Reading v. Haggin — 35 N.Y. St. Rep. 585

Majority

p. 585

Fannie W. Reading, Resp’t, v. James B. Haggin, App’lt.

(Supreme Court, General Term, First Department,

Filed December 29, 1890.)

Headnote

1. Accounting—Contract relating to land—Pleading.

In an action for an accounting the complaint alleged an agreement made in 1871, by which plaintiff was to convey certain land in California to de

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fendant, who was to purchase in a mortgage and certain debts, sell the land and pay to plaintiff one-third of the net proceeds after reimbursing' himself for the advances made, with interest; that the conveyance was made to defendant, and on information and belief that said mortgage and. indebtedness were purchased by defendant and the property sold and defendant has retained all the proceeds, and further alleged that defendant, has failed to account for and pay one-third of the excess to plaintiff. Held, that the complaint stated f. cts sufficient to constitute a cause of acnon for an accounting; that it was not indispensable that plaintiff should allege that defendant had funds in his hands obtained from the property which should be paid to her.

2. Same—Jurisdiction.

The courts of this state have jurisdiction of such an action when the defendant is found in this state, as the action does not relate so much to-the lands as to the conduct of the defendant in their management and disposition and the uses made by him of their proceeds.

Appeal from an interlocutory judgment overruling demurrer to the complaint

Chas. D. Alexander, for app’lt; Chas. M. Da Costa, for resp’t.

The plaintiff commenced this action for an accounting by the defendant concerning the management and dispo^ sition of lands situated in the state of California, It is stated in. the complaint that in July, 1871, she entered into a contract with him, for a valuable consideration, to make and deliver to him a good and sufficient deed of all her right, title and interest, in and to a tract of land known as the Beading ranch, or so much thereof as would constitute 20,000 acres, and for which he .“ agreed, among other things, to purchase a certain mortgage on said estate known as the Hensley mortgage and so much of the indebtedness against said estate of Pearson B. Beading as he may deem proper, and to cause said property of said estate to be sold to satisfy said indebtedness, and defendant further agrees that if, at such sale of said estate, he shall purchase said estate, he shall hold the said property so ■ purchased together with the property so agreed, as aforesaid, to be conveyed to him until such time as he deems ad-visible, when he may sell and dispose of the entire tract of land, so purchased by him and so conveyed to him by the plaintiff, until such time as he deems advisable, and out of the proceeds of said sale shall retain all moneys by him expended in the purchase of the said land and of said claims in and about the said land for taxes or expenses thereon, or in connection therewith, together with the interest thereon from the date of payment, at the rate of one per cent, per month, and shall pay to plaintiff the one-third of any excess over and above any such advancements, outlays and expenditures, with the interest as aforesaid, defendant retaining the other two-thirds.

The complaint further states that she thereupon, and about the same time, conveyed the land to him. And about two months thereafter executed and delivered another deed of the same property to him, to more fully carry out the terms of the agreement first entered into. It is then alleged that the “ plaintiff is informed and believes that defendant, in accordance with the terms of said agreement hereinbefore in paragraph first of this complaint mentioned, did purchase the mortgage on said Beading Banch known

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as the Hensley mortgage and other indebtednesses against the estate of Pearson B. Reading^ deceased, and did cause the said property known as the Reading Ranch to be sold to satisfy said mortgage and other indebtednesses, and did cause the said property so sold to be conveyed to himself, and thereafter did sell and dispose of lands or parts thereof, and out of the proceeds of said sale did retain all moneys by him expended in the purchase of said land and of said claims and in about the land for taxes or .expenses thereon or in connection therewith, together with interest from the date of payment at the rate of one cent per month.

“ But defendant has failed to account for and pay over to plaintiff one-third of the excess of the moneys or any of the moneys received by him on said sale of said property over his advancements, outlays and expenditures, and has neglected and refused to pay and account for the same, although he has been continuously requested and urged to do so; and defendant is and remains accountable to plaintiff for said one-third of the excess of the moneys received by him on sale of said property over his advancements, outlays and expenditures.”

And in addition thereto that on, or about the fifteenth of June, 1888, he delivered to her a statement of receipts and disbursements, but so genera], vague and indefinite that it failed to give her accurate and definite information concerning the execution of the trust which he had undertaken, as that was set forth in the agreement made between them. And judgment is then demanded for an account of the dealings and transactions of the defendant under this contract, and of the moneys received and expenditures made by him, and that he be adjudged to pay her such sum as might be found to be due and owing tq her.

The ground of objection stated in the demurrer is that the complaint failed to state facts sufficient to present a cause of action. But while it is true that it is not alleged, unless by way of inference, that the defendant has money proceeding from the execution of the trust created by the agreement which should be paid over by him to her, still what was done under the agreement to carry it into effect, and by himself since that time in the management and disposition of the estate, entitled her to a full and clear exposition of its affairs. The business had been in progress for upwards of eighteen years, and it was due to the plaintiff that she should be accurately informed of what had transpired, and of the present condition of the part of the estate remaining unsold. And that she could only obtain voluntarily or involuntarily from the defendant. It was not indispensable that she should allege that the defendant had funds in his hands obtained from the property which should be paid to her. That she could not do in the absence of information from him exhibiting the condition of the estate. And she became entitled to that information for the purpose of ascertaining whether he withheld from her moneys obtained from the property which he ought to pay over. That was the scope and design of the action, and it seems to be within the limits of the authorities. Upon this subject it has been said that wherever the account stands upon equitable claims,

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or has equitable trusts attached to it, the jurisdiction is absolutely universal. And that cases of accounts between trustees and cesluis que trust may properly be deemed confidential agencies, and are peculiarly within the appropriate jurisdiction of courts of equity. 1 Story Eq. Jur., 5th ed., .§§ 454, 465. The beneficiary is entitled to an account of the acts and management of the trustee, or quasi trustee, and, if it cannot be voluntarily obtained, then to-the aid' of a court of equity to secure it. And that is the ground upon which the case of Marvin v. Brooks, 94 N. Y., 71 , 80-81, appears to have been decided. And that the trust, or fiduciary obligations, there related to money to be invested in property, and here in property to be managed and disposed of for the joint benefit of the parties, will not interfere with this application of that decision. If the jurisdiction ¡extended to the former, it necessarily must include the latter.

The case of Uhlman v. N. Y. Life Ins. Co., 109 N. Y., 421 ; 16 N. Y. State Rep., 371, in ho way infringes on this statement of the jurisdiction, for the plaintiff failed there because the element of a trust was held not to enter into it. The cases so numerously cited by the defendant’s counsel, brought on entire contracts before the period for their complete performance had expired, have no application to this action. They were actions at law depending upon the fact of full performance for their success, and do not need to be especially examined. While here the action is supported by the plaintiff’s right to an account, of which she has been deprived by the defendant.

In support of the demurrer it has been further objected that the complaint states no cause of action within the jurisdiction of this court, for the lands are situated in the state of California and their management was confined to that state. But the action does not so much relate to the lands, as to the conduct of the defendant in their management and disposition, and the uses made by him of their proceeds. And over that, as the defendant has been found within this state, this court has jurisdiction. This general - subject was at an early day considered in the case of Masie v. Watts, 6 Crunch, 148, where after an examination of the authorities it was concluded that, “ Upon the authority of these cases, and. of others which are to be found in the books, as well as upon general principles, this court is of opinion that in a case of fraud of trust or of contract, the jurisdiction of a court of chancery is . sustainable wherever the person be found, although lands not within the jurisdiction of that court may be affected by the decree.” Id., 160. And that very aptly includes this case, and it has since been followed without dissent. Watkins v. Holman, 16 Peters, 25, 57; Sutphen v. Fowler. 9 Paige, 280, 282; Newton v. Bronson, 3 Kern., 587; Gardner v. Ogden, 22 N. Y., 327 .

It is not necessary to consider whether this objection is within the comprehension of the demurrer. For it is sufficient that it has no legal foundation to support it. Upon neither of these objections, nor any incidents of them entering into the subdivisions of the argument, was the defendant entitled to succeed. But the judgment should be affirmed, with costs, with leave to the defend-

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ant to answer in twenty days on payment of the costs of the demurrer, and the costs and disbursements of the appeal

Van Brunt, P. J., and Brady, J., concur.