New York Law Review

Author: The New York Law Review

  • Thomson v. Tracy, 80 N.Y. 153 (1880): Discretionary Nature of Writs of Prohibition

    Thomson v. Tracy, 80 N.Y. 153 (1880)

    The issuance of a writ of prohibition is not a matter of right but rests in the sound discretion of the court, and therefore, an order denying such a writ is not appealable to a higher court.

    Summary

    Thomson sought a writ of prohibition to prevent a surrogate court from adjudicating his equitable claims against an estate, arguing that these claims were already subject to a pending Supreme Court action. The Supreme Court denied the writ, and the General Term affirmed. The Court of Appeals held that because the issuance of a writ of prohibition is discretionary, the lower court’s decision was not appealable. The court emphasized that such writs are extraordinary remedies, reserved for cases of extreme necessity and not for grievances addressable through ordinary legal proceedings or appeals.

    Facts

    Thomson had equitable claims against the estate of Peter G. Fox, deceased, and had initiated an action in the Supreme Court during Fox’s lifetime. A judgment in Thomson’s favor was initially entered but later set aside because Fox had died before the findings were signed. The Surrogate of Montgomery County ordered the sale of Fox’s real estate to pay debts and directed creditors to submit their claims. Thomson filed papers with the surrogate, asserting that the surrogate lacked jurisdiction to adjudicate his claims because of the pending Supreme Court action and that the proceeds from the real estate sale were impressed with a trust for the payment of the judgments.

    Procedural History

    Thomson sought an alternative writ of prohibition in the Supreme Court to prevent the surrogate from adjudicating his claims. The Supreme Court denied the application for a peremptory writ. The General Term affirmed the denial. Thomson appealed to the New York Court of Appeals.

    Issue(s)

    Whether an order from the Supreme Court denying a writ of prohibition is appealable to the Court of Appeals.

    Holding

    No, because the issuance of a writ of prohibition is discretionary with the Supreme Court, and therefore its denial is not appealable.

    Court’s Reasoning

    The Court of Appeals emphasized that a writ of prohibition is an extraordinary remedy that should only be issued in cases of extreme necessity, not for grievances that can be addressed through ordinary legal proceedings or appeals. The Court stated that the issuance of the writ is “not demandable as matter of right, but of sound judicial discretion, to be granted or withheld, according to the circumstances of each particular case.” Citing Ex parte Braudlacht, 2 Hill, 367, the court reinforced that the Supreme Court has discretion to grant or deny the writ. Because the decision to grant or deny the writ is discretionary, the Court of Appeals held that the Supreme Court’s order refusing to grant it is not appealable. The court declined to address the merits of Thomson’s equitable claims or the surrogate’s jurisdiction, focusing solely on the non-appealable nature of the discretionary decision. The court also provided a historical overview of the use of writs of prohibition, detailing the historical conflict between the Courts of King’s Bench and the Courts of Admiralty.

  • Ray v. Sizer, 75 N.Y. 224 (1878): Indemnification for Partnership Debt After Dissolution

    Ray v. Sizer, 75 N.Y. 224 (1878)

    A partner who is compelled to pay a partnership debt after dissolution is entitled to indemnification from the remaining partners who continued to benefit from the underlying agreement that created the debt.

    Summary

    This case concerns a dispute over liability for royalties on steam gauges manufactured after a partnership dissolution. Ray, a former partner in Ray, Sizer & Marvin, sought indemnification from Sizer and Marvin for royalties he paid to Allen, based on a contract originally held by Ray & Sizer. The Court of Appeals held that while the partnership agreement didn’t automatically transfer the burden of the Allen contract, Ray, as a surety, was entitled to reimbursement from Ray & Marvin (the continuing partnership) because they used the Allen patent after he left the firm.

    Facts

    Ray & Sizer entered into a contract with Allen, granting them the exclusive right to manufacture steam gauges under Allen’s patent, with royalties payable to Allen. Ray, Sizer & Marvin later formed a partnership, with the agreement that the firm could use any inventions secured by the partners. Ray then sold his interest in the partnership (Buffalo Steam Gauge Company) to Sizer and Marvin, who agreed to assume all debts of the company. After Ray’s departure, Ray & Marvin continued to manufacture gauges. Allen then sued Ray & Sizer for unpaid royalties on gauges manufactured by Ray & Marvin, and Ray was compelled to pay.

    Procedural History

    Ray sued Sizer and Marvin to recover the amount he paid to Allen. The trial court granted a nonsuit against Ray. Ray appealed. The lower appellate court reversed the trial court, granting a new trial. This appeal was from that order.

    Issue(s)

    Whether Ray, having been compelled to pay royalties on gauges manufactured by Ray & Marvin after he left the partnership, is entitled to indemnification from Ray & Marvin, based on principles of equity rather than the assumption agreement.

    Holding

    Yes, because Ray, in effect, became a surety when Ray & Marvin continued to manufacture gauges under the Allen contract after he transferred his interest. They could not use the patent without also bearing the burden of paying the royalties associated with it.

    Court’s Reasoning

    The court found that the assumption agreement between Ray, Sizer, and Marvin did not automatically cover the contingent liabilities under the Allen contract. However, the court reasoned that when Ray transferred his interest in the partnership, including the right to manufacture under the Allen contract, to Ray & Marvin, he essentially became a surety for any royalties owed on gauges they manufactured. The court stated, “The new firm could not manufacture under the Allen contract, and cast upon Sizer the burden of paying the royalties.” Ray & Marvin acquired the right to use the patent and manufacture the gauges, they were obligated to pay the royalties. The court emphasized that the right to indemnity did not depend on Ray & Marvin making a profit. The court also noted that Ray & Marvin’s claim that they were manufacturing in hostility to the patent was irrelevant because the judgment in Allen’s suit against Ray & Sizer conclusively established that the gauges were manufactured under the patent. The court stated, “Having acquired the right to the use, by the purchase of the plaintiff’s interest, what they did, must be deemed to have been done in subordination to Allen’s rights, and not in hostility to them.”

  • Granger v. Crouch, 86 N.Y. 494 (1881): Priority of Mortgages Based on Intent and Equity

    Granger v. Crouch, 86 N.Y. 494 (1881)

    When determining the priority of mortgages with seemingly concurrent liens, courts will look to the intent of the parties and the equities of the situation, rather than applying a rigid rule based solely on maturity dates or order of assignment.

    Summary

    Granger purchased a mortgage from Craig, which was secured by the same property as a larger mortgage retained by Crouch. The mortgages were recorded concurrently, with no explicit agreement about priority. When Granger sought to foreclose, a dispute arose over which mortgage had priority. The court held that the mortgages were concurrent liens. The decision emphasized that priority should be determined based on the parties’ intentions and the equities of the situation, not merely on technical factors such as the maturity dates of the underlying notes.

    Facts

    Purdy purchased land from Craig and the Crouches, initially agreeing to pay with cash, a mortgage for $6,500, and other real estate. This was modified; instead of cash, Purdy issued two notes secured by a $3,200 mortgage. The $6,500 mortgage and the $3,200 mortgage were recorded at the same time. Purdy later sought an extension on the notes from Granger, offering a bonus and a collateral mortgage on other property. Granger checked the records, saw the concurrent mortgages, and agreed to purchase the notes and the $3,200 mortgage, taking an assignment. There was no agreement with Craig and Crouch about priority.

    Procedural History

    Granger, as the assignee of the $3,200 mortgage, sought to foreclose. The referee determined that the $3,200 mortgage had priority. The General Term affirmed the referee’s decision. The case was appealed to the New York Court of Appeals.

    Issue(s)

    Whether the $3,200 mortgage assigned to Granger had priority over the $6,500 mortgage retained by Crouch, given that both mortgages were recorded concurrently and there was no express agreement regarding priority.

    Holding

    No, because the intent of the parties, derived from the circumstances and the nature of the transaction, indicated that the mortgages were intended to be concurrent, with neither having priority over the other.

    Court’s Reasoning

    The court reasoned that the determination of priority between mortgages should be based on the intention of the parties and the equities of the situation. The court reviewed prior cases, noting that they were

  • Wiseman v. Lucksinger, 84 N.Y. 31 (1881): Enforceability of Parol Agreements for Easements

    Wiseman v. Lucksinger, 84 N.Y. 31 (1881)

    An easement, which is an interest in land, requires a written conveyance (deed) or a legally sufficient substitute like prescription; a mere parol agreement or license, even with consideration, is generally revocable and does not create a permanent easement.

    Summary

    Wiseman sued Lucksinger to enforce an easement for a drain running through Lucksinger’s property. Wiseman claimed he purchased the right for $7 and enjoyed it for over 25 years until Lucksinger blocked the drain due to nuisance issues caused by Wiseman’s alterations. The court found no written conveyance existed, only a lost receipt. The Court of Appeals held that the oral agreement, even with consideration, was a mere revocable license, not an enforceable easement. Wiseman’s use was permissive, not adverse, precluding a prescriptive easement claim. Equity will not enforce a parol agreement absent clear terms, acts of part performance unequivocally related to a permanent easement, and circumstances making reliance on the agreement reasonable. Therefore, Lucksinger was within his rights to revoke the license.

    Facts

    • Wiseman and Lucksinger owned adjoining lots in Syracuse.
    • Lucksinger built a drain across his and Stern’s land to the street sewer.
    • Wiseman paid Lucksinger $7 for the right to connect his drain to Lucksinger’s drain.
    • Wiseman connected his drain and used it for 25 years.
    • Wiseman replaced his plank sewer with a larger tile sewer which, combined with changes to his privy vault, caused waste to flow back into Lucksinger’s basement.
    • Lucksinger cut off the connection to stop the nuisance.
    • No deed or written agreement for the easement existed, only a lost receipt for the $7 payment.

    Procedural History

    Wiseman sued Lucksinger in equity court seeking to restore his drainage rights and restrain Lucksinger from interference. The trial court ruled in favor of Wiseman, declaring an easement and enjoining Lucksinger. The General Term affirmed. Lucksinger appealed to the New York Court of Appeals.

    Issue(s)

    1. Whether a parol agreement supported by consideration can create an enforceable easement allowing Wiseman to drain his property through Lucksinger’s land in perpetuity.
    2. Whether Wiseman acquired a prescriptive easement based on 25 years of usage.

    Holding

    1. No, because an easement requires a written conveyance or a legally sufficient substitute; the parol agreement created a revocable license, not an easement.
    2. No, because Wiseman’s use was permissive and not adverse; therefore, no prescriptive right was established.

    Court’s Reasoning

    The Court of Appeals reversed the lower courts, holding that the right to drain through Lucksinger’s land constituted an easement, which is an interest in land. The statute of frauds requires such interests to be created by a written conveyance. A parol agreement, even with consideration, constitutes a mere license, which is revocable at will. Citing Hewlins v. Shippam, the Court emphasized that an easement cannot be conferred except by deed.

    The court acknowledged that equity might enforce parol agreements in certain circumstances, but only where the contract is complete and sufficient, its terms are well-defined, and there are acts of part performance unequivocally related to the agreement. Here, the receipt was equivocal, and the circumstances did not suggest a permanent arrangement. The court noted the lack of specificity regarding the duration of the agreement and the heavy burden a perpetual easement would place on Lucksinger’s property.

    The Court distinguished the case from those where significant, permanent improvements were made in reliance on an agreement, creating an equitable estoppel. Wiseman’s temporary plank sewer was not a substantial enough improvement to justify equitable intervention.

    The Court also rejected Wiseman’s claim of a prescriptive easement because his use was permissive, not adverse. The initial agreement purchased permission for use. Quoting St. Vincent Orphan Asylum v. City of Troy, the court stated, “The occupation of a grantee of the fee is perhaps hostile to his grantor, but not so as to a licensee.” Permissive use cannot ripen into a prescriptive right.

    The court concluded that Lucksinger had merely exercised his legal rights and had not acted fraudulently. Therefore, the judgments were reversed, and a new trial was ordered.

  • Lacustrine Fertilizer Co. v. Lake Guano & Shell Fertilizer Co., 82 N.Y. 476 (1880): Recording Act and Constructive Severance of Land

    Lacustrine Fertilizer Co. v. Lake Guano & Shell Fertilizer Co., 82 N.Y. 476 (1880)

    An unrecorded conveyance of an interest in real estate, such as the right to remove marl, is void against a subsequent purchaser in good faith for valuable consideration, and the doctrine of constructive severance cannot be applied to defeat the rights of such purchasers under the recording act.

    Summary

    This case concerns a dispute over ownership of marl deposits. Torrey, the original landowner, excavated marl and deposited it on his land. He then sold the land to Spaulding, excepting the marl with a right to remove it within ten years. Torrey later conveyed the marl to Barnum, but this conveyance was unrecorded. Torrey reacquired the land and sold it to Evans, who had no actual notice of the Barnum conveyance. The court held that the unrecorded conveyance to Barnum was void against Evans, a subsequent good faith purchaser, and that the marl was real estate subject to the recording act, not personal property due to constructive severance.

    Facts

    Between 1851 and 1853, the State excavated marl from land owned by Torrey during canal construction. The marl was deposited on the banks of the cut. In 1865, Torrey conveyed the land to Spaulding, excepting the marl deposits with a ten-year right of removal. In 1866, Torrey conveyed the marl to Barnum. This conveyance was not recorded. Torrey reacquired the land in 1869 through foreclosure. In 1874, Torrey’s devisees conveyed the land to Evans. Evans had no actual notice of the conveyance to Barnum. The plaintiff, deriving title from Barnum, sued the defendant, who succeeded to Evans’s title, claiming ownership of the marl.

    Procedural History

    The Special Term dismissed the complaint, and this appeal followed to the Court of Appeals of New York. The Special Term originally dismissed the case arguing a legal action was needed to determine title before an equitable injunction could be issued. The Court of Appeals affirmed the judgment, though on different grounds, focusing on the application of the recording act.

    Issue(s)

    1. Whether the marl, after being excavated and deposited on the land, remained part of the real estate?
    2. Whether the conveyance of the marl from Torrey to Barnum was a conveyance of real estate within the meaning of the recording act?
    3. Whether Evans was a good faith purchaser for valuable consideration without notice of the prior unrecorded conveyance to Barnum?

    Holding

    1. Yes, the marl remained part of the real estate because it was incorporated into the soil and intended to remain permanently.
    2. Yes, the conveyance of the marl was a conveyance of an interest in real estate under the recording act because it involved the sale of a part of the soil.
    3. Yes, Evans was a good faith purchaser because he paid valuable consideration and had no constructive notice of Barnum’s unrecorded deed.

    Court’s Reasoning

    The court reasoned that the marl, once deposited on Torrey’s land, became part of the realty. The exception in Torrey’s deed to Spaulding was a reservation of an interest in the land, terminable after ten years. The subsequent conveyance to Barnum was a conveyance of an interest in real estate. Because the Barnum conveyance was unrecorded, it was void against Evans, a subsequent purchaser in good faith and for valuable consideration. The court rejected the argument that the marl became personal property through constructive severance, stating that such a theory would undermine the purpose of the recording act, which is to protect bona fide purchasers. The court emphasized that “the term ‘conveyance,’ as used in that act, ‘shall be construed to embrace every instrument in writing by which any estate or interest in real estate is created, aliened, mortgaged or assigned; or by which the title to any real estate may be affected in law or equity.’” They distinguished growing crops from standing timber or marl deposits, noting the latter are interests in land and subject to the recording act. The court also noted that Evans’s status as a good faith purchaser protected subsequent grantees, regardless of their knowledge of the unrecorded conveyance, citing Wood v. Chapin. The court also noted the trial court could have refused to hear the equitable action until the legal title was settled in a pending replevin action. The court noted: “We think it must be a general rule that the owner of land cannot, by agreement between himself and another, make that which in its nature is land, personal property, as against a subsequent purchaser for value, without notice, there having been no actual severance of the subject of the agreement, when the subsequent grant was made, and we are also of opinion that, in the case supposed, the doctrine of constructive severance cannot be applied to defeat the rights of subsequent purchasers under the recording act.”

  • Hun v. Cary, 82 N.Y. 65 (1880): Standard of Care for Bank Trustees

    Hun v. Cary, 82 N.Y. 65 (1880)

    Trustees of a savings bank must exercise ordinary care and prudence in managing the bank’s affairs, exhibiting the same degree of diligence and skill that men of common prudence exercise in their own affairs.

    Summary

    This case addresses the standard of care required of trustees of a savings bank. The Central Savings Bank failed, and the receiver sued the trustees, alleging misconduct led to the bank’s collapse. The court held that the trustees breached their duty by investing in an expensive lot and building when the bank was already in a precarious financial state. The court found the trustees liable because their actions demonstrated a lack of ordinary prudence and care, not just a mere error in judgment. They were to act with the same level of care as they would with their own finances.

    Facts

    The Central Savings Bank was incorporated in 1867. By 1873, the bank was substantially insolvent, with expenses exceeding income. Despite this, the trustees decided to purchase a lot and erect a new banking house. The trustees purchased a corner lot for $29,250 and obligated the bank to erect a five-story building at a cost of $27,000. At the time the receiver was appointed in 1875, the bank’s assets primarily consisted of this lot and building, which were later lost to foreclosure.

    Procedural History

    The bank’s receiver sued the trustees to recover damages for their alleged misconduct. The trial court found in favor of the receiver. The defendants appealed, arguing the case was improperly tried before a jury and that their discharges in bankruptcy were a valid defense. The General Term affirmed the trial court’s judgment. The Court of Appeals then reviewed the case.

    Issue(s)

    1. Whether the trustees of a savings bank are liable for losses resulting from investments made with a lack of ordinary prudence and care.
    2. Whether the action was properly tried before a jury.
    3. Whether the trustees’ discharges in bankruptcy constituted a valid defense to the action.

    Holding

    1. Yes, because trustees must exercise the same degree of care and prudence that men of common prudence exercise in their own affairs, and the trustees’ investment lacked such prudence.
    2. Yes, because the action sought a money judgment for damages caused by the trustees’ misfeasance, making it a proper action at law.
    3. No, because the claim was for unliquidated damages resulting from a tort, which was not provable in bankruptcy and therefore not discharged.

    Court’s Reasoning

    The court reasoned that trustees of a savings bank owe a duty to depositors to exercise ordinary care and prudence in managing the bank’s affairs. They are not held to the highest degree of care, nor can they get away with only “slight care”. The court stated, “When one deposits money in a savings bank…he expects, and has the right to expect, that the trustees or directors…will exercise ordinary care and prudence in the trusts committed to them—the same degree of care and prudence that men prompted by self-interest generally exercise in their own affairs.” Investing a substantial portion of the bank’s assets in a building project when the bank was already struggling financially was a breach of this duty. The court emphasized that it was not a mere error in judgment but a reckless act. Even though the trustees may have paid a fair price for the lot, they were still liable because the *purchase itself* was imprudent given the bank’s financial condition. The court also noted, “It is not legitimate for the trustees of such a bank to seek deposits at the expense of present depositors. It is their business to take deposits when offered. It was not proper for these trustees…to take the money then on deposit and invest it in a banking-house, merely for the purpose of drawing other deposits.” The court also held that a jury trial was proper because the action sought monetary damages for the trustees’ misconduct, which is a legal remedy. Finally, the court determined that the trustees’ bankruptcy discharges did not shield them from liability because the claims were based on tortious conduct and thus not dischargeable in bankruptcy.

  • Seiter v. Geiszler, 70 N.Y. 294 (1877): Usury Requires Intent by Borrower to Pay and Lender to Receive Illegal Interest

    Seiter v. Geiszler, 70 N.Y. 294 (1877)

    Usury requires a corrupt agreement where the borrower intends to pay, and the lender intends to receive, interest exceeding the legal rate; the mere fact that a lender extracts an unlawful premium without the borrower’s knowledge or consent does not establish usury.

    Summary

    This case addresses the essential elements of usury. Seiter loaned Geiszler money, ostensibly at a legal interest rate. However, Seiter charged Geiszler an additional “commission” through the attorney facilitating the loan, which Geiszler disputed. The court held that usury was not established because Geiszler did not intend to pay usurious interest, and Seiter’s extraction of the commission was without Geiszler’s agreement or knowledge. The critical element of a mutual agreement to violate the usury laws was absent, making the loan valid.

    Facts

    Geiszler owed Seiter $172.45 on two past-due notes. Seiter agreed to loan Geiszler $1,500, with the existing debt to be paid from the loan proceeds. At the loan closing, Geiszler received a statement showing the $172.45 debt, an attorney’s bill for $230.45 (including a $150 “commission for obtaining loan”), and a check for $1,097.10. Geiszler questioned the $150 commission, stating he did not expect to pay it. Seiter responded that it was “cheap enough.” The $150 was, in fact, retained by Seiter, not paid to the attorney.

    Procedural History

    The mortgagee, Seiter, brought the action against the mortgagor, Geiszler, to foreclose on the mortgage. The lower court likely found in favor of the mortgagee. Geiszler appealed the decision, arguing the mortgage was usurious. The New York Court of Appeals reviewed the case.

    Issue(s)

    Whether the loan was usurious when the lender charged and retained a “commission” that, if considered interest, would exceed the legal rate, but the borrower did not agree to pay it and protested the charge.

    Holding

    No, because there was no intent on the part of the borrower to pay usury, nor any expectation that the lender should receive usury. The essential element of a corrupt agreement to violate usury laws was missing.

    Court’s Reasoning

    The court emphasized that usury requires a specific intent and agreement by both parties: the borrower must intend to pay, and the lender must intend to receive, interest exceeding the legal rate. The court stated, “There was no intent on the part of Geiszler to pay usury; no expectation on his part that Seiter should have usury. And I am not able to perceive how, in the absence of such intent, there could have been an agreement or contract for it.” Because Geiszler protested the $150 commission and never agreed to it, Seiter’s actions were viewed as a potential fraud or unauthorized extraction of funds, but not usury. The court reasoned that “either the attorney, without right, or Seiter, by false pretense, has deprived the defendant Geiszler of the money due to him, but it was by virtue of no agreement, and so there can be no usury.” The court distinguished between waiving a tort and implying an agreement, stating that “from a fraud you cannot imply or import a term into a valid agreement, for the purpose of rendering that agreement void.” The remedy, if any, would be a claim by Geiszler for the unauthorized deduction, not a finding of usury invalidating the entire loan.

  • Codd v. Codd, 40 N.Y. 315 (1882): Adverse Possession Against Trustees Bars Beneficiaries

    40 N.Y. 315 (1882)

    Adverse possession against trustees holding legal title also bars the equitable claims of beneficiaries when the trustees fail to assert their rights within the statutory period.

    Summary

    This case addresses whether adverse possession against trustees bars the rights of the trust beneficiaries. Matthew and Martha Codd conveyed land to trustees to pay debts, manage the land for their benefit, and then hold it for their heirs. The defendant claimed title through adverse possession. The court held that because the trustees, who held legal title, were barred by adverse possession, the plaintiff (a beneficiary) was also barred. The court reasoned that the plaintiff’s rights derived from the trustees’ title, and their failure to protect the title bound the beneficiary.

    Facts

    Matthew and Martha Codd executed a deed on May 24, 1808, conveying land to Breese and Varick as trustees. The trusts included selling land to pay debts, managing the remaining land for the benefit of Matthew and Martha Codd, and holding the residue for their heirs. The deed reserved a power of appointment to the grantors. On March 26, 1842, someone under whom the defendant claimed entered into possession of the land under a claim of title based on a written instrument. The defendant and their predecessors continuously occupied the land for more than twenty years.

    Procedural History

    The trial court found for the defendant based on adverse possession. The General Term reversed, holding that the plaintiff’s right of entry did not accrue until 1871, so the statute of limitations had not run. The Court of Appeals reversed the General Term and affirmed the trial court’s judgment.

    Issue(s)

    Whether adverse possession against trustees, who hold legal title to property, also bars the rights of the beneficiaries of the trust.

    Holding

    Yes, because the beneficiaries’ rights are dependent on the trustees’ title, and adverse possession that bars the trustees also bars the beneficiaries.

    Court’s Reasoning

    The court reasoned that the trustees were granted a fee simple interest in the land, with the power to sell and lease the property. This required them to hold the title. The trust deed gave the trustees all legal and equitable rights. Because the trustees had neglected to assert their title, the defendant had acquired a good title by adverse possession against them. The plaintiff’s estate was equitable, and her rights derived from the trustees’ legal title. Because the trustees were barred by adverse possession, the plaintiff was also barred. The court emphasized that the plaintiff’s rights were no greater than the trustees’. The court stated, “Whatever way it was conveyed to her, by the trustees themselves or by force of the statute, she took subject to the acts of the trustees and became bound and affected by their affirmative acts, and by their neglects.” The court explicitly rejects the idea that the plaintiff took a vested legal remainder that was not affected by the trustee’s actions. To allow the beneficiary to recover where the trustees could not would undermine the purpose of having a trust and incentivize beneficiaries to delay asserting their rights while the trustees’ position deteriorated. The Court stated that “if cestui que trust and trustee are both out of possession for the time limited, the party in possession has a good bar against both.”

  • Arnold v. Pacific Mut. Ins. Co., 78 N.Y. 7 (1879): Permissible Delay Under a Marine Insurance Policy ‘Via’ a Port for Orders

    78 N.Y. 7 (1879)

    Under a marine insurance policy allowing a vessel to stop at an intermediate port ‘via’ for orders, the insured is entitled to a reasonable time to determine the best port for discharge based on market conditions, and such a delay, if incurred in good faith, does not constitute a deviation that voids the policy.

    Summary

    Arnold v. Pacific Mutual Insurance Co. concerns a dispute over a marine insurance policy for a shipment of coffee. The policy allowed the vessel to stop at Hampton Roads for orders. The vessel arrived at Hampton Roads, and the plaintiffs delayed ordering the vessel to its final port for 18 days while attempting to secure a favorable sale. The insurer argued this delay was an impermissible deviation from the insured voyage. The New York Court of Appeals held that the delay was reasonable under the circumstances, as the plaintiffs were entitled to a reasonable time to assess market conditions at the potential discharge ports to secure the best possible sale of their cargo. This case clarifies the scope of permissible delays under “via for orders” clauses in marine insurance policies.

    Facts

    The plaintiffs, B.G. Arnold & Co., insured one-sixth of their goods with the defendant, Pacific Mutual Insurance Co., under an open marine insurance policy. The policy covered goods shipped from Santos, Brazil, to New York, Baltimore, or Boston, ‘via’ Hampton Roads for orders. A shipment of coffee was made on the barque “Eliza and Maria.” The vessel’s charter-party specified a voyage to one of those three ports ‘via’ Hampton Roads for orders. The plaintiffs reported the risk to the defendant, but mistakenly omitted the “via Hampton Roads” provision. The vessel arrived safely at Hampton Roads on August 25th. The captain telegraphed the plaintiffs in New York. Plaintiffs delayed giving final port orders for eighteen days, hoping for a better market price for their coffee. The vessel was sunk by a steamer on September 13th while still at anchor in Hampton Roads, resulting in a total loss of the cargo.

    Procedural History

    The plaintiffs sued the defendant to recover the insurance for the lost coffee cargo. The lower court ruled in favor of the plaintiffs. The defendant appealed to the New York Court of Appeals, arguing that the plaintiffs’ mistaken reporting of the risk and the extended delay at Hampton Roads constituted breaches of the insurance policy.

    Issue(s)

    1. Whether the plaintiffs’ mistaken declaration of the risk, omitting the ‘via’ Hampton Roads provision, invalidated the insurance coverage, given that the insurer suffered no damage from the mistake?
    2. Whether the plaintiffs’ eighteen-day delay at Hampton Roads, while awaiting favorable market conditions before ordering the vessel to its final port, constituted an unreasonable deviation from the insured voyage, thus voiding the policy?

    Holding

    1. No, because under an open marine insurance policy, a mistaken declaration of the risk can be corrected after the loss, absent any damage to the insurer resulting from the mistake.
    2. No, because the ‘via’ Hampton Roads clause in the policy implied a reasonable time for the plaintiffs to assess market conditions and choose the most advantageous port for discharge, and the eighteen-day delay was not unreasonable under the circumstances.

    Court’s Reasoning

    The court reasoned that the mistaken reporting of the risk did not invalidate the policy, as the policy was an open one intended to cover all shipments made under the specified conditions. The court emphasized that “even if by mistake an erroneous declaration be made, it may be corrected even after the loss,” citing precedent (Robinson v. Touray). The court found no evidence that the insurance company was harmed by the mistake.

    Regarding the delay at Hampton Roads, the court emphasized the purpose of the “via Hampton Roads for orders” clause: to allow the plaintiffs to select the port with the most favorable market conditions. The court cited cases involving similar phrases (“to call,” “to touch”) and noted that a reasonable delay for a purpose connected with the voyage is permissible. The court stated that the plaintiffs were entitled to a reasonable time, after the arrival of the vessel at Hampton Roads, to find a purchaser for the coffee at either of the ports specified.

    The court acknowledged the general rule that unreasonable delay constitutes a deviation, but it clarified that only “an unreasonable or unexcused delay, that is a voluntary and unnecessary waste of time” would amount to a deviation. Because the plaintiffs were actively trying to sell the coffee in a temporarily depressed market, the delay was deemed reasonable. The court referenced Columbian Ins. Co. v. Catlett, noting that what constitutes a deviation depends on the nature of the voyage and the usage of trade.

    Chief Judge Church and Judge Folger dissented, arguing that the

  • Matter of Will of Emma G. Simpson, 56 How. Pr. 125 (N.Y. Ct. App. 1878): Codicil Republishes Will Revoked by Marriage

    56 How. Pr. 125 (N.Y. Ct. App. 1878)

    A properly executed codicil republishes a will revoked by the testator’s subsequent marriage, effectively reinstating the will’s provisions as of the codicil’s execution date.

    Summary

    This case concerns the validity of a will executed by an unmarried woman, subsequently revoked by her marriage, and then purportedly revived by a codicil executed after the marriage. The court held that the codicil, which expressly referred to and reaffirmed the will, effectively republished the will, making it valid despite the intervening marriage. The court reasoned that a codicil, when properly executed, incorporates the will it references, and the act of publishing the codicil serves to republish the will itself.

    Facts

    Emma G. Simpson (formerly Emma G. Clark), an unmarried woman, executed a will in 1873. Subsequently, she married, which, under the law at the time, revoked her will. After her marriage, she executed a codicil in 1876. This codicil specifically referred to her prior will by date and witnesses and declared her intention to republish, reaffirm, and adopt the will as modified by the codicil as her present will. The original will was present during the codicil’s execution and identified by one of the witnesses.

    Procedural History

    The Surrogate’s Court initially concluded that the will was revoked by the subsequent marriage of the testatrix. The General Term reversed the decree of the surrogate and remitted the proceedings to him with directions to admit the will to probate. This appeal followed.

    Issue(s)

    Whether a will, revoked by the subsequent marriage of the testatrix, is revived and republished by a codicil that refers to the will and expresses the testatrix’s intention to reaffirm it, where the codicil is executed with the formalities required by statute.

    Holding

    Yes, because a properly executed codicil operates as a republication of the will to which it refers, thereby validating the will despite its prior revocation by marriage.

    Court’s Reasoning

    The court relied on the well-established doctrine that a codicil, when executed with the statutory formalities for wills, republishes the underlying will, except as modified by the codicil itself. The court stated, “The general doctrine is well settled that a codicil executed with the formalities required by statute for the execution of wills, operates as a republication of a will so far as it is not changed by the codicil.” The court noted that this principle had significant consequences, particularly concerning after-acquired property. By republishing the will, the codicil makes the will speak as of the date of the codicil, extending the will’s reach to property acquired after the original will’s execution but before the codicil. The court emphasized that the codicil expressly referred to the will, identified it, and declared the testatrix’s intent to reaffirm it, leaving no doubt that the codicil was intended to revive the will. The court also cited authorities supporting the proposition that a testamentary document may be incorporated into a will by reference if the will clearly identifies the document. “I am of opinion that the publication of the codicil was a publication of the will, and that both papers together are to be considered as the will of the testatrix.”