which the policy was given to secure. Jones v. Bank, 6 Rob. (N. Y.) 162. INGALLS, J. An examination of this case has led us to the conclusion that the same was correctly decided at the circuit, both in regard to the merits and the law applied thereto. The opinion of the learned justice, delivered upon the decision, seems to contain all which is necessary to be said in disposing of the appeal. The judgment should be affirmed, with costs. MADERS v. LAWRENCE. (Supreme Court, General Term, Third Department. July 2, 1888.) 1. SET-OFF And Counter-CLAIM-ACTION FOR PRICE OF GOODS-BREACH OF WARRANTY. In an action on a promissory note given for the difference due plaintiff on an exchange of horses, damage for breach of plaintiff's warranty of his horse is a proper counter-claim under Code Civil Proc. N. Y. § 501, subd. 1, providing that a counterclaim must be a cause of action "arising out of the contract or transaction set forth in the complaint as the foundation of the plaintiff's claim, or connected with the subject of the action. "1 2. SAME-BREACH OF WARRANTY-LIMITATION. It appeared that more than six years had elapsed since the warranty was made, but that the statute of limitations had not run on the note. Held that, while defendant's right to maintain an independent action for such damage was barred, the same might nevertheless be interposed as a counter-claim to such note. 8. SALE-WARRANTY-SUFFICIENCY OF EVIDENCE. Defendant testified that plaintiff warranted the horse, and the evidence showed that he became worthless in consequence of the defects complained of. Plaintiff denied the warranty. Held, that the evidence warranted a verdict for defendant. Appeal from Essex county court. Action by George Maders against Zachariah Lawrence on a promissory note. Judgment for defendant. Plaintiff appeals. Code Civil Proc. N. Y. provides that a counter-claim must be a cause of action "arising out of the contract or transaction set forth in the complaint as the foundation of the plaintiff's claim, or connected with the subject of the action." Argued before LEARNED, P. J., and LANDON and INGALLS, JJ. T. A. Rowe, for appellant. T. F. Conway, for respondent. INGALLS, J. This action was commenced in justice's court, and the plaintiff complained upon a promissory note, of which the following is a copy: "AUSABLE FORKS, N. Y., August 25, 1879. "Six months from date, for value received, I promise to pay George Maders fifteen dollars, with interest. his "ZACHARIAH X LAWRENCE. mark. "Witness: J. S. DWYER." By an amended answer, the defendant (1) denied the complaint, and each and every allegation thereof. (2) By way of counter-claim, stated, in substance, that the plaintiff and defendant exchanged horses, and that the note in question was given by the defendant to the plaintiff as the difference between the horses; that at the trade the plaintiff warranted his horse to be perfectly sound, and very valuable; that the horse proved to be unsound, viz., had the heaves, was lame, and of little or no value. (3) For a third answer or defense the defendant alleged that the note mentioned in the complaint was wholly without consideration, and void. Upon the trial the parties were witnesses, and the defendant stated the warranty substantially as alleged in the On the subject of what may be pleaded as a counter-claim, see Lapham v. Osborne, (Neb.) 18 Pac. Rep. 881, and note. answer, and the plaintiff denied that he warranted the horse. Evidence was produced to the effect, by the defendant, that the horse which he received from the plaintiff upon the exchange became worthless in consequence of the defects of which he complained. The jury rendered a verdict in favor of the defendant, of no cause of action. We are satisfied that the evidence justified the verdict. It is contended by the appellant that, as the defendant had an immediate right of action upon the warranty, and more than six years having elapsed from the making of the contract and the commencement of this action, the statute of limitations constituted a bar to the defendant's counter-claim, based upon such pretended warranty. This presents the material question upon this appeal. As between the parties to this action, the giving of the promissory note in suit constituted but part of the transaction, as the contract which gave rise to such note also included the warranty in question, and the defendant was at liberty to assert the breach of such warranty, with an allegation of damages in consequence thereof as a counter-claim. Code Civil Proc. § 501, subd. 1; Farrell v. Krone, 24 Wkly. Dig. 89; Hopkins v. Lane, 87 N. Y. 501. The case last cited supports the proposition, although the doctrine was not then applied on account of a defect of parties. In the case at bar the plaintiff asserted the note as a valid cause of action, based upon an adequate consideration, and the defendant assailed the same upon the ground that in the contract, and as a part thereof, the plaintiff warranted his horse to be perfectly sound and very valuable, when in fact he was unsound and worthless; and the defendant insisted upon the damages arising from such breach of warranty as a defense to said note. The plaintiff, by commencing such action upon the note, invited any valid defense which the defendant had, arising from the transaction which originated the note, and which legitimately assailed the consideration thereof. We think the practical effect of asserting such note by the plaintiff was to give efficacy to the defense of the defendant by way of counter-claim, or, at least, as a defense to the extent of the note, by defeating the consideration thereof. It would seem unreasonable and unjust to allow the plaintiff, under the circumstances, to delay an action upon the note until after six years from the giving thereof, and then assert the same, and defeat the defendant's claim or defense upon the ground that the statute of limitations barred such defense. We do not think the law necessitates such a result. If the defendant had commenced an action upon the warranty, doubtless such statute would have barred a recovery; but we conclude that a very different rule obtains when the plaintiff asserts a cause of action as to which such statute has not attached, and the defense is merely resorted to as an attack upon the consideration of the obligation which is the subject of the action, and arising from the same transaction. Such defense is resorted to by the defendant as a shield, and not as a sword. By prosecuting the note, the plaintiff, in effect, asserts that the same had a good and adequate consideration to support it, and the defendant, by interposing the defense, denies such consideration; thus accepting and meeting the issue in that respect tendered by the plaintiff. Again, the case fails to show that any such question was insisted upon at the trial, but, on the contrary, the case was tried upon the merits, and the plaintiff was defeated, and it seems quite apparent that substantial justice was administered in the justice's court, and the county court has given its approval of such proceedings. It is but reasonable to require parties who litigate in the justice's court to fairly raise the questions upon which they rely, and not to conceal them, and seek upon appeal to take advantage thereof, to the prejudice of the adverse party. We conclude that no error has been committed which requires us to reverse the judgment, and the same is therefore affirmed, with costs. LEARNED, P. J., and LANDON, J., concur. DoWDEN 0. CALVIN et al. (Common Pleas of New York City and County, General Term. June 28, 1888.) NEGOTIABLE INSTRUMENTS-TAKING UP FORMER NOTE-ACCOMMODATION PAPER. Where defendants, whose names had been signed to a note without authority, gave the payee a new note in place of the old, at the latter's request, the question whether the new note was an accommodation note, or was given because defendants did not dispute their liability on the former note, was for the jury. Appeal from trial term. Action on a promissory note, brought by George A. Dowden against John Calvin and Thomas Wright. The court directed a verdict for plaintiff, and defendants appeal. The defendants carried on business under the name of Calvin & Wright, and employed one Louis La Farge as their book-keeper, giving him power to sign checks on the bank-account only Plaintiff lent La Farge various sums of money, which he claimed to have believed were used in defendants' business, and the note in question was given for part of the money so lent. La Farge had represented to him that he was the owner of the business, and was carrying it on in the name of Calvin & Wright, who were only his employes. The note was given without the knowledge of Calvin & Wright. La Farge soon after died, and during his last illness plaintiff first learned that the note was given without authority. He then requested defendants to give him a new note to take up the former, which he had discounted, and save his credit at the bank. Defendants consented, and executed the note in suit. Argued before VAN HOESEN and ALLEN, JJ. William B. Ellison, for appellants. Herman Kobbe, for respondent. PER CURIAM. If the note in suit was given for the accommodation of Dowden, (and we think the jury might reasonably have drawn that conclusion from the testimony,) he cannot recover upon it. Whether the note was an accommodation note, or whether it was given because the defendants did not dispute their legal liability upon the former note that was signed in their names by La Farge, is the question that ought to have been submitted to the the jury. It was, in our opinion, an error to direct a verdict. There is no question of usury in the case. Judgment reversed, and a new trial ordered, with costs to abide the event. In re DANZIG. (Common Pleas of New York City and County, General Term. May 11, 1888.) ASSIGNMENT FOR BENEFIT OF CREDITORS-MISCONDUCT OF ASSIGNEES-RIGHT TO FEES. An assignee who has been removed for misconduct in office, whatever may be the degree of misconduct, is not entitled to commissions. Appeal from special term; ALLEN, Judge. Appeal by Danzig, the assignee, from an order depriving him of his statutory commissions. Richard S. Newcombe and Leopold Wallach, for appellant. PER CURIAM. The distinction between the authorities relied upon by the appellant and the case at bar is that, in the latter case, the assignee has been absolutely removed. In the former cases the assignee was not removed, but was left to carry out the trust imposed, but was denied an allowance of commissions upon all transactions in abuse of the trust. That seems to be the distinction. Therefore the ruling in the Gomprecht Case, decided by this court, and affirmed by the court of appeals, (102 N. Y. 741,) is applicable. There was an absolute removal, and we quote: "Misconduct in assignees cannot be graduated and qualified so that in case of removal we may give v.2N.Y.s.no.5-11 commissions to one assignee and withhold them from another; and it may now be safely asserted to be the law in this state that an assignee who has been removed for misconduct in office, whatever may be the degree of misconduct, is not entitled to commissions." That is res adjudicata, and was so held in the matter of Wolf and of Hyman, and reaffirmed in the Gomprecht Case. If your position were correct, there would be no reason why two commissions should not be allowed in this case. If Danzig was entitled to a pro rata share, the party who succeeded him would also be entitled to his commission, and this the courts are not disposed to allow. The simple fact is that he was removed from his position. This appeal is from a denial of the motion for an allowance, and we think that question has been decided in the court of last resort, in the Gomprecht Case. The order appealed from, therefore, is affirmed. NATIONAL BANK OF WEST TROY v. LEVY et al. (Supreme Court, General Term, Third Department. July 2, 1888.) FRAUDULENT CONVEYANCES-ACTIONS TO SET ASIDE-ADMINISTRATORS. A creditor having a judgment against the administratrix, upon which no execution has issued, cannot maintain an action to set aside as fraudulent a mortgage executed by the intestate conveying land in a county in which his judgment was not rendered or docketed, though the administratrix refuses to bring such action. Appeal from judgment on report of referee. The National Bank of West Troy brought an action against Margaret Levy, executrix, etc., of Bernard Levy, and Catharine Ryan, administratrix of the estate of Michael Ryan, to set aside a mortgage executed by Ryan to Levy, as being in fraud of the rights of creditors. In accordance with the report of the referee, judgment was rendered in favor of plaintiff, and defendants appealed. Argued before LEARNED, P. J., and LANDON and INGALLS, JJ. N. C. Moak, for appellants. E. L. Fursman, for respondent. INGALLS, J. This action was brought by the plaintiff in its own behalf, and as well on behalf of all the other creditors of the estate of Michael Ryan, deceased, similarly situated with the plaintiff, who might choose to come in and contribute to the expense of the prosecution of the action, and avail themselves of the benefits of the same. The purpose of the action was to have declared fraudulent and void a mortgage purporting to have been executed by said Patrick Ryan, of West Troy, in the county of Albany, to said Bernard Levy, to secure the payment of $5,000, which mortgage was dated May 11, 1872, and recorded in the clerk's office of Albany county, May 23, 1877, in Liber 265 of Mortgages, p. 463, etc. The mortgage embraced certain lands situated in the said village of West Troy. The mortgagor and mortgagee were both dead at the time of the commencement of this action. The plaintiff commenced, and prosecuted to judgment, an action against the said Catharine Ryan, as administratrix of Patrick Ryan, deceased, upon certain promissory notes executed by said Patrick Ryan, which were held and owned by the plaintiff. Judgment was rendered in favor of the plaintiff against the said Catharine Ryan, as administratrix, for $3,126.19 damages, and $217.24 costs, December 3, 1877, and entered in the county of Rensselaer, but was not docketed in the county of Albany, where the premises described in mortgage were situated. No execution was issued and returned in any form previous to the commencement of this action. The prayer for relief, as stated in the complaint herein, is as follows: "Wherefore this plaintiff demands judgment herein that the said mortgage be adjudged and declared fraudulent and void, and that the same be canceled and discharged of record, and that the said defendant Bernard Levy be directed and decreed to execute, duly acknowledge, and deliver to this plaintiff a proper satisfaction of the said mort gage, and authorize and empower the clerk of the said county to satisfy and discharge the same of record; that the said real estate be adjudged to be sold, and the proceeds arising from such sale be applied to the payment of the unsecured debts of the estate of the said Michael Ryan, deceased, including the said debt and judgment of this plaintiff, and the costs and expenses of this action, so far as the same may be required for that purpose; and that the balance of the proceeds of said sale be disposed of according to law; and that this plaintiff may have such other and further relief and judgment in the premises as may be just." The plaintiff, through its counsel, "requested the defendant Catharine Ryan, as the administratrix of Michael Ryan, deceased, to institute an action, at the plaintiff's expense, to set aside the said mortgage as fraudulent and void as against the judgment of the plaintiff, which she refused to do, and she also declined to allow an action to be commenced and prosecuted in her name by the plaintiff for that purpose. Immediately after the opening of the case by the plaintiff's counsel before the referee, the defendants' counsel made a motion to dismiss the complaint upon the following grounds: "First. The complaint shows no cause of action against the defendants, or either of them. Second. The complaint does not show that any execution has been issued on the alleged judgment against defendant Catharine Ryan, as administratrix, or that any such execution has been returned wholly or in part unsatisfied. Third. The complaint does not show the recovery of any judgment against Michael Ryan, or that any execution has been issued thereon, and returned wholly or in part unsatisfied. Fourth. The heirs of Michael Ryan are not made parties defendant herein. Motion denied, and defendant Levy excepts." The motion, upon the same grounds, was renewed by the defendants' counsel at the conclusion of the evidence, and was again denied. The referee, upon the facts stated in his report, found and decided as conclusion of law as follows: (1) That said alleged mortgage is void; (2) that the plaintiff is entitled to a judgment that said alleged mortgage is void and of no effect, and. directing that the same be canceled and discharged of record." Judgment. was accordingly entered by the plaintiff. We have reached the conclusion that the complaint should have been dismissed by the referee upon the ground that no judgment had been entered or docketed in the county of Albany, where the real estate is situated, and no execution has been issued and returned upon any judgment against the said Michael Ryan in his life-time, or against the said Catharine Ryan, as administratrix or otherwise, previous to the commencement of this action. Such defect in the plaintiff's case we deem fatal to the recovery herein. This question was substantially covered by the decision of this court at the last May term, in the case of Harvey v. McDonnell, 1 N. Y. Supp. 83. Reference is also made to the following cases: Adsit v. Butler, 87 N. Y. 585; Estes v. Wilcox, 67 N. Y. 264; Sullivan v. Miller, 106 N. Y. 635, 13 N. E. Rep. 772; Bank v. Wetmore, 42 Hun, 359; Adee v. Bigler, 81 N. Y. 349; Andrew v. Vanderbilt, 37 Hun, 469. The statute of 1858, c. 314, does not in terms aid the plaintiff's case, as it does not authorize the commencement of such an action by any person other than those specified in such statute. Nor do we think it was intended to authorize a creditor at large to prosecute such an action, even though the persons named therein should refuse to institute the same upon request. The case of Lichtenberg v. Herdtfelder, 103 N. Y. 302, 8 N. E. Rep. 526, applies with force upon the case at bar, and adversely to right of the plaintiff to maintain this action. The reasoning of Judge EARL in that respect cannot be regarded as obiter, as is suggested by the learned counsel for the plaintiff. The judgment must be reversed, and a new trial ordered, and the order of reference discharged, with costs to abide the event. LANDON, J., concurs. |