Case ID: ny-st-rep_22/html/0262-01.html
Source: Caselaw Access Project
Author: {"author": "Larremore, Oh.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

James Blewitt, Pl’ff and Resp’t, v. Stephen H. Olin, Def’t and App’lt.
    
    
      (New York Common Pleas, General Term,
    
    
      Filed February 9, 1889.)
    
    1. Trustee—Deed—Effect of.
    A deed conveyed to the defendant as trustee for Minna C. DeKay, and “to his successors and assigns forever,” certain real estate, hut neither the habendum clause, nor any other portion of the instrument, imposed upon the defendant any active duty. Held, that the effect of such a deed was to vest both the legal and equitable title directly in the cestui que trust.
    
    2. S ame—Principal and agent—Relation oe tbustee in benting and
    MANAGING PBOPEBTY.
    Under such a conveyance, it was held that as the defendant was not irt law a trustee, he was either an agent of the cestui que trust in renting and managing the property, or he was a stranger to the whole transaction.
    3. Same—Sub-agent—Pebsonal liability op agent—Undisclosed pbin"
    cipal.
    Where the-sub-agent of such a general agent contracted with mechanics for labor and materials towards the completion and preservation of the buildings, and fitting them for occupancy, without disclosing his principal: Held, that such general agent is not personally liable upon a contract made by his sub-agent for services rendered and materials furnished to the undisclosed principal of both agents.
    Appeal from a judgment of the general term of the city court, affirming a judgment entered upon a verdict rendered by direction of the court against the defendant.
    A deed was made January 26, 1884, by Charles H. Bliss and wife, conveying to the defendant, as trustee for Minna 0. DeKay, the “Rutland” flat, “his successors and assigns” * * * “to have and to hold premises unto the said party of the second part, his successors and assigns, to his and their own proper use, benefit and behoof forever.” The defendant took possession of the property as trustee, subject to a mortgage of four hundred and ten thousand dollars.
    The defendant took possession of the property as trustee under said deed, appointed an agent to take charge of and rent the property, who employed mechanics to complete the buildings and fit them for occupancy.
    The defendant subsequently discharged this agent and appointed another. These two agents collected, in the aggregate, over $30,000 in rents. Out of these rents the trustee paid interest amounting to $8,000 on the mortgages for which he was not personally liable. His title as trustee, and that of his cestui que trust, was extinguished by a foreclosure of the mortgage.
    It does not appear that anything was ever given to the cestui que trust, nor that she ever interfered with the defendant’s administration of the affairs of the property; nor that she ever appointed him her agent. Nor does it appear that he ever had any authority, express or implied, from the cestui que trust, or any other person, to take charge of that property, excepting only that which the said deed conferred upon him as trustee. He, himself, claimed and exercised the right to control the property solely and expressly as trustee under said deed.
    The first agent appointed by the defendant was Sidney De Kay, who made a lease of a portion of the premises, with the approval of the defendant, as to the form of said lease, to a tenant, in the name of “ Stephen H. Olin, true-tee for Minna C. De Kay, by Sidney De Kay, his agent;” and in one of the letters of defendant to his said agent, he says: “ While I remain trustee, I must require compliance with my requests,” While De Kay was in the defendant’s employment as agent, he engaged the plaintiff to do certain work that was found by the referee to be “ proper and necessary for the maintenance and preservation ” of the flats, without disclosing to plaintiff his principal. For a part of the work the plaintiff was paid by De Kay, but at the time De Kay was discharged, a balance remained unpaid for which this action was brought in the city court.
    The trial judge (Browne) in his charge, said: “An examination of the minutes satisfies me that there was no question of fact to submit to the jury. The performance of the labor and furnishing of the materials to the value of the amount claimed, was admitted by the defendant, the only -question being whether the defendant was liable as an undisclosed principal. The question presented is important in view of the fact that the statutes of uses and trusts vested both the legal and equitable title to the lands and buildings in Mrs. De Kay, under' the deed of trust offered by the plaintiff to establish a legal ownership in the defendant.
    “Yet with reference to the subject matter of this action and as to the plaintiff herein, the defendant was the prin cipal. There is no question that under the deed to him he took possession of the property, exercised acts of ownership, appointed an agent to take charge of the property, permitted acts to be done towards the completion and preservation of the buildings, * * * inferentially received all the rents and profits arising from the buildings. ■* * * It seems to me that by these acts he changed that which was but a mere naked trust under the deed into such a trust as charges him with liability to an action. I am clearly of opinion that the rule laid down in Easterly v. Barber (65 N. Y., 252) sustains the above proposition.”
    This appeal is the second appeal taken from the city -court in this action. On the first trial the plaintiff, in addition- to the evidence given in this trial, gave in evidence a deed dated February 15, 1884, between Stephen H. Olin, as trustee for Minna DeKay of the first part and Sidney DeKay of the other part, in which the defendant agreed to take the control and management of the property as trustee of Minna 0. DeKay, collect the rents and apply them to the payment “ of the expenses necessary and proper for the maintenance and preservation of the property,” and to the other purposes mentioned in the said deed.
    
      G. L Hives (Austen G. Fox, of counsel) for appellant.
    The main questions presented are these: Was the trial court right in holding that Mr. Olin was liable, as matter of law, for work and materials which he did not order, which the plaintiff furnished at “The Rutland flat on orders of one Sidney DeKay, whose wife Minna DeKay was the owner of the flat? Was the court right in refusing to submit certain questions to the jury?
    1. The evidence showed that Minna DeKay held the* entire, legal and equitable title to the “Rutland,” and was liable as undisclosed principal for proper work and materials furnished thereat for her sole benefit at the request of ■her agent and husband, Sidney DeKay. That she held the entire legal and equitable title to the Rutland. See 1 R. S., 728, § 49; Wright v. Douglass, 7 N. Y., 564; Moorehouse v. Hutchinson, Daily Register, July 14, 1888. As owner she was liable as undisclosed principal. Rollin v. Cross, 45 N. Y., 766.
    2. The defendant was no more than a general agent for Minna McKay. Executing a lease as trustee is not evidence that the lease has the legal title. 1 Platt on Leases, 59. But whatever effect the executor of such a lease “as-trustee” in raising a presumption of á legal title, the plaintiff destroyed that presumption by putting in evidence the deed which showed that the defendant had no title. One who has contracted with A., not knowing that A. is in fact acting as the agent of another person, may on discovering such to be the fact, hold that other person as principal. The reason why he can do so is that the contract though not in form, was made in fact for the benefit, of that other person, and when accepted by the latter ifc can be enforced against him as undisclosed principal.. But if it turns out that the person sued as a principal was-at most a mere agent, then because the plaintiff has not sued the true principal, but merely another agent, the action fails. Thomas v. Edwards, 2 M. & W., 216; Hare on Contracts, 281; Frank v. Olin, 15 N. Y. State Rep., 161.
    3. The defendant is not liable on any ground of estoppel.
    To say that a defendant is liable as an undisclosed principal is a contradiction in terms. And for the very reason that the plaintiff did not trust him. See Armstrong v. Stokes, L. R., 7 Q. B., 598, 603-604.
    4. The cases cited by plaintiff do not apply to the question herein. The only ground that the plaintiff ever hacL was that because the defendant had the legal title to the property under a trust deed, he was liable for such work and materials, as by the terms thereof it was his duty to-see were provided. Thus Van Hoesen, J., said, in deciding this case in the first appeal (Blewitt v. Olin, 13 N. Y. State Rep., 76): “The defendant, from February, 1884, to May 1, 1885, had the legal title to the Rutland flats. He was the trustee for Mrs. DeKay, and he agreed to receive the rents, to apply them to the expenses of the trust, and to such other expenses as might be necessary and proper for the maintenance and preservation of the property, and to pay certain claims that were specified in the deed of trust.”
    
    But upon the last trial the plaintiff did not put in evidence the deed of trust, but relied solely on the deed of conveyance, which put the whole title in Minna DeKay.
    It is not because one is trustee, but because one as trustee, holds the title to real estate, that he may be held liable, in a proper case for work and materials furnished on the property.
    5. Under any view of the case the question of the extent of De Kay’s alleged agency was a question of fact and the court erred in directing a verdict for the plaintiff. Wells on Questions of Law and Fact, § 146; Frank v. Olin, 15 N. Y. State Rep., 161. Or whether De Kay was acting on his own behalf, or that of an alleged principal. Maryland Coal Co. v. Edwards, 4 Hun, 432. The question in such cases is to whom was credit given. Story on Agency (9th ed.), § 288.
    
      Isaac N. Miller, for respondent.
    1. There was no issue of fact to be passed upon by the jury.
    The performance of the work and furnishing the materials by plaintiff was admitted.
    The defendant’s request therefor was the sole thing requiring proof.
    The evidence offered by plaintiff on this point was:
    
      (a). The deed from Bliss and wife to defendant, “ as trustee for Minna De Kay.”
    (&). A lease dated June 18, 1884, by “ S. H. Olin, trustee for Minna 0. De Kay by Sidney De Kay, his agent,” and the latter showing that this form of lease was approved by defendant.
    (c) . Various letters from defendant to Mr. De Kay, one calling for account and one demanding a return of his power of attorney.
    
      (d) . Two accounts rendered by Mr. De Kay to defendant showing amounts .collected and disbursements.
    (e) . The admission of defendant himself that Mr. De Kay had the control of the property by the appointment of the defendant from the taking of the title down to February 1, 1885.
    (/). The testimony of the defendant that he left the management to Mr. De Kay and subsequently discharged him.
    All this showed an admitted state of facts from which the court and not the jury should deduce the conclusion. Where the facts are uncontroverted, it is error to submit the case to the jury. 2 Whittaker’s Practice, 388, 389; Mack 
      v. Insurance Company, 106 N. Y., 560; Ruiz v. Renauld, 1 Cent. Rep., 304; Underhill v. Vandervoort, 56 N. Y., 242; Dwight v. Germania Life Insurance Co., 4 Cent. Rep., 529.
    2. It is immaterial for the purpose of this action to consider the question whether in law the legal estate vested in defendant by the deed in evidence.
    As a matter of fact it is in evidence that he took possession of the “Rutland,” and exercised acts of ownership and control in a manner which he could not do unless he had the legal estate. Though by construction of law it might have been a bare trust, he treated it as an ■ active trust. His acts establish a constructive trust whether there was a trust deed or not. Such constructive trustees are subject to the same rules and remedies as other trustees. Perry-on Trusts (8th ed.), § 245.
    One who acts as trustee cannot be heard to say he had no right to act as trustee. Easterly v. Barber, 65 N. Y., 252; Deming v. Puleston, 55 id., 655.
    
      
       See former appeal, 13 N. Y. State Rep., 76; also Frank v. Olin, 15 N. Y. State Rep., 161.
    
   Larremore, Oh.

J.—When

this case was before us on the former appeal it presented a radically different state of facts. Evidence was offered upon the trial from which such former appeal was taken, sufficient to support a finding that the defendant was trustee of a valid express trust according to the requirements of the New York statutes, for decision on such former appeal was based entirely on the assumption that defendant was a trustee within the strict statutory definition of the term. See opinion Blewitt v. Olin, 13 N. Y. State Rep., 76.

Upon the present trial there was introduced merely a conveyance of the property in question to Stephen H. Olin, as trustee for Minna De Kay. Neither the habendum clause nor any other portion of the instrument imposes upon the so-called trustee any active duty, and undoubtedly the effect of a deed so drawn would be to vest both the legal and equitable title directly in the cestui que trust. This point was conceded by all the judges who passed upon the case in its present form in the court below.

We cannot go outside of the present record in deciding the present appeal. The evidence on the first trial, which tended to make the defendant out an actual trustee, was, from that point of view, of such significant character that it would seem that it must hqve been kept out of this trial by design. Even if it had been omitted by inadvertence, plaintiff would be obliged to take a new trial and have it introduced in regular form, in order to get the benefit of it. For the purposes of this discussion, therefore, the legal status--of the parties is as follows: Mrs. De Kay was the owner, in her own right, of the Rutland flat; the defendant was her general agent, and Sidney De Kay, the hus"band of the owner, was a sub-agent under the employment of the defendant. As defendant was not a trustee, it must be held either that he was an agent or that, in the eyes of the law, he was a stranger to the whole controversy.

The plaintiff sold and delivered the goods in question. upon the contract and order of Sidney De Kay, the sub-agent. It is a familiar principle of the law of agency that when a liability is incurred by a person, who in the transaction acted as the agent of an undisclosed principal, the ■claim may be enforced either against the agent or against ■said principal, when the latter is discovered. There are sound reasons for the rule giving the plaintiff his choice of defendants in such an action. The credit was given directly to the agent; therefore he ought to be held accountable for any loss. On the other hand, the undiscovered principa,! is the real party in interest and expects to reap the results of the contract, and consequently there is just cause for holding him responsible if any mishap occurs. But what plaintiff claimed on the present trial was, that á general agent is personally liable upon a contract made by a sub-agent for goods furnished to the principal of both agents. I know of no authority and can perceive no equitable rule which would support such a proposition of law. The general agent does not receive the benefit of the transaction, as in the case of an undisclosed principal, and cannot be charged on that ground. For authority in point see Thomas v. Edwards (2 Meeson & Welsby, 216).

The only possible theory upon which plaintiff could recover from defendant upon proof making the latter out to be an agent and not a trustee, would be that defendant was agent for an undisclosed principal; that plaintiff sold the goods and gave the credit to defendant as an individual, and in ignorance of the fact that defendant was acting for or represented any other person. Even on such theory ■defendant would be entitled to go to the jury on the whole issue, and have them pass upon the question of plaintiff’s Knowledge of defendant’s agency, as well as determine the ■actual contract made in the premises.

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