Court Opinion

ID: 3599456
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:46:17.646028+00
Date Added: 2024-06-11T09:10:52.531032
License: Public Domain

[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 506 
[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 507 
The general question of the rights of the plaintiffs to recover in this action against the executors of Devlin, and against the defendants Bryan, Askenburgh, and Atwood, was decided by the Commission of Appeals when this case was before that tribunal on the plaintiffs' appeal. (54 N.Y., 403.) The only parties now appealing are the executors, and the leading facts are substantially the same as recited in the opinion of the court on the former appeal. We do not propose to review that decision, and it must stand as the law of the case.
The Commission of Appeals then held, in substance, that Devlin and the three other defendants named, by signing and issuing the subscription agreement dated February 22, 1865, held out to those to whom it should be exhibited for the purpose of inducing them to become subscribers, that they designed to become joint purchasers, with those who should unite in the agreement, of the lands and leasehold estates described in the list annexed, at the price of $125,000. That Devlin undertook to receive the sums subscribed as trustee for the purpose of applying them to the payment of the purchase money. That under these circumstances the four defendants named occupied such a relation to the persons who in good faith agreed to unite with them in the purchase on the terms proposed, as precluded them from making a profit out of their associates by being themselves the vendors of the property, which they had acquired for a much smaller sum than $125,000; and that they were bound to account to those who, in ignorance of the facts, had subscribed and paid in their contributions on that basis, for the profits made *Page 510 
by the purchase of the property and its sale to the joint concern.
Daniel Devlin, whose executors are the only appellants, received the whole fund paid in by bona fide subscribers, upon the trust expressed in the agreement of February 22, 1865, to take the title to the property in his own name for the benefit of the purchasers, and put it into an association for development, upon such terms as the subscribers might elect after the subscription should be completed. At this time he was the owner of one-half interest in the leasehold property, which he had purchased of the defendant Bryan for $8,125. He headed the subscription list appended to the agreement, with his own signature for $5,000, although, as found by the court, he did not at the time of signing intend to pay his subscription or any sum towards the purchase of the property, and the sums received by him from bona fide subscribers he paid over to the defendants Bryan and Askenburgh and Bryan, less the sum of $17,500, which he retained to his own use.
The findings sufficiently show that Devlin, at the time of receiving the payment of these subscriptions and paying them over, was aware of the facts relating to the purchase of the property, and that he did not disclose them to the parties who paid their subscriptions, and it is expressly found that the intent and design of Devlin, Bryan and Askenburgh in signing and acting under the agreement of February 22, 1865, was to effect a sale of the property therein described, at a profit to themselves in excess of the profits which would be realized by the other subscribers, and that in collecting the payments of money under the agreement it was their intent and design to distribute the same among themselves and the defendant Atwood, as sellers of the property, at a profit, which intent they concealed from the plaintiffs and other subscribers.
It is also found that the actual cost of the property to the defendants Devlin, Askenburgh and Bryan, up to February 22, 1865, was $26,200. The details of the representations *Page 511 
by which various parties were induced to subscribe, of the amounts paid in, and of their distribution, etc., and of the conversion of the property into the stock of an incorporated company, and its distribution, etc., are set forth in the findings; but it is not necessary to repeat them here.
There can be no doubt of the liability of the parties thus selling their own property to their associates to account to them at least for the profits made by such sale, nor that such an accounting is a proper subject for the cognizance of a court of equity. In this view of the case, the demurrer to the complaint was properly overruled. The complaint certainly set forth a cause of action, and the objections to the joinder of parties and causes of action were not well founded. Devlin, the trustee of the fund, was clearly liable to refund to his associates, in their due proportion, the profits he had himself realized, and he was also liable for the misappropriation of so much of the fund as he had paid over to those privately interested with him in excess of the actual cost of the property. An accounting was necessary for the purpose of ascertaining the amount of profits to be refunded, and the proportion payable to each bona fide
subscriber, and to such an accounting it was proper that every person interested in the result, whether as liable to pay or entitled to participate, should be a party. The judgment at Special Term proceeded upon this basis, and while it held the estate of Devlin primarily liable to the innocent subscribers to re-distribute the fund received by him on equitable principles, it also adjusted the equities between the estate and those who had participated with the testator in the profits which were to be refunded. The defendants certainly have no right to complain of this result, which merely compels them to refund the profits they have obtained. The most serious question is that which arises on the appeal of the plaintiffs. They claim that they were entitled to recover the whole amount paid in by them and their assignors, and that the defendants against whom a recovery has been had were not entitled to any reduction on account of the original cost to them of the *Page 512 
property. We have considered the case in this aspect, and while acknowledging the force of the argument that the plaintiffs were entitled to rescind the contract of February 22, 1865, and recover back what they had paid upon it, find difficulties in the way of so modifying the judgment as to enforce that right in the present action. If the action were simply to rescind the contract and recover back the payments, it might be subject to the objections raised by the demurrer, and other difficulties would arise in sustaining the present judgment. We think that substantial justice has been done by the judgment as it stands.
The judgment in favor of the plaintiffs for the interest in the fund assigned to them by the former plaintiffs, Amelung and Holcomb, was, we think, correct. There can be no doubt that such an interest is assignable. We also think that the judgment in favor of the defendant Donnelly, and the defendants Henffer and Toel, should be sustained, on the grounds stated in the opinions at General Term.
The judgment should be affirmed on all the appeals, without costs as between the plaintiffs and the executors of Devlin, and with costs to the defendants Donnelly, Henffer and Toel against the executors, payable de bonis, etc.
All concur.
Judgment affirmed.