Harrington v. Erie County Savings Bank

It seems the rule that a trustee may not purchase or deal in the trust property in his own behalf does not render such a purchase void ah origine, but voidable only, and at the instance of the cestui que trust or of a party who has acquired the rights which belong to one in that relation. The title, even while in the hands of the trustee, may be confirmed as well by acquiescence and lapse of time as by the express act of the cestui que trust. The title of a subsequent bona fide purchaser for value and without notice, when there is nothing on the record to show that his. grantors had not a perfect right to convey, cannot be impeached, even in equity ; he takes the land freed from the trust.

Appeal from, judgment of the General Term of the Supreme Court, in the fourth judicial department, entered upon an order made J anuary 29, 1883, which denied a motion for a new trial and directed judgment for defendant on an order dismissing the complaint on trial. This was an action of ejectment. The material facts are stated in the opinion. Upon the evidence the jury might legally have concluded, either that the conveyances by which the trustee got title were made for the purpose of swindling the estate, or that the object of such conveyances was to pay the claim made against the estate by him and give him in satisfaction the property in question. In either event the conveyances would be void, and the title would have remained in the trustees (Lytle v. Beveridge, 58 N. Y. 592; Russell v. Russell, 36 id. 581; R. S., part 2, chap. 1, title 2, art. 2, § 65 [7th ed.], p. 2183; Briggs v. Davis, 20 N. Y. 15; S. C., 21 id. 57; Douglas v. Cruger, 80 id. 15; Bish. on Insol. Debt. [cd. of 1879] 311, 312; Powers v. Bergen, 6 N. Y. 358; Fitzgerald v. Tapping, 48 id. 438; People v. Building Co., 23 Hun, 274; 92 N. Y. 98; Marvin v. Smith, 46 id. 571.) The quit-claim deed, being in contravention of both the trust expressed in the deed and the power in trust in the will, is- void. The plaintiff would not be estopped by such a deed if it had been proven, either'as against the trustees or Mrs. Harrington. (Stuart v. Kissam, 2 Barb. 493; Heath v. Crealock, L. R., 10 Ch. App. 22; S. C., 11 Eng. Law Rep. [Moak] 486; Douglas v. Cruger, 80 N. Y. 15; Bigelow on Estop. 480.) The transfer of defendant was in contravention of the trust, which is expressed in the assignment, and, therefore, absolutely void under the statute as the trust was still alive. (R. S., part 2, chap. 1, title 2, art. 2, § 65; Thatcher v. Candee, 3 Keyes, 157; Briggs v. Palmer, 20 Barb. 392; affirmed, sub nom. Briggs v. Davis, 20 N. Y. 15; 21 id. 574; Acer v. Westcott, 46 id. 384, 392; 7 Lans. 193; Lytle v. Beveridge, 58 N. Y. 592; Bergen v. Bennett, 1 Caine’s Cas. in Error, 348; Davoe v. Fanning, 2 Johns. Ch. 204; Gardner v. Ogden, 22 id. 344; Callahan v. Cunningham, 8 Cow. 361; Perry on Trusts, § 205.) A purchaser haying knowledge of facts sufficient to put him on inquiry is presumed to have made inquiry, and is chargeable with notice of whatever he could have ascertained by the inquiry upon which the circumstances should have put him. (Reed v. Gannon, 50 N. Y. 345, Cordova v. Hood, 17 Wall. 1; Att'y Gen'l v. Biphosphated Guano Co., 27 Weekly Rep. 621; Gallatin v. Cunningham, 8 Cow. 361; Balcom v. Life Ins. Co., 11 Paige, 454; Boone v. Childs, 10 Pet. 177, 212; 2 Wait’s Act. and Def. 507; Jackson v. Matsdorf, 11 Johns. 91; Jackson v. Mather, 7 Cow. 301.) The sale to George P. Stevenson assuming that it was bona fide, and that the estate was credited with the amount of the proceeds, was in legal effect a compliance witli the provisions of the trust deed. (Briggs v. Davis, 20 N. Y. 30, 31; Dodge v. Stevens, 94 id. 209, 214.) The ci’edit given to the trust account by Edward I. Stevens for $10,000 is equivalent to the payment by George of that amount "of money to the trustees, and is a conversion of the land into money within the meaning of the assignment. (Silverthorn v. McKinstorn, 12 Penn. St. 67; Whittington v. Roberts, 4 Monr. [Ky.] 173, 174; Livingston v. Newkirk, 3 Johns. Ch. 312, 318, Ball v. Miller, 17 How. Pr. 300; Duntz v. Duntz, 44 Barb. 461, 462; Slade v. Vanvechten, 11 Paige, 21, 22, 25; Graham, v. Dickenson, 3 Barb. Ch. 170; Wallace v. Duffield, 2 Serg. & R. 524; Rogers v. Tilley, 20 Barb. 639; Bergen v. Bennett, 1 Caine’s Cas. 18.) Whether the sale was for the full value of the land is immaterial. (Briggs v. Davis, 20 N. Y. 30-32; Shelton v. Homer, 5 Metc. 467; Dubois v. Barker, 4 Hun, 80; v. Newton, 46 Barb. 173; Gallatin v. Cunningham, 8 Cow. 361, 377-384.) A sale can only be deemed in contravention of the trust where it is in conflict with its terms. Where a trust deed, as in this case, directs a sale without limit as to time, price, purchase or terms," and where no conditions precedent to the exercise of the power to sell remain unfilled, the sale is valid. (Lytle v. Beveridge, 58 N. Y. 592; Russell v. Russell, 36 id. 581; Briggs v. Davis, 21 id. 574; Allen v. Dewitt, 3 Comst. 276; Rome v. Phillips, 27 N. Y. 357; Douglas v. Cruger, 80 id. 15; Powers v. Bergen, 6 id. 358; Perry on Trusts, 785; Roseboom v. Mosher, 2 Den. 61; Dubois v. Barker, 4 Hun, 80; Hancox v. Meeker, 28 id. 214; Belmont v. O'Brien, 2 Kern. 394; Jackson v. Vandalfsen, 5 Johns. 43; Jackson v. Walsh, 14 id. 407; Jackson v. Brooks, 8 Wend. 426; Silverthorn v. McKinster, 12 Penn. St. 67; 3 Ross’ Com. Law, 305, 319; Burr, on Assign. 392; 1 Perry on Trusts, 205; Taintor v. Henderson, 7 Burr. [Penn.] 48; Bradstreet v. Clark, 12 Wend. 602, 667; Dundas v. Hiscock, 12 How. [U. S.] 256, 271; Sugden on Pow. 82; 2 R. S. [6th ed.] 1109, § 73; 1119, § 164; 1130, 1; 2 R. S. 1110, § 79; Peck v. Newton, 46 Barb. 173; Gallatin v. Cunningham, 8 Cow. 361; Johnson v. Bennett, 39 Barb. 237; Hubbell v. Sibley, 50 N. Y. 71, 472, 473; Tiff. & Bull. on Trustees, 811; Dodge v. Stevens, 94 N. Y. 209; Chapman v. Delaware, etc., R. R. Co., 3 Lans. 284; 1 Perry on Trusts, 205.) All the deeds should be construed as one instrument and constitute a substantial compliance with the provisions of the will. (Cooper v. Whitney, 3 Hill, 95.) The provisions of the trust deed, and the will of Mr. Harrington construed together and in connection with the quit-claim deed of the children, the deed to Mrs. Harrington, the bond and mortgage of indemnity given by her, and the entire object of all these transactions conclusively show that the sale was a legal performance of the intention of Harrington as shown by his assignment and his will, and within the powers of the children and trustees and the executors’ clause of the will as to payment by executrix of the debts provided for by the assignment. (Lang v. Ropke, 5 Sandf. 363; Burr. on Assign. [2d ed.] 394; Merrill v. Englesby, 28 Vt. 150.) Hone of the convéyances in question aro void under the provisions of the statutes as to fraudulent conveyances. (3 R. S. [6th ed.] 224, 225, § 5.) The quit-claim deed from plaintiff and the other heirs of Harrington to Spaulding and Stevenson conveyed to them in their own right all the interests, legal or equitable, which he then had in the premises, and he has acquired no right since. (1 R. S. 748 [6th ed.] vol. 2, 1130, § 1; 2 R. S. [6th ed.] 1094, § 17; 3 R. S. [6th ed.] 225, § 2; 2 R. S. 1105, § 49; 1103, § 35; 1101, §§ 8, 9, 10, 11; 1104, § 4, 2; 1110, § 76; 4 Kent, 211, note; Tower v. Hale, 46 Barb. 361; Peck v. Mallams, 10 N. Y. 509, 537, 538; 4 Kent, 262, note; Jackson v. Walsh, 14 Johns. 407, 414, 415, 66; Jackson v. Brooks, 8 Wend. 426; Nicholson v. Halsey, 1 Johns. Ch. 417; James v. Morey, 2 Cow. 246.) The rule that the title can only be questioned in such a case by proceedings in equity is inflexible. (James v. Morey, 2 Cow. 246; Jackson v. Walsh, 14 Johns. 407, 414, 415; Shelton v. Homer, 5 Metc. 467; Bostwick v. Atkins, 3 Comst. 53, 60.) The plaintiffs are estopped by their deed from asserting a legal title to the premises in dispute, whatever may be their equitable rights to call assignees to account. (4 Kent, 98.) The defendant is entitled to protection as a bona fide purchaser of the premises. (Claflin v. Lenheim, 66 N. Y. 301; Birdsall v. Russell, 29 id. 220, 249; Welch v. Sage, 47 id. 143, 147; 2 Kent, 147; 2 R. S. 1104, § 41; Lang v. Ropke, 5 Sandf. 363; Morrison v. Brand, 5 Daly, 40; Roger v. Murray, 3 Paige, 390; Guthrie v. Gardner, 19 Wend. 414; 1 Story’s Eq. Jur., § 64, chap. 381, 410, 411; Briggs v. Davis, 20 N. Y. 23, citing Jones v. Powles, 3 M. & K. 581; Tiffany & Bullard on Trustees, 197, 198, 199, 818; Jackson v. Walsh, 14 Johns. 407, 415; Jackson v. Henry, 10 id. 185, 195; Frazer v. Western, 1 Barb. Ch. 220, 240; Mowry v. Walsh, 8 Cow. 238; Warner v. Blakeman, 36 Barb. 501, 519.) Conceding that there has been no conveyance of the premises in question by the trustees, the plaintiff cannot maintain ejectment for the reason that the legal title still remains with the trustees. (1 R. S. [1st ed.] 730, § 67; 2 R. S. [6th. ed.], 1110, § 60; Calkins v. Calkins, 3 Barb. 305; Sayre v. Wisner, 8 Wend. 661; Amsberry v. Hinds, 48 N. Y. 57; Satter v. Tobias, 3 Paige, 338; Ang. on Lim., § 22; Rogers v. Murray, 3 Paige, 390; Williams v. City of Oswego, 25 Hun, 36, 38; Rogers v. Leftwitch, 2 Heisk. [Tenn.] 480; Laws of 1875, chap. 545; Wood v. Mather, 38 Barb. 473; Wood v. Mather, 44 N. Y. 249; People v. Canal, 6 id. 463; R. R. Co. v. Van Horn, 57 id. 473.) The plaintiff, irrespective of his quit-claim deed, is estopped by the facts proved from asserting any claim to this property by silence while Stevenson and the defendant were erecting buildings. (Wendell v. Van Rensselaer, 1 Johns. Ch. 344; Bowen v. Bowen, 30 N. Y. 519; Niven v. Belknap, 2 Johns. 573, 589; Higenbotham v. Barnet, 5 Johns. Ch. 184, 188; Cheeney v. Arnold, 18 Barb. 434, 440; Brewster v. Baker, 16 Barb. 613, 618; Walrath v. Redfield, 18 N. Y. 457 ) Plaintiff is estopped by the receipt by the estate of the purchase-money of which the plaintiff has had the benefit, which there has been no offer to repay, and which cannot be offset or ordered to be repaid by any judgment which can be rendered in this action. (Big. on Estop. 514; Tompkins v. Hyatt, 28 N. Y. 347; More v. Smedburgh, 8 Paige, 600.) He is also estopped by lapse of time in equity and by the equitable defenses set up in the answer, and which were established by the "plaintiff’s own evidence. (Code of Civ. Pro. 1531; 2 R. S. [6th ed.] 578, § 45; Bedell v. Shaw, 59 N. Y. 46; Barney v. Griffith, 5 Sandf. Ch. 552, 558; Colburn v. Morton, 5 Abb. Pr. [N. S.] 308, 316; Peabody v. Flint, 6 Allen, 52, 57; Story’s Eq. Jur., §§ 1520, 1523; id. 81; Bostwick v. Atkins, 3 Comst. 53, 60; Tiff. & Bull. on Trustees, 146, 148; Bergen v. Bennett, 1 Caines, 19 et seq.; Cunningham v. Cassidy, 17 N. Y. 276; Hubbell v. Medbury, 51 id. 100; Fifth N. Bk. v. Hyde Park, 101 Ill. 595; Pom. on Rem. 379; Duncomb v. R. R. Co., 84 N. Y. 190, 199; Getty v. Devlin, 54 id. 403, 415; Gould v. N. Bk., 86 id. 75, 82, et seq.; Boerum v. Schenck, 41 id. 182, 196, 197.)