or estimate made by Andros to Daboll to amount to $39,524. These were firm assets, and primarily liable for the firm debts, and which must be applied to the firm debts before any can be applied upon the individual debts of the individual members of the firm. It is difficult, upon this showing, to see how the members of the firm could have known, or even suspected, that the firm was insolvent, and unable to pay its liabilities, at the time of purchasing these baby carriages. It was incumbent on the plaintiff, before it could repudiate the contract of sale, to show affirmatively facts and circumstances tending to prove that the representations made by the bookkeeper at the time he was inquired of by the mercantile agency, and the representation of William M. Hyland at the time of crdering the goods of plaintiff's sales clerk, were, to the knowledge of the persons making such representation, false or fraudulent. The facts disclosed by the evidence would tend rather to prove them innocent than guilty of any such false representation. The evidence, therefore, capable of an innocent interpretation, cannot be used to establish guilt. Morris v. Talcott, 96 N. Y. 100; Ccnstant v. University, 133 N. Y. 640, 31 N. E. Rep. 26; Fenno v. Hannan, (Sup.) 10 N. Y. Supp. 408. To sustain an action for fraud founded upon representations made by a purchaser, it must be made to appear that he believed or had reason to believe at the time he made them that they were false, or that without knowledge he assumed or intended to convey the impression that he had actual knowledge of their truth when he had no such knowledge, and that the plaintiff relied upon them to his injury. Wakeman v. Dalley, 51 N. Y. 27; Meyer v. Amidon, 45 N. Y. 169; Oberlander v. Speiss, Id. 175. To set aside a sale of a chattel which has been delivered on the ground of fraudulent representation by the vendee, the fraud must be clearly proved; and, while fraud may be established by circumstantial evidence, it can only be by proof of such circumstances as are irreconcilable with any other theory than that of the guilt of the person accused of the fraud. Baird v. Mayor, etc., 96 N. Y. 567. Within this rule we think the jury were not authorized from the evidence in this case to find that the purchase of these goods by the Keith Company was procured by fraud. There is no direct evidence, which we have been able to find, which would uphold the finding of the jury that Hyland at the time of ordering these goods knew or had reason to believe that any representation or statement made by him as to the financial condition of the firm was untrue. As we have seen, the stock on hand and the amount of book accounts due the firm were far in excess of the liabilities of the firm, and those liabilities were a first charge upon the entire firm assets before any of the firm property could be applied upon the individual liabilities of the individual members of the firm; and there is nothing in the transaction, so far as the evidence discloses, from which the jury could properly infer that Hyland purchased these carriages with a fraudulent design of appropriating their value, and not paying the plaintiff the price at which they were purchased. But, if there was enough in this case

to authorize the jury to find the representations made by the Keith Company's bookkeeper were exaggerations of the financial condition of the Keith Company, the evidence discloses no facts tending to establish the bookkeeper's authority to make any such declaration, or to bind the firm by it. The case expressly shows that the representations made by the bookkeeper to the mercantile agency were not communicated to the Keith Company, or either member of that firm, and that the bookkeeper had no express authority from the firm to make representations as to its financial standing which would bind the firm, and his representations to the mercantile agency would not amount to such fraudulent representations by the firm as would authorize the plaintiff to treat the sale by them of these carriages to the Keith Company, and the purchase of the same by said ccmpany, as fraudulent and void. The question of fraud must therefore turn upon the statement made by Hyland at the time of making the order. That statement was that "the company had had an unusually good holiday business, was prosperous, and was doing a nice business, and everything was looking promising, and its financial condition was all right." Under the circumstances of this case, and within the authorities, we do not think that that statement can be construed as fraudulent, so as to vitiate the sale, and it was therefore error to allow the jury to speculate upon that statement in the absence of any evidence showing that Hyland knew at the time of making the same that it was untrue.

We think it was also error to allow the statement of the mercantile agency, based upon the representations of the Keith Company's bookkeeper, to be received in evidence. There was no evidence of authority in the bookkeeper to make statements to the mercantile agency of the Keith Company's financial standing, nor was there any evidence that the Keith Company knew that their bookkeeper had made such statements at the time of ordering the goods, and the acceptance of the goods by the Keith Company in the absence of such knowledge was not a ratification of the statement of the bookkeeper. Bigelow, Frauds, 363. In this case, the plaintiff, having asserted the authority of the bookkeeper to make this statement, assumed the burden of proving affirmatively the existence of such authority. This, we think, it failed to do, and for that reason the declarations of the bookkeeper were not competent to bind the principal, and their reception under the defendant's objection was error. For these reasons, without discussing the other questions raised by the appellant, we think this judgment should be reversed.

Judgment reversed, and new trial ordered, costs to abide the

event.

HERRICK, J., concurs. PUTNAM, J., concurs in result.

(70 Hun, 317.)

PEOPLE ex rel. COLLINS v. DONOHUE et al.

(Supreme Court, General Term, First Department. June 30, 1893) 1. RES JUDICATA-JUDGMENT AGAINST PRINCIPAL-EFFECT AS TO SURETIES. The bond of a trustee appointed by an order of court was conditioned that if the trustee "will well and faithfully perform and discharge his duties as such trustee, as named in said order, then this obligation shall be void, else to be and remain in full force and virtue." Held, that a judgment against the executor of the trustee, in favor of his successor, for the recovery of the trust fund, was not conclusive on the sureties in the trustee's bond.

2. LACHES-WHAT CONSTITUTES.

Where a cestui que trust, who is entitled to receive yearly the income from the trust fund, does not demand the income for 19 years, she is guilty of such laches as will preclude a recovery of the unpaid income from the sureties on the trustee's bond.

3. TRUSTS-APPOINTMENT OF TRUSTEE-CESTUI QUE TRUST.

Where a valid trust has been created, the life beneficiary of the trust estate may afterwards be appointed trustee by an order of the court. Van Brunt, P. J., dissenting.

Appeal from circuit court, New York county.

Action in the name of the people, originally brought on the relation of Maria L. Collins against Charles Donohue, impleaded with another. Relator having died, John Collins was substituted in her place. 19 N. Y. Supp. 36. From a judgment in favor of plaintiff, entered on a trial by the court without a jury, defendant Donohue appeals. Modified.

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

Abram Kling, for appellant.

Simon W. Rosendale, Atty. Gen., (A. M. Card, of counsel,) for respondent.

O'BRIEN, J. This action was brought against the defendant as surety upon a bond dated October 6, 1865, conditioned for the faithful performance and discharge by one Welcome R. Beebe of his duties as trustee, in pursuance of an order of the supreme court appointing said Beebe trustee to receive and hold, for the use and benefit of Maria Louisa Collins, a certain fund of money which had been left by her mother, by last will and testament. Subsequent to the death of the trustee, Beebe, which occurred in 1884, Maria Collins, who was the life beneficiary of the trust fund, upon her application, was appointed trustee, under an order which directed her to apply the use, interest, and income of the fund, as directed by her mother's will, to her own use, and the principal to the person or persons to whom the same should be determined to belong. She, having made a demand upon the executors of the former trustee, and failed to obtain the fund, commenced an action against such executors, which was referred to a referee, who subsequently reported that said Beebe, as trustee, was chargeable with the principal and interest upon the fund. Upon such report of the referee a judgment for the sum of $12,357.67 was

entered; that being the amount, as found by the referee, for which said Beebe, as trustee, was chargeable. Having failed to obtain payment of this judgment, or the satisfaction of an execution issued thereon, this action was commenced to enforce the liability of the sureties. Upon the trial, evidence was presented that a check for the amount of the trust fund was delivered to Beebe subsequent to his appointment as trustee. Such evidence, supplemented by the judgment entered upon the report of the referee, was relied upon as establishing the defendant's and appellant's liability. This liability was resisted upon two principal grounds; the first, that the judgment entered against the executors of the trustee, fixing the amount for which the trustee,, Beebe, was chargeable, was not binding upon the surety. In Black on Judgments (section 586, p. 698) it is said that:

"The general tendency of the English and American jurisprudence is to hold, in ordinary cases of suretyship, that a judgment against the principal is not conclusive upon the surety unless the latter was made a defendant to the action. * * On the whole, the best rule which can be deduced from the authorities is that the judgment is conclusive upon the surety only in cases where the principal may be considered as the former's agent in the particular transaction, and where, upon a fair construction of the contract of indemnity, it may be construed as binding the surety to a responsibility for the conduct or result of the suit in which the judgment is rendered; otherwise, the judgment proves only the fact of its own existence."

And in the next section this author states that:

"Where the obligation of the surety is simply to pay money if the principal fails to do so, there is no such privity between them as will make a judgment against the principal evidence against the surety. But the case is different with regard to sureties on bonds given in the course of a suit or other proceeding, for in the latter instance the surety submits himself to the acts of the principal, and to the judgment, as itself a legal consequence falling within the suretyship."

In the American and English Encyclopedia of Law (volume 12. p. 93) the rule is thus stated:

"Where a surety has contracted with reference to the action of his principal in some judicial proceeding, he is bound by a judgment against the latter. It would seem, by the weight of authority, in all other cases of suretyship a judgment against the principal is at least prima facie evidence against the surety. But a surety may show that a judgment against his principal was obtained by fraud or collusion, or that the court had no jurisdiction to render the judgment."

With respect to bonds given by administrators, it has been held in this state (Casoni v. Jerome, 58 N. Y. 316) that sureties are bound by the decree of the surrogate, "because, by their contract, they have made themselves privy to the proceedings against their principal, and, when the principal is concluded, the surety, in the absence of fraud or collusion, is concluded also;" citing cases. In Harrison v. Clark, 87 N. Y. 576, Casoni v. Jerome was cited and approved; and therefore the law may be regarded as settled that, with respect to sureties upon an ordinary administration bond, they are bound by the decree of the surrogate, or by a judg ment against their principal, in the absence of fraud or collusion. The surety's obligation upon such bonds is to be responsible for the faithful discharge of the administrator's duties; and the bind

ing force of a decree, as stated in the authorities, results from the nature of the contract or obligation which the surety assumes. The inconsistency that, upon a first glance, would seemingly be present in the authorities, will be dissipated if we bear in mind that there is no fixed or rigid rule, which, under all circumstances, would make a surety bound by an order or judgment against his principal, but the question is as to whether or not he is so bound as to be determined by the nature of his obligation, and the language and terms of the bond itself. Thus, in Thomson v. McGregor, 81 N. Y. 593, which was a case of a receiver's bond, the surety upon which was sued after the principal was ordered to pay over a sum adjudged to be the balance of the trust funds in such principal's hands, which order was not obeyed, and where it was claimed that such order was conclusive upon the surety, it was held that the surety was not bound by the order, "and in the absence of express terms in the bond, binding him to submit to the judgment of the court, such a liability could not be imposed upon him."

To determine the surety's liability, and the extent to which he is bound by the judgment against his principal, in the case at bar, resort must be had to the bond itself, which provides as follows:

"Now, the condition of this obligation is such that if the above-bounden Welcome R. Beebe shall and will well and faithfully perform and discharge his duties as such trustee, as named in said order, then this obligation shal be void, else to be and remain in full force and virtue."

We here find that neither by the nature of the contract nor the express terms of the bond does the surety obligate himself to be bound by the judgment of the court; and when it is sought to charge him, after the death of the principal, with the latter's unfaithfulness, he should not be precluded by a judgment obtained against the representatives of the deceased principal in an action to which he was not a party, and of which he had no notice. But, assuming that the judgment was not binding upon the surety, there was, nevertheless, evidence presented showing that the former trustee had received the principal of the fund, and had failed to turn over the same, having converted it to his own use. The finding

to this effect, therefore, was based on sufficient evidence; and, nothing to the contrary being shown, it would justify a recovery against the surety for such principal sum. In regard to the interest, it seems to me there are two grounds opposed to the recovery thereof: In the first place, no evidence has been given that interest was ever received by the trustee; and in the absence of such evidence the surety has a right to invoke the rule that a trustee is not liable to pay interest upon a fund, to a greater extent than interest has been received, which rule would prevent the trustee's being chargeable with interest in a case where no interest was obtained by him upon a trust fund. Secondly, even though it had been shown that interest had been earned, it could not have been recovered by this trustee, because it was money that belonged, not to the trustee, but the beneficiary, to whom it should, from time to time, have been