Ford v. Belmont — 30 N.Y. Super. Ct. 97

Majority

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Emily Fowler Ford, plaintiff, vs. Augustus Belmont, et al. defendants.

Headnote

1. A declaration, by the grantor in a deed, of its objects and purposes, contained in a separate instrument, even when not under seal, may operate to alter the character of such deed, however plainly a mere conveyance of the legal estate in the land.

2. Where instruments simultaneously executed, relating to the same subject matter, are for that reason construed together, the general purpose of the whole, apparent therefrom, will control the strict construction or any apparent purpose of one.

3. Where by the legal construction of one or more instruments, the sole purpose of one is apparently merely to create a trust, which can only be executed as a power in trust, although such instrument be an absolute conveyance in fee simple of the legal estate, such legal estate remains in the grantor in such instrument, subject to the execution of such power, which is capable of being enforced in equity.

i. Admissions in an answer in chancery, by a person claiming a legal estate in certain real estate, (of which he was in possession by virtue of a conveyance thereof to him by a prior owner, which was absolute on its face,) of the existence and contents or terms of an instrument under seal, (executed by him •shortly after such conveyance,) which declared certain trusts and conditions respecting the estate held by him, and in derogation thereof, are admissible as evidence of such existence and contents, in an action in partition between parties claiming under such grantee, as a common source of title.

D. Where the grantor of such premises, before the conveyance by him thereof to such grantee, agreed with a third person, to permit him to sell and dispose thereof, in order tq compromise by that means certain claims due to

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the United States government by other persons, and to allow such third , person to retain the residue of the money and securities received on such sale, after completing the compromise; and a firm, consisting of the grantee and his brother, agreed with such third person to advance the sum necessary to accomplish the compromise, and thereupon such parties, (consisting of such third person and firm,) entered into a written agreement, whereby it was agreed that such grantor should convey the premises to such grantee, and that such firm should advance the sum necessary for such compromise, to be repaid with interest, (together with a bonus for advancing the same,) out of the proceeds of the property when sold, and that the remainder of such proceeds should be divided, (after satisfying such sums,) into three parts, whereof the grantee’s firm should be entitled to one third, and such third person to two thirds; and after the conveyance by such grantor, to the grantee, executed in pursuance of the agreement, the grantor executed an instrument in writing, setting forth that he held the premises according to the terms of such agreement, which it recited. In an action of partition between parties claiming title under the grantor in such deed,

Held 1. That if the conveyance to such grantee had been taken without the consent of such third person, but with knowledge of his rights, a resulting trust would have arisen in his favor.

2. That the legal effect of the absolute conveyance to such grantee, was restricted by the instrument executed by him, declaring the trusts, terms and conditions, on which he took it and held such estate, under the decision in the case of the New Dry Dock Oo. v. ¡Stillman, (30 N. T. Hep. 176.) That such instrument operated not as a covenant, but as a declaration of trust. That the purpose of such deed was, not to vest in such grantee the fee of the two thirds of such premises, (of which such third person was to have the benefit,) leaving in him a mere right of action; but to give to such grantee a power in trust to sell the land and pay two thirds of the proceeds of tho sale to such third person, leaving the legal estate, on which such power was to operate in the original grantor, capable of being divested by its exercise.

3. No mqre of the legal estate in fee in such land passed to the grantee under the deed to him, than was necessary to enable him to convey enough of the land to pay off the sums charged thereon, and an equity of redemption in an undivided third of the residue. The residue of the legal estate in such land remained in the original grantor.

4. That the deed to such grantee became, by the accompanying declaration by him of its terms, a mere mortgage to him for the sum advanced and the interest and bonus thereon, and he had only a legal estate in one third, leaving such third person equitably entitled to the benefit of the other two thirds thereof.

6. That, although as the conveyance to the grantee was taken with the assent of such third person, and, therefore, no resulting trust could arise in

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favor of the latter, yet it was subject to whatever right he had remaining in or to such land by virtue of the original agreement, not modified by, or merged in, the new agreement.

6. That, under the original agreement between the grantor and such third person, the latter would have been entitled, on effecting the compromise therein mentioned, to a deed of such premises or a sale of them by such grantor, and the 'payment of the proceeds to himself. Such third person had, therefore, a right to procure a sale of his two thirds interest remaining, (after the sums charged were paid either by the grantor or grantee,) or to a conveyance from the former of the legal estate therein.

7. If such legal estate in two thirds of the premises in question did not pass to such grantee by such conveyance to him, it remained in the original grantor, and could not he conveyed by such grantee, or pass to his assignee in bankruptcy, so as to defeat the rights of such third person and those claiming under him.

8. A statement by such grantee in a schedule annexed to his petition in bankruptcy (which alleged that all his property was set out in such schedule) of a claim to only “ one third residuary interest ” in such premises, and a note appended thereto, setting forth that such third person was “ entitled to the remaining two thirds interest arising from any excess after satisfying”

- the mortgages thereon, (which would in themselves be a good declaration of trust,) are strong evidence of a conveyance to such third person as against persons claiming under such assignee in bankruptcy, after a lapse of seven years between the first declaration in trust by such grantee and his application in bankruptcy.

9. That a conveyance of such two thirds interest in the land to such third person, might be presumed after a lapse of time, and other attendant circumstances, inconsistent with the non-existence of such conveyance.

10. Even if such grantee acquired the legal estate in the premises by the deed to him, such third person would have a right to enforce the power of sale at any time, and if the legal estate was vested in such assignee in bankruptcy, and by him conveyed to the plaintiff, the title which would pass by a sale in this action, being in partition, would not be such as this court would compel a purchaser to. take, because it would always be liable to be divested by the exercise of the power in trust to sell for the benefit of such third person or his representatives, and therefore unless they were made parties, the complaint should be dismissed.

(Tried before Robertson, Ch. J. at special term,

December 17, 1866;

decided January 15, 1867.)

This was an action for the partition of certain land in the city of Hew York, claimed by the plaintiff to be held by her in common with the defendants. The complaint alleged the original ownership in fee of such land by Dun

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bar 8. Dyson, in July, 1842; his application by petition, at that time, to the United States District Court for the southern district of Hew York, to be discharged as a bankrupt, in September of that year; the declaration of him as one»; the delivery of a copy of the decree, so declaring him, by order of the court to the official assignee, (William C. H. Waddell, Esq.) appointed by orders of .both the United States District and Circuit Courts for such district, in January previous, and duly qualified as such; the conveyance by such assignee by deed poll, in his official capacity in August, 1846, of one undivided third-part-of such piece of land in fee simple to G-ordon L. Ford ; the vesting of the title to such third part by virtue of several mesne conveyances in the defendants as trustees for the defendant Mrs. Belmont; and the conveyance by such assignee to the plaintiff, in October, 1860, in fee simple, of two undivided third parts of such premises. The answer claimed, that the defendants were owners in fee as trustees, &c. of the whole of the premises, whereof partition was sought, and denied that the plaintiff was seised in fee as tenant in common with them as alleged in the complaint. It also set up as a defense, that neither the plaintiff" nor her ancestor, predecessor or grantor-was seised or possessed of the premises described in the complaint or any part thereof, within twenty years before the commencement of this action.

It was admitted on the trial that Alexander M. Bruen, under whom both parties claimed, owned the premises as far back as February, 1833, and that in 1835, he, by his attorney, George W. Bruen, (duly authorized by a power of attorney duly executed in July, 1835, and recorded,) conveyed the same to Dunbar S. Dyson, in fee simple.

In January, 1842, Mrs. Janet Clarke, (widow of John X. Clarke, deceased,) filed a bill of complaint in the late court of chancery of this state against Robert Dyson, Dunbar 8.

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Dyson, Matthew 8. Clarke, and Anna E. Clarke, his wife, and Virgil Maxcy, as defendants. In which bill such complainant prayed that Dunbar 8. Dyson should be decreed to execute to her a mortgage upon certain land, including the premises m question, for a certain amount, ($25,000,) or, if s'o much had been aliened or incumbered by him as to prevent what remained from being sufficient security for that amount, to execute to her a mortgage for so much money as what remained should be good security for, and to pay the residue to her in cash, and in default thereof that the defendant, Matthew S. Clarke, be decreed to pay the same and be removed from his place as trustee for the complainant.

The facts upon which such relief was prayed, as set forth in that bill of complaint, were:. That by various acts and instruments, specifically set forth therein, such as the will of the father of the complainant, the marriage settlement and will of her mother, a conveyance by her in trust to the defendant M. S. Clarke, a sale by him of certain lands, (including those embraced in such trust deed,) he became trustee for her of one half of a mortgage on such lands for a certain sum ($50,000;) but that in violation of such trust and in order • to enable Eobert and Dwnbar 8. Dyson, to carry out an agreement by them with the government of • the United States, for compromising the indebtedness of certain other persons, (George and Herman Bruen and John Bloodgood,) in which Matthew S. Clarke was interested, he assigned such mortgage to Eobert Dyson, (with knowledge on the part of the latter, that Clarke held such mortgage as trustee for her,) under an agreement by both the Dysons, to execute a mortgage for the like amount to Clarke, as trustee, upon the property so conveyed by Alexander M. Bruen to Dunbar S. Dyson. That Matthew S. Clarke was interested in the lands so conveyed to D. S. Dyson by virtue of two instruments, copies whereof were

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annexed to such bill, being, First, a power of attorney and agreement executed by Matthias Bruen and Alexander M. Bruen to him, (Clarke,) dated in May, 1835, authorizing him to compromise, (within one month,) certain claims of the United States government against the persons before mentioned (Gr. and H. Bruen and Bloodgood) and' to sell certain lands, (including the premises in question,) to enable him to carry out any compromise entered into by him, and agreeing that he should have the residue of any money, bonds, notes or obligations received on such sale beyond the sum necessary for such compromise; and, Secondly, an instrument dated and executed in July, 1835, by the two Dysons and Clarke, declaring the terms on which such property conveyed by A. M. Bruen to D. S. Dyson was holden, which terms were as follows: A certain sum ($200,000) was to be paid or secured to be paid to the United States of America, by the Dysons; A certain sum paid as a premium for raising such moneys ($25,000) was “ to be charged on the general fund to be raised out of said lots. Such $200,000 was then to be repaid with proper interest, and the remainder of the money or lots unsold’’was “ to be divided or sold, as the case ” might “be, in theproportion of two thirds to or by Matthew.St. Glair Glarhe, and one third to or by said Robert and Dunbar S. Dyson. Such lots-were also thereby agreed ” to be sold'or disposed of as “might thereafter be agreed upon.”

The answer of Robert Dyson and Dunbar S.' Dyson, (defendants in such suit in chancery,) to such bill of complaint, admitted the execution of such power of attorney and agreement by Matthias and Alexander M. Bruen, and the agreement between the Dysons and Matthew S. Clarke, whereof copies were annexed to such bill.

Dunbar S. Dyson, in his petition for his discharge as a bankrupt, dated July 8, 1842, sworn to and signed by him, stated that a certain schedule annexed, (marked. B,) con

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tained “ according to the hest of his knowledge, information and belief an accurate inventory of Ms property, rights, and credits of every name, hind and description, and the location and situation of each and every parcel and portion thereof.” In such schedule is set down “ One third residuary interest in 204 lots in the Seventeenth ward of the city of Hew York as per deed of the same from Alexander M. Bruen, and map thereof duly recorded in the proper office. Reference being had to said map, on which said lots are marked as follows, (see note A at the end of this schedule.”) Then follows an enumeration of such lots and their location, (including those in question,) and also of incumbrances thereon, and such note A, which is as follows: “ Matthew St. Clair Clarke of Washington city, is entitled to the remaining two thirds interest, arising from any excess after satisfying the amount of mortgages on said property, which have been allowed said Clarke in account. The property referred to being 204 lots in the Sixteenth ward of the city of Hew York, herein before mentioned.’"’

In August, 1846, such official assignee in bankruptcy, (W. C. H.' Waddell, Esq.) pursuant to orders of the proper United States Court, conveyed (for the consideration of one dollar) to Gordon L. Ford in fee, one third of the two hundred and four lots mentioned in such schedule. By several mesne conveyances from Ford and others, professing to convey the whole of such lots, the defendants acquired their title thereto.

In October, 1860, the same official assignee conveyed to the present plaintiff (for the sum of one dollar) all of the same lots, (subject to his previous conveyance to Gordon L. Ford,) pursuant to an order made by the proper United States Court, authorising a conveyance at private sale for a nominal consideration, and the costs of the assignee and his counsel, but not mentioning the person to whom it was to be conveyed.

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Proof was given on the trial, of the death of hoth the Dysons, and that no instrument signed by them and Matthew S. Clarke, was in possession of the administrator of Robert Dyson; also that Dunbar S. Dyson was unmarried at the time of his death.

Exceptions were taken by each party on the trial, to the admission of each of the documents and instruments offered by the other, showing the foregoing facts, and particularly to the bill and answer in the suit in chancery before mentioned, but only on the ground that the plaintiff was not bound by them.

Other matters appear in the opinion of the court.

J. Townshend, for the plaintiff.

J. Larocque, for the defendants.

The main point in this ease is whether the legal title to an undivided two thirds of the lots in question passed by the deed from the official assignee in bankruptcy to the plaintiff That turns principally on the effect of the instrument of July, 1835, executed by Mr. Clarke and the two Dysons. The existence and contents of that instrument are fully proved by the admission made by Mr. D. S. Dyson in his answer to the bill of complaint of Mrs. Clarke against him and others. This was admissible in evidence as the declaration of a party in possession of lands claiming title, against his own interest. (1 Phil. on Ev. 527, 528, Cowen & Hill's Notes, Edwards’ ed.) And it only proves an instrument, which is not binding on purchasers unless they have notice of it, such notice may be found, in the admissions in the petitions and schedule in bankruptcy, through which such assignee derived his title. The previous agreement between the Bruens and Clarke is only important as showing

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the consideration for the deed to D. S. Dyson, and establishing a right in Clarke to have the whole property conveyed to him by Bruen. Although he "may have assented to that deed to Dyson, so as to destroy any merely resulting trust, except for his creditors, (1 R. S. 728, § 52,) he is only affected thereby, so far as such deed interfered with his right to such conveyance. That deed to Dyson from Bruen, became by the instrument of July, 1835, converted into a mere mortgage to him, for the sums advanced by himself and brother, and a conveyance of the equity of redemption in an undivided third, and either a conveyance to Mr. Clarke of the remaining two thirds, or the grant of a power to D. S. Dyson, in trust "to sell and pay over the proceeds of sjich two thirds to Clarice; as a trust for that purpose would not be valid. (1 R. S. 727, §§ 45, 55.) If Dyson took such conveyance without the consent of Mr. Clarke, it of course would create a resulting trust in favor of the latter. (1 R. S. 728, § 53.)

In regard to the legal effect of the instrument of July, 1835, 1 think the recent decision in the Court of Appeals of this state, in the case of the New York Dry Dock Company v. Stillman, ( 30 N. Y. Rep. 176 ,) is conclusive. And as that is somewhat intricate, it will not be amiss to enter into a minute detail of the facts and the points decided.

The subject of controversy, in that case, consisted of "a fund, claimed to be the share of a certain Walter Smith, of the proceeds of the sale of certain land by persons, (Nevins & King,) alleged to be donees of a power in trust therein for his benefit. Its claimants were the plaintiffs, who as assignees of a junior judgment against Smith, had redeemed from a sale of his interest in such lands, on execution under a prior judgment obtained against him, and the defendant, who had bought all the interest of the judgment debtor in such lands or their proceeds, or in the execution of the power in trust, from a receiver

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appointed in a suit by a creditor who had obtained a judg- f ment subsequent to both the judgments under which the plaintiffs claimed.

In 1834, the judgment debtor, (Smith,) had the legal title in fee to the land in controversy, and conveyed an undivided half thereof to a Mr. II. H. Kevins. On the first of March, 1838, some time before the recovery of any of such judgments, against Smith, he and Kevins conveyed all their interest in such land in fee to the latter. On the same day the latter conveyed it to a Mr. E. Townsend, who again, on the same day, conveyed it to Kevins and a Mr. O. C. King as joint tenants and not as tenants in common. Messrs. Kevins and King the next day executed two declarations of trust; one, in favor of the Kew York and Erie Railroad Company, and the other, in favor of certain parties originally interested in the first purchase of the land by Smith. The first of such instruments declared, that in case such company should- complete part of their railway between certain points, (Owego and Dunkirk,) within a certain time, (seven years from 1834,) the grantees, (Nevins & King,) would convey to such company one fourth of such lands as a free gratuity, or would sell such portion and pay them the proceeds. The second of such instruments declared that in case the company did not perform such conditions, the grantees would sell such lands and pay to the parties so originally interested, including the judgment debtor, (Smith,) the net proceeds thereof in certain prescribed portions. In 1850, after the purchase by the defendant from the receiver, and the redemption by the plaintiffs under their judgment, the company not having performed such condition, Messrs. Kevins King sold the share set apart for such company; Smith’s share of the proceeds of that sale, under the second declaration of trust, amounted to over eleven thousand dollars, which formed the subject of controversy,

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in such action. The declaration of trust by Kevins & King, in favor of the railroad company, was made in pursuance of an agreement between Kevins and Smith, at the time of the conveyance by the latter to the former, providing for a conveyance and payment, similar to that which was contained in such declaration to be made to the company. The other declaration of trust by the same parties, was made in pursuance of an agreement entered into, in January previous, ‘to vest the whole title to the land in Kevins, to enable him to convey to each proprietor or party interested therein, the share which he had drawn by lot.

Upon the trial in the Supreme Court before a referee, he held that the authority of Messrs. Nevins & King to sell, was only good as a power in trust, and that the legal title remained in' Smith, which was acquired by the plaintiffs, who were therefore entitled to the fund. The general term of that court affirmed such decision, from which affirmance, the defendant appealed.

The turning point in the case evidently was, Whether the declaration of trust by Kevins & King in favor of the proprietors, (including Smith,) as to the portion of land set apart for the railroad company, (in case they failed to perform the condition attached,) converted the deed from Townsend (their grantor) into a conveyance of a legal estate to Smith, or left in Townsend the legal estate, subject to the execution by Kevins & King, (the grantees,) of the authority specified in such declaration of trust as a power in trust. J have been thus minute in noting the leading facts in the case, in order to show that such question was the turning point. It is true that the counsel for the plaintiffs contended, (p. 186,) that the three conveyances, on the 1st of March, 1838, (from Smith to Kevins, from the latter to Townsend, and from the last to the first two as joint tenants;) an agreement on the same day be

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tween Kevins & King and the Kew York and Erie Kailroad Company; and the agreement made the next day between the former and all parties interested, formed but one transaction; and that, therefore, no legal title was vested in Kevins & King, in consequence of one provision of the Kevised Statutes, (1 R. S. 728, § 49;) but, on the contrary, by another, (Id. 727, § 47,) was vested in ' the parties for whose benefit such provision was made. It had been fully conceded that the authority of Kevins & King was void as a trust, and only good as a trust power, (p. 190.) The proposition so contended for by the plaintiff’s counsel was held, in one opinion, (Mullin, J. p. 192,) to be answered, (as expressed therein,) by the fact, that Smith “ conveyed the fee to Kevins, in that part of the land that was intended for the railroad company and Kevins, by a similar conveyance to Townsend. Keither took in trust, as in the conveyance to neither, was a trust expressed, and no declaration of trust was ever executed by either,” or, as the idea was more fully carried out in the second opinion delivered, (Selden, J. p. 196,) “that the reasoning by which ” such proposition “ is reached, assumes that the sole, object of the deed from Smith to Kevins, on the 1st of March, 1838, was to create that power in Kevins & King, in which the series of conveyances resulted;” whereas “ that conveyance was given in part execution of the plan adopted to carry into effect the division and distribution of the lands among all the joint proprietors. * * It was thought proper, for that purpose, to vest the whole title and interest, both-legal and equitable, in Kevins, and the deed from Smith was essential to that object. Unless that deed is held to have taken place according to its terms, the whole scheme of distribution was a nullity. There was nothing whatever to prevent its taking effect as designed, and hence, Smith, by its exe

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cution, was completely divested of all legal title to the lands.” The judgment of the court below was unanimously reversed.

Several points were clearly settled by that decision, which are applicable to the case before me.

First. A declaration by the grantor in a deed of its objects and purposes, contained in a separate instrument, even when not under seal, (Laws of 1860, ch. 322,) may operate to alter the character of such deed, however plainly a conveyance of merely the legal estate in the land.

Second. Where instruments, simultaneously executed, relating to the same subject matter, are, for that reason, construed together, the general purpose of the whole, apparent therefrom, will control the strict construction or apparent purpose of one.

Third. Where, by the legal construction of one or more instruments, the sole purpose of one is apparently merely to create a trust, which can only be executed as a power in trust, although such instrument be an absolute conveyance in fee simple of the legal estate, such legal estate remains in the grantor in such instrument, subject to the execution of such power, (1 R. S. 734, §§ 58, 93; Id. 735, § 103,) which is capable of being enforced, in equity.

Applying this to the case in hand, it is very evident, from the declaration of trust executed by D. S. Dyson— for it is such, and not a mere covenant, since it speaks of the terms upon which the land is to he holden—that the purpose of the deed to him, as to the undivided two thirds claimed by Mr. Clarke, was not to vest a fee in Dyson, entitling him to dispose of it as he thought proper, and leaving in Clarke a mere right of action; but to give him a power in trust to sell and pay the proceeds to Clarke, leaving, whatever legal estate there was in Mr. Bruen, to be divested by the exercise of such power of sale. As much legal estate passed to Dyson, of course,

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by such deed, to enable him to convey enough land to pay off his advances, as is usually vested in a mortgagee, and also a legal estate in one third for his own benefit, but, as to the residue, it remained in Mr. Bruen. There is no distinction in principle between a legal estate, so left undisposed of, and the legal estate conveyed to Mr. Townsend, in the case just cited, for the purpose of dividing the property. If the agreement and power of attorney to Mr. Clarke are to be taken into consideration, they show á right on his part to call on Bruen, either for a deed, or to sell the property at any time, as he had effected the compromise which entitled him thereto. Under the two instruments, Mr. Clarke had the right to enforce, in equity, a sale of his two third interest by Mr. Bruen or Mr. Dyson, by virtue of the power“in trust, or a conveyance by Mr. Bruen, or his representatives, of the legal estate to himself. At all events, therefore, if it has not been divested, such legal estate remained in Mr. Bruen, and could not be disposed of by the assignee in bankruptcy, which is fatal to the plaintiff’s case.

But, if the conveyance to Dyson bh supposed to be made without Clarke’s assent, he took it subject to the right of the latter to have a conveyance executed to him by Dyson. And as equity presumes that whatever ought to be done has been done, such a conveyance may be presumed. The admission in the petition and schedule in bankruptcy, is strong evidence "on this point. The first states that all his property is set out in the schedule. The latter claims only “ one third residuary interest in 204 lots, &c. as per deed of the same from Alexander M. Bruen,” and the accompanying note alleges that Mr. Clarke was “ entitled to, the remaining two thirds' interest arising from, any excess, after satisfying ” the mortgages therein. It does not state merely an interest in the execution of a power in trust, or the proceeds of sales thereunder, but in the

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land itself. There is ample room in this to find, as a matter of fact, after the lapse of-seven years, between the deed and such admission, (which, of itself, would be a good declaration of trust,) that Dyson had actually released such undivided two thirds to Mr. Clarke.

But even if Dunbar S. Dyson acquired the legal title to such premises, by the deed to him, Mr. Clarke, or his representatives, would have a right to enforce the power of sale at any time, and even if Dyson’s legal title to two thirds were vested in the plaintiff, the title conveyed in this action on a sale, would not be such as this court would compel- a purchaser to take, because it would always be subject to be divested by the enforcement of such power. Unless, therefore, Mr. Clarke, or his representatives, be parties, the bill should be dismissed.

For these reasons, I think the complaint should be dismissed, with costs.