152 N.Y. 285 | NY | 1897
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The position taken by the appellant is, first, that the transactions between Hernz, Melhado and Waddell, and the consequent conveyance from Hernz, as executor and trustee, to Melhado, constituted a fraud upon the estate in Hernz's hands; and, second, that Mrs. Blood was not a bona fide purchaser, *292
without notice of the fraud. I think it would be difficult to deny some degree of justification to the conclusion reached by the trial judge, that the transaction as conducted between Hernz, Waddell and Melhado, whereby the real estate in question was acquired and reconveyed at a profit to the latter, amounted to a fraud upon the beneficiaries of the trust. The evidence was of a character to justify an inference that there was a guilty combination, or a collusion, between these parties to benefit one, if not more, of them at the expense of the trust estate. It is true that the sale at auction is unimpeached and that it is not proved that Hernz shared in the profit; but there is room for strong inferences adverse to him. Considering the fact of a sale by the trustee, subject to the somewhat depressing influence of a lease at a low rental, with most of the term unexpired; that the property was bid in by Melhado, whose wife was the lessee; that Melhado and Hernz had been intimate friends and business associates; that, instead of requiring Melhado to complete his purchase at the time fixed by the terms of the auction sale, Hernz allowed the matter to be postponed, until Melhado could find a purchaser at a profit and a party willing to loan $30,000 upon the property, and that no money was required to be paid upon the sale at auction, nor until the requisite amount was obtained through the deposit by Mrs. Blood upon her subsequent purchase — these and other facts, bearing upon the relations subsisting between Hernz and Melhado and Hernz's assistance in procuring for Melhado a resale at an advanced price, might well be deemed to constitute such badges of fraud as would vitiate the transaction, if it stood there, at the instance of the beneficiaries of the trust, or their representative, the plaintiff. But, in the view which I take of Mrs. Blood's relation to the matter, it becomes unnecessary to pass upon the question of the validity of the transaction as between Hernz and Melhado. I think we must agree with the prevailing opinion at the General Term, that Mrs. Blood was not only a purchaser for value, but in good faith, and that the evidence does not warrant the conclusion that she either *293
had actual notice of any fraudulent motive on the part of Hernz to defraud the estate, or any knowledge of facts or circumstances equivalent to such notice. The rule, as it was early laid down in the case of Williamson v. Brown (
But it is argued, on behalf of the appellant, that Mrs. Blood was chargeable with knowledge gained by her attorneys, Wandell and Lobenthal. Wandell's agency for Mrs. Blood did not extend beyond the examination of the title which she was to acquire, and while notice of any facts coming to him in relation to the title, and affecting it with liens or equities, would have been constructive notice to her, it does not appear that there were any such. Hernz sold under the power of sale in the will and there is no complaint that it was insufficient for that purpose, or that it was inadequately executed. Both he and Lobenthal were aware of the advantageous purchase made by Melhado of the trust property; but, in view of the authorized and fairly conducted public sale, what was there to suggest collusion with respect to the resale? So far as the evidence *296 shows, an inquiry could not have resulted in the discovery of anything upon which to rest an objection to the title. They might have regarded the trustee as having acted improvidently; but that is not enough. Wandell could hardly be assumed to have had any doubt with respect to the validity of Melhado's title, when he was passing it upon the large loan made by Mr. Moller, his client. He was a lawyer of standing and of respectability, recommended to Mrs. Blood as being competent upon such questions, and it does not appear in the evidence that he gained any knowledge of facts, other than what the records would give to him, or than what came under his observation upon the closing of the title. It does not appear that he knew any more than she did about the relations of Hernz and Melhado and, moreover, his duty towards her ended with his report, at the time of the closing of the title, that he approved of it. So far as Mr. Lobenthal is concerned, I find nothing in the evidence, which charges him with any knowledge of an intent on the part of Hernz to defraud the estate, or of any collusion between Melhado and Hernz, or of any other facts than were apparent upon the face of the matter. He did not know Hernz. He had only seen him once or twice and his testimony does not tend to show any knowledge in him of any facts which, being chargeable to his client, imperilled her title for failure of further inquiry. A careful consideration of the record fails to find any support for the contention of the appellant that Mrs. Blood was not a bona fide purchaser.
The conclusion reached renders it unnecessary to consider the questions relating to the defendant Mrs. Koss; to whom, as her daughter, and for love and affection, Mrs. Blood subsequently conveyed the premises.
The order of the General Term should be affirmed and, under the stipulation of the appellant, final judgment should be ordered in favor of the respondents, with costs.
All concur, except BARTLETT, MARTIN and VANN, JJ., dissenting.
Order affirmed and judgment accordingly. *297