author: Andrews, J. YaN BRUNT, P. J.: O’BbieN, J.:

text:
    HERMAN WRONKOW, Respondent, v. HOBART OAKLEY and Others, Defendants. In the Matter of the Petition of CHARLES WOLFF, Appellant.

      Foreclosure — when a purchaser will he relieved from his hid — conveyance of an inchoate right of dower under a power of attorney — reasonable doubt as to the title.

    Upon a motion by one Wolff, a purchaser of certain land at a mortgage foreclosure sale, that he be relieved from the purchase, it appeared that, in 1881, Cecilia, wife of Moritz Bauer, gave to her husband a power of attorney, which was duly acknowledged and recorded at the time, by which she authorized him to convey all lands belonging to her, individually or jointly with another, and to make “all necessary or proper contracts, deeds, conveyances, releases, releases of dower and thirds, and right of dower and thirds, or other instruments for the conveying, surrendering and relinquishing all or any part of my estate, right, title and interest, whether vested or contingent, choate or inchoate, therein.”
    Moritz Bauer became owner of the equity of redemption in the premises in question, by deed dated October 4, 1890, and on October twentieth, as an individual and as attorney for his wife, he conveyed them. Cecilia Bauer was not made a party to the action of foreclosure, the purchaser at the sale under which objected that she had an outstanding right of dower in the premises.
    'The Revised Statutes ([8th ed.], p. 2456, § 16) provide that no act of a husband shall prejudice the right of the wife to her dower unless the wife joins in the conveyance.
    ■Chapter 300 of the Laws of 1878 authorized a resident married woman of age to make a power of attorney, “ with like force and effect and in the same manner as if she were a single woman.”
    Chapter 249 of the Laws of 1879 abolished the rule requiring a private examination of a married woman upon her acknowledgment of a written instrument.

      JSeld, that the purchaser should not be compelled to complete his purchase, the matter being in reasonable doubt.

      That it was, under all the statutes, a doubtful question whether a wife could, even now, release an inchoate right of dower by an attorney acting under a power of attorney from her.
    That it was not clear that the language of the power, executed in 1881, would cover property which the husband did not buy until 1890. (Per O’Brien, J.)
    That, strictly construed, the power applied only to the lands of Cecilia Bauer, and not to the lands in question, which belonged to Moritz Bauer. ■ (Per Van Brunt, P. J.)
    That it was not certain that a wife could constitute her husband her attorney to release dower. (Per O’Brien, J.)
    That it was a serious question whether chapter 300 of the Laws of 1878 related to any acts except such as were connected with the separate estate and business of a married woman. (Per O’Brien, J.)
    Andrews, J., dissenting.
    Appeal by Charles Wolff, petitioner and the purchaser of the premises in question, from an order of the Supreme Court, made ou the 22d day of March, 1892, denying his motion to be relieved from his bid at the sale, in this action, of mortgaged premises.
    The dissenting opinion of Judge Andrews precedes those of Yan Brunt, P. J., and O’Brien, J., as the facts are fully stated in the former opinion.

      Glover, Sweezy <& Glover, for the petitioner, appellant.

      D. Solis Ritterband, for the plaintiff, respondent.
   Andrews, J.

(dissenting):

The action was brought to foreclose a purchase-money mortgage for $5,000, dated September 2, 1890. It was commenced October 22, 1891, and judgment of foreclosure and sale was entered December 22, 1891. By the terms of the judgment the premises ■were directed to be sold subject to a lease expiring May 1, 1898, and to a first mortgage for $17,019.22. The property was sold at auction on January 21, 1892, and the petitioner, Charles Wolff, was the purchaser for the price of $5,600 over and above the incumbrances above-mentioned; and said petitioner paid to the referee $560, ten per cent on the amount of his bid, together with the auctioneer’s and exchange fee, and signed the usual terms of sale. Subsequently, a motion was made by the petitioner to be relieved from his purchase, and from the order denying such motion this appeal is taken.

It appears that one Moritz Bauer became the owner of the equity of redemption of the mortgaged premises by deed from Hobart Oakley, dated October 4, 1890. By deed dated October 20, 1890, executed by said Moritz Bauer in his own behalf, and also executed by said Bauer in the name of his wife, Cecilia Bauer, as her attorney, in fact, such equity of redemption was conveyed to one Randolph Guggenheimer. The power of attorney, under which said Bauer acted as the attorney of his wife, was executed and acknowledged by her, and recorded in the year 1881. It describes both the parties thereto as being of the city of New York, and so, likewise, does the deed to Guggenheimer. Said power authorizes said attorney to contract for the sale of and to grant, bargain, sell and convey all or any lands, tenements or hereditaments or real estate to me belonging, situate, lying and being within the United States of America, whether belonging to me, individually, or jointly with another, or others, at public or private sale, for cash or upon credit, or partly for cash and partly upon credit, and for such price or prices, and upon such other terms and conditions as to my said attorney may seem meet and proper; and for the purpose aforesaid and in my name, place and stead, as my act and deed, to sign, seal, execute and acknowledge and deliver all necessary or proper contracts, deeds, conveyances, releases, releases of dower and thirds, and - right of dower and thirds, or other instruments for the conveying, surrendering and relinquishing all or any part of my estate, right, title and interest, whether vested or contingent, choate or inchoate, therein.” Mrs. Bauer was not made a party to this action.

It also appeared that certain persons had obtained judgments against Moritz Bauer prior to the time that he acquired title to the property in question, and which, by orders of court, made also prior to Bauer’s acquisition of title, had been marked lien suspended ” or “ partially suspended upon appeal,” and that such persons were not made parties to this action.

The objection to the title, based upon the failure to make the wife of Moritz Bauer a party to the action, presents the questions — (a) of the power of a resident married woman to release her dower by attorney; (5) of her right, if she has such power, to make her husband her attorney for such purpose ; and (e) whether the power of attorney, if otherwise valid, authorized the release of the wife’s dower in after-acquired property and for a nominal consideration. These questions are important, because the decision of them not only affects the title of the property in question, but may affect many other titles.

The Revised Statutes of this State Contain the following provision: “No act, deed or conveyance, executed or performed by the husband, without the assent of his wife, evidenced by the acknowledgment thereof, in the manner required by law to pass the estates of married women, and no judgment or decree confessed by or recovered against him, and no laches, default covin or crime of the husband, shall prejudice the right of his wife to her dower or jointure, or preclude her from the recovery thereof, if otherwise entitled thereto.” (4 R. S. [8th ed.], 2456, § 16.)

It has been decided by the courts of this State that the only way in which a wife can release her dower during the life of her husband, is by joining with him in a conveyance to a third person. (Carson v. Murray, 3 Paige, 483; Elmendorf v. Lockwood, 57 N. Y., 322; People v. Knickerbocker Life Ins. Co., 66 How. Pr., 115; Ford v. Knapp, 31 Hun, 522.) It has also been held by the courts of other States, under statutes similar to our own, that the wife must execute the release herself, and that she cannot release by power of attorney. (See Am. and Eng. Ency. of Law, vol. 5, p. 914, and cases there cited.) In 1878, however, the legislature of this State passed the following statute:

“Any married woman, being a resident of this State and of the age of twenty-one years or more, may execute, acknowledge and deliver her power of attorney, with like force and effect and in the same manner as if she were a single woman.”

The question presented for decision is whether, assuming that prior to the passage of this statute a married woman could not release her dower through an attorney in fact, this statute has authorized her to do so. It is suggested that the statute does not authorize a married woman to release her dower through an attorney, because the act provides that she may execute, acknowledge and deliver her power of attorney, with like force and effect, and in the same manner as if she were a single womam,; and that the legislature, in assimilating the case of the wife to that of a single woman, could not have intended to authorize the former to act through an attorney in any matter in which the latter could not do so; and that as a single woman cannot, of course, ever be vested with such an estate, and cannot, therefore, appoint an attorney for the purpose of releasing dower, therefore, a married woman cannot do so. We think this is too narrow an interpretation of the statute. It is a general maxim of the law that whatever a man, sui juris, may do^ of himself, he may do by another; and the same maxim applies, of course, to a single woman. We think that the true interpretation of the statute is, that just as a single woman can appoint an attorney to perform any act, which she herself can do, so any act, which can be done by a married woman of herself, can be done by her duly appointed attorney; and as a married woman can release her dower by joining with her husband in a conveyance of the property to a third party, she may perform that act through an attorney.

It may be said that as the legislature originally prescribed a particular way in which a married woman could release her dower, such special provision of the Revised Statutes should not be considered as modified or affected by the general provisions of the above-quoted act of 1878, which does not, in terms, refer to the release of dower, and which authorizes a power of attorney to be acknowledged in the same manner as if the woman executing the power were single. There would be force in this objection if the law in relation to acknowledgments of deeds and other instruments by married women had remained as it was when the Revised Statutes were adopted. It was provided in those statutes that the acknowledgment of a married woman, residing within this State, to a conveyance purporting to be executed by her, should not be taken unless, in addition to the requisites required in the case of other persons, she acknowledged, on a private examination apart from her husband, that she executed such conveyance freely, and without any fear or compulsion of her husband. And the provision of the Revised Statutes above quoted, in regard to conveyances releasing the right of the wife to her dower, provided that the assent of the wife must be evidenced by the acknowledgment thereof, in the manner required by law to pass the estates of married women.

It appears to have been considered by the legislature that these provisions in reference to the manner in which conveyances executed by married women should be acknowledged, afforded great protection to them; but whether such oqtinion was, or was not, well founded, such provisions have been entirely swept away by later legislation; for, in 1879, the legislature passed the following statute, which was amended by chapter 300 of the Laws of 1880: “ The acknowledgment by married women, or the proof of the execution by married vromen, of deeds or other written instruments, may be made, taken and certified, in the same manner as if they were sole; and all acts and parts of acts which require for them any other or different acknowledgments, proofs or certificates thereof are hereby repealed.” (4 R. S. [8th ed.], p. 2487.)

As above stated, under the said act of 1878, acknowledgments of powers of attorney could be made by married women as if they were single; but under said act of 1879, all acknowledgments of married women of the execution of deeds and other written instruments can now be made, taken and certified, in the same manner as if they are single, and the protection — if it was any protection— of married women, in regard to their dower rights, and other rights in real property, afforded by the provisions as to private examination, has been entirely taken away ; and, so far as the protection of such rights is concerned, it can make no possible difference whether the married woman releases her dower by joining with her husband in a conveyance, or whether she releases the same through an attorney appointed by her for that purpose. Nor do we perceive any good reason whatever why a married woman may not as well appoint an attorney to execute a deed, which releases her dower rights, as to execute such deed herself. The reason of the rule ceasing, the rule itself fails; and we think that the objection is not well taken.

The second question raised is, whether, if a married woman has the power to appoint an attorney to release her dower, she can make her husband her attorney for such purpose.

We do not think this objection is well founded. It has been held that husbands and wives may legally contract with each other in reference to their separate estates (Owen v. Cawley, 36 N. Y., 600; Bodine v. Killeen, 53 id., 93); that they may become agents for each other [Knapp v. Smith, 27 N. Y., 277); that a husband may assign to his wife a chose in action (Seymour v. Fellows, 77 N. Y., 178); and it lias very recently been held that the common-law disability of a married woman to engage in a business, as a copartner, or jointly with her husband, was removed by chapter 90 of the Laws of 1860. (Suau v. Caffe, 122 N. Y., 308.) Under these decisions, if a married woman can- release her dower rights through an attorney, as we think she can, we are of the opinion that she can appoint her husband such attorney.

The third question raised is as to whether the power of attorney given by Mrs. Bauer to her husband gave him the right to convey property acquired after the execution of such power. The power in question authorized Mr. Bauer to sell and convey all or any lands belonging to Mrs. Bauer situate within the United States. There is nothing whatever in the power which restricted it to lands belonging to Mrs. Bauer at the time the power was executed, and we think that it covers lands subsequently acquired.

Another objection to the title is that certain judgment-creditors should have been made parties to the action.

On April 10, 1889, one King recovered a judgment in the Court of Common Pleas for $2,299.54. On June 12, 1889, an appeal was tgken from said judgment to the General Term, and, upon the consent of the plaintiff and the sureties upon the appeal bond, the judgment was marked “ Lien suspended on appeal,” and upon the record in the county clerk's office, where the judgment had been docketed, a similar entry was made. On February 5,1890, a judgment of the General Term was entered, affirming the above-named judgment, and for $117.67 costs. Subsequently an appeal was taken from said last-mentioned judgment to the Court of Appeals. On July 2, 1890, an order was entered suspending the lien of both judgments as to property on which said judgments were or might become liens / this order was .entered by consent of the American Surety Company. On December 3, 1891, the lien was restored by proper entries in the judgment-book, and on December 4, 1891, both judgments were assigned to the American Surety Company. Moritz Bauer took title to the property in question on October 4, 1890, and conveyed the same on October 20, 1890.

The order entered on July 12,1889, directing that the lien be suspended on appeal, did not, in terms, apply to after-acquired property. It is not necessary for the purposes of this appeal to decide, and we do not now decide, whether, under the various provisions of the Code in reference to the suspension of the lien of judgments on appeal, this order suspended the lien of the judgment as to property acquired by Bauer after it was entered. It is not disputed that the order entered, suspending the lien upon the original judgment, and upon the judgment for costs, at the General Term, was entered upon the consent of the American Surety Company that such lien should be suspended, not only as to property upon which the judgments were then liens, but as to after-acquired property. It is also undisputed that on February 4,1891, both judgments were assigned to the American Surety Company, and that that company only can raise an objection as to the regularity, of the foreclosure so far as relates to said judgments; and that company is estopped from raising such question by reason of the consent above mentioned.

Some question is also raised in regard to judgments recovered by one Healy; but, by an order of this court, entered, on consent of the plaintiff.\ all the real property of Moritz Bauer (with an exception which does not include the property in suit), upon which said judgments were, or might thereafter become, a lien, was exempted from the liens of said judgments; and such exemption remained in full force at the time of the recording of plaintiff’s mortgage and at the time of filing the notice of Us pendens herein.

We are of the opinion that it was not necessary that either of the judgment-creditors above mentioned should have been made parties to the action, and that the order appealed from should be affirmed, with costs.

YaN BRUNT, P. J.:

I dissent from the foregoing opinion upon the ground that the power of attorney did not authorize the' executions of the release of dower. Mr. Justice Andrews correctly states that the power authorized the conveyance of any and ail lands belonging to Mrs. Bauer, and that it applies to lands subsequently acquired as well as those owned at the time of the execution of the power, but the lands in question never belonged to Mrs. Bauer, but to her husband, and she had no estate in them, simply an inchoate right of dowel’. By the power, full authority is given to convey lands belonging to the donee of the power, but nothing more. It is true tbat the attorney is authorized to execute releases of dower, but only for the purposes aforesaid, viz., to convey lands belonging to-Mrs. Bauer.

The words “ releases of dower ” have no relation to the power as. granted, and hence are surplusage.

Even if this were not clearly so, it cannot be said that the question is free from reasonable doubt, and lienee a purchaser should not be compelled to take, as Mrs. Bauer is not bound by our adjudication.

I think, however, that there is much more than a reasonable doubt and that, under a power to sell and convey the estate belonging to a married woman, a release of dower cannot be executed.

O’BbieN, J.:

Apart from the objection that certain judgment-creditors should have been made parties to the foreclosure suit, three others are presented against the validity of the title based upon the failure to make the wife of Moritz Bauer a party, presenting three questions thus-formulated by Mr. Justice ANdebws :

First. Of the power of a resident married woman to release her dowry by attorney.

Second. Of her right, if she has such power, to make her husband her attorney for such purpose.

Third. Whether the power of attorney, if otherwise valid, authorizes the release of the wife’s dower in after-acquired property and for a nominal consideration.

Upon this appeal from an order refusing to release a purchaser at a judicial sale, it is not necessary, in order to relieve a purchaser, that all the questions should be decided in his favor, the rule being, that if the questions of law presented are of so serious a character, as renders it improper for the court to pass upon them in the absence of persons interested therein, he should not be compelled to take the title. In other words, where doubtful and debatable questions of fact and law exist, which, for their final determination, require the presence of other parties, the court will not, in the absence of such parties, make a determination for the purpose of compelling a person to specifically perform a contract to purchase land.

HuN — Yol. LXIY 29

In respect to the first of these questions, as to the power of a resident married woman to release her dower by power of attorney, it seems reasonably clear that no such right would exist were it not for the statutory authority which it is claimed exists by virtue of chapter 300 of the Laws of 1878. The serious question, however, presented under this section is as to whether it relates to acts other than those connected with her separate estate and business and can be construed into a repeal of all prior provisions, specifying the manner in which she may execute a power of attorney. This precise question has never been passed upon, and, having in view the peculiar nature of a wife’s inchoate right of dower and the various statutes passed in relation thereto, I cannot but regard it as a serious and doubtful question. Assuming, however, that a wife can make her husband attorney for such purpose, the other question is presented, as stated by Mr. Justice YaN Bbunt, as to whether the terms of the power of attorney and the conditions thereof have been complied with.

The power itself is open to the construction that it refers and relates only to property then owned, and did not cover or include interest acquired after the granting of the power. I think, upon a judicial sale, a purchaser is entitled to a marketable title free from reasonable doubt, and such I do not think was the one tendered to the purchaser here, and having made his application to be relieved, it should, under the circumstances, have been granted.

I think, therefore, that the order appealed from should be reversed, with ten dollars costs and disbursements, and the application of the purchaser, of an order to be relieved, should have been granted.

Order reversed, with ten dollars costs and disbursements.


source: Caselaw Access Project

author: O’BbieN, J.: Ingraham, J.:

license: Public Domain

text:
    CHARLES S. HOLMES, Respondent, v. BESSIE L. GILMAN, Appellant, Impleaded with Others, Defendants.

      Partnership — over-drafts by one partner — the payment of life insurance premiums with the proceeds — rights of the wife, the beneflcia/ry under the policies, and the firm to their proceeds.

    Arthur C. Gilman, who was a partner in the firm of Labaree & Co. during a considerable period of time, took from time to time large sums of money from the firm beyond his interest therein, without the knowledge or consent of his copartners. During this period, as agent for his wife, he insured his life for her benefit in several companies; and in the case of another company he personally signed the application, the loss being made payable to his wife.
    On the death of Gilman, the firm of Labaree & Co., claiming to own these policies, because the premiums had been paid by Gilman out of firm moneys, which were overdrafts, assigned their rights for value to one of the partners named Holmes.
    In an action brought by Holmes against the wife of Gilman to compel her to account for the proceeds of these policies,

      Held, that the plaintiff was entitled to recover the amount of such premiums as were paid from firm moneys by Gilman in fraud of the rights of the firm, but that he was not entitled to recover the moneys realized from the policies themselves.
    That the partnership relation forbade the idea that one partner could steal or embezzle from the firm, inasmuch as each partner had an undivided part of the whole, and not the whole of an undivided part of the firm property.
    That, as the wife had an assurable interest, protected by the law3 of the State, the policy and its proceeds were not solely the result of Gilman’s payment of the premiums. (Per O’Brien, J.)
    That, therefore, assuming the partnership relation to be one of trust, equity would not follow a fund diverted, but which had been subsequently invested so as to unite it with other property interests Qr rights, and give the whole investment to the party whose money had been diverted. (Per O’Brien, J.)

      Semble, that the proper remedy of a party under such circumstances would be by an action for money had and received.
    Appeal by the defendant, Bessie Lawrence Gilman, from so much of a judgment of tlie Supreme Court, entered in tbe office of the clerk of the city and county of New York on the 12th day of December, 1891, as adjudged the following conclusions of law contained in a referee’s report:

      Second. The plaintiff, as one of the surviving partners, and as assignee of the other surviving partners of J. H. Labaree & Co., is entitled to follow the moneys wrongfully withdrawn .by Arthur C. Gilman from the funds of the firm, and to recover the same, and any securities or investments into which the same may have been converted.

      Third. The said policy of life insurance, No. 12525, for $10,000, issued by the Provident Savings Life Assurance Society, and the said policy, No. 130072, for $15,000, issued by the Northwestern Mutual Life Insurance Company, and the said policy, No. 270053, issued by the New York Life Insurance Company, having been wholly procured and continued by the use of moneys wrongfully withdrawn by the said Gilman, did not, nor do the proceeds thereof, in whole or in part, belong to the defendant, Bessie Lawrence Gil-man, the wife of said Arthur C. Gilman, to whom the said policies were respectively made payable, nor has the said Bessie L. Gilman any right to or interest in the same; but the plaintiff is equitably entitled to recover and receive the whole of the proceeds of said several policies.

      Sixth. The moneys collected by the defendant, Stephen IL Olin, as trustee, and deposited with the defendant, The Union Trust Company, to wit:
    The proceeds of said policy, No. 12525, of the Provident Savings Life Assurance Society, amounting to $10,000.
    The proceeds of said policy, No. 130072, of the Northwestern Mutual Life Insurance Company, amounting to $15,000.
    And the proceeds of said policy, No. 270053, of the New York Life Insurance Company, amounting to $20,227.
    And any accumulations of interest thereon are declared to be held in trust for the plaintiff by the said Olin and the said Union Trust Company.

      Seventh. The moneys collected by the said Stephen H. Olin, as trustee, from the said New York Life Insurance Company upon the said policy, No. 141004, and any accumulation of interest thereon, are declared to be impressed with a trust in favor of the plaintiff, Charles S. Holmes, to the extent and for the sum of $1,099.82, and the said Olin and the said Union Trust Company are declared to hold the said proceeds and accumulations of interest to that extent in trust for the said plaintiff.

      Eighth. The plaintiff is entitled to judgment that the defendants Stephen H. Olin, as trustee, and the Union Trust Company do pay to tbe plaintiff the proceeds of the three policies, to wit: Policy No. 12525 of the Provident Savings Life Assurance Society; Policy No.’130072 of the Northwestern Life Insurance Company, and Policy No. 270053 of the New York Life Insurance Company, mentioned in the preceding sixth conclusion of law, and amounting to $45,227; and the further sum of $1,099.82, mentioned in the preceding seventh conclusion of law, out of the proceeds of the said Policy No. 141004 of the New York Life Insurance Company.
    The appeal was also from so much of the fourth conclusion of law as stated that the proceeds of the policy of life insurance, No. 141004, for $5,000, issued by the New York Life Insurance Company, were subject to a lien and charge in favor of the plaintiff, amounting to .$1,099.82; and from so much of the said judgment as directed that the taxable disbursements of all parties should be paid out of the funds in suit, one-half thereof out of the moneys awarded to the •defendant Gilman; and from so much of the said judgment as ordered and adjudged that the defendant, the Union Trust Company, and the defendant, Stephen H. Olin, as trustee, should pay to •the plaintiff the sum of $47,473.81.
    The trial of the action, which related to the proceeds of certain policies of life insurance, took place before a referee. After the ■death of Gilman, the assured, an agreement was made between the firm, the widow and Stephen H. Olin, under which Olin was to •collect the policies in question, and to deposit the proceeds with the defendant, the Union Trust Company.
    As to one of them, Policy No. 141004, in the New York Life Insurance Company, the referee decided that the plaintiff had a lien only to the extent of the premiums paid. This amount was :$1,099.82. As to the other three he decided that the plaintiff could .recover their face.
    N. H. Olin, for the appellant.

      ■John R. Holmes, for the respondent.
   O’BbieN, J.:

This action was brought to recover $56,706.10, the proceeds of four policies of insurance and two certificates of membership in the Mercantile Benefit Association. Each of the four policies was issued upon an application signed, “ Bessie Lawrence Gilman, per A. C. Gilman,” and she was named in the application as the party for whose benefit the insurance was desired. In each policy the amount of the insurance was made payable upon the death of A. C. Gilman to the appellant. The applications for membership in the Mercantile Benefit Association were signed by A. O. Gilman, and he therein stated that he desired his death loss to be paid to the appellant, his wife; and certificates of membership were so issued. Upon Gilman’s death the amounts due upon the policies and certificates were collected and deposited in a trust company, where they still remain.

It appears, from • the findings and opinion of the referee, that in December, 1880, A. C. Gilman became a member of the firm of J. H. Labaree & Go., dealers in teas and coffees in the city of New York, and continued a member of that firm and the firms that succeeded it under the same name until his death, which occurred on. the 15th of December, 1890.

During all this time he had practically the exclusive charge of the office affairs of these several copartnerships. Their books of' account were kept by him or under his directions, and he had the entire management of their bank accounts. All notes, checks and other paper issued in the business of the copartnership were made by him, and for several years prior to his death it was his custom to^ prepare and furnish to his copartners semi-annual statements which purported to show the assets, liabilities and actual condition of the firm at the dates when the same were rendered. These statements had been accepted by his copartners, without question, as true, they having the most unbounded confidence in his integrity. * * * During upwards of eight years prior to his death he had plundered his firm of large sums of money which he had appropriated to his own use. * * * Ilis embezzlements amounted to more than $220,000. The moneys so taken, or much the greater portion of them, were deposited by him to his own credit in one or another of several banks with which he had individual accounts, and then drawn out for his own purposes.

The complaint alleged that all the premiums and assessments upon the policies had been wrongfully paid by A. O. Gilman out of moneys wrongfully diverted from his copartners, and the plaintiff claimed the right to follow these moneys into the policies, impress them with a trust, and take the proceeds as belonging to him. The amount of the plaintiff’s money which the referee decides was invested in these premiums was $4,155.29 ; and having found that this money went to pay the premiums of certain of the four policies of insurance, he held that as to those policies the plaintiff was entitled to judgment, impressing upon them or the proceeds a trust in favor of the plaintiff; and as to one of the policies, although by the judgment the proceeds thereof are not awarded, he decided that the amount of premiums paid out of the plaintiff’s money with interest should also be recovered by him.

As to the remaining funds, being the proceeds of the other policies, the premiums upon which had not been paid with the plaintiff’s money, he decided, subject to a lien thereon for premiums paid in favor of plaintiff, that the same belonged to the defendant. The appeal is from so much of the judgment as was in favor of the plaintiff.

It will be seen that the referee adopted the plaintiff’s theory, that he was entitled not only to the amount of the premiums, but also to the policies which were the fruits of those premiums, upon the ground that equity will follow the proceeds, impress a trust upon them, and take them from the defendant. A contrary view of the principles which should control and govern the rights of the parties was expressed upon the motion granting the preliminary injunction in this case. As the judgment is not open to the criticism of being founded upon insufficient evidence, its affirmance or reversal is necessarily dependent upon the view which we are to take of the two directly opposite theories advanced in this case.

Throughout the referee and the counsel for the plaintiff characterized the moneys appropriated by Gilman as moneys “stolen or embezzled ” from the firm. We think that a moment’s consideration of the true relation and title of a partner to the funds and property of the copartnership will demonstrate that the use of such language is inappropriate. We also seriously question (although we are aware of the fact that writers and text-books, and also in decisions, expressions to that effect can be found) whether the relation of a partner to his copartners is strictly that of a trustee. The relation between partners is strictly one of contract. It does not arise by •operation of law, but is founded upon an agreement, express or implied, between the parties thereto.

There can be no doubt that from its nature, as was said in the Manufacturers' Bank v. Cox (2 Hun, 572, 575), the principles upon which the relationship of copartners is founded are strict and exacting, demanding entire good faith towards each other and the highest standard of morality, integrity and fair dealing. And it is, no doubt, in view of the character of this relationship that we frequently speak of and designate the same as a trust relation ; and this arises from the fact that the functions, rights and duties of partners in a great measure may be regarded as comprehending those both of trastees and agents, and in some cases, where the facts warrant, the general rules of law applicable to such characters have been applied. This, however, is far from saying that the relation itself is strictly one of trust. In this case the importance of the distinction between a quasi trust and a strictly trust relation need not be dwelt upon in view of the conclusion which, upon either ground, we have reached.

'Whatever the relation of one partner to another may be, we do not think that the appropriation of any of the copartnership property by one partner can be properly characterized as property stolen or embezzled. As was said in Mabbett v. White (12 N. Y., 455) the relation subsisting between partners is of the most intimate and confidential nature. They are joint tenants of the stock and effects of the company; their interests are joint and mutual, and each is sized per my et per tout. Each has entire possession as well of every part as of the whole, and each of two partners has an undivided moiety of the whole, and not an undivided whole of a moiety. A partnership is a voluntary association, by which, in all the affairs connected with the business, an authority is impliedly given to every member to dispose of the partnership property as if it were his own personal effects. Such . is the indivisible nature of their interest, and the capacity of every member to act as the authorized agent of all, that whatever one does in the course of the partnership business has the same efficacy as if all had severally and directly joined in the act.

As the title of a copartner in and to all of the partnership property is clear from the principle recognized in this case, we do not think that the fact of appropriating any portion thereof by a partner and using the same for his individual benefit can be termed a stealing of the same, for the reason that one cannot steal property to which he has title. This view, we think, will be ’ enforced by a consideration of the result of the contrary doctrine as applied to the ordinary affairs of a copartnership. It is a matter of common occurrence in copartnership affairs to have one ■copartner overdraw his account and take from the funds of the copartnership an amount in excess of what he is justly entitled to. This is sometimes done with and sometimes without the knowledge or consent of his copartners. We do not think it would be seriously claimed, if the amount of such overdraft were some small sum like ten dollars, or twenty dollars, or $100, out of the property of a copartnership with assets of $10,000, $50,000 or $100,000, that a partner thus appropriating the money would not have a title thereto, or that the same could be recovered if paid out, from either the wife or the insurance company, if applied in payment of a premium due upon a policy of insurance.

The principle, however, which is the same whether the amount •of the overdraft be great or small, is apt to be obscured when it is sought to be applied in a case like the one at bar, where the amount appropriated exceeds $200,000, and where the contract obligation has been so fraudulently disregarded by one partner as to excite our indignation at the extent of the duplicity and the resultant loss of the other copartners.

The distinction which we seek to emphasize will be apparent if we consider what rights the plaintiff would have, upon the facts here shown, to recover the moneys paid to the insurance company, if we assumed that during the life of Gilman the policies, by reason of the failure to pay the premiums, had lapsed and the plaintiff had discovered the misappropriation of the firm’s money by Gilman.

It is true that a recovery against the insurance company could be defeated upon the ground that money was paid which, having no “ ear-mark,” could not be followed. But, assuming it were property which could have been identified and which was still in the possession of the insurance company, we think that no recovery could be had as against the insurance company, due entirely to the fact that the title of tbe property thus delivered was at the time of its delivery in Gilman, and, therefore, could not be recovered back by the plaintiff as against the company which stood in the position of one receiving the same without notice and for value.

We do not think that Gilman’s title to these moneys is in any way affected by the rule which holds that, as between agent and principal, a settlement is only final if the principal is informed of the facts. For while this may be good as between the parties, it should not be extended so as to permit the plaintiff to seek the interposition of a court of equity to set aside such an account, and follow the money after plaintiff had paid it over to Gilman as his own, and knew that it was expended in procuring insurance for the wife.

We think the law which determines the exact title that a partner has in and to the funds and property of the copartnership would raise a serious question as to the right of his copartners to follow such funds or property in the hands of persons, who, without fraud or knowledge of the misappropriation, had, in good faith, for value, received the funds or property.

It is not, however, necessary for us to go to this extent. But we shall assume, upon the very theory taken by the referee, that the partnership relation is one of trust * * * that the partnership moneys of which Gilman was placed in charge were in his charge in trust, and that his duties in respect to them were those of a trustee for his copartners. Assuming upon this theory the right of the surviving partners, upon showing that, of the so-called trust-moneys diverted, some was expended in the payment of premiums, to recover such sums, the question still remains whether the facts established-will entitle the plaintiff to recover any more than the amount of such-premiums paid.

The principles that should govern were those stated in the opinion upon the injunction herein, and we do not understand that any different view was taken by the referee. It is * * '* settled “ that equity will, in cases of theft or diversion of a trust fund, follow the misapplied trust fund or stolen money through any change of investment or form until the means of ascertainment fail or the rights of bona fide purchasers or incumbrancers intervene (Newton v. Porter, 69 N. Y., 133), but if the stolen money or diverted fund has been mingled with other money, or has been invested with other money, then equity will not give the mingled amount of the whole investment to the plaintiff, but will give him a lien to the extent of the money taken and mingled or invested, with interest.”

In applying this principle to the facts appearing upon the motion, it was intimated that “the insurable interest which a wife has upon the life of her husband, irrespective of how or by whom the premiums were paid, is her individual and separate property, and as such entitled to be recognized and protected by the laws of this State.” This view was enforced by citations from the case of Ætna National Bank v. United States Life Insurance Company (24 Fed. Rep., 770), which decision was approved in the Supreme Court in the Central Bank of Washington v. Hume (128 U. S., 195), wherein it was said that “ the obvious distinction between the transfer of a policy taken out by a person upon his insurable interest in his own life and payable to himself or his legal representative, and the obtaining of a policy by a person upon the insurable interest of his wife and children, and payable to them, has been repeatedly recognized by the courts.”

These views were not concurred in by the referee; and he distinctly held (which resulted in the conclusion reached by him), that the wife had no insurable interest, or any interest, in a policy other than that produced by, or resultant from, the payment of premiums; and that as these had been paid with moneys belonging to the plaint iff, not only the premiums, but the entire proceeds or principal sum due upon the policy belonged to the plaintiff.

In examining the reasons given for the opinion of the referee, we are unable to concur with him, it seeming to us that by force alone of the statutes of this State, the insurable interest of a wife in the life of her husband is property which belongs to her. Therefore, the proceeds of the policy did not spring solely from the premiums paid, but arose also from the right of the wife to insure her husband’s life, which is property, or in the nature of property. The proceeds are not, then, the sole result of the plaintiff’s money, but of that mingled with something which belonged to the wife; and, therefore, the plaintiff is not entitled to the whole proceeds, but only to a lien for the amount of the premiums and interest.

In determining the question as to whether the insurable interest of a wife is property, regard need only be had to its nature. In important respects, this right is sole and exclusive of all other persons ; and by statute the wife’s policy has certain substantial features and advantages which add to its value and are not found in other j)olicies. It cannot be taken by her creditors nor by his, even when he pays the premiums, and it is n on-assignable. In other words, the wife’s insurable interest is an exclusive right peculiar to herself to make a contract for the payment of money, which contract is a more advantageous one than can be made by any other person in regard to the same subject-matter.

It has never been denied that a franchise (which is nothing more than a special privilege), is property.

As defined by Webster, property is that which is peculiar to any person; that which belongs exclusively to an individual; that to which á person has a legal title, whether in possession or not; thing owned.” As, therefore, the right which a wife has to make a particular contract of insurance upon the life of her husband is one limited to her, we do not see how, under the definition, it can be regarded as anything other than property.

Apart, however, from these general considerations, as already said, we think that the statute itself enforces the view that the insurable interest of the wife is property.

The referee, in his opinion, attaches much weight, and it seems to us gave undue importance to the case of Shaler v. Trowbridge (28 N. J. Eq. Rep., 595). It is true that that was a case in some respects similar to this. But the distinction between that case and the one at bar was pointed out in the opinion delivered at Special Term upon the motion for an injunction.

It was therein said: “ The distinction between this and the other cases, in one respect, is to be found in the circumstance that in Shaler v. Trowbridge the policies were originally taken out by the husband payable to himself, whereas in the case cited and the one at bar the policies were payable to the wife. Another distinction is to be found in the fact that the status < of a married woman and her rights under the law relating to property and policies of insurance are entirely different in the two States of New Jersey and New York.”

Both of these distinctions between the Shaler case and the one at bar we regard as material and important.- Unquestionably, a difference must arise between a policy taken out by a husband on his own life and assigned to his wife and' a policy taken out by the wife on the life of the husband, which latter is a contract made between her and the company, and the moneys due thereunder are expressly payable to her alone.

With reference to the other distinction, the status of a married woman and her rights, under the laws of New Jersey and New York, as they existed at the time of the decision of the Shaler case, are so different and distinct that it is only necessary to refer, with regard to the woman’s rights, under the laws of New Jersey, to the cases of Muirhead v. Aldridge (33 L. J., 203; Skillman v. Skillman (2 Beas., 403); Osborne v. Edwards (3 Stock., 73); Clinton S. M. Co. v. Hummell (10 C. E. Green, 45); Persons v. Persons (id., 250), and Quidort's Admr. v. Pergeaux (3 id., 472). These cases will show that a wife gained no interest in a policy on her husband’s life unless she paid the premiums, and her property mingled with her husband’s was liable to the claims of his creditors; and this is true of money in bond as well as of less tangible rights.

We think, therefore, that the learned referee was in error in holding that the Shaler case went on fixed and certain principles of equity jurisprudence, which, as he states, must be the same in every civilized jurisdiction, for the reason that the rule governing the application of such principles will show that they are to be applied according to the legal relations of the parties existing in the forum.

Apart, however, from the importance of these distinctions, if we assume that the principle in Shaler v. Trowbridge would apply to the facts here established, we cannot but regard the case as directly opposed to the views expressed in Central Bank of Washington v. Hume (supra); Ætna National Bank v. United States Life (supra); Pence v. Makepeace (65 Ind., 345) and Stigler's Exrs. v. Stigler (77 Va., 163), which, we think, are founded upon the better reasoning and more consonant with justice and the public policy that prevails of protecting the insurable interest of the wife in the life of her husband.

It may be urged that the logical conclusion resulting from our views would negative plaintiff’s right to impress a trust on these funds even to the extent of the premiums paid. The learned counsel for the defendant, affected, no doubt, by the justice of the claim so asserted as to premiums paid with copartnership money, apparently concedes plaintiffs right to recover the same.

Technically, the proper form of action to obtain such moneys “ ex mquo et iono,” as against Mrs. Gilman, would be for money had and received.

We have, however, all the parties before the court; the action itself is one in equity, and it will avoid circuity of action if the rights of the parties are here determined. This seems to be the attitude assumed by counsel in submitting the questions regardless of the form of action, and without objecting to an adjustment of their rights in this action.

We think that the surviving partners would have a cause of action against Mrs. Gilman for moneys given to her or applied to her use •out of the copartnership funds. The amounts of such payments are easily ascertainable, and are, in fact, determined by the referee in his report.

As no point is made in regard to the form of action, and as a recovery for the premiums paid could be had against Mrs. Gilman in a proper action, and as a grave doubt exists upon the question as to whether to the amount thereof a lien could not be impressed upon the funds in court, we have concluded to adjudge the rights of the parties in accordance with what we regard to be both equitable and just. 1

While, therefore, we are of opinion that, to the extent that it can be shown that premiums were paid with moneys of the firm, they should be recovered, with interest; we also think that no recovery of the proceeds of such policies beyond such premiums should be allowed.

This conclusion requires a reversal of the judgment and a new trial, which is accordingly ordered, with costs to appellant to abide event.

Yan Brunt, P. J., concurred in result.

Ingraham, J.:

There are two grounds upon which plaintiff may seek to sustain this action. One is that the money that was used to pay the premiums upon the polices of insurances from which the fund which plaintiff seeks to recover was realized was stolen or embezzled from the firm of Labaree & Co., so that neither Gilman, who stole it, or the defendant Bessie L. Gilman ever had any title thereto as against the firm, or this plaintiff, as surviving partner of the firm; and the other, that, as between Gilman and his copartners, Gilman was a trustee for his copartners as to the firm assets, and upon the misappropriation by Gilman of such assets the surviving copartners, as the cestui que trustents, could follow the trust property into the hands of any one who received it, except a bona fide purchaser for value, without notice of the trust.

It is not clear from the complaint upon which of these grounds plaintiff places his cause of action. The complaint alleges that Gilman robbed the firm of which he was a member, and that the money of which he robbed the firm was used to pay these premiums.

It is also alleged that each of the other partners implicitly trusted Gilman and intrusted to him the entire management of the bank account, finances and office business of the copartnership, but there is no special agreement alleged by which Gilman occupied any relation to the firm other than that of a copartner, who in the administration of the firm business had special charge of the firm’s finances.

The counsel for the plaintiff, in his brief submitted on this appeal, appears to rely upon the existence of the trust relation. He says:

In order to prevent the reversal of the judgment rendered by the referee it is sufficient for the plaintiff and respondent to show, first, that Arthur G. Gilman occupied a fiduciary relation to his copartners in the firm of J. H. Labaree & Go.; second, that without the knowledge and consent of his copartners he withdrew from the firm, moneys intrusted to him in that capacity; and third, that with this money he paid the premiums on the policies involved in this appeal, i. e., he bought the policies with this money.”

I agree with Mr. Justice O’Brien, that for the reasons stated by him the plaintiff could not be said to have stolen or embezzled the firm property. He, as a member of the firm, was the owner of the copartnership property, and the fact that he paid himself from the assets a greater amount than under the copartnership agreement he was entitled to, be that amount small or large, could not be said to be a robbery from the firm. He would be, under the copartnership agreement, liable to repay to the firm or to his copartners, upon an accounting, the amount of such excess; but upon no principle can a member of a firm be said to steal or embezzle property of which he is the legal owner.

It is, undoubtedly, a general principle that where one partner diverts the capital or funds of the copartnership to carry on another trade or the same trade for his own profit and advantage, or to invest such copartnership money in any property for his own benefit, he will be compelled in equity to account for all profits made by such investment. (Story on Partnership, § 178.) In Long v. Majestre (1 Johns. Ch., 305), Chancellor Kent held that an action could be maintained by one partner against the administrator of his deceased partner for an .accounting of the business which the deceased partner had carried on with another party with the funds of the copartnership.

Whether the relation that existed between Gilman and his copark ners can be said to be that of a trustee and cestui que trust or not is immaterial. Whatever the relation is that exists, a copartner who invests the capital of the copartnership in any way for his personal advantage, or in property taken in his own name upon which he realized a profit, will undoubtedly be held to account in equity for not only the portion of the copartnership property so invested, but also for any profits that he may realize therefroih.

In the case of Shaler v. Trowbridge (28 N. J. Equity, 595), a copartner invested the copartnership property in a policy of life insurance which was payable to himself or his executors upon his death, and it was held “ that such policy of life insurance, although taken in his own name, was, in reality, copartnership property, it having been created entirely by the application of the moneys of the copartnership, and that a subsequent transfer of the policy, without consideration was void as against the copartnership,” and I concur with the decision in that case.

If therefore, the proof in this case shows that Gilman invested the copartnership money in any property or contract or obligation of his own, so that such property or obligation was created or existed solely because of the investment of the copartnership money or property, plaintiff would be entitled to judgment declaring that such obligation or property that had been so purchased or created by the use of the copartnership money was, in reality, copartnership property in the hands of a copartner, his representatives or a transferee who was not a bona fide purchaser for value.

The question to be determined is, whether or not these policies of insurance come within this rule. There were four policies of insurance, and, so far as they affect this question, they are substantially the same; the application for the policies were made by defendant, Bessie L. Gilman and signed “ Bessie L. Gilman, by Arthur C. Gilman,” who thereby acted as her agent in making such applications, and the contract in the policies was that the insurance company promised to pay to Bessie L. Gilman, the wife of Arthur C. Gilman, the sum mentioned within ninety days after due notice and satisfactory proof of the death of Arthur O. Gilman.

The contract was thus between the insurance company on one part and Bessie L. Gilman on the other, and the sole relation that Arthur 0 Gilman had to the contract was that he had acted as agent of the defendant Bessie L. Gilman, in making the application for the policies of insurance, and the contingency upon which the money was to be paid was the termination of his life.

He, therefore, in procuring the policies to be made; in paying the premiums; in receiving and acting upon notice, and in doing whatever was necessary to perfect and continue the rights of the assured, must stand in the attitude of an agent acting for and representing the assured.” (See Whitehead v. N. Y. Life Ins. Co., 102 N. Y., 150.) And it was further expressly held, in the last case cited, that upon the execution and delivery of these policies the wife had a vested interest in the policy, which could not be divested by any act of the husband ; and she had the right to pay the premiums and so continue the policy in force, and the husband could not, without the consent of the assured, surrender the policy to the company. This principle has been many times reasserted in this State, and is now well settled.

The question as to whether or not the wife had an insurable interest in the life of her husband, or just what that insurable interest was, has nothing to do in determining this question. That question related solely to the validity of the contract of insurance. The insurance company has admitted the validity of the contract of insurance by paying to the wife, or upon her order, the amount due under the policy upon the death of the insured.

What we must assume is that this agreement between the insurance company and Bessie L. Gilman was a valid agreement whereby the insurance company agreed to pay said Bessie L. Gilman the amount named in the policy upon the death of Arthur C. Gilman.

The referee has found, upon evidence which is sufficient to sustain the finding, that Arthur O. Gilman had drawn from the copartnership sums largely in excess of the amount that he was entitled to draw under the copartnership agreement; and that he had paid out. of such money so withdrawn the premiums upon these policies of insurance. In some instances the payments were made by check of the copartnership, which were charged up to him as. against his interest in the copartnership, and in other instances by his individual •check upon an individual bank account, which individual bank account was largely made good by moneys drawn by him from the copartnership.

I fail to see how it can make any difference in determining this question as to whether Arthur O. Gilman took such money from the copartnership with or without the knowledge of the copartners. The act in either case was the same; it was a withdrawal by him of the capital of the copartnership and the appropriation thereof to his own use, and, as before stated, if he had invested such proceeds in real estate or other property, a court of equity could compel him or his transferees to account for such property as the property of the copartnership.

Here, however, there was no such investment. What he did, having appropriated a portion of the copartnership property to his own use, was to pay a debt of his wife, or, in other words, present her with so much money, which he, acting as her agent, applied to the payment of her obligation and thereby continued in force the •policies of insurance, whereby the insurance company agreed to pay h.er at a future time a sum of money.

There was here no investment of copartnership property by the copartner for his own benefit. The defendant had the right to pay the premiums herself, and so continue the policy of insurance; and the fact that her husband undertook to pay them himself with what he represented was his own money, and where she had no knowledge that it was not his money, cannot be said to be an investment by a copartner of copartnership property for his individual benefit.

It may be that the surviving partners would have a cause of action against Bessie L. Gilman to recover the money belonging to the copartnership, that Arthur O. Gilman had given to. her or applied to her use; but upon no principle can it be said that when- she used money given to her by her husband in payment of her obligation to the insurance company, and which she had no reason to suppose was not her husband’s money, it was an investment of the firm money upon which the surviving partners of the firm can impress a trust so that not only can they recover back the amount so given her, but adopt her act in making the investment as a firm act, and hold the property in which money so given to her had been invested as firm property.

In all of these policies of insurance it is Bessie L. Gilman, as the assured, who paid the premiums, and it is upon her payment of the premiums in the future that the policies are to remain in force.

It is not the interest of the insured or of the copartners that is covered by the insurance, but is the interest of the assured, the defendant, that is so covered. The assured pays the premiums; to the assured the sum is to be paid ; and when her husband gave her the money to pay these premiums that money belonged to and became her property just as much as it belonged to and became the property of the bank in which it had been deposited.

As between the bank and Arthur O. Gilman, upon the deposit of any of this money, the money became the property of the bank and the bank became his debtor.

Upon the payment of Gilman’s check to the insurance company that indebtedness was discharged, and the money so paid became the property of the insurance companies, and their obligation to pay defendant the sum of money was continued in force. It was then the money that was paid by the bank to discharge its obligations to Arthur O. Gilman that was received by the insurance company.

It may be that the surviving partners can recover from the defendant Bessie L. Gilman, in a proper action, the amount of money that Arthur O. Gilman had paid to her, or on her account, out of the copartnership funds; but the investment that she had made of money received by her from her husband, or that he had applied towards paying her obligations, was money given to her by one who had the legal title to it and which she had a right to apply to her own. use; her only liability being the obligation which might be implied to repay the money of the firm, in case it should subsequently appear that said money that was given her -was money belonging to the copartnership. If the bank had invested the money that was deposited with it in real estate, it could hardly be claimed that the copartnership would be entitled to have such real estate declared to be the property of the copartnership, and I can see no reason why the defendant stands in any different position.

The case of Olmsted v. Keyes (85 N. Y., 597), which seems to be relied upon by the plaintiff, is in harmony with these views. It was there held that the policy taken out by Lester for the benefit of his wife became the property of the wife, and that upon her death her interest in such policy, under the law as it then stood, devolved upon her husband by virtue of his survivorship, and that he was entitled to reduce the policy to possession the same as he would any other choses in action belonging to her at the time of her death.

The right of the surviving partners to recover a money-judgment against the defendant Bessie L. Gilman, for any sum of money paid to her or given to her by her husband, which was, in fact, copartnership property, cannot be enforced in this action. This action is in equity to impress upon the proceeds of these policies' of insurance a trust in favor of the plaintiff, and for the reasons before stated no such trusts exists.

I think, therefore, the plaintiff has failed to show any right to recover, and that the complaint should have been dismissed. For these reasons I think the judgment should be reversed and a new trial ordered, with costs to appellant to abide the event.

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


author: Andrews, J.:

text:
    SAMUEL G. METCALF, as Receiver of the Property of JOSÉ F. NAVARRO, a Judgment Debtor, Appellant, v. JOSÉ A. del VALLE, Respondent, Impleaded with Others, Defendants.

      Supplementary proceedings — a receiver is entitled only to the property to which the judgment-debtor had title when he was appointed — priority of a judgment-creditor who sues first to set aside a fraudulent transfer of personal property.

    Samuel G-. Metcalf was, in July, 1889, appointed a receiver in supplementary proceedings of the property of one Navarro, who, in December, 1888, had, it was alleged, fraudulently assigned certain insurance policies to one Hyland. In October, 1889, del Valle, a judgment-creditor of Navarro, began an action to set aside the assignment of the insurance policies, in which judgment was rendered against him; on appeal from which judgment a new trial was granted in October, 1891.
    About that time Metcalf, as receiver, began an action to set aside the same assignment, to which action del Valle was made a party; in it Metcalf asked that the respective rights of the parties be determined, and that the judgment under which he was appointed he paid first.
    To this complaint del Valle demurred.

      Held, that the demurrer was well taken.
    That the title of Metcalf, as receiver, extended only to the property which Navarro had when Metcalf was appointed, which did not include the property which Navarro had previously fraudulently transferred.
    That the receiver by his appointment did not acquire title to the policies, .and in bringing an action brought it simply as trustee for creditors, and with no greater or superior rights than those possessed by the creditor.
    That, by his action del Valle' obtained a priority which could not be defeated by any creditor or by the receiver of the property of Navarro.

      JBostwick v. Menck (49 N. Y., 383) followed.
    Appeal by tbe plaintiff Samuel Gr. Metcalf, as receiver of tbe property of José F. Navarro, a judgment-debtor, from an interlocutory judgment of tbe Supreme Court, entered, on a trial before tbe court at tbe New York Special Term, in the office of the clerk of the city and county of New York on tbe 10th day of March, 1892, sustaining a demurrer interposed by tbe defendant del Valle to the complaint.

      Charles A. Murjyhey, for tbe appellant.

      C. O. de L. 3. Hulse, for tbe respondent.
   Andrews, J.:

Tbe amended complaint alleges the following facts: That the Rirst R ational Bank of Rondout recovered judgments against the defendant Navarro for over twenty-five thousand dollars on or about July 18, 1889; that on or about July 25,1889, the plaintiff Metcalf was appointed receiver of said Navarro’s property in proceedings supplementary to execution, but that from the property received by him he realized about nineteen hundred dollars only, and that said judgments, aside from this, remain unpaid; that prior to December 31, 1888, the defendant Navarro owned five policies of insurance on his life for $10,000 each, payable to his executors, administrators or assigns, and that on that date he fraudulently assigned the same to the defendant Hyland; that at the time of such assignment the defendant Navarro was insolvent, and that the assignment, was made with intent to hinder, delay and defraud his creditors ; that the cash value of said policies is over twenty-five thousand dollars, their value in paid-up insurance over fifty thousand dollars, and in the event of the death of said Navarro, over sixty-five thousand dollars; that plaintiff first learned of the existence of said policies in the fall o'f the year 1890, at which time he also learned that the defendant del Valle, who was also a judgment-creditor of said Navarro to the extent of some- twenty-thousand dollars, had commenced an action in October, 1889, to set aside said assignment of insurance policies as fraudulent and void; that at such time the plaintiff also learned that the trial of that action had taken place- and had resulted adversely to del Valle, and was then pending on appeal; that a decision granting a new trial in that action was rendered in October, 1891, and thereupon plaintiff obtained leave of the court to bring this action; that plaintiff, ever since July 25, 1889, has been the owner of said policies, and of all the right, title and interest of said Navarro in and to the same, and, as such, is entitled to institute and prosecute this action to set aside said assignment, and apply said policies, or the proceeds thereof, to the judgments aforesaid. The plaintiff, in his prayer for relief, asks that, after said assignment has been set aside, the rights of the respective parties be determined and the proceeds of said policies be, first, applied towards the payment of the judgments recovered by said bank, and that any balance be adjudged to be paid to the parties entitled thereto.

The defendant del Valle demurred to such amended complaint on the ground that the same did not state facts sufficient to constitute a cause of action as to him; and from the judgment sustaining such demurrer this appeal is taken.

The sole question presented for our consideration is, whether the legal title to the policies in question vested in the plaintiff when he was appointed receiver of the defendant Navarro’s property, and whether he has, as such receiver, the prior and exclusive right to prosecute an action to set aside as fraudulent the assignment of such policies to the defendant Hyland.

The plaintiff’s counsel, in his brief, cites a number of cases decided in this court, in which it appears to have been held that a receiver of the property of a judgment-debtor, appointed in supplementary proceedings, acquires the legal title, not only to the personal property of the judgment-debtor, which may be in his possession at the time the receiver is appointed, but also to such personal property as has, prior to the appointment of the receiver, been fraudulently transferred by the judgment-debtor to some third party. Such counsel also cite some cases decided in the Court of Appeals which contain expressions of opinion which may, but not necessarily must, be construed as supporting the same doctrine. This precise question, however, was considered and decided by the Court of Appeals in the case of Bostwick v. Menck (40 N. Y., 383), and we are of the opinion that the decision in that case must control us in deciding the case at bar. Grover J., in delivering the opinion of the court, said: He (the receiver) does not acquire the legal title to such property ” (fraudulently conveyed) “ by his appointment. That is confined to property then owned by the debtor, and the fraudulent transferee of property acquires a good title thereto as against the debtor and all other persons, except the creditors of thé transferror. The only right of the receiver is, therefore, as trustee of the creditors.” The same doctrine is laid down in Pettibone v. Drakeford (37 Hun, 628), and in Olney v. Tanner (10 Fed. Rep., 101; affirmed on appeal, 18 id., 636). While, therefore, some of the eases in the Court of Appeals cited by plaintiff’s counsel contain expressions which may be construed as conflicting with the doctrine laid down in Bostwick v. Menck (supra), yet, as that case has never been directly overruled or questioned, we must consider it as a controlling authority.

It necessarily follows that the title to the policies in question did not vest in the plaintiff by virtue of his appointment as receiver of the property of Navarro, and the plaintiff has no prior or exclusive right to maintain an action to set aside such assignment as fraudulent, and that the defendant del Yalle, having brought the first action against the judgment debtor Navarro and his assignee Hyland, for the purpose of setting, aside said assignment, has obtained a lien and preference over the receiver and all other creditors upon the property sought to be reached. (Storm v. Waddell, 2 Sandf. Ch., 494; Corning v. White, 2 Paige, 567; Olney v. Tanner, supra; Edmeston v. Lyde, 1 Paige, 637.)

In Olney v. Tanner the court said: “ In the Superior Court it has been still more explicitly decided that the receiver ” (in supplementary proceedings) has no title nor lien in respect to such property until the commencement of his suit. (Field v. Sands, 8 Bosw., 685; Conger v. Sands, 19 How., 8.) In Field v. Sands the court say: “ Such proceedings (supplementary) no more create a lien upon the assigned property than would a judgment-creditor’s suit against the debtor only. Such proceedings do not affect property vested in a third person.” “ Such fraudulent transfers, therefore, are no more absolutely void, as respects such a receiver, than as respects judgment creditors themselves. They are avoidable only when assailed at the election of the creditor or receiver in an action brought for the specific purpose of setting them aside. (High on Receivers, § 411.) There is nothing in this respect that a receiver might do that the creditor himself cannot do.”

In Corning v. White (supra) the court said : “ This court has • frequently decided that the creditor who first files his bill here to reach the defendant’s property, which cannot be sold on an execution at law, obtains a preference.”

The defendant del Yalle, having brought his action first to set aside the alleged fraudulent transfer, cannot be divested of his priority of lien, and there is no reason why he should be stayed in . his action by the receiver or any other creditor. Having a prior lien on the policies over the receiver and all other creditors, his rights cannot be adjudicated in this action, and he is not a necessary or proper party thereto.

In Bostwick v. Menck (supra), the court, said: They (the fraudulent transferees) have the right to retain the property until the superior right of creditors to divest them of it is shown; this right of creditors they have the right to litigate in respect to each creditor.” * * * But the proceeding in each case is‘separate and distinct, and the creditors take priority according to the date of their several proceedings.

The judgment sustaining the demurrer should be affirmed, with costs.

Yan Brunt, P. J., and O’Brien, J., concurred.

Judgment affirmed, with costs.