Penman v. . Slocum

*58 James, J. The validity of the two contracts of July 3d, 1855, was not questioned on the trial. Their validity being-conceded, the plaintiff’s intestate, and J. J. Slocum acquired the right to purchase or sell the lands, at any time within the next sixty days, subject to the defendant’s right to sell; in which event they were each to have a sum specified. This was a valuable interest, and formed a sufficient consideration for the subsequent agreement of August 8th, 1855. By that agreement, defendant was to sell said property to Remington for $90,000, and out of the first proceeds to retain $67,000 ; then to pay said testator and J. J. Slocum $8,000, and divide the balance equally between the three. The sale was made accordingly, and defendant received $20,000, and took to himself a bond and mortgage, with warrant of attorney to enter judgment for balance. By this arrangement, the plaintiff’s testator became vested with an interest in the securities thus taken by the defendant, equal to $9,000 ; and a liability thereby devolved upon the defendant to account to him for the proceeds of said security, to such an amount. In other words, a trust resulted from the agreement and sale, and vested upon the defendant, to be performed according to the interest of the party thereto. “ Implied trusts,” says Story (Eq. Jur., § 1195), are of two classes; “first, those which stand upon the presumed intention of the parties ; and second, those which stand independent of any such intention, and are forced upon the conscience of the party by the operation of law.” And although it has been said to be a general rule, that the law never implies, and a court of equity never presumes a trust, except in case of absolute necessity, Story says, that “it is stating the doctrine a little too strongly; and the more correct exposition of the rule is, that a trust is never presumed or implied, as intended by the parties, unless, taking all the circumstances together, that is the fair and reasonable interpretation of then- acts and transactions.” That is precisely this case. Here the three parties had an interest in land; an arrangement was made between them, whereby the defendant was to sell and convey, receive the proceeds to be *59 paid down, and take securities for the balance in his own name, and when received, make distribution as therein provided. This arrangement is susceptible of no reasonable interpretation other than that the parties intended that defendant should become a trustee for the others in receiving and distributing the proceeds of the sale. (Story’s Eq. Jur., § 1195, &c., on implied Trusts; Ryan v. Dox, 34 N. Y., 307; Campbell v. Walker, 5 Ves., 678.) Being a trustee, the purchase by him of the premises, under the judgment entered for the balance of the unpaid purchase money, inured to the benefit of his cestui que trust in the proportion of their interest in that security. “ It is a settled principle of equity, that no person who is placed in a situation of trust or confidence in reference to the subject of sale, can become a purchaser of the property on his own account.” (Case v. Carroll, 35 N. Y., 385.) The defendant, on purchase of said property, held it as trustee for the benefit of those originally interested in the security; and his subsequent sale to Beekman, inured also for the benefit of such trust, and for Avhich he is liable to account. (Flagg v. Mann, 1 Sumner, 486, and cases cited.) The principles of law, governing the preceding branch of the case, are so well settled that I do not deem it necessary to marshall or review the authorities in support of it. The non-joinder of J. J. Slocum as a party, if a defect, appeared upon the face of the complaint, and was waived by failure to demur. (Code, §§ 144, 147, 148.) But aside from the question of pleading there was in reality no defect of parties. The interest of plaintiff’s intestate, in the price received for said land over and above $75,000, was an ascertained, distinct and definite interest, not depending upon any privity or community of interest with J. J. Slocum, or requiring any accounting with him. I have been somewhat embarrassed Avith regard to the plaintiff’s right of action when this suit commenced. As an action simply to recover the third of the $15,000 surplus, it was prematurely brought. By the terms of the agreement *60 of August 8th, 1855, the defendant was not hound to account until the money was received; and the money was riot received until after this action was commenced. A supplemental complaint may be resorted to where facts have occurred subsequent to the commencement of the action which vary the relief to which the plaintiff was at that time entitled. I think it may be said, as held by the referee, that at the time this action was commenced, upon the facts as proved, the plaintiff was entitled to a judgment declaring his rights in the premises; if so, the subsequent payment of the whole of the purchase money varied the relief to which the plaintiff was entitled when the action was brought, and presented a proper case for a supplemental complaint. But the order allowing a supplemental complaint provided that, if the referee, before whom the action was to be tried, should be of the opinion that plaintiff was not entitled to any relief without proof that defendant received the $70,000 mentioned in said supplemental complaint-, that then said referee should determine the question of the legal effect of the said fact not having occurred before suit brought, and should give such judgment or prescribe such terms with reference thereto as should be agreeable to law and equity and the rules and practice of court. This order was not appealed from, and it therefore binds and controls the parties in the proceedings under it. It constituted the referee an arbitrator of the questioris presented by it, whose decision was final.' The facts established by the referee outside the supplemental complaint entitled the plaintiff to a judgment defining his rights under the agreements and for an account of the money when received; and these facts, together with those found and declared under authority of the supplemental complaint, entitled plaintiff to further judgment for the amount received. The other points presented by the appellant, but not pressed, are not well taken. Judgment affirmed.