author: O’Brien, J. :

text:
    Matilda Teschmacher, Respondent, v. August Lenz, Appellant.

      JTailure to pass upon requests to find — partnership accounting as to profits of real estate retained by one partner subsequent to a dissolution — conclusions of a referee based on reasonable inferences, not disturbed.

    The refusal or failure of a referee to pass upon, requests to find, submitted on behalf of one of the parties to an action, on the trial thereof before him, in no way affects the validity of his decision or report, where the person submitting such requests has been in no way injured by such referee’s refusal or failure to act, by reason of the fact that the referee in his report has found upon every question submitted to him, provided his findings and conclusions as made present all the questions that the party making such requests could have raised by exceptions to the refusal of the referee to find such of his requests as were pertinent.
    Although there can be no accounting between co-partners, in regard to the profits ■of their partnership business, subsequent to the time of the dissolution thereof, yet one of such partners, if the other has taken possession of real estate belonging to the co-partnership, can recover, his share of the rents and profits thereof collected and retained by his co-partner subsequent to the dissolution of the partnership.
    lEeal estate bought with the money of a partnership for the use of the firm is firm property, although the title thereto be taken in the name of an individual member thereof; this fact of the partnership ownership may be proved by parol evidence, and the Statute of Frauds has no application to such a case.
    ■Upon an accounting had before a referee, directed to take and state the account in an action brought to dissolve an alleged co-partnership and to compel an ■accounting for the partnership property, the best testimony that the plaintiff ■could give "was furnished, and the defendant failed to meet the case presented against him, abandoned the controversy, and left his counsel to wage a contest practically alone with the plaintiff and her witnesses, presenting no denial or account.

      Meld, upon an appeal from a judgment in favor of tlie plaintiff, that the defendant had no cause to complain if, from such evidence as was furnished, with a view to giving the plaintiff her full rights in .the property acquired by their joint energy and labor, the referee reached conclusions adverse to the defendant, based upon reasonable inferences from the testimony given before him.
    Tan Brunt, P. J., dissenting.
    Appeal by tlie defendant, August Lenz, from an interlocutory judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 14th day of July, 1892, upon the decision of the court, rendered at the New York Special Term, adjudging that the plaintiff and defendant were co-partners, and appointing a referee to take and state an account of their dealings as such, and also from an order made at the New York Special Term, and entered in said clerk’s office on the 10th day of February, 1893, appointing a referee, and also from the report of said referee filed in said clerk’s office on the 30th day of March, 1893, and also from an order made at tlie New York Special Term, and entered in said clerk’s office on the 19th day of April, 1893, confirming the report of the referee, and also from the final judgment entered in said clerk’s office on the 11th day of May, 1893, xtpon the report of such referee.

      Frederick A. Botty and John Fennel, for the appellant.

      Henry W. Smith, for the respondent.
   O’Brien, J. :

The plaintiff, claiming to have been the partner of the defendant from December, 1885, until the fall of 1890, brought this action for a dissolution of the firm and an accounting. The partnership was denied, but upon the trial at Special Term the learned judge found in favor of tlie plaintiff’s contention that there was a co-partnership which commenced in December, 1885, and terminated on the 26th ■of September, 1890, and referred the matter of the accounting to a referee. No exceptions were taken to the admission or rejection of evidence on the trial, nor were any requests to make findings of fact or conclusions of law presented to the judge on behalf of tlie defendant, and no exceptions were filed to the findings of fact and conclusions of law made by the judge. 'When tlie plaintiff rested defendant moved to dismiss the complaint on the ground of the insufficiency of the proof in regard to the co-partnership, which motion was subsequently renewed at the close of defendant’s case; both motions were denied and exception taken, which -were the only exceptions presented in respect to the proceedings at the trial. Thus, the only question as to the interlocutory judgment presented for review is, whether the evidence produced upon the trial was sufficient to sustain the judgment.

In addition to the plaintiff five other witnesses were examined, all of whom gave evidence more or less weighty, tending to support her testimony as to a co-partnership between the parties, and it was not error, therefore, for the judge to deny, the motion to dismiss the complaint. The evidence adduced by the defendant denying such co-partnership presented a question of fact upon conflicting evidence, and upon a review thereof we do not think it can be justly claimed that the weight of such evidence was so clearly in favor of the defendant that we should interfere with the conclusion reached by the learned trial judge upon this disputed question of fact.

The more serious questions are those which were presented upon the accounting before the referee and upon exceptions filed to his report. The principal exceptions are those relating to the referee’s findings of fact and conclusions of law, upon the ground that such are contrary to the evidence and the law. The appellant insists, in addition, that.the referee made erroneous rulings upon the admission and rejection of evidence, but an examination shows that no substantial error in any way affecting the result was made, and these objections must be regarded, therefore, as untenable.

The defendant presented to the referee forty requests, which he no doubt wished to have found as findings of fact, and twenty-seven conclusions of law, which the referee refused very properly, as we think, to pass upon. There had been a trial upon the issue as to whether a co-partnership did or did not exist, and that was settled by the interlocutory judgment. But, entirely disregarding such judgment, the counsel for the defendant upon the reference called out on cross-examination of plaintiff’s witnesses all the facts that he could elicit on this point, and many of his exceptions to the admission and rejection of evidence and most of his requests to find submitted to the referee were to obtain from him a decision reversing the interlocutory judgment upon tliis question and requiring a finding upon practically every separate piece of evidence that appeared in the record. "Very few of these requests were pertinent or put in any such shape that the referee could pass upon them conveniently, and where, as here, in total disregard of the practice relating to a reference under an interlocutory judgment or the questions which alone are for the referee to pass upon, counsel masses a great number of requests in such a way that the referee cannot be expected to entertain, much less pass upon them, he is not obliged to do so. (Davis v. Leopold, 87 N. Y. 620; Sniffen v. Koechling, 45 N. Y. Super. Ct. 61.) Nor does the omission to pass upon the few requests that were pertinent affect the validity of the deeisiomor report. (Code Civ. Proe. § 1023.) The defendant was in no way injured by such refusal or failure, because the referee in his report found upon every question submitted to him, and those findings, with his conclusions, to which exceptions were filed, present all the questions that the defendant could have raised by exceptions to the refusal of the referee to find such of his requests as were pertinent.

From the testimony and the report it appears that the parties engaged in the business of sausage making, at first in a small way, and that they kept nc books of account of the firm’s transactions'; that the money taken in during the week was laid in the safe in the store, the expenses being paid from this money as they accrued, and that on Sunday or Monday of each week the week’s accumulations were counted up, the outstanding bills paid, and the remainder, or net profits of the business, were laid in a separate compartment of the safe.

The referee found that at the commencement of the business the defendant contributed $700 and the plaintiff $200, and to this finding the defendant excepts, upon the ground that it is conceded that the $200 was never so contributed by the plaintiff. As a matter of strict accuracy, the appellant is right, the testimony showing that the plaintiff had $200 for contribution, but that it was never actually contributed because, according to her statement, the defendant requested her to hold it until it should be needed. No injury has been done the defendant, however, with respect to this $200, because, although the referee finds that it was contributed, it is deducted from the amount coining to the plaintiff, so that, she being both credited and debited with it, the.one offsets the other, the referee expressly holding that she was not entitled to be allowed that amount on the division of the proceeds of the co-partnership.

There is some evidence showing what moneys had been accumulated as profits of the business, and what division thereof between the parties had been made down to April, 1888, and that from this-latter period to October first in the same year no profits were made. From October 1, 1888, to May 1, 1890, a period of eighty-three weeks, the referee finds that the average weekly net profits were $154.28, and to this finding the appellant most strenuously objects,, upon the ground that it is entirely unsupported. In this sweeping statement we think the ajipellant is in error. It is true that the testimony upon this point is very unsatisfactory and somewhat problematical, but the plaintiff and one other witness gave testimony as to the variations in the profits during a period of seven weeks, and the referee’s conclusion was reached by taking all of such amounts and dividing the total by seven, thus obtaining the average weekly profit. This was the best testimony that it was in the power of the-plaintiff to furnish. No books, as stated, having been kept of the firm’s transactions, and the defendant having taken and appropriated .all the money, she was not in a position to give any more definite or satisfactory evidence, and in the absence of any different statement or account by the defendant, the plaintiff should not be deprived of what, upon even slight evidence, the referee was justified in finding had been earned in the business. It having been found that the plaintiff and defendant were partners, if the testimony of the plaintiff is to be relied upon at all, the conduct of the defendant was most reprehensible, he having put the business from the very outset in his own name, and though the plaintiff was engaged with him in securing profits out of the business, these, when accumulated, wrere taken and appropriated by the defendant, and except in two instances prior to-October, 1888, without rendering any account or giving satisfaction to the plaintiff for her share or portion thereof.

It is also found that in 1888, with the funds of the partnership, in addition to $2,000 contributed by the plaintiff, real estate was purchased, the title of which was taken in the name of the defendant, for which the appellant insists he should not be held accountable, and in which lie claims the plaintiff should have no interest. There are certain facts which militate against plaintiff’s statement that this was purchased out of the partnership funds under an agreement that it was to be partnership property — notably the fact that for the §2,000 which she advanced on property taken by the defendant, she received from the latter a mortgage, upon which from time to time she was paid the interest and subsequently the principal. This she explains, however, by her testimony, that the defendant, induced her to permit the property to be taken in his name, and that until such time as it could be arranged to be taken in their joint names the mortgage was given her as security for the moneys that she advanced. "We see no reason to differ with the conclusion reached by the referee upon the facts here appearing as to the manner in which the property was bought, the uses to which it was put and the occupancy of a portion of it for the conduct of the business and as a home for the parties, it being entirely within his province, upon the conflict presented on the question as to whether this real estate was or was not partnership property, to conclude in favor of the plaintiff.

The rents of this property, though sometimes collected by the plaintiff and sometimes by the defendant, were all retained by the defendant, and though it was found that the partnership terminated on the 26th of September, 1890, the referee upon the accounting allowed the plaintiff her proportion of the rents down to the date when the property was sold, and also credited her with her proportion of the profit realized upon the sale of the house. This the appellant also claims to have been an error, upon the ground that the accounting should not be extended beyond the termination of the co-partnership in September, 1890, as found by the interlocutory judgment. There is no force, however, in this argument, because it is perfectly clear that, while there could be no accounting between the parties in regard lo the profits of the business subsequent to the date named, this is an entirely different question from permitting a-recovery of what was realized from the use or sale of partnership property acquired prior to the date of dissolution. If, instead of real estate, there had been horses and wagons, or money in bank, at the date of dissolution, it could hardly be claimed that the defendant could take possession of these, and, by renting out the former,, or obtaining interest upon the money, retain all these upon the. ground tliat he was not obliged to account therefor, or for anything .subsequent to the date of dissolution.

In addition the appellant claims that an inquiry into or accounting for the real estate was improper upon the reference, upon the grounds, first, that the particular transaction was not set out in the complant; and, second, that all transactions relating to real property must be in writing. As to the first, it was no more essential to set it out in the complaint than it would have been to have claimed that the partnership had purchased a horse or any other property, it being pertinent on the accounting to determine just what property the partnership had acquired, and that this claim as to the real estate was not an afterthought is shown by the inquiry entered into in reference thereto upon the trial at Special Term. As to the second, it has been held repeatedly that real estate bought with firm money for the use of the firm is firm property, though the title be taken in the name of an individual member (Baxter v. Bell, 86 N. Y. 195; Collumb v. Read, 24 id. 505), and this fact may be'proved by parol evidence; the Statute of Frauds does not apply. (Fairchild v. Fairchild, 64 N. Y. 471.) The sole question thus presented is whether the evidence produced sustains the findings of the referee, and whether those findings sustain his conclusions of law; and upon this we find no reason to disturb the decision of the referee.

Another finding of the referee excepted to is that in the month of October, 1888, plaintiff sold to the co-partnership merchandise for which the firm agreed to pay her $300, and upon account of which she was paid the sum of sixty dollars. The value of such property upon the reference was positively testified to by the plaintiff to have been worth the sum found by the referee; and, though it was found that upon the trial a lower value was placed upon it, it was competent on the reference, there being no testimony to the contrary, for the referee to accept the plaintiff’s version. In saying that' the referee was at fault in finding that sixty dollars was paid upon the goods so sold the appellant is strictly accurate, the testimony being that the defendant did not pay her any money, but instead thereof did discharge a debt which she had incurred in Brooklyn, and which she stated amounted to fifty dollars. The difference between the amounts is small, and is in defendant’s favor, and, therefore, he has no right to complain of a view taken by the referee most favorable to him upon the question of the payment and its amount.

The most unsatisfactory item of credit allowed the plaintiff is in regard to the $3,000 for the good will of the business. The plaintiff testified that such, in her opinion, was the value of the good will; and this was supported by another witness, who, however, was in no way shown to bo competent, and whose testimony upon this question is of very little value. In addition, however, the referee has found that the average weekly profits amounted to $154 a week ; and this, together with such testimony as was presented, was some evidence, however meagre, upon which to base the finding as to the value of such good will. Upon this question we can but repeat what we have already said. If the best testimony that the plaintiff could give was furnished, as is here shown, and if, as here appears, the defendant failed to meet the case presented against him, abandoning the controversy and leaving his counsel to wage a contest practically alone with the plaintiff and her witnesses, presenting no denial or account, he has no cause to complain if, from such evidence as was furnished, with a view to giving the plaintiff her full rights in the property acquired by their joint energy and labor, the referee has not exceeded his power in reaching conclusions based upon reasonable inferences.

The plaintiff’s testimony on all the items included upon the accounting was as clear as the nature of the transactions and the manner in which the firm’s dealings were conducted rendered possible ; and in most of her claims she is supported by other witnesses, while, on the other hand, the defendant does not himself appear for examination and presents but a single witness, who knew nothing of the firm’s business; and such testimony, witli the production of the bank books showing the dejjosits made by the plaintiff, together with the fact that she received a mortgage in her own name upon the real estate, is the only evidence presented to destroy the force of plaintiff’s case. "We do not think that she should be punished for the defendant’s wrongful acts in appropriating without accounting to her all the moneys and assets of the firm, including the good will, and then when in that position refusing to be examined or present any account, or make any showing as to the amount or disposition which he had made of the co-partnership property, relying seemingly upon the plaintiff’s inability, in the position in which she was placed, ever to present a satisfactory statement upon which she might base her right to recover her just proportion of what resulted from the joint enterprise. In the .view o'f such an attitude, assumed by the defendant, he is not in a position to invoke the court’s aid in preventing the plaintiff from getting what justly belongs to her. Upon the whole case, therefore, we do not think that we should seize upon technical or captious objections to disturb a judgment which seems to be right and just.

Judgment affirmed accordingly, with costs.

Follett, J., concurred; Yan Brunt, P. J., dissented.

Judgment affirmed, with costs.


source: Caselaw Access Project

author: O’Brien, J. :•

license: Public Domain

text:
    Emma C. Tweddell, Plaintiff, v. The New York Life Insurance and Trust Company and Another, Defendants.

      Trust — income accumulated during a minority cannot, at majority, be added to the principal of a trust fund.

    Tlie last will and testament of a testatrix contained two clauses in the following words:
    “ Third. I give and bequeath to my niece, Emma C. Bills, all my jewelry not-above bequeathed, and all the rest of my personal property not above bequeathed, the money, however, and the securities as evidence thereof, are given with the following restrictions, namely: Such moneys and securities all to-be placed by my executor in the keeping and control of the New York Life-Insurance and Trust Company, and to be held by them during the term of her natural life, said company to pay over'quarterly or semi-annually to my executor the interest accruing upon said securities until said Emma C. Bills shall arrive at the age of twenty-five years, should she live to that age, and aftjer she shall become twenty-five years old to pay such interest to 'her directly during the period of her natural life.
    “ Fourth. I direct my executor to receive from said company the interest accruing upon said securities until my said niece shall become twenty-five years of age, should she live so long, and to dispose of the same as follows, namely: During the time from my decease till said Emma shall be nineteen years of age, to pay to her from said interest thus received by him a sum not to exceed one-thousand dollars per year; from then till she shall be twenty-one years of age, to pay her from said interest a sum not to exceed twelve hundred dollars a year; from then till she shall become twenty-five years of age, he shall pay to her the whole of said yearly interest. And I hereby direct the said New" York Life Insurance and Trust Company to reinvest such securities hereby intrusted to them as shall run out, and I hereby direct my executor to reinvest the surplus interest accumulating- Over the yearly allowance above stated, in the said New York Life Insurance and Trust Company, to the end that the same maybe added to the trust fund, subject to the same reg-ulations as the principal above named, and become a part thereof. And I hereby further will and direct that the said Emma 0. Bills may at any time bequeath by will all or any part of the funds thus intrusted to said company, and if she should not dispose of the same by will, it shall, upon her decease, be paid to her children or child, should she have any, equally.”

      Held, that a trust was created thereby in favor of Emma C. Bills, with remainder over to her child or children, which remainder was subj ect to her right to dispose of the same by will;
    That such disposition was clear and definite, in no wise against any statute, and would be upheld;
    That the surplus income accumulated during the minority of Emma C. Bills-should be paid to her upon her reaching the age of twenty-one years.
    The statutes of the State of New York do not permit the income upon a trust-estate, accumulated during the minority of the life beneficiary, to be added to the capital when such beneficiary reaches her majority, and thereafter tobe held in trust with the principal of the trust estate.
    Submission of a controversy upon an agreed statement of facts under section 1279 of the Code of Civil Procedure.
    The following facts are submitted by both parties:
    Emma S. Clark, the aunt of the plaintiff, departed this life, being a resident of Suffolk county, New York, in the year 1889, leaving a last will and testament which was thereafter duly admitted to probate by the surrogate of said county.
    Said will was in the words following, viz.:
    “I, Emma Sarah Clark, of Setauket, Suffolk county, New York, do make, publish and declare this my last will and testament in manner following, to wit:

      “ First. I give and bequeath to my sister, Mrs. Annie J. Bills, all my wearing apparel and books and sapphire and diamond ring' and gold butterfly.
    “ Second. I give and bequeath to my friend, Mrs. Eveleen T, Coffin, twenty thousand dollars.
    “ Third. I give and bequeath to my niece, Emma 0. Bills, all my jewelry not above bequeathed, and all the rest of my personal property not above bequeathed, the money, however, and the securities as evidence thereof, are given with the following restrictions, namely : Such moneys and securities all to be placed by my executor in the keeping and control of the New York Life Insurance and Trust Company, and to be held by them during the term of her natural life, said company to pay over quarterly or semiannually to my executor the interest accruing upon said securities until said Emma C. Bills shall arrive at the age of twenty-five years, should she live to that age, and after she shall become twenty-five years old to pay such interest to her directly during the period of .her natural life.
    “ Fourth. I direct my executor to receive from said company the interest accruing upon said securities until my said niece shall become twenty-five years of age, should she live so long, and to dispose of the same as follows, namely: During the time from my decease till said Emma shall be nineteen years of age, to pay to her from said interest thus received by him a sum not to exceed one thousand dollars per year; from then till she shall be twenty-one years of age, to pay her from said interest a sum not to exceed twelve hundred dollars a year; from then till she shall become twenty-five years of age, he shall pay to her the whole of said yearly interest. And I hereby direct the said New York Life Insurance and Trust Company to reinvest such securities hereby intrusted to them as shall run out, and I hereby direct my executor to reinvest the surplus interest accumulating over the yearly allowance above stated in the said New York Life Insurance and Trust Company, to the end that the same may be added to the trust fund, subject to the same regulations as the principal above named, and become a part thereof. And I hereby further will and direct that the said Emma C. Bills may at any time bequeath by will all or any part of the funds thus intrusted to said company, and if she should not dispose of the same by will, it shall, upon her decease, be paid to her children or child, should she have any, equally.
    “ And I hereby appoint my friend, Charles H. Coffin, the sole executor of this my last will and testament, hereby revoking all former wills by me made.”
    The defendant Charles H. Coffin is the executor named in said will, and duly qualified, and still acts, as such executor.
    The plaintiff is the Emma 0. Bills referred to in said will. Subsequent to the death of said Emma S. Clark the plaintiff married Francis Tweddell. The plaintiff has no children. She attained the age of twenty-one years on the 6th day of July, 1894.
    The defendants have received the income upon the estate left in trust by said will, and from said income have paid to the plaintiff the annual sums directed to be paid to her by said will, but there still remains in tlieir hands an accumulation of such income received prior to July 6, 1894, amounting to $7,500.
    The questions submitted to the court are :

      First. Do the statutes of this State permit the provisions of said will directing the accumulated income to be added to the capital of the trust estate when plaintiff attained majority, and thereafter to be held in trust ?

      Second. If such provision is invalid, should the sum of $7,500 (being such accumulated income) be paid to the plaintiff ?

      Lucius H. Beers, for the plaintiff.

      R. F. Robinson, for the defendant The New York Life Insurance and Trust Company.

      Wilson db Wallis, for the defendant Coffin.
   O’Brien, J. :•

The validity of the trust, as shown by the questions submitted, is not presented, except as to the accumulated income. But it is argued that, inasmuch as the remainder over to the plaintiff’s children, provided by the fourth clause of the will, is repugnant to the absolute bequest in the third, the former is wholly void and there is no valid remainder bequeathed, and from this the conclusion is sought to be derived.that, as there is no remainder, the accumulation is wholly for the benefit of the plaintiff, who was an infant at the death of the testator, that she is to receive the income of the accumulation, and that the accumulated principal belongs to her absolutely, subject to the trust, and is disposable of by her by will or will pass to her legal representatives.

If the construction to be given to the will requires a holding that the remainder over to the children is void, then it would seem to follow that not only the accumulation of income but the principal as well would belong to the plaintiff freed from the trust. We think, however, that the intention of the testatrix, so far as it relates to the creation of the trust, is clear and valid. By the third clause the residue of the testatrix’s property is bequeathed to the plaintiff, subject to the restrictions that the same is to be placed in the keeping and control of the trust company, to be held by it during the term •of her natural life, with a provision that the interest accumulating thereon should be paid over quarterly or semi-annually to the executor until the plaintiff’s arrival at the age of twenty-five, after which time the interest or income was to be paid to her directly during the period of her natural life. By the fourth clause what the executor was to do witli the interest or income is shown, it being therein provided that certain sums should be paid to plaintiff during certain periods of her life until she arrived at the age of twenty-five years, and that any excess over such payments should be added to the principal, and upon her arrival at the age of twenty-five that the interest upon the entire fund thus made up of capital and income should be paid to her during her life, with power to plaintiff to bequeath by will-any part of the funds thus placed in trust, and upon failure to dispose of the same by will, upon her decease the same to go to her child or children equally.

It will thus be seen that a trust is created in the fund, with remainder over to her child or children, which remainder is subject to her right to dispose of the same by will. Such a disposition being clear and definite and in no wise against any statute, should be upheld.

In regard to the income accumulated during the infancy of the plaintiff, we think that under the statute and decisions it should be paid to her. The will provides that the accumulation saved out of the income shall not be paid over to the minor upon her attaining her majority, but when she reaches the age of twenty-five years shall be added to the principal of the trust fund, of which the principal is to be payable at her death to her appointees, or, failing appointment, to her children. This presents the precise question which was fully discussed and decided by the Court of Appeals in Pray v. Hegeman (92 N. Y. 508), and Barbour v. De Forest (95 id. 13). As said in the former case (head note): The provisions of the Revised Statutes (1 R. S. 726, § 37; Id. 773, § 3), authorizing an accumulation of the income of real and personal property for the benefit of minors, require that the accumulation shall be for the benefit of a minor solely and during liis minority, and that when the period of accumulation ceases the accumulated funds shall he released from further restraint and paid over to the person for whose benefit the accumulation is directed. A direction for accumulation during a minority, accompanied with a gift of the income of the accumulated fund, after the expiration of the minority, to the minor for life, and of the principal upon his death to other persons, is void.”

These cases are controlling, and the distinction sought to be made between them and the one at bar we regard as untenable. If we are right in our view, that the plaintiff has but a life interest in the fund, whether we regard such fund as the result of the original capital, or of such capital as increased by the accumulated income, then it is evident that the accumulation resulting during minority, although the plaintiff would receive the interest arising therefrom, when added to the capital, is not solely for the benefit of such minor, but will go upon her death to her apqiointees or her children.

We think, therefore, that with regard to the first question, the statutes of this State do not permit the accumulated income to be added to the capital when plaintiff attained majority, and thereafter to be held in trust; and, secondly, that the sum of $7,500 (being such accumulated income) should be paid to the plaintiff.

Judgment accordingly, witii costs.

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

Judgment ordered for plaintiff, with costs.


author: O’Brien, J.:

text:
    Chu Pawn and Others, Respondents, v. Robert J. Irwin, Appellant.

      Pleading ■ — issue as to the execution of a contract through fraud — stipulation that the issue was as to its actual execution.

    An. action was brought to recover certain moneys obtained from the plaintiffs by the defendant while acting in a fiduciary capacity upon statements that the money was to be used to pay custom house duties, etc. The answer admitted the receipt of the various sums, except one small item, hut claimed that the defendant had disbursed more than the amount credited in the complaint, and also set np affirmatively a cause of action against the plaintiffs upon a written contract. In their reply the plaintiffs denied “that they ever signed the document or contract,” and alleged “that they never knowingly signed the said contract, knowing or agreeing to the matters therein stated.”

      The parties entered into a stipulation as follows: “It is agreed that the only-question to be tried in this ease is the question as to whether there is a contract between the plaintiffs and. the defendant, as alleged by the defendant, and that in case the jury find there was no such contract the court can direct a verdict for such amount as is proper. The court is to submit that one special fact to the jury, and in case the jury find there w-as such a contract, then counsel consented that the amount to be allowed to the defendant under the contract can be ascertained either by a reference or in such other way as the court may direct.”
    The contract signed by the plaintiffs was admitted in evidence, and the whole force of the plaintiffs’ testimony was directed to show that through misrepresentation and fraud the plaintiffs’ signatures were obtained thereto.
    The trial judge, in submitting the question to the jury, thus presented it:
    “Did the plaintiff Cliu Pawn sign the name of Yee Long & Co. to this contract, knowing what was in it and understanding that it was a contract between the plaintiffs and the defendant?”

      Meld, that the issue, as finally presented, was not whether a contract did or did not exist, but whether a contract concededly in existence had or had not been obtained by fraud;
    That, upon the pleadings, the issue of fraud was not presented, nor did the stipulation embrace such issue of fraud, or include any inquiry beyond the simple one as to whether there was or was not a contract between the parties;
    That the allegation in the reply, that the plaintiffs never knowingly signed the contract, knowing or agreeing to it, was equivalent to a statement that they did not know what the papers signed by them contained, and that they did not sign it intending to agree to it, which was no defense to the obligation imposed upon them by such contract, as they were bound by the terms thereof, although not knowing or intending to agree to its terms;
    That they must stand by the words of their contract, and if they did not read what they signed they alone were responsible for their omission to do so.
    Appeal by the defendant, Robert J. Irwin, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of New York on the 12th day of April, 1894, upon the verdict of a jury, rendered after a trial at the New York Circuit.

      George A. Strong, for the appellant.

      Franldi/n Bien, for the respondents.
   O’Brien, J.:

This action was brought to recover certain moneys obtained by the defendant from the plaintiffs in a fiduciary capacity upon statements that the money was to be used to pay custom house duties, etc. The answer admitted the receipt of the various sums, except one small item, but claimed that the defendant had disbursed more than the amount credited in the complaint, and also set up affirmatively a cause of action against the plaintiffs upon a written contract, by the terms of which, among others, the defendant was to receive thirty per cent upon all reductions in duties and money saved on duties through any compromise with the government, and that such sums so earned under the written contract, after deducting what had been paid him, would leave the plaintiffs indebted to the defendant. In their reply the plaintiffs denied that they ever signed the document or contract,” and alleged that they never knowingly signed the said contract, knowing or agreeing to the matters therein stated.”

At the trial the parties entered into a stipulation as follows: It is agreed that the only question to be tried in this case is the question as to whether there is a contract between the plaintiffs and the defendant, as alleged by the defendant, and that in case the jury find there was no such contract the court, can direct a verdict for such amount as is proper. The court is to submit that one special fact to the jury, and in case the jury find there was such a contract, then counsel consented that the amount to be allowed to the defendant under the contract can be ascertained either by a reference or in such other way as the court may direct.”

The contract signed by the plaintiffs was admitted in evidence, and the whole force of the plaintiffs’ testimony was directed to showing that through misrepresentation and fraud plaintiffs’ signatures were obtained thereto, and the trial judge, in submitting the question to the jury, thus presented it: “Did the plaintiff Chu Pawn sign the name of Tee Long & Co. to this contract, knowing what was in it,'and understanding that it was a contract between the plaintiffs and the defendant ? ” From this it will be seen that whether a contract did or did not exist, was not the issue as finally presented, but whether a contract, concededly in existence, had or had not been obtained by fraud. Upon the pleadings, the issue of fraud was not tendered, nor did the stipulation embrace such issue of fraud, or include any inquiry beyond the simple one as tb whether there was or was not a contract between the parties.

The reply, after denying that the plaintiffs signed such contract, alleges that they never knowingly did so, knowing or agreeing to it. This latter is equivalent to a statement that they did not know what tlie paper signed by them contained, and that they did not sign it intending to agree to it. This, under the decisions, is no defense, the law holding that parties are bound, although not knowing or intending to agree to the terms, or, as stated in Upton v. Tribilcock (91 U. S. 45-50): “ It will not do for a man to enter into a contract, and, when called upon to respond to its obligations, to- say that he did not read it when he signed it, or did not know what it contained. If this were permitted, contracts would not be worth the paper-on which they are written. But such is not the law. A contractor must stand by the words of his contract, and if he will not read what he signs, he alone is responsible for his omission.” And the conditions entitling one to relief from a written contract are thus stated in Brice v. Lorrilard (55 N. Y. 250): “It must be the mistake of one party by which his intentions have failed of correct expression, and there must be fraud in the other party.”

Note.— The rest of tlie cases of this term will he found in the next volume, 83 Hun.— [Rep.

It will thus be seen that the real issue upon the contract was as to whether it had an existence or not. Though the defendant endeavored to hold the proof down to this issue, the plaintiffs were permitted to introduce evidence tending to show that the contract was procured by fraudulent representations or acts; and 'it was as the result of such testimony that the jury found upon the question submitted to them by the court — not against the existence of the contract, which was conceded — but against its validity. It is for errors committed in permitting evidence of fraud to be introduced over defendant’s objections and exceptions, and for the refusals to confine the evidence and the charge of the court to the only issue made by .the pleadings and the stipulation of the parties, that the defendant :asks for a reversal of the judgment. Such exceptions, we think, for the reasons stated, are good.

The judgment must be reversed and a new trial ordered, with costs to appellant to abide event.

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

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


author: Bockes, J.:

text:
    September, 1874.
    RICHARD HILTON, Plaintiff, v. CHRISTOPHER W. BENDER, MARIA BENDER and others, Defendants.

      Adverse possession underr invalid deed—Assessment deed—Tenant—may purchase what tide hostile to his landlord's — Go-tenants—one may purchase, enter und&r and hold hy title hostile to that of the other—Presumption—as to truth of recitals in deeds from long possession.

    It is not necessary that an adverse possession should commence under a valid deed.
    Possession under a tax deed, invalid by reason of want of authority to execute it, if continued for twenty years, ripens into "a perfect title.
    A tenant may protect his possession against his landlord by showing that the title of the latter has expired or been extinguished.-
    One tenant-in-common, who enters into possession of real estate under a title hostile to the claim of his co-tenant, is not precluded from setting up a title so acquired as against the latter.
    Whether an undisturbed possession under an assessment title for upward of a third of a century, furnishes presumptive evidence of the truth of the recitals contained in the deed, quere.

    This canse came before this court upon a case and exceptions, ordered to be heard here in the first instance.
    The action was brought for the purpose of recovering from Maria Bender, the interest (i. e., one undivided half) in the premises described in the complaint, which was devised to the plaintiff, Richard Hilton, by the will of James Hilton, his uncle. The defendant, Christopher W. Bender, was the husband of Maria. The other defendants were her tenants in the actual occupancy of , the premises.
    The evidence tended to show that James Hilton, the testator, died in December, 1836; that for a great number of years he had been in possession himself, or rented to tenants the premises described in the complaint; that at the time of his death the premises were occupied by John Hilton, to whom he had leased them a short time before his death. James Hilton died, leaving a last will and testament, by which he devised this property to his executors, as trustees, to apply the income thereof to the support of his son, James Hilton, diming his life, and, after his decease, to the support of Rachel Hilton, his wife, during her widowhood, and on her decease or remarriage he devised this property to this plaintiff, Richard Hilton, and to Robert Hilton, Jr., and Catharine, his wife, as tenants in common. The interest of Robert Hilton, Jr., and Catharine, his wife, passed, ten or twelve ye'ars before the commencement of this suit, to Maria Bender.
    Rachel died, not having remarried, about nine or ten years before this action was brought.
    The defense interposed by the defendant, Maria Bender, is, that' John Hilton, while in possession of these premises as tenant of James Hilton, the testator, and while acting, as the evidence tended to show, as his agent, in March, 1836, purchased this property at a city assessment sale. John Hilton, subsequent to James Hilton’s death, and on December 16, 1852, made a general assignment of all his “ lands, tenements and hereditaments,” not describing this property specifically, for the benefit of his creditors.
    The assignees conveyed these premises to William S. Paddock, November 6, 1858, and William S. Paddock, on the 29th day of December, 1858, conveyed them to Maria Bender.
    The plaintiff objected that the deed given at the assessment sale was inadmissible, unless proof was made that the proceedings, required by statute to authorize its execution, had been had. The court admitted it without such proof.

      The plaintiff requested the court to submit the whole case to the jury, and also asked that various specific questions should be so submitted.
    The court denied each of such requests, dismissed the complaint, and ordered that the exceptions be he.ard in the first instance at the General Term.

      Marcus T. Hun, for the plaintiff.

      Amasa J. Parker and William S. Paddock, for the defendants.
   Bockes, J.:

It may, perhaps, be questionable whether title to the premises was shown in plaintiff’s testator, James Hilton. No deed to bim was produced, nor was he in possession, claiming title, at the time of his decease. He was shown to have been in possession several years prior to his death, claiming to own the premises, and exercising acts of ownership over them. But he was out of possession at the time of his death; the premises then being occupied by John Hilton, who, however, claimed as his tenant, and had made substantial and valuable improvements on the lot. The admission of tenancy, by John, as proved, made no disclosure of its conditions, or of the duration of the tenancy.

But without determining this point, the evidence established, as I think, an adverse possession by Mrs. Bender and her predecessors in occupation, which barred the plaintiff’s claim. In March, 1836, John Hilton, from whom Mrs. Bender claimed title through mesne conveyances, obtained a deed of the premises, purporting to give him title for one thousand years, under an assessment sale. This was prior to the date of the will even, and a considerable period prior to the decease of the plaintiff’s testator. Following this to the time of the trial, a period of over thirty-five years, the premises were occupied by persons claiming to hold, and holding under that title. It appears that John Hilton, the purchaser on the assessment sale and grantee in that deed, which was duly acknowledged and was recorded in 1838, held under it until 1852, when he conveyed to Barent P. Staats and Stephen Paddock, Jr., who, in 1858, conveyed to William S. Paddock, and he conveyed to the defendant, Mrs. Bender. Here, then, was an adverse holding of over thirty-five years prior to the commencement of the action. Twenty years were sufficient to bar the right of entry under the true title. But it is said the assessment sale and deed were without the authority of law, and void. It was not necessary that the adverse possession in order to be effectual, should commence under a valid deed. It was held, in Finlay v. Cook that a comptroller’s deed, even though that officer had no authority to sell, was a sufficient foundation for an adverse possession. It is. there said: The deed was fair upon its face; it contained no evidence of a want of authority by the comptroller to execute it. As it purported to be executed under'an authority, it gave color of title to the grantee, although the pretended authority recited upon its face did not, in fact, exist; ” and, it is added, that possession and claim under such deed, by the grantee and those claiming under him, were presumed to have been in good faith, and therefore adverse to the title of the former owner, “ and if continued for the period of twenty.years ripened into a perfect title.” Now, it seems that John Hilton’s possession and claim of title under the assessment sale, were hostile to the title under which the plaintiff claims, from the time he received his deeds. His hostile attitude in regard to the title was notorious; certainly, his claim of title, and holding under this deed, were known to those interested to defeat it, from about the time of the testator’s death, as one witness states that when the will was read, he stepped forward and presented this deed; it was common talk in the familyand the premises continued thereafter to be held adversely to the time of the trial. But it is urged that John, being tenant, could not acquire hostile title against his landlord. The answer to this is. that the hostile title originated with the purchase on the assessment sale. It was not the buying in by the tenant of an existing outstanding title. The sale, if valid, originated a new title, which superseded the previous one, and on its consummation by deed, a hostile right sprung into existence. Such right, a tenant may acquire, and it may be interposed by him against the landlord’s claim. A tenant may protect his possession against his landlord, by showing that the title of the latter has expired or been extinguished. As was said in Jackson v. Rowland, “a tenant cannot dispute the title, of the landlord, so long as it remains as it was at the time the tenancy commenced; but he may show that the title under which he entered has expired or has been extinguished.”

Nor would it help the plaintiff’s case if he had established the fact (which I think he failed to do) that John obtained his title while agent of the testator in regard to the premises. Even if such title, and all benefits and advantages growing out of it, could have been claimed by the latter, and could have been obtained by him or by his devisees by proceedings in equity, no steps were ever taken having that object in view, and the property passed under conveyance, for aught that appears to the contrary, to bona fide holders. Tinder such circumstances, a bona fide purchaser for a valuable consideration, would take the property free from any claim of the testator and of all persons claiming under him.

It is further insisted that Mrs. Bender’s holding was that of a co-tenant with the plaintiff, and therefore that she could not acquire title as against the latter. But Mrs. Bender did not enter as co-tenant; she entered as purchaser under hostile title, of over twenty-five years’ standing, and asserted her right to possession thereunder, never claiming as co-tenant with the plaintiff, or acknowledging any right in him, or claim by him to the property.

Thus, it seems, that all the elements of an adverse holding existed in this case, with a perfect right on the part of the defendants to insist upon it as a defense. Here was an actual and uninterrupted possession, under claim and color of title, for a period of over thirty-five years. This was sufficient to bar the plaintiff’s right of entry, and must be held to afford a perfect answer to the action.

I am quite of the opinion, also, that the assessment deed was effectual as a muniment of title. As an ancient deed, it answered the requirements of a valid conveyance of the premises embraced in it. It was in due form, and purported to have been executed pursuant to lawful authority; and there had been an undisturbed possession under it for over a third of a century. So, of itself) it furnished presumptive evidence of the truth of its recitals. But this point need not he here determined. I am of the opinion-that the case was properly disposed of on the point above considered. Motion for new trial denied, and judgment ordered for the defendants, with costs.

Present—Miller, P. J., Bockes and Boardman, JJ.

Mew trial denied, and judgment ordered for the defendants,, with costs.

      54 Barb., 9.

       18 John., 355; 7 Hill, 476 ; 7 Barb., 101; 33 id., 263.

      6 Wend., 666, 671.

      1 Greenl. E., §§ 20,21; 14 Mass., 257; 10 John.,475; 4 Wend., 543 ; 38 N.Y., 264; Cow. & Hill’s Notes, notes 311, 882.