text:
    The Sun Mutual Insurance Company, plaintiff and appellant, vs. Joseph D. Davis et al. defendants and respondents.
    An agreement having been entered into between G. & Co. and D. & T., for the purchase and shipment by the latter firm, from Cuba to New York, of cargoes of sugar consigned to G. & Co., to be insured by G. & Co. on joint account, and at the joint expense of both firms, an open policy of insurance was effected by G. & Co., for the benefit of themselves, or “ whom it may concern,” upon which goods purchased under such agreement were entered belonging to both firms jointly; Held that D. & T. were liable as joint contractors with G. ■ & Co. to the insurers, for the portion of the premiums remaining unpaid.
    (Before Robertson, Ch. J. and Garvin and McCunn, JJ.)
    Heard February 15, 1865;
    decided May 27, 1865.
    This was an appeal from a judgment absolute, in favor of the defendants, upon a demurrer to the complaint. That pleading set forth that two of the defendants, (Davis and Toscano,) were partners under the firm of Davis & Toscano in the island of Cuba, and the other three defendants, (.Grove, Allison, and Kohl,) were partners under the firm of William Grove & Co., in the city of New York ; that such-firms agreed that the first named, should purchase in Cuba and ship to New York and Boston, cargoes of sugar consigned to the latter firm, to be insured by them on joint account, and at the joint expense of both such firms, and by them sold on like joint account; and that such firm of Davis & Toscano, actually, in the year 1863, shipped to the firm of Wm. Grove & Co., seven different adventures of sugar, and on being advised of such shipments, the latter firm in pursuance of such agreement, applied to,the plaintiffs to insure such shipments on joint account of both firms. The complaint then proceeds to state that in consideration of certain premiums therein after stated “ agreed to be paid for the said respective insurances by the parties for whose account the same was effected,” the plaintiffs insured such shipments against certaiti perils, under an open and running policy theretofore issued by them to William Grove & Go., upon which, by its terms, shipments of such description were applicable, by which they “ had undertaken to insure for account of all whom it might concern, all such risks as should be reported by the said William Grove & Co., and by the plaintiffs accepted and entered upon said policy and insured thereby.” This was followed by a detailed statement of the amount of goods, vessels, amount of insurance and premiums upon the seven shipments before mentioned, and stating $2668, as the aggregate of such premiums, and that the defendants had paid on account of such premiums $444,24, leaving a balance of $2223.76 still due.
    The demurrer only assigned as a ground that the complaint did not "contain facts sufficient to constitute a cause in action.

      J. H. Choate, for the appellant.
    I. The action was brought to recover a premium due for an insurance made by the. plaintiff upon property belonging to the defendants as partners, and upon their express promise to pay the same. The facts stated in the complaint are sufficient to constitute a cause of action against the defendants, Davis & Toscano, by whom the demurrer is interposed. It states that all the defendants constituted a copartnership which owned the property insured, and that as part of their copartnership agreement and adventure, it was arranged that all the property should be insured in New York for the joint and equal account .and benefit, and at the equal expense and charge of all the defendants ; that in pursuance of this agreement, application was made to the plaintiff for the insurance for the joint and equal account and interest of all, and that in consideration of the insurance all the defendants, through the agency of William Grove & Co., undertook to pay the premium, and that, so far as paid, it has been paid by all the defendants. It also appears that" the insurance, though effected under a policy standing in the name of William Grove & Co., was made expressly “ for whom, it may concern,” and that the interest of Davis & Toscano, as well as that of William Grove & Co., was intended to be covered thereby by the parties who effected the insurance. The repeated adjudications of this court on the construction and effect of this clause of the policy, leave no question but that Davis & Toscano were entitled to the benefit of the policy, to sue thereon in their own names. By the inevitable mutuality of such a contract, they are liable to the insurers for the premium. (Crosby v. The New York Mut. Ins. Co., 5 Bosw. 369. Forgay v. The Atlantic Mut. Ins. Co. MSS. 3 Kent’s Comm. 258. 2 Caines’ Rep. 203.)
    II. The argument on which the learned counsel for the defendants sought to sustain his demurrer was, that inasmuch as the complaint disclosed that the insurances were effected under a policy in the sole name of William Grove & Co. only, the law would presume that they only were liable for the premium. Therefore the plaintiff could have no benefit of the additional allegations inserted to charge the other defendants with an express promise to pay it. In other words, that all such other allegations must be disregarded, as much as if they were stricken from the complaint.
    Thus, upon a general demurrer, where the only question is, whether the statements in the complaint constitute a cause of action, he would have the court wholly ignore and erase from the complaint all the allegations which are relied upon as stating the cause of action against his clients. But there is no such presumption even upon the policy alone as that which he claims, as will presently appear, and if there were, it would be only to the extent of presuming that none but the parties in whose names the policy is effected are liable by force of the policy itself. No presumption of law ever went to the extent of presuming away an express promise made by other parties, for valuable consideration received by them, to pay the premium. And that is what this complaint expressly alleges—that for the insurance of their property they, Davis & Toscano, as well as William Grove & Co., undertook to pay the premium.
    III. There is no fact or principle that can be invoked to take this transaction out of the ordinary rules as to the rights and liabilities of partners. The partnership appearing, and the fact that the contract was made by one partner for the account and benefit of the firm, in relation to the property of the firm, his act and contract are the act and contract of the whole firm, and subject all the members to the same joint and several obligation.
    It is to be noted, that no premium note appears to have been' given in this case, so that there can be no pretense that the insurers accepted the liability of the party effecting the insurance, and waived any claim upon the other partners, for whose benefit the insurance was effected.
    IV. The point here sought to be raised on the part of the defendants has no place on the argument of this demurrer, in the face of the express allegations of the complaint. It can only be raised, if it all, by answer, unless indeed it be claimed that a party who is not named in the policy cannot, by his own express agreement outside of, and in addition to, the policy, make himself liable to pay the insurers for insuring his property. But should the point be insisted upon by answer, it will be found to have been disposed of in the American courts, and by the most authoritative writers on insurance law.
    1. Owing to a usage peculiar to the city of London, where all insurances are effected by brokers, “ policy brokers,” or “ insurance brokers,” as they are called, who make all insurances part of their own accounts with the underwriters, and give their own notes, and settle all losses in their own accounts with the underwriters without reference to the real parties insured ; the courts there have, in pursuance of the obvious understanding of the parties deduced from this usage, held that the liability for the premium note is limited to the broker, who is the only party named in the policy and in the premium note. But no court in England ever held, or will hold, that in the case of a departure from the usage, by an express promise of the principal to the insurer to pay the amount of the premium, he is not liable to make his promise good.
    2. This peculiar and anomalous rule has been universally denied in the courts of America, where no such usage prevails, and it has here been held, even in the case of policies effected by an agent, that the party for whose benefit the policy was effected, is liable directly to the underwriters for the premium. And even where a note has been given by the agent in his own name, the real party insured, in settling for a loss, is subject to a deduction of the unpaid premium. (2 Duer on Ins. 209, &c. 1 Arnould on Ins. Am. ed. 109, 110, 113 c. 1 Phillips on Ins. 274. The Ins. Co. of Pa. v. Smith, 3 Wharton, 520. The Patapsco Ins. Co. v. Smith, 6 Harris & J. 166. Aldrich et al. v. The Eq. S. Ins. Co., 1 Woodb & M. 278. Hurburt et al. v. The Pac. Ins. Co., 2 Sumner, 471, 480.)
    3. But here there can be no question as to brokers or agents, the insurance being by one partner for the benefit of all, and his every act being the act of all.

      W. H. Anthon, for the respondents.
    This action cannot be sustained against Davis & Toscano, either on the ground that they are beneficially interested in the policy, or on the ground that they are partners with William Grove & Company, the insurers.
    Are they liable as beneficially interested ?
    I. There was no privity of contract between the insurance company and any party, except William Grove & Co., the policy being in the usual form, insuring them in consideration of premiums paid, loss payable “ to whom it might concern.”
    II. The terms of the policy as set forth in the complaint, are plain and unambiguous. William Grove & Co., and they alone, are the parties to whom the plaintiff is to look for the premiums, and no parol evidence can now be adduced to change the nature and effect of that contract.
    III. The contract was made with William Grove & Co., and if a credit for the premiums was given, that credit was given to them, and the remedy of the insurer is confined to the party to whom the credit is given.
    See 2 Duer on Insurance, 301, and the English cases cited there, which establish the fact that where the insurance is effected in the name of a broker, which is the universal custom in England, he alone, and not the principal, is liable for the premium.
    IY. These view's are particularly pertinent to an open run-

      ning policy, like the one mentioned in the complaint, doubtless intended to cover the whole general business of the insured, and in regard to which'it is evident that the company must look for their premium expressly to' the firm with whom the contract is made.
    Y. It is therefore submitted that as parties beneficially interested the defendants are not liable.
    Are they liable as partners of William Grove & Oo. in this particular adventure ?
    I. The policy does not treat the two firms as partners ; it is made with William Grove & Company alone, and it is a plain principle of law “ that where any contract is made by one partner upon his own exclusive credit, he alone is liable therefor, and the partnership, although the money, property, or other contract is for their own proper use and benefit, and is applied thereto, will in no manner be liable therefor. (Story on Partnership, 212.)
    II. Notwithstanding a copartnership, either of the copartners may undoubtedly contract on his own account and make himself alone liable for merchandise bought for copartnership account, if the vendor chooses to accept him. (Sylvester v. Smith, 9 Mass. Rep. 121, opinion of Parker, J.)

    III. The exception to the rule is the case of dormant partners, because in general it may be claimed that a man cannot be said to agree to look to one person only when he is not aware that there is another interested; but this reason will not apply to the present case, because the form of the policy in favor “ of whom it may concern ” is in fact a recognition and permission of assignees, dormant partners, or any one else who can prove an interest.
    IV. The plain meaning, therefore, of this policy is, that the plaintiffs look to William Grove & Company alone for the payment of the premiums, with full knowledge that there are others interested, and are willing that all the world may claim the benefits of the insurance, on proving interest.
   By the Court, McCunn, J.

In discussing the merits of this demurrer, we are not warranted in looking at the facts in any other light than as the complaint presents them, because the interposition of a demurrer admits the truth of all the allegations contained in the complaint, and the only question to be determined is, whether a judgment entered upon these facts would be good and valid in law ?

The .complaint alleges that the two firms, William Grove & Co. of Hew York, and Davis & Toscano of Cuba, entered into a partnership to buy and ship sugars from Cuba to Hew York ; that it was agreed between all the partners that Grove & Co., the members of the firm in Hew York, were to insure the goods so shipped at the joint and equal expense of both firms, out of the proceeds of the shipments ; that on being advised of the shipments, Wm. Grove & Co. applied to the plaintiffs to insure the goods for the joint and equal account and interest of all the defendants, and that in consideration of the premiums agreed to be paid by the new copartnership, the plaintiffs. did, in an open policy, for whom it may concern, and upon which, by its terms, shipments of the said description were applicable, and which policy had been effected by and in the name of Wm. Grove & Co. some time previous, allow the risks to be entered; that the defendants paid, on account of said premiums, $414.24, and that there remains a balance due and owing, for which they ask judgment.

This is a brief outline of the facts set up in the complaint, and I am clearly of opinion they would warrant the entry of a judgment thereon.

The policy declared on is an open policy, and is in the ordinary form, and contains the usual clause for whom it may concern, and it had been effected by William Grove & Co., before the partnership between them and Davis & Toscano was formed ; yet the company had a right to select their risks thereunder, and as they thought proper to assume these risks in consideration of the premiums agreed to be paid by the defendants, they are clearly entitled to recover. It is true the policy was effected in the name of William Grove & Co., but no presumption of law arising on the face of the policy, can presume away an express promise made afterwards by other parties, for a full consideration. Moreover, one-half the sugars entered under the risks, were the goods of Davis & Toscano, and under this form of policy they had a right to enter these shipments as risks, and consequently they had an interest in, and were entitled to the benefits of the policy, and by virtue o.f mutuality of contract, they became liable to the insurers. (3 Kent’s Com. 344, 9th ed. 2 Caines’ Rep. 203.)

And for all that appears in the complaint, the policy may have been effected by Wm. Grove & Co., in their own name, to cover these very risks ; at any rate, the complaint alleges that all the parties agreed to pay, or be responsible for, the premiums at the time the risks .were entered, and it was for this consideration the risks were assumed by the company.

It may be remarked here, that.the facts set out in the points offered to sustain this demurrer can be conveniently set up in the form of an answer.

The order must be reversed, with costs. The defendants to be permitted to withdraw their demurrer, and answer within twenty days, upon payment of costs.

Robertson, Ch. J.

Whether the open policy mentioned in the complaint was obligatory as a contract on the plaintiffs, or was any thing more than a mere specification of the terms of future policies, of which use could readily be made, as each risk was assumed, by endorsement, so as to render a full policy in each case unnecessary, is immaterial in this case. Possibly it might have some effect as evidence, in the absence of any other, to determine to whom credit was given by the plaintiffs, and that they considered the firm of William Grove & Co. alone, in whose name the policy was made out, their paymasters, so as to throw upon the former the burden of proving that the promise to pay the premium was made by both firms. In this case there is a positive allegation to the latter effect, and unless it is impossible for parties not named in a policy of insurance, particularly when beneficially interested therein, to become liable to pay the premium, a good cause of action is shown against all the defendants. Even a presumption arising out of the usage which seems to have gained foothold in the city of London, in reference to the person, whom credit is given in case of insurances by agents or brokers, and which perhaps grew out of frequent insurances on foreign account, could not overcome positive evidence of a promise by the principal; the presumption is the other way, in this country. (2 Duer on Ins. 298. 1 Arn. on Ins. Am. ed. 109, 110, 113, n. 1 Phil, on Ins. 274.) The defense of the absence of any separate promise by the firm in Cuba, must be set up by answer.

The demurrer should have been overruled. The judgment therefore must be reversed with costs.


source: Caselaw Access Project

author: By the Court, Monell, J.

license: Public Domain

text:
    Daniel B. Taylor, plaintiff and respondent, vs. George W. Beebe et al. defendants and appellants.
    1. In making contracts by the corporation of New York, prescribed forms must be observed by the functionaries who make them on their behalf. Hence, contracts for work, or supplies, must be founded on sealed proposals, made in compliance with previous notice, and properly published, and must be given to the lowest bidder. The contracts of such corporation which fail to pursue these designated forms are void.
    2. This doctrine is applicable to, and controls, the duty of the corporation to make leases of its public property by public auction. Ml leases must be made in the mode designated by law; and if the corporation attempts to exercise a power not conferred by law, or to act in disregard of restrictions imposed upon it, its acts are void.
    3. Whether the power of the corporation to lease its wharves to individuals is exercised by it as an aggregate municipal body, or through the means of some delegated agent, its obligation to follow all forhas designated by law and statutory provisions is equally incumbent.
    4. Where a public wharf, leased by the comptroller, is not let by public auction, as required by law, the lessee acquires no right, under the lease, to collect the wharfage.
    5. Such a case is not aided by those revised city ordinances of the corporation (art. 4, % 27 and 28,) which merely authorize the comptroller, in conjunction with the commissioners of the sinking fund, to lease the corporate property whenever in their judgment it may be advisable to do so, but also require those officers to conform such leasing to the provisions of the city charter.

    6. A lease of a wharf is merely a letting of the franchise of wharfage. No property in', or right to, the wharf itself passes to the lessee. There cannot, therefore, be a possessio pedis, as in the case of real property.
    7. In an action by one claiming to be the lessee of a wharf, to recover wharfage, the burthen of proof is on the plaintiff. Unless he shows a proper lease of the wharf to him, he fails to establish any right to collect wharfage of the defendants.
    (Before Barbour, Monell, and Garvin, JJ.)
    Heard March 13, 1865;
    decided May 27, 1865.
    The action was to recover wharfage. The complaint alleged that on or about the 16th September, 1863, the plaintiff was the lessee of the bulkhead in the East river, at the foot of 49th street; that for fifty-eight days, commencing with said 16th September, the defendants- deposited and left remaining, on said bulkhead, a quantity of goods, wares and merchandise, exceeding, one hundred and fifty tons in weight. The plaintiff claimed compensation for such use of the bulkhead, by the defendants, under the act entitled “ An act in relation to the rates of wharfage, aryl to regulate piers, wharves, bulkheads and slips, in the cities of Hew York and Brooklyn,” passed April 10, 1860. The answer was a general denial. Upon the trial the plaintiff proved a parol letting to himself by the comptroller of the city of Hew York, of the bulkhead or wharf in question for a period less than one year. There was no proof that the letting was by auction in pursuance of public . notice, nor was there any written lease. The defendants discharged lumber from vessels upon the wharf, where it remained for sixty days.
    The plaintiff testified that he asked Mr. Beebe, one of the defendants, several times in the month, to tell him when he was going to move the lumber, telling him that perhaps there would be more of a bill than he would be willing to pay. He (Beebe) said he Would be perfectly willing to pay what the law allowed, but that he (the plaintiff) must not charge more.
    The defendants moved to dismiss the complaint, on the ground that no authority had been shown on the part of the comptroller to make the lease. The motion was denied, and the defendants excepted. The case was submitted to the jury, who found a verdict for the plaintiff.
    The defendants appealed from the judgment.

      A. C. Morris, for the appellants.
    I. The hiring to the plaintiff, even had- it been in the form of a written lease, duly executed by the corporation, would have been void, as being made in violation of the provision of the - city charter, requiring all leases to be made by public auction. (Brady v. Mayor, 2 Bosw. 173; affd. 20 N. Y. Rep. 312. Aplleby v. Mayor, 15 How. 428. People v. Stout, 4 Abb. 23.)
    In the case of People v. Wood, (4 Park. Cr. R. 144,) it was held that the mayor, &c. might be indicted for giving a lease without, having complied with the provisions of the charter just referred to.
    II. But' the question, here is not respecting the powers of the corporation, but of the comptroller. The only authority the comptroller has in the matter is derived from the ordinances read on the trial, and an ordinaftee to be found at page 291 of Valentine’s Ordinances. Section 27 authorizes the comptroller to let property for a term not exceeding one year, “ as provided in the next succeeding section.” Section 28 provides how leases shall be made, to wit, “ by conforming in such leasing to the provisions of the act entitled ‘An act to further amend the charter of the city of New Yorle, passed April 14,. 1857.’” The ordinance (Val. Ords. p.-291,) confines the powers of the comptroller to leases of not less than one nor more than ten years. They are to be made at public auction to the highest bidder, as provided by the amended charter of. 1857.
    III. The defendants showed affirmatively, by the ordinances read by them, that the comptroller had no power to make the lease in question. This was unnecessary, as the burthen of proof to show the comptroller’s authority was upon the plaintiff. The court will not take judicial notice of powers conferred upon the comptroller by ordinance.
    IY. The defendants are liable to the corporation for the use of the dock, and a payment to the plaintiff would be no protection to them.
    D. B. Taylor, respondent, in person.
    I. The comptroller of the city of New York, is the proper officer to give leases in such cases, and he having leased the bulkhead to the plaintiff, his acts are presumptively lawful. The plaintiff was, therefore, until the contrary appeared, the lawful lessee in possession of the bulkhead, and entitled to the use and profits thereof.
    II. The defendants, not the plaintiff, were bound to show cause, if any there was, why the lease of the plaintiff was not valid ; the plaintiff proved all the law required him to prove, to recover in the action ; he proved his whole complaint. The motion to dismiss the complaint was therefore properly overruled in any view which may be taken of the case.
    III. The fact that the comptroller had no right to lease the bulkhead to the plaintiff, and that such lease was void, was new matter, and cannot be set up under the present pleadings. The motion to dismiss was therefore properly overruled on that ground. The only pleading on the part of the defendant was a general denial.
    (1.) The answer must allege all those facts which, when the case of the plaintiff is admitted or proved, the defendant must prove in order to defeat a recovery. Here nothing is set up. (Sec. 149 of the Code, sub. 2. (Catlin v. Gunter, 1 Duer, 253, Ayrault v. Chamberlain, 33 Barb. 237. Carter v. Koezley, 14 Abb. 147. McKyring v. Bull, 16 N. Y. Rep. 297. Dillaye v. Parks, 31 Barb. 132. Haight v. Badgeley, 15 Barb. 502. Laraway v. Perkins, 10 N. Y. Rep. 371. Pier v. Finch, 29 Barb. 170. Graham v. Harrower, 18 Howe, 144.)
    (2.) The defendant cannot give in evidence a defense of new matter not set up in his answer. The only effect of a general or specific denial in an answer is to cast the burden of proof on the plaintiff; when that proof is given, if the answer contains nothing more than such a denial, the plaintiff is at once, and, as a matter of course, entitled to a verdict and judgment. (Texier v. Gowen, 5 Duer, 392.)
    (3.) The rule is as above, even though the fact appears from the plaintiff’s evidence. In such case it cannot be set up, unless pleaded on the ground that facts found, but not pleaded, are not available to the party proving them. (Brazill v. Isham, 12 N. Y. Rep. 16. Kelsey v. Western, 2 Comst. 506. Field v. Mayor, &c. 2 Seld. 179.)
    ' IV. The fact that the comptroller did not lease the bulkhead to the plaintiff at auction, even if properly pleaded and proved, could not defeat the action.
    (1.) Because such proof is no defense in an action between the plaintiff and a person using said bulkhead. The defendants are bound to pay some one for such use. The plaintiff has the lease, .and on payment for the use, to him, the city would be estopped from collecting the rent or use over again.
    (2.). The comptroller, had, by the ordinances of the city, the right to let said bulkhead.
    (3.) The comptroller is the proper officer to let such property, being the custodian of all the city property, and his acts as between third parties, are binding, and presumed lawful.
    (4.) The letting was lawful, for in a,ny event, part of a year, as it is presumed till the contrary is fully proved, that the comptroller had done all the charter required him to do, and properly advertised, and tried to lease the bulkhead, as provided under the charter, and having failed in doing so, 'let the same under the ordinance. (Revised Ordinances, § 27, art. 4, chap. 9.)
    V. The defendant having been requested to remove the lumber, and not doing so, but agreeing to pay what the statute allowed, the plaintiff in such case is estopped from now setting up that the plaintiff was not the lessee of the bulkhead. (Ingraham v. Baldwin, 9 N. Y. Rep. 46.)
   By the Court, Monell, J.

The 41st section of the charter of the city of New York, (Charter of 1857,) requires that all leases of the public property shall be made by public auction, and to the highest bidder who shall give adequate security. Neither the duty nor the power of granting leases of the corporate property, is conferred upon any department of the city government. Such duty and power is vested in the corporation alone, and can be exercised in such manner only as the common council may direct. Such direction cannot, however, violate any provision of law.

In respect to contraéis made with the corporation, the law is well settled, that all prescribed forms must be observed by the public functionaries. Hence, contracts for work or supplies must be founded on sealed proposals, made in compliance with public notice, and must be given to the lowest bidder. ([Charter 1857, § 38.) If, therefore, the corporation omits to observe those designated forms, its contracts are void. (Brady v. The Mayor, &c. of New York, 20 N. Y. Rep. 312. Bonesteel v. The Same, 22 id. 168. McSpedon v. The Same, 7 Bosw. 601.) These cases apply in principle, and are controlling in respect to the duty of the corporation to make leases of the public property by public auction. The law contains no exceptions. All leases must be made in the designated mode ; and if the corporation assume to exercise a power not conferred by law, or to act in opposition to restrictions imposed upon it, its acts are void.

The power of the corporation to lease its wharves to individuals, is beyond dispute ; and it is not necessary to question its right to delegate such power to the comptroller or to any other officer of the city government. But whether the power is exercised by the corporation, as an aggregate municipal body, or by some delegated agent, the duty is no less incumbent, of following all designated forms and provisions of law. The wharf at the foot of Forty-ninth street belongs to the city of New York, and the plaintiff -claims to recover wharfage as the lessee of the corporation. To authorize a recovery it was necessary for the plaintiff to establish in himself a legal right to the wharfage. The letting by the comptroller was not made by public auction as required by law; and it seems to me that the plaintiff acquired no more right under it, to collect wharfage, than if the letting had been by the street commissioner, or by any other unauthorized city official. Nor is the case aided by the sections of the revised ordinances which were read in evidence at the trial. (§§ 27 and 28 of art. 4, chap. 9 of Rev. Ord.) These sections merely authorize the comptroller, in conjunction with the’ commissioners of the sinking fund, to lease the corporate property, whenever in their-judgment it may be advisable to do so. But the same sections require those officers to conform such leasing to the provisions of the city charter, before referred to.

A lease of a wharf is merely a letting of the franchise of a wharfage. No property in, or right to, the wharf itself, passes to the lessee. There cannot, therefore, be a possessio pedis, as in the case of real property. By law, the public has the right to use any wharf or pier upon a public highway, subject to the legal charges for wharfage; and such right or easement in the public constitutes the only possession there can be of the wharf itself; the possession of the owner being of the franchise merely.

There was no evidence in the case tending to show any possession of the franchise in the plaintiff. He had not collected wharfage, which was the only possession he could have. Nor was there any evidence of any relation existing between the plaintiff and defendants from which a quasi tenancy could be implied. The conversation testified to by the plaintiff, be-between himself and one of the defendants, disclosed no assertion that the plaintiff was the lessee, nor an intimation, even, that he was entitled to collect the wharfage. To the defendants’ comprehension, the plaintiff might have been a mere agent of the corporation. There is nothing, therefore, in the case, upon which we could apply the principle, that a tenant cannot dispute the title of his landlord.

The plaintiff’s right to a recovery, rested solely, in my . opinion, upon the strength of his title to the franchise of wharfage. The letting by the comptroller was not by public auction, and was therefore void. Hence, the .plaintiff failed to establish any right whatever to collect wharfage of the defendants. The burden of proof was on the plaintiff. There being no contract between the parties, it was incumbent on the plaintiff to show, in the first instance, not the defendants’ liability, but his ownership of the franchise, and his right to its emoluments. Failing to show this, the learned justice erred, I think, in denying the motion to dismiss the complaint.

If the views I have expressed are sound, they necessarily lead to a reversal of the judgment. In that case, of course, a new trial should be ordered, with costs to the appellants, to abide the event of the suit.


author: By the Court, Robertson, Ch. J.

text:
    Timothy H. Furniss, plaintiff, vs. John Ferguson et al. defendants.
    Where a sum of money had been paid on account of a judgment, to the original owner, before an assignment thereof to subsequent assignees, and without their knowledge; and such assignees assigned to a purchaser, for a consideration, not only the judgment itself, but also “ all sums collected thereon,” and all collateral securities therefor held by them or their attorney, or any one for their benefit, and in cas^of its prior payment, discharge or transfer, the proceeds or price of any settlement or sale of the same; but warranted to the purchaser their title thereto and power to transfer it to the extent of the consideration paid, only; and all their responsibility arising out of such assignment and warranty was to end in ninety days, unless within that time notice of the ground of their liability was given to them ;

      Held 1. That the second assignee could recover of the assignors the same proportion of the consideration money paid by him, and interest, as the amount paid to the original plaintiff in the judgment, on account of it, bore to the amount due on such judgment, and interest, but no more.
    2, That this was an equitable rule, analogous to that applied to a purchase of a particular piece of real estate by measurement, when it falls short of the supposed area—being a case of mutual mistake, admitting of compensation, rather than a failure of title, or any internal and secret defect in the commodity sold.
    (Before Robertson, Ch. J., and Garvin and McCunn, JJ.)
    Heard February 17, 1865;
    decided May 27, 1865.

      This action was brought to recover damages sustained by reason of the sale and assignment by the defendant to the plaintiff of a judgment obtained by a third party (Brown) against another person (Wyman) in the state of Alabama, after the collection by the plaintiff in such judgment against the defendant therein of nearly a thousand dollars, without disclosing the fact of such collection. The judgment was for a considerably larger 'sum ($6575) and recovered in the year 1838; in which year such moneys were also so collected. The judgment remained under the control of the attorney by whom it was recovered (Mr. G-oldth waite) to the time of its assignment to the plaintiff. In the year 1852 the plaintiff in such judgment (Brown) assigned it to the present defendant and a deceased partner (Ogden) composing the firm of Ogden, Ferguson & Co. In August of that year one of such firm, (the defendant Ferguson,) on behalf of the-firm, sold and assigned the judgment,' for a considerable sum ($2576.) The instrument of assignment, which was signed by him alone, contained a recital of the recovery of such judgment; its assignment to the defendants and its being in such attorney’s hands for collection. A transcript of it, certified by the clerk of the court in which it was recovered, in which certificate was included a statement that it was unsatisfied, was annexed to such instrument of assignment. The instrument assigned not only the judgment but “all sums collected thereon, and all securities for the same, held as collateral” by the defendants, or such attorney, or by any one for their “ benefitand in case of the prior payment of such judgment, or' its discharge or transfer, “ the proceeds or price of any settlement or sale of the same.” Such assignment was by its terms subjected expressly to any prior contracts made by such attorney for the benefit of the defendants, by their authority, and also to the payment of his charges. The intention of the defendants was declared therein to be to substitute the plaintiff in their place and transfer to him all their rights to or growing out of such judgment.' The defendants warranted thereby their title to such judgment and their power to transfer it only to the extent of the consideration paid, and after ninety days all responsibility arising out of such assignment was to £( end unless notice was given within that time specifying the ground of such liability.”
    The foregoing facts are alleged in the complaint, which also avers the delivery by the plaintiff within ninety days of a notice to the defendants specifying the grounds of their liábility, and the payment by him of the costs and charges of such attorney, and alleges the legal rate of interest in Alabama to be eight per cent. The answer takes issue on the payment of such costs, the collection of such amount upon the judgment, and the rate of interest in Alabama.
    A former judgment of dismissal of the complaint in this action upon a trial was reversed by the Court of Appeals by whom it was sent back for a new trial, (15 N. Y. Hep. 437.) Subsequently a verdict for the plaintiff, on a second trial, was set aside by this court at a general term ; because the recovery was for the full amount of the moneys collected. And the verdict on which the present judgment was entered was for an amount of damages according to the rule established at such general term.
    A motion made on the last trial,' before any evidence was introduced, to dismiss the complaint, was denied. It was established in evidence that a certain sum had been collected by the attorney of the plaintiff in the judgment ($988.85) before the 9th of April, 1839, part of which ($113.85) had been retained by him for services in other cases, and part ($43.75) for commissions in collecting part of such sum ($875.) Such attorney also had a claim for a commission upon the amount of such judgment, for recovering it, which was paid by the plaintiffs and was proved to be a proper charge.
    The defendants’ counsel offered to prove facts tending to show entire ignorance by the defendants of the collection of any moneys on such judgment before their assignment thereof to the plaintiff, their good faith and innocence of fraud, the making by the plaintiff of inquiries relative to such judgment, before its purchase, and his reliance therein; which offer was excluded, and an exception was taken to such refusal.
    The judge before whom the action was tried charged the jury, that the plaintiff could recover the same proportion of the consideration money paid by him, and interest, as the amount paid over to the original plaintiff in the judgment in question, on account of it, was of the amount due on such judgment and interest, but no more. Both parties excepted to the charge so given, and appealed from the judgment entered on the verdict.
    - On the trial the plaintiff claimed to recover the whole amount of the moneys collected for the original plaintiff, less his commissions, with interest at eight per cent according to the law of Alabama, for over twenty-three years, being from the time of collection to the trial, and his counsel requested the court to charge the jury that he was entitled to recover it, and for a refusal so to charge he excepted. He also excepted to the charge as given, for not so instructing the jury. The defendants' counsel also made various requests to charge, founded mainly upon the principles, 1st, That a warranty of title to a judgment did not include warranty of the amount due on it, or the non-collection of any sums thereon. 2d. That if a sum equal to the amounts collected on such judgment was not collectable on such judgment after the assignment, the plaintiff was only entitled to nominal damages ; and that he could not recover any thing more than the excess of what was collectable thereon after the assignment, if such previous payments had never been made beyond the difference between what could have been collected at any time and the amount of such payments. 3d. That the assignment in question did not transfer any sums collected on such judgment previous to the assignment, unless they had been collected for the benefit of the defendants ; all of which the presiding justice refused to charge, and the defendants’ counsel excepted to such refusal.
    The jury rendered a verdict for nearly $530, under the charge of the judge, to which the plaintiff's counsel excepted. How such sum was made up did not appear by the case; but no error therein was pointed out in case the charge of the court was wrong.
    Both appeals were heard together.

      C. A. Peabody, for the plaintiff.
    J. Larocque, for the defendants.
   By the Court, Robertson, Ch. J.

An inquiry into the grounds of the decision of the Court of Appeals in favor of the liability of the defendants, when this case was formerly before them, (15 N. Y. Rep. 437,) is only profitable or material in order to determine the proper measure of damages, which would vary according to the mode in which the defendants are made liable, if, upon a warranty of title, they are not to be made so beyond the consideration paid, which becomes virtually thereby a standard. But their title to the judgment, as a subsisting one, has not failed at all, although their right to collect the whole amount apparently due on it is gone. . This consideration may have induced the learned justice, who delivered the opinion in the court of last resort, to assimilate the position of the defendants to that of the creator of an article, whose internal defects he may be presumed as matter of fact to know. In such case, the seller, if liable at all, either upon the ground of warranty or fraud, would be liable for the whole injury to the buyer by reason of the inferiority of the article sold to its description, without regard to the price paid therefor. In this ■case, that would be the whole amount of money collected, and interest, possibly, at the rate allowed in the state of Alabama. The limitation of liability in the assignment being only in case of a failure of title, would not reach such a warranty of quality, and the defendants would be liable for that amount. A charge of fraud would lead to the same result; but being based upon a presumption as a fact, and not as matter of law, of knowledge by the defendants of the collections made, the evidence of ignorance and good faith offered would have been admissible to repel it.

But this court has already held at general term, that if the defendants were liable at all, they were only liable for the same proportion of the consideration money paid which the amount collected was of the whole judgment. This is an equitable rule, and would be similar to that applicable to a purchase of a particular piece of real estate by measurement, where it fell short of the supposed area ; a case of mutual mistake, admitting of compensation, which, in my view, the present case resembles much more than either a failure of title or an internal and secret defect, in the commodity sold, and in which there would be no necessity of presuming fraud, even technically, against respectable and innocent parties.

Possibly, also, as the plaintiff agreed to limit his right of recovery in case the title of the defendants to the whole judgment and their authority to assign it failed, to a mere recovery of the consideration, the court of last resort may have considered that as determining the standard of damages for any short coming in the judgment itself. But there is something in the opinion delivered looking at the liability of the defendants for the whole amount of such collection. It was therein held that the assignment in question, by expressly assigning not only the judgment but all sums collected thereon, and all securities for the same held as collateral by “ the defendants or their attorney for their benefit,” and all proceeds or price of” any settlement or sale,” in case of any payment, discharge or transfer of such judgment, created an implied warranty to transfer all sums paid upon such judgment, either before or after such assignment, or that the whole amount was due except so much as had been paid to them or for their benefit. If that be the rule of damages, that adopted in this case was clearly erroneous. In the opinion delivered by this court at the general term, no notice is taken of such view, nor is any reason given for adopting the measure of damages now allowed. This court may have considered- itself at liberty'to disregard it, as not being entertained by all the members of the Court of Appeals who concurred in the decision, and that the question of damages was still left open. At all events, we are not now at liberty to depart from the rule so adopted by this court, until admonished of error by a higher tribunal.

The judgment must be affirmed, with costs to each party against the other, upon the respecive appeals of his or their adversary.


author: Robertson, Ch. J.

text:
    Henry J. Harrington, plaintiff and respondent, vs. James A. Dorr, defendant and appellant.
    1. A waiver of protest of accommodation notes passed away after they become due, by the person for whose accommodation they were indorsed, in satisfaction of a previous debt owing by such person to the transferee, made by a memorandum above the indorser’s name, is a waiver of a demand, also. And the indorser’s undertaking, instead of being conditional, becomes thereby as absolute as if he were a joint maker.
    2. A note past due may be negotiated; and a party who lends his note, without limitation as to the time of its use, is not presumed in law to have limited such time to the period prior to its maturity.
    3. The fact that the indorser of a note appears to be a surety, only affects the question of indulgence to, or discharge of, the maker. The law may imply the condition of a reasonable time in the negotiation of a note, without necessarily restricting such time to that before its maturity.
    4. Waiver of demand and notice, by an accommodation indorser, leaves him absolutely liable for the payment of the note, as much as though he were a joint and several maker by writing his name under the maker’s with the word “ surety” subjoined. And his liability must be determined upon the same principle as if he were the accommodation joint maker of the note.
    5. Any presumption, arising from the form of the obligation, when a party is an ordinary indorser, and thereby supposed to limit its use to the period before maturity, because his contract is conditional, fails when, by waiving demand, he makes his contract absolute.
    (Before Robertson, Ch. J., and Garvin and McCunn, JJ.)
    Heard February 9, 1865;
    decided May 27, 1865.
    This action was brought against the defendant as indorser of six promissory notes, hearing different dates, payable at different times, (though all made on the same day,) and in the following form:

      “ $500.00. Northfield, January 15th, 1858.
    Eight months after date, we promise to pay to the order of James A. Dorr, five hundred dollars, at No. 34 Pine street, New York city.
    The Northfield Brick Company, by James A. Doer, Treasurer.”
    Indorsed, “ Protest waived,
    James A. Doer.”
    The defense set up in the answer, so far as involved in the trial, was that the defendant indorsed the notes for the accommodation of one Myers, and that Myers passed them to the plaintiff after their maturity.
    The cause was tried before a referee, who found the following facts, namely :

      First. That the Northfield Brick Compan}’-, in or about the month of June, 1858, made the notes described in the complaint, bearing the dates and for the amounts and payable at the times and place in said complaint stated, amounting in all to the sum of $4000. Second. That at the time of the making of such notes, such company were indebted to Michael A, Myers in the said sum of $4000, which indebtedness was evidenced by notes given by said company and held by Myers, past due and unpaid. Third. That Myers surrendered to the said company the past due notes, so held by him, and received therefor the notes in the complaint described ; such notes indorsed by the defendant at the request of said Myers, to enable him (Myers) to use them. That no consideration was paid to the defendant for so indorsing the said notes, but that Myers gave to the company, for the notes in the complaint described, so indorsed by the defendant, the said past due and unpaid notes of such company. Fourth. That there was no agreement between Myers and the defendant, by which Myers was restricted as to the use which he might make of any of the notes in the complaint mentioned. Fifth. That Myers continued to hold such last notes until after their maturity ; after which Myers transferred and delivered the same.to the plaintiff, for a full and.valuable consideration, equal to the amount of the said notes, paid by the plaintiff to Myers therefor.
    And, as a conclusion of law from the foregoing facts, the referee adjudged and determined that the plaintiff was entitled to judgment for the amount of the said notes, and interest as specified in the complaint.
    From the judgment entered upon the report, the defendant appealed.

      B. D. Silliman, for the defendant, (appellant.)
    I. The plaintiff is not the real owner of the notes in suit.
    II. The evidence is clear and distinct, that the defendant lent his name, not to the maker of the notes, (the Northfield Brick Company,) but to Myers, without consideration, and solely for his (Myers’) accommodation. There was, therefore, no liability on the part of Dorr to Myers; but Myers was bound to protect Dorr from liability upon his indorsements as the paper matured. (Wright v. Garlinghouse, 26 N. Y. Rep. 539.)
    III. The plaintiff took the notes as assignee of Myers, and took only such title as Myers had at the time of the transfer. By taking them after their maturity, he took such claim and demand only as Myers then had against Dorr as indorser thereof. (Farrington v. Park Bank, 39 Barb. 645.) By taking the paper from Myers “ dishonored,” the plaintiff holds it subject to all equities and to all defenses on the part of the defendant against Myers. (Johnson v. Bloodgood, 1 John. Cas. 51. Sebring v. Rathbun, Id. 331. O’Callaghan v. Sawyer, 5 John. 118. Lansing v. Lansing, 8 id. 454. Havens v. Huntington, 1 Cowen, 387. Williams v. Matthews, 3 id. 252. Furniss v. Gilchrist, 1 Sandf. 53. Reed v. Warner, 5 Paige, 650. Britton v. Bishop, 11 Verm. R. 70. Odiorne v. Howard, 10 N. H. Rep. 343. Bower v. Hastings, 36 Penn. Rep. 285. Cummings v. Little, 45 Maine Rep. 183. Andrews v. Pond, 13 Pet. 79.)
    IV. When Dorr indorsed the notes for the accommodation of Myers, the latter became bound to take them up at maturity. This excluded the idea that he could negotiate them after maturity. In contemplation of law, therefore, the contract between him and Dorr was that they should not be used after maturity. (Byles on Bills, 94, 95. Reynolds v. Doyle, 1 M. & G. 753. S. C. 2 Scott’s N. R. 45. Story on Bills, §§ 187, 191.)
    Y. There was also an agreement by Myers with Dorr (when he induced the latter to indorse these notes for his accommodation) to use them before maturity. The notes for which he wished to substitute them were past due, and therefore no longer negotiable; he desired Dorr’s indorsement to the new notes, in order to be able to use them, while negotiable, i. e. before their maturity. Such being the contract, both by operation of law and by actual agreement between Dorr and Myers, the plaintiff taking these notes after due, took them subject to all equities, as absolutely as he would have done had they been originally business paper.
    YI. When Dorr indorsed the notes for accommodation of Myers, the relation of principal and surety arose, which must be regarded by all other parties or holders affected with notice. (Bank of Toronto v. Hunter, 4 Bosw. 646. Pitts v. Congdon, 2 Comst. 352. Griffith v. Read, 21 Wend. 502.) The plaintiff was chargeable with knowledge that Dorr was surety only for Myers, and a right on the part of Myers to negotiate Dorr’s indorsements several years after the paper had been dishonored, cannot be implied, to the prejudice of the surety. The well settled rule in such cases excludes implied engagements. (Rochester City Bank v. Elwood, 21 N. Y. Rep. 88. Gates v. McKee, 3 Kernan, 232. Ludlow v. Simond, 2 Cai. Ca. 1. Leeds v. Dunn, 6 Selden, 469.)
    YII. Where a guaranty is given by a surety, although no period of credit is specified^ yet it is not to be taken as a guaranty for an unlimited period, but to be restrained by the usual course of business. (Pitman on Sureties, 172. Combe v. Wolf, 8 Bing. 150. Howell v. Jones, 1 Cr. M. & Ros. 97.) The court has judicial knowledge that, in the usual course of business, indorsed paper is negotiated before its maturity. So certain is this, that paper past due “ does not circulate for commercial purposes, and neither banks nor business men deal in it, or accept it, in exchange for money or merchandise. The substantial elements of commercial paper are wanting.” It is disgraced paper. (Farrington v. Park Bank, 39 Barb. 645.) It follows that the agreement between Dorr and Myers having been that the notes should not be used after maturity, the plaintiff, by taking them when past due, had notice of it.
    VIII. But where the guaranty expresses time, the limit is absolute, and any variation will discharge the surety. (Holl v. Hadley, 5 Bing. 54.) This rule is held with special strictness as regards negotiable paper. (3 Kent’s Com. 124. Birckhead v. Brown, 5 Hill, 635.) Here the time was distinctly expressed by the_ very words of the notes, viz. “ eight months after date.” That promise, and that only, was guaranteed by Dorr. But he did not agree to guarantee a promise made (by Myers issuing the notes) two or three years after that eight months had expired. Dorr, by indorsing and becoming surety for the promise of another, to make a payment eight months after January 7th, 1858, did not undertake to guaranty a very different promise, which had not been made—a promise which might or might not be made' two or three years-after that date. The promise which he did guaranty, was expressed in the note, to be one maturing on the days named in 1858. “ If this is the meaning which the paper naturally conveys, it is the sense which the court is bound to apply to it.” (Per Denio J. Gates v. McKee, 3 Kern. 234.) The only contract or undertaking made by Dorr was therefore one by its terms maturing on, and restricted to those days.
    IX. No case in this country, we believe, has held that accommodation paper could be negotiated after maturity so as to bind the surety, unless with his express consent. In England, in certain cases where the question arose mainly on the pleadings, the surety was held liable on paper negotiated after maturity. (Charles v. Marsden, 1 Taunt. 224. Sturtevant v. Ford, 4 M. & G. 101.) But the more recent English cases indicate dissatisfaction of the courts with those decisions, and a disposition to recede from them. Even in Sturtevant v. Ford, the court treat the question as one of pleading, merely, and say that they should hold, the surety not liable, but for the case of Charles v. Marsden, In Parr v. Jewell, (16 Common Bench, 7 J. Scott, 684, 81 E. C. L. R. 684,) it was held that it is a good defense to an action by the indorsee against" the acceptor of a bill of exchange, that it was accepted for the accommodation of the drawer without consideration, and that it was indorsed over by the drawer after it had been paid by him at maturity.
    X. Dorr having indorsed for Myers’ accommodation, they stood in the same relation to each other as though Myers had been maker and Dorr indorser. Such being the case, and the notes being in Myers’ hands at maturity, the law presumes that Myers had negotiated and paid them at maturity. (Chirographum apud debitorem, repertum prcesumitur solutum.) The notes, therefore, had ceased to have vitality, and were “functi officio,” before their subsequent delivery to the plaintiff. Dorr’s suretyship as indorser thereon had ceased, and they could not be again negotiated so as to bind him. In Parr v. Jewell, (ubi supra,) Crompton, J. said, “it would be very unreasonable toehold that an accommodation bill may be kept outstanding for an indefinite time, and circulated and paid over and over again.” (P. 703.)
    XI. By his indorsement alone Dorr agreed to be liable only if payment should be demanded at maturity, and notice given of non-payment. Such is the nature of the contract of indorsement. The waiver averred by the complaint related only to the demand and notice necessary at maturity. The waiver given by the defendant performed its function when the notes matured. The notes were then still in Myers’ hands, and the defendant owed nothing upon them. If Myers could again negotiate them, Dorr not being chargeable at the time of such second negotiation, could thereafter be rendered liable, only by new demand and notice. No such new demand and notice is averred, waived, or proved.
    XII. The construction claimed by the plaintiff makes the statute of limitations unavailable. The liability of the indorser, instead of being limited to six years after the maturity of the notes, would continue for twelve years. Myers might have held the notes for six years, and negotiated them on the last day of that period, and the indorser’s liability would not cease until the end of six years more. Thus the defendant, waiving demand and notice, which by the terms of the notes would have been due in September and October, 1858, might first hear of his liability in September and October, 1870.
    XIII. The insolvency of Myers, known to. the plaintiff at the time of the alleged transfer of the notes to him (he then holding the dishonored notes of Myers) creates a strong equity in favor of the defendant, as against the plaintiff. (Gillespie v. Torrance 25 N. Y. Rep. 306.)

      E. W. Chester, for the plaintiff, respondent.
    I. The notes were for a valuable consideration, and were indorsed by the defendant for the purpose of being used by Myers. Myers’ use of them was in strict accordance with the understanding between him and the indorser. (DeZeng v. Fyfe, 1 Bosw. 335. 2 id. 398, affirmed in the Court of Appeals.)
    II. It is no defense to a bill or note, held by an indorser who has given value for it, that it was made without consideration paid to the acceptor or indorser, where there is no fraud in the use made of it, or where the use is in accordance with the purpose for which it was accepted or indorsed. It does not affect the responsibility of such an acceptor or indorser that it was passed away after maturity, or that the purchaser for value knew that the acceptor or indorser was an accommodation acceptor or indorser, or that he took it in payment or as security for a precedent debt. (Edwards on Bills, 316. Smith v. Knox, 3 Esp. 46, per Lord Eldon. Bank of Rutland v. Buck, 5 Wend. 66. Powell v. Waters, 17 John. 176. Grandin v. LeRoy, 2 Paige, 509. Seneca Co. Bank v. Neass, 3 Comst. 442. Duel v. Spence, 1 Abb. 237. Mohawk Bank v. Corey, 1 Hill, 513. Brown v. Mott, 7 John. 361. Grant

      & Cary v. Ellicott, 7 Wend. 227. Story on Promissory Notes, 5th ed. §§ 194, 195. Sturtevant v. Fordes, 4 Scott, 668. Bank of Salina v. Babcock, 21 Wend. 499. Bank of Sandusky v. Scoville, 24 id 115.)
    Taking a' note in payment of a precedent debt, and still more as merely security for it, or with the knowledge that it was made or indorsed for the accommodation of the party using it, or after maturity, all stand upon the same footing. Against holders who take notes in either of these ways the maker or indorser cannot set up merely that he became a party to the note for the accommodation of the party who held and passed it away. It is enough that its use is consistent with the purpose for which it was made or indorsed.
   Robertson, Ch. J.

The notes in suit in this case having been passed away by the person for whose accommodation they were indorsed by the defendant (Myers) after they became due, in satisfaction of a debt due by such person to the plaintiff, by a memorandum above the defendant's name, the protest of such notes was waived, which includes a waiver of demand also, (Coddington v. Davis, 1 N. Y. Rep. 186;) and his undertaking, instead of being conditional, became thereby absolute as if he were a joint maker. It is claimed on behalf of the defendant, that by implication of law the use of such notes by Myers was limited to the time such notes had to run.

There is no doubt that any one taking a negotiable obligatory instrument past due, or for a precedent debt, takes it subject to all equities or defenses, as between the original parties, except that of the want of a.consideration, if that be one. A promissory note made by one person and delivered to another, to be negotiated by the latter, without any limitation as to time or purpose, is equivalent to a general authority from the maker to bind him to pay according to the terms of such note the amount specified therein, to any person to whom the party for whose accommodation it is made, may deliver it, for a valuable consideration. The legal effect of taking it when past due is precisely similar to that of incorporating in the body of the note the terms and conditions of the original understanding of the parties as to its use, and no more. And if, in this case, by operation of law or the express agreement of the parties outside of such notes, they were not to be passed away after becoming due, such limitation of their use would be available as a defense, to the defendant.

Notes or bills of exchange past due, may be passed away so as to bind accommodation makers of the one or acceptors of the other; otherwise the books would not be so full of decisions as to the effect of taking notes past due from an accommodation holder. The fact that the indorser appears to be a surety, can only affect any indulgence to or discharge of the maker. The law may imply the condition of a reasonable time in the negotiation of a note, yet not necessarily restrict such time to that before its maturity.

In this case, as I have said, the waiver of the demand and notice left the defendant absolutely liable for the payment of the note, as much as though he had been a joint and several maker by writing his name under the maker’s, with the word “surety” subjoined. And his liability must be determined upon the same principle as if he were such accommodation joint maker of a note. A note past due may be negotiated, and is more valuable than one not due, because it draws interest from its maturity. A party who lends his note without limitation as to the time of its use, cannot therefore be presumed in law to have limited such time to that before its maturity. He might even have post dated the note when he delivered it. Any presumption, arising from the form of the obligation, when a party is indorser and thus may be supposed to limit its use to the period before maturity, because his contract is conditional, fails when he makes his contract absolute, by waiving demand.

This court held, when this case was formerly before it, that without reference to the waiver of demand and notice, the defendant was liable : possibly considering that the delivery of the indorsement without any restriction as to the time and mode of its use was a waiver of such demand and notice. The cases there cited as authority for that decision, Sturtevant v. Ford, (4 Man. & Gr. 101,) and Carruthers v. West, (11 Q. B. R. 143,) were full on this point; and to these may be added the earlier case of Charles v. Marsden, (1 Taunt. 224.) Cases in which a note 'has been once passed away and paid, functus officio, are not applicable to one where the accommodation paper has not' received any vitality or * performed any office by being used as was intended. (See Parr v. Jewell, 16 Com. Bench, 7 J. Scott, 684. E. C. L. R. 81.) I have not been able to find any subsequent cases which intimate dissatisfaction with the doctrine established in those earlier cases ; on the contrary, subsequent cases, by making distinctions, seem tacitly to approve them.

In any event there are no such clear and convincing proofs of haste or error in the former decision of this court as to induce a departure from its deliberate judgment. The judgment must be affirmed, with costs.


text:
    Isaac W. Edsall, plaintiff and respondent, vs. James Brooks and another, defendants and appellants.
    1. Although in actions for defamation, greater liberality is practiced in construing „ supposed defamatory words when they are spoken, than when contained in written or printed articles, yet in both cases, it is entirely a question of intent as to the sense in which they are used.
    2. Although every one is presumed to use the words of a language, in their ordinary import among all those who commonly employ it as a vehicle of ideas, yet where some words have by local usage acquired a distinct and peculiar meaning, they may be presumed to have been uttered or published in that sense; and if such usage be averred in the pleadings and evidence introduced to sustain it, the sense in which such words were used in a publication in that locality should be submitted to the jury.
    3. So held in an action for libel, upon a publication respecting the plaintiff, who had been a police officer, made by the defendants in a newspaper edited by them in the city of New York, headed ‘‘Blackmailing by a policeman'' which consisted of a statement of a dismissal of the plaintiff as such policeman “ on charges of blackmail, preferred against him by citizens in three distinct cases; of a detailed account of the receipt by the plaintiff, from three several persons designated by name, who had been defrauded of money, of sums paid by each of them voluntarily to him, for his aid as an officer in recovering such moneys; and an allegation of his trial upon charges preferred against him for such receipt before the Board of Metropolitan Police, and their consequent dismissal of him from office; where a local meaning of the word blackmailing corresponding with the plaintiff’s conduct had been alleged in the answer, and sustained by evidence on the trial.

      4. The ordinary meaning of the word blackmail, and the decision in this case in 2 Robertson 29, commented on and explained.
    (Before Robertson, Ch. J. and Garvin and McCunn, JJ.)
    Heard February 16, 1865;
    decided May 27, 1865.
    This was an action for an alleged libel published by the defendants, and was three times tried. Upon the first trial the complaint was dismissed upon the ground that the article was a privileged communication ; which judgmént was reversed at general term, upon the ground that the acts charged against the plaintiff by the defendants, in the answer of the latter, or proved by them, not being sufficient to establish the accusation contained "in such publication, it was not privileged. (2 Rob. 29. 17 Abb. Pr. 226.) Upon the second trial the plaintiff recovered a verdict, which was set aside upon an appeal from the judgment entered therein, in consequence of the admission of improper evidence. (See 2 Bob. 414.) The plaintiff also recovered a verdict on the third trial, from the judgment on which the present appeal was taken.
    The article complained of was published in a newspaper edited by the defendants ■; but only the supposed defamatory part is set out in the complaint. It was headed “ blackmailing by a policeman ; ” which was followed by a statement that the plaintiff had been dismissed, as a policeman, “ on charges of blackmail, preferred against him by citizens in three distinct cases.” In the publication itself, as set out in the answer and admitted, this was succeeded by a statement of three cases of voluntary payments of certain sums to the plaintiff, by persons, for his aid as ah officer, in the recovery of money of which they had been defrauded, of the preferment of charges against him for such receipt to the Board of Police Commissioners, and his trial and dismissal in consequence thereof, from office.
    The answer set up two defenses. 1st. That such charges being made against the plaintiff as stated in the publication complained of, and so set forth, he was dismissed as charged in the complaint, and that such publication was a just, fair and impartial account of such facts, charges, trial and dismissal, and was a privileged communication; and 2d. That the plaintiff was employed as a policeman in the particular cases mentioned in such publication and complaint, and received for his services in such cases, the sums also mentioned in such publication and complaint, without permission of the Board of Metropolitan Police, and contrary to law ; that the acceptance of such sums, under such circumstances, is known as, and called throughout this community, “ blackmail ” and “ blackmailing ; ” and that the plaintiff was dismissed for so receiving the same. Ho reply was put in to such answer.
    Upon the last trial of the issues in this action, two witnesses only were examined as to the meaning of the word “ blackmailing ; ” one for the defendants, (who was the author of the publication in question,) who testified that “ the general acceptance of the term blackmailing in the community,” was “ taking money or property improperly, for services rendered or to be rendered.” Upon his cross-examination he said “it might be done by simply asking” that “ in this community” such term did not “ imply simple extortion, under all circumstances,” and admitted that all “ presents voluntarily given for services rendered were not ” blackmailing, adding the qualification “ unless it was improper for the party to receive it.” The other witness so examined, (Carpenter,) who -was an inspector of police, testified that in this community, (Hew York,) blackmailing was “ extorting money illegally, immorally, or wrongfully," and implied extortion; and upon being asked upon his cross-examination whether, if a “policeman, by force of his authority, * * or from lack of principle, should receive ” a certain sum from a defrauded person, “ for discharging his duty, it would come under blackmail,” he answered that he did “ not think it would approximate to it' at all.”
    Upon such trial, a motipn was twice made by the defendants to .dismiss the complaint, which was refused, and an exception taken. The counsel for the defendants then made three requests to the court, to instruct the jury substantially as follows :

      First. That as matter of law, the word “ blackmailing” is equivocal, and as such, its construction is a question for the jury whether it is libellous or not; and if they did not think it libellous, under the definition of libel given by the court, they should find for the defendants.

      Second. That if the jury should believe, under the evidence, the term “ blackmailing” equivocal, they might construe its meaning, and if they should believe it not libellous, they should also find for the defendants. •

      Third. That the jury had a fight to construe the particular publication in question, and say if it came within the definition of libel given by the court. With these requests, the learned judge before whom the cause was tried, refused to comply, but charged the jury, in substance, that the defense was, that the publication in question was “ a fair, correct report of and com-. ment upon the proceedings before the commissioners,” and as such the defendants, as publishers of a newspaper, were not responsible therefor; but that this court, at general term, had determined that “the comments prefixed” to such publication, were not privileged, but libelous. He then proceeded to say: “ I have allowed, in this case, some evidence tending to prove the common understanding by the community of the meaning of the word hlaclcmailing, * not because I thought it proper evidence, but because there was no objection made to it. But ® ® I do not find in it any thing which would authorize me to submit to you as a matter of fact what is, or is not, the general meaning of that word. I think the witnesses agree, substantially, in regard to the meaning of the word. * ® There is no justification set up, either in the answer, or proven upon the trial, for the publication of this libel.” He then instructed the jury that the plaintiff was entitled to recover some damages, and laid down rules for their government in estimating them.
    The counsel for the defendants excepted to the refusal of the learned judge to comply with his requests. Also, to so much of his charge as instructed the jury that the remarks prefixed to the publication in question were libelous, and that such publication was not privileged; to his refusal to submit the meaning of the word “ blackmailing ” to the jury; and to his charge, that the plaintiff was entitled to a verdict for some amount.
    The jury found a verdict for the plaintiff, upon which judgment was rendered, from which the present appeal is taken.

      C. Lawton, for the defendants, (appellants.)

      A. Sanford, for the plaintiff, (respondent.)
   By the Court, Robertson, Ch. J.

There cannot be a doubt, on reading the answer in this case, that it presents different defenses to the whole, or different parts of the cause of action alleged in the complaint. After setting forth the evidence of the publication complained of, which had been suppressed in the complaint, the defendants aver therein the preferment of the charges, and allege the trial and consequent dismissal of •the plaintiff, and claim that the account of such charges, trial and dismissal in such publication was a just, fair and impartial statement of them, and was privileged; this was evidently aimed only at the body of the publication. They next, for a further defense in such answer to the part of the publication stated in the complaint, set forth the official character of the plaintiff) his receipt of a salary for his services in such capacity, and also his acceptance, for his own benefit, of a certain sum without the consent of the police commissioners, for his services as such policeman in the cases before mentioned ; and aver that such acceptance of such money “ was and is known, denominated and called throughout this community as blackmail, and ® * blackmailing, and it is so known and understood by the community generally.” They also set up, in such second defense, the charges, trial and dismissal before mentioned, and claim the benefit of the privileged character of the publication.

Neither of such defenses, so set up, may prove to be a legal defense in this action, or shew that the heading and first part of such defamatory article set out in the complaint, was a privileged communication, or any part of one ; but the second one does set up a justification as to the comments on the plaintiff’s trial, contained in such article, and undoubtedly should have been sustained on the trial, if receiving money under the circumstances specified was “ blackmailing,” under the general or legal meaning of the word, or, under its local meaning, if parol evidence be admissible to establish such meaning. The testimony of the author of the article was evidence of such local meaning, if material to the defense of the defendants. The learned judge, therefore, in his instructions to the jury, on the trial, that there was no justification either set up or proven on the trial,” for the publication, must be understood as meaning no legal justification ; in other words, that neither any nor all of the matters set up in the answer constituted a defense. The exception to such instruction, as well as to the refusal to charge that the legal meaning of the word “ blackmailing” was equivocal, and therefore its construction as libellous, was a question for the jury, or that if, under the evidence, they thought it equivocal, it was also a question for them, fully raises the question whether parol evidence is admissible in an action of libel, to shew a local meaning of the language used, which embraces the occurrences or conduct charged, both when the legal meaning of such language is equivocal and when it is unequivocal.

I assume that under this the decision formerly rendered in this case, (17 Abb. Pr. 226,) it is the settled law of this court, that any comments which accompany a correct report of a judicial proceeding in regard to the conduct of any one, which they do not warrant as a legitimate conclusion, if defamatory, are libelous, notwithstanding the leading case in this state, relied on in the opinion then delivered, Thomas v. Crowell, (7 John. 264,) merely denies the right to “garble” or “discolor” accounts of judicial proceedings, so as “ to asperse character,” by “ comments or constructions,” without responsibility ; and although in cases of slander, accompanying words may be had recourse to, or even extrinsic circumstances, to show that they were used “ mitiori sensu.” (Van Rensselaer v. Dole, 1 John. Cas. 279. Dexter v. Taber, 12 John. 239. Quini v. O’Gara, 2 E. D. Smith, 388.) For the two other cases cited in such opinion, (Stanley v. Webb, 4 Sandf. 21, and Clement v. Lewis, 3 Brod. & Bing. 279,) are decisive on that question ; the decision in the first, being in this court, was based on that of the second; in the former the heading was, “ extorting money to hush up a complaint,” and in the second, “shameful conduct of an attorney.” Another case may also be added, (Barthelemy v. The People, 2 Hill, 248,) which also sustains such view, in which facts occurring in the proceedings referred to, and not charged in the publication, were not allowed to be proved to support its accusations. The ground of such distinction between words written and spoken defamatory words, is not very clear, perhaps, but any removal of the distinction itself, can only be made by an appellate court.

The next question that presents itself is whether this court, in its decision at general term in this case, definitively held, as a conclusion of law, that the term “ blackmailing” could mean nothing but the imputation of a crime or offense, of which the plaintiff was not guilty, under the circumstances stated in the pleadings, and not merely that, as a conclusion of law, such circumstances would not warrant such a charge. The latter would evidently have been a sufficient ground to warrant the judgment of the court of reversal in such case,, as the question had been entirely withdrawn from the jury at the first trial. In order to ascertain, therefore, if the first was the ground, it will be necessary to look a little into the learned and elaborate opinion delivered at general term, already referred to.

With the respect I entertain for my learned brother who delivered that opinion, and before whom that cause was last tiled, I cannot bring myself to believe that after a thorough examination of the meaning of the word blackmail,” lexi-. cographically, etymologically, and in its common use, he meant to hold that there was no sense of it which could be applied to a public officer for receiving money without the consent of his superior, for 'services rendered in the discharge of his duty, for which he received a salary, when prohibited by law from receiving it without such consent. The learned judge, after citing a definition of blackmailfrom Wharton’s Law Lexicon, as being money paid to be protected from devastation, states in such opinion, that “ substantially, we now attach the same meaning to the term.” He then adds: In common' parlance, and in general acceptation, it is equivalent to, and synonymous with, extortion which he apparently defines as “ the exaction of money, either for the performance of a duty, the prevention of an injury, or the exercise of an influence.” This, clearly, would bring the reception of money by a public officer, for the discharge of his duty, from the parties benefited, within such latter definition. But he adds : “ It supposes the service to be unlawful, and the payment involuntary ;” and then proceeds to point out various modes of moral compulsion, which he considers may render it involuntary. He concedes, ■ however, that ufrom its indefiniteness and, comprehensiveness, the offense is not classified as a distinct crime,” although “ believed to be criminal.” Under such a course of reasoning and statement, assuming such definitions to be accurate, when the only point to be arrived at was, whether the learned judge, before whom the cause was originally tried, was right in withdrawing the case entirely from the jury, if it appears, oh more full examination, that the offense of which the plaintiff was guilty, was akin to that of extortion, as an offense known to the law, and that the settled meaning of blackmail is not confined to the payment of tribute for protection against injury, or if it were so, that it is exactly what the plaintiff did, unless there be an essential distinction between redress and prevention, I trust I shall be pardoned in making the inference that the general term of this court did not intend to establish, as an absolute rule of law, that the term 'blackmailing was of so certain, definite and narrow a meaning, that it could not be applied to the plaintiff’s conduct in question, to characterize it.

Extortion is made by Blackstone ([Com. vol. 2, p. 141,) a public offense; and he defines it to be an abuse of public justice which consists in any officer’s unlawfully taking, by color of Ms office, any money that is not due to him.” Hawkins adds to this, “ more than is due, or before it becomes due.” (1 Pl. of Cr. B. 68, § 1.) And the Revised Statutes (vol. 2, p. 651, § 7) declare that “ no * * person to whom any * compensation shall be allowed by law for any service, shall take * any other * reward for such service but such as is or shall be allowed by the laws of this stateand that a violation of such provision shall be a misdemeanor. (Id. § 17.) And although proceedings under the fourth part of such statutes are excepted from the operation of such provisions, inducing swindlers to refund money through threats ■ or fear of official action against them, is not included as part of such proceedings.

Officers appointed by the Board of Metropolitan Police hold during good behaviour. (Laws of 1860, ch. 259, § 13.) The commissioners of such board are empowered to enact “ rules and regulations of general discipline.” (Id. § 27.) No policeman can be removed except on charges preferred against him according to such rules and regulations, and upon a public hearing and examination of such charges, after notice to him. (§ 13.) Such board has power to issue subpoenas tested in the name of its president, and to administer oaths to parties summoned thereby, whose false swearing therein is declared to be perjury. (Id. § 25.) It is declared to be cause of removal for any member of the police force to receive any reward or present for services rendered in the discharge of his duty, without notice to such board, (Id. § 65,) and such rewards become the property of certain trustees. (Id. § 66.) Clearly, such board act judicially to hear and determine charges against officers of the force for offenses against its regulations, or the laws of this state which relate to their office ; and removal from office for violations of them, follows as a punishment. Upon such a trial and conviction the plaintiff was removed. The essential of illegality which the learned judge, in his opinion already alluded to, considered to be necessary to make up the offense of extortion, in blackmailing, was not wanting ; unless what is prohibited and punished by law be not illegal. It strikes me, therefore, that the illegal acceptance of money by a police officer from a party injured, for services in the line of his duty, for which he already receives a salary, comes so near extortion, both in its legal and ordinary sense, at least- so far as that idea enters into the meaning of blackmailing, as to exempt the defendants from suffering a severe lesson for the ignorance of legal philology.

The foregoing views, however, presuppose blackmailing, as ordinarily understood, necessarily to include the idea of extortion by moral compulsion. No authority is given for such exclusive interpretation, or when, how or where such limitations of its original meaning began. If we are allowed to abandon reliance upon lexicographers of established reputation, and trust to a general understanding, very few will agree upon the same sense. Worcester states, in his dictionary, that blackmail originally meant the performance of labor, payment of copper coin, or delivery of certain things in kind, as rent, and refers to it as a term in old English law. It was contrasted with blanch-farm or white rent, which was paid in silver. (Burrill’s Law Diet, in Derb.) Spelinan, in his glossary, attributes the term black to the color of the coin ; Jamieson, in his dictionary, to its illegality. The term mail does not seem to be derived from any French word “ maille,” if there be such an one, but rather from the Gaelic “mal” a rent, or the German “ mahl,” a tribute ; the difference in sense being: trifling:. The sense in which it was used, mentioned by Wharton, is secondary, and confined originally to the north of England. ([Whishaiv’s Law Diet.) Uean Swift used it to signify “hush money,” or “money extorted from persons under the threat of exposure in print for an alleged offense.” Bartlett, in his Dictionary of Americanisms, is the first lexicographer who confines its meaning to that sense, and the use of it in such sense to this country, This brief allusion to its origin and variety of meanings at different times, and in different countries, and by different authors, shows the danger of confiding in any supposed general employment of it in any limited sense. I am not satisfied, therefore, that the meaning of blackmailing is legally confined to extortion by threats or other morally compulsory measures; the influence arising out of previous dependency and superfluous gratitude to a public officer for merely doing his duty arising out of the recovery of property expected to be lost, accompanied by the power of playing upon the hopes and fears of the party injured, may be as effective as any moral compulsion. The law sets aside executory contracts obtained under similar influences.

The general rule as to the interpretation of words, is that words spoken are to be construed in the sense in which they are understood by those who hear them, (Backus v. Richardson, 5 John. 476;) and if susceptible of two interpretations, the intended sense is a matter for the jury, (Woolcott v. Goodrich, 5 Cowen, 714.) The meaning, of words not unavoidably imputing something derogatory to the person of whom they are published, must be submitted to a jury. (Lewis v. Chapman, 16 N. Y. Rep. 369.) The question of privilege in the use of even libelous words as legitimate criticism, is to be set up by answer, and submitted to a jury, (Cooper v. Stone, 24 Wend. 434;) the court can only pronounce them prima facie libelous.

The case of Stone v. Cooper, (2 Denio, 293,) fully illustrates the danger if not impropriety of assuming the “ durior sensus ” of a word to have been universally adopted. The charge in that case was against'the plaintiff, that he was in haste to collect money due him, “to put it in Wall street for shaving purposes.” The court in that case held, construing the word shaving “ mitiori sensu,” that although frequently used to imply oppression or extortion, its natural meaning was simply buying notes at a discount beyond interest.” In that case there was no allegation in the pleadings of the sense in which the word was intended to be used, and it was, therefore, left to its prima facie legal construction. In this case there was evidence on the tirial, as was alleged in the answer, that the generally understood meaning in the community in which the written article in controversy was published (New York,) of the acts with which the plaintiff was charged by it was blade-mailing. The two witnesses who were examined as to its meaning, differed widely as to it; the witness for the defendants leaves out wholly the idea of extortion or moral coercion, and restricts it to “money improperly received for services rendered, or to be rendered.” The other witness said “it was extorting money illegally, immorally, or wrongfully; ” possibly, he embraced the idea of extortion also.

Although greater liberality seems to be exercised in the case of words when they are spoken than when they are contained in written or printed articles, yet in both cases it must be one of intent; of course, a person must be presumed to have used words in their ordinary import among those who speak the language to which such words belong, in the community in which they are uttered or published ; but if they have acquired by local usage a different meaning, it must be presumed that they were used to convey the ideas attached to them by such usage, and such meaning may be alleged as a fact in the pleadings, and the evidence upon it may be passed upon by the jury. The meaning of all words in the English language is not everywhere the same, and the only criterion of the meaning of them as used on any occasion is the understood meaning in the community, society or individuals to whom they were addressed ; it is only when understood in that sense they do the party at whom they are aimed any injury.

I think, therefore, the sense in which the term blackmail was intended to be used by the defendants in the article in question ought to have been submitted to the jury; and for this reason the judgment should be reversed, and a new trial had, with costs to abide the event.