Court Opinion

ID: 3625689
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:06:20.532814+00
Date Added: 2024-06-11T14:00:35.686131
License: Public Domain

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The General Term reversed the judgment of the Special Term upon question of law only, and hence, in our review here, we must take the facts as they have been found so far as there is any evidence to support them. The facts material to the disposition of this case are not much in dispute, and there are at least two grounds upon which, we think, the judgment of the Special Term can stand.
The plaintiff has received the principal of what we will call the trust fund, with the simple interest thereon, and that is all, upon the facts established, to which she was entitled.
We have not a very definite description of the trust created by the plaintiff and her husband. All we know about it is that she placed the sum of $5,000 in his hands for investment for her, and that, with her assent, he invested it in the mortgage for $50,000, and she thus became interested in that mortgage to the extent of the $5,000. Seventeen thousand dollars were paid upon the mortgage in the lifetime of Mr. Price, besides all the interest due thereon. There is no evidence that he took that $17,000 as including her $5,000, or any part thereof. Under his agency to invest, he could treat her $5,000 as still invested in the mortgage, and so all he can be charged with receiving for her is the annual interest on that sum. It does not appear what, under his agency for her, he was to do with the interest, whether he was to reinvest it for her, or pay it over to her, or keep it for her until she called for it. Nor does it appear what he did with the interest as he received it. It does not appear that he used it in his business, or for his own purposes, or that he in any way made any profit out of it. In the absence of proof, we must assume that he, a man of *Page 133 
wealth, had the money, or its equivalent, at all times ready to respond to any call she might make. She was undoubtedly entitled to the interest upon demand, but she never demanded it, although she must have known that it had been received. She commenced her original suit without any demand, and in her unverified complaint alleged an investment for her by her husband of $10,000 in the mortgage. He did her no injustice by disputing and denying her excessive and unjust claim.
But if we assume that, as she owned one-tenth of the mortgage, one-tenth of the $17,000 paid upon the mortgage, to wit, $1,700, was received for her, then what was Mr. Price bound to do with that $1,700? We do not know enough about his agency to say that he was bound to reinvest it. What trust was there as to that sum? So far as the evidence discloses, he simply became indebted to her for that sum, and liable to pay it to her upon demand. She could have sued him for it, and thus have compelled payment to her with simple interest. It was not paid to him for investment, and it does not appear that he made any profit out of it. If there was any breach of trust, it was simply in not paying it over to her, and for such a breach the simple interest is the general measure of damages, and that she has received. We see no ground for compounding the interest as a penalty, or punishment of Mr. Price for misconduct.
In Rapalje v. Hall (1 Sandf. Ch. 399), it was held that a trustee is not to pay interest, even simple interest, solely for the reason that he deposits the trust moneys indiscriminately with his own; nor because he makes use of them in his own business; that there must be superadded a breach of trust, a neglect or refusal to invest the fund at the time or in the mode which the trust instrument or the law itself has pointed out. To the same effect is Jacot v. Emmett (11 Paige, 142).
The law exacts of a trustee fidelity to his trust. If he is guilty of fraud or the mismanagement of the trust fund, or is guilty of a breach of trust, or has used the trust funds for his own purposes and made a profit therefrom, he may be compelled to pay interest, and in extraordinary cases compound *Page 134 
interest, so as to place the cestui que trust in the same situation as if the trustee had faithfully performed his proper duty. Here all the elements as grounds of liability for interest upon the moneys paid to Price upon the mortgage are wanting.
It is said that he ought to be charged with interest because in his answer interposed to the complaint in the original action, he denied the trust. It does not appear that he ever denied or repudiated the trust before that action was commenced. He simply denied in his answer the alleged trust for $10,000. It is difficult to perceive how that denial, in the absence of fraud in the management of the trust fund and of any breach of the trust, affected his situation or in any degree increased his liability or justly exposed him to any penalty or punishment.
We, therefore, conclude that there was nothing in the facts existing prior to the death of Mr. Price, which entitled the plaintiff, as matter of law, to more interest than he has received; nor is her case any stronger against the executors. They found the original suit pending untried when they assumed their duties as executors. They found a complaint asserting a claim upon the mortgage for $10,000, and an answer interposed by their testator denying it, and they had no personal knowledge of the matter. What could they do under such circumstances? They could not with safety or propriety allow the claim, and they certainly were not bound to allow it. It was their apparent duty to defend the action and obtain the judgment of the court upon the plaintiff's claim, and that judgment was that her just claim was only $5,000, and the interest thereon. It thus turned out that it was their duty to defend the action. While the suit was pending they received the interest upon the mortgage. That interest, prior to September, 1879, they kept with other funds belonging to the estate of their testator, and after that date they deposited all the interest paid upon the mortgage in a separate bank account, They made no use of the interest thus paid and no profit out of it. The plaintiff made no demand of the interest and was *Page 135 
making an excessive claim in her action. What could the executors do except to hold the interest ready for the plaintiff and subject to the final judgment in the pending action? There certainly is no basis for holding the executors liable to pay interest upon the interest thus received by them, and there is absolutely no authority which would sanction such a holding.
But it is said that the executors appealed from the judgment and thus delayed the plaintiff in obtaining the fruits of her judgment, and that, therefore, they should pay her compound interest, or the interest upon the interest received by them. It does not appear that they acted in bad faith or maliciously in bringing the appeal, or even unreasonably. It is true that they were defeated. (98 N.Y. 388.) But there were fair questions for debate upon the appeal, and the executors should not now be punished for bringing the appeal. The mortgage run to their testator and they held it, and hence, during the pendency of the litigation and of the appeal, the interest was paid to them. What could they do but to receive it and hold it until final judgment upon the rights of the parties, or at least until some proper demand was made for it? By bringing the appeal they exposed themselves to the usual penalty, to wit, the payment of the accruing interest upon the judgment and the costs allowed by law. Such interest and the costs are in the law the measure of the injury done to the opposite party by the appeal.
But there is another ground for defeating this action which we think did not receive proper consideration by the learned General Term. The recovery in the first action is a bar to any recovery in this. It is a general principle that the judgment of a court of competent jurisdiction is final as to the subject-matter thereby determined; final not only as to the matter actually determined, but as to every other matter which the parties might have litigated in the action and had determined. The purpose of the rule is to diminish and put an end to strife and contention between litigants, and to spare the courts the labor and vexation of many suits when one *Page 136 
would serve to adjust the entire controversy between the parties. (LeGuen v. Gouverneur, 1 John. Cas. 436, 492; Rice v.King, 7 John. 20; Bruen v. Hone, 2 Barb. 586.)
Here the plaintiff's complaint in the first action was sufficient for the recovery of all the interest she now claims, and the proper parties were before the court for the adjustment of the entire controversy between them. If the $1,700 was in the hands of Mr. Price at the time of his death as plaintiff's money, then she having recovered the simple interest thereon, cannot now maintain this action to recover an additional sum created by compounding the interest. Whatever interest she was entitled to upon that sum should have been recovered in the first action. If she was entitled to interest upon the annual interest received upon the mortgage, why should that not have been adjusted in the first action? She claimed some interest. Why did she not claim it all? The action related to the trust and the trust fund, and the amount of the fund, principal and interest, was in controversy and was to be determined. In that equitable action the court could take and state the account in reference to the fund down to the time of the trial, and could determine what should be done with the interest as it came in after the trial, and could, if needful, render a money judgment against the executors. (Code, § 1207.) It would be contrary to all authority to permit the plaintiff after she has recovered a part of the interest claimed by her to maintain another action to recover more interest, and that too upon substantially the same evidence. It appeared upon the trial of the first action that the $17,000 had been paid upon the mortgage to Mr. Price, and that the annual interest had been paid, and hence it cannot now be claimed that she did not then know the facts upon which she now bases this action. The first adjudication was not affected with fraud or mistake, and there is no ground whatever for the maintenance of this action to rectify that adjudication, or to agitate anew the controversy which the court was then competent forever to put at rest. The doctrine ofres adjudicata, properly applied to this case, defeats this action. *Page 137 
We are, therefore, of opinion that the order of the General Term should be reversed and the judgment of the Special Term affirmed, with costs.
All concur.
Order reversed and judgment affirmed.