Opinion
Argued March 13, 1907
Decided April 9, 1907
Andrew J. Nellis for appellant.
William W. Morrill for respondents.
The action is for the conversion of a quantity of machinery, the subject of a conditional sale made by the plaintiffs to the Cayadutta Knitting Company in 1896. The condition of the sale was that the title to the property sold by the plaintiffs should remain in them until the payment by the vendee of the purchase price, for which certain drafts were given. These drafts were renewed from time to time, but never paid. In 1901 the knitting company transferred the machinery, together with other personal property and real estate, to the firm of Littauer Brothers, who were large creditors of the company. In 1902 the property was sold by Littauer Brothers to the defendant, who, in consideration thereof issued a portion of its capital stock. The agreement between the plaintiffs and the knitting company was oral and, of necessity, was not filed as required by the statute; but the trial court found that both Littauer Brothers and the defendant had knowledge of the plaintiffs' title and that neither was a purchaser in good faith. It, therefore, awarded the plaintiffs the value of the goods converted. The learned counsel for the appellant, in an elaborate argument, contends that in effect the transaction between the original parties was not a conditional sale but a chattel mortgage and, therefore, void. We think this claim is not well founded, and that there are only two objections to the recovery which require our notice.
The evidence given by the plaintiffs to show that the defendant had knowledge of their claim were declarations of Titus Sheard, a stockholder and director of the defendant company, who negotiated the purchase of the property in suit from Littauer Brothers. Sheard had died before the time of the trial. This evidence was admitted against the objection and exception of the appellant, who contends that such admission was error. We think the law is settled otherwise. The fact that Sheard was a director and officer of the defendant did not render his admissions or declarations admissible as against the defendant. ( First Nat. Bank of Lyons v. Ocean Natl. Bank, 60 N.Y. 278.) They were admissible, however, on another ground of which his connection with the defendant forms no factor, except that it was through that connection that the declarations made were against the interest of the declarant. Mr. Greenleaf states the rule (Evidence, sec. 147): "A third exception to the rule, rejecting hearsay evidence, is allowed in the case of declarations and entries made by persons since deceased, and against the interest of the persons making them, at the time they were made. We have already seen that declarations of third persons, admitted in evidence, are of two classes, one of which consists of written entries, made in the course of official duty or of professional employment * * *. But declarations of the other class, of which we are now to speak, are secondary evidence, and are received only in consequence of the death of the person making them. This class embraces not only entries in books, but all other declarations or statements of facts, whether verbal or in writing, and whether they were made at the time of the fact declared or at a subsequent day. But, to render them admissible, it must appear that the declarant is deceased; that he possessed competent knowledge of the facts, or that it was his duty to know them; and that the declarations were at variance with his interests." Wigmore on Evidence (Vol. 2, sec. 1469) is to the same effect. The exact question was decided by this court in Lyon v. Ricker ( 141 N.Y. 225) in accordance with the rule stated in the authorities cited. There Judge PECKHAM, after reviewing the authorities, said: "The court receives declarations of a deceased person against his interest because of the likelihood of their being true, of their general freedom from any reasonable probability of fraud, and because they cannot be set up or proven until the death of the party making them. We think it plain that the declarations of the deceased grantor were admissible against the defendant, although the latter claimed nothing under the grantor, and was not, therefore, strictly in privity with him." (See, also, Bump v. Pratt, 84 Hun, 201; Griffin v. Train, 90 App. Div. 16.)
The second objection, however, we think fatal to the recovery. Though the evidence may have admitted of a different conclusion, the trial court found, at the request of the defendant, "That no sufficient demand for the restoration of the property in question was made before the commencement of this action." The universal rule in this state is that where property comes lawfully into the possession of a party he cannot be charged for a conversion in failing to surrender it to the owner unless a demand therefor is made ( Gillet v. Roberts, 57 N.Y. 28), and this rule applies although in his answer the defendant may set up a hostile title and claim to own the property. ( Goodwin v. Wertheimer, 99 N.Y. 149.) In the present case the plaintiffs, after the default of their vendee in the payment of the purchase money allowed it to continue in possession of it. They could not charge the vendee with conversion until after demand ( O'Rourke v. Hadcock, 114 N.Y. 541), and under the recent decision of this court, until the defendant's vendors were in default, those vendors had an interest of which they might dispose. ( Davis v. Bliss, 187 N.Y. 77.) Therefore, the purchase by the defendant was not a wrongful act.
The judgment appealed from should be reversed and a new trial ordered, costs to abide the event.
GRAY, VANN, WERNER, WILLARD BARTLETT and HISCOCK, JJ., concur; CHASE, J., not sitting.
Judgment reversed, etc.