62 A.2d 394 | N.J. | 1948
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *161 The complainant has appealed from a decree of the former Court of Chancery dismissing a bill to partition premises in Newark originally owned by Rosa Buccino. The latter died in 1932, devising the land to her husband, Nicola Buccino, for life, with a remainder in fee to her son, Frederick Buccino, in trust, to sell the land and immediately to divide the proceeds equally among testatrix's ten children, one of whom was the trustee. In 1934 a judgment creditor of Frederick Buccino levied execution upon his interest in the land and his interest was thereupon sold by the Sheriff of Essex County in October, 1934, to the complainant's predecessor in title. The *162 life tenant, Nicola Buccino, died in 1935. In 1943 Frederick Buccino, as trustee, gave a deed purporting to convey full title to the land to a predecessor in title of defendants Donato Gradone and Filomena Gradone, his wife.
The bill of complaint for partition was filed by the complainant in 1946 against the defendants Gradone and the defendant Shepherd Savings and Loan Association, which holds a mortgage on the premises given by the immediate predecessor in title of the Gradones. In the bill the complainant claimed title in fee to an undivided one-tenth part of the premises, by virtue of the levy of execution and sheriff's sale in 1934. The learned Vice Chancellor on the pleadings determined that the complainant was not in laches, but declined to determine (1) whether or not the complainant had title to an undivided one-tenth part of the land and (2) whether or not the mortgage of the Shepherd Savings and Loan Association constituted a lien on that undivided part. Thereafter on the application of all parties an issue was framed and sent to the Supreme Court for its opinion on these two questions, a practice, it may be remarked in passing, that is no longer either necessary or proper under the new Constitution. It was thereupon certified to the Court of Chancery that, since a trust estate is not liable to seizure and sale on execution at law, complainant's title arising from an execution at law was not such as "will entitle her to partition." On the basis of this certification a decree was entered dismissing the bill.
The complainant appeals on the ground that since Frederick Buccino, who was the trustee of the remainder in fee, was also a beneficiary to the extent of one-tenth of the remainder, his equitable interest as beneficiary merged with his legal interest as trustee, thereby giving him full and complete legal and equitable title to an undivided one-tenth interest in the lands, which interest was subject to execution at law.
The gift of the remainder in trust, although merely to sell the land and distribute the proceeds, was an active trust, Martlingv. Martling,
As has been noted, however, Frederick Buccino, the trustee of the remainder in fee, was also one of the ten beneficiaries of the trust. This raises a question as to whether there was a partial merger so as immediately to give to Frederick Buccino the complete legal and equitable title to an undivided one-tenth interest in the remainder in fee, thereby making his interest subject to levy and execution at law. Although the decisions in this State are in conflict, the precise question has never been considered in the court of last resort. Extending the sound rule that a sole trustee, who has also the entire beneficial interest, holds the property free of the trust, the earlier cases in this state held that where there were several trustees or beneficiaries and one or more of the trustees were also beneficiaries, a merger of the equitable interest of the trustee-beneficiary into his legal interest took place, Cooperv. Cooper,
"Such a view, however, is objectionable since it defeats the purpose of the settlor in creating the trust. He intended that the whole legal interest should be subject to the trust to the same extent as though a third person were trustee. There is no reason of public policy requiring that the intention of the settlor should be thus defeated. Moreover, as a matter of legal technique, the view is unsound. The trust property given to the trustee was the whole of the trust property, and not two undivided shares or successive interests. It is the equitable interest of the beneficiaries and not the legal interest of the trustee which is divided. The trust attaches to the whole of the trust property, and no part of it is held by the trustee free of trust."
See also Restatement, Trusts, § 99; 1 Bogert on Trusts andTrustees, § 129, p. 383:
"But if there are two or more trustees or two or morecestuis, a diversity arises. The two or more trustees hold their interest (generally legal) as joint tenants. The title is vested in a group as a unit; while the two or more cestuis hold their equitable interests as tenants in common in almost all cases. This slight difference in the character of legal and equitable interests may justify the refusal to apply merger except in the instance of a single person as sole trustee and sole cestui. Thus, even if A and B hold a legal fee as trustees for A and B who have the complete equitable interest, the difference between joint tenancy and tenancy in common may be ample ground for leaving the trust intact."
The decision in Rankine v. Metzger,
"The trust itself is not severable; it is one and indivisible. The surviving trustee had clear authority to execute the trust provision as to eight-ninths of the trust property, and in this respect he was subject to no infirmity whatever. The authority was to sell the whole interest. The trustee could no more save out his own share from passing under the execution of the power than he could the interest of any other child, and if he sought to make severance he could not do it, as the interest of each would be equal to his own in the part reserved. As the trust was good in its inception and was indivisible, the partial interest of the trustee, we think, may not intervene to defeat its execution, and upon the death of his cotrustee the power was properly executed and conveyed good title."
The complainant relies on a group of English cases and early New Jersey cases which follow their reasoning. The English authorities are of no force here because of our fundamentally divergent view of the power of the settlor and the beneficiaries of a trust over the trust res. In England the beneficiaries of the trust may by united action terminate the trust, notwithstanding the fact that to do so may nullify the intention of the settlor, 3 Scott on Trusts, § 337. In this State it is the intention of the settlor of the trust that governs and not the desires of the beneficiaries, Restatement, Trusts, §§ 337, 341 and the New Jersey cases cited supra. Cooper v. Cooper,
The case of Morse v. Hackensack Savings Bank,
"The estate which the heirs took at the testator's death was an actual estate, which was alienable, devisable and descendable, and liable to be seized and sold as lands; but when the power of sale was exercised, the estate of the heir or his alienee was determined, and the purchaser under the power became seized under the devisor by a title paramount to the title of the heir by descent * * * (p. 283).
"He (the executor) had not the capacity to do any act in relation to the trust property which would enure to his own benefit and oppose to impair or defeat the trusts he undertook to perform." (pp. 285-286).
Inasmuch as a trust estate is not liable to seizure and sale on execution at law, Cowan v. Storms,
For reversal: None.