
    Barker Place as Ex’r., etc., App’lt.; v. Jedidiah K. Hayward, Resp’t.
    
    
      (Court of Appeals,
    
    
      Filed December 10, 1889.)
    
    1. Referee—Non-suit by—Findings on.
    Where a referee grants a non-suit at the close of plaintiff’s case, he has no right to make any findings of fact depending upon disputed or inconclusive evidence, and on appeal defendant is bound to show that on the undisputed evidence he was entitled to judgment.
    2. Money had and received.
    Defendant was the attorney and brother-in-law of plaintiff, who was executor of his mother’s estate, and under the advice of defendant, in order to prevent her husband’s creditors from seizing a mortgage of $25,000, plaintiff assigned it to him, he paying but one dollar, and he assigned it to one Fuller who foreclosed it and defendant received $8,500 of the proceeds, for which this action was brought, Held, that the assignments are to be weighed in connection with all the other facts and it cannot he said that there is not a very strong conflict in the evidence when three of plaintiff’s witnesses testify absolutely that there was no sale of the mortgage, etc., and no transfer upon any consideration whatever.
    3. Same—Evidence.
    The fact that plaintiff entered in his inventory the sum of $12,000 as received from the mortgage, did not furnish absolute evidence that he actually received that sum from the defendant or from any other source.
    
      ■i. Same—Estoppel.
    Plaintiff was not estopped by the fact that the mortgages, etc., were assigned to keep them out of the way of the creditors of the husband of testatrix, as there was no intent to defraud creditors of the estate, or anyone else.
    Appeal from judgment of general term of New York superior court, reversing judgment in favor of defendant and ordering a new trial.
    
      Chas. F. Wells, for app’lt; J. K. Hayward, for resp’t.
    
      
       Reversing 13 N. Y. State Rep., 288.
    
   Earl, J.

This action was brought by the plaintiff as sole acting executor of Susan A. Place, deceased, against the defendant, to recover three sums of money alleged to have been received by him to and for the use of the plaintiff. One jtem was a sum of $10,000 and upwards alleged to have been received by him upon a bond and mortgage, which came to the plaintiff as executor. The other two items, amounting together to about $12,000, were alleged to have been received by him upon two endowment policies issued to the testatrix upon the life of her husband James K. Place, which became due subsequently to her death, in November, 1885. The action was referred to a referee and tried before him, and at the close of the plaintiff’s evidence the defendant, without announcing that he rested his case, moved “ that the complaint be dismissed on the merits,” and the referee granted the motion, and the plaintiff’s counsel excepted. Thereafter the referee made his report containing findings of fact and of law, and concluding that the complaint should be dismissed on the merits and judgment rendered against the plaintiff on the merits of the action, with costs to the defendant. Subsequently, upon the settlement of the case, this took place:

“ On settlement of case on appeal the plaintiff’s attorney having in his proposed case given the following notice:
“A motion will be made upon the case before the referee to change or modify his findings so that the decision on the final motion will be judgment for the defendant dismissing the complaint, with costs, and not a judgment or decision or finding upon the merits.
“And the plaintiff’s attorney having made said motion, the same is denied by the referee on the whole case, and the plaintiff’s .attorney excepts.”

Section 1209 of the Code provides as follows: “A final judgment, dismissing the complaint, either before or after a trial, rendered in an action hereafter commenced, does not prevent a new .action for the same cause of action, unless it expressly declares, or it appears by the judgment roll, that it is rendered upon the merits.”

The defendant by procuring a dismissal of the complaint on the merits probably had this provision of the Code in mind and intended to procure a judgment that would bar a new action for the same cause. And the plaintiff’s counsel by the motion he made on the settlement of the case sought to have the dismissal in such form that the judgment would not bar a new action. The precise scope of that provision of the Code we do not now determine. nevertheless what the referee did was to nonsuit the plaintiff. We can give no other significance to the proceeding. Therefore he should have made no findings of fact except such as would justify a nonsuit upon the trial. Under the Code the referee was required to make findings of fact and of law after granting the nonsuit; but he had no right to make any findings of fact depending upon disputed or inconclusive evidence. Therefore to maintain this judgment the defendant is bound to show that there was no disputed questions of fact which upon a jury trial the court would have been required to submit to the jury, and that upon the undisputed evidence he was entitled to judgment. Scofield v. Hernandez, 47 N. Y., 313.

As these moneys were received by the defendant after the death of the testatrix, and as all the dealings with reference thereto between him and the plaintiff took place after her death, he claimed upon the trial that the plaintiff could not in his representative capacity maintain this action, but that the same should have been instituted .by him in his individual name. But the referee held before any evidence had been given that the plaintiff could maintain this action in his representative capacity; and that ruling then became the law of the case, and even if erroneous the defendant, having had judgment in his favor, cannot now complain of it. But upon the argument here he expressly waived any objection that the plaintiff could not maintain this action in his representative capacity, and therefore this nonsuit cannot be maintained upon the ground, if a valid one (which we do not determine), that the plaintiff in his' representative capacity could, not maintain "the action.

The plaintiff is not, by anything which appears in the case, es-topped from claiming against the defendant that the proceeds of the mortgage and of the insurance policies received by him belonged to and were payable to the plaintiff.

The defendant during all the times of the transactions under consideration was the plaintiff’s attorney, and the evidence tends to show that the plaintiff, during those times, acted under and implicitly relied upon his counsel and direction. It appears, without dispute, that there was fear on the part of the defendant, whose wife was a daughter of the testatrix and a sister of the plaintiff, and interested in the estate of her mother, as well as on the part of the plaintiff, that the mortgage and the insurance policies might be seized by adverse claimants, creditors of the husband of the testatrix; and therefore the plaintiff claims that, under the advice of the defendant, on the 22d day of November, 1869, he assigned the mortgage to him for the purpose of protecting the same against such adverse claimants. The consideration expressed in the assignment was $12,000. At the same time the defendant executed to the plaintiff the following instrument:

I, J. K. Hayward, agree to reassign the mortgage of $25,000 to Barker Place, on the repayment of the sum, principal and interest, loaned to Barker Place by said Hayward.
J. K. Hayward.

The plaintiff and his father, who at the time had the principal management of the estate of the testatrix, both testified that the assignment of the mortgage was merely formal, without any consideration 'whatever, and that but a dollar at any time was paid to the plaintiff for the same. On the 16th day of April thereafter, the defendant, by an assignment absolute in form, in consideration of $12,000 paid to him by W. J. A. Fuller, assigned the mortgage to him; and on the 23d day of April thereafter Arthur T. Sullivan, who was at that time one of the executors of the will of Susan A. Place, for the recited consideration of one dollar, also executed an assignment of the same mortgage to Fuller. The mortgage was subsequently foreclosed, and Fuller received as the net proceeds of the foreclosure $33,949.29; and the defendant, having repaid to Fuller the $12,000 which he had paid for the mortgage and the interest thereon, Fuller gave a check for the amount payable to the order of the defendant and to the plaintiff as executors. Twenty-five thousand nine hundred and forty-nine dollars and twenty-nine cents of the proceeds of that check came to the hands of the plaintiff, and $8,500 thereof came to the hands of the defendant, and that sum, at least, and the interest thereon, the plaintiff claimed to recover in this action.

These various assignments do not estop the plaintiff from recovering in this action, and it was not necessary for him to bring an action to set them aside before he could recover. If it is true, as claimed by the plaintiff, and as testified to by him and his witnesses, that the defendant never paid a dollar for the mortgage and received the $8,500 without any consideration, under an original understanding and agreement by which the proceeds of ihe mortgage were really to belong to the estate represented by the plaintiff, if he received such proceeds, professing to the plaintiff to act in his interest and in the interest of the estate, then when he received them they became money which belonged to the estate, and the plaintiff can recover the money in this form of action for money had and received. The money having been received by the defendant in pursuance of the arrangement and understanding between him and the plaintiff, he cannot set up the assignment to him, which has become functus officio, as an absolute bar to plaintiff’s claim. The instruments executed are evidence, and may be very persuasive evidence in the defendant’s favor showing that he and Fuller became the owners in some way successively of the mortgage, he as pledgee and Fuller as absolute owner. But their force and effect as evidence are to be weighed in connection with all the other facts, and it cannot be said that there is not a very strong conflict in the evident ^ when three witnesses on the part of the plaintiff testify absob ¿ely that there was no sale of the mortgage and no transfer of b upon any consideration whatever.

The considerable delay which took place after the transactions of which the plaintiff complains before he commenc jd this action furnishes no defense to the action, but is a fact '„o be weighed with all the other evidence in the case. Nor does the fact that the plaintiff entered in the inventory of his mother’s estate the sum of $12,000 as received from the mortgage furnish absolute evidence that he actually received that sum from the defendant, or from any other source. He testified that it did not represent money received by him, but that he inserted the amount in his inventory under the direction of the defendant, and that he verified the inventory at the same instigation, although the item was not, in fact, true. The facts connected with the making of the inventory do not estop the plaintiff, but constitute evidence against him to be weighed with the other evidence.

So, too, the plaintiff must not necessarily fail in this action because these assignments of the mortgage and the insurance, policies were made to keep them out of the way of the creditors, not of Mrs. Place, but of her husband. There was no intent to defraud creditors of the estate, and, so far as I can discover from the case, no actual intent to defraud any one. It was not so alleged in the answer, and the intent was certainly not conclusively proved upon the trial. It is undoubtedly true that where one transfers property to another for the purpose of cheating his creditors the courts will not aid him to recover it back, for the reason that he and his grantee have been engaged in a fraud and crime, and being in pari delictu, the courts will not aid either of them. But here, if any wrong was committed or intended by these transfers, the plaintiff and the defendant were not m pari delictu, and the defendant cannot invoke the rule mentioned for his protection. He was the plaintiff’s lawyer, and the plaintiff was acting under his direction. He was advised that the transfers were necessary to protect and cover up the property against the assaults of the creditors of his father. The scheme was concocted and carried out under the advice of the defendant, and under such circumstances there is no reason for enforcing the rule invoked by the defendant. As between the parties there was no absolute transfer, but a transfer made for the benefit of the estate, and to save the property to the estate, and the rule of law referred to should not, under such circumstances, be so applied as to aid the defendant in holding property thus acquired, and to thus enable him to consummate a wrong and a fraud upon the estate. Goodenough v. Spencer, 15 Abb., N. S., 248; Ford v. Harrington, 16 N. Y., 285. Still further, the maxim ex turpi cousu non oritur actio does not apply to the plaintiff prosecuting in his representative capacity for the benefit of the estate he represents, and so we held in Wetmore v. Porter, 92 N. Y., 76. “

It is the claim of the defendant that at the time of the transfer •of the mortgage to him he loaned the plaintiff $19,000 for the benefit of the estate, and that this mortgage was transferred to him as part security for that loan. But the plaintiff and his father both testified that the mortgage was not transferred for that purpose; that the $19,000 was not loaned to the plaintiff, but to the firm of Place & Co., and that a large portion of that loan had been paid by the firm to the defendant, and that the defendant took and held the firm notes payable to his wife for whatever "balance was due him on account thereof.

There was, therefore, evidence bearing upon the claim of the plaintiff to the proceeds of the mortgage received by the defendant to be weighed, and if the referee, upon the evidence, had found that the $8,500 received by the defendant out of Fuller’s check, •or at least a large portion of it, was due to the plaintiff, the finding would have been so far sustained by the evidence that this -court could not have disturbed it

The two insurance policies were .assigned by the plaintiff to Fuller December 2, 1870. The plaintiff claims that the assignments were made under the advice of the defendant for the purpose of protecting the policies against the claims of the creditors of James K. Place, and that they were merely formal without any consideration whatever. And there is evidence tending very strongly to show that his claim is well founded. The defendant received upwards of $12,000, the entire proceeds of the policies, in 1875, and there is evidence tending to show that he received this sum without any consideration, and that at the time he received it the money equitably and justly belonged to the estate represented by the plaintiff.

In these transactions with the plaintiff, the defendant was acting as his legal adviser. He was not only his lawyer but his brother-in-law, thus bearing towards him very confidential relations. As -against the plaintiff under such circumstances he was required to make very strict and satisfactory proof of his right to these moneys, and not leave that right to be spelled out by inferences of doubtful import. The burden was upon him to establish affirmatively that his transactions with his client were fair and just, that his client acted on full information of all the material circumstan■ces and that he did not take undue advantage of his client’s complaisance, confidence, ignorance or misconception. Whitehead v. Kennedy, 69 N. Y., 462. He should have the full benefit of the documentary evidence showing that the title to this money had passed out of the plaintiff, but that evidence should be weighed with all the other evidence, and thus the truth reached and the rights of the parties determined, due influence being given to the confidential relation mentioned.

Therefore, if we regard the disposition made of this case at the •close of the plaintiff’s evidence as a non-suit, the exception thereto was well taken, and for that reason the judgment should be reversed.

But we must reach the same conclusion if we should assume upon this record that the case was closed upon both sides and finally submitted to the referee, and that he took all the evidence into consideration, weighing it, and made his findings accordingly. The trial was not altogether a satisfactory one. It was conducted with considerable passion, at least upon one side, and many questions were put on the cross-examination of the plaintiff and one of his witnesses which cannot be justified by any rules of law. The objectionable questions were so numerous that we cannot take time to comment upon them particularly, or to show their bearings or connection with other evidence. We will simply specify some of the questions which we regard as objectionable. They are as follows: “ Did you hold yourself out as a partner of Place & Co.? ” “Don’t you know what relations to a firm constitutes a partner? ” “What was there peculiar about the circumstances of your relations to Place & Co. after July, 1869 ? ” “What partnership acts, if any, were there which you could not perform in Place & Co. after majority? ” “Then you were a general partner to all intents and purposes, were you? ” “Did you furnish any capital to Place & Co. on or after July 1, 1869 ? ” “Did you find any capital in the firm when you went into it? ” “Did you ever •draw out anything as profits? ” “Has there ever been a settlement of the affairs of that firm relating to you showing to what profits you were entitled, what losses chargeable with and your relations to the firm ? ” What peculiar obligations were you under which restricted your interest in the profits of the firm to one-fourth of one per cent.? ” And more' of the same general character on the same subject. Again, “ Then your oath to that inventory was false swearing, was it? ” “ Can you think of anything that does not make Hayward’s receipt from you of the Sullivan & Baker place bond and mortgage ridiculous, except to secure $7,000 of the $19,000 of November 22, 1869?” “Then it is your idea of what is right and proper that if a pledgee collects a chose in action which he is holding as security for a loan he should not have pay for his collections, is it ? ” “ Do you consider a lawyer’s services worth nothing who takes the responsibility of successfully hiding $12,000 for five years? ” “How, in your opinion, did the return of the surplus of the refinery mortgage not required to secure the balance of the $19,000 militate against the alleged pledge of the refinery mortgage? ” How do you think the $20,000 which you said last Tuesday was paid back, in derogation of the claim of a pledge ? ” “ Did it go to show that there was no pledge of the mortgage?” “If that payment to Barker Place left enough of the assets in his hands to secure his advance, how would that fact derogate from the theory of a pledge?” “Will you state how,, in your opinion, taking title out of Sullivan and conferring it on Hayward by mortgage of Front St. equity afforded a better or any title at all in Hayward ? ” “ Did either of the executors know more about the transfers than you did, or as much? ” “Do you claim or pretend that Mr. Hayward tricked the executors, by deception, out of all of those deeds ? ” “ Do you think that Mr. Hayward believed, in November, 1869, that the unassailed assets, needed further protection ? ” “ Now, Mr. Place, do you think that Hayward knew that the assets needed no protection, and cheated the executors into an attempted protection; or do you think that Hayward believed that they needed protection and attempted to secure it by the transaction in evidence. Which of these theories do you now think, in the light of all that has transpired, is the true explanation of what Hayward caused to be done-to the assets of Susan A.Place ? ” “ Do you think that Hayward did all that he could do, at that time, to protect the interests of the estate of Susan A. Place ? ” “ That is, that you cannot tell what you now think of Hayward’s devotion in ’69 and ’70 to the interest of the estate of Susan A. Place; why can't you tell ? ” “ Do you think that Hayward, during all this period, was looking out for himself as well as the estate of Susan A. Place? ” “Will you name any act of Hayward’s of omission or commission during ’69 up to ’76 in which you think that Hayward acted, in reference to the estate of Susan A. Place, either dishonestly or foolishly ? “ Have you any opinion that he did not do as well as he could in making the transfers ? ” “ Do you decline to stigmatize any of Hayward’s acts of omission or commission in making the transfers ? ” “ Do you wish to give any further answer, or can you make any further statement in derogation of Hayward’s devotion to the estate, to the executors and to yourself, in making the transfers in 1869 and ’70 ? ”

I do not perceive how any of these questions were proper or material. It is possible that some of them could have been allowed in the discretion of the referee upon cross-examination, and that many of them were harmless. But the latitude of cross-examination allowed transcended the bounds of a reasonable discretion.

The insurance policies were assigned to Fuller, but I find in the case no evidence whatever that they were assigned to him upon any consideration or benefit at the time passing to the plaintiff or to the estate, and the findings of fact by the referee to the contrary of this are without support.

• I am not sure that I fully comprehend the following finding of law, to wit: “ That the transaction between plaintiff, defendant and Fuller, as to the proceeds of the refinery mortgage of July, 1872, constistuted a ‘restoration’ of the net profit thereof by Fuller to plaintiff and defendant in portions agreed upon at the time by the parties upon defendant’s restoration to Fuller of his, Fuller’s, purchase money and interest therefor.” I do not perceive in what sense it can be said that the payment by Fuller to the plaintiff and the defendant of the proceeds of the mortgage constituted a “ restoration ” of such proceeds to them. They had never before had the proceeds. Fuller either held the mortgage as a security for $12,000 loaned by him to the defendant or he held it as absolute purchaser for that sum, and then made a voluntary gift to the plaintiff and the defendant of the whole balance after payment of what was due to him upon his loan or purchase. We do not think the evidence fairly warrants a finding that the proceeds thus turned over to the plaintiff and defendant were divided up in portions agreed upon at the time by them in the sense that each took a portion as his share of the gift. I also have difficulty in comprehending the fourth finding of law, which is as follows: That the transaction between plaintiff and Fuller relating to the insurance policies, November and December, 1870, constituted a pledge or mortgage by plaintiff to Fuller, by deed of the said insurance policies and of the obligations to plaintiff of the estate of Susan A Place, to secure the payment of defendant’s loan, then held by Fuller. I find no evidence in the case justifying a finding that the insurance policies were pledged or mortgaged to Fuller. It is not claimed that he advanced or loaned any money to the plaintiff.

What is meant in this finding by the words of the obligations to plaintiff of the estate of Susan A. Place ? ” What obligation to the plaintiff of the estate of Susan A. Place could the plaintiff mortgage or pledge to Fuller ? And how could the plaintiff mortgage or pledge to Fuller the insurance policies “ to secure the payment of defendant’s loan then held by Fuller ? ” I do not find in the case any evidence of any loan made by the defendant to the plaintiff which was then held by Fuller. If it is meant that the policies were pledged to secure a loan of Fuller to the defendant I do not find in the case any evidence of such a loan.

The following is the seventh finding of law: “ That plaintiff’s position is not bettered by his theory that he was merely a voluntor or a voluntor in fraud of creditors, cran executor voluntor, or an executor voluntor in fraud of creditors, or a client of the grantee of voluntor’s grantee, or a “ hider ” by deed of his assets from paramount creditors.”

This is certainly incomprehensible and what part it played in the final conclusion reached by the referee cannot be perceived.

The eighth finding is as follows: “ Barker Place is estopped to deny the security import of his deeds or the absolute sale character of Sullivan’s transfer, except in an action brought for the purpose of setting them aside.” This is an erroneous view of the law as I have already shown, and it may be and it is indeed probable that it was the application of the rule of law therein involved that influenced and largely controlled the decision. The plaintiff was not estopped in this action from denying that he made the transfers of the mortgages or policies either absolutely or as security" He had the right to show that the moneys claimed by him came' to the defendant’s hands under the arrangements and understanding testified to by him and his witnesses and that the moneys, notwithstanding the formal character of the transfers, actually belonged to him. •

The ninth finding of law is tainted with the same error. As we have before stated, an action for money had and received is the-proper remedy to recover the proceeds of these choses in action in the hands of the defendant upon the facts alleged and testified to by the plaintiff and his witnesses. So, whether we treat the disposition of this case by the referee as a non-suit or a decision after final submission of the case upon the merits and after weighing the evidence, I think the judgment should be reversed.

I may not fully have comprehended the argument submitted on the part of the defendant. The following are excerpts from his brief; When a mortgagee hands over to the mortgagor money equal to the face of the mortgage, which he then receives, mutuality is so stronglyimplied by these co-equal,simultaneous exchanges, expressed in appropriate writings, under seal, made and delivered inter sese, as mortgages, that a denial by one party of mutuality without more does not impeach the purport of the transaction, as to the other party, much more after the mortgage res has properly paid the mortgage debt.” “Again, performing all the acts, writings and acknowledgments, for a proper pledge, for so important a purpose, under the peculiar circumstances in which the Places then were, and then impotently denying the intended efficiency of of their intended, purpose, while still keeping the money, only shows the stupid mendacity which these people are willing to resort to for the purpose of cheating a relative, who went out of his ivay to risk his all to help them in distress.”

“Plaintiff would have the court believe that Mr. Hayward was responsible for putting his own money into the inventory as proceeds of the $25,000 B. & M.; granted, and it shows mutuality, intended by Hayward, which cannot be rebutted by any mere words of the plaintiff, which do not amount to an estoppel of defendant.”

“ The denial of one party to perfected exchanges, by proper deeds, under seal, does not rebut mutuality.'’''

“ Plaintiff’s theory is worse than stultification; it is crime in six persons, three clients and three lawyers, sixteen crimes, and such lawyers too as A. H. Wallis and W. J. A. Fuller; mendacity can go no further with the dead and absent.”.

“ Plaintiff’s non-mutuality theory is the word of a subsequent insolvent against his sealed and recorded agreement when he was solvent”

“ Plaintiff’s position is that it was a fraud in Hayward to be repaid out of plaintiff’s ‘ cats and dogs ’ for the money loaned on them, or for Mr. Hayward to intend, in fact, the purport of his sealed writings, held out to the creditors, or to make the estate pay for what it received, or to make Barker Place pay for what he received, or in not allowing these ‘ frauds ’ to cheat him as well as their other creditors. They treat it as a fraud that Mr. Hayward required security for his $19,000 loaned to protect tainted assets,, which loan was to go into a firm ‘ run by a superannuated, indicted bankrupt in the name of a blind man, and a clerk, as dummy partners. But the choicest morsel of fraud, which they set up against Mr. Hayward, is the fact that he pursued the §33,949.29 itself for his fee in collecting the same for Mr. Fuller, instead of pursuing Mr. Fuller after he (Fuller) had turned over all the money to Barker Place.”

“ Again, defendant’s $19,000, if it went under these deeds, saved all these crimes and made all these acts meritorious, besides saving these self-accusing rogues from prison, protecting their ill-judged advances on tainted assets (surrogate’s account), their testatrix’ ill-gotten estate (Sedgwick v. Place); their voluble perjuries {their theory as to surrogate’s oaths) ; their ready crimes (transfers); their attempted frauds (id.); their bogus firms (Place & Co.); their bankrupt reputations from disgrace. It is sorry gratitude a relative (by marriage only), friend and lawyer gets for jeoparding Ms all to save such abandoned wretches (their theory), from a doom confessed to be merited ten times over. How valuable is the testimony of persons who can thus afford to criminate themselves for so small a prospect of a successful ‘steal.’ ”

“ Hayward was not so insane as to put his client, Barker Place, into the same old hole. One such episode in the family was enough for one son-in-law, especially the one who furnished the money and brains to keep the family out of prison. When challenged to say whether Hayward did not take the deeds to secure the ‘ deposit,’ §19,000, they would not say no. Where then, oh, where, their trover or case?

“ That he, James K. Place, caused mortgages for $19,000 to be made on the estate assets for protection, in a case where cash received and admixture were the just of the protection, and did not consider the cash received from the mortgages as relating to the mortgage, or received cash from mortgagee without intending mutuality, when the want of mutuality made such transfers crimes in three clients and three lawyers, sixteen crimes, as well as useless for the purpose intended.”

Judging from the referee’s findings, we think this same line of argument must have been addressed to him. While I may not fully comprehend it, I have carefully studied the case and have reached the conclusion that the ends of justice require that there should be a new trial in the calm atmosphere which should surround a judicial inquiry, that the facts may be more fully developed and what is now left obscure and uncertain may be cleared up. I have not intended to intimate any opinion as to the merits of the controversy between these parties, as we have only the evidence upon one side, nor do I even express any opinion as to the weight of the evidence now before us. The new trial is granted solely for the errors of law pointed out.

Judgment reversed and a new trial granted, costs to abide event.

All concur.  