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said compromise, the plaintiff had an oral stipulation with Fisher & Co. for a preference. The conditions of the compromise were not fulfilled, and the plaintiff received nothing under it. On March 28, 1877, the plaintiff commenced suit against Fisher and Whiting on the contract for the purchase of the goods. Fisher and Whiting appeared in the action by attorney, but did not answer, and made default. On April 18, 1877, the plaintiff's attorney served notice of adjustment of costs, but no adjustment was had, and no judgment was docketed, and the suit remained in that condition until after this action was commenced. The defendant's testator, who was the original defendant herein, set up that action as a defense, claiming that the plaintiff had elected thereby to affirm the contract, and thereupon the plaintiff, on September 26, 1879, obtained and entered an ex parte order, at a special term of this court, that the said action be discontinued on payment of defendant's costs. On the same day the plaintiff tendered to the attorney of Fisher and Whiting $10 for their costs in said action, which he declined to accept. On May 14, 1877, the plaintiff commenced suit against Hersee, in which Fisher and Whiting were named as defendants, but the summons and complaint were served on Hersee alone, and he alone answered. The allegations in the complaint upon which issue was taken and a trial had, were, in substance, that the purchase of said goods was fraudulent, and that Hersee participated in the fraud. The action was tried before Mr. Justice BARKER without a jury, and judgment rendered in favor of Hersee, which was affirmed at the general term, on appeal, in June, 1879.

The present action was commenced July 31, 1879. The referee before whom it was tried found, in substance, that the sale of said goods on credit was induced by representations made by Fisher respecting the means and liabilities of said firm which were false, to his knowledge; that, at that time, Fisher & Co. were insolvent, and unable to pay their debts, and knew themselves to be so; and that they ordered said property, and obtained possession of the same, without the expectation or intention of paying for it. He found the facts of the indebtedness of said firm to Hersee, the suit brought, and judgment recovered therein, and the issuing of execution, and the levy and purchase by Hersee, substantially as above stated. He also found that, at the time of the purchase, Hersee advanced nothing for the goods, but took them in part payment of a precedent debt, and was not a bona fide purchaser. He found that, before the commencement of said action, the plaintiff demanded of the defendant possession of said goods, and defendant refused to surrender them. He also found the facts above stated in reference to the compromise, and the two actions brought by the plaintiff, and he found that, in the last of said actions, Justice BARKER decided that the purchase by Fisher & Co. was fraudulent, but that Hersee was not a party to the fraud. The referee also found, as conclusions of law, that, by reason of the fraud so found, no title to the property vested in Fisher & Co.; that, as the defendant's testator parted with no value for the goods, he acquired no better right to them than was possessed by Fisher & Co.; that his levy was a conversion; that none of the subsequent acts of the plaintiff constituted a waiver of the cause of action herein; and that the plaintiff is entitled to recover the value of so much of said property as was levied on by him, with interest. The report of the referee was affirmed in the supreme court at special and general terms.

E. A. Scroggs, for appellant, Hersee, Ex'x, etc. D. H. Humphrey, for respondent, Equitable Co-operative Foundry Co.

RAPALLO, J. The point is elaborately and ably discussed in the opinion of SMITH, P. J., at general term, that the bringing of the action by the plaintiff against Fisher and Whiting for the contract price of the goods sold to them was not an election to affirm the contract, which was final, and precluded the plaintiff from subsequently bringing this action in disaffirmance of the contract, because the first action was abandoned and discontinued before trial or judgment, and no provisional remedy or other benefit was obtained by the plaintiff therein, nor was the position of the parties changed thereby.

We do not, however, deem it necessary to pass definitely upon that point, for the reason that there appears in the case no finding, or request to find, that, at the time of the bringing of the action on the contract, the plaintiff had knowledge of the fraud which entitled it to rescind the sale. This fact was essential to put the plaintiff to its election of remedies, and it should appear in the findings of fact to disclose error in the conclusion that the bringing of the action was not a waiver of the right to disatfirm the contract. The burden of showing error in the conclusion of the referee is on the appellant, and nothing is better settled than that this court will not, for the purpose of reversing a judgment, look into the evidence to supply a fact not found. It is only for the purpose of affirming a judgment that the court will look at the evidence to supply a fact not specified in the findings. The mere bringing of the action for the price of the goods, unless it was brought with knowledge of the fraud, was not a binding election, or a waiver of the right to rescind, and no error in the conclusion of the referee is disclosed by the record.

The point made in the dissenting opinion of BARKER, J., at general term, that the finding of the referee that, before the commencement of this action, the plaintiff demanded of the defendant possession of the goods, and the defendant refused to surrender them, is unsupported by the evidence, is not available to the appellant on this appeal. If the finding was unsupported by any evidence, it was an error of law reviewable in this court; but, in order to raise the point here, it was necessary that the finding should have been excepted to, and the case contains no such exception.

The other points are fully discussed, and, I think, properly disposed of, in the prevailing opinion at general term.

The judgment should be affirmed.

(All concur.) (103 N. Y. 604)

CONSELYEA and another, Ex'rs, etc., 0. SWIFT.

(Court of Appeals of New York. December 7, 1886.) 1. PROMISSORY NOTES-COMPLAINT-ANSWER-EVIDENCE-BURDEN OF PROOF.

Where, in an action upon a promissory note against an indorser, the answer denied none of the plaintiff's allegations, but set up affirmatively that the defendant was an accommodation indorser, and that the note was in fact paid out of moneys in the hands of the plaintiff's testator applicable thereto, the whole burden of proof was

upon the defendant, and without evidence the plaintiff was entitled to a verdict. 2. TRIAL-RIGHT TO OPEN AND CLOSE-ACTION ON NOTE-COMPLAINT-ANSWER.

Where, in an action upon a promissory note against an indorser, the allegations of the complaint were not denied, but defendant set up in his answer that he was an accommodation indorser, and that the note had been paid out of moneys in the hands of the plaintiff's testator applicable thereto, the defendant holds the affirmative of the issue, and was entitled to open and conclude. Action on promissory note. Judgment for defendant. Plaintiffs appealed. Mr. Troy, for appellants. Mr. Ross, for respondent.

DANFORTH, J. The complaint contains seven causes of action. As to the first six no question arises. The seventh makes out a perfect case upon a promissory note against the defendant as indorser, and the answer denies none of the plaintiffs' allegations, but sets up affirmatively that the defendant was an accommodation indorser, and that the note was in fact paid out of moneys in the hands of the plaintiffs' testator applicable thereto. The defendant adds, upon information and belief, “ that the said plaintiffs are not the lawful owners and holders of said note, and that he is not indebted to them thereupon in any sum whatever.” This clause is relied upon by the respondent as an answer to the appeal. It is not sufficient. It is not a denial of any averment. Neither of the facts so controverted are alleged in the complaint. It is merely an affirmative statement of a conclusion drawn from the preceding new matter in the answer; and, while it might have been omitted as wholly unnecessary, it put in issue no part of the plaintiffs' case. The whole burden of proof lay upon the defendant, and without evidence the plaintiff was entitled to a verdict. Fleischmann v. Stern, 90 N. Y. 110.

The learned counsel for the respondent has placed upon his points cases from other states.' We do not refer to them, for our own Code is upon this subject very explicit, and requires each material allegation in the complaint, not controverted by the answer, to be taken as true. Section 522. In this case, as before suggested, no allegation is denied. It was therefore for the defendant to establish the defense set up, and, as he thus held the affirmative, he had the right to open and close the evidence; and the learned trial judge erred in ruling to the contrary.

The judgment appealed from should therefore be reversed, and a new trial granted, with costs to abide the event.

(All concur, except RUGER, C. J., and FINCH, J., not voting.)

(103 N. Y. 607)

DENTON and others o. SANFORD and others.

(Court of Appeals of New York. December 14, 1886.) 1. EXECUTORS AND ADMINISTRATORS - POWER TO PAY TESTATOB's BID AT FORECLOSURE

SALE.

Testator, foreclosing a mortgage on realty out of the state, bid it in at the sale for the amount of all

the prior liens and costs. Before completing the transaction he died, and his executors, without waiting to be sued, but acting in good faith, under the advice of counsel, and with reasonable prudence and care, paid the amount of the bid. Held, that, being bound to fulfill their testator's contract, they

had a right to discharge the obligation voluntarily, without suit. 2. SAME-ACTS IN GOOD FAITH, BEFORE QUALIFYING, SUBSEQUENTLY RATIFIED.

Executors paid the purchase money and took a deed of land bid in by testator at foreclosure sale before qualifying as executors. After qualifying, they ratified

these acts, which were all done in good faith. Held, no devastavit. 3. SAME-INVESTING TRUST FUND IN SECURITIES OUT OF STATE-DEVASTAVIT.

The executors sold the real estate, and, being unable to obtain cash, took a morte gage, which was supposed to be ample security to represent certain trusts created by the will, and invested the trust funds in this mortgage coming to the estate in this way. Subsequently a flaw in the title of the real property, unknown to the executors, and probably to testator, was brought to light, and payment of the interest on the mortgage ceased. All the acts of the executors were in perfect good faith. The beneficiaries sued the executors for the deficiency in the trust fund. Held, that this case comes within the exception to the rule forbidding an executor or trustee residing in this state, and deriving his authority from a will executed and admitted to probate here, to invest trust funds in mortgages Secured by real estate situated

out of the state. 4. SAME-SURROGATE'S FINAL DECREE-CONCLUSIVENESS.

The whole administration by the executors was reviewed by the surrogate upon their accounting of which the petitioners hereis had notice. The surrogate's decree charged them with the amount of the inventory, and the increase thereof, and credited them with the loss on the inventory, with the expenses and legacies and trust fund invested in this mortgage, and has never been impeached or reversed. Held, the decree furnishes absolute protection to them. Benjamin Low, for appellants, Denton and others. F. V. Sanford, for respondents, Sanford and others.

EARL, J. Samuel Denton died April 7, 1878, leaving a will in which these respondents were appointed executors, and leaving personal estate inventoried at about $48,000, but actually worth much less. He gave legacies to various persons, and created trusts, and made these respondents trustees of $3,000, and ordered the interest to be paid annually to Nathaniel R.

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Denton, and, at his death, the principal sum to be divided between his children; of $1,000, and ordered the interest to be paid annually to John Baird, and, at his death, the principal sum to be divided between his children; and he also made them trustees of $500, for the benefit of George W. Denton.

Previous to his death he held a mortgage upon premises situated in the state of New Jersey, and he there commenced a foreclosure of that mortgage in the court of chancery, and obtained a judgment for foreclosure, directing a sale of the mortgaged premises. In pursuance of that judgment, the premises were sold, and bid off for the testator by his attorney for the sum of about $11,000, which was the amount of the prior liens and incumbrances upon the premises, together with the costs of the foreclosure; but before the sale was consummated, and the deed given, he died. After his death the executors were called upon to complete the sale, and pay the purchase price, and on the eighth day of June, 1874, they took the deed in their individual names, but for the benefit of the estate. All this they did acting in good faith, under the advice of counsel, and in the exercise of reasonable prudence and care. They held this real estate until April 2, 1877, in the mean time renting it, and making diligent efforts to sell it; and, having failed in such efforts, on that day they conveyed it to John Burt for $6,000, and on the same day he conveyed it to Mary F. Maples, and she executed to Burt two mortgages,-a first mortgage to secure $4,500, and a second one to secure $1,500, of the purchase money. The mortgage for $4,500 was assigned to the executors as trustees for the security, and as an investment of the funds belonging to the three trusts above mentioned.

Subsequently to that date the executors rendered a final account of their proceedings, after citations personally served upon all these petitioners. Upon that accounting it appeared that they had paid all the legacies except those invested in and represented by the mortgage for $4,500, and another trust of $1,500, and the surrogate made a decree in which he adjudged that the account of the executors should be finally settled and allowed, as filed and adjusted; and the decree recited further as follows: "And, it further appearing that said executors have the sum of $6,000, invested on bond and mortgage for the following persons: The sum of $3,000 for said Nathaniel R. Denton, the sum of $1,000 for John Baird, the sum of $500 for George W. Denton, and the sum of $1,500 for the said Emily Conklin; and it further appearing that said legatees Nathaniel R. Denton, John Baird, and George W. Denton claim interest on their respective legacies from the date of the death of said Samuel Denton, which occurred on the seventh day of April, 1874; and after hearing the respective counsel in this matter, and due deliberation being had thereon,-it is ordered, adjudged, and decreed that said executors pay to Nathaniel R. Denton the interest on his said legacy of $3,000, from April 7, 1874, being the sum of $210; and that they pay to John Baird the interest on his said legacy of $1,000, for the same period of time, being the sum of $70; and that they pay to the general guardian of said George W. Denton the interest on his said legacy of $500, for the like period of time, being the sum of $35,—said interest amounting, in all, to the sum of $315, and for which amount said executors are credited in the foregoing statement;" and it was further decreed that the executors, upon complying with the terms of the decree, should be discharged. Thereafter interest on the two mortgages was regularly paid, down to the first day of April, 1882, and paid over to the persons entitled thereto under the various trusts and the decree of the surrogate. Subsequently it turned out that, unknown to the executors, and probably also to the testator, there was a defect in the title to the real estate, and in consequence thereof the mortgagor ceased to pay the interest upon the mortgage for $4,500, and it was foreclosed by the executors; and there was realized upon such foreclosure, after deducting the costs and expenses of the same, nearly $2,300, for which they have accounted. After that time no interest was paid to these petitioners, and they filed this petition in the surrogate's court calling the trustees to account for the money invested in the New Jersey real estate, and asking that they be made personally liable for any deficiency in the trust fund.

There is nothing in the proof or the findings of the surrogate impeaching the perfect good faith of the executors in all their transactions. The testator having bid off the real estate in New Jersey, and, as we must assume, having become personally obligated to pay his bid, and to perform his contract of purchase, these executors, representing his estate, were bound to perform that contract. They were not obliged to wait until it was enforced against them by legal proceedings, but they had the right voluntarily to discharge the obligation which their testator had incurred.

It matters not that they paid the money and took the deed before they had qualified as executors. After they had qualified they could ratify what they had previously done, and thus make that legal which was before illegal. They cannot be charged with a devastavit in taking money of the estate before they had received their letters, and, acting in good faith, and with what then appeared to be reasonable prudence, using it to discharge an obligation, apparently valid, resting upon their testator. They thus found themselves with this land belonging to the estate, situated in the state of New Jersey. They sold it for the best price they could obtain, which was, without their fault, much less than cost. . Having paid all the legacies which were due and payable, and which they were bound to discharge in cash, they took the two mortgages for $6,000 to represent the trust funds which they held. The mortgage for $4,500, in which these petitioners were interested, was apparently adequate security.

While it is a general rule that an executor or trustee residing in this state, and deriving his authority from a will executed and admitted to probate here, cannot invest trust funds in mortgages upon real estate situated out of the state, yet, as stated in Ormiston v. Olcott, 84 N. Y. 339, that rule is not uni. versal, and has some exceptions. There FINCH, J., said: “The rule should not be made arbitrary and inflexible, and so rigid as to admit of no possible exceptions, for it is merely an outgrowth or consequence of the broader and admitted proposition that the duty of a trustee in making investments is to employ such diligence and such prudence as, in general, prudent men of discretion and intelligence in such matters employ in their own like affairs. While, therefore, we are not disposed to say that an investment by a trustee in another state can never be consistent with the prudence and diligence required of him by the law, we still feel bound to say that such an investment, which takes the trust fund beyond our own jurisdiction, subjects it to other laws, and the risk and inconvenience of distance, and of foreign tribunals, will not be upheld by us, as a general rule, and never, unless in the presence of a clear and strong necessity, or a very pressing emergency.

We think this investment comes within the exceptions to the rule. Here was land belonging to the estate, and the trustees sold it. Not being able to obtain cash, they took a first mortgage, which was supposed to be ample security to represent the trusts. They did not take available funds, and carry them out of the state and there invest them in real estate, but they invested the trust funds in a mortgage which regularly and legitimately came to them, upon land belonging to the estate which they sold, and we cannot say that it was a breach of duty on their part so to invest them; and, if there were nothing more in the case, the loss upon the investment, however disastrous to these petitioners, could not be cast upon the trustees.

But we think, also, that the decree of the surrogate upon the final accounting of the executors furnishes absolute protection to them. These petitioners were parties to that accounting, and it does not appear that any objection was there made to the payment of $11,000 in discharge of the testator's bid, or to

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