In re Peabody

118 F. 266, 55 C.C.A. 360, 1902 U.S. App. LEXIS 4520
CourtCourt of Appeals for the First Circuit
DecidedJuly 29, 1902
DocketNo. 428
StatusPublished

This text of 118 F. 266 (In re Peabody) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Peabody, 118 F. 266, 55 C.C.A. 360, 1902 U.S. App. LEXIS 4520 (1st Cir. 1902).

Opinion

PUTNAM, Circuit Judge.

This case arose out of an adverse proceeding commenced in the district court against Peabody, as trustee in bankruptcy of Mrs. Lillian Davis, to compel a release by him, as such trustee, to. the petitioner, of certain parcels of real estate, the title to which was in the name of the bankrupt. No objection was taken in the district court on the question of jurisdiction, but both parties proceeded to present the merits of the case, and assented to the court taking full control thereof. The decision being against the trustee in bankruptcy, he commenced this proceeding as an original one in the form of a revisory petition under section 24b of the act establishing a uniform system of bankruptcy, approved July 1, 1898. Neither party has questioned the propriety of this proceeding, and both have gone to a hearing on the merits before us without raising any issue of jurisdiction. Consequently, we accept jurisdiction, reserving what we said on that topic in Hutchinson v. Otis (decided by us May 22, 1902) 115 Fed. 937. What we there said is re-enforced by the opinion [267]*267of he circuit court of appeals for the Seventh circuit in Walter Scott & Co. v. Wilson, 115 Fed. 284, where it was held that an adversary proc seding of this character is in the nature of a bill in equity, from whic 1 an appeal can be taken under the provisions of the statute estal lishing this court.

Ti e proponent in the district court was Mrs. Lucinda B. Sullivan, the 1 rother of Mrs. Lillian Davis. It appearing that the children of Mrs. Davis—the grandchildren, therefore, of Mrs; Sullivan—had a possi ble interest in the question, the petition in that court was amended, n .aking them parties. As already said, this prayed that the trustee shou .d release certain parcels of real estate described therein, and the cour: entered a final decree accordingly.

T ie important facts are as follows: Mrs. Sullivan bought the estate in question in May, 1895, and, so far as any payments have been made towards it, they were made by her from her own funds. The purchase war from one Brown. In her conversations with him before the purchr.se she told him she was acquiring the property for her grandchildren, and especially for the purpose of giving them a collegiate education. Such, in fact, was her intention. The grandchildren were then respectively about eight years and four years old. Mrs. Sullivan requested Brown to meet her at the registry of deeds with the deed, where the purchase money was to be paid. Brown, knowing that the grandchildren were children of Mrs. Davis, of his own motion, and without the knowledge of Mrs. Sullivan, had caused the deed to be drawn from himself, as grantor, to Mrs. Davis. When Mrs. Sullivan and Brown met at the registry, she first learned that the deed was made to Mrs. Davis. She then said to Brown that she objected to Mrs. Davis appearing as grantee; that she did not intend that Mrs. Davis should have any interest in the property; and that she was buying it for her grandchildren, and especially for the purpose of giving them an education. She also said that she wished some kind of a “trust deed,” but she had no correct idea what such a deed is. Brown replied that it would cost her something to have the deed drawn over again, and that it would be better to leave it as it was; and it so remained.

Mrs. Sullivan had no conception of the technical meaning of the words “equitable estate,” yet she intended the property for her grandchildren’s benefit in some sense. Nevertheless, a fair construction of the record is’ that she did not intend that they should have an interest which they could assert by law, but that her purpose was to use, in a general way, the property for their benefit, meanwhile reserving to herself the right to control it. The record at one point states that she never intended to take any title, legal or equitable; but this is clearly a slip, and must be rejected.

After the conveyance was made, Mrs. Sullivan took possession of the property, and she has since had the exclusive care and control of it. . She let it to tenants, received the rents, paid all the taxes, $100 towards a new sidewalk, the interest on mortgages resting on the property when she purchased, and portions of the principal thereof, and. generally did all those things which the owners of real estate [268]*268naturally and properly do. She retained the deed in her possession until it was abstracted therefrom by Mrs. Davis, or her husband, without her knowledge. There are other matters which are shown by the record, but all subsequent to the purchase, and of such a kind that,, by all the leading authorities relating to the rules for establishing or defeating alleged resulting trusts, they cannot affect the interests of the parties hereto; and we have no occasion to consider them.

_ There is sufficient in what we have said to overcome those presumptions arising from the fact that Mrs. Davis was the daughter of Mrs. Sullivan, which commonly rebut the existence of the usual resulting trust. In this case, also, we have not only the fact that the purchase-money was paid by Mrs. Sullivan,' but the further fact that she in all respects conducted herself, and was permitted to conduct herself, as the de facto and equitable owner of the property, by retaining possession of it and of its fruits, and its exclusive and absolute control. Thus there applies, not only the presumption of a resulting trust in her favor through her advancing the purchase money, but, also, that presumption arising from the well-settled practice of the equity courts, by the aid of which they apply the rule that what is agreed to be done is held to have been done. Sugd. Vend. (8th Am. Ed.) 270. Indeed, this undisputed possession and control have, according to the rules of equity, under the circumstances, the force of a formal declaration of trust by Mrs. Davis.

This control continued for more than five years,—that is, from the-date of the purchase until the commencement by Mrs. Davis of the-proceedings in bankruptcy in November, 1900; and, so far as the-record shows, it has ever since continued. Under the circumstances, the rules of equity hold this fact of so much weight as to be practically conclusive against the assertion of an interest in Mrs. Davis. These-rules are so well settled as not to require the citation of authorities but the cases will be found grouped in Godef. Trusts (2d Ed.) 180. There is, apparently, a typographical error in the text, which explains-itself, and which is further explained by reference to one of the cases cited,—Murless v. Franklin, 1 Swanst. 13, 19. Of course, the rules-would not apply here if Mrs. Davis were a minor, but, she being of full age, they are of perfect effect. Therefore on this record there is-no doubt that, as a matter of fact, Mrs. Davis never acquired any equitable interest in the property, or that the chancery courts would' have interfered to prevent her controlling it contrary to any purpose of Mrs. Sullivan, or to compel her to release to Mrs. Sullivan on-Mrs. Sullivan’s request, if the bankruptcy had not intervened; and, as-we have several times held, the equitable rights of a trustee in bankruptcy cannot rise higher than those of the bankrupt.

Neither have we any occasion to consider any question of relative rights as between Mrs. Sullivan and her grandchildren. The trustee in bankruptcy has no interest therein, and he is the sole petitioner before us. If the facts raised a proper trust in favor of the grandchildren, there would remain no doubt that the trustee had no interest which he could call upon, us to protect.

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Related

Smithsonian Institution v. Meech
169 U.S. 398 (Supreme Court, 1898)
Foreman v. Burleigh
109 F. 313 (First Circuit, 1901)
Walter Scott & Co. v. Wilson
115 F. 284 (Seventh Circuit, 1902)
Hutchinson v. Otis
115 F. 937 (First Circuit, 1902)

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Bluebook (online)
118 F. 266, 55 C.C.A. 360, 1902 U.S. App. LEXIS 4520, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-peabody-ca1-1902.