Patrick v. . Beatty

163 S.E. 572, 202 N.C. 454, 1932 N.C. LEXIS 134
CourtSupreme Court of North Carolina
DecidedMarch 30, 1932
StatusPublished
Cited by21 cases

This text of 163 S.E. 572 (Patrick v. . Beatty) is published on Counsel Stack Legal Research, covering Supreme Court of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Patrick v. . Beatty, 163 S.E. 572, 202 N.C. 454, 1932 N.C. LEXIS 134 (N.C. 1932).

Opinion

Adams, J.

The controversy between the parties originates in their diverse constructions of the second and seventh items of the will. The plaintiff says that upon the death of the devisor, the trustee, Yennie Beatty, acquired the title and the right of possession to a one-third undivided interest in the devised real property for the benefit of Paul 0. Beatty; that Paul C. Beatty is the equitable owner; and that the plaintiff has succeeded to his title as his trustee in bankruptcy. Yennie Beatty takes substantially the same positioii but insists that the right of division and possession must await the majority of Jennings Beatty, while Jennings contends that he has a present right to call for a division of the property. The trustees of the First Wesleyan Methodist Church claim a present right to demand partition. Paul 0. Beatty insists that the equitable title and right of possession do not vest in him until Jennings Beatty attains his majority and that his trustee in bankruptcy has no right or title to his interest.

The trustee of the estate of a bankrupt is vested by operation of law with the title of the bankrupt to . . . property which prior to the filing of the petition he could 'by any means have transferred or which might have been levied upon and sold under judicial process against him. 9 Remington on Bankruptcy, 852, sec. 70; 11 U. S. C. A., see. 110. As the clause is disjunctive we may first inquire whether the bankrupt’s interest in the devised land is subject to sale under such judicial process.

Prior to the act of 1812 no equity could be sold under execution. The first section of this act empowered the sheriff or other officer to whom an execution on a judgment was directed to sell lands and tenements and goods and chattels held in trust for the judgment debtor; the second section authorized the sale of the equity of redemption in “all lands, tenements, rents, or other hereditaments . . . pledged or mort-

gaged.” Laws of North Carolina, 1812; 1 Rev. Sts., 266, secs. 4, 5. These provisions in modified form are now in effect. Not only equitable and legal rights of redemption in personal and real property pledged or mortgaged by the judgment debtor may be sold under execution, but real property or goods and chattels of which any person is seized or possessed in trust for him. C. S., 677, subsecs. 3, 4.

*458 In the case before us the interest of the bankrupt is not an equitable or legal right of redemption; the question is whether the interest of the cestui que trust in the real property held by the trustee is subject to sale under execution.

In the second item of the will the testator devised to Vennie Beatty, his executrix and trustee, and to her heirs all his property except such as was necessary to pay his debts and funeral expenses. He directed the trustee to hold the property in trust: to manage, control, and rent the real estate; to pay taxes, assessments, and dues; and to deposit the remaining moneys in a bank to be held until a division of the property could be made. According to the direction in item seven the estate is to.be divided when Jennings Beatty reaches the age of twenty-one years.

It was the purpose of the Statute of Uses, 27 Henry VIII, to transfer the use into' possession by providing that whenever one person was seized of an estate for the use of another, the cestui que use should be deemed to be seized of the same estate in the land that he had in the use. Under these circumstances it was not necessary for him to appeal to the conscience of the feoffee or to resort to a court of chancery. But there were nonexecuted uses which could not be enforced in a court of law, and the courts of chancery, for the purpose of compelling performance, took jurisdiction of the uses which were not executed by the statute and developed the doctrine of trusts. Tyndall v. Tyndall, 186 N. C., 272. The statute executed such uses as were passive; not such as were active. If the feoffee to uses had any active duty to perform the use was active and was not executed by the statute, Lummus v. Davidson, 160 N. C., 487. So as to trusts, which.are active or passive. The distinction between the two is stated in Perry on Trusts (7 ed.), sec. 18: “Trusts are divided into simple and special trusts. A simple trust is a simple conveyance of property to one upon trust for another, without further specifications or directions. In such case the law regulates the trust, and the cestui que trust has the right of possession and of disposing of the property, and he may call upon the trustee to execute such conveyances of the legal estate as are necessary. A special trust is where special and particular duties are pointed out to be performed by the" trustee. In such cases he is not a mere passive agent, but he has active duties to perform, as when an estate is given to a person to sell, and from the proceeds to pay the debts of the settlor.”

Lewin says that in simple or passive trusts the cestui que trust has jus habendi, or the right to be put into actual possession of the property, and jus disponendi, or the right to call upon the trustee to execute conveyances of the legal estate as the cestui que trust directs, but if the trust is special or active the trustee is called upon to exert himself actively in the execution of the settler’s intention. Lewin on Trusts, sec. 18.

*459 The distinction is clearly marked in our decisions, as may be observed by reference to McKenzie v. Sumner, 114 N. C., 425, which presents, the case of a passive trust and to Cole v. Bank, 186 N. C., 514, which deals with a trust that is active.

A cestui que trust’s interest in real property held by a trustee as an active trust may not be sold in this State under judicial process. The question arose in Harrison v. Battle, 16 N. C., 537, in which the Court held that the trust described in the first section of the act of 1812 (0. S., 677, subsec. 4), “is a pure and unmixed one” — i. e., a passive trust. This construction had previously been announced in Brown v. Graves, 11 N. C., 342 and Gillis v. McKay, 15 N. C., 172; and in the later case of Battle v. Petway, 27 N. C., 576, it was said: “Now, the act of 1812 did not mean to change the nature of trusts, the relation between the trustee and cestui que trust, or the rights of the latter against the former. The sole purpose of it was to render the interest of the cestui que trust liable at law, as it was before in equity, for the debts of the cestui que trust in certain cases, by transferring by a sale on execution against the cestui que trust the legal estate of the trustee, as well as the trust estate of the debtor. It is the necessary construction of such a provision, that it was not intended to embrace any such cases as those just adverted to, in which the trustee could not voluntarily convey to the debtor without incurring a breach of trust to other persons, with whose interests he is also charged. As was said in Gillis v. McKay, 15 N.

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Bluebook (online)
163 S.E. 572, 202 N.C. 454, 1932 N.C. LEXIS 134, Counsel Stack Legal Research, https://law.counselstack.com/opinion/patrick-v-beatty-nc-1932.