Clift v. Moses — 7 N.Y. St. Rep. 691

Majority

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Joab L. Clift, Resp’t, v. Mary E. Moses, Impleaded With Others, App’lt.

(Supreme Court, General Term, Fourth Department,

Filed April, 1887.)

Headnote

1. Will—Construction of—Insolvent testator—Rents—Who entitled to.

The heir, and. at law, the devisee of an insolvent decedent is entitled, as against the personal representatives or creditors, to receive and retain as his own rents and profits arising from realty between the date of decedent’s death and the date of the sale, of [the real estate for .the payment of the decedent’s debts

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3. Same—When executor entitled to rents—1 Rev. Stat. , 729, § 56

If the will absolutely converts the realty into personalty at the testator’s death, the executor and not the devisee is entitled to its possession, and to recover the rents and profits, notwithstanding 1 Rev. Stat., 729, § 56.

3. Same—Liability of devisee for testator’s debts—Code Civ. Pro., § 1843.

By Code Civ. Pro., § 1843, a devisee is liable for the testator’s debts to the extent of property received by him, but beyond this he does not become personally liable by merely accepting of the devise and of the rents and profits thereof, though the devise is charged with the debts, unless the will charges the devisee with the duty of personally paying the debts, or unless the devise is upon the condition that the devisee pays the debts

4. Same—When realty converted into personalty .

Where the will does not contain an imperative direction for the sale of the realty or for treating it as personalty, a conversion is not affected unless it clearly appears that it was the intention of the testator to effect a conversion Authority conferred upon executors to mortgage or sell solely for the purpose of paying debts does not work a conversion of the realty into personalty as of the date of the testator's death.

5. Real estate when treated as personalty.

When the owner legally directs that upon the happening of an event, or at a time specified, his land shall be converted into and treated as money, the courts of equity hold that upon the happening of the event, or the arrival of the time, the land becomes money and is subject to the rules of law governing money and ceases to be subject to the rules of law applicable to real estate

6. Same—When grantees take subject to liens.

Grantees of land subject to specific liens enumerated in the grant are not personally bound to pay the liens, though they form part of the consideration for the grant.

April 9, 1878, Charles Pardee died, leaving a last will and testament, of which the following is a copy:

“I, Charles Pardee, of Skaneateles, county of Onondaga, being of sound mind and memory, do make, publish and declare this to be my last will and testament in manner following. I do order and direct my executor" hereinafter named, to pay all my just debts and funeral expenses as soon after my decease as can conveniently be done. I give and bequeath unto my adopted (laughter, Mary B Moses, wife of Lucian Moses, the household furniture and whatever may be in the house and used as house-keeping articles. I give and bequeath unto Amos R Pardee my gold watch. I give and bequeath to Eliza Bronson, widow of Henry G Bronson, deceased, one hundred dollars; to Mrs. Sarah Greenman, one hundred dollars; to Mrs. Triphina Austin, if living at my decease, one hundred dollars. I do give unto my daughter, Mary E. Moses, the rest and residue of my estate, real and personal, making her residuary legatee of this, my last will and testament. I do hereby nominate and appoint, Bcnoni Lee and Mary E. Moses, my executor and executrix, of this, my last will and testament, revoking all former wills by me made I give and devise to my ex ecutor and executrix all my real and personal property of every kind, in trust, for the purpose of paying my debts and legacies named in this, my last will, giving them power to sell, mortgage or convey any and all real estate for the purposes above named in this, my last will

“ In witness whereof, I, the said Charles Pardee, have hereunto set my hand and seal this 19th day of September, 1876.

“C. PARDEE [l. b.].’*

July 17, 1878, the will was probated, and the executor and executrix nominated therein having renounced, letters of administration, with the will annexed, were issued to

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Jacob Dewitt, who qualified and thereafter acted as administrator until October 1, 1880, when he died, and November 1, 1880, letters of administration with the will annexed were issued to Sidney Smith, one of the defendants, who has, since that date, acted as such administrator. November 18, 1879, De Witt was appointed as trustee under the will, to execute the power in trust, and November 8, 1880, Smith was appointed a trustee vice De Witt, who had died.

July 1, 1881, the power of sale contained in the will was executed, and the testator’s real estate sold for the purpose of paying his debts. Between April 9, 1878 (the date of the testator’s death), and July 1, 1881 (the date of sale of the real estate), Mary E. Moses (the devisee named in the will), was in possession of the testator’s real estate and collected rents therefrom amounting to $7,221.92. The estate is conceded to be insolvent. The administrator refused to sue for the recovery of the sum so collected, and the plaintiff, one of the creditors of the estate, brought this action to recover the sum for distribution among the creditors. The administrator and all of the creditors of the estate are joined as defendants with Mrs. Moses, but she alone defends. The case was tried at special term, where it was held that Mrs. Moses was liable to pay over the rents collected, and a judgment was entered directing her to pay them to the administrator for distribution among the creditors, from which judgment she appeals.

William G. Tracy, for resp’t; Louis Marshall, for app’lt.

The heir, and at law, the devisee, of an insolvent decedent is entitled, as against the personal representatives or creditors, to receive and retain as his own rents and profits arising from realty between the date of the decedent’s death and the date of the sale of the real estate for the payment of the decedent’s debts. Gibson v. Farley, 16 Mass., 280 ; Boynton v. Petersborough and Shirley R. R. Co., 4 Cush., 467 ; Newcomb v. Stebbins, 9 Met., 540 ; Lobdell v. Hayes, 12 Gray, 236 ; Towle v. Swasey, 106 Mass., 100 ; Campbell v. Johnson, 1 Sandf. Ch., 148 ; 2 Will. Ex. (6 Am. ed.), 893; Schouler Ex. & Adm., § 216. This rule is too firmly established to be questioned in this court.

“§ 56. A devise of lands to executors or other trustees, to be sold or mortgaged, where the trustees are not also empowered to receive the rents and profits, shall vest no estate in the trustees; but the trust shall be valid as a power, and the lands shall descend to the heirs or pass to the devisees of the testator, subject to the execution of the power.” 1 R. S., 729.

Upon the assumption that this case is within this section, it was held at special term, and it is now conceded by the

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counsel lor both parties, that the title to the testator’s real estate, upon his death, vested in Mary E. Moses, the devisee, subject to be divested by the execution of the power of sale, and until it was executed, she alone was entitled to the possession of the realty,.and entitled to collect the rents. If the concession expresses the rule of law applicable to this case, it defeats the plaintiff’s right to re cover. Her right must have been a personal one, for it is difficult to see how she was entitled to receive or recover the rents as a trustee for the personal representatives, or for the testator’s creditors; and not being in any sense a wrong-doer in receiving the rents, she cannot be held liable as a trustee in invitwm.

It is illogical to say that rents which were hers alone, and which she alone could have recovered by action, can be recovered of her unless by virtue of some promise, expressed or implied, or by virtue of some statute. Lent v. Howard ( 89 N. Y., 169 ), is not an authority for the position that rents which a devisee or heir is entitled to collect before the execution of a power of sale may be recovered of him by the executor. On the contrary, the case holds that the executor’s right to the rents arose from the fact that the realty was, by the will, converted into personalty at the testator’s death. The executors, and not the heir or devisee, in that case, received the rents and profits, and it was held that they must account for them as assets upon the theory that they arose from personalty.

No case has been cited holding that when realty is by a will absolutely^ converted into money at the testator’s death, the heir or residuary devisee is entitled to possession and to the- rents until the land is actually conveyed under the power in the will.

We are not considering cases in which the time for the conversion is postponed until some period after the testator’s death, or of the rights of heirs, or of the devisees to the intermediate rents in such cases.

When the owner legally directs that upon the happening of an event, or at a time specified, his land shall be converted into and treated as money, the courts of equity, by a convenient fiction, hold that upon the happening oí the event, or the arrival of the time, the land becomes money and is subject to the rules of law governing money, and ceases to be subject to the rules of law applicable to real estate.

If the will absolutely converted the realty into personalty at the testator’s death, the executor, and not the devisee, was entitled to its possession, and to recover the rents and profits, notwithstanding the section of the statute quoted.

Disregarding the effect of this concession, we are led to

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examine the plaintiff’s claim that the judgment is sustainable upon both, or upon either of the following grounds:

First. That the devisee having accepted the devise and taken the rents, the law implies a promise or liability on her part to pay all the testator’s debts.

Second. That, under the will, the realty was, at the testator’s death, absolutely converted into personalty, and the rents, as well as the principal, are assets, and applicable to the payment of the testator’s debts.

Can the judgment be supported on the first ground ? That the will does not expressly charge Mary E. Moses with the duty of personally paying the testator’s debts, and that the devise to her is not, in terms, upon the condition that she shall pay his debts, is so obvious that it cannot be made plainer by discussion.

As bearing upon this ground of liability, the question whether the will charges the testator’s debts upon his real estate, was much debated by counsel upon the argument.

Had the testator’s estate been solvent, and but partly disposed of by the will, or had the estate been divided by the will between several persons, it might be important to determine whether he intended to charge his real estate, or some part of it, with the payment of his debts; but as the estate is insolvent, and there is no conflict between those named as beneficiaries, it seems wholly unnecessary to consider this question, for, under the statutes, the debts are charged and become a general lien upon the whole estate and the burden upon the realty, or the personal liability of the devisee for the testator’s debts would not be increased, though the debts were by the will specifically charged upon the realty.

By statute (Code C. P., § 1843), a devisee is liable for the testator’s debts to the extent of property received by him, hut beyond this he does not become personally liable by merely accepting of the devise and of the rents and profits thereof, though the devise is charged with the debts, unless the will charges the devisee with the duty of personally paying the debts, or unless the devise is upon the condition that the devisee pays the debts. Cronkhite v. Cronkhite, 1 T. & C., 266; Wheeler v. Lester, 1 Bradf., 213 , 293; Pom. on Eq. Juris., § 1246, note; 2 Redf. on Wills (3d ed ), 304. The position that when a testator expressly charges all of his property with the payment of his debts and then devises and bequeathes the residuum, that the residuary legatee and devisee becomes personally Hable to pay aH the testator’s debts by simply taking possession of the realty and enjoying the use thereof until it is appHed to the payment of the debts, is without support in reason or in authority.

Neither can the devisee in such a case be compeHed to

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account for the rents, issues or profits received from the-realty. See authorities cited in support of the first proposition in this opinion.

Grantees of lands-subject to specific hens enumerated in the grant are not personally bound to pay the liens, though they form part of the consideration for the grant. Belmont v. Coman, 22 N. Y., 438 ; Binsse v. Paige, 1 Abb. Ct. App. Dec., 138 ; 1 Keyes, 87.

Persons who are vested with the legal title to, and by' virtue thereof are in possession of real estate charged with, specific hens, are not accountable for the use enjoyed, or for the rents collected before the title is divested by a sale. If creditors wish to cut off the right to enjoy the use and rents, which is incident to possession under a legal title, they must intercept the rents and profits, while enforcing their hens, by the aid of a receiver. In such cases creditors cannot lie by until after the title is divested and then compel its late owner to pay over the rents which he has received, or the profits earned by his management and care of the property. Hollenbeck v. Donnell, 94 N. Y , 347 ; Hamilton v. Austin, 36 Hun, 143 ; Jones on Mort., §§ 670, 1120, 1659.

We know of no authorities holding that the rights of creditors having general hens are superior in these respects to those of creditors having specific hens.

The conclusion of law, that under the wih Mrs. Moses became personally liable to pay ah of the testator’s debts by receiving the rents cannot be sustained, and her exception to this conclusion is valid.

Was the realty converted by the wih into personalty at-the testator’s death ?

When a testator directs that his real estate must be sold and converted into money for ah purposes it is cahed 1 ‘ a conversion out and out.” 3 Redf. on Wills (3d ed.), 140. This wih does not direct that the real estate shah be sold, but simply empowers the testator’s executors to mortgage or seh, not for ah purposes, but solely for the purpose of paying his debts and legacies, and a technical conversion-out and out is not effected. But the more important question is : Was the realty converted into personalty by the wih for the purpose of paying debts and legacies ? The wih not containing an imperative direction for the sale of the realty, or for treating it as personalty, a conversion is not effected unless it clearly appears that it' was the intention of the testator to effect a conversion.

It cannot be contended that the testator intended a conversion of his real estate for the purpose of paying pecuniary legacies aggregating but $300. Nor does it appear that the testator contemplated a sale of ah his real estate for the purpose of paying his debts, as his executors are

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expressly authorized to mortgage his realty for this purpose. We are unable to conclude from the provisions of the will that it was the clear intent of the testator to effect a conversion.

But a single fact outside of the will is relied on for the purpose of aiding the court to infer an intention to effect a conversion, which is, that after the testator’s death, which occurred eighteen months after the date of the will, he was found to be insolvent. From this fact the trial court found that the testator was “probably” insolvent when he executed the will. The court did not find that the testator knew that he was insolvent when he executed it, and there is no evidence to support such a finding unless it should be inferred from the situation in which the estate was found after his death. If he was insolvent when he made the will, but was unaware of it, it affords no guide to his intention, and so we are left to gather the testator’s intention from the will.

To effect a conversion of reality into personalty, in the absence of a direction that a sale must be made in any event, it must clearly appear that the testator intended a conversion. White v. Howard, 46 N. Y., 144 -162; In the Matter of the Will of Fox, 52 N. Y., 530 -587; affirmed 94 U. S., 315 ; Hobson v. Hale, 95 N. Y., 588 . In Hood v. Hood ( 85 N. Y., 561 ), and in Lent v. Howard ( 89 N. Y., 169 ), power to sell was conferred upon the executors, who were directed, after paying debts and legacies, to invest the residum in securities for specific purposes, which could not have been accomplished without a conversion of the realty into personalty, and it was held that the testators must have necessarily intended a conversion. In Moncrief v. Ross ( 50 N. Y., 431 ), and Fisher v. Banta ( 66 N. Y., 468 ), a sale of the realty was directed. In Dodge v. Pond ( 28 Barb., 121 ; 23 N. Y., 69 ), after paying the debts, about a million and a half of dollars were devised and bequeathed; and the residuum, about two hundred and fifty thousand dollars, was directed to be divided into as many parts as the testator should have children and grand-children living at a certain time after his death, or upon the happening of a certain event.

The testator’s real estate was situated in five different states. At the time of his death, he had five children and twenty-two grand-children, and when the time for distribution arrived the number of his grand-children had increased. It was held in the supreme court that the circumstances justified the conclusion that the conversion was intended. This, however, was not the principal question involved, and in the court of appeals (where the judgment was modified),

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it was remarked that it was not very material to determine whether the realty was converted into personalty, and then the opinion was expressed that a conversion was intended.

In Hobson v. Hall (supra), the court of appeals analyzed and discussed at considerable length the leading English and American cases turning upon the question of conversion, and if we correctly understand that case, it is decisive against the position of the plaintiff that a conversion was affected. We have been cited to no case holding that authority conferred upon executors to mortgage or sell solely for the purpose of paying debts (which is the affect of this power, as the legacies amount to but $300), works a conversion of the realty into personalty as of the date of the testator’s death.

The judgment should be reversed and a new trial granted, with costs to abide the event.

Hardin, P. J., and Boardman, J., concur.