Jones v. Butler

Beady, J.:

The plaintiffs, as children of Thomas 0. Butler, Jr., and Jane Ann, his wife, were not cestms que trust under the marriage settlement or trust deed. In case the mother died before the father, there was no provision made for the disposition of the capital or corpus of the estate. This action, which was commenced by them upon the theory that they were beneficiaries under the trust, was not successful, because the court of last resort declared that it could not be maintained in that aspect, although the question whether they could obtain any relief as to such estate as heirs at law of their mother during the lifetime of the father, and whether they could prosecute any remedy as to the personal estate of the trust through an administration of their mother, as her next of kin, was suggested, but not determined in that case. (Jones v. Butler, 51 N. Y., 658.)

The suggestion as to the father arises from the fact that he was entitled to the income during his life, under the provisions of the trust and the quasi control of the property therefore through the trustee. Whether the Commission of Appeals, by the suggestion mentioned, designed to convey the impression that in this action the plaintiff’s remedy, if any, could not be prosecuted, is in doubt, and it renders the consideration of this case embarrassing, perhaps, because the complaint remains the same as it was when the decision referred to was made, and the facts are substantially unchanged.

The plaintiffs, as heirs at law, were in the case, although their claim, according to the opinion, was not presented in either of the aspects suggested, namely, as to their remedy, during the life of their father or through the administration of "the mother’s estate. When the action in one branch of it was before Justice Ingraham, he said, “ whether the children claim as cestuis que trust under the marriage settlement, or as the heirs of their mother, would be immaterial. The facts are sufficiently set out in the complaint to entitle them to relief in either character, and when the facts appear in the complaint the court is to give such relief as the parties are entitled to, whether ashed for or not in the prayer of the complaint,” and this view we understand to be sustained by numerous decisions. It is the law of the Code, and is one of the results which was contemplated by that law in opposition to the technical rules of pleading which under the common law system prevailed. The doctrine which grows out of the intermingling of the legal and equitable systems is, that if the plaintiff in an action is entitled on the revealed facts within the issues to relief under the whole law of the land it must be accorded. (See cases collected, 2 Wait’s Pr. Rep., 403.)

All the facts were, as stated, disclosed when the case was disposed of in the Commission of Appeals, and we have the right, doubtless, to assume, such being the fact, that the refusal or disinclination to consider the plaintiff’s rights, as heirs at law, arose from the fact that the action was not, for some reason, so presented as to enable that court to give it consideration. It may be that the administration of the mother’s estate was not represented, and therefore that the proper parties were not before the court. The action, as suggested, is the same now as then, and the doubt naturally springs into the mind whether if the case be decided in favor of the plaintiffs the court of last resort will not say, the facts are the same, the pleadings the same, and we held on a former occasion that the plaintiffs’ case, as heirs at law, was not and could not be presented to us herein. The learned justice at Special Term has, however, considered the rights of the plaintiffs as heirs at law, and that, doubtless, places the action before us in such a way — in such a new phase • — ■ as to justify us in the treating it as if the facts had not received any probable adverse consideration from the Commission of Appeals in that relation. The decision of the court below is against the plaintiffs on the propositions that they are not beneficiaries under the marriage settlement, and that by the deed dated May 1, 1834, they are estopped from denying as heirs of law of Jane Ann Butler the validity of that instrument, and are also estopped from denying that the grantee therein named acquired the premises through said deed in fee simple absolute. The deed of trust provided that should circumstances make it necessary, the trustee for the time being could, and might with her consent in writing, dispose of and convey all or any of the estate and property belonging to her, and invest the net proceeds thereof in any other productive fund or property, etc. The deed of May 1,1834, was executed by Thomas C. Butler, trustee of Jane Ann Butler, by and with the advice and consent of Thomas C. Butler, Jr., and the said Jane Ann, his wife, and the requisite formalities demanded by the trust deed were therefore duly observed in the transfer to Jonas Butler, the grantee, but the learned justice found in reference to this deed that no money or other valuable consideration passed between Jonas and the grantors, and that he had notice that the property described belonged to the trust estate. And it further appears that Jonas Butler and his wife conveyed the premises to Frederick M. Butler, and that the latter reconveyed them to- Jonas, and that Jonas and wife conveyed the premises to Cecelia Ann Butler, the daughter of Thomas C. Butler, Sr., and one of the defendants in this action. The learned justice also found that no money or other valuable consideration passed between any of the parties on the execution of any of these conveyances and that they all had notice that the property described in them belonged to the trust estate. It thus appears, therefore, that the Broome street property conveyed, through the instrumentality of the deed of May 12th, to Cecelia Ann Butler, was without consideration, and accepted with knowledge of the trust, and as the learned judge found, was held by her as a cover.

It also appears that he further found, and as a necessary consequence, that although standing in her name, the property does not belong to her, but to the beneficiaries under the trust.

The scheme on the part of the trustee, Thomas C. Butler, Sr., seems to have been to transfer the property mentioned to the defendant Cecelia Ann, and to keep it in that way for his and her benefit. The design also seems to have succeeded. In the various opinions presented to us in this case in the printed pamphlet the conclusion is generally expressed that the income of the estate to which, Thomas C. Butler was entitled abeady passed to the defendant Cecelia Ann, under the deed of May 1, 1834, and the subsequent conveyances, and that she is entitled therefore to the income, which, were it not for that deed, would have been his. It may be said here that there are no exceptions to the findings of fact, and that the non-payment of any consideration for the grants made and the knowledge by the grantors and grantees of the trust estate, and that they were dealing with it, and that it was the property in fact of the beneficiaries of the trust, and that the conveyance to Cecelia Arm was only a cover, stand confessed, and standing confessed, prove that the plaintiffs, as heirs at law, own the property. These facts make a formidable array against the doctrine of estoppel, and prevent its application.

The legal effect of them is to establish the conclusion that the property has never, in legal contemplation, passed away bom the trastee. Cecelia Ann Butler holds it for him.

The conveyance in which the plaintiffs’ father and mother united was for the purpose of changing the corpus of the estate. This is all that could be done under the trust deed, and all the parties knew it. They admit the fact. It was not changed.

The conveyances moved in a circle back to the trustee, because Cecelia Ann held it for him as a cover. She knew this could not be done, and when the title reached her she knew it was in legal effect back again to its origin after many wanderings. And this, it may be said, makes the deed void, for the reason that it was in effect made to the trustee, who could not be both purchaser and seller. (Davoue v. Fanning, 2 Johns. Ch. Rep., 252; Michoud v. Girod, 4 How. U. S. Rep., 503), and eases cited in point thbd in that case.

The doctrine of estoppel to prevent the abuses or injustice that might otherwise arise, is confined within just and rational limits, and a party is not estopped unless he has gained some benefit or advantage by the act which is relied upon as an estoppel, or unless the party claiming the benefit of the estoppel was induced to alter Ms condition. (Smith v. Ferris, 1 Daly, 18, and cases cited. See, also, Payne v. Burnham, 62 N. T. Rep., 69.) "What benefit did Jane Ann, the plaintiff’s mother, or her husbatd, derive from the deed in which she joined, and what injury did it cause to their grantee or Ms alienees.

The answer is qrnte patent: no injury and no advantage. Neither their grantee nor any of the subsequent grantees were injured. They accepted their deeds in furtherance of a scheme, and it is wholly immaterial whether it is called a fraud or not.

Whatever in legal parlance the facts justly provoke as a designation, the courts will apply. The doctrine of estoppel stands as a guardian against, not in favor of, fraud, and equity rejects estoppels and pursues the actual truth, and will determine and decree according to the verity and justice of the fact. (Perry on Trusts [2d ed.], 501, § 416.) If it were applied in this case, a new element will have crept into its office, and it will sustain, not prevent, a wrong. If it can further the claim of Cecelia Ann Butler, it will award her property for wMch she has not paid, and to the fee of which she is not only not entitled, but which she holds as a cover, and in violation of acknowledged and established rights; although, for the mortgage executed by her as a part of the design, she is entitled, perhaps, to protection, if the property be not of sufficient value to afford it, of which, however, there is no doubt. Having arrived at these conclusions, the result is that the learned judge at Special Term was in error in declaring that the deed of May 1, 1834, was an estoppel upon the plaintiff. It was not. It is said, however, that the action cannot be maintained, because the plaintiffs, though heirs-at-law, were not entitled to the estate until the death of then* father, who was living when this action was commenced. The answer is, they had an interest in the trust estate. They were part owners of the fee, and interested in the preservation of the estate from waste and malappropriation. They had the right, therefore, to ask for the appointment of a new trustee, and for an accounting from the existing one.

Whatever right their mother possessed in that respect they succeeded to, and could exercise in the same way. The facts justified it. It was not an interference with the interests of their father, but for mutual protection, because, whatever was done for the preservation of the estate was for his benefit. We entertain no donbt of this proposition. The power of this court to remove a trustee, and to call for his. accounts by the owners of the fee, cannot be questioned, nor can its power be doubted to settle existing equities revealed in such a procedure.

It is not necessary to discuss the question whether, in reference to the personal estate, it is requisite that the administration of the mother’s estate should have been represented, because this action could have been maintained in regard to the real estate, and for the selection of a trustee. These questions are thus mentioned although the selection of a trustee is not necessary, the trust having ceased by the death of Thomas 0. Butler, Jr., the father of the plaintiff, but the representatives of the deceased trustee are properly before the court in relation to his accounts and any claim that may arise upon them.

They are also alluded to because this action, it is claimed, was prematurely commenced, namely, during the life of the father, and the objection, therefore, relates back to the time when the action was commenced. It follows from these views that the judgment of the Special Term must be reversed, and it is equally clear that there me issues which require determination upon this judgment of the court thus expressed in reference to the deed of May 1, 1834. There must, therefore, be a new trial.

If, it may be said in conclusion, it is necessary, in order to a complete adjustment of all matters, that the administration of the mother’s estate shall be represented, the practice, by amendment or by supplemental complaint, makes ample provision for the addition of all the necessary parties, or elements, to accomplish the object in view. As many of the facts seem to be found, it may be the better course to send this case back to the Special Term for the preparation of the proper decree under the views expressed herein, with the right of either party to furnish further proof, and without prejudice to any application for any amendment by supplemental complaint or otherwise. If, however, this mode of procedure with regard to the facts already found be not acceptable, a new trial is ordered, with costs to abide the event. The order to be entered hereon to be settled by Justice Beady.

Daniels, J., concurred. Davis, P. J., not sitting.

Judgment reversed, new trial ordered, with costs, to abide event, unless the parties stipulate to modify the judgment as directed in . . * opinion.

Order for accounting modified as directed in opinion.

Appeal from orders staying proceedings dismissed, without costs.

Motion to dismiss appeals denied, without costs.

Orders to be settled by Brady, J.