| NY | Jan 5, 1873
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *347
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *348
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *349 Assuming that the plaintiff's husband was her trustee, and that the mortgage in question, while held by him, was impressed with a trust in her favor (as to which we do not deem it necessary to express any opinion, in the view we take of the case), there is, nevertheless, no ground for the reversal of the order appealed from.
This conclusion is reached by the following, among other considerations:
1st. The complaint alleges generally that Stephen Dillaye, the plaintiff's husband, immediately after their intermarriage on the 31st day August, 1848, entered into the possession, management and control of her real and personal property as her trustee; and that he continued to manage, control and possess her said property as such trustee until the commencement of her action; that he held the property impressed with a trust for her benefit, and was liable to account to her therefor. It then (after stating facts, showing that her funds or a portion thereof had been appropriated by her husband for his own individual use, and had been invested in certain real estate and securities) charges substantially that the same were held by the persons then having the legal title thereto, subject to her equitable lien, and charged with all the equities existing against her husband for the enforcement of her said lien. There is nothing in the complaint to show the nature of the trust; and although it alleges that Sedgwick and Cowles held the land owned by them, and on which the plaintiff sought to establish a lien, with notice of her equitable *352 rights, she does not claim that The Commercial Bank, or any of the other defendants, were chargeable with such notice. The report of the referee is equally indefinite as to the character of the trust. It merely finds that by an ante-nuptial agreement, entered into between the plaintiff and the said Dillaye, he "became trustee of certain real and personal property of the plaintiff, and, soon after their marriage, took possession thereof, and managed and controlled it as such trustee." He does not set forth the agreement nor state its terms, and there is nothing in his report to indicate its provisions. We are, therefore, authorized to assume that the trustee was empowered to manage and control the property as he should deem proper and beneficial for his wife, and even if, instead of taking the mortgage in question in his individual name, as he did, he had received and taken it in his name as trustee of his wife, and it had been therein expressly declared that he held it under such a trust, yet any bona fide purchaser would have acquired a perfect title thereto. If we have recourse to the ante-nuptial agreement itself, as it is set forth in the answer, the case is not varied. That, in express terms, makes, conconstitutes and appoints Mr. Dillaye trustee of the real and personal estate to which his wife was entitled under the will of her father; "and, as such trustee, to have the entire and sole management, direction and control thereof, subject to the limitations and conditions" thereinafter mentioned; and the said appointment is "declared to be irrevocable." Those limitations and conditions have reference to the disposition of the property after the death of the plaintiff, and are unnecessary to be noticed here. There is, clearly, nothing in this appointment or declaration of the husband's power and authority which would make a sale or pledge of the mortgage a violation of duty or breach of trust.
2d. If it be conceded that the plaintiff could have impeached the title of the bank to the mortgage, if it or any of the previous assignees thereof had taken it with notice of the trust, there is no allegation in the complaint or finding by the referee *353 of such notice; but, on the contrary, the referee finds, in express terms, that none of them had any actual knowledge of the application of the plaintiff's money or the property to the mortgage, or that she had any interest or equity whatever therein; and the record of the ante-nuptial agreement did not operate as constructive notice of the trust created thereby, so far as it related to the personal property affected by it; nor, indeed, would actual knowledge of its contents have conveyed any notice that the plaintiff had or could have any claim or right to the mortgage, or the money secured thereby.
3d. It follows, from what has been said, that the bank, without any notice of the plaintiff's equities, had a right to negotiate for the purchase of the mortgage; and nothing appears to invalidate the assignment thereof to it. It is found by the referee that the assignment to Thompson, and those to all the subsequent assignees, were regular and absolute on their face, and expressed a full consideration; and, in addition, that the bank, when the transfer to it was made, or soon after, actually advanced, on the faith of the mortgage, the whole amount unpaid thereon, and more; and it is not shown that it was chargeable with knowledge or information of any fact or circumstance by which the transfer could be impeached or questioned by the plaintiff on the case made by her complaint. It was, therefore, abona fide purchase of the mortgage for a full and valuable consideration, without any notice, express or implied, of any trust therein in favor of the plaintiff, and, consequently, without knowledge or notice that the sale to it was made in contravention or in violation of such trust. Under such circumstances it acquired a perfect title thereto, free and discharged of all trust and equities with which it was charged in the hands of Dillaye. (See Story's Equity Jurisprudence, 10th ed., §§ 409, 410.) The above principle is not questioned, but is expressly admitted by DENIO, J., in Bush v. Lathrop
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4th. The plaintiff cannot derive any benefit from the finding of the referee that the assignment by Dillaye to Thompson was made under an agreement for a loan of money, and for *354 the transfer of the mortgage back to Dillaye by him on being paid the face thereof, less twelve per cent per annum for the time it had to run when such re-transfer was made. She has not based her claim for relief on that agreement; nor does it appear to have been tried or decided on that theory.
Having reached the conclusion that the plaintiff is, for the reasons above expressed, not entitled to a reversal of the order appealed from, I deem it unnecessary to consider the effect or the applicability to this case of the principle decided by the Court of Appeals in Dillaye v. Greenough (
It results, from what has already been said, that the order appealed from must be affirmed, and that judgment absolute must be rendered against the plaintiff, with costs pursuant to her stipulation to that effect.
All concur.
Order affirmed and judgment accordingly.