Opinion
November Term, 1902.
George A. Strong, for the appellant.
Bronson Winthrop, for the respondent.
The respondent was permitted to show, under objection and exception to its competency and admissibility, what took place at the interview between the committees of the respective parties on December 19, 1896, prior to the execution of the deed. The first question to be determined is whether it was error to receive this testimony. It was offered for the purpose of showing that the respondent's agreement to transfer the property was upon the distinct understanding or agreement that the control of the council over matters pertaining to the medical education should be merely nominal and that in fact such affairs should be entirely under the direction and control of the medical committee of the council composed of persons agreeable and satisfactory to the medical faculty of the respondent. Briefly stated, the claim of the respondent is that as the holder of property devoted to medical education, it had a duty and interest in maintaining, continuing and developing the theories and principles of education and conserving the good will and impetus attained during the long existence of the college and which are distinct from the property utilized, though intimately associated therewith; that this could be done only by continuing the instruction, direction and control in the persons who, having taken up the work of their predecessors in the faculty, had carried it on to its then stage of development; that it was for the mutual benefit of both to have the property and business affairs owned and managed by the university, but that this was not to otherwise affect the educational work. The respondent then contends that upon its being thus shown that the transfer was not intended as an unconditional gift, and that the appellant has violated the condition attached and rendered specific performance impossible, a court of equity should decree a reconveyance. The appellant insists that the preliminary negotiations or agreement were merged in the resolution and deed which showed that the conveyance was absolute, and that, therefore, parol evidence was incompetent and inadmissible.
If there was a parol agreement creating a trust or attaching conditions to the transfer, equity will enforce the trust or conditions if valid, provided the same were accepted and are capable of being performed; but if the contract be void for indefiniteness or otherwise, or if the trust or conditions have not been accepted, so that specific performance is impossible, equity will decree a return of the property. ( Associate Alumni v. General Seminary, 26 App. Div. 144; Rank v. Grote, 110 N.Y. 14; Ahrens v. Jones, 169 id. 555; Amherst College v. Ritch, 151 id. 282; Peck v. Hoyt, 39 Conn. 9; Peacock, Pub. Admr., v. Nelson, 50 Mo. 256.)
It may well be that the appellant was not authorized to accept the conveyance on the conditions claimed to have been attached; but even if it did have such authority it does not appear that the council ratified the agreement made by its special committee. Nevertheless the appellant received the property from the respondent, which was under no obligations to make the conveyance except upon such conditions as it saw fit to impose, and if its consent was given upon these conditions equity will not permit the appellant to both repudiate them and retain the property, but will hold that it must ratify or repudiate in toto, and will imply a trust to the effect that the grantee, if performance be not made or be impracticable, hold the property for the benefit of the grantor. ( Reed v. McConnell, 133 N.Y. 425, 435; Farmers' Loan Trust Co. v. Walworth, 1 id. 433; Dix v. Marcy, 116 Mass. 416; Rackemann v. Riverbank Imp. Co., 167 id. 1; Peacock, Pub. Admr., v. Nelson, supra; Pullman's Car Co. v. Transportation Co., 171 U.S. 138; Chapman v. County of Douglas, 107 id. 348; Rader's Admr. v. Maddox, 150 id. 128.) It is manifest, therefore, that it was important and material to show the parol agreement. We think the evidence was competent upon several grounds: (1) As showing that the real agreement rested in parol, and the deed was executed in part performance thereof. ( Chapin v. Dobson, 78 N.Y. 74; Juilliard v. Chaffee, 92 id. 529.) (2) As showing the real consideration and a failure thereof. ( Baird v. Baird, 145 N.Y. 659.) (3) As showing a collateral agreement not in conflict with the deed which contains nothing on the subject of control over the educational work. ( Routledge v. Worthington Co., 119 N.Y. 592; Rackemann v. Riverbank Imp. Co., supra.) (4) As showing that the conveyance, though absolute in form, was made upon conditions or in trust, and that it would be a fraud upon the respondent to allow the appellant to repudiate the trust or conditions and retain the property. ( Rank v. Grote, supra; Amherst College v. Ritch, supra; Ahrens v. Jones, supra; Peck v. Hoyt, supra; Dix v. Marcy, supra; Peacock, Pub. Admr., v. Nelson, supra.)
Upon the evidence thus received, the Special Term held in effect that the property was not transferred as a gift, but in consideration of an agreement which had been repudiated and the performance of which has become impracticable, because of appellant's acts, and for the reason that the council would be in these matters thereby divested of authority to act freely and as might seem for the best interests of the university. The sufficiency of the testimony to justify these findings remains to be considered. There were present at the conference between the committees of the respective parties on the 19th day of December, 1896, Mr. Dimock and the chancellor constituting the special committee of the council, and Drs. Pardee, Witthaus, Stimson, Thompson and Polk of the faculty, and Mr. Miller, a member of the council and of the medical committee and of the board of directors of the respondent. With the exception of Dr. Thompson they were all called as witnesses. Mr. Dimock, who was spokesman for the appellant's committee, testified in substance that he drew attention to the fact that he and Mr. Miller had been elected to the council and placed on the medical committee at the instance of the faculty, together with their friends, Col. Payne and Mr. Barney, and stated that if the respondent would pass its property over to the university, it "would engage that that Committee, the Medical Committee, should always remain constituted of people who were acceptable and satisfactory to the Governing Faculty; that as vacancies occurred members of the Council who were agreeable or acceptable to them would be appointed to the place, and that that committee, so constituted, would have and should have the entire management and control of the property to be turned over and of the affairs of the Medical College, and that it should succeed, in the appointment of professors, to the powers that had been exercised by the Governing Faculty theretofore;" that while they were surrendering the management and control which had been exercised partly by the governing faculty and partly by the board of directors of the respondent, they were giving it to a body "satisfactory to them, and would be continued to be satisfactory to them," and that he thought that this was a "continuation of the state of things" that had "existed from the first;" that the chancellor expressed no dissent to what he stated; that he stated in answer to a question, as to how the governing faculty were to manifest their acceptance of new members of the committee as vacancies occurred, that some means would be devised, and that they could trust the university for that. This testimony of Mr. Dimock was corroborated in the main by the testimony of Mr. Miller and of all the doctors present, except Dr. Thompson, who was not called.
The chancellor's testimony is to the effect that Mr. Dimock spoke of the interest the medical committee would take in the college if the property were transferred; of the increased interest the public would take in the institution if its proprietary character were abolished, and of the greater ease with which money could be obtained and of the personnel of the medical committee, but he says Dimock did not state that the affairs of the medical college should be directed and controlled by the medical committee, and that nothing was said as to the future composition of that committee.
In answer to a question with reference to the statement contained in Col. Payne's letter, herein quoted, to the effect that the entire interest and control was to be vested in a medical committee, he said that if by vested was meant only "put under the charge of the Medical Committee," he would not object to that, but he denied that it was to be vested in that committee exclusively. He further stated that his view of the matter was "that before this conveyance the Medical College Laboratory owned the property and the members of the Governing Faculty owned the fees which came from the students, the income of the college," and that after the conveyance they ceased to have any legal right other than that of other professors elected without a stated compensation.
It is claimed on the part of the appellant that the testimony of the witnesses, who thus gave evidence in behalf of the respondent, was materially contradicted by their cross-examination and by other evidence of their subsequent acts and conduct. This evidence and the criticisms upon their testimony have been carefully considered. It cannot be discussed at length within the reasonable limits of an opinion. It is sufficient to say that we have reached the conclusion that this was a fair question of fact, and we would not be justified in reversing the decision of the learned trial justice, who had an opportunity to observe the witnesses, on the ground that his conclusion is against the weight of evidence. This testimony, introduced on behalf of the respondent, is not at all improbable. The respondent and its faculty turned over to the appellant very valuable property and interests. They had the authority to continue themselves and their successors in the charge and control of this property and of the faculty in perpetuity. According to the appellant's claim, this property and all of these rights were surrendered gratuitously and unconditionally. In determining this question the history of the organization of the faculty, of the incorporation of the respondent, and of the relations existing between the respondent and the faculty and between them and the appellant, the material events of which are recorded in the statements of facts, are quite important. In these circumstances we think the probabilities favor the existence of the reserved rights claimed by the respondent. ( Rogers v. N.Y. T. Land Co., 134 N.Y. 197, 214.) We think the testimony fairly justified a finding that a promise was made on the part of the special committee of the council to the effect that the entire direction and control of the affairs of the medical college should be vested in the medical committee, which should at all times be composed of members satisfactory and agreeable to the faculty, but that there was no definite agreement as to the means by which this was to be accomplished. Five of the eight members of the respondent's board of trustees testified that they voted to transfer the property in reliance upon these promises. In addition to the duty and interest that the respondent had in preserving the continuity of the college work, it had a proprietary interest in the right to the income of the college as the successor of the professors after they resigned, under the resolutions set forth in the statement of facts, which would entitle it to enforce the contract or trust or recover back the property. ( Associate Alumni v. Theological Seminary, 163 N.Y. 417.)
It is unnecessary to determine whether this was a trust, valid or invalid, which has been repudiated, or a contract that has been rescinded for a breach or upon a consideration that has failed or is void because not in writing or ultra vires; or a transaction voidable because of mutual mistake, for in either case the appellant should not ex œquo et bono retain the property and equity will impress it with a resulting trust for the benefit of respondent and decree the execution thereof by directing a retransfer.
This is not a case where specific performance may be decreed, for the conditions have been repudiated by the council and they never became binding upon that body. Furthermore the members of the faculty have all resigned and are otherwise engaged, and, as to the members of the medical committee, one failed of re-election and the others resigned from the council, and thereby from the committee, and the appellant has filled all vacancies and proceeded to organize a medical college with a full corps of professors in its own way, disregarding the claims of the respondent.
The contention that if these rights were reserved they would have been embodied in the resolutions or in the conveyance was a fair argument for the consideration of the trial court and for our consideration in reviewing the decision. It must be borne in mind, however, that the faculty had been permitted always to maintain and govern their property and the medical college without interference on the part of the university and there was room for trust and confidence that the parol understanding upon which the property was transferred would be carried out by the appellant in good faith. We think that the direct and positive testimony of the witnesses, to which attention has been drawn, has not been overcome.
Shortly after the execution of the conveyance the appellant undertook to consolidate with the medical college of respondent, the Bellevue Hospital Medical College, and the council so amended the report of the medical committee, with reference to the assignment of work to the professors, as to put the former Bellevue Hospital professors in control of a material part of the work, and so apportioned the work, against the protest of the members of the former faculty of the respondent, that the ultimate result, as the former faculty regarded it, would be a sacrifice of the principles and methods of instruction theretofore practiced in the medical college of the university and a substitution therefor of the principles and practice of the Bellevue Hospital College. This was a violation of the agreement that the entire direction and control of the affairs of the medical college should be vested in the medical committee, and since performance cannot be specifically decreed, the court decided that the property should be retransferred.
It follows, therefore, that the judgment should be affirmed, with costs.
O'BRIEN, J., concurred; PATTERSON, J., concurred in result; VAN BRUNT, P.J., and McLAUGHLIN, J., dissented.
I cannot concur in the prevailing opinion, either as to its law or its facts. If the conveyance from the plaintiff to the defendant was made upon an understanding or agreement whereby an implied trust arose in favor of the plaintiff, notwithstanding the fact that upon the face of the deed making the conveyance it appeared to have been entirely an absolute one, then it seems to be the settled law, not that the failure upon the part of the grantee to comply with the terms of the implied trust justifies the court in setting aside the conveyance, but that it imposes upon it the duty of enforcing the trust. ( Associate Alumni v. Theological Seminary, 163 N.Y. 417.)
The fact that a trustee has mistaken his rights under the deed out of which the trust arises has never before been held to invalidate the trust; but the court must impose upon the trustee the specific performance of the trust, which, under the authority of the case last cited, may be coupled with a provision that, in case of a failure to comply with the conditions, the fund be paid over or surrendered either into court or to trustees appointed by the court. I cannot find that it has ever before been held that, where a party has mistaken his rights under a contract by claiming too much, he thereby loses all claim to protection as to rights which were admittedly conferred upon him by the contract.
It further seems to me that the weight of evidence is decidedly against the proposition which has been urged by the plaintiff, namely, that the medical committee of the council of the defendant, with the assistance of the faculty of the medical department, was to have absolute control of the affairs of such medical department. It seems to me that an examination of the evidence in this case shows that this is a mere deduction which has been arrived at by the various witnesses, who testified substantially to that effect. Although this claim is made by the witnesses upon the part of the plaintiff, it is confessedly by their own evidence untrue. The medical committee of the council of the defendant, assisted by the medical faculty, were not to have absolute control. It is admitted that the defendant was to be financially responsible for the medical department. It is admitted that the council of the defendant had the power to fix the salaries of the occupants of the various chairs in the medical department. Now, if the council had this control over so important a branch of the medical department as the fixing of the salaries of its professors and were to be permanently responsible for the medical department, what becomes of this claim of the absolute control of the medical department being vested in the committee of the council of the defendant assisted by the faculty of the medical department?
Furthermore, there is not a writing or a communication from any of the witnesses upon the part of the plaintiff that does not contradict his position upon the witness stand. Let us take particularly the witness Dimock, who was a member of a sub-committee of the council of the defendant, and who, it is alleged, made to the committee of the plaintiff the assurances and assertions in regard to the control of the business and affairs of the medical department. He swears that he assured those gentlemen that that control should be in a committee of the council which should be appointed at their suggestion and satisfactory to them. He says that that was part and parcel of the arrangement which was entered into between the sub-committee of the council and the committee of the plaintiff. And yet, when he reports the action of his sub-committee to the council of the university, there is not one word said in regard to any such proposition. Upon the contrary, his report is that the council of the university were to have the unreserved control of the business and affairs of the medical department. There is not a suggestion that there was any reservation of right upon the part of the plaintiff or its representatives to authoritatively interfere in the management of such business. The report undoubtedly holds forth the idea that these gentlemen were to be treated fairly by the council of the university, and that in respect to the question of salaries they should be liberally treated; but there is not a suggestion of any reservation in the absolute character of the gift which was to be made by the plaintiff to the defendant. And in this connection it is to be observed that the medical department had found themselves embarrassed for the want of funds; that it was a proprietary institution; that it was found that they could not secure any endowment or any assistance by way of donation which would be of any avail so long as they remained a proprietary institution; and it was because they desired to be upon the basis of a university, relieved from the proprietary interest, that this arrangement was proposed and was carried into effect. This whole scheme, if the present claim upon the part of the plaintiff is sustained, was a misrepresentation to the world at large of the condition under which this deed of gift was executed. If Mr. Dimock's claim that this reservation was made is well founded, then his failure to report this alleged reservation to the council, to whom he was reporting the transaction, would seem very strongly to savor of an intended suppression of a very material fact which might, and undoubtedly would, have prevented the council from accepting the gift upon any such terms. Mr. Dimock attempts to excuse this suppression of this very material fact by the assertion that the reports were not written by himself. But it appears that some of them were amended in his own handwriting, and that he read every one of them from beginning to end to the council. It seems to me that Mr. Dimock has one of two horns of a dilemma to take in this situation. Either he is mistaken in regard to what took place at these meetings at which this agreement was entered into, or he has suppressed material facts, which he knew to be material, from the council of whom he was the trusted agent. It is somewhat difficult to say, under these circumstances, what credit can be placed upon the testimony of a witness whose own acts contradict him in every particular.
But it may be said that there were other witnesses who testified to the same thing — Doctors Pardee, Witthaus, Stimson, Thompson and Polk, of the medical faculty, and Mr. Miller, a member of the council and of the medical committee of the appellant and of the board of directors of the respondent. It is true that these witnesses have testified, some of them, substantially to the effect that the affairs of the medical department were to be in the hands of the medical committee of the council of the defendant and the faculty of the medical department. But they all concede that the council was to have absolute control of the salaries, and that all that they expected in that regard was that they should be treated fairly. Pardee's testimony as to the matter was that all that there was was an expectation that they would be treated fairly. Doctors Witthaus, Stimson, Thompson and Polk swear to the agreement. But it will be observed that, when they sent a written statement of their grievances at about the time the misunderstanding between the medical faculty and the council of the university took place, there is not a suggestion therein that the council has not unreserved control, nor a suggestion of any secrect trust or agreement. They say: "It is sufficient to say that the Medical Committee agreed upon a plan which was adopted by the Council on May 14th, and, although that plan was not, in our judgment, free from grave objection, we were ready loyally to accept it." In that plan, adopted by the council on May fourteenth, there was not a suggestion of any such trust or agreement as is sought to be imposed upon the transaction by this action. As has already been stated, there is not an act performed by any of the parties connected with this transaction, at or about the time, that is not hostile to the claim now made. Mr. Miller, who was a witness upon the part of the plaintiff, testified that he was present at the time this alleged secret trust was agreed upon, and he does not say a word as to what took place at that interview.
Undoubtedly, the persons who were interested in the plaintiff and who authorized the directors to make this deed of gift to the defendant for the purpose of relieving themselves of what was deemed to be the stigma of a proprietary school, in order that they might as a university get the benefit of an endowment, and, although it was conceded that the result of the assumption upon the part of the defendant of this medical school would be a deficit which it would be necessary for the council of the defendant to make up, expected and had reason to expect fair and liberal treatment at the hands of the defendant, not only in respect to the matter of salaries, but also in respect to the management of the affairs of the medical department; and they believed that the method in which the proposed consolidation with the Bellevue Medical College was to be carried out ignored the sacrifices which they had made for the purpose of establishing the close connection between the medical department and the defendant, and was hostile to their interests and to the ideas which they had cherished and furthered for years. In a letter of the 29th of May, 1897, addressed to the chancellor and council of the defendant and signed by the witnesses Polk, Stimson and Thompson, as well as by Doctors Loomis and Woolsey, they say: "We beg to make a reluctant but most earnest appeal against action which we are compelled to deem injurious to the highest interests of our school and of medical education, and most embarrassing and distasteful to ourselves. We refer to your action in the matter of the proposed consolidation of your medical department with the Bellevue Hospital Medical College." And after stating their grievances, they close by saying: "We appeal to you in the name of our common interests and labors in the past, in the name of our school to whose highest interests we are devoted, and in the name and memory of him, now gone from among us, to whose great services to the University you have yourself, Mr. Chancellor, borne so frequent and eloquent testimony."
Is this the language used by parties who are claiming a want of authority upon the part of the defendant to act? Clearly not. It is true that during the course of that letter they say: "We, therefore, feel reluctantly compelled formally to state to you that in our opinion our agreement with you has been broken, and in a way and to an extent that are greatly prejudicial to the interests of the department and of ourselves," but what agreement did they there refer to? It is apparent from the preceding part of the letter. They say: "We need not here repeat the conditions to govern such consolidation which we deemed essential to the welfare of the department and the success of our methods and plans. It is sufficient to say that the Medical Committee agreed upon a plan which was adopted by the Council on May 14th, and although that plan was not, in our judgment, free from grave objection, we were ready loyally to accept it." That was the agreement that they deemed to be broken. It was the plan adopted by the council on May fourteenth, and this reservation of power which formed this secret trust is nowhere mentioned in that plan.
Again, the same gentlemen write to the chancellor of the defendant on the 4th of June, 1897, and say: "We feel also that the rights, powers and property which we so recently transferred to the University for the furtherance of certain objects are being used against our judgment for other purposes which are antagonistic, and we appeal through you to the Council for the protection of our school and for justice" — not a suggestion from one end of the written communications to the other of a want of power upon the part of the council, or that there had been any reservation such as is claimed by the oral testimony.
I have not adverted to the oral evidence contradicting the claim of the plaintiff, because it seemed to me that the written declarations of the plaintiff's witnesses so completely refuted their testimony that no instrument in writing could be nullified upon what so clearly appears to be mistaken evidence. If deeds solemnly entered into are to be set aside upon oral testimony contradicted by every written communication of every witness, then the sooner dependence upon written contracts under seal is abolished the better.
McLAUGHLIN, J., concurred.
Judgment affirmed, with costs.