87 N.Y.S. 757 | N.Y. App. Div. | 1904
This action was brought to establish a trust and to. compel the defendants to account to the plaintiffs. It was shown upon the trial that the plaintiff Brooke Mackall was the owner of certain real property in the city of Washington, D. 0. In 1895 he and his wife, Jennie W. Mackall, executed a deed of trust, or. mortgage, upon the property to secure the payment of $65,000, with interest ' thereon at the rate of five and one-half per cent per annum. Brooke Mackall became ill and for a considerable period was unable to pay the interest due upon the mortgage. The holder, a Mr. Harrison, threatened foreclosure, when Mrs. Mackall wrote to Mrs. Laura I. Olcott, the wife of the defendant Olcott herein, who was an intimate ' friend of Mrs. Mackall, and obtained from her a loan of $5,000, to secure which the plaintiffs gave a second mortgage upon thepremises .on the 7th day of February, 1898.
The evidence is probably sufficient to establish an agreement between Olcott and the Mackalls that he would bid off the property for Mackall’s benefit to enable him to procure a new loan thereon. This is expressed in the letter written by Olcott, under date of October 25, 1898, to Mackall, as follows : “ I was not able to attend the sale in Washington; but on my behalf, the property was bid in by Mr. Birney, and I made the deposit of $500. Mr. Birney writes me that it takes $70,900 to cover Mr. Harrison, and that the bid that he made on my behalf was $71,000. Of course you appreciate that the only reason why I made this bid was to protect you, and you certainly now have an opportunity to have the additional time that you wished to procure the loan. I, myself, have not any particular belief that it will be so easy as you think, but if you can pro- ' cure the loan so that Mrs. Olcott will not be under the necessity of raising the amount of cash that is necessary, of course she will be only
At this point in the negotiations between these parties it is clear that the only protection which Olcott had agreed to furnish to the Mackalls was to bid in the property at the sale, thereby enabling Mackall to procure a new loan and thus protect whatever equity he had in the property. Had the transaction stopped here and Olcott had done nothing more, it is clear that no liability of any kind could attach to him. He had then fulfilled' the obligation which he had assumed. He had a further right. He had made a deposit of $500 upon the sale. Mrs. Olcott’s mortgage of $5,000 was unpaid. He, therefore, in the event of a failure of Mackall to' furnish the money, in order that compliance might be made with the terms of the sale, had the right to assume that obligation himself for the purpose of protecting his own interest and the interests of his wife. In such event he would have been under no obligation to have held the property for Mackall’s benefit or to account for anything which he might realize upon a subsequent sale, either public or private. !Nor could he have been charged in such transaction with a violation of the obligation which he had assumed or of offending in any sense either against law or morals. Mackall did not raise the money either by loan or otherwise to protect his interest in the property, although lie made efforts so to do, and certainly Olcott was under no obligation to act further for him ; but he, like Mackall, was unable to make compliance with the terms of. the sale, as he had not made preparation for raising the money, nor was he required to pay the amount of his bid as between himself and Mackall. It was Mackall’s default in failing to raise the money within the period between the date of the sale and the date when his right to redeem expired. Olcott not being able to complete-his sale, a resale of the property was subsequently had, at which the property was again struck off to Olcott for $72,500. Between the first and second sales, while it appears that Olcott made endeavors to raise the money to comply with the terms of his first, bid and that such endeavor
As already suggested, the court was unable to find any express agreement; consequently the judgment cannot be sustained upon the theory of the complaint. In order to reach the conclusion which it did, the court was forced to find an implied understanding, but this implied understanding, as we have already seen, did not embrace any undertaking upon the part of Olcott to bid in the property, raise the money to pay the amount of the bid and then hold it for Mackali’s benefit. The only agreement which Olcott undertook to carry out, and which he discharged, was to bid in the property upon the sale. It is clear, therefore, that so far as the judgment is based upon any agreement, either express or implied, it cannot be sustained. The facts warranted no such finding, and no trust was created under such circumstances. (Wheeler v. Reynolds, 66 N. Y. 227.) To meet this condition the court went a step further and found that the defendants occupied towards the plaintiffs a confidential relation, and under the authorities they became trustees of
This leads us to the conclusion that the judgment should be reversed and a new trial granted, with costs to the appellants to abide the event.
Van Brunt, P. J., Ingraham and Laughlin, JJ., concurred.
Judgment reversed, new trial ordered, costs to appellants to abide event.