author: Van Brunt, P. J.: O’Brien, J.

text:
    William Jay and Others, Respondents, v. William G. Wilson, Appellant.

      Vendor it nil purchaser — marketability of the title, not affected by a deed prior in date anti subsequent in record to the vendor’s — attorney’s fee for the search when he rejects the title — the refusal of the title must not be capricious.

    A purchaser is not hound to take a title which he can defend only hy parol evidence, a species of proof which time, death or some other casualty may place heyond his reach. N
    Whore a loan is to be made upon a title, provided the title is “satisfactory” t® the attorneys of the lender, the attorneys have no right to refuse arbitrarily or capriciously to be satisfied with the title.
    In order to justify the rejection of a title, there must be some reason, tenable at law, upon which such dissatisfaction is founded.
    Where Uie record title is complete and no resort to parol evidence is necessary to sustain it, tlie mere existence of an outstanding deed of the premises, dated before hut recorded after the deed under which the present owner claims, affords no legal ground for a refusal to accept the title.
    In an action brought to recover a fee for searching the defendant’s title, it appeared that the defendant, desiring- to obtain a loan upon his house from Egerlon C. Winthrop, made a written agreement with the plaintiffs, who were Winthrop’s attorneys in the matter, that the loan should be made in case his title to the premises proved “satisfactory” to the plaintiffs and that ho would pay them for tlieir services one per cent of the loan and the usual disbursements ; that the search which was made showed title in the defendant, hut also showed that a former grantor in the chain of title had given to another person a deed of the premises in question which was dated before, hut was recorded after, the one under which the defendant claimed title. There was no proof that the grantee in the deed secondly recorded had over been in possession of the premises, or that the grantee in the deed recorded first had any reason to suspect the existence of the other deed. The plaintiffs notified the defendant! that they had, after an examination of the search, advised Winthrop not to make the loan.

      Jleld, that the title was marketable and should have been accepted;
    That the plaintiffs, having unreasonably decided against the validity of the title, and having improperly advised Winthrop not to accept it, could not recover any fee for the services which they alleged that they had rendered to the defendant under the agreement.
    O’Brien, J., dissenting on the ground that the defendant was bound to give some explanation of this matter.
    Appeal by tlie defendant, William G-. Wilson, from a judgment of tlie Supreme Court in favor of the plaintiffs, entered in the office of tbe clerk of tbe comity of New York on the 6th day of May„ 1895, upon tlie decision of the court rendered after a trial at the New York Circuit before the court without a jury.
    This action was brought to recover a fee for searching the title to premises alleged to be owned by defendant under an agreement ■evidenced by a memorandum, signed by the defendant, as follows :
    “48 Wall Street, New York, Nov. 26th, 1894.
    “ Messrs. Jay & Candler, Attorney and Counsel for Egerton L.
    Winthrop:
    “Dear Sir.— Your client being willing to loan me $20,000 for' 5 years at 5 per cent per annum on my bond, secured by a first mortgage on the premises known as No. 314 West Eighty-sixth street, New York city, and now owned by me, which mortgage is to be executed by me and my wife, and which said bond and mortgage •are to be drawn by, and to be in form satisfactory to you, the said loan to be made in case my title to said premises is satisfactory to you, I hereby agree to pay you for your services for examining such title one per cent on the amount of the proposed loan, and in addition, all cash which you may disburse for searches and for recording such deeds and mortgages and other papers as shall he ■desirable, and for notary’s fees and such other disbursements as shall be necessary.
    “ Yours respectfully,
    “ WILLIAM G. WILSON.”
    Frederick Yan Tine was the owner of the premises under examination prior to June 29, 1889. On November 6, 1889, Yan Tine ■executed a deed to Mary F. Ilopkins for the consideration, as shown in the deed, of $40,000. The deed was recorded November 13, 1889. By a deed dated June 29, 1889, Frederick Yan Tine purported to convey the same premises to Nelson M. Whipple. This ■deed was recorded May 14, 1890. By deed dated July 17, 1891, ■and recorded July 22, 1891, Mary F. Hopkins conveyed the title to William G. Wilson, the defendant in this case.
    Hpon discovery of the Yan Tine-Whipple deed, the plaintiffs wrote to Rose & Putzel, who were the attorneys for the defendant at the time of the purchase by him of the premises, informing them of the condition of the record, and requesting them to call and ■explain the matter. Although such attorneys disclaimed being the representatives of the defendant, they nevertheless wrote in reply, saying that if the plaintiffs or whoever had the matter in charge would call at their office “ we shall be happy to give such further explanations as we possibly can.” These letters do not seem to have 'brought the attorneys together, but resulted in further communications, one of which was a letter from the plaintiffs directly to the defendant stating, among other things, that “ after carefully examining the returns.made upon the search and considering the questions S presented, we have reached the conclusion with great reluctance that we cannot approve the title or advise our client to make the loan.” Thereafter Nose & Putzel wrote the plaintiffs that the defendant had handed plaintiffs’ communication to them, and demanded back the abstract and searches. Then plaintiffs wrote to Nose & Putzel as follows: “ When the difficulty in the title was manifest to us. we endeavored to obtain the presence of one of your firm here to explain matters, but without success. We then went to the Lawyers’ Title Company and stated the condition of the title as disclosed by our official searches to one of the counsel in the law department, and were informed by him that under the state of facts as they were disclosed by those searches, the company would not be willing to insure the title.” The letter closed by advising them that they should commence a suit for their fee.

      Gibson- Putzel, for the appellant.

      Flamen B. Oandle-r and Fgerton JL. Winthrop, Jr., for the respondents.
   Van Brunt, P. J.:

I concur in the conclusion arrived at by Mr. Justice O’Brien, that the contract under consideration in this action did not confer upon the plaintiffs the right arbitrarily and capriciously to refuse to be satisfied with the title which was tendered, but that there must he some reason upon which the dissatisfaction was founded. But I do not concur in the'conclusion that there was any difficulty with the title which was offered under the contract referred to. I think that in arriving at this conclusion the learned justice has misconceived the rule applicable to the question of marketable titles. It is undoubtedly the law as stated in Irving v. Campbell (121 N. Y. 353), and cited by him, that a purchaser is not bound to take a title which he can defend only by a resort to parol evidence, which time, death or some other casualty may place beyond his reach; and that a purchaser will not generally be compelled to take a title when there is-a defect in the record title which can be cured only by a resort to parol evidence. But in the case at bar there is no defect in the record title. It is complete. .The purchaser would not be compelled to resort to parol evidence for the purpose of defending his title. The sole ground upon which it is claimed that the title is not marketable is the fact that subsequent to the record of the deed of a purchaser in 'good faith, there appears from his grantor a deed of a previous date upon the record. This subsequent deed casts no cloud upon the title of the purchaser. Ilis record title is superior, and there is not a tittle of evidence impeaching that record title.

But it is claimed upon the part of the respondents that if the grantee of the subsequent deed should show that the purchaser who paid his money for the property knew of the existence of this deed, or was in possession of the property, the title •would be impeached. There is not the slightest attempt to prove that the grantee in that deed ever was in possession, or that the first purchaser had any reason to suspect the existence of any such deed. If such a procedure is to create a cloud upon title, then no purchaser is secure' because his grantor, after he has conveyed and his grantee’s deed is placed on record, may sign and acknowledge a new deed dated back of the deed by which he has conveyed the property, and record it and thereby create a cloud upon the title. The validity of titles cannot be subject to any such schemes or devices. The record title in the case at bar was good. It required no parol evidence to sustain it, and hence, according to the authority cited, the title was a marketable one.

Parker, J., concurred.

O’Brien, J.

(dissenting):

Upon the trial and on this appeal the appellant insisted that u pon the showing made the title was valid and marketable, and that the plaintiffs, therefore, were bound to be “ satisfied.” On the other hand, the respondents contend that, under the terms of the contract, the title to the premises which was to be examined by the respondents was to be satisfactory ” to them, and that, as the title after examination was not a satisfactory one in their judgment, they were entitled to recover the fee agreed upon for their services. I do not think it is necessary, for the disposition of these contentions, to determine whether the title was in fact valid and marketable, the question presented being whether it was a satisfactory one within the terms of the agreement made between the plaintiffs and the defendant.

There is a class of cases in which it has been held that “ when a person contracts to perform work to the satisfaction of the other party to the contract, and the subject involved is a matter of taste, like the-painting of a portrait, the rule is that the person for whom the work is to be done is the sole judge, and if he refuses to accep>t the work on the ground that it is not satisfactory, his decision cannot be questioned.” (Moore v. Goodwin, 43 Hun, 530.) And there is-another class in which it has been held that it is competent for the-parties to make an agreement outside of matters relating to taste, by which one can give to the other the right of arbitrarily rejecting-the performance or tender of performance by the other party., (Gray v. Cen. R. R. of N. J., 11 Hun, 10.) I think, considering the subject-matter of the contract and the construction to be given thereto, that it did not confer upon the plaintiffs the right arbitrarily and capriciously- to refuse to be satisfied, and that in this respect it falls within the principle established by another class of cases in which the rule has been stated as follows: “ That which the-law will say a contracting party ought in reason to be satisfied with, that the law will say he is satisfied with.” (Miesell v. Globe Mutual Life Ins. Co., 16 N. Y. 115; Dennis v. Mass. Benefit Association, 120 id. 496.)

Applying this rule, which is as favorable as the appellant contends for, I think that the conduct of the plaintiffs in refusing to pass the title or make the loan without further explanation, which I think the defendant was called upon to furnish, was neither capricious nor arbitrary. The good faith of the plaintiffs is not assailed.. As soon as the existence of the Yan Tine-Whipple deed was known,. they gave the defendant and those who were acting for him a statement of the defect, aiid requested suggestions or explanations which might satisfy them, and these were not furnished. The existence of this deed was sufficient to put the plaintiffs upon inquiry, it being conceded that if Whipple had gone into possession of the premises in question under his deed, this would have been notice to •all, and that one who took title under such circumstances would do so at his peril, no matter whether his deed was recorded first or not. I think this proposition is sound, although that contended for by the appellant may be equally sound, i. e., that a person holding title under a recorded deed, purporting on its face to be for a valuable consideration, is presumed to have been a purchaser in good faith and without notice of the existence of an unrecorded deed prior in date; and that the burden of proving that the grantee in the first recorded deed had notice is upon the assailant of the title. If, however, the title were assailed upon the ground that Whipple had gone into possession with notice, the attitude and knowledge as to the title of the person who took from Van Tine the deed first recorded would be necessary to support defendant’s title. And in this situation, upon the question presented by the appellant as to this being a marketable title, we might with profit resort to the case of Irving v. Campbell (121 N. Y. 353), where Huger, Ch. J., in •discussing the question as to what constituted such a title, said:

The rule as to the quality of such title is quite fully stated by Judge Earl in Moore v. Williams (115 N. Y. 586). He there says: x x x < Is a purchaser bound to take a title which he can defend only by a resort to parol evidence which time, death or some other •casualty may place beyond his reach ? * * A good title means not merely a title valid in fact, but a marketable title which •can again be sold to a reasonable purchaser or mortgaged to a person of reasonable prudence as security for a loan of money. A purchaser will not generally be compelled to take a title when there is a defect in the record title which can be cured only by a resort to parol evidence.’ It was also said by Judge Andrews, in Fleming v. Burnham (100 N. Y. 10), ‘A title open to a reasonable •doubt is .not a marketable title. The court cannot make it such by passing upon an objection depending upon a disputed question of fact or a doubtful question of law, in the absence of the party in wliom the outstanding right was vested. * •• * It would especially be unjust to compel a purchaser to take a title, the validity of which depended upon a question of fact, where the facts presented upon the application might be changed on a new inquiry or are open to opposing influences.’ ”

It is conceded by appellant that a recorded deed is open to attack upon the ground that there is a prior unrecorded deed, provided it can be shown that the grantee in the recorded deed took under the former deed — took with notice of the unrecorded deed. The existence of the Whipple deed justified an inquiry by the plaintiffs into the question as to its effect, and the probability of an attack upon the title from that quarter; and, if it were made, it is conceded that the evidence to sustain the title would in part, at least, rest in parol. The inquiries, however, addressed to the defendant, and to those whom plaintiffs in the beginning had a right to regard as his attorneys, elicited no explanation of any kind, nor upon the trial of this action was it suggested one way or the other as to whether or not Whipple went into possession of the property at the time of the delivery of the deed to him, or what, if any, were his relations to this title. Where, as here, the contract was that the title was to be satisfactory to the plaintiffs, I do not think the defendant could legally take the position that he would give no explanation, but would compel the plaintiffs to accept or reject the title at their peril. In this, I think, as argued by the respondents, the counsel for the appellant loses sight of the relation existing between the parties to this controversy. While, as a matter of law, the burden is upon the one that claims a title is not marketable to prove that fact, the answer is given in the suggestion that the relation between the respondents and the appellant was not that of vendee and vendor, but was that of attorneys for the proposed mortgagee and the proposed mortgagor. The appellant, therefore, stood in the light of a vendor of the property, so to speak, and it was for him to satisfy the respondents, if he could do so, from the documents or other conclusive and satisfactory evidence that he might possess, which was not of record, that his title was marketable; and it was not incumbent upon the respondents to make good the title of the appellant, a.nd, if they could, to show that the title was marketable, and one upon which they could conscientiously advise their client to loan Ms money. While, therefore, if this had been an action for specific performance, brought by a vendor against a vendee, wherein the former had produced prima facie evidence from the record as to the validity of his title, the vendee could not reject the title tendered without showing that such title was invalid or unmarketable, attorneys for a proposed lender, under a contract such as was here entered into, providing that the title was to be satisfactory to them, are not in the same position. And where, as here, upon examination such attorneys discover the existence of a deed prior in date to that under which the proposed borrower claims, concerning which no explanation is given, although asked of the proposed borrower, and the duty of giving which devolved on the latter, the refusal to make the loan, or pass the title, cannot be characterized or regarded as arbitrary, captious or unreasonable.

I am of the opinion, therefore, that the judgment was right and should be affirmed, with costs.

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


source: Caselaw Access Project

author: YaN BbuNt, P. J.: PARKER, J.

license: Public Domain

text:
    George S. Clay and Others, Appellants, v. Lucretia M. Wood and Others, Respondents.

      Will — an absolute gift followed by a request — when it does not limit the fee first given.

    In an action brought, among other tilings, to construe the will of William W. Clay, it appeared that after payment of his debts he gave to his wife his house and furniture and also a legacy, which he directed should he paid before any other legacies given thereby; that after making certain other bequests, he gave her all his residuary estate, which latter gift was followed by a clause in these words; “And it is my desire and request that my said wife do sustain, provide* for and educate Lucretia M. Wood, the daughter of my said adopted daughter, Josephine M. Wood. And it is my further desire and request that my wife do make the said Lucretia M. Wood, Josephine M. Wood and my nephews and nieces, the children of my brothers, Caleb S. Clay and George Clay, joint heirs after her death in the said estate, which by this will I have bequeathed to my said wife.”
    After the death of the testator his widow made a will, by which she undertook to give all the property to persons other than the children of Caleb S. Clay and George Clay, and subsequently this action was brought to construe the will of William W. Clay and for an accounting.

      IFdd, that under the terms of the will the widow took an absolute fee in the residuary estate;
    That the clause relative, to the disposition of the residuary estate, which the testator desired his widow to make, contained merely a request;
    That it did not limit the absolute gift to her of such estate, nor did it give the nephews and nieces of the testator a vested interest in the residuary estate. Parker, J., dissenting.
    Appeal by tlie plaintiffs, George S. Olay and others, from a judgment, of the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of New York on the 21st day of March, 1S95, upon the decision of the court, rendered after a trial at the New York Special Term dismissing the plaintiffs’ complaint.
    William W. Clay died on the 21st of October, 1875, leaving a last will dated May 24, 1859. By the said will the testator devised and bequeathed his property as follows : First, he directed his debts and funeral and testamentary expenses to be paid, among which debts was included the mortgage then a lien upon his house and lot No. 23 West Thirty-first street, Now York city, provided it should not be paid before his death. Second, he gave to his wife the said house and lot and the household furniture, etc., contained in the house, and also the sum of §20,000, which sum was to be paid before any legacies thereinafter bequeathed. Third, he bequeathed to his two brothers, Caleb S. Clay and George play, and to his sister, Lucinda S. Clay, each the sum of §5,000. Fourth, he gave to his nephew William W. Clay, Jr., the son of his brother George Clay, $1,000 and one share of stock in a library association; to his nephew Edmund P. Clay, the son of his brother Caleb S. Clay, $500; and to his adopted daughter, Mrs. Josephine M. Wood, $3,000. lie then provided that, in case his estate was insufficient to pay these legacies in full after the payment of his debts, funeral expenses and legacies to his wife, these legacies should be reduced proportionably, and that in no case should they be a lien or charge upon the house and lot or household goods devised and bequeathed to his wife. The fifth clause, which occasions the controversy in this case, is as follows:
    £i Fifth. All the rest, residue and remainder of iny estate, real, personal and mixed, of which I shall or may die' seized and possessed, or to which. I shall be entitled at the time of my decease, after paying my debts and funeral expenses and testamentary expenses and the legacies above bequeathed, I do give, devise and bequeath to my beloved wife, Lucretia 1VI. Clay, and to her heirs, executors, administrators and assigns forever. And it is my desire and request that my said wife do sustain, provide for and educate Lucretia M. Wood, the daughter of my said adopted daughter, Josephine M. Wood. And it is my further desire and request that my wife do make the said Lucretia M. Wood, Josephine M. Wood and my nephews and nieces, the children of my brothers, Caleb S. Clay and George Clay, joint heirs after her death in the said estate, which by this will I have bequeathed to my said wife.”
    Shortly after the death of William W. Olay, his widow, Lucretia M. Clay, made her will, by which she undertook to give all of the property to persons other than the children of Caleb S. Clay and George Olay.
    After the death of Lucretia M. Clay and the probate of her will, this action was brought to obtain a judicial construction of the will of William W. Olay, deceased, late of the city and county of New York, and for an accounting of the personal property bequeathed therein and a partition thereof, and for an account of the rents and profits and partition of the real estate devised therein.

      Jolm F. Dillon, Dusk Taggart and Ila/rry Hubbard, for the appellants.

      James L. Bishop, for the respondents.
   YaN BbuNt, P. J.:

I cannot concur in the conclusion arrived at by Mr. Justice Par-KER in this case. It seems clear to me that it was not the intention of the testator to limit the estate which he had given, devised and bequeathed to his wife in such absolute and unmistakable terms by’ anything that was subsequently contained in the will. It seems to me idle to suppose that the testator in one breath should give to his wife all the rest, residue and remainder of his estate and to her heirs, executors, administrators and assigns forever, and then in the very next sentence say that she should have only a life estate therein. The words do not require the assumption of any such inconsistent action upon tlie part of the testator, and in my judgment such a limitation upon the estate given to the testator’s wife would be contrary to his intentions.

In the very next sentence, after having given to his wife all the residue of his estate as absolutely as it was possible for language to do so, using words of succession, which were not at all necessary, giving it to her heirs, executors, administrators and assigns forever, he says: And it is my desire and request that my said wife do sustain, provide for and educate Lucretia M. Wood, the daughter of my said adopted daughter, Josephine M. Wood. And it is my further desire and request that my wife do make the said Lucretia M. W ood, Josephine M. Wood and my nephews and nieces, the children of my brothers, Caleb S. Olay and George Olay, joint heirs after her death in the said estate which by this will I have bequeathed to my said wife,” thus in the very last words of the clause declaring that he had given the estate to his wife.

How can such language be construed to be a limitation upon an absolute gift 1 It is a request. He wished her to do it; but he did not intend to impose any obligation upon her so to do unless she saw fit to comply with his desire and request. He did not intend to give these nephews and nieces a vested interest in this estate. He put the title in his wife, and then he says: When you get through with it I would like to have you give it to the nephews and nieces.” The testator did not give it to them; he did not intend to give.it to them; he only made the request that his wife should do so, evidently intending to give her the1 option, if she saw fit, not to make such disposition of her estate, because it was hers; he said it was to be hers after his death; and it was the wife who was to give it — a thing which the testator never attempted to do. (In re Hamilton, L. E. [1895] 2 Chan. 370;)

The judgment should be affirmed, with costs.

Follett, J., concurred.

PARKER, J.

(dissenting):

I think both the argument and the decision of the court in Phillips v. Phillips (112 N. Y. 197) call for a reversal of the judgment. In that case the testator’s will gave to his wife all of his property, real and personal, named her as executrix, and then proceeded as follows: “ If she find it always convenient to pay my sister, Caroline Buck, tlie sum of $300 a year, and also to give my brother, Edwin W., during liis life, the interest on $10,000 (or $700 per year), I wish it to be done.”

The widow paid to the brother the annuity for a single year, and then stopped, not because she was unable, or because it was not convenient for her to pay, but because she chose not to pay. “ The real intention (said the court) of the testator was one of two things. He meant to make the annuities to his brother and sister dependent upon the existence of a specific fact, or upon the choice and will of his devisee. If they rest upon the former, they become a gift from him; if upon the latter, they have no existence outside of the choice of the widow.” Whether tire use of the word “ wish,” in the connection in which it was used, was sufficiently imperative and unequivocal to master the discretion involved in the absolute ownership previously given, or to rise only to the level of a request or suggestion, was said by the court to be the leading proposition involved.

As the primary question in every case involving the construction of a will is the intention of the testator, it was said that the use of the words “I wish” or “I desire,” is by no means conclusive. They raise the question, but do not decide it. Its decision must depend upon these words considered in connection with the whole will. That the word “ wish ” is frequently used by a testator as equivalent to a command was asserted by the court, and the assertion followed by an argument to prove that it was in such sense that the testator used it. In course of such argument the court, after referring to the fact that the testator did not intend to make payment of the annuities dependent upon the choice of his wife, but upon her ability to pay, if not inconvenient to her, said : “ Given that ability he says lIwish it to be done? The words are not, I wish her to do it, or, I hope she will feel it to be her duty, or, I trust she will see the propriety of such payment to be made, but, J] the testator, dealing with my own bounty to her —■c I wish it to be done; ’ it is my wish, not hers, that I put behind the annuities.” When, in the course of the argument, the court came to consider the effect of precatory words in wills, it said: “It - is perfectly well settled that what are denominated precatory words expressive of a wish or desire, may, in given instances, create a trust or impose a charge. Without a detailed consideration of the cases, it is quite clear that, as a general rule, they turn upon one important and vital inquiry, and that is, whether the alleged bequest is so definite, as to amount and subject-matter, as to be capable of execution by the court, or whether it so depends upon the discretion of the general devisee as to be incapable of execution without superseding that discretion. In the latter case there can neither be a trust or a charge, while in the former there may be, and will be, if such appears to have been the testamentary intention.”

I have thus fully referred to the decision in Phillips1 case that it may more readily appear, as we proceed in the examination of the will before us, on what we found the conclusion, that both the argument and the decision in that case, when applied to the language of this will, call for a determination that upon the death of Lucretia M. Clay, so much of the estate originally devised and bequeathed therein to Lucretia M. Clay as remained, became vested in Josephine JVI. Wood, Lucretia M. Wood, the children of Caleb S. Clay and George Clay, share and share alike.

There are points of difference between the two wills which will be referred to later on, because they are substantial and entitled to consideration, but in the main the argument which found favor with the court in Phillips’ case, seems to us alike applicable and controlling in this case. In this case the testator, after using language adequate to vest in his wife the residuary estate, continued: “And it is my desire and request that mjr said wife do sustain, provide for and educate Lucretia M. Wood, the daughter of my said adopted daughter, Josephine M. Wood, and it is my further desire and request that my wife do make the said Lucretia M. Wood, Josephine M. Wood and my nephews and nieces, the children of my brothers, Caleb S. Clay and George Clay, joint heirs after her death in the said estate which, by this will, I have bequeathed to my said wife.” The determination in Phillips’ case, that the use of the word “ wish ” is sufficient to raise the question whether the testator intended to. control and direct the disposition intended, necessarily determines that the word desire,” employed in this will, accomplishes the same result.

Indeed, the court said in that case that the words I wish ” or “ I desire ” have that effect. But if the word desire ” had not been mentioned by the court, the holding that the word “ wish ” is sufficient for the purpose, was necessarily equivalent to a decision that the word “ desire ” effectuates the same thing, for the words are synonymous.

In Webster’s International Dictionary it is said that “I wish you to do this ” is a milder form of command than I desire you to do this.” In Webster’s Unabridged Dictionary it is said: “A man desw es liis friend to write often; a merchant desires his clerk to be more careful in future. In this latter case, from the relations of the parties, desire is stronger than request; it implies a command or injunction.”

In view of the decision in Phillips’ case, there is no necessity to consider the relations existing between these parties, for the purpose of reaching a determination whether the word “ desire ” is sufficiently strong to present the question whether the testator intended by the use of that term to control and direct the disposition of his property in the manner suggested in his will, for it has already been determined as we have said. But as the relations which the parties bore to each other are proper to be considered in determining the meaning which the testator intended should be given to the word “ desire,” it should be borne in mind when considering the will in its entirety.

Before examining the will for the purpose of ascertaining whether, as a whole, it indicates a settled purpose on the part of the testator to do that which the use of the word desire ” suggests, it will be well to have in mind what persons, if any, were so related to the testator as would naturally entitle them to consideration by him in the disposition of his estate.

He had no living ancestors nor descendants, but he had a sister and brothers who had children, and he had an adopted daughter who was the mother of a young child, who was named after testator’s wife. These near relatives and the adopted daughter and her child appear to have been the subject of careful consideration by the testator when he came to decide how to dispose of his property. His wife either stood first in his affections, or else he regarded it his duty primarily to assure to her such comfort as a reasonable amount of property would afford, so he provided that, after payment of debts and funeral expenses, his wife should have the house and lot in which they lived, and all the household furniture and contents, together with the stun of $20,000, which sum was to be paid before any of the other legacies bequeathed by the will.

By the next clause, he gave to his sister and his brothers the sum of $5,000 each. By the fourth provision, ho gave $1,000 to a son of his brother George Clay; $500 to a son of his other’ brother, Caleb S. Clay, and $3,000 to his adopted daughter. To avoid any possibility of these legacies being charges upon the real estate devised to his wife, he provided that if his estate should prove insufficient to pay all of the legacies in' full, in addition to the devise and bequest to his wife, such legacies should be reduced proportionably. Then follows the fifth clause by which he gave all of the rest, residue and remainder of his property to his wife, and which also contains the provision hereinbefore quoted, in which he stated it to be his desire that his wife should sustain, provide for and educate Lucretia M. Wood, and that his wife should make the adopted daughter and her daughter and his nephews and nieces, children of his brothers, joint heirs after her death in the estate bequeathed to his wife by the will. lie thus clearly marked out the objects of his bounty. And it is impossible to read the will without coming to the conclusion that ho fully intended to provide adequately for the maintenance and comfort of his wife, and that his immediate relations, together with his adopted daughter and^lier child, should be benefited so far as possible, consistent with his primary scheme of assuring a reasonable competence to his wife. This result he sought to accomplish by devising and bequeathing to her a certain amount of his estate, -and giving to his brothers and sister and adopted daughter fixed amounts, and providing for the turning over by his wife of that which should remain of his estate to the persons described, at her death.

The argument in Phillips’ case, to show that the provision for the brother and sister iu that case was not meant to bo dependent •upon the uncontrolled choice of the wife, seems to us cleaily applicable to this one. There is nothing in the language employed which suggests any discretion on the part of his wife. She was not authorized to make selection between two classes, to add other persons to the class named, or to give more to some members of the class than to others. On the contrary, the will in effect declared it to be the testator’s wish that the persons who should constitute the designated class at tlie time of the death of testator’s wife, should share equally in the estate remaining.

It may be further observed in this connection that the language employed fulfills all the conditions adequate to create a trust by precatory words.

(1) Because there is no hint of any discretion to be exercised by the wife; on the contrary, the language employed excludes any idea of option on her part to make other disposition of the estate remaining than that suggested by the testator.

(2) The jiroperty which the testator desired should be disposed of in the manner stated is definitely pointed out as the said estate which by this will I have bequeathed to my said wife.”

(3) The persons who are intended as beneficiaries of the testator’s bounty are clearly pointed out, namely, nephews and nieces of the testator, together with his adopted daughter and her child.

There was also present an additional circumstance, always considered by the court in the construction of wills, and to which reference has already been made, namely, the relation and situation of the testator towards those whom he apparently desired to benefit. His scheme for the disposition of his property was undoubtedly, as we have seen from an examination of the whole will, to give something to his brothers and sister, who, in the ordinary course of nature, would pass away shortly before or after the death of his wife; to juovide for his wife amply during her life, and to secure such of the property as should remain to his relatives and his adopted daughter and her child.

I think it very clear that such was his purpose, and, having reached that conclusion, the authority to which reference has so frequently been made, requires us to hold that the words employed in the fifth paragraph of the will, considered in connection with the entire instrument, created a trust in respect to so much of the property devised and bequeathed by the second and fifth paragraphs as should not be used by the widow during life.

The respect in which there is a marked difference between this will and the one in Phillips' case, and which the respondents urge is of such a character as to call for an affirmance of the judgment, will now be considered. In this will the testator, in the second paragraph, followed the devise and bequest with the words, “ and to her heirs and assigns forever,” and the gift of the residuary estate, by the fifth paragraph, was followed by the words, “ and to her heirs, executors, administrators and assigns forever.” Had these words been omitted it would be difficult to find any foundation Avhatever for a claim that this case should not be controlled by the rule in Phillip ease and in Colton v. Colton (127 U. S. 300). In considering this conceded difference in form, it may be said in the first place, that without the use of these words the language employed was sufficient to vest the estate in the testator’s wife. Their use did not enlarge the estate devised to her. Without them, and in the absence of the clause containing the precatory words, the entire residuary estate, as well as the estate devised by the second clause, would have vested in her, and, therefore, so far as the vesting of the estate is concerned, the result of the language used in this case is precisely the same as in Ph illips’ case. There, although these words were not used, the court held that the language employed was sufficient to vest absolutely the estate in the testator’s wife. To sustain respondents’ contention of an effective distinction between the two wills in this respect, some other ground for it must be found than that the residuary clause vested the estate in Mrs. Clay because of the words, “ and to her heirs, executors, administrators and assigns forever,” for the language used in Phillips’ case was sufficient to accomplish the same result. Such a ground is not furnished by the suggestion that the devise and bequest to the wife in the legal and technical form adequate to convey the legal estate in fee, cannot be followed by an imposition upon the holder of such legal estate of a trust in respect to the whole or any part thereof because of repugnancy or inconsistency.

There can only be repugnancy in respect to estates of the same character. Where there is a disposition of the whole legal estate in fee, followed by an attempt to create a remainder in fee, the last disposition» is repugnant. Jlut there is no repugnancy when the testator gives the legal estate in fee and then imposes a duty upon the holder of the legal estate which constitutes in law a trust.

Had the testator devised and bequeathed to his wife and to her “heirs and assigns forever a house and lot (describing them), but in trust, nevertheless, for the following purposes, to wit, to sustain, provide for and educate Lucretia M. Wood, the daughter of my adopted daughter, Josephine M. Wood, and upon the further trust, that my wife do make the said Lucretia M. Wood, Josephine II. Wood and my nephews and nieces, children of my brothers, Oaleb S. Clay and George Clay, joint heirs after her death in the said estate, which by this will I have bequeathed to my said wife,’’ it would not be contended that a trust was not created by words apt and sufficient. In such a case it would not be questioned, but the use of the phrase “ heirs and assigns forever,” were intended as words of limitation marking out the legal estate, and not as indicating any disposition of the beneficial interest. As used in this will, their legal effect is not different, if, from the whole will, it appears that the testator intended to direct his wife to make over the estate remaining at her death to the persons described in his will.

In construing this will, therefore, these words seem only to be of importance in arriving at the intention of the testator. Did he intend by their use that not only the legal estate, but the beneficial interest as well, should vest absolutely in his wife? Unquestionably he intended to, and did, vest the legal estate in her; but, in view of the exact and definite expression of the desire of the testator as set forth in the fifth paragraph of his will, considered in connection with the whole scheme of the will and in the light of the authorities to winch we have referred, it seems quite clear that they wore used as words of limitation marking out the legal estate, and nothing more. That being the case the expression of the testator’s desire was just as effectual to impose a trust upon the real and personal estate devised and. bequeathed to Mrs. Clay as if the testator had used the most apt and technical language known to the law for the purpose, of expressing his intention to creat such a trust. It is one of the fixed rules of equitable construction that there is no magic in particular words; and any expressions that show unequivocally the intention of the parties to create a trust will have the same effect.” (Hill on Trustees [2d Am. od.], 83.)

The construction which I have suggested should be given to the will, and which seems to be warranted and required by the argument and decision in Phillips' case, makes the testator’s wife the trustee of the beneficial interest of that part of the estate remaining at the time of her death for the persons described in the concluding paragraph of the fifth clause.

This conclusion works out the wish of the testator, as expressed in his will, and is just. It was his property to dispose of as he chose. He undertook, by his will, which is nothing but his wish expressed in writing, and subscribed and attested as required by statute, to make disposition of it. The person whom he trusted to execute his wishes did not attempt to carry them out. On the contrary, in violation of the confidence bestowed upon her, a confidence justified by the marriage relation, she attempted, by her own will, and before the testator’s will was even probated, to exclude from participation in his bounty his blood relations. Her conduct was flagrantly disloyal and shocking to the moral sense. And it is fortunate that this attempted wrong can be prevented by the application of those rules which courts of equity are allowed and required to enforce for the purpose of giving effect to the intention and desire of a testator, when not in conflict with some positive rule of law or public policy.

The trustee failed to execute the trust reposed in her. She attempted to make disposition of the property it is true, but the attempt was to make an unauthorized disposition of it, and, therefore, her act was illegal ail'd of none effect.

As the trust remained unexecuted upon her death, the estate remaining became at once vested in the cestuis que frust by operation of law. (Watkins v. Reynolds, 123 N. Y. 211.)

I advise a reversal of the judgment.

Judgment affirmed, with costs.


author: O’Briicn, J.:

text:
    Richard H. Wright, Appellant, v. James B. Duke and Others, Respondents.

      Partnership —fiduciary relation of partners to each other — a sale by one to his co-partner in ignorance of a secret verbal agreement — action for deceit — right to damages.

    The gravamen of an action for 'deceit is that the plaintiff has been deceived to his hurt, and not that the defendant has gained an advantage.
    The relation of partners to each other is one of trust and confidence, and if some of the partners propose to huy the share of another partner in the business, the intending purchasers having general charge of the operations of the firm, of its office and of its books, they owe their fellow the dnty of fully disclosing the extent and condition ol the business and the existence of all valuable assets.
    Upon the trial of an action brought to recover damages for deceit alleged to have been practised by the defendants upon the plaintiff at the time of and in connection with a sale made by him to them, his co-partners, of his interest in the assets and business of the firm of W. Duke, Sons & Go., manufacturers of tobacco and cigarettes, it appeared that at the time of such purchase the term of the partnership had expired, although the business was carried on as it had been during such term; that during the interval the defendants were negotiating for and had secured a very valuable written contract with a company whose machine s they used in manufacturing cigarettes, by which the existing rate of royalty was reduced, connected with which reduction was a verbal agreement upon the part of the owners of the machines that the continuing partners should enjoy a rate for the use of machines, which should he twenty-five per cent lower than that given to any other person or firm, and that they concealed from their associate (although he knew of the negotiations therefor) knowledge of the fact of the execution of this written contract as well as of the verbal agreement, the latter agreement being' inserted in the written contract after the plaintiff’s retirement from the firm.

      Held, that there was such a failure to disclose fully the condition of the business as entitled the plaintiff to recover.
    It was claimed by the defendants that the contract was of no value to the plaintiff at the time of the sale by him of his interest in the business, and could not have been used in any way to his advantage, for the reasons, as claimed, that the partnership had expired by limitation before the sale of his interest; that the contract could not have been sold, or transferred or realized upon, as an asset of the firm, and that it could not have been used separately by any of the individuals theretofore composing the firm, and finally that, if assignable, it was, as a matter of fact, a contract of no value at that time.
    It appeared that the contract was, as a matter of fact, treated as assignable by both the parties, and its benefits were enjoyed, not only by the firm of W. Duke, Sons & Co. after plaintiff’s retirement, hut also by the corporation of that name after the firm had been incorporated.

      Held, that it was immaterial whether, as an abstract question of law, such a contract could he the subject of assignment;
    That as there was evidence tending to show that the parties at the time of the sale regarded the contract as of some value, an appellate court would not investigate or determine the value, as that question concerned only the amount of the damages and not the right to them.
    Appeal by tlie plaintiff, Eicliard II. Wright, from a judgment of the Supreme Court in favor of the defendants dismissing the complaint upon the merits, entered in the office of the cleric of the county of Now York on the 3d day of January, 1894, upon the decision of the court rendered after a trial at the New York Circuit before the court without a jury. -

      Edward B. Ilill and William J. Curtis, for the appellant.

      Joseph II Choate, IF. W• Fuller and Ralph Oakley, for the respondents.
   O’Briicn, J.:

This is an action to recover damages for deceit alleged to have been practiced by the defendants on the plaintiff at the time of and in connection with a sale made by him to them, his co-partners, of his interest in the assets and business of the firm of W. Duke, Sons & Co., manufacturers of tobacco and cigarettes. The sale was made on September 16, 1885, for the “lump sum” of $39,750, the plaintiff giving a deed of conveyance of such interest, as well as a release under seal of all claims and demands against his co-partners.

The office and principal factory of the firm was at Durham, N. C. James B. Duke had general oversight of the operations of the firm; George Watts had charge of the office at Durham and acted as cashier, secretary and treasurer in a general way, being assisted by B. N. Duke; B. L. Duke took, no active part in the business. Plaintiff’s duties were traveling, introducing the firm’s goods and establishing agencies, in the course of which he traveled, at different times, over nearly all the world. He had nothing to do with the office of the company, and very little with the manufacturing. The articles of co-partnership between plaintiff and defendants had expired by limitation on January 1, 1885, and negotiations for a fuller term, with increased capital, were in progress from that time to the time of the sale, the affairs of the partnership meanwhile drifting along as if the firm was still in existence.

During this time, from February to April, 1885, negotiations were pending between James B. Duke on behalf of the firm, and a Mr. Strouse representing the Bonsack Machine Company, for a more favorable license to the firm than the one then existing respecting the use of machines for making cigarettes, the patents for which were owned by the Bonsack Company. It is undisputed that plaintiff was aware of and was consulted concerning these negotiations, and was informed by James B. Duke of the proposition made by the Bonsack Company to reduce the royalty to twenty-four cents a thousand on cigarettes made upon the machines, and that plaintiff objected, and said he thought better teims ought to be obtained-The conditions of the contract being determined upon in New York, between James B. Duke, and Mr. Strouse, were communicated by the former in a general way by.letter to Benjamin N. Duke, at Durham, who went to Lynchburg, Ya., on June eleventh, for the purpose of meeting Mr. Strouse and executing the contract. Accordingly, on that date a writing was drawn up by Mr. Strouse, purporting .to contain all the provisions of the agreement arrived at between him and Janies B. Duke, and was signed by Mr. Strouse "and B. N. Duke on behalf of their respective companies; it was then taken to the office of the firm at Durham and put in the safe. The rate therein stated was twenty-four cents a thousand.

After the terms of this agreement had been arrived at between J. B. Duke and Mr. Strouse exceedingly strained relations arose between plaintiff and his co-partners, which were accentuated by an attempt to adjust a personal debt owing by plaintiff to W. Duke,, the father of the defendants Duke. The outcome was a suit by plaintiff to dissolve the firm and for a receiver, and a notice sent by the other members of the firm to the plaintiff and to all their customers on July 2, 1885, that the firm was dissolved. Plaintiff’s interest was transferred on September sixteenth, after which he had no connection with the firm. During none of the negotiations leading up to the purchase by defendants of plaintiff’s interest in the firm was this contract with the Bonsack Company mentioned or referred to between them, and it was upon the alleged concealment of its existence that he bases his right to recover.

The plaintiff admitted that in or about February, 1885, J. B. Duke told him that he was trying hard to get from Strouse a more favorable agreement than any other firm for the use of the Bonsack machines, and that the latter had made a proposition to reduce the royalty to twenty-four cents a thousand. But it is evident from the proofs that plaintiff was unaware of the execution of a contract such as was entered into. He himself so testifies; B. L. Duke says ho did not know of its existence; B. N. Duke says he told no one of its execution except perhaps his partner Watts; Watts testified that ho certainly believed that plaintiff knew nothing about it because the written article had been in his possession since its execution, and that plaintiff never had asked for it, nor had it been shown to any one; and J. B. Duke does not say that he told plaintjff of its execution, but simply that some mouths prior to the contract being signed he informed plaintiff of the terms being agreed upon for which the contract afterwards provided. But even had the plaintiff, prior to the transfer of his interest in the firm, read or been told the contents of the written memorandum or agreement, lie would not thereby have become aware of the vital feature of the contract between his firm and the Bonsack Company, which provided that the firm should always have twenty-five per cent lower rate than anybody else; because, though it had been agreed upon between J. B. Duke and Mr. Strouse before the contract was signed, it was not reduced to writing until January, 1886, -when this hitherto unexpressed condition was written in at the instance of J. B. Duke.

The learned judge below has found as a fact, That the plaintiff was informed by James B. Duke, at the time of negotiating the said oral contract, as to what terms Mr. Strouse, the president of the Bonsack Machine Company, was willing to have provided in said contract.” Upon the question whether or not this finding is correct, the whole case turns. If the plaintiff, though ignorant of the execution of the contract, was informed at the time of its negotiation, as claimed by J. B. Duke, of all the terms and conditions that were to be embraced therein, he could not hope to establish his cause of action, because, with the knowledge that such an important arrangement was in progress, it would be as much his duty as that of the defendants, while discussing the subject of the sale to them of his interest in the firm, to call attention to it as being of value in determining the amount he should receive, and plaintiff’s claim of a fraudulent and intentional concealment would be unavailing, and the judgment should be affirmed. If to our minds an examination of the record shows that such finding was unwarranted, compelling the inference that, while plaintiff was informed of some of the terms of the agreement, he was kept in ignorance of its most important condition, and that this was done designedly, then the conclusion follows that such concealment was a fraud upon the plaintiff, requiring'that the judgment dismissing the complaint upon the merits should be reversed.

Upon this point we have on one side the unsupported statement of J. B. Duke that he told plaintiff at the time of his having agreed with Mr. Strouse for the twenty-five per cent preference to his firm. On tlie other side we have, besides the denial of the plaintiff, the whole course of circumstances and events prior and subsequent to the sale, as tending to discredit the accuracy of Mr. Duke’s recollection in this respect.

The plaintiff had regarded the use of the machines favorably, and was anxious to have them ado¡3ted by the firm. The reduced royalty proposed or agreed to be paid for their use, however, he did not regard as advantageous. If that had been all there was of the contract, and he had known it during the negotiations to buy out his interest in the firm, it undoubtedly would have had no influence upon him in fixing the value of his share at any higher figure than he was induced to accept. lie stated at the time the rate was named to him that he thought better terms could be secured, expressing himself in vigorous language. That this statement was’ well founded, as well as the fact that had he known of the provision of the contract giving his firm a preference of twenty-five per cent over other users of the machines, he would have regarded it as of great value, is shown by the events after the severing of his connection with the firm. In a short time it was soon that pdaintiff’s advocacy of the Bonsack machines was justified. Their use revolutionized the business of making cigarettes, and the profits of the defendants sprang up enormously, and increased from year to year. Soon after the sale, and on September 30, 1885, plaintiff became general manager of the Lone Jack Cigarette Company. As a condition of his joining such comjjany he insisted upon a contract with the Bonsack Machine Company, and he obtained one at the rate of fifteen cents a thousand. After learning of the Lone Jack contract, defendants claimed a rate of eleven and a quarter cents and a balance due them for excessive royalties paid of upwards of $237,000, which they sought to enforce by litigation. The result, therefore, of plaintiff’s efforts to get a low rate for his new company was to obtain still more favorable terms for his competitors, his late partners, who by reason of their contract were beyond competition. These circumstances decidedly weaken the force of J. B. Duke’s testimony that he told plaintiff all the terms of his oral agreement with Mr. Strouse, for it is difficult to believe that plaintiff would have undertaken so hopeless an enterprise as the building up of competition in the manufacture of machine-made cigarettes, as against tlie defendants, bad be known they possessed snob advantages.

That tbe defendants were as oblivious of tbe value of tbe contract as they try to have it appear is also incredible. On September 5, 1885, tbe defendants made a proposition to plaintiff either to purchase bis one-fifth interest in-the firm for $36,000, they to take tbe assets as inventoried July second, as if they bad purchased the same on that day, or to sell their four-fifths interest at $36,000 a share, the plaintiff to take the assets as shown by the books and inventory of that date. The latter proposition did not include the good will of the business nor tlie use of the firm name. Nor does it appear that they intended it to include the contract with the llonsaek Company, for on September seventh they wrote by Mr. Watts to Mr. Strouse informing him that they were having trouble with the plaintiff, and that there was a possibility of the business being sold by order of the court, and of plaintiff through a syndicate becoming the purchaser. The remainder of the letter is as follows: “ Should such an event take place we would at once begin manufacturing cigarettes under the name of W. Duke, Sons & Co., with as much capital as we now have and all the experience ; so would, give the new buyers a lively time, as we feel confident that within twelve months any new cigarette business we might start would be as large as this one now is. We desire to know that should we conclude not to purchase the present brands and business, but start a new one, will you give us the use of the machines now iu use here ? If we get these machines soon as we should want them, and under same arrangements as now (of which Mr. Wright knows nothing), we would endeavor not to employ any hands to roll cigarettes. Advise us at once, as we are making all necessary arrangements looking to the possibility of such an event.” This certainly looks as though the defendants fully appreciated the value of the machines in the manufacture of cigarettes, and that the experimental stage in their use was past, else why should they say, we would endeavor not to employ any hands to roll cigarettes ; ” i. e., rely wholly on the machines for production. And with such faith in, and reliance upon, the machines, if they could have them under the same arrangements as then existed, whether known or unknown to plaintiff, they might well feel' justified in saying they would give the new buyers a lively time, as we feel confident that within twelve months any new cigarette business we might start would bo as large as this one now is.”

In addition, we have the evidence of <J. B. Duke on the trial of an action brought by the Bonsack Machine Company against W. Duke, Sons & Co. after the dissolution of the firm, in which he stated that he liad not told Mr. Wright about the contract. And it appears from the correspondence of the defendants with that company that, in oyder to avoid knowledge of the terms of the contract by persons who might open the mail of W. Duke, Sons & Co., the royalties were returned on the basis of the original contract, and rebate checks sent by the Bonsack Company to correspond with the reduced rate of twenty-four cents per thousand. Upon the same trial the defendant B. N. Duke testified that he never told plaintiff nor anybody but defendant Watts about the contract. We have, besides, the inventory which was shown plaintiff during the final closing of the transaction, in which the cost of the machine-made cigarettes was put down at figures which were not correct, such cost being put down by the appraisers who made the inventory from information furnished by the defendant Watts, who gave no explanation of why correct prices were not put down.

It is true that the defendants offered and allowed the plaintiff every opportunity to examine the books; but, in view of the manner in which the rebates were made, not even an expert looking at the books could have told that the firm paid less than the standard rates of royalties. And an examination of this inventory and the books which plaintiff made, and which purported to show a payment of standard royalties of thirty and thirty-three cents a thou-^ sand, may account for the failure of plaintiff to inquire further, believing as he might have done that the books and inventory correctly set forth the true relations of his firm with the Bonsack Company. Apart from this, however, it is evident that no examination that he could .have made, not even an inspection of the written agreement, which was carefully put away in the safe by defendant Watts and never shown to the plaintiff, would have given him a knowledge of all the terms of the agreement, particularly of the crucial one which related to the twenty-five per cent preference clause which, as stated, was not put in writing until the January following the retirement of plaintiff from the firm.

Another reason why the plaintiff could have assumed that the contract was not concluded was, that when J. B. Dulce informed him of the terms that Strouse was willing to accept, plaintiff told him to hold off and he would get more favorable terms. Unless, therefore, there is evidence to show that subsequent to that time plaintiff was informed that a contract had actually been entered into between the parties, and he was apprised of its terms, he might very well have thought that they were still engaged in negotiating a contract; and this view is strengthened by the fact that immediately upon retiring from the firm the plaintiff sought to obtain for the Lone Jack Company, with which he then became connected, from the Bonsack Company, more favorable terms than those fixed by the original agreement, which appeared by the inventory and books shown to plaintiff as being the royalties that the firm of W. Duke, Sons & Co. was then paying.

Regard being had, therefore, to the studied efforts to conceal from the plaintiff all knowledge of the real agreement between the firm and the Bonsack Company, we must conclude, notwithstanding the testimony of Mr. J. B. Duke on this trial to the contrary, that at the time when plaintiff sold his interest in the firm he was ignorant of that feature of the contract which favored Duke, Sons & Co. over all other firms or competitors.

Were this sale of plaintiff’s interest a negotiation between strangers, it may be that no obligation would rest upon the defendants to state fully and in good faith all the terms of the agreement; but this rule cannot prevail as between partners. In Mitchell v. Reed (61 N. Y. 126) Eael, Oh. J., says : “ The relation of partners-with each other is one of trust and confidence. Each is the general agent of the firm, and is bound ’ to act in entire good faith to the other. The functions, rights and duties of partners in a great measure comprehend those both of trustees and agents, and the general rules of law applicable to such characters are applicable to them.” In Parsons on Partnership, *225, it is said : “ From the requirement of perfectly good faith it follows that no partner must deceive his co-partners for his benefit, and their injury, either by false representations or by concealments. * * * So if he proposes to buy of them the whole or any part of their share of the business, and by any false statement or intimation on his part, or any concealment or prevarication, influences tliem to enter into an arrangement to effect bis wishes, it will not be obligatory on them.” And in 1 Bigelow on Fraud (ed. 1890), 311, 312, it is said : Where a partner intending to purchase the interest of his co-partner has had the special management of the business or the keeping of the accounts * * * the intending purchaser must make a full disclosure of the extent and situation of the business; otherwise the purchase will be 'liable to be avoided by the other partner.” And in the same work (pp. 312, 313) it is said : £! It is certainly the duty of partners towards each other to refrain from all concealment in the transaction of the partnership business. If a partner be guilty of any such concealment and derive a benefit therefrom, he will be treated in equity as a trustee for the firm, and compelled to account to his co-partners. * * * The burden is upon him to justify the transaction.” There would be no advantage in multiplying authorities upon this subject, all tending to support the proposition that in their dealings, as between each other, partners must act with the utmost candor and good faith. This duty or obligation was not lessened in the case at bar by the fact that during the negotiations the relations between the partners became strained, for until the relation was terminated the obligation remained.

Since, therefore, the knowledge that the firm possessed a favorable contract was exclusively in the possession of the defendants, which did not appear in airy writing or book kept by the firm, and could not in all its terms be ascertained from the written agreement, it is useless to argue “ that plaintiff was given a full opportunity to investigate the firm’s affairs,” and, against his right to complain, to insist that “ by his own admissions it appears that he was invited to be present at the taking of the inventory ; that he did not come ; that he knew there were many contracts of the firm, none of which were included in the inventory; because had he done what the defendants claim he should have done with respect to attending and examining, he could not have obtained, except .from an admission of such of the defendants as knew, any knowledge of the existence of an agreement which gave the firm the preference they then had over all competitors, which if the result of the use of the machines could have been foreseen, was a most valuable asset. This, we think, is an answer to the suggestion made by the learned trial judge, that tlie plaintiff is not entitled to succeed because lie might have ascertained the existence of the Bonsaek contract by inquiry. For, in view of the attitude and conduct of the defendants, there is a grave doubt whether any inquiry by plaintiff would have elicited the information ; and there is no proof that we have been able to find that the plaintiff had reason to suppose that any such contract, including the preference clause, existed, everything being done to induce him to believe just the contrary.

The crucial point is, that the most valuable part of the contract was verbal, and it ivas not known by or communicated to plaintiff, and seems to have been purposely concealed. The concealment of so much as was in writing is not, therefore, very material,' except as bearing on the question as to whether or not knowledge of the existence of the contract was designedly withheld from plaintiff. It is begging the real question then to argue that plaintiff could have ascertained by inquiry the existence of the written portion, and upon demand could have seen it, or could have ascertained its conditions 'from the firm’s books. And in connection with the testimony showing that plaintiff’s expert was given full opportunity to examine the books, we must remember the testimony of Watts, that “no expert looking at our books could have told that we paid a royalty to the Bonsack Company of less than thirty and thirty-three cents respectively.”

It is contended, however, that, assuming that plaintiff sold his interest in the business in ignorance of the existence of this license, as he claims, he suffered no damage and can recover none. This proposition is claimed to be supported by the well-settled rule that the gravamen of an action for deceit is that the plaintiff has been deceived to his hurt, and not that the defendant has gained an advantage. It may be that the measure of damages as to the value of the contract is its value on the 16th day of September', 1885 ; and it is claimed that the license was then of no value to the plaintiff, and could not have been used in any way to his advantage whatsoever, for the reasons, as claimed, that the partnership had expired by limitation ; that the license could not have been sold, or transferred, or realized upon, as an asset of the firm; that it could not have been used separably by any of-the individuals theretofore composing the firm, and, finally, for the reason that, if assignable, it was, as a matter of fact, a contract of no value at that time.

This last reason we shall consider hereafter. With regard to the others alleged, they are based on what actually did occur, and not "what might have been the result had plaintiff known of the true state of facts. After the notice of July second, and when plaintiff had filed his bill for' a dissolution, it could not be known what the ultimate inode of dissolution would be. It might be that the defendants would, as they actually did, buy out the plaintiff; it might be that the plaintiff would buy out the defendants; it might be that the assets of the firm would be sold under judicial decree in plaintiff’s suit. Whether the purchaser would secure the benefits of the contract, we do not regard as important. There is apparent authority for the proposition, both in the Federal and State courts, that the validity of such a contract is not affected by a change in the firm. (Belding v. Turner, 8 Blatchf. 321; Sizer v. Ray, 87 N. Y. 220.) But apart from this, it was, as a matter of fact, treated as assignable by both the parties, and its benefits were enjoyed, not only by the firm of W. Duke, Sons & Oo. after plaintiff’s retirement, but also by the corporation of that name after the firm had been incorporated. We think, therefore, the appellant correctly argues that it is a matter of little consequence whether, as an abstract question of law, the defendants might or might not have been deprived of the contract, if in fact they have enjoyed the benefits of it. And it is evident from Watts’ letter already referred to that the defendants believed that the rights of the Bonsack contract would pass to the purchaser of their establishment, and they were taking the precaution of opening negotiations for a new contract with that company.

This brings us to a consideration of the contention that, even if the contract was assignable, the plaintiff was not injured because as a matter of fact the contract at the date of the sale had no value. If this question is to be determined by the evidence, there is sufficient to show not only that the plaintiff would have regarded such a contract as of some value, but the efforts of the defendants in preventing his knowledge of its existence and taking measures to secure a contract equally favorable in the event of his purchasing their interest have a tendency to show that they also regarded it as of some value. Whether the value was more or less is beside the question presented for our consideration and would be wandering into the regions of speculation. Its only bearing could be upon the question of damages and would go to the amount thereof. Of course, if it clearly appeared that the contract was of no value, this court would not put the parties to the exjoense and labor of a new trial merely for the purpose of determining a technical right. Rut as we have said, there being evidence to show that even as of the date of the sale it had some value, it is unnecessary for us to determine liow much, because that concerns the amount of damages, and not the right to damages, which latter is the question we have to decide.

Our conclusions upon this record, therefore, are, that if the finding of fact made by the learned judge below, to the effect that the plaintiff was informed as to what terms Mr. Strouse was willing to have provided in said contract, is intended to cover plaintiff’s knowledge of the existence of the preference clause of twenty-five per cent, then we think that such finding is unsupported by evidence, and that, on the contrary, the evidence preponderates in favor of a finding that the plaintiff was ignorant of any such clause; that its existence was deliberately concealed from him to his injury; and that, in view of the relation of the parties, the concealment of such fact was a fraud on the plaintiff for which he is entitled to damages.

The judgment, therefore, should be reversed and a new tidal ordered, with costs to appellant to abide the event.

V"aN BeuNt, P. J., and Paeeee, J., concurred.

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


author: O’Brien, J.: Yan Brunt, P. J.

text:
    George P. Rowell and Others, Respondents, v. Henry Moeller, Appellant.

      Amendment of a complaint — introducing a new cause of action — when it will he allowed.

    Where a proposed amendment to a complaint will have the effect of introducing a new cause of action, the purpose of the complaint as originally drawn and that of the amendment being, however, substantially the same, the Special Term has power, in its discretion, to allow the amendment to he made.
    In an action brought to charge the defendant as a stockholder of a corporation upon the ground that no certificate of the full payment of the stock of the corporation was ever filed, and that such stock was not fully paid, the original complaint contained an allegation that no certificate that the stock was fully paid had been filed, but there was no allegation that the stock was not fully paid in property, nor did the complaint contain a statement of how much stock the defendant owned.
    Upon an appeal from an order granting the plaintiff leave to amend the complaint in these particulars,

      Held, that the permitting of an amendment was one within the discretion of the court at Special Term, and, it not appearing that such discretion had been abused, the order would not be reversed on appeal.
    The effect of the decision in Deyo v. Morse (144 FT. Y. 216) considered Yan Brunt, P. J., dissenting.
    Appeal by the defendant, Henry Moeller, from an order of tho Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county, of New York on the 3d day of October, 1895, allowing the plaintiffs to amend their complaint.

      Thomas McAdam, for the appellant.

      Philip Ccwpenter, for the respondents.
   O’Brien, J.:

The action was brought to charge the defendant as a stockholder of a corporation on the ground that no certificate of full payment of the stock was ever filed and that such stock was not full paid. While the original complaint contained an allegation that no certificate that the stock was full paid had been filed, there was im allegation that the stock was not full paid in property, nor did it contain a statement of how much stock, if any, the defendant owned. The order appealed from granted leave to amend the complaint in these particulars.

It will thus be seen that the question presented is identical with the one considered in Rowell v. Janvrin (69 Hun, 305), wherein this court held that it was error to permit such an amendment, saying : The cause of action sought to be set up by die amended complaint was entirely independent of, and had no relation to, that which had been alleged in the original complaint. In the original complaint a liability of a stockholder was sought to be enforced because of the failure to file a certificate that the whole of the capital stock had been paid in, under sections 10 and 11 of the Manufacturers’ Act (Chap. 40 of 1848). By the amended complaint a liability upon the part of the stockholder was attempted to be set up, arising from the provisions of section 14 of the same act, in reference to the purchase of property and the issuing of stock therefor. These were distinct independent grounds of a recovery, the only common feature being that in each the defendant was sought to be charged, as a stockholder.” An appeal from this decision was dismissed by the Court of Appeals (13S N. Y. 656).

Unless there is some later authority this should be controlling and decisive upon this appeal. We are referred for such an authority to the case of Deyo v. Morse (144 N. Y. 216). At Special Term a motion was therein made to strike out the amended complaint on the ground that it set up a different cause of action, which motion was denied. The General Term reversed the Special Term ordo-, and the Court of Appeals reversed the General Term, and after adverting to the fact that the view of the General Term was that the court had no power to authorize an amendment which changes the cause of action, said : Whether an amendment of a pleading shall be allowed in such a case is, in general, a matter of discretion in the court. The General Term has the right to review the exercise of such discretion by the Special Term, and its order made in the exercise of this power of review could not be reviewed here, x- * -x- qqie casej therefore, depends on the power of the Special Term to authorize an amendment before trial of a complaint, so as to permit a substitution of a different cause of action from that originally alleged. We think this question was in principle determined in the case of Brown v. Leigh (49 N. Y. 78). * * * The power of the court to grant or deny the relief, or to impose such terms as justice may seem to require, is an adequate protection against an oppressive exercise of the power. To deprive the court of this power wronld, in many eases, result in injustice and encourage litigation. The present case is an illustration. The causes of action were legally distinct, but the purpose of both complaints was to compel the application of the decedent’s property to the payment of his debts.”

This case must be regarded as effecting a sweeping change in the practice relating to the amendment of pleadings. The whole current of authority at General and Special Term was against the power of the court to allow an amendment to a complaint which set up a different cause of action. Examples of such decisions are Deyo v. Morse (74 Hun, 224); Vrooman v. Jackson (6 id. 326); Craig v. Hyde (24 How. 313), and in this category we must place the case of Rowell v. Janvrin (69 Hun, 305). It is true that in the latter case neither in the order nor in the opinion of the General Term is the decision expressly placed upon the want of authority in the court to allow such amendments, but it is quite evident from a reading of the opinion that such was the view of the court. The fact that it was not placed expressly upon the ground of want of power may account for the dismissal of the appeal to- the Court of Appeals.

As Deyo v. Morse ([supra) is authority, therefore, for the proposition that the Special Term has power to grant leave to amend, the question now presented is, whether such power was properly exercised. It is insisted that the amendment should have been refused because the cause of action set up in the amended complaint is barred by the Statute of Limitations, and, therefore, the court neither has the power nor should it, in the exercise of its discretion, allow the amendment, and in that connection we are referred to the case of Quinby v. Claflin (21 Hun, 611). There the General Term said : a The order appealed from gave leave to the plaintiff to amend his complaint by adding as a third cause of action a .further claim against the defendant of $34,000. The claim was barred by the Statute of Limitations. We are of opinion that the order was unauthorized.” It will be noticed in that case that an additional or third cause of action was sought to be pleaded, and the attention of the court was directed to a consideration of whether that should be allowed, and we think the question was very properly answered in the negative.

In principle, this case is more like that of Elting v. Dayton (61 Hun, 425). There a judgment for the plaintiff in an action to recover payment for work done under a contract, which was by its terms to be completed by a certain date, was reversed and a new trial ordered on the ground that, as the complaint alleged performance and did not aver an extension of time, and as it was found on the trial that the work was not completed by the date agreed upon, the plaintiff could not, without an amendment of the complaint, recover on the theory that strict performance had been waived. The amendment was there allowed up>on the opinion from which we quote : “ It is said by the counsel for. the respondent that tlie amendment should not be allowed because a new suit on the cause of action would be barred by the Statute of Limitations. Although some laches has been shown on the part of the plaintiff, the fact that the Statute of Limitations lias run against a new action is a strong reason for granting instead of refusing the relief.” (See, also, Eighmie v. Taylor, 39 Hun, 366.)

The Special Term, therefore, having the power in a proper case to allow the amendment, the question being one calling for the exercise of its discretion, and as upon the showing here made we cannot say that such discretion was improperly exercised, we think the order should be affirmed, with ten dollars costs and disbursements.

Follett, J., concurred.

Yan Brunt, P. J.

(dissenting):

I dissent. The discretion of the court was not properly exercised. There was no excuse offered; and unless in every case an amendment is to be allowed, as matter of course, this motion should have been denied.

Order affirmed, with ten dollars costs and disbursements.


author: O’Brien, J.:

text:
    The People of the State of New York ex rel. John R. Krushinsky, Relator, v. James J. Martin and Others, Police Commissioners of the City of New York, Respondents.

      New York city — a policeman, passing a civil service examination by a substitute, may be dismissed without written cha/rges.

    Where a person has been legally appointed a member of the police force of the city of New York, he obtains a status and rights, of which he can only be deprived in the manner prescribed by law; but where through fraud he obtains possession of a certificate of such appointment, or where he never had a valid title to such a certificate, he acquires no status as a member of the force, and has none of the rights possessed by a legally appointed member.
    Where an applicant for appointment as patrolman on such police force procures a substitute to pass the mental and physical examinations required of such applicant for that position, and receives a certificate of appointment through such fraud and misrepresentation, the police commissioners of the city of New York have power to make an investigation for the purpose of ascertaining whether he had passed the civil service examinations “as required by statute ; ” and if, upon such hearing, they determine that the examinations were, in fact, passed by a substitute, they need not make and prefer written charges against him under section 250 of chapte'r 410 of the Laws of 1882, as amended, but may summarily vacate his appointment and discharge him from the force.
    Certiorari issued out of tlie Supreme Court and attested on the 15th day of February, 1895, directed to James J. Martin, Avery D. Andrews, Charles II. Murray and Michael C. Kerwin, composing-the board of police commissioners of the police department of the city of New York, commanding them to certify and return to the office of the clerk of the county of New York all and singular the acts and proceedings by them had in the premises, and the affidavits and petitions, notices, writings, documents and other proceedings and things before them, together with their action, decision and proceedings in the premises in regard to the removal of the relator as a member of the police force of the police department of the city of New York.

      Lends J. Gremt, for the relator.

      Theodore Gonnoly and Terence Fa/rley, for the respondents.
   O’Brien, J.:

On the 30th of March, 1888, the relator applied to the police-commissioners for appointment as a patrolman in the police department of the city of New York. Thereafter he was notified by the secretary of the civil service board to attend competitive physical and mental examinations. The physical examination appears by a statement annexed to the return, and the answers made to the questions upon the mental examination are also to be found in the record. Such examinations having been found satisfactory, the police commissioners on or about the 20th of February, 1890, issued a certificate of appointment to the relator, and thereafter he performed the duties of the office up to the 5th day of February, 1895.

On October 12, 1894, the mayor of the city addressed a communication to the board of police calling attention to certain papers, used upon the examination of applicants for appointment on the-police force before the civil service board, together with a report of an expert in handwriting, upon which the claim was advanced that fraud and deceit was by some person practiced on the civil service board. Attention was thus called, among others, to the application and the examinations of the relator, and testimony was adduced tending to show that the original signature to the application, which was concededly in the handwriting of the relator, wras entirely different from the handwriting in the answers to questions put upson • the examination, and from which the conclusion was deducible that the latter were written by another and distinct person than the one who signed the name of the relator to the application for appointment. As a result the board of psolice, on November 9, 1894, adopted a resolution directing the relator, among others, to appear before said board on a day and hour named, the resolution stating that it was the intention of the board “ to investigate the question whether they have ever psassed the civil service examination as required by statute.” A copy of this resolution was served on relator, and subsequently, on November 22, 1894, the board made an investigation into the legality of his appointment, informing him that the pnincipal question was as to whether he wrote the answers to the mental examination questions put to him by the civil service board. An opportunity was accorded the relator to demonstrate the fact that he did write them, the psropsosition being that he should write from dictation the answers to certain questions to be put to-him. He was advised by his counsel, however, not to answer questions or make response, and this advice he followed. It is unnecessary to review the testimony, it being sufficient to say that it establishes the fact that the relator procured a substitute to pass the mental and physical examinations for him, and that the certificates given him were procured by fraud and misrepresentation. Thereupon the-board adopted a resolution striking the relator’s name from the roll of officers of the force.

The psosition taken by the relator here is that the proceedings against him were illegal, upon the ground that he could not be dismissed from the force until written charges had been made or preferred against him psursuant to section 250 of chapter 410 of the Laws of 1882, as amended by chapter 180 of the Laws of 1884. Upson the merits, therefore, it will be seen that no serious question is presented, the claim being that the procedure adopted, and psarticularly the failure to make written charges and serve them on the relator, was irregular, and that the action of the police board in dismissing him cannot' be upheld.

The provisions of ike law requiring the formulation of written ■charges and service of the same could only apply to one who had been legally constituted a member of the force. As against the relator such a course was unnecessary, for the reason that the proceedings of the board of police were in the nature of an investigation to ascertain whether or not he was legally a member of the force. When the fact was established that the relator was ineligible for appointment, the board had the right summarily to vacate his appointment, discharge him from the force and refuse longer to recognize him as a member thereof, and this follows as a sequence from the fact that the relator never was legally7' a member of the force because, being appointed in violation of the civil service laws, his appointment was void ab initio and conferred no rights upon the appointee. Where one lias been legally appointed on the police force he obtains a status and rights, of which he can only be deprived in the manner prescribed by law. One, however, who ■obtains possession of a certificate of appointment by fraud, or who never had a valid title to such certificate, acquires no status as a member of the force and ■ has no rights such as are possessed by7 a legally appointed member. Authorities are abundant to support these views, but as conclusive upon the direct question presented as to the legality of the proceedings taken .by the commissioners, we need only refer to the cases of People ex rel. Kopp v. French (102 N. Y. 586) and People ex rel. Short v. Fire Commissioners (47 Hun, 528; aff'd., 114 N. Y. 67).

We think that the writ in this case should be quashed and the proceedings dismissed, with costs.

Yan Brunt, P. J., and Follett, J., concurred.

Writ quashed and proceedings dismissed, with costs.