
    James L. Cheeseman, Plaintiff and Appellant, v. James H. Sturges et al., Defendants and Respondents.
    1. S., one of the defendants, held real and personal property in trust, to be used for the joint benefit of himself and the plaintiff, and a third person, in specified proportions, as copartners in a joint enterprise, and under an agreement that he was to make advances for carrying out the enterprise, and that all stocks or other securities than cash, which should be received, should remain undivided until a final settlement, and that he would not dispose of the property (other than money) without the consent of the others. He accordingly made large advances, and subsequently sold and conveyed all the property without the consent of the plaintiff, and received therefor stock of an incorporated company.
    
      Held, that the plaintiff, by bringing an action, with full knowledge of these facts, in which he demanded a transfer of his share of the stock, and obtained an injunction against any disposal of it, pending the action, must be deemed, for the purposes of this suit, to have made his election of this remedy, and must be treated as if he had consented to the sale.
    2. Hence the proper relief in such action is that the plaintiff should pay his proportion of the advances and have a transfer of his share of the stock, and in default of his paying, that his share of the stock should be cold, and that he should pay the deficiency, if any.
    3. The plaintiff is not entitled to a judgment that the whole stock be sold to pay the advances, and that the residue of the proceeds, or the deficiency, if any, be apportioned The defendant may be allowed to retain Ms share of the stock, on being charged with his part of the, advances.
    4. After the commencement of this action, but before the trial, the corporation, the stock of which was in controversy, increased its capital stock, without, however, altering the nominal value of a share; and subsequently certificates of stock of the new issue were deposited in Court to await the result of the action.
    
      Held, that if the plaintiff desired to make any claim against the defendant, based on Ms individual acts, in effecting such alteration in the stock, pending the action, he should have modified his pleadings accordingly. But by going to trial he must be deemed to pursue the stock as it existed after such increase.
    (Before Bosworth, Ch. and Moncrief and Robertson, J. J.)
    Heard, February 13, 1862;
    decided, March 29, 1862.
    Appeal by the plaintiff from a judgment entered after a second trial, before Mr. Justice Hoffman, at a Special Term, on the 9th of March, 1861.
    This action was brought against James H. Sturges, Andrew Thorp and Thomas S. Thorp, who were partners in a joint enterprise. The details of the facts briefly stated in the head note, fully appear in the report of a former decision, in 6 Bosw., 520, and in the opinion of the Court stated below.
    Upon the second trial it was adjudged that the plaintiff was indebted to the defendant Sturges, in the sum of $25,271An), and it was further adjudged that the defendants held as security therefor, l,866f shares of stock in the Hew York Ice Company, to which plaintiff should be entitled, on payment of his indebtedness, and interest, within sixty days, and that if plaintiff failed to pay, the shares should be sold by a Referee, and the indebtedness be paid out of the proceeds, rendering the residue to the plaintiff, or, if there should be a deficiency, that the defend-. ant, Sturges, should have judgment and execution against him therefor.
    
      James W. Gerard, for plaintiff, (appellant.)
    I. The Justice found, as a matter of fact, that Cheese-man was not a party to the sale made by the defendant, Sturges, to the Hew York Ice Company, nor to the investment by Sturges in 6,000 shares of the capital stock of the Hew York Ice Company, and did not consent to it after-wards.
    The Judge erred in deciding, that the plaintiff having elected to look to the stock of the Hew York Ice Company for his indemnity, with knowledge of the actual capital being $350,000, and having availed himself of the remedy, by injunction, to prevent its transfer, and secure it for his demands, was precluded from any relief in the shape of a judgment for money, on the case he makes in his complaint.
    II. The Justice should have given judgment in favor of Cheeseman, against defendants, for the cash balance, on the sale of the property by Sturges for $140,000; and to satisfy that judgment he should have ordered sold by a Referee, the stock on file, and as much more as was necessary for that purpose. Sturges is to be considered as a trustee violating his trust, one condition of which was, that he would not sell without the consent of Cheeseman. Another reason why Cheeseman should have a judgment for cash is, because the defendants destroyed the original capital of the Hew York Ice Company without the knowledge or consent of Cheeseman, and in violation of the injunction.
    The plaintiff in his complaint claimed that he was entitled to have the balance paid to him in cash, but as Sturges was insolvent, that he had a right to have enough of the stock sold to pay his judgment in full, even if the sale of the whole stock was necessary for that purpose.
    The Justice should have given a judgment in favor of the plaintiff, for the balance found in his favor, in cash, with an equitable lien and power to sell any amount of stock necessary to pay that balance. (2 Story’s Equity Jurisprudence, §§ 1265, 1232,1257,1258, 1259; Hovenden on Frauds, 468, 470, 471; Wallace v. Duffield, 2 Serg. & R., 521, 529; Lewis v. Maddocks, 17 Vesey, Jr., 47, 57; 16 U, S. Dig., 626, citing 9 Texas, 482; Willis on Trustees, 64.
    III. If not a money judgment, Cheeseman was entitled to a judgment for one-third of the number of shares of stock at par, (6,000 shares,) remaining after allowing so many shares to Sturges at par as was necessary to pay the money advanced by Sturges to carry out the enterprise.
    Sturges should be compelled, upon every principle of equity, to take the stock at par for his advances, as Oheeseman is compelled to take it at par for his balance, and the Thorps not being Iona fide purchasers of the stock for present value without notice, they stand on the same footing with Sturges, and no higher.
    IV. At all events, and under all circumstances, if the Court sustains all the doings of the defendants, the Justice erred in his judgment in ordering to be sold only 1,867 shares of this last stock, which he awarded to Oheeseman, at par, for one-third of the shares of the stock received by Sturges, instead of ordering all the stock to be sold and reduced to cash, paying Sturges his advances, and giving to Oheeseman his one-third of the balance. The J udge has considered this a case of copartnership, and by the law of partnership, on a dissolution and winding up of the concern, all the assets are to be sold and reduced to cash, and the cash divided among the partners as the balance due to and by them respectively may appear by their respective accounts. (2 Hoffman Ch. Pr., 131; 4 Sandf., 311.)
    V. There could be no judgment against Oheeseman for money, in any event. Sturges and Braisted were to furnish all the money, as a condition of their beiug allowed to participate in the enterprise, and they were to look to the proceeds resulting from that enterprise alone for reimbursement. Therefore the judgment, to this extent, should have been, that Sturges be paid his advances out of,the stock, first, either by taking the stock at par, or selling as much as was necessary to pay all his advances, and to divide the balance of the money or the stock among them, (Oheeseman, £,) and if the stock was sold and did not produce enough to pay Sturges his advances, he could have no judgment against Oheeseman for a third of the deficiency. If Oheeseman gets nothing, he is not to be a loser by the enterprise.
    
      
      John N. Whiting, for defendants, (respondents.)
    I. The amount found due by the plaintiff to the defendants is upon a computation favorable to the plaintiff.
    II. Oheeseman was a party to the exchange for the stock of the New York Ice Company, and such exchange is to be considered his own act. We contend that the facts show that he concurred in it, and that he ratified it.
    III. The only judgment which plaintiff might have claimed, was for a transfer to himself of one-third of the ' stock of the New York' Ice Company, held by the defendants as the proceeds of the property of the joint enterprise, yiz.: one-third of $140,000 of said stock, upon the payment by said plaintiff of one-third of the charge against it.
    IV. Any judgment which would apply the stock in the hands of the defendants as if it were money, to the satisfaction of the charges against it, and impose upon the plaintiff an equality of condition with the defendants, in the residue only, would be manifestly erroneous.
    1. The charges constituted a money debt, binding the plaintiff personally, and a burden upon the property.
    2. If the property had remained of its original character, the requirement from the creditor partner, or from the trustees holding a claim upon the property, to take his pay in the property at any assumed, or even at any proved valuation, would have been clearly erroneous.
    3. If the exchange had been made by Sturges, without Cheeseman’s procuration, the plaintiff had his election of remedies against Sturges, either,
    (a.) To charge him for a wrongful conversion, or
    (6.) As a simple contract debtor upon a breach of trust, or
    
      (c.) To adopt the transaction as his own contract, recognize Sturges as his agent in its accomplishment, and follow the proceeds, for his share of the same.
    He has elected the last named by the form of his action and the prayer of his complaint.
    Having made such election, the whole transaction of Sturges, as matter of law, must be treated as a contract voluntarily entered into by Oheeseman, and all charges and suggestions as to wrongdoing must be lost sight of and dropped. (2 Story’s Eq. Jur., §§ 1262,1263,1285,1286; Murray v. Lylburn, 2 Johns. Ch. R., 442; Murray v. Ballou,, 1 Id., 581; Pocock v. Reddington, 5 Ves. R., 800; Long v. Stewart, Id., note; Harrison v. Harrison, 2 Atk. R., 122; Vernon v. Vawdry, 2 Id., 119; Collyer on Partnership, § 182; Story on Agency, §§ 439, 214.)
    The right to adopt the transaction as his own, if availed of, must be relied upon entirely, and the party is not entitled in addition to any of the usual claims and remedies against a wrongdoer. (Murray v. Lylburn, 2 Johns. Ch. R., 442.)
    4. Any division or distinction between the stock to the amount of the debt, and the surplus over and above that amount, requiring the defendants to account for so much of the stock held by them as is nominally equivalent to the debt, as money, and as to the residue requiring them to account for the plaintiff’s proportion of stock only in kind, would be supported by no reason or principle. •
    V. The interest of Cheeseman in the stock being encumbered by a lien, the judgment, as far as he had a right to pray for one, could be for the delivery of nothing. There is no pretense that he ever made tender of his share of the advances. He could, at any time, have arranged to sell his stock (one-third), and tendered the purchase-money, if equal to one-third of the advances, and he would have obtained his stock.
    No action thereupon was necessary on his part, as he had his rights, at all times, without the assistance of the Court.
    The only judgment which could be properly granted in the cause would be on application of the defendants, and for a foreclosure of their lien, and a sale of the stock to repay the same.
   By the Court—Bosworth, Ch. J.

When this cause was before .the general term on an appeal from the judgment entered on the report of a Referee, the Court held that the claims of the plaintiff must be adjusted either upon the principle, first, that the plaintiff has ratified the sale to the Hew York Ice Company, or second, that he entirely repudiates that sale. (6 Bosw., 520, 531.)

Waiving, for the present, the question, whether the plaintiff must be deemed to have made an election between these principles, by which he is concluded in this action, what are his rights, when tested solely by contracts to which he is a party ?

The agreement of the 21st of August, 1855, between Cheeseman, Braisted & Sturges, by the covenant contained in it “that all stock or other securities than cash, provided for in said contracts, as part of the consideration for the performance thereof, shall remain undivided until a final settlement,” imports that, by “ said contracts,” Cheese-man, and Cheeseman and Christie, were to be paid by the People’s Ice Company, partly in money and partly in stocks. That agreement also imports, that the money, which it was contemplated the People’s Ice Company would pay in performance of the said contracts entered into with them, would be applied to refund “ all moneys advanced ” by either of the three, in the performance of that agreement.

The declaration of trust, (as it is called) viz.: the covenant by Sturges of the 25th of September, 1855, shows that it was not intended, by conveying the property to which the agreement of the 21st of August, 1855, relates, to modify the rights or interests of either of these three parties in such property, or their relations to it, as between themselves; Sturges covenanted therein, to hold said real estate and premises, in trust for the three jointly; not to convey or encumber it except for the purpose of said contracts, and then only with the consent and approbation of Cheeseman & Braisted.

Looking at all the provisions of the agreement of the 21st of August, 1855, in connection with the covenant of Braisted & Sturges to pay, furnish and supply “ all the necessary money and means to fully carry on and perform said contracts,” and in connection also with the declaration of trust of September 25, 1855, I think it was the understanding of these three parties, that when the contracts with the People’s Ice Company were performed, and the latter had made the payments which they had stipulated to make, the money received from them would be applied by Sturges to reimburse moneys advanced, and that either of them would then have a right to call for a final settlement. Sturges was precluded by his covenant from disposing of anything, other than money, which he might receive, until a final settlement was had between them. In this view, if the contracts had been performed, and the People’s Ice Company had paid the stipulated price, and if the money received by Sturges was insufficient to pay his advances, then any balance, payable either by Braisted or Cheeseman, it would be his right to demand, on transferring to him his aliquot part of “ all stocks or other securities than cash” which should then “remain undivided.”

Whether, in the event that Cheeseman refused or was unable to pay his aliquot part of the unsatisfied balance of the advancements, Sturges could recover it by action at law, or would be compelled to bring an action for an account, and take a judgment for a sale of the undivided stock and other securities owned in common, and payment out of the proceeds, and if still a deficiency, a judgment against Cheeseman for his proportion of it, may be quite material, in one aspect of the case, in determining whether the judgment appealed from-is erroneous.

If the latter was his only remedy, then the judgment is erroneous, even on the principle that the plaintiff ratified the sale to the Hew York Ice Company.

If the plaintiff has ratified that sale, then his interests and rights, in and to the property mentioned in the declaration of trust of the 25th of September, 1855, have become vested in and attach to 5,600 shares of the stock of that company, amounting to $140,000. The property held by Sturges in trust, was transferred for stock of the company, amounting to $140,000.

The Court, at Special Term, has found that Oheeseman did not assent to a transfer, except upon the terms that the stock of the Hew York Ice Company should be $430,000, and that $215,000 of such stock, or half of the whole stock, should be obtained for the joint property. The capital of that company was fixed at $350,000, and only $140,-000 of the stock was paid for this property, being $35,000 less than half of the whole stock. And it is not found, as a fact, that Oheeseman ratified this sale. On the contrary, as I construe the statement of facts found, the Court finds that, as a matter of fact, Oheeseman did not ratify the sale that was made.

The Judge held, as matter of law, (first,) that this action, by reason of the claim made in it, the form of the complaint, and the character of orders obtained in it at the plaintiff's instance, and other proceedings had therein, precludes the plaintiff from obtaining any relief in the shape of a judgment for money, in this suit.

And, (third,) that although the capital stock of the Hew York Ice Company has been changed pending this suit, by an increase of the capital from $350,000 to $500,000, so that the plaintiff cannot in any event, or upon any terms, obtain any part of the stock, precisely as it existed when this suit was commenced, yet as the plaintiff has proceeded to trial with full knowledge of the change in such capital, he is to be deemed to have elected to look to and seek his indemnity, out of the new and substituted stock, and “is entitled to resort to no other property or fund, or personal liability.”

The conveyance of the property to the Hew York Ice Company, by Sturges, and what Consideration he received for it, were known to the plaintiff before this suit was commenced. The facts, are stated in the complaint, and the relief prayed is a judgment against Sturges that he account concerning the moneys paid to him prior to such conveyance, and the stock received by him as the consideration of such conveyance, and that the defendants pay over and transfer to the plaintiff his just and equitable share of the said moneys and stock.

The plaintiff prosecuted the action, in this aspect and on this basis, to judgment. And he obtained a judgment, in substance and effect, that Sturges, after retaining enough of the stock, at its par value, to satisfy his advances, should transfer to the plaintiff his proportion of the residue of the stock, viz.: 754 shares, and pay the dividends that had been received thereon. (6 Bosw., 526.)

With this judgment the plaintiff was satisfied. The defendant appealed from it to the General Term: the judgment was reversed, and the Oourt, in the opinion delivered, states, as its conclusions, that the plaintiff had elected his relief, and was concluded by his election, and that he could not have more than his proportion of the stock, on paying his due proportion of the advances. (6 Bosw., 532, 533.)

In Orme v. Broughton, (10 Bing., 533,) Tindal, C. J., says, that “ after bringing an action in which the grievance alleged is the loss sustained by breach of the contract, I think it would be impossible to bring a second action, or to resort to any other means to enforce the contract, inasmuch as the first action is to be deemed an election as to the remedy sought.”

In the case before us, the plaintiff, by his complaint, sought his proportion of the stock for which the property had been conveyed to the Hew York Ice Company, and pursued the claim for relief of that character, to judgment.

In Gardner v. Ogden et al., (22 N. Y. R., 327,) it was held that the clerk of a broker, employed to sell land, having access to the correspondence between his principal and the vendor, stands in such a relation of confidence to the latter, that, if he becomes the purchaser, he is chargeable as trustee for the vendor, and must reconvey or account for the value of the land.

The vendor having brought a suit against both the broker and his clerk, making a claim against the broker for having fraudulently sold the land, and against the clerk for a reconveyance or accounting, the Court said, (Id., p. 340,) “ In the present case, the plaintiff has elected to regard Smith (the purchaser) as his trustee, and his complaint, as to him, and the decree of the Special Term, proceeds on this basis. The plaintiff, therefore, elects to affirm the sale made to Smith. He cannot, uno flatu, affirm it as to him, and disaffirm it, as to Ogden.” * * “ The affirmance of the sale by the plaintiff, is a complete answer to the claim for damages against the firm for fraud in making the sale." (Id., 341.)

In Sanger v. Wood, (3 Johns. Ch. R., 416,) Chancellor Kent says: (p. 422,) “ Any decisive act of the party, with knowledge of his rights and of the fact, determines his election in the case of conflicting and inconsistent remedies. . * * * And I consider the going to trial in the action at law ” (the fraud having been discovered a few days before the trial) “ and especially the entry of judgment afterwards upon the verdict, as a decided confirmation of the settlement in April, 1816.”

Evans v. Inglehart, (6 Gill. & J., 188,) affirms the same doctrine.

Ho more decided conduct in regard to electing between remedies open to a plaintiff, can be had, than exists in this case. With a full knowledge of the alleged wrong, and in a complaint stating it, judgment is prayed for the plaintiff’s share of the stock into which the trust property had been converted. An injunction was sought and obtained restraining the transfer of it. And a portion of it has been' retained within the control of the Court, pending this litigation, to satisfy any claim the plaintiff might establish.

It is settled law, that a party prosecuting two suits at the same time, upon the same cause of action, seeking in the one relief inconsistent with that sought in the other, will be compelled- to elect which remedy he will pursue. And in the present case, the plaintiff has made his election and is concluded by it, for all the purposes of this suit, and of any relief that can be granted in it.

He must be treated, therefore, precisely as if the conveyance to the Hew York Ice Company had been made with his assent, and upon terms authorized by him.

In this aspect of his rights and liabilities, the property in which he and Sturges were interested had been converted into stock, and no money could be realized from it to pay the advances made by Sturges, except by a sale of the stock.

The agreement of the 21st of August, 1855, between Oheeseman, Braisted & Sturges, provides “ that all stocks or other securities than cash, provided for in said contracts as part of the consideration for the performance thereof, shall remain undivided between them until a final settlement, and that neither of said parties shall sell or dispose of his interest in said contracts, or any of the proceeds other than money, without the consent in writing of the others.”

I think it was the intent and understanding of the parties, that after the contracts had been executed and payment had been received, there should be a final settlement between the parties to ascertain how much was due to either for advances made, with a view to a division of what might remain after satisfying such advances.

The said agreement of the 21st of August, 1855, also provides, “ that upon the performance and completion of the same (the said contracts), after refunding all moneys expended in the performance thereof, to the parties advancing and furnishing and providing it, and all costs, charges and expenses paid or incurred in the performance of said contracts, to divide and apportion the balance between them equally, share and share alike.”

This agreement indicates very clearly that Oheeseman was not to make any pecuniary advances, pending the executing of the contracts, and that the advances to be made by the-other parties were to be satisfied out of the money and stocks and other securities to be received for performing the contracts, and only the balance then remaining was to be divided between the parties.

The plaintiff insists that injustice has been done to him by the decision that he should pay his just proportion of the advances by a day named, and that in default thereof his third of the stock should be sold to satisfy that sum, or so much of it as may be necessary for that purpose, and that in case of a deficiency he should pay such deficiency. He further insists that enough of the whole stock should be sold to satisfy the entire advances, and that the residue, if any, should be divided, and in case it did not sell for enough to pay the entire advances, the plaintiff should be charged with only his proportion of the deficiency.

I am not satisfied that this claim is well founded.

The Judge found a balance, due to Sturges for advances, of,................................... $79,058 75

If the stock would sell for 50 cents on the dollar, it would produce,................ 70,000 00

And leave a deficiency of,................ $9,058 75

One third of which is,..................... 3,019 58

The latter sum would be-amount of the plaintiff’s loss, and double that the amount of Sturges’ loss, as he has succeeded to Braisted’s rights and liabilities.

Oheeseman’s proportion of the $79,058.75 is $26,352 .92 His third of the stock, viz. $46,666.66, at 50 ' per cent would produce,................. 23,333 33

And his loss would be,.................... $3,019 59

' Hence it follows,.that whether the whole stock be ordered to be sold to pay the entire advances, or only one-third of it to pay one-third of the advances, the result is precisely the same to the plaintiff, provided it may reasonably be expected that, it can be sold at the same rate per cent, in- each case.

And I know of no principle on which- it is just to assume that it will- sell at a. higher rate per cent on a sale of stock amounting at its par value to $140,000, than on a sale amounting, at its part value to only $46,666fin,.

I am, therefore, of the opinion, that there is nothing inequitable in that part of the judgment now under consideration ; and if there is not, there can be no reason why Sturges should not be allowed to retain his share of the stock, on being charged with his part of the advances. The plaintiff cannot, in judgment of law, be benefited by compelling him to submit to a sale of it to work out the equities of the parties, and Sturges should, therefore, be left to his chances of realizing more by holding his stock, than from a sale of it in presentí. If permitted to retain Ms proportion, he also incurs the risk of a greater loss, but I am inclined to think that the plaintiff has no rights, which permit him to require a sale of the whole, in presentí.

If these views are correct, then the only qliestion left, regards the effect of the increase of the capital of the H. Y. Ice Company, pendente lite.

The increase of capital from $350,000 to $500,000, was determined upon by the corporation, on the 27th of January, 1857. This action was commenced on the 14th of that month; the plaintiff knew that the capital had been increased, as early as January 8,1858. An order in this action was made as early as January 7,1858, modifying the injunction orders previously granted, on a deposit of the stock of the H. Y. Ice Company with the Clerk of the Court, amounting to $25,000; and on the 8th, certificates of 1,000 shares were so deposited, and these certificates were upon the increased capital of 500,000.

The trial, resulting in the present judgment, was had in March, 1861. If the plaintiff proposed to make any claim, based on the individual action of the defendant Sturges in effecting such increase of capital, he should have moved to adapt his pleadings to it, and have caused them to be so amended as to present the questions he designed to raise. Instead' of doing that, he goes to trial, knowing of the increase of the capital, and must be deemed to have continued to pursue the stock in the company, as it existed after such increase of its capital. (Sanger v. Wood, supra(.

This branch of the case may be viewed in another aspect. Supposing the property to have been conveyed to the M.' Y. Ice Company, with the knowledge and assent of. the plaintiff for $140,000 of its stock, (the capital being then $350,000,) and this suit to have been brought to recover the plaintiff’s proportion of such stock; the pendency of such a suit would not affect the capacity or right of the company to increase its capital, pendente lite; nor would the fact of such, an increase affect the rights and liabilities of the parties to the suit, inter se, in respect to the stock forming the. subject matter of such litigation. The par value of the shares continues unaltered, and the nominal increase of the capital is supposed and purports to be represented by a corresponding increase of actual capital.

And the plaintiff, in the case supposed,, would receive, by the judgment of the Court, his portion of $140,000 of stock as it existed, at the time judgment was pronounced. He would obtain the same number of shares, and of the same par value, and in judgment of law of the same actual value, as if the capital had not been increased. .

The plaintiff, having elected to affirm the sale made to the Mew York Ice Company, occupies the same position as if he had been a party to such sale and had procured it. ' The result of these views is, that he cannot make the fact, that the Mew York Ice Company has increased its capital during this litigation, the basis of a claim to charge the : defendant, in damages, for the cash value of the $140,000 of stocks, as it existed before or at the time of the increase of the capital.

It is not the case of a fraudulent or wrongful conversion, ■by a defendant, pendente lite, of trust property, which a suit is instituted and seeks to reach, and to. which, at the commencement of the. suit, the plaintiff was entitled.

The conversion, or change in the character of the stock, ■is one of form rather than of substance, and that change has been made by the corporation, and not by the defendants.

This appeal has been argued by the co.unsel of the appellant on the basis, and on a preliminary statement made by Mm to the Court, that he should assume the facts to be correctly found; and insist that on the facts found the judgment was erroneous. Considering only these questions, and no others were discussed, I tMnk there is no error in the judgment, and that it should be affirmed.

The other Justices concurring in the opinion, judgment o'f affirmance was ordered.  