Smith v. Ogilvie

• Decision Date: 02 June 1891
• Citation: 27 N.E. 807,127 N.Y. 143
• Parties: SMITH et al. v. OGILVIE.
• Court: New York Court of Appeals Court of Appeals

127 N.Y. 143

27 N.E. 807

SMITH et al.

v.OGILVIE.

Court of Appeals of New York, Second Division.

June 2, 1891.

Appeal from supreme court, general term, first department.

This action was brought by the plaintiffs as successors of the firm of Street & Smith, against the defendant as survivor of the firm of J. S. Ogilvie & Co., to set aside as fraudulent a certain settlement made between the plaintiffs and defendant in reference to royalties agreed to be paid by J. S. Ogilvie & Co. under an agreement with the predecessors of the plaintiffs. Prior to and at the time of the agreement providing for the payment of royalties, Francis S. Street and Ormond G. Smith formed the copartnership of Street & Smith in publishing a newspaper known as the ‘New York Weekly.’ Street was also a member of the firm of J. S. Ogilvie & Co. The agreement entered into was as follows: ‘This agreement, made and entered into the 16th day of September, 1880, between Messrs. Street & Smith, of New York, parties of the first part, and J. S. Ogilvie & Co., of the same place, parties of the second part, by which the said parties of the first part agree to allow the said J. S. Ogilvie & Co. to publish and sell certain stories, which shall have been mutually agreed upon, in book form. In consideration of the privilege of the exclusive publication and sale of said books, the said J. S. Ogilvie and Co. agree to pay Messrs. Street & Smith a royalty of twenty cents per volume for all copies sold, the retail price of which shall be $1.50, and the same amount in proportion for any books published under this agreement, the said price of which shall be more or less than $1.50, provided that the cost of making the electrotype plates of said books shall be paid by Messrs. Street & Smith; in all other cases the royalties shall be ten per cent. of the retail price. The payment of royalties to be made quarterly, unless by mutual consent. STREET & SMITH. J. S. OGILVIE & CO.’ Street died in April, 1883; the plaintiff Ormond C. Smith succeeding to his interest. Subsequent to July 2, 1883, Street & Smith demanded of the defendant a statement of the stories published under the agreement, and the royalties due thereunder, and in compliance therewith a statement was rendered, which bore date September 1, 1883. On the 22d of September, 1883, Street & Smith and the defendant settled their accounts respecting the matters embraced within such statement, the latter paying royalties up to July 1, 1883; the firm of Street & Smith at the same time giving him a receipt in full. In the fall of 1883, Street & Smith made a claim of the defendant for royalties upon certain stories published in another series. This claim the defendant disputed, upon the ground that such publications were not books, and therefore not included in the royalty agreement, and, the plaintiffs threatening to commence an action, it was agreed that the defendant should pay $1,600 in settlement, which was done; the plaintiffs at the same time executing a release therefor. No objection was made by Street & Smith to the settlement until the commencement of this action, nearly five years thereafter, and since that time the defendant has accounted to the firm of Street & Smith, as then existing, and to their successors, under the royalty agreement, semi-annually, and paid royalties shown to be due by such accounts, the payment being accepted without objection until the commencement of this suit.

Edward C. James, for appellants.

A. W. Gleason, for respondent.

PARKER, J., ( after stating the facts as above.)

The trial court found, as a fact, that after the settlement in the fall of 1883, and the execution and delivery of the release by the parties thereto, there remained no unsettled matters in connection with the publication of the stories mentioned in the complaint. In order to maintain the action, therefore, it became necessary for the plaintiffs to obtain an adjudication that the settlement was fraudulently procured, and should therefore be set aside. The trial court, however, upon the whole testimony, found as a fact that the defendant did not practice any fraud or deceit or make any false representations in procuring such settlement. And the conclusion of law that the settlements were valid transactions, and binding upon the parties thereto, necessarily followed the finding of fact made. The general term having affirmed the findings of the trial court, they are necessarily controlling here. It is asserted, however, that the plaintiffs are entitled to a reversal of the judgment because of an alleged error in refusing to hold that the burden of proof was on the defendant to show affirmatively that, in the settlements evidenced by the receipts of September 22 and December 7, 1883, no deception was practiced or undue influence used. On the trial plaintiff's counsel, after offering in evidence a transfer by the executors of Francis S. Street, and by Ormond G. Smith, survivor of Francis S. Street, to Street & Smith, of all the right, title, and interest which the said Francis S. Street had in the copartnership of Street & Smith, asked the court to ‘rule that the burden of proof is now on the defendant.’ The court denied the plaintiffs' request. This question was again presented by the plaintiffs in the form of a request to the court to hold, as a matter of law, that the burden of proof rested upon the defendant to show that the settlements were procured without fraud. The court refused to so find, and the exceptions taken to such refusals present the only question requiring consideration. It is asserted that, notwithstanding the finding made by the court that the defendant did not practice any fraud or deceit or make false representations in connection with the accounts as...