Colie v. Jamison — 11 N.Y. Sup. Ct. 284

Majority

p. 284

SAMUEL D. COLIE, Appellant, v. JOHN JAMISON, Respondent.

Headnote

Bankruptcy — effect of, on title of bankrupt to real estate—Bquitdble title re-naming in bankrupt after conveyance to assignee — Basement.

The defendant conveyed to the plaintiff an alley, reserving to himself the right to use the same, in common with the plaintiff, so long as he should -continue to own the adjoining lot; subsequently defendant was, on his own ajrplication, - declared a bankrupt, and conveyed all his property to his assignee, who afteiv ward reconveyed the same to him, the proceedings in bankruptcy having been discontinued. Held, that the defendant remained the actual owner of the property, in equity, notwithstanding his bankruptcy and the conveyance to the assignee, and that his easement in the alley was not terminated thereby.

Appeal from a judgment in favor of the defendant, entered upon the trial of this action by the court without a jury.

In March, 1867, the defendant and Edward Gallagher conveyed to the plaintiff an alley way, the deed stating that it was “ to be allowed to be used by the said parties of the first part hereto in common with the party of the second part hereto, as and for the purposes of a private alley, so long as said parties of the first part shall continue to own the remainder of said lot No. 6.”

Before this action was commenced, both defendant and Gallagher had been adjudicated bankrupt on their voluntary petition, and they had duly assigned and conveyed all their property to the assignee, who had subsequently reconveyed to the defendant his property, the proceedings in bankruptcy against him having been discontinued. The plaintiff, claiming that by the assignment the defendant ceased to be the owner of the lot, built a fence across the alley, which was cut down by the defendant. Three other fences were

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built, all of which were cut down. This action was brought to restrain the defendant from cutting down the fences, or entering upon the alley.

George Wadsworth, for the appellant.

John B. Greene, for the respondent.

The plaintiff asks a decree to forfeit a valuable right of the defendant, on sheer technical grounds. It will be vain for him to expect that a court of equity can forget its maxims and traditions, and be astute in searching for a way to afford him relief. He is entitled to prevail only on establishing his claim strictissimi juris.

The question is, whether the proceeding in bankruptcy terminated the defendant’s ownership of the lot adjoining the alley; and we are of opinion that it did not. The view of the subject taken by the learned judge at Special Term, in substance accords with our own. The proceeding in the bankruptcy court having been duly discontinued before any actual disposition was made of the defendant’s property, that court has no further jurisdiction of the matter, and the rights of the parties must be determined by our own laws.

Ho doubt the title to all the property of the defendant, including his right in the alley, vested in the assignee in bankruptcy by virtue of the bankrupt act, and if this fact destroyed the defendant’s easement for a moment, it is gone forever. We think it did not have that effect. The transfer to the assignee was merely nominal and official. He took no beneficial interest whatever. The title was vested in him as an officer of the court, for the mere purpose of administration under the order and direction of the court. The transaction amounted to nothing more than a trust, the particular objects of the trust being limited and defined by the provisions of the bankrupt act, and the general purpose being to convert the defendant’s property into money, and with the proceeds to pay his debts. The assignee in bankruptcy was only a nominal trustee, and was in fact an agent appointed by law to accomplish that pur

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pose. In sr.eli a case a resulting trust arises by implication of Jaw, in favor of the bankrupt, which affects all the property undisposed of in the due execution of the trust; and as to .all such property, the actual ownership in equity remains in the bankrupt.^[1] It is expressly provided by statute, that when a trust is created, which vests the whole estate in law and equity in the trustees, such fact shall not prevent the persons creating the trust from granting or devising the trust estate subject to the execution of the trust, and that every such grantee or devisee shall have a legal estate in the lands, as against all persons except the trustees and those lawfully claiming under them.^[2] Before our statute of trusts, a cestui que trust might assign or devise his equitable estate;^[3] and the receipt of rents and profits was regarded as equivalent to legal seizin thereof.^[4] While under our statute a cestui que trust has no estate, legal or equitable, in the lands, but only a right to enforce the trust in equity, yet this principle applies only to those persons for whose benefit the trust was created. The power of disposition given by sections 60 and 61 to the creator of the trust, are marked indicia of ownership.^[5] We think, also, that the defendant ought to be deemed the creator of the trust in this case, within the meaning of section 61, for it resulted solely from his petition in bankruptcy. It is also provided by statute, that when the purposes for which an express trust shall have been created shall have ceased, the estate of the trustee shall cease also.^[6] No reconveyance is necessary; but, upon the cessation of the trust, the donor goes or remains in as of his former estate. Keeping these principles in view, and looking back at the history of the defendant’s proceeding in bankruptcy, the trust resembles an incumbrance upon, rather than an estate in the land.

It appears that the defendant continued in possession of the trust property during the pendency of the proceeding in bankruptcy. We are of opinion that, according to a just and reasonable interpretation of the deed containing the reservation of the alley, the defendant continued to own his-lot adjoining the same, in the sense in which that term was used in the deed, notwithstanding the proceedings in bankruptcy.

* Adams Eq., 31.

† † 1 R. S., 729, §§ 60, 61.

‡ ‡ Lewin on Trusts, chap. 33.

§ § Id.

|| || Briggs v. Davis, 21 N. Y., 574 .

¶ ¶ 1 R. S., 730, § 67.

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This conclusion being decisive of the case, we need not consider the other questions.

The judgment should be affirmed, with costs.

Present — Mullin, P. J., Smith and Gilbert, JJ.

Judgment affirmed, with costs.