Burns v. Niagara, Lockport & Ontario Power Co.
130 N.Y.S. 54
N.Y. App. Div.
1911
Check Treatment
Scott, J.:

Appeal from interlocutory judgment overruling demurrers to the amended complaint.

The complaint shows in brief that defendant Luther made a contract with the Niagara, Lockport and Ontario Power Company for the construction of a canal from the Niagara river to Lake Ontario fоr certain considerations not relevant to this appeal; that, in consideration of promises of co-operation on them pаrt, Luther agreed to give to Ekner Z. Burns, Bred L. Corey and B. P King, each, one-quarter of the moneys, stock ‍​​‌‌‌‌‌‌‌‌​​​‌‌​‌​​​‌‌​‌​​​‌​‌​‌​​​‌‌‌​​‌‌​‌‌​‌​‍and bonds, which he (Luther) might realize out of the enterprisе; that said Bums, Corey and King each fully performed the services required of them; that thereafter Luther assigned all his right, title and interest in- the said promotion аgreement to Paul L. Brady, John Bogart and Joseph Gf. Robin, in consideration whereof said Luther was to receive a certain amount of bonds and fivе per cent of the common stock of *282the power company, including any increase therein; that thereafter the 'defendant Iroquois Cоnstruction Company acquired, hy assignment, the said construction contract, and in consideration therefor assumed the undertakings and obligations of sаid Brady, Bogart and Robin, including the agreement of the latter to deliver to Luther the specified amount of bonds and stock. Then follows a somewhat dеtailed statement of the relations and transactions between the power company and the construction company, resulting in the issue of a large amount of stock and bonds by the pbwer company, a part of which, as it is said, has-been delivered to the construction company, and a part retained by the power company pursuant to the instructions -and under the control of the construction company. It is alleged that all the stock thus physically withheld by the power company has been paid for and is legally issuable. It is alleged that the contract was assignеd and the stock and bonds issued with full knowledge, on the part of every one concerned, of the rights of Burns, King and Corey, and that the stock is not and has not bеen purchasable upon • the market, but, for certain reasons, is of great, unique and rapidly-increasing value. It-is claimed that by virtue of the facts set forth in the complaint Elmer Z. Burns, plaintiff-⅛ assignor, became the equitable assignee of the defendant Luther to the extent of one-quarter of the bоnds and stock which Luther became entitled to receive under his contract with Brady, Bogart and Robin. There are the usual allegations of lack of’ legal remedy and demand. The relief ■ demanded is that'Luther be declared to be a trustee for plaintiff (as well as Corey and King) to all the rights which Luther acquired under his contract with Brady, Bogart and Robin, and that plaintiff be declared to be the equitable assignee and owner of one-quarter of the stock and bonds agreed to be-, delivered to said Luther, and that said Luther be required to'make such assignment and to do and perform, such acts as mаy be necessary to fully confirm plaintiff in such ownership and entitle her to such possession of the bonds and stock. Appropriate relief is alsо asked against the several defendants,' to- the end that plaintiff may ultimately receive from the Iroquois Construction Company and the Niagara, ■ Lockport and Ontario Power Company, or one *283of them, the amount of stock and bonds to which she claims to be entitled, or, failing that, a sum of monеy ‍​​‌‌‌‌‌‌‌‌​​​‌‌​‌​​​‌‌​‌​​​‌​‌​‌​​​‌‌‌​​‌‌​‌‌​‌​‍representing the value of such stock and bonds. Nearly all of the defendants demur, their grounds being: First, that the complaint does not state facts constituting a cause of action against each of the demurring defendants; second, that causes of action have been improperly united; third, that there is a mis-joinder of parties plaintiff, in that the defendants Luther and Corey should have been made plaintiffs. The theory of the complaint is that Luther, having embarked upon an enterprise out of which he hoped to realize a profit, and wishing ‍​​‌‌‌‌‌‌‌‌​​​‌‌​‌​​​‌‌​‌​​​‌​‌​‌​​​‌‌‌​​‌‌​‌‌​‌​‍the assistance of Burns, Corey and King, agreed that he would divide his profit when realized into four parts and give one part to Burns, оne part to Corey and one part to King. This was a valid agreement and created a trust which equity will enforce. (Hirsh v. Auer, 146 N. Y. 13.) Having assumed this trust relation, it became Luther’s duty to take all reasonable and proper steps to obtain possession and make distribution of the trust fund. He still remained- in control of thе promotion or construction contract, and could make such arrangements as he saw fit to have it carried out, hut when he had made those arrangements and thereunder became entitled to receive stocks and bonds as his profit, he was bound to take such steps as might he necеssary to secure them, even to the extent of bringing suit. The complaint alleges that he has been requested to sue, hut he has declined to do so. This justifies the commencement by the plaintiff of the action the trustee should have brought, and furnishes a reason why the latter should be made.defendant instead of plaintiff. In seeking to impress the trust created by Luther upon the stock and bonds still held by the power company, or those already issued to the construction company, it is necessary for the plaintiff to trace the history of the transaction from its beginning to its end, and it is entirely proper to jоin as defendants all those who have been directly concerned, not necessarily because affirmative relief is asked against all of thеm, but in order to cut off their equities, if they claim any, and thus establish a clear path to the final relief desired. This is not stating a separate cause оf action against each defendant, or uniting *284causes of 'action in one count. Possibly some of the defendants are not absolutely necessary parties, but any of them may prove to be necessary, and they arfe, therefore, all proper parties in accordance with the ‍​​‌‌‌‌‌‌‌‌​​​‌‌​‌​​​‌‌​‌​​​‌​‌​‌​​​‌‌‌​​‌‌​‌‌​‌​‍general rule in equitable actions that all persons who are or may be materially interested' in the subject-matter of the action arе proper parties to the end that there may be a complete decree binding upon all. (Mawhinney v. Bliss, 124 App. Div. 611; affd., 194 N. Y. 590; Shepard v. Manhattan R. Co., 117 id. 446; International Paper Co. v. Hudson River Co., 92 App. Div. 56.) The plea that Luther should have been jоined as a party plaintiff has already been referred to. Corey’s demurrer to the effect that he should have been joined as plaintiff rather than as defendant seems to rest upon a mistaken reading [of the complaint, in which the pleader was careful to allege that Luther promisеd to give to each of those whose assistance he invoked one-quarter of what he himself might realize. It is not alleged that he promised to givе three-quarters to them collectively. The complaint does hot justify the construction that ‍​​‌‌‌‌‌‌‌‌​​​‌‌​‌​​​‌‌​‌​​​‌​‌​‌​​​‌‌‌​​‌‌​‌‌​‌​‍Luther, Burns, Corey.and King became partners or joint adventurers in the enterprise. Its plain reading is that the enterprise remained Luther’s, and that what he promised to Burns, Corey and King was pay for their services аnd not profits as partners. •We think the demurrers .were rightly-overruled.

The judgment is, therefore, affirmed, with costs, with leave to defendants to withdraw their demurrers and answer within twenty days, upon payment of costs in this court and the court below.

Ingraham, P. J., McLaughlin, Laughlin and Clarke, JJ., concurred. .

Judgment affirmed, with costs, with leave to defendants to withdraw demurrers and answer on payment of costs.