Opinion
Argued May 22, 1873
Decided June 3, 1873
J.D. Kernan for the appellant. W.F. Cogswell for the respondents.
It is not necessary for the conclusions to which we have reached, to consider whether the statutory right which a mortgagee has to become himself the purchaser on a mortgage foreclosure by advertisement, is equivalent to a permission to a trustee so to do, in a decree for the sale of trust property. For the purposes of this case we may treat it, as that of one who being trustee of the equity of redemption has bought the same at a sale thereof. Medbury, if considered as trustee of the equity of redemption in the mortgaged premises, for the creditors of Alfred Hubbell primarily, and for Alfred Hubbell secondarily, could not become the purchaser of the premises at the foreclosure sale, so as to remove them from the operation of the trust. He was still liable to be called upon by his cestuis que trust to account for the same, and the rents and profits thereof. ( Slade v. Van Vechten, 11 Paige, 21.) This liability accrued as soon as he took possession of the premises in pursuance of the foreclosure sale, and began openly and notoriously to occupy them as his own, asserting an individual right thereto. The cestuis que trust could at once have come to the court, and have set aside the sale, and have had the premises re-exposed for sale. ( Davoue v. Fanning, 2 J. Ch. R., 252.) Or they could at any time afterward, until their rights were lost or otherwise extinguished, have called upon the trustee to have accounted for the rents and profits of the property, and the property itself, the same as if he had bought it for them or still held it for them, notwithstanding the sale. If, then, this right of action of the cestuis que trust was subject to the operation of the statute of limitations, that statute began to run on the 10th day of October, 1849, which was the day on which Medbury took possession of the premises as his own.
The principles laid down in the opinion in Hubbell v. Sibley ( 50 N.Y., 468), sustain the conclusion that such right of action was so subject; and that the right of action expired after ten years from the time at which it accrued. (Code of Pro., §§ 74, 97; 2 R.S., p. 301, § 52.) And as this suit was not begun until July, 1869, ten years had for some time gone by. But it is claimed by the plaintiff that in this case the cause of action did not accrue until he was appointed trustee instead of Medbury, which was in June, 1863. It is true that the plaintiff as trustee had no cause of action before that time. Nor had he any cause of action then, unless those whom he represented then had one. The fact that Medbury, as trustee, could not sue Medbury as an individual, did not suspend the cause of action against him. Any of the cestuis que trust could have sued; the assignor or any of his creditors who were interested in the assignment and in the trust fund. The plaintiff on his appointment as assignee acted not in his own right, but in a right to which he succeeded officially; and represented interests and rights which had begun before he became concerned for them as trustee. If the right to bring an action was in being at a date earlier than that of his accession to the office, he took the right as it then was, and if lost to his cestuis que trust by the running of the statute, it was lost to him.
For the purposes of this case it is not needed, that it be decided whether or no a trustee can bring such an action as this unless at the request of his cestuis que trust.
It is said that until the appointment of the plaintiff as the successor of Medbury there had been no refusal by the latter to account for the property and to surrender the trust estate. But when Medbury foreclosed his mortgage and took possession of the premises as his own, and notoriously held them as his own, he did declare to all interested that he held it in hostility to their rights, as discharged from the operation of the trust, no longer as their trustee but as his own. This gave cause of action and set in motion the statute.
The plaintiff claims that the assignor, and his creditors interested in the assignment, could not maintain an action without the plaintiff. The cases above cited are authorities to the contrary. And see also Hill on Trustees, 518, 519; Story on Eq. Jur., §§ 465, 512. Nor does section 113 of the Code of Procedure affect the question. That is permissive. The trustee of an express trust may by it sue without joining the beneficiaries. It does not forbid an action by them, or by him with them.
It is further claimed that an action having been commenced before the foreclosure proceedings by creditors of the assignor, in which an injunction order was made restraining Medbury and his co-assignee from disposing of or interfering with the assigned property, which injunction order was still in force, the right of action was suspended thereby and the statute ceased for the time to run. It is not evident how such could be its effect. The injunction operated only upon the assignees to disable them from action. The cestuis que trust were not enjoined. They could have proceeded with the suit begun, and could have brought another. Moreover there is no finding by the Special Term, that there was an action and an injunction order. Nor is there any finding, that there was irregularity in the sale on foreclosure. And as the question of the effect of the manner of conducting that sale will be more fully considered in another case before us, it is expressly excluded here as not in this case.
The judgment appealed from should be affirmed, with costs.
All concur.
CHURCH, Ch. J., and ANDREWS, J., not sitting.
Judgment affirmed.