Summary
holding that a trust that granted a life estate to the grantor's son and a remainder to the son's heirs created a vested remainder subject to open for the son's children and "such vested remainder became a fee simple absolute in the children living at the death of their father."
Summary of this case from Pryor v. Maloney (In re Maloney)Opinion
Argued May 27, 1895
Decided November 26, 1895
Joseph W. Taylor for appellants.
William F. Cogswell for respondents.
This appeal presents a question of broader interest than attaches merely to the pecuniary rights of the parties to the litigation. It involves a consideration of the power of the Supreme Court in dealing with the real property of minors, and the extent of its jurisdiction in directing a sale or mortgage of their property. By the will of Elizabeth J. Stanley a trust was created in the real property of which she died seized, during the life of her son, James W. Stanley, for his benefit, with remainder to his children or their descendants living at his death, and in default of such issue to certain other specified devisees. James W. Stanley was unmarried at the death of his mother and the remainder to his children was contingent until the birth of issue. He subsequently married and there were two children of the marriage (the infant defendants) who were living when the mortgage in question was executed. Under the will, the first born child of James W. Stanley took at its birth a vested estate in remainder in the land devised, subject to open and let in after-born children as they severally came into being, and such vested remainder became a fee simple absolute in the children living at the death of their father. (1 Rev. St. 723, § 13; Moore v. Littel, 41 N.Y. 66; Williamson v. Berry, 8 How. [U.S.] 495.) The estate in the children of James W. Stanley was a legal estate. The estate of the trustee was for the life of James W. Stanley and terminable at his death. The will created two distinct legal estates in the devised property, viz., an estate in the trustee for the life of the beneficiary, with the right of possession and to receive the rents and profits during the continuance of the trust, and an estate in remainder which became vested on the birth of children as before stated. The trustee had no power over the estate in remainder except such as may have been given him by the will. He could not sell or incumber it or in any way by his own act alter or affect the interests of the remaindermen unless authorized by the will. The provision of the Statute of Uses and Trusts (1 Rev. St. 729, § 60), declaring that every valid express trust shall vest the whole estate in the trustees, is by settled construction limited to the trust estate, and has no application to future legal estates in lands covered by the trust, to take effect in possession on the termination of the trust. The trustee in the present case had an estate for the life of James W. Stanley, and it was this estate and this only which vested in the trustee. ( Stevenson v. Lesley, 70 N.Y. 512.) The will of Elizabeth J. Stanley conferred on her executor and trustee a power to sell the real estate devised, if deemed by him advisable so to do for the purpose of investment of the proceeds. It gave him no power to sell the lands for the payment of debts, or for any other than the specified purpose. It conferred no power to mortgage, and it is not claimed nor could it be reasonably contended that the mortgage in question can be sustained as an exercise of the power of sale contained in the will. ( Albany Fire Ins. Co. v. Bay, 4 N.Y. 9; Bloomer v. Waldron, 3 Hill, 361; Rogers v. Rogers, 111 N.Y. 228.) When, therefore, the application for leave to mortgage the premises in question was made to the court by James W. Stanley, October 15, 1888, the infant defendants were vested with a legal estate in the remainder in the premises, and the trustee had no power under the will to sell or otherwise affect or incumber their estate for the purposes specified in the application.
We shall pass without comment the question urged upon us, that the appointment of James W. Stanley, the sole beneficiary of the trust, as the trustee, was unauthorized and void. We entertain some doubt whether a trust is void in its inception where the instrument creating the trust appoints the sole beneficiary the trustee, but we have no doubt that the appointment of the beneficiary as trustee by the court, on the death or resignation of the testamentary trustee, does not extinguish the trust. The incompatibility of the two relations united in the same person is evident. Whether a trust so constituted in the first instance may not be sustained, leaving it to the court to substitute a competent trustee, will need consideration when the question directly arises. ( Rogers v. Rogers, supra; Woodward v. James, 115 N.Y. 346.)
We come to the main question, and that is whether the court, either by virtue of an inherent or statutory power, could, upon the application made in this case, authorize James W. Stanley to bind the estate of the infant remaindermen by mortgage. That the Supreme Court, acting as a court of equity, possesses an inherent jurisdiction for some purposes over the persons and estates, real and personal, of minors, cannot, we think, be successfully controverted. The origin of the jurisdiction of the Court of Chancery in England over the persons and estates of infants is involved in some obscurity. The better opinion seems to be that it grew out of the transfer by the Crown to the chancellor of the supervision theretofore exercised by the king as parens patriæ over persons who, by reason of non-age, were incapable of acting for themselves. (See 2 Sto. Eq. Jur. § 1327, et seq.) The chancellor intervened for the protection of minors and their property, and the precedents are numerous where the chancellor authorized the application of their property for their education and maintenance, and, at times when the interests of the infants seemed imperatively to require it, permitted even the capital of a fund belonging to the infants to be anticipated or broken in upon for such or similar purposes. ( Harvey v. Harvey, 2 P. Wms. 21; Saunders v. Vautier, 4 Beav. 115; Rocke v. Rocke, 9 Beav. 66; In re Bostwick, 4 Jo. Ch. 100.) But this power of management and disposition exercised by the chancellor (if not always so) came to be regarded as extending only to the personal estate of infants and to the income of their real property. It did not extend to the binding of the inheritance. The question came before Lord HARDWICKE in Taylor v. Philips (1 Ves. Sr. 229) and he said: "There is no instance in this court binding the inheritance of an infant by any discretionary act of the court. As to personal things, as in the composition of debts, it has been done; but never as to the inheritance; for that would be taking on the court a legislative authority, doing that which is properly the subject of a private bill." And in Russel v. Russel (1 Molloy, 525) the lord chancellor of Ireland said: "I have no authority to bind an infant's legal estate. This was decided long ago by Lord HARDWICKE in Taylor v. Philips. The chancellor has never since attempted to deal with the legal inheritance of infants without the aid of Parliament." The subject of the inherent jurisdiction of equity over the estates of infants was considered by NELSON, J., in his dissenting opinion in Williamson v. Berry ( supra), which, upon this point, has been frequently referred to with approval. Speaking of the powers of management and control over the property of infants vested in courts of chancery, he says: "They relate to their personal and the income of their real estate, the court having no power to direct the sale of the latter for their maintenance and education; that power rests with the legislature." The doctrine has been frequently declared in this state that a court of equity has no inherent power to direct the sale or mortgage of the real property of infants, and that its power in this respect is purely statutory. ( Rogers v. Dill, 6 Hill, 415; Baker v. Lorillard, 4 N.Y. 257; Forman v. Marsh, 11 id. 544; Horton v. McCoy, 47 id. 26; Jenkins v. Fahey, 73 id. 355, 361.) The obiter remarks of Ch. KENT on this subject in Matter of Salisbury (3 Jo. Ch. 348) and in Hedges v. Riker (5 Jo. Ch. 163) are contrary to the general current of authority. The text books are explicit in stating the modern doctrine on the subject (Pom. Eq. Jur. § 1309; Bispham's Eq. § 549). The question of the inherent power of a court of equity to order a sale of an infant's real property, upon the theory of a supposed benefit to him, is quite distinct from its acknowledged power in the enforcement and protection of trusts and from the power of courts in the exercise of their ordinary jurisdiction to establish or enforce rights of property between parties to a litigation, whether infants or adults.
Having reached the conclusion that the order made in the case has no support in the inherent jurisdiction of the court over the estate of the infant defendants, it remains to consider whether it can be sustained under any statutory authority. The legislature possesses whatever power as parens patriæ was in England lodged in the sovereign over the estates of infants, consistent with constitutional limitations. From the origin of the state government the legislature has enacted statutes conferring upon courts in certain cases and under careful restrictions the power to order the sale or mortgage of the real property of infants for their benefit. The petition presented to the court in this case asked that the order be granted "pursuant to the statute in such cases made and provided," but no specific statute was referred to. On the argument at the bar the only statutory authority relied upon to sustain the order was the 65th section of the Statute of Uses and Trusts, as amended by chapter 257 of the Laws of 1886. The original section declared that: "When the trust shall be expressed in the instrument creating the estate, every sale, conveyance or other act of the trustee in contravention of the trust shall be absolutely void." This was plainly a provision for the protection of the trust estate against destruction or impairment by the unauthorized act of the trustee. The estate to which the section refers is the trust estate, that is, the estate held under the trust. It did not in the nature of things comprehend legal estates in remainder in the same land taking effect on the termination of the trust. It needed no statute to protect remaindermen as against any sale or conveyance by the trustee. It perhaps added nothing to the protection of the cestui que trust beyond that given by the common law. But it was a statutory expression of a rule which would challenge the attention of the trustee and of persons dealing with him in respect to the trust. But the material point is, that the legislature, in enacting the section, was dealing with transactions by the trustee in respect to the trust estate. The trust estate, in a case like the present, was the estate for the life of the beneficiary named. An attempted sale or conveyance by the trustee of the estates in remainder would, doubtless, be ineffectual, but this would be so for the reason that the trustee would have no estates in remainder to sell or convey, and not because such sale or conveyance would be in contravention of the trust. The estates in remainder would be outside of and not within the trust. The amendment of 1886 relaxed somewhat the stringency of the original section. It added a proviso giving power to the Supreme Court to authorize any trustee to "mortgage or sell any such real estate whenever it shall appear to the satisfaction of said court or a judge thereof that it is for the best interest of the said estate so to do, and that it is necessary and for the benefit of the estate to raise by mortgage thereon or by a sale thereof funds for the purpose of preserving or improving such estate." But the amendment in no wise vested in the court a compulsory power to order the sale or mortgage of estates outside of the trust. It makes no reference to infants or persons incapable of acting for themselves, and if the construction claimed could be sustained it would authorize the court to order the sale or mortgage of the estates in remainder of adults without their consent, for the purposes specified, which would be plainly unconstitutional. ( Powers v. Bergen, 6 N.Y. 358; Brevoort v. Grace, 53 id. 245.) The scope and purpose of the section and the amendment is plain. It was to vest in the court the power to order a sale or mortgage, which, under the section as it originally stood, it might not possess, when necessary to preserve and improve the trust estate, and this purpose is emphasized by the circumstance that notice of the application is required by the final clause of the amendment to be given only to the beneficiaries of the trust. It is claimed that the case of In re Morris (63 Hun, 619), which was affirmed in this court without opinion ( 133 N.Y. 693), is adverse to the construction here given to the section as amended. The principal question argued in that case seems to have been whether certain assessments for local improvements were to be borne by the trust estate alone or should be apportioned between the trust estate and the estate in remainder. The opinion in the General Term did not refer to the question here considered. If that case should seem in any aspect to conflict with the construction we now place upon the statute we think it ought not to be followed. It would be most dangerous to establish a construction of the statute of 1886, which would make it possible to deprive infants of their inheritance by hurried and informal proceedings, such as were taken in this case, and that too on the application of a party hostile in interest, and who by the general rule of law was bound to pay the ordinary taxes and improvements upon the property.
This decision does not leave the court without power upon the application by or in behalf of infants whose property is in danger of being lost by the failure of duty of a life tenant to pay taxes or make improvements, or for other reason, to intervene for their protection. The provisions of the Code (Sec. 2348 et seq.) for the sale or mortgage of the real estate of infants are ample for such contingencies. They are in the main transcripts from the Revised Statutes. But proceedings under these sections are hedged about by safeguards, preventing inconsiderate action by courts, and by requiring security, protect infants against the dishonesty of those who undertake to represent them. The court has on repeated occasions declared proceedings instituted under these provisions to be void, when not taken in conformity to the statute. ( Ellwood v. Northrup, 106 N.Y. 172; In re Valentine, 72 id. 184; Battell v. Torrey, 65 id. 294.) There is no pretense that this is a proceeding under the general statute for the sale or mortgage of the real estate of infants. It conformed to none of its requirements. The consent of the guardian ad litem of the infant defendants to the granting of the order does not conclude them. ( Ellwood v. Northrup, supra.) The court had no jurisdiction to grant the order, and it is open in this proceeding to collateral attack for want of jurisdiction. ( Risley v. Phenix Bank, 83 N.Y. 318; Williamson v. Berry, supra.) The plaintiffs may as a consequence of our decision lose their money. But they were chargeable with notice of the statements in the petition and of the legal interests of the children in the land. ( Pitcher v. Carter, 4 Sand. Ch. 1, 20.) The infants on the other hand have had no benefit from the money advanced to their father, and they should not lose their inheritance unless it has become bound in accordance with law.
The judgment below should be reversed and a new trial granted.
All concur (FINCH, J., in result), except GRAY, J., not voting, and HAIGHT, J., not sitting.
Judgment reversed.