118 Ala. 273 | Ala. | 1897
Lead Opinion
On the 30th day of April, 1847, John Falconer, in consideration of $900 paid by Mary Jane Robinson, bargained, sold and conveyed, by deed in fee, with warranty, unto Thomas Welsh, the lands in controversy, situate in the city of Montgomery, Alabama, “in trust and for the sole and separate use and benefit of the said Mary Jane Robinson during her natural life, and, at her death, to the issue of the said Mary Jane Robinson, by her marriage with her present husband, Seth Robinson, free from all liability for the debts, contracts of her present or any future husband, with the power to bargain and sell and such assurances to make of the same to any person, on request of said Mary Jane Robinson, in writing, and invest the proceeds of the sale thereof in such property as the said Mary Jane Robinson may select, and the same to be held subject, in like manner, to the uses and trusts hereinbefore stated.”
On the 30th day of January, 1854, as the deed recites, said “Thomas Welsh, trustee for Mary Jane Robinson, for and in consideration of three thousand dollars, to the said Mary Jane Robinson in hand paid, by Nathnaiel H. Wright, the receipt whereof is hereby acknowledged,” by deed in fee, with warranty, granted, bargained, sold, enfeoffed and confirmed unto the said .Nathaniel H. Wright, a certain part of said lands. This deed was signed and sealed by “Thomas Welsh, trustee,” and by said Mary Jane Robinson. At the same time, Seth Robinson, the husband of said Mary Jane, executed a quit claim deed to said premises to said Wright. By mesne conveyances from. Wright, this property was, in March, 1873, duly conveyed to the defendant, George W. Stone, vesting in him all the title of the said Wright. Immediately after the execution of the Welsh deed to Wright, in Í854, he, Wright, took possession of the granted premises, as rightful owner, and he and those succeeding to Ms right and possession, including the defendant, Stone, have since held independent and adverse possession thereof.
The said Mary Jane Bobinson died in December, 1889.
On the 5th day of August, 1890, a bill was filed in the chancery court by the remaindermen created by the Falconer deed, against the devisees of said Mary C. Pierce and against the said George W. Stone, setting up alleged breaches of trust on the part of Welsh, the trustee, knoAvn to, and participated in by the said several purchasers from him, and knoAvn to said Stone, in that the purchase money Avas not, in either ease, received and invested by Welsh, as trustee, as required by the terms of the trust, but that the same was suffered to be received, and Avas received, in the one case, by Mrs. .Bobinson, and in the other, by her husband; and the bill avers that he, Welsh, died many years ago without leaving any estate, and Avithout ever having received anything whatever for or on account of the said sales of said trust property; and without ever making, and Avithout any one else making, any reinvestment Avhatever of the proceeds of either of said sales. The prayer Avas that complainants be decreed to be entitled to said lands; that the several holders thereof be required to convey the saíne to them, and that an account of the value of the use and occupation of said property since the death of said Mary Jane Bobinson be taken and the defendants decreed to pay the same, and for general relief. The respondents set up, in bar, inter alia, laches of complainants, and staleness of demand.
The cause coming on for hearing before us, on appeal, upon consideration of the questions and line of argument then prominently addressed to our attention, Ave
After that decision, real actions were instituted by the complainants, in the circuit court, and prosecuted to verdicts and judgments in their favor; and from those judgments appeals were prosecuted to this court, and are now before ns. We have before us, also, the said application for a modification of the former opinion, in the equity cause.
The opinion we now hold is that the conveyances executed by Welsh, the trustee, though infected with palpable breaches of trust, apparent upon the faces of the conveyances themselves, were yet, in the view of a court of law, Aralid executions of the trust, passing the legal title in fee to the premises to the grantees, respectively, leaving a resort to a court of equity as the appropriate and only remedy of the beneficiaries of the trust for redress of the breaches of trust committed by Welsh and his vendees.
The first questions are: What title did Wesh, as trustee, have when he conveyed to Wright and Pierce? Was it a fee or less estate? If there is an axiom in the law, it must be regarded as axiomatic, in the construction of active trusts, that t'he trustee, (not a bare donee of a power), irrespective of the estate the instrument purports to convey, will take, thereunder, precisely that quantum of legal estate which is necessary to the discharge of the declared powers and duties of the trust, no more and'no less; so that if t'he instrument imports a larger estate .than is thus essential, it is cut down to the measure of the exigencies of the trust; as where t'he conveyance to the trustee is in fee, and the trusts re
It is also laid down, and nowhere disputed, that,
Then, the inquiry arises, what has become of this fee simple title, so vested in Welsh, the trustee? The case shows that during the life of Mrs. Robinson, upon her request, in writing, manifested by her signing and sealing the deed, in the one case, and actually joining in the deed, in the other, Welsh, the trustee, upon valuable considerations, by his deeds, respectively, granted, bargained, sold and conveyed to Wright and Pierce, respectively, his entire title and estate in the premises; in the one case, with the usual covenants of warranty, etc., and the other by quitclaim. In the deed to Wright he expressly declares, upon its face, that he conveys, as trustee; in that to Pierce, the law imputes the act to that capacity for the reason that he had no pretense of
Mr. Lewin (p. 221) says: “It may be stated as a general rule, that the legal estate in the hands of the trustee has, at common law, precisely the same properties and incidents as if the trustee were the usufructuary owner.” He proceeds to give numerous illustrations of the rule, and reaching page 225, says: “A trust estate, whether real or personal, may, at law, be conveyed, assigned or encumbered by the trustee like a beneficial estate; and if there be co-trustees, each may exercise the like powers of ownership over his own proportion. Thus, if lands be vested in trustees as joint tenants, each may, at law, receive the rents, and each may, at law, sever the joint-tenancy by a conveyance of his share.” He also shows that a devise by the trustee of the trust estate, will at law pass his title to the devisee. But, of course, all such dispositions are subject to the equitable rights of the cestui que trust. Thus, the same author says, at page 572: “In a court of law, the-trustee, as the absolute proprietor, may of course exercise all such powers as the legal ownership confers; but, in equity, the cestui que trust is the absolute owner; and the question we have to consider in this place is, how far the trustee may deal -with the estate without rendering himself responsible in the forum of a court of equity.” He then proceeds to set forth, at length and in detail, the rights, powers, and liabilities of the trustee, in a court of equity.
Mr. Perry says: “As a general rule, the legal estate in the hands of a trustee has at common law precisely the same properties, characteristics, and incidents, as if the trustee were the absolute beneficial owner. The legal title vests in him together with all the appurtenances and all the covenants that run with the land. The trustee may sell and devise it, or mortgage it, or it may be taken on execution. It may be forfeited, and it will escheat on failure of heirs, and so it will descend to heirs on the death of the trustee. All these proper
In Huckabee v. Billingsly, 16 Ala. 414, Huntington executed to Howell a deed, in trust, to secure a debt due to Harrell, and secondarily to secure debts due to the Branch Bank at Mobile. Without the debts to tin? bank being paid, the trustee, in plain contravention of the trust, executed to the trustor, Huntington, a quitclaim deed in consideration of the payment of the Harrell debt. Afterwards, in strict pursuance of the power of sale contained in the trust deed, he, the trustee, sold the property to the plaintiff, and executed to him his deed thereto. The court held that the quitclaim of the trustee to the trustor divested the title of the former, and revested it in the latter, and that the action of trespass to try titles, founded on the subsequent deed of the trustee to the plaintiff, under the power, could not be maintained. Chief Justice Collier discussed the subject at length; saying, inter alia, that, “A trust estate, whether real or personal, may, like a beneficial estate,
In McBrayer v. Cariker, 64 Ala. 50, Chief Justice Biuckell said: “The general rule, insisted on by appellant, may be conceded, that at laAv the trustee, clothed Avitli t'he legal title, unless restrained by the terms of the trust, may convey, assign, or incumber the trust estate; and if the cestui que trust is injured he must resort to a court of equity for relief;” citing Huckabee v. Billingsly, supra. But, in that case, the conveyance of the trastee, relied upon, Avas made after the actiAre duties of the trustee, under the terms of the deed, had terminated, if, indeed, the trust had ever been an active one — a question AAdiich t'he court said it Avas unnecessary to decide; and it Avas correctly held that the trustee had no title to convey, at the time he executed his deed. The authorities are uniform that after all poAver in the trustee to perform an active duty, under the peculiar terms of the trust, ceases, his title, which Avas commensurate only Avit'h the duty, also ceases, and thereafter lie can conA^ey none to another. Comby v. McMichael, 19 Ala. 747; Doe ex dem. Gosson v. Ladd, 77 Ala. 223.
In Hairston v. Dobbs, 80 Ala. 589, the executor of a Avill Avas given “full poAver to purchase or sell property he may think necessary or proper, * * * * * * or to dispose of anj- property for the benefit of the estate.” He sold and conAmved lands of the estate to Dobbs. Held, that, though the conveyance may have been made in payment of an individual debt due by the executor to Dobbs, (a papable breach of trust), yet the conveyance passed the legal title to the latter, and the devisees
Mr. Freeman, in his note supra, 19 Am. St. Rep. 267, citing many authorities, states the rule thus: ‘‘Where the rules of law upon the subject have not been modified by statute” (which he subsequently shows is the case in New York, Michigan, Wisconsin, Minnesota, Kansas, California and Dakota) “all conveyances by a trustee, whether to an innocent purchaser or not, and whether in contravention of the trust or not, operate upon the legal title and vest it in the grantee. This conclusion,” he says, “necessarily followed from the refusal of the common law to recognize trusts or equitable titles, for unless such trusts or titles were to be considered, there was no reason why the trustee should not convey to whomsoever he pleased. His conveyance was, therefore, valid at law, and the rights of the beneficiary could be protected only by his seeking redress in equity, and compelling the grantee to respect and to execute the trust, as the original trustee should have done.” As stated above, in New York and the other States mentioned, the rule is changed by statute, and it is declared that where the trust is expressed in the deed to the trustee, creating the estate, every transfer or other act of the trustee in contravention of the trust, is absolutely Amid. Discussing these statutes, Mr. Freeman observes: “The doubts most likely to arise concerning the signification of these statutes are, first, do they mean that inhibited conveyances shall be deemed void at law, as Avell as in equity? and, second, if void both at laAV and in equity, are they also Amid when, upon their face they appear to be made pursuant to the authority conferred on the trustee, and the fact of their being in contravention of the trust must be established by extrinsic evidence; and knowledge of this fact cannot be brought home to the grantee or his successors in interest?” He then proceeds to the New York decisions, construing the statute, holding the inhibited conveyances to be void, both at law and in equity, against purchasers with
Notice the analogies which we meet with in almost every day experience. A mortgagee’ is invested with the legal title to land, in trust, for the sole purpose of securing his debt. I-Iis power to sell for that purpose is required to be exercised after strictly defined formalities; yet his bare deed to the premises, or a transfer of the mortgage with apt words to convey the land, passes the legal title to the land, though there be entire disregard of the prescribed formalities. And if the condition of the mortgage be not performed by the mortgagor to the very day, payment of the mortgage debt thereafter, (until the rule was changed by a recent statute in this State), did not operate to re-transfer the title to the mortgagor; and his only remedy was in equity. A vendor of land who receives full payment of the purchase money, and puts the purchaser in possession without a conveyance, stands as a constructive trustee of the vendee; and, clothed with the dry legal title, may eject the vendee at law. The vendee’s only remedy is in equity. A trustee of an express trust, purchasing at his own sale, commits an open and conclusively prejudicial breach of his trust, yet his purchase discharges the express trust, and converts him into a constructive trustee, of which character the cestuis quo trust, may avail themselves, by a proceeding in equity, seasonably begun- — -within two years, under our rulings, unless there be special circumstances justifying greater delay. Countless instances might be given, demonstrating the universal rule of the common law, that trustees clothed with the legal title by virtue of the
A moment’s reflection discovers, as a logical necessity, that the very 'doctrine itself of the validity of trustees’ conveyances, in a court of law, implies its application to conveyances in contravention of the trusts; for if a conveyance be in conformity to the trust, no question of its validity can possibly arise. It is absolutely valid and unassailable, both at law and in equity. And it seems needless to argue, that so far as the validity of the conveyance, in a court of law, is concerned, it is wholly indifferent how the breach is manifested; whether shown upon the face of the trustee’s deed, or to be established by extrinsic averment and proof. The breach, whatever its nature, being immaterial, as affecting the legal conveyance, its existence or non-existence is not a matter of inquiry. Thus, it is impossible to find a case anywhere, where the trustee Avas sui juris and was confessedly clothed Avith the legal title, and his deed Avas not immoral and Aroid, as offensive to public policy, that his conveyance Avas assailed, except because it was in contravention of the trust; and in every such case, at laAV, Avhich our research discloses, (and Ave have spared no pains, in that behalf), with one exception to which we Avill refer, the parties complaining Avere remitted to their remedies in equity. See the Alabama cases above referred to; also the numerous authorities in point collected upon the briefs of counsel; to which we acid Taylor v. King, (Va.) 8 Am. Dec. 746; Cox v. Blanden, (Pa.) 26 Am. Dec. 83; Reece v. Allen, (Ill.) 48 Am. Dec. 336; Gale v. Mensing, (Mo.) 64 Am. Dec. 197, and extended note; Stephens v. Clay, 31 Am. St. Rep. 328.
The rule is universal that upon breach of trust by a trustee, howsoever manifested, the cestui que trust may affirm or disaffirm the breach at his election. For instance, no one would doubt, for a moment, the equity of a bill filed, in due season, by a cestui que trust, against the trustee, who, holding the legal title, sold and conveyed to a purchaser, both of whom engaged in misappropriating the purchase money, and against such purchaser, affirming the sale and conveyance, and electing to hold the trustee and purchaser responsible for the misappropriation and to have the money reclaimed and the same laid out, under the .direction of the court, in other property upon the same trusts, securing its payment into court, or to another trustee appointed by the court, by a lien on tlie land conveyed to the purchaser. Suppose, a demurrer to such a bill, objecting that complainant had his remedy at law, in that the breach of the trust rendered the sale and conveyance to the purchaser void at law, and that his only
These elections cannot, of course, be made in a court of law.
Again, were we to bold that tbe Wright and Pierce deeds are void, because of tbe breaches of trust apparent upon the deeds themselves, we would presuppose that tbe recitals of payment of tbe purchase money to Mrs. Robinson, in the one case, and her husband, in the’ other, conclusively establish, as matter of law, be
A purchaser from a trustee, in contraArention of the trust, in no sense, becomes thereby an express trustee. He becomes a trustee in invitum, by construction of law. He is a constructive trustee. • He holds actually in his oavu right, and in hostility to the Avorld; but a court of equity, as Judge Story puts it, Avill “force a trust upon his conscience,” and compel him to perform it or ansAver for its fruits. — 2 Story Eq. Jur., §1257; 2 Washburn Real Prop., marg. p. 177, §21; Hill on Trustees, marg. p. 144; 1 Perry on Trusts, §§217, 241; 2 Pom. Eq. §1018; Smyth v. Oliver, 31 Ala. 39. A resulting trust, though by no means an express one, because not declared in the deed out of Avliich it arises, approaches more nearly thereto, in that it rests upon a presumed intention; from which results the rule, that the purchase money must have been paid at the time of the purchase; Avhereas, a constructive trust, like the present, is supported by no such presumption. It is entirely in invitum, and is raised and enforced by a court of equity, as a principle of justice. It has attached to it none of the attributes of an express trust. The purchaser is charged for breaking up the trust, and not because he has agreed to execute it.
In AdeAv of these considerations Ave are compelled to hold that the legal title passed by the Welsh deeds to Wright and Pierce, and that the remedy of the complainants Avas alone in equity, upon bill filed in due season.
It follows from what has been said that the counsel for the complainants,-had they been in season, properly conceived their remedy when they filed the bill in equity.
But, that bill was properly dismissed by the chancellor, and the dismissal affirmed by this court, because of the great staleness of the demand sought to be
Let us illustrate by a perfectly plain case: One. having (we will say) a vested leghl estate in remainder in lands dependent upon a precedent life estate, is by fraud and deceit, induced to sell and convey his estate to another, pending the life estate. Here, we observe, his estate is, by his deed, entirely gone — destroyed. But, there grows out of its destruction, by reason of the fraud, a right in him, at his election, to confirm the fraud and sue for damages, in the equitable action of deceit, or, repudiating the transaction, to file a bill in chancery for rescission and restoration to his estate. It is manifest that the remedy chosen is open to him at once, without regard to the life or death of the life tenant. If he elects the remedy in chancery his object is to get back his title, it matters not when his right of possession may accrue, for until he is restored to his title by a court of equity he can never have a right or action of possession at law. His restoration to his estate, established by decree years before his possessory period, is just as available to him, for all purposes, as if so established after that period. The question of the time or event of the possessory right is utterly immaterial. No one would contend that a party thus alleged to be defrauded could lie by for thirty or forty years, either before or after the life estate falls in, and then file a-bill to rescind his conveyance on account of such alleged fraud.
The briefs on file contain an ample collation of the authorities on the subject we are discussing. Though the last Alabama case on the subject (Lowery v. Davis, 8 So. Rep. 79) seems to commit this court irrevocably to the much criticised and doubtful, if not plainly erroneous, doctrine of Woodstock Iron Co. v. Fullenwider, 87 Ala. 584, yet the integrity of that decision is, by no means, essential to the correctness of the conclusion declared in this case. There, (as in the two subsequent cases which followed that decision — Lansden
That the complainants’ right to file their bill, at any time after the commission of the alleged breach of trust, was perfect, cannot be questioned. A-case strongly illustrative (saying nothing of our own decisions cited upon briefs) is that of Wright v. Miller, 8 N. Y. 9, (59 Am. Dec. 438). There a trust deed vested an equitable estate in lands in remaindermen. The trustor and trustee conveyed, in contravention of the trust, under a decree of court fraudulently obtained. The remainder-men filed their bill, pending the life estate, to have the fund properly restored and reinvested for their ultimate use, when their right in possession would have accrued, and the relief was granted.
We think there can be no doubt that the dismissal of the bill was supported by the staleness of the demand.
The application for modification of our former opinion in the equity case is granted so as to conform to the views herein expressed. In each of the law cases the judgment will be reversed and the cause remanded.
Dissenting Opinion
dissenting.- — I am aware that any further discussion of the principles involved in this case, would not change the result, and I do not propose 'to do more than merely to state my position, and the propositions which sustain it. John Falconer, in 1847, conveyed the lands in fee to Thomas Welsh in trust, for the sole use and benefit of his daughter, Mary Jane Robinson, during her natural life, and at her death to com