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App. Div.] SECOND DEPARTMENT, MARCH TERM, 1899.

It follow's from this rule that the court was correct in applying the withdrawal in reduction of the earliest items of the account and charging the defendants with the balance.

These views lead us to the conclusion that the judgment below was right, and it should, therefore, be affirmed.

All concurred.
Judgment affirmed, with costs.

38 515 044 483 38 515 79 82

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Hyman Sonn and Henry Sonn, Appellants, v. Herman HEILBERG,

Respondent.
Restrictive covenants a restriction to a family residencedoes not prevent the erec-

tion of an apartment house.
Restrictive covenants are to be strictly construed against the grantor.
A covenant contained in a deed by which the grantee agrees “not to erect any

building * less than three stories in height, and the same to be in every way adapted for use as a family residence,” and not to erect or permit to be erected buildings in which certain enumerated classes of business should be carried on, is not violated by the erection by the grantee of a six-story apart. ment house designed for the use of several families, as, in view of the enumeration of the prohibited classes of business, it is evident that the object of the covenant was to restrict the use of the premises to residence purposes in contradistinction to business uses and not to prohibit the erection of houses

designed to be occupied by more than one family. BARTLETT and WOODWARD, JJ., dissented.

APPEAL by the plaintiffs, Hyman Sonn and another, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of New York on the 8th day of September, 1898, upon the decision of the court rendered after a trial at the New York Special Term dismissing the complaint upon the merits.

This appeal was transferred from the first department to the second department.

Morris II. Hayman, for the appellants.

Milton Mayer (Albert Erdman with him on the brief], for the respondent. HATCH, J.:

By this action the defendant is sought to be restrained in the erection of a six-story apartment house, for the residence of families, npon Seventy-eightlı street, between Amsterdam avenue and the

SECOND DEPARTMENT, MARCH TERM, 1899.

(Vol. 38.

Boulevard, in the borough of Manhattan. The lots upon which it proposed to erect the structure are subject to a restrictive covenant which, in terms, is as follows: "Not to erect any building or buildings on the land owned by us, or either of us, aforesaid, and as -above particularly described, other than of stone or brick, and of not less than three stories in height, and the same to be in every way adapted for use as a family residence, the fronts of houses hereafter built on the south side of said block, being the block on Seventy-eighth street, between the Tenth avenue and the Boule. vord, in said city of New York, not to extend beyond the front of the houses now erected on said side of said block, excepting, however, that the houses on the lots next to property fronting either on the Boulevard or on Tenth avenne may extend so far as to conform to the line of the property built on said Boulevard at Tenth avenue, and, further, not to erect, or permit to be erected or established, upon any of the said property, or part thereof, any slaughter house, smith shop, forge, furnace, steam engine, brass foundry, nail or other iron foundry, livery stable, saloon, coal yard, or any manufacturing of gunpowder, glue, varnish, vitriol, ink or turpentine, or for the tanning, dressing, or preparing skins, hides or leather, or any brewery, distillery or any other noxious or dangerous trade or business."

The particular language which it is claimed the proposed erection will violate exists in the clause "Not to erect any building * less than three stories in height, and the same to be in every way adapted for use as a family residence,” the claim being that the apartment house is not a “family residence.” In all other respects no infringement of the covenant is claimed.

claimed. The court decided the case upon the pleadings, and certain admitted facts having relation to a change in the character of the structures and the business carried on in the immediate neighborhood. It is the general rule of construction in respect of restrictive covenants that they shall be strictly construed against the grantor. (Duryea v. Mayor, 62 N. Y. 592; Blackman v. Striker, 142 id. 555; Levy v. Schreyer, 19 Misc. Rep. 227.) That is, the covenant being in derogation of the right of unrestricted use of the land, for all lawful purposes, shall not be incumbered by any restrictive clause unless the same be plainly within the intent of the parties as gathered from the language used in the covenant and from surrounding circumstances. (Clark

App. Div.]

SECOND DEPARTMENT, MARCH TERM, 1899.

V. Jammes, 87 Hun, 215.) Construing this covenant in the light of these rules, we do not think that the proposed apartment house is in violation of it. It is evident that the parties who entered into the covenant songht to devote the land to residence purposes in contradistinction to business use, and for that purpose aptly described the designated use to which it was proposed to devote the land as a family residence; and to make this meaning plain, the covenant was made to enumerate certain classes of business which might not be carried on upon the property, and for which erections of buildings would not be permitted. It seems clear from this enumeration that the object sought was to restrict the use to residence purposes. The use of the word family in no sound sense qualifies the purpose to which the building should be put. It could scarcely be claimed that if a single gentleman erected a house upon these premises, three stories in height, that he could not be permitted to occupy it, although he had no family, in the ordinary sense of that term. And so we conceive that he might let the apartments in the house to other single gentlemen, without its being supposed that he had violated the covenant restricting the use to a "family residence." Or suppose that a family in literal sense did in fact erect and occupy a house answering to the requirements of the covenant, would they be held to have violated the terms of the covenant if they let rooms in the house to other families, or boarded them therein? We think not; and if not, how does the existence of a structure for the use of several families contravene its provisions? The structure does not cease to be a family residence, although more than one family resides therein, and there is no limitation or restriction upon the use of the property save that it shall be used for the residence of a family, and that business shall not be carried on thereon. The proposed structure is in every way adapted to family use, and will be used by families as a residence; and this being so, the proposed structure is in literal compliance with the covenant. If the parties had in mind the exclusion of a building for the use of more than one family, they should have so stated it in their covenant; not having done 80,

the court should not be called upon to interpolate it.

We think the judginent below was right and should be affirmed. All concurred, except BARTLETT and WOODWARD, JJ., dissenting. Judgment attirmed, with costs.

SECOND DEPARTMENT, MARCH TERM, 1899.

[Vol. 38.

THE THIRD NATIONAL Bank of the City of New York, Respondent,

v. The Travelers' INSURANCE COMPANY, Appellant. Money paid over by a bank upon the faith of a bond conditioned to repay money withdrawn from the obligor's bank account by its authorized agent, if it were not collected from the agent by the bank the bond is a primary obligation and not a mere guar. anty of collection. The Travelers’ Insurance Company deposited with the Third National Bank of

the city of New York a sum of money to the credit of its agent, the Bank of Salt Lake, to be used for certain purposes, without notifying the bank of any

restrictions upon the agent in the use of the money The Bank of Salt Lake having become insolvent after drawing, in violation of

its duty, $1,822.31 from the Third National Bank, the insurance company applied to the Third National Bank for the payment to it of the entire amount of the deposit, including the amount thus wrongfully withdrawn by its agent, which request the Third National Bank complied with upon the execution by the insurance company of a bond of indemnity, conditioned for the payment to the Third National Bank " upon demand, such portion of the said sum of $15,555.03, not exceeding $1,822.31 and interest, as the said Third National Bank of the city of New York may not, in fact, collect, within twelve months from the date

hereof, from the said Bank of Salt Lake, or from the said collateral securities." The Third National Bank having failed to collect any part of the sum of $1,822.31

within the time specified in the bond, made a demand upon the insurance company for that amount, and such demand having been refused, brought an action upon the bond in which the defendant contended that the instrument was a guaranty of collection and that lack of diligence having been shown in collecting the sum mentioned therein, the defendant was discharged from liability

thereunder. Held, that the undertaking on the part of the defendant was a primary obligation

to pay the $1,822.331 if that sum were not collected within the time specified in

the bond, and was not a mere guaranty of the collection thereof. Semble, that if the plaintiff, after obtaining payment under the bond, should

receive payment from the Bank of Salt Lake, the latter payment would inure to the benefit of the defendant.

APPEAL by the defendant, The Travelers' Insurance Company, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 9th day of August, 1898, upon the verdict of a jury rendered by direction of the court, and also from an order entered in said clerk's office on the 5th day of Angust, 1898, denying the defendant's motion for a new trial made upon the minutes.

This appeal was transferred from the first department to the second department.

App. Div.]

SECOND DEPARTMENT, MARCI TERM, 1899.

Albert Stickney, for the appellant.

Thomas G. Shearman, for the respondent.

HATCH, J.:

The facts which form the basis of this action are without dispute. The defendant deposited with the plaintiff the sum of $10,006.67 to the credit of the Bank of Salt Lake, located in Salt Lake City, Utah. This money was to be drawn by the latter bank for the purpose of delivery to the borrowers thereof in Utah, the bank acting as agent therefor. The plaintiff had no notice of the purpose for which the money was deposited, and was not informed of

was not informed of any restriction upon the use of the money by the Bank of Salt Lake. The latter, in violation of its duty, drew a draft upon such fund for the sum of $1,822.31. This draft the plaintiff paid. Subsequently, and before any more of the deposit was drawn out, the Bank of Salt Lake failed and made an assignment of all its property for the benefit of creditors. After this assignment the defendant applied to the plaintiff to repay to it the whole sum of the deposit, including the amount of the draft drawn by the Salt Lake Bank. This the plaintiff consented to do upon defendant executing and delivering to it a bond conditioned to repay the sum which had been drawn from the fund, The bond was executed and delivered. It recites the foregoing facts, and also recites and provides further, as follows:

And, WHEREAS, the said Bank of Salt Lake is indebted to the said Thiru National Bank in the sum of $15,555.03, including the said sum of $1,822.31 above mentioned, with interest from July 2, 1896, to secure which indebtedness the said Third National Bank holds certain securities as collateral;

“ And, whereas, the said Travelers Insurance Company has requested that the whole of the said sum of $10,006.67 be returned to it, and the said Third National Bank is willing to comply with such request, provided the Travelers Insurance Company will indemnify it against all claims to the said sum by the said Bank of Salt Lake, or its legal representatives, and will repay to the Third National Bank such portion of the said sum of $15,555.03, not exceeding $1,822.31 and interest, as it may not collect from the said Bank of Salt Lake or realize from the said collateral security held by it within twelve months from the date hereof.

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