Ogden v. Raymond et al.

3. The answer next sets up that the note was an accommodation note to the Company, and this was known to the plaintiff; and, further, that the loan of the plaintiff to the Company has been fully paid.

There is no evidence of Ogden's knowing the character of the note. There is evidence that his loan was not paid. And, in that case, even if he knew it was accommodation paper, there would be no defense on this ground.

The exceptions taken upon the trial remain to be considered. The defendants' counsel offered to read the minutes of the Company, which was overruled, and an exception taken. In what way these minutes bore upon any issue in the case, does not appear. The counsel did not state in his offer the object of it, nor the contents or tenor of the minutes.

The question was asked, how Ogden got the note from the Company. It was objected to, and the question ruled out, and an exception taken. No question was raised by the answer as to the manner in which Ogden acquired the note from the Company that it was in an illegal or fraudulent manner. Besides, the question seems fully answered by replies to other questions.

It was asked, how many notes were transferred to Ogden upon the transfer of this note. On objection this was ruled out, and an exception taken. This fact was immaterial to the issue. The only question pertinent to this part of the case was, whether Ogden had been paid in full. Afterwards, the fact is testified to. He got about $19,000 in notes, of which $12,000 had been paid. The question as to the judgments had on any of the notes was equally irrelevant, and so also was the question as to the securities now held by Ogden, and that as to loss under the policy.

The inquiry as to the character of the subscribers to the stock, being office-boys, insolvent, &c., was irrelevant, when there was no allegation in the answer of the subscription of defendants being obtained by fraud.

The extent of capital and number of trustees, were facts equally irrelevant.

The judgment should be affirmed.
Judgment affirmed.

Bates v. Cobb et al.

HENRY W. BATES, Plaintiff and Respondent, v. NATHANIEL R. COBB and JAMES H. STEBBINS, Defendants and Appellants.

1. A complaint which states that the defendants, as agents for the plaintiff. purchased stock, and on a settlement of the contract of purchase the vendor was found indebted in a sum specified, for which the vendor gave notes to the defendants as such agents, which they received for the plaintiffs, and which have since been paid to them, and that they refuse to pay over the same to the plaintiff, states facts sufficient to constitute a cause of action, although it does not state how the vendor of the stock did or could become indebted to the vendee.

2. It would, it seems, have been sufficient if it had stated that the defendants, as agents of the plaintiff, on settlement with a third person received a note for the plaintiff which was paid to them at maturity and they refuse to pay over the money.

3. Where a party who claims a balance of account against another, and holds two notes as collateral security, assigns his account to a third person who brings an action thereon and the defendant therein claims to set off one of such notes which had been paid to the assignor, after the assignment but before the suit was brought, and afterwards the suit is settled by the payment of ten per cent of the sum sued for and costs, such settlement is no bar to an action by the defendant therein to recover from the said assignor the amount of the other note, although it was paid pending the former action and before the settlement.

4. A settlement "in full of an account and demand sued upon in this action" does not embrace any matter not embraced in the controversy as disclosed by the pleadings therein.

(Before BosWORTH, Ch. J., and Woodruff, J.)

Heard, November 9th, 1858; decided, May 28th, 1859.

THIS action was tried before William C. Barrett, Esq., Refe ree, who reported in favor of the plaintiff the sum of $78.72 with interest from the 25th day of December, 1851, besides his costs, and from the judgment entered upon the report the defendants appealed.

The complaint herein alleged three distinct causes of action, stating them separately.

The defendants introduced their answer by insisting that the complaint did not, particularly in the first and second sub-divisions thereof, state facts sufficient to constitute a cause of action, and, reserving the right to move for a dismissal of the complaint

Bates v. Cobb et al.

on the trial of the cause, they proceed to answer each cause of action, denying the plaintiff's allegations and also alleging matter in bar.

The Referee reported in the plaintiff's favor for a part only of his first alleged cause of action, and he found for the defendall the other matters in issue.

ants upon

The first cause of action alleged by the plaintiff (which alone is material to the case on the appeal) is, that the defendants were stock brokers and co-partners; that they were employed by the plaintiff, and under such employment they purchased certain stock; that upon a settlement of the contract of purchase the vendor was found indebted to the defendants as agents for the plaintiff, in the sum of $314.19, and in payment and settlement of that indebtedness delivered to the defendants, as such agents and brokers for the plaintiff, four promissory notes made by Jacob Little & Co., dated October 23d, 1851, for $78.72 each, and payable respectively in six, twelve, eighteen and twenty-four months, which notes were received by the defendants in payment of the amount due to the plaintiff on such contract; that such notes were paid to the defendants and they have refused to pay over the money so received to the plaintiff.

The special matter in the answer relating to the cause of action so alleged is, that before the maturity of the said notes, in the complaint mentioned, the plaintiff became indebted to the defendants, and as collateral security for such indebtedness the plaintiff left the notes in their hands, and when the two notes, due respectively at six and twelve months, became due they were paid and credited in account, and that on the 13th of May, 1853, before the other two notes became due, the defendants assigned their account to one Teackle with the collateral securities; that there was then due to the defendants from the plaintiff $2,582.78; that on the 18th of May, 1853, Teackle brought suit against the plaintiff, which suit was, after issue joined, compromised and settled for a sum about equal to ten per cent on the amount claimed to be due; that Teackle, by virtue of the assignment, became entitled to the notes and that they were paid to the defendants as his agents before such settlement, and were credited on such account against the plaintiff, and that the compromise. and settlement was made by the plaintiff with knowledge of

Bates v. Cobb et al.

such payment, and that the amount had been credited and applied as aforesaid, and therefore that by means of such receipt and application of the money and the settlement of the said claim, after such receipt and application, the defendants became and are discharged from all liability to account for or pay over the moneys to the plaintiff.

It was shown on the trial that the defendants received the four notes mentioned in the complaint as the plaintiff's agents or brokers in settlement of a balance due to him; that when the first two became due they were paid and it is conceded that they were duly accounted for; that on the 13th of May, 1853, the defendants claiming that the plaintiff owed them a balance of $2,582.78 in account, on their transactions for him, assigned their account of such transactions to Elisha W. Teackle, who brought an action against the said plaintiff to recover such balance. The plaintiff defended that action upon various grounds not material to the present case, but he also set up in his answer a counterclaim averring that on or about the 23d of April, 1853, the present defendants had also received to the use of the plaintiff (then defendant) the sum of $78.72, that being the principal sum mentioned in the third of the said four promissory notes, which sum, with interest, he claimed to set off against the claim of the said Teackle as assignee; that action was pending until Febru ary 8th, 1855, when it was settled by the payment of ten per cent of the claim of the said Teackle and $125 on account of the costs of suit, and a receipt was given on behalf of Teackle expressing that the amount was paid and received in full of "the account and demand sued upon" in that action.

During the pendency of that suit the fourth of the above mentioned notes, being also for $78.72, was on or about the 23d or 26th of October, 1853, paid to the defendants.

The facts found by the Referee, so far as material to the present appeal, are, "That the defendants received the certain promissory note of Jacob Little & Co., mentioned and set forth in the first cause of action, set forth in the complaint in this action as due and payable in twenty-four months after date, for account of the said plaintiff; and that the said note was paid at maturity, and the proceeds thereof were received by said defendants, and that they have never paid or accounted for the same to

Bates v. Cobb et al.

plaintiff; that the said last mentioned note was not embraced in the settlement between plaintiff and said Elisha W. Teackle; that said note was not held by defendants as collateral security, as alleged in the answer; and as conclusions of law from the facts found, the said Referee found that the said plaintiff was not entitled to recover against the said defendants for any part of the amount claimed in the second and third causes of action set forth in the said complaint, or any part of the aforesaid note payable at eighteen months after date; and that said plaintiff was entitled to recover the full amount of the promissory note therein referred to as payable twenty-four months after date, being $78.72, with interest from the date of the maturity of said note." To which finding and decision of the Referee the defendants' counsel duly excepted.

Judgment for the plaintiff having been entered upon this decision of the referee, the defendants appealed to the General Term.

J. B. Yates Sommers, for the defendants, (appellants.)

I. The complaint does not state facts sufficient to constitute a cause of action, and, therefore, the Referee erred in denying defendants' motion to dismiss the complaint.

The first count is defective, in not showing how the plaintiff acquired title to the notes, or that he, in fact, had any title. He claims title upon an alleged indebtedness from a vendor to a vendee, when none of the facts stated by him show how such an indebtedness could exist. It might have been sufficient to have averred the existence of the indebtedness without setting forth the facts which gave rise to it; but having set forth the facts, the plaintiff's case must fail, unless those facts justify the conclusion of indebtedness.

II. The defendants were not simply the brokers or agents of the plaintiff. They acted for him not only in that capacity, but also in the capacity of factors-buying and selling and making advances for him, and thus having possession of his property. They transacted his business in their own names, and thus acquired rights beyond those of mere brokers. One of these rights gave them a lien on the property of the plaintiff which came into their hands, for the amount of their commissions,