50 N.Y.S. 294 | N.Y. App. Div. | 1898
This, action was brought by the executrix of the will of Sarah Drake, or Merle, to recover $5,000 and interest which it was claimed one Robert P. Hoah, temporary administrator of Mrs. Drake’s estate, had misappropriated, and which the defendants had received with notice that it was a trust fund improperly applied. Hoah had been appointed temporary administrator of the above estate and had received some $10,500 in cash which he had deposited in bank. Out of this money, on the 10th of October, 1881, Hoah, in his name as . trustee, opened a speculative account, with the firm of Alfred de Cordova & Co., who were stockbrokers doing business in the city of Hew York. Upon that day he deposited with said firm a check for $5,000 drawn by him as trustee upon the Merchants’ Exchange Hational Bank to the order of the .firm. On the eleventh of-'October, the defendants bought for account of Robert P. Hoah, trustee, 500 shares of Hew York Elevated Railroad Company stock
Upon the trial of the action, at the opening of the case, it was urged that the complaint did not state a cause of action and should be dismissed, among other grounds stated, for the reason that there was no allegation that Noah had failed to account for the money which he had received. This objection is not well taken. It having been established that the money deposited with the defendants by Noah belonged to the estate of which he Avas a temporary administrator, under circumstances which imputed' notice to the defendants of the origin of the money, when the estate claims its own money which had been received Avrongfully by the defendants, it Avould seem that the burden was upon the latter to show that such payments had been made as absolved them from accounting to the estate for its property which they had wrongfully received. It is true that the counsel for the defendants cites the case of Gray v. Farmers' Exchange Bank (105 Cal. 64), which seems to conflict with this view. But no authority in this State has been produced
It is also claimed that the complaint was defective because no demand was alleged. Of course, if this action is to be considered as one in equity, no demand was necessary. If an action at law,, neither was any demand essential to its maintenance. Notwithstanding the claim of the defendants’ counsel -that the receipt of the money in question was not wrongful ab initio, no other conclusion than that it was wrongful ab initio can be arrived at. The defendants knew, at the time they received this money, that it was trust money, or, at least, they were put upon inquiry, and no inquiry whatever was made until after the money had been at the risk of this Denver and Rio Grande speculation, which resulted in a loss, and then inquiry was only made (according to the testimony of the defendant de Cordova himself) of Mr. Noah. That he did not believe Mr. Noah’s statement is evidenced by the subterfuge which' was resorted to in order to take the money out of the category of trust funds by going through the form of payment to Noah as trustee ; handing over the check to him with one hand and receiving back th¿ procéeds of it with the other. No inquiry whatever was made where any information might be procured. But it is said that inquiry at the bank would have resulted in no information. This is not made to appear. Consequently, we have the defendants receiving the money under such circumstances as to put them upon inquiry, and making inquiry only from the party who was endeavoring to perpetrate the fraud upon the estate which he represented. The complaint seems to have been sufficient, therefore, whether we consider the action as one at law or in equity.
It is further urged that -the proof was defective, in that there was no legal evidence that the defendants received any money from the Drake estate. It seems to us that the conclusion of the learned judge below was amply justified by the evidence introduced. It appears that Noah received $10,500 in cash belonging to the estate^
It is also urged that the addition of the word “ trustee ” to the check was not such a notice of a trust as to put the defendants upon inquiry. The case of Gerard v. McCormick (130 N. Y. 261) seems to lay down a different rule, and the cases therein cited clearly establish a different rule. Furthermore, it appears from the examination of the defendant de Cordova, made shortly after this transaction, that he knew this money was trust money, and desired to change the account for that reason, and went through the form above described. of changing the account, which shows, not only that the defendants received the money under circumstances putting them upon inquiry as to the money being a trust fund, but that they knew the fact at the time. Under such circumstances, it is not necessary for us to discuss the question as so whether proper inquiry was made.
As to the question of" laches, we are of opinion that, as long as an action is brought within the period allowed by the Statute of Limitations, the right to maintain the same is not lost by mere lapse of time.
The only remaining question necessary to be discussed is as to the right to a trial by jury. It seems to be apparent that the action in question was equitable in its nature. The defendants had wrongfully received trust funds, and the estate to which it belonged had a right to receive'the principal and all the increase which had resulted from its use. The plaintiff, therefore, had a right to an accounting in respect to this money'.. ■ If a profit had been made she. would have been entitled to such profit. If the result of the speculation was a loss she was entitled to recover the principal and interest. Cleárly a cause of action of an equitable nature. Therefore, there was no right to a trial by jury. And even if the action be deemed an action at law the defendants lost their right to a trial by jury by not making their demand in time. Upon the trial the
- The judgment should be affirmed, with costs.
Barrett, R'umsey, Ingraham and McLaughlin, JJ., concurred.
• Judgment affirmed, with costs. '