Mann v. Fairchild

Potter, J. . This action, as appears by the pleadings, especially by the complaint and prayer or demand for judgment, is an action in equity, and seems to be based upon the theory that the defendant was a trustee of the St. Lawrence Bank, by virtue of certain resolutions, passed by the board of directors of said bank, or by virtue of an assignment made to him by said directors. If this theory, and the facts upon which it is based, shall fail, the action must fall, because, if the claim exists only at law, the statute of limitations set up makes a legal defense to it, as this" action was not commenced within six years after the alleged cause of action accrued. If a party brings an equitable action, even now, when the same court administers both systems of law and equity, the — 112 — party must 'maintain' his equitable action upon equitable grounds, or fail, even though he may prove a good cause: of action at law, on the trial. (Heywood v. The City of Buffalo, 14 N. Y., 540.) The referee has found, as á fact in the cáse,. that the defendants’ testator did not take possession of any of the property or effects of the said bank mentioned in the resolutions or proceedings referred to in the complaint. This finding has nrot been reversed; there was testimony to sustain such a finding, and this court, in their review, are to regard this as true.' The referee has not found that Fairchild took possession of any of said assets under the assignment made to him, but, on the contrary, he has found that the "directors of said bank transferred to H. Van Rensselaer the remaining; assets of the bank, and directed Fairchild, who was their cashier, to delivér the Same' to' Van Rensselaer, and that Fairchild did so deliver them to him accordingly. 'This delivery, at the direction of the bank, was their delivery,"and he, as their cashier, in obeying their direction, was not acting for himself individually, but for his principals. True, he signed the- transfer to Van Rensselaer, but it appears uncontradicted that he first refused to sign it, on the ground that he did not hold the property as assignee, and only signed it upon advice of counsel, so as to cut off any claim to it by reason of the assignment to him. As the execution of this paper is the only evidence of his possession, and there being no finding that he ever had possession or accepted the trust, it was proper evidence not to contradict the writing, but to negative the question of his possession,■ and, as part of the res gestee, to show his denial of possession ; but we need not look beyond the finding of the referee in this -regard. ■ Ro objection being raised to this evidence of possession, this fact could not be reviewed, even if it was error. In my view, therefore, the defendants’ testator could not be-and was not a trustee of the bank in any sense. - ■ ■. But, if we are mistaken in-this view, and if -he wasisuch a trustee, as- matter of law,- what right has the plaintiff shown to call him to account? ■ If, by virtue of his office as cashier, or otherwise, he became, trustee, it was for the ■ bank, or for — 113 — their creditors, or the stock holders. All these rights to assets in his hands, which so belonged to the bank, it is shown, passed to the receiver upon his appointment, in fact as well as at law. All rights which the bank had held to assets or debts due them from or in the hands of any of their debtors passed to the receiver. On the 24th of February, 1843, the receiver sold to the plaintiff, at public sale, as such receiver, five several demands, enumerated as follows: 1. A demand against Egbert FT. Fairchild, of Ogdensburgh, for six Arkansas State bonds of $1,000 each on which a suit has been commenced in the Supreme Court, and is now pending. 2. A demand against Egbert Ff. Fairchild for certain furniture belonging to the bank, taken by him. 3. A demand against Egbert FI. Fairchild, of Ogdensburgh, for a balance supposed to be due from him on the books of the'bank. 4. A claim against Fairchild and Bacon for any balance due from them to the St. Lawrence Bank, not' heretofore settled by them. ' 5. All the rest and residue of the property and effects of the said bank of whatever name or nature. By this purchase, the plaintiff obtained all the title to these claims that was in the receiver, which was all the title the bank owned, before the receiver was appointed. The plaintiff makes no claim against Fairchild, under the fifth division of items. The other four were legal claims only, so that a several action in equity, to recover for either of them, would not lie, I do not see how the consolidation of them into one action, changes their character so as to sue in equity. They were still legal claims. If it be true that the receiver, before the sale, was officially the cestui que trust for creditors, the plaintiff did not buy this trust. The plaintiff held the claims when purchased, in his own -right, for his own use and benefit, and not for others. The plaintiff did not purchase the trust. The receiver could not divest himself of this trust power to another; it was a trust only reposed personally in him, in confidence, by the court;; he could not assign or convey a — 114 — trust; it did not pass with the conveyance of each claim; it was not a thing to be scattered and divided to several vendees, who purchased demands at this public' sale, in due proportions, so as to enable each to act as trustee, for the enforcement of his purchased claim. The receiver did not profess'to sell it, accompanied with a trust, and had there been a liability on the part of Fairchild to account to the receiver for the benefit of creditors, it did not pass to the plaintiff by this sale. True, all equitable claims of the bank, against individuals, passed to the receiver, and it is equally true, that the receiver had the same power to sell to others equitable claims, as he had legal ones, and the purchaser of an equitable claim takes with the claim the right to sue it in equity, but as the argument that the claim in question is of an equitable character, seems to depend upon its being a trust, we have proceeded to show that it has no trust features connected with it. I do not intend to say that the receiver is a trustee, by virtue of his office, I think it is otherwise, he is the mere officer of the court, accountable only to them for the performance of his duties. If we are right in this view, that the plaintiff’s claim was strictly a legal one, and that he has shown no right in equity to recover, nor shown a case in which the courts of law and equity have concurrent jurisdiction, then the six years’ statute of limitations applies to his demand, and the judgment should have been, as it is, for the defendant. (2 E. S., 301, 1st ed., §§ 49, 50, 52; Code, § 91; Borst v. Corey, 15 N. Y., 505, and cases cited at pages 509, 510.) The case of Mann v. Fairchild, reported in 14 Barb., 548, is not to be regarded as res judicata of this matter, and certainly does not bind this court on the ground of the rule of stare decisis. Nor is the view we have "taken now in conflict with the holding of the court in 34 Barbour. The decision there was upon demurrer upon the assumed truth of the allegations in the complaint, which was in equity for an account. Here, the case stands upon facts .found by the referee, showing a legal debt, if any, and not a case in equity, so that our holding does not even overrule the decision in 14 Barbour. — 115 — Another ground, and from the briefs and arguments of counsel it would seem to be the principal ground upon which the case is to be decided, is, “ that the plaintiff, at the time he purchased the claims or things in action, upon which this suit is brought, was an attorney and counselor at law, and solicitor in chancery, and that he bought the demands with the intent to bring the action thereon, that the purchase was therefore illegal, and prevents a recovery thereon.” The statute in this regard (2 E. S., 288, marg. paging, § 58), provides, that “no attorney, counselor or solicitor, shall, directly or indirectly, buy, -or be in any manner interested in buying, any bond, bill, promissory note, bill of exchange, book debt, or other thing in action, with the intent and for the purpose of bringing any suit thereon.” And section sixty-two of the statute makes such buying a misdemeanor. The referee in this case has found as a fact, that the plaintiff, at the time of the purchase of the claims in this suit, was an attorney and counselor at law, and solicitor and counselor in chancery, and that he bought the said demands with the intent to bring a suit thereon. There is evidence in the case to sustain such a finding. The judgment being affirmed at General Term, without reversing this finding of fact, we are not at liberty here to question this finding, unless it be that, notwithstanding such a finding, such intent could not exist as matter of law. It is urged that, as matter of 'law, this purchase was not obnoxious to the provisions of this statute for two reasons: First, that the sale was a judicial sale; and, second, that the purchase was made in the name of the Farmer’s Loan and Trust company, and not in the name of the plaintiff. The statute we have cited is as general in its terms of prohibition as is reasonably possible, in order to forbid the buying or being interested in buying by an attorney, etc. There is no exception, it applies in terms to all purchases. Did the plaintiff buy these claims % How otherwise did he obtain them? Did the loan and trust company buy at the receiver’s sale ? If so, then the plaintiff must have purchased of them, but he. testifies himself that he purchased in his — 116 — own name, but announced to the bidders that he was purchasing for the trust company. On reporting his action to the trust company, they were dissatisfied, and desired him to retain them himself, which he did. The sale was not consummated until after this agreement with the trust combany; then the nominal purchase made in the plaintiff’s name was completed by the plaintiff’s paying his own money to the receiver, and taking the receiver’s transfix to himself. These facts, I think, constitute this a purchase by the plaintiff; we shall best ascertain the intent of this statute by finding the object which the legislature had in view in its enactment. The first statute of this State, on this subject, seems to have been passed in the year 1818, chapter 259. Its title, as well as its provisions, clearly indicate its intent. It is entitled “ An act to prevent abuses in the practice of the law, and to regulate costs in certain cases.” The first clause of section one of that act, is in the language of our present statute, section fifty-eight, above cited, except, that in the last revision there was added the words, '■'■with the intent and for the purpose of bringing any suit thereon.” This statute also made the buying, etc., by an attorney,- a misdemeanor, punishable by indictment, fine and .imprisonment. The revisers, in their notes, say, that the words above italicized, were added to make the statute conform to the supposed intent, and citing two cases in the reports, arising upon this provision, which had been supposed to be somewhat in conflict, viz.: Van Rensselaer v. Sheriff of Onondaga (1 Cowen, 458) where it was held that the above statute of 1818, “never meant to forbid the purchase of one demand for the mere purpose of seowrimg another,” and the case of The People v. Walbridge (6 Cowen, 516) where the court said: “ The intent with which an attorney or counselor buys a note, need not be alleged in the indictment, nor need it be averred that a prosecution has been commenced on it. It is the act of buying that constitutes ’the offense. (See Williams v. Mathews, 3 Cowen, 261 ; People v. Walbridge, 3 Wend., 129, contra) It will thus be .perceived that, by the Revised Statutes, the mere buying is — 117 — now, by legislative construction, as well as by the unmistakable language of the statute, not alone sufficient to constitute it a misdemeanor, and doubtless not sufficient to visit upon the purchaser the penal consequences of a loss of the claim purchased, without the fact being also established that it was also “ with the intent, and for the purpose of bringing a suit thereon.” Such intent in this case is also found as a fact by the referee. We have looked far enough into the facts to be enabled to say, we find evidence- to sustain such a finding; its weight was .a question for the referee—not for us. The purchase was made by an attorney; the consideration paid was comparatively small. He had notice before the purchase that the claims were disputed, and, if suits should be brought, would be litigated and defended. When purchased, they were put in prosecution by the plaintiff, and the referee finds the demands were purchased with intent to bring a suit thereon. We think that neither the purchase at a receiver’s sale, nor the declaration, or even the fact that -the purchase was in the name of another, amounts to an exception in the law; it establishes no justification. The object for which the statute was passed would fail and could always be evaded if' such defenses could avail. (Arden v. Patterson, 5 Johns. Ch., 48.) The case of Orcutt v. Petit (4 Denio, 233) is not in conflict with this view. If the intimation given in that case, that the plaintiff is to be examined, is sound (the soundness of which I do not concur in), such examination was had in this case. The statute does not demand that the testimony of the plaintiff when so received shall be conclusive ; and if the question of intent is for the court, and not for the jury, the referee, who stood in the place of the court, has decided that question. This statute is entirely unaffected by section 303 of the Code, authorizing attorneys, etc., to agree with parties as to their compensation. Assuming what this court is bound to assume as facts, the purchase in this case was contrary to public policy and to good morals, and is in contravention of the positive statutes — 118 — of the State, and cannot be enforced. (Pennington v. Townsend, 7 Wend., 276.) There are several other minor points raised on the argument, one of which is as to the form of the judgment—that is, that it should have been a judgment of nonsuit, instead of dismissing the complaint. Without seeing that any injury could result to the plaintiff if the judgment was in another form, it is sufficient to say it is right that judgment should be in favor of the defendant, and for costs, and, if we are right in the position we have taken, another trial could be of no avail to the plaintiff. I think the judgment must be affirmed. All concur. Judgment affirmed.