author: Per Curiam.

text:
    DAVID B. HALSTEAD, Respondent, v. CHARLES C. DODGE, et al., Appellants. NELSON J. BOTSFORD, Respondent, v. CHARLES C. DODGE, et al., Appellants.

      Decided December 22, 1884.

      Corporations—liability of trustees, for not filing reports—parties defendant—error in election of trustee, effect on liability—obligation of corporation to file annual report—stochholder, what sufficient to constitute.

    Plaintiff may bring his statutory action, in case of failure to file the annual report, against such of the trustees of the corporation as he may select; therefore, if there are three or more trustees, and the action is brought against but two, the non-joinder of the others constitutes no defense.
    In case one of the defendants is a trustee whose election is not technically legally valid, where, as matter of fact, he was in form elected a trustee by those who had the right to elect one, if there was a vacancy to be filled, and thereafter acted as trustee, and while acting as such, there is a failure to make and file the report required by law, he must be held liable on any such default between the time of his election and resignation ; his not being a stockholder will not exempt him from liability.
    Annual filing is necessary as to all corporations, notwithstanding chap. 510 of law of 1875. That chapter amending § 12 of the Act of 1848, must be read in connection with that section as it stood before the amendment; and thus read, whether the first report under the requirement of the amendment is to be made in January, 1876, or January, 1877, a further report must be made twenty days from the first day of January in each year thereafter.
    Where a certificate is filled out and signed by the president and secretary it constitutes the person named in it a holder of the shares specified therein, although the corporate seal is not affixed; and although it is not detached from the certificate book, the party named in it being in the case at bar the secretary of the company.
    Before Sedgwick, Ch. J., Van Vorst and Freedman, JJ.
    Appeal by defendants from judgments entered on the reports of a referee.
    The facts sufficiently appear in the opinion of the referee, which was as follows :

      J. S. Bosworth, Referee.
    Each of these actions is .brought against the defendants as Trustees of the “ Pyrolusite Manganese Company, ” a manufacturing corporation, to recover the amount of a debt alleged to be owing by I he corporation to the plaintiff. In each case it is sought to charge the defendants as such trustees, because the said corporation did not, within twenty days from the first of January, 1882, make and publish and file a report as required by law in such case made and provided, and also because the corporation has not since then made, published and filed such a report; these actions were commenced in March, 1883. Some questions common to both actions will be first considered. The defendant Dodge alleges in his answer in each action that one E. H. Woodward “ at all the times alleged in the complaint was a co-trustee "with this defendant of the Pyrolusite Manganese Company and was and is a necessary party to this action.” The defendant Pond has not set up this defense ; his answer in each action consists of a general denial of the allegations of the complaint. The defendants .insist that as the statute makes the trustees jointly and severally liable, they must be sued separately or jointly ; that by bringing an action against more than one trustee, the plaintiff has elected to treat these as jointly liable, and that his complaint is fatally defective because he has not made all the trustees parties defendant. The common law rule that persons jointly and severally hable, must ah be made defendants, if more than one of those thus liable were sued, applied only to actions arising ex contractu (Graham Pr. 2d Ed. 91). As to actions ex delicto the rule was different. In such a case the injured party could sue one, all or any number of them (Ib. 93, and cases there cited). Under the statute which subjects trustees to the liability here sought to be enforced, the liability is imposed for a neglect or omission to perform a duty which the statute enjoins. Bo right of recovery is based upon any contract, made or alleged to have been made by the trustees ; it is based on their misconduct, for which, when established, they are subjected to a liability which the statute affixes as the penalty for such misconduct. I think, therefore, that this defense is unavailing (Strong v. Sproul, 4 Daly, 326 ; Quigley v. Walter, 2 Sweeny, 175).
    It is objected on behalf of the defendant Pond, that he was not at any time a trustee of the company.
    He was as matter of fact elected a trustee on July 12, 1881. On that day the trustees were Edward H. Woodward, Charles 0. Dodge and Pauline Woodward. All the stockholders were represented at that meeting, and all ‘the votes cast were in favor of such election. He ivas elected in the place of Pauline Woodward, whose resignation was presented at that meeting and accepted. Her resignation was in terms conditioned “to take effect after the legal election of the fourth trustee ” named in contract, bearing date June 29, 1881. The word “ legal ” is interlined and is in a different ink from the residue of the written resignation, but when or by what authority it was inserted was not shown. By the articles of incorporation, the business of the corporation was to be managed by three trustees. It does not appear that any appropriate action has been taken to make four, the number of the trustees. It would seem from the evidence that A. T. Woodward was elected a trustee at the same time. The. acting trustees at that time were Edward H. Woodward, the president, and the defendant Charles E. Dodge. After the election of Pond and of A. T. Woodward, there were in form four trustees. As Pond was elected trustee in place of Mrs. Woodward, there is some force, as I think, in the position that he was legally elected a trustee, unless the condition of Mrs. Woodward’s resignation, as it was not literally and legally complied with, rendered such election a nullity. If she had resigned unconditionally, and Pond had thereafter been duly elected a trustee in her place, I do not see that the validity of his election could be questioned, merely because then or thereafter, there was a fourth trustee elected, without such prior action having been taken as would ho necessary to make the election of a fourth trustee legal. Mrs. Woodward’s resignation was in fact accepted, and Pond was elected as her successor. He then believed that he had been duly elected a trustee.
    About June 26, 1883, he formally resigned as trustee, and the five shares of the stock of the company which had stood in his name, from the time of his election as trustee, on the books of the company, was transferred to Chas. 0. Dodge, and on the evidence given, presumably at the request of Pond.
    In the meantime, Pond, though evidently paying but very little attention to the details of the company’s business, did various acts as secretary of the company. As such secretary, he signed notices of proceedings had, and also certificates of the ownership of stock in the company. On or about June 3, 1882, Pond and Dodge “as Trustees of the Pyrolusite Manganese Company,” presented a petition to the supreme court, in which they prayed “for a final order, dissolving said corporation and appointing one or more receivers of its property, and for such other relief as may be just.” That petition alleges “that the said petitioners are one-half in number of the trastees of the Pyrolusite Manganese Company.” It was signed by Dodge and Pond, and verified by them on June 3, 1882. In the verification they, each for himself, swore, “that the matters of fact stated in the foregoing petition and schedule thereto annexed are just and true, so far as he knows, or has the means of knowing.” On that petition, the supreme court made an order, on the 5th of June, 1882, by which, among other things, it was “ ordered that all persons interested in the said corporation show cause” (at a time and place named, before Horace 0. Chittenden, appointed a referee for that purpose, “why the prayer of the petitioners should not be granted.” On December 29, 1882, the defendant Pond was examined as a witness under this order of reference, and testified thus, viz.: “ Q. You are, or suppose yourself to be one of the trustees ? A. I suppose myself to be ; yes, sir. Q. How many shares of stock do you own ? A. Five shares.”
    The evidence justifies the conclusion, that litigation on the orders, made on the petition, was going on at the time that Pond resigned his trusteeship, in June, 1883.
    On April 17, 1883, he attended a meeting of the trustees, at which time the trustees proposed a resolution, removing Edward H. Woodward from the office of president of the company, and elected Chas. 0. Dodge president. Pond voted for the resolution, stating at the time of so voting, according to his own testimony, “If I am a trustee, I vote so and so.” This being translated means, as I understand it, that he said when he voted, “ If I am a trustee of this company, I vote aye, ” (or in favor of the resolution). After the vote was taken a notice was sent to Woodward, and published in one or more newspapers, signed by Pond as secretary of the company, declaring that at a stated meeting of the board of trustees of the company then held, Woodward was removed from the office of president of the company, and that Dodge was elected the president.
    I think that Pond cannot claim exemption from the liability imposed by statute upon the trustees of such a corporation, on the ground, that, technically, his election was not legally valid.. As a matter of fact he was in form elected a trustee by those who had the right to elect one, if there was a vacancy to be filled. He supposed then that he was legally elected, and there is no reason to doubt that those who voted for his election supposed it to be legal. Without imputing to him motives which I think do not exist, he must have believed when he verified the petition before referred to, that he was in fact a trustee legally elected. Besides continuing to prosecute that petition as such trustee, up to the time of his resignation of the office, he acted as trustee at a meeting held in April, 1883, at which Woodward was removed from the office of president and another person was appointed president of the company. Without his presence and action at the meeting there could no pretense that the removal of Woodward from office was effected.
    Easterly v. Barber (65 N. Y. 252), was a contest between the plaintiff, who had acted as trustee (but claimed not to have been legally elected a trustee) and his co-trustees, to recover from these co-trustees the amount of a debt owing to the plaintiff by the corporation, of which they were such trustees, on the ground of the omission to make and file the report required by law. The court held (Ib. 262), “that a person having voluntarily assumed the character of a trustee shall not be permitted to deny, either as to his co-trustees, or the cestuis que trust, that he held that character, or to disavow his acts in that capacity. Accordingly, the failure to file the report in this case was the plaintiff’s failure as well as that of his associates. They could only be held hable with him to a creditor who had been aggrieved by their conduct. The plaintiff has not been injured. The penalties of the statute were not given for his protection.”
    The logical conclusion to which this decision leads is, that if his co-trustees should be compelled to pay debts owing by the company, because they had not made and filed such a report, that they could recover from him his alleged part of the sum which they had thus been compelled to pay. That being so, they would not seem to be any good reason why such creditors could not recover from him directly. The language of the opinion imputes that. They would only be held liable with him to a creditor who had been aggrieved by their conduct. If he would be held hable with them, he would be held hable if sued separately.
    The act of Pond in filing the petition previously mentioned with a view to have the corporation dissolved and a receiver of it properly appointed, was an act of peculiar significance. Without the allegation that he was a trustee of the company, the court would not have had jurisdiction to act on the petition. The object and intent of that proceeding, was to take property of the company out of the hands and control of the persons elected by the stockholders to manage its business. The result sought would change the relations of each creditor of the company to it, and impose the necessity upon them to resorting to other remedies then such as they would have had so long as the corporation remained undissolved. It would seem to be fitting in such a case, to carry the rule enunciated in Easterly v. Barber (supra), so far as to hold, that a trustee thus acting, although perhaps not legally elected, was hable to the creditors of the corporation, who were such, while, during his trusteeship, there was a failure to make and file the report, required by law. I think he must be held liable on any default to make and file a report between the time of his election as trustee, and the time of his resignation of the office.
    But it is further objected that Pond was not a stockholder. If this were so he would nevertheless be hable if the views above expressed are sound.
    One acting as trustee cannot be held to be exempt from liabihty as trustee merely because he was not a stockholder. But I think he was a stockholder. On the books of the company he appeared to be the owner of five shares of the stock; certificate (No. 43) was filled up and signed. It was signed by the president and Pond as secretary of the company. This transfer of stock to him was doubtless made to satisfy the requirement of the statute that a trustee must be a stockholder. Although the certificate was not detached from the books, it was within the control of Pond, and he was at liberty to do with it as he pleased. Whether he paid for the stock or it was given to him is of no consequence. The fact that the corporate seal was not affixed to it while the stock stood in his name, did not prevent the title to it from resting on him. A person buying stock of the company or of the owner of it, who receives from the company a certificate of his ownership thereof, authenticated by the signatures of its appriate officers, will become the owner of such stock, although the officers may have omitted to affix to it the corporate seal.
    It is further insisted that the question of liability of the trustees is to be determined by section 12 of the general law, as amended by chapter 510 of the laws of 1875 (p. 589). That this section, as thus amended, provides first for corporations where the certificate of incorporation had been filed more than a year prior to the 20th of January next after the passage of the act, and requires but one report in such cases. Next for corporations whose certificates of incorporation might have been filed less than one year from the 20th of January next after the passage of the act, and as to the latter class, a certificate must be made and filed in each successive year. In the nature of things, there is no reason why an annual report should be required in the latter class of cases which will not apply in equal force to the other class.
    Section 12 of the act of 1848 requires that “every such company shall, annually, within twenty days from the first day of January, make a report, &c.” This act would require a report from a company though not organized more than thirty days prior to the succeeding 20th day of January. The change apparently intended to be made was, to dispense with the necessity of a report until after the lapse of one year from the filing of the certificate of incorporation.
    The section, as amended, read in connection with the section amended, imports to my mind a requirement that annual reports be made, and specifies the time when the first report shall be made; and whether in obedience to this requirement—the first report required by this act shall be made in January, 1876, or in January, 1877, a further report must be made twenty days from the first day of January in each year thereafter. If these views are correct the only question left is, whether in January, 1882, or January, 1883, the corporation was a debtor to each of the plaintiffs, and the amount of such debt. Pond was a trustee ; no report was made in either of these years, or before this action was commenced in March, 1883, or since then, so far as the evidence discloses.
    The debt of the corporation to Halstead arose between July 25, 1882, and December, both days inclusive. Hal-stead had loaned to the company from time to time, moneys to be.used, and in fact used in the legitimate business of the company and to pay its current expenses, amounting to $4,313.40 over and above a payment of $182.30 made on account of such loans. All of this indebtedness was due and payable as early as December 11, 1882, besides interest on each sum loaned from the time it was due and payable.
    This debt, therefore, was contracted while Pond was a trustee, and was due before the time when the trustees should have made their report in January, 1883. On March 22, 1883, at the time this action was commenced, there was due from the corporation to the plaintiff the sum of $4,400.32.” . . .
    The referee then considered the effect óf a payment made since the commencement of the action, and concluded as follows : this will leave due at the date of this report from the corporation to the plaintiff the sum of $4,057.94, which sum the plaintiff was entitled to recover.”
    From the judgments entered upon the reports made pursuant to the foregoing opinion, defendants appealed.

      William B. Peck, attorney and of counsel for appellant,
    on the propositions contained in the headnotes, argued :—I. The action should have been brought either against one or against all of the trustees of said company. Edward H. Woodward has always been a trustee of said company. The statute under which the defendants are sought to be held liable, provides that upon the failure of a corporation to properly make and publish a report, all of the trustees thereof shall be jointly and severally liable for certain debts of said corporation (Laws 1875, ch. 510). At common law, in all cases where parties are jointly and severally hable, the plaintiff must sue either each separately or all together (De Ridder v. Schermerhorn, 10 Barb.
      638 ; Allen v. Fosgate, 11 How. Pr. 218 ; Dean v. Whiton, 16 Hun, 203; 1 Chitt's Pleadings, 30-49 ; 3 T. & R. 782 ; 1 Parsons Contr. 12). Neither the laws nor the code have changed this rule, except as to parties hable upon the same written instrument (Code, §§ 448,454 ; De Ridder v. Schermerhorn, 10 Barb. 638 ; Allen v. Fosgate, 11 How. Pr. 218 [220]; Dean v. Whiton, 16 Hun, 203 ; Strong v. Wheaton, 38 Barb. 623). Section 454 of Code, which is the only present authority for said exception, reads as follows : “ Two or more persons, severally liable upon the same written instrument, ” etc. This action is not brought against persons severally hable on the same written instrument, but to enforce a joint and several liabihty created by statute. The learned referee cites in his opinion, the ■decisions in the actions Strong v. Sproul (4 Daly, 326) and Quigley v. Walter (2 Sweeney, 195), in support of his rulings that Edward H. Woodward is not a necessary party to this action. Strong v. Sproul was reversed at the court of appeals (See 53 N. Y. 497). The action of Quigley v. Walter, was one where two of four trustees were named in the summons, but only one was served with summons or appeared, and where judgment was only taken against the defendant so served. The decision was based on the fact that while there was nominally two defendants, there was really but one defendant. The two cases cited do not, therefore, support the said referee’s opinion.
    II. Pond was not a stockholder, and therefore could not be a trustee. Laws 1848, chapter 40, §3, provides that a trustee must be a stockholder. He never subscribed for, paid for, or had any of the stock of said company in his possession. No stock of the said company was ever issued or transferred to him. Certificate No. 43 for five shares of stock, which it is claimed Pond owned, was never sealed or cut from the certificate book. While it was made out in his name, it was also, on the day it was dated, July 12, 1881, indorsed in blank by him. There was, therefore, as much of a delivery from him back to the company as from the company to him. His ownership, if any, in the stock was for only one day, and probably but for a moment. Further, the seal of the company was necessary to the issuing or transferring of stock thereof (By-laws, Art. XIII; B. fol. 128 ; H. fol. 114.)
    The learned referee, in his opinion, states that the certificate was within Pond’s control. There is no proof to sustain that statement. Even if Pond had had the physical control of the certificate, he did not have the right to affix the corporate seal or to cut the certificate from the book.
    III. It is settled in this state that the recovery allowed by statute against trustees for the failure of a corporation or its officers to make a report is a penalty. It is only officers de jure that come within the purview of the statute (Merchants’ Bank v. Bliss, 35 N. Y. 412 ; Garrison v. Howe, 17 Ib. 458 ; Adams v. Mills, 60 Ib. 536 ; Bonnell v. Griswold, 8 Ib. 128; Whitney Arms Co. v. Barlow, 68 Ib. 34). In this action it is extremely doubtful that there was ever any liability on the part of the company for the alleged indebtedness, and it is clearly proven that defendant, Pond, was not, in fact, a trustee of the company. The learned referee, in his opinion, states that Pond was at least a trustee de facto, and that a trustee de facto is hable to a creditor for a failure of the corporation to file an annual report, and cites Easterly v. Barber (65 N. Y. 252), as enunciating such a rule. This case can clearly be distinguished from the case at bar. In Easterly v. Barber, a de facto trustee brought an action against his co-trustee to recover for a failure to file an annual report, and the court held first, that one trustee could not bring such an action against his co-trustee, and second, that plaintiff was estopped from denying that he was a de jure trustee as against his co-trustee, and therefore could not bring the action. Anything further is obiter dicta. The case of Easterly v. Barber is not authority for the proposition that a de facto trustee is liable to a general creditor of the corporation for a failure to file an annual report. In the said case of Easterly v. Barber, the plaintiff was invoking the aid of a penal statute, and the rale above stated, that nothing can be presumed against the defendant, &c., was applied, as it should be in the present action. A de facto trustee is not a trustee, though by the operation of the doctrine of estoppel his acts are for some purposes treated as the acts of a trustee. An officer de facto is not a good officer in point of law (King v. Corporation of Bedford Level, 6 East, 368). Only de jure trustees can be held hable for a failure to file an annual report under the statute. It is not the duty of persons who are not legally trustees to make and file a report, (Craw v. Easterly, 4 Lan. 513 ; aff'd 53 N. Y. 679). Pond was never in such a position that he could have legally made or filed a report, or that he could have compelled the trustees of said company to make and file such report, or join with him in making and filing the same, and therefore should not be held hable for the failure of the company to file a report.
    IV. There was no obhgation on the part of the Pyrolusite Manganese Company to make or file a report after December 31, 1881, the law making such report necessary having been repealed, and hence there is no habihty on the part of the trustees in case of a default in making and filing such report. Section 12 of chapter 40 of the laws of 1848, by virtue of which section the defendants are sought to be held liable, was amended by chapter 510 of the laws b£ 1815, so as to read as follows : “Every such company shah within twenty days from the first day of January, if a year from the time of filing of the certificate of incorporation shah then have expired, and, if so long a time shah not have expired, then within twenty days from the first day of January in each year after the expiration of a year from the time of filing such certificate, make a report,” etc. Prior to this amendment the said section read as fohows : “Every such company shah annually within twenty days from the first day of January, make a report, ” etc. The amendment operated as a repeal of the former statute (Knox v. Baldwin, 80 N. Y. 610; Victory Webb Printing Co. v. Beecher, 26 How. 48 ; Sedgwick Statutory Law, 104; U. S. v. Tyner, 11 Wall. 88; Dexter v. Allen, 16 Barb. 15 ; Moore v. Mausert, 49 N. Y. 332; People v. Supervisors, 67 Ib. 109 ; Angel v. Town of Hune, 17 Hun, 374). As the defendants were elected trustees of said corporation, as the alleged default was permitted, and as this action was commenced afier said amended statute went into effect, their liability in this action is governed by its provisions (Knox v. Baldwin, 80 N. Y. 610 ; People v. Supervisors, 67 Ib. 109). The amended section drops the word annually from the statute. It refers to two classes of companies, the one class being those whose certificates of incorporation had been filed for a year or more, and the other class being those whose certificates had not been filed for so long a time. Said section provides that the first class “ shall within twenty days from the first day of January,” make a report, etc., and that the other class “shall within twenty days from the first day of January in each year, after the expiration of a year from the time of filing such certificate, make a report,” etc. There is no requirement in said section that the first class of companies shall report “annually,” or “in each year,” or in fact make but one report. The Pyrolusite Manganese Company was incorporated in the year 1873, and therefore was not required by law to file a report after January 21, 1881. The defendants could only be held hable in this action in case the company had been incorporated since January, 1875 (Chapter 510, Laws 1875).
    V. The said statute is penal (Merchants’ Bank v. Bliss, 35 N. Y. 412 ; Garrison v. Howe, 17 Ib. 458 ; Adams v. Mills, 60 Ib. 536 ; Garrison v. Howe, 17 Ib. 458 ; Bonnell v. Griswold, 80 Ib. 128 ; Jessup v. Carnegie, 80 Ib. 441 ; Hall v. Segel, 13 Abb. N. S. 178). The statute being penal in its character “nothing can be presumed against the defendant, and every fact necessary to establish his liability must be affirmatively proved, and this, although it can only be done by proof of a negative ” (Whitney Ames Co. v. Barlow, 68 N. Y. 34).

      Dill & Chandler, attorneys, and James B. Dill, of comisel for respondents,
    on propositions stated in the head notes, argued:—I. The defendant moved to dismiss the complaint, upon the ground that under a strict interpretation of the original act, as amended by the act of 1875, there was no obligation on the part of the corporation to file any report after the year 1876 (Laws 1848, ch. 40, § 12 ; Laws 1875, ch. 510). This construction of chapter 510 of the laws of 1875 was recently repudiated by this court at general term (Vernon v. Palmer, 48 Super. Ct. 231). . And by the supreme court at circuit (opinion by Barrett, J.) and general terms (opinion by Daniels, J.), in Parsons v. Sprague, supreme court, 1st Department, Nov. 3d, 1883 (not reported).
    II. The defendant moved to dismiss the complaint on the ground of the non-joinder of Edward H. Woodward, one of the trustees. This motion only applies to the defendant Dodge; non-joinder was not pleaded by the defendant, Pond. (1.) The motion was properly denied. Edward H. Woodward was a non-resident of the state, being a non-resident of the state it was not necessary to join him in any action (Angel v. Lawton, 76 N. Y. 540). (2.) It is no defense that a part only of the trustees are joined in an action under the statute (Quigley v. Walter, 32 Super. Ct. 175 ; Strong v. Sproul, 4 Daly, 326). This case (Strong v. Sproul) was reversed at the court of appeals (53 N. Y. 497) on the point of practice only, and the law as laid down by general term stands without contradiction or qualification. (3.) The principle claimed by the appellant, that in common law, where parties are jointly and severally hable, the plaintiff must sue one or sue all, is limited to actions ex contractu (1 Chitty Plead. 97, 98 ; Tyler Stephen on Plead. 27 ; Graham’s Practice, 2d ed. 91). As to an action ex delicto, the rule was different. In such a case the injured party could sue one, all, or any number
      (Graham's Prac. 2d ed. 93, and cases cited; Strong v. Sproul, 4 Daly, 326). This is an action ex delicto, and not ex contractu (Bonnell v. Griswold, 80 N. Y. 128).
    This defense must also fail, because there is no proof that this third trustee was within the jurisdiction of this court where the action was brought, and free from all legal disability (Angel v. Lawton, 76 N. Y. 540).
    m. Bond certainly acted as trustee and assumed the position from July 12, 1881, to June 26, 1883, and he therefore is estopped from denying his trusteeship (Easterly v. Barber, 65 N. Y. 262).
   Per Curiam.

Judgment affirmed, with costs, upon opinion of referee.


source: Caselaw Access Project

author: Sedgwick, Ch. J. Van Vorst, J.

license: Public Domain

text:
    WILLIAM F. BRIDGE, Appellant, v. GEORGE H. PENNIMAN, Respondent.

      Contract—rescission of-—when return of property purchased, deemed made in pursuance of.

    Plaintiff purchased of defendant twenty-two shares of the stock of a certain corporation for $22,000, which purchase was induced by the false and fraudulent representations of defendant. This action was brought to recover $22,000, the purchase price aforesaid, the plaintiff claiming that he had returned the said shares of stock to defendant in rescission of the contract. The main fact of the evidence in that regard was, that plaintiff after learning of the embarrassed condition of the company, and after negotiation or dispute with defendant, took a bond executed by defendant and his wife, who charged her separate estate therein, which bond after reciting the transfer of all plaintiff’s stock to defendant, proceeded to indemnify plaintiff from all claims against the company, and from all liability as a stockholder or trustee thereof, etc. ; and plaintiff did at the time, or soon thereafter, so transfer to defendant all his stock, including shares purchased from other persons than defendant, and not in question here. The evidence, however, showed that plaintiff’s entire connection with the company and all his purchases of stock, were induced by defendant’s said false representations.

      Held, upon consideration of all the facts and circumstances that said delivery of the twenty-two shares, could not be deemed made in pursuance of a rescission of the contract, and that as there was no unconditional tender or delivery of the stock, plaintiff could not recover in this action.

      Decided January 5, 1885.
    Before Sedgwick, Ch. J., Van Vorst and Freedman, JJ.
    Appeal by plaintiff, from judgment for defendant, entered on the report of a referee.
    So much of the opinion of the referee as is necessary to show the facts, is given below :
    E. W. Patterson, Referee.
    “ This is an action brought to recover back the purchase price paid by the plaintiff to the defendant, upon a sale made by the latter to the former, of twenty-two shares of the stock of the Judd Linseed and Sperm Oil Company, which shares were of the par value of one thousand dollars each, and for which the plaintiff paid to the defendant the sum of twenty-two' thousand dollars. The theory of the action is that the plaintiff rescinded the sale, because of the falsity of certain representations made by the defendant, concerning the value of the stock and the condition of the company, which induced the plaintiff, to purchase. It is claimed that the shares were given bask to, and received by the defendant, and that he was placed by the plaintiff in the condition in which he stood before the sale was made, except in so far as it became impossible to place him in that condition by reason of Ms own acts preventing it.
    “The plaintiff having closed Ms case, the defendant moved to dismiss the complaint. . . because it appeared affirmatively that the plaintiff did not rescind the sale by residing the defendant, as nearly as might be, to the position he occupied before the sale was made, but on the contrary entered into a new arrangement, entirely incompatible with a claim of a rescission of a sale of the shares having been made. . . .
    “ Some time in 1816, prior to the month of Hay, Penniman began negotiations with Bridge,. looking to the purchase by the latter of the shares of stock in the Judd Company. After some time spent in these negotiations, Bridge bought the shares belonging to the defendant, and he also bought some belonging to the other persons. He did so on the faith of the statements made by the defendant that after the payment to the company of certain indebtedness then due it by the defendant and his brother Samuel, the capital of the company would be intact, and that the company would in effect be in a sound and solvent condition. The money Bridge paid for the defendant’s shares went into the treasury of the company in payment of the defendant’s debt thereto. It was agreed that Bridge should be made a trustee and president of the company ; and that agreement was carried out. And from May, 1876, until some time in November, 1876, Bridge acted as a trustee and president of the company. In June, 1876, the plaintiff made an examination of the books of the company and ascertained that the representations made by the defendant as to the value of the stock and the condition of the company were erroneous. He at once communicated his discovery to the defendant, and exhibited to him a statement of the accounts showing the result of the examination, he, the plaintiff had made. On the 28th of June the defendant wrote Bridge a letter, in which he said : ‘ I am grieved to write that after worrying all day over the figures of the accounts, I cannot find any mistakes in the balances as taken off in the sheet you handed me. I have gone back to the balances taken January 1, 1876, and find them all apparently correct, and I cannot conceive how we could have made so great mistakes then, or such serious losses since. I can readily make the assets foot up some seventy thousand dollars more than your sheet does, but even this will leave us with an apparent loss of nearly half our capital.’ In the same letter he also uses the following expression : 11 need not write you that anything in my power will be done to keep you from loss.’” . . .
    The referee after holding that plaintiff was justified by circumstances in not moving towards rescission till November, 1816, proceeds: . . “And assuming that the plaintiff then desired to pursue a remedy in the courts, he had, under the well settled rules of law, one of the three courses to take : 1st. To retain the shares and to sue Mr. Penniman for damages. 2d. To file a bill in equity to procure a rescission of the contract of sale, in which event he need hot have returned what he received, nor made any offer to return it before he filed his bill. For, on tender of return made in his bill, all the equities could have been adjusted in the action ; or, 3d. To return or offer to return,, unconditionally the twenty-two shares, thus placing the defendant, as near as might be, in the position he occupied in May, 1816, when the shares were sold and the price paid for them ; and sue for, as money had and received, the price paid (Gould v. Cayuga Co. Nat. B., 86 N. Y. 75).
    “ As before stated, the theory of the plaintiff’s case is that he elected to take the third of the courses above referred to ; that he returned the shares, and was thereupon entitled to sue for the money he paid for them. He must stand on that presentation of his case. . .
    “Bridge’s testimony is, that on the 1st day of November, 1816, he said to the defendant: ‘I expected him to hold me harmless, and pay me that money for the stock I had purchased.’ This expectation was founded on the passage contained in Penniman’s letter, of June 28th, above quoted, as to protecting Bridge from loss ; but that passage does not in any way relate to Bridge’s surrendering his shares, or retiring from all interest in, or connection with the company, and I do not see anything in the evidence before me to countenance any such construction. Bridge says, that in this interview of November 1st, asked Penniman to give me a written obligation, so that, in case anything should happen to me, my wife would get the money that I put into the company for his benefit and the benefit of his concern;’ and that Penniman refused to sign any more papers. Thereupon the witness continues : I told him he could have the stock, that it was worthless; and I gave it back to him, and told him at the same time I should expect him to pay me for that stock.’ He subsequently gave back to the defendant not only the twenty-two shares he had bought from the defendant, but he surrendered to the defendant thirty-eight other shares, for which he, Bridge, had paid to other parties the full sum of thirty-eight thousand dollars ; and he thus gave up and relinquished to the defendant every share of stock he held in the Company. This relinquishment and transfer of the shares to the defendant was after and in consequence of certain correspondence, which began by letter from the defendant to the plaintiff on November 2, 1876. . . Having the date of the actual transfer of the sixty shares from the plaintiff to the defendant thus fixed as of the 10 or 12 of November, 1876, it becomes pertinent, in order to ascertain the nature and purpose of this transfer, to recur to what took place between the parties early in that month ; and, as what they did is in writing, there can be no mistake as to its meaning.

      “ On November 2,1876, the defendant wrote the plaintiff the letter above alluded to. It evidently relates to the conversation" which Mr. Bridge says they had on the preceding day ; that conversation being the first between them in which the subject of the relinquishment of the stock or its surrender or delivery appears to have been referred to In the letter of November 2, tho defendant says : ‘ I cannot consent to the proposed entire abandonment by you of your interest in our company and business, without again, in this more formal way, advising against it, as I feel perfectly satisfied that by continuing in the business, with your capital and credit, it will take but a little while to make up your losses.’ Again, and in the same letter, he states : If you conclude to give it up, I am, though very unwillingly, obliged to make the best arrangements I can for its continuance.’ This letter, read in connection with the conversation, which Mr. Bridge states took place on the previous day, shows that the parties were negotiating for some arrangement to be made between them, and does not show in any way that Mr. Bridge was taking the attitude of enforcing a legal right to rescind the contract; and it seems that, on the 2d of November, Penniman was corresponding with the plaintiff upon the basis of a proposition made by the plaintiff that the latter should retire from the business altogether, and abandon the interest he had in it. I have tried in vain to make something else out of this letter and the conversation which led to its being written. There is nothing in the case to impeach the good faith of that letter. Nothing had occurred, so far as the evidence discloses, to apprise Penniman of any purpose of Bridge to stand upon or assert legal rights to the return of the purchase money. If he meant it, he certainly did not express it in the conversation to which he had testified. No formal demand had been mado for the return of the purchase money, and no tender or offer back of the twenty two shares of stock had been made. All that Bridge did'was to tell Penniman the stock was worthless, and he might have the whole of it. It is perfectly obvious that what took place in November related to the sixty shares of the stock of the Judd Company, and not merely to the twenty-two shares bought of the defendant. It cannot be contended that it was necessary to tender the sixty shares in order to rescind the sale of the twenty-two shares which was all Bridge purchased of Penniman. There was no liability of Penniman possible, as upon a rescission of tho purchase from the other seller to Bridge. And there is nothing that can indicate that in the offer to hand to Penniman the whole sixty shares, the plaintiff intended or attempted to put himself in a position to sue for the purchase price of the twenty-two shares. The question to be considered hero is, what does this transaction of giving up the sixty shares mean, and what does the evidence show it to have been ? If the plaintiff intended to rescind tho sale of tho twenty-two shares, and place himself in a position to sue for the twenty-two thousand dollars, why did ho transfer sixty shares in bulk, and do it in connection with an agreement for indemnity against claims of creditors of the company ? It seems to me there can be but one answer to this ; namely, That this particular transaction was not intended as a rescission, but that Bridge surrendered all the shares he had under an agreement made with Penniman, and upon receiving indemnity against the debts of the company, doubtless believing that Penniman would, in some way, and at some time, save him from loss. The bond of indemnity itself is very significant. It is not limited to protecting Bridge from liability on the twenty-two shares he bought from the defendant, but extends to all of Bridge’s liability as a stockholder, for the full amount of the sixty shares, and the instrument recites in substance that it is given because and in consideration of the transfer of all Bridge’s stock and interest in the company to the defendant. How can a contract as to specific property be rescinded by giving up that property and also transferring other property, and taking an indemnity against liability for holding that specific property and the other property also ? This bond of indemnity was accepted by Bridge. It was not executed by the defendant alone, but Mrs. Penniman became one of the obligors ; that is, she indemnifies Bridge not only against liability on the twenty-two shares, but against liability on the other shares also. Thus a new party was introduced into the transaction—a transaction much wider in its scope than the twenty-two shares, and having for its object something more than merely protecting the plaintiff from a loss which might be occasioned by the purchase of the twenty-two shares from the defendant. This seems to render it clear that the transaction was not a rescission, nor based upon a rescission, but was a new arrangement, whereby Bridge abandoned his interest in the company in consideration of his being indemnified against claims of creditors which he might have incurred by reason of his having been a stockholder in and trustee of the Judd Company. . . .
    “By the arrangement Penniman was put in new relations to the business again. The plaintiff knew that if Penniman accepted the surrender of the sixty shares, the latter would make arrangements to continue the business, for Pemiiman told him so, and the letter, above referred to, of November 2, shows it distinctly. I do not see how che promise contained in the letter of June 28, vague in its terms, and pointing to no specific method of protecting the plaintiff, can be imported into the transaction of the alleged rescission so as to enable the plaintiff to claim that all that took place upon the surrender of the sixty shares was colored by, and subject to, a reservation of a legal right to sue Penniman for the money paid on the sale of the twenty-two shares. ... I am constrained, therefore, to hold that there is no evidence in this case of an unconditional return, or offer to return to the defendant the twenty-two shares of stock, for the purchase price of which this suit was brought. It is clear that the shares were given upon a new arrangement, amply set forth in the documents in evidence, and in that state of the case it is my duty to dismiss the complaint.”

      William C. Holbrook, for appellant.
    G. E. P. Howard and Joseph H. Choate, for respondent.
   By the Court.

Sedgwick, Ch. J.

The plaintiff claimed, that the defendant had sold to him twenty-two shares of the stock of a corporation, for which he had paid the defendant $22,000, and also that the purchase was so induced by the false and fraudulent representations of the defendant; that the plaintiff had a right to rescind the purchase and recover the $22,000, also claiming that he had in fact rescinded. The defenses denied the right to rescind and the fact of rescission, claiming that the plaintiff had not tendered or returned the stock to the defendant, in a manner that would allow the plaintiff to rescind, or in other words, unconditionally.

The most important fact, as to the return of the shares to the defendant is, that after negotiation or dispute between the plaintiff and defendant, after the plaintiff had demanded that defendant should give security, as well as his own obligation, as an indemnity against plaintiff’s liability as stockholder, etc., the defendant and his wife, the latter expressly charging her separate estate, made a bond to the plaintiff. It recited, whereas William F. Bridge has transferred or is about to transfer to George H. Penniman, all his stock and interest in the company specified, and has resigned as president and trustee of the company, in consideration of the premises and of one dollar, the‘said George H. Penniman, who is here the defendant, and his wife, do jointly and severally agree to indemnify and save harmless the said Bridge from all claims, debts or demands, of whatever name, nature or kind, now existing against said company or heretofore contracted by it, or on its behalf, also from all claims or demands against him as a stockholder in, or trustee of said company,” etc. The plaintiff upon receiving this bond transferred the stock.

The matter may be considered in view of alternative suppositions; one, that the loss indemnified against in the bond, was of the kind that might be the foundation of a recovery for damages in an action brought for damages from the fraudulent representations referred to ; the other that the arrangement as to the bond was independent of the original transaction, and the transferring of the stock was merely a consideration for the contract of indemnity.

On the former supposition, when the plaintiff took indemnity for the losses, upon a claim for damages, he would elect to stand upon his right to damages for being induced by fraudulent means to make the purchase. In such case, he had lost the right to rescind, and indeed the possibility of returning the shares, as a condition of the right to rescind, was gone upon his transferring them, under the contract made by the bond of indemnity. My rendering of the testimony is, that in fact, the bond was given under the plaintiff’s repeated claim for damages from the original transaction.

On the other supposition, that the transfer of the shares was merely a consideration for the bond, it would seem clear that the shares, and the whole of their value and of then use, were given and wholly devoted to the object of the bond as a contract, and that, as in the former case, the plaintiff lost the right and power to use them in any way, as a condition of rescinding the purchase and claiming the money paid on it from the defendant. Evidently, the plaintiff had.lost all dominion, or jus disponendi of the shares, and this he must have to enable him to return the shares or tender them in disaffirmance or rescission of the original contract.

This latter supposition, includes the possible case of the original purchase and sale being made under a mutual mistake of fact.

The learned counsel for the appellant argues, that the bond of indemnity was given in consequence of a promise made by the defendant, after the plaintiff had discovered that the representations were untrue. That promise was in a letter of defendant, and was, “I need not write you that anything in my power to do, wiE be done to keep you from loss.” The learned referee in his opinion, shows that this was not in its meaning, a promise to indemnify, or an offer to make a contract of indemnification, but was an assertion as to the writer’s future action in the business of the company. If it were otherwise, and was a contract, some consideration must be found to support it. The plaintiff made no mutual promise to form a considertion. If the implied promise was the legal obligation of the defendant to make the plaintiff good from loss from the original transaction, then the plaintiff elected not to rescind. If there were an impHed promise that each should do what was afterwards done when the bond was given, then, as it has been remarked before, the plaintiff devoted the shares to a purpose other than giving or tendering them to the defendant, in order that the latter might be subjected to the obligation to return the money paid for the shares.

It is unnecessary to go into further particulars, for the opinion of the referee fully and satisfactorily shows the merits of the case.

Judgment affirmed, with costs.

Freedman, J., concurred.

Van Vorst, J.

(dissenting). I cannot concur in the disposition made of this case by the referee, nor in the result reached by Sedgwick, Oh. J.

The plaintiff had purchased from the defendant, his relative, in whose statements he had reason to suppose he might place confidence, twenty-two shares of stock in “ The Linseed, and Sperm Oil Company,” at one thousand dollars a share, and purchased additional shares of defendant’s brothers, upon similar representations. The representations of the defendant, which induced the plaintiff to buy these shares, were material. They referred to the condition of the company, and the value of the stock. The representations proved to be false.

These conditions authorized the plaintiff to return the shares, purchased from the defendant, and to demand from the defendant, the price he had paid for them. In other words he might rescind the sale. Dealing with a relative, with whom he had been on friendly terms, his. movements in the direction of a rescission were not so direct, prompt and decisive, as they would have been, had he been dealing with strangers. On purchasing these shares, the plaintiff became a trustee and the president of the company. This was in pursuance of the understanding of' the parties. Shortly after assuming the duties of his office as trustee, and in June, 18J6, and from an examination of the books of the corporation, he discovered the facts, which showed that the capital of the company was largely impaired, and that his stock was worthless. Plaintiff at once, and in a kindly manner, called the defendant’s attention to the facts, and to the worthlessness of his stock. He submitted statements taken from the books. The defendant could find nothing to substantially impeach the truthfulness of the plaintiff’s discoveries from the books. He claimed some errors, but not enough to materially change the result reached. On June 28, the defendant wrote the plaintiff a letter, in which he said, I need not write to you that anything in my power to do, will be done, to keep you from loss.”

The defendant did however, claim at the same time, that «there was a much larger stock of seed on hand, than they had supposed, which would make the condition of the company better, and that there were other assets of of the company, of which the plaintiff had no knowledge. Defendant also claims that when the seed was worked up the condition of the company would be found to be improved. The plaintiff then told the defendant that, relying upon such statements, and that the defendant would save him from loss, he would remain in the company until the seed was worked up. The seed was worked up by the latter part of October following, but the affairs of the company were not at all improved. The result was the same as when plaintiff discovered the real condition of the company in June. About the last of October the plaintiff informed the defendant, that he expected that he would hold him harmless, and pay him the money for the stock, and that he wanted him to give a written obligation, that he would get the money that he had put in the concern for his benefit. Plaintiff told the defendant in this interview, that he could have the stock, that it was worthless, and that he expected that he would pay back the money which he had received for it.

The certificates for the shares, it appears, were not actually transferred to the defendant until November 10 or 12, when an undertaking of indemnity was executed by the defendant, and his wife, the purpose of which was to save the plaintiff harmless from the debts and liabilities of the company, to which he might be exposed from havbeen a stockholder and trustee of the corporation. This obligation made no provision for payment for the shares, nor has defendant returned to the plaintiff, the money paid by him on the purchase of the shares.

In giving this bond of indemnity, the defendant did not come up to the measure of his liability to the plaintiff. And in executing and delivering it, he was only moving in the direction which he had clearly undertaken to pursue in his letter of June 28, to hold plaintiff from loss.

The plaintiff is still, however, out of pocket, through the purchase of these shares, from the defendant, in the sum of $22,000, and upwards.

It was held by the referee that the bond of indemnity was the result of a new arrangement between the parties, inconsistent with a right of rescission, or a demand at this ■ time for the price paid for these shares. I do not put such construction upon the bond of indemnity, nor the letters of the parties. I do not understand from the case, that the plaintiff when he received that undertaking, gave up, or intended to give up, his demand or claim for the money he had paid for the stock, and which moneys the defendant used to extinguish, joro tanto, his obligations to the corporation. The certificates for the stock itself, as the plaintiff testifies, he delivered to the defendant on or about the first of November, with a demand for payment. The transfer of the shares was not however, made until about the 11th day of the month. According to the evidence, the debts of the company did not cause the plaintiff alarm, as he believed there were assets sufficient to pay them.

That his stock had become valueless or substantially so, through the loss of three-quarters of the capital of the corporation, was the fact upon which his claim and demand against the defendant rested. For that, he seeks indemnity in the action.

I cannot find and do not believe under the evidence, that he ever intended, in his negotiations with the defendant, to abandon such substantial claim, or that his delivery of the shares to the defendant, under the circuxnstances, is to be considered otherwise than as an effort to get back his money.

It was suggested on the argument that the bond of indemnity guarantees the plaintiff against liability from his ownership of the shares purchased from the brothers of the defendant, in addition to these he acquired from the defendant himself. But in guaranteeing against liability as the owner of all the shares, the defendant was doing nothing more, than discharging his duty. He had promised to secure the plaintiff against all loss by his letter of June 28.

The referee has found as a fact, that the plaintiff bought all the shares relying upon the representation m'ade by the defendant.

That was consideration sufficient to sustain the promise made, and feeling the force of such obligation he made the original promise.

The judgment should be reversed, with costs to abide the event.


author: Van Vorst, J.

text:
    WILLIAM GHORMLEY, Respondent, v. WILLIAM B. DINSMORE, President, &c., Appellant.

      Common carrier—Hxpress companies, liability of—Trial.

    A common carrier may stipulate for exemption from liability for losses occurring through his own negligence or that of his servants ; but the contract exempting the carrier from loss or injury in the carriage of goods, should not be deemed to include negligence, by any general words, nor unless the contract in clear and explicit form, embraces negligence.
    The language and terms of the contract in this case—i. e., the receipt of the Adams Express Company,—have already had judicial consideration and construction, and it has been held that it does not cover nor include immunity from loss occasioned by the carrier’s negligence (Magnin v. Dins-more, 56TT.Y 168; lb. 621T.Y. 39; Mynard». Syracuse, &c. E. R. Co., 71 lb. 180).
    Where the shipper fails at the time of the shipment to state the just and true value of the merchandise shipped, the carrier will he relieved from liability, beyond the amount fixed by the receipt, unless something more is shown than mere negligence to carry safely and deliver promptly; e. g., misfeasance or willful acts.

      Decided January 5, 1885.
    In the case at bar, the value of the goods was stated in the receipt at fifty dollars, which was much less than the value as found by the verdict. The package, as appeared by the evidence, was not delivered to the consignee and the non-delivery was unexplained by the carrier. There was some evidence tending to show a misdelivery. Defendant requested the court to charge that in no event could the recovery exceed fifty dollars and interest, but no distinct point based on plaintiff’s failure to state true value was made, nor was there a distinct attempt to limit defendant’s liability to cases of misdelivery or other misfeasance. The questions of negligence and the value of the goods, were submitted to the jury; there was no exception to the submission of the question of negligence, but the defendant excepted to the submission of the value on the ground that the contract between the parties fixed the same. Held, that this exception was unavailing, in case of a loss through the negligence of the carrier, as was prima facie, established by the non-delivery in this case, and found by the jury. Further held, that if the defendant’s counsel intended to raise the question of the carrier’s liability for any degree of negligence under the receipt, or that the omission to state the true value, limited the recovery to fifty dollars, the points should have been dis- ■ tinctly presented at the trial.
    The contract or receipt in question, provided that the shipper should present a written claim for the loss, within thirty days from its date, and this not having been done, it was urged on the trial against any recovery. It appeared that the defendant took time in searching for and tracing the package and finally stated to plaintiff that it could not be found, when plaintiff presented his claim. Held, that these facts excused the plaintiff from presenting his claim at an earlier date.
    Before Sedgwick, Ch. J., Van Vorst and Freedman, JJ.
    Apeal from a judgment entered upon the verdict of a jury-
    This action was brought the to recover sum of $275, damages for non-delivery of a package delivered by the plaintiff to the Adams Express Co., as a common carrier.
    The answer denies, on information and belief, the delivery of the package to the Express Co. for carriage for a reasonable consideration, and its negligence in fading to deliver the same, as alleged in the complaint; but alleges that on the 12th day of November, 1883, “ a certain package was delivered to the Adams Express Oo. addressed, and to. be shipped and forwarded to Mrs. J. H. Brinton, Eo. 1423 Spruce street, in the city of Philadelphia ; that said package was so delivered, by a person giving to the Adams Express Company the name of Ghormley but that the value of said package was not known to the Adams Express Company. The articles contained in said package are admitted to be the same as mentioned in the complaint. The answer further alleges a special contract or bill of lading, received and accepted by the plaintiff, limiting the liability of the express company for any cause whatever, excepting the fraud or gross negligence of the company, to the sum of $50; and exempting it altogether from any loss or damage, unless the claim should be presented within thirty days from the date of such contract or domestic bill of lading; and further alleging, that claim of the plaintiff in this action was not presented within such time.
    The two defenses were based, respectively, on the following clauses of the receipt and contract: “ Eor, in any event, shall the holder hereof demand beyond the sum of fifty dollars, at which the article forwarded is hereby valued, unless otherwise herein expressed, or unless specially insured by them, and so specified in this receipt, which insurance shall constitute the limit of the liability of the Adams Express Company.”
    “In no event shall the Adams Express Company be liable for any loss or damage unless the claim therefor shall be presented to them, in writing, at this office, within thirty days after this date, in a statement to which this receipt shall be annexed.”
    After a trial of the issues before a jury, a verdict was rendered in favor of the plaintiff, and his damages assessed at the sum of $215.
    Further facts appear in the opinion.

      Charles M. Da Costa and William D. Cuthrie, for appellant.
    I. The receipt in evidence was a valid contract limiting the defendant’s liability. Eeceipts similar in every particular—indeed, identical in language—to .that delivered to the plaintiff in this case, have repeatedly been held valid by the highest court of this state, and to contain a binding contract of affreightment. At most, the plaintiff can only claim that the package in suit was lost and not delivered. There is no proof of conversion— no proof of any wrongful act (Magnin v. Dinsmore, 56 N. Y. 168 ; 62 Ib. 35). Plaintiff could not recover the actual value of the contents of the package—in other words, could not recover more than the $50, by reason of his failure to disclose the actual value of the package (Magnin v. Dinsmore, 62 N. Y. 35, 70 Ib. 410). In Belger v. Dinsmore (51 Ib. 166), the court, in speaking to a receipt similar in all respects to the one at bar, said : “A party accepting such an instrument, as has been already shown, declares his assent by such acceptance, to those terms and conditions, they thereby become obligatory on both parties, and prescribe their mutual rights and obligations.” And the recovery was limited to the sum of fifty dollars, the agreed valuation (See also Wetzell v. Dinsmore, 54 Ib. 496; Kirkland v. Dinsmore, 62 Ib. 171; Collender v. Dinsmore, 55 Ib. 200; United States Court in this Circuit, Berry v. Dinsmore, unreported [1876]; Dinsmore v. Neresheimer, 32 Hun, 204).
    The above authorities, and others too numerous to cite, have thus established the validity of these receipts and contracts. The question resolves itself to this: Is the shipper bound by the valuation of the package shipped, as fixed by himself in his contract with the carrier ? The plaintiff knew the terms of the contract; it was filled out by one of his clerks, and so tendered to the Express Company for signature. It does not purport to absolve the carrier from liability for his negligence: Had the plaintiff in the receipt stated what he now claims to be the real value, his right to recover that amount in this action would have been unquestioned. But, after a loss has occurred, he cannot be heard to assert that his representation in the receipt as to the value of the package, was false. Particularly is this so when it is recollected that the charges of the Adams Express Company for carriage vary with the value of the packages to be carried. An additional charge of ten cents for every $100 or fraction thereof is demanded when the package is over $50 in value. By withholding the real value, the plaintiff deliberately deprived the Express Company of this additional freight. No principle of law or public policy can be mentioned' which has ever sanctioned any rule preventing the shipper and carrier from agreeing on the value of the article carried, or enabling such shipper to repudiate the contract after a loss, and recover the real value if it exceed the agreed valuation. The defendant, therefore, insists that the court below erred in admitting evidence as to the value of the contents of the package forwarded, and likewise erred in refusing to charge the jury that the plaintiff’s recovery could in no event exceed the sum of fifty dollars.
    II. The failure to present a written claim within thirty days was fatal to the plaintiff’s recovery (Smith v. Dinsmore, 9 Daly, 188 ; Hirschberg v. Dinsmore, 67 How. Pr. 103; Express Company v. Caldwell, 21 Wall. 264; Weir v. Adams Express Co., 5 Phila. 355 ; Southern Express Co. v. Hunnicutt, 54 Miss. 566 ; Lewis v. Great Western Railway Co., 5 Hurlstone & N. 867). So, also, in this state, stipulations of the same nature in insurance policies and telegraph blanks have been held valid and binding (Matter of Att’y Gen’l v. Continental Life Ins. Co., 93 N. Y. 70 ; Blossom v. Lycoming Ins. Co., 64 N. Y. 162 ; Young v. W. U. Tel. Co., 34 Super. Ct. 390 ; 65 N. Y. 163 ; Heimami v. W. U. Tel. Co., 57 Wisc. 562).
    III. There was no waiver or extension by the Adams Express Company of the thirty days’ clause. The contract required the presentation of the claim in writing within thirty days from the 12th of November, 1883. Inquiry as to the package made at the office of the Adams Express Company was certainly not a compliance with this thirty days’ clause. It was of the essence that a claim in writing should be presented within the thirty days (Young v. Western Union Tel. Co., 34 Super. Ct. 390). But, as a matter of fact, no notice of any kind was given. The only evidence is that inquiry was made as to the package, and that the company’s agents promised to look for and trace the package. The contract does not call for notice of loss or damages, but for a claim for loss or damage. A claim is, in just judicial sense, a demand of some matter, as of right, made by one person of another, to do or forbear to do some act or thing, as a matter of duty (Costen v. Mayor, &c., 43 N.Y. 399). The only evidence in the case is of inquiries as to the non-delivery of the package. Such inquiries were undoubtedly made within thirty days after the date of the receipt. But it appears that the first oral demand or claim for the $275 was made in March, four months after the shipment. There was no proof that the presentation of the claim was deferred to enable the company to find the package, or that reliance was placed on anything said. Even could such an inference be drawn from the proof of the inquiries that were made, at the office of the Express Company, it does not appear that there was any authority whatsoever in the employees to waive or extend any condition. Such power could not be presumed (First Nat. Bank v. Ocean Nat. Bank, 60 N. Y. 278 ; Young v. Western Union Tel. Co., 65 N. Y. 163). See Matter of Att’y-Gen’l v. Cont. Life Ins. Co. (93 N. Y. 74).
    IV. There was no proof of the non-delivery of the package by the carrier. Nor was there any proof of a conversion or misfeasance on the part of the carrier. But conceding a non-delivery, and conceding further that such non-delivery was unexplained, nevertheless these facts could not establish a wrongful act, such as conversion (Magnin’s Case, 70 N.Y. 417).
    The is not a scintilla of evidence to prove misdelivery. It appeared that in answer to written inquiry, the plaintiff received a communication to this effect: “Delivered at 755 Corinthian Ave. Nov. 13, ’83, Signed, Mrs. J. B. Brinton.” Whether or not this was the consignee of the package, was not shown. It certainly could not be inferred from difference in the middle letter. The rule is too well settled now to be questioned, that in legal proceedings the law does not recognize a middle letter, and knows but the initial of one surname (Clute v. Emmerich, 32 Hun, 10). But aside from any such technical reasoning, the plaintiff’s evidence shows beyond doubt that the package .delivered at loo Corinthian Avenue was not the package which the plaintiff had shipped.
    The plaintiff’s cause of action, as stated in the complaint, was plainly grounded on breach of the contract to carry. It was alleged an agreement to carry for a valuable consideration and the breach or non-fulfillment of it (Catlin v. Adirondack Co., 11 Abb. N. C. 311, 380). Although the plaintiff alleged a consideration in his complaint, he wholly failed to prove one on the trial (Bristol v. Rensselaer & Saratoga Railroad Co., 9 Barb. 158). But the plaintiff will not be permitted on this appeal to claim that his action is not on contract, for non-delivery, but in tort for conversion. The whole drift of the plaintiff’s case was toward proof of loss and non-delivery. No issue of conversion was tendered or tried. The court will not now allow the plaintiff to change front after the trial and thus mend his hold. Misdelivery was not claimed below. The court charged only on the question of non-delivery ; the motion to dismiss was on that assumption (See Salisbury v. Howe, 87 N. Y. 128).

      Peter Mitchell, for respondent.
   By the Court.

Van Vorst, J.

Receipts, like the one before us, given by a carrier, on the delivery to him of goods for carriage, and by which the liability of the carrier was limited to a specific sum, in case of the failure by him to deliver the goods to the consignee, have been frequently under consideration in the courts of this state. In several of these cases, the question has been more or less discussed, as to whether the limitation of liability, in the instruments under consideration, embraced the case of a failure to deliver, or a loss occasioned, by the negligence of the carrier.

Under the decisions in this state, a common carrier may stipulate for exemption from liability for losses occurring through his own negligence, or that of his servants (Steers v. Liverpool, New York & Phil. S. S. Co., 57 N.Y. 1; Poucher v. New York Central R. R. Co., 49 lb. 263 ; Magnin v. Dinsmore, 56 Ib. 168). The result of the decisions is, however, that the contract of the carrier, exempting him for loss or injury in the carriage of goods, should not be deemed to include negligence, by any general words, nor unless the contract in clear and explicit form, embraces negligence (Westcott v. Fargo, 61 N. Y. 542). The language and terms of the receipt, issued by the defendant, in this action, on the delivery of goods for carriage, have already had careful consideration, and have had judicial construction.

In Magnin v. Dinsmore (56 N. Y. 168), it was held, that the contract did not include immunity from loss occasioned by the carrier’s negligence. That construction has been at least twice adopted, by the court of appeals, in subsequent decisions. In the same case (62 NY. 39), Folgee, J., says:—“This contract did not, per se, excuse the defendant from liability for a loss arising from its own negligence. Thus we have heretofore held in this case.” And in Mynard v. Syracuse, &c. R. R. Co. (71 N. Y. 180, 185), Church, Oh. J., referred to Magnin’s case (56 N. Y. 168), says: “It was held that the stipulation did not cover a loss accruing through negligence, Johnson, J., in the opinion saying, 1 But the contract will not be deemed to except losses occasioned by the carrier’s negligence unless that be expressly stipulated.’ In each of these cases, the language of the contract was sufficiently broad to include losses occasioned by ordinary or gross negligence, but the doctrine is repeated, that, if the carrier asks for immunity for his wrongful acts, it must be expressed, and that general words will not be deemed to have been intended to reheve him from the consequence of such acts.”

If Belger v. Dinsmore (51 N. Y. 166), in the commission of appeals, cannot be reconciled with the above conclusion, it must be considered as overruled by the later cases in the court of appeals.

After the decision in Magnin v. Dinsmore (56 N. Y. 168), and upon a subsequent trial of that cause, a new element was introduced in the case. The point was taken by the defendant, that the plaintiff had failed, at the time' of the shipment, to state the just and true value of the merchandise. This was held in the end to have been “such an imposition upon the defendant, as would reheve it from habihty for the total value of the goods, unless something more is shown than negligence to carry safely and to deliver promptly ” (Magnin’s case, 62 N. Y. 35, 44). And this view was sustained in the same case (70 N. Y. 410), Allen, J., saying:—“The disclosure of the value of the goods was a condition precedent to the attaching of any habihty of the carrier, for merely ordinary neglect, unaccompanied with any misfeasance or willful act.”

The instrument dehvered by the defendant to the plaintiff in this case, is in substance the same, as that before the court of appeals in Magnin v. Dinsmore. By. the terms of the receipt, the goods, dehvered to be carried, were valued at fifty dollars. The property was not dehvered to the consignee. Upon the trial the plaintiff was allowed to prove the real value, which was considerably in excess of the sum stated in the receipt, and he obtained a verdict for the full amount.

The package was directed to Mrs. J. H. Brinton, 1423 Spruce Street, Philadelphia, Pa.” It was never dehvered to her. The defendant, -upon the plaintiff’s application, after the non-dehvery was brought to its attention, attempted to trace the missing package. The return first made to the plaintiff, was, that the package, or one answering its description, in every particular, had been dehvered at 155 Corinthian Avenue, to Mrs. J. B. Brinton.. Afterwards, however, the defendant’s agent, stated to the plaintiff, that the package delivered at Corinthian Avenue, was not the one shipped by plaintiff, but was a package containing books. The defendant’s agent informed the plaintiff, that they had sent a tracer in every direction, and could not find out when or where the package was delivered. Unless delivered at Corinthian Avenue, the package has not been accounted for. The defendant’s counsel, at the close of the plaintiff’s case, moved to dismiss the complaint upon several grounds, amongst which was, that the failure to perform the contract was not established.

There was sufficient evidence of the non-delivery, at least, to take the case to the jury. That seemed to be the principal question litigated upon the trial. But upon the argument of this appeal, the learned counsel for the defendant admitted that there was a non-delivery. That point, therefore, is out of the case.

At the close of the case, the defendant’s counsel asked the court to charge the jury, that in no event can the recovery of the plaintiff in this action exceed the sum of fifty dollars, and interest from the date of shipment. This motion was properly denied by the judge. The case was in no such condition, that the trial judge could say, that the defendant was free from negligence. That was a question of fact, if, as the defendant’s counsel contended at that time, no non-delivery had been shown.

The court then charged the jury, ‘ ‘ that the failure of the defendants to deliver the goods, unexplained, is evidence of negligence.” • To which the defendant’s counsel then and there excepted, on the ground that there was no evidence of a failure to deliver. ” There was certainly evidence that the package had not been delivered to the consignee, In fact, it is now a part of the case, that it was not delivered. That a non-delivery unexplained is evidence of negligence, has been too often held to need authority to support it. It was so held in Canfield v. Balt. & O. R. R. Co. (93 N. Y. 532).

No exception was taken to the submission to the jury of the question of negligence, as affecting the defendant’s liability under the receipt. If the defendant’s counsel intended to raise the question of the carrier’s liability for any degree of negligence, under the receipt, he should have distinctly raised it at the trial, and while the judge was charging the jury.

Nothing was said as to any positive misfeasance, or misdelivery of the package. If it was in the mind of the defendant’s counsel, that the defendant’s liability could only be established by proof of an actual conversion of the merchandise, through a wrong delivery, or other misfeasance, he should have distinctly raised that question at the time.

The trial judge further stated, “I leave to the jury,to determine what the value of the goods is.” The defendant's comisel excepted, on,the ground, “that the contract between the parties fixes the value of the goods.” But that objection is unavailing, if the conclusion reached above, that the carrier is hable for the full value, in case of a loss through his negligence, is correct. The authorities above cited show that the defendant is hable, notwithstanding the limitation in his receipt, for the full value, when the goods committed to him for carriage are lost through his negligence.

No distinct point appears to have been raised on the trial, arising from the fact that the real value of the goods had not been stated by the plaintiff, at the time of the delivery of the goods for carriage, so as to bring the case within Magnin v. Dinsmore (70 N. Y. 410). Had tho defendant claimed, and urged in an effective way, that the omission to state such value, should limit the recovery to fifty dollars, unless an actual conversion had been proven, then the question could have been submitted to the jury, as to whether or not there had been a misdelivery, or other misfeasance. But an examination of the case does not show that any such ground was distinctly taken below. This subject is alluded to for the reason that the defendant’s counsel, in his brief used on this argument, incidentally alludes to the fact that the defendant carrier was deprived of additional freight by the withholding of the real value. A point of that character should have been plainly presented at the trial, and before the case was submitted to the jury, and a ruling thereon had.

The failure of the plaintiff to present a written claim to the defendant, within thirty days of the date of the receipt, is, however, urged as a reason why he should not recover in this action. That point was urged on the trial. But it cannot prevail.

The provision in the contract upon that subject cannot apply to this case. As soon as he was apprised of the loss, the plaintiff called upon the defendant for an explanation. Time was taken by the defendant in searching for, and tracing the package. They supposed that it had been delivered, but in the end stated that it could not be found. When informed of that fact, the plaintiff presented his claim.

Time taken by the defendant in searching for the goods, under the circumstances of this case, in the expectation of finding them, excused the earlier presentation of the plaintiff’s demands (Smith v. Dinsmore, 9 Daly, 188). The judgment and order are affirmed, with costs.

Sedgwick, Ch. J., and Freedman, J., concurred.


author: Freedman, J.

text:
    NORA HOUGH, Appellant, v. PETER BOWE, et al., Respondents.

      Conversion of property.—Statute of fratids—Actual change of possession— Burden of proof—special damage—mitigation.

    Where, in an action for special damages for conversion, defendant attempts to justify under an attachment against the property of a person who has sold the property in question to the plaintiff, and there is evidence of the sale and a valuable consideration paid by plaintiff therefor before the levy, and there is some explanation given by the plaintiff why there has not been a visible change of possession, the case is one for the consideration of the jury, and a dismissal of the complaint is erroneous. Under the facts in such a case showing a purchase for a valuable consideration before the levy, the burden of proof is upon the defendant to establish the fraudulent character of the transfer in case the jury find such purchase for a valuable consideration.

      Decided January 5, 1885.
    The payment by the plaintiff of the attaching creditor’s claim to the sheriff, does not constitute a bar to the action, it appearing that the payment was not voluntary, but compulsory and under protest, and made to enable plaintiff to recover possession of the property.
    The return of the goods upon such payment, and their acceptance by the plaintiff, do not constitute a complete satisfaction, but can be considered only in mitigation of damages, and the money paid by plaintiff to procure such return, constitutes special damages.
    Before Sedgwick, Ch. J., Van Vorst and Freedman, JJ.
    Appeal by plaintiff from judgment dismissing complaint.
    This action was brought to recover damages alleged to have been sustained by plaintiff by reason of the entry by defendants under an attachment against a third party, upon the premises occupied by her as a liquor store, and the taking and conversion of portions of the stock, interfering with her business, injuries to the stock by handling, and the recovery of §604.80, paid by plaintiff to defendants to secure the return of the residue of the stock.
    At the close of plaintiff’s testimony the court dismissed the complaint.
    Further facts appear in the opinion.

      Louis J. Grant and Herbert Kettell, for appellant.
    The money paid to secure the return of the goods is recoverable herein (2 Sedgwick Damages 414; 1 Chitty, 396 ; Ford v. Williams, 24 N. Y. 366 ; Murray v. Burling, 10 John. 175 ; Baker v. Freeman, 9 Wend. 36 ; Deluce v. Kelly, 5 Week. Dig. 32 ; Vedder v. Van Buren, 14 Hun, 251; Woodham v. Gelston, 1 John. 137; Comstock v. Hier, 73 N. Y. 277).

      Plaintiff has an election to bring trover or an action for money had and received.
    In trespass de bon. asp. the return of the property before suit cannot be a plea in bar, while the action is for taking and detention as well as for value, nor for the same reason can it be pleaded puis darrein. It follows that it can only go in the mitigation of damages, otherwise plaintiff will recover for injury never received (6 Bacon’s Abdgt. 628 ; Vosburgh v. Welsh, 11 John. 175 ; Torry v. Blake, 58 N. Y. 191; Butler v. Muffin, 1 Den. 407 ; Reynolds v. Shuler, 5 Cow. 323 ; Shipwich v. Blanchard, 6 T. R. 298).
    Expense of recovering property is recoverable in an action of trespass de bon. asp. (Gray v. Bullard, 22 Minn. 278).
    Supposing that quare clausum frágil and de bonis asportatis are here united as they arise out of the same transaction, there is no difficulty (Policy v. Wilkisson, 5 Civ. Proc. 135).
    The evidence of payment under duress is conclusive (Scholey v. Mumford, 60 N. Y. 498).

      Charles F. MacLean, and Joseph Ullman, for respondents.
   By the Court.

Freedman, J.

The gravamen of the complaint is that the defendants wrongfully took certain goods of the plaintiff, and the recovery sought is mostly for special damages. At the trial the defendants aS-tempted to justify under ah attachment issued against the property of plaintiff’s nephew, John J. McCann. At the close of plaintiff’s case it appeared that prior to the levy upon the goods in question there had been a sale, sufficient at least in form, of the goods by McCann to the plaintiff, and there was evidence of a valuable consideration paid by the plaintiff. If, in addition to this, it had also appeared that there was an immediate and actual change of possession, plaintiff’s title could only have been defeated by proof that she had actual knowledge or belief that the sale to her was made by McCann with intent on on Ms part to defraud Ms creditors (Parker v. Conner, 93 N. Y. 118). But there was not sufficient, if any, evidence of an immediate and actual change of possession as required by statute. In consequence of the absence of such proof, the transaction was presumptively fraudulent agamst creditors. This being so, it may perhaps be a debatable question whether the burden was not upon the plaintiff throughout to prove that it was m good faith and without any intent to defraud creditors, or whether, m view of plaintiff’s proof that she had purchased before the levy and paid a valuable consideration, the burden was not cast upon the defendants to establish the fraudulent character of the transaction. From what was said by the learned judges of the court of appeals, who delivered the opimons in Starin v. Kelly (88 N. Y. 418), and Murphy v. Briggs (89 N. Y. 446), it would seem that the burden rested upon the defendants, in case the jury found a purchase for a valuable consideration. But in either case, upon the proofs given by the plaintiff to the effect that she had purchased before the levy and paid a valuable consideration, and especially as she gave some explanation why there had not been a more visible change of possession than there was, the case was one for the jury, and the dismissal of the complaint was erroneous, unless the payment by the plaintiff of the attaching creditor’s claim to the sheriff constitutes a bar to the action. In my judgment it does not, under the circumstances of this case.

The complaint avers that by reason of the unlawful taking and the detention of her property, the plaintiff was compelled to pay, and did pay, said claim to the sheriff, in order to obtain the return of her goods, and that notwithstanding such payment, all of the goods taken were not returned to her. It may be a question whether the plaintiff gave sufficient competent evidence of a partial loss of the goods. But she showed, among other things, that the payment made by her was not a voluntary one, but that it was compulsory and under protest. The credibility of this testimony was for the jury. This being so, the return of the goods and their acceptance by "the plaintiff cannot be deemed to constitute in law a complete satisfaction. As the case stands at present, the return of the goods and their acceptance by the plaintiff go only in mitigation, and the money paid by the plaintiff to procure such return is special damage.

The conclusion reached as stated, renders an examination of the other questions involved unnecessary.

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

Sedgwick, Ch. J., and Van Vorst, J., concurred.