Court Opinion

ID: 3616418
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:59:24.908024+00
Date Added: 2024-06-11T09:41:00.987011
License: Public Domain

[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 491 
This action was brought by the plaintiff, as sole acting executor of Susan A. Place, deceased, against the defendant to recover three sums of money alleged to have been received by him to and for the use of the plaintiff. One item was a sum of $10,000 and upwards alleged to have been received by him upon a bond and mortgage which came to the plaintiff as executor. The other two items, amounting together to about $12,000, were alleged to have been received by him upon two endowment policies issued to the testatrix upon the life of her husband, James K. Place, which became due subsequently to her death, in November, 1885. The action was referred to a referee and tried before him, and at the close of the plaintiff's evidence, the defendant, without announcing that he rested his case, moved "that the complaint be dismissed on the merits," and the referee granted the motion and the plaintiff's counsel excepted. Thereafter the referee made his report, containing findings of fact and of law, and concluding that the complaint should be dismissed on the merits and judgment rendered against the plaintiff on the merits of the action, with costs to the defendant. Subsequently, upon the settlement of the case, this took place:
"On settlement of case on appeal the plaintiff's attorney having in his proposed case given the following notice:
"A motion will be made upon the case before the referee to change or modify his findings so that the decision on the final motion will be judgment for the defendant dismissing the complaint, with costs, and not a judgment, or decision or finding, upon the merits.
"And the plaintiff's attorney having made said motion, the same is denied by the referee on the whole case and the plaintiff's attorney excepts."
Section 1209 of the Code provides as follows: "A final judgment, dismissing the complaint either before or after a *Page 492 
trial, rendered in an action hereafter commenced, does not prevent a new action for the same cause of action unless it expressly declares, or it appears by the judgment-roll, that it is rendered upon the merits."
The defendant, by procuring a dismissal of the complaint on the merits, probably had this provision of the Code in mind, and intended to procure a judgment that would bar a new action for the same cause. And the plaintiff's counsel by the motion he made on the settlement of the case sought to have the dismissal in such form that the judgment would not bar a new action. The precise scope of that provision of the Code we do not now determine. Nevertheless, what the referee did was to nonsuit the plaintiff. We can give no other significance to the proceeding. Therefore, he should have made no findings of fact except such as would justify a nonsuit upon the trial. Under the Code the referee was required to make findings of fact and of law after granting the nonsuit; but he had no right to make any findings of fact depending upon disputed or inconclusive evidence. Therefore, to maintain this judgment, the defendant is bound to show that there was no disputed question of fact which, upon a jury trial, the court would have been required to submit to the jury, and that upon the undisputed evidence he was entitled to judgment. (Scofield v. Hernandez, 47 N.Y. 313.)
As these moneys were received by the defendant after the death of the testatrix, and as all the dealings with reference thereto between him and the plaintiff took place after her death, he claimed upon the trial that the plaintiff could not, in his representative capacity, maintain this action, but that the same should have been instituted by him in his individual name. But the referee held before any evidence had been given that the plaintiff could maintain this action in his representative capacity, and that ruling then became the law of the case; and even if erroneous, the defendant having had judgment in his favor cannot now complain of it. But, upon the argument here, he expressly waived any objection that the plaintiff could not maintain this action in his representative *Page 493 
capacity, and, therefore, this nonsuit cannot be maintained upon the ground, if a valid one (which we do not determine), that the plaintiff in his representative capacity could not maintain the action.
The plaintiff is not, by anything which appears in the case, estopped from claiming against the defendant that the proceeds of the mortgage and of the insurance policies received by him belonged to and were payable to the plaintiff.
The defendant during all the times of the transactions under consideration was the plaintiff's attorney, and the evidence tends to show that the plaintiff during those times acted under and implicitly relied upon his counsel and direction. It appears, without dispute, that there was fear on the part of the defendant, whose wife was the daughter of the testatrix and a sister of the plaintiff, and interested in the estate of her mother, as well as on the part of the plaintiff, that the mortgage and the insurance policies might be seized by adverse claimants, creditors of the husband of the testatrix; and, therefore, the plaintiff claims that, under the advice of the defendant, on the 22d day of November, 1869, he assigned the mortgage to him for the purpose of protecting the same against such adverse claimants. The consideration expressed in the assignment was $12,000. At the same time the defendant executed to the plaintiff the following instrument:
"I, J.K. Hayward, agree to reassign the mortgage of $25,000 to Barker Place on the repayment of the sum (principal and interest) loaned to Barker Place by said Hayward.
"J.K. HAYWARD."
The plaintiff and his father, who, at the time, had the principal management of the estate of the testatrix, both testified that the assignment of the mortgage was merely formal, without any consideration whatever, and that not a dollar, at any time, was paid to the plaintiff for the same. On the sixteenth day of April thereafter the defendant, by an assignment absolute in form, in consideration of $12,000, paid to him by W.J.A. Fuller, assigned the mortgage to him; and, on the *Page 494 
twenty-third day of April thereafter, Arthur T. Sullivan, who was at that time one of the executors of the will of Susan A. Place, for the recited consideration of $1, also executed an assignment of the same mortgage to Fuller. The mortgage was subsequently foreclosed and Fuller received as the net proceeds of the foreclosure $33,949.29; and the defendant having repaid to Fuller the $12,000 which he had paid for the mortgage and the interest thereon, Fuller gave a check for the amount payable to the order of the defendant and to the plaintiff as executors. Twenty-five thousand nine hundred and forty-nine dollars and twenty-nine cents of the proceeds of that check came to the hands of the plaintiff, and $8,500 thereof came to the lands of the defendant, and that sum, at least, and the interest thereon, the plaintiff claimed to recover in this action.
These various assignments do not estop the plaintiff from recovering in this action, and it was not necessary for her to bring an action to set them aside before she could recover. If it is true, as claimed by the plaintiff, and as testified to by him and his witnesses, that the defendant never paid a dollar for the mortgage, and received the $8,500 without any consideration, under an original understanding and agreement by which the proceeds of the mortgage were really to belong to the estate represented by the plaintiff; if he received such proceeds, professing to the plaintiff to act in his interest and in the interest of the estate, then when he received them they became money which belonged to the estate, and the plaintiff can recover the money in this form of action for money had and received. The money having been received by the defendant, in pursuance of the arrangement and understanding between him and the plaintiff, he cannot set up the assignment to him which has become functusofficio, as an absolute bar to plaintiff's claim. The instruments executed are evidence, and may be very persuasive evidence in the defendant's favor, showing that he and Fuller became the owners in some way successively of the mortgage, he as pledgee and Fuller as absolute owner. But their force and *Page 495 
effect as evidence are to be weighed in connection with all the other facts; and it cannot be said that there is not a very strong conflict in the evidence when three witnesses on the part of the plaintiff testify absolutely that there was no sale of the mortgage, and no transfer of it upon any consideration whatever.
The considerable delay which took place, after the transactions of which the plaintiff complains, before he commenced this action, furnishes no defense to the action, but is a fact to be weighed with all the other evidence in the case. Nor does the fact that the plaintiff entered in the inventory of his mother's estate the sum of $12,000, as received from the mortgage, furnish absolute evidence that he actually received that sum from the defendant, or from any other source. He testified that it did not represent money received by him, but that he inserted the amount in his inventory under the direction of the defendant, and further verified the inventory at the same instigation, although the item was not, in fact, true. The facts connected with the making of the inventory do not estop the plaintiff, but constitute evidence against him to be weighed with the other evidence.
So, too, the plaintiff must not necessarily fail in this action because these assignments of the mortgage and the insurance policies were made to keep them out of the way of the creditors, not of Mrs. Place, but of her husband. There was no intent to defraud creditors of the estate, and, so far as I can discover from the case, no actual intent to defraud any one. It was not of alleged in the answer, and the intent was certainly not conclusively proved upon the trial. It is, undoubtedly, true that where one transfers property to another for the purpose of cheating his creditors, the courts will not aid him to recover it back for the reason that he and his grantee have been engaged in a fraud and a crime, and being in pari delicto the courts will not aid either of them. But here, if any wrong was committed, or intended, by these transfers, the plaintiff and the defendant were not in pari delicto, and the defendant cannot invoke the rule mentioned *Page 496 
for his protection. He was the plaintiff's lawyer and the plaintiff was acting under his direction. He was advised that the transfers were necessary to protect and cover up the property against the assaults of the creditors of his father. The scheme was concocted and carried out under the advice of the defendant; and under such circumstances there is no reason for enforcing the rule invoked by the defendant. As between the parties, there was no absolute transfer, but a transfer made for the benefit of the estate and to save the property to the estate; and the rule of law referred to should not, under such circumstances, be so applied as to aid the defendant in holding property thus acquired, and to thus enable him to consummate a wrong and a fraud upon the estate. (Goodenough v. Spencer, 15 Abb. [N.S.] 248; Ford v. Harrington, 16 N.Y. 285.) Still further, the maxim ex turpi causa non oritur actio does not apply to the plaintiff prosecuting in his representative capacity for the benefit of the estate he represents, and so we held in Wetmore
v. Porter (92 N.Y. 76).
It is the claim of the defendant that, at the time of the transfer of the mortgage to him, he loaned the plaintiff $19,000 for the benefit of the estate, and that this mortgage was transferred to him as part security for that loan. But the plaintiff and his father both testified that the mortgage was not transferred for that purpose; that the $19,000 was not loaned to the plaintiff, but to the firm of Place  Co., and that a large portion of that loan had been paid by the firm to the defendant, and that the defendant took and held the firm notes payable to his wife for whatever balance was due him on account thereof.
There was, therefore, evidence bearing upon the claim of the plaintiff to the proceeds of the mortgage received by the defendant to be weighed, and if the referee, upon the evidence, had found that the $8,500 received by the defendant out of Fuller's check, or, at least, a large portion of it, was due to the plaintiff, the finding would have been so far sustained by the evidence that this court could not have disturbed it.
The two insurance policies were assigned by the plaintiff to *Page 497 
Fuller December 2, 1870. The plaintiff claims that the assignments were made under the advice of the defendant for the purpose of protecting the policies against the claims of the creditors of James K. Place, and that they were merely formal without any consideration whatever. And there is evidence tending very strongly to show that his claim is well founded. The defendant received upwards of $12,000, the entire proceeds of the policies in 1875, and there is evidence tending to show that he received this sum without any consideration, and that at the time he received it the money equitably and justly belonged to the estate represented by the plaintiff.
In these transactions with the plaintiff the defendant was acting as his legal adviser. He was not only his lawyer, but his brother-in-law, thus bearing toward him very confidential relations. As against the plaintiff, under such circumstances, he was required to make very strict and satisfactory proof of his right to these moneys, and not leave that right to be spelled out by inferences of doubtful import. The burden was upon him to establish affirmatively that his transactions with his client were fair and just; that his client acted on full information of all the material circumstances, and that he did not take undue advantage of his client's complacency, confidence, ignorance or misconception. (Whitehead v. Kennedy, 69 N.Y. 462.)
He should have the full benefit of the documentary evidence showing that the title to this money had passed out of the plaintiff; but that evidence should be weighed with all the other evidence, and thus the truth reached and the rights of the parties determined, due influence being given to the confidential relation mentioned. Therefore, if we regard the disposition made of this case at the close of the plaintiff's evidence as a nonsuit, the exception thereto was well taken, and for that reason the judgment should be reversed.
But we must reach the same conclusion if we should assume upon this record that the case was closed upon both sides and finally submitted to the referee, and that he took all the evidence *Page 498 
into consideration, weighing it, and made his findings accordingly. The trial was not altogether a satisfactory one. It was conducted with considerable passion, at least upon one side; and many questions were put on the cross-examination of the plaintiff and one of his witnesses which cannot be justified by any rules of law. The objectionable questions were so numerous that we cannot take time to comment upon them particularly, or to show their bearings or connection with other evidence.8224 * * *
I do not perceive how any of these questions were proper or material. It is possible that some of them could have been allowed in the discretion of the referee upon cross-examination, and that many of them were harmless. But the latitude of cross-examination allowed transcended the bounds of a reasonable discretion.
The insurance policies were assigned to Fuller, but I find in the case no evidence whatever that they were assigned to him upon any consideration or benefit at the time passing to the plaintiff or to the estate, and the findings of fact by the referee to the contrary of this are without support.8225 * * *
The eighth finding of law is as follows:
"Barker Place is estopped to deny the security import of his deeds or the absolute sale character of Sullivan's transfer, except in an action brought for the purpose of setting them aside."
This is an erroneous view of the law, as I have already shown, and it may be, and it is, indeed, probable that it was the application of the rule of law therein involved that influenced and largely controlled the decision. The plaintiff was not estopped in this action from denying that he made the transfers of the mortgage or policies either absolutely or as security. He had the right to show that the moneys claimed by him came to the defendant's hands under the arrangements *Page 499 
and understanding testified to by him and his witnesses, and that the moneys, notwithstanding the formal character of the transfers, actually belonged to him.
The ninth finding of law is tainted with the same error. As we have before stated, an action for money had and received is the proper remedy to recover the proceeds of these choses in action in the hands of the defendant upon the facts alleged and testified to by the plaintiff and his witnesses.
So, whether we treat the disposition of this case by the referee as a nonsuit, or a decision after final submission of the case upon the merits, and after weighing the evidence, I think the judgment should be reversed.
While I may not fully comprehend it, I have carefully studied the case and have reached the conclusion that the ends of justice require that there should be a new trial in the calm atmosphere which should surround a judicial inquiry, that the facts may be more fully developed, and what is now left obscure and uncertain may be cleared up.
I have not intended to intimate any opinion as to the merits of the controversy between these parties, as we have only the evidence upon one side; nor do I even express any opinion as to the weight of the evidence now before us. The new trial is granted solely for the errors of law pointed out.
The judgment should be reversed and a new trial granted, costs to abide event.
All concur.
Judgment reversed.
8224 Numerous questions are here quoted in the opinion. As they present no point of general interest they are omitted.
8225 The portion of the opinion omitted here is taken up with a discussion of various findings of the referee. *Page 500