text:
    THE MARINE NATIONAL BANK, Plaintiff and Respondent, v. THE NATIONAL CITY BANK, Defendant and Appellant.
    I. Check.—Bill of Exchange. —Altered in Amount and Payer’s Name.—Certification of.—Bight, etc., of certifying Drawee and of Holder.
    1. Aeeeptam.ce, contract of, what it does not guarantee.

      a. It does not guarantee either the correctness of the amount, or that there has been no alteration in the name of the payee.

    1. It only guarantees the genuineness of the drawer's signature,
    • a. This is so whether the acceptance is before or after an alteration.
    2. Recovery back by the certifying drarnee of money paid hy him on a check, the amount of which had been raised and the payee’s name altered before certification.
    Mistake of Fact.
    1. Money so paid in ignorance of the alteration ma/y be recovered back from the person to whom it was paid, as having been paid under mistake of fact,

    UNLESS
    the person to whom the payment was made, or those under whom he derived title to the check or bill, received the check or bill in ignorance of the alteration and on the faith of the certification, knowing the check to have been in the state when certified, as when it was received in payment parted with value, or is equally innocent with the certifying drawee, and has parted with value.
    Therefore,
    3. Estoppel.
    1. Where the drawee, after the check or bill has been raised in amount and the name of the payee changed by a party who had no authority to make the alteration, in ignorance of the unauthorized alteration, certifies the check, and the party whose name had been thus without authority inserted in the check as payee thereof, receives the check in ignorance of the alteration, knowing that the drarnee certified it in the condition in which it was presented, and on the faith of the certification parts with value to the full amount of the altered sum, and the drarnee thereafter pays the check or Ull,

    he is estopped
    from claiming that the payment was made under a mistake of fact, and from showing that the sum and name of the payee contained in the check were not inserted therein by the drawer, or by his authority, and cannot recover back the money from the payee, who so receives the check or one lawfully claiming under him:

      Before Barbour, Ch. J., Monell and Freedman, JJ.

      Decided December 31, 1873.
    4. Maxim.
    1. Where one of two innocent persons must suffer, the loss should fall on the one who has been chiefly instrumental in producing it. a. This maxim applies to such a case, and under it the drawee cannot recover.

    II. Certification of a check by a bank is equivalent to an acceptance of a ■bill of exchange by the drawee.
    1. The obligation is the same in the two cases.
    Appeal from judgment entered on referee’s report.
    The action was to recover money paid under an alleged mistake of facts.
    Lunt Brothers gave to a stranger their check upon the Marine National Bank, for twenty-five, dollars, payable to the order of Henry Smith. The next morning a person purchased gold of Berippe & Co., and offered in payment the same check, which had then been altered or “raised” to §4,679.96. Before delivering the gold, Berippe & Co. required the check to be certified. It was taken to the Marine National Bank, and by it certified as good A Thereupon, Berippe & Co. received the check and delivered the gold. The check was endorsed by Berippe & Co. (the name of Henry Smith, the payee, having been erased, and that of Berippe & Co. inserted before they received it), and deposited by them in the defendant’s bank, and was cleared by them through the clearing-house the following morning. Buring the day the plaintiff discovered that the check had been altered, and demanded of the defendant a return of the money. The action was tried by a referee, who found the facts, and gave the plaintiff judgment.
    The defendants appealed.

      Arnoux, Ritch & Woodford, attorneys, and Wm.. Henry Arnoux, of counsel for appellant.

      I. The plaintiff having certified the check in question after the alteration was made, thereby undertook, as an original obligation, to pay to the order of Derippe & Co. the amount therein expressed, and the said Derippe & Co., having parted with value on the faith of such certification, the plaintiff was not entitled to recover, and the decision of the referee was erroneous.

      First. The certification was an original undertaking by the plaintiff to pay the check. “ The certificate of a bank that a check drawn payable by the bank is good, operates not as a promise to pay the debt of another, but as an engagement of the bank to pay the debt as its own” (Mead v. Merchants’ Bank, 25 N. Y. 13).
    The certification of a check imposes upon the bank an obligation to retain the amount which by the certificate it admits it has on hand to the credit of the drawer, to meet the check when presented, and to pay the same-to the holder on demand. And whether this admission is true or false, the bank is bound thereby to an innocent holder of the check (Farmers’ & Mech. Bk. v. Butchers’ & Drovers’ Bk., 16 N. Y. 125).

      Second. Certification that a check is good is equivalent to. payment (Smith v. Miller, 43 N. Y. 171).
    II. The plaintiff is estopped by its own acts from denying the validity of the check in question for the-amount and to the payee therein mentioned (Mc.Williams v. Mason, 31 N. Y. 294).
    The Marine Bank, by certifying this check in the hands of the holder, held him out, or allowed him to appear, as having full power of disposing the property to Derippe & Co., and they, innocent third parties, were thus led into dealing with such apparent owner, and they will be protected.
    Such acts will constitute an estoppel (See McNeil v. Tenth National Bank, 46 N. Y. 329).
    The referee has declared that Derippe & Co. were innocent third parties.

      But the learned referee concludes that the fact of the forgery presents an insuperable obstacle to defendants’ successful defence.
    Here, again, the doctrine of estoppel steps in and says, that though the filling up of the check is a forgery, the acceptor is estopped from setting up the fact (Van Duzer v. Howe, 21 N. Y. 531).
    And any alterations made before delivery would not affect the validity of such instrument in the hands of a T)ona-1ide holder for value (5 Ala. 297; 1 Branch, 10 : 11 N. H. 395).
    But even if, as between the plaintiff and Derippe & Co., this position is untenable, which it is not, it is the law, as between the plaintiff and defendant.
    III. The title to said check passed to Derippe & Go. by delivery, and from them to the defendant, and the plaintiff had no right of action against defendant while it retained possession of said check.
    Choses In action, such as bonds and mortgages and promissory notes not endorsed, may be well transferred by delivery only (Westerlo v. De Witt, 36 N. Y. 340, 345; Duffield v. Elles, 1 Bligh, N. S. 497, 542; Brown v. Brown, 18 Conn. 410).

      John H. Platt, attorney, and Waldo Hutchings, of counsel for respondent, urged :
    I. The rule of law is, that when, in consequence of a mutual mistake, one party has received the property of another, he must refund, and this without reference to vigilance or negligence (Kingston Bank v. Elinge, 40 N. Y. 391).
    II. The Marine Bank paid the check in question, both banks believing that it was genuine, that is to say,, under a mutual mistake of fact, and it is entitled, therefore, to recover back the money paid under that mistake.
    For (1) a check is a bill of exchange, of which the bank on which it is drawn is the drawee (Chapman v. White, 6 N. Y. 412 ; Meads v. Merchants’ Bank, 25 N. Y. 143).

    (2) Certifying a check amounts, in law, to accepting a bill of exchange (Farmers’ Bank v. Butchers & Drovers’ Bank, 16 N. Y. 125; Barnes v. Ontario Bank, 19 N. Y. 152; at p. 159 ; Meads v. Merchants’ Bank, 25 N. Y. R. 143, at p. 146, etc., per Wright, J. [dissenting] ; Irving Bank v. Wetherald, 36 N. Y. 335; Merchant’s Bank v. State Bank, 10 Wall, 604, at pp. 647, 648).
    (3) The acceptance of a bill of exchange is not an admission nor a certificate that the body of the bill is genuine (Bank of Commerce Union Bank, 3 N. Y. 230).
    (4) A drawee who has paid a bill of exchange under the belief that it was genuine, whereas the body of the bill had been altered fraudently, can recover the amount that he has paid under such mistake of fact,, provided the drawer’s signature remained genuine (The National Bank of Commerce v. The National Mechanics’ Banking Association, decided at the General Term of the Superior Court of the city of New York, in January, 1873, not yet reported; Bank of Commerce v. Union Bank, 3 N. Y. 230).
    (It will be noted that this case is cited with approval in the case of the Park Bank v. The Ninth National Bank, reported in the 46th N. Y. p. 77).
    III. The only person who could transfer the title to the check drawn by Lunt Bros, was the payee Smith, named therein. The City Bank therefore obtained money from the Marine Bank on the presentation of a forged title, and the Marine Bank can recover in this action (Bank of Commerce v. Union Bank, 3 N. Y. 330 ; Canal Bank v. Bank of Albany, 1 Hill, 287, 290).
    IV. It is the party endorsing the bill who gives it currency and vouches for its genuineness, so far as the body of the bill is concerned, and the acceptor speaks only to the genuineness of the drawer’s signature (Bank of Commerce y. Union Bank, 3 N. Y. 230; Canal Bank v. Bank of Albany, 1 Hill, 287),
    Y. It is proper, therefore, that the party who endorses a forged check and thus gives it currency, should bear the loss. It is directly the result of his own negligence (National Bank of North America y. Bangs, 106 Mass. 441); and as each party to the bill has his remedy, against his immediate endorser, the first endorser is the one on whom the loss must fall eventually (Bank of Commerce v. Union Bank, 3 N. Y. 230 ; Canal Bank v. Bank of Albany, 1 Hill, 287).
    Were the whole instrument a forgery, the case of the National Park Bank v. The Ninth National Bank (46 N. Y. 77) holds that the Marine Bank could not recover, and the distinction between the case and the one before the court is this : In that case the bank misleads the holders of the check by its false certificate of a fact which is peculiarly within the knowledge of the bank, and which it is bound to know, viz., the handwriting of its customer and correspondent. But even this rule is not inflexible. When the holders of a check take it under circumstances which should have put them on their guard, and their failure to make inquiry as to its genuineness amounts to negligence, the drawee of the check who has paid it under a mistake of fact is not estopped to show even the forgery of the drawer’s signature, and on doing so he may recover the money that he has paid under such mistake of fact. To illustrate this principle: A stranger comes into a broker’s office and asks the price of a given amount of gold in currency. The stranger goes out and returns and presents a forged check for the amount drawn to the broker’s order. The broker takes the check. This is held to be such negligence on the part of the broker, that the bank that pays the check to another bank in which the broker deposits the check, may recover from the broker the amount of the check (National Bank of North America v. Bangs, 106 Mass. 441).
    Thus, even the rule that the drawee is bound to know his correspondent’s signature and pays to his own loss,, in case it turns out to be forged, does not apply when the holder of the check takes it under the circumstances of the case just cited; and in the present case ¡Derippe & Co. not only took the check from a stranger, but the drawers of the check were also strangers to them, so far as never having had business transactions with a man makes him a stranger.
    VII. To make Derippe & Co. bona-fide holders for value of the check, it must appear not only that they gave value for it, but that it was transferred to them by one who had the title to it. Unless a draft has been accepted and endorsed in blank so as to become payable to bearer, the only persons who can transfer a title to it are those whose names appear on the instrument. ¡¡Now the only parties whose names appeared on the paper when Derippe & Co. claim they acquired a title to it were Lunt Brothers (the drawers), Derippe & Co. (the payees), and the Marine bank (the drawees). They were all the original parties to the instrument (even were it genuine), and of whom can Derippe & Co. claim to be transferees for value ? Of the acceptors ? They had possession of the draft for a special purpose and not as owners. Of the drawers? The draft they drew was payable to the order of Henry Smith. Of the stranger who offered it to them ? He had no title. His name did not appear on the instrument.
    The bank accepted the draft, by certifying it, before it came into the possession of Derippe & Co., but the payees of a bill of exchange accepted before it is delivered to them, are none the less original parties to the bill.
   By the Court.—Monell, J.

It is claimed by the appellant that the principle which controlled the decision of this court in the National Bank of Commerce v. the National Mechanics Banking Association (35 N. Y. Sup. Ct. R. 282) has no application to this case. In that the check was certified before alteration ; in this case it was certified after alteration. The difference, it is claimed, so distinguishes the cases, that the present case is not embarrassed by a former decision.

In the case referred to, a check for a small amount was certified by the bank. It was afterwards altered to a larger sum, and negotiated. It was paid by the certifying bank, through the clearing-house, without discovering the alteration. It having been found that the payment was made under a mistake of facts, it was held the certifying and paying bank could recover.

In this case, however, it is insisted that by the certification of the check after its alteration, the bank incurred an obligation which estops it from claiming the benefit of a mistake.

It is conceded, that had the bank, upon presentation of the check, paid the amount over its counter, it could recover. This is precisely in accordance with Bank of Commerce v. Union Bank (3 N. Y. R. 230) and the late case in this court of the same plaintiff against the National Mechanics Banking Association. In the first of these cases, a sight draft was altered after it was issued, and paid by the drawee in ignorance of the forgery, and it was held he could recover.

No greater effect can be given to a bank certification of a check, than to the acceptance by the drawee of a bill of exchange. The obligation is the same in the two cases (Farmers Bank v. B. & D. Bank, 16 N. Y. R. 125; Barnes v. Ontario Bank, 19 Id. 152, 159). And in neither case does the obligation extend beyond a guarantee of the genuiness of the drawer’s signature. It is not a guarantee that the amount is correct (Bank of Commerce v.Union Bank, supra).

The plaintiffs, by their certification of the check, are not estopped from showing the forgery of the amount, or the alteration of the name of the payee. The signature of the drawer was genuine, and there the obligation of the payee terminated.

There is nothing, therefore, in the contract of acceptance of a bill of exchange, or of the certification of a check, which can distinguish it from an actual payment except so far as it may operate as an estoppel; and if a recovery can be had in the latter case, it can also be had in the other. It is the mistake offacts which enables a party to recover ; and there can be no difference in principle between an actual payment of money under a mistake, and the incurring of' an obligation to pay money.

It is substantially found, and is undoubtedly true, that Derippe & Co. received the check in ignorance of the alteration, and upon the faith of the plaintiff s' certificate; and the defendants insist that the plaintiffs should be estopped from claiming, as against the defendants, the benefit of the mistake, upon the principle as well of estoppel, as also that when one of two innocent persons must suffer, the loss should fall upon the one who has been chiefly instrumental in producing it.

The reliance of Derippe & Co. was upon the certificate written upon the check. It conveyed to them the information (if it did not contain the obligation) that it was “good” for the amount specified in it. In ignoranee of the alteration, that amount they took to be $4,679.96 ; and they parted with that sum to the holder, and received the check innocently and ignorantly.

Had no other rights intervened, doubtless the certifying bank could legally have claimed the benefit of the mistake. It could have insisted that it had merely guaranteed the genuiness of the drawers’ signature, and had assumed no obligation as to the amount inserted, and having paid it under a mistake, could probably | have recovered.

1' But I am of opinion that other rights had intervened, and that Derippe & Co. were authorized to rely upon, as they did rely upon, the certificate upon the check, i When it was presented, it purported to be payable to their order; it was payable to their order, and filled for the full sum of $4,679.96, and there was nothing to excite suspicion. Yet Derippe & Co., before they would part with value, required the check to be certified. It was accordingly taken to the bank, the certificate put upon it, and then delivered to Derippe & Co. for its full amount.

A general definition of an estoppel in pais is thus given in Continental Bank v. Bank of Commonwealth (SOW. Y. JR. 575, 581): “It is argued that theré must have been some act or declaration of the plaintiff or of its agent to the defendant, assignors, which so affected the conduct of the latter to their injury, as that it would be unjust now to permit the plaintiff to set up the truth of the case to the contrary of its mistaken act or declaration.” In that case the certificate of the bank teller was a forgery. But the defendant before receiving the check, caused inquiry to be made of the teller, who pronounced it “all right.” It was held that the bank was estopped by the declaration of its teller from questioning the genuineness of the certification. In that case the receiver of the check relied upon the declaration of the teller, and parted with value only upon such declaration. In the case before us, Derippe & Co. relied on the act of the bank, and parted with value only upon such act. The declaration in the one case, and the act in the other, were both and equally made under a mistake, yet they must both and equally have the same effect. They equally affected the conduct of the receivers of the checks, and as Derippe & Co. were led by the act of the plaintiffs into the belief that the check was “good” for the whole' amount, it must estop the latter from “setting up the truth to the contrary of its mistaken act.”

I think also that regarding the parties as equally innocent, the loss should fall on the plaintiffs as being the chief instrument in producing it. It innocently and under a mistake certified the check. It thereby induced the receiver to part with value. Without the certificate, Derippe & Co. doubtless would not have received the check, and would not have been injured, but receiving it, on 'the strength of the certificate, the injury may be fairly attributable to the act of the plaintiff.

There was nothing in the evidence to impair the entire good faith of Derippe & Co. There was nothing to excite suspicion or to put them on inquiry. In respect to the alterations of the check, both in the amount and in the name of the payee, the bank which certified it in its altered condition, and Derippe & Co., who afterwards received it, must equally be regarded as ignorant and innocent.

The plaintiffs, being estopped by their act of certification of the check from alleging the truth as against Derippe & Co., are equally estopped as against the defendants who received the check from Derippe & Co.

The learned referee arrived at a different conclusion, but not without much doubt and misgiving. He however thought another objection was conclusive, namely, that Derippe & Co. did not get title to the check, for the reason that the erasure of Smith’s name and the insertion of Derippe’s & Co’s. was a forgery. It was no more a forgery than the alteration of the amount. Either rendered the check void as to the drawer. But it does not follow that as between Derippe <fc Co. and the plaintiff, the alterations in the check will impair their relative rights. Had the bank not paid the check, Derippe & Go. would have been remediless against the drawers. But I apprehend the question between Derippe & Co. and the plaintiff is quite a different one, and it does not lie with the latter to inquire into the former’ s title. It was certified after the payee’s name had "been altered, and in the condition it was as to the amount, and so came to Derippe & Co.

The same state of facts existed in Bank of Commerce v. Union Bank (supra). The payee’s name had been altered. But the court put its decision on the ground of a payment made under a mistake of facts, not because the holder had no title.

I am of opinion that the conclusions of tire referee were erroneous, and that his judgment should he reversed, the order of reference vacated, and a new trial granted, with costs to the appellant to abide the event-

Barbour, Ch. J., and Freedman, J., concurred.


source: Caselaw Access Project

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

license: Public Domain

text:
    JOHN UNDERWOOD, Plaintiff and Respondent, v. JOHN GREEN, Defendant and Appellant.
    I. Execution.—Erra Yeabs elapsing.
    1. When an execution issued for the collection of a judgment will not be set aside, although five yews have elapsed since the entry of the judgment, and no leave of the court to issue execution has been obtained, a. When an appeal is taken from such judgment to the General Term, and proceedings therein stayed, and the General Term reverses the judgment, but on appeal to the Court of Appeals that Court reverses the General Term and affirms the decision below, an execution issued within five years after the entry of judgment on the remittitur from the Court of Appeals is properly issued without obtaining leave of the court.
    1. In such case it is not necessary to obtain leave of the court.

    Per Honell and Ebeedman, JJ.
    Babboub, Ch. J., dissenting.
    II. Appeal.—Pbactice.
    1. What will not be considered at General Term.

    1. A point not raised in the Court below will not be considered, ,
    Per Babboub, Ch. J., and Fbeedman, J.

      Before Barbour, Ch. J., Monell and Freedman, JJ.

      Decided, December 31, 1873.
    Appeal from order.
    In this case judgment was recovered and docketed against the defendant, on November 30, 1863. The defendant appealed to the General Term, and the judgment was reversed and a new trial ordered by an order made December 31, 1864. The plaintiff appealed from said General Term order to the Court of Appeals, which court reversed the said General Term order and affirmed the judgment recovered and docketed November 30, 1863. Upon the appeal to the General Term an undertaking was given which stayed all proceedings on the judgment below.
    The costs on the appeal to the Court of Appeals were, on the 2d of May, 1872, adjusted by the clerk of the Superior Court, no question as to his authority to adjust them being raised before him; and on said 2d May, 1872, the remittitur from the .Court of Appeals was filed, and an order of this court making the judgment of the Court of Appeals the judgment of this court was entered ex-jpa/rte with the clerk of the court, and thereupon on said 2d day of May, 1872, judgment was entered in the office of the clerk of this court against the defendant for the costs of the appeal to the Court of Appeals adjusted as above stated. ' Qn the 15th of August, 1873, plaintiff issued an execution on the judgment recovered November 30, 1863, without leave of the court being obtained in any way.
    Thereupon defendant moved at Special Term for (among other relief) an order vacating and setting aside “the execution issued on the j udgment of November 30, 1863, because it was not issued within five years, and leave of the court was not obtained to issue the same.” No question was raised at Special Term as to the clerk’s authority to adjust above-mentioned costs.
    The motion was denied, and from the order entered on the denial the defendant appeals.

      A. H. Reavey, attorney, and of counsel for appellant, urged:

      First. The judgment entered May 2d, 1872, for $378.04, the costs of the appeal, was and is an absolute nullity, because said costs were adjusted by the clerk of this court, and not by the court or a judge thereof.
    The costs being costs of an appeal from an order could only be adjusted by the court or a judge thereof, and not having been so adjusted the judgment therefor is a nullity (Brown v. Leigh, 50 New York Rep. 427).

      Second. The execution to collect the judgment entered November 30th, 1863, having been issued more than fine years thereafter, without leave of the court, was and is a nullity (§ 284, Code).

    There is no exception in the event of an appeal, and the time cannot in such an event be enlarged.
    In 3d How. Rep. 281, held : “ The Code not only enlarges the time within which an execution may be issued without leave of the court from two to fine years from the entry of judgment, but takes away the 30 days’ suspension of the right to issue it ” (see 12 How. Rep. 539 ; 2 Duer Rep. 654 ; 4 Duer Rep. 342 ; 1 Kernan Rep. 285 ; 49 N. Y. Rep. 162).
    In 3d Fuer Rep. 45, held“An execution upon a judgment in Marine Court, issued more than fine years after judgment rendered, is not merely irregular, but noid.’
    By the true construction of section 284 Code, no execution can be issued without leave of the court after the lapse of five years from the entry of judgment (1 Code Rep. N. S. 198 ; 2 Abbot Rep. 117-120 ; 12 Howard Rep. 438; 13 Howard Rep. 572-574 ; 3 Howard Rep. 280).

      In. the case of Hall v. Emmons et aZ., in this court, an order was made allowing the principle to be surrendered, which was reversed at General Term, and on appeal the Court of Appeals affirmed the Special Term and reversed the General Term. Pending the appeal in the Court of Appeals, the plaintiff entered and collected judgment.
    Subsequently, upon motion, Judge Jones ordered restitution and says: “The Special Term order stands in full force, and the defendants are entitled to all the rights which they obtained by compliance with it.” Upon appeal, Judge Me Gunn, delivering the opinion of the court, said: “By the action of the Court of Appeals, the defendants were remitted to all the rights they had when the order of surrender was made.” The Court of Appeals affirmed this order.

      Frank Loomis, attorney, and of counsel for respondent.
   Monell, J.

Upon the appeal from the judgment the proceedings on the part of the plaintiff were stayed. The General Term reversed the judgment, and granted a new trial. From the order of reversal, the plaintiff appealed to the Court of Appeals. The latter court reversed the order of the General Term and affirmed the judgment which had been reversed.

Until the affirmance by the Court of Appeals, the first judgment, after its reversal by the General Term, was at least suspended. An execution upon it could not have been issued; nor could it have been enforced by action or otherwise. In effect it was as if it had been cancelled of record. And although the judgment of affirmance restored the original judgment, the whole of the intervening time, from the first appeal to the final affirmance, was dies non juridici, to the plaintiff.

The cases we were referred to merely sustain the general proposition, that an execution cannot he issued without leave after five years from the entry of judgment. In none of those had there been an appeal or suspension of the judgment.

The true construction of the section (284) of the Code, I think, is, that execution must issue within five years of the entry of the judgment where such judgment is final between the parties. The first judgment was only final in the court below, and was subject to appeal. There was, therefore, no judgment upon which an execution could be issued until the end of the appeal and the affirmance of the judgment. During the intervening time there was either a stay of proceedings or a vacated judgment, either and both of which must have the effect of suspending the period prescribed by the 284th section of the Code.

In King v. Harris (34 N. Y. R. 330) it was held that the lien of a judgment vacated by an order of the Special Term could not be restored by a reversal of such order by the G-eneral Term, as against other creditors who had in the meantime acquired a lien. In the court below (30 Barb. 471), Mullen, J., gives the effect of a reversal as follows: “After the entry of the order of the Special Term, all persons dealing with the real estate of iihe judgment debtor as bona-fide purchasers, or incumbrancers, and all commencing actions affecting the real estate, would be at liberty to act as if no such judgment had ever been docketed / and the subsequent reversal of the order could not affect such parties or their proceedings.”

The judgment entered upon the remittitur from the Court of Appeals is a new judgment, and although the ■former judgment is restored, so far as respects its lien, .an execution can issue only after such judgment upon the remittitur, and is in fact issued upon it.

I am, therefore, of opinion, that under the facts of the ease, the execution was properly issued, it being within ■ five years of the entry of the judgment upon the remittitur from the Court of Appeals.

The order should be affirmed, with costs.

Barbour, C. J.

The papers used upon the motion below on the part of the appellant, raised no question touching the validity or legal effect of the order of a General Term of this court, which in terms reversed a. judgment at Special Term, or of the order of the Court of Appeals, which, in like manner, reversed the General Term order and affirmed the original judgment, and therefore it is unnecessary for us to consider here whether a judgment can properly be affirmed or reversed by- a mere order of an appellate court. It is-sufficient to say that the question is not now before us.

The point of the appellant’s counsel, that the judgment entered upon the remittitur was a nullity because, the costs being costs on appeal from an order merely, were adjusted by the clerk and not by the court or a. judge, cannot be sustained; for there is nothing in the papers used upon the motion or in the decision of the judge which indicates that the question was, or could properly have been, raised or adjudicated at the Special Term.

I am of opinion, however, that the learned judge erred in refusing to set aside the execution. The language of the Code, § 284, clearly prohibits the issuing of execution after the lapse of five years from the entry of judgment, except upon notice and proofs and an order of court, founded thereupon, granting permission to issue the same. The prohibition is imperative, and in terms-extends to all cases (See Morse v. Goold, 11 N. Y. 285 ; Redmond v. Wheeler, 2 Abb. 117 ; Swift v. Flanagan, 12 How. P. R. 438; Sacia v. Nestle; 13 Ib. 572).

The order appealed from must therefore be reversed,, with costs, and an order entered vacatingii and setting aside the execution.

Freedman, J.

I agree with the learned Chief Justice • that there is nothing in the point made hy the appellant that the judgment entered upon the remittitur is void, because the costs being costs on appeal from an order merely, were adjusted by the clerk and not by the i court or a judge thereof. Sot only is there no proof that this question was raised or passed upon at Special Term, but if there were, the proposition could not be maintained. The appeal was under Subd. 2 of § 11 of the Code from the order of the General Term, reversing plaintiff’s judgment and granting a new trial. The Court of Appeals reversed that order and affirmed the judgment with costs, which under § 307 meant full costs (Brown v. Leigh, 52 N. Y. 249). The appeal not being an interlocutory or special proceeding within the meaning of Subd. 2 of § 311, it became under Subd. 1 of the last-named section, the duty of the clerk, on application of the' prevailing party, to insert the costs allowed by the provisions of the Code in the entry of the judgment which necessarily had to be entered upon the remittitur.

Upon the other branch of the case I concur in the views expressed by my brother Monell. The time during which plaintiff’s judgment remained suspended, should not be held to constitute part of the five years mentioned in § 284. As an additional reason why the order appealed from should be affirmed, I will point out that it has been repeatedly held that an execution issued without leave, after five years from the entry of the judgment in a court of record, and in violation of § 284, is not void, but only voidable in the discretion of the court from which it issued (Bank of Genesee v. Spencer, 18 N. Y. 150 ; Winebrener v. Johnson, 7 Abb. N. S. 202).

The order should be affirmed, with costs.


author: By the Court.—Barbour, C.J.

text:
    JOHN DRISCOLL, Plaintiff and Respondent, v. THE WEST, BRADLEY, & CARY MANUFACTURING COMPANY et al., Defendants and Appellants.
    I. Corporation organized under General Manufacturing Corporation Act.—Transfer of Stock, By-laws concerning.
    1. Power to make, whence derived.

    1. Solely from the seventh and eighth sections of the act authorizing the formation of corporations for manufacturing, etc., purposes, passed February 17, 1848, and section 1, title 3, chap. 18, part 1 Revised Statutes.
    2. What by-laws such corporation has power to make respecting the transfer of stock.

    1. None but such as relate solely to the manner, form, and mode in which the transfer must be made.
    3. What by-laws on this subject the corporation has no power to make.

    1. No power to make any by-law which will prevent an owner from transferring Ms stock, and seriously embarrass him in so doing, and wMch will deprive him of any substantial right whatever.
    Therefore,
    1. A by-law which prohibits a tranffer of his dock by an owner beccmse he is in debt to the company is ultra vires and void.

    EL Stock, Certificate of, having annexed thereto a Power of Attorney to transfer executed in Blank by the Person
    NAMED IN THE CERTIFICATE AS OWNER OF THE NUMBER OF SHARES THEREIN SPECIFIED.
    1. Delivery of, effect. <

      a. It is a good and valid symbolic delivery of the stock itself, and the purchaser of the stock upon such delivery becomes possessed of all the vendor’s property and interest therein, wholly independent of any act of ratification or dissent on the part of the company.

    2. JSstoppelby.

      a. When one purchases stock in good faith, relying upon a certificate stating in effect that A. was the owner of the number of shares therein specified, and that'the same were transferable in the books of the company to the person entitled thereto, upon the surrender of the certificate, and wMch contains no condition other than such, surrender,

      Before Barbour, Ch. J., Monell and Freedman, JJ.

      Decided December 31, 1874.
    THE COMPANY IS ESTOPPED
    from claiming that the stock was not transferable to a purchaser upon complying with the sole condition expressed in the certificate.
    Appeal from judgment entered on a decision "by a single judge upon a trial of an equity case.
    This action was brought to compel the defendant to transfer to the plaintiff two hundred shares of defendant’s stock upon its books, and to have the plaintiff declared to possess and enjoy all the rights, privileges, and franchises of a stockholder in said company.
    The two hundred shares in question at one time belonged to J. W. Bradley. An action was commenced in August, 1871, by Matthew Bartlett as plaintiff against said Bradley as defendant.
    In that action a judgment was rendered directing the sale of the stock under the direction of a referee named in the judgment. Pursuant to this judgment, the stock was sold by the referee, and the plaintiff in this action became the purchaser, and thereupon said referee executed and delivered to the plaintiff herein an assignment and transfer of said stock, which after various recitals was as follows :
    “In consideration of the said sum of three thousand dollars, I hereby sell, assign, and transfer to the said John Driscoll the said two hundred shares in the capital stock of the West, Bradley & Cary Manufacturing Company, and do hereby constitute and appoint him attorney to transfer the same bn the books of the company ; and I do hereby assign and transfer to him the certificate for said stock delivered to the said Matthew Bartlett by Joseph W. Bradley, as aforesaid, together with an assignment and power of attorney executed "by said Bradley to said Bartlett, and dated New York, October 21st, 1869.
    “In witness whereof, I have hereunto set my hand and seal, the second day of February, 1872.
    “Joseph B. Flahders,
    “ Beferee. [l. s.]
    “In the presence of
    “War. Myers Hoes.”
    The stock at the time of said, sale and transfer to plaintiff stood on the books of the company in the name of said Bradley.
    The plaintiff on the transfer to him applied to defendant to transfer the stock to him on its books. The application was denied, and thereupon the action was brought.
    The defence is that the defendant is a corporation duly incorporated under and in pursuance of an act of the legislature of the State of New York, entitled, “ An act to authorize the formation of corporations for manufacturing, mining, mechanical, or chemical purposes,” passed February 17, 1848 ; that in pursuance of the provisions of the aforesaid act the said corporation passed by-laws in and by which it was among other things provided that “all certificates of stock shall be “signed by the president and secretary, and all trans-" fers of stock shall be made on the books of the com- “ pany by the holder of a certificate, or his lawful representative, upon a surrender of such certificate.” “No stock shall be allowed to be transferred on the ‘' books of the company if the person in whose name “ the stock shall stand shall be indebted to the com“pany, unless with the consent of the president or “ treasurer, or by a vote of the board of trustees,”
    That said by-laws were adopted at the time of the organization of the company, and before the capital stock thereof was issued or allotted to the subscribers thereto, and before any of the capital stock of the said company was issued to or owned by Joseph W. Bradley, mentioned in the complaint, and said by-laws have ever since been in force, and that all the capital stock issued by said company was subject,to the said condition, and that said condition was annexed to the ownership thereof; that prior to and on the 21st day of October, 1869, the said Joseph W. Bradley was indebted to the said company to a large amount, to wit, to the sum of eleven thousand seven hundred and twenty-four dollars and eighty-eight cents ; that on the 2d day of February, 1872, said Bradley was indebted to said company in the sum of twelve thousand four hundred and thirty-three dollars and fifty-three cents; that on the 18th day of April, 1872, said Bradley was indebted to the said company in the sum of twelve thousand six hundred and eighty-three dollars and fifty-three cents ; that on the 25th day of January, 1873, said Bradley was indebted to said company in the sum of twelve thousand six hundred and twenty-five dollars and thirty-four cents, and that said indebtedness continued from the month of September, 1869, and still so continues unpaid or discharged ; that at the various times mentioned in the complaint the stock therein mentioned was held by said defendant under the lien created by said by-laws, for the indebtedness aforesaid, and ever since has been and still is so held, and was so held at the several times of the demand for the transfer thereof alleged in said complaint, and that the refusal to make such transfer was in consequence of such indebtedness of said Bradley to said corporation; of all of which the plaintiff had notice.
    The action was tried before a single judge at the Special Term for the trial of issues in equity cases.

      The judge decided that the ■ plaintiff was entitled to the relief demanded.
    From the judgment entered in conformity with the decision defendant appealed.

      Sterling & Walden, and Daniel T. Walden, of counsel for appellant, urged:
    I. Under the general expression of power contained in the statutes, courts have lield a by-law forbidding transfer under indebtedness to the corporation was authorized, and therefore valid (McDowell v. Bank of Wilmington, 1 Harr. 27, 31; Cunningham v. Alabama L. Ins. Co., 4 Ala. (N. S.) 652, 666, 658, 659; St. Louis Per. Ins. Co. v. Goodfellow, 9 Mo., 149, 152; Mechanics’ Bank v. Merchants’ Bank, 45 Ibid. 513, 516 : See also Tuttle v. Walton, 1 Geo. R. 43; Allen, J., Bank of Attica v. Manfs. and Traders’ Bank, 20 N. Y., 514: Also S. C. 501, 505).
    II. The by-law is reasonable, and is not “ inconsistent with any existing law,” and as a protection to the corporation and its property and credit, it is salutary, and for the security and advantage of stockholders. “The “public has a concern in the Solvency and security of “these institutions, and the means should be allowed “to indemnify themselves against losses.” “The re- “ straint imposed is like giving a right of set-off against “those who maybe indebted to it. If an individual “holds the money of another, the person entitled to it 5 c cannot make any transfer or assignment of the money “to another which will deprive the depositary of his “right of set-off against debts due before notice of the “assignment. The dividends on stock accruing after “an assignment and before notice thereof maybe regained by a corporation against the assignee, to be u applied in payment of a debt actually due from the “ assignor at the time of notice of the assignment ” (Bates v. N. Y. Ins. Co., 3 Johns. Cas., 238; Per Scott, J., St. Louis Ins. Co. v. Goodfellow, 9 Mo. 152, 153; Angell and Ames on Corp. 9th ed.) § 355 ; McDowell v. Bk. of Wilmington, 1 Harr. 32, per curiam ; Per Warren, J., Tuttle v. Walton, 1 Geo. 48, 49 ; Gibson v. Hudson Bay Co., 1 Str. 645; Savage, Ch. J., Gilbert v. Manhattan Iron Co., 11 Wend. 628 ; Verplanck, Senator, Com. Bk. v. Kortright, 22 Wend. 362 ; Per Allen, J., Bank of Attica v. Manft’s Bk., 20 N. Y. 515).
    TTT. This by-law being valid, it gave the corporation a right to detain the stock until the indebtedness was paid; it did- not forfeit the stock, but created a restraint upon the full disposition and complete change of ownership (Angell and Ames on Corp. [9th ed. 356]).
    It is, in effect, a lien, whether it be strictly so or not. Gilbert v. The Manhattan Iron Manufacturing Co., 12 Wend. 628 ; Arnold v. Suffolk Bank, 27 Barb. 429; Leggett v. Bank of Sing Sing, 24 N. Y. 287; Bank of Attica v. Manufacturers’ Bank, 20 N. Y, 515 ; Bank of Utica v. Smalley (2 Cow. 770).
    Whatever it may be called, there is under this by-law an equity given to the corporation as security for the indebtedness. That equity is enforced by a refusal to transfer the stock, and the court will not require a transfer to be made until the indebtedness is discharged (Union Bank v. Land, 2 Wheat. 360, 393 Brent v. Bank of Washington, 10 Peters, 596, 614; Reise v. Bank of Commerce, 14 Maryland, 277; McCready y. Rumsey, 6 Duer. 574; Leggett v. Bank of Sing Sing, 24 N. Y, 283; Bank of Attica v. Manufacturers’ Bank, 20 N. Y., 510, etc., per Allen, J.).
    Steamship Dock Co. v. Heron, Administratrix (52 Penn. 280), is not in conflict with the above; in that case there was no by-law p’assed imposing the restriction until after the assignment, per Thompson, J. (p. 282).
    This lien, or claim of the corporation, is not waived or impaired by the form of the certificate declaring that the stockholder is entitled to so many shares, transferable only on the books of the company, personally or by attorney, on surrender of the certificate (Reese v. Bank of Commerce, 14 Mayhew, 217; Farmers’ Bank v. Inglehart, 6 Hill, 50).
    IY. The capital stock of an incorporated company is personal property, and it has not, neither has the certificate or other evidence of title or ownership, any of the qualitiés of commercial or negotiable paper (Weaver v. Barden, 49 N. Y. 286, 288 ; McNeil v. Tenth National Bank, 46 Ibid. 332; N. Y. & N. H. Railroad Co. v. Schuyler, 34 Ibid. 80, per Davis, J. ; Mechanics’ Bank v. N. Y. & N. H. Railroad Co., 13 Ibid. 600, 622, 626, 627, 630).
    Y. The delivery of the certificate with assignment and power endorsed to the plaintiff vested in him the entire title, legal and equitable, which was held by Bradley at the time of the assignment, subject to such liens or claims as the company had upon it (Angell and, Ames on Corp. [9th ed.] § 354; Child v. Hudson Bay Co., 2 P. Wms. 207; Bank of Utica v. Smalley, 2 Cow. 760; Kortright v. Com. Bank of Buffalo, 22 Wend. 362; N. Y. & C. R. R. Co. v. Schuyler, 34 N. Y. 80; Bank of Attica v. Mfrs. Bank, 20 N. Y. 515, 516, per Allen, J., and cases cited; McNeil v. Tenth Nat. Bank, 46 N. Y. 326, per Rapallo, J., 331, 332, 335; Leitch v. Wells, 48 Ibid. 585, 592, 606; Weaver v. Barden, 49 Ibid. 288, 289, per Allen, J. ; McCready v. Rumsey, 6 Duer, 574).
    YI. The plaintiff, as assignee of the stock, is chargeable with notice of the restrictions that may exist to his acquiring the complete title (Per Allen, J., Bank of Attica v. Mfrs. Bank, 20 N. Y. 517; McCready v. Rumsey, 6 Duer. 577, per Hoffman, J).
    Where a person has information sufficient to put him upon inquiry, he is presumed to have made the inquiry or to have been guilty of a degree of negligence fatal to his claim to be considered a bona fide purchaser (Williamson v. Brown, 15 N. Y. 354; Kellogg v. Smith, 26
      Ibid. 18; Baker v. Penner, 39 Ibid. 70, 74; Hoyt v. Thompson’ s Ex., 19 Ibid. 208, 222).
    In McCready v. Rumsey (6 Duer, 574) the general' statutes under which the corporation was created provided that every transferee of stock should succeed to all the rights' and liabilities of prior shareholders (p. 577), and this is supposed by Justice Sedgwick to distinguish that case from this.-
    That case is not distinguishable from the one now before the court.
    The provision of the Banking Act of 1838, to the effect above, is but a declaration of the legal effect of any transfer of stock. It does not create any rule peculiar to those corporations, or give a more limited title to the assignee of a certificate of shares in a banking corporation than such an assignee would have of any other corporation. Ho transferee of any stock obtains, as against the corporation, any better title than his assignor, and is subject to all the liabilities of the-assignor, so far ’as regards the stock (McCready v. Rumsey, 6 Duer, 582, Bosworth, J.).

      Flanegan & Bright, attorneys, and Osborne E. Bright, of counsel for respondent, urged :
    I. Bradley was the legal owner of the stock, and had the right to transfer it to Bartlett (Bank of Utica v. Smalley, 2 Cow. 770; Com. Bank of Buffalo v. Kortright, 22 Wend. 348 ; Fatman v. Lobach, 1 Duer, 354).
    II. The plaintiff, through the pledge and the judgment, became the legal and equitable owner of the stock.
    He had no notice of any lien of the company upon it. The restriction upon the right of transfer being contained in a by-law, he could be affected only by actual notice (Morgan v. Bank of North America, 8 Serg. & R. 172).
    It is also to be remembered that the certificate, in its common use in the market, approximates as nearly as possible to negotiability.

      III. Assuming that the by-law created a lien upon the stock, still the company have lost the right to assert it against this plaintiff. Such by-laws must have only reasonable scope (Angell & A. on Cor. §§ 354, 355, 567; Robinson v. Chartered Bank, Law Rep., 1 Eq. 32).
    1. The company has impaired its right to the enforcement of the by-laws:

      (a). By leaving the certificate in the hands of Bradley, thus conferring upon him an apparent title (McNeil v. Tenth Nat. Bank, 46 N. Y. 325).
    IV. The by-law does not by its terms create a lien. It merely provides that if Bradley is indebted to the company, Ms stock shall not be transferred without the consent of the treasurer. Its utmost effect would be to give the company fair opportunity to protect its claim by attachment or by equitable proceedings.
    V. The by-law could not create a lien, because statutory authority is wholly wanting (Steamship Dock Co. v. Heron’s Admx., 52 Penn. State R., 280; Gribson v. Hudson Bay Co., 1 Str. 645; Stebbins v. Phoenix Ins. Co., 3 Paige, 350; McCready v. Rumsey, 6 Duer, 574).
    In the case of manufacturing corporations, the trustees are authorized to make prudential by-laws for the “ management and disposition of the stock and business affairs of the company, not inconsistent with the laws of this state;” and the “stock shall be transferable in such manner as shall be prescribed by the by-laws of the company (3 Gen. Statutes, Edm. Ed., p. 734, §§ 7, 8).
    These provisions are intended to enable the company always to determine who are stockholders entitled to vote and receive dividends. They authorize, for example, such a regulation as that which governs the certificate in this case, viz., that the transfer shall be on the • surrender of the certificate. They cannot be intended to encourage secret liens, nor to clothe trustees with a discretion to legislate contrary to the common law. The only restriction upon the right to sell and transfer stock is expressly stated in section 8, viz. : “No shares shall be transferable until all previous calls thereon shall have been fully paid in, or shall have been declared forfeited-for the non-payment of calls thereon.”
   By the Court.—Barbour, C.J.

The only power expressly given to companies organized under the general Manufacturing Corporations Act touching the transfer of their stock, is found in the seventh and eighth sections of that act, and in the first section of title 3, chapter 18 of the Revised Statutes, which are as follows:

§ 7. The trustees of such company shall have power to make such prudential by-laws as they shall deem proper for the management and disposition of the stock .and business affairs of the company, not inconsistent with the laws of this State, etc.

§ 8. The stock of such company shall be deemed personal estate, and shall be transferred in such manner as shall be prescribed by the by-laws of the company (Laws of 1848, page 56.)

By § 1 of title 3d, every corporation, as such, is given power “To make by-laws not inconsistent with any existing law, for the management of its property, the regulation of its affairs, and for the transfer of its stock’’ ’ (subdiv. 6, 2 R. S. [5th ed., 596]).

The seventh section was designed, no doubt, to authorize each company to regulate and fix, through bylaws, the manner in which the stock that would constitute its capital when sold or subscribed and paid for, ■should be distributed and disposed of upon its organization, and also, probably, to provide by fixed rules for the manner in which stock subsequently acquired by the company as owner should be sold or held. It is quite clear that the legislature could not have intended Tby that section to empower the company to control or prohibit the sale or disposition of stock not belonging io"itself, but owned as “personal estate” bv others.

The stock of a corporation, like the corporation itself, is an artificial, invisible, intangible thing, and is, therefore, incapable of actual delivery. In practice, however, certificates are issued by the company stating that certain persons are, respectively, stockholders or owners of a certain number of shares, and that the same are transferable on the books of the company by the owner in person, or by his attorney, on the surrender of the certificate, and to that is usually annexed a blank power of attorney ; and the delivery of such certificate and power, properly executed, to the purchaser upon a sale of the stock, is considered, and in law is, a good and valid symbolic delivery of the stock itself. Upon a sale of the stock and the delivery of the certificate and power, therefore, the purchaser becomes the absolute owner of the stock described in it; or rather, of all the vendor’s property and interest in such stock, wholly independent of any act of ratification or dissent on the part of the company (See McNiel v. The Tenth National Bank, 46 N. Y. 331, and cases there cited). But it seems to have been assumed by legislators from the earliest times that corporations should have the power or means of ascertaining by certain evidencé to be placed and perpetuated upon their own books what persons were in fact stockholders, and the number of' shares owned by each, so that their respective rights as voters and sharers of dividends could be determined, and the company thereby saved from vexatious litigation touching those matters ; and it was for that purpose, probably, that the provisions authorizing the company to prescribe by a by-law the manner in which stock should be transferred, was inserted in the eighth section of the Act of 1848, and in the Revised Statutes above referred to.

The defendants claim, however, that those provisions-, also empowered the company to enact the by-law which declares that11 no stock shall be allowed to be transferred on the "books of the company if the person in whose name the stock shall stand shall "be indebted to the com]Dany, unless with the consent of. the president and treasurer, or by a vote of the board of trustees,” and that such by-law is binding upon the plaintiff. For the following brief reasons, I am satisfied that this claim of the defendants cannot properly be sustained.

First. The Act of 1848 expressly declares that the stock “ shall be deemed personal estate, and shall be transferable,” with one single exception, which is made in the act itself in these words : “ but no shares shall be transferable until all previous calls thereon shall have been fully paid in, or shall have been declared forfeited for the non-payment of calls thereon.” Upon the principle of the maxim exjpressio unius est exelusio alterius, it must be held that the legislature could not have intended to empower a company to make another and further exception by means of a by-law. The entire question as to the right of the owner to transfer his stock, together with the exceptions to that right, was before the minds of the legislators, and it must be assumed they provided for all the exceptions'they intended to make. Besides, nothing short of a direct and positive authority given by the act, in clear and explicit terms, would be sufficient to empower a company to prohibit the transfer of stock which the legislature, in the same act, had declared to be personal estate, and, with one exception, transferable. Such authority cannot be implied from the general power given to the corporation to make by-laws for the transfer of its stock, or to prescribe the manner in which it shall be transferred.

Second. It is only the manner, form, or mode in which the transfer must be made that is the subject of regulation by the company through its by-laws ; and the mode of manner of transferring thereby provided for must be a reasonable one, and not such a method as will prevent an owner from transferring his stock or seriously embarrass him in so doing, nor such a one as will deprive him of any substantial right whatever. A by-law, therefore, which, at the will of all or of any of the officers or directors of the corporation, prohibits a transfer of his stock by an owner because he is in debt to such company is not only unreasonable, but wholly ultra vires and void. The law does not confer upon corporations the power of thus coercing payments under pretence of a by-law prescribing the manner in which stock shall be transferred upon its books.

Third. Sufficient evidence was presented upon the trial to show that the plaintiff purchased the stock in good faith, relying upon the certificate, which stated in effect that Bradley was the owner of the two hundred shares, and that the same were transferable upon the books of the company to the person entitled thereto upon the surrender of the certificate, and which contained no condition other than such surrender. The defendants, therefore, were estopped by their certificate from subsequently claiming that the stock was not transferable to a purchaser upon complying with the sole condition expressed therein. A contrary doctrine would open the door to the perpetration of great frauds.

The by-law relied upon by the defendants furnished no justification for their refusal to permit a transfer of the stock to be made upon the books of the corporation; and it follows that the judgment appealed from was correct, and should be affirmed, with costs.,


author: By the Court.—Monell, J. Barbour, C. J.

text:
    JACOB SHIPSEY, Plaintiff and Respondent, v. THE BOWERY NATIONAL BANK OF NEW YORK, Defendant and Appellant.
    I. Check lost.
    1. Rights and duties of holder of.

      а. Rights of. Upon giving notice of the loss to the drawer, and tendering sufficient indemnity, he has a right of action against the drawer as upon a lost instrument.
    б. Duty of. If it was necessary to go through the forms of demand and protest, that duty rests on the holder and
    1. Not on the collecting agent, the check being lost during its transmisdon by mail to the drawee.

    II. Payments, Appropriation op.
    1. Where neither party makes any specific appropriation of money paid at the time of payment, the law applies it to eldest claim held hy the party receiving against the party paying.

      a. Afo^'tiorari, if there he hut one indebtedness then existing, the law will apply the payment to that indebtedness.
    1. After the law has once made such application, no subsequent and different application to the prejudice of other persons can be made by either of the parties of both of them.
    III. Bank acting as Collecting Agent, por reward.
    1. Check depodted with it for collection lost during transmission by mail to the drawee.

      a. Liability and duties of hank.
    1. It is not responsible for the loss of the check, nor is it bound to make presentment of it as a lost check. Its only ddty is to ascertain within a reasonable time, that the check had not reached its destination, and then to give notice to the holder of the loss. ^

      Negligence in not performing these duties would render the bank liable for an injury that might be thereby caused to the holder.

    IV. Application op aboye Principles.
    1. A. on the 2d of November, 1868, deposited in a hank for collection a check drawn on a bank in another State, and the bank with which the check was deposited transmitted it the same day to the bank on which it was drawn hy mail; on the 15th November, the transmitting bank ascertained that the check had not then reached its destination, and had not been paid, but had been lost in the course of transmis-. sion; on the 18th November, notice of the loss was given to A. ; on that day and the succeeding day the drawer had on deposit with the drawee more than enough to pay the check, and was perfectly solvent; on the 31st and 35th November, the drawer (being then indebted to A. only on the check in question) paid to A. more than sufficient to meet the check; no application of this payment was made at the time by either party; afterwards A. undertook to apply it to other debts which subsequently became due to him; on November 38th, the property of the drawer was seized by the sheriff under attachments, and he filed his voluntary petition in bankruptcy December 7th.
    Before Barbour, Ch. J., Monell, and Freedman, JJ.

      Decided December 31, 1873.
    Held,
    A. could not recover against the transmitting bank because
    1. He had suffered no injury from the act of the bank in not sooner ascertaining and communicating the loss.

      a. tie could by proper diligence have collected the check on the 10th November.

      i. The check was paid on the 35th November.
    Appeal "by defendant from judgment entered on decision of a single judge on a trial by the court without a jury.
    Plaintiff kept an account with defendant, and was in the habit of depositing with defendant for collection checks drawn by one Merritt on the Port Chester National Bank, under an agreement by which plaintiff was to pay defendant one-eighth of one per cent, on the amount of all checks so deposited to cover the expenses of the collection thereof. On the second of November, 1868, plaintiff, being the owner for value of a check for $550, dated that day, drawn on said Portchester Bank, by said Merritt to his own order, and endorsed by him, endorsed the same and deposited it with the defendant as a bank for collection, and at the time of such deposit paid to the defendant in cash, under the aforesaid agreement, a sum equal to one-eighth of one per cent, on the amount thereof; and the defendant forthwith credited to plaintiff’s account on its books, and in plaintiff’s pass-book, the full amount of the check, and this credit was made in the same form and manner as any deposit of a customer with his bank is ordinarily made ; it was credited in the same form and manner as the amount would have been had it consisted of bills instead of a check.
    The ordinary course of the defendant’s business with respect to checks such as the one in question was for defendant’s cashier to enclose the same in a sealed envelope, properly directed to the Portchester National Bank, with the postage thereon prepaid, and to place such envelope in a private box of the defendant, to which it was the duty and ordinary course of business of the porter of the defendant to go twice a day, and take therefrom such letters or envelopes as he found there, and deposit the same in the post-office. The duties thus imposed on the cashier and porter of the defendant they performed November 2d, 1868. The plaintiff was aware, prior to November 2d, that the defendant was in the practice of collecting the checks drawn by Merritt on the Portchester National Bank, deposited with it by plaintiff for collection, through the mails.
    According to the due and ordinary course of mail and business, a check mailed as aforesaid on November 2d, would reach the Portchester National Bank on the following morning, November 3d, and the defendant, which at that time was nearly every day in correspondence with the Portchester National Bank, would receive from said Portchester National Bank advice of such check on November 4th.
    The check in question never was received by, nor was it ever presented at the Portchester National Bank, and no demand for the payment of this check was ever made upon the Portchester National Bank by the defendant.
    On November 16th, 1868, defendant’s cashier discoverecl for the first time that the check in question had never been received by the Portohester National Bank. On the same day the cashier returned to New York, and on the 18th day of November, 1868, notified the plaintiff, by letter, that the check in question had never been received by the Portohester National Bank, and that, if the check was not found, defendant would ask plaintiff for a duplicate. This was the first notice that the plaintiff had that said check had not been paid, and was the first notice of any kind the plaintiff had as to anything in relation to said check after its deposit by him with, the defendant.
    From November 18th, 1868, until January 7th, 1869, the defendant made various requests of the plaintiff to procure a duplicate check, and otherwise assist defendant in obtaining payment of the amount of this check from Merritt or the Portohester Bank. On November 25th, 1868, defendant demanded a duplicate check from plaintiff. On December 4th, 1868, defendant, by letter, offered to give plaintiff a bond to indemnify Merritt in. the premises, if Merritt so desired. On December 22d, 1868, defendant sent plaintiff such a bond unexecuted, which plaintiff returned, and on December 31st, 1868, defendant again sent plaintiff such a bond duly executed, which plaintiff again returned, and on that day the defendant charged" the amount of this check to the plaintiff’s account, and on January 7th, 1869, plaintiff having drawn all moneys due to him from defendant, except an amount equal to the amount of this check, demanded the amount of this check from the defendant, and the. defendant refused to pay the same. During all the time from November 2d, 1868, until December 31st,. 1868, the amount of this check remained credited to plaintiff’s account on the books of the defendant and on plaintiff’s pass-book, and during that period, plaintiff frequently drew his account with defendant, including the check in question, down so that his balance amounted to less than the amount of the check in question, and his book was balanced by the defendant on the 18th day of December, 1868, and the balance then struck included the credit to plaintiff of the amount of the check in question. The Portchester National Bank has continued its business since November 2d, 1868, without interruption, and has remained solvent.
    On the 15th and 16th days of November, 1868, Merritt had on deposit in the Portchester Bank more money than was sufficient to pay the check in question.
    On the 21st and 25th of November, 1868, Merritt paid plaintiff' an aggregate of $575. At the time of the receipt of this money there was no debt due from Merritt to plaintiff other than the check in question. Neither party made any specific appropriation of this money at the time, but afterwards, other checks of Merritt’s which plaintiff had cashed having been returned protested, the plaintiff made an application of the $575 toward the payment of those checks. . •
    This action was brought to recover from defendant the amount of the check of November 2d, 1868, the complaint alleging that defendant discounted the check and placed the proceeds to his account, but failed to pay them over on demand.
    The answer denied that defendant discounted the check, and pleaded the above matters in bar. ’
    The cause was tried before the court, a jury trial being waived. The learned judge before whom the trial was had found the above facts, and as conclusions of law from them found that defendant was liable for the amount of the check, by reason of its negligence in not discovering the loss prior to November 15th, 1869, and in not notifying the plaintiff thereof until N ovember 19 th, 1863, and in not having demanded payment of the check from the Portchester Bank as a lost check, and that the plaintiff had the right to apply the money received November 21st and 25th to and upon the then subsequent indebtedness, and was not bound to apply the same to the check in question, and that plaintiff was entitled to recover the amount of the check in question from defendant.
    On these findings judgment was entered against defendant for plaintiff, and defendant appeals therefrom.

      James R. Marvin, attorney, and F. G. Salmon, of counsel for appellant, urged:

      First. The plaintiff has not been damaged by any act of the defendant.

      (a.) When the last check was deposited for collection with defendant, and when, in the ordinary course of business it would have been presented for payment, there were no funds to pay it, it would have been returned unpaid on the third day.

      (b.) Lack of presentation and protest, when there are not funds to pay, do not discharge the endorser (Johnson v. B. R. N. America, 5 Robertson, at pp. 594 and 595).

      (c.) Any later presentation and protest was expressly waived by the plaintiff’s own acts.

      (d.) Plaintiff did not endeavor to protect himself. Merritt was solvent for some time after notice to him of the loss of the check, but he (plaintiff) did nothing to protect himself.
    (<?.) The defendant was amere collecting agent, and is only liable for actual damage suffered by its principal, and can show that its principal sustained no damage (Allen v. Suydam, 20 Wend. 321.

      Second. The check now sued on has been paid and satisfied in fact and in law.
    1st. The creditor can elect on what demand the money shall apply.
    2d. If he fail ,so to do, the debtor can exercise his election.

      3d. If neither of them elect, the law appropriates the fund to the payment of the eldest claim, or as the equity of the case may require (Pars on Cont., vol. 2, pp. 144, 145, and notes, Tit. of Appropriation of Payments).
    Now supposing, but not conceding, that when the payments of November 21st and 25th were made, Merritt exercised no election as to their appropriation, and the plaintiff did not appropriate them to the payment of the lost check, there could have been no appropriation of them at all; for appropriation on the part of the creditor being a mere act of the mind, he could not elect to appropriate the fund on account of an indebtedness of the existence of which he was not aware—which in fact did not exist.
    There being only one debt or demand on November 21st and 25th existing between Shipsey and Merritt, and the fund being appropriated to pay that debt, or else remaining unappropriated, the law steps in and applies it as justice and equity demand in payment of that debt (Pars on Cont., cited supra).

    It may be claimed that the creditor has a reasonable time to elect how he will apply the fund; but that doctrine only applies to cases where the creditor has two or more coexisting and ascertained demands against the debtor. Such have always been the facts in the cases where the court has held as above as to reasonable time.
    But even this is a departure or attempted departure from previously well-settled principles.
    The court of errors held that the election must be made at the time of the payment, and cite Sir William Grant in Devaynes v. Noble Claton’s case, (1 Mer. 584 to 610) to that effect with approbation (Baker v. Stackpoole, 9 Cow. at p. 435, near the bottom of page ; Stone v. Seymour, 15 Wend, at p. 24).
    The well-settled rules of law governing appropriations are:

      1st. That the fund must be applied to the most precarious security when there is nothing to control the application—i. e., no election on either side (Pars. Cord. vol. 2, Tit. Appropriation, p. 143, and note).
    2d. If one of the debtor’s liabilities be contingent, the law will apply the payment to a certain debt (Pars. Cont. vol. 2, supra, p. 143 ; Niagara Bank v. Rosevelt,, 9 Corr. 409, at p. 412).
    If there were any liability on the unpresented checks of $870 on November 21st and 25th, what was it but a contingent liability ? (Niagara Bank v. Rosevelt, supra.)

    3d. A party cannot wait after the payment until his debtor becomes further indebted, and then appropriate the payment to the extinguishment of the newly created demand, leaving a previous demand unpaid (Baker v. Stackpoole, 9 Cow. 420, at p. 435, near bottom; Stone v. Seymour, 15 Wend, at p. 24).
    4th. In no case can a creditor who receives payment generally retain and appropriate it to the extinguishment of a demand created after the payment, leaving a prior demand unpaid (Baker v. Stackpoole, supra; Stone v. Seymour, supra).

      John C. Shaw, attorney, and Thomas Allison, of counsel for respondent, urged:

      First. When this check was deposited, the defendant became its owner and a debtor to plaintiff for its amount, and the only way in which defendant could have acquired the right to charge plaintiff with its amount was by properly protesting the check and charging him with notice as endorser, which defendant never did. We submit the court below should have found •that defendant was the owner of this check and not plaintiff’ s agent to collect it, and that the relation between plaintiff and defendant was that of endorser and holder. In this view, whatever else may be held as to the rights of the parties, if principal and agent, the defendant had no claim against plaintiff as endorser, and could not retain any part of his bank balance to meet any such claim. The plaintiff was entitled to the money thus retained by defendant, and the judgment was right on the merits, whether founded on a correct theory or not (see the opinion of the N. Y. Superior Ct. Gen’l Term, Holtsinger v. National Corn Ex. B., 6 Abb. Pr. R. S. 292, as to the practice).
    On the question of ownership, see Chapman v. White, 2 Seld. 412 ; Market Bank v. Hartshorne, 3 Keyes, 137 Clark v. Merchants Bank, 2 Comstock, 380; Scott v. Ocean Bank, 23 N. Y. R. 289, and see the two last-named cases cited and the distinction between a bank becoming owner and merely collecting agent, pointed out by Parker, J., in Commercial Bank of Clyde v. Marine Bank, 3 Keyes R. at page 341. See. also Opinion of Gen’l Term of Superior Court, June Term, 1873, in Justh v. National Bank of Commonwealth (Daily Register, July 2, 1873).

      Second. The loss of the check in the mail, if it be assumed to have occurred, would be no excuse for defendant’s entire failure to present, demand payment of, protest, and give notice of non-payment of this check as a lust check.
    1st. The collection agent takes the risk of the agency he employs to do his business through (Hoard v. Garner, 3 Hannf. S. C. R. 179; Allen v. Merchants Bank, 22 Wend. 215 ; Montgomery County Bank v. The Albany City Bank, 3 Seld. [7 N. Y.] 459 ; The Commercial Bank of Penn. v. The Union Bank of N. Y., 1 Kern [11 N. Y.], 203).
    2d. The owner of a lost check should make, as far as possible, the same presentment and demand, and give the same notice of dishonor, with all other precautions, that he would employ if the note were in his manual possession. The loss of the "bill is not an excuse for the entire omission of these acts, Tbut only for reasonable delay (2 Parsons on Notes and Bills, 261 ; Chitty on Bills, marginal pages 288, 289, 291, and 297 Edwards on Bills, marginal pages 295, 296, 305, 306 ; Smith v. Rockwell, 2 Hill R. 482; Rowley v. Ball, 3 Cowen R. 303).

      Third. The holder must also at the time of demand and notice offer indemnity to both maker and endorser in the case of a note, and to drawee, drawer, and endorser in case of a check or bill, if the same be lost. In this case the defendant did not do this. All defendant did was to offer plaintiff indemnity for Merritt and none for himself. Defendant did not deal with Merritt, but sought to place the plaintiff in the position of assuming the responsibility of dealing with Merrit (Smith v. Rockwell, 2 Hill R. 482; Rowley v. Ball, 3 Cowen R. 303; Edwards on Bills, marg. pp. 305-307).
    Griving notice of loss to parties on the paper is not giving notice of demand and non-payment, but is merely using means for the holder’s own protection (Edwards on Bills, marg. pp. 307, 308).
    The law of this State and of England does not authorize the holder to demand a duplicate check or bill or note when the original is lost, though the law of France does authorize such a demand. Defendant, therefore, can claim no benefit from his demand to that effect made in this case (Chitty on Bills, Marg. p. 289 ; Baker v. Burnham, 37 N. Y. R. 614).

      Fourth :—The defendant, as collecting agent of plaintiff, was at least bound to give immediate notice of the loss of the check or of the absence of funds to pay it so soon as defendant had actual knowledge of those fiicts. Yet defendant had actual knowledge on November 15th, 1868, that this check was lost, and gave no notice of that fact to plaintiff until November 18th, 1868.

      Fifth. If, however, the question is to be decided on the ground of the application of payments, then we say these checks and this money could not be applied to the check in question in this suit. The plaintiff was credited with the amount of this check on defendant’s books from November 2d, 1868, until December 31st, 1868, and during all this time plaintiff was allowed to, and did, draw his account down so that his balance was reduced to an amount less than the check in question. While this state of facts existed, plaintiff had no claim against Merritt on this check. The defendant had such claim, if any one. There was no debt due plaintiff from Merritt on this check until December 31st, 1868, and the checks and money were received November 21st and 25th, 1868, and could not be applied by either plaintiff or the law to a subsequent debt of December 31st, 1868 (Thomas v. Kelsey, 30 Barb. 268; Baker v. Stackpoole, 9 Cow. 420; Niagara Bank v. Rosevelt, 9 Cow. 409 ; Hunter v. Osterhoudt, 11 Barb. 33 ; Seymour v. Van Slyck, 8 Wend. 403).
   By the Court.—Monell, J.

The check which the defendant undertook to collect, as the agent of the plaintiff, having been lost, the latter, as soon as he was apprized of the loss, had a right of action upon it as upon a lost instrument, upon giving notice of the loss to the drawer and tendering a sufficient indemnity. The loss of the check, and the consequent inability of the holder to make a presentment, did not relieve the drawer of his liability to the holder. If it was necessary to go-through the forms of demand and protest, that duty rested upon the plaintiff and not upon the bank. Immediately upon receiving notice of the loss, the plaintiff was bound to give notice to the drawer, and to do all that he was required to do to fix the liability of the drawer; then, upon an offer of indemnity, he could have legally demanded payment (2 Pars, on Con. 262; Freeman v. Boyston, 7 Mass., 483, 486).

It is clear, therefore, that if the plaintiff took the proper steps to fix the liability of the drawer of the check as upon a lost instrument,' there was' a present indebtedness from him to the plaintiff on the 18th of November, to the amount of the lost check.

That was the legal status of those parties on that day.

The question then arises, whether the subsequent payments made by Merritt should operate as a payment or satisfaction of such indebtedness.

On the 21st and 25th of November Merritt paid to plaintiff the aggregate of five hundred and seventy five dollars, a sum sufficient to satisfy or pay his indebtedness upon the lost check. At that time there was no other debt dxoe from Merritt to the plaintiff. Neither party made any specific appropriation of the money at the time, but afterwards other checks of Merritt which the plaintiff had cashed having been returned protested, the plaintiff made an appropriation of the $575 towards the payment of these checks.

The law in regard to the appropriation of payments is this: The debtor may direct its application to any debt. If he makes no application, the creditor may apply it to any demand. If neither makes any specific application, the law will apply it to the eldest claim (2 Pars, on Cont. 144, 145).

No appropriation or application of the money paid by Merritt was made by either party at the time of payment. It could not be applied afterwards to the prejudice of other parties.

Not only under the rule I have stated was the application due to the debt evidenced by the lost check as being the oldest debt, but it was in fact the only debt due at the time of payment, and therefoie entitled to a priority (Stone v. Seymour, 15 Wend. 19). The plaintiff could not wait, after the payment, until another debt became due, and then apply the payment to the extinguishment of the newly created demand, leaving the previous demand unpaid (Baker v. Kauffman, 9 Cow. 420).

I am satisfied, therefore, that the defence of payment was sustained hy the evidence, and should have prevailed at the trial.

I am also of the opinion that the learned justice was in error in respect to the other branch of the case.

His conclusion of law is that by reason of the negligence of the defendant in not discovering the loss of the check prior to November 15th, 1868, and in not notifying the plaintiff thereof until November 18th, 1868, and in not having demanded payment of the check from the Portchester National Bank as of a lost check, the defendant, upon the facts found, became liable to the plaintiff for the full amount of the said check.”

It is doubtless true that the defendant, having undertaken to collect the check, is to be held liable for all injury caused by its negligence. It was not responsible for the loss of the check; nor was it, in my judgment, bound to make presentment of it as a lost check. It seems to me that its only duty to the plaintiff was to ascertain within a reasonable time that the check had not reached its destination, and then to give notice to him of the loss. All duty in respect to it then passed to the plaintiff, who was bound to tender to the drawer a suitable indemnity and demand payment of the lost instrument. For any negligence of the defendant, in not duly ascertaining the loss of the check, it would be liable, as already said, for any injury that might thereby be caused to the plaintiff.

At the time the plaintiff received notice from his agent, the defendant, of the loss of the check, namely, on the 18th of November, the drawer of the check was solvent and able to pay. On that and the succeeding day his balance in bank was much more than sufficient to pay the check, and there was no proceeding against his property until the 28th of November. The plaintiff, therefore, could hy diligence have enforced his claim against the drawer of the check, and prevented a loss. And had he, as I think he should have done, demanded payment of Merritt, with an offer of indemnity, it is probable the money would have been paid. At any rate, he had an immediate cause of action for the recovery of the amount.

The error of the learned judge was in enlarging the duty of the defendant beyond that of giving notice of the loss of the check, for he says it was also negligent in not demanding payment as of a lost check. That was no part of its duty, but if any demand was necessary, it devolved upon the plaintiff’ to make it after he was apprized of the loss.

The defendant undertook merely to collect the check, and was bound to reasonable diligence only. The loss of the check was not attributable to any act of the defendant, and imposed no other obligation than to give notice of the loss. If it negligently omitted reasonable diligence in discovering the loss, for that neglect it may be liable, provided the plaintiff was injured by reason of it; but that is the limit and extent of its liability.

But I do not think any presentation was necessary, as the omission to do so would have been no defence by the drawer, unless he could have shown some injury (Etting v. Shook, 2 Hall, 459 ; Conroy v. Warren, 3 John Cas. 259).

For both the reasons above assigned I think the judgment should be reversed, and a new trial ordered, with costs to the appellants to abide the event.

Freedman, J., concurred.

Barbour, C. J.

I concur in reversing the judgment appealed from, but for one only of the reasons stated in the opinion of Judge Monell. • As the drawer of the ■check was not indebted to the plaintiff otherwise than on the check, when the $575 was received from the former by the latter, and as nothing was said by either touching the purpose or object to which the $575 was to be applied, the receipt of that sum by the plaintiff operated in law as a payment of the check.


author: By the Court.—Barbour, P. J.

text:
    JAMES F. CORLEY et al., Plaintiffs and Respondents v. WILEY H. GRIFFIN et al., Defendants and Appellants.
    Before Barbour, Ch. J., and Curtis and Van Vorst, JJ.

      Decided December 31, 1873.
    The portion of section 288 of the Code that provides as follows: “If any defendant be in actual custody under an order of arrest, and the plaintiff shall neglect to enter judgment in the action within one month after it is in his power to do so * * * * such defendant may on his motion be discharged,” etc., etc., confer upon such a defendant the absolute right to such a discharge. The word may, taken in connection with context, clearly shows this intention of the legislature as much as if the word shall had been used.
    It is not a mere permission to the court to exercise a discretion in the premises. If the defendant in custody establishes the facts in the case, he is entitled to his discharge.
    Appeal from an order of the Special Term refusing to discharge a defendant from actual custody under an order of arrest, as provided in section 288 of the Code. The facts appear fully from the points and opinion of the ■court.

      Roger A. Pryor, for appellants.
    1. Appeal from order denying motion for appellant’s discharge from imprisonment. Motion made under and pursuant to section 288 of the Code, amendment, 1870.
    2. Order not in discretion of judge. In Section 288 of the Code may means shall; and no ‘ ‘ cause to the contrary” being “shown,” appellant was entitled of right to a discharge (People v. Supervisors, etc., 51 N. Y. 406 ; The Mayor v. Furze, 3 Mill, 612; Mason v. Fearson 9 How. [U. S.] 237; Supervisors v. U. S., 4 Wallace [U. S.] 446 ; City of Galena v. Amy, 5 Wallace [U. S.] 705)..

      Treadwell Cleveland, for respondents. ,
    The language of section 288 of the Code, under which this motion was based, is permissive only, and not mandatory. It confers a discretion upon the court. The precise words are : “If any defendant be in actual custody under an order of arrest, and the plaintiff shall neglect to enter judgment in tho action within one-month after it is in his power to do so * * * such defendant, may on his motion be discharged from custody by the court in which such action shall have been commenced, unless good cause to the contrary be shown; and after being so discharged, such defendant shall not be arrested upon any execution issued in such action.
    “ The primary and most common use of the word ‘ may ’ is the giving permission to perform the act referred to. Where it occurs in a statute it should be read in that sense, and not in the sense of ‘must,’ unless-there is something in the connection of the language, or in the sense and policy of the provision, to require an unusual interpretation” (Miller v. People, 24 N. Y. 405).
    It is true that when a public body is clothed with power to do an act which concerns the public interest,, the exercise of that power may be insisted on as a right, but the word “may” in a statute can mean “must” or “shall,” only in those cases where the public interests and rights are concerned, and when the public, or individual persons have a claim de jure that the power should be exercised (Malcolm v. Rogers, 5 Cow..
      188; Newburg Turnpike Co. v. Miller, 5 Johns. Ch. 101).
    Had the legislature intended that the provision should be mandatory, the language would have been—the de- . fendant “ shall be discharged from custody,” etc.
    To give the word “ may” the meaning of “must” in this case is against all well-known rules of construction.
   By the Court.—Barbour, P. J.

It seems quite clear that the legislature designed, by the second subdivision of the 288th section of the Code, to confer upon every defendant who should be kept in actual custody upon an order of arrest, for more than one month after the plaintiff had power to enter judgment, an absolute right to be discharged from such custody, and exonerated from liability to arrest on execution, unless good cause to the contrary should be shown. The word “may,” taken in connection with the context, just as clearly exhibits that intention as the.word “shall” would have done. The provision in question, therefore, gives to a prisoner so situated the privilege of asserting and obtaining one of the highest and most important rights of a citizen, the right of personal liberty, ■and is not a mere permission given to the court to grant the release, or, arbitrarily, to withhold it, notwithstanding no “good cause to the contrary” be shown (see Williams v. The People 24 N. Y. 405, and 2 N. Y. 556, § 37). Indeed, the exercise of such arbitrary power would defeat the plain intent and object of the legislature.

In this case, all the facts required by the act to entitle the prisoner to the relief asked for were established by the moving papers, and no attempt was made by affidavit or otherwise to show any cause why he ought not to be discharged. The motion should therefore have been granted, and it follows that the order appealed from must be reversed, with costs, and an order entered discharging the defendant Griffin from the custody of the sheriff.

Curtis and Van Vorst, J J., concurred.


author: By the Court.—Barbour, C. J.

text:
    HENRY COLLINS et al., Plaintiffs, v. JOHN BURNS et al., Associates or Copartners under the name of THE BRITISH AND NORTH AMERCAN ROYAL MAIL STEAM PACKET COMPANY, Defendants.
    Before Barbour, Ch. J., and Monell and Freedman, JJ.

      Decided December 31, 1873.
    The following provision in a bill of lading : “ The goods to he taken from-alongside hy the consignee immediately the vessel is ready to discharge, or otherwise they will he landed hy the master, and deposited at the expense-of the consignee, and at his ris7c of fire, loss, or injury in the warehouse provided for that purpose on the steamship wharf at Jersey City, or sent to the-public stores,” etc, is in effect an agreement on the part of the carriers that they will keep the goods safely, and deposit them in a warehouse or in a public store, in case they shall not be taken from alongside by the owner. The portion of the provision that the property shall be thus: stored at the owner’s risk of fire, loss, etc., was intended to cover such injury or loss as might be sustained while the goods were thus stored.
    In the case at bar, the goods were landed from the ship, and placed alongside ready for delivery to the consignee, and were there delivered, by-mistake, by the employes of defendants to some swindler or thief, whe stole and carried them away.

      Held, that under this contract the goods continued and remained in the-possession of the carriers until they were delivered to the thief by them., and consequently they were liable to the owners for the loss of the: goods.
    In this case the court directed a verdict for plaintiffs» and ordered the exceptions to "be heard in the first instance at General Term.
    The question of the liability of defendants on a "bill of lading was the only question litigated on the trial.
    The facts appear sufficiently from the opinion of the court.
    Brown, Hall & Vanderpoel, for plaintiffs.

      A. J. Vanderpoel, of counsel.

      D. D. Lord, for defendants.
   By the Court.—Barbour, C. J.

The bill of lading in this case contained this provision : “ The goods to "be taken from alongside by the consignee immediately the vessel is ready to discharge, or otherwise they will be landed by the master, and deposited at the expense of the consignee, and at his risk of fire, loss, or injury, in the warehouse provided for that purpose cm the steamship wharf at Jersey City, or sent to the public store,” etc. The goods were landed from the ship and placed alongside ready for delivery to the consignees, and were there delivered, through mistake, by the employés of the defendants to some swindler, who thus stole and carried them away.

The clause in the bill of lading above set forth is in effect agreement on the part of the carriers that they will keep the goods safely, and deposit them in a warehouse or in a public store, in case they shall not be taken from alongside the ship by the owner. The provision that the property shall be thus kept and stored at the owner’s risk of fire, loss, etc., was intended to cover such injury or loss as might be sustained while the goods were thus stored. The property remained in the possession of the carriers, therefore, under their contract, at the time such goods were delivered Tby their servants to the thief. The defendants are therefore liable to the plaintiffs for the loss of the goods, and the latter must have j udgment upon the. verdict accordingly, with “costs.

Morell and Freedmar, JJ., concurred.

Rote.'—See the' case of Gleadell d. Thomson (Superior Court Deports, vol. 35 [3 Jones & Spencet'], p. 232), decided at General Term, February, 1873. Opinion of the Court, by Yah Vorst, J.

A bill of lading with similar provisions was considered by the court.

Reporters.