author: Mullin, J. Selden, J.

text:
    The New York Dry Dock Company v. Timothy Stillman and others.
    In November, 1834, S., having previously acquired the title to certain lands at D. for the benefit of himself and others, conveyed one moiety thereof to N. On the same day an agreement was entered into between S. and N., by which they agreed each with the other to convey one undivided fourth part of said lands to the N Y. St E. Railroad Company, on condition that said company should, within seven years, construct a single track of their road to D. But that if said company should fail to perform that condition they would divide the said one-fourth part of the land between themselves. On the 8th of January, 1838, the several persons interested in the lands, including the railroad company, agreed on a plan for dividing the same amongst themselves; in pursuance of which all the parties interested conveyed, by deeds absolute on their face, their intérests in the land, including the railroad company's shares, to N., who was to convey to such parties the portions of the land to which they were respectively entitled, except that the share of the railroad company was to be conveyed to N and K. in trust to convey the same to the company on the performance of the condition aforesaid; but if the company should fail to perform that condition, then the trustees were to divide the lands, or their proceeds, amongst the persons interested therein. N. thereupon conveyed the portion of the lands intended for the railroad company to T. , who conveyed the same to N. and K. and the latter gave back to the railroad company a declaration of trust, setting forth the terms and conditions on which they held the land, and a like declaration setting forth the terms and conditions "on which they were to convey the same, or divide the proceeds amongst the parties interested therein. All these conveyances were executed and delivered oh the 1st and 2d of March, 1838. The railroad company failed to perform the condition upon which the land was to be conveyed to it. On the 26th of October, 1838, a judgment was docketed against S. in favor of G., on which the land forming the railroad company’s share was sold by the sheriff, and was redeemed by the plaintiffs as assignees of a junior judgment, who received a deed from the sheriff. In 1850 N. and K. sold the shares of the railroad company, and the proceeds of ten parts thereof, belonging to S. under the declaration, amounted to $11,226.83, which was the fund in controversy. The defendant claimed the same under a subsequent judgment against S. and a creditor’s bill founded thereon.

      Held, 1. That a valid trust was not created by all or any of the conveyances executed by the parties, in respect to the share of the lands intended for the railroad company, the trust attempted to be created not being for either of the purposes for which alone 'express trusts are permitted.

      2. That although the trust was void, there was a valid power in trust vested in ÍT. and K. by the conveyance of March 1,1838.
    3. That there being no legal interest in S. on the 26th of October, 1838, on which the judgment of G-. could be a lien, the title of the plaintiffs to relief must fail.
    4. That the arrangement between the parties interested in the land prior to March 1, 1838, created no trust. That their rights and liabilities rested in covenant, whereby each owner agreed to give a portion of his land to the railroad company, and that the title did not pass charged with any such obligation, except so far as either party had the right in equity to compel a specific performance.
    6. That S. did not, as the beneficiary of the power in trust, become, by virtue of section forty-seven of the statute of uses and trusts, vested with a legal estate in the land, upon the failure of the trust estate to vest in ÍT. and K.
    6. That it was not until the declaration of trust in behalf of the respective owners took effect that S. was clothed with any interest whatever in the lands, or their proceeds. That the interest he then acquired was an equitable title to enforce the execution of the power and the sale of the lands for an account and distribution of the proceeds.

      Appeal from a judgment of the Supreme Court.

    The principal question was whether Walter Smith, on the 26th clay of October, 1838, had any legal estate in certain lands, at Dunkirk set apart as and for the share of the New York and Erie Railroad Company, which was bound by the lien of a judgment recovered against him on that day by Isaac E. Guernsey, and which lands, being sold on an execution issued thereon, were redeemed by the. plaintiffs as assignees of a junior judgment recovered by Obadiah Holmes on the 6th day of May, 1839. The plaintiffs claimed that Smith had the legal estate in that share. The appellant Stillman claimed that he had no such estate, but, if any, at most only an equitable interest not subject to any lien of the judgment, and not capable of a sale on the execution, and that he acquired all the interest of Smith under an assignment made by him for the benefit of creditors, and a purchase from and a conveyance by a receiver in a creditor’s suit against Smith upon a judgment recovered on the first Monday of January, 1840, against Smith by Ckauncey Tucker, and also under an assignment to him by Smith on the 9th August, 1848. The dispute ivas about the proceeds of the lands; which, subsequent to the attempted redemption, were sold by trustees in whom a power in trust had been created, as held by the court below, by a conveyance to them, amounting to $11,226.83. Another question was Avhether the plaintiffs could purchase and hold these lands by Avay of redemption under the statute, under a judgment purchased by and assigned to them for a purpose not within their charter.
    Walter Smith, in the year 1834, had the legal title to a large tract of land at Dunkirk, which he held for and with the consent of several associates, in his own name, having taken the conveyances thereof with their approbation; so that there was no resulting trust in their favor, although they paid portions of the purchase money. About the same time, and by several conveyances, with the like assent of his associates, of whom Eussel H. Kevins Avas one, Smith conveyed one-half of the lands to Kevins by absolute deeds. At the time of each conveyance he and Kevins entered into an agreement with each other providing, among other things, that in case the Kew York and Erie Eailroad Company should within seven years construct and finish their railway by a single track from Owego to Dunkirk, they would convey to the company “as a free gratuity” one-fourth of the lands, or would sell such one-fourth and give the company the proceeds. The title to the lands remained in Smith and Kevins, Avith the consent of their associates, until January, 1838, when they met, and by resolution, .agreed upon a committee of tivo of their number “to prepare a division of lands and property at Dunkirk, so that one-fourth should be held subject to the conditions of the grant originally made to the railroad company, and the remaining three-fourths to be divided in half shares among the proprietors, in order that proper deeds may be duly executed.” This division was made by lot; the one-fourth for the railroad company, upon which the question in this case arises, being drawn by itself as one of the proprietor’s shares and constituting a separate parcel. Other distinct parcels were allotted to each proprietor. It was then agreed that “the whole title and estate in the lands, and in every part thereof, should be vested in Kevins in fee, and that he should thereupon execute and deliver convey-0 anees to the proprietors respectively of the shares drawn by him, upon the payment by them of the proportion of the claims and expenses to which such respective shares were liable.” As to the railroad company’s one-fourth share, it was agreed that it should be conveyed to and vested in Kevins and Charles C. King as trustees, subject to the performance of the conditions upon which their title was to become absolute, “ reserving thereupon the amount of the expenses for money, taxes, and other matters, properly chargeable to the one-fourth of the property.” In order to carry into effect the division and distribution thus made, on the 1st day of March, 1838, Smith & Kevins, and all the other proprietors, having or claiming any interest in the lands, including the railroad company, executed deeds of conveyance, absolute on their face, vesting all their interest in the lands, including the railroad company’s shares, in Kevins. These conveyances being voluntary, and the grantee of their own'selection, there could be no resulting trust in favor of the grantors; and the title became absolute in Kevins, including the railroad company’s share, and Smith had no legal estate in any part of the lands; Kevins then conveyed to the proprietors who had paid for •their shares the lots drawn by him. Then, in order to carry the agreement into effect, as to the railroad company’s share, on the same 1st' day of March, 1838, Kevins, with the consent of all the proprietors, by deed, conveyed that share (except one block omitted by mistake) to Elihu Townsend, his heirs and assigns forever, subject to the conditions, and reserving the amount of expenses, &c., and then Townsend and wife conveyed it to Kevins and King as joint tenants and not as tenants in common. Then Kevins and King, on the 1st and 2d days of March, 1838, executed two declarations of trust; one to the railroad company, and the other to the other proprietors; the first declaring the interest of the railroad company, as already stated; and the second, that of these proprietors in case the railroad company did not perform the condition by completing the single track from Owego to'Dunkirk within the seven years, and providing, in case that event did not occur (as it did not), that they would sell the railroad company’s share of the land and pay the net proceeds to the proprie • tors in certain proportions; that of Smith being ten shares. On the 4th January, 1840, Smith being insolvent, made an assignment of all his property to four trustees, in trust for creditors. On the 20th January, 1843, the land forming the railroad company’s share, was sold by the sheriff on the judgment of Guernsey against Smith, and was redeemed by the plaintiffs within fifteen months, as assignees of the judgment of Holmes against Smith, and they received a. sheriff’s deed. On the first Monday of January, 1840, Tucker recovered, his judgment against Smith, and upon a creditor’s bill based upon the return of an execution unsatisfied, on the 10th day of April, 1845, obtained a decree, setting aside Smith’s assignment for the benefit of creditors; the assignees and Smith were decreed to convey everything to a receiver who was declared vested with all his interests, and the receiver subsequently, and on the 25th day of November, 1853, sold and conveyed all Smith’s interest in the railroad company’s share, &c., at auction to. the appellant Stillman. Stillman had previously, and .on the 9th day of August, 1848, obtained a conveyance of all Smith’s interest in that share. It was expressly-found that none of the conveyances by Smith to Kevins were fraudulent as to, creditors, and no such fact was alleged in the complaint. In June, 1850, Kevins and King sold the shares of the railroad company, and the proceeds of ten parts of it belonging to Smith under the declaration of trust, equivalent to $11,226.83, which is the fund now in controversy. It was claimed that if Smith had a legal estate in the lands forming the railroad company’s share, it passed under the sheriff’s deed, and the plaintiffs, if authorized to redeem, would be entitled to the fund; if not, that it passed to the appellant Stillman, through the receiver, and he is entitled to it.
    . The réferee who heard the cause, and the general term of the supreme court, in the eighth district, decided that the trust to sell in Kevins and King was invalid as a trust, but good as a power in trust; that the legal estate iu the land remained in Smith, and the plaintiffs were entitled to the fund. Stillman excepted and appealed to this court.

      Wm. Curtis Noyes, for the appellant.
    I. The conveyances bjr Smith to Kevins, and by Kevins to Townsend, were made with the full assent and approbation of all the associates who had paid in part and were paying the purchase money; each was absolute on its face, unaccompanied by any valid trust or any declaration thereof, or any power in trust, and vested the entire title to the lands in fee simple in each successive grantee, leaving no legal or equitable estate in Smith.
    II. It was the intention and agreement of all the parties to vest the whole title and estate in the lands, first in Kevins, and then in Towiisend; and that neither of them individually should be charged with, or assume any trust in regard to them. In fact, no trust was declared, nor did any exist as to either of them, and hence the sixth section of the statute of frauds was directly applicable, inasmuch as it declares that “ Ko * * * trust or power over, or concerning lands, or in any manner relating thereto shall be created, grantéd, assigned, surrendered or declared unless by act or operation of law, or by a deed or conveyance in writing, subscribed by the party creating, assigning, surrendering or declaring the same.” (2 R. S. 134, § 6.) The seventh section then declares that the preceding section should, not be construed to “ prevent any trust from arising or being extinguished, by implication or operation of law, &c„” which was amended in 1860, by inserting the words “Nor to prevent any declaration of trust from being proved by any writing subscribed by the party declaring the same.” (Laws 1860, ch. 322.) It was held, under the original sixth section, that it was necessary that the trust should be declared by some deed or conveyance actually subscribed by the party charged with the trust (Wright v. Douglas, 3 Selden, 564); and the effect of the amendment would seem to• be to dispense with the “deed or conveyance,” and to recognize a trust as valid, although declared by a less formal instrument, if actually subscribed. In this case there was neither, and therefore no trust could exist either in Nevins or Townsend.
    III. Nor could any trust in either of them arise “ by act or operation of law;” inasmuch as all the parties who assented to the conveyances, and had paid as much of the consideration money as had been paid, and were to pay the balance, well knew and approved of the making of the conveyances to them precisely as they ivere made; and were, of course, chargeable with knowledge' of the law, which prevents any such trusts from arising. (1 R. S. 728, § 51; Norton v. Stone, 8 Paige, 222; Brewster v. Power, 10 id. 562.)
    IV. No trust whatever could result from such a transaction, except in favor of the creditors of these persons interested in and who paid for the lands, who assented to the conveyances (1 R. S. 728, § 52); but such a trust could not constitute any legal or equitable estate in their favor or in favor of their creditors, in the land, but simply a pure trust enforceable only in equity. Hence, it has been held that the land is not subject to any lien of a judgment in favor of a creditor against the party interested in the land when the conveyance was made, and that it is not subject to sale on an execution against him. (Garfield v. Hatmaker, 15 N. Y. 475; 2 R. S. 368, § 26.)
    V. The opinion of the court below seems to concede that the whole estate and title in the lands did vest in Townsend, because it assumes that Nevins &.King obtained valid power, in trust from them, to sell the lands for the benefit of Smith and his associates; and yet it seems to assume also that the same legal title passed from Smith to Townsend, so that the judgment became a lien Upon it. But these two propositions are contradictory; for, if the contemplated trust was invalid as such, and only sustainable as a power in trust, then the- legal estate remained in Townsend until divested by the execution of the power, as the legal title could not pass to Smith and his associates as beneficiaries, giving them an absolute title, and the trust remain valid as a power, in order to. divest that power by a sale for their own benefit. In other words, if the legal title passed to Smith and his associates as beneficiaries, the power became inoperative; if the power was valid, no legal title vested in Smith and his associates, but remained in Townsend.'
    VI. And this is the rule as declared by the revised statutes: if the trust be invalid as such, because not allowed by the fifty-fifth section, but is valid as a power in trust, no title vests in the trustee, but'it remains in the donor, or creator of the trust or power, until divested by the execution of the' power.
    1. Section forty-nine of the revised statutes, as to uses and trusts, only prohibits the vesting of any “ estate or interest” in the trustee; no estate or interest is given to the beneficiary. (1 E. S. 728, § 49.)
    2. Nor under the forty-seventh section would the legal estate vest in the beneficiaries, because they were not entitled to the “actual possession of the lands, or the receipt of the rents and profits.”

      3. Besides, the case of a trust invalid as such, but valid as a power in trust, is expressly provided for by sections fifty-eight and fifty-nine, the last of which declares that-the lands “shall remain in or descend to the persons otherwise entitled, subject to the execution of the trust as a power.”
    4. This is, moreover, the view taken of the sections in question by Comstock, J., of this court, who, in construing these provisions of the statute of uses and trusts, says:' “The result is*-that express trusts (using that term in the strict technical sense, as descriptive of legal titles, vested in a trustee for the fiduciary purposes declared in the instrument) were abridged, and confined to the enumerated classes. But the trust limitation, although not belonging to that class, if not otherwise unlawful, will be effectuated in a different mode. If of a passive character, the use is executed by vesting the title in the beneficiary. If active, it takes effect as a power • in trust, leaving the title in the donor or his heirs, subject to the power.” (Downing v. Marshall, 23 N. Y. 380.)
    5. Again, the trust, or power in trust in this case, could only have been created by the “ owner of the. estate, or one having authority to dispose of it, or of some interest therein;” and this was Townsend, to whom the lands were conveyed for this purpose (Selden v. Vermilyea, 3 Comst. 525), and it is plain that any estate or interest not embraced in the trust or power, and not .otherwise disposed of, remained in or reverted to the person who created such trust or power, who was Townsend and not Smith. (Sterricker v. Dickinson, 9 Barb. 519; 1 R. S. 729, § 62. Same rule as to express trusts; 4 Kent’s Com. 210; Briggs v. Davis, 21 N. Y. 574.)
    6. Again, to hold that any legal estate vested in Smith and his associates, would violate the plain intention of the parties and render null much of what they had done; for, having once had the title, they intentionally divested themselves of it and conveyed it to Townsend, else they would have conveyed directly to Kevins and King; and, besides, they intended to leave the legal title in Townsend until it became necessary to execute the power in favor of the railroad company, until it was ascertained whether they would perform the condition upon which their title was to become perfect. The intention of all the parties, so plainly shown, cannot thus be violated. (Rawson v. Lampman, 1 Seld. 456; Ring v. MoCoun, 6 id. 268.)
    VII. Where, therefore, Smith and his associates had no' legal estate in the lands subject to the lien of a judgment, or liable to be sold- on execution, yet they had an interest in the execution of the power upon the failure of the railroad company to perform the condition which they or their assignees could then compel in equity, and so could their creditors. (1 K. S. 734, §93; 735, § 143.)
    VIII. The appellant Stillman became entitled to Smith’s-share of the lands and their proceeds, under Smith's assignment to his assignees, and the receiver in the judgment creditor’s suit, and by his deed or assignment from the receiver; having purchased the interest at the receiver’s sale.
    ■ IX, The plaintiffs' charter only authorized them “ at any place or places in the city and county of New York, and also at any place or places in the county of Kings, to construct and use one or more dry and wet docks, and other artificial means or basins, of such dimensions and materials and in such form and manner as they may. deem expedient for the purpose of building, receiving and repairing ships or vessels; and shall be capable in law of holding such estate or property as may be necessary for the accommodation and furtherance of their said business and concern,”' (Laws 1825, ch. 114, § 1,) and did not warrant their redeeming; or—what is the same thing—purchasing and holding real estate elsewhere; and .hence, they had no right to redeem or take the deed for the lands, the proceeds of which are in controversy.

      1. No express power to redeem on judgments in their favor was given, as was done in the .charter of the Chautauque County Bank; and the general powers of corporations as conferred by the revised statutes, are not more extensive than the charter itself. ’ (1 B. S. 599, § 1, sub. 4; Chautauque County Bank v. Risley, 4 Denio, 480; S. C. 19 N. Y. R. 369.)
    2. The decision in favor of the right of the bank in the case cited, to take a sheriff’s deed, did not involve any determination as to the right to redeem; for there, the time for a second redemption had expired, and the bank purchased the sheriff’s certificate of sale, and took the deed as assignee of the purchaser, having themselves previously assigned two of the judgments in their favor, on which a redemption had been made by the assignee of the certificate, as their agent. In other words, they took the deed, in satisfaction of a debt, which the charter expressly authorized.
    3. To sustain the purchase in this case, it must be held that the plaintiffs may buy up judgments against any person, which will authorize a general dealing in them, and then may redeem and hold any quantity of real estate it may be able to obtain by such methods.
    X. If it be conceded that the conveyances to Kevins and King, with the covenants or declarations of trust executed by them to the grantors, and the Erie Railroad Company created an express trust, and that such trust, was not void under section 55 of the statute of trusts, so that the legal title and estate remained in the grantors still,
    1. The trust in Kevins and King was void as a trust, but valid as a power in trust (2 R. S. 729, § 58), not for the benefit of Smith alone, but for the joint as well as several benefit of each and all the grantees; the execution of which power could have been enforced in equity by either or all of them, or by the respective assignees of their beneficial interest. (Id. 734, § 96.)

      2. Ifc was a special power in trust, such as is provided for in subdivision 2 of section 95, embracing a class of persons (as to each share of the railroad company and the other grantees) and not a power in trust for each of them, severally or alone.
    3. Smith, prior to the appointment of the receiver, could have compelled the execution of the power—so could his assignee in insolvency, and so could the receiver after his appointment; and this, whether he had become vested with the legal estate of Smith in the land or not. (Id. 735, § 104.)
    4. The interest of Smith, as beneficiary, under the power in trust, was contingent upon the failure of the railroad company to perform the condition upon which they would become entitled, and was entirely distinct and different from any strict legal estate he had in the land; so that if he had conveyed such legal estate by deed, the grantee would have taken it, subject to the execution of the power. Until such execution, the grantee would have been entitled to possession, and to the rents and profits; but would not, as simply grantee, and in the absence of any covenants to that effect, have been entitled upon a sale under the power, to a share- of the proceeds of the land as beneficiary under it, as. against an assignee of Smith’s beneficial interest.
    5. So Smith could at any time have sold his contingent interest as beneficiary under the pow,er, retaining the legal estate in the land, and until the latter should be divested by a sale under the power, enjoying the rents and profits.
    6. If the sale on the execution and the sheriff’s deed, vested in the plaintiff the legal estate of Smith, which was only an estate subject to be divested by the execution of the power, they were only entitled to receive the rents and profits until the sale in execution of the power, and acquired no other estate or interest.
    7. It follows, therefore, that the equitable and beneficial interest of Smith in the power in trust, being a distinct and separate interest, did not-pass to the plaintiffs by the sheriff’s deed.
    8. As a necessary result, therefore, Stillman, as the purchaser at the receiver’s sale of Smith’s beneficial interest in the execution of the power, which was entirely distinct and different from any legal estate he may have had in the land, is entitled to the proceeds arising from the execution of the power.

      C. Tucker, for the respondent.
    I. The conveyance from Smith to Kevins, March 1,1838, the subsequent conveyance by Kevins to Elihu Townsend on the same day, and the conveyance by Townsend to Kevins & King, as joint tenants on the same day, and the agreement between King & Kevins, of the one part, and the Kew York and Erie Railroad Company, of the other part, on the same day, and the subsequent agreement on the next day, between Kevins & King, of the one part, and Smith and all the other parties interested, amounted to an express power in trust, leaving or vesting the legal title in Smith, subject only to the execution of the power. So far as regards this land, the matter is to be treated the same as though the conveyance by Smith to Kevins, for the purposes of partition, the conveyance on the same day by Kevins to Townsend, and from Townsend to Kevins and •King, as joint tenants, together with the declaration of the conditional rights of the Kew York and Erie Railroad Company, and the subsequent declaration of the manner in which Kevins and King should dispose of the property and distribute the proceeds, had all been embodied in one instrument. (Cow. & Hill’s Kotes, 1421, and cases there-cited; Cornell v. Todd, 2 Denio, 130; Smith v. Ransom, 21 Wend. 202.) These several instruments refer to each other, and when read together, amount briefly to this: The several tenants in common desire to make partition, and to accomplish that object, by mutual agreement convey the land to Kevins and King, they covenanting by the same agreement to sell the same and distribute the proceeds among the several tenants in common, in severalty, according to their respective interests. If the several instruments refer to each other, it is not necessary that they be dated the same day. (1 Comst. Rep. 186.) This creates an express power in trust in Kevins and King to sell these lands for the benefit of the respective owners, and distribute the proceeds to each, as therein expressed. By 1 R. S. 728, § 49, it is provided that in every disposition of lands in this manner, no estate or interest shall vest in the trustee; of course the legal title is in the persons for whose use or benefit the conveyance was made. (See § 47 of the same Statute, page 727.) By section fifty-eight of the same statute, page seven hundred and twenty-nine, it is provided “that when an express trust shall be created, for any purpose not enumerated in the preceding sections, no estate shall vest in the trustees, but the trust of directing or authorizing the performance of any act which may lawfully be performed under power, shall be valid as a power in trust.” (As to powers in trust, see 1 R. S. '732, § 77; Id. 734, § 94; Downing v. Marshall, 23 N. Y. R. 366, 377 to 380.) That section applies clearly to this case. These tenants in common had a right to empower Kevins and King to sell this land and distribute the proceeds, and until that sale took place, Smith, or his representative, was vested with a “ legal estate in the land, of the same quality and duration, and subject to the same conditions as his beneficial interest.” (§ 47; Rawson v. Lampman, 1 Seld. 456.) This latter case also proves the rule that all these instruments must be read together as one instrument. This being the case, the judgment of October 26, 1838, through which the respondents obtained title, became a valid lien upon all of Smith’s interest in the land. The subsequent judgment of May 6, 1839, under which the respondent redeemed, as judgment creditor, was also a valid lien. Smith’s general assignment was not made till January 4th, 1840. The title of the respondent became perfect by sheriff’s deed long before the sale by Kevins & King, under the power in trust. The respondents being the owners of the entire interest of Smith, at the time Kevins and King sold the property, (June, 1850,) under the power of sale, became entitled to the ten thirty-eighths of the proceeds, to recover which this action is brought, and the judgment of the court below to that effect, upon the report of the referee, was right.’ The power in trust being valid, the respondent’s title was subject to the execution of the power, by Kevins and King, and hence the respondent became entitled to the ten thirty-eighths of the proceeds of the sale, after the execution of the power. (1 R. S. 729, §59. See also page 735, § 108.)
    H. This is not a trust arising by. implication of law under sections 50, 51, 52 and 53 of page 728 of the statute of uses and trusts. The fact that the trust and its object is clearly expressed by taking all the instruments by -which it is created, as one entire instrument, negatives the idea of an implied or resulting trust. If it were true, as claimed by the appellant, that an implied trust was created, it could only be a trust in favor of the respondent as creditor, under section 52 on page 728. The debt on which the judgment of October 26, 1838, was recovered, existed as early as the 20th of April, 1835. (See also 2 R. S. 125, § 1, 6 Hill, 438, 440.)
   Mullin, J.

In the autumn of 1834, Walter Smith acquired title to certain lands at Dunkirk, in Chautauqua county, for the benefit of himself and others, and in Kovember of that year he conveyed one moiety thereof to Russel H. ’ Kevins. On the same day said last mentioned deed was executed and delivered, an agreement was entered into between .Smith and Kevins, wherein and whereby they agreed, each with the other,' to convey one undivided fourth part of said lands to the New York and Erie Railroad Company, upon condition that said company should, within seven years from the 8th day of September, 1834, construct a single track of their road to Dunkirk. But if said company should fail to perform said condition, they would divide said lands amongst themselves. Subsequently, and prior to the 8th day of January, 1838, said Smith conveyed other lands to said Nevins, under like agreements as to the share of said railroad company. Nevins held said lands for. the benefit of divers persons who had furnished the moneys to him to pay for the same. ‘

On the 8th day of January, 1838, the several persons interested in said lands held a meeting in the city of New York, and agreed on a plan for dividing said lands amongst all those entitled to portions thereof. In pursuance of the arrangement then made, all the parties interested conveyed their interests in said land to Nevins, and Nevins was to convey to said persons the portions of- the said lands to which they were entitled, except that the share of the railroad company was to be conveyed to said Nevins and Charles C. King, in trust to convey the lands set apart to said company on performance by it of the condition aforesaid as to the construction of its road to Dunkirk. In the mean time said trustees were authorized to sell and convey said lands and to deliver to said company the proceeds, after deducting the charges and expenses incident to said sale. But if said company should fail to perform said condition, then said trustees were to divide said lands, or their proceeds, amongst the several persons interested therein, in certain proportions.

To carry into effect this arrangement and division, Nevins conveyed the portion of the lands intended for the railroad company to Elihu Townsend, and Townsend conveyed to Nevins and King, the persons selected as trustees, and the trustees gave back to- the railroad company a declaration of trust, setting forth the terms and conditions on which they held said land, and. a like declaration setting forth the terms and conditions on which they were to convey said lands, or divide the proceeds, amongst the parties interested therein. All the conveyances aforesaid were executed and delivered on the 1st of March, 1838, except the declaration of trust in favor of Smith and the others, which is dated the 2d of March, 1838,

It is not found, nor does it appear, that in the deed from Smith to Kevins, or in that from Kevins to Townsend, there is any reference to the arrangement or trust in favor of the railroad company, or of the proprietors, in the event of the company failing to perform the .condition.

The Guernsey judgment, under which the interest of Smith was sold, was docketed on .the 26th of October, 1838; and the Holmes judgment, under which the plaintiffs redeemed, was docketed on the 6th of May, 1839. • Unless the Guernsey judgment became a lien on the interest of Smith in the portion of the lands set apart to the railroad company, the sheriff’s sale and the redemption under the Holmes judgment were void, and the plaintiffs-are not entitled to recover, whether Stillman is or is not entitled to hold Smith’s shares of the railroad lands.

It is not claimed by either side that a valid trust was created by all or any of the conveyances executed by the parties, in relation to the share of the lands intended for the railroad. The trust was undoubtedly void,- and the only questions presented for decision in the case are whether the fee in said land remained in Smith, passed to the lailroad company or to the trustees, or whether by reason of there being a valid power in trust in Kevins and King, the real interest in the lands was not an equitable interest merely, which passed through the receiver in the Tucker suit to Stillman, leaving the fee nominally only in Smith, which if sold, covered nothing but a mere nominal interest to the purchaser at the sheriff’s sale.

Although the trust was void, there was a valid power in trust vested in Kevins & King by the conveyances of the 1st of March, 1838. (3 R. S. 5th ed. 21, § 77.) That section is in these words: “When an express trust shall

be created for any purpose not enumerated in the preceding sections, no estate shall vest in the trustees, but the trust, if directing or authorizing the performance of any act which may be lawfully performed under a power, shall be valid as a power in trust, subject to the provisions in relation to such powers contained in the third article of this title.”

By the seventy-eighth section it is declared that in every • case where the trust shall be valid as a power, the lands to which the trust relates, shall remain in or descend to the persons, otherwise entitled, subject to the execution of the trust as a power.

Considering the conveyances from Smith to his immediate grantees, and from them to their grantees, and so. on from one party to another until the title is finally vested in Kevins & King, as separate and distinct transactions, the only parties to the trust would be Townsend and the trustees. In that case, the trust being void, the title under section seventy-seven above cited would be in Townsend. The several parties through whom the title passed, would in that view of the case have conveyed away their respective estates in the land, and there would have been no legal interest in Smith on the 26th of October, 1838, on which the judgment of Guernsey could be a lien, and the title of the plaintiffs to relief must fail.

The arrangement between the parties interested in the land prior to the 1st of March, 1838, created no trust. Their rights and liabilities rested in covenant, whereby each owner agreed to give a portion of his land to the railroad company. The title did not pass charged with any such obligation, except so far as either party had the right in equity to compel a specific performance.

But it is said that the several conveyances of the 1st of March, 1838, are to be treated as parts of one transaction, and hence that Smith who held the title in fee on that day to a part of the premises in question, is to be deemed and taken to be the person who conveyed in trust to Nevins & King, and it was in him and not in the intermediate parties in whom the title remained; the trust being valid as a power in trust only.

Whatever consequence may follow from treating the several instruments executed on the 1st pf March, 1838, as cue instrument, the fact still remains that Smith on that day conveyed the fee to Nevins in that part of the lands that was intended for the railroad company, and Nevins by a. similar conveyance conveyed the fee to Townsend, Neither took in trust, as in the conveyance to neither was a trust expressed, and no declaration of trust was ever executed by either.

The plaintiff does not ask that a part of the proceeds of the railroad land be awarded to him, because in equity his judgments are liens on the lands or their proceeds; but its claim to relief rests on the legal lien of the Guernsey judgment, and a sale in pursuance thereof. Unless, therefore, there was a legal lien, the • plaintiff has no claim to relief at law, as, title was out of Smith by a deed in fee, and the fee passed from him to Nevins; and as between them, Smith had no remedy at law or in equity. And it was not until the declaration of trust in behalf of the respective owners took effect that Smith was clothed with any interest whatever in the lands or their proceeds. The interest he then acquired, was an equitable title to enforce-the execution of the power and the sale of the lands for an account'and distribution of the proceeds.

The judgment of the court below should be reversed, and a new trial ordered, costs to abide the event.

Selden, J.

The right of the plaintiff to maintain this judgment, depends primarily upon the question whether the judgment recovered by Guernsey against Smith, in October, 1838, was a lien upon the lands from which the fund in controversy was derived.

It is clear that the conveyance of the premises in question on the 1st of March, 1838, by Townsend and wife to Kevins & King, taken in connection with the agreements executed by the latter to Smith, Townsend and others, and to the Kew York and Erie Railroad Company, although invalid as a trust, it not having been made for either of the purposes for which alone express trusts aré permitted (see Statute of Uses and Trusts, 45, 55), was nevertheless valid as a power in trust, under section 58 of the same statute. This is conceded by the counsel on both sides. Under this conveyance, therefore, Smith in common with his associates,- had a contingent equitable right to his ratable proportion of the proceeds of the lands. It is not claimed that this equity could be seized and sold upon execution. The mode of reaching such an interest is prescribed by the statute. (1 R. S. p. 734, § 93; p. 735, § 103.)

But the counsel for the respondent contends that, aside from this mere, equity, Smith had, subsequently to the" creation of the power, a legal title to, or interest in the lands, upon which the judgment in favor of Guernsey might attach as a lien; and in support of this position he cites and relies upon sections 47 and 49 of the statute of uses and trusts. (1 R. S. pp. 727, 728.) He also cites section 58 of the same statute, and insists, no doubt justly, that this case falls directly within the latter section. His argument is, that as, under this section, no estate could vest in Kevins and King, the trust to.them being valid simply as a power, Smith, as the beneficiary of the power, became, by virtue of section 47 of the statute, vested with a “ legal estate in the land.” But this is an entire misapprehension of the statute. A very clear exposition of these provisions of the statute concerning trusts, is given by Comstock, J., in the case of Downing v. Marshall (23 N. Y. R. 366, 379). Section forty-seven refers exclusively to a class of passive trusts where the immediate possession and whole beneficial use of the land is given directly to the cestui que trust, the trustee being made by the deed the depositary of a mere naked title, with no active duties to perform in respect to the property. In such cases this section, in connection with section forty-nine, vests the whole estate in the beneficiary. The deed takes effect upon the title, but not according to its terms.

Section fifty-eight, on the other hand, applies to cases where active duties are imposed upon the trustee, and where no rights are given to the beneficiary except through the execution of the trust. In cases of this class, if the trust is not one which is authorized by section fifty-five, no estate whatever passes under the deed, either to the trustee or the cestui que trust, but the title remains in the grantor, the grantee becoming, if the duties imposed upon him are such as can be legally and properly executed, the mere trustee of a power. A case might perhaps be supposed, which would belong partly to one and partly to the other of these classes; as where, by the same instrument, the immediate possession and use is given to the beneficiary, while certain powers in relation to the property are at the same time conferred upon the trustee; but this is not such a case. Here no possession or pernancy of the profits is given to the beneficiaries, or either of them, and consequently they can take no title whatever under section forty-seven. The case falls entirely within section fifty-eight of the statute, and by virtue of the next section, viz: section fifty-nine, the estate in all such cases remains in “the persons otherwise entitled, subject to the execution of the trust as a power.”

This language excludes the idea that any title passes to any one by virtue of the deed. The title does not pass; it “ remains.’' The persons “ otherwise entitled,” must be those in whom • the title would rest independently of the deed, being of course the grantors themselves. It is clear, therefore, that Smith had no title to the lands in question, under section forty-seven, as the beneficiary of the trust attempted to be created.

There is, however, another view of the case which, although not very distinctly presented, is perhaps hinted at in the brief of the respondent’s counsel. It claims that the several deeds from Smith to Kevins, from Kevins to Townsend, from Townsend to Kevins and King, and the counter agreements executed by the latter, being all parts of one and the same transaction, are to be read and construed together as one instrument. Assuming this to be so (as perhaps it is, so far as the papers executed on or about the 1st of March, 1838, are concerned), it might be urged with much apparent force that as the conveyances from Smith to Kevins, and Kevins to • Townsend, were merely preliminary to that from Townsend to Kevins and King, and designed solely as a means of conveying from Smith to Kevins and King the powers which were- ultimately vested in them, no other or greater effect ought to be given to the two previous deeds than to the final deed from Townsend to Kevins and King. That- deed conveyed no title, but simply a power. Why, then, it might be asked, should the prior deeds which, so far as the trust to Kevins and King was concerned, were merely intended to give effect to that deed, be held to have done more?

It would indeed seem that if the whole object of this series of deeds was to create the power vested in Kevins and King, then no title could have passed to any one under them, or either of them; in other words, that the effect would have been the same as if the conveyance had been directly from Smith to Kevins and King, in which case the title to such undivided portion of the lands as was conveyed by Smith on the 1st of March, 1838, would, under section fifty-nine of the statute, have remained in Smith; and in that case, if it could be fairly maintained that as to the ten thirty-eighth parts belonging to Smith, the fund in controversy should be held to have been derived from that portion of the lands, the .plaintiffs would be entitled to the money they have received. There is, however, an insurmountable objection to this conclusion. The reasoning by which it is reached assumes that the sole object of the deed from Smith to Kevins on the 1st of March, 1838, was to create the ¡lower in Kevins and King, in which the series of conveyances resulted. But such was not the fact. That conveyance was given in part execution of the plan adopted to carry into effect the division, and distribution of the lands among all the joint proprietors which had been agreed upon. It was thought proper for that purpose to vest the whole title and interest, both legal and equitable, in Kevins, and the deed from Smith was essential to that object’. Unless that deed is held to have taken effect according to its terms,'the whole scheme of distribution was a nullity. There was nothing whatever to prevent its taking effect as designed, and hence Smith, by its execution, was completely divested of all legal title to the lands, and as it has been shown that he could derive no such title under the trust, it follows that the judgment of the supreme court was erroneous, and should be reversed;

Hogeboom, J., was absent. All the other judges concurring, judgment affirmed.


source: Caselaw Access Project

author: Mullin, J. Wright, J.

license: Public Domain

text:
    John H. Bullard v. B. F. Raynor and another.
    After an account containing, among other items, a charge of the sum paid to take up a note made by the debtor, has been rendered to the debtor, and its correctness conceded by him, and the account has become a stated account, neither the debtor nor his assignee can assail the note for usury, when the same is brought forward as a set-off by the party rendering the account.
    If one permits an account into which a usurious item enters, to become stated, and then assigns to a third person his demands against the party rendering the account, the assignee will take the claim subject to the right of the party rendering the account to rest upon the sanie as a stated account.
    Usury is a defence personal to the party known as the borrower. He can not transfer to another the right he has to allege and prove a demand to he usurious.
    The maker of a promissory note, tainted with usury, may by bill in equity, assert the usury .and defeat the note as a set-off, notwithstanding. an account between him and the holders thereof, embracing such note, has been rendered, and has become a stated account. But while it stands a stated account as between him and the holders of the note, the assignee of the maker is concluded by it, and can not assail the note for usury when it is claimed as a set-off.
    The plaintiff by his complaint, claimed to recover of the defendants as partners, the sum of $114.38 for goods sold and delivered to them. Also, $3,173.04 for money loaned to and debts assumed by E. F. Bullard for the defendants, for $1,000 of which the defendants gave their note at six months from 30th September, 1854, payable to the estate of Jacob Snyder, which note was afterwards transferred to said E. F. Bullard. It was alleged there was still due on said note $104.18. E. F. Bullard assigned all his claims against defendants to the plaintiff.
    The defendant Raynor alone appeared, and by his answer alleged that the $114.38- for goods sold, had been fully paid.
    The note for $1,000 was borrowed of the defendants, and was wholly without consideration.. That the money loaned by E. F. Bullard had been fully paid, and that there was a balance due the defendants which they insisted upon by way of counter-claim.
    On the trial the plaintiff proved a letter signed by defendants, and addressed to E. F. Bullard, in which they admitted an indebtedness to the plaintiff for potatoes and buckwheat in the sum of $114.38, and requested said E. F. B. to' settle with the plaintiff for the same. This letter was dated 23d December, 1854. The plaintiff rested. On the part of the defense, it was shown by E. F. B. that he did assume the said debt of $114.38 to his brother the plaintiff, and by the defendant Raynor, that said E. F. B. was credited in account on the defendants’ books for this sum, and that the account containing such credit had been rendered to E. F. B., and its correctness conceded. It was also shown that the plaintiff when inquired of by the defendants whether E. F. B. had assumed said debt, admitted he had, and subsequently said E. F. B. had applied to the plaintiff for leave to sue the defendants in his name for the said $114.38. The only item of dealing between the parties really in controversy in this suit, was one of $75, the facts in regard to which were briefly as follows: There is charged to E. F. B. on the defendants’ books under date of 20th July, 1854, the sum of $75, as “jjaid your note held by Harrington after shaving it. It will be due the 13th inst.” The account containing this item, with others of dates prior and subsequent, consisting of both debts and credits, ivas rendered to E. F. B. as above stated, and its correctness conceded by him. E. F. B. testified that the note thus charged to him, was a note Avhich he loaned to Harrington for his (H.’s) accommodation, and that he (H.) "was to pay and take it up. Raynor testified that Harrington brought said note to the defendants’ store, and wanted the money on it, and he (R.) proposed to let him have $70 for the note, and Harrington accepted the offer, and R. paid him the $70 and took the note.

      The court charged the jury among other things, that if the $75 note was usurious, yet if the maker had stated the account including it, and thereby admitted the correctness of the charge, the plaintiff claiming as assignee of the-maker, could not set up the defense of usury; to which the plaintiff’s counsel excepted.
    The appellant’s counsel in his points, insisted on the alleged error in this branch of the charge only to reverse the judgment of the court below.
    . The jury rendered a verdict for defendants. On which judgment was entered, which was affirmed at a general term in the 4th district.

      A. Pond, for the appellant.
    J. R. McIntosh, for the respondents.
   Mullin, J.

E. E. Bullard assigned to the plaintiff all claims and demands which he had against the defendants. This assignment unquestionably carried all moneys due said E. F. Bullard from the defendants, whether for loans or advances made to the defendants, or for debts paid by him for them. The plaintiff took subject to all defenses existing against his assignor in favor of the defendants. The amount which the plaintiff was entitled to recover, was the balance due to E. F. B. after allowing all payments made by the defendants. Amongst other deductions which the defendants claimed should be made from the amount of moneys apparently due to E. F. B., was the note of $75 loaned by him to Harrington. This note, if valid, was a legal set-off against E. F. B. and against the plaintiff, unless the.latter can assail it for usury.

Two reasons are assigned why the plaintiff can not assail a claim against his assignor for usury. 1st. Because he is not a borrower; and 2d. Because the assignor had stated the account between himself and the defendants, in which he was charged with the money paid for the note in question, thereby admitting the correctness of the charge. The plaintiff can not thereafter set up usury to defeat the claim.

I can not agree to the first proposition. I think the assignee of the demand in suit can resist it for usury, unless his assignor has by his acts in reference thereto, precluded him. No rule of law is better settled than that the purchaser of property charged with a usurious lien or claim, can allege the usury and defeat the claim, when the purchaser sold discharged of such usurious lien. (Post v. Dart, 8 Paige, 639; Shufelt v. Shufelt, 9 id. 137; Ord on Usury, 131; Brooks v. Avery, 4 Coms. 225.)

In Shufelt v. Shufelt, the chancellor gives the reason of the rule. Ho says (page 145): “In the ordinary case of the giving of an usurious mortgage by the owner of the mortgaged premises, the statute having declared the usurious security void, the owner of the premises, of course has the right to sell his property or to mortgage the same, as though such void mortgage had never existed. And the purchaser in such a case necessarily acquires all the rights of his vendor to question the validity of the usurious' security. For if the original mortgagor had not that right, the premises would to a certain extent, be rendered inalienable in his hands, notwithstanding the security was absolutely void as to him.”

The principle must embrace personal property as well as real, and the right of the vendee to avail himself of the usury in the dealings between his vendor and a third person, touching the property, must reach every case where such third person attempts to appropriate the property purchased, by virtue of any usurious contract with the vendor.

The case before us affords a very apt illustration of the necessity of extending the principle to this class of cases. Assuming that the defendants were indebted to E. F. B. $100 or any other sum, and that the defendants held the note in controversy void for usury, if the $100 were not the subject,of sale and assignment, discharged from any usurious lien or agreement in reference thereto, the debt would be practically inalienable. The law gives to a debtor the right to retain in his hands money due from him to another, sufficient to satisfy any demand he may have against his creditor, which is available as a set-off. This is to all intents and purposes a lien on the fund, and if the set-off is usurious, the person entitled to the fund must be entitled to avail himself of the usury.

In such a case it is competent' for the vendor or assignor to waive the usury and sell the claim, subject to any lien which may exist against it, or he may elect to consider the usurious lien void, and sell the claim discharged of it, and in such case the vendee or assignee will have the right to protect the whole interest he has purchased against the usurious lien.

Although the learned judge, who delivered the opinion of the court below, declares it to be his opinion that the plaintiff could not resist the note in question on the ground of usury, the decision of the court is not put on that ground, but upon the second ground above stated, viz: that if E. F. B. had stated the account including the usurious note, and thereby admitted the correctness of the charge, the plaintiff could not resist it on the ground of usury. -

We must assume that the jury found the note to be usurious; that the account was stated including the note, and that the plaintiff thereby admitted its correctness.

The charge leaves it uncertain whether the plaintiff was prevented from asserting the usury by reason of an estoppel resulting from the acts of his assignor, or whether the" note must be held to have been paid before the assignment to the plaintiff. As the same judge delivered the opinion in the general term who tried the cause at the circuit, we must assume that his charge at the circuit was put on the latter ground, as that is the one put forth in the opinion at the general term. So understanding the charge, I think it was right. The defendants kept the account on their books of'the moneys received from and paid to E. F. Bullard. It was their right to charge him with the note given by him to Harrington, subject to its being repudiated when the entry came to his knowledge. A copy of the account embracing this item was presented to him, and this charge was never disputed by him. After the expiration of a reasonable time from the rendition of this account without objection, it became stated. The effect of stating an account is to bind the party by it as correct in its items and in the balance struck, and thereafter the burthen is on him to show it to be increásed by reason of fraud or mistake. (Lockwood v. Thorne, 1 Kern. 170.)

If E. F. Bullard was concluded by the rendition of the account, the result would be that he having assented to the appropriation of the moneys in the defendants’ hands to the payment of the note, he is not permitted to recall it;

• and the demand passed to the plaintiff with .this item adjusted and satisfied between the assignor and the defendants.

In Barrow v. Rhinelander (1 Johns. Ch. R. 550; Same case in error, 17 Johns. R. 538), Chancellor Kent held that stating an account did not preclude a party who had been the victim of a usurer from obtaining relief in chancery against the usury. The same doctrine has been asserted in other cases. (2 Johns. Ch. R. 19Í; 1 Yes. Sr. 317; Bullock v. Boyd, Hoff 294; Philips v. Belden, 2 Edw. 1.) I do not intend to disturb these cases. If .the usury laws are to be enforced so as to prevent usury, they must not leave a door open through which the usurer can insert his finger; if an opening is left he will soon have his whole body through. If stating an account will prevent investigation into a usurious transaction, all dealings into which usury enters will soon take the form of stated accounts, and the law be made a shield, instead of a sword, against violators of this wholesome and necessary law.

If E. F. B. were the party plaintiff, I should hold hint entitled to repudiate this settled account, and to resist the set-off of the note. Buti so far from manifesting any desire to take advantage of the usury, he has permitted the account into which this usurious item enters to become stated, and then assigns to the plaintiff. . The latter must take the claim, subject to the rights of the defendants, to rest upon the account as stated.

Usury is a defense personal to the party known as the borrower. He cannot transfer to another the right he has to allege and prove a demand to be usurious.

The only way a third person can avail himself of usury is by" purchasing property charged with a lien or incumbrance which is usurious, and then only in protection of his title. On the facts in this case E. F. B. might, -by bill in equity, have asserted the usury in this note, and defeated it as a set-off, notwithstanding the account" between him and the defendants had become a stated account; but while it stood as a stated account as between him and the defendants, the assignee was concluded by it, and could not assail it successfully so as to let in the defense of usury.

• The appellant has not alluded, in his points, to the charge of the court in regard to the mistake of $100 in the defendants' account, which they were permitted on the trial to rectify as against the plaintiff; and hence I presume he has become satisfied that the ruling was right. If the point was raised, it would be unavailing, as there can be no doubt but "that such mistake could be corrected between the original parties, and the • plaintiff could recover no more than his assignor was legally entitled to recover from the defendants.

The judgment should be affirmed, with costs.

Wright, J.

The questions arise upon the charge of the court; and, to have a right understanding of them, it will be necessary to see what the case was. The plaintiff claimed, as assignee of E. F. Bullard, to recover of the defendants, as partners, the sum of $104.18, as the balance of accounts between E. F. Bullard and the defendants. The substance of the arrangement between the defendants and Bullard, out of which the account arose, was, that he should, from time to time, let the defendants have money, and they were to receive and pay his drafts and orders when presented. In the fall of 1856, E. F. Bullard stated the account between the parties, making the sum of $109.11 as the balance due to him. The account,-as thus made up, .was presented to the defendants, and payment of the balance demanded; but not being paid, it was assigned by E. F. Bullard in March, 1857, to the plaintiff. The complaint admitted that the defendants had from time to time made payments to E. F. Bullard, leaving the sum of $104.18' due him on the 1st December, 1856, for which amount judgment was demanded. In the account as stated by the plaintiff’s assignor, among other items therein allowed to the defendants as payments, was a $75 note made by Bullard, payable to the order of one Harrington, which was paid by the defendants. It appears in evidence that about a week after the date of the note, which had ninety days to run, Harrington came to the defendants’ store, and wanted to get the money on it. The defendants’ objected to paying it then, saying -that money was worth more than the interest to them; but Harrington finally agreed to take $70 for it, and they paid him that amount. Through mistake in the account stated by E. F. Bullard, no credit was given to the defendants for $100 paid to S. G. Perkins, on the 26th September, 1854, on Bullard’s order. Allowing the Harrington note as a payment, and also the $100 paid to Perkins and omitted to be credited, it would leave nothing due to the plaintiff. The court charged the jury, among other things, that if the $75 note was usurious, yet if the maker had stated the account including it, and thereby admitted the correctness of the; charge, the plaintiff, claiming as assignee of the maker, cannot set up the defense of usury. To this proposition there was an exception. The court further charged, that if the jury were satisfied from the evidence that the $100 claimed to have been paid by the defendants to Perkins, September 26,1854, was actually paid under authority from E. F. Bullard, and was omitted in the account through mistake, they would have the right to allow it to the defendants as a credit in the account between the defendants and E. F. Bullard;. to which the plaintiff excepted, and requested the court to charge that, under the facts of this case, the defendants were estopped from setting up said $100 mistake against the plaintiff in this action, which was refused.

None of the exceptions are now insisted on, except the first;- and that, I think, is not tenable. If the note for $75, made by E. F. Bullard and payable to Harrington at the defendants' store, was- tainted with usury, the plaintiff is not in a condition to set up the usury in avoidance of so much of the account stated by his assignor. Whether there was usury in the transaction depended upon Bullard’s testimony, who stated that the money was loaned by him to Harrington, for the accommodation of the latter. If so, the discounting of it by the defendants, for $70, was usurious. On the contrary, if it was not an accommodation note, but belonged to the payee, and was given for a debt of the maker, there was no usury in its inception, and the defendants were at liberty to purchase it from Harrington for $70, or any other sum that they agreed upon. Conceding, however, that it was a usurious loan, and might have been avoided by E. F. Bullard, the borrower, the plaintiff, under the circumstances of this case, cannot interpose the statute against usury, in his behalf. Bullard, in December, 1856, stated an acount with the defendants, in which was included the $75 note in question, and admitted it as an offset against a corresponding amount in his favor, and cancelled the one in payment of the other. The balanee claimed as due to him was $109.11, over and above all the items he had allowed as payments; and this account as stated by him, Bullard himself testified, was the one he assigned to the plaintiff. ■ The plaintiff brought his action to recover this balance, claimed to be due from the defendants to his assignor upon such accounting. On the trial, he attempts to impeach, on the ground of usury, one of the items on the credit side of the account which his assignor had allowed as a payment, and struck the balance accordingly. This he could not do. If there was any usury in the case, his assignor had waived it, and when an assignor waives the defense of usury the assignee cannot set it up. Here the assignor did not merely waive the defense of usury, and sell the account subject tó the items allowed and admitted'by him to be proper offsetting items; but the purchaser took it subject to such items, and thereby bound himself to allow and pay them. Again: in the complaint the plaintiff admitted the payments allowed by his assignor, and sought only to recover the excess or balance claimed by such assignor as being due at the time of the assignment. The important issue raised by the pleadings was the amount paid to E. F. Bullard, and, according to the plaintiff’s own showing, one of the payments made to and allowed by Bullard was the $75 note, sought to be avoided on the ground of usury. He cannot be permitted to deny the payments averred in his complaint (which includes all allowed by his assignor), nor question the validity of them.

There is another conclusive ground against the plaintiff. No one but a party to a usurious loan, or his heirs, devisees or personal representatives, can avoid a usurious contract on account of usury. (Post v. The Bank of Utica, 7 Hill, 391; Rexford v. Widger, 2 Comst. 131.) Usury cannot be set up by a stranger to the original transaction. A purchaser from the borrower is not included in the term borrower, and cannot avoid a note or mortgage for usury. (Schermerhorn v. Talman, 4 Kernan, 127.) Nor is a right of action to avoid notes or contracts, on account of usury, assignable.

The judgment should be affirmed.

All the judges concurring, judgment' affirmed.


author: Ingraham, J.

text:
    Charles E. Haley v. Justus E. Earle.
    The general rule in actions for damages arising from negligence, is that the defendant’s negligence makes him liable, unless the plaintiff has done ■something to contribute to the accident. If he has, then he can not recover.
    Although the plaintiff has been guilty of negligence, yet, if his negligence had nothing to do with the occurrence, the defendant lias no right to seek 1 on that account to excuse the negligence on his part which caused the injury to the plaintiff.
    Hence, in an action for damages caused by a collision of boats, it is not erroneous for the judge to charge that, although the plaintiff’s boat was without a helmsman, that was a matter of no consequence, unless the absence ' of a helmsman contributed to the injury.
    The plaintiff was the owner of a barge, which was towed by the, steamer Niagara, on the Hudson river. The defendant was running a steamboat called the New Jersey, which boat came in collision with the barge, in consequence of which the barge was injured and sunk.- At the time of the collision there was no helmsman on the barge. There was evidence upon the question whether the accident was owing to the want of a helmsman. The court charged the jury that if both were careless, there must be a verdict for the defendant. “That the plaintiff’s barge was without a helmsman. This was a matter of no consequence, wnless the absence of a helmsman contributed to the injury. If it did, the plaintiff could not recover.” The jury found for the plaintiff. The general term affirmed the judgment.
    --, for the appellant.

      Ira Harris, for the respondent.
   Ingraham, J.

The only question in this case is whether the judge erred in submitting to the jury the question whether the want of a helmsman on board of the barge contributed to the accident, and if not, that that fact did not prevent the plaintiff’s recovery.

The general rule in these actions is that the defendant’s negligence makes him liable unless the plaintiff has done something to contribute to the accident. If so, then he can not recover. To this extent the judge at the circuit charged the jury. Was he in error in adding the instruction that if it did not contribute to the injury .it was a matter of no consequence?

There is a class of cases in which the omission to do some necessary act, or the doing of some act which is forbidden, prevents a recovery, although it does not produce the act complained of. Such is the case of an insurance, where the breach of any representations made to the insured, or the omission to do some act required by the policy, affects the right of recovery, although the damage did not arise from such cause. But I do not understand that rule as applying to cases of torts. If the plaintiff, by his acts, contributes to the injury, he can not recover, irrespective of the defendant’s negligence. But if he does nothing, or omits to do any thing to cause the accident, he is not in fault and may recover, although guilty of negligence which might, under other circumstances, have led to the injury.

In Dygert v. Bradley (8 Wend. 469), a new trial was granted- because the judge charged the jury that the plaintiff was' bound to select as a station on the canal at which to stop his boat, a safe place which would admit of the passage of boats.

In Carroll v. The New York and New Haven Railroad Company (1 Duer, 571), this question was examined at length, and the rule laid down “ that one party can not recover from another damages for an injury, when his own negligence or wrong contributed to bring about the occurrence, and that if his own negligence or wrong did not contribute to produce the act which caused the injury, the party doing the act is liable.”

There can be no reason for setting aside this judgment for such a cause. If the negligence of the plaintiff had nothing to do with the collision, the defendant has no right to seek on that account to excuse his negligence which caused the injury to the plaintiff.

The judgment should be affirmed.

All the judges concurring, judgment affirmed.


text:
    Lawrence Brainerd and Nelson C. Wood, assignees, &c. v. George E. Dunning and J. S. Smith.
    A provision, in an assignment of property in trust for the benefit of creditors, directing the payment of debts and liabilities due, or to grow due, if intended to secure debts or claims not then in existence, but which are afterwards to be created, either by the assignor or the assignees, would be void.
    But a clause directing the payment of debts, bonds, notes, bills and sums of money due and to grow due, is not subject to such a construction. It applies only to claims then in existence. Whether due or to grow due, is immaterial.
    A clause providing for the payment of all debts, ffcc. due to the assignees from the assignor, “ or for which he is liable, or may become liable to them, including notes, bills and drafts indorsed and guarantied by them,” &c., refers to such notes, &c., on which the assignees are indorsers or guarantors, and on which the liability has not yet been fixed by protest— claims which they may pay, or become liable to pay, by reason of indorsements or other responsibilities which they have already made or incurred . for the assignor.
    A direction for the payment of all debts, demands and sums of money for or upon which, or on account of which the' assignees, or either of them, have become or may be rendered liable, for or on account of the assignor, applies only to past debts, and not to new ones to be created, and vests no discretion in the assignees. It only secures debts which have been assumed, or on which the assignees may be rendered liable.
    If the findings of a referee are imperfect, it is the duty of the party who is not satisfied with them to apply for more specific findings, instead of seeking to avail himself of such defects. In such cases the finding of facts necessary to sustain the judgment will be presumed. D. and S., the plaintiffs in an attachment suit, issued an execution therein,
    . without any directions to the sheriff not to levy on any particular property ; and were afterwards informed that the sheriff had levied on certain lumber claimed by B. and W. as assignees of the judgment debtor, and that a suit was threatened by B. and W. The attorney of D. and S. .refused to give the sheriff directions not to sell the lumber. D. and S. knew the lumber was, advertised for sale under the execution, and they afterwards received the proceeds of the sale, in payment of their execution.

      Held, that these facts would have been on a trial before a jury, sufficient to submit to them the question" whether D. and S. had not by their acts, ratified the taking of the goods by the sheriff, and the subsequent sale of them to pay their claim.

      Held, also that D. and S. having, with full knowledge of all the facts, and without objection, received the proceeds of the lumber and applied them to their own use, this amounted to a ratification of the levy made by the sheriff, and made them liable to the real owner, for the property so sold.
    This action was brought by the plaintiffs, assignees of Lawrence R. Brainerd, an insolvent debtor, to recover from the defendants the value of certain property assigned to them, and which was taken and sold by the sheriff under an attachment and execution issued upon a judgment recovered in their favor against Leonard R. Brainerd. The complaint charged the defendants with taking, carrying away and converting to their use the property. The defendants answered by a general denial, and a justification of taking the property of Lawrence R. Brainerd, under the attachment and sale under the execution, and they averred that they gave no directions to the sheriff in attaching or selling the property. It appeared on the trial, and the referee so found, that an attachment in favor of the Bank of Malone was issued on the 3d October, 1857, under which the property in question was attached by the sheriff on the 5th October, 1857, the property then being at. Champlain Rapids. That on the 6th October, 1857, Brainerd made an assignment of all his property to the plaintiffs, for the benefit of his creditors. The assigned property was partly real and partly personal, and located in various places in this State and elsewhere. The assignees, on receiving the assignment, proceeded at once to take possession of the assigned property, and make the inventories. This occupied several days. Prior to the assignment being executed, an agreement was made with the bank, that they would abandon their attachment if an assignment was made proferimr the debt due to the bank. The sheriff was informed of this by the attorney for the bank on the 12th October, and was informed of the same agreement by the assignees on the 6th October.
    On the 6th of October an attachment was issued in the action in favor of the defendants, which was delivered to the sheriff that evening, at a place some distance from where the goods were. The sheriff immediately annexed to the attachment a list of the goods attached previously at Champlain Rapids, under the attachment in favor of the bank, on the 7th of October. The "sheriff went to Champlain Rapids and looked over the property. He after-wards informed the defendants he had taken the lumber on their attachment. A judgment was afterwards obtained in that action, and an execution issued on the 10th of November, 1857, under which the sheriff sold the attached property. The property was bought by the plaintiffs, who paid for it $109, and the sheriff paid the, proceeds to the attorney. No directions were given by the defendants either to seize the goods under the attachment or to sell them under the execution, but both defendants and their attorney knew they had been seized'under the attachment, and that the sheriff had advertised the lumber for sale under the execution. The plaintiffs gave notice of their claim as assignee, and the sheriff applied to the defendants for indemnity, which they refused, and told him to call a jury. He went on without such jury, sold the property, and paid over the proceeds to. the defendants’attorney, who paid the same to the defendants. The referee found for the plaintiffs, and his judgment was affirmed, on appeal.

      A. J. Parker, for the appellants

      Palmer & Armstrong, for the respondents.
   Ingraham, J.

Two questions have been submitted to us on this appeal.

1. Whether , the assignment under which the plaintiffs claim, is not void for giving a preference for debts for which the assignor might thereafter become liable to the plaintiffs, or either of them.

2. Whether the defendants in any way directed an interference with, or did any acts mating themselves liable for the acts of the sheriff in selling the property seized under the attachment.

(1.) The words of the assignment complained of are, “ shall pay and discharge in full all debts, bonds, notes, bills and sums of money, due or to grow due to the parties of the second part, or either of them, from the assignor, or for which he is liable or may become liable, including notes, bills and drafts indorsed and guaranteed by them, &c., and'all debts, demands and sums of money for or upon which or on-account of which they, or either of them, have become or may he rendered liable for or on account of the party of the first part.” The objection made to this provision is that it includes drafts and liabilities not then in existence. If this provision was intended to secure debts or claims not then in existence, but which were after-wards to be created either, by the assignor or the. assignee, it would be void. This was settled in Sheldon v. Dodge (4 Denio, 217), where an assignment contained a provision giving a preference to debts which should thereafter become pressing, and for which Dodge should, as surety, become responsible; and the objection to it was that the instrument reserved to the assignee the power of declaring which of the debts in a certain class should become preferred, by agreeing subsequently to become liable therefor. This principle was previously settled in Grover v. Wakeman (11 Wend. 187), viz: that the assignment must declare who are to be preferred, and a reservation of that power either to the assignor or assignee rendered it void. (See also Barnum v. Hempstead, 7 Paige, 568.) But, as is sai'd In the latter case by the Chancellor, I do not think that this clause of the assignment is subject to such a construction. .It provides for the payment of debts, bonds, notes, bills and sums of money due and to grow due. This evidently applies only to claims then in existence; whether due or to grow due was immaterial. It further provides “ or for which the assignor was liable, or may become liable to them, including notes, bills and drafts endorsed by them.” This evidently referred to such notes, &c., on which the assignees were endorsers or guarantors, and in which the liability had not yet become fixed by protest; claims which they might pay, or become liable to pay, by reason of endorsements or other responsibilities which they had already made or incurred for the assignor. (Van Dine v. Willett, 24 How. Pr. R. 206.) The remaining part of the clause is still less objectionable, as it provides for the payment of all debts, demands and sums of money for or on account of which they have become or may be rendered liable. This clearly applies only to past debts, and not to new ones to be created, and vests no discretion in the assignee. It only secures debts which have been assumed or on which they may be rendered liable. The instrument throughout bears a construction perfectly consistent with an honest intention; and as fraud is not to be presumed where the instrument is consistent with an honest intention, I see no reason for imputing a fraudulent intent to the parties in making this assignment.

I am unable to find in the case any evidence that this question was raised on the trial, or submitted to the referee, and there is no finding by the referee either of fact or law to which the defendants have excepted which properly raises this question. Even if there were doubts as' to the assignment, I think the objection should have been taken below, to make it available in this court.

(2.) The other ground of appeal is that there are no facts in evidence to make the defendants liable for the levy made by the sheriff, if such levy was upon property belonging to the plaintiffs.

The referee held the defendants liable for acts occurring before the sale, as well as the receipt of the money after the sale, with full knowledge of the source from which the money was obtained. We are asked by the appellants to confine ourselves to the finding of the referee in this case, and not to look into the testimony to see whether there is enough to sustain it.

The report of the referee is very imperfectly made up if it is intended as a substitute for findings of fact or law. But where the findings are thus imperfect, it is the duty of the party who is not satisfied with them to apply for more specific findings, and not seek to avail himself of such defects; and this court has held that in such cases the finding of facts necessary to sustain the judgment will be presumed.

But I think there is evidence enough in the case to warrant the submission of this question as one of fact. The defendants knew that the sheriff had levied on property claimed by the plaintiffs as assignees. They knew that a suit was threatened by the assignees. They issued the execution without any directions as to this lumber which the sheriff was by law required to sell and apply to the execution, unless otherwise directed. Their attorney refused to give the sheriff directions not to sell it. The defendants knew the lumber was advertised for sale under the execution, and afterwards they received the proceeds of the sale in payment of their execution. All these facts as found by the referee would have been, on a trial before a jury, sufficient to submit to them the question whether the defendants had not, by these acts, ratified the taking of the goods by the sheriff, and the subsequent sale of them to pay their claim. (Judson v. Cook, 11 Barb. 642; Fox v. Jackson, 8 Barb. 357.)

The case of Wilson v. Tumman, et al. (6 Manning & Gr. 236), relied on by the appellants, was one where the plaintiff did no act and was sought to be charged by proof that he had said he had a claim on the property, but nothing was done to the property by him or, so far as the case shows, by the sheriff, after that declaration. Without expressing an opinion as to the agreement of this case with some of the decisions in this state on that question, it is enough to say that the present case differs very materially from the former, in that the plaintiffs in the execution, with full knowledge of all the facts, and without objection, received the proceeds of the property and applied them to their own use. Such receipt of the proceeds of the sale to their use on the execution, with the knowledge they possessed, is a ratification of the levy made by the sheriff, and makes them liable for the property so sold, to the real owner.

In Freeman v. Ritchie (13 Ad. & Ell., N. S. 780), the mere receipt of the money, without knowledge of the illegal taking, was held to be insufficient to make out a ratification of the seizure; but in that case the court recognize the distinction between the receipt of the money with the knowledge that a trespass had been committed, and taking it without such knowledge. In the former case it might amount to a ratification.

The judgment should be affirmed.

Seldest, J., also read an opinion in favor of affirmance; and all the other judges concurring, judgment affirmed.