Griggs v. Day

• Decision Date: 10 January 1899
• Citation: 52 N.E. 692,158 N.Y. 1
• Parties: GRIGGS v. DAY et al.
• Court: New York Court of Appeals Court of Appeals

158 N.Y. 1

52 N.E. 692

GRIGGS

v.DAY et al.

Court of Appeals of New York.

Jan. 10, 1899.

Appeal from supreme court, appellate division, First department.

Action of Clark Robinson Griggs against Melville C. Day and another, as surviving executors of the will of Cornelius K. Garrison, deceased. From a judgment of the appellate division (47 N. Y. Supp. 609) reversing a judgment entered on the report of a referee, and dismissing plaintiff's complaint, with costs, he appeals. Reversed.

David B. Hill and Joseph H. Choate, for appellant.

Elihu Root, for respondents.

HAIGHT, J.

This action was commenced in the late superior court of the city of New York on the 15th day of January, 1884, against Cornelius K. Garrison, who died on the 1st day of May, 1885, during the first trial; and the present defendants were substituted as defendants in his place. It was brought for an accounting between the plaintiff and Cornelius K. Garrison, the defendants' testator, with respect to their transactions in the construction of the Wheeling & Lake Erie Railroad, in the state of Ohio, and in the sale and hypothecation of the securities issued by the company. The action has been tried three times. The first trial took place before Mr. Odell, as referee, who rendered judgment against the plaintiff for $2,191,131.54. This judgment was reversed in the general term, and a new trial ordered. 58 N. Y. Super. Ct. 385,11 N. Y. Supp. 885. The second trial took place before William B. Hornblower, as referee, who found in favor of the plaintiff, and ordered judgment against the defendants for $188,089.73. Both parties appealed from this judgment, but it was affirmed in the general term without modification. 61 N. Y. Super. Ct. 124,19 N. Y. Supp. 1019. The defendants then appealed to this court, where the judgment was reversed, and a new trial ordered. 136 N. Y. 152, 32 N. E. 612. The third trial took place before Austin Abbott, referee; and, upon his report, judgment was entered in favor of the plaintiff for $670,116.30, together with costs and disbursements. From this judgment an appeal was taken to the appellate division by the defendants, in which court the judgment was reversed both upon the facts and the law, and the complaint dismissed upon the merits, with costs. 21 App. Div. 442,47 N. Y. Supp. 609. From the judgment entered upon that decision an appeal has been taken to this court.

On the 24th day of September, 1879, the plaintiff entered into a contract with the Wheeling & Lake Erie Railroad Company for the construction and equipment of its projected railroad from Martins Ferry, opposite Wheeling, on the Ohio river, to Huron and Toledo, on Lake Erie, a distance of 233 2/3 miles. The road was divided into three divisions. The first was to extend from Martins Ferry to Bowerstown, the second division from Bowerstown to Huron, and the third division from Norwalk to Toledo. In consideration of the agreement of the plaintiff to construct and equip the road according to the requirements of the contract, the company undertook to issue first mortgage bonds to the amount of $3,500,000, and paid-up stock to the same amount, and to deliver to the plaintiff $15,000 of the bonds and $15,000 of the stock for each mile of the main track constructed by him; such bonds and stock to be delivered to him upon construction of 5-mile sections. The company reserved $84,000 of the bonds, which were to be disposed of by the trustees of the company in payment for the construction of 14 miles of road between Huron and Norwalk; and it also reserved $7,500 per mile of its stock to pay for right of way, grading, bridging, and tying the railroad, and other necessary expenses incident to the enterprise. The company further agreed to furnish the contractor available subscriptions, or the proceeds thereof, and aid to the amount of $4,000 per mile of main track, branches, and sidings, or so much as might be necessary to furnish right of way, grade, bridge, and tie the railroad between Huron and Martins Ferry, and also to use its best endeavors to secure for the contractor available subscriptions and aid to the same extent per mile for the same purposes upon the third division of the contemplated road. The contract was subsequently modified in several particulars, some of which we will allude to hereafter. After the execution of the contract the company delivered to the Farmers' Loan & Trust Company $3,500,000 of its shares of stock, and 3,500 of its first mortgage bonds, of $1,000 each, to secure the payments provided for by the contract. In November, 1880, the plaintiff borrowed of Garrison the sum of $15,000, and on December 17, 1880, he borrowed the further sum of $25,000, for which he gave his note, payable on demand, for $40,000, the amount of the two loans, and executed and delivered to Garrison the following paper: ‘New York, December 17, 1880. In consideration of a loan of $40,000 this day made to me by C. K. Garrison, I, C. Robinson Griggs, do hereby transfer to said Garrison all the first mortgage bonds of the Wheeling and Lake Erie Railroad now in the Farmers' Loan and Trust Company, amounting to $3,307,000; making, with $193,000 held by W. W. Phelps and others, an entire issue of $3,500,000. I further assign to said Garrison my construction contract with said company, and all stock to which I now am, and may hereafter be, entitled under said contract. I further authorize the sale of all or any of said bonds at 85 per cent., net; and, for every $15,000 of bonds sold by said Garrison for myself or any other person, I agree to transfer to said Garrison, and authorize him to retain from any stock to be received under said construction contract, $7,000 of fully-paid stock of said railroad company. All sums received from sales of bonds, over the amount of loan and interest, to be paid to me on my order. [Signed] C. Robinson Griggs.’ The bonds mentioned in this instrument were soon afterwards turned over to Garrison, and thereupon he continued to make advances to the plaintiff to aid in the construction of the road, which eventually amounted to the sum of $4,414,156.10. A portion of this indebtedness was liquidated by Garrison exercising the option contained in the agreement of December 17th, by crediting to the plaintiff bonds received by him, at 85 cents on the dollar. As to the balance, the referee has charged Garrison, as of May 1, 1883, with $2,062,643.13, the amount of the promissory notes issued by the railroad company to the plaintiff, and by him turned over to Garrison as collateral security for the advances made by him, and also by charging Garrison, under date of April 16, 1887, with the further sum of $348,394.87 on account of the stock of the company belonging to the plaintiff, which was held as collateral by Garrison, and which his executors refused to turn over to the plaintiff. The controversy in this court arises over the charging of the defendants with these amounts. The appellate division has held that neither of them should have been charbed, and that they should be expunged from the account; thus leaving, as is said in the opinion, an apparent balance in favor of the defendants on account of over $2,000,000.

The first question arising for our consideration is whether we have jurisdiction to review the order of the appellate division reversing the judgment entered upon the report of the referee. As we have seen, it is stated in the order that the reversal was upon the facts as well as upon the law. In the case of Hirshfeld v. Fitzgerald, 157 N. Y. 166, 51 N. E. 997, we have recently held that such a certificate does not preclude us from looking into the case for the purpose of determining whether there are controverted facts, or inferences to be drawn from conceded facts, upon which a reversal upon the facts could be based; following the case of Otten v. Railway Co., 150 N. Y. 395, 401,44 N. E. 1033. In the Hirshfeld Case we found that there was no conflict with reference to the facts, and consequently a reversal upon the facts was unauthorized. The constitution has now limited our power to review cases to questions of law, except where the judgment is of death. Formerly, where the reversal was upon the facts, and it so appeared in the order of reversal, we had the power to review the facts, under section 1338 of the Code. But after the adoption of our present constitution this section was amended by striking out the clause authorizing us to review the facts, and we are thus left with the power only to review the law. Where the facts are controverted, and they must be determined from conflicting testimony or inferences drawn from the surrounding facts, the question becomes one of fact, and not of law, and this court has no power to review. But where the facts are conceded, or are not controverted, a question of law arises, as to the judgment that should be given thereunder. In this case it is contended by both parties that the facts are uncontroverted. The respondents' counsel, in his brief, says: ‘The respondents contend that the decision of the appellate division, so far as it relates to the vital and controlling propositions in this case, namely, that relating to the notes of the railroad company and that relating to the railroad company's stock, was founded upon and warranted by the conceded or uncontroverted facts before the referee; that the only difference between the appellate division and the referee upon these two items was that the appellate division drew a legal conclusion from these conceded or uncontroverted facts directly the reverse of that drawn by the referee.’ We have, accordingly, looked into the record for the purpose of ascertaining for ourselves whether the facts were controverted, and whether the certificate of the appellate division should be disregarded, and, after a careful examination of the testimony, have reached the conclusion that the facts, so far as these claims are concerned, are...