Case ID: ny-st-rep_34/html/0030-01.html
Source: Caselaw Access Project
Author: {"author": "Bradley, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Noyes G. Palmer, Resp’t and App’lt, v. The Cypress Hills Cemetery, App’lt and Resp’t.
    
    
      (Court of Appeals, Second Division,
    
    
      Filed December 2, 1890.)
    
    1. COBPOBATION—CONTBACT—ÜLTBA VIBES.
    Where a contract was ultra vires merely, there is no occasion for the court to deny to the plaintiff the benefit of its provisions where the validity of it is recognized by the defendant and performance has been accepted by it from the plaintiff.
    & Same—Cemeteby association—Pubchase of lots by sufebmtendent.
    The plaintiff, who was at the time superintendent of the defendant, a cemetery association, contracted to buy a large number of lots for resale. Held, that his relation was not fiduciary, but that of an employee, and that, under the findings of the referee, it could not be said that the purchase by him was on his part unfair, or that it was produced by means illegal or within the condemnation of public policy.
    3. Same.
    The findings of fact by the referee seem to be supported by the evidence and warrant the conclusion that plaintiff was entitled to specific performance of the contract by defendant.
    Appeal from judgment of the general term of the supreme court, in the second judicial department, affirming judgment entered on report of referee in favor of the plaintiff.
    The action was brought for specific performance of an alleged contract by which the defendant agreed to sell to the plaintiff a certain number of lots of the cemetery property. The referee directed judgment for the conveyance of certain lots by the defendant to the plaintiff and for the recovery by the latter .of $955.93. The defendant appealed from the entire judgment and the plaintiff appealed from the affirmance of the money recovery part of it only.
    
      William G. Coolce, for pl’ff; Homer A. Nelson, for def’t.
    
      
       Affirming 14 N. Y. State Rep., 591.
    
   Bradley, J.

The defendant was incorporated prior to 1850, pursuant to the provisions of chapter 133 of Laws of 1847, authorizing the incorporation of rural cemetery associations. The plaintiff in the complaint alleged that in June, 1864, he purchased of the defendant four hundred lots in its cemetery at the price of $10,000; that he afterwards sold fifty of them, for which, deeds were given by the defendant on his order; that he fully paid the' defendant the purchase money; and that the defendant refused to make certificates or deeds for the remaining three hundred and fifty lots. He therefore demanded judgment directing specific performance by the defendant of its alleged contract. The defendant by its answer admitted the making of the agreement as alleged, but denied that the consideration had been fully paid; and further alleged that the plaintiff; - upon terms mentioned by him, proposed to relinquish to the defendant two hundred of such lots, and. that afterwards, on April 14, 1876, the defendant accepted such offer by the following resolution adopted by its trustees :

“Resolved, That Mr. Palmer’s offer to surrender to the cemetery two hundred lots on being allowed the interest he has paid to the Williamsburgh Savings Bank, with interest thereon compounded every six months, be accepted and the amount as proposed be allowed him on settlement, such amount being $5,309.15 ;’’ that after crediting him that amount there remained due from the plaintiff to the defendant $2,419.35; that on the liquidation by him of such indebtedness the “defendant is ready to convey as the plaintiff may request all such plots as he has not sold or surrendered;” and that on the performance bjr the plaintiff the “defendant is and at all times has been ready to convey said lots to the plaintiff or on his order.”

The plaintiff held the position of surveyor and superintendent of the defendant from July, 1849, to May, 1864, and from July 1, 1864, to November, 1875. The defendant further alleged that after the location of the plots within his purchase, the plaintiff, in violation of his duty as such superintendent and without authority, caused an avenue to be opened so as to promote the sale of them and thereby blotted out a large number of lots, and in doing it diverted the labor and resources of the defendant from their legitimately authorized purposes. In addition to such charge against the plaintiff -the only issue presented by the pleadings was whether the purchase-money which the plaintiff undertook to pay for the 400 lots or for the residue after deducting the 200 of them in the event they had been relinquished as alleged by the defendant, had been paid. And this depended upon the state of the accounts between the plaintiff and the defendant, which was a subject of controversy on the trial. The referee having found that the agreement of sale was made as alleged and admitted by the pleadings; and that the plaintiff had surrendered to the defendant 200 of the lots as alleged in the answer and sold 52 220-400 lots, further found that after adjusting the accounts between the parties and crediting the plaintiff with the amount which the defendant agreed to allow him for the surrender of those lots, there remained due to him from the defendant $621.14, which, with interest, made the amount for which judgment, in addition to the other relief, was directed.

It is urged by the gLefendant’s counsel that the alleged agreement to sell to the plaintiff 400 lots was invalid, and that it should not have the support of the judgment of the court for its performance. The sale of that number of lots to the plaintiff was not within the spirit or purpose of the statute from which the defendant derived its corporate existence and powers. The purpose for which the defendant was incorporated was to procure and hold land, to be used exclusively for a cemetery or place for the burial of the dead.” Laws 1847, chap. 133, §§ 1, 4.

The statutory direction is that at least one-half of the proceeds of sales of lots be applied to the payment of the purchase money until fully paid, and the residue to the preservation, improvement and embellishment of the cemetery, and that the entire proceeds of sales be so applied after the payment of the purchase money, etc. Id., § 7. And the lands are exempt from taxes, and not liable to sale on execution or to be applied in payment of debts due from individual proprietors. Id., § 10. It is contemplated by the statute that the trustees of the associations created pursuant to it, should, with a view to the proper management of cemeteries, designate the terms and restrictions upon which sales and conveyances be made. And, although the lands purchased by such an association cannot legitimately be devoted to any other purpose than that of a cemetery, the unqualified sale of large portions of it to individuals for resale by them possibly might deny to the trustees the power to control or regulate the terms or conditions of the sales, which it was by the statute contemplated they should exercise in that respect. It may, therefore, be seen that the execution of the provisions of the act of incorporation according to •its policy might be somewhat embarrassed by the sale to individuals for speculative purposes, on their part, of large blocks of cemetery lands by the trustees of the association. But inasmuch as the defendant, by its answer, raises no question as to the validity of the contract with the plaintiff, but admits its force as such, and declares its readiness to perform the contract upon payment' of the purchase money, 'the question whether it was effectually made or was within the corporate power of the defendant to make it, does not arise for consideration, Duffy v. O'Donovan, 46 N. Y., 223, and the court is not called upon to declare the contract ineffectual for illegality unless it was inherently so, or, in view of the circumstances under which it was made, contrary to public policy in such sense that it could not properly have judicial sanction. If the contract was ultra vires merely, there is no occasion for the court in this action to deny to the plaintiff the benefit of its provisions, since the validity of it is recognized by the defendant and performance has been accepted by it from the plaintiff. Parish v. Wheeler, 22 N. Y., 494; Whitney Arms Co. v. Barlow, 63 id., 62 ; Rider Life Raft Co. v. Roach, 97 id., 378.

The referee has not found what motive actuated the parties or either of them to make the contract, but there was some evidence tending to prove that in it was the purpose of raising money for the association. The plaintiff paid $5,000 on the purchase and assumed the payment of a mortgage for like amount held by a savings bank at the time the contract was made. And it appears that some of the trustees of the defendant, about the same time, became purchasers of blocks of lots which, including those in the plaintiff’s purchase, numbered 1,560. It is difficult tó see any justification for the trustees to become purchasers from .the defendant and to deal with the property for their own benefit or advantage. That was clearly in violation of their fiduciary relation to the defendant and was contrary to public polity. Butts v. Wood, 37 N. Y., 317; Barnes v. Brown, 80 id., 527; Duncomb v. N. Y., H. & N. R. R. Co., 84 id., 190.

' But it was not found by the referee, nor does it necessarily appear by the evidence, that the sale to the plaintiff was part of a scheme embracing the sales made to the trustees. The plaintiff was not a trustee at the time the contract with him was made, and his relation of superintendent was not fiduciary, but was that of an employe, and as such he was subject to the direction of the trustees. He became trustee in 1874 and continued such until in October, 1875. In view of the findings of the referee it cannot, on this review, be said that the purchase by the plaintiff was, on his part, unfair, or that it was produced by means illegal or within the condemnation of public policy. It is suggested by the defendant’s counsel that the facts which the evidence tended to prove should have the same consideration to which they would be entitled if within the issues of the pleadings. While that would be so for the purpose of sustaining the judgment, the same rule is not applicable for its reversal when not within the findings of the court or referee. Burnap v. National Bank, 96 N. Y., 125. In support of his proposition are cited City National Bank v. Phelps, 86 N. Y., 484, and Fowler v. Bowery Savings Bank, 113 id., 450 ; 23 N. Y. State Rep., 130. But it may be observed that in the former the defect in the complaint was not specified as a ground upon which the motion to dismiss the complaint was made; and in the other case the fact not alleged was not only proved without objection, but was found by the court. In the present case, however, the evidence did not require the conclusion that the plaintiff was chargeable with anything, in inducing the sale to him or in obtaining the contract, affecting its validity other than what appeared by its terms as alleged, and in the provisions of the statute relating to the powers and duties of the trustees bearing upon the subject. Nor does it necessarily appear what the referee would have found in that respect if request had been made. The exception to the denial of the motion to dismiss the complaint was not well taken. The finding of the referee that the plaintiff was employed by the defendant and acted as superintendent from July 1, 1864, to November 25, 1875, at an annual salary of $3,000 was challenged by the exception of the defendant, because by the employment when made he was to have $1,200 per year and ten dollars for each lot sold by way of compensation, and in August, 1873, the agreement was so modified that the trustees undertook to allow him $3,000 per year from July 1, 1864. This, apparently, was not justified by business principles and it may' be that it was not in fact But there is evidence tending to prove that at the time of such employment it was contemplated that the plaintiff should have a salary of $3,000, and that the commissions on sales with the $1,200 would produce it. As the plaintiff was unable to realize that amount of salary from the compensation so measured, he called attention of the trustees to the deficiency and thereupon they in August, 1873, adopted the following resolution :

Whereas, the $1,200 per annum and commissions on sales have not equalled the expected sum, therefore,

Resolved, that the committee in settling with Mr. Palmer, superintendent, will make good to him the salary of $3,000 per annum from July 1, 1864.” And on August 20, 1875, the trustees by resolution directed that the claim of the plaintiff for salary of $3,000 per annum from July, 1864, be allowed subject to audit by the secretary and treasurer as to payments made thereon. The defendant, through the action of its trustees, did what it could to give the plaintiff the benefit of an increased salary for nine years past services and it may be that this was done without any legal obligation and upon considerations of good faith. But no issue-upon that subject is presented by the pleadings.

The plaintiff was credited with it and the defendant, by its answer, expressly recognizes and admits the plaintiff’s right to the allowance of an annual salary of $3,000 from July 1, 1864-; and for that reason it must now bé assumed that the facts were such as 'to justify it; and the same may be said of the exception to-the finding in support of the consideration for the relinquishment of the 200 lots by the plaintiff to the defendant. The plaintiff having assumed the payment of the mortgage to the savings bank and paid interest upon it for upwards of eleven years, proposed to make the surrender of the 200 lots upon being relieved from the payment of the mortgage, and on being allowed the amount so paid by him upon it with interest compounded semi-annually upon such payments. This offer was accepted, and the plaintiff was credited with $5,309.15, the amount in that manner produced; and that credit is by the defendant’s answer distinctly admitted as correctly allowed to the plaintiff, pursuant to the arrangement" made with him for such surrender of lots. This repurchase by the defendant may not strictly have been within the provisions of Laws 1875, chap. 356, because the plaintiff did not hold them on certificates for resale, but the amount which the defendant allowed the plaintiff for them was within the maximum sum which the defendant was permitted by that act to pay for lots held by private owners on such certificates.

On this review consideration can be given only to questions raised by exceptions; and it must be assumed, unless his findings indicate otherwise, that the determination of the facts by the referee was made in reference to the issues as presented by the pleadings. In that view, his findings of fact seem to be supported ; and they warrant the conclusion that the plaintiff was entitled to the specific performance directed. The ulterior effect upon the sale of the lots held by the plaintiff is not the subject for consideration here, inasmuch as they cannot be diverted from burial purposes for which the land was originally purchased and to which it was necessarily devoted by the defendant-. After a careful examination of the evidence on the subject, the conclusion is reached that the referee was permitted by it to find that after payment of the consideration of his purchase pursuant to the contract, there was due the plaintiff from the defendant the amount recovered by him of thq defendant and no more; and that as the accounts'and dealings between the parties were necessarily the subject of investigation to ascertain whether the defendant had received payment of such consideration, it was not error to direct judgment in liis favor for the balance due to him, as incidental to the main relief sought for and awarded.

The judgment should be affirmed, without costs in this court to either party.

All concur, except Haight, J., absent.