Medical College Laboratory v. New York University

76 A.D. 48, 78 N.Y.S. 673

Opinions

Laughuin, J.:

The respondent was permitted to show," under objection and exception to its competency and admissibility, what took place at the'interview between the committees of the respective parties on December 19, 1896, prior to the execution of the deed. The first question to be determined is whether it was error to receive this testimony. It was offered for the purpose of showing that the respondent’s agreement to transfer the property was upon the distinct understanding or agreement that the control pf the council over matters pertaining to the medical education should be merely nominal and that in fact such affairs should be entirely under the direction and control of the medical committee of the council composed" of persons agreeable and satisfactory to the medical faculty of the respondent.. Briefly stated, the claim of the respondent is that as the holder of property devoted to medical education, it had a duty and interest in maintaining, continuing and developing the theories and principles of. education and conserving the good will and impetus attained during the long existence of the college and which are distinct from the property 'utilized, though intimately associated therewith; that this could be done only by continuing the instruction, direction and control in the persons who, having taken up the work of their predecessors in the faculty, had carried it on to its then stage of developmentthat it was for the mutual benefit of both to have the" property and business affairs owned and managed by the university, but that this, was not to otherwise affect the" educational work. The respondent then contends that upon its being thus shown that the transfer was not intended as an unconditional gift, and that the appellant has violated the condition attached and rendered, specific performance impossible, a court of equity should decree a reconveyance. The appellant insists that the. preliminary negotiations or agreement were, merged in the resolution and deed which showed that the conveyance was absolute, and that, therefore, parol evidence was incompetent and inadmissible.

If there was a parol agreement creating a trust or attaching conditions to the transfer, equity will enforce the trust or conditions if valid, provided the same were accepted and are capable of being performed ; but if the contract be void for indeliniteness or otherwise, or if the trust or conditions have not been accepted, so that specific performance is impossible, equity will decree a return of the property. (Associate Alumni v. General Seminary, 26 App. Div. 144; Rank v. Grote, 110 N. Y. 14; Ahrens v. Jones, 169 id. 555; Amherst College v. Ritch, 151 id. 282; Peck v. Hoyt, 39 Conn. 9; Peacock, Pub. Admr., v. Nelson, 50 Mo. 256:)

It may well be that the appellant was not authorized to accept the conveyance on the conditions claimed to have been attached; but even if it did have such authority it does not appear that the council ratified the agreement made by its special committee. Nevertheless the appellant received the property from the respondent, which was under no obligations to make the conveyance except upon such conditions as it saw fit to impose, and if its consent was given upon these conditions equity will not permit the appellant to both repudiate them and retain the property, but will hold that it must ratify or repudiate in toto, and will imply a trust to the effect that the grantee, if performance be not made or be impracticable, hold the property for the benefit of the grantor. (Reed v. McConnell, 133 N. Y. 425, 435 ; Farmers' Loan & Trust Co. v. Walworth, 1 id. 433; Dix v. Marcy, 116 Mass. 416; Rackemann v. Riverbank Imp. Co., 167 id. 1; Peacock, Pub. Admr., v. Nelson, supra; Pullman's Car Co. v. Transportation Co., 171 U. S. 138; Chapman v. County of Douglas, 107 id. 348; Rader's Admr. v. Maddox, 150 id. 128.) It is manifest, therefore, that it was important and material to show the parol agreement. We think the evidence was competent upon several grounds: (1) As showing that the real agreement rested in parol, and the deed was executed in part performance thereof. (Chapin v. Dobson, 78 N. Y. 74; Juilliard v. Chaffee, 92 id. 529.) (2) As showing the real consideration and a failure thereof. (Baird v. Baird, 145 N. Y. 659.) (3) As showing a collateral agreement not in conflict with the deed which contains nothing on the subject of control over the educational work. (Routledge v. Worthington Co., 119 N. Y. 592 ; Rackemann v. Riverbank Imp. Co., supra.) (4) As showing that the conveyance, though absolute in form, was made upon conditions or in trust, and'that it would be a fraud upon the respondent to allow the appellant to repudiate the trust or conditions and retain the property. (Rank v. Grote, supra; Amherst College v. Ritch, supra; Ahrens v. Jones, supra ; Peck v. Hoyt, supra; Dix v. Marcy, supra ; Peacock, Pub. Admr., v. Nelson, supra.)

Upon the evidence thus received, the Special Term held in effect that the property was not transferred as a gift, but in consideration of an agreement which had been repudiated and the performance of which has become impracticable, because of appellant’s acts, and for the reason that the council would be in these matters thereby divested of authority to act freely and as might seem for the best interests" of the university. The sufficiency off the testimony to justify these findings remains to be considered. There were present at the conference between the committees of the respective parties on the 19th day of December, 1896, Mr. Dimock and the .chancellor constituting the special committee of the council^ and Drs. Pardee, Witthaus, Stimson, Thompson and Polk of the faculty, and Mr. Miller, a member of the council and of the medical committee and of the board of directors of the- respondent. With- the exception of Dr. Thompson they were all called as witnesses. Mr. Dimock, who was spokesman for the appellant’s committee, testified in substance that he drew attention to the fact that he and Mr. Miller had. been elected to the council and placed on the medical committee at the instance of the faculty, together with their friends, Col. Payne and Mr. Barney, and stated that if the respondent would pass its property over to the university, it “ would engage that that Committee, the-Medical Committee, should always remain constituted, of people who were acceptable and satisfactory to the Governing Faculty; that as vacancies occurred members of the Council who were agreeable or acceptable to them would be appointed to the place, and that' that committee, so constituted, Avould have and should have the entire management and control of -the property to be turned over and of the affairs of the Medical College; and that it should succeed, in the appointment of professors, to the powers that had been exercised by the Governing Faculty theretofore; ” that while they were, surrendering the management and control which had been exercised partly by the governing faculty and .partly by the board of directors of the respondent, they were giving it to a body “ satisfactory to them, and would be continued to be satisfactory to them,” and that he thought that this was a “ continuation of the state of things ” that had “ existed from the first.; ” that the chancellor expressed no dissent to what he stated; that he stated in answer to a question, as to how the governing faculty were to manifest their acceptance of new members of the committee as vacancies occurred, that some means would be devised, and that they could trust the university for that. This testimony of Mr. Dimock was corroborated in the main by the testimony of Mr. Miller and of all the doctors present, except Dr. Thompson, who was not called.

The chancellor’s testimony is to the effect that Mr. Dimock spoke of the interest the medical committee would take in the college if the property were transferred.; of the increased interest the public would take in the institution if its proprietary character were abolished, and of the greater ease with which money could be obtained and of the personnel of the medical committee, but he says Dimock did not state that the affairs of the medical college should be directed and controlled by the medical committee, and that nothing was said as to the future composition of that committee.

In answer to a question with reference to the statement contained in Col. Payne’s letter, herein quoted, to the effect that the entire interest and control was to be vested in a medical committee, he said that if by vested was meant only “ put under the charge of the Medical Committee,” he would not object to that, but he denied that it was to be vested in that committee exclusively. He further stated that his view of the matter was “ that before this conveyance the Medical College Laboratory owned the property and the members of the Governing Faculty owned the fees which, came from the students, the income of the college,” and that after the conveyance they ceased to have any legal right other than that of other professors elected without a stated compensation.

It is claimed on the part of the appellant that the testimony of the witnesses, who thus gave evidence in behalf of the respondent, was materially contradicted by their cross-examination and by other evidence of their subsequent acts and conduct. This evidence and the criticisms upon their testimony have been carefully considered. It cannot be discussed at length within the reasonable limits of an opinion. It is sufficient to say that we have reached the conclusion that this was a fair question of fact, and we would not be justified in reversing, the decision of the learned trial justice, who had an opportunity to observe, the witnesses, on the gmund that his conclusion is against the weight of evidence. This testimony, introduced on behalf of the- respondent,'is not at all improbable. The respondent and its faculty turned over to the appellant very valuable property and interests. They had the authority to continue themselves and their successors in the charge and control of this property and of the faculty in perpetuity. According to the appellant’s claim, this property and all of these rights were surrendered gratuitously and unconditionally. In determining this question the history of the Organization of the faculty, of the incorporation of the respondent, and of the relations existing between the respondent and the faculty and between them and the appellant, the material events of which are recorded in the statements of facts, are quite important. In these circumstances we think the probabilities favor the existence of the reserved rights claimed by the respondent. (Rogers v. N. Y. & T. Land Co:, 134 N. Y. 197, 214.) We think the testimony fairly justified á finding that a promise was made on the part of the special committee of the council to the effect that the entiré direction and control of the affairs of the medical college should be vested in the medical committee, which should at all times be composed of members satisfactory and agreeable to the faculty, but that there was no definite agreement as to the means by which this was to be accomplished. Five of the eight members of the respondent’s board of trustees testified that they voted to transfer the property in reliance upon these promises. In addition to the duty and interest that the respondent had in preserving the continuity of the college work, it had a proprietary interest in the right to the income of the College as the successor of the professors after they resigned, under the resolutions set forth in the statement of facts,, which would entitle it to enforce the contract or trust or recover back the property. (Associate Álumni v. Theological Séminary, 163 ,N. Y. 417.)

It is unnecessary to determine whether ’ this was a trust, valid or invalid, which has been repudiated, or a contract that has been rescinded for a breach or upon a consideration that has failed or is void because not in writing or ultra vires / or a transaction voidable because of mutual mistake, for in either case the appellant should not ex oequo et bono retain the property and equity will impress it with a resulting trust for the benefit of respondent and decree the execution thereof by directing a retransfer.

This is not a case where specific performance may be decreed, for the conditions have been repudiated by the council and they never became binding upon that body. Furthermore the members of the faculty have all resigned and are otherwise engaged, and, as to the members of the medical committee, one failed of re-election and the others resigned from the council, and thereby from the committee, and the appellant has filled' all vacancies and proceeded to organize a medical college with a full corps of professors in its own way, disregarding the claims of the respondent.

The contention that if these rights were reserved they would have been embodied in the resolutions or in the conveyance was a fair argument for the consideration of the trial court and for our consideration in reviewing the decision. It must be borne in mind, however, that the faculty had been permitted always to maintain and govern their''property and the medical college without interference on the part of the university and there was room for trust and confi-. dence that the parol understanding upon which the property was transferred would be carried out by the appellant' in good faith. We think that the direct and positive testimony of the witnesses, to which attention has been drawn, has not been overcome.

Shortly after the execution of the conveyance the appellant undertook to consolidate with the medical college of respondent, the Bellevue Hospital Medical College, and the council so amended the report of the medical committee, with reference to the assignment of work to the professors, as to put the former Bellevue Hospital professors in control of a material, part of the work, and so apportioned the work, against the protest of the members of the former faculty of the respondent^ that the ultimate result, as the former faculty regarded it, would be a sacrifice of the principles and methods of instruction theretofore practiced in the medical college of the university and a substitution therefor of the principles and practice of the Bellevue Hospital College. This was a violation of the agreement that the entire direction and ■ control of the affairs of the medical college should be vested in the medical committee, and since performance cannot be specifically decreed, the court decided that the property should be retransferred.

It follows, therefore, that the judgment should be affirmed, with costs.

O’Beien, J., concurred; Patterson, J., concurred in'result; Van Brunt, P. J., and McLaughlin, J., dissented.