Case ID: ad_2/html/0112-01.html
Source: Caselaw Access Project
Author: {"author": "Hatch, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

James F. Darmour, Respondent, v. Robert R. Chapman, Appellant; William K. Hammond and Others, Respondents.
    
      Reformation of an instrument because of mutual mistake.
    
    Where a declaration, of trust recited that a bond of indemnity was to be given, / arid it was clear that it was intended that the bond should contain a condition as to the payment of certain amounts when adjusted, but it did not, so state, a reformation of the instrument upon the ground of mutual mistake is proper,.
    Appeal by the defendant, Robert R. Chapman, from a judgment of the Supreme Court, entered in the office of the - clerk of the county of ' Queens on the 13th day of June, 1895,' upon the decision of the court rendered after a trial at the Queens County Special Term, directing the distribution of the fund, which is the subject of the action, in the manner set forth in the judgment,
    
      George W. Stephens, for the appellant.
    
      G. WasKbourne Smith, for the defendants Hammond and Tracy, respondents.
    
      Joseph Fiteh, for the defendant Fitch, as trustee, and others, respondents.
    
      Nelson Smith, for the plaintiff, respondent.
   Hatch, J.:

This action was brought to reform a trust agreement, and enforce the same. The plaintiff' was a contractor, engaged in the erection of a barrack at Willets Point, Queens county, for the Federal government. As such contractor, and about September 20, 1893, he entered into a contract with one Charles J. Worth to do the ' mason and carpenter work for the erection of the barrack and furnish the material therefor. Under this contract Worth prosecuted' the work and furnished materials. therefor, until about the 20th day of April, 1894, when he failed. Thereupon plaintiff, Worth and Chapman agreed that Chapman should go on, take the mate- i rials which Worth had furnished and the building as it then stood and complete the same for a specified sum, and' pay the' obligations which-Worth had contracted in the construction. , Plaintiff and Chapman, in pursuance of this agreement, entered into a written agreement. This agreement contained no clause providing that Chapman should pay Worth’s debts. In view of the conclusion reached we do not deem this fact important. Chapman fulfilled the contract and completed the barrack.

At the time of Worth’s failure he was indebted to the defendant Hammond for brick furnished at the barrack; to Tracy, for laying brick, and to certain other persons, now represented by the defendant Fitch, for labor performed.

After the barrack was completed, plaintiff, Chapman and Fitch met for the purpose of an accounting and settlement, when it was-found that plaintiff was indebted to Chapman in the sum of $7,664.77. It was thereupon agreed that plaintiff should pay to Chapman $3,673.93, and that the balance, $3,990.84, should be held by plaintiff for the benefit of Hammond, Tracy and Fitch, as trustee, until their claims, which Chapman questioned, could be adjusted by him. Thereupon the following declaration of trust, so called, was drawn:

“Long Island City, Oct. 4, ’94.
“Received of James F. Darmour, settlement of contract to build barracks at Willets Point, in the following manner:
Check.......................................... $3,673 93
Check (held by Joseph Fitch until indemnity bond pro-. duced)....................................■____ 1,538 06
Balance......................................... 2,452 78
to be held by James F. Darmour until disputed claims of E. J. Hammond ($1,536.03) and Richard Tracy ($916.75) have been adjusted by me.
“ ROBERT R. CHAPMAH.
“ The foregoing is the original receipt delivered to me this day, and I hold the moneys as above set forth.
“JAMES F. DARMOUR.”

This paper was written by Chapman, and delivered at that time, and in his answer he admits its execution. Subsequently a bond was delivered by Fitch to the defendant Chapman, conditioned for the payment of any amounts shown to be due on the claims represented by Pitch, but the same was never executed by Chapman, and-no bond of indemnity was ever executed or delivered by him. Before this action was commenced plaintiff requested Chapman to isdjjust the accounts mentioned in the declaration of trust, and he refused!. Tli©. hioney, which was retained by plaintiff, in pursuance of the settlement, Was deposited in the Queens County Bank,, in the name of plaintiff’’® wife, Julia Darmour. After the demand! was made upon Chapman 'to adjust the accounts, he brought an action against the plaintiff, hr® wife and the bank to obtain 'an injunction restraining the defendant® from disposing of or otherwise interfering With the fund on deposit, and'obtained a preliminary injunction therein.. This resulted in a-judgment making permanent the temporary iinjunctioa, with leave-to Darmour to move to vacate the same, unless within ten days after the payment of certain costs, Chapman adjusted: the claims of Hammond and Tracy, or instituted litigation to determine the rights of *bbe parties with respect to the money. Thereupon this action was '-biW-ght, and has resulted in a judgment reforming the declaration Gtff'toist by inserting therein the condition in the bond of indemnity íuhiñíig to' Pitch, and declaring that the respective parties named in the declaration of trust are entitled to the several amounts therein •expressed,' and directing that cheeks be made out' by Julia Darmour, and delivered to the respective parties, and vacating the- injunction obtained in the action instituted- by Chapman against the present plaintiff, his wife, and the Queens; County Bank, so- far as to allow the Queens County Bank to pay the same. It is now earnestly argued that this judgment may not stand, and several reasons which require examination are assigned therefor.

. The complaint alleged that the declaration of trust between plaintiff and the defendant Chapman did not contain the clause that Chapman should pay Worth’s debts, and asked for its reformation in that respect. But it' is clear that this -allegation was not regarded as important, in view of the evidence, and the court ' made no finding thereon, nor did the decision of the court reform the declaration of trust in this respect. Consequently much of the appellant’s argument in this regard is without force.

The real question presented, and the one upon which the court passed, was the defect in the declaration of trust. With respect to that the complaint alleged that by mutual mistake it' did not contain the condition to be entered in the bond of indemnity to be delivered to Fitch. The court found as a fact that it did not, and the respect in which it failed. This finding was clearly correct. The declaration itself provided for the giving of a bond, and it is evident that some condition was contemplated which the bond should contain, else it would be ineffectual for any purpose. The natural inference which arises is that as the claims which Fitch represented were to be adjusted by Chapman, and the sum of money being limited in amount, that the condition of the bond would be to pay the amount found due upon adjustment, not exceeding the specified sum. This is substantially what the evidence tends to establish, and the appellant, although sworn, did not deny it, while Gregg, who was sworn for him, testified with respect to who was to draw the bond, but he did not claim that the evidence given respecting its condition was wrong. A case was, therefore, presented which required reformation within the doctrine of the most extreme cases, as it was clear beyond mistake. (Southard v. Curley, 134 N. Y. 148.)

What transpired before the declaration of trust was executed is not of importance here, whatever may have been the original agreement. It is certain, beyond dispute, that Chapman recognized some liability for the claims mentioned in the declaration of trust, and that liability was to be determined by an. adjustment of the claims, while the fund stood as security. It became Chapman’s duty to adjust them, and in this he failed. ■ All that was. necessary in this action was to determine their amounts.

The evidence is abundant to establish the claims of Hammond and Tracy for the full amount of the sums stated in the declaration of trust. The evidence is less satisfactory respecting the parties whom Fitch represented. But we think it sufficient. The claim due Owen of $435, which formed a part of the amount, has been adjusted by the parties and paid since the trial. The other claims are all set out in the answer of the defendant Fitch, with their respective amounts. The testimony of plaintiff is that the amounts represented by these claims were contained in a list of indebtedness which was present when the agreement to complete the building was made, and which Chapman was to pay. Fitch states that the amount of these claims represented the amount of the check. It is objected that the list was not produced, but that objection was not taken upon the trial, nor was any objection urged to the oral statement of what it .contained. The defendant Chapman nowhere in his testimony -denies or puts.in issue-the amount of these claims. His whole effort was directed to establish that he never agreed to pay any of them. While the burden undoubtedly was upon Fitch to establish the amount of the claims, yet the issue which Chapman tendered was not as-to the amount due upon the claims from somebody, but was a denial that he was liable for any sum whatever. In this view we think the claims were sufficiently established to uphold the finding of the ■ court. . The discussion respecting the extent to which the building had progressed, and the amount of indebtedness assumed of Worth’s debts, we think is aside of the questions presented on this appeal. The agreement made, provides for the payment to the parties named of whatsoever sum should be found due them up to a specified amount. The only issue, therefore, was as to the amount of the claims. This has been found to be, upon sufficient evidence, the sums specified. And whether we call the paper a declaration of trust or - an assignment,, or whatever we call it, it amounts to a setting apart of certain moneys which, upon the happening of a contingency, should belong to the parties named. That contingency has happened, and a legal inquiry has adjudged that the money be paid to the parties .entitled.

We think the judgment is right and should be affirmed, with costs.

All concurred.

, Judgment affirmed, with costs to respondents Hammond and Tracy and to the respondent Fitch, and disbursements only to the respondent Parmour.