App. Div.]

Third Department, September, 1911.

better machinery as it is that the machinery will in time wear out. The creation and maintenance of a fund for the purpose of keeping good and efficient the plant and machinery of an electrical railway, if reasonable and made in good faith for that purpose and not for the purpose of avoiding taxation, the court may well consider a step in the right direction. The name or manner of the division of the fund is immaterial. The question is, is it made in good faith and is it a reasonable fund to provide for the continued efficiency of the property. Earnings should provide for wear and obsolescence, and new capital should be resorted to for additions, enlargements and new property not already represented in capitalization. It does not appear that the amount set aside from earnings for the up-keep and obsolescence of the property is unreasonable.

We have considered the evidence carefully and also the able opinion of Mr. Justice LE BOEUF at the Special Term. The facts, and conclusions he draws from them, fully sustain the result reached. The order is, therefore, affirmed, with costs to be paid by the appellant.

Order unanimously affirmed, with costs to be paid by the city, appellant; BETTS, J., concurring in result.

ABRAHAM TERIER, Respondent, v. GILBERT DE WITT DARE,

Appellant.

Third Department, September 28, 1911.

Physicians - action for malpractice - evidence - privileged communication - waiver of privilege- right of physician to have action defended by medical society.

In an action against a physician for alleged malpractice in failing properly to treat a dislocation, it is error to exclude testimony by the defendant as to the nature of a chronic infectious disease for which he had previously treated the plaintiff where he claims that such disease attacked the dislocated joint so that he treated the plaintiff accordingly. By bringing the action against his physician the plaintiff waived the privilege otherwise existing as to communications between patient and physician.

Third Department, September, 1911.

[Vol. 146.

In such action it is error to admit in evidence a letter written by the defendant to the plaintiff stating that he belonged to a medical society which defended its members in actions for alleged malpractice, it indicating that he had partial insurance against liability. SEWELL and BETTS, JJ., dissented.

APPEAL by the defendant, Gilbert De Witt Dare, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Clinton on the 30th day of December, 1910, upon the verdict of a jury for $500, and also from an order entered in said clerk's office on the 19th day of December, 1910, denying the defendant's motion for a new trial made upon the minutes.

James Taylor Lewis, for the appellant.

John E. Judge and Royal Corbin, for the respondent.

KELLOGG, J.:

The plaintiff has recovered a judgment against his physician for malpractice. He fell from the steps of his house and struck upon his shoulder and was treated for the injury by the defendant. Plaintiff's evidence tends to show that his shoulder is dislocated and that he was not properly treated for a dislocation. The doctor had treated the plaintiff for a considerable time before the injury for a chronic infectious disease, and his theory is that the shoulder was not dislocated but bruised, and that infection from the contagious disease attacked the shoulder joint following the bruise, and he treated him accordingly and informed him fully as to his condition. The plaintiff does not substantially deny taking the medicine prescribed for the chronic disease, or that the defendant informed him that his trouble was caused by such disease. I think the judgment is not fairly sustained by the evidence.

The court excluded evidence as to the nature of the disease for which the defendant had previously treated the plaintiff as a privileged communication between patient and physician, to which the defendant excepted.

It is evident that the defendant could not by experts show to what extent the present condition of the plaintiff might be due to a chronic disease unless he was able to show what the disease

App. Div.]

Third Department, September, 1911.

was. By bringing an action against his regular physician, who had been treating him for a disease, claiming that the subsequent treatment was malpractice, the plaintiff waived the professional privilege and the defendant was permitted to show any facts he knew bearing upon the present condition of the plaintiff.

In Van Allen v. Gordon (83 Hun, 379) the court says: "Had the defendant himself brought an action against the physician, alleging misconduct or malpractice, he doubtless would be deemed to have waived the statute. But we think the interposing of a general denial in an action brought against him cannot be so treated." (See, also, Capron v. Douglass, 193 N. Y. 11.) I think the ruling was prejudicial and calls for a reversal of the judgment.

After suit brought the defendant wrote a letter to the plaintiff, saying in substance, among other things, that the medical society of the State defends its members in actions for alleged malpractice. This letter was offered as evidence and received over the defendant's objection and exception. The re-examination with reference to the letter developed the fact that by reason of membership in the society the member was entitled to be defended by the attorney of the society in such actions, and to that extent the defendant is insured or indemnified. The letter was not evidence upon any subject before the jury and it could only tend to prejudice the defendant's case by making the jury believe that the medical society in some way must bear a part of the burden of the defense. Perhaps the jury reasoned that if the defense cost the defendant nothing, its verdict against him would not be a very serious burden.

I think the familiar rule in negligence cases excluding evidence that the defendant is insured against liability applies in principle to this case. The letter cannot be said to be an admission of the defendant's guilt, as the suit was already pending, but it was an unwise attempt by the defendant to frighten the plaintiff from further prosecuting the case, not by a false statement, but by a statement which as matter of fact rested upon a substantial basis. Perhaps standing alone this erroneous ruling might not call for a reversal, but, as a new trial is to be had, the error will not occur again.

[Vol. 146.

Third Department, September, 1911.

I favor a reversal of the judgment and order, and a new trial, with costs to the appellant to abide the event.

All concurred, except SEWELL and BETTS, JJ., dissenting.

Judgment and order reversed and new trial granted, with costs to appellant to abide event.

THE PEOPLE OF THE STATE OF NEW YORK, Respondent, v. THE BANK OF STATEN ISLAND.

In the Matter of the Judicial Settlement of the Account of JOSEPH B. MAYER, Former Receiver of the Bank of Staten Island, Appellant.

JOHN S. DAVENPORT, Receiver, Respondent.

Third Department, September 28, 1911.

Banks - receiver-failure to bring action to enforce statutory liability of stockholder accounting — negligence of receiver's attorney

rate of compensation.

Although section 52 of the Banking Law, as amended by chapter 441 of the Laws of 1897, provides that where a banking corporation shall have been dissolved and a permanent receiver appointed all actions or proceedings to enforce the liability of stockholders under said section shall be taken and prosecuted only in the name of and on behalf of the receiver unless he refused to take such action or proceeding upon proper request made by a creditor, and that in that event the action or proceeding may be taken by the creditor, the Legislature did not intend to make it the absolute duty of a receiver to sue stockholders to enforce their liability.

Hence, although a permanent receiver failed to bring a statutory action

against a solvent stockholder within the time limited by the statute, his account should not be surcharged with the amount which he might have recovered.

The courts cannot hold such act mandatory so as to impose a positive duty where it merely confers a discretionary power.

Moreover, in no event should the accounts of such receiver be surcharged with the amount which he might have recovered from a stockholder where the legal steps to be taken were necessarily left to his attorney at law whose appointment he did not control and whom the court refused to discharge on his motion, for the negligence in failing to prosecute the stockholder was that of the attorney.

App. Div.]

Third Department, September, 1911.

A receiver of a corporation acquires no vested rights to compensation under the statute as it exists at the time of his appointment. He is only entitled to compensation at the rates allowed by the statute as amended at the time when the services are rendered.

APPEAL by Joseph B. Mayer from so much of an order of the Supreme Court, made at the Albany Special Term and entered in the office of the clerk of the county of Albany on the 17th day of March, 1911, as surcharges his accounts as receiver of the Bank of Staten Island, and fixes his commissions at the rate of two and one-half per centum on the amounts received and disbursed.

Joseph B. Mayer was appointed the receiver of the Bank of Staten Island January 23, 1904, by a judgment in an action brought in the Supreme Court to dissolve the corporation for insolvency. He continued as receiver until June 29, 1906, when he resigned and his successor, John S. Davenport, was appointed. He presented his accounts as such receiver and a referee was appointed to take, state and settle the accounts. Upon the hearing before the referee it was stipulated as facts, for the purposes of the proceeding, that at the time of the entry of the decree of dissolution and the appointment of Joseph B. Mayer as permanent receiver, one Howell H. Barnes, then a stockholder in the said Staten Island Bank, held certificates of stock for 100 shares; that the par value of the stock was $5,000; that the said Howell H. Barnes was solvent and remained solvent and able to respond to any judgment that might have been recovered against him in an action to recover upon a stockholder's liability for the period of two years thereafter, and that no stockholders' action was brought against him under the statute.

The referee found that there had been no willful neglect on the part of the appellant and refused to surcharge his account with the amount recoverable from the stockholder.

Upon the motion to confirm the report of the referee an order was made surcharging the account of the receiver "with said amount of five thousand dollars, the stockholders' liability of Howell H. Barnes to said bank."

Samuel F. Moran, William F. Sheehan and John W. Searing, for the appellant.