Townshend v. Frommer

This .is an action of ejectment and through it the plaintiff seeks to establish his right to the possession of certain real estate in a block of land in Hew York city, which is bounded by the Fourth and Fifth avenues and Seventy-sixth and Seventy-seventh streets. The question of his right turns upon the sufficiency of certain proceedings for the foreclosure of a mortgage to bar his grantors of any right in the premises. The defendants claim title through conveyances upon a sale pursuant to the decree in said foreclosure proceedings; while the plaintiff claims that his grantors had a vested • interest in the premises covered by the mortgage, which was never cut off by the mortgagee’s proceedings and remained theirs to dispose of. The material facts can be briefly stated. In 1835, William Wagstaff, being the owner of land, of which that now in question formed a part, conveyed to Dimond and .received back a purchase-money mortgage for $10,000. Dimond then

“ But in trust, nevertheless, that the said party of the second part and her heirs shall receive the yearly income, rents, profits and produce of the said lands and premises and apply the same yearly, during the natural life of thé said Clarissa, to the use of the said Clarissa, free, clear, exempt and discharged from all claim, demand, right, control or influence of her husband, the said James L. Curtis, or any husband that she may at any time have, and not to be in anywise subject to liis debts, or any lien or charge created by him or anyone claiming by, from or under him, but to the sole and separate use of the said Clarissa.

“ And on the further trust that the said party of the second part and her heirs shall, at the decease of the said Clarissa, convey the said lands and every part of them in fee simple to the children of the said Clarissa, living at her decease, and the surviving children of such of them as may then be dead, in equal portions, per stirpes, and not per capita, that is to say, etc.” * * *

Meanwhile, the mortgage affecting the premises had become the property of George Lovett, who, in September, 1837, commenced foreclosure proceedings. He joined Mr. and Mrs. Curtis, the grantors, and Eliza Eacey, the trustee named in the trust conveyance, as parties defendant; but he did not join as such certain children of Mrs. Curtis then living. In 1840 a decree of foreclosure and sale was had. The plaintiff in foreclosure purchased a part of the premises at the sale, and subsequently acquired the remainder from another purchaser. By mesne conveyances the interest of Lovett in the land in question became vested in a Mrs. St. John, in 1858, and she, and

In November, 1885, the plaintiff purchased and took bargain and sale deeds, without covenants, from children and grandchildren of Mrs. Curtis, of four undivided tenth parts of the land. In the subsequent year Mrs. Curtis died, and then the plaintiff commenced his action.

It is quite evident that whether the proceedings leading to1 foreclosure and to a sale of the mortgaged property were efficacious to confer a clear title upon the purchaser, as against plaintiff’s grantors, is a question to be determined by the legal construction and effect, which should be given to Mrs. Curtis’ trust deed to Mrs. Eacey. IE the effect of that deed was to vest a legal estate in remainder, from the time of its delivery, in the children of Mrs. Curtis, then they were necessary parties to the foreclosure proceedings, in order to cut off their rights and the equity of redemption. And this is what the appellant claims to have been the legal effect of that instrument. But if the effect of the trust deed was to vest the whole of the legal and equitable estate in the trustee, subject to the exécution of the trust in favor of the grantor, and the reversion remained in the grantor and her heirs, until after the termination of the trust estate and subject only to the execution of the power in trust, then all other interests wrere suspended meanwhile, and were, of necessity, contingent; and Mrs. Curtis’ children, living at’the time, acquired no estate in the lands requiring them to be joined as defendants in order to bar their rights and the rights of others in the class. And this is, substantially, the main position taken by the defendants.

When the property was conveyed to Mrs. Curtis, through Stillwell, she became its absolute owner in fee, but subject to the lien of the mortgage referred to. Her power of disposition over it was absolute, and, in its conveyance by the' deed to Mrs. Eacey, she exercised that power of disposition in the creation of two trusts. The first trust was to receive the rents, and profits of. the lands, and to apply the same to her (the

Prior to the Revised Statutes and at common law, a trust to convey was certainly recognized as a special or active trust. Mr. Perry, in Ms work on Trusts (vol. 1, p. 305), speaking of instances at common law of how the legal estate may he prevented from vesting in the cestui que trust by the operation of the statute of 27 Henry VIII, mentions those where there may “ any agency, duty or power be imposed on the trustee, as by a limitation * * "x" to pay the rents or to convey the estate,” etc. * * * (And see Lewin on Trusts, 210, and the English cases cited in note.) With the enactment of the article in our Revised Statutes upon uses and trusts, all such were' abolished, except those which that article specified and authorized; but by the 58th section of the article, it was provided that “ where an express trust shall' be created for any purpose not enumerated * * "x". no estate shall vest in the trustee; but the trust, if directing or authorizing the performance of any act, which may be lawfully performed under a power, shall be valid as a power in trust,” etc. A power, under the statute, is where authority is given to do some act in relation to lands or the creation of estates therein, which the owner might lawfully perform; and where a disposition is limited to be made to any person, or class of per

Our statute of uses had been modeled after the English statute (27 Henry VIII, cli. 10), and its purpose was to simplify and strengthen titles in lands, by abolishing distinctions between the mere title and the use, and in converting the beneficiary’s interest into a legal estate. Hnder that system, however, trusts could be created and the legal estate still be separated from the use, whenever the duties of the trustee were active; that is, when they called upon him for the performance of some act about the estate. The revision, in 1830, of the statute was intended still further to prevent complications, which arose in the separation of the legal and equitable estates, through construing and enforcing a use as a trust; and, to that end, abolished all excepit the active express trusts enumerated; permitting all other express trusts to be executed as powers in trust. (See Reviser’s notes to sections 45 and 55; Lang v. Ropke, 5 Sandf. 363 ; Downing v. Marshall, 23 N. Y. 366 .)

Obviously, a limitation upon the validation as a trust power of a trust, not comprehended within those authorized, is imposed in the respect that it must be one of those trusts which, at common law, would be deemed special or active trusts, as distinguished from nominal or passive trusts. The operation of sections 47 and 49, and 50 and 58, of our statute of. uses and trusts, read in connection, must be to prevent trusts from having any effect, when only passive, -and not directing or authorizing the performance of some act about the lands. An express trust, as a term descriptive either of the mode of its creation or of the legal title, could be created formerly whenever a special power, or duty, relating to the disposition of lands was imposed, and our Revised Statutes, while abolishing all express trusts, except those particularly enumerated, still permitted effect to be given to the intentions of a grantor, by declaring that when others were attempted they should be effectuated through ’ the medium of a power in trust. ■

When the appellant’s counsel insists upon the objection that a trust to convey is but a formal or passive trust, which cannot be validated as a power in trust, he reasons that the conveyance by the trustee is unnecessary for the vesting of the estate. If, in order to decide whether a trust, not authorized by the statute, shall be classified among those express trusts which may be effectuated as powers in trust, we are to determine its substance or activity by the obligatory nature of the duty to be performed, then the difficulty might, indeed, be deemed a serious one. If an express trust is not active unless it imposes a duty, which not only may, but must, be performed to affect, or effect, an estate, then the trust to convey here might be fairly said not to rank as a power in trust. But I think that would be fallacious reasoning; inasmuch as the test of activity is not in the importance, or in the obligatory nature of the duty to be performed by the trustee, but consists in what the trust empowers and demands of him. If it is something which the grantor could do, and, in order to carry out, would require action on his part, then the trust created is an active trust notwithstanding that, by reason of the statute, the act or duty may be one which, when directed to be performed by a trustee, the statute might execute when the time for performance arrived. It is not that the statute declares a conveyance by a trustee to be unnecessary; it is that by construction of the statute a conveyance is deemed to be unnecessary.

It is the power to do something about the lands; that is, to dispose of them by a conveyance, that qualifies the trust as active. A trust to convey, naturally, involves a power of disposition, and such a duty is active, as compared with a trust which is

Trusts to appraise and divide shares, or to sell, or to convey, have been held valid as powers in trust, under the 58th section of the Statute of Uses and Trusts, in the following cases of Gilman v. Reddington ( 24 N. Y. 9 -15); Crittenden v. Fairchild (41 id. 289-291); Manice v. Manice (43 id. 303-364), and Clark v. Crego ( 47 Barb. 599 ; affd. 51 N. Y. 646 ); the-latter of which may be deemed to be very much in point.

I think we are quite warranted in holding that the further trust in this deed to convey after the grantor’s death was valid as a power in trust, and the question then is, what effect, if any, did its creation have ijjpon the estate of the grantor. Did it confer any interest in the estate during the continuance of the grantor’s life upon any members of the class of intended .beneficiaries?

In Bowen v. Chase ( 94 U. S. 812 ), cited for the appellant, the language of the opinion,, to the effect that a direction to convey does not derogate from the vesting quality of equitable interests, has reference to the deed of appointment, executed under the power reserved to the grantor in her deed of trust. Madam Jumel had deeded her 'estate to a trustee, upon the-trust to pay over the rents to herself for her life, and upon

Upon the question of the vesting' quality of an estate, which is limited to take effect at a future day, upon the termination •of a prior trust estate, in persons then to be ascertained, cases where the trust was to convey to definite persons named might bo as unsatisfactory as authorities, as where the grantor or testator had given the remainder directly. It is the uncertainty here as to the precise persons, in whom would exist the right to enforce the execution of the power in trust, if, upon Mrs. ■Curtis’ death, any estate remained to be conveyed, that introduces the element of contingency. The distinguished counsel for the appellant refers to many cases, in support of his proposition that the plaintiff’s grantors, who were of the class ■entitled to the benefits of the power in trust, took vested remainders in the lands deeded by Mrs. Curtis, some of which involved questions arising prior to our Revised Statutes.

The revision made radical changes in the law of uses and trusts as it had existed, and it was intended that the law in that respect should have a new point of departure. It would be much easier to state reasons for our conclusion, if we had

In Watkins v. Reynolds ( 123 N. Y. 211 ), the question was not discussed as to powers in trust. Testator, there, left property upon an express trust for his daughter’s life, and, upon her death, upon trust to convey to her heirs then living. There was no point made nor discussion had by courts or counsel as to powers in trust. It was simply held that when the trust terminated by the daughter’s death, the trust estate vested at once in a son and daughter surving her, and a formal conveyance was unnecessary by the trustee. The point of the opinion, in that respect, was in holding that upon the daughter’s death the title had vested in her heirs.

In Genet v. Hunt ( 113 N. Y. 158 ), the action was for the construction of a will made by Mrs. Riggs. Prior to and in anticipation of marriage she had executed a deed to trustees, upon the trust to apply the rents and profits to her use during life. If she died during coverture the trustees were to convey, as she by her will might direct, and, in default of such direction, to her heirs-at-law. Mrs. Riggs died, leaving a husband and children surviving, and by a will had undertaken to dispose of her estate. The question presented and passed upon was whether the trusts created by the will were valid, within the law of perpetuities, or were void for remoteness. It was held that the will was an execution of the power of appointment reserved in the trust deed, and, therefore, spoke from

The expressions in the opinion, which are seized hold of by tire appellant as characterizing the interests of the persons -entitled to take pursuant to the direction of the trust deed, must be read in connection with the text of the opinion, and as indicating merely the inalienable character of the trust property, except in the modes pointed out by the trust deed. But nothing in the opinion need be deemed as deciding that the persons, who might be entitled upon Mrs. Riggs’ death to receive the trust property by virtue of the trust deed, took any vested legal estate in remainder upon its execution. The same learned judge who delivered the opinion in Genet v. Hunt, at the same term of court, in the case of Goebel v. Wolf ( 113 N. Y. 405 ), adverts to the rule upon the subject of the vesting or non-vesting of estates in language useful to the present contention. In the latter case the question was whether, upon the testator’s death, his children took immediate vested estates, under a further trust created in his will for the trustee to divide the estate equally among his children, upon the arrival of his youngest child at the age of twenty-one years. It was contended that the gift was to the children as a class, and for

Miller v. Wright ( 109 N. Y. 194 ), decided that upon the death of the life tenant the trust terminated and the real estate vested in his children. That was a suit for the partition of real property, and the question was as to the effect upon the title and proceedings of the vesting of the interests of the children by reason of the life tenant dying, pending the' partition proceedings. Judge Eabl merely decided that the children should have been made parties, upon the death of the fife tenant before judgment.

Stevenson v. Lesley ( 70 N. Y. 512 ), was an action for the construction of a will, which gave the residuary estate in trust for testator’s grandchildren, share and share alike, to be paid and conveyed to each .child- as it became of age, and meanwhile to be applied in their support. After testator’s death,, another grandchild was born, and the contention was over its right to a share. It was held that, being born after testator’s

Gilman v. Reddington ( 24 N. Y. 9 ), was an action for the construction of a will. The trust there was for the benefit of testator’s three infant children, until the two youngest attained the age of thirty years or died under that age. The youngest died after the testator and at the age of two years. • The question was as to the limitation of the trust during the two lives, and it was held valid. It was held that the children took vested remainders at testator’s death. But the trust was for specified children. The testator had created an estate for them, which he intended they should be supported from up to a certain age, and then they were to have it absolutely. The estate was theirs, beneficially, from the instant of its creation, and the enjoyment only postponed. An expression of Judge Comstock’s in the opinion. might be profitably referred to. He said that “ trusts to convey lands to a beneficiary are not enumerated in the statute of uses and trusts, but they are valid as powers in trust where the purpose of the power is lawful.”

I have carefully considered these cases cited for the appellant and many other authorities in the books, and I have not found any so in point as to be controlling here. The question of trusts and powers, with which we are dealing, is one hedged in with difficulties and fraught with the risk of leading courts in apparent opposition to previous decisions. In its discussion the ingenuity of the legal mind has been exerted in the direction of subtle distinctions, and has been influenced by abstract propositions and led by authors, who wrote in an atmosphere charged with technicalities and abstruse learning. If, in applying the doctrine of trusts to a given case, we are able to adhere to fundamental principles, the more exact should be the solution; and unless prior adjudications comprehend a decision of the precise question presented, they are not necessarily controlling upon the case at bar. There is a distinction between the present case and the cases in the books where the testator’s devise, or the grant, is to a trustee

The.- intention of a grantor, whether express or implied, cannot control or interfere with the operation of a rule of law; but I think, when clearly evidenced, it can be made helpful, and may, in such a case as this, aid in the application of the established rules. We are commanded by the statute to give effect to intention, in our construction of an instrument so far as it is possible. (2 R. S. 748, § 2.) From the language of the trust clause, it is evident that the grantor Mrs. Curtis desired, in the first place, to assure to herself, by placing the estate in another’s hands as trustee, beyond tlie risks attendant upon her husband’s acts or business, and beyond his influence and control, a life income from the estate; and, in the next place, after her life had ended, if any of her children should then be living, or any survivors of deceased children, that they should have it divided among them. She could have effected this latter purpose by a direct gift, or grant in remainder, contained in the instrument; or she could do it as it was done by adding another trust to that already created; namely, by empowering her trustee to convey the lands after her decease, in the due proportions, to her children. There does not seem to be any confusion in the thought that she as deliberately purposed, as she as deliberately expressed herself in language, that during her life the whole estate should be in

The rule in equity as to the joinder of parties in a foreclosure action affects those who have vested estates in remainder or reversion, and does not concern itself with those who have future contingent interests merely. (Story’s Eq. Bldgs. § 144.) I cannot see how Mrs.' Curtis’ children acquired any vested interest in the equity of redemption, for lack of any immediate right to the possession of the lands through a grant to them. What interests were not in Mrs. Curtis’'trustee remained in her, while she lived, and conjointly they represented all estates in the lands. She had not granted them to any person, other than her trustee; but had merely authorized them to be conveyed at some future day and to- persons then to be ascertained.

In Bennett v. Garlock ( 79 N. Y. 302 ) the question concerned the nature and tenure of the plaintiff’s interest in a trust estate,

Where such a power in trust follows in a grant upon the creation of an authorized express trust, I think the true principles of construction underlying the question of interests to be that, during the continuance of the preceding trust estate, the whole title is in the trustee, subject to the execution of the trust, and that the reversion is in the grantor and his heirs, subject to the execution of the power in trust; that the disposition of the estate after the grantor’s death, by way of a power in trust to convey to members of a class who may then be ascertained, gives to any then existing individuals, who might fall within the description of the class, an interest purely contingent, as well as future in its nature; and that the destruction of the estate in the grantor and trustee, as by proceedings in equity to foreclose a prior mortgage, destroys

The recent decision of this court, in its Second Division, in the case of United States Trust Company v. Roche ( 116 N. Y. 120 ), is much in point. A conveyance had been made of real estate to a trustee, in trust to receive the rents and profits during the life of the prospective wife of the grantor, and, after her death, in further trust, to sell and to divide the proceeds among the issue of the marriage, in case there were any living. After the marriage the realty was mortgaged. Default occurring in payment, foreclosure proceedings were instituted. It was objected as a defense that a cliild of the marriage, living and of full age, was a necessary party. Follett, Oh. J., delivering the opinion of the court, held' that the joinder of the child was not necessary, as he “had not a vested interest in the subject of the trust, nor in its avails. His interest is contingent upon his 'surviving his mother.” The proposition was not reasoned upon, but was nakedly stated and assented to by the members of that court.

Our conclusion is that at the time of the foreclosure proceedings the then living children of Mrs. Curtis did not have any estate in the lands in question and their equitable interests were all in abeyance. The whole estate was transferred to the trustee, and every interest not embraced in the trust remained in the grantor. Until her death terminated the estate in the trustee, no estate could vest in any others. The happening of the event which would render the trust power to convey enforceable in favor of persons then ascertained would set in operation the statute and vest the estate in those persons; but as meanwhile she and her trustee had been divested of the estate, none remained to which future interests might attach.

The importance of this case, in the large amount of property involved, as well as in the legal questions presented, and the great skill and ability, with which these questions have been argued by counsel, warrant this somewhat extended dis

The judgment should be affirmed, with costs.

All concur (Rugeb, Oh. J., in result), except Ahdeews, J., dissenting.

Judgment affirmed.