FOSTER v. ROCHE, 117 N.Y. 462 (1889)

MARGARET FOSTER v. THEODORE M. ROCHE, as Trustee, etc., Impleaded, etc., Appellant, CHARLES B. FITZPATRICK Purchaser, Respondent.

Court of Appeals of the State of New York.Argued November 25, 1889
Decided December 10, 1889

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Edward Perkins for appellant.

John A. Deady for respondent.

DANFORTH, J.

Assuming the order to be subject to review in this court, I find no reason to differ from the conclusion reached by the three tribunals which have passed upon the questions embraced in it. On the contrary, it seems to me that a different result would tend neither to right nor equity. It is to be borne in mind that the only ground of this proceeding

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is the omission of the purchaser to deposit the money actually paid into the trust company in a manner technically different from the mode adopted. The appellant does not show that anything is coming to him from that money, or even that the accounting has been had which may entitle him to something. He went before the Supreme Court and not only asked it to exercise its extraordinary powers over a purchaser for value, without notice, but to do so in favor of one who had himself, or as trustee, so far as appeared, incurred no loss, or who, if any loss was, in fact, incurred by any one, was morally culpable in respect to the circumstances which led to that loss. The appellant stood as trustee for others. With a supposed regard to their security he obtained a direction as to the sale and the disposition of the purchase-money, and thenceforth gave the matter no attention whatever. The order was permitted to lie in the obscurity of the record until the mischief was done, and was then produced only to be vacated by his consent. The purchaser knew nothing of it. The money was to be paid into the trust company. This much, but no more, was brought to the attention of the purchaser. Although a party to the action and active in procuring the order, the defendant neither served the purchaser with a copy of the order nor did he give him any notice of it. The purchaser knew, indeed, of the conditions or terms of the sale as prepared by the referee and which the bidder was to sign. It contained, however, no reference to an order or other action of the court, but, so far as appeared, the terms were either suggested by the parties or prescribed by the referee. These terms concerned no one but the parties to the action — the order had been made by their consent — and they were competent in like manner to change, or vary, or waive its terms. If, under the conditions of sale, the purchaser was to deposit ten per cent at the time and place of the sale with the trust company, it was competent for his attorney and the attorney for the plaintiff and the referee to agree that the referee, in the absence of an officer or agent of the company at the time and from the place of sale, should act in his place. And so

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they did agree, and by an act in which this appellant, through his attorney, participated, the ten per cent called for was paid. Again, the terms of sale notified the appellant, as they did the purchaser, that the balance of the purchase-money was to be paid at twelve o’clock on the fifth of November at the office of the trust company, and that the deed was then and there to be delivered.

On the adjourned day the purchaser again appeared, and the referee, and the balance of the money was then paid by the purchaser, received by the trust company, and credited by that company, in the way such moneys were usually received and entered upon their books. It is of no significance that the money passed from the referee to the trust company, instead of coming to it directly from the hand of the purchaser. The plaintiff’s attorney and the referee were both interested, and it was their duty to see that the computation was correct, that the sum paid corresponded to it; and it is entirely immaterial whose hand conveyed the money over the counter to the officer of the company who received it. Payment of the money was made, and to the proper party. No loss could happen from anything then done, or with which the purchaser was concerned. The loss, if any, occurred because the order of the court as to the mode of withdrawing the money was not complied with, and that was made possible because no one charged with the carriage of the decree thought it worth while to notify the trust company or serve upon it a copy of the order. That duty was not imposed upon the purchaser. It was the duty of this appellant to see to it that the trust company had notice of the limitations put upon the authority of the referee.

It would be in the highest degree dangerous, and opposed to every principle of equity, if it should be held that a payment so made could be impeached or invalidated because the parties interested in the proceeds of a judicial sale allowed a referee, for whose conduct the purchaser was in no way responsible, to have an advantage which the letter of the decree denied.

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As bearing upon the claim that the court should exercise over the purchaser its summary jurisdiction, it is also to be considered that the moving party deliberately consented to the annulment of that portion of the decree which, by amendment, regulated the disposition of the purchase-money. The referee does not find, and was not asked to find, when Roche first learned that the money had been drawn out from the trust company by the referee. There is no suggestion, except his own affidavit, that he did not know the terms or manner in which it was, in fact, deposited. If he did not it was because he did not choose to inquire. According to his affidavit he became aware of it on the 21st of March, 1887, four months after the transaction, which he knew was to be completed on the fifth or sixth of the November preceding, and in the meanwhile, upon an occasion sufficient to put him upon inquiry, he consented in writing, as did also the other parties to the action, to vacate the order for the breach of which he now complains. He seems to have distrusted the referee appointed to make the sale as early as September and before it took place, but he took no precaution to prevent third persons or the purchaser from dealing with him as one entitled to be trusted, and finally vacated and set aside the order which his mistrust had called into being. The order was vacated before he applied to the court to enforce it, and then only against a person wholly innocent and who had acted with circumspection and caution.

There are, however, other circumstances. The appellant, as we have seen, discloses no loss either on his own part or that of any other person; he fails to show even that the referee who drew the money from the trust company did not apply it to the payment of debts or liens superior to his own interest, or that the referee is insolvent, or even unwilling to account for the money obtained. But without regard to those considerations the appellant’s own negligence was quite sufficient to justify the court below in refusing its assistance, especially against a purchaser who, without notice, paid the purchase-money in good faith, and, as the court finds, discharged

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his entire duty. The appeal from the order which followed that finding is without merit and, therefore, fails.

The order appealed from should be affirmed, with costs.

All concur.

Order affirmed.