Monzani v. Monzani

MONZANI v. MONZANI. N. Y. Supreme Court, Second District, Special Term; January, 1891. JParent and child; duty of father in respect to infant’s propertyl\ The father of an infant, owner of real property stands in respect thereto as a guardian under the statute, and where he is also tenant by the curtesy therein it is his duty to pay the interest on encumbrances on the property out of the rents. Where in violation of such duty he procures paramount liens upon the property to be assigned to his wife, who forecloses the same, buying in the property for much less than its value, the infant, by reason of the father’s representations, omitting to protect his interests, the court will, where interests of third persons1 have not intervened, adjudge the infant to be the owner of the property subject to the estate by the curtesy and ■ the liens, and will require an accounting for the rents and profits. Trial by the Court. This action was brought by Richard P. Monzani against Julian T. Monzani and Eliza Jane Monzani, his father and step-mother to declare the plaintiff the owner in fee of the premises described in the complaint, to set aside a certain judgment of foreclosure of a mortgage thereon and for other relief. It appeared that plaintiff’s mother, the first wife of the defendant Julian, died in 1876, intestate and seized of the property in question, leaving her surviving her said husband and plaintiff, her only heir-at-law. At the time of her death the property was subject to two mortgages for $500 and $300 respectively, held by one William Conselyea. Plaintiff at the time of his mother’s death was nine years of age.__ In 1883, the defendant Julian, having remarried with his co-defendant, procured from Conselyea an assignment of such mortgages to be made to his said wife. These mortgages were foreclosed by the wife and the property bought in by the wife for $1,000. Adolphus D. Page (Samuel Campbell, attorney), for plaintiff I. Under our statutes, the property in question descended to the plaintiff from his mother, subject to the life estate of Julian T. Monzani as tenant by the curtesy. II. As life tenant the law placed upon him the duty of caring for and preserving the property for the remainder man—the plaintiff (Kent in vol. 4, 75*; Mosely v. Marshall, 27 Barb. 42). The general rule in equity, is that a tenant for life must keep down the interest of any mortgages. This case was reversed in 22 N. Y. 202, but upon, other grounds (Gillespie v. Brooks, 2 Redf. 349). All ordinary taxes, assessments and interest on incumbrances and charges for ordinary repairs must be paid out of the income of the life tenant (Wade v. Malloy, 16 Hun, 226). III. By common law, where an infant became seized of real property and he had no general guardian, the father became his guardian in socage until the infant, arrived at the age of fourteen years when he was able to select his guardian. Should he not elect, the guardian in socage remained until superseded by the appointment of a general guardian (Kent’s Com. vol. 2, p. 216*). The guardian in socage has been retained in this. State by the revised statutes. Revised statutes, vol. 4, p. 2418 (Banks’ 8th edition),, provides : Section 5. "Where an estate in lands shall become vested in an infant, the guardianship of such infant,, with the rights and duties of a guardian in socage, shall belong : “ i. To the father of the infant.” “ 2. If there be no father, to the mother.” “ 3. If there be no father or mother, the nearest and eldest relative of full age, not being under any legal incapacity; and as between relatives of the same degree of consanguinity, males shall be preferred.” Section 6. “To every such guardian, all statutory provisions that are or shall be in force, relative to guardians in socage, shall be deemed to apply.” Section 7. “ The rights and authority of every such guardian shall be superseded, in all cases where a testamentary or other guardian shall have been appointed under the provisions of the third title of the eighth chapter of this act.” As such guardian he is to be strictly accountable for his ward’s property. He cannot suffer it to go to waste or destruction, and the burden of proof rests upon him to show his good faith in dealing with the property. It is undisputed that he received enough from the rentals to pay the interest, indeed he seems to have received enough to pay the principal. The guardian’s trust is one of obligation and duty and not speculation and profit (Schouler on Domestic Relations, 342). “ Among the most obvious powers and duties of the guardian in the management of his ward’s property are these: To collect all dues and to give receipts for the same, to procure such legacies and distributive shares from testators or others as may have accrued ; to take and hold all property settled upon the ward by way of gift or purchase unless some trustee is interposed; to collect dividends and interest and the incomes of personal property in general; to receive and receipt for the rents and profits of real estates ; to receive money due the ward on bond and mortgage to pay the necessary expenses of the ward’s personal protection, education and support (Jackson ex dem. Davy v. De Walts, 7 Johns, 156). A. died seized of land, in 1771, leaving a widow, an only son, heir-at-law, and a daughter having married B. the widow gave permission to B. and his wife, to take possession and occupy a part of the land; and B continued in possession, claiming to hold in right of his wife. In an action of ejectment, brought by the heir-at-law, against B. it was held, that the legal intendment was, that the widow entered as guardian in socage to her infant son ; and that the defendant having entered by permission of the guardian and under the title of the heir-at-law, could not set up a title in a third person, in contradiction to the title under which he so entered (Beecher v. Crouse, 19 Wend. 306 ; Byrne v. Van Hoesen, 5 Johns. 66 ; Sylvester v. Ralston, 31 Barb. 286; Emerson v. Spicer, 46 N. Y. 594 ; White v. Parker, 8 Barb. 48). As such guardian he held the plaintiff’s property in. trust for his—plaintiff’s—benefit. He could not speculate with it. We now find the legal title to this property in his wife and possession under a pretended purchase—a purchase conducted by this trustee. He managed the business of divesting his ward of his title and the trustee is now enjoying the property and its use. A trustee who is selling trust property may not purchase at his own sale for his own benefit, and this applies generally to any one holding fiduciary relations (Blauvelt v. Ackerman, 20 N.J. Eq. 141; Dyer v. Taulot, 8 How. 183). Either the trustee purchasing will become a constructive trustee or the sale will be void, at the option of the cestui qui trust, unless he can show it to be fair and favorable to the cestui qui trust (Johnson v. Blackman, 11 Conn. 343; Child v. Brace, 4 Paige, 303; Michoud v. Girord, 4 How. [U. S.] 503 ; Cram v. Mitchell, 1 Sand. Ch. 258). A trustee cannot acquire an outstanding title to trust for his own benefit (Morrison v. Caldwell, 17 Am. Dec. 153). Whether he be trustee, mortgagee, life tenant, or purchases otherwise (Morgan v. Boone, 16 Am. Dec. 153). It is well settled that a trustee cannot purchase at a sale of his ward’s property, for he who undertakes to act for another in any matter cannot, in the same matter act for himself, for the situation of the trustee gives him an opportunity of knowing the value of the property and as he acquires that knowledge at the expense of the cestui qui trust, he is bound to apply it to cestui qui trust’s benefit. As a trustee cannot buy on his own account, it follows that he cannot be permitted to buy as agent for a third person; the court can with as little effect examine how far the trustee has made an undue use of information acquired by him in the course of his duty in the one case as in the other (1 Lewin on Trusts [Am. Law Series Ed. p. 658]; Ex. parte Bennell, 10 Ves. 381; Coles v. Freecolluck, 9 Ves. 248). To sustain such a sale the purchaser must show the straightforwardness of the transaction, the burden of proof resting on him (McCauls v. Bee, 16 Am. Dec. 610; Pairo v. Vickery, 37 Md. 467; Mackey v. Coates, 70 Pa. St. 350; Jamison v. Glascock, 29 Mo. 191). In closing this we respectfully call the attention of the court to sections 20 and 21 of the Revised Statutes (See Volume 4 of Revised Statutes, Banksjj 8 ed. p. 2613) which prescribed the duties and obligations of a guardian in socage, the latter section prescribing the penalty for waste by such guardian. IV. The action of the defendant, Julian T. Monzani, as a matter of law was a fraud on plaintiff. Considering that he was the life tenant he was bound to preserve the estate. Considering that he was the guardian he was bound to so care for the estate that when the life estate ceased the remainder man could receive the estate. The evidence of plaintiff and his witnesses, which testimony stands uncontradicted, has clearly shown that the defendant was a life tenant and guardian. The testimony of Mr. Monzani, Sr., taken before trial, shows that he personally conducted the negotiations of the assignments and foreclosure. While admitting that he attended to the business she did so as agent for Mrs. Monzani. He knew plaintiff’s rights in the matter and she was chargeable with notice. It is well settled law that knowledge by the agent is knowledge by the principal, for upon general principles of policy, it must be taken for granted that the principal knows whatever the agent knows (Bank of U. S. v. Davis, 2 Hill, 461 ; Sulton v. Dillaye, 3 Barb. 529). Mr. Monzani, Sr., in his testimony before the trial, admitted that he paid the $800 for Mrs. Monzani, claiming that it was hers but that he gave it to her. Thus we have evidence that the money really came from him (Loomis v. Wheelwright, 3 Sandf. Chan. 135 ; Hall v. Irwin, 66 N. Y. 649). The court' will bear in mind that the property was purchased by defendant for $1,000 when it was really worth $3,300, and defendants offered it for sale for $3,500 the same year that they purchased it. No testimony was offered by defendants to show that the foreclosure proceedings were just and fair. V. This action in its present form can be sustained (Verplank v. Van Buren, 76 N. Y. 247 ; Wade v. Molloy, 16 Hun, 226 ; Loomis v. Wheelwright, 3 Sandf. Ch. 135). This latter case being somewhat similar to ours. VI. Nor is the right to relief barred by the foreclosure proceedings (Mandeville v. Reynolds, 68 N. Y. 528 ; Verplank v. Van Buren, 76 Id. 247). VII. The defendant Monzani by his acts, forfeited his estate (Rev. Stat. vol. 4, p. 2613, Banks' 8th ed; Code of Civil Procedure, § 1665 ; The Aronslidt, 15 Peters, 318 ; 2 Stat. at large, 345). VIII. Whatever he paid to discharge the mortgages has been forfeited (Guckenheimer v. Angeine, 81 N. Y. 394; Hassard v. Rowe, 11 Barb. 22). IX. The trust referred to in the answer cannot be sustained and cannot be considered in this action (Gould v. Gould, 51 Hun, 9; s. c., 20 State Rep. 674; Dillayea v. Greenough, 45 N. Y. 438). X. The plaintiff’s rights are not barred by time (Code of Civil Procedure, § 382). Horace Graves, for defendant. See as to the rignts and liabilities of the father. Matter of Camp., Ct. of App. June, 1891; 37 N. Y. State Rep. 767 ; rev’g 32 Id. 336. [MAJORITY — Bartlett, J.] Bartlett, J. The evidence in this case leaves no doubt in my mind that the foreclosure suit was merely a contrivance for depriving the plaintiff of his inheritance. These defendants may have believed that this course was justifiable, because the property had originally been purchased with the husband’s money, but that fact does not constitute any legal justification for their conduct. The father was the plaintiff’s guardian under the statute (1 R. S. 718, § 5). He was also the life tenant of the property. As such it was his duty to pay the interest on the mortgage out of the rent (Wade v. Malloy, 16 Hun, 226). Instead of doing this he allowed the mortgages to be foreclosed, or, rather, he actively assisted his wife in bringing about the foreclosure. In thus acting he ignored his obligation both as life tenant and as guardian. His son, a youth of dull capacity, was afraid of him, and signed the consent for the appointment of the guardian ad litem in the foreclosure suit in ignorance of the nature or effect of the paper, and in consequence of his father’s representations that it was for his interest to sign it. The price realized on the foreclosure sale was $2,000 less than the uncontradicted evidence shows the property to have been worth, and the step-mother became the purchaser. The result of the whole transaction has been to transfer the title of the property from the son to the step-mother without a cent of compensation to the son, who was the owner of the fee. The plainest principles of equity demand that the son shall be restored, if possible, to the position he occupied' before this scheme was carried through. Fortunately, this can be done without difficulty in the present case, as no rights of third parties have intervened. The plaintiff should be adjudged to be the owner of the premises in fee, subject to a life estate as tenant by the curtesy on the part of his father, and subject also to a lien in favor of his step-mother to the amount of the mortgages which were assigned to her. The decree should further provide for an accounting by the defendants for the rents and profits which they have received, and the application of such portion thereof as may be necessary to satisfy the interest charges on the step-mother’s lien. Provision may also be made for the payment of such interest charges as shall hereafter accrue out of the rents to be received by the life tenant. Judgment is, therefore, directed in favor of the plaintiff in accordance with the views expressed in the opinion, with costs against both defendants.