87 N.Y.S. 931 | N.Y. App. Div. | 1904
Lead Opinion
The careful consideration Which this case received at the hands of the learned trial judge and the full discussion which was had of the facts and the law, has rendered our labor in disposing of the questions involved comparatively easy. We do no.t feel called upon to again recite the facts which have been elaborately reviewed by the learned court below (40 Misc. Rép. 601). Indeed, we should not find it necessary to give any expression of our views herein were it not for the earnest insistence of counsel for the appellants that the court adopted erroneous rules of law in making disposition of the controversy. He earnestlycontends that the plaintiff has an adequate remedy at law in the recovery of damages for the wrong which he claims to have been done him, in consequence of which the defendants are entitled to a trial by jury of the question of fact which the case presents. We are unable to support this contention. When the stock was delivered by Slayback to Raymond it was upon the distinct understanding and agreement that it was to be delivered to Hemphill, Sr., for the purpose of inducing him to come to the rescue of the Carbon Steel Company by sustaining its credit. Plaintiff was pecuniarily interested in securing the continued credit and solvency of the Carbon Steel Company in order that the securities which he held of the company might remain valuable, and also that it might be able to discharge the indebtedness held by the plaintiff and his wife against it. The stock was delivered to Raymond under such circumstances as brought the latter into a fiduciary relation with the’ plaintiff., In fact he held the stock in trust for delivery to
It is the right of the plaintiff to have restored to him the property which had been misapplied and to receive benefits therefrom so far as the same may be derived from the present situation, and the rights of innocent third parties will not be prejudiced. This entitles him to a return of the stock for the purpose of surrendering it in order that an equivalent of shares may be issued to him by the new corporation. This relief he cannot obtain in an action at law, and to this relief the plaintiff is entitled. (Pollock v. National Bank, 7 N. Y. 274; Cushman v. Thayer Mfg. Jewelry Co., 76 id. 365; Bedford v. American Aluminum Co., 51 App. Div. 537.) The same principle is recognized in Bosley v. N. M. Co. (123 N. Y. 550), relied upon by the appellant. The fact that a rescission may not be practicable upon the rendition of a judgment does not oust the court of its equitable jurisdiction. Having once acquired jurisdiction, it may retain it and award a money judgment where there would otherwise be a failure of justice. (Valentine v. Richardt, 126 N. Y. 272.) It is made to appear in the present case that a large proportion of the stock which was delivered to Raymond still remains under the latter’s control, is capable of delivery, and when delivered can be surrendered for shares in the new company. "Upon ■ both grounds, therefore, that a fiduciary relation creating, a quasi trust existed which entitled the plaintiff to an accounting and also upon the right to a rescission of the transaction and a return of the stock, the plaintiff has shown a right to invoke the equitable jurisdiction of this court.
It is a rule of law firmly settled that before a judgment can be reversed as against the weight of evidence it must appear that the proof offered clearly preponderates in favor of a result contrary to that which was reached. Mere differences of opinion respecting the conclusion which ought to be reached is not sufficient to justify the reversal of a judgment as being against the weight of evidence. (Aldridge v. Aldridge, 120 N. Y. 614; Roosa v. Smith, 17 Hun,
It is undisputed that Raymond procured the delivery to himself, of these shares of stock; but he acquired thereby no title to the same or right to the possession except for a specific purpose. The purpose for which they were delivered was, therefore, the only-matter in dispute. It is established by the findings of the trial court that the stock was diverted by Raymond from- the use to which he alone had a legal right to devote it and such finding is supported by the evidence. By such act plaintiff suffered damage in-the loss of his stock, and it does not answer to say that notwithstanding the stock was not used for the purpose for which it was delivered, the credit of the company was maintained. Raymond was interested in the maintenance of the credit of the company, and in his position as president he was bound do all things within his power to do to maintain the standing and credit of the company and discharge its obligations, and this he was bound to -do quite irrespective of the delivery of the stock to him. It was not delivered to him as a, gift, but to be used for a specific purpose, and its diversion from such use charged Raymond with liability without regard to the fact that the crédit of the company continued t.o be maintained. The plaintiff desired to secure the active efforts
The fraud which the court has found was perpetrated upon the plaintiff was committed in 1893. The action was not begun until 1900. The six years’ Statute of Limitations applied and concededly it would have run had not other matters interposed to prevent it. The case falls within the provisions of subdivision 5 of section 382 of the Code of Civil Procedure which provides that an action to procure a judgment, other than for a sum of money, on the ground of fraud, in a case which was cognizable in the Court of Chancery on the 31st day of December, 1846, is barred by the six j ears’ Statute of Limitations but that the cause of action “is not deemed to have accrued until, the discovery, by the plaintiff or the person under whom he claims, of the facts constituting the fraud.” The court found that the plaintiff first learned of the fraud practiced upon him by Raymond about the month of July or August, 1898, and that in the month of October, 1899, he demanded of Ray
The appellant contends that the facts disclosed by this record conclusively established that the plaintiff was possessed of such knowledge and occupied such a relation to the corporation that he was afforded an abundant opportunity to. inform himself concerning the status of the corporation and who its stockholders were; that the books were open for his inspection and no obstacle lay in the "way of the fullest examination. Many items of evidence are adduced by the appellant in favor of this contention. The learned trial court, however, made a complete and exhaustive examination of nearly all of the items of the testimony now called to our attention, and the conclusion which he reached after such examination, we think, was abundantly justified by the evidence and sufficient to exonerate the plaintiff from any imputation of negligence in failing earlier to discover the fraud. We do not deem it necessary to again analyze in detail and make several answers to this claim of the appellant. While it is true that the learned trial court held that no negligence could be imputed which would defeat the plaintiff in maintaining the action after the discovery of the fráud, short of the running of
We conclude that upon the facts and the law the plaintiff became entitled to the judgment which has been rendered. It should, therefore, be affirmed, with costs. .
Van Brunt, P. J., Patterson and McLaughlin, JJ., concurred.
Concurrence Opinion
I concur in the affirmance of this judgment, upon the ground that the relation between the plaintiff and the defendant Raymond was in its nature fiduciary, entitling the plaintiff to require Raymond to account for the stock that was placed in his hands to carry out what was understood to-be the common object of the parties to rehabilitate the credit of the corporation in which they both were largely interested. The court below has found that Raymond induced the plaintiff to deliver his stock in the corporation in which the parties were interested for the purpose of procuring with that stock the active assistance necessary to enable the company to continue its business. The misrepresentations by which the delivery of that stock was induced are not material to enable the plaintiff to maintain his action to require Raymond to account for the stock that he received and which was to be applied by him for a particular purpose. If Raymond induced the plaintiff to deliver the stock upon the statement that a specified use of the plaintiff’s stock was necessary to enable the corporation to continue its business, and the plaintiff delivered that stock upon the representation and understanding that it was to be used to secure the active assistance of the Pittsburg parties in the enterprise, and Raymond, receiving the stock for that special purpose, appropriated it to his own use, without having used it or being required to use it for that purpose, there would, I think, be a cause of action in equity for an accounting, irrespective of the fact that the original delivery of the- stock was obtained by fraud. If, after Raymond had received this stock, he had actually delivered it to those in Pittsburg with whom he was in communication, I do not think this action could be maintained in the form in which it was brought; but as the court found, upon evidence which I think sustained the finding, that Raymond represented to the plaintiff -that in order to induce those in Pitts-burg to become interested in the company it was essential that the plaintiff should transfer his stock to them, and that the plaintiff intrusted "Raymond with the stock in question for that purpose, there arose as between the parties a fiduciary relation in regard to that stock whereby Raymond became bound to treat the stock received from the plaintiff as property held by Mm in trust, to be used for the purpose for which it was delivered and for which the
This also answers the claim of the defendants as to the Statute of Limitations, and although I agree with Mr. Justice Hatch that, upon the evidence, a finding that the plaintiff knew or should have known of the fraud which induced him to deliver the stock to Raymond before January, 1894, would have been without evidence to support it, my view of the nature of the action is that it is not controlled by subdivision 5 of section 382 of the Code of Civil Procedure, but that it comes under section 388 of the Code, and the statute would not run until ten years had elapsed from the time the cause of action accrued. I also think that the finding of the referee is amply sustained by the evidence, and that no error was committed to justify a reversal of the judgment.
Judgment affirmed, with costs.