Kip v. Hirsch — 18 Abb. N. Cas. 167

Majority

p. 167

KIP V. HIRSCH.

N. Y. Court of Appeals;

December, 1886.

Headnote

(Reversing 53 Super. Ct. (J. & S.) 1.)

1, Specific performance; title supported, by statute of limitations!} Executors who have been long in possession—in this case nearly twenty years,—under a sale in foreclosure in an action in which an assignee of the mortgagor for benefit of creditors was not joined as defendant, so that bis interests were not then foreclosed, the assignment having been made many years earlier,—in this case the assignment and foreclosure sale upwards of forty-six years ago,—can sell and compel specific performance by the purchaser, notwithstanding the omission to make the assignee for benefit of creditors a party to the foreclosure, if it appears that no sale was ever made by the assignee, and it does not appear that the assignment was ever acted upon, or that any of the debts provided for by it remained unpaid.^[2]

2. Payment; presumption of from lapse of time!} The presumption that debts secured by the assignment are paid is to be regarded in such a case as a legal presumption that the trusts for which if was

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created have ceased, and that the title has reverted to the grantor or those claiming under him.

3. Trust; cessation by cessation of purpose.] Under 1 B. 8 . 730, §67,— providing that “ when the purpose for which an express trust shall have been created shall have ceased, the estate shall also cease,—the . legal presumption of payment of debts by lapse of time sufficient to bar obligations of. all kinds, is enough to terminate the estate of the trust under an assignment for benefit of creditors which does not appear to have been acted oh.

The case of McCahill v. Hamilton, 20 Hun, 388 , distinguished or overruled.

4. The same.] The provision of L. 1875, c. 545, p. 618, that “where an estate has been conveyed to trustees for the benefit of creditors and no different limitation is contained in the instrument creating the trust, such trust shall be deemed discharged at the end of twenty-five years,” etc., applies to previously created trusts, and is in the nature of a statute of limitation.

5. Statutes; interpretation of the words “ shall be deemed."] The statute declaring that a trust shall be deemed discharged after the lapse of years may, if necessary to sustain its constitutionality, be construed as making the lapse of time prima facie or presumptive evidence that the trusts have been discharged, and permitting this presumption to be rebutted by other evidence.^[2]

6. Will; power to sell vacant and unproductive lots.] A testamentary power to executors to let and lease productive property and at any time after testator’s decease, “ to sell all the Vacant and unproductive lots ”—Held, to sustain a sale of lots which were Vacant and unproductive at testator’s death; and that inclosing them and storing lumber thereon afterwards did not change their character of vacant lots, and that leasing them for taxes only did not change their character of unproductive lots.

Appeal from an order of the Superior Court of New York at a General Term, which reversed a judgment for specific performance recovered on a trial at Special Term.

Isaac L. Kip and another brought this action as executors of Leonard W. Kip, deceased, against Edward Hirsch to compel specific performánce of defendant’s contract to purchase certain land from the plaintiffs.

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In June, 1835, Leonard W. Kip, the plaintiffs’ testator, was the owner of the lots of land in controversy, and in that month he conveyed them to Daniel E. Delavan, taking from, him a mortgage on the same lots to secure $1500, part of the purchase money. The deed and the mortgage were recorded on the twenty-ninth of June, 1835. On the sixteenth of May, 1840, Delavan made a general assignment to Walter J. Smith, conveying the lots in question, together with a very large amount of other real estate and personal property, in trust, to sell the real estate with all convenient speed, and apply the proceeds of the real and personal estate to the payment, first, of certain specified debts of the assignor; next, to the payment of all the other debts; and, when the trust was fully executed, to return the surplus, if any, to the assignor. This assignment was recorded June 6, 1840. In August, 1840, Leonard W. Kip commenced a suit for the foreclosure of the above-mentioned mortgage, making Delavan a party defendant, but his assignee, Smith, was not made a party. This foreclosure suit proceeded to a decree, and the mortgaged premises were sold under the decree, and bought in by Leonard W. Kip, and a master’s deed was executed to him, December 30, 1840, and recorded February 23, 1841.

The mortgaged premises consisted of three lots on the easterly side of Fourth avenue, between 120th and 121st streets, in the city of New York. They were vacant and unproductive, and so continued until the death of Leonard W. Kip, which took place in 1863. He left a will, of which the plaintiffs in this .action aré the surviving executors. Bv this will, after making certain bequests, he devised the residue of his real and personal estate to his executors, in trust for the benefit of his wife during her life; directing them to let and lease all his productive real and leasehold estates, and empowering them, at any time after his decease, to sell all vacant and unproductive lots, and divide the proceeds among his children; On the fifteenth of April, 1867, the plaintiffs, as executors of the will, leased tlie lots in question to John I. Reeber for the term of nine months from the date of the lease; he agreeing

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to pay, as rent, the taxes on said lots as soon as due and payable. Beeber took possession of the lots under this lease, and inclosed the same with a fence on all four sides, and occupied them for storing lumber, from April 15, 1867, until about the year 1883, when he relinquished his business to his sons, who have since then carried on the same business on the premises as his successor's.

March 17, 1885, the plaintiffs and defendant entered into an agreement in writing, whereby the plaintiffs agreed to sell and the defendant agreed to purchase the premises for the sum of $12,750, payable as set forth in the agreement. But the defendant now refused to complete the purchase, claiming that the plaintiffs’ title was defective by reason of the omission to make Walter J. Smith, the assignee of Delavan, a party to the foreclosure suit through which the plaintiffs’ testator derived his title.

The Special Term, upon these facts, held that testator did not at the time of his death own the real estate in question, and that, as he was not such o%vner, the executors could not convey by virtue of any express power of sale in the will, because such power referred only to land of which the testator was owner at the time of his death; that the testator’s interest in the premises was personal property, namely, the mortgage, which the executors took in trust for the purposes described in the will; but that the will by implication conferred all the powers necessary to a performance of the duties of the trust; that the taking possession of the premises under the foreclosure proceedings and the master’s deed was a legal exercise of enforcing the mortgage in one way; that, in the course of time, Smith’s right of redemption was cut off by the statute of limitations, and that, thereupon, the executors as trustees became the owners of the land by operation of law and invested with an implied power of sale; and rendered judgment for the plaintiffs.

The General Term, upon appeal, reversed the judgment directing specific performance, upon the ground that, by the weight of judicial opinion, before a purchaser should be com

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pelled in an action for specific performance to accept a title resting upon adverse possession, such title as a whole must be free from reasonable doubt, and that if there be any doubt which is practicable, the vendor must show that it is capable ¡ of being dispelled by competent evidence within easy reach; and that, within this rule of law, the plaintiffs’ title was not free from reasonable doubt, as it rested largely upon the assumed bar of the statute of limitations, and upon the parol evidence of a witness over eighty years of age (Eeeber, the lessee), and as nice and complicated questions of implied power arose under the will in various forms, upon which the rights of the parties largely depended. (Decision reported in 53 Super. Ct. (J. & S.), 1.)

From the judgment of reversal, the plaintiffs appealed.

Isaac L. Miller, for the plaintiffs, appellants.

John H. V. Arnold, for the defendant, respondent.

[after stating the above facts],—If the assign-

ment and the title of the assignee were still subsisting, and the trusts executed, the objection would be unanswerable; but we think that the circumstances of che case are such as to create a legal presumption that the purposes for which the trusts were created have ceased, and that consequently the estate of the trustee has ceased, and the title reverted to Delavan, the grantor of the plaintiffs, or those claiming under him. (.1 Ji. S. 730, § 67.) His title was, of course, transferred to the plaintiffs’ testator by the sale under the decree, "Delavan, the mortgagor, having been a party to the foreclosure. The assignment to Smith was made in 1840, more than forty-five years before the trial of this action, and nearly forty-five years before the making of the contract of sale; and although the trust was to sell the real estate with all convenient speed, for the purpose of paying the debts, it is found as a fact that no sale was ever made by the assignee of the property in question, or any part thereof. It does not appear that any of the property embraced in the assignment was ever sold, or

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that the assignment was ever acted upon in any manner. Walter J". Smith, the assignee, lived twenty-five years, and Daniel E. Delavan thirty years, after the making of the assignment."

It is found that no successor in the trust was ever appointed in place of Smith, and it does not appear that Smith ever claimed or asserted any title to the lots in question under the assignment, or that any creditor of Delavan, or any other person, has ever made any claim under the assignment, or attempted to enforce the trust, although the executors of Ivip have been in actual possession, through their tenants, for nearly twenty years.

After such a great lapse of time since the making of the assignment and the sale under the foreclosure, we think the presumption that the debts of Delavan secured by the assignment have been paid or in some manner discharged is so strong that the fact that the assignment once existed is no longer a substantial objection to the title. So much time has elapsed that the presumption of payment would apply even to debts evidenced by specialty or by judgment; and it cannot be conceived that if the debts have not in fact been paid, there could be any now outstanding which would not be barred by the statute of limitations.

We think there is no danger in holding that, independently of the act of 1875 (chap. 545), the trusts created by the assignment should, under such a state of facts as exists in the present case, be decreed discharged, and that the estate of the trustee should bo deemed to have ceased. No one but the successors of the trustee, if any should ever be appointed, can dispute the title which the defendant will acquire by the conveyance from the executors under the power contained in the will of the testator; and their right to redeem has long been barred by the statute of limitations.

. We think the lots in question are embraced in the power of sale. They were unquestionably vacant and unproductive at the time of the death of the testator, and nothing that lias happened since has materially changed their condition. Tire

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putting of a fence around them and the storing of lumber or building materials thereon did not change their character of vacant lots, so long as they are not built upon; neither did the lease change their character of unproductive lots, as no rent was reserved, the only agreement on the part of the tenant being to pay the taxes.

But we think the testator intended to include in the power the real estate which was vacant and unproductive at the time of his death.

The title of Delavan, to which the testator succeeded by his purchase at the foreclosure, was subject only to the estate of the trustee. That was not an absolute estate, but only for the purposes of the trust. Whenever those purposes ceased the trust ceased, and the assignor, or those who succeeded to his right, were in by their original title.

We are inclined to the opinion further that the act of 1875 (chap. 545) is applicable to this case. There is nothing in the act which confines its operation to assignments made after its passage; but on the contrary its language imports that it applies to trusts theretofore created. It purports to amend section 67 of the statute of limitations and trusts (1 R. S. 730), which provides that “ When the purposes for which an express trust shall have been created shall have ceased, the estate of the trustee shall also cease,” by adding the following words: “And where an estate hasheen conveyed to trustees for the benefit of creditors, and no different limitation is contained in the instrument creating the trust, such trust shall be deemed discharged, at the end of twenty-five years from the creation of the same;"and the estate conveyed to trustee or trustees and not granted or conveyed by him or them, shall revert to the grantor or grantors, his or their heirs or devisees or persons claiming under them, to the same effect as though such trust had not been created.”

To construe this act as relating only to assignments made after its passage would prevent its having any operation until the year 1900, which could not have been the intention of the legislature. The intention to make it apply to past assign

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ments appears clearly from its language which is: “ When an estate has been conveyed,” not “ shall have been ” or “ shall be ” conveyed.

It is in the nature of a statute of limitation and, if necessary to sustain its constitutionality, it should be construed as making the lapse of time prima facie or presumptive evidence that the trusts have been discharged, and permitting this presumption to be rebutted by evidence.

In Bellinger v. Shafer, 2 Sandf. Ch., 293 , 296, and cases therein cited, section 67 as originally enacted was held applicable to trusts created before its enactment, as well as to those subsequently created; and we are induced to think that the same construction should be placed on the section as amended by the act of 1875.

In the case of McCahill v. Hamilton, 20 Hun, 388 , the Supreme Court held‘a similar outstanding assignment to constitute a valid objection to the title, and the act of 1875 not to rémedy the defect.

It must be observed, however, that in that case it appeared that the assignment had been acted upon, and some sales of real estate had been made under it, although the time when the last sale was made does not appear in the case as reported.

But it is not necessary now to finally decide this point as to the act of 1875, as in the present case nearly double the time prescribed by the act of 1875 has elapsed, and no conveyance has ever been made by the trustee. The presumption of payment attaches to all the debts and it can hardly be conceived that any facts can exist which would entitle any person to enforce the trust.

Under these circumstances, we think that the defendant will acquire a good and marketable title to the premises, by a conveyance from the plaintiffs as executors; and he should be decreed to specifically perform his contract of purchase.

The order of the General Term should be reversed, and the judgment at Special Term affirmed, but without costs on this appeal, the question being novel, and there having been

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one unreversed decision of the Supreme Court sustaining the views of the respondent.

All concur, except Milleb, J., dissenting.