Hoyt v. Dollar Savings Bank 231 N.Y. 583

Annie V. Hoyt, Appellant, v. Dollar Savings Bank of the City of New York, Respondent.

Trust — action to recover trust funds illegally invested in a second mortgage — when holder of first mortgage which forecloses same and bids in property not liable for trust funds lost thereby.

Hoyt v. Dollar Savings Bank, N. Y. City, 187 App. Div. 243, affirmed.

(Argued May 4, 1921;

decided May 31, 1921.)

Appeal from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered April 19, 1919, affirming a judgment in favor of defendant entered upon a dismissal of the complaint by the court on trial at Special Term. The action is to recover the sum of $3,000 and interest, the plaintiff claiming that the defendant had participated in an illegal investment of trust funds, the property of the plaintiff, which investment was made by plaintiff’s guardian while she was an infant under the age of twenty-one years. The complaint alleged that an application having been made to defendant for a loan of $20,000 on certain real property it agreed to lend $17,000 and to permit the borrowing of the remainder from a third party subordinate to its loan; that thereafter plaintiff’s guardian agreed to join in the loan and with the knowledge of defendant lent $3,000 of trust funds in conjunction with and subordinate to the loan made by defendant; that thereafter, default having been made in payment of the principal and interest, defendant foreclosed and bid in the property for the amount of its loan, the loaii of trust funds being thereby extinguished and lost. The trial court held that there was no fiduciary relation between plaintiff and defendant.

Patrick J. O’Beirne for appellant.

Martin A. Schenck and George M. Mctckellar for respondent.