Mulligan v. Amo — 211 A.D. 498

Majority

p. 498

Rose Mulligan, Appellant, v. Mary Ann Amo (Formerly Mary Ann McQuaid) and Others, Respondents, Impleaded with Mary Parry (Formerly Mary Hall) and Others, Defendants.

Fourth Department,

January 7, 1925.

Headnote

Trusts — constructive trusts —- election of remedies — beneficiary cannot follow trust property after suing trustee — trust property was acquired by third persons without knowledge of trust.

The beneficiary of a constructive trust may elect either to pursue the trust property, which has been transferred by the trustee, into the hands of the purchaser with knowledge, or to sue the trustee, but having secured judgment against the trustee, the beneficiary cannot thereafter pursue the trust property into the hands of the purchaser notwithstanding the beneficiary is unable to realize on the judgment.

Furthermore, in this ease the evidence establishes that the purchasers of the trust property from the trustee were without knowledge oí the existence of any trust.

Appeal by the plaintiff, Rose Mulligan, from a judgment of the Supreme Court in favor'of the defendants Hester Hoff and others, entered in the office of the clerk of the county of Erie on the 23d day of June, 1924, upon the decision of the court rendered after a trial at the Erie Special Term, dismissing the complaint upon the merits.

Kellogg & Weil [Dorsey W. Kellogg of counsel], for the appellant.

Templeton, Turnbull & Templeton [Foster B. Turnbull of counsel], for the respondents Albano and another.

William R. Daniels, for the respondents Hester Hoff and another.

As this court held in Mulligan v. McQuaid ( 206 App. Div. 653 ), at the time when Mary Ann McQuaid had title to the premises,.

p. 499

she held it as trustee for Rose Mulligan to the extent of the amount unpaid to Rose Mulligan on the Parry mortgage. When Mary Ann McQuaid mortgaged the property for 13,500, and then conveyed the equity to the Campbells, she breached that trust.

At that time Rose Mulligan had the choice of two remedies. She could follow the trust res into the hands of the mortgagees and purchasers, provided they took with notice of the trust, or she could follow the substitute for the trust res, which was the money received by Mary Ann McQuaid as the product 'of the mortgage and sale.

Having that choice, she elected the latter. She brought an action against Mary Ann McQuaid, the trustee, alone. She charged the existence of the trust, the transfer of the trust res, the receipt by the trustee of the product thereof, asked for an accounting and for judgment against the defendant on the basis of the accounting. That is precisely what she got under the decision of this court, which held that Mary Ann McQuaid took the property charged with a trust in favor of the plaintiff; that she was bound to account out of the moneys received by her for the sum shown by the evidence to have been due said Rose Mulligan, with interest thereon; and directed a judgment accordingly. The action was not concerned with the trust res, to wit, the real property itself; and hence no Us pendens was filed. Neither was this court in its decision concerned with the real property. Plaintiff, having elected to pursue that course, in effect ratified the transfer. Her judgment, whether it is collectible or not, represents the proceeds. She is in no position, after having failed to realize anything on her execution, to start anew and pursue the alternative remedy which she had originally rejected. (Bogert on Trusts, 508, 509, and cases cited; 39 Cyc. 535; Terry v. Munger, 121 N. Y. 161 ; Davenport v. Walker, 132 App. Div. 96 , 99.)

But if we pass that point, and assume that the plaintiff was not by her election prevented from bringing this action, we have to deal merely with an attempt to follow the trust res into the hands of purchasers. It takes on no additional feature by reason of the judgment in the other action. It has the same attributes, and only those, which it would have had if the other action had not been brought. We have, then, merely to determine whether the grantees and mortgagees, subsequent to McQuaid, knew of the existence of the trust, or knew of facts sufficient to put them on inquiry and charge them constructively. Without discussing the evidence at length, it is sufficient to say that it has been considered carefully, and we agree with the court below that the

p. 500

defendants Albano, Hoff and Hussey were purchasers in good faith without notice of the existence of any trust.

Present — Hubbs, P. J., Clark, Davis, Sears and Crouch, JJ. All concur.

Judgment affirmed, with one bill of costs to the defendants Albano, and with one bill of costs to the defendants Hoff and Hussey.

Cases cited

Terry v. Munger 121 N. Y. 161 N.Y. 1890-04-15 p. 499