Court Opinion

ID: 3605050
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:50:47.351612+00
Date Added: 2024-06-11T14:07:27.905987
License: Public Domain

I am unable to agree with the disposition made of this case by the court. I am of opinion that the appeal taken from the Special Term directly to this court under section 1336 of the Code of Civil Procedure is regular. The plaintiff tried his case before a referee and secured a large money judgment against the defendant Simonson. From this final judgment of the Special Term the defendant Simonson appealed to the Appellate Division, where it was adjudged, among other things, that said final judgment be made an interlocutory judgment, and as so modified affirmed. In pursuance of this interlocutory judgment certain questions were sent to a referee, and on the coming in of his report a final judgment against the plaintiff was entered at the Special Term. From this judgment the plaintiff appealed directly to this court under section 1336 of the Code, which provides that where a final judgment is entered in the court below after the affirmance upon an appeal to the Appellate Division of the Supreme Court of an interlocutory judgment, such an appeal may be taken. It is true that under the further provisions of this section we can only review the determination of the Appellate Division affirming the interlocutory judgment. In other words, the questions *Page 371 
before us are, whether the Appellate Division was right in holding that the trial of this cause must proceed upon the theory that the plaintiff and defendant Simonson were partners, and the issues presented are those arising in ordinary accountings; also, the further question whether it was competent for the Appellate Division to transform a final judgment of the Special Term, awarding the plaintiff damages, into an interlocutory judgment which submitted to a new referee certain questions, some of which were involved in the trial resulting in said final judgment.
I agree with the prevailing opinion that the second final judgment of the Special Term from which this appeal is taken, entered upon the report of the referee appointed under the interlocutory judgment, is not here for review.
I also agree that the judgment from which this appeal is taken does not conform to the decision of the Appellate Division, and that the Special Term upon proper application should open the same and amend it according to the suggestions of this court.
Assuming that the appeal directly to this court from the Special Term judgment was properly taken, I am of opinion that the decision of the Appellate Division was erroneous on both of the points that are before us for review.
I agree with the learned referee that the moneys that plaintiff advanced were in the nature of trust moneys in the hands of the defendant Simonson, and that the latter, by means of a fraudulent and sham sale of the premises held by him in trust, so far as the plaintiff was concerned, attempted to appropriate the lands and proceeds to his own use, ignoring the rights of the plaintiff.
The referee did not err in holding the plaintiff had the right to elect that the agreement between himself and Simonson might be rescinded, or was abandoned, because of Simonson's fraudulent failure to perform his contract with the plaintiff and to discharge his duty as trustee in the premises.
The argument is advanced that there was no fraud in the *Page 372 
inception of this contract. A careful examination of the undisputed facts in this record, as it is now presented, satisfies me that, so far as the defendant Simonson is concerned, the contract was fraudulent in its inception and throughout.
The referee has found that the plaintiff, up to the time this action was commenced, was not in default under this contract. The referee also found that the conveyance of the title of these premises by Thomas, who was the representative of Simonson, to Winsor, in pursuance of the secret direction of Simonson, was fraudulent and void, and made at the suggestion or direction of Simonson.
It is expressly found that Simonson agreed to take this title in the name of a third person as his representative and to procure from said third person such papers, agreements or deeds as would properly protect the interests of the plaintiff, of which interest he (Simonson) then and there had notice.
It is found further that Simonson failed and neglected to perform this covenant in any way; also, that Simonson, although frequently requested, neglected and refused to render to the plaintiff sufficient or adequate statements of the accounts relative to the receipts, disbursements and payments made in carrying the premises in question. In other words, Simonson was to take these premises in trust for the plaintiff, protecting the latter by a proper conveyance or declaration of trust, and each were to make certain necessary advances in completing the buildings that were being erected thereon, and the property was to stand as security, not only for the original liens, but for the advances thus made. When the plaintiff ascertained that Simonson had failed to perform any of the covenants of this contract between them, he instituted this action, claiming to treat the contract as abandoned by Simonson and demanding a judgment against him for the amount of the liens and advances.
In view of these facts, it is clear that this contract was fraudulent in its inception, as it is undisputed that Simonson failed to perform on his part, beginning with the very first step, which was to take the title in the name of a third person *Page 373 
and procure such deeds and papers to be executed as would secure the plaintiff's rights in the premises.
It is said that while the secret, fraudulent and void conveyance made at the suggestion or direction of the defendant Simonson must be set aside, yet there is no direct finding of the referee that this contract was fraudulent in its inception. Under the facts disclosed this is not necessary, as the fraudulent action of Simonson, taken at the moment the plaintiff sought to protect his rights in a court of justice, characterizes the whole transaction, and it is a legitimate inference from the facts found that this entire scheme was originated by Simonson with fraudulent intent.
The referee reached the proper conclusion, and the Appellate Division should have affirmed the judgment entered upon his report.
I am also of opinion that the Appellate Division had no power to transform the final judgment in plaintiff's favor into an interlocutory judgment, and, as so modified, to affirm the same. If the Appellate Division were of opinion that the judgment entered upon the report of the referee was erroneous, that the legal principles upon which he proceeded were unsound, and that the plaintiff was not entitled to the money recovery which had been awarded him, the proper course was to have reversed the judgment and ordered a new trial.
It follows that the appeal is properly here, and that for the reasons stated the judgment appealed from should be reversed and a new trial ordered, with costs to abide the event.
GRAY, HAIGHT, MARTIN and VANN, JJ., concur with PARKER, Ch. J.; O'BRIEN, J., concurs with BARTLETT, J.
Appeal dismissed. *Page 374