Case Name: Francis Gellatly, Receiver, &c., Plaintiff and Respondent, v. John Lowery, Defendant and Appellant
Court: New York Superior Court
Jurisdiction: New York
Decision Date: 1860-01-28
Citations: 6 Bosw. 113
Docket Number: 
Parties: Francis Gellatly, Receiver, &c., Plaintiff and Respondent, v. John Lowery, Defendant and Appellant.
Judges: 
Reporter: Reports of cases argued and determined in the Superior Court of the city of New York
Volume: 19
Pages: 113–123

Head Matter:
Francis Gellatly, Receiver, &c., Plaintiff and Respondent, v. John Lowery, Defendant and Appellant.
1. The taking of a note, in New York, from the agent of another for the purpose of carrying it to the principal by whom it had been entrusted to such agent, and carrying it to such principal, in New Jersey, and delivering it to him, is not sufficient to charge the person so carrying the note, in an action for converting the note to his own use, in favor of judgment creditors of a firm by whom the note had been fraudulently assigned to the said principal.
2. The general partner in a limited partnership had, in fraud of the creditors and of his special partner, transferred certain notes to his father living in New Jersey. The defendant who had advanced to the special partner the capital of the firm, demanded from the father a portion of the amount so transferred, threatening suit, declaring he would have it from the father, but without having any thing with which the fraudulent general partner’s name was connected. Thereupon the father gave the defendant an order on his agent in New York for two of the notes. The defendant went the next day to New York to such agent and delivered the order, and was shown one of the notes. He took it, saw the name of such general partner was on it, (he being payee,) and by the first conveyance thereafter he went to New Jersey, declared he would not take notes with that name upon them, but would have the individual property of the father; delivered the father the note, and received from him his own (the father’s) notes.
Held, that the defendant is not liable to a receiver for the benefit of the creditors of the limited partnership, as for a conversion to his own use of the note so received from such agent in New York and carried to New Jersey.
3. A party who has caused a deposition to be taken on his own behalf does not necessarily, by offering and reading parts of it in evidence, bind himself to read it all, nor make the whole of it evidence offered and put in by himself, nor make answers which are irrelevant or incompetent admissible.
4. In this respect the deposition of a party taken on his own behalf stands on the same footing as any other deposition. If the answers which the party taking the deposition declines to read are relevant and competent, the other party may read them, or cause them to be read, and use them as evidence in his own favor.
5. In an action to recover the value of a promissory note, alleged to have been converted to the defendant’s use, judgments, against the maker and executions returned unsatisfied having been put in evidence to show that the note was of no value by reason of the insolvency of the maker, it seems to be admissible for the defendant to go further and prove that all equitable remedies are exhausted by proceedings against such maker supplemental to execution, his examination, &c., and that no property could be discovered.
(Before Hoffman and Woodruff, J. J.)
Heard, November 16th, 1859;
decided, January 28th, 1860.
This is an appeal by the defendant from a judgment for $2,886.49 damages and costs, entered in the plaintiff’s favor, on the decision of John Crosby, Esq., Referee, before whom the action was tried.
The plaintiff is the Receiver, appointed at the instance of judgment creditors, of a limited copartnership firm carrying on business in New York, under the name of “Ebenezer Cook,” in which Ebenezer Cook was the general partner, and one John A. Lowery, the son of the defendant, was the special partner, and had contributed, as such, $8,000 to the capita] stock. The capital so contributed by John A. Lowery, his father, the present defendant, had advanced to him for that purpose.
The complaint, in substance, states that the firm became insolvent in February, 1854, and that the property of the firm, then and immediately after, consisted of (among other things) three notes of one McCoy, each for $2,008: that those notes were, without any consideration paid therefor, procured by the defendant from a creditor of the said Ebenezer, to whom the latter had, with intent to give him an illegal preference, transferred them, and were disposed of by the defendant for his own use; and the plaintiff thereupon demands judgment for the value of the notes. The answer sufficiently put the allegations in issue which involved the defendant in any liability, denying that he obtained or disposed of any notes of McCoy, and averring that the only time he ever saw or had either of them in his custody was for the space of one day, when he received it from the possession of one Sherman, who held it subject to the order of one Thomas Cook; that he so received it for the sole purpose of carrying it to the said Thomas Cook, and he did so carry it, and did not, in any manner, dispose of it for his own benefit.
The Referee found as follows:
“I find the following facts, as established by the proof:
“ That, in the year 1853, a limited partnership, under the statute, was formed between Ebenezer Cook, as general partner, and John A. Lowery, the son of the defendant, as special partner ; the special partner contributing to the capital of said partnership the sum of eight thousand dollars; that, in or about February, 1854, the said partnership became embarrassed, and shortly after insolvent; and that, while in a state of embarrassment, and in contemplation of insolvency, the said Ebenezer Cook sold all the effects of said partnership to one Robert McCoy, taking his notes as payment therefor.
“ That the said Ebenezer Cook paid over to his father, Thomas Cook, on or about the first February, 1854, two of said notes, with other property, in payment of an old indebtedness of his to his said father, with intent to give him a preference over the creditors of the said partnership; that each of said notes was dated 1st February, 1854, one being payable in nine months and the other in fifteen months after date.
“ That, afterwards, the defendant, knowing of the insolvency of said partnership, and of the circumstances under which said Thomas Cook received the said two notes, received one of them from the said Thomas Cook, being the note payable fifteen months after date, without any consideration being given therefor, which he afterwards exchanged with said Thomas Cook for a note of said Thomas Cook of like amount, and payable ten days after the said McCoy’s note was payable.
“ I do further find that the plaintiff has been duly appointed the Receiver of all the property and effects, equitable interests and things in action of the said Ebenezer Cook.
“I do therefore find, as a conclusion of law, that the said defendant is liable to the said plaintiff for the amount of the said note of Thomas Cook, so received by the defendant from Thomas Cook, in exchange for the note of Robert McCoy, held by said defendant, with interest; and I therefore give judgment for the plaintiff against the defendant for the sum of two thousand and eight dollars, with interest from the fourteenth day of May, one thousand eight hundred and fifty-five, amounting in the whole to twenty-five hundred and twenty dollars and twenty-six cents, and the costs of this action.”
The proofs upon which the Referee found that the defendant received one of the notes made by McCoy,' from Thomas Cook, which he afterwards- exchanged with said Cook, for the note of the latter, and upon which the Referee bases his conclusion that the defendant is liable as for a conversion of: the McCoy note, were:
That at. the time of the insolvency of the firm, and the sale of the property by Ebenezer Cook, for the notes of McCoy, the special partner, (John A. Lowery,) and his father, the present defendant, were in Europe. On their return they found that Ebenezer Cook had made such sale, and disposed of all the McCoy notes, distributing them to various parties; and" among other dispositions, he gave to his own father, Thomas Cook, who resided at Point Pleasant, Ocean county, in'Hew Jersey, three of such notes, each for $2,008j for a debt which he owed to his father. Thomas’Lowery, on the 24th of October, 1854, went to Hew Jersey to see Thomas Cook, at his house; complained that Cook had thus received, in. payment'of an old debt, notes which were the proceéds of his (Lowery’s) son’s money, and claimed that he was entitled to receive part of the amount, and threatened that unless some arrangement was made he would commence a suit to prevent Thomas Cook’s collecting the McCoy ■ notes. Thomas Cook agreed to let him have $4,000. in McCoy notes, and gave him an order on B. B. Sherman, of Hew York, for two of the notes, they having been left, by Thomas Cook, in Sherman’s hands for collection for his account. ■ The defendant remained over night, and on the 25th came to Hew York, presented the order to Sherman, and Sherman handed him one note, the other being in Bank. Defendant took it, and seeing the name of Ebenezer Cook upon it as indorser, (he being the payee,) and being unwilling to receive any notes having his name upon them, he took the first conveyance, and returned to Thomas Cook, in Hew Jersey, (on the 26th,) told him that he would not have a note with Ebenezer Cook’s name on it, gave him the note, and asked him for his own, Thomas Cook’s, notes, and they were given him, viz., two notes, each for $2,008, indorsed by a son-in-law of Cook, Robert Pharo.
On the trial the defendant’s counsel produced a deposition made by the defendant, in his own behalf, and read parts thereof, but declined reading a certain answer contained in the deposition made by the witness to questions put by his own counsel. The plaintiff’s counsel insisted and the Referee held that as the answer was a reply in writing, to a question put by his own counsel, the defendant was not at liberty to decline reading it, and he ruled that the answer was therefore in evidence, -and he thereupon permitted the plaintiff to give other testimony which, but for his ruling that such answer was in evidence, as if put in evidence by the defendant might have been irrelevant and inadmissible.
For the purpose of showing that McCoy’s note, to recover the value of which, this action was brought, was of no value, the maker being insolvent, the defendant put in evidence several judgments, recovered at about the time the said note became payable, (some before and some after, and embracing a period of about one year,) and executions issued thereon returned unsatisfied. He then offered proof that proceedings supplemental to execution had been taken, and to show that they were ineffectual, and no property of McCoy could be discovered. This the Referee excluded.
The defendant appealed from the judgment entered on the Referee’s decision, to the General Term.
Albert Cardozo, for the defendant (appellant).
I. The Referee clearly erred in the decision he made, that an answer which defendant’s counsel declined to read in evidence, was as matter of law in evidence, and was defendant’s evidence.
No different rule (though the Referee held otherwise) exists where the testimony is taken in writing, prior to the trial, than where the witness is produced in Court.
1. In either case, before the answer is actually given, the question may be waived and withdrawn.
2. It was as competent for the defendant to waive the question, as it was for the plaintiff to waive his objection.
3. The answer in the deposition, was not in evidence—was not given—until actually read to the Referee, anymore than an answer to an oral question would be, before it was uttered.
It being on the paper was of no importance.
II. The Referee should have allowed the testimony, as to the proceedings supplemental to execution against McCoy.
HI. There is no evidence to sustain the Referee’s judgment.
1. There is no proof that the firm of E. Cook, or Ebenezer Cook individually, was either insolvent, or contemplated insol vency, when the notes of Robert McCoy were paid to Thomas Cook.
2. The Referee erred in holding that the defendant ever became possessed of the note made by Robert McCoy.
(a.) The note made by McCoy was held by B. B. Sherman (subject to a lien) for, and as the property of Thomas Cook.
(5.) When Mr. Lowery carried it from Sherman to Cook, he did no more than carry it from an agent to the principal.
(c.) What transpired was no more a negotiation by Lowery of the McCoy note, than if Lowery had received the McCoy note directly from Thomas Cook, to inquire, preliminary to accepting it, whether he ought to do so; and had returned it saying “ it is not satisfactory, you must give me something else.”
(d) It seems monstrous to say, that keeping the note long enough to cany it to Thomas Cook and refuse to accept it, was retaining it for the purpose of obtaining from Thomas Cook other security in place of it.
3. The defendant certainly sought something different from what the McCoy notes proved to be. Surely, then, he had a right to say that he would not accept them.
4. Even in the view which the Referee took of the facts, it is a strained conclusion to hold that the delivery of the McCoy note, by Lowery to Thomas Cook, and the delivery to Lowery by Thomas Cook of the latter’s own note, was a negotiation by Lowery of the McCoy note.
5. It seems but fair that if Mr. Lowery for a moment held one of the McCoy notes, even under an agreement with Thomas Cook, to take it, that there should be a bous pcenitenticz within which he might withdraw from an illegal contract.
a. In any view, Mr. Lowery had but the most technical sort of possession of the McCoy note. He restored it speedily, to the very person from whom (through an agent) he received it; and that person’s liability (if any existed) for the original taking of it, by him from E. Cook, was unaffected by what occurred between him and Mr. Lowery. Mr. Lowery’s acts have not impaired the estate of Ebenezer Cook, diminished the assets nor damaged the estate in any manner or degree.
John E. Parsons, for the plaintiff (respondent).
I. If the McCoy note was transferred to Thomas Cook, by Ebenezer Cook, in contemplation of the insolvency of himself, or of the special partnership, with the intent of giving him a preference over creditors of Ebenezer Cook, or of the partnership, such transfer was absolutely void, as against the plaintiff, representing the rights of creditors. Mo title passed to Thomas Cook. The note remained the note of the partnership. The defendant could obtain no title to it from Thomas Cook, and if he obtained and converted the note, he is responsible to the plaintiff. Especially is this so where the defendant had notice of all the facts, and gave no consideration for the note. (2 R. S., 4th ed., p. 175, §§ 20, 21.)
3. The defendant did receive the McCoy note payable at fifteen months, and converted it to his own use.
II. The rulings of the Referee are correct. An answer in a deposition produced by the defendant could not be waived by him—and that answer being in evidence, made the plaintiff’s question admissible.
HI. The defendant, who effected the partnership arrangement himself, using the name of his son, a boy seventeen years of age, for whose support and maintenance he was chargeable, and himself advanced the special capital, was not a creditor of the partnership.
Thomas Cook owed him nothing. He ascertains that Thomas Cook has obtained the McCoy notes—visits him for the purpose of compelling him to surrender them to him—procures from Thomas Cook an order for two of them, knowing them to be assets of the partnership, calls on Mr. Sherman and receives one, makes no objection to it—doubtless then, is advised of the danger of the transaction—returns to Thomas Cook, not to surrender the note, but to ask him to take the McCoy notes, and in place of them give his own notes of the same amount. He did not want notes with Ebenezer Cook’s name on, for it would implicate his son, intending to retain all the benefit of the transaction, but to shift the responsibility on Thomas Cook. He holds the note till after he has got Thomas Cook’s notes safely in his hands. He does realize, in fact, $1,000, having no shadow of claim, while creditors receive nothing.
The questions are all of fact. In such a case the Court will not disturb the conclusions of the Referee.

Opinion:
By the Court—Woodruff, J.
We think the Referee erred in holding that there is any. foundation whatever for this action. Taking the facts as strongly in the plaintiff's favor as any evidence in the cause will warrant, Ebenezer Cook the partner of the defendant's son, had transferred to his father, Thomas Cook, the property of the firm by a conveyance which was fraudulent and void as against the creditors of the firm, and which was also void as against the defendant's said son (the partner.) The property so transferred consisted of notes of one McCoy. The defendant insisted that by receiving the property so transferred, Thomas Cook had in fact received property belonging to his son and in effect received what the son had contributed as capital, which capital had been advanced to the son by him, the defendant, and making that claim he demanded that compensation should be made to himself and threatened a suit if it was not made.
Under the influence of this demand, Thomas Cook gave him an order on B. B. Sherman for two of the notes made by McCoy.
The evidence to our minds shows, by a decided preponderance, that when the demand was made and the order .was given and received, the defendant had refused to take any part of the property which had belonged to the firm and did not intend to receive any such property, and was not aware when he took the order, that the notes it was proposed be should receive from Sherman were the property of the firm; but the Referee has found otherwise: and let it therefore be assumed that he knew that the McCoy notes were the identical notes which had been fraudulently transferred to Thomas Cook.
It is however plainly shown that he did not know that they bore the indorsement of Ebenezer Cook, the fraudulent partner.
He presented the order. One noté was given to him and on discovering that it bore the indorsement óf Ebenezer Cook, he returned by the first conveyance to Thomas Cook, and demanded other notes instead of those mentioned in the order, and Thomas Cook gave him his own notes.
It is not and cannot be claimed that if on the first interview Thomas Cook had paid him two thousand dollars or any other sum in money, the defendant would have been in any manner liable to the present plaintiff. It would have béen a payment of money which Thomas Cook was not bound to make, but which he would be deemed to have voluntarily made, and in which neither the plaintiff nor any creditor of Ebenezer Cook had any interest. :
So if Thomas Cook had at that first interview delivered to him his own notes indorsed by his son-in-law, the same notes which he did give him at the second interview, it would have been equally clear that the plaintiff had no interest therein, and the creditors whom he represents would have had no concern therewith. -
So if the defendant had found the McCoy notes in the hands of Thomas Cook and had agreed to accept two of them, but on their being produced and handed to him he had examined them, and finding' the name of E.- Cook upon them, refused to accept them in satisfaction of the claim he was urging, and thereupon Thomas Cook's notes had been given to him, -there would not have been the' slightest ground to claim that he was liable as for disposing of the McCoy notes to his own use, and yet this would have been as literally exchanging the McCoy notes with Thomas Cook as what he did do was.
So if the defendant when the one note, for which he is held liable, was handed to him by Mr. Sherman, had, on seeing the name of E. Cook, handed it back to him, and then gone to Thomas Cook and obtained his notes in lieu thereof, it would be equally clear- that the defendant is not liable.
The supposed ground of liability becomes therefore very narrow. If he had left the note with the agent of Thomas Cook, he would not be liable, but because he carried it to the principal, Thomas Cook himself, he is liable as for a conversion to his own use.
We are not able to perceive that any such liability results from his act. For all the purposes of holding the custody of the note, Sherman and Cook may properly be regarded as' one. Sherman evidently held the note subject to Cook's order. The defendant, producing such an order, received the note-and carried it to Cook. The distance which at the time separated Cook and Sherman, rendered the interval between the time when the defendant took the note into his hand and the time when he delivered it to Cook, several hours, but that can make no difference, he went by the first conveyance. Suppose that on receiving the order from Cook he had only to' go into the next room, and obtaining the note and perceiving the name of E. Cook upon it, he had returned with it to Cook and refused to accept it, we think it plain it would have involved him in no liability.
It does not appear that there ever was a moment, after he was informed of the true tenor and character of the note, at which he consented to make it his own property; and he certainly did not use it in any proper sense for his own benefit. Instead of converting it to his own use, he returned it to the party who held it and who had the legal title to it as against himself, and as against Ebenezer Cook, the indorser, and Robert McCoy, the maker.
We are not willing to carry the idea of constructive conversion so far as has been done in this case. We think the defendant has been charged with the amount of a note which, according to the only sensible view of the transaction, he never accepted or consented to receive as his own, and in respect to which he did nothing amounting to a conversion.
It is proper to add that the Referee erred in holding that because the testimony of the defendant in answer to the questions put by his own counsel had been reduced to writing, that therefore the defendant's counsel could not waive the reading of any answer which he did not wish to have read. If the testimony was relevant to any issue in the cause and tended to prove a fact to which the defendant's statement was competent evidence, the plaintiff was at liberty to read it. (Forrest v. Forrest, 6 Duer, 102.) In this respect the deposition of the plaintiff is to be treated as the deposition of any witness would be when taken on commission or otherwise.
A party who has caused such deposition to be taken does not necessarily, by offering parts of it in evidence, bind himself to read it all, or make answers which are irrelevant or incompetent admissible.
It is not obvious upon what ground the Referee excluded evidence that proceedings supplemental to execution had been taken- against McCoy, and no property was discovered. The action was to recover the value of a promissory note of said McCoy, and it is for that value the Referee gave the plaintiff judgment. Evidence was given of judgments against McCoy, and of the return of executions unsatisfied, some due before and some after the day of the maturity of such note. If this was admissible, in order by proof of the exhaustion of all legal remedies against him to show that he was insolvent, and the note of little or no value, it is not easy to see why evidence that further equitable remedies had been exhausted without discovering any property, was not competent.
The judgment should, we think, be reversed, and a new trial ordered. Costs to abide the event.
Ordered accordingly.