Miller v. Wright — 14 N.Y. St. Rep. 811

Majority

p. 811

David Miller, App’lt, v. Benjamin Wright et al., Resp’ts.^[1]

(Court of Appeals,

Filed April 10, 1888.)

Headnote

1. Trust—Construction of-Real estate held in trust—When converted INTO PERSONALITY.

An undivided interest in the land in question was conveyed to the plaintiff, as trustee, for certain trust purposes. There was no absolute or impera

p. 812

tive direction in the deed creating the trust, to sell the whole of the real estate. There was not even discretion vested in the trustee absolutely, to sell the whole of it. He was authorized to sell only so much of it as was necessary for the purposes of the trust. He was not bound in the execution of the trust to sell any of it. He could lease or mortgage it for the purposes of the trust. The trustee was vested with a discretion as to how much of the realty, if any, he should sell, and whether he should lease or mortgage rather than sell. Held, that there was not a conversion of the realty into personalty.

2. Same—When trust terminates.

_ The trust was to last only during the life of the grantor, and it was pro vided that after his death the grantee was to pay over “ and duly transfer both principal and interest, and the whole residue of the property hereby conveyed to the surviving children of the grantor.” Held, that upon the death of the grantee, the trust terminated, and that the real estate unsold vested as such in his children. That upon the death of his grantor, plaintiff ceased to have any interest in the land. ,

3. Partition—Parties.

An action to partition said land was commenced before the death' of plaintiff’s grantor, but before judgment, said grantor died, leaving several children, who were not made parties defendant. The action proceded to judgment and to sale. Held, that in order that the plaintiff’s grantor’s children might be bound in the judgment, they should have been made . parties to the action. That their title could not be diverted by sale made in partition, to which they were not parties.

Appeal from a judgment of the supreme court, general term, second department, affirming a judgment of the special term, compelling the purchaser to take title.

William Clarke Roe, for purchaser, app’lt; Taylor & Ferris, for Benj. Wright et al., Resp’ts.

This was an action to partition land, and the plaintiff derived his title to an undivided interest therein under a deed executed to him by Charles E. Miller on the 36th day of February, 1876. It was a deed with full covenants, but nevertheless upon the following trusts, viz: “ upon the trust that the said party of the second part, his heirs and assigns, shall and do forthwith, or as soon as conveniently may be and in Ms own discretion, absolutely sell and dispose of so much of said premises, or any part, at public auction, or otherwise, to the best purchaser, and for the best price which can be reasonably obtained or shall or may be necessary to defray all expenses of every nature in the protection, securing, altering, possessing or amending the said estate or any part thereof, or in the fulfillment of any purpose or purposes in reference to the said estate, which the said party of the second part may deem proper, or the expense of any legal steps, advise or counsel in reference to the said estate, or any part thereof, which advice, legal steps, and the proper amount to be paid therefor, shall be entirely within the discretion of the party of the second part, or shall be necessary for the support and maintenance of the said party of ,the first part, or to

p. 813

lease the same or any part thereof, or to mortgage the same or any part thereof, for such amounts and upon such terms .and conditions as to the party of the second part may seem best, and the receipt or receipts and signature of such party of the second part, his heirs or assigns, shall be a complete and full discharge and release of the sums therein mentioned, and shall bind the party of the first part, his heirs or assigns, as fully as if signed by the party of the first part.

And upon the further trust that the party of the second part, his heirs and assigns, shall after any such sale, lease or mortgage, forthwith apply the proceeds of such sale, lease or mortgage, in the first place, to the payment of all "the costs, charges or legal or other expenses by him incurred, as hereinbefore set forth, including the usual commissions, charges, repairs and all extraordinary costs, etc., by him incurred in the execution of the trusts herein imposed; and, second, and, thereafter, to invest the residue of the proceeds of such sale, lease or mortgage, upon interest or .some security to be approved by the party of the second part, and semi-annually to pay over the income thereof, after deducting all expenses thereof, unto the party of the first part during he term of his natural life, and after his death to pay over and duly transfer both principal and interest, and the whole residue the property hereby conveyed to the surviving children of the party of the first part hereto, share and share alike.”

At the commencement of the action, Charles E. Miller, the grantor, was alive,, and was made a party defendant; but he died before judgment, leaving several children, besides the plaintiff, who were not made parties defendant. The action proceeded to judgment, and to a sale, and the appellant Peck became the purchaser upon the sale. He, however, objected to taking a conveyance and to completing his purchase, on the following grounds: “That the children of Charles E. Miller, deceased, have an interest in fee in his share of the said premises, and ought to have been made parties defendant in the said partition suit, at the death of the said Charles E. Miller.

That as the said Charles E. Miller died before judgment was entered herein, the trust ceased, and the fee then vested in the surviving children, the judgment so entered does not affect, in any manner, their rights and interests in the premises.”

A motion was made at special term to compel the purchaser to take the title, which motion was granted, and the general term affirmed the order of the special term.

We are of opinion that the purchaser should have been relieved from his purchase. It is not disputed that the trusts created by this deed were lawful, and that a legal

p. 814

title, commensurate with the trusts and for the purposes of the trusts, was vested in the trustee during the continuance thereof. The court below held that there was an imperative direction in the deed of trust to sell the land, and that therefore there was an equitable conversion of it into personalty, and hence that the children of Charles E. Miller could take no interest in the property conveyed as realty, and consequently were not necessary or proper parties to the action. We are constrained to differ with the learned general term. There was no absolute or imperative direction to sell the whole of the real estate. There was not' even discretion vested in the trustee absolutely to sell the whole of it. He was authorized to sell only so much of it as was necessary for the purposes of the trust. He was not even bound in the execution of the trust to sell any of it. He could lease or mortgage it for the purposes of the-trust. The trustee was vested with a discretion as to how much of the realty, if any, he should sell, and whether he should lease or mortgage rather than sell, and we know of no case where, under a trust with such provisions, it has; been held that there was a conversion of the realty into' personalty for any purpose. The trust was to last only during the life of the grantor, and it is provided that after his death the grantee was to pay over[1] ‘ and duly transfer both principal and interest and the whole residue of the property hereby conveyed to the surviving children ” of the grantor. It was evidently contemplated that there might be money on hand which had been realized by a sale, lease or mortgage of the property, and that so much of it as remained at the death of the grantor, principal and interest,' was to be paid over to the children; and it must have been supposed that a portion of the property conveyed might, then remain, as that was required to be transferred to the children also.

This case is entirely unlike Morse v. Morse ( 85 N. Y.,. 53 ), and Delafield v. Barlow (107 id., 12 N. Y. State Rep., 494). Upon the death of Charles E. Miller, therefore, the-trust terminated and. the real estate vested as such in his children, and as that death occurred before judgment, in order that they might be bound by the judgment, they should have been made parties to the action, and their title, could not be divested by a sale made in partition to which, they were not parties. Indeed the plaintiff, upon the death of his grantor, ceased to have any interest in the land, and. the action could not well thereafter proceed in his name, but should have proceeded in the name of some person interested in the land.

Sometime after judgment in the partition suit the children of Charles E. Miller united in the following instru

p. 815

ment entitled in this action: “ We, the undersigned, being all the children and heirs-at-law of Charles E. Miller, late of Queens county, deceased (except the plaintiff herein and Ezra W. Miller and two children surviving Phebe J. Eallestein, deceased), hereby consent that the claim of said Ezra W. Miller be made a legal and subsisting charge upon and against the estate of our late father, the said Charles E. Miller, deceased, to be paid out of the share of said estate, coming from the property described by the judgment herein to be sold, and we hereby respectively waive notice of any and all proceedings that may be instituted for the establishment of said claim, the same being just and equitable to the best of our knowledge, information and belief.”

This was executed by all of them under seal. It is claimed, on behalf of the defendant, that by this instrument they recognized the validity of the sale, and are therefore estopped from denying it. It does not appear that that instrument has ever been acted upon. It was not acknowledged or proved except as to one of the subscribers. It does not appear to have been based upon any consideration, and was clearly revokable until acted upon. We do not see, therefore, how it can be held to render valid a sale which was otherwise invalid.

It is also claimed that Peck, the purchaser, was a party to this action and was therefore bound by the judgment ■and estopped from disputing the validity of the sale. But he had no interest whatever in the land sought to be sold, and was neither a necesary or proper party to the action, and no adjudication was made in reference to him. We cannot, therefore, perceive how his position, as a party to the action, can bind him as a purchaser at the sale to take an imperfect title.

It also appears that the children of Charles E. Miller, after the death of their father, recognized the continuance of the trust, and the right of the plaintiff to proceed in the action to judgment, and that they acquiesced in the judgment and the sale. But these are not matters of record, and rest in parole; and it is by no means certain that they are in any way estopped from disputing the validity of the sale; and it cannot therefore be said that the title is so free from doubt that the purchaser ought to be compelled to take it.

But Peck, at the time of his purchase, knew that the children of Charles E. Miller were not parties to the action, ,and he bid at the sale, making no objection on that account. He may not have known, and probably did not know, that he could not obtain a perfect title as against them at the time of his purchase. But it may be that they are satisfied with the sale, and are ready and willing to perfect the

p. 816

title. If they should remove the defect of which the purchaser complains, it would, under the circumstances of this case, be reasonable and just that he should be compelled to take the title. Therefore, instead of making a final order relieving him from the purchase, we will remit the case to the special term to the end that he may there be compelled, if it should seem just to the court, to take the title if made perfect, upon: such terms as it may impose.

Our conclusion, therefore, is that the orders of the general term, and of the special term, should be reversed with costs to the appellant in both courts, and the case remanded to the special term for further hearing there upon the motion.

All concur.