The order of the General Term should be reversed, and that of the Special Term affirmed. All concur (Andrews, J., on the construction of the instrument), except Danforth, J., not voting.

William F. BRIDGE, Appt.,

v.

George H. PENNIMAN, Respt.

1. In an action to recover back the price paid for certain shares of corporate stock which the plaintiff alleged he was induced to buy and pay for by representations of defendant which were untruthful, held, that the question, whether the plaintiff rescinded by tendering back the stock without conditions or whether he used the stock and its transfer to defendant as a new consideration for a new contract by which he obtained from defendant a bond of indemnity, with surety, against the liabilities to which he was exposed, was one of fact for the jury.

2. The referee having found as a fact that the plaintiff did not make an unconditional tender of his stock, but used it as his own with which to purchase the indemnity received, and the possible questions of law in the case being inextricably involved in and dependent upon the conclusions of fact, held, that the judgment dismissing the complaint should be affirmed.

(Decided April 19, 1887.)

APPEAL from a judgment of the General Term of the Superior Court of New York City, affirming a judgment entered upon report of a referee dismissing the complaint in an action to recover back the price paid for certain shares of corporate stock. Affirmed.

Reported below, 19 Jones & S. 183. The facts were stated in the prevailing opinion of the court at general term, as follows:

The plaintiff claimed that the defendant had sold to him twenty-two shares of the stock of the Judd Linseed & Sperm Oil Company, a corporation, for which he had paid the defendant $22,000; also, that the purchase was so induced by the false and fraudulent representations of the defendant, that the plaintiff had a right to rescind the purchase and recover the $22,000; and that he had in fact rescinded.

The defense denied the right to rescind, and the fact of rescission, claiming that the plaintiff had not tendered or returned the stock to the defendant in a manner that would allow the plaintiff to rescind, or in other words, unconditionally.

The most important fact as to the return of the shares to the defendant is that after nego. tiation or dispute between the plaintiff and defendant, after plaintiff had demanded that defendant should give security as well as his own obligation, as an indemnity against plaintiff's liability as stockholder, etc., the defendant and his wife, the latter expressly charging her separate estate, made a bond to the plaintiff. It recited, whereas, William F. Bridge has transferred or is about to transfer, to George H. Pen

|niman, all his stock and interest in the company specified, and has resigned as president and trustee of the company, in consideration of the premises, and of $1, the said George H. Penniman, and his wife, "do jointly and severally agree to indemnify and save harmless the said Bridge from all claims, debts or demands of whatever name, nature or kind, now existing against said company, or heretofore contracted by it, or on its behalf, also from all claims or demands against him as a stockholder in, or trustee of, said company," etc. The plaintiff upon receiving this bond transferred the stock. Mr. William C. Holbrook, for appellant: Plaintiff having purchased the entire sixty shares, and taken office in the corporation on the faith of defendant's individual representations, thereby rendering himself liable for certain debts of the corporation, for which he was not previously responsible, as the referee has found, was entitled upon rescinding the contract to indemnity against such debts, in addition to a return of the purchase money which defendant personally received, and in giving the bond of indemnity defendant was doing no more than his plain duty, i. e., of restoring plaintiff to the position he occupied before he acted upon his representations.

Newbigging v. Adams, 55 Law Times, N. S.

794.

Even, however, upon the assumption that that case is not entirely decisive of this, plaintiff's right to indemnity should be sustained upon the strength of defendant's promise to indemnify plaintiff from loss should he, when the seed was worked up, decide to surrender his stock and retire from the company, or otherwise stand upon his legal rights.

Pollock, Contracts, pp. 165-7, 497–9; Benjamin, Sales, § 417 and cases cited.

If our contention as set forth in the preceding points is correct, then there was no such condition annexed to the return of the stock as prevented rescission, nor was the taking of the bond of indemnity an arrangement or new agreement, incompatible and at variance with the theory of rescission as found by the referee. Hammond v. Pennock, 61 N. Y. 145-155; Pollock, Contracts, p. 510.

Plaintiff having a legal right to rescind, nothing short of release, or the acceptance of something in satisfaction, would bar such right.

Bowman v. Teall, 23 Wend. 309; Allaire v. Whitney, 1 Hill, 484; De Bussche v. Alt, L. R. 8 Ch. Div. 286.

The fact that the bond of indemnity was signed by defendant's wife, who was not previ ously under any liability to plaintiff in respect to his transactions with defendant, and the fact that plaintiff surrendered the entire sixty shares upon receiving such bond, do not militate against his theory of a rescission.

Gunby v. Sluter, 44 Md. 237.

Laches in rescinding are not to be imputed to plaintiff. Defendant, in fact, sustained no damage from the fact that plaintiff did not rescind upon the first discovery of the falsity of his statements; and even had he met with injury he would be estopped to assert it, inasmuch as plaintiff, at his request, deferred exercising his right to rescind.

A purchaser who is entitled to rescind a con

He

Lawrence v. Dale, 3 Johns. Ch. 23; Louber v. Selden, 11 How. Pr. 526; Rosenbaum v. Gunter, 3 E. D. Smith, 203; Wheaton v. Baker, 14 Barb. 594; Bruce v. Davenport, 3 Keyes, 474; Dows v. | Griswold, 4 Hun, 550.

Hammond v. Pennock, 61 N. Y. 145; Masson v. Borat, 1 Denio, 69; Pearse v. Pettis, 47 Barb. 276; Colson v. Smith, 9 Ind. 8; Baker v. Lever, 67 N. Y. 304.

So, too, where one party to a contract makes a positive representation, it is not laches in the other not to proceed immediately to verify that representation; unless he has reason to doubt its accuracy laches cannot commence.

Partridge v. Usborne, 5 Russ. 195, 232; Doggett v. Emerson, 3 Story, 700, 740; Lindsay Petroleum Co. v. Hurd, L. R. 5 P. C. Cas. 221. The referee having found that plaintiff relied upon defendant's representations, that such representations were material and untrue, plaintiff had a right to rescind, even though they were not fraudulent or made with intent to defraud.

Hammond v. Pennock, 61 N. Y. 145, 152 and cases cited; Pollock, Contracts, pp. 484-489; Degraw v. Elmore, 50 N. Y. 1; Bowen v. Mandeville, 95 N. Y. 237; Neblett v. Macfarland, 92 U. S. 101-5 (Bk. 23, L. ed. 471, 472. See note).

Mr. Joseph H. Choate, for respondent: Assuming that the plaintiff, as late as November, had a right to rescind, his course was plain. He might do one of three things:

1, to retain the shares and sue the defendant for damages;

2, to proceed in equity for a rescission of the contract of purchase;

3, to return, or offer to return, unconditionally, the twenty-two shares bought from the defendant, and sue for the price paid as money had and received.

Gould v. Cayuga Co. Nat. Bank, 86 N. Y. 75; S. C. 99 N. Y. 333.

Or, as the court below has said: " A party seeking to rescind a contract must reject it wholly, without imposing conditions."

Welsh v. Gossler, 15 Jones & S. 104. Or, again; an offer to return, on condition that the party rescinding shall be paid a sum of money, is an invalid tender.

Howard v. Hayes, 15 Jones & S. 89.

The plaintiff lost by his laches any right of rescission that he might originally have had. The rule is a rigid one that the purchaser who claims to have been defrauded must disaffirm promptly upon ascertaining the fraud; and the proof is clear and the referee finds that in June the plaintiff had fully ascertained that the

The real controversy revolves about the inquiry whether the plaintiff did in fact rescind by tendering back without conditions the stock received, or whether, on the contrary, he used that stock and its transfer to the defendant as a new consideration for a new contract, by which he obtained from the defendant a bond of indemnity with the protection of a surety added, against the liabilities to which he had become exposed by his official connection with the company.

This appears to us to be a question of fact. The history of the transaction as detailed by the adverse parties runs upon different lines and is colored by their respective theories. As a consequence, there is to some extent disagreement and contradiction between them; and where the facts themselves are not disputed the inferences derivable from them as to the real nature of the transaction and the true intent and understanding of the parties are extremely divergent and open to wide differences of opinion.

The plaintiff's theory is that when the worthless character of the stock was fully ascertained, the defendant promised to protect his vendee from loss; that the latter tendered back the stock and demanded the purchase money as a clear rescission of the contract; and that the indemnity given stood outside of that rescission, and rested independently upon the duty and liability of the defendant to indemnify, and upon his express promise so to do. This theory has been assailed with the criticism that the plaintiff transferred not only the stock bought of defendant but that purchased of other parties, and received from defendant a bond of indemnity which could not have been compelled and which he was not bound to give either by virtue of his general duty or of any promise which he had made.

It is argued from the terms of the correspondence which passed between the parties that the plaintiff steadily demanded the protection of a surety, the liability of some third person which would supplement that of the defendant, and so was seeking to obtain what he had no right to demand and could not have compelled, and which, therefore, he chose to buy by a transfer of all the stock which he owned.

The theory of the defendant is that the arrangement was made in that way; that the plaintiff by becoming the president of and a

director in the oil company stood exposed to a heavy and dangerous liability for its debts in case of disaster, and above and beyond the total loss of his stock; that he realized and conceded that he had not been willfully or purposely deceived; and so concluded as the wisest treatment of the misfortune to lose his stock in exchange for adequate protection against threatened and further loss in addition.

Attention is directed to a letter written by the defendant which, it is claimed, offered to plaintiff a choice of alternatives and meant in substance that in the emergency the defendant would give to the plaintiff all his stock, if the latter would assume the risk of the corporate success or failure and leave the defendant's loss measured only by the stock thus transferred; or, on the other hand, if the plaintiff chose to give his stock to defendant he might end his loss at that point, and the defendant would protect him by adequate security against any further injury. The letter is capable of such interpretation, and it is said presented to plaintiff's mind a choice of alternatives one of which he adopted, and which fully explains and accounts for the transfer made and the bond given in return.

It seems to us apparent that the question thus raised depends almost wholly upon the view taken of the facts and of the conflicting inferences which they originate, The referee has found as a fact that the plaintiff did not make an unconditional tender of his stock, but used it as his own with which to purchase the indemnity received; and refused to find in accordance with plaintiff's theory and version of what occurred. There are facts and inferences in the case from which that conclusion could fairly be drawn, although open to a doubt which manifested itself when the general term affirmed the judgment by the dissent of one member of the court. The possible questions of law in the case are inextricably involved in and dependent upon the conclusions of fact; and accepting them as found by the referee and approved by the general term, it is clear that there was no rescission, but a new contract agreed upon and executed.

The judgment should be affirmed, with costs.
All concur.

Peter BOWE, As Sheriff, Respt.,

v.

Charles W. WILKINS et al., Appts.

1. Where a sheriff has levied upon property by virtue of an attachment, it is his duty, when the attachment is vacated, to deliver up the property to the defendant or to the person entitled to it.

2. A bond to indemnify the sheriff for taking property as that of the defendant in an attachment suit and for his keeping it under such attachment, can not be construed to cover a detention by the sheriff after the attachment has been vacated.

4.

truth of the case when it will not involve surprise or injustice to either party.

When the new matter set up in the answer does not constitute a counterclaim such new matter does not call for a reply, but is deemed controverted by the plaintiff by traverse, or avoidance, as the case may be.

5. When it does not appear from the record what was the precise ground upon which the case was decided, parol evidence thereof may be given, provided such ground was within the issues of the case.

6.

Where a sheriff has attached property and been indemnified, and, after the attachment has been vacated, has refused on demand to deliver the property to the owner, and a recovery has been had against him for such refusal, the sureties on the bond of indemnity are not liable to the sheriff for the amount of such recovery.

7. When the sole ground of recovery against such sheriff was the demand and refusal, he cannot allege in an action on the indemnity bond that he had a right to retain the property after the demand until service on him of a copy of the order vacating the attachment and until his costs and fees were paid, where his refusal to deliver was not put upon any of these grounds and where he did not set up such defense in the action against himself.

8.

Where the sheriff levied the execution against himself on the goods which he had attached and kept in his hands, and sold them on the execution and turned over the money to the attorney for the plaintiff in the execution, held, that issuing an execution without any directions as to what property is to be taken thereon, implies only an authority to do a lawful act, and the knowlege of the attorney in the execution as to where the money came from which he took from the sheriff, would be no ratification by the plaintiff in the execu tion of his prior illegal act in refusing to surrender the goods, much less on the part of the obligors in the indemnity bond, being equally ignorant.

9. An attempt to defend the sheriff from the consequences of his illegal act in refusing to deliver the goods done without their request or sanction can not be set up as a ratification by the obligors in the indemnity bond of such act, when sued by the sheriff on their bond.

(Decided April 19, 1887.)

APPEAL from a judgment of the General Term of the Court of Common Pleas of the City and County of New York, affirming iff in an action on a bond of indemnity. Rea judgment of the trial term in favor of plaintversed.

The facts and questions raised appear from

Clark v. Woodruff, 18 Hun, 419, affirmed in 83 N. Y. 518.

The suit and recovery in the superior court was not for the taking under the execution, but for the detention on the theory of an attachment then having been issued. The execution was issued and the sale was had long after the suit in the superior court was brought. If this is clear, then this indemnity bond could not cover a case where the Sheriff held the property after the process was vacated, because the defendants could not, in law, give an indemnity to a sheriff to hold property without any process whatever; in other words, a party cannot indemnify the sheriff to do a wrongful act; such a bond as that would be void.

Griffiths v. Hardenbergh, 41 N. Y. 464; St. John v. St. John's Church, 15 Barb. 346; Ives v. Jones, 40 Am. Dec. 421, 423, 426; Chapman v. Douglas, 5 Daly, 244, 252.

It is not proven in this case that the Sheriff was requested even to hold on to the property after the process was vacated; and even if such request was made by the attorneys for the plaintiffs in the attachment suit, that could not bind the sureties on this bond

First. Because plaintiffs' attorney was not the attorney for these indemnitors.

Second. Even if he were, he could not bind them by direction of an illegal act.

The sale under the execution without notice to the indemnitors, although the attorneys had notice, is not such a ratification as makes these defendants liable.

Clark v. Woodruff, 83 N. Y. 518.

It must be made to appear that the recovery in the action against the Sheriff was for the identical taking under which the bond was given; and if that does not appear distinctly by the record, it can be proven that such recovery was otherwise.

Willett v. Kipp, 12 Hun, 474.

The proceedings on the trial of the main action in the superior court clearly show that the verdict and judgment was founded upon the refusal to deliver the property when demanded on December 21. This was in aid of the record, and was allowable.

McKnight v. Devlin, 52 N. Y. 399; Doty v. Brown, 4 N. Y. 71; Wood v. Jackson, 8 Wend. 9; Dear v. Reed, 37 Hun, 594; Agan v. Hey, 30 Hun, 591; Banfield v. Haeger, 7 Abb. N. C. 318; Leavitt v. Wolcott, 95 N. Y. 212, 222.

A bond must be construed strictly in favor of the obligors, and a construction given which will relieve them from liability, rather than to hold them; and in this connection, the surrounding circumstances may be examined to see what these defendants agreed to hold themselves liable for.

Roberts v. Berdell, 52 N. Y. 644; Gillet v. Roberts, 57 N. Y. 33; Jessop v. Miller, 2 Abb. App. Dec. 449; Oberwarth v. McLean, 7 Daly, 70. Mr. Charles F. MacLean with Mr. Malcom Graham, for respondent:

The superior court suit by Galinger was brought for matters indemnified against. The record is in evidence. The complaint shows exactly what that suit was for. It is an action of trespass. The allegation is that on December 11, 1880, The plaintiff wrongfully entered said store, *** and wrongfully took possession of said property, and converted the same to his own use.'

The removal of the goods did not constitute this cause of action, nor did the refusal to return them; nor would a return of them constitute a defense. Galinger's cause of action was complete when the Sheriff took his goods under an attachment against Mrs. Briggs, and no demand was necessary.

Hicks v. Cleveland, 48 N. Y. 84; Kluender v. Lynch, 2 Abb. App. Dec. 538; Kuhlman v. Orser, 5 Duer, 242.

It is immaterial whether a second demand was made or not. The plaintiff having a complete cause of action by the taking, whether the Sheriff subsequently refused to return the property or not, he had a right to proceed upon the trespass, even though he might have declared upon the demand and so laid his action in

trover.

Livermore v. Northrup, 44 N. Y. 107.

The Statute of Limitations runs in such case from the time of the seizure; the cause of action was thus complete.

Snelly v. Conner, 7 N. Y. Week. Dig. 93; Coddington v. Carnley, 2 Hilt. 528.

Parol evidence cannot be admitted to countervail the record in the Galinger Case. The record in that case is in evidence and shows plainly that the action is brought for the trespass of December 11, 1880; and as the record is the proper evidence, defendants were not at liberty to go outside of it and show that other matters appeared upon the trial.

Manny v. Harris, 2 Johns. 24; Royce v. Burt, 42 Barb. 655; Castle v. Noyes, 14 N. Y. 329; Union Nat. Bank v. Kupper, 63 N. Y. 617; Beard v. Yates, 1 Thomp. & C. Add. 21; Nickett v. Armstrong, 6 N. Y. Week. Dig. 73; Campbell v. Butts, 3 N. Y. 173; Davis v. Talcot, 12 N. Y. 184.

This rule has no exceptions. It is true that when the grounds of a judgment do not appear, either by the record or the judgment, parol evidence may be received; as, for example, where the extent of the locus in quo is in dispute, or upon which of two defenses the action was defeated, or what were the grounds of a nonsuit. Kerr v. Ilays, 35 N. Y. 331; Dunckle v. Wiles, 11 N. Y. 420; White v. Madison, 26 N. Y. 117.

But none of these cases hold that when the issues appear plainly by the record, parol evidence may be received to show that something else was tried. Even where matters outside the