Benedict v. Arnoux

• Decision Date: 11 January 1898
• Citation: 154 N.Y. 715,49 N.E. 326
• Parties: BENEDICT et al. v. ARNOUX et al.
• Court: New York Court of Appeals Court of Appeals

154 N.Y. 715

49 N.E. 326

BENEDICT et al.

v.ARNOUX et al.

Court of Appeals of New York.

Jan. 11, 1898.

Appeal from supreme court, appellate division, First department.

Action by Elias C. Benedict and others, executors of Edwin Booth, deceased, against George T. Arnoux and others. From a judgment of the appellate division (39 N. Y. Supp. 793) reversing a judgment entered on a decision, and awarding judgment in favor of defendants, Campbell appeals. Reversed.

John E. Parsons, for appellant.

Henry B. Johnson, for respondents.

HAIGHT, J.

This action was brought to foreclose a mortgage for $16,500 on property known as ‘No. 64 South Fifth Avenue,’ in the city of New York, made by the defendant George T. Arnoux to the late Edwin Booth. The trial court found as facts that the plaintiffs, as executors of the last will and testament of Edwin Booth, deceased, were the owners of the bond and mortgage mentioned in the complaint; that default has been made in the payment of the interest due thereon; and that the whole sum secured by the mortgage by reason thereof has become due and payable. He also found as facts that George T. Arnoux, the mortgagor, was the purchaser of the premises from the executors of William Campbell, deceased, who sold and conveyed the same to him under and pursuant to a power of sale contained in the last will and testament of the said Campbell, and such sale was made by said executors pursuant to said power for a lawful purpose, without fraud, and for the intended benefit of said estate, and with full knowledge by said executors, and each of them, that the sale to said George T. Arnoux was made, and they intended it to be made, as an out and out sale for the benefit of said estate of said Campbell; that the plaintiffs' testator, Edwin Booth, had in his lifetime, and in or about the month of January, 1891, deposited with the firm of Arnoux, Ritch & Woodford, attorneys at law, in the city of New York, the sum of $16,500, to be invested for him on bond and mortgage, and George T. Arnoux, the mortgagor mentioned in the complaint herein, borrowed said sum to enable him to pay the executors of the said Campbell that much of the purchase money on the said premises, and the mortgage aforesaid was given as collateral security to the bond of said George T. Arnoux for the loan made by said Edwin Booth, as aforesaid; that, in the whole of the transactions aforesaid, there was no fraud or deceit practiced by the said Arnoux, Ritch & Woodford, or any one connected with that firm, on the executors of the last will and testament of the said Campbell; but said executors acted advisedly, and with full knowledge and upon their own judgment, in making the sale to said George T. Arnoux, and with full knowledge that the said George T. Arnoux borrowed part of the purchase money to pay for the premises from said Booth, and that the mortgage involved in this action was given to secure the amount so borrowed. The court concluded by directing the usual judgment of roreclosure and sale.

There is conflict in the testimony with reference to the details of the transactions of the parties, but the following facts in the case are without substantial dispute: William Campbell died on the 27th day of April, 1888, leaving a last will and testament, which has been duly admitted to probate, by which the defendants Joseph Campbell, Emma Campbell, and Martha Campbell were appointed executor and executrices, all of whom have duly qualified and received letters testamentary. The testator left, him surviving, Sarah Campbell, his widow, and seven children, three of whom are the executors. At the time of his decease, he was seised and in possession of the real property in suit, and the adjoining property thereto, known as ‘No. 62 South Fifth Avenue,’ the two places being worth about $30,000 each. He left no personal estate of any substantial value. The testator, in his will, after making some specific bequests, devised to his executors all the rest, residue, and remainder of his estate, in trust, however, during the natural life of the testator's wife, with remainders of one-seventh to each child, except one in which a further trust was created for her benefit during life. By the tenth clause he provided that ‘if at any time my executors, or such or them as shall have qualified, the survivors or survivor of them, shall deem it for the best interests of my said estate that any part or parts or all of my real estate should be sold, then I authorize and empower my executors, as such, and the survivors and survivor of them, to sell and dispose of any real estate of which I may die seised or interested in and any part or parts thereof, upon such terms and in such manner as they shall deem best, and for that purpose to make, execute, and acknowledge all necessary deeds of conveyance therefor.’ It further appears that, at the time of the testator's death, his son, James Campbell, was engaged in business with the testator's son-in-law, John D. Phyfe, under the name of Phyfe & Campbell, in the construction of buildings upon lots known in this case as the ‘Ninety-Eighth Street Property’; that the testator in his lifetime had made loans to, and had indorsed paper for, Phyfe & Campbell, and, upon his decease, there were outstanding claims which were presented against his estate amounting to the sum of $40,000, to offset which he held claims against Phyfe & Campbell to the extent of $45,000. On one of these claims a judgment had been entered in favor of the Chemical National Bank for twelve thousand odd dollars. This judgment was entered upon paper drawn by Phyfe & Campbell, indorsed by the testator, and guarantied by William H. Arnoux. Action was brought in the lifetime of the testator, but judgment was not entered until after his decease. The bank was then paid its claim by Arnoux, the guarantor, who took an assignment of the judgment. Proceedings were then instituted by Arnoux in the surrogate's court for the sale of the real estate of the testator for the payment of his debts, and pending these proceedings the arrangement was made between the parties which has become the subject of this controversy. It does not clearly appear who originated the plan, but the first conversation took place between Phyfe and William H. Arnoux. Phyfe was anxious to get money with which to complete the unfinished houses on the Ninety-Eighth street property. He inquired of Arnoux if the executors could mortgage the testator's real property. Arnoux, upon an examination of the will, advised that the power to mortgage was not given, but that they had the power to sell. After this conversation, Arnoux wrote Joseph Campbell, saying: ‘Mr. Phfye has made me a proposition which, if you join in, I will carry out, and I believe it will relieve your property from the lien of my judgment.’ Subsequently the executors met Arnoux at his office, and the arrangement that appars there to have been made was that the executors should sell the property known as ‘No. 64 South Fifth Avenue,’ to George T. Arnoux, a brother of William H. Arnoux, for the sum of $30,000; that William H. Arnoux, as the agent of Booth, who had money in his hands for investment, should make a loan upon the property for the sum of $16,500, and that this money should be used for the completion of the buildings upon the Ninety-Eighth street property. Accordingly, the executors deeded to George T. Arnoux, and he gave back to them a mortgage for the sum of $13,500, which, together with the money derived from the loan obtained from Booth, made up the $30,000, the purchase price of the lot. Up to this time the title to the Ninety-Eighth street property had been in Mrs. Phyfe. William H. Arnoux loaned her the sum of $300, and there-upon she deeded the property to him, with the understanding that it was to secure the repayment of such loan, as well as the Chemical National Bank judgment, which had been assigned to him. The $16,500 derived from Booth was used in part for the payment of taxes and liens upon the property, and the balance placed in the hands of William H. Arnoux, with the understanding that he should pay therefrom the bills for the completion of the buildings upon the property when approved by Joseph Campbell if they exceeded $100 in amount.

The appellate division, in its opinion, appears to have reached the conclusion that Arnoux, having the legal title to the Ninety-Eighth street property, derived all the benefit from the expenditure of the money obtained from Booth in the completion of the buildings upon the property. They say: ‘We fail to find any testimony tending to show that any agreement existed, either verbal or written, by which, as between Arnoux and the estate, the estate could enforce any obligations of Arnoux to hold this property as security for the payment of this judgment. or as security for the repayment to the estate of the amount which the estate had paid to Arnoux to be used in the completion of these buildings. Arnoux did not agree to repay the estate that sum of money, the proceeds of this mortgage. The proceeds were largely in excess of the sum due to Arnoux on his judgment; the amount of the judgmentbeing slightly over $12,000, while the amount which was paid to Arnoux of the money of the estate was in the neighborhood of $16,500. Nor was there any evidence of any agreement by Arnoux or any one else by which this Ninety-Eighth street property could be held as security for the payment of any debt of Phyfe & Campbell, or of this estate, or that upon the completion of the Ninety-Eighth street houses they whould be sold, and the proceeds applied in any way to the benefit of the estate, except so far as this verbal agreement before mentioned, if carried out, would relieve the estate from the payment of Arnoux's judgment.’ It appears to us that the learned appellate division have misapprehended the conceded facts in this particular. The transaction itself speaks louder than...