Barnes v. Dow

59 Vt. 530

• Court: Supreme Court of Vermont
• Decided: February 15, 1887
• Status: Published

Opinion

The opinion of the court was delivered by

Veazey, J.

It seems plain, from the language of the will as a whole, that it was the intention of the testator to provide a life support for his sister Hannah out of his estate, and to secure it by a devise of his estate in trust to his executor; and then to give the remainder to his nephew, Lewis A. Dow. The language is awkward, but the meaning clear. 'The devise to Dow and to the executor would be inconsistent but for the exception in behalf of Hannah in the devise to Dow, followed by the direct gift to Hannah in the' same paragraph. It created an active trust in the executor for special use, viz., the' support of Hannah during her life, and that was to be the end of the trust. The provision is: “Í give to Hannah Barnes, my sister, her support during her natural lifetime out of my estate.” There was .no limitation to income. It was a gift of support. The gift to Dow was the estate, except this support. There was nothing for him except what was left after the support. . The trust in the meantime was not to him, but to the . executor. The legal title pending the trust could not be in both. Unless it was in the executor as trustee, there was no trust; yet the form of the gift to Hannah necessitated a trust. We think the language of the will imports an unmistakable intention of a permanent and indefeasible provision for a life support of Hannah out of the estate. This intention could not be carried out without upholding the clause which put the legal title in the executor in trust. Dow therefore could make nó conveyance to affect the title until the trust terminated. The object of the gift to Hannah was such as to exclude the idea of alienation on her part. A life support must be as lasting and continuing as life. It was in amount, indefinite and indeterminate. Hodges does not stand as an innocent- purchaser, as he had notice of the trust.

This case, as we construe this will, comes within a recognized and settled exception to the general rule that the law does not allow property, whether legal or equitable, to bo fettered by restraints upon alienation. The rule constituting the exception is thus formulated by Perry in his work on Trusts : ‘! But a trust may be so created that no interest vests in the cestui que trust; consequently,.such interest cannot be alienated, as where property is given to trustees to be applied in their discretion to the use of a third person, no interest goes to the third person until the trustees have exercised this discretion. So if property is given to trustees to be applied by them to the support of the cestui que .trust and his family, or to be paid over to the cestui que trust for the support of himself and the education and maintenance of his children. In short, if a trust is created for a- specific purpose, and is so limited that it is not repugnant to the rule against perpetuities, and is in other respects legal, neither the trustees, nor the cestui que trust, nor his creditors or assignees, can divert the property from the appointed purpose. Any conveyance, whether by the operation of law or by the act of any of the parties, which disappoints the purposes of the settlor by diverting the property or the income from the purposes named, would be a breach of the trust. Thei’efoi’e, it may be said that the power to ci’eate a trust for a specified purpose does, in some sort, impair the power to alienate property.” Perry, vol. 1, s. 386a, (2d ed.) See cases cited in note 3, and in the brief of the trustee on this point. Sharswood, J., in Rife v. Geyer, 59 Penn. St. 396, says: “Wherever it is necessary for the accoixiplishment of any object of the creator of the trust that the legal estate should remain in the trustee, then the trust is a special active one ; ” and it was there held that “ a benefactor has the power by means of a trust to restrict his bounty so that it shall not be liable to the debts, control or engagements of the beneficiaiy, A trust of this nature is of necessity an active trust, requiring the legal title to be vested in the trustee.”

If it appears from the will that it was the intent of the testator that the beneficiary should have nothing. that she could dispose of, it will be as effectual to protect the trust as if there was an express clause against alienation. Keyser v. Mitchell, 67 Penn. 473; Perkins v. Hays, 3 Gray, 405.

Neither can a creditor of a beneficiary, standing as Hannah Barnes does in this case, reach his or her interest. Van Amee v. Jackson and Ketcham, 35 Vt. 173; and see cases cited in trustee’s brief.

The defendant Hodges is in no situation to invoke (he doctrine of subrogation, as he was simply a volunteer and without any special agreement binding upon the trustee and beneficiary so faras related to the property. Bank v. Cushing, 53 Vt. 321.

The question is not what would be equitable as between the beneficiary and the mortgagee, but as to the right of the beneficiary to alienate the property so as thereby to defeat the trust. This trust could be defeated only by a sale by the trustee to a purchaser without notice of the trust, and this would impose a personal liability on the trustee. The settlor impressed upon his own property a trust quality for a purpose legal, commendable, and without wrong to any one, and died. His death closed the door to any such invasion of his purpose, as this case shows was attempted.

As an attempt to convey the property by the beneficiary to a party with notice of the trust, the transaction must fail, and it can stand only as against Dow and his interest.

But the debts against the Barnes estate were prior to any right of the legatees, and wore chargeable against the estate; therefore, in so far as the money borrowed of Hodges went to pay the debts which Morse, as executor, was bound to pay, it would be just that Hodges should be reimbursed. This money was borrowed by Dow at the instance of Morse and with the assent of Hannah Barnes, to be applied in payment of debts, and was loaned by Hodges for this purpose, all parties apparently acting in good faith, and the money was to large extent thus appropriated. As the estate got the benefit of the money in part in the discharge of the trust by Morse, and without detriment in any respect, it should be returned to the lender to the extent that it relieved the .estate. The estate should not be enhanced at the expense of Hodges who acted in good faith. By returning the money to Hodges to the extent that it benefited the estate by going into the hands of the executor, and being used and accounted for by him, or being used by Dow with his assent in behalf of the estate, the trust.is not depleted, and the estate is left as it would have been if the money had not been borrowed. By this the beneficial purpose of the settlor will not be defeated, and no wrong done to any one,

The balance of the $900 borrowed was used by Dow. He claims it also went to the benefit of the estate, but we do not think this so clearly appears as to warrant making it a charge against the estate.

Another subject of contention before the master and here was in reference to the correctness of Morse’s account as executor of Barnes’ estate. Morse had died and Gilford was the administrator of his estate, and presented Morse’s account as executor before the master. Dow was improved as a witness in his own behalf and in behalf of Wilson’s trustee. Gilford seasonably objected to Dow’s testifying to anything that transpired before the decease of Morse. The objection was overruled, and Dow was allowed to testify that he paid certain items of charge against the Barnes estate in Morse’s administration account, in pursuance of an arrangement to that elfect Avith Morse; to which Gilford excepted.

Our statutes first provide that interest shall not disqualify a witness ; then that where 4 ‘ one of the original parties to the contract or cause of action in issue and on trial is dead, * * * the other party shall not be admitted to testify in his oavh favor, except,” etc.; also “ when an executor or administrator is a party, the other party shall not be permitted to testify in his own favor, unless,” etc., ss. 1001-2-3, R. L.

It is insisted that the testimony of Dow was not upon a contract or cause of action in issue and on trial, but was upon a collateral question ; therefore, Dow was a competent witness.

The general question in issue and on trial in this branch of the case was this : What items in Morse’s account as executor should be allowed ? It was a contention primarily between the two estates, but Dow had come into it as a party, and was interested in the result. Dow testified that certain items of charge for cash paid on claims allowed against the Barnes estate were paid by him, and this was offered for the purpose of haring them disallowed. If Morse paid them they should stand. If Dow paid them they should be cut out.. Morse was dead. If the question Ayas collateral, then Dow was a competent witness, as repeatedly decided in this State.

It has been held that the words, contract in issue, as used in the statute, mean the same as contract in dispute or in question, and relate as Avell to the substantial issues made by the ' evidence as'to the mere formal issues made by the pleadings. Hollister v. Young, 42 Vt. 403; Pember v. Congdon, 55 Vt. 58. It was undoubtedly the intention of the statute, after the disqualification of interest Avas removed, to preserve equality in evidence between parties to contracts, so that Avhen controversies arose over them in court the representatives of a deceased party Avould stand on the same footing with the survivor. So it was hold in Ins. Co. v. Wells, 53 Vt. 14, that the maker of a note could not testify to a payment to the payee Avliile he Avas alive, though the latter had transferred the note before his decease to the plaintiff; and Hollister v. Young, 41 Vt. 156, was cited, Avhorein it was held that the assignee of a contract or cause of action, made or existing between the defendant and the deceased party, is entitled to stand upon that proviso of the statute against testimony of the surviving defendant, even though the estate or heirs of the deceased had no interest in the subject-matter of the suit. It has been repeatedly held in Missouri, and lately in Meier v. Thieman, 7 Western Reporter, 141, that the words "the other party refer, and can only refer, to' the other party to the original contract or cause of action, and not necessarily to the party to the record. Sherwood, J., there says : “ Whether party to the record or not, makes no difference as to the statutory incompetency of the witness ; he is prohibited from testifying in his own favor in any case whatsoever where the other original party to the contract or cause of action in issue and on trial is dead. The letter of the statute makes no distinction as to the status of the witness on the record; the rule of his exclusion is as broad as the contract or cause of action in issue and on trial, and his testimony in his own favor. And the reason, policy, and spirit of the rule keep pace with its letter.” On this point Wharton tersely says : ‘ ‘ The reason of this exception is, that where there is no mutuality there should not be admissibility; i. e., when the lips of one party to a contract are closed by death, then the other party should not be heard as a witness. * * * Much, however, as the statutes may differ in words, they are the same in purpose. That purpose is to provide that when one of the parties to á litigated obligation is silenced by death, the others shall be silenced by law.” 1 Whart. Ev. s. 466.

Although this doctrine may not yet have been reached in our decisions, its justice and logic would seem to compel its ultimate adoption. But in this case all embarrassment on this point is obviated by the fact that Dow is a party to the record.

Dow not only testified to paying these items, but also to his arrangement with Morse that he should pay them. His testimony was : “He, Morse, told me if there were any claims I could pay them, and take a receipt for them; it would save the expense of his going around.” The evidence made a substantial issue between Dow and the Morse estate. There was no issue over the validity of the items. The question was as to whether Morse had paid them. The defence was that he had arranged with Dow to pay them, and that the latter had paid accordingly.

We think the cause of action in issue and on trial as it took shape as to these items was one in substance between Morse’s estate and Dow, and that Dow was incompetent as a witness in his own favor.

That the master properly excluded the entries on Morse’s book showing memoranda in his own favor, is settled by numerous decisions. Godding v. Orcutt, 44 Vt. 54; Lapham v. Kelly, 35 Vt. 195.

The objection to the court inquiring into the matter of Morse’s account owing to the pendency of the appeal in the County Court from the allowance of the Probate Court, is not well taken. No question is made but that the consideration of this account is raised by the pleadings. No claim is urged that the settlement of the Morse account in his lifetime is conclusive. The only objection alleged is the pendency of the same matter on appeal in the County Court. The appeal vacated the allowance of the Probate Court. Probate Court v. Gleed, 35 Vt. 24.

The mere pendency of an action in one court is not in all cases a bar to another action for the same cause between the same parties in another court. Stanton v. Embrey, 93 U. S. 548; Ins. Co. v. Brune’s Assignee, 96 U. S. 588; Gordon v. Gilfoil, 99 U. S. 168. Many other cases could be added.

The Court of Chancery had jurisdiction of this cause not on account of this feature of it, but on other grounds; and this feature is a mere incident, but necessary to be settled in order to a final relief between all the parties to the cause. Therefore, although the Court of Chancery does not interfere in the settlement of estates, as that pertains to the Probate Court, except in aid of that court; yet the case seems to come within the general rule that whore a party is obliged to resort to chancery for one purpose that court will retain and dispose of the whole matter, although in some of its aspects a legal remedy exists. If there bo doubt as to whether that rule is applicable on the ground that the general limitation of the rule is to cases brought purely for discovery in first instance, we think it is cured here by the fact that Gifford in his cross-bill prays for an accounting and for general relief. Having invoked the aid of chancery, he should not be heard to deny the jurisdiction. The objection was not raised by plea, but came as a suggestion in argument.

There is another rule tending to support the jurisdiction that where an account has equitable trusts attached to it, there is clear ground for equitable jurisdiction. Story Eq. Jur. s. 454.

Morse was trustee under the will as well as executor, and his account covers both aspects of his administration, although in name it stands as his account as executor.

Decree reversed, and cause remanded with mandate.