Norton v. Mallory — 8 N.Y. Sup. Ct. 499

Majority

p. 499

JOHN B. NORTON, Appellant, v. RUSSELL B. MALLORY AND ANOTHER, RESPONDENTS.

Headnote

Statute of mes and trusts—what trmts not affected by — When ti'usts corise by implication of law— Gomeya/nce by tt'mtee to cestui que trmt—when fraudulent, as to creditors.

In 1868, Sarah Mallory, the mother of the defendant, Russell, was the owner of a lot of forty-one acres, and had an interest in certain other real estate in connection with her said son, who desired her to unite with him in the sale of the latter, and allow him to receive and enjoy the proceeds of such'sale, for his own use and benefit. It was finally orally agreed that this should be done, and, in consideration thereof, the said Russell, the heir-at-law of the said Sarah, agreed that

p. 500

upon her death, he would convey the forty-one acres to his son, the defendant, F. E. In pursuance of this agreement, the sale was made. Sarah died in September, 1868, intestate. In November, 1870, the defendant, Russell, without any intent to cheat or defraud his creditors, conveyed the forty-one acres to his said son, hy deed, which was recorded November 26,1870. Prior to that, time the plaintiff had commenced actions against the said Russell, in which he subsequently recovered judgments. This action was brought, to have the conveyance set aside. Held, that the complaint was properly dismissed. That upon the death of Sarah Mallory, the land descended to Russell, as her heir-at-law, and he held the same, as trustee for his son. That his agreement to convey the same was founded upon a valuable consideration, and would he enforced by a court of equity. And that as the trust arose hy implication of law, it was not invalidated hy the statute of uses and trusts.

Appeal from a judgment, dismissing plaintiff’s complaint with costs.

Sarah Mallory was the mother of the defendant, Russell B. Mallory, and grandmother of the defendant, Frederick E. Mallory, who is the son of Russell B. Mallory. In 1868, Sarah was the owner of a considerable interest in real estate, in connection with her son Russell. Russell desired her to unite with him in the sale of such lands, and allow him to have and enjoy, absolutely, the proceeds of such sale, for his own use and benefit. It was finally agreed that this should be done, upon condition that Russell, who was her only heir-at-law, should, at her death, convey a lot of forty-one acres of land, which she owned absolutely and was not to sell, to his son, the defendant Frederick E. Mallory, then an infant about four years old. The sale of all the lands, except the forty-one acres, was accordingly made, and Russell received and retained all the proceeds. In September, 1868, Sarah Mallory died intestate, leaving the defendant Russell, her only child and heir-at-law, whereby he became possessed of an apparent title, in fee simple, to forty-one acres, hy inheritance.

In November, 1870, the said Russell being then in an embarrassed or insolvent condition, he and his wife joined in the conveyance of said forty-one acres of land to his son, the defendant Frederick E. The deed was recorded, November 26,1870. The judge finds that such conveyance was made in pursuance of the agreement with his mother, and in good faith, without any intent to cheat or defraud his creditors, or hinder or delay them in the collection of their debts, hut with the intent that snch deed should precede the plain

p. 501

tiff’s judgment, hereinafter referred to, and prevent such judgment from becoming a lien upon said lands. After the recording of said deed, the plaintiff recovered judgment against Russell, for about $1,000 in all, upon an indebtedness from said Russell to the plaintiff, existing in April, 1870. Such judgments were duly docketed in Schuyler county, where said lands were situate, and executions thereon were returned unsatisfied, as to a large portion thereof. This action was then brought by the plaintiff, to set aside such conveyance, and to charge said lands with the payment of such judgments.

Upon the trial, the facts were found substantially as above set forth, and plaintiff’s complaint dismissed, upon the ground that Frederick E. was, in equity, entitled to such conveyance, and that it was not in fraud of the plaintiff.

Scott Lord, for the appellant.

John J. Vam, Alim, for the respondents.

Prior to the Revised Statutes, no doubt can exist that the arrangement between Russell and his mother would have created a valid trust. “ The most simple form in which an implied trust can be presented is that of property delivered by one person to another, to be by the latter delivered over to and for the benefit of a third person.”^[7] “If there be either a good or valuable consideration, equity will raise a use or trust corresponding to such consideration.”^[8] Such trusts are treated as implied or created by operation of the law, and are not affected by the provisions of the Revised Statutes.^[9] The case under consideration is not a resulting trust in favor of creditors, under section 52, because the plaintiff is not a creditor of the person paying the money. She paid the consideration to Russell, who, by her death, took the title to the land in question, under a contract, by which he held the legal title in trust for*, and subject to, the equitable title of his son. By the fiftieth section, trusts arising or resulting by implication of law, are not

p. 502

abolished. The trust in this case is of that character and is valid.

The evidence justified the court below, in finding the existence of the agreement, under which the trust arises. The agreement and payment of the consideration being so found upon sufficient evidence, the consequences are inevitable. It would be inequitable and unjust that Russell should have the consideration, derived from the sale of Ms mother’s lands, for the payment of his debts, and that his creditors should still be at liberty to take the property in dispute, devoted by the mother to an entirely different purpose. The creditor would thus have a double fund, out of which to secure Ms debt. The second fund would be one not justly applicable to the payment of the debt, or equitably belonging to the debtor, but, in fairness and good conscience, belonging to Fred. E., under the agreement. Fred. E. was and is an infant of such tender years, as to be incapable of understanding or assenting to the arrangement between his father and grandmother. But, as the agreement was beneficial to him, the court will assume his assent and acceptance of the property under the deed. The ease is stronger for the beneficiary than that of Sieman v. Austin,^[7] where the creditor’s judgment was recovered and became a lien upon the trust property, before the conveyance from the trustee to the cestui que trust. In other respects, it is very similar. In that case, it was held that the Revised Statutes, relating to uses and trusts, were inapplicable, and that the common law governed the rights of the parties. The same view is taken in 4 Kent’s Commentaries.^[8] “ If a trust be created for the benefit of a third person without his knowledge, he may when he has notice of it, affirm the trust, and call upon the court to enforce the performance of it.” It is also held, in Sieman v. Austin,^[9] that the prohibition of section 51, of a trust resulting to the person paying the consideration, does not apply to a resulting trust for the benefit of a third person. Such conclusion must be still more clear, when such person, as in this case, was not of an age to know of, or assent to, the act by which the title vests in the trustee. The authorities are quite conclusive, that a trust, of the character claimed in this case, may be created, and. that, when created, the equities of the cestui

p. 503

que trust are superior to those of any creditor of the trustee, except, perhaps, an incumbrancer who has parted with his money upon the security of the property, without notice of prior equities. It is claimed by the appellant, that a trust cannot be created by parol. The Revised Statutes^[7] prohibit the creation of trusts, except by act or operation of law, or by writing, etc. The next section (7th) provides that the sixth section shall not be construed to prevent any trust from arising by implication or operation of law. Such trusts may be proved by parol, provided they flow from acts, relations, situations and conditions of the parties, impressing property with trust character, and imposing upon the party holding property, the obligations of a trustee towards the beneficiary.^[8]

Conceding the findings of the court below to be right (and there is no evidence from which a doubt can arise), the case was properly disposed of. The suggestions of danger from such secret trusts, and from perjury in establishing them, are pertinent and forcible, but are properly addressed to the court of original jurisdiction. Having produced conviction there, and being in no respects incredible, impossible or contradicted, this court would not be justified in disregarding or disbelieving such evidence.

I am inclined to the belief that Davis’ testimony was admissible upon the question of Russell’s good faith in making the deed to his son. But if it were not, there is abundant and uncontradicted evidence without it, to sustain the conclusions of the court below. In equity cases, errors in the reception of evidence will not be regarded, when it is apparent they could not have affected the result.^[9]

If these views are correct, the judgment should be affirmed with costs.

Present—Miller, P. J., Boardmajt and James, JJ.

Judgment affirmed, with costs.

* 2 R. S., 135, § 6.

† † Foote v. Bryant, 47 N. Y., 544 ; Perry on Trusts, § 137.

‡ ‡ Foote v. Bryant, 47 N. Y., 544 , 551; Rundle v. Allison, 34 N. Y., 180 , 184; Ashley v. Marshall, 29 id., 494, 502.

Footnotes

* 2 Story’s Eq. Jur., § 1196.
† † Id., § 1197; see also Id., § 1210.
‡ ‡ 2 R. S., 728, §§ 50, 51, 52 and 53.
* 33 Barb., 9 ; affirmed in 29 N. Y., 598 .
† † Page 307.
‡ ‡ Ante.