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    ERASTUS BRAINERD, Respondent, v. MARTHA WHITE, et al., Appellants.

      Lis pendens—when not canceled on motion—action on married woman's note.

    In an action on the promissory note of a married woman, charging, her separate estate, etc., in which judgment is asked that the real estate of the defendant be charged with the payment of the note, a Us pendens may be filed, and while the action is pending and undetermined, the court cannot cancel it on motion on the ground that under section 1670 of the Code of Civil Procedure plaintiff was not entitled to file such notice.
    Before Sedgwick, Ch. J., Freedman and Russell, JJ,

      Decided December 4, 1882.

      Appeal by defendant White from an order denying her motion to cancel a notice of lis pendens, that had been filed in the county clerk’s office by the plaintiff.
    The complaint alleged that the defendant White made her promissory note, etc., to the defendant Manifold, who indorsed it, etc., to the plaintiff; that the note was given by defendant White to defendant Manifold in payment of “ an indebtedness for brown stone furnished to and work and labor performed upon the separate estate of defendant White,” who was a married woman, “at her special instance and request, and for the benefit of said separate estate, and that in and upon said note the said defendant White, in writing expressing the consideration, charged her separate estate with the payment thereof ”; and that defendant White was the owner of certain particularly described parcels of real estate in the city of Hew York. The complaint demanded judgment for the amount of the promissory note and interest, “and that the said real estate of the said defendant White is charged with the payment thereof, and that the same is a lien thereon.”
    The counsel for defendant White argued that the present was not an action in which, under section 1670, Code of Civil Procedure, a notice of lis pendens is allowed to be filed, and that the court had inherent power to cancel a notice thus filed.

      Cephas Brainerd, for appellant.
    The allegations in the complaint are only a presentation of facts necessary to give validity to the note, if it had not contained the statutory words charging defendant’s separate property. In such an action as this it is not competent for the plaintiff to file a lis pendens, and tie up every lot of land a defendant may own (Leitch v. Wells, 48 N. Y. 586). The Code contemplates a specific action with reference to a specific piece of property, and such has been the doctrine of lis pendens in all its aspects for a hundred years, not only under formal notice, but under notice presumed from the fact that an action had been commenced (Fitzgerald v. Blake, 28 How. 110; Mills v. Bliss, 55 N. Y. 139).

      Henry Arden, for respondent.
    The action not being “ settled, discontinued or abated, or final judgment rendered,” the court has no power to order the Us pendens canceled (Code Civ. Pro. § 1674).
    A notice of Us pendens may properly be filed in action to have a debt declared a lien upon the separate real estate of a married woman. Such an action is “ an action affecting the title to real property” (Sanders v. Warner, 2 N. Y. Week. Dig. 507; Wilmot v. Meserole, 41 Super. Ct. 276).
   By the Court.—Sedgwick, Ch. J.

I am of opinion that the court properly denied the motion to cancel the notice of lis pendens. It is not necessary to assert that in no case would the court have power to cancel a notice of lis pendens before a settlement, discontinuance or abatement of the action. It is enough if it have not the power in a case of this kind.

The complaint claims that, by reason of the facts therein stated, the plaintiff is entitled to a judgment that the real estate of the defendant White be charged with the payment of the promissory note alleged to have been made by her. It is not material to determine now whether he has or has not, by reason of the facts, a right to such a judgment. Unless the defendant should interpose in some competent way, if she made entire default, the plaintiff could enter such a judgment. Then, between them, it would be res adjudicata. The plaintiff has the right to make the claim, and at least have it litigated. Such a judgment would affect “the title to real property” (§ 1670, Code Civ. Pro.). It would be an incumbrance upon it.

Before the statute requiring a notice of Us pendens to be filed, in order to give notice to strangers of the existence of the right claimed in the action, constructive notice was given by the filing of the bill of complaint and beginning the suit. In this former practice the complainant had the benefit of notice, whether he after-wards succeeded or failed, and purchasers took at their peril. And it may be said that the statute, so far as real estate was concerned, only substituted for notice, by mere filing and service of subpoena, the specific notice now required to be filed, leaving strangers, in the latter as in the former case, to act at their own risk.

In this present case, jf the motion had been granted, it would have been in consequence of the defendant contending that the plaintiff had not legal right to have the real estate charged, and of the court so holding. That would have been a determination of the plaintiff’s cause of action against him. If, at the subsequent stage of the action, this was followed, the issues would practically be determined upon motion, instead of upon trial. Or, if it were not followed, the action might be sustained and the benefit of the notice gone. The matter cannot be heard upon motion.

Under section 1670, the nature of the judgment which the action is brought to recover is the description of the action in which a notice of Us pendens may be filed, and not the validity of the cause of action as described by the complaint.

The section mitigates somewhat the supposed consequences of unfounded claims of this kind. The notice may be canceled if there be unreasonable neglect to proceed in the action.

It may be proper to add that cases where the complaint does not, on its face, make a claim for a judgment that would affect real estate, have not been referred to.

Order affirmed, with $10 costs.

Freedman and Russell, JJ., concurred.


source: Caselaw Access Project

author: By the Court.—Sedgwick, Ch. J.

license: Public Domain

text:
    JAMES McCALL, Respondent, v. ARTHUR B. PROAL, et al., Appellants.

      False representations—statement that accounts are good, import and effect of—evidence to show falsity.—Tort—waiver of.

    In an action for damages from false representations, whereby it was alleged plaintiff was induced to advance a certain sum in return for an assignment of divers book accounts, together with a note of the defendant Proal of the same amount, the alleged representation being “ that said accounts were perfectly good ” and “ could and would be collected in time, to pay said note before it became due and the proof being that the defendant Proal stated that the accounts were good, giving his reasons for so believing, and that the defendant Pool went over the accounts one by one with plaintiff, stating each man to be good, except some few as to whom he gave no opinion.

      Held, that defendants were entitled to a charge that defendant Pool did not, as matter of fact, state that all the accounts were good; 1, because an allegation that an account was represented to be good, is not supported by proof of a representation that the person charged by the account is good; 2, because he made no representations whatever, as to many of the accounts.

      It seems, that the representations alleged are merely expressions of opinion ; but if an action thereon can be maintained, it is only on the theory, that they related to the actual indebtedness and pecuniary solvency, at the tiine of the representations, of the persons charged.
    The testimony of a collector to whom they were given, showing that after the use of diligence only a small portion of said accounts had been paid, such testimony consisting of an account of failure to get replies from some, a denial of liability from others, further promises from others, which were not kept, etc., is not proof of the falsity of such representations ; and the declarations of the parties to the collector, are not evidence against the defendants, of the truth of the matters declared.
    Upon the maturity of the above note, plaintiff surrendered it, and accepted a new one for the same sum, less the amount of the collections made on the accounts, and repeated said transaction at the maturity of the new note.

      Held, that thereby plaintiff waived any cause of action in tort which he may have had upon the alleged false representations.

      Before Sedgwick, Ch. J., Freedman and Russell, JJ.

      Decided December 4, 1882.
    Appeal by defendants severally from judgment, entered upon verdict of jury.
    The facts appear in the opinion.

      J. T. Lovejoy, and Thomas F. Wentworth, for appellant Proal.

      F. Jellenik, and John S. Davenport, for appellant Pool.

      D. M. Porter, for respondent.
   By the Court.—Sedgwick, Ch. J.

The action is for damages from false representations. The complaint charged also fraudulent concealment, in connection with the representations. The case went to the jury, upon the allegations of false representations, and a verdict was not taken as to the fraudulent concealment.

For the purposes of this appeal, it is enough to say, that the alleged representations concerned certain accounts, in a livery-stable business, against about seventy-seven persons, and were alleged to have been made to'induce the plaintiff to give his check for $1,393.63, to defendant Proal. The complaint alleged that the defendants “ told the plaintiff that said accounts were perfectly good, ” and that “ said accounts could be and would be collected in time to pay” a note, made in the transaction by defendant Proal, to plaintiff.

On the trial, at the close of the testimony, the respective counsel for the defendants, asked the court to charge that as matter of fact the defendant Pool did not represent all these accounts to be good or collectible.

The evidence . on this point, was as follows. A witness who was outside of the room, when, as plaintiff maintained, the representations were made, heard defendant Pool say, “I know these to be good.” The rest of his testimony showed that he did not know to what Pool referred in this remark—whether to certain names, or to all names, on a list that the witness only supposed Pool might have had in his hand.

The plaintiff testified that Pool took the accounts from Proal, and read over a few of the names; that he said they were good accounts, and he thought they would be paid; that Pool commenced to explain about the accounts ; he thought they were good, and would be collected ; that after a time, “ he took the accounts a second time from Proal, and commenced at the beginning, and read them through, one by one, commenting, as he read, upon each. ” He would state, “ that is good; that man is perfectly good;” that Pool continued reading the accounts, and in several instances said, “ here is a man, that I know to be good; and he seemed to be quite familiar with the accounts, all of them except two or three, and he put particular stress upon the quality of the accounts, and wished to impress me, that they were good. ” On cross examination the plaintiff testified, that Pool again took the paper, and read over, a second time, the list from the beginning, and as 'he read, he commented upon each one ; “he did not say, that.all the accounts were good, but the comments were all good; there were ten or fifteen names, maybe, that Mr. Pool, did not seem to know, the balance of the names Mr. Pool, seemed to know, and commented upon them very strongly; stating some of them were good, and some he knew to be perfectly good, and he turned, once or twice, to Mr. Proal, and asked him, why he did not take these accounts, and collect them; that he had only to present them.”

The defendant Proal testified, that the plaintiff asked him, if the accounts were good, and he told him yes, and his reason for believing that they were all good, was partially, from his individual knowledge, and partially, from statements made by others ; that he believed them to be all good.

In my opinion, an allegation that the representation was, that an account is good, is not sustained by proof, that the representation was, that the person charged by the account was good. The latter means, that the person charged has sufficient pecuniary resources, to pay the account, but not that the account makes a valid charge. The testimony showed that, if plaintiff was to be believed, Pool made statements, as to the persons, who were charged by the accounts severally. He made none as to the accounts in a lump. It might perhaps, be properly held, that if he spoke the same thing, as to each, it would be enough, to charge that he spoke as to them all. Then, as matter of fact, the representation of Pool, as to them all, would only refer to the pecuniary responsibility of all the persons charged; of some, he, according to the plaintiff’s testimony, said that they were good; of others, that they were perfectly good; and of the remainder, twelve or fifteen in number, he did not know the pecuniary responsibility. I think, that the defendants, were entitled to have it charged, that so far as the case was affected by the fact, of what Pool said, as matter of fact, Pool did not represent that all these accounts were good ; because, first, his representations concerned only the pecuniary means, or standing of the persons charged, and, second, the plaintiff’s case showed that he made no representation as to twelve or fifteen accounts.

The counsel further asked the court to -charge “ that there was no evidence of any representation as to Brown’s solvency on which the plaintiff relied.” The complaint charged that one of the inducements to plaintiff was a representation that Brown was solvent. This Brown endorsed the noté under circumstances which, it is not necessary to detail. I am of opinion that it affirmatively appears by testimony given by plaintiff, that what Pool said as to Brown was not any inducement to the plaintiff to part with his check. It was said to Proal after the arrangments were completed, and the plaintiff did not rely on it.' Moreover, what was said did not refer to Brown’s solvency. Pool, speaking to Proal, told him to get Brown’s indorsement on the note, so as to make good. This evidently referred to having an indorsement for the purpose of procuring a discount.

The court refused to charge, as asked in these two instances, and exceptions were taken. The charge as made did not embody the matters referred to in the requests. For these reasons, I think there should be a new trial.

If an action will lie for a representation that accounts of this kind could be and would be collected within a certain time, which is the representation alleged in the complaint, it could be supported only on the theory, that such a representation was a statement of existing facts as to the character of the accounts as they existed, at the time of the representations, such as that the persons were then solvent or pecuniarily responsible, and that they were actually indebted for the matters charged. ' My opinion is that the alleged representations are not statements of fact, but are expressions of opinion. At least, the plaintiff would be bound to prove the falsity of the representations by showing that the persons were not solvent or pecuniarily responsible, or that they were not indebted. The proof on this, point consisted of the facts, that about two hundred and ninety dollars of the accounts had been collected ; that the bank of which defendant Pool was president, and to which the accounts had been given for collection, had collected no other sum, and that a collector in whose hands. the accounts were finally placed, after the use of what might have been found to be diligence by the jury, collected no more.

His testimony on this point consisted of an account of his failure to get replies from some, a denial of liability from others, further promises from others, which were not kept. This did not show that the parties were not solvent, or without means to pay, or not indebted. And the declarations of the parties to the collector, were not evidence against the defendants of the truth of what was declared.

At the time of the representations, when plaintiff gave his check to defendant Proal, he received, beside the benefit of the assignment of the accounts, a note of the defendant Proal at three months. At the maturity of the note, an amount of about $200, that had been collected on the accounts, was applied to the note, and a new note made by Proal, at three months, was taken by the plaintiff. Again, at the maturity of the second note, a third note by Proal was taken by the plaintiff.

When the first note was taken, the plaintiff had an election between reliance on the cause of action for false representations or on the cause of action upon the contract of the promisory note. If he knowingly received the benefit to any extent of the contract, he waived the right of action in tort.

The complaint alleged as part of the statements of the defendants, that the “said accounts could be and would be collected in .time to pay the said note before the same became due,” and the other representation that “theaccounts were perfectly good,” in the meaning of the complaint, is to be restrained to the character of the accounts that would insure their collection in time to pay the note. When the first note became due, and again, the second, it appeared to the plaintiff, and he must have known, that within the meaning of the complaint, the accounts were not good, and could not be collected within three months. Knowing this, he acted upon the note he first received, parted with it. to defendant Proal, and took the second note. In doing this, he affirmed what he might have avoided, and waived his right to proceed for the tort.

I am of the opinion that the judgment should be reversed and a new trial ordered, with costs of the appeal to the appellant to abide the event.

Freedman and Russell, JJ., concurred.


text:
    JACOB LORILLARD, Respondent, v. WILLIAM P. CLYDE and B. F. CLYDE, Appellants.
    I. Bes adjudieata.

    1. Framed issues, verdict thereon, and judgment on verdict
    -WHEN THEY WILL NOT OPERATE AS RES ADJUDICATA.
    1. The verdict alone will not.
    2. The verdict of the jury on such of the framed issues as are outside the issues joined by the pleading, and immaterial to them, and upon which the controversy did not turn, coupled with a judgment adjudicating, among other things, in accordance with the verdict of the jury on these issues, will not conclude the parties as to the matters thus found and adjudicated.
    Before Sedgwick and Freedman, JJ.

      Decided December 4, 1882.
    Appeal by defendants from a judgment in favor of plaintiff, entered on a verdict of a jury, as directed by the court.
    The action was upon an agreement between the parties, in which a firm, of which appellant was one partner, agreed to “ guarantee Jacob Lorillard,” the plaintiff, “a dividend of not less than7per cent, per annum for seven years” upon certain stock in an incorporated company, to be taken by plaintiff under the agreement, which provided that the company was to be formed in the future.

      The particulars of this agreement are stated in the opinion of the court of appeals in Lorillard v. Clyde. (86 XT. Y. 387).
    The defense was that the agreement was void as against public policy, in that, as alleged, it contemplated that the corporation should be formed with less than seven bona fide corporators; that the directors, other than William P. Clyde and Jacob Lorillard, should not be bona fide stockholders; that such other persons should, “ after its issue to them,” transfer their stock to William P. Clyde & Co.; that the names of the persons should remain on the stock book as stockholders, but their stock and the votes of those who were directors were to be controlled by William P. Clyde & Co.
    The evidence to sustain this defense was a record of certain proceedings, particularly described in the opinion.
    The court directed a verdict in favor of plaintiff.

      Boardman & Boardman, attorneys, and S. C. Boardman, of counsel, for appellants, on the questions discussed by the court, argued:
    I. The plaintiff and defendant in the present action, having been respectively plaintiff and defendant in the action brought in the supreme court to dissolve the corporation, every question determined in that action is res adjudioata as between them, and the findings of the jury and judgment therein are conclusive evidence against both, as to all matters therein litigated (Doty v. Brown, 4 N. Y. 71; Gardner v. Bucksbee, 3 Cow. 120 ; Wood v. Jackson, 8 Wend. 9 ; Birkhead v. Brown, 5 Sandf. 134; Kingsland v. Spalding, 3 Barb. Ch. 341). (a) The action to dissolve the corporation was one in which the defendants were, under the provisions of the constitution, entitled as of right to a trial by jury (Attorney-General v. Utica Insurance Co., 2 Johns. Ch. 370; People v. Albany & Susquehanna R. R. Co., 57 N. Y. 161). (b) In such actions the answers by the jury to issues framed are, by express statute, made conclusive on the parties and binding on the court. They cannot be set aside or disapproved by the court, as can be done when the court, in cases in which the parties are not entitled as of right to a jury trial, sends certain issues to a jury in order to have the benefit of the jury’s findings on a disputed question of fact. Section 970 of the Civil Code provides : “Where a party is entitled by the constitution, or by express provision of law, to a trial by a jury, of one or more issues of fact, in an action not specified in section 968 of this act, he may apply upon notice, to the court for an order, directing all the questions, arising upon those issues, to be distinctly and plainly stated for trial accordingly. Upon the hearing of the application, the court must cause the issues, to the trial of which, by a jury, the party is entitled, to be distinctly and plainly stated. The subsequent proceedings are the same, as when questions, arising upon the issues, are stated for trial by a jury, in a case where neither party can, as of right, require such a trial; except that the finding of the jury, upon each question so stated, is conclusive in the action, unless the verdict is set aside or a new trial is granted.”
    II. In the case at bar, the agreement provides that the exclusive control of the corporation, the management of its business, and commissions of two and half and five per cent, shall be given to the defendants, and that it should purchase specific property at fixed prices and assume specific liabilities. It is submitted the agreement sued on is illegal and void as against public policy and cannot be enforced, although the plaintiff may have performed his part (Gray v. Hook, 4 N. Y. 449 ; Perkins v. Savage, 15 Wend. 412 ; Knowlton v. Congress Springs Co., 57 N. Y. 518; Card v. Hope, 2 Barn. & Cress. 661; approved in Ward v. Ruckman, 36 N. Y. 93 ; Fort Edward Plank R. Co. v. Payne, 15 N. Y. 583 ; Bliss v. Mattison, 45 N. Y. 22).

      Horace Barnard, attorney, and of counsel for respondent, argued:
    The only defense pub forth by the defendants is set up in the production of the judgment-roll in the action, entitled: “The People of the State of New York and Jacob Lorillard against the Philadelphia and New York Steam Navigation Company, Wm. P. Clyde and others.” The plaintiff in this action is not bound by the findings in that. The issues were not raised by the pleadings, were not litigated by the plaintiff, and he cannot be bound by any findings made by consent or stipulation of the attorneys (Campbell v. Consalus, 25 N. Y. 613 ; Jarvis v. Driggs, 69 Id. 146, 147).
   By the Court.—Sedgwick, Ch. J.

On the trial, the counsel for defendants claimed that the defense of the illegality of the agreement complained upon was res adjudieata between the parties, in an action formerly determined by the supreme court. The record in the action was produced. The plaintiff was The People of the State of New York, against The Philadelphia & New York Steam Navigation Company, William P. Clyde, Benjamin Betts, John A. Leslie and Amos Rogers.

The complaint alleged that, on June 10, 1874, the individual defendants and others executed articles of association to form a company under the act for the incorporation of companies formed to navigate the ocean, &e., passed April 12, 1852, and other amendatory acts ; that the certificate of incorporation was duly filed ; that it provided that the points between which the company was to navigate its vessels were Philadelphia and New York, and also that William P. Clyde, Jacob Lorillard, Benjamin Betts, Amos Rogers and John A. Leslie should constitute the board of directors for the first year; that, at a meeting for the organization of the board of directors, the last named persons acted as directors, and that the officers of the company were then chosen ; that, at this meeting, William P. Clyde & Co., agents of the company, were made the agents and managers of the company’s business, to be paid specified commissions; that, at the time of the execution of the articles, five of the “said incorporators” were, and afterwards continued to be, clerks of William P. Clyde & Co.; that each of the said clerks was noted on the subscription book of said company as having subscribed for one share of its stock, of the par value of $100, “but that soon afterwards ” the said William P. Clyde required the five clerks to indorse upon the certificates, respectively, “ an irrevocable assignment and transfer” of the stock in blank as to the assignee, and at the same time took possession of such indorsed certificates, and had for several years retained control of the certificates; that, “by such indorsement and delivery, as aforesaid, they parted with their legal and equitable title to the said shares of stock, by which said Benjamin Betts, &c., the clerks, no longer continued to be either the legal or equitable owners of said five named shares of the par value, &c., within the meaning of the statute, &c.”; “that, up to this date, such shares are the only ones standing in the name of such clerks on the book of said company”; that the effect of such transfer was to “ knowingly reduce ” the number of “actual bona fide” shareholders below the number required by law to constitute such a company; that “ such a condition of affairs has privately continued for several years, and that there have not been a sufficient number of lawful stockholders or directors, since such transfers and assignments as before mentioned, to constitute a board of five directors,” as required by law ; that the “ effect, purpose and intent of the said transfers and assignment” by the persons specified, “ and their subordinate positions in the hire and employ of William P. Clyde & Co., was to enable Williara P. Clyde, president of the company, and his father, who was a stockholder, to obtain complete control of the company, to the advantage” of said Clyde, and in fraud of the rights in said company of any other dona fide and lawful stockholders; that persons named, being the clerks already specified, had unlawfully combined to manage the affairs of the corporation in the interest of William P. Clyde & Co., “and in fraud of the rights of Jacob Lorillard, the principal stockholder, and in violation of the statute”; that, contrary to the statute, there had never been an annual or any election held by the stockholders, or stockholders’ meeting called; that, in fraud of the rights of Jacob Lorillard, vice-president, director and principal stockholder, a directors’ meeting was held, and it was then and there resolved that two-steamers be taken from the line between Philadelphia and New York and run between Philadelphia and Boston, or any other ports that might be for the interest of the company ; that this'resolution was contrary to the articles of the association and of the express objects of its formation; that said William P. Clyde, as president, had, in other respects specified, used the property of the company in a manner that was in violation of the articles of association ; that, in violation of the statute, no certificate by the said William P. Clyde, as-president, and a majority of the directors, stating the amount of the capital stock, and that the same had been paid in, was ever filed; that the company had been for more than a year insolvent.

The complaint further alleged, by way of recapitulation, “and as they have hereinbefore in substance alleged and complained,” that “the private assignment and transfer by the said Betts, &c., of their single-shares of stock in said corporation, left said corporation without the number of stockholders requisite under the statute incorporating it to carry on its business,. and that they are not now lawfully directors in said ” company.

The complaint asked judgment that the charter of the company be vacated, its corporate existence annulled and the corporation be dissolved, and that a receiver be appointed, &c.

The complaint was verified by Jacob Lorillard, now the plaintiff here.

The defendants, the company, William P. Clyde and John A. Leslie answered. The answer denied many of the allegations of the complaint; it admitted that the indorsement upon the certificates charged in the complaint had been made as charged, but denied “that the intention was that any of such parties should part with their legal title to such shares until a transfer on the books was so made, or that any of the parties ceased to be shareholders in said company until and by such transfer on the books of the company, or that they ceased to be the legal owners of said stock until such transfer.” The answer alleged that Jacob Lorillard and William P. Clyde & Co. entered into the agreement, which is now the subject of this action; that said company was formed pursuant to said agreement, and mainly under the advice of said Lorillard ; that all the names of the stockholders and directors-were selected by agreement between said Lorillard and said William P. Clyde & Co.; that it was contemplated by the agreement that the vessels of the company should be employed on other routes than between Philadelphia and New York; that it was supposed that the words of the articles would allow such employment, and if there had been any violation of the statute in this regard, it was unintentional and inadvertent ; that the action had been brought on the “relation or information” of the said Jacob Lorillard, who has an “interest in the questions involved in this action”; that Lorillard had retained counsel to prosecute the-action, and had indemnified the People as plaintiff against the costs and expenses of the action. The answer continued: “ These defendants aver that there is a defect of parties in this action, in this, that the said Jacob Lorillard has not been joined with the People as. a party plaintiff. They further allege that he is a necessary party to this action, either as plaintiff or defendant.” The answer was verified June, 1879.

On January lo, 1880, issues were framed for a trial before a jury. Among these issues were the following: First. Was the corporation defendant created, organized and conducted in good faith for the legitimate purposes contemplated by the acts of the legislature, specified in section 2 of the complaint ? Second. Was said corporation defendant created, organized and conducted with the real design and for the sole purpose of enabling Jacob Lorillard and William P. Clyde & Co., through the forms of law, and in the guise of a corporation, to carry on and conduct a private enterprise, which was, in truth and in fact, a partnership or joint adventure between said Lorillard, on the one part, and the said William P. Clyde & Co. (of the other part), and thus of using the said acts of the legislature to evade the personal liability attaching to partnerships or joint adventures? Third. Were there seven tona fide corporators, and five tona fide directors of said corporation defendant, as required by law? Fourth. Were the directors of said corporation defendant, other than William P. Clyde and Jacob Lorillard, tona fide stockholders therein, as required by law ? Fifth. Was the share of stock of said corporation which was issued to each of the . . . five corporators and three directors (other than William P. Clyde and Jacob Lorillard) so issued, and was the power of attorney, in blank, authorizing a transfer, etc., signed by said persons . . and by them delivered to William P. Clyde with the real design and for the purpose in fact, of giving said persons the appearance of owning a share of said stock, when in truth, each of said shares was well understood by them to be, and in reality was, the property of Willian P. Clyde, or William P. Clyde & Co., and thus of apparently complying with, but actually evading the provisions of said act of the legislature specified in the second section of the complaint, etc.; and was it also in execution of the purpose specified in the “second” question? Seventh. Was the appointment of William P. Clyde ■& Co., as the agents of said corporation, etc., so made in execution and fulfillment of the contract. . . referred to in the pleadings, etc., and was the corporation, pursuant to said contract, etc., thereafter exclusively managed by said William P. Clyde & Co., and was such appointment and exclusive management . . . part and parcel of the methods adopted to enable said Lorillard and William P. Clyde & Co. to effect the purpose specified in the second question, and in execution thereof ?

There were many other issues framed, but such as have been stated, will present the question that is to be answered.

On February 24, 1880,. an order was'allowed “that Jacob Lorillard be made a party plaintiff in this action, with the People, the defendants, except Amos Rogers, hereby stipulating in open court, that upon said Lorillard being made a party, to consent to a summary amendment of all the proceedings herein, by inserting the name of said Lorillard, as a party plaintiff, and every issue and proceeding to remain unaltered, except in said amendment, and without prejudice to the proceedings already had.”

The present plaintiff, Lorillard, was not a party to this order. The record does not show that any amendments to the pleadings were made, to show how or why he was party plaintiff, or what was his interest in the litigation; nor was any judgment against him asked. He did not take part in any proceeding until June 2, 1880. In the judgment-roll appears a certificate of the judge, before whom the framed issues were tried by the jury. Before the certificate begins is a statement as follows: “Entered that Jacob Lorillard appeared and was made a party plaintiff, under the order of the court, and moves with the People, the litigation on.” Then by the certificate it appears that to the first issue as framed, the jury answered, Ho; to the second, Yes; to the third and fourth, Ho; to the fifth, Yes, and to the seventh, Yes. Upon the verdict, etc., judgment was entered, which recited: “It having been established in this action: First, that the defendant corporation, The Philadelphia & Hew York Steam navigation Company, has offended against the provisions of the act creating it. Second, that it has violated the provisions of law, to wit: the third and seventh sections of chapter 328 of the act entitled “An Act for the incorporation of companies formed to navigate the ocean by steamships,” passed 12th April, 1852, by which said defendant corporation has forfeited its charter by abuse of its powers. Third, that it has exercised a franchise or privilege not conferred by law, “and. after hearing counsel for the defendants, and counsel for the People, and on motion of the attorney-general,” it is ordered, adjudged and decreed that the defendant corporation . . be and hereby is dissolved.”

In considering whether this judgment was conclusive as to any issue in the present case, it is first to. be noticed that the effect of making the present plaintiff a plaintiff in that action would extend no further, at the utmost, than to bind him by the determination to be made between the People and the defendant of the issues framed by the complaint and answer. A scrutiny of those issues will show that the People did not claim that the corporation was formed, in an unlawful manner, or anything in respect to an alleged cause of forfeiture, which rested upon the illegality of the agreement, or the intent with which it was made, or upon anything being done in pursuance of the agreement. The complaint did not claim that the clerks of Clyde & Co. were not owners of the stock that had been issued to them, and which made them shareholders and qualified to become directors, but only claimed that sometime afterwards the certificates of stock were delivered to William P. Clyde & Co., with a power of Attorney, in blank, indorsed, and that from that time they ceased to be shareholders, or qualified to be or remain directors.

The complaint did not rest upon the illegality of ¿he agreement. It is not to be intended, that Loriljard, when made a plaintiff, meant to allege that the Agreement was unlawful, or that as the defendants claimed that there was no cause of forfeiture, they proffered an issue to maintain that the agreement, which they averred led to the formation of the corpo’ation, was illegal.

The conclusion seems to be irresistible that the questions framed for the jury went outside of the issues formed by the pleadings. The pleadings formed no issue as to whether the corporation was created in good faith, as asked in the first framed issue. Nor ‘did they, as to whether the corporation was created, organized or conducted with the sole purpose of enabling Lorillard and William P. Clyde and Co., through the forms of law and in „ the guise of a corporation, to carry on what was in fact a private enter-prize, in the nature of a partnership or joint adventure, as was asked in the second framed issue. The third and fourth, framed issues, asked whether there were seven tona fide corporators, and five tona fide directors as required by law, and whether the directors, who were the clerks of Clyde and Company, were tona fide stockholders. The time referred to is indefinite ; and it must be presumed that it referred to the time when .the complaint, as part of its cause of action, stated they ceased to be shareholders, which, we have seen was after the formation of the company. So, also, the fifth framed issue asked whether the shares had been delivered or issued to the directors, who were clerks, with the real design and for the purpose in part of giving an appearance of ownership in the stock, when in truth the stock remained the property of Wm. P. Clyde & Co., and whether it was in execution of the purpose specified in the second question. The complaint, as has been already pointed out, made no claim that the directors referred to, were not the owners of the shares upon the certificates being issued to them, nor that the transfer was in execution of the purpose referred to. It must also be said, that the seventh question, as to whether the appointment of William P. Clyde, as agent of the corporation, was made in fulfillment of the agreement, referred to an allegation of the answer made for the purpose of showing that the charter was not to be forfeited, but did not refer to any issue made as to the illegality of the agreement. And' again, no issue was made by the pleadings as to whether or not the agreement was made with the intent of consummating or executing it, in violation of the statute.

To determine whether any issue in • this case was determined by the former proceeding, the substance and not the form of the proceeding must be considered (Palmer v. Hussey, 87 N. Y. 303). It must have been, that in the case by the People, on the issues actually framed, there ivas no purpose of determining as to whether the agreement .was void on its face or by its actual intent. It would be another question, as to whether the agreement was not a° piece of evidence, relative to the intent with which the things complained of were done. But in that case, the agreement and its quality, would only be looked at as circumstantial evidence. There is no rule, that inferences from testimony in a former proceeding, constitute an estoppel in a subsequent case, when the same testimony is given. In substance, then, the matters referred to in the framed issues that have been examined, were at the best, pieces of evidence,, as to the issue actually framed.

It further appears, from the issue framed by the pleadings, that it was an immaterial matter, whether the agreement was valid and with valid intent, or the reverse. As we have seen, the parties made no issue but that, in its original formation, the corporation had a lawful origin. The matters that were complained of, as happening subsequent to the formation, were impeached for the existence of certain things, and the doing and intent of certaiif acts, at this subsequent time. Evidently, although the agreement and intent of the agreement, might be received in evidence, for certain purposes, an adjudication as to them, was not called for by a necessity to adjudicate upon the real issue, but would be immaterial whether found one way or the other. “A judgment is conclusive upon the parties thereto, only in respect to the grounds covered by it, and although a decree in express terms, purports to affirm a particular fact or rule of law, yet, if such fact or rule of law, was immaterial to the issue, and the controversy did not turn upon it, the decree will not conclude the parties in reference thereto ” (Woodgate v. Fleet, 44 N. Y. 14 ; citing People v. Johnson, 38 N. Y. 63 ; Remington Paper Co. v. O’Dougherty, 81 N. Y. 474).

Again, it appears that in the former proceeding, that the plaintiff in this action, could not have had an adjudication, as to the agreement or its validity or intent, which could have been the foundation of any judgment in his favor, as to his rights under the agreement. He could not have claimed as to it, that he should have judgment for an amount due upon it. An adjudication, that the agreement was valid, would not have been any bar to the defense in the former proceeding. It would, if it possessed any influence, have tended to show, that the People and its co-plaintiff, who is plaintiff here, had no cause of action. As the former proceeding could not have given the plaintiff a favorable adjudication, either in his own favor, upon its terms, or have been used defensively, as to any claim made adversely to him, it would not bind him in this action (Dawley v. Brown, 79 N. Y. 390; citing Stowell v. Chamberlain, 60 N. Y. 272; Perry v. Dickerson, 85 N. Y. 345).

The verdict of the jury did not itself constitute an estoppel. It is the adjudication upon the verdict, which concludes the party,—e. g., notwithstanding the facts found by a jury, a party in whose favor the verdict is, may not be entitled to judgment. The adjudication in this case, or the judgment, did not make any determination as to or upon the matters, we have noticed as outside of the issues in the former proceeding. Webb v. Buckelew, 82 N. Y. 555. The judgment that the corporation be dissolved, was placed upon a recital that certain things had been established in the action. The first was, that the corporation had offended against the provisions of the act creating it. This refers, necessarily, to a corporate act, after the formation of this company. The second, that it ■ has violated the provisions of law, to wit, the 3d and 7th sections of the act, as to the number of shareholders and directors, and the qualification of the latter, “by which said corporation has forfeited its charter, by abuse of its power,” examined in the light of the complaint, excludes that it was established, that the first organizing of the company was invalid. The same is true of the third, which recited that it had been established, that the corporation had exercised a franchise not conferred by law.

In brief, there had been no former binding adjudication, that the agreement was invalid on its face, or in the intent with which it was made, or that the organization of the company was not, at the time, lawful and in pursuance of the statute.

The plaintiff, on this trial, gave sufficient proof that the company was duly organized. In Lorillard v. Clyde, 86 N. Y. 384, it had been held that the agreement was not invalid on its face. On this trial, the only evidence to establish that there was an actual unlawful intent, or that the subsequent action upon it, in respect to the formation and conduct of the corporation, showed that there was such an actual unlawful intent, was the proceeding in the supreme court, that has been examined and passed upon.

One particular objection to the agreement may be noticed now. It is, that one of its clauses provides for vesting the exclusive management of the corporation in William P. Clyde & Co., and if it were valid, would bind the directors of the corporation to be formed, to keep this management of the corporation in the hands of William P. Clyde & Co., no matter how prejudicial to the interests of the company such management might be. The court of appeals held that the agreement to do so was not invalid, because it contemplated, by proper construction, only a proper management, beneficial to the company. Even if the former proceedings be considered on this point, although the findings, but not the judgment, declare that the appointment of William P. Clyde & Co., as managers, was in pursuance and in execution of the agreement, there is no finding that this execution of the agreement was prejudicial to the company. The pleadings did not allege any improper motive in the appointment, but improper action as managers. The defendants in the present action did not set up as a defense, that William S. Clyde & Co. were ousted from the management, in consequence of the action of the plaintiff ; nor was there any recovery of an amount equal to dividends at seven per cent, for any time after they came to be managers by the dissolution of the corporation.

The agreement being valid, the corporation at its organization having been formed in a lawful manner, and it having carried on business, for the time covered by a recovery in this case, the plaintiff was entitled to the verdict that was directed It was sufficient, for the purposes of this action, that in the time referred, the corporation existed de facto, although there existed cause for its subsequent dissolution.

Judgment affirmed, with costs.

Freedman, J., concurred.


author: By the Court.—Freedman, J.

text:
    SOLOMON D. McMILLAN, Appellant, v. JOHN B. ARTHUR, Respondent.

      Fraud—what not sufficient to constitute in sale of stock by agent.

    In case of a sale of stock by one as agent for the owner, where no relations of trust and confidence exist between the purchaser and such agent, the latter is not bound to reveal to the purchaser the fact of his interest in the event of a sale ; and an assurance by him that the stock could not be had below a certain figure, which the purchaser forthwith paid therefor, though false, is not actionable, being a representation as to value or price which is covered by the rule of caveat emptor.

    Before Sedgwick, Ch. J., and Freedman, J.

      Decided December 4, 1882.
    Appeal from judgment dismissing complaint with costs, entered upon the decision of a judge at special term.

      In May, 1872, defendant called upon plaintiff at Ms office, and informed Mm that he, defendant, knew where he could-buy certain shares of stock in the New York Waterproof Paper Company for plaintiff, at $9 per share, and that the same could not be had for any lower price. Plaintiff told defendant that he might buy said stock for him, and upon the same day defendant procured certificates for the shares and delivered them to plaintiff, who paid therefor. In June and August, 1872, plaintiff similarly purchased other shares at $8 per share. At the time of the last purchase defendant, in answer to a question from plaintiff, stated that he, defendant, had no interest in the stock. Defendant acted in these transactions as agent for one Hyde, who owned the stock, under, an agreement that defendant should receive, as compensation for making the sale, one-half of any amount realized for the stock over $5 per share, of which fact plaintiff was ignorant.

      W. I. Butler, for appellant.
    Bristow, Peet & Opdyke and David J. H. Willcox, for respondent.
   By the Court.—Freedman, J.

The nature of the action does not clearly appear from the complaint. As there was no contract of purchase and sale between plaintiff and defendant, none could be rescinded. No case can be found in which the receipt of a secret advantage by a broker or agent has been held a ground for rescission between one of the principals and the broker or agent, while the contract remained in force or executed between both principals. If the defendant was the agent of the plaintiff in the transactions complained of, his liability, if any, would arise from the equitable doctrine that the agent must account for any and every profit made in the business of his principal. That liability extends no further than to compel the agent to pay to his principal the amount of any secret advantage received by him. The action was not brought upon any such theory. Moreover, the court below found, and the evidence sustains the finding, that in the transactions complained of the defendant acted as the agent of Daniel 0. Hyde, the owner and seller of the shares of stock, in pursuance of an employment by Hyde to effect a sale, and that as between plaintiff and defendant the relation of principal and agent did not exist.

The only remaining question of importance is, whether the defendant was guilty of an actionable fraud for concealing from the plaintiff the fact that in the event of a sale he was to receive from the seller quite a large commission, and for assuring the plaintiff that the shares could not be purchased at a lower figure than the plaintiff paid. As no relation of trust or confidence existed between plaintiff and defendant in a legal sense, the latter was under no obligation to reveal the fact of his interest in the event of a sale (Dambmann v. Schulting, 75 N. Y. 55). For the same reason, the assurance that the shares could not be had below a certain figure, assuming it to have been false, was a statement as to value or price only, which is not actionable, but is covered by the rule of caveat emptor (Ellis v. Andrews, 56 N. Y. 88; Furman v. Titus, 40 Super. Ct. 284).

Neither the concealment nor the false statement was therefore material in such a sense as is necessary to sustain an action thereon.

In every aspect that can be taken, the plaintiff failed to make out a case.

The judgment should be affirmed, with costs.

Sedgwick, Ch. J., concurred.


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    E. P. GRANT, Respondent, v. W. T. BIRDSALL, Impleaded, &c., Appellant.

      Summons—irregularity in, when not jurisdictional—waiver of.

    Where the Christian names of plaintiff and defendant are designated, by their initial letters only in the summons and complaint, the defect is not jurisdictional, but is a mere irregularity which may be disregarded as not affecting a substantial right. In any event, where judgment has been taken thereon for failure to answer, and it appears that defendant was designated by his name as used in indorsing the note sued on, and that the defendant appeared in obedience to a supplementary order and signed several adjournments, promised to pay the judgment, &c., on a motion to vacate the judgment upon the above ground, made eighteen years after the entry thereof, defendant will be held to have waived the defect.
    Before Sedgwick, Ch. J., and Freedman, J.

      Decided December 4, 1882.
    Appeal from order.
    The facts appear in the opinion.

      S. W. Valentine, for appellant.

      D. M. Porter, for respondent.
    Defendant has waived all irregularities to the judgment, and cured them by his laches, in waiting eighteen years after the judgment-roll was filed before moving; also by appearing personally in 1875, in pursuance of a supplementary order, and signing the adjournments granted at his request (Howard v. Dusenbury, 44 How. Pr. 423; Wade v. De Leyer, 40 Super C. 541; White v. Coulter, 59 N. Y. 629). Defendant, by indorsing the note upon which he was sued with his initials, adopted that as his name, and he can be sued under it (David v. Williamsburg City Ins. Co., 83 N. Y. 265 ; Bank of Havana v. Magee, 20 Id. 355 ; Brown v. Drovers’ Bank, 6 Hill, 443 ; Millen v. Stettuer, 22 How. Pr. 518 ; Palmer v. Stephens, 1 Den.
      471; Doe v. Yates, 5 B. & Ald. 544; Petrie n. Woodworth, 3 Cai. 219). It was proper to describe the parties by their name, as used ; it is their name (Commonwealth v. Trainor, 123 Mass. 415). An omission to insert the Christian name of a party is, at most, an irregularity (1 Chitty Pr. 266, 217; 1 Tidd Pr. 148 Ballouhey v. Cadot, 3 Abb. Pr. N. S. 122; Pixley v. Winchell, 7 Cow. 365). “ The court shall, in every stage of an action, disregard any error or defect in the pleadings or proceedings which shall not affect the substantial rights of the adverse party, and no judgment shall be reversed or affected by reason of such error or defect” (Code of Proc. § 176 ; Lederer v. Ehrenfeld, 49 How. 403).
   By the Court.—Freedman, J.

This is an appeal from an order entered in April, 1882, refusing to vacate the judgment entered in this action against the defendant for want of an answer, April 4,1863, for $349.10, and directing the defendant to appear on a certain day and submit to an examination concerning his property, pursuant to an order made October 13, 1881. The motion to vacate the judgment was made after a lapse of eighteen years, upon the ground that in the summons and complaint the Christian names of both the plaintiff and the defendant had been designated only by their initial letters. It was not denied that the moving defendant was the proper party, nor was it denied that he had been served with the summons and complaint. Moreover, it appeared that the defendant, who is a lawyer, had adopted “ W. T. Birdsall” as his name in indorsing the note upon which he was sued ; that in 1875 he had appeared in obedience to an order made in proceedings supplementary to execution ; had obtained and signed several adjournments; and that the last of the adjournments had been obtained in consequence of his promise to pay the judgment. Nor was there any question as to the identity of the plaintiff. Under these circumstances there were no merits in the motion, unless the defect complained of is a jurisdictional one. In my judgment it constituted a mere irregularity, which has been waived. But even without a waiver, the court below would have been bound, under our system of practice in civil actions and proceedings, to disregard it as not affecting a substantial right, though a different rule may prevail as to indictments.

The motion to vacate the proceedings supplementary to execution instituted pursuant to the order of October 13, 1881, was made on the additional ground of the death of the plaintiff before the date of said order and the cessation of his attorney’s authority in consequence thereof. On the hearing of the motion, the proofs adduced by the defendant in support of this claim were not convincing, and the fact claimed to exist was denied by the attorney who had commenced the proceedings. The direction requiring the defendant to appear on a future day was therefore proper enough, as the case then stood. If the defendant can now show, as it seems he can, additional facts which clearly establish the death of the plaintiff before October 13, 1881, he may, upon proper papers, apply at special term for leave to reargue that branch of his motion.

The order appealed from should be affirmed, with costs.

Sedgwick, Ch. J., concurred.


text:
    JOSEPH M. EMANUEL, Respondent, v. LAWRENCE ENNIS, Appellant.

      Statute of descents—relatives of half Mood—ancestor, meaning of.—1 i?„ S. 753, § 15.
    Section 15 of the statute of descents (1 B. S. 753),—providing that in case an inheritance came to an intestate by descent, devise or gift of one of his ancestors, all those not of the blood of such ancestor shall be excluded from the inheritance,—refers to the immediate ancestor from whom the intestate received the inheritance, and not a remote ancestor who was the original source of title.
    The term ancestor, when used with reference to the descent of real-property, embraces collaterals as well as lineals through whom an inheritance is derived.
    M. died intestate, unmarried and without issue, leaving him surviving, certain brothers and half-brothers. At the time of his decease he-was seized of certain real property, which he had taken by descent from a deceased brother of the whole blood, who had taken the-property by descent from their mother, the father being the common ancestor, and the half-brothers children of a second ’wife. Held, that on the death of M. the half-brothers were entitled to share-equally in such property with the brothers of the whole blood.
    Wheeler v. Clutterbuck (53 N. Y. 67), followed.
    Before Sedgwick, Ch. J., and Freedman, J.

      Decided December 4, 1882.
    Appeal from judgment entered on the decision of a judge at special term.
    Plaintiff contracted to buy certain lots of defendant and to give other property and cash in payment. The plaintiff’s counsel objected to defendant’s title to the lots in question, claiming that an undivided interest in the premises was still outstanding in certain heirs who were of the half blood to the original owners, and the defendant’s counsel contended that the half blood was-excluded by statute.
    Susannah Milledoler died seised of these premises-in 1815, intestate, leaving her husband Philip and six children her surviving. Philip Edward, one of her sons, died in 1850, intestate and without issue, and John L., another son, died in 1853, also intestate and without issue. Philip Milledoler (the husband of Susannah and father of Philip Edward and John L.), after the death of said Susannah, married a second time and died in 1852 (before his son John), leaving two children by his second wife—viz., William S. Milledoler and Abian S. Beekman.
    In. 1854 a partition suit was begun by the heirs, which finally resulted in a sale by order of the court, and the title of defendant was derived through the-purchaser at the partition sale. The children by the second marriage were not recognized in, nor made parties to, the partition suit. The plaintiff’s counsel contended that upon the death of John L. Milledoler, in 1853, a certain undivided interest in the premises became vested in his half-brother and sister, and as they had never been deprived of nor parted with that interest it was still outstanding in them or their, heirs, and, consequently, defendant’s title was defective; and plaintiff thereupon claimed to recover the money paid by him on the contract, with damages, costs and expenses, and that the contract should be rescinded.
    The decision of the question rests upon the proper construction of § 15 of. the statute of descent (1 JR. S. 753), which reads as follows: “§ 15. Relatives of the half Mood shall inherit equally with those of the whole blood in the same degree ; . . unless the-inheritance came to the intestate by descent, devise or gift of some one of his ancestors ; in which case all those who are not of the blood of such ancestor shall be excluded from such inheritance.” The court below found, as a conclusion of law, that “ the equal undivided one-fifth of one-sixth (being one-thirtieth) which descended to the said John L. Milledoler, and which lie-inherited from his brother, Philip Edward, descended to and became vested as follows: the equal undivided one-sixth of such one-thirtieth (being one one-hundred- and-eightieth) to and in each of his said three sisters, Maria B., Susan Ann and Cornelia (one one-hundred- and-eightieth to each); another equal undivided one-sixth of such one-thirtieth (being one one-hundred-and-eightieth) to and in the two surviving children of his said brother,Benson, deceased; another equal undivided one-sixth of such one-thirtieth (being one one-kundred- and-eightieth) to and in his half-brother, William S. Milledoler; and the remaining equal undivided one-sixth of such one-thirtieth (being one one-hundred-and-eightieth) to and in his half-sister, Abian S. Beekman.”
    Judgment was rendered for plaintiff for the full amount claimed.

      Thomas Bracken, for appellant.

      Joseph C. Levi, for respondent.
    In statutes of descent the word “ancestor” is not used in the restricted sense of either a forefather,, a progenitor or an ascendant (McCarthy v. Marsh, 1 Seld. 263, 274 ; 3 Wash. Real Prop. [4th ed.] 18; Prickett v. Parker, 3 Ohio St. 394; Cliver v. Sanders, 8 Id. 501, 507; Armstrong v. Moran, 1 Bradf. 318 ; Bailey v. Bailey, 25 Mich. 188; Greenlee v. Davis, 19 Ind. 60, 62 ; 57 Barb. 269 [note a]). The “ancestor” referred to in the statute is not the original or remote, but the proximate and immediate ancestor (Wheeler v. Clutterbuck, 52 N. Y. 67; Valentine v. Wetherill, 31 Barb. 655, 659; Gardner v. Collins, 2 Peters U. S. 58, 89; 3 Wash. Real Prop. [4th ed.] 18 ; Buckingham v. Jacques, 37 Conn. 402, 404 ; Clark v. Shailer, 46 Id. 119 ; Hyatt v. Pugsley, 23 Barb. 285, 300; Prickett v. Parker, 3 Ohio St. 394, 396; Clayton v. Drake, 17 Id. 367, 371; White v. White, 19 Id. 531, 535; Murphy v. Henry, 35 Ind. 442, 450). The word “ancestor” in the statute does not refer to lineals exclusively; it embraces collaterals as well (Wheeler v. Clutterbuck, 52 N. Y. 67; McCarthy v. Marsh, 5 Id. 263, 274, 282; Jackson v. Green, 7 Wend. 333-338; Stat. 11 and 12 Wm. III., ch. 6; Bing. on Desc. 494, 495, 497; 3 Wash. Real Prop. [4th ed.] 18; Prickett v. Parker, 3 Ohio St. 394, 397). The “blood of such ancestor ’ ’ which the statute requires as a prerequisite to the right to inherit in the given case, is not the whole, but the half or any part of the blood (Beebee v. Griffing, 14 N. Y. 235, 240 ; Gardner v. Collins, 2 Peters U. S. 58, 87; Cole v. Batley, 2 Curtis C. C. 562 ; Baker v. Chalfant, 5 Whart. 477, 479 ; 4 Kent, 404 [note g] ; Kelly v. McGuire, 15 Ark. 555, 596).
   By the Court.—Freedman, J.

The facts being as found by the learned judge below, the conclusions of law follow from the facts found by force of the statute of descents, as interpreted by the court of appeals in Wheeler v. Clutterbuck (52 N. Y. 67).

The judgment should be affirmed, with costs.

Sedgwick, Ch. J., concurred.


text:
    CHARLES FINKELMEIER and another, Executors, etc., Respondents, v. HESTER BATES and others, Appellants.
    I. Counter-claim—Tort to Contract.

    1. Landlord and Tenant.

      (a) In an action against a tenant after his dispossession for rent, accrued prior thereto, he cannot counter-claim damages arising from a tortious withholding by the landlord, having its inception subsequent to the dispossession, of personal property remaining in the premises after the dispossession.
    II. Pleading.

    1. Tortious taking or withholding, when not pleaded.

      (a) A pleading which alleges that “A. took possession of . . . . (certain chattels) and has detained and kept the same, and agreed to pay whatever the same were reasonably worth, but has not paid for the same, and that the same are reasonably worth the sum of $-” does not state a cause of action, or a counterclaim, in tort.
    III. Lessor and Lessee.

    1. Implied promise to pay for appliances put in by tenant, WHEN NOT RAISED BY THE LAW.
    (a) S. leased two certain lots from J. covenanting to erect there on a building of a certain description. The lease provided that at the expiration of the term, the building was to belong to the lessor upon payment of half of its appraised value, or the lessor might give a new lease at an appraised value, and that the building should belong to the lessor at the end of that lease. S., at the same time, leased from another party certain lots, forming with the first one an L. This lease contained precisely the same covenants as the.one from J. S. erected a building covering all the lots. He planned the building, and provided it with certain appliances, e. g., an elevator, a. steam heating apparatus, etc., part being in first set, and a part in the second set of lots. These were in the building when it was accepted by the tenant, were always used by the various sub-tenants, were substantially attached to the building, and cannot be removed without considerable injury. The assignee of S. mortgaged the land to B. The appliances were not mentioned in the mortgage. Afterwards, B. foreclosed and bought in. Afterwards, Mrs. S. H. Jewell, to whom J. had devised one of the lots leased by himtoS., in connection with the owner of the other lot dispossessed B., and under the warrant of dispossession, they were put into possession of the premises with the said appliances thereon ; and they made leases, including the use of the appliances, to persons who as sub-tenants were in possession at the time of the dispossession.

      Held,

    1st, that the law would not imply a promise by the lessors or those claiming under them, to pay the reasonable value of the appliances;
    2nd, if there was an implied contract to pay, it was a joint one of Mrs. Jewell and the owner of the other lot; and therefore a cause of action on it could not be counter-claimed against a cause of action which only Mrs. Jewell had.

      2. Tort-feasor, as to appliances, when lessor not.

      (a) In the case above put, even conceding that the appliances did not constitute part of the building, the mere taking possession of them by the lessor with the building, she not disposing of them, but leaving them in the possession of the sub-tenant.
    Before Freedman and Russell, JJ.

      Decided December 4, 1882.
    Appeal from judgment entered upon .the decision of the court at special term.
    The facts sufficiently appear in the opinion.

      Edward Van Ness, attorney and of counsel, for appellants; on the question determined by the court urged:
    That the boiler, engine, hoistway, &c., were chattels for the temporary convenience of tenants is manifest, and as such belong to the lessee and his assigns (Potter v. Cromwell, 40 N. Y. 287; Voorhees v. McGinnis, 48 Id. 278). As between mortgagee and mortgagor, they passed to the defendants on foreclosure (Ewell on Fixtures, 275, and note; Taylor L. & T. §§ 544,545). It is immaterial to consider what may be the rule in other cases, for in this what should belong to the lessor and what should belong to the tenant was defined by the lease. The building built by the lessee was the joint property of the landlord and tenant, and what was not part of the building as between lessor and lessee, belonged as a personal chattel, to the lessee or his assignees. The answer alleges that the plaintiff agreed to pay whatever the same were reasonably worth. No damages are demanded. The defendant construes the act of the plaintiff most favorable to her, namely, that she did not intend any wrong, but intended to pay. Including the chattels in the lease, is not the appropriation complained of, but the evidence of it. It shows that the plaintiff regarded them as chattels, and as her own property, a construction we have adopted, and demand pay for them. “ With the use of the machinery and elevator now in said building,” the lessees agree “ also to put the machinery now in said buildings in good running order, and the parties of the second part hereby agree “ that if they run the machinery and elevator in said premises they will make all necessary repairs to the same at their own expense, &c.” “ And upon the termination of this lease they will surrender said machinery and elevator, &c.” The re-entry on the part of the lessor was not tortious so far as the possession of the chattels is concerned, they being in the building. But the plaintiff’s testator being in possession of the chattels of Bloomfield, an implied assumpsit arose instantly on her assuming ownership of the chattels to pay what the property was reasonably worth. It is well settled that where trover would lie an action can be maintained on an implied assumpsit for goods sold and delivered (Burley v. Taylor, 5 Hill, 583, opinion by Cowen, J. ; Chitty on Contr. 10 Am. ed. 21, note; Butts v Collins, 13 Wend. 139, 154). The demand passes to executors, and is assignable (McKee v. Judd, 12 N. Y. 622). If the act of the plaintiff is susceptible of two constructions, the option is with the lessees to place such construction on the lessor’s act as she please (Andrews v. Artisans’ Bank, 36 N. Y. 298). In Peiser v. Stern, 1 Hilt. 86, the defendant waived his remedy on the tort but not the tort itself. He asked damages. In 4 Keyes, 335, a judgment founded upon a tort was counter-claimed. Money lost in gambling may be counter-claimed (McDougall v. Walling, 48 Barb. 364). The answer in this case is within the rule stated in Coit v. Stewart, 50 N. Y. 17; Berrian v. Mayor, &c., 15 Abb. Pr. N. S. 207.

      Richard L. Sweezy, attorney, and of counsel for respondents, urged:
    I. The alleged counter-claim is not a “ cause of action in contract,” but on a tort, and cannot be set up in this action (Code, § 501). II. The elevator, engine, boiler, and heating apparatus are part of the realty, and could not be removed by defendants (McRea v. Cent. Nat. Bk., 66 N. Y. 489).
    III. Defendants do not show facts amounting to a conversion of this alleged personal property.
    IV. Only part of these alleged fixtures are on our premises. If we have converted them, we did it jointly with the other owners (see lease), and any implied promise growing out of the conversion is a joint promise of all the owners. If defendants sue on the tort, they can sue us separately, but if they sue on the implied joint promise, they must join all the owners in their action. A defendant cannot counter-claim a joint cause of action against the plaintiff and other persons not parties to the action (Code, § 501),
   By the Court.—Freedman, J.

This action was brought by the devisee of a lessor, against the assignees of the lessee to recover for rent and taxes. During its pendency the devisee died, and the action was continued, first by her temporary administrator, and afterwards by the present plaintiffs as her executors.

The defendants defended as to the taxes for 1879, and the quarter’s ground-rent due November 1, 1879. As to these items, they alleged that before the same became due, they had assigned the lease. They also interposed counter-claims for one-half the value of the building, and the value of the elevator, engine and boiler, on the theory that they had subsequently taken a re-as-. signment of the lease.

The court below dismissed the counter-claims, and gave judgment for the plaintiffs for the full amount claimed.

Afterwards, the plaintiffs consented, that the disputed items of plaintiffs’ claim be stricken out, and an order was entered, amending and reducing the judgment accordingly.

The right of the defendants to recover half the value of the building, was passed upon and denied by the general term of this court, in the case of Johnston against these same defendants (48 N. Y. Superior Ct. 180).

The only question, therefore, to be determined upon the present appeal, is as to the correctness of the decision of the court below, dismissing the counterclaim for the value of the alleged personal property. The action being on contract, viz.-, for rent and taxes, the counter-claim is not available as such, if founded on an independent tort. From the manner in which it was pleaded, it is not clear, that the pleader intended to rest it on such a foundation. It is alleged, that the plaintiffs’ testatrix took possession, and detained the said personal property, but it is not alleged, either in terms or by implication, nor can the legal inference be drawn from the language used, that the taking of possession or the detention was wrongful. ¡Nor were any damages demanded. The allegation is, in substance, that the plaintiffs’ testatrix took the-property, detained it, and agreed to pay its reasonable value, but failed to do so. The question of pleading must therefore be determined, in favor of the availability of the counter-claim as one on contract.

The evidence, however, given at the trial, showed that in fact there was no agreement to pay,' and consequently the defendants were, and are left to rely on an implied promise.

The question then arises, whether such an implication results as matter of law from the facts of the case, and if it does, whether it results in such a way that under our system of practice it can constitute the basis of a counter-claim, to the cause of action set forth in the complaint.

The facts are substantially as follows : in November, 1866, Charles W. Jewell, the owner of the lots of ground, known as Nos. 109 and 111 West Broadway, in the city of New York, leased the same to one David C. Sturges, for the term of twenty-one years at the rent of $3,000 per annum, and the lessee to pay the taxes. The lessee also covenanted to erect upon the demised premises, a first-class commercial building, not less than five stories high, and to cost not less than $30,000. At the expiration of the said term, the building was to be appraised, and was to belong to the lessor upon payment of one-half of the appraised value; or, the lessor might give a new lease at an appraised rental, and at the expiration of the second term, the building should belong to the lessor.

By lease bearing even date, and containing precisely the same covenants and provisions,the lots Nos. 3, 5 and 7 White street, belonging to Messrs. Johnston, and forming an L with Mr. Jewell’s lots, were also leased to Mr. Sturges.

Thereafter one Walter Jones became the assignee of said leases, and entered into possession. As such, he erected on the premises a building of the character called for, which was accepted by the lessors, as a performance of the covénant on the part of the lessee to build. The building is six stories high, and covers the five lots. It was planned for, and provided with, an elevator and steam-heating apparatus, and an engine to run the elevator, and a boiler to supply the engine and the heating pipes. These appliances were in the building at the time it was accepted by the lessors, and have always remained there, and have always been used by the various sub-tenants who occupied the building. They are substantially attached to it, and cannot be removed without considerable injury. First-class commercial buildings in the city of New York,- of the size and character of the building referred to, are oftener supplied, than not supplied, with a steam elevator and a steam heating apparatus.

In 1871, after the completion of the building, Jones mortgaged the leases, and leasehold premises, and his interest in the building to the defendants, who after-wards foreclosed, bought in, and entered into possession. The elevator, engine and boiler, were not mentioned in the mortgage, and consequently, the defendants only obtained them upon the theory that they were part of the building.

On October 10, 1871, Charles W. Jewell died, and by Ms will, devised the lot No. Ill West Broadway, being the northerly half of the premises described in his lease to Sturges, to Selena H. Jewell, the plaintiffs’ testatrix.

In December, 1879, Mrs. Jewell, in conjunction with the owner of the lot No. 109 West Broadway, took possession of the demised premises, by virtue of a warrant, duly issued under the statute relative to summary proceedings to recover the possession of lands ; but they did not disturb the actual occupancy of the sub-tenants. From them, they merely took leases to themselves. So far as the elevator, engine, boiler and heating apparatus stood upon the premises thus recovered, they were also taken possession of. But from the mere taking of these, articles,. under the circumstances they were taken, the law does not imply a promise on the part of Mrs. Jewell, to pay their reasonable value.

Only a portion of the said articles were on her premises. If she converted them, she did it jointly with the other owner, and any implied promise growing out of the conversion, would be-a joint promise of both.

In so far, therefore, as the defendants’ counterclaim is based upon an implied, contract to pay, it cannot be maintained in this action, because it rests on a joint cause of action, against Mrs. Jewell and another person, not a party to the action.

It is only as a tort-feasor, that she could be proceeded against separately. But, in that case, the defendants would have to rely and proceed on the tort, and that, again, they cannot do in this action.

Moreover, the evidence does not even show she was a tort-feasor. It can hardly be controverted, though it is not necessary so to decide, that the said appliances were designed and always considered, by all parties, to be parts of the building, and that, if the defendants had chosen to perform the covenants of the lease, they would have been entitled at the end of the term, to be paid for them as parts of the building. It is not the usual case, therefore, between landlord and tenant, where the tenant hires a building, and puts in machinery for the purposes of a personal business carried on by him, without being -under obligation to the landlord so to do. But, even upon the assumption that the defendants can maintain that, as between the parties to this action, the said appliances did not constitute parts of the building, it does not follow, that the mere taking possession of them, by Mrs. Jewell with the building, in itself amounted to a wrong. She has not disposed of them. She left them in the positions they always occupied, and thus allowed the sub-tenants of the defendants, who were in actual possession of parts of the building, and who must be presumed to have had the right of possession, as against the defendants, to have the benefit of their use. At any rate, as the defendants had theretofore considered and treated these appliances as parts of the building, Mrs. Jewell was justified in acting upon the same assumption, and it was incumbent upon the defendants to notify her of their mistake, if a mistake it was, and demand a return of the property, before they could treat her as a tort-feasor. This they did not do.

In every aspect that can be taken, therefore, the counter-claim under examination cannot be maintained in this action.'

The judgment should be affirmed, with costs.

Russell, J., concurred.


text:
    THE MACKINNON PEN Co., et al., Appellants, v. THE FOUNTAIN INK Co., et al., Respondents.

      Public policy—covenants in restraint of trade—when valid—breach of what constitutes—when restrained by injunction.

    S. & R, the owners of the entire capital stock of a certain manufacturing corporation and its patents, agreed to sell the business and patents to F., C. and C., and accept as part of the purchase price notes of the company with an agreement by said purchasers that they would remain trustees of the company for a definite period of time, and would maintain in the company assets equal to all its liabilities, including said notes. As an inducement to this guaranty, the vendors covenanted that neither of them would engage in business in opposition to the company to which the patents were conveyed, so long as said purchasers should remain such trustees.

      Held, that the covenant of the vendors was not against public policy and void as being in undue restraint of trade.
    Where one of said covenantors becomes the owner of most all of the stock of another company of which he is the manager and only acting officer, an injunction will go against said company in a proper case to restrain it from acts constituting a breach of said covenant.
    It is a breach of said covenant for such last named company in pursuance of a fraudulent advertising scheme, to give away with the goods sold by it, an article similar, and by such company ad ver-' tised to be equal to that manufactured and sold by said first named company under its patents.
    Before Sedgwick, Ch. J., Freedman and Russell, JJ.

      Decided, December 4, 1882.

      Appeal by the plaintiffs from an order of the special term denying their motion for the continuance of an Injunction during the pendency of the action.
    The facts are stated in the opinion.

      Isidor Grayhead and Edmund Coffin, Jr., for appellants.

      A. B. Chalmers and S. Jones, for respondents.
    No questions of infringement of trade-mark or patent being involved in' this action, though the defendants may have imitated the plaintiff’s pen in shape, form, color, etc., and may be endeavoring to palm off their pens on the public as the goods of the plaintiffs, and although the defendants’ acts in this respect are tainted with fraudulent representations, an injunction will not issue (Enoch Morgan’s Sons Co. v. Troxall, 14 Week. Dig. 503).
    The clause in question was inserted in the agreement for a defense, as a means of protection to the plaintiffs ; not to found an action on, as a means of attack.
    Its true construction is that French, Carle ton and Coffin would secure the company’s notes by keeping the assets up to a certain point (their being trustees was a mere incident to this object), provided that the assets were already at that point, and that Brown and Sutherland would do nothing to prevent their keeping up the assets by opposition in business. This being a mere proviso, no cause of action, legal or equitable, arises on it.
    The agreement is against carrying on business in opposition to the Mackinnon Pen Company, which is not a party to the agreement, and there is no consideration expressed therein moving from that company or to Brown. Therefore the agreement is not enforceable, certainly not by the company.
    The' agreement is void, as being in restraint of trade; being without any limit as to time or place, itds void (Chappel v. Brockway, 21 Wend. 157; Dunlap v. Gregory, 10 N. Y. 241; Arnot v. Pittston & E. C. Co., 68 Id. 558; Parsons Contr. 254-259 ; Mitchell v. R0eynolds, 1 P. Wms., 181; Horner v. Graves, 7 Bing. 735 ; Proctor v. Sargent, 2 M. & Gr. 20 ; Mallan v. May, 11 M. & W., 653 ; Ross v. Sadgben, 21 Wend. 166 ; 2 Kent's Com. 467, n. “E;” Hitchcock v. Coker; 6 Ad. & E. 438, 554 ; Ward v. Byrne, 5 M. & W. 548 ; Hornes v. Ashford, 11 Moore, 91; S. C., 3 Bing. 328 ; Allsopp v. Wheetcroft, 15 L. R. Eq. 59 ; Green v. Price, 13 M. & W. 695 ; Noble v. Bates, 7 Cow. 309 ; Saratoga Co. Bank v. King, 44 Id. 91; Curtis v. Gokey, 68 N. Y. 300 ; Laurence v. Kidder, 10 Barb. 641 ; Alger v. Thatcher, 19 Pick. 54; Cook v. Johnson, 47 Com. 175 ; Oregon Steam Nav. Co. v. Hall, 1 Wash. 283 ; 34 Am. Rep. 803, and cases there cited; 2 Parsons Con. 747, et seq.; Oregon Steam Nav. Co. v. Winson, 20 Wall. 64).
    The Fountain Ink Company carries on the business of manufacturing and selling ink, and Brown is only a stockholder and one of the officers thereof. The giving away of a few pens, designed to show the desirability of that kind of ink for that description of pen, so as to bring the ink of the Fountain Ink Company more favorably to the notice of the public and increase its sale, is not carrying on the business of the sale of pens, especially when a loss of fifteen cents is incurred on each pen.
    The plaintiffs cannot maintain an action on the agreement so long as the Mackinnon Pen Co. has assets to meet the payment of said notes, nor can the plaintiffs claim damages against either of the defendants for a breach of agreement by Brown and Sutherland, unless it is shown that the said assets have been, depleted by the acts of Brown and Sutherland. Butin no event will an injunction lie for such a breach of agreement.

      There is no obligation expressed or implied between either of the plaintiffs and the defendant, The Fountain Ink Company, respecting the sale or giving away of the stylographic pens, nor in reference to the conduct of its business. lío breach of agreement can be claimed, nor is any alleged against the said The Fountain Ink Company.
   By the Court.—Freedman, J.

There is little, if any, conflict as to the material facts upon which the right of the plaintiffs to an injunction depends. They are briefly stated as follows:

The Mackinnon Pen Co. is a manufacturing corporation which makes and sells stylographic pens, under certain patents of the United States and other countries. The defendants Sutherland and Brown owned the entire capital stock of this company and its patents, and contracted, July 5,1881, to sell the business and patents to the plaintiff Fren ch. French assigned portions of his contract to the plaintiffs Carleton and Coffin, and the contract was completed September 9, 1881. By this contract French was to give certain notes for part of the consideration money ; but in the completion of the contract Sutherland and Brown accepted, in the place of the notes he was to give, notes of the Mackinnon Pen Co., to whom the patents were conveyed, with an agreement on the part of French, Carleton and Coffin that they womd become and remain trustees of the company for a definite period of time, and would maintain in the company assets equal to all its liabilities, including their notes. As an inducement to them to give this guaranty, Sutherland and Brown agreed that neither of them should engage in business in opposition to that company so long as French, Carleton and Coffin should remain as such trustees. This agreement was made in writing under seal and is the foundation of this action. The notes run for five years from September, 1881, and the plaintiffs last referred to are still the trustees and holders of the stock of the company. The defendant Brown has become the owner of almost-all the stock of the defendant, the Fountain Ink Co., which is a Mew York corporation, making and selling ink. He is the active manager and officer of the company. He has undertaken to advertise and increase the sale of his ink by offering to give away a stylographic pen wi th each bottle, and is publicly representing that these pens, which do not cost over forty cents, and are given away with a quart bottle of ink for $1, are equal to those which the Mackinnon Pen Co. sells at from $2 to $5.

These acts are not a legitimate business enterprise, but an advertising fraud. To carry it out, Brown, the covenantor, hides himself behind the cloak of the Fountain Ink Co., of which corporation he is the only acting officer and the owner of almost all the stock. But he should not be allowed to do through another what he -cannot do himself, whether that other be a clerk, an agent, or a corporation controlled by him for his benefit. The plaintiffs clearly showed that actual damage resulted and continues to result from the wrongful acts-complained of, and it is quite apparent that they have no adequate remedy in an action at law for damages. It is also quite clear that the acts complained of constitute a violation of the covenant. The only remaining question therefore is, whether the covenant is valid in law. The learned judge who denied the motion for the continuance of the injunction during the pendency of the action, placed his decision on the sole ground that the covenant referred to was void as against public policy because it was in restraint of trade. In this I think he erred. The true reason why contracts in gen-' eral restraint of trade are repudiated as contrary to public policy, is that they deprive the public of the enterprise and skill of one of the parties without any-corresponding benefit to the party contracting for such restriction. In such a case the contract injures one party without benefiting the other (Chappel v. Brockway, 21 Wend. 159). Whenever in a given case the reason of the rule fails, the rule falls with it. Thus it is well settled that an agreement in partial restraint of trade, restricting it within certain reasonable limits or times, or confining it to particular persons, is valid, if founded upon a good and valuable consideration. (Story on Contracts, 4 ed. § 155).

The test of the reasonableness of any restriction is, whether it is such as only affords a fair protection to the party in whose favor it is made, and at the same time does not militate against the public interest (Id. § 552). Patented inventions, and secrets of art or trade, not patented, are not within the purview of the rule against restraint of trade ; and a trader may sell a secret in his art, and restrain himself generally from the use of it. These exceptions are allowed for the purpose of stimulating inventive genius, and of encouraging science and well-directed ingenuity (Id. § 556; Alcock v. Giberton, 5 Duer, 76 ; Jarvis v. Peck, 10 Paige Ch. 118).

In the case last referred to it was held that a man engaged in a particular trade or business may relinquish the same to another ; and he may lawfully covenant not to carry .on the same trade or business in such a manner as materially to interfere with the business or profits of the one to whom he has sold out.

So where a retiring partner, on being paid for the good-will of the business, agreed with the remaining partner not to engage in business in opposition to him so near as to take away his customers and injure his trade, it was held that the agreement provided only for a fair protection to the continuing partner, and was not void as against public policy (Dethlefs v. Tamsen, 7 Daly, 354). Even in a case concerning the business of a common carrier the same doctrine was upheld, with. the sole restriction that “ the contract to be upheld must appear from special circumstances to be reasonable and useful, and the restraint of the covenantor must not be larger than is necessary for the protection of the covenantee in the enjoyment of his trade or business” (Dunlop v. Gregory, 10 N. Y. 241).

The covenant in the agreement in suit is expressly limited to such acts as shall be in opposition to the plaintiff corporation. The defendants are under no restraint of trade in any place or in any manner, so long as they respect the good, will of the business for which they have been paid. Besides the covenant is expressly limited as to persons, namely, so long as the individual plaintiffs remain trustees. It is a reasonable protection to the plaintiffs, and the restraint of the covenantors is not larger than is necessary for the protection of the covenantees. Within the principles of the authorities cited, the agreement in question is therefore valid and binding on the defendants who executed it, and all persons and agencies under their control, though no question of infringement of a trade-mark or patent is involved. In Morgan’s Sons Co. v. Troxall, recently decided by the court of appeals, no contract relation existed.

The order appealed from should be reversed with costs, and the motion for the continuance of the injunctions granted. Order to be entered hereon to be settled on notice.

Sedgwick, Ch. J., and Russell, J., concurred.