New York Law Review

Tag: 1880

  • 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.

  • 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.