Burrell v. Bull, 3 Sand. Ch. 15

Burrell v. Bull

3 Sand. Ch. 15 | New York Court of Chancery | 1845

The Assistant Vice-Chancellor.

The defendants move to suppress the deposition of Mr. Stewart, who was sworn as a witness for his wife. He has no interest in the event of the suit, and the objection of bias does not go to his competency.

But on the ground of public policy, I think he was an incompetent witness.

The complainants relied upon the case of Richardson v. Learned, (10 Pick. 261,) where the Supreme Court of Massachusetts held the husband to be a competent witness for the trustee of the wife in an action for a part of her separate estate. The conclusion was deduced from the fact that the husband had no interest in the event of the suit, without adverting to the effect of the principle upon the married relation. On the other hand, in Snyder’s Lessee v. Snyder, (6 Binney, 483,) the Supreme Court of Pennsylvania came to an opposite conclusion, *25reposing their opinion upon what appears to be the true ground, public policy.

In Hopkins v. Smith, (7 J. J. Marsh. 263,) the Court of Appeals in Kentucky decided that the husband, although not interested, could not be a witness for the wife’s trustee in an action of trover for a part of her property.

In England, the only case admitting such testimony, is Burridge v. Winter, (1C. & P. 364,) at Nisi Prius, before Abbott, Ch. J. That case was contrary to Monroe v. Twistleton, (Peake’s Ev. by Norris, 248, and Appendix, 29,) previously decided by Lord Alvanley, and to Doker v. Hasler, (R. & M. 198,) decided by Best, Ch. J., the same year that Burridge v. Winter was tried. And the latter case was expressly overruled in O'Connor v. Majoribanks, in the C. P., Trin. T. 1842, and the rule established, on consideration, that husband and wife should not be witnesses either for or against each other in civil cases; and that without regard to the circumstance whether the fact came to them confidentially or otherwise, neither could be permitted, even after the marriage terminated, to testify concerning what transpired between them during the marriage, or came to their knowledge by reason of the relation.of husband and wife; (6 Lond. Jur. Rep. 509; 5 Scott’s New Rep. 394.) This accords with the Chancellor’s view of the true reason of the exclusion, as stated in The People, ex rel. Barry v. Mercein, (8 Paige’s R. 50,) and which I feel bound to adopt. The Supreme Court go upon the ground of confidential communications in Ratcliff v. Wales, (1 Hill, 63,) and Babcock v. Booth, (2 ibid. 181.) The authorities are decidedly against the competency of the witness, and his deposition must be suppressed. And see farther on this point, Greenleaf’s Ev. 384, et succ., § 334, &c.(a)

The testimony of William Pine is objected to on the ground *26of interest. It is said he was liable to pay the rent as between himself and Burrell, and a decree in favor of Burrell will satisfy that liability.

If that be the result, I think his interest is balanced. There is nothing to prevent Bull and McKean from suing him upon their respective mortgage debts, for whatever sum they were compelled to pay by reason of the fourth of the rent in arrear when they took possession. The amount applicable to the reduction of their mortgage debts, is diminished by the amount of such rent then chargeable on the property surrendered ; and although their mortgages were upon three-fourths only of the stock and fixtures, yet their rights and interests as occupants of the premises, were affected by the entire rent in arrear. The answers show that when they contemplated paying the arrears, it was the whole, and not three-fourth parts, that they designed to pay. Thus it seems that Pine was liable to the defendants, (and so remained when he testified,)'and if the result of this suit should cause them to pay the one-fourth of the rent which was in arrear on Burrell's óne-fourth of the lease, it will not exonerate Pine from answering over to them in respect of the thereby increased deficiency upon his mortgage debt.

There is another ground which is decisive of this question. The allegations in the bill would be a complete defence to Pine in any action brought by Burrell for his omission to pay the rent. The bill shows that Burrell ratified and adopted Pine's surrender to the defendants, and accepted their engagement to pay the rent. This was a satisfaction of Pine’s liability in that respect.

The defendant Bull moved to suppress the re-examination of W. Pine on the 25th of October, 1844; because his examination had been closed, and was then resumed upon the same matters. The first objection taken before the examiner fails because the ground of the objection was not stated. When the objection is taken at folio 240, the ground is stated, and the question and answer on that folio must be suppressed.

There is also a motion to suppress the testimony of Burke, because he is a party defendant, and it is said is primarily liable for the claim made by the bill. As to the former objection, the fact does not appear on this motion that a replication was filed *27to his answer. Hence his being a party, is not of itself a ground for excluding his testimony. As to his interest, he was not liable at all to the complainant in equity, unless he bought with notice of the rights stated in the bill. If be did buy with such notice, he became a participant in the fraud which the bill charges upon Bull and McKean. For such fraudulent conduct, the complainant could recover against the latter alone, or against them and Burke also. If he chose to omit Burke, and should recover against the others, there would be no contribution due from Burke to them. And a recovery against them, without satisfaction, would not prevent a recourse to him. Thus Burke has no interest which makes him incompetent. He may have a bias, strong in proportion to the probability of the complainants proving notice against him, conjoined with the prospect of their obtaining full satisfaction upon a decree against Bull and Mc-Kean.

The point that Burke was primarily liable, was urged against any decree being made at all, as well as against the competency of his testimony.

The only liability of his which can be so considered, is for an account of the profits subsequent to the time when he took possession of the refectory. This account is doubtless waived by the complainants using him as a witness.

In respect of the account claimed after the sale on the landlord’s warrant and before Burke took possession, he has no interest whatever. And in respect of the claim for an account of the sale of the stock, fixtures, possession and lease to Burke; the parties who made the sale and received the proceeds of it are primarily accountable on the case made by the bill. It would be very hard if Burke should be held accountable before those who obtained his money by the alleged fraud upon the complainants.

Upon the merits of this case, I have had no difficulty, notwithstanding the elaborate and ingenious argument of the counsel for Bull.

The testimony establishes that Bull and McKean, for the consideration of obtaining the immediate possession of the refectory, agreed to pay the rent then in arrear. Whether one-fourth of it *28was to be refunded by Burrell, is not material to this part of the inquiry, and I will omit it for the present.

The motives for the agreement were obvious and pressing. The refectory in operation was then deemed a valuable property. The stock, fixtures, &c., separated from the refectory, the lease and the good will, were worth far less than their mortgages. Those mortgages entitled them to take the stock and fixtures, but they could not have obtained possession of the leasehold, without Pine’s consent, till about the end of the current lease. Thus a divesting and sale of the movables, whether by the distress warrants, or on their own mortgages, would have broken up the refectory, and resulted in the certain loss of a large portion of their debts. Pine was in the exclusive possession, but he possessed one-fourth of it for Burrell, its absolute owner.

In the absence of Burrell and his agent, being pressed by Bull and McKean to put them in possession, he made the agreement, by which he in effect relinquished to them his equity of redemption in the three-fourths of the lease, and delivered up tó them the entire possession and the good will of the refectory ; and by which they agreed to pay the rent and to protect Burrell’s interests. That the delivery of possession on the evening of the 9th of December, was entire and complete, is shown by the fact that Pine never after had any charge there ; and Bull and McKean placed Thompson in charge, who proceeded before Stewart returned, as having charge not of three undivided fourths, but of the whole establishment.

Stewart’s resuming possession of the one-fourth, the ensuing day on his return, by proceeding to the premises, asserting Burrell’s right, and assenting to Thompson’s agency; did not alter or change the terms on which the parties had been let into possession. By those terms they were bound to respect Burrell’s interest, precisely as they and Thompson were, after Stewart’s assent to what had been done.

The statute of frauds has no application to this agreement. Instead of its performance of necessity being postponed more than a year, it was necessarily to be performed immediately.

Both the answers, although they deny the agreement, show that Bull at least intended to pay the rent. And looking at the *29fact that Mr. Irving issued the distress warrants in consequence of information from Bull; the agreement to pay the rent, thereby acquiring possession, and the subsequent omission to pay it; there is certainly good reason to suspect Bull of a design to defraud both Pine and the complainants.

But it is unnecessary for the complainants to show any fraudulent intent. It suffices that there was a valid agreement made for their benefit on which they had a right to rely ; by the violation of which the defendants became nominally the exclusive owners of the whole establishment except th'e lease of the building ; and upon the strength of such ownership they excluded the complainants from the whole, including the lease. They did not pay the rent; the necessary consequence was a sale under the distress warrants, and they became the purchasers, and con_tinued the business.

Now, it makes no difference whether Burrell, by their subsequent understanding with Stewart on the 10th of December, was to bear a fourth of the arrears or not. They were to pay the arrears in the first instance. Until they paid the rent, they had no claim on Burrell for the fourth part, if there were such an agreement. And as they did not pay the arrears, Burrell was never in default for not refunding. Much was said of the inadequacy of the value of the stock, fixtures, &c., to constitute any inducement to Bull and McKean for the alleged agreement to pay the rent. I cannot discover any inadequacy. Pine estimated the establishment as worth $10,000. In March following McKean sold his share to Burke for $2500, and Bull obtained for his, including the good will of the new lease, $2350.

The sale having resulted from Bull and McKean’s violation of their engagement and of their duty to Burrell, it did not alter or affect the rights of Burrell as between him and them. He continued in equity the owner of the fourth part of the stock, fixtures, die., until the sale of the same to Burke. (So far as Burke is concerned, Burrell ratifies that sale by waiving a decree against him.)

The complainants are therefore entitled to an account of the profits of the concern from the 19th of December, 1842, until Burke took possession, and to a decree for such profits, and for *30one-fourth of the sums obtained from Burke on the sale to him in respect of the stock, fixtures, furniture, &c., and the possession of the premises. Although Bull did not convey the complainant’s fourth of the subsisting lease by name, yet he did convey the possession expressly, and he and McKean gave possession of the whole to Burke. The lease was then within five weeks of its determination ; and the defendants in effect assumed to clothe Burke with the whole right to the premises. They should therefore account for the price obtained, as if they had actually transferred the entire lease.

The complainants having used the testimony of Burke, I think . it establishes against them the position that their agent, Stewart, agreed to refund to Bull and McKean one-fourth of the arrears of rent which they were to pay on taking possession. •

The accounting will accordingly provide for this, and it must proceed upon the basis of the reduced rent paid to the landlords during the closing period of the lease.

The remaining question in the cause relates to the renewal of the lease, at a reduced rent, for which Bull contracted with the landlords. It is proved that while Burrell had an acknowledged interest in the current lease with Bull and McKean, it was arranged that Bull should obtain a new lease for their common benefit, on the best terms he could. The' other parties intrusted the whole negotiation to him. Bull accordingly negotiated for the renewal, his interest in the premises being known to the landlords, and obtained the promise of the same at a yearly rent $1000 less than that in the old. lease. And after having the terms of renewal settled in writing, not so as to be legally binding on the landlords, but so as to be certain of their accomplishment. ; he refused to recognize Burrellis right to participate in it, and finally appropriated its benefit to himself, excluding McKean also. I agree with his counsel that no resulting trust arose from this transaction ; but I cannot perceive that the statute of frauds has any application, although the whole arrangement was by parol.

It was a transaction by which one of three joint owners of a lease, deputed by his associates to obtain its renewal for the common benefit, and availing himself of his part ownership and his *31connection with the property to obtain such renewal; procured it in his own name, and attempted to shut out his associates from sharing in its advantages. It is in short, an unmitigated fraud, against which courts of equity have ample jurisdiction to grant relief.

Without citing the authorities at large, I refer to James v. Dean, (11 Ves. 383, and 15 ibid. 236;) Featherstonhaugh v. Fen-wick, (17 ibid. 298 ;) Pickering v. Vowles, (1 Bro. C. C. 197;) Mulvany v. Dillon, (1 B. & Beatt. 409.)(a)

The defendant Bull must account for the sum received by him, precisely as if the renewed lease had been engaged to Burrell, McKean, and himself, according to their respective interests in the outstanding term.

There must be a decree accordingly, reserving the question of costs and all further directions.

In Langley v. Fisher, the Chancellor of England, April 10, 1845, held, affirming the decision of the Master of the Rolls, that a husband could not be compelled to testify against his wife in a suit affecting her separate estate. Reported before the Chancellor in 9 Lond. Jur. Rep. 837, and 14 Law Journal, N. S. Chy. 102 ; before the M. R., 7 Lond. Jur. Rep. 164, and 15 Law Journal, Chy. 73.

See also Gibbes v. Gibson, reported postea ; and 5 Paige, 268.