
    Jane A. McKenna, Appellant, v. The Brooklyn Union Elevated Railroad Company and The Brooklyn Heights Railroad Company, Respondents, Impleaded with Mary E. Gordon.
    
      Reservation in a deed of easements used by an elevated railroad and the damages recoverable therefor — it does.not sever the easements from the fee hut creates a trust for the grantor on the part <f the grantee — the record of the deed is notice thereof to the railroad company — the rights of all parties adjusted in an action by the grantor against the grantee and the 'railroad company.
    
    Jane A. McKenna, who owned premises abutting upon a street in which an elevated railroad was constructed, brought an action to enjoin the operation of the railroad and to recover damages for the impairment of the easements appurtenant to her premises. During the pendency of the action she conveyed the premises to one Gordon by a deed in which she attempted to reserve the easements appropriated by the elevated railrbad company, and the right of action against it for the damages to the fee and rental value of the premises. Subsequently, and without McKenna’s knowledge or consent, Gordon, for a consideration of $500, granted to the elevated railroad company the" right to maintain and operate the railroad in front of the premises and released it from all right of action for damages theretofore or thereafter accruing.
    
      Held, that as the easements affected by the elevated railroad were appurtenant to the premises, they could not be severed therefrom by the reservation contained in the deed to Gordon, and that the latter consequently had power to execute the release to the elevated railroad company;
    That the reservation contained in the deed was, however, effective as between the grantor and grantee and all subsequent grantees who took title with notice of the existence of the reservation;
    That the record of the deed was notice to the elevated railroad company of the existence of the reservation, and that when it paid the $500 to Gordon it did so at its peril;
    That in an action brought by McKenna against Gordon and the elevated railroad company, the court might adjust all rights of the parties;
    That in such an action McKenna was entitled to show that the $500 did not represent the full value of the easements appropriated by the railroad company;
    Thafrthe court might determine the consideration which should be paid by the elevated railroad company for the release, and upon payment of that sum to McKenna allow the release to stand;
    That if the amount determined by the court warranted it, the court might direct Gordon to pay over to McKenna the §500 received by Gordon, in part payment.
    Appeal by the plaintiff, Jane A. McKenna, from a judgment of the Supreme Court in favor of the defendant railroad companies, entered in the office of -the clerk of the county of Kings on the 7th day of November, 1903, upon the decision of the court rendered after a trial at the Kings County Special Term dismissing the complaint as to said railroad companies and directing a recovery by the plaintiff from the defendant Mary E. Gordon of a certain, sum of money adjudged to have been received by the latter as trustee for the plaintiff.
    Prior to the construction of the defendants’ elevated railroad on Myrtle avenue the plaintiff owned certain premises on that street. In September, 1900, she began suit for an injunction and for $9,000 damages for trespass upon her easements. Issue was joined, and the action is pending and on the calendar. In July, 1901, the plaintiff conveyed the said premises to the defendant Gordon, and the conveyance, was immediately recorded. The deed contained this clause: “ Subject also to the party of the first part’s reservation of all the right, title and interest of, in and to the easements occupied, abridged or used by The Brooklyn Union Elevated. Railroad Company, and their legal lessee, The Brooklyn Heights Railroad Company, and a certain action now pending against said company and their lessee for injury to the fee and rental of said premises, and all right, interest, judgments or otherwise that may accrue therefrom, it being the intention of the party of the first part to convey said described premises, reserving all the right or rights of damages against the said railroad companies by reason of the interference with the easements of light, air and access, and to hold the party of the second part free from any charges or costs, judgments or otherwise,, which may arise by reason of any action now pending against the said railroad companies, upon the understanding and agreement that the party of the ‘second part will join with the party of the first part in all necessary papers or actions to enable the party of the first part to effectually and legally carry on her action, terminate the same, or carry out the directions or orders of the court in which such action is brought, and upon the termination. of said action, by settlement or by judgment of the court, to ' release to the said railroad companies a right to .the easements now occupied, used or abridged by them.”
    In May, 1902, Gordon made, executed and delivered to the Brooklyn Union ’Elevated Railroad Company and the Brooklyn Heights Railroad Company the following release: “ Know all men by these' presents, that I, Mary E. Gordon, wife of Edward F. Gordon, residing at Ho. 579 Myrtle Avenue, Borough of Brooklyn, and owner of premises Ho. 579 Myrtle Avenue, in the Borough of Brooklyn and City of New York, bounded and described as follows: Beginning at a point formed by the intersection of the northerly side of Myrtle avenue with the easterly side of Classon avenue; running thence northerly along the easterly side of Classon avenue sixty-two (62) feet- ten and three-quarter (10f) inches; thence easterly parallel with Myrtle avenue twenty-four (24) feet; thence southerly parallel with Classon avenue sixty-three (63) feet two (2) inches to the northerly side of Myrtle avenue, and thence westerly along the northerly side of Myrtle avenue twenty-four (24) feet to the point or place of begin- . ning. Together with the buildisngs thereon erected, and the appurtenances, for and in consideration of the sum of One dollar and other valuable considerations, receipt whereof is hereby acknowledged, hereby grant unto The Brooklyn Union Elevated Railroad Company and its lessee, The Brooklyn Heights Railroad Company, their successors and assigns, forever, the right to maintain and operate an elevated railroad in Myrtle avenue in front of said premises, as now constructed, maintained and operated. And hereby release the. said, companies and each of them, their successors and assigns, from all my claims and damages arising heretofore or hereafter from the construction, maintenance and operation of said railroad in front of said premises, as now constructed, maintained and operated. And hereby covenant that I am the owner of the said premises, and have good right to convey the above-described property rights.”
    In March, 1903, the plaintiff brought this action against the railroad corporations and Gordon, praying that Gordon be declared the trustee of the plaintiff; that her conveyance or release to the railroad companies be declared void, be set aside and canceled; that Gordon be ordered to become a party to the original suit of plaintiff against the defendant railroad companies to recover fee and rental damages, and for any other requisite relief. The defendants answered, but Gordon withdrew her answer át the trial.
    The decision of the Special Term found the facts heretofore stated, and also that the Brooklyn Union Elevated Railroad Company and the Brooklyn Heights Railroad Company paid Gordon in consideration of the release $500; that it was executed and delivered without the knowledge and consent of the plaintiff, but without collusion, and that the consideration paid was fair and reasonable. The complaint as to the defendant corporations was dismissed, with costs, and the court adjudged that the $500 was received by Gordon as trustee for the plaintiff, who was entitled to recover such sum" against Gordon, with costs.
    
      George W. Sickels [Cyrus V. Washburn with him on the brief], for the appellant.
    
      Charles L. Woody and George D. Yeomans, for the respondents.
   Jenks, J.:

The easements being appurtenant to the premises, were unseverable by any reservation by the grantor. (Pegram v. Elevated R. R. Co., 147 N. Y. 135; Kernochan v. N. Y. E. R. R. Co., 128 id. 559, 568; Foote v. Elevated Railroad, 147 id. 367; Western Union Tel. Co. v. Shepard, 169 id. 170.) Therefore, the grantee of the premises could execute the release to the defendant corporations. (Authorities, supra) But the reservation was effective between the grantor and grantee. In Begramis Case (supra) the court, per Gray, J., say: “ There need be no question as to the right of the parties to agree to make such a reservation as this; but the effect of it, while certain in so far as it could not sever the easements from the land, was a question between them, in the dis^ position of which the concern of the defendants was that in any action relating to a damage to the property for invasion of its easements the legal owner should be bound by the result.” The Western Union Tel. Co.'s Case (supra) holds that such a reservation may be construed as a contract, and that the grantor should have the damage therein referred to as further consideration, Landón, J., for the court, saying: It was competent for the grantor and grantee to agree that a part of the consideration of the land conveyed should consist of the money damages thereafter to be recovered from the. trespassers.” It Was also held that under the circumstances a trust arose in favor of the grantor, commensurate with his interest in the subject-matter.

All subsequent grantees, with notice of the existence of this right, stand' in the shoes of the original grantee (Trustees v. Lynch, 70 N. Y. 440, 449), where Allen, J., quotes the language of Lord Cottenham in Tulk v. Moxhay (2 Phil. 774): “If an equity is attached to property by the owner, no one purchasing, with notice of the equity, can stand in a different situation from the party from whom he purchased,” and says that a grantee is not. absolved from a covenant in equity, for the technical reason that it did not run with the land. (See, too, Pom. Eq. Juris. [2d ed.] § 1048; Seymour v. Seymour, 28 App. Div. 495, 498; Pinch v. Anthony, 8 Allen, 536.) Bispham, in his Principles of Equity (6th ed. § 263), says: “But if the purchaser has notice of the trust, be will be bound in the same way as the original trustee; in other words, he will be construed to hold the legal title as a trustee for the equitable owner (citing authorities). '■ The same rule will be enforced for the protection of * * * vendors who have parted with the legal title, but who still may have an equitable lien for unpaid purchase-money ; - * * and parties for whose benefit covenants have been entered into which affect the land, although they may not technically run with the land,” citing authorities.

The next question then is whether the defendant corporations had notice of this reservation prior to their taking of the release in question. I think that the record of the deed containing the said reservation was such notice. (Clapp v. Byrnes, 3 App. Div. 284, 296; affd., 155 N. Y. 535; Sweet v. Henry, 175 id. 268, 276; Western Union Tel. Co. v. Shepard, supra; Perry Trusts [5th ed.], § 239.) In Clapp v. Byrnes (supra) this court, per Hatch; J., said: “ It seems too plain for argument that the recitals in the deed to Gallan, the declaration of the purposes for which it was made and accepted, and the restriction of the power to acts that might be lawfully and properly done or performed under and by virtue of the instrument, constituted notice to all subsequent purchasers from him. (Williamson v. Brown, 15 N. Y. 354; Judson v. Dada, 79 id. 380; O’ Connor v. Waldo, 83 Hun, 491; Suarez v. De Montigny, 12 Misc. Rep. 263-265 ; Kirsch v. Tozier, 143 N. Y. 390; 2 Devlin on Deeds, §§ 1001, 1002, 1005.) A conveyance with a recital of its purposes and object is notice thereof, and the grantee takes subject to trusts implied as well as express. (Cuyler v. Bradt, 2 Caines Cas. 326.) ” It matters not that the defendants paid value. (Bisp. Eq. [6th ed.] § 262, citing Le Neve v. Le Neve, 3 Atk. 646 ; Perry Trusts [5th ed.], § 217; Beach Mod. Eq. Juris. § 346.)

The case is analogous to that of a vendor who has a constructive trust or lien upon the land for the amount of purchase money unpaid, which exists against the defendant corporations as subsequent purchasers with notice. Perry on Trusts (5th ed. § 232) says: “ The principle upon which the lien depends is this : that a person who has obtained the estate of another ought not, in conscience, to keep it, and not pay the consideration-money in full; and a third person, who receives the estate with full knowledge that it has not been paid for, ought not, as a matter of equity, to be allowed to keep it without paying for it.” Kent, C., in Garson v. Green (1 Johns. Ch. 308), quotes Lord Redesdale in Hughes v. Kearney (1 Sch. & Lef. 132): “The heir cannot be permitted to hold what his ancestor tmconscientiously obtained; and is not a thing unconseientiously obtained when the consideration is not paid ? ” (See, too, Champion v. Brown, 6 Johns. Ch. 398; Chase v. Peck, 21 N. Y. 581.) Pomeroy, in his Equity Jurisprudence (2d ed. § 1048), says: Equity impresses the trust upon the property in the hands of the transferee or purchaser, compels him to perform the trust if it be active, and to hold the property subject to the trust, and renders him liable to all the remedies which may be proper for enforcing the rights of the beneficiary. It is not necessary that such transferee or purchaser should be guilty of positive fraud, or should actually intend a violation of the trust obligation; it is sufficient that he acquires property upon which a trust is in fact impressed, and that he is not a bona fide purchaser for a valuable consideration and without notice.” ■

The defendant companies plead, inter alia, the payment of $500 to Gordon, their grantor, and the grantee of the plaintiff. But is the payment to Gordon effective to release the equitable lien or the trust which is in favor of ’the plaintiff % There was nothing in the reservation in the deed or in the record that establishes the right or the authority of Gordon to receive this amount, which, as we have seen, must be regarded as in the nature of the balance of the consideration paid by Gordon for her purchase of the premises. When the defendant corporations paid this money to Gordon they knew of the reservation in the deed and the purpose thereof. Gordon had ne authority in law or from the plaintiff to receive this money. Even if she be regarded as a trustee in the light of the effect of the reservation, she thereby had no authority to receive this money as if for the plaintiff. The defendant corporations, therefore, paid to Gordon at their peril. (See Moore v. American Loan & Trust Co., 115 N. Y. 65, 77, 79; Perry Trusts [5th ed.], § 926.) But even if the ■ law clothed Gordon with authority or the plaintiff did the like, I think that there was error in the rulings of the learned court. The court found that - the consideration, i. e., the $500 paid to Gordon, was fair and reasonable, but to this, the plaintiff excepted, and she presses upon our attention that after the defendants had proved this payment her offer of competent evidence as to the value of such easements was wholly excluded under exception. This part of the consideration was unliquidated. The full consideration of the property consisted in part of the compensation to be made to the plaintiff grantor for the trespass, not what the trespasser might be willing to pay. The defendant corporations pleaded and proved that they paid $500 to the grantee of the plaintiff and their grantor. The court found that the transaction was unknown to 'the plaintiff, and the plaintiff proved that she had never received the money. There was, therefore, no evidence of her assent or ratification. In Western Union Tel. Co. v. Shepard (supra) the court, per Landon, J., say : “ Equity looks to the substance of things, and will carry out this contract in its spirit and intention. as the findings of the trial court have established it. Equity, when it is needful, always inquires into the consideration, and for thatipurpose does not stop at the letter of the instrument but goes behind it, in all cases between grantor and grantee, and such of their assigns as have notice of the facts,” citing authorities. I am of the opinion, ado]3ting the theory that the conveyance was to stand and. the full consideration, therefore, was to be established, that the plaintiff, as against this evidence of payment of the $500, was entitled to offer the testimony rejected otherwise the consideration due the vendor would be fixed in part at the option of her vendee. All of the parties are before the court, and, therefore, the court may adjust the equities and rights of all the parties and * " * * render a complete decree,” (Pegram v. Elevated R. R. Co., supra; Western Union Tel. Co. v. Shepard, supra.) The release or conveyance to the defendant companies may stand affirmed. Perry on Trusts (5th ed. § 171) says: “ There is a distinction between cases of fraud in which equity will set aside the sale altogether, and those cases in which it will allow the sale to stand, and hold the purchaser as a trustee.” The amount of the “ consideration ” may be determined and adjusted in this action, and the court may, if such amount warrant it, direct the payment by Gordon of the $500 theretofore received by Gordon upon such amount.

The judgment should be reversed and a new trial be granted, costs to abide the final award of costs.

All concurred; Bartlett, J., in result.

Judgment reversed and new trial granted, costs to abide the final award of costs.  