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Goldmark v. U. S. Electro Galvanizing Co., 111 App. Div. 526, 97 N. Y. Supp. 1078: Press Pub. Co. v. Star Co., 33 App. Div. 242, 53 N. Y. Supp. 371; Presbrey v. Public Opinion Co., 6 App. Div. 600, 39 N. Y. Supp. 957; Magnolia Metal Co. v. Sugden, 57 App. Div. 575, 68 N. Y. Supp. 563; Tanenbaum v. Lippmann, 89 App. Div. 21, 85 N. Y. Supp. 122.

We are then to inquire into the facts disclosed by the plaintiff's papers to see whether a proper case is presented for the granting of the order; for, although the provisions of the Code appear mandatory in their terms, nevertheless it is well established the judge is not necessarily compelled to grant the order as a matter of strict right, but where it appears the application is made for purposes of annoyance or delay should deny same. Jenkins v. Putnam, 106 N. Y. 272, 12 N. E. 613. Although the language of the section is apparently mandatory, the granting or refusal to grant such an order is in a degree a matter of discretion. Matter of Davies, 168 N. Y. 102, 61 N. E. 118, 56 L. R. A. 855. Notwithstanding it appears to have been the practice of the courts to regard the privilege to examine an opposing party as a substantial right when free from abuse of that right, and this is particularly true when it is made to appear that the facts sought to be established are within the personal knowledge of the defendant, and it is necessary to prove them to make out the plaintiff's case. Commercial Pub. Co. v. Beckwith, 57 App. Div. 574, 68 N. Y. Supp. 600: Tanenbaum v. Lippmann, 89 App. Div. 21, 85 N. Y. Supp. 122; Presbrey v. Public Opinion Co., 6 App. Div. 600, 39 N. Y. Supp. 957. In Goldmark v. U. S. Electro Galvanizing Co., 111 App. Div. 526, 97 N. Y. Supp. 1078, the court says that:

"Where there is no doubt of the good faith of a party to a litigation seeking to establish a fact essential to his cause of action by the testimony of his op. ponent, I can see no reason why a party is not entitled to have the knowledge of his opponent as to the fact which he wishes to establish put upon record, so that the evidence of that fact would be available to either party to the action when the trial takes place. It is not the duty of a court of justice to suppress the fact, or throw obstacles in the way of either party establishing the truth. and where a party to an action has presented to a justice of the Supreme Court an affidavit complying with sertion 872 of the Code, and the facts and circumstances are stated which show that the testimony of the person whose deposition is proposed to be taken is material and necessary for the party making the application for the prosecution or defense of the action, there is no reason why the examination should not be allowed."

The plaintiff seems to have brought himself within the provisions of the sections of the Code in question and of the decided cases. The action is for the specific performance of a contract for the sale of certain real estate. The sale was made subject to the approval of Mr. Shire, and the complaint alleges such an approval on Mr. Shire's part. The answers deny that fact. Whether he approved or not is peculiarly within the knowledge of Mr. Shire, and the plaintiff in our opinion has the right to establish that fact if he can by Mr. Shire's testimony, and may do this by an examination before trial, and is not required to wait until trial before putting him on the witness stand.

The motion to vacate order is denied, with $10 costs.

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and 136 New York State Reporter (117 App. Div, 352)

FULLER V. MUNICIPAL TELEGRAPH & STOCK CO. (Supreme Court, Appellate Division, Third Department. January 18, 1907.) 1. GAMING-SPECULATIVE TRANSACTIONS_RECOVERY OF PAYMENTS AS MARGINS

-PRINCIPAL AND AGENT.

Where customers paid an agent of defendant certain sums as margins on sales and purchases of stock, but defendant made no actual purchases or sales, and the agent knew these facts, and at the termination of the agency settled with the customers, neither he nor his assignee obtained ti

tle to any claim they might have against defendant. 2. SAME.

Where a customer paid $770 margins on acoount of purchase of stocks to an agent of defendant, but no purchase was made, and the agent, on closing his relations with defendant, transferred the account to another company, which carried it for several weeks without expense to the custower, and then paid him $1,100, so that he received the full benefit of the transaction as if the purchase had actually been made, he is not entitled to recover from the defendant the amount of margins paid, though defend

ant retains that amount without consideration. 3. SAME.

Where customers paid sums to an agent of defendant as margins on sales and purchases of stock, which defendant never actually made, and when the agent closed his relations with the defendant they transferred their accounts to another company through the agent, and it appears that no moneys were received by them from the company to which the trans

fer was made, they are entitled to recover of defendant the amounts paid. 4. SAME-SET-OFF AND COUNTERCLAIM.

In an action to recover of a broker amounts paid as margins on pur. chases and sales of stock which the broker never actually made, the broker is not entitled to set off a claim for nonpayment of additional margins

Appeal from Judgment on Report of Referee.

Action by William H. Fuller against the Municipal Telegraph & Stock Company. From a judgment in favor of plaintiff on the report of a referee and from an order granting an additional allowance of costs, defendant appeals. Reversed on condition.

Argued before SMITH, CHESTER, KELLOGG, and COCH-
RANE, JJ.

John A. Delehanty (D. Cady Herrick, of counsel), for appellant.
James Jenkins (John A. Stevens, of counsel), for respondent.

JOHN M. KELLOGG, J. The manner in which the business was transacted at the so-called broker's office at Rondout, and at the defendant's main office at Albany, is not materially different from that described in Haight v. Haight & Freese Co., 112 App. Div. 475, 98 N. Y. Supp. 471, and McCarthy v. Meaney, 183 N. Y. 190, 76 N. E. 36. Here there were no sales or purchases of stock pursuant to the orders of the various customers. The business of those offices, so far as the plaintiff and his assignors are concerned, was all on paper. They were simply bookkeepers, and not stockbrokers. The plaintiff and his assignors actually intended to and believed they were buying and selling stocks, and were paying their money on account of such supposed transactions. Otherwise the business was purely fictitious. The above cases show the liability of the defendant, if it is established that Quincey, the person in charge of the Rondout office, represented the defendant so far as to make it liable for his acts in receiving the moneys of the plaintiff and his assignors and paying them over to it.

It is unnecessary to discuss all the evidence bearing upon the question of the liability of the defendant for Quincey's acts. Among other things, the evidence tended to show that the moneys received from the plaintiff and other customers were deposited by Quincey in the bank to the credit of defendant, that a part of said moneys consisted of a commission of one-fourth of 1 per cent. on the par value of the stock for buying and selling the stock, and that the defendant agreed to pay Quincey one-half of that commission “as his fee" for doing the business. There was sufficient evidence to justify the findings that the defendant is liable for the moneys received at the Rondout office.

The complaint proceeds upon the theory that the plaintiff and his assignors paid money into the Rondout office as margins and commissions for stocks which they directed to be bought and which stocks were wrongfully reported as bought, that the stocks were not bought, and that the transaction, so far as the defendant was concerned, was simply to receive the money on account of a series of fictitious entries upon its books, and, that having failed to perform its contract, the defendant is liable to the plaintiff for the moneys received, with interest thereon. Among the claims upon which recovery was had were the Rafferty claim of $1,038.58 and the Hiltebrant claim of $253.68. The plaintiff cannot recover upon either of these claims. When customers "bought" stocks at the Rondout office, Quincey, the manager, gave them a slip stating that he had bought the stock in his name for their account. When he closed his relations with the defendant, he put one of these customers, without expense to him, in the Metropolitan Stock Exchange of Boston for the same stocks, giving him a ticket with that company and receiving back the Quincey ticket. The other customer, when Quincey closed his relations with the defendant, offered to settle with him for a small amount, and he paid it and received the slip previously given. These facts constitute the alleged assignment of these claims. It is evident that the business as conducted by Quincey and the defendant with reference to the plaintiff and his assignors was illegal, and both Quincey and defendant were 'iable for the wrongful acts. There can be no real question that Quincey knew the manner in which the defendant carried on its business, and that the transactions, so far as he and the defendant were concerned, were purely bogus and existed only on paper. Therefore, when he substituted one company for the other and paid one customer a small amount, it must be deemed that he was settling with his victim for the wrong done. By such settlement he obtained no title to any claim against the defendant. Quincey could not recover from the defendant, and his alleged assignee is in no better position.

One Wolff had paid into the Rondout office $770 margin on account of the purchase of stocks. Quincey, when he closed his relations with the defendant, transferred Wolff's account to the Metropolitan Company, and he was carried with the Metropolitan Company for several weeks for the same stocks without expense to him, and the and 136 New York State Reporter transaction was then closed and Wolff was paid $1,100. In fact, he received from Quincey $1,100 on account of the $770 which he had paid to Quincey and on account of the same transactions. After Wolff was transferred to the Metropolitan Company he was informed of the fact by Quincey and assented to it. So far as Wolff is concerned, this may fairly be treated as one transaction. It does not appear whether the transaction between Quincey and the Metropolitan Company was an actual purchase of the stock, or only a fictitious paper transaction. However that may be, Wolff received the same advantages from it that he would have received if Quincey had purchased the stock when the order was first given and when he was representing the defendant. It does not, therefore, seem that Wolff has suffered any damage by reason of the fact that Quincey and the defendant did not in the first instance purchase the stock. It is true the defendant still holds his money without consideration. But it received it under such circumstances that both it and Quincey were liable for it, and Quincey, one of the wrongdoers, reinstated the purchase and procured for Wolff all the benefits intended. He received every benefit an actual purchase of the stock could have brought him. That was, in fact, an adjustment by one of the wrongdoers for the wrong done, and after having had full satisfaction Wolff, or his assignee, cannot now proceed against the other wrongdoer. If Quincey had remained the representative of the defendant when the $1,100 was paid to Wolff, it is evident that with the $1,100 in his pocket Wolff could not recover of the defendant the $770 which it had received. It is also clear that, if an action had been brought against Quincey after this account was transferred to the Metropolitan Company, the transfer and the receipt by the plaintiff of the profits of the transaction, larger than the original investment, would be a defense so far as Quincey is concerned. If a defense to Quincey, it would seem to be a defense to the defendant, who was apparently a conspirator with him in obtaining the plaintiff's money. When Quincey closed his relations with the defendant, several other assignors of the plaintiff transferred their accounts to the Metropolitan Company through Quincey; but they either paid the regular commission, or it does not appear how they were reinstated, and it appears that no moneys were received by them from the Metropolitan Company, and therefore, as to those various claims, it cannot be said that the parties have received any satisfaction on account of the wrong done by the defendant in obtaining and withholding their moneys.

Prior to the times mentioned in the complaint, and at the time of the Northern Pacific "corner," the sudden drop in the market resulted in entries upon defendant's books tending to show that Quincey was indebted to it in a large sum, which indebtedness was on account of purchases made by the assignors through Quincey, and these paper transactions are now urged by the defendant as a counterclaim. It is evident that, if defendant is liable for a return of the margins on account of the manner in which it did its business, it could have no legal claim for nonpayment of margins on similar transactions. It is unnecessary, therefore, to consider the evidence which tends to show that the defendant to induce the assignors to continue doing business with the Rondout office agreed to wipe the slate and start anew. The defendant therefore had no counterclaim.

The case is a long and complicated one, difficult and extraordinary, and the discretion of the Special Term granting an additional allowance of costs was properly exercised.

The judgment therefore is reversed upon the law and the facts, and the referee discharged and a new trial granted, with costs to the appellant to abide the event, unless plaintiff within 20 days from entry of order stipulates to modify the judgment by deducting therefrom the amount recovered on account of the Rafferty claim, the Hiltebrant claim, and the Wolff claim. In case of such stipulation the judgment is so modified, and, as modified, is affirmed, without costs.

The order appealed from is affirmed, without costs. All concur.

(52 Misc. Rep. 353) GREENWALDT V. UNITED STATES HEALTH & ACCIDENT INS. CO. OF

SAGINAW, MICH.

(Supreme Court, Special Term, Erie County. December, 1906.) 1. INSTRANCE-NONPAYMENT OF PREMIUMS-FORFEITURE.

Where an accident and health policy provided that, if any renewal pre. mium should be paid after the expiration of the policy, the insurer should not be liable for any illness originating before 30 days from the date of the renewal, and a premium for a certain month was paid after it was due, and 15 days thereafter insured was taken ill and remained so for several months, during which time premiums were paid, he was not entitled to

recover sick indemnity. 2. SAME-ESTOPPEL-PROOF OF CLAIMS.

The fact that insured bad been requested to make out his proof of claims

did not entitle him to recover, 3. APPEAL-PRESUMPTIONS-FACTS TO SUSTAIN DECISION.

Where an accident policy was issued in consideration of a premium and policy fee, and the premium was $1 per month, and insured, on the issuance of the policy, paid the agent $3, it could not be presumed on appeal from a judgment in favor of defendant in an action on the policy, in the absence of evidence, that $2 was a payment of premiums in advance and not a payment of the policy fee. Appeal from Municipal Court of Buffalo.

Action by Max Greenwaldt against the United States Health & Accident Insurance Company of Saginaw, Mich. From a judgment in favor of defendant, plaintiff appeals. Affirmied.

Charles W. Strong, for appellant.
Dana L. Spring, for respondent.

WHEELER, J. On the 7th day of February, 1905, the defendant issued its policy of accident and health insurance to the plaintiff in consideration of the policy fee and the payment of premiums on the first day of each month. It was provided in the policy that:

“If the payment of any renewal premium shall be made after the expiration of this policy or the last renewal receipt, neither the assured nor the beneficiary will be entitled to recorer for any accidental injury happening between the date of such expiration and 12 o'clock noon, standard time, of the day fol.

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