Noyes v. Turnbull , 61 N.Y. Sup. Ct. 26 ( 1889 )

Learned, P. J.

It is evident that, as a matter of fact, the defendant Turn-bull was not one of the persons who bought the wool alleged in the complaint, and was not one of the persons who made the notes therein set forth. That wool was in fact bought, and those notes in fact made, solely by Silas H. Pomeroy. But the plaintiff claims that Turnbull is liable, on the principle that a retiring partner may be liable for subsequent purchases made by the firm of one with whom the firm has previously dealt, and who has not been notified of the retirement.

Two questions are presented,—the one, whether that principle applies in this case; the other, whether Consalus had not in fact notice that he was dealing only with Silas H. The three trustees were never partners; and in many respects their rights were very different from those of partners. They had no beneficial interest in the property. They were joint tenants, not tenants in common. On the death of one, his representatives would have no interest in the trust-estate. One of the trustees could not voluntarily relinquish the trust. They were accountable for the proper management of the trust to the persons beneficially interested therein. All these particulars show that the position of trustees is widely different from that of partners.

It is not perhaps necessary to decide in this case whether or not all of the three trustees were personally liable to Consalus for purchases made prior to the decree. We are not willing to assume that they were thus liable. The cases of Thacher v. Dinsmore, 5 Mass. 299; Schmittler v. Simon, 101 N. Y. 554, 5 N. E. Rep. 452,—only decide that an executor who signs or indorses or accepts negotiable paper is personally liable, although he adds to his name the word “executor,” or the like. Foland v. Dayton, 40 Hun, 563, held that an executor will be personally liable for services done for the estate where there is no agreement to look to the estate; and that such agreement may be shown by circumstances. Austin v. Munro, 47 N. Y. 360, is to the same effect, for it is said that executors have no right to bind the estate for debts contracted by them. This reason, it will be seen, does not apply to these trustees. So, in New v. Nicoll, 73 N. Y. 127, it was held that generally trustees cannot charge the trust-estate, unless so authorized by the instrument creating the trust; but are personally liable on contracts made by them. How, that exception takes the present case out of the two decisions last cited, for these trustees were expressly authorized to incur, on account of the trust, further liabilities, and were to carry on the manufacturing business, which would require a constant incurring of debts. It cannot be assumed that they were to do this on their own responsibility, especially when they were expressly authorized to do this on account of the trust. Hor did they give their personal obligations, the business being throughout conducted in the old name of L. Pomeroy’s Sons. Even if it should be urged that Silas H. Pomeroy, who made the purchases prior to the decree, was personally liable, it would not follow that Turnbull was liable also. As above pointed out, these trustees were not partners. When a partner purchases in the business of the firm all the partners are liable, because all are interested beneficially in the purchase,—in the profits of the business. But it is not so with trustees. They are not interested in the profits of the business. They are conducting a trust for the benefit of others. An executor who gives his note as executor for a purchase made by him for the estate may be personally liable. But it does not follow that his co-executor is also personally liable on that note. So,.even if Silas H. was personally liable for purchases made by him, it would not follow that Turnbull was personally liable therefor, although he knew of the fact; because, as we have seen, the authority, expressly as well as impliedly, given by the will was to incur liabilities on account of the trust-estate. And there was abundant notice given by the letter-heads above mentioned that the business was in the hands of trustees. Those who dealt with the concern must therefore have known that the business was carried on by persons having no beneficial interest therein, and inquiry would at once have disclosed the terms of the will and the authority given thereby.

Passing this question, however, we come to the effect of the discharge of Turnbull from his trust under the decree. Now, the plaintiff compares this transaction to the retiring of a partner. There is no resemblance. A partn er who retires often takes some of the capital with him. At any rate he withdraws (or assumes to withdraw) that personal liability for the partnership debts which is on him as a partner. He retires voluntarily, and as a matter of right. The trustee discharged by the decree takes with him no capital. The property of the trust remains unaffected. He withdraws no personal liability; for when the trust-deed authorized (as did this) the incurring of liability, then the liabilities incurred must be those of the trust-estate, unless by some personal act a trustee makes himself liable. Furthermore, the trustee cannot relinquish his trust at pleasure. He can only be released by the court. Whatever the misconduct of his co-trustee, he cannot, as a matter of right, step out of the trust. In all these respects the supposed analogy between the two cases fails. Furthermore, it may be said generally that a trustee'is liable only for his own acts or his own negligence. A partner is often liable for the acts or negligence of his copartner. Hence it is that one dealing with a partnership may look to the liability of all the partners, and therefore arises the principle that the retiring partner must give notice of his retirement; but it is not so with a trustee. The court of equity has special power over all express trusts. It may discharge a trustee and appoint another. It may remove a trustee against his will. Should the trustee removed against his will be liable for acts subsequently done, even if he did not give notice of his removal? Some stress is laid on the fact that prior to the decree Turnbull knew that his co-trustee, Pomeroy, was purchasing wool on credit. But it does not appear that Pomeroy was purchasing on the credit of Turnbull; and that Pomeroy should purchase on the credit of the trust-estate or on his own credit would be no ground of liability against Turnbull, for Pomeroy was not, as co-trustee, an agent of Turnbull. Even if the trustees had divided the trust duties among them, we do not see that one would be responsible for the acts of another.

A further consideration is that which was principally relied upon by the learned justice who tried the case,—that is, the change in the letter-heads. We must consider that some years had elapsed between the purchases made before the decree and those made after. Then Consalus received some 20 letters in which the letter-head contained, as above stated, the name only of S. H. Pomeroy as trustee. As the old letter-heads contained the names of the three, this change should have put him upon inquiry. For all these reasons we think the judgment should be affirmed, with costs.

Landon, J., concurs.