text:
    John McQueen, Receiver, etc., of The Powerville Felt Roofing Company (Limited) Appellant, v. Tobias New, Respondent.

      Jurisdiction of a fraud committed in another State — non-resident parties in interest in an action for tort — separate causes of action — fraud, committed by the officers of a corporation outside of the State.

    The courts of the State of New York have jurisdiction to entertain an action to recover damages against a resident of such State arising out of fraud committed in another State.
    When persons are not within the jurisdiction of the courts of the State of New York, and there is no way by which they can be brought within its jurisdiction, they need not be made parties defendant in an action brought therein.
    In an action founded in .fraud it is not necessary to make all of the wrongdoers parties defendant.
    In an action brought to compel a defendant to account for property which belonged to a corporation of which the plaintiff is receiver, and which it is alleged the defendant fraudulently acquired, the fact that the plaintiff seeks' to have set aside the proceedings through which the defendant asserted that he acquired the property, does not constitute an independent cau,se of action.
    The officers of a corporation organized under the laws of the State of New York are bound to administer its property and its affairs in accordance with the laws of such State, and the fact that the transfers of property of such corporation, in violation of the laws of the State of New York, were made in another State does not render the act less fraudulent in law, nor does it relieve the officers thereof from liability therefor.
    Appeal by the plaintiff, John McQueen, receiver, etc., of the Powerville Felt Boofing Company (Limited), from an interlocutory judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of New York on the 3d day of December, 1894, upon the decision of the court, rendered at the New York Special Term, sustaining the defendant’s demurrer to the plaintiff’s complaint.

      Henry H. Whitman, for the appellant.

      F. J. Mather, for the respondent.
   Follett, J.:

The Powerville Felt Hoofing Company (Limited) was incorporated under the laws of the State of New York. December 21, 1892, by a final judgment entered in an action in this court, the corporation was dissolved because it was insolvent, and thereafter John McQueen was duly appointed permanent receiver, and entered upon the discharge of his duties. It is alleged in the complaint that November 25,1892, the corporation owned and was in possession of personal property in the city of Chicago, 111., of the value of $15,000 and upwards, and that on that day the corporation confessed a judgment to "William II. Eberts and John M. Eberts in the sum of $81,000 damages, besides costs, and upon the same day an execution thereon was issued to the sheriff of Cook county, who thereupon levied and took into his possession all of the personal property of the corporation then in the city of Chicago. It is further alleged that at that date the corporation was insolvent, as was- well known to Erancis J. Palmer, the treasurer, and Charles E. Lockwood, the secretary, who, because of such insolvency, collusively, .and with intent to defraud the creditors of the corporation, confessed said judgment to said William H. and John M. Eberts, the former being the president of the corporation. It is further alleged that December 5, 1892, William II. and John M. Eberts, under the firm name of Eberts Bros., transferred to this defendant the afore.said judgment and the lien which had been acquired by the levy of the execution, and that the defendant by a written contract dated on that day, which is set out in the complaint, agreed to dispose of the avails of such property and other' personal property of the corporation then at Duluth, Minn., as follows:

(1) Pay the expenses of managing, selling and converting said property. (2) Retain therefrom about $40,000 in payment of notes made or indorsed by the corporation and also indorsed by Eberts Bros., and. then owned by the defendant. (3) Distribute the remainder ratably among the creditors of the corporation to whom Eberts Bros. were liable as indorsers. (4) Bay the surplus, if any, to Eberts Bros. It is further alleged that October 21, 1893, the defendant, by virtue of said judgment, execution and fraudulent bill of sale, acquired from the proceeds of the property so levied on $3,381, which he has refused to pay to the plaintiff although demanded. It is further alleged that the defendant knew when he took said assignment and entered into the contract set out in the complaint, that the judgment confessed and all proceedings taken thereunder were fraudulent and void, and were taken with the intent to defeat the just claims of the creditors of the corporation, to secure an unlawful preference over them and in fraud of the rights of the receiver. It is also alleged that the defendant is a resident of this State. March 31, 1893, the defendant filed with the plaintiff a verified claim, in which he alleged that the corporation was indebted to him in upwards of $11,000. On November 21, 1893, by an order duly made by the Supreme Court the plaintiff was authorized to bring this action.

The defendant demurred to the complaint on the following grounds:

1. That the court has no jurisdiction of the subject of this action.

2. That there is a defect of parties defendant in the omission as parties of William II. Eberts and John M. Eberts referred to in the agreement set forth in said complaint.

3. That several causes of action have been improperly united, one being a suit or proceeding to set aside a judgment, and the. second a claim for recovery of money.

4. That the complaint does not state facts sufficient to constitute a cause of action.

The demurrer was sustained on the ground that sufficient facts are not stated in the complaint to constitute a cause of action. The first ground of demurrer needs no consideration, for it has been many times held that the courts of this State have jurisdiction to entertain an action to recover damages against a resident of this State for a fraud committed in another State. It does not appear on the face of the complaint that there is a defect of parties defendant. It is not alleged that William H. and John M. Eberts are residents of this State, or that they are or ever have been within the jurisdiction of the courts of this State, but, on the contrary, it is inferentially alleged that they are, and at the time of the transactions complained of were, residents of the State of Michigan; nor does it appear that they could be brought within the jurisdiction of the court by substituted service. When persons are not within the jurisdiction of the court, and there is no way by which they can be brought within its jurisdiction, they need not be made parties defendant. (Story’s Eq. Pldgs. [10th ed.] § 78.) Besides, it does not appear that William H. and John M. Eberts are necessary parties. This is an action founded in fraud, and it is not necessary in such actions to make all of the wrongdoers defendants.

As to the third ground of demurrer, it is apparent that only a single cause of action is stated in the complaint; that is, to compel the defendant to account for property which belonged to the corporation, and which, it is alleged, he fraudulently acquired. The fact that the plaintiff seeks to have the proceedings through which the defendant asserts that he acquired the property set aside, does not constitute an independent cause of action.

The only real question involved is whether sufficient facts are set out in the complaint to constitute a cause of action. It is urged that it is not alleged that the judgment confessed is fraudulent in fact, but that the allegation is that it is fraudulent in law, because violative of the statute of this State prohibiting transfers of property by an insolvent corporation, in contemplation of insolvency, for the purpose of giving preferences to its officers or creditors. It seems to be conceded by the learned counsel for the defendant, and also in the opinion delivered at Special Term, that had the transfer described in the complaint been made in the State of New York sufficient facts to constitute a cause of action would have been stated in the complaint. This concession is undoubtedly correct, and it disposes of the case. The corporation was organized under the laws of this State, and its officers were bound to administer its property and its affairs in accordance with the laws of this State, and the fact that transfers of property, in violation of the laws of this State, were made in another State does not render the act less fraudulent in law, nor does it relieve them from liability therefor. A mile that officers of corporations of this State may make such transfers in another State would enable the officers of failing corporations of this State to transfer some or all of their movables to an adjoining State, and there, by confessions of judgment or otherwise, to secure preferences to themselves or to creditors which are forbidden by our statutes.

It is alleged that this defendant knew that the transfer which he contracted to carry out and enforce was fraudulent and void under the laws of this State.

We think the complaint states facts sufficient to constitute a cause of action and that the interlocutory judgment should be reversed, with costs, and with leave to the defendant to withdraw his demurrer and answer upon the payment of the costs in this court and in the court below.

Van Brunt, P. J., and Parker, J., concurred.

Judgment reversed, with costs, and with leave to defendant to withdraw demurrer and answer on payment of costs of appeal and in the court below.


source: Caselaw Access Project

author: Van Brunt, P. J.:

license: Public Domain

text:
    In the Matter of the Estate of John Callahan, Deceased. Mary A. McGuire, as Executrix, etc., of John Callahan, Deceased, Appellant; Louisa Leach, Respondent.

      Executors and administrators — claims against a decedent — when deemed established — a denial in an action not a rejection under the statute.

    A party against whom an action was brought died before the trial. The action was revived against his executrix, who served a verified answer denying the claim. This action was discontinued in 1889.
    In April, 1891, the creditor presented her claim to the executrix, who took no . action thereon, and in February, 1893, the creditor, upon a statement that eighteen months had elapsed since the executrix was appointed and that she had not accounted, obtained an order that the executrix account.
    A referee, to whom her account was referred, found that the creditor’s claim was established, and from the decree affirming the referee’s report the executrix appealed.

      Held, that the action, and the denial interposed to the claim by the executrix by her answer in that action, was not a rejection under the statute;
    That as a reasonable time had elapsed during which the executrix neither rejected the claim nor offered to refer it, the claim must be deemed to be established.
    Appeal by Mary A. McGuire, as executrix of tbe last will and testament of John Callahan, deceased, from a decree of the Surrogate’s Court of the county of New York, entered in said Surrogate’s Court on the 5th day of December, 1894, settling the accounts of said executrix.
    The case is reported before in 66 Hun, 118, and 139 N. Y. 51.

      W. R. Page, for the appellant.

      W. W. Niles, Jr., for the creditor, respondent.
   Van Brunt, P. J.:

In December, 1888, the respondent offered certain real estate at auction by R. V. Harnett & Co., auctioneers. It was knocked down to John Callahan, the appellant’s testator, who made a payment to the auctioneers on account of the purchase money. He thereafter refused to complete the purchase on the ground that the title to said real estate was defective. The property was then resold and brought a price lower than that which Callahan had bid. On the 20th of February, 1889, the respondent brought an action in the Court of Common Pleas against Callahan demanding judgment for the deficiency between the two sales and for the expenses of the resale. Callahan died in April, 1889, before the trial of the action. The appellant was appointed his executrix, and the action was revived against her as such executrix. An amended complaint was served setting up the same cause of action, and in July, 1889, the defendant appeared and served a verified answer denying the cause of action. On the 1st of August, 1889, the plaintiff therein moved to discontinue the action in the Court of Common Pleas, which motion was granted and an order thereupon entered.

Subsequently, in August, 1889, the respondent brought an action in the same court against the auctioneers, setting up substantially the same cause of action and demanding the payment to her of the amount deposited by Callahan upon said sale. The issues were tried in February, 1891, and the plaintiff’s complaint was dismissed at the close of her case.

In April, 1891, the respondent served upon the executrix a statement of her claim against the estate of John .Callahan. This claim the executrix never rejected or offered to refer. On the 3d of February, 1892, the respondent presented a petition to the surrogate stating that she was a creditor of John Callahan, deceased; that more than eighteen months had elapsed since the appointment of the executrix, and that she had not accounted, and praying for a judicial settlement of the account. A citation was thereupon issued to the executrix, certain proceedings were had and the executrix was ordered to file her account. The executrix then filed her account and the petitioner objected to it upon the ground that it did not state the amount or nature of her claim. The objections were referred to a referee who found that the claim of the respondent had been established against the estate of the decedent and should be paid. This report was confirmed and a decree thereupon entered ; and from that decree this appeal is taken.

It seems to be assumed or claimed that the denial of the creditor’s claim in the action in the Court of Common Pleas was equivalent to a rejection of the same. But the difficulty about the position of the appellant is, that the proceeding in the Court of Common Pleas was not under the statute. That action was discontinued, the respondent preferring to pursue her claim against the estate under the statute. She then presented her claim to the executrix and the executrix neither rejected or offered to refer the same; and after the lapse of a reasonable time, no action being taken upon it by the executrix, it became established. The answer in the action in the Court of Common Pleas had nothing to do with the proceeding under the statute. The executrix was bound within a reasonable time to reject or offer to refer. If she did not she admitted the claim; and this was the condition of affairs which appeared before the surrogate, and he was clearly right in directing its payment.

The decree appealed from should be affirmed, with costs.

O’Brien and Parker, JJ., concurred.

Decree affirmed, with costs.


text:
    Henry N. Markert, Respondent, v. The Manhattan Railway Company and The New York Elevated Railroad Company, Appellants.

      Easements taken by elevated railroads — measure of damages — erroneous refusals to consider benefits to business property.

    The owner of the fee of certain premises in the city of New York, used in part for business purposes, near two stations of the elevated railroads, brought an action to enjoin the alleged unlawful use by the railroad companies of his easements of light, air and access, and to recover for past damages resulting from such use. Upon the trial of the action the defendants requested the court to find that the special benefits accruing to the business portions of the premises from the railroad stations were greater than the disadvantages resulting from the operation of the railroads; that the fee value was greater than before; that said premises and property in the neighborhood had come into greater demand for business purposes, and that the presence of the railroad stations constituted a material advantage to the premises in question by increasing their availability and the variety of uses to which they might profitably be put.
    The court refused to pass upon these requests, characterizing them as immaterial.

      Held, that, in refusing to pass upon the findings requested, the court excluded from consideration facts which should have influenced its j udgment, and that for such error the judgment in favor of the plaintiff would be reversed.
    Appeal by tlie defendants, Tlie Manhattan Railway Company and The New York Elevated Railroad Company, from a judgment of the' Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 10th day of September, 1894, upon the decision of the court rendered after a trial at the New York Special Term.
    The premises in question were known as No. 920 Third avenue, situated between Fifty-fifth and Fifty-sixth streets, near which, at Fifty-third street and Third avenue and at Fifty-ninth street and Third avenue, there were elevated railroad stations.
    The action was brought to enjoin the alleged unlawful use liy the defendants of the plaintiff’s easements of light, air and access to the plaintiff’s premises and to recover for past damages resulting from such use.

      R. L. Maynard, for the appellants.

      E. M. Felt, for the respondent.
   Van Brunt, P. J.:

This is one of the class of actions with which the court has become somewhat familiar, brought to recover for the taking of certain easements by the elevated railroads.

It is not necessary to discuss the particular facts of this case. But it would appear that the learned court erred in refusing to pass upon certain findings which were requested by the defendants.

The premises in question were partially occupied for business purposes ; and the court was asked to find that the special benefits accruing to the business portions of said premises from the said railroad stations are greater- than and more than offset the disadvantages accruing from the presence and operation of defendants’ railroad in front of the said premises. This request was refused as immaterial.

The court was also asked to find that the fee value of the premises in suit, exclusive of the building, has steadily increased since the construction of the defendants’ road, and the same is now more valuable than at any time prior to the construction of said road. This also was refused as immaterial.

The court was further requested to find as follows: “ Since the building and use of defendants’ railroad and stations aforesaid in Third Avenue, the premises in suit and property in the neighborhood of the same have come into greater demand for business uses, and such demand has greatly increased the fee value of Third Avenue property in the locality, including the land described in the complaint.

“ The presence of the said station constitutes a material element of advantage and benefit to the premises in suit, and increases the availability thereof, and the variety of uses to which the same may be profitably put.” These requests were also refused as immaterial.

This, we think, was error. The court made elaborate findings upon the questions which were presented; and in refusing to pass upon the findings requested, upon the ground of immateriality, it seems to have excluded from consideration facts which were calculated to and should have influenced its judgment; and when they were declared to be immaterial, it is impossible to say that due consideration was given to circumstances surrounding these premises which the court was bound to consider in coming to a conclusion.

"We tliink, therefore, that the judgment appealed from must be reversed and a new trial ordered, with costs to the appellants to abide the event.

Follett and Parker, JJ., concurred.

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


text:
    Harriet S. A. Clark, Respondent, v. Albert F. Jammes and Marie F. Jammes, Appellants.

      Restrictive covenants as to realty — dressmaking establishment — injunction.
    Restrictive covenants relative to tlie use of buildings are to be construed most strictly against the covenant, and unless tbe thing sought to be enjoined is plainly within its provisions an injunction will not issue in enforcement thereof.
    The use of premises for a dressmaking establishment is not prohibited by the terms of a covenant that the owners of the fee will not “at any time hereafter erect on any of the lots or lot ownefl by them respectively any building except brick or stone dwelling houses of at least two stories in height, and except buildings of brick or stone for private stables.”
    The requirement of the covenant is fulfilled by the character of the building, and any occupation of the building consistent with its use as a private dwelling house does not violate such a restriction. This is especially so where it appears that the covenant in question subsequently enumerates in terms a variety of objectionable uses, not including a dressmaking establishment, in the nature of nuisances which it expressly forbids.
    Appeal by the defendants, Albert F. Jammes and Marie F. Jammes, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 22d day of April, 1895, as resettled by an order entered in said clerk’s office on the 24th day of April, 1895, enjoining their use of certain premises as a store, their display of any merchandise in its windows, or of any lettering indicating the maintenance of a place for the sale of merchandise.

      James R. Ely and Roger Foster, for the appellants.

      T. G. Shearman, for the respondent.
   Van Brunt, P. J.:

We think that the difficulty in the maintenance of the order appealed from is in the covenant contained in the agreement which forms the basis of the injunction. It seems to be assumed that this restrictive covenant prevents the occupation of any building which may be erected upon the premises therein described for any use except that of dwelling houses or private stables. In the construction of restrictive covenants of this kind it must be borne in mind that they are to be construed most strictly against the covenant; and unless the thing enjoined is most plainly within the provisions of the covenant an injunction will not issue.

That part of the covenant which applies to the case at bar is that the owners of the lands therein mentioned shall not or will not, at any time hereafter erect on any of the lots or lot owned by them respectively any building except brick or stone dwelling houses of at least two stories in height, and except buildings of brick or stone for private stables.”

It is conceded that the house erected upon, these premises was erected as a private dwelling house, and has all the exterior 'appearances of such a building. But it is urged in support of the injunction that, under such a restriction as was contained in the covenant in question, it could not be used for a dressmaking establishment or for any commercial purpose. We cannot find in the terms of the covenant any such restriction. The requirement of the covenant is fulfilled by the character of the building, and any occupation which may leave the building of the general character of a private dwelling house does not seem to violate this restriction. This view is accentuated when we consider the balance of the covenant. It reads as follows : “ And further, that neither he nor they shall or will, at any time hereafter, erect or permit upon such lots, or any part of the same, any lively stable, slaughter house, smith shop, forge, furnace, steam engine, brass foundry, nail or other iron factory, or any other manufactory of gunpowder, glue, vitriol, ink or turpentine or tanning, dressing or preparing of skins, hides or leather, or any brewery, distillery, museum, theater, circus, place for the exhibition of wild animals or any other erections known as nuisances in the law.”

It will be seen that the parties evidently contemplated that the first part of the covenant to which attention has been called did not restrict the rise to which the premises were to be put. It only designated the character of the building which was to be erected upon the premises, and they thought it necessary, in order to exclude its occupation for purposes which were considered detrimental to the neighborhood, to put in a provision prohibiting the permission upon said lots or any part of the same of such occupation. A consideration of the whole of the restrictive covenant, therefore, seems to lead inevitably to the conclusion that in its construction it is necessary to hold that the occupation of a portion of a house erected for a dwelling house for any purpose not within tlie prohibition contained in the last clause of the covenant does not come within its restrictions. We think, therefore, that the court erred in issuing the injunction, and that the motion should have been denied.

The order should be reversed, with ten dollars costs and disbursements, and the motion denied, with ten dollars costs.

O’Brien and Parker, JJ., concurred.

Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.


text:
    Frank Frisbie, Respondent, v. William W. Averell, Appellant.

      Amendment of pleading — changing the cause of action — terms of its allowance.

    A party who notices a motion to he allowed to serve a supplemental complaint should not be denied relief because the paper thus sought to be served is held by the court to be an amended complaint.
    Where permission to serve an amended complaint is granted, and its effect, practically, is to allow the plaintiff to declare upon an entirely different obligation from the one set up in the original complaint, the plaintiff should pay all the costs which have accrued up to the time when the motion is made.
    Appeal by the defendant, William W. Averell,. from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 18th day of March, 1895, granting the plaintiff’s motion to serve a supplemental complaint, except from so much of said order as allowed the defendant twenty days from the service of the supplemental complaint to serve an answer thereto.
    The action was begun in March, 1892. The original complaint set forth a note dated February 9, 1880, and demanded a money judgment. The answer pleaded the Statute of Limitations. The supplemental complaint set forth a note of the same date, but alleged its true date to be February 9, 1890, asked reformation of the instrument, and that the plaintiff be allowed to recover upon it as reformed.

      E. Hassett, for the appellant.

      J. W. Purdy, Jr., for the respondent.
   Van Brunt, P. J.:

It is apparent that it was a misnomer to call the new pleading which was to be served a supplemental complaint. It was clearly an amended complaint and not a supplemental complaint, and the fact that a party moves for relief under an erroneous name is no proper reason for the denial of the same.

Under the circumstances of the case, however, we think that the terms which were imposed were entirely inadequate. The plaintiff was allowed to amend by declaring upon an entirely different instrument from that which he had declared upon in the original complaint, although the difference was but a change of. date. 'We think that the terms imposed should have been the payment of the costs of the action up to the time of the motion.

The order appealed from should be reversed, with costs of appeal, and a motion to amend granted upon payment of the costs of the action up to the time of said motion.

O’Brien and Parker, JJ., concurred.

Order reversed, with costs of appeal, and motion to amend granted upon payment of costs of action up to the time 'of said motion.


author: Per Curiam :

text:
    Andrew J. Rogers, Appellant, v. William A. Patterson and Others, Respondents.

      Action to charge a decedent’s debt oh his real property — purchasers pending the action — necessary parties.

    Where a complete determination of a controversy cannot be had without the presence of other parties, it is the duty of the court to direct them to be brought in.
    An action was brought by a creditor of John H. McCunn, deceased, to charge a debt, due by him to the plaintiff, upon his real estate in the possession of his heirs, three years having elapsed since his death. Pending this action the real estate in question was sold in an action for partition. The plaintiff filed a lis pendens and also gave actual notice to the purchasers at the sale in partition of the existence of his debt and of his action to enforce it.
    Upon an appeal from the order denying his motion to make the purchasers upon the partition sale parties to his action,

      Reid, that as section 1858 of the Code of Civil Procedure, applicable to this action, protected purchasers in good faith and for value of the premises against which the debt of the deceased person is sought to be enforced, it was the plaintiff’s right to have the purchasers made parties in order to have it determined in this action whether they or any of them were entitled to the protection of the statute.
    Appeal by tlie plaintiff, Andrew J. Rogers, from an order of tlie Supreme Court, made at tlie New York Special Term and entered in tlie office of tbe clerk of the county of New York on the 11th day of April, 1896, denying his motion to bring in new parties defendant in the action.

      George M. Baker, for the appellant.

      Charles Fox, for the respondents.
   Per Curiam :

It is the duty of the court, where a complete determination oí a controversy cannot be had without the presence of other parties, to direct them to be brought in. (Code Civ. Proc. §§ 452 et seql)

The only question before this court, therefore, is, whether the parties whom the plaintiff seeks to have brought in as defendants in this action are necessary parties within the intent of the statute ?

The complaint alleges a good cause of action, and, for the purposes of this motion, it must be assumed to be true. And, considering its allegations in connection with the facts stated in the affidavit of the plaintiff’s attorney, it seems quite clear that the motion to bring in other parties as defendants should have been granted.

The suit is brought under the statute (§§ 1843 et seq., Code Civ. Proc.) against the heirs at law of John H. McCunn, deceased, to collect a debt due from him to the plaintiff.

At the time of the commencement of this suit more than three years had elapsed since the decedent’s death, and hence, that species of statutory lien running with the land, which creditors have, was terminated. Thereafter the remedy of the plaintiff was against the heirs of McCunn to the extent of the value of the lands which came to them by descent from him. And in a suit timely brought against such heirs at law the plaintiff may acquire a lien upon such of the lands as had not been aliened by the heirs at the time of its commencement. (Code Civ. Proc. § 1852.)

It appears that, when this suit was brought, certain real estate which had descended to these defendants as heirs at law of John H. McCunn had not been sold, and hence, under the provisions of fhe section last referred to, the final judgment (if plaintiff shall be successful, and for the purposes of this motion 'we must assume that he may be) may direct that the debt of the plaintiff be collected out of such real property. But in the meantime this property has been sold, by virtue of a judgment in partition, to the several parties whom the plaintiff insists must be brought in as defendants.

It appears, not only by the filing of the lisqJ&ndens, but by actual notice given at the time of the sale, that the purchasers were informed fully of the pending action, and the plaintiff’s claim thereunder.

If the plaintiff shall b'e entitled in this suit to a judgment directing that his claim be collected out of the real property of McCunn, it is also his right to have it determined in the same suit whether any or all of the purchasers are entitled to the protection of section 1853 of the Code of Civil Procedure, which provides that the title of a purchaser in good faith and for value, acquired before the notice of the pendency of the action is filed, or final judgment is entered and the judgment roll filed, is not affected by the judgment provided for by the three preceding sections. Otherwise, the plaintiff, after obtaining a judgment against tlie heirs of McCunn, and directing the sale of the real estate which descended to them, to satisfy it, might be confronted, in an attempt to enforce the lien, with the claim by some of the purchasers that they were purchasers in good faith and entitled, therefore, to the protection afforded by section 1853.

Such unnecessary litigation the law abhors, and its aim is to prevent a multiplicity of suits, and to accomplish that purpose it is made the duty of the courts, in such cases as the one under consideration, to bring in the purchasers of the land, upon which the lien is sought to be established, to the end that all possible question or questions relating to its enforcibility, as well as to the right of acquisition, may be fully and finally determined.

The order should be reversed, with ten dollars costs and printing disbursements, and the motion granted.

Present — Van Brunt, P. J:, O’Brien and Parker, JJ.

Order reversed, with ten dollars costs and disbursements, and. motion granted.


text:
    Mary Manning, Respondent, v. John B. Manning, Appellant.

      Reference in an equity case — discretionary powers of the referee to take or order an account.

    A referee to whom a suit in equity has been referred has the power to make a report directing the entry of an interlocutory judgment declaring the rights of the parties and directing that an accounting be had. Where the suit is of such a nature that the referee is called upon to determine whether an interlocutory judgment should he entered after determining»the rights of the parties, or whether the accounts should be taken in addition and the whole matter be included in his report as a basis for final judgment, he is at liberty to determine which course is the proper one to pursue, and with his exercise of this discretionary power the courts will not interfere unless it appears that there has been, an abuse of discretion.
    Appeal by the defendant, John B. Manning, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 8th day of April, 1895, granting the plaintiff’s motion to set aside a referee’s report and the interlocutory judgment entered thereon.

      Thomas M. Bowlette and John A. Straley, for the appellant.

      Robert D. Murray, for the respondent.
   Per Curiam :

The learned judge at Special Term, in his statement of the reasons which persuaded him to set aside the report of the referee directing the entry of an interlocutory judgment, requiring the defendant to account to the plaintiff for all interest, income and profits arising out of or resulting from the account opened by him in her name, * * and that he pay over and deliver to her all certificates of stock, bonds, bank notes, money or other property which, upon said accounting, may be found so to be due to her,” and the interlocutory judgment entered thereon, conceded that in some cases a referee has the power, and it is also his duty to report in favor of an interlocutory judgment. This concession is in accordance with the practice as settled in Mundorff v. Mundorff (1 Hun, 11). In that case it is held that the practice in vogue prior to the adoption of the Code of determining the rights of parties in suits at equity in the first instance and declaring such rights by an interlocutory decree, which also provides for the manner in which the accounting should be had, and referring the case to a master for that purpose, still continues in full force, and that a report of a referee to hear and determine sustains all the relations to the case that the former interlocutory decree did in hearings had in the Court of Chancery.

The order of reference in that case was “ to hear and decide all the issues in the action, and to take any account that he may determine should be taken; ” the referee made a report deciding the equitable rights of the parties and directing an accounting. Subsequently, on motion of plaintiff’s attorney, .an order was made at Special Term referring the case to another referee to take and state the account, and the question of practice was presented by an appeal taken from that order. This case has been frequently cited with approval. (Hathaway v. Russell, 15 N. Y. Super. Ct. 538, and note; affd., 46 id. 103; Seymour v. Spring Forest Association, 15 N. Y. St. Repr. 520-527; Produce Bank v. Morton, 40 N. Y. Super. Ct. 328-337.

It has not been criticised, so far as we liave observed, although the conclusion was reached in Garcznski v. Russell (75 Hun, 495) that under such an order of reference the referee should hear and determine all the issues made by the pleadings, and if the proof entitled the plaintiff to an accounting, that the referee should take and state the account as a part of his report.

We do not understand that case, however, to deny that a referee has the power in certain cases to report in favor of an interlocutory judgment, for in the opinion expressing the views of a majority of the court it is distinctly stated that the power of the court, in a proper case, to settle an interlocutory judgment upon the report of a referee, and to appoint another referee to take the accounting provided for by such judgment, is not questioned.

But were it otherwise, we should still feel called upon to concur in the position taken in Mumdorff’s case and the authorities following it, to some of which we have referred.

Conceding the power of a referee, in any suit in equity, to make a report directing the entry of an interlocutory judgment declaring the rights of the parties, and directing that an accounting be had, it is difficult to see any basis for the order under review.

This was a suit in equity, the plaintiff claiming certain rights and interests which the defendant denied. If found in her favor, she was entitled to an accounting from the defendant in order to ascertain what interest, income, stocks, bonds and other chattels she was entitled to from him. I*t may well be that in this particular case it would have been better for all the parties had the referee taken and stated the account in his report, upon which could have been entered a final judgment.

The Special Term was impressed with this view, and it is not unlikely that its view, rather than the referee’s, was the correct one, although, judging from the meagerness of the record before us, the referee had an advantage in passing upon that question, because he had the evidence before him. But as this was a suit of such a nature as called upon the referee to determine whether an interlocutory judgment should be entered after determining the rights of the parties, or whether the accounts should be taken in addition and the whole matter included in his report as a basis ’ for final judgment, he was at liberty to determine which course was the proper one to pursue. And with his determination of the manner in which he should exercise such discretion,' the courts should not' interfere unless it appears that there was an abuse of discretion.

This question was before the court in Palmer v. Palmer (13 How. Pr. 363), where the court said: “ The mode of conducting its trial, therefore, must be within the discretion of the referee, so far as relates to all questions within the ordinary discretion of a judge on the trial of a cause. If this cause had been tried in court, the judge would most likely have gone so far as to make an interlocutory order or decree for an account, and then have referred it to a referee to take and state the account. But it would have been entirely competent for one of the judges of this court at Special Term to have gone on and tried the whole cause, and taken and stated the account, and found its result, as the referee has done here.” The argument of the court was, that the trial is to be conducted before a referee as before one of the judges of the court, and for tl;e purposes of the trial and disposition of the cause he has, for the time being, the ordinary powers of the court. This referee might have disposed of all of the questions, including the account, in a report for final judgment, but having in mind the power of the court at Special Term and of referees appointed by the court in such cases, he reached the conclusion, as we must presume, that under the facts of this case it was his duty to direct the entry of an interlocutory judgment.

Certainly, there is nothing in this record which warrants the court in holding that there was in this case an„ abuse of the discretion which the law confers.

The order should be reversed, with ten dollars costs and printing disbursements.

Present — Van Brunt, P. J., O’Brien and Parker, JJ.

Order reversed, with ten dollars costs and disbursements.


text:
    The American Distributing Company, Appellant, v. Edward W. Ashley, Respondent.

      Goods sold — a refused bill, no evidence of price or value — amendment of an answer during the trial.

    In an action brought to recover for goods sold and delivered, where the defendant admits the sale of the goods, but denies the price and the value, evidence produced by the plaintiff that he presented a bill for part of the items in suit, which the defendant refused to pay unless a considerable deduction was made, is no proof whatever of either the price or the value of the goods.
    Where, in such an action, the answer denies the price and the value of the goods, sold, it is not error for the court upon the trial to permit an amendment making these denials more definite.
    Appeal by the plaintiff, The American Distributing Company,, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 31st day of December, 1894, upon the verdict of a jury rendered after a trial at the New York Circuit, and also from an order entered in said clerk’s office on the 31st day of December, 1894, denying the plaintiff’s motion for a new trial made upon the minutes.

      Henry Thompson, for the appellant.

      Hamilton R. Squier, for the respondent.
   Per Curiam :

It is conceded that the plaintiff sold and delivered to the defendant, doing business under the name of Starkweather & Co., 2,626.64 gallons of spirits on the following specified dates, on. a credit of thirty days:

April 23, 1894 432.8 gallons.
“ 30, « 431.68 “
May 5, “ 452.10 “
“ 10, “ 432.16 “
“ 25, “ 435.30 “
June 1, “ 436. “
2,626.64 “

It is alleged in the complaint that the plaintiff sold and delivered to the defendant “ spirits of the value and at the agreed price in all of three thousand two hundred and sixteen and ($3,216.78) dollars,” less an allowance of three cents per gallon, amounting to $78.77, and that there is due the plaintiff $3,138.01, with interest thereon from July 1, 1894. On the trial it was conceded that the defendant had returned to the plaintiff sixty empty barrels for which he was entitled to credit in the sum of $60, leaving plaintiff’s claim $3,078.01, the interest on which from July 1, 1894, to December 24, 1894 (the date of the trial), is $87.21, making the total amount due as claimed by the plaintiff, $3,165.22. The jury rendered a verdict for $2,864.90, which is $300.32 less than the-plaintiff’s claim. The defendant admitted in his answer the sale of the goods, but denied that they were of the value alleged, or that they were sold at the price alleged. On the trial the answer was amended so as to make it more specific in this respect. When the plaintiff rested it had not proved a cause of action. It had simply shown a sale and delivery of the goods, but it had not proved that they were sold at a price agreed upon, or that they were of any value. The plaintiff, showed that it had, through a clerk, presented a bill for some part of the items which the defendant refused to pay unless the plaintiff would deduct $500 or $600. The defendant was called as a witness in his own behalf and testified that he purchased the goods on the dates specified, upon an agreement to pay one-half of one per cent per gallon above the market rate'in consideration of a credit of thirty days. No witness was called in behalf of the plaintiff to contradict this testimony. Evidence was then given that the market value of such spirits on the dates when they were sold was from $1.06 to $1.22J- per gallon. At the close of the evidence the court submitted two questions to the jury: (1) Were the goods sold at an agreed price ? (2) If not sold at an agreed price, what was their fair market value ? and the jury returned a verdict for $2,864.90; 2,626.64 gallons at $1.06£ per gallon equal l$2,797.37, less $60 for barrels returned, equal $2,737.37, the interest on which from July 1, 1894, to the date of the verdict is $77.52, amounting to $2,814.89, which is $50.01 less than the verdict. No exception was taken to the charge and no exception was taken by the plaintiff, except to the overruling of two objections to the admissibility of evidence, no grounds of objection being stated, and, besides, the evidence was competent... No error was committed, by the court in permitting the answer to be made more definite. The answer, as served, denied that the goods were sold at a price agreed upon, and denied that they were of the value alleged in the complaint.

The judgment and order should be affirmed, with costs.

Present — Van Brunt, P. J., O’Brien and Follett, JJ.

Judgment and order affirmed, with costs.


text:
    Luz Diaz Govin, Respondent, v. Luciana Govin de Miranda and Others, Appellants, Impleaded with Others.

      Bill of pa/i'ticula/i'S as to a contract of marriage — denied before and granted after answer.

    'The fact that a motion, made by a defendant in an action, for a bill of particulars has been denied before the service of his answer, affords no ground for a denial of a similar motion made by him after the service of his answer.
    If a party sues upon an ordinary contract, the defendant in the action is entitled to know when and where it was made, and the defendant is equally entitled to the same information if the action is founded on a contract of marriage. '
    In an action brought for the admeasurement of dower, where the issue raised was as to the marriage of the plaintiff, the defendant is entitled to know, in order to prepare for the trial, whether the alleged marriage was a ceremonial marriage, and, if so, when and where performed and by whom, and if a non-ceremonial marriage, when and where it was contracted.

      .Semble, that he is not entitled to be furnished with the names Of the-witnesses present at the marriage.
    Appeal by tbe defendants, Luciana Govin de Miranda and others, from an order of the Supreme Court, made at the New York Special 'Term and entered in the office of the clerk of the county of New York on the 8th day of May, 1894, denying the said defendants’ motion for a bill of particulars specifying the day and date of the alleged marriage of the plaintiff, when and where it took place, the name and designation of the clergyman or magistrate who performed or celebrated the same, the name and designation of the witnesses and other persons present, and if such marriage was evidenced by any agreement in writing that the plaintiff be required to produce and serve a copy thereof, and if this cannot be done to state what its terms were, if any, respecting a marriage settlement or respecting any agreement for the release of dower.

      Cephas Brainerd, for the appellants.

      A. Kling, for the respondent.
   Van Brunt, P. J.:

This action is brought for the admeasurement of dower. The issue raised is as to the marriage of the plaintiff. A motion was made for a bill of particulars as to the date of the marriage, where it took place, the name or designation of the clergyman or magistrate who performed or celebrated such marriage, the names of the witnesses and other persons present, and if such marriage was evidenced by any agreement in writing that the plaintiff be required to produce and. serve a copy thereof, or if there were any agreement or settlement upon the plaintiff, or release of dower, to state its terms. This motion was denied, and from the order thereupon entered this appeal is taken.

Prior to the service of the answer a somewhat similar motion was made and denied, and it is claimed that this motion should be denied at the present time for the same reasons then advanced, and also upon the ground of laches.

There does not seem to be any claim of laches in the service of the notice of motion, but in the hearing of the motion. It may be said that the motion could not have dragged its weary length along without the active co-operation of both parties, and if there has been. laches upon one side in bringing the motion to argument, there has been equal laches upon the other side in not having the same disposed of.

The fact that a motion had been denied before answer affords no ground for the denial of a similar motion after answer. In respect to the marriage the defendants could answer without any bill of particulars. A simple denial of the marriage makes a complete issue which will protect the defendants. It may, however, be necessary for the defendants, in order to properly prepare for the trial, to be informed as to when and where and what kind of a marriage is claimed. If a party sues upon an ordinary contract, the defendant is entitled to know when and where it was made, and if a party sues upon a contract of marriage the defendant is equally entitled to the same information. The defendants in this action are entitled to know whether it was a ceremonial marriage, and, if so, when and where performed, and by whom; and if a non-ceremonial marriage, when and where it was contracted. They probably are not entitled to be furnished with the names of the witnesses by whom the plain tiff proposes to establish her cause of action ; but the other matters above mentioned clearly come within the ordinary scope of bills of particulars.

The observations contained in the opinion handed down at the March term of this court on the determination of a similar motion in the case of Bullock v. Bullock (85 Hun, 373) may, perhaps, be applicable to the ease at bar. "We think that the motion should have been granted as far as indicated in this opinion. The service of a bill of particulars as above required should not in any way curtail the plaintiff’s right to introduce circumstantial evidence or evidence of admissions to establish such marriage.

The order appealed from should be reversed, with ten dollars costs and disbursements, and the motion granted as above stated.

Follett and O’Brien, JJ., concurred.

Order reversed, with ten dollars costs and disbursements, and motion granted as stated in opinion.


author: Follett, J.:

text:
    The People of the State of New York v. The American Steam Boiler Insurance Company of New York City (Henry S. Ward as Receiver), Respondent. The Superintendent of the Insurance Department of the State of New York, Appellant.

      Steam, boiler insurance company — right of a receiver to collect interest upon bonds deposited, with the Superintendent of Insurance.

    Prior to tlie codification of tlie statutes relating to insurance (Chap. 690 of the Laws of 1892) a solvent insurance company,' incorporated under chapter 463 of the Laws of 1853, which was complying with the laws of this State, had a right to collect interest or dividends upon securities deposited with the Superintendent of the Insurance Department as security for the policy holders of the company, and the statute of 1892 did not change this rule.

      Where such a corporation has been dissolved and a receiver has been appointed, not by reason of insolvency, but because the corporation chooses to discontinue its business, and no allegation is, made that the receiver is guilty of misconduct or that he is not properly discharging his duties, he is entitled, as-against the Superintendent of the Insurance Department, to collect'the interest upon bonds deposited by the corporation with that official, pursuant to law, as-security for the policy holders.
    Yan Brunt, P. J., dissenting.
    Appeal by tbe Superintendent of the Insurance Department of the State of New York from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 28th day of December 1894, directing said Superintendent to pay over to Henry S. Ward, as receiver of the American Steam Boiler Insurance Company, $3,000, being a sum of interest upon certain bonds theretofore-deposited by the corporation with said Superintendent, pursuant h> the statutes of this State, and collected and held by him.

      Charles W. Francis, for the appellant.

      J. C. O'Conor, for the respondent.
   Follett, J.:

The American Steam Boiler Insurance Company was incorporated, pursuant to chapter 463, Laws of 1853, with an authorized and paid-up capital of $200,000. By the 6th section of this statute, as amended by chapter 551, Laws of 1853, insurance corporations were required to deposit with the Comptroller of this State securities of a certain value, to be held by him pursuant to this provision of said section:

The Comptroller shall hold such stocks or securities as security for policy holders in said companies; but, so long as any company so depositing shall continue solvent, may permit such company to collect the interest or dividends on its stocks or securities so deposited, and, from time to time, to withdraw any of such securities, on. depositing with the Comptroller other securities of like character, the market value of which shall be, at the time of such deposit, at or above par.”

By chapter 366, Laws of 1859, the insurance department was created, and the securities deposited with the Comptroller were transferred to the department of insurance, and thereafter all securities were required to be deposited with that department.

November 5, 1883, the American Steam Boiler Insurance Company deposited with the insurance department, pursuant to said section, United States four and one-half per cent registered bonds of the par value of $100,000, which were subsequently withdrawn, and consolidated three per cent stock or dock bonds of the city of New York (the interest on which is payable on May first and November first in each year) were substituted in the place of the bonds of the United States so withdrawn. By section 2 of chapter 517, Laws of 1888, it was provided:

“ § 2. The stock and securities so deposited may be exchanged from time to time for other securities, receivable as aforesaid, and so long as the company so depositing shall continue solvent and comply with the laws of this State, it may be permitted by the said Superintendent to collect the interest or dividends on said deposit.”

In 1892 the statutes relating to insurance were revised and consolidated by chapter 690, and by section 14 of this act it is provided:

“ § 14. Exchange of securities ; i/nterest.— The stocks and securities deposited with the superintendent of insurance, pursuant to the provisions of this chapter, or heretofore deposited with him, may be exchanged from time to time for other securities receivable, as provided in this chapter, and so long as the corporation depositing the securities shall continue solvent and comply with the laws of the State, it shall be permitted by the superintendent to collect the interest or dividends on such deposits.”

November 6, 1893, an action was begun in this court to dissolve the corporation, pursuant to the 3d subdivision of section 1785 of the Code of Civil Procedure:

“ § 1785. In either of the following cases an action to procure a judgment, dissolving a corporation created by or under the laws of the State, and forfeiting its corporate rights, privileges and franchises, may be maintained, as prescribed in the next section : * * *
“ 3. Where it has suspended its ordinary and lawful business for at least one year.”

On the 21st of November, 1893, a final judgment was entered in the action dissolving the corporation under which Henry S. Ward was appointed permanent receiver of the corporation and of its assets. The receiver gave a bond, which was duly approved, and since that time he has been engaged in the discharge of his duties.

The 1st day of May, 1891, the insurance department collected $1,500, the interest due on that date on said bonds, and thereafter the receiver .duly demanded the payment of said sum to him, which was refused, and in June, 1891, he applied at a Special Term of this court for an order requiring the department to pay over said sum. The motion was denied, but on appeal the order was reversed by this court and leave granted to make a new motion (81 Hun, 198). In the meantime $1,500, the interest due on said bonds November 1, 1891, fell due, which the department also collected. This sum was duly demanded by the receiver, and upon refusal a motion was made for an order requiring the department to pay to the receiver said two sums, amounting to $3,000, which was granted, and the department appealed.

By the record it appears that the American Steam Boiler Insurance Company is not insolvent, but has sufficient assets to pay all of its liabilities, and, besides, a considerable dividend to its shareholders. The corporation was not dissolved because it was insolvent, but because it chose to discontinue its business. These facts are not disputed. It is clear that the department has no right to collect and hold the interest on the ground that the corporation is insolvent, for it is conceded that it is not, nor can the department retain the inter•est on the ground that the corporation has failed to comply with the laws of the State, because it is not alleged that it has failed to •comply with the laws in any respect. The statutes authorize such a corporation voluntarily to discontinue business and wind up its affairs, and we see no ground on which the department has the right to retain the interest collected on the bonds. It is not alleged that the receiver lias been guilty of any misconduct, or that he has not discharged his duties pursuant to the statutes of the State and the rules of the court.

By the 16th section of chapter 690, Laws of 1892, it is provided that in case an insurance corporation shall be adjudged to be insolvent and a receiver shall be appointed, he shall take possession of all such assets and credits, including the securities deposited in the insurance department.” The next section provides that the court may order the securities held by the department to be converted into money and the proceeds paid by the department to the, receiver. It cannot be that the Legislature intended that the securities of insolvent corporations should be turned over to receivers or the avails thereof pursuant to an order of the court, and that the •court should not have power to direct that the income arising from securities should be paid over to the receiver of a solvent corporation for the purpose of winding up its affairs. The reasons given for the judgment rendered when this case was first before this court are sufficient and satisfactory, and further discussion seems unnecessary.

The order should be affirmed, with ten dollars costs and disbursements.

O’Brien, L, concurred; Van Brunt, P. J., dissented.

Order affirmed, with ten dollars costs and disbursements.


author: O’Brien, J. : Van Brunt, P. J.:

text:
    William Lewis Boyle, Appellant, v. The Staten Island and South Beach Land Company (Limited), Respondent. Actions Nos. 1 and 2.

      Consolidation of actions — not made until after answer.

    "Where the defendant seeks to consolidate two actions brought against him by the same plaintiff, it is the better practice to -wait until answers have been interposed in each action from which the court can better determine the issues involved and the propriety of consolidating the actions.
    Hefore an answer was served in either of two actions a motion was made to consolidate them; one action was brought to recover the amount of interest coupons on negotiable promissory coupon notes and the other to recover for moneys paid out to the use of the defendant. One of the directors, and file principal owner of the stock of the defendant, by affidavit, alleged as to the first cause of action that the plaintiff did not own the coupons, and as to the second cause of action alleged the defendant was not indebted to the plaintiff, but that an accounting would show that the plaintiff was largely indebted to the defendant.

      Held, that the possible difference in the nature of the two actions and in their manner of trial made the motion to consolidate premature.
    Appeal by tbe plaintiff in tbe above-entitled actions, William Lewis Boyle, from an order of tbe Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 4th day of March, 1894, consolidating the two actions by the same plaintiff against the same defendant-into one action.

      Willard Parker Butler, for the appellant.

      Robert L. Harrison, for the respondent.
   O’Brien, J. :

The first action is brought to recover the amount of interest coupons on certain negotiable promissory coupon notes issued by the-defendant corporation and payable to the bearer. The second action is brought to recover for moneys alleged to have been paid out to the use of the defendant. Before answering and upon an affidavit of one of the directors and principal owner of the stock of the defendant, averring that the plaintiff is not the owner of the-interest coupons sued upon in the first action, and that the defendant is not indebted to the plaintiff in any sum in the second action,, but that on the contrary the plaintiff is indebted to the defendant in. a large amount, as will appear upon an accounting, the claim being that the plaintiff was the agent of the defendant and manager of the real estate constituting the property of the defendant, the object of which was to manage, develop and sell real estate, a motion for the consolidation of both actions into one was made.

Section 817 of the Code of Civil Procedure provides that “ when two or more actions in favor of the same plaintiff against the same defendant, for causes of action which may be joined, are pending in the same court, the court may in its discretion, by order, consolidate any or all of them into one action.”

No doubt both of these actions, being upon contract, could be joined in one complaint, but this is not necessarily controlling upon the question whether they should or should not be consolidated. If the issues or the questions arising were different, or if for any other good and sufficient reason it was not proper for the court to exercise its discretion in favor of granting the motion, it should have been denied. Whether the issues and questions will be identical cannot be determined definitely until the answers are interposed. For this reason we think it the better practice to wait before making a motion to consolidate until after the interposition of answers, because it is only then that the issues are definitely determined, and thus the court is in a better position, to determine upon the identity of issues or questions' involved in two or more actions sought to be consolidated. Here’ the first action, being to recover upon coupons, is affected by section 1778 of the Code, and, therefore, pursuant to such section, “ unless the defendant serves with a copy of his (its) answer or demurrer a copy of an order of a judge directing that the issues-presented by the pleadings be tried, the plaintiff may take judgment-as in case of default in - pleading.” By the order of consolidation no effect is given to this section, because without answering the-defendant has obtained an order directing that the issues be tried in connection with another suit brought against it by the plaintiff upon a different cause of action, and without its- being made clearly and definitely to appear that the questions or issues to be tried are the-same. Even assuming that the defense outlined in the affidavit, that the plaintiff is not the owner of the coupons, be interposed, the action upon the coupons is one that can be tried upon the short-cause calendar before a jury; whereas, in the other action, if an-accounting is to be entered upon to determine whether the plaintiff is indebted to the defendant or the defendant to the plaintiff it may involve the examination of a long account and be referable. Unless,, therefore, it appeared that the accounting which the defendant-intended by its answer to demand of the plaintiff as its agent was in some way connected with the obtaining and possession 0f the coupons in his like capacity as agent, the similarity between the questions involved is wanting.

We think upon the showing made the motion should have been denied and that the order appealed from should be reversed, with ten dollars costs and disbursements, and the motion denied, with ten dollars costs, but with leave to renew after issue joined.

Follett, J., concurred.

Van Brunt, P. J.:

I dissent from so much of this opinion as proposed to grant leave to renew.

Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs, with leave to renew after issue joined.


author: O’Brien, J.:

text:
    The H. B. Claflin Company, Appellant, v. Eugene Arnheim and Others, Respondents.

      Preference by a failing debtor — extension of time obtained by fraud —judgments confessed during such extension, set aside.

    There is no law which prevents a failing debtor from giving to any creditor that he may select a preference by means of a confession of judgment for any valid debt. He may practically prefer his creditors to as great an extent as his property permits, provided he does so by giving mortgages or bills of sale, or confessing judgment, instead of putting such preference in a general assignment for the benefit of creditors, which alone the statute condemns.
    A person will not be allowed," by fraudulent promises or'agreements, to deprive the plaintiff in an action of the benefit which, but for such fraud, he would have obtained.
    In an action brought to restrain the defendants, who were judgment creditors, from collecting the proceeds of certain executions issued by them against their debtor, and to have the plaintiff’s judgment which was subsequently obtained declared to be a prior lien upon the proceeds of such executions in the hands of the sheriff, it appeared, on the plaintiff’s motion for an injunction to restrain the sheriff from paying out the proceeds until the determination of the action, that the plaintiff had commenced an action against the debtor, and before the latter’s time to answer had expired, an extension of his time to answer was granted upon his promise to pay the plaintiff’s claim, and not to dispose of his property in the meantime, and that notwithstanding the representations thus made, that if the extension were granted there would be no change in his (the debtor’s) property, that no judgments would be entered against him, that the plaintiff would not in any way be prejudiced by the delay, and that the debtor would pay the plaintiff’s claim in installments, such debtor, in violation of his promise, and with a view to defrauding the plaintiff and to prevent his obtaining a preference, confessed judgment in favor of the defendants, five of his other creditors.
    It was neither alleged nor claimed that the confessed judgments were fraudulent, or that the judgment creditors were parties to any fraud.

      Held, that the action was maintainable, and that the right to enter the judgment which the plaintiff had secured could not be postponed by the fraud of his debtor, and such judgment be thus made subsequent and subordinate to judgments confessed by him to other of his creditors for antecedent debts.
    Appeal by the plaintiff, The II. B. Olaflin Company, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 23d day of January, 1895, denying the plaintiff’s motion for an order enjoining and restraining the sheriff of the city and county of New York, his servants, agents and attorneys, from delivering or paying over to any of the defendants, or their agents or attorneys, or in any manner disposing of, until the determination of this action, or the further order of the court, any or all the proceeds of the property of the defendant Eugene Arnheim, derived by the sale thereof under executions, and vacating the stay heretofore granted in the action.

      Kneeland & Stewart, for the appellant.

      Joel M. Marx, for the respondents.
   O’Brien, J.:

This action is brought to restrain the defendants, who are judgment creditors, from collecting the proceeds of certain executions issued against one Eugene Arnheim, and to have plaintiff’s judgment, which was subsequently obtained, declared to be a prior lien upon the proceeds in the hands of the sheriff.

The motion for an injunction to restrain the sheriff from paying out the proceeds until a determination of the action was made upon the complaint and affidavits, from which it appears that plaintiff had commenced an action against Arnheim, the debtor; that before the latter’s time to answer had expired, an extension of time to answer was granted upon his promise to pay the plaintiff’s claim ánd not to dispose of his property in the meantime; that notwithstanding the representations thus made, that if the extension were granted “ there would be no change in his (the debtor’s) property in the meantime, that no judgments would be entered against him, and the plaintiff would not in any way be prejudiced by the delay; that its rights would be preserved, and that he, the defendant Eugene Arnheim, would pay the plaintiff’s claim in installments,” the defendant, in violation of his promise, and with a view to defraud the plaintiff and to prevent his obtaining a preference, confessed judgments in favor of five other creditors.

It is neither alleged nor claimed that the confessed judgments are fraudulent, or that the judgment creditors were parties to any fraud. There is no law which prevents a failing debtor from giving any creditor that he may choose a preference by means of a confession of judgment for any valid debt. It is insisted, however, that the right to enter judgment which plaintiff had secured could not be postponed by the fraud of Arnheim, the debtor, in favor of the judgments confessed to the other defendants for antecedent debts, and to support this contention reference is made to the cases of Clark v. Taylor (37 Hun, 312) and Jaques v. Greenwood (12 Abb. Pr. 232).

In Clark v. Taylor the plaintiffs were about to enter judgment .against one Taylor, whose time had expired. If such judgment had been then entered, the amount thereof could have been collected upon the execution issued thereon. To induce the plaintiffs •to refrain from so doing, Taylor agreed that he would pay the •claim by frequent partial payments before November first, and that if he concluded to make a general assignment he would give the plaintiffs notice of his intention so to do ; Taylor also made a false statement as to his assets and liabilities. The proposition having been accepted on the twenty-seventh of September, Taylor, on the twenty•eighth, without giving any notice to plaintiffs, made a general assignment. Upon the trial the court found that Taylor intended to make the assignment at the time of entering into the agreement, and that he made the agreement for the purpose of preventing the plaintiffs from exercising their legal rights, and to gain time in which to make the assignment. It was held that the assignment was fraudulent as to the plaintiffs, and as to them should be set aside. In the course of the opinion it was said: It is settled in •this State that an assignment for the benefit of creditors is not voidable, because it prevents a creditor from acquiring a lien by an impending judgment, attachment or execution. * * * Whether •this assignment is fraudulent and voidable as against the plaintiffs depends upon the intent of the assignor. If it was conceived and executed for the purpose of depriving the plaintiffs of a valuable legal right, it is voidable as against them. * * * An assignee is not a purchaser in good faith, but stands in the shoes of the .assignor.”

And in Jaques v. Greenwood a judgment having been taken by default against the firm, they obtained a stay of proceedings on the pretense that they had a defense to the action (which they failed to show), and on the assurance of their attorney that they would not .make any assignment. Meanwhile they made an assigment for the “benefit of creditors, giving preferences thereby, and preventing the judgment creditors from realizing anything upon their execution. Held, that the assignment was void as against such judgment creditors, as being made with intent to hinder and delay them.

The weight to be given to these cases as authority is not lessened by the case of Wood v. Mitchell (44 N. Y. St. Repr. 694), for there no promises or agreements were made by the judgment debtor, all that appeared being that in the ordinary way, in pursuance of a legal right, an extension of time was procured in which to answer, and before the expiration thereof judgments upon just and legal debts were confessed. It was therein held that upon these facts the action of the attorneys could not be held to be a fraud on the plaintiff in the action in which the extension was obtained; and it was therein said: “ There was here no agreement, express or implied, that pending the extended time the existing status should not be changed by any act of the defendant. The case, therefore, is not analogous to Jaques v. Greenwood (12 Abb. Pr. 232),” and we might add nor is it analogous to the case of Clark v. Taylor (supra). They are authority for the proposition that by fraudulent promises or agreement one cannot succeed in depriving a plaintiff in an action of a benefit which but for such fraud he would have obtained.

It will be noticed that the cases referred to (Clark v. Taylor and Jaques v. Greenwood) were brought to set aside general assignments for the benefit of creditors upon the ground that as to the creditor induced to refrain from entering a judgment by the fraudulent Representations of the assignor, they were invalid. And upon this •circumstance the respondents base a claim that a distinction is to be •observed between the rights which creditors secure under an assignment and those that are obtained upon confessions of judgment, and fo support this alleged distinction our attention is directed to many decisions which are like, or dispose of questions similar to, those involved in Manning v. Beck (129 N. Y. 1), Abegg v. Bishop (142 id. 286) and London v. Martin (79 Hun, 229). In the latter case it was said by this court: “ A failing debtor may now practically prefer his creditors to as great an extent as his property permits, provided he does it by giving mortgages and bills of sale, or confusing judgments, instead of putting it in the general assignment, which it is said the statute alone condemns.” This is a correct statement of the law, and the error into which the respondents have fallen is in confusing the statute therein referred to (which was the act of 1887, relating to general assignments for the benefit of creditors) with the Statute of Frauds.

Upon an examination of these cases it will be found that no such question was involved as the distinction between the case of an assignment and a judgment suffered as affected by the statute relating to fraudulent conveyances. That statute was not under consideration and the language used was not intended to apply to it, but to another statute, viz:, the statute of 1887 prohibiting the making of preferences in an assignment beyond a certain portion of the estate. And the court held in these cases in regard to that statute that a judgment obtained was not invalidated by such action of a debtor who confesses judgment to a creditor who in good faith acts for the purpose of obtaining security for the payment of an honest debt due from the debtor to himself. A reading of the opinion in Manning v. Beck (supra) shows that the only question discussed was the statute in respect to preferences in assignments, and there is no determination of any question under the Statute of Frauds. It is true the court says: “ It does not seem to us that either the letter or the spirit of our statute covers a case where the creditor is ignorant of any intended violation of the statute by the debtor.” The statute being discussed was that in respect to assignments, and it was the alleged attempt to circumvent that statute that was under consideration. We think, therefore, that there is no authority for the position that a distinction is to be made between the rights of a party holding under an assignment and one obtaining a lien by a confessed judgment. The Statute of Frauds makes no such distinction. An assignment and judgment suffered are placed in the same section and in the same category, and in both the intent of the debtor controls the validity of the action, entirely independently of the knowledge or intent of the creditor. It provides that “ Every conveyance or assignment in writing or otherwise of any * * * goods or things in action * * * made with the intent to hinder, delay or defraud creditors or other persons * * * and every bond or other evidence of debt given, suit commenced, decree or judgment suffered, with the like intent as against the persons so hindered, delayed or defrauded shall be void.” (2 R. S. 137, § 1.) Where then is there any distinction to be made between an assignment of goods or tilings in action, and a judgment suffered by which a creditor obtains a lien through execution upon such goods or things in action ? If the assignment is made or the judgment suffered with intent to hinder, delay or defraud creditors, such assignment and such judgment are both void. The statute leaves no ambiguity upon this subject. There is no ground for distinction ; the one comes under the ban of the statute just as well as the other.

It is said that in the case of an assignment for the .benefit of creditors the assignee stands in the shoes of the assignor. In the case of the confession of a judgment does the creditor do any more ? By the fraudulent act of the debtor machinery is set in motion for the obtaining of a lien, and such lien is of no greater dignity than if an assignment of the thing had been made and the thing transferred to the assignee for the purpose of defrauding creditors. There is no distincton between an assignment to a trustee for the benefit of the creditor and a direct assignment to the creditor. The statute certainly intimates none; and the evils to be obviated require no such distinction to be made. The language is : “ Every bond or other evidence of debt given, suit commenced, decree or judgment suffered with the like intent.” If the statute had stopped there, even if a party paid value for the property without notice of the fraudulent intent of the debtor, the conveyance to him would necessarily be held void. And it was to save innocent purchasers that section 5 of title 3 of the Statute of Frauds was enacted. That section reads: “ The provisions of this chapter shall not be construed in any manner to affect or impair the title of a purchaser for a valuable consideration, unless it shall appear that such purchaser had previous notice of the fraudulent intent of his immediate grantor or of the fraud rendering void the title of such grantor.” (2 R. S. 137.) What was the necessity of this portion of the enactment if it was only necessary, in order to escape the previous provisions of the law, to show that the creditor had no notice of the fraudulent intent of his assignor or of his judgment debtor? The section in question expressly impeaches the title of a person who buys for value with notice of such intent; and the purchaser for value without notice is the only person that is protected from the operation of the statute. If a debtor does these things — makes an assignment or conveyance or suffers judgment with intent to hinder, delay or defraud creditors — his act is voidable at the instance of creditors as against all the world except a bona fide purchaser for value; and he cannot be bona fide purchaser unless he is ignorant of the fraudulent intent. It does not seem necessary to multiply words upon this proposition, as the statute is so explicit that it needs no discussion for its elucidation, and words in such a case would tend only to obscurity. If any other authority be needed the case of Starin v. Kelly (88 N. Y. 418) is directly in point.

It will thus be seen that we reached the conclusion that the distinction sought to be made between an assignment and a judgment suffered, is illusory, and that the statute is not so solicitous as to the manner in which the fraud is accomplished as it is in determining the question of whether actual fraud was intended and consummated to the injury of another. The mode or character in which the transfers are made can make no difference, the suffering of a judgment, the transfer or insolvent act being voluntary, and in each the third parties not parting with anything upon the faith thereof. The results obtained are the same although the methods may be different. In both the debtor voluntarily puts liens upon his property, and neither the creditors under the assignment nor the judgment creditors part with anything on the strength of the confessions or the making of the assignment from which they may receive benefit, and neither the confessions nor the making of the assignment require any act on the part of either class of creditors.

Our conclusion, therefore, is, that the right to enter judgment, which the plaintiff had secured, could not be postponed by the fraud of Arnheim and such judgment thus be made subordinate to the judgments confessed to tli,e other defendants for antecedent debts.

The judge at Special Term, though not disputing the existence of the facts set forth in the papers upon which the motion for an in junction was made, denied the motion upon the ground that he did not think the action could be maintained. In this, we think, for the reasons stated, the learned judge erred.

The plaintiff, therefore, having a right to maintain the action, and having made a showing entitling him to an injunction, we think the order should be reversed, with ten dollars costs and disbursements, and the motion granted, with ten dollars costs.

Van Brunt, P. J., and Parker, J., concurred.

Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.


author: O’Brien, J. :

text:
    Charles L. Eidlitz, Respondent, v. Jacob Rothschild, Appellant, Impleaded with Others.

      Pleading — office of a reply — cannot lie inconsistent with the complaint nor be used to amend it.

    A reply may only set forth- new matter, not inconsistent with the complaint, constituting a defense to the counterclaim.
    A reply cannot be employed for the purpose of amending a complaint, nor can it be used to introduce a new cause of action.
    An action was brought upon a written contract to do certain electrical work in a hotel, and the contract was made a part of the complaint, in which the plaintiff also demanded a certain sum for extra work.
    The defendant, by his answer, set up the same written contract, adding the plans and specifications, and .then set up a counterclaim based upon the non-performance of the contract and the defective execution of the work, to which the plaintiff replied in substance that, under a clause of the contract permitting it, the parties modified the specifications, that alterations were made, and that these were an expense to the plaintiff and constituted his claim for extra work.
    Upon a motion to strike out this part of the reply,

      Held, that the reply attempted to set up a contract different from that originally alleged in the complaint, was inconsistent with the complaint' and should be stricken out.
    Appeal by the defendant, Jacob Rothschild, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 18th day of March, 1895, denying his motion to strike out certain jiarts of the plaintiff’s reply.
    The plaintiff alleged in his complaint that he had done certain extra work and furnished materials therefor of the value of $529, no part of which had been paid.

      In his reply he alleged that alterations had been made in the specifications, and that the alterátions made were a source of expense to him and constituted his claim for extra work.

      Charles B. Reid, for the appellant.

      Ernest F. Eidlitz, for the respondent.
   O’Brien, J. :

This action was brought to foreclose a mechanic’s lien. The plaintiff, who was an electrical contractor, entered into a written contract with the appellant Rothschild on or about October 25, 1893, whereby he agreed to furnish the electrical light plant for the Hotel Majestic at a certain price. The complaint alleges performance of this contract, with the exception of certain work which plaintiff was prevented from doing, owing to his wrongful ejection from the premises by defendant. The written contract is annexed to the complaint marked Exhibit A, and made a part thereof. The defendant, by his answer, puts in issue almost all the material allegations of the complaint, admitting only the making of the contract, and also annexes the written contract marked Exhibit A, and a specification marked Exhibit B. The answer further sets forth a counterclaim, in which defendant alleges “ that an agreement was made between the plaintiff and this defendant, dated on or about the 25th day of October, 1893. That said agreement was duly executed by the parties thereto on or about its date, and was the only agreement between said parties relative to the work to be done on or about the premises, referred to in said agreement.” The damages in the counterclaim are based upon the non-performance and defective performance of certain work by the plaintiff. To this counterclaim plaintiff made a reply, alleging that the contract contained a provision that should the owner request any alterations he should be at liberty to do so ; that during the progress of the work defendant Rothschild desired certain changes in the specifications and drawings, and in many instances such changes were rendered necessary by reason of errors in said drawings and specifications; that on or about the 21st of February, 1894, defendant Rothschild directed plaintiff to make such changes as he should find necessary for the improvement and perfection of the work, and that by the direction and witli the consent of said, defendant Rothschild, and in accordance with the contract, a number of alterations which are set forth were made ; that the contract set forth in the amended answer was the only contract made by the plaintiff with the defendant Rothschild, but “ that as to the specifications and drawings, they were changed as provided in said contract and as above stated.”

So much of the reply as is thus indicated the appellant moved to strike out, upon the grounds (1) that such portion is irrelevant and redundant; (2) that it is new matter inconsistent with the complaint; and (3) that it is new matter not constituting a defense to the counterclaim.

By the Code of Civil Procedure (§ 514) a reply may only set forth new matter, not inconsistent with the complaint, constituting a defense to the counterclaim. Here the counterclaim is for damages for failure of the plaintiff to cany out his contract. The new matter contained in the reply sets up that, under a provision of the contract permitting it, the specifications were modified by an arrangement between the parties by which alterations consisting of additions and omissions were made in the work, for the failure to supply which omissions the defendant Rothschild in his counterclaim seeks to recover damages. It may well be that had the defendant Rothschild brought an action for damages against the plaintiff for failure to perform his contract the new matter contained in the reply would be a good defense. But where, as here, the plaintiff sues upon a definite contract, which is in writing and is made a part of the complaint, and then alleges performance of this contract, with certain exceptions which are not material in this discussion, -without any allegation as to alteration or modification in the specifications of the work to be done thereunder, and the defendant answers, and, by way of counterclaim, seeks to recover damages for a failure so to perform the contract, new matter in a reply which seeks to change the contract sued upon and to plead an entirely different contract is clearly inconsistent with the complaint and the theory upon which the plaintiff’s cause of action is based. We have been referred to no authority permitting it, nor in any system of pleading having regard to logic would it be permitted to amend a complaint by means of a reply. Here the complaint alleges performance of one contract and the defendant counterclaims, alleging a failure to perform certain provisions-thereof, and it is inconsistent for the plaintiff then to come in by way of reply and set up another and different contract. As said, a reply cannot be resorted to for the purpose of amending a complaint, nor is it within its province thereby to introduce a new cause of action. This, if desirable, is to be secured by an amendment of the complaint.

We think that the criticisms made to the reply are justified, and that the motion to strike out the portion referred to should have been granted.

The order is accordingly reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.

Van Brunt, P. J., and Parker, J., concurred.

Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.