
    Heloise Durant Rose, Respondent, v. William W. Durant, Appellant.
    
      PowbV of attorney by a sister to a brother, construed, in the light of his representations — when acts of the brother as administrator, and a surrogates decree are not conclusive on the sister —failure to take objection to a defect of parties by answer or demurrer—the interests of persons, not parties, protected on an accounting — a surrogate’s decree, how pleaded.
    
    
      Semble, that, where a power of attorney, prepared by a brother and presented by him to his sister, with the representation that it constitutes him her agent and .attorney in respect to all the property left by their deceased father, is executed by the sister without legal advice and on the faith of the representation, and she thereafter acts on the belief that she has conferred upon the brother the exclusive management of her father’s estate and of her interest therein, she is, in an action to compel him to account for his management of the estate, entitled to have the power of attorney construed in the light of such representation, and not by the strict terms of the instrument.
    In such a case the plaintiff is not concluded by the fact that, after the father’s death, the defendant procured certificates which were made out in the name of the father as “agent,” to be changed by adding a statement that the agency was for the mother of the plaintiff and defendant, nor bjr a decree of a surrogate made upon the defendant’s accounting as administrator of his father’s, estate, where it is not properly pleaded as a defense in the answer.
    Nor is the objection, that the creditors of the plaintiff’s father and of the defendant as administrator of his father’s estate were not made parties, available-where it was not taken either by demurrer or answer.
    Facts which justify a decree compelling an accouAting by the brother, considered.'
    
      Semble, that the defendant may properly show, upon the reference under the. interlocutory judgment, that persons, not made parties, are entitled to pay-' ment in preference to the plaintiff out of the property belonging to the father,, and that the referee may, by his report, make- suitable provision for their protection.
    
      Semble, that in pleading a decree of a Surrogate’s Court, it is necessary to allege either .the jurisdictional facts, or that the decree was duly made and entered in a proceeding of which the surrogate had jurisdiction
    Appeal by the defendant, William W. Durant, from an interlocutory judgment, of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Rew York on the 2d day of March, 1899, upon the decision of the court rendered after a trial at the Rew York Special Term, ordering a reference for an accounting to the plaintiff from the defendant.
    This action was brought to compel, an accounting by the defendant, the plaintiff’s brother, as administrator of the estate of her father, and to recover her share of the proceeds of the estate, in' the .management of which the plaintiff claimed she had made the defendant her agent and attornev in fact.
    
      Carlisle Norwood, for the appellant.
    
      John E. Parsons, for the respondent.
   O’Brien, J.:

A summary of the facts underlying this controversy is unnecessary in view of the opinion on the former appeal where they are stated. (Frethey v. Durant, 24 App. Div. 58.)

The principal question for determination is, was it proved that a fiduciary relation existed between the plaintiff and the defendant. Upon the former appeal where a judgment dismissing the complaint was reversed, it was held that the testimony then adduced by the-plaintiff justified the conclusion that such a fiduciary relation existed.. At the second trial evidence was introduced by the defendant to-overthrow the plaintiff’s, upon the question of a fiduciary relation, by which he sought to establish that such relationship was confined to that property consisting of certificates for bonds and stocks-of the road which stood in the father’s name as trustee for the plaintiff. ■ In support of this contention, great stress is laid upon •the wording of the power of attorney executed and delivered by the plaintiff to the defendant.

The language employed in the power' of attorney, is not limited, to the property which stood in the father’s name as trustee for the plaintiff, and if she is to be believed, as she was by the- trial court, she was led to think from the representations made her that the power constituted the defendant her agent and attorney in respect-to all the property left by the father. As it was prepared and presented to her by the defendant, she is not to be bound by the strict-terms of the instrument, but it is to be construed in the light of what it was represented to her to be. In other words, having executed it without legal advice and on the faith of what was told her, she has a right to have it construed as she was induced to believe-it really was. That she acted on the belief that the power of attorney and the verbal assent which she gave to her brother conferred upon him the exclusive management of the father’s estate and of her interest therein, is evidenced by her entire conduct thereafter. She employed no one else, took no steps to protect her interests, but, confiding in her brother, she left this country for a sojourn in-Europe, and only returned, when, after repeated efforts, she failed to secure any explanation or accounting of the father’s estate from the defendant.

Her failure for a long time to demand an account is now urged as an argument against her, it being contended that if she was entitled to one, she would not have waited so long. It is shown, however, that she made frequent inquiries, and was told that it was inadvisable to stir up matters because"there was a $20,000,000 judgment-which in the event of assets being disclosed, might absorb them all. It is not by this -record made to appear that there ever was such a-judgment, yet the use made of it to stay the plaintiff’s hand is significant and characteristic of all the ■ defendant’s attitude towards her. He had- obtained a power of attorney ; he had secured her assent ter his management of the estate; he had permitted her to depart for Europe with the impression that he would protect her interests; and "he was thus enabled to adopt a policy which gave him the means to yun a yacht and to live in luxury, while his mother, to use her .own expression, became dependent upon him ; and his sister, with the exception of the proceeds realized from some securities which were in the father’s name as trustee for her when he. died, has never received any benefit from or explanation concerning the great ¿amount of property which it. was supposed in the family that the ■father possessed.

That the defendant, when the father died, was not a man. of means, and that as the result of his management of the railroad property and lands he became wealthy, are not disputed; nor is any explanation offered other than that the wealth came from dealing with property in which the father was in some way interested. When charged with wrongdoing and unfair dealing in the father’s estate by his sister, the natural instinct of an innocent man would be to court an inquiry and seek the opportunity to vindicate himself. .Here, however, when after repeated refusals to give any explanation nr accounting, the defendant is brought into court, instead of promptly meeting the charges, numberless objections and obstacles are interposed to the effort to secure or wring from him an ¿accounting.

The defendant’s evidence does not outweigh that given by the -plaintiff, although upon some minor particulars as to dates and places, it was shown that the plaintiff’s recollection was not good. Thus as tb when and where the power of attorney was. executed — which.is in one aspect entirely immaterial — the plaintiff’s recollec. fion ' was faulty. But in this there is nothing extraordinary or unusual, for many years have elapsed, and upon such a detail she might very well be mistaken without ■ destroying the force of her testimony as to what actually occurred, or as to what wás said by the defendant as an inducement to obtain her signature to the power of attorney and her assent to his managing the property.

Undoubtedly, if the relation between the defendant and his sister was not fiduciary, he could not be compelled to make a disclosure. Whether such a relation existed was upon conflicting evidence presented for determination to the judge below, and with his conclusion, after an examination of the voluminous record submitted •on this appeal, we do not think we should interfere.

Upon the finding that such a fiduciary relationship did exist, the interlocutory judgment for an accounting legally and properly ■followed; but to what extent and for what property can only be determined upon the accounting. Upon the sale of the certificates for the stock and bonds to the Delaware and Hudson Canal Company, there were included certificates which concededly belonged to third parties, and which were in the defendant’s hands for the purpose of effecting the sale. There were also certificates in favor of the mother for which the defendant is accountable to her. There •remain, however, certificates which were made out in the name of the father as agent ” ; but for whom is not made clear. The fact ■that after the father’s death, by direction of the defendant, there was .added to the stubs of the certificates a statement that the agency was for the mother, is not conclusive upon the plaintiff. In addition, there were lands covered by the Rosekrans and Cheney rnort.gages, which, it appears, were subsequently transferred to a certain -timber company. To the extent that these certificates, stocks, bonds, mortgages and lands belonged to the father, the defendant •.should account, and, less the amount paid out for- expenses and a reasonable compensation for services and subject to the rights of ■creditors, the plaintiff is entitled to her one-third share. •

It is insisted that such an action as this could only be brought .against the defendant as administrator, and that the decree of the surrogate upon his accounting as administrator is conclusive on the plaintiff. Both these objections were disposed of on thé former appeal and all we need add to the reasons given for not holding the .surrogate’s decree conclusive is that no such defense is properly pleaded. As the Surrogate’s Court is of limited jurisdiction, it was necessary to allege either the jurisdictional facts or that the decree was duly made and entered in a proceeding in which the surrogate had jurisdiction.

There are some findings to which objection is made and which, if permitted to stand as they are, might leave the referee in some •doubt as to the extent to which he might go upon the accounting! To avoid any uncertainty, the findings .and decree_ should be con•strued, as they are susceptible of being construed, into holding that upon the accounting the referee should proceed to ascertain what proportion of the certificates, mortgages and lands which came into the possession of the defendant, was. actually the property of the ■father, whether in his name, as agent, or otherwise. And the referee can also ascertain to what extent he should account for purchases made of claims, accounts and judgments against, the father and in addition determine what interest she had in property not in the father’s name at the time of his death, and which, therefore, did not pass to his administrator, hut which defendant secured and reduced to his possession by the outlay of sums much less than the value of the properties.

Objection is made because the court did not specifically state-.thafc Dr, Durant.had interests in the securities and property at the time of his death, and because the court required an accounting with regard to the “ Durant Interest in the Adirondack Railway Company.” It is sufficient to say that the point at issue was whether or not the plaintiff was entitled to an accounting, and it will b'e the business of the referee to state the- interests of Dr. Durant, The words “ Durant interest,” it may be inferred, relate to the interests belonging to the Durant family, inasmuch as this suit does not concern outsiders who may have owned securities in the Adirondack property,, which, possibly, were controlled by Dr. Durant. In decreeing that the plaintiff receive a one-third interest, the intention was to award to the plaintiff a one-third share of what, upon the accounting, should appear to have belonged to her father at his death — and of property which, while acting in a trust relation, the defendant secured. The exact nature and amount of this interest, the referee after an accounting can alone determine.

As correctly said in the former opinion : • “It was not incumbent upon the- plaintiff to show affirmatively that the defendant had failed to account for and pay over to the plaintiff moneys belonging to her as an heir of her deceased father. It is well settled that when a fiduciary relation is shown to exist, and property or property interests have been intrusted to an agent or trustee, the burden is thrown upon such agent intrusted to render an account and to show that all his trust duties have been fully performed, and the manner in. which they have been performed. It is assumed that the agent or trustee has means of knowing and does know what the principal ■ or céstui que trust cannot know, and is bound to reveal the entire truth. (Marvin v. Brooks, 94 N. Y. 71.) It is not necessary in such a case as this that the plaintiff should show that there will be something found due to her on the accounting. That fact can never be known with certainty until the account has been taken. The right to this accounting results from the facts that the fiduciary relation has been created and assumed by the agent or trustee, and that the principal or cestui que trust is not informed and does not know what has been done with reference to the property or property interests confided to the agent or trustee.”

We do not understand that upon the trial the learned judge found or decided what property or how much of. it -belonged to the father, but only that a fiduciary relation existed, and that the defendant, having undertáken to manage the plaintiff’s interests as well as his own, should give an account of his stewardship and pay over to her her just share of what, upon an accounting, the referee shall determine is due her.

To obtain such relief it was essential to prove that there was fiduciary relation and that there was some property which reached the hands of the-agent or trustee for which no account has been rendered. Here, not only the first was proved, but the inference is not less certain that there was property for which the defendant should account and for which no account has been given. Thus the defendant concedes that the plaintiff is entitled to a certain share in the $30,000 forfeited on the Crane contract; and it is made inferentially to appear that the defendant obtained by virtue of his position property which, as shown by the sale to the Delaware company, resulted, in the realization of a large sum of money. In addition we have the fact appearing that lands on which the .certificates. were a lien were indirectly conveyed to him. Nor can we escape the conclusion that the' manner in which the defendant dealt with the property which was in the name of the father was unauthorized, for instance, the transfer of certificates 'and of the interest in the mortgages to Mrs. Durant, the manner in which the outstanding judgments were bought up in the name of the defendant’s wife, and the recording of the deeds of the family house without authority. These acts, together with the haste with which possession of the property was secured, the refusal to give any information to his sister and the use made of the alleged $20,000,000 judgment against the father -— all of which finally resulted in the defendant’s becoming rich and the plaintiff poor although each was presumably equally entitled to benefit from the father’s property — amply justified the conclusion reached by the learned trial judge that an account should be had. .

The only other objection necessary to notice is that the action is defective because the proper parties are not before the court, it being .claimed that thé creditors of the father and his administrator as such, should be parties. The Code of Civil Procedure provides that where such a defect appears upon the face of the complaint objection must be taken by demurrer, and where it does not so appear, it must be taken by answer. The defendant not having availed-himself of either,of •these remedies', was not in a position to successfully urge this objéc•tion upon the trial nor again upon this appeal.- Moreover, it will .be competent upon the reference, without the presence-of such parties, for the defendant to show who, in preference to the plaintiff, would be entitled to payment out of property belonging to .'the father; and, upon its appearing that there are persons other than the plaintiff and defendant interested in the money or. property for which the defendant shall account, the referee can by his report make suitable provision for their protection.

Our conclusion is that the interlocutory judgment was right and should be affirmed, with costs.

Van Brunt P. J., Rumsey, Ingraham and McLaughlin, Jj., concurred. .

Ingraham, J.

(concurring) :

I concur in the affirmance of this judgment and wish to add a few words to the opinion of Mr. Justice O’Brien.

1 think the record shows that the authority given to the defendant was given and received for the purpose of enabling the. defendant to have a iree hand in dealing with all the-securities and property which had belonged to the plaintiff’s father or in.whicli the plaintiff had an interest. It is quite evident that the plaintiff had been given to understand that in consequence of judgments which it was alleged had been -recovered against her father, whatever property there was should be dealt with in some way other than the usual method of • administration. The power of attorney authorizes th'e defendant to “ sell, transfer and assign all shares of stock or bonds of The Adirondack Railway Company standing in my name on the books of' the said company, or owned by me, and all trustees’’ certificates for such stock and bonds, to surrender, change and receive such certificates, and generally to use, manage and control all my rights and interests in such stock, bonds and certificates ” in said company. The plaintiff testified that she signed this power of attorney after an interview between her mother, the defendant and herself, at which the defendant stated that “ he being the man of the family, that it was naturally right he should attend to our affairs; that it was to our, my mother and his, interest that the estate- should be 'settled, and to carry out father’s intention in these negotiations which had been pending, and he had mother’s power of attorney, and he wanted mine for the same purpose, and then when the road was sold and the land, that there would be some-debts to-be 'paidi, and after that there would be about a million and a half coming to us¡, and there was just the widow and the two children; the widow would have a third-, and the children would divide equally, "x" * * he' had said before that we were all in the same boat and our interests were identical, so that he added at the end' that if I did not sign it that of course we being three having equal interests, that two could freeze out the other pne; ” that it was relying upon these statements and to enable the defendant to realize from the property left by their father that the power of attorney was executed. -The plaintiff further testified that all the proceedings to manage, and dispose of all the property left by. the father or in which the plaintiff had an interest were left to the defendant to manage. That the defendant did take' possession of all the property left by the plaintiff’s father as well as all the property to which the plaintiff was entitled, and that he managed and controlled it, is established; and it is difficult to see upon- what principle the defendant can refuse to account for the property belonging to his father or in which the plaintiff had an interest which came into his hands. By the execution 'of this instrument the defendant betiame the agent in fact for the plaintiff, and as such received and administered property which had belonged to the plaintiff as well as that which had belonged to his father. Whether hq received it as his father’s administrator. or as his father’s successor in some indefinite trust, or as the direct attorney for the plaintiff, ''acting under the terms of this power of attorney, is not material. What the plaintiff is entitled to, is to have an accounting by the defendant of all the property which he received that belonged to her father or in which she had an interest.

As to the decree of. the Surrogate’s Court upon the accounting of ■the defendant as administrator of the father, it is quite apparent that it is in no way binding upon the plaintiff. In the first, place, it is not pleaded as an adjudication. There is no allegation in the answer that this decree would stand in the way of a judgment requiring the defendant to account to the plaintiff for her interest either in the estate of the father, or in any other property received by the defendant in which she. had an interest.

Nor does it appear in the record that the citation to appear in the accounting proceeding was ever served upon the plaintiff so as to give the court jurisdiction over her. It is sufficient to say, however, that the decree of the surrogate is not pleaded as an adjudication binding upon the plaintiff.

Van Brunt, P. J., Rumsey, O’Brien and McLaughlin, Jj., concurred.

Judgment affirmed, with costs.  