
    Marie A. Jahn, Plaintiff, v. Patrick J. Gleason et al., Defendants. August Roediger, Plaintiff, v. Patrick J. Gleason et al., Defendants. Wilhelmina Messuik, Plaintiff, v. Patrick J. Gleason et al., Defendants.
    (Supreme Court—Queens Special Term,
    February, 1895.)
    A temporary receiver appointed in an action for partition occupies a position which prohibits him from buying the property for himself from those who do not know that he is the purchaser.
    Where such a receiver purchases the land from the heirs through a third person for much less than its actual value, the vendors are at liberty to avoid the sale on repaying the amounts received.
    Action to set aside conveyances of land on the ground of fraud.
    The facts appear in the formal decision which follows the opinion.
    
      II Randolph Anderson, for plaintiffs Marie A. Jahn and August Boediger.
    
      Qeo. W. Stephens, for defendants.
   Bartlett, J.

These cases would have been disposed of long since if counsel had not delayed so long in submitting their briefs, the last of which I did not receive until late in December last. The formal decisions filed herewith, under section 1022 of the Code as amended last year, contain a sufficient statement of the facts. The evidence leaves no doubt whatever in my mind of the correctness of the conclusion that the defendant Gleason was really the purchaser of the city hall property in Long Island. City, which he held at the time as receiver in the partition suit.

The proof seems to me equally plain that the consideration paid to each of these plaintiffs was utterly inadequate. If there was no other evidence as to the value of the property, the fact that $1,000 was paid to the widow for her right of dower is enough to indicate that the same purchaser was obtaining the fee at far less than it was really worth when he paid the heirs at the rate of less than $700 for their combined interests.

It is manifest that the receiver occupied a position which prohibited him from buying the property for himself from those who did not know he was the purchaser. The rule which he violated is clearly stated by Chancellor Walworth in the case of Van Epps v. Van Epps, 9 Paige, 237, where he says: “ The rule of equity which prohibits purchases by parties placed in a situation of trust or confidence with reference to the subject of purchase is not confined to trustees or others who hold the legal title to the property to be sold; nor is it confined to a particular class of persons, such as guardians, trustees or solicitors. > But it is a rule which applies universally to all who come within its principle; which principle is that no party can be permitted to purchase an interest in property and hold it for his own benefit where he has a duty to perform in relation to sucli property which is inconsistent with the character of a purchaser on his own account, and for his individual use.”

Now, there was a plain conflict here between the interest of Mr. Gleason as an intending purchaser of this property from the heirs and his duties as a receiver of the property in the partition suit. As receiver he was bound to get as much rent as possible. As an intending purchaser it was his interest to have the receipts for rent fall off, so that the apparent value of the property might diminish and the owners he induced to sell for a lower price. As receiver he was bound to manage the property as a whole in such a way as to maintain and, if possible, increase its value, real and apparent. As an intending purchaser it was his interest to manage it in such a way as to decrease its apparent value until it passed into his own hands. The equitable principle to which I have referred clearly applies to a person situated as he was, and under such-circumstances the vendors, who have sold their interests for far less than the property was actually worth, are at liberty to avoid the sale upon repaying to the purchaser the amounts which they have received from him.

In the brief for the defendants it is argued that the form of each complaint is such that no -relief can be granted, in the absence of a finding of actual fraud, on the ground that Mr. Gleason was disqualified to purchase by reason of his position as receiver. I think, however, that the allegations of the complaint in each case are quite sufficient to sustain a judgment in favor of the plaintiff upon the ground stated in the formal decision. Each complaint expressly alleges the appointment of Mr. Gleason as receiver.

There should be judgment for the plaintiffs setting aside the deeds conveying their respective interests to the defendant Brassell, upon the payment by them to the defendant Gleason of the amounts which they respectively received. Plaintiffs must also have their costs.

The following is the formal decision referred to in the opinion:

In pursuance of the provisions of section 1022 of the Code of Civil Procedure, the court makes the following decision, stating concisely the grounds upon which the issues in this action have been decided, and directing the judgment to be entered thereon:

Prior to his death in 1889, Louis Boediger owned the premises described in the complaint, which may conveniently be designated as the city hall property in Long Island City. Among his heirs at law were Marie A. Jahn, August Boediger and Wilhelmina Messuik, each of whom inherit a one-seventh interest in the premises mentioned. Wilhelmina Messuik instituted a suit for the partition of the property in the County Court of Queens county; and in that suit Patrick J. Gleason was duly appointed receiver of the premises, pendente Ute, with power to collect the rents. He qualified as such receiver, took possession, collected the rents, and has never accounted as receiver or been discharged, so far as appears in this action. The partition suit appears never to have been discontinued, although there is no evidence that anything was ever done therein after the appointment and qualification of the receiver.

Subsequently, on the 19th'of July, 1889, at the request of Tilomas F. Donnelly, Esq., who was her attorney in the partition suit, Firs. Jahn executed a deed whereby she conveyed to Rodey S. Brassell her interest in the city hall property in Long Island Oity. The consideration which she received for this conveyance was $1,000, which was much less than the actual value of her interest at that time. Although Fir. Donnelly explained the deed to her, Mrs. Jahn did not understand that she was to receive no more for her interest. Mr. Bras-sell, the grantee named in the conveyance, was really the agent for Mr. Gleason to effect the purchase of the property. Mrs. Jahn did not know this, nor did she know anything about Mr. Brassell.

The property was subsequently conveyed by Mr. Brassell to Mr. Gleason, who held the title thereto at the time of the trial of this action.

The acquisition of these premises in this manner by Mr. Gleason, who was the real purchaser, at a time when he was the receiver in partition, was in violation of the rule of law which forbids a person to purchase property when he lias a duty to perform in reference thereto which is inconsistent with the character of a purchaser on his own account and for his own benefit. The plaintiff is, therefore, entitled to avoid the sale upon paying to him the amount which she received, with interest.

Judgment is directed setting aside the conveyance from Marie A. Jahn to Rodey Brassell, dated July 19, 1889, with costs, upon payment to the defendant Gleason of $1,000, with interest from that date.  