Broome County NyArchives Court.....Drake, Julia Vs. Clinton Paige 1889
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Source: Reports Of Cases - New York
Written: 1889

Fourth Department, May Term, 1889.

JULIA R. DRAKE, Respondent, v. CLINTON F. PAIGE, Appellant, Impleaded with LEWIS 
B. PAIGE and Others.

Partition suit — rights acquired under a mortgage given by one of several 
devisees upon his undivided interest in the residue—when not subject to a 
deduction of the amount improperly taken by the mortgagor, one of the executors, 
from the estate.

In an action, brought for the partition of certain land devised to the several 
parties to the action by the will of their father, it appeared that one of the 
devisees, Lewis, by mortgage from whom the plaintiff claimed an interest in the 
premises, was also executor under the will of the testator; that, by conveyance 
of other lands made by himself and his co-executor, Lewis had come into 
possession of a larger amount of money belonging to the estate than his entire 
interest therein.

It also appeared that Lewis had subsequently executed to one Drake a mortgage 
for $60,000 upon his one-fourth interest in the residuary estate of his 
testator, (the parcels being specifically described, and including the premises 
sought to be partitioned) for the purpose of securing Drake against liabilities 
assumed by the latter, and in consideration of Drake's agreeing to take care of 
and protect the property of Lewis from the enforcement of judgments recovered 
against him; that, in pursuance of such agreement, Drake had paid Lewis' notes, 
on which he was indorser, and had taken up judgments which had been recovered 
against Lewis. The latter Drake had not satisfied, but had caused a portion 
thereof to be assigned to himself and a portion to his wife. All of these 
judgments had been a lien on the one-fourth interest, which Lewis took under the 
will and mortgaged to Drake, but before the trial of this action were barred by 
the statute of limitations.

It also appeared that Drake took such mortgage in good faith, for the purposes 
mentioned in the agreement, without any knowledge of the fact that Lewis had 
appropriated to his own use the proceeds derived from the sale of other lands 
belonging to the estate.

Held, that the rights acquired by Drake under such mortgage were superior to the 
claims existing on the part of Lewis' co-tenants, claiming an undivided interest 
with Lewis in the lands devised by their testator, for the deduction, from the 
share of Lewis in the estate, of the amount which had been improperly taken from 
the estate by Lewis.

That the general rule that a person having a partial interest in the estate, and 
being an actor in a breach of trust with respect to such estate, thereby 
subordinates his rights therein to the claims of others having an interest in 
such estate with him, whose rights and interests are prejudiced by his breach of 
trust, did not apply to the present case, so far as concerned the rights of 
Drake, who, as a purchaser for value, without notice of the breach of trust on 
the part of his mortgagor, was entitled to enforce his rights in priority to 
those of the co-tenants of his mortgagor.

Clapp v. Meserole (1 Keyes, 281) distinguished.

That the fact that Drake, instead of satisfying the judgments against his 
mortgagor, had caused them to be assigned to himself and wife, did not affect 
his rights in the premises.

Semble, That, to the extent of the judgments which were liens upon Lewis' 
interest in the real estate and were taken up by Drake, the latter would be 
entitled to be subrogated to the benefit of such liens as against other 
claimants.

Appeal by the defendant Clinton F. Paige from a judgment, entered upon the 
report of a referee in the office of the clerk of the county of Broome on the 
25th day of October, 1888 in an action brought for the partition of certain real 
estate.

The plaintiff, in her amended complaint, alleged that she and the defendants 
Jane L. Paige, Lewis B. Paige and Edith Paige, and Clinton F. Paige, as trustee 
for Lewis B. Paige, own and possess, as tenants in common, certain four parcels 
of real estate therein described; that the plaintiff owns an undivided three-
fourths interest in fee; that Caroline L. Paige owned the other one-fourth, and 
she died intestate, in 1879, leaving her surviving a husband, the defendant 
Clinton P. Paige, and three children, the said Jane L., Lewis B. and Edith, to 
whom the fee of said one-fourth descended; that Lewis B., after the death of his 
mother and in 1879, conveyed his interest to Clinton F. Paige in trust for 
certain purposes; that Clinton F. Paige is tenant by the curtesy of an undivided 
fourth; that the parties, own no other lands in common, and there are no 
specific liens or incumbrances upon the premises or the shares thereof against 
any of the parties; that Clinton F. Paige is the executor of the will of Hazard 
Lewis, deceased, and, as such executor, or in his individual capacity, has for 
many years received the rents and profits of said premises and not paid them 
over. Judgment was asked for a partition and that Clinton F. Paige, as executor 
or individually, account for the rents and profits.

The defendant Clinton F. Paige, personally and as trustee, answered, denying any 
knowledge or information sufficient to form a belief as to the ownership by 
plaintiff of three-fourths, and alleging that the premises were originally owned 
by Hazard Lewis and were by him devised, after the payment of debts, funeral and 
testamentary expenses, to his wife Maria Lewis, and to his daughters Jane E. 
Drake and Caroline L. Paige, and to his son Frederick Lewis, to be equally 
divided between them, each to have one-fourth part thereof; that by said will 
the executors were authorized to sell and convey said real estate, or partition 
the same, or sell and divide the proceeds; that Frederick Lewis, Clinton F. 
Paige and Horace S. Griswold were made executors; that Frederick Lewis, during 
the time he held the premises so devised to him, being one-fourth of the 
premises herein, appropriated and converted to his own individual use a large 
amount of the estate moneys which came into his hands as executor and trustee, 
which became and is a lien upon his one-fourth interest in said real estate, 
superior to any right acquired by the plaintiff, and that Frederick Lewis is a 
necessary party defendant.

The answer further alleged that Clinton F. Paige, upon the death of Caroline L. 
Paige, became and is entitled, as tenant by the curtesy, to the use during his 
life of all the premises owned by said Caroline.

It further alleged that he, upon the request of the owners and as their agent 
for a number of years, took charge of said premises, spending much time and 
money in their care and preservation, and paid out the avails as directed by the 
owners, and that his services and payments were equal to the receipts; that 
prior to the death of said Caroline he had no estate or legal interest in the 
lands, and all that was done by him was as agent of the owners, and more than 
six years have elapsed since such receipts; that the matter of the use and 
occupation has been litigated and settled in the Surrogate's Court upon the 
accounting of the executors.

Upon the trial it appeared that Hazard Lewis was the original owner of the 
property. He died July 3, 1863, leaving a will which was duly probated on July 
15, 1863. In this will, after certain specific bequests and devises to his widow 
and children, there came the following clauses:

"Eighth. All the rest and residue of my estate, whether real or personal, of 
every name, kind and description, and wheresoever situate, after the payment of 
my just debts and funeral and testamentary expenses, I give, devise and bequeath 
to my said wife Maria, to my said daughters Jane E. Drake and Caroline L. Paige, 
and to my said son Frederick, to be divided equally between them, share and 
share alike, each of said four persons to have one fourth part thereof.

"Ninth. I hereby authorize and empower my executors, hereinafter named, to sell, 
deed, grant and convey by deed, under seal, with common covenants of warranty, 
any or all of my real estate not in this will particularly described and 
devised, and the avails apply to the payment of my debts and funeral and 
testamentary expenses; or, at their discretion, to lease any portion of such 
real estate for the purpose of paying such debts and expenses; and I authorize 
them to partition the same after the payment of debts and expenses, amongst 
those in the eighth devise herein named, or to sell and deed the same, and the 
avails divide among those named in said devise and bequest eight.

"My intent is that all devises, of every name and kind in this will contained, 
shall pass the real estate to the respective beneficiaries free from 
incumbrance, and that any and all mortgages and judgments on either of them that 
shall cover or be a lien upon any of the lands, or any portion of the lands in 
this will devised and described, shall be paid by my executors from the avails 
of my personal estate not herein bequeathed, and the avails of lands not 
specifically devised. And I hereby direct and empower my said excutors to 
appropriate the avails of my personal estate not herein bequeathed and the 
avails of my real estate not in this will devised by specific description, to 
the payment of all mortgages and all judgments encumbering any and all real 
estate in this will devised."

Jane E. Drake, named in the eighth clause, died on the 12th of May, 1883, and 
the plaintiff is now the owner of her one-fourth; the plaintiff is also the 
owner of the one-fourth given to Maria Lewis. No question is made on this appeal 
as to those two-fourths. In the will, Frederick Lewis, Clinton F. Paige and 
Horace S. Griswold were named executors, and letters were issued to them. 
Griswold continued to act till August 9, 1870, when he died; Frederick Lewis 
continued to act until August 23, 1873, when he resigned; Clinton F. Paige still 
continues an executor. About February 4, 1875, the Supreme Court, upon petition, 
appointed Patrick H. Drake, husband of said Jane E. Drake, an executor and 
trustee, and he continued to act with Paige until November 5, 1882, when he 
died. On April 1, 1871, Lewis and Paige, as executors, sold and conveyed to one 
Morgan, a tract of land, not specifically devised by said will, for $9,000, of 
which $2,000 was paid down to Lewis, and a bond and mortgage given to the 
executors for the balance, $7,000, with interest. This bond and mortgage were 
held as part of the estate until October, 1872, when they were assigned by the 
executors to one Root, the assignment being dated October 9, 1872, and 
acknowledged October 21, 1872. Nothing has been paid on the bond and mortgage. 
It is found by the referee that Lewis was in embarrassed circumstances at the 
time, and desired to dispose of the bond and mortgage for the purpose of raising 
money to be used or applied to his individual use; that Paige had knowledge at 
the time of such desire and purpose on the part of Lewis, and joined with him in 
executing and acknowledging the assignment that such purpose might be carried 
into effect; that the bond and mortgage were thus transferred to Root, and the 
avails received by Lewis, and he charged himself with the amount thereof upon 
the books wherein he kept his accounts as executor.

On the 26th of March, 1872, Lewis and Paige, as executors, sold and conveyed to 
one King a tract of land, not specifically devised, for $4,500, and King gave 
back to them a bond and mortgage for that amount, which, on February 5, 1873, 
was reduced by payment to Lewis to the sum of $3,600, and interest from April 1, 
1873. This bond and mortgage the executors, by assignment dated and acknowledged 
March 4, 1873, assigned to one Hall. The referee finds that this assignment was 
made for the purpose of enabling Lewis to raise money to be used by him for his 
individual benefit; that Paige knew of such purpose on the part of Lewis at the 
time, and joined in executing and acknowledging the assignment that such purpose 
might be carried into effect, and the bond and mortgage were transferred 
accordingly and the avails were received and applied by Lewis to his own 
individual use and benefit; that at this time the estate was still quite largely 
in debt; that the transfers to Root and Hall were not made for the purpose of 
partitioning or dividing any portion of the residuary estate, or that Lewis 
might receive his share or any portion thereof; that Lewis when he appropriated 
the avails of said mortgages intended to replace and return to the estate the 
money thus taken by him.

On the 3d of June, 1873, Frederick Lewis and Maria A., his wife, executed and 
delivered to Patrick H. Drake a mortgage for $60,000 upon the one-fourth 
interest of said Frederick in the said residuary estate, the parcels being 
specifically described, and on other real estate owned by him. This included the 
premises described in the complaint. This mortgage was recorded June 4, 1873. As 
a part of the transaction an agreement was given back to Lewis, signed by Drake 
and dated June 4, 1873, which stated that the mortgage was given to secure 
Drake "against all liability he has or may have incurred as indorser for the 
said Lewis," the amount being supposed to be about $32,000; also to secure Drake 
for advances which he is to make to liquidate and satisfy the large amount of 
judgments against the said Lewis, which are a lien upon the property covered by 
the said mortgage, Drake agreeing "to take care and protect the said Lewis and 
his property from the enforcement of any of the judgments against the said Lewis 
or his property, and save the property of the said Lewis from sacrifice and the 
said Lewis from damage and costs." The referee found that the amount of paper 
upon which Drake was indorser for Lewis at the time of the mortgage was from 
$20,000 to $30,000; that the judgments against Lewis, for which Drake was to 
make advances and which he was to take up, amounted to $31,631.10, with 
interest; that Drake, in pursuance of the mortgage and agreement, paid the said 
notes on which he was indorser, and paid and took up the said judgments, which, 
however, he did not, have satisfied, but caused a portion to be assigned to his 
wife Jane E. Drake, and the remainder to himself; that all the said judgments 
were a lien on the one-fourth interest which Lewis took under the will and 
mortgaged to Drake; that about $23,000 of said judgments were a lien on such one-
fourth interest at the time of the assignment of the Morgan mortgage to Root in 
October, 1872; that Drake when he received his mortgage did not know that Lewis 
had received any more than his share of the said estate, nor did he know of the 
sales made by Lewis and Paige to Morgan and King, or that the Morgan and King 
mortgages had been disposed of and the avails appropriated by Lewis; that Drake 
took his mortgage in good faith for the purposes in his agreement, without 
notice of any secret lien against or upon the interest of Lewis in the residuary 
estate. Default being made in the payment of this mortgage, it was foreclosed 
and the premises sold on 6th of November, 1875, and bid in by Drake. The referee 
found that Drake was a purchaser in good faith. The one-fourth interest of the 
parcels described in the complaint brought $7,250. The entire proceeds of the 
mortgage sale were about $24,000. The plaintiff has the title acquired by Drake 
on this foreclosure. At the time of the commencement of this action all the 
debts and liabilities, funeral and testamentary expenses, and all incumbrances 
and liens upon or against said Hazard Lewis, had been paid.

On the 13th of December, 1880, proceedings were commenced in the Surrogate's 
Court for an accounting of the executors, which resulted in a decree on the 16th 
of May, 1887. From this it appears that the executors had received large amounts 
from the proceeds of sales of real estate, as well as from personal property and 
from rents, and that Frederick Lewis, aside from the Morgan and King mortgages, 
had received more than his share of the funds received by the executors. The 
surrogate charged him solely as of the date of the decree (which included a 
large amount of interest), with the sum of $24,215.85, and credited him with his 
share, $20,350.97 leaving a balance of $3,864.88, which was decreed to be paid 
to the other residuary legatees or their representatives. He charged Lewis and 
Paige, together, with the amount of the said Morgan and King mortgages, $10,600, 
amounting altogether to $21,644.75 at date of decree, and directed that they pay 
the same as follows: To Maria Lewis, $11,128.39; to Julia R. Drake, as executrix 
of Jane A. Drake, $7,201.73, and to the administrators of the estate of Caroline 
L. Paige, $3,314.43. Frederick Lewis is insolvent, and has been since the spring 
of 1873, and no part of the balance charged to him and Paige, together, can be 
collected of him. Paige appealed from the decree, and pending that and this 
partition suit, and on September 7,1887, the plaintiff and said Paige entered 
into a stipulation in writing which, after reciting the provisions of said 
decree, proceeded as follows: "Clinton F. Paige has appealed from said decree 
which is pending. There is also an action of partition pending to partition the 
real estate in which Julia R. Drake and the heirs of Caroline L. Paige and 
Clinton F. Paige claim an interest. Julia R. claiming absolute title to the 
share of undisposed residuary real estate formerly belonging to F. Lewis, and C. 
F. Paige claiming the same should first be charged with payment of the 
deficiency of F. Lewis, with which Lewis and Paige are jointly charged, which is 
one of the principal questions litigated. Mutual talk of compromise has 
occurred, to which C. F. Paige assents, viz.: That the sum payable to Julia R. 
Drake by said decree shall, subject to the provisions hereafter named, be paid 
or secured to her, a cash payment of at least $3,000 to be made, and the balance 
secured to be paid at some agreed time. That Paige shall be released and excused 
from the payment of any part of the sum of $14,107.71, payable by said decree to 
Maria Lewis, and shall be left to settle himself with the heirs of Caroline L. 
Paige, D. H. Carver, for the $300 costs and all other matters involved in the 
decree, and the executions now in the sheriff's hands shall be withdrawn, and 
said decree, by suitable indorsement, be satisfied and receipted as to the 
interest of Julia R. Drake and Maria Lewis. It is also further provided that all 
claim of C. F. Paige and others to charge the interest of Frederick Lewis in the 
residuary real estate is waived, except that it is understood that he is to have 
the right to seek to charge the same and be subrogated in the place of said 
Lewis as to the sum of $7,189.97, being the sum paid by him to Julia P. Drake on 
account of the $21,644.75 charged to him and Lewis, jointly, for money received 
and used by said Lewis, with interest thereon, all the rest of said $21,644.75 
being satisfied by this agreement."

The referee decided against the claim of Paige for subrogation, and held that 
the plaintiff was the owner of three-fourths; that the other fourth, being that 
taken by Caroline L. Paige under the will, was owned by the defendants Jane L. 
Paige, Edith Paige, and Clinton F. Paige, as trustee of Lewis B. Paige, and that 
in this fourth Clinton F. had a tenancy by the curtesy. An actual partition was 
directed. The record indicates that Frederick Lewis and wife have been made 
parties defendant by amendment.

Alexander Cumming, for the appellant.

T. C. Millard, for the respondent. 

Merwin, J.:

The only question before us is whether Clinton F. Paige has a lien or charge on 
the one-fourth interest of Frederick Lewis, acquired by plaintiff through the 
foreclosure of the mortgage of June 3, 1873, for the amount he was compelled to 
pay by reason of the appropriation by Frederick Lewis of the Morgan and King 
mortgages. We must assume here that Paige was correctly charged by the surrogate 
with the amount of those mortgages by reason of the knowledge of Paige of the 
design of Lewis to misappropriate and his assistance in enabling him to do it.

The claim, then, of Paige is that he was, in effect, in the position of a surety 
for his co-executor, and that, when he paid the other parties the moneys his co-
executor had appropriated, he became entitled in equity to be subrogated to any 
remedy the other parties might have had against the share of Frederick Lewis for 
his misappropriation, and that one of those remedies was the right to have an 
equitable charge or lien on such share in whosesoever hands it might be. It is, 
I think, true that, as between the parties themselves, if one had obtained more 
than his share, an equalization would be made upon a division of the balance of 
the common property, and that this right for equalization would enure to the 
benefit of one who, as surety, had been compelled to respond for a defaulting co-
owner. I do not suppose that the fact that the parties sought a personal remedy 
through an accounting in the Surrogate's Court would operate as a waiver of any 
other remedy (Clapp v. Meserole, 1 Keyes, 281); or affect the right of the 
surety. But the trouble here is, the rights of third parties have intervened. A 
large creditor of Paige has obtained, as he claims, a lien by mortgage and a 
title by subsequent foreclosure, all before the discovery or ascertainment of 
the misappropriation, and, upon agreement with the judgment-debtor has advanced 
and paid out large sums in payment of judgments which are conceded to have been 
liens on the share of Frederick and were recovered before the misappropriation. 
I say conceded, because that fact is found by the referee upon the request of 
the defendants. So that the question, then, is whether the equity of the surety 
is superior to the right, be it legal or equitable, of the mortgagee or those 
holding under him. Drake, when he took the mortgage, assumed new 
responsibilities; he agreed to and did advance moneys to take up prior 
judgments; he parted with value on the faith of the mortgage, and the referee 
finds that he then had no notice or knowledge of any misappropriation by Lewis. 
The evidence authorizes this finding. At the mortgage sale he was a, purchaser 
for a valuable consideration, although the purchase-money was applied on the 
mortgage debt (Wood v. Morehouse, 45 N. Y., 376); and his title was as of the 
time of the execution of the mortgage. Authorities are cited by the respondent 
to the effect that under the will no estate vested in the executors; they took 
simply a power in trust, and the fee was in the devisees, subject to the 
execution of the power. (Reed v. Underhill, 12 Barb., 113; Crittenden v. 
Fairchild, 41 N. Y., 289; Hetzel v. Barber, 69 N. Y., 1.) The will admits of 
this construction, and it does not seem to be disputed by the appellant. His 
answer is apparently on that basis, and his right to tenancy by the curtesy, 
which he claims in his answer, is on that basis. If the title vested in the 
devisee, he had a right to mortgage or sell; if the power to the executors was 
exercised simply for the purposes of division, then, according to the case of 
Ackerman v. Gorton (67 N. Y., 63), the proceeds would be deemed realty for the 
purpose of the retention of liens on the legal estate; if the power was 
exercised in order to provide for charges and expenses imposed by the will, then 
the balance, after providing for such incumbrances, should be deemed still to 
retain its character of realty. (Vernon v. Vernon, 7 Lans., 492.) The premises 
described in the complaint seem to be such balance.

The general rule under the English cases is that if a tenant for life, or other 
person having a partial interest, be an actor in a breach of trust, all the 
benefit that would have accrued to him, either from that trust fund or any other 
estate comprised in the same settlement, may be retained as against him, his 
assignees in bankruptcy, or, except when the defense of purchase for value 
without notice is applicable, those claiming under him, until the amount 
retained, with the accumulations thereon, have compensated the trust estate for 
the loss it has sustained. (Lewin on Trusts [2d Am. ed.] 609.) The same rule 
should apply here, and the mortgagee, as a purchaser for value without notice, 
have the benefit of the exception and be protected. There is another view of the 
case which supports the same conclusion. About $23,000 of the judgments that 
Drake assumed and agreed to take up and did take up, were conceded liens on the 
one-fourth interest of Lewis before the misappropriation. 

Drake having paid these at the request of Lewis, would be entitled to be 
subrogated to the benefit of the liens for his protection as against subsequent 
claimants (Gans v. Thieme, 93 N. Y. 232; Clute v. Emmerich, 26 Hun, 10; 
affirmed, 99 N. Y. 342), and thereby fortify the right which was obtained by the 
foreclosure.

The amount of these was more than was realized upon the foreclosure sale. How 
much Drake, in fact, paid for these judgments does not appear. Presumptively, he 
paid the full amount. Nor does it, I think, affect the question that instead of 
satisfying the judgments he had them assigned to himself and his wife. Keeping 
in form the legal lien would not injure his equitable rights. The judgments have 
all now by lapse of time ceased to be legal liens. But it is said that under the 
rule laid down by Judge Denio in the Clapp Case, above cited, the share of 
Frederick Lewis may be followed although he may have transferred or incumbered 
it before the misappropriation. That case differs materially from this. In that 
case the fund still remained in the hands of the trustee. It was a case where 
the title was in the trustee absolutely, and the determination was for the 
benefit of the beneficiary, directly and not of a party who claimed to be 
subrogated. Here a party, who was an actor in the misappropriation, seeks the 
benefit of the principle of subrogation. He is still executor and the case shows 
there are assets still in his hands, but the amount does not appear and no 
relief is claimed here as to them. The right of subrogation is an equitable one, 
and its application must depend upon the circumstances of each particular case. 
The continued insolvency of Lewis has brought about the present strife. He 
ceased to be executor in 1873, but nothing was done about an accounting until 
1880.

Having in view the origin of the claim of the appellant, he has not, in my 
opinion, shown any equitable right superior to the right acquired by Drake, and 
through him by the plaintiff, in the share of Frederick Lewis in the property 
described in the complaint.

It follows the judgment should be affirmed, with costs.

Hardin, P. J., concurred; Martin, J., did not vote. 

Judgment affirmed, with costs.

Additional Comments:
Reports of Cases Heard and Determined in the Supreme Court of the State of New 
York. Marcus T. Hun, Reporter. Volume LIX, 1889, HUN 52. Banks & Company, 
Albany, NY. 1901.

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