Majority
Headnote
One F., in October, 1868, executed an instrument under seal, which, by its terms, conveyed to plaintiff certain real and personal estate, with power to sell and convey the lands “by retail for the best price that can be got,” and, until such sale, to rent such of them as could be rented, and after defraying expenses and retaining five per cent for commissions, to pay over to F. the residue of the avails received during his life, and upon his death, after payment of his debts, to distribute the residue in the manner and to the persons specified. In December, 1870, F. executed to defendant R. a written contract for the sale to him of certain premises, part of the real estate included in said instrument, and R. went into possession under said contract. F. died in April, 1873. In an action to recover possession of the premises contracted to R., held (Earl, J., dissenting), that conceding plaintiff became seized under the instrument of an estate in the lands in trust for leasing with power of sale, as F. was entitled to receive'to his own use all receipts from sales during his life, and as he could have compelled an execution of the trust by a sale, he having, instead of resorting to a court of equity for that purpose, made a sale, thus accomplishing the same result, R. not being in default, was in equity entitled to hold the premises as against plaintiff.Whether, during the life of Joseph Fellows, the original owner of the property in question, the plaintiff was possessed of an estate in the property conveyed by the deed of the 10th of October, 1868, entitling him to the possession, or whether that instrument conferred upon him a mere power in trust, is not material to be considered upon this occasion. If a trust was created by the instrument referred to and the estate vested in the plaintiff as trustee, it was a trust for leasing the lands and paying over the rents to Fellows, the creator of the trust, during his life, and terminated at his death, before the commencement of this action.
With the termination of the trust the estate of the trustee ceased. That the deed or instrument under which the plain
If it should be conceded, for all the purposes of this action, that the plaintiff became seized under the deed of an estate in the lands in trust for leasing with the power of sale, there would still be a grave question whether he could recover of the defendant in the action. During the life of Fellows, the original owner of the property and the author of the trust, he was the sole cestui que trust entitled to receive to his own use all receipts from sales; and those entitled under the deed, after his death, had and could claim no interest in that part of the trust property which during the life of Fellows should be converted into money. The plaintiff, if trustee, had no discretion as to the time of sale, but was bound to sell within a reasonable time, for the best price that could be obtained. He could not, to the prejudice of the cestui que trust for life, defer a sale with a view to a prospective rise in value, or to benefit those who should become entitled after the death of the life tenant. The direction of the deed is to sell the lands, “ by retail, for the best price that can be got for the same; ” that is, the best price that could then be had for the same. The deed looked to a conversion into money as soon as sales could be made and during the life of Fellows, so far as practicable. The author of the trust deemed himself entitled to and entirely competent to care for and dispose of the proceeds of the sales that should be
It was not intended, and a court of equity will not allow a trustee of such a trust or of any trust, by postponing or accelerating a sale, to affect the interests of successive cestuis que trust. By so doing a trustee could, by fraud or collusion, defeat the intention of the trust and deprive the rightful owner of his just rights. (Hawkins v. Chappel, 1 Atkyns, 621; Walker v. Shore, 19 Ves., 387.) Fellows, the author of the trust, who was also the cestui que trust for life, entitled to have sales made when they could be made at the best price and within reasonable time, lived four and a-half years after the execution of the deed, and could, during that time, have compelled .an execution of the trust by a sale of the lands, or such of them as could be sold. Instead of resorting to a court of equity to put the trustee in motion, he made sale of the locus in quo to the defendant Bobertson, and, so far as appears, for the best price to be obtained, and received the avails, to which he would have been entitled had the sale been made in form by the plaintiff and the money received by him. Had Fellows found a purchaser for a proper price, he could have compelled the plaintiff to sell and pay to him the proceeds. The same result has been accomplished, and Fellows has received that to which he was entitled; and the defendant Bobertson is, in equity, entitled to hold the premises as against the plaintiff) who, at most, during the life of Fellows, was a trustee invested with power to sell for his benefit and pay the proceeds to him; so that an equitable defence to the action is made out.
It is true that the interest of Fellows in the property during his life, and the fact that he was entitled to and could have compelled a sale of the property and every part thereof for his benefit during his life if proper prices could have been obtained for the same, is not entirely consistent with the idea that there was a valid trust for a leasing of the premises
Were it necessary to decide the question, I should have great difficulty in finding an express trust declared for any of the purposes for which by law such trusts may be created. The only purpose recognized by the statute of uses and trusts, of which there is the least intimation in the instrument, has respect to the rents and profits of the lands and their receipt and application to the use of Mr. Fellows, the owner of the lands, during his life. An express trust may be created for such purpose, but for no other purpose, included within the powei’s conferred upon the plaintiff. (1 R. S., Y28, § 55.)
The main purpose of the instrument was to relieve its author from the burthen of managing the portion of his estate embraced within its terms, and create an agency for that purpose, and it was during the life of Fellows, in substance and effect, but an agency for the sale of the real property mentioned and the collection of the debts owing to Fellows for lands then under contract of sale, and for the payment of all the avails and proceeds to Fellows, the owner, who never parted with his property in or his rights to the income of, or the avails of the sales of any part of the property. The whole purpose of the instrument might have been accomplished during the life of Fellows, by a sale of the property and the payment of the proceeds to him. In that event those coming after him would have taken no benefit under it. The authority to covenant in respect to the title in behalf of Fellows and his heirs was a simple warrant of attorney for that purpose, and the power under it terminated with the life of Fellows; so that it is difficult to assign aplace to the instrument, either as a conveyance or a warrant of attorney, or as creating a power in trust. The sale of the lands was the principal object of the transaction and of the agency, and for that purpose a trust could not be created. How much or how
This power to lease and to collect and pay over the rents could be exercised under a naked power of attorney or a power in trust, .and under the same authority by which the sales should be made. There was certainly no trust created in respect to lands which were not the proper subjects of renting, and so far as the estate and interest of the parties to the deed are concerned, the instrument cannot properly be held to have created an express and active trust, vesting the title and possession in the trustee of a portion of the premises, and to have simply conferred upon him either a naked power or a power in trust as to other lands, all included in the same general terms. This would be to establish a trust not as created in terms by the instrument, but by proof of extrinsic facts which would have authorized the creation of an express trust. But without definitely passing upon this question, which is not involved in this action, and upon the decision of which the rights of other parties not before the court may depend, we pass to the consideration of the question whether a trust was created to come into existence at the death of Fellows.'
The deed or instrument, while it provided for the management of the estate by the plaintiff for the exclusive benefit of Fellows, the owner, during his life, sought to provide for the disposition and distribution of it after his death, which should-take the place of, and serve as substitute for a testamentary disposition. It declares that after the decease of Fellows, and after the payment of all his just and legal debts
There is no express trust created for the sale of lands for the payment of debts by the instrument under consideration. If one is established, it must be by interpretation of the doubtful phraseology of a crude and imperfect document, and without necessity’ for its existence, and when all could be accomplished under a power. The power to sell may exist with authority to pay debts from the avails, but if an express trust exists it is not the direct creature of the instrument itself, but it must be judicially established upon proof of the
There is not even an express direction to the plaintiff to pay the debts of Fellows, still less does he take title subject to their payment; nor are they charged upon the property which is the subject of the power delegated to the plaintiff. The instrument does not profess to dispose of all the property of Fellows, and does not put at the control of the plaintiff the large amounts received to his use and paid to him during the five years of the continuance of the power before his death.
The clause, “ and after the payment of all my just and legal debts,” preceding the directions for distribution of the residue of the property included within the power, comes far short of making that property the primary fund for the payment of the debts, or directing their payment from it. It is at the most but an intimation and direction that the disposition of his property then made shall not interfere with the just claims of creditors, whether their debts were created before or after the execution of the instrument. It did not work any change in the order in which his property should be appropriated to the payment of his debts as prescribed by law. The personal representatives of Mr. Fellows will be charged, and notwithstanding the execution of this instrument are charged, with the payment of his debts from personal assets in their hands. Personal estate is to be first exhausted in the discharge of debts, including at common law the payment of debts with which the real estate is
Heirs and devisees (and the donees under this power may be regarded as occupying the same position) can only be charged in respect to lands coming to them, or the lands themselves charged with the payment of debts, upon proof that there are no assets, personal or otherwise, applicable in the first instance to their payment. (2 R. S., 450 et seq.; Schermerhorn v. Barhydt, 9 Paige, 28.) A general direction in á will for the payment of the testator’s just debts, is not the express direction which the statute requires to change the statutory order of marshaling the assets of a testator; and the construction and effect of such a direction must be the same whether found in a will, deed or other instrument. (Rapalye v. Rapalye, 27 Barb., 610 ; Kinnier v. Rogers, 42 N. Y., 531 ; Skinner v. Quin, 43 id., 99.) In the case last cited, R., by willy after the payment of all his lawful debts, gave to his executor all his estate, real and personal, upon certain trusts, with a devise over of all the rest and residue of his estate to his wife, with authority to his executor to sell and convey his real estate after the death of his
The property itself, the subject of the power to the plaintiff, not being charged with the payment of the debts except as all the property of the deceased debtor is charged in its equitable order, and there being no conveyance of the property to the plaintiff, subject to the payment of the debts so as to charge him as a grantee cum onere, an intent to create a trust for the payment of the debts from this particular property cannot be implied. Had there been a trust created for the payment of debts the trust fund would by such act have been made the primary fund for that purpose, and to raise •such a trust by implication or by judicial interpretations would be to change the order in the marshaling of assets, without and against the sanction of the party who alone can change the equitable rule on that subject, and transfer the charge from one class of property to another. This was not a grant of property to pay debts, but at most a grant of an estate which might, if there should be a deficiency of other
Dissent
The judgment should be affirmed.
(dissenting). In the view I take of this case, it will not be necessary to consider the force and effect or to determine the validity of the instrument executed by Fellows on the 15th day of October, 1868, and I will confine my attention to the prior instrument executed October tenth. I will first consider what Fellows intended by that instrument, and then whether that intention can have effect under our laws.
It was his evident intention to vest the title to all the property conveyed in the trustee. He had become old and infirm, and the management of his large estate, located in eight different States, had probably become irksome and harassing to him. He therefore says, that, on account of his infirmities and advanced age, he deems it expedient to convey all his property to his nephew, and he uses apt and proper terms to convey title. He acknowledges a consideration of one dollar, and uses the terms “ have sold, and by these presents do grant, release and convey,” terms appropriate and ample to convey the fee to real estate. The terms of the trust also show that the grantor must have understood that the title to the property was by the instrument vested in the trustee. It was provided that the trustee should sell the lands by retail for the best price that could be obtained, and convey the same in fee simple to purchasers, with covenants of warranty binding his heirs; that until the lands should
This intent should have effect, unless some statute or rule of law stands in the way. It is the injunction of the statute that “ in the construction of every instrument creating or conveying, or authorizing the creating or conveying of any estate or interest in lands, it shall be the duty of courts of justice to carry into effect the intent of the parties, so far as such intent can be collected from the whole instrument, and is consistent with the rules of law.” (1 R. S., 748.) This statute rule requires not only that the language of an instrument unquestionably valid shall be so construed as to give effect to the intent of the parties, but that the construction shall be such as to uphold the instrument rather than to nullify it. (Post v. Hover, 33 N. Y., 593 .)
At common law this instrument would have been valid and effectual to pass the title to the real estate. (4 Kent’s Com., 320; Leggett v. Perkins, 2 Coms., 297; Wright v. Miller, 8 N. Y., 9 .) But the claim is that it is inoperative to pass the title under our statutes, because no express trust is created under section 55 of article 2, title 2, chapter 1, part 2 of the Revised Statutes, and because section 88 provides that where an express trust shall be created for any purpose not enumerated, no estate shall vest in the trustees; but the trust, if directing or authorizing the performance of any act which may lawfully be performed under a power, shall be valid as a power in trust. It is conceded by the counsel for the trustee
I am of opinion that here was a trust to receive the rents and profits and apply them to the use of the grantor. It is no objection to the validity of the trust that the avails of the real estate were to be applied to the -use of the grantor ( Van Epps v. Van Epps, 9 Paige, 237 ; Matter of Livingston, 34 N. Y., 555 ; Rome Ex. Bank v. Eames, 1 Keyes, 588); or, that the avails of the real and personal estate were to be mingled together and applied. (De Kay v. Irving, 5 Denio, 646 .) The direction to “ pay over ” is, substantially, a direction “ to apply to the use.” (Leggett v. Perkins, 2 N. Y., 297 ; Leggett v. Hunter, 19 id., 445, 454 .) It is true that nothing is said in the instrument about receiving the rents, but that is necessarily implied. The authority to rent carries with it an authority to receive the rents. It is not necessary that the purpose of the trust should be declared in the words of the statute; it is sufficient that a purpose within the stat
It is claimed on behalf of defendants that the authority to rent is merely incidental to the absolute authority to sell, and that, therefore, there is no valid trust to receive rents and profits within the statute; and this view was sanctioned by the opinion of the learned judge who wrote the opinion of the General Term. Precisely what is meant by the word “ incidental,” in this connection, I do not understand. The authority to receive rents and profits, was not conferred as incidental to the authority to sell, but was conferred in express language and by terms just as absolute as the power to sell. The authority to ' sell was, doubtless, the primary and most important authority, and when exercised would put an end to the authority to lease. But until the land should be sold, the power to lease was also important, and its exercise for the benefit of the beneficiaries under the instrument was just as essential, until the power to sell should be called into exercise, as the latter power. The leasing of the lands was one of the express purposes for which the conveyance was made, and hence it is in no sense merely incidental to any other purpose. In Irving v. De Kay (9 Paige, 521) the chancellor said: “ If any of the purposes for which the trust was created are legal and valid, and would have authorized the creation of such an estate, the legal title vests in the trustees during the continuance of such valid objects of the trust.”
It is further claimed by the learned counsel for defendants that a trust within the third subdivision of section 55 operates to suspend alienation, although the title be vested in the trustee, and that there can be no such trust where there is absolute and unqualified authority and discretion to sell, and it was mainly upon this ground that the case was decided against the plaintiff in the courts below. The claim, as I understand it, is, that where there is a trust, under section 55, to lease lands, the title must vest in the trustee for some term, and during such term must be inalienable under the
There is no statute providing that a trust to receive the rents and profits and apply them until the land shall be sold, may not coexist with an absolute power of sale, and there is nothing in the nature of the trust and the power which forbids their coexistence.
There is no statute which provides, that, in order to vest . title to land in a trustee upon such a trust, the power of alienation must for some term be legally suspended, and there is no reason for such a suspense of alienation. Alienation may be practicably and necessarily suspended and yet not theoretically, in law, suspended; and during such suspense the title may vest for the purpose of such a trust.
The trustee does not confer title to the real estate upon himself by omitting to exercise the power of sale. He takes the title upon the lawful trust at the same time that he takes the power, and while he can put an end to the trust by exercising the power, until he does exercise it the title and trust remain. Suppose the grantor had conferred the title with the trust upon one person and made some other person the donee of the power, could it be doubted that the trust estate would vest at once and remain in the grantee until the power was exercised % There would have been no legal suspense of alienation, and yet no practical or legal inconsistency between the trust estate and the power of sale. The statute requires no particular length of time for the trust to continue. It may be for life or for any shorter term. The duration of- the term may not be fixed and certain, and a term, the length of which is defined in the instrument, cannot differ in substance from one which the language of the instrument when applied to the circumstances of the case makes necessary. A trust which must exist for one day is just as valid as one which must exist for life.
On the other hand, showing that this is a valid trust that can exist without a legal suspense of the power of alienation, and that it can coexist with an absolute power of sale, there are a number of authorities. In McLean v. MacDonald ( 2 Barb., 534 ), lands were devised to trustees upon trust, to receive the rents and profits thereof, and to sell the same and invest, the proceeds on bond and mortgage, and to collect the income and profits and apply the same during two specified lives, to the use of certain persons named; and it was held that there was a valid trust, under section 55, and that the trustees were seized of such an estate in the lands as would entitle them to maintain ejectment. ■ The case is imperfectly reported. But as I understand the facts, the trust and power of sale coexisted and there was no suspense of alienation, the trustees being empowered at any time to sell the real estate. The fact that they were to invest the proceeds and continue trustees of them as personal estate had nothing to do with the validity of the trust as to the real estate. That terminated when the sale was made. In Belmont v. O’Brien ( 12 N. Y., 394 ), lands were conveyed to trustees upon trust to receive the rents and profits, and they were empowered at any time to sell the lands and to invest the proceeds in other lands or personal securities. It was
It is claimed by the plaintiff that this trust survived the grantor, and that it must continue until the land shall all be sold under the power conferred upon the trustees. The trust is authorized “to receive the rents and profits of lands and apply them to the use of any person during the life of such person, or for a stated term,” subject to the rules prescribed in the first article of the same title. The trust need not be for the benefit of one person only, but may be for the benefit of more than one, provided the conveyance creating the trust does not suspend the power of alienation of the land, or authorize a suspense of alienation for a period longer than that allowed by article 1, referred to. I am inclined to think that this trust cannot be upheld for a longer period than the life of the grantor, and that it, therefore, terminated at his death, and that the legal title to the land, subject to the execution of any valid power contained in the instrument, then vested in the heirs of the grantor, unless there is some other valid trust which continued the legal title in the trustees.
Section 55, subdivision 1, authorizes an express trust “ to sell lands for the benefit of creditors,” and a deed conveying lands upon such a trust vests the legal title in the trustee. (§ 60; Duvall v. English Ev. L. Church of St. James, 53 N. Y.,. 500 .) This deed, after providing for the expenses of the trust and the payment of the avails of the property, during the life of the grantor, to him, provides as follows: “ After my decease and after the payment of all my just and legal debts and the expenses of the trust aforesaid, the residue shall be distributed,” etc. Here is a power to sell and pay the avails to the grantor during his life, and after his death, a power to sell, and after the payment of debts, to distribute the balance as directed. This is the same as if he had provided that the trustee should sell and use the proceeds first to pay his debts and then to distribute the balance to his appointees or heirs. If it had been in that form no one would dispute that, within the statute, it was a power to sell for the benefit of creditors.
Here, then, the plaintiff held the legal title to the real estate upon a valid trust, during the life of the grantor. At his death the trust to sell, for the benefit of creditors, came into activity, and the plaintiff took the legal title for the purposes of that trust. Such legal title will continue in him until that trust is fully discharged. As debts remained unpaid at the timé of the trial, and there was'no proof that there was one dollar of personal property to pay them, he then had the legal title and was entitled to recover by virtue thereof. ■
In the examination of this case I have not deemed it important to consider the force and effect of the instrument executed October fifteenth. If valid that instrument, certainly, did not weaken plaintiff’s title; if invalid, the original instrument was not affected by it.
But there was another defence relied upon at the trial' which must be briefly considered. The defendants proved that on the 16th day of December, 1870, a contract was made between Joseph Fellows and defendant Robertson, for the sale of the land in question by Fellows to Robertson, for the sum of $800, and that defendants went into possession under that contract. The terms of that contract are not set out in the case, and it does not appear that any portion of the $800 was paid or tendered by the defendants to any one. The defendants did not claim, either in their answer or upon the trial, to have the contract specifically performed, and there was no proof showing that they were entitled to have it thus
I am, therefore, of opinion that upon the facts appearing upon the trial, the plaintiff was entitled to recover, and the judgment of the General Term should be reversed, and new trial granted, costs to abide event.
Andrews and Miller, JJ., concur with Allen, J. ; Church, Ch. J., and Folger and Rapallo, JJ., concur in result, on the ground that under the contract with Fellows, the defendant, not being in default, established an equitable defence to the action. Earl, J., dissenting.
Judgment affirmed.