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N. Y. COURT OF APPEALS.

Wilmerding, applt., v. McKesson, impl'd, respt.

Decided Oct. 12, 1886.

If an executor is merely passive and simply does not obstruct the collection or receipt of assets by his associate, he is not liable for the latter's waste; but where he

knows and assents to such misapplication, or negligently suffers his co-executor to receive and waste the estate, when he has the means of preventing it by proper care, he becomes liable for a resultant loss.

The co-executor hypothecated securities for loans to himself and his firm. Held, That defendant was not liable for the waste thereby occasioned.

Where there was no wrongful intent on the part of the executor he is not liable for legal interest; but at most should be charged with interest at five per cent.

This action was brought to make defendants liable as executors and trustees, under the will of W., plaintiff's father, and as guardians of his minor children, and to recover from them for a loss alleged in their accounts to have occurred to plaintiff's share of the estate. It appeared that among other trusts created by the will of W.

Vol. 25-No. 1b.

was one for the benefit of plaintiff, which the will directed to be separately invested and the income thereof to be paid to her during her life. When the testator died, he was a member of the firm of W. & M. The business of said firm was continued by the surviving partners, one of whom, G., one of defendants here, was an executor under said will. G. had the custody and control of the securities belonging to the estate. Moneys realized in the course of the administration were paid to G.'s firm under his authority, and were used from time to time in the business of said firm, interest thereon being paid by it, and credited on the account books of the estate. This fact was known to defendant McK. The provision of the will directing a certain portion of the estate to be set apart for the benefit of plaintiff was not complied with. The firm failed and the money in their hands belonging to the estate was lost.

Stephen P. Nash, for applt. William Allen Butler, for respt. Held, That McK. was negligent in not keeping himself informed as to the contents of the firm books, and in allowing the balances to remain with the firm, and in allowing the moneys of the estate to accumulate in the hands of his co-executor and co-guardian. It was his duty to see that the amounts that were paid in were properly invested.

Where funds of an estate are received by one of the executors under circumstances creating a doubt in respect to their safety, a

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co-executor is not exonerated from the duty of vigilance in protecting them. If he is merely passive and simply does not obstruct the collection or receipt of assets by his associate, he is not liable for the latter's waste, but where he knows and assents to such misapplication, or negligently suffers his co-executor to receive and waste the estate, when he has the means of preventing it by proper care, he becomes liable for a resultant loss. 88 N. Y., 384.

It appeared that G. hypothecated securities belonging to the estate, for loans to himself or his firm.

Held, That his fraudulent acts in this respect constituted a spoli

Iation and waste of the funds of the estate for which McK. was not responsible.

An executor or trustee is not a guarantor for the safety of the securities committed to his charge, and does not warrant such safety under any and all circumstances and against all contingencies, accidents or misfortunes, 84 N. Y., 314; he is not liable unless it appears that he had knowledge or assented to the acts done or had notice which would excite his suspicion and put him on inquiry. Williams on Executors, 6 Am. Ed., 9; 7 J. C. H., 17; 53 N. Y., 483; 74 id., 539; 84 id., 314, 339; 88 id., 384; 10 Peters 532; 130 Mass., 481.

Interest was allowed on the losses with annual rests at six per cent.

Held, Error; that there being no wrongful intent on the part of

McK. he should not be made liable for the full amount with legal interest and should at most be charged only with interest at five per cent.

Judgment of General Term, affirming as modified judgment of Special Term for plaintiff, reversed, and judgment of Special Term modified, and as modified, affirmed.

Opinion by Miller, J. All con

cur.

ASSESSMENT.

N. Y. SUPREME COURT. GENERAL TERM. FIRST DEPT.

The Mutual Life Ins. Co. et al.,

applts., v. Russell Sage, respt.

Decided Oct. 15, 1886.

No personal liability for the payment of an assessment levied upon real property in the city of N. Y. for street improvements is incurred by the owner of the said property unless he is named in the assessment roll as the owner thereof; and, if said property is sold under foreclosure of a mortgage subject to which it was purchased by the person owning it at the time the assessment was levied, and is bought in by the mortgagee who pays the assessment out of the proceeds, thus causing a deficiency to arise, said mortgagee and the persons against whom the deficiency judgment was entered cannot recover the amount of the said assessment from the owner of the property at the time the assessment was levied.

Appeal from a judgment dismissing the complaint.

Defendant purchased certain property in the city of New York subject to a mortgage to plaintiff, The Mutual Life Ins. Co. While said property was owned by defendant an assessment for regulating the boulevard was levied upon

it, but defendant was not named as its owner in the assessment rolls. Subsequently the Mutual Life Ins. Co. foreclosedits mortgage upon the premises, and bought them in at the sale and paid off the assessment thereon out of the proceeds. The paying of this assessment caused a deficiency to arise upon the foreclosure, and a judgment was entered against the persons liable therefor under the bond to secure which the mortgage was given, and who thereupon joined with the Mutual Life Ins. Co. as plaintiffs in this action to recover the amount of said assessment from defendant Sage.

Julien T. Davies and Edwin Coffin, for applts.

That a party cannot obtain by voluntarily paying an assessment a greater right than the city itself had against the owner of the property assessed. That, therefore, when plaintiffs paid the amount of the assessment, they did no more than relieve the land of the lien of the assessment, ostensibly for their own benefit, and they could not create thereby a personal liability against defendant where none had before existed. That had the city itself possessed the right to pursue defendant personally for the collection of the tax, the case would have been essentially different.

Judgment affirmed.

Opinion by Macomber J.; Brady

D. T. Walden and A. J. Vander- and Daniels JJ., concur.

poel, for respt.

Held, That though the assessment was good and sufficient to bind the real estate, yet it created no personal liability which could be enforced against the owner. § 175, Chap. 86, Laws of 1813; Chap. 410, Laws of 1867; Chap. 326, Laws of 1840; 99 N. Y., 280; 8 Barb., 493; 44 How. Pr., 334; 23 N. Y. 285; 7 Hun, 373; 40 N. Y., 372; 48 id., 486; 78 id., 439.

That Chap. 86, Laws of 1813, does not give a right of action against the rightful owner by any person who shall have paid an assessment upon real property in the city of N. Y. when such assessment could not have been recovered from such owner personally by the city, for the statute does not contemplate that a personal liability of a party may be created by a voluntary act of another person alone.

PARTNERSHIP. CONSPIR

ACY.

N. Y. SUPREME COURT. GENERAL
TERM. FIRST DEPT.

James J. Nealis, recr.. applt., v.
Henry Adler et al., respts.

Decided Oct. 15, 1886.

While one member of a copartnership cannot make a general assignment of the firm property for the benefit of creditors with preferences in the absence of express or implied authority from the other, he can sell or transfer partnership property to satisfy or secure partnership indebtedness without the knowledge of his copartner, even though it may be intended thereby to appropriate the property of the firm to the payment of certain demands to the exclusion of the other creditors.

A judgment recovered by default against a copartnership upon service of the summons upon one partner only is not rendered fraudulent by reason of the fact

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When a copartnership is insolvent a contingent liability arising from an indorsement of the promissory notes of the firm is a sufficient consideration for the assignment of the collectable accounts due the firm to the indorser, although said liability has not yet matured. Great latitude as to the reception of evidence should be allowed in an action brought by a receiver of the property of a copartnership to set aside, as fraudulent, certain judgments recovered against the firm under suspicious circumstances, and if the judgment creditors and one of the copartners co-operated in procuring the recovery of said judgments, anything said by either of them tending to explain or characterize what they did, and any conversations between the partners in regard to the transactions culminating in the judgments sought to be set aside are admissible in evidence.

Appeal from judgment of Special Term dismissing complaint.

Plaintiff, as receiver of the copartnership property of the firm of A. & S., appointed in an action between said partners, brought this action to set aside, as fraudulent, certain judgments recovered against said firm and levies made under them, and an assignment of the collectable accounts due the firm.

It appeared that the judgments were recovered by default in favor of the son and brother-in-law of A. upon firm notes made by A., and that the summonses were served upon A, only, and the fact of such service was designedly kept a secret from S. It further It further appeared, however, that the notes were given for bona fide indebtednesses of the firm. The assign

ment of the collectable assets of the firm was made by A. to his brother-in-law in consideration of a contingent liability incurred by the latter in having indorsed the firm paper; and while it appeared that such liability had not matured at the date of the assignment, it also appeared that the firm was insolvent at that time.

S. was called as a witness in behalf of plaintiff, and was sought to be examined as to conversations had between himself and his partner in regard to the notes upon which the judgments were recovered, but much of his evidence was excluded by the court, as were also many questions asked the book-keeper of the firm in reference to directions given him by A. in regard to the transactions culminating in the judgments.

Samuel S. Thomas and A. Blumenstiel, for applts.

Stern & Myers, for respt.

Held, That it was not necessarily a fraud for one partner, without the knowledge of the other, to make and deliver these notes as long as they were given for bona fide partnership indebtednesses, even though it may have been thereby intended to appropriate the property of the firm to the payment of these demands to the exclusion of the other creditors; for while it is true that one partner is legally incapable of making a general assignment of the copartnership property preferring certain of the firm creditors over the others, a partner may create obligations binding on the firm and under which its property may

be taken and sold without the assent of his copartner, and he may, in like manner, sell or transfer partnership property to satisfy or secure a partnership indebtedness. 12 N. Y., 242; 25 id., 315.

only by circumstances, and however slight they may be, if they legally tend to prove the case, they should by received.

Judgment reversed and new trial ordered.

Opinion by Daniels, J.; Brady, J., concurs.

That while the contingent indebtedness to secure which the assignment of the collectable accounts of the firm had been made had not matured, it was still a legal consideration for the assignment of the accounts, as the firm was insolvent and it would, in the N. end, devolve upon the assignee to pay the obligations.

That the judgments were not made inoperative or unlawful by reason of their recovery on the service of the summons on A. and not on his partner, for the law has provided for that course of procoeding, and when it has been followed the execution may be levied upon the joint property, Code Civ. Pro., § 1932-35, and the designed omission to inform S. of the service of the summonses in and of itself had no such effect upon the judgments or executions as to prevent this appropriation of the firm property to their payment.

That portions of the evidence rejected should have been received, for as the parties co-operated in what they did, what was said by either to explain or characterize what they did, and the conversation between the partners when S. discovered the existence of the notes, etc, was admissible as proof. That great latitude is allowed in these investigations, and when an unlawful intent actuates the parties it can ordinarily be proven

PRACTICE. APPEAL.

Y. SUPREME COURT. GENERAL
TERM. SECOND DEPT.

John White, applt., v. James
Boice et al., respts.

Decided July, 1886.

The retention of a notice of argument which is not served the requisite number of days before the time appointed for the hearing, is not a waiver of a regular notice.

Appeal from order at Special Term refusing to vacate an order of General Term as "irregular and void," but opening the default of defendants as excusable.

The motion was made to set aside the order made at General Term upon the ground that there was no notice of argument given to defendants' attorneys. Notice of argument was served on them only four days before the term. The notice was retained by defendants' attorneys. On motion of plaintiff's attorney, defendants not appearing, an order was made at General Term reversing the judgment in favor of defendants.

The principal question presented by this appeal is whether or not defendants waived a regular notice

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