Court Opinion

ID: 5194373
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:41:04.227849+00
Date Added: 2024-06-11T08:27:00.443129
License: Public Domain

Ingraham, J. (dissenting):
I do not concur in the affirmance of this judgment. The coupons in question had been detached from the bonds before delivery ; and after they were detached and before September twelfth, when they became due, they were delivered to Wm. H. Kelly for value.
As they were thus detached from the bonds before delivery by the obligor, they never represented interest on the bonds and were *99not, therefore, secured by the mortgage which secured the payment of the bonds and interest. When issued for value by the obligor, however, they became, in the hands of a holder for value, obligations of the company, and if not paid could be enforced by the usual methods.
The defendant, the Manhattan Company, having acquired the property of the East River Company subject to the first mortgage, while under no legal obligation to pay the bonds and coupons representing interest thereupon, was compelled to pay them to avoid a. foreclosure of the mortgage which secured these bonds and interest. The coupons in question, however, having been detached before the bonds were issued, had no relation to the bonds, did not represent interest on them, and were, therefore, simply contract obligations of the East River Company.
The original complaint alleged the execution and delivery of the bonds by the East River Company; that there were annexed to the bonds the coupons in question; that the Manhattan Company became the successor of the East River Company and acquired its-properties subject to the mortgage and the payment by it of the said bonds and coupons; and after setting out the coupons sued on, alleged that the Manhattan Company “is ready and willing and has promised and agreed to pay the principal of said coupons, to wit, thirty dollars; but declined to pay interest thereon.”
The fact that the Manhattan Company had acquired the franchise and property of the East River Company, subject to the payment of the bonds and coupons, and was ready and willing to pay the coupons, imposed no legal obligation unless it had by a valid agreement, based upon a consideration, assumed the payment of the obligations of the East River Company (Fernschild v. Yuengling Brewing Co., 15 App. Div. 29, affd., 154 N. Y. 667) and the only allegation in this complaint which would impose such an obligation is that which alleged that the Manhattan Company had promised and agreed to pay the principal of the coupons. -The defendant, the Manhattan Company, interposed an answer in which it' admitted that, as the successor of the East River Company, it was at all times ready and willing to pay the said coupons to the lawful holder thereof when presented, and still is ready and willing to pay the same, and did not either admit or deny the allegation of the com*100plaint that it had promised and agreed to pay the coupons. Subsequently the Manhattan Company consolidated and became merged with the Edison Electric Illuminating Company, and after such consolidation the plaintiff served an amended complaint containing the same allegations as to the Manhattan Company. The defendant interposed an answer to the amended complaint in which it denies the allegation that the Manhattan Company was the lawful successor of the East River Company and that it was ready and willing to pay these coupons or had ever promised and agreed to pay them. Upon the trial, to prove the allegation that the Manhattan Company had agreed to pay these coupons, plaintiff' introduced the original answer of the Manhattan Company with a letter of the attorney of the company. At the close of the case the defendant moved to dismiss the complaint upon the ground, among others, that there was no evidence that the Manhattan Company had ever assumed the payment of these coupons or agreed to pay them. This was denied upon the ground that the admission in the first answer was evidence of such an agreement and that question was left to the jury, who found a verdict for the plaintiff.
I think the complaint should have been dismissed. The original complaint had alleged that the coupons sued on were attached to the bonds and were secured by the mortgage, and that the Manhattan Company was ready and willing and had promised and agreed to pay them. The answer admitted that the company was ready and willing to pay the face value; but that was not an admission of a legal liability to pay, much less an admission of an express promise to pay. . There is no affirmative allegation in that answer which could be construed to be an admission or declaration that any such engagement or promise existed. The failure in that answer to deny the allegation of such an express agreement in the complaint prevented the defendant from disputing that allegation so long as .that answer stood as a pleading in the case; but when the plaintiff served an amended complaint and the defendant interposed its answer thereto, the answer to the original complaint was superseded. While a statement of fact in, the answer was evidence of the fact allege'd, as a declaration of the defendant, it has never been held that the mere omission to deny an allegation was an admission of its truth, except so far as, upon the trial of the action in which the answer failing to *101deny the allegation had been interposed, the defendant was precluded from questioning the truth of the allegations to which there was no denial. In Dale v. Gilbert (128 N. Y. 625) it is said: “ In this respect it is like an admission in a pleading. While the admission remains, evidence is not admissible to. show that the party does not rely upon it. It is an admission of record and is conclusive. If the pleading be amended by striking out the admission the truthfulness of the admission is still a question, when proven to have been made, but it is not conclusive upon the party, who made it and he may give evidence to show that it was made inadvertently and mistakenly, and then the jury must decide whether, on the explanation, . it be correct.” (See Paige v. Willet, 38 N. Y. 28.) The mere -failure to deny an allegation in the complaint, however, is not such a declaration of a fact as to be admissible in another action between the same parties,, or in the same action in which the pleading has been superseded by an amendment, to prove the existence of the fact.
The defendant has made no declaration or statement which admits that it had promised and agreed to pay these coupons ; and the plaintiff’s right to recover depends entirely upon the proof of such an expressed promise by the' defendant. The defendant was quite willing to admit that it stood ready and willing to pay all coupons that represented interest upon bonds secured by the mortgage upon its property. When it appeared, however, that these coupons did not represent interest upon bonds secured by a mortgage upon the property, an entirely different question was presented as to its willingness to pay. And the mere fact that the defendant had failed to deny a promise to pay coupons which were alleged to be those representing interest on these bonds when that issue was presented' was certainly no evidence to show that the defendant had promised and agreed to pay coupons which did not represent interest on bonds secured by mortgage upon its property, but at most represented an ordinary contract obligation to pay money of a corporation with which the defendant was not connected, and -for the fulfillment of whose obligations it was not responsible.
The only other evidence introduced by the plaintiff which it was claimed tended to show that the Manhattan Company had agreed to pay these coupons was a letter addressed to the company by its attorneys. A witness was called by the plaintiff who testified that. *102he called upon Mr. Hemmens, one of the defendant’s attorneys, with five of these coupons and received from, him a letter addressed to the company. That letter is as follows: “ The bearer Mr. Baltes has five coupons of the East River Electric Light Company’s bonds, which seem to be all right. We advise that they be paid if there is no record that like numbers have already been paid.” ' This letter was advice given by an attorney to his client, and contained no admission of .any fact except that the bearer of the letter had five coupons which seemed to be all right. The attorney advised the defendant' that they might be paid. But that advice was certainly no admission of any contract on the part of the defendant to pay them, and was evidently based upon the fact that these were coupons of the bonds representing interest thereon. The evidence in the case shows that the presumption was a mistake; and certainly advice given by an attorney to his client based upon a mistaken fact is not evidénce of any fact.
I think, therefore, that the defendant’s motion to dismiss the complaint should have been granted.
But assuming that this answer could be treated as an admission of some legal obligation of the defendant, the Manhattan Company, to pay these coupons, it was simply an admission which the defendant could rebut. On behalf of the defendant a witness was called who testified that he was auditor of the New York Edison Company ; that he was director and secretary of the Manhattan Electric Light Company for four years; that he was a director of the Manhattan Electric Light Company at the time of the consolidation of that company with the Madison Square Company; that the Manhattan Company did not have possession of any of the books of account, ledgers' or any other books formerly owned by the East River Electric Light .Company or the Thomson-Houston Electric Light Company. He was then asked: “ Did you make any agreement at any time to pay any' debts of any other electric light corporation ? ” which was objected to as calling for a conclusion. This objection was sustained, to which there was an exception.
I think that this was error. The question did not call for a conclusion, but for the fact whether any agreement at any time had been made by the defendant corporation. It. was direct evidence to overcome the effect of ,any alleged admission made by the *103defendant corporation in its failure to deny the allegation of an agreement or promise to pay. The only way that the defendant could disprove the truth of a statement which was alleged to be an admission of a fact was by direct proof that the fact alleged to be admitted was not true. When the fact alleged to be admitted was that an agreement had been made, it certainly was competent for the corporation whom it was alleged had made such an admission to call its officers with knowledge of the affairs of the corporation, and prove that no such contract or agreement had been made. There was no proof of any particular agreement made at any particular time, and there was no method by which the defendant could prove that no such agreement had been made, except by calling its officers with knowledge of the affairs of the corporation, and offering their testimony that no such agreement had been made. There was no objection on the ground that the witness had no knowledge of the affairs of the corporation, the only objection being that the question called for a conclusion; And as this objection to the question was clearly incompetent, to sustain it was error.
McLaughlin, J., concurred.
Determination affirmed, with costs.