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for murder in the first degree, the trial judge tion, but whose line of ancestry may somecharged as follows: "The fact, if proved, where betinged with insanity. The law that the mother and uncle of the defendant should not permit, and we are quite clear were insane is no evidence of the insanity that it does not permit, any judicial tribunal of the defendant; and without other proof to infer that a man is insane simply and sole tending to prove that the defendant was in ly because some of his ancestors have been so. sane at the time he did the act it must be The judgment under review should be afdisregarded by the jury. The law does not pre firmed, with costs. sume the son insane because the mother was, nor because other relations were, and from such CULLEN, C. J., and O'BRIEN, HAIGHT, facts alone you cannot find insanity in the de VANN, WERNER, and HISCOCK, JJ., confendant.” On a review of the conviction the cur. Supreme Court of Indiana held that these instructions in regard to hereditary insanity Judgment affirmed. were not open to any valid objection. Bradley v. State, 31 Ind. 492. So upon a trial for manslaughter in Arkansas, evidence was

(185 N. Y. 368) held to be competent tending to show that HATHAWAY et al. v. DELAWARE insanity had existed in the family of the

COUNTY. defendant for some time—first in the grand (Court of Appeals of New York. June 12, 1906.) mother and great uncle and great aunt, and 1. APPEAL-APPEAL FROM JUDGMENT-FINDthen temporarily in the mother. The court INGS OF FACT-CoxCLUSIVENESS. declared, however, that this testimony was

On an appeal solely from the judgment,

the Appellate Division has no power to disturb not admissible until some evidence had been

the findings of fact of the lower court. adduced indicating that the defendant had

2. PAYMENT-RECOVERY-MISTAKE OF FACT. shown signs of her own insanity, saying that Money paid under a mistake of fact may evidence of hereditary insanity is only ad be recovered back, though the party making missible as cumulative evidence-as corrobo

the payment was negligent in making the mis

take, unless the payment has caused such a rative of the other. Green v. State, 64 Ark.

change in the position of the other party that 523, 530, 43 S. W. 973. In Berry v. Safe it would be unjust to require him to refund. Deposit & Trust Co., 96 Md. 45, 65, 53 Atl. [Ed. Note.For cases in point, see vol. 39, 720, 727, one of the issues related to the com

Cent. Dig. Payment, $$ 272–281.] petency of a testator, and the plaintiff sought

3. SAME. to show by the testimony of his niece that

A defaulting ex-county treasurer, who dur

ing his term of office had borrowed money from other members of the family had been af

plaintiff on obligations supposed to have been fected with mental derangement. This evi given by the county, presented to plaintiff a dence was excluded upon objection by the de

forged note purporting to be signed in behalf fendant and the ruling was sustained upon

of the county by the treasurer then in office,

and received for the note plaintiff's check to appeal, the court saying: “It is competent the order of the treasurer, which check was to prove that insanity exists or existed in turned over to the treasurer in settlement of the family of the person whose sanity is

the ex-treasurer's defalcations. Held that, as

the check showed on its face that the money was under investigation, but this can only be done

being paid to the county by plaintiff, and not after a foundation has been laid by an offer by the ex-treasurer, the county was liable, on of some direct proof of insanity in the person discovery of the forgery, to refund to plainwhose mental condition is in issue. It is only

tiff the amount of the check.

[Ed. Note. For cases in point, see vol. 39, cumulative evidence, and unless the founda

Cent. Dig. Payment, $8 272–281.] tion above indicated has been laid it is not admissible. Of itself and standing alone, it

Appeal from Supreme Court, Appellate proves nothing. No foundation was laid for

Division, Third Department. its introduction, and therefore the evidence of

Action by Charles Hathaway and others collateral insanity was properly excluded.”

against the county of Delaware. From a The principle which runs through all these

judgment of the Appellate Division (93 N. Y. cases, and others which might be cited to the

Supp. 436, 103 App. Div. 179), affirming a same effect, is that mental derangement is

judgment dismissing the complaint as to the not to be inferred in the absence of some

first cause of action, but reversing a judgment manifestation of its existence in the person

for plaintiff on the second cause of action, whose capacity is under investigation; so that

plaintiffs appeal. Judgment as to the first while proof of hereditary tendency may add

cause of action affirmed, and as to the second to the weight which might be given to per

cuse of action reversed and remanded. sonal manifestations of insanity, it will not A. B. Cruikshank, for appellants. Chas. . suffice of itself to establish that any mental L. Andrus and Edwin D. Wagner, for redisorder exists. See Snow v. Benton, 28 Ill. spondent. 307; Baxter v. Abbott, 7 Gray, 71. The rule of evidence to be deduced from the cases CULLEN, C. J. As to the first cause of ac

, which have been cited is well founded in rea tion we content ourselves with stating our son, and calculated to prevent baseless and concurrence in the view of the Appellate speculative inferences adverse to those whose Division and of the Trial Term, that the personal conduct discloses no irrational ac plaintiffs failed to establish that the money

which they sought to recover was appropriat the other party that it would be uned to the discharge of valid obligations of just to require him to refund” (Nat. Bank the defendant, and that, therefore, as to this of Commerce v. Nat. Mechanics' Banking cause of action the judgment below should Ass'n, 55 N. Y. 211, 14 Am. Rep. 232) and if be affirmed. For the facts relating to this circumstances exist which make such recoy. claim see report of the case in 103 App. Div. ery inequitable, the burden of proving that 179, 93 N. Y. Supp. 436.

fact rests upon the party resisting the payAs to the second cause of action we think ment. (Mayer v. Mayor, etc., of N. Y., that the decision of the Trial Term was cor Y. 455; Phetteplace v. Bucklin, 18 R. I. 297, rect and the action of the Appellate Division 27 Atl. 211). That the plaintiffs paid their in reversing the judgment awarded by the money under a mistake of fact, to wit, that Trial Term was erroneous. The facts on

they had received a genuine obligation of the which this claim was founded are as follows: defendant, is unquestioned. It does not apPrior to January 1, 1900, one Woodruff was

pear that the defendant's claim against the county treasurer of Delaware county

Woodruff or his sureties has been in any the respondent in this action—and was a de manner jeopardized or impaired. On final faulter in his trust. On that day he was

analysis the transaction is simply this: The succeeded as county treasurer by Hugh Adair. plaintiffs paid money to the defendant as a About May 1, 1900, Adair discovered that

loan. The defendant received it as a payWoodruff was indebted to the county, and

ment on the debt of Woodruff. Though the demanded payment of the debt. Thereupon

fault or misfortune which led to this mistake Woodruff presented to the plaintiffs what pur

was the plaintiffs,' in failing to discover the ported to be a note of the county of Delaware forgery, that no more than negligence can and to be executed by Hugh Adair, its treas

bar their right to recover, unless by that urer, under authority of the board of super- payment the situation of the defendant has visors, for the sum of $5,000 and interest,

been altered to its detriment. Generally in payable February 1, 1901. The signature of

actions of this kind the mistake under which Adair to this note was forged by Woodruff.

money is paid is a mutual one as to the exisWoodruff had dealt with the plaintiffs during

tence or nonexistence of a fact which justifies his incumbency of the office of county treas

or requires the payment. It is not essential, urer, and had borrowed for the county, on however, that the mistake should be of that what either were or were assumed to be its

character. The case at bar is on all fours obligations, several sums of money. On the

with that of Mayer v. Mayor, etc., of N. Y., presentation of the forged note referred to

supra. In that case the plaintiff paid the Woodruff represented that he was obtaining city of New York an assessment for a local the loan for the county. The plaintiffs there

improvement upon an adjoining lot instead of upon drew their check to the “order of Hugh

the assessment on his own. The fault or Adair, county treasurer of Delaware County,” | negligence by which the payment was made and delivered it to Woodruff for transmission

on the wrong lot was the plaintiff's, yet it to the county treasurer. Woodruff turned

was held that he was entitled to recover back the check over to Adair on account of his the money so paid, it not appearing that by personal indebtedness and it was received by

the payment the city had lost its lien upon

the lot, the assessment of which had been ignorant of the means by which Woodruff

paid. Judge Andrews said: “The city rehad obtained it. The money was collected

ceived the money upon a lawful demand, but and went into the treasury of Delaware

from a person who was not legally liable to county. The plaintiffs on discovering the

pay it, and we do not find that the circumforgery demanded the return of the money,

stance that money paid by mistake is rewhich, being refused, they instituted this ac

ceived upon a valid claim in favor of the tion. On the trial neither party asked for

recipient against a third person prevents a the submission of any question to the jury,

recovery back, provided the claim against and if the evidence presented any question of

the party who ought to pay it is not thereby fact that question must be considered as de extinguished or its collection prevented.” cided by the court in favor of the plaintiff, a

The case is decisive of the one before us, finding which it was not within the power of

unless under the facts some other rule conthe Appellate Division to disturb, for the flicting with or modifying the general rule is appeal to that court was solely from the applicable to this case. judgment. Alden v. Knights of Maccabees, The learned judge who wrote for the Ap178 N. Y. 535, 71 N. E. 104.

pellate Division recognized the principle that Plaintiffs sought to recover this money as money paid under a mistake of fact may be paid under a mistake of fact. The rule as to recovered back, and would have upheld the such payments is thoroughly settled in this judgment for the plaintiffs had he not deemed state. "Money paid under a mistake of fact the case controlled by the decision of this may be recovered back, however negligent court in Goshen Nat. Bank v. State, 141 N. the party paying may have been in mak Y. 379, 36 N. E. 316. That case and the ing the mistake, unless the payment has earlier decisions on which it is founded caused such a change in the position of (Justh v. Nat. Bank of Commonwealth, 56

Adair as a payment on that account, he being th

N. Y. 478; Stephens v. Bd. of Education of Brooklyn, 79 N. Y. 183, 35 Am. Rep. 511; Southwick v. First Nat. Bank, 84 N. Y. 420) proceed on the primary proposition that “money has no earmarks” and that the possession of money vests the title in the holder as to third persons dealing with him and receiving it in good faith in the due course of business, and upon the secondary principle that where money is transferred by checks the same rule obtains as where payment is made in coin or bills. In the Justh Case a person had obtained a loan from the plaintiff on altered and forged bonds. The money was advanced by a check to the order of the borrower, who deposited it in the defendant bank. Thereafter by a check on his deposit the forger paid the defendant a loan which he had obtained from it. In the Stephens Case one Gill obtained from the plaintiff money on a forged mortgage and the check was deposited in Gill's bank and collected. Thereafter Gill paid the defendant a debt he owed it by a check on his own bank. It was held that the plaintiffs could not recover, but it is to be observed that in each case the plaintiff intended to give the money to the borrower, that the check was given for the purpose of paying the borrower, and when deposited and collected it was the same as if payment had been made in the first instance in money. The same is true of the checks given by the borrowers to their creditors. When the money was collected thereon it was the same as if the original payments had been made in money. There was not in any respect a diversion of the checks. Each served the exact purpose for which it was drawn. The latest case in this court is Nassau Bank v. Nat. Bank of Newburgh, 159 N. Y. 456, 54 N. E. 66, and is of a similar character. The crucial distinction between those cases and the present one lies here. There was an earmark on the money which the defendant received and the plaintiffs' check was diverted in that, while it was given as a loan to defendant, it was used to pay Woodruffs' debt. Had the plaintiffs given Woodruff money and the defendant received it in good faith without knowledge how it was obtained, doubtless the plaintiffs could not recover. I assume that if they had given a check to Woodruff's order the money could not be reclaimed after payment even if plaintiffs could have successfully resisted an action brought on the check. Southwick v. First Nat. Bank, supra, opinion pages 434, 435. But that is not the present case. The check was drawn by the plaintiffs to the order of the defendant. It imported on its face that the money represented by it was the property of the plaintiffs, and that they, not Woodruff, were paying it to the defendant. Sims v. U. S. Trust Co., 103 N. Y. 472, 9 N. E. 605; Bristol Knife Co. v. Nat. Bank of Hartford, 41 Conn. 421, 19 Am. Rep. 517. Woodruff had no apparent title to the check.

He was merely the agent of the plaintiffs for the purpose of delivering it to the defendant. It is not necessary to consider the ostensible or apparent authority of Woodruff as to the directions he might give the defendant for the disposition of the proceeds. That question was a vital one in the Sims and the Knife Co. Cases, because in each case the defendant had not only collected the checks, but on the faith of the instructions received from the agent, disposed of the proceeds. In those cases the defendants were held liable notwithstanding the payment of the money in good faith. The decisions proceeded on the circumstances of the case and the character of the business. Nor is it necessary to consider whether the rule that one who holds money or property as agent, trustee, executor, administrator, guardian or partner has no apparent authority to dispose of it in payment of his own debt (Gerard v. Mc.Cormick, 130 N. Y. 261, 29 N. E. 115, 14 L. R. A. 234; Rochester & C. T. R. Co. v. Pavi. our, 164 N. Y. 281, 58 N. E. 114, 52 L. R. A. 790) applies to one instrusted with a check for delivery to another. These questions would be important had the defendant parted with anything on the faith of the check. The Sims Case and the Knife Co. Case are cited as authority (if authority be necessary) for the single proposition that the defendant was chargeable with knowledge that the moneys to be transferred by the check were the moneys of the plaintiffs. Therefore, we have in this case a payment not made by Woodruff, but made by the plaintiffs, and as to which the ordinary rule that money paid by mistake may be recovered applies.

To return to the case of the Goshen Nat. Bank, supra. There the cashier of the plaintiff was also the county treasurer of Orange county. He paid the comptroller the state taxes by a check drawn by him as cashier of the plaintiff upon the Importers' & Traders' Bank of New York City. It was within the power and a part of the duty of the cashier to issue such checks to customers who might pay the bank therefor. But in the instance of the payment to the comptroller the issue of the check was simply an embezzlement of the funds of the bank. The bank sought to reclaim these funds, and in answer to that claim this court held, first, that there was no diversion of the check, because it was issued for the very purpose of paying the comptroller the state taxes; and, second, that by reason of the peculiar character of cashier's checks and their general use in the commercial world they were to be regarded substantially as the money which they represented. It was there said by Judge Peckham: “When the comptroller received this draft he had the right, in the absence of any other notice than its form, to regard it as the property of the cashier, regularly in his possession and proper to be used in payment of the taxes due at that time.” This presump

tion cannot be extended to the case of ordinary checks of the depositor drawn on his bank. On the contrary, if in this case the money belonged to Woodruff and not to the plaintiffs, the presumption is that the check would have been drawn to Woodruff's order and not to that of the defendant. Possession of a bill or note unindorsed by the payee is not of itself evidence of title. It may have been acquired by fraud or theft. Daniel on Neg. Instruments, $ 574.

The judgment appealed from, so far as it affirmed the judgment of the trial court dismissing the first cause of action should be affirmed, but so far as it reversed the judgment for the plaintiffs on the second cause of action should be reversed and such part of the judgment of the trial court reinstated ; neither party to recover costs in the Appellate Division or in this court.

O'BRIEN, HAIGHT, VANN, WERNER, WILLARD BARTLETT, and HISCOCK, JJ., concur.

Judgment accordingly.

(185 N. Y. 420)

VOHMANN et al. V. MICHEL et al. (Court of Appeals of New York. June 12, 1906.) TRUSTS Co-TRUSTEES – SATISFACTION

OF MORTGAGE - EMBEZZLEMENT RELEASE BY CESTUIS QUE TRUST-ESTOPPEL.

Plaintiffs, who were trustees of an estate, after discovering that their co-trustee had embezzled the funds of the estate and satisfied a mortgage executed by defendant on receiving the amount due thereon before the mortgage matured by delivering a forged satisfaction, permitted such co-trustee to abscond without notifying defendant, and later two of the four cestuis que trust, who were of age, the others being infants, executed to plaintiffs a release of all liability by reason of such embezzlement. Held, that plaintiffs and the releasing cestuis que trust were thereby estopped to demand a vacation of the satisfaction and a foreclosure of the mortgage, and that the trustees were only entitled to such relief to the excent of the interest of the infant cestuis que trust in the mortgage indebtedness.

Appeal from Supreme Court, Appellate Division, Second Department.

Action by Carl Vohmann and others, as trustee under the will of Louise Pommer, deceased, against John Michel and others. From a judgment of the Appellate Division (96 N. Y. Supp. 309, 109 App. Div. 659), reversing in part the judgment of the Special Term dismissing the complaint, defendants appeal. Modified and affirmed.

This action was brought to compel the reinstatement, as valid liens, of two mortgages executed by the defendant Michel, which were procured to be satisfied of record by means of forged and fraudulent satisfaction pieces, executed by and at the instance of the defendant Carl Coenan, and to foreclose such mortgages. The defendant Coenan and the plaintiffs Mecke and Vohmann were the executors and trustees nam.

ed in the will of Louise Pommer, deceased, who died on Staten Island on March 12, 1897. By her will she devised her residuary estate to her executors and trustees in trust, to keep the same invested and pay the income to her four children until they should respectively become 25 years of age, when each was to receive an equal share of such residuary estate. The executors and trustees duly qualified and entered upon their duties. On or about February 15, 1899, the executors and trustees acting through one Cossmann, a real estate agent, loaned to the defendant Michel the sum of $6,500 of the funds of the estate, and as security therefor took back a mortgage made to such trustees individually, due February 15, 1902. Before this mortgage became due, and in November, 1900, Coenan prepared a satisfaction piece of this mortgage, signed his name to it, forged the signature of Vohmann thereto, and procured the signature of Mecke by false and fraudulent

fraudulent statements. Then Cossmann, who was a notary public, and who appears to have abetted Coenan in his dishonesty, executed an acknowledgment of the signatures of Mecke and Vohmann to the false satisfaction piece. At Coenan's request Cossmann procured the defendant Mi to pay the $6,500 loaned to him on the mortgage, although it was not then due. The money thus paid was turned over to Coenan, who used it for his own purposes. The defendant Michel paid this money in good faith to Cossmann, with whom he had dealt in the transaction and was guilty of no negligence in the matter. The defendant Horrmann loaned to Michel the money to pay off this mortgage, believing that the satisfaction piece had been legally executed in good faith, and took from Michel a mortgage on the same property to secure his loan. The full amount of Horrmann's loan to Michel was $8,000. Shortly after the execution of this first mortgage to the trustees by Michel, a second loan of $500 was made by the trustees to him, and he gave a second mortgage, which was paid off and discharged at the same time and in the same way as the first mortgage, the only difference being that the second mortgage was due at the time it was paid by Michel. The courts below have held that this payment of the second mortgage is good as against the estate, and there is no question as to its validity upon this appeal. Coenan's two cotrustees, Vohmann and Mecke, spent most of their time out of this state, and only visited Staten Island at infrequent intervals. They intrusted to Coenan the possession of all the securities of their trust and practically the entire management of the trust estate. They did not discover Coenan's honesty or his fraudulent discharge of the mortgage referred to until about September 20, 1901, about a year after the money had been stolen. When the discovery was made they informed Frank and Hermann Pom

mer, two of the children of Louise Pommer, deceased, and beneficiaries of the trust, of Coenan's dishonesty. At this time Hermann was about 23 years of age and Frank about 25. The other two children were infants.. It appears that Coenan had married an adopted daughter of Louise Pommer, and the children referred to him as "uncle." The defendant Michel, however, was not informed of the true state of affairs.

In order to shield Coenan from prosecution, Frank and Hermann Pommer executed releases to Vohmann and Mecke, from any liability to them for losses occasioned by Coenan's dishonesty, and on October 3, 1901, they gave Coenan a receipt for their distributive shares of the trust estate. They permitted him to resign his trust on October 4, 1901, and consented to his leaving the country. Frank Pommer was appointed executor and trustee in his place, and is one of the plaintiffs in this action together with Vohmann and Mecke, the other two executors and trustees. This action was commenced in February, 1903, over two years after the execution of the fraudulent satisfaction pieces, and more than one year after the discovery of the dishonesty of Coenan. The first cause of action relates to the first mortgage for $6,500, and the second to the $500. The Special Term dismissed the complaint on the ground that the plaintiffs were estopped from claiming that the mortgages were not properly satisfied of record. Upon appeal to the Appellate Division the dismissal of the first cause of action was reversed, and a new trial granted as to that; but the judgment as to the second cause of action was affirmed, and is not now questioned.

J. Culbert Palmer, for appellants. Frederic W. Hinrichs, for respondents.

they represent. Ludington V. Mercantile Nat. Bank, 102 App. Div. 251, 92 N. Y. Supp. 454; affirmed on opinion below. 182 N. Y. 522, 74 N. E. 1119.

If this were all that is shown by the record before us, we should be compelled, notwithstanding the obvious hardships of the case, to concur in the conclusion reached by the learned Appellate Division. It appears, however, that at the time of the discovery of Coenan's dishonesty two of the beneficiaries of the trust estate were adults. Hermann Pommer was then about 23 years of age, and Frank C. Pommer was about 25. They were at that time fully informed of Coenan's misdeeds, and that his fraud and defalcation had entailed upon the estate a loss of about $21,000. With full knowledge of these facts they released the two trustees, Vohmann and Mecke, from all liability on account of Coenan's default, and gave to Coenan himself receipts for their distributive shares in the estate. They concurred with the two trustees in permitting Coenan to resign his trust without calling him to account, and consented to his leaving the country without making any attempt to compel restitution. They voluntarily released Vohmann and Mecke from all liability, although it was through their neglect of the duties of their trust that Coenan was afforded, to some extent at least, the opportunity to perpetrate his frauds, and in effect connived at Coenan's unmolested escape from prosecution. After having released all the guilty parties and acquiesced in all that had been done from the discovery of the irregularities in September, 1901, until the bringing of this action in February, 1903, they now seek to compel Michel, the innocent mortgagor, to bear the full burden of Coenan's wrongdoing in respect of this mortgage, although the mortgagor was not notified or given any opportunity to protect himself We think it would be highly inequitable to permit the plaintiffs at this late day to disregard and disaffirm all that has been done by the two adult cestuis que trust, and to proceed against these defendants in the same manner as they could have done if they had not formally acquiesced in Coenan's default. "Where the cestui que trust has assented to or concurred in the breach of trust, or has subsequently acquiesced in it, he cannot afterwards proceed against those who would otherwise be liable

WERNER, J. (after stating the facts). The appellants in this court concede that the calling in of the mortgage before it was due involved the exercise of a joint discretion by the trustees, in which the participation of them all was essential to protect any person dealing with them. The learned counsel for the appellants insist, however, that although the mortgage was called in before it was due, the trustees are estopped from challenging the validity of the transaction because of their surrender to Coenan of the full control of the trust estate, and their failure, upon the discovery of his dishonesty, to compel him to make restitution, as well as their omission to promptly notify the defendant Michel. We think this contention cannot be admitted. While the conduct of the appellants in these respects, and in taking releases from their adult cestuis que trust, may be quite sufficient to create an estoppel against them individually, we do not think their acts constitute such an estoppel as to prevent them from enforcing, as trustees, the demands of the estate which

therefore.” Beach on Modern Eq. Juris. $

244; Perry on Trusts, § 850; Thompson v. Harrison, 2 Bro. Ch. 164; Kirby v. Taylor. 6 Johns. Ch. 242. In this connection it should be borne in mind that, at the time these adult beneficiaries ratified the defaulting trustee's act, they were entitled to the remainder of their shares of the trust fund, subject only to the contingency that they should arrive at the age of twenty-five years, a contingency which had occurred at the time of the trial. These remainders, there

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