Titus v. Poole

Citation145 N.Y. 414,40 N.E. 228
PartiesTITUS v. POOLE et al.
Decision Date09 April 1895
CourtNew York Court of Appeals
OPINION TEXT STARTS HERE

Appeal from supreme court, general term, Fourth department.

Action by Charles M. Titus against Charles F. Poole and others, executors of the will of Edward V. Poole, deceased, for breach of warranty. From a judgment of the general term (26 N. Y. Supp. 451) affirming a judgment for plaintiff, and an order denying a new trial, defendants appeal. Affirmed.

In February, 1883, the plaintiff, Titus, and defendants' testator, E. V. Poole, entered into an agreement whereby Poole was to purchase of Titus certain hotel property in the city of Ithaca at an agreed price of $9,000; $4,000 of which was paid by Mr. Poole assuming a mortgage for that amount then on the premises, and $5,000 by assigning to Titus a certain certificate of the alleged bank stock of the Home Savings Bank of South Waverly, Pa., it being for 50 shares, of $100 each. The negotiation for the sale took place at Ithica, where the plaintiff resided, and was consummated there February 9, 1883, under the supervision of Mr. Ellsworth, by the conveyance by the plaintiff to Poole of the hotel property subject to a mortgage of $4,000, and by the transfer and delivery by Poole to the plaintiff of the certificate. The certificate was printed, and was in the following form: ‘No. 33. State of Pennsylvania. 50 shares. The Home Savings Bank. Organized under act of legislature of Pennsylvania. Authorized capital, $100,000. Shares $100 each. virtue, Liberty, Independence. South Waverly. This is to certify that E. V. Poole is entitled to fifty shares in the capital stock of the Home Savings Bank of South Waverly, transferable only on the books of the bank in person, or by attorney on the surrender of this certificate. South Waverly, Dec. 10th, 1874. S. Kirby, Prest. C. E. Pendleton, Cash'r. Indorsed: _____.’ It was transferred to the plaintiff by the indorsement of Poole, signed to the blank power of attorney printed on the back.

The action was brought December 26, 1888, against the executor of Poole for the breach of alleged warranties made by Poole on the transfer of the stock to the plaintiff, viz.: (1) That the Home Savings Bank was a regularly organized bank under the laws of Pennsylvania; (2) that it was all right, and that the stock was good, high stock, and worth 100 cents on the dollar; (3) that it was a dividend-paying stock. There was but one witness as to the transaction between Poole and the plaintiff, and his evidence is uncontradicted. One of the parties was dead, and the plaintiff was not a competent witness. Ellsworth testifies that, the parties being present in his office, Poole produced the certificate of stock, and that the witness opened and looked at it, and then said: ‘This isn't stock; that is a savings bank; a savings bank has no stock;’ and Mr. Poole said: ‘It is a regularly organized bank, under the laws of Pennsylvania, and has savings-bank privileges.’ The witness further testified: ‘Mr. Poole said, in answer to my statement, it was good stock, worth 100 cents on the dollar; a dividend-paying stock; that he was one of the original, or one of the early, stockholders,-I don't know but he used the word ‘first.’ Mr. Titus said: ‘If that is so, Mr. Poole, and it is all right, I will take the stock at $5,000 in the trade and deal.’ He said the capital was all paid up. I think he told the amount, $100,000, if it was $100,000. He said $100,000 capital paid up. * * * He said it was worth 100 cents on the dollar, and was good, high stock. * * * I think he said what kind of hands the bank was in, but I do not recollect the language he used. Mr. Titus said at that time, in Poole's presence, if the stock is all right, as you say, we will make the trade or deal.'

It appeared on the trial that the Home Savings Bank was not an incorporated bank, but was conducted by a partnership, of which one Kirby was the principal member. The business was established at Waverly, Pa., in 1873. It seems that in Pennsylvania there is no restriction upon individuals carrying on the business of private bankers. The laws of that state do authorize the establishment of banking corporations, subject to visitation, and the laws carefully guard the business of such corporations in the interest of stockholders and depositors. The capital stock of the Home Savings Bank was never paid up in full. When the stock in question was transferred by Poole to the plaintiff, there had been paid only the sum of $86,338. The evidence establishes beyond controversy that in February, 1883, the bank was hopelessly insolvent. It held the paper of Kirby to an amount nearly equal to its paid-up capital, and when the bank failed in 1887 the debt of Kirby amounted to $112,000, and but a small part of it has been paid. The public were not informed of the condition of the bank, and it was regarded by outsiders as solvent, and in some cases after that year the stock was sold in small amounts at par to persons who supposed the bank was incorporated. It paid occasional dividends from 1873 to 1887. It paid none in 1874, 1876, 1879, 1881, 1883, and none after 1884. The dividends when paid were 4 per cent. per annum, with the exception that 8 per cent. was paid in 1875.

Poole, the defendants' testator, died October 7, 1887, the same year that the bank went into bankruptcy, leaving a will by which he appointed the defendants his executors. May 7, 1888, the claimant presented a verified claim to the executors, in words following: ‘Estate of Edward V. Poole, Deceased. To Charles M. Titus, Dr. To amount due from E. V. Poole in his lifetime, on exchange of real estate for which a worthless certificate of alleged Home Savings Bank stock was fraudulently assigned to said Titus, $5,000, with interest on the same from February 10, 1883,’ together with written offer to refer the same. June 19, 1888, the executors rejected the claim. June 28, 1888, the plaintiff brought suit in the supreme court against the executors, founded on the transaction, and alleging fraud and deceit on the part of the testator in respect to the transfer of the stock and the making by him of representations (substantially like those set forth in the complaint in this action), which were alleged to have been false and fraudulent, and the plaintiff claimed $5,000 damages and interest from February 10, 1883. The action was tried in October, 1888, and resulted in a nonsuit, on the ground that the facts proven did not constitute a cause of action. It was said on the argument that the precise ground of the nonsuit was the failure of the plaintiff to prove the scienter. Subsequent to the nonsuit, and on the 26th day of December, 1888, and more than six months after the rejection of the claim originally presented to the executors, the present action was brought, based on warranty, and not on fraud. Before bringing the second action a second claim, based on the transaction of February 9, 1883, but setting out the representations as warranties, was presented and rejected. The action was tried before a jury, and resulted in a verdict for the plaintiff, $7,647.75, being the sum of $5,000 and interest thereon from February 9, 1883. Other facts are stated in the opinion.

David M. Dean, for appellants.

Frank E. Tibbetts, for respondent.

ANDREWS, C. J. (after stating the facts).

The principal question arises upon the defense of the short statute of limitations applicable to claims against the estate of a decedent, presented to an executor or administrator after the publication of notice for the presentation of claims, pursuant to the order of the surrogate, and disputed or rejected by him, and not referred. Section 1822 of the Code of Civil Procedure, which is a substantial re-enactment of a provision in the Revised Statutes, declares that in such cases the claimant must commence an action for the recovery of the claim against the executor or administrator within six months after the dispute or rejection; or, if no part of the debt is then due, within six months after a part thereof becomes due, and, ‘in default thereof, he and all persons claiming under him are forever barred from maintaining such an action thereupon, and from every other remedy to enforce payment thereof out of the decedent's property.’ It is plain that, if section 1822 of the Code is the only provision applicable to the case, the claim of the plaintiff was barred at the time of the commencement of the action. The decedent died October 7, 1887, and the executors having duly advertised for the presentation of claims, the claim of the plaintiff was presented May 7, 1888, and was rejected by the executors June 19, 1888, and, not having been referred, this action was commenced December 26, 1888, more than six months after the rejection of the claim. The claim, if any existed, was due at the decedent's death, and all the conditions existed which made the six-months limitation a bar to the action, if the section referred to is alone to be considered. The fact that a second claim was presented November 29, 1888, was immaterial. The claim then presented was founded on the same transaction as that specified in the claim first presented. It was for the same amount, and it differs from the claim originally presented only in the circumstances that it ignores the suggestion of fraud, and sets forth in detail the representations made by the decedent to induce the plaintiff to accept the certificate of stock in the Home Savings Bank, and treats them as warranties. The transaction set forth in the first claim was sufficient to apprise the executors that it was founded on the transfer of the certificate of stock by the decedent to the plaintiff, and that out of the transaction there might arise either an action for deceit or for breach of warranty, or for failure of consideration, and, if a reference had then been had, evidence to support either of these claims might have been given, and a...

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