Majority
Headnote
1. Infants—Mortgages—Guardian ad Litem.An elaborate statement of facts seemed to be necessary to fully present the interesting and important question which we must consider upon this review. The judgment appealed from assumes in a collateral proceeding, in an independent, original action, to overturn and declare void the acts and decisions, orders, and determination of the supreme court in a proceeding for the sale of infant’s-real estate, and we must consider under what circumstances this may be done. The supreme court has no inherent jurisdiction to direct the sale of an infant’s real estate, but its jurisdiction rests upon the statute. Code Civ. Proc. §§ 2348-2364, inclusive; Losey v. Stanley, 147 N. Y. 570 , 42 N. E. 8 , and cases cited. The proceedings assailed in this case show that the petition upon which they are based gave the court jurisdiction. It was framed under section 2348 of the Code, which provides that real property belonging to an infant may be mortgaged as prescribed in the following subdivisions:
“(1) Where the personal property and the income of the real property of the infant * * * are together insufficient for the payment of his debts, or for the maintenance and necessary education of himself and of his family. (2) Where the interest of the infant * * * require or will he substantially promoted by such disposition on account of the real property * * * be exposed to waste or dilapidation or being wholly unproductive, or for the purpose of raising funds to preserve or improve the same, or for other peculiar reasons or on account of other peculiar circumstances.”
By section 2349, the application shall be made by a petition of a general guardian, or the guardian of the property of the infant, and, if the infant is of the age of 14 years, he must join in the petition. That jurisdiction given by this petition is not questioned upon this appeal, nor was it upon the trial, by the learned trial judge, who states in Ms opinion that the petition did give jurisdiction; but it is claimed by the learned counsel for the respondent that matters subsequent to the petition invalidated the proceedings, and that fraud was established sufficient to justify the action of the trial court in this case. It is claimed that the proceedings were void because Dan-forth was the attorney for the bank at the time that he was appointed special guardian. It is not claimed that any act or omission of his was detrimental to the plaintiff in the proceedings to mortgage the real estate, or that he is. not responsible, or that Ms bond was insufficient’ or that in the particular matter in which he acted as such guardian he acted in the double capacity of special guardian and attorney for the bank. The fair inference from the finding of the court is that he' was generally the attorney for the bank, and fraud on his part will not be presumed from the bare statement that he was such attorney, and, while such an appointment was perhaps unwise and subject to criticism, it was not sufficient to oust the court of jurisdiction.
In Battell v. Torrey, 65 N. Y. 296 , the grandfather of the infant petitioned for the appointment of himself as the special guardian for the infant, for the purpose of selling or mortgaging the infant’s land, who' was also, as he claimed, the creditor of the infant, and Ms claim against the estate of the infant grew out of advances made and liabilities incurred by him, not as a guardian, or by any authority whatever, but as a volunteer in defending a litigation over the estate of the infant, and the sale or mortgage was asked for to pay for such advances. This state of facts was urged as a reason for vitiating the proceeding, but the court said that, while this “state of things requires the exercise of uncommon care on the part of the court in supervising the proceeding,” it did not raise a jurisdictional question; that the court in that regard acted judicially, and, if it decided erroneously or made a mistake as to any other matter submitted to its consideration not involving its jurisdiction to do or omit to do or authorized to be done, cannot be questioned except by appeal, or in a direct proceeding to set aside or vacate what has been erroneously done.
Section 2360 of the Code provides that from the time of the filing of the petition “the infant is considered a ward of the court with respect to the real property or interest and the income and proceeds thereof.” So that the court exercises constant supervision over every step in the proceeding. Through its own officer it takes the proof,
The proceedings are also objected to because the report of the contract made by the special guardian, and under oath, establishes that the contract made by the purchaser was an oral one; and we are cited to the case of Hardie v. Andrews, 13 Civ. Proc. 413-417 (a special term decision), in which the court intimated that under section 2356, Code Civ. Proc., the agreement should be in writing, although it was not necessary under the Revised Statutes that it should be, and, as the proceeding that the court was then considering was under the Revised Statutes, the intimation referred to, while entitled to great respect, was obiter; but the court did not hold there that a verbal contract, consummated by a conveyance, and all of the provisions of the contract carried out through the orders of the court, would avoid the proceedings or devest the court of jurisdiction, and we regard it ns a mere irregularity. But collusion is charged between the officers of the bank and the general guardian, and that it was substantially agreed in advance that the proceedings were'to be taken to mortgage the plaintiff’s real estate for the payment of the debt of the bank, the claim being that there was no valid debt against the plaintiff, but that it was against the guardian, the defendant Stevens, individually; but bad faith is not charged, and the fraud that will devest jurisdiction could not exist without it.
The learned counsel for the respondent in his able brief makes this •statement:
“In discussing the question whether the necessary result oí the facts alleged in the complaint, and proved or admitted upon the trial, was to work a grave injustice and culpable fraud upon the infant, it Is unnecessary for the plaintiff’s counsel to charge the general guardian or the officers of the bank or any of the persons connected with the proceeding in question with any sinister purpose or actual fraudulent intent. It may well be, and judging from their reputation probably is, the fact that all fully believed that the infant actually owed the debt, and they were actuated by no other purpose than to secure the bank for a debt which it manifestly believed the infant owed.”
The question was fairly before the supreme court, when the proceedings to mortgage the real estate were considered and disposed of, whether this charge of collusion was true, and whether the bank had not a just and equitable claim upon the plaintiff and his property that could be enforced in that proceeding under.the broad grant of power given to the court by section 2348 of the Code. There was no dispute but what the bank advanced the money to the guardian, or that the guardian used it in the business and concerning the property of the plaintiff, or that the guardian kept it separate from his own, or that the parties believed that the best interests of the infant were subserved by the transaction. We must remember that these transactions occurred at a time of great business depression, when very little property was being operated at a profit; when the infant was too young to be consulted; when he was actually living in a foreign
Judge Andrews said in Hyland v. Baxter, 98 N. Y. 614 :
“The principle of res adjudicate, supports the conclusiveness of a judgment when the same matter is subsequently called in question between the parties in a collateral action, whether the question was rightly or wrongly decided., on the principle of quieting contentions and securing the orderly administration of justice.’’
In Ross v. Wood, 70 N. Y. 10 , 11, Judge Allen said:
“The fraud which will justify equitable interference in setting aside judgments and decrees must be actual and positive, and not merely constructive. It must be that which occurs in the very concoction or procuring of the judgment or decree, and something not known to the opposite party at the time, and for not knowing which he is not chargeable with negligence.”
And again he said at page 11:
“Equity will not take cognizance on the same ground of the very point of which another court of competent authority in the case has considered and decided."
And again:
“And the rule should not be relaxed to retry questions deliberately tried and adjudicated by courts of equity having concurrent jurisdiction of the subject-matter.”
Section 2358, Code Civ. Proc., provides:
“A mortgage * * * made in good faith as prescribed in this title upon an application in behalf of the infant * * * has the same validity and effect as if executed by the person in whose behalf it was executed and as if the infant was of full age.”
The rule referred to is sustained by the following cases: Smith v. Nelson, 62 N. Y. 286 ; Stillwell v. Carpenter, 59 N. Y. 423 ; Ward v. Town of Southfield, 102 N. Y. 287 , 6 N. E. 660 ; Mayor, etc., v. Brady, 115 N. Y. 599 , 22 N. E. 237 , and cases cited.
It is a principle well established in equity jurisprudence that a trustee (and it is held that a guardian is such) who, acting in good faith, makes expenditures of the funds of the cestui que trust, for the benefit of the property of the cestui que trust, or to pay off incumbrances or taxes upon the property which, if not paid, might consume the prop
“When a trustee is authorized to make an expenditure, and he has no trust funds, and the expenditure is necessary for the protection, reparation, or safety of the trust estate, and he is not willing to make himself personally liable, he may, by express agreement, make the expenditure a charge upon the trust estate. In such a case he could, himself, advance the money to make the expenditure, and he would have a lien upon the trust estate, and he can by express contract transfer this lien to any other party who may, upon the faith of the1 trust estate, make the expenditure.”
This the guardian of the plaintiff attempted to do through his arrangement with the bank.
These propositions are amply sustained by Randall v. Dusenbury, 39 N. Y. Super. Ct. 174 , affirmed 63 N. Y. 645 , and by Perry, Trusts, § 476, where that author says:
“But there are circumstances where a trustee must exercise the discretionary powers of an absolute owner; otherwise great loss might happen to the estate. The exigencies of the moment may demand immediate action. The cestui quetrust may be numerous or scattered or under disability. * * * The alternative of applying to the court may be attended with considerable or disproportionate expense, and perhaps delay, so that the opportunity is gone and lost forever. It is therefore evident that it is for the interest of the cestui quetrust that the trustee should have a reasonably discretionary power, to be exercised in emergencies, though no such power is given in the instrument' of trust. And so it is a rule of equity that a trustee may safely do that without a decree of the court which the court, on a case-made, would order or decree him to do.”
As to whether the plaintiff (an infant) was bound by the act of his guardian, see Thompson v. Railway Co., 168 U. S. 451 , 18 Sup. Ct. 121 .
It is not necessary to consider whether there could be a recovery in a legal action brought by the bank against the plaintiff upon the note-that evidenced the debt due to the bank. It is sufficient, for the-purposes of the proceeding that is assailed in this action, that, under the circumstances, there was an equitable obligation ‘from the plaintiff to reimburse the bank for its advances at the request of his guardian in the business of the plaintiff. At least, that question was fairly before the supreme court in that proceeding, and its determination should not be overthrown in this collateral action. The provisions-of the Code are broad enough to permit the mortgaging of the plaintiff’s real estate to meet Ms equitable obligations. If, as between him and his guardian, he has been wronged in the proceeding, his redress must be against him in an appropriate proceeding. The cases: cited by the learned counsel for the respondent do not aid us. In Bank v. Ritchie, 8 Pet. 128 , there was a bill of review to set aside a conveyance made in a proceeding in chancery to sell infant’s real estate-under the laws of Maryland. The bill of review was under the chancery practice, and not a collateral proceeding. A bill of review is in. the nature of a writ of error, and its object is to procure an examination and alteration or reversal of a decree made upon a former bill, which decree has been signed and enrolled. 2 Barb. Ch. Prac. 90, and cases cited. But there were radical errors in that case apparent upon.
The judgment appealed from should be reversed, and a new trial ordered, with costs to the appellant to abide the event. All concur.
Cases cited
- Smith v. Nelson 62 N. Y. 286 p. 33
- Ward v. Town of Southfield 102 N. Y. 287 p. 33
- Mayor of New York v. Brady 115 N. Y. 599 p. 33
- Noyes v. Blakeman 6 N. Y. 567 p. 34
- New v. Nicole 73 N. Y. 127 at 131 p. 34
- Randall v. Dusenbury 39 N. Y. Super. Ct. 174 p. 34
- Thompson v. Maxwell Land Grant & Railway Co. 168 U. S. 451 p. 34
- Bank of United States v. Ritchie 8 Pet. 128 p. 34
- Ellwood v. Northrup 106 N. Y. 172 p. 35
- In re Valentine 72 N. Y. 184 p. 35