Taylor v. Hamden Hall School, Inc.

• Court: Connecticut Supreme Court
• Writing for the Court: Before BALDWIN; ALCORN
• Citation: Taylor v. Hamden Hall School, Inc., 149 Conn. 545, 182 A.2d 615 (Conn. 1962)
• Decision Date: 19 June 1962
• Parties: Margaret T. TAYLOR v. HAMDEN HALL SCHOOL, INC. (three cases). Supreme Court of Errors of Connecticut

Page 615

182 A.2d 615

149 Conn. 545

Margaret T. TAYLOR v. HAMDEN HALL SCHOOL, INC. (three cases).

Supreme Court of Errors of Connecticut.

June 19, 1962.

Sherman Rosenberg, New Haven, with whom, on the brief, was Jack D. Barnston, Woodbridge, for appellant-appellee (defendant).

Donald F. Keefe, New Haven, with whom was William R. Murphy, New Haven, for appellee-appellant (plaintiff).

Before BALDWIN, C. J., and KING, MURPHY, SHEA and ALCORN, JJ.

ALCORN, Associate Justice.

Three cases have been argued together, each being an appeal from a judgment of the Court of Common Pleas. The plaintiff brought three foreclosure actions on the same day--one, to foreclose a mortgage, dated June 1, 1927, given by the defendant's predecessor in title to secure a $30,000 note of even date payable to John P. Cushing and thereafter assumed by the defendant with an agreement to pay the note; another, to foreclose a mortgage, dated October 23, 1944, given by the defendant to secure a note of even date for $3000 payable to the plaintiff's husband; and the third, to foreclose a mortgage given by the defendant on December 21, 1950, to secure a note of even date for $65,000 payable to the plaintiff and her husband or the survivor. The $65,000 mortgage covered six parcels of land, of which one was subject to the $3000 mortgage and three others were subject to the $30,000 mortgage. The defendant, in its answer in the action to foreclose the $30,000 mortgage, denied the allegations of the complaint and pleaded, as a special defense, the breach of a fiduciary duty owed to the defendant by the plaintiff's husband which, because of the plaintiff's knowledge thereof, invalidated her claim under the note and the mortgage and prevented her from being a bona fide holder in due course. In each of the other two actions, the defendant denied the allegations of the complaint and pleaded in a special defense that there was a lack of consideration, that the notes and mortgages were executed without authority and as a result of material misrepresentations of fact on which the defendant relied and that the plaintiff knew all of the facts. The court found the issues in each case for the plaintiff and rendered judgment of foreclosure. The defendant appealed in each case. The court, in the action involving the $65,000 mortgage, found the principal of the debt to be $39,000, with $7410 interest from July 3, 1956, and awarded attorney's fees of $2500. In this case, the plaintiff filed a cross appeal, attacking the conclusion as to the amount of the debt. The appeals were not joined as they might have been. Practice Book § 382. Consequently, we are confronted by three separate records and must, in the consideration of each case, limit ourselves to the findings and conclusions in each case. Leonard Building Corporation v. New Britain, 146 Conn. 681, 684, 154 A.2d 614.

Certain of the facts are basic to all three cases. These we shall set forth first and, subsequently, recite such other facts as are pertinent to the determination of the individual appeals. The defendant is a nonstock, charitable and educational corporation, managed by a board of trustees, which has assumed the assets and liabilities of its predecessor corporation, Hamden Hall Associates, Inc. It conducts the Hamden Hall Country Day School, providing education for boys and girls from kindergarten through the high school level. Hamden Hall Associates, Inc., was established about forty-five years ago. The plaintiff is the widow of E. Stanley Taylor, who was headmaster of the school from 1933 until his death on July 3, 1956. Following the depression in 1929, the school fell into financial difficulties and was unable to meet its expenses. This condition continued through the 1930's and the early part of the 1940's.

Upon this general background, we consider the appeals in the order of the execution of the several mortgages, referring to them, for reasons which will be apparent, as the Cushing mortgage ($30,000), the Vreeland mortgage ($3,000), and the gymnasium mortgage ($65,000).

In the Cushing mortgage case, the defendant alleged by way of special defense that Taylor had secretly purchased the note and the mortgage while he was a fiduciary agent of the defendant and without disclosing the facts to the defendant; that, therefore, Taylor's claim under the note and the mortgage was invalid; and that, as the plaintiff had notice of the facts and was not a holder in due course, her claim under the note and the mortgage is likewise invalid.

The court concluded that the note and the mortgage were in proper form, duly executed and acknowledged by the proper officers of the school, and prima facie valid; that the defendant had not proved its special defense or that the note was invalid; that although Taylor attended the meetings of the board of trustees ex officio, by reason of his status as headmaster, he was not a member of the board of trustees at the time of or after his acquisition of the mortgage and was not in a fiduciary position when he purchased it; that the transaction was entirely fair to the school and the obligation undertaken was enforceable by Taylor and is enforceable by the plaintiff in its present amount of $20,500; that the trustees were and are chargeable with knowledge of Taylor's purchase; that the defendant, after having accepted large gifts from the Taylors without repudiating the mortgage debt, is estopped to deny its liability in full; and that the sum of $20,500 is owed to the plaintiff with interest at 6 percent from July 1, 1956. Judgment of strict foreclosure was rendered with July 10, 1961, designated as the law day. The debt was found to be $20,500, principal, plus interest of $3460.

The finding in the Cushing mortgage case, which is not subject to correction, discloses these additional facts: John P. Cushing headed the school when it was founded. On June 1, 1927, the defendant's predecessor, in exchange for its acquisition of land and buildings, executed a note for $30,000 payable to Cushing. The note was secured by the mortgage in issue. On June 28, 1951, the defendant acquired the mortgaged premises by warranty deed, in which it assumed and agreed to pay the mortgage debt. Upon Cushing's death in 1941, his executor sold the note and mortgage to E. Stanley Taylor. The assignment was recorded in the Hamden land records on August 5, 1941. Taylor, at the time he acquired the mortgage, as well as for many years before and after, served the school as headmaster without salary and attended every reported meeting of the board of trustees, except one. The trustees reposed the highest faith and confidence in Taylor and did not question the school's financial affairs. For a number of years after Taylor's purchase of the Cushing mortgage, the interest thereon was paid by the school. The treasurer signed checks in blank, and the assistant treasurer reviewed the checks in payment of interest, knew their purpose, and that they were paid to Taylor. Upon Taylor's death in 1956, the Cushing mortgage went, under his will, to his sister, from whom it was purchased by the plaintiff, who knew that Taylor had acquired it at a discount.

The defendant, in its appeal from the judgment foreclosing the Cushing mortgage, has assigned error in rulings on evidence, in the court's conclusions and in the overruling of the defendant's claims of law. The rulings on evidence are not presented in accordance with Practice Book § 405, and therefore we do not consider them. Martyn v. Donlin, 148 Conn. 27, 30, 166 A.2d 856; Metz v. Hvass Construction Co., 144 Conn. 535, 538, 135 A.2d 363.

The remaining assignments of error focus on the defendant's claim that Taylor occupied a fiduciary status with the school which affected his acquisition of the Cushing mortgage. The burden of proving the existence of that relationship rested on the defendant under the pleadings. State ex rel. Capurso v. Flis, 144 Conn. 473, 477, 133 A.2d 901; Mercer Electric Mfg. Co. v. Connecticut Electric Mfg. Co., 87 Conn. 691, 697, 89 A. 909. The court concluded that this burden of proof had not been sustained. This conclusion is to be tested by the facts found and must stand unless it is legally or logically inconsistent with those facts or unless it involves the application of some erroneous rule of law material to the case. Yale University v. Benneson, 147 Conn. 254, 255, 159 A.2d 169.

An agent is a fiduciary with respect to matters within the scope of his agency. Santangelo v. Middlessex Theatre, Inc., 158 Conn. 572, 578, 7 A.2d 430; Restatement (Second) 1 Agency § 13. He is not in a fiduciary relation to his principal, however, in matters in which he is not employed, unless the nature of the agency is such as to create a confidential relation in all matters. Restatement (Second) 2 Agency § 390, comment d. There is nothing in the finding to indicate the nature of Taylor's duties or the extent of his agency as headmaster. The defendant's claim would have substance if the transaction involving the Cushing mortgage was encompassed within the field of Taylor's employment or was within the ambit of a general confidential relationship. The court found that the trustees and the corporation 'reposed in * * * [Taylor] the highest degree of faith and confidence.' It does not follow from this finding that such faith and confidence extended beyond those matters within the scope of Taylor's undefined duties as headmaster. Judgments of a court are assumed to be well-founded and regular, and 'nothing will be held to be irregular but that which specially appears so.' Valente v. Porto, 93 Conn. 146, 149, 105 A. 338, 339. The court's conclusion that Taylor was not in a fiduciary position in his acquisition of the Cushing note and mortgage must be taken to mean that the trustees reposed faith and confidence in him in matters within the scope of his duties as headmaster, to the exclusion of any general confidential relationship...