Court Opinion

ID: 5461409
Source: CourtListenerOpinion
Date Created: 2022-01-09 19:37:35.470365+00
Date Added: 2024-06-11T08:32:54.172141
License: Public Domain

Leonard, J.
The grant from the Mayor, &e. of New York to Denton Pearsall and others, for the perpetual right to run a railroad through the Second avenue for the transportation of passengers, was valuable ; it was transferred by the grantees to the Second Avenue Railroad Company, an incorporation duly created; the company accepted and used the grant; the company set it up successfully as a defense to an action by the mayor, &c. of New York, to recover penalties for the nonpayment of a license fee for each car, attempted to be imposed *390by the city; and no consideration for such transfer has ever been paid.
The principle that trustees, directors and others, acting in a trust relation, cannot make valid contracts with themselves affecting the trust estate is well established, and clearly applicable here. The trustees cannot fix the price of the property of the trust estate which they take under the name of a purchase ; nor can they sell to the estate which they represent, and conclusively settle the price to be received. Where the trustees have bought or sold such property as it was necessary for the estate which they represented to buy or sell, at fair and reasonable prices, the transaction is not necessarily to be disturbed. But if the price is unreasonable, or unfair, or any fraud or advantage has been imposed or taken, courts are swift to hold the transaction void, or to open the contract so as to fix a proper compensation between the trustees and the estate which they represent, as upon the whole transaction may be just.
Applying these rules to the present case, it will be found that the grantees from the city corporation, being a majority of the trustees of the Second Avenue Railroad Company, undertook to settle the price at which the company should receive an assignment of the said grant from themselves. The resolutions, so far as they created any evidence in their own favor, were wholly nugatory and void. The company was organized with the expectation that the grant was to be transferred to it, and the assignment was executed pursuant to the plans of the promoters of the company. I do not think that the assignment can be called fraudulent or void. The" action is to recover the consideration. It was not in the power of the trustees of the company to name the price for the transfer of the grant from themselves to the company. That is a question which must necessarily remain open. The consideration named in the' transfer was not conclusive upon the company.
The defendants, insisting that the transaction is wholly *391void, have offered no proof as to the actual or proper valuation of the grant. They chose to submit the case without any proof on this subject, and the inquiry is now closed. I am unable to see that they are now entitled to any relief on the question of consideration or value.
On the question of the statute of limitations, the action of the whole board of trustees, during the time the grantees were members, contained sufficient acknowledgments in writing, signed by the defendants, to take the case out of the operation of the statute, if they possessed any validity. But the same reasons which prevent the trustees from fixing their own value upon the grant, operate to preclude any construction whereby a right of action can be given to themselves, or any prejudice created to the railroad company which will accrue in an advantage to themselves. Without the benefit of the resolutions of the company, passed while the grantees constituted a majority of the members of the board of trustees, and more than six years having elapsed since the- cause of action accrued, there is no existing promise to revive the demand. The statute appears to be a conclusive bar.
The argument that this is an action upon a sealed instrument, and therefore is not barred until the lapse of twenty years, cannot be sustained. The action is to recover the price of property conveyed at an agreed or implied valuation. There is no breach of any agreement under seal, alleged or proven. The fact that the grant is assigned by an instrument under seal, has no bearing upon the action, in this respect.
The judgment should be reversed and a new trial ordered, with costs to abide the event.
There is also an appeal from an order sending the case back to the referee, and allowing the defendant Sealey to put in an answer to the complaint, setting up a claim to a share of the money alleged to be due from the railroad company for the said grant, and directing the referee to proceed and *392ascertain the amount due to Sealey, and allowing him to enter .judgment for such amount as may be reported to be due him. No judgment had been entered on the report. Sealey was the owner of a share of the price due for the grant.. He had refused to join in -the action, and had therefore, under the provisions of the Code, been made a party defendant. He did not thereby lose his demand. The relief granted appears to- be within the discretionary power of the court, and the order should be affirmed with $10 costs to the respondents.
If I am correct as to the statute of limitations, the disposition made of this order appears to be of little consequence.
I am for reversing the judgment, ordering a new trial before the same referee, with costs to abide the event; and also for affirming the order allowing the assessment of damages due to Sealey, &c. with $10 costs against the appellants.