issued on this judgment, a year or so before the execution in question, was inadmissible. It tended in no way to justify the defendant for any neglect to enforce the execution placed in his hands. Nor did it tend to prove what directions the plaintiff had given to this defendant. The evidence in this case was conflicting, and this improper evidence very probably had influence with the jury. Judgment reversed; new trial granted; costs to abide event. In re PRESTON. (Supreme Court, General Term, Third Department. September 21, 1889.) MORTGAGES-ASSIGNMENT OF DEBT-RIGHTS OF ASSIGNEES. The payee of certain notes indorsed some of them over, and then made an assignment for the benefit of creditors. Afterwards the maker, without knowledge that any of the notes had been transferred, executed a mortgage to the assignee for the benefit of creditors to secure the notes. Held, that the proceeds of the mortgage should be applied pro rata to the notes in the hands of the assignee and indorsees without regard to any preferences contained in the assignment, and it is immaterial that the mortgage was executed in pursuance of a prior agreement that the notes were to be so secured. Appeal from special term, Ulster county; SAMUEL EDWARDS, Judge. Fitch made a general assignment to Preston in November, 1884. Before that time, Mrs. Anderson had given Fitch several promissory notes in payment of goods sold, amounting to over $13,000. One of these notes, of the amount of $1,169, remained in his hands at the time of the assignment. The others had previously to the assignment been discounted by banks, and were held by them with Fitch's indorsement, amounting as follows: By National Bank, $4,194; by National City Bank of Brooklyn, $1,200; by State of New York National Bank of Kingston, $5,861. Fitch's assignment, after wages due employes, preferred notes held by the National Bank of Rondout, on which he was liable as indorser or otherwise. A few days after the execution of the assignment, Fitch procured from Mrs. Anderson a mortgage on real estate. It was given to Preston, assignee of the estate of Fitch. It recited that Mrs. Anderson was indebted to the estate of Fitch in the sum of $8,000, and was conditioned to pay that sum February 2, 1885. This mortgage was given to secure the aforesaid notes, amounting to over $13,000. It was made for $8,000, because that was all the property was worth. The mortgage was given in pursuance of a prior understanding between Fitch and Mrs. Anderson that she was to secure these notes on that property. At the time the mortgage was given Mrs. Anderson did not know by whom the notes were held, but supposed they were held by Fitch. The notes were spoken of when the mortgage was given, and there was no other indebtedness of Mrs. Anderson to Fitch than these notes. Preston, the assignee, subsequently foreclosed the mortgage and obtained $4,284.46 as the net proceeds. Of that sum he applied $1,169 to the discharge of that note of Mrs. Anderson which Fitch had at the time of the assignment, and which passed to the assignee. On the accounting, this application was approved by the court, and he was directed to apply the residue so far as it would go to the payment of those notes of Mrs. Anderson, which were held by the National Bank of Rondout, the first preferred creditor of Fitch. The State of New York National Bank of Kingston, a creditor in a subsequent class, appeals. Argued before LEARNED, P. J., and FISH and PUTNAM, JJ. F. L. Westbrook, for appellant. Severyn B. Sharpe and Howard Chipp, Jr., (J. N. Fiero, of counsel,) for respondents. LEARNED, P. J. There can be no question that Mrs. Anderson gave this mortgage to secure all the notes which she had given to Fitch. Such is the testimony of Fitch, and such is the evident meaning of the transaction. She had no intention to secure one rather than another of all these notes; and the reason why the mortgage was not made for the whole amount of the notes was explained to be because the property was not worth more than $8,000. The property was hers, and she had a right to apply it as she chose. She did apply it to the payment of all these notes. Therefore it was the right of each holder of these notes to share pro rata in the avails. No one of these several holders of these notes had a right to take more than his pro rata share of the net avails. Mrs. Anderson was the debtor, and she had a right to secure one debt, or all, as she might prefer. There is not any evidence that she desired to prefer one above another. Indeed she supposed that all the notes belonged to Fitch. Her appropriation, therefore, of her own property settled the rights of her several creditors; and each became at once entitled to share pro rata in the proceeds. The previous assignment of Fitch, by which, as to his own property, he preferred the National Bank of Rondout, did not affect Mrs. Anderson's mortgage. Fitch had no right to control Mrs. Anderson's property, and he did not attempt to control her property; for when he made the assignment, the mortgage had not been executed. It is suggested that there had been a previous understanding that she would secure these notes-that is, all of them-on this subsequent mortgaged property. If this gave Fitch any equity, such equity would equitably pass to the several owners of the notes to whom he had transferred them. It is not material to the proper disposal of this case that the mortgage was in form to Preston, assignee. It was given to secure these notes, and Preston cannot be permitted to apply the proceeds in any other way than as the mortgagor determined. It is fully in the power of the court, under the statute, to make a proper and just disposition, and to cause these net avails to be applied pro rata among all who are entitled. All the persons entitled to share are before the court, and the person in possession of the property is here also. The respondents urge that if Preston took the property as assignee, then he should distribute it according to the prefer ences of the assignment; that if it took it in any other capacity it cannot be brought into this accounting. But this is not sound. As assignee, Preston is entitled to the pro rata share belonging to the note which was in Fitch's possession when he assigned; but the mortgage belonged in equity to all the holders of the notes pro rata. And as he is in possession of the avails the court can, under the equity powers given by the statute, prevent the assignee from misappropriating to the use of the assignment property which is not subject thereto. It is a settled rule that the debt is the principal, and the security is the collateral. The debts in this case consist of the several notes, and of all of them. The mortgage is but the collateral. The holders of the notes are the equitable holders of the collateral; and the person who has possession of the avails of the collateral must distribute those avails among all the holders of the notes in proportion to their claims. The decree appealed from must be modified so that Preston, the assignee, shall retain only his pro rata share of the avails of the mortgage, and shall distribute all of the said avails pro rata among all of the Anderson notes, without regard to the preferences of the assignment. The appellants are entitled to costs of their appeal against the respondents except assignee. concur. All PARSONS et al. v. RAMSEY. (Supreme Court, General Term, Third Department. September 21, 1889.) EVIDENCE-COMPETENCY. In an action on account, a letter writen by a third person, material to the issue, and calculated to prejudice the jury, which is a mere unverified statement, for the admission of which no foundation is laid, is inadmissible, over objection. Appeal from Albany county court. Argued before LEARNED, P. J., and LANDON and INGALLS, JJ. R. W. Brass, (J. H. Clute, of counsel,) for appellant. F. E. Wadhams, for respondents. INGALLS, J. This action was brought by the plaintiffs to recover of the defendant the sum of $146.50, for printing certain matter contained in the following bill: ALBANY, N. Y., 188-. "M. Hon. J. H. Ramsey to Weed, Parsons & Co., Dr., 39 and 41 Columbia St., near Broadway. "1881. "Book & Job Printers, Publishers, &c. "Mch. 12. Ptg. 100 cops. bill rel. to canal towing, 2 pp., 5,000 speeches of Hon. W. W. Astor and Hon. Dolphus S. Lynde, 12 pages, 80 00 Composition on speech of Hon W. W. Astor for Jour Ptg. nal and Argus, 9 00 2.50 2 50 3 50 45 00 100 cops. Senator Astor's speech separately, 146 50" The plaintiffs claimed at the trial in the county court that such printing was done at the instance of the defendant, who promised to pay therefor. Evidence was produced in support of the plaintiffs' theory, and the defendant was examined as a witness on his own behalf, and positively denied that he requested the plaintiffs to perform the work, or that he promised to pay therefor. There was a direct conflict in the evidence upon the main question involved. The plaintiffs were allowed, against the objection of the defendant, to read in evidence the letter of H. E. Tremain, which was addressed to Mr. Frederick E. Wadhams, the plaintiffs' attorney, which was dated July 8, 1886, which was an answer to a letter addressed to Mr. Tremain by Mr. Wadhams, in relation to the plaintiffs' claim for such printing, and as to the defendant's liability therefor. The letter objected to is contained in the printed case, and is as follows: "Law Offices of Tremain & Tyler, 167 Broadway. "NEW YORK, July 8, 1886. "Frederick E. Wadhams, Esq., Albany, N. Y.-DEAR SIR: Absence from the city has delayed this reply to your note of June 29th. I am quite sure that I did not personally incur or permit myself directly or indirectly to become responsible for any unpaid printing bills in the matter you mention. My relation to the subject you mention was purely advisory, and under the direction of Mr. Ramsay. I remember co-operating with him, and with the private secretary of Mr. Astor in correcting, for prompt circulation, the proofs of Mr. Astor's speech. If I had had any idea that this printing had not been ordered by some one else than myself, I should have paid further attention to the matter, such as ordering or receiving the stated number of copies, and insuring the payment of the bill. My recollection that I had nothing to do with incurring this bill, and was not even indirectly charged with the duty of seeing that it was paid, is confirmed by the circumstance that I never knew there was any printing bill incurred, while I was professionally employed in the matter, that remained unpaid until a few weeks ago, when Mr. Parsons, in his store, called it to my attention. My recollection is further confirmed by learning, as I then learned, that there were other items in the bill (such as printing speeches of others) which I never knew were printed until the printed copies were distributed, and in the proofs of which I never was consulted. Irrespective of any question of liability, had I known of any unpaid bills of this character in the summer of 1881, I should have exerted myself actively to have insured their payment. I cannot undertake, however, to shoulder a loss, the result of inadvertence on the part either of Mr. Ramsey or my client, particularly at this late day, when I would be without any means to recoup my loss if I should assume it. Had I known of this unpaid bill in season, I should have done my best to have it paid. Even since the failure of my client, had I personally incurred it, I should pay it. I do not think Mr. Ramsey's recollection will be found to differ from mine, or that he will say under any circumstances that I should pay this bill, even though not liable. I did not have an opportunity to see Mr. Ramsey after Mr. Parsons mentioned the matter to me this spring, so you are at liberty, if you choose, to show him this letter. Yours, truly, H. E. TREMAIN. "P. S. I had supposed that Mr. Crane, not Mr. Ramsey, ordered the printing." The statements contained in the letter are clearly material as bearing upon the principal question involved in the controversy, viz., whether the defendant procured the work to be done by the plaintiffs, and promised to pay therefor. The letter was well calculated to prejudice the defendant's case with the jury, and it doubtless had that effect. The letter amounted merely to the unverified statement of Mr. Tremain, and we are not able to gather from the case, or elsewhere to discover, any substantial ground which justified its reception as evidence. The counsel for the defendant not only objected to its admission, but moved to strike it out after it was received, and excepted to the ruling of the court in admitting it as evidence, and in refusing to strike it out. We do not discover that the defendant admitted the truth of the material statements contained in the letter, or that any sufficient foundation was laid for the admission of the letter as evidence. This error seems to us so clearly fatal to the recovery that it becomes unnecessary to consider any other question raised upon this appeal. The judgment must be reversed, and a new trial ordered, with costs to abide the event of the action. All concur. CLARK v. ELDRED. (Supreme Court, General Term, Third Department. September 21, 1889.) 1. APPEAL APPEALABLE Order-COUNTY COURT. Under Code Civil Proc. N. Y. § 1342, amended by Laws 1881, c. 135, which provides for an appeal from an order made by the county court in an action taken to it by appeal; and section 1340, amended by Laws 1888, c. 507, which provides for an appeal from an order of the county court granting or refusing a new trial,-an appeal lies from an order of a county court granting a new trial in an action taken to it by appeal. 2. REFERENCE-MISCONDUCT OF REFEREE-NEW TRIAL. Where a new trial has been granted to plaintiff for misconduct of the referee, partly caused by defendant, on condition that plaintiff shall pay the costs of the reference if finally successful, the condition will be stricken out as unreasonable. Appeal from Rensselaer county court. Action by Anna M. Clark against Perry W. Eldred. Judgment was rendered for defendant, and new trial afterwards granted to plaintiff on certain conditions. From the part of the order imposing conditions plaintiff appeals. Argued before LEARNED, P. J., and FISH and PUTNAM, JJ. H. A. King, for appellant. D. M. Westfall, for respondent. LEARNED, P. J. The opinion in Reilley v. Canal Co., 102 N. Y. 383, 7 N. E. Rep. 427, gives two reasons for its conclusion,-one, that no order had been entered in the county court. If no order had been in fact entered, then, of course, there was no occasion justifying a decision that such order could not be reviewed. The other reason was that an order granting or refusing a new trial was not an order affecting a substantial right. See Code Civil Proc. § 1340. This decision made it necessary for the legislature to express its mean ing more clearly. And it did so by chapter 507, Laws 1888,1 amending section 1340, Code Civil Proc. Since that amendment, it would be difficult for the court of appeals to deny the right of appeal under that section. Agricultural Works v. Eggleston, 107 N. Y. 277, 14 N. E. Rep. 312. With this section, thus amended, and with section 1342, as amended in 1881,2 we think that the present appeal lies to this court. Cramer v. Lovejoy, 41 Hun, 581; Gray v. Fisk, 53 N. Y. 630. eree. We think, also, that there are cases where the terms imposed on granting relief may be so contrary to those established by law and practice as to justify a review in this court. O'Brien v. Long, 1 N. Y. Supp. 695. The order of the county court granted a new trial on the ground of misconduct of the refHe had reported in favor of the defendant for costs. The court imposed as terms that, if the plaintiff should be successful on the merits upon a new trial, she should credit the defendant on the judgment and execution with the sum paid by him for referee's fees and stenographer's fees on the first trial. There are two constructions which may be given to this order. One is that the plaintiff, if successful, would, on final judgment, include in her costs the referee's fees and stenographer's fees on the former trial, and therefore that the defendant should not pay these twice; the other is that the plaintiff would not include these sums in her costs, and that the defendant would offset what he had paid for the referee and the stenographer. The latter is the construction put on the order by the plaintiff, and on that construction she insists that the order is unjust in its terms. The alleged improper conduct of the referee consists in drinking liquor with the defendant, at his expense, in saloons, while the reference was pending, and in altering his report after it had been delivered to the defendant's attorney. Enough appears in the affidavits to fully justify the setting aside of the report; and it will be seen that the grounds on which it was set aside are, to some extent at least, chargeable against the defendant. It seems, therefore, rather strange that the terms imposed on setting the report aside should be beneficial to the defendant, on whom some of the blame must rest for this miscarriage of justice. Justice plainly would require that the referee should refund what he has received for fees; but perhaps this cannot be brought about. But, should the plaintiff finally recover in the action, then it will have been determined that she had a just claim, and that the defendant was wrong in neglecting to pay it. It would, then, seem unreasonable to make the plaintiff, in that case, pay the fees of the first referee and of the stenographer, when she was in no way blamable for the misconduct. The claim in suit is about $60. The defendant's costs are over $374, of which the referee's fees are $125, and the stenographer's $3.50. To require the plaintiff, if successful, to pay these sums, is practically to deny her justice. She is entitled to a fair trial. It is decided that she has not had that, owing to the fault of the referee, and perhaps of the defendant. If the referee alone were culpable, it might then be the just disposition to make these fees of the referee a part of the final costs, so that they would fall on the unsuccessful party. But the order appealed from casts these fees on the finally successful party; for, if the plaintiff is unsuccessful in the end, then we suppose the defendant will tax these fees in his final bill; and, if the plaintiff is successful, she is required by this order to pay these fees. On the whole, it seems to us that the best disposition is to strike out that part of the order which is appealed from. The part of the order appealed from is stricken out; the $10 costs of this appeal and printing disbursements to abide the event of this action. 1Laws N. Y. 1888, c. 507, amending Code Civil Proc. § 1340, provides that an appeal may be taken to the supreme court from an order of the county court granting or refusing a new trial. Laws N. Y. 1881, c. 135, amending Code Civil Proc. § 1342, provides that an appeal may be taken from an order made by the county court "in an action brought in, or taken by appeal to, the county court." |