upon or involved in the decision at General Term. The point so praised may be stated as follows : By the terms of the arbitration agreement it was provided that the compensation of the arbitratoi’s axxd their expenses and the expexxses of witnesses, should be boxue and paid by, the parties thereto in the following px’oportion, to wit: One-fourtlx thereof by the Union Insui’ance Company ; one-fourth •thereof by the Insurance Company of the State of Penxisylvaxiia; one-f oux'tli thereof by the Continental Insurance Company, axxd oixefourtlx thereof by Lorenzo Dimiclc ; “ the saxne to be advanced from •time to time in the proportions above mentioned upon the certificate •of the ai’bitx’atox's, or a majority of them; the expenses of witnesses •to be adjusted and aliowred by the arbitratox-s, or axnajority of them.” 'The agreement also contaixxed a stipulation fixing the compensation of the arbitrators, and providing that no part of the costs and ■expexxses of the ax’bitration or of witnesses should be recovered by the prevailing party or pax’ties, or be entered in the judgment, and that any limitation by statute as to the rate of such compensation was waived. It is xiow contended that this portion of the agreement is still operative, so far, at least, as to limit the x-ecoveiy of the plaintiffs, if they are entitled to recover anything, to one-fourth of the following items of expense, xxamely : Fees of ai’bitrators, counsel fees and witnesses’ fees and expenses. I think, however, that the decision upon the demurrer necessarily involves the negative of this view. The stipulation relied upon forms a part of the submission which has been revoked, and, as its terms cleaxly show, was predicated upon a continuance and coxxxpleted execution of the agreemexit. It was, in effect, inconsistent with revocation, and, therefore, destroyed by revocation. The claim of the plaintiffs, as I understand it in the light of the decisions at Special and General Terms, is for the damages recoverable under section 2384 of the Code of Civil Procedure against the revoking party, and also against his sureties, if any, upon the submission or any instrument collateral thereto. These damages are specified in the section to be all the costs and other expenses, and all the damages which he has incurred in preparing for the arbitration and in conducting the proceedings to the time of the revocation.” The cause of action does not arise upon the agreement; on the contrary, it is outside of it, and comes into existence as the consequence •of the act of revocation, by virtue of a statute which, in creating it, also measures the extent of the recovery. The statute rests upon the principle that the revoking party, ex debito justitw, should make good -to the other damages suffered through expenditures rendered fruitless by the act of revocation. This liability extends to the security given by the revoking party under a collateral agreement or otherwise to secure the performance of the award, and although such agreement may not in terms provide for the payment of the expenses •of the award, or of the arbitration, the law,” to quote from the opinion at Special Term upon the demurrer, has stated that, where any such obligation is entered into, the obligor, in case of a revocation of the submission, becomes liable to pay the expenses of the party who is not at fault, and the contract between the parties is to be construed in view of the provisions of the statutes governing ■such instruments.” The plaintiffs, therefore, seem to be entitled -to the full measure of recovery prescribed by the section of the ■Code above referred to. The items of damage proven on the trial «orne within the allowance, and amount in the aggregate to the sum of $49,178.45. It follows from what has been said that the plaintiffs are entitled to have judgment against the defendants that the 500 shares of the capital stock of the New York and Harlem Railroad Company held by the defendant, the Central Trust Company, ■as set forth in the agreement of submission, is subject to a charge in favor of the plaintiffs for the jiayment of the sum of $49,178.45, and interest within the limit of $50,000; and that the stock be sold, and the plaintiffs paid the amount of the claim, within the limit mentioned, out of the net proceeds of such sale. Costs of this action are awarded to the plaintiffs against the answering defendants.


author: Per Curiam : Ingraham, J.:

text:
    Edward Wright, Respondent, v. Robert W. Chapin, Appellant.

      Contract — express covenant to pay a sum due try the covenantee to a third person — measure of damages — effect of a foreign judgment.

    The complaint in an action alleged that the plaintiff "bought certain lands in Canada of George-Good win for the price of §60,000, and gave to Goodwin a mortgage for the purchase money; that subsequently the defendant made an agreement with Goodwin by which the latter agreed to accept from the defendant §52,500 in payment of his purchase-money mortgage; that soon afterwards the defendant purchased the lands of the plaintiff by an agreement in which he expressly agreed to pay to Goodwin, as a part of the purchase price, the said sum of §52,500 in full satisfaction of Goodwin’s claims upon the property, to indemnify the plaintiff against all liability to Goodwin and to relieve the lands from his lien; that subsequently the defendant resold the lands to the plaintiff, but that the plaintiff reserved all rights growing out of the former transactions; that the defendant failed to make a portion of the agreed payments, and that the plaintiff brought an action in a Canadian court against the defendant to enforce his liability by reason of the premises and recovered a judgment which the complaint alleged had, by the laws, rules and practice of Canada, the force of a personal j udgment against the defendant; and that this judgment directed that the defendant “pay into court” the amount due Goodwin upon his claim.
    Upon a former appeal to the General Term, upon a demurrer to the complaint, the only question considered was as to the right of the plaintiff to recover upon this Canadian judgment. Thereafter an appeal was taken from a judgment in plaintiff’s favor rendered after a trial, in which the plaintiff recovered not upon the foreign judgment, but money damages as for a breach of contract.

      XLeld, that the complaint stated a good cause of action upon contract, separate and apart from the allegations relative to the Canadian judgment;
    That the defendant’s promise, made to the plaintiff in consideration of the latter’s transfer of his lands, to pay to Goodwin the debt •which the plaintiff owed him, and to relieve the plaintiff from all liability to Goodwin, was an express covenant to do a particular act and was enforcible;
    That although the plaintiff had not himself paid Goodwin the debt, the plaintiff could recover of the defendant for so much of the indebtedness of the plaintiff to Goodwin as the defendant had failed to pay;
    That the Canadian judgment was not a bar to the action, but was conclusive evidence, as between the parties to it, that the defendant was bound to keep his promise and pay Goodwill, and that at the date of the entry of the judgment there was due the amount claimed.
    Appeal by the defendant, Robert W. Chapin, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 9th day of January, 1895, upon tlie decision of the court rendered after a trial at the New York Special Term.
    The substance of the complaint is given in Y4 Hun, 521, upon the former appeal to the General Term from an order sustaining a demurrer to the complaint.
    The complaint alleged that the plaintiff purchased certain lands in Canada of one George Goodwin at a price of $60,000, and that he gave to Goodwin a mortgage for the purchase money ; that thereafter the defendant made an agreement with Goodwin by the terms of which Goodwin agreed to accept from the defendant $52,500 in payment and satisfaction of his purchase-money mortgage of $60,000 (the times and amounts of this payment being specifically stated); that afterwards the plaintiff sold the lands to the defendant, who at the same time promised, by an agreement under seal, to pay to Goodwin, as a part of the purchase price of the premises, this sum of $52,500 at the times and in the amounts which had been fixed in the former agreement between the plaintiff and Goodwin; that this sum was to bo in full satisfaction of Goodwin’s claims against the premises, and that the defendant at the same time agreed to indemnify the plaintiff against all liability of Goodwin and to relieve the lands of his lien; that subsequently the defendant and a certain mining company which had become interested in the lands, resold the lands to the plaintiff, but that the plaintiff upon this transfer saved and reserved all rights against the defendant, upon his promise to pay Goodwin and to indemnify the plaintiff; that the defendant failed to make some of the payments which he had covenanted to make; that Goodwin foreclosed for this failure, recovered judgment and threatened to sell the premises; that the plaintiff brought an action in a Canadian court of general jurisdiction against the defendant, to enforce his liability by reason of the premises, and that he recovered a judgment for $22,429.28 and $318.60 costs; that this judgment directed the defendant to pay into court this amount due Goodwin upon hip claim ; the complaint alleged that this judgment had, by the laws, rules and practice of Canada, the force of a personal judgment against the defendant, and that the plaintiff had a right to enforce it.

      Tbe defendant demurred to the complaint, but the question was decided adversely to Mm in an opinion of the General Term, reported in 74 Hun, 521.
    Upon the present trial the plaintiff did not attempt to recover as upon the Canadian judgment, but sought to recover damages under the allegations of the complaint as for a breach of contract.

      H. B. Closson, for the appellant.

      Arthur C. Rounds, for the respondent.
   Per Curiam :

The defendant seems to be greatly distressed by the fear that in case he pays this judgment the plaintiff may decamp with the money and the defendant be left to pay the Canadian judgment of a like amount. Should the defendant pay the Canadian judgment, and so relieve the plaintiff in this action from his liability on his covenant to George Goodwin, there might be a way found of reducing the present judgment by the amount paid on the Canadian judgment, without making double payment.

The judgment should be affirmed, with costs, on the opinion of this court, reported in 74 Hun, 521, and on the opinion of Hr. Justice Ingraham, rendered on the trial of this action.

Present — Yan Brunt, P. J., Follett and Parker, JJ.

Judgment affirmed, with costs.

The opinion referred to was as follows:

Ingraham, J.:

On the appeal to the General Term from the judgment sustaining the demurrer there was but one question considered, and that was upon the right of the plaintiff to recover upon the judgment pleaded; and it was held that the complaint having alleged that the judgment of a Canadian court was a personal judgment authorizing a recovery by the plaintiff of a sum of money from the defendant, and that allegation having been admitted by the answer, the action upon that judgment could be maintained. Nothing was said as to the right of the plaintiff to recover for the breach of the contract set up in the complaint.

Upon the question of the necessity of making Goodwin a party defendant, although that question was not discussed, the court must have disagreed with the court below, as, if Goodwin was a necessary party, the judgment would necessarily have been affirmed.

The plaintiff now claims the right to recover for a breach, of the original obligation.

The complaint alleges the making of the agreement and its breach by the defendant, and these allegations are admitted by the answer. The subsequent judgment of the Canadian court, adjudging that the defendant pay the amount due to Goodwin into the court, is also alleged. It does not appear that the learned justice who tried the original issue of law raised by the demurrer considered the question as to whether or not the plaintiff was entitled to recover for a breach of the original obligation, as that case appears to have been submitted to him as an action upon the judgment only. If the only cause of action set up in the complaint was upon the judgment the other allegation of the original obligation and its breach by the defendant would have been unnecessary as the judgment itself was all that it was necessary to plead.

In this complaint the making by the defendant of the agreement to pay is alleged, and I can see no reason why the plaintiff is not entitled to enforce that agreement. Here the plaintiff seeks for a money judgment against the defendant, and if that cause of action was merged in the Canadian judgment, then it would follow that the plaintiff would be entitled to recover a money judgment upon the proof of the Canadian judgment, and yet the right to recover on that judgment in this action is strenuously denied by the defendant. Nor can it be said that the Canadian judgment is an adjudication that the plaintiff is not entitled to recover a money judgment against the defendant, for by the original obligation the agreement of the defendant was to pay to Goodwin the amount due by plaintiff to him, and the Canadian court held that plaintiff was bound to pay Goodwin that amount. It did not pass upon the question as to whether or not this plaintiff was entitled to recover the amount that the defendant had agreed to pay Goodwin in case of the defendant’s failure to comply with his agreement. Nor does it appear that in that Canadian action plaintiff claimed his right to-recover a money judgment against the defendant upon the defendant’s failure to comply witli his agreement to pay Goodwin; that judgment simply held that the defendant was bound to pay Goodwin, and adjudged that he should pay him, and, notwithstanding that adjudication, the defendant has refused to comply with his contract.

The plaintiff now in this action asks that he be allowed to recover against the defendant by reason of the failure of the defendant to comply with his contract to pay Goodwin what he agreed to pay him; and if, upon the conceded facts, plaintiff is entitled to such a judgment, I cannot see that an adjudication of the Canadian court that defendant was bound to fulfill his contract to pay Goodwin was an adjudication that plaintiff was not entitled to recover from the defendant the damages that he sustained because defendant had refused to do what he was bound to do, namely, to pay Goodwin.

The defendant having answered, and the case now coming on to be tried upon the pleadings and proofs, I think the plaintiff is entitled to a determination of the question whether or not, upon the facts as admitted and proved, he is entitled to judgment against the defendant. There can be, I think, no doubt but that when A agrees with 13 to pay to C a debt which 13 owes C, and breaks his agreement, B has an action against A for a breach of that agreement.

The material question is as to the measure of damages, and this is the precise cause of action that plaintiff alleges and the defendant admits. It is true that under this contract defendant agreed with plaintiff that he would pay Goodwin, but the contract was between the plaintiff and the defendant and the defendant has broken his contract. The question, therefore, is whether there was a valid contract between plaintiff and defendant based upon a good consideration by which the defendant agreed to pay Goodwin a sum of money ; whether that contract has been broken by the defendant, and whether plaintiff has sustained any damage in consequence of that breach of the contract, it is first necessary to understand just what promise the defendant made to plaintiff, and whether there has been a breach of that promise.

The complaint alleges that by a certain indenture by him made, executed and delivered, the plaintiff, for and in consideration of the covenants and agreements of the defendant in said indenture contained, and more particularly for and in consideration of his covenant and agreement to pay tlie purchase price of those lands in the indenture mentioned, and in the mode thereinafter stated, and for and in consideration of other good and valuable considerations, duly granted, bargained, sold, ceded and assigned unto the defendant the lands therein described, together with the buildings thereon situated and the appurtenances thereto belonging, subject to the lien or mortgage thereon existing in favor of the said Goodwin; that the said defendant, for and in consideration of the said grant, bargain, sale, assignment and conveyance, and the covenants and agreements of the said Wright, in the said indenture contained, duly and expressly covenanted, undertook and agreed faithfully and truly to pay to the said Goodwin, as a part of the purchase price of the said lands, the said sum of $52,500 mentioned in a certain indenture or agreement entered into between said Goodwin and this defendant, on or about the 21st day of May, 1890, “ at the times and in the mode in the said indenture mentioned, * * * said payments to be in full satisfaction and discharge of all the claims of the said George Goodwin in, upon or against the said property or against the said Edward Wright * * * and that thereby the said Robert W„ Chapin, defendant herein, for the said considerations, duly covenanted and agreed to relieve the said Edward Wright of and from and to indemnify him against all liability whatsoever to the said George Goodwin under or by virtue of the covenants and agreements contained in the indenture above mentioned executed by the said George Goodwin and the said Edward Wright on or about the 22d day of October, 1889, * * * that thereby the said Robert W. Chapin, for the said considerations, further covenanted and agreed to relieve the said lands mentioned and described in the said deed, of and from the said lien, mortgage or hypothecation in favor of the said George Goodwin, as above more particularly mentioned and described.” This allegation is admitted by the answer.

It thus appears that defendant purchased lands from plaintiff, and as consideration for such purchase, agreed to pay Goodwin the debt that plaintiff owed Goodwin, and agreed to relieve plaintiff of and from all liability to said Goodwin. The defendant, therefore, has the plaintiff’s property, and as the consideration of the conveyance of the property he agreed to pay a debt of plaintiff’s to Goodwin, and to relieve plaintiff from the liability which he was under to Goodwin, and that covenant the defendant has failed to perform by-failing to pay $22,429.38 of the said indebtedness of plaintiff to Goodwin. This covenant is not strictly a covenant for indemnity against loss, but an express covenant to do a particular act, namely, to pay Goodwin the money due him and to relieve plaintiff from a liability to Goodwin; and the damage sustained by plaintiff by a breach of that covenant is the amount of the liability from plaintiff to Goodwin.

I think this question was determined in the case of Port v. Jackson (17 Johns. 239). In that case it appeared that the plaintiff, being the owner of a certain indenture of lease, assigned the same to- the defendant for the consideration therein mentioned, for the residue of the term demised then unexpired, and the defendant, in and by the same indenture, covenanted with the plaintiff, his executors, etc., that he, the defendant, would keep and perform all the covenants, payments and agreements mentioned and contained in the indenture of demise which, on the part and behalf of the plaintiff, were or ought thereafter to be paid, done and performed; that the defendant had not paid the yearly rent for twenty-four years and a half prior to the commencement of the action to'the original lessors; and the plaintiff in that action sought to recover from the defendant the amount unpaid; and the question was presented Avhetlier the plaintiff ought to have averred that he had been damnified by a breach of the covenant on the part of the defendant in having either voluntarily or compulsorily paid the rents in arrears; and it was claimed on the part of the defendant that until the plaintiff had paid the rent he could not maintain an action at law; in other words, that the covenant is not broken until the plaintiff has satisfied the rent. And the court said: “ This is a mistake. The covenant is that the defendant shall pay the rent to the lessor as it falls due, and the moment the dajr of payment is past and the rent is left unpaid, the covenant is broken as well according to its words as its spirit, and the action is, at all events, maintainable. Another question then arises, what shall be recovered? Nominal damages only, or the amount of the rent due. My opinion is that the latter is recoverable. The covenant is not that the defendant shall indemnify the plaintiff against his own covenant in the lease or against any damage which he may sustain, but it is express and positive that the defendant will pay the rent for which the plaintiff continued to be liable, notwithstanding the assignment; the sum to be paid is certain and liquidated, and the breach of the covenant consists in the non-payment of it, and a plea of non-damnifiGat'US would, therefore, be no answer to the declaration.”

In arguing this question the court supposes this case: Suppose a covenant is entered into by A with B that he will pay B’s bond to a third person when it falls due. There cannot be a question that if A makes default lie is liable for the amount of the bond, though B has not paid it himself.” It seems to me that this supposed case is the exact case here. The defendant has agreed that he will pay Goodwin the debt that plaintiff owes Goodwin; the time of the payment of that debt lias arrived, and defendant has made default. And it would seem that he is liable for the amount still due upon the plaintiff’s obligation to Goodwin, although plaintiff has not paid it to Goodwin himself. I do not find that this case has been at all questioned, but it has been reaffirmed by many cases in this State.

In Kohler v. Matlage (72 N. Y. 266) the action was to enforce a bond, the condition of which was that if one Chapman “ shall well and truly pay or cause to be paid unto the proper parties the balance of the debts of the concern for manufacturing a variety of bread known as ‘ Kohler’s Cream Bread,’ remaining due and unpaid upon the delivery of this bond, and which are stated by said Chapman not to exceed $2,500, within nine months after the date of this bond,” then it was to be void. The court held that this was an original obligation to pay the debts and not an indemnity against loss or damage, by reason of a liability to pay the debts; in one case the covenantee is to be saved from the thing specified, and in the other from the consequences of it; and held that the plaintiff was entitled to recover without allegation or proof that he had paid the debts.

The question is discussed at some length in an opinion by Mr. Odell, as referee, in the case of Adams v. Symon (22 Abb. N. C. 472), and I think that opinion very satisfactorily answers the objection taken by the defendant to the recovery upon the obligation sued on in this action. The allegation of the recovery of the Canadian judgment is entirely immaterial here. It is, however, conclusive evidence between the parties that the defendant was bound to carry out the agreement and to pay Goodwin, and that on the date of the entry of that judgment there was due this amount claimed.

The covenant of the defendant here is quite different from that before the court in the case of Slauson v. Watkins (86 N. Y. 597), for there as part of the consideration of the sale of the premises by Slauson to "Watkins the latter assumed a mortgage on the property, and that consideration of the conveyance was paid by assuming the mortgage, and there could be no recovery until it was ascertained that there would be a deficiency upon the foreclosure of the mortgage. Here the covenant was not that the defendant would assume a mortgage, but that he would pay to Goodwin the amount that plaintiff owed him.

I think, therefore, that on the conceded facts under the authority stated plaintiff is entitled to judgment against the defendant for the amount claimed with interest, and judgment is directed accordingly.


author: Van Brunt, P. J.: Follett, J.

text:
    William E. D. Stokes, Respondent, v. Edward S. Stokes, Appellant, Impleaded with Others.

      Reference in an action for misconduct of corporate officers — not ordered prior to adjudication of misconduct — proceeding under an intermediate order — not a waiver of the right to appeal — time to appeal therefrom.

    If the object of an action is to compel the officers of a corporation to account for official misconduct, and not to procure the examination of a long account, a reference cannot be ordered to take and state an account between the defendants and the corporation of which they are officers, until there is some proof to sustain the allegations that there has been some official misconduct and a deter-nation to that effect has been reached by the trial judge and is put into the form of an interlocutory judgment directing an accounting.
    Under the Godo of Civil Procedure a party may proceed under an intermediate order and wait until the judgment is entered before appealing therefrom. The right to appeal from the intermediate order is not waived by proceeding under it, but continues until the entry of judgment in the action and the expiration of the time to appeal from the same. (Follett, J., dissenting.)
    Where a party to an action has proceeded under an order of reference, and the order of reference is thereafter materially amended by the court, and in consequence of such amendment an appeal is then taken from the order of reference as amended, the party taking the appeal refusing to go on before the referee under the amended order of reference, it cannot be said that by proceeding under the original order of reference he waived his right to appeal from the order of reference as amended. (Follett, J., dissenting.)
    Appeal by the defendant Edward S. Stokes from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 20th day of June, 1894, referring the action to a referee to take and state an account between the defendant Edward S. Stokes and a corporation of which he was an officer, and also from such order, as amended by an order made at the New York Special Term, and entered in said clerk’s office on the 30th day of November, 1894, and also from said order entered on the 30th day of November, 1894, amending said order entered on the 20th day of June, 1894.

      John J. Adams, for the appellant.

      Frank H. Platt, for the respondent.
   Van Brunt, P. J.:

This action is brought under section 1781 of the Code of Civil Procedure to compel the defendants to “ account for their official conduct in the management and disposition of the funds and property of the corporation, ‘ the Hoffman House,’ committed to their charge as directors, officers and trustees, and return the account books and papers and checks of the defendant corporation.” The complaint charges that “ the defendants * * * have had since its organization and now hold the control of said corporation, and have been guilty of official misconduct therein and in the management and disposition of its funds and property committed to their charge, and that the said defendant Stokes lias wrongfully acquired to himself and transferred to others money and property of the corporation, and has lost or wasted the same, with the knowledge and concurrence or acquiescence” of certain of the other defendants named. Upon the trial, after a certain amount of evidence was taken, the learned trial judge, without having reached any conclusion upon the question of whether the defendant Stokes or the other defendants had been guilty of fraud, neglect, violation of law or other misconduct as charged, made an order appointing a referee to take and state an account of certain transactions had by the defendant Stokes with tlie defendant corporation, the Hoffman House, which appear upon the books of the corporation in three accounts, the referee being directed, among other things, “to state and report any special circumstances, as well as his reasons for allowing or disallowing any claim or allowances that may be claimed by either party.” The parties proceeded before the referee, and after certain' testimony was taken, an application was made for an amendment of the order of reference, directing an accounting by the defendant Stokes of all the dealings and transactions between himself and the Hoffman House, and directing him to produce the books and papers of the corporation and deliver them to the referee. Thereupon this appeal was taken from both orders.

We can find no authority for the orders made. The object of this action was go compel the defendant officers to account for official misconduct, and not for the examination of a long account, and the latter could not be ordered until there was some proof to sustain the allegations that there had been some official misconduct and a determination to that effect is reached by the trial judge and put in the form of an interlocutory judgment directing the account. The issue here presented was as to whether the defendants, or one of them, Stokes, had been guilty of official misconduct. "Without, however, reaching any determination upon this question, the trial judge, as already stated, appointed a referee. For such practice we can find no authority either under section 1013 or section 1015 of the Code of Civil Procedure, which are the sections showing in what actions and under what circumstances references may be ordered. (See cases cited in Judge Follett’s opinion.)

The claim is made that there has been a waiver of the right to appeal by reason of the fact that the appellant went on before the referee, and several authorities are cited to sustain this proposition. An examination of these cases will show that they arose under the old Code, and have no application to the condition of the law as it now exists. Section 1316 of the present Code of Civil Procedure is as follows : “ An appeal taken from a final judgment brings up for review an interlocutory judgment or an intermediate order which is specified in the notice of appeal, and necessarily affects the final judgment, and which has not already been reviewed, upon a separate appeal therefrom, by the court or the term of the court, to which the appeal from the final judgment is taken. The right, to review an interlocutory judgment, or an intermediate order, as prescribed in this section, is not affected by the expiration of the time within which a separate appeal therefrom might have been taken.”

Under the old Code there was no authority to review an intermediate order upon the appeal from a judgment. Such practice was introduced by the new Code, with certainly no good results, but it still exists and must be considered. A party may now go on under an intermediate order and wait until the judgment is entered in order to review the same. There can be, therefore, no waiver of a right to appeal from such intei’mediate order by going on under it. In the case at bar the party did not waive his right to appeal by going on, because that exists until the entry of judgment, and the expiration of his right to appeal from the judgment.

Furthermore, the right to appeal from the last order entered was not waived, if it could be waived by going on before the referee, because the original order was materially amended, and then an appeal was taken from the order as amended in consequence of such amendment. The party refused to go on before the referee under the amended order of reference, and it is difficult to see how, because he proceeded under the original order of reference, and was content and willing so to do, when the court amended the order, such procedure waived his right to appeal from the order as so amended.

It seems to me that, it being conceded that the court had no power to make the orders of reference in question as against the consent of the defendants, the right to review such orders has not been impaired by any of the proceedings of the defendant.

The orders should be reversed, with costs.

O’Brien, J., concurred.

Follett, J.

(dissenting):

This action was begun December 28, 1892, by a stockholder in behalf of himself and of other stockholders against the Hoffman House (a corporation) and its officers for an accounting as to their conduct in the management of the business of the corporation and the possession of its fund and property. The Hoffman House was incorporated August 18, 1890, under the laws of New Jersey, with a capital stock of $750,000, divided into 2,500 shares of eight per cent preferred cumulative stock of $100 each, and 5,000 shares of common stock of $100 each. The plaintiff and Edward S. Stokes, one of the defendants, are the principal owners of the shares.

It is alleged in the complaint that the individual defendants have mismanaged the affairs of the corporation and misappropriated its funds, and a judgment is prayed for that the defendants be required to account and pay to the corporation all money and the value of the property which they have acquired, transferred, lost or wasted by fraud and negligence. Also that all alienations of property contrary to law be set aside; that a receiver be appointed of the funds of the corporation and the individual defendants restrained from acting as directors or officers thereof. All of the defendants answered, denying that the affairs of the corporation had been mismanaged. The Hoffman House and Edward S. Stokes answered separately and the other defendants jointly, the same attorney appearing for all of the defendants. Hpon the issues so joined the action came on for trial May 25, 1891, at a Special Term, all of the parties appearing. Evidence was given in behalf of all of the litigants, and at the close the defendants moved that the complaint be dismissed, no grounds being stated. The motion was denied and an exception taken, and thereupon the following order, except the italicised paragraphs, was granted and entered on the day of its date:

“ At a Special Term of the Supreme Court of the State of New York, held at the County Court House in the city of New York on the 20th day of June, 1891.

Present — Hon. George L. Ingraham, Justice.

“ Title of cause. Order.
“ This being an action brought by the plaintiff as a stockholder and a creditor of the Hoffman House against the defendant, and proofs on the part of the plaintiff having been taken, and proofs having been taken on the part of the defendants, and it appearing that the defendant Edward S. Stokes has had certain transactions with the corporation, which appear upon the books of said corporation in three accounts therein, known as the ‘ Edward S. Stokes Account,’ the ‘Fenwick Hall Account’ and the ‘Yacht Account,’ and it appearing that the taking of an account of the transactions embraced in the said three accounts is necessary for the information of the court before a final judgment herein may be decreed and entered, it is, on motion of ITolmes & Adams, attorneys for the plaintiff,
“ Ordered, that it be referred to Middleton S. Burrill, Esq., as referee.
First. To take and state an account of all and singular the dealings and transactions between the said Edward S. Stokes and the said Hoffman House embraced in the said three accounts. And also any other sum or sums of money that have been received by the said Ed/ward S. Stolces from the defendant corporation, the Hofffhan House, or paid by the Hoffman House on account of said Edward S. Stolces.
Second. That the said referee shall, in taking and stating said account, make all just allowances to the said Edward S. Stokes for any just claims or demands that he may have against the said Hoffman House, and also any not appearing in said three accounts.
Third. That said referee shall report what sums, if any, shall appear to be due from the said Edward S. Stokes to the Hoffman House, or from the said Hoffman House to the said Edward S. Stokes, and said referee is at liberty to state and report any special circumstances, as well as his reasons for allowing or disallowing any claim or allowances that may be claimed by either party. And it is further
Ordered, that the question of costs, as well as all other questions, be reserved until the coming in of the report of the said referee and the hearing thereon. Aiid it is further
Ordered, that either of the parties, plaintiff or defendants, have liberty to apply to the court for a further order or direction in the premises, as he or they may be ordered.
Ordered, * * * that the defendant Edward S. Stolces produce and file with the referee appointed by said interlocutory decree of June 20, 1894, all boolcs of accoxmt in his possession or wider his control relating to the business of the said corporation, the Hoffman House, and leave the srnne in the custody of the referee for such times and under such terms as the referee may directs

On the 8th of October, 1894, all the parties appeared before the referee, and a hearing under the order was begun without any objection being interposed by any of tbe parties, and was continued without objection from day to day until November 23,1894. On the 26th of November,.1894, the referee made the following report:

“ I, Middleton S. Burrill, the referee, to whom it was referred by the interlocutory judgment herein, dated the 20th day of June,' 1894, to take and state an account between the defendant Edward S. Stokes and the Hoffman House, do hereby report and certify that, pursuant to the said judgment, I proceeded to a hearing of the matter so referred, at my office in the city of New York, on October 8, November 14, .November 19th and November 23rd, 1894, and on all of such hearings the plaintiff appeared and attended by his attorneys, Messrs. Tracy, Boardman & Platt, and the defendant Edward S. Stokes by his attorney John J. Adams, Esq. Pursuant to my direction, contained in the minutes of the hearing of October 8th, 1894, the defendant Edward S. Stokes did file an account, and the plaintiff filed objection thereto, both of which are now on file with me. At the hearings of November 14, 19 and 23 the defendant was examined upon said account by counsel for the plaintiff. At the hearing of November 23, 1894, the defendant had present in his custody and possession the books and papers mentioned in the proceedings of that date, and I then ordered him to deposit such books and papers with me, as referee, for inspection by the plaintiff’s attorneys, which he refused to do by the direction and advice of his attorney, John J. Adams, Esq.
“ I further certify that the annexed is a true copy of the record of the proceedings before me upon such hearings.
“Dated New York, November 26, 1894.
“(Sgd.) MIDDLETON S. BIJEEILL,
“ Referee.”

Annexed to this report is the evidence taken before him. On this report and on all the papers and proceedings in the action an order to show cause was granted on the application of the plaintiff, on the return of which (November 30, 1894) the order of June 20, 1894, was amended by adding thereto the italicised paragraphs. January 25, 1895, Edward S. Stokes appealed from both orders, the other defendants not appealing.

At the close of the trial before the Special Term any one of the litigants had the right to require the court to determine the issues involved in the trial. The parties were entitled to a decision (Code Civ. Proc. § 1022 ; Wood v. Lary, 124 N. Y. 83) and to an interlocutory judgment to be entered thereon deciding whether a cause of action had been established and a case for an accounting made out. But no decision was made, no interlocutory judgment was entered, and nothing was done except to enter the order, which determines no issue. In the proceedings had after entry of the order it is called an “interlocutory judgment” and an “interlocutory decree,” but it is neither, for it adjudges and determines no issue, simply appoints a referee with certain powers. On the argument it was intimated that there had been a mistrial, and that the orders would have to be reversed. (Doyle v. Metropolitan E. R. Co., 136 N. Y. 505; Farmer’s Natl. Bank v. Houston, 44 Hun, 567; Griffin v. Cranston, 1 Bosw. 281; 5 id. 658; Const. art. 6, § 8; Const. 1894, art. 6, § 3.) But the attention of the court was not then called to the fact that after the entry of the order of June 20, 1894, all parties appeared before the referee and for several days engaged in taking the evidence without any objection being raised to that mode of trial. No objection was raised to trying the matter under the order of reference until the referee ordered Edward S. Stokes to permit the plaintiff to examine the books of the corporation, and then the appellant raised no objection to the mode of trial, but after the order was so amended that he was required to produce the books, this appeal was taken.

The appellant by voluntarily going to trial before the referee, without objection, waived his right to appeal from, or to move to vacate the order of reference. ( Ubsdell v. Root, 1 Hilt. 173; Porter v. Parmly, 6 J. & S. 490; Grunberg v. Blumenlahl, 66 How. Pr. 62; Brady v. Donnelly, 1 N. Y. 126; Baird v. The Mayor, 74 id. 382.) The defendant could not go on under the order before the referee as long as he was satisfied with his rulings, and, when dissatisfied, object to that mode of trial, and then appeal from the order.

A question of waiver of the right to appeal can never arise after the time to appeal has run, because the expiration of the time is an end of the matter; but a litigant may waive his right though his time to appeal has not run, and once waived it is gone forever, and the waiver cannot be revoked by appealing within the time allowed by statute.

A reference to take and. state an account as between a corporation and its officer, wlio lias kept and lias possession of its books, of necessity requires the officer to produce the books, and the express command introduced into this order by the amendment of November 30, 1894, added nothing to the force or effect of the original order.

The provision of section 3 of article 6 of the Constitution, that “ the testimony in equity cases shall be taken in like manner as in cases at law,” does not prevent litigants, by express stipulation or by acquiescence with the assent of the court, from taking the evidence in such a case before a referee, and thereafter submitting it to the court as the evidence therein.

The orders should be affirmed, with costs.

Orders reversed, with costs.


author: Follett, J.: Van Brunt, P. J.: O’Brien, J.:

text:
    Monroe L. Simon and Another, as Administrators, etc., of Patrick Doran, Deceased, Appellants, v. James O'Brien, as Administrator, etc., of Lizzie F. Doran, Deceased, Respondent.

      Life insurance — policy of the Catholic Benevolent Legion, construed — determination of rights of various pa/i'ties thereunder — stipulation as to costs enforced.

    A policy of life insurance issued by the Catholic Benevolent Legion to Patrick Doran contained the following clauses:
    “These conditions being complied with, the Supreme Council Catholic Benevolent Legion hereby agree to pay out of its benefit Fund to Lizzie F. Doran, wife, a sum of money not exceeding Two thousand Dollars, according to the provisions of law governing said Fund, upon the death of said member in good standing, provided he shall not have substituted another beneficiary, or reduced the amount of said benefit under the rules governing disability Benefits.
    “ The said Supreme Council agrees to pay out of its Benefit Fund to said member a sum not exceeding one-half of the benefit above stipulated, upon due proof that he has become entitled thereto under the provisions of law relative to permanent disability, upon the surrender of this certificate and acceptance by him of another, one-half the amount first above mentioned.”
    Sections 8 and 4 of chapter 2 of the by-laws of the Catholic Benevolent Legion were as follows :
    “Sec. 8. A member may at any time, when in good standing, surrender his certificate and have a new one issued, payable to such beneficiary or beneficiaries related to or dependent upon him as he may direct, upon the payment of a certificate fee of fifty cents.

      “Sec. 4. In the event of the death of a beneficiary of a member, and no change of beneficiary shall have been made as hereinbefore provided, the share of such deceased beneficiary shall be paid to his or her legal representative.”
    Lizzie F. Doran died prior to the insured, Patrick Doran. Neither left ancestors or descendants, and the insured did not designate another beneficiary in the-place of his deceased wife.
    By the constitution of the Catholic Benevolent Legion the beneficiary was limited! to the family and dependents of the insured.

      Held, that Lizzie F. Doran was the ultimate beneficiary under the certificate; but that she was not solely interested therein because the insured, Patrick Doran, during his life was entitled to receive one-half the amount of the policy upon proof that he had become permanently disabled;
    That the only interest that Lizzie F. Doran had in the certificate was a contingent one, subject to be wholly divested by the designation of another beneficiary, or by her death before the death of her husband;
    That the 4th section of chapter 2 of the by-laws of the insurer did not provide for an ultimate disposition of the insurance, but merely designated the person to whom the corporation might pay the same in discharge of its liability;
    That the designation of a beneficiary, not within the class specified in the contract, would be invalid and would confer no right upon the person designated;. That the collateral relatives of the wife of the insured, as they were not dependent upon him, were not members of his family, and were not related to him within the meaning of the contract, could not have been legally designated by the insured as beneficiaries under the certificate; that the law could not confer a right to the insurance money which the parties to the contract could not confer;
    That in case the insured failed to designate his beneficiary the amount .payable by the certificate, in case the insurer was liable, was payable to the legal representative of the member, to be distributed according to the terms of the contract;
    That the insured had a vested interest in the certificate of which no one could divest him, and, in case of his failure to designate a beneficiary, his legal representatives were entitled to the fund.
    Where the parties to an appeal have stipulated that neither shall recover costs against the other, no costs will be awarded. (Van Brunt, P. J., dissenting.)
    Appeal by the plaintiffs, Monroe L. Simon and another, as administrators, etc., of Patrick Doran, deceased, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of New York on the 26th day of January, 1895, upon the decision of the court, rendered after a trial at the New York Special Term, adjudging the defendant to be the rightful owner of a certain sum of $2,000 free from any lien or claim of the plaintiffs.

      John J. Gleason, for the appellants.

      David McClure, for the respondent.
   Follett, J.:

It is assumed in the record that the Catholic Benevolent Legion is a corporation, organized under the laws of this State, but when incorporated or under what statute is not disclosed. We find in the record a document called “ The Charter of the Catholic Benevolent Legion,” which may be the articles of association, and also a document called “ The Constitution of Catholic Benevolent Legion,” in the second article of which the objects of the legion are stated.

“ Section 1. The objects of the legion shall be: * * *
“ 3d. To establish a benefit fund, from which, on the satisfactory evidence of the death of a member who shall have complied with all its lawful requirements, a sum not exceeding $5,000 shall be paid to his family or dependents as such member may have directed; and from which benefit fund a sum not exceeding $2,500 may be paid to a member who shall have become permanently disabled from attending to business or gaining a livelihood, and who, having complied with all its lawful requirements, has arrived at the age of expectancy as fixed by the printed table in our laws.”

The case contains another document called “The Laws of Catholic Benevolent Legion,” which we assume to be the by-laws of the corporation, chapter 2 of which contains the following sections:

“ Sec. 3. A member may at any time, when in good standing, surrender his certificate and have a new one issued, payable to such beneficiary or beneficiaries related to or dependent upon him as he may direct, upon the payment of a certificate fee of fifty cents.
“ Sec. 4. In the event of the death of a beneficiary of a member, and no change of beneficiary shall have been made as hereinbefore provided, the share of such deceased beneficiary shall be paid to his or her legal representative.”

Under this constitution and these by-laws the Catholic Benevolent Legion issued and delivered to Patrick Doran a certificate, of which the following is a copy :

'“No. 14771.
$2000.00.
“ Catholic Benevolent Legion Benefit Certificate.
“ This certificate is issued to Patrick Doran, a member of Harlem 'Council No. 211, Catholic Benevolent Legion, located at New York city, N. Y., upon evidence received from said Council that he is a third grade contributor to the Benefit Fund of this Legion, and upon •condition that the material statements are true which are contained in his application for membership and medical examination filed in the office of the Supreme Secretary ■ and made a part of this contract, and that he will strictly comply with the laws, rules and regulations of the Legion.
“ These conditions being complied with, the Supreme Council Cath•olic Benevolent Legion hereby agree to pay out of its benefit Fund to Lizzie F. Doran, wife, a sum of money not exceeding Two thousand Dollars, according to the provisions of law governing said Fund upon the death of said member in good standing, provided he shall not have substituted another beneficiary or reduced the amount of said 'benefit under the rules governing disability Benefits.
“ The said Supreme Council agrees to pay out of its Benefit Fund to said member a sum not exceeding one-half of the benefit above .stipulated upon due proof that he has become entitled thereto under the provisions of law relative to permanent disability, upon the surrender of this certificate and acceptance by him of another one-lialf the amount first above mentioned.
“In Witness Whereof, the Supreme Council of the Catholic Benevolent Legion has hereunto affixed its seal, and caused this certificate to be signed by its Supreme President and attested and recorded by its- Supreme Secretary at the city of Brooklyn, New York, this 7th day of February, 1888.
“JOHN MoGUIRE, Supreme President. [l. s.]
“JOHN D. CARROLL, Supreme Secretary.
• “ I accept this certificate on the conditions therein named.
“ Patrick Doran,
“ Of Harlem Council, No. 211 C. B. L.
■“ [l. s.] Witnessed and delivered in our presence.
“P. J. Casey, President,
“ J. J. Cleary, Secretary.”

April 9, 1893, Lizzie F. Doran, the wife of Patrick Doran, the beneficiary in the certificate, died intestate, leaving no ancestors nor descendants, and leaving her surviving Patrick Doran, her husband, two brothers and two sisters her only next of kin. September 21, 1893, the defendant was duly apjoointed the sole administrator of her estate. May 13, 1893, Patrick Doran died intestate, leaving no ancestors nor descendants, but leaving a brother, nephews and nieces, his sole next of kin. June 9, 1893, the plaintiffs were duly appointed administrators of his. estate.

Patrick Doran did not designate another beneficiary in the place of his deceased wife, and the certificate remained in full force and effect at the time of his death and was found among his papers. Both administrators claimed the $2,000, payable by virtue of the certificate, and the Catholic Benevolent Legion, admitting its liability, paid over the money, pursuant to a stipulation entered into between the rival administrators that it should be deposited with the Farmers’ Loan and Trust Company to await the decision of an action to be brought to determine who was entitled to receive it.

Lizzie F. Doran was the ultimate beneficiary under the certificate, but she was not solely interested therein because Patrick Doran during his life was entitled to receive one-half of the $2,000 upon proof that he had become permanently disabled. (Certificate, 3d clause, const. art. 2, subd. 3.) The only interest that Lizzie F. Doran had in the certificate or in the sum payable thereby was a contingent one, subject to be wholly divested by the designation of another beneficiary, or by her death before the death of her husband. (Hellenberg v. Dist. No. 1 of I. O. of B. B., 94 N. Y. 580; Smith v. N. B. Society, 123 id. 86-88 ; Sabin v. Phinney, 134 id. 423; Tyler v. Odd Fellows' Mutual Relief Association, 145 Mass. 134.) In Smith v. N. B. Society (supra) the interest of a beneficiary was held to be no more a vested one than that of a legatee in a will before the death of a testator, and in Hellenberg v. Dist. No. 1 of I. O. of B. B. (supra) it was held that upon the death of a beneficiary before the death of the member the case stands exactly as if no designation had been made. These decisions are conclusive against the right of any person claiming under Lizzie F. Doran to take the money, unless there is some provision in the contract by which they are expressly entitled to it. The only provision in tlie certificate, constitution or by-laws under which the defendant claims to be entitled to the money is the 4th section of chapter 2 of the by-laws above quoted. That section does not provide for the ultimate disposition of the fund, but simply designates the person to whom the corporation may pay the sum in discharge of its liability. It is difficult to see how that section relates to contracts like the one under consideration, except in the event of the death of a beneficiary after the death of the member, in which case if payment had not been made to the beneficiary before his death, then a payment to his legal representative is provided for by this section. But it may be that this corporation issues other kinds of certificates to which section 4 is specially applicable.

By the constitution the persons who may be designated as beneficiaries are limited to the family and dependents of the member. (Art. 2, § 3.) But by section 3 of chapter 2 of the by-laws it is provided that when a new certificate is issued it may be made payable to one related to or dependent on the member. The designation of a beneficiary not within the classes specified in the contract' would be invalid and would confer no right upon the person designated. (Hellenberg v. Fist. No. 1 of I. O. of B. B., 94 N. Y. 580; Sanger v. Rothschild, 123 id. 577; Tyler v. Odd Fellows Mutual Relief Association, 145 Mass. 134.) The collateral relatives of Patrick Doran’s wife were not dependent upon him, were not members of his family, nor'were they related to him within the meaning of the contract, and they could not have been legally designated by Doran as beneficiaries under this certificate, and the law cannot confer a right to this money which the parties to the contract could not confer. In case the member fails to designate his beneficiary the amount payable by the certificate, in case the corporation is liable, is payable to the legal representative of the member to be distributed according to the terms of the contract. (Bishop v. G. L. E. O. of M. A., 112 N. Y. 627.)

Suppose the person designated under this contract had been a dependent who was nowise related to the member, and the beneficiary had predeceased the member, who died without making a new designation, it would not, we think, be seriously contended that the dependent’s next of kin would be entitled to take the fund. The member had a vested interest in the certificate of which no one could divest him, and in case of his failure to designate a beneficiary his legal representatives are entitled to the fund. In the case at bar the husband succeeded to the entire estate of his wife, under the laws of this State, and the defendant lias no title to the fund.

The facts in this case having been agreed on there is no occasion for a new trial. The judgment should be reversed and a judgment ordered in favor of the plaintiffs adjudging them to be entitled to-the fund. The parties having stipulated that neither shall recover costs against the other no costs are awarded.

Van Brunt, P. J.:

I concur except as to costs. I do not see how the parties can control the discretion vested by statute in the court by their stipulation.

O’Brien, J.:

The by-laws provide (Chap. 2, § 4): “ In the event of the death of' a beneficiary of a member, and no change of beneficiary shall have-been made as hereinbefore provided, the share of such deceased beneficiary shall be paid to his or her legal representative.” As there is no ambiguity in this language, it should be construed to mean just, what it says, and the money, therefore, very properly could have been paid over by the legion to the legal representatives of the wife. I concur iii the view expressed in the opinion of Mr. JusticeFollett, that the wife had no vested interest during the life of the member, but the latter having died after the beneficiary, the money should be paid to those designated in the certificate, which, read in the light of the charter and the constitution, made the contract between the member and the society. The parties had the right to agree upon the person or persons to whom, in the contingency named, the money should be paid.

The question, however, of who is entitled to the money and that-of who should receive it are separate and distinct. Although in terms payable to the legal representatives of the beneficiary named (who in this case was the wife) for the purpose of administration, it by no means follows that her brothers or sisters are entitled to it. So to hold would be contrary to the certificate and the charter and constitution of the legion. They limit the benefits to the member himself, or to his family, or to dependents designated by him. I do not think, therefore, that the brothers or sisters of the wife have any interest in the fund, but it must eventually go to and constitute a part of the estate of the husband. At law, the surviving husband is absolutely entitled to the personal property of the wife where she dies intestate without children. Whether, therefore, the wife had a vested interest or not — and, as said, I concur in the view that she had not — and though the payment of the fund by the legion under the contract was properly made to the administrators of the wife, it at once became the property of the estate of the husband; and, as the question here is as to what persons are eventually entitled to take, I think that this must be decided in favor of the estate of the husband.

I, therefore, concur in the result reached by Mr. Justice Follett, and, as the administrator of the wife had a right to receive payment, he should not be required to do more than hand over such fund' to the plaintiffs, who, as administrators of the husband, represent his estate.

Judgment reversed, and judgment ordered in favor of the plaintiffs.