author: By the Court. Duer, J.

text:
    Calvin E. Hull, Respondent, v. Thomas Carnley, Sheriff, and Joseph H. Colton, Appellants.
    (Before Oakley, Ch. J., Duer, and Paine, J.J.)
    March 8.
    March 26, 1853.
    Where, by the terms of a chattel mortgage, the mortgagee has an immediate right of possession, the property cannot be levied on and sold under an execution against the mortgagor.
    But where the mortgagor has a right of possession for a limited period, the weight of authority is, that Ms possessory interest is a proper object of levy and sale.
    The sale, however, in this case, must be confined to the interest of the. mortgagor, for if the sheriff, having notice of the mortgage, sell the entire property as that of the mortgagor, he renders himself liable to the mortgagee, at least to the extent of the mortgage debt.
    A provision in a mortgage that the mortgagor may retain the possession until a default in the payment of the debt, is no evidence of a trust, affecting the validity of the mortgage.
    If the continual possession of the mortgagor under such a provision is any evidence of fraud, it only raises a presumption that may be repelled, and the finding of a jury or judge negativing a fraudulent intent, is conclusive.
    Upon these grounds judgment for plaintiff affirmed with costs.
    Appeal from a judgment at special term, in favor of the plaintiff.
    The cause, hy the consent of the parties, was tried hy the Chief Justice without a jury, in October, 1852. The action was brought to recover against the defendants the value of three lithographic presses and fourteen lithographic stones, and the following are the material facts, as stated in the pleadings, and established by the evidence.
    On the 14th of August, 1850, one Francis Michelin executed and delivered to the plaintiff a chattel, mortgage, covering the presses and stones in question, to secure the repayment of $230 —$100, with interest, in six months, and the residue in one year from the date of the mortgage; and, by an express provision in the mortgage, Michelin, until a default in payment, was to continue in the quiet possession of the property. On the day of its execution and delivery, a true copy of the mortgage was filed in the office of the Clerk of Kings County, where Michelin resides.
    On the 28th of September,'l'SSO, the defendant, Colton, recovered a judgment against Michelin, in the Court of Common Pleas, for $488.46; and immediately issued an execution thereon, which was delivered to the defendant, Camley, then sheriff of the city and county. By virtue of this execution, Carnley, under an indemnity from Colton, levied upon and sold the property so mortgaged, as belonging solely to Michelin. Previous to the sale, written notice of the existence and terms of the mortgage had been given to him, and he was forbidden to sell in prejudice to the rights of the plaintiff.
    The Chief Justice gave judgment for the plaintiff for $261.88-—the sum due upon the mortgage, with costs.

      E. W. Chester and A. J. Vanderpoel, for the defendants,
    insisted that thé property was subject to sale under the execution, and was rightfully sold; and, in support of their -argument, relied upon the following points and authorities.
    I. The sheriff, in levying, was bound to levy on the property in substance, and not upon a right or interest springing out of the property. The property, if rightfully subject to the mortgage, was sold subject to it, and was liable to pay the mortgage ■debt.
    H. The sheriff, in levying on property so circumstanced, is only to inquire whether he may lawfully seize and sell, but is not bound, either in levying or selling, to admit or decide upon the validity of the mortgage. Caveat emptor applies to the purchaser. He gets the right and title of the defendant in execution, not the right of a third person. The sheriff is liable to such third person, only in case his right is such that the levy is a trespass.
    HI. The sheriff was not a trespasser—the mortgagee having neither the actual nor constructive possession, nor the right of possession, could maintain neither trespass, trover, nor case. In •these actions was formerly to be found a remedy for every injury to personal property. The Code has created no new rights, but only changed the form of remedy for a wrong,
    IV". The sheriff has not, either in law or in fact, destroyed any right of the respondent to the property, nor created any difficulty in the assertion of that right. The property was all sold to one purchaser. In law the mortgage is just as effectual against the property as before the levy ; in fact, the property has been as much within reach of the mortgagee as if the levy had not been made. The property has been with the mortgagor, and at or within a few steps of its former situs ever since the sale. The purchaser has done no act in regard to it, that the mortgagor had not a full right to do. What wrong then has been done ? What injury or damage suffered?
    V. The sheriff did not give notice that he sold subject to the mortgage. If he had done so, would he have been less a wrong-doer ? He had no right to judge whether the mortgage was valid—whether it was bona fide—whether paid or unpaid. It was enough that he had the right to levy, sell, and give possession. Ought he to have given notice that he sold subject to the mortgage, provided it was valid? Whether he gave such notice or not, all knew that he- did so sell, and the mortgagee was not damaged, much less injured by such an unusual notice not being given. The levy is as much a trespass on the mortgagee’s rights with the notice as without.
    VI. If any one has a right to complain that the notice was not given, that the property was sold subject to the mortgage, it is the purchaser. But he pretends to no ignorance, and if the mortgagor is to be believed, he can well afford to pay the mortgage, since the value of the property sold was from $1600 to $1100, and it does not appear to have been sold for more than enough to satisfy the execution.
    VII. There is no evidence that the plaintiff was damaged, nor of any amount of damage, by the sale.
    VHI. If the respondent has a right of action, that right accrued on the day of sale, and was independent of the time when money was payable by the terms of the mortgage. The demand upon the sheriff after the sale, and paying over the money, was a nullity, and created no right of action.
    IX. The finding was contrary both to law and evidence, and ought to be set aside, and judgment entered for the appellant.
    X. The mortgage provides that until default be made in the payment of the said sum of money, the mortgagor is to remain and continue in the “ quiet and peaceable possession of the said goods and chattels, and in the full and free enjoyment of the same.” This is a “ trust for the use of the person making” the mortgage, and the statute declares it “ void as against the creditors existing, or subsequent of such persons.” (2 R. S. 135, § 1; Spies v. Boyd, 11th vol. Legal Observer, 54; Griswold v. Sheldon, 4 Coms. 581.) 1. This section is wholly independent of the subsequent provisions in Sec. 5 in the same title, and of the 1st section of Title 3, same chap., 7 (p. 137). 2. Under the Revised Statutes the distinction between an absolute sale and a mortgage of goods was abolished. A mortgagee acquires the same right to the immediate possession as the vendee in the case of an absolute sale. Continued possession by the mortgagee is in derogation of the legal nature of the conveyance. (2 R. S. 136, Sec. 5; Doane v. Eddy, 16 Wend. 523; Randall v. Cooks, 17 Wend. 53. 3. Where .the possession is in derogation of the legal nature of the conveyance, the law presumes it may be by a secret consent or agreement of the parties, and pronounces it fraudulent and void, unless the good faith of the parties and absence of fraudulent intent is made to appear. The law will only sanction it as a privilege granted by the mortgagee or vendee founded on motives satisfactory to a jury, or where the situation of the property forbids an actual taking of possession. But where on the face of the instrument by which the party places the legal title out of his own control and beyond the reach of his creditors, he retains to himself the right of possession and full and free enjoyment for a certain time, he creates a trust in the property for his own use, a right which the statute says he shall not have, and makes his act void. (Goodrich v. Downs, 6 Hill, 433.) 4. The right to possess and fully and freely enjoy personal property, necessarily gives the right to use it for its ordinary purposes and to enjoy its proceeds and benefits. The person exercising that right would -not be accountable to the owner for any injury to or destruction of his property, except for its abuse. At the end of the term the property may be worn out or of comparatively little value. It is hard to see how this would differ in effect from conferring upon the party the right to sell and dispose of the property as his own. (Griswold v. Sheldon, 4 Coms. 581; Spies v. Boyd, 11 Legal Observer, 54.)
    XI. The plaintiff did not prove the absence of fraudulent intent by facts and circumstances so as to overcome the presumption of fraud which the law raises from the seller remaining in possession. (Randall v. Parker, 3 Sandford, 69.)
    XII. Assuming that the mortgage is valid, the mortgagor having the right to the possession, the mortgagee’s only action would be in the nature of case for an injury to the reversion. This would only lie for an injury or a destruction of the property. The sale could not impair or affect the right of the mortgagee; his mortgage, notwithstanding the sale, remained a lien on the property in. the hands of the purchaser, and he could take it from the purchaser when his mortgage became due in the same manner as he could from the mortgagor. (Bank of Lansinburgh v. Crary, 1 Barb. S. C. 542; Hurd v. West, 7 Cow. 752; Gordon v. Harper, 7 T. R. 9; Van Antwerp v. Newman, 2 Cow.; Jackson v. Parker, 1M. and S. 234; 2 Saund. R. 47 (d.) (f.) and cases cited.)
    XHI. The demand on the sheriff of the goods, and his neglect to deliver them after he had rightfully parted with the possession, did not show any conversion by him or render him liable. The law makes it his duty to take the goods into his possession and deliver them to the purchaser. As well might they in this case have demanded the goods of the mortgagor and sued him for a conversion.
    XIV. There must be a demand of both defendants, and there is no proof that any demand was ever made of the defendant Colton. (Mitchell v. Williams & Roberts, 4 Hill, 13.)

      D. D. Field, for the plaintiff,
    in support of the affirmance of the judgment, insisted upon the following points and authorities.
    I. A bond fide mortgage of chattels, duly executed and filed, passes the legal title to such chattels to the mortgagee (Sto. on Bail., secs. 287,288, and cases there cited). In respect to title, the Statutes of this State have abolished all distinction between absolute sales and mortgages of chattels (Randall v.0Cook, 17 Wen. 523). It matters not that a mortgagor continues in possession of chattels mortgaged, or that /he has a right to hold such chattels for a definite period. He is simply a bailee until the condition of the mortgage has been complied with (Fuller v. Acker, 1 Hill, 473; Rogers v. Traders’ Ins. Co., 6 Paige, 583).
    II. The interest of a mortgagor, in such case, is- a limited, prescribed interest. His use, appropriation and possession of such chattels are limited and prescribed (Smith v. Acker, 23 Wen. 653). A sale, any interference with the title of the mortgagee, any act inconsistent with such prescribed use on the-part of mortgagor, would at once terminate his right to possession; and at all times the interest of the mortgagee is one which the courts will protect (Matteron v. Baucus, 1 Com. 295; Wheeler v. McFarland, 10 Wen. 318; Howland v. Willet, 3 San. Sup. C. Rep. 607).
    IH. A stranger claiming under mortgagor, can hold no more than his limitéd and prescribed interest. A levy upon, and sale of mortgaged chattels, under execution against property of the mortgagor, is an unlawful interference with the interest of the mortgagee, for which he has a remedy against the officer (Otis v. Wood, 3 Wen. 500; Bailey v. Borton, 8 Wen. 339 [see 347]; Butler v. Miller, 1 Com. 496).
    IV. The duty of the sheriff is well established. He should discriminate. If he does more than is necessary, under his authority, he is a trespasser (King v. Manning, Comyn R. [619 mar, page]; Waddell v. Cook, 2 Hill, 47; Melville v. Brown, 15 Mass. 82; Burrall v. Acker, 23 Wen. 609, &c.).
    V. The principle governing in case of sales of partnership property, under execution against property of one partner, or of property held by tenants in common, or joint tenants under execution, against property of a single tenant, is equally applicable to the case of a sale of mortgaged chattels under execution against the property of the mortgagor (White v. Phelps, 12 N. H. 382).
    VI. The sheriff, or officer, by levy upon and absolute sale . of chattels mortgaged, assumes, personally, the payment' and satisfaction of the mortgage.
   By the Court. Duer, J.

A chattel mortgage in all cases' vests the legal title in the mortgagee, and where, by the terms of the instrument, he has the immediate right of possession, the property cannot be rightfully levied on and sold under an execution against the mortgagor, even when the possession has not, in fact, been changed. In these cases the mortgagee is, in judgment of law, the absolute owner. The mortgagor a mere bailee at sufferance. (Marsh v. Lawrence, 4 Cow. 469; Otis v. Wood, 3 Wend. 500; and McCracken v. Luce, cited in the opinion of the court; Bailey v. Burton, 8 Wend. 346; Mattison v. Baucus, 1 Comst. 295.)

On the other hand, where the mortgagor is entitled to the possession for a definite period, the weight of authority seems to be, that his possessory interest is a proper object of levy and sale, and without meaning to commit ourselves by a positive opinion, we shall assume, for the purposes of this decision, that such is the law.

In this case, Ivlichelin, the mortgagor, by an express clause in the mortgage, was to continue in the possession of the goods and chattels mortgaged, until- a default in the payment of the principal debt, and it was during the period that he was thus entitled to the possession, that the levy and sale, which are the subject of the complaint, were made. The mortgage had previously, however, been filed, and the sheriff had also express notice of its existence and terms, and the question is, whether thus charged with notice constructive and actual, he has not rendered himself liable in the present action, by his proceeding to sell and deliver to the purchaser, the entire property as that of the debtor. If he is liable, the other defendant, the judgment creditor, under whose direction and authority he acted, must be equally so. If the claim and rights of the plaintiff as mortgagee have been disregarded and violated, they are jointly liable as wrong-doers.

The question as to the liability of the sheriff, we believe, has not arisen in any case, in all its circumstances, similar to the present, but it has arisen and been determined in several cases so strictly analogous, that, in principle, they are not distinguishable.

The leading case is Wheeler v. McFarland, 10 Wend. 320. The plaintiff had a lien for advances made by him to the judgment debtor on the property levied on hy the sheriff, who had notice of the facts, but who, nevertheless, proceeded to take possession of, and advertise for sale, the whole of the property, as belonging absolutely to the debtor. The court held that by thus acting, he rendered himself liable as a trespasser ab imitio, so as to entitle the plaintiff to a recovery against him in an action of replevin. It is true that the lien of the plaintiff in this case was created by a pledge, and not by a mortgage, but as the interest of a pledgor is just as liable to be sold under an execution as the qualified interest of a mortgagor (2 E. S., p. 366, s. 20), we cannot perceive that this distinction detracts at all from the weight of the decision, as a relevant authority.

So the interest of a debtor, as a joint owner or partner, may undoubtedly be sold under an execution against him, but if the sheriff, having notice, proceeds to sell the entire property, thus jointly held, as that of the debtor, it is settled by many decisions that he becomes immediately liable to the other joint owners or partners, who are entitled to recover against him in a suitable action, the property itself, or its value. (Walsh v. Adams, 3 Denio, 125; Waddell v. Coit, 2 Hill, 49; Mellville v. Brown, 15 Mass. 82; White v. Phelps, 12 N. H. R. 182; Johnson v. Evans, 7 Mann & G. 240.)

These decisions, as it seems to us, can only be explained and justified upon the ground that,-whenever it is known to the sheriff, or he has reason to believe, that the interest of the judgment debtor in the property upon which he has levied, is special and limited, it is his duty to declare the fact, and by express words, confine the sale to such right, title and interest, as the debtor may really possess. It is this doctrine, therefore, that we must now consider as established, and so far from thinking that goods covered by a mortgage can be justly excepted from its operation, we are clearly of opinion that it is to the relation of mortgagor and mortgagee, that it applies with a peculiar force. A mortgagee of chattels is in all cases the real owner, and the mortgagor, when permitted to retain the possession, simply his bailee. (Bancroft v. Jones, 4 Comst. 509; Fuller v. Acker, 1 Hill, 473; Rogers v. Traders' Ins. Co. 6, p. 583.)

And, as we before intimated, we seriously doubt whether a right of possession, which in its nature is strictly personal and incapable of transfer (for if a power of disposition is given to the mortgagor, the mortgage itself is fraudulent and void, 2 Oomst. 581), is a proper subject of levy and sale, under an execution, at all. Where fraud cannot be justly imputed, we see no reason why the rights and interests of a mortgagee ought not to be as carefully protected as those of a pledgee; and consequently, if a sale of goods and chattels, covered by a mortgage, is allowable at all under an execution against the mortgagor, it is evident that it ought to be so conducted as not to defeat, or in any degree impair, the remedy of the mortgagee. It should, therefore, comprehend the entire property as a single lot, be limited to the right and interest of the defendant, and be expressly subject to all the terms and conditions of his prior conveyance.

It is said, that when the property levied upon is in the possession of the mortgagor, the sheriff is not bound to inquire and determine whether the mortgage is valid or not—-in other words, he has a right to be silent, and cast the risk upon the purchaser. The reply is, that the duty of the sheriff to inquire and determine whether the defendant is an absolute owner, or has only a special and limited interest, is exactly the same, in the case of a mortgage as in that of a pledge or of a partnership—a pledge may be a cover for fraud, as well as a mortgage —the asserted partnership may not exist, or may not embrace the goods in question. The sheriff, however, in proclaiming the fact that a title is asserted by a third person, to which that of the defendant in the execution is subordinate, and in selling the property subject to this claim, determines nothing as to its validity—he merely pursues the course which the law judges to be necessary for the protection of rights and interests, which might otherwise be sacrificed or endangered; he cannot say that a mortgage duly tiled is a valid security, but he cannot treat it as not existing. He has no right to say that it is invalid by selling the property which it embraces, as belonging absolutely to the judgment debtor—it is at his own peril that he thus conducts the sale. As embracing a denial of the title of the mortgagee, it is an invasion of his rights, for which the law gives him an appropriate remedy. When the mortgage is valid, the sheriff is as much a trespasser and wrong-doer as if the judgment debtor had no interest in the property at all.

There is no force in the objection that the property is still subject to the mortgage, and as such, may be even now seized and sold by the sheriff. - In all cases where goods are wrongfully sold, the owner has an election to reclaim the property from the hands of the purchaser, or recover its value from the tortious vendor. If the sale made by the defendant was unlawful, we see no reason for denying this election to the plaintiff.

The result is, that the defendants must be answerable in damages to the full extent of the sum for which judgment has been rendered against them, unless the title of the plaintiff as mortgagee can be’ successfully impeached. If the mortgage, as has been contended, was upon its face fraudulent and void as against creditors, or was rendered so by the continued possession of the mortgagor, the property which it embraced was rightly sold under the execution, as belonging exclusively to the debtor. It is evident, from the fact that an indemnity was required and given, that it was upon the ground that the mortgage was wholly void, that the sale proceeded, and it is upon this ground alone that it can be justified. That the mortgage was founded upon a full and valuable consideration was clearly proved, and is not denied, but it is insisted that it was rendered void as against creditors by the provision which it contains, that until default in the payment of the moneys meant to be secured, the “ mortgagor should remain and continue in the quiet and peaceable possession of the goods and chattels which it embraced, and in the full and free enjoyment of the same.” The objection is founded upon the interpretation given by the counsel for the defendants to S,l, Tit. 2, of the Statute of Frauds (2R.S., p. 135), which declares that “ every conveyance, transfer, or assignment of goods and chattels, in trust for the use of the person making the same, shall be void, as against his creditors existing or subsequent;” but the learned counsel, we think, greatly erred in assuming that the stipulation to which he objected created a trust in favor of the mortgagor, within the meaning of the statute. Such a construction may very reasonably be given to 'a provision which not merely gives to the mortgagor for a time the right of possession, but authorizes him to deal with the property, during that period, as an absolute owner, nor have we any difficulty in assenting to the decisions in which, in such cases," this construction has been adopted (Wood v. Lowry, 17 Wend. 492; Griswold v. Sheddon, 4 Comst. 582; Spies v. Boyd, 11 Leg. Obs. 54). bn Such a case, it may be justly regarded as the established law. But when the provision is limited to the personal use and enjoyment of the property by the mortgagor, that it created no trust affecting the validity of the mortgage, was, in our judgment, expressly decided by the Court of Errors in Smith v. Acker (23 Wend. 653), and is a necessary inference from the opinions delivered in the Court of Appeals in the recent case of Griswold v. Sheddon.

The objection arising from the actual possession 'of the mortgagor will be disposed of in a few words. In this court it has uniformly been held that the continued possession of a mortgagor, when consistent with the terms of the mortgage, and limited to endure only until a default in payment, where the mortgage has been duly filed, is not even presumptive evidence of a fraudulent intent, nor are we aware that until the adoption of the Revised Statutes, it has ever been doubted that such was the established law, in this State, as well as in England. The immediate delivery of the possession is indeed essential to the validity of a pledge ; and its omission, where there is an absolute sale, as inconsistent with the nature of the contract, may be justly held to raise a presumption of fraud. But the main object of a mortgage, as distinguished from a pledge, is to enable the debtor to retain the possession and enjoyment of the property, so long as he fulfils the conditions of the contract, and this is just as true of a mortgage of chattels as of lands, nor can we believe that the Revised Statutes meant to abolish so important and vital a distinction—we cannot believe that it was the intention of the Legislature, in effect, to convert every chattel mortgage into a pledge. As the danger of fraud is now effectually guarded against by requiring every such mortgage to be filed (Laws of 1833, chap. 299), we are not at all disposed to favor a doctrine which is not only clearly opposed to the general understanding of those engaged in business, but plainly repugnant to their interest and convenience.

It is not necessary, however, to insist upon these views in the present case, nor to explain more fully the reasons which have led "us to adopt them. Let it be admitted that the act of 1833, requiring a chattel mortgage to be filed, as notice to creditors and purchasers, has not repealed these provisions in the Revised Statutes, upon which the argument is founded (2 R. S., s. 5, p. 136), and that, according to the literal construction of those provisions which the Supreme Court has adopted, an immediate delivery of the property, followed by an actual and continual change of its possession, is just as necessary in the case of a mortgage as of an absolute sale. When there is no such change of possession, it is only a presumption of fraud that is raised, and this presumption, by the express words of the statute, may be repelled by evidence that the mortgage was made “ in good faith, and without any intent to defraud creditors or purchaser.” This question, it is now settled,, is a question, not of law but of fact, and hence the finding of the judge, by whom alone this cause was tried, must have the same effect as that of a jury. He has decided, as á question of fact, that there was no fraudulent intent, and as the case is now before us solely upon exceptions of law, we are as much concluded by his decision as we should have been by the verdict of a jury.

The judgment at special term must therefore be affirmed with costs.


source: Caselaw Access Project

license: Public Domain

text:
    Douglas v. Mayor, &c., of New York.
    The plaintiff, in the year 1850, and for several years before, resided in a hired house in the City of New York, during the winter and spring, and at his country seat in the town of Flushing, Queens County, during the summer and ■autumn. In the winter of 1850, he was assessed in New York for a tax on his personal estate, and in the summer was assessed for a similar tax in Flushing, whieh he paid. He resisted the payment of the tax in New York, and filed his complaint to restrain its collection.
    fíeZtZ, that whether the domicil of the plaintiff was or was not at Flushing, he was a resident of New York, and liable to be taxed as such when the tax for city was assessed. Judgment at special term dismissing complaint affirmed, with costs.
    (Before Oakley, Ch.J., Duer and Paine, J.J.)
    March 10 ;
    March 26, 1853.
    Appeal from a judgment at Special Term, dismissing the complaint with costs.
    The object of the complaint was to restrain the defendants from collecting, by warrant or otherwise, a tax, amounting to more than $2,500, on the personal property of the plaintiff. The tax had been assessed upon him as a resident of the third ward of the city of Yew York, between the 1st of January and the 1st of April, in the year 1850, for his proportion of the taxes for that year, upon the valuation of his personal property at $200,000. The complaint alleged that a warrant for the collection of the tax had been issued, and that to relieve his property from a sale under it, the plaintiff had given his check for $2,502 41, the sum claimed to be due, and prayed as a part of the relief to which he was entitled, that the collection of the check might be restrained, and the check itself returned. The principal ground upon which the whole relief was demanded was, that the tax was illegal and void, the plaintiff when it was imposed being a resident not of the city of Yew York, but of the town of Flushing, in the county of Queens, in which town and county he alleged that for many years past, including the year 1850, he had been assessed for his personal property, and had paid the taxes assessed.
    The answer of the defendants admitted the assessment for the tax, its amount, and the issuing of a warrant for its collection, as set forth in the complaint, but averred that at the time the assessment for the year 1850 was made, in and for the city and county of Yew York, and during the whole of that time, the plaintiff was a resident and taxable inhabitant of the city, and liable as such to be assessed and taxed therein. This was, therefore, the only issue made by the pleadings.
    Before stating the proceedings and evidence upon this issue, it seems proper to advert briefly to the statutory provisions which have a bearing upon the question.
    The 5th section in Tit. 2 of the Revised Statute relative to the assessment and collection of taxes, provides “ that every person shall be assessed in the town or ward where he resides when the assessment is made, for all personal estate in his possession or under his control as trustee, guardian, executor, or administrator.” And § 8 of the same title requires the assessment to be made between the first days of May and July in each year. The Legislature, by an act passed on the 25th of March, 1850, amended the fifth section as above quoted, by adding, “ that in case any person possessed of such personal estate shall reside during any year in which taxes may be levied, in two or more counties or towns, his residence for the purposes and within the meaning of this section, shall be deemed and held to be in the county or town in which his principal business shall have been transacted” (Laws 1850, p. 142), The act “ to amend the charter of the city,” passed April 2, 1849, provides in § 22, that assessments for all taxes for the city and county shall thereafter be made between the first days of January and of April in each year ; but the time for making such assessments in other counties, as defined by the General Act, has not been altered.
    The action was tried as an equity case before Mr. Justice Duer, at a Special Term, in March, 1852. .Upon the trial, the town clerk of the town of Flushing proved, that the plaintiff had been assessed in that town for his personal estate, and had paid the taxes thereon in the years 1849,1850, and 1851; that he resided there when the assessments were made, and for several preceding years had lived there during the summer season.
    The counsel for the plaintiff then called as a witness,

      Robert Rmwiddie, who, being sworn and examined, testified that he was a merchant, and resided in the city of New York; that he had been acquainted with ¥m. Douglas, the plaintiff, for eleven years last past, during which period he had collected his rents, interests, and dividends, and attended to all of his financial business. That the plaintiff did no business. That Avitness deposited in bank, to credit of plaintiff, all moneys collected. That Avitness advised with plaintiff from time to time about his "business. For a number of years last past the plaintiff has gone to Flushing about the first week of May, and remained there until November. Plaintiff has a house at Flushing. Servants were left there during the winter. Plaintiff has some land at Flushing, close to the house. It is about eight years that he has been in the habit of spending his time during this part of the year at Flushing, always at the same house. Plaintiff is an unmarried man, and has never been married. From latter part of November to first week of May, he usually spends his time at No. 28, Park-place, in the city of New York. He has a house there ; it belongs to his brother. He rents it from his brother George ; he rents it for the year; there is no written lease. I have not been at his house in Flushing, when he was there.
    On cross-examination by defendants’ counsel, the witness testified that the plaintiff was about sixty years old. Before he procured this country seat at Flushing, he resided at No. 28, Park-place, New York. This was eight years ago, and before that time he resided at No. 28, Park-place, New York. He resided there, ever since I knew him, before he went to Flushing. He employs servants, and keeps house there. He takes his servants with him to Flushing, and part of his furniture. He keeps a servant in the house in Park-place, to take care of it all summer. I understand that he never was engaged in any business. His bank account is kept in the Bank of New York. My office is in the Exchange Building. He keeps his check-book at his house. My office is not an office for Mr. Douglas’s business. I deposit moneys to his credit, and keep the usual bank pass-book. I settle the account at the bank, and receive the checks, and return them to him. I keep books—not a cash book; I keep books, for him, as if he kept them himself. I render him a statement at the end of the year. He does not inspect the books himself. He has paid me a stated salary. He owns real estate in the city of New York ; some of it is rented, and some is vacant lots. He has bonds and mortgages and stocks. I have the bonds in my charge, and collect the interest. The stocks and mortgages he has in a box, which in the winter is at his house, and in summer he either takes down with him, or leaves it here. I attend to all his financial business. His fortune is principally invested in bonds and mortgages of property in this city, and real estate, lie has money out at Flushing, on bond and mortgage, on a farm there for $6,000. I have the bond; the interest is paid to me in this city. He has some lands at Flushing, near the house he occupies. He rents the house at Flushing the same way as the other from his brother George; I never saw a written lease of it. He has .20 or 30 acres of land there himself. I never heard of his raising vegetables for sale. I consult him from time to time ; I see him as occasion requires. I never pay any of his bills for household expenses. He comes to my office frequently ; he has no desk in my office, nor any place there under lock and key. He does not stay at Flushing altogether in the summer ; he is sometimes elsewhere. He frequently travels in the summer ; in the winter he generally stays here. In the summer he is absent for a day or a week. His absences are short; principally at Herkimer, the residence of his sister. I cannot tell how large tire house is at Flushing; I saw it when building; it is of stone or brick. Servants are left in the house in the winter. I never saw any of his, furniture go away from the house in Park-place. It looks bare in summer. The pictures are covered up, and not removed to Flushing, but remain at Park-place.
    On being re-examined by the counsel for plaintiff, the witness says: I merely act for Mr. Douglas, as before stated ; I was th.e book-keeper of the mercantile firm of George and John Laurie, and during all the time they continued in business, till 1st January, 1852. They then retired, and I and another gentleman succeeded them in business. I kept the books and papers of Mr. Douglas in the office of George and John Laurie, while they were in business, and in my own since. Mr. Douglas did not pay any part of the expense of that office at any time.
    The testimony being ended, it was admitted, that if the plaintiff was a taxable inhabitant of the city, the assessment, and all the subsequent proceedings, were regular.
    Among other questions argued by the counsel of the parties,' when the testimony was closed, was, that of the jurisdiction of the court, which the counsel for the Corporation strongly denied.

      The judge, on the last day of the term, delivered his judgment as follows :
    Doek, J.—The relief which is sought in this case is purely equitable, and it is therefore by the rules which courts of equity as such are bound to observe, that my decision must be governed.
    Yielding to the authority of the decision of the Court of Errors, in the case of The Mayor of Brooklyn v. Messerole (26 Wend. 134,140, per Nelson, C. J.), I am therefore constrained to dismiss the complaint for want of jurisdiction. That decision, in my judgment, established the principle that a court of equity has no power to review, and set aside as illegal, the proceedings of any subordinate tribunal of special and local jurisdiction, whether acting under a statute or the common law; the illegality of such proceeding being in all cases a question purely of legal, and never of equitable cognizance. It is true that in The Mayor of Brooklyn v. Messerole, the illegality, which was the ground of complaint, was apparent on the face of the proceedings ; but the judgment of Chancellor Kent, in More v. Smedley ( 6 John. Ch. R. 28), the authority upon which Chief Justice Nelson, in his opinion in the Court of Errors, chiefly relied, is in point to show that the objection to the exercise of any jurisdiction applies, with equal force, when the illegality can only be established by a" resort to extrinsic proof.
    Upon the intricate question of domicile, which was so ably and learnedly discussed by the counsel, I shall intimate no opinion ; I have, in reality, no right to consider it, and for obvious reasons have been careful not to form any definite opinion in relation to it.
    The complaint is dismissed with costs.
    Tire plaintiff appealed from this judgment to the General Term. The Appeal (March 10, 1853) was now heard.

      E. Sandford, for the plaintiff and appellant,
    insisted that the judgment at Special Term ought to be reversed and judgment be given for the plaintiff for the relief demanded by his complaint, and contended: That as the facts upon which the plaintiff relied, to establish his claim to be relieved from the payment of the tax in question, did not in any manner appear upon the face of the proceedings by which the defendants had created an apparent obligation to pay it, they constituted a proper ground for equitable relief, when there was a separate equity tribunal to administer that relief, on the ground that there was no adequate remedy at law. (Mayor of Brooklyn v. Messerole, 26 Wend. 134,137; Simpson v. Lord Howden, 6 Myl. and Cr. 97; Hamilton v. Cummins, 1 John’s Ch. R. 517; Van Doren v. The Mayor, &c., 9 Paige, 388-9.) The case of More v. Smedley, he urged, had no application to the present case, as the act complained 'of there was a legislative act of a Board of Supervisors, in the exercise of a portion of the political power conferred upon them, and the proceedings were voidable, and not void. (J. 6, C. R. 28, 31.) And that at any rate the Code had abolished the distinction referred to, so far as it had previously existed, and it is no longer an answer to a claim for specific relief, that if the complainant would wait, and suffer the injury which he seeks to avert, he might have a claim to compensatory relief. He is not to be denied relief on the ground that if he goes farther and fares worse, the facts which lie has exhibited to the court will entitle him to redress. If he can show any right to be relieved at all, he is entitled to the relief upon this complaint. The counsel then insisted that if the court had jurisdiction the title of the plaintiff to the relief which he asked could not reasonably be denied. He was certainly not liable to be taxed twice in one year. He was a taxable inhabitant of the County of Queens, duly assessed as such in the town of Flushing, and paid his taxes there. He was not a resident of .the City of New York, nor liable to be assessed as such, nor to pay the tax in question. In discussing this question the learned counsel entered largely into a consideration of the law of domicil, alleging that by the authorities to which he referred the town of Flushing was shown to be the plaintiff’s domicil, and that this fact being established fixed his residence there.

      A. J. Willard, for the corporation.

      L The plaintiff has mistaken his remedy. 1. The present action is governed by the rules of equity, applicable to injunction bills. 2. The subject matter of the present action never could have sustained a bill in equity. The courts of equity could not review the proceedings of subordinate tribunals, acting under a statute authority—clothed with the exercise of poEtical powers—whether such proceedings were void, or merely voidable. (Moers v. Smedley, 6 Johns. Ch. R. 28; The Mayor, &c. v. Messerole, 26 Wend. 134; Van Doren v. The Mayor, 9 Paige R. 388.) 3. The jurisdiction of these courts to set aside deeds and other instruments, conferring a colorable title merely, was based upon the idea of fraud, and is inapplicable to the present ease. 4. The distinction as to evidence on the face of the instrument, and evidence extrinsic, was applicable exclusively to the latter class of cases. It has created exceptions against equity jurisdiction, proceeding on. the idea that there existed no necessity for its exercise; but has never conferred or enlarged that jurisdiction. 5. The proper remedy for the plaintiff, if he was unjustly assessed, was, in the first instance, to make Ms objection before the assessors. (1 R. S. 393, § 23.) He may further appeal to the supervisors, who have power to grant relief. 6. If the plaintiff was not subject to taxation, the assessment of the tax was void, and all parties attempting to enforce it are trespassers. (The Mayor, &c. v. Messerole, 26 Wend. 134.)
    II. The plaintiff was, at the time of the tax laid, a taxable inhabitant of the city of New York, and of the ward within which he was assessed; and the tax was properly laid. 1. The assessment was required to be laid between the 1st of January and the 1st of April. It must be intended that it was laid during the period. (Laws, 1849, p. 284, § 22.) 2. During this period of the year, the plaintiff resided in the city of New York. 3. Being a resident of New York at the time the assessment was laid, he was properly taxable there. (1 R. S., p. 389, § 5.) 4. The fact that he resided during a portion of the year at Flushing, does not divest his abode in Hew York of the character of a residence within the meaning of the Revised Statutes. (Bartlett v. The Mayor, &c. N. Y.—Opinion of Mason, J.)

      III. The residence contemplated by the statute, is that of the domicil of the person, if he is domiciled within the state. 1. A person may hate two or more residences. (Bartlett v. The Mayor, &c. N. Y.) 2. So for certain minor purposes, such as conferring jurisdiction, he may have more than one domicil. (11 Pick. 410; 5 Vesey, 750.) 3. But as it regards the exercise of the privilege, and the discharge of the burdens incident to citizenship, he can have but a single domicil.
    IY. The plaintiff’s domicil was in the city of New York; which, coupled with residence at the period of making the assessment, made his' liability to taxation there perfect. The city of New York was the original domicil of the plaintiff, and the evidence is not sufficient to show that it was changed.
    The counsel also insisted that the act of March, 1850, was applicable to the case, and that it was proved by the testimony of the plaintiff’s own witness, that his principal business was transacted in the city of New York. The city, therefore, by the terms of the act, was his residence for the purposes of taxation.
    The counsel for the plaintiff, at the close of the argument, stated that his client was exceedingly desirous that the cause should be determined upon its merits, and would no doubt acquiesce in the decision of the court, if adverse to his claim, and that the counsel would so advise him.
    The counsel for the Corporation then said, that with this understanding he would not insist upon the objections to the jurisdiction of the court.
   . March 26.—Br the Court. Oakley, Ch. J.

In compliance with the wishes of the plaintiff, as expressed by his counsel, and with the hope of putting- an end to the controversy, we have considered, and shall decide this cause upon its merits, as they appear upon the pleadings and evidenced

Passing over the objection, then, to the jurisdiction of the court upon which alone the complaint was dismissed at special term, the main question, the liability of the plaintiff to be taxed as a resident of the city, it seems to us, is free from difficulty. It has, in effect, been already decided by this court, in the case of Bartlett v. The City of New York (5 Sand. S. C. R. 44), if not by the j udgment then pronounced, yet by the reasoning upon which the judgment was partly founded. The published opinion of the tyro distinguished judges by whom that case was determined, commands throughout our entire assent. In this case, as in that, the argument for the plaintiff rests entirely upon an erroneous construction of the word “ resides,” in the 5th section of the general act; a construction by which residence and domicil are made in effect equivalent and convertible terms. It may be quite true that a person can have but one domicil, but it is certain that he may have two residences, for such is the case with every man of fortune, who, like the plaintiff, has a town house and a country seat, in each of which he dwells at different seasons of the year, with the intention of making each his permanent abode for a.limited period. (Frost v. Brisbane, 19 Wend. 11.) The residence of the plaintiff in 1850, and for several preceding years, was just as certainly in this city during the winter and spring, as in Flushing during the summer and autumn. He was, therefore, a resident of the city, liable to be taxed as such when the assessment was made, of which he complains, and as the regularity of the proceeding against Mm, if he was so liable, is not denied, he is bound to pay the tax large as it may seem, for the collection of which he suffered a warrant to be issued.

It may also be true, as was contended, that Flushing was the plaintiff’s true and only domicil,. although we should have great difficulty in so holding were it necessary to determine the question; but we are unable to see that this fact, if proved or conceded, has any bearing upon the argument. In most cases, when a person has two residences, one of them is also his domicil; but we apprehend that his residences, in the legal and statutory sense of the term, are just as distinct as if both, as might be the case (In re Thompson, 1 Wend. 45) were separated from his domicil.

It is not asserted or supposed that the plaintiff, or any other citizen, is liable to be taxed twice in the same year for the taxes of the year; but it only follows, not that his assessment in this city was unlawful, but that he ought not to have been afterwards assessed in Flushing. His assessment here between January and April was a legal bar to Ms assessment in Flushing between May and July; and if he chose to submit to this assessment, and pay the tax demanded, he has himself only, or the advice which he received, to blame. The law imposed upon him no such necessity, and we cannot relieve him from the consequences of his voluntary act.

As the act of March, 1850, amending the 5th section of the general act, was not in force as law when the assessment in this case was «made, we do not think that its provisions can, with propriety, be referred to, as sustaining the legality of the assessment. Had the act been in force, its application to this case might well be doubted. The plaintiff was not engaged in any gainful pursuit, and had therefore probably no place of business within the meaning of the law. His only business was to receive and spend an ample income.

The provisions of the act are, however, a legislative recognition of the fact that a taxable citizen may have two or more residences, and a declaration of the sense in which the word “ resides” ought to be construed in the section amended, in its original form. Such a declaration we, indeed, think was unnecessary; but had the question been in reality doubtful, we should probably have allowed it to decide our judgment.

Without adverting at all, however, to the Act of 1850, as a ground or motive for our decision, our conclusion from the pleadings and evidence is, that the plaintiff, as a resident of the city, was rightfully assessed for the tax, the payment of which he has resisted; and, consequently, that he has no claim to the relief, or any part of the relief, which he seeks. The judgment at Special Term, dismissing his complaint, is therefore affirmed, with costs.

We are not to be understood as intimating any opinion as to our jurisdiction; but it is not to be denied that the present union in this court of legal and equitable powers may have given a new aspect to the question.


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

text:
    Willets v. the Phœnix Bank.
    (Before Oakley, Ch. J., Duer and Paine, J.J.)
    March 17, 1853;
    March 26.
    A bank-check, payable to the order of bills payable, as it cannot be passed by an endorsement^ is, in judgment of law, payable to bearer.
    It stands upon the same ground as a check payable to the order of a fictitious person.
    The certifying of a check as “ good,” is not a mere declaration of an existing fact, but creates a new and binding obligation on the part of the bank.
    The meaning is, not merely that the check was “ good ” when certified, but that it shall be “good” when presented for payment.
    A certified check is, therefore, as truly an absolute unconditional promise to pay upon demand the sum which it specifies, as an ordinary bank-note; and laches, in making the demand, is no more imputable in the one case, than in the other.

      Held, upon these grounds, that the plaintiffs, holders for value, were entitled to recover the sum advanced by them upon four checks, certified by the defendants, although payment was not demanded until two months after the checks were certified, and in the interval the maker had withdrawn, upon other checks, all his funds from the bank. Judgment for plaintiff accordingly.
    The action was brought to recover the amount of four checks certified by the defendants to be good.
    The complaint stated that the plaintiffs were the holders and owners of four checks drawn by A. B. Tripler on the defendants. That one of the checks, dated 9th of April, 1850, was for the sum of $800—another, dated 11th April, 1850, for the sum of $1201.80—another, dated 16th April, 1850, for the sum of $1662—and the last, dated 20th April, 1850, for the sum of $735. That these checks were respectively certified by the defendants to be good and payable by them, and that Tripler had then sufficient funds deposited with the defendants to meet the same. That the plaintiffs afterwards on the 6th of June advanced to Tripler the sum of. $4000 on the said checks on the consideration that the sums were certified by the defendants to be good and payable by them, and that on the 7th of June they presented the said checks for payment to the defendants, who then refused, and have ever since refused, to pay the samé.

      The answer admitted that the checks mentioned in the complaint, were, on the days they were respectively dated, at the request of Tripler, the maker, certified by the defendants to be good, and that Tripler had then fymds in the bank sufficient to meet the same.
    The defences set-up were that the usage of the banks in the City of New York, where all the parties transacted their, business, is to certify checks as good, when good, in order to save the counting out and transferring of money from hand to hand, and to receive the checks so certified as cash on the next day, in the usual exchanges between the banks. That it is not the custom of the banks to certify checks for the purpose of remittance to other places but to issue certificates of deposit, certified checks being considered merely as temporary vouchers, but certificates of deposit as absolute liabilities of the banks for any length of time, and that of this usage and custom Tripler and the plaintiffs were fully aware. That contrary to usage none of the checks so certified for Tripler were presented to the defendants for payment until the Yth of June succeeding their respective dates..
    That after the said checks were certified and before the same were presented for payment, the defendants paid out on other checks of Tripler all his money deposited in their bank, and that on the Yth day of June, and for several days prior, Tripler had failed in business and suspended payment.
    The answer further alleged upon information and belief, that Tripler passed the checks to one Hotchkiss as security for or vin satisfaction of a usurious loan, and that Hotchkiss well knew when he received the same that Tripler had then no funds in the bank to meet them.
    That Hotchkiss on the 6th or Yth of June passed the checks to the plaintiffs, who are merchants trading and "doing business in the City of New York, under the firm of S. & É. Willets, and who received the checks, not in good faith, nor in the way of their trade and business, but fraudulently and collusively, and without any present consideration therefor.
    The reply took issue upon the defences set-up in the answer.
    Upon these pleadings the cause was tried before the Chief Justice and a jury on the 20th of October, 1852.

      Upon the trial, the counsel for the plaintiffs, to maintain and prove the issue on their part, read in evidence four certified bank checks, in the words and figures following:

      ú “ Eo. 1707.”
    9 “ Eew York, April 20th, 1850.
    8 “ Phoenix Bank,
    “Pay to the order of Bills payable, seven hundred and PA thirty-five dollars.
    <j “ $735. “ A. B. Tbipleb.”
    «
    !
    a
    A
    <j
    “Eo. 1658.
    “ Eew York, April 11th, 1850.
    “ Phoenix Bank,
    .“ Pay to the order of 1658, twelve hundred and one t or dollars.
    “ $1,201t8o-V “ A. B. Teiplebi”
    g “ Eo. 1688.
    3 “Eew York, April 16th, 1850.
    E “ Phoenix Bank, *

    Eh *

    “ Pay to the order of Bills payable, thirteen hundred PA and forty-two dollars.
    “ $1,342. “ A. B. Tbipleb.”
    d “Eo. 1654.
    8 “Eew York, April 9,1850.
    E “ Phoenix Bank,
    “Pay to the order of Bills payable, eight hundred PA dollars.
    “ $800. . “A. B. Tbipleb.”
    The making and certifying of the said checks, their presentment on the seventh day of June, one thousand eight hundred and fifty, and non-payment, were all admitted.
    The amount of said checks and interest (subject to correction by calculation) was admitted to be four thousand six hundred and sixty-two dollars and fifty-six cents.
    And hereupon the counsel for the plaintiffs rested.

      The counsel for the defendants thereupon moved to dismiss the complaint.
    First, because a check certified by a teller is not binding on a bank, such act not being within the scope of a teller’s authority.
    Second, the checks were all payable to order of Bills payable, and were not negotiable, and did not pass by delivery, but by assignment only, and no assignment had been proved.
    But his Honor the Chief Justice denied said motion to dismiss complaint, to which decision the counsel for the defendants excepted.
    The counsel for the defendants then, to maintain and prove the issue on their part, called

      Isaac Gr. Ogden, Jr.: who, having been duly sworn, testified as follows:—I was the paying teller of the defendants for eight years, terminating in the summer of one thousand eight hundred and fifty; Tripler, the maker of these four checks, was a dealer with the bank; I certified these checks, and at the times they were respectively certified, we had the funds therefor in bank.
    The defendants, offered to prove, by this witness, the state of Tripler’s account, after the checks were certified; and plaintiff’s counsel objects to same being shown, except by production of Tripler’s checks, or the books of original entries.
    The defendants thereupon produced the books of the bank, containing original entries of Tripler’s checks.
    Said witness further testified: Tripler, afterwards and before the checks were presented, drew out all the funds he had in bank; his last check was drawn on the third day of June of one thousand eight hundred and fifty.
    The counsel for the defendants then offered to prove by this witness, the mode of business of the defendants’ teller and book-keeper in regard to certified checks, and to show how the mistake occurred in regard to these, but the counsel for the plaintiffs objected to such offer. The court sustained the objection, and the counsel for the defendants excepted to such decision. •

      The counsel for the defendants then called

      William B. Meeker, who, being duly sworn, testified as follows :—I was assistant book-keeper in the Phoenix Bank in the spring and summer of eighteen hundred and fifty, and as such kept A. B. Tripler’s account; the books now produced and shown me, are the books of original entry of that account; the other book here produced, is the bank ledger, containing that account; between the twentieth day of April, one thousand eight hundred and fifty (the date of the last check now in question), and the seventh day of Jnne following, the bank paid out on Tripler’s checks, seventy-one thousand nine hundred and eight dollars and sixty-one cents, and there were deposited by him in that period seventy-one thousand seven hundred and sixty-eight dollars and twenty-two cents.
    The counsel for the defendants then asked the witness what amount was paid out on Tripler’s checks, and what amount deposited to his credit between the ninth day of April (the date of the first of the four checks), and the twentieth of same month (the date of the last).
    The counsel for the plaintiffs objected to this question as irrelevant.
    The court sustained the objection, and the counsel for the defendants excepted to the decision thereon.
    The witness further proved that the seventh day of June, one thousand eight hundred and fifty, the date of the last item in said Tripler’s account, there was to said Tripler’s credit, a balance of seventeen dollars and five cents.
    The counsel for the defendants then called

      Stephen Willets, one of the plaintiffs, who, being duly affirmed, said :—I am one of the plaintiffs ; we received the four checks in question from Jeremiah Hotchkiss on the 6th day of June, one thousand eight hundred and fifty; the money, I understood, was for Tripler; I advanced him four thousand dollars on these checks, and took them for security therefor; when we advanced the money we did not expect to use the checks any more than we would Phoenix Bank stock, had we loaned on that; the next day we went to Hotchkiss to get the money on another loan, not connected with this which he had from me; Hotchkiss then told us to draw these checks; we sent to deposit them, but the teller said we had better draw them; we presented them to the bank on the seventh day of June, but the bank would not pay them on that evening, and we went the next morning, and they put us off until they got out an injunction against us. The plaintiffs are crockery merchants in Water street. Mr. Hotchkiss is a money broker in Wall street; I think it was just near by three o’clock when Hotchkiss came after the money; there was no agreement as to interest; we should have returned him all over the four thousand dollars, after deducting the interest, if we had drawn the amount of the checks ; Ave have no other securities for this loan besides these checks.
    On examination by the plaintiff’s counsel, being shown* a check, the witness says :—This is the check we gave Hotchkiss for the money we loaned on the checks.
    The same is produced and read, and’ is in the words and figures following, to wit:
    “ New York, 6 Mo. 6,1850.
    “ Cashier of the Mechanics Bank,
    “Pay to J. Hotchkiss, or bearer, four thousand dollars.
    “ Dolls. 4,000.
    “ Stephen & Enmuro Willets.”
    The defendants’ counsel then called

      Nicholas G. Ogden, who, being duly sworn, testified:—I was the cashier of the Phoenix Bank in the spring and summer of one thousand eight hundred and fifty.
    Question.—Had yon any knowledge of these checks being certified by the teller ?
    The counsel for the plaintiffs objected to the question.
    The court decided the question to be irrelevant.
    The counsel for the defendants excepted to such decision.
    And hereupon the parties rested.

      The counsel for the defendants then renewed Ms motion for dismissal of the complaint on the former grounds, and also on the following.
    That the circumstances under wMch the plaintiffs took the checks, were sufficient to put them on inquiry, and that the facts proved, showed laches on 'their part, which in law prevented their recovery from the defendants.
    That as Tripler could not recover from the bank, the plaintiffs could not, for they claimed title through Tripler at a period when he had none to transmit.
    But the Chief Justice denied said motion.
    And the defendants’ counsel excepted to such decision.
    The respective counsel then summed up. the case to the jury.
    The court charged the jury, that if they should find that the plaintiffs had taken the checks under circumstances which ought to have put them on inquiry, as prudent men, they could not recover; otherwise they would be entitled to their verdict.
    The jury found for the plaintiffs, and their verdict was taken, subject to the opinion of the court on the points of law raised in the case, with liberty to the court to order a nonsuit to be entered. The case to be heard at the General Term.

      E. S. Van Winkle, for the defendants,
    argued the case upon the following points and authorities.
    I. A check, certified by a teller only, is not binding on a bank, such an act not being within the scope of the teller’s authority. The cashier is the proper officer to perform such duties. (Massey v. Eagle Bank, 9 Metcalf Rep. 306; Manhattan Co. v. Lydig. 4 Johns. 377.) And usage to the contrary cannot control. (Woodruff v. Merchants' Bank, 23 Wend. 673.)
    II. The checks not being payable to any person, or his order, or to bearer, but to the order of bills payable, are not negotiable. (Brown v. Gilman, 13 Mass. R. 158; Douglas v. Wilkeson, 6 Wend. 637.) They did not pass by delivery, but by assignment only, and no assignment has been proved; and even if the court holds that the purchase and delivery on 6th June is evidence of an assignment, which may have been by . parol, yet it was an assignment of a mere chose in action, and subject to all equities. (Covill v. The Tradesmen's Bank, 1 Paige, 131; Gay v. Gay, 10 Paige, 369; DeMott v. Starkey, 3 Barb. Ch. 403; O'Callaghan v. Sawyer, 5 Johns. R. 118.) The checks, then, being at that day void in the hands of Tripler, the assignor, were void also in those of the plaintiffs, the assignees, although they may have paid full value therefor bond fide. (Ellis v. Messervie, 11 Paige, 467; Aff’d Evans v. Ellis, 5 Denio, 640.)
    HI. In this case there was no dispute about the facts attending the purchase of the checks. It was, therefore, a pure question of law whether the plaintiffs were guilty of laches, and the court erred in submitting it to the jury. (Hall v. Suydam, 6 Barb. Sup. Ct. R. 83; Pangburn v. Bull, 1 Wend. 345; Masten v. Deyo, 2 Wend. 424.)
    IY. The plaintiff’s conduct in buying the checks, constituted laches.
    Y. The court' erred in excluding the testimony offered by the defendants. 1. As to the mode of business pursued by the defendants in regard to certified checks, and to show how the mistake occurred in regard to those in question. (3 Term R. 307.) 2. As to ignorance of the cashier of the bank of any such checks having been certified by the teller. 3. To show the amount paid out on Tripler’s checks and deposited to his credit, between the ninth of April, the date of the first of the four checks, and the 20th of the same month, the date of the last.
    YI. If either the first or second, or the third and fourth points of defendants are sustained, then there should be a nonsuit or dismissal of the complaint. If the fifth point only is sustained, in either branch, then there should be a new trial.

      E. W. Stoughton, for plaintiffs,
    argued the points, and cited the authorities that follow.
    I. The first ground taken, that it was not within the scope of a teller’s authority to certify checks, is unsound. It is a part of that officer’s duty so to do. But if it were not, the pleadings admit that the defendants certified the checks mentioned in the complaint, and consequently the question as to the authority of the teller was not within the issue.
    H. The checks were negotiable without endorsement. One was payable to the order of 1658, the other three to the order of bills payable. The effect of so drawing them, was the same as if they had been drawn payable to bearer. (Story on Bills, § 56, and cases’ cited.)
    HI. The offers to show how the mistake, in paying out the money by the defendants on Tripler’s checks, arose, and to show the amount deposited by him between the 9th and 20th days of April, were properly overruled.
    IT. Whether the circumstances under which the-plaintiffs took the checks ought to have put them on inquiry, and whether they had been guilty of laches, were questions of fact, properly submitted to, and correctly found by, the jury. (Rothschild v. Corny, 9 Barn. & Cress. 388; Chitty on Bills, 321, 322, 512; Goodman v. Harvy, 4 Adol. & Ellis, 870, 7 Term Reports, 430; Hendricks v. Judah, 1 John. Rep. 319; Forman v. Haskins, 2 Caine’s Rep. 369.)
   By the Court. Oakley, Ch. J.

Whether the teller had any authority from the bank to certify the checks in suit, is not a question that we are called upon to consider under the pleadings, since the complaint avers, and the answer in terms admits, that the certifying of the checks was the act of the defendants.

The case, therefore, of Massey v. The Eagle Bank (9 Metc. 309) is not applicable, nor is it necessary now to say whether we should have followed that decision, had the question, as to the authority of the teller, been properly raised.

The objection that the checks were not negotiable, and, consequently, that the plaintiff being merely an assignee, took them subject to every defence to which they were liable when transferred to him, was much insisted upon in the argument; but we are satisfied that it is untenable.

One of the checks was payable to the order of 1658, the other three to the order of bills payable; and as the required order could not, in either case, possibly be given, the checks, unless transferable by delivery, were payable to no one, and were void upon their face. The law is well settled, that a draft payable to the order of a fictitious person, inasmuch as a title cannot be given by an endorsement, is, in judgment of law, payable to bearer. (Vin. v. Lewis, 3 Term R. 183; Minot v. Gibson, id. 281, S. C. 1 H. Black. 569, affirmed in the House of Lords.) And it seems to us quite manifest that in principle these decisions embrace the present case. At any rate, the bank, by certifying the checks as good, is estopped from denying that they were valid as drafts upon the funds of the maker, and, consequently, were. payable to bearer. The giving of such a certificate^ if otherwise construed, would be a positive fraud.

The only question, therefore, that remains to be considered, is, whether the facts that payment of the checks was not demanded until nearly two months after they were certified, and that in the meantime the maker had drawn all his funds from the bank, including those represented by the checks, constitute a valid defence ?—for, if not, the plaintiffs are clearly entitled to our judgment.

The answer to the question evidently depends upon the construction to be given to the act of the proper officer of a bank in certifying a check. Is it a mere declaration of an existing fact? or does it create a new and binding obligation on the part of the bank? Is it simply a declaration that the maker had then funds in the bank corresponding with the amount of the check? or is it an appropriation of those funds to the credit of the check, and a promise that, upon demand, they shall be applied to its payment ? If the former, the defendants-are not liable. If the latter, they have no defence.

That the latter is the true legal interpretation of a certified check, we cannot doubt, since, upon any other construction, the act of certifying would be nugatory, or would operate as a fraud. It would be nugatory, if understood by all, as creating no obligation, on the part of the bank, to retain funds to meet the payment of the check. It would operate as a fraud, if generally understood as creating an obligation which the law would hold not to exist.

The sole and manifest object of the maker dr holder of a check, in requiring it to he certified, is to enable him to use it as money; that is, to pass it to others with the same certainty of its acceptance, as affording the same security to a holder; and the bank, in complying with the request, must know that such is its object.

It is, therefore, certain, that a bank, by certifying a check, means to give it a currency and value that would not otherwise belong to it; and this additional value, it seems to us, can only be given by interpreting the certificate as an unconditional promise of payment, whenever payment shall be demanded; otherwise, a certified check would be of no more use or value than an ordinary check, and would afford no greater security to a holder. The certificate is a useless form, unless it means, not merely that the check was good when certified, but that it will be good when presented for payment. This construction is, therefore, necessary to give effect to the apparent intention of the parties, and, at any rate, is necessary to prevent the check from being subsequently used as a means of deception and fraud.

We did not'1 understand the counsel for the defendant as denying that a certified check imports an obligation on the part of the bank to retain sufficient funds of the maker to meet.its payment, but this obligation, he contended, exists only for a limited period, and may, therefore, be wholly discharged by the laches of the holder in demanding payment.

When this demand is delayed, even for a few days, the counsel insistéd, that the holder of the check takes upon himself the risk of a withdrawal of the' funds which, had he acted with due diligence, would have been applied to its payment. Such is, indeed, the nature of the defence set up in the answer, in the distinction which it avers to exist between a certified check and a certificate of deposit; but no evidence of the general usage and custom which the answer alleges as establishing this distinction, was given upon the trial, and, in the absence of such • evidence, there is no ground of principle, it seems to us, upon which it can be maintained. We can perceive no reasons for restricting the obligation of the bank within the limits suggested, or any other, and, consequently, none for the imputation of laches to a holder.

The obligation of the bank is simple and unconditional to pay upon demand, and in all such cases the demand may be made whenever it suits the convenience of the party entitled to the stipulated payment.

When the business of a bank is properly conducted, it is not possible that it can sustain any loss or prejudice from this interpretation of its contract—the contract which it makes in certifying a cheek, and it is only where delay may be prejudicial that the want of due diligence may be legally imputed, and operate as a bar to a claim otherwise valid. When the business of the bank is properly conducted, it is the duty of the officer certifying the check to cause it to be immediately charged, as paid, in the account of the drawer, and when this is done, the sum thus charged will remain as a deposit in the bank to the credit of the check, and be for ever withdrawn from the control of the maker, except as a holder of the check. Such a deposit stands exactly upon the same ground as every other. The bank, instead of being prejudiced, is benefited by the delay of its owner in calling for its payment, and can with no more propriety impute laches to the unknown holder of the check than to a known holder of an ordinary deposit. The loss which the bank, in this case, by resisting the demand of the plaintiff, seeks to avoid, has resulted from the laches of the teller, in suffering Tripler, the maker of the checks, to withdraw the funds that were appropriated to their payment, but assuredly neither the laches of its own officer, nor the fraud of Tripler, can excuse the bank from a compliance with its own engagement. As we intimated upon the argument, there is, in reality, in good sense, no distinction, in the nature of the liability created, between a certified check and a note of the bank payable on demand. Each is intended to circulate as money —each is an absolute promise to pay a specific sum upon demand, and laches in making the demand is no more imputable in the one case than in the other. The only difference between them is, that the promise which in the note is expressed, in the check is implied.

The Supreme Court of Massachusetts, in the case of Massey v. The Eagle Bank, which was cited and much relied on by the counsel for the defendants, although they denied the authority of the teller to bind the bank, gave the same construction to a certified check as that which we now have explained and adopted. The learned judge who then delivered the opinion of the court said, that “unless the word ‘good’ carries with it a binding evidence of the fact that the money is in the bank to meet that particular check, and that it will be paid to the bearer at any time when presented, it is of no practical utility. It will amount to no more than this, viz. that at the moment of its first presentment the check was ‘ good,’ but not that it will continue so two horns after, if not being offered -other checks of the same drawer are presented to the amount of his deposit in the bank.” (9 Metc. 311.)

We shall notice briefly the last ground upon which it was argued that the plaintiffs were not entitled to recover, namely, that the circumstances under which the checks were transferred to them, ought to have excited then* suspicions, and led them to inquire, and were, therefore, sufficient to charge them with a knowledge of the facts, which, upon inquiry, they would have ascertained. Had they inquired, they would have ascertained that Tripler had withdrawn all his funds from the bank, and was guilty of a fraud in attempting to transfer checks which he ought to have returned or destroyed.

Assuming that the doctrine of constructive notice is applicable at all to the present case, and if applicable, that the question properly arose upon the evidence, it was in effect, and we think rightly, submitted to the jury, and was settled by their verdict. We cannot say that their verdict was against evidence.

The plaintiffs are entitled to judgment upon the verdict for the sum of §4,000, which they advanced upon the checks, with interest and costs.


text:
    John L. Francia, and others v. Leo Del Banco.
    F. & Go. sold and delivered to D. 100 boxes of raisins at $2 per box at 4 months credit for approved paper, and received in payment a bill of exchange drawn and endorsed by D., and accepted by a house in Philadelphia. D. alleging that the raisins were of inferior quality to the sample by which they had been sold, endeavored to rescind the contract, and gave a written notice to F. & Co. that payment of the acceptance would be resisted. The bill at its maturing was not presented to the acceptor for payment, and at the expiration of the term of credit, F. & Co. brought their action against D. for the price of the raisins so sold and delivered to him.
    (Before Duer and Bosworth, J.J.)
    Feb. 17 & 18;
    April 30, 1853.

      Held, that the action could not be maintained upon the original consideration, the debt created by the sale having been satisfied by the reception in payment of the bill of exchange, and that the question of' D.’s liability as drawer and / endorser could only be properly raised and determined in an-action upon the bill itself.
    This was an appeal from, a judgment entered at Special Term upon the report of a referee. The judgment was in favor of the plaintiffs for $214.56.
    The complaint set forth that the plaintiffs, trading under the name and firm of Francia & Co., sold and delivered to the defendant 100 boxes of raisins for which he promised to pay them the sum of $200 in four months from the date of the purchase, and averring that although the term of credit had expired the said sum was still unpaid and owing to the plaintiffs, claimed judgment for the amount with interest.
    The answer set up two defences. First: That the raisins were sold by sample, and when delivered were found not to correspond with the sample, but were of an inferior quality, unmerchantable, and of little or no value, and that as soon- as the' fact was discovered the defendant had offered to rescind the contract and return the boxes of raisins.
    Second: That the defendant in payment for the raisins delivered to the plaintiffs a bill of' exchange drawn by him on Eldridge & Co. of Philadelphia for the sum of $200 payable to his own order four months after date, which bill, accepted by the drawees and endorsed by him, “ was accepted and received by the plaintiffs as aforesaid.” It was also averred that the bill had not been presented for payment at maturity, nor protested for non-payment.
    The reply admitted that the raisins were sold by sample, but averred that those delivered agreed with, and were equal in quality to the sample exhibited. It also admitted that the plaintiffs had received the bill of exchange mentioned in the answer, and averred that they, the plaintiffs, “ having received a written notice from the defendant that payment of the said bill would be resisted, and Eldridge & Go. having failed and become insolvent, did not cause the said bill to be presented for payment, and that the same was in their possession unpaid ready to be produced and cancelled",” and insisted that the notice so given by the defendant released them from any obligation to present the bill for payment, or cause the same to be protested.
    The testimony of the witnesses examined before the referee related chiefly to the quality and condition of the raisins delivered, but, as the decision of the court was not founded on this evidence, it is omitted. The plaintiffs’ counsel produced before the referee the bill of exchange mentioned in the pleadings, and offered to cancel and deliver up the same.
    The defendant proved, by the auctioneer who sold the raisins, that the sale was for approved paper, satisfactory to the seller. He also gave in evidence the following receipt:—
    “New York, 7th May, 1850.
    “ Received from Leo Del Banco, his note, accepted by Levi Eldridge & Go., at Philadelphia, at 4 months, dated 3d May, 1850, for two hundred dollars, in full for bill of raisins, same date.
    “Fraxcia & Co., per James J. Fox.”
    It was also proved that the note mentioned in this receipt was the bill of exchange referred to in the pleadings. The authority of Fox to sign the receipt was not denied.
    The Referee made the following report:—
    “ In pursuance of an order made in the above cause, whereby it was referred to me to hear and determine, and report thereon to this court, I do find and report as follows:—That about the 3d day of May, 1850, the plaintiffs sold and delivered to defendant, through Gerard & Betts, auctioneers, in the city of New York, 100 boxes of raisins, at two dollars per box; that said raisins were sold by sample, at a credit of four months, for paper satisfactory to the sellers; that the raisins, sold and delivered, were equal to samples; that the plaintiffs, at the time of said sale, received from defendant, in compliance with the terms thereof, a draft drawn by defendant on, and accepted by, Levi Eldridge & Co., of Philadelphia, payable four months after date; that before the maturity of said draft, and on or about the 10th day of May, 1850, the defendant gave notice to the, plaintiffs that the same would not be paid; and that the same never was presented by them to the acceptors, for payment ; that such draft was produced before me, by the counsel for the plaintiffs, who offered to deliver up the same.
    “I do therefore report, and decide, as matter of law, that the talcing of said draft did not extinguish the liability of defendant on the original consideration; that, in consequence of notice from defendant that said draft would not be paid, the omission of the plaintiffs to present the same for payment did not make the draft their own, and its production and offer to deliver it up, on the trial, entitle the plaintiffs to recover on the original consideration.
    “I therefore render judgment for the plaintiffs for $200, with interest from Sept. 6, 1850, making $214 56.
    “Dated New York, Sept. 21, 1852.
    ■» “ L. Hoyt, Referee.”
    The cause was now heard upon exceptions to this report. The questions raised and argued upon the evidence, relative to the warranty, and its breach, are omitted.

      S. Sanxay, for defendant.
    The facts in this case show a special sale of 100 boxes of raisins on specific terms, namely, for “approved paper,” and a full compliance with those terms by the defendant; in other words, a contract fully performed. The defendant paid for the raisins by the delivery of his draft, accepted by Eldridge & Co.; and the plaintiffs having accepted this papér as a payment, can no longer resort to the sale and delivery of the raisins as a cause of action. The liability of the defendant as a vendee being extinguished, the only remedy of the plaintiffs against him (if they have any) is as drawer and endorser of the accepted draft; and this can only be enforced in an action upon the paper itself. It is, however, clear that the defendant is discharged upon the bill by the omission to demand payment of the acceptor, and no sufficient excuse is shown or existed for not taking the necessary steps to charge the defendant as • drawer and endorser. And it is so far from being proved that the acceptor had no effects, that he- appears to have had the identical raisins, or their proceeds, in his hands. The decision of the referee should be reversed, and judgment ordered for defendant. Upon the point of the defendant’s discharge as drawer, the counsel cited the following authorities, Hill v. Heap, D. & R. N. P. R. 59; Chitty on Bills, 8th ed., p. 486; Dennis v. Morrice, Esp. R. 185.

      T. Tucker for plaintiffs.
    The receiving by the plaintiffs of the bill of exchange did not extinguish their claim against the defendant to be paid for the raisins, since there was no special agreement that the bill should be accepted as an absolute payment. (Tobey v. Barber, 5 John. R. 68; Porter v. Talcott, 1 Cowen R. 259; New York State Bank v. Fletcher, 5 Wend. 85; Coles v. Sackett, 1 Hill, 516; Vail v. Foster, 4 Comst. 312.) The written notice from the defendant that payment of the acceptance would be resisted, relieved the plaintiffs from any obligation of presenting it for payment. The object of the rule of law, which requires the holder to notify the drawer of a bill of its dishonor, is to protect the drawer, but has no application where the drawer cannot be prejudiced by the omission; and the same circumstances which are by law a waiver of the necessity of giving notice of non-payment, will dispense with the necessity of presentment. Here the defendant could not be prejudiced by the imputed neglect of the plaintiffs, since a presentment for payment to the acceptor, after notice that payment would be resisted, would have been useless. As he learned that payment would not be made, it was idle to give him notice that it had not been. As bearing upon the second point, the counsel cited Rogers v. Stevenson, 3 Term R. 213; Brett v. Levett, 13 East. 214,1 Wend. R. 219 ; Chitty on Bills, 8th ed., pp. 373, 385, 390.
   By the Court. Duer, J.

The referee has found that the raisins sold by the plaintiffs to the defendant, corresponded in quality and condition with the sample exhibited, and we are not prepared to say that this finding is against the weight of evidence. Hence, if the breach of the warranty, implied in the sale, were the sole defence, the motion to set aside the report would necessarily be denied.

But this is not the only defence. The raisins were sold on a credit of four months, for approved paper, and the answer alleges, in substance, that the required payment was made by a bill of exchange drawn on and accepted by the house of Eldridge & Co., of Philadelphia, and endorsed by the defendant and received by plaintiffs, in satisfaction of the purchase,, and these allegations are not only sustained by the proof, but, as not denied, are admitted by the reply.

Whether an existing debt is, in all cases, satisfied by the mere delivery to the creditor of the promissory note or acceptance of a third person, endorsed by the debtor, is a question which we deem it unnecessary to consider, and upon which the English cases and our own are not easy to be reconciled. But all the authorities agree that where such a note or bill, by the understanding and agreement of the parties, is transferred and received in payment of the debt, the prior liability of the debtor is extinguished, and it is only as an endorser that he can then be charged. We think that the pleadings and the evidence show that in this case such was the agreement of the parties.

It has been contended, however, that this objection is fully met by the allegations in the reply, and the proof upon the hearing before the referee, that the acceptors of the bill were insolvent when it reached its maturity, and that the defendant had' previously given notice to the plaintiffs that its payment would be resisted. The facts thus alleged and proved, it was argued, released the plaintiffs from their obligation to demand payment of the acceptors, and by rendering the bill valueless, revived their original demand against the defendants.

To this reasoning, however, we cannot assent. It is not sustained by the cases to which we were referred, nor by any authorities that we have been able to discover. The mere insolvency of an acceptor has never been admitted to excuse a regular demand of payment, and notice of protest, as necessary to charge an endorser; and whether - such is the legal effect of the notice given by the defendant that payment of the bill would be resisted, is a question that we must decline to consider, since we are satisfied that it is only in a suit upon the bill itself that it can properly arise and be determined. It is possible that the defendant may still be liable as drawer and endorser, but we can perceive no ground for the assertion that his liability as a purchaser, which was extinguished by his transfer of the bill, has been revived by any subsequent act; such might have been the effect of the notice given by him, had it rendered the acceptance wholly void, by discharging Eldridge & Co. from the legal obligation which it created; but that such was its effect, has not been and cannot be pretended. It cannot, therefore, be said that the notice rendered the bill valueless. It diminished the probability of its payment at maturity, but had no effect whatever upon its value as' a security. Had the acceptors continued solvent, the value of their acceptance was precisely the same after the notice as before.

We are, therefore, of opinion that the referee erred in holding that the taking of the draft, accepted by Eldridge & Co., did not extinguish the liability of the defendant for the original consideration, and that this liability, if extinguished, *was revived by his subsequent conduct.

The report is therefore set aside, and the rule for a reference discharged. Costs to abide the event. The referee ought to have dismissed the complaint, but, according to a recent decision of the Court of Appeals, we have no power io dismiss it now. If the pleadings, however, remain as they are, it must necessarily be dismissed upon the trial.