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[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 531 The original trust to Noyes and Ogden, created in October, 1843, by Rogers, for the benefit of Selden and Vermilya, was, I think, subsequently abrogated by the agreement and acts of all the parties interested. That it has been essentially modified is *Page 532 admitted. According to the provisions of this trust, the trustees were authorized to dispose of the trust property, "to pay and discharge the bonds and notes then held by the cestuis que trust as they fell due respectively." To pay off the demands mentioned in the prescribed order, was therefore the object of the trust, as the indebtedness of Rogers to Selden and Vermilya was the sole consideration for its creation.
By the agreement of October, 1846, executed by Rogers and all the cestuis que trust then having claims upon the fund, after reciting the trust and the proceedings under it, and that "it was deemed for the advantage of the other parties that an amicable arrangement should be made for the final settlement of all claims existing against said property; it was agreed that Rogers should release to the trustees aforesaid, all his residuary interest in the property held by them in trust, for the benefit of the parties holding said bonds and notes, and that upon such conveyance being made, he should be discharged from all further claim on account of said indebtedness; and the trust fund should be accepted, as a satisfaction of the same, and the said bonds and notes be cancelled." Upon the consummation of this arrangement, the indebtedness of Rogers was discharged for an agreed equivalent in property. The original trust was at an end. The trustees had no duty to discharge. They could not sell the property, or give preference in the application of the proceeds to the payment of demands, all of which were satisfied and extinguished by the act of the parties. The cestuis que trust ceased to be creditors; and I am unable to perceive how a valid trust, "to sell land for the benefit of creditors," can be created or continued, where the relation of debtor and creditor has been annulled, and the indebtedness discharged by a legal accord and satisfaction. Reliance has been placed, upon a clause of the agreement of October, 1846, as distinctly recognizing the continuance of the original trust. That clause is as follows: "And in event of any of the parties not consenting hereto,then a sale shall be made under the trust deed, upon the requisition of other parties subscribers hereto, for the payment of the bonds and notes held by them, which have become due." The *Page 533 word "hereto" refers to the agreement about to be executed by bondholders. It was expected that all of them would become parties to the arrangement, it was possible that some might not, and in that contingency, and that only, a sale was to be effected under the original trust. Accordingly we find, that the Christophers, who held some of the securities, did not ratify the agreement by their trustee, until February, 1847, five months after its subscription by the other bondholders. Rogers had then released his residuary interest in the property to Noyes and Ogden; and all the bondholders having subscribed, or ratified, the agreement, the arrangement was consummated, and the provision above referred to became inoperative by the failure of the contingency, upon which it depended.
II. Did the agreement of October, 1846, with the instruments subsequently executed in its performance, any or all of them, create a new trust, or power in trust, authorizing the trustees to sell and distribute the proceeds of the property, conveyed to them by Rogers, among those who, at the time of its creation, were interested in the bonds and notes in question? This presents the second, and more important question in the cause and the one which was principally discussed upon the argument.
The most that can be inferred from the agreement of 1846 is, the belief and expectation of the parties, that the trustees, by the conveyance of the residuary interest of Rogers, would acquire the legal title to all the trust property, and hold it subject to any arrangement, which the bond holders might make subsequently, for its disposition; and if none was made, that the trustees would be authorized to sell it for the benefit of those interested. If this expectation had been expressed formally in the deed from Rogers to the trustees, instead of being implied, from a preliminary agreement, it was unauthorized by the 55th section of the statute relative to uses and trusts, and would consequently have been void, as an express trust. It would not have been a trust "to sell lands for the benefit of creditors," in form or effect; because on the completion of the arrangement contemplated by the agreement above mentioned, the cestuis *Page 534 que trust ceased to be creditors, as I have endeavored to show. Neither was it a trust under the 2d subdivision of the section above quoted, "to sell lands to satisfy any charge thereon," because the indebtedness of Rogers, which was the only charge pretended, was by the agreement of the parties, converted into land, and of course ceased to be a charge upon it.
But in the second place, neither an express trust, nor a power in trust, was created or conferred upon the trustees by the conveyance of Rogers, or of any other person having the requisite authority; nor was there any stipulation to that effect, in the preliminary agreement. This objection, if well founded, is conclusive against the existence of either. The agreement of October, 1846, should be construed in reference to the different subjects embraced in it, and the separate interests of the parties, by whom it was executed. To that agreement Rogers and the bondholders were the only parties. The former covenanted that he would release to the trustees his residuary interest in the property held in trust for the benefit of the parties holding said bonds and notes. And the latter agreed that "upon such conveyance being made, Rogers should be discharged from all farther claim, on account of his indebtedness." This was all that Rogers was to perform or receive. The bondholders then agree with each other, "that an arrangement shall be made for the disposition of the whole trust property, and that the same shall be offered for sale by the trustees, unless an amicable division, without sale, shall be sooner agreed upon." This was a distinct subject of the agreement, in which Rogers had no interest, and to which he was not a party. What concern had he, for example, in the amicable division of the property, after his conveyance and discharge?
The whole clause presupposes a conveyance by him, and its object is to provide for a disposition of the property thus acquired. But nowhere in the instrument is the duty imposed upon Rogers to create a trust, or trust power for the benefit of the bond holders, nor do they stipulate for any thing of that nature among themselves. This has in effect been determined as to Rogers by this court. The cestuis que trust assumed *Page 535 that the original trust would continue, notwithstanding the debts of Rogers were discharged, so far as to enable the trustees to take, hold and convey the legal title to the real estate. They did not therefore contract for its continuance, nor for the creation of a new trust, or trust power, as a substitute. It is impossible to mistake their views when we look at their acts, in performance of this agreement. On the 28th of November, Rogers released to the trustees his residuary interest, including whatever was before held by the loan company, for the benefit ofthe bondholders, and in performance of his covenant. It was accepted as such, and he was discharged from his indebtedness. Again, in the deed of confirmation and release to the Farmers' Trust and Loan Company, of the 5th of February, 1847, to which Rogers, the trustees and the bondholders were all parties the conveyance of Rogers to the trustees previously executed, is recited as being made in pursuance of the agreement of October, for the benefit of the parties interested in the trust.
In obtaining a conveyance, therefore, of the residuary interest of Rogers, to trustees, for the use and benefit of the bondholders, without any other provision whatever; the cestuis que trust received all that they had contracted for, and in the precise manner stipulated in the agreement with Rogers. They assumed, as has been suggested, that this process, which they had defined by contract, would vest the legal estate in the trustees for their use. This the law prohibited, and transferred the whole title, legal and equitable, to the beneficiaries, as tenants in common. (1 R.S. 728, §§ 47, 49.) There was no uncertainty, as has been intimated, as to the persons beneficially entitled, nor as to their share in the property, respectively. Both are particularly stated, in the deed of the 5th of February above mentioned, and the cestuis que trust in addition covenant that they are the bona fide holders of all the bonds and notes remaining unpaid. An erroneous assumption, by the cestuis que trust, arising from a mistake of the law, can not control the legal effect of the conveyances executed in pursuance of their agreement. Nor will it alone furnish foundation for a trust or a power in trust. A power is defined, by statute, to be an authority *Page 536 to do some act in relation to lands, which the owner granting the power, might himself lawfully perform. (1 R.S. 732, § 1.) An express trust includes a power and more. Therefore, where an express trust is created for a purpose, not enumerated in the statute, no estate vests in the trustees, but the power continues, and may be exercised, in the performance of any act,directed or authorized by the trust, which may lawfully be performed under a power. (1 R.S. 729, § 58.) But it is indispensable to the creation of a trust, or a power in trust, that the authority to perform the required act should be rightfully delegated to the trustee, by the person having authority to dispose of the estate, or some interest therein, in the manner directed by the trust or power. This has not been done in the present case. If Rogers was the owner of the lands in question, within the spirit of the rule suggested, as the defendants insist, he has not granted, or assumed to grant, to the trustees an authority to sell the trust property, and distribute the proceeds. The loan company could not delegate it, for they were but trustees, with a mere lien upon the lands, which was satisfied when they conveyed to Noyes and Ogden. The latter took the interest of Rogers, by virtue of the original trust; the conveyance of the company operating only as a release of a prior charge upon the estate. The bondholders could grant no such power, for at the date of their agreement, in October, 1846, they had only an interest in the original trust, and none whatever in the real estate. (1 R.S. 729, § 60.) Nor did they assume to do any thing of the kind. Again. The agreement of October is not a part of the subsequent conveyances, executed in pursuance of it. It can not be legitimately used to supply their deficiencies. It shows what ought to have been done by way of performance, not what was done.
The cases to which we have been referred as to the effect of the recital of one instrument in another, can not aid the defendants. (8 Peters, 33, 88; 8 Cowen, 586.) Because the part of the agreement upon which they rely to raise the trust, is not recited in, and consequently is not a part of, any conveyance subsequently executed; and because if it had been, it would *Page 537 show an agreement between the cestuis que trust, that the trustees should sell upon a certain contingency, after they had obtained the title. Not that Rogers, or any other person, should grant them such authority.
We think, for the reasons suggested, that the defendants have failed to establish an express trust, or a power in trust, for the sale of the lands in question. We think, also, that there are decisive objections against implying, from the agreement of the cestuis que trust, an irrevocable power of attorney to the trustees to dispose of this property. It is not the contract of the parties, but an equitable substitute. It can only be justified upon the ground that it will effect their real purpose, although by a different instrumentality from that which they have prescribed. The defendants affirm, in their answers, that their object in procuring a conveyance to trustees was, "to give them the power to dispose of the entire property, and close up the trust." This could be effected by a trust, or a power in trust, which would enable the trustees to transfer the title which they received, and not otherwise. A power of attorney must be executed in the names of the cestuis que trust, in whom the title was vested, subject to all incumbrances, dower included, which might exist at the time of the sale; not to speak of the difficulty in relation to those who were minors. The trustees could not bind their principals, or any of them, by a covenant, even against incumbrances imposed for their own benefit, by their own act. A partition would be a far more equitable method of adjusting the rights of the tenants in common, than by a sale by virtue of a power of attorney, under such circumstances, if indeed a purchaser could be obtained. It is to be inferred that this is the view of the defendants, as their counsel disclaimed all reliance upon this point, and placed the defence exclusively upon the other grounds which have been considered. The decree of the superior court must be reversed.
And thereupon the decree of the superior court was reversed, and a decree for partition directed to be entered with special provisions. *Page 538