author: Putnam, J.: Herrick, J.: Mayham, P. J.

text:
    The People of the State of New York ex rel. The Singer Manufacturing Company, Relator, v. Edward Wemple, Comptroller of the State of New York, Respondent.

      Chapter 542 of the Laws of 1880 — tax authoi'ized thereby — basis thereof ■ — • “ capital stock” defined — manufacturing corporation —holding of real estate is no part of its ordinary business.

    Under the provisions of chapter 542 of the Laws of 1880, and the acts amendatory thereof the Comptroller of the State of New York is not authorized to assess a tax against the surplus moneys of a foreign corporation invested by it in real estate in the State of New York. Such statute only authorizes the Comptroller to levy a tax upon the capital stock of a foreign corporation employed in its business within the State, and does not authorize his assessing such a corporation upon its surplus or undivided property within the State. (Mayham, H. J., dissenting.)
    The term “ capital stock,” as used in chapter 542 of the Laws of 1880, and the acts amendatory thereof, refers to the capital stock authorized by the charter of a corporation and subscribed or raised by its stockholders, on which it pays dividends, and whicli'it is obliged to maintain intact, not the surplus or undivided profits owned by it, however invested, which it can at any time turn into money and divide among its stockholders.
    When a foreign corporation, whose business is manufacturing and the selling of its manufactured products, uses a portion of its surplus in the purchase of real estate in the State of New York, and holds the same as an investment, not using it in its business, such purchase and holding is not an employment of its capital stock within the State, within the meaning of chapter 542 of the Laws of 1880, and the acts amendatory thereof; the basis of the tax authorized by such statutes is the amount or portion of the capital of such corporation in use within the State in the transaction of its ordinary business. (Per Herrick, J.) The holding of real estate and the receiving of rentals therefrom is no part of the ordinary business of a manufacturing corporation. (Per Herrick, J.)
    Certiorari issued out of tlie Supreme Court and attested tbe 9th .day of February, 1892, directed to Edward Wemple, Comptroller of the State of New York, commanding him to certify and return his proceedings and decision in relation to the assessment of a tax on the property of The Singer Manufacturing Company.

      Jitlien T. Davies and Wm. A. Poste, for the relator.

      T. E. HanoooTc, Attorney-General, and John W. Hogan, for the defendant.
   Putnam, J.:

There is no dispute between the parties as to the facts of this case. The relator is a foreign corporation with a paid-up capital of $10,000,000, on which for the year ending November 1, 1890, a. dividend of twelve and a half per cent was declared. Of that capital during said year $372,397.10 was employed in this State in the business of the corporation. During the last six months of the same year relator invested $900,000 in real estate in the city of New York, which was purchased with its undivided profits or surplus. The comptroller, claiming that he was authorized so to do, under the provisions of chapter 542 of the Laws of 1880, as amended by chapter 361, Laws of 1881, chapter 151, Laws of 1882, chapter 359 and chapter 501, Laws of 1885, chapters 193 and 353, Laws of 1889, and chapter 522, Laws of 1890, assessed the tax authorized by said act upon the amount of capital stock employed by relator in this State as aforesaid, viz., $372,397.10, and also upon said surplus of $900,000 so invested in real estate.

The only question submitted is whether the comptroller was authorized to include in the assessment against relator said real estate so purchased by it with its surplus or undivided profits.

If he could legally make such assessment his authority must be found in the statutes above referred to.

Section 1 of the act of 1880, as amended by chapter 361 of 1881, provides as follows: “ Hereafter it shall be the duty of the president or treasurer of every * * * corporation * * * liable to be taxed on its corporate franchise or business, as provided in section 3 of this act, to make a report in writing to the comptroller annually on or before the 15th day of November, stating specifically the amount of capital paid in, the date, amount and rate per centum of each and every dividend declared by their respective corporations * * * during the year ending with the first day of said month.”

The section further provides that in any year when any such corporation shall fail to make a dividend, or make one less than six per cent on the par value of its capital stock, the officers of the corporation shall, between the first and fifteenth of November, forward to the Comptroller a certificate containing a statement of the cash value of the capital stock of said company at a sum not less than the average price said stock sold for during said year.

Section 3 of said act (Cbap. 542 of 1880, as amended by chap. 522 of 1890) provides as follows: Every corporation * * * now or hereafter incorporated, organized or formed under, by or pursuant to law in this State, or in any other State or country, and doing business in this State, except * * * shall be liable to and shall pay a tax as a tax upon its franchise or business into the the State treasury annually, to be computed as follows: If the dividend or dividends made or declared by such corporation * * * during any year ending with the first day of November amount to six or more than six per centum upon the par value of its capital stock, then the tax to be at the rate of one-quarter mill upon the capital stock for each one per centum of dividends so made or declared; or if no dividend be made or declared, or if the dividend or dividends made or declared do not amount to six per centum upon the par value of said capital stock, then the tax to be at the rate of one and one-half mills upon each dollar of the valuation of the said capital stock made in accordance with the provisions of the first section of this act.”

Section 11 of chapter 542 of 1880, as amended by chapter 501 of 1885, provides as follows, viz.: The amount of capital stock which shall be the basis for the tax under the provisions of section 3 of this act, in the case of every corporation * * * liable to taxation thereunder, shall be the amount of capital stock employed within this State. In making to the Comptroller the report in writing or certificate of estimate and appraisal of the capital stock of such corporation * * * provided for by the first section of this act, it shall be the duty of the president or treasurer thereof, as the case may be, to state specifically the amount of capital stock employed within this State of such corporation. * * * Whenever the Comptroller is dissatisfied with such report * * * of any corporation * * * whose capital is only partially employed within this State, he is authorized and empowered to ascertain, fix and determine the amount of capital employed within this State, and to settle and account for the taxes and penalties due the State thereon.”

In my view, under the above provisions of the act of 1880 and the acts amendatory thereof, the action of the Comptroller in assuming to assess the $900,000 surplus moneys invested by relator in real estate, was unauthorized. The statute only authorizes the Comptroller to levy 'a tax upon the capital stock of a corporation. It will be observed that by the provisions of section 11, above quoted, the basis of the tax against every corporation under the provisions of section 3 of the act shall be the amount of its capital stock employed within this State. Section 11 (supra) leaves in force the provisions of section 3 except in limiting the franchise tax, authorized by the act, to capital stock employed within the State. Section 3, above quoted, provides that if a dividend of six per cent or upwards is made by a corporation during any year ending November first, the tax shall be at the rate of one-fourth of a mill upon the capital stock of the corporation for each one' per centum of dividend so made. If no dividend is made, or one less than six per cent on the par value of the capital stock of the corporation, then the tax is to be at the rate of one and one-half mills upon every dollar of the valuation of the said capital stock made in accordance with the provisions of the 1st section of the act. Section 1, as we have seen, provides for an appraisal of the value of the capital stock of the'corporation at its actual cash value where no dividends have been declared,, or a dividend less than six per cent.

The act in question, then, only provides for a tax against relator to be assessed upon its capital stock. It did not authorize the Comptroller to assess the corporation on its surplus or undivided profits. In Williams v. The Western Union Tel. Co. (93 N. Y. 162-188) Judge Earl discusses the meaning of the words “ capital stock,” as follows, viz.: “ The ‘ capital stock’ in this section does not mean share stock, but it means the property of the corporation contributed by its stockholders, or otherwise obtained by it, to the extent required by its charter. While the term •' capital stock ’ is frequently used in a loose and indefinite sense, in this section, and in legal phrase generally, it means that and no more. In State v. Morristown Fire Association (3 Zabr. 195) Green, Ch. J., said: ‘ The phrase ‘ capital stock ’ is very generally, if not universally, used to' designate the amount of capital to be contributed for the purposes of the corporation. The amount thus contributed constitutes the ‘ capital stock ’ of the company.’ In Burrall v. Bushwick R. R. Co. (75 N. Y. 211) Folger, J., defined ‘capital stock’ as ‘that money or property which is put in a single corporate fund by those who, by subscription therefor, become members of a corporate body.’ In Barry v. Merchants' Exchange Co. (1 Sandf. Ch. 280) Vice-Chancellor Sandford said: ‘ The capital stock of a corporation is like that of a co-partnership or joint-stock company, the amount which the partners or associates put in as their stake in the concern.’ By loss or misfortune, or misconduct of the managing officers of a corporation, its capital stock may be reduced below the amount limited by its charter; but whatever property it has up to that limit must be regarded as its capital stock. When its property exceeds that limit then the excess is surplus. »Such surplus belongs to the corporation, and is a portion of its property, and in a general sense maybe regarded as a portion of its capital, but in a strictly legal sense it is not a portion of its capital, and is always regarded as surplus profits.” (See, also, Barclay v. Culver, 30 Hun, 1-5 ; State Bank of Wisconsin v. City of Milwaukee, 18 Wis. 281.)

As suggested above, the only authority which the Comptroller possessed to tax the relator was derived from the statutes above referred to and quoted, and those acts only authorize him to assess relator’s capital stock, and not its undivided surplus. It is true that section 11 (supra) of the act, after providing that the basis of the tax against a corporation under the provisions of section 3 of the act in question, shall be the amount of capital stock employed within the State, and that the corporation in making its report to the Comptroller shall report the amount of capital stock so used in the State, uses the word “ capital ” twice in the section instead of “ capital stock.” But it will be observed that it only authorizes the assessment upon the capital stock of the corporation, and in sections 1 and 3 of the act the tax authorized is also to be assessed on capital stock of the corporation.

1 cannot believe that it was the intention of those who framed the statutes in question to authorize an assessment by the Comptroller on the undivided profits or surplus of the corporations mentioned therein. If relator during the year in question had only paid a dividend of five per cent, the tax under section 3 of the act would have been one and one-half mills upon each dollar of the valuation of its capital stock made in accordance with the provisions of section 1 of the act. It seems to me that the language contained in section 3 necessarily limited the tax to the capital stock, and precluded the idea of an assessment on the surplus. Under section 1 the valuation of the stock is to be its actual value in cash, and not less than the average price said stock sold for during the year. The surplus which the Comptroller taxed increased the value of the capital stock which under the act is assessed. If the position of the respondent can be sustained a corporation can be taxed on its surplus and on its stock, which is increased in value by such surplus.

To illustrate: A corporation has a capital stock of $1,000,000, and a surplus of equal amount, and makes a dividend of five per cent, per annum, all its capital stock and surplus being employed within this State. In consequence of the large surplus the capital stock of the corporation is worth $2,000,000. The corporation then, according to the position taken by the Comptroller, must pay the franchise-tax assessed on the surplus of $1,000,000, and also on the value of its capital stock, which is doubled in consequence of such surplus. The effect of such a procedure must necessarily be to compel the-corporation to pay a double tax on its surplus.

In the case supposed the surplus or undivided profits, under the-acts in question, are taxed by the assessment of the capital stock of the corporation at its market value. The surplus necessarily increases the value of the stock, and the Comptroller in assessing the increase in value taxes the surplus.

To continue our illustration: A corporation with a capital stock of $1,000,000, and a surplus of like amount, all employed in this-State, during the year expiring November first, has made a dividend of twelve and one-half per cent on the par value of its capital stock. Now it is clear that the dividend is increased in amount, perhaps . doubled, by the surplus, and hence the franchise tax assessed by the Comptroller under the provisions of section 3 (swpra;) is increased, perhaps doubled. Therefore, whether a corporation pays a dividend of six per cent or upwards, or not, the surplus is necessarily taxed by the Comptroller in assessing the franchise tax in question, because the surplus necessarily increases the income of the corpora- ^ tion, and hence the annual dividend, and also increases the market value of its capital stock.

I conclude that the capital stock referred to in the act of 1880, and acts amendatory thereto, is capital stock authorized by the charter of the corporation, and subscribed or raised by its stockholders, on which it pays dividends, and which it is obliged to maintain intact, not the surplus or undivided profits owned by it, however invested, which it can at any time turn into money and divide among the stockholders. This surplus or undivided profits it is true until divided belongs to the corporation, increasing the value of the corporate stock, but it cannot be deemed capital stock which can be assessed for the franchise tax authorized by the acts above mentioned.

The views above stated render it unnecessary to consider the position taken by appellant that the surplus belonging to relator so assessed by the Comptroller was not employed in the State within the meaning of section 11 of the act of 1880 and acts amendatory thereto.

I think the determination of the Comptroller should be reversed, with the usual costs.

Herrick, J.:

When a foreign corporation, whose business is manufacturing and the selling of its manufactured products, uses a portion of its surplus in the purchase of real estate, and holds the same as an investment, not using it in its business, I do not think that such purchase and holding is an employment of its capital stock within this State within the meaning of the statute.

“ The basis of the tax is the amount or portion of its capital in use here in the transaction of its ordinary business.” (People ex rel. Southern C. O. Co. v. Wemple, 131 N. Y. 64.)

The holding of real estate and the receiving of rentals therefrom is no part of the ordinary business of the corporation.

If the money so invested is not employed within this State then it is not the subject of taxation here. (People v. American Bell Telephone Co., 117 N. Y. 241.)

The determination of the Comptroller was, therefore, erroneous, and should be reversed.

Mayham, P. J.

(dissenting):

The relator being a foreign corporation doing business in this State, in its report to the Comptroller for the year ending on the 1st of November, 1890, for the purpose of taxation, stated that the amount of capital stock employed in the State of New York was $372,397.10, on which it was liable under the Laws of 1880 and 1881 to a tax of $1,163.74.

The Comptroller, in addition to the sum reported, found that within the six months next preceding the 1st of November, 1890, the relator had employed within .this State $900,000 capital, the tax on which would amount to the sum of $1,406.25, making the aggregate tax imposed by him $2,565.99. It seems conceded that this latter sum of $900,000 consisted of an investment by the relator in April of that year of about that amount in real estate in the city of New York which it then held under leases for the purpose of its business.

Notice of this assessment was given to the relator by the Comptroller, whereupon the relator applied for a rehearing, which was granted, and on such rehearing the Comptroller determined to readjust the tax, and affirmed the same, whereupon the relator sued out tips writ of certiorari.-

The principal question raised by the certiorari is whether the investment of this $900,000 of the surplus earnings of the relator is taxable under section 11 of chapter 542 of the Laws of 1880, as added by chapter 151 of Laws of 1882, and amended by chapter-501 of Laws of 1885.

That section reads as follows: “The amount of capital stock which shall be the basis for tax under the provisions of section 3 of this act, in the case of every corporation, joint-stock company and association liable to taxation thereunder, shall be the amount of capital stock employed within this State. In making to the Comptroller the report in writing, or certificate of estimate and appraisal of, the capital stock of such corporation, joint-stock company or association provided for by the first section of this act, it shall be the duty of the president or treasurer thereof, as the case may be, to state specifically the amount of capital stock employed within this State of such corporation, joint-stock company or association.

“ "Whenever the Comptroller is dissatisfied with such report or certificate of estimate and appraisal, as the case may be, of any corporation, joint-stock company or association, whose capital is only partially employe^ within this State, he is authorized and empowered to ascertain, fix and determine the amount of capital employed within this State, and to settle an account for the taxes and penalties due the State thereon.”

Does this section authorize the Comptroller to impose this tax on the surplus capital of a foreign corporation doing business within this State when the same is invested in real estate which is not used by the corporation in its business, but solely as a place of investment of its surplus earnings ?

The power of the Comptroller to impose a tax' upon a foreign corporation doing business in the State is not “ questioned to the extent that its capital stock is employed in this State, but the learned counsel for the relator insists that there is a distinction between the term capital stock and capital represented by the surplus earnings of a coloration, and that as the surplus earnings of the relator were used in the purchase of this real estate, the corporation, by the use of the same in the purchase of property in this State, did not employ its capital stock within this State. A distinction is thus sought to be drawn between the capital stock of a corporation measured by the number of shares of the same at its par, or nominal value, and the additions or accretions to the par value of such shares measured by its surplus earnings, and that, therefore, the use or investment of its surplus earnings in this State in the purchase of real estate is not the use of any part of its capital stock in this State.

It can hardly be denied that until dividends of the surplus earnings of a corporation are declared and paid to the shareholders, such surplus belongs to the corporation and constitutes a part of its capital, and that its aggregate capital is represented by the shares of its capital stock.

It would seem to follow, therefore, that the capital of a corporation is the amount of its aggregated assets, whether it consists of the paid-up capital of each individual share of stock or the paid-up shares and the undivided accumulations of profits on the business.

If this reasoning be sound, then the sources from which the money is derived which was used by the corporation in this St&te for the purchase of this real estate is immaterial, as it would be the employment of the capital stock in this State, whether the funds were received from the par value of the original stock or from the net profits of its business. In either event it would be the lawful employment of the company’s capital stock in this State, and hence the subject of assessment and taxation.

The case of The People ex rel. The American Contracting & Dredging Co. v. Wemple, Compt. (decided by this court, and reported in 60 Hun, 225, and 38 N. Y. St. Repr. 17, which was affirmed in the Court of Appeals in 129 N. Y. 558), seems to be analogous in principle to the one under consideration. It is true that the relator in that case was a domestic corporation. But it became important in the decision of that case to consider what constituted the employment of capital in this State, and it was held that the balance of funds kept on deposit in a bank in this State, the amount of rent paid for premises occupied by the relator in this State, and the salaries paid to the officers of the corporation therein could properly be regarded by the Comptroller as capital employed in this State for the purpose of fixing the amount of tax to be imposed on the corporation.

The words “ capital ” and “ capital stock ” seem in section 11 of the act of 1885 to be used interchangeably. In that portion of the section imposing upon the president or other fiscal officer the duty of the corporation to make a report, the words “capital stock” are used; and in the part of the section requiring the Comptroller to make the assessment the word “ capital ” is used.

For the purpose of this act, therefore, we think the words capital stock ” and “ capital ” were treated by the Legislature as equivalent or synonymous and employed in the same sense, and mean all the property of the corporation which it may properly use or invest in any business or pursuit in which it may lawfully use its capital or assets.

We are also of the opinion that the purchase by the relator of these’pieces of real estate on which at the expiration of the existing leases thereon it intended to erect new buildings to be used in part as offices for the company and “ for the office requirements of the company,” as appears in folio 32 of the case, was such an employment of the capital of the relator in this State as to bring it within the jurisdiction of the assessing and taxing power of the Comptroller. It is true that the Court of Appeals in the case of People ex rel. The Southern Cotton Oil Co. v. Wemple (131 N. Y. 68) says: “ The basis of the tax is the amount or portion of' its capital in use here in the transaction of its ordinary business.” In that case, however, it appeared that a corporation of another State, engaged in a manufacturing business, maintained a sales agency in this State with a warehouse for its manufacturing, sold a portion of its manufactured products in the State, and kept large sums of money on deposit in the State, was doing business within the State within the meaning of this taxing act. The court, also, in that case says: “ How much that (tax) may be in any particular case is generally a question of fact to be determined by the Comptroller under the procedure pointed out by the statute.”

The court, also, in this case holds that when a corporation of another State employs any portion of its capital here, and thus has the benefit and protection afforded by the laws of this State to the extent of the capital employed, there is no reason why it should not be burdened by ‘State tax to the same extent as a domestic corporation.

In the case of The People v. American Bell Telephone Co. (117 N. Y. 241), cited by the relator, the court held that it was not employing any of its capital in carrying on business in this State.

It was a Massachusetts corporation, created finder the laws of that State, with its office in Boston, where it made all of its contracts with independent corporations in this State, such corporations paying all the rental or royalty growing out of the contractual relation to the corporation in Boston, so that none of its capital was used or employed in this State, and Ruq-er, J., says: The Bell Telephone Company has no office or officer, agent or employee in the State of New York, unless the local corporations can be so denominated.” He then proceeds to show that the local corporations bear no such relation. "We do not think that case is an authority against the validity of the tax imposed in the case at bar.

N or do we think that the contention of the relator, that the imposition of this tax upon the capital of the relator employed in the purchase of this real estate will subject the property of the relator to double taxation, can be considered, and taken as a ground for reversing the determination of the Comptroller in this case. The power of the Legislature to impose terms upon which foreign corporations may do business in this State is not disputed, and, under the authorities in this State and in the Federal courts, cannot well be questioned, so long as they do not violate the Federal Constitution or law regulating inter-State commerce. The court cannot,, therefore, relieve the relator from this tax on the equitable ground that it is a double taxation, so long as the use of its capital in this State makes it the subject of taxation by the Comptroller, under the provisions of section 11 of chapter 501 of the Laws of 1885.

"We are, therefore, of the opinion that the assessment made by the Comptroller was correct, and should be confirmed.

Determination of the Comptroller reversed, with costs.


source: Caselaw Access Project

author: Per Curiam :

license: Public Domain

text:
    The People of the State of New York, Respondent, v. Michael Pillion, alias Michael Finnerty, Appellant.

      Information — requisites thereof — power of the Court of Special Sessions to pass upon the sufficiency thereof.

    An information in tlae Court of Special Sessions of the city of Albany performs the same office that an indictment does in courts of record, and while it is not expected that an information will be drawn with the same technical accuracy as an indictment, yet it should state with sufficient accuracy the crime charged, in order that the accused may know the exact offense which it is claimed that he has committed.
    However awkwardly or inartificially an information in a Police Court may be drawn, if it charges a crime known to the law, and states acts done by the accused which constitute such crime, it will be held sufficient; it is essential to the sufficiency of an information that it contains such statements.
    An information charging a person with the violation of a given section of the Code, where the section sets forth a number of offenses, is not sufficient, nor is an allegation therein, in the words of a subdivision of such section, a statement of the act which constitutes the crime charged.
    Upon the trial of a prisoner the Court o'f Special Sessions of the city of Albany has power and authority to pass upon the sufficiency of the information in the case lodged in a Police Court, and when the information is insufficient to cause the defendant to be placed upon trial, a motion to dismiss and discharge the defendant should be granted.
    Appeal by the defendant, Michael Pillion, alias Michael Finnerty, from a judgment of the Court of Special Sessions, held in and for the city of Albany on the 4th day of May, 1894, convicting the defendant of a violation of section 41 K of the Penal Code of the State of New York.

      J\ Mu/rra/y Downs, for the appellant.

      James W. Eaton, District Attorney, for the respondent.
   Per Curiam :

This is an appeal by the defendant from a judgment of conviction by the Court of Special Sessions of the city of Albany, for a violation of section 41 K of the Penal Code of the State of New York.

The evidence in the ease is not brought before us on this appeal.

It appears from the record that the defendant had been brought before one of the police magistrates of the city of Albany, and the case against him was sent to the Court of Special Sessions for trial, and upon such trial, and before the taking of any testimony, a motion was made to dismiss the information and to discharge the defendant, for the reason: That the information did not state facts sufficient to constitute a crime.” This motion was denied. A motion was then made to dismiss the information, and for the discharge of the defendant, for the reason “ that the court did not have jurisdiction of the offense, the same being an infamous crime.”

This motion was also denied, and to these denials exceptions were taken by the defendant.

The information against the defendant is as follows :

“ City and County oe Albany, ss. :

Michael F. Cantwell, being duly sworn, deposes and says that he resides in No. 816 Broadway, Albany; that one John Doe, alias Michael Finnerty, at the city of Albany, in the county of Albany aforesaid, on the 10th day of April, 1894, did wrongfully, unlawfully, wickedly, willfully, maliciously and knowingly violate section 41 El of the Penal Code of the State of New York, as amended, in that he did, at the charter election being held in and for said city of Albany, that day vote at a polling place of the first district of the eighth ward of said city, under the name of Michael Finnerty of 866 Broadway, without being qualified therefor.

“MICHAEL F. CANTWELL.

“Taken, subscribed and sworn to before me this 10th day of April, 1894.

“Peter A. Stephens,

Police Justice, Justice of the Peace?

We think the Court of Special Sessions was in error in denying the motion to dismiss the information and discharge the defendant.

An information in the Court of Special Sessions performs the same office that an indictment does in courts of record, and while, as has been heretofore held by this court, such informations “ are not expected to be drawn with the technical accuracy that an indictment should be, yet, * * * taking the place as they do of indict-

ments in superior courts, they should state with sufficient accuracy the crime charged, that the defendant may know the exact offense which it is claimed he has committed.” (People v. Olmsted, 74 Hun, 323.)

It has been held that “ An indictment for a statutory offense, especially when the offense is a misdemeanor, charging the facts constituting the crime, in the words of the statute, and containing averments as to time, place, person and other circumstances to identify the particular transaction, is good, as a pleading, and justifies putting the defendant on trial.” (People v. West, 106 N. Y. 293.)

It is also held that an indictment must charge the crime, and also state the act constituting the crime. (People v. Dumar, 106 N. Y. 502-509.)

It is said that the principal reason for requiring a specific statement of the act, is the right which the accused has to be informed of the precise accusation which he is required to defend.” (People v. Stark, 136 N. Y. 538-541.)

These requirements are essential. However awkwardly or inartificially done, if the information charges a crime known to the law, and states, acts done by the accused which constitute such crime, it will be held sufficient.

The information in this case does not comply with either of the requirements specified, and seems to have been drawn by one utterly unacquainted with the principles of pleading.

The crime charged is that John Doe, alias Michael Finnerty, did wrongfully, etc., “ violate section 41 K of the Penal Code of the State of New York, as amended.”

At the time set forth in the information, section 41 K of the Penal Code consisted of eighteen subdivisions, and many of such subdivisions specified several distinct and separate crimes.

The charge should be for the commission of some distinct and specific crime. Charging a person with the violation of a given section of the Code, which section sets forth a number of offenses, is not sufficient.

After attempting, in the manner indicated, to charge the commission of a crime, the information then proceeds to set forth a violation of the fifth subdivision of section 41 K, which subdivision defines and sets forth a distinct and separate crime, which is the subject of a distinct and separate charge. An allegation in the words of such subdivision is not the statement of an act which constitutes the crime charged, but is, in itself, the charging of a specific crime, which must be supplemented by a statement or specification of acts done which constitute such crime.

The charge, or rather, attempted charge, of a violation of said subdivision is insufficiently made in so far as it attempts to charge a crime, and nowhere in the information are there any acts or facts alleged which constitute the offense defined in subdivision 5.

There are other and still graver reasons for reversing the judgment of conviction in this case, which, however, we do not think the public interests require should be stated at this time, the reasons already given being sufficient to dispose of the case. The Court of Special Sessions had power and authority to pass upon the sufficiency of the information, and the information being insufficient to cause the defendant to be placed upon trial, the motion to dismiss and discharge the defendant should have been granted. “ For it seemeth to me unreasonable to send a prisoner, and not withal to signify the crimes laid against him.”

The judgment of conviction is reversed, and the defendant discharged.

Present — Mayham, P. J., Putnam and Herrick,-JJ.

Judgment of conviction reversed.


author: Mayham, P. J.: Putnam, J. :

text:
    Jennie L. M. Woods, Respondent, v. Charles Reiss, Appellant, Impleaded with Others.

      When defenses need, not refer to any particular cause of action — a general denial not stricken out as inconsistent with affirmative defenses.

    Where the defenses interposed by an answer cover the entire complaint, it is not necessary, under the provisions of section 507 of the Code of Civil Procedure, to refer to the respective causes of action to which they are respectively intended to refer.
    Under the provisions of section 507 of the Code of Civil Procedure, a defendant is permitted to interpose as many defenses as he has, and while a denial is not technically an affirmative defense, it may, under that section, be interposed with affirmative defenses, and it is error to strike it out on the ground that it is inconsistent with the other, and affirmative, defenses interposed in the action.
    Appeal by the defendant, Charles Reiss, from an order of the Supreme Court, made at the Albany Special Term and entered in the office of the clerk of the county of Albany on the 5th day of December, 1893, striking out the first defense contained in the defendant’s amended answer.

      B&rvjamin Patterson, for the appellant.

      FramMin M. Damaher, for the respondent.
   Mayham, P. J.:

This action was commenced to foreclose a mortgage which the plaintiff in her complaint alleged one Graham Martin had executed and delivered to Dudley Olcott, president of the Mechanics and Farmers’ Bank, to secure the payment at maturity of all notes, checks, drafts, bills of exchange and commercial paper, drawn, made, indorsed or accepted by Graham Martin, and which have been or may hereafter be discounted by the Mechanics and Farmers’ Bank of Albany. The complaint also alleged that the mortgagor, Graham Martin, after the making of the mortgage, became indebted to the Mechanics and Farmers’ Bank on paper of the character mentioned in the same, which he failed to pay, and on which the bank recovered judgments, one for $1,041.58, and one for $3,026.99, neither of which had been paid, and that Olcott, as president of such bank, duly assigned the mortgage and all the obligations which it was .intended to secure to the plaintiff, and tbat Graham Martin has failed to pay the same.

The complaint also alleges that the defendant Reiss and several others have, or claim to have, some interest in or lien upon the mortgaged premises, or some part thereof, which accrued subsequent to the lien of the mortgage.

To this complaint the defendant Reiss interposed an answer in which he undertook to set up several separate defenses.

First. A general denial. Second. Alleges that at the time Graham Martin became indebted to the Mechanics and Farmers’ Rank on notes, checks, drafts and indorsements discounted by such bank, the defendant Reiss had a lien on the real estate mortgaged by virtue of his judgment against Martin, and that at the time of the execution of the mortgage there was nothing due from Martin to the bank. Third. That all the papers referred to in the mortgage, on which Martin was indebted to the bank, were paid, and that the bank suffered no loss thereby. Fourth. That the bank recovered judgments against Martin in his lifetime, for the alleged debts secured by the mortgage, but that no executions, as required by statute, were issued upon such judgments, and that the executions alleged to have been issued in the actions specified in the complaint were null and void, in that they failed to contain the indorsement required by section 1433 of the Code. Fifth. That the execution specified in the complaint did not contain an indorsement directing the sheriff not to levy it upon the mortgaged property as prescribed by section 1433 of the Code. Sixth. That the judgments alleged in paragraphs 3 and 4 of the complaint have been paid and satisfied. The answer demanded judgment that the complaint be dismissed, with costs.

Upon these pleadings the plaintiff moved at Special Term to strike out the general denial unless the defendant elected to strike out the other defenses, which were claimed to be inconsistent with the denial therein, or that the other defenses in the answer be stricken out, as inconsistent with the first defense; and the defendant having failed or neglected to elect by which defense he would abide, the court on such motion struck out the denial in the answer, with costs, and from that order the defendant appeals.

The first subdivision of this answer, which was stricken out on this motion, put in issue eveiy material allegation of the complaint, and cast upon the plaintiff the burden of proving that her mortgage was a valid and subsisting lien as against this defendant, or against any lien which he might establish against the premises covered by the plaintiff’s mortgage.

Ordinarily, a general denial in an answer would seem to be inconsistent with any allegation in avoidance of the facts set out in the complaint, because, if the existence of such facts are denied, and the facts themselves do not exist, no result could flow from them, and any attempt to avoid them would seem to be unnecessary and illogical, because it would, by implication, seem to admit that which was untrue for the purpose of avoiding the consequence of the falsehood.

But I fail to see that the other portions of the answer are so inconsistent with the denial as to justify the striking out of that defense, even if we assume that inconsistent defenses separately stated in the answer may be stricken out, which is doubted.

This defendant is made a party solely on the ground that he has, or claims to have, some interest in, or lien upon, the mortgaged premises accruing subsequently to the lien of the mortgage, and after the denial in his answer he alleges that his lien on the mortgaged premises existed under a judgment against the mortgagor prior to the attaching of the lien under the mortgage, and that the claims for which the mortgage was given had been paid. The other defenses set up were that the mortgagee had recovered judgments on its claim in an action at law for the demand, and that no valid execution had been issued for the collection of the same, and returned unsatisfied so as to authorize this foreclosure action.

I am inclined to the opinion that the defendant had a right to interpose these defenses under the provisions of section 507 of the Code of Civil Procedure. '

It is true that these defenses were not numbered as required by that section, but no objection on that ground was raised on the motion, and we are not called upon to consider the effect of that omission here.

The defenses interposed, if proper, went to the entire complaint, and it was not, therefore, necessary to refer to the respective causes of action to which they were respectively intended to refer as required by that section. (Crasto v. White, 52 Hun, 473.)

But we are of tlie opinion, that under the provisions of section 507 of the Code a defendant is permitted to interpose as many defenses as he has, and while a denial is not technically an affirmative defense, it may under that section be interposed with affirmative defenses, and, therefore, it was error to strike it out on the ground that it was inconsistent with the other affirmative defenses interposed in this action. In Goodwin et al. v. Wertheimer (99 N. Y. 157) the court say: “ A defendant may put his defense upon distinct and even inconsistent grounds.” In Bruce v. Burr et al. (67 N. Y. 210), where the defense of warranty of the solvency of the maker of a note, and also the defense of fraud of the maker in giving the note, were interposed, it was urged that the defenses were inconsistent, and that a rescission for the fraud could not, therefore, be properly claimed. The court, Church, Cli. J., says: “ The Code (§ 150) allows a defendant to put in as many defenses or counterclaims as he may have, and the objection of inconsistency between them is not available.” That section is in the same language as section 507 of the Code of Civil Procedure.

In Societa Italiana v. Sulzer (188 N. Y. 172) O’Brien, J., says : “It is possible that an error was committed in compelling the defendant to elect which defense she would stand upon, and requiring her to abandon the other.” But he holds that the defense stricken out was immaterial, as it did not set up a valid counterclaim. It cannot be said in this case that the defense of a general denial which was stricken out on this motion was immaterial.

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

Putnam, J. :

I am not clear that an answer should be allowed which denies the execution of the mortgage on which the action is brought, and the notes it was given to secure, and at the same time alleges payment of such notes; which denies the recovery of judgments on such notes, and at the same time alleges that no execution as prescribed by statute had been issued upon such judgments, and also alleges payment'thereof. These defenses seem to be entirely and necessarily inconsistent. But the general denial contained in the •answer put in issue the allegations in the complaint, that Graham Martin died intestate at the city of Albany; that he was insolvent; that Mary Graham died intestate in the city of Albany, leaving her surviving the plaintiff, her only heir at law and next of kin, also the assignment by Dudley Olcott individually and as president of the Mechanics and Farmers’ Bank of Albany, of the mortgage in suit and the notes it v as given to secure to said bank, and the assignment by the latter to the plaintiff.

Such denials were not inconsistent with the other allegations in the answer. It appears that at the Special Term the defendant was directed to elect as between the general denial and the other defenses asserted in the answer, and failing to so do the first clause of the answer was stricken out. The effect of the order from which the appeal is taken was to strike out the denial of the assignments and other denials above referred to, not inconsistent with the other allegations in the answer, and on the issues made by which defendant had a right to a trial by a court or jury. Assuming that plaintiff was entitled to some relief, the order I think should not have stricken out the first clause of the answer absolutely, but only so far as it denied the execution of the mortgage and notes, or it should have provided that defendant might amend the same by excepting from his denial the execution of the mortgage and notes.

For this reason I concur in the result reached by Presiding Justice Mayham.

Herrick, J., not acting.

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


author: Mayham, P. J.:

text:
    Sidney G. Marshall, Respondent, v. The Reading Fire Insurance Company of Reading, Pennsylvania, Appellant.

      Insurance company — revocation of agency — effect as to third persons subsequently dealing with the agent — chapter 690 of the Lems of 1892 — when a policy is not void — restriction on the right of the insurer to cancel the policy.

    Where an insurance company, at the time of the revocation of the power of an existing agency, gave no public notice of the same, and loft with the former agent policies in blank, signed by the company, such revocation is not effective as against a person subsequently insured .in such company by such agent, in the absence of any proof that such revocation of authority was known to him at the time of the issuance to him of the policy.
    The failure on the part of a foreign insurance company to do the acts required of it by the provisions of sections 31 and 137 of chapter 690 of the Laws of 1892, does not render a policy issued by it void.
    A provision in a policy of fire insurance, which reserves the right on the part of the insurer to cancel the policy, to be valid must be upon the condition of a restoration of the unearned premium upon the same, where the assured has practiced no fraud in obtaining the policy.
    Appeal by the defendant, The Reading Eire Insurance Company of Reading, Pennsylvania, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Clinton on the 25th day of November, 1893, upon the verdict of a jury directed by the court, after a trial at the Clinton Circuit, with notice of an intention to bring up for review on such appeal an order made on the 21st day of November, 1893, and entered in said clerk’s office, denying the defendant’s motion for a new trial made upon the minutes.

      8. L. Wheeler, for the appellant.

      L. L. 8 hedden, for the respondent.
   Mayham, P. J.:

On the 1st day of March, 1893, the defendant, a foreign corporation, issued by its agent an insurance policy to the plaintiff, in consideration of a cash premium of thirteen dollars and seventy-five cents at that time paid by the plaintiff to the agent of the defendant, to indemnify the plaintiff in the sum of $1,000 on stock and $100 on store against loss and damage by fire.

Tlie person who took this risk acted as agent for the defendant, and had been so acting for several years previous thereto ; was furnished with policies in blank by the defendant, signed by the officers of the defendant, and to the knowledge of the plaintiff had been in tlie habit of countersigning policies issued by tlie defendant through him as agent, the defendant receiving tlie premiums of him, and in some instances paying taxes on policies so made out and executed by this agent.

On the 13th day of April, 1893, the insured property was. destroyed by fire. The plaintiff thereafter made due proof of loss and presented the same to the defendant and demanded payment for tlie same, which was refused, and thereafter the plaintiff brought this action.

The main contention on tlie part of the defendant on this apjieal is that the policy on which this action was brought was not a valid policy issued by the defendant; that the person who assumed to act as agent for the defendant and by whom this policy was filled up, countersigned and delivered, was not at the time of making this policy the lawful agent of the company, and had no power or authority to issue such policy and bind tlie company thereby, and that the policy was, therefore, void.

The first ground of that contention was that the defendant had, on the 20th day of September, 1892, suspended and revoked all the powers of the agent who filled out and delivered the policy in suit, and had conferred all tlie powers possessed by him on another agent, and that on the 20th of March, 1893, the successor of such first-mentioned agent went to the store of the plaintiff and notified him of the suspension of such agency, and demanded a renewal of the policy, which the defendant refused, but it does not appear that the agent making that demand returned or agreed to return the premium or unearned premium paid by the plaintiff on this policy.

As the defendant at the time of the alleged revocation of the power of the former agent gave no public notice of the same, and in no way informed tlie plaintiff of such revocation, and left with the agent the policies signed by tlie company, thus leaving in him the vndicia of authority, the revocation did not bind the plaintiff, in the absence of any proof that it was known to him at the time of the receipt of the policy.

The agent had acted as the general agent of the defendant upon the subject of issuing of policies, and his acts had been adopted by the company, and so long as the company left this class of policies with him and thus enabled him to continue to deal with the public upon the strength of his previous agency, and to use its policies, no secret revocation of his power could absolve the defendant from liability to third persons dealing upon the strength of such apparent authority without any knowledge of the revocation of such authority. (Post v. Ætna Fire Ins. Co., 43 Barb. 361; Ellis v. Albany City Fire Ins. Co., 50 N. Y. 407; Ruggles v. American Cent. Ins. Co., 114 id. 415 ; Arff v. Fire Ins. Co., 125 id. 57.)

But it is insisted by the learned counsel for the defendant that this policy is void under the provisions of section 137 of chapter 690 of the Laws of 1892.

Section 31 of this chapter prohibits the agent of a foreign insurance company from transacting any business in this State until he has filed in the office of the clerk of the county where he resides a certified copy of the authority of the Superintendent of Insurance authorizing him to do insurance business, which certificate is also required to be filed in the office of the Superintendent of Insurance, a copy of which is to be printed four successive weeks in the State paper at Albany and proof of such publication filed in the office of the Superintendent of Insurance.

None of these things seem to have been done by the agent who executed and delivered the policy in this case. Section 50 of the same title imposes a penalty on any person acting as an agent of a foreign fire insurance company who acts in that capacity without first complying with the provisions. But none of these sections, so far as I can see, render a policy void for a failure to comply with these provisions. It is true that section 137 provides that policies shall be held void if issued by foreign fire insurance companies unless such companies shall have complied with the general insurance laws of this State; but that provision does not seem to apply to the regulation of agencies of foreign insurance companies doing business in this State.

It is urged that as the enactment of chapter 690 operated to suspend the agencies unless the authority was renewed as required by that chapter, that this relation ipso facto was dissolved, and that the plaintiff was charged with notice of that fact, as it was effected by a public statute, and all persons are bound and presumed to know the law, and -that as to this class of cases the ordinary rule governing principal and agent is no longer applicable to agents of foreign insurance incorporations.

But it will be observed that this law imposes a duty upon the companies and their agents for the protection of the public, and should not be so construed that it may become an instrument of fraud and oppression to those for whose protection it was intended.

It presupposes that companies and their agents may assume to act without having qualified themselves by paying the excise duties imposed for the privilege of doing business in this State, and for such violation of law imposes heavy penalties.

But it nowhere in terms gives the company any immunity or enables it to escape the obligations of its contract through such violations. By assuming to insure the plaintiff’s property it deprived him of the opportunity of availing himself of other insurances, and it should not, when a loss occurs, be permitted to allege its own violation of law as an excuse for refusing to fulfill its contract.

But it is urged that the company in its policy reserved the right to cancel the policy. Such provision to be valid must be upon the condition of a restoration of the unearned premium where the assured lias practiced no fraud in obtaining the policy.

In its application to the plaintiff to cancel this policy it adopts it as its own, but fails to give the requisite notice of its intention as required in the policy itself, and I see nothing in the conduct of the plaintiff at the time of the proposed cancellation of the policy which can be construed into a waiver of the required notice.

I have examined the exceptions taken by the defendant to the various rulings of the trial judge and see no ground in them for a reversal of this judgment.

Putnam and Herrick, JJ., concurred. •

Judgment affirmed, with costs.


author: Pee Cueiam :

text:
    The City of Schenectady, Appellant, v. Catherine A. Furman and Another, as Executors, etc., of Robert Furman, Deceased, Respondents.

      City of Schenectady — the notice by the common council thereof to an owner, of work to be performed at Ms expense, is jurisdictional — waiver thereof.

    On April 16, 1889, the common council of the city of Schenectady passed a resolution declaring that there were obstructions and deposits in a certain cre§k, designating the grade and width of the same, and directing the owner to dredge the creek to the channel designated thereby. A notice of such resolution was published five days, as required by the city charter, and on April twenty-third it was confirmed. On May seventh the common council amended such resolution, without any additional notice, at the request of such owner, but not in his presence.
    Such owner, who was not informed of the extent of the proposed modification or of the time when the common council would meet to act on the same, objected to the modification as made and gave notice before the work was done that he would not pay for it.

      Held, that the notice of five days required by the provisions of the charter of the city was jurisdictional, and that when the common council had once acted they could not change the resolution without again giving the required notice;
    That such owner was not estopped, by his request for a modification of the first resolution, from denying his liability to pay for the work done under the modification thereof.
    Appeal by tbe plaintiff, Tlie City of Schenectady, from a judgment of tbe Supreme Court in favor of tbe defendant, entered in tbe office of tbe clerk of tbe county of Schenectady on tbe 31st day of July, 1893, upon tbe decision of tbe court rendered after a trial at tbe Schenectady Circuit dismissing tbe plaintiff’s complaint.

      8. W. Jaelcson, for tbe appellant.

      Jtdberi J. JLandon, for tbe respondents.
   Pee Cueiam :

This case was before this court at a former term on an appeal from a judgment in favor of tbe plaintiff, which was reversed, and a new trial ordered by this court (61 Hun, 171).

Some of tbe questions raised and discussed on that appeal, and which were ruled adversely to tbe contention of tbe plaintiff and appellant, appear apparently in the same form on this appeal.

The facts upon which the common council assume jurisdiction and authority to do work for which the defendant is sought to be charged in this action, appear to be substantially the same in both trials and on both appeals.

If these facts as proved on the former trial did not confer jurisdiction on the common council of the plaintiff to do the work for which the defendant is sought to be charged in this action, then the same jurisdictional defect exists on the second trial. On the 16th of April, 1889, the common council passed a resolution declaring that there are obstructions and deposits in Mill creek, designating the grade and width of the same, and declaring that to be the natural and normal channel and grade of the creek, directing the owner to dredge the creek to the channel so designated. A notice of this resolution was published live days, and on the twenty-third day of April the same was confirmed. On the seventh day of May thereafter the common.council amended the resolution so confirmed without any additional notice, upon the request of the defendant, but not in his presence, and it does not appear that he dictated the extent of reducing the amount of work required in the resolution confirmed on the sixteenth of April.

There was no proof on the first trial that this modification of the first resolution was made at the request of the defendant, and it is now insisted that the request was a waiver of any notice required by section 61 of the charter, added by section 6 of chapter 91 of 1889, and that the defendant is estopped on this trial by that request.

Within the decision of the G-eneral Term on the former appeal, Ave cannot agree with the plaintiff in that contention.

In discussing the effect of this modification made on the seventh of May, LeaeNed, J., says: “ It will be seen that the resolution of July 9th directed the superintendent to do this work under the resolutions of April 16th, April 23d and May 7 th. The superintendent testified that he did the Avork under the resolutions as amended. It does not lie'with the plaintiff to say, therefore, that the amendatory resolution of May 7th was of no effect. The plaintiff held it as valid, and the work was done accordingly.”

Now, section 61, above mentioned, is explicit on this point. After the common council has passed a resolution of this kind, it must give five days’ notice, and at tlie time and place mentioned “ in such notice * * shall bear all parties interested * * * and after snob bearing shall again consider such ordinance, and may confirm, modify or rescind the same. No such ordinance or resolution shall create any duty or obligation until it shall be confirmed or modified as aforesaid.”

The common council did on the twenty-third day of April, confirm that resolution. They then, on the seventh day of May, amended it without notice to the party interested. This they had no right to do. All their subsequent action was based upon that amendment. They did not cause the alleged obstruction and deposit to be removed, according to the resolution of April twenty-third, but according to that of May seventh.

There is no force in saying that the resolution of May seventh diminished the amount to be removed. The parties interested had a right to be heard as to the matter. They might have good reason for desiring that the resolution of April twenty-third be carried out. The plaintiff cannot argue that the defendant was not injured by the change. The notice of five days was.jurisdictional; when the common council had acted they could not change the resolution, at least not without again giving the required notice.

This was once determined by this department to be the law of this case, and Ave cannot now, without overruling a former determination of this court, adopt a different rule. Nor do we see any reason to question the soundness of the views expressed by Justice LeaeNed, above quoted. When the common council had once acted upon a notice which, under the statute, conferred jurisdiction upon them to act in a given manner, their powers were spent, and they could not again resume them without again giving the statutory notice to those over whose persons or property they can acquire jurisdiction, only in the way pointed out by statute.

Nor can we hold that the defendant is estopped by the request made for a modification. lie was not informed of the manner or extent of the proposed modification or of the time when the common council would meet to act on the same. lie objected to the modification as made, and gave notice to the superintendent, before the work was done, that he would not pay for the same.

■ If we are right in our construction of the previous determination of this court then the plaintiff is met at the threshold of this case by an insuperable objection to a recovery, and tbe consideration of tbe other questions in the case are unnecessary.

The judgment must be affirmed, with costs.

Present — Mayiiam, P. J., Putnam and Herrick, J J.

Judgment affirmed, with costs.


author: Mayham, P. J.: HerricK, J.:

text:
    The Mohawk National Bank of Schenectady, Appellant, v. The Schenectady Bank, Respondent.

      Banking association — stock impressed by charter with the indebtedness of the holder to the association, and by-laws containing a similar provision — a chose in action is assigned subject to equities.

    By tie provisions of section 19 of chapter 260 of the Laws of 1838 a power is conferred upon a banking association organized thereunder to regulate, in and by the articles of association, the manner of transfer of its stock, which become its charter on being filed in the proper office. Such articles of association, with the statute under which it was authorized and created, becomes the law of the association both as between the association and its members, and as between the association and all persons dealing with its members, in all matters regulated by the charter; and where by such charter the stock issued by the association became impressed with all debts due to the bank from a stockholder, that characteristic passes with such stock, and binds not only the stock, but also each holder thereof.
    The power of a banking association, organized under chapter 260 of the Laws of 1838, and the acts amendatory thereof, to incorporate in its charter a provision that its shares shad be deemed pledged and held by the association as security for the payment of all the debts and liabilities to the association, of the respective owners thereof, and that no transfer of any stock can be made until such debts and liabilities are discharged, without a resolution of the board of directors of such association assenting to such transfer, is one that has the sanction of authority; it violates no principle of sound public policy, being the exercise of a power in the issuance and control of its stock, and of its stockholders, while debtors of the bank, clearly conferred upon it by the statute under which it was formed, which is the organic law of its existence.
    There is a well-recognized distinction between provisions in charters or articles of association of corporations in restraint of the alienation of their §tock hy their stockholders, and the imposition of such restraint in a mere J>y-law of the corporation; such restraint sought to be imposed by a by-law may be inoperative as against a bona fide xiurchaser of stock, while If contained in the charter or articles of association of the corporation it may be held valid.
    Ordinarily the purchaser of a chose in action, not negotiable, takes it subject to all the equities existing against it in the hands of the assignor.

      Appeal by the plaintiff, The Mohawk National Bank of Schenectady, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Schenectady on the 31st day of March, 1892, upon the report of a referee.

      Alonzo P. Strong, for the appellant.

      S. W. Jackson, for the respondent.
   Mayham, P. J.:

This action was prosecuted to compel the defendant to transfer upon its stock books thirty-seven shares of the capital stock of the defendant of the par value of fifty dollars per share.

The stock was held by one Paige and stood in his name upon the books of the defendant, and was represented by a certificate issued by the defendant to him on the 10th day of July, 1868.

The plaintiff claims title to the certificate and stock represented by it by virtue of a bill of sale and assignment and power of attorney executed by Paige, dated the 18th of September, 1876, claimed to have been given by Paige to the plaintiff as collateral to the renewal of an original loan by the plaintiff to him of $5,500. On the 22d of July, 1884, the plaintiff caused such assignment and power of attorney to be presented at the bank of the defendant and a demand made upon the defendant to permit a transfer of such stock upon its books from Paige to the plaintiff, which was refused by the defendant.

On the 9th day of February, 1870, Paige became indebted to the defendant in the sum of $6,100 on his promissory notes for that sum, which were discounted by the defendant, which remained unpaid, and which, with renewals and interest, amounted, at the time of the trial, to the sum of $7,013.97.

The defendant was incorporated on the 24th day of December, 1861, under and in pursuance of an act of-the Legislature of New York, entitled “An act to authorize the business of banking, passed April 18, 1838, and the several acts amendatory thereof,” being chapter 260 of the Laws of 1838.

Section 15 of that act prescribes the manner in which banking associations may be formed under that act by making, filing and recording in tlie office of tlie Secretary of State articles of association as therein prescribed.

Section 18 provides that tlie shares of such banking association shall be transferable on the books of the association in such manner as may be agreed upon in the articles of association, and every person becoming a stockholder shall, in proportion to liis share, succeed to all tlie rights and liabilities of prior stockholders. The articles of association formed by the defendant under this statute contained, .among other things, the following provisions: “ Article 9. The directors shall cause suitable books to be provided and kept for the registry and transfer of the shares of the association, and every transfer to be valid shall be made in such boofis, and be signed by the shareholders, or by his or her attorney, duly authorized in writing, and every transfer shall be made and taken expressly subject to all the conditions and stipulations contained in these articles.

“ Article 10. The shares of the capital stock of this association shall be deemed pledged and held in security by the association for the payment of all debts and liabilities of the owners thereof to the association; and no transfer of any stock can be- made until such debts and liabilities are discharged, without a resolution of the board of directors assenting to such transfer.”

It is insisted by the learned counsel for the defendant that, under the above provisions of the defendant’s charter, it had a lien on the stock in question for the indebtedness of the assignor to it at the time of the assignment, and that such lien is and was valid as to the assignor, or as to any assignee to whom he might assume to transfer the same.

' Section 19 of chapter 260 of the Laws of 1838, that being the law under which the defendant was incorporated, provides that “the shares of said association shall bo deemed personal property, and * shall be transferable on the books of the’association in such manner as may be agreed on in the articles of association, and every person • becoming a shareholder by such transfer shall, in proportion to his shares, succeed to all the rights and liabilities of prior shareholders.”

Under this provision it is quite clear-that the power was conferred upon the association to regulate the manner of the transfer of stock in and by the articles of association, which became its charter on being filed in the proper office, and that charter, with the statute under which it was authorized and created, became the law of the association, both as between the association and its members and the association and all persons dealing with its members in all matters regulated by the charter.

By the charter itself the stock issued by the association became impressed with all debts due to the bank from a stockholder, and that characteristic passed with it and bound the stock not only, but each holder of the same.

In Leggett v. The Bank of Sing Sing (24 N. Y. 288) Weight.. J-., in discussing the effect of a provision similar to the one under consideration, uses this language: “ The lien unquestionably attaches in respect to the shareholders’ debts when the bank is asked to transfer the legal title.” In the same case AlleN, J., who dissents from his associates on some of the questions, but agrees with them as to the effect of the charter in creating a lien in favor of the bank for debts of the stockholders, uses this language: As an agreement in effect making the debt of the shareholder a lien upon his stock, it is not prohibited by any law, and is inconsistent neither with any statute nor with public policy. A pledge of the stock in security for the payment of a debt actually contracted would clearly be valid; and an agreement pledging it, given in advance of the debt,, can •be nevertheless valid.”

Similar provisions in special charters granted by the Legislature are not unusual, which is high evidence that public policy sanctions them, and courts have sustained and enforced such provisions. (Union Bank of Georgetown v. Laird, 2 Wheat. 390; Bank of Utica v. Smalley, 2 Cow. 770.)

“ Each association organized under the General Banking Law may incorporate such special powers in its articles of association, not inconsistent with-the laws of the State, as the association shall think expedient, and these special provisions will have the force of law with the associates.” (24 N. Y. 289, supra.)

The articles of association, the voluntary agreement of the associates in regulating the terms of their association and their right as members thereof, takes the place of a special charter and performs its office. It seems to follow that the power of this association to incorporate this provision in its charter is one that has the sanction of authority, and that it violates no principle of sound public policy. '

It is the exercise of a power in the issuance and control of its stock, and of its stockholders while debtors of the bank, clearly conferred upon it by the statute under which the corporation was formed, which is the organic law of its existence.

It would seem to follow that, on the creation of the debt by Paige to defendant on the 9th of February, 1810, the lien of the defendant attached to this stock, and as the debt has not been paid, the lien has not been divested. As was said by Sutherland, J., in Bank of Utica v. Smalley (supra;): “ This provision was intended exclusively for the benefit and protection of the bank. The lien upon the stock for any debts due to them cannot be affected by a transfer of the stock.” Doubtless, had this indebtedness of Paige been less in value than the stock, the plaintiff, as assignee, could, on extinguishing the lien, compel a transfer, but that is not this case. It does not seek by payment to extinguish the defendant’s lien, but rather by the assertion of its claim under the assignment, and power of attorney, made long after the defendant’s lien attached, seeks to hold the stock by what it asserts is a superior title. This, we think, it cannot do. This is not a case where a corporation seeks to exercise powers not specifically granted to it, but rather a power which is expressly conferred by the charter granted, as we have seen, under and in accordance with the powers conferred on it by the statute, which is the organic law of its existence. It does not, therefore, come under the condemnation of any of the decisions cited by the learned counsel for the plaintiff under his second point. Nor can the lien created by this charter be denounced as a secret lien, such as the law will not uphold.

In Driscoll v. West Bradley & C. M. Co. (59 N. Y. 96) the court hold that a company could not by a by-law render the stock inalienable by a stockholder, where the scrip of stock had nothing upon its face to show that the company retained a lien on it by its by-laws as to a purchaser who bought without notice of the lien. But that case was where there was a restraint created by a by-law and not the charter, and there was no express or implied authority either in the statute or the charter for creating such lien, and while the by-law was sufficient in terms, there was no authority in the statute under which the defendant in that case was incorporated to pass such bylaws, and the court say: Hence, if the defendant is to maintain this by-law, it must point out the authority either in its articles of association, and show that they are authorized by law, or in some statute.”

This, we think, the defendant did in the case at bar, under the provisions of section 19 of chapter 260 of Laws of 1838, under and in pursuance of which the provision in the charter of the defendant was clearly authorized. It seems quite apparent that there is a well-recognized distinction between provisions in the charter or articles of association in restraint of .alienation of stock by a stockholder and the imposition of such restraint in a mere by-law of the 'corporation, and this distinction accounts for the mere fact that in some cases the courts have held that such restraint is inoperative as against a bona fide purchaser of the stock, and in other eases such condition in restraint of alienation is held valid.

In Bank of Attica v. Manufacturers & Traders' Bank (20 N. Y. 505) DeNio, J\, in pointing out that distinction, uses this language : “ And the difference between a restraint upon alienating the shares in these associations, contained in the articles which must receive the assent of all the primary shareholders, and by which all persons holding derivative interests must be bound, and a like restraint imposed by the agents of the association in the form of by-laws, which may or may not come to the knowledge of the shareholders, and which, if known, may be disapproved of by them, is very marked.”

In Driscoll v. West Bradley, etc. (supra), Judge Eolgeb, while denying the power to impose such restraint of alienation by and under the provisions of the by-laws, fully recognizes the power to do so in the charter or articles of association. He says : There . may be in some cases an agreement of the original stockholders among themselves, by their articles of association, that such power shall exist. The latter, as we have seen, does not appear in this case.”

There is nothing in the character of this stock which makes it negotiable or which invests the transferree with rights superior to those of the assignor. Ordinarily the purchaser of a chose in action, not negotiable, takes it subject to all the equities existing against it in the hands of the assignor, and if we are ’ right in holding that the defendant has a valid lien on this stock for the debt of Paige, his assignment to the plaintiff cannot divest that lien or invest the assignee with greater rights than those enjoyed by the assignor. (McCready v. Rumsey, 6 Duer, 574.)

The defendant, on making the loan to the plaintiff’s assignor, acquired a vested right in this stock, which cannot be divested by Paige by assignment, and the assignee of the stock took the interest of the assignor subject to that right, and cannot divest the defendant except upon, payment of the defendant’s lien.

Nor do we think the defendant in this case is estopped from asserting its right.

This case is clearly distinguishable from Knox v. Eden Musée (74 Hun, 483).

The judgment must be affirmed, with costs.

Putnam, J., concurred.

HerricK, J.:

I concur upon the ground that the plaintiff is not a bona fide holder for value of the stock in question. The assignment of such stock was made to the plaintiff to secure the payment of an antecedent debt.

The plaintiff parted with nothing of value upon the faith or credit of the stock.

Upon the other questions in the case, it seems to me that the principle in the case of Knox v. Eden Musée Americain Co. (74 Hun, 483) applies.

Judgment affirmed, with costs.


text:
    John Freston, Jr., Appellant, v. The Lawrence Cement Company, Respondent.

      Execution of a contract.

    A person, who by a contract undertakes to quarry, burn and deliver cement at a certain place, is required to do, at Ms own expense, all that is necessary to accomplish such purpose.
    Appeal by the plaintiff, John Freston, Jr., from a judgment of the Supreme Court in favor of the defendant, entered in the office of tbe clerk of the county of Ulster on the 28th day of April, 1893, upon the decision of the court rendered after a trial at the Ulster Circuit dismissing the plaintiff’s complaint.
    The contract entered into between the parties to this suit was in the following terms:

      “ This contract, made and entered into at Eddyville, N. Y., this 5th day of February, 1890, between the Lawrence Cement Company, party of the first part, and John Freston, Jr:, party of the second part:
    “ Witnesseth, that in consideration of one dollar in hand paid, the receipt of which is hereby acknowledged, and a further consideration as hereinafter stated, the party of the second part agree with the party of the first part for the season of 1890, to quarry, burn and deliver in storehouse alongside of canal at Rosendale, N. Y., cement of good quality, and said stone to be quarried from our quarry at Rosendale, recently operated by E. T. Smith. The party of the second part is to quarry the stone so as not to endanger the quarry.
    “ The party of the second part does hereby agree with the party of the first part to well and faithfully perform said work in a thorough and workmanlike manner, to the satisfaction of the said party of the first part, its superintendents or agents, and upon the faithful performance of said work the said party of the first part agree to pay unto the said party of the second part the sum of twenty-nine cents (29) per barrel for all cement of good quality delivered in said storehouse at Rosendale, N. Y. Payments shall be made on or about the fifteenth [15th] day of each and every month that this contract is in force, covering the account of the previous month.
    “ And it is further hereby expressly understood and agreed by and between the parties hereto, that if at any time during the said season of 1890 the party of the second part abandon said work, or cease carrying out this contract as he has hereinbefore agreed to do, then said party of the first part may, at its option, terminate this contract, upon written notice to the party of the second part.

      “ It is further agreed and understood that the said party of the second part shall be alone responsible for any loss or damage that may occur, happen or be done to any person, persons or property, in the prosecution of this contract, by reason of any accident or any cause whatsoever, and the party of the first part in no event shall be responsible therefor.
    “ The party of the second part further agrees to become responsible for all materials delivered, and to protect the said party of the first part from all mechanic or other liens.
    “ If at any time the operations or business of the party of the first part shall be' interrupted by breaks, accidents, fires, or any other cause, or by casualties of any kind, the obligations of the said party of the first part shall cease during the period of such interruption, and the said party of the first part shall not be held liable for damages arising therefrom, and the said party of the second part shall not be held responsible to the party of the first part for like interruptions.
    “The party of the second part agrees that he will not sell, assign or sublet this contract without the written consent of the party of the first part first had and obtained. .
    “ This contract shall bind the executors and administrators of the party of the second part.
    “ In case of death, financial embarrassment or failure of the party of the second part, the option of continuing this contract shall rest I with the party of the first part.
    “ The party of the first part for use only is to furnish tools and one stone drill, and the party of the second part agrees to keep the tools in repair. The party of the first part further agrees to unload off of boats what coal may be used in burning the cement.
    “ If for any reason the party of the first part should decide to cease operating their works at Rosendale, during the season of 1890, then the party of the first part agrees to give the party of the second part employment on their works at some other point, during the season of navigation on the canal, at a fair compensation.
    “ In witness whereof, the parties hereto have hereunto set their hands and seals, in triplicate, the day and year first above written.
    “LAWRENCE CEMENT CO., [n. s.]
    “ By Geo. S. Coutant,
    “JOHN FRESTON, Jr. [l. s.]
    “ Witness:
    “John Brodhead.”

      William Lounsbery, for the appellant.

      Bernard de Yarn Wagonen, for the respondent.
   Mayham, P. J.:

There is no disputed question of fact in this case. The whole case turns upon the construction to be given to the contract under which the cement was furnished by the plaintiff.

The trial judge held that, as the plaintiff undertook to quarry, burn and deliver the cement at the dock, he was by the terms of the contract required to do, at his own expense, all that was necessary to accomplish that purpose, and that as wood and coal were needed to prepare the cement, he was required, at his own expense, to furnish the same. His monthly deliveries of cement were, therefore, properly charged in the receipts with the coal received of the defendant, and the considerations for the receipt were not open to examination.

We think his interpretation of the contract was correct and that he committed no error on the trial for which the judgment should be reversed.

No further opinion seems to be required. The judgment must be .affirmed, with costs.

Putnam and Herrick, JJ., concurred.

Judgment affirmed, with costs.


text:
    Luther Shute, Respondent, v. Frederick W. Jones, Appellant.

      Promissory note — prima facie evidence of indebtedness —burden of proof — reversal upon questions of fact — the referee’s opinion is no part of the case on appeal.

    An ordinary negotiable promissory note, payable to the order of the plaintiff in an action brought thereon and presented by him upon the trial, when its execution is properly proved, is on its face prima facie evidence of the indebtedness of the maker thereof to the plaintiff for the amount of the same, with lawful interest, and to overcome such legal presumption the burden of proof is cast upon the defendant. Such prima faeie case may be overcome by a preponderance of proof on the part of the defendant; and in actions on notes, as in all other cases, the plaintiff holds the affirmative of the proposition which he asserts, and must establish it by a preponderance of proof before he can . recover.

      Although, an appellate court may review and reverse the decision of a referee upon questions of fact, it is only authorized to do so in the case of disputed facts where there is a clear and manifest preponderance of evidence against the finding of the referee.
    The opinion of a referee before whom an action was tried does not constitute a part of his report from which an appeal can he taken, and the fact that erroneous expressions and conclusions are contained in such opinion furnishes no ground for a reversal of the judgment rendered in the action.
    Appeal by tbe defendant, Frederick ~W. Jones, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Columbia on the 11th day of September, 1893, upon the report of a referee.

      Henry Vam, Hoesen and J. Rider Oadn/, for the appellant.

      L. F. Longley, for the respondent.
   Mayham, P. J.:

This action was brought upon a note alleged to have been given to the plaintiff for $2,000, and also upon an account claimed to be due the plaintiff from the defendant.

The answer admits the execution and delivery to the plaintiff of the note in question, but denies that there was any consideration therefor moving from the plaintiff to the defendant, or from any one in his behalf, or that the defendant ever received any consideration, or that any was received by any other person for him for such note.

The answer also set up a counterclaim to which the plaintiff interposed a reply. On the trial before the referee defendant asked, and was permitted by the referee, to amend his answer so as to deny any knowledge or information sufficient to form a belief as to whether he ever executed and delivered the note mentioned in the complaint to the plaintiff.

The note in suit is not set out in the complaint, nor does it appear in the case, but is described in the complaint as a promissory note in writing, dated on the 5th day of February, 1890, at Hudson, N. Y., and thereby, for value received, promised to pay to the order of the plaintiff two thousand dollars four months after said date, with interest.”

The principal defenses set up in the answer and sought to be established by the proof on the trial are, that there was no consideration for this note, and that the same had no legal or valid inception in the hands of the plaintiff, and was delivered to Mm, not for the purpose of vesting the title thereto m Mm, but only as the agent of the defendant for the purpose of having the plaintiff solicit the indorsement of a third person, for the purpose of enabling the defendant to negotiate the same and have the same discounted for the benefit of the defendant.

This note being an ordinary negotiable promissory note, payable to the order of the plaintiff and presented by him in court, where its execution was properly proved, was on its facq ¡prima facie evidence of the indebtedness of the defendant to the plaintiff for the amount of the same with lawful interest.

To overcome that legal presumption the burden in the first instance was cast upon the defendant.

It is quite true, as insisted by the learned counsel for the appellant, that this ¡prima facie case may be overcome by a preponderance of proof on the part of the defendant; and in actions on notes, as in all other cases, the plaintiff holds the affirmative of the proposition which he asserts, and must establish it by a preponderance of proof before he can recover.

These rules are elementary, and require no citation of authorities. In this case the plaintiff, by the proof and production of this note, made \ú& ¡prima, facie case. The defendant, by evidence criticizing the plaintiff’s accounts, evidence of his financial ability, and in various other ways sought to overcome the plaintiff’s ¡prima facie case, to which the plaintiff responded with evidence tending to uphold the consideration and validity of this note.

Upon these opposite sides of this contest there was a large amount of conflicting evidence offered by the respective parties in „ support of their respective theories.

This evidence was listened to by an experienced and learned referee, who saw the witnesses and had a much better opportunity of judging of their character and the probable truth or falsity of their narrations than this court on appeal can possibly have.

He occupied the place of the jury and was by his position constituted peculiarly the judge of the facts, and while it is true that this court on an appeal may review and reverse, on questions of fact, it is only authorized to do so upon disputed facts where there is a clear and manifest preponderance of evidence against the finding of a referee or the verdict of a jury.

This rule is of very universal application, and the reason for it is well stated by Huger, J., in Baird v. Mayor, etc. (96 N. Y. 567), as follows: “ "When there is evidence on both sides and the case is balanced, and the mind of the court has been called upon to weigh conflicting statements and inferences and decide upon the credibility of opposing witnesses, much weight must be accorded to the special adaptation of the trial court to investigate and determine such questions. Any other rule would nullify the peculiar advantages which that tribunal possesses, in observing the manner and appearance of the witnesses produced, and the various physical and mental peculiarities by which the mind of the professional observer determines the degree of credit which ought prudently to be attached to oral testimony. These rules have been the subject of frequent comment in the courts, and are fully sustained by authority.”

This rule was approved and the language of the opinion quoted in Lowery v. Erskine (113 N. Y. 55), and the doctrine there laid down may be regarded as of universal application in this State.

Applying it to this case we do not feel authorized to reverse the finding and determination of the referee on the disputed question of fact as to the title to this note, or the consideration upon which it was given.

In the case last cited the court say: “ The rule governing appellate tribunals in reviewing questions of fact is stated (as follows): ‘ To justify a reversal it must appear that such findings were against the weight of evidence, or that the proof so clearly preponderated in favor of a contrary result that it can be said with a reasonable degree of certainty that the trial court erred in its conclusions.’ ”

We have carefully read the evidence in this case, and the very elaborate brief and comments of the learned counsel for the defendant, but fail to find reason within the above rules for a reversal of the findings and conclusions of the referee upon the questions of fact on this appeal. But it is insisted by the learned counsel for the appellant that the referee erred on the trial of this action upon questions of law, for which this judgment should be reversed.

Tbe exceptions taken by tlie defendant to tbe report of tbe referee are all directed to his conclusions of law, and we find in the case no requests on the part of the defendant of the referee to find, either upon questions of fact or law.

If we are right in holding that we cannot disturb the findings of fact of the referee upon the conflicting evidence in this case, then the conclusions of law found by him arc, we think, fully supported by the facts found in his report, and the exceptions of the defendant to his conclusions of law are not well taken.

But it is insisted that the referee erred in allowing probative force to an affidavit of the defendant used on a motion to amend the answer. It nowhere appears in the report of the referee that he considered that affidavit as evidence, and it does not appear from the case that it was offered in evidence by the plaintiff or defendant upon the merits, and it cannot, therefore, be held as evidence in the case; as it was not, therefore, an element in the trial, and was neither used by tlie plaintiffs or objected to by the defendant, we fail to see how the defendant can predicate error upon it.

It is true that in the opinion of the learned referee he refers to that affidavit in connection with the cross-examination of the defendant upon the trial; that opinion is properly printed in the appeal book, but it does not constitute á part of the report of the referee, from which an appeal can be taken. In Magie v. Baker (14 N. Y. 435) the court say: The appeal book contains, it is true, an elaborate opinion by the judge and a general exception thereto. But that opinion is not in the case and has no right to be there. It is not one of tlie papers on which an appeal can be taken. * * * In the appeal book it is very proper that the opinion, if any has been written, should be printed, in order to give the appellate court the benefit of the reasons assigned for the judgment. But it performs no other office.”

In Laning v. N. Y. C. R. R. Co. (14 N. Y. 521-539) Eolger, J., in discussing the right of the appellate court to review a judgment upon expressions of a judge in an opinion, uses this language : “ But we are not authorized to review a judgment and to reverse it for an alleged error, which does not appear upon the record, and is not shown, or to be arrived at, save by expressions appearing in the opinion of the court.” In Snebley v. Conner (18 N. Y. 218) the court say: “We cannot look at tbe opinion given at General Term for the reasons or grounds of the decision there pronounced.”

Without stopping to discuss whether or not the reasons and arguments used by the learned referee in his opinion are, or are not, sound, we are, within the decisions referred to, precluded from making them the basis of our action in determining whether or not this judgment should be affirmed.

If an examination of the opinion should disclose erroneous expressions or conclusions, they would furnish no ground for a reversal of this judgment.

We have carefully examined the exceptions taken by the counsel for the defendant to the receipt and exclusion of evidence on the trial under his objections, and find no error committed by the referee in such receipt or exclusion of evidence.

On the whole case, we think the judgment should be affirmed.

Putnam and Herrick, JJ., concurred.

Judgment affirmed, with costs.