Court Opinion

ID: 5236584
Source: CourtListenerOpinion
Date Created: 2022-01-06 17:10:42.211349+00
Date Added: 2024-06-11T08:27:44.260891
License: Public Domain

Scott, J. (dissenting):
I agree with the conclusion at which Mr. Justice Hotchkiss has arrived, that in no aspect of the case is the plaintiff entitled to a preferential lien upon the assets of the Carnegie Trust Company now in the hands of the Superintendent of Banks as official liquidator. This conclusion, however, in my opinion, renders it necessary to reverse the present judgment in toto and to remit the plaintiff to an action at law. Among the defenses pleaded by the defendants and insisted upon at the trial was one to the effect that plaintiff had an adequate remedy at law. That plea was disregarded by the trial court because it was of the opinion that plaintiff was entitled to a preferential lien which, if established, would have justified an appeal to equity. The right to such a preference being now denied, the jurisdiction for an adjudication in equity has disappeared, and the defense that there is an adequate remedy at law is established. This is true under any theory upon which plaintiff can sustain its claim against the Carnegie Trust Company. The plaintiff’s theory, and this is the one accepted by my brother Hotchkiss, is that the money of the Van Norden Trust Company, predecessor of this plaintiff, was received by the Carnegie Trust Company upon an undertaking to apply it to a specific purpose, to wit, the purchase of certain stocks, but that it never used the money for that purpose. Assuming for the moment that the money did pass from the Van Mor den Trust Company to the Carnegie Trust Company, as the money of the first named company, I am unable to see that any technical trust relation resulted. That could result, under the cases upon which plaintiff relies, only if the Carnegie Trust Company accepted the money upon a valid agreement to apply’ it in a particular way. One is not to be made a trustee except by his own act or consent, and the mere fact that the Van Norden Trust Company sent the money to the Carnegie Trust
*24Company to be used in a particular way did not of itself constitute the Carnegie Trust Company a trustee. Something more was necessary, to wit, the agreement of the Carnegie Trust Company to so apply the money. Of such an agreement I see no evidence. Certainly the Carnegie Trust Company did not formally agree by any corporate act; no officer professed to consent in its name unless the letter of the vice-president be accepted as such an undertaking. That letter, however, was not signed in the name of the company, nor was the company in any way referred to in it. As to the authority of the vice-president to bind the company to any such agreement I shall have something to say later in this opinion. For the present it is sufficient to say that, even assuming that the Carnegie Trust Company received the money, I can find no legal evidence that it assumed any obligation to apply it in any particular manner. If this be so the proper form of action in which to recover it is an action for moneys had and received. Such an action is triable upon the law side of the court before a jury. If the plaintiff had been entitled, as it claims to be, to impress a preferential lien upon the assets of the Carnegie Trust Company, a suit in equity was the appropriate remedy, because relief was sought which could not have been obtained at law by a mere money judgment, and the court, acting on its equity side, having taken jurisdiction for one equitable purpose, would retain jurisdiction for all purposes. But when the claim upon which alone a resort to . equity is justified has been disallowed, the right to recover a money judgment in equity in an action otherwise triable before a jury is lost. Otherwise, an easy method of avoiding a jury trial would be provided, for any plaintiff having a mere demand for a money judgment could avoid a jury trial by asserting an unfounded claim for equitable relief. It has long been the law that this may not be done. (Bradley v. Aldrich, 40 W. Y. 504.)
If, as I think is the legal result of the evidence, the Carnegie Trust Company never received the money of the Van Worden Trust Company, because the checks were diverted and stolen by Cummins while the money thereby represented was still the property of the Van Worden Trust Company (jPeople v. Cummins, 153 App. Div. 93; affd., 209 W. Y. 283),
*25then the appropriate form of action would be one for damages for the conversion, which is clearly an action cognizable at law.
If I am right in the conclusion that the judgment appealed from should be reversed in toto, it is unnecessary to discuss at length at the present time the fundamental question whether or not the plaintiff has shown any enforcible claim against the Carnegie Trust Company. As I look at it, the money of the Van Norden Trust Company never became a part of the assets of the Carnegie Trust Company in such a manner as to create a liability by the latter company to the former. It is true that the Carnegie Trust Company collected the checks, but it did so for account of Cummins and thereby assumed an obligation to him. If this be so, plaintiff cannot recover as for money had and received and must fall back upon the letter signed by its vice-president, Smith, on April 20, 1910, upon the faith of which, as it is said, the Van Norden Trust Company drew and forwarded the checks to the Carnegie Trust Company. This letter does not purport on its face to be the act of the Carnegie Trust Company. It is not signed in the name of that company, and that company is not named in it, except that the name of the company and the roster of its officers is printed on the letter-head. The signature is merely “ E. L. Smith, vice-president.” This is not equivalent to a signature by the corporation, even though it may be said to appear inferentially that Smith was vice-president of the Carnegie Trust Company and intended to sign the letter as such. (Buffalo Catholic Inst. v. Bitter, 87 N. Y. 250.)
Nor does the letter carry any presumption upon which the Van Norden Trust Company was entitled to rely, that Smith as vice-president was authorized to execute the agreement on the part of the Carnegie Trust Company, for the agreement itself is neither made in the name of the company nor does it bear its seal. {People’s Bank v. St. Anthony’s R. C. Church, 109 N. Y. 512.) The evidence is very clear that Mr. Smith was never in fact authorized to make the agreement in behalf of the Carnegie Trust Company. If the stocks had actually been bought it would, I think, have been well within the corporate power of the Carnegie Trust' Company to hold them as trustee
*26for the Van Norden Trust Company, and an agreement to do so signed in the name of the company by any general officer would doubtless be within the apparent scope of his authority. It is not that portion of the agreement, however, which the company is charged with breaching, for it never came into possession of the stock. The breach with which it is charged is that it did not buy the stocks at all, and this part of the agreement was not, in my opinion, within the apparent scope of Mr. Smith’s authority. No doubt the Carnegie Trust Company might have lawfully undertaken a trust which would involve both buying stocks on the market and then holding them in trust, but there is nothing in the case which would justify a presumption of authority in the vice-president to so agree, in face of the established want of actual authority. As was said by this court in a case afterwards affirmed by the Court of Appeals:' “Parties dealing with a business corporation as distinguished from religious and other corporations may rely on the apparent authority of the officers * * *, but in the absence of evidence upon which estoppel may be predicated, as by holding out as authorized or a course of dealing, the question in all cases still is whether the contract was authorized, and when it appears that it was not and that there has been no estoppel, that becomes a complete defense.” (Gause v. Commonwealth Trust Co., 124 App. Div. 438, 451; affd., 196 N. Y. 134. See, also, Davidge v. Guardian Trust Co., 203 N. Y. 331; Jacobus v. Jamestown Mantle Co., 211 id. 154.) It is clear, if plaintiff can recover at all, that it must be on the ground of estoppel, for, as has been said, the money sued for never came actually into the hands of the Carnegie Company as the property of the Van Nor den Trust Company, having been diverted into Cummins’ pockets; the Carnegie Trust Company never derived any benefit from it, and Smith, its vice-president, never had actual authority to agree on behalf of the Carnegie Company to take the money and use it to buy stocks in the open market.
Upon the ground of estoppel it would seem that plaintiff must fall. It nowhere appears that the Carnegie Company had ever engaged in the business of buying stocks for others, or that it had held out its vice-president, Smith, as authorized in its behalf to engage to transact that business, which was cer*27tainly not a part of the generally understood, business of the trust company.
For these reasons, I am of opinion that the judgment should be reversed and the complaint dismissed, with costs to appellants in all courts.