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& EXECUTORS AND ADMINISTRATORS (8221*)—ACTIONS FOB MONEY LOANED
DECEDENT-SUFFICIENCY OF EVIDENCE.
An action for money loaned a decedent must be maintained by clear and convincing evidence more cogent than will suffice to maintain a suit against the living.
[Ed. Note.—For other cases, see Exe:utors and Administrators, Cent. Dig. 8 1873; Dec. Dig. & 221.*] Appeal from Trial Term, Franklin County.
Action by Elizabeth Murray Russell against John H. Amlot, as executor of William P. Amlot, deceased. From an order setting aside a verdict for plaintiff and granting a new trial, plaintiff appeals. Affirmed.
The action was brought to recover $4,000 claimed by plaintiff that she loaned to the defendant's decedent May 21, 1906. The deceased was a widower, who owned considerable real estate, and was in poor health. He lived on a farm on the Canadian border. Plaintiff was his housekeeper.
A brief history of events in chronological order is as follows: In the fall of 1905, deceased, being then ill in bed, made a will known as the “Canadian will,” wherein he devised to the plaintiff the home farm on which they were living with the personal property thereon. It was shown that he made statements to different persons to the effect that plaintiff had taken good care of him, and that she would be well paid for her services. In February, 1906, he sold some of his land and deposited $4,000 of the proceeds in a bank in Huntingdon, Canada. Plaintiff went to the bank and made the deposit for him in his name. March 1, 1906, one La Duke, a notary of Huntingdon who had drawn the will and who seems to have been doing more or less business for Amlot, was sent for, and was directed by him to draw a check for $4,000 to the order of plaintiff on the Can an bank. He eturned his office at Huntingdon, a number of miles distant, drew the check there, and seems to have mailed it to him. Amlot signed the check and delivered it to plaintiff, who on March 5th appeared at La Duke's office with the check, and together they went to the bank, where plaintiff procured a Boston draft payable to her own order for the $4,000 then on deposit in Amlot's name. Some information or instructions seem to have been given by Amlot to La Duke concerning this check, which La Duke was not permitted to testify to at the trial against the objection of plaintiff. On March 14, 1906, after the above transaction, the home farm which Amlot had willed to plaintiff was sold for $4,000, $1,700 being paid down and a mortgage taken for the rest. On April 2d plaintiff deposited the Boston draft for $4,000 in the Malone bank to her own order, having held the draft for about a month, opening a new account for that purpose, and she also on the same day deposited to the credit of Anlot's account in the same bank the $1,700 paid on the home farm. Amlot at that time had an account in that bank, but it seems to have been entirely balanced. Thus matters stood until May 21, 1906, when plaintiff gave to Amlot her check on the Malone bank for $4,000. That is claimed to be the loan in question. Her check was on the following day deposited to Amlot's credit in the Malone bank. Shortly thereafter both went to Saratoga, where they remained some time, and Amlot deposited in the Saratoga Trust Company in his own name $5,700 drawn from the Malone bank, being the amount of plaintiff's check of $4,000 and the $1,700 paid on the home farm. In the fall of 1906 plaintiff returned to Franklin county, living in the village of Ft. Covington; plaintiff keeping house for him as before. He seems to have been in expectancy of death and desirous of adjusting his affairs. In November he procured a piece of real estate to be purchased for $375 and placed in plaintiff's name. In December he deeded to her a tract of 13 acres of land adjoining. There is a dispute as to who furnished the consideration for the first parcel, but plaintiff makes no claim that she paid for the second. If she did pay for the first, she has not shown where the money came from, and it is claimed by defendant that it came froin Amlot. *For other cases seo same topic & NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexos
Plaintiff gave evidence of a number of admissions made by the deceased to the effect that he had borrowed money of her. Most of these admissions were proved by her relatives. It does not appear for what purpose Amlot received the loan if such it was. He evidently did not need to use the money because it was deposited in the Saratoga Trust Company to draw interest. In April of the following year more than the $4,000 was returned to the Malone bank to his credit. The trial justice set aside the verdict of the jury in plaintiff's favor, and the latter appeals.
Argued before SMITH, P. J., and CHESTER, KELLOGG, COCHRANE, and SEWELL, JJ.
R. W. Berry, for appellant.
COCHRANE, J. Several rulings at the trial are claimed by the respondent to have been erroneous, and are relied on by him to sustain the order granting a new trial.
First. The court received in evidence the contents of the so-called “Canadian will,” wherein the deceased devised to the plaintiff the farm on which he was living, with the personal property thereon. This will seems to have been subsequently superseded by another will, but it was in existence and was not shown to have been revoked by subsequent will or otherwise at the time when plaintiff received the $1,000 from the deceased. It is true the only issue under the complaint was whether on May 21, 1906, plaintiff advanced $1,000 to Amlot at his request and on his promise to repay the same; but it was incumbent on plaintiff to show that her check to Amlot was not in payment of an antecedent indebtedness by her to him. The presumption was that this check was given to pay a debt, and not as a loan. Kilmer v. Quackenbush, 125 App. Div. 352, 109 N. Y. Supp. 444; Poucher v. Scott, 33 Hun, 223, affirmed 98 N. Y. 422; Grafing v. Heilmann, 1 App. Div. 260, 37 N. Y. Supp. 253; Koehler v. Adler, 78 N. Y. 287, 290. It was therefore proper as tending to overcome this presumption to show the business relations between the parties and the transactions which had just taken place to establish that plaintiff was not indebted to Amlot. It was conceded that plaintiff had recently acquired from Amlot the money constituting the subject of the alleged loan. It therefore became very material to determine in what capacity she held such money. It was a fact that Amlot had willed to her the home farm, and that he subsequently sold this farm for the identical amount she received from him. She claims that the money was given to her in the place of the farm. It is true that the sale of the farm was not actually consummated by the execution and delivery of the deed until shortly after he gave her his check, and she had exchanged the same for the Boston draft, but it was consummated before she deposited the draft and received the avails thereof to her own credit. We cannot say what passed between them in the meantime, but plaintiff was clearly entitled to whatever inferences the jury might see fit to draw from the existence of this will and the sale of the property therein proposed to be devised to her as bearing on the question whether plaintiff had made a loan to Amlot, or whether she had merely discharged
to the contrary. The contents of the will tended to show that Amlot had vested plaintiff with title to money equivalent to the farm he had willed her and subsequently sold, and that she held such money in her own right and was not indebted to him therefor.
Second. It is claimed that the court erroneously received admissions of Amlot to the effect that plaintiff had taken good care of hiin, and that she would be well paid for her services. These admissions, like the will, were relevant to the question of the ownership of the inoney which constituted the alleged loan. They were made about the time that plaintiff received the money, and tended to throw light on the mental attitude and disposition of the deceased toward plaintiff. Moreover, if the will was properly received in evidence, these admissions or statements, if technically inadmissible, were harmless, inasmuch as they were merely expressive of that which by the will became an accomplished fact.
Third. The court properly excluded testimony of La Duke as to the statements which Amlot made to him concerning the $1,000 check to plaintiff's order at the time when he instructed La Duke to prepare such check. La Duke did not deliver the check to plaintiff nor communicate to her what Amlot had told him. La Duke simply prepared this check in his own office pursuant to Amlot's previous directions, sent it to Amlot, who signed it, and who personally delivered it to plaintiff. The conversations between Amlot and La Duke were not brought to the knowledge of plaintiff, and were clearly hearsay. Whatever talk may have passed between Amlot and his attorney or agent would throw no light on what subsequently passed between Amlot and the plaintiff.
The trial justice, however, set the verdict aside as against the weight of evidence, and with this exercise of discretion on his part we are not inclined to interfere. It is settled that an action of this kind must be maintained by evidence which is clear and convincing and more cogent than such as will suffice to maintain an action against the living. The trial justice had the witnesses before him, and had at his disposal better means than an appellate court in determining in what manner the discretion of the court should be exercised on a motion for a new trial. The case on the facts is not so convincing in favor of plaintiff as to enable us to say that the verdict of the jury was not against the weight of evidence. The order should be affirmed, with costs.
FENN v. W. M. OSTRANDER, Inc., et al.
(Supreme Court, Appellate Division, First Department. May 14, 1909.)
1. CORPORATIONS (8 553*)-APPOINTMENT OF RECEIVER.
Mere misconduct will not justify the appointment of a receiver for a corporation, unless such appointment be necessary to preserve the property or rights of creditors or stockholders, and a receiver will not be ap
*For other cases see same topic & $ NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes
pointed upon loose and general allegations of fraud made on information and belief and unsupported by legal proof.
[Ed. Note. For other cases, see Corporations, Cent. Dig. $8 2201-2216;
Dec. Dig. $ 553.*] 2. CORPORATIONS (8 553*)-GROUNDS FOR APPOINTMENT OF RECEIVER.
In an action against a corporation and its officers, brought by a stockholder in behalf of himself and other stockholders to compel the officers to account for their official conduct and restore to the corporation any property that they have acquired to themselves or transferred to others or lost, that the officers held property in trust for the corporation, which they are in readiness at any time to convey to the corporations, or such persons as it may designate, is not sufficient ground for the appointment of a receiver pendente lite.
[Ed. Note.—For other cases, see Corporations, Cent. Dig. SS 2201-2216; Dec. Dig. § 553.*]
Appeal from Special Term, New York County.
Action by Nene Van Tuyll Fenn against W. M. Ostrander, Incorporated, and others. From an order appointing a receiver pendente lite for defendant corporation, defendants appeal. Reversed.
Argued before INGRAHAM, MCLAUGHLIN, LAUGHLIN, CLARKE, and SCOTT, JJ.
Myles Higgins, for appellants.
SCOTT, J. This is a representative action brought by plaintiff, as a stockholder in the corporation known as "W. M. Ostrander, Inc.," in behalf of herself and other stockholders similarly situated who may join with her and contribute to the expenses of the action. The action is brought under section 1781 of the Code of Civil Procedure for the purpose of compelling the defendants who are officers of the corporation to account for their official conduct, and to restore to the corporation any money and the value of any property which they have acquired to themselves or transferred to others or lost or wasted. The action is therefore one in the right of and in behalf of the corporation, and the complaint contains appropriate allegations excusing any demand upon the corporation itself to bring the action.
No question is raised as to the right of a stockholder to maintain such an action. The present appeal, however, brings up for review an order appointing a receiver pendente lite or"all the property, real and personal, and interest therein, and the rents, issues, and profits thereof, and proceeds of all contracts heretofore made for sales or portions thereof, and all the goods, chattels, moneys, and things in action of the defendant corporation, and evidences of the same which are of, or ought of right to belong to, said corporation, of any and every nature and wheresaever situated within the state of New York, with all the powers and duties usually conferred upon and exercised by receivers appointed by this court in such cases; including all real property mentioned and more particularly described in the complaint herein and in the above-mentioned affidavits or any of them; and including also all books, papers, records, documents, instruments, contracts, deeds, office furniture, fixtures, and plant of every nature and description whatsoever located at the office of the defendant corporation, No. 437 Fifth avenue, borough of Manhattan, New York City or elsewhere; and all cash on deposit to the credit of said defendant corporation in any
banks, trust companies, or elsewhere; and all moneys due or to become due to the defendant corporation.”
The order contains restraining clauses forbidding any officer or employés of the corporation to interfere with said assets in any way except to turn them over to said receiver. In short, in an action in behalf and for the benefit of a corporation, not alleged to be insolvent, for the purpose of compelling officers to make restitution to the corporation, a receiver has been appointed of all the property of the corporation itself within this state, with powers authorized by the Code of Civil Procedure (section 1788), where an action is brought in hostility to a corporation to sequester its property, or to dissolve it and distribute its assets, thus effectually preventing the corporation from transacting business or pursuing the purposes of its incorporation. While it is not to be doubted the court has sufficient jurisdiction, even over foreign corporations, to appoint a receiver of the assets within this state, at the suit of a creditor or stockholder in a proper case, yet to justify so sweeping an order as that appealed from a very clear case must be made out.
Whether or not the court should in any event, in an action like the present, appoint a receiver of the assets of a corporation merely upon the ground of misconduct of the officers or directors, has been the subject of much discussion and some diversity of opinion. The rule now generally accepted seems to be that mere misconduct will not justify the appointment of a receiver, unless such an appointment be necessary to preserve the property or rights of creditors or stockholders. Phillips v. Sonora Copper Co., 90 App. Div. 140, 86 N. Y. Supp. 200; Am. & Eng. Enc. of Law (2d Ed.) vol. 23, p. 1023. It is also well established that a receiver will not be appointed upon loose and general allegations of fraud and maladministration, made on information and belief, and unsupported by anything that can reasonably be called legal proof, especially when the answering affidavits deny the allegations contained in the moving papers. Weber v. Wallerstein, 111 App. Div. 700, 97 N. Y. Supp. 852; People v. Oriental Bank, 124 App. Div. 741, 109 N. Y. Supp. 509.
The papers read in behalf of plaintiff, and upon which the order appealed from is based, consist of a complaint and of affidavits by the plaintiff and one of her attorneys and the managing clerk of the latter. It appears that the defendant corporation was based upon a business formerly carried on by the defendant Walter M. Ostrander. It was incorporated in the state of New Jersey in June, 1905, with a capital stock of $2,000,000, nearly all of which was issued to the defendant Ostrander in consideration of the transfer to the corporation of the good will and assets of the enterprise and business theretofore owned and carried on by him. What these enterprises and business were, and that was their real value, or that of the good will, does not appear. The stock was divided into 20,000 shares, of which Ostrander returned to the company 12,030 shares, of which some 7,000 or 8,000 shares still remain in its treasury. The plaintiff is the owner of 35 shares, for which she paid par. Plaintiff's mother also bought some 80 shares of the stock, and it is alleged that numerous other persons have bought