97 N.Y.S. 76 | N.Y. App. Div. | 1905
The Wm. Badam Microbe Killer Company, a domestic corporation, on or about Bo’vember 30, 1903, executed, acknowledged and delivered to Joseph A. Morris, as trustee, its certain indenture of • mortgage,, which mortgage was filed' in the office of the-register of the county of Bew York on October.- 21, 1905. .Said Morris accepted the trust and appointment as said trustee and continued to act down to Bovember 8> 1905, when in writing lie resigned his trust and now declines to act. Walter W. Bostwick, alleging the foregoing facts and that, by assignment, he is sthe owner of all the outstanding bonds of said company, and that default, was made in the payment of interest on the coupons of said bonds due and payable on July 1, 1905, and that the said'bonds and indenture of mortgage provide for foreclosure sale of the property set forth in said mortgage, six months after the default, and that by reason of the resignation of said Morris it is necessary that some one be substituted in the place and stead of said trustee, petitioned the Supreme Court for his.own appointment as such substituted trustee. The' court granted such petition and the company brings this appeal from so much only of said order as appointed the petitioner trustee. .It appears that there is some question as to the validity of a considerable number of the bonds, the company alleging that,they liad íeen delivered under a misrepresentation of fact and that, by resolution, the board of directors had rescinded the contract and sale upon which they had been delivered, and repudiated any liability under said bonds. It also appears that under the indenture of mortgage the trustee' had certain: discretionary powers conferred upon him. It seems clear; therefore, that it would ,not be proper to' appoint the owner and holder of the bonds the trustee under the mortgager It would make the eest/ui que trust the trustee, and such is obnoxious to well-settled principle. If there b.e necessity for any trustee, obviously said trustee, as between the company, which denies the validity of the bonds; and the holder-of the bonds, who demands, foreclosure of the mortgage and payment of the bonds, should be disinterested.
It is a general and well-settled provision of law that the office of trustee and beneficiary may riot be united in the same person, as the I two interests are incompatible. (Rankine v. Metzger, 69 App. Div. 269, and cases cited.)
O’Brien, P. J., Ingraham, McLaughlin and Houghton, JJ., concurred.
Order reversed, with costs, so far as it appoints petitioner trustee, and matter remanded to Special Term.
