Clark v. Wilson

53 Miss. 119

• Court: Mississippi Supreme Court
• Decided: October 15, 1876
• Status: Published

Opinion

Simrall, C. J.,

delivered the opinion of the court.

In 1873, Hugh Clark and wife made a deed conveying a tract of land, personal effects, &c., to W. W. Mangum, in trust to take possession of the property, and sell it on default made by Clark in the payment of his indebtedness to Harrison & McLaren, merchants at Yazoo City.

Some time after this, Harrison & McLaren became insolvent, and were adjudicated to be bankrupts. In conformity to the provisions of the bankrupt law, John T. Jennings and W. M. Ingram were appointed trustees.

In March, 1874, these trustees, by an instrument of writing, appointed John Thompson, in the place of Mangum, to execute the trusts declared in the deed of Clark and wife.

On the 20th of March, 1874, Thompson, after posting notice of the sale on the door of the court house five days anterior to the sale, sold the tract of land described in the trust deed to D. K. Wilson, for $725, and executed to him a deed. After his purchase, Wilson instituted the special proceeding given in the “Act in relation to unlawful and forcible entry and unlawful detainer,” to recover the possession from Clark.

Clark enjoined that suit for sundry reasons : —

1. Because he positively refused to include his land in the trust deed, did not knowingly and understandingly sign such deed, or authorize any person to do so for him.

2. Because he does not believe that he is indebted to Harrison & McLaren.

3. Because the trustees of the bankrupts had no authority to substitute.a trustee in the place of Mangum.

The first question in logical order is as to the power of the trustees of the bankrupts’ estate to appoint a trustee, instead of the one named in the deed.

The clause in Clark’s deed is as follows: “ Should said second party [Mangum] fail from any cause to act herein, then said third parties [the cestuis que trust] may appoint in writing any one else to execute this trust, with every power, title and right, as well as duty, touching the same.”

The proposition advanced by the counsel for the appellants is, that the power conferred on the cestui que trust is personal and confidential, and did not pass by the conveyance of their property and estate as bankrupts to Jennings and Ingram, trustees.

For the appellees, it is contended that the power was incident to the interest of the cestui que trust, and would accompany the transfer of that interest, and vest in the assignee ; and, whether that be true or not, by virtue of the bankrupt law the conveyance therein contemplated from the bankrupts to the trustees carried the power and vested it in them.

It was competent for the grantor, Clark, to confer such power on the trustee as he chose, provided he did not violate the law, and to grant such privileges and rights to his creditors, the cestuis que trust, as he might elect. The deed is the source and the limit of the powers, duties and rights of the trustee and cestuis que trust.

There is no inherent right in the creditor who is secured by a deed in trust to appoint a trustee in the event of death, resignation, or refusal to act. It is because express authority is conferred on the cestui que trust “ to name another trustee ” that such power can be exerted.

Since all the powers are raised by the grantor, his will, as expressed in the deed, is the measure of their extent. If the trustee is authorized to sell, the terms, the time and the manner, as prescribed, must be pursued. If the trustee dies, becomes unable or declines to sell, and no provision is made for a successor, the vacancy can only be filled by the Chancery Court, which never permits the trust to fail because the appointee of the grantor cannot, or will not, execute it.

The law does not supply the cestui que trust with such power. He does not have it, unless he stipulates for it with the grantor. Nor can those who take by succession from him, as the executor or administrator, make an appointment, unless they are expressly authorized by the grantor to do so. Hill on Trustees, 183; 1 Sugden on Powers, 145; Bradford v. Belfield, 2 Sim. 264. When the power is granted, it should designate the person by whom, as well as the event or circumstances upon which, it may be exerted. If a person not named, or distinctly described by his office or character, makes the appointment, or if the circumstances do not warrant the new appointment, or there be serious irregularity in executing the power, in all these cases the acts done by the appointee will be invalid; and the original trustee will not be exonerated or discharged. Hill on Trustees, 189; Guion v. Pickett, 42 Miss. 77.

“ Where a party takes under execution, he takes under authority of the power equally as if the power and the instrument executing the power had been incorporated in one instrument.” Litt. § 169; Co. Litt. 113a; Marlborough v. Godolphin, 2 Ves. 78; Doolittle v. Lewis, 7 Johns. Ch. 45, 48.

It is claimed by counsel for the appellees that these principles do not apply in this case, because the power is appendant to the estate, and not personal, or, as it is termed, “ in gross.” A power is annexed to the estate when the donee has an estate in the land, and the estate to be created by the power is to, or may, take effect in possession, during the continuance of the estate to which it is annexed, as the power to a tenant for life in possession to make leases. A power in gross is where a person to whom is given an estate ; but the estate is not to take effect, under the power, until after the determination of the estate to which it relates. Co. Litt. 298, note by Hargrave & Butler. A power to the mortgagee to sell is an example of the former kind ; being annexed to the estate, it is not personal, or in gross, and would not terminate at the death of the mortgagor. 1 Caines’s Cases in Error, 15. No power is conferred on the assignees of Harrison & McLaren to appoint a trustee. No estate in the land is granted to them. Nor could they, by deed, raise an estate and transfer it to a purchaser. We mean a distinct estate. They could only assign their interest in the land by an assignment of the debt. The security created by the deed of trust inseparably attends the debt as an appendage to it. An assignment of the principal thing carries with it the security as an appendage. There can be no transfer or assignment, by deed or otherwise, of an estate in the land separate from and independent of the debt. These remarks are applicable alike to deeds of trusts and mortgages. They are essentially the same security, differing only in the form.

It has come to be almost the universal doctrine that the mortgagor, or grantor in the deed of trust, is the real owner of the land, and that it is transmissible from him by deed, descent or devise ; and that the interest of the mortgagee is only regarded as real estate so far as the legal title, after condition broken, may be necessary to give him the benefit of his security. Strickland v. Kirk, 51 Miss. 795, 799. The mortgage, or deed in trust, is a burden or charge on the land. It would follow, as a corollary from the principle, that the mortgagee, or cestui que trust, has no interest or estate in the land, except a charge or burden upon it as a security; and that neither can transmit that to another except he passes also the debt. In Jackson v. Bronson, 19 Johns. 325, it was ruled, that there could be no assignment of the mortgagee’s interest in the land without an assignment of the debt. Nor is his interest the subject of attachment or sale under execution. Hutchins v. King, 1 Wall. 53, 58; Southerin v. Mendum, 5 N. H. 420, 425; Strickland v. Kirk, uhi supra. The interest of the mortgagee is a chattel, and is devolved on the holder of the note passed by delivery or indorsement.

But there are differences between the mortgagee and cestui que trust, growing out of the structure of the instruments under which their respective rights accrue, important to be noted in considering this question. The points of agreement are, that both are creditors and have securities for their debts. But the mortgagee, after condition broken, becomes owner of the estate, is invested with the legal title, and may, a,t law, have a certain redress predicated of his legal right. But the cestui que trust in no contingency takes the title that is outstanding in the trustee, to be dealt with as declared by the grantor, to accomplish the trust dependent on it. Ordinarily, the trust is to sell the land, and pay the creditor. In addition to the power of sale, Mangum, in this case, was directed to take possession of the property.

It would follow, therefore, that a power conferred on the cestui que trust cannot, in the nature of things, be a dependency of the title, but must be personal or in gross. It is a confidence reposed in the cestui que trust, which he cannot delegate to another, unless thereto authorized by the donor.

Our conclusion is, that Harrison & McLaren, before their bankruptcy, could not have transferred the debt and the trust security, by deed or otherwise, with all the rights and powers which it conferred on them, so as to have vested in the purchaser from them the power to appoint a new trustee. That right can only be communicated to an assignee of the cestui que trust, where the donor has expressly stipulated that the assignee shall also have the power. In that case, any one who becomes the owner and holder of the debt, and the trust security as its incident, is assignee of the power, and would be authorized by the donor to execute it.

It remains to consider, whether, by operation of the bankrupt law, and the conveyance of the bankrupts pursuant to it, the power could or did vest in the trustees.

The forty-third section of the bankrupt law is to the effect that the bankrupt shall convey, transfer and deliver all the property and estate of the bankrupt to the trustees, who shall hold the same in the same manner and with the same powers in all respects as the bankrupt would have held the same, if no proceedings in bankruptcy had been taken. The purpose oí the conveyance is to place the property and estate in the trustees, so that they, may be administered for the creditors. It has, therefore, been uniformly held, that unless property or estate is beneficially in the bankrupt, so that it may be applied for the creditors, it does not pass; that property, which may be held by the bankrupt purely in trust for another, does not go to the trustee. The trustees take property, or rights or interests in or to property, choses in action, &c., precisely as the bankrupt was owner, or had interest in the same, but only such as may be valuable to or made available for creditors.

Whatever interest Harrison & McLaren owned in the debt of Clark, or in the property pledged as security, vested in the trustees. What were they ?

The supposition must not be indulged that the bankrupt law proposes or intends that the bankrupt shall assign more or greater interests or rights of property, or appendages to it, than he had, or than were capable of assignment. If he was a mortgagee, he complies with the law when he delivers up the evidences of indebtedness; if he is cestui que trust, or creditor protected by the ordinary trust deed, all that he can transfer to the trustees is the note or bond. In each instance the securities, as incidents and appendages of the debt, pass also.

But if the bankrupts were the donees of a power purely in personal trust and confidence, although in aid of a security, such power, not being in its nature assignable, does not vest in the trustees.

If, however, the power had been bestowed on Harrison & McLaren and assigns, the donor, Clark, would then have made it assignable, and it would have been communicated to the trustees by the conveyance of the bankrupts.

But because the trustees of the bankrupts’ estate could not appoint a trustee in the place of Mangum, it by no means follows that they are without remedy. They have succeeded to all the rights of the bankrupts, to the deed of Clark, and the trust security. If they could not execute the trust through the original trustee, they had a plain and adequate remedy in the Chancery Court, either to have another trustee appointed to make the sale, or to have the trust executed by a foreclosure, decree, and sale.

The case of Sargent v. Howe, 21 Ill. 148, cited by counsel for the appellees, supports these views. There the trustee refused to execute the trust at the instance of the assignee of the notes, who brought his plaint in chancery for relief. The reasoning was to show that the court could afford relief. It was to the effect that the assignment of the notes carried the security, to “ the same extent and in the same condition it was held by the payee.” In defining with more particularity what these rights were, it was said “ that the lien, which the payee held in the property, passed by the assignment ; the assignee succeeded to the equitable rights of the assignor in the trust property to the same extent he held it as a security.” Therefore, as the court had ample jurisdiction over trusts and trustees, it could compel the recusant trustee to do his duty or could remove him and appoint another.

Precisely that course was open to the appellees as holders of Clark’s indebtedness. They could have complained to the Chancellor that Mangum would not execute the trust, and, by reason of their equitable interest in the trust property, they could have asked that the court would either remove him and appoint a new trustee, or, through its own master or commissioner, make sale of the property.

The trustees of the bankrupts’ estate assumed to exercise a power which they did not have, in appointing trustees in the stead of Mangum. The sale made by the trustees was invalid and ineffectual to pass the trust property to Wilson, the purchaser, who, therefore, had no right to vex Clark with a suit to recover the possession.

But there was also controversy between the trustees of the bankrupts’ estate and Clark as to the real balance due from him. It is necessary that such balance should be ascertained in order to determine the sum for which the trust property should stand as security.

In'order to determine that question, and conclude finally the litigation between the parties, the decree will be reversed and cause remanded.