text:
    Thomas N. Dwyer v. James Rorke.
    (Supreme Court, Appellate Division, First Department.
    November 20, 1896.)
    Partnership—Settlement of accounts—Burden of proof.
    Where partners agree that on the settlement of the partnership accounts no charges shall be made “ save for expenses or disbursements, actually paid or incurred,” the burden is on the partner-who entered the charges to show that they had been actually paid or incurred ; and he cannot rely on acquiescence, implied by the fact that bis co-partner had not objected thereto at the time of their entry in the books, or when contained in a subsequent statement.
    Appeal from judgment on report of referee.
    Action by Thomas N. Dwyer against James Rorke to dissolve a partnership and for an accounting. There was a judgment in favor of plaintiff, and defendant appeals.
    George A. Strong, for appellant; George Putnam Smith,, for respondent.
   VAN BRUNT, P. J.

—On or about the 23d of February, 1884, a co-partnership was formed between the plaintiff and ■the defendant under written articles for a term of five years, which co-partnership was continued for five years to the 23d of February, 1889, the date provided in the articles for its. expiration. In July, 1893, the defendant having disputed certain charges made for expenses and disbursements by the plaintiff in the accounts which bad been rendered, and the-defendant desiring a settlement of the partnership accounts, and the defendant desiring to go to Europe, and wishing that, such settlement be postponed, the parties, on the 11th of July, 1893, entered into an agreement reciting the fact of the co-partnership, and that a question had arisen in reference-to the settlement of the accounts, by which it was mutually agreed:

“ First, that in the settlement of the accounts of the partnership between said partners no charges shall be made by either partner for expenses or disbursements, save for expenses- and disbursements actually paid or incurred.”

The'next clause of the agreement provided:

. That, as Mr. Dwyer expects to sail for Europe on the 12th day of this month, a co-partnership accounting of all the past-transactions of said firm from its inception to the present time shall be -had as soon as possible after his return to the City of New York, not exceeding one month after such return.

The second provision of the agreement was as follows : .

“ Second. It is further expressly agreed and understood that for the future no charges shall be made by the party of the first part for expenses or disbursements, save for expenses and disbursements actually paid out by said first party, and that any future settlement of partnership accounts shall be made uruler and pursuant to the rule here stated.”

Then follows a provision for an extension of the co-partnership for the further term of five years from the 23d of February, 1894. On the 19th of Octob'er, 1893, the defendant wrote to the plaintiff:

“ I write to call your attention to your agreement with me of July' 11th, 1893, which provides that, as you expected to sail for Europe the next day, July 12th, a partnei’ship accounting of all the past transactions of the firm of Thomas ÍL Dwyer & Co., from its inception to the then present time,, should be had as soon as possible, and not exceeding one month after your return to Sew York City. The extension of that partnership was consented to by me on the express condition that such accounting should be had, and I now request that it be taken without further delay.

Thereupon the plaintiff began this action on or about the 20th of October, 1893, praying for a dissolution of the co-partnership and an accounting. On the 31st of October, 1893, the parties consented to the entry of an interlocutory judgment by which the co-partnership was dissolved, and it was provided that an account be taken of all the partnership dealings and transactions from the commencement thereof, and of the moneys received and paid by the plaintiff and defendant respectively in relation thereto. The judgment further provided that, in case of any disagreement between the parties as to any item or items contained in said accounts when the same shall be made up, it be referred to the referee named in the judgment to hear and determine the issues and to take proof, and report to this court, with his opinion as to whether said item or items should be allowed or disallowed, and what, upon the balance of said account as adjusted by him, should appear to be due from either party to the other. Differences having arisen in reference to the accounts, proceedings were had before the referee, and the books of the firm, the annual statements, and an account of the condition of the firm to 1893 were filed by the plaintiff as a basis for the accounting. The defendant then filed .exceptions to the account as to the expenses and disbursements charged in the account as having been made by the plaintiff. The referee ruled that the burden lay upon the defendant to overthrow such items in the account as were objected to by him. This ruling was made at the opening of the trial, and reaffirmed in the referee’s report; the referee holding that, in the absence of fraud or mistake or failure to object to charges for disbursements or expenses at the time they were entered in the books or contained in the statements, the defendant must be held to have approved and acquiesced in such charges. The question presented upon this appeal is whether this ruling was correct.

We think, upon a consideration of the agreement of the 11th of July, 1893, that it became incumbent upon the plaintiff to establish by proof that the expenses and disbursements which were contained in his account had been actually paid or incurred. This is the express provision of the agreement. It appears from that agreement that it-was expected, after the plaintiff’s return, that the accounts of the firm from its inception to the 11th of July, 1893, were to be settled. The defendant made objections to charges which were contained in those accounts as made by the plaintiff; and it is probable from the circumstances of the case that but for the agreement of the 11th of July, 1893, it would have been incumbent upon the defendant to have established fraud or mistake in reference to these charges. But, in order to avoid the legal implication of the settlement of these accounts, the parties •entered into this agreement, and provided that no charges •should be made by either party for expenses and disbursements, save for expenses and disbursements actually paid or incurred. And that this applied to the business of the firm prior to the execution of the agreement is manifest from the fact that they have an express provision in respect to the •charges which wer.e to be' made for expenses and disbursements in the future business of the firm. The first clause of the agreement would be absolutely meaningless if the burden was upon the defendant to show fraud or mistake’in reference to these charges for expenses or disbursements. That would have been the result had there been no agreement. But, in order to avoid this implication, and as a condition of "postponing this accounting until the plaintiff should return from. Europe, and as a consideration for an agreement to extend the co-partnership for five years, it was provided that in the settlement of the accounts of the co-partnership no .charges should be made by either party for expenses and •disbursements, save for expenses and disburséments actually paid or incurred. It became, therefore, clearly the duty of the plaintiff, when objection was made to these charges, to •show by proof that they were actually paid or incurred; and he could not rely upon the fact of acquiescence in the •charges upon the part of the defendant. This was an error which pervaded the whole of the proceedings before the referee, .and necessarily affected the condition of proof upon which he was called upon to pass. We think, therefore, that the conclusion of the referee was founded upon an erroneous assumption of the relations of these parties. As has been already said, in consequence of this agreement the plaintiff took upon himself the burden of showing that what he charged for expenses and disbursements had been actually paid or incurred.

The judgment appealed from should be reversed, and a new trial of the question as to the accounts should be had before .another referee, to be agreed upon by the parties; but, if the parties cannot agree upon a referee, a new referee will be appointed by the order to be entered upon this decision. Costs of this appeal to the appellant to abide the event.

All concur.


source: Caselaw Access Project

author: RUMSEY, J. INGRAHAM, J.

license: Public Domain

text:
    Margaret B. Edson v. John A. Bartow et al.

    (Supreme Court, Appellate Division, First Department.
    Nov. 13, 1896.)

      1. Bes judicata—Identity of question.
    A decision, in construing a will, that persons named as executors took individually the residuary estate, is not an adjudication of the question whether, by reason of any extrinsic circumstances, the estate came to them charged with a trust.
    3. Bequest in trust—Silence of legatee.
    Silent acquiescence has the effect of an express promise, where a person permits a testator to make a bequest to him on the belief that he will apply it for the benefit of others.
    3. Wills—Construction of—Void trust.
    Testatrix, after making bequests in favor of various religious and charitable bodies, provided that, if any legacies should fail, the amount thereof should go “ absolutely to the persons named as my executors that, “in the use of the same, I am satisfied they will follow what they believe to be my wishes and that “ I impose on them, however, no conditions; leaving the same to them personally and absolutely, without limitation or restriction.” There was no evidence of any promise by executors B. or F. to apply the amount of such legacies according to the testatrix’s wish. Executor P., who, as testatrix’s counsel, drew her will, consented by silence to carry her wishes into effect. In an action to construe the will, it was decided that the bequests to the re-' ligious and charitable bodies were void, and that the executors took individually the amount of such legacies. Held, that since each took, as tenants in common (1 Bev. St. p. 727, § 44), an absolute one-third interest in the residuary estate, and P. took his interest charged with avóid trust, such interest passed to testatrix’s next of kin. Ingraham, J., dissenting.
    "Appeal from special term, New York County.
    Action by Margaret B. Edson, individually and as executrix, against John A. Bartow and others, as executors, to impose a trust on a bequest to the executors, and to declare said bequest invalid. From a judgment for defendants (37 H. Y. Supp. 99), plaintiff appeals.
    Joseph H. Choate, for appellant; David B. Ogden, for respondent executors; Cephas Brainerd, for respondent Young Women’s Christian Assn.; S. P. Hash, for respondent Orphans’ Home & Asylum and others; Huntington & Rhinelander, for respondent Huntington; Peter B. Olney, for respondent Charity Organization Society ; William W. Hoppin, for respondents Woman’s Hospital and others ; John B. Pine, for respondent House of Mercy; J. F. Kernochan, for respondent New York Free Circulating Library.
   RUMSEY, J.

—In May, 1890, Mary A. Edson made her will,, which was followed in the same month by two codicils. In this will and codicil, after making a large, number of bequests, to various charitable institutions, the precise nature of which will be considered later, Miss Edson made the following-bequest :

“ If, for any reason,' any legacy or legacies left by my will or by any codicil, either pecuniary or residuary, shall lapse or fail, or for any cause not take effect, in whole or in part, 1 give and bequeath the amount which shall lapse, fail, or not take effect, absolutely, to the persons named as my executors. In the use of the same, I am satisfied that they will follow what, they believe to be my wishes. I impose upon them, however, no conditions; leaving the same to them personally and absolutely, and without limitation or restriction.”

The last codicil was executed on the 27th day' of May, and on the 29th of May, two days afterwards, Miss Edson died. The will contained a direction to the executors to sell and convey any real estate of which the testator died seized, and to apply the proceeds of such real estate to the purposes of her will. In an action subsequently brought by the executors for a construction of the will, it was held that a large number of bequests to charitable and benevolent institutions were, void, and that the general devise of the rest, residue, and rein under of the estate to the executors, to be divided among such incorporated religious, benevolent, and charitable societies .of the city of Hew York, and in such amounts, as should be fixed or approve 1 by them, with the approval of the Reverend Dr. William -R. Huntington, which bequest was contained in the last clause of the will, was also void. It was further held in the same action that the bequest to the persons named as executors, quoted above, was valid, and vested in those persons, absolutely, the residuum of the estate, not otherwise disposed of, and that they took such share personally, and not as executors. After that action had been decided, this suit was brought. The plaintiff in this action is the widow and executrix of Marmont B. Edson, who was the brother of Miss Edson,, and her only next of kin and heir at law. The plaintiff alleges that the persons named as executors, who took the-residuum of the estate of Mary A. Edson, under the bequest to-them, received that estate upon a secret trust to dispose of it according to her wishes, and that those wishes, by virtue of which the trust was created, were that the estate should be distributed by the legatees to the various corporations, the particular legacies to which in the former part of the will were declared void, or that it should be distributed, in accordance with the immediately preceding portion of the will, to such incorporated religious, benevolent, and charitable societies in the city of Hew York as should seem good to the persons taking the estate. It is claimed by the plaintiff that, these trusts being void, the bequest to the defendants fails, and that. therefore, she, as the executrix of the next of kin of the testatoi, is entitled to have the residuary estate. Upon the trial at the special term, it was held that the plaintiff had failed to make out her case, and her complaint was dismissed. From the judgment dismissing the complaint, this appeal is taken.

The respondents claim that the questions presented in this action were decided adversely to the plaintiff here in the action brought by them for tlie construction of the. will, and that the judgment there is an adjudication in their favor, which must dispose of this case. It appears from an examination of the judgment in that case, as it is presented here, that the parties to this action were also parties to that one; and, of course, so far as any questions were raised by the pleadings in that case, the decision of them is conclusive upon the parties in this action. Cromwell v. Sac Co., 94 U. S. 3ol. It was decided in the former suit, upon an interpretation of the will, that the persons named as executors took the title to the residuum of the property absolutely, to do with it as they pleased,'and that must be taken as the settled law of the case between these parties. But the question presented here is not whether the residuary legatees took the estate by virtue of the will of Hiss Edson, but whether, by reason of any extrinsic ■circumstances, that estate came to them charged with a trust. That question was not presented in the action for the construction of the will. The only question presented there was whether certain clauses of the will were valid, and what ivas the construction and effect of those clauses which were decided to be good. There was no claim in the former action that the will was at all ambiguous, and for that reason there was no ground for the introduction of extrinsic evidence, but the case was to be decided solely upon the inspection of the paper which was presented as the will of Hiss Edson. The question depended simply upon the terms of the will itself, and had nothing to do with the alleged extrinsic fraud. Here the construction and effect of the will are admitted, but it is claimed by the plaintiff that, by reason of the facts occurring at the time the will was executed, the apparently absolute estate which the respondents take is charged with a void trust, and for that reason the estate, which otherwise would be apparently good, is invalid. The question raised there could not be clecided in the action for the construction of the will. The distinction between the questions raised in the two classes of cases is considered and explained in Be Ileleman, 126 U. Y. 73, and it is apparent from what is said in that case that the decision in the action to construe the will is not an adjudication upon the main question presented in this case.

It is a well-established principle of law that where a person, knowing that a legacy to him is intended by tlie testator to be applied to purposes other than for his own benefit, either expressly promises, or by silence implies, that he will cany the testator’s intention into effect, and the property is left to him upon the faith of that promise or undertaking, it is, in effect, the case of a trust. The rule has been laid down in numerous, cases, and must be deemed to be settled in this state by the case of O’Hara v. Dudley, 95 N. Y. 403. The plaintiff claims that the circumstances under which this will was executed are such as to bring the residuary legatees within this rule of law,, and to charge them as trustees of the property which they took by the residuary clause of the will. The rule of law is not disputed, but it was held by the learned judge at special term, and is claimed here by the respondents, that the evidence is not sufficient to bring the residuary legatees within the condemnation of that rule, and it was for that reason that the complaint was dismissed. It is evident, from the statement of the rule mentioned above, that a secret trust in such cases-may be established by some other means than an expressed promise. If the rule were only to be applied where it could be shown that the legatee expressly promised, in terms, to> carry .out the provision of the secret trust, it would be seldom that it could be proven, and a wholesome rule would lose much of its beneficial effect. But the rule is not so limited. It is not necessary, in order to establish a trust of this kind, to show that the alleged trustees made an express promise to carry the wishes of the testator into effect. A much broader-rule has been established. Where a person, even by silent-acquiescence!, permits the testator to make a devise or bequest upon a belief that he will apply it for the benefit of others, that has the force and effect of an express promise. O’Hara v. Dudley, 95 N. Y. 403. In Russell v. Jackson, 10 Hare, 204, it appeared that the testator made a devise to the two Jacksons, by a secret trust, which was stated in full only to his solicitor, but that subsequently the testator and the solicitor and the two Jacksons were present at an interview in which the testator stated to them that, having confidence in them, he would leave his property to them, being satisfied that they would carry out his intentions, which they knew, and that one of them assented to what was said, and that the other did not dissent. Upon that condition of affairs, the vice chancellor-held that the silent acquiescence was just as effectual to charge the legatee as a trustee as though there had been an express-promise. In Tee v. Ferris, 2 Kay & J. 357, the testator had devised his property to four persons absolutely; but at the time of his will had written a letter in which he said that he had devised the estate tó them because he was not able to-decide upon the disposition of it, and that he adopted that course in entire confidence that, if he should die without making any further disposition, they would appropriate it to-charity use, in their sound discretion. After the will had been executed, Ferris, oné of the legatees, being with the testator, the will and letter were produced by the solicitor who drew it, and they were read aloud in the presence of Ferris.' The letter was not communicated to Ferris at the request of the testator, hut Ferris heard it as it was read, the testator being; present, and kept silent and said nothing about it. The court-held that his silence when the letter vras read was equivalent to an undertaking on his part to carry into effect the testator’s intention as therein expressed, and the legatee Ferris was charged as trustee. This case has frequently been cited, both in England and in this country, and never without approval, so that the rule laid down in it may now be deemed to be a fair illustration of the extent to which courts of equity will go in establishing a secret trust for the purpose of avoiding a fraud upon the testator. With this rule in mind, let us examine the testimony in this case, as to which there is no dispute :

It appears that Miss Edson was desirous of devoting a large part of her estate to charitable objects. Her brother, Marmont Edson, who was her only next of kin, was a man of considerable wealth, and had no need to receive any benefit from his sister. The will which she finally executed was drafted by Mr. Parsons, one of the residuary legatees, who had been her counsel and adviser. When that draft was presented te Miss Edson, she made various changes in it,—not particularly important, but yet ■ sufficient to show that she understood the provisions of tlie will. Among these provisions were various bequests of considerable sums to different charitable institutions, and there was a special gift of the rest, residue, and remainder of her estate to her executors, to be divided among such incorporated religious, benevolent, and charitable societies as they should appoint with the approval of Dr. Huntington. The will then contained the clause quoted at the beginning of this opinion. The second codicil, which was executed a few days afterwards, repeated the two provisions which have just before been stated, with another provision which is of much force in this connection. That was, substantially, that if any of the societies or institutions named in the will or codicil should be unable to take the legacy intended for it, by reason of want of incorporation, or any other cause whatever, she gave that legacy absolutely to the person who was president of such society, if it had a president, and, if not, to the person who should be treasurer, if it had a treasurer, and, if not, to the person who should be its chief executive officer, to be by him applied to the use and purpose of such institution or society. It is evident from this that Miss Edson was determined that, if there were any possible way to have it brought about, none of the bequests in her will should fail by reason of any legal objections. This intention is emphasized by the residuary clause, which only took effect in case any legacy left by the will or codicil should lapse or fail. It is quite evident from an examination of the will that there were no large legacies which could lapse or fail for any other reason than their invalidity, because the only other legacies were small, compared with the great bulk of the property, and the whole residue of the estate was bequeathed to the executors, to be distributed to indefinite charitable societies, in the paragraph of • the will immediately before the absolute gift to the persons named as executors. It is quite clear from an inspection of the will that there could be no failure of any bequest which would not go into the rest and residue, to be distributed pursuant to the next to the last paragraph of the eighth clause of the will, and the first paragraph of the fifth clause of the last codicil, if those bequests should turn out to be valid. So it was evident that the only contingency upon which the bequest in the last paragraph would take effect was the illegality of the residuary clause just before mentioned. This, of course, must have been known to the person who drew the will, because it is apparent from an inspection of the paper itself, and it necessarily follows from even a cursory reading. It appears that, when these papers were executed, Hr. Parsons was present; that he read over the will and the codicil to Hiss Edson at the several times when they were executed, and that from time to time he paused and looked at' Hiss Edson; and that she nodded in - such a way as to indicate that she understood perfectly what was said. That having been done, the will was executed in proper form. There is no evidence—indeed, there could be no evidence —of the wishes which Hiss Edson had expressed to the persons named as her executors with regard to the disposition of this absolute devise to them. There is nothing in the case to show that at any time she had any communication with either Bar-tow or Fairchild with regard to these bequests. There is nothing to show any further communication to Hr. Parsons than such as must have taken place when he received her instructions for drafting the will, and we can therefore look for her wishes only in the paper which is presented as her will. It is quite evident from this paper what her wishes were. They were that this property should go in charity, and in such charity as might be appointed by her executors with the approval of Dr. Huntington. The person who drew the will must necessarily have been acquainted with those wishes. "When he read over the last bequest, by-which he, with the other persons named as executors, took that property absolutely, he must, have been charged with the knowledge that' the wishes of Hiss Edson about the disposition of her property had been immediately before that expressed to him in that will, and he must have known that the wishes which she expressed the belief that he would carry into effect were those wishes which had just been expressed by her on that solemn occasion. No other conclusion can be drawn from the circumstances surrounding the transaction. Either Hr. Parsons knew what her wishes were, as she said he did in the will and codicil, in which case he was bound in good faith to carry them into effect, because he did not dissent, or he had no knowledge at the time when he read that clause to the testator, although she said that he had. We must believe that he knew what the wishes .were, and, believing it, it is impossible to resist the conclusion that he drew the inference which any other man must necessarily draw,—that the testator’s wishes with regard to the disposition of her property were those which she had immediately expressed in her will, and which she feared, perhaps, might for some reason not take effect. Under all the circumstances, as they are disclosed, it is a necessary inference, we think, that Hr. Parsons, when he drew this will and attended to the execution of it, knew what the testator’s wishes were; that he knew they were those which had just been expressed; and that he gave her to understand, by his acquiescence, that he would carry those wishes into effect, in case, for any reason, they failed to be carried into effect under the other clauses of the will. The inference thus drawn is strengthened by the act of the legatees which took place shortly after the probate of the will. Hone of them, as is conceded, except Mr. Parsons, ever had any communication with the testatrix about this will, nor did they know anything about it,—even the fact that the will had been executed, or that a bequest had been made to them. Yet we find that in a short time after the probate of the will, with the approval of Dr. Huntington, they proceeded to appoint the residuary estate which had been given to them to certain charitable objects. This appointment could hardly have been made in the way in which it was made, with the approval of the gentlemen selected by the testatrix for that purpose, unless the legatees had been advised of the wishes of the testatrix. Whence could they have received any such information, unless it was from that one of their number who had drawn this will, and was aware of Miss Edson’s wishes ? The evidence, so far as Mr. Parsons is concerned, is not great in amount, to be sure. But reading between the lines, and drawing such inferences as we are compelled to draAV from the surrounding circumstances and from subsequent acts, we must conclude, from all the facts, that Avhen this Avill Avas executed he did have an understanding with Miss Edson as to her wishes with regard to this property, and that, in making a disposition of her estate, she relied upon his tacit consent to be governed by her Avishes previously expressed. This brings the case, so far as he is concerned, clearly within the cases above cited.

But Messrs. Fairchild and Bartow stand upon an entirely different footing. It has been decided in Fairchild v. Edson, 77 Hun, 298, 28 N. Y. Supp. 401, that the three gentlemen named as executors took this residuary estate absolutely, under this clause of the will. Each one of them became tKe owner of the one-third of the estate which was given to him, AAÚth an absolute right, not only to have it, but to have it separated from the rest at once upon the final disposition of the estate, because he took his share in severalty, and absolutely, under the terms of the will. By the express provisions of the statute, he took this as a tenant in common, and not as a joint tenant. 1 Rev. St. p. 727, § 44; In re Kimberly’s Estate, 150 N. Y. 90; 44 N. E. 945. It has been said, that the necessary intent of the testatrix in making this devise to the persons named as my executors ” was that they should take it as joint tenants, because otherwise they would not be bound to carry out her wishes. But this involves the consideration of extrinsic proof for the purpose of giving a construction to the grant. The nature of the estate which is granted by a will or deed is to be determined by the words of the grant, and no parol evidence is admissible to alter the construction which must necessarily be given to the words themselves. There is a vast difference between admitting parol evidence for the purpose of establishing a trust, and admitting it for the purpose of changing the legal construction of a grant. In the one case, evidence must necessarily be received. In the other case, the party claiming under a will gets his estate by virtue of what is put into the will, and the extent and nature of that estate must be determined by the words which are written in the paper,' and it cannot be enlarged or diminished by extrinsic considerations as to the intent of the testator which'have not been put into the grant- itself. This rule of lawr is so well settled that authorities need not be cited to sustain it. As these gentlemen took this property as tenants in common, with regard to them the bequest was precisely the same as if the residuary estate had been divided into three portions, and one portion given to each of them. If they had taken the estate as joint tenants, it -is established by O’Hara v. Dudley, supra, that each one Avould have been bound by the tacit agreement of Parsons to devote it to the wishes of the testatrix, no matter Avhether they had any notice of this agreement or not. The reason is that the joint tenants have but one estate, and not three separate estates in severalty, and they all take this one estate subject to the infirmity which necessarily results from the agreement betAveen the testatrix and one of their number which resulted in the gift being made. But with tenants in common, upon both principle and authority, the rule is different. As to them, the share of each one belongs to him, without any reference to the ownership of the other shares; and, Avhen the property is so given, it must be deemed that he takes his share free from any charge that another legatee had impressed upon his own share ; and, unless he himself had been a party to the promise by Avhich the trust was created, he would take the absolute oAvnership of his share by a valid title. The trust in this case is impressed upon the property, not by reason of the intent of the testatrix, but because the legatee, having knoAvledge of that intent, accepts the trust, either upon an express promise to carry it out, or upon such acquiescence as estops him from denying that the promise Avas made. Unless there is such promise or estoppel, the cases are conclusive that no trust exists. The promise must be made wdth reference to the estate Avhich is bequeathed, and it can only be made, in the nature of things, by the person to whom the bequest is made, if he has a separate estate from any other bequeathed in the will. It necessarily follows that, if the person sought to be charged as trustee knew nothing about the bequest to him, he cannot be charged with an assent, and therefore he cannot be charged with a trust. To hold otherwise would be to put it in the power of any person talcing a share of property under a will to deprive every other person mentioned as a legatee under the will of the power to take any part of the estate. One tenant in common has no more connection with another tenant in common than has one legatee with another legatee. The estate given to each is separate from the estate given to any other; and there is no reason, in principle, if one tenant in common can be charged with an agreement made by another tenant in common, to which he is not a party, and of which he has no knowledge, why any legatee of a portion of the estate may not also be charged with a like agreement made between the testatrix and the draftsman of the will, although he knew nothing whatever about it. For this reason, upon principle, it seems to us that it cannot be said that one tenant in common is chargeable with the tacit agreement by which another tenant has impressed upon his own share a trust. The same rule is to be deduced from the cases. It was expressly decided in Tee v. Ferris, 2 Kay & J. 351, where that question was the only question presented when the case finally came before the vice-chancellor. The case was followed in Rowbotham v. Dunnett, 8 Ch. Div. 430. The same rule is laid down in the case of O’Hara v. Dudley, supra. In that case it appears that the testatrix gave her estate to three persons absolutely, but as joint tenants. Such is stated to be the bequest, by Judge Finch, at the beginning of his opinion. It appears in that case that but one of the legatees had any knowledge of the intention of the testatrix, or had made any agreement to be bound by it; and it was claimed that, because no such agreement had been made by the others, they were not bound, and that as to them the devise was good. In repudiating that claim, Finch, J., bases his decision expressly upon the ground that three legatees took this estate as joint tenants. He lays stress upon the rule that the trust comes to exist, not because of the intention of the testatrix, but because of the implied agreement of the legatee to carry out that intention ; and he distinguishes the cases of Rowbotham v. Dun-nett and Tee v. Ferris from the case which he had in hand expressly because of the fact that in those cases the legatee as to whom the devise was held to be good was a tenant in common, and not a joint tenant; and he insists all through his opinion upon the fact that all the legatees in the case before him were joint tenants, and therefore, and for that reason alone, were bound by the tacit acquiescence of one of them. Applying-the rule laid down in these two cases, we must hold that, so far as the defendants Bartow and Fairchild are concerned, the complaint was properly dismissed as to them, and the judgment must be affirmed. But with regard to Mr. Parsons the case is entirely different. He understood the wishes of the testator, and, by acquiescence, agreed to carry them into effect. As to him, liis portion of the estate is charged with this trust.

This trust is void because of its indefiniteness. The trust, as expressed by the wishes of the testator, and as found in the will, and as it was attempted to be carried out, is to divide this estate among such incorporated religions, benevolent, or charitable societies as they shall see fit. It is well settled that such a trust as that is invalid. People v. Powers, 147 N. Y. 104; Fairchild v. Edson, 77 Hun, 298; 59 8. R. 163. Where a testator creates a trust which is invalid because it is one which the law will not permit to be carried out, the trust necessarily fails, and the property which is attempted to be bequeathed by the invalid trust goes to the next of kin. O’Hara v. Dudley, 95 N. Y. 403; Springett v. Jenings, L. R. 10 Eq. 488. This must be the result as to the portion of the estate bequeathed to Mr. Parsons. As to him the judgment of the special term must be reversed, and judgment ordered that the portion of the property bequeathed to him was not disposed of by the will, and goes to the plaintiff, as the executrix of the next of lcin.

It is perhaps unnecessary to say that there is no claim on the part of anybody that there is any actual fraudulent intent on the part of the executor, or anybody else, to get possession of this property. The attempt is simply to evade the well-settled rules of law which render a bequest void, if it should happen that they were applied to this case. While such an intent, which has for its ultimate end, not private gain, but to devote the property to charitable use, involves no immorality, but the opposite, yet there are grave reasons of public policy why such things should not be permitted. In this particular case there can be no suspicion that any wrong was intended, except an evasion of the law. While an evasion of the law like this involves no moral obliquity, it is the duty of the courts always to condemn it. The fact that the gentlemen who attempted it were, by their position and character, far above any suspicion of attempting to make gain for themselves, affords the greater reason why they should be held to the strictest rules. The thing may just as easily be attempted by some less scrupulous person for mere personal objects, but in the one case as well as in the other the policy of the law requires that such bequests should not be encouraged.

With regard to Dr. Huntington, it is quite clear that the complaint was properly dismissed. He took nothing under this will, and the plaintiff was entitled to no relief against him whatever. The judgment, as to him, must be affirmed, with costs.

As to the defendants Bartow, Fairchild, and Huntington, the judgment is affirmed, with costs to be paid by the plaintiff.

As to the defendant Parsons, the judgment is reversed, with costs, and judgment ordered that the one-third part of the residuary estate which was bequeathed to him did not pass by the will, and shall be distributed by the executors to the next of kin.

VAN BRUNT, P. J., and WILLIAMS and PATTERSON, JJ., concur.

INGRAHAM, J.

(dissenting).—I concur with Mr. Justice Rumsey so far as he holds that when this will was executed there existed between Mr. Parsons, one of the executors, who prepared the will, and Miss Edson, the testatrix, an implied understanding as to her wishes in regard to the property left to her executors, and that she relied, in giving it to him and his co-executors, upon his tacit consent to be governed in the disposition of it by her wishes in the Avill expressed, and that this brings the case, so far as he is affected, clearly AAuthin the cases cited by him in his opinion. I do not concur in his conclusion as to its effect upon the other executors, Messrs. Fairchild and Barto\Ar. By the will in question the testatrix attempted to make a disposition of all her property, dividing the residuary estate among the several charities named by her. Fully appreciating the fact, hoAvever, that this disposition of her residuary estate might be invalid, according to the May of this state, an attempt Avas made by her to evade the result of such illegality by the disposition that she made of her residuary estate in case that contingency should happen. The eAddence shoAvs that, if the conclusion arrived at by Mr. Justice Rumsey is correct, she has been successful, so far as íavothirds of her estate Avas affected, and that a scheme has been here devised by Avhich a testator, by selecting gentlemen of character and a keen sense of honor, can in all cases render. nugatory any provisions of law limiting the disposition that can be made of property by a last will and testament. That the court should find themselves in such a predicament, and feel themselves bound to enforce a Avill Avhich, considering its provisions and the acts of those selected to execute its provisions, has resulted in an illegal disposition of this property,—a disposition prohibited by the positive Mav of this state,—seems to me to confess an impotence in the administration of the laAv entirely unjustified. The position here presented is exactly that presented to the court in Re O’Hara, 95 N. Y. 420 :

If equity will not touch this devise, by putting a trust for the heirs at law and next of kin upon the fund in the hands of these legatees, the road to an evasion of our statutes, and to the temptations of necessity or greed, will be left Avide open. While in such cases it has been well said that the court should act with caution, and only upon the clearest proof of the fraud, yet AArhen, as here, the facts are proved beyond reasonable question, Ave ought not to hesitate. The testatrix did intend an absolute devise to these legatees, on the face of the Avill; but she did not intend that they should have the resultant beneficial interest, and relied upon their promise to carry its fruits elsewhere. They do not refuse to perform. Although they deny the promise, it is quite possible that they mean to keep it. *We are not authorized to say or suspect that they will not, but, if they do, they must inevitably carry out a planned and purposed evasion of our statutes against perpetuities. * * * The principal legatee in this case knew it, and it was distinctly planned between him and the testatrix that her understood and declared purpose, which could not be lawfully carried out by a devise on the face of the will, should be effected by an absolute devise coupled with his honorable obligation to hold and appropriate the property to forbidden uses. And evasion of the law was the very occasion and object of the absolute devise. Without that, it could not have been suggested without a fraud upon the testatrix; for, if there was no need of it,—if no statute was to be avoided or flanked,— the very suggestion of an absolute devise was fraudulent. * * * Any devise or bequest of this character is dangerous and indefensible. It exposes testators to the suggestion of unnecessary difficulties, as inducements to the artifice of an absolute devise concealing an illegal trust. It exposes the devisee to temptation, and, even when he acts honestly, to severe and unrelenting criticism. It subserves no good or useful purpose. If we sustain it, we admit that any statute may be thus evaded, and that equity cannot redress the wrong.”

In this case the evidence goes further, and shows that the testatrix was not mistaken in depending upon those whom she selected as her instruments to evade the law. Shortly after the probate of the will, these executors did carry out, by an evasion of the statute, her wishes. Mr. Bartow, one of the executors, testified that he executed this instrument called a “grant” because he considered that he was carrying out the wishes of Miss Edson, and, when asked whether he felt that he was bound to do what he did with the property, he answered, “ I don’t think I was legally bound to do it; ” and then, when the question was put to him, “ But in honor and conscience ? ” he answered:

“ I knew what Miss Edson's wishes were, as expressed in her will, and, if she chose to leave that money for myself, which she did, I consider that it was the part of an honest man to try to carry out her wishes.”

Mr. Fairchild, another of the executors and residuary legatees, said:

“ I don’t think that at any time I had any intention of keeping any of that money for myself. I did not have any such intention.”

When asked the question, “ Why didn’t you keep it, or any part of it, for yourself ? ” he answered :

“ I thought I would be ashamed to. I did not think that was the intent of the testatrix. I thought that her whole purpose was that the portion of her property given to us by the last clause should go to some benevolent objects. Failing it going as she expressed in her will, I felt that her intention was to give this property to us to be disposed of as we thought best for benevolent objects. I did not think that she intended that I should keep any of it for myself. I did not think that . she intended that. I think that keeping it for ourselves would have been what I and Hr. Bartow, or either of us, or Hr. Parsons, might well have been ashamed of.”

It is impossible to resist the conclusion that all. three of these executors considered themselves bound—if not legally, at least morally, and as honest men—to use this property left to them by this will to carry out the illegal disposition that Hiss Edson had attempted to make by the will; that to have used this legacy in any other manner would have been a dishonorable act on their part, and one that would have exposed them to disgrace; and that she and Hr. Parsons, when he prepared the will, well knew that this consideration would require that they should join with Hr. Parsons in executing the implied or tacit understanding between Hr. Parsons and the testatrix in pursuance of which this residuary clause was inserted in the will and codicil, and thus became a part of Hiss Edson’s will. Hr. Justice Bumsey concedes, in his opinion, that if these three executors had been joint tenants of this property, applying the principle in Be O’Hara, supra, the executors would hold the legacy or devise to them as trustees for the next of kin. But he holds that as they were tenants in common, and applying the principle stated by Vice Chancellor Sir W. Page Wood in Tee v. Ferris, 2 Kay & J. 366, it was only the share of Hr. Parsons, with whom the implied or positive agreement could be said to have been proved, that was affected. The terms of the will before the court in the O’Hara” Case are not stated in the report. The nature of the bequest contained in the will is stated by Judge Finch in delivering the opinion of the court, “ The testatrix gave to three persons, who were her lawyer, her doctor, and her priest, absolutely, but as joint tenants, the bulk of her estate; ” and in that case the only one who had any knowledge of the intention of the testator was, as in this case, the lawyer who drew the will. I think it can be said, however, that in this case the bequest or devise vras not to the executors as tenants in common, but as joint tenants, and thus the principle established by the will of O’Hara applies. This clause originally appeared in a draft will prepared by Hr. Parsons, and was submitted to the testatrix. That original draft will provided that if, for any reason, any legacy should lapse or fail, “ I give and bequeath the amount thereof absolutely to my executors. In the use of the same, I am satisfied that they will follow what they believe to be my wishes.” If the will, as executed, had stood in this condition, I do not suppose it would be claimed but that the bequest would be one to the executors as a class, and would thus be joint, and not several. In the will, however, as executed, the clause stands, “ I give and bequeath the amount which shall lapse, fail, or not take effect, absolutely to the persons named .as my executors.” The rest of the clause is the same, the words interpolated being “ the persons named as.” Did the interpolation of these words change the character of this bequest? It is a canon of construction universally applied that the sole object of a court is to ascertain and enforce the intention of the testator ; and we have here before us, in the language in this very will itself, the clearly-expressed intent with which this testatrix used these words when she added to a will which disposed of all her property this clause in question, "What wras that intent ? That she, having made certain dispositions of a large portion of her property, about the validity of which there might arise serious doubts, because what she attempted to do might be illegal, wished to provide a method by which such illegal disposition of the property could be consummated, relying upon the honor .and integrity of her three executors to accomplish that result. Was it her intention that these three executors should take this property as tenants in common, as their own property, and dispose of it for their own purpose ? Clearly not. Wliat she intended to do was to leave this property to her executors, to carry out her intention, if it should appear that that intention was illegal, and could not be carried out by the will. In other words, it was her intention that her executors should be vested with the property to make a disposition of oit which the law said that she should not make by will, and, to carry out that intention, she created her executors her residuary legatees. Is it not clear that this, bequest was not to these executors as tenants in common, not to them as individuals, but as joint tenants, for the purpose of carrying out this illegal testamentary distribution of her property ? It seems to me that this was the clearly-expressed intention of the testatrix. The will makes no provision as to sharing the property between the executors; contains no provision as to its going to their representatives in- case of their death. It simply says that she gives the property to these persons personally and absolutely, and without limitation or restriction, but "with a full confidence that they will use the property in such a manner as to carry out'her wishes. Those wishes—the only wishes she expressed, and the wishes that these executors have attempted to carry out— was the illegal disposition of the property that she had .attempted in her will. To say that the testatrix intended by this provision to create these executors the owners, as tenants in common, of this property, to be used by them, and to pass to their representatives in the event of their death, would, it seems to me, violate the expressed intention of the testator. If, however, we should feel constrained to hold that these executors took this bequest as tenants in common, I do not think that it would follow that this bequest vested an individual share in each of the executors absolutely, not affected by the trust applied to the share of Mr. Parsons. I think that the principle applied in the case of Bussell v. Jackson, 10 Hare, '206, is applicable, and should be applied. There Lord Justice Turner, then vice-chancellor, said:

“ But, whether Thomas Aston Jackson was present or not, the evidence is, I think, clear that the gift would not have been made to him but for the promise given by William Jackson that the intentions of the testator should be carried into effect; and I fully agree to the principles laid down in Huguenin v. Baseley [14 Ves. 289], followed in many other cases, that no person can claim an interest under a fraud committed by another. However innocent the party may be, if the original transaction is tainted with fraud that taint runs through the derivative interest, and prevents any party from claiming under it.”

This case has been somewhat criticised by Yice Chancellor Wood in Tee v. Ferris, supra, and in several other cases, but the will in the case at bar differs substantially from those discussed in the cases last referred to. In none of these cases has it appeared that the bequest to the persons named was intended as a method of evading a statute or rule of law, but such intention of the testator was found in proof outside of the will. In this case it seems that the intention of the testatrix is clearly expressed in the will. Extrinsic evidence was only necessary to show that that intention had been communicated to one of the legatees prior to the execution of the will, so that the will was executed by the testatrix relying upon an implied or tacit understanding that such intention should be carried into effect. And, when such a tacit or implied understanding obviously related to the disposition of the entire residuary estate to the three executors, its acceptance by either of the executors carried with such acceptance an obligation to comply with that tacit understanding. If Mr. Parsons, when he submitted this will to the testatrix, had said to her, “ I agree that, in case any of these legacies are void, I will apply the property coming to me under this bequest to carrying out your intention with regard to this charitable disposition of your property, and that my co-executors will unite with me in such a disposition of all property that passes to them under this bequest,” could it be said that either of the executors could have accepted the bequest, with knowledge of this obligation made on their behalf and obtained upon such a representation, and repudiate the obligation ? It seems to me clear that they could not; that, accepting the bequest, they would be clearly bound by the conditions upon which it was given, and would ratify the promise made on their behalf. This is just the understanding that the law implies in consequence.of the acts of Mr. Parsons in inducing the testatrix to make this will in question. Hnder the circumstances, the law implies a tacit understanding between Mr. Parsons and the testatrix that this property should go to the executors as executors, not for their own benefit, bnt, although vesting in them individually, should be applied to carry out the intention of the testatrix. That having been the tacit understanding under which the will was. executed, however innocent these two executors may have been of the arrangement between Mr. Parsons and the testatrix, upon accepting the bequest they ratified the understanding between their co-executor and co-legatee and the testatrix which induced the execution of the will; and it is quite evident that this is exactly what the defendants Bartow and Fairchild understood was the condition upon which the bequest to them was made. It is true that they say that they understood there was no “ legal obligation,” but it seems to me clear that they did understand that the testatrix did not intend that they should take this property as absolute owners for their own benefit, but impressed with an obligation or trust to carry out her wishes, and that, when they accepted it upon that condition, they were bound to ajiply it in such a way that it would accomplish that intention.

I also concur with Judge Rumsey in his disposition of the other questions involved, and I therefore think that the judgment entered here should be that the residuary estate of the-testatrix not disposed of by the will should go to the plaintiff, as the executrix of the next of kin. I think I should say, also, that I concur with Mr. Justice Rumsey in saying that these' executors have but too faithfully attempted to carry out the trust that the executrix imposed upon them, and that it was the illegal intent of the testatrix to make a disposition of her property prohibited by law, attempted to be carried into effect by her executors, that in my opinion has rendered their action invalid.


author: WILLIAMS, J.

text:
    Matter of Judicial Settlement of Estate of Jacob W. Morris, Deceased.
    (Supreme Court, Appellate Division, First Department.
    November 6, 1896.)
    Wills—When legacy vests.
    Where testator devised his estate in trust for his wife for her life, . with remainder to his children, or, if he should have no children living at the death of his wife, to the children of his brother, and died without issue, the estate in remainder vested at testator’s death in the children of his brother who were living at that time.
    Appeal from surrogate’s court, Mew York County.
    Judicial settleinent of the accounts of Robert C. Embree as executor of and trustee under the will of Jacob W. Morris, deceased. From certain portions of the decree relating to the construction of the will, Lewis Morris appeals.
    Carl A. De Gersdorff and H. Snowden Marshall, for appellant; Lawrence E. Embree and Charles A. Moran, for respondents.
   WILLIAMS, J.

—The facts were found by the surrogate in the decision, and were not excepted to. They are as follows : The testator died January 1, 1863, leaving a will which was executed November 10, 1859. By this will he gave, devised, and bequeathed to his executors all his real and personal estate, in trust: (1) To receive and pay over to his wife all the net income therefrom during her life. (2) At the death of his wife, to assign, transfer, and set over in fee, all said property to any child or children of his and his wife’s who might then be living, dividing the same equally between them ; such transfer and division of property not to be made, however, until such child or children should arrive, respectively, at lawful age; the income in the meantime, after the death of the wife, to be applied by the executors to the education, maintenance, and support of such child or children. (3) Provided, however, he should not have any child or children by his wife, him surviving, or living at the death of his wife, then he directed his executors to assign, transfer, and set over all the property to the children of his brother, Richard R. Morris, their heirs, executors, and administrators, forever, dividing the same equally between them; the children, however, of a deceased child taking only a parent’s share among them. The testator at his death left an estate consisting entirely of personal property. He left no issue. His wife survived him, and died November 1, 1895. His brother, Richard R. Morris, had four children living at the death of the testator; Helen Morris, Anna Morris,. Mary W. Morris, and Sophia P. Morris, after-wards the wife of Charles D. Rurrill. Helen, Anna, and Mary W. died without issue before the death of the testator’s widow. Sophia P. survived such widow, and is still living. Helen Morris died June 30, 1874, leaving a will executed January 13, 1874, and admitted to probate after her death, whereby, among other things, she gave and bequeathed to the sons of her cousin Charles M. Morris all her right, title, and interest in the property bequeathed to her sisters and herself by Jacob W. Morris, deceased. Lewis Morris, the appellant, is the only surviving son of Charles M. Morris, the cousin of Helen, who made this will. The surrogate decided that the estate of the testator, Jacob W. Morris, did not, under the will in question, vest in the children of his brother, Richard R. Morris, until the death of his widow, and therefore the only person entitled to participate in the distribution of the estate was Mrs. Bur-rill ; that the appellant had no interest therein. Thereupon the decree was made and entered in accordance with the deci sion of the surrogate; and from such decree this appeal is taken.

The question to be determined is narrowed down to the single one whether, under the will, the estate vested in the children, of Richard R. Morris at the time of the death of the testator, or the death of his widow. It is a well-settled rule for the construction -of wills, that, if futurity is annexed to the substance of the gift, the vesting of title is suspended, but if the gift is absolute, and the time for payment only is postponed, the gift is not suspended, but title vests at once. Smith v. Edwards, 88 N. Y. 103; Miller v. Gilbert, 144 N. Y. 73; 64 St. Rep. 41; In re Baer, 87 Hun, 483; 34 N. Y. Supp. 1016, affirmed 147 N. Y. 348 ; 69 St. Rep. 694. And out of this distinction has grown the rule that, where the only gift is in the direction to pay or distribute at a future time, the case will not be ranked with those in which the payment or distribution only is deferred, but is one in which time is of the essence of the gift. Smith v. Edwards and In re Baer, supra; Delafield v. Shipman, 103 N. Y. 463 ; Warner v. Durant, 76 N. Y. 136 ; Shipman v. Rollins, 98 N. Y. 311; Bowditch v. Ayrault, 138 N. Y. 229; 34 N. E. 514. This latter rule is not, however, inflexible or arbitrary, and is to be applied in subordination to the testamentary intention, and not as destructive of such intention. If the language of the will is doubtful, resort must be had to the primary canon of construction,—that the intent of the testator, collected from the entire will, must prevail, and general rules adopted by the court, in and of the interpretration of wills, must give way, where their application in any particular case would defeat such intention. Cases above oiled, and Campbell v. Stokes, 142 N. Y. 29; In re Young, 145 N. Y. 538 ; Fargo v. Squiers, 6 App. Div. 485. And there , is another rule, which was laid down in Packham v. Gregory, 4 Hare, 396, and which has been approved of by the court of appeals of this state (Loder v. Hatfield, 71 N. Y. 92, 100 ; Bushnell v. Carpenter, 92 N. Y. 270 ; In re Young, 145 N. Y. 535, 940,—that, even though there be no other gift in the will than that contained in a direction to pay or distribute in the future, yet, if such payment or distribution appear to be postponed for the convenience of the estate only (as to let in some intermediate estate), the ulterior legatees will take a vested interest at the death of the testator. This rule does not apply to a will where the postponement of the payment or distribution is upon any contingency, but only to a will where the sole object of the postponement is to let in an intermediate estate. This same distinction is embodied in the Revised Statutes,, which provide:

Future estates are either vested or contingent. They are vested when there is a person in being, who would have an immediate right to possession of the lands, upon the creating ■of the intermediate or precedent estate. They are contingent, while the person to whom, or the event upon which they are limited to take effect, remain uncertain.” 1 Rev. St. p. 723, §13.

This provision as to real estate applies also to personal property. Id. p. 773. This rule and this statute are harmonious, and are particularly applicable to this will; and, so applying them, there can be no doubt that this estate was vested at the death of the testator. Whatever contingency existed at the time the will was executed entirely disappeared at the time of the testator’s death. It was certain, when he died, that he left-no children by his wife. The will took effect at the testator’s death, and then the four children of testator’s brother Eichard were living, and the only thing standing between them and the right to possession of the estate was the intermediate life estate of the widow of the testator. Neither the persons to whom, nor the event upon which, their estate was limited, was uncertain. The widow was certain to die, and the persons who were then entitled to the estate were certainly the four children of testator’s brother Eichard. There was no contingency in the case. The estate was therefore, both under the rule referred to, and under the statute, at the time the testator died, a vested, and not a contingent, estate.

We do not deem it necessary to refer to other considerations suggested by the appellant for his contention. The decree is erroneous in the provisions appealed from, and, as to those provisions, should be reversed, with costs ; and, inasmuch as the facts are not in dispute, the proper decree should be directed to be entered by this court in accordance with the views expressed in this opinion.

All concur.


author: RUMSEY, J.

text:
    In the Matter of Application by J. Walter Thompson for Order that Receiver Sell Assets, etc.
    (Supreme Court, Appellate Division, First Department.
    November 6, 1896.)
    Receivers—Levy on assets in hands of.
    Leave will be granted to levy an execution on assets in the hands of the receiver of the execution debtors appointed in an action to dissolve a partnership between them, where the partnership was solvent when the action for dissolution was commenced.
    Appeal from special term, New York County.
    Application by J. Walter Thompson, a judgment creditor of Schloss & Sons, for an order permitting a levy on assets of said Schloss & Sons in the hands of a receiver. The application was denied, and petitioner appeals.
    H. C. Bryan, for appellant; Eugene Van Schaick, receiver, in pro. per.
   RUMSEY, J.

—On the 9th and 12th days of June, 1896, respectively, the- petitioner, J. Walter Thompson, recovered judgments against" Schloss & Sons, a firm doing business in this city, upon which executions were issued to the sheriff of the city and county of New York. On the 20th day of April, 1896, an action was brought in this court by 'William Schloss, one of the firm, for a dissolution of the firm, and an accounting between the partners; and on the same day, upon the consent of all parties, Mr. Van Schaick was appointed receiver pendente lite, and soon after qualified and took possession of the property. In the'complaint upon which the receiver was appointed, it is alleged that the partnership was entirely solvent at the time of the commencement of the action; and the receiver took possession of the property simply to hold it pendente lite until the court could make the judgment to which it should deem the parties to the action were entitled. Upon that state of-affairs, .Thompson, the judgment creditor, moved at the special term that the sheriff have leave to levy upon the assets of the partnership, that he might collect his judgment. The motion was denied, and from the order denying it this appeal is taken.

We are quite clear that the denial of this motion was erroneous. Thompson had regularly recovered judgment, and, by the issue of execution, had taken such steps as were necessary to subject the assets of the firm to the payment of his judgment. If no’receiver had been appointed, it would have been the duty of the sheriff to make the levy, and thus proceed to collect his execution. It is quite true the appointment of a receiver affected that duty to some extent. After that had been done, and the property taken into possession of the court, it was no longer proper for Mm to make a levy upon the property, which had ceased to be in the possession of the judgment debtors, and had come within the protection of the court. But the appointment of the receiver, who took possession of the property pendente lite, in no way changed the title to the property. The title still remained in the partners, who had been the owners of it before the suit was begun. The receiver had no title, strictly speaking, but simply had the right to the possession of the property under direction of the court, until such time as the judgment in the action should make the disposition of it which the law required. The receiver was merely their agent. Keeney ,v. Insurance Co., 71 N. Y. 396, 401. While this is so, he was still an agent appointed by the court within the control of the court; and the property which he had taken into his possession could not be interfered with without permission of the court first given. If the partnership had been insolvent, there is no doubt that the court would not have permitted any creditor to levy upon the property for the purpose of securing a prior lien, but it would have held the assets to be divided equally among the creditors, because in such a case as that equality is equity. The reason is that, where the assets are not sufficient to pay all the debts, it would be manifestly unjust to permit any creditor, not having a lien by contract, to take sufficient of the assets to pay his own debt in full, and thereby deprive other creditors of the right to share pro rata in the property of the firm for the payment of their debts. But no such case is presented here. Here, as it is conceded, the firm is perfectly solvent, and able to pay all its debts. The property is held by the receiver simply for the convenience of the members of the firm, to enable them, at their leisure, to settle their matters between themselves. In such a case as that, it would be manifestly unjust to permit the appointment of a receiver to be used as a means of denying to a creditor of the firm, who had secured a judgment in due course of law, the right to collect his debt. It would be allowing the judgment debtors, in effect, to use the power of the court to hinder and delay their creditors, and thus evade the payment of their just debts. The case of Holmes v. McDowell, 15 Him, 585, is cited as authority for the order made in this proceeding. But the order in that case was put solely upon the ground that the firm was insolvent, and that it would be unjust to permit one person to acquire a lien upon the property to the prejudice of others equally deserving. See page 591.

The principal objection to this motion, however, is that it was not made in the action in which the receiver was appointed. Ordinarily, of course, it is better that motions of this kind should be made in the very action in which the receiver was appointed, and in which the court has taken possession of the fund. Where the parties are insolvent, and the right to share in the property requires* the marshaling of assets, it is necessary that the application should be made in the action in which the receiver was appointed, for there only is it practicable to settle the rights of all parties who may be entitled to share in the fund, But there are no such rights to settle in this case. It is conceded that the property is amply sufficient to pay every debt, and that there will be a large surplus after that is done. All that is necessary here is that the receiver should have notice of the application, that he might come into court, and show any reason, if there were any, why it should not be granted. The parties to the action, the judgment debtors, had no right to notice. The receiver having had his day in court, and not being able to show any reason why he should be permitted to retain this property against a person who has been adjudged to be a creditor of the firm, the relief asked for should have been granted.

The order appealed from must be reversed, with $10 costs and disbursements, and the motion granted, with $10 costs, giving leave to the sheriff to levy, pursuant to his execution, upon the assets of the firm of Schloss & Sons in the hands of the receiver, precisely as though they were still in the possession of the judgment debtors.

All concur.


text:
    Louis E. Bomeisler v. Elsa Forster.
    (Supreme Court, Appellate Term, First Department.
    November 6, 1896.)
    1. Injunction—Restraining action at law.
    An action at law will not be enjoined, on the ground that plaintiff therein had executed a release for a valuable consideration, since such release, if fairly obtained, is a complete defense to the action at law.
    2. Same—Temporary injunction—Effect of decision. ■
    A decision granting a temporary injunction is not an adjudication as to the right to a permanent injunction, where the facts alleged in the moving papers were not proved on the trial.
    Appeal from superior court of New York City, special term.
    Action by Louis E. Bomeisler, as executor of the will of Salvatore Cantoni, deceased, against Elsa Forster, for an injunction. There was a judgment in favor of plaintiff, and defendant appeals.
    Samuel H. Randall, for appellant; Charles W. Brooke, for respondent.
   RUMSEY, J.

—This action was brought to restrain the defendant from prosecuting an action which she had brought in the superior court of tiie city of New York against Cantoni, who was the original plaintiff here, or from bringing or prosecuting any other action or proceeding in law or equity against him upon the cause of action set out in the pending action in the superior court, to procure judgment declaring a release given by the defendant to him a perpetual bar against all such actions, and to restrain the defendant from in any manner prosecuting, harassing, importuning, communicating with, or annoying him personally or by procurement or otherwise, orally or in writing, by virtue of certain matters which were set out in the complaint. It appears from the complaint that the defendant claimed that she had been induced by Cantoni, several years before, to procure a divorce from her husband, and to live with him as his wife; that she had lived with him for several years; that she had had by him four children, of whom two were living; that she had received from him, while she so lived with him, $5,000 a year for her support; that he had made to her a promise to marry her, which was the inducement for her- to live with him as she did; that he had become tired of her, and turned her off, with her children, leaving her without support, and refused to perform his promise. It is fair to infer from the testimony in the case that these facts were, to a very considerable extent, true. Indeed, it was assumed all through the case that, while they were denied by Cantoni, there was no substantial question as to their accuracy. It appears that, after the relations between Cantoni and the defendant had ceased, she was induced, upon payment of the sum of $60, to execute to the plaintiff a release of all causes of action Avhich she might haAm, and especially of those groAving out of her claim against Cantoni by reason of his failure to keep his agreement to marry her. This release was dated on the 21st day of May, 1892. The defendant claims that the release was procured by fraud. After she had made it, and on the 31st day of May, 1892, she brought an action against Cantoni, the original plaintiff here, for damages groAving out of his failure to perform his promise to her. After this action was begun, various negotiations took place betAveen the parties for a settlement, and the result Avas that on the 2d of June there Avas paid to the attorneys for the plaintiff (the defendant herein) the sum of $5,000, and an agreement Avas made that the action commenced on the 31st of May should be discontinued; that Mrs. Forster should sign various affidavits, which Avere draAArn up for her by the attorney for the plaintiff in this action, admitting aAvay her rights in the action Avhich she had brought, and that she should go to California, and there remain, and that she should no longer trouble Cantoni. It was also stated that, as a further consideration for the payment of the money, Mrs. Forster agreed that she would never commence any suit ivhateArer on any cause of action she had, more particularly referring to the claim she set up against Cantoni for being the father of her children, and for having induced her to get a diArorce from her former husband, and for the alleged promise to marry her, and the housekeeping claim. The defendant Avent to California. After she got there, she received her $5,000. She remained there until the month of March, 1894, Aihen she returned to this city, and began another action against Cantoni, alleging substantially the same facts as had been set up in her action of 1892. Thereupon Cantoni brought his action, asking for the relief mentioned in the former part of this opinion. Upon the trial the plaintiff succeeded, and judgment Avas entered, giving him substantially all the relief that he asked for. It is from that judgment that this appeal is taken. After the trial of the action Cantoni died, and his executor was substituted as plaintiff.

An examination of the record shows various errors in the rulings of the court in the admission of evidence, which would be sufficient, if there were no other reason, to require the reversal of tills judgment and the granting of a neAV trial. But vve are not disposed to put our decision upon the ground of errors occurring upon the trial in the admission of evidence. In our judgment, the facts proved upon the trial, giving them their very broadest effect, are not sufficient to entitle the plaintiff to any judgment in this action, and the complaint should have been dismissed upon the merits. It may be that the complaint, taking all its allegations together, set out a sufficient cause of action in equity to entitle the plaintiff, if he had ¡moved those allegations, to a judgment forbidding the defen* clant from importuning or harassing him by reason of the facts which she alleged against him. But the allegations of the complaint were not proved upon the trial. All that appeared upon the trial was that Mrs. Forster claimed to have a cause of action against Cantoni; that she had been induced- by the payment of $60 to release that cause of action, and all oí it; that, after the release had been executed, she, claiming that it had been procured from her by fraud, began a suit to enforce the cause of action, which was apparently covered by the release;, that afterwards, by the payment of a substantial consideration, she was induced to discontinue that action, and to" promise again that she would not sue Cantoni upon that or any other cause of action ; and that afterwards, in defiance of that agreement, she did commence another suit upon the same cause of action. No proof was made upon the trial that she had in any other way harassed Cantoni; that she had followed him to his place of business, or approached him in the street, or importuned him for relief; but the plaintiff’s case, when the evidence closed, stood solely upon the fact that a suit had been, begun against Cantoni after Mrs. Forster had executed a release of the cause of action. This release was a perfect defense to the action which was begun in March, 1894. It is well settled that legal proceedings will never be enjoined on grounds of which the person aggrieved may avail himself in defense of the action at law. .The rule is practically without exception, as laid down in Beach, Mod. Eq. Jur. § 654, that “ a court of equity will not interfere to enjoin a pending or threatened suit at law to which there exists a perfect legal defense, or where the ground for relief is as equally available at law as in equity. And if the matters of defense are equally available in the court of law, the fact that they are complicated, and more difficult of presentation there, is not sufficient reason for the interference of equity.” See, also? High, Inj. §§ 89, 90. There can be no doubt that the execution of this release, if itwás fairly obtained-from Mrs. Forster without fraud, was a. perfect defense, not only to the action begun in 1892, but also to that begun in 1894, to restrain which this action in equity was brought. The case is precisely within the rule laid down as above ; and for that reason, when the evidence was closed, it was the duty of the court at special term to dismiss the complaint. The case of Baker v. Hawkins, 14 R. I. 359, is not at all in point. In that case the plaintiff was permitted to maintain- his action in equity upon the sole ground that it would •thereby prevent a circuity of action, because the defense which he had to the action at law could not be presented in that case, and was solely cognizable in equity. The case of Wright v. Fleming, 76 N. Y. 517, which is cited by the respondent as a decision in his favor, is directly the other way. It was held there that the allegations of the complaint upon which the court was asked to restrain the proceedings before the surrogate because of iho execution of the release, were not sufficient 'to'.warrant the ¡injunction or to constitute a cause of action, •and that the -.complaint should have been dismissed. We cannot understand -how the learned counsel for the respondent could have been so misled as to assert that the complaint in that action was held to be sufficient. But it is said that the decision upon the motion for a preliminary injunction should .be .regarded as an -adjudication in the plaintiff’s favor in this case. The mde is well settled that in actions in equity, where •an injunction Is-asked for, the granting of a preliminary injunction upon affidavits -will not be regarded as res adjudicata when the ease comes to be tried. Banks v. Society, 4 Sandf. -Cb. 438. All that could have been decided upon that motion ■was that, upon the facts stated in the complaint and the moving affidavits, it was proper for the court to exercise its discretion to restrain Mrs. Forster, during the pendency of the action, from doing any of the acts which it was alleged she threatened to do, and which it was plain would, if done, have been a serious injury to the plaintiff. It was alleged in the motion papers upon that motion that Mrs. Forster threatened to follow the plaintiff to his place of business, and there openly accuse him of committing the acts which she had alleged in her complaint lay at the foundation of her cause of action, and to stand upon the sidewalk threatening and importuning him and harassing him, -and to go to his place of business, and sit upon his doorstep, and accuse him of all those acts, and to harass him until such time as she could get money from him. It was because of those allegations that it was proper to grant a preliminary injunction restraining the commission of those acts, and it was perfectly proper, in the discretion of the court, when it was alleged that such acts were threatened, not only to require Mrs. Forster to refrain from doing those acts, but also to restrain her from the future prosecution of the action at law until the truth of the allegations of the plaintiff set up in this action could be examined. But the adjudication in that case goes no further than a holding that, if all the facts alleged upon which the injunction was granted were proven, they would constitute a good cause of action, and a good reason for granting a temporary and preliminary injunction. They were not proved upon the trial, and for that reason the decision upon the motion for a preliminary injunction lost its weight as an adjudication. Upon the trial, the only thing that was proven, as we have already stated, was that a release had been given, which, if valid, was a perfect defense to this action; that there had been an agreement not to sue, upon sufficient consideration, which, if valid, was also a defense to the action; and that it was claimed by Mrs. Forster that each of those papers was procured from her by fraudulent statements, and without explaining to her the effect of them. This clearly presented an issue which might have been tried in the action at law, and which should have been presented to a jury. It is not necessary that we should comment upon the remarkable state of facts presented by the testimony and the affidavits in this action. They are alike discreditable to all parties who are connected with them. It is sufficient to say that, giving the facts proved by the plaintiff the greatest weight that they are entitled to, and disregarding all errors in the admission of evidence committed upon the trial to the detriment of the defendant, the plaintiff did not establish a cause of action entitling him to the relief that he demanded.

The judgment of the special term should therefore be reversed, with costs, and judgment ordered for the defendant dismissing the complaint, with costs, and permitting her to try in the action at law the truth of the facts which she has alleged, and the validity of the release and agreement which is set up as a defense to them.

All concur.


author: INGRAHAM, J.

text:
    John Schantz v. Waller Oakman et al.

    (Supreme Court, Appellate Term, First Department.
    November 13, 1896.)
    Accounting—Action for—Pleading.
    A cause of action for an accounting is not stated by a complaint which alleges that plaintiff had an option for the purchase of the stock of certain street railroads, that defendants owned the stock of a certain other railroad, that the parties desired to form a new corporation by which their interests might be united, that in consideration of mutual covenants and agreements plaintiff undertook to deliver to the new company the shares of stock controlled by him, and that the stock of defendant’s company should be turned into the treasury of the new company, but which complaint does not allege that either party agreed to procure the organization of the new company, or that it was in fact organized.
    Appeal from special term, New York County.
    Action by John Schantz against Walter Oakman and others for an accounting. From an interculoctory judgment sustaining demurrers to the complaint, plaintiff appeals.
    John McCrone, for appellant; S. B. Clarke, for respondents Oakman and Ryan; Lloyd McK. Garrison, for respondent Yillard.
   INGRAHAM, J.

—Two demurrers were interposed to the complaint,—one on behalf of the defendants Oakman and Ryan, which stated three causes of demurrer, one being that the complaint does not state facts sufficient to constitute a cause of action,—and also a demurrer interposed by the defendant Yillard, alleging four distinct causes for demurrer, the fourth being that the complaint does not state facts sufficient to constitute a cause of action. The issues of law raised by these demurrers wmre sustained by the special term upon the ground, as appeared by the opinion of the learned judge, that the complaint did not state facts sufficient to constitute a cause of action against either of the defendants. As to the defendant Villard, it is quite clear that no cause of action either at law or in equity, is alleged. He is not alleged to have been a party to any agreement as between this plaintiff and the defendants Oakman and Ryan. It is not alleged that he has in his possession any property in which this plaintiff has any interest, nor is any fact alleged that would entitle this plaintiff to compel him to account to the plaintiff, or which would create any liability in favor of the plaintiff against him. Whatever rights the plaintiff acquired as between himself, Oakman, and Ryan, could only be enforced against Oak-man and Ryan, and in such an action it is quite clear that Villard has no interest. The judgment, so far as it sustains Villard’s demurrer, is clearly right, and should be affirmed.

The demurrer of the defendants Oakman and Ryan presents-a somewhat different question, and requires a short analysis cf the complaint. It is well to keep clearly in mind, kon ever, that the action is in equity, and asks that an account be taken of all the transactions and dealings of the defendants, and each of them, and of all the moneys received and paid by them, respectively, in relation to the business prosecuted by the said defendants for consolidating certain street railway companies in the city of Milwaukee, and that the amount which may be found to have been acquired and received by, or which became payable to, the defendants Oakman and Ryan as profits of the said business should be adjudged to be the property of Oak-man and Ryan and this plaintiff jointly, and that the plaintiff recover his share thereof. No judgment of any kind is asked as against Villard or Payne, but an accounting is asked as to all of the moneys received by Oakmán and Ryan as profits. No cause of action is alleged to recover the damages sustained for a breach of any contract made between plaintiff and Oakman and Ryan. The plaintiff does not claim that any such action for damages is alleged, or insist upon his right to maintain this action as an action for damages. This action will therefore be treated upon this appeal as an' action for an accounting in equity, and the question determined will be whether or not, upon the allegations of the complaint, the plaintiff is entitled to such equitable relief.

The complaint alleges that prior to October 16, 1889, the plaintiff was in possession and the owner of certain rights and privileges for the purchase and delivery and transfer to him of-a large majority of the shares of the capital stock of certain companies or corporations operating street railroads in the city of Milwaukee, and that the defendants Oakman and Ryan were the owners of a majority of the shares of the capital stock of the Milwaukee City Railroad Company, a corporation operating a street railroad in the city of Milwaukee. The complaint then alleges that the defendants Oakman and Ryan, being desirous that there should»be formed a new corporation, to be known as the Consolidated Company, and that there should be a union of interest betive.en.tkek plaintiff and the? said, defendants, an agreement was entered inho, between this pMhtiff; and said defendants Oakman and. Ryan*, the object and intent; of which is expressly stated to- be the promotion of the- interests of said Consolidated Company.. The. agreement is. not, set out in full, but its substance-is, alleged- The consideration! .is stated to be mutual covenants, and agreements to do> and refrain from doing the things and acts, therein specified ^ and the: plaintiff undertook “to arrange-to deliver-to the said Consolidated Company the entire capital stock of the said Milwaukee Railroad Company controlling its railroad property and franchises, free from any mortgage liens,, free of any contract, for construction, or other expenditures, and free of any claims upon said stock or property upon the part of one Hinckley or other persons.” This is the only provision of the' contract by which either of the parties expressly agreed to, do> any particular thing. The complaint then alleges that, in- addition to, this obligation of the plaintiff,, there were certain other provisions, which provided that the Milwaukee City Railroad Company and the' Milwaukee Cable Railroad Company were to-maintain and operate their respective properties j that the stockholders of the Milwaukee City Railroad Company were to turn into the treasury of the Consolidated Company the capital stock of said Milwaukee City Railroad Company ; that tke-MR~ waulcee Cable Railroad Company were to issue bonds, secured by a mortgage upon its property, to an amount specified, which were also to he turned over to the Consolidated Company, which company was also to make certain payments to other persons named, with a provision that the Consolidated Company, which had not been incorporated, and which, so far as appears, no one agreed to have incorporated, was to issue certain stock ; and that plaintiff and his associates were to refrain, from undertaking any street-railway enterprise to conflict with the interests of the said Consolidated Company.

■This is the contract that is alleged, and from its form, as alleged, it would appear that all of these provisions, except that in relation to the obligation of the plaintiff to deliver to the Consolidated Company the entire capital stock of the Milwaukee Cable Railroad Company, were executory in their nature, and contemplated the execution of further agreements to carry them into effect. Be that, however, as it may, there was no express obligation on the part of these defendants, any more than there was on the part of the plaintiff, to organize or have incorporated the Consolidated Company, or to procure that the other corporations named, or their stockholders, would do and perform the acts provided for in this contract. There was certainly no greater obligation upon the defendants Oak-man and Ryan to organize the Consolidated Company than there was upon the plaintiff, and the complaint expressly alleges that the said company was never organized or incorporated, and the obligation to turn over to said company the entire capital stock of the Milwaukee Cable Company was never performed by the plaintiff. The carrying out of this contract depended entirely upon the organization of the Consolidated Company, the sole object of the parties to the contract being that there should be formed a new company, to be known as the Consolidated Company, and that the interests of such Consolidated Company, should be promoted. Yet the agreement is silent as to the persons who are to organize such company, and before the contract could become in any way effectual, or «capable of being enforced, the incorporation of such new company was necessary. It thus appearing that the new corporation (the sole object of the contract being to promote its interests) was never in fact organized, the plaintiff therefore never became entitled to the only interest that undep the contract lie ever ivas to become entitled to, namely, $300,000 of the f ully-paid capital stock of such Consolidated Company. We are not here dealing with a cause of action for a breach by the defendants of their contract or obligation, if any there was, to organize this new company, or to cause to be paid to plaintiff a portion of the capital stock in the new company which he was to receive. But what plaintiff asks in this action is that the defendants should account to him for subsequent transactions in relation to railroads in the city of Milwaukee, and pay to him a moiety of any profits that they may have realized in consequence of their dealings in relation to such railroad companies with others. Mow, it seems to us entirely clear that nothing in this contract, as alleged in the complaint, •created any partnership or joint adventure between the plaintiff and the defendants Oakman and Ryan, or any relation between them which would entitle the plaintiff to claim that all that Oakman and Ryan subsequently did in relation to street railroads in the city of Milwaukee was-part of the business which said co-partnership or joint adventure was organized to carry out. There was no agreement for a division of profits resulting from a partnership or joint adventure; no property in which the parties were to have a joint interest. What appears to have been contemplated by the contract Avas the formation of a neAAr •corporation, to Avhich Avas to be transferred certain properties, and of the capital stock of Avhich this plaintiff Avas to be entitled to a certain portion in full-paid stock. That corporation Avas never organzied. If there was any liability for such a failure to organize that corporation, in consequence of AAdiich qdaintiff sustained damage, his proper remedy is an action for ■damages against the -person or persons aaTlo Avere bound to organize the corporation, and in consequence of Avhose default he lost AAdiat he Avould have gained had the contract been carried out. Upon no principle that Ave can discover is the plaintiff authorized to call upon any one for an accounting as to operations or other adventures haAÚng no relation to this company, and in Avhich this plaintiff had no interest. The question hiere presented Avas exa,mined by thp learned judge at special term, and we might well have rested our affirmance of his judgment upon his opinion. We wish, however, to emphasize the distinction between an action in equity brought by the plaintiff,, and an action, upon the allegation of proper facts, to recover damages for a breach of a contract, and to hold on this appeal that upon the allegations of this complaint the plaintiff is not entitled to maintain this action against these defendants, or either of them, for an accounting, and that in the absence of any allegation that these defendants, or either of them, violated any contract, the plaintiff would not be entitled to maintain any action for damages.

We think, therefore, that the judgment below was clearly right, and it should be affirmed, with costs, with leave to the plaintiff, upon payment of the costs of appeal and costs of the court below, to amend his complaint, if so advised.

All concur.