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Brookman et al. v. Metcalf.

he afterwards gave the notes and no fraud upon him is shown, he must be deemed to have waived the condition by voluntarily giving the notes to the amount of such subscription; and on this ground alone I regard the notes as valid, binding notes even in favor of the Company, although the fact be taken to be as the Referee has found, that the $300,000 subscription was not made up. If it were material, the correctness of that finding upon the evidence might be questioned. But still more clearly is the defendant bound in this case, for after his subscription he took out policies of insurance, the premiums upon which (exclusive of unearned premiums on his open policy) was nearly equal to the amount of his two notes. As that open policy was taken in pursuance of his subscription and in performance of his agreement, I apprehend the Company were entitled absolutely to require that the whole amount of the premium be paid. It was not the ordinary case of an open policy, on which premiums can only be collected to the amount of the risks indorsed thereon.

After not only giving his notes but actually receiving policies for the amo

ts, and more than the amounts of his notes, it is too late for him to say, in the absence of any fraud, that the $300,000 subscription was not made up. (Holbrook v. Wilson, November Term, 1858;' Holbrook v. Basset, July, 1859.)

The defendant had agreed to gives notes in advance.

The note in question was therefore not only a note given for value in due course of business, but it was also a subscription note given in advance for premiums under the 12th section of the charter of the Company.

By the terms of that section, the Company were authorized to negotiate such note for the purpose of paying claims or otherwise in the course of its business.

It has often been held that such notes are valid binding notes, founded on sufficient consideration, and subject to transfer as business notes.

By the tenth of the by-laws of the Company the President or Vice-President, with the advice and consent of the Finance Committee or a majority of them, has authority to transfer bills receivable to secure the payment of losses or other purposes that shall have the sanction of the Finance Committee.

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Brookman et al. v. Metcalf. On the 30th of November, 1855, the Board of Directors, after reciting the subscription which the defendant and others had made in advance of premiums, resolved “that the officers commence at once to collect the notes * * * and proceed in liquidating the liabilities of the Company therewith."

The Company was at that time indebted to the plaintiffs in a large amount.

On the 10th of December, two notes of the Company, amounting to $5.574.56, were past due.

The statute authorized the Company to transfer the note in question for any lawful purpose in due course of business.

The Board of Directors, by a specific resolution, authorized the officers of the Company to proceed at once in liquidating the indebtedness of the Company with this and other notes mentioned.

Here was authority enough, in my opinion, for the action of the officers.

Thereupon, a settlement was made with the plaintiffs in which they accepted $2,000 in money; consented to apply $2,000 of the money due to them on a subscription also in advance of premiums, thus accepting as cash a subscription for which they were entitled to give notes on time; and agreed to give time for the payment of the residue of the sum then due to them for four months; in consideration of which the officers transferred to them the note in question as security for the payment of such residue at the end of such four months.

I think this was a valid transfer, authorized and upon sufficient consideration and in no wise inhibited nor invalidated by the statute.

If this be so the decision of the Referee was erroneous. At the time of the transfer to the plaintiffs, there was nothing due to the defendant, and therefore there was no right of set-off which can defeat the plaintiffs' recovery.

If there be no existing debt due to the defendant, at the time of the transfer of his note, he cannot set off a debt subsequently becoming due as against the assignee, although the assignment be made to secure an antecedent debt. In other words, an assignee, although he takes a note to secure a precedent debt, if there be no fraud, can collect such note notwithstanding his assignor may, by debts becoming due after the

Gilbert et al. v. Beach.

assignment, owe the maker of the note the same or a greater amount.

Besides, in this case, the plaintiffs received the note, as already stated, for a sufficient consideration in the consent to allow as cash a subscription for which they had a right to give notes on time, and in the forbearance of the residue of the debt due them.

It is claimed, that inasmuch as the receipt given by the plaintiffs for the note in question, as collateral security to the note of the Company, contained a reservation of authority to sell the notes, if the note of the Company was not paid, that therefore a sale was the plaintiffs' only remedy. That they are mere trustees to sell for account of the Company, and cannot sue on the notes. This claim is groundless. They received the notes as security, and have the legal title. They can, therefore, sue and collect the note. They have also the equitable title, holding the note as security they have a right to retain the money collected, and the circumstance that when collected it will go so far towards discharging the debt of the Company is only what is always true when the holder of such securities collects them. In that sense only the collection is for account of the principal debtor. (Nelson v. Wellington, July Term, Superior Court, 1859.)'

I concur, therefore, in the result to which Justice MONCRIEF has arrived.

The judgment must be reversed, and a new trial ordered. Costs to abide the event.

Ordered accordingly.

JOSEPH T. GILBERT et al., Plaintiffs and Appellants, v. THEO

DORE BEACH, Defendant and Respondent.

1. The owner of a lot of ground, who has contracted with masons, carpenters

and other mechanics of competent skill, for the erection of a building thereon, in a safe and proper manner, is not responsible to third persons for injuries caused by the mere negligence of the contractors' servants in the prosecution of the work.

1 Ante, page, 178.

Gilbert et al. v. Beach.

2. Where, by the contract with the carpenters, (in such case,) they had agreed

to construct a suitable gutter to receive the water falling upon the roof, and a leader running down to the basement, where it was to be connected with a main pipe leading into the sewer, and the carpenters had left the leader unfinished over the Sabbath, not extending within twelve or fifteen feet of the ground, and negligently omitted to provide effectual means of carrying off the water, in consequence of which, during a storm, the water flowed through the leader to the ground, and thence into the premises of the plaintiffs next adjoining, and caused injury to their goods: Held, that the

owner is not liable for the damages. 3. Held, also, by the Superior Court, that the neglect of the plumber, who

was to furnish and introduce the main pipe leading to the sewer, to introduce it in due season and before the storm, was no excuse to the carpenters for not extending the leader down to the basement, and did not make the owner liable. But held, in the Court of Appeals, that if the neglect to put in the main pipe caused the accident, it was the duty of the owner to cause it to be done, and he is not excused by reason of his having contracted with the plumber to do it. (Before HOFFMAN, Slosson and WOODRUFF, J. J.)

Heard, November 7th ; decided, December 10th, 1859.

This action was brought to recover damages from the defendant for injury to the goods of the plaintiffs from water which flowed from the defendant's lot into the lower story of the store of the plaintiffs, and for the expense of removing the water. At the time of the injury, a building was in course of erection on the defendant's lot, and during a heavy rain, at night, the water flowed from the roof through a leader in the rear, which reached to within about twelve or fifteen feet of the ground, and in consequence of the insufficient precautions used by the persons employed in erecting the building, it then fell to the ground and flowed into the adjoining store belonging to the plaintiffs.

The cause was tried in May, 1854, and a verdict for the plain. tiffs was taken, subject to the opinion of the Court, and upon a hearing in General Term, in March, 1855, judgment was ordered for the defendant. The pleadings and a statement of the facts proved are contained in the report of the case in General Term. (4 Duer's R., 423.) On appeal to the Court of Appeals, the proceedings were held a mistrial, and the judgment was reversed upon that ground. (16 N. Y. R., 606.)

The case was again brought to trial on the 7th day of April, 1859, before Mr. Justice Slosson and a jury, and upon a state

Gilbert et al. v. Beach

of facts, in substance such as contained in the former report of the case in 4th Duer, the Judge instructed the jury that the defendant was entitled to their verdict, which being rendered, and judgment thereon entered, the plaintiffs appealed to the General Term.

The only fact not stated in the former report which it seems material to mention, is, that it having been shown that the owner of the lot (the defendant) had made contracts for the erection of the building, and by his contract with the carpenters, they had agreed to supply and put up a leader to extend from the gutter at the roof down to the basement, there to be connected with the main water pipe running into the sewer, and that the leader had not been brought down to the basement, nor lower down than within twelve or fifteen feet of the ground, by reason of which the water flowed into the store adjoining; proof was given tending to show, on the one hand, that the defendant was bimself to furnish the main water pipe in the basement; and, on the other, that one McKensie, the plumber, had contracted to furnish and introduce it, and that he had improperly delayed doing so. And it was claimed that the want of the main pipe in the basement delayed the extension of the leader and the making the required connection with the sewer; and on the other hand it was insisted that the leader should have been continued down to the basement, whether the connection could then be formed or not, and that the negligence of the carpenters in not doing this, was the sole cause of the flowing of the water into the plaintiffs' store.

E. W. & G. F. Chester, for plaintiffs, (appellants,)

Urged the same arguments in substance stated in the former report, (4 Duer, 426,) and cited additional authorities. (Kelly v. The Mayor, 1 Kern., 432; Pack v. The Mayor, 4 Seld., 222; Hutson v. The Mayor, 5 id., 163; Storrs v. City of Utica, 17 N. Y. R., 104.)

Also that the building, in the condition it was on the night of the storm, was a nuisance, and the defendant, as owner, was liable on that ground.

Also, that inasmuch as the carpenters could not complete the leader until the main pipe was introduced into the basement, they were not in fault.

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