author: Robertson, J. Bosworth, Ch. J.

text:
    Burr v. E. E. Wilcox, Executrix, &c., of Elisha C. Wilcox; Burr v. Peake.
    1. Where a stock subscription, on the organizing of a manufacturing Corporation under chapter 40 of the Laws of 1848, is made by and in the name of J., but at’the request of and for the benefit of W.; and where after all the stock had been subscribed for, the trustees apportioned the stock according to the several subscriptions, and apportioned ten shares to J. for W.; and W. subsequently paid the Corporation for such stock in monthly installments of ten per cent; and the Corporation, on such installments being paid, issued to W. a certificate of his ownership of said ten shares: and such facts appear on the records of the proceedings of said Corporation, W. is liable to creditors of said Corporation as a stockholder in said Corporation, according to the provisions of said statute, for debts contracted after such apportionment of stock was made, though contracted before such certificate was issued.
    2. A person may be a stockholder within the meaning of that statute, whose name does not appear on the stock-transfer book as a transferree of stock; or the book purporting to contain an alphabetical list of the stockholders of the Corporation.
    3. So also a person may be, to whom no certificate of ownership of any shares of such stock has been issued by the Company.
    (Before Bosworth, Ch. J., and Robertson, J.)
    Heard, February 23;
    decided, March 10, 1860.
    These actions come before the Court on questions of law arising at the trial, and there directed to be heard at the General Term, in the first instance. The suit of Burr v. Wilcox was commenced on the 23d of June, 1858, and was tried on the 25th of June, 1859, before Mr. Justice Pierrepont and a jury. It was originally commenced against Elisha C. Wilcox, to recover of him as a stockholder in the Hudson River Stone Dressing Company, $1,000, and interest from June 23d, 1858. He denied, in his answer, that he ever was such a stockholder. He having died pending the action, the action, by order duly entered, was continued against Ellen E. Wilcox, executrix of his last will and testament.
    The facts of the case were agreed upon by stipulations between the parties, and are as follows:
    On or about the 31st of March, 1853, a corporation named the Hudson River Stone Dressing Company was duly organized under a statute of the State of Hew York, entitled “ An act to authorize the formation of corporations for manufacturing, mining, mechanical or chemical purposes,” passed February 17,. 1848, with a capital of $200,000, divided into 2,000 shares. Such corporation was organized to carry on the business of stone-cutting in all of its branches, in the city of Hew York.
    Immediately after it was so organized, to wit, in April, 1853, it commenced said business, and continued to carry it on until after the recovery of the judgment hereinafter mentioned, by the Bank of the Union, against it, and one John T. Bruen.
    The whole amount of said capital stock was never paid in, nor was any certificate of such payment made, signed, sworn to, Or recorded as required by the 10th and 11th sections of said act; which sections are in these words, viz.:
    “ § 10. All the stockholders of every Company incorporated under this act, shall be severally individually liable to the creditors of the Company in which they are stockholders, to an amount equal to the amount of stock held by them respectively, for all debts and contracts made by such Company, until the whole amount of capital stock fixed and limited by such Company shall have been paid in, and a certificate thereof shall have been made and recorded as prescribed in the following section; and the capital stock, so fixed and'limited, shall all be paid in, one-half thereof in one year, and the other half thereof within two years from incorporation of the said Company, or such corporation shall be dissolved.
    “ § 11. The President and a majority of the Trustees, within thirty days after the payment of the last installment of the capital stock so fixed and limited by the Company, shall make a certificate stating the amount of the capital so fixed and paid in; which certificate shall be signed and sworn to by the President and a majority of the Trustees; and they shall, within the said thirty days record the same in the office of the County Clerk of the county wherein the business of the said Company is carried on.”
    On the 19th of January, 1854, the said corporation made its promissory note in writing, for the sum of $1,500, payable to the order of John T. Bruen, four months after its date, and Bruen indorsed it to the Bank of the Union in the city of Few York. Said Bank brought a suit on the note against the Hudson River Stone Dressing Company, and said John T. Bruen in the Supreme Court of this State, on or about the 27th of May, 1854, and recovered judgment therein, April 21st, 1854, against said maker and indorser for the amount of said note with interest and costs, being $1,786.98.
    Said judgment was duly docketed; and an execution issued upon it to the Sheriff of the proper county was returned wholly unsatisfied before this suit was commenced. Said judgment is in full force and wholly unpaid.
    On the 10th of May, 1858, the Bank of the Union duly assigned to the plaintiff in this action the aforesaid judgment, together with the claims and demands on which the same was founded, and all rights and remedies for the collection thereof.
    The defendant holds a genuine certificate of stock in said Company of ten shares of said stock, which certificate is in the words and figures following, to wit:
    Humber 148. Shares 10.
    Hudson River Stone Dressing Company.
    CO to Be it known that E. C. Wilcox, Esq., of Few York-City, r"l is entitled to ten (10) shares of the capital stock of the Hud- w H son River Stone Dressing Company, on each of which shares £5 p, one hundred dollars have been paid, and which are trans- 8 <í ferable only on the books of said Company, by said E. C. 15 1g Wilcox, or his attorney, on surrender of the certificate. o | In witness whereof, the President and Secretary of said | ^ Company have hereto subscribed their names, at the city P“ 8 of Few York, this 6th day of February, A. D., 1854. ^ Charles T. Shelton, President.
    Charles F. Sanford, Secretary.

      Samuel H. Jordan subscribed for ten shares of the capital stock of the Company in his own name, but such subscription was made at the request of Elisha C. Wilcox, in the name of said Samuel H. Jordan, but for said Wilcox, to whom the certificate was issued—the name of Wilcox, however, not appearing on the subscription book. The original subscription book is lost.
    The stock of the Hudson River Stone Dressing Company was all taken up by subscription in April, 1853, the subscribers obligating themselves to pay for the stock in ten monthly installments of ten per cent, commencing May 1st, 1853. On the 15th day of April, 1853, the whole stock having been subscribed for, the Trustees apportioned the stock according to the several subscriptions, and ten shares were apportioned to Jordan for Wilcox— all of which facts appear on the records of the Company.
    Wilcox himself paid for his stock in monthly installments of ten per cent, paying his first installment May 3d, 1853.
    The Hudson River Stone Dressing Company keep at its business office in the city of New York, a book for the purpose of entering alphabetically the names of stockholders.
    The defendant’s name appears on a page under letter, “ W” in said book thus: “ Feb. 6th, 1854, E. 0. Wilcox, ten shares,” and the same appears in no other place or manner in said book.
    Said Corporation also always keep at its said office, a book called a transfer book for the purpose of transferring therein the stock of said corporation. Said book is composed of blank transfers, which are filled up from time to time, as transfers of stock are made and signed by the transferrers, showing by whom, to whom, and when such stock was transferred, and the number of shares transferred. Said book on the 27th of December, 1858, was about one-half filled with executed transfers of stock.
    No stock transfer whatever to the defendant, is contained in said transfer book, or any transfer book of said Company; nor has any share, nor have any shares of stock of such Company, been ever transferred to defendant, or any other person or persons for him or his use, on the transfer books of said Company.
    Said Corporation also have a book of records in which are entered the by-laws of said Corporation, and the minutes of its proceedings, and in said record book is a by-law adopted by said Corporation at the time of its organization, declaring that the stock of such Corporation is transferable only on the transfer book of said Corporation by the holder thereof, or his attorney, on surrender of his certificate thereof; said by-law was in force and was the law of such Corporation before and on the 6th day. of February, 1854, and ever since has been, and still is, the law in respect to the transfer of, and title to, the stock of such cor-, poration.
    The defendant was not one of the signers of the certificate for the formation of said Corporation, nor had any claims to, or right to, or interest in, any stock thereof, other than what the certificate dated February 6th, 1854, may indicate.
    The entry of defendant’s name, as before stated, in the transfer book aforesaid, thus: “ February 6th, 1854, E. C. Wilcox, ten shares,” is not in the handwriting of defendant, but said entry appears to be in the same handwriting as many of the other similar entries of names in said book.
    The debt and contract on which the aforesaid judgment was recovered, and for the collection of which this action is brought, was made by said Company on the 19th day of January, 1854.
    On these facts, the jury, by the direction of the Judge, found a verdict for the plaintiff for $1,071. The Judge then ordered, that the questions of law arising at the trial be first heard at the General Term, and that the entry of judgment in the meantime be suspended.
    The case of Melancthon Burr v. William J. Peake, and the foregoing case, were argued together. The facts in the two cases are alike, except that Peake was an original subscriber in his own name. Six shares were apportioned to him, and like Wilcox, he paid his ten installments, and took a certificate for six shares, dated February 6, 1854.
    The verdict ordered against him was for the sum of $642.60, and the questions of law arising at the trial, were there ordered to be heard in the first instance at the General Term.

      J. N. Balestier, for plaintiff.
    I. The fact that Wilcox subscribed for the stock in the name of Jordan, does not affect the liability of Wilcox. Wilcox personally paid up all the installments, and took the certificate in his own name. -It is admitted that the name of Jordan was merely lent; that he had no interest whatever. Wilcox cannot be suffered to evade the claims of creditors by setting up that he originally subscribed for the stock under an alias. (Belmont v. Coleman, 1 Bosw., 188.)
    II. Assuming the correctness of the first point, Wilcox was a stockholder in the Hudson River Stone Dressing Company when the debt was contracted, and continued to be one up to the time this action was brought.
    1. He became a stockholder as soon as he subscribed for the stock. Neither the index nor the certificate made him a stockholder: his subscription made him one. (§ 6 of Corporation Act; United Society v. Eagle Bank, 7 Conn., 456.)
    2. It made no difference that he had not paid in full for his stock when the debt was contracted. He was still a stockholder and a partner, and, as such, liable, as much as a member of a mercantile firm is for its debts before he has paid in his capital in full. The statute does not create, but only limits, his liability as a partner. (Corning v. McCullough, 1 Comst., 47.) The statute itself, under which the Company was organized, contemplates a credit in paying for stock. It provides that half the stock may be paid for in one year, and the other half in two years, (§§ 10, 11, Laws of 1848, p. 56,) and authorizes the Trustees “to call in subscriptions in such payments or installments as they shall deem proper.” (§ 6.) It would, therefore, be absurd to say that, until the subscribers had paid in full, no stockholder existed.
    3. About nine-tenths of the installments had been paid by Wilcox when the Company’s note was made. Could his refusal to pay the tenth installment relieve him from liability to creditors? (Corning v. McCullough, supra; §§ 6,10,11 of Corporation Law; Mann v. Currie, 2 Barb., 294; Mann v. Pentz, 2 Sand. Ch. R., 257.)
    4. The terms “subscriber ” and “stockholder, within the meaning of the act, are identical propositions. (Act, passim.)
    III. Even if Wilcox was not a stockholder until he paid for his stock and got his certificate, he is still liable, under section 10 of the act of 1848. There is nothing in that section to favor the doctrine of Tracy v. Yates, (18 Barb., 152,) that stockholders are liable only for the debts contracted after they become and while they are stockholders. On the contrary, they take their stock cum onere. Especially is this the case with respect to a maturing debt, when a certificate of stock is taken with notice of such maturing debt. (Belmont v. Coleman, supra.)

    IV. If the naked proposition embraced in the third point can be questioned, there is a yet stronger one, based on the statute. The stockholders áre, by the terms of the law, liable to creditors “for all debts and contracts made by such Company.” The two classes of obligations are here described and distinguished. Although the note of the Company was a contract before Wilcox had paid his last installment and taken the certificate in his own name, still it did not become a debt until several months after-wards. The note was dated January 19th, 1854, but it did not fall due until May 23d, 1854. Wilcox had notice that it was running to maturity, when he took his certificate. It might never have become a debt, if a defense had existed. At all events, it was not a debt before the day it fell due. Wilcox’s stock certificate bears date February 6th, 1854, upwards of three months and a half before the debt was due. Unless it can be held that even paying for his stock and taking his certificate did not make him a stockholder, he was such when this debt was made. (Garrison v. Howe, 17 N. Y. R., 458.)
    V. Although it has been held, under the old general corporation laws, that a person, having no interest, who allowed his name to stand as a stockholder, was liable to creditors, it has never been held, and probably never will be, that the real stockholder or party in interest is not liable under the law of 1848. (§25.)
    VI. Some stress is laid on the facts that the index was improperly kept, and that the names of stockholders were not given at length, &c. All objections of this class are of no avail against creditors. Ho improper or unlawful act of the Company, or of individual stockholders, can screen them from creditors. They cannot set up their own errors and shortcomings as a defense to the payment of their debts, and no Court will ever establish such a “ new way to pay old debts.”
    VII. The defendant’s counsel at the trial argued that a “ transfer ” of stock in a “ transfer book ” was necessary to constitute a stockholder. How there could be a transfer of stock to an original subscriber, he did not disclose. The stock did not exist until it was subscribed for, and it could not be transferred until it existed. If the learned counsel’s argument on this point proves anything, it is that no original subscriber for stock is liable to creditors, but only those taking the stock at second-hand. But, even if a formal transfer to an original subscriber were proper, the want of one will not enable a stockholder to evade liability. (§25.)

      Elisha S. Capron, for defendant.
    I. Wilcox and Peake were never stockholders of the Company ; especially they were never stockholders in such a sense as to be individually liable to the payment of its debts, within the meaning of section 10 of the Act of 1848. (Sess. of 1848, chap. 40.)
    1. The defendants respectfully submit that the statute of 1848, authorizing the formation of these corporations, and the decisions of the Courts interpreting its various provisions, establish the distinction between stockholder, and stockowner, in respect to the rights of creditors to sue individual members in actions at law. The former are liable, the latter are not. A stockholder is one in whom the legal title to the stock is vested; a stock-owner has some equitable right to acquire the legal title from the Company or third persons.
    The 34th [16] section of the statute of 1848, (Sess. of 1848, ch. 40; 1 R. S., 1218, 4 ed.,) is framed on this distinction. It assumes that the legal title to the stock appears on the books in the name of the executor, trustee, &c., but is, in fact, owned by others whom they represent, and hence the necessity of providing that the executors, trustees, &c., should not be personally liable as stockholders. This distinction is further manifest from the closing paragraph of that section, which makes the estates represented liable, as the intestates, wards or persons represented would have been, if living, &e., and they held the same stock in their own names. (1 Kern., 148.)
    This case establishes the distinction mentioned.
    In the further discussion of this point, the counsel cited and commented on, 6 Hill, 624; 5 Barb., 210; 1 R. S., 4 ed., 1219, 1220; 3 Paige, 350; 1 Comst., 47; 2 Hill, 265; 18 Barb., 152; 2 Wend., 327.

      II. If the defendants be stockholders, they did not become such until after the debt was contracted for which the judgment was recovered, and therefore are not individually liable to its payment, according to the statute under which this action is brought. .
    If ever stockholders, the defendants did not become so before February 6th, 1854, whereas the debt was contracted January 19th, 1854, or eighteen days prior to defendants becoming interested in the Corporation or Association.
    In deciding a question of this kind arising on the statute creating the “ Rossie Galena Co.” (Stat. of 1837, 445,) the Court of Appeals determined that individual stockholders were liable to creditors, after judgment against the company, “in the same sense as partners or members of an unincorporated association,” and that the statute by allowing one to be sued alone, merely deprived him of his plea of non-joinder of his associates in the action, but that he was in other respects liable on the same principle as a partner. (1 Comst., 47, 53.)
    The Supreme Court, also, in an action arising under the statute incorporating the “Rossie Lead Mining Co.,” (Stat. of 1837, 441,) the individual liability—sections of which are identical with those of the other statute of 1837, page 445, incorporating the “ Rossie Galena Co.,” adjudged that only those stockholders are individually liable who were such when the debt was contracted. (2 Hill, 265.)
    The 9th and 10th sections of the two special statutes cited above, and which are identical, are in legal effect the same as the 28th [sec. 10] and 42d [24] of the general act of 1848, excepting that the former declares stockholders jointly, as well as individually, liable to creditors of the Company, and for the whole amount of the debts, instead of an amount equal to their stock, and one or two other immaterial limitations. But the question here discussed must require the same decision under all those statutes.
    The case cited from 1st Hernan, 148, does not present the question here considered, because the statute under which the Corporation in that case was organized, provided that “the persons composing the Company at the time of its dissolution, should be responsible for its debts;” but the reasoning of Judge Edwards in that case, (pages 153,154,) and of Judge Johnson, on pages 155 and 156, clearly indicates their concurrence in the doctrine of 2 Hill, 265, and 1 Comstock, 47.
    The defendants therefore insist, that if ever stockholders in a sense which subjects them to liability for debts of the Company, they are only liable for such as were contracted after they became stockholders, and it could be legally asserted that the debt had been contracted on their credit; and the debt in this case not being such a one, they are not liable.
    The counsel commented on the case reported in 6 Abbott’s Practice Reports, 385, as follows:
    In the head-notes of this case the Reporter says, that in proceedings under the act of 1849, chapter 226, those “persons are liable as stockholders who were such when the bank failed, and that it is not necessary to inquire who were such when the debt was contracted,” &c.
    It is enough to say that those are proceedings against banks and under a special statute defining the liability of stockholders, and definitely directing all the proceedings; and, therefore, whatever may be the liability of bank stockholders under its provisions, they can have no application on that question to the liability of stockholders under the general manufacturing statute, the provisions of which are very different.
    But the general language of the Reporter in his notes is not justified on that point of liability by any part of the Judge’s opinion, nor by any of the sections of the statute of 1849; on the contrary, it is important to inquire, not only who were stockholders when the debt was contracted, but also who were such, within the meaning of that term, as defined by section 2 of the statute of 1849, when default in payment was made.
    It may, however, be mentioned that the Judge, on page 397, by his remarks, very strongly implies, at least, that the defendant’s objection to the entry of the stockholder’s name, made in the index book, is well taken: that unless it conforms to the statute in all respects, it is available for no purpose.
    The creditor is as chargeable with knowledge of the requirements of law as the stockholder is, and if he consults the “index book ” and finds an imperfect entry, he is put on his guard, and ■is thereby cautioned to look further, and see whether the person on whose credit he would trust the Company is really a member thereof.
    III. The stockholder, in an action at law, brought under the provisions of the general manufacturing statute, cannot be charged with interest on the amount of his liability.
    These actions are in their nature penal, and the recovery must be confined to the amount fixed by the law creating the liability. The 10th section of the statute of 1848 provides that the stockholders shall be liable to an amount equal to the amount of stock held by them, not to the amount of the plaintiff's debt; and it is submitted that the Court cannot extend the liability to include interest. The effect of the statute is at least to liquidate the damages.
   Robertson, J.

If some of the positions taken by the defendant’s counsel be correct, it is possible for a Company, created under the General Incorporating Law, (2 R. S., 5th ed., p. 657,) to have all its capital stock paid in and the certificate filed under section 34, (11), and go on and transact all its business, without having a single stockholder within the meaning of that word as contended for. Moreover, it is further contended, that there may be persons having a right to all the earnings of the Company, as stockowners, but who are not stockholders, because their names are not entered on the transfer book as such; in other words, that all the stock of the Company is supposed originally to be its property; that it does not legally become the property of any

one else, until entered in the transfer book, according to the bylaws of the Company, made in pursuance of the power given to them by section 29, (7,) the certificates of stock held by subscribers, and issued by the Company are said to be only evidence of a right, and do not constitute the right itself; which should be created by a formal transfer on the books. This view receives apparently some support from cases where stock stands on the books of the Company in the name of one person, while another holds the certificate of it, where the Courts have held that the persons, in whose name the stock stands, are the stockholders responsible to third persons, (Rosevelt v. Brown, 1 Kern., 148; Worrall v. Judson, 5 Barb., 210; Stebbins v. Phenix Fire Ins. Co., 3 Paige, 350; Adderly v. Storm, 6 Hill, 624,) while they have intimated that the person holding the certificate was not a stockholder. (Tracy v. Yates, 18 Barb., 152.) I am inclined to believe, that under the law as it stands, after the original issue of stock, any subsequent holders who are to be made liable, can only be those to whom the stock is transferred on the books, or whose names appear, as such on the index book, or register of stockholders. They are the only persons, with whom the creditors of the Company may be supposed to contract, or whom they may be presumed to trust. So long as a party leaves his name on the books as stockholder, he consents like a retiring partner in a firm who gives no notice to the world, to become responsible for future contracts. I am also disposed to believe, that the mere holder of a certificate whose name is not entered on any of the books of the Company is not a stockholder, within the clause making the latter personally responsible, otherwise two sets of stockholders would be liable instead of one. It is also true, that the provisions which make the index book or register prima facie evidence of stockholding and all transfers, except for the purpose of making the transferree liable to creditors, void; do not make the entries therein take the place of an actual transfer— but only throw the burden of proof upon the party whose name is registered; in the cases now before the Court, the entries do not show any stock to have been held by the defendants until after the contract was made which forms the subject of the action.

If the plaintiff relied solely upon the entry as evidence of the holding of the stock by the defendants, I should think the action could not be sustained because the defendants would not then be stockholders when the debt was created, being the 19th of January, 1854. If the statute is to be sustained as one limiting the liabilities of partners, and not as imposing a penalty, (Corning v. McCullough, 1 Comst., 47,) no principle of law could create a joint liability as a partner by one who was not a partner when the debt was created.

These considerations strip these cases of all collateral questions and reduce them to the single one of whether a subscriber for stock, to whom it is allotted, who pays his installments thereupon as demanded and finally receives a certificate of stock, is such a stockholder as to-be liable for debts contracted before he is entered on the books as one. I do not look upon the issue of stock by the Company to subscribers as a transfer, within the meaning of the statute; the stock in fact has no existence as such until issued, and after it is issued the power of the Company to give certificates so as to create more stock is ended, (Mechanics' Bank v. New Haven Railroad Company, 3 Kern., 599; see also 17 N. Y. R., 602.) It undoubtedly was the duty of the Company to have entered the names of the original stockholders on their index book or register, but their failure to do their duty cannot deprive creditors of any right against the stockholders. But the statute itself contemplates the existence of stockholders before certificates are issued. The 6th section of the act (Laws of 1848, p. 54,) permits the Trustees to call in and demand from the “stockholders ” all sums subscribed by them under penalty of “forfeiting the shares of stock subscribed for:” the 10th section makes the “stockholders" liable until the amount of-stock shall have been paid in. This evidently presupposes the withholding of certificates of stock until the whole is paid in, and allows the shares of stock subscribed for to be forfeited whether entered in the books or not; if this were not so, it would be in the power of the Company, in other words the subscribers themselves, to relieve themselves from all liabilities to creditors while participating in the profits of the Company. Indeed, the statute does not refer to the issue of any certificates of stock at all, and a mere subscription assented to, under such circumstances makes the subscriber a stockholder (United Society v. Eagle Bank, 7 Conn., 456.) The payment of installments I do not consider material, except as showing the adoption of the subscription by the Company. The main point to be decided is, whether a party so situated as to be entitled to demand a share of profits, is not responsible for contracts until all the acts are performed which the statute prescribes as the condition for limiting their responsibility, and I think the defendants in the cases now under review were so situated; the fact of the subscription by the original defendant in the first case being made by an agent, I look upon as immaterial; that defendant paid the installments and took the certificate which show such a recognition of him by the Company as to entitle him to a share of the profits, and of course makes him liable as a stockholder.

As the case has been submitted at the General Term as involving only questions of law, every intendment is to be made against the defendants as upon a demurrer to evidence and I have so considered the testimony.

The judgment must therefore be entered in conformity with the foregoing views in each of the cases for the amount of the verdict and costs, with liberty to apply for an extra allowance to be included in such costs.

Bosworth, Ch. J.

It is admitted (by a stipulation contained in the case) that E. 0. Wilcox holds a certificate of ten shares of the capital stock of this Company, dated February 6, 1854. That this stock was apportioned to Samuel H. Jordan for said Wilcox, on the 15th of April, 1853; on a subscription for capital stock originally made by Jordan for Wilcox and at his request ; the amount subscribed for, to be paid for in ten equal monthly installments.. That Wilcox paid these ten monthly installments, and made the first of such payments on the 3d of May, 1853.

It is quite clear, therefore, that Wilcox was alone interested in these shares as owner from the time the subscription was made; and as such owner he paid for them, and he holds a certificate that they are his.

I entertain no doubt that he is a stockholder within the meaning of § 32, [sec. 10,] of 2 Revised Statutes, 660, 5th edition.

The fact that the ten shares were not fully paid for on the 19th. of January, 1854, (the time when the debt in question was contracted,) does not interpose any obstacle, to his being deemed a stockholder. He had then paid nine of the ten installments; had paid it on stock apportioned to Jordan for him; which stock was so apportioned on a subscription made for him. Under § 32, [sec. 10,] (supra,)) non-payment of part of the capital stock is made a ground of liability.

He was also, within the meaning of that section, a stockholder when the debt in question was contracted. The act of 1848 (chap. 40,) section 10, declares that the stockholders shall be liable to the extent named, “ for all debts and contracts made by such Company,” until the events have occurred which by that section are to terminate the liability which it imposes.

I do not accede to the proposition, that a stockholder, under that act, cannot be made liable for debts contracted before he became a stockholder. The act itself declares and defines the liabilities as well as the immunities of the stockholders.

And that in terms, makes the stockholder liable for all debts and contracts, without reference to the time when they were contracted.

And it may be added, that if the defendant is not a stockholder within the meaning of the tenth section of that act, or was not on and before the 19th of January, 1854, then it would follow that if all the subscribers to the capital stock, had subscribed for it at the instance of third persons, and although such third persons regularly paid all the installments as they matured, and were the only persons equitably or in fact interested in it, such third persons would not be liable for any debts of the Company.

There were stockholders within the meaning of that section of the act, from the time the stock was apportioned and an installment on each share had been paid. There can be no doubt that one subscribing on his own account, and accepting the apportionment made to him and who has paid his first installment, is from that time a stockholder within the meaning of section 10, of the act of 1848. (Ch. 40.)

Being of the opinion, that Wilcox is not exempt from liability as such, because he subscribed in the name of Jordan; and that as he held a certificate of stock when. the debt in question matured, and thence until after this suit was commenced, he is liable to an amount equal to the amount of such stock; I Concur in holding that judgment should be entered for the plaintiff on the verdict. The like judgment should also be entered in the suit against Peake.

Ordered accordingly.

       Affirmed in the Court of Appeals, 22 N. Y. R., 551.


source: Caselaw Access Project

author: By the Court—Woodruff, J.

license: Public Domain

text:
    New York Car Oil Company, Plaintiffs and Respondents, v. Abner H. Richmond and Abraham Springsteen, Defendants and Appellants.
    1. The statute of New York, authorizing the formation of manufacturing corporations by the signing and filing a certificate in the office of the Clerk of the county and a duplicate in the office of the Secretary of State, provides that “ the copy of any certificate of incorporation filed in pursuance of the act, certified by the County Clerk or his deputy to be a true copy and of the whole of such certificate, shall be received in all Courts and places as presumptive legal evidence of the facts therein statedbut this provision does not necessarily exclude every other mode of proving the fact of incorporation.
    2. When it is proved that no certificate can be found in the office of the County Clerk, so as to show that, if filed, it has since been lost or mislaid, so that the original cannot be found nor a copy be certified by the Clerk, it is competent to show by other evidence that in truth a copy was filed, and to produce in evidence a sworn copy of the original. The parties are not to be deprived of the benefits of their incorporation, or of the right to prove it, by the carelessness or misfortune of the Clerk.
    3. A copy of the duplicate on file in the office of the Secretary of State, duly authenticated, is competent evidence of the contents of the certificate, and, on proof that a like certificate was filed with the County Clerk, then, of the fact of incorporation.
    4. The rule requiring a party to produce the best evidence, only holds when such production is possible; and on its being shown that, for some reason not within the control of the party, the best evidence cannot be produced, secondary evidence may be given.
    5. Where property is wrongfully taken from the possession of the owner, he can maintain an action to recover the possession from the wrongdoers without a previous demand.
    6. Although it be conceded that, where property is taken from the possession of a judgment debtor, an officer taking the same by the levy of an execution against such debtor thereon, without notice that such debtor is not the owner, cannot be sued as for a wrongful taking and detention without a previous demand, it does not follow that the plaintiff in execution, actually directing such levy and taking, is entitled to any such demand, if the debtor so in possession is the mere agent of the owner, and has no leviable interest in the property.
    7. The circumstance that a servant, in the manufactory of the plaintiff, employed to put in and take out goods, and watch the premises, and making occasional sales, when called upon by the constable and the creditor in an execution against another party, pointed out goods as the property of the execution debtor, will not defeat a recovery of the goods from the possession of the officer and creditor by the plaintiff, on due proof of his ownership.
    8. To warrant the reversal of a judgment on the decision of a Eeferee, the weight of the evidence must be clearly against his finding. When the testimony is greatly conflicting, it would not be enough that the Court were of opinion that they should have come to a different conclusion upon the facts.
    (Before Hoffman, Woodruff and Moncrief, J. J.)
    Heard, January 10th;
    decided, March 10th, 1860.
    This action was brought to recover the possession of eight and one half casks of lubricating oil and ten bushels of coal, and one tank of oil, the property of the plaintiffs, of which it was alleged the defendants had become wrongfully possessed and which they wrongfully detained from the plaintiffs, who, as the complaint alleged, are a manufacturing corporation, organized under the Act of February, 17th, 1848, entitled “an act to authorize the formation of corporations for manufacturing, mining, mechanical or chemical purposes.”
    - The answer of the appellant, Richmond, (who alone answered the complaint,) denied that the plaintiffs are a corporation; denied that the plaintiffs owned or had any interest in the property; denied the taking or detention of the plaintiffs’ goods mentioned in the complaint. And for further answer averred the recovery of a judgment, by the said appellant, against “The American Oil Manufacturing Company;” the issuing of an execution- thereon, its delivery to the defendant Springsteen, a constable ; the levy thereof upon property on the premises occupied by The American Oil Company, which property belonged to the last named Company, and was at the time in the custody of its agent, which property is partly described in the complaint.
    On the trial before Danl. B. Taylor, Esq., to whom by consent the cause was referred, the plaintiffs offered in evidence a copy of a certificate of association filed in the office of the Secretary of State. The defendant objected to the evidence on the ground that it was not in compliance with the statute. That the certificate of the County Clerk of the fact that such certificate had been filed with him should be produced.
    The plaintiffs then proved by the deputy clerk, from the County Clerk’s office, whose duty it was to enter such certificates in an index, that he had searched in that office and could not find any articles of association of the New York Car Oil Company on file or in the office of the County Clerk; and by two other deputies that the witness so examined had charge of the entering and filing of such certificates, and that one of the last named witnesses, according to the routine of business, received such papers and the fee for filing, thirteen cents, and delivered them to the first named witness the following morning, to be entered and filed in the proper place of deposit.
    They then proved by two witnesses that the articles of association were executed in duplicate, one copy to be filed in the County Clerk’s office and one to be sent to the Secretary of State,. and one of those witnesses stated that there were three original copies, all executed, that he filed one about the last of September, 1857, in the office of the County Clerk, that he handed it to the person at the desk and paid him his charge twelve or thirteen cents, and sent another copy to the Secretary of State.
    The same two witnesses and also a third testified, that in January, 1858, they saw those articles of association in the office of the County Clerk, and examined them there with a view to preparing the further certificate or report required by the statute; which must mean the report mentioned in the twelfth section of the act, stating the amount of capital paid in and other particulars there mentioned.
    The copy so produced was shown to be a true copy of the articles so filed, and it was received in connection with the oral testimony as proof of the incorporation of the plaintiffs.
    The taking of the goods, or so much thereof as was recovered, was then proved, viz.: Eight barrels of oil and three barrels of coal, and their value, but it was also proved that the person who had the care of the manufactory where the property was found at the time of the taking told the constable and the defendant Richmond, by whose direction the constable was acting, that the property belonged to the defendants in the execution which he held, viz.: to the American Oil Manufacturing Company.
    There was great conflict of evidence on the question whether the property belonged to the American Oil Manufacturing Company or to the plaintiffs, and whether in fact there was any such Company as the New York Car Oil Company, the defendant insisting that the whole claim of the plaintiffs was an artifice resorted to, to cover up and protect the property of the American Oil Company, by the pretense of having formed a new incorporation, and the further pretense that the oil in question was manufactured and owned by a new incorporation, when in truth the machinery, the lease of the factory and all of the property belonged to the former Company, which confessedly had held the lease, owned the machinery and carried on the business, and that this was done to avoid the payment of the debts of the American Oil Manufacturing Company.
    Testimony was also given by the defendant, tending not only to contradict but to impeach the character of some of the plaintiffs’ witnesses.
    The Referee found as matters of fact and law that the plaintiffs were duly incorporated. That the property in question belonged to them. That its value was $310, and that they had sustained damage by the taking to the amount of $30, and awarded the property to the plaintiffs with their said damages and costs of suit.
    The defendants appealed to the General Term, and the exceptions taken on the trial raised the points considered in the opinion of the Court.

      Mitchell Sanford, for the defendants (appellants).
    I. The Referee erred in admitting a certificate purporting to be a certified copy of a certificate of the incorporation of plaintiffs, filed in the office of the Secretary of State. (Sess. Laws of 1848, p. 54.)
    He also erred in admitting the testimony of John J. Reynolds, as to the filing of articles of incorporation in the office of the County Clerk of New York county; and because it was not the best evidence which the nature of the case admitted. (1 Penn. Small Cases, 149; 6 John., 19; 12 id., 221.)
    II. The Referee erred in refusing to grant a nonsuit.
    1. Under the statute of February 17, 1848, a corporation cannot sue or be sued unless they are duly organized under that statute.
    2., The. plaintiffs were not so duly organized.

      3. Mere oral evidence of filing a certificate is not admissible.
    4. The certified copy of the certificate from the office of the Secretary of State was not admissible. It should have shown upon its face that it was a duplicate of one filed in the County Clerk’s office. In a case like the present, the certificate filed in the Secretary’s office, cannot be held as an original.
    HI. In an action of replevin it is necessary to prove a demand where the defendant is an innocent holder. The defendants in this action were innocent holders. (Pringle v. Phillips, 5 Sand., 157.)
    1. Hazzard was the agent of the plaintiffs. He informed the defendant, Springsteen, that the goods taken belonged to the American Oil Manufacturing Company.

      2. Under such circumstances the officer is bound to take the goods.
    IV. The finding of the Referee was against evidence.
    V. The plaintiffs did not show a title to the goods replevied.
    VI. Under the pleadings it was necessary for the plaintiffs to prove themselves a Corporation. (8 Wend., 480; 2 Cow., 770; 14 Johns., 416; 8 id., 378.)
    VII. The witness, Baldwin, stands impeached.
    VIII. The plaintiffs were bound by the act of their agent, Hazzard. (Black. Com., v. 1, 429, [Christian’s ed.;] Com. on Contracts, v. 1, 238, 239, 240; 1st ed.)

      E. W. Dodge, for the plaintiffs (respondents).
    I. The defendant could not require the plaintiff to show itself duly organized as the New York Car Oil Company, as the answer does not affirmatively allege that the plaintiff was not a corporation. A simple denial by answer of an immaterial allegation of the complaint upon that point, it is contended, is not enough, under the statute, to entitle the defendant to dispute the plaintiffs’ corporate existence. (2 R. S., 4th ed., 698, § 3.)
    II. Conceding that the answer of the defendant is sufficient to enable him to dispute the corporate existence of the plaintiff, then it is submitted that the making and filing the articles of association, in the office of the Clerk of the city and county of New York, and a duplicate thereof, in the office of the Secretary of State, were fully established by proof. The loss of the articles of association from the office of the County Clerk, was proved by the deputy clerk and two assistants in the office.
    That the articles were filed in such office, was shown by John J. Reynolds, Daniel A. Baldwin, Silas M. Stilwell. The attempt to impeach the two last named witnesses, failed. Whether they were entitled to credit, was a question solely for the Referee. The duplicate filed in the office of the Secretary of State, was proved by an exemplified copy.
    The Referee decided the articles of association to be correct in form and substance, and there is nothing in the case to show the contrary. (R. S., 4th ed., 12,15; §§ 19, 20; Sess. Laws of 1848, p. 54; Palmer v. Lawrence, 3 Sand. S. C. R., 161, 168.)
    III. The plaintiff owned the oil and coal in dispute. Upon this subject, the evidence is clear and uncontradicted. If it be insisted there is any evidence to show ownership of this property in the American Oil Manufacturing Company, then the plaintiff claims that the conflict thus created, has been settled by the Referee, and his decision will not be disturbed upon an appeal.
   By the Court—Woodruff, J.

The first exception upon which the appellant insists as a ground of reversal is, that “ the Referee erred in admitting the certificate purporting to be a certified copy of the incorporation of the plaintiffs, filed in the office of the Secretary of State.”

This exception may properly be considered in connection with another, viz.: that the Referee should have granted a nonsuit as moved for by the defendants, on the ground that the plaintiffs did not sufficiently prove that they were duly incorporated under the act under which they claimed such incorporation, viz.: The act of February 17th, 1848. (Laws of 1848, ch. 40.)

In so far as these exceptions proceed upon the form of the certificate given in evidence or the manner of its authentication or any supposed defect therein for want of compliance with the act, it must suffice to say that the appellant has not thought proper to embody the certificate of association or the copy produced on the trial, in the case or bill of exceptions settled and furnished to the Court on appeal. We are therefore unable to discover whether there are or are not any such defects therein, and must therefore assume that no such defects exist, and that the appellant does not rely upon any such defects as grounds of objection; nor were any defects in the form or authentication thereof suggested on the argument of this appeal.

And we have only to inquire whether under the circumstances proved at the trial the production of a certified copy from the office of the County Clerk could be dispensed with, and whether without such production the incorporation of the plaintiffs could be proved at all— and was sufficiently proved?

The act of 1848 requires that a certificate be filed in the office of the Clerk of the County, and a duplicate thereof in the office of the Secretary of State, and in the 9th section the act provides, that “ the copy of any certificate of incorporation filed in pursuance of the act, certified by the County Clerk or his Deputy to be a true copy, and of the whole of such certificate shall be received in all courts and places as presumptive, legal evidence of the facts therein stated.”

In the first place we do not regard this provision as necessarily excluding every other mode of proving the fact of incorporation, it provides one mode of proving the fact, a simple and in general an easy mode of doing so.

But if such certificate ought to be regarded as the best evidence, and therefore to be produced in the first instance, the rule requiring a party to produce the best evidence, only holds when such production is possible, and on its being shown that for some reason not within the control of the party the best evidence cannot be produced, secondary evidence may be given.

Here the plaintiffs proved by evidence satisfactory to the Referee, that the certificate was duly executed and was filed with the County Clerk and the fees paid. The party was no longer responsible for the safe keeping of the certificate, and if it was lost by the County Clerk after it had been left with him, the party could not be prejudiced thereby if he could prove the fact by other competent testimony. This the plaintiffs did by the best evidence that can be suggested. They proved the fact of filing—and they proved the contents of the paper filed by the production of a copy sworn to be a true copy of the certificate. From the necessity of the case, resulting from the loss of the paper filed, it was impossible that the County Clerk could certify the paper produced to be a copy and the plaintiffs were not responsible for the inability of the Clerk to certify, and should not be prejudiced by it. Any other doctrine would render the proof of the existence of any corporation so organized, dependent upon the care of the County Clerk in preserving papers filed, and in case of the accidental destruction of papers in that office, render such proof wholly impossible. No such doctrine can be admitted for a moment.

In the next place if the contents of the certificate could not be established by parol evidence or by a sworn copy, the duplicate produced from the office of the Secretary of State was the next highest evidence. It was proved that the certificate was executed in duplicate, and one was filed in the office of the Secretary of State. A copy of this was produced, and was not only so certified, but was also sworn to be a true copy. We have no hesitation in saying that even if there were no other provision by statute bearing on the subject, this proof of the plaintiffs’ incorporation was, after proof of the loss of the paper filed with the County Clerk, competent and sufficient.

Again, the certificate was filed in the office of the Secretary of State in compliance with the express provisions of the law, and by the general laws of the State, (1 R. S., 166, § 4,) it is enacted, that “ all copies of records and papers in the office of the Secretary of State, certified by him and authenticated by the seal of his office, shall in all cases be evidence equally and in like manner as the original.”

These views are sufficient; and we think they conclusively dispose of all objections founded on the idea that the plaintiffs were bound to prove their incorporation by producing either the original or a certified copy thereof from the County Clerk’s office. And as already suggested, the appellant, not having seen fit to insert the paper or papers in his case or exceptions, we have no means of examining the contents, or form, or authentication thereof, to determine whether they are or are not a compliance with the statutes. The finding of the Referee therefore must stand unimpeached by any thing appearing before us on this appeal.

2. The next objection urged upon our attention is, that the plaintiffs should have proved a demand of the property before action brought.

Where property is levied upon and taken by a Sheriff or Constable under an execution, and it appears that when the levy was made the property was in the actual possession of the defendant in the execution, the Sheriff or Constable may be entitled to a demand of the property before action brought for such taking. It does not follow that the plaintiff in execution actually directing such levy and taking is entitled to any such demand, if in truth the party so in possession has no leviable interest in the property taken.

In this case Springsteen, the constable, made no defense; he suffered judgment by default. As to him, therefore, the question does not arise.

But the very question in whose possession was the property found, was one of the questions most severely contested on the trial. The same proof that bore upon this question, bore also on the inquiry whether the property belonged to the plaintiffs, or to the defendants in the execution, and it is, we think, entirely clear that if the proof did not establish that the property belonged to the defendants in the execution, then it did not prove that the property, when levied' upon, was in the possession of those defendants.

The Referee has found that it was the plaintiffs’ property, and unless that finding was against the evidence we must regard the same proof as establishing this point also. And if the defendant desired a specific finding upon the question, from whose possession was the property taken, he should have called the attention of the Referee to that subject, and procured such finding thereon. In the absence of such finding, we must take the fact to be favorable to the plaintiffs who have prevailed, since the evidence, would, we think, clearly warrant such a finding. (Fish v. Wood, 4 E. D. Smith, 327; Hardin v. Palmer, 2 id., 172; Viele v. The Troy and Boston Railroad Company, 20. N. Y. R. 184.

It is only when the property is lawfully in the possession of the defendant, that a previous demand before suit brought is necessary.

3. It is claimed, that inasmuch as the person in charge of the manufactory pointed out the property as the property of the defendants in the execution, the plaintiffs are therefore concluded.

The mere circumstance that Hazzard, the person referred to, was in the employment of the defendants, wrought no such consequence. He was not the general agent of the defendants. It is testified that one Griffin was the plaintiffs’ agent, that Hazzard stayed there and watched the buildings; was employed to take in and put out goods, and to watch the premises, and sometimes sold small quantities of oil. He could not estop the plaintiffs by consenting to a levy in satisfaction of the debt of a third person any more than he could lawfully deliver the plaintiffs’ property to the defendant (the judgment creditor) in payment of his judgment.

Besides Hazzard testified that he requested the defendants not to take the property, and that while he remained there they did not remove it, but he locked the door and left, in order to find and consult the plaintiffs’ agent, and in his absence the defendants, by some means, opened the door and were engaged in removing the oil when he returned.

4. It only remains to consider whether the finding of the Referee that the property was the property of the plaintiffs, was so against the weight of the evidence that the judgment should be reversed upon that ground.

It must be conceded that there were many circumstances of suspicion in respect to the title of the plaintiffs, to the manufactory and the machinery therein. And there was proof that the machinery had been claimed and taken by the American Oil Manufacturing Company, (the judgment debtors,) by process in a replevin suit that was still pending. The proofs relating to the incorporation of the plaintiffs, the ignorance of Hazzard, one of the employees in the factory, that there was any other Company than the American Oil Manufacturing Company, and many other circumstances were justly calculated to create the suspicion that the last named Company having become embarrassed, the scheme of forming, or pretending to form, a new Company was devised by its managers in order to avoid the payment of the debts of the old Company, and yet obtain the possession and enjoyment of its property under a new name.

But on the other hand there was positive proof that the new Company was incorporated. There was some evidence that the new Company purchased the machinery and lease of the factory, and the proof was uncontradicted that the oil in question was manufactured by the new Company.

In a great conflict of evidence tending to establish either claim, we cannot say that the Referee so erred in his conclusion that his finding should be set aside. We could not do this, even if we thought we should have formed the opposite conclusion.

An attempt was made to impeach the plaintiffs’ witnesses. On the other hand, their characters were supported by other testimony; the case depended in no slight degree upon the credibility of the witnesses whom the plaintiffs produced, and if their testimony was believed the case was clearly with the plaintiffs, and the oil was their property.

Under such circumstances, the finding of the Referee must be taken by us as conclusive. The judgment should therefore be affirmed.

       See Grant v. Morse et al., 33 N. Y. R., 323.


author: Robertson, J, Bosworth, Ch. J.

text:
    Henry Steffens, Plaintiff and Respondent, v. John D. Collins, Defendant and Appellant.
    1. Where the defendant, J. D. Collins, by his written agreement with the plaintiff, H. Steffens, “ agrees that Henry Steffens, the present lessee and occupant of the first floor of house, Ho. 166 Maiden lane,* * may continue to use and occupy the said premises,” for a time and on conditions therein specified, and the plaintiff sues the defendant for subsequently erecting a partition across a part of said first floor, so as to enclose a passage-way leading from one of two front doors on said first floor to upper stories of said building, it is competent for the defendant to prove that the said agreement was given to the plaintiff at the request of one Atherden, who had theretofore occupied the premises under a lease from the defendant then unexpired ; and that when Atherden took possession, the partition was up, and he having taken down the partition, was bound and had agreed to restore the same whenever the defendant should request it. That Atherden sold out to the plaintiff, and it was part of the terms of sale that the plaintiff should perform Atherden’s agreement in respect to the partition.

      2. It appearing and being conceded that the plaintiff had no right of passage over the first floor to the upper stories, and that the defendant had; and, therefore, that the plaintiff had no right to the exclusive occupation of every part of the first floor; such evidence is competent to prove of what precise part of the first floor the plaintiff was lessee, and was to have the continued possession, within the meaning and intent of the parties at the time of executing the said agreement.
    (Before Bosworth, Ch. J., and Robertson, J.)
    Heard, February 20;
    decided, March 10, 1860.
    This is an appeal by the defendant from a judgment against him, and from an order denying a motion for a new trial. The complaint states, that the plaintiff “is the lessee, occupant and proprietor of the first floor of the house, Ho. 166 Maiden lane, in the city of Hew York, which he hired from the defendant at the yearly rent of eight hundred dollars.” That he occupied said first floor “ as a refreshment and eating saloon;” and that defendant wrongfully “erected a partition through said first floor,” and continues the same to the annoyance and injury of the plaintiff; and thereby interferes with the convenience and accommodation of plaintiff’s customers, and thereby also has deprived the plaintiff of the custom of his usual patrons, to his damage, $3,000.
    The answer puts at issue all the material allegations of the complaint. The action was commenced on the 11th of December, 1857, and was tried before Mr. Justice Slosson and a jury on the 26th of October, 185,9.
    At the trial, the plaintiff produced and read in evidence a paper writing signed by the defendant, dated Hovember 14, 1856, reading thus, viz. :
    “ I do hereby agree that Henry Steffens, the present lessee and occupant of the first floor of house, Ho. 166 Maiden lane, in the city of Hew York, may continue to use and occupy the said premises as long as I hold the lease thereof granted to me by John B. Hunter, dated September 5th, 1854, for ten years from first May, 1855, and recorded in Register’s office, in Liber 677, page 297, provided, Henry Steffens pays the rent he now pays, which is $800 a year, payable monthly, in advance; and provided I don’t sell the lease, and before I sell the lease Henry Steffens shall have the first right to buy it, for the same price any one else will give for it; and if Henry Steffens don’t buy it, then I am to pay him for his good will, stock and fixtures, at a fair valuation, before I can make him leave it.”
    The plaintiff then gave evidence tending to show, that at the time said agreement was executed, there were two doors on Maiden lane opening into said first floor; one near one corner of the building and in front of a stairway leading to the upper stories thereof, and the other nearly in the center of the building; and that the defendant subsequently put up a partition enclosing the entrance to the upper lofts, in which partition was a door through which persons could pass to and from said first floor. He also gave evidence tending to show that this partition interfered with the easy access and egress of persons acqustomed to patronize him; and that his business was much reduced.

      Henry Knack, the plaintiff’s bar-tender, and a witness on "his behalf, on cross-examination, testified thus:
    “Mr. Atherden occupied the premises, and carried on the same kind of business there before the plaintiff went there; the plaintiff bought him out, his stock, fixtures, good will, lease and everything; I negotiated the purchase for him. * * I negotiated the whole thing; I paid the money. Steffens was never present, except when the paper about the premises was signed by Mr. Collins at Mr. Stallknecht’s office; nothing was paid to Mr. Collins for signing the papers.
    “ Q. What was the agreement with Atherden, when he sold out, in respect to putting up the partition ?
    Objected to by plaintiff’s counsel, and objection sustained. The defendant’s counsel excepts. The defendant’s counsel here offers to show that when the plaintiff bought Atherden out, the paper signed by Collins was executed at Atherden’s request, and in pursuance of the agreement between Atherden and Steffens, and the partition was up when Atherden took the premises; and that he (Atherden) having taken the partition down, was bound to and had agreed to put it up when defendant should request it to be done; and that when the plaintiff bought out Atherden, it was part of the agreement that he should perform his (Atherden’s) agreement in respect to the partition.
    “The plaintiff’s counsel objects to the evidence. Objection sustained, and exception taken.”

      The evidence also tended to show, that the partition complained of, merely restored said first floor to the condition it was in when Atherden hired of the defendant, and that it was put up a second time, on the 28th or 29th of October, 1857.
    The further evidence bearing upon the questions determined by the Court, sufficiently appear in the opinion of Robertson, J.
    The jury rendered a verdict in favor of the plaintiff and assessed his damages at $590.
    The defendant moved for a new trial and the motion was denied. From the order denying it, and from the judgment entered on the verdict, the defendant appealed to the General Term.

      S. Sanxay, for appellant.

      Thos. C. T. Buckley, for respondent.
   Robertson, J,

The defendant, prior to November, 1855, held a lease of a store in Maiden lane in this city, which was to expire in May, 1865, and underlet part of the first floor to a Mr. Atherden. The part which he so underlet consisted of the whole of that floor, except a part partitioned off, thereby shutting off an entrance through a front door to a staircase ascending to the upper part of the building. This partition inclosed a hatchway and had a door in it, forming an entrance into the part let to Atherden. Atherden during his occupation took down the partition but agreed to put it up, whenever requested by the defendant; but no lease appears to have.been given to him of the part of the first floor inclosed by such partition, which appears, during his occupation, to have been a common entrance to the rest of the first floor, and the upper part of the building, from which cotton and other goods was hoisted through the hatchway before spoken of. This partition remained down until the 28th or 29th of October, 1857. The plaintiff, before the 14th of November, 1856, bought of Atherden his stock, fixtures, good will, lease and everything. On the last named day, the defendant let to the plaintiff the first floor of the house in question as long as he held his own lease, at a yearly rent of $800 payable monthly, on condition the defendant did not sell the lease, in which case he was to offer the preemption to the plaintiff, and if the latter did not buy it, pay for his good will, stock and fixtures. The instrument letting such premises describes the plaintiff as “lessee and occupant of the' first floor,” and provides that he may “ continue to use and occupy the said premises;” and, I think, there can be no doubt that the legal construction of these phrases is merely that he may continue to use that part of which he was already “ lessee.” The term “ continue ” implies some previous right, and could not fairly be extended to any part not occupied by the plaintiff. It therefore remains to be detérmined of what part he was so in possession or lessee. Atherden, from whom he derived title, clearly had no right of possession to the part inclosed by the partition, and there is no evidence that he transferred anything but his lease which would only carry that which was leased b}r it; if he usurped the possession of the inclosed space, there is no evidence that he transferred it to the plaintiff. The plaintiff, therefore, clearly had no right of possession to the contested inclosure when he obtained the lease from the defendant. He' went into the premises in question two or three days before the lease to him was signed, but there is not a particle of evidence to show of how much he took possession, and it is hardly to be assumed that he took possession of an entrance, to the staircase to the upper stories, constantly in use for hoisting goods. If the lease in question gave the plaintiff an exclusive right to the whole of the first floor, I do not see but what the entrance to the staircase would come within the premises let, and that the defendant would have deprived himself of the use of it and the hatchway, and the right of hoisting goods there through it. But even if the plaintiff had been in exclusive possession of the whole of the first floor at the time of taking the lease in question, I think such possession should have been known to the defendant when he gave the lease. The latter knew that Atherden had no right to the possession of any space within the inclosure, and that the plaintiff had only acquired his rights; any seizure and occupation beyond that should be established to be of that open and palpable character which would warrant the inference of notice to the defendant; he certainly had no reason to suspect such usurpation, while he was allowed to use the staircase and hoistway. But the evidence excluded by . the Court would have made the right of the parties still plainer; the defendant was debarred from showing an agreement by the plaintiff -with Atherden to perform the.promise of the latter to put up the partition at the time he bought him out, which was, at least, an agreement not to take possession of the space to be inclosed.. I am unable to see how a party rightfully in possession of a certain part of. a first floor of a house under a prior lease from the'head landlord; agreeing to shut off that part from the rest by putting up a partition, which his assignor had before agreed to restore; could be presumed to be wrongfully in possession of the residue, so as to give him a right thereto under an instrument agreeing only to continue him in the premises of which he was lessee. This as an action for damages for an eviction, under the evidence given, must necessarily fail; and that which was ¿xcluded ought to have been admitted for the purpose of showing an agreement by the plaintiff, not to take possession of the contested space, as well as knowledge by him of the extent of the rights of Atherden, whose place he took.

If, however, the action be sought to be sustained as one for damages Caused by removing the easement of the light and air of and entrance from the contested part to the residue of the first floor of the premises in question, the evidence excluded would equally have settled that difficulty, because the plaintiff would appear thereby to have agreed to perform the promise of his assignor to put up such partition.

I. have put out of view the considerations that the weight of evidence seems to establish that it was Atherden, in performance of his agreement, and not the defendant, who put up the partition, and that the plaintiff declined to have the partition removed, as well as any arising from the character of the damages assessed.

Upon the ground of the exclusion of the evidence as to the plaintiff’s agreement with Atherden as to putting up the partition, as- well as the refusal to dismiss the complaint, I think the judgment at Special Term should be reversed', with costs.

Bosworth, Ch. J.

I think the evidence offered and excluded pertinent and material, upon the question what the parties understood the phrase, “ the present lessee and occupant of the first floor of house Ho. 166, Maiden lane,” to mean and designate. The word “ lessee,” in this connection, is as significant as the words, “ the first floor.” It is not claimed, that the plaintiff had a lease of all which the words, “the first floor,” would, literally and strictly, include. There is no pretense that the defendant and his lessees were to have no right of passage over it to the upper stories. Then, as the plaintiff was not to have exclusive possession of the whole of the first floor, it was competent to prove what part he was “lessee” of, and what part he was to “ continue to use and occupy ” under the agreement of November 14, 1856. The evidence offered and excluded was admissible on this question. On this ground I agree that there should be a new trial. I think the damages excessive on the evidence before us.

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


text:
    Elizur Ward and John H. Gilbert, Plaintiffs and Respondents, v. The Washington Insurance Company, Defendants and Appellants.
    1. In an action on a policy of insurance on goods in a building owned by the assured which was destroyed by fire, the defense being that the plaintiffs had fraudulently misrepresented the amount or value of the goods lost, thus fraudulently over stating their claim in their notice and preliminary proofe of loss served on the insurers, the plaintiffs cannot, on their part, give evidence of the value of the building, although it has appeared that the building was also insured, and to what amount. Such affirmative evidence on the part of the plaintiffs is irrelevant to the question what was the amount or value of the goods lost.
    2. But if the plaintiffs have, against the objection of the defendants, been permitted to prove the value of the building, it does not lie with the plaintiffs to object to testimony offered by the defendant to the same point to contradict or rebut the testimony of the plaintiffs’ witness, and a ruling of the Court rejecting testimony so offered, is erroneous.
    3. Although the Court may exercise a discretion by preventing a waste of time in the examination of an unreasonable number of witnesses on each side to a single point or fact in dispute, yet that discretion should not be exercised except in a case clearly calling for interposition; and where a plaintiff has called and examined one witness to establish a fact, and the defendant has examined one witness who contradicts the first, it is ground for setting aside the verdict that the Judge refuses to permit the defendant to examine another witness.

      4. The admission of illegal or irrelevant testimony is error, and entitles the party objecting thereto and excepting to a reversal of the judgment, as matter of right, unless the Court can say upon the whole case, that the illegal testimony could not possibly have influenced the jury or affected the result.
    (Before Hoffman and Woodruff, J. J.)
    Heard, January 5th;
    decided, March 10th, 1860.
    Appeal from a judgment on a verdict recovered by the plaintiffs on a trial before Mr. Justice Slosson and a jury, on the 8th day of December, 1858.
    The plaintiffs are assignees of a claim against the defendants, upon a policy of insurance issued by the defendants to one Elisha B. Morrell, whereby they insured his goods in a certain building owned by him in Brooklyn; the amount insured by the defendants was $1,000, and there was other 'insurance ón the goods to the amount of $2,000. The defense, relied upon was a failure of the insured to furnish a true account of his loss to the defendants, and a fraudulent over valuation and statement of such loss.
    The plaintiffs had a verdict, and the defendants appealed frorii the judgment entered thereon. The questions raised by the exceptions of the appellants and the rulings on the trial are fully stated in the opinion of the Court.

      Gilbert Dean, for the defendants (appellants).
    I. The evidence in relation to the value of the building in which the goods destroyed by fire were stored, was irrelevant and calculated to prejudice the defense by inducing the jury to believe the witness Morrell had no motive to cause the fire—or obtain an excessive insurance. Such testimony, when admitted under objection, is fatal to the verdict. (Whiting et al. v. Otis, 1 Bosw., 420; 6 Hill, 292; 19 Wend., 232; 24 id., 419.)
    II. If it is insisted on the part of the plaintiff, that this testimony was relevant and-material, then the Judge erred in excluding it when offered by the defendant. In any event, therefore, the defendant is entitled to a new trial.

      John D. Sherwood, for the plaintiffs (respondents).
    I. The only issue,; viz., the amount or quantity of goods destroyed by the fire, after testimony produced on both sides, was found by the jury to be in favor of the plaintiffs, and their finding is fully warranted by the evidence. The testimony in fact greatly preponderates on the side of the plaintiffs.
    II. Testimony having been given on both sides, and the weight of evidence not being clearly in favor of the defendants, verdict is conclusive, and will not be disturbed by the Court. (Eaton v. Benton, 2 Hill, 576; Keeler v. Fireman's Insurance Company, 3 id., 256; Easterly v. Cole, 1 Barb., 235; Watkins, &c., v. Stevens, 4 id., 168; Quackenbush v. Ehle, exr., 5 id., 469; Davis v. Allen, 3 Comst., 168).
    ITT. The refusal of the Judge to hear further testimony on behalf of defendants, as to the value or worth of the building, containing the insured property, was not error; and there is no reasonable ground to believe that such limitation influenced the jury, or operated to the legal prejudice of the defendants.
    1. The testimony in regard to such value was immaterial.
    2. The extent to which such testimony should be allowed to be given, was in the discretion of the Judge.
    3. The defendants were allowed to give considerable testimony in regard to value—more than that offered by plaintiffs— and it was discretionary with the Judge to limit it as he did, to save unnecessary waste of time.
    4. There is no probable room to believe that such limitation affected the verdict of the jury.
    5. Nor that the defendants were legally prejudiced thereby. (Crary v. Sprague, 12 Wend., 41; Supervisors of Chenango County v. Birdsall, 4 id., 458.)
    Justice has.been done in the whole case, and the judgment should be affirmed.
   By the Court—Woodruff, J.

This is an action brought upon a policy of insurance to recover for goods consumed by fire, which destroyed the buildings 67 and 69 Poplar street, Brooklyn, in which the goods were at the time of the alleged loss. Although other issues were in form raised by the defendants’ answer, the whole controversy at the trial was, whether the insured party had furnished to the defendants a true account of his loss, or had fraudulently overstated the quantity or value of the goods burned.

Or as the counsel for the plaintiffs in his printed points states.the only controversy, “the defense was a false and fraudulent over valuation of the goods, and that Morrell ’’ (the insured, party and assignor of the plaintiffs) “had furnished a false account' to defendants of the amount of loss.”

From the judgment entered upon a verdict for the plaintiffs, the defendants have appealed. By that appeal they have brought under consideration the exceptions taken by their counsel to the rulings of the Judge at the trial and nothing else.

The counsel for the respondents has prepared points on several questions which might properly be. considered, if this were a motion for a new trial, viz.: whether the verdict was warranted by the evidence ? What is the preponderance of the testimony ? Whether the verdict ought not to be deemed conclusive ? And whether upon the whole case it does, not appear that justice has been,done? Upon a perusal of the whole of the testimony we quite agree with the counsel for the respondent, and there is so little reason to believe that any injustice' has been done, that if this case was. before us, on a motion for a new trial which is addressed ' in some degree to the discretion of the court, we should hesitate long before granting the motion for any error committed on the trial.

But the appellants are here insisting on their strict rights.

They rely on their exceptions, and unless we can say that by no possibility can they have been prejudiced by the ruling of the Judge,' they are entitled to a reversal, if that ruling was erroneous.

It appeared that there was insurance upon, the goods to the amount of $3,000. The proofs of loss stated the amount and value of the goods destroyed, to be $3,461.64, and the contest was, whether this was not a false an.d fraudulent overstatement .of the amount and value of the goods. The insured party also owned the building, and the plaintiffs voluntarily proved that there was also an insurance on the building to the amount of $5,000. The plaintiffs then inquired “ what was the building worth?” and the defendants objected to the inquiry, but the objection was overruled, and the defendants excepted.

■ The answer of the witness stated the value of the building to be $7,000 to $8,000.

If there had nothing more appeared in the case on this subject, we should have.felt much inclined to say that without imputing gross ignorance or want of common sense to the jury, we could not declare that by any possibility this evidence could have injured the defendants, because proof that the building was worth any sum whether greater or less, did not in any degree tend to show how many goods were stored therein nor what was their value.

But on the examination of the defendants’ wituesses the object of this inquiry seems to have been seen. The defendants examined a witness who testified that the building was only worth $3,500: and it may have been apprehended that the defendants would insist that such proof tended to show a fraud connected with the same subject matter, indicating a design to defraud the Insurance Companies who were liable for the damage done by the fire. And perhaps, also that there was a motive to. burn the property voluntarily to obtain the insurance, in the fact that the building was insured for more than its value. And thereupon when the defendants inquired of a second witness what was the value of the building, the plaintiffs’ counsel objected to the quesr tion, and the court sustained the objection, and the defendants excepted.

Now, evidence of the value of the building was admissible or it was not. If it was admissible when offered by the plaintiffs, it was clearly competent for the defendants to give proof on the same subject to contradict the plaintiffs’ witness or .to rebut the inference which might otherwise be drawn from his testimony. If it was not admissible when offered by the plaintiffs, then the testimony should have been rejected, and the defendants’ exception was well taken. Whether admissible or not, the plaintiffs having insisted upon it and the Court having received it in spite of the defendants’ objection, it was clearly competent for the defendants to rebut and fully overcome it.

The ruling of the Judge on admitting, the testimony was accompanied with a statement that he should not permit any lengthened inquiry in regard to the value of the building, and on his subsequent Rejection of the defendants’ proof he repeated the statement and suggested that the inquiry had gone far enough. This would indicate that the reception or rejection of the testimony was deemed a matter resting in discretion.

We do not understand that it was matter of discretion, when one witness had been examined on each side to the point of inquiry, to refuse to the defendant the opportunity to turn the scale by another witness. The discretion which ■ the Court may sometimes exercise in controlling the number of witnesses examined to a single point to prevent a useless waste of time, can have no application to this case.

That testimony may sometimes be so entirely irrelevant that the Court can say, even upon a bill of exceptions, that its reception could not possibly have affected the result, and may therefore refuse to reverse on that ground, has been held. See on that subject, Forrest v. Forrest, (6 Duer, 145, 146,) and cases there collected in which the subject is discussed.

On a motion fpr a new trial a liberal discretion, when the verdict is clearly right, is exercised. But on exception to the ruling the conclusion must be inevitable that the error could not affect the result or the verdict must be set asidei In Whiting v. Otis, (1 Bosw., 420,) it was deemed clear that the irrelevant and incompetent evidence was calculated to prejudice the defendant. In Strang v. Whitehead, (12 Wend., 64,) on writ of error it was said by the Court, that “it is wrong to permit any evidence to be given to the jury but such as may properly influence their verdict,” and the judgment was reversed.

In Farmers' and Mechanics' Bank v. Whinfield, (24 Wend., 420,) it is held that “it does not follow that because irrelevant testimony has been given on one side, though without objection, the other has a right to give evidence in reply;” and authorities are cited to that proposition. But in the same case it was held, that on exception the party objecting “is entitled to his neat point that the testimony is irrelevant,” and although if the Court can see that it must necessarily have tended in his own favor or that it could not possibly prejudice his case,, that might be an answer; yet, so long as the chance is equal that it may have had some effect one way or the other, the party is entitled to the benefit of the principle that irrelevant testimony should be shut out .from the jury. And the Court add, with singular aptness to the present case, “ above all, if the testimony be permitted to go to the jury, he should have a chance to set it right by explanationwe add, much more should he be permitted to contradict and overcome it.

As already suggested, if the testimony was relevant, the defendants had a strict right to have the counter-testimony received. If it was not relevant, it was nevertheless so treated by the plaintiffs and insisted upon by them, and so received by the Court, and being received, we cannot say that it could not have influenced the jury on the question of the plaintiffs’ good faith, or possibly by exciting their sympathy in behalf of the assured.

We think the verdict ought otherwise to be sustained, but are compelled to reverse the judgment for the error mentioned.

Judgment reversed, and new trial ordered. Costs to abide the event.