Summary
In Butterfield v. Cowing (112 N.Y. 486) the principle of these cases was declared, the court saying: "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 sanction, whether by previous consent or subsequent ratification.
Summary of this case from Woodbridge v. BockesOpinion
Argued January 14, 1889
Decided March 5, 1889
John D. Kernan and Abram Wakeman for appellant.
Julien T. Davies for respondents.
The action proceeded upon the theory that the 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 conclusion reached by us ( 82 N.Y. 449), is an answer to every question raised by the action, 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 New 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 afterwards 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 July seventh, 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 trustee 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 trustee 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 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 for a proportionate share of the money received by Cowing from the other defendant upon the transaction. It does not appear that so 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 was 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.
Judgment affirmed.