ANDERSON ET AL.
NEW YORK & H. R. CO. ET AL.
Appeal from Special Term, New York County.
Action by William S. Anderson and another against the New York & Harlem Railroad Company, the New York Central & Hudson River Railroad Company, the New York, New Haven & Hartford Railroad Company, and Everett P. Wheeler. From a judgment for plaintiffs, defendants appeal. Reversed.
See, also, 58 Misc. 72, 110 N.Y.Supp. 232.
[116 N.Y.S. 955]
Alexander S. Lyman, for appellant Railroad Companies.
Horace E. Deming, for appellant Wheeler.
L. M. Berkeley, for respondents.
Argued before PATTERSON, P. J., and INGRAHAM, McLAUGHLIN, LAUGHLIN, and CLARKE, JJ.
On the 19th of December, 1896, the plaintiffs were the owners of certain real estate situate on Park avenue, in the city of New York, and on that day entered into a written contract to convey the same in exchange for other property to one Hodges. The contract contained the following provision:
" And whereas in this exchange of properties that agreed to be conveyed by the parties of the second part [the plaintiffs in this action] is valued by both parties hereto at a less sum than it otherwise would be valued at by reason of a certain structure recently erected by the New York Central and Hudson River Railroad Company in front of said buildings, it is further agreed by both parties hereto that any and all claim or claims and rights of action to damage or depreciation of said buildings by reason of such structure shall be and remain with and the property of the party of the second part, irrespective of in whose name any action may be brought to recover such damage, and the party of the first part [Hodges] will execute such further proper instrument as the parties of the second part may be advised is necessary to confirm such property and rights in the said parties of the second part."
Hodges on the 29th of December assigned his interest in the contract to the defendant Wheeler. Two days later the plaintiffs conveyed the real estate in question to Wheeler, and, simultaneously with the execution and delivery of the deed of conveyance, Wheeler, as party of the first part, and they as parties of the second part, entered into an agreement, which, after reciting the conveyance and that Anderson and Dowling claimed a cause of action against the New York Central & Hudson River Railroad Company and the New York & Harlem Railroad Company " for damages to said houses and property by reason of the elevation of the tracks of said companies upon Park avenue in front of said houses" and that it was not the intention of either of the parties " that said cause of action should pass" to Wheeler by the conveyance, but that the same should be and remain the property of Anderson and Dowling, provided as follows:
" Now, in consideration of the premises and of one dollar to the party of the first part in hand paid, the receipt whereof is acknowledged, it is hereby [116 N.Y.S. 956] covenanted and agreed by and between the parties hereto that the aforesaid cause of action does not pass by said conveyance but remains the property of the parties of the second part hereto and the party of the first part hereby, assigns, transfers and sets over to the parties of the second part, their heirs, executors, administrators and assigns all his right, title and interest in any cause of action against the said railroad companies, or either of them, by reason of their aforesaid elevation of said tracks in front of said houses or the running of engines and trains thereon or connected in any way therewith, accruing to the date hereof."
Subsequently these plaintiffs, through the Court of Claims, collected from the state of New York the damages to the premises in question up to the time of the conveyance to Wheeler. In April, 1906, they brought this action. The complaint, among other things, alleged that the construction, maintenance, and operation of the railroad structure in front of said premises were illegal; that the owners had never consented thereto, and by reason of the impairment of the easements appurtenant to the premises the same had been damaged to the amount of $10,000; that the plaintiffs had requested Wheeler to bring an action as trustee for their benefit, or to become a plaintiff with them in this action, to recover such damage, which he had refused to do, but instead was proposing to settle with the railroad companies the claim for said damage, and to convey certain easements to them for an inadequate consideration, with the intent, he himself being without pecuniary responsibility, of applying said consideration to his own use, in violation of the aforesaid reservation and in fraud of the rights of the plaintiffs. Judgment was asked that it be determined that Wheeler had no beneficial interest in the easements or in the damages caused to the premises, but that he is a trustee of the same for the benefit of the plaintiffs, and, as such, that he be directed to execute such conveyances and releases as might be necessary to secure to them all the damages reserved; that he and the railroad companies be enjoined from carrying out their proposed settlement; and that the railroad companies also be enjoined from maintaining and using the said railroad structure until they pay to the plaintiffs the fee and rental damages. The answers of the railroad companies and Wheeler put in issue the material allegations of the complaint. The trial resulted in a judgment directing Wheeler to deliver to the plaintiffs upon demand a good and sufficient deed conveying to the New York & Harlem Railroad Company and to the New York Central & Hudson River Railroad Company a marketable title to such of the easements appurtenant to the premises in question as are required for or taken by the maintenance and use of the railroad viaduct in Park avenue in front of said premises, and that if the plaintiffs shall then tender such deed to such railroad companies, and they shall neglect for 10 days after such tender to pay the plaintiffs the sum of $6,000, then they be enjoined and restrained from using such viaduct; that the plaintiffs recover of Wheeler the sum of $380, the same being the interest on $6,000 from the date of the commencement of the action to the time of trial, and from the two railroad companies named the costs of the action. From this judgment, the railroad companies and Wheeler appeal.
All the parties seem to agree that, when the plaintiffs conveyed the land to Wheeler, this by operation of law took with it the easements [116 N.Y.S. 957] of light, air, and access, and if they did not, that question has been so definitely and thoroughly settled by this court and the Court of Appeals that it is no longer open for consideration. They could, however, as between themselves and as a part of the consideration, create " a resultant trust by virtue of which the grantee becomes a trustee for his grantor as to all moneys received or judgments recovered for the invasion or destruction of such easements." McKenna v. Brooklyn E. R. R. Co., 184 N.Y. 391, 77 N.E. 615.As between the plaintiffs, therefore, and the defendant Wheeler, if the easements were reserved, then that reservation operated to retain in favor of the plaintiffs certain rights which Wheeler could not and ought not in equity to disregard. Pegram v. Elevated R. R. Co., 147 N.Y. 135, 41 N.E. 424; Freund v. Biel, 114 A.D. 400, 99 N.Y.Supp. 1067.The principle by which such trust relation is created, and the reason why it should be enforced in a court of equity, is fully discussed by Judge Landon in Western Union Tel. Co. v. Shepard, 169 N.Y. 170, 62 N.E. 154,58 L.R.A. 115.
The main question presented, therefore, is whether the plaintiffs, when they conveyed to Wheeler, reserved all the damages, fee and rental, then accrued or thereafter to accrue by reason of the erection and maintenance of the structure referred to, and constituted him a trustee for their benefit in collecting or receiving the same. The answer to the question necessarily depends upon the construction to be put upon the conveyance to Wheeler and the agreement which was executed in connection with it. The agreement between the plaintiffs and Hodges has no bearing upon the subject, and ought not to have ...