Crane v. . Andrews

92 N.E. 679, 199 N.Y. 359, 1910 N.Y. LEXIS 1246

• Court: New York Court of Appeals
• Decided: October 11, 1910
• Status: Published

Opinion

Hiscock, J.

This action was brought for the purpose of establishing in behalf of respondent a lien on or interest in certain ore and timber lands now held by the appellant Hudson Iron Company, whereby he should have the right to remove timber and ore and collect royalties on such products removed by others until he had obtained satisfaction of an indebtedness for upwards of $90,000 and interest against another iron company. The suit is based on a written agreement made between him and one Andrews purporting to secure such rights, and of which agreement the trial court found that the appellants had notice. The alleged consideration for the grant to respondent of this lien or interest was that he was to have credit for the procurement by another person of conveyances of the premises in question to the trustee named in said agreement, through whom they w'ere subsequently to be conveyed to other parties subject to his rights, and the judgment is based on the express theory and finding that one Eaton accepted the conveyances as trustee in part for the benefit of respondent and to carry ont said agreement and that his subsequent conveyance through an intermediate party to the appellant iron company was in violation of his trust.

The agreement between respondent and Andrews is loosely drawn and indefinite in many respects, and the evidence on the trial is more or less characterized by the same features, so that it has been difficult to get hold of the real relationship between the various parties and of their true purpose and to determine whether the evidence does sustain the construction and findings adopted and made by the trial justice, for that is the troublesome question in the case. After proper consideration I have reached the conclusion that it does not; that there is no evidence to establish that Eaton accepted the conveyances as trustee under or for the purpose of carrying out respondent’s agreement and that his subsequent grantees did not take the lands charged with such a trust or interest in favor of respondent. The discussion of that question necessarily involves a review at considerable length of the evidence.

Prior to Hay 16, 1904, respondent and the defendants Andrews, Clark and Yillard had become involved in the management of an unsuccessful iron company known as the Eastern Iron Company of Hew York and the Eastern Iron Company of Hew Jersey. Respondent appears to have been an actual bona fide creditor of the companies to the extent of $94,632.55. Andrews was a director and president of both corporations and Yillard was a stockholder in the Hew York company and also an apparent creditor thereof to the amount of $42,410.45. At about this time apparently some of the interested parties commenced to consider the possibility of a reorganized or new company which by the acquisition of additional ore lands might become enabled successfully to manufacture iron. In accordance vrith these plans they established some sort of relations with one Hershon who promised the ability to obtain options on three tracts of undeveloped' or abandoned ore lands which would serve the desired purpose. For alleged sentimental reasons Hershon desired to give to respondent, who, as stated, does occupy a meritorious position as creditor, the benefit of these options, and to make them the basis of some sort of an arrangement which would secure to him payment of his aforesaid indebtedness, and on the date mentioned the agreement already referred to, which is the basis of this action, was made. In substance, and so far as material, it provided that respondent should “ assign and deliver, or cause to be assigned and delivered, to James M. Clark, or some other third party to be mutually agreed upon as Trustee, the several options to be received and controlled by him ” upon three tracts of laud already referred to. These tracts, however, were to be subject to his right to remove timber and ore and other metals, and subject to a royalty on ore which might be removed, all to secure the payment of his indebtedness above méntioned, and it was further agreed that said rights and privileges “ be represented and further secured by a proper agreement or evidence thereof to be issued, made and delivered to the second party (said Crane) * * * by the said trustee or by any corporation to be hereafter organized for the purpose, among other things, of working said lands.” Andrews agreed, on presentation and delivery of proper deeds to said tracts of land, to. pay “on account of the purchase price thereof” the sum of $34,500 and certain expenses, etc. lie also agreed to pay to Crane the sum of $10,000 to be applied in part payment of his indebtedness “upon the delivery of said options as aforesaid, or within thirty days thereafter, upon satisfactory assurance of prompt payment to the second party.” Said agreement likewise provided for payment in substantially similar manner to Villard of the indebtedness due to him from the Eastern Iron Company before mentioned, and while Mr. Villard was not in any manner a party to the agreement he was fully advised of its execution and terms.

At the time this agreement was made Mershon had no options on any of the property which in accordance with his plan to benefit the respondent he could turn in in fulfillment of his agreement, but subsequently and prior to June 30, 1904, he had reached a point where he could deliver deeds of two of the parcels.

In the meantime and on or about June 4, 1904, the appellant Hudson Iron Company had been incorporated with the defendant Andrews as a director and president and Villard as a director and vice-president, and prior to the delivery of the deeds which Mershon had obtained as aforesaid, the request was made by Andrews and Clark speaking for themselves and as claimed at the request of Villard, that one Eaton, who was an employee of the latter, should be substituted as trustee for' Clark under the agreement already referred to, Clark being an officer of the new company. Respondent consented to this substitution and subsequently Mershon secured delivery of the deeds transferring to Eaton two out of the three projiosed parcels, the other parcel mentioned in the original agreement having been dropped out for some i-eason. Subsequently Eaton conveyed the premises without consideration to one TJlbricht, a representative of the Villard estate, and he subsequently executed conveyances to the Hudson Iron Company which made a large issue of stock and bonds against these and some other properties of uncertain value and a large proportion of which were issued or transferred to the appellant Villard, apparently making him a large profit in addition to paying the indebtedness mentioned in the original agreement between respondent and Andrews and the moneys advanced on execution of the deeds to Eaton. As has been stated, the respondent claims and the court has found that these conveyances were accepted and the lands held by Eaton as a substituted trustee under the agreement which has been referred to. The appellants claim in opposition to this theory that the conveyances were not procured under the original agreement at all; but that Villard, who unquestionably did advance moneys to secure the execution of the deeds to Eaton, did so for his own benefit and that the latter took the conveyances as the former’s individual representative and agent and entirely independent of respondent’s agreement with Andrews and the rights therein secured.

Whether that may be of controlling importance or not, it is difficult to see how Mr. Villard can be bound by or made subject to the written agreement referred to. He was not in any manner a party thereto and I cannot find any evidence which fairly establishes that he acted under its terms and provisions in doing whatever he did do to secure the execution of the conveyances to Eaton however respondent and Merslion may have been misled into the belief that he was thus acting. According to Merslion’s testimony, which although disputed the 'trial justice had a right to believe, Andrews quoted Villard as desiring that Eaton should be substituted as a trustee in the place of Clark under the agreement, but there is no proof binding on Villard tliat he ever did make such a request and so far as respondent was able to give evidence of his acts they were in repudiation of rather than in accordance with the agreement. At some time before the conveyance, whatever his earlier attitude may have been, he seems to have reached the conclusion that he would prefer to secure control of these properties independent of the agreement which secured re payment of respondent’s debt and thus be enabled, as he subsequently did, to deal with the iron company at a profit to himself unhampered by respondent’s equitable claims.

But however the case may lie as to Villard, there is absolutely no evidence to show that Eaton, as found by the court, ever accepted the conveyance as trustee under respondent’s agreement with Andrews and for the purpose of carrying out the provisions in respondent’s favor therein contained. The deeds to him on their face did not purport to be in trust or otherwise than as ordinary conveyances to him individually and there is no testimony in support of respondent’s theory and of-the findings of the court that he ever agreed to act as trustee under the written agreement or that he ever knew about it. On the contrary, the only evidence on that general subject is that Villard asked him to take the conveyances as his representative and agent. Under these circumstances, however respondent and Merslion may have been misled into the idea that Eaton had been properly advised with by Andrews or Villard and that he was acting as substituted trustee in place of the original one named in the agreement and was accepting the conveyances under the terms of the latter, the evidence utterly fails to establish those facts, and it follows that not having accepted the conveyances under any trust obligation to respondent, none were violated by the subsequent con veyances to the appellant iron company. At least, to whatever relief the respondent may he entitled on some other theory he is not entitled to a judgment on the theory adopted by the trial court of a trust accepted and then violated.

The trial court has not found that the appellant iron company caused or procured the execution of the conveyances to Eaton by agreeing that he should receive them as a trustee under the respondent’s agreement. It is, therefore, unnecessary to consider whether the evidence would have justified such a finding and whether the effect of such a finding if made would have been to estop the iron company when it became the owner of the lands from denying that they were conveyed to Eaton as such trustee and that in its hands they were subject to a, trust in respondent’s favor.

Many other reasons have been urged by the learned counsel for the appellants why this judgment should not be affirmed. I think that some of them are clearly untenable, and in view of the conclusion reached on the point discussed and of the possibility that more complete and satisfactory evidence may be produced on another trial, it does not seem desirable to occupy space in discussing other questions which have been or may be raised.

In accordance with these views the judgment must be reversed and a new trial granted, with costs to abide event.

Cullen, Ch. J., Gray, Haight, Yann, Willard Bartlett and Chase, JJ., concur.

Judgment reversed, etc.