McLenegan v. Yeiser

Dodge, J.

It was substantially conceded upon the argument that the trust attempted to be created by the fourteenth paragraph of the will did not satisfy the requirements of our statute, no duties being imposed upon the trustees such as are permitted by sec. 2081, Stats. 1898, to support a grant or de-rise in trust, so as to vest the legal estate in the trustees. Appellant, however, contended that, though that trust fails, there was by the twenty-first paragraph conferred upon the same persons a good and valid power in trust to sell and convey these lands. That claim is vigorously contested by the respondents here, although it seems to have been sustained by the trial court. That question is therefore first for consideration. Two sections of our statutes are suggested, under one or other of which may exist a power to sell, namely, secs: 2082 and 2084, Stats. 1898, viz.:

“Sec. 2082. A devise of lands to executors or other trustees to be sold or mortgaged, where such trustees are not also empowered to receive the rents and profits, shall vest no estate in the trustees; but the trust shall he valid as a power and the lands shall descend to the heirs or pass to the devisees of the testator subject to the execution of the power.”
“Seo. 2084. When an express trust shall be created for any purpose not enumerated in the preceding sections of this chapter no estate shall vest in the trustees; but the trust, if directing or authorizing the performance of any act which may be lawfully performed under a power, shall be valid as a power in trust, subject to the provisions in relation to such powers contained in the next succeeding chapter.”

By the language of the will under consideration the property is devised to the trustees, and they, by paragraph 21, are commanded to sell and convey the same. That this constitutes a devise of lands to trustees to be sold seems too plain *310for more than statement, and, if sucb sale is to be made “for tbe benefit of legatees,” it is one of tbe express trusts in terms authorized by see. 2081, subd. 2, merely being limited by sec. 2082 so far that title does not vest in tbe trustees. I-t is, however, unnecessary to decide whether a sale of land, in order to substitute the proceeds therefor as corpus of an estate to pass to the devisees of the land, falls within the idea expressed by the words “for the benefit of legatees,” for, if it does not, then the provision falls squarely within sec. 2084 The will then creates an express trust for a purpose not enumerated by preceding sections. Such express trust is made void by sec. 2071, but the power to do the act is preserved by sec. 2084, if such act be one which may lawfully be performed under a power. Sale and conveyance are acts which might be So performed at common law. Townshend v. Frommer, 125 N. Y. 446, 458, 26 N. E. 805; Holly v. Hirsch, 135 N. Y. 590, 32 N. E. 709. When for the benefit of others, they are made lawful by sec. 2122, Stats. 1898. Smith v. Bowen, 35 N. Y. 83, 89. See, also, Skinner v. Quin, 43 N. Y. 99.

Respondents seem to contend, however, that the twenty-first paragraph of the will does attempt to authorize a sale for the benefit of legatees, which is a purpose expressly enumerated in sec. 2081; whereby sec. 2084 is rendered inapplicable, so that we must return to sec. 2082, which preserves the power of sale, although it repudiates any title in the trustee. Counsel then argues that the power cannot be preserved under this section, because it doesi not satisfy the requirement of sec. 2081, as defined by the courts of New York; that, in order to a valid trust to sell real estate under that section, the purpose to sell must be the primary object of the trust, and the duty to sell must be imperative. We fail to discover any lack of these elements. It is substantially conceded that there is no valid and effective purpose to this trust except that of selling the property; hence in the effort to find a valid *311purpose in the testator’s directions we must assume that as his primary one. The duty of the trustees to sell is clearly absolute, and not discretionary. They must sell whenever the beneficiary so elects. Apart from these considerations, however, counsel’s argument serves only to create for him a dilemma, either horn of which ip alike inconsistent with the result for which he contends. If the trust to sell is not such as is enumerated in sec. 2081, the power of sale is valid by virtue of sec. 2084. If it be such as is enumerated, then a power in trust arises under sec. 2082. This is the result <5f the authorities cited, for in all of the cases where the trust to sell was held invalid for the reasons now urged, the court recognized impliedly or declared expressly that a power to sell remained, although no title vested in the trustee. Cooke v. Platt, 98 N. Y. 35, 39; Chamberlain v. Taylor, 105 N. Y. 185, 192, 11 N. E. 625; Woerz v. Rademacher, 120 N. Y. 62, 68, 23 N. E. 1113; Steinhardt v. Cunningham, 130 N. Y. 292, 300, 29 N. E. 100. We cannot escape the conclusion that by paragraph 21 of the will there was conferred upon John and James Reigart a power in trust to sell the lands which they did sell, and which by mesne conveyances have now come to the appellant.

The next contention in support of the judgment is that such sale is void because not made in good faith, by which is meant merely that it was in fact made to the life tenant, who had an election as to when it should be made. There is no contention that the trustees did not obtain a full and adequate nominal price, nor that they in any wise failed to make every exertion to obtain the highest possible one. The respondents insist, and apparently tjhe circuit court held, that the life tenant was’excluded from being a purchaser, not alone because she was life tenant, but because she was able, under the terms of the will, to control the time of selling. Recognizing as fully as any court in the country the impropriety of allowing those acting in fiduciary capacities to become purchasers *312at their own sales {In re Taylor Orphan Asylum, 30 Wis. 534; Hutson v. Jenson, 110 Wis. 26, 40, 85 N. W. 689), we are nevertheless unable to agree witb respondents that the reasons for so Folding extend to Mrs. Slaymaker under the circumstances of this will. Such bolding would carry to undue and impracticable refinement the duty of those having rights of election, by exercise of which others may be affected. Counsel suggests that she might select an inopportune time, when prices were depressed, and, by then demanding a sale, cause loss to the reversionary interests; but the same is true of a creditor secured by mortgage or trust deed, even of one exercising his right to execution sale; but courts have never considered any rule of ethics or of public policy to exclude such creditors from purchasing. True, courts of equity may, perhaps, under peculiar circumstances1, lend aid to prevent actual injury from abuse of such powers, and possibly might have done so here had Mrs. Slaymaker attempted wreckage of the value of the reversion. Such power in courts, it is confidently believed, is sufficient to guard the rights of others, without imposing on those having merely an election as to the time of a sale the absolute prohibition deemed necessary for trustees. We are not surprised that no decided case has been cited in support of such a restriction, nor that somewhat extended search on our part has revealed none1. Indeed, the only analogous decision we have found is Howard v. Ducane, 1 Turn. & R. 81, where Lord EldoN, as chancellor, held that a life tenant, whose consent and direction was required for exercise of a power of sale, was not precluded from purchasing.

Respondents further insist that the attempted sale was invalid because of the credit given for the price. This contention applies more particularly- to the acceptance of notes and a securing mortgage for* the $15,000, payable twenty-five years after date, with only two per cent, interest; for the payment of the other $3,000 of purchase money is established by *313the acknowledgment of payment contained in the deed, with no contradiction from the evidence. It is said this was beyond the power, which, being silent as to terms, it is assumed must be construed to authorize sale for present money only. To this proposition is cited Waldron v. McComb, 1 Hill, 111, which, however, was reversed. McComb v. Waldron, 7 Hill, 335. Also is cited 2 Perry, Trusts, § 786a, where, however, we find recognized a distinction when power of investment of proceeds exists. In such case it is recognized that acceptance of mortgage on the property sold is a proper exercise of the trustee’s discretion; a view supported by Leggett v. Hunter, 19 N. Y. 445. With this view we agree. It seems plain that when the duty of a selling trustee is to keep proceeds of a sale invested, he cannot do so more surely than by leaving a reasonable amount thereof secured upon the property sold. Nothing can tiren happen to the estate more prejudicial than the return to it of the very property parted with, which is not injurious if enough of the price is collected, or otherwise secured, to cover expenses of sale and of reclamation. In the instant case the low rate of interest has injured no one, since Mrs. Slaymaker, the life tenant, who during her life was the only one interested in the amount of income, outlived tire maturity of this mortgage. We do not wish to be understood, however, as approving the extent of credit at this rate of interest. Active precaution on the part of the trustees would have suggested maturing such liability upon the death of Mrs. Slaymaker within the twenty-five years; but, in view of her age and expectancy of life in 1871, we cannot say that the granting of such credit requires a court of equity to declare the sale void, when no prejudice has resulted to the re-maindermen.

We thus reach the conclusion that by E. 0. Eeigart’s will a valid power in trust to sell the lands in question was granted, and that such power has been validly executed, so that the real estate passed to the purchasers, and no title re*314mains in the plaintiffs or other heirs of E. O. Eeigart. Any construction of the will as to their relative proportions thereunder is therefore unnecessary. The question whether or not the $15,000 notes and mortgage given for part of the purchase money have been paid has not been tried, and is not presented by the complaint. A denial of all the relief sought by plaintiffs must result from the conclusions reached.

By the Gourt. — Judgment reversed, and cause remanded, with directions to dismiss the complaint.

Oassoday, O. J., took no part.