Case Name: WALTER S. CHURCH, Plaintiff, v. JAMES KIDD and others, Defendants
Court: New York Supreme Court
Jurisdiction: New York
Decision Date: 1874-12
Citations: 10 N.Y. Sup. Ct. 254
Docket Number: 
Parties: WALTER S. CHURCH, Plaintiff, v. JAMES KIDD and others, Defendants.
Judges: 
Reporter: Supreme Court Reports (Hun)
Volume: 10
Pages: 254–272

Head Matter:
WALTER S. CHURCH, Plaintiff, v. JAMES KIDD and others, Defendants.
Code, § 268—Motion for new trial under — Beal property—when trust may he shewn by parol — evidence to qualify an absolute cormeyance of—Equity cases—judgment —not reversed for technical errors — Account stated—who not hound try.
A motion at General Term, under section 268 of the Code, for a new trial, where the decision to be reviewed is interlocutory and provides for a reference, should be made before proceeding with the reference directed by the interlocutory order.
When a person takes an absolute conveyance of real property at the request and for the benefit of another, who at the time has an interest therein to be protected, he will be deemed the trustee of the party for whom he undertook the purchase; and on tender to him of the purchase-money and interest, he will he compelled to convey the property to the one equitably entitled to it. Equity will not allow a party to retain property thus obtained upon the faith of a verbal contract, and the arrangement made between the parties may be shown by parol evidence.
In equity actions the court will always look at the entire case and see whether substantial justice has been done, and where that appears it will affirm the judgment, notwithstanding the admission of testimony which, in ordinary actions at law, might have necessitated a new trial.
A statement of account made between trustees and third persons interested in the trust property, in which there is an agreement to pay interest upon a sum (made up of a principal sum and interest and a bonus thereon, the latter not yet being legally due, though in such account stated to be) found to be due such third persons, there being no authority in the trustees from their cestui que trust to make such agreement, is not binding on the cestui que trust, although for several years after he obtains knowledge of such account stated, he gives no notice to such third persons of his dissent therefrom. »
In equity actions the granting or withholding of costs, rests entirely in the discretion of the court.
This is a motion for a new trial, on a case and exceptions, under section 268 of the Code of Procedure.
The motion is made by the defendants, other than the representatives of Hr. Cagger’s estate. The latter do not join in the motion. The action was brought for the purpose of having the rights of the plaintiff declared and decreed in certain leases, title to which was originally taken by James Kidd and Peter Cagger; and which title was, at the time of commencing the action, in Hr. Kidd and the heirs of Hr. Cagger, then deceased. An accounting was also demanded.
The defendants, other than Hr. Kidd and the representatives of Hr. Cagger’s estate, were made parties because of their claims for the repayment of advances made by them on the security of the leases, under contracts with Kidd and Cagger. Issue being joined, all the defendants having appeared and answered, the case was tried by and before Hr. Justice Ingalls at Special Term, without a jury. He found and decided all the material issues of fact in favor of the plaintiff; and, on the 26th of August, 1812, the interlocutory decree made by him was entered, whereby the rights of the parties in and to the leases were declared; and a reference was ordered to take and state the account, as regarded the collections upon the leases, and the payments made to the defendants on their advances, etc., with a view to the entry of final judgment in the action. The parties thereupon proceeded with the accounting before the referee; and that officer has made his report, whereon final judgment may now he entered at any time, on due application to the court at Special Term. In the meantime, a case with exceptions has been made and settled, embodying the evidence and proceedings before Hr. Justice Ingalls, with his decision of the case on the. interlocutory order or decree.
The facts in the case are: that on the 21st day of July, 1853, Stephen Yan Rensselear entered into a contract in writing with the plaintiff, Walter S. Church, and one Oscar Tyler, for the sale by Yan Rensselaer to Church and Tyler of the interest and estate of Yan Rensselaer, as landlord, in certain lands in Albany county, which were leased in fee, with reservation to Yan Rensselaer of certain rents, services, etc., in the several leases specified. By the. terms of this contract, Church and Tyler were to pay in cash $10,000 on its execution. The residue of the purchase-money, which was to be ascertained by a valuation of the leases to be made in a manner specified in the contract, was to be paid with interest in five years from the date of the contract, i. e., on July 21, 1858.
On the 1st of August, 1853, Stephen Yan Rensselaer entered into a similar contract, in writing, with Church and Tyler, for the sale of other leases of the like nature, the purchase-price for which was to be paid in six years from the date of the contract, i. e., on August 1, 1859.
Under both of these contracts Church and Tyler were entitled to, and received assignments of, the interest and estate of Yan Rensselaer in certain of these leased lands, as payments were made under the contract.
On the 2d of April, 1855, Oscar Tyler assigned, by an instrument in writing, to Walter S. Church, all his rights and interests in and arising from the two contracts before mentioned.
In the year 1862, Walter S. Church having failed to perform the covenants and conditions of the two contracts, and to make the payments therein required, and being in financial embarrassment, and unable to make his payments 'under these contracts, a new contract in writing was entered into, on the first day of March of that year, between Stephen Yan Rensselaer of the first part, and Walter S. Church, James Kidd and Peter Cagger of the second part, whereby Yan Rensselaer agreed to receive the sum of $150,000 ($75,000 in cash and the remaining $75,000 with interest in two years from the date of the contract), and when that sum and inter- - est were paid in full, to execute a transfer and assignment of such . of the leases as should remain unsold. After the execution of this contract, Church assigned all his interest therein to Cagger and Kidd.
It was claimed on the trial, by W. S. Church, that this contract was entered into, and this assignment taken by Kidd and Cagger, at his request and on his behalf, and that Cagger and Kidd agreed to act for him, and that, subject to the repayment of the advances to be made, as hereinafter stated, Kidd and Cagger held the title to this property as his agents.
For the purpose of raising the money necessary to make the first payment of $75,000 to Tan Rensselaer, an agreement in writing was entered into on the 1st day of March, 1862, and after the assignment by Church of -his interest in the contract, between James Kidd and Peter Cagger of the first part, and Dean Richmond, Harmon Pumpelly, Charles L. Austin, John K. Porter and Peter Cagger of the second part, wherein it was provided that Dean Richmond should pay the sum of $25,000, Peter Cagger and John K. Porter together the sum of $25,000, Harmon Pumpelly the sum of $15,000, and Charles L. Austin the sum of $10,000; and in consideration of such payment, each of such advancers should receive the sum thus advanced by him and interest thereon, and, in addition thereto, a sum equal to fifty per cent upon such sum so advanced, out of the collections of rent under the leases above mentioned, and the proceeds of any sale of the leased lands, after first deducting therefrom certain expenses, etc., and the remaining $75,000 which was to be paid to Tan Rensselaer under the contract with him of March, 1862, above mentioned.
On the 2d day of May, 1864, the entire purchase-money having been paid to Tan Rensselaer, a deed of conveyance of the premises mentioned and described in the aforesaid contract between Tan Rensselaer and Cagger, Kidd and Church, was executed by Stephen Tan Rensselaer and wife to James Kidd and Peter Cagger, Walter S. Church’s interest having been transferred to James Kidd and Peter Cagger, as above stated.
After the execution and recording of this deed, and in the year 1864, complaints were made by the advancers that the work of settling up and disposing of the leases was not prosecuted with diligence, and threats were made to have a receiver appointed to close up the business so that the advancers might recover the amount due to them. In consequence of these threats and complaints,, soon after January 1, 1865, a statement was made of the account of each advancer, crediting him. with the amount advanced with interest up to January 1, 1865, and adding thereto fifty per cent on the amount advanced ; and at the foot of this account was a statement that on an adjustment had, the sum therein. mentioned, i. e., the amount advanced with interest and the fifty per cent added, was found due, and that on such sum interest was to he paid semiannually until the principal sum should be paid. This statement was signed by Peter Cagger for himself, and for James Kidd as" his cotrustee; and the different accounts so stated, with this agreement written under them, were sent about the time they were made to the different advancers; and in pursuance of this statement of account, interest was twice paid on the total amount, i. e., the amount advanced and interest, and the bonus of fifty per cent to the advancers, and receipts were taken from them specifying that such payment was for the interest of that sum. • After the first two payments the amount realized from the leases was always more than sufficient to pay the interest, and payments were made in excess of the interest due, and generally on account.
There is some dispute as to when Walter S. Church first became aware of this statement and the payments of interest made under it, he swearing that it was not until a year after it was made, and till just after the second payment of interest, while certain facts in the case tend to show that Church was aware of the transaction at the time, or almost immediately after it took place.
It was admitted that after it was known to Church that this statement had been made, he gave no notice to Kidd, Austin, Pumpelly, Richmond or Porter of his intention to repudiate it, though he did make objections thereto to Cagger, which were not, however, communicated to them. It was not until after the death of Cagger, Austin and Richmond, and just prior to the commencement of this action (April, 1871), that he claimed to the advancers that this was an unauthorized statement of account, and that the advancers should not be allowed to credit to interest on the bonus, any of the moneys received by them from these leases.
Lyman Tremain, for the defendant Richmond.
A motion for a new .trial at General Term, after interlocutory decree in an equity case, is the proper mode of bringing before the court for review the merits of the case. (Code, § 268; Stanton v. Miller, 1 N. Y. Supreme Court R., 23; S. C., 65 Barb., 58.) The costs of this action are in the discretion of the judge at Special Term, and such discretion is reviewable at General Term. (People v. Central Railroad Co, 29 N. Y., 418; Downing v. Marshall, 37 id., 380; Witmore v. Parker, 52 id., 466.) The judge, erred in allowing Church to testify as to transactions, conversations and agreements had by him with Cagger, deceased. (Code, § 399.) Parol proof that the , purchase was made for plaintiff’s benefit, or on his account, is inadmissible. (Botsford v. Burr, 2 Johns. Ch., 409; Bartlett v. Pickersgill, 4 East, 577, note; Bannet v. Dougherty, 32 Penn. St., 371; Nixon’s Appeal, 63 id., 279, 282.) Parol evidence of a trust, in contradiction of the terms of an absolute deed,fmust be clear and unequivocal. (McGinity v. McGinity, 63 Penn. St., 38, 44; Todd v. Campbell, 32 id., 250, 252.) Here the complaint charges, and the proof shows, that the deed was given to Kidd and Cagger. (Swinburne v. Swinburne, 28 N. Y., 571; Lounsbury v. Purdy, 18 id., 515.)
George W. Miller, for the defendants, Kidd and Pumpelly.
The pretended interest claimed by the plaintiff in the residuum of the leases in question, could not be established by parol, however clear the existence of the fact may have been, without a plain violation of law. But if the fact be that such a parol agreement was made with Kidd and Cagger as Church swears to, it has no legal validity, and cannot be enforced, and the complaint should have been dismissed for that reason. (2 R. S., 135, § 6; Levy v. Brush, 45 N. Y., 589; Ryan v. Dox, 34 id., 307.) The transaction was in a legal sense intended to hinder, delay and defraud the creditors of Church, and he is not in condition to invoke the aid of the court. A transaction which has the effect of hindering, delaying and defrauding creditors is not only illegal but immoral, and a particeps criminis cannot, by aid of any court, derive any benefit from it in any form. (Nellis v. Clark, 4 Hill, 424, and kindred cases; Sweet v. Tinslar, 52 Barb., 271; Stewart v. Ackley, 52 id., 283.)
Marcus T. Hun, for the defendant Austin.
When the intention is to hold a fund itself as security for a payment, courts of equity will always recognize the interest and enforce the rights of the party in the fund. (Hendricks v. Robinson, 2 Johns. Ch., 283- 314; 17 Johns., 438; Van, Hoozen v. Corey, 34 Barb., 1; Seymour v. Canandaigua & Niagara Falls R. R. Co., 25 id., 284; Rorrbach v. The Ætna Insurance Company, 1 hi. Y. Sup. Ot. R., 345; Morrill v. Noyes, 3 Am. Law Reg. [LT. S.], 18; Holroyd v. Marshall, 9 Jur. [N. S.], 215 [foot of page]; Pinch v. Anthony and others, 8 Allen, 536; Hall v. The City of Buffalo, 1 Keyes, 193.) The court, in admitting evidence subject to be retained or stricken out, and in not deciding before the termination of the trial to strike it out, must be presumed to have retained it and acted upon it. (Berriant v. Sanford, 1 Hun, 625; Clussman v. Merkel, 3 Bos., 407; Sharpe v. Freemam,, 45 N. Y., 804.) The declarations of an agent which are part of any res gestee which is the subject of inquiry, are receivable against the principal; and when the acts of the agent will bind the principal, his declarations respecting the subject-matter will also bind him, if made at the same time and constituting part of the res gestee. They must be made not only during the continuance of the agency, but in regard, to a transaction depending at the very time. (1 Greenl. Ev., § 113; Luby v. The Hudson River R. R. Co., 17 N. Y., 131; Anderson v. Rome, W. & O. R. R., 54 id., 340.) On the question of estoppel, see Story on Agency [7th ed.], § 127; id., § 93; L. R. [3 Eng. and Irish App.], 255; Wendell v. Van Rensselaer, 1 Johns. Ch., 353; Kelly v. Scott, 49 N. Y., 595; Tilton v. Nelson, 27 Barb., 605; Sharpley v. Abbott, 42 N. Y., 448; 2 Story Eq. Jur. [10 E. & L.], § 1284, a. The agents have acted within the general scope of their employment. (Booth v. Bierce, 40 Barb., 114.) The statement of account and agreement to pay interest were valid and binding on the parties. 1st. It was an account stated, and can only be set aside by reason of fraud or mistake. (Lockwood v. Thorne, 11 N. Y., 170; Chubbuck v. Vernan, 42 id., 432; Rock v. Bonitz, 4 Daly, 120; Johnson v. Hartshorne, 52 N. Y., 178.) 2d. It was sustained by the sufficient consideration that it was given to prevent litigation and settle a dispute as to the rights of the parties. (Crass v. Hunter, 28 N. Y., 389-394; Russell v. Cook, 3 Hill, 504; Supervisor v. Browne, 4 Lans., 24-33; Organ v. Stewart, 1 Hun, 415.) 3d. It will be enforced by a court of equity, after the parties have mutually assented to its validity for seven years and have acted upon it; and the court will not give Church equitable relief, without first requir ing him to do equity in carrying out his agreements. (Smallcombe’s Case, L. R. [3 Eng. and Irish Appeal], 255; id. [3 Eq. Cases], 769.) The assignment was fraudulent. An insolvent debtor, he was to retain possession of the property assigned. (Smith v. Acker, 23 Wend., 653; Griswold v. Sheldon, 4 N. Y., 587; Edgell v. Hart, 9 id., 213.) Church makes an assignment and retains out of the property assigned a support for himself. (Edgell v. Hart, 9 N. Y., 213; Griffin v. Barney, 2 id., 370.) The granting or withholding of specific performance is within the discretion of the court, and it will not be granted when it would be against conscience and equity to do so. (Story Eq., § 742; 1 Sugden on Vendors [8 Am. ed.], 319; Peters and others v. Delaplaine, 49 N. Y., 362, 367; Seymour v. Delancey, 6 Johns. Ch., 222; Sherman v. Wright, 49 N. Y., 227, 231; St. John v. Benedict, 6 Johns. Ch., 111; Nellis v. Clark, 20 Wend., 24, 29; see also Jones v. Read, 3 Dana, 540; Walker v. Miles, 3 Dev. S. C., 519; Wright v. Wright, 2 Litt. [N. S.], 12; Sweet v. Tinslar, 52 Barb., 271; Stewart v. Ackley, 52 id., 283.) The undisputed existence of certain facts in the case, will authorize the court to decide as matter of law, that the fraudulent intent existed. [Cunningham v. Freeborn, 3 Paige, 564; Edgell v. Hart, 9 N. Y., 213.) The intent to delay is as much a violation of law as the intent to defraud. (Nicholson v. Leavitt, 4 Sandf., 252, 283; Hendricks v. Robinson, 2 Johns. Ch., 300.) The court is asked to aid a dishonest debtor in his efforts to crawl out of the entanglements of his own fraud.
Amasa J. Parker, for the plaintiff.
Where the arrangement is made to protect an existing and vested interest, it may be made by parol. (Levy v. Brush, 45 N. Y., 596.) Fraud is now by statute a question of fact, and must be proved as such, both against the person conveying and the person taking a fraudulent conveyance. (2 R. S., 137, § 4; Dygert v. Remerschnider, 32 N. Y., 629; affirming, 39 Barb., 417; Auburn Bank v. Fitch, 48 id., 344; Ruhl v. Phillips, 48 N. Y., 125.) The defendants were not assignees, nor did they act in a representative capacity, but only for themselves. (Penny v. Black, 6 Bosw., 50, 57.) The defendants are not entitled to recover interest on the fifty per cent bonus. This bonus was only an usurious interest, agreed to be paid for loaning the money, and the simple question is whether interest can be recovered on interest. (7 How. Pr., 256; 1 John’s Ch. R., 14; 11 Paige, 228.) Indeed the interest money ought to have been recovered back. (Boyer v. Pack, 2 Denio, 107.)

Opinion:
Bookes, P. J.:
This motion is made under the clause of section 268 of the - Code, which provides that when the decision filed under section 267 does not authorize a final judgment, but directs further proceedings before a referee or otherwise, either party may move for a new trial at General Term; and for that purpose may, within ten days after notice of the decision being filed, except thereto, and make a case or exceptions, as in said section is provided in case of an appeal. This case fell within the clause of section 268, above cited, and the defendants had the right, consequently, to make a motion for a new trial at General Term on a case and exceptions. But it is insisted that they were bound to diligence, and should have made the motion before proceeding with the reference directed by the interlocutory order.
The clause of section 268 giving, the right to make this motion, was introduced into that section by amendment in 1867. Its object was to- facilitate proceedings, and more particularly to save the labor and expense of the reference until the case could be reviewed at General Term on the questions, which, as decided, constituted the basis of that proceeding. In Stanton v. Miller, Judge Talcoit says, that the amendment of 1867 was adopted to avoid the delay and expense of the further contemplated proceedings, which would be useless if it should turn out that any error had been committed on the trial, or in the interlocutory decision; and he adds, that to proceed with the trial of the matters referred,
" would involve much expense and delay, the whole of which would have been uselessly incurred, if it should turn out that the justice at the circuit had erred in the admission or exclusion of evidence, or in his findings of fact or conclusions of law."
In this case over two years have elapsed since the .interlocutory decree was made and entered, and the parties have gone on with the reference before the referee to its termination. That officer has made his report, and the case is in readiness for the entry of final judgment. It was to save the labor and expense attending the reference, anticipatory of a reversal of the interlocutory decree, that the privilege was given to parties at this stage of the case to make the motion. If nothing was to be gained either in dispatch or in the avoidance of labor or expense, there was no necessity for the amendment introduced into the Code in 1867; for parties might secure all that could be attained by the motion, on appeal after final judgment. Here, as it appears, the labor'and expense of the reference have been incurred; and now to entertain the motion at this late day, and in the present condition of the case, would be to allow a practice subversive of the purpose which induced the amendment, pursuant to which this proceeding is taken. The party desiring the benefit of this provision should be diligent in seeking its advantages. If he lie by until they are lost, the motion is without merit. Therefore laches unexcused, and especially the proceeding with the reference to its conclusion, should, in consideration of its object, be deemed a waiver of the right to the benefits of this provision ; otherwise the whole purpose of it is defeated. Nor can it be urged that action on the order of reference could not be avoided, if the adverse party insist on proceeding; for a stay would be granted by the court, when it should be made to appear that there was an intention to make the motion so soon as the case and exceptions were settled, and that the party was acting in good faith, with no purpose to cause unnecessary delay. I am of the opinion that the defendants, under the circumstances of this case, might well be held to have lost their right to make this motion, because of the unexcused delay; and for the further reason that it is not made until after the reference under the interlocutory order has terminated, and the referee has made his report.
But the motion has been fully argued on the merits; and the counsel for the defendants expressed apprehension lest their case might be in some way imperiled, unless the questions involved in it, should be considered on this application. We have therefore concluded to disregard the objection above suggested to the hearing of the motion, and the case will be examined as presented on the proof and exceptions,
In the examination of the questions presented on this motion, it will be necessary to consider them with reference to the defendants separately, to some extent, inasmuch as they are not all affected by them alike. The position of the defendants, Kidd and the representatives of Cagger's estate, is quite different from that of the other defendants. The former defendants have the legal title to the leases in controversy, and contest the plaintiff's right to any interest whatever in them. The other defendants are only interested to protect their rights as advancers of money on the security of the leases, which rights are not disputed by any one, except as regards a claim by them for an allowance of interest. It may be well therefore to examine the ease, first, as between the plaintiff and the defendants, Kidd and the representatives of the Cagger estate. The plaintiff in his complaint charged that he had a reversionary interest in the leases in controversy, which were conveyed by Mr. Van Rensselaer to Kidd and Cagger, and which were held by them under an absolute conveyance in fee. This averment, as regarded the plaintiff's right to the leases, was denied by the defendants, Kidd and the heirs at law and personal' representatives of Cagger. The learned judge on the trial found in favor of the plaintiff on this issue. He found and decided that the leases in controversy were the property of the plaintiff^ subject to the payment to the defendants of certain moneys in the findings specified; that Kidd and Cagger held them as trustees of the plaintiff for the purpose of paying and satisfying those moneys; and that Kidd and Cagger were bound to convey and deliver them to the plaintiff, with the rents due and to grow due thereon, so soon as the several amounts secured thereby should be paid, either by collections therefrom, or by the plaintiff from his own funds. These findings, inserted in the record at length and in due form, are challenged as unsupported both in fact and law.
The first question which here arises, is, as to the character of the evidence by which the plaintiff sought to establish his alleged right in the leases, which were held by Kidd and Cagger by absolute conveyance. The conveyance of the leases to the parties last named, neither stated nor intimated that the plaintiff had, or was to have, any interest in the property thereby conveyed. It was in form a simple and absolute conveyance of the leases to Kidd and Cagger, with all rights growing or to grow out of them. Hor was there any paper executed and delivered by Kidd and Cagger to the plaintiff expressly declaring his rights as charged in the complaint and found by the learned judge on the trial; but the evidence given to establish the plaintiff's claim rested in parol. It consisted of oral statements of the parties, and of memoranda, letters, receipts and recitals in instruments executed by those defendants, which tended to establish the plaintiff's right to the leases substantially as averred. in the complaint. The judge held this evidence competent, and gave it effect. It is insisted that the plaintiff's alleged rights in the leases could not be established by such evidence; that its admission was erroneous, and the effect given it was in disregard of the statute of frauds. It is answered that the case is in principle like' that of Ryan v. Dox. In this case it was held, that where a party takes an absolute conveyance of real property, at the request and for the benefit of another, who at the time has an interest therein to be protected, he will be deemed the trustee of the party for whom he undertook the purchase, and on tender to him of the purchase-money and interest, he will be compelled to convey the property to the one equitably entitled to it; and further, that such equitable right may be established by parol. The soundness of this decision has been repeatedly recognized; and especially is it recognized in the recent case of Levy v. Brush, If, therefore, the case at bar be within the principle of the case cited, the statute of frauds can have no application ; otherwise it is fatal to the plaintiff's right of action. ISTow a distinction must be observed between a case where the party has an interest in the property to be protected when the conveyance thereof is made, and a case where the party has no such interest. In the latter, where he has no interest to be protected, the case would faff within the statute. But in the former, where he has an interest, he will be protected in his rights, although the agreement between him and the person taking title, rests in parol. " In such cases equity will not permit a party to retain property obtained on the faith of a verbal contract, and consummate a fraud' by retaining the property and refusing to perform the contract."
To the same effect is the decision in Stoddard v. Whiting, which case, in many of its features, is like the one at bar. The question now arises, had the plaintiff an existing, vested interest in the leases when the contract was entered into between Yan Rensselaer, of the one part, and Church, Kidd and Cagger, of the other part, dated March 1, 1862, and when Kidd and Cagger subsequently took the conveyance ? That he then had an interest in the leases, seems beyond peradventure. He held contracts with Yan Rensselaer, by which, on due performance on his part, the latter was bound to convey them to him. These contracts were parti/performed on his part. He had already paid to Mr. Yan Rensselaer a very considerable amount on the purchase-price agreed by him to be paid, and the contracts were, beyond question, of great value to him.' This cannot be well denied. It was of the utmost importance to him that his interest should be protected from forfeiture; and such protection might be secured by an oral agreement with Kidd and Cagger, in the way it is here alleged and found to have been done. It was competent to establish the plaintiff's right and interest in the leases by parol, in this case, notwithstanding Kidd and Cagger took and held the leases under an absolute conveyance from Yan Rensselaer'.
It is further urged that improper evidence was received, against the defendants' objection, to establish the arrangement between the plaintiff and Kidd and Cagger, in this : that the plaintiff,was allowed to testify to personal transactions and communications between himself and Mr. Cagger, who was then deceased, contrary to the provisions of section 399 of the Code. The representatives' of the Cagger estate are not before the court on this motion. This question may therefore be considered without regard to their rights.
It will be seen, on an examination of the rulings of the court, that the evidence admitted was competent as against the defendant, Kidd, inasmuch as it had reference to transactions and communications wherein the latter participated. Such was the cáse in most instances where objections were urged against the plaintiff's testimony as incompetent under the provisions of the section cited. Thus the evidence was competent as against Kidd. The defend ants, Kidd and Cagger, were not partners in this matter. As represented in the conveyance to them, they were tenants in common of the property conveyed. It was therefore admissible for the plaintiff to' testify to what occurred between himself and Kidd; and the evidence could not be excluded on Kidd's objection, because Cagger, who was dead, was present and took part in the matters of inquiry. What was said and done between the plaintiff and Kidd, pertinent to the issue, might be proved by the former. But all evidence which by possibility might be objectionable under the provisions of section 399, may be stricken out of the case, and there would still remain abundant proof to sustain the findings of the court. It would still remain well established by evidence of undoubted admissibility, that the plaintiff was to have the leases, or all that remained of them, after the defendants' just claims upon them were fully satisfied.
The unobjectionable admissions and statements of Kidd and Cagger; the memoranda made by them, or of which they were cognizant; the letters, receipts and recitals in agreements with which they were connected, and the manner in which the business pertaining to the leases was conducted, afford abundant proof to sustain the conclusions declared by the learned judge in his findings. It is quite apparent on a full reading of the case, that the admission of the evidence objected to did.not, as in fairness it could not, work any harm. It was held in Platt v. Platt, that in equity actions the court will always look at the entire case, and see whether substantial justice has been done; and where that appears, it will affirm the judgment, notwithstanding the admission of testimony which, in ordinary actions at law, might have necessitated a new trial. There seems to be no. ground for a new trial on Mr-Kidd's application, by reason of the admission of improper evidence.
It is further urged that the entire arrangement between the plaintiff and Kidd and Cagger, was entered into with a view to hinder, delay and defraud the plaintiff's creditors, and therefore that he has no standing in court to enforce the agreement. This alleged defense is not set up in the answers. But it is unsupported in point of fact. It is very manifest that the arrangement was entered into, in order to save the contracts with Van Kensselaer from forfeiture. Had a forfeiture been permitted, there would have been nothing growing out.of them either for the plaintiff or his creditors. The inducement to action was the preservation of" the plaintiff's rights, rather than to hinder, delay or defraud his creditors. Undoubtedly the plaintiff was under great pecuniary embarrassments. It was. this perplexity which necessitated his action in calling Kidd and Cagger to his aid. It is not a little difficult to perceive how the rights of the plaintiff's creditors could be prejudiced by an arrangement which preserved to them what, without it, would have been lost. It is quite plain, I think, that the parties in this action had no intent — as such action manifestly did not further that purpose •— to hinder, delay or defraud the plaintiff's creditors.
With the questions above considered, the defendants., other than Kidd and the Caggers, have, as I think, no concern. As regards Kidd and the Caggers, they have the absolute legal title; and those questions are important to them in the defense of such title. But the other defendants claim only as advancers and lien-holders; and it is of no consequence to them, who shall be adjudged to own the leases, so be it that their rights in them are recognized and protected. Therefore they can have no interest in the issue between the plaintiff on the one side, and Kidd and the Caggers on the other, as to their ultimate ownership.. Those parties, both plaintiff and defendants, admit alike the superior right of the advancers and lien-holders to the leases; and the decision of the court gives to them the full extent of their claim, except as to an allowance for interest which will presently receive attention. Thus it seems that the defendants, the advancers and lien-holders, are not in a position to insist upon the objections above urged by the counsel for Mr. Kidd. Their rights, as advancers and lien-holders, are in no way injuriously affected by the rulings above considered. They are not harmed by them; hence, cannot be heard to complain. But were it otherwise, and admitting their rights to be affected by those objections, the same .considerations which led to the conclusion that they were ineffectual as to Kidd on his motion for a new trial, will render them unavailing, also, to the advancers and lien-holders.
But, in point of fact, the decision rendered, fully recognizes the rights of the latter, and makes all needful and proper provision for the security and ultimate payment of the money due them. It follows that all further questions which can affect their interest, will arise on the accounting ordered by the interlocutory decree; and were there no special directions given therein, to control that proceeding, the case would require no further attention at this time. But this decree does contain a direction as to the allowance of interest, binding on the referee who is to take and state the accounts, and the correctness of this direction is properly challenged here. This subject will now be considered.
According to the decision, the advancers were not entitled to interest on the bonus of fifty per cent on their advances, agreed to be allowed them in and by the instrument on which their 'claims are based. It appears that the first sum of $75,000 paid to Mr. Tan Rensselaer on the contract executed by him, Church, Kidd and Cagger, was made up as follows: Dean Richmond advanced $25,000; Porter and Cagger together advanced $25,000; Harmon Pumpelly advanced $15,000; and Charles L. Austin advanced the remaining $10,000. These sums were to be repaid to those advancers from collections to be made upon the leases, etc., with interest thereon; and also, as stated in the agreement, " the additional sum of fifty per centum of the amount respectively advanced by them: that is to say, to Dean Richmond the sum of $12,500, being fifty per centum of the amount contributed by him; to John K. Porter and Peter Cagger the sum of $12,500; to Harmon Pumpelly the sum of $7,500; to Charles L. Austin the sum of $5,000." The bonus to these advancers was in all respects the same as interest. It was interest, as it was a premium to be paid for the use of money. In consideration of the money advanced, the advancers were to have for its use and employment in the way agreed upon, the ordinary bonus of seven per cent, with an additional bonus of fifty per cent on the sums advanced. The question now is, was interest allowable in taking and stating the accounts of the advancers on this bonus ? I am content to adopt the reasoning and conelusi on of Mr. Justice Ingalls on this question, as given in his opinion at Special Term. He considered the question in all its bearings, as here presented, and reached the conclusion that even the alleged promise by Kidd and Cagger to allow interest on the bonus, did not authorize its allowance on the accounting with the advancers, ordered in this case. The learned judge reasons as follows:
" The agreement which provides for the payment of such bonus, does not create any obligation to pay such interest. It provides for the payment of the principal sums advanced and interest thereon, but no direction to pay interest upon such bonus. It is therefore' not a fair inference that the parties originally contemplated such " payment, else we may infer a provision to that effect would have been inserted in the agreement. Tkerd is no evidence of an express promise on the part of the plaintiff to pay such interest. Without such promise, or something equivalent thereto, the law will not recognize a liability to pay the same. It is well settled that compound interest is not collectible, without a special agreement to pay the same, and that, too, after the original interest has become due and payable. I do not perceive why the bonus of fifty per cent, so far as the right to compute interest thereon, can be regarded in a more favorable light than an agreement to pay interest upon a principal debt. And hence, there should, at least, be an agreement to pay interest thereon, after such bonus became due and payable. No such agreement on the part of the plaintiff is established. It is insisted by the defendants that a statement of the account in their favor by -Messrs. Kidd and Cagger, was made, including such interest up to a certain date, and that the same was entered in a book kept in the office of plaintiff, and a copy of such statement was furnished the defendants or some of them, and under such circumstances as should have brought knowledge thereof to the plaintiff and that such facts are equivalent to an express promise by the plaintiff to pay interest upon such bonus until the same should be fully paid. If we assume to be established, what the defendants thus claim, I do not think they have been successful in bringing their case within any principle, which the law recognizes, which entitles thém to charge and collect interest upon the bonus. It neither amounts to such a promise to pay such interest as the law requires to create a liability, nor can it be properly held to be such a consolidation of the bonus with the original indebtedness, as to constitute one principal sum upon which interest can be computed. In regard, however, to the payments of interest upon such bonus which had been actually made to the parties who advanced their money, by Messrs. Kidd and Cagger, the trustees, prior to the time, the plaintiff protested to Mr. Cagger against the payment of such interest, and prior to the change in the form of the receipts taken from the parties who had made the advances, I feel justified, from all the circumstances, in holding that such payments of interest have been substantially adopted by the plaintiff, or at least that his repudiation thereof has not been so prompt and of such a character, as should entitle the plaintiff to recover the same of such parties, or to be allowed the same on the accounting. The plaintiff should have promptly notified such parties that he objected to such payments of interest, and claimed either that it be refunded or applied upon his indebtedness. The protest which he claims to have lodged with Mr. Cagger, was not sufficient. There is no doiibt but that compound interest may be retained, when the same is paid voluntarily by a party." .
This presentation of the question by Mr. Justice Ingalls is deemed quite satisfactory and conclusive.
It is further urged that costs should have been allowed to the advancers against the fund. In equity actions the granting or withholding of costs, rests in the discretion of the trial court. Mor can it be well maintained that the discretion of the court in this case, in refusing costs to the defendants, was not fairly and judiciously exercised. The defendants failed in nearly all the important questions in the case, both of fact and law; hence, have no claim to be recompensed by an allowance of costs. As regards the defendants — the advancers and lien-holders — their rights were stated in the complaint, substantially, as found by the judge. On the claim for an allowance of interest on the bonus, put forward by the advancers, they have failed. Indeed, as to the advancers and lien-holders, they were only interested in the litigation to the extent of having a fair and just accounting, in order to have the amount due and unpaid to them respectively, accurately and definitely determined, as their superior right to the lease's and to their avails, as security and for the purpose of payment to them of their just and full claims, was not controverted by any one.
After a careful examination of the case, I am of the opinion that the moving parties have no just cause of complaint; that the findings and decision of the court, at Special Term, are well supported, both in fact and law; hence, the motion for a new trial must be denied.
Present — Bocees, P. J., Landon and Countryman, JJ.
Motion .denied, with costs.
Stanton v. Miller, 65 Barb., 58.
Supra.
3 R. S. (5th ed.), 137, § 6.
34 N. Y., 307.
45 N. Y., 589,596.
Levy v. Brush, supra, per Grover, J.; 74 Penn., 311; 73 id., 458; 55 id., 369.
46 N. Y., 627
Stoddard v. Whiting, supra, on page 632.
2 N. Y. S. C. Rep., 25, 26.
Van Benschooten v. Lawson, 6 John. Ch., 313; Toll v. Hiller, 11 Paige Ch., 328; State of Connecticut v. Jackson, 1 John Ch., 13; Boyer v. Pack, 2 Denio, 108; Van Rensselaer v. Jones, 2 Barb., 644; 41 id., 22, 23, 24; 17 How., 265, 257.
17 How., 211; 46 id., 1.