Musgrave v. Buckley — 24 N.Y. St. Rep. 74

Majority

p. 74

Thomas B. Musgrave, Resp’t, v. William F. Buckley, App’lt.

(Court of Appeals, Second Division,

Filed June 4, 1889.)

Headnote

1. Railroad bonds—Subscription to—Partnership—Right op one PARTNER TO RECOVER ONE-HALP THE LOSS SUSTAINED ON PURCHASE OP BONDS ON JOINT ACCOUNT.

In an action to recover one-half the losses sustained by reason of a forfeiture of a subscription on joint account for certain railroad bonds, it appeared that plaintiff and defendant entered into an agreement to the effect that the subscription which was taken in defendant’s name should be owned and disposed of for their joint account, and as a consideration plaintiff agreed to furnish the money to pay the installments and carry the subscription for- their mutual benefit. Pursuant to such arrangement plaintiff paid to defendant the amount of the first installment paid by the latter. Subsequently, plaintiff and defendant conferred together in reference to the calls for further installments on the subscription, and agreed to let the company issuing the bonds avail itself of its option to forfeit the subscription for non-payment of installments, and the amount paid

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' thereon, and thereafter the option was exercised by the company and the forfeiture made, with the concurrence of both plaintiff and defendant. Held, that as the forfeiture was only at the option of the company, and until the company saw fit to exercise it, and as the defendant was under no obligation to submit to it, but could have paid the calls and saved the forfeiture, the plaintiff was entitled to recover.

2. Practice—When facts not re viewable—Code Civ. Pro., § 1337.

By section 1337 of the Code of Civil Procedure, questions of fact found by a referee upon a conflict of testimony, and which have been affirmed by the general term, are not subject to further review in this court.

Appeal from a judgment of the general term of the court of common pleas of the city and county of New York, affirming a judgment entered upon the report of a referee.

John E. Parsons, for app’lt; George W. Ellis, for resp’t.

This action was brought to recover one-half of the losses sustained by reason of a forfeiture of a subscription on joint account for two hundred thousand dollars of the bonds of the New York, West Shore and Buffalo Railway Company.

The North River Construction Company had undertaken to build and equip for the New York, West Shore and Buffalo Railway Company, a double track railway from a point opposite of the city of New York, along the west shore of the Hudson river and the south bank of the Mohawk river, and thence to the city of Buffalo, and to receive in payment therefor the mortgage bonds and capital stock of the railway company. The North River Construction Company had opened a subscription book for the bonds of the railway company, in which the subscribers undertook to pay the construction company par and accrued interest for the bonds to the amount set opposite of their respective names, upon the conditions that ten per cent of the subscription shall be paid up on call, and thereafter not more than ten per cent shall be called at any one time, and on at least ten days’ notice. A default in the payment of any installment entitled the company, at its option, to forfeit the subscription, and all installments previously paid. Each subscriber, upon the payment of the entire amount subscribed by him, was entitled to receive the bonds subscribed for, and, in addition thereto, fifty per cent of the par of his subscription, in certificates representing full paid capital stock of the railway company. The defendant subscribed for the bonds of the par value of two hundred thousand dollars, and paid the first installment of ten per cent, amounting to the sum of twenty thousand dollars. The plaintiff and defendant had entered into an arrangement to the effect that the subscription so taken in the name of the defendant, should be owned and disposed of for their joint account, and, as a consideration therefor, the plaintiff agreed to furnish the money with which to pay the installments, and to carry the subscription, until disposed of, for their mutual benefit. Pursuant to such arrangement, the plaintiff paid to the

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defendant twenty thousand dollars, the amount of the first installment paid by him. At the time of this agreement, the bonds were considered valuable, but thereafter, and about the 1st of November, 1881, they fell below par. In January, 1882, they were worth but ninety cents on the dollar, and, in the following April, only about seventy cents. On the 6th day of January, 1882, the construction company made a call for ten per cent of the subscription, and on the eighth of April made another call of like amount. The plaintiff refused to advance the money for these calls, and thereafter, and on the 15th day of August, 1882, the construction company, exercised its option, and declared the subscription and the payment made thereon, forfeited.

The defendant claims that the plaintiff ought not to recover, for the reason that he refused to advance the money with which to pay the January and April calls, thereby causing a default which permitted the construction company, at its option,to forfeit the subscription and installment paid,and that tire fact that the market value of the bonds had declined, formed no excuse for such default. We do not consider it necessary to enter upon a' discussion, or to determine the legpl propositions thus raised, for we consider them fully answered by the fact that the plaintiff and defendant conferred together in reference to the calls for installments and agreed to let the construction company avail itself of its option to forfeit the subscription, and the amount paid thereon; and thereafter the option was exercised by the company, and the forfeiture made, with the concurrence of both the plaintiff and the defendant. These facts were found by the referee upon a conflict in the testimony. They are in accordance with the testimony of the plaintiff, and have been affirmed by the general term, and are not subject to further review in this court. Code of Civil Procedure, section 1337.

The defendant was not bound to agree to the forfeiture ; he was under no obligations to do so unless he thought it was for the best interests of himself and associate. There was no forfeiture until the fifteenth day of August, 1882 ; true, there had been a default as early as the January before, but a forfeiture did not take place at the time there was a default. The forfeiture was only at the option of the construction company, and, until that company saw fit to exercise it, the defendant could have paid the calls and prevented a forfeiture. It is not a question of waiver or estoppel; it is a question of agreement by the parties as to what was best under the circumstances. At the time they agreed to submit to the forfeiture, either party was at liberty to advance the money and pay the calls. The question was whether it was advisable to do so. At the time of the January call, the bonds had depreciated to such

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an extent that the $20,000 paid in at the time of the subscription, was an entire loss, and the decline at the time of the second call, showed that there would be an additional loss of about $40,000, if the calls were paid. Under these circumstances, it is not surprising that the parties reached the conclusion, that they had rather submit to a forfeiture, and lose the $20,000 than pay the calls, then amounting to $40,000, and lose that also.

The judgment should be affirmed with costs.

All concur.