author: By the Court. Sandford, J.

text:
    Pinckney v. Hagadorn.
    Before the Revised Statutes it was settled that the auctioneer, in public sales of property, was the agent of the buyer and seller, and the Revised Statutes (2 R. S. 135, § 8, 9), which require the note or memorandum of a contract of sale, to be subscribed by the party making it, or his authorized agent, is sufficiently complied with, when the entry by the auctioneer of the sale, in which the name of the principal appears, is signed by the auctioneer with his own name, without any reference to his character as agent. The intention to bind him, and not the auctioneer, is plain, and makes it the contract of the principal.
    The rule of law, which requires an agent to sign the name of his "principal, in the execution of instruments, is confined to writings under seal.
    An auctioneer, upon the sale of real estate, made an entry in his book of sales of the name of the seller of the property, and in connexion therewith a description of the property,which consisted of five lots, which were sold at the sale to different purchasers, and the entries of which were made thereunder, in the following manner: “ 1 lot, corner of Avenue A, to W. J. $2,010,” underneath which were entries of the sales of three lots immediately adjoining, and then the following: “ 1 lot, next adjoining, J. L. P., $1,350.” Held, that the entry, in the position and connexion which it occupied in the sales book, signified that J. L. P. had become the purchaser of that lot, and sufficiently indicated that he was the highest bidder, and that the same was struck off to him.
    (Before Sandford, Duer, and Bosworth, J.J.)
    April 21;
    June 26.

      Held also, that, taken in connexion with the description of the property contained in the entry of sales, it was a sufficient identification of the lot sold.
    A mis-deseription in the first name of the seller does not invalidate the contract of sale.
    The powers of an auctioneer are limited and special. But where the terms of sale provided that ten per cent, of the purchase money should be paid on the day of sale,

      Held, that the auctioneer’s authority was not limited to receiving it on that day, ' unless previously prohibited by the seller.
    As a general rule, time is not so essential in executory contracts for the sale of land as to work a forfeiture on the omission to pay at the day stipulated. And until the seller does some act to make it essential, the buyer is at liberty to pay after that day.
    This was an action brought by the plaintiff to enforce specific performance of an agreement for the sale of real estate.
    The complaint alleged, that on the 12th of March, 1851, the defendant caused a certain lot of ground belonging to him, situated on St. Mark’s Place, in the city of Hew York, and described in the complaint, to he offered for sale at public auction. That the same was subsequently struck off to the plaintiff, he being the highest bidder, and that the plaintiff, having complied with the terms of sale, had demanded a deed from the defendant, which was refused. The complaint prayed that the defendant might be compelled to execute a deed. Hie answer of the defendant denied that the auctioneer, as the agent of both parties, signed the memorandum of sale; or that the plaintiff paid to the auctioneer the ten per cent, upon the said purchase required by the terms of sale, and alleged that if paid, it was not until after the said sale, and when the auctioneer had been forbidden by the defendant to receive the same, and that the conditions of sale in this respect, if varied by the auctioneer, were varied without the authority of the defendant. The reply admitted that the ten per cent, was not paid on the day of sale, but alleged that the plaintiff was ready then to pay it, and that the defendant ratified the auctioneer’s subsequent reception of, it.

      The cause was referred, by consent, to M. TJllshoeffer, Esq. It appeared in evidence before the referee, upon the trial of the action, by the testimony of Mr. Bleecker, the auctioneer, that he sold five lots in St. Mark’s Place between Avenue A and---- for the defendant on the 12th of March, 1851, upon a previous employment by the defendant for that purpose; that the lot in question was one of the five lots so sold. The terms of sale were, ten per cent, to be paid on the day of sale, with the auctioneer’s fees ; $1,000 to remain on bond and mortgage, and the balance of the purchase money to be paid in fifteen days, when warranty deed should be given. The entry in the sales book of the said auctioneer was here produced in evidence, and was as follows, under the date of March 12th, 1851, namely: First, the name of “ John Hagadorn, Esquire,” written at the side of the left page—immediately thereunder on the same is written, “ terms of sale,” and immediately under “ terms of sale,” are written, “ ten per cent, on the day of sale with auctioneer’s fees—one thousand dollars can remain on bond and mortgage on each lot at the option of the purchaser, the balance to be paid in fifteen days, when warrantee deed will be given.” That in the centre of said page, a little to the. right of the aforesaid entry, there is wafered to said page a small slip cut from a paper, and which reads as follows:—“ On St. Mark’s Place, Avenue A, five valuable building lots, situated on and next the northwest corner of St. Mark’s Place and Avenue A, all fronting on St. Mark’s Place—said lots are each in size from 22 feet 6 inches to 23 feet, front and rear, by 54 feet. For particulars apply to the auctioneer, Ho. 7 Broad street.” On the page on the right of said book, and opposite the aforesaid entries, under the words, “ building lots on St. Mark’s Place, H. W. corner of Avenue A,” are the entries following (written in lead pencil):
    1 Lot cor. of Av. A, Wm. Irwin, $2,010
    I. L. Pinckney, 1 Lot next adjoining, 1,410
    1 Lot next adjoining, Irwin, 1,355
    1 Lot next adjoining, Mr. Irwin, 1,350
    1 Lot next adjoining, I. L. Pinckney, 1,350
    7,475
    A. J. Bleeckeb.

      Witness received auctioneer’s fee and the 10 per cent.; received the 10 per cent, on the 15th of March, 1851. Witness gave a receipt-for the 10 per cent. The receipt, being produced and proved by the witness, was in the words following:

      “ $135. Hew York, March 15,1851.
    “ Received from I. L. Pinckney 135 dollars,, being 10 per cent, deposit, according to the conditions of sale, upon his purchase of lot in St. Mark’s Place, sold him the 12th day of March, 1851, at auction, for $1350, for which a good and sufficient title is to be given by John Hagadorn and others.
    A. L. Bleeckeb, Auctioneer, by A. L. B. ■
    Received no countermand not .to receive the ten per cent, before he had received it. Did not know as he ever received any countermand. After the sale the defendant came into witness’s office, and wanted to pay his bill and close his account .—cannot identify the time, but presume it was March 28,1851. Recollected that the defendant came into witness’s office and inquired of Mr. Baker whether or not the 10 per. cent, had been paid, and understanding that it had not, the defendant objected. Thought this was after the 10 per cent, had been received. Two lots were struck off to the plaintiff at said sale, one of which a Mr. Irwin afterwards took.
    William O. R. English was next sworn, and testified that on the 7th of April,. 1851, at plaintiff’s request, and with the plaintiff, he tendered to the defendant a deed of the lot in question, a bond and mortgage of the said lot for $1000, and $220, with the receipt for the 10 per cent., amounting to $355, which papers were admitted as proper and sufficient; but the defendant would not execute the deed, or take the money.
    The plaintiff here rested, and the defendant’s counsel moved for a nonsuit, on the ground that the auctioneer was a special agent, and was bound to pursue his instructions, and that in this light the plaintiff had not made nut his case. The referee denied the motion, and the defendant’s counsel excepted. Various conflicting testimony was then offered upon both sides, upon the point, whether the auctioneer had been forbidden by the defendant to receive the 10 per cent, prior to its actual payment by the plaintiff.

      The referee reported in favor of the plaintiff, and concluded his report as follows :—
    “ My opinion upon the delay by the plaintiff in making the payment until three days after the sale, but within the fifteen days fixed for the completion of the purchase, such payment being received by the auctioneer- as a compliance with the terms of sale, is that it did not rescind the contract, but was a sufficient payment, and that it left the contract binding on both parties. I likewise conclude that the auctioneer, under the circumstances, had authority to receive the money when it was paid to him, and that the plaintiff paid the money without any notice from the defendant of any objection thereto, and that the auctioneer received such money without being notified by the defendant not to receive it. There is some difficulty in regard to the testimony, which is conflicting on the point of notice to the auctioneer, but the weight of the proof leads me to the conclusion that there was no revocation of the auctioneer’s power to receive the money, nor was the auctioneer notified of the defendant’s dissent until after the money was received. I can see no other mode of reconciling the testimony than by supposing that the language used by the defendant’s son to the auctioneer was not at as early a time as he thinks, and was not expressed so as to be understood as communicating a clear rescission of the contract: and this is the result of my examination of the testimony. Ho award has been proved to affect this action in any respect. - A warranty deed was to be given by the terms of the sale. The auctioneer’s receipt says that a good and sufficient title is to be given. I rather think that under the terms of sale the vendee could not be compelled to complete the purchase unless a good and sufficient title is given; but this point is not material, because the plaintiff was willing to take the defendant’s warranty deeds and offered to complete the purchase, and did make the requisite tender and offer.”
    The defendant moved to set aside the report.

      Mr. J. O. Robinson, for appellant,
    argued the following points:
    I. The memorandum required by the statute is one which, without any extraneous proof, shows that something, and what, has been bought and sold for a certain price, and between certain parties. (16 Wend. 28-31; Baptist Church v. Bigelow, 12 John. R. 102; Merritt v. Clason, 14 Id. 486; 3 John. R. 399, 419; Bailey v. Ogden.) In this case it does not appear from the memorandum in the sales book, that the lot in question was struck off, or contracted to be sold to, the plaintiff, nor does it sufficiently specify the lot sold, nor by whom. (Paley on Agency, 170.)
    H. The auctioneer had no authority to extend the time for the payment of the “ 10 per cent.,” or to receive it, or give a receipt for it on the 15th of March. (2d Kent’s Com. 792 & 793 (7th Ed.) 2 Ed. 537, and authorities there cited.) The law will never construe it to have been the intention of the principal to allow the agent to exceed the authority given to him, when it is to his disadvantage. (Story on Agency, § 172, and authorities there cited; 2 John. R. 48, Batty v. Carswell; 2 Kent’s Com. 617-619 (4th Ed.); 1 John. Ch. 375, Benedict v. Lynch, 1 Sugd. 56-27, § 7. Paley on Agency, 170-70.)
    HI. The time was material. (1 John. Ch. 375; 2 Barb. 280 ; 2 Story Eq. § 780.)
    IY. The weight of evidence was clearly contrary to the conclusions of the referee, and the defendant deems it established by the evidence in the case: 1. That the 10 per cent, was not paid at the time specified in the terms of sale, but in three days thereafter, and probably longer. 2. That the plaintiff was again in default in not paying or offering the balance of "the purchase money within the fifteen days fixed for the completion of the sale. 3. That the referee erred in finding that the plaintiff completed his contract within the fifteen days. 4. Also in finding contrary to the evidence that no notice was given to the auctioneer that the defendant did not consider himself bound by the sale. 5. That the testimony of Hagadorn in that respect stands uncontradicted. 6. The referee also erred in supposing that the testimony was conflicting upon the point of notice to the auctioneer, and also in concluding that there was no revocation, of the auctioneer’s power to receive the money, and that the auctioneer was not notified of the defendant’s dissent until after the money was received. Also in supposing that the only mode of reconciling the testimony was to construe the language of Hagadorn (witness) as he has in that respect.
    Y. In this case the auctioneer was a special agent of the defendant, and the acts of a special agent do not bind the principal unless strictly within the authority conferred. (2 Kent’s Com., 792-793 (7th Ed.), and authorities there cited. Rossiter v. Rossiter, 8 Wend. 494; Batty v. Carswell, 2 John. R. 48.)
    VI. An auctioneer is considered as'a special agent for the purpose of sale, and as soon as the sale is complete his agency ends. (Paley on Agency, p. 170.)
    VH. A plaintiff seeking a specific performance, must show himself without fault, or fully excuse any default on his part. (1 John. Ch. 375-9; Campbell v. Harrison, 3 Litt. 292; Bank of Columbia v. Hagner, 1 Peters. 464; Colson v. Thompson, 2 Wheaton, 336; Id. 299; Harvey v. Banks, 1 Randolph, 408, 2 Desauss. 590. 1 do. 382.) Upon the ground that he who seeks equity, must himself do equity. (1 Desauss. 163; 2 Wheat. 2 Story Eq. § 780.) The plaintiff also made default in not paying, or offering the balance of the purchase money, exclusive of the 10 per cent., and one thousand dollars in 15 days after the sale, pursuant to the terms thereof. And as the complaint does not allege such payment or offer, it does not state facts sufficient to constitute a cause of action.

      Mr. W. C. R. English, for the plaintiff,
    said—
    There was one question of fact. Did Hagadorn direct the auctioneer not to complete the sale ? The referee found in the negative. By that finding the court is concluded. There were two questions of law. Had the auctioneer any right to receive the ten per cent, after the day of sale ? Is the vendor discharged if the vendee fail on the very day to pay the ten per cent ?
    Both these points the referee decided correctly.
   By the Court. Sandford, J.

The defendant resists a specific performance of this agreement on various grounds. We will consider, first, the objections made upon the statute of frauds.

Before the revised statutes it was settled that the auctioneer, in these public sales, is the agent of both the buyer and the seller, and that his entry of the name of the purchaser in his sales book, immediately on striking off the property to him, was a sufficient signing of the contract to bind the purchaser. (McComb v. Wright, 4 J. C. R. 659; Emerson v. Healis, 2 Taunt. 38; Rennys v. Proctor, 3 Ves. and B. 57; First Baptist Church v. Bigelow, 16 Wend. 28.)

The revised statutes require the note or memorandum of the contract to be subscribed by the party making the sale, or his •authorized agent. (2 R. S. 135, 8, 9, Champlin v. Parish, 11 Paige, 405.) Here the entry is subscribed by the auctioneer with his own name, without any reference to his character as agent. Does that suffice within the meaning of the statute ?

In our opinion it is sufficient. The rule of law which requires an agent to sign the name of his principal in the execution of instruments, is confined to writings under seal. (Evans v. Wells, 22 Wend. 324; Townsend v. Corning, 23 ibid. 435; Townsend v. Hubbard, 4 Hill, 351.)

The auctioneer’s entry in this instance furnishes the name of his principal, and although that name does not appear in the subscription, the intention to bind him and not the auctioneer personally, is perfectly plain, and makes it the contract of the principal.

Several objections are next made upon the entry itself. It is not denied that the entry contains the price of the property and the terms and times of payment, but it is contended that it does' not show by whom the lot is sold, nor what particular lot is sold, nor that it was struck off or contracted to the plaintiff.

As to the last objection, the entry “ 1 lot next adjoining, I. L. Pinckney, $1350,” in the position and connexion which it occupies in the sales book, signifies that I. L. Pinckney had become the purchaser of that lot. It is true, there is no word used which expresses in direct terms that he was the highest bidder, or that it was struck off to him, or that he had contracted to buy the lot. But all this is fully signified by what is entered upon the book. The entries can have no other meaning. The use of initials in the entry of the' plaintiff’s name does not impair the validity of the writing. It is not denied that the plaintiff is the person intended and the person to whom the lot was struck off, nor is it even alleged that there is any other Pinckney who has the same initial letters of his Christian name. We therefore think there is no force in the objection that the sales book does not show the plaintiff to have been the purchaser.

Next, as to the point that it does not show what particular lot was sold to him. This is founded upon an alleged omission in the description of the lot. The whole entry, taken together, discloses that "the plaintiff bought a lot fronting on St. Mark’s Place, on the south, being the fifth lot from Avenue A (the intervening four lots appearing in the same entry), from 22 feet 6 inches to 23 feet front and rear, and 54 feet deep. The description, we think, is ample to identify and bound the lot sold, as one 22 feet 6 inches wide. Beyond that, the plaintiff could not, perhaps, claim a conveyance under the description, but to the lot of that width we think there is no difficulty in sustaining his claim, and he claims no more in his complaint.

The remaining objection is, that the entry does not give the name of the seller. In our opinion, there is enough proved, in connexion with the surname, to identify the person contracting, and that it is a case of misdescription of the Christian name. The land sold is described in the writing. It is conceded that William Hagadorn was the owner of the land, and employed the auctioneer to sell it. Bejecting the erroneous word “ John,” there is sufficient remaining upon the face of the auctioneer’s entry, in the name “ Hagadorn,” and the description of the property he proposed to sell, to demonstrate the party intending to contract. The parol evidence, therefore, becomes evidence of identity of the person. The seller, “ Hagadorn,” is ascertained by the, entry, his identity is shown by the conceded facts before mentioned, and the inapt or false designation “John” does not vitiate the contract. This is upon the maxim, “falsa demonstn'aüo non nocet; ” for illustration of which we refer to Jackson, ex dem. Dickson v. Stanley, 10 John. 133; Jackson, ex dem. Miner v. Boneham, 15 ibid. 226; and 2 Cow. & Hill’s Notes to Phill. Ev. 1368 to 1375.

The defendant’s next point is, that the auctioneer was an agent, with limited power, and had no authority to extend the time for the payment of the ten per cent., nor to receive'it, or give a receipt for it three days after the sale.

The power of an auctioneer is, no doubt, special and limited. His authority to receive the stipulated deposit, which in this case was ten per cent., is not, nor could it be questioned. He receives the deposit not merely as the agent of the seller: he is bound to keep it for the indemnity of the purchaser, until the latter is enabled to look into the title proposed to be conveyed to him, and decide on its sufficiency, or until the lapse of the time limited for the’ purpose in fixing the day for the payment and security of the residue of the price.

The terms of sale in this case, as is customary, provided that the purchaser should pay ten per cent, on the day of sale. Was the auctioneer’s authority limited to receiving it on that very day ? His entry in his sales book had made a complete contract, by which the purchaser was bound, at all events, to take the lot at the price there set down. The seller had a right, undoubtedly, to make time of the essence of the contract, if he chose to do so.' As a general rule, time is not so essential in executory contracts for the sale of land as to work a forfeiture on the omission to pay at the day stipulated (Edgerton v. Peckham, 11 Paige, 352, 363), and until the seller does some positive act to make it essential, the buyer is at liberty to pay after the day. We find no warrant for the doctrine that the auctioneer’s authority to receive the deposit on a sale made by him, on the terms here expressed, “ ten per cent, on the day of sale,” is limited to receiving it on that day and on that day alone. Until notified to the contrary by the seller, and his authority to receive it thereby revoked, we see no good reason why it does not continue after the day of sale. We do not perceive that it differs in this respect from the authority of other agents empowered to receive money on the sales of land or other executory contracts.' It is a very common occurrence that executory contracts are made for the sale of lands, and left in the hands of agents tó receive payment. They provide for payment on fixed days, and almost universally they make the execution of a conveyance dependent upon the payment of the price at the times and in the manner stipulated. -We venture to say it was never heard of that the principal in such contracts could refuse to convey because the agent had received a payment after the day stipulated, there having been no notice to him not to receive it, or other revocation of his authority.

The power of an auctioneer, in receiving the ten per cent., does not fall short of that of such agents for the collection of contracts made on private sales, and we think we are holding the rule quite strict enough in favor of sellers at auction, when we decide that, until notified by the seller after the day of sale that he repudiates the contract and revokes the auctioneer’s authority to receive the deposit, that authority continues in full force.

The stipulation for the payment of a per centage, by way of deposit, on the day of sale, is for the benefit of both the buyer and seller. The buyer, by complying with those terms literally, will put it out of the seller’s power to revoke the sale on the ensuing day by recalling the auctioneer’s authority to receive the deposit. If the buyer postpone the payment of the deposit till the next or a subsequent day, he does it at the peril of that contingency. The seller may in the meantime forbid the auctioneer to receive the deposit, and on a tender of it to himself personally, he may refuse it, on the ground that he'was entitled to have it received by the auctioneer on the day of sale. But we cannot hold that the auctioneer’s authority to receive it terminates absolutely on the day of sale, nor that it differs in this respect from the power of other agents authorized to receive money payable at a fixed day.

The convenience of business, a circumstance which courts should always regard where no principle of law interferes, seems to require an authority in the auctioneer even more extended than .that we have expressed. The quantity of real estate sold at public auction in this city is immense. A great many parcels are sold by one auctioneer in a single day: and when, as the fact sometimes occurs, he sells a hundred or more distinct parcels at a single sale, it is manifestly impracticable that all or » even a major part of the purchasers can pay their deposit to him on the day of sale. The convenience of all concerned in this great and increasing department of business would be sub-served by holding that each purchaser may pay his deposit in twenty-four hours after the sale. When j udicial sales are made, there is a propriety in requiring an immediate deposit, so as to preclude sham bids made for the sake of delay.

Whether the principles of law will authorize the latitude we have suggested, we need not now decide. We are very clear, however, thatjhey do warrant us in deciding, that until prohibited by the seller, the auctioneer’s authority to receive the deposit continues after the day of sale. Its limit would probably be the time fixed for the completion of the purchase, for if the buyer neglect to pay the deposit after that period, the purchase may be deemed abandoned, and the auctioneer’s authority to act for the seller thereby terminated. There was no such lapse of time in this case as would impair his authority to receive the deposit.

The only remaining question is then presented—Did the defendant revoke the auctioneer’s authority before he received the deposit ? This was a point to be determined on the evidence. The defendant’s son testified positively that he notified the auctioneer, the day after the sale, not to receive the ten per cent. There is, on the other hand, strong negative testimony to show that the young man was mistaken as to the time when this notice was given. The referee had the advantage of seeing the witnesses, and observing their respective candor and intelligence, and we ought to be governed by that consideration where there is not a very decided preponderance of testimony against his conclusion. Forming our opinion on the printed testimony alone, we should probably have decided that the notice was given the day after the salé, but the preponderance in that direction is not so great as to justify us in overruling the report of the referee made with the advantage of the personal examination of the witnesses: and as he has decided that the notice was not given till after the payment of the deposit, the motion to set aside his report must be denied, and the judgment must be affirmed.


source: Caselaw Access Project

author: Bv the Court. Duer, J.

license: Public Domain

text:
    Robert H. M’Curdy and others v. James M. Brown and Henry Hicks.
    (Before Duer, Campbell, and Paine, J.J.)
    May 14;
    June 26, 1852.
    The action for the delivery of personal property under the Code is substantially the former action of replevin.
    Hence the plaintiff can only recover upon a legal title—he must show an absolute or special property giving him an immediate right to the possession.
    To constitute a lien creating a legal title actual possession of the property is indispensable.
    A person who advances money upon the faith that the proceeds of goods which remain in the possession of the owner will be applied to his reimbursement, although he may thereby acquire an equitable lien, has not a legal title to the possession of the goods, and cannot therefore maintain an action for their delivery.
    When the title of the plaintiff in such an action is denied by the answer, the defendant is not bound to prove the title set up in his answer, until that of the plaintiff has been established.
    If, from the defect of proof, the complaint is dismissed, the defendant is entitled to a judgment for the value of the goods.
    Exceptions overruled, and judgment dismissing the complaint affirmed with costs.
    This was an action to compel the delivery of forty-nine bales of cotton and woollen cloths of the value of $3706 52. The sheriff had delivered possession to the plaintiff upon the usual affidavit and undertaking.
    The cause was tried on the 24th March, 1852, before Mr. Justice Bosworth, who, upon the motion of the defendants, dismissed the complaint, and ordered judgment against the plaintiffs for the value of the goods in question.
    The plaintiffs appealed from this judgment, and the cause was now before the court upon the record and a bill of exceptions.
    The pleadings were in the usual form: the plaintiffs averring that they were entitled to the immediate possession of the goods in question, which they had demanded from the defendants, who had refused to deliver them, and claiming judgment for such delivery with damages; and the defendants denying the right of the plaintiffs, averring ownership in themselves, and claiming judgment for a return of the goods, or their value, with costs.

      The bill of exceptions sets forth that the plaintiffs, upon the trial, in order to maintain and prove the issues upon their part, called as a witness,
    Henry G-. Thompson, who, being duly sworn, testified as' follows: I was one of the firm of Thompson & Company, of this city, and remember the sheriff’s taking the goods in question in this action, under the process in the same; the goods were what are commonly called Georgia Plains, and there were forty-nine bales of them. The assignees of Thompson & Co. then had the store, the defendants. I was in the store as their agent, and had charge of these goods as such: Thompson & Co. had previously stopped payment; they stopped the twentieth of September last; the goods in question had been in the store, some since Hay last, some since June last, some since July . last, some since August last, and some had been brought in the same month in which they were taken by the sheriff.
    The plaintiffs had sold under the arrangement between them and its, and we had delivered, pursuant to their order, a large amount of similar goods; we had delivered all they had sold; what goods they sold were retained by us, until we were order- ■ ed by them to deliver the same; they gave us their own notes for the goods they sold; they had sold about twenty-five thousand dollars’ worth of plains before we had any paper from them; they then gave us their own notes to a certain amount on account. They sold the goods on commission, and gave us their own notes on account, as we asked for them; I think the thirteenth of September was the first time they were in advance to us.
    Hy father, Orrin Thompson, transacted the business with the plaintiffs for us; ■ he was not a member of our firm, but was authorized to do so.
    The goods in question in this suit were in our store, Ho. 8 and 10 Spruce street, at the time they were taken by the sheriff; we had been in that store since about 1849; the store passed to the assignees on the twentieth or twenty-second of September last; no change was made in the exterior of the store up to the time the goods were taken; our name continued upon the door, and the assignees’ name was not up.
    The plaintiffs’ counsel next called as a witness on their part,

      Oebot Thompson, who, being duly sworn, testified as follows: I was formerly a member of the firm of Thompson and Company, but ceased to be such several years since; after I left the firm, I still exercised a supervision over its business.
    In the year 1850, the plaintiffs spoke to us about selling this kind of goods, the Georgia Plains; the year before that, we had sold all we made to a house in Boston, and had declined making for any other party, except upon orders; about November or December, 1850, I told the plaintiffs that if they could sell about eight hundred bales of the goods in this market, we would supply them; they said it was too early then to be able to tell how many they could sell. In January or February of the next year, Mr. McCurdy told me he had seen the jobbers, and they had engaged about 400 bales; soon after this, the failure of Austens & Spicer put a damper on the market, and he told me he could not engage to sell more that season; we were to deliver about one third of that quantity in the first half of each of the months of July, August, and September.; these goods were made at Tariffville, and are of three or four kinds, called copperas, black and white, and sheep’s grey of two shades; we made and were ready to deliver our quota for July and August, in all about $35,000 worth, and in August the plaintiffs advanced us $25,000 in their own notes; they were to sell at six months, and to guarantee, and were to have a commission of either 5 or 6 per cent., without any further charge; in September they advanced $25,000 more, which brought us in debt to them.
    I requested plaintiffs to furnish us with a memorandum of the kinds and quantities wanted, that we might deliver them; we could not .deliver them without such a memorandum, because they had been hypothecated, with liberty to substitute others for any we.wished to dispose of; my anxiety to deliver arose from a fear that the jobbers would back out from their engagements, as the goods were dull.
    It was our understanding with the plaintiffs that we should not ourselves sell any of this kind of goods in this market until after October, and this quantity was all that was to be' offered here; we never told them the goods were hypothecated.
    Being cross-examined on the part of the defendants, this witness further testified: The goods were not charged to the plaintiffs, until sent for by them, and delivered; they were not liable to Thompson & Co., except for such as they sold, and then only under their guarantee; in settling up sales they gave their own notes, and not the notes of the purchasers, because they guaranteed the sales; if plaintiffs had sent for their goods, as we requested them to do, they would have been delivered; we were anxious they should send and take them, because the jobbers were getting sick of the goods at the prices.
    In settling for sales, plaintiffs gave their own notes; that is the usual way.
    At the time' they made the second advance, nothing was done except to ask for and receive it; no further security was asked for by them.
    The advance was all in their own notes. (It was agreed by counsel that these notes had been paid.)
    If the goods had not been sold, and called for by them, they would have been on our hands; there was no understanding that plaintiffs should pay for any not sold.
    Thompson & Co. stopped on a Saturday, September twentieth ; their stopping was entirely sudden and unexpected; I was here the day before, and knowing the amount they had to pay, had spoken to some of my friends, who said they could have the necessary amount, and I left the city Saturday morning, at eight o’clock, and when I left, had no idea but that the house would go on; we had no expectation, when the second advance was made, of stopping; om* arrangements had been made up to January; a call was made on us that we did not anticipate, and that occasioned our stopping.
    Being again directly examined, this witness further testified: When the second advance was made, plaintiffs had not sold that amount of the goods, and that fact might have been adverted to; it was mentioned that what the jobbers had engaged from plaintiffs, with what the latter had sold, would cover the $50,000; and I requested plaintiffs to send for the goods; I do not know that they never did send for them.
    The counsel for plaintiffs next recalled on their part,
    Henry G. Thompson, who further testified: There is about $7,500 still due the plaintiffs out of their second advance; the goods in suit were worth about $3,700; we made about 800 bales of the plains, the last season; we had some on hand over from the year before; we sold none of the last year’s through any other house than the plaintiffs.
    It was admitted and agreed, by and between the counsel for the respective parties, that the value of the goods in question was $3,706 52.
    The plaintiffs here rested their case, and the defendants’ counsel moved for a nonsuit, on the ground that the plaintiffs had shown no title to, or right to the possession of, the goods in question.
    The court so held and decided, as also that the matters so given in evidence on the plaintiffs’ part were not sufficient to entitle them to a verdict.
    To which ruling and decision of the said court the plaintiffs’ counsel excepted.

      H. Ketchum, for the plaintiffs,
    insisted that the judge erred in granting the nonsuit, inasmuch as the proof given on the trial was sufficient to show that the plaintiffs were entitled to the possession of the goods, and that it ought at any rate to have been submitted to the jury; he farther contended that the defendants, having shown no property in the goods, were not entitled to a judgment for their value.

      Wm. M. Evarts contra—
    The following cases and authorities were cited upon the argument: Haille v. Smith, 1 Bos. & Pull. 563; Holbrook v. Wight, 24 Wend. 169; Grosvenor v. Phillips, 2 Hill, 145; 2 Kent Com. 820, note (5). 1 Starkie on Ev. 142.
   Bv the Court. Duer, J.

The action given by the Code for the delivery of personal property is substantially the former action of replevin, changed, indeed, in its name, and modified in its form, but in its principle and its object identical. The plaintiff asserts a legal title to the property of which he claims the delivery, and to entitle him to the judgment which he seeks, it is a legal title that by the proper evidence he must establish. Hence the plaintiffs in this case were bound to prove upon the trial that they had an absolute or special property in the goods in question, and an immediate right to their possession. If they have failed in this necessary proof they were properly nonsuited, and the judgment for the agreed value of the goods founded upon the nonsuit must" be affirmed. This view of the nature of the action for the delivery of personal property was adopted by this court in the case of Robert v. Randall (3 Sandford Sup. C. R. 707), nor do the provisions of the Code, as it seems to us, admit of any different construction. The plaintiffs could not have obtained a delivery by the sheriff of the goods in question, but upon an affidavit, stating that they were the owners, or were lawfully entitled to the possession by virtue of a special property therein (Code, § 207, sub. 1), nor can we doubt that the facts which were thus necessary to be stated to sustain their claim to a delivery are exactly those which they were bound to prove upon the trial to entitle them to a judgment.

The remarks that have now been made, are not merely prefatory, but involve in truth our decision of this case. The facts in evidence upon the trial, not only clearly show that the plaintiffs were not the owners of the goods in controversy, but in our opinion are entirely insufficient to prove that they had any special property, by which they could lawfully demand the possession. The sole owners of the goods were Thompson & Co., whose title was not meant to be divested by the agreement between them and the plaintiffs, until actual sales were made to j-obbers or other persons, and the plaintiffs were their agents to effect such sales, acting under a del credere commission, and the notes, which they advanced to Thompson & Co., were a loan of their credit, not the consideration of a purchase. The principal witness for the plaintiffs expressly stated that if the goods were not sold by the plaintiffs as agents, they must have remained on the hands of Thompson & Co., and that they were not liable to Thompson & Co., except for such as they sold, and then only under their guaranty. Ho evidence was given on the trial that there had been an actual sale of the goods in question, before they were demanded from the defendants, and if the plaintiffs meant to rely upon a sale to a third person as giving them a right to claim the delivery, it was upon them that the burden of proving the fact certainly .rested. The judge, upon the trial, had no right to presume its existence.

It was very faintly contende'd upon the argument that the plaintiffs were entitled as absolute owners to the possession of the goods described in their complaint; but it was strenuously insisted that they had acquired a lien to the extent of their advance which gave them a special property and a lawful right to demand the possession. It is, however, the settled law that to the creation or continuance of a lien which a court of common law can recognise or enforce, the actual possession of the property upon which it is held to attach, is indispensable (Godwin v. the London Assurance Co., 1 Black. 104; Kinlock v. Craig, 3 Term. R. 119, 783; Combie v. Davies, 7 East. 5; Rice v. Austin, 7 Mass. 197); and we apprehend that the books may be searched in vain for a case in which a lien conferring a legal title has been held to arise merely from' an advance upon goods that remained in the possession or under the- control of the original owner. Such a lien may, indeed, in some cases, be created and preserved by a mortgage in writing, but never by a mere implication of law. In the present case the original owners, Thompson & Co., retained the possession of the goods in question until they were passed to the defendants as their assignees; and that they should retain the possession until sales were made, and an order for a delivery to the purchasers given by the plaintiffs, seems to have been a part of the agreement between them and the plaintiffs.

It is this circumstance, the continued unbroken possession of the original owners, which distinguishes this case from those on which the learned counsel for the plaintiffs so strongly relied— Haille v. Smith, 1 Bos. and Pull. 563; Holbrook v. Wight, 24 Wend. 196; and Grosvenor v. Phillips, 2 Hill, 145.

In each of those cases there was a change of the possession by a delivery of the property by the original owner to a third person, as the agent or trustee for the plaintiff, and in each the ground of the decision was, that the possession of the agent or trustee was that of the plaintiff. By this possession the lien, which was relied on as giving a special property and legal title;, was perfected.

On the other hand, the case of Nichols v. Crist, 3 Price, 527, which was not cited in the argument, is quite decisive in favor of the defendants. In that case, a del credere factor had accepted bills drawn upon him by the owner of the goods, upon the faith of their consignment to himself, and the goods were actually put on board a vessel for the purpose of being delivered to him; but, as it appeared that the control of the property was still retained by the owner, it was held that the factor had not acquired a lien divesting the title of the owner.

The complaint, in the case before us, avers that the defendants were in possession of certain goods and chattels of the plaintiffs, to the immediate possession of which the plaintiffs were entitled; and upon these averments issue is taken by the answer. We are clear in the opinion that the judge rightly decided that neither of them was sustained by the proof. Whether the plaintiffs had an equitable lien which, upon a complaint properly framed, we might have enforced, is a totally different question, which, in this action and on the pleadings as they stand, we have no right to decide or consider. It is sufficient to say that the judgment in this suit will be no bar to any equitable relief to which they may be entitled, if that relief shall be properly sought.

The objection that the defendants, having no property in themselves, were not entitled to a judgment for the value of the goods, is certainly groundless. They were not bound to show property in themselves until a jorimA facie .title had been established by the plaintiffs, and as, from the failure of this necessary proof, it resulted that the goods had been wrongfully taken from their possession, ,they were necessarily entitled to a judgment for their value. The judgment rendered is thus the only judgment that could have been given. '

It is therefore affirmed with costs.


author: By the Court. Bosworth, J.

text:
    Charles T. Shelton v. John J. V. Westervelt.
    (Before Dues, Campbell, and Boswokth, J. J.)
    May 16;
    June 26.
    Where an execution debtor agrees with a deputy sheriff that on the latter relinquishing specific property at the time actually levied upon, other property, ordered by the debtor, oh his receiving itj shall be substituted as the subject of the levy, the agreement is void.
    Where such property is received by the debtor and substituted after the return day of the execution, the sheriff acquires no valid lien upon it, and a subsequent bond fide mortgage of it will acquire a title good as against the sheriff.
    Where property is substituted before the return day and levied upon, the levy is good, although the previous agreement for substituting it is void.
    This action was brought to recover for the conversion, by the defendant, of a steam-engine and boilers. The plaintiff claimed under a mortgage execute'd to him by Sheldon & Duncan, on the 3d of Hay, 1849', to secure the payment of three promissory notes made by them, each dated April 1, 1849, and payable to the plaintiff, or order, one year after its date, two of them being for the sum of $535 each, and the other for the sum of $636. The mortgage was duly filed on the 4th of Hay, 1849, and was given for a good consideration, and was given and taken in good faith, and without any intent to defraud the creditors of Sheldon & Duncan.
    The defendant justified as sheriff, under a pretended levy under and by virtue of an execution directed and issued to him on a judgment in favor of Thompson & Hason against Sheldon & Duncan, which execution was received in the sheriff’s office on -the 1st of February, 1849, and was returnable within sixty days after the receipt of the same by the sheriff, or on the 2d of April, 1849.
    The engine and boilers in question were made at Springfield, Hassachusetts, for Sheldon & Duncan, under an agreement between them and the maker, that they were not to become the property of Sheldon & Duncan, until put up for them in this city and put in complete running order by the maker, and had been accepted by and paid for by them. The boilers arrived and were oh the premises of Sheldon & Duncan c in Eighth street, in this city before, and the engine not until after the 2d of April, 1849. They were put in working order about the 11th of April, 1849, and were accepted about that time and before the third of May thereafter. It does not appear how or when they were paid for.
    The sheriff levied the execution under which he justifies upon an old steam-engine and boilers, on or about the 16th of March, 1849, then on the premises of Sheldon & Duncan, and placed a person in charge of the property. After that and before the arrival of the engine and boilers in question, and in anticipation of their arrival, it was verbally agreed between the deputy sheriff holding the execution and Sheldon,, one of the defendants in the execution, and at the request of the latter, that if the deputy would permit Sheldon & Duncan to remove the old engine and boilers so as to make room for the new ones, Sheldon would consent to substitute the new ones on their arrival, as the subjects of the levy instead of the old. The plaintiff had no knowledge or notice of this arrangement. The deputy assented to this arrangement. The old engine and boilers were accordingly remoVed, and on the arrival of the new boilers and engine, the deputy, in pursuance of this arrangement, levied on them, so far as they could be levied on under such an arrangement, and placed a person in charge of them, in whose custody they remained until the time of the sale, which was the 2d of April, 1850. The substitution of the new for the old engine took place before the execution of the mortgage, but not until after the return day of the execution. The substitution of the new boilers for the old ones took place before the return day of the execution. The jury, under the direction of the court, rendered a general verdict for the plaintiff, and in answer to specific questions of fact submitted to them, found—
    1. That the new boilers were levied upon before the second of April, 1849, but that the engine was not.
    2. That the boilers were worth $600 at the time of the sale of them by the sheriff.
    3. That the engine and boilers at that time were worth the sum of $2,000.
    The judge at the time directed a judgment for the plaintiff for $1,833 37, the amount of the principal and interest of the notes secured by the mortgage, reserving for the consideration of the court at General Term, the question of the validity of the agreement between the deputy and the defendants in the execution, for the substitution of the new engine and boilers for the old ones, and also reserving for the judgment of the court the other questions arising upon the case.

      Wm. M. Evarts, for the plaintiff.

      A. J. Vanderpoel, for the defendant.
   By the Court. Bosworth, J.

The jury have found that the engine was not levied upon before the return day of the execution. After the return day it was substituted for the old engine which had been regularly levied upon. This substitution was made in pursuance of a previous agreement between the deputy sheriff who had made the levy, and the defendants in the execution. The consideration of the agreement for the substitution by the execution debtors, was the relinquishment by the sheriff of the old engine from the levy made upon it. If the sheriff can justify the sale of the new engine, it must be on the ground that this agreement, and the delivery of the new engine to him in pursuance of such agreement, gave him a special property in it, with authority to sell it in satisfaction of the execution, which could not be defeated by a subsequent mortgage, bond fide taken, to secure an honest and just debt. Independent of, and in the absence of any such agreement, it certainly cannot be pretended that he can hold and sell property, acquired by the execution debtor, after the return day of the execution, or by virtue of a levy made upon it after such return day.

The mortgage having been taken bond fide, to secure a just debt, and without any intent to defraud creditors, is valid against all parties except such as can show a valid prior title.

If the new engine and boilers had not been substituted for the old, could the sheriff have maintained an action against the execution debtors on their promise to make such substitution 1 The deputy was not the agent of the plaintiff in the execution, in making this agreement. The sheriff would be liable to him for the value of the property, if, in consequence of relinquishing it from the levy, it should be placed beyond his power to reclaim and sell it on the execution.

The law imposes upon him the duty of safely keeping, and of selling the property according to law, and of paying to the plaintiff the proceeds of such sale. Any agreement with the execution debtor, by which he relinquishes to the debtor the possession and disposition of the property discharged from the levy, is a violation of his duty, contrary to law, and absolutely void. It was decided in Strong v. Tompkins et al. 8 J. R. 98, that a sheriff who took, on arresting a defendant, the note of a third person to the order of and endorsed by the defendant, instead of a bail bond, could not recover against the maker, notwithstanding he had paid to the plaintiff the amount of the judgment recovered in that action, and notwithstanding the note was received upon a special agreement that it should be applied to the settlement of. the demands for which the suit was brought, in which such arrest had been made. The court said that the plaintiff in that case had no right of property in the note. He was not the legal holder, because the assignment to him was a nullity; and he had no more right to sue the defendants than if the name of the payee had been forged. To give effect to such contracts would lead to the greatest abuse and oppression, and would be suffering the provisions of a very beneficial statute to be eluded.

The same principle was applied in Codwise v. Field, 9 J. R. 263; and in The Bank of Orange Co. v. Wakeman, 1 Cow. 46. Vide Burrell v. Acker, 23 Wend. 609, and 2 R. S. 286, § 60.

The principle decided in Strong v. Tompkins is, that a sheriff cannot acquire any right from an agreement contrary to law and made by him as sheriff, nor justify any act done under it, ' when the rights of third persons are in question. Unless he can justify the taking and sale of the engine under this agreement, he is without any defence, so far as that portion of the property is concerned. The levying of the execution after the return day was passed, upon property subsequently acquired, was a nullity. (West v. Shockley, 4 Harrington, 287.) Tie relinquishment of the old engine and boilers was invalid as to the plaintiff, notwithstanding that, he would have the right to have it reseized and sold to satisfy his execution. (Colton & Ulman v. Camp, 1 Wend. 365.)

The cases cited by the defendant to show that a levy may be good as against the execution debtor, which would be inoperative against a junior execution creditor, or a howAfide purchaser, have no application to this case. (Ray v. Harcourt, 19 Wend. 495; Van Wyck v. Pine, 2 Hill, 666; Dresser v. Ainsworth, 9 Barbour, S. C. 620.)

The new engine was not property which in judgment of law was bound by the execution from the time of the receipt of it by the sheriff, or at any time before the return day. It was not the property of -the debtor until after the return day, and it is doubtful from the evidence, whether it was even within the city and county of Hew York before the execution had run out. There had not been, and could not have been, within the life-time of the execution, any levy, either actual or constructive.

There was therefore no levy to interfere with the right of Sheldon & Duncan to execute the mortgage. The agreement by force and virtue of which the sheriff claims the right to hold and sell the new engine under the execution, was utterly void, even as against the execution debtors, and is no answer to this action.

I think the right of the sheriff to hold the new boilers under his levy, is unimpaired by any fact proved in this case. Although the agreement for the substitution of them for the old was illegal and void, yet as they were actually levied upon before the return day of the execution, and taken in charge of the sheriff, they are as much bound by the levy as if no such agreement had been made. The validity of the levy, which it was his duty to make, is not affected by any void or illegal agreement respecting the new boilers. The sheriff claims nothing under or by reason of the agreement; whether he had made it or not, it was his duty, for aught that appears, to have levied upon these boilers. He did levy upon and sell them under the execution. Hie levy was prior to the execution of the mortgage of them to the plaintiff. Hiere is no evidence in the case tending to show, that the delay of the sheriff to sell resulted from any iustruction from the plaintiff in the execution, or from any cause other than his own volition or the exercise of his own discretion. The pleadings do not show, as was insisted on the argument they did, that the notes described in the mortgage were in point of fact given at the time the mortgage bears date, and for the purpose of seeming moneys advanced to pay for the new engine and boilers. The case made does not therefore show that the plaintiff furnished the money to pay for them, and at the same time took Sheldon & Duncan’s notes for the amount, and a mortgage upon the property thus paid for, to secure the repayment of the advance, and that the title in them vested in Sheldon & Duncan simultaneously with the giving of the mortgage. What the rights of such a mortgagee upon the other facts appearing in this case would be, is a question which does not arise.

We are of opinion that the verdict should have been limited to the value of the new engine, which the jury found to be $1400, and interest on it from April 2, 1850, the time of the conversion.

The judgment entered must be modified accordingly, and a judgment entered for $1400, the valué of the new engine, with interest on that sum from April 2, 1850, until the time of entering the judgment.


text:
    Brouwer, Receiver, &c. of The Pelican Mut. Insur. Co. v. John H. and Wm. H. Harbeck.
    A Mutual Insurance Company, authorized by its charter, for the better security of its dealers, to take premium notes in advance of persons intending to receive policies, and to negotiate such notes for the purpose of paying claims or otherwise in the course of its business, may lawfully transfer snch notes to a party who has insured in the company, on account of a claim for a loss, or to any ■ person, on a discount of them at the rate of I per cent, per annum.
    The transfer of such notes by the president alone, without a previous resolution of the board of directors, is valid, he being authorized by the by-laws to make ' contracts and transact the ordinary business-of the Company.
    And though such transfer amounts tp over $1,000, yet if made in and according to the ordinary course of its business, it cannot be avoided at the suit of a receiver subsequently appointed, notwithstanding the company was actually insolvent at the time, unless it was openly and notoriously insolvent, or the party to whom the transfer was made had notice of the insolvency.
    (Before Campbell and Bosworth, J.J.)
    May 17, 18 ;
    June 19, 1852.
    The receiver of an insolvent corporation cannot impeach or disaffirm the lawful and authorized acts of the corporation.
    "Where the party receiving notes discounts them, and at the request of the Company pays a claim of its creditor, which was usurious but not known to the transferee to be so, the transfer to him is not thereby invalidated.
    A transfer of property and effects of a company amounting to over $1,000, can be lawfully made in and according to the ordinary course of its business without a previous resolution of the board of directors, viz. on the discount of a note, in payment of checks, or bills, or of debts, dec.
    The facts of this case are fully stated in the opinion of the court.

      H. B. Cutting, for plaintiff,
    argued the following points:
    I. The transfer to the defendants of "the effects of the company, to the amount of S8,393fw9T, was not authorized by a previous resolution of the Board of Directors, and is void. (Johnson v. Brush, 3 Barb, C. R. 207; 1 R. S. 591, sec. 8.) The term “ effects ” embraces every species of property, real and personal, including things in action. (1 R. S. 599, sec. 64.) The transfer of the effects in question was not within the exceptions specified in thestatute. 1. They were not promissory notes, or evidences of debt, issued by the officers of the company in the transaction of its ordinary business. 2. Nor was it a payment in specie or other current money, or in bank bills. 3. The defendants were not purchasers for a valuable consideration and without notice.
    II. There was no by-law authorizing the transfer; and if there had been, it would be void. (1 R. S. 600 ; sec. 1. sub. 6.)
    DT. The decision of the Chief Justice, that the plaintiff must prove open avowed insolvency; and that actual insolvency, unless coupled with proof that defendants knew the company to be insolvent, was not sufficient to maintain the action, was erroneous. (Fols. 121, 122.)
    The statute declares that no payment made, or security given by any moneyed corporation when insolvent, or in contemplation of insolvency, with the intent of giving a preference to any particular creditor,,shall be valid in law; and every person receiving any of the effects of the corporation shall.be bound to account therefor, &c. (1 R. S. 591, sec. 9.) The object of the statute was to enforce an equal distribution of the assets, and is analogous to similar provisions in bankrupt laws.
    IV. The Chief Justice erred in dismissing the complaint; he thereby decided that the transfer of the effects of the company was valid, although not authorized by. any previous resolution of the Board of Directors ; and took from the jury all questions of fact, and amongst others, the question whether the transfer was made when the company was, in fact, insolvent, and known to its officers to be so; whether it was made in contemplation of insolvency, and with the intent of giving a preference to the defendants over other creditors.
    V. The company was, at the time of the transfer of its effects, actually insolvent, and was known by its officers so to be. At least, the evidence ought to have been left to the jury.
    VI. There was evidence which ought to have been submitted to the jury, that the defendants knew or had reason to believe, or had notice enough, to put them on inquiry at the time of obtaining the said effects, that the company was insolvent. If notice to the defendants was • necessary, the court erred in shutting offi proof of the credit of the company at that time. (Fol. 66.)
    VII. The debt due to the Beldens was usurious and void, and the company was entitled to demand and receive from them the collaterals in their possession. The defendants, with notice qf the usury, received these securities, and became substituted in the place of the Beldens, and the receiver has the same right to claim and recover these effects from the defendants, that he would have had against the Beldens, if they had continued to hold them. (Complaint, fols. 9, 10.) The answer does not controvert the averment of usury!
    VIH. The judgment of the judge at special term ought to be reversed, and a new trial ordered.

      James W. Gerard, for defendant,
    insisted as follows—
    I. 1 Bevised Statutes, 122, third edition, enacts. “ That no conveyance, assignment, or transfer, not authorized by a previous resolution of its board of directors, shall be made by any such corporation, of any of its real estate, or of any of its effects, exceeding the value of $1,000; but this section shall not apply to the issuing of promissory notes, or other evidences of debt, in the transaction of its ordinary business, nor to payments in specie "or in bank bills made by such officers, nor to avoid any conveyance, assignment, or transfer, in the hands of a purchaser, for a valuable consideration, and without notice.”
    This is not a case of a collusive transfer, made with an illegal intent, out of the ordinary course of the business of the company, which the statute was intended to remedy. These notes were not directed into a channel foreign to the business of the company, but were used in the course of the regular "business of the company to pay its debts. Hie title of the Messrs. Bel den to three of the notes accrued on the 12th November, 1847, when they lent on them $2,500; and the title of Harbeek to the other notes accrued on the 6th and 7th December, when they lent on them $2,000. The equity of redemption of the company to the notes was extinguished on the 14th December, when the Messrs. Harbeek discounted the notes and paid the loan to the Beldens, and deducting their own loan, and the loss on the brig George, paid the balance in cash to the company.
    H. The transfers of the notes, and the signing of the check on their face, purport to he the act of the company in the manner and form required by their by-laws, and the invariable usage of the company. The statute, even in cases where it applies, can only operate on those transfers where the transferee knew that there was no resolution, so as to create an illegal intent, which is the gravamen of the complaint. In this case, no such knowledge was proved or pretended.
    The endorsements being regular in form, as the endorsements of the company, the legal presumption is, that the notes were transferred according to law; and the onus is on the plaintiff to show that the Harbecks knew that they were not so transferred ; and no proof of any such notice is shown or pretended. (1 Hill, 11, Safford v. Wykoff. 7 do. 91, Bank of Vergennes v. Warren. 1 Denio, 520, Gillett v. Campbell. 3 Denio, 254, Aimes v. Mutual Insurance Co. 1 Coms. 290. 22 Wend. 348.)

      1H. But by the twelfth section of the act incorporating this company, these notes are expressly authorized to be negotiated to pay losses or otherwise; and this section, and the organization and objects of mutual insurance companies, and the whole spirit of their charters, override and modify the eighth and ninth sections of the prior statutes of 1830, applicable to money incorporations. And the third and fifth sections of the charter of the Atlantic Company authorize the company to vest that power in their officers. (Laws of 1843, p. 65.)
    This modification, authorizing the officers to pay losses by a transfer of notes, or by converting them into money, was indispensable to the execution of their ordinary daily business, as the trustees met but once a month, and their business would stop if their notes could not be turned over in specie, or converted into cash, to meet the daily losses of the company. And such was their unvaried usage; for the minute books of this company do not contain a single resolution of the transfer of notes to pay losses, nor was such a resolution ever passed by any- one of the Mutual Insurance Companies in our city. (Case, fol. 251.)
    By the ninth by-law of the Pelican Company, and uniform course of business from its commencement, the trustees allowed and sanctioned the President tó adjust and pay losses, and for that purpose to use the notes of the company. The receiver, therefore, is estopped from committing a gross fraud, by claiming adverse to the by-law and practice sanctioned by the trustees.
    This custom was in issue. (Ans. f. 46, 53. Replication, 59.)
    The third section of the charter allows the corporate powers to be exercised by the trustees themselves, and by such persons as they may delegate the power.
    Such delegation maybe shown by express resolution, or may arise from the general course of business. The ninth by-law was such an express delegation; and under it the President alone adjusted and paid losses^by the transfer of notes, or by getting them cashed and paying in money, without the agency of the Board of Trustees, or any other‘person or persons.
    But if the eighth and ninth sections of the general act, applicable to money corporations, was not modified by the twelfth and other sections of the charter of this company, the defendants were purchasers of these notes for a valuable consideration, within the exception in the eighth section, and had no notice that the transfer of the notes to them or to the Beldens was made without a previous resolution of the trustees. (Meyer v. Aspinwall.)

    The consideration was not only a valuable, but was a present one, parted with at the time of the transfer,—viz. the Beldens lent $2,500 on their notes; Harbecks lent $2,000 on their notes, and on discounting the notes also paid the Beldens $2,600. In fact, the whole transaction may be considered a' discounting of the notes, and applying part of the proceeds to pay the loss on the brig George of $3,010, which was conceded by the complaint (fol. 8) to have been adjusted, liquidated, and due.
    The payment of a loss was decided in Aspinwall v. Meyer to be a valuable consideration, within the exception of the eighth section.
    That the eighth section cannot apply to a payment in money or notes of a loss, made by an insurance company in the ordinary course of its business, but only to a transfer, conveyance, or assignment of its real estate or similar permanent effects as contra-distinguished from its notes or cash with which it paid its losses, is clear from the language of the ninth section, which makes an evident distinction between such transfer and the payment of a debt or loss, for it says,no such conveyance, assignment, or transfer, nor any payment made or security given, &c., shall be valid, &e., in case of insolvency.
    IV. The insolvency that avoids a transfer payment or security to a creditor means an open notorious insolvenoy, by which the creditor is presumed to have notice,—or secret insolvency with actual notice.
    The statute did not mean to avoid payment of losses made by a mutual insurance company in the ordinary course of its business, while the company is going on with its business apparently as usual,—although it might afterwards appear, that, if they had wound up that day, the company with its assets was utterly unable to meet its debts,—but only to avoid one creditor knowingly getting a preference in the distribution of assets after a company has stopped or failed in its business, in the popular sense of the term, or is about to do so, and the creditor knowing it, unjustly and with an illegal intent, gets such preference for an old debt. (2 Young and Jervis, 469, Cullen v. Langer.)

    That this is the intention of the statute is manifest—first, from its phraseology; second, from the injustice which would otherwise be done to insurers who'received payment of losses, which they may be called upon to refund at any future period of time within six years on a company openly bursting up, and a receiver appointed; and third, from the penal consequences attached to every director who assents to such transfer, security, or payment, by the tenth and eleventh sections of the act,— viz. a liability to the creditors and stockholders to the extent of loss thereby sustained, and to be liable as a criminal for a misdemeanor, punishable by fine and imprisonment.
    Y. Again: when the Beldens and the Harbecks acquired the title to these notes, on the 12th November and the 6th and 7th December, they were not creditors, nor did they receive - them in any such capacity, but as lenders of money presently advanced on the strength of these notes,—a present consideration,—which moneys were applied by the company to its use.
    YI. Neither on these days, nor on the 14th December, when the transaction was closed by the discounting of the notes, had the company failed or stopped its business, or contemplated doing so. On the contrary, they continued their business for nearly three months afterwards, effecting policies and paying losses; and contemplated new officers to be brought in, with a new subscription and new patronage, as appears by the minutes of the company.
    YH. Open insolvency was not pretended; and if the company was actually insolvent, there was not a particle of proof to go to the jury to show that they, the Beldens or the Harbecks, knew it.
    The Harbecks had been old insurers with the company; and so far from suspicion of their insolvency, they in August, 1847, gave to the company a subscription note of $3,000, which they discounted and paid in October or November, before due; and the company owed on it, at the time of their failure, $2,000. (See Case, fol. 258.)

      William H. Harbeek, in June, 1846 (Case, fol. 154), had been elected a trustee; but he never attended a meeting. From ill health, he resigned July 14,1847 (fol. 109). Dixey, from the same office, was named as a trustee, who never attended but one meeting. (See Case, fol. 254.)
    It requires mutual knowledge of insolvency or contemplated insolvency to avoid the payment.
    The statute requires an illegal intent. There can be no illegal intent without knowledge. The complainant well knew that; for the gra/vamen of th'e complaint is to carry out an illegal intent. (Complaint, fol. 16, 17, 18, 21.)
    YHI. The transaction was not paying or preferring a creditor at all, but it was a negotiating of notes for present consideration, to pay losses and raise money for the use of the company; and there was no evidence to submit to the jury. Suppose these notes had been discounted on the 14th December, by the bank with which the company kept its account, would any sane man pretend to question the title of the bank to these notes ?
    There is not a particle of law, justice, or honesty, in the claim of the receiver; and every point that can be raised in this case has been decided by this court, in the cases of Meyer and Aspinwall, and Harbeek and Bishop, confirmed by the Court of Appeals.
    IX. These Mutual Safety Insurance Companies are not monied corporations within the meaning of the Revised Statutes. They were ribt in existence then, nor were they contemplated. (1 Denio, 520, Gillet v. Campbell.)

   By the Court. Bosworth, J.

On the 12th of Nov., 1847, the Pelican Mutual Insurance Company borrowed of 0. & Gr. Belden $2,500. No time was fixed by the terms of the loan when the money was to be repaid. The company gave a memorandum check for the sum borrowed, signed by their president, payable to the order of and endorsed by their secretary, and at the same time delivered to the Beldens as collateral security for the return of the money three promissory notes belonging to the company, and being part of their property and effects.

On the 6th of December the defendants loaned to the company $1,000, and on the 7th of December the further sum of $1,000, and on one of those days received from the company a§ collateral security for the repayment of the loans, promissory notes, being of the property and effects of the company, and amounting to between $4,000 and $5,000. The moneys thus borrowed of the defendants and the Beldens were properly applied to the use of the company in the transaction of their ordinary business. - The notes turned out as collateral were • taí¡en in the regular course of the company’s business, for premiums, for risks on various vessels.

On and prior to the 14th of December, 1847, the company owed the defendants $3,010, for a loss, under a policy of insurance, effected hy the defendants on the brig George, in March, 1846.

On the 14th of December, the defendants discounted for the company all of the collaterals which were held by themselves and the Beldens, and retained pursuant to the terms óf the arrangement under which the discount was made.

Their loan of - -' - - - - $2,000

The amount of loss of brig George - - 3,010

Eor discount on the notes and interest on the

money lent ^..... 649 31

And paid to the Beldens for the company their

loan of ------ 2,500

And for interest on their loan - - - 120

And to the company the balance of the proceeds, being..... 113 98

These notes were discounted by the defendants at the rate of seven per cent.

There was no resolution of the trustees formally authorizing the transfer of the collaterals to either the Beldens or the defendants, or the transfer of them to the defendants at the time the latter discounted them.

The company continued to transact business and take risks until the 28th of January, 1848.

On the 3d of January, 1848, creditors of the company preseated to the Supreme Court a petition, which set forth the insolvency of the company, their inability to pay their debts, and prayed for an order or judgment dissolving the company, and for the appointment of a receiver, and for an injunction.

On the 18th of February, 1848, the Supreme Court decreed the dissolution of the company^ granted an injunction, and ordered the appointment of a receiver. The plaintiff was appointed such receiver on the 14th of March, 1848.

The plaintiff brings this action to avoid -the transfers of the notes discounted by the defendants on the 14th of December, 1847, and to compel them to account for the moneys they have collected upon any of these notes with interest, and to pay the value of such of them as may remain in their hands uncollected.

The plaintiff’s counsel insisted that the transfer to the defendants on the 14th December, 1847, of the notes in question, amounting to $8,393 was void on two grounds:

1. Because the transfer was not authorized by a previous resolution of the board of directors.

2. Because (as he insisted the fact was), the company at the time of the transfer was actually insolvent, or made it in contemplation of insolvency, and with the intent of giving a preference to the defendants over other creditors.

He also insisted that there was, at least, sufficient evidence to call for the submission to the jury of the question, whether the company was not in fact insolvent, and whether the defendants did not Imow of the fact, or have such notice as made it their duty to inquire how that fact was. He also objected that proper evidence to be submitted to the jury was excluded by the court. The Chief Justice before whom the cause was tried, decided that on the evidence given, the plaintiff could not recover, unless he proved, that at the time of the transfer the company was either openly and avowedly insolvent, or actually insolvent, and that the defendants had knowledge of it.

When the plaintiff rested, the Chief Justice, on the motion of defendants’ counsel, dismissed the complaint, on the ground that there was no evidence of open or distinct insolvency, nor sufficient . evidence of a knowledge by the defendants of actual insolvency, to entitle the plaintiff to have that question of fact submitted to the jury. The plaintiff excepted, and the only questions presented for review, relate merely to the accuracy of the decisions made at the trial.

It appeared very clearly from the evidence, that it was part of the ordinary and accustomed business of the president to adjust and pay losses. One of the by-laws (the third) of the company gives authority to the president, vice-president, or either of them, “ to sign the policies of the company, and transact its ordinary business.”

The ninth by-law gives them “ authority to settle and pay all claims for losses and return premiums in full, or by compromise, except such claims as in their judgment may be deemed of a doubtful character, in which case the same shall be ■referred to the committee of advice, 0and settled'or adjusted as the committee may determine.”

In 1845-6 the company occasionally paid losses in notes. These notes being payable one year from date, it was difficult to get them discounted by the banks, and sometimes money was borrowed to pay losses. The president transacted the business of adjusting and paying the losses. This course of business was not only well known °to the trustees, but it was expressly provided by the by-laws that the president might transact this business and all the ordinary concerns of the company.

I think this mode of dealing and transacting the business of the company is clearly authorized by its charter. The fourth section declares that “it shall possess all the powers and privileges, and be subject to all the restrictions, reservations, and limitations, which are reserved, granted, or imposed upon the Atlantic Mutual Insurance Company by the act incorporating that company,” with two exceptions, which have no bearing upon any point controverted in this action. (Laws of 1843, p. 66, §4.)

The act incorporating the Atlantic Mutual Insurance Company, provides that “ all the corporate powers of the said company shall be exercised by a board of trustees, and such officers, clerks, and agents, and other persons as said trustees may appoint from time to time.” ’ (Laws of 1842, p. 262, § 3.) It authorizes the trustees “ to make such other by-laws as may be deemed necessary for the government of the officers and the conduct of their affairs. (Id. § 5.) That the company, for the better security of its dealers, may receive notes for premiums in advance, of persons intending to receive its policies, and may negotiate such notes for the purpose of paying claims, or otherwise, in the course of its business.” (Id. § 12.)

The company is expressly authorized by its charter to negotiate notes for the purpose of paying losses : so far as the transaction of the 14th of December, 1847, was a negotiation of its notes to pay losses under the policy of insurance on the brig George, its legality is found in the charter of the company, and is valid, unless it was of such a character as to subject it to the .operation, of the prohibitory provisions of the 8th or 9th section of the 1st of E. S. p. 591.

It certainly cannot be of the least consequence whether they are negotiated directly to the person to whom the loss is payable, or to some third person who is willing to discount them, and thus enable the company to pay the loss in money.

The act is explicit that they may not only be negotiated for the purpose of paying claims, not losses merely, but claims, or “ otherwise, in the course of its business.”

The negotiation of notes to the Beldens on the 12th of Kovember, and to the defendants on the 6th and 7th of December, as security for money borrowed of them, was a transaction in the course of its ordinary business. The money was borrowed for the use of the company, was applied to its legitimate business, and for aught that appears in paying losses. Those who loaned the money had a just claim against the company for its repayment ; the company was authorized by its charter to negotiate its notes for the purpose of paying these claims. It did so negotiate them on the 14th of December, 1847, to the defendants, who retained sufficient of the proceeds to satisfy, and in payment of the amount due them, and paid for the company to the Beldens and'to the company the residue of the proceeds, in cash, amounting to the sum of $2,733TW

The transaction was clearly a proper one, unless it can be avoided on the ground that it falls within some one of the prohibitions contained in the 8th or 9th section of 1 E. S. p. 591. I think it does not come within any prohibition contained in the 8th section.

That section allows the issuing of notes or other-evidences of debt by the officers of a company in the transaction of its ordinary business, amounting to more than $1000 ai a time. It was insisted that the issuing of notes or other evidences of debt, as here used, means. obligations or promises to pay, made by the company itself, and not notes owned by it and made by third persons. If this be so, it is not obvious that this section can have any full practical application to incorporations of the nature of this one. Ordinarily it could not well have any notes or evidences of debt to issue except those made by its dealers. The Revised Statutes declare that “ the term, evidences of debt,” as used in this title, shall be construed to embrace every written instrument or security, for the payment of money, importing on its face the existence of a debt, and whether under seal or otherwise.” (1 R. -S. 599, § 65.) The statute therefore makes it include evidences of debts, other than of the debts of the company itself. Reither is it obvious if this claimed construction be correct, why the transfer by a bank of $1000 at a time, of bills made by other banks, on discounting a note, is not as much prohibited by § 8, as a transfer by this company of its premium notes in payment of a claim or on a sale of them for cash.

This transaction was, in effect as wfell as in form, either a sale of the notes upon a discount of them by the defendants, or a negotiation of them in payment of claims. Either disposition of them is expressly authorized by § 12 of the act of 1842. (Laws of 1842, p. 263.)

The president could lawfully be authorized to transact such business. The uniform usage of the company in transacting it through Trim, coupled with the powers conferred by the by-laws, constituted him a fully authorized agent for that purpose, and his lon&fide transactions with its dealers bind the company and the plaintiff. (Howland v. Myer, 3 Coms. 290; Hyde v. Lynde, 4 Coms. 387.) I do not think that a previous resolution of the company is necessary to authorize each or any particular transfer by an incorporation of over one thousand dollars of its effects, where the transfer is made in and according to the ordinary course of its business, and to pay just claims. (2 Sandford S. C. R. 180 ; Aspinwall v. Myer, S. C. 3 Coms. 290.)

I think that the complaint was properly dismissed, and that the plaintiff could not recover on proving less than was required of him at the time. If he could have proved that the company was openly and notoriously insolvent on the 14th of December, 1847, or that it was actually insolvent, and that the defendants had knowledge of the fact, then the discount of the notes might have been regarded as a transaction,'in effect, designed to secure payment to the defendants of the loss that had been incurred by the company under its insurance of the brig George, and to prefer them to that extent over other creditors. The only words in the 9th section which could, even in that aspect, be regarded as descriptive of this transaction are, “no transfer, nor any payment made, by any such corporation when insolvent, or in contemplation of insolvency, with the intent of giving a preference to any particular creditor over other creditors of the company, shall be valid in law.” There certainly was no judgment suffered, lien created, or security given. There was a transfer of some notes which the Beldens held as security for money loaned. The other notes were held by the defendants at the time, as security for moneys previously loaned by them. The notes held by each amounted to more than their loans, and could be lawfully retained until the loans were repaid. The transfers made at the time of the loans were not made with intent of giving a preference, or to secure any pre-existing debt. Money was then borrowed temporarily on the security of the transferred notes. It was certainly lawful to repay the loans out of the proceeds of such notes. It was lawful for the defendants, at the instance of the company, to discount at the rate of seven per cent, the notes held by the Beldens, and pay the latter the amount of their loan and interest. There was nothing as to which the defendants could be preferred, or which the company could have then had an intent to prefer, unless it was the debt for the loss of the brig George. Unless such facts could be proved as would clearly show that the purpose of the defendants in discounting the notes on the 14th of December was to obtain payment of'that debt from a company insolvent, and known to be so, there could be no ground for saying that the transaction was a payment made by an insolvent company with' intent to prefer one of its creditors over another. If the transfer or the payment, whatever it may be called, was not made with that intent, then it is not prohibited by the ninth section.

It cannot be successfully pretended, that if a company of this character which does not intend to suspend operations, or believe that it must necessarily fail, and continues its business, believing it will sustain itself by means, which it confidently expects to be able to command, but which it ultimately fails to get; cannot make valid payments to its bond fide dealers, while in this condition, although the result may show, that in point of fact its me^ns were insufficient when these payments were made to satisfy its creditors in full.

The condition of these defendants, on the 14th of December, 1847, was this : They held $3,500 (in amount) 'of notes of the company, as security, for a loan of $2,000, made on their credit. The company owed them another debt of $3,010, conk-acted in the regular course of its business. They received from the company, notes amounting, with those they held, to $8,393,S,§: they took these notes in satisfaction of the loan of $2,000, and of the interest due, on account of their debt of $3,010, and actually advanced in cash $27385,8.

Unless all this was done merely to prefer them, as to the debt of $3,010, over other creditors, and with that intent, why should they not retain the notes ? And how can the intent thus to prefer them exist, or be established, unless it be true that the company making the transfer was, in fact, insolvent, and the defendants had knowledge of that fact. Unless they knew of such insolvency, or believed it to exist, the. idea of obtaining a preference by the transaction, or the possibility of that being an inducement to it, would be out of the question.

What the actual condition of the company then was, is not precisely shown. There was evidence enough, I think, to justify the submission of the question, of its being, in fact, unable to pay all its debts, but not to justify a jury in finding, that the defendants knew or believed that to be the fact. The evidence showed that the defendants advanced their subscription note to the company in August, 1847, for $3,000, and discounted it for the company in October or November, 1847. That the company yet owes them at least $2,000, on this note. If they were favorite creditors whom the company intended to prefer, or who sought payment by way of preference through the transaction of December, 1847,- it is singular that no attempt was made to obtain payment of the amount owing to them by the company. There was no evidence that the defendants at any time apphed to' any officer of the company for payment or security, or conversed with them or with any one else relative to the particular condition of the affairs of the company, or knew or heard that dealers who applied for payment of liquidated or conceded losses were refused payment; or delayed in receiving it. The company continued to pay losses until the first of January, 1848. The secretary testified that on the 28th of December the company paid losses to the amount of $9,000, and that it had then a surplus of assets. If the company was actually insolvent, there was no evidence tending to show that the defendants knew that fact.

Without such evidence the transaction of the 14th of December, between the defendants and the company was, as between them, one that occurred in and according to its ordinary course of business, in which a loss owing was paid by the company, and the defendants discharged a just claim and bond fide advanced money to the company.

That the intent to prefer one creditor of an insolvent company to another, is essential to render a transfer by such a company invalid, is illustrated by § 71, of the article in relation to the voluntary dissolution of corporations. (2 R. S. 469, § 71.) That section declares all transfers made, after the filing of a petition for dissolution, in payment of, or as security for a preexisting debt, or for any consideration, void as against the receivers who may be appointed, and as against the creditors of the corporation, irrespective of the intent with which the transfer is made. That provision applies as well to the case where a petition for a dissolution is presented by the directors, trustees, or other officers of a corporation, as by its creditors* (2 R. S. 463, § 39, 40, and 41 and 42 ; and id. 467, § 58, 65, 67> 68, 70, and 71.)

§ 9 of 1 R. S. 591, declares transfers by an insolvent company invalid when made with intent to pay or secure one creditor, in preference to another. It was not intended to invalidate a fair bond fide transaction between itself and one of its dealers, who, without notice of its actual insolvency, discounted its notes according to its ordinary course of business, although as part and parcel of the transaction he was paid, and cancelled a just claim.

The defendants’ counsel, referring to the 9th of December, 1847, asked a witness this question: “ What was the credit of the company at that time?” Upon objection, the question was excluded, and an exception taken to the opinion of the court: This decision, taken in connexion with the further decision that the plaintiffs might show open and notorious insolvency, or actual insolvency and knowledge of it by the defendants, must be regarded as conclusive on this motion, that the question was not put for the purpose of proving that the company was then generally reputed to be insolvent: that course of inquiry was expressly permitted to the plaintiff’s counsel by the court; the question, upon all fair intendment, must be deemed to have been put with a view to ascertain rather the relative standing of the company, as to the extent of its business, the general character of its risks, -and the amount of its capital, or other points entirely compatible with the absence of all suspicion of insolvency, than its general reputation for actual solvency or insolvency: I think the question as put was properly excluded.

It requires a somewhat strained construction, in- which every inference and intendment must be taken unfavorably against the defendants, to hold that the loan by the Beldens was usurious. Whatever the contract was, the defendants were not parties to it. They do not claim under it, nor do their rights depend upon it. If the company, in the ordinary course of its business, deemed it for its own interests to pay a usurious rate of. interest, I do not see that after having paid it they had any rights left, except to bring an action within one year thereafter, to recover back the usurious excess from the person receiving it. (1 R. S. p. m, § 3.)

The defendants did not receive this excess. They advanced the $2,620 for the company to the Beldens, and it does not even appear that they knew any part of the advance was to compensate the Beldens at a greater rate than 7 per cent, for the loan of money. There is nothing in the evidence upon this point establishing any right to have the transaction of the 14th of December avoided on the ground that the loan by the Beldens on the 12th of Eovember was usurious.

This case has been considered upon the assumption that the provisions of the 8th and 9th sections of 1 R. S. p. 591 are applicable to this company, so far as they do not conflict with the terms of this charter. Whether they are or are not applicable, it is unnecessary to decide. If applicable to that extent, they do not invalidate the transaction of December 14th, if the view that has been taken of it be correct. i

The first and second articles of that title treat of corporations whose powers, by the terms of their charter, are to be exercised by a board of directors. Section 63 of the third article of that title declares that the term directors, as used in that title, shall be construed to mean all persons having by law the direction or management of the affairs of any such corporation, by whatever name they may be described in its charter, or known in law. (1 R. S. p. 599, § 33.)

Bronson, Ch., in Gillett v. Campbell, expressed the opinion that sections 8 and 9 only extend to such moneyed corporations as are by their charters subject to the management of a board of directors, trustees, or other officers. (1 Denio, 523.)

That they did not extend to corporations whose powers, instead of being made by their charters exercisable by a board of trustees, might be vested at the will of the corporation in a single agent or officer.

It is unnecessary, on the facts appearing and evidence given in this case, to decide that question, and no opinion is intended to be expressed upon it. We are of the opinion that no error was committed by the judge at the trial, and that a judgment should be entered in favor of the defendants.