Doe ex dem. Gosson v. Ladd

77 Ala. 223

• Court: Supreme Court of Alabama
• Decided: December 15, 1884
• Status: Published

Opinion

OLOPTON, J.

—An assurance, declaring a use, trust, or confidence of land, for the mere benefit of third persons — the trustee being the repository of a naked legal title, having no duties to perform, and subject to no accountability — vests the legal estate in the beneficiary, to the same extent as if the conveyance had been made directly to him. The legal and equitable estates are merged by the operation of the statute of uses, and no estate or interest vests in the trustee.— You v. Flinn, 34 Ala. 409. When a use, or successive uses are declared, which impose active duties on the trustee, in the control, management, or disposition of the trust property, or in other respects, a legal estate, commensurate with the scope and extent of the nses or trusts, is vested in the trustee. The extent and duration of his estate are determined by the object and extent of the trusts upon which the estate, is given. It continues as long as there are any active duties to be performed, or any office in respect to the property to be fulfilled ; but ceases on the cessation of the duties and office. When the purposes of the trusts have been fully accomplished, all having been done necessary to their complete execution, there no longer remains any trust; the estate of the trustee terminates, and the equitable estate of the beneficial owner, if in esse, is converted into a legal estate. — Schaffer v. Lavaretta, 57 Ala. 14; McBrayer v. Cariker, 64 Ala. 50 ; Grinball v. Patton, 70 Ala. 626 ; Yarnell's Appeal, 70 Penn. St. 335.

In 1 Perry on Trusts, § 320, the author observes : “ Where an estate is given to trustees, and their heirs, in trust to pay the income to A. during her life, and at her decease to hold the same for the use of her children, or her heirs, or for the use of other persons named, the trust ceases upon the death of A., for the reason that it remains no longer'an active trust; the statute of uses immediately executes the use in those who are limited to take it after the death of A., and the trustees cease to have anything in the estate, — not because the court has abridged their estate to the extent of the trust, but because, having the fee or legal estate, the statute of uses has executed it in the cestui que trust.” The policy and purpose of the statute are to remedy the evil and inconvenience of a separation of the legal and equitable estates, and to consummate their merger, as soon as such union is practicable, consistently with the intention of the grantor, as expressed in the conveyance.

2. By the deed, Nicholas, the grantor, covenanted to stand seized of real and personal property for uses and purposes as follows: The payment of all debts and liabilities then owed by 'him ; the joint use of himself and his wife, dui’ing their joint lives; one undivided half to be at all times at his sole disposal; and in the event of the death of his wife, one half of what shall then remain to be divided in manner following : specified sums of money and slaves to be retained and held by him in trust for designated individuals, and the residuum of the one half, or its proceeds, to be divided equally between three named children of his wife; the interest or use thereof only to appertain to them during their lives, and at their deaths to be divided between their several children who shall be then living. As to one half of the estate, the legal title and sole use were retained and reserved by the grantor, and the primary use of the whole was vested in him for the purpose of paying his debts and liabilities. After this was effected, other active duties were imposed on the trustee, which continued during the lives of the children, who had an equitable life-estate. The corpus of the estate remained vested in the trustee, the life-tenants being entitled only to the interest or use. But the active duties of the trustee continued only during the life-estates. When they fell, the trust fell with them. The trustee had no right or power to hold for the use of the remainder-men. As to them, he had no duties to perform, and no office to fulfill, — -not even to convey. They were in by virtue of the deed.

It is insisted, that the statute can not operate until the death of all the life-tenants, and that one of them is still living. This is untenable. The deed contemplates and provides for a division between the life-tenants at the death of their mother, and after payment of'his debts, so that each should take a separate portion ; and must be construed as if its provisions had been complied with. A failure in this respect can not change the legal effect of the deed. The wife of the grantor having died soon after the execution of the conveyance, on the death of two of the life-tenants, the legal estate in their several portions was vested in their respective children who were living, if nothing has occurred to cut off the remainder. The remainder-men were then ascertained, and the preservation of the trust was not necessary for this purpose.

3. The grantor, after the death of his wife, repudiated the trust, and asserted a hostile holding. Thereupon, the life-tenants brought their bill in the Chancery Court, to establish the trust deed, to remove him from the trusteeship, and to have a successor appointed. In the progress of the suit, a decree was made removing the grantor, and appointing a new trustee, with all the powers conferred by the deed, and with power to dispose of the property as the deed provides. A court of equity, though having jurisdiction to remove old, and appoint new trustees, can not confer on its appointees powers merely discretionary, or powers resting on personal trust and confidence, unless the deed creating the trusts confers them on the acting trustee, or they attach to the office; but the court may invest its appointees with all the powers requisite for the discharge of the duties of the trust. — Hill on Trusts, 316. Among the powers conferred by the deed is the following : “And the said John P. Nicholas shall at all times have the sole and absolute right to sell and dispose of the estate hereby conveyed to the uses aforesaid, and on giving adequate security to i/nvest the proceeds according to the terms of this deedJ <

4. A power is discretionary, when it is not imperative; or, if imperative, when the time, or manner, or extent of its execution is left to the discretion of the donee. Generally, the courts will not compel the execution of discretionary powers, nor review the discretion, when exercised in good faith. The nature and character of the uses created by the deed were such as to render the necessity of a sale probable, either for the payment of the debts of the grantor, or for a division, on the death of his wife, in the manner provided by the deed. Two thousand dollars in money, and specified personal property, were to be retained, in trust for certain beneficiaries, and the remainder of the estate, or its proceeds” were to be equally divided between the life-tenants. To realize this money, or to make an equitable division of the residuum, a sale of the corpus of the estate might become necessary. If necessary for either purpose, a court of equity would compel the exercise of the power, on the refusal of the trustee to sell, or direct a sale. The uses created are imperative; and a power of sale conferred for the execution of the uses, where its exercise becomes necessary to their consummation, is equally imperative. It is appendant to, and an integral part of the trust. Perry says: “ At the present day, a trnst, that is, a power imperative, whether a bare power or a power coupled with an interest, would equally be carried-into execution in courts of equity; for the maxim now is, that ‘the trust or power imperative is the estate.’ And it is well settled, that even in trusts reposed in trustees by name, the survivor, if he takes the estate with a duty annexed to it, can execute the power; and the rule of survivorship now applies not only to trusts, or powers imperative, which are construed as trusts, but also to such discretionary powers as are annexed to the office of trustee, and are intended to form an integral part of it.” — 2 Perry on Trusts, § 505. A power which survives by devolution of law, a, court of equity may confer on new trustees.

' 5. It Mull be observed that the power of sale is not conferred upon a third person, but on the grantor himself, which has some significance in determining its character. The terms, “ the sole and absolute right,” were meant to exclude any inference of the right of the cestuis gue trust, or any of them, to interfere, or direct, or control in any manner. If they are construed to intend that no other persoip under any circumstances, shall have the power, and that it can not devolve on a succeeding trustee, in case of his death, resignation or removal; the prohibition would extend equally to the power “ to dispose of” the estate in any manner; for “the sole and absolute right at all times” applies to the power to “ dispose of,” as well as the power to sell. The uses might be thereby embarrassingly obstructed, if not defeated. The power is qualified and explained by the words “ to the uses aforesaid;” that is, the right to sell is conferred for the purpose of discharging and executing the uses created by the deed. No discretion or judgment is authorized as to the manner of investing the proceeds. They are to be invested according to the terms of the deed, and to make this sure, adequate security is required. The idea of personal trust and confidence is excluded. It rather seems that the grantor, of course not doubting his own honesty, intended, by the requisition of precedent adequate security, to guard and protect the estate in the possession and under the control of a succeeding trustee, if there should be one. The power of sale does not repose on personal trust and confidence. Although conferred by name, it is annexed to the office of trustee.

6. The defendants claim under a sale and conveyance made by Guerringer, the substituted trustee, in January, 1852. It is insisted, that the sale and conveyance were not made in the execution of the power, and are not referable to it. The intention to execute a power, it is said, must be manifest, either expressly or by clear implication, but need not appear by express reference to the power. In Blagge v. Miles (1 Story, 426), Judge Story says: “ Three classes of cases have been held to be sufficient demonstrations of an intended execution of a power: (1.) Where there has been some reference in the will or other instrument to the power; (2.) Or a reference to the property, which is the subject on which it is to be executed ; (3.) Or where the provision in the will or other instrument, executed by the donee of the power, would otherwise be ineffectual, or a mere nullity; in other words, it ■would have no operation, except as an execution of the power.” The transaction must not be reasonably susceptible of any other interpretation, than as an intended execution of the power.

7. The deed is not before us, and we have no means of ascertaining whether it does ór does not contain an express reference to the power. It. may be that we would, if necessary to sustain the rulings of the primary court, presume that it contained such reference. The record shows that the deed is in reference to the property, which is the subject on which the power is to be executed, and was executed by Guerringer individually and as trustee, and by the life-tenants. The half interest reserved by the grantor was sold in 1844 under execution, and purchased by the persons under whom the defendants claim. ■The same half interest was subsequently sold in 1847, by the register, under the decree o’f the Chancery Court, and purchased by the trustee, Guerringer, for the benefit of the trust estate. The sale was confirmed to him as trustee, but the deed by the register was made to him individually. Hence, due caution and protection required a deed from him, as an individual, and as trustee. As trustee, the deed is inoperative, except as an execution of the power. If not intended as an execution, why was it made by Gnerringer as trustee, and why did the life-tenants join in its execution ?

When the bill was filed by the life-tenants, to establish the trust deed, aud appoint a new trustee, the event had occurred, on the happening of which the deed required a division to be made. A controversy arose between the purchasers at the sheriff’s salé, and the new trustee, as to the title and possession of the realty, which continued until a compromise was effected in 1852. It is contended that the sale and conveyance were made in the consummation of this compromise. Concede it. There is no charge of fraud, or collusion, or bad faith in the matter of the compromise, and it was recognized by the Chancery Court, which at that time had jurisdiction of the trust property. Under these circumstances, it must be presumed that the settlement of the pending and protracted litigation subserved the interests of the trust estate, and of the oestuis qxie trust. If a compromise of the controversy was necessary, to enable the trustee to discharge his duties, and to execute the uses, and a sale was necessary for this purpose, this is a circumstance, — an act, — showing an intention to execute the power.

8. The record recites, that the conveyance is sufficient in law to pass the estate and title of the grantors therein. The estate and title of Guerringer were what he acquired by virtue of the register’s sale, and under the original deed by reason of his substitution as trustee. The conveyance by him was made in January, 1852. More than thirty years elapsed after the. making of the conveyance, before the commencement of this suit; during all which time, the defendants and those under whom they claimed have been in open, notorious, and adverse possession, claiming title. The period of time had expired, after which it is the policy of the law to quiet past transactions, and when the courts will indulge for this purpose all reasonable presumptions. After such a lapse of time, and such uninter-* rupted possession, it is permissible to invoke the rule of presumption in favor of a due execution of the power of sale, and of the regularity and validity of a conveyance, sufficient in law to pass the estate and title of the grantor — Matthews v. McDade, 72 Ala. 377.

On the case made by the record, the remainder was cut off, and the legal title did not vest in the plaintiffs.

Affirmed.