text:
    Amelia M. Millard, App’lt, v. Otis G. Clark et al., as Executors, etc., Resp’ts.

      (Supreme Court, General Term, Third Department,

      Filed July 14, 1894.)

    1. Trust—Creation.
    A trust of money or of personal property can be created, by which the author of the trust is the trustee.
    2. Same.
    A deposit in a savings bank of money, belonging to a third party, subject to the control of the depositor, creates a trust in favor of said party.
    3. Same.
    Reservation in trustee of power of control is not fatal to the creation of a trust. ,
    4. Same—Retaining.
    Retaining possession of the instrument by which a trust is created, unti the author’s death, does not render it ineffectual.
    Appeal from a judgment in favor of defendants.

      King & King (Edwin A. King, of counsel), for app’lt; Shaw, Bailey & Murphy (K JD. Bailey, of counsel), for resp’ts.
   Herrick, J.

—The appellant and the respondent Ella J. Williamson are the daughters of one Orange B. Young, deceased. The appellant was born in 1848. She and her sister are the only issue of their father. Until their respective marriages, both resided with, and were supported by, their father. In 1886 their father remarried, and his widow survives him. While-quite young, it appears that each of the children was possessed of a child’s savings bank, in which they placed their pennies and small change received from their parents and friends. In February, 1858, the appellant’s father opened an account in the Central Savings Bank oE Troy, in her name, and received a pass bank book made out in her name, and from time to time deposited other money upon such account; and it appears that he took money from the child’s savings bank, and deposited it in said Central Savings Bank. He told her that he had started a bank account for her, and occasionally showed it to her, but never delivered the bank book to her, to keep herself. Deposits were made from time to time,—frequently of very small sums, such as might well be the savings of a child. He remarked, in referring thereto, that he “ thought it was a good idea to have them save their pennies. They would be more apt to save their money when they grew up.” On or about August 12, 1864, on the birthday of the appellant, her father told her that he would give her a present of $100, ■and put it in the bank for her. She wanted the money herself, and he told her that he would let her take it for awhile, but that she must return it, and he would put it in the bank for her. He handed her the money, and she retained it for part of a day, and then returned it to her father, and he deposited it to her credit in the Troy Savings Bank, subject to his control, and opened an account, which was subsequently increased by various deposits made by him, and by the interest earned by it. In October, 1878, the account in the Central Savings Bank, with the accumulated interest, amounted to the sum of $349.91. About that time said bank ceased to do business, and the account was transferred, and made a special deposit, on interest, in the Central National Bank of Troy, subject to the control of her father, the said Orange R. Young. The account, as it theretofore had been in the Central Savings Bank, had been subject to no such limitation, but was simply deposited in appellant’s name. These bank books were shown to the plaintiff from time to time, and she was told by him of the money she bad in the bank, which he was constantly increasing for her until his death. From the time of the opening of said accounts, they were often mentioned in the family; and it was often stated by appellant’s father that they were appellant’s property, and that at his death she could have them. The appellant and her father had frequent conversations relative to them, and at some of such conversations the appellant urged her father to turn over the accounts to her, but he refused to do so ; stating that after his death she might need the money more than while he lived, and he would keep them, so that she then would have something, and that when he died she would not be'ashamed of the amount in the bank. Similar accounts were opened and kept in the same way for the benefit of his other daughter. On or about May 2, 1889, her father withdrew from the two accounts about the sum of $1,800, which he invested in bonds and mortgages, one for the sum of $1,300 and the other of $500 The assignments on such bonds and mortgages were made out in the name of Orange R Young. On the $1,300 bond said Young pasted a paper bearing, in his own handwriting, the words following :

“ This real estate bond of $1,300 is for my dau'ghter Amelia M. Millard. It is the money she had in the savings bank to her credit, which was put in the bank when she was small. I now put it in this form so that she can realize more interest. At my death this is to go to her. This bond is dated April 1st, 1889.
Trot, May 2, 1889. O. R Young.”

The bond of $500 had a paper attached to it in the same words, excepting the description of the amount of said bond. The moneys received from time to time as interest upon such bonds were deposited by her father to the credit of the appellant, subject to his control, in the Central National Bank, to the credit of the account already referred to. The $1,800 withdrawn from the accounts, and invested in the bonds and mortgages referred to, was withdrawn and was invested without the knowledge of the appellant. Orange R. Young died in March, 1892, leaving a will, wherein the respondents were appointed executors, and whereby he disposed of his estate; among other things, creating a trust of a portion thereof for the benefit of the appellant and her children. Nowhere in the will was any specific mention made of the bonds and mortgages, or of the accounts in the savings bank hereinbefore referred to. The appellant made a demand of the said executors for the delivery to her of the bank books containing the accounts in the said savings banks, and of the above mentioned bonds and mortgages, which was refused, whereupon she commenced this action to compel the delivery thereof. At the close of the evidence the court dismissed the plaintiff’s complaint, with costs. From the judgment entered thereon this appeal is taken.

There is no conflicting testimony in the case. The only questions are those of fact arising from the different inferences, to be drawn from the undisputed evidence in the case, and the questions of law arising therefrom. Various exceptions were taken by the appellant to the findings of fact and law, and the refusals to find, by the trial court. It will be only profitable, however, to call attention to the three following requests to find matters of fact, to wit:

“ Seventh, From the inception of said respective accounts until the death of said Young, March 14, 1892, said accounts were frequently discussed by and between plaintiff and said Young, and in the family of said Young, and said pass books were often seen and occasionally examined by plaintiff, and that it was often and commonly stated by Young, and understood, that said accounts and books were the property of plaintiff, and by said Young held expressly for her, and were to pass into her possession and control at his death.”

The court modified such request to find by striking out the italicized words, and inserting instead the following: “ To belong to the plaintiff, and were to pass into her possession and control at his death.” To whicli modification the appellant excepted.

“Eleventh. Said Young intended said accounts, bonds, mortgages and fund to be, and he held and managed the same, solely and exclusively, for the benefit of this plaintiff.” Which the court refused to find, to which the appellant excepted.

“ Twelfth. Said Young neither made, nor intended to make, any testamentary gift or disposition of said accounts, bonds, mortgages or fund.” Which request the court likewise refused, and to which appellant excepted.

With great respect for the learned justice before whom the case was tried, it seems to me that he erred in the inferences of fact that he drew from the testimony in this case. Most of the facts, and the evidence thereof, were agreed upon between the parties. Some of the evidence was documentary. The oral testimony is very limited. So that I have less hesitation in differing from the trial justice, as to the facts, than I would in a case where all the facts are dependent, or largely dependent, upon oral testimony, where the trial court has an opportunity to observe the witnesses, their demeanor, and manner of giving testimony, which afford him greater facilities for arriving at a conclusion as to who is telling the truth, and as to what the real facts' are, than are possessed by the appellate court, which does not see ' or hear the living witnesses. It appears here that the bank account was originally started from gifts made to appellant by her father and other persons, which she had deposited in her child’s bank, and that moneys taken from tier savings bank were continued to be deposited from time to time by her father ; that the deposits so made in the savings bank were in her name ; that she was told by her father that he had started a bank account for her, and the moneys so deposited were spoken of by him, from time to time, to her and in the family, and to others, as her property,-—not as property or money that was to be hers at some future time, but as money that was then hers. The written memorandum made by him, and attached to the bond, recognizes the money, with which such bond was purchased as her money.

“It is the money she had in the savings bank to her credit, which was put in the bank when she was small. I now put it in this form so that she can realize more interest.”

This is a recognition that the money was, and had been for some period of time, her money,—not that she was to become the owner of it at some future time, but that she was then the owner of it.

This case differs in essential particulars from the case of Beaver v. Beaver, 117 N. Y. 421; 27 St. Rep. 405, and 137 N. Y. 59 ; 50 St. Rep. 69, and indeed from all the cases to which I have been referred, where moneys have been deposited in the bank by one person for the benefit of another. In the Beaver Case the father deposited his own money in the savings bank, m his son’s name, but retained possession of the bank book himself, and never spoke of it, or in any other way recognized it, as belonging to his son. The only sum that was thereafter drawn from the bank, until after the father’s death, was drawn by the father himself. The son died about 20 years after the deposit was made, never having, known anything about such deposit having been made in his name, and in the meantime having opened an individual account in the same bank in his own name; and it was held that these circumstances did not show a gift, or establish a trust for the benefit of the son. In the case before us the account was opened by a deposit composed entirely or in part of the accumulated savings of the appellant (then a child) of moneys which she had received from her parents and other persons. It was in her own name, not subject to the control of any one, and it remained so on deposit, without any limitation or restriction upon it, for a period of 20 years. It was so deposited with her knowledge. She saw the bank book from time to time. It was talked of, by her father, to her, and to and in the presence of the family and others, as her money. Her savings continued to be taken ami deposited, from time to time, to such account. The money which had been given to her by her father and other persons before it was placed in the savings bank was hers. That stamped the character of the account, from the beginning, as an account composed of her money,-not money that was to be hers thereafter, but of money that was hers, and had been hers prior to its deposit. The money that was contributed thereafter by the father, by placing it in the bank without its previously going through her hands, constituted a gift to her. It became part and parcel of her account. It became a part of her money, was so intended by the father, and that intent was effectuated by placing it with that which was theretofore hers. A very large proportion of the account consisted of accumulated interest upon the deposits, which was also hers. The other account-the one opened in the Troy Savings Bank-was opened by a deposit of $100. The $100 was presented to her as a birthday gift, and was for a time—although for a short time—in her physical possession and control, delivered to her by her father, and returned by her to him to be deposited in the savings bank for her. That was an absolute gift. All that was necessary to constitute a valid gift was done. There was an actual manual delivery by the doner to the donee. When that money was deposited in the savings bank, it was the appellant’s money that was deposited, not the money of her father. The account was opened with her money deposited in her name. That stamped the character of the account in that bank. The accretions that were made to it by the accumulation of interest, by deposits of her money, by the deposits by the father of moneys belonging to him, in the same account, did not change the character of the account; but the account impressed its character upon the money so deposited, and rendered the account one of money belonging absolutely to the appellant. The money in both banks was recognized by the father as money belonging to his child,—money that wjas absolutely hers, but money that he retained the control of until the time that she would need it most. The deposit in the Central Savings Bank was there about 20 years after the account was originally opened, and was then placed in another bank, in the name of the appellant, subject to the father’s control. It must be borne in mind that it was her money whose place of deposit was being changed. His control over it was that of a trustee for her and the reservation in himself of the power of control wras not fatal to the creation of a trust. Van Cott v. Prentice, 104 N. Y. 45; 5 St. Rep. 654; Locke v. Farmers' L. & Trust Co., 140 N. Y. 135-142; 55 St. Rep. 546. The retention by him of the bank books, under the circumstances, was not fatal to the creation of a trust. Retaining possession of the instrument by which he creates a trust in himself, until his death, does not render it ineffectual. Martin v. Funk, 75 N. Y. 134; Cunningham v. Davenport, 74 Hun, 53 ; 56 St. Rep. 171. In the case of Von Hesse v. MacKaye. 136 N. Y. 114; 49 St. Rep. 76, the intended donor placed bonds in the hands of a trustee for the sole benefit and behoof of his daughter, with a proviso that such bonds were to be subject to the order of the father for and during his life. Subsequently, lie withdrew some of "the bonds from the trust. But yet it was held that the reservation of power and control over the bonds did not invalidate it, the court saying, “but few things are better settled than that the reservation of such power is entirely consistent with the trust, and does not work its destruction, where the rights of creditors are not involved.”

It seems to me that in view of these decisions the trial court was in error in holding “that, to establish a trust, it must appear that no power is left in the settler to revoke it, or to defeat its effect by any different disposition of the property,” and in holding, for that reason, that no trust had been established. The words, “ subject to the control of Orange R. Young,” do not import the retaining of ownership or title, but simply of the management thereof, which, coupled with his declaration in this case as to the ownership of the money, and the purpose for which it was being Icept, it seems to me, admit of no other interpretation than that he was acting as the custodian or trustee of her money, and that such legal rights as he retained were held by him as trustee. A trust of money or of personal property can be created, by which the author of the trust is the trustee. Locke v. Farmers' L. & T. Co., 140 N. Y. 135-141; 55 St. Rep. 546. A formal or written agreement is not necessary to create a trust of mono}*, or any personal estate. Any declaration, however informal, evincing the intention with sufficient clearness, will have that effect. Day v. Roth, 18 N. Y. 448-453. The refusal of the appellant’s father to turn over the money, or a portion of it, to her, coupled with this statement, “ that she might need it more after his death than while he lived, and that he would keep it, so that she would then have something,” did not deprive it of its character as a trust fund, but rather emphasized the manner in which he held it. Mabie v. Bailey, 95 N. Y. 206-210. It has been held, time and again, in the case of money deposited in a bank in the name of one person in trust for another, as “ B. Bailey in trust for Ida Mabie,” and the bank book kept in the possession of the one depositing the money, that the money so deposited can be recovered by the person for whom it was designated to be held in trust. Id. See, also, Willis v. Smyth, 91 N. Y. 297; Fowler v. Bowery S. Bank, 113 N. Y. 450; 23 St. Rep. 130; Cunningham v. Davenport, 74 Hun, 53; 56 St. Rep. 171. What difference is there, in principle, between moneys deposited to account of “ B. Bailey, in trust for Ida Mabie,” and moneys deposited to account of “Ida Mabie, subject to sole control of B. Bailey.” In each the beneficial interest is in Ida Mabie. In each the management and control of it is in B. Bailey. The form of the deposit does not of itself determine the question, but surrounding circumstances maybe resorted to, to determine what was intended. In the Mabie Case, 95 N. Y. 206, Bailey deposited his own money in trust for Mabie. In this case it was appellant’s money, or a portion of it. Again, Bailey exhibited the pass book to Ida Mabie’s mother, together with pass books containing accounts for the benefit of her other children, and, without stating the amount of the several deposits, informed her that the deposits for the children were large enough to amount to something when they grew up, and, in reply to her question “ why he could not let us have the money now,” replied, “It would do us more good hereafter.” The subject of the deposits was spoken of by Bailey on several occasions, in which the provisions made for Mabie and other ' members of the family were recognized. It will be seen that the circumstances of that case were singularly like those in this. The court said: “These facts * * * confirm the proof furnished by the bank books and pass books of the creation of a trust, and exclude the supposition that the transaction was not intended to bo that which the written evidence, unexplained, imports.” Subsequently, the deposit was withdrawn by B. Bailey during his lifetime, and yet Ida Mabie was held entitled to recover the amount from the executor of Bailey’s estate, the court saying: “ If the withdrawal was with the intent on his part to ignore the trust, and convert the money to his own use, it might be competent evidence of a change of purpose, but it throws no light on the original transaction.”

The withdrawal of a portion of the money deposited in this case, and investing it in bonds and mortgages, the title of which was taken in the name of Young, without the knowledge of the appellant, did not change the legal relation in the least, but coupled with the written declaration that he attached to them, and which I have before adverted to, rather strengthens the evidence of the relations between them, and containing an explicit declaration that the money with which the bonds were purchased belonged to the appellant, and that he had changed the investment, not for his interest, but for hers, that she might derive more interest, and this followed up by his subsequent acts in depositing the interest received upon the bonds and mortgages to her account, all furnish additional evidence that the money was the appellant’s, and that the control that he exercised over it was not that of one having or claiming title to it, but simply of one holding and managing it for her benefit. The case of the bonds and mortgages in question here differs greatly from that of the bonds and mortgages in question in Matter of Crawford, 113 N. Y. 560; 22 St. Rep. 942, and Wadd v. Hazelton, 137 N. Y. 215; 50 St. Rep. 400. In the Crawford Case the bonds were purchased with the intended donor’s own money. He kept them in his own possession. He drew the interest himself, and used it for his own benefit. There was never at any time any recognition by him that the money with which the bonds were purchased belonged to Mrs. Crawford, or that the bonds were hers, but simply that he intended that they "should be hers after his death. So, in the Wadd Case, the mortgage was purchased with the intended donor’s own money, and an assignment made out to the proposed beneficiary, but never acknowledged or recorded, but deposited with the testator’s own papers ;j and never at any time was there any statement that the money with which the mortgage was purchased belonged to the intended beneficiary, or that the mortgage itself belonged to her—simply an intention that it should belong to her after his death. In both cases the beneficial interest in the bonds and mortgages was retained by the intended donors in themselves. They drew the income from them, for their own benefit, during their lives. Here, as we have 'seen, Young invested appellant’s money—money that he avowed to be hers—retaining no beneficial interest in it, or in the bonds and mortgages, for himself, but turned the income thereof into the account of the appellant. ■ It seems to me, therefore, under all the circumstances, that the money deposited in both savings banks must be regarded as the appellant’s own money ; that the gift thereof, so far as it was originally derived from her father, was completed by actual delivery—some of it into her hands, the rest into her bank account, consisting of her money—and. that, as to the money that still remains in the savings bank, it must be regarded as absolutely hers; and as to that which was withdrawn without her knowledge, and invested in bonds and mortgages, that such investment must be held to have been made for her benefit, and such bonds held by her father as her trustee. It follows from these conclusions that the judgment of the trial court should be reversed. There being no conflict of testimony in the case, I do not see that there is any occasion for a new trial; and the judgment is therefore reversed, and judgment ordered for the plaintiff, with costs of trial in the court below, and with costs of this appeal.

All concur.


source: Caselaw Access Project

author: Herrick, J.

license: Public Domain

text:
    In the Matter of the Estate of Harvey Randall, Deceased.

      (Supreme Court, General Term, Third Department,

      Filed July 14, 1894.)

    Executors, etc.—Purchase oe interest.
    An administrator cannot purchase an interest in, or a claim against, the estate.
    Appeal from a decree settling the accounts.

      L. Fraser, for app’lt; S. W. Russell, for resp’t.
   Herrick, J.

—This is an appeal from a decree made by the surrogate of Washington county, settling the accounts of the appellant, Caleb Randall, as administrator. The decedent, Harvey Randall, died in 1890, without leaving any last will and testament, and leaving, him surviving, five sisters and two brothers, his only heirs and next of kin, two of such sisters being named Sarah and Jane Randall. The surrogate found that the deceased left an interest in real estate to the value of $16,000 or more, and personal estate which at the time of the decree was of the value of $53,775.71; and that after the payment of the debts and funeral expenses there was for distribution by the administrator among the respective' heirs and next of kin, on November 16, 1891, a balance of $51,913.22; and that Caleb Randall, Caleb Randall as committee for Aaron Randall, a lunatic, Jane Randall, Sarah Randall, Angeline Andrews, Maria Seers, and Caroline M. Randall, were each entitled to have and receive one-seventh of such balance, except as the same had been reduced by way of payments or advancements properly applicable as payments therein. The appellant takes no exception upon this appeal to the findings of the decree of the surrogate, except in so far as they relate to Sarah Randall and Jane Randall. To Sarah Randall the surrogate found that there was a balance due of $2,911.83, and to Jane Randall a balance of $3,447.70. He appeals from so much of the findings and decision of the surrogate as determine that the said Sarah and Jane Randall were interested in the estate of the decedent, or that they received anything by way of advancement upon their shares therein, and to the order of the surrogate allowing the said Sarah Randall and Jane Randall to intervene upon this accounting as parties interested in said estate. The appellant’s claim is that the said Sarah and Jane Randall ceased to be interested in such estate by reason of assignments made to him of all their shares and interests therein. It appears that on the 19th day of August, 1890, Jane Randall executed an instrument in writing, wherein it recited that for a consideration of $3,900, to her in hand paid by said Caleb Randall, she sold and assigned to the said Caleb Randall all her share, right, title, and interest in and to the personal and. real estate of her deceased brother, Harvey Randall, as heir at law, next of kin, or otherwise, and authorized the said Caleb Randall to collect and receive the same, and every part and parcel thereof. On the 8th day of October, 1890, Sarah Randall executed a similar instrument in writing, the consideration for which was named therein as being the sum of $4,400. Both Sarah and Jane Randall, at the time of the death of their brother Harvey, were living in the state of Michigan, and had been living there for many years. Sarah was 74 years of age, and Jane 79. Neither of them had been at their brother’s for a great many years; neither of them knew the amount of property he was worth at the time of his decease. Sarah testifies that the appellant told- her the estate amounted to about $33,500, and Jane testifies that he told her that the estate was worth about $38,500. Bach testifies, in substance, that he stated that their shares amounted to not more than the amount specified in the bill of sale or assignment; that, if it was found that their share amounted to more, he would pay the overplus. The appellant disputes the stories of his sisters Sarah and Jane, and claims that the assignments in question were absolute assignments to him of all their right, title, and interest in the estate, and entitle him to have and receive all tlieir shares in the estate, and that there was no agreement on his part to pay them any additional sum if, upon the settlement of the estate, their interests therein should prove to be greater than the amount he had paid them. There is a sharp conflict of testimony as to what the real nature of the transactions was between the appellant and his two sisters. The surrogate has found upon all the testimony that the appellant knew the character, quality, and value of the property, both real and permona!, of which decedent died possessed; that neither Jane nor Sarah Randall had at any time before the hearing upon the accounting before him any knowledge of the value of the estate of which said decedent died possessed, except such as was acquired by them from the statements of the administrator made to them together and, separately ; that such statements were made to Sarah and Jane by the appellant for the purpose of obtaining undue, unjust, and wrongful advantage over them, and that he represented to them, and to each of them, that the value of both the real and personal estate was much less than it really was, and represented that it was of much less value than he well knew it to be, and that they, and each of them, relied-upon such representations. The appellant asks us to review such findings of fact, and also asserts that the surrogate had no power or authority to determine whether such assignments were fraudulently obtained or not; that they could only be set aside in a proceeding brought for that purpose in a court of equity.

I do not think it is necessary to enter into an investigation of these latter questions. Assuming the appellant to be correct in the position that he has taken in relation to them, Tdo not see how7, upon the facts as they appear in this case, and the law, as I understand it, applicable to such facts, he has been injured. The purchase that he claims to have made, it seems to me, must be held to have been made for the benefit of the other beneficiaries of his trust. The relation that he held to the estate prevented his having any transactions in relation to it that would result in any pecuniary benefit to himself, coupled with detriment to any of the other heirs or next of kin of the decedent. The transaction that he entered into with Sarah and Jane Randall was not simply one of release of their interest in the estate, as in Re Pruyn 141 N. Y. 544; 57 St. Rep. 824, but was a purchase, or attempted purchase, of their interest in the estate, for the sole benefit and advantage of the appellant. As a purchaser, his purchase inures to the benefit of the estate, or, treated as a release from all claim against the estate for less than its value made for the other beneficiaries, the remaining heirs and next of kin would be entitled to the benefit of such transaction. But they have not appealed from the decision of the surrogate, and the appellant’s appeal is not in tlieir behalf, because they were awarded too little in the distribution of the estate, but it is in his own behalf, because the shares of Sarah and Jane Randall were not set apart to him as the assignee of their interests ; and, further, that there was awarded to them the difference between the amount of their interests and the sum that he paid to them upon the attempted purchase of such interest from them. The appellant occupied to the estate of the decedent, and to his heirs and next of kin, the position of a trustee pure and simple. “Absolute and most scrupulous good faith is the very essence of the trustee’s obligation. The first and principal duty arising from this fiduciary relation is to act in all matters of the trust wholly for the benefit of the beneficiary. The trustee is not permitted to manage the affairs of the trust, or to deal with the trust property, so as to gain any advantage, directly or indirectly, for himself, beyond his lawful compensation.” Pom. Eq. Jur. § 1075. Treated either as a purchase of an interest in the estate or as a claim against it, it seems to me that the transaction between the appellant and Sarah and Jane Randall cannot be upheld for the benefit of the appellant. “If the trustee or executor compounds debts or mortgages, or buys in for less than is due, he shall not take the benefit of it himself, for when he takes a trust he takes it for the benefit of the cestui que trust." Van Horne v. Fonda, 5 Johns. Ch. 388; Swinburne v. Swinburne, 28 N. Y. 568. Ño party can be permitted to purchase an interest in property, and hold it for his own benefit, when he has a duty to perform in relation to such property which is inconsistent with the character of a purchaser on his own account, and for his own individual use. Van Epps v. Van Epps, 9 Paige, 237 ; Colburn v. Morton, 1 Abb. Dec. 378. The reasons for prohibiting transactions between a trustee and his cestui que trust are fully set forth in the case of Ten Eyck v. Craig, 62 N. Y. 406-419. As administrator of the estate it was the duty of the appellant to husband it, and care for it, so as to create as much of a fund as possible for division among the heirs and next of kin of the decedent. He is to deal with it for their benefit exclusively, not for his own. He is to deal with them in relation to it for their benefit, not for his. The rule is inflexible that the trustee shall not place himself in a position where his interest is or may be in conflict with his duty. . Id. The appellant’s interest as a purchaser in his own behalf was necessarily inconsistent with the duty he owed to the beneficiaries of the estate.

This case presents an object lesson of the propriety of the rule prohibiting transactions between a trustee and his cestui que trust, and prohibiting trustees from purchasing property which they hold in 'trust. It has resulted in grave misunderstandings between the parties, and false swearing as to what the real transaction was, and of serious scandal upon the administration of trust estates, and, if the scandal be upheld, to the loss of a large portion of their shares "in the estate, to which two of the heirs and next of kin were entitled. The appellant, from the nature of his relation to ■the estate, knew its resources and its value better than any one else. The, parties with whom he was dealing lived, and had lived for many years, at a distance from where the estate had been accumulated. They were advanced in years, and could not deal with the appellant on equal terms. There are cases where confidential relations have existed between the parties, or where one party to the transaction has occupied a position of trust in relation to the other, or where there has been opportunity for the exercise of undue influence, where the courts have held that such-, relation! cast the burden of proof upon the purchaser of establishing the-good faith of the transaction, and that it had not resulted unduly,, 'to the detriment of the other party. But this case is not simply a case where confidential relations existed between the parties, oiswhere there was an opportunity for the exercise of undue influence,,, but in addition, is one of dealing between a trustee and his cestui' que trust, pure and simple, and where also it appears that such dealing, if .upheld, will result in large pecuniary gain to the-trustee, personally, and a corresponding loss to the cestui que trust. The fact that the trustee will largely profit and that the eesiui quetrust will lose is not necessarily a controlling element. In a large number of instances it must necessarily be impossible for the court to discover what advantages have been derived by the trustee, and » what injury has been sustained by the cestui que trust; and the-only safety lies in maintaining, as a general rule, the invalidity of purchases of claims against, interests in, or legacies payable out of estates by the trustee of such estates, when purchased for their own benefit; and, where such purchases have been made, and-have resulted profitably to the trustee, to hold that they are made-for the benefit of the estate, and, if loss has resulted, to charge-such to the trustee personally. It results from this that,, whether we treat the transaction of the appellant with Sarah a-nd Jane-Randall as invalid, and of no effect, or as transactions that inure to the benefit of the remaining heirs and next of kin to the decedent, the appellant has not been injured by the decree of the surrogate,, and has no cause of appeal therefrom. The decree should, therefore, be affirmed, with costs and disbursements to be paid by the appellant personally. All concur.


author: Follett, J.

text:
    Sarah B. Tucker et al., by Guardian ad Litem, etc., et al., Resp’ts, v. Manhattan Railway Company et al., App’lts.

      (Supreme Court, General Term, First Department,

      Filed May, 1894.)

    1. Pleading—Answer—Affirmative defense.
    Defense of adequate remedy at law, in equitable action, is waived by not pleading it in the answei.
    2. Same—Demurrer.
    Objection that there is a misjoindei oi defect of parties plaintiff, oi that causes of action are improperly united, is waived if nqt taken by demurrer or answer.
    3. Parties—Equitable actions.
    In equitable actions, all persons having an interest in the controversy should be made plaintiffs or defendants and their interests determined.
    4. Elevated railroad—Injunction—Infant.
    In an action against an elevated railroad for an injunction, the court has no power to appoint a special guardian for an infant plaintiff and authorize him to convey the ward’s interest to the company.
    ^Appeal from a judgment in favor of plaintiffs.
    In 1878 Sarah B. Tucker, Isabella Tucker Newell and Ella V. A. Dayton acquired the fee of Nos. 123 and 125 West Broadway, each having an undivided one-third interest, and, on the 9th of May, 1890, Ella Y. A. Dayton conveyed her interest to Sarah B. Tucker and Isabella Tucker He well. At the date of this conveyance both of the grantees were infants. October 15, 1892, Isabella Tueker Hewell became twenty-one years of age, and Sarah B, Tucker will become twenty-one years of age July 3, 1897. This lot is situate on the east side of the street and has a frontage thereon of thirty-seven feet and eight inches, and is bounded on .the west by the east line of the street, the fee of which is not in •the plaintiffs. Prior to May 1, 1885, the lot was covered by two ¡brick and frame buildings two stories in height, the first floors of which were used for business purposes and the upper floors for dwellings. In 1885 those buildings were removed and the present building, which is six stories high and constructed of brick and stone and is adapted and used for business purposes, was erected and was ready for occupancy February 1, 1886. The construe- * tian of the elevated road in West Broadway was begun in 1876, and was completed and put in operation in 1878. There is a station of defendants’ road at West Broadway and Franklin street,0 .about 300 feet south of plaintiffs’ premises, which largely increases the number of persons passing up and down the street in front of said premises.
    This action was begun August 11, 1890, to recover damages for the trespasses on the street easements from August 11, 1884, to the date of the trial, and to restrain the maintenance and operation of the road in front of the plaintiffs’ premises. The court found that the damages occasioned by the trespasses from August 11, 1884, to May 9, 1890, when Ella Y. A. Dayton conveyed her interest to her sisters, were $3,430.56, one-third of which belongs to Mrs. Dayton, and that the damages for the trespasses committed between May 9, 1890, and December 9, 1893, the date of the decision, amounted to $2,364.82 The judgment also provides that the plaintiffs, upon being paid $7,500, should convey their interest in the easements to the defendants, in which case the injunction was not to issue. It also provides that the guardian ad litem of the infant plaintiff, who, by the judgment, was appointed special guardian, should receive one-half of the said sum, $3,750, and hold it, with all the accumulations thereon, until the infant becomes twenty-one years of age, when it should be paid over to her. The guardian was required to file a bond in the sum of $7,500, with two sufficient sureties, conditioned that she should safely keep such sum.
    The damages for trespasses committed between August 1,1884, six years before this action was begun, and May 1, 1885, the date when the old buildings were removed from the lot, were assessed at seventy-two dollars and eighteen cents, which is at the rate of $100 per year. Ho damages were awarded for trespasses committed between May 1, 1885, and February 1, 1886, when the new building was ready for occupancy, and for the trespasses committed since the latter date the damages were assessed at the rate of $600 per year.

      Ezra A. Tuttle, for app’lts; Eliphalet W. Tyler, for resp’ts.
   Follett, J.

—On the trial a joint equitable cause of action in favor of Sarah B. Tucker and Isabella Tucker Newell, two of the plaintiffs, and a joint legal cause of action in favor of all three plaintiffs were established. Both causes' of action arose out of injuries to real property. The defendants, not having objected by demurrer or by answer that there was a misjoinder or defect of parties plaintiff, or that causes of action were improperly united, have waived these objections. Code Civ. Proe. § 499. A defendant in an equitable action cannot avail himself of the defense that the plaintiff has an adequate remedy at law, unless it is pleaded in the answer. Truscott v. King, 6 N. Y. 147; Cox v. James, 45 id. 557, 562; Town of Mentz v. Cook, 108 id. 504; 13 St. Rep. 845; Ostrander v. Weber, 114 N. Y. 95; 22 St. Rep. 979; Hyatt v. Ingalls, 124 N. Y. 93, 105; 35 St. Rep. 114; Buffalo S. & C. Co. v. D., L. & W. R. R. Co., 130 N. Y. 152; 41 St. Rep. 259; Watts v. Adler, 130 N. Y. 646; 41 St. Rep. 325. De Bussierre v. Holladay, 4 Abb. N. C. 111; 55 How. Pr. 210, so far as it conflicts with the cases cited, is overruled. Sarah B. Tucker and Isabella Tucker Newell, being the owners of the lee,_ had the right to maintain this action in equity to restrain the defendants from maintaining their road, and incidentally to recover such damages as they had sustained by the past trespasses, and it is the usual rule that in equitable actions all persons having interests in the controversy should be made plaintiffs or defendants and their interests determined. The presence of Mrs. Dayton as a plaintiff in this action does not harm the defendants, but prevents the necessity of another action, and the defendants should not now or hereafter"be permitted to raise this defense.

The appellants urge that the conveyance by Mrs. Dayton of her one-third interest in the premises to her sisters having been made while the grantees were infants, they may evade the grant when they reach their majority, and thus expose the defendants to an action in behalf of Mrs. Dayton. Isabella Tucker Newell became twenty-one years of age October 15, 1892, since which date she has prosecuted this action to judgment, and it is now too late for her to repudiate the conveyance. Should Sarah B. Tucker, on becoming of full age, repudiate the grant to her, a one-sixth interest would revert to Mrs. Dayton, who' is a party plaintiff in this action, and she would be estopped by the judgment herein, which she has aided to secure, from prosecuting another action on the claim enforced by her in this suit. The presence of Mrs. Dayton as a party plaintiff is a protection to the defendants’ present and future interests.

The part of the judgment awarding an injunction, unless the defendants pay $7,500 upon receiving a conveyance of the easements, rests on the theor}r that the court had power to appoint in this action a special guardian for the infant plaintiff, and authorize the guardian to convey the ward’s interest to the defendants. This is not a proceeding to sell an infant’s real estate, nor is it an action of partition, nor was it brought for the purpose of divesting the infant’s title; no such relief is asked for in the complaint, nor are the allegations therein sufficient to warrant such relief, and the special term erred in appointing a speciel guardian and directing her to convey the infant’s title. Under such a conveyance the defendants would not acquire a legal title to the interest of the infant in the easements, and for this' error the judgment should be reversed and a new trial granted, with costs to the appellants to abide the event.

Van Brunt, P. J., and Parker, J., concur.

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


text:
    Alida J. McNutt, Resp’t, v. William Hilkins et al., App’lts.

      (Supreme Court, General Term, Third Department,

      Filed July 14, 1894.)

    Election oe remedies—Mistake.
    The rule that a party is bound by Ms election does not apply, where there was a mistake as to the remedy.
    Appeal from a judgment in favor of plaintiff.

      Cameron & McArthur, for app’lts; James H. Bain, for resp’t.
   Herrick, J.

—This is an appeal from a judgment of the county court reversing a judgment of the justice’s court. The plaintiff brought her action in the justice’s court, alleging that the defendants were copartners, and that in the month of August, 1893, she sold and delivered to the defendants a team of horses and set of ' double harness for the sum of $300, which the defendants agreed and promised to pay for by boarding the plaintiff and her family for five months at the price of. sixty dollars per month; that the defendants boarded the plaintiff and her family for two' months only, but refused and neglected to board them for any further length of time; and that by reason thereof the plaintiff sustained damages in the sum of $180. The defendants, in answer, deny each and every allegation in plaintiff’s complaint, and allege that before the commencement of the present action the plaintiff commenced an action before a justice of the peace against the same defendáhts for the cause or causes of action set forth in the complaint herein, in which the defendants recovered judgment against this plaintiff for the sum of $2.30 costs. Upon the trial of the present action, it was stipulated between the parties that the judgment rendered in the former action,- and the record thereof, together with all the proceedings had therein, and the evidence, testimony and proof taken upon the trial thereof, should be made the evidence, testimony and proof in this action. As a matter of fact, such judgment, and record thereof, and the proceedings, evidence and testimony taken in the first named action in the justice’s court, constitute all the evidence and testimony given and taken in the action now to be considered. In the first action brought by the - plaintiff against the defendants, the plaintiff, in her complaint, alleged that she was the owner of a team of horses and set of double harness, which came into the possession of the defendants about the month of September, 1893, and that the defendants wrongfully and unlawfully sold and disposed of said horses and harness, appropriated and converted the same to their own use and benefit, and that at the time oí such conversion they were worth the sum of $200 ; and she demanded judgment against the defendants for the sum of $200. The result of such action, as before stated, was a judgment in favor of the defendants, and against the plaintiff, for the costs of the action. This second action resulted, like the fil-st, in a judgment in favor of the defendants, and against the plaintiff, for costs. The plaintiff appealed to the county court, which reversed the judgment; and the defendants, upon the reversal of the judgment, appeal to this court.

The defendants, who appeal from the judgment of the county court, to sustain the judgment recovered by them in the justice’s court, assert that the plaintiff is precluded by the action she first brought.in the justice’s court, for a conversion of the horses and harness by the defendants, from now bringing another action for the purchase price, or for damages for breach of contract of sale of such horses and harness; and the only question to be passed upon, in this appeal, is the effect which the plaintiff’s commencing the first action had upon the second.

The doctrine is well settled that where thei-'e exists an election > between inconsistent remedies the party is confined to the remedy which he first prefers and adopts. Morris v. Rexford, 18 N. Y. 552 ; Greton v. Smith, 33 N. Y. 245 ; Bank of Beloit v. Beale, 34 N. Y. 473; Rodermund v. Clark, 46 N. Y. 354. The party is not entitled to both remedies, and the selection of one precludes a resort to the other. Strong v. Strong, 102 N. Y. 69. Upon a given state of facts, the party may have the right to disaffirm the contract, and either retake the goods, by replevin, or sue for their wrongful conversion (Kennedy v. Thorp, 51 N.Y. 174) ; or, where the sale of goods has been procured by fraudulent representations, the vendor may rescind the sale and replevy the goods, or ratify the sale and sue for the purchase price ; or, where the property has been wrongfully converted, the owner can waive the tort, and sue for the purchase price upon an implied contract of sale. Terry v. Munger, 121 N. Y. 161; 30 St. Rep. 746; Wise v. Grant, 140 N. Y. 593; 56 St. Rep. 496. But he must do one or the other, and any decisive act of his, with full knowledge of all the facts, determines his election. Fowler v. Bowery S. Bank, 113 N. Y. 450; 23 St. Rep. 130. And by bringing one action he waives his right to bring the other. Conrow v. Little, 115 N. Y. 387; 26 St. Rep. 527. And, when he has once made his election or determination, it is determined forever. Moller v. Tuska, 87 N. Y. 166; Powers v. Benedict, 88 N. Y. 605.

Did the plaintiff in this case make an election between remedies open to her? Upon the former trial the plaintiff claimed that she sold the horses and harness for the sum of $300. to be paid for by boarding herself and family for five months,—$60 per month, —and that the horses and harness were to remain her property until the board had been furnished, and that she was boarded for two months only. The defendants, in opposition to her claim, contended that the sale was an absolute one; that the title to the horses and harness passed to them at once; and, in addition thereto, that thereafter, upon defendants dissolving the copartnership, the defendant Hilkins bought out Lavoy, and gave said team of horses and harness to Lavoy in part payment of the purchase price, with the knowledge and consent of the plaintiff, the understanding being that Hilkins was to continue keeping the hotel, and the plaintiff could board with him. Under that claim, raised by them, of an absolute sale, the defendants succeeded. Under such condition of facts, I do not think it can be said that the plaintiff has made an election of remedies. She simply made a mistake as to what her remedy was. There being an absolute sale and passage of the title to the defendants, she, of course, could not maintain an action against them for conversion. The case of Morris v. Rexford, 18 N. Y. 552, was one to recover the purchase price upon an alleged sale of goods, and it appeared that prior to that time the plaintiff had brought actions in replevin against other parties, through whose hands they passed, or were to pass, to Rexford, upon which the sheriff had taken possession of the goods, and delivered them to the plaintiff ; and, so far as appeared in the*case, the actions for replevin are still pending. And the court there held that the plaintiff had made his election of remedies, and must abide by it, but recognized the fact that if the plaintiff had no cause of action in replevin, and had no rightful claim to the goods, then the fact that such actions in replevin had been commenced by him would be no bar to an action for the purchase price, stating: If it shall appear on another trial that no such right of election existed, then the replevin suits will have no effect at all upon the present controversy, and the plaintiff will be entitled to recover, provided the jury shall again find that the defendant was the purchaser.” See page 557. The mere bringing of a former action upon the same state of facts does not necessarily preclude a party from bringing the second. “ The institution by a party of a fruitless action, which he has not the right to maintain, will not preclude him from asserting the rights he really possesses.” Kinney v. Kiernan, 49 N. Y. 164. The defendants, by their contention, succeeded in establishing that there had been an absolute sale, and that, therefore, the plaintiff had mistaken her remedy ; and they cannot now set up the judgment which they there obtained to prevent the plaintiff recovering the purchase price of the property which they formerly urged, and established, was sold to them by her, and which it is conceded they have not paid for, and thus not only retain the property, but also the purchase price.

The judgment of the county court should be affirmed, with costs. All concur.


author: Per Curiam.

text:
    John H. Fredericks, App’lt, v. Goodman Street Homestead Association et al., Resp’ts.

      (Supreme Court, General Term, Fifth Department,

      Filed January 18, 1894.)

    1. Mechanics lien—Building lots.
    Though there are uo buildings on tract of land intended for building lots, a lien may be obtained for grading roadways thereon.
    2. Same—Assignment—Subconteactob.
    Prior assignment of contractor’s claim under contract defeats the right of a subcontractor to a mechanic’s lien.
    3. Estoppel—Statement not acted on.
    A party is not estopped by his statements, unless the adverse party has acted in reliance thereon.
    Appeal from a judgment dismissing the complaint.
    The opinion of Mr. J ustice Bradley at special term is as follows :
    The facts that a contract was made with Weider & McMahon to do the work at a certain price, and that they sublet the work to the plaintiff at a certain lower price, are undisputed, but beyond that the facts are mainly the subject of controversy. The premises in question, consisting of upwards of 50 acres, were prior to November 21, 1889, owned by Henry G. Brewster, who on that day conveyed them to the defendant association, and, by provision to that effect in the deed, the grantor covenanted to make the improvements which Weider & McMahon undertook by their contract to make. The contract with them was made prior to August, or thereabouts, of 1890. It is insisted on the part of the defense that the contract with Weider & McMahon was made with Brewster, while on the part of the plaintiff it is claimed that it was made with the Goodman Street Homestead Association. The fact that Brewster assumed the obligation to make the improvements does not necessarily establish the fact that the contract may not have been made with the defendant association. There was no written contract made, otherwise than by the verbal adoption •of the proposal made in writing by those contractors. The proposal was addressed by Weider & McMahon to' the Goodman Street Homestead Association alone. The acceptance of it would seem presumptively to make the contract between them; and there is no other evidence tending in the like direction. The proposal was handed to Mr. Palmer, the president of the association. The plaintiff, who was also a bidder for the work, says that Palmer furnished to him a bidding sheet containing the specifications, .and that Pal pier afterwards said to him that if he had known the contractors were going to sublet to him they would have let the work fo him in the first place. The evidence tending, to show that the contract was made with Brewster is not very clear or satisfactory. Mr. Brown, the engineer and surveyor who made the estimate of the work done, etc., and who was employed by Mr. Brewster, made such estimates and addressed them to the association, and his final statement of the work done, etc., he headed with the Homestead Association as ■‘Dr.” to the contractors. I am inclined, in view of all of the evidence, to think that the contract may be treated as having been made by -it with Weider & McMahon. The work to be done was mainly grading roadways, grading for sidewalks, and laying them. The tract was intended for building lots, and was treated as such, although there was no building upon it belonging to the association. By the articles of association of the defendant, its object was stated “to provide homesteads and building lots for its membersand it was there provided that the capital stock should consist of 390 shares of $250 each, and that the land should be divided into 390 lots. And by a map produced it was represented that the tract was divided into .that number of lots, of which the lines were also described. Further provision in the articles of the association is made for weekly payments by, the members, with leave to pay the full amount unpaid at any time after the allotment to them respectively.
    The question of the applicability to the present case of the statute providing for liens is raised. The view here taken is that the work came within the contemplation of that statute. Laws 1885, c. 342. The land was intended for building lots, and was wholly owned by the same party. As has been observed in reference made to the articles of asssociation of the defendant, the premises were treated as building lots. The statute includes within its purpose not only buildings, but lots and appurtenances. Section 1. And it is entitled to a reasonably liberal construction to effectuate the object had in view by it. Kenney v. Apgar, 93 FT. Y. 539. The evidence tends to prove that the work was not entirely completed as required by the contract. But, in view of what does appear, the conclusion is justified that the plaintiff has proceeded in good faith, and that, within the rheaning of the rúle upon the subject, the contract was substantially performed, and the expense of supplying the deficiencies is ascertainable, and its amount may be deducted from the contract price of the work. From time to time, as the work progressed, payments of estimates of work done were made to the original contractor, less 10 pér cent, reserved, and they in like manner made payments to the plaintiff. The last estimate upon which payment was made bore date May 21, 1891. The engineer made his final estimate and statement bearing date August 1, 1891, by which he represents the amount due the contractors as $1,125.54, provided the work is accepted as complete; but the engineer annexed to it the statement that he could not accept the work, as he did not consider it completed according, to the contract. In that amount was included the sum of 10 per. cent, so reserved. The plaintiff has received nothing since that statement was made and upon the merits he is entitled to relief in this action, unless it is defeated by a written assignment made April 19, 1890, by the original contractors to the Traders’ National Bank, of “any and all claims, accounts, or moneys to grow due under’’ the contract for any work that might be done upon the Goodman Street Homestead tract; and the said Weider & McManon thereby authorized the bank to give a receipt for the same, and it was further provided

      by the assignment that any money collected under the contract was to be used to pay any indebtedness'of Weider & McMahon to the bank, whether then existing or thereafter incurred. This assignment was made a few days before the plaintiff commenced work upon the premises. And it appears that those contractors afterwards, by discount of their notes, borrowed money of the bank, and that on June 10, 1891, at the time the plaintiff’s notice of lien was filed, they owed the bank, on account of such loans, the sum of $1,963. This was in excess of the amount due or to become due upon the contract. And on February 6, 1892, Mr. Brewster paid to the bank, on account of the work, and to apply upon such indebtedness, the sum of $1,169.19, which did not fully pay the indebtedness of Weider & McMahon to it. As has been observed, the obligation to pay for the work of improvements was with Brewster, who was also cashier of the bank. As between the parties to the assignment, it was effectual to transfer to the bank such claims as should arise for the work done under the contract as security for future loans by the bank to the assignors and their indebtedness to it. The question arises whether or not the plaintiff, as against the association combination, can be relieved from the effect of the assignment. The original contract was with Weider & McMahon, and the personal liability to the plaintiff for his work was theirs only. The plaintiff had no contractual relation with the association, nor was any assumed between them. The payznents were made to Weider & McMahon, and the plaintiff received what was paid him from them. His remedy against the defendant association was one in rem, by force of the statute upon which it was wholly dependent. The original contractors could, before liens filed, by transfer vest the right in another to money due upon their contract, and thus defeat the remedy of the plaintiff under the statute. McCorJde v. Herman, 117 N. Y. 297; 27 St. Eep. 333; Stevens v. Ogden, 130 N. Y. 182; 41 St. Eep. 331. It follows that unless for some reason the effect of the assignment can be obviated in the plaintiff’s behalf he cannot recover. It appeared that Mr. Palmer, the president of the association, knew of the assignment at the time it was made. The plaintiff testified that after he commenced the work, in October, 1890, about the time and after the second estimate was made, he met Mr. Palzner, and said to him he had heard that Weider was “slippery,” and that he should look to him and the association for pay, and that Palmer said to him there was enough money to pay the plaintiff, and that he would get his pay; that he need not be afraid. Upon this it is insisted on the part of the plaintiff that the defendant association is estopped from asserting the assignment as a defense. Notwithstanding this evidence of the plaintiff was contradicted, it will be here assumed that the fact was as testified to by the plaintiff. The question then arises, was ■ that effectual for the purpose so urged in behalf of the plaintiff? Palmer, as the president of the defendant association, represented it.
    It may be that a different question would have been presented if the representation had preceded the making the contract by the plaintiff with Weider & McMahon. It is not only essential to an estoppel in pais that the party asserting it has acted or proceeded in reliance upon the truth of the statement, but that the denial of the truth would result in some injury or loss to him. Winegar v. Fowler, 82 H. Y. 315. In the present case the plaintiff had, before the alleged statement was made by Palmer, bound himself by contract to perform the work, and had entered upon and proceeded in its performance. And if he had then refused to proceed he would have been liable to the original contractors for damages, which would have been the difference between the price for which they had agreed to do the work and that for which he.had undertaken to perform it.. So far as appears, Weider & McMahon were responsible until some time later. They afterwards became insolvent, and made a general assignment for the benefit of their creditors in July, 1891. The plaintiff must be deemed to have proceeded with the work by force of and pursuant to his contract to do it as he had undertaken. It is necessary to consider that subject further. There seems to be no support for estoppel. It is, however, urged that the defendant association is precluded by the statute from availing itself of the assignment to the Traders’ Hational Bank as a defense. It provides that a person performing work, etc., for any one other than the owner, may at any time demand of such owner the terms of the contract, and the amount due or unpaid, etc., and if the owner shall neglect or refuse to comply with such demand, or shall, intentionally, falsely state the terms of the contract, or the amount so due or unpaid, and if the -person so making the demand shall sustain loss by reason of such refusal, neglect or false statements, the owner shall be liable to an action therefor; and such person may, by filing notice thereof within due time, have a lien upon the premises on which the work has been performed. Laws 1885, chap. 342, § 3. Assuming, that it sufficiently appears that the plaintiff could not collect his claim of Weider & McMahon, the case does not seem to be brought within the meaning of the statute. There was no demand made by the plaintiff of the association of the amount due or unpaid to the original contractors, nor did that defendant, by its president, refuse to state or falsely state the amount then due upon the contract. And it may be added that, at the time of the alleged interview of the plaintiff with Palmer, the advances, which it appeared exhausted the balance due Weider & McMahon upon the contract, had not been made by the bank. Nor is there any evidence of collusive payment within the meaning of the statute. Section 2. In the case of Stevens v. Reynolds, 54 Hun, 419; 29 St. Bep. 497, cited by the plaintiff’s counsel, the court ■of appeals disagreed with the general term, and reversed the determination there made, and affirmed the judgment of the special term. 130 FT. Y. 182 ; 41 St. Bep. 331. In the view taken, the plaintiff acquired no lien upon the premises. But in view of the circumstances, to which it is unnecessary further to refer, the plaintiff should not be charged with costs.
    The complaint' is therefore dismissed, without costs.

      Sullivan, Morris & Jerome, for app’lt; David Hayes, for resp’ts.
   Per Curiam.

—Judgment appealed from affirmed, with costs, on the opinion of Bradley, J., at special term.


text:
    Thomas H. Groves, App'lt, v. John Rice et al., Resp'ts.

      (Supreme Court, General Term, Fifth Department,

      Filed January 18, 1894.)

    1. Estoppel—Acceptance op benefits.
    A subcontractor, by requesting the contractor’s assignee to complete the contract, is estopped from attacking the assignment as fraudulent.
    8. Same.
    An estoppel, arising from the ratification of an assignment for the benefit of creditors, operates as to claims against the assignor purchased after the ratification.
    Appeal from a judgment dismissing the complaint.
    The opinion of Mr. Justice Bradley, at special term, is as follows:
    The assignment was made and dated July 30, 1891. It expressed .■ertain preferences, amongst which was that in behalf of the plaintiff, to the amount of five hundred dollars ($500). The plaintiff’s relation as creditor of the defendants Rice, as alleged in the complaint, is founded upon four judgments recovered.by the Central Bank of Rochester against them in November and December, 1891, upon which executions were issued, and returned unsatisfied, and which judgments were assigned to the plaintiff. This action was commenced in December, 1891, and by the complaint the plaintiff charged that the general assignment of the defendants Rice was made with the intent to defraud the creditors of the a-signors. The defendants Rice were, and had been for several years, partners doing a plumbing business in the firm name of Rice Bros. The plaintiff had for some time prior to the time of the assignment indorsed their notes for their accommodation. The j udgments before mentioned were recovered upon their notes so indorsed by the plaintiff, and upon which he had been charged with liability as such indorser. Before such assignment was made to the defendant Olancey, and on the 8th day of December, 1891, the defendants Rice, in their firm name, had entered into a contract in writing with the plaintiff whereby they undertook to do all the steam fitting, and furnish all the material therefor, to heat what was designated as the “Jenkinson Building,” belonging to the plaintiff, and situated in the city of Rochester, for the sum of two thousand three hundred dollars ($2,300). The defendants Rice had before the time of making their general assignment commenced, and only partially performed, the work; that is to say, the work then done upon the job amounted, at the rate of the contract price, to a sum not exceeding seven hundred dollars ($700). Thereafter, at the request of the plaintiff, and for him, the defendant Clancey, as such assignee, proceeded in the performance of the work, and it was substantially completed in the fall of 1891. It is unnecessary here to determine whether or not, in the performance of the contract after the assignment, all the work was done, or caused to be done, by the assignee.

      The plaintiff, treating him as such trustee, deriving his title and powers from the assignment, requested him to proceed with the work his assignor had agreed to perform. By that means the plaintiff received the beneficial result, so far as it was such, of the performance of such work; and this recognition of the relation to the assignee, and so dealing with him in that relation, was an adoption of it by the plaintiff for the beneficial purposes he had in view, and which were by that means accomplished in his behalf. Having thus proceeded in recognition and in affirmance of the assignment, the plaintiff cannot, without the aid of some further cause for relief from the effect of his adoption of it, be permitted to impeach its validity. Hone v. Henriquez, 13 Wend. 240 ; Rapalee v. Stewart, 27 N. Y. 310; Toy Co. v. Daggett, 9 Civ. Proc. R. 408. The procurement by the plaintiff of the assignee to appropriate the trust funds in the performance of such contract, and then to repudiate the trust by proceeding to impeach the assignment, would seem to indicate inconsistent purposes, and it may be seen that such dealing and such opportunities might result unjustly to somebody. Such consequences are prevented by the legal principle that a party that has made his election is concluded by it, and cannot adopt and successfully pursue another, inconsistent with it.
    It is, however, urged on the part of the plaintiff that he is not estopped by his adoption of the assignment, or assent to it, in the manner he did, because the judgments upon which his action is founded were not, nor were the debts upon which they were recovered, owned by him at the time he so availed himself of the relation of the assignee in the performance of the contract with the assignors, and that he took by the assignments of the judgments all rights and remedies of the Central Bank, for the purpose of the relief in view. The plaintiff was a creditor at large of the assignors at the time the assignment was made. He then, also, was indorser of the notes upon which such bank judgments were recovered, and was charged with liability thereon at their maturity. These facts in relation to the bank notes may not have any important bearing upon the question, and, in the view taken, have none. They merely tend to show why he became the owner of the judgments. It may be assumed that he was required to pay to the bank the amount for which he, as indorser, was liabl§ to it upon Bice Bros.’ paper. Assuming that the plaintiff had, by ratification of the assignment, denied himself the right, in respect to the debt then owing to him by the assignors, to effectually take proceedings to impeach the assignment, it does not seem evident .that he could found an action for such purpose upon a debt which he might subsequently obtain by transfer from another, against the assignors. The affirmative of that proposition is urged by the plaintiff’s counsel, and is illustrated by reference to the doctrine to the effect that the innocent purchaser of property sold in fraud by creditors takes unimpeachable. title, and his transfer of the property to another having knowledge of the fraud will vest perfect title in the latter. The reason of that rule is in the essentiality of giving to the innocent purchaser the full enjoyment of his property, which includes the opportunity to sell without restraint occasioned by the fraud of the vendor in the original sale. In O'Brien v. Browning, 11 Hun, 179, cited by the plaintiff’s counsel, the appellants, founding their claim upon a judgment against the assignor, were held not barred or estopped from coming in, and availing themselves of the benefit of a recovery in an action to set aside an assignment for fraud, because they had been defeated in an action for a like reason founded upon another judgment against the assignors. The view of the court was that the question whether the assignment was fraudulent against the one judgment of those parties, or the demand upon which it was recovered, was not adjudicated in the action or proceeding founded upon the other judgment. It may be observed that in that case there was no voluntary adoption of the assignment, by accepting anything under it. . There was no acquiescence in its validity. The estoppel arising from effectual ratification of an assignment is personal to the party thus affected, and he is not relieved from such disability in respect to further debts of the assignor which he may have afterwards purchased. In such case the right of the party in respect to the manner of proceeding may not be as ample as that of his assignor of the judgment, but may be qualified by the relation which he may have assumed, or become chargeable with, to the trust created bv the assignment; and his relation in that respect, for the purposes of remedy founded upon such judgments, is not changed by taking title to them.
    After careful examination of the evidence, the only ground discovered for the predication of fraud in the assignment, or against the assignors, is in the fact that they, in contemplation of the assignment, respectively drew moneys for their individual purposes; that is to say, that, on the day before the assignment was made, William H. Rice drew out of the moneys of the firm one hundred and eighty dollars ($180), and on the same day John Rice drew out one hundred and seventy-five dollars ($175). They drew this money to pay their personal debts, and it was used for that purpose. Bach understood that the other drew this money, and entries of it were made in their respective accounts on the books of the firm. They had been in the habit of drawing weekly sume money for their personal expenses, but the sums drawn on that day by them were larger than they had been accustomed to take weekly. The firm being insolvent, and about to make a general assignment, they could not, without the imputation of fraudulent intent, withdraw or withhold any considerable portion of the funds or property from its creditors. Whatever, in such case, may have been the actual intent of the assignors, the law will treat it as fraudulent against their creditors, for the* purposes of relief against their assignment. Menagh v. Whitwett, 52 NT. Y. 146 ; Ransom v. Van Deventer, 41 Barb. 307. The sums so drawn by the members of the defendants’ firm were not large, nor do the circumstances under which they were taken and used necessarily indicate any actual intent on their part to defraud the firm creditors. The amounts were charged to them, respectively, upon the books, on the day the funds were taken and appropriated. But, in view of the legal rule applicable to such cases, it must be held that the withdrawal of the money by the defendants for their individual purposes was fraudulent, as against the creditors of the firm. But that fact is not important for the purposes of the result in this action, if the plaintiff had effectually estopped himself from assailing the assignment by his dealing with the assignee, and before mentioned. It is suggested that such could not have been the effect unless the plaintiff at the time had knowledge of the facts upon which the charge of fraud could have been founded. The plaintiff, in his testimony, does not assert or claim ignorance on his part of that or any fact in that respect which afterwards led him to. bring this action. And in view of that, and what appears, it is not to be assumed that he was for that cause misled into the course he at first adopted. The books of the firm were under the control of the assignee, and it may be supposed that they were accessible to the plaintiff. Upon the books, or some one of them (the cash book), appeared the entries of the sums drawn by the members of the firm, that day charged to them, respectively, under date of July 29,1891. I am inclined to think that the action of the assignee in proceeding with the performance of the work at the request of the plaintiff may properly be treated as a benefit taken by the latter under the assignment. If these views are correct the complaint should be dismissed.

      David Hays, for app’lt; J. & Q. Van Voorhis, for resp’ts.
   Per Curiam.

—Judgment appealed from affirmed, with costs, on the ground stated m the opinion of Bradley, J., at special term.


text:
    Annie Ives, App’lt, v. James Ives, Resp’t.

      (Supreme Court, General Term, Third Department,

      Filed July 14, 1894.)

    1. Divorce—Reference.
    The court, in an action of divorce, has no authority to appoint a referee nominated by either party or agreed upon by both parties.
    2. Same—Estoppel.
    In such case, a party who consents to such appointment of referee as a condition of postponing the trial, cannot attack the validity of the order of reference; but it will be modified by striking out the name of the referee.
    3. Motions and orders—Modification.
    On a motion to set aside an order and for such further order as the court may deem proper, the court may modify such order.
    4. Attorney and client—Authority—Repudiation.
    A party cannot repudiate the authority of his attorney to make a stipulation after he has accepted its benefit.
    Appeal from an order denying a motion to set aside an order of reference in an action for-a divorce.

      C. W. Thompson (John Conboy, of counsel), for app’lt; George Morton (Daniel Magone of counsel), for resp’t.
   Herrick, J.

—The case of the appellant upon this appeal is one that does not commend itself to the favorable consideration of the court. The action is one for divorce on the ground of adultery. When the case was upon the circuit calendar for trial, a motion was made on behalf of the plaintiff to put it over the term on account of the illness of the plaintiff, and in deciding the motion for a postponement the court announced that the case could be set down for trial the following week of the term, or, if the plaintiff preferred, it might go to the special term for trial, or to a reference. Thereupon the counsel for the respective parties agreed to a reference, and presented to the court an order containing the name of the person who had been agreed upon by them as the referee in the case, and the court directed an entry of the order. Thereafter, and after the adjournment of the circuit court, a motion was made on behalf of the plaintiff to vacate and set aside such order of reference as having been improvidently made, and being in violation of the rules and practice of the court; the plaintiff stating in the moving affidavit “ that she did not consent or know that a reference was to be had or ordered in this case until after the return of her said attorney;'' that she then informed her attorneys that she was dissatisfied with the order of reference, and that she at no time consented to a reference. The. special term denied the motion to vacate such reference, whereupon the plaintiff appeals to this court.

In so far as to the order appealed from designates a person as referee, who was agreed upon by counsel for the respective parties, I think it was irregular, and should have been modified, and the court at special term should have designated another referee. Section 1012 of the Code, after referring to several classes of actions, among them actions for divorce, says: “In the cases specified in this section, where the parties consent to reference, the court may, in its discretion, grant or refuse a reference; but where a reference is granted, the court must designate the referee.’’

It seems to me that the spirit and intention of the section that I have quoted is that the court, in case a reference of the case has been already consented to, must, of its own motion, and without consent or agreement thereto by the counsel or parties as to the person, name the referee. This construction of the section is strengthened when § 1012 is read in connection with § 1011, which provides that all cases except those specified in § 1012 must be referred upon the consent of the parties, manifested by a written stipulation signed by the attorneys for the parties and filed with the clerk, and that, “ where the stipulation does not name the referee, he nyiy be designated by the court, on motion of either party. Where the stipulation names the referee, the clerk must enter an order, of course, referring the issue or issues for trial to that person only." That is, the section provides that in all cases, except those mentioned in § 1012, the parties can absolutely control the selection of the person before whom their case shall be tried. It is in sharp contrast to § 1012. The provisions of each emphasize and bring out distinctly the spirit and intention of the other. Section 1012 is supplemented and made certain by rule 73 of the rules of practice of the supreme court, which, in the case of divorce, provides that “ the court shall, in no case, order the reference to the referee nominated by either party nor to the referee agreed upon by the parties.” The reason for the adoption of that portion of § 1012 of the Code and of rule 73, that I have cited, was to prevent collusion between parties in the procuring of divorces. It is said in this case that there is a genuine contest, evidenced by the nature of the issues, and the behavior of the parties and their counsel, and that, therefore, the reason for the adoption of the rule in question does not apply to this case, and that consequently, there is no occasion for its enforcement. I do not think that such reasoning can justify the violation of a very plain rule of practice. To permit it would be to throw the burden upon the court in every case coming before it, where an application is made for a reference, and the referee named by the parties, of determining whether there is a bona fide and genuine contest between the parties. The court will have to determine whether the hostility exhibited is real or simulated, and in a large majority of the cases presented to the court it has no means of determining any such questions. As heretofore stated, the selection of the referee' was in violation of the spirit, if not of the letter, of § 1012 of the Code, and in plain violation of the spirit and letter of rule 73. The case of Fullmer v. Fullmer, 6 Wk. Dig. 42, I do not think in point in this case. The questions there raised came up upon the coming in of the referee’s report and the application for a judgment thereon. The court suid: “ The reference was not void for a selection of a referee contrary to the rule. The failure of the plaintiff to attend was a matter in regard to which he must seek relief by application to the discretion of the court or of the referee. These affidavits should have been presented to the court by way of a special motion, not on a hearing upon the merits upon the application for judgment.”

That is a plain recognition that a reference so made is a violation of the rule, and it simply decides that it is too late to raise such questions after the case has been tried by the referee agreed upon, and indicates that an application for relief from such an order should be made before trial, as has been done here in this case. In addition thereto, it may be stated that at the time of this decision (1878) that portion of § 1012 of the Code before alluded to had not been enacted. We are not at liberty to disregard the rules of the court. They have the same force and effect that the statutes have, and we have no more right to disregard; them than we have to disregard the statutes of the state. In re Moore, 108 N. Y. 280; 13 St. Rep. 621. I think, therefore, that the court was in error in designating the person agreed upon by the parties to the action as the referee therein.

The appellant’s contention, however, goes further than simply vacating the order of reference as tó the person designated as referee. She insists that, the referee being improperly named, the whole order of reference falls through; citing the case of Preston v. Morrow, 66 N. Y. 452, which says that: “ By consenting to refer to a particular referee, named in the consent and in the order, the parties did not waive the right to a trial either by the court or by a jury, if, for any reason, the reference agreed upon should fall through. Upon the death, removal or refusal of the referee to act, the actions were again in the court for trial as prescribed by law, as if no reference had been consented to.” That case was decided under the old Code of Procedure, and which differed materially in ■ respect to the control of the court over references from the present Code. But, in addition to that, there are features in this case that distinguish it from the case of Preston v. Morrow. In this case there was a consent in open court to a reference, not to any particular person, but that the case should be referred. The plaintiff agreed to it as a condition of not then and there going to trial. The naming of a particular person as referee was an after matter; and, because a stipulation was entered into, which the court acceded to, and which was in violation of the rules of practice and the Code, the plaintiff cannot now, in good faith, after she has received the benefit derived from the stipulation to refer the case for trial, ask to have the whole order vacated because that portion of the order designating the particular person before whom the reference was to be tried was improperly made. Further than that, the plaintiff’s motion is capable of division. Her motion was not 'simply for an order vacating and setting aside the order of reference, but was “ for such other, further or different rules or order as the court may deem proper.” Under such a prayer for relief the court can modify the order previously granted', and correct the error into which it had been led by the plaintiff’s counsel. The plaintiff, in her affidavit, states that she never consented to a reference. The court can only deal with parties to actions before it; when they are represented by attorneys, through their attorneys. The agreements and stipulations of such attorneys are the agreements and stipulations of the parties; and where an attorney for a party has entered into an agreement, and the court has acted upon it, it.is too late for the party to repudiate the authority of the attorney after reaping the benefit of his action. The plaintiff’s attorney here elected to have the case tried by a referee as a condition of postponing the trial. The trial of the case was accordingly postponed. She must be held to his agreement in open court to try the case as a reference, the referee to be designated according to law and the rules and practice of this court, o The order appealed from should therefore be modified, and the original order of reference also modified by striking therefrom the name of the person therein designated as referee, with ten dollars costs of such motion, to be paid by the plaintiff, without costs of this appeal to either party. Either party may apply, upon notice, to a special term of the court, for the appointment of a referee to hear and determine this action pursuant to the consent of the parties entered into in open court that this case should be tried before a referee.

All concur.