text:
    Maurice E. Viele, App’lt, v. William H. Keeler, Resp’t.

      (Court of Appeals,

      Filed December 1, 1891.)

    Will—Devise—Effect ov Codicil.
    By the will of one T. a portion of his estate was devised to his executors in trust for his three daughters until they became of age; upon that event each daughter was to manage and have the use of her share during her life and upon her death such share was to pass to her children, if any; if none, then to testator’s remaining aforementioned children or their descendants. In case any daughter should marry and her husband be found capable and prudent, etc., to the satisfaction of the executors, and the latter had given the daughter a testimonial to that effect, then the estate was to be enlarged to afee. A codicil provided that upon the death of the daughter the remainder should go in fee to her child or children or their descendants, and contained no provision respecting the contingency by which the life estate should become a fee. Held, that the codicil did not revoke the paragraph in the will, and the executors had the power, upon being satisfied that the husband of the daughter possessed the qualities described, to convert the life estate into a fee.
    Appeal from judgment of the supreme court, general term, third department, granting judgment for defendant upon submission.

      S. O. Shepard, for app’lt; Isaac Lawson, for resp’t.

       Reversing 35 St. Rep., 904.

   O’Brien, J.

On the 10th day of July, 1890, the plaintiff, by an instrument in writing, agreed to convey and the defendant to purchase for the sum of $15,000 the undivided half of certain real estate, situated in the city of Albany, and particularly described in the record. The plaintiff stipulated on his part to execute and deliver to the defendant, on or before the first day of September thereafter, a warranty deed of the premises, with the usual full covenants which would be sufficient to vest in the defendant an estate in fee simple absolute, free and clear 'of all liens and incumbrances. Within the time provided in the agreement the plaintiff duly executed, acknowledged and tendered to the defendant a warranty deed of the premises described in the agreement, which contained all the usual full covenants, but the defendant refused to accept it on the ground that the plaintiff was not the owner of the land described therein in fee simple absolute and that the deed would not vest title in the defendant. The plaintiff claimed that the defendant was bound to specifically perform his part of the contract and the controversy was submitted upon an agreed case to the general term, where judgment was directed for the defendant.

The only title which the plaintiff had was derived from his wife, Maria Yiele, who died in the month of December, 1889, having duly executed her will which was admitted to probate in the surrogate’s court of Albany county, in and by which she devised the land in question to her husband, the plaintiff. Mrs. Yiele was a daughter of Charles D. Townsend who, it is admitted, was, in his lifetime, seized of an estated in the lands in question in fee simple absolute. The controversy is narrowed down to the question whether Mrs. Yiele took, under her father’s will, an estate for life or in fee. Charles D. Townsend died in Albany in the month of January, 1848, the owner in fee simple of the lot of land described in the contract. He left surviving one son and three daughters his only children and heirs at law, of whom Mrs. Yiele was one. He left a will dated January 28, 1836, and two codicils, all of which were admitted to probate in Albany county. The title of Mrs. Yiele depends upon the construction to be given to these instruments. The executors were directed to proceed immediately after taking an inventory to collect all outstanding debts, except such as they deemed properly secured or invested, and out of such debts and the rents and issues of the estate to pay all the debts of the deceased. After the payment of debts the executors were directed to divide the estate into four equal parts. One of these parts the testator gave absolutely to his son John F. Townsend. The other three equal parts were disposed of in the following language: “ I do give and bequeath the remaining three equal parts of the said division, being three-fourths of my estate as above mentioned, unto my said executor or executors, who shall consent to act, or may survive, or in case of their refusal, incompetency or inability thus to act, then to such person or persons as they shall name, or in case of their refusal to make such choice, then to such person or persons as the chancellor shall appoint, to have and to hold the said three equal parts of the said division in trust, and for the use of my daughters Helena D. Townsend, Maria Townsend and Sarah Townsend, severally setting apart to them each one of the said equal parts of the aforesaid division, and to their respective names, and thus continue to hold each of said several parts to her use to whom it shall have been assigned until she shall arrive at the age of twenty-one years, and they shall insure, and constantly keep insured, the several house or houses in the name of such one of my said daughters to whom they may assign them, and pay all assessments or taxes or charges thereon, or such other of my real property as they shall assign them as above directed, and shall also reinvest in their several names in safe securities all moneys which maybe paid on the securities apportioned to them as aforesaid, and shall charge the expense thereof to the share of that one to whom they shall have been apportioned as above, and after deducting such, and all incidental expenses, shall apply (if required) all the income of said several portions to the respective use, maintenance and education of said daughter to whom the share whence it shall have been derived belongs. And the surplus over such necessary expenses they shall invest, as above directed, in the name and. for the use of such one of my daughters to whom the share has been apportioned as above producing said income, and this my said executors or executor are required to do for my said daughters respectively until they shall severally arrive at the age of twenty-one years. But, and incase the aforesaid rents and income of any one share shall in the consideration of my aforesaid executors or executor be insufficient for the education and maintenance of my daughter to whom such share shall have been thus assigned, suitable to her condition, whether married or single, then they áre authorized to make to her such advances, from time to time, out of the principal of her said share as in their discretion they may deem prudent and needful, and each of my said daughters, after they shall respectively have arrived at the age of twenty-one years, are severally required, as my executors are directed, constantly to insure and keep insured the house or houses, and to payali assessments and taxes thereon, and on all other real property severally apportioned to them, and to invest and keep invested all moneys and securities belonging to her share, as above mentioned, and to receive and appropriate to her own several use and enjoyment, independent of her husband, if married, during her natural life, the net income and rents accruing therefrom, and for the better management- thereof to appoint an attorney, or agent or trustee, and by her own act and deed separately to account and settle with him and them therefor, and at and after the event of her death her aforesaid share, both of real and personal property, shall pass to her surviving children, but if she leaves no children surviving her, then such share shall pass to and be equally divided among my aforementioned children and their descendants, according to the statutes of descent of this state.

But, and in case any of my said daughters shall marry, and her husband be found capable and prudent in the management of property, and shall treat her and her family with kindness, then in addition to the life estate given her as above in the share apportioned to her as hereinbefore directed, she shall have the fee therein, and the absolute property and control thereof in her own several right, exclusively to possess, or to dispose of by deed, will or otherwise, and to appropriate and enjoy the avails thereof, provided always, that my said executors or executor acting, as aforesaid, in the execution of this will, be fully satisfied of the existence of such traits of character in her said husband, and shall have first given to such my daughter a written testimonial to that effect, and this they shall have authority to do at any time, as well after as before they have fully executed the other provisions of this will.”

The second codicil, bearing date in the year 1848, is the only one which in any way affects the title to the premises in question and, so far as material, is in the following words :

“After my said daughters, Helena, Maria and Sarah, shall severally have attained the age of twenty-one years, it is my will that each shall then have and hold all and singular (the real and personal property) severally apportioned to and belonging to her, according to the several clauses and directions of my aforesaid will, for and during her natural life, to her own separate use and free from all control, etc., of' any husband which she may have, with remainder in fee to her child or children and their descendants, and that she and they may have severally the free and uninterrupted enjoyment of their several portions without molestation.

“ It is my will that each of them, if married, do possess and enjoy their respective portions aforesaid as if they were femme sole and unmarried.”

The principal question in the case arises upon this codicil. The defendant claims that its effect was to revoke the last paragraph of the will above quoted, whereby power was given to the executors, upon being satisfied that the husbands of the daughters possessed the qualities specified, to convert the life estate into a fee.

In the year 1850 an action to. partition the real property of which the testator died seized, including the lands in question, was commenced. The children and heirs at law of the deceased, and the husbands of such of the daughters as were married, were made parties to this action. By the judgment in this action the premises embraced in the contract of sale between the plaintiff and defendant were allotted and setoff to Mrs. Viele and adjudged and decreed to be vested in her during her natural life, free from any control on the part of her husband, with remainder in fee to her issue, and if no such issue survived her then to the heirs at law of the testator. This judgment was according to the terms of the original will, the power given to the executors to vest a fee in the daughters, in the event specified, not having yet been exercised. On the 31st day of October, 1872, the sole surviving executor executed under seal, acknowledged and procured to be recorded in the clerk’s office of the county of Albany, an instrument in execution of the power conferred by the last paragraph of the will above referred to, and of which the following is a copy:

“I; John F. Townsend, formerly of Albany, now of New York, sole surviving executor of the last will and testament of Charles D. Townsend, late of the city of Albany, now deceased, and now acting in this behalf, as executor of the said will, do hereby certify that I am fully satisfied that Maurice E. Viele, the husband of Maria Townsend, Solomon Townsend, the husband of Helena D. Townsend, and Edward S. Coles, the husband of Sarah Townsend (the three daughters of the said Charles D. Townsend, in his said last will and testament named), are, and that each of their said respective husbands is, capable and prudent in the management of property, and that each one of said husbands of the said respective daughters of said testator does treat his said wife and her family with kindness, and being so fully satisfied of the existence of such traits of character in each of the husbands of the daughters of said testator respectively above named.

“ I do, therefore, as such executor as aforesaid, make, sign and deliver to said daughters this written testimonial to that effect, in pursuance of the provisions in said will contained, and intend the same to become operative, as is provided in and by said will-, in case of the execution and delivery of this instrument”

If the power conferred upon the executors in the original will was not revoked by the codicil, this instrument vested an absolute fee in the daughters, as it had for that purpose all the effect of a conveyance. 4 R. S., (8th ed.) 2475, § 38.

It is certain that this codicil contains no express words of revocation. If the testator intended to revoke such an important provision of his will as that which vested the fee of the real estate in his daughters, upon the existence of certain conditions to be certified by his executors, it is reasonable to conclude that he would have used appropriate words to accomplish such a result, and not leave it to construction or implication. We have had occasion recently to pass upon the effect of a codicil upon the original will. In that case, as in this, it was claimed that the codicil revoked an important provision of the will. The language of the codicil in that case was much more favorable to revocation than in this, but we held that it had no such effect. Redfield v. Redfield, 126 N. Y., 466 ; 38 St. Rep., 516.

There is no irreconcilable conflict and no inconsistency between the language of the codicil and the provision of the will which it is claimed is thereby revoked. Both can stand without doing violence to the language used by the testator. If it is asked what the testator intended to accomplish by the codicil if not a revocation of the provision of the original will referred to, it may be answered that he intended to effect two changes, which were, no doubt, deemed to be important It will be seen by the terms of the original will that the legal life estate of the daughters’ shares was in the executors. The codicil provided .that upon the daughters attaining the age of twenty-one years they should be vested with the legal title to each share “ according to the several clauses and directions of my aforesaid will,” for and during her natural life to her own separate use, free from the control of her husband. The will and codicil were both executed prior to the legislation in this state in regard to the rights of married women to take and hold property, and the husband’s interest and control of the property devised by the testator to his daughters would be, in the absence of restrictions in the will, such as the common law conferred.

Anticipating the marriage of the daughters the testator in the codicil repeated some provisions of the will and added some new ones, all calculated to secure the daughters, if married, in the enjoyment and control of the property to the same extent as if they were unmarried. But neither by words or by implication did the testator manifest any intention to change or modify that provision of his will by which an absolute fee, in a certain event, was to vest in his daughters. He left that important provision untouched, as is manifest from the language used in the codicil. It is a familiar rule that a codicil will not operate as a revocation of previous testamentary provisions beyond the clear import of its language, and that an expressed intention to make a change in a will in one particular negatives, by implication, an intention to alter it in any other respect. Redfield v. Redfield, supra.

So, also, it is said that a revocation of an earlier disposition of a will by a later one, or by a codicil, on the ground of repugnancy, is never anything but a rule of necessity, and operates only so far as is requisite to give the later provision effect. Austin v. Oakes, 117 N. Y., 577, 598; 28 St. Rep., 834 ; Crozier v. Bray, 120 N. Y., 375 ; 31 St. Rep., 506; Taggart v. Murray, 53 N. Y., 233; Pierpont v. Patrick, id., 596. We have seen that all the language of the codicil can have full effect without disturbing the special provision of the will under which Mrs. Yiele became vested with an estate in fee simple absolute to the prem. ises in question.

The written testimonial which was necessary in order to vest the absolute fee in Mrs. Yiele, was executed by the surviving executor, the other having died. We do not think that the exercise of this power was confined to all the executors named in the will, as suggested by the defendant It is apparent from the nature of the act as well as the express language of the will that the testator intended that the survivor should perform this duty in case of the death of his associates. The existence in the husbands of the qualities specified in the will was a matter to be determined by the executors alone, acting in the performance of the duty imposed upon them by the will and without fraud, and upon this question the testimonial is conclusive and applies to the lands in question though allotted to Mrs. Yiele many years before its execution by a judgment in partition. Mor does the judgment in partition declaring that Mrs. Yiele was vested with a life estate in the premises in any way affect the question. That judgment was in accordance with the situation existing in 1850, when it was rendered, and before the executor exercised the power to convert the life estate into a fee. It is not, in any respect, inconsistent with the existence of a fee simple absolute in Mrs. Yiele at the time of her death. We think that the conveyance tendered to the defendant by the plaintiff was a good performance of the -contract and was sufficient to vest a perfect title in the defendant

The judgment of the general term should be reversed, and judgment ordered for the plaintiff that the defendant specifically perform the contract.

All concur.


source: Caselaw Access Project

author: Ruger, Ch. J.

license: Public Domain

text:
    Lauren C. Woodruff, Resp’t, v. The New York, Lake Erie & Western R. R. Co. et al., App’lts.

      (Court of Appeals,

      Filed December 1, 1891.)

    1. Trustee—When entitled to allowance and counsel fee.
    Plaintiff, with others, was trustee under a deed of trust given by a railroad to secure payment of its bonds. Subsequently plaintiff took a lease of the road, by which he assumed payment of the bonded debt, and released it to the Erie Railway, which also assumed such payment. Default having been made in payment of interest, plaintiff brought actions therefor against the Erie road and its receiver, in which he was successful, and which produced a large fund for distribution among the bondholders. He was actively engaged in the matter for nearly thirteen years, and the court allowed him for services about twenty-five per cent, of the amount recovered. The plaintiff brought the actions in his own name, and became liable for all costs, etc. Held, that in bringing the proceedings he was performing a trust duty, and was entitled to recover the necessary costs and expenses which he was put to in securing the fund in question.
    2. Same—Compensation for services.
    Such a trustee, however, should be allowed as compensation for his own services only at the rate usually awarded to executors and administrators.
    (Earl, Peckham and O’Brien, JJ., dissent.)
    Appeal from judgment of the superior court of Buffalo, general term, affirming order of special term granting allowance to plaintiff as trustee.

      John G. Milburn and E. C. Randall, for app’lts; M. H. Peck, for resp’t.

       Modifying 31 St. Rep., 7.

   Ruger, Ch. J.

The object of this proceeding was to obtain certain allowances oat of a fund in court for the plaintiff’s services and expenses in prosecuting certain litigations resulting in the creation of such fund. The fund was procured by the prosecution of the lessees of the Erie & Genesee Valley Railroad upon a covenant in its lease whereby they were obligated to pay the amount of certain bonds at maturity and the annual interest thereon to the holders, who were secured by a mortgage upon such road executed to the plaintiff and two others, as trustees for •their benefit Both parties are here asking for the distribution of this fund by the court if it has the power to order distribution. We think there is no doubt as to the authority of the court over the fund. Eor the purposes of this discussion the plaintiff may be regárded as the sole trustee under the mortgage, inasmuch as one of such trustees had died before any litigation ensued, and the other took no active part in administering the trust. The bondholders, who were permitted by the court to litigate the question, opposed the granting of any allowances from the fund. The special term ordered such allowances to be made and the general term affirmed the order.

The evidence tended to show that the plaintiff had incurred large liabilities, made large expenditures and performed valuable services in the prosecution of the several actions which produced the fund in dispute, and was industriously engaged for the period of nearly thirteen years in pushing them to a successful conclusion. The amount and value of such expenses and services have been fixed by the courts below upon contradictory evidence, and we are not therefore at liberty to review their conclusions upon the facts. The sum allowed was quite large, amounting to about twenty-five per cent of the sum recovered ; but it must be borne in mind that without the action of the plaintiff there would have been no fund to distribute, and that for a long period of time, without assistance from the beneficiaries of the fund, and against an energetic and untiring opposition, he resolutely prosecuted the actions which resulted in recovering the sum of upwards of $50,000, now lying on deposit in the Metropolian Trust Company of New York to the credit of the trustees and subject to the order of the court.

It is a cardinal principle in the disposition of trust estates that the trust fund shall bear the expenses of its administration, and that one who successfully conducts a litigation in autre droit for the benefit of a fund shall be protected in the distribution of such fund for the expenses necessarily incurred by him in the performance of his duty. In re Holden, 126 N. Y., 589; 38 St. Rep., 504; Trustees v. Greenough, 105 U. S., 527.

It is laid down as an elementary rule in Perry on Trusts, that “ Trustees have an inherent equitable right to be reimbursed all expenses which they reasonably incur in the execution of the trust, and it is immaterial that there are no provisions for such expenses in the instrument of trust If a person undertakes an office for another in relation to property, he has a natural right to be reimbursed all the money necessarily expended in the performance of the duty.” Lewin on Trusts, 557 ; Perry on Trusts, § 910. This right is extended not only to necessary traveling expenses, but to all reasonable fees paid for legal advice in the discharge of his duties, and in most of the states includes compensation for time, labor and trouble. Perry on Trusts. §§ 910, 917, 918.

It was held in Wetmore v. Parker, 52 N. Y., 450, that this court has decided in two cases, Downing v. Marshall and De Courval v. Ray, 37 N. Y., 380, that the special term has power to make allowances to trustees and others acting in a fiduciary capacity for all expenses necessarily incurred in the faithful performance of their duties, including counsel fees. In Downing v. Marshall, supra, the court said “ that persons acting in autre droit, as executors, administrators, trustees, guardians, receivers, etc., are upon a faithful execution of their trusts to be indemnified out of the trust property for all expenses necessarily incurred in the faithful performance of their duties.” There can be no reasonable doubt but that the general rule is that trustees, and others acting in a fiduciary capacity, are entitled to reasonable allowances for costs and expenses, incurred in the course of the performance of their duties, out of a fund which has been secured or protected by their efforts.

It is claimed, however, that the plaintiff was not a trustee for the bondholders and in securing the fund in question was not acting for the interest of the bondholders, but was engaged in protecting his own personal interest We do not think that this claim is supported by the facts of this case. The proof shows that the plaintiff and two other persons were appointed trustees under a mortgage made by the Erie & Genesee Valley Railroad Company in 1871, to secure bonds to the extent of one hundred and twenty thousand dollars, issued and negotiated for the purpose of obtaining money for the construction of its railroad. It does not appear that the plaintiff had any other interest in such railroad than as trustee under such ° mortgage, until the circumstances, hereinafter related, took place, which gave him a certain interest therein. On November 1, 1871, the railroad company executed a lease of the road to him for the unexpired term of its charter, upon the consideration that he should, among other things, pay the annual interest accruing on said bonds, and also the principal sum of said bonds at the maturity thereof. It was further-provided in the lease that upon the payment of such bonds by the said plaintiff, or the Erie Railway Company, the annual rent of such railway should be reduced to one dollar and taxes. On the 8th day of November, thereafter, the plaintiff executed a lease of the railroad to the Erie Railway Company, upon the agreement of that company that it should make the payments and perform the covenants agreed to be made and performed by him and thereupon the Erie Bailway Company entered into the pas’ session of such railroad and performed the covenants made by it and paid the interest on such bonds until the year 1874, when it defaulted in such payment This default continued for four years, and no effort seems to have been made by any one except the plaintiff to compel the performance by the Erie Eailway Company of its obligations. In the meanwhile that company had become insolvent, and its property went into the hands of a receiver. At this time the bondholders of the Genesee Yalley Eailroad had the security, not only of the original mortgage, but also the covenants of the plaintiff and the Erie Eailway Company to pay the principal and interest of this claim. In 1877 an action to foreclose such.mortgage was begun by the trustees against the mortgagor, L. 0. Woodruff, individually, and the successors to the Erie Eailway Company. This action was defended by the successors of the Erie Eailway Company, and resulted, after many years of litigation, in a judgment for the sale of the property mortgaged and the recovery of the deficiencies against the mortgagors and Woodruff.

The sale resulted in a deficiency. In 1877 Woodruff commenced an action in the supreme court in his individual name against the Erie Railway Company, H. J. Jewett, its receiver, and a number of other individuals and corporations, to compel the payment by them to the holders of the bonds of the unpaid instalments of interest on these railroad bonds. This action was predicated upon the plaintiff’s equitable right to compel the parties primarily liable to make such payment for the protection of their surety. The action resulted in 1885, alter a long and harrassing litigation, in a judgment fixing the payment of such interest upon the receiver of the Erie Railway Company. In the meanwliile the property of the Erie Railway Company had passed out of its-hands and those of its receiver into the possession of the New York, Lake Erie & Western Railroad Company, and a further action became necessary to reach the funds applicable to the payment of the judgment recovered in the hands of the latter company. Woodruff had become insolvent in 1884; but in 1886 he commenced another action in his individual name against the New York, Lake Erie & Western Railroad Company to subject the pi'operty in its hands received from the Erie Railway Company and its receiver to the payment of the judgment theretofore recovered against the receiver of the Erie Railway Company. This action resulted in a judgment on January 11, 1890, under which the fund involved in this proceeding was eventually placed in bank to the credit of the trustees of the mortgage.

If the actions above referred to had been prosecuted in the name of Mr. Woodruff as trustee, there could have been no question made but that he would have been entitled to an allowance for his costs, counsel fees and expenses in prosecuting such actions; but, because he was individually liable for the payment of such interest coupons and prosecuted such actions individually, it is claimed that he was not in a strict sense a trustee, or acting in a fiduciary capacity, and is not, therefore, entitled to the allowances usually made in such cases.

We are of the opinion that this view of the character in which Mr. Woodruff acted in prosecuting such actions is too narrow and technical to be supported in a court of equity. While Mr. Wood-ruff might, by virtue of the covenant in his case, have been liable to pay the annual interest on the coupon bonds, it seems to have been a liability voluntarily assumed by him for the benefit of the bondholders alone. It was contemplated by both the Erie & Grenesee Valley Railroad Company and the plaintiff, when he took the lease of their road, that he should transfer it on the same terms assumed by him to the Erie Railway Company, who were to become primarily liable for the payment of the bonded debt, and the interest thereon. For some purpose, which is not disclosed, it was thought best that the lease should pass through him; but it is uncontradicted that he assumed this liability without any consideration, or the prospect of any personal benefit, in the interest of and for the protection of the bondholders. Whether, as the trustee of such bondholders, he thought it his duty to promote their interests by securing to them the payment of their bonds and interest by a large railroad corporation like the Erie Railway Company we do not know, but that he voluntarily stepped into the position that made him liable, for the purpose of providing an apparently responsible corporation as the paymaster of their bonds, is evident from the whole case. That he was not working to protect his individual interest in prosecuting the actions referred to is also apparent from the fact that when the general term of the supreme court in 1882 adjudged that the lease to him was ultra vires, and void, and thus, apparently, released him from all liability for the payment of rent, he still continued the prosecution of that action, and obtained the decision of this court reversing that judgment, and holding that such lease was valid, and thus re-established his own liability thereunder.

It further appears that in 1884 and long before the litigation resulting in the creation of the fund ended, Mr. Woodruff had become insolvent and the question whether he was liable upon his-lease to pay rent or not must have become a matter of comparative indifference to him. The last action resulting in the payment of the money composing the fund was commenced in 1887, long after he became insolvent

Neither do we think because the actions were commenced in the name of Woodruff individually, instead of as trustee, that it was necessarily shown that he was not acting as a trustee in prosecuting them. It is unquestionable that, as such trustee, he was under an obligation to protect the fund in his hands from waste and destruction and secure the annual income therefrom for the benefit of the bondholders. In pursuance of his duty in this respect, after default in the payment of interest, he prosecuted the foreclosure of the mortgage; but this remedy being likely to prove inadequate, he also commenced the action against the receiver to recover the rentals of the railroad property due from him. It was probably within the power of the bondholders, also, to maintain actions against the Erie Railway Company and its receiver for this money; but they, in fact, made no effort to do so; and it would evidently be inconvenient and expensive on account of the large number' of bondholders interested, the difficulty of securing united action on their part, the necessity of a large number of separate actions, and the doubtful nature of the remedy, to pursue that remedy. If there was any other remedy -in the power of the trustee to pursue and protect the interests of those who were the beneficiaries of the fund in his charge it was his duty to use it. Fortunately the remedy was in the trustee’s power, to commence an action which would produce the same result as would have followed actions by the bondholders. That action he did commence and asked, as the relief to be granted, that the amount of such rents should be paid into his hands, as trustee for the bondholders, by the Erie Railway Company. Does it -lie in the mouths of these bondholders, who accept the benefit of his action, to say that he was not acting in that respect as their trustee, because he was personally liable for the payment of such rentals? As we have seen, Woodruff was insolvent for the larger part of the time that this litigation was going on and could have been moved in a very small degree by motives of self interest.

We think that in the proceeding, to bring this fund into the possession of the trustees for the benefit of the bondholders, he was performing a trust duty, and is entitled to the benefit of the rule which protects trustees while engaged in the performance of such duties. We "think that this case comes within the meaning and spirit of the decision in the case of Trustees v. Greenough, supra. In that case one Yose was the holder of a large amount of the bonds of the Florida Railroad Company, and, upon allegations that the fund provided for the payment of such bonds was being dissipated and squandered through the dishonesty and incapacity of the trustees and others having its administration in charge, brought an action in his own name for his own benefit and that of other holders of such bonds. After a long and expensive litigation the action resulted in the recovery and preservation of a large part of the fund .and the accumulation of a large sum in money in the hands of the court for distribution. Yose claimed that he should be allowed for the costs, expenses and counsel fees incurred and expended by him, and services rendered in the prosecution of such action. It was claimed that Yose was not before the court in the character of a trustee, and was not, therefore, entitled to reimbursement of his expenses. It was said by Judge Bradley, in delivering the opinion of the court, that “ if the complainant is not a trustee, he has, at least, acted the part of a trustee in relation to the common interest. He may be said to have saved the fund for the cestuis que trust, and to have secured its proper application to their use.” He further says : “It is a general principle that a trust estate must bear the expenses of its administration. It is also established by sufficient authority that where one of many parties, having a common interest in a trust fund, at his own expense takes proper proceedings to save it from destruction, and to restore it to the purposes of the trust, he is entitled to reimbursement either out of the fund itself, or by proportional contribution from those who accept the benefit of his efforts.”

Within the doctrine of this case, we think that the plaintiff was entitled to recover the necessary costs and expenses which he was put to in securing the fund in question.

A different question, however, arises as to the plaintiff’s claim for compensation for his services. It was held in Lent v. Howard, 89 N. Y., 169, that “ the principle is, that for the personal services of an executor or trustee in the discharge of executorial duties, or those which pertain to his trust, the commissions allowed by law are deemed to be a full equivalentbut in that case the executor had carried on and managed a number of large farms for agricultural purposes for a series of years, and the court held that such service was not included in his duty as an executor, and it, therefore, sanctioned an allowance for his compensation for such services. See also Greenough’s case, supra.

We think the trustee in this case should have been allowed compensation for his services at the rate usually awarded to executors and administrators. Inasmuch as the sum in the hands of the trustee for distribution is found by the court and the commissions thereon can be accurately computed, we do not think it is necessary to have a rehearing of the case for the purpose of settling the amount. The percentage allowed to executors and administrators on the sum received here would amount to $695.85, and the allowance of such a sum is in accordance with the rule recently adopted as to the compensation of persons acting in a fiduciary capacity.

The order appealed from is therefore modified by deducting from the item allowed for personal services the sum of $1,833.41, and, as modified, affirmed, without costs to either party in this court.

Andrews, Finch and Gray, JJ., concur; Earl, Peckham and O’Brien, JJ., dissent.


author: Peckham, J.

text:
    George C. Manning et al., Resp’ts, v. Louis P. Beck et al., App’lts.

      (Court of Appeals,

      Filed December 1, 1891.)

    Assignment eor creditors—Bill oe sale previously given—Fraud.
    A creditor who procures a bill of sale from an insolvent debtor in payment of, or as security for, an honest and subsisting debt, and in ignorance of any intention on the part of the debtor to make thereafter a general assignment, can hold it as against the world, even though the property passing under the bill of sale exceeds one-third of the assets of the vendor.
    Appeal from judgment of the supreme court, general term, fifth department, affirming judgment setting aside a bill of sale and general assignment made by defendant Louis P. Beck to the other defendants, as fraudulent and void.
    The appellants in this action were, at the time of the commencement thereof, judgment creditors of the defendant Louis P. Beck, and they brought the action against him and William H. Beck, and H. Israel Weinberg, for the purpose of setting aside a bill of sale executed by Louis P. to William H. Beck, and an assignment without preferences for the benefit of creditors, executed by Louis P. Beck to the defendant H. Israel Weinberg. The complaint alleged that the bill of sale and the assignment were executed for the purpose of hindering, delaying and defrauding the creditors of the defendant Louis P. Beck, and it set forth various facts supporting, as the plaintiffs alleged, that statement. The complaint also alleged that the making of the bill of sale by Louis P., and its delivery to the defendant William H. Beck, and the making of the general assignment to the defendant Weinberg, were all parts of one transaction and that such papers were executed in 'order to avoid the statute of the state of Hew York forbidding the preferring of creditors in a general assignment to an extent greater than one-third of the assets of the person making the same. The plaintiffs demanded judgment that the assignment to the ■defendant Weinberg should be adjudged fraudulent and set aside;- also, that the bill of sale should be adjudged fraudulent as against these plaintiffs, and that the defendant William H. Beck should be directed to transfer and deliver the property mentioned in the bill of sale, or so much thereof as might remain in his hands at the commencement of this action, to a receiver to be appointed by the court, and that he should in the meantime be enjoined from disposing of or meddling or interfering with such property; also, that the defendant William H. Beck should be directed to account for and deliver to the receiver the proceeds of the sale of any property which had been or might thereafter be made by him; also, that the defendant Weinberg should be directed and required to account for and transfer to the receiver all the property which had already or which might thereafter come into his hands as such assignee, and that the receiver should, after paying out of the fund so coming into his hands his lawful commissions and expenses, dispose of the same in payment of these plaintiffs' judgments, and that such judgments should be declared a lien superior to all other claims upon the funds and property coming into the hands of such receiver.
    The defendants by their answer denied all allegations of fraud and also any intention to hinder, delay or defraud the creditors of Louis P. Beck; and also denied various other of the allegations in the complaint.
    Upon motion at special term a receiver of the defendant Louis P. Beck was appointed to take possession of and hold all the estate, debts, property, equitable interests and things in action of the defendant Louis P. Beck, transferred to the defendant William H. Beck or to the defendant H. Israel Weinberg by the general assignment already referred to. The receiver was directed to hold such property pending this action. The action was tried before one of the justices of the supreme court, sitting in equity, and judgment was thereupon ordered for the plaintiffs and a docree was entered setting aside the bill of sale from Louis P. Beck to the defendant William H. Beck, and also the general assignment from Louis P. Beck to the defendant Weinberg, as fraudulent and void as to these plaintiffs. It was further decreed that the defendant William H. Beck should account for and deliver to the receiver appointed in the action all the property transferred to him by the bill of sale, as well as the proceeds of all sales of such property, or any part thereof, as might have been made by him, and that he should account for all the property sold by him before the appointment of the receiver, to the full value thereof. It was further decreed that the defendant Weinberg should account for and turn over to the receiver all the property which passed to him by the assignment; that the several judgments so recovered by these plaintiffs against Louis P. Beck were and each of them was a lien superior to all other claims upon the funds and property coming into the hands of the receiver; that the receiver should, after paying his lawful commissions and expenses, pay to the plaintiffs in this action, respectively, the amounts of their several judgments, with interest upon each from the time of recovering the same; and within thirty days from the entering of the judgment the receiver was directed to make and render an account, and distribute the funds in his hands in accordance with the judgment herein. It was further adjudged that the plaintiffs should recover of the defendants Beck their costs of the action.
    Upon the trial the court found, among other things,, these facts, viz., that defendant, William H. Beck, is a son of Louis P. Beck, and on the 3d of January, 1889, the father was indebted to the son to the extent of nearly $5,000. The father was the owner of a stock of goods in a store and of the fixtures therein, and on the above mentioned day he conveyed them all to his son by a bill of sale. The consideration for the execution of such bill was an agreement of the son to take the goods described in it as payment of the debt due him and his assumption of certain indebtedness of the father, which he agreed to pay, and the payment of a small amount in cash to the father. The son was entirely solvent and able to pay' the debts which he assumed. There was no question but that the consideration for the bill of sale fully equalled the value of the goods and fixtures which passed under it.
    At the time of the execution of thp bill of sale the son had not the slightest knowledge that the father intended to make a general assignment for the benefit of creditors. Weinberg, the assignee, received certain notes from the father, but at that time he did not know' that he contemplated making an assignment, and the assignee was at all times ignorant of any fraudulent intent on the part of the father.
    The assignment for the benefit of creditors was made by Louis P. Beck to the defendant Weinberg on the 4th day of January, 1889, in the afternoon, and the assignee duly accepted the trust and executed a bond for the faithful discharge of his duties, and the first knowledge William H. Beck had of the making of the assignment was on the morning of the 5th of January, 1889, when he was informed of the fact by the assignee. At the time of the making of the bill of sale the defendant, William H. Beck, knew that Louis P. Beck was insolvent. The findings of the court in relation to the intent of the father, which accompanied the execution of the bill of sale and the assignment, are particularly set forth in the opinion. ,
    There is no finding that Louis P. Beck executed the bill of sale in contemplation of making an assignment for the benefit of his creditors.
    Other facts are set forth in the opinion.

      George F. Danforth, for app’lts ; Edward F. Wellington, for resp’ts.

       Reversing 35 St. Rep., 978.

   Peckham, J.

By chap. 503 of the laws of this state, passed in 1887, it was enacted that “ In all general assignments of the estates of debtors for the benefit of creditors hereafter made, any preference created therein shall not be valid except to the amount of one-third in value of the assigned estate left after deducting the costs and expenses of executing such trust; and should one-third of the assets of the assignor be insufficient to pay in full the preferred claims to which, under the provisions of this section, the same are applicable, then the said assets shall be applied to the payment of the same pro rata to the amount of said preferred claims.”

The provisions of this act have been under review in the second division of this court in the case of Berger v. Varrelmann, 127 N. Y., 281; 38 St. Rep., 813, and whatever has been therein decided we regard as conclusive upon us to the same extent as if decided by us. .That action was brought by judgment .creditors of the assignor to set aside a judgment entered against them by confession as in fraud of an assignment by them executed immediately after the confession of such judgment, and to recover for the benefit of the estate of the assignors the amount realized on the sale under the judgment. The ground of the action was that the judgment was confessed by the judgment debtors in contemplation of the subsequent assignment made by them and for the purpose of creating a preference by such j udgment for more than the amount permitted by the statute. It was held that the provisions of the act were not confined to preferences in the assignment itself, but that they applied to those created by a separate instrument in contemplation of the assignment, including all the instrumentalities which the insolvent debtor, in contemplation of such general assignment, voluntarily employed to give a preference. But a question arose in the case whether the act applied as against a judgment creditor by confession who had no knowledge that the debtor confessing the judgment intended to follow it with an assignment.

The learned chief judge, in the course of the opinion, considered (not decided) the case upon the theory that the creditor had no knowledge, when he took his confession of judgment, that the debtor contemplated making a general assignment, and said that he thought it might well be decided upon that theory, but because some of his brethren thought, in the absence of a finding of fact that the creditor had this knowledge, the judgment by con- „ fession should not be set aside, but allowed to stand as a valid preference to the extent of one-third of the estate of the assignors, he proceeded to discuss the question of knowledge by the creditor, and, from the whole evidence, he came to the conclusion that the creditor had such knowledge, and that the court was required, under the rule as to implying facts, to infer in support of the judgment under review that the creditor knew when he took his confession of judgment and made his levy that the judgment debtor then contemplated making a general assignment.

A majority of the court agreed in this view, and the judgment by confession was set aside. Some of the members, however, thought that the fact of knowledge could not be implied, and, as it had not been found, they dissented from the views of the majority.

This case is therefore authority for holding that when the creditor has knowledge that the judgment is confessed' by the debtor in contemplation of his assignment for the benefit of creditor, the judgment under the facts set forth in the case will be regarded as in violation of the statute.

The case under discussion here does not come within the authority of that just cited. A careful examination of some additional facts found by the learned court herein is necessary in order to determine precisely what is the status of the case before us. By the fifty-first finding the court found that the bill of sale and the assignment to Weinberg were one transaction, and were both made for the purpose and with the intent on the part of the vendor and assignor to cheat, hinder and defraud his creditors, and to divide his property among creditors whom he wished to prefer in violation of the laws of the state of New York forbidding the creation of preferences in any assignment to an extent greater than one third of the assets of the person making such assignment, and for the purpose of evading such statute, and cheating and defrauding his said other creditors.

By the fifty-second finding the court found that the vendee, William H. Beck, had, at the time of the making of the bill of sale and of transferring and disposing of the notes heretofore mentioned, actual knowledge of the intent of the vendor and assignor (his father) to cheat, hinder, delay and defraud his creditors.

By the fifty-third finding the court found that the two Becks, father and son, at the time when the bill of sale was executed, and for a long time prior thereto, had connived and conspired together to cheat and defraud the creditors of the father and to dispose of all his property of any value among his friends, whom he wished to prefer in violation of the laws of the state of New York prohibiting any preference beyond the amount of one-third of the assets of the person making the general assignment.

In the first of these three findings the intention of the vendor and assignor Beck is alone spoken of. The finding in substance is that it was his intention to cheat some of his creditors by dividing his property among other creditors, whom he wished to prefer, in violation of the laws of New York, and by evading those laws. The court finds that this intention of the elder Beck the son William H. Beck had actual knowledge oí at the time of the making of the bill of sale.

It is not claimed that the first above mentioned finding was intended to refer to these instruments as having been executed with the intent to hinder, delay or defraud creditors under those sections of the statute relating to fraudulent conveyances. 2 R S., 137, §§ 1 to 8. The learned counsel for the plaintiffs cites the finding for the sole purpose of sustaining his claim that the bill of sale and assignment were set aside because upon their face they were a fraud upon the statute relating to preferences in general assignments.

The exact extent of the knowledge imputed to the son by the second of these findings is rendered somewhat plainer by referring to the sixteenth and one hundred and first findings of fact made by the court upon the request of the defendants. Those findings are respectively (1) that at the time of the purchase by the son from the father through this bill of sale, the son did not know that the father intended making a general assignment for the benefit of his creditors; (2) that the son first learned of the assignment made by his father to Weinberg the day after it was made, when he was told of it by the assignee.

So far as the son is concerned, taking into consideration his ignorance of the existence of any intention on the part of his father to thereafter make an assignment, all the knowledge that can be imputed to the son by the fifty-second finding is that he knew of his father’s intention to execute the bill of sale and that it would operate as a preference to those creditors benefiting by it. Of any intention on the part of the father to hinder and defraud creditors by making an assignment upon the heels of the bill of sale, the son is by the express finding of the court entirely acquitted. The court in order to characterize the intent of the father, connects the execution of the bill of sale on one day with the execution of the assignment on a subsequent day and calls them one transaction, and then finds that both were made for the purpose of hindering and defrauding the creditors of the father by dividing his property in a manner not permitted by the statute.

These findings show the fact that a preference was intentionally given to the son and others by the execution of the bill of sale by the insolvent father, and unless that fact constituted a violation of the statute as to preferences, there is no finding that the son was aware of any intent on the part of the father to violate that statute. It is claimed that the fifty-third finding is a finding of actual fraud and conspiracy separated from the bill of sale and assignment, and in which fraud they were the culminating acts.

Bearing in mind the ignorance of the son as to any intent on the part of the father to make an assignment, and the result of the finding is that the father meant to pay or secure some of his creditors by making this bill of sale, and the son conspired with the father to that end, the effect of which the court says would be to prefer some of the creditors to a greater amount than one-third of the property of the vendor, and this contrivance and action the court characterizes as a conspiracy to cheat and defraud creditors and a violation of the laws of Hew York in regard to preferences. There was no conspiracy to execute this bill of sale and to thereafter make an assignment, for the court finds the son was ignorant of an intent by the father to execute such an instrument, and indeed it fails to find even that the father had such intention when the bill of sale was made.

Of course a mere conspiracy to cheat and defraud amounts to nothing, Brackett v. Griswold, 112 N. Y., 454; 21 St. Rep., 791; and if an intent to defraud creditors is only proved by the doing of perfectly lawful acts, the mere fact that such acts are charged as being done pursuant to a conspiracy is immaterial. The finding of the court of an intent to cheat and defraud creditors is based upon the finding of a conspiracy to dispose of all the father’s property among his friends in violation of this statute, and the alleged intent to illegally dispose of the property or to violate the statute is based, so far as the son is concerned, upon the fact of the execution of the bill of sale by the father, with the knowledge and connivance of the son, the result of which was to give a preference to the son and those other creditors whose debts were to be paid by the son. If this were an illegal act, where the son was in ignorance of any intent on the part of the father to thereafter execute a general assignment, then such act might be characterized as one which did hinder, delay and defraud creditors; otherwise, not.

My examination of these findings of fact has been quite minute because of the claim made by the learned counsel for the plaintiffs that there was a substantial finding of fraud under the statutes relating to fraudulent conveyances, irrespective of any alleged fraud arising from an intentional evasion or attempt at evasion of the act of 1887, but I cannot see that any such construction can be fairly placed upon what has been found by the trial court. A reference to the opinion of the court makes the matter still more clear, as it there appears that the case was decided upon the theory that the bill of sale and the assignment must be construed together, and although there was a cunningly devised scheme to accomplish by indirection what he was prohibited by statute from doing directly, the vendor and assignor must be held to have failed in such purpose.

The question is therefore now fairly before us, whether a creditor who procures a bill of sale from an insolvent debtor in payment of, or as security for an honest and subsisting debt, and in ignorance of any intention on the part of the debtor to make thereafter a general assignment, can hold it as against the world, even though the property passing under the bill of sale exceed one-third of the assets of the vendor. If the preference were contained in the general assignment itself, we have no trouble in concluding that it would be unlawful if in excess of the one-third of the assets of the assignor, entirely irrespective of the question whether the creditor was ignorant of the preference when the assignment was made, or whether he was ignorant of the intention of the assignor to make such assignment. In that case the assignor attempts to do, in the very instrument itself, that which the statute says he shall not do in such an instrument. The inhibition of the statute is not limited to the condition that the creditor shall be in ignorance of the preference. Such preference shall not be made, says the statute, and if made, it shall be void for the excess over one-third the assets. If the creditor attempt to take the preference, he does it by virtue of the very instrument which the statute says shall, not give it, or if it do give it, that it shall be void for the fexcess. There is no room for argument in such case. But it is an entirely different matter where a preference is given by reason of an instrument which the debtor ordinarily has full power to execute and deliver for the very purpose of thereby giving a preference, and which a creditor has like full power to receive for the purpose of thereby receiving such preference. In such case it seems to me an important consideration to inquire whether at the time the security was taken or the debt paid the creditor knew the-debtor was insolvent, and intended to follow the bill of sale by an assignment for the benefit of his creditors, and to thus divest himself of all control over his property. If he had such knowledge it would be entirely proper, as was held by the second division, to-regard the confession of judgment as one of the instrumentalities employed by the debtor in contemplation of making an assignment for the purpose of giving a preference in violation of the act. Whether it should be regarded as one of such instrumentalities ought, as it seems to us, to depend somewhat upon the state of mind of the creditor. If he had knowledge that the debtor in. tended to make an assignment, and that the security was given with the intent that it should result in consequence of the assignment in a violation of the provisions of the act, then we think the security should be adjudged ineffectual. In such case the creditor in effect participates with the debtor in an attempt to violate the act. But even then how far the judgment should go is worthy of some inquiry when the question shall arise. Whether it should set aside the whole security, or leave it to fare with the rest under the assignment to the extent of one-third of the debtor’s assets, in accordance with the act, we do not now determine.

It is said that the statute is aimed at the debtor and his action alone, and that it does not affect the creditor, and hence if the debtor make an illegal preference and thus violate the statute, the intent or knowledge of the creditor is immaterial, and the preference in excess of the amount permitted by the statute must be disregarded. This may well be true when the preference which the debtor makes is contained in the very instrument described in the statute. Any preference the debtor therein makes which runs counter to the statute- must be treated as the statute directs, and the intent of the assignor in giving the preference is wholly immaterial.

But the statute does not, and was not intended to prevent a creditor from obtaining payment of or a security, and thereby a preference, for his debt, even from an insolvent debtor, and where a court is asked to set aside a security which is disconnected from and prior to any general assignment, on the ground that it is in violation of the act in relation to preferences in general assignments, it at once becomes a question whether that act was ever intended to cover a case where the creditor obtaining or availing himself of such securities was ignorant of any existing intention on the part of the debtor to thereafter perform an entirely separate, act and make a general assignment. It does not, in terms, cover such a case, and we think it should not be thus extended by construction.

In White v. Cotzhausen, 129 U. S., 329, it appeared that it was the intention of the debtor, by the means he adopted, to give to his mother and relatives, and it was their intention to obtain a preference over all other creditors, and what was done was in execution of a scheme for the appropriation of the estate by the debtor’s family to the exclusion of the other creditors, thereby avoiding a general assignment. In that case the supreme court was administering the law of Illinois, and the learned judge, in the course of his opinion, said that where an insolvent debtor recognizes the fact that he can no longer go on in business and determines to yield the dominion of his entire estate, and in execution of that purpose, or with intent to evade the statute, transfers all, or substantially all, his property to a part of his creditors in order to provide for them in preference to other creditors, the instrument or instruments by which transfers are made and that result is reached, whatever their form, will be held to operate as an assignment, the benefits of which may be claimed by any creditor not so preferred who will take appropriate steps in a court of equity to enforce the equality contemplated by the statute. Such, said the judge, we think is the necessary result of the decisions in the highest court of Illinois.

The act there under consideration was a statute of Illinois prohibiting the preference in an assignment of any debt or liability over another, and declaring such preference void.

Taking the facts into consideration as shown in that case, viz. : a scheme entered into by all the family, debtor and creditors, to give and to obtain a preference over all other creditors, and by means of such scheme to appropriate the entire estate of such debtor to his own family, and to the exclusion of all other creditors, it does not seem a great strain upon the statute to hold such a scheme void. But we have no such case. Instead of a scheme shared in by the creditors to appropriate property in evasion of the statute, there is entire ignorance upon the part of the creditor of any such scheme, and there is the fact that the creditor is only doing an act which has always heretofore been entirely legal, viz.: obtaining security and probably thereby a preference in the payment of his debt from an insolvent debtor.

In the case in the supreme court it is recognized that the statute of Illinois does not contravene the general rule that a debtor, when financially embarrassed, may in good faith compromise his liabilities, sell or transfer property in payment of debts, or mortgage or pledge it as security for debts, or create a lien upon it by means of a judgment confessed in favor of his creditor. But all these acts, which might otherwise be valid, and which a creditor would have the right to avail himself of, are to be declared void if the debtor has at that time recognized the fact that he can no longer go on in his business. Our statute does not in terms cover such a case, and differs also from the Illinois statute, which declares void all preferences.

It does not seem to us that either the letter or the spirit of our statute covers a case where the creditor is ignorant of any intended violation of the statute by the debtor, and where the act of the creditor is simply to obtain security for the payment of an. honest debt due from the debtor to himself.

We are disposed to agree with the supreme court of Pennsylvania, as the doctrine of that court is announced in Lake Shore Banking Co. v. Fuller, 110 Penn. St,, 156, where the court says: “ Hor can we agree that a mere intent of the debtor, unexpressed to the creditor, to give him a preference by paying or securing the debt, although he at the time contemplated, and soon after executed a general assignment, operated to defeat such preference on the ground that it is contrary to the act of 1843. Such an intent is not unlawful, and cannot be inferred from a proper act. But, even if it were, the creditor, who has a perfect right to accept payment or security of his debt, and has not participated in the illegal, unlawful intent, should not be compelled to forfeit his preference in that amount. He at least is innocent, and may in good conscience hold the advantage he has obtained.”

It has been urged that by this construction the statute may be easily evaded.

It is said a failing debtor may prefer his favorite creditors by separate instruments, and then make a general assignment, and as a result his favored creditors will be paid in full, and those provided for in the assignment will get nothing. Those creditors, however, who participated in or were cognizant of the intent of the debtor, could not avail themselves of their securities beyond at any rate the statutory rate, Berger v. Varrelmann, above referred to, and as to those creditors who were ignorant of any such intent, it is not perceived that any great misfortune would attend the allowance of their securities in the same way as has been legal for hundreds of years past. The debtor might neglect to make an assignment at all, and then it would look as if the acts of preference would be legal. The statute of 1887 at any rate docs not cover such a state of facts,' and we do not feel at liberty to enlarge its provisions by construction so as to bring such facts within the condemnation of the statute. If it he thought good policy so to do, the legislature, and not this court, is the body to which application should he made to effect such change in the law.

There are many other facts found by the trial court and not herein alluded to, which the counsel for plaintiffs claims are evidence of actual fraud on the part of the defendants herein, within the statute relative to fraudulent conveyances. The findings of the court, as we have seen, go upon the ground that the intent of the debtor to violate the statute of 1887 was a fraud and hence a hindrance and delay to creditors. The actual fraud has not been found, and we do not feel like disposing of this case upon a fact not found or passed upon by the court below, while repudiating the real ground upon which the judgment was founded. The actual fraud claimed by the counsel for the plaintiffs may be proved on the new trial, and, if found as a fact by the court or jury, will dispose of the case in favor of plaintiffs.

We think the judgment should be reversed and a new trial ordered, with costs to abide the event.

All concur, except Earl, J., not voting.


author: Finch, J.

text:
    Elizabeth Blazy, Resp’t, v. Hector McLean, App’lt.

      (Court of Appeals,

      Filed December 1, 1891.)

    1. Deed—Collateral security.
    Plaintiff’s husband and another had contracted with defendant for the purchase of a farm, and upon the contract was endorsed a memorandum by which the former agreed to pay §2,000 additional, to be “secured in part ” by plaintiff’s deed of certain property belonging to her, said sum to be paid prior to the execution of the deed of the farm. Reid, that plaintiff’s deed was, in substance and effect, a mortgage, and as defendant conveyed the farm to a third party for a new consideration he was not entitled to hold plaintiff’s property as collateral security.
    2. Evidence—Written contract varied by oral testimony.
    The court refused to allow defendant to show that when the deed was executed the three parties and Mrs. Blazy were together, and that the deed was explained to her and she agreed to deliver it absolutely as a payment of §2,000, which defendant then agreed to accept and indorse. Reid, error; as Mrs. Blazy was not a party to the contract, but a stranger, and the rule as to varying a written contract by paroi testimony did not apply.
    Appeal from judgment of the supreme court, general term, fifth department, affirming judgment for plaintiff entered upon an interlocutory judgment previously rendered and upon the report of a referee to whom had been referred the matter of the rents and profits of certain real estate while in the possession of the defendant.

      E. W. Gardner, for resp’t; Cassius C. Davy, for app’lt

       Reversing 35 St. Rep., 409.

   Finch, J.

The deed of the plaintiff and her husband to the defendant McLean was declared by the judgment below to have been in truth a collateral security. The property which it covered belonged to the plaintiff in her own right, and the deed was delivered by her husband apparently in accordance with the terms of a written contract. John Blazy, the husband, and Augustus 0. White had contracted with McLean for the purchase of a farm. That contract recited a consideration of $5,092.52 “ with other stipulations and payments heretofore made and to be performed,” and was signed by the vendor and vendees. What those other stipulations and payments were the contract does not recite. But endorsed upon it appears the following memorandum signed by all the parties: “ In addition to the within payments of $5,092.52 we the parties of the second part agree to pay to the party of the first part $2,000 with semi-annual interest on the same from and after the 1st day of January, 1878, said $2,000 and interest being secured in part by a deed executed by Elizabeth Blazy and John Blazy on lots Nos. 29 and 30 on the north side of Wager street in the city of Eochester, and said $2,000 to be paid to the party of the first part prior to the execution of a deed to the parties of the second part; and on the sale of said lots by said McLean the avails of said sale after paying all expenses are to be applied on the $2,000 aforesaid, this being a part of the original agreement”

By the terms of this memorandum $2,000 was added to the purchase price, and that sum was declared to be “ secured in part ” by Mrs. Blazy’s deed. The two lots were not to be taken in payment of the $2,000, but to become security for that payment “ in part.” If the transfer was absolute there was no need of the additional memorandum, or if made, the price of the lots should have been credited at once.

This contract was dated January 23, 1878, and the deed was delivered by the husband the next day. There is no ambiguity in this writting. Blazy and White agreed to pay McLean $2,000 before the delivery of his deed, and Mrs. Blazy gave her deed as collateral security for their debt. It was therefore, in substance and effect, a mortgage. The evidence further shows that the debt which it was intended to secure no longer exists. McLean has ■conveyed the farm to Mrs. White for a new consideration agreed upon between them, and without the knowledge dr consent of Blazy or his wife. Of course he cannot now claim that the debt of two thousand dollars remains, and that he is entitled to hold the Eochester lots as collateral security.

But he takes a different position. He claims in his answer that he took the deed of Mrs. Blazy as payment in full for the $2,000 ; that Blazy as vendee abandoned the contract and forfeited the payment, and the vendor accepting that abandonment delivered up the contract as cancelled and annulled and re-sold the premises to Mrs. White. It is evident that this theory cannot stand upon the face of the written contract. That shows that McLean did not take the lots at $2,000 and agree to credit that sum on the •contract; and that he took them as security only in part, and if he sold them was to credit merely what he received. There was thus no error in the finding of fact that the deed was given as collateral security upon the facts permitted to be proven. The debt having been extinguished a re-conveyance was a natural and necessary consequence.

But the defendant offered to show a very different state of facts. Three times he sought permission to prove that the deed was delivered by Mrs. Blazy and accepted by him as a complete and absolute transfer of the lots and for which he agreed to allow two thousand dollars as a payment upon her husband’s contract. By the evidence of Blazy, the husband, it appears that there were two -occasions on which the subject of the deed was more or less discussed with the wife. One of these was on the day of the execution of the contract, and the other on the next day when the deed was signed and acknowledged. The defendant offered to prove that on each of these occasions it was explained to Mrs. Blazy that the deed was to be absolute and the value of the lots be at once applied upon the contract. This evidence was steadily excluded.

Just that agreement with the wife was pleaded in the answer, and no ground of objection was stated on the trial, and no allusion to the point is made in the opinion of the general term. The rulings are briefly defended by the respondent upon the, ground that the written contract was conclusive. That is true where the contest is between the parties to the instrument, but not true as against a stranger to it. Sprague v. Hosmer, 82 N. Y., 466 ; Lowell Mfg. Co. v. Safeguard Ins. Co., 88 id., 591. Mrs. Blazy was no party to this contract, and not bound by it. Notwithstanding the agreement of the parties to take the lots as collateral, she was at liberty to apply them absolutely or not at all on her husband’s contract, and the parties to that were at liberty, to induce her, if they could fairly, to take that action. When the deed was executed, the three parties and Mrs. Blazy were together, and one of defendant’s offers was to show that on that occasion the effect of the deed was explained to her, and she agreed to deliver it absolutely as a payment of $2,000 on the contract which the defendant agreed to accept and endorse. I cannot discover any lawful objection to that evidence. It does not even contradict or vary the writing. It only shows performance. By the contract Blazy and White were to pay $2,000 at any time before the vendor should convey, and Mrs. Blazy’s deed was to be given as security. But if she paid the $2,000 at once, no security was needed, and the proof offered showed simply an immediate payment in accord with the terms of the contract, and which merely made the provision for security needless and superfluous. The rejected evidence shut out the defense, and I am compelled to say that its rejection seems to me to have been a material error.

For this reason the judgment should be reversed, and a new trial granted, costs to abide the event.

All concur, except Huger, Oh. J., not voting.


author: Gray, J.

text:
    Ursula Jooss, App’lt, v. Christian Fey et al., Resp’ts.

      (Court of Appeals,

      Filed December 1, 1891.)

    Deed—Husband and wife.
    Under a deed, made since the enabling acts of 1848 and 1849, to a husband and wife, which provides in express terms that they should take as-joint tenants and not as tenants in common, the wife takes and holds as a joint tenant with her husband and not as a tenant by the entirety.
    Appeal from judgment of the city court of Brooklyn, general term, affirming judgment dismissing complaint.
    Action of partition. The defendants, Christian Fey and Louise Fey, are husband and wife, and in 1882 they bought the premises described in the complaint, each contributing to the purchase money from his and her own property. The words of grant were to them “ the parties of the second part, as joint tenants, and to their heirs and assigns forever,” and the habendum clause was, to them “ as joint tenants and not as tenants in common.” Subsequently, Louise, the wife, conveyed her interest in the premises to the plaintiff. The court below, at trial and at general terms, held that the action could not be maintained, on the' ground that the defendants had acquired and held the premises as tenants by the entirety, and the wife could not convey as she did. The plain tifE‘appealed to this court.

      H. C. Conrady, for app’lt; James C. Church, for resp’ts.

       Reversing 30 St. Rep., 147.

   Gray, J.

Prior to the passage of the various acts by the legislature of this state for the benefit of married women (in the years 1848, 1849, 1860 and 1862), the common law rule obtained that by a conveyance to husband and wife they could only take and hold the estate as tenants by the entirety. It was immaterial to ■affect the quality of their holding, whether the estate was given to them or acquired by their joint purchase. Words of grant, which to separate persons would convey in joint tenancy, to husband .and wife would convey by entireties. They could not take and hold otherwise. They were seized each of the whole and neither ■could sell without the consent of the other. Williams on Real Property, 208 ; 2 Kent’s Com., §§ 110, 132 ; Jackson v. Stevens, 16 Johns., 113, 115. This estate of tenancy by the entirety has but one feature in common with that of a joint tenancy, and that is in the right of survivorship. In all other essential respects they ■differ. The estate which vests by virtue of a grant jointly to husband and wife is peculiarly the result or product of the marriage relation and depends for its continuance upon the unity of man and wife.

Lately, at our October term, we had occasion in Stelz v. Schreck, 40 St. Rep., 267, to consider the effect upon this tenancy by the entirety of the severance of the marriage relation by a divorce, and we held that husband and wife then held as tenants in common. This result, it was considered, flowed logically from the peculiar cause for the tenancy by the entirety. It depended upon the continuance of the marriage relation, and ceased with its cessation. When the married women’s acts were passed, the effect was to relieve them from various disabilities under which they were at common law, and to qualify them, to the extent specified in the acts, to act as unmarried women might with respect to their separate estates, and to vest them with the same capacity for the acquisition of a separate property as though they were unmarried women. The disabilities were not wholly removed; but only to the extent that the statutes, by their plain reading, must be taken to have changed the common law as affecting the legal status of married women. By § 3 of chapter 200 of the Laws of 1848, as ■amended by chapter 375 of the Laws of 1849, it was provided that “ any married female may take by inheritance, or by gift, ■grant, devise or bequest, from any other person than her husband, and hold to her sole and separate use, and convey and devise real ■and personal property, or any interest or estate therein, and the rents, issues and profits thereof in the same manner and with like effect as if unmarried, etc.”

The subsequent legislation of 1860 (chap. 90), and 1862 (chap. 172), provided that all property owned by, coming to, or acquired by a married woman as her separate property, “ shall, notwithstanding her marriage, be and remain her sole and separate property, * * * and shall not be subject to the interference or control of her husband, or liable for his debts,” and that she may sell and convey such property as if she were unmarried. In Meeker v. Wright, 76 N. Y., 262, it was considered by the learned judge, who delivered the opinion in that case, that this legislation had abrogated the common law rule governing a conveyance to husband and wife. But in that view a majority of the judges did not concur, and the appeal was decided upon another point.

When, later, in the case of Bertles v. Nunan, 92 N. Y., 152, it became necessary to consider the effect of the changes wrought by the legislature of this state in the status of the married woman at common law, the majority of the court concurred with Judge Earl in his opinion that whatever the effect of a conveyance to husband and wife was prior to 1848, it so remained thereafter. It was considered that the provisions of the legislative acts in behalf of married women did not define what estate the husband and wife shall take in lands conveyed to them jointly, and that the legislature did not contemplate the abrogation of their common law unity. “ The common law incidents of marriage,” it was remarked, “ are swept away only by express enactments.” The question is so fully discussed and the authorities and legislation are so generally reviewed by Judge Earl as to relieve us from the necessity of repetition. Whatever was the previous drift of the decisions in this and in other courts, the case of Bertles v. Nunan must be held as firmly establishing the proposition that the common law rule as to the unity of the husband and wife had not been abrogated by the legislation of this state with respect to their tenancy of real property when conveyed to them merely by such a description. Those expressions of the learned judge, in his opinion in that case, which speak of the wife’s right to receive conveyances, or of their force and effect in respect to the estate granted, have reference to the case of a grant as made to the wife in connection with her husband, and should not be read as importing otherwise in the construction of the statutes. Nothing in that decision holds against the right of the married woman’s capacity to hold real property as a joint tenant with her husband, provided that it is the plain intent of the deed of conveyance as expressed in the words of grant. If it appears plainly that she takes not merely as the wife, .but separately by virtue of her individual right, then the case would come within the express words of the enabling enactments of 1848 and 1849, which conferred the capacity upon the married woman to acquire by grant, or otherwise. Under these acts a husband and wife may be made joint tenants or tenants in common where the intention is made plain by express words.

This must be so, if we would give to them meaning and force. The disabilities of the woman, which were the consequences of her coverture at common law, were incompatible with modern notions, and with that recognition of her natural rights which a changed condition of things in the world compelled, and the legislation of the state, commencing with the year 1848, was the outcome of such forces of thought.

The unity of husband and wife caused by the marriage relation continued to subsist, notwithstanding legislation; for it had not expressly abrogated that rule of the common law. The utmost it had done was in express enactments to confer especial capacities and powers upon the married woman; among which was the power to take property as though she were unmarried, and the power to dispose of it as such. Legislation had almost entirely relieved her of her common law disabilities; but the rule of strictness in the construction of statutes changing the common law forbids extending the effect of an act beyond what is required to give it a reasonable and proper effect. Bertles v. Nunan did not deny a full operation to the legislative enactments; it simply applied this rule of construction and confined the operation to what the language of the acts clearly imported; and as they did not in terms withdraw the married female wholly from her status under the law, as it existed prior to the Revised Statutes, nor defined the kind of estate which would vest in her by a grant jointly to her and her husband, the prior rule of the common law remained in force and qualified the interest of each as a tenancy by the entirety, where, by virtue of their union of person, each was seized as of the whole estate, with the right of survivorship and without the right of independent alienation. But, in the case before us, the operation of the common law rule was obviated by the intention of the grantor as shown by the express words of the grant, and the case was brought within the purview of the enabling acts, and so the wife took and held as joint tenant with her husband. This interest was, therefore, alienable by her and was acquired by the plaintiff through her conveyance to him. That acquisition entitled him under the Code, § 1532, to bring the action for a partition.

For the reasons given, I think the judgments of the special and of the general terms should be reversed, and a new trial ordered, with costs in all the courts to abide the event of the trial.

All concur.


author: Learned, P. J. Landon, J.

text:
    The People ex rel. William J. Best, App’lt, v. Chas. M. Preston, Supt. of the Banking Dep’t., Resp’t.

      (Supreme Court, General Term, Third Department,

      Filed November 30, 1891.)

    1. Banks—Special examinee—Ceetieicate.
    A refusal of the superintendent of the hanking department to grant a certificate for the services of a special examiner, on the ground that the claim is stale or barred by the statute, is an acting on the question and not a refusal to act, and the examiner’s remedy, if any, is by certiorari.

    2. Same—Res adjudicata.
    Such a decision is one on the merits and is binding on his successor in office as res adjudicata.

      3. Mandamus—Limitation.

      Mandamus should not he granted after the period fixed by statute as a bar to an action has expired.
    Appeal from order denying motion for a peremptory mandamus.

      John T. McDonough, for app’lt; Charles F. Tabor (I. H. Maynard., of counsel), for resp’t.
   Learned, P. J.

This is an appeal from an order denying relator’s motion for a writ of peremptory mandamus.

In 1877 the relator was appointed by the banking department a special examiner to examine the Union Dime Savings Bank of New York. He entered on his work September 26, and continued till' February 27, 1878. The statute says that the expense “ shall be paid by the corporation examined in such amount as the superintendent shall certify to be just and reasonable.” Laws of 1875, chap. 371, § 43. During the examination the bank paid for this examination, for services, expenses, services of accountant, attorneys and clerks, and disbursements in all $9,356.05. This included $2,500 for the services of the relator paid to him.

After the examination Mr. Lamb, acting superintendent of the banking department, proposed to certify, under the law, $2,500 in full for compensation, being the amount already received. The relator deemed this insufficient, but presented no bill; and no formal action was taken by the acting superintendent.

In November, 1887, the relator applied to Mr. Paine, then superintendent of the banking department, for a certificate of the amount deemed just and reasonable. Mr. Paine denied the application March 3, 1888, holding that the lapse of ten years since the services, and the failure to give or demand a certificate during that time, was a bar. Mr. Paine wrote a full and careful opinion, and concluded by saying: “If I am wrong in this opinion the examiner has his remedy in the courts. ”

In May, 1890, the relator applied to Mr. Preston, the superintendent of the banking department, to re-open and re-hear the matter and to make the said certificate; and about December 31,1890, the superintendent denied the application, writing an opinion and giving two reasons for his refusal.

1. That the claim was stale and the applicant was barred.

2. That the decision of Mr. Paine was res adjudícala and a bar to the reopening of the matter.

Thereupon the relator applied for a peremptory mandamus, which was denied. The opinion of the learned justice holds that the act of granting a certificate is judicial and therefore mandamus does not lie. Also, that if the relator felt aggrieved by the decision of Mr. Paine he should have reviewed it by certiorari. Also, that Mr. Preston properly held that the decision of Mr. Paine was res adjudicata.

The learned counsel for the relator, on this appeal, while he does not dispute the general rule that mandamus does not lie to direct a judicial, or quasi judicial, officer how to act, insists that neither Mr. Paine nor Mr. Preston did act on the application, but that each refused to exercise judicial discretion; the former, on the ground of ' the staleness of the claim; the latter on the ground of res adjudícala.

The question, then, is this : When the relator applied for a certificate to Mr. Paine, and Mr. Paine refused it on the ground that the claim was stale (or barred by the statute), was that decision an acting, or a refusal to act. We think it is the former. It was a judicial decision that the claim was stale. That decision presupposed a consideration of the services; of the time when they were finished; of the reasonable time thereafter to apply for a certificate; and it might have included a consideration of any excuse for the delay. It appears from the opinion that Mr. Paine considered also the fact that, owing to the lapse of time, the funds in the bank are not the same which they were at the time'of the examination; and. also that it would not be equitable to charge the depositors of 1888 for services rendered to the depositors of 1878. All this shows judicial action. True, he came to the conclusion to make no certificate. But in a trial at law a plaintiff who fails because his action is barred by the statute has a judicial decision, as much as if he succeeded. We, therefore, think that the remedy of the relator in both instances was by certiorari.

But as the facts are before us and as another important question is presented, we proceed to consider that, without reference to the form of the present proceeding.

Mr. Preston, in refusing to grant the certificate, held that the action of his predecessor, unreversed, was binding on him as res adjudicala, in a manner analogous to a judgment in a court. We are of opinion that he was right.

The answer of the appellant to this point is that a decision is binding in this way only when it is on the merits. Osterhoudt v. Rigney, 98 N. Y., 222. But we have already stated that we consider the action of Mr. Paine to be, not a refusal to decide, but a decision. And if a decision, then of course on the merits. A judgment that an action is barred by the statute of limitations is just as much a judgment as any other, so far as the matter of resadjudícala is concerned.

In Osterhoudt v. Rigney, ut supra, at p. 234, the court says: “ The rule which forbids the re-opening of a matter once judicially settled, applies as well to the decisions of special and subordinate tribunals as to decisions of courts exercising general judicial powers.” That remark was not obiter; for the question of re-opening such a decision was directly before the court. It is hardly necessary to cite any other authority in this state.

In United States v. Bank of the Metropolis, 40 U. S. (15 Peters), 377, the supreme court of the United States, speaking of the powers of the postmaster-general, say: “ The right of an incumbent of reviewing a predecessor’s decisions extends to mistakes in matters of fact arising from errors in calculation and to cases of rejected claims in which material testimony is afterwards discovered or produced.” Taking this exposition of the right to review claims, the relator’s case does not come within it. See also Lavalette v. United States, 1 Court of Claims, 147. But there is another consideration. In the present case the relator had no claim against the state. The relator’s claim is against the savings bank. The superintendent of the banking department is only the judicial authority to decide the amount. When that has once been decided between the parties the savings bank has a right to insist on the absolute bar to any future application.

In our system of government, where changes of state officers are so frequent, and where one political party may succeed another in a few years, it is of great importance that there shall be no right in a new officer to reverse the decision of his predecessor. The contrary rule would in our government be especially dangerous. And officers themselves should be protected from the importunity of claimants in such cases ; even where the claim is one against the state itself.

Still another objection exists. Mandamus should not be granted after the period fixed by statute as a bar to an action has expired. Code, § 414; People ex rel. Millard v. Chapin, 104 N. Y., 96 ; 5 St. Rep., 588. And may even be refused for loches before that period. Where a right exists, but a demand is necessary to entitle a person to maintain an action, the time begins to run under the statute of limitations from the time when the right to make the demand was complete. Code, § 410. By analogy to that principle, the relator’s right began when he had finished his work, viz.: February 27, 1878. He cannot extend his time.by neglecting to demand a certificate. People ex rel. Sheridan v. French, 13 Abb. N. C., 413.

Order affirmed, with ten dollars costs and printing disbursements.

Mayham, J., concurs.

Landon, J.

I concur in the result upon the ground quoted in the above opinion from 15 Peters, 377. I think that mandamus is the proper remedy when a ministerial officer refuses to perform an act which an individual has the legal right to require, although the refusal may be based upon the officer’s misconstruction or misapplication of the law.