
    The National Bank of Commerce in New York et al., Plaintiffs, v. The Bank of New York et al., Defendants.
    (Supreme Court, New York Special Term,
    July, 1896.)
    1. Banks — Old clearing-house building — Title.
    Fifty-nine banks, having associated themselves for the purpose of a clearing house to facilitate their exchanges, contributed their several shares of a common fund, and also other sums, for the purchase on December 16, 1874, of premises, the title to which was taken in the name of five persons who executed á declaration • of trust reciting that the consideration - was paid' by tile Clearing House -Association, and that they held the property for the use of the association and subject to its disposal at any time. Several years thereafter, new members having come into' the association and, three of the original trustees 'having died, at the request of the asociation a conveyance was made of the premises by the successors to themselves' in connection with three new grantees; and a declaration of trust was made by the grantees to the effect that they held the property for the use and benefit of the several banks which, composed the Clearing House Association on the 16th day of December, 1874. Held, on demurrer, that the effect of the transaction was that the legal and equitable title of the premises was in the fifty-nine banks as tenants in common, and that the five individual grantees had no title to the property, but had at most a power in trust to sell and distribute the proceeds among those who had the legal and equitable title.
    2. Same—Trustees. '¡
    The. individual grantees having sold the property, and the purpose for which the purchase was made having thereby ceased, and. the proceeds having come into the possession of the grantees, they may be compelled to account for and distribute the same among the original associates and their assigns.
    3. Same — Parties.
    The allegations of the- complaint that the banks were associated for the purpose of a clearing house association to effect and facilitake their exchanges as part of the business conducted by each of' said banks severally, and references to the Clearing House Association by name in the complaint, do not justify the conclusion of the existence of a “ person ” who could be sued as the Clearing House Association, and a demurrer cannot be sustained on the ground of defect of parties defendant by reason of the absence of the Clearing House Association as a party defendant, it not appearing but that all the individual members, are made parties defendant.
    4. Pleading — Demurrer. " .
    
    When the complaint in an action for equitable relief alleges that a defendant has, or claims to have, some interest in the subject-matter of the action, a demurrer by such defendant on the ground that the complaint does not state a cause of action is not well taken, By demurring such defendant admits that it has, or claims to have, such interest. . .
    Demubbeb to complaint.
    ■ Benjamin D. Silliman and Putney & Bishop (Benjamin D. Silliman, Frederic A. Ward, Wm. B. Putney, Michael H. Cardozo and James L. Bishop, of counsel), for plaintiffs.
    .■ Bristow,- Opdyke & Wilcox (Joseph H. Choate, William S.. Op-dyke and David Wilcox, of counsel), for defendants..
   Tbuax, J.

Certain of the defendants demur to the complaint on the ground, first, that it does not state facts sufficient to constitute a cause of action, and, secondly, that there is a defect of parties defendant in the omission of the “ Clearing House Association,” mentioned in the complaint.

Section 488 of the Code óf Civil Procedure says that the defendant may demur to the complaint where it appears upon the face thereof that there is a defect of parties defendant. I cannot find anywhere in the complaint that there is any such entity as the. Clearing House Association. It is alleged in the third paragraph of the complaint that the Bank of Hew York and.certain other banks were associated for the purpose of a Clearing House Association to effect and facilitate their exchanges as a part of the business conducted by each of said banks severally; and in the seventh paragraph of the complaint it is alleged that the persons constituting said Clearing House Association (referred to in a certain instrument dated December 16, 1874, which instrument is set up in full in the complaint) were the plaintiffs and said original associates. The Clearing House Association is mentioned in the eleventh paragraph of the complaint and the New York Clearing House Association is mentioned in the twelfth paragraph thereof, but nowhere in the complaint is it alleged that there is a legal body known as the Clearing House Association or the New York Clearing House Association that can be sued. The complaint indicates that certain banks have made an agreement to do certain business in a certain way, but the terms of the agreement are not set forth in the complaint, and there is nothing to show that a “ person” who could be sued was created by said agreement. The second demurrer is overruled.

The complaint alleges that on or about the 15th day of September, 1874, the plaintiff and certain of the defendants were associated for the purpose of a clearing house" association, to effect and facilitate their exchanges as a part of the busine'ss conducted by each of the said banks severally, which said banks are designated in the complaint as the original associates, and that at said time the said original associates owned and were in possession of the sum of $100,146.52, which they severally had contributed to and for the purpose of said clearing house, and that no person or corporation other than the said original associates had contributed anything to or was interested in the said fund or any part thereof; that on said day it was agreed by and between the said original associates that they should contribute ratably toward the purchase of premises which could be used as a clearing house for them, and that in pursuance of said agreement the said original associates contributed their respective shares in the said fund of $100,146.52, and also a certain other sum which was equal to three-tenths of 1 per cent, of the capital stock of the said original associates, toward the purchase of certain premises mentioned and described in the complaint; that none, of the defendants other than the original associates contributed anything toward the purchase price of said premises or toward the increase of the value of said premises; that in pursuance of and to carry into effect said last-mentioned agreement, the defendants Ooe and. Tappan, with three other persons since deceased, did, on behalf of the said original associates, purchase certain premises mentioned and described in the complaint, as joint tenants and not as tenants in common, with the money so raised as aforesaid, which constituted the total funds belonging severally to the said original associates, and was furnished solely by the original associates for the purchase of said premises and for the improvement thereof, and that no part of said purchase money was contributed by the. grantees named .in the deed; that upon the purchase of said premises said Ooe and Tappan and others named in the deed executed and delivered to the said original associates an instrument in writing to the effect that the premises mentioned in said deed had been conveyed to them as joint tenants; that they had no personal interest in said purchase or property; that the consideration for said premises had been paid by the said Clearing - House Association and that they held the same for the use of said Clearing House Association, subject to its disposal at any time; that the persons constituting said Clearing. House Association referred to in the last-mentioned instrument were the original associates and no others, and that by virtue of said-conveyance and said' instrument the whole beneficial interest,’ title and estáte in said premises vested forthwith in said original associates as tenants in common in proportion to said several contributions to the said purchase price of said premises, and that “it was contemplated and understood ” by the said original associates at the time of the payment of said money and purchase of said property that each of said original associates should- have á beneficial interest in said property in proportion to the amount of its several contribution thereto; that immediately after the purchase of said premises the said original associates took possession thereof and thereafter occupied a portion thereof for the purpose of a clearing housed and subsequently permitted the use -thereof by other banks which became members of the Clearing House Association in connection with themsélves, and that the portion of the building ■ not occupied for the clearing house was rented by the trustees above named, who received the rentals thereof, and that the expenses" of the clearing house, except certain expenses for printing, were paid, by an assessment "of $200 on each bank, and the balance necessary after "that amount was paid pro. rata, aecord.ing to the average amount which each bank.sent to -the clearing house for the preceding year for exchange.

The complaint further alleges that three .of the persons named as grantees in the deed above mentioned died on or before the 2d day of November, 1887, and that on said day Frederick D. tappan and George S. Coe, the only surviving grantees'mentioned in the aforesaid deed, executed and'delivered a certain deed of the above-mentioned premises unto Frederick D. Tappan, George G. Williams, George F. Baker, William A. Nash and George B. Coe, as joint tenants and not as tenants in common, and to the survivors and survivor of them and their heirs and assigns forever; that contemporaneously with the execution and delivery of said deed, the grantors therein named made, executed and delivered a certain instrument in writing by and in which they declared, among other things, that' they had no personal interest in the said property, but held the same for the use and benefit of the several banks which composed the Clearing House Association on the 16th day of December, 1874, or their assigns, according to their several contributions towards the said pm’chase money and subject to their disposal at any time; that between the date of the purchase of said premises in December, 1874, and the 2d day of November, 1887, several banks, in addition to the original associates, had become members of the Clearing House Association, but had contributed nothing toward the purchase money of the premises and had acquired no interest therein.

The complaint further alleges that since the purchase of said premises certain of the original associates (naming them) have ceased to do business and have assigned their respective interests from time to time to such banks as constituted the Clearing House Association at the times the said several assignments were made; that the said premises have been used in part by the said original associates and such banks as thereafter became associated with them as a place for the making of exchanges, and that the defendants Tappan, Coe, Williams, Baker and Nash have since the said property was conveyed to them made leases of other parts thereof and have received the rents and income thereof; that said premises are no longer used as a place for making exchanges by the several banks connected with the New York Clearing House Association or for.any purpose for which they were conveyed to the defendants last above mentioned; that the said Tappan, Coe, Williams, Baker and Nash have sold said premises and have received therefor the sum of $725,000; that they refuse to recognize the exclusive right of the original associates and their assigns in and to the entire proceeds derived from the sale of said premises, and have refused to pay over to the plaintiffs and to the other original associates and their assigns their respective shares in the proceeds of said premises, 'and have asserted and still'assert that they, will-not distribute the said fund between the plaintiffs and the other original associates and their assigns exclusively, unless compelled so to do by some court; that they are equitably bound and should be required to transfer .the proceeds of said sale to the said original associates according to their respective rights and interests therein, and to account to the original associates for their proceedings concerning the same, and that no action has ever been taken, to effect the legal and permanent organization of the Clearing House Association.

The complaint further alleges that certain of -the defendants (naming them) claim to have some interest in or to the said premises and to the said fund derived from the sale thereof. The judgment demanded is that the original associates and their assigns be adjudged and declared to be entitled to the entire beneficial interest, title and estate in the said premises and to the rents, issues and profits thereof; that they and their assigns be adjudged entitled to the futid derived from the sale of the said premises according and in proportion to their respective contributions toward the-purchase money therefor; that certain of the defendants (naming them) be adjudged to have no interest in or to said fund, or to any part thereof, except such interest as they may have acquired by assignment from some of the original associates; that the defendants -Tappan, Coe, Williams, Baker and Nash account for the rents, issues and profits of -said premises and be directed to pay over the same, together with the proceeds derived from the sale of said premises, to the original associates and their assigns according to their respective rights and interests, and that the rights of the plaintiffs and each of the defendants in and to any and all property held by them may be adjudged and determined, and that such an accounting and distribution may be had' as may be necessary for the. determination and enforcement of the rights and interests of the plaintiffs and for such other and further- judgment and relief as may be just.

Eight of the nine defendants who demur are mentioned and described in the complaint as among the original associates; the other defendant demurring, namely, the Chase National Bank, the complaint alleges, is one of those defendants who has or claims to have “ some interest in or to said premises and to the funds derived from the sale thereof.”

The demurrer is a several one; that is, each of the defendants above named demurs on the ground that the complaint does not state facts sufficient to constitute a cause of action against it. The demurrer of the Chase National Bank must be overruled if any cause of action is stated against it in the complaint. By demurrring the, said defendant admits the allegation that it claims to have some interest in or to the premises mentioned in the complaint and to the fund derived from the sale thereof. To use the words, slightly changed, used by the Court of Appeals in the case of Townsend v. Bogert, 126 N. Y. 376, if the-interest of the defendant the Chase National Bank is of a nature not subject to trial in this action it may plead the facts in its .answer and upon the trial seek a dismissal of the complaint as against itself, or it may safely disregard the action entirely, since -no personal judgment is sought against it, or it may answer showing that its presence is not essential and ask to have the complaint dismissed as to it, and so its rights will be perfectly preserved without leaving the plaintiff to blunder in the dark to an imperfect remedy.

But does not the complaint state facts sufficient to constitute a cause of action against the demurring defendants ? In answering that question it is to be borne in mind that it is not sufficient to sustain a demurrer to the complaint on the ground that it does'not state facts sufficient to constitute a cause of action that the facts are imperfectly or informally averred or that the complaint lacks definiteness .or precision, or that the material facts are argumentatively averred; but that the complaint will be deemed to allege what can by reasonable and full intendment be implied therefrom. Marie v. Garrison, 83 N. Y. 14; Zebley v. F. L. & T. Co., 139 id. 467.

It may be, as claimed by the defendants demurring, that the complaint fails to show that all the parties interested in the fund are joined as parties to the action, although I think the fair inference to be drawn from the complaint is that all such parties are made parties to the action; yet, if the complaint does so fail to show, the remedy is by demurring on the ground that there is a defect of parties plaintiff or defendant, and if such objection is not taken, either by demurrer or answer, the defendant is deemed to have waived it. Code Civ Pro., § 499. The defendants have not demurred upon the ground above stated, but have demurred upon the ground that there is a defect of parties, in that the Clearing House 'Association has not been' made a party to the action. By taking that specific objection they waived all others.'

It is perhaps unnecessary for me to say in this- connection that if it' should appear on the trial that the court could not make a complete determination of the controversy without the presence of other parties, it would direct them to be.brought in. Code Civ. Pro., § 452.

The claim of the defendants demurring, as I understand it, is to the effect that it appears upon the face of the complaint that the purpose for which the purchase money of the premises .mentioned in the complaint was contributed by the original associates, was not for the acquiring of that particular property, but that such money was raised as a general building fund for the Clearing House Association, and .that any newcomer into.that association, although contributing nothing towards the fund, was jointly interested with the original associates; that the purpose of the contribution survived the sale of the premises arid continues for the benefit of -the association at large, as distinguished from the contributors, and that as all the members of the association are jointly interested, there is no .personal right in the plaintiffs and the other original associates to demand a separation of the fund resulting from the sale - of said premises.

I do not so understand the complaint. As I understand it, it alleges that certain persons, acting as trustees for certain banks, designated the original associates^ purchased in trust for these banks, with money contributed by them, certain premises to be used for the purposes of a clearing house association, to effect and facilitate their exchanges as a part of .the business conducted by each of-the said banks severally; that said trustees have sold said premises 'and that said premises are no longer used for the purposes aforesaid, and that said' trustees have the proceeds of the sale thereof in their possession; that they refuse to account for the same, “ and .that no other person or corporation other than the said original associates has contributed anything to or has any interest in.the said fund or any part thereof.”

How, if the object for which the premises mentioned in the complaint were purchased has been accomplished, if they, have been sold and there is in the hands of the persons who are acting as trustees a fund arising from such sale, and if no other person or corporation other than the original associates is interested in said fund or any part thereof, it seems to me that the plaintiffs are entitled to the relief demanded in the complaint.

Whether the trust on which the property was held was or was not recognized by the Revised Statutes is immaterial. The trust was not a secret one; it was declared by another instrument in writing, and, therefore, is not within the provision of the 1st Revised Statutes, 728, § 51, which declares that “ where a grant for a valuable consideration shall be made to one person and the consideration thereof shall be pqid by another, no use or trust shall result in favor of the person by whom such payment shall be made, but the title shall vest in the person named as alienee.” Woerz v. Rademacher, 120 N. Y. 62.

The effect of the transaction was that the legal and equitable title to the premises, was in the fifty-nine banks who were known as the original associates as tenants in common, and the five individual grantees had no title to the property, but had at most a power in trust to sell and distribute the proceeds among those who held the legal and equitable title.

They have sold the premises; they should distribute the proceeds.

The demurrer is overruled, with leave to the defendants to • withdraw the demurrer and answer on payment of costs.

Ordered accordingly.  