189 Ky. 323 | Ky. Ct. App. | 1920
Opinion op the Court by
Reversing.
J. S. Vickers, deceased, left a last will and testament, tke parts of which necessary to be considered are as -follows :
“First. I hereby appoint my two sons, James B. Vickers and Elmer C. Vickers, executor's of .this my last will, and direct that all of my debts and funeral expenses be first paid.
“Third. I will and devise all the balance of my estate- to my wife and children equally, share and share alike, and direct that after my present crops, now growing and nearly matured, shall be ready for market and as they shall become ready for market, they shall be sold and my whole estate be reduced to cash, except that it is my desire that my executors shall in the execution of the office of trustees, as hereafter explained, retain the team of old mules and the youngest jersey cow.
“Fourth. I direct that after my estate shall have been reduced to cash, my said two sons, James B. Vickers and Elmer C. Vickers, shall invest the whole cash balance of said estate in land to be held by them,' in trust as trustees,' for my said wife and children, who shall have -equal shares in said land, and my trustees shall hold cultivate and use said land for the joint and equal benefit of my said wife and children until such timé as my youngest child shall have attained the age of sixteen years, when said land shall be sold in such a manner as my trustees may elect, and the proceeds be equally divided between my said wife and children.”
Elmer C. Vickers died, but James B. Vickers duly qualified as a trustee under the will and is now acting as such. The “will was probated on September 7, 1918, and in pursuance of its directions, the executors reduced the estate in their hands to money, and on the first day of March, 1919, the present trustee having then in his hands seven thousand and five hundred dollars, arising from a sale of the property of decedent, and which as a trustee he was directed to invest in land for the benefit of the widow and children of decedent, he, as trustee purchased from one French, a farm containing one hundred and seventy-one acres, which French conveyed to him as trustee by a deed of that date. As a consideration for the sale and conveyance, the trustee paid to French the seven thousand and five hundred dollars, which he held as.trustee, and which was practically the entire amount of the trust fund, and in addition thereto promised the further sum of eighteen thousand, two hundred and forty dollars, one-half of which he agreed to pay at. the end of one year
The vendor retained a lien upon all the land to secure the payment of the deferred payments and in the deed executed by him the amount of the consideration unpaid was stated. When the note for the first one-half of the deferred consideration became due, the trustee was unable to pay any part of it, and realized that he was unable from the profits of the farm to provide a support for the cestui que trusients, pay the taxes, arid ever discharge the notes or any part of them, the cash payment having consumed the entire trust fund in his hands. To escape the predicament in which he found himself, and as he thought to prevent the loss of the trust fund which he had invested in the land, the trustee, entered into an ex-ecutory contract with Jennings & Gragg, by which he coritracted to sell the farm to them which he had purchased from French, at a price which was in excess of that'which he had agreed to pay for it, of two thousand five hundred dollars. Gragg & Jennings made a cash payment of fifteen hundred dollars, but refused to pay the remainder of the consideration, or to accept the deed of the trustee as a conveyance of the title, upon the ground that the trustee was not authorized to sell the land, nor to convey it in the absence of an order from the chancellor so to do. The trustee, however, made an executory contract for the purchase of a farm of thirty-eight acres from one Bailey, and paid to him the fifteen hundred dollars which Jennings & Gragg had paid to him, as a part of the consideration. He agreed to pay to Bailey the sum of fifteen thousand and five hundred dollars for the land purchased from the latter. The trustee, joining with the other cestui que trustents, except the appellant, Nettie Vickers, the infants among them suing by their statutory guardian, brought this action making Nettie Vickers a defendant, and praying the chancellor to clothe him with authority to execute a deed to Jennings & Gragg, to approve of the sale by him of the French farm and the reinvestment of the trust fund with its increase, if any, in the farm agreed to be purchased from Bailey. The court, upon a hearing of the evidence, adjudged, in accordance with the prayer of the petition, that the sale by the trustee of the French farm be confirmed, and the trustee directed to execute a deed to Jennings & Gragg, in accord
Without undertaking to recite the testimony, suffice it to say, that the evidence shows that the sale of the French farm was such as the dictates of ordinary prudence and common sense would demand, and that it would he very much to the benefit of the beneficiaries of the trust with the proper investment of the trust fund in other real estate. The judgment will necessarily have to be- reviewed in its relation to the confirmation of the sale of the French farm, separately, from the direction as to the reinvestment of the trust fund in the purchase of the Bailey farm. It will be observed that the children of the testator for whom, together with the widow, the trust was created, are, six of them, infants, and they are joint owners of the beneficiary interests in the land with their mother, and the two adult children, and if the will of the testator, which created the trust, does not expressly or by implication, vest authority in the trustee to sell and convey the title to the land, the interests, of the infants could not be sold except under a judgment of the circuit court in an action instituted by the persons authorized to do so, and against the parties required by the provisions of the Civil Code, and the sale would necessarily have to be made in the manner, at the time and place, upon the' terms and by the officer prescribed by the provisions of the Civil Code, in order to make a valid sale'and to divest the infants of their interests. Clark v. Stanhope, 109 Ky. 521; Walker v. Smyser, 80 Ky. 627; Hening v. Harrison, 76 Ky. 723; Murray v. Rodman, 25 Ky. L. R. 978; Howard v. Sebastain, 143 Ky. 327; Hicks v. Jackson, 24 R. 218; Malone v. Conn, 95 Ky. 93; Isaert v. Davis, 17 R. 686; Dineen v. Hall, 112 Ky. 273; Craig v. Wilcox, 94 Ky. 484.
Neither has the chancellor power to approve or confirm a sale of an infant’s real estate, made by an unauthorized person, or when the court has not acquired jurisdiction to order a sale as provided by the provisions of the Civil -Code, it cannot thereafter malíe a void sale of an infant’s real estate valid by its approval. Kinslow v. Groves, 98 Ky. 266; Hulsewede v. Churchman, 111 Ky. 51; Bullock v. Gudgell, 117 Ky. 288; Ford v. May, 157 Ky. 830; Bills v. Burgess, 15 K. L. R. 41. The above stated
Hence, to determine whether the judgment ought to • be upheld so far as it relates to the validity of the sale, by the trustee to Jennings & Gragg, of the French farm, the question to be considered is whether the trustee is clothed with authority, by the will, to make a valid and enforcible contract for the sale of the land, for if he is clothed with such authority the sale is valid, though made without the previous sanction and permission of the chancellor. First National Bank v. Reed, etc., 23 K. L. R. 1897; Citizens National Bank v. Jefferson, 88 Ky. 651. If the trustee is authorized to sell the trust property by the instrument which created it, he is privileged to do so, and a court of equity will not interfere with his exercise of such authority, provided he acts in good faith and with ordinary prudence, and an authorized sale made in the manner above described, the chancellor is authorized to approve and enforce when application is made to him. When the authority to sell the trust property is not conferred by the instrument which created it, in the absence of statutes providing to the contrary J the chancellor may authorize him to do so upon proper application wherever on account of a change of conditions and circumstances, the capital of the trust fund is endangered or its security weakened, and it has become to the best interests of the beneficiaries of the trust and necessary to the preservation of the fund and the carrying out of the intentions of the creator, that the trust property be sold and the proceeds otherwise invested. Hence, if the trust instrument does not give the trustee power to sell the property, in which the fund is invested, he cannot, when it is once invested, or when it is already invested at the time the instrument creating the trust is executed, sell the property and reinvest the proceeds in other property,
In the instant case the will which created the trust, directed the exebutors, who were, also, made the trustees,. to sell all the estate of the testator, not otherwise devised, and convert it into money. It does not appear, from the record whether his estate consisted of personal property, alone, or whether there was also, real estate. It further
For the same reasons heretofore indicated the proposed investment of the trust fund, and its probable increase, in the Bailey farm, when it shall have been withdrawn from the French farm, should not have been sanctioned. The trustee seems to be simply proposing to remove the fund from the “frying pan into the fire.” He should be permitted to buy such a quantity of real estate or such a part of the Bailey farm, and have it conveyed to him as trustee, as. the trust fund will pay for, but no more, but he should not be permitted to incumber the land which he buys with the trust fund with liens to secure the payments for other lands, which he purchases without having any trust funds with which to pay for them.
For the reasons indicated the judgment of the court approving the sale of the French farm is affirmed, but that portion of the judgment which approves and directs the investment of the trust fund in the Bailey farm in