Close v. Van Husen

| N.Y. Sup. Ct. | Sep 4, 1854

By the Court,

Hand, P. J.

If it was not competent for the defendant to show the paroi agreement made between him and J ames McMasters at the time the note was given, still I think the judgment must be affirmed. The mortgage given by James to the plaintiff was a transfer, pro tanto, of his interest in the real estate of his grandfather, subject to redemption; or rather, a valid lien thereon, subject to the execution of the power of sale by the executors; and entitling the plaintiff, in case of a sale, to a preference over any claim arising out of the verbal promise to one of the executors.

Transactions like that between James McMasters and Van Husen, should not be countenanced by the court. As executors,. Cady and Van Husen could sell sufficient of the personal property to pay. the debts ; for notwithstanding the provisions of the will, the creditors could not be compelled to wait until the death of the widow. Except for the purposes of paying funeral expenses and the debts, and defraying the expenses of administration, the widow was entitled to the use of all the property during her life; but the effect of this agreement, between James and Van Husen, was to take this piece of property from her, and allow one of the remaindermen to anticipate so much of the estate, upon paying interest, which would increase the fund for distribution at her expense. It was the duty of the executors to pay the debts, and bring that part of their trust to a close years before the sale of the real estate; and if there was a surplus of the personal estate, the use of it belonged to the widow. Beyond what was necessary to pay debts, &c., they had no authority to sell during her life ; much less to take a lien upon the share of one of the distributees, when the proceeds of the land should come into their hands by the execution, at a future day, of a power in trust, to secure themselves against the consequences of an improper act.

James McMasters could make a valid mortgage of his interest • in the farm. (In the matter of John and Cherry streets, 19 Wend. 666. Allen v. Dewitt, 3 Comst. 276. And see Fitzgerald v. Jervoise, 5 Madd. R. 25; Elwin v. Elwin, 8 Ves. 547; Leigh & Dalz. on Eq. Con. 53, 91; 1 R. S. 729, § 56.) Id. 723, § 13.) Had there been no will, he would have been heir in that proportion ; and as such, would have taken an interest in the real estate in the same proportion; and the executors or trustees took no interest in the land, and had only a mere naked power in trust to sell. And, indeed, where all the objects and purposes of the sale have ceased, as a general rule, the heir takes the estate unaffected by the power in trust. (Leigh & Dalz. on Eq. Con. 95, 100, 137, 142. Smith v. Claxton, 4 Madd. R. 484. Bogert v. Hertell, 4 Hill, 492.) And, again, in the present case,' the devisees (as they were termed in Smith v. Claxton,) or distributees, notwithstanding the impression of personalty given to it in equity, if before sale the debts, &c., had all been paid, and no others had any interest therein, could have prevented the sale, and have taken the land as land, if they had all so agreed. (1 Jarm. on Wills, 533. 4 Leigh & Dalz. on Eq. Con. 88, and ch. 7. 2 Stor. Eq. Jur. §§ 793, 4.) Or, it seems, they might have made a valid agreement among themselves, by which one or more of them could have taken his or their share in lands. (Smith v. Claxton.) There was a sale in this case; but there was no actual conversion, and could not be until after the death of the widow of the testator. (Smith v. Kearney, 2 Barb. Ch. 533. Allen v. De Witt, Fitzgerold v. Jervoise, cited above.) And the interest of James McMasters was of that nature that no lien or mortgage could be created by paroi; certainly not to give a preference over a mortgage duly executed and recorded during the life estate of the widow.

But it is contended, that James, at the time he gave this mortgage, was a debtor of the estate, and that such indebtedness should be considered as part of the assets, and his share subjected to a retention or deduction therefor. Where one, entitled to a portion of a fund in the hands of a trustee, is indebted to that fund, the equity of the trustee to impound the interest of a cestui que trust in the trust fund, is clear. ( Wigram, V. C. in Courtenay v. Williams, 3 Hare, 554.) The right of the executors to retain for the debt due from the legatee to the testator is sustained by numerous cases. (Courtenay v. Williams, supra. Smith v. Kearney, supra. Campbell v. Graham, 1 Russ. & My. 453. Jeffs v. Wood, 2 P. Wms. 128. Ram. on Assets, 469.) And in Jeffs v. Wood, the principle was extended to include what the legatee had received of the executor, on the ground that it might be considered as payment. And in Smith v. Kearney, it was applied to a fund arising from the sale of real estate. But the debt was due to the testator, lío doubt a direction for sale may stamp the fund with the quality of personalty. But, the difficulty of the defendant’s case is, that before he had any valid lien upon the property, the plaintiff had acquired a prior one, which was not lost by the subsequent sale.

[Franklin General Term, September 4, 1854.

Hand, Cady, C. L. Allen and James, Justices.]

The judgment must be affirmed.