[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 334
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 335 Whether, during the life of Joseph Fellows, the original owner of the property in question, the plaintiff was possessed of an estate in the property conveyed by the deed of the 10th of October, 1868, entitling him to the possession, or whether that instrument conferred upon him a mere power in trust, is not material to be considered upon this occasion. If a trust was created by the instrument referred to and the estate vested in the plaintiff as trustee, it was a trust for leasing the lands and paying over the rents to Fellows, the creator of the trust, during his life, and terminated at his death, before the commencement of this action.
With the termination of the trust the estate of the trustee ceased. That the deed or instrument under which the plaintiff *Page 338 claims title is very inartificially drawn and ambiguous in its terms, leaving much to be spelled out as to the actual purpose of the transaction and the intent of the parties is very obvious. The instrument has been frequently before the courts for interpretation, and there has been a wide diversity of opinion as to its true interpretation and effect. Some judges have held that by it a valid trust was created for the leasing of lands during the life of Mr. Fellows. Others have held that a mere power in trust was created in the plaintiff for the purposes mentioned in the deed, while others have been of the opinion that the instrument was but a warrant of attorney from Fellows to the plaintiff, revocable at the pleasure of the former.
If it should be conceded, for all the purposes of this action, that the plaintiff became seized under the deed of an estate in the lands in trust for leasing with the power of sale, there would still be a grave question whether he could recover of the defendant in the action. During the life of Fellows, the original owner of the property and the author of the trust, he was the sole cestui que trust entitled to receive to his own use all receipts from sales; and those entitled under the deed, after his death, had and could claim no interest in that part of the trust property which during the life of Fellows should be converted into money. The plaintiff, if trustee, had no discretion as to the time of sale, but was bound to sell within a reasonable time, for the best price that could be obtained. He could not, to the prejudice of the cestui que trust for life, defer a sale with a view to a prospective rise in value, or to benefit those who should become entitled after the death of the life tenant. The direction of the deed is to sell the lands, "by retail, for the best price that can be got for the same;" that is, the best price that could then be had for the same. The deed looked to a conversion into money as soon as sales could be made and during the life of Fellows, so far as practicable. The author of the trust deemed himself entitled to and entirely competent to care for and dispose of the proceeds of the sales that should be *Page 339 realized during his life; and the provision for those who should come after him was only in respect to the lands that should remain unsold and the fruits of sales not realized at the time of his death.
It was not intended, and a court of equity will not allow a trustee of such a trust or of any trust, by postponing or accelerating a sale, to affect the interests of successivecestuis que trust. By so doing a trustee could, by fraud or collusion, defeat the intention of the trust and deprive the rightful owner of his just rights. (Hawkins v. Chappel, 1 Atkyns, 621; Walker v. Shore, 19 Ves., 387.) Fellows, the author of the trust, who was also the cestui que trust for life, entitled to have sales made when they could be made at the best price and within reasonable time, lived four and a-half years after the execution of the deed, and could, during that time, have compelled an execution of the trust by a sale of the lands, or such of them as could be sold. Instead of resorting to a court of equity to put the trustee in motion, he made sale of the locus in quo to the defendant Robertson, and, so far as appears, for the best price to be obtained, and received the avails, to which he would have been entitled had the sale been made in form by the plaintiff and the money received by him. Had Fellows found a purchaser for a proper price, he could have compelled the plaintiff to sell and pay to him the proceeds. The same result has been accomplished, and Fellows has received that to which he was entitled; and the defendant Robertson is, in equity, entitled to hold the premises as against the plaintiff, who, at most, during the life of Fellows, was a trustee invested with power to sell for his benefit and pay the proceeds to him; so that an equitable defence to the action is made out.
It is true that the interest of Fellows in the property during his life, and the fact that he was entitled to and could have compelled a sale of the property and every part thereof for his benefit during his life if proper prices could have been obtained for the same, is not entirely consistent with the idea that there was a valid trust for a leasing of the premises *Page 340 during his life. Such a trust would seem to imply, if not inalienability of the lands held in trust, at least, that upon any sale or transfer of the property, the proceeds, or avails, should be held upon a like trust, and the income only paid to the life tenant. This, however, we do not pass upon.
Were it necessary to decide the question, I should have great difficulty in finding an express trust declared for any of the purposes for which by law such trusts may be created. The only purpose recognized by the statute of uses and trusts, of which there is the least intimation in the instrument, has respect to the rents and profits of the lands and their receipt and application to the use of Mr. Fellows, the owner of the lands, during his life. An express trust may be created for such purpose, but for no other purpose, included within the powers conferred upon the plaintiff. (1 R.S., 728, § 55.)
The main purpose of the instrument was to relieve its author from the burthen of managing the portion of his estate embraced within its terms, and create an agency for that purpose, and it was during the life of Fellows, in substance and effect, but an agency for the sale of the real property mentioned and the collection of the debts owing to Fellows for lands then under contract of sale, and for the payment of all the avails and proceeds to Fellows, the owner, who never parted with his property in or his rights to the income of, or the avails of the sales of any part of the property. The whole purpose of the instrument might have been accomplished during the life of Fellows, by a sale of the property and the payment of the proceeds to him. In that event those coming after him would have taken no benefit under it. The authority to covenant in respect to the title in behalf of Fellows and his heirs was a simple warrant of attorney for that purpose, and the power under it terminated with the life of Fellows; so that it is difficult to assign a place to the instrument, either as a conveyance or a warrant of attorney, or as creating a power in trust. The sale of the lands was the principal object of the transaction and of the agency, and for that purpose a trust could not be created. How much or how *Page 341 little of the property was productive or could be made productive by way of rent does not appear; probably but a small portion could be rented, and the renting of that was subsidiary and secondary to the main purpose of the deed. The authority to rent did not embrace all the lands mentioned, but only such as could be rented and occupied by a tenant, i.e., such as in the usual course of things would be regarded as the proper subjects of a demise, and for such short terms as should not interfere with the more important purpose, the sale of the lands.
This power to lease and to collect and pay over the rents could be exercised under a naked power of attorney or a power in trust, and under the same authority by which the sales should be made. There was certainly no trust created in respect to lands which were not the proper subjects of renting, and so far as the estate and interest of the parties to the deed are concerned, the instrument cannot properly be held to have created an express and active trust, vesting the title and possession in the trustee of a portion of the premises, and to have simply conferred upon him either a naked power or a power in trust as to other lands, all included in the same general terms. This would be to establish a trust not as created in terms by the instrument, but by proof of extrinsic facts which would have authorized the creation of an express trust. But without definitely passing upon this question, which is not involved in this action, and upon the decision of which the rights of other parties not before the court may depend, we pass to the consideration of the question whether a trust was created to come into existence at the death of Fellows.
The deed or instrument, while it provided for the management of the estate by the plaintiff for the exclusive benefit of Fellows, the owner, during his life, sought to provide for the disposition and distribution of it after his death, which should take the place of, and serve as substitute for a testamentary disposition. It declares that after the decease of Fellows, and after the payment of all his just and legal debts *Page 342 and the expenses of the trust, the residue should be distributed in the manner and to the persons especially mentioned. It is urged that by this clause an express trust was created and existed from the death of Mr. Fellows, to sell lands for the benefit of creditors, which is one of the purposes for which an express trust may be created. (1 R.S., 728, § 55.) The reason for retaining this trust among the few express trusts allowed by statute is obvious. The intention was to legalize a trust under an assignment for the benefit of creditors, which would in most cases be entirely defeated, if the title were to remain in the debtor; and there is an evident distinction between a trust to sell, created by deed and to be operative during the life of the grantor, and a similar trust created by devise or by deed to take effect at the death of the grantor. In the former case there is a necessity that the estate should pass, but in the latter no such necessity exists. By construing the trust as a power the interests of all are as effectually secured as if the legal estate passed to the trustees. On the death of the grantor or testator the power attaches immediately on the land, and nothing can be done to defeat its execution. The object of the revisors in the radical changes effected in the law of uses and trusts was to limit and restrict express trusts to cases in which it was necessary, for the protection of those interested, that the title or possession should vest in the trustees. Where no such necessity existed, the intent was that the trust should be executed as a power, and without vesting the legal title or possession in the trustees. (Revisers' Notes, 5 Stat. at Large, 322 et seq.)
There is no express trust created for the sale of lands for the payment of debts by the instrument under consideration. If one is established, it must be by interpretation of the doubtful phraseology of a crude and imperfect document, and without necessity for its existence, and when all could be accomplished under a power. The power to sell may exist with authority to pay debts from the avails, but if an express trust exists it is not the direct creature of the instrument itself, but it must be judicially established upon proof of the *Page 343 existence of debts for the payment of which a trust might have been created. Constructive and implied trusts are not abolished. They may be implied or presumed from the supposed intention of the parties and the nature of the transaction, or they may be raised independently of any such intention, and forced on the conscience of a trustee when necessary to prevent a fraud. But an intent to create an express trust will not be presumed in the absence of an express declaration to that effect when the whole purpose of the deed, without peril to the rights of any person, can be accomplished under a power conferred by the deed.
There is not even an express direction to the plaintiff to pay the debts of Fellows, still less does he take title subject to their payment; nor are they charged upon the property which is the subject of the power delegated to the plaintiff. The instrument does not profess to dispose of all the property of Fellows, and does not put at the control of the plaintiff the large amounts received to his use and paid to him during the five years of the continuance of the power before his death.
The clause, "and after the payment of all my just and legal debts," preceding the directions for distribution of the residue of the property included within the power, comes far short of making that property the primary fund for the payment of the debts, or directing their payment from it. It is at the most but an intimation and direction that the disposition of his property then made shall not interfere with the just claims of creditors, whether their debts were created before or after the execution of the instrument. It did not work any change in the order in which his property should be appropriated to the payment of his debts as prescribed by law. The personal representatives of Mr. Fellows will be charged, and notwithstanding the execution of this instrument are charged, with the payment of his debts from personal assets in their hands. Personal estate is to be first exhausted in the discharge of debts, including at common law the payment of debts with which the real estate is *Page 344 charged by mortgage. By statute, in this State, heirs and devisees are required to satisfy mortgages upon property devised or descending to them. (1 R.S., 749, § 4.) The order of marshaling assets for the payment of debts is to apply, first, the general personal estate; second, estates specifically devised for the payment of debts; third, estates descended; fourth, estates devised, though generally charged with the payment of debts. (2 Williams on Ex., 1526, note 2; Livingston v.Newkirk, 3 J.C.R., 312; 4 Kent's Commentaries, 420.) In order to effect a change in the order there must be some absolute and positive direction, clearly indicating an intent to relieve the class of assets primarily liable, and to charge some other portion of the estate in exoneration of the funds and property primarily liable. A mere direction to an executor to sell real estate does not make the proceeds necessarily liable as personal assets; but they will be only applicable to the payment of debts when the assets personal in their character shall have been exhausted.
Heirs and devisees (and the donees under this power may be regarded as occupying the same position) can only be charged in respect to lands coming to them, or the lands themselves charged with the payment of debts, upon proof that there are no assets, personal or otherwise, applicable in the first instance to their payment. (2 R.S., 450 et seq.; Schermerhorn v. Barhydt, 9 Paige, 28.) A general direction in a will for the payment of the testator's just debts, is not the express direction which the statute requires to change the statutory order of marshaling the assets of a testator; and the construction and effect of such a direction must be the same whether found in a will, deed or other instrument. (Rapalye v. Rapalye, 27 Barb., 610; Kinnier v.Rogers, 42 N.Y., 531; Skinner v. Quin, 43 id., 99.) In the case last cited, R., by will, after the payment of all his lawful debts, gave to his executor all his estate, real and personal, upon certain trusts, with a devise over of all the rest and residue of his estate to his wife, with authority to his executor to sell and convey his real estate after the death of his *Page 345 mother, and pay over the proceeds to his wife. This court held that the power to sell was valid as a power in trust and not as an express trust. Galton v. Hancock (2 Atk., 424, 430) was twice argued, and upon the second argument Lord HARDWICKE, after holding the case for twelve months under advisement, reversed the decision which he had first made. The question was whether the devisee of an estate incumbered by a mortgage was entitled to have the estate exonerated out of the real assets which descended upon the heirs, and upon the second argument it was held she was, notwithstanding the testator in his will set out with the desire that all his debts should be paid in the first place, and concluded with a general residuary devise to the defendant, who asserted the claim that the mortgage debt should be satisfied from the assets which went to the heir. It was claimed there, as here, that the introductory clause directing the payment of debts was sufficient to charge the incumbrance upon the estate devised, and that the devisee took it cum onere. But this claim was disallowed, and the rule established in equity for the marshaling of assets was applied.
The property itself, the subject of the power to the plaintiff, not being charged with the payment of the debts except as all the property of the deceased debtor is charged in its equitable order, and there being no conveyance of the property to the plaintiff, subject to the payment of the debts so as to charge him as a grantee cum onere, an intent to create a trust for the payment of the debts from this particular property cannot be implied. Had there been a trust created for the payment of debts the trust fund would by such act have been made the primary fund for that purpose, and to raise such a trust by implication or by judicial interpretations would be to change the order in the marshaling of assets, without and against the sanction of the party who alone can change the equitable rule on that subject, and transfer the charge from one class of property to another. This was not a grant of property to pay debts, but at most a grant of an estate which might, if there should be a deficiency of other *Page 346 assets, be charged with their payment. Whether there was a valid power in trust created in the plaintiff by the instrument under consideration, it is not necessary to determine, for such a power would not give the plaintiff a title to or right of possession of the property, but the same would go to the heir or other party entitled, subject to this power. It is sufficient for all the purposes of this action that at the time of its commencement the plaintiff was not, as the trustee of an express trust, entitled to the possession of the premises.
The judgment should be affirmed.