Butterfield v. Cowing — 21 N.Y. St. Rep. 500

Majority

p. 500

Julia L. Butterfield (Formerly Frederick P. James), Executrix, etc., App’lt, v. James A. Cowing and The New York Elevated R. R. Co., Resp’ts.^[1]

(Court of Appeals,

Filed March 5, 1889.)

Headnote

Trust—Breach of—When cestui que trust bound by concurrence— General rule.

No cestui que tiust can allege that to be a breach of trust which has been done under his own sanction, whether by previous consent or subsequent ratification. _ The general rule is that either concurrence in the act, or ac■quiesence without original concurrence, will release the trustees.

Appeal from a judgment of the supreme court, general term, first department, affirming a judgment in favor of the defendants entered upon the decision of a special term held in New York county, dismissing the complaint upon the merits upon the trial' of the issues. The facts will be found in the general term opinion reported in 4 New York State Reporter, 78.

John I). Kernan and Abram Wakeman, for app’lt; Julien T. Davies, for resp’ts.

The action proceeded upon the theory that defendant Cowing, as trustee, under a mortgage executed by the “West Side Elevated Patent Railway Company,” had violated the provisions of the mortgage to the prejudice of the plaintiff, and that the other defendant, “The New York Elevated Railroad Company,” had, with notice of that violation, obtained an advantage. Upon the first trial judgment was rendered for the plaintiff against Cowing, but in favor of the railroad company. The plaintiff and the defendant Cowing each appealed to the general term, where the judgment as to Cowing was affirmed, and reversed as to the railroad company, and as to the latter a new trial was granted. The facts presented to the special term, and the proceedings of that court, and_ also of the general term, are reported ( 17 Hun, 256 ). Cowing appealed to this court, and the conclusions reached by us ( 82 N. Y., 449 ), is an answer to every question raised by the action,

p. 501

except one, and that was pointed out in the opinion, which assigned reasons for our judgment, and in which all the .judges of the court agreed.

The present appellant was afterwards substituted as plaintiff, and the case comes before us free from the difficulty suggested by our decision, viz.: whether the plaintiff, before the trustee made the sale and conveyed the mortgaged property to the defendant, “The Hew York Elevated Railroad Company,” which acts constituted the alleged breach of trust, consented to carry his bonds into that -company. A refusal by the trial court to find as requested by the defendant, that the inchoate organization, to which the plaintiff did in fact consent, was an organization after-wards perfected under that name, constituted the error which we thought required' a new trial. 82 N. Y. (supra) 456, 457. It now appears by the record that the question was fully considered by the trial judge, and expressly answered in the affirmative. The consent of the plaintiff was expressed in a stipulation signed by himself and Cowing, by which his opposition to the conduct of Cowing as trustee was withdrawn, and permission given to the plaintiff “to unite with other bondholders in the new organization,” and he agreed “ so to do as to all bonds which he absolutely owns.” The finding of the court is, “that the new organization mentioned in this stipulation was the company or organization provided for in a certain agreement of J uly 7, and “that The New York Elevated Railroad Company, the defendant in this action,” was that organization. We have only to give proper effect to that finding.

The strength of the plaintiff’s case is in the doctrine which governs the relation of trustee and cestui que trust. Assuming, as in view of our former decision we must, that there would have been responsibility on the part of the trustee in omitting to follow the terms of the mortgage by which he undertook to be bound, and that his dealing with the other defendant was a violation of those terms, it was possible for the plaintiff to absolve both the trustee and the other defendant from liability, either by acquiescing in the ■consummation of that transaction, or by a positive adoption of it. Here there was both. At first objecting, and in the most formal manner expressing that objection by suit against the trustees and others, and among them the new organization, and actually staying the consummation of their scheme, he acquiesces by withdrawing his action, and then adopts the conduct of the trustees by agreeing to join, and, in fact, by that consent, becoming a party to the new organization.

It is quite clear that no cestui que trust can allege that to be a breach of trust which has been done under his own

p. 502

sanction, whether by previous consent or subsequent ratification. The general rule is that either concurrence in the act, or acquiescence without original concurrence, will release the trustees. And there are no circumstances to make the plaintiff’s case an exception. Whatever the trustee did, which might otherwise have been found the subject of just complaint, was done by the assent and sanction of the plaintiff. If there is a breach of trust, the plaintiff is bound by his concurrence in it as to any fund to which he might otherwise be entitled. An examination of the evidence, in view of the appellant’s objections to its sufficiency, leads us to the conclusion that it warrants the findings of the trial judge. The defense justified by it is affirmatively set up in the answer and is fully sustained.

A point is made by the appellant that the plaintiff is entitled to have judgment in this action tor a proportionate share of the money received by Cowing from the other defendant upon the transaction. It does not appear that se much has at any time been denied to him. His action is upon a theory which, whether well-founded or not, is an emphatic disclaimer that he wanted it, or would have it, much less sought for it. Indeed, receiving it would have been another act of ratification utterly inconsistent with the proceeding instituted for the sole purpose of undoing the business out of which that money; came. Nor do we find anything in the judgment which justifies the contention of the plaintiff, that there is conceded to be due him in this action any sum of money, nor any concession that for that sum he “is entitled to recover herein.” The judgment is, perhaps, unnecessarily prolix, and the recitals somewhat extended. It simply states, as if for the information of the plaintiff, the sum of his share “ by reason of any of the matters and things involved in the action.” It awards no judgment on that account, but refers to it as on deposit with the company according to the terms .of the mortgage, in which the plaintiff, as a bondholder, had an interest. If the final -judgment is not warranted by the findings,-the remedy was.by a motion to correct it.

The plaintiff failed to make out the cause of action alleged in his complaint, and the issues were, properly disposed of. If there were other matters which might have been presented under different pleadings they are not disclosed in evidence, nor the attention of the trial judge directed to them.

We think the appeal fails and the judgment of the court below should be affirmed.

All concur.