Western Union Telegraph Co. v. Shepard

62 N.E. 154, 169 N.Y. 170, 1901 N.Y. LEXIS 791

• Court: New York Court of Appeals
• Decided: December 20, 1901
• Status: Published

Opinion

Landon, J.

The question presented by this appeal is Avhether, upon the facts found by the trial court, the plaintiff is entitled to a reversal of the judgment. All parties recognize the fact that the previous decisions of this court have established the law to be that the land and its easements are inseparable, and thus the grant of the land carries ivith it the grant of the easements. Whence it folloAvs that the damages done or accruing to the land or its easements after the grant are recoverable by the grantee. And so Ave decide in the case of Shepard v. Metropolitan and Manhattan Elevated Railway Companies, involving these very damages, and under advisement when this case was argued and submitted. That is to say, as between the grantee and the trespassing defendants, the grantee is the real party in interest, no matter what agreement he has made Avith his grantor for the ultimate disposition of the proceeds of his recovery when adjusted by it, or realized or realizable from it. Such a judgment Avhen recovered is assignable; its proceeds in possession of the grantee, or the right to their possession, Avhen that right has ripened into judgment, are assignable; and thus the previous agreement to assign them when they shall have become ripened or merged into a judgment, or into possession, or the adjudged right of possession, is a valid one. (Field v. Mayor, etc., of N Y., 6 N. Y. 178; Stover v. Eycleshimer, 3 Keyes, 620; Carver v. Creque, 46 Barb. 507; National Bank of Deposit v. Rogers, 166 N. Y. 380.) For, in every one of these stages, it is a property right, unaffected by any quality of personal wrong, and not in contravention of good morals, or public policy. The inseparability of land from its easements is, therefore, immaterial here. We are not now dealing with the non-assignability of the easements apart from the land, but with the money about to be handed over, proceeds of the damages done to the land by a trespass upon its easements. The distinction is clear between the equitable right to the proceeds of the injury and the legal title to the thing or right injured.

Thus it was competent for the grantor and grantee to agree that a part of the consideration of the land conveyed should consist of the-money damages thereafter to be recovered from the trespassers. The reservation clause in the deed, construed in the light of the facts found by the trial court showing what the parties intended to accomplish by it, may without violence to its terms be construed as a contract between the parties that the plaintiff should have as a further consideration the proceeds of the damages therein referred to. In its letter it is a reservation of “ all claim or right of action ” against the railroad companies for damages, past, present or future. Both parties thereby intended to agree that the plaintiff should have the benefit of the claim for damages, and the . reservation of the cause of action for them was intended to give the plaintiff the remedy or means of securing them. It is manifest that as between the parties to the deed the claim to the damages was to remain, and did remain, with the plaintiff, although as between the grantee and the railroad company the right to the cause of action to recover them passed to the grantee. Thus the grantee had the right to sue for and recover the damages, not however for himself, but for his grantor.

It is not necessary to reform such a contract. Equity will never permit a dishonest advantage to he gained under a technical rule of law, or tolerate that a purchaser shall keep for himself, against his grantor, the proceeds of rights which he did not pay for, or intend to purchase, hut on the contrary expressly agreed should belong to his grantor. (Thurber v. Chambers, 66 N. Y. 42.) Equity should not permit the substance of such a contract to be defeated because of an unhappy attempt to confer upon the grantor complete power to realize upon it without recourse to the grantee. Circumstances and the acts of the grantee have compelled such recourse, and equity demands that the grantee shall respond.

In such case, when any act of the parties, or either of them,, is essential to carry out their intention as it may appear from, the provisions of a contract, the stipulation or agreement foir the performance of such act will be deemed within the provisions of such contract as though expressed therein. (Jugla v. Trouttet, 120 N. Y. 27; National Bank of Deposit v. Rogers, supra.) Equity looks to the substance of things, and will carry out this contract in its spirit and intention as the findings of the trial court have established it. Equity, when it is needful, always inquires into the consideration, and for that purpose does not stop at the letter of the instrument, but goes behind it, in all cases between grantor and grantee and such of their assigns as have notice of the facts. (M’Crea v. Purmort, 16 Wend. 460; Halliday v. Hart, 30 N. Y. 474, 494.) The defendant Shepard had full notice of the facts, and thus stands in the shoes of Tubbs, the original grantee. (Hodge v. Sloan, 107 N. Y. 244; Gibert v. Peteler, 38 N. Y. 165; Acer v. Westcott, 46 N. Y. 384.) Upon the facts the defendant Shepard ex mguo et bono has no right to withhold the proceeds of his recovery from the plaintiff. If he receives the proceeds, he does so as trustee for the plaintiff.

It is well settled that when one person becomes invested with the title to real property under circumstances which in equity obligate him to hold the title and to exercise his ownership for the benefit of another, a trust arises in favor of the latter person commensurate with his interest -in the sub ject-matter. Such trusts are known as implied or resulting trusts, and are not ¡irohibited by our Ee vised Statutes. It is only where the existence of the trust is dependent upon the mere will of the parties that it must be created by express language and must be one of the four express trusts permitted by the Ee vised Statutes. (Foote v. Bryant, 47 N. Y. 545.) It should not. be necessary to cite authorities in support of a proposition so consonant with common honesty and equally as simple. But this court has in a previous case found it agreeable to its sense of justice to use language very much to' the purpose here. Pegram v. N. Y. El. R. R. Co. (147 N. Y. 135) was an action brought by Pegram, an abutting owner, against the elevated railroad companies to secure an injunction and damages. Upon the trial the plaintiff’s evidence showed that the premises described in the complaint had been sold pending the action, to one Schortemeier. The deed to Schortemeier contained a reservation similar in its essentials to the one involved in this action. The trial court awarded to the plaintiff a judgment for money damages for the period of six years before the commencement of the action and down to the date of the conveyance to Schortemeier, and denied the injunction asked for in the complaint. The plaintiff appealed from so much of the judgment as denied the injunction; the defendants appealed from so much of the judgment as awarded any damages to the plaintiff. The judgment was affirmed by this court in an opinion by Judge Gray containing the following language:

“ But, as between the plaintiffs and Schortemeier, the reservation in the conveyance would, upon its face, operate to retain in, or confer upon, the plaintiffs certain rights which Schortemeier could not, or ought not, to disregard. * * * There need be no question as to the right of the parties to agree to make such a reservation as this. * * * If the plaintiffs had brought in Schortemeier as a party defendant in the action, the court would have been in a position to adjust the equities and rights of all the parties and. to render a complete decree, which would have been binding upon each. The equities created or arising between the plaintiffs and Sehortemeier, through the reservation in the deed, can only be effectively adjusted by his presence as a party to an action which had that as one of its objects. Standing, as the holder of the legal title, outside of the action, if the reservation in the plaintiffs’ conveyance to him is operative to any extent, it may be deemed to make him, as the holder of the legal title, a trustee for the plaintiffs with respect to any damages which might be recovered of the defendants, for the injury occasioned to the rental and fee value of the property, through an action brought,in his name, or wherein he'was joined as a party.”

In order to prevent a failure of justice, the court, which shapes its judgments in the most efficient forms, may direct the payment by the defendants, the railroad companies, to the plaintiff of the amount of the judgment already recovered by the defendant Shepard against them.

Our attention is invited by the briefs of counsel to a question alleged to be based upon evidence offered by the defendants before the trial court and excluded. The record does not contain that evidence. Of course, there is no finding upon it. It, therefore, has no force, as a former judgment. But we are referred to Shepard v. Metropolitan El. Ry. Co. (82 Hun, 527), being the action brought to recover the damages in question, in which, we are told, this plaintiff, upon petition and affidavits, asked to intervene and be made a party for the purpose of securing the same relief in that action that it now seeks in this. The motion was denied, as the opinion states, on the merits. That must mean that in the opinion of the court upon the papers before it the plaintiff had no right to intervene and take a controlling part in that action. An appeal was taken to this court and the order affirmed. (147 N. Y. 685; S. C. 713.) It would require clearer evidence than any now before us to convince us that the court there found the facts to be as the trial court upon common-law evidence has here found them. But however the facts were there found, the question was not whether the plaintiff had a right to recover in its own action against Shepard, but whether it had a right to seek a recovery in Shepard’s action against other parties, hotli against him and them. We have already tried to point out the distinction between the right of recovery in this class of cases against a debtor in equity, and against a debtor’s debtor in law. It was entirely discretionary with the Supreme Court to deny the motion and remand the Western Union Company to its own action. (Foote v. Lathrop, 41 N. Y. 359; Beards v. Wheeler, 76 N. Y. 213.) This discretion is simply less embarrassing when the law seems clearly to indicate how it should be exercised. The case, no doubt, should have the force of stare decisis upon the point of discretion involved in it, but that point is not important in this case.

The judgment should be reversed, with costs against the defendants Shepard, Tubbs, J. M. and L. H. Levy in this court and below; and, inasmuch as under the reservation in the contract of sale the damages may be apportionable, a new trial is granted.

O’Brien, Martin, Yann and Cüllen, JJ., concur; Parker, Cli. J., and Bartlett, J., dissent.

Judgment reversed, etc.