Imágenes de páginas
PDF
EPUB

(63 App. Div. 614.)

and 106 New York State Reporter

JONES et al. v. KELLY et al.

(Supreme Court, Appellate Division, First Department. July 9, 1901.) 1. WILLS-BEQUESTS TO CHARITY-VALIDITY-RIGHT TO CONTEST.

Laws 1860, c. 360, forbidding a testator, having a husband, wife, child, or parent, to give to any charitable institution more than onehalf the estate after payment of debts is peremptory, and hence the bequest prohibited may be challenged by any person who would derive a benefit from the estate, though not one of the relatives designated. 2. SAME-INVALID PROVISION-PROPERTY-DESCENT.

A portion of a testator's real estate, not effectually disposed of by his will, will be treated as real estate, and descends immediately on the testator's death to his heirs at law.

8. SAME-EQUITABLE CONVERsion-Resulting Trust.

Where a testator directs his executors to sell his lands, and from the proceeds pay bequests, one of which is void, there is no equitable conversion of the whole, but a resulting trust in favor of the heirs at law pro tanto.

4. SAME-INVALID PROVISION-DESCENT.

Where a testator fails to effectually dispose of property which descended from his father, decedent's heirs on his paternal side are entitled thereto.

5. SAME-EXECUTOR-POWERS IN TRUST.

Where a testator directs his executor to sell his land, and from the proceeds thereof pay a bequest void under Laws 1860, c. 360, forbidding certain testators from giving any charitable institution more than onehalf the estate after payment of debts, such executor has a power in trust for the purpose of carrying out the valid provisions, and can sell the realty to pay such institution the one-half.

Appeal from specia! term, New York county.

Action by Winifred F. Jones and others against Mary Ann Kelly and others to set aside the will of John P. Conlon, deceased, who died without issue or parent, leaving property to certain charitable institutions, after the payment of debts and certain legacies. From a judgment in favor of plaintiffs, Eva K. Conlon appeals. Affirmed. The following is the opinion of the court below (O'GORMAN, J.): The right to challenge bequests prohibited by the act of 1860 is not confined to the widow or the next of kin specifically named therein. Harris v. Society, 4 Abb. Prac. (N. S.) 421; Rich v. Tiffany, 2 App. Div. 25, 37 N. Y. Supp. 330. Trustees v. Ritch, 151 N. Y. 282, 45 N. E. 876, 37 L. R. A. 305, is not to the contrary, for it cites with approval the Harris Case, wherein it was distinctly held that the prohibition of the statute is peremptory, and may be insisted upon by any person who would derive a benefit therefrom. The one-half of testator's estate not effectually disposed of by his will must be treated as real estate, and it descended immediately upon his demise to his heirs at law. While apt language has been employed to work a conversion, the conversion fails, however, as to that part of the will that is invalid. A power to executors for an invalid purpose will not create a conversion, and, where the object for which the sale of lands is directed fails in whole or in part, there is no equitable conversion of the whole, and there is a resulting trust in favor of the heirs at law pro tanto. The land in such a case retains its original character, and descends to the heirs. Chamberlain v. Chamberlain, 43 N. Y. 431; Chamberlain v. Taylor, 105 N. Y. 185, 11 N. E. 625; Gourley v. Campbel', 66 N. Y. 174; Read v. Williams, 125 N. Y. 566, 26 N. E. 730, 21 Am. St. Rep. 748; Betts v. Betts, 4 Abb. N. C. 419. As the real estate descended from the father of the decedent, the heirs entitled to the one-half not disposed of are the plaintiffs, and the defendants Maria Coror and James Con

nington, who appear to be the decedent's only heirs on the paternal side. The defendant Dwyer has a power in trust for the purpose of carrying out the valid provisions of the will, and can, therefore, sell the realty to pay the institutions their one-half; the remainder of the proceeds, after making due allowance for the debts and widow's dower, to descend to the heirs above named as real estate. Wager v. Wager, 89 N. Y. 161.

Argued before O'BRIEN, HATCH, and LAUGHLIN, JJ.

INGRAHAM,

M. A. Tyng, for appellant Conlon.

B. P. Ryan, for respondents Jones and others.
L. S. Goebel, for respondents Kelly and others.

MCLAUGHLIN,

PER CURIAM

Judgment affirmed, with costs, on opinion be

low.

(35 Misc. Rep. 558.)

PEOPLE v. SCANNELL, Fire Commissioner, et al. (two cases).

(Supreme Court, Special Term, New York County. July, 1901.)

1. CRIMINAL Law-Removal OF INDICTMENTS.

Removal of indictments from the court of general sessions of the peace in and for the city and county of New York is a matter of right where good cause is shown.

2. SAME-GROUNDS.

The fire commissioner of the city of New York, who was individually Indicted for felonies affecting his official conduct, and also for conspiracy with another defendant to defraud the city in the matter of bids for fire department work, alleged that in all his transactions he acted on the advice of the corporation counsel, and the defense showed that difficult and important questions of law were involved, and defendants asked for a removal of the indictments from the court of general sessions to the supreme court. Held, that the removal will be allowed. John J. Scannell, fire commissioner of the city of New York, and William L. Marks, were indicted for conspiracy. Motion to remove indictments into the supreme court for trial. Applications granted.. See 72 N. Y. Supp. 449.

Myers, Goldsmith & Bronner, for the motions.
Eugene A. Philbin, Dist. Atty., opposed.

MCADAM, J. On June 28, 1901, two indictments were found by the grand jury of the court of general sessions against the defendant John J. Scannell, charging him with certain felonies and misdemeanors affecting his official conduct as the fire commissioner of the city of New York. Simultaneously therewith, the grand jury indicted the said Scannell and William L. Marks for conspiracy, the indictment charging that, as the result of such conspiracy, Marks was, at the expense of the city, to be favored in the awarding of bids for fire department work. This last indictment covers 91 typewritten pages. It is needless to say that the cases are important ones, not only to the people of the state, but to the defendant Scannell, who, if convicted, must not only suffer imprisonment, but lose his office, and be forever disqualified from holding any other office. The defendants apply to remove the trial from the court of general sessions to this court because of the character of the cases, the

and 106 New York State Reporter

high public position of the official, the publicity and notoriety already given and incident to the charges, and because grave and difficult legal questions are involved that ought to be passed upon in the first instance by the supreme court. Another circumstance that gives importance to the trial is that the defendant Scannell claims to have acted in all the transactions which are called in question by the advice of the law officer of the city government, to whom he was required to appeal in all cases in which he needed advice affecting his duties. Various difficult questions of law will arise in regard to Scannell's duties in awarding contracts on behalf of the fire department, and as to the extent to which said defendant is protected by the advice of the corporation counsel. The voluminous papers presented for and against the application conclusively demonstrate the gravity of the charges and the importance of the legal questions involved. The application is clearly brought within the authorities which hold that, under such circumstances, good cause for the removal of the indictments into this court ex

See People v. Sessions, 10 Abb. N. C. 192; People v. Rourke, II Abb. N. C. 89; People v. Squires, I N. Y. St. Rep. 534; People v. Clark (Sup.) 15 N. Y. Supp. 79. The power of removal is unquestionable. Code Crim. Proc. §§ 344, 346. Upon the argument the learned district attorney suggested that the granting of the application would be a reflection upon the judges of the court of general sessions. Such a suggestion has never been made before, although the power has been exercised for many years; nor has the removal of a cause from an inferior court into this court ever been so regarded. It is common practice to remove cases from the supreme court into the United States courts, and from the municipal courts into the city court; and such removals have never been regarded as reflections upon the justices of the courts from which the removals were made. Nor have removals on certiorari or appeal been considered as undignified to the inferior tribunal, no matter what result followed. The fact that the statute gives a right of removal for good cause shown entitles a party in a proper case to such removal, and, if there is any reflection, it is one of legislative origin. The district attorney is fearful of the delay that may result from a removal. There is no ground for such fear. The appellate division has already assigned Mr. Justice Fursman, one of the ablest criminal judges in this state, to hold supreme court, part 1, during September next; and if, in the opinion of the district attorney, the public interests require that an earlier date be set for trial, the appellate division or the governor, upon the mere suggestion of the district attorney, may assign a justice for the immediate trial of the indictments. As the cases are clearly within the rules laid down by the authorities before cited, the applications will be granted.

Applications granted.

(35 Misc. Rep. 616.)

CUTTING et al. v. BALTIMORE & O. R. CO. et al.

(Supreme Court, Special Term, Richmond County. July, 1901.)

1. CORPORATIONS-STOCK-MORTGAGE BONDS-INTEREST-GUARANTY-PAYMENT. A corporation holding a majority of the stock in an insolvent corporation, and in control thereof, which has guarantied certain mortgage bonds of the corporation, owes the duty to the minority stockholders to pay the interest on such bonds only as the majority stockholder, not as guarantor; its only obligation in that regard being towards the holders of the bonds.

2. SAME-DUTY.

The duty of paying such interest is conditioned on the possession of the requisite funds from the latter corporation's assets.

& SAME-DEFAULT-FORECLOSURE-PURCHASE.

Where a corporation holding the majority of stock in and controlling the affairs of an insolvent corporation allows the interest on mortgage bonds of such corporation, on which it was guarantor, to go unpaid, and actively instigates a foreclosure proceeding based on such default, with the purpose and intent of becoming the purchaser at the sale, and does become such purchaser, title being taken by a new corporation, in which such controlling corporation holds the entire stock, such corporation holds the value of the minority stock in trust for the minority stockholders in the old insolvent corporation, since such minority stockholders are entitled to whatever chances of value their stock might have in the future.

4 SAME-INCOME Bonds-VALIDITY—ESTOPPEL TO QUESTION.

Minority stockholders in a corporation having an issue of income bonds outstanding, each of whom has accepted his pro rata share of such issue, are thereby estopped to deny the validity of such issue; creditors only of the corporation in such case being entitled to raise such question.

5. SAME-MINORITY STOCKHOLDERS RIGHTS.

Defendant corporation was the majority stockholder in an insolvent corporation, of which it was a creditor, without security, on an open account, and on certain mortgage bonds, of which it was guarantor. Such corporation also had outstanding income bonds, on which nothing had ever been paid. In order to place such corporation on a solvent basis, defendant actively instigated foreclosure proceedings in default of interest on the mortgage bonds, with the intent to purchase at the sale. After judgment of foreclosure, defendant paid the interest, and sale was made to defendant, title being taken in the name of a new corporation, in which it held the entire stock. Held that, though defendant was technically wrong in its course to bring about the liquidation, there being nothing to show actual fraud, the minority stockholders in the insolvent corporation were entitled to a transfer of the same number of shares of the new corporation as they held shares in the old, on payment of their pro rata shares of the moneys paid by defendant for interest on such mortgage bonds, subject to defendant's lien for the payment of the minority stockholders' pro rata share of the income bonds and open account.

Action by Robert L. Cutting and others against the Baltimore & Ohio Railroad Company and others. Judgment rendered.

Blair & Price, for plaintiffs.

Guthrie, Cravath & Henderson, for defendants

MAREAN, J. The defendant was owner of the majority of the stock (51 per cent.) of the Staten Island Rapid Transit Railroad Com

and 106 New York State Reporter

pany, and was in control. It had also guarantied the second mortgage bonds of that company. As guarantor it had no duty touching the payment of the interest towards minority stockholders. Its only obligation in that regard was towards holders of the bonds. It was only as majority stockholder that it owed to minority stockholders any duty to pay the interest, and that duty was conditioned upon the possession in the assets of the company of the requisite funds.

The defendant was also creditor, without security, of the said company, for a large sum presently due; and while, had defendant chosen, it could, by making default in other directions, have probably paid the interest falling due July 1, 1898, and so have prevented foreclosure, the assets of the company did not, without default elsewhere, and without defendant's foregoing its own right of payment of its claim, afford the means of paying such interest. The defendant allowed such interest to go unpaid, and actively instigated the foreclosure, based upon the default, with the purpose and intent of becoming the purchaser at the sale. After the entry of the judgment of foreclosure, defendant, out of its own funds, paid the interest falling due July 1, 1898, January 1, 1899, and July 1, 1899, and thereupon a sale under the judgment was had indirectly, but really to defendant, the nominal title being taken by a new company, to wit, the Staten Island Rapid Transit Railway Company, defendant taking all the stock, and in lieu of payment of the purchase money the foreclosed bonds were then taken up in exchange for a new issue of the same amount by the new company, bearing interest from July 1, 1899, at 4 per cent. Under these circumstances the defendant holds 49 per cent. of the stock of the new company in trust for the minority stockholders of the old company. At one time I entertained some doubt whether the substantial want of value of the old stock did not lead to a contrary conclusion. But I think not. The minority stockholders were entitled to whatever chances of value their stock might have in the vicissitudes of the future; and in the most desperate chance there is probably a fractional certainty, however attenuated. But the lack of substantial value is a material fact when the ethical character of defendant's conduct comes to be considered in determining how it shall be treated in connection with the enforcement of the trust. Staten Island Rapid Transit Railroad Company was hopelessly insolvent. Beyond the first and second mortgages, amounting to $3,500,000, it had outstanding an issue of income bonds amounting to $4,500,000, upon which the company had never been able to pay a penny of interest. $2,332,000 of this issue were held by defendant. Besides, the company was indebted to the defendant on open account, as above mentioned, to the amount of $1,174,032.60. The company had never paid a dividend. It is urged by plaintiff that the income bonds were void, but, each stockholder having accepted his pro rata. share of the issue, they are all estopped. Only creditors could have questioned their validity. There is no reason to suppose that the defendant saw any actual value in the property loaded down with these incumbrances, and desired to obtain it for that reason. It is more than probable that it apprehended a necessity, in order to put

« AnteriorContinuar »