Newton v. Hunt

119 N.Y.S. 3 | N.Y. App. Div. | 1909

Lead Opinion

Laughlin, J.:

On the former appeal herein by the substituted trustees from an interlocutory judgment overruling their demurrer to the complaint on the ground, among others, that it failed to state facts sufficient to constitute a cause of action, this court sustained the complaint. (Newton v. Jay, 107 App. Div. 457.) The material facts bearing upon the sufficiency of the complaint and which have now been substantially proved as alleged, are stated in our former opinion, and may, therefore, so far as pertinent to the questions presented by this appeal, be discussed without being restated. Our decision on the former appeal constitutes the law of this case, so far as this court is concerned, and it follows upon proof of the allegations of the complaint that the plaintiff is entitled to some appropriate equitable relief.

After the former decision on the appeal answers were interposed by all of the defendants and the issues were brought to trial. The learned trial justice found every material fact alleged in the complaint and sustained every claim made thereon by the plaintiff with one exception. The learned counsel for the substituted trustees evidently contended on the trial, as he now does here, that the clause in the mortgage given by the defendant Anna Benkard Hunt, Frederick Percy Hunt, Lilian Catherine Hunt and Reginald Sidney Hunt, all of her children, excepting the respondent Rupert Herbert Hunt, who at thejhue of the execution of the mortgage was an infant and did not join therein, to Thomas Charles Line, made on the 1st day of July, 1898, providing that the said Anna Benkard Hunt, at the request of and with the concurrence of her adult children, released to them and to all persons interested in the trust estate as a condition of obtaining the loan from the mortgagee the power of appointment in unequal shares conferred upon her by herself or reserved to her by the indenture of November 18, 1879, to the end and intent that the trust estate should thereupon vest absolutely in her four children named therein, being all of her children, including the infant, share and share alike, subject only to her life interest therein, was not effectual to release and extinguish the power of unequal appointment among her children, that is to say, that it did not divest her of authority to exercise the power of appointment which she reserved or gave to herself by the indenture of November 18, 1879. If the trial justice had sustained the contention made in behalf of the plaintiff on this point, the judgment would have presently attached not only to the income, which, by the trust indenture, was given to the trustees for the use of the settlor of the trust during her life, but to a three-quarters interest in the remainder of the corpus of the estate as well, provided the remainder vested absolute in the children as was assumed by the parties to the mortgage and was asserted by both appellants and respondents and assumed by this court without examination on the former appeal. If the right of the children to share equally in the remainder had become fixed and vested absolute or absolute as to the settlor of the trust even though they only took a contingent estate in remainder and was no longer subject to be changed by an exercise of the power of appointment, the three of the four remaindermen who had attained their majority were perfectly competent to assign or to give an equitable mortgage on their vested interests, and such we consider it to be, whether such interests were vested absolute or subject to be divested by some event other than the exercise of the power of appointment, for their interests were alienable, as will be shown presently.

The notice of appeal of the plaintiff is, as has been stated in the statement of facts, from many parts of the judgment, which, however, depend upon the decision of the single question as to whether the settlor has, as against the owner of the indebtedness and the holder of the mortgage, extinguished all right to further exercise any power of appointment with respect to directing by will or otherwise that her children shall take the remainder in unequal shares, or that one or more shall take to the exclusion of others or another.

The learned counsel for the appellants other than the plaintiff request the court to reconsider the decision made on the former appeal, principally upon the-ground that the court overlooked or failed to follow the decision of the Court of Appeals in Noyes v. Blakeman (6 N. Y. 567). On the former appeal herein that case was cited in the points and examined by the court, but it was not deemed necessary to consider it in the opinion, for it was deemed inapplicable, in view of the later decision in Schenck v. Barnes (156 N. Y. 316), which expressly decided that where the settlor of the trust reserves to himself the beneficial interest for his life, such beneficial interest is subject to the claims of creditors, even though he were solvent at the time he created the trust. It necessarily follows from that decision that the prohibition against the alienation by a life beneficiary of rents, issues and profits, contained in section 63 of article 2 of title 2 of chapter 1 of part 2 of the Revised Statutes, does not apply where the life beneficiary is the settlor of the trust; and it necessarily follows that it was competent for the settlor of the trust to assign her interest in the income, as she did in the case at bar, by giving a mortgage thereon. Nothing in the case of Noyes v. Blakeman (supra) was, we think, intended to decide that the estate of the remaindermen, was by virtue of section 60 (1 R. S. 729) of the Revised Statutes vested in the trustees, so that their interests were inalienable. That point was not then presented for decision. The trustees took the interest and title of the beneficiary and the possession of the fund or property, to enable them to perform the trust; but the beneficiary has a right to have the trust performed and has a standing in equity to enforce it (Van Cott v. Prentice, 104 N. Y. 45, 53), and the trustees did not take the estates in remainder. (Baltes v. Union Trust Co., 180 N. Y. 183; Stevenson v. Lesley, 70 id. 512; Embury v. Sheldon, 68 id. 227, 234; Losey v. Stanley, 147 id. 560, 568.) The rule on this subject is the same, both with respect to personal property and with respect to real property. (Hutton v. Benkard, 92 N. Y. 295, 304; Cook v. Lowry, 95 id. 103, 111.) Estates in remainder, even if subject to be divested, are alienable. (Stringer v. Young, 191 N. Y. 157; Ham v. Van Orden, 84 id. 257, 270; Matter of Tienken, 131 id. 391, 401. See, also, Baltes v. Union Trust Co., 180 id. 183, and Hotchkiss v. Elting, 36 Barb. 38, 46.) It follows, therefore, that it was competent both for the beneficiary and for the remainder-men to give an equitable mortgage on their respective interests in the income and in the corpus of the estate as they did.

It was stated in the opinion on the former appeal, in effect, that the settlor of the trust, by her agreement with the parties in interest, as already stated herein, and by executing the mortgage, extinguished any right she had to make a further appointment with respect to the division of the remainder between her children. The decision of that question was not necessarily involved and is, therefore, not res adjudícala. The four justices who are voting for a modification of the decree in accordance with the views expressed in this opinion are equally divided in their views on that question, and for that reason, as well as for another to be stated presently, no opinion is expressed thereon now. In the circumstances, we deem it proper to defer a decision of the question as to whether the settlor of the trust may, by will or otherwise, give any further effectual direction with respect to the shares in remainder which her children "shall take, until her death, and to confine our decision to an adjudication that the plaintiff, by virtue of the mortgage, has a lien upon and is entitled to the income payable under the trust indenture to the life beneficiary, and to the interest and estate in remainder which the children, who joined in the mortgage had at the time of the execution of the mortgage of which they shall not have been divested by death or by the exercise by their mother of the right, if any reserved to her, to direct by last will and testament that her children shall take in unequal shares, if she has not released and relinquished such right and the reversionary interest, if any, in the settlor of the trust.

It appears by the judgment roll in an action in the Supreme Court in the county of Hew York, brought by one of the original trustees in July, 1879, against the other two, the settlor of the trust and her husband and her children, for leave to resign and for the substitution of William Jay and Alonzo C. Monson — respondent Rupert Herbert Hunt was not a party, for he was not born until after the termination of the litigation — that with the consent of the settlor, two of the original trustees resigned in 1879, after accounting in that action, and the third then, pursuant to authority conferred upon him by the original trust agreement, named Alonzo C. Monson and William Jay as substituted trustees on the nomination of the settlor of the trust, and then the plaintiff in that action resigned as trustee with the consent of the settlor; that before .these resignations the trustees had decided to exercise the power conferred upon them and advanced to the settlor the sum of $50,000 out of the corpus of the trust fund on condition that she should exercise the power of appointment reserved to her in the original trust indenture, which was a general power of appointment to be exercised by her by a last will and testament or an instrument in the nature thereof, and in default of such exercise, it was provided that the remainder should pass under the laws of the State of Hew York with respect to intestate property ; that she had exercised this power of appointment by the indenture of Hovember 18, 1879, to which reference is made and which is more fully described in the opinion of this court on the former appeal, and that,the court, in and by the judgment in that action, entered Hovember 26, 1879, accepted the resignations of the trustees and the appointment of the substituted trustees and conferred the same authority upon the substituted trustees as on the original, except as to advancing part of the capital to the settlor and naming successors, and fixing a new basis for the compensation, of the trustees pursuant to the settlor’s agreement with them, and it was further therein adjudged that the settlor had, by making the indenture of November 18, 1879, exhausted all right to exercise the power of appointment, and the court ratified and confirmed the disposition of the estate which she had thus made and adjudged that her action in exercising the power of appointment by said indenture- of November eighteenth was final and exhausted that power, and the $50,000, being the consideration for her exercise of the power of appointment, was ordered paid to her out of the principal. That judgment was, of course, binding upon all the parties and was binding upon the issue of the settlor then unborn, as well as upon issue in being, for their interests were the same as those presumptively entitled to take and they were necessarily represented by them. (Tonnele v. Wetmore, 124 App, Div. 686; revd., 195 N. Y. 436. See, also, Downey v. Seib, 185 id. 427.) It seems to me that the effect of that decree necessarily is that there remains no further authority in the settlor of the trust to exercise the original power of appointment. It would seem, therefore, in view of this decree, that there can no longer be any question with respect to the validity of this trust and the plaintiff has elected to proceed upon the theory that it was valid. Had it not been for the judgment of the Supreme Court, to which reference has been made, there would be a serious question as to whether the settlor could exercise the power of appointment reserved in the original indenture otherwise than by will, but the judgment forecloses that question.

The decree of the Supreme Court to which reference has been made confirms the trust indenture of November 18, 1879, which, in effect, reserves to the settlor authority to revoke by last will and testament the appointment as made, in whole or in part, as to one or more of the children, and to direct that another or others shall take the estate thus cut off, which might result in the children taking in unequal shares. The question whether it was competent for the settlor of the trust, as a condition of obtaining the loan to secure which the mortgage was given, to effectually release and relinquish this reserved right to give a further valid direction by her last will and testament with respect to the shares which the children should take as between themselves, is one which we do not now decide, for the reason that it may never arise, as she may not attempt to exercise the reserved authority and the indebtedness may- all be paid out of income, and in no event can it be determined until the death of the settlor of the trust, the precise interest in remainder, if any, which will he subject to the lien of- the mortgage. It appears by the trust indenture of November 18, 1879, that there is a possible interest in reversion in the settlor of the trust, for if all of the children should die during the life of their mother, without leaving lawful issue, the remainder was undisposed of and it would revert to her estate in the absence of a "will otherwise disposing of it. (Baltes v. Union Trust Co., 180 N. Y. 183; Hotchkiss v. Elting, 36 Barb. 38, 46.) We are of opinion also that although each remainderman took a vested interest in -the remainder by virtue of the trust indenture of November 18, 1879, such vested interest was subject to be divested by his death during the lifetime of his mother. The same was doubtless true with respect to his father, but the father has since died, which eliminates that question. The provisions of the indenture of November 18, 1879, upon which this question depends, follow the provisions authorizing the trustees to hold the corpus of- the estate during the life of the husband of the settlor, should he survive, and to pay over to him the surplus rents, issues and profits, and so far as material they are as follows : “And upon his death shall assign, transfer, convey and set over all and singular the said estate real as well as personal unto such children of the party of the first part as shall then be living and to the issue of such of them as shall have died in equal shares per stirpes and not per capita absolutely and forever. And this indenture further witnesseth that the party df the first part hereby reserves to herself the right to vary the disposition hereinabove made of the said trust estate hy her Last Will and Testament or by an instrument in the nature thereof hereafter to be executed 'by her by directing that a certain part of such annual income shall be paid to her children during the lifetime of her' said husband if she shall so desire, and also by directing and appointing that the said estate upon her said husband’s death shall be assigned, transferred, conveyed and set over nnto one or more of her children or to their issue to the exclusion of other of her children and their issue or that such estate be assigned, transferred, conveyed and set over unto said children and to their issue in such unequal shares as she may desire and as she may hereafter determine.

“And in the event of there being no child or children of hers, nor issue of a child or children living at the time of the death of the party of the first part, then she reserves to herself the absolute right of disposing of the said trust estate by her Last Will and Testament or instrument in the nature thereof, to any person or persons whomsoever, as she may desire, and she also reserves to herself the right to dispose by Last Will and Testament or by instrument in the nature thereof, of all and singular the said trust estate in the event of all her children departing this life without issue during the lifetime of her said husband, anything herein contained to the contrary in anywise notwithstanding.”

It seems quite clear, in view of these provisions, that any child who predeceases his mother would become divested of any interest in the estate, and that the same would vest on the death of his mother in his issue, and in the event of his leaving no issue then living, in the other children or their issue then living (Matter of Hogarty, 62 App. Div. 79); but they would take under the indenture and not from him.

The construction of the indenture in this regard was not presented for adjudication on the former appeal, and the court did not decide the question. The observation in the opinion on the former appeal that “ upon the execution of the deed of appointment and the relinquishment of the right to further exercise the power of appointment, the interests of the children, which were theretofore contingent, became vested subject only to the life estate of their mother, the legal title, however, being in the trustees ” (107 App. Div. 457, 468), was made with reference to the extinguishment of the right of the settlor to further exercise the power of appointment. The question as to whether the remainder vested absolute in the children, or was subject to be divested, was not only not necessarily involved in a decision of the appeal, but the court was not asked by either party to pass upon the question, and both counsel in their points assumed and expressly claimed that the remainder vested absolute in the children so far as the question now under consideration is concerned — they litigated the question as to the right of the settlor to exercise the authority reserved — and that theory of the construction of the indenture is still asserted by the plaintiff and not questioned by the defendants. On this point counsel for the defendant trustees who were the appellants on the former appeal stated in his points as follows : “ The rights of the children of Mrs. Hunt, under the terms of the marriage settlement, as resettled, became vested, and cannot be taken from them except by their consent. It must be borne in mind that the claim in this action is against Mrs. Hunt and all her children; two of her children, Lilian Catherine Hunt and Reginald Sidney Hunt, were parties to the mortgage, but her other son, Rupert H. Hunt, was not a party to the mortgage, and the plaintiff has no claim against him except that the plaintiff is endeavoring in this action to take from him some of his vested rights. Under the deed of trust as resettled the corpus of the estate vested absolutely in the children, subject to Mrs. Hunt’s life estate, and that of her husband, but she expressly reserved to herself the right to dispose by will of the corpus in such shares as she might see fit, and so she can now give to Rupert IT. Hunt the entire corpus of this estate.”

Counsel for the plaintiff who was the respondent stated in his points as follows: “ But, in addition to the interest of Mrs. Hunt, we have also an assignment of the interests of two of her children in the trust estate. That these expectant interests in remainder are assignable needs no argument. They are vested remainders, the possession only being postponed. * * * The power of appointment does not interfere with the vesting.”

It will thus be seen that the question as to whether the estates of the remaindermen were vested absolute, or subject to be divested by their death during the life of their mother, was not presented for decision on the former appeal, but would be necessarily involved if the court should now undertake to decide the precise interest in remainder that will be subject, on the death of the settlor of the trust, to the payment of this indebtedness, and since the interests of the mortgagor-remaindermen are subject to be divested by their death during the lifetime of their mother, it cannot now be known whether any share or interest in the remainder will be applicable to the payment of. the indebtedness, and since we are not in accord on the question as to whether the settlor may, by her last will and testament or otherwise, affect the interest in remainder which any child will take, we have reached the conclusion that we should merely declare the mortgage a lien upon the interest of the mortgagors in the estate at the time of the execution of the mortgage of which they shall not become divested by their death during the lifetime of their mother, or by the exercise of the authority or power reserved to the settlor by the trust indenture of November 18,1879, and not cut off or relinquished by the agreement and mortgage to which reference has been made.

The effect of the foreign adjudication was, we think, properly decided by the learned trial justice and needs no further consideration here. We agree with the learned trial justice that the income can be reached as it accrues from time to time in the hands of the substituted trustees. The contingent estates in the remainder of the other mortgagors might, perhaps, be presently reached by directing a sale thereof; but that relief does not appear to have been asked and no objection is made to deferring relief against the remainder until the expiration of the trust.

We think, however, that the court erred in adjudging that the substituted trustees are accountable to the plaintiff for all income received after notice of the claim made by plaintiff under the mortgage. The plaintiff took no further step toward asserting or enforcing "his claim after giving this notice, until he commenced this action some four years thereafter. In view of the fact that the Supreme Court in resettling the trust commanded the trustees to pay the income to Mrs. Hunt, I think they were justified in continuing to pay it after such notice until the plaintiff obtained an injunction, the appointment of a receiver or a judgment of a court of competent jurisdiction, declaring that the lien of the mortgage attached to the income as it accrues. The judgment, therefore, should also be modified by requiring the trustees to account only from the date of the decision of the trial court herein.

The judgment should be modified as herein indicated and by inserting appropriate provisions showing that it is not to be deemed an adjudication on the question as to whether or not it is competent for the settlor of the trust to direct by last will and testament that the remaindermen who joined in the mortgage shall take less than their interests as recited in the mortgage — the modifications to be made in the judgment to carry our decision into effect will be determined on the settlement of the judgment to be entered hereon — and as thus modified affirmed, without costs to any party.

Patteeson, P. J., Claeke and Scott, JJ., concurred; Ijtobaham, J., dissented.

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Dissenting Opinion

Ingbaham, J.

(dissenting);

There are several interesting questions presented by this appeal, and I wish, first, to state my conclusion without considering how far the court is concluded by the former decision on the appeal from the judgment, overruling the demurrer to the complaint. (107 App. Div. 457.) By the original deed of trust, dated the 31st day of July, 1872, it is quite clear that a valid trust was created. By that instrument the defendant Anna B. Hunt, then Anna Benltard granted, bargained, assigned, transferred and set over unto the parties of the second part the property described, which consisted of real and personal property, “ To have and .to hold the above described premises with the appurtenances, unto the said parties of the second part, and their successors and assigns upon the trusts nevertheless, and to and for the uses and purposes following, that is to say.” The trustees were to sell and dispose of the real and personal, property at such time and upon such terms as tlie trustees should deem proper; to invest and keep invested from time to time the net proceeds thereof; collect and receive the interest, income, rents, issues and profits therefrom, and' pay and apply the net interest, income, rents, issues and profits to the use of Anna Benkard, the creator of the trust, for and during her natural life, and after her death to pay and divide the real and personal estate, or the proceeds thereof, among such person or persons or body corporate and in such relative shares, estates or proportions as the said party of the first part should, by her last will and testament or instrument in writing in the nature of a last will and testament, designate and appoint, and in default of any lawful designation or appointment, then to pay and divide the said real and personal estate or the proceeds thereof among such person or persons as under the laws of the State of New York should then be the heirs at law of the party of the first part. This created an express trust under section 55 of the Statute of Uses and Trusts. (1 R, S. 728, as amd. by Laws of 1830, chap. 320, § 10.) Under section 60 of that statute (1 R. S. 729) every express trust, valid as such in its creation, except as therein, otherwise provided, “ shall vest the whole estate in the trustees, in law and in equity, subject only to the execution of the trust. The persons for whose benefit the trust is created, shall take no estate or interest in the lands, but may enforce the performance of the trust in equity.” Section 63 (1 R. S. 730) provides that “No person beneficially interested in a trust for the receipt of the rents and profits of lands, can assign or in any manner dispose of such interest.” The trustees became vested with title to the property transferred, and the interest in the trust property of those for whose benefit the trust was created was the light to enforce the performance of the trust in equity. At the time of the crea-, tian of this trust Anna Benkard, the grantor, was unmarried, and in default of the exercise by her of the power of appointment her heirs at law at the time of her death would become absolutely entitled to the remainder. The reservation of the power of appointment did not at all affect the trust, or vest in the grantor a beneficial interest in the remainder. Her interest as a beneficiary under the trust was entirely distinct from the right that she reserved to exercise this power. She parted with all title to the property which vested in the trustees. She had a right to enforce the performance of the trust in equity. She also reserved to herself a power of apjjointment of the remainder by a last will and testament, the two being entirely distinct; the right to appoint being one which could only become effective after her death and would necessarily depend upon her leaving a last will and testament by which only could the power be exercised. Upon the failure to exercise such power the estate would vest absolutely in those who would be her heirs at law at the time of her death so that the remainder would necessarily be contingent. Thus, if the grantor of the power should have children who should die before her, those children would never have any interest in the property, as they could never become the heirs at law of the grantor. The provisions of this original trust instrument, however, were seriously modified by the agreement of the 18th of November, 1879, and the judgment of the Supreme Court entered on the 26th of November, 1879, ratifying and confirming that agreement. On the 17th of November, 1879, an indenture was executed between Charles G. Landon, a trustee under the deed of trust of July 31, 1872, and Alonzo C. Monson and William Jay, which recited tlio instrument creating the trust; the resignation of two of the trustees; that the party of the first part was the remaining trustee and contemplated resigning his trusteeship and for that purpose had commenced an action in the Supreme Court to have the accounts passed, and that he be discharged from said trust; that Anna B. Hunt had consented that the resignation of all three trustees should be accepted and requested that Alonzo C. Monson and William Jay, the parties of the second part, should be appointed as the successors of the said trustees. The indenture witnesses that the party of the first part, the remaining trustee, nominated, constituted and appointed the said Monson and Jay, parties of the second part, to be trustees under the deed of trust of the 31st of July, 1872, and that for the purpose of vesting said Monson and Jay with all the said estate, real and personal, the said party of the first part did grant, bargain, alien, release, transfer and set over to Monson and Jay, their successors and assigns, all the trust estate, real and personal, then held under the provisions and trusts of said indenture, subject to the trust contained in and created by the said indenture or deed of trust. It was further recited that on the 18th day of November, 1879, an indenture had been executed between Anna B. Hunt, the original creator of the trust, and Monson and Jay, which recited the trust deed of the 31st of July, 1872, the resignation of the three trustees provided for in said trust deed, and the appointment of Monson and Jay as trustees under the said trust deed; that the original trustees had exercised the discretion in them vested in and by the said trust deed by advancing to the said Anna B. Hunt the sum of $50,000 out of the principal of the estate on condition that she should upon receiving the same exercise the power of appointment by her reserved in the said trust deed, and designate and appoint by deed under seal the persons to whom said estate was to be paid over, distributed and divided at her death; that the said Anna B. Hunt had determined, so to exercise her said power of appointment to her reserved and to dispose of the estate held in trust as thereinafter set forth. The indenture then witnessed that in consideration of the premises and the sum of $50,000, paid to her by the said trastees, the said Anna B. Hunt did, by virtue of the power to her reserved in and by the said deed of trust, designate and appoint that the estate remaining in the hands of the trustees at the death of the said Anna B. Hunt should be paid over, divided and disposed of by paying the rents, incomes and profits thereof to her husband during his life, and upon ins death to assign, transfer, convey and set over the said trust estate unto such of her children as should then be living, and to the issue of such of them as should have died, in equal shares per stirpes and not per capita absolutely and forever; the said Amia B. Himt, however, reserved to herself the right to vary the disposition made of the said trust estate by her last will and testament, or by an instrument in the nature thereof thereafter to be executed by her, by directing that a certain part of such annual income should be paid to her children during the lifetime of her said husband if she should so desire, and also by directing and appointing that the said estate upon her husband’s death" should be assigned, transferred, conveyed and set over unto one or more of her children or to their issue, to the exclusion of other of her children and their issue, or that such estate be assigned, transferred, conveyed and set over unto said children and to their issue in such unequal shares as she might desire and as she might thereafter determine; that in the event of there being no child or children of hers, nor issue of a child or children, at the time of the death of the said Anna B. Hunt, then she reserved to herself the absolute right of disposing of the said estate by her last will and testament, or an instrument in the nature thereof, to any person or persons whomsoever as she might desire.

Subsequent to the execution of these two instruments judgment was entered in the action commenced by the remaining trustee and to which the said Anna B. Hunt, her husband and all of her children, except the defendant Rupert Herbert Hunt, who was then unborn, were parties. That judgment recited the conveyance by the plaintiff to the substituted trustees, the indenture by which the defendant Anna B. Hunt had received the sum of $50,000 on condition that she should exercise the power to her reserved of appointing by her last will and testament or otherwise the manner in which the remainder of the said trust estate should be vested and divided at her death; that the said Anna B. Hunt, in consideration of such payment, had so exercised the power and had, by an instrument duly executed under her hand and seal, duly appointed the manner in which said trust estate should be vested and distributed at her death. It was ordered, adjudged, decreed and declared that the power of the defendant Anna B. Hunt reserved by the said trust deed of appointing and directing the manner in which said trust estate should be paid over and divided at her death had been duly and effectually exercised and exhausted by her execution of a certain indenture of deed under her hand and seal dated the 18th day of November, 1879, whereby she appointed and directed in substance that the two trustees or their successors should hold the said trust estate - during the lifetime of her husband, the defendant Percy Hunt, if he should survive her, and should pay him the income thereof, or such part of said income as she might by her last will direct to be paid to him, and upon his death or her death, as the case might be, that they should divide the principal of said estate equally among her children, and the issue of such of them as should have died before that time per stirpes, or to pay •over and divide the principal of said estate to and among- her children and their issue in such shares and proportions as she might by her will direct, all of which, by reference to said original deed or to the record thereof, when the same should have been recorded, should more fully and at large appear; and it was further ordered, adjudged and decreed that the said appointment and disposition of the said estate so made as aforesaid wns ratified and confirmed, and it was thereby declared that the power to appoint and dispose of the said estate had been exercised and exhausted, and that such appointment and disposition were effectual, final and irrevocable.

The effect of this instrument, ratified and confirmed by the judgment, was to limit the power of appointment reserved by Anna B. Hunt, so that it thereafter could only be exercised according to the terms of the instrument judicially declared to be effectual and irrevocable. It bound all the parties to that action, including Anna B. Hunt, in whom the power to dispose of the remainder of the property had theretofore existed. It still reserved, however, to Anna B. Hunt the right by a last will and testament, or instrument in the nature of a' last will and testament, to distribute the remainder among her children as she wished, either in unequal proportions or by excluding one or more of her children and appointing one or more of them to receive the entire trust estate upon her death. It was adjudicated that a valid trust existed; that the legal title of the corpus of the trust was in the trustees and that the right of the beneficiaries was restricted to an enforcement of the trust in equity. The trust existing and the trustees holding the title to and possession of the property in July, 1898, the indenture upon, which this action is based was executed. The defendant Anna B. Hunt and her children were therein described as residents of Paris, France. She and her children who were of age united in what was called a mortgage to secure the sum of £9,200. This instrument recited the trust indenture of July, 1872, and also the indenture of the 18th of November, 1879. It also recited that .the said Anna B. Hunt had reserved a power to vary such disposition by her will by appointing such trust estate to her children in unequal shares, or to one or more children or their issue to the exclusion of the others. It then provided that the mortgagors jointly and severally covenanted to pay to the mortgagee the sum of £9,200 with interest thereon ; that the mortgagors as to the share to which she or he was or should become entitled under the said indenture of the 31st of July, 1872, and the 18th day of November, 1879, or in any other manner whatsoever and as beneficial owner, did grant, appoint, bargain, sell, assign, transfer and set over unto the mortgagee all the real and personal estate and all other the trust estate comprised in or then subject to the trusts of the said indenture of the 31st of July, 1872, and the 18th day of November, 1879, or either of them, to hold unto and to the use of the mortgagee, subject to the proviso for redemption thereinafter contained. It was further provided that the said Anna B. Hunt, at the request and with the concurrence of the said Frederick Percy Hunt, Lilian Catherine Hunt and Reginald Sidney Hunt, released unto the said Frederick Percy Hunt, Lilian Catherine Hunt and Reginald Sidney Hunt and all other persons interested in the said trust estate the power of appointment in unequal shares or to one or more child or children to the exclusion of the others, to the end and intent that the said trust estate shall vest absolutely, subject to the life interest of the said Anna B. Hunt, in the said Frederick Percy Hunt, Lilian Catherine Hunt, Reginald Sidney Hunt and Rupert Herbert 'Hunt in equal shares; and the said Frederick Percy Hunt, Lilian Catherine Hunt and Reginald Sidney Hunt mutually covenanted and agreed to divide equally, notwithstanding any such appointment or attempted appointment, every and all parts and interests in such trust estate to which they may respectively be or become entitled, with a covenant of further assurance. By this instrument a lien was created upon the interest of the mortgagors in all the real and personal estate and all other the trust estate comprised in or then subject to the trust. There was no assignment or attempted assignment of the income which was payable to Anna B. Hunt for her life. Wliat was transferred to secure the payment of this loan was the real and personal estate which constituted the trust. Anna B. Hunt attempted to release unto her three children who joined with her in the execution of the mortgage the power of appointment in unequal shares to one or more child or children to the exclusion of the others, and her three children then mutually covenanted and agreed to divide the trust estate equally, notwithstanding any such appointment or attempted appointment. So that upon the termination of the trust the entire trust estate would vest in Anna B. Hunt’s four children, and the three children who executed the mortgage conveyed their interest in the trust property to secure the payment of the amount secured.

I can find nothing in this instrument which either directly or by necessary implication assigned or attempted to assign the future income from the trust property to accrue to Anna B. Hunt during her life. The whole transfer relates to the real and personal estate and all other of the trust estate comprised in and subject to the trust to continue during Anna B. Hunt’s life. It is the trust estate that is subject to the trust that is assigned and transferred to the mortgagee, and full effect can be given to every covenant and agreement in this instrument by construing it as transferring the interest of those executing it in the remainder, and excluding from the effect of the mortgage, which it nowhere attempts to assign or transfer, the income upon the trust property during the continuance of the trust. After default had beer, made in the payment of the amount loaned, the plaintiff commenced an action at law in the courts of England to recover the amount of the loan. The mort- " gagors appeared in that action, interposed an answer and there resulted a money judgment in favor of the plaintiff for the amount due with interest. That judgment is set forth in the complaint and was proved upon the trial, and, as I understand it, the learned trial judge held that it was a binding adjudication, both upon those parties to it and the trustees who yvere not parties to that action as to the effect of this mortgage. Upon default in the payment of the amount of this loan to secure which this mortgage was given undoubtedly the mortgagee had an action to foreclose the mortgage, in which case under a proper judgment the interest of the mortgagors in the property mortgaged could have been sold and the proceeds applied to the payment of the indebtedness; but to such an action the trustees would be neither necessary nor proper parties ; or the mortgagee as a creditor of the mortgagors could, upon having exhausted his remedy at law, have commenced a creditor’s action to have applied to the payment of hip debt the equitable rights and interest of the mortgagors. But the plaintiff has not commenced either of these actions. He has apparently seen fit to treat this mortgage as an absolute transfer to him of the interest of all of the mortgagors in this trust, and commenced this action to recover from the trustees so impelí of the trust property as will discharge the amount of his demands.

In a creditor’s action it is undoubtedly the rule that judgment against the debtor is conclusive evidence to establish the existence and amount of the loan from the debtor to the creditor. The cases upon this question are reviewed in Nicholas v. Lord (121 App. Div. 924; affd. by the Court of Appeals in 193 N. Y. 388); but what was established by the English judgment, and all that was established by it, was the existence and amount of the debt of the mortgagors to the mortgagee. In Nicholas v. Lord the debtor transferred certain property to trustees in trust, to pay any just debts which'the grantor then owed. The action was brought against the trustees to recover a debt which the debtor then owed, and which lias been established in an action in this State by a judgment in favor of the plaintiff against the transferrer of the property; and it was held that the recovery of that judgment was conclusive evidence as to the existence of the debt and its amount as against the trustee. Undoubtedly in an action to foreclose this mortgage the English judgment would be conclusive evidence that the mort-' gagors were indebted to the plaintiff, and as to the amount of the indebtedness and in a judgment creditor’s action to reach the equitable assets of a judgment debtor the English judgment would be conclusive evidence to the same extent. It seems to me, however, that this action cannot be sustained as a creditor’s action. It is not alleged in the complaint, nor is it claimed, that the plaintiff has exhausted his remedy at law against the defendants. No judgment has been recovered in this State against the defendants, and no judgment has been recovered in France, where the debtors reside. A judgment creditor’s action cannot be founded upon the English judgment, for the debtor did not reside there, and assumably had no property there; and in no case has it been held that a judgment recovered against a debtor in a foreign country in which the debtor was not domiciled can be the basis of a creditor’s action in another jurisdiction from that in which the judgment was recovered. This court has held that a creditor’s action to reach a trust fund in this jurisdiction could only be maintained where a judgment had been obtained in this jurisdiction against- the debtor and execution thereon returned unsatisfied. (Dittmar v. Gould, 60 App. Div. 94. See, also, Ward 14. Boyce, 152 N. Y. 191; Capital City Bank v. Parent, 134 id. 527.) Schenck v. Barnes (25 App. Div. 153; affd., 156 N. Y. 316) was an action brought by a judgment creditor to reach property conveyed by the judgment debtor to a trustee upon trust to collect the rents and profits thereof and to apply them-to the use of the grantor during his life, with remainder over. The action wag based upon a judgment against the defendant judgment debtor recovered in this State, the issue of an execution thereon and its return unsatisfied, and the judgment asked for was that the court determine the amount of interest which the defendant Barnes reserved to himself in and to the said trust fund; that the right to such interest be sold and the proceeds be applied to the satisfaction of the plaintiff’s judgment. There was a demurrer to the complaint, which has been sustained at the Special Term, but which the Appellate Division overruled, and the judgment of the Appellate Division was sustained by the Court of Appeals. In the opinion of Mr. Justice Cullen in the Appellate Division the principle upon which the action was sustainable-was discussed, and it was there treated solely as a judgment creditor’s action based upon the judgment in this State, the court stating that “There is, therefore, but one question presented, and that a narrow one, i. e., whether such an interest, reserved for his own benefit by the founder of a trust, is subject to the claims of his creditors; ” but botli in the Appellate Division and the Court of' Appeals it was expressly stated that the court did not determine in what manner the debtor’s life interest could be appropriated to the plaintiff’s claim; and it is not necessary to determine it in this action, as the absence of a judgment against the debtor and the return of an execution unsatisfied prevents the action from being treated as a judgment creditor’s action. Nor do I think the judgment in its present form could be sustained as a judgment in an action to foreclose a mortgage. As before pointed out I can find no provision in the indenture of mortgage which actually imposes a lien upon the accruing income. All that is actually mortgaged is the corpus of the trust property, and the legal effect, it seems to me, of this instrument is to create a lien upon the coi'pus of the trust estate subject to the trust. I assume that the mortgagee would have a right to maintain an action for the foreclosure of that mortgage, and upon a judgment of foreclosure the court would be justified in selling the interest of the mortgagor in the mortgaged property and apply the proceeds to the payment of the plaintiff’s indebtedness, but the plaintiff did not demand such a judgment and no such judgment has been granted. The court, by its judgment, determined that the plaintiff by virtue of the mortgage instrument of July, 1898, and the assignments thereof has a lien upon the beneficial life interest of the defendant Anna Benkard Hunt, and upon the vested remainders of the two defendants Lilian Catherine Hunt and Reginald Sidney Hunt which equity will enforce; that the lien upon the beneficial life interest of the defendant Anna B. Hunt became and is effective as against the trustees from January 11, 1900, and the judgment then directed the trustees to pay over to the plaintiff any sum or sums that may have come into their hands as rents, issues, profits and income from the trust estate from January 11, 1900, sufficient to satisfy and pay the plaintiff’s debt of $57,353.55, and the trustees are directed on the death of Anna B. Hunt to pay over to the plaintiff equally out of any shares that might be coming to the two defendants Lilian Catherine Hunt and [Reginald Sidney Hunt, or out of the share that might be coming to either of them in case the other may have died prior to the death of Anna B. Hunt any balance that might be due and at that time remained unpaid to the plaintiff on said mortgage debt.

In my view this judgment is erroneous so far as it applies to the income accruing to the defendant Anna B. Hunt, for the reasons before stated, that her income is not charged with a lien in favor of the plaintiff. It is also erroneous in directing the trustees to pay out of the principal of the trust upon the death of Anna B. Hunt the amount of the debt due to the mortgagee, as it seems that the proper relief to which the plaintiff would be entitled would be a judgment foreclosing the mortgage and directing a sale of the mortgagor’s interest in the trust property. In an action to foreclose the mortgage there would be presented the question as to whether or not there ever was a valid mortgage or lien created upon this property, and I do not understand that the English judgment is sufficient to prove the actual existence and delivery of the mortgage. ' Upon the trial the defendants attempted to show that the mortgage was delivered to a solicitor for the purpose of obtaining a loan of money, but no loan of money was ever obtained and no money paid to the defendants by either the mortgagee or by the solicitor to whom it was delivered for the purpose of obtaining a loan of money. All of this testimony was excluded by the learned trial judge upon the ground that the English judgment was conclusive as to the delivery of the mortgage and that the plaintiff legally acquired title,thereto. Considering the form of the English judgment and the sole question presented to the court upon the trial of that action, I do not think that the force of the English judgment applied so as to estop the defendants from proving that there was never a valid delivery of the mortgage, and that as between the mortgagor and the mortgagee, it never became a valid and existing lien upon the mortgaged property. Full effect and credit can be given to the English judgment as establishing a common-law liability in favor of the plaintiff against the defendants, without extending the force of that judgment to the existence of a valid lien in favor of the creditor upon the defendants’ interest in this trust property. There is no question of estoppel, as the plaintiff’s testator never saw this mortgage, or heard of it until after lie had advanced the money to the English solicitor and the solicitor had become bankrupt and neither the plaintiff’s testator nor the mortgagee advanced any money on the mortgage or any recitals therein. It is perfectly apparent from the evidence that the plaintiff’s testator’s money which was placed in the hands of the solicitor for investment was not itself paid by the solicitor to the defendants, and the attempted assignment of this mortgage to the plaintiff’s testator was never consummated until after the solicitor had become bankrupt and had swindled the plaintiff’s testator out of the money which had been intrusted to him. There can be no question but that as.between the mortgagor and an assignee of the mortgage, all of the equities as • between the original mortgagor and mortgagee are open for investigation ; and upon the facts here proved, it seems to me that there was no justification for a finding that this mortgage had ever been actually delivered to the plaintiff’s testator, or that it ever created an existing lien, either in favor of the original mortgagee, the solicitor to whom the mortgage was subsequently assigned, or the plaintiff’s testator. The equities in this case are strongly with the defendants. It seems to me to be greatly extending the force and effect of the English judgment to hold that it was conclusive evidence of the delivery of the mortgage and that it created a valid and existing lien upon the defendants’ interests in this trust property. I do not think, therefore, that this judgment can be sustained.

We are then presented with the question as to how far the former decision of this court upon the appeal from the judgment overruling the demurrer to the complaint disposes of the questions heretofore discussed. I do not understand that the court determined the form of the judgment to which the plaintiff would be entitled if the facts alleged in the complaint were proved. Nor do I understand the court to have decided that this judgment was conclusive evidence of the validity of the mortgage and that it created a lien upon the defendants’ interest in the estate. The court did decide "that there was a good cause of action alleged in the complaint. The complaint alleged the execution and delivery of the mortgage and that the plaintiff was the owner and holder thereof. The questions that I have discussed, I do not think, therefore, were directly j>resented to the court on the former appeal; nor do I understand that the court determined these questions.

My conclusion is that the judgment appealed from should be reversed and a new trial ordered.

Judgment modified as stated in opinion, and as modified affirmed, without costs. Settle order on notice.