139 N.Y. 461, Zebley v. Farmers' Loan and Trust Co.

Citation:139 N.Y. 461
Party Name:JOHN F. ZEBLEY, Appellant, v. THE FARMERS' LOAN AND TRUST COMPANY, Respondent.
Case Date:October 17, 1893
Court:New York Court of Appeals

Page 461

139 N.Y. 461

JOHN F. ZEBLEY, Appellant,

v.

THE FARMERS' LOAN AND TRUST COMPANY, Respondent.

New York Court of Appeal

October 17, 1893

Argued October 3, 1893.

Page 462

COUNSEL

William Wirt Hewett for appellant. A cestui que trust may require a trustee who has made away with the trust property to account. He may follow the trust fund into the hands of other persons or into other property in the hands of the trustee, or he may proceed against the trustee personally. (Perry on Trusts, § § 760, 843; In re Y. & C. R. R. Co., 50 Me. 565; Hoyle v. P. & R. R. Co., 54 N.Y. 314.) The trustee cannot dispose of this property upon its own consideration, and thereby deprive plaintiff of his share in the fund. (Hollister v. Stewart, 111 N.Y. 645; People v. Cork, 110 id. 443; Mitz v. B. & R. R. Co., 58 id. 63; Berford v. Barnes, 45 Hun, 243; In re McCarter, 93 N.Y. 558; In re Foster, 15 Hun, 387; Fellows v. Longfor, 91 N.Y. 324.) The question whether plaintiff became a holder of these bonds before or after the decree of foreclosure is immaterial. (Code Civ. Pro., § § 1909, 1910.) The point of non-joinder of parties was not made at General Term. (Bradstreet v. Schuyler, 3 Barb. Ch. 608;

Page 463

Griffith v. Godey, 113 U.S. 89.) That facts are imperfectly or informally averred, or that the complaint lacks formality or precision, or that facts are argumentatively averred, are not grounds for demurrer, but for motion. A complaint will be deemed to allege what can by reasonable or fair intendment be implied from the allegations. (Marie v. Garrison, 83 N.Y. 14; 45 id. 157; Hale v. O. N. Bank, 49 id. 626; Olcott v. Carroll, 39 id. 436; Lorillard v. Clyde, 86 id. 384; Butterworth v. O'Brien, 39 Barb. 192; Code Civ. Pro. § 488; Carter v. De Camp, 40 Hun, 258; Burney v. Drexel, 33 id. 419; Willis v. De Forest, 16 Barb. 61; Dodge v. Colby, 108 N.Y. 445.)

Herbert B. Turner for respondent. It is always an objection to a suit in equity that it appears to be stale and speculative, and this defense may be made by demurrer (Speidel v. Henrici, 120 U.S. 377.) If the plaintiff is entitled to any relief whatever, it must be sought in the original foreclosure suit, and not in a separate action. (Shaw v. R. R. Co., 100 U.S. 611; F. N. Bank v. Shedd, 121 id. 86; C. Co. v. Blatchford, 11 Wall. 172; Knapp v. R. R. Co., 20 id. 117; Beals v. I. M. & T. R. R. Co., 133 U.S. 290.) The subject-matter of the foreclosure suit was the mortgaged railroad in question. The foreclosure was in the nature of a proceeding in rem. That subject-matter was finally disposed of in that action, to which in legal intendment, the then holder of these eleven bonds was a party, being represented by the mortgage trustee. (Waples on Proc. in Rem, § § 606, 615; Pom. Eq. Juris. § § 181, 239, 1413; Oelrichs v. Spain, 15 Wall. 211; G. R. R. Co. v. Cowdrey, 11 id. 478.) The amended complaint alleges that the holders of the bonds which the plaintiff now owns, had, at the time of the action for foreclosure, no notice of that action and of the subsequent proceedings, and that the plaintiff himself had no such notice. But these averments are frivolous. The pendency of the action was itself notice, and if it were not so, such a trust could never be wound up, for to notify the bondholders in

Page 464

such cases is generally impracticable, and is not required. (Pom. Eq. Juris. § § 632, 633, 638.) There is nothing in the amended complaint to show that the foreclosure action is not completely open now for any application in respect to the fund that could have been made at any stage of the proceedings. The entry of final judgment is no bar to any application that ought to be entertained. That judgment may even be opened at any time, if it is made to appear that substantial justice demands that it should be done. (Rumsey's Pr. 648; Hatch v. C. N. Bank, 78 N.Y. 487.)The present holder of the bonds is, so far as legal right and remedies attaching to ownership are concerned, in the same situation as the person who held the bonds at the commencement of the foreclosure suit. The transfers of the bonds from hand to hand since that time have neither added to nor subtracted from them any of their rights as tokens of an interest in the fund. And that is all they were after the foreclosure. (Daniels' Ch. Pr. 1525, 1545; Wilder v. Keeler, 3 Paige, 164; Van Hook v. Throckmorton, 8 id. 33.) If the plaintiff is entitled to any relief in the premises, it must be sought in a proper proceeding in the action for foreclosure, and cannot be obtained elsewhere. (Lea Cas. in Eq. [ 4th Am. ed.] 1389.) The payment by the plaintiff of his proportionate share, or the tender of such payment, is a condition precedent to his having any interest whatever in the purchase. It is well settled that facts showing the performance of conditions precedent must be stated. (Hatch v. Peet, 23 Barb. 575; Oakley v. Morton, 11 N.Y. 25; Wolfe v. Howes, 20 id. 197.) To prove conversion it must be shown that property physically capable of being the subject of conversion came into the hands of the one sought to be charged. No such allegation is made in the complaint. If a party, either ignorantly or willfully, omits the very facts on which his case depends, and contents himself with averring evidence inconclusive in its nature, the courts cannot shield him from the consequences of his error, if the objection is taken at the proper time, and in the proper form. (Emery v. Pease, 20 N.Y. 62; City of Buffalo v. Holloway,

Page 465

7 id. 493; People v. Supervisors, 34 id. 268; Lawrence v. Wright, 2 Duer, 673; Van Liew v. Johnson, 6 T. & C. 648; Calvo v. Davies, 73 N.Y. 211.)

O'BRIEN, J.

The courts below have sustained a demurrer to the plaintiff's complaint. The actual merits of the plaintiff's claim are not involved in this appeal, but only the question whether he has stated enough in his complaint to call for an answer from the defendant and an examination of the facts by the court. If he has, then the case must be disposed of upon the facts as they may appear. The action was commenced in April, 1888. The allegations of the complaint are quite broad and general. It states that prior to the commencement of the action, the plaintiff became and is the owner of eleven bonds, issued by the New York & Boston Railroad Company, a domestic corporation, upon which there is due and unpaid the sum of $11, 000, with interest from November 1, 1872. That such bonds were a part of an issue of $2, 500, 000, duly issued by said corporation, for the purpose of borrowing money to be used in completing and operating its road, under date of November 1, 1869, payable with semi-annual interest November 1, 1889. That at the same time the railroad duly executed, sealed and delivered to the defendant a mortgage or deed of trust, conveying to the defendant, as security for the redemption and payment of said bonds and the interest thereon, all of its property and franchises, the mortgage being referred to and made a part of the complaint. That the defendant became a party to the mortgage and accepted the trust and the bonds were thereupon issued in form payable to the defendant, trustee or bearer, in the sum of one thousand dollars each, and the defendant did thereafter, in accordance with the terms of the...

To continue reading

FREE SIGN UP