3. COMPROMISE AND SETTLEMENT (8 20*)BREACH-RIGHTS OF PARTIES. Where the consideration for the release of one member of a syndicate from liability for a syndicate indebtedness was the payment of a specified sum, and his promise to show the transactions of the members of the syndicate whenever necessary, the partial failure of consideration arising from his failure to perform such promise did not defeat the release generally, but only entitled the other party to damages for nonperformance. [Ed. Note.-For other cases, see Compromise and Settlement, Cent. Dig. §§ 83-88; Dec. Dig. § 20.*] Appeal from Supreme Court, Appellate Division, First Department. Action by Edwin M. Post and another against Edward R. Thomas and others. From a judgment of the Appellate Division, First Department (153 App. Div. 865, 139 N. Y. Supp. 6), affirming a judgment against the defendant named in favor of the plaintiffs entered upon the report of a referee, the defendant named appeals. Reversed, and new trial granted. to Thomas & Thomas, stockbrokers, and See, also, 154 App. Div. 934, 139 N. Y. the pool to Edward R. Thomas. On that day Supp. 1140. Edward L. Blackman, of New York City, for appellant. William G. Wilson, of New York City, for respondents Post et al. Origen S. Seymour, of New York City, for respondent Hamilton. Edward R. Thomas wrote to the plaintiff a letter in which, among other things, he said: "I also wish to inform you that I have purchased from Mr. O. F. Thomas his one-third interest in the account on your books known as the 'Keokuk & Des Moines pool,' and that I hereby assume all his liability and credit in the same. I wish it clearly understood that my present interest in this pool is a two-thirds interest and that I am responsible for twothirds of its losses and am entitled to two-thirds of its profits after I am credited with the $50,000 margin which I now have on my twothirds share in excess of Mr. Hamilton's proowned by Mr. Č. A. Hamilton and that this account is in no sense a joint account. In other words myself and Mr. Hamilton are each liable for our share and not for the share of the other." CHASE, J. [1] In September, 1901, the three defendants and one other person entered into a pool to buy, sell, and deal in the stock of the Keokuk & Des Moines Railroad Company for the purpose of acquiring all or a large portion of the 11,000 shares out-portionate margin; the other one-third being standing of the stock of said company other than that owned by the Rock Island Railroad Company, in the expectation that thereby the market price of said stock would be greatly advanced, or that the Rock Island Railroad Company, which held 14,000 shares of the stock of the said Keokuk & Des Moines Railroad Company, would sell a sufficient part of its said shares to give the pool control of a majority of the stock of said company. Each of the four men contributed $5,000 to the pool. Within a few days thereafter the fourth man, with the consent of the others, withdrew from the pool, and he was repaid the $5,000 that he had contributed. Subsequently an additional payment of $5,000 was put into the pool by each of the three defendants. It was mutually agreed that the defendant Edward R. Thomas and the defendant Orlando F. Thomas, or one of them, would manage the pool. By mutual agreement the money of the pool was first deposited with the firm of Thomas & Post, stockbrokers, in the name of the "K. & K. Syndicate." The stock of the company was purchased and sold through said stockbrokers, and they carried the stock purchased for the pool in the "K. & K. Syndicate" account. The account was subsequently transferred At that time it seems to be conceded that the stock held as collateral to the account was worth more than the indebtedness of the pool to the plaintiffs. On April 14th, the day following the letter from which we have quoted, plaintiffs wrote Edward R. Thomas and said: "We beg to acknowledge the receipt of your esteemed favor of the 13th inst. and have noted the sales, charges and credits as noted therein. Concerning the Keokuk & Des Moines syndicate we now understand that you are sole owner and liable for two-thirds of the same and that Mr. O. F. Thomas has no further interest the property of C. A. Hamilton." in said syndicate, the remaining one-third being Orlando F. Thomas on April 13 wrote the plaintiffs, saying: "I have sold to Mr. E. R. Thomas my onethird interest in the Keokuk & Des Moines syndicate including whatever margin I may have against it and no further liability attaches to me." The collateral being then sufficient to pay the pool indebtedness, there is some basis for the claim, at least as between the plaintiffs and the defendant Edward R. Thomas, that the plaintiffs assented to carrying the held as collateral to said account 2,450 shares K. & K. Syndicate account with the personal of the stock of the Keokuk & Des Moines liability of Edward R. Thomas therefor, lim- Railroad Company, which stock was of united to two-thirds of the amount thereof sub-certain value. The market value of the ject to a division as between him and Hamilton, taking into account the payments that had theretofore been made by each on account of the pool. The account was continued, and the plaintiffs in June thereafter told Mr. Edward R. Thomas that it was impossible for them to use the Keokuk & Des Moines stock in their loans, and for that reason it was impossible for them to carry the account. One of the plaintiffs testified that on the 15th day of June he made such representations to Mr. Edward R. Thomas as caused him to take over the account in its entirety, which he did by having the debit balance in the account and the stock transferred to an stock at that time does not appear. At that time, according to the claim and computation of Edward R. Thomas, if the payments made by him and Hamilton were taken into consideration without considering the interest included in such balance, he was liable for and should pay $23,323.85 thereof, and Hamilton should pay $54,723.37 thereof. It was also claimed by Thomas that if the interest included therein was adjusted as between Hamilton and himself, the amount of said account that should be paid by him was about $17,323.85, and the amount that should be paid by Hamilton was about $60,723.07, in case of which payments the 2,450 shares of stock would be owned by Thomas and Ham as and one-third to Hamilton. The court found: account which he, Thomas, owned on the books of the plaintiffs, entitled the "Interna-ilton in the proportion of two-thirds to Thomtional Silver Syndicate Account." This statement to Edward R. Thomas was apparently made by telephone, and on the same day, June 15th, the plaintiffs wrote Edward R. Thomas a letter, in which they say: "In accordance with your telephone conversation to we have charged the International Silver Syndicate account with the entire K. K. Syndicate account as per statement herewith." Some days after the transfer of this account Edward R. Thomas asked to have it transferred to its own name. Plaintiffs wrote him a letter, in which they say: "In regard to transferring the K. K. Syndicate account from the International Silver account back to its own name we find that while it is true the K. K. Syndicate has been benefited by the transfer to the International Silver Syndicate at the same time at the present moment while it stands in the latter account it is receiving the benefit of the value of approximately $12,000 worth of silver certificates which are in the Silver Syndicate account. The entire debit balance of the International Silver account is approximately $102,000 and if the K. K. Syndicate stock is removed from that account with the debit balance it will suffer somewhat by the removal. It would place it in a stronger position if you would strengthen the K. K. account to about the extent mentioned above which is now represented by sil ver securities." "That on or about the 23d day of June, 1904, the plaintiffs requested the defendant Edward R. Thomas that the K. & K. Syndicate account be taken up, whereupon the said defendants stated the plaintiffs that the then balance of said account was properly chargeable to the defendant Charles A. Hamilton, as the transactions of the members of the pool showed, which proof he would furnish the plaintiffs whenever necessary; that he the defendant Edward R. Thomas was willing to take up the 2,450 shares of the stock of said railroad company then held by the plaintiffs to the credit of said account and pay to the plaintiffs the sum of $30,000, if the plaintiffs would execute and deliver to him a release of his obligation to them on said account. That the plaintiffs thereafter executed and delivered to him an instrument in writing not under seal, and without any consideration in form as follows: "New York, June 23, 1904. "E. R. Thomas, Esq., 71 Broadway, New York City-Dear Sir: For one dollar, and other valuable considerations, and by virtue of the powers vested in me as sole liquidator for the firm of Post & Company, and as their attorney in fact, I hereby release and absolve you from any liability on account of what was carried on the books of Post & Company, and known as the "K. K. Syndicate Account" and will execute any further paper which you may require to carry this out. "Yours truly, Edwin M. Post, & Co. ""Witness: M. L. Bowden.'" The court also found at the request of the defendant Thomas as follows: It will be seen by this letter that the plain-"Liquidator and Attorney in Fact for Post tiffs were reluctant about retransferring the K. K. account for the reason stated that they wanted the benefit of about $12,000 worth of silver securities, which seemed to have been held to the credit of the account. It does not appear just what was done in settling this controversy, but the balance of the K. K. account, after deducting therefrom the amount that was to the credit of the International Silver Syndicate account, being $36,123.30, was transferred to its own name. No claim seems then to have been made by the plaintiffs that the K. K. Syndicate account and liability had become the personal account and liability of Edward R. Thomas. In June, 1904, there was due the plaintiff's on said account $78,045.92, and the plaintiffs "The defendant E. R. Thomas at the time of the execution and delivery of Hamilton's Ex. 4 [the above release] was not admitting liability. dicate account in excess of $20,000, but was in on his part to the plaintiffs on the K. K. Syngood faith denying any liability for any part of that account other than for two-thirds of the proper amount of the account after crediting the O. F. Thomas and through the International payments of $S6,123.30, made by himself and Silver Syndicate, to that two-thirds, and the plaintiffs then knew and had notice of his such denial of any greater liability." We think that the finding of the court that the release was given without any considera not have obtained the $30,000 without giving both the stock and the release. They could not accept the money in settlement of a real controversy and then repudiate the conditions on which it was paid. Nassoiy v. Tomlinson, 148 N. Y. 326, 42 N. E. 715, 51 Am, St. Rep. 695; Auerbach v. Curie, 126 App. Div. 836, 111 N. Y. Supp. 327; Jafray v. Davis, 124 N. Y. 164, 26 N. E. 351, 11 L. R. A. 710. tion has no evidence to support it. If it be | $30,000 in exchange for the stock and the conceded that there is some evidence in the release. It may be assumed that they could record to sustain the finding or conclusion to the effect that the defendant Edward R. Thomas assumed the K. & K. Syndicate account by its being transferred on the books of the plaintiffs to the International Silver Syndicate account owned by him, and thereby became personally liable for the whole thereof, such finding must be read with the further finding of the court that the defendant Edward R. Thomas in good faith claimed the contrary at the time of the settlement and release. His good faith in claiming the contrary is emphasized by the fact that two of the justices of the Appellate Division in considering this case were of the opinion that it is quite clear "that at least as between the plaintiffs' firm and the appellant, the transfer of the pool account to the Silver Syndicate Account did not increase the appellant's liability." They further say: [2] It is the settled law of this state that if a debt or claim be disputed or contingent at the time of payment, the payment, when accepted, of a part of the whole debt is a good satisfaction, and it matters not that there was no solid foundation for the dispute. The test in such cases is, was the dispute honest or fraudulent? If honest, it affords the basis for an accord between the parties, which the law favors, the execution "That was a transfer in form only, and the of which is the satisfaction. Simons v. Amerfact that the plaintiffs' firm interposed no ob-ican Legion of Honor, 178 N. Y. 263, 70 N. E. jection to transferring the account back to the pool account is cogent evidence that they did not understand that the appellant had become liable to them for the entire pool account." 776. The law wisely favors settlements, and where there is a real and genuine contest between the parties, and a settlement is had without fraud or misrepresentation, for an amount determined upon as a compromise ment should be upheld, although such amount is materially less than the amount claimed by the person to whom it is paid. actions of the members of the pool whenever necessary. It does not appear that there has been any failure on the part of Edward R. Thomas to show the transactions of the members of the pool under such alleged promise, but a partial failure of the consideration of the release of the kind and character claimed would not defeat the release generally, but the remedy for such a breach of the contract would be in damages for its nonperformance. De Kay v. Bliss, 120 N. Y. 91, 24 N. E. 300. There is a difference of opinion among the members of this court as to what was intended by the parties to that transaction. It does not appear that the plaintiffs prior to the tri-between the conflicting claims, such settleal of this action claimed that Edward R. Thomas had become personally liable for the K. & K. Syndicate account by reason of its transfer by them to the International Silver [3] It is said by respondent that the conSyndicate account, and no such claim is made sideration for the release included the promby the plaintiffs in the complaint in this ac-ise by Edward R. Thomas to show the transtion. The question as to whether there was any consideration for the release does not depend upon the question whether Edward R. Thomas became by the transfer of the K. & K. Syndicate account personally liable to the plaintiffs for the whole amount thereof, but whether at the time of the settlement there was a legitimate controversy, which resulted in the payment of the $30,000 conditioned upon the plaintiffs' giving the receipt which they did give to said Thomas. The contest was a real and genuine contest, and it was the claim then made in good faith by Edward R. Thomas and it is his claim now that the $30 000 paid by him included an amount in excess of the amount that the plaintiffs could have recovered against him, together with the market value of the 2,450 shares of stock transferred in connection with such settlement, and that such excess was paid for the express purpose of obtaining the release which was then given, and which we have quoted. The judgment should be reversed and a new trial granted, costs to abide the event. WILLARD BARTLETT, C. J., and COLLIN, CUDDEBACK, HOGAN, and CARDOZO, JJ., concur. MILLER, J., not sitting. Judgment reversed, etc. (212 N. Y. 274) SEVERSON, Commissioner of Charities, v. MACOMBER. 1914.) The amount owing to the plaintiffs from (Court of Appeals of New York. July 14, the pool account was easily determined by simple computation, but the amount for 1. HUSBAND AND WIFE (§ 319*)-SECURITY which the defendant Edward R. Thomas was legally liable was subject to serious controversy and dispute. Plaintiffs obtained the FOR SUPPORT-LIABILITY ON UNDERTAKING, Code Cr. Proc. § 899, provides that persons who actually abandon their wives or children without adequate support, or leave them in upon and pleaded guilty to a charge of being a disorderly person under the terms of sec tion 899 of the Code of Criminal Procedure, which defined as disorderly persons, amongst others, those "who actually abandon their wives or children without adequate support, or leave them in danger of becoming a burden upon the public, or who neglect to provide for them according to their means." Thereafter, in accordance with the provisions of section 901 of said Code, the city judge required said Lathrop to execute an undertaking with a surety in the penalty of $400 on the condition: danger of becoming a burden upon the public, | HISCOCK, J. In November, 1909, in the or who neglect to provide for them according city of Binghamton one Lathrop was arrested to their means, are disorderly persons. Section 901, subd. 1, formerly provided that a magistrate might require such a person, when brought before him, to give an undertaking that he would support his wife and children and indemnify the county, city, etc., against their becoming, within one year, chargeable upon the public, and section 904 provided that such undertaking was forfeited by the commission of any acts constituting the person giving it a disorderly person. As amended by Laws 1909, c. 506, section 901, subd. 1, provides that the undertaking shall be conditioned for the payment to the county superintendent or overseer of the poor, or to a society for the prevention of cruelty to children, weekly, for one year, a reasonable sum for the support of the wife and children, and section 904 provides that the undertaking is forfeited by the failure to make such payments. Held, that under the amendatory act it is not essential to a recovery on the undertaking that the wife and children should have become a public charge, where the specified weekly payments have not been made. [Ed. Note.-For other cases, see Husband and Wife, Cent. Dig. § 1115; Dec. Dig. § 319.*] 2. HUSBAND AND WIFE (§ 319*)-SECURITY FOR SUPPORT-LIABILITY ON UNDERTAKING. It was not a defense to an action against the surety on an undertaking given by a husband to secure the making of weekly payments for the support of his wife and children, pursuant to Code Cr. Proc. § 901, that the husband had become insane, it not appearing that the insanity arose after the undertaking was executed and within the year covered thereby, or that the husband possessed no means or property from which he could make such pay ments. [Ed. Note.-For other cases, see Husband and Wife, Cent. Dig. 1115; Dec. Dig. § 319.*] 3. HUSBAND AND WIFE (§ 319*)-SUPPORTSECURITY. The surety on an undertaking given by a husband to secure the making of weekly payments for the support of his wife and children pursuant to Code Cr. Proc. § 901, could not question the force of the judgment convicting the husband of being a disorderly person, which necessarily established that he was liable and able to support his wife when the judgment was rendered, nor dispute the recitals in and consideration for the undertaking. [Ed. Note.-For other cases, see Husband and Wife, Cent. Dig. § 1115; Dec. Dig. § 319.*] Appeal from Supreme Court, Appellate Division, Third Department. "If the above-named Irving Lathrop shall pay to said Broome County Humane Society the sum of six ($6.00) dollars weekly for the space of one year next ensuing, for the support of his wife and children, as has been ordered by the then this obligation to be void, otherwise to said special city judge and acting as city judge, remain in full force and virtue." This undertaking was executed by the appellant as surety. For a while Lathrop made weekly payments as provided by said undertaking, and then ceased. Thereafter this action was brought against the appellant, as such surety as aforesaid, to recover on his undertaking by reason of the failure of Lathrop to make payments. At the close of the trial in county court the judge directed a verdict for the sum of $400 specified as the penalty in the undertaking, and afterward made an order setting aside the verdict. The Appellate Division reversed this order, and in effect reduced the recovery to an amount equal to the aggregate of the weekly payments, which were due and unpaid at the time when the action was commenced, and as thus modified affirmed the recovery. I regard it as necessary to consider only two of the defenses in respect of which the appellant claims to have been injured by erroneous rulings. No evidence was offered by the respondent tending to show that Lathrop's wife or children had become a public charge after the execution of the undertaking, and it is insist did not appear that any damage had resulted from his failure to make the payments specified in the obligation, and that therefore there could be no recovery. This contention is based on the theory that the undertaking was one of indemnity to protect the public treas Action by John F. Severson, as Commis-ed that, in the absence of such evidence, it sioner of Charities of the City of Binghamton, N. Y., against Henry M. Macomber. From an order of the Appellate Division, Third Department, 153 App. Div. 482, 138 N. Y. Supp. 250, reversing an order of the county judge of Broome county, setting aside a directed verdict in favor of plaintiff for $400ury. The other defense is predicated on ceron a new trial on appeal from a judgment of the City Court of Binghamton, and directing judgment for plaintiff in the sum of $90, defendant appeals by permission. Affirmed. See, also, 155 App. Div. 883, 139 N. Y. Supp. 1144. Thomas B. Kattell, of Binghamton, for appellant. Rollin W. Meeker, of Binghamton, for respondent. tain evidence which it is claimed tended to establish that Lathrop had become insane after the undertaking was executed, it being asserted that this condition, if established, relieved him from making the payments specified in the undertaking and exonerated the appellant as his surety. [1] The first contention, that it was necessary for the respondent to show that Lathrop's For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes family had become a public charge after the execution of the undertaking in order to be entitled to recover, is almost wholly rested on the decision of this court in Goetting v. Normoyle, 191 N. Y. 368, 84 N. E. 287. That case was brought by the commissioner of public charities of the city of New York to recover on an undertaking executed on conviction of one who was a disorderly person because of failure to support his family in accordance with sections 685, 686, and 687 of the charter of the city of New York (chapter 466 of the Laws of 1901). Section 685 at that time provided that any person "who actually abandons his wife or children without adequate support, or leaves them in danger of becoming a burden upon the public, or who neglects to provide for them according to his means, may be arrested, as provided by section nine hundred of the Code of Criminal Procedure. And if there upon it shall appear by the confession of the defendant or by competent testimony that he is guilty of the charge, the said magistrate shall make an order specifying a reasonable sum of money to be paid weekly for the space of one year thereafter by such defendant to the commissioner of public charities for the support of the wife or children." Section 686 provided: "Any person convicted of any of the offenses hereinbefore (in section 685) recited shall, upon being served with such order, enter into a bond that such person will pay weekly for the space of one year such sum for the support of the wife or children or either or any of them, as has been ordered as aforesaid, to the commissioner of public charities." Section 687 provided for a suit on such bond on default and that: "All moneys recovered in any suit, action or proceeding shall be paid to the commissioner to be by him applied and expended for the support of the wife and children, or either or any of them." It was held in an action brought on an undertaking given under these sections, that the undertaking was one of indemnity and to secure the support of the wife and children in order that they might not become a public charge, and that a breach of such undertaking could not be established without proof, in addition to the other necessary facts, that the support of the wife and children had in fact been a charge on the public treasury through failure of the disorderly person to comply with the provisions of his undertaking. public treasury. At the time this interpretation was placed upon these provisions subdivision 1 of section 899, defining disorderly persons of the class to which Lathrop belonged, read as it does at present. Subdivision 1 of section 901, providing for the execution of an undertaking by a disorderly person, provided that it should be conditioned "that he will support his wife and children, and will indemnify the county, city, village or town against their becoming, within one year, chargeable upon the public." Section 904 provided: "The undertaking mentioned in section nine hundred and one is forfeited by the commission of any of the acts which constitute the person by whom it was given a disorderly person." if the provisions of the Code of Criminal Therefore, I think it must be assumed that Procedure in force at the time Lathrop was convicted and the appellant's undertaking executed were in the same form as when the Goetting Case was decided, appellant's contention for the necessity of proving, in an action on his undertaking, that the wife and well founded. But they were not in the same children had become a public charge would be form. Commencing almost immediately after the decision of the Goetting Case amendments were made both to the provisions of the New York Charter and to the provisions of the Code of Criminal Procedure which I think we must construe as intended to meet the views expressed by Judge Gray and eliminate the indemnity character of the undertaking, and thus avoid the necessity thenceforth of proving in an action on such an undertaking that the delinquent's family had become a charge on the public treasury. The Goetting Case was decided in March, 1908. In May, 1908, an act was passed (Laws of 1908, c. 357) amending section 687 of the Greater New York Charter by providing that in an action or proceeding instituted upon any undertaking of the character which we have been discussing, "it shall not be neces sary to prove the actual payment of money by the commissioner of public charities but the neglect to pay the sum ordered to be paid by competent authority for the support of the wife or children shall be a breach of the undertaking and the measure of damages shall be the sum ordered to be paid and which was withheld at the time of the commencement of the action with interest thereon." In May, 1909, an act was passed (Laws of 1909, c. 506) amending subdivision 1 of section 901, Code of Criminal Procedure, relating to the execution and form of undertaking by disorderly persons of the class now under consideration so that it read as follows: In the course of his opinion Judge Gray compared the provisions of the charter of New York City, on which that action rested, with sections 899 and 901 of the Code of Criminal Procedure, and what he wrote necessarily involved the conclusion that an undertaking given by a disorderly person like Lathrop, under said latter sections as they ing] be a person described in the first or sec"If he [the person executing the undertak. then were, was one of indemnity, and that ond subdivision of section eight hundred and therefore, before a recovery could be had for ninety-nine, that he will pay to the county subreach of an undertaking, it would be neces-perintendent of the poor or to a socisary to establish that the support of the delin-ety for the prevention of cruelty to children, weekly for the space of one year thereafter a |