Cumming v. Williamson, 1 Sand. Ch. 17

Cumming v. Williamson

1 Sand. Ch. 17 | New York Court of Chancery | 1843

The Assistant Vice-Chancellor.

The first objection made to the mortgage is, that its execution was not authorized by the power of attorney to Wells. This objection is urged in behalf of Clarke, as well as the other defendants. But he having suffered the bill to be taken as confessed, in which the execution of the mortgage is set forth as being in pursuance of a power from him, is precluded from questioning that fact. The defendants insist, that the power of attorney authorized the execution of a mortgage for a single purpose, “ to raise money.” That this mortgage was executed for a precedent debt, and that it is utterly void. They argue that it is a naked power, and that it must be strictly construed. The rule, in this respect, is thus expressed by Chancellor Kent, in his opinion, in Wilson v. Troup, (3 Cow. 200,)—“ Courts of equity look to the end and design of the parties, in considering the extent of powers, and to a substantial rather than to a literal execution of the power.” It is on this ground that the aid of courts of equity is continually invoked to supply the defective execution of powers, in cases where the inflexible rule of the common law would hold the execution inoperative. And this jurisdiction extends, as well to naked powers where there is a meritorious consideration, as to powers coupled with an interest. (See 2 Sugd. on Powers, 94—100.) Testing this case by the principle referred to, I think the power of attorney warranted the execution of the mortgage to the complainants. The end and design of the constituents was to improve their real estates, and especially by filling up their lots, which were covered by the water of the river. Their attorney was authorized to mortgage their lands to effect these objects. He was to raise money for that purpose. It is true, that he was not to contract for the labor to be paid in a mortgage, because that mode of payment would enhance the price. It was not the design of the parties to raise the money before contracting, or in anticipation of the *22performance of the work. That course would involve the certain loss of interest, and the possible loss of the fund raised. The attorney proceeded in the mode ordinarily pursued. He made a contract with the complainants, by which they were to be paid in cash as the work advanced. No question has been made but that the terms were advantageous to the defendants. The change in the financial condition of the country, and in the demand for real estate, from 1836 to 1839, made it very desirable to the defendants to discontinue the work. A large cash debt was due to the complainants on the contract. The attorney, after endeavoring in vain to raise the money from others to pay this debt, mortgaged to the complainants. This differed from a literal execution of the power in one particular only. Instead of executing a mortgage for $29,500 to some money lender, and then carrying the money over to the complainants, and paying their debt, he executed a mortgage for the same debt to the complainants. The effect upon the defendants’ interests is precisely the same. If the former course had been adopted, their estate would have been incumbered in the same manner that it now is. If the complainants and Wells had arranged to have the latter execute a mortgage to some broker who would deliver the money to Wells, and he to the complainants; and then the complainants would forthwith return the money to the broker, and he assign the mortgage to them, would not the power have been pursued to the very letter on consummating such an arrangement í The defendants themselves would never have questioned it. I cannot perceive why such an execution of the power is more conformable to its intent and spirit, than the mode adopted in this case. It appears to me that the execution of the mortgage was a substantial and valid execution of the power.

A reference to a few of the multitude of cases on the subject, will illustrate the rule of equity in regard to powers.

In Roberts v. Dixall, (2 Eq. Cas. Abr. 668, pl. 19. S. C. 2 Sugd. on Powers, App. No. 17,) a father was empowered in a marriage settlement, to appoint and divide the estate among his children. Having two children he appointed the whole estate to the elder and charged upon it the payment of a gross *23sum to the younger child. This was held in equity to be a good execution of the power according to its substance and intent.

In Long v. Long, (5 Ves. Jr., 445,) where on a settlement, power was given to the father to charge the estate with such sums for the benefit of younger children as he should think fit, and by his will he directed the estate to be sold, and gave the money to his children, giving to the eldest son a very small portion ; Lord Rosslyn decided, that the appointment was in substance exactly what he had a right to do.

In Bullock v. Fladgate, (1 Ves. & B. 471,) Sir William Grant held, that in equity a power to appoint an estate directed to be bought with money which was to arise by the sale of another estate directed to be sold, might be exercised over the estate directed to be sold, in the same manner as it might be over the estate directed to be purchased. In Miller v. Chance, (3 Edw. Ch. R. 399,) the trustees of the Masonic Hal], were authorized by the statute incorporating them to mortgage the premises bought by them, with the building or buildings thereon, if in their opinion it should be necessary, for the purpose of creating such building or buildings thereon. After the buildings were erected, the trustees executed mortgages to persons who had bestowed work and materials in their erection. It was objected, that under the power the mortgages could only be executed in order to create the buildings and before their erection, but the Yice-Chancellor held that the mortgages were valid within the spirit and intent of the statute.

The case of Waldron v. Macomb, (1 Hill’s R. 121,) cited by the defendants, is not applicable. It was a case at law, where under a power to executors to sell, they undertook to convey in fulfilment of a contract of sale made by the ancestor of their testator.

In the view which I have taken, it is not material to determine the competency of Wells as a witness for the complainants. It is my impression, that he was not liable personally on the contract with the complainants, (see Jones’s Devisees v. Carter, 4 Hen. & Mun. 184; 2 Hilliard’s Abr. 283, *24§ 31;) and therefore, that he was a competent witness in their behalf.

II. The defendants insist; that the mortgage is void as to Mrs. Williamson and Mrs. Cochran, because they were residents of this state, and could not, therefore, execute any power which would authorize the conveyance of their real estate.

The conclusion, to which I have arrived under the next point discussed, renders it unnecessary that I should consider the legal proposition involved in this point, in reference to Mrs. Cochran’s interest. And as it regards the share of Mrs. Williamson, I do not think that the objection is well founded in fact. The agreement, reciting and confirming the power, was executed by Mr. and Mrs., Williamson, at Edinburgh, in Scotland, several months after its date. They are described in it as residents of Geneva, New-York; but in the mortgage, their residence is stated to be in Edinburgh, and they are so described in the bill of complaint. Their agent, who verifies their answer, sets forth in his affidavit, that they are, at the time of making it, in Germany. It does not appear that they have resided, or been in the United States, since the date of the agreement. It is a reasonable inference from these facts, that they were residents of Scotland at the time they executed the agreement. This brings the case within the statute of 1835, (Laws of 1835, p. 315,) which recognizes the validity of powers of attorney for the conveyance of real estate by married women, resident out of the state.(a)

III. In behalf of Mr. and Mrs. Cochran, and their third part of the mortgaged premises, it was further objected that their marriage settlement did not authorize the trustee of Mrs. C. to execute any mortgage, and that the mortgage in question was in contravention of the trusts declared in the settlement. By that instrument, the trustee was authorized, whenever Mr. and Mrs. Cochran were minded to have any of the real estate “ bar*25gained, sold, aliened and conveyed in fee simple, and the proceeds arising from such bargains, sales, conveyances and grants, invested in stocks, placed out on securities, or laid out” in other lands, &c., and should signify such their mind and desire in writing signed in the presence of a witness; then the trustee might grant, bargain and convey, &c.

It is impossible to hold upon this instrument, that the trustee was authorized to mortgage the premises for any purpose. There is a dictum of Lord Macclesfield, in 3 P. W. 9, (Mills v. Banks,) that a power to sell and raise a sum of money, implies a power to mortgage; and such seems to have been the partial decision of Lord Cowper eighteen years before, in the same case. But as Sir Edward Sugden observes, (1 Sugd. on Powers, 538,) “ this cannot be treated as a general rule; for the intention of the parties and the nature of the case may render it apparent that a sale out and out only and not a mortgage is within the authority.” Here the disposition of the proceeds to arise from the alienation, precludes the supposition that a mortgage was ever within the intention of the parties delegating the power. The argument of Judge Co wen in the case, in 1 Hill, before cited, is clear and convincing on the question of intention in this case. So far as it affects the interest of Mrs. Cochran in the premises, I must hold that this mortgage is inoperative. The legal estate in fee was vested in Williamson on a trust which did not authorize him to mortgage. No consent or request of Mr. and Mrs. Cochran could confer upon him an authority to deviate from the terms of that trust. Nor could they institute any title in the premises, except in pursuance of the trust deed. (1 Rev. Stat. 730, §§ 63. 65;) Wood v. Wood, (5 Paige, 600;) Hawley v. James, (16 Wend. 164-5, per Bronson, J.)

I do not conceive that the complainants are therefore without remedy for the recovery of their debt against the estate of Mrs. Cochran. Her marriage settlement contains no restriction upon her power to deal with the property. And however it may be in regard to the real estate, under the provisions of the Revised Statutes which prohibit alienations in contravention of the trusts thereby authorized, her separate estate is in equity, chargeable with her debts contracted on the credit of it, as if *26she were a feme sole. North American Coal Company v. Dyett, (7 Paige, 9; 20 Wend. 570.)

The premises of Williamson and wife, and B. Clarke, are not liable for more than two-thirds of the debt. If the mortgage had been executed by them personally, it would have subjected their interest, in the land mortgaged, to the whole debt. But their attorney was not authorized to incumber the land, except for the specific purpose of improving it, and therefore could not charge it by way of securing the debt of Mr. and Mrs. Cochran.

The complainants are entitled to a decree against the undivided interests of Williamson and wife, and B'. Clarke, in the mortgaged premises, for- the payment of their costs of suit, and two-thirds of the mortgage debt and interest. The bill must be dismissed as to Mr. and Mrs. Cochran, but without costs, and without prejudice to the complainants’ claim against them, •or their joint or separate estate, for the remaining third part of their debt and interest.

On this subject see 1 Rev. Stat. 758, §§ 10, 11; 762, §§ 38, 39; Laws of 1835, Ch. 275, p. 325; 1 Revised Laws, 369, §§ 1, 2; Colonial Laws of N. Y., 82, (Van Schaack’s edition,) Act of October 30, 1710; ibid. 611, Act of February 16, 1771; Jackson v. Gilchrist, 15 Johns. 109; Bool v. Mix, 17 Wend. 129; Constantine v. Van Winkle, 6 Hill, 177; 2 Kent’s Comm. 151—2d Ed.