Atwater v. Russell

| Minn. | Mar 11, 1892

Collins, J.

This was an action brought for the purpose of obtaining from the court a construction of a certain trust deed in which plaintiffs were named as grantees, executed and delivered October 1, 1888, by one Bichard Martin, since deceased. It is the trust deed mentioned in the codicil to the last will and testament of said Martin, ante, p. 31, (51 N.W. 624" court="Minn." date_filed="1892-03-11" href="https://app.midpage.ai/document/atwater-v-russell-7967354?utm_source=webapp" opinion_id="7967354">51 N. W. Rep. 624.) That action was brought by these plaintiffs, as executors, against these same defendants, as heirs at law and devisees. The deed purports to convey to plaintiffs, as trustees, valuable real property in Hennepin county, Minnesota.

Plaintiffs accepted the trust in writing October 1st of the same year. All of the defendants took part in the trial below, but the Sheltering Arms made no claim adverse or hostile to that of St. Barnabas’ Hospital. Both of these institutions were and are located in the city of Minneapolis, in which place Mr. Martin resided for many years during his lifetime, accumulating a handsome fortune. The plaintiffs and St. Barnabas’ agreed below, as well as on appeal, each claiming that the deed was valid, either as creating a trust, or a power in trust, and that its provisions were ample and sufficient in respect to St. Barnabas’. St. Luke’s Hospital contended along this same line until a certain point was reached, and then declared that the trust or power in trust attempted to be created by the deed was absolutely void as to St. Barnabas’, but valid as to St. Luke’s. The heirs at law — a common enemy — claimed that the deed was void both as a trust and as a power in trust. The court below, on findings of fact, by its conclusions of law construed the instrument in accordance with the amicable views of plaintiff trustees and defendant St. Barnabas’ Hospital.

By the terms of the deed in question the trustees therein named were authorized and directed to perform three distinct acts in relation to the property: First, to collect the rents and profits from the same, using the sums collected for the payment of taxes and in paying the expenses of carrying out the trust, any deficiency in respect to these matters being made a charge upon the property; second, to sell the land; and, third, to pay over the proceeds to one of two beneficiaries then in existence and designated by name ; the rights of appellant St. Luke’s and the power of the trustees to recognize it as the beneficiary, being made to depend upon the inability of the respondent St. Barnabas’ to satisfy the trustees, or, to use the words found in the instrument, “ to prove ” certain things in respect to its permanency to the satisfaction of the trustees. The court below held that the trust attempted to be created by the deed was not one of the express trusts authorized by 1878 Gr. S. ch. 43, § 11, but that the acts authorized and directed to be performed by the trustees were valid powers in trust, to be exercised and executed in favor of one or the other of the designated beneficiaries, as might be determined by the trustees, in accordance with the terms of the deed; and that the legal estate in the land was by the residuary clause in the last will and testament of Richard Martin, before mentioned, devised to the executors in said will, in trust for the legatees named in said residuary clause, but subject to the execution of the power created by the instrument now being construed. It would seem to be of little consequence whether the trust created by the deed be construed as an express active trust or as a power in trust, for in either case the ultimate result would be the same, — the heirs at law, or the residuary legatees, being deprived of the property. In either event, the construction as to the validity of the provisions of the deed and as to the proper beneficiary would be the same, and on this point these litigants are in harmony. Whatever the construction in this respect, it is argued with much zeal and ability by the counsel for the heirs at law that the deed is invalid, for reasons which will appear as we proceed.

1. It was claimed that by the terms of the deed there was a suspension of the power of alienation of land not measured by the duration of two lives in being at the time of its execution, and hence in contravention of the statute. This claim was founded upon the provisions of the deed whereby the time of sale was prescribed. The period of time within which the trustees should sell was absolutely limited to the ten years next ensuing, and it was further provided that sale should be made “as soon as in the judgment of my said trustees the said lands can be sold for a reasonable price, compared with other lands in the vicinity.” This clause was practically the same as that construed in the will case, the only difference being that under the will the executors were not directly referred to the prices put on other lands in the vicinity, and a comparison with such prices, as a means of ascertaining and fixing a reasonable price for the trust land. But such a- reference, or requirement, if it can be so called, added nothing and in no manner affected the condition as to price, already imposed, for such price would unquestionably and necessarily be regulated and determined by reference to and comparison with the prices put upon and for which other lands in the vicinity were sold. A reasonable price at which this land should be sold could only be ascertained in the manner mentioned. For the reasons stated in the opinion in the will case, all being pertinent and forceful here, the power of the trustees to alienate this land and to pass the title in fee to a purchaser was not suspended for any period of time. The power might have been exercised lawfully at once, and it might not be exercised until some future day within the fixed maximum period of time, — ten years next following.

2. It is contended in behalf of the heirs with much plausibility that by the provisions of the deed there has been effected a suspension of the ownership of the proceeds of a sale of land, forbidden by the rule of the common law against perpetuities, and which avoids the instrument. The contention is that by its terms the trustees not only have the power to suspend and postpone indefinitely a designation as between the two beneficiaries named, but that they may postpone and suspend at will the payment over of the proceeds of a sale; that they were directed not to act absolutely, but conditionally only. The contention really goes further, and is that the conditions and contingencies specified in the deed, on the fulfillment and happening of which the trustees were to designate the beneficiary, may never happen, are indefinite in meaning, and impossible of execution. To determine the merits of this claim there must be made a critical, but not captious, examination of the whole deed, that we may discern, if possible, the intent, plan, and purpose of the grantor, bearing in mind that it is the policy of the law not to seek grounds to avoid a conveyance, but to endeavor to uphold it, if it can be done on sound legal construction.

We are not to construe doubtful and ambiguous clauses and expressions so as to bring the disposition of the property within the prohibition of the law against perpetuities, when, without reference to these clauses and expressions, the meaning, intent, and design of the grantor are apparent. We quite agree with the counsel for respondent trustees that the trust is to be supported if it can be done by any reasonable and fair construction of the instrument. Instruments of this nature should be construed as if the rule against suspension did not exist, and only after the meaning has been determined may the rule be applied to learn whether the provisions are valid. And the rule is constantly subordinated to another rule, — that, where there is fair room for two constructions, the instrument should be preserved, rather than defeated.

It is our duty, however, to carefully weigh and consider each objection made to the deed, and to give full effect to any which may be sufficient to render it void in law. By the paragraph numbered 2, and by the very terse sentence which commences paragraph numbered 3 in the deed it is plain that the grantor required a sale to be made as soon as a reasonable price could be obtained for the land, and that in no event should such sale be postponed beyond the expiration of the period of ten years then next ensuing. This provision as to a sale was absolutely “out and out,” and, although there was some latitude as to the exact time of sale, it was to take place within ten years in any event. A sale and a payment of the proceeds to one of two beneficiaries named were imperatively commanded. In express terms the deed then directs that the proceeds “should be appropriated” to St. Barnabas if a certain condition of affairs is found to exist with reference to it by the trustees. On the other hand, should this condition of1 affairs be found not to exist, the appropriation of the proceeds is to St. Luke’s. In the use of the somewhat peculiar phrase “shall be appropriated” there is nothing to indicate that it was the plan or purpose of the grantor to have payment deferred or postponed for any period of time whatsoever. In fact, these words suggest an immediate appropriation or application of the proceeds to the use of one of the beneficiaries, which is to be directly ascertained and resolved upon, before or when the pro-eeeds of sale are in hand. That the trustees are to determine as to the existence or nonexistence of certain facts does not indicate, necessarily, that there must be a postponement of the use of the gift, any more than it would have been indicated had the trustees been given discretion to elect unqualifiedly as .between the beneficiaries. The words in paragraph 3, whereby the trustees are - directed to determine the beneficiary, are, in effect, that, if they are satisfied that the churches named will permanently sustain St. Barnabas’ as a church hospital, then St. Barnabas’ shall be declared the beneficiary, and shall receive the proceeds. This language calls for and demands immediate affirmative action on the part of the trustees. They are to initiate the inquiry which will lead to a conclusion as to where the gift shall go, and the difficulty of construction which seems to surround the counsel for appellant heirs, and lead them to contend that a determination must necessarily be postponed, and may never be made, arises largely from a misapprehension in respect to the words found in paragraph 3, whereby the grantor provided that, if the churches <?shall prove to the satisfaction” of the trustees that they will “permanently sustain” St. Barnabas’, then it shall be the beneficiary; otherwise his bounty is to go to St. Luke’s. He did not contemplate, when using the language above quoted, that the churches should be called upon to make “proof” that they were legally authorized and financially able to sustain the hospital for all time to come, but simply that the trustees should be satisfied or convinced that a plan had been devised by which the ability and disposition of the churches to sustain St. Barnabas’ in a continuing and lasting manner had been evinced. An institution of that character which is in a continuing and lasting condition is “permanent” in the ordinary sense of the word. That the grantor intended nothing more than that his trustees should simply be assured or satisfied of this, and that he did not require or anticipate anything in the nature of judicial inquiry or formal proof of the legal and financial ability of the churches to support the hospital named, is also manifest from the phraseology of paragraph 4, in which he provided that, if the churches of the denomination named, “now or hereafter in the city, * * * before this trust is fully executed, do not folly satisfy my aforesaid trustees * * * that they will efficiently support and sustain St. Barnabas’,” then the proceeds shall be paid over to St. Luke’s. The trustees are to be made satisfied of this, nothing more; and hence could become satisfied by the performance of such acts on the part of the churches or church members as would clearly indicate and convince, not to a legal, but to a moral, certainty, that the hospital would be efficiently and permanently supported and sustained. That this was to be determined before or immediately after the real property was converted into personalty, so that the application and appropriation would be immediately made, is obvious, not only from the general tenor of the instrument, but from expressions other than that in paragraph 3, already commented on. For instance, in the language in paragraph 4, whereby Mr. Martin directs, contingently, a payment of the net proceeds to St. Luke’s. If his trustees are not satisfied with the attitude and disposition of the local churches towards St. Barnabas’ “before this trust is fully executed,” the money is to go to St. Luke’s. As the trust would not be fully executed until the trustees had fully and entirely performed their duties and their mission had ended, it is manifest that he meant and referred to a partial execution of the trust, — that is, to the collection of rents and profits, the payment of taxes, the sale of the land, and the ascertainment of the exact sum to be paid over. So that the provision is, substantially, that, if the trustees are not satisfied, when a sale is made, or as soon afterwards as a decision can be reached, with what has been done by the churches which theretofore may have been, or at that time may be, in existence in Minneapolis, in respect to the efficient and permanent support of St. Barnabas’, it shall not be declared the beneficiary.

Just what Mr. Martin had in mind when speaking of the proceeds which might remain in the hands of his trustees — the last clause in paragraph 4 — seems somewhat doubtful. Possibly he referred to the proceeds to be turned over, — the net proceeds, — which would be the sum realized at a sale plus the rents and profits and minus the amounts paid out for taxes-and expenses of the trust. Or he might have contemplated a sale- of the lands in parcels, on different days, and that the power of selecting a beneficiary should continue as to the proceeds by each parcel as the same were disposed of. But there is nothing here to indicate that the selection and designation of a beneficiary were to be delayed, when the land was sold as a whole, or in parcels.

3. By counsel for the heirs it is argued at length that as to the beneficiary there is an uncertainty in the deed, which, as to St. Barnabas’ Hospital, renders it invalid; and, further, that as to the subject-matter of the trust there is an uncertainty in the instrument, which, as to both St. Barnabas’ and St. Luke’s, renders it invalid. The counsel for the last-named institution heartily indorses the first of these propositions, but strongly condemns the second. It has been noticed that in paragraph 3 it is directed that the money conditionally given to St. Barnabas’ is not to be used on buildings, but for the support of charity patients therein. This provision is right in line with the purpose of Mr. Martin, elsewhere indicated in the deed, of having>“such steps taken by the churches as would convince the trustees that the hospital named would be sufficiently and permanently supported and sustained by the churches before the money was paid over, because the erection of buildings in which eharity patients could be placed, there to have the benefit of Mr. Martin’s benefaction, would, of itself, go a long way towards satisfying the trustees of the stability and permanency of the institution. The contention is, on this point, that charity patients in St. Barnabas’ Hospital, and not the hospital itself, became the beneficiary under the deed. And, further, that, because such patients are an indefinite and unascertainable body or class of people, they are incapable of taking as beneficiaries, and the trust, as to them, must fail. However this may be, it is enough to say that St. Barnabas’ Hospital is the beneficiary upon condition, and not such charity patients as it may receive, shelter, and aid. To it is given the custody, control, and disposition of the money; the donor thereof merely indicating his intention to have it used for one of the purposes for which the institution was established. St. Barnabas’ Hospital was none the less the beneficiary of the money because Mr. Martin specified that his gift to it should be used in a certain direction, and that charity patients alone should have the benefit to be derived from the same. It is legal for a donor to prescribe, by way of limitation, that his gift shall be kept and preserved, so as to subserve a purpose which a donee corporation has been created to promote. To so prescribe is nothing more than to declare that the trust funds shall be devoted to the objects which the legislature had in view when providing for the existence of the corporation. Fosdick v. Toiun of Hempstead, 125 N.Y. 581" court="NY" date_filed="1891-02-24" href="https://app.midpage.ai/document/fosdick-v--town-of-hempstead-3627866?utm_source=webapp" opinion_id="3627866">125 N. Y. 581, (26 N. E. Rep. 801.)

Authority is conferred upon corporations of the character of St. Barnabas’ by 1878 G. S. ch. 34, § 174, to acquire property by gift, but they are prohibited in the same section from diverting such gift from the specific purpose designated by the donor. The claim that an indefinable, unascertainable beneficiary, described as the “charity patients of St. Barnabas’,” was named in the deed, is without foundation.

The argument of counsel for the heirs that the deed is invalid, because uncertain as to the subject-matter of the trust, is, in part, based upon that clause in the instrument which directs that the rents and profits derived from the land shall be applied to the payment of taxes and the expenses of conducting the trust, a deficiency, if any, being made a charge upon the property itself, and in part upon the somewhat ambiguous clause wherein Mr. Martin referred to any portion of the proceeds which might remain in the hands of his trustees. Undoubtedly the declaration of a trust must be reasonably certain in its material terms, and this requisite of certainty includes the subject-matter or property embraced within the trust, the beneficiaries or persons in whose behalf it is created, the nature and quantity of interest which they are to have, and the manner in which the trust is to be performed. In substance this is the law as stated in 2 Pom. Eq. Jur. § 1009. But from an examination of the instrument in question it is evident that the entire proceeds which should come to the trustees, whether as rents or profits or from a sale of a certain described tract of land, were to be paid over to one of two designated beneficiaries, less such sums as might be required for the payment of taxes and the expenses of the trust. The exact sum which should go to one or the other of the two-institutions could not be ascertained . in advance or foretold; but this did not render the subject-matter of the trust uncertain. There was no question but that the beneficiary, would take all of the fund, and,become the legal owner of it. The precise amount of money which it might thus acquire could not be told at any time before the same .was ready to be paid over, for it depended upon circumstances, and that is always the case where there has been a valid trust created for the sale of property. But the subject-matter — the. nature and quantity of the interest which should be acquired by the designated beneficiary— was at rest. In this respect the case is wholly different from Prichard v. Thompson, 95 N. Y. 81, and Tilden v. Greene, 54 Hun, 231" court="N.Y. Sup. Ct." date_filed="1889-11-07" href="https://app.midpage.ai/document/tilden-v-green-5497354?utm_source=webapp" opinion_id="5497354">54 Hun, 231, (7 N. Y. Supp. 382.)

4. It is further asserted, and at great length argued, by counsel for the heirs that the conditions -upon which the trust is to be executed are indefinite and uncertain, and that the trust is undefined. And, further, that the provisions of the deed are so vague, indefinite, and uncertain as to be incapable of enforcement by judicial decree, therefore invalid. . So far as it seems advisable for the safety of his client as a beneficiary contingently, counsel for St. Luke’s Hospital holds the same views. Much that has heretofore been said has a bearing upon and can be applied to these assertions. . The respondents regard the instrument. as creating a general power in trust for. the benefit of two designated beneficiaries, with a valid discretionary power in the trustees of selecting between them.

Under ofir statute- -1878 G. S. ch. 44, § 25, — a trust power does not cease to be imperative, where the grantee has been given the right to select as between the persons designated as the objects of the trust, so that the power now being considered would have been valid beyond doubt had the trustees been given unlimited discretion as between St. Barnabas! and St. Luke’s, — simply directed to pay the .proceeds to the hospital which, in their judgment, was best entitled or most de-i serving. Power v. Cassidy, 79 N.Y. 602" court="NY" date_filed="1880-01-27" href="https://app.midpage.ai/document/power-v--cassidy-3616009?utm_source=webapp" opinion_id="3616009">79 N. Y. 602. Instead of investing the trustees with uncontrolled discretion as between the two, Mr. Martin imposed a condition, as to St. Barnabas’, requiring that the trustees should be guided and governed by the situation and circumstances prior to or as soon after the sale as a decision could be reached.

If they were satisfied that St. Barnabas’ was so situated and circumstanced as to assure its permanency as a church hospital, then the entire proceeds were to ,be awarded to it. If the prescribed condition of permanency -was found not to exist to the satisfaction of the trustees, St. Luke’s became the beneficiary absolutely. There was a discretion to be exercised, as is usually the case where a trust relation is created. But it was as to but one of the contemplated beneficiaries, not as to the other, and a rule or guide was furnished for the exercise of this discretionary power. If anything, it was less difficult to exercise this power than it would have been had the trustees been required to compare the claims and merits of each, and decide as between them; for the limits of the discretionary power were not only circumscribed, but well defined. We see no reason why the provisions of the trust deed and the duties of the grantees therein could not be enforced by judicial decree, for it seems manifest that a designated beneficiary, entitled to compel tüe exercise of a power for its benefit, is not lacking; there is a distinct trust fund, the source of which is arbitrarily fixed, and the amount sure to be ascertained; and, in our opinion, there is no want of certainty as to the manner in which the trust is to be performed. WTrile the authorities seem to be at variance, and frequently confusing, an examination-of a few, which we cite out of a much larger number, will demonstrate that much more indefinite and uncertain powers than those found in the Martin deed have'been upheld by the courts. Ould v. Washington Hospital for Foundlings, 95 U.S. 303" court="SCOTUS" date_filed="1877-11-26" href="https://app.midpage.ai/document/ould-v-washington-hospital-for-foundlings-89601?utm_source=webapp" opinion_id="89601">95 U. S. 303; Quinn, v. Shields, 62 Iowa, 129" court="Iowa" date_filed="1883-12-04" href="https://app.midpage.ai/document/quinn-v-shields-7100688?utm_source=webapp" opinion_id="7100688">62 Iowa, 129, (17 N. W. Rep. 437;) Dodge v. Williams, 46 Wis. 70" court="Wis." date_filed="1879-01-15" href="https://app.midpage.ai/document/dodge-v-williams-6602736?utm_source=webapp" opinion_id="6602736">46 Wis. 70, (1 N. W. Rep. 92, 50 N. W. Rep. 1103;) Fadness v. Braunborg, 73 Wis. 257" court="Wis." date_filed="1889-01-08" href="https://app.midpage.ai/document/fadness-v-braunborg-8183026?utm_source=webapp" opinion_id="8183026">73 Wis. 257, (41 N. W. Rep. 84;) Loring v. Blake, 98 Mass. 253" court="Mass." date_filed="1867-11-15" href="https://app.midpage.ai/document/loring-v-blake-6415192?utm_source=webapp" opinion_id="6415192">98 Mass. 253; Lorings v. Marsh, 6 Wall. 337" court="SCOTUS" date_filed="1868-01-20" href="https://app.midpage.ai/document/lorings-v-marsh-87926?utm_source=webapp" opinion_id="87926">6 Wall. 337; White v. Ditson, 140 Mass. 354, (4 N. E. Rep. 606;) Lyman v. Parsons, 26 Conn. 493" court="Conn." date_filed="1857-11-15" href="https://app.midpage.ai/document/lyman-v-parsons-6577296?utm_source=webapp" opinion_id="6577296">26 Conn. 493; Miller v. Teachout, 24 Ohio St. 525; Delany v. Delany, L. R. Irish 15 Ch. Div. 55.

The much-discussed and very recent case of Tilden v. Green, 130 N.Y. 29" court="NY" date_filed="1891-10-27" href="https://app.midpage.ai/document/tilden-v--green-3612340?utm_source=webapp" opinion_id="3612340">130 N. Y. 29, (28 N. E. Rep. 880,) has brought forth comment from the counsel herein, each seeming to extract comfort from the controlling opinion of the court. The conclusion, reached by. a bare majority of the learned justices, was that the selection of the objects of the trust was delegated absolutely to the trustees, and that there was ho person or corporation who could demand any part of the estate, or maintain, an action to compel the trustees to execute the power in their favor. To quote: “This is the fatal defect in the will. The will of the trustees is made controlling, and not the will of the testator. * * * As was said by the learned presiding justice of the general term: ‘The radical vice of the entire provision (the thirty-fifth article) seems to have arisen from the testator’s unwillingness to confer any enforceable rights upon any qualified person or body.’ ” 54 Hun, 231" court="N.Y. Sup. Ct." date_filed="1889-11-07" href="https://app.midpage.ai/document/tilden-v-green-5497354?utm_source=webapp" opinion_id="5497354">54 Hun, 231, (7 N. Y. Supp. 393.) The case at bar is radically different upon the point wherein the Tilden will was declared fatally defective.

5. As to the sixth point made in the brief of counsel for the heirs, we are of the opinion that 1878 G. S. ch. 43, § 11, subd. 5, supra, has no bearing upon the questions now before us.

6. The testimony hate been carefully examined in connection with the assignments of error relating to the same. None of the assignments were well taken, and none need special consideration.

Order affirmed.

Mitchell, J., absent) sick, took no part.

(Opinion published 51 N.W. 629" court="Minn." date_filed="1892-03-11" href="https://app.midpage.ai/document/atwater-v-russell-7967355?utm_source=webapp" opinion_id="7967355">51 N. W. Rep. 629.)

APPLICATION TO TAX COSTS.

Vanderburgh, j.

This action, which is brought for the construction of a certain deed conveying lands to the plaintiffs in trust for certain purposes, and also another action brought against the same defendants, except the St. Luke’s Hospital, for the construction of the will of Richard Martin, deceased, were determined in the district court adversely to the defendants Anna S. Russell et al., heirs at law, and the St. Luke’s Hospital, and in favor of the claims of the plaintiffs, and of the defendants St. Barnabas’ Hospital and the Sheltering Arms.

On appeal to this court, the decisions of the district court were affirmed. The nature of the issues will more fully appear in the foregoing statements and decisions on such appeals.

Certain questions are now brought before us in relation to the allowance of costs in this court. Separate appeals were brought by the defendants Russell and others, heirs at law, and by the St. Luke’s Hospital, and in each the notice of appeal was served upon the plaintiffs, and upon the defendants St. Barnabas’ Hospital and the Sheltering Arms. This was the correct practice, and was necessary in order to secure a final determination of the hostile claims of the defendants as between themselves. The plaintiffs and the corporations last named are the respondents and the prevailing parties in this court, and the other defendants are the defeated or unsuccessful parties.

The authority of this court to award costs is regulated and limited by the statute, and the court has no equitable or discretionary power other than the statute confers. Downing v. Marshall, 37 N. Y. 387.

The statutory provisions are that the prevailing party be allowed his disbursements necessarily paid or incurred, and in addition thereto an amount as costs not exceeding the statutory limit, in the discretion of the court. 1878 G. S. ch. 67, § 16 et seq.

Under the statutes of New York, in certain actions the court may order extra allowances as costs, and in equity cases discretion is given to allow or apportion the costs as may be just, within the statutory limit as to the amount. Beyond this the courts recognize no chancery powers to add allowances for counsel fees. And the same rule governs in actions for the construction of wills. Downing v. Marshall, supra.

Allowances to trustees for their expenses in suits rest upon a different principle.

It is, however, the practice in that and some other states to direct the taxable costs of all the parties in such actions to be paid out of the estate.

But that rule is not applicable here, under the strict language of the statute we have referred to.

(Opinion published 52 N. W. Rep. 26.)

This court has no power to grant costs to the defeated party, nor to relieve him from the payment of the costs allowed to the prevailing party, except in the exercise of the discretion which the statute allows. In the case at bar we think no statutory costs should be allowed in favor of or against any of the parties. But under the statute the disbursements of the prevailing parties must be taxed and allowed according to the usual course and practice in this court, to be taxed against the defendants Bussell and others and the defendant St. Luke’s Hospital, in proportion as the same may have been incurred in each of the respective appeals.