Brown v. Robinson (In re Appeal of Eagle Ins. Co. of London, England)

• Decision Date: 22 October 1918
• Citation: 224 N.Y. 301,120 N.E. 694
• Parties: BROWN v. ROBINSON et al. Appeal of EAGLE INS. CO. OF LONDON, ENGLAND.
• Court: New York Court of Appeals Court of Appeals

224 N.Y. 301

120 N.E. 694

BROWN

v.ROBINSON et al.

Appeal of EAGLE INS. CO. OF LONDON, ENGLAND.

Court of Appeals of New York.

Oct. 22, 1918.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Lawrence E. Brown, as substituted trustee under the last will and testament of Agnes Hyatt Robinson, against Charles A. Robinson, individually and as trustee, etc., George Hyatt Robinson, and others. From a judgment of the Appellate Division (173 App. Div. 583,160 N. Y. Supp. 287), modifying a judgment of the Special Term, the Eagle Insurance Company of London, England, a defendant, appeals. Judgment of the Appellate Division reversed, and that of the Special Term affirmed.

Collin, J., dissenting.Nathan L. Miller, of Syracuse, for appellant.

Charles H. Tuttle and Thomas Barry, both of New York City, for respondents.

HISCOCK, C. J.

This action was brought by the plaintiff to have the accounts of himself and the defendant Charles A. Robinson, as trustees under the will of Agnes Hyatt Robinson, settled. There were joined in the action as defendants, besides plaintiff's cotrustee, George Hyatt Robinson, a son of and beneficiary under the will of Mrs. Robinson, and various corporations which claimed an interest by reason of various alleged transfers in the contingent interest of Robinson under his mother's will. Among these parties was the appellant, Eagle Insurance Company, with whose rights, of the alleged transferees, we alone have to deal. By joining these transferees it was intended to have various conflicting claims between them and Robinson litigated and settled, and this has happened, at least in the case of the said insurance company; it having been held that the transfers executed by Robinson to it were infected with usury and void.

After setting forth various formal matters and the execution by Robinson and his wife to the insurance company and others of various transfers of his interest in his mother's estate, and which are the subject of the present controversy, the complaint alleges ‘that, as the plaintiff is informed and believes, the said defendant George Hyatt Robinson has also executed an instrument assigning to the defendant Carnegie Trust Company, as trustee for himself and others, all of his remaining interest in the corpus of said trust estate,’ and amongst the prayers for judgment is the one that the court ‘shall determine and adjudge as to the validity of the various assignments made by the said George Hyatt Robinson, and also the interests of the various parties to this action.’

The insurance company first answered in this action, and alleged that the assignments executed to it were ‘good, valid, and subsisting assignments of the remainders (to which Robinson was contingently entitled) after the termination of the various trusts, to the extent of said assignments, and prior to all other interests in said remainders.’ It did not deny the allegation of Robinson's assignment to the Carnegie Trust Company, which was subsequent to its transfers, but asked judgment that defendant be adjudged entitled to such interests in such remainders. Robinson and his wife answered separately, and in addition to the various other admissions and denials each alleged that the transfers to the insurance company, although absolute in form, were loans and usurious, and each separately admitted that he or she, in connection with the other, had executed an instrument assigning and transferring all of the interests of the wife ‘and her husband, the defendant George Hyatt Robinson, in the principal of the estate of * * * said husband's mother, Agnes Hyatt Robinson, deceased, to the defendant Carnegie Trust Company of the City of New York, as trustee for said George Hyatt Robinson, his wife, * * * and the child of said George Hyatt Robinson, * * * and others,’ and each of said defendants, in the prayer for relief, in substance asked that the assignments, transfers, and mortgage to the defendant Eagle Insurance Company be declared void and of no effect, and ‘that the said Eagle Insurance Company * * * be directed to deliver up the same, and all other writings given by’ the defendant Robinson and his wife in connection therewith, and that the same be canceled; also that the rights of the defendants to the trust fund and property in question be ascertained, so that the rights of the defendant Robinson and his wife thereto ‘may be settled, and the income and principal thereof be paid over and disposed of according to the will of the defendant's [husband's] * * * mother, * * * and according to the trust agreement executed’ by Robinson and his wife to the Carnegie Trust Company. There was no offer in the pleadings or upon the trial that, as a condition of the relief prayed for, the defendants or either of them should repay the amounts actually received on said alleged loans.

On the trial the following facts, amongst others, were found:

Agnes Hyatt Robinson died, leaving an estate, consisting of personal property amounting at the time of the trial to something in excess of $200,000, and certain real property, the value of which does not appear. By her will she created two trusts for the benefit of her son Charles Hyatt Robinson, the payment of the principal of which to him was in each case contingent. Under the first trust he was to receive the principal of the fund provided and when he reached the age of 25 years. By the provisions of the second trust he was to receive the principal on the double contingency that he survived his father and reached the age of 25 years.

In 1907, and a short time after he had passed the age of 21 years, Robinson, through brokers and attorneys in New York City and a solicitor in London, made application to the appellant, which was an English corporation chartered to do insurance business, and also to loan money on and purchase expectancies, to advance moneys to him on a purchase of certain interests or shares in his expectancies under his mother's will. The result of this application and of the negotiations which followed was that the appellant paid to him the sum of $70,000, in addition to certain sums retained by it as premiums for insurance on Robinson's life and the sum of 5 per cent. for apprehended expenses in connection with the transfers, and took from him two transfers of parts of his contingent interest under the first trust created by his mother's will, aggregating $96,250; also advanced to him the sum of $17,350, exclusive of insurance premiums and 5 per cent. for apprehended expenses, as in the preceding case, and took from him a transfer of part of his contingency interest under the second trust created by his mother's will, amounting to $45,400; and also advanced to him the sum of $12,650, exclusive of insurance premiums and 5 per cent. for apprehended expenses, and took an assignment of part of his contingent interest under the second trust created by his mother's will, amounting to $40,000. Robinson and his wife also executed a mortgage on the former's interest in the real estate of his mother, in which he had a contingent interest, to secure the payment of the sums transferred as aforesaid.

In each case the instrument executed by Robinson and his wife was in form an absolute sale and transfer of his interest in his mother's estate to the extent stated. There was no personal obligation of any kind upon his part, except the covenant that at the time when each of said instruments was executed the property held by the trustees for the contingent benefit of Robinson in each trust consisted of real and personal property having ‘a clear market value * * * over and above all incumbrances' of $140,000. In the case of the last transfer Robinson also retained the right, within 6 months after reaching the age of 25 years, provided that his father was still living, ‘to repurchase the said sum of $40,000 hereby assigned’ upon payment ‘of the sum of $20,240, with interest thereon’ from the date when Robinson attained his majority to the date of payment.

Upon these and other facts which will be stated in connection with the discussion of specific points the trial court in substance held and found that the transfers executed by Robinson to the insurance company were sales, and that the amounts paid by it to him were at the date of such payment the fair values computed in accordance with the Carlisle Tables of the respective amounts and interests of and in his expectant remainders then transferred by him to it. The court, however, held, as it is assumed because of a misconception of the effect of a decision made by the Appellate Division at about that time, that the transfers were in effect equitable mortgages of his interest and in accordance with these views judgment was directed for the insurance company on the issues between it and the Robinsons for payment of the amounts advanced by it to him together with interest.

The Appellate Division took a different view of the transactions. It took the view that they were not sales and absolute transfers by Robinson of certain interests in his expectant remainders, but amounted to and were loans which were cloaked in and covered by the appearance of a sale. Said court likewise made findings that the amounts paid by the insurance company to Robinson, with interest and certain insurance premiums added, were very much less than the present values of the sums transferred by him to it computed according to the Carlisle Tables, and also made findings of fact and drew conclusions of law which stated that said loans were usurious and void; it being claimed, however, by the appellant, that such findings of fact are so connected with and limited by certain other findings that they do not sustain and warrant the conclusion of usury and illegality. The judgment directed by the Appellate Division, on the findings made by it and those of the Special Term which were allowed to stand, was in substancethat all of the transfers...