author: Bradley, J. :

text:
    Hannah M. Lawler, as Administratrix, etc., of John Lawler, Deceased, Respondent, v. The National Life Association of Hartford, Conn., Appellant.

      Contract of co-operative life insurance — interest of the beneficim'y therein — transfer thereof — parties to an action — presumption that a witness knows the pmpose oj the action.

    While the manner of making a transfer of the interest of the beneficiary, named in a life insurance policy issued by a co-operative or assessment company, may not have been strictly within the requirements of the contract between the insurer and the assured, it is within the power of the insurer to waive a strict observance thereof. ■
    Where it is within the power of an assured to revoke the designation of the beneficiary named in a life insurance policy, and to substitute another person, the beneficiary has no vested interest in the policy or the fund represented thereby during the life of the assured; he has, however, an interest therein which is inchoate or inceptive in character, to become vested in the event that his designation as beneficiary shall not have been revoked by the assured during his life, and if the effect of a contract of life insurance is that the insurer shall pay to the beneficiary a stipulated sum upon the death of the assured, unless he in the meantime should terminate the relation of the beneficiary, by the appointment of another, the interest of the beneficiary is that of a possibility coupled with an interest, and the beneficiary has such potential interest as will enable him by assignment to transfer the same and will enable his assignee to take the interest of the beneficiary subject to the condition applicable to her relation as such beneficiary.
    In case the assured joins in such assignment so as to waive all claim which ho has in the policy and empowers the assignee to collect the money which may become due upon the same by reason of his death, a transfer is made by the assignment and delivery of the policy to the assignee of the right to the fund, with such power as the assured and the designated beneficiary could confer upon him to collect the same when payable.
    Where an assured has no interest in a policy of life insurance except that existing in his power of appointment, he may treat the expectant fund as subject to the control of the beneficiary, and join with the latter in making a transfer of it, or he may confirm an assignment to an assignee, made by the beneficiary, and then, as between them, such assignee, when the liability of the insurer arises, is entitled to payment. In such case the only question of any essential importance to the insurer is as to who is entitled to the money. .
    It is a rule in equity that all persons, whose presence is necessary to the determination of the interests involved in a controversy, must be made parties to the proceeding, and if they are not made parties the plaintiff may be required to bring all of them in, but in an action at law a defect of parties is available as a defense.

      Where a person was a witness for the plaintiff upon the trial of an action and testified in court in support thereof, it may he assumed that she was advised of the nature and the purpose of the same.
    Appeal by tbe defendant, The National Life Association of Hartford, Conn., from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Cayuga on the 9th day of July, 1894, upon the verdict of a jury rendered by direction of the court after a trial at the Cayuga Circuit, and also from an order entered in said clerk’s office on the Jth day of June, 1894, denying the defendant’s motion to set aside the verdict.

      W. A. Sutherland, for the appellant.

      P. MeLmcghlm,, for the respondent.
   Bradley, J. :

The recovery was had on a policy issued by the defendant upon the life of Edward J. Reilly, and in which Lillie Gr. Reilly, his. sister, was the designated beneficiary. Afterwards, on March 23, 1892, she made a written assignment of all her “ right, title and interest in said Policy due or to become due, to John Lawler,” and authorized him “to collect the same in case of the death of the insured.” At the same time Edward J. Reilly, by written instrument by him subscribed to that effect for value received, waived all claim, right or title in and to the policy, and authorized and empowered John Lawler to collect the same in case of his death. He died in May, 1892. In July following Lawler died, and letters of administration were issued to the plaintiff. The liability of the defendant at the time the action was commenced to pay the amount due by its terms upon the policy is not questioned. But it is insisted

(1) That the plaintiff had no right of action.

(2) That there is a defect of parties plaintiff.

The first proposition is founded upon the objection that the plaintiff’s intestate, by the transfer before mentioned, took to the policy or to the defendant no relation which enabled him to maintain the action. The defendant is a co-operative or assessment company,, and the policy provides for payment to Lillie Gr. Reilly, or to such other persons as the insured might appoint, in writing, on notice thereof to the defendant. This is in accordance with the statute which provides that such insurance “shall give to any member thereof the right at any time, with the consent of such corporation, * * * to make a change in his payee or payees, beneficiary or beneficiaries, without requiring the consent of such payee or beneficiaries ” (Laws 1883, chap. 175, § 18); and one of the conditions annexed to the policy is that it “ shall not be assigned or transferred, unless notice and copy of the assignment be given to the Association.” The defendant was furnished with a copy of the assignment made by the beneficiary, and not with a copy of such instrument made by the insured, but the defendant had notice of the latter and raised no question or objection during the life of the insured about the omission to furnish a copy of it. And while the manner of making the transfer may not have been strictly within the requirement of the contract it was in the power of the defendant to waive such strict observance, and it may be treated as having done so in so far as the transfer could be made by the two instruments before mentioned. It is, however, urged on the part of the defendant that they, by their terms, were ineffectual to make the liability of the defendant to pay available to the plaintiff, for the reason that the beneficiary could not, and the insured did not, make any assignment to him. It is true that it was in the power of the insured to revoke the relation given to the beneficiary as such and substitute another, and, therefore, there was no vested interest in her during his life. (Smith v. N. B. Society, 123 N. Y. 85 ; Sabin v. Phinney, 131 id. 123.)

The beneficiary, nevertheless, had an interest in a sense inchoate or inceptive in character to become vested in the event that it should not be revoked by the insured during his life. It was something more than a mere possibility. She had the relation of beneficiary. Nothing was to be done requisite to the perfection of her right to the fund on his death, except payment of the dues and assessments; but some action on the part of the insured was required to defeat it. The effect of the contract was that the defendant should then pay to her the stipulated sum, unless he, the assured, in the meantime should terminate her relation as beneficiary by the appointment of another. It would, therefore, seem that hers was a possibility coupled with an interest, and that her interest had such potential existence as to enable her by assignment to transfer, and the assignee to take it subject to the condition applicable to her relation as such beneficiary. This would clearly be so in equity. (Field v. Mayor, etc., 6 N. Y. 187; Jones v. Mayor, etc., 90 id. 387; Reynolds v. Ellis, 103 id. 115.) There is no apparent reason why, upon such facts, it is not so at law. ( Van Hoozer v. Cory, 34 Barb. 9; Conderman v. Smith, 41 id. 404; Smith v. Tiber, 46 Hun, 313.) But in the present case the insured also joined in the assignment so far that he waived all claim which he had in the policy, and empowered Lawler to collect the money which might become due upon it by his death, and the policy was delivered to him. By this method, adopted by the insured and the beneficiary, transfer was made to Lawler of the right to the fund secured by the policy with such power as they could confer upon him to collect it when payable.

Whether, in view of the manner prescribed by the policy for doing it, this may be treated as the appointment of him as the beneficiary, it is unnecessary to inquire. As appears by the condition before mentioned it was within the contemplation of the contract that an assignment of the policy could be made. And there seems to be nothing in the contract, in its nature or in the statute, which denies or defeats such right; and as the insured has no interest in the policy, except that existing in his power of appointment, he may treat the expectant fund as subject to the control of the beneficiary and join with the latter in making a transfer of it, or what may be substantially the same thing, confirm an assignment to the assignee made by the beneficiary. And then, as between them, such assignee, when the liability of the company arises to pay, is entitled to payment. In such case the only question of any essential importance to the company is as to who is entitled to the money. That was the only question in Ireland v. Ireland (42 Hun, 212) and Sabin v. Phinney (134 N. Y. 423), cited by the defendant’s counsel. In the former case no transfer was made to the defendant, nor any appointment of her as beneficiary accomplished, although the insured bad expressed his desire and purpose to have her put in such relation to the policy, and in the latter case the defendant had been appointed as and was the beneficiary. But it is- urged that Elizabeth Gr. Plunkett, nee Reilly, was a necessary party to the action because the transfer to Lawler .was made as collateral 'security of a loan by him to the insured, and the amount loaned was less than that which defendant was liable to pay. It is a rule in equity that all persons whose presence is necessary to the determination of the interests involved in the controversy must be made parties, and the plaintiff may be required to bring all of them in. But in an action at law the defect of parties is available as a defense. (Chapman v. Forbes, 123 N. Y. 532.)

If this were an action in equity it might be assumed that the plaintiff would be required to bring in Mrs. Plunkett, the beneficiary named in the policy. (Kittle v. Van Dyck, 1 Sandf. Ch. 76; Sherman v. Parish, 53 N. Y. 483.) But the view taken is that while she may have had the right of redemption, the plaintiff’s intestate took such legal title by the assignment as to enable him to maintain the action at law. (Ennis v. Harmony F. Ins. Co., 3 Bosw. 516 ; Roussel v. St. Nicholas Ins. Co., 9 J. & S. 279; Pitney v. Glens Falls Ins. Co., 65 N. Y. 6.)

At all events the plaintiff as such is a proper party, and the defendant cannot be prejudiced by the absence of Mrs. Plunkett as a party. It is evident that she is content with the prosecution of the action by the plaintiff to judgment. She was a witness for the plaintiff on the trial and testified in support of the action, and it may be assumed that she was advised of its nature and purpose. If she had deemed it desirable she might have been allowed to become a party. (Rosenberg v. Salomon, 144 N. Y. 92.) By the contract of insurance it is expressly provided that no action shall be maintained for any claim upon or by virtue of the policy after the lapse of one year from the death of the member. (Wilkinson v. First Nat. F. Ins. Co., 72 N. Y. 499.) If Mrs. Plunkett is entitled to any portion of the proceeds of the policy the plaintiff, in the event of its collection by her, may, as between them, be treated as trustee to that extent and required to account to her.

The trial court was not required by the facts to determine that the defendant was' entitled to the benefit of forfeiture of all claim founded upon the policy.

The judgment and order should be affirmed.

Dwight, P. J., Lewis and Haight, JJ., concurred.

Judgment and order appealed from affirmed.


source: Caselaw Access Project

author: Bradley, J.:

license: Public Domain

text:
    Mary E. Riley, Respondent, v. Ashbel W. Riley and Another, as Executors, etc., of Ashbel W. Riley, Deceased, Appellants.

      Parol evidence to vaA'y a written instrument — the consideration clause therein is merely evidence of a fact — proof of a consideration, not expressed, which would extend the covenants of the instrument, inadmissible.

    It is a general rule that a written agreement, complete in itself, is presumed to embrace within its stipulations the conclusion to which the parties had arrived when it was made, and their prior and simultaneous negotiations on the subject are not admissible as evidence to change or modify it, but it is also a general rule in the State of New York that the consideration clause of an instrument is open to explanation and modification by parol evidence for all purposes except to defeat the legal effect of the contract and to vary the terms of its stipulations; the consideration clause is only evidence of a fact, and as such is susceptible of explanation by parol.
    Where the practical effect of the admission of parol evidence, offered to prove that there was a further consideration than the consideration stated in a written instrument, would be to enlarge the covenant of the party against whom such evidence is offered, and to make it appear that it was intended to embrace in the consideration for a lease the relinquishment of a claim, the parol evidence is not admissible to vary the terms of the written contract.
    Appeal by the defendants, Ashbel W. Riley and another, as executors, etc., of Ashbel "W. Riley, deceased, from a judgment of the Sujireme Court in favor of the plaintiff, entered in the office of the clerk of the county of Monroe on the 12th day of May, 1894, upon the report of a referee.
    The plaintiff was the wife of the testator, who negotiated a sale to the Union and Advertiser Company of certain land at the price of $25,000. The plaintiff declined to execute a deed until the company agreed to pay, in addition to that sum, $2,500 to her for the release of her dower interest in the land. She then executed the deed, and the purchase money, including the $2,500, was paid to the husband. Thereafter he entered into an agreement with her, of which the following is a copy:

      “ This indenture, made this fifteenth day of October, A. D. 1883, between Ashbel W. Riley, of the city of Rochester, county of Monroe and State of New York, party of the first part, and Mary E. Riley, of the same place, party of the second part, witnesseth: That the said party of the first part, for and in considera^ tion of the covenants and agreements of the party of the second part hereinafter mentioned, has demised and leased, and by these presents does demise and lease, unto the said party of the second part, all those premises situate, lying and being in the city of Rochester, county of Monroe and State of New York, known as Y8& Plymouth avenue, 80 Plymouth avenue and 116 South Fitzhugh street, to have _and to'hold the said demised premises, with the appurtenances thereunto belonging, unto the said party of the second part for and during the term of her natural life. It is agreed that said party of the second part shall not enter upon the enjoyment of said demised premises and the rents and profits thereof until the death of said party of the first part. It is covenanted and agreed by and between the parties hereto that said party of the first part shall en joy the rents and profits of said premises, and pay all taxes, assessments, repairs and other charges, if any, upon the same until his death, and that thereafter, and until her death, said party of the second part shall enjoy said rents and profits, and pay all of said taxes, assessments, repairs and other charges, if any, as aforesaid.
    “It is agreed that if the said party of the second part shall remarry after the death of said party of the first part, this lease shall thereupon terminate.
    “ The said party of the second part accepts the property mentioned in this lease in lieu of her right of dower which may no'w boiong or afterwards accrue to her in any of the property of said party of the first part.
    “ It is covenanted and agreed by and between the parties hereto that all covenants and agreements herein contained shall extend to and be obligatory upon the heirs, executors, administrators and assigns of the respective parties.
    “ Dated this 15th day of October, A. D. 1883.
    “ASHBEL W. RILEY, [i. s.]
    “MARY E. RILEY. [t, s.]”
    This action was brought for money had and received by the defendants’ testator for the use of the plaintiff, to recover the sum of $2,500 before mentioned, and interest, and the referee directed judgment accordingly.

      F L. Durancl, for the appellants.

      Walter S. Subbell, for the respondent.
   Bradley, J.:

On a former review it was held that the action was not barred by the Statute of Limitations. (141 N. Y. 409.)

The only defense sought to be made available on the last trial was that of alleged payment. The referee found that the defendants testator agreed to sell to the Union and Advertiser Company‘a piece of real estate in the city of Rochester for the sum of $25,000 ; that the plaintiff refused to sign the deed unless she was paid the sum of $2,500; that thereupon the company agreed with the testator to pay .him the sum of. $25,000 for the premises, and in addition to pay to the plaintiff the sum of $2,500 in consideration of the execution by her of the deed; that it was executed by both of them. The deed expressed a consideration of $27,500, and on March 31, 1882, was delivered to the grantee. The consideration (including such $2,500) ivas paid to Aslibel ~W. Riley, deceased.

The defendants gave evidence (the question of its admissibility Avas reseiwed) tending to prove that afterwards the decedent desired to convey certain land in the city of Chicago, and to induce his wife (the plaintiff) to join with him in the execution of the deed, he made with her the Avritten agreement above set forth, demising to her certain premises in the city of Rochester, .of date October 15, 1883, and that it was then understood between them that her claim for the $2,500 in question was included as part of the consideration for the real estate granted to her by that instrument. The evidence so taken was stricken out by the court on the plaintiff’s motion on the ground that it tended to vary the terms of the Avritten instrument, and exception was taken. It is the general rule that a written agreement, complete in itself, is presumed to embrace within its stipulations the conclusion to which the parties had arrived when it was made, and their prior and simultaneous negotiations on the subject are not admissible as evidence to change or modify it. The written contract referred to needs nothing to render it complete. The covenant of the decedent-iwas the demise of the premises to the plaintiff for the period of her life following his decease or until she should remarry. The plaintiff accepted the demise in lieu of her right of dower upon the conditions of the grant. The question is Aidiether or not parol evidence was admissible to prove that there was a further consideration than that mentioned in the written instrument. It was competent for that purpose, unless the consideration, as there expressed, rested in the covenant of the plaintiff.

Since the case of McCrea v. Purmort (16 Wend. 460) it has been the general rule in this State that the consideration clause of an instrument is open to explanation and modification by parol evidence for all purposes except to defeat the legal effect of theuontract and to vary the terms of its stipulations. In that case the consideration expressed was money, and it was held that parol evidence was competent to prove that instead of money it was a quantity of iron at a stipulated price; and Mr. Justice Cowen there said that, although there be an acknowledgment of a particular consideration, it is not “ an objection to other proof of other and consistent considerations.” That case could have been disposed of upon the principle that a receipt is only prima facie evidence of the 'payment acknowledged by it.

In Murray v. Smith (1 Duer, 412) the plaintiff had conveyed to defendant’s testator certain land by deed, expressing a pecuniary consideration, and subject to the one-half of a mortgage covering the premises. The acceptance of the deed did not create any covenant to pay the amount of the mortgage debt. The grantor having, by reason of his obligation to the mortgagee, been required to pay a deficiency arising from the foreclosure of the mortgage, brought, action against the defendant to recover upon the alleged promise of' his testator, as part of the consideration of the conveyance to him, to pay half the amount secured by the mortgage. The question was whether parol evidence was admissible for such purpose. In the opinion of the court Mr. Justice Bosworth said: “ The law must be deemed to be settled in this State that either party is at liberty to show, for any purpose except to prevent its operating as a valid and effective grant, that its consideration was different, greater or larger than that named in it.”

A similar case was presented in Taintor v. Hemmingway (18 Hun, 458 ; 83 N. Y. 610) where, in holding that parol evidence was admissible to prove that the defendant in taking the conveyance from the plaintiff promised to pay a mortgage upon the premises, it was said in substance that the deed did not express the full consideration which the defendant by the agreement undertook to pay; that the contract to assume and pay the mortgage was independent of the contract expressed and embraced in the deed, and that “ the verbal agreement was in addition thereto and in no respect contradictory. It did not vary the terms of the contract contained in , the deed, and was not merged therein.” In numerous cases the doctrine is repeated that the consideration clause in a written instrument is as between the parties to it open to explanation byparol, and may be thus shown to be other or different than that expressed in the instrument for any purpose other than to impair the validity of the contract. (Wheeler v. Billings, 38 N. Y. 263; Hebbard v. Haughian, 70 id. 54, 59; Ferris v. Hard, 135 id. 354, 363; Frink v. Green, 5 Barb. 455; Adams v. Hull, 2 Den. 306.) It would seem that the evidence offered was admissible unless it tended to vary or enlarge the terms of some stipulation of the parties or one of them in the lease in question. The clause expressive of the consideration and acknowledging receipt of it in an instrument, and commonly known as the consideration clause, is only evidence of a fact and as such is susceptible of explanation by parol.

In the instrument upon which the question arises in the present case the clause is “ That the said party of the first part, for and in consideration of the convenants and agreements of the party of the •second part hereinafter mentioned, has demised,” etc. The consideration of and following the grant of the life estate as expressed is that “ the said party of the second part accepts the property mentioned in this lease in lieu of her right of dower which may now belong or afterwards accrue to her in any of the property of said party of the first part.” The instrument was executed by both the parties to it. The consideration thus expressed is equivalent to and in the nature of a covenant on the part of the plaintiff’ to relinquish her right of dower, and is, therefore, not subject to modification by oral evidence. It seems that to permit parol evidence to prove that there was a further consideration would have the effect to enlarge the plaintiff’s covenant, and to make 'it appear that it was intended to also embrace in the consideration for the demise the relinquisli- ' xnent of the claim which she in this action asserts against the defendants. Such would have been the practical effect of the evidence if available for the purpose for -which it was offered. And as a consequence, the well-settled rule that parol evidence is not admissible to vary the terms of a written contract would have been violated. (Graves v. Porter, 11 Barb. 592.)

If these views are correct the evidence was properly rejected. In thus holding, the doctrine of Murray v. Smith is not questioned. In that case there was no covenant on the part of the grantee. The grant was made subject to one-half of the mortgage. The consideration clause was in the usual form. - The acknowledgment of the receipt of a sum of money as the -consideration of the grant concluded neither of the parties to it from showing the' true character and amount of the consideration, that it was other and different from that stated in the deed and that it was not fully paid. This did not tend to vary or contradict in any respect the terms of the covenants in it, nor, as was there said, was such evidence inconsistent with the terms of the instrument. '

The rule applied in the Murray and Taintor cases is within that of McCrea v. Purmort and many others.

As the relinquishment of the plaintiff’s claim in question was not embraced within the terms of the instrument the judgment should be affirmed.

Dwight, P. J., Lewis and Haight, JJ., concurred.

Judgment appealed from affirmed.


text:
    Mary Henning, Respondent, v. Libbie Miller, as Executrix, etc., of Catharine Barbara Nestel, Deceased, Appellant.

      Verbal promise of a grantee to pay, by .a provision in her will, for real estate conveyed to her — remedy of the grantor — trial of disputed claims against estates— costs therein.

    Where a grantee named in a deed verbally agrees to pay in the future, by a devise and bequest in her will, a specified consideration for the premises conveyed to her thereby, and fails to do so, the agreement is void and will not support an action founded thereon, but the grantor may recover of the grantee the value of the property conveyed.
    The action in such a case does not rest upon the contract, except as there arises an implied contract to pay the value of that which the party sought to be charged received, upon the faith of his repudiated void promise, from the grantor.

      By reason of the amendment to section 3718 of the Code of Civil Procedure by chapter 686 of the Laws of 1893, the reference of a disputed claim against an estate is an action, and must be treated as such, and the right of the claimant to recover costs therein is dependent upon the provisions of section 1836 of the Code of Civil Procedure.
    Appeal by the defendant, Libbie Miller, as executrix, etc., of Catharine Barbara Nestel, deceased, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Erie on the 9th day of April, 1894, upon the report of a referee, and also from an order of the Supreme Court, made at the Erie Special Term and entered in the said clerk’s office on the 9th day of April, 1894, directing that the plaintiff recover against the defendant her costs in the action.

      Philip A. laing, for the appellant.

      G. W. Sichmon, for the respondent.
   Bradley, J.:

The trial was of a disputed claim made by the plaintiff against the estate of the defendant’s testatrix. The referee found that the plaintiff being the owner of an undivided one-third part of certain lands, entered into an agreement with the defendant’s testatrix whereby it was verbally agreed between them that in consideration of a conveyance by the plaintiff to her.of her interest in such lands the defendant’s testatrix would devise and bequeath an equal undivided one-tliird part of all the estate, real and personal, of which she should die seized and possessed to the plaintiff ; that the plaintiff, in performance of the agreement, made such conveyance by deed in which the consideration expressed was $1,100, and that the value of the plaintiff’s interest in the premises was then $366.66; that nothing has been paid to her on account of the conveyance, and that the testatrix, by her will, devised and bequeathed to Libbie Miller all her estate, real and personal, except $100 conditionally bequeathed to the plaintiff, and that at the time of her death she owned real estate valued at $500 and personal property of the value of $1,000. And, as conclusion of law, the referee determined that the plaintiff was entitled to recover $366.66, with costs and disbursements, and that if she receive the $100 legacy it be applied as payment upon the judgment.

There is no serious controversy about any of the facts so found by the referee, except the fact of the agreement between the plaintiff and the defendant’s testatrix, and there is evidence tending to support that fact.

On the review of a former trial (66 Hun, 588) the parol agreement was treated as one for the revei’sion to the plaintiff of the real estate conveyed to the grantee on the death of the latter, and the court held that the agreement, being within the Statute of Frauds, was void, and, therefore, ineffectual to cut down the estate which the deed purported to convey to a lesser estate. The evidence upon the trial, now the subject of review, tended to prove that the agreement of the grantee was to pay the consideration for the conveyance in the manner as found by the referee, and that the conveyance was made to her by the plaintiff pursuant to such an agreement. In that view, as she. failed to make payment in that manner, the plaintiff is not without remedy, although the agreement is void. While for that reason it will not support the action founded upon it, the plaintiff may recover the value of the property conveyed. (Robinson v. Raynor, 28 N. Y. 494; Day v. N. Y. C. R. R. Co., 51 id. 583 ; Reed v. McConnell, 133 id. 425, 435; 62 Hun, 153 ; Quackinbush v. Ehle, 5 Barb. 469 ; Lisk v. Sherman, 25 id. 433 ; Rosepaugh v. Vredenburgh, 16 Hun, 60 ; Bonesteel v. Van Etten, 20 id. 468.)

The action in such case does not rest upon contract other than that implied to pay the value of that which the party sought to be charged, or he whom he represents, has received, upon the faith of his repudiated void promise, from the claimant when it can be done without the support of such agreement. None of the cases cited by the defendant’s counsel hold to the contrary of that proposition.

In Morse v. Inhabitants of Wellesley (156 Mass. 95; 30 N. E. Rep. 77), the oral promise of the grantee of certain premises conveyed by the plaintiff, to grant back to the latter certain privileges in them, was held ineffectual to support an action. As no such reservation was contained in the deed or by any written contract, the promise sought to be enforced was within the Statute of Frauds, and was not available to qualify the estate which the deed by its terms purported to convey.

In the present case the conveyance of the entire estate of the plaintiff to the defendant’s testatrix is not questioned.

The plaintiff seeks her remedy as a creditor of the estate represented by the defendant as such executrix.

It is suggested on the part of the defendant' that the change in the state of facts from those on the first trial permitted by the evidence on the last trial is inapplicable to the plaintiff’s disputed claim as presented to the defendant and upon which this action is founded. If that were so a serious difficulty would have been encountered1 by the plaintiff. (Eldred v. Eames, 115 N. Y. 401.) But such is not the fact. The claim as made and rejected by the executrix was that of an indebtedness of the estate of her testatrix for an undivided third part of the real estate conveyed by the plaintiff to her. This is the claim to which the evidence was directed on the trial. The referee certified that the plaintiff’s demand was duly and in due time presented, was wholly rejected and the payment of the demand unnecessarily resisted by the defendant, and that the plaintiff was entitled to costs.

Thereupon, after hearing the parties, the court ordered that the plaintiff recover her costs and disbursements against the defendant.

It is now insisted that costs were improperly allowed to the plaintiff. By reason of the amendment to section 2718 of the Code of Civil Procedure, made by chapter 686 of the Laws of 1893, and which had taken effect at the time of the reference to the referee who made the report in question, this became an action and must be treated as such. (Adams v. Olin, 78 Hun, 309; 29 N. Y. Supp. 131; 60 N. Y. St. Repr. 695.)

The right of the plaintiff to recover costs was, therefore, dependent upon the statute. (Code Civ. Proc. § 1836.) The action was brought within the provisions of that section by the certificate of the referee. Nothing appears in the record to justify the conclusion that the referee’s certificate was not permitted by the facts disclosed at the trial. Ely v. Taylor, 42 Hun, 205; Field v. Field, 77 N. Y. 294 ; Carter v. Beckwith, 104 id. 236 ; Matson v. Abbey, 141 id. 179.)

In the special proceeding of Vaughn v. Strong (66 Hun, 278) the facts upon which the court held that the claim was not unnecessarily resisted were mainly presented by the uncontroverted affidavit of the defendant.

In the present case nothing essentially bearing upon the question of costs appears outside of the evidence taken at the trial.

The judgment and order should be affirmed.

Dwight, P. J., Lewis and Haight, JJ., concurred.

Judgment and order appealed from affirmed.


text:
    The Hornellsville Electric Railway Company, Respondent, v. The New York, Lake Erie and Western Railroad Company, Appellant.

      Condemnation proceedings by a street surface railroad, corporation to extend its lines —jurisdiction, how obtained ■ — - land already dedicated by law to a public use — when it may be condemned — right of one rail/road compa/wy to cross the trades of another' — amount of damages not interfered with upon appeal — costs discretionary — trial under Code of Civil Procedure, section 8872.
    While the provisions of section 6 of chapter 565 of the Laws of 1890 were in force in their application to street surface railroad corporations, the filing of the map and profile and the service of the written notice therein provided for were essential to the support of a proceeding instituted hy such a corporation to acquire title to real property hy condemnation in order to extend the lines of its road, hut the amendment of such act hy chapter 676 of the Laws of 1892 relieved such a corporation from a compliance with the provisions of section 6 of the act of 1890.
    Where the corporate existence of a street surface railroad corporation is unquestioned, its proceedings to acquire such rights as are necessary for the construction and operation of its road must he governed by the statutes in force at the time such proceedings are taken and conducted.
    The provision of section 2 of chapter 676 of the Laws of 1892, to the effect that in the certificate of incorporation of a street surface railroad, there should he stated the names and description of the streets, avenues and highways in which the railroad is to he constructed, is not applicable to a corporation created under the provisions of chapter 565 of the Laws of 1890.
    Jurisdiction is obtained in condemnation proceedings hy the service of the petition and requisite notice; although the Legislature cannot dispense with the giving of notice in such proceedings, it may by statute prescribe the kind of notice, and the mode of giving it.
    Land already dedicated hy law to a public use cannot, unless such power he expressly conferred hy statute, he appropriated to another public use, but the right of a street surface railroad company to have its tracks intersect with those of a steam railroad company is provided for hy section 4 of chapter 676 of the Laws of 1893, notwithstanding the fact that the steam railroad company has title in fee to the land at that place in the street subject to the easement of the public; the right of crossing the tracks is not necessarily inconsistent with the purpose to which the land was originally appropriated, and the objection to the proposed crossing of the tracks on the ground that it will interfere with the use by the steam railroad of its tracks, presents a question for the consideration of the commissioners in condemnation proceedings.
    Where, upon the review of condemnation proceedings, the conclusion is not fairly required that the commissioners erred in their award in respect to the amount of damages, and it does not appear that they adopted any erroneous principle in the method of estimating the same, their disposition of the question will not be overruled on appeal.
    The allowance of costs in a special proceeding rests in the discretion of the court, and a proceeding instituted under the statute by a railroad company to acquire the right to cross the tracks of another railroad company, is not, in the strict sense of the term, a condemnation proceeding to acquire title to land, and the rule of discretion in respect to the granting of costs is applicable to such a proceeding.
    The word “trial,” as used in section 3373 of the Code of Civil Procedure, refers to the trial of the issues raised by the petition and answer referred to in section 3367 in proceedings brought for the condemnation of real estate.
    Appeal by the defendant, The New York, Lake Erie and Western Railroad Company, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Steuben on the 24th day of September, 1892, upon the report of a referee, and also from the referee’s report, and also from an order of the Supreme Court, made at the Y ates Special Term and entered in the office of the clerk of the county of Steuben on the 7th day of December, 1892, confirming the report of the commissioners appointed herein, and also from the report of such commissioners ; also from an order of the Supreme Court, made- at the Monroe Special Term and entered in the Steuben county clerk’s office on January 3,1893, denying the defendant’s motion that costs be allowed to it.

      James II. Stevens, for the appellant.

      Jte Merville Page, for the respondent.
   Bradley, J.:

The plaintiff was duly incorporated December 17,1891. At that time, and until June 7, 1892, the statute provided that before con■structing any part of its road, or instituting any proceeding for the condemnation of real property, a railroad company should make a map and profile of the route and file it in the office of the clerk of the county in which the road was to be made, and give written notice of the time and place they were filed to the occupants of the lands over which the proposed route passed, that they, within fifteen days after such notice, might, upon ten days’ notice, make application to the court for the appointment of commissioners to examine the route, etc., and that the corporation should not in the meantime, nor until the determination of such application (if made), institute any proceedings for the condemnation of real property. (Laws 1890, •chap. 565, §§ 5, 6.) This statute by amendment, taking effect June 7, 1892, relieved street surface railroad corporations from the operation of the provisions before mentioned. (Laws 1892, chap. 676, § 6.) The plaintiff being such a corporation gave no written notice of any such map and profile, and no profile was filed. Nor was it required by the statute existing at the time the proceedings were instituted by the plaintiff to establish and acquire the right to construct its road. • But, by section 90 of chapter 676, Laws of 1892, it was provided that “ a street surface railroad corporation may file, in each of the offices in which its certificates of incorporation are filed, a statement of the names and descriptions of the streets, roads and highways in which it is proposed to extend its road. Upon filing .such statement such corporation shall, except as otherwise prescribed by law, have the same power and privileges to extend, construct, •operate and maintain its road in such streets, roads and highways as it acquired by its incorporation to construct, operate and maintain its road in the' streets, roads and highways named in its certificate of incorporation.”

After the statutory provision requiring the filing of a map and profile, and the giving of written notice thereof,.ceased to exist, and in August, 1892, this proceeding was instituted by petition made in conformity with the statute, which with the notice was duly served upon the defendant, and the latter, after making preliminary objections and excepting to the overruling of them, answered the petition.

Thereupon further proceedings were in due form had to their ■conclusion. While such provisions of section 6 of chapter 565, Laws of 1890, were in force in their application to street surface railroad corporations, the filing of the map and profile and such a written notice were essential to the support of a proceeding of' this character to acquire the rights which the plaintiff seeks to obtain. (Matter of R. E. R. Co., 123 N. Y. 351.) But as tliere was no such statutory provision applicable to the plaintiff’s proceeding at the time it was commenced or thereafter, that question does not arise for consideration.

By the act of 1892 (§ 2) it was provided that in the certificate of incorporation of a street surface railroad should be stated “ the-names and description of the streets, avenues and highways in which the road is to be constructed.” This was not made requisite by the provisions of the statute under which the plaintiff was incorporated. (Laws 1890, chap. 565, § 2.) And it may be that the certificate contained no such statement, nor is such amended provision applicable to the plaintiff. Its corporate existence is not questioned, and its proceedings to acquire such rights as are necessary for the construction and operation of its road must be governed by the statutes-in force at the time they are taken and conducted.

On April 27, 1892, the plaintiff filed in the office of the clerk of Steuben county (that being the county in which the plaintiff’s office is located and in which is included the entire route of its road) a-map showing the route upon Canisteo street and other streets. The map so filed was in its contents a substantial compliance with the-statute as it contained all that was made requisite by the provisions of section 90 of the act of 1892. It may be.assumed that the plaintiff’s-certificate of incorporation was filed in the office of the clerk of the-county of Steuben as well as in the office of the Secretary of State. (Laws 1892, chap. 687, § 5.) It does not appear in the record here that such map or statement was or was not filed in the office of the Secretary of State. Whether or not that was necessary requires no consideration, as the question was not specifically raised in the proceeding. The defendant’s counsel insisted that it was essential to the legality of the proceeding that a map and profile of the proposed route be filed in the office of the county clerk and notice given as required by the act of 1890.

As has been observed, the change in the statute rendered that unnecessary.

The defendant’s first proposition is not sustained.

In tlie petition by which this proceeding was instituted was stated the purpose of the plaintiff to extend its road along Oanisteo street and to intersect with it the defendant’s railroad tracks where they pass over that street, and the land which the plaintiff proposed to use there for its road was definitety described. By the petition the defendant was advised of the purpose of the proceeding and of the land sought for use in the intersection of its tracks, and by the service of the petition with the requisite notice jurisdiction was given of the proceeding. (Code, § 3360; Rochester R. Co. v. Robinson, 133 N. Y. 242.) While the Legislature cannot dispense with all notice, it may by statute prescribe the kind of notice and the mode of giving it. (Stuart v. Palmer, 74 N. Y. 183.) And thus is provided what is requisite to due process of law, which merely requires that a party shall be brought into court or have the opportunity afforded him to be duly heard there; and it is no objection that the Legislature has taken away one form of remedy or notice and provided another. (People ex rel. Witherbee v. Supervisors, 70 N. Y. 228 ; Matter of Union R. R. Co., 112 id. 61.) In the present case notice annexed to the petition was, pursuant to the statute, duly given to the defendant of the time and place the petition would be and was presented to a Special Term of the Supreme Court held in the judicial district where the premises are situated. (Code Civ. Proc. § 3361.) The defendant, therefore, had its day in court. And it was within the jurisdiction and power of the court to grant the relief sought and obtaiiied in the proceeding. The defendant’s counsel also insists that the plaintiff could not condemn lands of the defendant acquired by it for and already appropriated to public use, and, therefore, could obtain no right to cross its tracks. It is true that land already dedicated by law to a public use cannot without power expressly conferred by statute be appropriated to another public use. (Matter of City of Buffalo, 68 N. Y. 167.) But the statute provides for the intersection of the railroad of one company by that of another. (Laws 1892, chap. 676, § 4, subd. 5.) And it may be added that the right of crossing sought by this proceeding is not necessarily inconsistent with the purpose to which the land is already appropriated and used by the defendant. And the objection to the proposed crossing by the plaintiff’s road on the alleged ground that it will interfere with -the use by the defendant of its road was for the consideration of the commissioners. (Matter of B., H. T. & W. Ry. Co., 79 N. Y. 64.) The fact that the defendant had title in fee to the land at that place in the street, subject to the easement of the public, does not for the purposes of the question here modify the practical effect of the proposition.

The determination by the commissioners of the question of damages is not satisfactory to the defendant. There was much evidence on the subject, and that given on the part of the defendant, in view of the number of tracks, the number and frequency of trains passing over its road at that place, and the delay and hazards which it was assumed might be encountered, and their consequences, tended to prove damages largely in excess of the amount a-warded by the report of the commission. This, evidently, was based somewhat upon speculative consideration. And while upon the evidence the matter of damages was a subject susceptible of opinion widely differing as to the amount, the conclusion is not fairly required that the commissioners erred in their award in that respect. It does not appear that they adopted any erroneous principle in the method of estimating them. No occasion, therefore, appears for overruling their disposition of the question of damages.

The defendant contends that the denial of its motion for costs was error. The general rule applicable to special proceedings is that the allowance of costs is dependent upon the discretion of the court. (Code, § 3240 ; Matter of Cortland, etc., R. R. Co., 98 N. Y. 336.)

A proceeding under the statute by a railroad company to acquire the right to cross the tracks of another railroad company is not in the strict sense of the term a condemnation proceeding to acquire title to land, and the rule of discretion before mentioned as to costs is applicable. (Matter of Lima, etc., R. Co., 68 Hun, 252.) This may, I think, be treated as such a proceeding. (Matter of Lockport & B. R. R. Co., 77 N. Y. 557 ; Buffalo, etc., R. R. Co. v. N. Y., L. E. & W. R. R. Co., 72 Hun, 583.) In that view no substantial reason appears to require the court on this review to disagree with the Special Term on the subject of costs. But if it be assumed that this case comes within the meaning of a proceeding to condemn real property, it is not seen that the defendant was, as lhatter of right, entitled to costs.

Tbe statute, in such case, provides that the moving party, before service of petition, may make a written offer to purchase the property at a specified price; that the owner may accept the offer, and thereupon an order may be entered to accomplish the purpose of the proceeding. If, however, the petitioner makes no offer or the defendant does not accept that made, and the amount awarded exceeds that of the offer, the defendant is entitled to costs. But if a trial is had and all the issues are determined in favor of the plaintiff, the defendant is not entitled to costs. (Code Civ. Proc. § 3372.) In the present case the plaintiff made no offer, the defendant answered the petition, and all the material issues were determined in favor of the plaintiff.

The trial mentioned in that section has reference to issues raised by the petition and answer, and referred to in section 3367.

In the Matter of L. S. & M. S. Ry. Co. (65 Hun, 538) all the costs awarded may be deemed to have been allowed by the exercise of the discretion of the court. No other question requires the expression of consideration.

The judgment and orders should be affirmed.

Dwight, P. J., Lewis and Haight, JJ., concurred.

Judgment and orders appealed from affirmed, without costs of this appeal to either party.


author: Dwight, P. J.:

text:
    In the Matter of the Application of Margaret Dean, Appellant, for Money Paid Into Court by John D. Rutledge, Respondent.

      Mechanics lien — effect of depositing money to discharge the lien — chapter 342 of 1885, section 24 —■ chapter 300 of 1893.
    Under the provisions of section 24 of chapter 342 of the Laws of 1885, a deposit with a county clerk of the amount of money claimed in the notice of a mechanic’s lien, with interest, is not a payment thereof, nor is the bond referred to in such section an absolute undertaking to pay the amount of the lien, but either is a_ substitute, merely, for the property from which the lien is discharged upon the deposit of the money, or the filing of the bond, and the bond can be enforced and the money acquired by the claimant only on his establishing his claim in an action brought for that purpose. While, under such circumstances, there can be no judgment in such an action for the foreclosure of the lien because the lien has been discharged, yet it may be adjudged therein that a claim exists which, but for the bond or the deposit, would have entitled the claimant to a judgment of foreclosure.
    The rule is unchanged by the enactment of chapter 300 of the Laws of 1893, the only effect of which is to bring the case of moneys deposited in court for the . discharge of a mechanic’s lien within the rules of the Code of Civil Procedure, in respect to the custody of the funds and the authentication of the order for its payment to the person, entitled thereto.
    Appeal by the petitioner, Margaret Dean, from an order of the County Court of Monroe county, entered in the office of the clerk of the county of Monroe on the 20th day of March, 1894, vacating an order directing the clerk of Monroe county to pay to the petitioner the amount paid by the respondent into court to discharge a mechanic’s lien, and directing the petitioner to return to and deposit with the said clerk the amount paid to her by virtue thereof, and also from the order of the County Court of Monroe county, entered in said clerk’s office on the 4th day of April, 1894, denying the petitioner’s motion to vacate the order entered in said clerk’s office on the 20th day of March, 1894. ■

      W. II. Whiting,, for the appellant.

      J. 8. Ila/oens, for the respondent.
   Dwight, P. J.:

The respondent, John D. Rutledge, was the owner of premises in the city of Rochester against which the appellant, on the 21st day of February, 1894, had filed a notice of lien, under the Mechanic’s Lien Law, for the sum of $122. On the ninth day of March, following, the respondent deposited with the clerk of Monroe county the sum of $122, with twenty-eight cents as interest thereon, and the lien was marked, on the docket of liens, as discharged by payment to the clerk. On the tenth day of March the appellant commenced an action in the Municipal Court of Rochester to foreclose the lien, the summons being made returnable on the sixteenth day of March, but on the fourteenth day of the same month the appellant, having learned of the deposit of the amount of her lien and claim, applied to the County Court and obtained an ex parte order for the payment to her of such amount, and, on presentation of that order, received the money the same day from the clerk. The respondent duly appeared in the Municipal Court on the return day of the summons against him, to make defense to the action to foreclose the lien, but that action was not prosecuted, and on the nineteenth day of March he procured an order of the County Court requiring the appellant to show cause why the ex pcvrte order procured by her should not be vacated and she be required to restore the money to the custody of the court. On the return of the order to show cause, the. facts being made to appear as above stated, the court made the order from which this appeal is taken, vacating the ex parte order above mentioned and directing the appellant to restore the money in question to the custody of the court.

The question here presented, like many other questions arising under the Mechanics’ Lien Law, is embarrassed by the apparent carelessness which has marked much of the legislation on this subject. In the particular now under consideration the statute of 1885 (Laws of 1885, chap. 342, § 24).provided for the discharge of the lien in several modes — among others, by depositing with the county clerk the amount claimed with interest (Subds. 2, 3), or by the execution, justification of sureties and approval by the court of a bond conditioned for the payment of any judgment which might be rendered against the property. (Subd. 6.)

Under this statute it was uniformly held, as the terms of the statute import, that the deposit of money was not payment nor the bond an absolute undertaking to pay, but that either was a substitute, merely, for the property from which the lien was discharged; that the bond could be enforced or the money realized by the claimant only on establishing his claim in an, action .brought for that purpose ; that while there could be no judgment in such action for the foreclosure of the lien because the lien was discharged, it must be adjudged that a claim existed which, but for the bond or the deposit, would have entitled the claimant to a judgment of foreclosure. (See People ex rel. Flynn v. Butler, 61 How. Pr. 274; Copley v. Hay, 34 N. Y. St. Repr. 771; Cunningham v. Hatch, 45 id. 685 ; Brandt v. Radley, 23 N. Y. Supp. 277; Kruger v. Braender, 3 Misc. Rep. 275.)

But, by chapter 300 of the Laws of 1893, a further subdivision (Subd. 7) is added to section 24, above cited, of the act of 1885, in the following language : “ All moneys paid to the county clerk as herein-before provided shall be considered as paid into court, and shall be subject to the provisions of section 745 of the Code of Civil Procedure, and upon such payment the county clerk shall forthwith enter' upon the c lien docket,’ and against the lien for the discharge of which said moneys were paid, the words ‘ discharged by payment.’ And thereafter the provisions of section 751 of the Code shall apply as to the repayment or surrender of said moneys. * * * ”

It is ujion this provision that 'the appellant bases her contention to the effect that the deposit of money under the former subdivision is no longer to be -regarded as a deposit, merely, to abide the establishment of the claim against the property from which the lien has been discharged, but as payment of the claim, and to be treated as money paid into court to keep a tender good, and as belonging to the claimant from the time of its deposit, and to be surrendered to him, on his application, at any time thereafter.

There is, no doubt, some language employed in the new subdivision which suggests such an effect as that contended for, but we think it very plain that it falls short of accomplishing that result. The apparently careless substitution of the word “ payment ” in the new provision for “deposit” in the old, cannot have the effect to transform the one into the other, and the sections of the Code of Civil Procedure referred to in subdivision 7 have no reference to the distinction suggested. Section 745 relates merely to the custody of the money paid into court, and section 751 only to the mode of authentication of the order for its payment out of court. And this seems to be the only effect of the new subdivision, namely, to bring the case of moneys deposited in court for the discharge of mechanics’ liens within the rules of the Code in respect to the custody of the funds and the authentication of the order for its payment to the person entitled thereto. Ve find, therefore, that the amendment of 1893 works no change in the nature or effect of the deposit provided for by subdivision 2 of the original section, and, consequently, does not take the case in hand out of the rule established by the decisions before cited.

The order appealed from should be affirmed.

Lewis and Bradley, JL, concurred; TIaight, J., absent.

Order of County Court of Monroe county appealed from affirmed, with ten dollars costs and disbursements.


author: Lewis, J.:

text:
    Union Bank of Rochester, Respondent, v. William W. Gilbert, Appellant, Impleaded with Another.

      Action upon a renewal promissoi’y note — defense of usury interposed by an indorser —pi'oof necessary to establish it — the veracity of a witness is for the jury — sale oj a. usurious note.

    Upon the trial of an action brought to recover the amount of a promissory note, from the maker and first indorser thereof, by a party acquiring title thereto from a second indorser thereof, where the defense of usury is set up by the first indorser, who alleges that the note was given to and accepted by the second indorser in renewal of a former note, upon the payment to such second indorser of a bonus in excess of the legal interest, it is incumbent upon the plaintiff, before he is entitled, to recover against the first indorser, to establish that the note had its inception in the hands of the plaintiff; if the note had its inception in the hands of the second indorser, and he exacted (as the first indorser alleged) a greater than the legal rate of interest, and thereafter transferred the note to the plaintiff, the note would be void for usury.
    Where, upon the trial of an action, brought by a bank upon a promissory note, the cashier of the bank testifies that he, himself, is the owner of such note at the time of the trial, the truthfulness of all of his testimony is for the consideration and determination of the jury, and not for the court.
    An individual, liable to pay a promissory note as indorser thereon, is in a situation, in indorsing a renewal note to take up the same, to make a usurious contract, and is entitled to interpose the defense of usury in an action brought to recover the amount of the renewal note.
    If a promissory note is void for usury, it cannot be rendered valid by a sale thereof to another.
    Appeal by the defendant, William W. Gilbert, from a judgment of tlie County Court of Monroe county in favor of the plaintiff, entered in the office of - the clerk of the county of Monroe on the 15th day of February, 1894, upon the verdict of a jury rendered by direction of the court, and also from an order entered in said clerk’s office on the. 15th day of February, 1894, denying the defendant’s motion for a, new trial made upon the minutes. \

      John F. Forthy, for the appellant.

      D. W. Foss, for the respondent.
   Lewis, J.:

The action was brought against George A.. Curran as the maker and the appellant as the indorser of a promissory note dated July 24, 1893, for the sum of $300, payable three mouths from date. It was alleged in the complaint that the defendant Curran made the note .in suit payable to the order of ~W. W. Gilbert, and then and there delivered the same to Gilbert, and the said Gilbert, for value received, afterwards indorsed the said note and then and there delivered the same to William Johnson, and that the said William Johnson, for value received, afterwards indorsed the said note and the same was thereupon and before it became due, for value received, duly transferred to the plaintiff, who then became and still is the owner and holder thereof; and judgment was demanded against the maker and Gilbert, the first indorser. Gilbert alone defended and interposed the plea of usury.

The plaintiff called, as its only witness, Gilman N. Perkins, who testified that he was the plaintiff’s cashier; that the note in suit was given in renewal of another note of the same amount; that he supposed it was discounted the same day it was dated; that it so appeared upon the books of the bank; he did not know who brought the note to the bank; that it was not placed to any one’s credit; that he simply surrendered the previous note upon the presentation of the one in suit, but to whom he could not say. When the note was taken by the bank it was indorsed by IVIr. Johnson. Johnson was what is called a loan broker.

The plaintiff thereupon rested, and the defendant Gilbert was called as a- witness in his own behalf and testified that the note was made by Curran and indorsed by the witness; that he received no ■consideration for his indorsement. He knew that the maker could not take care of the prior note when it should fall due, and he went to see Mr. Johnson, whom he knew had the former note, with the view of having it renewed. Mr. Johnson required him, as a condition for the renewal of the note, to pay the sum of twenty-two dollars and sixty-five cents, eighteen dollars bonus in addition to the lawful interest. He paid Johnson the twenty-two dollars and sixty: five cents. He did not know from any personal knowledge what became of the note for which the note in question was given in renewal. It was not delivered to him at the time of the giving of the note in suit. He paid Johnson what he asked him to pay for its extension or renewal. He took it to Mr. Jolinson because he had taken notes there before. He knew Mr. Johnson indorsed the notes and furnished the money, and, therefore, took them to him. He understood that Hr. Johnson advanced to Mr. Curran, the maker, the proceeds of a prior note for which this note was given in renewal. He remonstrated with Mr. Johnson on one or two occasions and asked him to renew the note for less, but Johnson declined.

The evidence being closed, the plaintiffs counsel asked the court to direct a verdict for the plaintiff for the amount of the note and interest. Defendant’s counsel asked to go to the jury on the whole case, and particularly on the question of the delivery of the note to Mr. Johnson and upon the question of the inception of the note. His request was denied and he duly' excepted. He thereupon requested the court to direct a • verdict for the defendant. The motion was denied and he excepted, and the court thereupon directed a verdict for the plaintiff for the amount of the note, with interest.

It was incumbent upon the plaintiff before he was entitled to recover to establish that the note had its inception in the hands of the plaintiff. To establish that the plaintiff relied solely ujnon the testimony of the cashier.

If the note had its inception in the hands of 'Johnson, and he exacted, as the testimony of Gilbert tended to show, a greater rate of interest than six per cent, and he thereafter transferred it to the plaintiff, it was void for usury. The plaintiff claims that the note had its inception when it was transferred to the plaintiff, and that Johnson acted simply as a note broker, and that the amount of money, in addition to the legal rate of interest, paid to him by Gilbert, was for his indorsement.

The witness upon whom the plaintiff relied to make its case was its cashier, Mr. Perkins, and he testified that he was himself the owner of the note at the time of the trial. The truthfulness, therefore, of his testimony was for the consideration and determination of the'jury and not for the court.- (Canajoharie Nat. Bank v. Diefendorf, 123 N. Y. 191.)

The testimony of the appellant tended to show that the note had its inception in the hands of Johnson. His dealings were entirely with Johnson. It was a question for the jury to determine whether the transaction was simply a cover for a usurious loan. If it was the exaction of usurious interest upon the renewal of a note the renewal note was tainted with usury. (Swartwout v. Payne, 19 Johns. 294.)

Gilbert being liable to pay the note as indorser was in a situation to make a usurious contract and was entitled to interpose the defense of usury. (Nat. Bank v. Lewis, 75 N. Y. 523.)

If the note was invalid in the hands of Johnson, it could not be rendered valid by sale thereof to the plaintiff. (Sweet v. Chapman, 7 Hun, 579.)

These were questions of fact which, we think, should have been submitted to the jury for their determination.

The judgment and order appealed from should be reversed and a new trial granted, with costs to abide the event.

Dwight, P. J., Haight and Beadley, JJ., concurred.

Judgment and order of the Monroe County Court appealed from reversed and new trial granted, costs to abide the event.


text:
    George R. Losey and Others, Respondents, v. Leonora Stanley, as Administratrix, etc., of James W. Stanley, Deceased, and Others, Appellants, Impleaded with Others.

      Appointment by the Supreme Court of a successor to a deceased testamentary trustee

    — the a/ppointment of the cestui que trust is irregular, not mid — actions and special proceedings defined — service of process by a parrty to a special proceeding

    — mortgage giren by a trustee to secure his liability individually and as trustee — failure of a trustee to properly apply the money received on the mortgage.

    A person cannot, at the same time, he trustee and beneficiary of the same identical interest.
    Where a testamentary trustee dies the trust vests in the Supreme Court with all the powers and duties of the original trustee, and such court, as the successor of the Court of Chancery, has general jurisdiction to appoint a trustee in place of the one dead or removed; where such court obtains jurisdiction of proceedings taken to secure the appointment of a successor of a deceased testamentary trustee, it will not appoint a life tenant of the trust a trustee thereof, and if an appeal he taken from its order appointing the life tenant such trustee, such order will ordinarily be reversed, but the fact that the appointment was an improper one simply renders it irregular, and not void.
    The word “ action,” when applied to a judicial proceeding, signifies an ordinary prosecution in a court of justice by one party against another for the enforcement or protection of a right, the redress or prevention of a wrong, or the punisliment of a public offense. Every other prosecution by a party for any one of the purposes specified in section 3333 of the Code of Civil Procedure is a special proceeding.
    The fact that a party to a special proceeding serves the process commencing the same is a mere irregularity, and does not make the proceeding void.
    The fact that a mortgage given by a trustee upon real estate under the authority of the court, provides that it shall be security for the personal liability of the trustee as well as for his liability as such trustee, does not affect the validity of the judgment of foreclosure of the mortgage where such judgment relates only to his liability as trustee.
    The failure of a trustee to apply the moneys received by him upon the execution of a mortgage, authorized by the Supreme Court, for the benefit of the trust estate, cannot affect the rights of the mortgagee who, under the provisions of section 66 of the Statute of Uses and Trusts, is not required to see to the application of the moneys advanced thereon.
    Appeal by the defendants, Leonora Stanley, as administratrix, etc., of James W. Stanley, deceased, -and others, from a judgment of the Supreme Court in favor of the plaintiffs, entered in tbe office of the clerk of the county of Monroe on the 22d day of January, 1894, upon the decision of the court, rendered after a trial at the Monroe Special Term, directing the foreclosure and sale of certain mortgaged premises, with notice of an intention to bring up for review upon such appeal the interlocutory judgment entered in said clerk’s office on the 28th day of April, 1892.

      Joseph W. Taylor, for the appellants.

      Willicuin F. Cogswell, for the respondents.
   Lewis, J.:

On the 28th day of March, 18Y5, Elizabeth Jane Stanley died, leaving a last will, which was admitted to probate on the 24th day of March, 1881, liy which she devised alf her estate to Martin Briggs, as executor and trustee, in .trust, to convert her personal estate into money, and invest the same and take charge of, rent and to receive the income and profits of the real estate, and, if by him deemed advisable, to sell and convey the real estate and convert the same into money, to be invested in good securities, and to pay the net income quarterly to her son, James "W. Stanley, during his life, and after his death she gave such estate to the children of J ames, if he should leave any, in equal shares, and in case he should leave no descendants, then it was to go to certain legatees named. Briggs accepted the trust, and acted as trustee up to the time of his death, on the 24th da}7 of December, 1883. In October, 1884, J. W. Stanley instituted proceedings in the Supreme Court for the appointment of a trustee in the place of Briggs, deceased, and on the 10th day of November, 1884, the court appointed said James W. Stanley as such trustee. He qualified, filed his bond, and continued to act as such trustee until the time of his death in July, 1890. In the' month of July, 1888, Stanley presented a petition to the Supreme Court for leave to sell or mortgage the real estate, stating in the petition as a reason therefor that it was necessary for the purpose of preserving and improving the estate, that the dwelling houses were out of repair, and could not be rented without being repaired, and that in its then condition the property would rapidly decrease in value, and that there were about $500 of unpaid taxes on the property. An order was made at a Special Term of the court on the 15th day of October, 1888, directing that notice of such application should be given to Arthur G-. and Leonora J. Stanley, the infant children of the petitioner, by serving a notice, together with a copy of the petition, upon them personally and upon their mother. Afterwards, and on the 22d day of October, 1888, an order was granted authorizing and permitting Stanley to mortgage the premises for the sum of $3,500. Stanley executed and delivered to the plaintiffs the mortgage which this action is brought to foreclose. It is stated in the mortgage that it was given as collateral security for the payment of a promissory note made by said Stanley for $1,000, which was indorsed by the plaintiffs Losey, Marcy and Leutchford and as a continuing security for any renewal or renewals thereof or for future advances or responsibilities which the said mortgagees might make or incur for said Stanley, either personally or as trustee, and as a general security for any and all balances which might be due and unpaid from time to time and at any time or times from said Stanley personally or as trustee to said mortgagees, or any of them, for any cause or causes not exceeding a balance of $3,500 at any one time.

Stanley thereafter, upon his promissory notes secured by said mortgage, borrowed money from time to time, and at the time of his death there were outstanding notes held by the plaintiffs aggregating the sum of $3,500. Stanley appropriated the money, thus borrowed to his own use, failed and neglected to repair the buildings or pay the taxes upon the property. At the time of granting the order to mortgage the property the affidavit of Stanley was presented showing that he had duly served a copy of the affidavit and a notice of the application for the order and a copy of the petition upon the children and their mother personally,- Erom the judgment entered on the findings and decision of the court at Special Term directing a judgment for a foreclosure of the mortgage this appeal was taken. It is claimed that James ~W. Stanley, being the sole beneficiary of the trust created by his mother’s will, his appointment as trustee was void and that all his acts thereunder were void. It is undoubtedly true that if Stanley had been appointed trustee by the will the appointment would have been invalid, for it is a general rule that a person cannot be, at the same time, trustee and beneficiary of the same identical interest. But when Briggs, the testamentary trustee, died, the trust vested in the Supreme Court with all the powers and duties of the original trustee. (1 R. S. 130, § 68.) The Supreme Court, as the successor of tlie Court of Chancery, has general jurisdiction to appoint a trustee in the place of one dead or removed. (People v. Norton, 9 N. Y. 176.) The testamentary trustee having died, a petition was -duly presented to the court by James W. Stanley praying the court to appoint a suitable person in his place and stead. That gave the court jurisdiction of the proceeding and it appointed Stanley trustee and he qualified, filed his bond as trustee and continued to act as such down to the time of his death. Had the attention of the court been called to the fact that he was a life tenant he would undoubtedly not have been appointed, or had an appeal been taken from the order it would probably have been reversed. The court had power to make an appointment; the fact that the appointment was an improper one was irregular simply. (Bangs v. Duckenfield, 18 N. Y. 592.) The trust originally created by the will was concededly legal, and being such and the trust devolving upon the court by the death of the trustee, its selection of an improper person to carry out the direction of the court did not make the order void. (Rogers v. Rogers, 111 N. Y. 228.)

The only proof upon the trial of the service of copies of the notice of the application for the appointment of Stanley as trustee, and of the petition upon the infants, was the affidavit of the petitioner Stanley. Mrs. Stanley and lier two children testified upon the trial that the notice and petition were never served upon them. The trial court found as a fact that the papers were properly served, as stated in the affidavit of Stanley. It is, we think, much more probable that Mrs. Stanley and her children had forgotten the fact of their service, than that Mr. Stanley, without, so far as appears, the slightest motive, deliberately committed perjury in making the affidavit. He was at the time living with his family on terms of friendship and affection, his wife and children having the utmost confidence in his integrity and in his judgment.

The written consent to the granting of the order was given by all the adult residuary legatees. The propriety and necessity for the order the petitioner had no reason to suppose would be questioned by any one, certainly not by his wife or his children. One of the children at the time being ten and the other fourteen years old, children of such ages would be quite unlikely to remember such an occurrence. It would be quite alarming if securities like this, years after they are taken and money advanced upon them, and after the party executing them is dead, could be attacked and destroyed by the testimony of witnesses to the effect that they had no recollection of the service of a notice requisite to the validity of the instrument. This notice was served by Stanley personally, and it is the contention of the appellants that the service was void for the reason that Stanley was a party to the proceeding, and our attention is called to sections 425 and 433 of the Code of Civil Procedure, which provide that service of a summons for the commencement of an action or a process, or other paper whereby a special proceeding is commenced in court, may be made by any person other than a party to the action. This was not an action ; was it a special proceeding ? An action when applied to' a judicial proceeding signifies an ordinary prosecution in a court of justice by a party against another party for the enforcement or protection of a right, 'or redress, or prevention of a wrong, or the punishment of a public offense. (Code, § 3333.) Every other prosecution by a party for any of the purposes specified in the last section is a special proceeding. (Code, § 3334.) It may well be doubted if this was a special proceeding within the meaning of this section. But if it should be held to be a special proceeding the service of the papers by Stanley was a mere irregularity and did not mate tlie proceeding void. A special guardian was appointed for the infants, upon the hearing of the application, for the purpose of protecting their interests, and he reported that he had been served with the petition and orders, and that, after a careful examination of the petition and of the matters therein contained, in his opinion it was for the best interests of the infants that the prayer of the petition be granted and that the petitioner, James ~W. Stanley, be permitted to sell or mortgage the property.

The mortgage Avas given to secure any balance which might be •due from Stanley personally, and also to secure any balance which might be due from him as a trustee". The fact that it provided for his personal liability is not material, for the judgment provided only for the liability he had incurred as trustee of the estate. The promissory notes for Avhicli the mortgage Avas adjudged to be security were all made by Stanley as such trustee, and were either payable to the mortgagees personally or they Avere liable thereon as indorsers or guarantors, and their liability upon the paper had been duly fixed by due notice of protest.

The trustee failed to appropriate the money for the benefit of the property, but for this failure the plaintiffs avIio advanced the money were not responsible. They were not required to see to the application of the moneys raised upon the. mortgage. “No person who .shall actually and in good faith pay 'a ,sum of money to a trustee, Avhich the trustee as such is authorized to receive, shall be responsible for the proper application of such money according to the trust, nor shall any right or title derived by him from such trustee in consideration of such payment be impeached or called in question in consequence of any misapplication by the trustee of the moneys paid.” (1 E. S. Y30, § 66.)

The history of the case shows many errors and irregularities, many of them of quite serious import; and Avhile the case is not free from serious doubts, Ave are of the opinion that the judgment was correct and that it should be affirmed, Avitli costs, to be paid out of the proceeds of the sale of the mortgaged property.

Dwight, P. J., Haight and Bradley, JJ., concurred.

Judgment appealed from affirmed, with costs.


text:
    Isaac Altman and Another, as Administrators, etc., of Jacob Altman, Deceased, Respondents, v. Eli Hofeller, Appellant, Impleaded, etc.

      Judicial settlement of an executor's accounts — v/pon whom conclusive —when a judgment may he reversed as to one and affirmed as to other defendants.

      A. judicial settlement of the accounts of an executor or administrator by a decree-of a court of competent jurisdiction is conclusive evidence against the parties who were duly cited or appeared, but, upon an appeal from the decree made therein, the General Term may reverse or affirm the same, wholly or partly,, as to any or all of the parties, and may, if necessary or proper, grant a new trial.
    The rule of severance is only so far qualified as not to permit a reversal as to some-only of the parties, when their relation with their associate parties in respect to the subject-matter is necessarily joint, and cannot be treated as several, nor-can a new trial be properly granted as to a portion of a gross sum recovered, and affirmed as to the residue of it.
    No person having an interest in the subject of an action is concluded by its determination unless he is a party to it, or may be treated as such. Although a person was a party to an action, yet, if the court on appeal from a judgment, recovered therein determines that the judgment as against him was erroneous, while it was otherwise as to the other parties, such person is entitled to a new trial upon the merits, and the judgment ceases to be an estoppel as to him.
    Appeal by tbe defendant Eli Hofeller from a judgment of tbe Supreme Court in favor of the plaintiffs, entered in tbe office of tbe cleric of tbe county of Erie on tbe 7th day of December, 1893, upon the report of a referee.
    The judgment appealed from provided, among other things, as-follows: “1. That tbe judgment or decree heretofore entered in this action on tbe 13th day of January, 1891, settling the accounts of the administrators of the estate of Sigmund Hofeller, deceased, and of the general guardian of the defendant Eli Hofeller, is of binding force and effect as against the defendant Eli Hofeller, and as between the plaintiffs in this action and said defendant conclusive evidence of the payment to said defendant of his entire distributive share in the property and estate of said Sigmund Hofeller, deceased, and that no portion of the same remained in the hands of said administrators, nor did they remain liable for the payment thereof at the-time of the commencement of this action.”

      William F. Cogswell, for the appellant.

      Morris Morey, for the respondents.
   Bradley, J.:

This action was originally brought against Gabriel Wile, as general guardian of Eli Hofeller, an infant, Gabriel Wile, as administrator, etc., of Lillie Hofeller, deceased, Lehman Hofeller and Schanette Wile.

The purpose of the action was the exoneration of the estate of the plaintiffs’ intestate from liability in the relation which he had assumed as surety for the administrators, etc., of Sigmund Hofeller, deceased, and with a view to that relief the prayer of their complaint was that a judicial settlement be had of the accounts of Lehman Hofeller and Schanette Wile, as administrators of the estate of Sigmund Hofeller, deceased; that Schanette Wile pay to Gabriel '-Wile, as such guardian and administrator, the amounts due from such estate to Eli Hofeller and the representative of Lillie Hofeller, deceased, and that Gabriel Wile be enjoined from prosecuting certain actions against the plaintiffs, etc.

Afterwards, and in December, 1886, Lehman Hofeller died, leaving his last will and testament, in which he nominated Levi Adler as executor, to whom letters testamentary were duly issued. And on February 10, 1888, Eli Llofeller became twenty-one years of age. Thereupon, in September, 1888, by supplemental summons, Eli Hofeller and Levi Adler, as such executor, were made additional defendants. All the defendants answered separately, except the executor Adler, who did not answer. The issues were tried before a referee, who, upon the facts found by him, determined that the plaintiffs were entitled by judgment to a judicial settlement of the accounts of Schanette Wile, as administratrix, etc., of Sigmund Hofeller, deceased, and of the accounts of Gabriel Wile, as general guardian of Eli Hofeller, and that Schanette Wile was liable on such accounting to account for the whole estate of her intestate. The referee stated the account of her as such administratrix and the»account of Gabriel Wile as such general guardian, the result of which was that he was charged with the amount of the estate of Sigmund Hofeller, deceased, to which Eli Hofeller and the personal representative of Lillie Hofeller were entitled.

The referee further determined, that the plaintiffs were entitled to judgment to the effect that they, as administrators, etc., of Jacob Altman, deceased, and his estate, were discharged and released from liability upon the bond executed by their intestate with Lehman Iíofeller and Schanette Wile (then Schanette Iíofeller), such administrators, and as one of their sureties, and directed judgment, which was entered, for such and other relief. Appeals from the judgment were taken separately by the defendants, Eli Iíofeller, GabrieíWile and Schanette Wile, to the General Term, and there it was ordered that the judgment appealed from be and it was reversed as to the appellant Eli Iíofeller, and a new trial granted as to him, with costs to that appellant to abide the final award of costs, and as to the other appellants affirmed, with costs, but that the settlement of the accounts of Schanette Wile and Lehman iíofeller, as administratrix and administrator of Sigmund Iíofeller, deceased, by the referee in this action, and the judgment therein shall be of no force and effect as against said Iíofeller in the further proceedings in this action.”

The issues between the plaintiffs and Iíofeller afterwards came on to trial before another referee, who determined that the judgment before mentioned settling the accounts of the administrators, etc., of Sigmund Iíofeller, deceased, and of the general guardian of the defendant Eli Iíofeller was binding on the latter and conclusive evidence of the payment to that defeirdant of his entire distributive share in the estate of Sigmund Iíofeller, deceased, and that no portion of it remained in the hands of such administrators, and the referee directed judgment for the plaintiffs, which was entered accordingly. Exceptions were taken by the defendant. The view of the learned referee on the last trial was that as the judicial accounting of the administrators was had in an action to which Eli Iíofeller and his previous general guardian were parties, the accounting was conclusive upon the appellant, and that as the judgment as to the administrators and general guardian was affirmed, it was rendered no less conclusive against the appellant by the reversal as to him, and, therefore, the granting of the new trial was futile to serve any substantial purpose in his behalf. Upon principle as well as by the statute a judicial settlement of the accounts of an executor or administrator by decree of a court of competent jurisdiction is conclusive evidence against the parties wbo are duly cited or appear. (Code Civ. Proc. § 2742.) This was the effect of the first judgment as to all tlie parties when it was entered. But upon an appeal from a judgment the General Term may reverse or affirm wholly or partly as to any or all of the parties, and may, if necessary or proper, grant a new trial. (Code, § 1317.) The rule of severance is only so qualified as not to permit a reversal as to some only of the parties plaintiff or defendants when their relation in respect to the subject-matter is necessarily joint with their associate parties and cannot be treated as several, nor can a new trial be properly granted as to a portion of a gross sum recovered and affirmed as to the residue of it. (Story v. N. Y. & H. R. R. Co., 6 N. Y. 85; Goodsell v. Western U. Tel. Co., 109 id. 147.)

The present case is one in equity, and there was nothing in the relation of the parties to prevent tlie reversal and new trial as to the defendant Eli Hofeller. The question is whether the reconsideration of the judicial settlement of tlie accounts of the administrators on the merits was open to him upon the new trial directed on the reversal of the judgment as to him alone. True, the accounting as between the plaintiffs and the administrators remained effectual, and the general guardian was conclusively charged by the judgment. But no person having an interest in the subject of an action is concluded by its determination unless he is a party to it or may be treated as such. Although the appellant was a party to the action, the court on review determined that the judgment as against him was erroneous, while it was otherwise as against the other defendants. If the case was susceptible of that situation the appellant was entitled to the benefit of a new trial "upon the merits.

The question is presented whether or not the fact that the administrators and general guardian were as- to the plaintiffs concluded by the judicial settlement declared by the judgment rendered is also conclusive upon the appellant, notwithstanding the reversal of it as to him.

The view taken by the General Term was that, although as between the plaintiffs and the administrators and the guardian, the guardian was by the judgment charged with having received of or from the estate of Sigmund Hofeller, deceased, an amount sufficient to pay the distributive share to which Eli Hofeller was entitled, the latter upon the facts as they appeared was not required to treat such liability of the guardian as having been created in such manner as to discharge the administrators to that extent from liability to him, the appellant.

Upon that subject, in the opinion of the court, delivered by Mr. Justice Dwight, it, with other things, was said: It is very apparent that the property may have come into the hands of the guardian under such circumstances as to render both the guardian and the administratrix liable therefor to the infant beneficiary of the estate. * * * It is very clear that there is nothing in the fact that the guardian has become charged, which of itself discharges the administratrix, and the assumption to the contrary is, as we have already said, the fundamental error of the conclusions of law of the referee in this respect. He finds as a fact that from the date of the marriage of Gabriel to Schanette, in January, 1880, Gabriel took possession of the property of Eli Hofeller, the son of his wife Schanette, and who from that time was a member of the family, and acted, and assumed to act, as the guardian of Eli’s property, and that between January, 1880, and September 14, 1881, the following sums of money from the estate of Sigmund Hofeller, deceased, were paid to him by Schanette Wile, or collected and received by him with her knowledge and consent, as follows, to wit; ’ and here follows a statement of moneys of the estate received by Gabriel before, his appointment either as guardian of Eli or as administrator of Lillie, aggregating the sum of nearly $12,000. It is very clear that for no part of this money was Schanette discharged from liability as. administratrix, albeit Gabriel did become charged with liability therefor as guardian upon his subsequent appointment as such. And the same is equally true of other funds and equitable assets of the estate which came into his hands after his appointment as guardian if and so far as they came into' his hands as the husband or agent of his wife and not as guardian of his ward, or were either collusively or negligently permitted by the administratrix to be received and disposed of by him for his own benefit.” And it was there further said that “ effect was given to the erroneous principle adopted by the referee by crediting to the administratrix in her account all the funds and assets, legal or equitable, of the estate with which the guardian had become by any means chargeable.” (Altman v. Wile, 46 N. Y. St. Repr. 517.)

Thus are presented some of the facts and some of the reasons by which the General Term was led to the conclusion that the appellant was entitled to a new trial, notwithstanding, as between the plaintiffs and the other defendants, Gabriel Wile was charged with liability to an amount adequate to discharge liis obligation as guardian and administrator; and upon those facts and for those reasons Schanette Wile, as administratrix, remained liable to Eli Hofeller.

The law of the case for the purposes of the new trial of the issues between the plaintiffs and the defendant Hofeller is that declared by the General Term, and, therefore, on the new trial, to which he is entitled upon the merits, he is not concluded by the judicial settlement of the accounts, as between the plaintiffs and the other defendants, determined by the judgment.

When the judgment, as against the appellant, was reversed it ceased to be an estoppel as to him, and the reversal in its practical effect was for the purposes of inquiry by him upon the new trial into the state of the accounts of the administrators of the estate of his father, deceased, and into the state of the accounts, legitimately, as such, between them and the general guardian, substantially the same (except for the purposes of a new trial therein) as if he had not been a party to the action ; and if there be established any liability of the administrators, or of either of them, to him he may eventually have his remedy upon their bond. (Code, § 2607; Nenz v. Oakley, 122 N. Y. 631.)

The judgment should be reversed and a new trial granted, costs of this appeal to the appellant to abide the final award of costs.

Dwight, P. J., Lewis and Haight, JJ., concurred.

Judgment appealed from reversed and new trial granted, with costs of this appeal to the appellant to abide the final award of costs.