Court Opinion

ID: 5246280
Source: CourtListenerOpinion
Date Created: 2022-01-06 17:59:41.392651+00
Date Added: 2024-06-11T08:27:52.163393
License: Public Domain

Scott, J.
(dissenting):
I am strongly of the opinion that the judgment appealed from is wrong and should be reversed. It is one of the conceded facts in the case that the Noel mortgage, although held in the name of the Park Mortgage Company, was the property of James Clarkson, when he died and was allotted to Miss Clarkson, now Mrs. Behrmann, as a part of her share of his estate. When she executed the deed of trust to Seybel, the mortgage was transferred to him as a part of the trust fund and he thereafter held it as trustee.
Seybel went through the form of procuring a certificate of title thereto from the Park Mortgage Company, the record holder. If James Clarkson, the former owner, held an assignment from the mortgage company, it may be assumed that Seybel, who was both the executor of Clarkson and the trustee of plaintiff, surrendered the former certificate issued to Clark-son. At all events, however the details of the transaction were carried out, we may start with the trust deed to Seybel and the paper issued to him by the Park Mortgage Company. That paper deserves consideration. It is executed under the seal of the company, and certifies that it (the company) has “ this day sold D. E. Seybel, as trustee for Fannie Clarkson, the bond of Leon Noel for six thousand dollars * * * seemed by mortgage, covering premises 239 Van Cortland Park Avenue, Yonkers, N. Y.” Then follows an agreement that the mortgage company will, on demand and the surrender of the certificate, deliver a formal assignment of the bond and mortgage such as could be recorded, or will, on like demand and surrender, execute and deliver a satisfaction piece.
By this instrument the Park Mortgage Company parted with all its beneficial interest in and all its actual title to the *872debt evidenced by the bond and the mortgage given to secure it. The bond it had parted with absolutely, as its certificate states, and of course the right to the possession of the security followed the ownership of the debt, and after the completion of the transaction evidenced by its certificate the Park Mortgage Company had no title or interest in either the debt or the mortgage which it could lawfully sell or assign to any one, except D. E. Seybel as trustee, unless the certificate issued to him was surrendred and canceled as does not appear to have been done, or the debt, by some other means, retransferred to the mortgage company.
When, therefore, the Park Mortgage Company, later, undertook by a like certificate to sell the same bond to Mary J. Alicer, it undertook to sell what it no longer owned, because it had already sold, it to another person and had never reacquired it. On the face of the documents, therefore, without considering the relations of Seybel to the mortgage company and his domination of its business, Mrs. Alker never acquired any title to the Noel bond, because her only pretended title thereto was by asale from a vendor who had already parted with all title to it and could not make a valid sale. The right to the mortgage, of course, followed the ownership of the debt, and as Mrs. Alker never acquired title to the bond, she had no right to an assignment of the mortgage, and the unauthorized formal assignment of the bond and mortgage to her by the mortgage company added nothing to her title, as between herself and plaintiff. But if we overlook, as was done at Special Term, the inability of the mortgage company to make a valid sale of that which it had already sold to another, and treat the transaction as if Seybel, as trustee, had transferred a part of the trust estate to Mrs. Alker, the judgment would still be wrong. The situation as it stood upon this theory was that Seybel as trustee held a mortgage for the benefit of his cestui que trust, and that he personally (or his firm which amounted to the same thing) owed Mrs. Alker some sixteen thousand dollars, which she had the right to call for at any time. He then proceeded to transfer, or cause to be transferred (if the transaction can be regarded as a transfer), the Noel bond and mortgage from himself as trustee to Mrs. Alker. No money passed. Nothing was given by Mrs. Alker, and *873she apparently had no knowledge that the bond had been sold to her, for a considerable time afterwards. All that happened was that Seybel made some entries on his own books, reducing his indebtedness to Mrs. Alker by $6,000, and charging himself with a like sum as trustee. This was a typical instance of the operation commonly known as “ robbing Peter to pay Paul,” but it is well settled that in such a case Peter, if he can trace and identify his property, and Paul has not transferred it to a bona Me purchaser for value, may recover it from Paul. (Newton v. Porter, 69 N. Y. 133.)
It is sought, however, to uphold the transaction on the ground that by the terms of the deed of trust Seybel was authorized to sell and transfer any securities in which the trust fund might be invested. Undoubtedly the trust deed did give him the power, and if he had sold the Noel bond and mortgage to a bona Me purchaser for value, the sale would be valid even if he afterwards embezzled the proceeds. But the power to sell did not involve the power to steal or to give away, and as I view the transaction there was no sale, and no consideration. Indeed there was not even a semblance of a sale from Seybel as trustee to Mrs. Alker. Acting in the name of the mortgage company, Seybel sold the same bond twice, once to himself as trustee, and then to Mrs. Alker. The latter paid nothing and the trust estate received nothing, for the making of entries on Seybel’s books without the knowledge of either Mrs. Behrmann or Mrs. Alker cannot be treated as a payment to or by either of them.
The situation of the parties as I see it is as follows: Seybel, as trustee for Miss Clarkson, received a bond and mortgage which had belonged to her father’s estate. The record title stood in the Park Mortgage Company, but the actual title became vested in Seybel, as trustee, by virtue of an instrument executed by the mortgage company, which while not in such form as to be recorded, yet was amply sufficient as between the trustee and the mortgage company to vest the whole title to the debt and the right to the possession of the securities in the trustee. This bond and the right to the possession of the securities was never assigned to any one by the trustee, and he never received any money in consideration of such assignment. *874The mortgage company, having no longer any title to or interest in the debt, undertook to make a second sale of it to Mrs. Alker, who paid no consideration for it, except that Seybel, without her knowledge, made an entry in his books apparently reducing his indebtedness to her, at the same time making a corresponding entry in his account as trustee.
In this transaction I can see none of the elements of a bona fide sale by Seybel, as trustee, to Mrs. Alker. On the contrary, I think that the title to the bond and the right to have the securities never passed out of Seybel, as trustee, and that the substituted trustee succeeded to the title and right. It is sought to strengthen the claim of Mrs. Alker’s estate by the plea that Miss Clarkson, by creating the trust and appointing Seybel trustee, enabled him to commit a fraud on herself and Mrs. Alker. But her case is no different from that of Mrs. Alker who gave her money to Seybel for investment, and thus, on her side, enabled him to do what he attempted to do. I have never before heard it seriously argued that a cestui qui trust is to be debarred from following property which her trustee has stolen or given away without consideration, merely because by appointing him trustee she put him in a position to defraud her.
I think that the judgment should be modified by granting the relief prayed for by plaintiff respecting the Noel bond and mortgage for $6,000.
As to the $200 participation in the Wright mortgage the plaintiff’s claim does not seem to be so clear, and as to that the judgment should be affirmed.
Under these circumstances the plaintiff should have costs of appeal only against the Park Mortgage Company and the executors of Seybel.
Clarke, P. J., concurred.
Judgment affirmed, with costs.