
    Charles H. Pendergast, as Receiver, etc., Resp’t, v. Ernest Greenfield, as Trustee and Individually, App’lt.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed December 2, 1889.)
    
    1. Trustee—What will create the relation oe.
    D. executed to defendant as “trustee and in trust only,” an assignment of all sums payable to him, the contractor, by the city of New York for the “ Riverside drive." At the same time defendant executed a declaration that the assignment to him was in trust only to pay out of the moneys all claims growing out of said work and existing against the firm of D. & Co. by reason thereof, and defendant agreed to account to D. for all moneys or profits received or to be received by him after payment of said claims, etc. Held, that the effect of these instruments was to create the relation of trustee and cestui que trust between the defendant and the persons who held such claims.
    2. Same—Pleading—Account stated.
    In an action under this instrument by plaintiff as receiver of a hank which had loaned D. moneys to prosecute the work, the complaint alleged that on a certain day an account was stated between the hank and defendant and a certain sum was found due the hank. Held, that this allegation did not make the action one upon an account stated entitling the defendant to a jury trial; that the action was one in equity for an accounting and that the words “account stated” meant no more than a sum agreed upon.
    3. Same—Claims covered by trust.
    In such action plaintiff could recover for loans made subsequent to the assignment in trust, as that provided for the payment of all claims “growing out of the work” and further “existing against Decker & Co. by reason of the work.”
    4 Trial—Jury.
    In an equity action a defendant is not entitled as of course to a jury trial of issues raised by a counterclaim and reply.
    Appeal by defendant from a judgment at special term, also from orders (1) denying a motion for a jury trial, (2) granting an extra allowance, (3) denying a motion for a new trial.
    
      Burton N. Harrison, for app’lt; John L. Cadwalader, for resp’t
   Barrett, J.

This action is founded upon a declaration of trust executed by the defendant on the 24th day of January, 1880, whereby he acknowledged that an assignment, executed contemporaneously by one Decker, was made to him, Greenfield, as trustee and in trust only ” for certain specified purposes. The assignment vested in the defendant all sums payable by the city for the improvement known as “The Riverside Drive.” Decker’s firm were the contractors for its construction; and the bank, of which the plaintiff is receiver, had discounted Decker & Co.’s notes to a large amount to enable them to carry on the work.

Prior to the date above-mentioned, assignments were made which vested in Decker individually all the rights of his firm in their contract with the city. He thereupon assigned ,all such rights to the defendant, and the latter then executed the trust instrument in question. By that instrument the defendant acknowledged that the assignment to him was “in trust only ” to pay, out of the moneys or profits derivable from the Riverside Drive contract, “all liens, claims, debts and demands growing out of said work and existing against the firm of Decker & Co. or either member thereof, as such, by reason of said work.” The defendant further agreed to account to Decker for all moneys or profits “ received or to be received under or by reason of the assignment * * * after payment of said liens, claims, debts and demands by him to be paid as aforesaid.”

The effect of these instruments, the assignment and declaration of trust, was to create the relation of trustee and cestui que trust between Greenfield and all the persons whose liens, claims, debts and demands were thus to be paid. Among the latter was the Produce Bank. The plaintiff, as its receiver, brought this action against Greenfield for an accounting and for the application to the purposes of the trust of whatever sums should be found in his hands as such trustee, under the assignment and declaration of trust. The defendant’s first point is that the action was in substance upon an account stated, that he was therefore entitled to a jury trial, and that, because of its denial, he is entitled to a reversal of the judgment. He founds this point upon an allegation in the complaint which reads as follows:

III. That from time to time accounts were had as between the said Produce Bank, of the City of New York, and said Ernest Greenfield, such trustee, concerning the amounts from time to time collected, disbursed and in his hands; and that on or about the 1st day of April, in the year 1885, an account was stated between the plaintiff, as receiver of the said Produce Bank, and Ernest Greenfield, as trustee as aforesaid, as to all sums and amounts up to that time collected, and as to all sums or amounts paid or payable by him to such date, by which account and statement, as aforesaid, a balance was found due by the said Ernest Greenfield as such trustee, under his trust, of the sum of $5,958.48.

The appellant’s contention proceeds upon an inaccurate view of the scope of the complaint and of the effect of this averment. The action is not upon a common law demand, but is in equity for an accounting. Nor is the form of the action unnecessarily in equity and thus designed to evade the constitutional rights guaranteed in common law actions. There was no contract between Greenfield and the Produce Bank which the latter could enforce at law. The agreement was between Greenfield and Decker, and the declaration of trust could only be enforced in equity by the persons for whose benefit it was executed. The action by one of the cestuis qus trust was, therefore, properly and necessarily of an equitable character, invoking the equity powers of the court to compel the trustee to perform his trust duty, to account to the cestuis que trust and to apply the moneys received by him under the assignment to the purposes specified in the ■contemporaneous declaration.

The action was not upon an account stated at all, either technically or substantially. The averment above quoted amounts to nothing more than a statement that prior to April 1, 1885, the trustee had from time to time voluntarily accounted to one of the cestuis que trust; and that on April 1, 1885, he again accounted, giving his cestui que trust full statements of receipts and disbursements up to date and agreeing upon the ascertained balance then in his hands under the trust.

The effect of this was simply that the trustee duly accounted to a particular cestui que trust for all his doings as trustee up to a certain date. So far he became bound to that cestui que trust in .any subsequent proceeding by the latter to enforce the trust. The fact of such settled accounting was but an incident of pleading and proof in an action calling for the application of the ascertained balance to the trust purposes. That accounting settled nothing with regard to the extent of the plaintiff’s demand against the ascertained balance. There was, in fact, no account to be stated between the plaintiff and the defendant in the ordinary sense of that expression. The word “ stated ” is used in the complaint, as •applicable to the defendant’s account of receipts and disbursements, in the sense of “ agreed upon.” The allegation is, in substance, that the plaintiff and defendant agreed be latter’s account of April 1, 1885, and that as between them a balance was then found due, applicable to the trust purposes, of $5,958.48." The court, therefore, properly retained the action for trial at special term, without a jury.

Upon the trial the plaintiff gave evidence tending to show that the Produce Bank and the defendant, the Continental Bank, were now the only remaining cestuis que trust who have any “liens, claims, debts or demands ” growing out of the work on Riverside Drive and existing against Decker & Co. He also gave evidence tending to show that such liens, claims, debts and demands amount to considerably more than the ascertained balance of April 1, 1885, namely, from $13,000 to $14,000. The defendant -contested these claims, insisting that the plaintiff and the Continental Bank should be confined to notes which were discounted prior to the date of the trust instrument. This contention runs through the appellant’s points and seems to be his main reliance, so far as the'merits are concerned. It is not altogether clear that the claims sought to be enforced are, as a matter of fact, amenable-to the defendant’s criticism. But I have no doubt that they are fully covered by the trust instrument, read in the light of the; surroundings. Its spirit and purpose cannot well be doubted. It was to enable Greenfield to collect all sums due at, and after, the date of the assignment, and to require him to pay all claims-growing out of the work. The appellant contends that this expression is qualified by the words which immediately follow in' the trust instrument" and existing against the firm of Decker & Co.”

This clearly does not mean so existing only at the date of the instrument, but existing then or at any time during the progress of the-work. The language is: “Growing out of the work and existing against Decker & Co. by reason of said work." This referred to work done and to be done until the contract was completed, and to moneys furnished from time to time to aid in the construction. And this is the interpretation of the instrument which the parties acted upon. For Greenfield collected large sums subsequently,, and also paid large sums arising after the date of the assignment. Indeed, Greenfield recognized the rights of the plaintiff and the-Continental Bank as late as December, 1884, when he entered into-an agreement with them whereby, in consideration of his promise to account, they released him from all personal responsibility, and took certain suits brought by other claimants off his hands.

The remaining question is whether the defendant was entitled to further credits besides those which entered into the account of April 1,1885. This seems to be settled by the pleadings themselves, for there is in the defendant’s answer neither denial of the averment already quoted nor affirmative allegation setting up mistake or specifying any additional claim of credit. The defendant does-deny, in a general way, that the account comprises each and every item which he was entitled to charge against the trust fund, but he does not set forth the particulars of any item omitted from the account, nor allege, even in general terms, that any item was by mistake or otherwise in fact omitted, nor does he in any manner qualify the admission that an account was stated, meaning, as we have already seen, agreed upon, as to all receipts- and disbursements up to the date specified, and that a balance was then found due by the defendant, as such trustee under his trust, of $5,958.48.

The claims that he attempted to make upon the trial, despite-his admission, were plainly after-thought, and were wholly without merit; such, for instance, as the effort to credit himself with the commission originally allowed by Decker, when he was already credited with a larger commission, allowed by the plaintiff and the Continental Bank in ignorance of the prior agreement.

The learned counsel for the defendant very properly admitted upon the trial that “ the efficacy of this prior agreement was destroyed by the subsequent agreement ” with the plaintiff and the Continental Bank. The plaintiff might well have relied upon the-pleadings upon this head, but he did, quite unnecessarily, furnish testimony in support of the admitted account, and that testimony,. though subjected to criticism, in my judgment fully supports the averment.

No other points were presented calling for special consideration. The court might properly have tried the entire cause at one time, for the defendant was not entitled, as of course, to a jury trial upon the issues raised by the counterclaim and reply, such counterclaim being in an equity action. Mackellar v. Rogers, 109 N. Y., 468; 16 N. Y. State Rep., 406.

But the defendant cannot now take advantage of the procedure which he induced the court to adopt The plaintiff was the only one prejudiced by remitting the trial of the counterclaim to the circuit. He was thus seriously delayed in obtaining his rights, and we think the learned judge wisely exercised his discretion in refusing at the later trial substantially to reopen the earlier.

The judgment, and all the orders appealed from, should be affirmed, with costs.

Van Brunt, P. J., and Daniels, J., concur.  