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Medical College Laboratory v. New York University

76 A.D. 48 Court N.Y. App. Div. English

Decision Majority — Laughuin, J.: · Dissent — Van Brunt, P. J. (dissenting):

Contents

Majority

p. 48
The Medical College Laboratory of the City of New York, Respondent, v. The New York University, Appellant.

Headnote

Absolute transfer of property of a medical college to a university on certain conditions orally agreed upon—parol evidence is competent, to establish the conditions — enforcement of the trust in equity — a reconveyance decreed if the trust be void for indefiniteness or be not accepted;..
In an action brought by the Medical College Laboratory of the City of New York against the New York University to set aside a deed by which the former corporation conveyed to the latter corporation all of its property, which cost over two hundred thousand dollars, for the nominal consideration of one dollar, the trial court found on sufficient evidence that, prior to the execution of. the conveyance, the special committee, representing the university in. the transaction, stated that if the conveyance were executed the university would engage that the entire direction and control of the property and affairs of the medical college should be vested in the medical committee of the council of the university, and that such committee should be, and always remain, constituted of men acceptable to the governing faculty of the'medical college; that, shortly after the conveyance, the university took from the medical committee the direction and control of the property and affairs of the medical college, and changed the personnel of the medical committee by placing thereon men not satisfactory to ' the governing faculty of the medical college.
Held, that evidence as to what took place at the interview between the committees of the respective corporations, prior to the execution of the deed, was competent. upon the following grounds: First, as showing that the real agreement rested in parol and that the deed was executed in part performance thereof; secohd, as showing the real consideration for the conveyance and that there had been a failure thereof; third, as showing a collateral agree- . meat not in conflict with the deed; fourth, as showing that the conveyance, although absolute in form, was made upon conditions or in trust, and that it would be a fraud upon the plaintiff to allow the defendant to repudiate the trust or conditions and retain the property;
That if there was a parol agreement, creating a trust or attaching conditions to the transfer, equity would enforce the trust or conditions, if valid, provided the saíne were accepted and were capable of being performed;
That if the contract was void for indefiniteness or otherwise, or if the trust or conditions had not been accepted, so that specific performance was impossible, equity would decree a return of the property;
That it was unnecessary to determine whether there was a trust, valid or invalid, which; had been repudiated, or a contract that had been rescinded for a breach or for a failure of consideration, or whether the contract was void because not in writing, or ultra vires, or whether the transaction was voidable because of mutual mistake, as in either case the defendant should not ex osquo et bono retain the property, and that equity would impress it with a resulting trust
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for the benefit of the plaintiff and decree the execution thereof by directing a retransfer;
That the plaintiff had an interest in preserving the continuity of its educational work, and also a proprietary interest (derived by an assignment from the professors) in the income of the college which would' entitle it to enforce the contract or trust and to recover back the property;
That the.court could not decree specific performance of the contract or trust, for the following reasons, viz.: First, that the conditions of the parol agreement had been repudiated by the council of the university, and had never been binding upon that body; second, that the members of the 'governing faculty of the medical college had all resigned and were otherwise engaged; third, that the medical committee of the council- of the university was no longer composed of men acceptable to the plaintiff, and, fourth, that the university had proceeded to organize the medical college without regard to the plaintiff’s claims;
That as specific performance could not be decreed, it was proper for the trial court' to direct a reconveyance of the property to the plaintiff.
Van Brunt, P, J., and McLaughlin, J., dissented.
Appeal by the defendant, The New York University, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 25th day of May, 1901, upon the decision of the court, rendered after a trial at the New York Special Term, directing a- reconveyance by the defendant to the plaintiff of certain premises and property mentioned and described in a deed from the plaintiff to the defendant bearing date the 8th day of February, 1897, and recorded March 2, 1897.
The theory of the action and the grounds of the decision are that the conveyance was made in trust or upon conditions and that the defendant has repudiated the trust or violated the conditions, and that a specific performance is impracticable.
It appears that the “subscribers and shareholders of ‘The University of New York’” were incorporated in 1881 “for the purpose of promoting literature and science,” under the name of “The University of the City of New York” and it was provided that the corporation should be “conducted and managed” by a council of thirty-two shareholders and the mayor and four members of the common council. (Laws of 1831, chap¿ 176.) In 1837 a committee of ten physicians associated themselves together for the purpose of organizing a medical department for the uni-
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versity, and an act was passed expressly authorizing, the university to grant diplomas upon the “ recommendation of the. medical , faculty ” (Laws of 1837, chap. 25), which for brevity will be called the faculty. . The first plan adopted by the council for the organization of .the medical department provided that it should be subject to.the control of the council and that the university should be responsible therefor financially. This plan was not carried out. In 1841 a new plan was proposed, and the following “ statutes ” were adopted by the council for the organization of the medical faculty on the 27th day of January, 1841, to wit:
“ I. All expenses for building, apparatus, museum, etc., are to be,provided for by the Medical Faculty and the Council shall be in no ways responsible for expenses incurred by' the Medical Faculty.
“ II. Each graduate shall pay to the Treasury of the University $20, $10 of which shall be given to the Chancellor for each diploma furnished by him, and this shall be the only tax required by the Council from the students or Faculty.
“ III. Nominations to fill vacancies and to establish new professorships shall come from the Faculty to the Council.
“ IV. The. Faculty shall have power to make any by-laws for their own government and that of the students, which-shall be compatible with the character and general statutes of the University, to-regulate the terms of instruction and the fees from students, and to recommend students for diplomas.”
On the 3d day of February, 1841, the council supplemented these statutes by by-laws regulating the giving of notices to fill vacancies,, providing for increasing the number of professorships bey bn d six on the recommendation of the faculty; that good moral character and the degree of doctor of medicine should" be an essential qualification for a “ chair; ” that “ it being the mutual desire of the Council and the Faculty to enlarge the usefulness of the medical profession,” an effort should be made as soon as deemed expedient by both to induce the Legislature to extend the term of medical education and that the council reserved the power to repeal or amend “ the plan of organization of the Medical Faculty.” Thereupon a medical faculty was elected and a committee appointed to organize the same. This committee became permanent and was known as the medical committee. It was designed to represent the council in
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matters pertaining to the faculty, but discharged no function of importance except as hereinafter specified.
The medical department first opened the last week of October, 1841. All vacancies arising in the faculty have been filled by nomination of the faculty and election of such nominees by the. council. As the medical college developed the number of professorships was increased to eight, such professorships being filled in the same way as vacancies. Assistant professors and instructors were employed by the faculty without action on the part of the council. The responsible professors, those who contributed the funds for the ' establishment of the medical department, were called the “ Governing Faculty,” and they managed the business affairs, the council taking no part therein except upon request of the faculty. Degrees were conferred by the university on all candidates recommended by the faculty.
An appropriation from the income of the United States deposit fund was made to the council “ for the use of the medical faculty ” of $3,000 per year for five years, and until otherwise ordered. (Laws of 1844, chap. 279, § 3.) But in 1847 (Chap. 258, § 2) the appropriation of $2,000 for each year of 1847 and 1848 was made from the same fund to the “Medical Faculty of the University of New York.” Some money appears to have been obtained by committees of the university for the medical college, but scholarships were granted for the same exceeding, according to the regular tuition fees, the amount received. This seems to have been the only direct financial aid given by the university, except that later on its council raised a fund of $10,000 by subscription and paid the income to the chancellor for his salary as president ex officio of the faculty, in which capacity he only acted on request.
From the profits and the investments of the governing faculty the medical college prospered and accumulated property. In 1869 an act was passed authorizing “ The Medical Department ” to acquire and hold real estate, not exceeding $75,000 in value, in its own name or in the name of a trustee, for purposes of a medical college. (Laws of 1869, chap. 39.)
In 1883 the eight members of the governing faculty were by name constituted a body corporate under the name of the “ Medical College Laboratory of the City of New York.” Prior to this the
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medical faculty had applied to the council for consent to incorporate under the name “University Medical College.of the City of New York,” which does not appear to have been granted. The Medical College Laboratory corporation was given power to take and hold property, real and personal, and to issue certificates representing the shares or interest of the incorporators therein who at that time owned all the property. The eight incorporators were constituted a board of directors and the board given, power to fill vacancies .arising therein. (Laws of 1883, chap. 125.) The property of the medical college was transferred by the members of the.governing faculty to the corporation. The board of directors assumed the-management of the financial or business affairs of the college, .and the governing faculty continued the management of the work of education and maintained relations with the council the same as before, Later three lay members were elected to the board of directors.
In 1892 an act w.as passed authorizing the members of the Medical College Laboratory to transfer their individual shares or interest in the property to the corporation “ upon such trusts for educational and scientific purposes, and subject to such provisions and conditions ” as might be agreed upon, “ with power to said corporation for the purposes aforesaid, at any time thereafter to enter into agreement with the University of the City of New York for the use of such property, and with further power at any time, in its discretion, to convey and transfer by deed or gift to said University of the City of New York any or all of such property.” (Laws of 1892, chap. 549.)
The respondent’s balance sheet for 1889 shows receipts or assets amounting to $226,074.45, with obligations, including faculty subscriptions or investments, of $148,300.' In 1891 or 1892 Col. Oliver H. Payne, a friend of the faculty, donated sufficient money to pay off all obligations then remaining, including the investments or subscriptions of the professors, and by resolution of November 22, 1892, the board of directors declared that all individual ownership should cease on December 1, 1892, and the interest of each director should vest in the corporation on his ceasing to be a member of the board.
Col. Payne became a member of the council in 1894. It appears
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that during the existence of the medical college there was no precedent for the removal of a professor. In the autumn of 1896 the chancellor of the university was approached by Dr. Stimson, a member of the governing faculty, upon the subject of removing one of the professors. ■ The chancellor suggested that the only way was for the medical college to surrender its property to the university and place itself under the management of the council. It was admitted that the council had been apathetic — that its old medical committee had not met during the administration of the then chancellor (upwards of ten years) — and this was ascribed to the independent status of the medical department. Similar suggestions had been made in 1875, again in 1886, and again in 1889; but then the property of the medical college was incumbered and nothing came of the suggestions. It was not contemplated at those times, however, that the property was to be transferred unconditionally, as a gift to the university, nor that the management and control of the medical college was to be placed in the hands of the council. The plan proposed ■ was for the faculty to take back a permanent lease, “ for themselves and their successors,” paying interest, tin the mortgage (which was to be reduced to $35,000) until discharged and then free of rent; the faculty also paying taxes, insurance and repairs. At this interview in 1896, between the chancellor and Dr. Stimson, it was mentioned that if the council ever had the power to remove a professor, it had lapsed with disuse. The advisability of interesting the medical committee in the affairs of the college was discussed, and the chancellor suggested that there were two vacancies in the council that might be filled with friends of the medical college. Dr. Stimson testified that the chancellor said that if the property of the medical college were transferred to the university a medical committee would be. appointed “ that should have control and direction ” of the affairs of the college, and would be composed of men “ agreeable ” and “ satisfactory ” to the faculty and that the faculty were invited to suggest two men to be elected to the council. Dr. Stimson further testified that after consulting with his colleagues he proposed Henry F. Dimock, a close, friend of Col. Payne, and Charles E. Miller,, a director of the medical college laboratory. The chancellor’s testimony differs from that of. Dr. Stimson chiefly in a denial that he said that the affairs of
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the college should be under the control of the committee. It .does not appear affirmatively whether the nomination of said two memr bers was made with a view of effecting a transfer of the property of the medical college, or merely to obtain a committee that would interest itself in the'affairs of the college.
On November 2, 1896, the two men proposed by Dr. Stimson were elected members of the council and were then, or soon after, placed bn the medical committee. The committee then, consisted of Henry F. Dimock, chairman, Col.Oliver H. Payne, Charles T. Barney and Charles E. Miller, with the chancellor ex officio. All except the chancellor were regarded by the governing faculty as their friends. At tliis time the board of directors of the Medical College Laboratory was composed of five members of the governing faculty and three lay members, one of whom was Charles E. Miller, above named. On November 24, 1896, the medical committee of the council adopted a resolution authorizing the chairman to confer with the executive committee in regard to inviting the Medical College Laboratory to transfer its property to the university in consideration of a guaranty to each member of- the governing faculty of a salary of $3,000 per annum for three years. It appears that the compensation of professors had been- as high as $5,500, out of the returns of the- institution, but were limited to $4,000 after the gift from Col. Payne, and he had guaranteed their salaries for a period which had expired, and that, owing to the -fact that the co.urse.of instruction had been lengthened to four years, it was anticipated that there would be a falling off of revenue and a possible reduc-' tibn of salaries. ' The executive committee approved the resolution of the medical committee and appointed .the chancellor and Mr. Dimock a committee to confer with the Medical College Laboratory and invited it to confer with said committee. A meeting was held ón the 19th day of December, 1896, at which all of the professional members of the board of directors and Mr. Miller were present. The other two lay members were not present. The testimony relating to what took place at that conference is considered in the opinion. •'
On January 28, 1897, the board of directors of the Medical College Laboratory adopted a resolution authorizing and directing the transfer of its property to the appellant. The resolution was
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preceded by a preamble reciting that the corporation “ in its discretion consider that the property, real and personal, should be transferred by gift.” A deed was executed, dated February 8, 1897, reciting a consideration of one dollar and containing an assumption of the debts, if any, of the grantor by the grantee, and conveying premises on tlie southerly side of Twenty-sixth street, 150 feet easterly of First avenue, together with all personal property, of the grantor wherever situated. The property covered by the deed had cost $200,000 and over, but its value was estimated at from $100,000 to $150,000. • The deed was accepted by the council on March 1,-1897.
On March 18, 1897, negotiations were formally commenced by the executive committee of the council for a consolidation of the Medical College Laboratory with the Bellevue Hospital Medical College. The overtures were promptly accepted by the trustees of Bellevue and reported by the medical committee to the council on April 5,1897, and approved. By April twelfth the consolidation seems to have been assured, and on that date the medical committee adopted a resolution calling for the resignations of the eight members of the "governing faculty, as it existed prior to the transfer from the respondent. The resignations were duly tendered and reported by the committee to the council and accepted on May 3, 1897, at which time the medical committee reported university statutes regulating the performance of the duties of the faculty, appointing the officers, professors, adjuncts and assistants of the faculty, conferring on the committee the power to appoint instructors and assistants and, with the approval of the executive committee, to fix salaries. This report was adopted. On May 24, 1897, the Council met on call and received a vehement protest from the former faculty of the Bellevue Hospital Medical College against the action already taken. The former action was reconsidered;. a substitute for the report of the medical committee was offered, and both the substitute and report referred to the medical committee, with directions to report at an adjourned meeting two days later. The difference between the report and substitute was that the latter stripped the medical committee of its power and left the former governing faculty in a minority in the'governing faculty of the new or consolidated college. The former report of the committee
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was the other way, which,, it. is claimed, would have insured a continuation of the methods and .policies which the governing faculty of. the respondent had developed.
On the adjourned day the council met and the medical committee. presented a compromise report acceptable to the old faculty. This was amended by the council in respects regarded as material by the former governing faculty of the respondent, and rendered not acceptable to said faculty by reason thereof. Memorials were submitted by the members.of the former governing faculty urging an abandonment of the.plan of consolidation. On June 8, 1897, a hearing was given by the executive committee to the. various professors. All from the respondent and some from the Bellevue Hospital Medical College favored an abandonment of the project of consolidation, chiefly because of the lack of harmony and conflicting views. On the tenth the executive committee adopted resolutions approving the scheme and tabled a resolution offered by Mr. Dimock to abandon it. ' The action of the committee as' thus amended by the council was adopted on the same day.
After May or June, 1897, the medical committee was not consulted concerning the affairs of the medical department. Six of the professors, members of. the former' faculty to whom chairs were offered, having declined, the chairs' were filled by the election of others for one year. On July 19, 1897, the treasurer rejDórted that he had purchased premises adjoining the former premises of the Medical College Laboratory for a little less than $100,000. On November 1, 1897, the annual election of members of the council was held; The committee on nominations reported Messrs. Miller and Payne, of the then medical committee, for re-ele.ction, hut,not, Mr. Dimock. Col. Payne nominated Mr. Dirnóck. The nominees of the committee were elected. Mr. Dimock withdrew from the meeting. Messrs. Payne, Barney and C. E. Miller, tendered their resignations and withdrew. The resignations were tabled and a committee was appointed then or subsequently to urge that they withdraw them. This.committee received a letter from Col. Payne, dated. January 8, .1898, stating that they could not attend the .meeting, but. setting, forth his view of the transactions in part as follows :
“ 1. therefore considered, my self peculiarly bound to understand fully the. conditions, upon which the transaction was to be made. , I
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repeatedly conferred with those gentlemen and with the Chancellor, and the result was that I entertained no doubt but that it was fully and definitely understood by all parties that in case the property was turned over, both the property and the entire direction and control of all matters relating to medical affairs should be vested in a medical committee to be constituted by an agreement on individuals by name. Such a committee was constituted, two gentlemen being elected by the council for that purpose. Under such circumstances alone I advised that the property be turned over,' otherwise I should not have so advised. I feel that the agreement upon which I relied when giving the advice has been entirely violated, and my own honor demands that the property should be returned.”
On January 8, 1898, the directors of the Medical College Laboratory made a written request for the retransfer of the property and stated, as a reason therefor, that the university had violated the understanding on which the transfer to it had been made, in changing the personnel of the medical committee without its consent and taking from that committee the direction and control of medical affairs.
It appears that there was another corporation,-the Loomis Laboratory, whose board of trustees was controlled by the former governing faculty, and which held in trust for the use of the faculty premises and apparatus, and an endowment fund stated to be $117,000. This property was in the way to be transferred to the university when the misunderstanding arose and arrested action. In March, 1898,-the council reappointed the same six members of the former governing faculty for ’ another year and elected them to permanent professorships upon the express “ condition that the professors support the U niversity statutes and the University control of ■ the property employed for medical education.” This seems to have been understood to mean, among other things, that they were to use their influence to have the property of the Loomis Laboratory turned • over to the university. The professorships were not - accepted and the former .members of the faculty, sooner or later, severed their connection with the university; the time or times when the separation occurred does not definitely appear. The university then fully constituted its medical department with a corps of professors not ■
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including any of the former governing faculty and the same has since so continued. This action was commenced,May 24, 1898.:
George A. Strong, for the appellant.
Bronson Winthrop, for the respondent.

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.

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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

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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

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.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.

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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. (R ogers 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

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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

Dissent

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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.

I cannot concur in the prevailing opinion, either as to its law or its facts. If the conveyance from the plaintiff to the defendant was made upon an understanding or agreement whereby, an implied trust arose in favor of the plaintiff, notwithstanding the fact that upon the face of the deed making the conveyance it appeared to have been entirely an absolute one, then it seems to be the settled law, not that the failure upon the part of the grantee to comply with the terms of the implied trust justifies the court in setting aside the conveyance, but that it imposes upon it the duty of enforcing the trust. (Associate Alumni v. Theological Seminary, 163 N. Y. 417 .)

" The fact that a trustee has mistaken his rights under the deed out of ’ which the trust arises has never before been held to invalidate the trust; but the court must impose upon the trustee the specific performance of the trust, which, under the authority of the case last cited, may be coupled with a. provision that, in case of a failure to comply with the conditions, the fund be paid over or surrendered either into court or to trustees appointed by the court. I cannot find that it has ever before been held that, where a party has mistaken his rights under a contract by claiming too much, he thereby loses all claim to protection as to rights which were admittedly conferred upon him by the contract.

It further seems to me that the weight of evidence is decidedly against the proposition which has been urged by the plaintiff, namely, that the medical committee of the council of the defendant, with the assistance of the faculty of the medical department, was to have absolute control of the affairs of such medical department. It seems to me that an examination of the evidence in this case shows

p. 65
that this is a mere deduction which has been arrived at by the various witnesses, who testified substantially to that effect. Although this claim is made by the witnesses upon the part of the plaintiff, it is confessedly by their own evidence untrue. The medical committee of the council of the defendant, assisted by the medical faculty, were not to have absolute control. It is admitted that the defendant was to be financially responsible for the. medical department. It is admitted that the council of the defendant had the power to fix the salaries of the occupants of the various chairs in the medical department. Now, if the council had this control over so important a branch of the medical department as the fixing of the salaries of its professors and were to be permanently responsible for the medical department, what becomes of this claim of the absolute control of the medical department being vested in the committee of the council of the defendant assisted by the faculty of the medical department ?

Furthermore, there is not a writing or a communication from any of the witnesses upon the part of the plaintiff that does not contradict his position upon the witness stand.' Let us take particularly the witness Dimock, who was a member of a sub-committee of the council of the defendant, and who, it is alleged, made to the committee of the plaintiff the assurances and assertions in regard to the control of the business and affairs of the medical department. He swears that he assured those gentlemen that that control should be in a committee of the council which should be appointed at their suggestion and satisfactory to them. ■ He says that that was part and parcel of the arrangement which was entered into between the sub-committee of the council and the committee of the plaintiff. And yet, when he reports the action of his sub-committee to the council of the university, there is not one word said in regard to any such proposition. Upon the contrary, his report is that the council of the university were to have the unreserved control of the business and affairs of the medical department. There is not a suggestion that there was any reservation of right upon the part of the plaintiff or its representatives to authoritatively interfere in the management of such business. The report undoubtedly holds forth the idea that these gentlemen were to be treated fairly by the coun

p. 66
cil of the university, and that in respect to the question of salaries they should be liberally treated; but there is not a suggestion of any reservation in the absolute character' of the. gift which was to be made by the plaintiff to the defendant. And in this connection it is to be observed that the medical department had found themselves embarrassed for the want of funds; that it was a proprietary institution; that it was found that they could not secure any endowment or any assistance by way of donation which would be of any avail so long as they remained a proprietary institution; and it was because they desired to be upon the basis of a university, relieved from the proprietary interest, that this arrangement was proposed and-was carried into effect. This whole scheme, if the present claim upon the part of the plaintiff is sustained, was a misrepresentation to the world at large of the condition under which this deed of gift, was executed. If Mr. Dimock’s claim that this reservation was made is well founded, then his failure to report this alleged reservation to the council, to whom he was reporting the transaction, would seem very .strongly to savor of an intended suppression of a very ■material fact which might, and undoubtedly would, have prevented the council, from accepting the gift upon any such terms. Mr. Dimock attempts to excuse this suppression of this very material fact by the assertion that the reports were not written by himself. But it appears that some of them were amended in his own handwriting, and that he read every one of them from beginning to end to the council. It seems to me that Mr. Dimock has one of two. horns of a dilemma to take in this situation.. Either he is mistaken in regard to what took place at these meetings at which this agreement was entered into, or he has suppressed material facts, which he knew to be material, from the council of whom he was the trusted agent. It is somewhat difficult to say, under these circumstances, what credit can be placed upon the testimony of a witness whose own acts contradict him in every particular.

. But it may be said that there were other witnesses who testified to the same thing-—■ Doctors Pardee, Witthaus^ Stimson, Thompson and Polk, of the medical faculty, and Mr. Miller, a member of the council and of the medical committee of the appellant and of the board of directors of the respondent. It is true that these witnesses have testified, some of them, substantially to the effect that the

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affairs of the medical department were to be in the hands of the medical committee of the council of the defendant and the faculty of the medical department. But they all concede that the council was to have absolute control of the salaries, and that all that they expected in that regard was that they should be treated fairly. Pardee’s testimony as to the matter was that all that there was was an expectation that they would be treated fairly. Doctors Witthaus, Stimson, Thompson and Polk swear to the agreement. But it will be Qbserved that, when they sent a written statement of their, grievances at aoout the time the misunderstanding between the medical faculty and the council of the university took place, there is not a suggestion therein that the council has not unreserved control, nor a suggestion of any secrect trust or agreement. They say: “ It is sufficient to say that the Medical Committee agreed upon a. plan which was adopted by the Council on May 14th, and, although that plan was not, in our judgment, free from grave objection, we were ready loyally to accept it.” In that ■ plan, adopted by the council on May fourteenth, there was not a suggestion of any such trust or agreement as is sought to be imposed upon the transaction by this action. As has already been stated, there is not an act performed by any of the parties connected with this transaction, at or about the time, that is not hostile to the claim now made. Mr. Miller, who. was a witness upon the part of the plaintiff, testified that he was. present at the time this alleged secret trust was agreed upon, and he does not say a word as to what took place at that interview.

Undoubtedly, the persons who were interested in the plaintiff and who authorized the directors to make this deed of gift to the defendant for the purpose of relieving themselves of what was deemed to be the stigma of a proprietary school, in order that they might as a university get the benefit of an endowment, and, although it was conceded that the result of the assumption upon the part of the defendant of this medical school would be a deficit which it would be necessary for the council of the defendant to make up, expected and had reason to expect fair and liberal treatment at the hands of the defendant, not only in respect to the matter of salaries, but also in respect to the management of the affairs of the medical department; and they believed that the method in which the proposed consolidation with the Bellevue Medical College was to be

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carried out ignored the sacrifices which they had made for the purpose of establishing the close connection between the medical department and the defendant, and was hostile to their interests and to the ideas which they had .cherished and furthered for years.- In a.letter of the 29th of May, 1897, addressed to the chancellor and council of the defendant and signed by the witnesses Polk, Stimson and Thompson, as well as by Doctors Loomis and Woolsey, they say: “ We beg to make a reluctant but most earnest appeal against action which we are compelled to deem injurious to the highest interests of our school and of medical education, and most embarrassing and distasteful to ourselves. We refer to your action in the matter of the proposed consolidation of your medical department with the Bellevue Hospital Medical College.” And after stating their grievances, they close by saying: “ We appeal-to you in the -name of our common interests and labors in- the past, in the name of our school to whose highest interests we are devoted, and in the name and memory of him, now gone from among us, to whose great services to the University you have yourself, Mr. Chancellor, borne so frequent and eloquent testimony.”

Is this the language used by parties who are claiming a want of authority upon the part of the defendant to act ? Clearly not. It is true that during the course of that letter they say“ We, therefore, feel reluctantly compelled formally to state to you that in our opinion our agreement with you has been broken, and in a way and to an extent that are greatly prejudicial to the interests of the department and of ourselves,” but what agreement did they there refer to? It is apparent from the preceding .part of the letter. They say: “We need not here repeat the conditions to govern such consolidation which we deemed essential to the welfare of the department and the success of our methods and plans. It is sufficient to say that the Medical. Committee agreed upon a plan which was adopted by the Council on May 14th, and although that plan was not, in our judgment, free from grave objection, we were ready loyally to accept it.” That was the agreement that they deemed to be broken. It was the plan adopted by the council on May fourteenth, and this reservation of power which formed this secret trust is. nowhere mentioned in that plan.

Again, the same gentlemen write to the chancellor of the defend-*

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ant on the 4th of June, 1897, and say: “ We feel also that the rights, powers and property which we so recently transferred to the University for the furtherance of certain objects are being used against our judgment for other purposes which are antagonistic, and we appeal through you to the Council for the protection of our school and for justice ” — not a suggestion from one end of the written communications to the other of a want of power upon the part of the council, or that there had been any reservation such as is claimed by the oral testimony.

I have not adverted to the oral evidence contradicting the claim of the plaintiff, because it seemed to me that the written declarations of the plaintiff’s witnesses so completely refuted their testimony that no instrument in writing could be nullified upon what so clearly appears to be mistaken evidence. If deeds solemnly entered into are to be set aside upon oral testimony contradicted by every written communication of every witness, then the sooner dependence upon written contracts under seal is abolished the better.

McLaughlin, J., concurred.

Judgment affirmed, with costs.

Cases cited