
    Philip S. Fowler and Others, as Trustees for the Subscribers to the Fund to Establish a Canning Factory at Lowville, N. Y., Respondents, v. William M. Coates and The United Security Life Insurance and Trust Company of Pennsylvania, as Trustees under the Last Will and Testament of William Gillespie, Deceased, Appellants, Impleaded with Thomas L. Gillespie and Others.
    Fourth Department,
    November 11, 1908.
    ¡¡Real property — deed construed — condition precedent to title — forfeiture of estate — rights of grantors acting through trustees — re-entry.
    "Where subscribers to a fund raised for the' purpose of inducing a person to move a factory to a certain village, convey lands to the owner of the factory under a deed providing that the conveyance is conditioned upon the operation of the manufacturing enterprise in the locality for ten years from a certain date, that the grantee’s title shall become absolute only at the expiration of said period and upon the faithful operation of the plant during the same, and that in case of failure so to operate all his rights shall cease and terminate, there is nota conveyance of the fee subject to be defeated by the grantee’s failure to perform, but on the contrary the vesting of title is postponed until performance, for the full stipulated period.
    Hence, where the manufacturing plant was destroyed by Are before the expiration of the period and the owner became insolvent and abandoned the same, the grantors are entitled to a decree declaring a forfeiture and removing as a cloud upon the title a mortgage executed by the grantee.
    .Even assuming that a defeasible fee was created by said instrument and construing the proviso as a condition subsequent, yet where the subscribers also , gave a sum, of money to the grantee upon bis agreement to operate the plant and he failed to protect himself against fire by insurance, and becoming insolvent abandoned the project without fault on the part of the subscribers, he is not absolved from carrying out his covenant and equity will decree a forfeiture.
    Although said conveyance was made by one of the subscribers as trustee for the others, the right of re-entry on the breach of the condition is not restricted to the nominal grantor, where after the breach by the grantee he .conveyed to the other subscribers.
    Although the subscribers on the insolvency of the grantee took a deed of his interest from the referee in bankruptcy, but-without assuming to pay a mort- • gage executed by the grantee, they did not lose their right of re-entry upon the breach of the condition or hold subject to the mortgage.
    Abuse and Robson, JJ., dissented, with memorandum.
    Appeal by the defendants, William M. Coates and another, as trustees, etc., from a judgment of the Supreme Court in favor of the 'plaintiffs, entered in the office of the clerk of the county of Lewis on the 4th day of June, 1908, upon the decision of the court rendered after a trial at the Lewis Special Term:
    
      Edward J. Boshart, for the appellants.
    
      Charles S. Mereness, for the respondents.
   Spring, J.:

The plaintiffs in this action, with others, were subscribers to a fund raised in the village of Lowville, Lewis county, for .the purpose of inducing one William G. Conover to move his canning factory, then located in the State of Delaware, to said village and there, operate the same. The amount raised exceeded $4,000. On April 23, 1901, Conover and a committee of the subscribers, comprising the plaintiffs and one West, entered into an agreement Whereby the-said Conover agreed to move his said factory to Lowville and operate the same, on a site to be furnished by said committee, for the period of ten years from August 1, 1901, and the committee agreed to pay to said Conover $3,285, besides providing the site for the location of the plant,- and these covenants were fulfilled by the committee. '

By the terms of the contract Conover • agreed to remove his canning plant and manufactory to Lowville, install the same on the site selected, and “in good faith to run and operate the same as a canning and preserving factory, or some other manufacturing enterprise upon said site that will utilize said buildings erected thereon.”

In consideration of the fulfillment of the covenants undertaken by Conover (designated the contractor), the committee representing the subscribers covenanted to cause to be delivered to him a deed of conveyance of said site, and the contract contained the following: “ Said deed to be executed by said owner and delivered to said contractor upon the arrival of said buildings, machines, machinery, tools, implements, apparatus and appliances at Lowville, aforesaid, and said deed of conveyance conditioned upon the faithful conduct-and operation of such manufacturing enterprise on said site for the period of ten years from said'1st day of August, 1901, as aforesaid, and said contractor’s title to said real estate to be and become absoInte only at the expiration of said period of ten. years, and upon the faithful operation of said plant during said period.”

On the 23d of May, 1901, and before said plant had been installed at Lowville, the owner of the site conveyed the same toDeWitt C. West, one of said Committee, on behalf of the subscribers, and who was styled in the conveyance “ as trustee for the subscribers to the fund to establish a canning factory at Lowville-,. N. Y.” On the same day said West, with the same description as to 1ns agency or trusteeship, conveyed the said premises to said Conover upon condition that said plant and manufactory be “ completed and ready for operation * * * before August 1st, 1901; ” and upon the further condition “ that said Conover or Lis heirs-or assigns, shall in good faith run and operate-the same as a canning and preserving factoiy, or some other manufacturing enterprise upon said premises-that will utilize said buildings erected thereon for and during the period of ten (10) years from said 1st day of August, 1901, as aforesaid, and the title of said William G. Conover to said real estate and rights hereby conveyed hereunder, to be and become absolute only at the expiration of said period of "ten years, and upon the full compliance by said Conover, or his heirs or assigns of the above-mentioned conditions and of the faithful operation of said plant during said period. And this conveyance is made and accepted upon the aforesaid express conditions; and in case said Conover, or his heirs or assigns, shall make default or fail to .perform any of the aforesaid conditions and shall fail or neglect in good faith to operate said manufactory at any time within said period of ten years, then and- in the event of such failure all interest of said Conover in the above described premises and rights shall at once terminate and cease, and said premises and "rights shall at once revert to said party of the first part, who may at once re-enter and take possession of said premises and rights, and without notice evict all persons therefrom in possession thereof, and use, occupy and enjoy said premises, as fully as'though this conveyance were-not made.”

The deed to West, as trustee, was recorded, in May, 1901, and the one from him to Conover was not recorded until March 22, 1906.

Conover located his plant and operated it as a canning factory until November 18, 1904, when the principal buildings were destroyed by fire. Conover did not rebuild the plant, and in March following was adjudged a bankrupt, and his creditors real-. ized no more than one per centum of their liabilities. Conover abandoned the enterprise, and at the time of the trial resided in the •State of Pennsylvania. West moved from Lowville, and in June, 1906, “ individually and as trustee for the subscribers to the fund to establish a canning factory at Lowville,” conveyed to the plaintiffs by quitclaim deed the premises in controversy. In June, 1904, Conover executed to the defendant mortgagees a mortgage on the premises to secure the payment of $25,000, no part of which has been paid.

The action is .brought by the plaintiffs on behalf of- the subscribers to secure a judgment declaring the termination and forfeiture of the Conover title, and that the mortgage mentioned is invalid, and'for the removal of the same as a cloud upon the title, and the judgment conforms to the relief sought.

It is the claim of the appellants that the title vested absolutely in Conover upon the conveyance by West, subject to be defeated upon his failure to perform the conditions assumed by him, and-that his covenant was to operate the existing plant for ten years, - and as performance was rendered impossible because the qplant was destroyed by fire, he was relieved of its fulfillment.

I doubt whether the title absolutely vested in Conover. It was the intention of the parties to withhold the vesting of ownership until he had operated the plant for ten years; The covenants in the deed explicitly so. state, and in the event of failure to operate the same, “ all interest * * * and rights,” not the fee title of

Conover in the premises, shall at once terminate and cease.” The parties, therefore, understood that there was to be no transfer of the fee title to him until performance and for the full- stipulated period.

In determining whether a condition is subsequent or otherwise, the intention of the parties as gathered from the instrument is controlling. (Nicoll v. N. Y. & Erie R. R. Co., 12 N. Y. 121, 130; Booth v. Baptist Church, 126 id. 215, 242.)

In the cases cited on the appellants’ brief, possession and the vesting of the title were both indispensable to carry out the purpose for which the purchase was made. To illustrate, in the Nicoll Case {supra) the land was conveyed to the railroad corporation upon condition that it construct its road within a certain time, so that it may well have been held that the- parties expected the title to pass. . .

We will, however, assume that the title was vested in Conover absolutely, subject to be defeated upon failure to perform. In other words, that the limiting clause is to be construed as a condition subsequent, The subscribers raised the money to purchase a site, and donated to Conover over $3,000 upon his agreement to operate the plant for ten years. We inay limit it to the existing plant. But Conover at least agreed to carry on a manufacturing business in that plant for ten years. At the time the agreement was made, the performance of this undertaking was possible. lie might have protected himself against such a loss as occurred by providing for the contingency in the conveyance. He might have insured his property and limited his rebuilding to the insurance money received. He assumed without restriction a reasonable undertaking. The destruction of the plant rendered it impossible for him to perform. He had but little insurance and was left penniless. The subscribers who had raised the money and purchased the site for a specific purpose were not responsible for the loss. Through no fault on their part, there was a failure to carry on the plant, and when that happened Conover’s rights terminated and ceased and the premises reverted ipso facto to the grantor West, as trustee, who was the one of the committee representing the subscribers in the conveyance to Conover. We appreciate that a forfeiture of a condition subsequent is regarded with' disfavor; Con-over, however, abandoned his project. He is not vindicating his title or asserting that he has complied with the covenants which he undertook when he accepted the deed. Ho one contends that the plant was operated for the ten years, or that Conover continued the venture after the fire. If we are right in the proposition that Conover was not absolved from his undertaking to carry on the plant for ten years because of its destruction by fire, then there is no injustice in declaring a forfeiture of the condition. The enforcement of the agreement of the parties compels the decree of forfeiture. “ A court of. equity cannot control the lawful contracts of parties.” (4 Kent Comm. [6th ed.] 131.)

It is held that in ease of a condition subsequent which is impossible of performance at its inception, or is subsequently rendered so by act of God or of the grantor, the estate becomes -unconditionally vested in the grantee. (2 Washb. Real Prop. [3d. ed.] 7; 4 Kent Comm. [6th ed.] 130.)

I have been unable, however, to find any authority for the proposition that the estate vests indefeasibly where the. condition was capable of performance at its creation, but performance was subsequently made impossible through no fault or intervention' of the grantor, and not by act of God.

The interests of the subscribers are to be considered, not wholly those of Conover. They have lost in the project. The dilapidated buildings now left are not worth more than $500. So at best they cannot be compensated for their contributions. The enterprise which they attempted to foster cannot be fulfilled^

It is claimed that the right of re-entry on forfeiture for breach of condition is lodged in the grantor; and that "is the general rule. West, however, was one of the committee. He held as trustee for the benefit of the subscribers, and evidently to obviate the annoyance of obtaining a deed from all the members of the committee. He was not the owner individually. Had he died the right of re-entry would not have passed to his heirs at law. . When it was inconvenient for him to act further he conveyed to tire-other members of the committee. He was simply as a matter of convenience eliminated from representing the subscribers.

The referee in bankruptcy conveyed Conover’s interest in the premises to the plaintiffs as trustees, subject to the mortgage of defendants, and it is urged that the grantees by accepting the conveyance succeeded to Conover’s rights, and were bound' to perform the conditions imposed upon him in the deed from West. The transfer, without the explicit declaration, would be subject to the mortgage,, if Conover held any interest. ' The grantees did not assume to pay the mortgage. Nor do I think the acceptance of a referee’s deed destroyed the right of re-entry upon the forfeiture of the condition subsequent in the West conveyance. As a matter of precaution it was prudent for those trustees to.obtain the interest of Conover, even though but nominal. If they had been able to obtain a release from the mortgagees, the title would have been effective in the plaintiffs without the expense of an action to obtain a judgment decreeing forfeiture.

The equities of the parties to the suit are not with the mortgagees. They, as trustees and executors, loaned a large sum of trust funds to Conover before the West deed was recorded. They either recklessly did this without any knowledge of Conover’s title, /or it wholly depended upon the West deed, or else improvidently turned over these trust funds to Conover relying upon his ability to carry out the conditions assumed by him and without any insurance upon the property to indemnify them in the event of loss by fire.

The judgment should be affirmed, with costs.

All concurred, except Kruse and Robson, JJ., who dissented in a memorandum by Kruse, J.

Kruse, J. (dissenting) :

The covenant or condition in the deed to Conover required him to remove his canning plant and manufactory .and all buildings, machines, machinery, tools, implements, appliances, apparatus and fixtures used or. kept for use in connection therewith and erect the same on the lands in controversy ; also in good faith run and operate the same as a canning and preserving factory or some other manufacturing enterprise upon said premises- that will utilize said buildings erected thereon for and during the period of ten years from August 1, 1901.

Conover removed the buildings, erected the same upon the lands and operated the same until they were Substantially destroyed by fire, which occurred before the expiration of the ten-year period. It is not claimed that such destruction was through the fault of Con-over or that there was any insurance on them to make the loss good.

I think, under the circumstances, there was no breach, and, therefore, no forfeiture. I think he was not required to rebuild. Conditions subsequent are not favored and are strictly construed. Beyond that I am inclined to the opinion that there are other difficulties in the way of the plaintiffs’ right to maintain the action. I,, therefore, vote for reversal.

Robson, J., concurred.

Judgment affirmed, with costs.  