author: DaNiels, J.:

text:
    JAMES V. SCHENCK, Appellant, v. DANIEL P. INGRAHAM, Jr., and others, Respondents.

      Receiver — settlement of Ms accounts — how reviewed — who may apply to vacate such settlement.

    Where it is sought to review proceedings had on the settlement of a receiver’s accounts, on the ground that claims allowed and paid out of funds in the hands of the receiver, under an order of the court, are fictitious and unfounded, the better proceeding by a creditor of the fund is to apply to be made a party to the suit in which the order was made, and to have such order vacated; for in such proceedings the court has a wider discretion and greater power for relief than in an independent action, depending for its success upon satisfactory proof of fraud.
    It is sufficient, to maintain the application in such case, that the creditor applying to intervene in the proceedings is entitled to participate in the fund, in however small a degree it may be.
    Appeal from an order denying a motion to have certain orders directing the distribution of funds in the hands of a receiver, and discharging such receiver, set aside and vacated, and from a judgment dismissing plaintiff’s complaint, in an action brought to set aside an alleged fraudulent settlement of a receiver’s accounts, and for the satisfaction of plaintiff’s judgment by such receiver. The defendant Ingraham was appointed a receiver in an action to settle up certain partnership affairs, and paid, as was claimed, exorbitant fees to his counsel, and retained an improper sum for his own services, which acts were done, as the plaintiff claimed, in pursuance of a fraudulent agreement between the receiver and his counsel.
    The plaintiff and one John R. Ryon, now deceased, recovered a judgment against James A. Miller and Catharine Loeb, on thé 12th day of September, 1870, for $2,954.71. They were then, and previously had been, partners in business, keeping the Grlenham hotel in the city of New York. An execution upon the judgment was issued against the property of the defendants in the judgment, and returned unsatisfied.
    In December, 1869, Catharine Loeb sold her interest in the business and property of the firm to Dell P. Peters, and the other partner, James E. Miller, thereupon commenced an action to settle the partnership affairs. The defendant Daniel P. Ingraham, Jr., was appointed receiver of the property of the firm, on or about the 16th day of December, 1869, and on the 25th of January, 1870, he sold the same, and received, as the proceeds of the sale, the sum of $8,415.04. Out of this amount, $448.98 were paid as wages to persons employed in the business of the hotel; $500 to the superintendent ; $816 to the collector of internal revenue, and the residue was divided, under an order of this court, between the receiver, his counsel, the counsel for the preceding receiver, Peters, and the counsel of the defendants in the action brought to settle the partnership affairs, the total amount so divided and distributed between the receiver and his counsel and the counsel for Peters being the sum of $6,218.
    The creditors, claiming this division to have been made pursuant to the terms of a fraudulent agreement existing between the receiver and his counsel, commenced an action on the judgment recovered against the partners, to annul it and have the judgment paid out of the proceeds of the property. Issue was joined in that action, and on a trial being had the complaint was dismissed. The plaintiffs appealed from the judgment on that decision.
    Ryon died in March, 1873, and Schenck continued the action as survivor.
    After that dismissal of the complaint, the surviving plaintiff in the judgment applied by petition, on motion, to have the order under which the distribution complained of was made, and the order discharging the receiver, set aside and vacated.

      The motion was denied, and the applicant appealed from the order denying it.

      M. II. Ellis and Adam 0. Ellis, for the appellant.
    The order making the allowances of $6,218 to these defendants for services, is a palpable fraud; likewise the order discharging Ingraham as receiver. If the power exists, the judgment should be reversed, as the justice did not pass upon the merits. {The Artisans1 Bank v. Treackuell, 34 Barb., 553.) The court, in the exercise of its inherent power, and on its own motion, can revoke these orders. {Baldwin v. The Mayor, eta., of N. Y., 42 Barb., 550; Lowber v. ■The Mayor, etc., of N. Y., 5 Abb. Pr¡, 481.) The plaintiffs could not have petitioned in the original action of Miller v. Loéb <$a Peters. It is only after decree in such actions that creditors are quasi parties. {Hubbard v. Gtiild, 2 Duer, 687.) “If the action had proceeded to a decree directing accounts to be taken, and all creditors to be called in in the usual form, the mode of proceeding by petition might be proper.” (Id.) “ Where the master has admitted the claim of a creditor, the latter becomes quasi a party to the suit; it is not, however, necessary to bring him before the court by supplemental bill.” (Daniells’ Ch. PI. and Pr., vol. 2, p. 1410 [1st Am. ed.].) The fees of the defendant Ingraham should be determined by reference to those fees allowed by law for like services; he is within the equity of provisions applicable to such cases. (Tnnes v. Purcell, 2 N. Y. S. C., 538 ; Howes v. Davis, 4 Abb. Pr., 71; 2 R. S., 93, § 58.) If he acts as counsel in the business of the receivership, he is not entitled to special compensation beyond taxable counsel fees. {Matter of the Bank of Niagara, 6 Paige, 213.) The Court of Appeals has decided that one rule of compensation for the attorney to the record is, in the absence of an express agreement, the particular sums which the Code specifies in different periods of the litigation. {Rooney v. Second Avenue R. R. Oo., 18 N. Y., 373; Oro-fut v. Brandt, 13 Abb. Pr. [N. S.], 128; Griffin v. Barney, 2 N. Y., 372.) The plaintiffs, being judgment creditors who have exhausted their remedy at law, can proceed by complaint (in the nature of creditors’ bill under former practice) to reach equitable assets of the judgment debtors, or their property fraudulently held by third persons, and can ask for the cancellation of the fraudulent orders in such an action. (2 R. S., 174, §§ 38, 39; Soouten v. Bender, 3 How. Pr., 185; Bxmis v. Morse cfe Platt, 6 Paige, 108; 3 Black. Com., 44; Shaw v. Dwight, 27 N. Y., 244; Hubbard & Willis v. Guild, 2 Duer, 685 ; Dobson v. Pierce, 12 N. Y., 156; Ochsendein v. Papalier, 6 Eng. P. [Moak’s notes], 579.) In proceedings supplementary to execution, the receiver can recover property held adversely to the judgment debtor only by action. (Code, § 299.) If a creditor’s bill will not lie, the remedy is by complaint in the nature of a bill of review or original bill. The complaint in this action can be so regarded under the, general prayer. (Barb. Ch. Pr., bk. 1, chap. 12, § 8; Daniell’s Ch. PI. and Pr., vol. 1, p. 357 [1st Am. ed.] ; 1 Barb. Ch. Pr., 34.) Peters was a stranger to the fund. He purchased Loeb’s interest only, and such purchase gave him no rights except such as she might have had after paying all copart-nership debts and accounting with Miller, the remaining partner. (Marti/n v. Wagener, 1 N. Y. S. 0., 509 ; Dayton v. Wilkes, 5 Bosw., 655 ; Menagh v. Whit/wéll, 52 N. Y., 146.)

      John E. Burrill, for the respondent Ingraham.
    In the absence of evidence to show that the allowances to the receiver and the other parties were excessive, or were improperly procured, the court must presume that they were fair and reasoriable and properly procured. The amount of the allowances, so long as they did not exceed the limit fixed by law, was in the discretion of the court which made the orders, and the propriety of such orders could not be reviewed on an appeal in the action, much less could their propriety be reviewed collaterally. Even if the court can inquire into the validity of these proceedings in this manner, the plaintiff has no interest in the subject-matter, and no standing in court sufficient to entitle him to the relief claimed. The plaintiff has no lien on the property, the proceeds of which went into the hands of the receiver. Plaintiff’s judgment was not recovered until, after the receiver had been discharged. This action was not commenced until two years after such discharge. This is not a creditors’ bill, because the judgment debtors are not parties, and the only interest which the plaintiff has is through Miller and Loeb, who ai'e not before’the court. If the plaintiff could maintain any action, it should have been commenced on behalf of himself and all other creditors of Miller and Loeb. If it should be adjudged that the moneys paid to the receiver and his counsel were improperly paid, the only decree the court could make would be to compel the receiver and his counsel to pay back into the treasury of the court such moneys, and when thus paid back, they would be distributed among all the creditors of the firm of Miller and Loeb, whose property produced the moneys. If the plaintiff can maintain this suit, then every other creditor of Miller and Loeb can maintain a like suit.
    . Nelson Smith, respondent in person.

      This case was decided at the March term, 1875.

   DaNiels, J.:

On the trial of the judgment creditors’ action, the only evidence given of the fraudulent nature of the distribution made of the proceeds derived from the sale, was the proceedings themselves by which it was accomplished, and that was considered insufficient by the court to entitle the plaintiffs in that action to the relief they sought. In this conclusion the learned court was probably correct. For, while those proceedings subjected the parties engaged in them to very grave suspicions that they were collusive and fraudulent in their nature, they probably did not warrant the conclusion with that degree of certainty which the law justly requires to establish the existence of fraud. That cannot be presumed against any person without satisfactory proof. And the evidence of its existence must be reasonably certain, before that can be deemed to be established. That which was given upon the trial of the creditors’ action was not of so cogent a character, and for that reason the orders made were a proper defense to the suit. As long as they could not be vacated or annulled for collusion or fraud, they were conclusive against the right of the plaintiffs to the relief they applied for in a collateral action. In the condition in which the proof left the case, they could not be reviewed nor corrected by means of the action which was brought. The evidence should have gone further, for the purpose of showing, if that could have been done, that the claims allowed and paid out of the proceeds of the sale were in whole or in part fictitious and unfounded. That would have so far confirmed the suspicion awakened by the proceedings themselves, as to have rendered it the duty of the court to disregard them, as a mere device or fraud, invented for misappropriating what justice required should be paid to the creditors of the firm whose affairs it was the object of the action to settle.

In dismissing the action of the judgment creditors, the learned judge, before whom the trial was had, suggested that the proper proceeding to be taken for redressing the wrong complained of, was that of a motion to vacate the orders. And, accordingly, an application in that form was afterward made by the surviving judgment creditor. It was one which he had the right to make, and it was the most appropriate and practical mode in which the complaint made could be considered and decided. For, in a proceeding of that nature, the court has a wider discretion, and much greater power for relief, than in an action dependent for its success upon satisfactory proof of fraud.

The judgment constituting the foundation of the application, was not recovered until the fund had been distributed, and the receiver discharged. But as the action in which it was recovered was against the firm carrying on the business of the hotel before Loeb sold out to Peters, it may reasonably be inferred that it was for a debt owing from the firm. And that was enough to give the creditors recovering it an interest in the property and assets of that firm. If the action to settle the partnership affairs of Miller and Loeb had proceeded to a decree, these, as well as the other creditors, would have been brought in under it to prove their claims, and share in the distribution of whatever fund might have been derived from the assets. That right gave them an interest iii the action prosecuted by Miller. And it was sufficient to entitle them, as creditors, to become parties to the proceeding whenever the proper protection of their interests might require that to be done. The transfer made by Loeb to Peters of her interest in the business and effects of the partnership, did not change the right of the creditors in this respect. For they were entitled to payment out of the partnership property before any thing could be properly claimed by the individual members of the firm. And the transfer to Peters merely gave him the right'which Loeb would otherwise have had, if that had not been made. (Buchan v. Sumner, 2 Barb. Ch., 166.) The fact that Peters may have been induced by the fraud of Loeb, as to tbe condition of the business, to purchase her interest, could not increase the amount of it. For what he acquired by the purchase was merely what she had the power to sell, and nothing more than that. It was merely her interest in the property of the firm after the payment of its debts. If she fraudulently represented its extent, the remedy was against her individually for the loss occasioned by the deception. It could not increase his rights against the property or assets of the firm. The creditors had the right to have them applied to the payment of their debts, so far as they might be necessary for that purpose, and the balance only which might afterward remain was all that could be rendered divisible between the members of the firm.

# It is not essential to the principle involved, that the particular creditor applying to intervene in the proceeding may be entitled to receive but a small amount of the fund to be divided. The right to participate in the fund at all, is sufficient to maintain the application, where it may be in danger of being misapplied by the conduct of the parties before the court. It was the duty of the partner, ffiy whom the suit was instituted, to close up the affairs of the firm, to secure the application of its property first to the payment of its debts. If that duty was disregarded, the only alternative which a creditor had, was to institute such measures as would enable him to secure protection for himself. And the proper mode of doing that in the proceedings which had been taken, was to apply for liberty to become a party, to have the orders vacated which had been made, and the claims allowed against the fund readjusted. (Gould v. Mortimer, 26 How., 167; Dwight's Case, 15 Abb., 259.) Such an application is within the provision made by section 173 of the Code, allowing the court to amend proceedings, process and pleadings by adding parties, whenever justice may require that to be done. The application, though not in terms for that relief, included it in substance. It. was nominally to vacate the orders by which what was claimed to be an unauthorized distribution of the partnership fund was allowed to be made. But as that could only be accomplished by the applicant first becoming a party to the action, it necessarily included that relief. The end applied for included all as means, which was required for its accomplishment.

Nine hundred and fifty dollars of the fund derived from the receiver’s sale of the partnership property were allowed by one of the orders, and paid by the receiver to Ira Shafer, as counsel for Peters, who had been receiver of the partnership effects. He was continued in that capacity but a few days at most, and he paid his counsel for his services on the motion upon the determination of which his appointment was made. This payment was conceded in the affidavit made by Ira Shafer to oppose the creditors’ application. And he then proceeded to. state generally the services performed by him during the continuance of both receiverships, but failed to show any specific thing done for Peters justifying the payment of the $950 made in his behalf under the order. So far as that item is involved, no just demand was shown for its payment. Peters, as receiver, had the property in charge but a few days, and Ingraham, as his successor, only from the sixteenth of December to the twenty-fifth of the following January, when it was sold and converted into money. And, during most of the time, Ira Shafer swears that he was engaged about the litigation, and that his services were worth at least $5,000. What litigation was prosecuted or defended, beyond that of the suit to close Tip the affairs of the partnership, and incident to the removal of one receiver and the appointment of another in his place, and an application by a claimant of some of the property for leave to sue the receiver for it, nowhere appears. And as the complaint in the partner’s action does not seem to have been even answered, or the suit seriously contested, there could not be an opportunity for much litigation in the action to settle the partnership affairs, nor in the proceeding to change the receiver, which Peters does not seem to have seriously opposed. The application for leave to sue the receiver must also have been a simple matter, requiring but little time or attention in opposing it. Por these services, during the period mentioned, as they are described in the affidavit of Ira Shafer himself, he received from the receiver, out of the proceeds of the sale of the partnership effects, not only the sum of $950, but the further sum of $1,900, under the order allowing the payments.

In this simple proceeding, requiring no more attention than the receiver himself was competent to give to the business of his trust, Nelson Smith was also employed on his part, and from his affidavit it appears that the service he performed was to institute proceedings to punish Byon for a contempt for attaching part of the partnership property in the receiver’s possession. H.ow much or what was done for that purpose was not mentioned, and from that circumstance and the nature of the proceeding itself, it may safely be presumed to have been neither laborious nor long continued. He also alleges that he performed divers other services, and paid out divers disbursements in relation thereto, and was employed a very large portion of his time during the continuance of the receivership. But what he did was not stated by him beyond the services already mentioned. A general statement of this nature can form no proper basis for the payment of a large sum of money, where it has been in no way supported by facts warranting the conclusion. It cannot reasonably be inferred from it, that any important service was performed, or any considerable disbursement made. But as the services performed in the proceeding taken for the punishment of the attaching creditor were specifically mentioned, that may be presumed to have been the most important of all that was done by Nelson Smith. And even that could not have been either intricate or laborious. For this, and the divers services and disbursements left undescribed, the receiver paid him the sum of $1,468. It was entirely unwarranted, according to the facts presented by the affidavit, considered in the most favorable view which can be taken of them. Besides that, no reason whatever appears, rendering the employment of both Ira Shafer and Nelson Smith either necessary or proper for the purpose of aiding the receiver in the management and protection of the property committed to his custody. There seems to have been but little need of counsel at all, but whatever there may have been, either one of these legal gentlemen would have been sufficient for the services required. Both certainly were not necessary, and for that reason, compensation to one of them out of the proceeds of the partnership effects, should certainly have been denied.

The receiver himself was allowed $1,900 for his commissions and services, in addition to the exorbitant amounts expended for the assistance of his counsel. What he did justifying such an appropriation of the proceeds, which came into his hands from a sale made by an auctioneer, who reserved his own commissions and expenses, of property under the superintendence of another person, who was paid $500 for his services, was not clearly made to appear. He stated in his affidavit, that as receiver he was at the hotel daily where the property was kept, and the business was carried on; that an inventory was made by him and under his direction; that he used diligent efforts'to make the property productive, and was sued for $10,000 by a claimant for selling the property. What became of the suit, beyond its mere commencement, was not stated. And if it was abandoned,, as it probably was, as long as nothing more was said about it, the suit could have formed the subject of no severe or very responsible service. The other services mentioned were precisely those which, as receiver, he must have expected he was required to perform. Similar services are always required of receivers of personal property. And it is for their performance that they are allowed their commissions. They can form no foundation for such an allowance as was made in this case. This property was brought into the custody of this court to secure its protection, and the division of its proceeds among those who should, in the course of the litigation concerning it, be finally found entitled to participate in their distribution. The object of the law in allowing the court to take it in charge, was to prevent it from being wasted, destroyed, or squandered, in order that a proper disposition of its proceeds could be made among the persons having lawful claims upon them. That has been completely frustrated and defeated in the present instance. The fund designed for creditors and others interested in the property producing it, in this instance, has been entirely exhausted by the claims allowed to the receiver and his counsel. And it is confidently claimed that this court shall, after all that has been done, maintain the proceedings as valid through which that has been accomplished. A result of that character would justly involve the administration of the law in the most unqualified and deserved condemnation. For, under the forms of law, it would protect and sanction the most apparent inj ustice. No lapse of time less than that prescribed for the commencement'of actions, would either justify or excuse the court for a failure to vacate and annul proceedings which appear to have been resorted to as, and successfully rendered, the means of such transparent injustice. Its power in this respect is ample, and it would be unworthy of the name of a court of justice, if this distribution of the property put into the hands of its officer for preservation and protection, should be permitted to stand. (O'Mahoney v. Belmont, 37 N. Y. Supr. Ct., 223.)

The order appealed from should be reversed with $10 costs besides disbursements, and an order entered making the appellant a party to the proceedings taken to distribute the proceeds of the partnership effects, and for pro rata payment out of such proceeds of the judgment recovered, after payment to the receiver of his* commissions and a proper allowance for the reasonable value of the legal services performed for the receivers for not exceeding one counsel, and requiring the balance of the proceeds to be paid into court for distribution under its direction ; and vacating the orders discharging the receiver and providing for the distribution already made. An order should also be entered affirming the judgment, without costs.

Davis, P. J., concurred.

Ordered accordingly.


source: Caselaw Access Project

author: Beady, J.:

license: Public Domain

text:
    WILLIAM B. FAIRCHILD and others v. EGBERT H. FAIRCHILD and others.
    1 J?. 8., 728, §§ 51 and 58 — oases not included in — real estate purchased by one partner for firm — how treated in equity — in whom title to, is vested — Mortgage — when instrument does not operate as.

    Where one member of a firm was authorized by the other partners to purchase and take title to certain real estate for the benefit of the firm, but they did not authorize him to take title absolutely in his own name without any recognition of their interests therein, and such partner purchased the real estate, paying therefor out of the partnership funds, but took a deed in his own name: held, that a resulting trust was thereby created in favor of the other members of the firm.
    Where one partner takes a deed in his own name, paying the purchase-price out. of a fund belonging to all the partners jointly, for the benefit of all, and without any ulterior motive other than to possess and enjoy the property, a resulting trust in favor of the other partners arises, which is not affected by section 51 of 1 Revised Statutes, 728. (Per Brady and Daniels, JJ.)
    Section 51, 1 Revised Statutes, 728, does not apply to land bought by the joint funds of a partnership, as such land is treated in equity as personal property.
    (Per Brady and Daniels, JJ.)

      Cox v. McBurney (2 Sandf., 561) overruled.
    Property so purchased is the joint property of the members comprising the partnership, and not that of him in whose name it is bought or to whom the transfer was made. (Per Brady and Daniels, ,TJ.)
    Where one of several tenants in common, in order to secure an existing indebtedness, executed an assignment of all “ her right, title, interest, estate, property and demand as legatee, devisee, heir at law or otherwise, of, in, and to the estate, real and personal, of her late father,” and “ of the rents, profits and income thereof,” to be held until the assignees should realize therefrom a sum therein specified, the instrument containing no power of sale: held, that the instrument did not operate as a mortgage, but as an assignment of the interest of the grantor, and that the alienees took only what their grantor had the power to transfer, and nothing more.
    Appeals from a judgment entered upon tbe decision of Justice YaN BbuNt, rendered at the Special Term.

      Edward 0. James, for the plaintiffs.

      Wm. F. Shepa/rd and Ma/rsh <& WalUs, for the defendants Walker and Coleman.

      L. Hasirouck, Jr., for the defendant Brown.

      Edga/r S. Van Wvtilde, for the defendants Beach and Borrowe.
   Beady, J.:

This action was brought by the plaintiffs, who are children of Egbert N. Fairchild, and some of his heirs at law, for the partition of real estate in the city of New York. The following facts appear to be established by the testimony given upon the trial:

Egbert N. Fairchild, Stephen B. Walker, Isaac D. Coleman and Henry J. Brown, in 1858, formed a copartnership for the purpose of constructing the new reservoir in Central park, which was n ot to be terminated by the death of any partner, but to continue until the work was completed. The firm name was Fairchild, Walker & Go. They began and completed the work, and, while it was in progress, took other contracts and did other work on firm account, in the same manner as the reservoir contract. In January, 1860, G-ustavus A. Sacchi was the owner of the real estate and premises described in the complaint, situate on the Harlem river, and offered the same for sale at auction. The advertisement was seen by Fairchild, Walker & Co., and the purchase of the land was talked over by them. They were then contemplating obtaining the contract for building the canal from the Harlem to the Hudson river, and this property they thought would be available for their use in that connection. They subsequently obtained a charter for the work. Fairchild, Walker and Coleman went up to look at the property, and concluded to buy it for firm use.

Fairchild was authorized to attend the sale and purchase at his discretion. Walker, however, attended the sale, and bid in the property, giving the firm name to the auctioneer, as the name of the purchasers. On the 24th January, 1860, a deed was executed and delivered by Mr. Saechi, conveying to Egbert N. Fairchild the premises in question for the consideration of $9,930, which deed was duly recorded. This deed was taken in the name of Egbert N. Fairchild, alone. The other members of the firm consented, and authorized said Egbert N. Fairchild to take title for the firm. But they did not consent or authorize him to take the title absolutely in his own name, without recognition of the other members of the- firm. And they did not, nor did either of them, know that the deed to him was absolute, without recognizing and protecting the rights of the firm, and of the several members thereof. These lands were paid for out of the copartnership funds. The taxes and incumbrances thereon were paid out of the copartnership funds. The lands were purchased for the benefit of the copartnership. It was always intended and understood by and between the members of the partnership, that the same should be copartnership property. Fairchild always said so. All the transactions and payments on account of this property were entered on the firm books, the payments being charged to “real estate” account. Walker, Coleman and Brown had nothing to do with keeping the firm books, which were under the charge of Egbert N. Fairchild, who had charge of the financial business of the firm. The lands were used by the firm, and improved and occupied by them from the time of the purchase. Fairchild, individually, never had any thing" to do with them. Fairchild and Brown died in 1864, Fairchild leaving eight children, as specified in the complaint, and Brown leaving his widow, Cornelia J. Brown, and three children, David W., Henry V., and Harriet Brown. Harriet afterward died in ber infancy, leaving ber mother and brothers ber heirs.

A part, only, of the premises has been sold. It also appeared that on the 31st of December 1866, the defendant Julia A. Schrei-mer (one of the children of Fairchild, and one of his heirs), and her husband executed to the defendants, Beach & Borrowe, an assignment of all her right, title, interest, estate, property and demand, as legatee, devisee, heir at law, or otherwise, of, in and to the estate, real and personal, of her late father, Egbert N. Fair-child,” “ and the rent, profits and income thereof,” to hold until Beach & Borrowe should realize therefrom $2,250, and costs and charges, in consideration that they should release her husband, Horace A. Schreimer, from arrest on a civil action, which said sum has not yet been realized by said Beach & Borrowe.

The court below held on the facts, that the real estate mentioned belonged to the firm named, but that the assignment mentioned was a mortgage, and covered the undivided one-eighth part of the premises in question, and that if the share of Mrs. Schreimer therein (four one-hundredths) was not sufficient to pay said indebtedness to Beach & Borrowe, it should be assessed pro rata upon the remaining ninety-six one-hundredths, not to exceed, in the whole, one-eighth of the whole real estate.

The plaintiffs appealed from the whole judgment.

The defendants, Coleman, Walker, and the representatives ’ of Brown, appealed from that part which holds that Beach & Bor-vowe held a mortgage upon the undivided one-eighth of said premises, and which directed payment thereof out of any thing more than Mrs. Schreimer’s four one-hundredths.

Many exceptions were taken during the trial, but they related chiefly to evidence tending to show that the property in question belonged to the firm of which Fairchild was a member when the purchase was made.

The facts set out in reference to the partnership and the general manner in which its affairs were conducted; the relations of the parties; each to the other; the acts and the admissions or statements of the partners inter sese ; their books and the entiles in them, which were competent items of proof on the issue presented or claim made by the defendants, the surviving partners, and the defendants, the representatives of the deceased partner, by the proof of which the controlling facts on behalf of Walker and Coleman and the heirs of Brown were developed, were objected to and exceptions taken almost at every step.

One of the counsel, iii his points, states that the case is “ bristling ” with the plaintiffs’ exceptions; and although the expression employed may be infelicitous, it indicates the energy and determination with which the plaintiffs’ counsel essayed to prevent the exposition of the fact that Fairchild, deceased, was not the absolute owner of the property in question. The exceptions, therefore, do not require examination in detail, because, assuming the facts established, namely, that the property was bought for the firm by Fairchild, and with its money, and that the deed was taken by him in his own name, without the consent or knowledge of the other partners, the judgment of the Special Term cannot be disturbed so far as it affects the alleged combined ownership. The findings upon these facts are abundantly sustained. They are established by a combination of facts and circumstances which are quite satisfactory, and therefore conclusive. The appeal consequently presents for consideration questions of law only.

It is urged on behalf of the plaintiffs, that under the provisions of the Revised Statutes (1 R. S., p. 728, § 51) no resulting trust in favor of the other members of the firm existed; but that section is modified by section 53, which declares that it shall not apply to eases where the alienee named in the conveyance shall have taken the same as an absolute conveyance, in his own name, without the knowledge or consent of the persons paying the consideration. The facts being as stated, the other members of the firm were protected by this modification. (Foote v. Bryant, 47 N. Y., 544.)

There is, however, another view of this case in this connection which may well be taken. Section 51, before alluded to, provides that where a grant for a valuable consideration shall be made to one person, and the consideration therefor shall be paid by another, no use or trust shall result in favor of the person by whom such payment shall be made, etc. This is not the precise case, therefore, contemplated by the statute. The general object in view when the statute was enacted, was to prevent frauds; and the design of section 51 was to hinder the transfer to one who paid no consideration for it, with the understanding that it was to be held by him for the benefit of one who did; a process by which frauds might easily be consummated.

Here, as we have seen, the deed is to one who paid the consideration out of' a joint fund of which he owned a share, but for the benefit of all, without any ulterior purpose other than to possess and enjoy the property. Each of the partners was interested in the whole fund and i/n the whole estate, and the purchase was for all of them. In such a transaction the court will not be astute to force it within the penalty of section 51. To prevent fraud in such a case would be to declare it out of the purview of the statute. The court of last resort has not failed to indicate a tendency to limit its operation in proper cases. (Day v. Roth, 18 N. Y., 448; Lounsbury v. Purdy, id., 515; Siemon v. Schurck, 29 id., 598; Foote v. Bryant, supra.) In Lounsbury v. Purdy the purchaser consented that the deed should be taken in the name of her brother, but not that it should be absolute. She intended that it should be given to Mm in some way for her benefit. The court declared that a trust resulted in her favor. In Siemon v. Schurck Judge HogebooM said that, “if it does not appear that the absolute character of the deed, upon its face, was known to or designed by the person paying the consideration, it will be presumed that it was so written by fraud or mistake, and without any intent to violate ihe statute.” “ This is clearly,” said he, the effect of the cases of Day v. Roth (18 N. Y., 448) and Lounsbury v. Purdy (id., 515).” It was also suggested by him in that case, that the prohibition contained in section 51, referred to herein, was not necessarily applicable to a trust for the benefit of a third person, in whose favor, for family or other lawful and sufficient reasons, it was deemed proper to make some provision. This case is one which is not strictly within the terms or spirit of the statute. It is not that of a secret trust for any purpose; the parties connected with the transaction were in no embarrassment; they were prosperous, and able to meet all their obligations, and the object of the purchase was one connected with their joint business. The mischief which the statute assailed was not in contemplation of the parties. The consideration was not paid by another, but by the alienee and his associates. He did not pay it all, but a part only, and it is clearly not within the express terms of the statute; and it is equally clear that it has not created an estate to prevent which that law was passed.

There is still another view to be taken of this case, and it is, that land bought by the joint fund of a partnership, as in this case, is to be treated in equity as personal property, and goes to the personal representatives of a deceased partner. (Collumb v. Read, 24 N. Y., 505; Buchan v. Sumner, 2 Barb. Ch., 165; Chester v. Dickerson, 52 Barb., 349, 362 [affirmed in Court of Appeals]; Hiscock v. Phelps, 49 N. Y., 97-103; Sage v. Sherman, 2 N. Y., 417.) This principle itself withdraws the land in question from the application of section 51. The case of Cox v. McBurney (2 Sandf., 561) to the contrary, is not regarded as in accord with general current of authority.

There is yet another view of this case, and that is, that property, purchased with copartnership funds for the firm, is the joint property of the members comprising it, and not that of him in whose name it was bought, or to whom the transfer was made. The deed to Fairchild was, therefore, in legal contemplation and effect, a deed to his associates as well. Although this rule might not be available against innocent purchasers without notice, it holds firm against the partners and their heirs, the latter succeeding only to the rights of their ancestor. The courts have applied this doctrine collaterally, because it has been held that if a member of a partnership, dissoluble at pleasure, privately obtain a renewal of a lease of part of the partnership premises, such lease is partnership property. (Montague on Part., vol. 1, p. 208, and cases cited.) The views thus expressed are conclusive of the correctness of the judgment rendered declaring that the heirs at law of Egbert N. Fairchild were entitled only to the share he owned in the land mentioned, and renders the consideration of all other questions incidentally relating thereto unnecessary.

The remaining question relates to the paper executed by Mrs. Schreimer, and the judgment pronounced in regard to it. That instrument is not a mortgage, but an assignment in form and in legal effect. It conveys all her right, title and interest in the real and personal estate of her father, and the rents, issues and profits thereof, to have and to hold the same “until thereout the parties of tbe second part shall have received the sum named, over and above the costs, charges and expenses attending the execution of the assignment, with interest thereon to date.” It also makes the parties of the second part her attorneys to take possession of and to manage her share of the estate, and to receive the rents, etc. This paper is designated an assignment by the parties, as appears from its language, and was so intended by them. It conveys her interest in the property referred to, and that only, with a defeasance when the event stated occurs, namely, the payment of the sums mentioned. There is no power of sale given by it; no right is conferred to sell or dispose of the property to which it relates; and it was taken to secure or to liquidate a precedent debt. The alienees took only what their covenantor had the power to transfer, and nothing more. It was not therefore a conveyance of any thing more, and the judgment pronounced, extending it beyond that interest, was erroneous, and it must be reversed.

The judgment of the court below is affirmed in all respects, except as to that part which relates to the assignment executed by Mrs. Schreimer; as to which it is modified so as to direct the sum secured to be paid out of four one-hundredths interest owned by her at the time of its execution.

Daniels, J'., concurred; Davis, P. J., concurred in result.

Ordered accordingly.


author: Buady, J.: DaNIels, J.:

text:
    RACHEL J. AINSWORTH, Plaintiff, v. WILLIAM W. BACKUS, Defendant.

      Policy of insu/rance taken out by wife on life of husbmd — assignment of— Agreement of third person to pay premiums — when action lies for breach of.

    Tlie plaintiff, having taken out a policy of insurance upon the life of her husband, assigned sixty per cent thereof to the defendant, who agreed to “ keep it alive ” for her benefit and that of her family. The defendant, in pursuance of such agreement, paid a portion of the premiums, but subsequently allowed the policy to be forfeited for non-payment of those subsequently accruing. This action was brought by the wife during the life of her husband to recover the value of the policy. Held (1), that as the defendant had entered upon the performance of tlie agreement, lie was responsible for bis misfeasance in relation thereto ; (2), that the fact that the husband was still living was not a bar to the action, but only affected the measure of damages.
    Whether the wife had power to assign the policy, quaere.

    ExoeptioNS ordered to be beard in the first instance at the General Term.

      D. S. Riddle, for the plaintiff.

      J. A. Billings, for the defendant.
   Buady, J.:

The plaintiff obtained a policy on the life of her husband, and assigned sixty per cent of the amount secured to the defendant, who, in consideration of such transfer, agreed to keep it alive ” for the benefit of the plaintiff and her family. He failed to perform the engagement, and permitted a forfeiture of the policy. The plaintiff seeks in this action, although her husband is still living, to recover the value of the policy, to indemnify her for the damages sustained by reason of the forfeiture named.

It will be perceived from this statement, that the only consideration which the defendant received for his promise, was the assignment of part of the sum secured by the policy, and this was, in faet, no consideration whatever. Such assignments seem to have been declared void by the court of last resort; and if the defendant had continued to pay the premiums, and the husband had died, he could only retain out of the amount of the policy, if it were paid him, the sums paid by him and the interest thereon. (Eadie v. Slimmon, 26 N. Y., 9, 18.) The defendant, therefore, in view of that decision, acquired by the assignment no interest in the policy; but that does not relieve him from obligations incidental to his agreement. He assumed to keep the policy alive, and failed either to do that, or. advise the plaintiff of his intention to withdraw from the engagement. He had paid premiums and so far had entered upon the performance of his contract; and this led to reliance upon him, in which the plaintiff, until otherwise advised, had a right to indulge. He could not, under the circumstances, abandon the contract, and permit the forfeiture to occur, except upon notice to the'plaintiff.

The rale seems to be well settled, that if a person undertakes an employment or trust, and begins the performance of it, he is liable for any injuries which may result from his neglect, even though he may not have received any consideration for the promise. If he omit to do what he has thus agreed to accomplish, the failure of consideration excuses his omission. This is called a nonfeasance. If he begin the execution of his engagement and fail to complete, his failure is a misfeasance, and he becomes responsible. (Wilkinson v. Coverdale, 1 Esp., 75; Thorne v. Deas, 4 Johns., 84; Smedes v. Bank of Utica, 20 id., 372.) The distinction thus recognized and applied, rests, doubtless, upon the proposition that an injury to one party or a benefit to another is a sufficient consideration for a promise. (Miller v. Drake, 1 Caines, 45; Foster v. Foster, 6 Mass., 58; Smedes v. Bank of Utica, 20 Johns., 380, supra) In Wilkinson v. Coverdale, the defendant undertook, voluntarily and without consideration, to get a policy of insurance renewed on account of the plaintiff, but did it so negligently that no benefit was derived from it, and the action against him was allowed to proceed. In the case of Thorne v. Deas, a case which was cited and approved in the Court of Errors in Smedes v. Bank of Utica, (supra), the doctrine of misfeasance was considered, and the cases stated and reviewed. It was not questioned that a voluntary undertaking, which the promissor undertook to carry out, entailed upon him the penalty of neglect in the performance of this promise. The rule is founded in common sense, in equity, and in good faith. The defendant was bound by virtue of his engagement, to keep the policy alive, or to notify the plaintiff that he would not, and thns enable her to protect herself against his default. The fact that her husband is living is not a bar to the action. It.affects the measure of damages only. (Hawkins v. Coulthurst, 5 Best & Smith, 343.) There is no force, either, in the proposition that the plaintiff had no interest in the policy because her husband was living. She had an inchoate right to the amount secured by it, which would become absolute upon the death of her husband, and the value of that fight would, doubtless, be the measure of damages.

She offered to show on the trial that the policy was worth $250, but was not permitted to do so; and that offer is a conclusive answer, it would seem, to the objection that she had no valuable interest in the policy. The result being that the plaintiff had a cause of action, the judgment was erroneous, and a new trial must be granted, with costs to abide the event.

DaNIels, J.:

I concur in the result. The statute does not seem to have rendered the wife incompetent to make the agreement alleged to have been made with the .defendant to keep up the policy. (4 Genl. Stats, of N. Y., 510, § 1.) And her power to do so was not presented by the case of Eadie v. Slimmon (26 N. Y., 9). No good reason seems to exist for denying her that authority, and its existence may be essential to her ability to insure the life of her husband at all.

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


text:
    TYLER W. PARKER, as Executor, etc., Respondent, v. JOHN W. WARTH, Appellant.

      Orderr striking out'answer — appeal from, aft&r entry of judgment upon.

    No appeal lies from an order striking out an answer as frivolous, and directing judgment for tile plaintiff, after judgment has keen entered thereon. If the defendant desires to reviewthe order, he must appeal from the judgment.
    MdtioN to dismiss an appeal from an order striking out defendant’s answer.

      J. W. Judson, for the appellant.

      Creo. IF". Van Sty/lce, for the respondent.
   Beady, J.:

The appeal taken in this case must be dismissed. The answer was, on motion, stricken out as frivolous, and judgment ordered for the plaintiff. Judgment was entered, and thereafter this appeal was taken, not from the judgment, but the order upon which it was based. Many decisions affecting the subject, namely, whether the appeal may be from the order, or should be from the judgment, have been made, which are some times in conflict and some times reconcilable. A collection of them may be found in Wait’s Practice (vol. 3, pp. 593, 594, 595), to which the curious student is referred. The cases in which, as there stated, the appeal from the order has been upheld and advocated, are those in which a further answer was permitted, and in which, consequently, no judgment was ordered in the first instance. Many adjudications will also be found there grouped, holding that when judgment is ordered, the appeal must be from it. It will be found also that the appeal has been sustained, when it is taken before the judgment is entered; a distinction which may well be made, although the efficacy of the appeal, unless a stay of proceedings is obtained, may well be doubted. Section 349 of the Code provides for an appeal from an order in any stage of the action, including proceedings supplementary to execution, but the action eo nom'rne ceases with the judgment. The right is then determined, and all that remains to be done is to enforce payment, or compel the performance of what the judgment decrees shall be done. Here there was no stay of the action when the appeal was taken. It had ended, and in the judgment the order was merged, leaving the defendant to his remedy by appeal from the judgment alone, which would necessarily bring up the order of which it was predicated. This is the rational view of the section, and is in accord with the adjudications referred to in Wait (swpra), holding that where, as in this case, judgment is ordered and entered, the appeal cannot be taken from the order' only.

If the appeal be from the order, no stay of proceedings relating to it would prevent the plaintiff from collecting the judgment; to prevent that there must be a stay of the judgment itself; and the Code makes no provisions for a stay of proceedings upon the judgment rendered on an appeal, taken after the entry of judgment, from an interlocutory order granted pending the action. All the consequences of a judgment, therefore, seem to be in hostility to an appeal from an order made in the action prior to the judgment rendered, and from which no appeal was taken until after the judgment was perfected.

The motion to dismiss must for these reasons be granted, with ten dollars costs.

Davis, P. J., and Daniels, J., concurred.

Motion granted, with ten dollars costs.


author: Brady, J.:

text:
    OCEAN HOUSE CORPORATION, Appellant, v. WILLIAM H. CHIPPU and others, Respondents.
    2 B. &, 542, § 9 —judgment v/pon award —when cannot be entered.

    No judgment can be entered upon the award of an arbitrator, where the instrument, submitting the differences between the parties to arbitration, is not attested by a subscribing witness.

      Goodsell v. Phillips (49 Barb., 353) followed.
    Appeal from an order made at Special Term, vacating a judgment entered upon an award of arbitrators.

      William Ba/rnes, for the appellant.

      Robert W. Todcl, for the respondents.
   Brady, J.:

The papers submitting the differences between the parties to arbitration, were not attested by a subscribing witness. The judgment upon the award was entered without notice, the submission on that proceeding having been proved by one who was not a subscribing witness. The statute relative to arbitrations declares that, upon the submission being proved by the affidavit of. the subscribing witness thereto, and upon the- award made in pursuance thereof being proved in like manner, or by the affidavit of the arbitrator, the court designated in the submission, shall, by rule in open court, confirm such award, unless, etc.; and further, upon such award being affirmed or modified, the court shall render judgment in favor of the party to whom any sum of money or damages shall have been awarded, etc. (3 R. S. [5th ed.], 856, 859.) In Hollen back v. Fleming (6 Hill, 303), and in Goodsell v. Phillips (49 Barb., 353), the provisions mentioned were considered, and it was held that the proceedings to obtain judgment upon an award of arbitrators were summary, and that the requirements of the statute should be strictly complied with. In the first case it is said, that the proof, when made by the subscribing witness, shall be such as to show that he was in fact a subscribing witness, within the legal designation of such a person, in order to establish the right of the successful party to the order directing the entry of judgment. In the second case the precise question presented in this case was passed upon, namely, whether a judgment could be entered upon a submission and award when it appeared that there was no subscribing witness to the submission signed, and the court decided that the statute could not be complied with, there being no subscribing witness, and that the judgment could not be maintained.

It is true that no section of the statute referred to requires, in express terms, that the submission shall be attested by a subscribing witness; but when it declared that the award could be afiirmed when the submission was pi’oved by the subscribing witness, it left no doubt of the intention of the legislature to require such an attestation before it could be enforced summarily. The design of this prerequisite is to insure the identity of the persons to be affected by the award, and not to leave that question open to doubt, by allowing proof of the execution of the written submission by evidence that the signatures were genuine, or by admissions, which are not regarded as the highest evidence to be furnished to courts of justice. The requirement is of the person who saw the parties sign, and who would be able to identify them, and to establish the condition of the parties at the time, and to state any and all circumstances attending the act of submission, which, under the rule of evidence, might be admissible.

We think these decisions are right, and that the order made at the Special Term should therefore be affirmed.

Davis, P. J., and DaNiels, J., concurred.

Ordered accordingly, with costs of the appeal.


text:
    MARGARET DIETRICH, Plaintiff, v. THE MAYOR, Etc., OF THE CITY OF NEW YORK, Defendant.

      Payment of taxes hy mistake — right to recover the same.

    The plaintiff paid the Croton water charges upon a lot owned hy her in the city oí New York, and received a receipt in which the lot was correctly described. Subsequently, plaintiff presented this receipt at the office of the tax commissioners, and asked for a hill of the taxes imposed upon it; the clerk, by mistake, gave her a hill of the taxes imposed upon a different lot, of which she was not the owner, which she, in ignorance of the mistake, paid; and the amount was credited to the second lot. This action was brought to recover the amount so paid, the plaintiff having been subsequently compelled to pay the taxes on her own lot. Held, that she was entitled to recover.

      Mayer v. The Mayor, etc. (2 Hun, 308) followed.
    MotioN for a new trial on a case and exceptions, ordered to be heard in the first instance at the General Term, the court below having dismissed the complaint.

      E. Ellery Anderson, for the plaintiff.

      I). J. Deem, for the defendant.
   Beady, J.:

The plaintiff was the owner of a lot on the north side of Thirty-seventh street, described, in 1871, on the maps of the city, by ward number 4,509. In the year 1870, by the subdivisions of the maps for that year, the lot was partly embraced in ward number 4,509, and partly in 4,510. In August, 1871, the plaintiff paid the Croton water charges and was given a receipt, in which the lot was correctly stated to be ward number 4,509. In November, 1871, the plaintiff applied at the office of the tax commissioners, and at the proper desk, for the bill of taxes for the year just mentioned, and gave to the c;lerk who was in attendance discharging such duty, and who was employed by the defendants for that purpose, the Croton water receipt referred to, and requested him to prepare a bill for the taxes imposed on the premises described therein. He complied witb this request, but gave her a bill in which the lot was designated as number 4,510, and she paid it. The amount was not, however, credited to. her lot, and she was subsequently compelled to pay the tax due on lot 4,509, which was owned by her and correctly designated in the receipt for the charges for Cro-ton water. This action was brought to recover back the amount first paid on the 29th November, 1871, with interest. From this statement of facts it is apparent that the plaintiff was led into the error of paying the taxes on lot 4,510, by the mistake of the clerk in the office of the tax commissioners. She gave to him a voucher which related to her premises, and requested a statement affecting them. Her application was properly made, and to a person duly authorized to act. Having done this, it was to her really a matter of no moment by what number her lot was designated, either in the one place or the other. Her interest was in the land, not in the figures by which it was known in the offices of the defendants. It may be that the clerk was confused by the double numerals of the year 1870, when the lot was partly in one set and partly in another; but however that may be, it is clear that' the plaintiff relied upon the bill which she received from the defendants’ authorized agent. The mistake is mutual, and this case is therefore within the principles of the case of Mayer v. The Mayor, decided in this district, and to be found reported in 2 Hun, page 306. The proposition that the plaintiff, having received a paper designating her lot by its ward number as 4,509 from the Croton water department, was guilty of negligence in accepting a bill from a different department, cannot operate to her prejudice. She had a right to assume that her bill was, in all respects, correctly prepared, under the circumstances, and that the only duty left undischarged was the payment of the sum set down as the tax imposed. The figures representing that, were the only' ones, doubtless, to which her attention was directed. This would be the natural impulse and the natural order of procedure. It has been determined, however, by the court of last resort, that it does not affect the right of the payer to recover in cases'of mutual mistake, that the mistake arose from a want of care on his part. (Kingston Bank v. Eltinge, 40 N. Y., 391.) The party having the legal right must prevail. It is unnecessary to pursue this subject farther, however, The case of Mayer v. The Mayor (supra), is conclusive of the right of the plaintiff to recover.

There must be a new trial ordered, with costs to abide, event.

Davis, P. J., and Daniels, J., concurred.

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


author: Beady, J.: Davis, P. J.:

text:
    EDWARD GROUT and another, Administrators, etc., Respondents, v. MARY J. COOPER, Appellant.

      Striking out material allegations from complaint — derrmrrer to such complaint because wanting such allegations — costs.
    Upon defendant’s motion, certain allegations of tlie complaint were stricken out , as immaterial; subsequently defendant demurred to the complaint on the ground that it was defective in not containing the allegations which had been stricken out, which demurrer was overruled by the Special Term, on the ground that defendant was estopped from alleging the materiality of that which had been stricken out. Held, that the order overruling the demurrer should be reversed,with costs to abide the event, and that plaintiff have leave to amend the complaint.
    Appeal from an order overruling a demurrer to the complaint.

      E. H. Berm, for the appellant.

      Edward S. Clinch, for the respondents.
   Beady, J.:

This action was commenced to recover the rents and profits of certain real estate which was held adversely to plaintiffs’ intestate. There is no allegation in the complaint that the intestate ever obtained possession of the premises in any form. The defendant for this reason insists that this action cannot be maintained, and in that he is right. It is not necessary to cite the authorities to prove it. It is substantially conceded also by the plaintiffs, and there is therefore really no difference between the respective counsel on that subject. It appeared, however, upon the argument, that the complaint did contain an averment, that, in an action of ejectment brought by the heirs of Francis Grout, the intestate, the Superior Court had adjudged that he became entitled to the immediate possession, as the owner in fee simple of one-sixth part of the real estate described in the complaint, and the rents, issues, and profits thereof, but it was stricken out as irrelevant or immaterial upon the defendant’s application. The motion therefor, it was stated upon the argument, passed against the plaintiffs by default. If that allegation were in the complaint, the point taken by the defendant could not be sustained, and the case on appeal therefore, uniting the admissions made in open court with the points printed and the complaint, presents the anomaly of a successful motion to strike out an essential allegation of the complaint, and, seemingly, to prepare it for a demurrer.

' This may not have been the design of the motion, but it is the effect, and this'proceeding impressed the learned justice at Special Term as one from which the defendant should derive no advantage. It affects us in the same way. There is no precedent for it that we know of, and the practice, even if unpremeditated in its effects, is to be condemned. The defendant should be estopped in such a case from assailing the paper which he has weakened by his attack upon it, and held to the consequences of his attitude, that what he sought to remove as unnecessary in the case against him, is in fact so. It may not be practical to carry out this theory in the face of the statute and the decisions relating to the subject embraced in the paragraph stricken out, but it would be just, if it could be done, to do it. The defendant was, nevertheless, right on the question of the insufficiency of the complaint, and his demurrer should have been successful, with a proper allowance to the plaintiffs as to the amendment of their complaint. We think, under all the circumstances, that the order appealed from must be reversed, but we think it should be with costs only to abide the event, and with liberty to the plaintiffs to amend their complaint.

DaNIELs, J., concurred.

Davis, P. J.:

I concur in the result. I do not'see that the order striking out the averment can have any legal effect upon the demurrer to the complaint. The court cannot go behind the complaint as amended by the order striking out certain averments, to determine whether or not, with those averments m, the complaint would not have been good. As demurred to it is bad, and that disposes of the demurrer. But in.fixing terms upon which the plaintiff may ■amend, we may act upon the suggestion of the admitted fact, that the defendant by his motion had reduced the complaint to a demur-rable condition. That fact should induce us to allow an amendment on easy terms, and this, I think, is within our power under the Code.

Order reversed, with costs to abide the event, and with leave to plaintiffs to amend.


author: Daniels, J.:

text:
    ANNE R. HANN, Appellant, v. BAKER VAN VOORHIS and others, Respondents.
    8 B. 3. (5th ed.), 21, § 76 and 264, §§ 48,44 — creditors of cestui que trust cannot reach, surplus income.

    Although the income of a trust estate,, created by a person other than the beneficiary, may be greater than is necessary for the education and support of the cestui que trust, yet the judgment creditors of the latter cannot secure the payment of their claims out of such surplus income.

      Campbell v. Foster (35 N. Y., 361) followed.
    Appeal from an order sustaining a demurrer to the plaintiff’s complaint, asking that her judgment against the defendant, Baker Van Voorhis, he satisfied out of certain income of a trust estate held for the benefit of Van Voorhis, which income was not necessary for his support.

      Townsend & Weed, for the appellant.

      Geo. W. Stephens, for the respondents.
   Daniels, J.:

The plaintiff, as a judgment creditor of the defendant Baker Van Voorhis, has brought this action to secure satisfaction of her judgment out of so much of the proceeds of a trust estate of real and personal property as is not necessary for his support and maintenance. The trust was created by the will of Elias W. 1 an Voorhis, and it is alleged that the income is greater than the amount required to reasonably support and maintain the judgment debtor. No surplus of the income was alleged to exist, in point of fact, at the time when the suit was commenced. But it was averred that his income from the trust amounted to the sum of $1,300 annually, and that $600 was sufficient for his annual support. These facts are admitted by the defendant’s demurrer, and they would, upon the ordinary principles of construction, seem to be sufficient to present a case within the section of the statute which declares that, “ where a trust is created to receive the rents and profits of lands, and no valid direction for accumulation is given, the surplus of .such rents and ‘pi'ofits, beyond the sum that may be necessary for the education and support of the person for whose benefit the trust is created, shall be liable in equity to the claims of the creditors of such person, in the same manner as other personal property which cannot be reached by an execution at law.” (3 R. S. [5th ed.], 21, § 76.) And that view has in many instances been deemed entirely consistent with another statutory provision, exempting from actions of this description trusts created by, and funds proceeding from, some other person than the judgment debtor. (3 R. S. [5th ed.], 264, §§43, 44; Hallett v. Thompson, 5 Paige, 583; Degraw v. Clason, 11 id., 136, 140, 141; Rider v. Mason, 4 Sand. Ch., 351; Genet v. Beekman, 45 Barb., 382.) And Stewart v. McMartin (5 Barb., 438) does not really conflict with them, because it was not pretended in that ease that the annuity payable to the defendant under the trust deed of her father, was more than was necessary for her support. (Id., 444.) In Bramhall v. Ferris (14 N. Y., 41) the liability to the claims of creditors of the surplus beyond the sum necessary for support and education, was expressly conceded. (Id. 47.) But the creditor’s action was defeated for the reason that the right of the debtor to thé income was rendered determinable in the event of any judgment affecting it being recovered against him. In Graff v. Bonnett (31 N. Y., 9) the action was brought by a receiver in supplementary proceedings, who had no power to reach the surplus beyond the support of the debtor) if it could be shown that any would come into existence. Judge HogbbooM, who delivered the prevailing opinion, said that “if this interest is not alienable so far as it is necessary for the support of the cestui que trust, then, I think it has been well held in several of the cases, that it will not pass to a receiver until it has actually become due, and perhaps not until it has been in some way determined that there will be a surplus over and above the inalienable right of the judgment debtor to a support; for it is only such surplus which is liable to the claims of creditors; and this surplus, it has been held, is not properly ascertainable under supplementary proceedings to discover and appropriate the debtor’s property to the satisfaction of the judgment, but only in a suit or proceeding where the issue is directly made upon the amount necessary for the debt- or’s support, and to which the trustees and cestui que trust are parties.” (Id., 11, 12.) And Locke v. Locke (2 Keyes, 457), which was a similar action, left the question now before the court in substantially the same condition.

This action has been brought in the form suggested above, but the case of Campbell v. Foster (35 N. Y., 361) prevents it from being maintained. That was also a suit by a receiver in supplementary proceedings. But the position was explicitly taken in the opinion, that the income of such a trust was beyond the reach of the creditors of the beneficiary. Other reasons were also assigned for defeating the action ; but at the end of the case, the judgment is stated to have been affirmed, on the ground that the fund c’ould not be reached. The disability was not restricted to actions by receivers, but the broad position taken in the opinion was sustained ; and that was, that the fund was not liable to the claims of creditors. As long as that is maintained, an action of the nature of that brought by the plaintiff cannot succeed.

It is not for this court to deny the authority of that decision ; and for that reason the order made in the present case should be affirmed; but as the plaintiff’s claim is clearly just, and the income of the defendant sufficient to support him and pay the debt also, it should be without costs.

Beady, J., concurred.

Order affirmed, without costs.


text:
    THE PEOPLE ex rel. DAVID WOOLF v. AARON JACOBS, Respondent.

      Mne for contempt — counsel fee cannot be included in — effect of including it in commitment — Habeas corpus.

    Where the court, in pursuance of 8 Bevised Statutes (5th ed.), 853, section 21, imposes a fine upon one who has been guilty of a contempt, it has no authority to include therein an allowance for counsel fees.
    The respondent, having been duly adjudged guilty of contempt in conveying certain real estate in violation of an injunction, was committed until he should pay a fine consisting of the value of the property so conveyed, the costs and expenses of the proceeding, and a counsel fee of $150. Subsequently he was discharged in proceedings on habeas corpus, on the ground that the unauthorized addition of the counsel fee to the fine authorized by the statute, rendered the commitment void. Upon a certiorari to review these proceedings, held, that though so much of the commitment as required him to pay the counsel fee was unauthorized, yet, until the respondent paid the sums legally adjudged against him, he was lawfully held in custody under the commitment; and that the order discharging him should be reversed, and he be remanded to the custody of the sheriff.
    If the respondent desired to review the order of commitment, he should have appealed therefrom.
    Weit of certiorari issued- to review proceedings bad on habeas corpus, in which the respondent, Aaron Jacobs, was discharged from “the custody of the sheriff of the county of New York.

      C. Bainbridge Smith, for the relator.

      Samuel J. Crooks, for the respondent.
   Daniels, J.:

A judgment was recovered against the respondent, in the Superior Court of the city of New York, on which, after filing a transcript and docketing it in the office of the clerk of the county of New York, an execution against property was issued and returned in part unsatisfied. Supplementary proceedings were thereupon taken against him, in which he ivas forbidden by the order of one of the judges of that court from making any transfer, or other disposition of his property, not by law exempt from execu tion, and from all interference therewith, during the continuance of the order. While that order was binding and operative upon him, he sold and conveyed a farm owned by him in Ulster county. And for that violation of the order, proceedings were taken against him before one of the judges of the same court to punish him for a contempt. In the course of them he was brought before the judge, a hearing of this charge was had, and an adjudication on the proofs produced was made against him. An appeal was then taken by him to the General Term, where the order was affirmed. The defendant was then brought before the judge by an attachment, examined on interrogatories, and further proofs taken, on which an adjudication was made, by which the value of the farm was ascertained to be the sum of $2,068.29, and the relator’s costs and expenses adjusted at the sum of $252.25. These facts were, according to the terms and recitals of the commitment, determined upon proofs produced before the judge satisfactorily sustaining those conclusions. And no objection to the sufficiency of the proofs seems to - have been taken on the hearing of the habeas corpus, and none was urged upon the argument before this court. In fact, no such objection could with any propriety be taken, because the proofs themselves did not appear upon the hearing had on the return to the writ of habeas corpus. But it was then claimed, as it has also been before this court, in support of the discharge, that, as the judge added to those amounts the sum of $150, as a reasonable counsel fee to the relator’s couse], and included that in the fine imposed upon the respondent, and directed his commitment and imprisonment until all should be paid, it nullified the entire proceeding, and entitled the respondent to be set at liberty.

There seems to be no reason for doubting the entire correctness of the position taken, that the allowance made for counsel fee was without .authority. In this class of cases the statute has plainly prescribed what may be done with the person found to be in contempt; and it is, that a fine shall be imposed upon him sufficient to indemnify the injured party for the loss and injury produced by the misconduct, and to satisfy his costs and expenses. (3 R. S. [5th ed.], 853, § 21.) And for the non-payment of that fine, .the party guilty of the misconduct may be lawfully imprisoned until it shall be paid, or he be otherwise discharged according to law. (Id., §§ 20-24.) The judge bad no authority for adding a counsel fee to the costs and expenses, when the statute declared that to be all that could be allowed beyond the indemnity for the loss produced by the party’s misconduct ; and a proper allowance for that had previously been made. (Sudlow v. Knox, 7 Abb. Pr. [N. S.], 411.) And because of that addition, and the inclusion of the amount of it in the fine imposed, the respondent was discharged on the writ of habeas corpus. It was held that this rendered the whole proceeding for his punishment void, and entitled him to his discharge upon the habeas corpus. How the conclusion arrived at could legally follow from this circumstance, it is difficult to see. For the statute declaring the cases in which discharges maybe made from, imprisonment upon habeas corpus, has provided that it shall be the duty of the court or officer hearing the case, forthwith to remand the applicant for the writ, when it shall appear that he is detained in custody for any contempt, specially and plainly charged’ in the commitment, by some court, officer, or body having authority to commit for the contempt so charged. (3 B. S. [5th ed.], 881, § 55( sub. 3.) The only exception made to the provision is, that the discharge may be directed when it appears that the prisoner is in custody on civil process, and the jurisdiction of the court or officer has been exceeded, either as to matter, place, sum, or person. (3 H. S. [5th ed.], 887, § 56.) But this provision did not entitle the respondent to be discharged in this case, for the jurisdiction' of the officer was not exceeded by the mere addition of this unauthorized counsel fee. His jurisdiction as to amount was unlimited, and therefore could not be exceeded by the erroneous allowance of a specific sum to which the relator had no right. And if it had been exceeded to that extent alone, no good reason can exist for holding that sufficient to render the residue of the sums allowed ineffectual, as to which there was no defect whatever in the jurisdiction. • It was erroneous to allow the counsel fee, but that was not an error which annulled the other two items lawfully required to be paid. The aggregate fine was made up of three distinct items, two of which, according to the facts stated in the commitment, were free from all objection. For the non-payment of those two, the imprisonment and commitment were lawful; and while they remained unpaid, sufficient legal cause existed for the detention of the respondent in custody. It is true they were included with the counsel fee, in the aggregate line, but as long as they were distinctly severable by the facts recited in the commitment, that could work no possible injury to the respondent. The amounts due for the loss occasioned by his misconduct, and for costs and expenses, were clearly and distinctly stated, ,and if he could not be detained for the counsel fee, he should have paid the others before he applied for his discharge. They were, as long as they remained unpaid, legal causes for his detention in custody, plainly and specially stated in the commitment, and, according to the statute, required him to be remanded, instead of being discharged. As to them, certainly, the jurisdiction of the judge was in no way exceeded. The case of Sudlow v. Knox (supra), was supposed to sustain a different conclusion, but an examination of the facts will show that to be a mistake. That was a proceeding by way of appeal, and while the court held the allowance of counsel fees to be improper, it did not hold that alone to be sufficient to render the entire order invalid. The contempt held to be established, consisted in the refusal of the party proceeded against to leave his books with the referee after he had produced them, and to permit a witness to examine them. And for those acts a gross sum was imposed upon him as a fine, without any proof of loss or injury to justify it, and a counsel fee added to the amount. There was no apportionment of the amount to the different subjects of the order, as there was in the present ease. And when the proceeding was found to be erroneous, there was no other course which could be adopted for the correction of the errors, than a reversal of the entire order.

The proceeding against the respondent, for the contempt, was what the law denominates a special proceeding. (Code, §§ 1-3.) And the final order made in it was the subject of an appeal, on which the propriety of the adjudication made could be thoroughly reviewed. (Yol. 5, N. Y. Statutes at Large, 133.) By the second section of this act, section 330 of the Code of Procedure is rendered applicable to such a review. And that provides that the appellate court may affirm, reverse, or modify the order appealed from. If an appeal had been taken from the order, it would have been the duty of the court to correct or modify the order by rejecting the allowance made by it for the counsel fee, and to affirm it as to so much of the fine as was imposed for the loss or injury, and for the costs and expenses. No difficulty whatever could exist in the way of such a modification, as long as the several amounts were definitely declared, of which the gross sum was composed. And that would have been the extent of the correction or relief which could be lawfully awarded upon an appeal. By necessary implication the residue of the order was rendered lawful and valid by the operation and effect of this legislation. It was sustained by the statute, under which the proceeding was taken, as to the two most important adjudications contained in it; and the law only allowed its reversal or "modification so far as it was without any support of that description. It was lawful in part, and erroneous, or without authority, in part. And it was only as to the latter that it required correction, or could have been corrected, if an appeal had been taken in the proceeding. By such a correction the imprisonment would have-been limited to the payment of the amount required to indemnify the creditor for his loss and injury, and for his costs and expenses. And to that extent the practice prescribed by the legislature clearly gave it validity, even in a direct proceeding taken by way of an appeal for the purpose of reviewing it. From that it necessarily follows that, to that extent, it lawfully justified the respondent’s detention in custody. For it could not be valid as to an appeal, and invalid by way of a return to a writ of habeas corpus. That would be a plain absurdity which the law. cannot be chargeable with maintaining. So far as these several statutes relate to this subject, they are required to be construed together; and as long as they contain nothing inconsistent with that conclusion, they should be so harmonized as to maintain the same result.

More liberty is taken with legal proceedings when they are brought under review by writ of error or appeal, than when they are only collaterally in question, as is the case upon a writ of habeas corpus. In the former, every thing properly appertaining to them is brought before the court, and all material errors can be corrected; while in the latter, only the adjudication or final process can properly be returned, and no means of correction or modification exists. But one of two alternatives can be followed : the proceeding must be held invalid, or a lawful justification for imprisonment. And every intendment that can reasonably be entertained is indulged in its favor, for that reason, where it may be collaterally in question. Upon this subject Judge Denio held, in deciding the case of People v. Hackley (24 N. Y., 74, 77), that, as a general rule, the propriety of a commitment for contempt is not examinable in any other court than the one by which it was awarded. This is .especially true where the proceeding by which it is'sought to be questioned is a writ of habeas corpus, as the question on the validity of the judgment then arises collaterally, and not by the way of review. The habeas corpus act, moreover, declares that where the detention of the party seeking to be discharged by habeas corpus appears to be for any contempt, plainly and specifically charged in any commitment ordered by a court of competent jurisdiction, he shall be remanded to the custody in which he was found. In this ease it is not denied that a contempt was specially and plainly charged in the commitment; and it was rendered none the less so because a sum of money was required to be paid for it beyond that prescribed by law, as long as it was capable of being deducted from the other sums lawfully required to be paid.

It was supposed by counsel on the argument, that the decision made in the ease of The People on the relation of Tweed v. Liscomb (60 N.Y.), may have introduced a new rule for the government of this class of cases. But if it did, this case is not included within it, for the reason that the relator in that case had complied with what the court held to be the lawful portion of the judgment rendered against him. To bring the respondent within that case, he should certainly have first paid the amounts adjudged against him as an indemnity for the loss or injury produced to the relator, and for his costs and expenses. The ease of Duffy has as little to do with the present controversy. He was in custody under the judgment of a competent criminal court, pronounced upon what was no more than erroneous decisions made in the course of his trial and sentence.

Until the respondent paid the sums legally adjudged against him, he was lawfully held in custody under the commitment. Instead of being discharged he should have been remanded. The order made for bis discharge should therefore be reversed, with costs, and he should be remanded to the custody of the sheriff.

Davis, P. J., and Beady, J., concurred.

Ordered accordingly.


author: Daotels, J.:

text:
    In the Matter of the Petition of CLARA M. PEUGNET to Vacate an Assessment.

      Designation of official papers in New York, under chap. 853, of 1868, and' chap. 383, of 1870- — duty of clerks of boa/i'ds of aldermen when none a/redesignated— Ohap. 580, of 1873 — effect of certificate of commissioner's appointed under.

    In order to render the designation of a paper, appointed to publish the proceedings of the common council under chapter 853, Laws of 1868, operative and complete, it is necessary that its name and title should be communicated to the common council and to the clerk of each board thereof.
    As no newspapers were ever designated under chapter 383, Laws of 1870, the prohibition therein contained against publishing notices in papers other than those to be designated thereunder, never became operative.
    Where no newspapers have been designated to publish notices of the passage of resolutions authorizing improvements to be made, it is, under section 30, chapter 137, Laws of 1870, the duty of the clerks of the respective boards of the eommon council to make-the publication in any newspaper that can be procured to make it.
    Where the contract for repairing a street, to defray the expenses of which an assessment has been laid, has been certified to be without fraud, by the commissioners appointed under chapter 580, Laws of 1873, the assessment cannot be set aside for a failure to publish the resolution authorizing the improvement as required by law.
    Appeal by the Mayor, etc., of the city of New York, from an order vacating an assessment made upon two lots owned by the petitioner, for the expenses of repaving Fortieth street, between Third and Madison avenues. •

      Wm. Barnes, for the appellant.

      T. F. Neville, for the respondent.
   Daotels, J.:

The assessment was set aside and vacated because notice of the resolution directing the work was not published for three days before its passage or adoption by either board of the common council. It was shown to have been introduced in the board of aldermen on the 9th day of January, and adopted by it on the 11th of March, 1871, and in the. hoard of assistant aldermen on the 24th, and adopted on the 27th of April, 1871, and approved by the mayor on the following day. One daily and three weekly papers were designated by the mayor 'and comptroller, on the 1st of December, 1868, for the publication of the proceedings of the common council, and the resolution was shown not to have been published by the daily papers before its adoption by either board of the common council. But, inasmuch as it did not appear that the designation made had ever been communicated to the common council, or to the clerk of each or either hoard, as the act of 1868 required it should be, to render the designation operative and complete, the failure to publish notice of the resolution in either of those papers, did not make out the petitioner’s case, or render the proceedings invalid. (Laws of 1868, vol. 2, p. 2008; Matter of Anderson, recently decided by the Court of Appeals.)

By section 1, of chapter 383, of the Laws of 1870, not more than seven daily and six weekly newspapers were to be designated by the mayor and comptroller for the publication of legislative, executive, and assessment proceedings. But it was shown that no designation whatever was made under this requirement, and consequently the publication could not have been made in compliance with that provision of the law. This act declared that it should not be lawful for any officer to pay, or allow to be paid, any money for advertising, except to such newspapers. (Laws of 1870, vol. 1, p. 882.) But that prohibition could only become operative by the designation being made of the newspapers mentioned in the act. The act could be complied with only by that being first made, so that the proceedings could be published in such papers. As it never was done, the duty created never became an active one.

But, by another act, the publication of the notice was rendered imperative, and it was required to be done through the agency of the clerks of the respective boards. (Laws of 1870, vol. 1, p. 369, § 20.) And as they were not bound, for the reasons already stated, to publish in the newspapers designated in- 1868, and none were selected under the act of 1870, they were necessarily left at liberty to make the publication through any newspapers that could be procured to make it, and that duty it was not shown they had failed to perform.

The last act cited required, before. any vote should be taken in either board upon the resolution, that notice of it should be published at least three days; and it was alleged that this notice had not been given. But the fact that it was not published in either of the papers designated in 1868, in which there was no obligation to publish it, nor in the Transcript, which, for want of time after its own appointment, could not have published it before the time of its adoption, did not sustain that allegation. The notice was required to be published before either board voted upon the resolution, and that may very well have been done in even a weekly paper, between the time when the resolution was introduced into the board of aldermen, and the vote taken upon it, which was a period of over two months, or in any daily, while it was before the board of assistant aldermen, and before they voted upon it. After being adopted by either board, a different publication was required. That was to include the resolution itself with the yeas and nays, and the names of the persons voting for or against it; and it was to be made immediately after the adjournment of the board adopting it, a,nd before it should be sent to the other board, or to the mayor for his approval. (Laws of 1870, 369, § 20.)

The clerks of the respective boards, were required to have these publications made, and, by the evidence which was taken, they were not shown to have neglected the performance of the duty. It was shown that the Transcript was designated as the official paper, pursuant to section 1, of chapter 574, of the Laws of 1871, on the twenty-fifth day of April of that year. But no evidence was given of the want of any part of the requisite publication, which by possibility might have been made in that paper.

If the notice had not been published, or there had been any omission to publish the resolution with the yeas and nays, and the names of the persons voting for or against it, that was a fact susceptible of direct and satisfactory proof, which it was for the applicant to make for tbe purpose of legally supporting the application; but that was not done. The case of Levy (11 S. 0. [4 IIun], 501), was relied upon as sustaining the sufficiency of the proof given upon the hearing. But the decision since made in the case of Anderson (supra), by the Court of Appeals, has so far modified the conclusion adopted in that case, as to deprive it of its effect as a controlling authority in the present controversy.

But even if the notice was not published, the assessment made on the petitioner’s property cannot legally be vacated. It was made for the expenses of a repavement, which, in ordinary eases, would be invalid for want of such publication. Bor thé'act of 1870 did prohibit the improvement from being made without the publication of the requisite notice for at least the period of three days. (Chapter 137, Laws of 1870, § 20.) But this case was relieved of the effect of that provision, by another proceeding which appeared to have been taken before the assessment was made.

The proofs produced upon the hearing of the petitioner’s application, contained an admission that the contract, for the expenses of performing which the present assessment was made, had been certified by the commissioners named in chapter 580, of the Laws of 1872. And it has not been claimed that they failed, before they did that, to conform in any respect to the provisions of that act. Under the admission which was made, it is to be presumed that the commissioners heard the case as the statute required them to do it, and afterward certified that the contract was free from fraud. For, as they had no power to make any other certificate, if they made any at all in the case under the provisions contained in the act, that must have been the one they were admitted to have made. And that legalized the contract from that time, even though the notice of the resolution never had been published in any paper as the act of 1870 required it should be. The statute of 1872 (Laws of 1872, vol. 2,1412, § 1) included contracts for repaving, and the certificate, when made by a majority of the commissioners, corrected the irregularity in making the contract, arising out of the omission to publish the resolution directing the improvement. For it was ratified and confirmed by the provisions of the act, as soon as the certificate was made. After that, it became the duty of the comptroller to issue assessment bonds to obtain the money to pay the expenses of the improyement. And then be was to certify the expenses to the board of assessors, which was thereupon not only authorized, but required, in the manner provided by law, to assess such expenses upon the property benefited by the improvement. (Laws of 1872, 1414, 1415, §§ 4, 5.) The applicant’s property must have been benefited by the work which was done under the contract, and under these provisions it was required to bear its proportionate part of the expenses. The assessment itself has not been complained of as irregularly laid by the proceedings taken for that purpose after the confirmation of the contract, and it must now be considered lawful and proper. For it could not have been the object of the law to provide for the imposition of an invalid assessment, by means of the provisions it contained, or for one which, when made according to its terms, the courts would be obliged to vacate for want of compliance with some other provision of law, relating to an antecedent portion of the proceedings. The design on the contrary was to provide, as it did in express terms, for an assessment through which so much of the expenses of the improvement as should be borne by the property, could be reimbursed to the city. And the provisions of the act, by necessary implication, rendered that valid, when imposed upon the basis of the commissioners’ certificate that the contract for the work had been entered into, and the work itself performed, without fraud.

That this act was within the power of the legislature, is now settled too well to be 'questioned. (Lennon v. Mayor, 55 N. Y., 361; Matter of Van Antwerp, 56 id., 261; Matter of Anderson, (supra), Litchfield v. Vernon, 41 N. Y., 123.) And as its effect was to render the assessment a legal one which is the subject of the present controversy, the order appealed from should be reversed, with ten dollars costs besides disbursements, and an. order entered directing a further hearing of the case.

Davis, P. J., and Beady, J., concurred.

Ordered accordingly.