text:
    Isaac P. Powers, Appellant, v. Hiram Knapp, Respondent.

      Evidence of being a stoclcholder of a corporation — what transfer of stock does not avoid liability under § 10, chwp. 40 of 1848.
    If the only evidence of a person being a stoclcholder in a corporation is found in • the fact that he signed the original certificate of organization, acted as a trustee of the company, indorsed oyer the certificates of stock made out to him, and frequently declared himself to be a stockholder, it is still a question of fact whether, under all the circumstances, and in the light of his explanations, he has ever made a contract with the company by which he has agreed to become the owner of any of its shares of stock. But when, in addition, it appears that an agreement was signed by him with other corporators, whereby he agreed to take and pay for thirty shares of stock, there is sufficient evidence to require the court to hold that such person did become a stockholder of the corporation.

      The liability imposed by section 10 of chapter 40 of the Laws of 1848 is not avoided by the fact that a stockholder assigned his stock prior to the accruing of the creditor’s indebtedness, where the transfer of such stock is not entered in the book required by section 25 of that act to be kept by the corporation.
    Appeal by the plaintiff, Isaac P. Powers, from a judgment of tbe Supreme Court in favor of tbe defendant, entered upon tbe verdict of a jury at tbe Jefferson County Circuit, in tbe office of tbe clerk of Jefferson county on the 31st day of May, 1892, dismissing tbe plaintiff’s complaint, and also from the order denying tbe plaintiff’s motion for a new trial, and to set aside tbe verdict made upon tbe minutes.
    Tbe action was brought by a creditor of tbe Winslow & Knapp Lumber Company, a corporation organized under chapter 40 of tbe Laws of 1848, against tbe defendant as a stockholder thereof, under a claim that be was liable under tbe provisions of section 10 of that act.

      HanmÁbal Smith, for tbe appellant.

      Watson M. Rogers, for tbe respondent.
   Parker, J.:

In December, 1889, tbe defendant signed with Egbert W. Knapp, Norris Winslow and two others, tbe original certificate of organic zation of tbe “ Winslow & Knapp Lumber Company,” in which it was stated that be was one of tbe trustees of such corporation. At tbe same time be signed with tbe same parties an agreement whereby he agreed to take thirty shares of the capital stock of the Winslow & Knapp Lumber Company, and pay therefor tbe sum of $100 per share, when said company is duly organized, and we are called upon for such payment by tbe trustees of said company.”

On tbe trial of this action, he testified that he understood the paper was for tbe purpose of organizing a company, but that be signed it simply to assist tbe others, who supposed that five persons were necessary to effect tbe organization, and under tbe agreement with them that he should put nothing into tbe company, and take nothing out of it; that it was agreed between himself, Egbert Knapp and Winslow that be was to have no interest in tbe concern, and that as soon as they became incorporated, be was to assign back to them anything that was supposed to be his.

The certificate was duly filed and the company entered upon the transaction of its business. Under date of March 11, 1890, two stock certificates of fifteen shares each were filled out upon the book of the corporation by its secretary to this defendant, and on the twenty-fifth of March they were detached from their stubs in such book, and laid irpon a table in its office, and the defendant was called in and requested by Egbert Knapp and Norris Winslow to execute the assignment in blank which was printed on the back of such certificates. The defendant did so, and immediately left the office, leaving the certificate upon the table. Egbert W. Knapp and Norris Winslow thereupon each took one of such certificates and retained it as his own property. The defendant never paid anything to the company for any stock, nor did he ever ask for any issue of stock to himself, nor was he ever called upon by the company to pay for any, nor was any ever issued to him except as above stated, and he did not receive anything for executing the assignment on the back of said certificates. No entry of such transfer in the manner required by the 25th section of the act, was ever made upon the books of the company.

Subsequently and on October 27, 1890, the defendant attended a meeting of the trustees and signed a written consent that the company mortgage its property, in which it was stated that he was the owner of thirty shares of the company’s stock. Such was the only meeting of the trustees that he ever attended. In March, 1891, the defendant also signed with others, and swore to a petition for the voluntary dissolution of the company, in which it was stated that he was one of the trustees, and the owner of thirty shares of its capital stock which had been paid for in full. Upon such petition the company was subsequently dissolved by order of court and a receiver of its property appointed.

The defendant testified that he knew resolutions were passed at the meeting of the trustees authorizing a mortgage, but had no recollection of signing the consent. As to the petition, he knew it was an application to dissolve the company, but had no farther knowledge of its contents; that he signed the papers because he was requested to do so by Egbert W. Knapp. There was also evidence tending to show that the defendant was a laboring man, ignorant of such business, in the employment of Knapp & Winslow, and easily influenced by them.

The plaintiffs debt was for money loaned the company, and accrued on October 29, 1890. The whole of the capital stock of the company had not been paid in, nor had the certificate required by section 10 of the law (Chap. 40) of 1848 ever been filed and recorded.

Upon these facts the plaintiff claimed at the trial that the court should hold, as matter of law, that the defendant was a stockholder of the company to the extent of thirty shares of its stock. The court declined to so hold and left it to the jury as a question of fact. The jury found that the defendant was never a stockholder of the company. Such ruling and such finding are claimed to be errors upon this appeal.

The relation of stockholder to a corporation depends entirely upon contract, and to establish it, it must appear that the minds of the parties met; that the defendant agreed to become a stockholder in the corporation with the privileges and responsibilities of such relation, and that the corporation accepted him as such. (Glenn v. Garth, 133 N. Y. 31; Morawetz on Corp. [2d ed.] §§ 24, 46.)

Section 10, chapter 40 of the Laws of 1848, under which this action is brought, imposes its liabilities only against the stockholders of a corporation, and the plaintiff is, therefore, required, in order to maintain his action, to establish the fact that the defendant was a stockholder of the corporation at the time his debt was contracted. This he could only do, within the authorities above cited, by showing that such a contract, either express or by implication, had at some time been made between the defendant and the corporation.

If the only evidence of such a contract was to be found in the fact that the defendant had signed the original certificate of organization, had acted as a trustee of the company, had indorsed over the two certificates of stock made out to him, and had frequently declared himself to be a stockholder, I should say that nevertheless it was a question of fact whether, under all the circumstances, and in the light of his explanations, he had ever actually made a contract with the company by which he had agreed to become the owner of any of its shares of stock. But when we take into consideration the agreement signed by him, and the other corporators, whereby he agreed to take and pay for thirty shares of such stock, a very serious question is presented whether the written and conceded evidence does not contain all the elements of the needed contract.

The subscription to take the thirty shares, alone by itself, would not constitute a contract with the company. (Dorris v. Sweeney, 64 Barb. 636 ; Lake Ontario Shore R. R. Co. v. Curtiss, 80 N. Y. 219.) But it has been held by a General Term of this court, in Dorris v. French (4 Hun, 292), that when such an agreement is consummated by signing the certificate of organization, it becomes one transaction, and is equivalent to subscribing formal articles of association, and the agreement may be enforced by the company itself. So in Phoenix Warehousing Company v. Badger (67 N. Y. 294), the defendant subscribed the certificate of organization, and placed opposite his name the number of shares taken by him, and it was held that such was a binding subscription for stock, and made him a stockholder in the company.

The statute does not require that the number of shares taken by a subscriber should be stated in the certificate, nor does it require that any subscription for stock should have been made at all before filing such certificate. (Morawetz on Corp. § 33.) Therefore, if a statement made in such certificate is a sufficient contract with the company, it would seem that a written agreement for thirty shares, made with the same corporators simultaneously with signing the certificate of organization, should be deemed a contract with the company, and as effectual as if made in the certificate itself.

The rule held in Dorris v. French (supra), is so far sustained by the Court of Appeals, and on principle we think that such rule is the correct one. The formation of every corporation is based upon a contract between individuals that they will form such an association, and assume the relations of shareholders in it. The act of the Legislature is simply to confer upon the individuals so contracting the right to form the corporation, and of acting in a corporate capacity. Therefore, when a number of individuals agree among themselves that they will take certain shares in a corporation to be formed, and, at the same time, themselves execute the certificate and take the steps necessary to acquire the corporate franchises given by the State, each act is but a part- of the one contract between them, by which they form the association intended. (Morawetz on Corp. §§ 24, 25. See, also, Buffalo & Jamestown R. R. Co. v. Gifford, 87 N. Y. 294.) As applied to this case, such reasoning assumes that the writings express the real transaction between the defendant and the other corporators, but the defendant claims that such is not the fact. From his explanation it is clear that he understood that he was joining with the others in forming the company, and that he intended to do so; also, that he understood that he was signing an agreement to take and pay for thirty shares of its stock. It is quite likely that he did not understand the liability that would attach to to him if he became a stockholder; but there was no fraud or deception practiced upon him as to the contents of any paper he was signing, and his ignorance as to the effect of the relations he was voluntarily assuming with the company does not relieve him from the legal responsibilities imposed upon them.

As to the rest of his explanation, it is not quite clear whether he means that it was agreed by parol that the writing should not be binding upon him, or that Egbert Knapp and Norris Winslow agreed that they would take upon themselves all the obligations which he assumed, and save him harmless from any liability thereon. The fact that he agreed to assign to them anything that was supposed to be his, as soon as the company was fully organized, seems to indicate that the latter agreement was the understanding which he had of the matter. But whichever way it was is not very material, as we are of the opinion that no arrangement that was made between him and his associates, operating to contradict the written contract, can be invoked to relieve him from its obligations.

In Phænix Warehousing Co. v. Badger (6 Hun, 293), the defendant had subscribed in the certificate of organization for 250 shares of stock. When sued on behalf of the company’s creditors for the subscription price thereof, he sought to defend on the ground that he had agreed with the other incorporators, at the time he subscribed, that he would be liable for only fifty shares, and that they would take the other 200 shares. The court held that as against the creditors of the company the plain terms of the subscription could not be contradicted, and that the agreement constituted no defense. That case practically decides the question presented by this claim, and it is but the application of a very familiar rule that the terms of a written contract cannot be varied or nullified by a contemporaneous parol agreement. (Engelhorn v. Reitlinger, 122 N. Y. 76; Thomas v. Scutt, 127 id. 133. See, also, Upton v. Tribilcock, 91 U. S. 45.)

It appears, then, from the controlling evidence in the case, that the defendant did make a contract with the company to take and pay for thirty shares of its stock. The fact that he never paid for it does not make him any less a stockholder, nor relieve him from liability as such. His subscription was accepted by the company, stock passed to his name on its books, and he acted as a trustee until the company was dissolved. Here was a contract, mutual between the company and himself, and one that a receiver of the company could have enforced against him for the benefit of its creditors. ( Wheeler v. Millar, 90 N. Y. 353 ; Buffalo & N. Y. City R. R. Co. v. Dudley, 14 id. 336.)

The question submitted to. the jury was, therefore, not an open one. Upon the facts proven the court should have held that the defendant did become a stockholder. But the defendant claims that, even though the defendant did become a stockholder, it is not disputed but that he assigned his stock before the plaintiff’s debt was incurred, and, hence, he cannot be held liable under section 10.

Section 25 of the act provides that a book shall be kept by the officers of the company, containing the names of the stockholders, etc., and that no transfer of stock shall be valid, etc., etc., unless entered upon such book. It is not claimed that the transfer by the defendant was entered upon such book, and, therefore, by the well-settled law of this State, his assignment was not effectual to relieve him from the liabilities imposed by section 10. (Shellington v. Howland, 53 N. Y. 372, 376.)

In Johnson v. Underhill (52 N. Y. 203, 209), it is said that both the assignor and assignee are liable to creditors until the transfer has been entered on the books.

The cases cited by the respondent’s counsel upon this question do not conflict with the above. It has always been held that as between the parties to the transfer, and even as between the parties and the company, an assignment may be valid to transfer a good title without being entered on the books. (Chemical National Bank v. Colwell, 132 N. Y. 250 ; Cutting v. Damerel, 88 id. 410 ; Isham v. Buckingham, 49 id. 216.)

But as against a party who does not stand in the attitude of one subrogated to the rights of the company, but is suing under a statute that creates an original liability and renders a stockholder liable whether he is a debtor to the company or not, as does the section 10 in question, no assignment is operative until it has been entered as required by section 25. The company can waive nothing as against a creditor so suing.

Our conclusion is that the court erred in submitting to the jury the question whether the defendant ever became a stockholder in the company, and that the verdict of the jury on that question is not sustained by the controlling evidence in the case.

The judgment and order denying a new trial must be reversed on the law and facts and a new trial granted, with costs to abide the event.

Hardin, P. J., and Merwin, J., concurred.

Judgment and order reversed on the law and facts and a new trial ordered, with costs to abide the event.


source: Caselaw Access Project

author: Parker, J.:

license: Public Domain

text:
    Frank B. Reynolds and Others, Respondents, v. John A. Webster and Almira E. Webster, Appellants, Impleaded, etc.

      Mortgage to secure future advances — rights of the mortgagee against other weditors of the mortgagor — notice by the record.

    A mortgage given as collateral to a bond in the penalty of §3,000, conditioned to pay at maturity any and all balances of account, money, notes, etc., and indebtedness of any kind at any time thereafter owing by the mortgagors to tbe mortgagees, and intended as a security for future sales of property to be made from time to time by the mortgagees to such mortgagors, is a valid security, and is a conveyance within the Becording Act.
    A party who takes such a mortgage upon recording the same is protected for advances made upon the faith and within the limits of the security, against intervening liens, until he has notice thereof, and the recording of a subsequent lien is not constructive notice thereof to him.
    Appeal by the defendants, John A. Webster and Almira E. Webster, from a judgment of the Supreme Court in favor of the plaintiffs, rendered at the Onondaga Special Term, and entered in the office of the clerk of the county of Onondaga on the 29th day of June, 1892.
    Action by the plaintiffs to foreclose a mortgage given by one Oovell to secure future advances. The defendant Webster claimed that a mortgage which he held from Oovell for a part of the purchase money of the same premises, but which was not recorded until after plaintiffs received and recorded theirs, was a prior lien to that of the plaintiffs.
    The court at Special Term held that plaintiffs’ mortgage was prior for all sums advanced by them without notice of defendants’ mortgage. On such decision judgment was entered against the defendants, and from such judgment this appeal is taken.
    AT. M. Waters, for the appellants.

      F. H. Emrha/rt, for the respondents.
   Parker, J.:

The defendant Webster, by his conveyance to Covell, transferred all his title and estate in the premises, and upon receiving back the mortgage for a part of the purchase price, he acquired only a lien thereon to that amount. (Bryan v. Butts, 27 Barb. 503 ; Trustees of Union College v. Wheeler, 61 N. Y. 88.)

He then stood in the position of an ordinary mortgagee for value, having transferred both title and possession to Oovell.

The case cited from (Dusenbury v. Hulbert, 59 N. Y. 541), does not hold any different rule. Such case merely decides that intermediate the receipt of the title by Oovell and the delivery back of the mortgage, it being all one transaction, Oovell could not have given any lien that would be superior to such purchase money mortgage. While Webster held his mortgage, and before he had it recorded, the plaintiffs received the mortgage which they are now seeking to foreclose, and they promptly put it on record in advance of Webster. Their mortgage was collateral to a bond in the penalty of $3,000, conditioned to pay at maturity any and all balances of account, money, notes, etc., etc., and indebtedness of any kind at any time hereafter owing by the firm of Coveil & Dickinson, or either of them, to the plaintiffs, and was intended as security for future sales of cigars, from time to time, to be sold to such firm by the plaintiffs.

Such a mortgage is a valid security, and is a conveyance within the Recording Act. (Ackerman v. Hunsicker, 85 N. Y. 43.) Both Webster and the plaintiffs, therefore, stood in their relations to Covell as mortgagees of the same premises, the security of each being liable to be affected by the provisions of the Recording Act.

That act makes a prior, unrecorded mortgage void as against a subsequent mortgagee in good faith and for value, whose mortgage is first duly recorded. Webster’s mortgage, therefore, although prior to plaintiffs’ became void as to it, provided plaintiffs are to be deemed purchasers in good faith and for value.

On behalf of Webster it is claimed that plaintiffs were not purchasers for val/ue because at the time they took and recorded their mortgage they had advanced nothing upon it. Also, that at most they were purchasers for value to the extent only of the amount advanced at the time Webster’s mortgage was recorded, viz., ninety dollars, and that, hence, under the Recording Act plaintiffs’ mortgage is made superior to Webster’s to the extent of ninety dollars only. The case of Ackerman v. Hunsicker, above cited, decides both of such propositions against the defendants. It is there said that such a mortgage is a potential lien for its full amount, of which subsequent purchasers or incumbrancers have notice through the record, and the rule is distinctly laid down that “ a party who takes a mortgage to secure further optional advances, upon recording his mortgage is protected against intervening liens, for advances made upon the faith and within the limits of the security, until he has notice of such intervening lien, and that the recording of the subsequent lien is not constructive notice to him.” (See, also, Farr v. Nichols, 132 N. Y. 327.)

These cases seem to be conclusive against the positions taken by the defendants upon this appeal.

The judgment, therefore, should be affirmed, with costs.

Hardin, P. J., and Merwin, J"., concurred.

Judgment affirmed, with costs.


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    William A. Sweet, Appellant, v. Henry J. Mowry and Others, Composing the Syracuse Water Board, the City of Syracuse and Others, Respondents.

      Action on an undertaking given to secure defendant from damages v/pon the granting of an injunction until the farther order of the court — burden of proof— costs of the proceedings before a referee when no damages are found to be sustained by reason of the injunction.

    In an action brought to perpetually enjoin the officers of the city of Syracuse, who were about to issue bonds under the provisions of certain acts of the Legislature, alleged to be-unconstitutional, the plaintiff applied for an injunction pendente lite, and obtained an order to show cause why such injunction should not be granted, which restrained the defendant from, proceeding further in the matter until the further order of the court. Upon obtaining such order a bond was executed by the plaintiff with a surety in the sum of ¡¡¡©50.
    Prior to the commencement of such action and the issuing of such order, a bank had resolved to bid for 8300,000 of such bonds at a premium of two and one-half per cent above the par value thereof. After the commencement of such action and the granting of such order had become known to the bank, it decided to make no bid for such bonds, and the highest bid received therefor was an average of three-sixteenths of one per cent premium above the par value of such bonds, which were subsequently sold at that price.
    Upon the argument of the order to show cause, the court reserved its decision and directed the plaintiff to furnish an increase of security to the extent of §10,000, as a condition for the further continuance of such injunction order.
    An undertaking was thereupon furnished by the plaintiff in such amount, and thereafter, the court rendered its decision denying the application for an injunction pendente lite, and vacating the temporary injunction then existing. The action having proceeded to judgment in the defendant’s favor, an order was made referring it to a referee to ascertain the damages sustained by the defendant by reason of such injunction. The defendant claimed damages for the loss sustained in the difference between the actual selling price of $300,000 of bonds and what would have been received therefor had the said bank bid for the same, together with the counsel fees and expenses incurred in obtaining the vacation of the injunction order and for the legal services and expenses on such reference.
    The referee reported that the defendant had suffered no damages recoverable under the undertaking by reason of the injunction, or the expenses of its vacation, and found that §1,000 would be a reasonable compensation for the defendant’s counsel fees for services rendered at the hearing upon return of the order to show cause, and that §300 would be a reasonable compensation for the defendant’s counsel fees on the hearing before him, which report was confirmed at Special Term as to the damages claimed to have been suffered on the selling of the bonds, hut disallowed as to the other items, and the court fixed as the defendant’s damages the §1,000 counsel fees and the counsel fees and expenses on the hearing before the referee.

      Held, that the burden was upon the defendants to show by satisfactory proof that the loss would not have been incurred except for the issuing of the injunction;
    That they were not entitled to any damages for the difference between the selling price of $300,000 of bonds and what would have been received therefor had the bank bid for the same, as the conclusion of the bank not to bid for the bonds should be ascribed to the uncertainty as to the validity of the bonds created rather by the commencement of the action than by the issuing of the injunction therein;
    That the counsel fees of $1,000 could not be properly charged as damages resulting from the granting of the injunction, but rather as expended in preventing the granting, on the return of the order to show cause, of an injunction to follow it; and that, as no damages were found to have been sustained by reason of the injunction, the plaintiff should not be charged with the expenses of the proceeding before the referee.
    Cross-appeals by tbe defendants, Henry J. Mowry, James B. Brooks,. William H. Warner, Charles Hubbard, William K. Niver and Peter B. McLennan, as water commissioners and composing tbe Syracuse Water Board, from that part of an order of tbe Supreme Court, made at the Oswego Special Term, and entered in tbe office of tbe clerk of the county of Onondaga on tbe 5th day of January, 1893, which confirmed the report of the referee appointed to ascertain the damages, if any, sustained by reason of an injunction order; and by the plaintiff, William A. Sweet, from that part of such order that does not confirm the report of such referee, and fixed and allowed the sums of $1,000, $200, $165 and $'78, as damages sustained by the defendants by reason of such injunction order.
    The defendants, or some of them, being officers of the city of Syracuse, were about to issue $500,000 of city bonds .under the provisions of certain acts of the Legislature, known as the Syracuse Water Acts, and had advertised for sealed proposals for the purchase of them, such proposals to be received and opened on the 9th day of June, 1890, at three o’clock in the.afternoon.
    The plaintiff claimed that such acts were unconstitutional, and on the 9th day of June, 1890, commenced an action against all the defendants herein to perpetually enjoin them from proceeding under such acts, and on June seventh applied to a justice of this court for an in j unction pendente lite.

      On sucli application the justice made an order to show cause, returnable on the 11th day of June, 1890, why such injunction should not be granted, and in the same order restrained the defendants, until the further order of the court, from taking any further proceedings under the statutes in controversy. Such order was served upon the defendants June ninth, and was, before three o’clock of that day, so modified that the defendants were permitted to receive and open any bids which might be tendered for bonds in response to said advertisement. Upon obtaining such order; a bond was executed by the plaintiff, and a surety in the sum of $250.
    Prior to the commencement of such action and the issuing of such order the Onondaga County Savings Bank resolved to bid for $300,000 of such bonds at a premium of two and one-half per cent above their par value. During the forenoon of June ninth, the commencement of such action and the issuance of such order became known to the officers of said bank, and they thereupon reconsidered their former resolution and determined to make no bid whatever. The highest bid received on June -ninth was an average of three-sixteenths of one per cent premium for the bonds, and all of them were subsequently sold in the fall of 1890 to such bidder.
    On June eleventh, upon the return of such order to show cause, the defendants appeared by counsel in response thereto, and argued before the court at Special Term the questions raised thereby. The court reserving its decision for some days after argument, then and there made an order requiring the plaintiff to furnish an increase of security to the extent of $10,000 as a condition for the further continuance of the injunction order, and an undertaking in that amount was thereupon given by the plaintiff and his sureties.
    On the 16th day of June, 1890, the court rendered its decision, denying the application for an injunction jpendente lite, and vacating the temporary injunction then existing. The action proceeded to jitdgment, which resulted in the defendants’ favor, and such judgment was subsequently affirmed in the Court of Appeals.
    Afterwards, on September 19, 1891, an order was obtained by the defendants referring it to a referee to ascertain the damages sustained by them by reason of such injunction. Upon the hearing before the referee the defendants claimed damages as follows : For loss sustained in the difference between the selling price of $300,000 of bonds and wliat would have been received had the Onondaga County Savings Bank bid for the same, $6,937.50 ; for counsel fees and expenses incurred in the removal of such injunction order, $3,000; also for legal services and expenses on such reference.
    The referee reported that the defendants had suffered no damages by reason of the injunction, either in the sale of the bonds or expenses of removing it. He found, however, that $1,000 would be a reasonable compensation to counsel for services rendered in the hearing upon the return of the order to show cause. He also found that $200 would be a reasonable compensation for the defendants’ counsel fees on the hearing before him.
    On a motion at Special Term to confirm such report, the court confirmed the report as to the damages claimed to have been suffered on the sale of the bonds, but disallowed it as to the other items, and fixed as the defendants’ damages the $1,000 counsel fee and the counsel fees and expenses on the hearing before such referee. From such order both defendants and the plaintiff appeal to this court.

      C liarles H. Peek, for the plaintiff.

      O. L. Stone and others, for the defendants.
   Parker, J.:

Upon the question whether the market value of the bonds was depreciated below the price which the savings bank contemplated offering, by the injunction itself, rather than by the litigation then inaugurated, we are not disposed to disturb the conclusion which the referee reached. We think, with him, that on the whole evidence the depreciation which evidently followed the commencement of the action, and the conclusion of the bank not to bid at all, should be ascribed to the uncertainty which the litigation suggested as to the validity of the bonds, rather than to the fact that the defendants were temporarily enjoined from accepting bids upon the day they had advertised to receive them.

The burden is upon the defendants, who claim to have sustained the damages, to show by satisfactory proof that the loss would not have been incurred except for the issuing of the injunction. (Dwight v. Northern Indiana Railroad Co., 54 Barb. 271.)

As to the other question, whether the counsel fees incurred upon the bearing on the return of the order to show cause, can be properly charged as damages, we also think that' the referee’s conclusion was the correct one..

When the application for an injunction was first made, the judge had the right to deny it until notice of the application was given the defendants, or he might then grant an order requiring them to show cause why such injunction should not be granted. Whichever course he took, he had the right to then “ enjoin the defendant until the hearing and decision of the application.” (Code Civ. Proc. § 609.)

In this case, he made an order to show cause and enjoined the defendants until the further order of the court. The defendants were then confronted with the following situation : They were threatened with an injunction pendente lite to be granted on the eleventh of June, unless they could show cause why it should not be. To make such a showing they must employ counsel, and evidently the order which required them to make that showing, and not the order restraining them from acting in the meantime, was the one which imposed upon them the burden of employing counsel..

The injunction order would continue until June eleventh, whether the defendants employed counsel to appear on that day or not, but in no event would it continue any longer, for it was then to be superseded by a new order of court. Although 'the order made June seventh, in terms, is to continue until the further order of court,” we give it no other meaning or greater force than is allowed it by section 609, that is, until the hearing and decision of the application,” and, therefore, we say that when such decision was made, whichever way it might be, an order would be made that would supersede the restraining order already granted.

Hence, counsel were not employed to dissolve that injunction. The defendants would have been relieved from that order whether they appeared on the eleventh or not, but they might have been troubled with another order then made, granting an injunction against them pendente lite, and, hence, they took measures to prevent stich an order from being granted. They went to the expense of hiring counsel, not because the temporary injunction had been granted, but to prevent another and more extensive one from being made. If the judge bad made tbe order to show cause, and not granted the temporary injunction, the defendants would have had the same condition before them, and the same expense to incur. Hence, it cannot be said that such expense was caused by reason of such injunction. Not having been rendered necessary by the temporary injunction, they cannot be assessed as damages in this proceeding. (Randall v. Carpenter, 88 N. Y. 293.)

As to the expense of the proceeding before the referee, inasmuch as no damages were found to have been sustained by reason of the injunction, they should not be charged as damages against the plaintiff. He did not render the inquiry necessary, and, therefore, he should not be required to pay the expense of it. (Randall v. Carpenter, supra)

The order of the Special Term should be reversed, and an order entered confirming the report of the referee.

Harder, P. J., and Merwie, J\, concurred.

Order of Special Term reversed, with ten dollars costs and disbursements, and an order allowed confirming the report of the referee.


text:
    Mary Reynolds, Appellant, v. The City National Bank of Watertown, and Others, Respondents.

      Deed, from a wife to her husband — executed before, a/nd delivered after the passage of chapter 537 of the Laws of 1887 — grantor’s lien for unpaid purchase price.

    A deed from a married woman to her husband dated prior to the passage of chapter 537 of the Laws of 1887, and delivered thereafter is not a void conveyance.
    It is a matter of no importance when such a deed was drawn up or executed; its validity depends upon the time of its delivery.
    Testimony was given on the trial of an action tending to show that a deed was delivered by a married woman to her husband in consideration of his agreeing to pay her $3,000 therefor, but that the premises therein described were recognized between the parties co the deed as the property of the husb.and, or as the product of their joint labor in which both were interested, and the title to which was kept in such a position that it could be used as the property of either, as the exigencies of their business might require.

      Held, that if such a deed was given to the husband under such an arrangement by his wife, she would not be within the equity of the rule that gives to a vendor of property a lien upon it until his Just demands for the purchase price thereof are satisfied.
    Appeal by the plaintiff, Mary Reynolds, from a judgment of the Supreme Court in favor of the defendants, rendered at the Jefferson County Special Term, and entered in the office of the clerk of the county of Jefferson on the 7th day of February, 1898, dismissing the plaintiff’s complaint.
    This action was brought to set aside a deed given by the plaintiff to her husband, and to cancel the record thereof and, so far as the same affects the premises therein described, to set aside and cancel a certain mortgage given by the plaintiff and her husband to the City National Bank of Watertown, and in case such mortgage is not set aside and vacated, to obtain- an adjudication that the plaintiff has a lien on the premises therein described for $3,000, the purchase price thereof, superior to the said mortgage, and to any right or interest that may be acquired by virtue of a judgment of foreclosure and sale thereof.
    The trial court found as matters of fact that the plaintiff, on January 13, 1885, executed a warranty deed of certain premises to her husband, and acknowledged the execution thereof on January 15, 1885 ; that thereafter the deed was kept in the house and was not recorded and delivered until the 28th day of June, 1889, and on June 28,1889, such deed was recorded in the clerk’s office in Jefferson county.
    That in May, 1890, the husband of the plaintiff represented to the cashier of the City National Bank of Watertown that he owned the premises in question, free from incumbrances except as to a certain mortgage, and on August 5, 1890, the plaintiff and her husband executed and delivered to the defendant, the City National Bank, a mortgage for the sum of $2,140, at the time of the execution of which the plaintiff had no knowledge of the invalidity of the title of her husband to such premises, and she signed the same for the sole purpose of releasing her supposed right of dower therein.
    That the defendant, the City National Bank, had no notice at or before the time of the execution or delivery of such mortgage, and the advancement of the money on the same, that the plaintiff claimed to have any interest in said premises except her indicate right of dower therein, or that she claimed any lien on said premises as vendor or otherwise.
    That on August 8, 1890, her husband gave this plaintiff a note for $3,000, payable on demand, for the purchase price of the premises in question; that judgment was subsequently recovered by the plaintiff thereupon, upon which an execution was issued.
    The referee decided as matters of law that Samuel W. Reynolds was the owner of the premises described in the deed from the plaintiff at the time of the execution and delivery of the mortgage to the City National Bank; that such mortgage was a good and subsisting security for the amount secured thereby; that the plaintiff had no lien on the premises in question as vendor thereof, and that the plaintiffs complaint should be dismissed, with costs.

      Hannibal Smith, for the appellant.

      La/rising dc Zansmg, for the respondents.
   Parker, J.:

We have no difficulty in adopting the finding of the court at Special Term, that the deed from the plaintiff to her husband bearing date January 13, 1885, was not delivered until June 28, 1889. The testimony that both parties gave before the referee in supplementary proceedings, is much more reliable than that given under the pressure of the situation at the time this action was tried, and is much more consistent with reason and the mode in which their business was done.

Before the referee both testified that the deed was not delivered in 1885, and the plaintiff gave her reasons for retaining it. It is not at all probable that the statement of both was misunderstood or inac-ctirately taken down, and it can hardly be supposed that they both deliberately and without reason then testified falsely, and now, for the first time, tell the truth as to the transaction.

If the deed was delivered in 1889, it was not a void conveyance. The disability which existed in 1885 had been removed by chapter-537, Laws of 1887, and the conveyance operated between herself and her husband in the same manner that it would between herself and one not related to her. It does- not depend for its validity upon the ratification of the agreement to convey, made in 1885, or upon any ratification whatever, hat it is in itself a new and executed contract súfficient in form and manner of execution to convey real estate, and surely it is a matter of no importance when it was drawn up or executed. It was delivered in 1889, at a time when such an instrument was operative between them, and, hence, it cannot be set aside as void.

It is claimed by the plaintiff’s counsel that notwithstanding the act of 1887, the disability against a married woman’s contracting with her husband still continued. It may be that such statute did not enlarge the power, oí a wife to'make, with her husband, an executory contract to convey, but' the question here is not whether her contract to convey could be enforced in 1889, but whether the conveyance which she then made was a void one. Certainly, at that date, all the disabilities that formerly rendered such a conveyance void had been removed, and, therefore, the title to her premises had been lawfully transferred to her husband, and he was in a position to lawfully convey or mortgage the same.

The question whether the transaction under which such deed was delivered was an actual and bona fide sale, so that the plaintiff acquired a vendor’s lien on the premises for the unpaid purchase money, is a more difficult one. It is true that she had the title to th& premises, and that at the time it was taken their pecuniary condition does not indicate that it was given to her in fraud of her husband’s creditors. It is also true that they both testify that the deed was delivered in consideration of his agreement to pay $3,000 for the premises, but yet if such premises were recognized between themselves as the property of the husband, or as the product of their joint labor in which both were interested, and the title to which was kept in such a position that it could be used as the property of either, as the exigencies of their business might require, and if it was conveyed to the husband under such an arrangement, then the plaintiff would not be within the equity of the rule that gives to the vendor of real estate a lien upon it until his just demands for the purchase price thereof are satisfied. (Pom. Eq. Juris. § 1250.)

There are many things indicating that the parties did not as between themselves assume the ordinary relation of vendor and vendee, and particularly showing that a vendor’s lien for the purchase money was not contemplated between them. The deed was delivered for the express purpose of enabling the husband to raise money on the premises for use in his business, and the plaintiff not only at once joined with him in putting a $2,000 mortgage thereon, but subsequently joined with him in further mortgaging it to the defendant, the City National Bank.

The whole course of their dealing by which this property was acquired, the unusual way in which the title was kept in her name on the record and in his name in the house, her readiness to give him the title and join with him in incumbering it, the fact that no evidence of a promise to pay the alleged purchase price was given or asked for when the conveyance was made, although on its face the deed expressed a consideration of only one dollar fully paid, and the subsequent conduct of the parties in giving a note for such purchase price and seeking to enforce it by judgment and execution against his personal estate in advance of his creditors, as soon as it appeared that the husband could not continue his business, all indicate that it was not a sale of property such as would give the wife the equity of a grantor’s lien.

An extended analysis of the evidence on this question is not necessary.. It has been thoroughly done by the judge at Special Term. He has seen the parties under examination, and from all the evidence has been convinced that the sale claimed by them Was never in fact made.

The case does not present such a preponderance of evidence against his conclusions as to warrant our interfering with them. (Baird v. Mayor, etc., of City of N. Y., 96 N. Y. 567 ; Devlin v. Greenwich Savings Bank, 125 id. 756; Beckwith v. N. Y. C. R. R. Co., 64 Barb. 308 ; Roosa v. Smith, 17 Hun, 138 ; Thompson v. Vroomam, 21 N. Y. Supp. 180.)

We do not discover any error in the admission or rejection of evidence which has worked any injury to the plaintiff, and on the whole case we conclude that the judgment is correct, and should be affirmed, with costs.

TIabdiN, P. J., and Meewxnt, J., concurred.

Judgment affirmed, with costs.


author: Parker, J. :

text:
    Theresa Sherff, Appellant, v. Theodore Jacobi and Catherine Jacobi, Respondents.

      Pleading — a com/plaint need not deny a possible defense — action to recoves' borrowed money — evidence admissible in.

    A complaint need not anticipate and deny a possible defense.
    In an action brought to recover a sum of money alleged to have been loaned by the plaintiff to the defendants, who were husband and wife, the wife denied that the plaintiff made any such loan, and averred that her husband furnished to the plaintiff board, rooms and fuel in full satisfaction of the plaintiff’s claim. The husband denied the loan, alleged that the money was a gift, and also stated as a counterclaim the board, use of rooms and fuel furnished by him.
    Upon the trial, it appeared that at the time the plaintiff made the alleged loan, she received from the husband a writing, acknowledging the receipt from her of the amount of such loan, and promising to pay the same, with interest at six per cent “ When Convenca,” which instrument was signed by both of the defendants. The plaintiff retained the paper and referred to it on the trial to fix the date of the loan. The defendant then put it in evidence, and claimed that such writing was conclusive evidence of the contract under which the defendant had received the money, and that it being an agreement to repay at the defendants’ convenience, the plaintiff would have to show a present ability to pay in order to recover under it. The court so held, and also held that the defendants’ ability to, pay could not be shown under the plaintiff’s complaint.
    The plaintiff then offered to show that such paper did not express the contract between the parties; that the plaintiff could not read or write; that she did not know the contents of the paper, and was deceived in taking it, and that it was never delivered to or accepted by her as the contract upon which the loan was made, and she asked leave to go to the jury upon that question. The court rejected the evidence on the ground that it was not admissible under the complaint, denied the plaintiff’s motion to amend and dismissed the complaint.

      Held, that the facts which the plaintiff offered to prove, if proven, would have left her case standing upon precisely such a cause of action as was set forth in the complaint;
    That it was % question for the jury whether the paper embodied the contract made, or was received and retained under the circumstances claimed by the plaintiff.
    Appeal by tbe plaintiff, Theresa Sherff, from a judgment of the Supreme Court rendered at the Onondaga Circuit, in favor of the defendants, and entered in the office of the clerk of the county of Onondaga on the 18th day of January, 1893, dismissing the plaintiff’s complaint.

      Jenney <& Marshall, for tlie appellant. ■

      Stephen Lockwood, for tlie respondents.
   Parker, J. :

The plaintiffs complaint in this action charges that on or about October 25, 1886, she loaned to the defendants $200, which they agreed to repay with interest, and she asks judgment against them for that amount. The defendant Catherine, who is the wife of the defendant Theodore Jacobi, answers separately, and denies that she made any such loan. She further avers that the defendant Theodore furnished to the plaintiff board, use of rooms and fuel of the value of $528, in full accord and satisfaction of her claim for such $200.

The defendant Theodore denies the loan, alleging that tlie money was a gift from the plaintiff to himself, and also sets up as a counterclaim the board, use of rooms and fuel, furnished by him to the plaintiff to the extent of $528.

On the trial, while the plaintiff was being examined,-it appeared that at the time she mad.e the alleged loan, she received from the défendant Theodore a writing, of which the following is a copy:

“ Syracuse, N. Y., October 25, 1886.
“ Received of Thrasa Seherff the sum of two hundred dollars. When Convenca I promas to pay the Sum of Two Hundred Hollars with six cent intrestest up to dat to Thrasa Seherff.
“$200. “THEODORE JACOBI,
“CATHERENA JACOBI.”

The plaintiff had retained such paper, and referred to it on the trial to fix the date of the loan. As soon as it appeared the defendant put it in evidence, while the plaintiff was being examined, and thereupon claimed that such writing was conclusive evidence of the contract under which the defendant had received the money, and that it being an agreement to repay at the defendants’ convenience, the plaintiff would have to show a present ability to pay in order to recover under it. The court so held, and also held that such ability to pay could not be shown under the plaintiff’s complaint.

In response to this claim, the plaintiff offered to show that such paper did not express the contract between the parties; that the plaintiff could not read nor write; that she did not know the contents of the paper, and was deceived in taking it, and that it was never delivered to and accepted by her as the contract upon -which the loan was made, and she asked leave to go to the jury upon that question.

The court rejected such evidence on the ground that it was not admissible under the complaint, and also denied the plaintiff’s motion to amend the complaint. The complaint was thereupon dismissed by tlie court, and from the judgment entered thereon this appeal has been taken.

Although the plaintiff received and retained the paper, it was not necessarily the contract between them. It is in the form of a receipt not signed by the plaintiff, and, although it has incorporated in it terms as to the repayment of the amount received, it may be that knowing she could not read it, the defendants inserted such terms fraudulently, and induced her to receive it as a mere receipt. It does not require the citation of authorities to show that the receipt and retention of the paper by the plaintiff under such circumstances would not make it conclusive as to her, nor prevent her from showing what the real contract was between them.

. Such were the facts which the plaintiff offered to prove, and if proven, it would have left her case standing upon precisely such a cause of action as is set forth in her complaint.

The confusion seems to have arisen from allowing the defendants to prove an affirmative defense before the plaintiff had proved her case, and then prohibiting the plaintiff from rebutting it. The logic of the situation was this: The plaintiff claimed a ’verbal loan of

money to be repaid with interest, but no time for repayment specified, and she testified to such contract; the defendant admitting the loan, claimed that the money was to be repaid at his convenience and that a contract to that effect was reduced to writing at the time. He is allowed to prove such defense by putting in evidence the writing and assuming, from the fact that it was still in the plaintiff’s possession, that it was delivered and received as expressing the contract between them.

To this, defense the plaintiff sought to reply that the writing was not the contract actually made ; that it had been imposed upon the plaintiff in fraud, and retained by her in ignorance of its contents, and that really the loan was made upon the terms set forth in the complaint.

The court excluded such evidence because the plaintiff had not anticipated such defense, and set up her reply to it in her complaint. This, we think, was an error for which the judgment should be reversed.

It was plainly a question for the jury whether the paper embodied the contract made, or was received and retained under the circumstances claimed by the plaintiff. Inasmuch as her cause of action under that claim was precisely the one set forth in her complaint, she should have been allowed to prove it. The complaint need not anticipate and deny a possible defense. ( Wheeler v. Millar, 90 N. Y. 354, 361.)

The judgment entered should be reversed and a new trial granted, with costs to abide the event.

Hardin, P. J., and Merwin, J., concurred.

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


text:
    John P. Harvey, Respondent, v. Ephraim G. Van Cott, as Executor, etc., of Edward B. Van Cott, Deceased, and Estelle R. Wright, Appellants.

      Life insurance — -transfer by will — monument for decedent — right of ma/rried woman leaving no descendants to transfer by will a life insurance policy — chapter 248 of the Laws of 1879 — effect of the executors death on the admissibility of testimony — statements made by him as to a sale and the consideration thereof.

    A testatrix, at the time of her death, held a policy of insurance upon the life of her husband, payable to her or to her legal representatives upon his dentil, or if she should not be then living, payable to her children; she died without children, leaving her husband surviving, and leaving a will by which she bequeathed a certain portion of her property to her husband, if living, and upon his death to her niece. The residue and remainder of her estate she gave to her niece, and appointed her niece and her husband the executors of her will. The husband sold and delivered the policy of insurance for a certain sum paid and in consideration of a monument being made and erected upon the lot where the wife was huried by the purchaser, who paid premiums upon the policy until the death of the husband, when an action was brought by him against the insurance company to recover the amount of the policy, 'which amount the insurance company paid into court, it being claimed by the executor of the husband’s estate and by the niece, either individually as a legatee or as sole surviving executor of her testatrix’s estate.
    On appeal from a judgment in favor of the plaintiff,

      Held, that the policy passed under the provisions of the residuary clause of testatrix’s will, and that a good title therefor was transferred by her husband as executor;
    That the purchase of the monument for the deceased was consistent with a proper use of the assets of her estate by her executor;
    That notwithstanding the provisions of chapter 248 of the Laws of 1879, the testatrix, as she died childless, had a clear right, under chapter 821 of the Laws of 1873, to dispose of the policy by her will without the written consent of her husband.
    Upon the trial of the action, several persons were allowed to testify that the husband of the testatrix, at various times after the alleged sale of the policy to the plaintiff, told them that he had assigned it, and the consideration which he received therefor. Such statements were not made by him while acting in the discharge of his duties as executor, and were in no sense a part of the res gestm.

    Query, whether the fact that the decedent’s husband was her executor, and was dead at the time of the trial, rendered such evidence admissible.
    That if, however, such evidence was improperly admitted, as it worked no harm to the defendant, the testatrix’s niece, it furnished no ground for a reversal of the judgment.
    Appeal by tlie defendants, Estelle R. Wright and Ephraim (t. Van Cott, as executor, etc., of Edward B. Van Cott, deceased, from a judgment of the Supreme Court in favor of plaintiff, entered upon the report of a referee in the office of the clerk of the county of Herkimer on the 7th day of September, 1892.

      C. J. Palmer, for the respondent.

      E. J. da W. P. .Ball, for appellant Van Cott.

      S. W. Pet/rie and Gha/rles E. Patterson, for appellant Wright.
   Parker, J.:

At the time of her death Mrs. Mary Van'Cott held a policy of insurance for $2,000, upon the life of her husband, Edward B. Van Cott, payable to her or her legal representatives, upon his death, or if she should not be then living, payable to her children, or their guardian if under age. She died without children, and leaving her husband surviving her. She left a will, by which she gave certain portions of her “ productive personal property ” to her husband for life, and upon his death to her niece, now the defendant Mi’s. Wright. “AH the rest, residue and remainder of my estate,” by a residuary clause in her will, .she gave to her said niece, and appointed such niece and her husband the executors of such will. The husband sold and delivered such policy to the plaintiff for a certain sum of money paid him, and for a monument which the plaintiff made and •erected upon the lot where the wife was buried. The plaintiff also paid the premiums upon such policy until the death of the husband.

Subsequently the husband died leaving a will in which he appointed the defendant Ephraim Gr. Van Cott his executor. The plaintiff thereupon demanded from the insurance company the amount of sxrch policy, claiming that he acquired the title thereto under his contract with the husband. Mrs. Wright claimed it as a legatee under Mrs. Van Cott’s will, or else as surviving executor of such will. Ephraim Van Cott claimed it as executor of the deceased husband’s estate. • The company paid the amount of the policy into court, and this action is now prosecuted to determine to whom, under the circumstances, such policy belonged. The referee found in favor of the plaintiff, and from his judgment both the other claimants appeal.

In order to determine the question presented on this appeal, we must ascertain the character of the property or interest which Mrs. Van Cott had in this policy at the time of her death. Prior to 1873, the property which a married woman had in such a policy was a peculiar and limited one. She could not dispose of it in any manner. (Eadie v. Slimmon, 26 N. Y. 9 ; Frank v. Mutual Life Insurance Co., 102 id. 266 ; Brick v. Campbell, 122 id. 337.) Her creditors could not reach it. They had no claim whatever upon it. (Smillie v. Quinn, 90 N. Y. 492 ; Baron v. Brummer, 100 id. 372.) It was, therefore, unlike an ordinary chose in action to the extent that it was considered as created and appropriated for a specific purpose.

By chapter 821 of the Laws of 1873, the prohibition against her disposing of the property was to a certain extent removed, and in the event that she had no child, or descendant of a child, she is allowed to dispose of the policy before the death of her husband by a last will and testament, or by a deed duly executed and acknowledged in the manner required to pass her dower right in lands.

In the case before us Mrs. Van Cott has not, in terms, made any specific bequest of the policy in question. She has not specifically mentioned it as a part of the property bequeathed, but after giving certain property to her husband, she gives “ all the rest, residue and remainder of my estate of every name and nature,” to her niece, now the defendant Mrs. Wright. At that time she held and owned the policy, and being childless, she had, by force of the statute of 1873, the clear legal right to dispose of it by her will. She does not in any way except it from the operation of her will (the language of the residuary clause is ample to include it), and we must, therefore, infer that she intended it to pass by such will.

The defendant Mrs. Wright, however, claims that it not only passed by the will, but that she took it in specie,” and freed from all claim or control on the part of the executors. Evidently Mrs. Van Cott had no such purpose, as she does not attempt to separate the policy from the rest of her assets. She does not mention it as an article especially bequeathed, but she disposes of it, if at all, with the bulk of her estate, and in terms that vest the title in the executors, giving to the residuary legatees only the proceeds remaining after the estate is fully administered upon. Pom. Eq. Juris. § 1132. If Mrs. Wright takes it “ in specie,” therefore, she does so by reason of the peculiar character of the property bequeathed. That raises the question whether, notwithstanding the statute of 1873 authorizing her to dispose of it, this policy was still such a peculiar kind of property as prevented it from passing, as other assets of her estate would pass, to the executor of the will.

The peculiar character of such policies in the hands of a married woman was impressed upon them by the courts on the theory that the statutes authorizing them looked to a provision for a state of widowhood and orphanage; and that it would be a violation of the spirit of the provision to hold that a wife insured under that act could sell or traffic with her policy as though it were realized personal property, or an ordinary security for money.” (Barry v. Equitable Life Assurance Co., 59 N. Y. 593.) But in the absence of children, and upon the death of the wife before the husband, both of the reasons upon which that theory is based are removed, and, doubtless, it was upon that consideration that the act of 1873 authorized the disposition of such a policy by will. At all events, when a wife who is childless dies before the husband, there being neither orphanage nor widowhood to be provided for, all reasons for longer impressing upon such property the peculiar characteristics above mentioned have ceased, and there is neither necessity for nor propriety in continuing upon such property, in the hands of a person to whom it is thus lawfully transferred, any different characteristics than attach to an ordinary chose in action.

This conclusion is somewhat confirmed by a decision of the Court of Appeals in Olmsted v. Keyes (85 N. Y. 593), where it is held that upon the death of the wife intestate, such a policy vests in the husband as survivor. If it was a chose in action, such as the husband could claim “jure mariti,” when his wife died without disposing of it, all the more would it seem to be such an ordinary asset as an excutor could claim under the residuary clause of a wife’s will. See, also, a reference to such case in Whitehead v. New York Life Insurance Co. (102 N. Y. 152); Walsh v. Mutual Life Insurance Co. (133 id. 408, 419).

"We conclude, therefore, that the policy in question was lawfully transferred by Mrs. Van Cott by the residuary clause of her 'will, and being so transferred, it became subjected to the liabilities which usually control the assets of an estate so bequeathed. Such being the case, her husband, as one of her executors, had power to give the plaintiff a perfect title to it. “ The executor is the owner of the personal property of the testator; the absolute title vests in him, and he possesses the jus disponendi in its full force. The honest purchaser is under no duty to see that the moneys are faithfully applied by the executor.” (Leitch v. Wells, 48 N. Y. 585, 595.) One of two executors possesses the power of selling the personal assets, as fully as if both were to join in the act of transfer. (Bogert v. Hertell, 4 Hill, 492, 503 ; Wilder v. Ranney, 95 N. Y. 7; Barry v. Lambert, 98 id. 300, 308.)

The purchase of a monument for the deceased was not inconsistent with the proper use of her assets by her executor. (Matter of Laird v. Arnold, 42 Hun, 136.)

Therefore, there is no fact appearing that discredits the good faith of the plaintiff in dealing with the executor for the purchase of the policy. It is said that the husband did not assume to sell it as executor. True, there was some doubt expressed as to whom it belonged, but we cannot say that the plaintiff did not rely upon his authority as executor to give good title to the policy. The title to the policy was believed to be in him, either as executor or as owner in his own right, and in either event a sale and delivery by him would give good title to .it, so long as there was nothing to notify the purchaser that the sale was being made in fraud of the estate. The consideration that was paid for the policy could be applied to either the estate or to the husband personally, as their respective rights on a final settlement of his accounts would require, and, therefore, nothing showed the plaintiff that the husband was acting in fraud of his trust.

It is claimed, however, that the policy could not be transferred by Mrs. Van Cott’s executors without the written consent of the husband, and as no such writing was given, the plaintiff acquired no title, and Mrs. "Wright, as surviving executor, has lawful right to the policy or its proceeds. This claim requires us to consider the effect of chapter 248 of the Laws of 1819.upon the operation of the act of 1873. As we have seen, the act of 1873 conferred upon a wife the power to assign her policy or bequeath it, when she had no children, on complying with certain formalities in the manner of transferring it. The act of 1879 conferred upon her full power to assign it in any manner, even though she had children, provided her husband consented in writing to the transfer.

The statutes are not inconsistent. Full effect can be given to the last one, without repealing or limiting the effect of the prior one. A married woman may still, without the consent of her husband, bequeath her property, provided she has no child/rem. If she has children, she is not aided by the act of 1873, and can only dispose of it by bringing herself within the provisions of the act of 1879.

The latter act, therefore, was passed for the benefit of those wives who had children, and was intended to extend, rather than limit, the power of married women to dispose of such policies. Certainly, if it was not intended to prohibit a married woman, who had no children, from bequeathing her policy without the consent of her husband, it surely should not be construed as limiting the right of one to whom she had thus lawfully bequeathed it. It is true that the statute of 1879 provides that in case of her death it may be disposed of “ by her legal representative, with the written consent of her husband,” but such provision is given its full meaning if it be held to apply to those cases when the wife has died without in any manner disposing of the policy.

It seems very clear that the act of 1879 was not intended to repeal or limit the power of disposition given to married women by the act of 1873. Assuming that, it would be a forced and unreasonable construction to hold that under the provisions of the latter act the person to whom it is thus lawfully assigned cannot himself transfer it without the written consent of the husband. The statute of 1873 expressly provides that the person to whom the policy is so transferred, under the provisions of that act, shall acquire the same rights in respect thereto as such married woman would have had in case she survived her husband, and we hold that this provision is not repealed or modified by any provision in the act of 1879.

It follows, therefore, that the executors of Mrs. Van Gott’s will took title to the policy in question, and the absolute right of disposing of it, unaffected by any provision of the act of 1879, and that no wxitten consent of the husband was necessary to authorize them or either of them to assign it.

This leads us to the conclusion that the plaintiff acquired a good title to the policy in question, and that the judgment in his favor should be affirmed, unless there was some error committed on the trial, in the admission of evidence, that requires us to order a new trial.

The error complained of is that several persons were allowed to testify that the executor, Edward B. Van Oott, at various times after the alleged sale of the policy to the plaintiff, told them that he had so assigned it, and the consideration which he received for it. The view which we have taken above entirely- excludes his executor, Ephraim G. Van Oott, from any interest in the policy, and, hence, the receipt of such evidence was quite unimportant as to him. But i the defendant Mrs. Wright, as a surviving executor, had the right to challenge the fact of the transfer of this policy to the plaintiff. In this capacity she was acting for the estate, seeking to recover against the plaintiff assets which she claimed belonged to the estate. Therefore, she had the right to except to any evidence tending to prove such transfer that was not legally admissible as against the estate. The evidence complained of tended to prove the transfer by the declaration of her co-executor as to what he had done regarding such transfer. They were not made by him while acting in the discharge of his duties, and were in no sense part of the res gestm. They were, therefore, not admissible as against the estate (Church v. Howard, 79 N. Y. 415; Davis v. Gallagher, 124 id. 487), unless the fact that the executor is since dead takes them from the general rule. It may be, as claimed by plaintiff’s counsel, that such fact rendered the evidence admissible within the rule given in Schenck v. Warner (37 Barb. 262); Stephen’s Digest of the Laws of Evidence (articles 25 and 28), and Livingston v. Arnoux (56 N. Y. 507), but we prefer to put onr decision upon the ground that the admission of such evidence worked the defendant Wright no harm.

If all the declarations improperly admitted were stricken out there is still abundant evidence in the case to show that the plaintiff procured the policy in the manner in which he claims he did, and there is not a particle of evidence in the case to dispute it. There is really no conflict over that question, and for that reason we conclude that the admission of such declarations is not a ground for granting a new trial. (Matter of Eysaman, 113 N. Y. 70, 71.)

The same considerations apply to the exceptions taken to the admissions made by Mrs. Wright, .so far as any of such rulings were erroneous. On the whole case we conclude that the judgment appealed from must be affirmed.

HakdiN, P. J., concurred; Mebwln, j., dissenting.

Judgment affirmed, with costs.


author: Merwin, J.:

text:
    Joanna Fealy, Respondent, v. John Bull, Appellant.

      Action on a check — what facts are sufficient to put a purchaser upon inquiry as to the rightful ownership thereof.

    McCarthy, a tenant on a farm, to whom a check was given for butter produced thereon, had, by an agreement made between himself and one Hare, provided that the title to all the property raised or produced thereon was to remain in Hare until the fulfillment of a certain contract, which at the time that such clieclc was given had not been fulfilled.
    On the trial of an action brought by the holder of the check, it appeared that the plaintiif was the sister-in-law of McCarthy, who had died the December following the giving of the check; that the plaintiff knew that Hare owned the farm, and that the check was given for butter produced thereon. She testific d that she purchased the check, which was dated November twenty-third (the day ‘on which the butter was sold), three or four days after it was given, and that she heard Hare ask for the check, but she did not remember when, nor what was then said. It appeared that this demand for the check was made on November twenty-fourth, at the house of McCarthy, of his wife, who testified that at the request of her sister, she presented the check at the bank for payment three or four days, or a week, after it was given, when payment thereof was refused, as the defendant, at the request of Hare, had stopped payment upon the same. Hare testified that a few days before the butter was taken away, he said to McCarthy’s wife, in the presence of plaintiff, that such check must be payable to him, but plaintiff testified that she did not remember anything of the kind, but she would not say that it did not occur.
    The court charged that if the plaintiff, at or before the time she purchased the check, had knowledge of .circumstances which ought to have put her upon inquiry as to the rightful ownership thereof, she could not recover. The jury found in effect that she was a purchaser in good faith for full value, and wi thout knowledge of circumstances which ought to have put her upon inquiry.

      Held, that the verdict, inasmuch as it involved the establishment of the proposition that the plaintiff did not have knowledge of circumstances that ought to have put her upon inquiry as to the rightful ownership of the check, was against the weight of evidence, and that a new trial should be ordered.
    Appeal by tlie defendant, John Bull, from a judgment of the Supreme Court in favor of the plaintiif, entered upon the verdict of a jury, rendered at the Cortland County Circuit, in the office of the cleric of the county of Cortland on the 20th day of January, 1892.
    The action was brought to recover the amount of a checlc, dated November 23, 1888, drawn by defendant on the Tompkins County National Bank for the sum of $238.58, payable to the order of Patrick McCarthy, and indorsed and transferred by him to plaintiff.
    In the answer it is alleged that the consideration of the check was property that belonged to William W. Hare, sold to defendant by the agent of Hare, and that Hare is the owner and lawfully entitled to the cheek and its proceeds, and that defendant has paid Hare; that plaintiff is not the owner of the check, and that she received it with full knowledge that McCarthy was not the owner and had no right to it or its proceeds.

      M. Vcm ■ Gleef- and J. H. Palmer, for the appellant.

      James Povgherty and J. E. Eggleston, for the respondent.
   Merwin, J.:

Ve find no exceptions in this case upon which a reversal can be properly based. The objection that plaintiff by reason of the payee’s death could not testify to the transaction between her and the payee at the time of the delivery to her of the check, under section 829 of the Code, came too late, even if tenable at all. The defendant claimed not under McCarthy but under Hare. The question to defendant, How did you first learn that the plaintiff claimed to own this check ? ” was properly excluded. At the close of the case a nonsuit was asked for on certain specific grounds which related to the effect of certain portions of the evidence. The motion was properly denied. No point is made as to the charge.

The main issue litigated at the trial was whether the plaintiff was the owner in good faith of the check. It. is' quite clear, and it does not seem to be denied that, as between Hare and McCarthy, Hare was the owner or entitled to receive the check. McCarthy was the •tenant upon the farm and the check was given for butter produced upon the farm. By the agreement between Hare and McCarthy the title of all property raised or produced was to be and remain in Hare until the fulfillment of the contract. At the time the check was given the contract had not been fulfilled.

The court charged that if the .plaintiff, at or before the time she purchased the check, had knowledge of circumstances which ought to have put her upon inquiry as to the rightful ownership of the check by Mr. McCarthy, she could not recover. The jury in effect found that she was a purchaser in good faith, for full value and without knowledge of circumstances which ougiit to have put her upon inquiry. The defendant claims that this finding is against the evidence.

The plaintiff was the sister of the wife of the tenant, Mr. McCarthy, and she lived in his family from the June previous to the giving of the check. Mr. McCarthy was sick all the summer, and died in December following. The plaintiff knew that Mr. Hare owned the farm, and that the check was given for butter produced upon it. She testifies that she purchased the check three or four days after it. was given. This, being before it was presented for payment, does not necessarily subject the purchaser to the equities existing against it as dishonored paper, but it is a circumstance to be considered in determining whether the purchaser acted in good faith and with due caution. (2 Parsons on Notes & Bills, 2J1.)

The butter was sold and the check is dated November twenty-third. On the twenty-fourth Mr. Hare was at the house of Mr. McCarthy and demanded the check of Mrs. McCarthy. The plaintiff testifies that she heard Mr. Hare ask for the check, but that she cannot tell the date and does not remember what was said. Mrs. McCarthy, a witness for plaintiff, testified that at the request of her sister she presented the check at the bank for payment, and that this was three or four days or a week after it was given. Payment was refused by the bank, as the defendant had previously, at the request of Hare, stopped payment on it.

Mr. Hare testifies that a few days before the butter was taken away he was at the house, and said to Mrs. McCarthy, in the presence of plaintiff, that the check for the price must be payable to him. As to this the plaintiff testifies: “ I do not remember that Mr. Hare told Mrs. McCarthy that the check should be made payable to him nor anything of the kind. I will not say it did not occur, but I don’t remember. My memory is good.”

The McCarthy family were in need of money as the plaintiff knew. She presumptively knew that if the check was good they could draw the money on it immediately, and that if the transaction was honest, there was no reason whatever for their waiting a single day, or for calling on plaintiff .to advance the money. The plaintiff would receive no benefit, if not taken for a prior debt, and if it was, that would be fatal to her position. The fact that they did wait and did call on one in the position of plaintiff to raise the money, would naturally lead one, though not very wise or prudent, to think there was some trouble about it. The bank was some miles from where they lived, but there was no reason why Mrs. McCarthy couldn’t go and present it, as she actually did do it within two or three days after. The plaintiff was at some inconvenience in raising the money, and her evidence leaves it a little uncertain as to when she obtained it.

The whole transaction was unusual. A careful consideration of the evidence leads us to the conclusion that the verdict, as it involves the proposition that the plaintiff did not have knowledge of circumstances that Ought to have put her upon inquiry as to the rightful ownership of the check by Mr. McCarthy, is against the weight of the evidence. Upon this ground a new trial should be granted upon the usual terms in such cases.

Hardin, P. J., and PARKER, J., concurred.

Judgments and order reversed and a new trial ordered upon the payment by the appellant of the costs of the trial, and without costs of this appeal to either party. In case such costs are not paid within twenty days, then judgments and order affirmed, with costs.


author: Merwin, J.: IIakdiN, P. J.:

text:
    William E. Dorwin and Another, Respondents, v. James B. Westbrook, Appellant.

      Contract in regard to a certificate being given for work done — promise made during the course of such work to certify it as of a certain class, not binding.

    In a contract to perform work and labor and furnish, materials for the construction of a railroad, it was provided that a certain engineer was, after the completion of the work, to certify a final statement of the work done, and that in making his final certificate he was not to be bound by certificates previously made by him for part payments made under the provisions of the contract.

      Held, that a mere promise, made by such engineer at the inception or during the course of the work, that he would certify the excavation as of a certain class, is not binding upon either party where the engineer does not fulfill his promise by giving the certificate, as promised, at the completion of the work.

      Appeal by tlie defendant, John B. Westbrook, from a judgment of the Supreme Court in favor of the plaintiffs, entered upon the verdict of a jury at the Tioga County Circuit, in the office of the clerk of the county of Tioga, on the 21st day of December, 1892, and from an order denying defendant’s motion for a new trial made upon the minutes of the court and entered in said clerk’s office on the 19th day of December, 1892.
    The action was for a balance claimed to be due the plaintiffs for work and labor done and performed, and materials furnished under a written contract dated May 13, 1891.

      8. D. Ilalliday and Thomas D. ITusted, for the appellant.

      Sears <& Lynch, for the respondents.
   Merwin, J.:

On the 13th of May, 1891, the plaintiffs and the defendant entered into a written contract, in and by which the plaintiffs, being the parties of the second part in said contract, agreed to construct, build and in every respect complete all the grading and masonry and other work required for a single-track railroad on a certain portion of the Mohawk Valley and Northern railway, commencing about five miles from the town of Malone and extending thence southwardly about one and a half miles. This was to be done in accordance with specifications annexed and made part of the contract, and all was to be done “ under the direction and inspection of the company’s engineers appointed to superintend the same, and to the full satisfaction and acceptance of the company’s chief engineer.” The work was to be completed by September 1, 1891. The defendant agreed to pay therefor, among other things, as follows: For solid rock excavation, one dollar per cubic yard; for loose rock excavation, forty-eight cents per cubic yard; for hard pan excavation, thirty-two cents per cubic yard; for earth excavation, nineteen cents per cubic yard. Provision was made for monthly payments for the work done, as certified by the chief engineer, less ten per cent, and at the completion of the contract, the defendant agreed “ to have a final statement made of all the work done as estimated and certified by the said engineer, together with all amounts due, including any percentage retained, and this amount so found as being due shall be paid to tlie said party of tlie second part within thirty (30) days after the completion of said work, and payment for tlie same shall have been made by the Mohawk Valley and Northern Railway Company to said party of the first part, provided said parties of the second part shall give satisfactory security for the payment of any and all unpaid claims against said work.”

The contract had, among others, the following clauses :

Third. And it is understood and agreed that the said chief engineer, in comparing the said final estimate and giving his final certificate, need not be bound by the preceding estimates and certificates, but such preceding estimates and certificates shall be held to be only approximate to tlie final estimate, and the said monthly estimates and certificates on unfinished work shall in no case be taken as an acceptance of the work, or a release of the parties of the second part from responsibility therefor until the final estimate is made and the work in its entirety is accepted- as complete under this contract.” t
Twelfth. All questions, differences or controversies which may arise between the parties hereto, under or in reference to this agreement and specification, or its performance or non-performance, or tlie work to which they relate, or in any way whatever pertaining to or connected with said work, shall be referred to the engineer of the company, and liis decision shall be final and conclusive to both parties.”

In tlie specifications there is a provision that “ the work will be executed under tlie direction and constant supervision of the engineer of the railway company, by whose measurements and calculations the quantities and amounts of tlie several kinds of work performed shall be estimated, and whose determination shall be conclusive on both parties.” In the contract it is provided that whenever the word engineer ’ or chief engineer ’ is used therein it shall be understood to refer to the chief engineer of the Mohawk Valley and Northern Railway Company.” In the specifications it is provided that “ whenever the word c engineer ’ or chief engineer ’ is used in these specifications, it is to be understood as applying to the engineer in chief of the company, or, in his absence, liis duly appointed assistant engineers - and inspectors representing him, limited by the special duties intrusted to them.”

Thereupon the plaintiffs entered upon the performance of the contract and made excavation to the amount of 35,491 yards. There is no dispute about this or about the final completion and acceptance of the work. The controversy is over the classification of the excavation and the consequent price. The plaintiffs claim that soon after the work was commenced the chief engineer or the engineer in charge fixed the classification at seventy-five per cent solid rock and the balance hard pan, and that both parties, plaintiffs and defendant, agreed to this arrangement. This the defendant denies, and claims that the final certificate or estimate of the chief engineer is conclusive, which classifies the work at about forty-five per cent solid rock, forty-five per cent earth and ten per cent loose rock. If this classification is correct, the plaintiffs have concededly been fully paid. The defendant also claims a settlement and release on .the 8th of April, 1892. The plaintiffs claim there was no settlement and that the release never became operative. The recovery is upon the basis of the classification as claimed by the plaintiffs, and the absence of any settlement or operative release.

The excavation was mainly in a rocky cut for the line of the track, and the balance was in a borrow pit. Soon after the work was commenced in the cut, the plaintiffs made complaint to the defendant’s agent that the engineer or assistants, who under the contract and specifications were required to make measurements, were absent and there was likely to be a delay. Thereupon, the plaintiffs or their agent and the defendant’s agent called on the chief engineer, Mr. Roberts, with a view of obviating the difficulty. They to some extent looked over the work in the cut, and upon the surface it appeared to be mainly large boulders with the spaces between filled with hard pan. The evidence tends to show that then the engineer told the parties that he would classify it at seventy-five per cent solid rock, and that would do away with all dispute about measurement, and that the balance of twenty-five per cent would be classified by his assistant as the work progressed; that this arrangement was assented to by both parties, the defendant’s agent saying that he was satisfied, or was satisfied if the plaintiffs were. A similar arrangement was made with the assistant engineer as to the borrow pit. There is no evidence that the remaining twenty-five per cent was classified as hard pan except that the assistant engineer told the plaintiffs or their agent, at the time of the arrangement for the classification for solid rock, that the whole of the balance was hard pan.

The court charged the jury in substance that if the engineer made the classification then and there when they were about to enter upon the work, and said that would take the place of any further measurement, and the plaintiffs relied on it supposing that was to be the final estimate, then the plaintiffs, so far as that part of the case was concerned, could recover. To this exception was duly taken. The court had previously stated that if the material taken out of the pit and cuts was classified by the engineer, in the presence and with the consent of the defendant, before the work began, or about the time, and that the work progressed under that classification, the plaintiffs could recover the price for such classification.

Assuming then that the engineer or his assistant, in the presence and with the consent of the defendant, stated verbally that he classified, the excavations in the manner claimed, and that this would take the place of any further measurement, and that plaintiffs relied on it supposing it to be final, is this sufficient to authorize the recovery ?

The defendant was not personally present, but was represented by Mr. Carroll. The evidence does not warrant the conclusion that either party intended to make or consent to any arrangement outside of the contract or inconsistent with it. No new contract was contemplated or any change in the original instrument. Whatever was said or done was rather designed to be in furtherance of the contract as made and supposed to be within its scope. The conclusion is not warranted that the parties themselves assumed to make a classification. It was the act or statement of the engineer under the power given him by the contract. The engineer and his assistants Avere not the agents of the defendant any more than they were the agents of the plaintiffs. They were not in fact the agents of either. When, therefore, the plaintiffs, as testified to by one of them, relied on the verbal statement of the engineer, they did not rely on any act or statement made by the defendant, or for which the defendant was responsible any more than the plaintiffs were. They were not misled by the conduct of the defendant. I fail to see, therefore, how; the arrangement for classification can be held to bind the defendant upon any theory of estoppel. The cases cited by the plaintiffs’ counsel do not, I think, apply.

The defendant was a contractor with the railway company and the plaintiffs were sub-contractors with the defendant. It was important for the defendant to have the kind and amount of work ascertained in such a way that it would be satisfactory to the company upón his settlement with them. He apparently was to settle with the company upon the basis of the same estimates and certificates of the engineers that were provided for settlement with -the plaintiffs. Under the contract, the final payment for the work, from the defendant to plaintiffs, wras not due until after the defendant had received payment for the same from the con^any. In ascertaining the amount, a final statement was to be made of all’ the work done “ as estimated and certified by said engineer,” and it was expressly provided that the engineer, in making his final estimate and certificate, need not be botmd by the preceding estimates and certificates, but that they should be held to be only approximate to the final estimates. These provisions were vital to the defendant in view of his relation to the company, and an intent on the part of the defendant to waive them should be clearly established.

It is not to be supposed that any of the parties believed that the ' verbal arrangement with the engineer would take the place of the certificates called for by the contract. In effect then the arrangement was that the engineer, when he came to make his preliminary and final estimates, would treat the excavation as seventy-five per cent solid rock. He failed to keep his promise. Does it follow that the defendant is responsible the same as if he had kept it, thereby nullifying the provisions of the written contract, and that too without evidence that the solid rock was as much as the proposed classification would make it ?

It is quite evident that none of the parties intended to waive any of the provisions of the contract. The trouble arises from the failure of the engineer to carry out his promise. He denies he made it, but assuming that he did, as the jury have found, it was not a certificate such as the contract called for as a basis for payment, and the evidence is not sufficient to show that the parties agreed or intended it should be. It may be that if the engineer in his final certificate did not give as large a percentage of solid rock as in fact there was, or the final certificate was made under circumstances that amounted to a fraud, the plaintiffs, under proper allegations, would have a remedy. This action, however, is on the contract, and upon the evidence a recovery is not warranted, based simply on a verbal agreement or promise by the engineer, made before the work was done, that the classification was or. should be at a certain rate, and which was not in fact carried out in the final estimates.

The defendant also claims that the plaintiffs are barred by a release given by them on the 8th of April, 1892. The plaintiffs claim that .they did not knowingly or intentionally execute it, but were induced to sign it on the representation of the agent of defendant that it was a receipt for money they were then receiving and that there was not in fact any settlement. The question whether it was executed under the circumstances claimed by plaintiffs, was left to the jury, upon the charge, in substance, that'if so executed it would not be a bar, and the court declined to charge that if they might have read it they could not avoid it on the ground that they did not read it. Whether the questions as to the release were properly given to the jury, it is not necessary here to discuss, in view of the conclusion on the other branch of the case.

IIakdiN, P. J.:

While concurring in the foregoing opinion, I deem it not inopportune to add that the evidence tends very strongly to support the release and settlement, and in respect thereto the verdict seems to be against the weight of the evidence. (Phelan v. Mayor, etc., 119 N. Y. 86.)

I think there should be a new trial.

Judgment and order reversed and' new trial granted, costs to abide the event. <