Chorrmann v. Bachmann

Headnote

1. Trusts—Sate of Trust Property—Conveyance to Trustee—Constructive Fraud.

Where a trustee under a will conveyed trust property to another, and it was immediately reconveyed to him individually, the transaction was a constructive fraud, voidable at the election of the beneficiaries .under the will.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 47, Trusts, §§ 259, 260.]

2. Limitation of Actions—Constructive Fraud of Trustee.

Where a conveyancé of trust property constituted a constructive fraud, but no actual fraud was proved, an action in respect thereof must be brought within 10 years, under Code Civ. Proc. § 388, providing for the limitation of certain actions.

Appeal from Special Term, Richmond County.

Action by Philip Chorrmann and others against Anna Bachmann and others. From a judgment for defendants, plaintiffs appeal.

Affirmed.

The following is the opinion at Special Term:

That the conveyance of the premises in Question on December 2, 1885, by Joseph Lewis, as trustee under the will of Philip Chorrmann, deceased, to Frederick Bachmann, and the reconveyance by Bachmann to Lewis individually on the same day, was a constructive fraud, and that the transaction was not void, but merely voidable at the election of the plaintiffs, who were beneficiaries under the will, is virtually admitted by all parties, and is in harmony with well-settled principles. Read v. Knell, 143 N. Y. 484 , 39 N. E. 4 . It is claimed by the plaintiffs that, notwithstanding the lapse of time which would ordinarily bar the maintenance of the action upon that theory, the facts are that the transaction consists of more than a constructive fraud, and that the premises were acQuired by Lewis at a price substantially less than their value, thus making his act one of actual fraud, and that knowledge of the facts constituting the fraud did not come to the plaintiffs until about three months prior to the commencement of the action. If this contention of the plaintiff is sustained, the lapse of time has not barred the action; but if, on the other hand, the evidence admits only of the finding of constructive fraud, the operation of the statute of limitations must result in a dismissal of the complaint. Yeoman v. Townsend, 74 Hun, 625 , 26 N. Y. Supp. 606 ; Smith v. Hamilton, 43 App. Div. 17 , 59 N. Y. Supp. 521 .

When actual fraud is alleged, it will not be presumed, and the burden of proof is upon the parties alleging it. Authorities supra. The plaintiffs have sought to show, as proof of actual fraud, that at the time of the sale by Lewis as trustee to himself the premises had an actual market value substantially in excess of $6,000, the consideration expressed in the deeds, and for which Lewis had actually accounted and paid over to the plaintiffs. Careful consideration has been given to the evidence bearing upon this Question, and I have concluded that the plaintiffs not only have not maintained this burden, but that the greater weight of credible testimony warrants the finding that the sum named was at the time the fair value of the premises. Hence actual

fraud has not been shown or found, the 10-year limitation provided for in section 388 of the Code of Civil Procedure is applicable, and not the limitation prescribed by subdivision 4 of section 382.

It follows that the plaintiffs’ complaint should be dismissed, with costs. Let the proposed findings and judgment be settled before me on notice of two days.