Lovett v. German Reformed Church , 12 Barb. 67 ( 1851 )

By the Court,

King, J.

These cases arise out of a controversy in relation to the trusts to which the temporalities of the above named religious incorporation are applicable; and the original case is reported as Gable v. Miller, (10 Paige, 627,) and on appeal, 2 Denio, 492. Gable and his associates brought a suit in the court of chancery, against Miller and his associates, claiming that the latter, as trustees of the above named religious incorporation, had committed a breach of trust in applying the property of the corporation to the promulgation and support of religious doctrines other than those for whoso support the property was given; and claiming that the property should be delivered to the complainants, and the defendants removed as trustees. On the 18th of May, 1844, the chancellor made a decree, declaring Gable and his associates to be the rightful trustees, and directing Miller and his associates to deliver to the complainants, all the property, &c. of the corporation. This decree was subsequently reversed by the court of errors, and directions given that Miller and his associates should be restored to what they had lost by the erroneous decree of the chancellor.

Whilst Gable and his associates were in possession of the property of the corporation, and acting as trustees under the chancellor’s decree, and before its reversal, they applied to the chancellor for leave to mortgage some real estate belonging to the corporation; leave was granted, and a mortgage executed by them in the name of the corporation, to George Lovett; and as security for part of the same debt, they suffered a judgment to be recovered by Lovett against the corporation.

The first case above mentioned, is a suit brought by Lovett for the foreclosure of his mortgage; it has been referred to three referees to hear and.decide, who reported in his favor, and a decree of foreclosure and sale has been entered in that suit; it now comes before this court on a rehearing, to set aside the decree and referees’ report. The second suit is brought by the corporation, to set aside the judgment in favor of Lovett; by conseitt, the testimony taken in the foreclosure suit is to be used in this.

The main questions in both suits are the same; and it is contended that the mortgage and judgment, given and suffered by those who, as the court of errors has decreed, were not trustees of the corporation, are invalid and void. Several points are stated, on behalf of the corporation, in support of the main proposition ; it seems to me, however, that they may be considered under two heads. First: Considering the corporation, as corporation, not to have been a party to the suit between Gable and Miller, and not affected by any of the proceedings in that suit. And, Second: Considering the corporation as practically a party to that suit, identifying itself with the prevailing trustees, and claiming the same benefits to which they are entitled. The argument of the counsel for the corporation applies itself to both these aspects of the case.

1st. It is objected that the corporation was not a party to the suit of Gable v. Miller, and was not bound by the decree therein, nor its property affected by such decree. Admitting this proposition to be correct, it in no wise affects the validity of the bond and mortgage and judgment; but, on the contrary, gives them additional strength. In this view of the case, the corporation have permitted Gable and his associates to take possession of their property, their seal, their records; to act as their trustees; and have in fact, held them out to the world as their trustees, and authorized to act for them ; and they are, as much as an individual would be, estopped from questioning the acts of their agents within the scope of their apparent authority. (Angell & Ames on Corp. 3d ed. p. 226, ch. 8, § 4.) As trustees, it was within the scope of their authority to apply to the chancellor for permission to mortgage the property, and to defend, or omit to defend, suits brought against the corporation; being responsible, like all other agents, for breach of trust, though third parties not colluding with them, would not be affected thereby. In this aspect of the case, it seems clear to me, that the mort- ' gage and judgment are both valid charges on the property of the corporation.

2d. Another aspect of the case is, that the corporation was represented, by its trustees in the suit of Gable v. Miller, affected by the decree therein, and entitled to all the benefits resulting from the reversal of the decree. In this proposition, the corporation identifies itself with Miller and his associates, who, eventually succeeded in the court of errors, and can claim the same, but no greater rights than such successful trustees.

The first point made here is, that the chancellor had no jurisdiction of the case at all, and his decree is consequently absolutely void.

It is sufficient to say, in answer to this, that the chancellor in that very case, overruling doubts he had formerly entertained, expressly decided in favor of the jurisdiction; and this court, still the same, though administered by other officers, will not depart from its own adjudications. The question here, is res adjudicata. The next, and most material point, is as to the effect of the reversal of the decree of the chancellor upon acts done by the trustees appointed by that decree, whilst the decree was yet in force: Are they avoided or not ?

Still considering the question as between the two sets of trustees, the court of chancery had authority to appoint Gable and his associates, trustees in the place of Miller and his associates, and to vest them with the trust property; and upon several considerations their acts, whilst such trustees, in relation to third parties, must be sustained. In the first place, appointed by a court of competent jurisdiction, they were trustees defacto, and their acts are good which concern third persons paying valuable consideration for them. They could have brought suit for the trust property against third persons, and no one would have been permitted, collaterally, to question their title. The principle governing such cases is strongly laid down in 3 Term Rep. 129, (Allen v. Dundas,) per Ashurst, justice, “ Every person is bound by the judicial acts of a court having competent authority, and- during the existence of such judicial act, the law will protect every person obeying it.”

Again, the restitution to which a party is entitled, upon the reversal of an erroneous judgment, is not restitution to every thing he has lost thereby; at least not to every thing which he has lost in consequence of the erroneous judgment; he recovers wrhat is still in possession of his adversary, but not every thing else. For instance, land sold under execution issued on the judgment, and bought by a third party, does not revert to the original owner on the reversal of the judgment; and in Bacon’s Abridgment, title Error, M. 3, citing Drury’s case in 8 Coke’s Rep. 142, b. it is held that if a man recovers by erroneous judgment, and by virtue thereof presents to a church, or enters into the perquisite of his villein; and after the judgment is reversed, these collateral things executed, shall not be divested thereby, but collateral things executory are, after reversal, as if no judgment had ever been. Indeed, unless the decree of a court of competent jurisdiction protects third persons, not parties to the suit, dealing with the successful party on the faith of the decree, no judgment can be of any avail until it shall have received the sanction of the highest tribunal in the land, or until the time for appealing shall have expired.

Thus much for the merits of the controversy. An objection is interposed in the first suit, that of Lovett v. The German Reformed Church, which seems fatal to the bill in its present shape. The plaintiff states that no proceedings have been had at law to recover the amount due on the bond and mortgage. The defendants plead, after excepting to its validity on the ground above mentioned, the judgment of $2,000 against the corporation as being for part of the debí secured by the bond and mortgage in suit, and the testimony sustains the plea. On this ground alone, then, the bill should be dismissed. (2 R. S. 3d ed. 205, 206. North River Bank v. Rogers, 8 Paige, 548.)

The report of the referees in the first suit, should be set aside, and the bill dismissed, with liberty, however, to the plaintiff, within forty days after notice of the order to be entered hereon, if he has exhausted his remedies at law upon his judgment, to amend his bill, by inserting the usual allegations in relation to his proceedings at law upon his judgment, and if he shall so amend, the defendants shall have forty days after service of such amendments, to answer the same, if they shall be so advised ; and if answered, and a replication filed thereto", either party to be at liberty to apply for a reference to hear and decide such new issues, or bring the same to a hearing upon the decree heretofore made in this action, and such new issues; to the end that a perfect decree may be made herein, and without prejudice to the right of the plaintiff upon dismissal of this suit, to file a new bill if he elects not to amend. The second suit, brought by the German Reformed Church, against George Lovett, should be dismissed with costs.

[New-York General Term, October 6, 1851.

Edmonds, Mitchell and King, Justices,]