Opinion
January Term, 1900.
Henry J. Speck, for the appellant.
James Lansing, for the respondent.
Under the allegations of the complaint, the money of the plaintiff is traced into the real estate therein described. It was delivered to the defendant and received by her as part of the purchase price. There being a misappropriation by the general guardian, the plaintiff had a right to look to the land for indemnity. She had an equitable lien thereon to the amount of the trust fund invested in it. ( Ferris v. Van Vechten, 73 N.Y. 113, 119; Holmes v. Gilman, 138 id. 369, 378.) In the Ferris case it is said (p. 119): "It must be conceded that trust moneys may be followed into lands to the purchase of which they have been applied, and the cestui que trust may elect whether to hold the unfaithful trustee personally responsible, or claim the lands, the fruits of the misappropriation of the funds, or cause the lands to be sold for his indemnity and look to the trustee for any deficiency." This lien was operative not only as against Nancy A. Mann, to whom the title was conveyed, but as to subsequent holders of the title who took with notice. (2 Story Eq. Juris. § 1258; 2 Perry Trusts [5th ed.], § 828; 27 Am. Eng. Ency. of Law, 250; 2 Pom. Eq. Juris. § 1048.) The defendant not only had notice, but herself received the trust fund with full knowledge of the diversion. She co-operated with the guardian to bring it about. She is to be regarded as conniving with the guardian to work a devastavit. ( Colt v. Lasnier, 9 Cow. 320.) She is, therefore, not in a position to claim that, under the mortgage given for the balance of the purchase money, she has a preference to plaintiff. If such preference was allowable, it might operate to deprive the plaintiff of any effectual remedy upon the land, and to that extent give to the defendant the benefit of her own wrong. The rights of the plaintiff were not bound or affected by the mortgage so far as the defendant is concerned. (1 Perry Trusts, § 458, note 4, citing Mathews v. Heyward, 2 S.C. 239.) The purchase on foreclosure did not enlarge the defendant's rights. (2 Story Eq. Juris. § 1264; Warner v. Blakeman, 4 Keyes, 508.)
If trust property is wrongfully converted by the trustee, and constitutes, although in a changed form, a part of the assets of an estate with which it is commingled, priority of lien will be adjudged in favor of the trust estate. ( Matter of Cavin v. Gleason, 105 N.Y. 256, 262.) If, in the present case, only a contract for sale had been given, and the money of plaintiff had been paid thereon with defendant's knowledge, there cannot be much doubt that the equitable lien of plaintiff would be a charge on the whole property and overreach any interest of defendant therein. The position here is equitably no better for the defendant.
Sufficient facts were, I think, stated in the complaint to constitute a cause of action.
It is claimed by the defendant that Nancy A. Mann is an indispensable party defendant. She has now no interest in the real estate, as that was cut off by the foreclosure of the mortgage. The right of the plaintiff is not based on any contract between the plaintiff and Nancy A. Mann, and, therefore, the views stated in Hovey v. Elliott ( 118 N.Y. 124), cited on the part of the defendant, do not apply. The right of the plaintiff is based upon the wrong committed by the guardian with the knowledge and co-operation of the defendant and Nancy A. Mann. The liability of the wrongdoers is several. (1 Hill Trustees, *520.) The plaintiff is not concerned with any remedy that defendant may have against Nancy A. Mann. The right of the plaintiff does not depend on whether the defendant has any remedy at all against Nancy A. Mann.
I fail to see how there is any defect of parties appearing on the face of the complaint.
All concurred.
Judgment affirmed, with costs, with usual leave to answer upon payment of costs.