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Cameron v. Seaman.

the meaning of the statute was the town of East Fishkill. There was a newspaper published in the village of Fish kill, in the town of Fishkill, which adjoined the town of East Fishkill. Fishkill village was nearer the mine than Poughkeepsie, but as I understand the evidence, one part of the town of East Fish kill was nearer to Poughkeepsie than was Fishkill village from the same point. Under these circumstances, a publication in either paper would be a substantial compliance with the statute. Fishkill village was nearer to one point of the town of East Fishkill than Poughkeepsie, while Poughkeepsie was nearer to another point than Fishkill village.

The report made in January, 1875, was made by the trustees elected in 1873. If they held over for any reason, they were the persons whose duty it was to make it. If they did not hold over, no duty rested upon the defendant, Robert Seaman, as one of the trustees elected in 1874, for there is no evidence that he accepted the office under that election.

The judgment should be reversed and a new trial gran ted.

All concur, except FOLGER and RAPALLO, JJ., who dissent from the result as to defendant, Robert Seaman, on the ground that the manufacturing act requires the report to be not only made, but also filed and published within twenty days from January 1st of each year.

Judgment reversed.

NOTE BY THE REPORTER.-The annual report must be sigued by the trustees; signing the trustees' names by the secretary and verification by him will not answer the requirements of the statute. Bolen v. Crosby, 49 N. Y. 183.

The term "existing debts" in the statute means debts due and payable at the time the penalty attaches, and does not include a promissory note not due until after the default. Nimmons v. Hennion, 2 Sweeney, 663.

The fact that the company is closing up its affairs and has ceased to do business does not excuse the omission to file the report; nor the fact that the creditor is a stockholder cognizant of the financial condition of the company. Sanborn v. Lefferts, 58 N. Y. 179. But where the creditor was a co-trustee, he cannot maintain the action. Easterly v. Barber, 65 N. Y. 252.

But a trustee cannot be rendered liable, ou account of omission to file the report, for a debt fraudulently imposed on the company. Adams v. Mills, 60 N. Y. 533.

The individual liability is subjeot to all the defenses to which the original indebtedness was subject. Jones v. Barlow, 62 N. Y. 202.

The liability incurred under the New York statute, being penal, will not be enforced in New Jersey. Derrickson v. Smith, 27 N. J. L. 166.

Vol. XXV. – 28

Davis v. Bechstein.

Only the trustees who are guilty of the neglect are liable (Boughton v. Otis, 29 Barb. 196), not their successors. Shaler v. Bliss, 34 Barb. 309.

Under the Massachusetts statute, the officers are liable for the debts of the company, wbere they have made a false certificate that the amount of the capital stock has been paid in, ouly where such statement is willfully false. Stebbins v. Edmands, 12 Gray, 203.

Directors are officers within the Indiana statute. Gaj v. Theis, 33 Ind. 307.

One who has assumed the charaoter of trustee cannot escape liability on tbe plea that he was uot legally elected. Easterly v. Barber, 65 N. Y. 252.

A statement in the certificate of formation that the capital had been paid in vash, whereas it was in property of uncertain value, renders the oficers personally liable. Waters v. Quimby, 3 Dutch. 198.

Quite similar to Cameron v. Seaman is the case of De Witt v. Hastings, 69 N. Y. 518. The action was precisely the same in form and allegations. The defendant offered to prove that the enterprise of the contemplated company was abandoned before its formation; that no papers were filed; that he surrendered his stock, aud uotified the acting president that he would have nothing more to do with it, and that in fact he had no further connection with it. This evidence was excluded on the ground that the defendant was estopped from denying the existence of the corporation. This was held error, as there was no estoppel, and the evidence would have authorized a finding that there was no organization, and no user of the corporate franchises. Judgment was acoordingly reudered for the defendant.

Davis v. BECHSTEIN.

(69 N. Y. 440.)

Mortgage without consideration- When void in hands of transferee.

The plaintiff executed to R. a bond and mortgage, without consideration, to be used as collateral security for his own note, upon which he proposed effect. ing a loan for himself. R. failed to procure the loan, but sold the bond and mortgage for value to the defendant B. Held, that R., having no authority to sell the bond and mortgage, conveyed no title to B., and plaintiff was enti. tled to surrender and cancellation of them. (See note, p. 220.)

ACTION for the surrender and cancellation of a bond and mortA gage executed by the plaintiff to Lawrence A. Riley, and assigned by him, for a valuable consideration, to the defendant Bechstein. The plaintiff had judgment, which was affirmed at General Term of the New York city Common Pleas, and defendant appealed. The opinion states the facts.

Davis v. Bechstein.

7. A. Gould, for appellant.

Nicholas Quackenbos, for respondent.

CHURCH, C. J. Neither the decision in McNeil v. The Tenth National Bank, 46 N. Y. 325; 8. C., 7 Am. Rep. 341, nor in Moore v. Metropolitan Nat. Bank, 55 N. Y. 41; s. C., 14 Am. Rep. 173, affects the question involved in this case. Those cases hold that the owner of a chose in action is estopped from asserting his title against a bona fide purchaser for value, who purchased upon the faith of an apparent absolute ownership by assignment, conferred by the owner upon the assignee and seller, but neither of them intimated an intention to interfere with the well-settled principle that a purchaser of a chose in action takes it subject to the equities between the original parties, and that the assignor can give no better title than he himself has. On the contrary, GROVER, J., in the last case, declared, in answer to the suggestion that these principles might be impaired by the decision that “no one pretends but that the purchaser will take the former (non-negotiable choses in action) subject to all defenses valid as to the original parties, nor that the mere possession is any more evidence of title in the possessor than is that of a horse.” It is only where the owner, by his own affirmative act, has conferred the apparent title and absolute ownership upon another, upon the faith of which the chose in action has been purchased for value, that he is precluded from asserting his real title, and this conclusion was arrived at by the application of the doctrine of estoppel.

At the time Riley transferred the bond and mortgage to the defendant Bechstein, as between him and the plaintiff, the murtgagor, he had no title or interest which he could transfer. The mortgage was executed and delivered to him as an accommodation, to be used as collateral security for the payment of a note of $2,000 which he contemplated getting discounted at the New York National Exchange Bank, and under an agreement not to have it recorded. He failed to procure the discount, and the plaintiff repeatedly requested the return of the bond and mortgage, and Riley promised to return the same from time to time. It is very clear that the bond and mortgage in his hands were of no value, and that he could not have enforced them, and the defendant when he purchased occupied no better position. Riley could not sell

Davis v. Bechstein.

any better title than he had, which was none, and the defendant could not acquire by the purchase from him any better title. The specific transaction in which the mortgage was to be used having failed, Riley's possession and right to the mortgage after that was no different than if it had been delivered to him without any agreement for its use at all. He was then the possessor of the bond and mortgage executed and delivered without consideration, and without authority to use it for any purpose. I have examined the evidence, and am of the opinion that it is sufficient to sustain the findings of the judge, and, therefore, the findings are conclusive.

[Omitting a matter of minor interest. ]
The judgment must be affirmed.
All concur. RAPALLO, J., not voting.

Judgment affirmed.

NOTE BY THE REPORTER.-McNeil v. Tenth National Bank, 46 N.Y. 325; 8. C., 7 Am. Rep. 341, referred to in the above opinion, was the case where the plaintiff had left with his stock brokers, to secure any balance of account, certain shares of stock, upon the certificate of which he had indorsed and signed a blank assignment and power of attorney to transfer, purporting to have been executed for value received, and which shares the brokers had, without the plaintiff's knowl. edge or authority, pledged to the defendant's assignor for advances. The court say: “The true point of inquiry in this case is, whether the plaintiff did coilfer upon his brokers such an apparent title to, or power of disposition over, the shares in question, as will thus estop him from asserting his own title, as against parties who took bona fide through the brokers." This case contains a careful and elaborate review of all the leading authorities, and criticis-g and distinguishes the case of Bush v. Lathrop, 22 N. Y. 535, which had disapproved the doctrine of Chancellor KENT on this subject. In the latter case there was an absolute assignment, for the consideration of $268.20, of a bond and mortgage for $1,400, designed to secure the former amount; and the court held that the defendant, who bad advanced $1,488 on a second assignment of the same, could hold them only for the amount for which they were originally pledged, the assignee of a chose in action taking but an equitable interest. Three judges dissented. The court in the McNeil Case distinguished the Bush Cuse on the grounds that the discrepancy between the expressed consideration of the original assignment and the amount of the bond and mortgage should have put the defendant on inquiry, and the difference between bonds and mortgages and shares of stock, the legal title to the latter being capable of transfer by assignment. It is evident, however, that the Bush Case was regarded with serious disfavor, although the opinion in it was pronounced by one of the ablest of Aunerican judges, the late Chief Justice DENIO,

Moore v. Metropolitan National Bank, 55 N. Y. 41; 8. C., 14 Am. Rep. 173, the other decision referred to in the principal case, was where a certificate of indebt. edness of the State of New York, issued by the New Capitol Commissioners, had been transferred by au assignment written thereoni, absolute in form, "for value received," but ou the secret condition that it was to be returned il not cashed in three weeks. The purchaser from the assignee was held to have ob

The Arctic Fire Insurance Company v. Austin.

tained valid title as against the owner, on the ground of estoppel, and the Buxto Case was overruled.

The distinction between the principal case and those above mentioned is not very clearly pointed out in the above opinion, and is not so easily grasped as the learned chief judge seems to take for granted, but it seems to us to be this: in the cases cited the plaintiff had appareutly sold a chose in action and appareutly clothed the assignee with the absolute title by an affirmative act of traus. fer; in the principal case the plaintiff had done nothing of this sort, but had simply executed an obligation, apparently for value but really without consideration, void as between herselt and the mortgagee, and to which the mortgågee could conter no greater title than he himself got, which was none at all. In the latter case there was no affirmative representation of owuership, and consequent right to convey or assign, which would estop the owner. In short, one is the case of an owner and vendor of a chattel; the other of an apparent debtor. The former is estopped from denying his apparent sale and transfer of title; the latter never is ostopped from deuying the existence of the apparent debt.

THE ARCTIC FIRE INSURANCE COMPANY V. AUSTIN.

(69 N. Y. 470.)

Lou by concurring negligence of towing company and owner of toro Rights of

croner of cargo.

The interpretation of a contract between a towing company and the master and owner of a boat to be towed, the relations of the parties, and their rela

tive rights and obligations are questions of law and not of fact. The captain of a steam tug, having a canal boat in tow at the risk of its master and owner, is not master of the canal boat, and has not such charge and control of the canal boat that its master and crew can be deemed for the trip the servants and agents of the owner of the tug, so as to make the latter chargeable with negligence of the master and crew of the canal

boat. Nor is the owner of the tug a common carrier and so liable for the negligence

of those in charge of the canal boat. Whore a canal boat in tow was sunk by collision with another tug owned by

the owner of the towing tug, held, that the owner of the cargo on the canal boat could not recover of the owner of the tug for the loss, it appearing that the omission to display proper lights on the canal boat contributed to

the 108s. The admiralty rule which assesses the damage equally upon two vessels, the negligen, management of which has occasioned loss or injury, has no application in common-law courts.

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