author: Eursman, J.:

text:
    THE PEOPLE OF THE STATE OF NEW YORK, Plaintiff, v. THE ULSTER COUNTY SAVINGS INSTITUTION, Defendant. In the Matter of LEWIS A. MITCHELL, Appellant.

      Savings bank — application for it,s dissolution and a receiver — when the bank will be allowed to resume on scaling down the deposits —power of the cowrt.

    A savings bank, incorporated under a special act (chap. 152, Laws of 1851), was successful ia its business until September 17, 1891, when a defalcation upon the part of its treasurer and assistant treasurer was discovered. An examination by the superintendent of the banking department, made November 1,1891, showed its liabilities to be $2,474,465.89, and its assets to he $2,108,547.39, showing a deficiency of les§ than fifteen per cent of its liabilities.
    Section 278 of chapter 409, Laws of 1882, the act relative to savings banks, provides, among other things, that whenever it shall appear to the said superintendent that an officer of such a bank has been guilty of misconduct or malversation the superintendent shall communicate the facts to the attorney-general, who shall institute such proceedings as the nature of the case may require. Said section also provides that “ the .court before which such proceedings shall be instituted shall have power to grant such orders, and iu its discretion, from time to time, to modify or revoke the same, and to grant such relief and render such judgment as the facts or evidence in the case, and the situation of the parties and the interests involved, shall seem to require.”
    Upon a communication received by him from the superintendent of the hanking department the attorney general began proceedings to dissolve the bank and to have a receiver appointed, and a temporary receiver was appointed.
    Thereafter the hank, upon a petition signed by au the trustees of the bank, by the receiver and by depositors representing $900.000, applied for permission to resume business as a solvent institution upon a basis of eighty-five per cent of its liabilities; in other words, that each deposit be reduced fifteen per cent.
    Held, that it has been the policy of the State to allow, whenever it was practicable, institutions of this character to resume business upon a basis of solvency.
    That, under the provisions of section 278, above cited, the court was authorized to permit the bank' to resume its business upon scaling the deposits down to a point which would render the bank solvent.
    The nature and functions of a savings hank, and the manner iu which it differs from a discount bank, considered.
    Instances of similar action by the courts of other States.
    Appeal by Lewis A. Mitchell from an order made at a Special Term of the Supreme Court, held in Rensselaer county March 12, 1892, denying a motion to vacate certain orders staying the commencement of actions against the defendant, made on the return day of an order to show cause. The above-entitled action was brought by the attorney general under the provisions of section 278 of chapter 409 of the Laws of 1882, providing as follows:
    “ § 278. Whenever it shall appear to the superintendent, from any examination made by him, or from the report of any examination made to him, or from the report made by any such corporation pursuant to the requirements of section 270 of this act, that any such corporation has committed any violation of its charter or of law, or is conducting its business and affairs in an unsafe or unauthorized manner, he shall, by an order under his hand and seal, direct the discontinuance of such illegal and unsafe or unauthorized practices, and strict conformity with the requirements of the law, and with safety and security in its transactions; and whenever any such corporation shall refuse or neglect to make any such report as is herein-before required, or to comply with any such order as aforesaid, or whenever it shall appear to the superintendent that it is unsafe or inexpedient for any such corporation to continue to transact business, or that any trustee or officer of a savings bank has abused his trust or been guilty of misconduct or malversation in his official position injurious to the bank or to its depositors, he shall communicate the facts to the attorney-general, who shall thereupon institute such proceedings as the nature of the case may require. The proceedings instituted by the attorney-general may be for the removal of one or more of the trustees, or for the transfer of the corporate powers to other persons, or the consolidation and merger of the corporation with any other savings corporation that may be willing to accept of the trust, or for such other or further relief or correction as the particular facts communicated to him shall seem to require. And the court before which such proceedings shall be instituted shall have power to grant such orders, and in its discretion, from time to time, to modify or revoke the same, and to grant such relief and render such judgment as the facts or evidence in the case, and tile situation of the parties and the interests involved shall seem to require; and whenever in such proceedings, an order shall be granted upon notice, or without notice, restraining such corporation and its officers from paying out or disposing of any moneys or property of or lield by such corporation, the superintendent may, and if directed by the court shall, take temporary possession of all the assets, property and rights of or held by such corporation, and hold such possession until the further order of the court. If a receiver be appointed he shall, subject to the direction of the court, proceed with diligence to convert the assets of the bank into money, and to make distribution thereof. And every receiver of a savings bank shall, whenever required by the court, upon the application of the attorney-general, render an account of his proceedings, and shall render a full account of all his proceedings, and make final distribution within eighteen months from the time of his appointment, unless the court, upon application by the receiver and notice to the attorney-general, shall give additional time for that purpose. The court may make such orders for the payment of small deposits by receivers, or such other provisions in respect to such deposits, to facilitate the distribution of the assets as may be just. Every official report made by the superintendent to the attorney-general, and every official report duly verified of any examination made under the provisions of this act, shall be presumptive evidence in all preliminary legal proceedings on motion to appoint a receiver.”

      Simpson (& Werner, for the appellant.

      Kenyon <& Sharpe and A. Sehoonmaker, for the defendant.

      I. K. Maynard) Deputy Attorney-General, for the plaintiff.

      G. M. Preston) Bank Superintendent, in person.

      John E. Van Etten, for certain depositors.

      Linson & Van Burén, for the receiver.
   The following opinion was delivered at Special Term:

Eursman, J.:

The defendant was incorporated as a savings institution by act of the legislature, passed April 12, 1851. (Laws of 1851, chap. 152.)

It has accumulated up to the commencement of this action deposits to an amount exceeding two millions of dollars. Its business affairs have been managed by thirteen trustees, except that by death and resignations the number at this time is reduced to eleven. The treasurer and assistant treasurer were appointed in 1867, and have held their respective offices continuously from that time down to the time of their removal in September and October last, respectively. About the 17th of September, 1891, a defalcation, resulting from the misappropriation and abstraction of its funds on the part of the treasurer and assistant treasurer, was discovered. Thereupon, at the instance of the trustees, the superintendent of the banking department began an official examination of the affairs of the bank, and afterwards the bank was closed and a report of its condition made to the attorney-general pursuant to statute. Afterwards this action was commenced by the attorney-general for the dissolution of the bank and the appointment of a receiver, and such proceedings were had that a temporary receiver was appointed, who duly qualified and entered upon the discharge of his duties. A careful and accurate examination of the affairs of the bank by the superintendent disclosed that on the first day of November last its liabilities were $2,474,465.89, and its assets $2,108,547.39, thus leaving a deficiency of $365,918.50. This deficiency is less than fifteen per cent of the liabilities of the bank, and it is now claimed and insisted that the bank can resume business as a solvent institution upon a basis of ■eighty-five per cent of its liabilities, and application is made to this ■court for permission to do so.

This application is made upon petitions on the part of all the •trustees of the bank, and of the receiver, and by depositors representing upwards of $900,000 of deposits.

The petitions show that the total number of depositors is in the neighborhood of 6,000, and that of those who are not petitioners a large number of depositors, representing small amounts, are widely scattered over Ulster county, some reside in other counties, and also in other States, and that deposits to the amount ■of upwards of $150,000 are represented by persons whose residence •■and address cannot be ascertained. The petitions also show that, ¡so far as can be learned, it is the universal desire of the depositors fhat the business of the bank shall be resumed, and it is asserted by counsel, and remains undisputed, that no depositor has expressed any unwillingness.

A careful study of the situation, as presented by the petitions, by the official certificate of the superintendent of the banking department, and by the various arguments and suggestions of counsel, induces in my mind the belief that such a course will be beneficial to all parties in case it is found that there is power in the court to authorize it. Such a course will continue in existence a long-estahlished and hitherto useful institution, which has only now been impaired by the extraordinary misconduct of its treasurer and assistant treasurer. It will save to depositors a large amount of their funds, which must necessarily be consumed in expenses in case the action proceeds, or the bank is put in liquidation and its assets distributed ratably among its creditors; it will save, moreover, to a large number of persons who are debtors to the institution the loss that cannot be avoided from shrinkage in values, resulting from forced collections of mortgages, and will probably result in assisting to sustain generally the credit of business men who-have at this time deposits in the bank.

It has been the policy of this State for a long series of years to-permit savings institutions, whose assets from any cause have shrunk below their liabilities, to resume business wherever it could be done upon a solvent basis, and this course has been uniformly, so far as I have been able to ascertain, recommended by the banking department. In 1819 this course was taken by Bank Superintendent Henry L. Lamb in the case of the Oswego City Savings Bank, and the Supreme Court permitted that institution, under like circumstances,'to scale down its liabilities to depositors ten per cent, and thereupon to resume business. Since that time the bank has been prosperous, and its deposits have steadily increased. In 1883 Bank Superintendent A. B. Hepburn, in his annual report to the legislature, approved the policy thus pursued by Superintendent Lamb. In that report he says : “ No one can make a study of the failed savings banks without perceiving how much better it would have been for depositors in many instances had the deposits been scaled so as to render the bank solvent, and they have been allowed to continue business. This department and the courts now have by law sufficient power over the tenure of office of savings bank managers to secure the removal of incompetent or unfaithful men. With the funds still in the hands of trustees, under the direction of the court and subject to the supervision of the superintendent, the depositors would have realized much more money, and the expensive management and costly andinterminable litigation which succeeds insolvency, as the night the day, would have been avoided. It seems that our courts now have the power to reduce each individual deposit to an amount sufficient to render an insolvent savings bank solvent, and authorize the managers of the bank to charge against each separate depositor such amount.”

Referring to the Oswego City Savings Bank, he adds: “ The eminent success attending the scaling process in the only instance in which it has been tried in this State is a strong, practical argument in favor of providing by statute for carrying out what seems to be a law already.”

In 1885 Superintendent "Willis S. Paine expressed his approval to the legislature as follows: “ In the single instance in the history of the savings banks of this State in which the scaling process has been resorted to as a possible means of saving depositors from ultimate loss, the experiment has met with such marked success it is probable that in the future this remedy will be applied in preference to placing the affairs of temporarily embarrassed banks in the hands of receivers for liquidation.”

It will thus be seen that the opinion of those most familiar with the savings banks of the State, and whose duty it has been to exercise a supervision over their affairs, so far as the same has been expressed,, indicates the propriety of permitting savings institutions to resume business wherever it can be done upon a solvent basis.

The remaining question is one of power.' The statute, which authorizes the institution of actions like the present, provides that “ the court before which such proceedings shall be instituted shall have power to grant such orders, and in its discretion, from time to time, to modify or revoke the same, and to grant such relief and render such judgment as the facts or evidence in the case and the situation of the parties and the interests involved shall seem to require.” (R. S. [8th ed.], p. 1573, § 278.)

The power thus conferred seems to be sufficient to enable the court to make such orders and such disposition of the institution and its affairs as may appear to be for the best interests of the institution, its creditors and depositors. Savings banks are quite unlike ordinary banks. Commonly, banks are business corporations, have stock and stockholders and paid officers, and conduct their affairs with a view to profit. Their relation to their depositors is in no sense one of trust. They receive deposits to be paid upon the check or draft of the depositors without interest or addition. Their profits, if any, are distributed among their stockholders, and its losses fall upon them, and their property is subject to sequestration at the suit of any creditor. A savings bank is an institution of quite a different character. Its relation to its depositors is in a large sense one of trust and confidence. It has no stock and no stockholders. Its depositors are not entitled to draw checks against it. It does not receive deposits to be paid upon demand simply, but for investment on securities taken for the benefit of the depositors. Its assets are held for distribution among its depositors ratably, and its losses fall in like manner upon its depositors, and no creditor or depositor can, by diligence in the pursuit of any legal remedy, obtain any advantage over any other creditor or depositor. Its profits and its losses fall upon each depositor according to his just proportion, and no depositor has a right in the distribution of its assets to obtain or receive his deposit in full at the expense of the other depositors. The assets, after deducting the necessary expenses, are held simply as belonging to and as security for all the deposits. It would seem, therefore, that no depositor has any just cause of complaint, if he is not permitted to receive his deposit in full, in case the assets are insufficient to pay all the depositors in full. Nor would the trustees be justified in exhausting or even impairing the assets of the institution in payment in full of diligent depositors, and thereby leaving those who are less vigilant to receive a less sum than would be theirs if a just and ratable distribution were had. Under the circumstances, the assets of the bank being held for all the depositors and the losses sustained by all, and there being no right in any depositor to insist upon the payment of his own claim in full at the expense of others, it is clear that the loss already sustained may and should thus be distributed, and the bank, if possible, permitted to resume business for the benefit of all depositors alike, that in the end each depositor, may receivers much as possible.

In the case of The People v. The Mechanics and Traders' Savings Institution (92 N. Y., 7), the action was brought by a creditor (other than a depositor) to compel the receiver to pay certain judgments in favor of one Sistare, and it was substantially held that all creditors of savings banks, including depositors, stand upon an equal footing. The court says : “ Upon insolvency the assets and property of the corporation, as in the case of other corporations, is a trust fund for the payment of creditors, and depositors we think stand as other creditors, having no greater but equal rights to be paid ratably out of the insolvent estate.”

In the case of Huntington v. Savings Bank (96 U. S. Sup. Ct. R., 388), speaking of savings banks, the court says: “ It is not a commercial partnership, nor is it an artificial being the members of which have property interests in it, nor is it strictly eleemosynary. Its purpose is rather to furnish a safe depositary for the money of those members of the community disposed to intrust their property to its keeping. It is somewhat of the nature of such corporations as church wardens for the conservation of the goods of a parish, the College of Surgeons for the promotion of medical science, or the Society of Antiquaries for the advancement of the study of antiquities. Its purpose is a public advantage without any interest in its members.”

íí- Í5- # if w # if

“ It is, like many other savings institutions incorporated in England and in this country during the last sixty years, intended only for provident investment, in which the management and supervision are entirely out of the hands of the parties whose money is at stake, and which are quasi benevolent, and most useful because they hold out no encouragement to speculative dealing or commercial trading.”

****** *

“ Yery many such exist in this country. Among the earliest are some in Massachusetts, organized under a general law passed in 1834, which contained a provision that the income or profit of all deposits shall be divided among the depositors with just.deduction of reasonable expenses. They exist also in New York, Pennsylvania, Maine, Connecticut and other States. Indeed, until recently, the primary idea of a savings bank has been that it is an institution in the hands of disinterested persons, the profits of which, after deducting the necessary expenses of conducting the business, inure wholly to the benefit of the depositors in dividends or in a reserved surplus for their greater security.”

Courts of equity in other States have exercised the power here sought. In the case of Matter of Newark Savings Institution (28 N. J. Eq. R., 552), the power to scale down deposits and authorize the resumption of business by savings institutions was distinctly declared and exercised. The chancellor says: “This court has jurisdiction over all trusts, as well where the trust is held by a corporation as where the trustee is an individual. A savings institution, such as the petitioner, is a mere trustee. It has no stock. It receives the money of depositors for investment and invests it on securities, taken for the general benefit of the depositors. It is merely a large incorporated agency for receiving and loaning money on account; of those to whom the money belongs. The interest received upon investments is to be ratably divided among the depositors. * * * The depositors (in the absence of fraud on the part of the managers,, from which personal liability would arise), have no recourse whatever for repayment of their principal or interest to anything, except the general investments of the institution. The institution now before me was incorporated for the sole purpose of receiving and investing deposits. The design of the legislature in granting the charter was to promote industry and frugality, and preserve and husband the fruits of honest toil. It contemplated no benefit to the managers, but looked only to the security and advantage of the depositors. The trust thus created is a general or public trust. No depositor has, under the charter or in equity, any right to any particular security in the hands of the institution for his deposit more than any other depositor. All the assets, after deducting necessary expenses, are held as a common fund for the security of all the depositors. It follows that no depositor has any reason for complaint if he is not permitted to receive his deposit in full, if there be even any uncertainty as to whether there will be assets enough to pay all the others in full. It 'follows, also, that the institution ought not, under such circumstances, to be permitted to exhaust such of its securities as are immediately convertible into cash without loss in the payment in full of clamorous or alert depositors, and leave for those who are less vigilant, or who may be less informed of the situation, the securities which are less available and on which such loss may be sustained, as that the latter may fail to realize the full amount due them. In other words, the vigilant depositor ought not to be permitted to devolve all the losses of the trust on the others who are as much entitled to payment in full as they are. To insure justice to the helpless is one of the most valuable prerogatives of this court. Equality in the present case is equity. I have no doubt as to the jurisdiction of this court over the subject, and I have no hesitation whatever in exercising it. Under the circumstances, I deem it my duty to see to it that the assets of this trust in the hands of the institution are not inequitably administered.”

* * ' # * * *

The course now taken in regard to this institution is not without precedent in this court. In the case of the Hoboken Bank for Savings (1874) like measures were taken by me under similar circumstances with salutary effect and most beneficial results to the depositors.”

In 1871 a similar proceeding for scaling down the deposits of a savings bank was taken in Connecticut. In that case a sum equal to twenty-four per cent of the deposits then in the bank was scaled by the trustees themselves, and a joint resolution was subsequently passed by the legislature ratifying their action. Afterwards an action was brought by one of the depositors to recover the difference between his deposit and the amount to which it Avas scaled, and the Supreme Court, without giving any effect to the resolution of the legislature, held that the action of the trustees in thus scaling down the deposits was lawful and proper, and that the depositor could not recover. Like proceedings have been had in New Hampshire, where there is a statute authorizing them. In Massachusetts, in the case of Lewis v. Lynn Institution for Savings (148 Mass., 235), the rule laid down in the Connecticut case was approved and applied. At page 244 the court says : But to the depositors themselves the undertaking of the corporation is that it will receive and combine the deposits, and manage and use them to the best practicable advantage according to the judgment of the trustees, and give to the depositors in just proportion among themselves the benefit of the result of such management. There is no absolute promise to repay to any depositor the full amount of his deposit at all events. Such a promise to one depositor would imply that in case of loss lie should be repaid out of tlie deposits of others. But the promise or undertaking of the corporation is the same to all. There is no promise to pay one at the expense of others. The promise is, in effect, to pay each depositor in full with his dividends provided the assets are sufficient, and if they are not sufficient, then to pay each one his proportionate share.”

It seems, therefore, that the application now made is supported by the provisions of the statute above quoted, and by well considered adjudications in this and other States. I think the power of the court is clear, and that the present presents a proper case for its exercise.

On appeal to the General Term the order was affirmed proforma.


source: Caselaw Access Project

author: Putnam, J.:

license: Public Domain

text:
    THE PEOPLE OF THE STATE OF NEW YORK ex rel. GROVE WEBSTER, Respondent, v. WILLIAM T. VAN TASSEL, Sheriff of Ulster County, Appellant.

      Contempts — a power to subpoena, a witness given to a committee of a common council — it is a contempt to refuse to testify — not a contempt to refuse to produce papers.

    The charter of the city of Kingston (Laws of 1872, chap. 150, § 32) gives to a committee of its common council power in certain cases to issue a summons “to any person to appear and testify before them,” and provides that any person who shall refuse to attend, or to be sworn or “to answer any proper or pertinent question” may be committed to the county jail, etc.,'but makes no provision for a case where a witness fails to produce books which he has been subpoenaed to produce.
    Such a committee of the Kingston common council directed, by subpoena, the city treasurer to produce certain bank books showing the accounts existing between himself, as city treasurer, and a certain bank, and also other documents. The city treasurer appeared and testified, but refused to produce the books and' documents; for which refusal he was punished as for a contempt.
    In proceedings taken by habeas corpms to review his commitment:

      Held, that as there was no provision in the city charter which authorized, in terms, the committee to require the production of the books, that the existence of such power would not be implied.

      That the power to punish for contempt would not arise by implication or from the necessity of the case.
    That, in this regard, a statute must be most strictly construed, and cannot be extended in any respect.
    Appeal by William T. Van Tassel, Sheriff of Ulster county, from an order of the county judge of Ulster county, entered in the office of the clerk of the county of Ulster on the 3d day of February, 1892, discharging, in habeas corpus proceedings, Grove Webster from imprisonment. The facts appear in the opinion of the county judge of Ulster county.
    The opinion of the county judge of Ulster county, referred to in the opinion of the General Term, is set forth in the note.

      Q. D. B. Hasbrouale, for the appellant.

      B. M. JDe Witt, for the respondent.

      By a resolution of the common council of the city of Kingston, adopted January 15, 1892, it was

        Resolved, That two members of the common council be added to the committee to investigate the city treasurer’s accounts in the place of Aldermen Murray and Dolson, whose terms of office have expired, and that said committee have full power to send for persons and papers.
      The chair appointed, in addition to the mayor, Alderman Brinnier and the city clerk, the other members being Aldermen Dederick and Tubby.
      Claiming to act under the provisions of the city charter, Laws of 1872, chapter 150, section 32, this committee issued a summons to the relator by which he was summoned “ to attend before the committee at the mayor’s office in the City Hall on Wednesday, January 27, 1892, at 3 o’clock p. m., there to give such information touching the subject of inquiry as might be in his possession; ” and he was further directed to “ bring with him before said committee all bank-books had and held by him as city treasurer of the city of Kingston, and containing the record of transactions between such officer and the First National Bank of Rondout, relating to the general fund account, bond and coupon account and all other accounts, and such other documents in his custody as might be required in the investigation of the said subject.”
      In obedience to the command of the summons the relator appeared at the time and place therein specified, and was sworn and examined as a witness by the members of the committee, but refused to produce any books or documents.
      Thereupon Alderman Dederick, a member of the committee, presented an affidavit to the recorder of the city of Kingston, setting forth the refusal of the relator to produce such books, and an order of attachment was issued by the recorder directed to the sheriff, commanding him “ to attach the relator and forthwith bring him before the recorder, at his office in the City Hall, to answer for his refusal to obey the said summons, and bring the said books and attend and appear and testify as thereby required.” The relator was arrested by the sheriff and taken before the recorder, who thereupon adjudged that he had failed and refused to attend and appear as required by the summons, and who forthwith, by an order under his hand, committed the body of the relator to the custody of the sheriff, commanding the sheriff that he keep him in close custody in the county jail of the county of Ulster for a period of twenty days, or until he “ shall attend and appear in obedience to such summons directing him to bring the books aforesaid before the said committee.”
      It is claimed by the relator that the action of the committee, of Alderman. Dederick and of the recorder is absolutely void, and that his detention is illegal for three reasons:

        Mrsi. That the committee is illegally constituted, in that the city clerk is made a member thereof without authority of law.

        Second. In that the warrant committing the relator to the custody of the sheriff is fatally defective; in that it provides for his perpetual imprisonment in case of his failure to comply with the order of the committee.

        Third. In that the recorder had no power to commit him to the county jail for refusing to produce the books and papers specified in the summons.
      There is possibly some question whether the action of the committee is not invalidated by the fact that the city clerk, who is in no sense, under the charter, a member of the common council, was made one of its members.
      But it is not necessary to discuss that point.
      Upon a careful examination of the statute and the authorities, I am rather of the opinion that the warrant of the recorder committing the relator to the custody of the sheriff is fatally defective, and that under the provisions of the habeas corpus act the relator would be entitled to his discharge upon that ground alone. (Code of Civil Pro., § 2088, sub. 3.)
      However correct these views may be, it was stated on the argument by counsel for the relator, and by the corporation counsel, that what was most desired was the opinion of the court as to the power of the recorder to commit the relator for a refusal to produce books and papers.
      It was suggested by the court, in order to avoid circumlocution of proceeding, that the relator waive the point as to the claimed illegality of the organization of the committee and the defective character of the recoi'der’s warrant, and that a stipulation of waiver be entered upon the record in order that the more important matter involved could be passed upon as the only point of the case. This, however, was not assented to. The proceeding is a special one, under the provisions of section 82 of the charter of the city, which is as follows:
      “ The common council, or any committee thereof, shall have power to issue a summons to any person to appear and testify before them, in respect to any matter pending before or referred to them. Such summons may be served at any place within the county of Ulster, in the same manner as subpoenas for witnesses in criminal cases. Any person who shall refuse to attend in obedience to any such summons may be arrested by an order or attachment, which may be issued by the mayor or recorder, upon proof of the service of such summons and of such refusal, and be committed to the county jail or other proper place of detention until he shall appear or testify as required. Such witness so refusing to attend may also be fined or imprisoned for disobedience of such summons by the mayor or recorder, in the manner and to the same extent as witnesses refusing to attend in obedience to a subpoena duly issued by a justice of the peace. Whenever any person summoned as a witness before said common council, or any committee thereof, shall refuse to be sworn or affirmed, or to answer any proper or pertinent question, the mayor or recorder, on complaint made, may forthwith commit such person to the county jail or other proper place of detention for a period not exceeding twenty days, or until he shall be sworn or affirmed or answer such questions. Such commitment shall be made by a warrant directed to the sheriff of the county or other officer having such place of detention in charge, and shall recite the cause of such commitment, and such officer shall keep such person in close confinement as directed thereby.”
      It is claimed by the learned corporation counsel that although the city charter does not in express language confer upon the common council or its committee the right to compel the production of books and papers, still that that power is one incident to the power to compel the presence of and the giving of testimony by a witness, and if this contention be correct, were it not for the alleged defects above referred to, it would be evident that the relator was in contempt, and was properly committed to the county jail for refusal to obey the command of the summons issued by the committee appointed under the resolution of the common council.
      If the proceeding were before a judicial instead of a legislative tribunal, there would be no question as to the correctness of this position, as courts of justice have for centuries had the inherent right to compel the attendance of witnesses and the production of such books and papers as were pertinent to the determination of the rights of parties in an action pending before them, and the Revised Law, the Revised Statutes and the provisions of the Code of Civil Procedure have in no sense conferred this power, but have simply defined, limited it and provided a method for its enforcement.

        There seems, however, from the earliest times to have been a wide distinction between the powers thus possessed by courts of justice and those conferred upon legislative bodies, and seems also to be a marked disposition upon the part of courts of justice to limit the scope of inquiry by legislative bodies, particularly those of a subordinate character, within the strict limit of the law authorizing such investigations. And the reasons assigned by the courts for the severity of their construction of such statute is that such investigations were unknown'to the common law; are purely creatures of the legislative body itself; are informally conducted without the usual safeguards and restrictions imposed by rules of evidence and procedure in courts of justice; are apt to be inquisitorial and oppressive, and are too often used for strictly partisan purposes, becoming a menace to the rights of the citizen, without affording him .that protection guaranteed by the Constitution and the laws. Interesting as the subject is, it is not possible within the limited time at the disposal of the court to review the authorities, ancient and modern, upon this important branch of the law. I can only refer to the statutes and to two or three of the more recent decisions.
      It is admitted by the corporation counsel, and by counsel for the relator, that the language of the charter, “ Such summons may be served at any place within the county of Ulster in the same manner as supboenas for witnesses in criminal cases,” means simply that such summons may be served without the payment to the witness summoned of the statutory per diem allowance, and the sum for mileage directed to be paid to witnesses in civil cases.
      It is claimed, however, by counsel for the relator, that as the city charter does not in express terms provide for the issuing of a summons commanding the witness to produce books and papers, and does not in express language provide that if a witness fail to produce books or papers he may be committed to the county jail, that that power is not conferred by statute, and that as the provisions of the charter providing for the punishment of a recalcitrant witness is penal in its nature, it must be literally and strictly construed.
      It will be seen by an examination of the statutes that in each case where the power to punish for contempt for a failure to comply with the provisions of a subpoena duces iecu/m, commanding the production of books and papers, is given, that the statute itself specifically and distinctly directs that a failure to produce such books and papers is a contempt. This distinct provision, it is admitted, is absent from the city charter. Whether it be a casus omissus or a deliberate withholding of power by tbe legislature is, for the purpose of this inquiry, immaterial. Thus, under the provisions of the Code of Civil Procedure and the Code of Criminal Procedure, express provision is made by statute for the production of books and papers, and for the punishment of a witness who fails to produce a book or paper when properly required so to do. The penalty for disobedience in ¡civil cases is prescribed by section 853 of the Code of Civil Procedure, which is as follows :
      “ A person so subpoenaed, who fails without reasonable excuse to obey the subpoena, or a person who fails without reasonable excuse to obey an order duly served upon him, made by the court or a judge, in an action before or after final judgment therein, requiring him to attend and be examined, or so to attend and bring with him a book or a paper, is liable in addition to punishment for contempt for the damages sustained by the party aggrieved in consequence of the failure and $50 in addition thereto.”
      The provisions of the Code of Criminal Procedure are embodied in section 613, and are to the efEect that, if books, papers or documents be required, a direction to the following effect must be contained in the subpcena, etc.
      In a leading case before the General Term of this department, Presiding Justice Learned writing the opinion, says: “ The power which courts possess of punishment for contempts and for refusal to give evidence is, in its nature, an exception to the provisions of the Constitution. It is a power to deprive a man of his liberty without a jury, and without a regular trial. It cannot, therefore, be extended in the least degree beyond the limits which have been imposed by statute. No implication and no fancied necessity can be permitted to add to the literal meaning of the words by which the legislature have restricted this power. And this is especially true of all tribunals which are not courts of general jurisdiction. (Rutherford v. Holmes, 5 Hun, 317.)
      This case, in which it was held that a justice of the peace had no power to adjudge a person in contempt and to punish him therefor, save in the exact cases prescribed by statute, and that a justice was liable in an action for false imprisonment at the suit of one imprisoned under and in pursuance of his warrant of commitment for such a contempt, was affirmed by the Court of Appeals in 66 New York (368), in which Judge Folgee, delivering the opinion, says: “It is also significant that the legislature, so far as it has, in general terms, enacted for proceedings as for contempts to enforce civil remedies and to protect the rights of parties in civil actions, lias confined its action to courts oí record,” and that no court not of general jurisdiction has any inherent or implied power to punish for contempt save in a case stated in the statute law.
      In the case of The People ex rel. Fries v. Riley, Sheriff of Kings County (25 Hun, 587), Judge Gilbert says; “ There exists no undefined power authorizing the commitment of citizens for contempt in cases defined and limited by statute.”
      This case, in which the relator was committed to the county jail of the county of Kings for refusal to pay a sum of money ordered to be paid by the City Court of. the city of Brooklyn, and released on habeas corpus by a justice of the Supreme Court in the second district, was followed by the Court of Appeals in Myers v. Becker (95 N. Y., 493), and in Sherwin v. People (100 id., 358), and in numerous cases at the General Term since that time.
      In the Matter of Bradner (87 N. Y., 171) it was unanimously held by the Court of Appeals that the board of supervisors of the county of Livingston had no jurisdiction to appoint a committee of its members for the purpose of an investigation relative to the railroad commissioners of one of the towns in that county, and tbat they had no authority to require the attendance of a witness before the committee upon such an investigation, and that, therefore, a subpcena requiring such attendance conveyed no mandate which imposed compliance, and disobedience thereto was not, within the meaning of the law, a contempt.
      In that case the board of supervisors appointed a committee to make an investigation, and a subpoena signed by the chairman of the committee was issued, requiring the defendants to appear before the committee at a time and place named, and to bring certain documents in their control as might be required in the investigation of the subject.
      The subprana was not obeyed and the recalcitrant witness was committed to the custody of the sheriff of the county. He sued out a writ of habeas corpus, and on the return of the writ the judge ordered it to be vacated and quashed, and imposed as a condition that no action for false imprisonment on account of the imprisonment of the relator should be brought.
      On appeal the General Term revised that part of the order imposing the condition, and on appeal to the Court of Appeals, that court unanimously held that the board of supervisors had no authority to compel.the production of the books and ¡papers; that no case of contempt was made out; that the warrant committing ■the relator to the custody of the sheriff was absolutely void and furnished no jurisdiction to the party causing it to be executed, who thereupon became liable to the •defendants for false imprisonment; that that right of action which had accrued to the relator could not he interfered with by the court, and that it, therefore, had no authority for imposing such a condition.
      In the case of The People, on the Relation of Sabold v. Webb, Sergeant-at-Arms of the Assembly (28 N. Y. St. Rep., 825), a committee of five members of the assembly, including the speaker, were given charge of certain repairs and alterations in the Capitol, the same to be completed by December 15,1888. Subsequently, and after the organization of the legislature of 1889, a committee of members were appointed to investigate all the questions connected with the work, with power to send for all persons and papers, and report to the house, with such recommendations as in its judgment the public interest might require and for the purpose of remedial legislation. The committee issued its subpcena directed to the relator, the superintendent of the Western Union Telegraph Company of Albany, commanding that he bring with him certain telegrams addressed to one Snaith, to whom the contract had been awarded. Upon the relator’s refusal to produce the telegrams or to give information thereof he was arrested on the warrant of the speaker, and subsequently committed to the common jail. He sued out a writ of habeas corpus, which came up before Mr. Justice Mayham, who, in a learned and exhaustive opinion, says:
      “ It seems well settled that the legislature cannot, nor can any committee appointed by it, constitute itself into a court of general jurisdiction, or a grand inquest for the purpose of inquiring into the conduct of a citizen not a member of its body. Nor can it compel the answer of the witness on an inquiry or an investigation before it, except for legislative purposes, or requiring information upon which to predicate remedial legislation. * * *
      “Assuming, therefore, as we must under the authorities, that the legislature has no general judicial powers, and that it can confer none upon its committees, and that its power to punish contumacious witnesses is confined strictly to examination for legislative purposes, we are forced to the consideration of the question, was the investigation in which the special committee of the house engaged when the relator refused to answer and produce papers for legislative purposes or to promote beneficial legislation, or was it inquisitorial in the nature of a judicial investigation? * * . *
      “As we have seen, a legislative committee may summon and examine witnesses in legislative proceedings or to promote remedial legislation, but when they seek to enforce obedience to their orders by proceedings for contempt they must be acting strictly within the limits of their delegated authority. Both committee and witness are subject to the provisions of the statute. In this case the recitals and preambles purporting to give reasons for the adoption of the resolution of investigation do not suggest any new legislation. The chief object seems to be the gratification of a very natural and, perhaps, a very laudable curiosity on the part of the press and public to know what have been done with the $100,000 profit on the contract. * * *
      “ The rule is elementary that the mere assertion of jurisdiction does not confer it upon a tribunal of sjiecial and limited authority. * * *
      “ I am of the opinion that the assembly had no jurisdiction to compel the relator to answer the question and furnish the telegrams demanded, and that his committal for contempt on refusing to comply with the requirements of the committee was without jurisdiction and void, and that he must he, therefore, discharged.”
      It will hardly be contended that the legislature of the State and the board of supervisors of a county are bodies inferior in dignity to the common council of the city of Kingston; and if the courts have uniformly viewed with such strictness the powers of these superior legislative bodies and denied to them in cases of this character the existence of any implied or inherent powers other than those expressly given by statute, it is difficult to see how it is possible to apply a different rule in construing the provisions of the charter of the city, which it is conceded contains no express statutory provision authorizing the commitment of a person who declines to produce books and papers.
      It would seem, therefore, entirely aside from the questions raised as to the legality of the constitution of the committee and the defect in the warrant of commitment, that the committee of the common council had exceeded its jurisdiction in undertaking to compel the relator to produce the books and papers specified in the summons, and that its action in causing a complaint to he made before the recorder of the city of Kingston, and the action of the recorder in committing the relator to the common jail of the county for disobedience of the summons, was without jurisdiction, and absolutely void; that the imprisonment of the relator is illegal, his detention by the sheriff unlawful, and that he is entitled to his discharge.
      If the books mentioned in the summons he in fact the property of the city, and not the individual property of the relator, the city is, of course, entitled to their possession, which can readily be obtained by the ordinary process of the courts, and it ought to he entirely unnecessary to call attention to those provisions of law which provide for the obtaining possession of property unlawfully withheld by another.

   Putnam, J.:

The opinion of the court below contains a full statement of the facts of the case and a learned and able discussion of the questions involved. In addition to what he has said, I will only make a few suggestions regarding one phase of the case.

The proceedings which resulted in the order of the recorder, adjudging the relator guilty of contempt in declining to produce books and papers, were brought under section 32 of the charter of the city of Kingston, chapter 150 of the Laws of 1872. And the question submitted is, does this section of said chapter authorize the commitment of the relator for contempt in declining to produce books and papers ?

It provides for two cases where a commitment may be made. First. Where one summoned shall refuse to attend. Relator did attend, and hence should not be imprisoned under that clause of the section. Second. Section 32 provides tliat one summoned, who refuses to be sworn, affirmed, or to answer any proper and pertinent question may be committed. The relator did not refuse to be sworn or to answer any proper or pertinent question. The above quoted clauses are the only ones relating to commitment for contempt.

The power to punish for contempt is derived from the statute, and cannot be extended beyond the limit imposed by the law. “No implication and no fancied necessity can be permitted to add to the literal meaning of the words by which the legislature have restricted this power. And this is especially true of all tribunals which are not courts of general jurisdiction.” (Rutherford v. Holmes, 5 Hun, 317; 66 N. Y., 368.)

There seems to be an omission in the act under consideration to provide for a case where a witness declines to produce papers; and unless we attempt to disregard the doctrine laid down in the case of Rutherford v. Holmes (supra), that the power to commit for contempt cannot be extended in the least degree beyond the terms of the statute, we are compelled to adopt the view of the court below. Tbe statute under which the recorder acted being silent as to any power on his part to commit for non-production of •papers or books, in this regard is different from the Civil and Criminal Codes and Revised Statutes.

Under section 856 of the Code of Civil Procedure, power is conferred upon the court to commit a witness when he refuses to produce a booh or paper which he was directed to bring by the terms of the subpoena.” The Criminal Code (§ 613) provides fora subposna duces tecum,, and (§ 619) that for disobedience to a subpoena the witness may be punished in the manner provided by the Civil Code. Under the Revised Statutes (2 R. S., 534, § 1), it was provided that the court could punish as for a contempt a person summoned as a witness for refusing or neglecting to obey such summons.

Section 32 of the charter of Kingston does not contain any general authority on the part of the recorder to commit for a refusal to obey the summons, but limits the right of commitment to certain acts of disobedience, viz.: The refusal to attend, and the refusal to be sworn or answer proper or pertinent questions.

I, therefore, conclude that there is an omission in the statute to confer power upon the recorder to commit for failure to produce papers and books, a defect that cannot be remedied by courts, and that hence the conclusion reached by the county judge was correct.

This view of the case renders it unnecessary to consider the other questions raised as to the order made by the recorder.

The order of the court below should be affirmed, with costs.

Mayham, P. J., concurred; Hebbick, J., concurred in the result.

Order affirmed, with costs.


author: Mayham, P. J.:

text:
    THE PEOPLE OF THE STATE OF NEW YORK ex rel. JAMES M. PATTERSON, Appellant, v. EDWARD REED, Respondent.

      Military Gode — delinquency court — when jurisdiction is established — attaching it collaterally — several fines included in one warrant — form of warrant.

    James M. Patterson, a member of the National Guard, was found guilty of certain charges by a delinquency court organized under the Military Code. Having failed to pay the fines imposed a warrant for their collection was issued, under which he was arrested.
    In proceedings by habeas corpus to procure his release the defendant, a marshal, justified under the warrant, which recited that the court was duly appointed and that Patterson was duly summoned to appear.
    The summons was put in evidence, and its service was proved by Patterson, himself.

      Held, that this was sufficient, prima facie, to establish jurisdiction of the person and subject-matter.
    That, upon habeas corpus, the court could not inquire into the legality or justice of the order of the delinquency court.
    That, for an error in the exercise,of its jurisdiction by the delinquency court, the remedy was by certiorari or by appeal.
    That as neither the petition nor answer to the return denied the existence or the organization of the court, although it was one of limited jurisdiction, its jurisdiction could not be attacked.
    That, under section 123 of the Military Code ([8th ed.], p. 853), the court did not exceed its jurisdiction in imposing a fine, which was the sum of several penalties for separate delinquencies, provided that.the penalty in each case did not exceed the statutory maximum.
    That if it was error to duplicate penalties in one warrant, the mistake could only be taken advantage of by appeal.
    That such a fine was not similar to a penalty imposed for a conviction in the nature of a criminal offense, but was more nearly like a recovery in a civil action of a game or excise penalty.
    That section 127 of the Military Code seemed to contemplate the duplication of penalties in one warrant.
    That section 114 does not require that charges and specifications shall be served on the accused when brought before a delinquency court.
    That while the statute did not prescribe the form of the warrant in such cases, the warrant was not erroneous in directing the imprisonment of the relator for default in paying the fine, since the statute made that act the duty of the sheriff or marshal in case of non-payment. (Military Code, § 127.)
    Appeal by the People of the State of New York and James M. Patterson, relator, from a final order of Hon. A. J. Cheritree, County Judge of Warren county, dated February 24, 1890, dismissing a writ of habeas corpus issued on behalf of the relator and remanding him to the custody of the marshal.
    The relator being in custody of the defendant under a warrant purporting to have been issued by a delinquent court organized under the provisions of the Military Code, sued out a writ of habeas corpus, and the defendant, by his return to such writ, justified under such warrant. The warrant recites that a delinquency court was duly appointed and held for a trial of enlisted men of the Eighteenth Separate Company of the National Guard, and that the relator was duly summoned to appear at such court at a time and place appointed, at which time and place such court was held, and the relator was returned thereto as delinquent in not attending certain specified drills and parades. That it appeared to the satisfaction of such court that the relator was a duly enlisted member of such company, and that no sufficient excuse was presented for the delinquency charged against him, and that the court thereupon adjudged him delinquent, as charged, and sentenced him to pay a fine of fifty dollars. The warrant required the defendant to collect such fine,, with costs, from the relator, and in default of property to arrest and convey him to the common jail of the village of Glens Falls, or the county of Warren, as the case may be, and to deliver him to the jailer for imprisonment according to law.
    The relator, by his traverse of such return, alleged that the court had not jurisdiction of his person; that no evidence was given in support of the charges; that prior to his case being called he had no knowledge of the charges against him, etc. Upon the hearing the only evidence given before the county judge was by the relator, that a summons was served upon him for his appearance before the delinquency court. The county judge made an order dismissing the writ and remanding the relator to the custody of the defendant, and from that order the relator appeals.

      Louis M.\ Brown, for the appellant.

      Loyal L. Danis and C. J. Buchanan, for the respondent.
   Mayham, P. J.:

The relator insists that there was no proof before the county judge on these proceedings that the delinquency court acquired jurisdiction, either of the person of the relator or of the subject-matter of the charge, to authorize that court to impose the fine for which the relator was arrested and committed by the defendant under the warrant issued by the president of the court.

We think the summons issued by the president of the delinquency court, which was put in evidence on the part of the relator and which he swears was served upon him, was sufficient prima faci& to establish the jurisdiction of that court, both of the relator and subject-matter of the' charge.

The statute authorizes the creation and organization of the delinquency court, and the amended return shows that the warrant was issued by the president of that court; and the existence and validity of such court is nowhere expressly traversed by the petition or answer to the amended return, and we, therefore, conclude that the existence and jurisdiction of that tribunal is established; and, by the service of the summons and the appearance of the relator in the delinquency court pursuant to its mandate, the court acquired jurisdiction of the person of the relator.

The delinquency court having thus acquired jurisdiction, the county judge, on habeas corpus, could not, nor can this court, on an appeal from his order quashing the writ, inquire into the legality or justice of the mandate, decree or final order of the delinquency court. For any error in the exercise of the jurisdiction, relief must be sought either by certiorari or appeal. This was the rule under the Revised Statutes, and it has not been changed by the Code. Section 2034 of the Code of Civil Procedure provides as follows : “ But a court or judge, upon the return of a writ issued as prescribed in this article, shall not inquire into the legality or justice of any mandate, judgment, decree or final order specified in the last section, but one, except as therein stated.” Section 2033 of the Code provides that where a person is in custody by virtue of a mandate in a civil cause, he can be discharged only in one of the cases mentioned in that section, and this proceeding does not come within any of the cases there enumerated.

It is quite true that, as this delinquency court is not a court of general jurisdiction, its recitals of jurisdictional facts do not -furnish. prima facie evidence of jurisdiction. But the jurisdiction of this court in this case does not rest upon recitals alone, but upon the summons and proof of service and the uncontradicted allegation in the return of the existence and organization of the court, which stand admitted in the record. While, therefore, the jurisdiction of this court was open to be attacked in this proceeding, yet, when jurisdiction is shown, its proceedings cannot be.collaterally assailed.

Upon this subject, Ruger, Ch. J., in People ex rel. Frey v. The Warden, etc. (100 N. Y., 26), uses this language: “When, however, a court has jurisdiction of the subject-matter, and has acquired jurisdiction of the person by service of proper process, or the voluntary appearance of the party, it is competent for it to try and determine all questions within the issue arising during the course of the trial, and its decisions thereon can be reviewed only on appeal in a direct proceeding, having that object in view.”

But it is insisted that the delinquency court had no power to inflict a penalty amounting in the aggregate to fifty dollars, and that the imposition of this penalty comes within the provisions of the habeas corpus act as contained in subdivision 1 of section 2033 of the Code, when the jurisdiction of the court has been exceeded. By section 123 of the Military Code (2 R. S. [8th ed.], p. 853), it is provided as follows: “ Every enlisted man who shall, without proper excuse, be absent from, or in any other respect delinquent at any drill, parade, encampment, meeting for instruction, or other duty ordered by competent authority, shall be fined by a delinquency court for enlisted men, not more than five nor less than one dollar for each absence or delinquency.”

The relator denies the right to duplicate offenses, and try a delinquent for ten offenses or delinquencies at the same time; but we see nothing in the act that prohibits such a fine if the same is made of a sufficient number of delinquencies at not to exceed five dollars for each offense to aggregate to that amount. That would not be the exercise of an excess of authority prohibited by the habeas corpus act above referred to, so long as each penalty did not exceed the maximum of the penalty for such delinquency. If the duplication of the penalties in one warrant was erroneous that was but an error in the exercise of the jurisdiction which could only be corrected on appeal, and not on habeas corpus, as we have already shown.

If the imposition of a penalty is to be considered in the nature of a conviction for an offense, then the case of the People ex rel. Tweed v. Liscomb (60 N. Y , 559) would be in point, and the authority of the court would be clearly exceeded, and the want of jurisdiction as to such excess of authority would be good ground for interference by habeas corpus, for as to such excess the court would be without jurisdiction and its order would be void. But it can hardly be claimed that the delinquencies charged against the relator were criminal, and that the penalties imposed by the statute for such delinquencies were in the nature of punishments for crimes, and hence the aggregation of punishment for several offenses charged in the Tweed indictments have no direct application to the delinquencies charged against the relator for which this sum of fifty dollars was imposed as a fine. The case is more nearly like a civil action for the violation of the game or excise laws, when several penalties may be recovered in the same action, and enforced on the same execution.

But the Military Code in itself contains provisions which strengthen the argument that fines may be aggregated and embraced in the same warrant for collection by the marshals. Section 127 is as follows: “ For the purpose of collecting any fines or penalties imposed by any courts-martial or delinquency courts, authorized by this act, the president of the court shall, within twenty days after the expiration of the time in which an appeal is allowed, as provided in this act, * * * make a list of all the persons fined, describing them distinctly and showing the sums imposed as fines or penalties, on each person and not paid, and shall draw his official warrant directed to any marshal * * * commanding him to levy such fines,” etc.

It seems quite evident, from the language above employed, that the president may in the same warrant aggregate several penalties against the same person in one warrant, and also that he may in the same warrant embrace more than one delinquent. It would seem, therefore, that the delinquency court did not exceed its authority in embracing in one warrant several fines, so long as the fine imposed for each delinquency did not exceed the maximum sum imposed as a penalty for any one delinquency.

It is also urged that there were no charges and specifications served on the relator, as required by section lié of the Military Code. That section only requires that charges and specifications shall be served on the accused when brought to trial before a court-martial No such requirement is made in trials before delinquency courts.

It is also urged that the warrant was irregular on its face in that it directed the imprisonment of the relator in the Glens Falls or county jail in default of collection or payment of the fine.

The statute does not jirescribe the form of the warrant, but it defines the powers and duties of the marshal or sheriff, charged with its execution, as follows: “In default of sufficient goods and chattels to satisfy the same, then such marshal of the court, or sheriff or constable of any city or county * * * shall take the body of such delinquent and convey him to the common jail of such city or county,” etc.

’ The warrant, therefore, directed substantially the performance of the same act which the statute required the sheriff or marshal to-do without any such direction, and it is difficult to see how the relator could be injured by such direction. Such direction was not required by statute, but it gave no direction that the sheriff, under the statute, was not required to do whether it was contained in the warrant or not.

The order of the county judge, directing that the writ be quashed and the relator remanded, was right and must be affirmed, with costs.

Order affirmed, with costs and printing disbursements. -

Putnam and Herrick, JJ., concurred.

Order dismissing writ of habeas corpus and remanding relator affirmed.


text:
    WILLIAM BOOKHEIM, Respondent, v. THOMAS ALEXANDER, Appellant, Impleaded with Another, Defendant.

      Bills and notes — bona fide’ holder — only a part of the consideration paid in cash and part by a meat bill contracted for cash — credibility of the plaintiff, a sole witness, submitted to the jury.

    Two persons, named Ruso, made a promissory note in the sum of $100, payable to Thomas Alexander, who, before its maturity, transferred it to one Myers for ten dollars. Myers, before its maturity, transferred the note to one Bookheim for twenty dollars, and a credit of eight dollars for meat which he had bought of Bookheim upon an agreement to pay cash therefor.

      Bookheim brought an action upon the note against the Rusos and Alexander, in. which Alexander answered denying all the allegations of the complaint except, the making and delivery of the note. He also alleged that he had borrowed of Myers ten dollars upon the security of the note, and at the same time had, at. Myers’ request, indorsed it.
    He alleged that the note had been wrongfully diverted by Myers.

      Held, that Bookheim, having taken the note before maturity, was a Iona fide holder thereof, although part of his payment was in cash and part in a meat bill due to him from Myers and canceled.
    That it was, therefore, not error to exclude the testimony of Alexander as to the equities existing between himself and Myers.
    That his transfer of the note and its indorsement estopped Alexander from denying its validity as against a bona fide holder.
    That as the transactions between Bookheim and Myers depended upon the testimony of Bookheim alone, it was error to refuse to submit to the jury the question of his credibility.
    Appeal by the defendant, Thomas Alexander, from a judgment, of the Supreme Court, entered in the office of the clerk of the county of Albany on the 25th day of January, 1892, upon a verdict for the plaintiff for $116.72, after a trial at the Albany Circuit before the court and a jury.
    The action was brought upon a promissory note in the sum of $100.
    The answer, as a second defense and counter-claim, alleged as-follows:
    ■ First. That said John G. Myers was not at any time a bona fide holder for value of said promissory note set forth in the complaint, herein, but that said John G. Myers received said note as collateral security for a loan of ten dollars to defendant, Thomas Alexander,, with the express understanding that defendant, Thomas Alexander, was to have more money upon it if he desired; and that said note was.not to go out of said Myers’ possession, and was not to be transferred or used by said Myers without due notification to and the authority of said defendant, Thomas Alexander; and was to be delivered up to said defendant, Thomas Alexander, on payment-of the ten dollars or any further sum advanced by said Myers; and that said defendant, Thomas Alexander, has tendered ten dollars, that being the amount due said Myers upon said note, and demanded a return thereof. That said John G. Myers wrongfully diverted said note from the purpose for which it was indorsed to him, and fraudulently misapplied the same by transferring it to the plaintiff herein; and at the time of said transfer to plaintiff there was due and owing to the defendant, Thomas Alexander, from said Myers on said note the sum of ninety dollars and interest from April 8, 1889.

      Second. Defendant, Thomas Alexander, alleges, upon information and belief, that plaintiff herein is not a bona fide holder of the note in suit for a valuable consideration, but received the same with notice of the foregoing facts and without paying any consideration therefor.

      Nathaniel Niles and Albert Hessberg, for the appellant.

      Henry E. Stern and Andrew Hamilton, for the respondent.
   Mayham, P. J.:

This action was prosecuted upon a promissory note made by John II. Ruso and Harriet L. Ruso, payable to Thomas Alexander, and by him transferred by indorsement before maturity to John G. Myers, who indorsed the same before maturity and transferred it to the plaintiff.

The action is prosecuted against the makers and first indorser of the note. The answer put in issue all of the allegations of the complaint except the execution and delivery of the note. The proof shows that the defendant Alexander indorsed this note and transferred it to John G. Myers, receiving for it at the time ten dollars in money. Myers transferred it to plaintiff for twenty dollars cash, and a credit of eight dollars for meat which he bought of plaintiff on an agreement to pay cash.

The defendant Alexander testified in his own behalf, under objection of the plaintiff, to the transaction between him and Myers at the time he let Myers have the note; that he was boarding at Myers’ Hotel and wanted money, and got a loan of ten dollars, and left the note with Myers as security, and at the same time wrote his name on the back of the note at Myers’ request. This was before the note became due.

He also testified that he offered to pay Myers the ten dollars he got of him, at the time he let him have the note, and five dollars for the use of it. This evidence was objected to by the plaintiff and stricken out on his motion; and at the conclusion of all of the evidence the trial judge directed a verdict for the plaintiff for the amount of the note and interest, on which judgment was entered.

The .defendant insists that the plaintiff was not a bona fide holder of this note for value, and that he, therefore, took this note subject to all the equities existing against it in the hands of Myers; and that as between Myers and Alexander there never was a bona fide transfer of the note, but that Myers took it as security for a loan of ten dollars.

Whether this contention is sound depends upon the transaction between the plaintiff and Myers. The legal presumption arising from the transfer is that he took it before maturity and for value. In Mechanics and Traders' Bank v. Crow et al. (60 N. Y., 87), it was held that the holder of a negotiable promissory note is presumed to be a bona fide holder for value, without notice of any defense to the instrument, and proof of want or failure of consideration between the original parties did not change that presumption, or put the holder to proof of the consideration upon which he received the paper. In the same case it was held that when the note was taken by the holder before maturity and paid for in part in cash and the balance in payment of a past-due note of the indorser, the holder became a bona fide holder for value (citing Brown v. Leavitt 31 N. Y., 113; Pratt v. Coman, 37 id., 440; Chrysler v. Renois, 43 id., 209; Weaver v. Barden, 49 id., 286), and holds that a verdict for the plaintiff was properly directed by the court. The points discussed and disposed of in the above cases are applicable to the case at bar. The plaintiff received the note before maturity. He paid cash at the time in part and turned in a cash obligation of the indorser in part payment for the balance.

The plaintiff, within these authorities, being a bona fide holder of this note, it was not error to exclude the testimony of the defendant Alexander as to the equities existing between him and Myers, his indorsee. By indorsing the note and putting it in circulation a subsequent holder became entitled to rely implicitly upon such indorsement, and he is estopped from denying the validity of that indorsement, as against an innocent holder of the note, without notice of any equities in favor of the indorsee.

But it is insisted, on the part of the defendant, that all of these facts depend upon the testimony of the plaintiff; and that as there was no other witness to support the plaintiff’s case than himself, the case should for that reason alone have been submitted to the jury, and the refusal of the learned judge to submit it was, for that reasoD, error, for which the judgment should be set aside.

With the testimony of the defendant out of this case its determination must to a great extent depend upon the credence that attaches to the testimony of the plaintiff. His testimony, with the corroboration only of the possessor of the note and the indorsement of the defendant, established his right of recovery, if that right is established in this action.

It has been repeatedly held that when the plaintiff’s right to recover rests solely on his testimony, or when his evidence is a necessary element to a recovery and stands alone, the credit to which he is entitled is a question for the jury. In Joy v. Diefendorf (40 N. Y. St. Rep., 491) the principal defense relied upon to defeat a recovery was that plaintiff was not a bona fide holder of the note, and the only witness on the part of the plaintiff to establish that proposition was the plaintiff’s own evidence, and a verdict for the plaintiff, under the direction of the court, was set aside and judgment entered thereon reversed on the ground that the question should have been submitted to the jury.

To the same effect is the case of Vosburgh v. Diefendorf (119 N. Y., 357), and Canajoharie National Bank v. Diefendorf (123 id., 191). We think this case comes within the principle of those decisions, and that this case, under proper instructions, should have been submitted to the jury, and that the refusal of the learned judge to submit it on the request of the defendant’s counsel was error.

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

Putnam, J., concurred; Herrick, J., not acting.

Judgment reversed, new trial ordered, costs to abide event.


text:
    ALFRED SCHIMPF, Respondent, v. ALONZO SLITER, Appellant.

      Negligence — a collision between a buggy and a bicycle — a person forced to act suddenly — when an en'ov of judgment is excused — evidence of value.

    Alfred Schimpf was lawfully riding at the rate of three miles an hour upon a bicycle, upon the right side of a drive-way in a public park, when Alonzo Sliter, who was driving in a buggy at the rate of six miles an hour and upon the same side of the drive-way, ran into him.
    In an action brought by Schimpf against Sliter to recover the damages thus sustained by him:

      Held, that Schimpf was not guilty of contributory negligence in failing to turn to his left in the hope of thus allowing Sliter to pass.
    That, although Schimpf was proceeding so slowly, he had a right to presume until the last moment that Sliter would, as he was legally bound to do, turn to his right and yield the road to Schimpf.
    That, assuming that Schimpf did not act in the matter with good judgment, he was excusable as a party put in jeopardy by the negligence of Sliter and forced to act suddenly.
    That it was error to have allowed Schimpf to testify to what he had paid his physician and for repairs to his bicycle; that the value of such items should have been shown.
    Appeal by tbe defendant, Alonzo Sliter, from a judgment of tbe Supreme Court, entered in tbe office of tbe clerk of Albany county on tbe 5th day of January, 1891, upon a recovery by the plaintiff of $269.15 and interest and costs, after a trial before a referee.

      Galen R. Hitt, for tbe appellant.

      Ila/rold L. Hooker, for tbe respondent.
   Putnam, J.:

Tbe referee found that on tbe 2d day of May, 1888, plaintiff riding on bis bicycle on tbe drive-way in Washington Park in the city of Albany, and going at tbe rate of three miles an hour, met defendant driving a buggy, going at a rate exceeding six miles an hour in tbe opposite direction. Plaintiff was on tbe right side of said road, near to its western margin, when defendant came up on tbe same side and ran into him, causing tbe injury for which this action was brought.

The referee found that the defendant was negligent and plaintiff free from contributory negligence. There was no serious controversy in the case as to plaintiff being on the proper side of the road and defendant being on the wrong side, and hence as to the negligence of the latter. But it is insisted that the plaintiff, going at the rate of three miles per hour on his bicycle and seeing that defendant was about to run into him, could easily have turned to the left and avoided the collision, but, on the contrary, he voluntarily ran his bicycle into defendant’s wagon and thus caused the injury. The rule in this class of eases is well settled that the plaintiff must show that the injury was not caused by his own negligence. If a want of care on his own part contributed to produce the injury, although the plaintiff was on the right side of the road and the defendant on the wrong side, plaintiff cannot recover. (Kennard v. Burton, 12 Shepley, 47, 48, 49; Lane v. Crombie, 12 Pick., 177; Parker v. Adams, 12 Metc., 419, 420; Hartfield v. Roper, 21 Wend., 615.)

Therefore, although plaintiff was on his own side of the road, he must also show that he endeavored to avoid a collision with defendant’s vehicle. The question then arises whether the evidence justified the finding of the referee that plaintiff was not guilty of contributory negligence. I have given that evidence a careful examination and am of opinion that it does.

The plaintiff was going on his own side of the street when he met the defendant driving somewhat rapidly. Schimpf could not be expected to know or believe that Sliter when he reached him would riot turn out. The latter would only be compelled to turn out for a bicycle a short distance, a foot or two, and could do so in a moment. Therefore, plaintiff was justified in supposing that defendant worfid obey the law, and turn out, until the last moment-Hence no negligence could be imputed to plaintiff in not himself going to the left until the defendant was right upon him, because until that time he could have no reason to believe that the latter would not give way to him.

Had plaintiff, when the horse and bicycle were near each other, turned to the left and the defendant, at the same time, turned to the right, and a collision occurred, the former would have been legally liable for all damage. He was not bound to put himself in that position. I think, therefore, from the facts appearing in the case, the referee could find that Schimpf was not negligent in assuming until the last moment that Sliter would give way to him, and at the last moment it was not negligence on his part to not run the risk of turning to the left, when to do so would have subjected him to risk of collision if Sliter should turn the same way.

But even if plaintiff did not act with good judgment in the matter, the finding of the referee can be sustained. It is well settled that when a party by negligence of another is placed in a position of danger and is compelled to act suddenly, that the law does not demand that accuracy of judgment which would be called for under other circumstances, and in such a case, even if he makes a mistake, he will not be deemed negligent. (See Dyer v. Erie R. R. Co., 71 N. Y., 228; Bucher v. N. Y. C. and H. R. R. R. Co., 98 id., 132, 133; Salter v. U. and B. R. R. R. Co., 88 id., 49; Twomley v. C. P. N. and E. R. R. R. Co., 69 id., 158.)

Hence, if plaintiff found at the last moment that defendant did not turn to his right, and he did make a mistake in not turning to his (defendant’s) left, yet being called on to act suddenly, his mistake, under the circumstances, was not negligent.

Chaplin v. Hawes (3 Carr. & Payne, 554) illustrates this view of the case: That was an action for an injury to a horse plaintiff’s servant was riding, by defendant’s cart. Defendant’s cart was on plaintiff’s side (the wrong side) of the road. The plaintiff’s servant was riding through the gate when the injury happened. He testified that when three or four yards from the gate he saw the cart coming and could have pulled up, but did not, thinking that the driver would wait, as it was a gate through which the cart had no right to pass. The defendant claimed that if plaintiff’s man pertinaciously insisted on his right of going through the gate, when he might have avoided the injury either by waiting or turning aside the plaintiff could not recover. The court held that if plaintiff’s servant had such clear space that he might easily have got away, he would have been so much to blame as to prevent the plaintiff from recovering. But on the sudden a man may not be sufficiently self-possessed to know what way to decide, and in such a case the wrongdoer is tbe party answerable for the mischief, though it might have been prevented by the other party’s acting differently.

This case, however, is much more favorable for the plaintiff than that of Chaplin v. Hawes. There plaintiff’s servant could have turned away with safety. Here Schimpf, when he was near enough to Sliter to make it apparent that the latter would not give way, could not have turned to the left without the greater risk of a collision, for which Schimpf would be legally responsible. Hence the finding of the referee, that no negligence appeared on the part of the plaintiff, was correct.

I think, however, without discussing the matter at length, that, under the ruling of the Court of Appeals in Gumb v. The Twenty-third Street Railway Company (114 N. Y., 411), the referee erred in allowing proof of sums paid by plaintiff to his physician, for medicine, for repairing his bicycle, etc. In the case above cited the court held it error for the plaintiff to testify as to what he had paid for repairing his wagon and the amount of his physician’s bill, without showing the value of such items. For this error of the referee a new trial will be necessary unless the plaintiff stipulates to deduct the amount of the items so proved, which is fifty-nine dollars and fifteen cents.

The judgment should be reversed and a new trial granted, costs to abide the event, unless the plaintiff stipulates to deduct from the damages recovered in the action fifty-nine dollars and fifteen cents. If he so stipulate, the judgments hould be affirmed, without costs to either party.

Mayi-iam, P. J., concurred; HekricK, J., not voting.

Judgment reversed and new trial granted, unless plaintiff deducts fifty-nine dollars and fifteen cents from judgment. If deducted, judgment affirmed, without costs to either party.


author: PutNAm, J.:

text:
    ELI VAN BROCKLEN, Appellant, v. GEORGE B. SMEALLIE, Respondent.

      Venden'and vendee — evidence and measure of damages for a breach of a contract of sale.

    Eli Yan Broeklen, a vendor, brought an action against George B. Smeallie, the vendee, for the recovery of damages resulting from an alleged breach of contract to purchase certain lands and personal property.
    Upon the trial of the action Yan Broeklen testified that the property was worth $10,000, the contract-price, when the contract was made, and also when the breach occurred. There was no evidence to the contrary.
    After notice to Smeallie, Yan Broeklen sold the property at private sale for $7,500, and sought to recover from Smeallie the difference between that sum and the $10,000, viz., $3,500. He did not, however, ask to go to the jury on the question of value, nor did he claim that the $7,500 was evidence of value for the jury.

      Held, that a recovery of nominal damages was correct.
    That the notice given by Van Broeklen to Smeallie did not bind the latter so that Yan Broeklen could recover of him the difference between the contract-price and that realized at the resale.
    That a private sale afforded no evidence of the true valué of land.
    Appeal by the plaintiff, Eli Yan Broeklen, from a judgment of the Supreme Court, entered in the office of the clerk of the county of Montgomery on the 5th day of October, 1891, upon a verdict for the plaintiff, directed by the court, for six cents damages, after a trial at the Montgomery Circuit before the court and a jury; and also from an order, entered in said clerk’s office on the 6th day of October, 1891, denying a motion for a new trial.
    The action was brought to recover the damages alleged to have resulted from the defendant’s breach of a contract of sale, which was as follows:
    “Eli Yan Broeklen hereby agrees to sell and convey to George B. Smeallie all his undivided one-third interest in and to the firm of Snyder, Yan Broeklen & Hull, and to its assets and property, real and personal, for $10,000; and to make, execute and deliver the necessary deeds and conveyances therefor on or before March 1,1891.
    “ George B. Smeallie agrees in consideration thereof to purchase the undivided one-third interest of said Eli Yan Broeklen in said copartnership and its property and assets, and to pay thereof the sum of ten. thousand dollars, and assume and discharge an undivided one-third of the liabilities and indebtedness of said firm.
    “ Said $10,000 to be paid as follows :
    ■ “ Cash and bonds and mortgages on unencumbered real estate to the amount of $5,000, to be paid and delivered to said Yan Brocklen on or before Mar. 1,1891, and balance to be paid by two promissory notes, with interest, one for $3,000 and one for $2,000, made by George B. Smeallie, payable, $2,000 June 1, 1891, and $3,000 to be renewed from time to time. ££ -gjj -^AN BROCKLEN.
    “ GEORGE B. SMEALLIE.
    “"Witness our hands this 21st day of Feb., 1891.
    “ Witness: O. S. Nisbet.”
    The property contracted to be sold by the plaintiff to the defendant was subsequently sold to a third person after the following notice was given to the contract vendee :
    “ Geo. B. Smeallie, Esq.:
    “I have made diligent effort, since you declined to take my interest in the firm, to sell the same and get the best possible price therefor. The best offer I can get is about $2,500 less than you offer. I am still willing to carry out the contract we made, but if you still decline to do so, I shall hold you for the difference between what you offered and what I can get for it.
    “ The offer which I now have must be answered by or before to-morrow night. If I hear nothing to the contrary from you, I shall accept this offer, as it is the best I can get.
    “Yours, etc.,
    “Dated April 2,1891. ELI YAN BROCKLEN.”

      O. S. ffisbet, for the appellant.

      L. A. Serviss, for the respondent.
   PutNAm, J.:

There is but a single question involved in this case. The appellant or vendor brings the action against the defendant or vendee for damages for breach of contract to purchase land. The contract-price was $10,000. The plaintiff testified on the trial .that the property was worth that sum when the contract was made and at tbe time of the breach of the contract. There was no conflicting evidence in this regard. After notice plaintiff sold the property at private sale for $7,500, and claims to recover the difference between the contract-price and the amount for which he sold the property of defendant. "When the trial was concluded the plaintiff claimed to recover as above stated, but the court held that the rule of damages was the difference between the contract-price and the actual value of the property. That the notice given by plaintiff to defendant did not bind the defendant so that the plaintiff could recover the difference between the contract-price and the amount for which he sold the premises. And the court directed judgment in favor of the plaintiff for nominal damages. The plaintiff did not ask to go to the jury on the question of value or claim that the amount received on the resale was evidence of value to be submitted to the jury. I think the rule of damages adopted by the court was correct. (Wilson v. Holden, 16 Abb. Pr., 133; Congregation Beth Elohim v. Cent. Pres. Church, 10 Abb. Pr. [N. S.], 494; Timby v. Kinsey, 18 Hun, 255; Pumpelly v. Phelps, 40 N. Y., 66; Griswold v. Sabin, 51 N. H., 171.)

The cases cited by appellant decided by courts of this State are not similar. Pollen v. Le Roy (30 N. Y., 549) was a case of the sale of personal property, but in that case the rule of damages was stated to be the difference between the contract-price and the real value of the property. It was held that a favr public sale, in the absence of other evidence, was competent evidence of value. But in this case, as we have seen, the plaintiff did not claim that the price for which he sold the property was evidence of its value or ask to go to the jury on that question. The case of Miller v. Collyer (36 Barb., 250) was that of a judicial sale under a decree in equity, and the court held that the purchaser could by order of the court be compelled to complete the sale, or that the court could upon his failure order a resale and compel him to pay the deficiency, he having by signing the memoranda of sale submitted himself to the jurisdiction of the courts.

I doubt whether the doctrine stated in Bowser v. Cessna (62 Penn., 148) is in all regards sustained by the decisions of the courts of this State. But in that case the rule of damages is stated to be the difference between the contract-price and the market-value of the property at tlie time of tbe breach. That case assumes that, the price brought ou the resale is evidence of the market-value, but it'holds that the sale must be a public one, not, as in this case, private. In Griswold v. Sabin (51 N. H., 171), also cited by appellant, the-court remarks. “ The plaintiff having sold the land at private sale he cannot claim that the price obtained was the true value.” There was no evidence except that offered by defendant as to the resale, and, as above stated, plaintiff did not ask to have that question submitted to the jury.

The judgment should be affirmed, with costs.

Matham, P. J., and BEekRIOK, J., concurred.

Judgment affirmed, with costs.