author: Finch, J.

text:
    Joshua M. Van Cott, Resp’t, v. John Prentice, et al. Ex’rs, etc., of John H. Prentice, dec’d, Appl’t.

      (Court of Appeals,

      Filed January, 18, 1887.)
    1. Trust — Ip fully constituted is enforceable though not supported BY A CONSIDERATION.
    A trust of properly if fully constituted is not open to the objection in an action brought by a beneficiary to secure its enforcement that it is voluntary and without consideration.

      2. Same — Power of revocation — What not inconsistent with completion OF TRUST.
    An instrument denominated by the grantor as a deed of trust transferred to a trustee named and appointed, therein securities and funds, directing the disposition of the income during the life of the grantor to certain beneficiaries, and of the principal according to accompanying sealed instructions not to be opened till his death. A full power of revocation was reserved and it was provided as a condition of the grant, that the beneficiaries should have no legal or equitable right to the principal or income, that the trustee should hold until the grantor’s death subject to his direction and control and that an attempt at interference with the execution of the trust, or to claim the securities contrary to the conditions imposed should determine the trust. Held, that a valid trust was created by the instrument with the completion of which neither the power of revocation nor the provisions determining the trust were inconsistent, and that the provisions denying the beneficiaries any legal or equitable right to either principal or interest was merely an amplification of the idea involved in the power of revocation.
    8. Trust deed — What considered as forming part of.
    A paper containing instructions to a trustee as to the final disposition of trust property and which is not to be opened until the death of the person creating the trust is not testamentary in its nature, but forms a part of the deed of trust.
    4. Same — Perpetuities what provisions not against statute of.
    A provision of the trust deed devoted at the settlor’s death, any further income accruing to the use of Mrs. H. and her three children, — one third to her, and the residue equally to said children, or the survivor or survivors of them and directs the principal to be delivered to the said persons or survivor or survivors, in the same proportion, when the youngest, of said surviving children shall come of legal age, unless in the exercise of his discretion he shall sooner make such distribution of said principal. Held, that the survivorship referred to was that existing at the date of the death of the settlor, and that the consequent duration of the trust was during the life of the settlor, and the minority of the youngest of the three children living at his death, so that the absolute ownership was suspended only during the continuance of those two lives at most, both of which were in being when the trust was created.
    ■5. Amendment after trial — When not allowable.
    An action was brought against the defendants in their representative capacity and the summons and complaint in an action indicated that intention, the complaint conceding that the defendants asserted another title. Held, that an amendment made after trial amending the summons and complaint, and ordering the judgment awarded to be entered against the defendants individually and de bonis propriis substituted a new and different cause of action and was erroneously granted.
    Appeal from a judgment of the supreme court, general term, second department.
    This action was brought against the defendants, as executors of the last will and testament of John H. Prentice deceased, to enforce a settlement of personal securities. The complaint alleged the plaintiff’s title as trustee of an express trust to tbe chattels, securities and interest therein described and that he was entitled to the possession thereof for the purposes of the trust, and that they were in the possession of the defendants who wrongly withheld them. The trust alleged was created by the instruments hereinafter set forth.
    “ This indenture, made this fourth day of March, 1871, between John H. Prentice, of the city of Brooklyn, of the first part, and Joshua M. Yan Cott, of the same plaee, of the second part, witnesseth:
    “For good and sufficient consideration the said Prentice hereby grants and assigns to the said Joshua M. Yan Cott the securities enumerated in Schedule A hereto subjoined, upon the trusts hereinafter more fully set forth, to-wit:
    “ First. To. collect and receive the sums due, and to become due thereon, for principal and interest, and to discharge the same, respectively, as paid.
    “ Second. From time to time to invest and reinvest the sums received thereon for principal in good bonds and mortgages, or in public securities, subject to my direction or approval.
    “ Third. To pay over the interest from time to time received on such securities or investments and reinvestments to Clarence King, of New Haven, in the state of Connecticut, or to such other person or persons as I shall from time to time direct, — the said King having no title to or beneficial interest in said payments ; and the said King shall pay over said interest, as received, to the person and for the uses specified in confidential written instructions, bearing even date herewith, signed in duplicate, and to be delivered to the said Yan Cott and the said King; and it is hereby declared and made a condition of these trusts that the beneficiaries thereof have no legal or equitable right to the principal or income of said securities or investments, but receive the same only as herein provided, as proceeding solely from the bounty of said Prentice, and subject to his power to revoke the trusts hereby created.”
    “ Fifth. The said Joshua M. Yan Cott shall hold the principal sums represented by the said securities and investments and reinvestments subject to the directions of the said Prentice contained in a private and confidential paper bearing even date herewith, delivered to him in a sealed envelope, to be opened by him at my death if he shall survive me, subject in the meanwhile to my direction and pleasure, and to be returned to me in the event of my surviving him, and absolutely subject to my direction and control until the event of my death.
    “ Sixth. In the event that the said Clarence King, or that the said beneficiaries, or that any person or persons whatever, shall, by any suit or proceeding at law or in equity, interfere with the execution of the trusts herein declared, or make any claim against the said Prentice or the said Van Cott to the said securities or investments or reinvestments, or the income thereof, contrary to the provisions or conditions of the said trusts, then and thenceforth the. said trusts shall' cease, determine, and become wholly void, and the said securities, investments, and reinvestments with all the interest, income, and increase thereof, shall thenceforth belong wholly to me discharged of the said trusts.
    “ In witness whereof I have hereunto set my hand and seal the day and year first above written.
    JOHN H. Prentice.” [l. s.]
    “Private and confidential declaration of the circumstances under which a deed of trust, of even date herewith, is executed by me to Joshua M. Van Cott, and directions to him as to the disposition to be made by him of the capital or principal sum in such trust, in the event of his surviving me, without my making any express testamentary or other disposition thereof in accordance with the condition of said trust.
    “ The late George S. Howland was provisionally interested with me in a real-estate speculation in the city of Brooklyn* He failed to make the payments stipulated on his part, and. thereby was disentitled to share in the nominal profits eventually made. By reason of his failure to pay as stipulated, I collaterally and incidentally lost and was damaged beyond his nominal share of' such profits if he had legally been entitled to them* Mr. Howland’s affairs became involved, and he died apparently insolvent, leaving a widow and three children surviving him* Neither they nor the creditors of Mr. Howland’s estate have any legal claim upon me. But I am moved by my sympathy for Mrs. Howland and those three children, for whom Mr. How-land left no provision, to set apart the securities mentioned in said deed of trust, and devote the income thereof for their benefit, according to the terms of the said trust. And I now direct that, unless I shall otherwise provide in my life-time or by testamentary disposition, the said trustee shall, after my death, devote any further income from the said securities, or the rein-vestments thereof, to the use of the said Mrs. Howland and three children, — one-third to her, and the residue equally to the said children, or the survivors or survivor of them; and the principal of said securities, or the reinvestments thereof, shall be delivered to the said persons, or survivor or survivors, in the same proportion, when the youngest of said surviving children shall come of legal age, unless, in the exercise of his discretion, he shall sooner make such distribution of said principal. And he shall be held harmless for all he shall do in good faith in carrying out my intentions as herein declared, or as in said trust deed provided.

      - “ In witness whereof I have hereunto set my hand and seal this fourth day of March, 1871. JOHN Prentice.” [l. s.]

      Aaron J. Vanderpoel, for appl’t. Joshua M. Van Oott, for resp’t

       Affirming 35 Hun, 317.

   Finch, J.

The objection that the trust here sought to be enforced was voluntary and without consideration has no weight, if it was, in fact, fully and completely constituted. Young v. Young, 80 N. Y. 437; Jones v. Lock, L. R., 1 Ch. 25. By what the grantor denominated his deed of trust he transferred to the trustee named and appointed in the instrument, the securities and funds now-in question, directing the income during his life to be paid to Clarence King, to be by him appropriated to the use of Mrs. Howland and her three daughters, in specified proportions, and at his death the principal to be disposed of in oc-cordance with sealed instructions therewith delivered, but not to be opened till that event. A full power of revocation was reserved, and it was proved as a condition of the grant that the beneficiaries should have no legal or equitable right to the principal or income; that the trustee should hold subject to the grantor’s direction and control, until the event of his death, and that if any attempt should be made to interfere with the execution of the trust, or to claim the securities contrary to the conditions imposed, then the trust should at once cease and determine.

Neither the power of revocation nor the provisions determining the trust in the event of a legal interference, on the death of the trustee in the life of the settlor, are in the least inconsistent with the trust, as completely and perfectly constituted. They both assume its separate and effective existence, and provide merely for its termination upon the happening of specified contingent events. But attention is called to the clauses in the deed which -require the trustee to hold and manage the fund subject to the direction and control of the settlor, and deny to the beneficiaries any legal or equitable right to either principal or interest. The latter provision is, plainly, but an amplification of the idea involved in the powet_ of revocation, for the grantor adds that the beneficiaries shall take what they receive as proceeding from his bounty, and subject to his right to revoke at any moment. It is made by the statute an element of such a trust, when the subject is real estate, that the beneficiaries shall take no estate or interest in the lands, but may simply enforce the trust in equity. 1 Rev. Stat, 729, § 60. The beneficiaries in the present trust must have such equitable right, but measured and limited by the lawful terms and conditions of the deed; and when, therefore, it was provided that they should “ have no legal or equitable right to the principal or income ” of the transferred securities, the clause unexplained might seem to some minds a denial of the equitable right to enforce the trust, and so inconsistent witb its necessary and essential qualities as sucb. But that equitable right of enforcement is not in terms denied, and the language withholding a right in the fund is not stronger than that of the statute when it denies a right to the land and vests the whole legal and equitable estate in the trustee.

We ought not to put the creator of this trust in the attitude of deliberately nullifying his own evident purpose. That he meant to create an effective trust is beyond all question, and a construction which makes him destroy, in the very effort to create, should not prevail if there be any other rational interpretation. He gives us his own explanation. After saying what right the beneficiaries shall not have, he specifies what right they shall have in the phrase “ but receive the same only as herein provided, as proceeding solely from the bounty of said Prentice, and subject to his power to revoke the trusts hereby created.”

Since he intended to create an effective trust, and declared he had done so, and delivered the possession and passed the title of the fund to the selected trustee, we are bound to understand his denial of an equitable right to the benficiaries as meaning only to emphasize Ins own control flowing from the voluntary character of his act and his reserved power of revocation, as a supposed and actual result of his own right to end his bounty at any moment, and not as a denial of the right of the beneficiaries to enforce the trust, as against the trustee, while it should remain in existence and the settlor, withholding his power of revocation, should permit it to stand. His meaning undoubtedly was that, as against himself and his own freedom of action, the beneficiaries should possess no legal or equitable right, and not that, as against the trustee, while the settlement stood unrevoked, there should be no equitable recourse. I think that the phraseology in which the settlor forbids an interference with the trust confirms that construction. The language of the deed is :

“ In the event that the said Clarence King, or that the said beneficiaries, or that any person or persons whatever, shall by any suit or proceeding at law or in equity interfere with the execution of the trusts herein declared, or make any claim against the said Prentice or the said Van Cott to the said securities or investments or reinvestments or the income thereof, contrary to the provisions or conditions of the said trusts,” then the trusts shall cease and determine.

The motive of this provision doubtless was a fear that some creditor of Howland might attack the trust fund as being in truth a debt due him paid to his wife and children ; and that fear explains the reiteration by the settlor of the idea that the fund came wholly from Ms bounty, and was purely voluntary. But wliat he guards against in the clause quoted is an outside interference preventing the execution of the trust, and .a suit, legal or equitable, to enforce a claim contrary to its provisions ; and this, for the benefit and protection of the beneficiaries. A suit by them against the trustee to enforce the trust according to its terms he does not forbid. I am therefore quite strongly of opinion that a just construction of the trust deed did not prevent its enforcement by the beneficiaries according to its terms.

What has just been said is also quite applicable to the other provisions which have been the subject of comment, and which require that the trustee shall hold the fund subject to the direction and control of the settlor until his death. That language only repeats, in another form, the effect of the reserved power of revocation. The existence of that inevitably leaves in the settlor an absolute control, since at any moment he may end the trust, and resume possession of the fund as his own. The trustee is directed to hold the fund and invest and reinvest, and pay over as ordered, but is to do all this subject to the settlor’s absolute control. This cannot mean that the trustee is to have no title; and the trust no effective existence, and the property remain the settlor’s, but that the trust and the title, good and effectual while it stauds, is nevertheless to continue and exist only at the will and pleasure of the settlor. Its continued existence was to be absolutely subject to the direction and control of Prentice, — a result always inevitable where a power of revocation is reserved. We discover nothing in the provisions of the deed, properly construed, inconsistent with a completely constituted trust, wholly voluntary and benevolent, and subject- to revocation by the settlor at any moment, — a kind of trust of Avhich the books furnish many instances, and which, indeed, are .sometimes subject to doubt and suspicion if the power of revocation is absent.

But other questions argued grow out of the sealed and confidential paper to be opened only on the settlor’s death, and which, when opened, disclose the final disposition to be made of the trust fund.

It is said, first, that the paper was testamentary in its character, and so not legally executed. The contention compels a view of the instruments delivered which is unsound in several particulars. It assumes, what is onot true, that the title to the securities constituting the trust fund was never vested in the trustee, but the property was the settlor’s at the moment of his death, and that the sealed paper alone, and by itself, is to be the subject of consideration, and took effect solely at the death of the signer. The three papers executed and delivered together, and at the same time, constituted the trust deed, and cannot be separated in determining their effect. The sealed paper was a component part of the declaration of trust, and spoke from that date. If it had been open, and its contents disclosed, there would have been no doubt that a trust was created whose duration extended beyond tbe death of the settlor, and depended in part upon the eontingencjr of that death; but the instrument would not thereby have become testamentary. The result is not-changed by the ignorance of the trustee as to the contents of the paper. It was not necessary to his duty that he should know those contents in advance of the time when they were to guide his action. It is not at all uncommon that trustees are ignorant of the persons who are to be beneficiaries by reason of contingencies which only the future can develop. The trustee accepted this trust, with full knowledge that he was to learn the contents of the sealed paper only at the settlor’s death, and has steadily and continually performed the duties of the trust from the date of its creation in accordance with .its terms. It is immaterial that the beneficiaries were ignorant of the trusts for their benefit until disclosed at the death of Prentice. Cumberland v. Codrington, 3 Johns, ch. 261; Shepherd v. McEvers, 4 id. 137. It is sufficient that when disclosed they claim its benefit. The trustee knew when he took the sealed paper, because he was told that'it contained an ultimate disposition of the trust securities. His ignorance was confined to the character and objects of that, disposition, and that only during a period when the knowledge was unnecessary. He could as he did accept the trust, and the obedience to its terms was entirely possible, since he was permitted to know them all in ample time for his necessary action.

But when the paper was opened at the death of the settlor, the disposition made was found to be of a character to raise another question which had been quite earnestly debated. The appellant contends that the trust created was void because contrary to the statute against perpetuities. It first devotes at the settlor’s death any further income accruing “ to the use of Mrs. Howland and her three children, one-third to her and the residue equally to the said children or the survivors or survivor -of them,” 'and the principal is directed to be “ delivered to the said persons or survivors or survivor in the same proportions when the youngest of said surviving children shall come of legal age, unless in the exercise of his discretion he — -the trustee — shall sooner make such distribution of said principal.” We are of opinion that the survivorship thus referred to is that existing at. at the date of the death of the settlor, and that the consequent duration of the trust is during the life of the settlor and the minority of the youngest of the three children living at his death, and so the absolute ownership is suspended only during the continuance of those two fives at the most, both of which were in being when the trust was created. It is claimed that the language used is nearly identical with that passed upon in Hawley v. James, 16 Wend, 60, but the difference is very marked and clear. There the suspension was not until the youngest of the grandchildren should attain the age of twenty-one years, but until tbe youngest of those who attained that age should reach it, and it was well suggested that the trusts might continue during thirteen minorities by reason of deaths occurring before the prescribed age was attained. That vicious element is not present in the limitation before us. The deaths of any of the three children of Mrs. Howland during the life of the settlor, had such occurred, would have been immaterial, as his own and not theirs was one life measuring the duration of the trust, and at its termination the life or minority of the youngest of the three then living is the only other life bounding such duration. So far, therefore, as the defendant’s appeal is concerned, we discover no error, and the judgment should be affirmed, with costs.

But the plaintiff also appeals from an order of the general term reversing an order of the special term permitting an amendment of the summons and complaint. The action was brought against the defendants in their representative capacity as executors of Prentice. The summons and complaint was so entitled, the use of the word “ as ” indicating that intention. The complaint alleged that the defendants held the property in their representative capacity, which the latter admitted, and the issue presented by the pleadings was whether the executors had title or the trustee. The complaint conceded that the defendants asserted no other title or claim. After the trial a motion was made and granted amending the summons and complaint, and ordering the judgment awarded to be entered against the defendants individually and de bonis propriis. On appeal the general term reversed the order, and we think correctly. The amendment substituted a new and different cause of action, and the defendants as individuals had beeu furnished with no opportunity to defend. The order appealed from by the plaintiff should be affirmed, with costs.

All concur, except Raparlo and Earl, JJ., not voting.


source: Caselaw Access Project

author: Rapallo, J.

license: Public Domain

text:
    S. Marie Brehm, Admrx., Resp’t, v. Mayor Aldermen and Commonalty of the City of New York, Appl’ts.

      (Court of Appeals,

      Filed January 18, 1887.)
    1. Taxes and assessments — Voro assessment paid by referee pursuant TO JUDGMENT OF FORECLOSURE CAN BE RECOVERED BACK.
    The land upon -which the assessment in question was an apparent lien was owned by the plaintiff’s intestate and was subject to a mortgage. A judgment was entered for the foreclosure of this mortgage and the sale of the mortgaged premises by a referee, which judgment directed that all taxes and assessments upon the mortgaged premises be paid out of the proceeds of the sale. The referee out of the proceeds of the sale paid the assessment in question June 6th, 1871. On application of plaintiff’s intestate the assessment was vacated December 4th, 1871. This action was brought December 18£h, 187V, Held, that the assessment having been paid out of the funds belonging to him by order of the court it was equivalent to a collection under process of law, and that on the subsequent vacating of the assessment, he was entitled to recover the money so paid.
    2. Same — Judgment in eoreclosube need not be set aside.

      Held, that the judgment of foreclosure was not the adjudication which created the apparent lien nor the authority upon which the right of the city as between it and the property or its owner, to collect the assessment depended. That it established no right as between them, and there was consequently no necessity of setting it aside for the purpose of entitling the-plaintiff to recover the money paid.
    3. Statute op limitations — Pbesentations op claims against New Yobk City — Commencement op action — Laws 1873, chap. 335 Code Ciy. Pro. § § 409, 410.
    The presentation of the claim by the plaintiff to the comptroller pursuant to the requirement of § 105, of the New York city charter of 1873 (Laws of 1S73 chapter 335) Held not to be the commencement of an action also Held that the maintenance of an action before the 30 days has elapsed after the presentation of the claim to the city as provided by said section is prohibited' by said act and that under Code Civ. Pro. § 409 the running of the statute of limitations is suspended during the term of the statutory prohibition. That Code Civ. Pro. § 410 does not affect this question. (Dickinson v. Mayor etc., 92 N. Y. 584, distinguished.)
    Appeal from an order of tlie supreme court, general term, first department, reversing a judgment of the New York county circuit dismissing the complaint and granting a new trial. The action being to recover back certain monej paid to discharge the lien of an assessment subsequently vacated.

      David J. Dean with E. Henry Laeombe, for appl’t; Moody B. Smith, for resp’t.

       Affirming 39 Hun, 533.

   Rapallo, J.

This action was brought to recover money paid to discharge the lien of an assessment, which, after the payment, had been vacated by order of the supreme court. The trial was before the court without a jury. The court at circuit dismissed the complaint. The general term reversed the judgment of dismissal, and ordered a new trial, and the present appeal is from the order of reversal. The only ground stated on the motion to dismiss was that there was no proof that the plaintiff ever paid the money. The money was paid under the following circumstances: The land, upon which the assessment was an apparent lien, was owned by Horatio N. Gray, the plaintiff’s intestate, and was subject to a mortgage held by Edward Roberts. A judgment was entered for the foreclosure of this mortgage, and the sale of the mortgaged premises by a referee, which judgment directed that all taxes and assessments-, upon the mortgaged premises be paid out of the proceeds of sale. Pursuant to this direction the referee, out of the proceeds-of sale, paid the assessment in question on the sixth of June, 1871. -Gray was then, as the former owner of the equity of redemption, entitled to the surplus moneys which arose on such sale. On his application, the assessment was vacated by order of the supreme court, dated December 4, 1871. This action was brought December 18, 1877.

It is apparent that the payment was made out of money belonging to the plaintiff’s intestate, and we think this was equivalent to a payment by him. The payment does not appear to have been made with his consent. He was living at the time of the trial, (the plaintiff having been substituted after judgment,) and testified that he was not aware of the fact at the time that the assessment was taken out of the surplus money. Having been paid out of funds belonging to him, and by order of the court, we think the payment was equivalent to a collection under process of law, and that, on the subsequent vacating of the assessment, he was entitled to recover the money so paid. So long as the assessment was not vacated, the court had power to direct its payment, and its validity could not be determined in the foreclosure action.

The.trial court, in its opinion, placed the dismissal on the ground that the foreclosure judgment, under which the money was paid, had not been set aside or annulled. We concur with the opinion of the court at general term that this ground is not tenable. The judgment of foreclosure was not the adjudication which created the apparent lien, nor the authority upon which the right of the city, as between it and the property or its owner, to collect the assessment, depended. It established no right as between them, and there was consequently no necessity of setting it aside for the purpose of entitling the plaintiff to recover the money paid. It was simply the means by which the city was enabled to collect the void assessment. On the appeal to the general term, the judgment of the trial court was sought to be sustained on the ground that the plaintiff’s claim was barred by the statute of limitations. We agree to the conclusion of the general term on tins point, but not with the reasoning by which it was reached. The general term held that the presentation of the claim by the plaintiff to the comptroller on the seventeenth of November, 1877, pursuant to the requirement of section 105 of the charter of 1873, (Laws 1873, c. 335,) the statutory limitation of six years not having expired at the time of such presentation, was the beginning of proceedings to enforce the claim, and therefore a quasi summons or legal process, and consequently that the service of the demand by the claimant, within the period of six years after the claim arises, must prevent the application of the statute to his prejudice. We are unable to adopt this view. The presentation, although a necessary preliminary to enable a claimant against the city to maintain an action on his claim, is not the commencement of an action. But there are other reasons which preclude the defendants from availing themselves of the statute of limitations to sustain the judgment of dismissal. In the first place, although the statute of limitations was set up'in the answer, it does not appear to have been insisted upon, or even referred to, at the trial; but the motion to dismiss was placed, and the dismissal was granted, wholly on other grounds. If error was committed in this respect, it could not be cured by raising on the appeal another question, which was not raised at the trial, and to which if it had been raised, there might possibly have been some answer. But assuming the question to be before us, it is by no means clear that the plaintiff’s claim was barred by the statute. Conceding that the statute began to run on the fourth of December 1871, when the order or judgment vacating the assessment was dated, the period of limitation would have expired on the fourth of December 1877, but for the provision of section 406 of the Code of Civil Procedure, which is that, “ when the commencement of an action has been stayed by injunction, or other order of a court or judge, or by statutory prohibition, the time of the continuance of the stay is not a part of the time limited for the commencement of the action.” On the seventeenth of November, 1877, at which time the right of action -was not barred, the plaintiff presented her claim to the comptroller. She would at that time have been entitled to commence her action, but for section 105 of the charter of 1873, which required her to wait until the comptroller had neglected, for 30 days after such presentation, to pay her claim. That section, in express terms, prohibited her from maintaining any action until the lapse of the 30 days. We think that section 406 of the Code of Civil Procedure was framed to meet just such a case, and to suspend the running.of the statute during the term of the statutory prohibition. This view is quite consistent with the case of Dickinson v. Mayor, etc., 92 N. Y. 584. In that case it would not have helped the plaintiff, the term of the statutory suspension being only 30 days, and the plaintiff having exceeded the statutory limitation more than one year, and the claim not having been presented to the comptroller until more than three months after the statutory limitation had expired. But here the action was brought on the eighteenth of December, 1877. The statutory limitation is claimed by defendants to have expired the fourth of December, 1887. The excess was only 14 days, and the operation of sect. 406 being to suspend the running of the statute during the 30 days following the seventeenth of November 1877, when the claim was presented, the action was commenced in due time. This construction also relieves the statutes from the apparent inconsistency, pointed out in the opinión at general term, of allowing a plaintiff six years within which to commence an action, and at the same time prohibiting him, during 30 days of that term, from maintaining any action.

Section 410 of the Code of Civil Procedure does not affect this question. It provides only for cases where a simple demand is a necessary preliminary to the bringing of an action, and the action may immediately follow a non-compliance with the demand. Its language is: “ Sec. 410. Where a right exists, but a demand is necessary to entitle a person to maintain an action, the time within winch the action must be commenced must be computed from the time when the right to make the demand is complete, except in one of the following cases.” The exceptions have no reference to the question now under consideration. cThis section (410) applies to many cases where a demand is necessary, and an immediate right of action follows ; but it could hardly -apply to the case of a promissory note payable 30 days after demand.. In the present case, not only a demand was necessary, but a presentation of the claim, and a neglect for 30 days to pay. The maintenance of an action before the expiration of the 30 days was prohibited, and the question is whether under section 406 the statute ran during the 30 days.

The order of the general term should be affirmed, and judgment absolute rendered against the defendants on their stipulation, with costs.

All concur.


author: Per Curiam.

text:
    Daniel R. Lyddy, Appl’t, v. Long Island City, Resp’t.

      (Court of Appeals,

      Filed January 18, 1887.)
    1. Municipal Corporations — Long Island City — Laws 1870, Chap. 719, Laws 1871 Chap." 461.
    The power which, was given to the common counsel of the defendant city-under chapter 719, of the Laws of 1870, to employ an attorney and counsel when the business of the board required one, was taken away by Laws 1871 chapter 401.
    2. Same — Contract with authorized agents — Chargeable with notice OF LIMITATION.
    One can contract with a city only through its authorized agents, and he is chai-geable with notice of the limitations upon their official authority imposed by general law.
    3. Same — Common council cannot ratify illegal contract.
    When the common council of a city lacks power under its charter to create liability by express contract, it can not legalize a claim founded on an alleged contract, by acknowledgement, ratification or otherwise.
    4. Statutes — Repeal by implication.
    If two acts of the legislature are manifestly repugnant and tend to nullify each other then the older enactment must yield to the later statute. It will not be presumed that the lawmaking power had an intention to establish conflicting and hostile systems upon the same subject, or to have in force provisions of law by which the later will of the legislature may be thwarted and overthrown.
    Appeal from an order of tbe supreme court, general term, second department, reversing the judgment of the trial term in favor of the plaintiff, and directing a new trial in an action against the city for the yalue of professional services.

      James M. Lyddy, for appl’t; Jesse Johnson and A. T. Payne for resp’t.

       Affirming 34 Hun., 634 mem.

   Per Curiam.

The plaintiff had judgment upon a trial before the court without a jury. On appeal the general term reversed the judgment, for alleged errors of law, and ordered a new trial. The plaintiff appeals from such reversal upon the usual stipulation for judgment absolute in the event of an affirmance by this court of the order appealed from. The action was brought to, recover for legal services alleged to have been performed by the plaintiff, at the request and upon the employment of the common council of Long Island City, in the investigation of certain alleged abuses by the board of water commissioners in the administration of the affairs of the water department of the city. It is claimed by the respondent that the common council had no authority under its charter to create any liability against the city for such services, a previously existing statute giving such authority having been repealed before the" rendition of the services. The defendant was originally organized as a city under chapter 719 of the Laws of 1870, and among the powers given to the common council by that act was that of employing “ an attorney and counsel, when the business of the board required one, and to pay them a reasonable compensation.” This charter was revised and extended by chapter 461 of the Laws of 1871, and it is claimed by the respondent that thereby the authority of the common council to employ attorneys was taken away, and that thereafter it was placed under an absolute disability to create any debt or liability on the part of the city for legal services.

While no express repeal of the provisions of the Law of 1870 is contained in the act of 1871, it is provided that such provisions thereof as are “not inconsistent with the provisions of this, act are to be construed with and made applicable hereto.” A clear implication arises from this language that such parts of the former statute as are repugnant to or inconsistent with the provisions of the later act are intended to be repealed. It is properly urged by the appellant’s counsel that repeals by implication are not favored by the law, and that a prior statute shall not be deemed repealed by a later one when they can both be given a legitimate effect, and stand together. The rule, however, implies that, if the two acts are manifestly repugnant,, and tend to nullify each other, then the older enactment must yield to the later statute. Mark v. State, 97 N. Y. 572. Upon examining and comparing these statutes, with a view of discovering the legislative intent upon the subject, it is apparent that the act of 1871 is much more elaborate, and attempts to establish a more comprehensive, systematic, and detailed form of municipal government, than that provided by the act of 1870. Among other things, this charter undertook to classify the business of the city, and for that purpose, provided for the establishment of eight separate departments, consisting of the following : “ Finance department and receiving taxes ; law department ; department of public works ; police and health department ; a board of education; board of water commissioners; a fire department; a board of assessors.” Of the law department it was enacted that it should “have charge and conduct of all law business of the corporation, and of all the co-ordinate departments created by this act. The chief officer of this department shall be called the attorney and counsel to the corporation. For such services he shall receive an annual salary of two thousand dollars, in lieu of all charges against the city for the same. Fie shall be appointed by the mayor, and shall hold his office for the term of three years, or until his successor shall have been appointed.” The common council are required to raise annually a sum, not exceeding |75,000, for the wants and welfare of the city, which sum is to be the budget for the ensuing year, and is required to be divided among the various departments of the city in certain specified proportions ; the sum of $8,000 being-assigned to the maintenance of the law department, and expenses of local judiciary. The common council is forbidden to divert any money from one fund or budget to another. It is also forbidden to borrow money, or to issue bonds or other evidences of debt, or to incur liability for the payment of any money, or direct any work for the payment of which the city may become liable beyond the amount of cash applicable to the particular purpose then in the treasury of the city ; and all acts done, bonds or other evidences of debt issued, and debts contracted contrary to the true meaning and intent of this section, shall be absolutely null and void as against said city ; but the members of the common council voting therefor shall be jointly and severally liable therefor.

The slightest consideration of these provisions shows an insurmountable repugnancy existing between them and the provisions of the act of 1870. By the later act the selection and appointment of attorneys to transact the legal business of the corporation is confided wholly to the mayor; their compensation is fixed and limited by law, and is payable from a fund, specially and inviolably devoted to that purpose; and it purports to organize a complete and perfected bureau for the transaction of all the corporate legal business of the municipality. It was not contemplated that extra counsel should be employed to perform legal services for the corporation, and no power was lodged in the authorities to provide funds for their compensation, even if employed. The scheme of the act was to guard the city from loose, reckless, and indefinite expenditure, and limit tire power of its authorities to create debts by the most careful and stringent provisions. All of the law business of the corporation was required to be performed by the officers of the law department, and their compensation was limited, and the common council was prohibited from using any of the funds raised for that department for any other purpose. The carefully devised plan to limit the power of the common council in the incurring of liability on the part of the city would be frustrated, and the scheme of the act in respect to the financial economy of the city would be nullified and defeated, by the retention of the provisions of 1870. It is not in accordance with settled rules of construction to ascribe to’the law-making power an intention to establish conflicting and hostile systems upon the same subject, or to leave in force provisions of law by which the later will of the legislature may be thwarted and overthrown. Such a result would render legislation a useless and idle ceremony, and subject the law to the reproach of uncertainty and unintel-ligibility. We are therefore of opinion that the provisions of the act of 1870 referred.to were inconsistent with, and necessarily repealed by, the subsequent statute, and that the common council had no power to bind the defendant by the employment of the plaintiff to render legal services. The plaintiff could contract with the city only through its authorized agents, and he is chargeable with notice of the limitations upon their official authority, imposed by general law. Donovan v. City of New York, 83 N. Y. 293. It follows, as the necessary result of the want of power on the part of the common council to create liability by express contract, that it could not legalize such claim by acknowledgment, ratification, or otherwise.

The question here discussed is fairly presented by the exceptions taken to the findings of law that the defendant is indebted to the plaintiff, and the refusal to find that the liability of the defendant is controlled by the statute of 1871.

The judgment should be affirmed, and judgment absolute ordered in favor of defendant, with costs.

All concur.


author: Earl, J.

text:
    Matter of the Judicial Settlement of the Account of Asa B. Kellogg, as Executor of Benjamin Akin, deceased.

    (Court of Appeals,

      Filed January 18, 1887.)
    1. Fraudulent Conveyance — Gift to Executor — Jurisdiction op Surrogate.
    Prior to 1876 the testator held a note for upwards of $11,000 against the person subsequently his executor and in that year he gave it to said person who destroyed it. The testator lived till October 1881, when he died insolvent. After the time of this gift the testator had assets far exceeding in amount the value of his debts. Held, that the gift in absence of an actual intent to defraud (of which there was no proof) was not a fraud upon the creditors and must stand. Whether the surrogate on an accounting of the executor had jurisdiction to enter upon the inquiry whether the gift was fraudulent and void as to creditors. Quaere.

    2. Practice — Appeal prom Surrogate’s decision — Exceptions — Wiiat reviewed — Code Civ. Pro., § 2545.
    An appeal to the court of appeals from an affirmance by the general term of a surrogate’s decree brings nothing there for review, where there was no appeal to the general term and upon an appeal from a surrogate’s decree, no complaint can be made of any finding or decision which has not been excepted to.
    3. Executor — Liability por money collected on check delivered before death op testator but drawn after.
    A claim belonging to the testator was collected by an attorney and deposited in his bank account. He had been directed by the testator to pay it when collected to the executor as his agent. The attorney made the payment by check which was delivered at the office of the executor for him to some one there in charge. The testator died later in the same day. Two days later the executor drew the money on this check and credited it in his account with the testator. Held, that when the money was drawn upon the check the payment related back to the delivery of the check. That he did not draw the money as executor but as payee of the check and he could not, in law or equity, be compelled to account for the check, except by first applying it upon what the testator owed him in current account.
    4. Same — Effect of admission of claim by.
    The executor had admitted the claim upon a certain note. Held, that in so doing he acted for and represented all the persons interested in the estate. That upon this admission alone in the absence of countervailing evidence, fraud or collusion, the surrogate was authorized to order the executor to pay it.
    5. Bills and notes — Evidence — Admission against interest.
    Endorsements of the amounts received as interest together with the dates thereof were made by the holder of a certain note at the dates of such payments. All of the dates being while the note was in life, and when it was against the interest of the holder to make them, unless true. Held, that it mattered not that the last two payments were made after the lapse of six years from the date and maturity of the note. That it is the fact, and that alone, that it was against the interest of the holder to make such endorsement that makes them mima facie evidence of payments.
    6. Evidence — Competent — Code Civ. Pro., § 829.
    The testimony of the executor as to the payment by him of certain money to the testator, on an accounting by the executor when he sought a credit for that amount related to a personal transaction with the testator and was properly excluded under Code Civ. Pro., § 829.
    7. Appeal — general term may modify Surrogate decree — Code Civ. Pro., § 2587.
    On an appeal from a surrogate’s decree the only error found by the general term of the supreme court was the charge against the executor of his certain note, and the only modification of tlje surrogate’s decree was that made necessary by the disallowance of that charge. Held, that the general term was competent to make the modification under Code Civ. Pro., § 2587.
    8. Same — Objections — What considered by court of appeals.
    The only objection filed to a certain note before the Surrogate was that it had been paid. Held, that the objection that the note was barred by the statute of limitations could not prevail in the court of appeals.

      Appeal from an order of tbe supreme court, general term, third department, modifying, and affirming as modified, tbe decree of tbe surrogate’s court, of Rensselaer county, on tbe accounting of an executor.

      Arthur II. Smith, for Sarah A. Kellogg, a legatee appl’t; L. Laflin Kellogg, for Asa B. Kellogg, executor appl’t; Matthew Kale, with Ward Cameron, for Aletha A. Akin, a creditor, resp’t and appl’t.

       Affirming 39 Hun., 275.

   Earl, J.

These appeals bring to our attention “several matters, which will be separately'considered.

1. Prior to 1876 the testator held a note for upwards of «111,000 against the executor, and early in that year he gave it to the executor, who destroyed it. The testator lived, until October 10, 1881, when he died insolvent. It was claimed by the testator’s widow, who at the accounting, was the sole creditor, that, at the time he made the gift of the note, the testator was insolvent, and hence that the gift was fraudulent and void as to her, and that, therefore, the executor, as to her, should be charged with the amount of the note. In the surrogate’s court he was so charged; but the general term reversed the decision of the surrogate as to that item, and relieved the executor from the charge, and, we think, correctly.- We do not determine that the surrogate had jurisdiction to enter upon the inquiry whether the gift was fraudulent and void as to creditors, and that, finding it fraudulent and void, he could, on that ground, charge the executor with it, although it was good and valid as against the testator. But passing the question of jurisdiction, we fail to End any evidence in the record that, at the time of the gift, more than five years before his death, the testator was insolvent. After that time, he had left a valuable farm and other assets, in all, far exceeding in amount the value of his debts, and hence the gift, in the absence of an actual intent to defraud, (of which there is no proof or finding,) was not a fraud upon the creditors, and must stand.

2. During the life-time of the testator, for some years prior to his death, the executor was the general agent of the testator, having the general management of his business, and as such he. placed in the hands of an attorney, a claim against one Schuyler for collection, Suit was brought upon it, and the attorney, some time before the death of the testator, collected $6,500. From that sum he deducted $500, for his services, and after-wards, on the tenth day of October, while the testator was still alive, he drew his own check upon a New York bank for the sum of $6,000, payable to the order of Asa B. Kellogg, the executor, and sent it to his office in the city of New York, and it was there delivered to some person who was in charge of the office, before the testator’s death, with directions to telegraph its delivery to the executor, wbo was then with the testator at Green-bush. The testator died the same day, and, on the twelfth day of October, the executor drew the money on the check, and credited it in his account with the testator. After such credit, there was still a balance due from him to the testator, with which he charged himself <rp. the accounting. The surrogate allowed the $6,000, as a credit in the account of the executor, as claimed by him. But some of the appellants claimed that that sum should have been charged to the executor as if he had actually received the check after the testator’s death, and that the courts below erred in not so charging it. We are of opinion that none of the appellants are in a position to claim any error here as to this item. Mrs. Akin, the widow, neither excepted to the finding of the referee, nor appealed to the general term. The general guardian of the infant appellants appealed, but did not except to any of the findings or decisions of the surrogate, and the special guardian of the'infants filed exceptions, but did not appeal to the general term. An appeal to this court from an affirmance by the general term of a surrogate’s decree brings nothing here for review, where there was no appeal to the general term, and, upon an appeal from a surrogate’s decree, no complaint can be made of any finding or decision which has not been excepted to. Code, § 2545. But for a further reason we think there was no error in reference to this item. The money, when collected, was deposited by the attorney in his bank account, and hence he became a debtor to the testator for that sum. He had been directed by the testator to pay it, when collected, to the executor, as his agent. He made such payment by .his check, and when the check was delivered at the office of the executor for him to some one there in charge, it was delivered to him, and operated as a payment sub modo. He could then treat it as funds in his hands, to be applied, so far as needed, in payment of what the testator then owed him. When the money was drawn upon the check, the payment related back to the delivery of the check. He did not draw the money as executor, but as payee of the check, and he could not, therefore, in law or equity, be compelled to account for the check except by first applying it upon what the testator owed him in current account.

3. At the time of the death of the testator, his widow held a note for $5,000 against him, given for borrowed money, dated March 17, 1870, upon which there were indorsed the following payments : $850, March 17, 1873; $350, March 17,1874; $350, March 17, 1875 ; $300, March 17, 1877; and $200, December 8, 1880. It was proved that the indorsements were made by Mrs. Akin at their dates. The note had been presented to the executor as a claim before the accounting', and admitted by him, and he had made payments upon it. The objection is now made by some of tbe appellants that the note was barred by the statute of limitations, and that the surrogate erred in ordering the executor to pay it. To this there are several answers. The only objection filed to this note before the surrogate was that it had been paid; and the statute of limitations does not appear to have been mentioned during the trial. The objection that the note was barred should not, therefore, prevail here. The executor had admitted the claim upon the note, and, in doing that, he acted for and represented all the persons interested in the estate. The admission implied that the note had not been paid, and that, by payments made thereon, it had been kept in life: and so, upon the admission alone, in the absence of countervailing evidence, fraud or collusion, the surrogate was authorized to find. But proof that the indorsements were made at their dates was sufficient to authorize the surrogate to find, and required him, in the absence of conflicting evidence, to find, that the note had been kept in life by payments actually made. The indorse-ments were all made while the note was in life, and when it was against the interest of the holder to make them unless true. It matters not that the last two payments were made after the lapse of six years from the date and maturity of the note. It is the fact, and that alone, that it was against the interest of the holder to make such indorsements, that makes them prima facie evidence of payments. Roseboom v. Billington, 17 Johns. 182; Risley v. Wightman, 13 Hun, 163; Hulbert v. Nichol, 20 Hun, 454.

4. It is claimed, on behalf of the executor, that his evidence as to the payment of $590 to the testator was improperly excluded, and that he was thus erroneously deprived of a credit for that sum. The payment was a personal transaction with the testator, and hence, under section 829 of the Code, he was incompetent to prove it. We cannot be certain, from an examination of all the evidence, that the testator, by his previous examination on behalf of the contestants, had been rendered competent to testify as to the payment, and, in view of the small difference the allowance of this credit would make in the final result, we are constrained to hold that the surrogate did not err in reference thereto.

5. The executor claims that the general term erred in its modification of the surrogate’s decree, and that it should have sent the case back to the surrogate for a rehearing. By the finding of the surrogate that the executor was chargeable with his note for upwards of $11,000, the estate of the testator was shown to be solvent, and there was enough to pay all the debts in full. But when the general term, upon the claim of the executor, struck out the note as the charge against him, the estate was shown to be insolvent, and then it appeared that the executor had made an overpayment to one of the creditors, whom lie bad paid in full. In readjusting tbe account, tbe general term disallowed tbis overpayment, and in tbis no error was committed. Objection to tbe overpayment was distinctly made before tbe surrogate. Tbe general term bad power to reverse, affirm, or modify tbe decree appealed from. Code, § 2587. All tbe elements for tbe modification appeared in tbe findings of tbe surrogate, and it had the power to render such a judgment as the surrogate should have entered. Tbe only error found by the general term was tbe charge against the executor of bis note for upwards of $11,000, and interest, and tbe only modification of the surrogate’s decree was that made necessary by tbe disallowance of that charge, and that modification tbe general term was competent to make.

Tbis case is not without some difficulties; but, after careful consideration, we have reached the conclusion that tbe judgment should be affirmed, without costs to any party.

All concur.


text:
    Edwin W. Gilbert et al., Appl’ts v. George Thayer, surviving administrator of Edwin Gilbert, deceased, Resp’t.

      (Court of Appeals,

      Filed January 18, 1887.)
    1. Mortgage — Assignment op as collateral — Right op assignor.
    Where the mortgage of a third person has been assigned by the mortgagee as collateral security for his own debt, Held, that the assignment is in substance and effect a mortgage or pledge of the transferred security; that it gives the assignee merely a defeasible title, which ends upon payment of the debt, leaving the ownership in the assignor, precisely as if no transfer had been made. That such defeasible title cannot be changed or enlarged as against the assignor, by any act or dealing of the assignee or his representatives to which the assignor is not in some manner a party.
    2< Same — Right op assignor after foreclosure.

      Held that if the assignee forecloses the mortgage without foreclosing the assignor’s right and becomes a purchaser at the sale, he holds the land as a substitute for the mortgage, and precisely as he held the latter and by no different or stronger title, and that whatever of benefit results from extinguishing the mortgagor’s equity inheres in the security assigned in its changed form, and goes of necessity to him who resumes his ownership by payment of-the debt.
    3. Same — Administrator op assignee — Duty to protect assignor.
    The assignee having died the assignor became administrator of his estate and foreclosed the mortgage. Held, that the foreclosure and sale was an incident belonging to possession of the collateral, and to the trust which that possession created. That it became the duty of the administrator to sell because the trust security demanded that action for its safety and strength. That it became the duty of the administrator to buy for the pro«tection of the estate and of the assignors ultimately liable; and that whatever benefit resulted as an incident of the trust, when the assignor redeemed, belonged wholly to him.
    4. Same — Merger — When not allowed.

      Held, that merger will never be allowed against the interest of the parties, or their obvious intention, or where the two estates are held in different rights.

      5. Appeal — Sueeogates — Oedeb to account affects substantial eight — Code Civ. Peo., § 2570.

      Held, that the order of the surrogate directing the defendant, who was administrator, to account for the proceeds of certain lands, affected a substantial right and was appealable to the general term under Code Civ. Pro., § 2570.
    6. Pledge — Duty op pledgee as to peopits.
    A pledgee must account for incidental income or profits derived from the pledge and equity will not tolerate a separation of the pledge from the debt.
    Appeal from an order of tbe supreme court, general term, fifth department, reversing an order of the surrogate of Ontario county, in favor of petitioner, which required an administrator to render an account of the proceeds from the sale of certain real estate.

      E. G. Lapham, for appl’t; William A. Sutherland and William F. Oogswell for resp’t.

       Affirming 40 Hun. 633, mem.

   Finch, J.

The order of the surrogate, directing the defendant to account for the proceeds of the land in controversy, was appealable to the general term; and that tribunal did not err in reversing the judgment, instead of dismissing the appeal. Such an appeal is permitted where the order “ affects a substantial right.” Code Civil Proc., § 2570. It need not be a “final” order, as becomes an essential inquiry when the jurisdiction of this court is invoked. (In re Halsey, 93 N. Y. 48,) but, whether such or not, is subject to review by the general term, if it involves a substantial right. That was the character of the order appealed from. It went beyond a mere direction to account, where assets are admitted, and their amount in the sole controversy, and adjudged, against the defendant’s denial, that there were assets, and settled the only substantial point of the litigation, except the amount of damages to be awarded.

In Fiester v. Shepard, 26 Hun, 183, S. C. 92 N. Y. 251, there was an order to account, which the general term reversed, and which we deemed appealable. That order determined the disputed right of the petitioner under the will, and so involved a substantial right of each party to the controversy.

The main question involved in the appeal was carefully considered by the general term, and, but for its interest and importance, and the alleged doubt clouding the opinions of this court upon the subject, might justly be allowed to rest upon the argument which prevailed with that tribunal. It is quite necessary, at the outset, to clear the facts of a possible ambiguity. The contention of the appellants depends largely upon the theory that Gilbert stood as creditor of the Little Falls Company, for a loan of. $1,000, secured by a mortgage of that company upon the laud in controversy, aud Thayer was simply a guarantor of that loan, in consideration of a certain proportion of a large rate of Interest agreed to be paid. If that was the conceded situation it is not impossible that the doctrine of subrogation might reach far enough to leave us still confronting the question principally discussed; but we need not pursue that inquiry, since we are thoroughly satisfied that the' case must stand, upon a different relation of the parties, which was deliberately fixed and chosen by themselves.

Three persons, Gideon Pitts, Perez R. Pitts, and Edwin Gilbert, the plaintiff’s intestate, loaned to George Thayer, the defendant, $3,000, taking his two notes,- — one for $1,000, dated October 1, 1859, payable in two years, with interest; and one for $2,000, dated November 1, 1859, payable in three years from date, with interest. It is undoubtedly true that Thayer borrowed this money to lend it in turn to the Little Palls Company. He had made application for a loan to that corporation, which the lenders had refused, but at the same time intimating a willingness to. take him as their debtor for the amount. This fact the surrogate expresses in his second finding in a somewhat ambiguous form, but not at all inconsistent with the further facts which he finds, and with the papers executed to carry out the arrangement. The original proposition for a loan to the company was for $5,000. This, the surrogate says, was refused, but he adds that the lenders “ were willing to loan the sum of $3,000, provided the said Thayer would guaranty or become responsible for the same.” How that responsibility was to be assumed, or what form it should take, the surrogate does not determine, except as he finds the form that it did take, and that form is a direct loan to Thayer in the first instance, making him the primary and sole debtor to the lenders, and leaving him to deal with the corporation as he pleased, save that the finding may leave room for a possible inference that, if Thayer secured on his loan to the corporation an interest of 15 per cent., he should allow to the lenders an interest of 10 per cent. The defendant made such loan, and took from the Little Falls Company their notes, corresponding with' those given by Thayer to his creditors in dates and amounts and periods of maturity, but providing for interest at 15 per cent., payable semi-annually. These notes were secured by the company’s mortgage to Thayer of their real estate on the east side of the river, dated two days earlier than the date of the October note. There the matter rested, with the rights and relations of the parties thus fixed, for a period of more than four months. On the fourth of February, 1860, Thayer assigned his notes and mortgage against the company to his lenders, as collateral security for his own debt to them. The assignment is in writing, and is proved to have been prepared by Gilbert, and written by him. There is no room for misunderstanding the fact it establishes. It recites the debt of Thayer to the original lenders, describing by dates and amounts the notes he bad given, and transfers, as security for that debt, the mortgage and notes of the company, expressly providing that, on payment, of his own notes, the assignment should be void and of “ non-effect.” It is not possible, in the face of this deliberate instrument, in the handwriting of Gilbert himself, to transform the-declared relation into a primary indebtedness of the corporation to him and his associates, simply guaranteed by Thayer; and there is no equity in this claim, which has slept for almost a quarter of a century, until changing values have given it great value, such as to justify a struggle to turn it into something-different from the form which it deliberately assumed.

In May, 1861, Gilbert died, and Thayer and the widow became administrators of his estate. In the inventory which they filed no mention is made of the Little Falls Company’s notes and mortgage, but the debt of Thayer to Gilbert is included. In the original loan of $8,000 each of the three parties furnished one-third, and Thayer’s debt to the amount of $1,000 was the property of Gilbert. We find in the inventory, accordingly, one-third of the note of October, 1859, and one-third of that of November, 1859, credited to the estate as assets, and due to the-estate from Thayer. There was a third note of earlier date for $224.09 inventoried as due from him. The final settlement of the accounts shows that all these notes were paid to the estate,, the one last mentioned in 1862, and the other two May 30,1863.. Soon after the death of Gilbert, the Little Falls Company gave-to Thayer another mortgage, but upon its property on the west-side of the river, dated November 26, 1861, and conditioned to secure the payment of $1,000 in one year, with interest at 12 per cent., payable semi-annually. The consideration of this-mortgage was a new loan to the company by Thayer to about one-half of the amount, the remaining half securing arrears of interest on the existing debt to him, and this, the west-side, mortgage, was assigned to the three creditors of Thayer, as collateral security for his debt to them, precisely in the same, manner as the first, or east-side mortgage.

These transfers, in legal effect, were each a mortgage of a. mortgage, or a pledge of a mortgage. The assignees get only a defeasible title, subject to destruction by the payment of the-debt, at any time before the rights of the assignor were foreclosed or extinguished. Both mortgages were foreclosed, and, on a sale, the lands were purchased by the administrators of Gilbert. The second, or west-side, mortgage was foreclosed by advertisement, the two Pitts and the representatives of Gilbert appearing as-mortgagees, the sale taking place February 16, 1863, and, under the law of Minnesota, one year thereafter being allowed for redemption by the mortgagor, in default of which the equity became extinct. The east-side mortgage was foreclosed by a suit ■ in equity, in the naine of the Pitts, as plaintiffs, to whom, for Convenience, tbe right of the estate had been transferred; but to neither foreclosure was Thayer a party in his individual character. In the equity suit he was not a party in any capacity, and in the foreclosure by advertisement he is affected no further than his action as a foreclosing mortgagee as administrator of the Gilbert estate would involve.

The property now in controversy is that covered by the second, or west-side, mortgage, and, after the payment by Thayer of his debt to the estate, was conveyed by him, as administrator, and by Mrs. Gilbert, as administratrix, to a third person, who in turn conveyed it to Thayer, who has since sold it for large sums. Are those proceeds his own, or do they constitute assets in his hands belonging to the estate of Gilbert ? Necessarily they must belong to either the assignor or assignee; for, by the foreclosure, -the equity of the mortgagor was effectually cut off and destroyed. The claim of the assignee is founded upon the purchase under that foreclosure by the administrators of Gilbert, and is, that an absolute title passed to the estate which was not, and could not be, transferred by the deeds to Thayer, and so the lands are to be treated as personal assets, and accounted for to the next of kin.

Two cases have substantially determined, as the doctrine of this court, that where the mortgage of a third person has been assigned by the mortgagee, as collateral security for his own debt, the foreclosure of that mortgage by the assignee, and his purchase at the sale, as against the assignor, work no other result than' to substitute the land for the mortgage in the hands of the assignee, and to leave it subject to the assignor’s right, by payment of the debt, to reclaim and hold his own property, discharged of the assignee’s lien upon it. Slee v. Manhattan Co., 1 Paige, 48; Hoyt v. Martense, 16 N. Y. 231. Of course, these cases assume that, upon the foreclosure, the equitable right of the assignor was not involved by making him a party, and foreclosing such right, but deal with the result where the right survives the foreclosure : and they were subsequently criticised by .suggestions, to which our attention is invited. Bloomer v. Sturges, 58 N. Y. 168. In that case the court held that the assignor, defendant, was so made a party defendant in the foreclosure action that its equity, as well as that of the mortgagor, was involved in the judgment, and extinguished by the sale. Of course, that ended the inquiry, and any decision of what would have been the rights of the Ocean Bank, if not involved in the action, was needless, and valuable only as a caution. That caution becomes applicable upon the facts before us, and makes it prudent to take the measure of its just force.

The opinion of JOHNSON, J., points out that in Hoyt v. Martense, the debt of the assignor, to which the assignment of the mortgage was collateral, was not yet due, and so the foreclosure was conducted in tbe names of both assignor and assignee, and for the understood purpose of cutting off the equity of the-mortgagor, without affecting the relations of the plaintiffs between themselves. In the case before us that difficulty did not exist; for Thayer as an individual, and as assignor, was not a party at all, and his personal rights were not thereby involved or imperiled. The opinion again shows that in Slee v. Manhattan Co., the foreclosure was by advertisement, and did not and could not affect any one but the mortgagor of the land, and those claiming under him, as owner of the equity of redemption, or by a right subsequent to the mortgage, and was declared to leave untouched the right of the assignor, as completely as if the foreclosure had been by an action in equity to which the assignor was not made a party. So far the comments of the court upon the two authorities bore upon the case then in hand,, and served to show that it stood outside of their scope and range. But then followed a suggestion, throwing doubt upon their doctrine where the assignor’s right remained. The-learned judge conceded that right, but questioned only its extent, and doubted whether the equity of the assignor extended to the land itself, or merely to a lien for the definite sum of the-'debt secured by the mortgage. No such doubt remains in our minds.

In Dalton v. Smith, 86 N. Y. 176, we held that the right of the assignor attached to the land, if the assignee became purchaser, and to the purchase money, if the title went to a stranger. In that case the appellant’s points cited Bloomer v. Sturges, as having effectually shaken the previous authorities. Our opinion then was, and still remains, that the assignment is in substance a mortgage or pledge of the transferred security; that it gives to the assignee merely a defeasible title, which ends upon payment of the debt, leaving the ownership in the assignor, precisely as if no transfer had been made; that such defeasible title cannot be changed or enlarged, as against the assignor, by any act or dealing of the assignee or his representatives to which the assignor is not in some manner a party ; that if the assignee forecloses the mortgage without foreclosing the assignor’s right, and becomes a purchaser at the sale, he holds the land as a substitute for the mortgage, and precisely as he held the latter, and by no other or different or stronger title ; and that whatever of benefit results from extinguishing the mortgagor’s equity inheres in the-security assigned in its changed form, and goes of necessity to him who resumes his ownership by payment of the debt. The sale to the assignee, freeing the property from the mortgagor’s equity, affected the relations of both assignor and assignee with the original mortgagor, but not at all their relations with each other. The security was thereby strengthened, and made more valuable, but remained a security still, and held by the same defeasible title and upon the same conditions, as at first. That is not only the logical, but the just, view of the transaction. The assignee gets exactly what he bargained for, and what is his of right. While he holds the security, whether in the form of mortgage or of land, he gains the added protection of the added value; but when his debt is paid, and his title annulled, he has no claim to anything more. It is said, in the Slee Case, to be the invariable rale that, where the mortgagee has gotten a renewal of a lease, or obtained any other advantage, in consequence of his situation as such mortgagee, the mortgagor coming to redeem is entitled to the benefit thereof. We have carried that doctrine far enough to hold that one who received, as collateral security, a salt block, and leased it, with others of his own, to a corporation taking stock in exchange, might be deemed to have elected to treat the property as entitled to the stock, and that the latter was an incidental benefit accruing, the right to which on redemption was the mortgagor’s. Chapman v. Porter, 69 N. Y. 276. If the assignment to Gilbert be treated as a pledge, (Campbell v. Parker, 9 Bosw. 322; Dalton v. Smith, supra,) the rule is equally familiar that the pledgee must account for incidental income or profits derived from the pledge, and that equity will not tolerate a separation of the pledge from the debt.

Here the foreclosure and sale was an incident belonging to possession of the collateral, and to the trust which that possession created. It became the duty of the administrator to sell, because the trust security demanded that action for its safety and strength. It became the duty of the administrator to buy, for the protection of the estate and of the assignor ultimately liable; and whatever of benefit resulted was an incident of the trust, and belonged to the two parties concerned, according to their respective rights, and, when the assignor redeemed, belonged wholly to him.

The argument founded upon the doctrine of merger is well answered by the opinion of the general term, which shows that, in equity, such merger will never be allowed against the interest of the parties, or their obvious, intention, or where the two estates are held in different rights. We have recently affirmed that view of the doctrine. Smith v. Roberts, 91 N. Y. 475.

The contention that some unpaid interest should be accounted for by defendant cannot survive the settlement of the administrator’s accounts by the surrogate. The notes were then paid, with interest. If a greater rate was chargeable, that was the time and occasion to have asserted the claim.

The order of the general term should be affirmed, with costs.

All concur.