source: Caselaw Access Project

author: Fithian, J. Monell, J.

license: Public Domain

text:
    TITUS B. ELDRIDGE, Plaintiff and Appellant, v. SAMUEL C. REED, Impleaded, etc., Defendant and Respondent.

      [Decided December 31, 1869.]
    Findings of fact of a justice at Special Term held to be against evidence and a new trial granted. It is not usury for a lender of money on bond and mortgage in good faith, and not as a cover, to take from the borrower the necessary disbursements for searching the title to the premises mortgaged. Reed made a mortgage to Wolcott, to be used by the latter to borrow money for the former. Wolcott transferred the mortgage to Eldridge, and received the full price thereof as a loan upon the security of the same, which money he delivered to Reed, less a certain sum retained by him for his services. Held, the mortgage had no inception in the hands of Wolcott, and that a retention by him of such sum for services did not make the loan or mortgage usurious in the hands of Eldridge. (Monell, J., dissenting.)
    Before Monell, McCunn, and Fithian, JJ.
    This ease was tried at Special Term, before Mr. Justice Jones.
    The action was brought by the appellant as assignee, for the foreclosure of a bond and mortgage executed to his assignor, John W. Wolcott, by the respondent.
    The complaint alleged that the bond and mortgage were given by the respondent Reed to Wolcott, to secure the payment of two promissory notes, made by the respondent Reed to the order of himself, dated Feb. 7, 1867, and indorsed by him, for the sum of §2,750 each, payable thirty and sixty days from date, that Wolcott assigned, transferred, and delivered the bond, mortgage, and notes to the appellant for value, Feb. 8, 1867.
    The answer denied the assignment, transfer, and delivery to the appellant, and alleged two further defenses, as follows: First. That the notes, bond, and mortgage were obtained from the respondent Reed by the appellant’s assignor, Wolcott, without consideration, and by means of fraudulent representations, and that the appellant had notice thereof and gave no value. Second. That the two notes were void for usury.

      The justice found that the bond and mortgage, and the promissory notes secured thereby, were void for usury, and rendered judgment for the defendant, dismissing plaintiff’s complaint, with costs.
    The plaintiff appealed from the judgment.

      Mr. John K. Porter for appellant.
    The learned justice “ mistook the import and preponderance of the evidence given upon the trial of the cause, and for that reason alone the judgment should be reversed and a new trial ordered” (51 Barbour, 346, 352).
    The respondent’s testimony as to usury was entirely unsupportéd. That of the appellant was corroborated by the testimony of Wolcott, on all points. The preponderance of the evidence was decidedly with the appellant. “ The just administration of the laws requires that that should be followed, when the witnesses are equally candid, intelligent, and positive in their statements ” (Townsend v. Foster, 51 Barb., 346, 352).
    When both plaintiff and defendant are examined, and one of them is corroborated and the other is not, a finding in favor of the uncorroborated party is contrary to evidence (Hartman v. Proudfit, 6 Bosw., 197).
    The payment of a commission to Wolcott, who negotiated the loan for defendant, and guaranteed its payment, did not render the transaction usurious (Barber v. Ketchum, 7 Hill, 444; Condit v. Baldwin, 21 New York, 219; Flint v. Schomberg, 1 Hilton, 532).
    The contract had no inception until the plaintiff advanced the money, and the issue of usury therefore depends on the question whether a usurious premium on the loan was received or bargained ■ for 5y him ; and of this there is no ■ pretence (Catlin v. Gunter, 1 Kernan, 368; Little v. Barker, Hoffman’s Ch. R., 487).
    The amount allowed to the plaintiff for examining the title and preparing the papers was not a usurious bonus, but a legitimate charge for services, and there is no color for claiming, nor any finding by the judge, that it was a device to cover a®usurious exaction (Thurston v. Corwin 38 New York, 281; Beals v. Benjamin, 33 New York, 61; Crane v. Price, 35 New York, 494; Smith v. Paton, 31 New York, 66; Nourse v. Prime, 7 John. Ch. R., 69).
    The burden of proof rests upon the respondent, and even if the evidence is considered of equal weight, the judgment should be reversed.
    “ Where the only evidence is conflicting and of equal weight, with no circumstances to detract from the weight of or corroborate that on the other side, and where the determination of the facts in issue either way must depend upon who has the affirmative, the court has a right to infer that the ultimate finding, if not in favor of the party having the negative, was based on a wrong rule of evidence ” (Strong v. Place, 4 Robertson, 392, 396).
    There was plain and manifest error in the admission of proof that in another action—two years before these transactions— there was an ex parte charge of fraud against Walker and McKinney, and that the plaintiff was their attorney and surety in that action.
    The proof was utterly irrelevant, and was in its own nature plainly incompetent and inadmissible (Hannah v. McKellip, 49 Barbour, 342; People v. Kennedy, 32 New York, 144).

      Mr. Ira Shafer for respondent.
    The finding of facts are fully sustained by the evidence. The • court below did not err in admitting the evidence showing that the plaintiff Eldridge was the attorney, counsel, and surety of Walker and McKinney.
    They were parties to the fraud on Reed—the fraud which tainted the notes he had given, and the collateral. This proof was some evidence of the fact that the plaintiff was not strictly a bona fide taker of the notes and security, and was therefore admissible.
    The same facts were proved without objection on the cross-examination of the plaintiff.

      The bond and mortgage, and the notes secured thereby, are void for usury.
    The mortgage in question having been obtained from Mr. Reed through fraud, and without a valuable consideration, is void. Assuming the plaintiff to have been a bona fide taker of the notes, it does not follow that he can successfully foreclose a mortgage obtained by and tainted with fraud. The rule which, for reasons of public policy, protects a bona fide taker of bank notes, coin, and. negotiable paper against a claim or defense predicated on fraud, has never been extended to a mortgage.
    This question is fairly before the court, inasmuch as it was discussed below, and the findings of fact establishing the alleged frauds are full and conclusive.
    The plaintiff was not a bona fide holder of the mortgage. The defendant insists that the transfer of the mortgage to the plaintiff by Wolcott was a device conceived by the plaintiff after the notes were protested, and for the purpose of serving his intimate friends and clients, Wolcott and McKinney. The acknowledgment and the record of the transfer were long after the protest of the notes, to wit, in May, and long after the protest Wolcott and McKinney tried to settle the matter with the defendant by trying to induce him to make a payment of a part of the notes.
   By the Court:

Fithian, J.

The judgment of the court at Special Term is based solely upon the conclusion of law that the notes and mortgages in suit were void for usury; and the sole question here is whether the findings and parts of findings of the learned justice at Special Term, upon which this conclusion is based, are sustained by the evidence. These findings are all, and each part thereof, excepted to.

I do not deem it necessary to notice the question of fraud at all. For there is not a particle of evidence even tending to show the plaintiff to have had any knowledge of, or connection whatever with, ahy one of the acts or declarations in the evidence charged as false or fraudulent. No witness swears to it. The plaintiff denies all knowledge on the subject, and the court has not found otherwise. The question of usury arises from facts independent of the question of fraud, and would stand with the same force as they now do if the original notes (defendant’s exhibit 1”) had been free from any taint of fraud.

The evidence as to the facts out of which the usury is claimed to have arisen is in a narrow compass, and contained in the testimony of three witnesses only, viz.—plaintiff, defendant, and the witness Wolcott. The facts found by the learned justice are substantially and in effect these: That the notes and mortgage in suit arose out of a corrupt and usurious agreement entered into by and between the defendant and the witness Wolcott, whereby the latter, being the owner or controller of the two notes first executed by the defendant, agreed to renew these two notes, and extend and give time of payment of the debt secured by them for such time as the new or renewed notes had to run, on consideration that the defendant would execute and deliver to Wolcott the notes and mortgage in suit, and permit Wolcott to retain $170 out of the money to be realized by a negotiation of such security. That the defendant agreed to this, and did accordingly, and in pursuance thereof, execute and deliver to Wolcott the notes and mortgage in suit, and receive from him the first notes, and permit him to, and he did, retain the $170, all of which was with the corrupt intent of demanding and receiving more than the legal rate of interest. That in all this Wolcott was acting in concert with and for the benefit of himself and McKinney, and that the notes and mortgage in suit being thus a negotiated and delivered security in the hands of Wolcott, tainted with usury, were thus transferred to the plaintiff, in like manner, tainted, and were, therefore, void for usury ” in the hands of the latter. These are the substance of the findings of the court, from the fifth to the last finding inclusive. And, indeed, must be so, substantially. For if the notes and mortgage in suit arose, as is claimed by plaintiff, out of a transaction virtually between Feed, the defendant, and Eldridge, the discounter of the notes, through Wolcott the agent, a middle man, in order to raise money to take up these two first notes, or for any other purpose, then no matter how much money Wolcott might have stipulated for or received, it would not be usury as against the party taking the notes and mortgage, and advancing the money thereon, unless he was also a party to the usurious contract. This principle is so familiar, and so well settled, it is unnecessary to cite authorities to sustain it. And so the retaining or taking by Eldridge of the price for searching titles, etc., is not usurious if taken in good faith for that purpose, and not as a cover.” And that it was not intended in this case as a cover for usury is virtually conceded. The question recurs then whether there is evidence to support the finding of the learned justice at circuit on the question of usury. And here I do not mean that this court on appeal, is to weigh and balance with nicety to see if peradventure the evidence may not preponderate against the verdict or finding. But, on the contrary, the court should construe the evidence liberally in favor of the finding, and sustain it, if consistently it can be' done. There are, however, certain well-established and elementary principles and rules applicable to investigations of this character, founded on reason and justice, and which should be closely adhered to in such cases. One of these rules is, that a party alleging fraud, usury, or other tortious and quasi criminal conduct against his adversary, should be held to stricter proof in establishing the facts upon which such consequences are to arise than in other cases. That if such charges are sought to be established by inference, the facts or circumstances upon which the inference is based must be proven with entire certainty, and not be left in doubt. And finally, if upon all the facts and circumstances proved on both sides, it is left a balanced case, the party alleging fraud, usury, etc., ought to fail.

With these rules in view, I will briefly examine whether there be any clear and satisfactory evidence to establish the fact upon which the usury is based. And for the present I lay aside the testimony of Wolcott altogether, except as referred to in considering Beed’s testimony, and resort to that of the defendant himself. In the first place, the court at Special Term find and assume that in the negotiation for the execution of the notes in suit, the witness Wolcott either owned, or assumed to own and control himself, the two notes first delivered. I am unable to find anything in Reed’s evidence to sustain this finding, except the fact sworn to by Reed that Wolcott undertook to negotiate about the renewal of them; and, at the close, delivered them up to him. And, although Wolcott denies the last statement, yet conceding both to be true, it is entirely consistent with the statement and evidence of Wolcott that in all that matter he was acting for and at the request of Reed, and as his agent. And the latter is not inconsistent with any of the circumstances of the case. Reed swears that he approached Wolcott on the subject of making some arrangement about the notes.

McKinney was the payee and holder of the notes. They were delivered by Reed to him, and receipted for by McKinney, as collateral for 1,600 shares mining stock, $3.25 per share, “ to be held with the balance of the capital stock in the hands of Marcus Walker, trustee for j?ro rata sales and benefit.”

Again, there is another finding closely connected with the last, and apparently in support of it (fifth finding), that when the two first notes were about becoming due, they were in the possession of Wolcott and McKinney, and for the purpose of inducing Reed to give collateral security, they (W. & McK.) “ led him (Reed) to believe that they had used said notes,” and “ were unable to protect said notes,” and that “ said notes could not be renewed unless collateral security was given,” etc. And further (sixth finding) that Reed believing this, and “ acting under such belief,” and induced thereby, and having “ no notice or knowledge” to the contrary, and there being “no suspicious circumstances to put him on guard or inquiry,” consented to give to him (Wolcott) the notes in suit, etc., in renewal of the first notes. The materiality of this finding is in connecting Wolcott with it. The finding is more than ordinarily particular and specific in all its language, studiously so, and excluding every negative inference.

Yet, when I look for the evidence to sustain such finding, I am unable to discover any whatever so far as Wolcott is concerned, or either of the other parties. Hot alone that it is against the weight of evidence, but it is without any substantial support whatever. If evidence is to be found anywhere to sustain such a finding, it must be in the testimony of Reed; for it is upon him alone that all these alleged facts rest. And on examining his testimony I find nothing to uphold such a finding. Reed does swear that when the two first notes were delivered up to him by Wolcott (as he says they were), he remarked to Wolcott “that is very strange, these notes have not been discounted at all.” And I find no evidence anywhere in the case that any person whomsoever had ever said, or pretended to him, or in the language of the finding, “ led him to believe,” that the notes ever had been discounted at all.” On the contrary, I find evidence from his own testimony, satisfactory to me, that he ought not and had no reason to believe any such thing. When the first note was about maturing Reed goes to McKinney, the original payee and holder thereof, to inquire about it. McKinney tells him that Walker, in whose hands McKinney had originally placed the stock, as stated in the receipt Reed held, would “attend to it and pay it.” The next day Reed sees Walker and McKinney together, and informs the former that he had come to “ see about that note of his.” Walker inquires what note, and Reed informs him, and says McKinney had told him to “ come and see about it.” That he (Reed) was not going to pay it when it became due. That it was understood Walker and McKinney were to attend to it. That they must arrange it, pay it or arrange it. Walker said McKinney had not spoken to him about it. He supposed McKinney was going to attend to it; and then proposed that Reed should make two other notes at thirty and sixty days, and he would take them on to Boston and see if “ they ” could not arrange it. The interview then terminated. Whether Reed did or not make and deliver to Walker the two notes here spoken of for thirty and sixty days does not appear. The next day, or the day after, Reed received from Walker (from Boston) a telegram that the notes could not be extended. Whereupon he immediately went to Wolcott, in Hew York, told him he would not pay the notes, for McKinney had agreed to take care of them. Wolcott said “that was just like McKinney, he never does any thing he ought to do.” And then asks Reed if he would give collateral security if he (Wolcott) would get the notes renewed % Keed says, “I don’t object to that.” Whereupon the negotiations commenced, resulting in the giving the notes and mortgages in suit. This is all the evidence on the subject of whether the two first notes were or not previously discounted. Certainly there is nothing there to warrant the charge or sustain a finding such as the fifth or sixth in this case. On the contrary, the evidence is quite convincing that Keed did not even make the inquiry as to who held the notes, but assumed and acted upon the assumption that Walker and McKinney, one or both of them, had the ownership or control of these notes. • It is barely possible that Keed might, in fact, have supposed and believed the notes had been discounted. But when he asks a court of justice, proceeding upon established rules of evidence, to find as a fact, as against an innocent and bona,fide holder of securities, that he was cheated and falsely misled into such belief, and acted solely upon it in making the securities, with no circumstances existing to put him on inquiry to the contrary—he must bring stronger evidence than he has in this case. The fifth and sixth findings, therefore, must fall for want of evidence. And likewise that part of the eighth finding in relation to the inducement under which Keed acted/6 as found in the sixth finding,” is not sustained by any evidence, and must be reversed. The language of the fifth finding (which seems to be one of the centre or pivotal points upon which all the other findings are made to rest) is very peculiar, as well in what it asserts as what it omits. The finding in substance is, that Wolcott and McKinney, with the intent stated of 66 inducing ” Keed to renew the first notes and give 66 collateral security,” not only 66 led him (Reed) to believe that they (W. & McK.) had, in fact, used said notesbut further, 66 that although they (W. & McK.) were making sales, and making money, and working rapidly, yet by reason of the inattention of said Me-Kinney they were then unable to protect said notes, and that said notes could not be renewed unless collateral security was given.” Now what did Wolcott or McKinney say or do to “ lead Keed ” to believe the above ? The finding is silent on that subject. And when I turn to the evidence, there is nothing to support the finding, such as it is. The gist of the finding is that Wolcott, having first falsely induced Reed to suppose the notes had been discounted, for his as well as the others’ benefit, then lied to Reed about the ability of himself and others to take the notes up, by saying that although they were making “ sales and money,” yet McKinney did not attend to the business. This might be an adequate reason to induce Reed to “believe” that McKinney would not take up, or deliver up, the notes. But how it could be any reason for Reed to “ believe ” they could not take up or deliver up the notes, is di 03 cult to understand. If it were true, as Reed, according to the finding, was made to “believe,” that they were “ working .rapidly,” and “ making sales,” and “ making money,” one would suppose that would be a very good reason for “ believing ” they were able (instead of “ unable ”) to take up the notes. So the finding defeats itself in this respect. But an examination of the evidence discloses that all there is in the case to support the whole of this fifth finding is to be found in a single folio, and but little more than a single sentence in Reed’s testimony, at folio 131 of the case. This is it. After testifying to the conversation between him and Wolcott, wherein the latter asked if he would give “ collateral” security, etc., Reed was asked by his counsel this question:

Q. At this time did you call Wolcott’s attention to what had been said at the time of your taking the stock ? It will be observed that the material point in this question was time. The gist of the fifth finding is, that Wolcott, at the time Reed consented to renew and give collateral security, deceived him into believing that the notes were outstanding, and although the enterprise was making money and doing well, yet, by McKinney’s inattention, they were unable to take up the note. As before remarked, all the evidence to be found in support of such finding is contained in the answer to the above question. And that answer is wholly irresponsive and evasive. The question was if, at that specified “ time,” he called Wolcott’s attention to a certain previous conversation? The answer was after he said they were mating sales,” etc. This answer may be true in all particulars, and still it wholly fails, in my judgment, to furnish any substantial evidence in support of the fifth finding of fact; and I find no other evidence in the case in any way relating to such finding. It follows, therefore, that the fifteenth finding, so far as it relates to the acts and statements in the fifth and sixth, and part of the eighth finding, is also unsustained by any evidence.

I am at a loss to understand the purpose or intent of the fourteenth finding. If it means (which it does not say) to intimate that Eldridge, the plaintiff, was the attorney or counsel of Wolcott or McKinney in or about any of the matters in controversy in this suit, it suffices to say that there is not a particle of evidence to support it. Mo witness swears or pretends any such thing. If it means merely that in other matters Eldridge was and had been attorney and counsel for Wolcott and McKinney, it is so wholly irrelevant and immaterial, that I fail to see why it should be grafted into the case. I allude to this finding, because it seems to me to characterize the other findings, and indicates to some extent the mode and manner in which the learned justice at Special Term was inclined to and did deal with this evidence. Influenced, as I think, by his well-known abhorrence of all fraudulent practices, he has permitted the evidence as to fraud to be unduly magnified in this case, so as to color and taint the whole evidence, and base upon the fraud (which of itself is not a defense) another and entirely different defense in no way connected with or supported by the fraud.

And this leads me, in conclusion, to consider briefly whether there is any evidence sufficient to show that the witness, Wolcott, was in any way pecuniarily interested in the particular stock sold to Heed by McKinney, or in the two notes received by McKinney therefor, so as to make him (Wolcott), a principal in the transaction of taking from Reed the notes and mortgages in suit. This must be shown in order to make out the defense of usury. For if Wolcott was acting simply to aid and assist Reed in this matter of renewal, or as a middle man between Reed and Eldridge, then the notes and mortgage in suit had no inception in the hands of Wolcott, and as Eldridge took no usury, there is none in the case.

As before remarked, the defendant Reed assumes the burden of establishing, by satisfactory evidence, the fact that Wolcott was interested pecuniarily in the first notes, and acted as principal, and for his own benefit in the negotiation of the notes and mortgages in suit. This fact must be proved, not surmised, and must be established by evidence to the point itself, and not by general accusations or assertions. There is no express finding on this subject, and if there be any evidence in support of the alleged fact, it must be found in the testimony of Reed, for Eldridge and Wolcott swear to the contrary. On a careful examination of Reed’s testimony, I not only fail to find any evidence to show Wolcott a principal, but what seems to me entirely satisfactory evidence to the contrary. Reed swears that McKinney approached him to try and sell him this mining stock; that McKinney represented that he had a gold mine, and that it was a “ splendid mine,” and that he (McK.) “ controlled most of the stock,” and offered to sell Reed 1,500 or 2,000 shares. And on Reed saying he had no money, McKinney offered to take his notes at thirty or forty days, and take them up on their becoming due. Reed thereupon consented to become the purchaser ; and he says “that Wolcott was there and corroborated all these statements, and said that he was interested.” How interested ? In the stock that McKinney was selling % He does not say so, and such is not the necessary inference, for there are various other ways in winch Wolcott could be interested, one of which obviously was as a co-stockholder, with McKinney in the company. And such is not the natural inference ; because the language used shows that it was McKinney individually who was dealing with Reed. He was selling the stock as his own, and proposing to take the notes to himself, and deal with them as his individual property. And this interpretation is sustained fully by the written evidence. The two notes were made payable to the orders of McKinney individually. Reed swears he delivered them to McKinney and took from the latter his written receipt, which is put in evidence. That receipt, when read in the light of the surrounding facts, is conclusive upon the question under consideration. It acknowledges the receipt by McKinney from Reed of the two notes at thirty and forty days; also one hundred shares of the stock of the “ Hardaway Bolt Company,” as security for the payment of the purchase price of 1,600 shares of the capital stock of the “ Gold Hill Mining Company of Colorado,” then and there sold by McKinney to Reed at the price of $3¿ per share. And further, that the 1,600 shares of stock so sold by McKinney to Reed was not to be assigned and delivered to him, but to be placed with all the “balance of the capital stock in the hands of Walker, trustee for pro rata sales and benefits.” From this receipt it is manifest that these parties were not interested in this stock so put into the hands of Walker “trustee, as owners in common and undivided,” but as owners in severalty, each party owning a certain specified number of shares. All of which they had put into a common pool, and the proceeds of the sale of all or any of which were to be divided among these several owners in proportion to the number of shares held by each. And in this view the transaction between McKinney and Reed is clear and apparent. McKinney was carrying in this pool more of this stock than was convenient for him to do. He therefore obtained the consent of his associates that he might (if he could) sell some of his stock to another person, and allow such other person to stand in the pool, as to the stock so sold to him, on the same terms as all the others. Accordingly, McKinney sold out of his own stock the 1,600 shares to Reed, who purchased it, and gave his notes for it, consenting and agreeing that his stock should so remain in the pool. And he (Reed) well knowing and consenting that this stock was to be put oft on to the public, irrespective of whether it had an intrinsic value or not; that a false market-value was to be given to it by fictitious sales among the parties themselves (of whom Reed was one), and that he (Reed) expected to realize the money to pay his notes from what he calls “ dividends” to be made from the proceeds of such sales, and not from any moneys really earned at the mines. That I am not stating this too strongly will appear from Reed’s evidence at folios 123 and 124 of the case, where he swears “they” told him that Walker was to hold the whole of the stock, and they should make “ large monthly dividends from the sales of the stock.” And that “ they ” proposed to buy it and sell it. Hr. Reed, the defendant, is a lawyer, and he must have known what such “ buying and selling” meant. The whole difficulty with this scheme was, that the public was a little more wary and cautious than those parties supposed, and did not take the bait. Hence this lawsuit. And if it were at all necessary to enter into that question, I should feel warranted in affirming and holding that upon the evidence, as it now stands, it would be unsafe to convict either of these parties of a fraud upon Reed. He knew too well the character of the transactions upon which he entered. It was not the representation as to the value of the mine that induced him to act, but the hope and expectation of a successful “ kiting” of the stock.

It suffices, however, to show that the transaction out of which this case has arisen, in its inception, was a matter between Reed and McKinney individually, in which Wolcott had no interest whatever as a principal negotiator.

That such is the true version of the m'atter is made more fully to appear from Reed’s testimony of what took place on the maturity of the first thirty-day note. He goes at once to McKinney about it; McKinney sends him to Walker. He then sees them together, and at once claims to them that they (Walker and McKinney) had agreed to take up these notes, and that he (Reed) would not do it. And it was not until his failure to make any arrangement with these two, that he went to Wolcott. He made no claim upon or charge against Wolcott. Assorting only that McKinney had agreed to take care of these notes, and he Keed “ would not pay them,” it is manifest that Keed did not then claim or pretend that Wolcott was under any obligation to look after these notes, or had any interest in them; but, on the contrary, approached Wolcott as a person interested with him (Keed) and the other parties in a joint speculation or scheme, the success or failure of which was not yet determined, to obtain Wolcott’s assistance to carry along the paper under the hope and belief that moneys would yet "be realized from the sales of the stock, and that Wolcott consented thus to raise money for Keed if he would furnish the security upon which to do it, and therefore Keed did furnish the notes and mortgage in suit. In the hands of Wolcott these securities were the property of Keed, undelivered and unnegotiated, and Wolcott could not have enforced them even if there had been no element of fraud in the case.

Thus, upon Keed’s testimony alone, if it stood uncontradicted, the essential and material fact upon which the defense of usury stands, if at all, is wholly unproved. And when, in addition to that, there appears the positive and unequivocal testimony of two witnesses, speaking from personal knowledge, that such fact did not exist, it is proper, and not disrespectful, to hold that the learned justice at the trial, in the language of the court in Townsend Iron Co. v. Foster (51 Barbour, 351), mistook the import and preponderance of the evidence given upon the trial of the cause,” and for that reason the judgment should be reversed, and a new trial ordered, with costs to abide the event.

Monell, J.

(dissenting). The facts found in this case by the learned justice, briefly stated, are these: McKinney and Wolcott, who were jointly interested in the transaction, by false and fraudulent representations of the value of the stock of the G-old Hill Mining Company, induced the defendant to purchase 1,600 shares of such stock, and to give in payment thereof his two promissory notes for $2,600 each, payable to the order of McKinney. About the time of the maturity of the first of said notes (neither of which had been used), McKinney and Wolcott, for the purpose of procuring collateral security, led the defendant to believe that such notes had been used, and that the same could not be renewed unless collateral security was given. It was thereupon agreed between the defendant and Wolcott that the former should make his two other promissory notes for $2,750 each, to be secured by mortgage on real estate, and on delivery thereof to Wolcott the defendant should receive his said first two promissory notes and $130 in cash, the balance of said last notes ($170) to be retained by Wolcott. Such agreement was carried into effect. The notes and mortgage were delivered to Wolcott, who returned to the defendant the two notes for $2,600 each, and paid him the $130 in cash, retaining the $170. The mortgage was assigned and the notes delivered the next day to the plaintiff, who paid to Wolcott the full face thereof, less the interest and a small legal charge. The amount retained by Wolcott was found to exceed the legal rate of interest, and the notes and mortgage were adjudged to be void for usury.

There is no question of law arising in this ease. If the finding of the court that there was usury in the transaction, and that Wolcott was a principal party, is sustained by the evidence, then the notes were void, even in the hands of the plaintiff, who became the owner before maturity, for a valuable consideration, and without notice of the usurious agreement.

The usurious agreement was made out upon undisputed evidence, if Wolcott was a principal party. It is not denied that $170 was retained out of the notes, part of which was for the discount and part for a fee for examining the title. But about $50 was retained by Wolcott, which, he says, was allowed to him by the defendant as “ a commission for his services in conducting the negotiations and indorsing the paper.”

If, therefore, Wolcott was jointly interested with McKinney in the first notes, then any agreement made between them or him and the defendant, whereby more than legal interest' was taken for the forbearance of the debt, rendered the notes void.

There is another question raised by the plaintiff, the answer to which again, somewhat, if not wholly, depends upon whether Wolcott was a principal. It is this: That the notes and mortgage had no legal inception or vitality until they were delivered to the plaintiff. That would be so, I think, if Wolcott had received them to negotiate and raise money upon for the defendant as his agent. But if Wolcott was interested in the first notes, and received the second notes and the mortgage in renewal of the first, then the notes and mortgage had their legal inception from such delivery to Wolcott, and are affected by the usurious agreement.

The whole case, therefore, turns upon what relation Wolcott bore to the transaction.

The court has found such relation to be that of principal; in other words, that Wolcott and McKinney were jointly interested in the stock sold to the defendant and in the notes received in payment.

There was no direct or positive proof to establish the interested relation of Wolcott to the transaction. But there was a chain of facts and circumstances, from which it was deemed by the court to be legitimate to draw the inference of his connection.

The entire transaction between all the parties, except the plaintiff, as found by the court, was founded and consummated in fraud. The representations which formed the inducement for the purchase were false. The stock was worthless. To perpetrate this and possibly similar frauds, the evidence authorized the inference that a conspiracy was formed between McKinney, Wolcott, Walker, and Eustis, who were the owners or principal owners of the mining company. They occupied the same office. participated either actively or tacitly in the fraudulent representations. They put the stock upon the market, made fictitious sales and purchases, for the purpose of creating a supposed market value and thereby inducing the unwary to purchase, during all which time they knew the stock they were endeavoring to sell was without any real or substantial value.

. The stock was never delivered to the defendant. It was represented to him that Walker would hold all the stock of the company, yet when applied to he said he had given it to Wolcott. The first notes, although payable to the order of McKinney, remained, it seems, in the possession of Wolcott, and were not negotiated. The conversations, negotiations, and arrangements for renewing the notes were all with Wolcott, who acted throughout as the principal, and McKinney was no longer known in the transaction.

The false representation that the first notes had been discounted were made as well by Walker as by Wolcott, and such representation induced the giving of the mortgage. Wolcott appears throughout to have been the active manager and operator in carrying out a scheme to defraud the defendant, and the other jpa/rtiaeps fraudis to have been his coadjutors.

Most of the facts which go to establish a conspiracy between these parties is without contradiction. No attempt was made to disprove the connection of Walker and Eustis with the mining company, nor their complicity in the attempts to create a fictitious market value for the stock.

Neither McKinney, Walker, nor Eustis, who were competent witnesses, was examined; and Wolcott’s evidence was confined to the alleged usurious agreement.

The answer of the defendant had sufficiently alleged the connection and interest of Wolcott, and it is a little singular, if he was a mere agent, that he was not interrogated on that subject. And the absence of such witnesses from the trial was a circumstance at least of suspicion.

A careful reading of the evidence will not fail, I think, to satisfy any one that the learned justice was justified in making the finding that Wolcott was interested with McKinney in the transaction; that they acted in concert, and that the acts done and representations made by one were done and made in the interest of the other.

Such finding, in my judgment, disposes of the case; for, as I have already stated, if Wolcott was a principal party, the notes and mortgage had a legal inception when delivered to him. As between the defendant and Wolcott, there was a good and sufficient consideration, and the securities, except for the usurious agreement, were valid instruments in the latter’s hands. It is not like a case of accommodation paper, made for the sole purpose of raising money upon it (Catlin v. Gunter, 11 N. Y. R., 368). The distinction is clearly stated in Knight v. Putnam (3 Pick., 184). If a note made for the purpose of raising money is discounted at a higher premium than the legal rate of interest, and none of the parties can, as between themselves, maintain a suit on it, provided it had not been discounted, then such discounting is usurious, for it is then that it first had its inception.

Being valid, therefore, as a mortgage in the hands of Wolcott, the usurious agreement immediately attached. If it had not been assigned, the defendant, as between himself and Wolcott, could not have set up a want of consideration. And even though we should believe that the notes were made for the purpose of raising money upon them to take up the first notes, they were yet no less valid, so far as a consideration was needed; and the negotiation of the securities was for the benefit of Wolcott, and not of the defendant. It is claimed, however, that the evidence does not sustain the finding of an usurious agreement; that on that subject the defendant and Wolcott are in direct antagonism. I do not find anywhere that Wolcott has countervailed the allegation, or the proof in support of it, that he was a party in interest. In his testimony he confined himself to what transpired at the renewal of the notes; and although he stated that he merely undertook to assist the defendant in procuring a loan, to enable him to take up the prior notes, he did not disavow his interest in the transaction.

If it was true that Wolcott was part owner of the notes, or even had been prior to their being discounted, if they had been discounted, that was of itself a sufficient consideration for the renewal notes, and it is, therefore, immaterial that Wolcott agreed to assist in getting the money.

It seems to me, looking at all the evidence, that the defense of usury could be established without regard to any contradiction in the testimony of Wolcott and the defendant, and without rendering it necessary to decide upon the weight of the evidence or the credibility of the witnesses.

If, however, it were necessary to decide upon those matters, we are concluded by the decision made at Special Term. A finding upon a conflict of evidence will not be disturbed. The interest of the conflicting witnesses was probably balanced, and the affirmative, on the issue of usury, was with the defendant; but I do not know of any rule of law that requires a court to decide a case against the party holding the affirmative, merely because the contradicting witnesses are balanced in interest and of equal credibility. In such a case, whichever way the fact is found, the appellate court will not reverse.

It is enough, however, to say that there were corroborative facts and circumstances in this case which gave a fair preponderance to the testimony of the defendant over that of Wolcott.

The objection to the admission of evidence that Walker and McKinney were charged with fraud in another action was, I think, properly overruled. One of the issues in the case was that the notes had been fraudulently obtained and were negotiated to the plaintiff after notice. Upon that issue evidence of other or cotemporary frauds was admissible. But as the decision of the case was made on the defense of usury alone, the evidence complained of was immaterial, and could have had no effect upon the decision.

There was no finding that usury was taken by the plaintiff, or that he was a party to or cognizant of the corrupt agreement of Wolcott. Nor do I find any evidence to support any such conclusion. On the contrary, it appears, and is without contradiction, that the plaintiff advanced the whole face of the notes, retaining only the legal discount and a small fee for examining the title. Nor was there any proof that he had any knowledge of the fraudulent acts of those from whom he received the securities.

It was his misfortune to have taken a mortgage, which, by the laws of this State, is absolutely void, leaving him with only his remedies against the party from whom he received it.

I think the judgment must be sustained, and am, therefore, in favor of its affirmance, with costs.


author: Monell, J.

text:
    CLINE QUIGLEY, Plaintiff, v. ELWOOD WALTER, Defendant.

      [Decided December 31, 1869.]
    , The Code has changed the rule In respect to actions upon a joint and several contract.
    Where defendants are jointly liable, the plaintiff may proceed against such as are served, and obtain a joint judgment against all, which may be enforced against their joint property, and against the separate property of the defendant served.
    Upon a several liability the plaintiff may proceed against the defendants served in the same manner as if they were the only defendants.
    Upon a contract both joint and several, one or more, and less than the whole, of the contractors may be sued.
    Previous to the Code upon a joint and several liability, each must have been sued separately, or all jointly. Two, or any greater number less than the whole, could not be sued in the same action.
    In action against two of four trustees of a corporation, upon a liability joint and several—held, not a misjoinder under the Code.
    Before Barbour, C.J., Monell and Freedman, JJ.
    This ease was tried before Hr. Justice Fithian and a jury.
    The Blacldieath Goal Company, incorporated under the general act for the incorporation of mining companies, was indebted to the plaintiff for goods sold and delivered.
    There were four trustees, and the company had failed to make and file an annual report, as required by the statute, whereby the trustees became jointly and severally liable for the debt.
    Two only of the trustees, namely, Joseph F. Joy and El wood Walter, were named as defendants in the summons and complaint. Walter alone was served. Joy was not served, nor did he appear in the action.
    Walter, the party served, answered, alleging that the plaintiff ought not to maintain the action, because at the time of the sale and delivery of the goods to the company, William H. Ashfield and Silas B. Dutcher were, jointly with the defendant, trustees of said company, and were living and within the jurisdiction of the court.
    At the trial the defendant moved to dismiss the complaint, on the ground that the suit was brought against two of the trustees? without joining the others. Thereupon, the plaintiff moved to amend by striking out the name of Joy, alleging that he had not been served. The motion was denied.
    The court directed a verdict against Walter only.
    The only exceptions by the defendant were to “ the refusal of the judge to dismiss the complaint ” (although the ease does not show amy sueh refusal, except inferentiaUy, perhaps), and to the rejection of some evidence offered.
    These exceptions were ordered to be heard at the G-eneral Term.

      Mr. Alfred Dickinson for defendant.
    This is a common-law action, and not an action under the statute. The statute merely declares the liability of the trustees (jointly and severally) in certain casps for the indebtedness of the corporation, and leaves the enforcement thereof subject to the common-law rules and practice (Corning v. McCullough, 1 Comst., 47).
    The right of action is founded on contract. The goods were delivered to the corporation upon the promise, express or implied, that the corporation would pay for them. That was a contract, and the 35th section of the act merely declares that the trustees on their failure to file and publish the annual statement, as therein provided, shall be liable for the debts of the corporation. It does not declare in what manner an action may be commenced against them, but merely declares that they shall be “jointly and severally ” liable.
    By the rule of the common law in actions of contract, persons jointly or severally liable must be sued severally or all must be joined in the action. And if more than one is made defendant and not the whole, the defendant’s answer of non-joinder is good in abatement (1 Chitty Pldgs., p. 30, and authorities therein cited; Strong v. Wheaton, 38 Barb., 623).

      The words “jointly and severally” have a, legal meaning, and wherever found must receive the construction they have always received, and the course of legal proceedings and pleadings thereunder for the enforcement of rights against persons so liable must conform to the law so settled and established, except so far as the Legislature by special act shall have altered them.
    bio alteration has been made in this by the Legislature. Section 120 of the Code, which prescribes that persons severally liable upon the same obligation, etc., does not apply,to a case of this kind (Strong v. Wheaton, 38 Barb., 616).
    The practice in all cases not excepted by the 120th section of the Code, must be governed by the old settled and established rule and practice.
    In making the trustees liable for the debts of the corporation, the Legislature did not alter nor intend to alter that rule, but having used the words only, they left them to be applied under the settled practice of the courts.
    This is held in the case of Strong v. Wheaton (38 Barb., p. 623), in an action against stockholders of a corporation, and the reasoning applies with full force to this case.

      Mr. George C. Genet for plaintiff.
    The offer of defendant to prove that the company had published its annual report, and delivered it to some one of their number to file, whom they did not pretend had done so, was immaterial, and properly excluded.
    The offer to prove that a judgment had been recovered against the company in Pennsylvania, and its property there sold thereunder, was also wholly immaterial, and properly excluded (Parsons v. Eureka Powder Works, 18 N. H. R.)
    The motion to dismiss the complaint on the ground “ that the suit was brought against two of the trustees without joining the others, wherefore defendant was entitled to judgment in his favor on his plea of non-joinder, otherwise that the action could not be sustained against the defendant Walter,” was properly denied.

      By section 12 of the act of 1848, defendant Walter was separately liable for the plaintiff’s debt.
    The rule formerly was that if there was a joint and several liability, and plaintiff by uniting two or more defendants had elected to treat it as a joint liability, he must be held to it, and could not recover against defendant on his individual liability (19 Wend., 644; 3 Hill, 476; 4 Hill, 37).
    But this rule has been changed by§§ 136-274 of the Code, which allows a separate judgment whenever a separate suit might have been brought, or a separate liability is shown by the evidence (Marquat v. Marquat, 7 How. P. R., 426; 2 Kernan, 340; 15 Barb., 528; 16 Barb., 33; 28 Barb., 666).
    This is not a contract debt. It is an action for a penalty for which each of the trustees is liable and all are liable collectively. It is an action to recover a penalty imposed by statute.
    It is an action rather ex delicto than ex contractu. The defendants are tort feasors rather than contract debtors. Plaintiff was not bound to prosecute all; and although a plea in abatement is permitted in case of the non-joinder of debtors, the privilege does not extend to tort feasors; all are regarded as principals, and neither the omission to sue all, or, if all are sued, the dismissal of one of them from the suit, can be pleaded by the other parties i'n bar (Bailey v. Berry, 8 Am. Law Reg., p. 273).
   By the Oourt:

Monell, J.

The question presented by the motion to dismiss the complaint, assuming the exception to be sufficient to raise it, is whether, in an action nominally against two of four trustees, and one only served, a judgment can be rendered against such one.

The liability created by the statute is joint mid several. Previous to the Code, upon such a liability the plaintiff could proceed against the parties jointly, or against each party separately. Two, or any greater number less than the whole, could not be sued in the same action.

The Code has, I think, changed the rule. The provisions of ithe 136th section apply to defendants jointly as well as severally liable. Where defendants are jointly liable, the plaintiff may proceed against such as are served, and obtain a joint judgment against all, which may be enforced against their joint property, and against the separate property of the defendant served. Upon a several liability, the plaintiff may proceed against the defendants served in the same manner as if they were the only defendants.

These provisions are not new; they existed before the Code (2 R. S., 377, section 1, Sess. Laws, 1833, p. 395; section 3, id., 1835, p. 248), the only difference being, that the Code is extended to all contracts creating a several liability. The third subdivision, however, is new, and was designed to relieve parties from the consequences of failing to prove a joint liability, which formerly was an inevitable nonsuit. Under that subdivision all the defendants must be served. Then judgment may be taken against any or either severally, if the plaintiff would have been entitled to such judgment if the action had been against such defendant alone. Such is the construction of the third subdivision by the Court of Appeals in the recent case of Fielden v. Lahens (6 Abb. Pr. R., N. S., 341, 349), which follows the earlier case of Blodgett v. Morris (14 Abb. Pr. R., 486). In the latter case the court say that the provision applies to all actions, whether they be upon a joint liability only, or one which is both joint and several; that the object of the provision was to prevent a non-suit where a cause of action was made out against some, although not against all of the defendants, and that it was not intended to change the law in any other respect, but simply applies to actions upon contract the same rules which at common law were applied to actions for torts.

Upon a joint obligation, all the obligors must be sued. If less are sued, the non-joinder of the others can be successfully pleaded in abatement. Upon a several obligation, the rule is so far otherwise that the plaintiff may have a several judgment, although there is nothing in the provision expressly authorizing a suit against two or more, and less than the whole of the obligors severally liable.

But the 120th section is yet more explicit. It provides that persons severally liable upon the same obligation may all or any of them be included in the same action.

The effect of this section upon the contmon-law rule has-been declared in several cases. In De Ridder v. Schermerhorn (10 Barb., 640), the court say a plaintiff is now allowed, upon a joint and several contract, to sue any one or more in the same action. That case did not, however, necessarily require a construction of the 120th section, as the action was upon, an alleged joint contract. But the design and effect of the section was illustrated by the case of a joint and several contract. But Brainard v. Jones (11 How. Pr. Reps., 569) was upon a joint and several agreement. Two only of the contractors were sued, one of whom demurred, on the ground of the improper non-joinder. The court sustained the action, overruling the demurrer, under the section referred to. The only question in that case was, whether the section was not confined to actions upon bills and notes, and it was held not to be.

And in Harrington v. Higham (15 Barb., 528) it is said that under the 274th section (which must be taken in connection with the 120th and 136th sections) there may be a judgment against one or more, whenever a several judgment, upon the facts of the case, would be proper. This is allowable, irrespective of the character of the complaint, whether it alleges a joint or several liability. The true criterion now is, the court say, whether a sepa/rate action might home been maintained. H it could, a several or separate judgment is proper.

In Parker v. Jackson (16 Barb., 33), which was an action upon a joint and several promissory note, the section received the same interpretation, although the precise question was not involved.

In Strong v. Wheaton (38 Barb., 616) the action was against stockholders of a corporation to enforce their individual liability, which was'-joint and several. On the trial it appeared that some only of the stockholders had been sued. The objection of misjoinder was taken, and overruled on the ground that it should have been set np in the answer. The court sustained that ground of the decision and conceded that the rule of the common law had been changed. The decision in Brainard v. Jones (supra) was approved, and held to apply and govern that case, if the subject-matter of the action was an obligation or instrument. It was held not to be, and, therefore, not reached by the 120th section.

If the case at bar rested wholly under that section, it might be said of it, that the cause of action, which is similar to that in Strong v. Wheaton, was not reached by the section. But, without interfering with that decision in which the second subdivision of section 136, as well as the 274th section, is entirely overlooked, it is enough that in actions against defendants severally liable, it is expressly provided in the section referred to, that the plaintiff may proceed against such as are served as if they were the only parties proceeded against.

This general effect of all the sections referred to, is given in the case of McIntosh v. Ensign (28 N. Y. R., 172).

If the remark in Blodgett v. Morris (supra), that it was intended to apply to actions on contracts the same rules which at common law were applied to actions for torts, is correct, then it is clear no misjoinder or non-joinder of defendants can be alleged in abatement. Under the former practice a non-joinder of defendants in the latter class of actions could not be taken advantage of in any way (Rose v. Oliver, 2 John R., 365; 1 Chitty Pl., 86; Brown on Actions, 314).

It seems to me, therefore, that the rule of the common law is changed, and if the liability is several, although it may be joint' also, the plaintiff may sue one or more and less than the whole of the joint and served contractors, and have a separate judgment against such as are served.

But there are other reasons why the verdict in this case should not be disturbed.

The defense of the non-joinder of Ashfield and Butcher was certainly unavailing, if Walter was the only trustee sued. Joy was merely named as a defendant. He was not served; he did not appear in the action, nor was he a necessary party, as the action would have been complete'against Walter alone. The defendant Walter cannot be presumed to have known of the non-service of process on his co-defendant, and he was, therefore, in a position to raise the question by insisting .upon the non-joinder of tile other trustees as a defense.

At the time the motion to dismiss the complaint was made, Joy was a party defendant to the record, and the question was properly raised, whether the action could be maintained; and had the motion been decided adversely to the defendant,, and an exception taken to the decision, we would have been required to place our decision upon that ground alone. But the case does not show that any decision was made or exception tahen, and we should not be allowed to supply the defect by conjecture or-presumption.

Immediately, as the case shows, upon the motion to dismiss being made, the plaintiff moved to amend, by striking Joy’s name from the summons and complaint. The motion was at first granted, but upon terms with which the plaintiff refused to comply. The motion was then denied. But the motion to dismiss does not appear to have been decided.

The court had the power to make the amendment (Code, section 173), and had the motion prevailed, no doubt could be entertained that the verdict against the remaining defendant would stand.

At the close of the trial, however, the court did, in effect, what it had previously refused. By directing the verdict against Walter alone, Joy was effectually dropped out of the case, and to such direction there was no exception.

The plea in abatement was a purely technical plea. It did not enter into the merits of the action, or affect the liability of the defendant Walter. Had all the trustees been named defendants, and Walter only served, the result would have been the same as if he had alone been sued; for there would be no practical difference in the judgment; and if there is any right to require contribution, it is equal in the two cases.

Being a merely technical defense, it should be judged strictly, and as the ease presented to the General Term contains no exceptions applicable to that question, there is nothing left of the defendant’s case, unless the exclusion of some evidence was error. As we find none, judgment should be entered for the plaintiff upon the verdict.


text:
    MARY M. DAVIS, Plaintiff and Respondent, v. ELIZA A. BANKS, Defendant and Appellant.

      [Decided December 31, 1869.]
    It is no defense to an action to recover rent, either that the premises were unfit for occupancy or became out of repair after the commencement of the term.
    A tenant may recoup damages for a breach of the landlord’s covenant to repair.
    There being no covenant by the landlord to repair, a parol promise to repair, being without consideration, is void.
    Where a tenant, to secure the payment of the rent» gave a chattel mortgage upon furniture—held, no ground for an injunction to restrain a foreclosure of the mortgage, that the premises were out of repair, and therefore no rent due.
    Before Babboub, C.J., Monell and Fbeedman, JJ.
    This was an appeal from an order granting an injunction, made at Special Term, by Mr. Justice McOunn.
    The defendant, by indenture, leased to the plaintiff certain premises in this city, for one year from the 1st of May, 1869, at a rent payable monthly, in advance. The lease contained no covenant on the part of the defendant (the lessor) to repair, but a covenant on the part of the plaintiff (the tenant) to keep the interior of the house and the plumbing and gas-pipes in repair, at her own expense.
    To secure the payment of the rent, the plaintiff gave to the defendant a mortgage on certain household furniture.
    A month’s rent became due on the 1st day of June, and another month’s on the 1st day of July. Both remaining unpaid, the plaintiff, on the 6th of July, was dispossessed of the premises under the landlord and tenant act, and the defendant seized the mortgaged furniture, and was proceeding to sell, when this action was brought to restrain the sale and to recover damages.
    The allegations of the plaintiff were, that in taking possession of the house she discovered that it was not in a tenantable condition, although it had been expressly represented to be so by the defendant. That the defendant agreed to fix the premises, and make them suitable for domestic purposes. That, failing to do so, and finding the defendant did not intend to keep her promise, and the premises being utterly untenantable and unfit for occupancy, the plaintiff surrendered the possession.
    Upon these facts, an order was made, at Special Term, for an injunction restraining the foreclosure of the mortgage, from which the defendant has appealed.

      Mr. O. L. Stewart for appellant.
    The justice erred in granting a perpetual injunction in this action.
    His authority could extend no further than to grant a temporary injunction, to hold during the continuance of the action (Code, sec. 219, parts 1 and 2).
    One of the objects for which this action was brought, was to obtain a permanent injunction restraining the defendant from disposing of or interfering with the personal property conveyed by the chattel mortgage. Until the hearing and determination of the suit, therefore, and certainly before answer, the court had no right to grant a permanent injunction. Whether or not the relief prayed for in the complaint should be granted, is to be determined only by the decision of the action itself.
    Upon the facts, as submitted to the court below, the plaintiff was not entitled to any relief in the nature of an injunction.
    The acts sought to be restrained are not unlawful. The mortgage under which the defendant claimed the property sought to be sold is valid, was given upon valuable consideration, and vests the title to the property in the defendant.
    No litigation is necessary to ascertain how much is due the defendant under the mortgage. The terms of the lease demising the premises to secure the rent of which the mortgage was given, sufficiently determine that question.
    It does not appear by the complaint that the plaintiff is entitled to the final relief demanded.

      Upon her own showing, no cause of action exists in her favor against the defendant. She rented premises for which she agreed to pay $250 per month in advance. She occupied the premises for the period of two months and six days. The rent for one month only, that of May, 1869, was paid; the rent due on the 1st day of June, and that due on the 1st day of July, was not paid.
    It is no defense to the claim for rent that the premises were unfit for occupancy (Edgarton v. Page, 10 Abb. Pr., 119; Moffat v. Smith, 4 Comst., 126; Tibbits v. Percy and an., 24 Barb., 39).
    If the premises were out of repair, it was the fault of the plaintiff, for she had covenanted to keep them in repair at her own expense.
    The act of April 13, 1860, chap. 345, has no application to this case. Under any circumstances, it does not relieve against rent due up to the time of surrender.
    In this case the plaintiff was compelled by legal process to surrender the premises in question. And if there had been a voluntary surrender and acceptance, it would not release the tenant from payment, of' the rent previously due (McKenzie v. Farrell, 4 Bosw., 192).
    In Bloomer v. Merrill (1 Daly, 485), it was held that the statute of 1860, chap. 345, applies only to injuries occurring after lessee’s entry, and not to those existing at the time of the lease.

      Mr. John R. Dos Passos for respondent.
    It is alleged, and not denied, that on the 6th day of July, the date of their abandonment by plaintiff, the premises were “ utterly mtencmtdble and unfit for occupancy.” •
    This brings the case directly within the purview of the act of April, 1860, which provides in substance that the lessees of any building which shall without their fault be so injured by the elements “ or amry other cause,” as to be “ untenantable and unfit for occupancy,” shall not be liable to pay rent “ after such destruction or injury,” and may thereupon quit the same.

      Conceding that the defendant, under the circumstances stated, had any claim whatever against the plaintiff, it could not at the utmost exceed the sum of $250—the rent for the month of June.
    The plaintiff averred, that a few days after occupying the house she complained of its untenantable condition to defendant, who promised and agreed to put the same in good order, and that upon the faith of this agreement plaintiff continued to occupy the house.
    It is true that plaintiff covenanted to make all repairs, but that obligation only applied to ordmia/ry repairs, and not to such as are within the meaning of the statute of 1860 ; and therefore the law will not consider the subsequent agreement of defendant, by which the burden of making the repairs was transferred to the latter, a nudum pactum.

    The original lease was altered and modified by parol, and agreements of a similar character have frequently been upheld by the courts (Monroe v. Perkins, 1 Pickering, 298, and cases cited; Lattimore v. Horsen, 14 Johnson, 380; Dearborn v. Cross, 7 Cowen, 48; 1 Greenleaf on Evidence, page 439).
    The defendant was not justified in attempting to sell the property mentioned in the mortgage upon a summary notice of three days.

    The mortgage stipulates that upon default in the payment of the rent, the property shall be sold according to “ statute.”
    There being no statute in existence regulating sales of this character, it is insisted that the phraseology must have been used to indicate and embrace the law governing sales of personal property by execution, which provides for a notice of six days.
    The policy of the law does not favor the summary sale of a debtor’s property, and where the terms of the instrument are ambiguous, all the time will be'given to prevent the same, that a reasonable construction will admit.
   By the Court:

Monell, J.

There was no covenant on the part of the defendant to keep the premises in repair, nor that the premises should he tenantable, or should continue so during the term. There was a covenant on the part of the plaintiff to do the repairs required inside the house.

It is no defense to an action for rent, either that the premises were unfit for occupancy, or had become out of repair after the commencement of the term (Howard v. Doolittle, 3 Duer, 464; Cleves v. Willoughby, 7 Hill, 83; Sherwood v. Seaman, 2 Bosw., 127; Post v. Vetter, 2 E. D. Smith, 284).

Had there been a covenant by the landlord to keep the house in repair, a breach of such covenant would have authorized a recoupment of damages by the tenant.

The parol promise, which it was alleged the defendant made, to put the premises in good repair, cannot be sustained for the want of a consideration. She was under no obligation to do any repairs, and her promise was a mere nudum ¡pactum.

It is possible that the condition of the premises would have justified the plaintiff in abandoning them under the statute of 1860 (Sess. Laws, p. 592, ch. 345). Had she done so, it may be that she would have been relieved from the payment of rent after such abandonment. But she would have remained hable for all rent due or accruing up to the time of surrender (McKenzie v. Farrell, 4 Bosw., 192).

It is entirely clear, I think, that the plaintiff is liable to the defendant for all rent due at the time she was dispossessed. She has not stated any fact which would constitute a defense to an action for its recovery.

Such rent having remained unpaid, there was a default in the chattel mortgage, and the title to the property passed absolutely to the defendant, and she had an undoubted right to sell it to pay the debt.

I am unable to perceive any ground upon which the injunction can be sustained. The order should, therefore, be reversed and the injunction dissolved.


author:
Barbour, C.J.
      Freedman, J.

text:
    CHARLES CARTER, Plaintiff and Appellant, v. ANDREW CLARK and Another, Defendants and Respondents.

      [Decided December 31, 1869.]
    The failure of the plaintiff, for more than four years, to put his cause upon the calendar, so that it could be brought to a trial when reached in its order, according to the course and practice of the court, entitles the defendant to a dismissal of the complaint, under the twenty-seventh rule of this court.
    To entitle the prevailing party to an allowance, under the 309th section of the Code, it is not necessary that a trial should have been had. It is enough that a defense has been interposed.
    Before Barbour, C.J., Monell and Freedman, JJ.

      Mr. Vine Wright Kingsley for appellant.

      Mr. Frederiele Smyth for respondents.

       Affirmed in Court of Appeals, October Term, 1870.

   By the Court:

Barbour, C.J.

This is an appeal from an order made in June, 1869, at Special Term, directing the dismissal of the complaint for want of prosecution, with costs, and an additional allowance of five per cent.

The action was in the nature of a creditor’s suit to set aside certain conveyances made by the judgment debtor, as fraudulent and void, and for the sale of the premises for the payment of the judgment.

Upon the motion the defendants showed, by affidavit, that the action was commenced in October, 1864; that issues were joined in March, 1865 ; and that in February, 1866, such issues were settled, and directed to be tried by a jury; but that the plaintiff had not placed the cause upon the calendar for trial, and younger issues had been reached in their regular order upon the calendar and tried.

The affidavit of the plaintiff’s attorney, read in opposition, stated that he was substituted in place of the original attorney in the latter part of 1867, when, finding that the suit was brought upon a judgment to set aside certain alleged fraudulent conveyances, he advised the plaintiff that the most speedy remedy to ohtam his claim was to examine the debtor upon an order supplementary to execution, and thereupon, and in 1867, he proceeded to examine the debtor and several witnesses, and that such examination is still pending at Chambers; that he has vigilantly prosecuted such examination from 1867 to the present time, and he believes that the same will show the judgment debtor has some $20,000 of property ¡real and personal, that should he applied hy the court to satisfy the judgment. The pleadings were not read upon the motion, nor is the amount claimed to be due upon the judgment stated in the affidavits; but as the Clerk, upon taxation of costs, has inserted $140 as the allowance of five per cent, upon the plaintiff’s claim, it may thence be inferred that the complaint claims $2,800 to be due upon the judgment. ISTo excuse is given for the failure on the part of the plaintiff to bring the cause to a trial except a statement in the affidavit of his attorney that the affiant, when substituted in 1867, supposed the cause was upon the calendar. The real reason for the delay is probably to be found in the same affidavit, where the attorney alleges that he has prosecuted the examination of the judgment debtor on supplementary proceedings until the present time, with the expectation to be able to satisfy said judgment, and necessarily terminate this suit thereby.”

Upon an examination of the calendar and records of the court, it appears that causes in which the issues were joined late in March, 1865, were reached in their regular order upon the calendar, and-tried as early as the month of October of that year, and it is believed that at every trial term held since that date causes have been reached in their order upon the calendar within five months after issue joined therein.

The evidence contained in the plaintiff’s affidavits does not show any excuse worthy of consideration for not proceeding in the regular way and bringing the action to a trial. There can be no doubt, therefore, that the failure of the plaintiff for more than four years to put his cause upon the calendar, so that it could be brought to a trial when reached in its order according to the course and practice of the court, entitled the defendants to a dismissal of the complaint, with costs, under the twenty-seventh rule of the courts, unless such dismissal would work an irreparable injury to the plaintiff; such, for instance, as might be caused by a removal of the equitable lien of a Us pendens in a suit of this character. In that case, it appears to me the court might properly, in the exercise of a sound judicial discretion, have permitted the plaintiff, by its alternative or conditional order, to proceed and try his cause at the then pending or next term, upon payment of costs. But the statement contained in the affidavit of the plaintiff’s attorney, to the effect that property has been discovered upon the supplementary examination to the amount of some $20,000, which ought to be applied to the payment of the judgment, showed conclusively that the continuance of a lis pendens lien in this suit was not necessary for the protection of the rights of the plaintiff. The dismissal of the complaint for want of prosecution was, therefore, right and proper.

The objection of the plaintiff to the allowance of five per cent, made to the defendants by the order is not well taken. To entitle the prevailing party to an allowance under the 309th section of the Code, it was not necessary that a trial should have been had. It was enough that a defense had been interposed, hi or was any notice required beyond what was contained in the order directing the plaintiff to show cause why the defendants should not have costs and farther relief. That entitled the defendants to move for an allowance, and we may assume, in the absence of evidence to the contrary, that such motion was made. So, too, as to the $10 awarded to the defendants as costs of the motion to dismiss. The costs of the motion were in the discretion of the court (Code, § 315).

The order appealed from should be affirmed, with costs.

Freedman, J.

(concurring). Since the decision in Schroeder v. Kohlenback (6 Abb., p. 66), the twenty-third rule of 1849, and subsequent twenty-first rule of 1852, which was left out in the revision of the Rules in 1854, has been re-enacted and in force as rule twenty-seven since October 1, 1858. A defendant, therefore, is just as much at liberty now as, according to the decision in Roy v. Thompson (1 Duer, 636), he was in 1852, to move under the rule for a dismissal of the complaint in all cases where the plaintiff has neglected to bring the cause to trial according to the course and practice of the court (Bowles v. Horne, 11 Abb., 84; 19 How., 346).

As it does not appear that the defendants in the case at bar claimed affirmative relief, it cannot be said that the duty of bringing the cause to trial devolved upon them. They applied for and obtained simply an order dismissing plaintiff’s complaint. It is not to be denied that a too strict enforcement of the rule may sometimes be made to work injustice, and nothing but a strong and clear case could induce me, while sitting at Special Term, to turn a plaintiff out of court in this summary manner. But the policy of the law always is to end litigation; and whether a motion under the rule referred to shall be granted absolutely or conditionally, or shall be denied, is a question to be determined by the justice presiding at Special Term upon the particular circumstances of each case and in the exercise of a sound judicial discretion. An abuse of this discretionary power may be reviewed and corrected by the General Term; but if the question be one of mere propriety, the General Term should not interfere. The papers submitted on this appeal show that the affidavits read on the motion below by both parties presented a case within the rule warranting the order as made, and the order, therefore, should not be disturbed.

As to the extra allowance and costs granted by the same order, I fully concur in the views of the learned chief-justice.

The order appealed from should be affirmed.


author: Freedman, J.

text:
    HENRY M. FIELD, Plaintiff and Respondent, v. JAMES STEWART and JOHN H. MASTERTON, Defendants and Appellants.

      [Decided March 5, 1870.]
    No appeal lies from an order denying a motion to compel a party to make his pleading more definite and certain, and to strike out irrelevant and redundant matter contained therein.
    Before Monell, Freedman, and Spencer, JJ.

      Mr. F. FT. Ba/ngs for appellants.

      Mr. Dudley Field for respondent.
   By the Court:

Freedman, J.

TMs is an appeal from an order made at Special Term denying the motion of the defendants to compel the plaintiff to make his complaint more definite and certain, to state two canses of action, alleged to be contained in one count, separately, and to number the same, and to strike out irrelevant and redundant matter therefrom.

The denial of the motion was a matter resting in the discretion of the judge below, and relates to a mere matter of practice or form of proceeding; it does not involve the merits of the action or some part thereof, and the order, therefore, is not appealable (Whitney v. Waterman, 4 How., 313; St. John v. West, 4 How., 329; Bedell v. Stickles, 4 How., 433; Salters v. Genin, 10 Abb., 478; 19 How., 233).

Nor does the order, as made, affect a substantial right, for a party cannot be said to have a substantial right to what a court has a discretion to grant or withhold. The Legislature must have-intended, by a substantial right, a fixed, determined right, independent of the discretion of the court, and of some value. Such a right must exist, and be injuriously affected by an order, to bring a case within the third subdivision of sec. 349 of the Code (Tallman v. Hinman, 10 How., 90).

The appeal should be dismissed with costs.


author: Monell J.

text:
    THE CENTRAL NATIONAL BANK OF THE CITY OF NEW YORK, Plaintiffs and Respondents, v. GEORGE D. ARTHUR and WILLIAM H. ARTHUR, Defendants and Appellants.

      [Decided March 5, 1870.]
    Since the law authorizing the examination of parties as witnesses, there is no difference between such witnesses and any other witness in respect to the manner of bringing them into court, or of their examination.
    To bring a party into court to testify, merely, a subpoena ad testificandum is necessary. To compel him to produce books or papers, a subpoena duces tecum is proper.
    The process is the same upon the examination of a party before trial, as at the trial, except that a summons is substituted for a subpoena where the party is merely to be examined as a witness before trial. If his books, etc., are required a subpoena duces tecum must be served.
    Before Monell, Freedman, and Spencer, JJ.
    Appeal from an order made at Special Term by Mr. Justice Jones.
    The action was to recover money received by the defendants to the plaintiffs’ use.
    After issue joined, the defendants were summoned by one of the judges of this court to be examined as witnesses before the trial, at the instance of the plaintiffs. The defendants were at the same time served with a subpoena duces tecum, requiring them to produce at such examination the ledgers and other books of their firm which contained any entries of accounts with one William H. Sandford.
    The defendants on such examination refused to produce their books. Thereupon the court adjudged them guilty of contempt . and ordered that an attachment issue.
    The defendants appealed.

      Mr. Joseph S. Bosworth for appellants.
    Prior to the Code, a party to an action at law could not be examined as a witness therein, either in his own behalf or at the instance of the adverse party. The only mode by which one party could obtain the testimony of the other, was by a bill of discovery filed in the Court of Chancery.
    The .Revised Statutes conferred power on the Supreme Court to compel, by order, the production and discovery of books and papers, being governed therein “ by the principles and practice of the Court of Chancery, in compelling discovery” (3 R. S., 5th edition, 293, sections 60-63 sections 21-24; Hoyt v. American Exchange Bank, 1 Duer, 652).
    Chapter 5 of the Code (3 R. S., 569, 570, section 388, sections 341-352) also conferred powers on the court before which an action is pending, to compel an inspection and copy of books and papers in the possession of a party containing evidence relating to the merits.
    The Code (chapter 6, 3 R. S., 570, section 389) abolished the bill of discovery, and provided for the examination of a party, but enacted that there shall not be any examination of a party had on behalf of the adverse party, except in the manner prescribed by this chapter (chapter 6, section 388).
    Section 390 provides for examining a party at the trial, or conditionally or upon commission. If examined conditionally, or upon commission, it must be done in the same manner, on the same grounds, and by virtue of the same proceedings as any other witness would be examined.
    Section 391 gives to either party a right to examine the adverse party before the trial, instead of at the trial, in the cases and in the manner specified in that section.
    When examined under that section, his attendance is to be compelled in the same manner, and his examinations to be taken and filed in the same manner “ as a witness who is to be examined conditionally ’’(Code, section 392).
    A witness, to be examined conditionally, must be summoned by a “ summons ” to be issued by the officer granting the order to attend before such officer (3 R. S., p. 675, section 10).
    If'the witness does not obey the summons the officer may issue his warrant to the sheriff of the county to apprehend the witness, and bring him before such officer to be examined (3 R. S., p. 684, sections 59, 60, 61).
    The summons, like an ordinary subpoena, only requires the witness to appear and be examined. The statute relating to the conditional examination of a witness out of court, relates to a special proceeding, and nothing can be done which is not clearly authorized.
    There is in this case no subpoena of any kind, and of course there is no subpoena duoes teovm. A summons, and on disobedience to that, a warrant to the sheriff, is the process.
    The first article of the 3d title of chapter 7 of the 3d part of the Eevised Statutes specifies four cases in which a summons may issue to compel the attendance óf a witness, and the contents or requirements of a summons in each case is the same, viz., “ to appear and testify.”
    A witness to be examined conditionally, is to.be summoned, not subpoenaed (3 R. S., p. 675, section 10; Norton v. Abbott, 28 Howard P. R., p. 388; Woods v. De Figaniere, 1 Robertson, p. 659; Green v. Herdes, 30 Howard P. R., p. 210).
    Even when a subpoena duoes teoum has been lawfully issued, and duly served, a witness cannot be compelled to bring into court papers or books not relating to the merits of the action.
    A party, to obtain an attachment for disobedience, must show, grima facie, that the papers required to be produced relate to the merits (Cowen and Hill and Edward’s Phillipps on Evidence, vol. 2, p. 814, note 531; Graham’s Practice, p. 265, ed. of 1836). That was not shown in this case.

      Mr. Augustus F. Smith for respondents.
    The Code, by section 390, is explicit in allowing an examination of a party in three cases, viz., at the trial, or conditionally, or upon commission.

      In the session of the Legislature before the Code, the right to examine a party was given, but the right was confined to the three cases above mentioned.
    When the Code was passed it gave also, by section 391, the right to examine a party before the trial (see notes to original Code, pp. 244, 245).
    Section 391 has no words that limit the right of a party to examine his adversary before the trial. Certainly he may then examine him precisely as he could at the trial. It has never yet been claimed that upon an examination at the trial, the party could not be compelled to produce his books and papers by a subposna duees teoum (Bonesteel v. Lynde, 8 How. Pr. R., 226).
    The opposition to compelling a party to produce his books upon an examination, has its origin in the deep-seated prejudice of lawyers educated at the common law, to oblige a party to give evidence against himself. But that prejudice is fast disappearing, for in truth there is no reason, in morals or propriety, why a party should be permitted to prosecute or defend a suit while he knows a fact which should defeat his claim, nor why, knowing such a fact, he should not be compelled to disclose it upon his oath.
    This prejudice is very apparent in the opinion in the case of Woods v. De Figaniere, 16 Abb., 159, but besides that the opinion is subject to these criticisms.
    The question of the right to have the books and papers before trial has repeatedly been decided in favor of the right. The first case cited was in the General Term of this court, in 1862, before the six judges (The People v. Dyckman, 24 How., 222; Jarvis v. Clark, 12 Legal Obs., 129, 131, 132; Garighe v. Losche, 6 Abb., 284, 5; Brett v. Bucknam, 32 Barb,, 655; Bonesteel v. Lynde, 8 How., 226).
    Upon the question of the right to examine a party without stating any special reasons, see Partin v. Elliott, 2 Sand. S. C. Rep., 667; Taggard v. Gardner, ibid.; Green v. Wood, 6 Abb., 277; Cook v. Bidwell, 17 Abb., 300, and Horton v. Abbott, 28 How., 388.
   By the Court:

Monell J.

The only question which it was proper for the justice at the Special Term to examine upon the motion made there, and which also is the only question which we can look at on this appeal, was, whether the court had power to enforce the mandate of a subpoena duees teeum, by requiring the production in court of the specified books.

The defendant placed his refusal upon several grounds, nearly all of which related to the competency of the evidence. Such objections could not be considered until the evidence was produced, and as all the preliminary proceedings for the examination of the party were properly taken, the sole question was, whether the command of the writ should be obeyed.

I do not understand that it is claimed that, since the enactment of laws authorizing a party to an action to be examined as a witness at the instance of an adverse party, there is any difference or distinction between parties to the action and other witnesses, either in respect to the manner of bringing the witnesses into court or of their examination when there. The very explicit, language of the Code (sec. 390) forbids any such claim. It is, that such examination shall be subject to the same rules of examination as of any other witness.

It is, however, insisted that upon an examination of a party before trial, the court cannot compel Him to produce his books, on the ground that, inasmuch as such examination is to be conducted in all respects like the conditional examination of an ordinary witness under the provisions of the Revised Statutes, that statute does not confer the requisite power.

The question is, therefore, unembarrassed by any of the several provisions of law in respect to the production before trial, or the inspection of books and papers in actions at law, or by any of the principles of equity relating to bills of discovery.

The only authority to compel the attendance of a party to an action to be examined at the instance of an adverse party, is found in section 392 of the Code, which provides that he may be compelled to attend “ in the same manner as a witness who is to be examined conditionally.”

If, therefore, the court can compel any witness upon a conditional examination to produce books or papers, it follows that the authority may be asserted over parties.

The tenth section of the act in relation to taking conditionally the testimony of witnesses, provides that the officer granting the order may compel the attendance of the witness, “ by issuing a summons for that purpose,” and enforcing the same in the manner prescribed (2 R. S., 393).

The forty-seventh section of the same title (p. 401) provides, that if a witness so summoned shall fail to attend, or, attending, shall, without reasonable cause, “ refuse to be examined or to answer amy legal andpertinent question” he may be committed to the common jail, etc.

There is no doubt, I think, that a “summons” issued by the officer is the only process which can be used upon conditional examinations to bring a witness before the officer. The general power which is vested in courts to issue process of subposna requiring the attendance of a witness (2 R. S., 276, sec. 1) has no application to a conditional examination, so far as relates to the mode of securing his attenda/nce.

It will therefore be seen that a summons in one case, or a subpoena ad testificandum in another, is and can only be used to secure the attendance of a witness. Its functions and powers then cease. To secure any thing more than mere attendance something besides a summons or subpoena must be used, namely, a subpoena duces tecum.

Mr. Phillipps, in his Treatise on Evidence, says (1 Phil. Ev., 3): “ This writ of subpoena duces tecum, as well as the other writ of subpoena ad testificandum, is compulsory upon the witness. And though it will be a question for the consideration of the judge at the trial whether in any particular case the actual production of writings should be enforced, yet the witness ought always to have them ready to be produced, if required, in obedience to the judicial mandate. From the earliest times our courts of law, in order to give effect to their proceedings, have resorted to these compulsory measures for the production of evidence—measures obviously essential to the existence and constitution of courts of justice.”

The propriety of this writ was considered by Lord Ellen-borough in Amey v. Long (9 East, 473), where the obligation to obey writs of that description is fully recognized. •

I am not aware of any statute giving to- or regulating the power of the court in respect to this writ. The power to issue it is not derived from any statute, but is assumed as one of the general or incidental powers necessary to the administration of justice (Bull v. Loveland, 10 Pick., 9, 14), the general statute, as we have seen, not authorizing the issuing of any such writ.

It cannot therefore be doubted that, upon a trial in a court of justice, the compulsory writ of subpoena duces tecum may be issued under the general powers of the court, and its obedience enforced.

In like manner, and under the same authority, the writ may be issued at any time. All the reasons which have sustained the exercise of the power at one time apply with equal force to its exercise at any other needed or appropriate time; and therefore, if it can be issued at the trial, it can also be issued before the trial, upon taking conditionally the testimony of any witness.

And although, to secure the attendance of a witness for such examination, a summons and not a subpoena is the proper process, as in other cases a subpoena would be, yet for the purpose of obtaining proferí of books and papers a subpoena dacces tecum must in all cases be issued.

My conclusion is, that upon taking conditionally the testimony of a witness, he may be required by a subpoena duces tecum to produce any books or papers specified in the writ.

And this applies as well to parties to the action as to any other witness.

The decisions' uniformly, with, I think, a single exception, sustain this view (Bonesteel v. Lynde, 8 How. Pr. R., 226, affirmed by General Term, id., 352; People v. Dyckman, 24 id., 222; Lefferts v. Brampton, id., 257, 262, 263; Morrison v. Sturgis, 26 id., 174,179 ; Lane v. Cole, 12 Barb., 680; Brett v. Bucknam, 32 id., 655; Garighe v. Losche, 6 Abb., 284; Jarvis v. Clerk, 12 N. Y. Legal Obs., 129; Mitchell’s case, 12 Abb., 249, 262).

The only adverse decision was at Special Term (Trotter v. Latson, 7 How. Pr. R., 261), which has since been overruled by the same court in General Term (Brett v. Bucknam, supra).

Disobedience to the mandate of such a writ can be punished as for a contempt, and any party aggrieved may also have an action for damages (Note 5, Cow. & Hill Notes, vol. 3, p. 11).

The affidavit upon which the application for the examination was founded was sufficient and contained all that is required in Green v. Herder (30 How. Pr. R., 210).

There was no error, therefore, in adjudging the defendants' guilty of a contempt, and ordering an attachment therefor to issue.

The order should be affirmed, with costs.