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The doctrine of equitable conversion rests and judicial writers to the effect that the upon that principle. 1 Pom. Eq. Jur. & 161. court of equity will not permit a trust to fail The power to receive the rents and profits of for want of a trustee to execute it. This the land intermediate the death of the testa- means that the power of appointment of a trix and the sale did not qualify the character trustee will be exercised by the court when as personalty of the land in the hands of the occasion properly arises requiring it. Such executors. That is incidental to the direction were the cases of Leggett v. Hunter, 19 N. to sell, and the rents and profits so received Y. 445; Delaney v. McCormack, 88 N. Y. also have the character of personalty, and are 174; Farrar v. McCue, 89 N. Y. 139; Cooke assets in the hands of the executor. Stagg v. v. Platt, 98 N. Y. 35; Rogers v. Rogers, 111 Jackson, 1 N. Y. 206; Lent v. Howard, 89 N. Y. 228, 18 N. E. Rep. 636; and they are N.Y. 169. The title to the personalty vested cited by counsel to support the contention in the executors, by operation of law; and, to that the trustee appointed by the court in accomplish the purposes of the imperative di- the present case was vested with the power rection in the will in that respect, it was to make the sale and conveyance in question. within their power, and imposed upon them It may be observed that those cases presented as a duty, by virtue of their office, to execute express trusts and powers in trusts within the power of sale. Lockman v. Reilly, 95 the Revised Statutes, and therefore came N. Y. 64; Meakings v. Cromwell, 5 N. Y. within the statute before referred to provid136; Bogert v. Hertell, 4 Hill, 492. As the ing for the appointment of trustees to execonsequence of this, the proceeds of the sale, cute such trusts, and the appointments were when received by the executors, would be le- essential for the execution of the trusts. The gal assets in their hands, for which they power of sale given by the will in question would be required to account, (Hood v. Hood, is not within the statutory term of express 85 N. Y. 561;) and if any duties were to fol. trusts, and no title passed to the executor of low in respect to one-third of the fund which the land as such; and “a general power is in would require the function of a trustee to ex- trust when any person or class of persons ecute, the executors, as such, would remain other than the grantee of such power is desresponsible for it until the severance, in some ignated as entitled to the proceeds, or any manner, by them of the trust fund, (In re portion of the proceeds or other benefits, to Hood, 98 N. Y. 363.)

result from the execution of the power. 1 We have proceeded far enough to show the Rev. St. p. 731, § 94. relation of the executors, as such, to the The statute upon the subject of trusts is powers given by the will, sufficiently for the not applicable to that created by this will, alpurpose of the question here; and it is un- though analogous principles, to some extent, necessary to consider the nature of the duties at least, are applied to those of personal which would be assumed after the sale, in property. Kane v. Gott, 24 Wend. 641; Cut. the management of the fund, the income of ting v. Cutting, 86 N. Y. 545. It may be which they were directed to pay Mrs. Bush. assumed that the power is inherent in the The power of sale was vested in the execu- supreme court, without the aid of the stattors; and, in view of the later authority giving ute, to administer trusts, in so far that it construction to the statute in that respect, may, upon the death or disability of a trus(2 Rev. St. p. 72, § 22,) that power of sale tee of an unexecuted trust, appoint another would be taken by an administrator with the to execute it; and for adequate cause may rewill annexed. Mott v. Ackerman, 92 N. Y. move a trustee, and supply his place with an539. It is, however, contended by the plain- other to complete the execution of a trust. tiff's counsel that, notwithstanding the cor- This proposition is not applicable to an execrectness of the proposition just stated, the utor so far as relates to the duties of his office power given to sell created a trust for that as such. As applied to him, the power is purpose, and as such came within the juris- exclusively in the probate court. The acdiction of the supreme court, and therefore ceptance of the resignation, as trustee, of the acceptance of the resignation of Boerum the person named as executor in the will did as trustee, and the appointment of Mrs. not, therefore, have the effect to relieve him Bush as such by the court, pursuant to the from the execution, so far as it remained unstatute, was effectual to vest in the latter the executed, of the trust which was devolved power to make the sale. 1 Rev. St. p. 730, upon him by virtue of the office of executor. SS 69-71.

There is no doubt about the 1 Perry, Trusts, § 281. In re Van Wyck, 1 power of the court to provide the means for Barb. Ch. 565; Quackenboss v. Southwick, the execution of a trust when there ceases to 41 N. Y. 117. While his relation as trustee, be a trustee to complete it. The statute pro- as distinguished from that of executor, may vides that, in case of death of a trustee of an be treated as terminated by force of the orunexecuted express trust, the trust shall vest der of the court, that of executor remained; in the court of chancery, (now in the su- and, as held in Mott v. Ackerman, supra, the preme court,) with all the powers and duties power to make the sale being within the of the original trustee, and shall be executed functions of the office of the executor, there by some person appointed for the purpose is no occasion to extend the inquiry whether under the direction of the court, (Id. $ 68;) it would be in the jurisdiction of the supreme and that provision is applicable to powers in court to appoint a trustee to execute such a trust, (Id. p. 734, § 102.) It is said by text trust or power as that in question, in the—24

event of a vacancy in the office of executor, may arise, if Mrs. Bush should leave children or whether the power must, in such case, nec- her surviving, the observance of the direction essarily be executed by an administrator with of the will will operate to suspend the abthe will annexed. While the executor re-solute ownership of the fund for some period mains in his relation as such, the court can- of time after her death. Batsford v. Kebnot appoint a trustee to supersede him in the bell, 3 Ves. 363; Patterson v. Ellis, 11 Wend. exercise of his functions as executor. It 259; Warner v. Durant, 76 N. Y. 133; Decannot be assumed, upon the findings of the laney v. McCormack, 88 N. Y. 174, 183. Such trial court, that all the duties of that officer suspension being for a time not dependent had been discharged by him at the time his upon lives, and not more than two, in being resignation of trustee was accepted by the at the time of the death of the testatrix, rencourt. The conclusion must follow that the ders the limitation over void, unless it is power to make the sale and conveyance re- saved by some provision of the statute. We mained in the executor, and that Mrs. Bush find none in its support. While the suspendid not, through her appointment as trustee, sion of the absolute power of alienation of take such power. This was the ground upon real estate may be extended beyond two lives which the general term placed its determina- limited, so as to embrace the period of minortion, and, so far as appears, the inquiry there ity of a child to whom the remainder is limwas not extended further than that.

ited, and such suspension may be created by There is a further question, having rela- a contingent limitation of the fee, (1 Rev. tion to the validity of the provisions of the St. p. 723, SS 15, 16; Id. p. 726, § 37,) our will by which the testatrix sought to give the attention is called to no statute qualifying, fund to the children of Mrs. Bush, if she left in that or any manner, the effect of the proany surviving her, and in the event there vision before referred to, limiting the time mentioned. This question arises upon the of suspension of the absolute ownership of statute, which provides that “the absolute personal property. The consequence seems ownership of personal property shall not be to be that the direction of the testatrix, by suspended, by any limitation or condition her will, to pay the fund to such children in whatever, for a longer period than during the event mentioned, or, on their failure to the continuance, and until the termination, arrive at the age of majority, to pay it to Mr. of not more than two lives in being at the Boerum and Mrs. Vanderveer, was in condate of the instrument containing such limi- travention of the statute, and void. Manice tation or condition; or, if such instrumentv. Manice, 43 N. Y. 303. It follows that, if be a will, for not more than two lives in be- Mrs. Bush does not survive her husband, the ing at the death of the testator." 1 Rev. St. testatrix will have died intestate as to that p. 773, § 1. At the time of the death of the fund, or, in case the power of sale is not extestatrix Mrs. Bush had no children living, ercised by sale of the land during her life, the and she never has had any; but, assuming intestacy may be applicable to it as real esthat she does not survive her husband, and tate; and such property, either as land or perthat on her death she leaves children surviv-sonalty, will, unless given other direction in ing her under the age of 21 years, the inquiry the mean time by those having a contingent arises whether the limitation over to them is interest in it, go to the heirs or next of kin valid, and that depends upon the determina- of the testatrix,—those who were such at the tion of the further question, whether the ab- time of the death of the testatrix; and not to solute ownership would then vest in such those who will be such at the time the conchildren. If it would, there would be no un- tinyency occurs which produces the intestacy. lawful suspension. Otherwise, it is difficult 1 Rev. St. p. 751; 2 Rev. St. p. 96; Hoes v. to see how the provision made for them by Van Hoesen, 1 Barb. Ch. 379; In re Kane, 2 the will can be supported. The will does Barb. Ch. 375. not, in terms, give the fund to the children, Such issue of Mrs. Bush, if she should but directs the executors, in the events men leave any her surviving, will therefore have tioned, to pay it to them. The postponement no interest in this fund or property derived of the time of payment of a gift is not im- from the provisions of the will; and, in the portant; that alone will not qualify the abso- event she does not survive her husband, her lute character of the ownership. The vest- interest is limited to a life-estate, or to the ing of it is suspended if some period in the income of the fund during her life. future is annexed to the substance of the consequence, then, and in that case, her gift. In the present case the conditions up. brother and sister will be the only heirs and on which the right of the children to take next of kin of the testatrix. They have conthe fund depend are to or may arise in the veyed and transferred their unconditional future, beyond the time of the death of the and contingent interest in the property to mother, and the contingency is uncertain. her. By that conveyance Mrs. Bush acquired The children must reach the age of 21 years, the entire beneficial interest in the property. and, if they do not, the fact that the direction This enabled her, individually, to convey it is that the fund go to Mr. Boerum and Mrs. to the plaintiff. Her deed to the plaintiff Vanderveer is not consistent with the vest- had the effect to vest in him the title to the ing of the absolute ownership in the children land. Since all the parties having any bene . on the death of their mother. It is therefore ficial interest in it or its proceeds have thus clear that, in the case supposed, and which 'joined in and made the conveyance, there re

As a

mains no occasion for the exercise of the maturity, commenced this action. The depower of sale given by the will; and, upon fendants, E. D. Bradshaw and Reuben Rowthe principle that the beneficiaries in the eq- land, suffered default. This defendant in uitable conversion of real property into per- and by his answer, and upon the trial, consonalty may effectually elect to have a re-tended that he was not liable as indorser upon conversion into realty, and take it as land, the note for the reason that, when the note rather than the proceeds of it, we think the became due, it was not presented to the maker exercise of such power of sale may be deemed for payment, and notice of its dishonor given. dispensed with and defeated. 2 Story, Eq. Upon the trial plaintiff insisted that demand Jur. § 793; Hetzel v. Barber, 69 N. Y.1; Pren- and notice of maturity had been waived by tice v. Janssen, 79 N. Y. 478; Armstrong v. the defendant prior to the date whereon the McKelvey, 104 N. Y. 179, 10 N. E. Rep. 266. note became due; and the plaintiff testified to In this case the beneficiaries are in a situa- a conversation which he claimed to have had tion to do so, as the title of the property, with the defendant which it was insisted contreating itas land, was in those three, (brother stituted, in legal effect, a waiver of his right and two sisters,) or some of them, and was to have a demand for payment made, and nonowhere else. There is therefore no inter- tice of non-payment thereof given to him. vening right of any other party to be prej. The defendant denied having the conversaudiced. The contingent and unconditional tion testified to by the plaintiff. In submitestates were united in Mrs. Bush by the con- ting the question to the jury the court charged veyance to her.

that if they believe the plaintiff's version of These views lead to the conclusion that the what took place between him and the defenddefendant has taken, by the conveyance to ant there was a waiver, otherwise not. The him, the title which the plaintiff undertook jury found in favor of the plaintiff, and the to convey; but, as the deterinination is made judgment entered thereupon was affirmed upon a ground not presented to or considered by the general term. In the disposition of by the court below, the plaintiff should not the case then, by this court, the facts most have costs.

favorable to the plaintiff must be deemed to The order of the general term should be re- bave been found in his favor. The liability versed, and the judgment entered upon the of an indorser of a note to pay it is made to decision of the trial court affirmed. All con- depend upon the implied condition that paycur.

ment shall be demanded of the maker at ma

turity, and, in the event of default, that no(116 N. Y. 188) CADY V. BRADSHAW et al.1

tice of non-payment shall be immediately

given to the indorser. These conditions are (Court of Appeals of New York, Second Divis- for the benefit of the indorser, to enable ion. Oct. 8, 1889.)

him to have prompt notice of the default, so PROMISSORY NOTE--WAIVER OF DEMAND AND NOTICE.

that he may immediately take steps to pro1. Before the date when the note matured the vide for his indemnity. The indorser may, defendant, indorser, asked the holder to extend it however, prior to maturity, waive the condianother year. The holder said he was willing if tions of demand and notice of non-payment. defendant would let his name be on it, and let it be The waiver may be made either verbally or as it was, and further asked defendant if he and R., another indorser, would let their names remain in writing. It is not necessary that the waiver on the note. Defendant said yes, if plaintiff would should be direct and positive. It may result let the note stand just as it was. Before maturity, from implication and usage, or from any unthe holder saw R., who consented to an extension. Held, that the facts constituted a waiver of de- derstanding between the parties which is of fendant's right to demand of payment and notice of a character to satisfy the mind that a waiver non-payment.

is intended. 1 Pars. Notes & B. 594. The

, of defendant, that the maker of the note had failed assent must, however, be clearly established, in business. The jury had a right to take into con- and will not be inferred from doubtful or sideration the extent of the interest of the witness, equivocal acts or language. Ross v. Hurd, 71 and such fact would show that, in the event of N. Y. 14. defeat, the witness would have to pay the whole judgment without any prospect of reimbursement

The facts which are relied upon to constifrom the maker.

tute a waiver, on the part of the indorser, of

demand and notice of non-payment, and Appeal from supreme court, general term, which must be assumed by this court to have fifth department.

been found in favor of the plaintiff, are as John H. Camp, for appellant. E. W. follows: Prior to the date at wbich the note Hamm, for appellee.

matured this defendant called upon the plainPARKER, J. The defendant Hiram Brad- tiff, and asked him if he would extend the shaw indorsed a promissory note made by E. note another year if the interest should be D. Bradshaw to the order of Reuben Row- paid up. He said he wanted it extended anland, and indorsed by him. The note was

other year, and Ed. (meaning the maker)

Plaintiff refor $1,000, payable one year after its date, would pay up the interest. which was July 11, 1882. It was not paid sponded that he was willing, if the defendwhen due, and thereafter this plaintiff, who ant would let his name be on it, and let it be became the owner and holder thereof before as it was. Plaintiff further asked the defend

ant if he and Mr. Rowland would let their 1 Affirming 40 Hun, 632, mem.

names remain on the note, and the defend

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ant said yes, if plaintiff would let the have the right to take into consideration the note stand just as it was. Before the ma-extent of the interest of a witness in deterturity of the note, plaintiff saw Rowland, mining the measure of credibility which who consented to the extension. The ques- ought to be given to his testimony. That tion presented, therefore, is whether the rule would seem to make it proper to show facts proven constituted a waiver of the in- on cross-examination, as was done in this dorser's right to a demand of payment and case, that in the event of defeat the witness notice of non-payment thereof. Now it is would have to pay the whole judgment, withtrue that the indorser did not say in so many out any prospect of reimbursement from the words, “I waive demand and notice of non-maker, as might otherwise be expected. We payment;” but, when he asked that the time think the ruling of the court was not error. of payment be extended a year, he in effect The judgment appealed from should be afrequested that no demand of payment be firmed, with costs. All concur, except BRADmade at maturity. That request, coupled LEY and HAIGHT, JJ., not sitting. with his promise to let his name remain on

(116 N. Y. 193) the note, if the time of payment should be extended, must, we think, be held to consti PATTERSON V. ROBINSON et al.1 tute, in legal effect, a waiver of demand and (Court of Appeals of New York, Second Divisnotice of non-payment. Cady v. Bradshaw,

ion. Oct. 8, 1889.) 23 Wkly. Dig. 559; Pars. Notes & B. 587; CORPORATIONS — INDIVIDUAL LIABILITY OF TRUSLeonard v. Gary, 10 Wend. 508; Spencer v.

TEES-PAYMENT. Harvey, 17 Wend. 489; Hunter v. Hook, 64

1. In an action by a bank receiver against cerBarb. 475; Leffingwell. White, 1 Johns. the mill was indebted in excess of its capital stock

tain trustees of a mill company, it appeared that . Cas. 99; Rope v. Van Wagner, 3 N. Y. St. to the bank; that a contract was made by which Rep. 157; Pugh v. McCormick, 14 Wall. 361; the bank agreed to treat the debt as dead or susReynolds v. Douglass, 12 Pet. 497; 2 Daniel, pended, and thereafter to cash the mill paper when

indorsed by one of the defendants and the bank Neg. Inst. 141, 145. The case of Sheldon v. president individually, and that subsequent mill Horton, 43 N. Y. 93, seems to be decisive of deposits were to be credited on the new account. the question presented. In that case the They were credited on the old account, and the inholder of the note went to the indorser and dorsers of the paper under the new account had no

notice of its dishonor. Held, that defendants were told him that the maker wanted the note to not liable under section 23, c. 40, Laws N. Y. 1848, remain another year, and asked him if he making trustees individually liable for indebtedwere willing; and he said he was willing to ness to which they have assented in excess of the let it remain; and he took the note and looked made by the mill under the contract was paid, so

capital stock of the company, as the new paper it over, and said it was a good note. The far as defendants were concerned. court held that the reply of the indorser con 2. The burden was on plaintiff to show that the stituted a waiver of demand and notice at contract between the corporations was unauthor

ized or was not ratified by the boards, and in the maturity, and their omission did not dis- absence of such proof the presumption is in favor charge the indorser. The case of Bank v. of its validity. Dill, 5 Hill, 403, pressed upon our attention

Appeal from a judgment of the general by appellant's counsel, we regard as clearly term of the third judicial department, affirmdistinguishable from the case under consid- ing a judgment entered on the report of a eration. In that case the proposition of the referee, dismissing the complaint. indorser was to the effect that the maker

Since 1865 the “Schaghticoke Woolen Mill” would pay the note in part, and give a re- has been a manufacturing corporation, duly newal note for the balance. No time was incorporated under chapter 40 of the Laws asked in which to make this part payment of 1848, with a capital stock of $250,000. and give the renewal note, and no agreement Its affairs have been managed by five truswas made to extend the time of payment; tees. Daniel Robinson was a trustee from while in the case under review the agree- its organization until its failure, in Novemment was not only to extend the time of ber, 1878, and James E. Pinkham was superpayment for one year, but it was also dis- intendent of the mill from 1866 until its tinctly agreed that the note should remain failure, and June 18, 1878, he also became a as it was, with the name of the indorser trustee and the treasurer of the corporation, thereon.

and so remained until its failure. For sevThe appellant calls our attention to but eral years before May 1, 1875, the woolen one other question. Against the defendant's mill kept its account with the Merchants' & objection, Hiram Bradshaw was compelled Mechanics' Bank of Troy; and, under a mutto answer this question: “Did your brother ual arrangement, the bank paid the checks fail in business?” An exception was duly and commercial paper of the mill when pretaken, and then the defendant answered, sented, without regard to the state of its “Yes, sir.” Now it is quite clear that this bank account. When the account showed a evidence was not of any materiality whatso- balance to the credit of the mill, the previousever upon the question directly in issue, as ly paid checks would be first charged to the to whether defendant waived demand and account, and, after they were charged, the notice at maturity; but that question depend oldest past due commercial paper was charged ed solely upon the testimony of the plaintiff as rapidly as it could be without causing an and defendant, who emphatically contradicted each other. Now it is the rule that the jury 1 Affirming 47 Hun, 637, memo

apparent overdraft. Checks and paper paid this commercial paper of the mill, representwhen the account was not good were carried ing $419,361, and January 24, 1879, began by the bank as cash items until they were this action to recover of the trustees of the charged up. May 1, 1875, the mill owed the mill the sum by which its indebtedness exbank $300,776, which was $50,776 in excess ceeded its capital stock, upon the ground that of its capital stock, and it was owing other they were liable for the excess, under the creditors such sums that its indebtedness twenty-third section of chapter 40, Laws then exceeded its capital stock by more than 1848, which provides: “Sec. 23. If the in$185,000. At this date D. Thomas Vail was debtedness of any such company shall at any the president and a director of the bank, and time exceed the amount of its capital stock, the president and a trustee of the mill. On the trustees of such company assenting therethe date last mentioned Mr. Vail, assuming to shall be personally and individually liable to act as president for both corporations, en- for such excess to the creditors of such comtered into the following oral contract with pany. Daniel Robinson: “That the debt of the Edwin Countryman, for appellant. Esek Schaghticoke Woolen Mills, then due to the Cowen, for respondents. Merchants' & Mechanics' Bank of Troy, should be treated as dead or suspended debt; FOLLETT, C. J., (after stating the facts that said Vail, as president of the woolen as above.) The plaintiff asserts that the company, should make drafts on the treasurer claims, amounting to $300,776, held by the of said company, which after acceptance by bank against the mill on the 1st day of May, him should be indorsed by Vail and Robinson 1875, have been fully and legally paid, and individually; that they should also individu- that between May 1, 1875, and the date of ally guaranty other paper of said company the failure of the bank, a new indebtedness, when advisable, which paper, so indorsed and amounting to $119,361, was incurred by the guarantied, should be used in the purchase mill to the bank, with the assent of the deof wool for the mills in manufacturing cloth; fendants, and that they are liable to the rethat such wool, and the cloth manufactured ceiver of the bank for the sums by which the therefrom, should be the property of Vail and indebtedness exceeds the capital stock of the Robinson until the cloth was disposed of, and mill. The referee found as a fact: “(8) That that the proceeds thereof should be applied to the creation of the debt of the Schaghticoke to the payment of the supplies, labor, and Woolen Mills to the Merchants' & Mechanics' current expenses of the mills and of the Bank of Troy, existing on the 1st day of paper so indorsed and guarantied, and no May, 1875, or to any part thereof, the depart of such proceeds were to be applied to fendant Daniel Robinson did not assent." the payment of the old or suspended debt As a conclusion of law: "(1) That neither held by the bank until all outstanding claims of the defendants are liable for any part of for such paper, supplies, labor, and current the indebtedness of the Schaghticoke Woolen expenses were satisfied."

Mills in excess of its capital stock existing Between May 1, 1875, and November 1, on the 1st day of May, 1875.” The plaintiff 1878, the business of the mill was carried on insists that the eighth finding of fact is with-. under this contract, Vail and Robinson in-out any evidence tending to sustain it; that dorsing, for the accommodation of the mill, it is a ruling upon a question of law; and such paper as it made in the course of its that the referee erred in finding it, and the business. This paper was presented to and general term in sustaining it. If the plainpaid by the bank; but, instead of canceling tiff's position is, in fact, well taken, he should and charging it to the account of the mill, have excepted to the eighth finding, pursuant the bank held the paper as a liability against to section 993 of the Code of Civil Procedure. the mill. No notice of the dishonor of this Brush v. Lee, 36 N. Y. 49, 53; Gidley v. paper was given to the indorsers. After | Gidley, 65 N. Y. 169, 171; Sickles v. FlanaMay 1, 1875, the bank charged to the account gan, 79 N. Y. 224; Mead v. Smith, 28 Hun, of the mill its current checks, but, instead of 639. But no exception was taken to this charging to its account its commercial paper finding, nor was an exception taken to the made and paid after that date, it charged up conclusion of law above quoted, which seems to the account, as rapidly as could be done to be a sequence to the finding of fact above without producing an apparent overdraft, quoted. Neither did the plaintiff request the the indebtedness which had accrued prior to referee to find the converse of this finding of May 1, 1875; so that when the bank failed, fact, pursuant to section 1023 of the Code of the debt, $300,776, existing May 1, 1875, had Civil Procedure. It does not appear that the been wholly paid, and the bank had in its case contains all of the evidence, or all bearpossession the commercial paper of the milling upon the eighth finding; and on such a made and paid since May 1, 1875, to the record this court must presume that the findamount of $419,361, which had been in- ing was sustained by the evidence. Porter dorsed by Vail and Robinson. October 31, v. Smith, 107 N. Y. 531, 14 N. E. Rep. 446; 1878, the bank failed, and November 27, Billings v. Russell, 101 N. Y. 226, 4 N. E. 1878, the plaintiff was duly appointed its re- Rep. 531; Cox v. James, 45 N. Y. 557. ceiver. In November, 1878, the woolen mill However, it is quite unnecessary to deterfailed, and Mr. Julliard was appointed its mine whether Robinson assented, within the receiver. The receiver of the bank found' meaning of the section, to the creation of the

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