tection to have actual possession of the trust certificate, either themselves or through their depositary, they could have demanded, and would undoubtedly have received, such possession when judgment went against them.

It is also urged, on behalf of defendants, that the plaintiff has ratified the acts of the defendants, and is estopped from repudiating the same. So far as the decision of this question depends upon the conflicting oral testimony of Messrs. Untermyer and William Stewart Tod it presents a question of fact, which has been settled in plaintiff's favor, and is binding upon this court. As to the correspondence upon which the defendants rely in this behalf, we feel bound to say that it establishes neither acquiescence nor ratification. On May 28, 1895, the plaintiff, through his counsel, Mr. Untermyer, wrote: "May I further ask that when you have formulated the lines of a plan of reorganization you will kindly advise me before the plan is formally issued?" On June 14, 1895, plaintiff's counsel addressed another letter to the committee, stating, in substance, that his client was asking for further information in respect to the matter, and for representation on the committee, in view of Mr. Tod's resignation, "so that when the time arrives for formulating a plan we may have a voice in the matter." On July 9, 1895, plaintiff's counsel sent a third letter to the committee, stating that the plaintiff desired to know "if any plan of reorganization has as yet been drafted or suggested," and asking to be advised "whether such a plan is now under consideration, and how soon they are likely to be advised of its details." To the last letter the defendants replied on July 16, 1895, stating "a decree of sale has been entered. The property is now being advertised for sale, and will, I understand, be sold upon the 16th day of September. No plan has yet been adopted, and I am unable to predict the probable date upon which a plan will be issued, but I have not forgotten your request to be advised of it in advance." On the 26th of October, 1895, plaintiff again wrote, saying, "I am still without information as to what has been done with this property or toward the formulation of the plan of reorganization which was to have been announced some time ago. Will you kindly advise me at your early convenience as to when we may expect to be furnished with a definite plan, and what is being done about it?" On the 23d day of November, 1895, after plaintiff's counsel had learned of the sale under foreclosure, he wrote to the defendants, asking to be advised if the new corporation which the defendants had caused to be formed had any relation to the putting forth of a plan of reorganization; when such a plan might be expected; and whether the defendants intended to transfer the property without notice to, or assent by, the plaintiff. We quote the parts which are definitive of plaintiff's position. "As here

tofore explained to Mr. William Tod, we have felt that the agreement contemplated the issuance of a plan before the sale, with the opportunity of withdrawal under the terms of the agreement to such of the bondholders as might desire to do so.

Upon our construction of the agreement the committee now hold the property which they purchased at the sale, which was had without notice to us, as trustees for the bondholders. If, when the plan is promulgated, it fails to meet with our satisfaction, we are not, in my judgment, relegated to the acceptance of the infinitesimal sum named in the decree as the upset price, which Mr. William Tod seemed to regard as our only alternative." Having received no answer to the last letter, plaintiff's counsel again wrote to the defendants on November 30, 1895, stating, "Information has come to us to the effect that the committee is about to convey the property in its hands to the North Alabama Railway Company, notwithstanding the protests made by me on behalf of the Industrial & General Trust, Limited, and the other bondholders whom we represent. Will you kindly advise me if this information is accurate? On our construction of the reorganization agreement the committee has no such authority." November 30, 1895, was the day on which the defendants converted the plaintiff's bonds. The length of the subsequent correspondence precludes its reproduction here. It is enough to say that in all of his letters written after November 30, 1895, plaintiff's counsel persistently and consistently maintained that defendants' use of plaintiff's bonds, without having first made and filed a plan for reorganization, was a violation of the agreement, and that no correspondence entered into, with a view of avoiding possible litigation, should be considered as a waiver of plaintiff's rights in the premises. The letters written on plaintiff's behalf, instead of establishing ratification of, or acquiescence in, the unauthorized acts of the defendants, show a constant and continuing protest, which found characteristic expression in the final letter of July 20, 1898, in which plaintiff's counsel said, “My client's claim is, as you know, that the committee had no authority to use their bonds in purchasing the property. They will do nothing to affect their rights in the pending litigation." Neither in the context of this correspondence, nor in the oral evidence by which it is connected and supplemented, do we find any support for defendants' claim of ratification or acquiescence. The argument that the sale of the railroad was regularly conducted under judicial sanction, and was not brought about by the defendants; that the plaintiff knew as early as July 16, 1895, that a decree of sale had been entered directing a sale on September 16th of that year, and that plaintiff entered no protest,-is really not germane to the question of ratification or acquiescence. It is true that the con

ditions which precipitated the foreclosure sale were not of defendants' choosing, but they were the creators of the situation presented by the reorganization agreement. The plaintiff had the right, in the first instance, to assume that a plan for reorganization would be adopted and filed before the sale. When the sale took place, without the previous adoption of a plan, the plaintiff was not bound to assume that its bonds would be used without its consent. The defendants, notwithstanding their breach of duty, could still have adopted a plan which the plaintiff could have approved or rejected. Approval would, of course, have implied waiver of previous wrong, but rejection would have left the plaintiff free to reclaim its bonds, to withdraw from the agreement, and to take such steps with reference to the breach of the agreement, or the reopening of the sale, as the exigencies of the situation would have suggested or permitted. There was no acquiescence before the sale, and there has been no ratification since the sale. The failure of plaintiff to withdraw from the agreement when a plan for reorganization was filed in July, 1898, or at any previous time, did not make the agreement binding upon it. By converting the plaintiff's bonds on November 30, 1895, the defendants abrogated the agreement as to the plaintiff. The plaintiff's right and the defendants' liability became fixed on that day. It is, moreover, an elementary rule that in actions at law judgment is rendered upon the situation which exists at the time of the commencement thereof, and not at the time of the trial.

The next question for our consideration is whether the proper rule of damages was applied. The plaintiff was permitted, under the objection and exception of the defendants, to prove the value of the Birmingham, Sheffield & Tennessee River Railway Company prior to the foreclosure sale as the basis upon which to assess the value of the plaintiff's bonds at the time of the conversion thereof by the defendants. Under this ruling the question of damages was submitted to the jury, and plaintiff had a verdict of $355,000. In actions of trover the value of the property at the time of its conversion is the usual measure of damages. This rule has its exceptions, which need not be considered here. What was converted? The plaintiff's bonds. When were they converted? After the sale in foreclosure. What did the bonds then represent? Simply their proportionate part of the proceeds of the sale. The railroad had been sold for $500,000, and each bond of $1,000 was, therefore, worth $139.76. The total amount of the plaintiff's bonds upon this basis was $79,663.20. It is to be remembered that the sale under foreclosure was, as far as we are advised, reg

ular and lawful. It was the culmination of a judicial proceeding which stands unassailed. While the defendants had violated the reorganization agreement in not adopting and filing a plan previous to the sale, that had no effect upon the regularity of the proceedings in the foreclosure suit, or upon the sale itself. In this respect the case at bar differs from James v. Cowing, 82 N. Y. 456, relied upon by the plaintiff. That action was based upon an alleged breach of trust. The sale by the trustee was held to be unlawful, and the plaintiff's damages were held to have been properly measured by the recovery of his proportionate share of the value of the property as fixed by the price which it brought under a prior foreclosure sale. That is precisely the measure of damages which should have been applied here, although the form of action and facts are different. The bonds were secured by the mortgage. Up to the time of sale, the value of the property was the value of the mortgage. Upon the sale the mortgage was extinguished, and the proceeds of sale took its place. The plaintiff, while repudiating the reorganization agreement, did not attack the sale, and its recovery in this form of action, therefore, must be limited to its share of the proceeds of sale. Thus we have the anomalous result that plaintiff's refusal to acquiesce in or ratify the wrong of the defendants leaves it in a worse position than those bondholders who have deemed discretion the better part of valor, in accepting the substituted securities offered them by the defendants. The plaintiff gets $139.76 upon each bond. Its more complacent associates receive securities worth more than twice as much. This result is inevitable in the case at bar, although it might possibly be avoided under a complaint based upon defendants' breach of contract supplemented by proof of plaintiff's actual damages.

Since our conclusion upon the question of damages is that the ruling of the courts below was fatally erroneous, and necessitates a new trial, we refrain from discussing the incidental exceptions which, under a different ruling as to damages, might be interesting and important.

The order of the appellate division should be reversed, and a new trial granted, with costs to abide the event.

O'BRIEN and LANDON, JJ. (PARKER, O. J., and HAIGHT, J., in the result, on the ground that the failure to make a plan and give notice thereof before using the bonds to pay the purchase price was not a conversion, but a breach of contract), concur with GRAY, J. CULLEN, J., concurs with WERNER, J.

Judgment reversed, etc.

(170 N. Y. 219)

BECKER v. CITY OF NEW YORK. (Court of Appeals of New York. March 25, 1902.)

APPEAL-REVIEW-DIRECTED

VERDICT-ACTION ON CONTRACT-QUESTION FOR

JURY-AGENCY-EXTRA WORK.

1. Where a verdict is directed for plaintiff for a small item of her claim, and her complaint as to the other items is dismissed ou defendant's motion, without the introduction of any evidence, on appeal all the facts warranted by the evidence must be assumed as settled in plaintiff's favor.

2. Plaintiff sued for the extra rock excavation properly made in a street improvement, but which the city surveyor refused to include in his final certificate, and for the amount of inspectors' fees and overtime penalty charged against the contractor by reason of delay alleged to have been due to the mistakes of the city surveyor. From the evidence the jury were at liberty to find that the final certificate of the surveyor was false, and in bad faith. A verdict was directed for plaintiff for an undisputed item, but the complaint was dismissed as to all other claims. Held, that plaintiff was entitled to go to the jury in respect to the conclusiveness of the final certificate.

3. Where, by reason of the mistake of a city surveyor in fixing a center line in the grading of a street under a contract providing that the city surveyor should so fix the grades, but that he should be the agent of the contractor, and that the city should not be liable for his mistakes, where the contractor investigated the location of the center line after it had been fixed by the surveyor in the belief that it was erroneous, and sought to have it corrected, and proceeded with the work on that line only upon being ordered so to do by the superintendent of streets, he cannot be said to have made the city surveyor his agent in respect to the establishment of such grade.

4. Where a contractor, without objection, in grading a public street, used the grades furnished under the contract by the city surveyor, though without requesting that they should be furnished, he thereby ratified the surveyor's action, and accepted him as his agent in establishing such grade, and cannot recover for losses suffered by reason of the surveyor's mistakes.

Appeal from supreme court, appellate division, First department.

Action by Jennie T. B. Becker, executrix of James Brady, against the city of New York. From a judgment of the appellate division (71 N. Y. Supp. 1133) affirming a judgment in favor of plaintiff for an undisputed minor item, and dismissal of complaint as to other claims, plaintiff appeals. Reversed.

L. Laflin Kellogg and Alfred C. Petté, for appellant. George L. Rives, Corp. Counsel (Theodore Connoly and Terence Farley, of counsel), for respondent.

BARTLETT, J. The plaintiff is the assignee of the claim of one Benjamin J. Carr, Jr., a contractor, arising under a contract made with him by the city of New York on November 13, 1889, for regulating and grading Claremont avenue, from 122d street to 127th street. This action has been twice tried. The first trial resulted in a verdict directed for the plaintiff upon the first and

second causes of action set forth in the complaint, the third and fourth causes of action being dismissed. Judgment was entered upon this verdict in favor of the plaintiff for $22,670.57. The appellate division reversed this judgment and ordered a new trial unless the plaintiff consented to reduce her recovery to the sum of $325, the amount of the repair security retained by the city. The decision of the appellate division was by a divided court. The plaintiff declined to accept the terms tendered, and went back for a new trial, which resulted in a directed verdict in her favor for the sum of $325, the amount of the repair security retained by the city, and a dismissal of the complaint, on motion of defendant, as to all other claims. The appellate division affirmed this judgment without opinion, and that determination is now before us for review.

The complaint contains four causes of action. The third and fourth were dismissed at the last trial, and are not involved in this appeal. The first cause of action embraces the undisputed item of $325; the sum of $2,044 inspectors' fees alleged to have been wrongfully charged against the contractor and deducted from the amount due him under the contract; the sum of $6,656.80 for excavating 7,728 cubic yards of rock, at the contract price, which the city surveyor wrongfully refused to include in his final certificate. The second cause of action seeks to recover $9,724, the alleged increased cost of the work occasioned by mistakes in lines and grades given by the city surveyor. To the first and second causes of action, excepting the sum of $325 admitted as aforesaid, the city interposes-First, the defense that the items of inspectors' fees and omitted rock excavation are not included in the city surveyor's final certificate under the contract; second, that the city of New York, under the terms of the contract, is not liable for increased cost of the work occasioned by mistakes in lines and grades given by the city surveyor. It is claimed by the counsel for the appellant that entirely distinct and separate from the claim for increased cost of the work occasioned by mistakes in lines and grades given by the city surveyor, and considering only the legitimate extra work under the contract, it would reduce the amount charged against the contractor for inspectors' fees from $2,044 to $1,680, and would leave due him for extra rock excavation, not included in the final certificate of the city surveyor, the sum of $4,666 of the $6,656.80 demanded in the first cause of action. The contract provides in regard to the certificate of the city surveyor as follows: "And the said party of the second part further agrees that the return of the city surveyor having charge of the work shall be the account by which the amount of materials furnished and work done shall be computed, and that he shall not be entitled to demand or receive

payment for any portion of the aforesaid work or materials until the same shall be fully completed in the manner set forth in this agreement, and such completion shall be duly certified by the surveyor, inspector, and superintendent of street improvements in charge of the work," etc. On the second trial the appellant swore one Amiot, a Canadian engineer, who was, at the time of this contract, an assistant of Slater, the city surveyor, in charge of the execution thereof. Amiot swore that there were 30,071 cubic yards of rock taken out under this contract; that of this amount 2,240 cubic yards of rock removed from between the line of the old and new grade were included in this quantity named of 30,071 cubic yards, which deducted leaves 27,831 cubic yards of rock excavation actually done under the contract, and necessary for its performance, without regard to the mistakes in lines and grades. The surveyor only allowed 22,343 cubic yards of rock excavation in his final certificate. This leaves 5,488 yards omitted from final certificate not affected by mistakes in lines and grades. On this point Amiot testified that the city surveyor told him that this difference was not included in the final certificate, for the reason that the contractor was not to be paid for one yard of rock more than was originally estimated. As bearing on this statement of the city surveyor, plaintiff read in evidence a letter written by the city surveyor to William M. Dean, superintendent of street improvements, dated August 20, 1891. This amount so originally estimated is contained in the notice that is attached to the contract and made a part thereof, to the effect that there are 16,794 cubic yards of earth excavation and 11,135 cubic yards of rock excavation, and in this letter, so read in evidence, the city surveyor admits that these figures were accidentally transposed, and that the earth excavation should be the lesser amount and the rock excavation the greater amount. The city surveyor states in the letter as follows: "This is principally due to the fact that my assistant, who, during my illness, made the preliminary survey, did not allow for excavation of said grade, and that the figures of earth and rock excavation were transposed and reversed. * Again expressing my regret that this error in the preliminary estimate occurred during my illness, and assuring you that I shall not allow such estimate to be made except when I am able to give the work my personal attention so as to prevent errors, I am," etc. The argument of the appellant is that the city surveyor was not particularly anxious to swell the amount of rock work in his final estimate, owing to this accidental underestimate in the preliminary survey. The appellant, in order to meet the provision in the contract that this final certificate was conclusive upon him, alleged, in his complaint, that said certificate and re

turn "are false, fraudulent, untrue, and made in bad faith, and that it does not contain 7,728 cubic yards of rock excavation, being work actually done under said contract by the contractor, and for which he is entitled to payment." The appellant insists that the testimony of Amiot and others, and the letter above referred to, are sufficient, standing uncontradicted as they do, to justify the charge that the certificate is false, fraudulent, untrue, and made in bad faith. The corporation counsel argues, in his brief, even if the final certificate is erroneous, in that it does not include extra rock excavation, that it was the duty of the contractor to demand a proper certificate, and he is bound to produce or show that it has been unreasonably withheld. The complaint alleges this demand for certificate, and the contractor testified to having made it.

We now come to the important question whether the city or the contractor is to bear the losses resulting from the erroneous center lines and grades given by the city surveyor. A brief statement of the facts is necessary before considering this legal question. On the 13th of November, 1889, this contract was executed. On the following day the contractor received notice to commence work. On the 15th of November Slater, city surveyor, assigned to the supervision of this contract, received the following letter: "Mr. James B. Carr, Jr., contractor for regulating and grading Claremont avenue, from 122d street to 127th street, has been notified to commence work on Wednesday, November 20th, 1889. [Signed] Richard Seibold, for Superintendent of Street Improvements." On this letter the following was underwritten: "You will please furnish him with all necessary grade lines, and also make examination and certify to this bureau if there will be any alterations in the total amount of the work to be done caused by the excavation or filling for the line of work since making preliminary survey." The contractor testified that before going to work Mr. Dean, the superintendent of street improvements, told him that he would find center stakes upon the line of the work. The contractor testified that when he went on the premises to commence work center line stakes were in position, and that he had not requested this work to be done. These center stakes purported to designate the distance from the center of the street to the house line, and to show the width of the excavation to be made. After the work had proceeded two or three days the contractor swears that a man named Grassnock came upon the work accompanied by a boy, who informed him that he was the city surveyor's assistant, and had been sent there; that Grassnock went along the line of the street and changed the center line stakes slightly; that the work then proceeded for a period of about eight months, working from this

alleged center line. At the end of that time the contractor employed a surveyor on his own account, and found that the center line was not correct, but was twelve inches away from the true line. The contractor in July, 1890, communicated this discovery to the city surveyor, who came there and moved the line a distance of four inches only, notwithstanding that, according to the contractor's private surveyor, the line was still eight inches out of the way. The contractor then wrote Dean, the superintendent of street improvements, and told him of the discrepancy discovered by his own surveyor, and that the city surveyor had gone over the line again, and that there was still a variation of eight inches from the true line, and closes as follows: "Please to notify me if I shall continue according to the lines of the engineer in charge." The titles "city surveyor" and "city engineer" are synonymous. The letter was dated July 18, 1890. On the 21st of July the superintendent of street improvements replied as follows: "You will proceed with your work of regulating and grading, etc., of Claremont avenue from 122d street to 127th street in accordance with the grade lines and stakes as given by Mr. Slater, the surveyor in charge." The contractor proceeded in pursuance of this direction, but subsequently a third set of stakes was given by Mr. Amiot, the assistant to Mr. Slater, and these designated the proper center line. These errors, before the correct line was given, resulted in the contractor excavating too far east on the one side and not far enough west on the other for a distance of about 600 feet. After his work was finished for this distance he was compelled to go back and correct these errors. Furthermore, it appears, without going into the details of the evidence, that when the work was nearly completed new grades were given, which compelled the contractor to excavate to a greater depth than had originally been done, and which necessitated the bringing back of his plant and the digging out of the rock in small quantities. The substance of the contractor's evidence on the second trial is that he did not demand of the city surveyor the fixing either of the center line or the grades, and that he suffered the losses alleged in the first and second causes of action by reason of these errors, for which he was in no way responsible. The defendant, for a defense to the claim that it is liable for losses sustained by the contractor on account of mistakes made in lines and grades by the city surveyor, invokes the general provisions of the contract, and more particularly the following clauses: "The party of the second part admits and agrees that the amounts and quantities of materials to be furnished and work to be done, as stated in the proposals for estimates for said work, are approximate only; that he is satisfied with the foregoing estimate in determining the prices

according to which he agrees to do the work required by this contract in accordance therewith, and that he shall not and will not, at any time, dispute or complain of such statement, nor assert that there was any misunderstanding in regard to the depth of the excavation to be made, or the nature or amount of the materials to be furnished or work to be done; and he covenants and agrees that he will complete the entire work to the satisfaction of the commissioner of public works and in substantial accordance with the said specifications and the plan therein mentioned, and that he will not ask, demand, sue for, or recover for the entire work any extra compensation beyond the amount payable for the several classes of work in this contract enumerated, which shall be actually performed, at the prices therefor herein agreed upon and fixed. A city surveyor will be employed by the parties of the first part to see that the work is completed in conformity to the profile and to ascertain and certify the quantity of work done. Said surveyor at the request of the contractor will be directed to designate and fix grades for his guidance during the progress of the work without charge, provided that the said parties of the first part shall not be liable for any delay or for any errors of said surveyor in giving such grades, and said surveyor shall be considered as the agent of the contractor so far as giving such grades is concerned and not the agent of the city of New York."

*

It must be admitted that the causes of action and lines of proof in this case are intermingled and complicated, and it is somewhat difficult to lay down clearly the rules that should govern the new trial which we feel constrained to grant. The defendant saw fit to introduce no evidence, and moved to dismiss the complaint, with the exception of a trifling item never disputed. It follows that all the facts warranted by the evidence must be assumed as settled in favor of the plaintiff for the purpose of this appeal. Stone v. Flower, 47 N. Y. 566; Bank v. Dana, 79 N. Y. 108; Bank v. Weston, 159 N. Y. 208, 54 N. E. 40, 45 L. R. A. 547.

In view of the evidence already pointed out, we are of opinion that the triors of fact were at liberty to find that the final certificate of the city surveyor was false and made in bad faith. This being so, the plaintiff was entitled to go to the jury on several questions of fact, notwithstanding the very stringent provisions of the contract.

The final certificate shows upon its face that there was legitimate extra work performed by the plaintiff's assignor under this contract for which he was entitled to compensation at the rates therein specified. With the final certificate thus possibly impeached, the jury should have been permitted to fix the amount of the extra work. The contractor's time bid for this work was 200 days,