Court Opinion

ID: 5186645
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:29:32.161687+00
Date Added: 2024-06-11T08:26:46.625208
License: Public Domain

Goodrich, P. J.;
This action was broughtto cancel and set aside a deed executed by the plaintiff to the defendants, dated August 23, 1897, and conveying about thirty-five acres of land at Tottenville, Staten Island. By an amendment ordered at the trial the prayer for judgment covers.»contract for the saleof the same property, dated August 16,1897, and executed by Cornelius C. Ellis to the defendants. Mr. Ellis, the original owner of the property, was seventy-four years of age and ¿ad been a sea captain, though not engaged in that pursuit for. ten years previously to the date of thesetransactions. The defendants Edgar S. Clock and Joseph R. Stein were real estate brokers having an office in the city of New York The plaintiff in this action is the daughter of Captain Ellis and the wife of Milton E. Quimby. Previous to the date of the contract there were negotiations between Quimby, Captain Ellis and the defendant Stein, Ipoking toward the purchase of the property in question, which culminated in the contract by which Ellis was to sell the property to the defendants for the sum of $60,000, the defendants to take title subject to mortgages aggregating that sum. The mortgages were to contain clauses providing for the release of any lots at specified-rates; Ellis was to procure maps and a survey of the land into lots, the ex-pensé of which was to be added to the amount of the mortgage, and was to pro-cure releases of the lots from mortgages as-they were sold. He was also to pay the taxes and interest on tlie mortgages for five years. At this point the statements of the-parties diverge. The plaintiff furnished¡ evidence that the agreement between Captain Ellis and the defendants was that the former was to receive $15,000 in cash before any deed was executed. This is denied by the defendants. But it is not- denied that at the time of the execution of this contract Captain Ellis-required the payment of something on account of the contract, whereupon the defendant Stein took from his desk a blank note signed by a Mrs. Clows, Who seems to-be a mythical sorb of personage, and filled it up as a note of $1,000, payable to the order" of Captain Ellis, telling him that he could take it to his bank and, obtain the money on it. This the captain endeavored to do, but the bank refused, and lie returned to the-office of the defendants, who, for fchepurpose of helping him to obtain the money. gave= him a letter certifying to the responsibility of Mrs. Clows. He again called at the bank,, which again refused to discount the note.whereupon he returned- to the defendants’ office, threw the note upon the table and rev-fused to have anything further to dó with the transaction. For the time- being this-seems to have suspended or terminated. the= arrangement between the parties. (Subsequently, negotiations were resumed, but, according to testimony offered by the plaintiff, the captain refused to go any further* with the transaction unless he received a-cash payment of $15,000. The defendants-then suggested to him that he should execute a deed of the property to some person-who could in turn execute a mortgage to him for the sum of $60,000, and that when the $15,000 was paid a deed could be executed to-the defendants by the person thus holding the title. There was testimony on the part-of the defendants absolutely contradicting this agreement. They claimed that Captain Ellis entered into an agreement with them by which the premises were to be conveyed to his daughter. Mrs. Quimby; that she waste execute to him a mortgage for $60,000 and-immediately convey to them the premises-subject to such mortgage, it being their intention to exploit the property by cutting it-up into lots and to sell them free and clear of incumbrances, for which purpose the; plaintiff was to procure partial releases of the lots thus sold from the general-mortgage,? that in pursuance of this plan photographs- and maps of the property were made by the defendants-at considerable-expense; and that efforts-were made by them looking, to a sale-of the property in lots, as they had" intended when the purchase was made. Whatever was the real agreement between the parties, they met at the defendants’ office on August-twenty-third, in an interview lasting for several hours. • Both parties agreed that the deed of Captain Ellis to Mrs. Quimby and the mortgage of the latter to him were executed, but the parties differ diametrically again as to other matters. At that interview, a deed executed by the plaintiff and conveying the property to the defendants, as well as the deed to the plaintiff, and her mortgage were acknowledged and sent to the office of the county clerk of the county of Richmond to be recorded, and they were recorded on the following day. The plaintiff, however, furnished evidence of herself, her father and her husband, to the effect that while three papers were executed, such papers were the *617deed to the plaintiff, her mortgage and what she supposed was a bond to accompany it. On the other baud, the defendants furnished evidence that there was no bond, although one was recited in the mortgage, but that the three papers were the two deeds and the mortgage, and that the same were read over to the plaintiff and Captain Ellis, were executed by them and acknowledged before a notary public. Upon this conflict of evidence the learned trial judge before whom the action was tried made the following decision: “I decide for the plaintiff unon the ground that neither she nor Ellis intended that the deed of August twenty-third should be given, t and that neither knew that it had been executed. Both the contract of August sixteenth and the deed of August twenty-third are without consideration, one-sided and inequitable. Ellis was an old sailor and careless in his business methods—the plaintiff was entirely without business experience. Both relied upon Quimby and Ballet T. .Clock—particularly on. Quimby, who was not careful' of their interest, but favored the dealings with Clock and Stein and Ellis for his own purposes. Inasmuch as all the transactions between Clock and Stein, the plaintiff and Ems were before the court, and the facts concerning both contract and deed freely gone into by both sides, plaintiff’s motion to amend her complaint should be granted. There should be judgment for the plaintiff setting aside both contract and deed, with costs. A motion for an allowance may be made on the settlement of the decree.”There was evidence tending to show that, after the negotiations commenced, Stein introduced to Captain Ellis, not the defendant Clock,’ his partner, but an old gentleman, Ballet T. Clock, father of his partner, an old sea captain of about the age or Captain Ellis, who supposed that he was one of the persons to whom he was selling the property; and that Captain Ellis had been previously acquainted with and had confidence in him. Captain Ellis and the plaintiff were not represented by counsel at any time previous to the recording of the deeds and mortgage, but the plaintiff’s husband assisted in the negotiations and was present when the contract and deeds and mortgage were executed. From the course of the trial we may assume that there were circumstances in the life of Mr. Quimby which made him unworthy of the confidence which Captain Ellis and the plaintiff reposed in him. He refused to answer whether he had been convicted of forgery and had served a term in the State prison of New Jersey, on the ground that it would injure his business and tend to degrade him. We do not lose sight- of the fact that it is probable that Captain Ellis and the plaintiff knew the previous history of Mr. Quimby, but Stein testified' that before the execution of the contract he was informed by Captain Clock that Quimby was a “crook” and “a scoundrel,” and yet he admits that before the transaction was consummated he agreed to pay him a commission of $350 for securing the property, and that he afterward paid him money on account of such agreement. Such,' agreement constituted Quimby, in a certain sense, the agent of the defendants andplaced the parties on an v ¿equal footing, as there is no evidence that Lilis or the plaintiff had any knowledge of such fact. We have a negotiation conducted on the one side by an experienced real estate broker, acting under the advice of his lawyer, and on the other side., an old man and his daughter, with little business experience, advised by, or relying upon, a bribed agent and a deceptive friend, the result of the negotiation being a transfer* of the title of valuable property without adequate, if any, consideration. In Frankel v. Wathen (58 Hun, 543; the court cited withe-approval the language of Lord Cranworth, in Aberdeen Railway Company v. Blaikie Brothers (1 Macq. 461), where he said: “An agent has duties to discharge of a fiduciary character toward his principal; and it is arrufe of universal application that no one having such duties to discharge shall be allowed to enter into engagements in which he has, or can have, personalinterest conflicting,- or which possibly may conflict, with the interests of those Whom he is bound to pro-* tect. So strictly is this rule adhered to, that no question is allowed to be raised as to the* fairness or unfairness of a contract so entered into.” It has been repeatedly held, as in Claflin v. Farmers & Citizens' Bank (25 N. Y. 293): “That a trustee or agent-shall not act ro¡r his own benefit in any mat-ter relating to liis agency or trust, is an old- and familiar doctrine of the court of equity, frequently asserted in the courts of this-country and in England. The rule is applicable to all persons standing in a trust rela-tion. The principal is entitled to the exercise in his behalf of all the skill, industrj'' and ability of his agent, and to his.intensesir fidelity to his trusts.” This was a case to* recover commissions for services as a broker, but later we shall apply its effect to the cas©5 at bar. In Murray v. Beard (102 N. Y. 605), the plaintiff, knowing that a corporation was-about to build a pier -and to advertise for* bids from timber merchants, visited several such merchants and obtained a. promise from each that, if he secured the bid. the plaintiff should receive a commission. The defendant obtained a contract for furnishing the* material, but refused to pay thebroker’s com-mision, and the court sustained him in such-refusal, saying: “The plaintiff^ while as«suming to act for the defendants in obtaining* the contract of sale, was in fact under equal-obligations, to competing dealers, to assist-them in effecting the-same sale. Thus if tile-plaintiff’s services could have been of advantage of any one, he was under the neces-* sity of being treacherous to one employer or' another. An.agentis.held to uberrima tides in-his dealings with his principal, and if he acts-adversely to his employer in any part of the transaction, or omits to disclose any interest* which would naturally influence his conduct in dealing with the subject of the employ-men^ it amounts to such a fraud upon the* principal as to forfeit any right to compensation for services. (Citing cases.) It is an elementary principle that an agent cannot-take upon himself incompatible duties and characters or act in a transaction where her has an adverse interest or employment. (Citing cases.) In such a case he must necessarily be unfaithful to one or the other, as-the duties which he owes to his respective principals are conflicting and incapable of faithful performance by the same person.”' While the last two^cases relate to actions by brokers for commissions, the principle in-* volved is of wider application and clearly governs the case at bar, for the defeodantsweve in pari delicto with Quimby. As he couldhave reaped no benefit for any services-which he rendered to the grantors by reason of bis secret and unjust dealings with the* defendants, so they cannot reap any benefit-from a contract into which Ellis and the* plaintiff were induced to enter by the use of Quimby’s influence with them. There was-another significant piece of evidence given by the defendant Stein, which must have had-weight with the learned trial court. Stein-*618testified that after the time when he says the title was passed a, proposed agreement be- ' tween Androvétte, ,the holder of the first mortgage, and Captain Ellis was drawn and given to' Ellis to obtain the signature of Andrbvette. This document was designed .to .secure Andró vette’si release of lots from his mortgage whenever they should be sold. It ("(Contains the following' sentence: u Whereas, the said party of the second part (Captain .;EUis} is about to convey the said mortgaged 'premises to Clock & 'Stein.” This paper was ' given by Stein to Ellis, indorsed in an envelope, addressed to-Clock and Stein, so that jt .might, when executed "by Androvette.be ..¡returned • to the defendants. The clause .cited is confirmation of the fact that the plaintiff had not then conveyed, and had not untended to convey,, the property to the defendants at the time when the deed to her and lithe mortgage by her to her father were executed. There will be found in the evidence «an air of mystery as to Captain Clock and Mrs. Clóws and their relations tó the defendants, which might have been dispelled .by tlieir appearance "as witnesses, and also "by the examination óf the defendant Clock, .and the court below-was justified in drawing .serious inferences, against the character of :the transaction by -reason of the failure of ithe defendants to " examine either of such persons as witnesses: The plaintiff’s belief •that Captain 'Clock was one of the firm is ..evidenced by the fact that the summons in this action was Originally served on Captain «Clock on the • supposition ¿that he was a partner and' necessarily a: party defendant, ¿such service being set aside On the motion of ythe defendants’ attorney on .the ground that" -.Captain Clock was not a member of the firm And, consequently, not a proper party defendant. Sometimes light is thrown back>ward on'transactiohstof this character. The' .defendant Stein admits that after this action was commenced the defendants conveyed -.the property to one Strauss; that he did not Jtnow who Strauss was and .had never seen Aim; that he knew¡ that he was an. infant; that he 'sold the deed to" a party for .ithe sum 'of $250 on u the understanding that forty per cent which the property ihay hereafter realize in profits shall be re-turned to Clock & Stein; ” and that the deed was given with á blank for the name of the grantee, which he afterward filled in with -the name of Strauss. There can be no doubt .as to the purpose of the défendant Stein in this conveyance, and’it sheds a baleful light •upon the original transaction. The plaintiff «contends, and furnished evidence to show, that she did not intend to execute, and did ¿not know that she had executed, any dee.d of -.the property to the: defendants until ‘informed of"that fact by aStaten Island newspaper, dated September first, and which she .saw a day or two thereafter, in which the fact of the deed was published; Shortly ¡after, she and her counsel had an interview with the defendant Stein, in which she stated •¿that she had never intended to, and never .had, executed such a! deed, and repudiated’ ;the same. Whether or not there was fraud -on the part of the défendants in procuring :the execution of the deed to them, and there lis. abundant evidence to justify the belief -.that there as, it is clear that the property ,of the plaintiff has been transferred from ¡her to the defendants; without any consideration whatever. Not ¡only was no cash paid, but- Captain Ellis or the plaintiff was made itó agree to bear the expense of surveying •the property, and to pay the interest on the the mortgage and the taxes for the term of Ave years, while' the defendants were to enter into possession of the property. Captain Ellis was an aged man, and nis testi* mony discloses á failing memory. He was • induced to rely on the belief that one of the persons with whom he was dealing, like himself, was an old sea captain with whom he had been acquainted in his earlier years. In some measure he relied also, on the advice of his son-in-law, to whom the defendants were paying money for commissions,1 . conditional upon the conclusion of the bar- • gain. There is evidence sufficient to justify the conclusion that the. defendant Stein was taking undue advantage of the plaintiff and her father, and that he knew that they were relying on the belief that the former was dealing with Captain Clock as a partner in the defendants’ firm, and on the advice; of Quimby, whom the defendants knew to be unworthy, of trust, and to. whom they were ‘paying commissions in connection with the purchase. It is not necessary to cite authorities to sustain the proposition that a court of equity will set aside such a transaction. While, however, there was at the trial ¡an amendment of the prayer:of the complaint, asking that the contract executed by Cáp- : tain Ellis to the defendant firm be set aside, there was no amendment of the papers by . which Captain Ellis was made a party, either plaintiff or defendant; and, while from the • facts we may believe that he would assenfrto setting aside the contract, the court below had no power to make such a judgment in a suit in which he was not a party. To this extent the judgment should be modified,", and as modified, affirmed with costs. All .concurred. , .