Wiggins v. Howard

Headnote

Referee to sell in action for partition — duty of, as to securities to be taken for' the purchase price — what acts of the beneficiaries amount to a ratification of his act vi taking an unauthorized security instead of cash.

Appeal from an order made at Special Term, denying a motion to confirm the report of a referee made herein.

This action was brought for the partition of certain land, and resulted in a sale thereof for a large sum, under the direction of James P. Pierce, a referee appointed for that purpose. The sale was had on-July 8,1868, and the proceeds were received and disbursed by one oí the plaintiffs’ attorneys instead of by the referee. Susan Posten, one-of the defendants in the action, had a dower right and life interest in the premises, estimated at $30,621.61, which belonged to her daughter, the defendant Julia A. Schenck. General Orook, one of the plaintiffs’ attorneys, was the counsel of these two defendants,, and, in pursuance of a provision in the judgment, mortgages were taken from purchasers for $16,811.50 to the referee, and assigned to the county treasurer, and for the purpose of making up the-remainder of the $30,621.61, General Crook executed a bond and mortgage on his own property to the county treasurer for $13,-780.11. All of these bonds and mortgages were received by the county treasurer on November 28, 1873, and down to this time the interest on Mrs. Posten’s share was paid to her daughter by General Orook. On November 25, 1873, Susan Posten and Julia A. Schenck conveyed the fund of $30,621.61 to Abraham Y. Schenck,. the husband of Julia A. Schenck, in trust for their benefit, and on the first day of December thereafter he presented a petition to the court, setting out the assignment to him and asking for an order that tho county treasurer deliver the said bond to him. On December 5 an order was made at Special Term, directing the

county treasurer to assign the bonds and mortgages to Miv Scbenck, and all of them were so assigned and delivered to him,, including tbe bond and mortgage from General Crook. From that, time down to September, 1876, Mr. Scbenck collected tbe interest and tben extended tbe time for tbe payment of tbe Crook mortgage for two years,, On March 18, 1878, Mr. Scbenck resigned bis position as trustee and transferred tbe estate to Ms wife, wbo was-thereupon appointed trastee in bis place. Thereafter tMs application was made to compel tbe referee to pay over the sum of $13,780.11 for wMcb tbe Crook mortgage was taken, and a referee appointed to examine tbe matter reported in favor of granting the petition; but tbe court at Special Term refused to confirm tbe report and denied the application.

Tbe court, at General Term, said: “ It was tbe duty of tbe referee on tbe sale of the premises to receive tbe purchase-money therefor or purchase-money mortgages, in pursuance of tbe provisions of tbe judgment in that behalf, and tbe defendants, Mrs. Posten and Mrs. Scbenck, were in a position to require tbe full performance of such duty. Instead of doing'so, however, they relied upon General Crook, wbo was their counsel, to receive this particular fund and invest tbe same, and for more than five years after tbe sale they received tbe interest thereon from him, under the full belief that it bad been invested by him. Tben in 1873 they found precisely bow tbe fund was invested, and instituted proceedings to have all tbe bonds and mortgages delivered up to their trustee by tbe county treasurer, and they were so delivered and held until March, 1878, during all of which time tbe interest was paid on tbe Crook bond and mortgage by Mm. It matters not that neither tbe referee nor tbe county treasurer bad the right in tbe first instance to receive the Crook bond and mortgage in place of cash. If tbe conduct of tbe beneficiaries of tbe fund ‘ bad been such in relation thereto as fairly to indicate a ratification thereof, that is equal to an original authority. Have we evidence of such ratification ? For ten years after tbe sale tbe interest on tbe fund was received from General Crook, and for tbe last five years it was so received with tbe full knowledge that bis bond and mortgage

-was tlie only security therefor; not only so, but when the same became due and payment might have been demanded and urged, -the time for such payment was extended instead by the trustee, who was the husband of one of the beneficiaries and the son-in-law •of the other. During all this time no word was said and no act was done indicating any intention to look towards the legal responsibility of the referee. On the contrary, every act indicated the full intention of the beneficiaries and their trustee to rely entirely upon their bond and mortgage.

“ The only rational interpretation of the act of the beneficiaries, .and their trustee, in procuring the assignment of this bond and mortgage to him, is that they intended thereby to adopt and ratify the acceptance of the same by the county treasurer. Certainly then, if never before, they were called upon to repudiate this bond and mortgage and call upon the referee, if ever they intended so to do. 'Then all the facts stood disclosed, and they not only accepted the' bond and mortgage, but when it came due extended the time for its payment. It is now too late to avoid that election, and they must be held to have accepted the bond and mortgage, and adopted .and ratified the act of the county treasurer in taking the same in place of the money. ”