Case ID: ad_68/html/0272-01.html
Source: Caselaw Access Project
Author: {"author": "Hieschberg, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Mary Oldfield, as Executrix, etc., of John Oldfield, Deceased, Appellant, v. Vassar College, Respondent.
    
      Assignment by a substituted trustee, by order of the court, of a note improperly purchased with the trust funds ■—■ transfer of the proceeds to the. remainderman liability of the latter where the 'note is forged—no implied warranty— Statute of Limitations.
    
    The will of Matthew Yassar gave §10,000 to his executors in trust to pay' the income to Caroline B. Yassar during her life and upon her death to pay the principal-to Yassar College.
    Upon the death of Caroline B. Yassar and Stephen M. Buckingham, the last surviving e.xecutor and trustee, it appeared that the trust fund had been invested in unauthorized securities, namely, promissory notes secured by mortgages upon property situated in other States.
    Yassar College having refused to accept such securities, Buckingham’s executors brought an action for the appointment of a substituted trustee and authority to close up the trust. The action resulted' in a decree Which, after reciting that purchasers stood ready to buy the securities and to pay the full amount due thereon, directed the substituted trustee to transfer and assign them to the respective purchasers on payment of the full amount due, and Buckingham’s executors were directed to pay over from such amount the §10,000 trust fund . to the college. The substituí ed trustee sold and assigned one of the notes secured by an Illinois mortgage by a sealed instrument to John Oldfield. From the proceeds of this note and the other securities the sum of §10,000 was paid by Buckingham’s executors, to Yassar College in extinguishment of the trust. In July, 1890, Oldfield discovered that the note and mortgage assigned to him were forgeries. He died February 1,1891, leaving a last will and testament which was admitted to probate April 8, 1891. June 2, 1898, his executrix brought an action in her representative capacity to recover from Yassar College the amount paid by Oldfield for the note and mortgage as for money had and received.
    
      Meld, that Vassal- College, having received the money in question in good faith and in the discharge of a valid obligation, the plaintiff could not recover it; That no implied warranty of the genuineness of the note and mortgage accompanied the assignment to Oldfield — the cases holding that such a warranty accompanies the sale of a security having no application to a formal transfer made by order of the court for the purpose of transmitting title, where the nominal vendor has no connection with the security either as owner or investor;
    That if a recovery might be had, the right to bring a common-law action for money had and received accrued to Oldfield when he discovered the forgery in 1890, and that the action was consequently barred by the six years’ Statute of Limitations.
    Appeal by the plaintiff, Mary Oldfield, as executrix, etc., of John Oldfield, deceased, from a judgment of the Supreme Court in favor of the defendant, entered in, the office of the clerk of the county of Dutchess on the 2d day of July, 1900, upon the decision of the court, rendered after a trial at the Dutchess County Special Term, dismissing the complaint upon the merits.
    
      James W. Husted, for the appellant.
    
      Franh B. Lown and Henry E. Losey, for the respondent.
   Hieschberg, J.:

The will of Matthew Yassar, deceased, was proved in Dutchess county on the 31st of August, 1868, and letters testamentary were then issued to Matthew Yassar, Jr., Charles W. Swift and Stephen M. Buckingham, as executors and trustees. By the will, among, other provisions, the sum of $10,000 was given to the executors in trust to pay the income to Caroline E. Yassar during her life, and upon her death to pay the principal to the defendant Vassar College. ■

For several years before his death, which occurred on the 1st day of December, 1887, Stephen M. Buckingham was the sole surviving executor and trustee, and as such had charge and possession of the securities in which this bequest was invested, viz., four certain promissory notes dated June, 1885, and secured one by an Ohio mortgage and three by an Illinois mortgage. The fair inference, from the evidence is that he made these investments as surviving ' trustee.

On the 19th day of October, 1887, Caroline E. Vassar died, and Buckingham, as executor and trustee, offered the securities in which the fund was invested to the defendant, but the latter refused to receive and accept them. Shortly thereafter the will of Stephen M. Buckingham was probated, and his executors and executrix, viz., Julius Catlin, Jr., Catharine M. Buckingham and John F. Halsted being duly appointed,' and having succeeded to the charge and possession of the securities, renewed the offer to the defendant and it was again declined. The executors then commenced an action in the Supreme Court against the administrator of Caroline E. Vassar • and the defendant Vassar College, for an accounting as to the trust fund and the appointment of a trustee of the trust on behalf of the estate of Matthew Vassar, with power and authority to close it up. In that action a final decree was entered by consent on the 1st day of February, 1888, in which it was adjudged that, it appearing to the court that all the securities were convertible into cash and that purchasers stood ready to buy them and to pay the full amount due for them, the plaintiff John F. Halsted was directed to transfer and assign them to the respective purchasers on payment of the full amount due; the said Halsted was appointed substituted trustee under the will of Matthew Vassar in place of Buckingham, deceased, for the purpose and with full power and authority of assigning the securities to the purchasers and receiving the money; and the plaintiffs in the action were directed to pay over from such money the sum of $19,000, the principal of the trust, to the defendant Vassar College or to its treasurer.

One of the notes, amounting to $2,500, secured by an Illinois mortgage, was sold and assigned by a sealed instrument by Halsted. to John Oldfield on the day the decree was entered, the assignment transferring all his (Halsted’s) right, title and interest in the note and mortgage, and the full amount, principal and interest, was paid by Oldfield to Halsted. With this money and the proceeds of the sale of the other notes the plaintiffs, in that action, as the executors of Stephen M. Buckingham, paid the sum of $10,000 on the same day, viz., February 1, 1888, to the defendant herein in settlement and extinguishment of the trust, and in obedience to the mandate of the judgment, taking back a receipt for the money drawn to themselves as executors of Stephen M. Buckingham, deceased.

The note and mortgage assigned to Oldfield turned out to be forgeries. The fact was not known to any of the parties at the time of the transaction herein recited, but was discovered by Oldfield in the month of July, 1890. He died February 1, 1891, leaving a last will and testament which was admitted to probate April 8, 1891, and of which the plaintiff is executrix. This action was commenced by her in her representative capacity on the 2d day of June, 1898, to recover a money judgment only, for the amount which her decedent paid for the note and mortgage, with interest from February 1,1888.

The action is for money had and received. Ho authority is cited in support of the plaintiff’s right to maintain it under the facts as stated and as found by the learned trial justice. The securities were not such as the representatives of the Matthew Vassar estate could lawfully invest in; the defendant refused to accept them or to ratify the investment in any way; the plaintiff purchased with full knowledge or the means of knowledge of these facts; there was no concealment or fraud so far as concerns the parties to either action in this court; the sale to the plaintiff’s decedent was not effected through any agency representing the defendant, and no warranty of the genuineness of the note and mortgage was made or is to be implied from the circumstances' of the transaction so as to bind the latter. The defendant could not have been compelled to take the securities, but could have maintained an action against the trustee by whose improvidence the investment was made and his representatives for the amount of the trust fund.

In reaching the conclusion that no implied warranty of the genuineness of the note and mortgage can accompany the assignment from Halsted, I do not overlook such cases as Ross v. Terry (63 N. Y. 613) and others cited, wherein it is held that on a sale of a bond or other security a warranty is implied that it is a valid and subsisting obligation. Such cases have no application to a formal .transfer made by order of the court for the mere purpose of transmitting title, where the nominal vendor has no connection with the security either as owner or investor. In such case the decree directing his act limits his authority to the performance of purely formal functions, His express, warranty would be without authority to bind the estate, and it necessarily follows that no warranty should or could be implied.

The case is also distinguishable from those cited by the learned counsel for the appellant, both on the question of the right of action and as to the Statute of Limitations. The action is not upon a sealed instrument as against the defendant, notwithstanding the note and mortgage were assigned by an instrument under seal.

In Colgan v. Dunne (50 Hun, 443) it is stated in'the head note that it was held that an action to recover a deficiency judgment in foreclosure is to be regarded as brought upon a sealed instrument, but the plaintiff’s intestate in that case was a creditor of the deceased whose.legatees were sought to be charged; the debt was represented by a bond and mortgage executed under seal by the deceased, the period of limitation of the debt being twenty years, not then expired, and the court held that the testator could not cut off his creditors’ right to a satisfaction of the debt, and that the only effect of the foreclosure judgment was to benefit the defendants by reducing the amount of the liability. The action was,. therefore, regarded as brought upon the bond and mortgage and not upon the deficiency judgment. The action was for a debt of the decedent, and is expressly authorized by section 1837 of the Code of Civil Procedure.

In Mertens v. Roche (39 App. Div. 398) the claim arose out of a sale by the executors of a deceased partner'to the surviving partner by mistake of assets which did not belong to the firm. No property was actually transferred, and the plaintiff was permitted to recover the purchase money from the legatee. The only question presented was the claim by the latter that his liability could not be determined in an action at law, but this was held untenable inasmuch as the casé was tried by stipulation as one in equity.

In Dwinelle v. Edey (102 N. Y. 423) the action, was between the original parties to a sealed agreement of copartnership, brought for the purpose of securing contribution of. losses in accordance with its terms.

I thinlt the defendant in this case received the money in question in good faith in discharge of the judgment debt or obligation of the executors of Stephen M. Buckingham as one of the trustees of the estate of Matthew Vassar; and that the plaintiff could not, under such circumstances, recover the money back would seem to result from the doctrine of Stephens v. Board of Education (79 N. Y. 183); Hatch v. National Bank (147 id. 184); Nassau Bank v. Nat. Bank of Newburgh (159 id. 456), and other similar cases. But if such recovery might be had, the right to bring a common-law action upon the theory of money had and received certainly accrued to the plaintiff’s testator when he discovered the. facts in the year 1890j and was consequently barred by the six years’ limitation when this action was commenced.

The judgment should be affirmed.

All concurred.

Judgment affirmed, with costs.