Trustees of Freeholders v. Bowman — 38 N.Y. St. Rep. 737

Majority

p. 737

The Trustees of the Freeholders, etc., of the town of Easthampton, Resp’ts, v. John A. Bowman et al, App’lts.

(Supreme Court, General Term, Second Department,

Filed May 11, 1891.)

Headnote

Estoppel—Towns—Unauthorized deed—Ratification.

A resolution of the board of trustees of respondent appointing a committee .was altered by one of its members so as to give them power to sell and convey lands belonging to the town. By means of said forged resolution said trustee, one D., induced defendant to accept a deed of lands from him and to pay him the purchase price thereof, and thereafter forged a resolution confirming the sale. Subsequent town officials, who found the record, sued D. for the proceeds, and did not discover the fraud until the execution was returned unsatisfied. Eel’d, that this was not such a ratification of D.’s act as to estop the town from avoiding the deed for want of authority.

Appeal from judgment in favor of plaintiff, entered upon trial by the court without a jury.

Action to set aside a deed purporting to convey to defendant certain common lands of the plaintiff on the ground that the same was made, executed and recorded without authority. A resolution of the board of trustees, passed in 1882, appointing a general prosecuting committee, was altered by Dominy, one of said committee, by interlining the words “ with power to sell or convey,” and by means thereof induced the defendant to accept the deed in question and pay to him the consideration therefor, and afterwards forged a resolution confirming the sale. The other facts appear in the opinion.

The following opinion was delivered on the trial:

Barnard, J. This case is not a plain one; there is no doubt but that the record was forged. The words interlined, giving the committee authority to sell, were not in the resolution as passed. The words were put there to 'defraud. After the record was altered the clerk’s copy seemed to evidence a good record. The question is not one of a transaction with an agent, but with a title acquired by forged authority to sell. The defendant got no title under such a power.

Did the town lose its right because a subsequent board of trustees sued for the consideration stated in the deed ? This body was in ignorance of the forgery when the action was commenced. During the trial some of the defendants denied all knowledge of the resolutions. The trustees prosecuted to judgment upon the theory and with the full belief that the resolution was passed. It now appears that it was never passed, and I think there is nothing in the former action which ratifies a forged resolution. Ratifica

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tion rests upon knowledge and this was wanting. The defendant has, therefore, no title; the deed rests upon nothing and the appearance should be removed so that the town title may be unclouded by it

Judgment for plaintiff, without costs.

H. C. Platt, for app’lts; Wilmot M. Smith, for resp’ts.

We concur in the opinion of the learned trial judge. The town never authorized the conveyance of the lands in question. The minutes which on their face appear to attest such authority, were, in that respect, forged. The grantee, doubtless, dealt with the faithless representative of the town, and paid his consideration money in good faith. It could scarcely be decreed otherwise.

So far then the case is clear. A person standing in an official position towards a town, having no authority save that derived by resolution of the town officials, simply cheats a man into paying money over to him by exhibiting false tokens as to the extent of his authority and delivering a deed which is without a shadow of authority. Dominy simply lied to Mr. Platt, and backed up his lie by exhibiting a resolution which was genuine in part but false and forged in the vital matter of authority. No corporation could conduct business if any other rule prevailed than to hold that this faithless official had thus simply swindled an innocent man out of his money.

But now comes the tight place in the case. New town officials found this record. • They were themselves deceived thereby. Dominy thus misled them so that they too, relying on his fraud, called on the faithless official to pay oyer the money which they suppose that he has collected for and with authority of the town. They sue him and recover a judgment They issue an execution but get nothing. Hence, while the town thus appears to ratify the collection and thus to ratify the transaction out of which it arose, the essential and vital element of the doctrine of ratification is, nevertheless, wanting, knowledge of the facts of the case. The town officers were misled into that suit. The swindler succeeds in getting all parties into a false position. Now, if we were to hold that this judgment was a ratification, we should hold that Dominy might swindle the town into an election to ratify. And that plainly involves unsound reasoning. The question of estoppel does not arise until we determine the point of election and ratification. But the town did not discover the fraud until after the execution was returned unsatisfied. There is no evidence that it has taken a single step in pressing its judgment against Dominy after the discovery of the truth in the premises. If it has, it would be difficult to defend the town against the consequences of election and ratification under the rule in Bowker Co. v. Cox, 106 N. Y., 115 ; 10 N. Y. State Rep., 658.

But the town has taken no step. It has simply stopped. Ought it to have procured the modification of the judgment against Dominy by rejecting therefrom the money claimed or collected from Bowman? Perhaps that would have been a wise

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thing to do as a measure of prudence to evince and emphasize its election to repudiate Dominy’s wrongful act. But it was not, as it seems to us, necessary so to do. It was a question of fact whether or not the town did promptly repudiate Dominy’s wrong when it discovered its right so to do. The fact that it suffered the judgments to stand was merely a circumstance which, with others, might tend to show an election to ratify. But the findings and disposition of. defendant’s requests by the learned trial judge pretty clearly show that the town never did, in fact, elect to ratify 'Dominy’s wrongful act, or do any act amounting to such a ratification, after discovery of his fraud. The election to repudiate it would always be an answer in Dominy’s favor to any attempt on the part of the town to enforce the judgment. That is no affair of Bowman’s. He neither lost nor gained anything by the conduct of the town in this respect. He simply stands where he stood before the town sued Dominy at all. He is simply the victim of Dominy’s fraud.

Perhaps a different question would have arisen if the town .had collected any of the money under that part of the judgment which rested on Dominy’s collection, from Bowman. Indeed that might be true even if it had collected anything under the judgment, for it constituted an entire recovery. .But even then, I incline to think that if it had promptly turned the collection over to Bowman on discovering Dominy’s fraud, it might still have been entitled to avoid the deed for want of authority. The town would have been in worse position than if Dominy had voluntarily paid over the money received from Bowman.

Suppose, for example, that some stranger had made this forged alteration of the town minutes, and that Dominy had honestly supposed he' had the authority, and had made this deed under those circumstances, and then collected the money from Bowman and paid it .over to the town. Would not the whole business have been a mistake, which a court of equity would have had power to correct on prompt repudiation by the town and return or offer to return the money to Bowman ? But, of course, it is unnecessary to speculate on the point.

The views above indicated lead us to the conclusion that we must affirm this judgment, but, under the peculiar circumstances of the case and the novelty of the question, we shall deny costs.

Dykman, J., concurs; Barnard, P. J., not sitting.