"The law is most clearly settled (and it would be a reproach to its principles or its ministration were it otherwise) that all the necessary expenses of a trustee-that is, all expenses of every kind which are reasonable, and in good faith incurred by him for the defense, protection, or reparation of the estate are to be treated in equity as a charge in all cases."

And in Re Attorney General v. North American Life Ins. Co., 91 N. Y. 57, it was said:

"The principle upon which counsel fees are granted in such instances is that of necessary disbursements, and it stands upon the same ground as any other necessary expense for the preservation of the fund. Often and usually the trustee has no interest outside of the performance of duty. What he does is for the benefit of others, whose interests are for the time being in his keeping. He owes them no duty to expend his own money for their benefit, and whatever he does so expend in the reasonable and prudent care of the trust fund is properly allowed to him as an expense."

In Downing v. Marshall, 37 N. Y. 380, 389, it was said:

"His [the trustee's] duties relate to the property and interests of others, and he is to be indemnified for necessary expenses in protecting such trust property, and has an equitable lien upon it for such expenses."

As said in the supplement to Bishop on Insolvent Debtors, (2d Ed. p. 55:)

"The general rule being thus unquestioned, the inquiry is whether it includes expenses of litigations unsuccessfully undertaken or defended by the assignee, without practical benefit to the estate, assuming them to have been incurred in good faith, and with the prudence which an intelligent and careful man would show in his own affairs. A rule which would preclude a trustee from such allowances would certainly be a severe one. It would require of him an infallibility of judgment, which we do not expect in the highest judicial tribunals, where opinions are sometimes conflicting. It is suggested in Mayer v. Hazard, supra, that an assignee may protect himself against loss by calling upon the creditors to indemnify him before he proceeds with litigation. It is doubtful whether this is a practical protection to the assignee."

The logical conclusion from Mayer v. Hazard is that an assignment which on its face is perfectly valid, and, so far as the assignee is concerned, was executed in good faith, is to be surrendered by the latter to the first or any attack made upon it, or else protected at his own risk and expense. If, however, the assignee should be unwilling at his own risk and expense to defend the assignment, and should fail to receive indemnity from friendly creditors, there are cases which might be cited as seeming authority for the view that he would be responsible for neglect of duty in permitting the trust estate, without action on his part, to be wrested from his possession. We do not think an assignee or trustee should be placed in such a dilemma, nor do we think the law places him in any such position of risk. We see no good reason, therefore, either in principle or upon authority, why an assignee who himself has been guilty of no fraud, and who undertakes to discharge the duties of a trustee under an assignment which is not void, should not be allowed such proper and necessary disbursements as he in good faith may have made, either in collecting, protecting, or defending the trust property. The judg ments confessed were more than one-third of the property of the assignors, and, under the rule held in the earlier cases, an at

tempt to give an unlawful preference in excess of the statutory limitation of one-third was held to be fraudulent. Here, therefore, the judgment creditors succeeded upon this ground; and, no appeal having been taken from such judgment, it is conclusive. It is proper, however, in this connection, to recall the fact that the earlier cases have all been overruled by that of Bank v. Seligman, 138 N. Y. 435, 34 N. E. 196, which decided that confessed judg ments, in excess of the one-third allowed by law, do not operate to make the assignment for the benefit of creditors void as fraudulent, but that such judgments are to be considered as preferences, and, if in excess of the legal proportion of the assignors' estate, are to be reduced to a lawful amount. Here, the assignee not having been a party to the fraud alleged as the ground for the creditors' successful attack, and the testimony showing that he acted in entire good faith, without knowledge of the prior confessions of judgment until after the attack upon the assignment was made, and in the light of the decision in Bank v. Seligman, supra, we think that reasonable disbursements made and sums paid to counsel for defending the assignment should be allowed. Our conclusion, therefore, is that the report should in all respects be confirmed, except as to the disallowance of necessary disbursements made by the assignee, or sums by him paid to counsel in defending the assignment, and that the question of the amount of such allowance should be referred to the same referee for decision, with costs of the appeal to appellants, and cost of reference to be paid out of the estate.

GREENWICH INS. CO. v. OREGON IMP. CO. et al.

(Supreme Court, General Term, First Department. February 16, 1894.) 1. PLEADING-ADMISSIONS IN ANSWER.

In an action by an insurance company to recover the earned portion of a premium on a policy issued by it, the answer admitted the issuance of the policy at the request of, and for the benefit of, defendant; that it continued in force, as alleged in the complaint, until canceled at defendant's request; and that the earned portion of the premium was the sum stated in the complaint, which defendant agreed to pay, but it denied that plaintiff had ever demanded, or that defendant had neglected or refused to pay, the same or any part thereof, or that said sum, or any part thereof, was due and owing. Held, that the answer admitted that the premium sued for was due and owing at the time the policy was surrendered, and was inconsistent with the claim that defendants had paid before the surrender.

2. PAYMENT-GIVING CHECK.

Giving a check for the debt is a conditional payment, and the debt is discharged only when the check is paid, unless it was agreed that the check should be received in satisfaction of the debt.

Appeal from circuit court, New York county.

Action by the Greenwich Insurance Company against the Oregon Improvement Company and others to recover a pro rata portion of a premium on a policy of insurance issued by plaintiff. From a judg ment entered on a verdict directed by the court in favor of plaintiff, defendants appeal. Affirmed.

JJ.

Argued before VAN BRUNT, P. J., and O'BRIEN and PARKER,

A. H. Holmes, for appellants.

E. R. Robinson, for respondent.

VAN BRUNT, P. J. This action was brought to recover from the defendants a pro rata or earned portion of a premium on a policy of insurance issued by the plaintiff. The complaint alleged that the insurance was made at the request, and for the benefit and advantage, of the defendants, and that the policy was continued in force until about the 20th of March, 1891, when it was canceled at the request of the defendants, pursuant to the terms thereof; and that the pro rata or earned premium up to the date of the cancellation of said policy was the sum of $1,503.76, and that the defendants promised and agreed to pay said sum. The defendants, in their answer, admit the issuance of the policy, and that it was issued at the request of, and for the benefit of, the defendants, and that it continued in force as alleged in the complaint, when it was canceled at the request of the defendants. They also admit that the pro rata or earned portion of the premium was the sum of $1,503.76, which sum defendants promised and agreed to pay; but they deny that payment had been demanded, or that they, or any of them, neglected or refused to pay the same, or any part thereof, and deny that said sum, or any part thereof, was due and owing. They also deny each and every allegation contained in the complaint not expressly admitted; and they further allege that before the commencement of this action the defendants paid to the plaintiff the sum of $1,503.76, in full payment of said claim or demand in said complaint set forth. Upon the trial it appeared that said plaintiff and defendants never had any transactions directly with each other, but they were all conducted through a firm of insurance brokers by the name of Saterlee, Bostwick & Martin, and that the plaintiff delivered the policies issued upon the defendants' property to Saterlee & Co., and the defendants paid the premium upon said policies to said Saterlee & Co., who, after deducting their commissions, paid over the same to the insurance company, excepting in the instance out of which this action arose. It further appeared that, shortly after the issuing of the policy in question, Saterlee & Co. made application to the defendants for the sum required to enable them to pay the premiums thereon, together with the premium upon another policy obtained by them for the defendants in another insurance company; and the defendants thereupon, on the 13th of February, 1891, furnished Saterlee & Co. with the amount required to settle said account, and took their receipt in full. Saterlee & Co. did not, however, pay the premium on the policy, and on the 20th of March, 1891, when the policy in question was canceled at the request of the defendants, the pro rata or earned portion of said premium due to the plaintiff was $1,503.76, which the defendants promised and agreed to pay, as admitted in their answer. On the 28th of March, 1891, the plaintiff sent Saterlee & Co. a notice for the payment of this premium, and also that of

another policy issued upon the 20th of March, 1891, but the same was not paid. On the 4th of May the treasurer of the defendant the Oregon Improvement Company went to see the president of the plaintiff, who informed him that the premium on the plaintiff's policy had not been paid. The treasurer returned to the plaintiff's office with Saterlee, in whose presence the president of the plaintiff again stated that the premium had not been paid, whereupon the treasurer stated that the defendants had paid it, on the 13th of February, to Saterlee & Co. At this interview Saterlee promised that his firm would send a check, which was to be held for a few days. On the 5th of May the defendants' attorneys wrote a letter to Saterlee & Co., notifying them to produce at once, to the defendants, satisfactory proof of payment of such premiums to the insurance company, or forthwith to repay said moneys to the Oregon Improvement Company. On the same day Saterlee & Co. sent their check to the plaintiff on the Chemical Bank, dated the 7th of May, to its order, for the sum of $6,410.75; this check covering the original premium on the policy in question before cancellation, less the broker's commission of 10 per cent., and entitling the defendant, if the check was paid, to a credit, in account with the plaintiff, of $7,123.05. The amount thus paid was not adequate to meet the indebtedness due the plaintiff for the earned premium on the policy mentioned in the complaint, and the full premium on the policy issued on the date of the cancellation of the policy mentioned in the complaint, but was simply the amount received by the brokers on February 13th, less their commissions. The check was receipted for on the receipt book of Saterlee & Co. by the plaintiff. Its receipt was also entered in the delivery book of the company. On the afternoon of May 5th the assistant secretary of the defendant called upon the plaintiff to ascer tain whether the premiums had been paid by Saterlee & Co. The president of the plaintiff showed the defendant's agent the check, and called his attention to the fact that it was dated the 7th, and that they should consider it payment only if it was honored by the bank. The check was deposited in the bank on the 11th of May, and not paid. From the time of the giving of the check until the 12th of May, Saterlee & Co. had no sufficient funds to meet the same in the bank. On the 9th of May the plaintiff wrote to the defendants, calling their attention to the fact that they had been requested to hold, from day to day, the check given in payment of the premiums, and notifying them that the premiums were not paid, and that they should look to defendants for their payment. On the 11th the de fendants wrote to the plaintiff in reply, to the effect that they had paid the money to the brokers on the 13th of February; and that the plaintiff, on the 4th of May, was notified of such payment; and that on the 5th of May they were informed by the officers of the plaintiff that they had received a check of the brokers for the amount of the premiums, less their commissions; and that, under the cir cumstances, they were advised that the plaintiff could not properly look to them for payment thereof, having accepted Saterlee & Co.'s check and their obligation in payment of the original obligations

of the defendant therefor. On the same day the plaintiff wrote to the defendants, in answer to their letter, that their messenger who called at the plaintiff's office regarding the alleged payment by the brokers was informed that they had received a check from the brokers for the premium, and his attention was called to the fact that it was dated ahead, and that they should only consider the premiums paid when the check was honored, and, furthermore, that they should look to the assured under the policy for payment in the event of the failure of the brokers to make their check good. It was claimed upon the trial that Saterlee & Co. were the agents of the plaintiff to receive the payment of the premium from the defendants, and that, even if they were not, the plaintiff accepted the check of Saterlee & Co. as payment of the premium on the part of the defendants. These propositions were repeated in different forms, but they were decided against the defendants by the court, who refused to allow defendants to go to the jury upon any such issues, and directed a verdict in favor of the plaintiff, and from the judg ment thereupon entered this appeal is taken.

It is difficult to see how, under the pleadings, it can be claimed that the payment of the 13th of February, 1891, to Saterlee & Co., was a payment to them as the agents of the plaintiff, because the answer admits the surrender of the policy in question on the 20th March, 1891, and that the pro rata or earned premium on said policy, up to the date of its cancellation, was the sum of $1,503.76, which they promised and agreed to pay. Now, if they had already, on the 13th of February, 1891, paid the full premium upon this policy, as was claimed upon the trial, how could it be possible that they should owe $1,503.76 upon such policy upon its surrender, before maturity, for pro rata or earned premium? The admis sion in the pleadings is entirely inconsistent with any such view. But, even if that were not so, it is apparent from the tenor of the letter of May 11th by the defendants to the plaintiff, when they were notified as to the condition of affairs in reference to this nonpayment of the check of Saterlee & Co., that they did not consider that the payment to Saterlee & Co. of the 13th February had canceled any indebtedness of theirs to the plaintiff, because they say:

"On May 4th you were fully notified of such payment, [referring to the payment of February 13th,] and on May 5th we made inquiries of Messrs. Saterlee, Bostwick and Martin, and having been informed by them that they had paid the premiums on the same date,-the 5th inst.,-but after said statement by Saterlee, Bostwick and Martin, we sent to your office, and were informed by your officers that they had received a check from Messrs. Saterlee, Bostwick and Martin for the amount of the premiums, less amount of their commissions. Under these circumstances, we are advised that you cannot properly look to this company for the payment of the premiums referred to, you having accepted Saterlee, Bostwick and Martin's check and their obligations in payment of the original obligation of this company therefor."

Here is no pretense that there was any satisfaction of the indebtedness of the debt to the plaintiff on account of this transaction prior to the 5th of May, when it is alleged the plaintiff accepted Saterlee's check in cancellation of that obligation. It was not the payment to Saterlee & Co. which was then claimed to have can