212 S.W. 937 | Tex. Comm'n App. | 1919
The plaintiff, West Texas Bank & Trust Company, as executor of the last will and testament of Dr. C. F. Simmons, deceased, instituted this suit against the defendants, A. L. Matlock, A. M. Avant, and A. W. Eastman (who died prior to the trial below), to recover from them, as trustees a trust fund of $50,000. Walter Brown and nine others, acting for themselves and aP others similarly situated, intervened.
The cause was submitted to the jury upou\ one special issue of fact; and upon the an swer to that issue, together with other facts found by the court, judgment was rendered1 for the defendant trustees and interveners. The Court of Civil Appeals affirmed the judg ment of the trial court. 172 S. W. 162.
Dr. 'Simmons was the owner of 60,000 acres of land in Dive Oak county, Tex. On the 4th i day of June, 1906, he conveyed the said land to J. P. Barclay, R. L. Ball, and E. P. Simmons, in trust, to convey to prospective purchasers in compliance with a certain plan of distribution theretofore devised and set forth in 22 rules hereafter referred to. The land, in accordance with the provisions of said rules, was laid out into a certain town site containing 4,200 lots, later designated as Simmons City, and 4,205 farm tracts, as provided for in the plan of distribution.
Dr. Simmons, through his agents, sold, for a consideration of $120 each, applications to purchase to about 4,100 persons, residing in different parts of the United States. The applicants prior to September 9, 1907, paid for their respective applications, and thereby became entitled each to a lot and farm. .
The agreement further provided that said bonus should be turned over to the trustees selected only on the execution and delivery by them, within one year. from the date of distribution, of a bond payable to Dr. Simmons, his heirs or assigns, conditioned that said trustees should hold the fund, in trust, to pay to any railroad company that should build and operate a railroad through said town site within a reasonable time.
The agreement was conditioned also that if no railroad was so built and operated within a reasonable time, then said $50,000 should revert to Dr. Simmons, his heirs or assigns, and stipulated further that the trustees, during the time they were authorized to hold said fund, should place the same at interest, to be paid annually to the said Simmons, or his estate.
At the time of the distribution September 9,1907, no railroad had been built to the town site. On that occasion A. L. Matlock, A. M. Avant, and A. W. Eastman were duly selected as trustees. It was agreed between them, Dr. Simmons, and the purchasers, that they, as trustees, should give a bond for the protection of the purchasers on the delivery of the bonus, but neither the trustees nor the purchasers then knew that the foregoing stipulations, relating to the building of the railroad within a reasonable time, the payment of interest, and the reversion of the fund, would be incorporated in the bond. The said Mat-lock, Avant, and Eastman, on learning that the fund would be turned over to them only on the conditions stated, and being desirous of securing possession thereof, and of preventing a reverter within the year to Dr. Simmons, executed the bond conditioned as required, and the sum of $50,000 was paid over to them by the said Barclay, Ball, and Simmons, to be held and administered as stipulated in the bond.
The booklet referred to, Home Sweet Home, is a part of each purchaser’s application to buy a lot and farm. It is vividly, and we may say, aptly, described by Chief Justice Fly in the opinion of the Court of Civil Appeals as a rose-colored pamphlet issued under an alluring title. It is indeed calculated to arouse by its songs, not only the sentiments of the lovers of homes, but their religious feelings as well. It contains, in addition to songs and customary prospectus inducements, a comparison between the productivity of said 60,000-acre tract and Texas lands generally with that of lands in other states, which is no wise unfavorable to the lands in the vicinity of Simmons City. Its relevancy, however, is due to the fact that it contains the rules above referred to,-particularly rules numbered 9 and 22. Those rules relate to many irrelevant matters, such as the establishment and naming of the town site, the numbering, description, and distribution of the lots and farms, the plan of making payments therefor, etc. Rules 9 and 22, however, are vital to a determination of the issues in-’ volved, and will be later set out in full. .
The plaintiff declares upon the bond executed by the defendant trustees. Recovery of the bonus fund is prayed for under the allegation that a reasonable time for the building of the railroad has expired, and that the failure to construct a railroad within such time has terminated the trust.
The surviving trustees deny that a reasonable time has expired for the accomplishment of the purpose of the trust, and assert,that they would not have executed the bond sued on, except that they could not otherwise get possession of the fund, and did not desire to jeopardize the interests of the purchasers by permitting the bonus to revert. The foregoing pleadings of the defendant trustees, as briefly above stated, include, in view of the evidence adduced, all of their material allegations, except those made the basis of a recovery of attorney’s fees! They ask the court to construe the contracts to purchase, of which rule 22 was a vital part, and to establish, define, and declare the rights of the parties at interest thereunder, and to declare their duties as trustees, under the trust.
The intervening purchasers resisted the a<> tion upon practically the same grounds as those urged by the trustees, and asserted an interest, not only in having the trust administered under the provisions of rule 22, but a vested interest in the trust fund itself, and prayed that the court so declare. They allege further that the bond is void for the reason that the provisions relating to a reversion of the fund, the payment of interest, and the building of a railroad within a reasonable time, were made without their knowledge or
The court submitted only the issue of reasonable time, and the jury found in answer thereto that a reasonable time had not expired for the building of a railroad to the town site. The court made further findings of fact substantially in accordance with the pleadings of the trustees and purchasers as above stated, and made in substance the following conclusions of law:
(a) That the interveners and other purchasers similarly situated have a vested interest in said $50,000 fund and the uncollected interest thereon from September 8, 1908. (b) That said interveners and purchasers have such equitable rights in and to said trust fund as to preclude plaintiff in error from recovering the same regardless of whether a reasonable time has expired for the construction of the railroad, (c) That the said $50,-000, together with all accrued uncollected interest thereon, when collected, is a trust fund in the hands of the defendants for the benefit of the interveners and those similarly situated. (d) That the sum of $2,000 be paid, as attorney’s fees; $1,000 to A. L. Matlock, one of the attorneys for the defendant trustees, and $1,000 to the attorney representing the intervening purchasers, (e) That the defendant trustees are estopped from contending that the payment of $4,000 of accrued interest to the Simmons estate was illegal or wrongful, inasmuch as the same is in accordance with the provisions of their bond as trustees.
No complaint is made that Dr. Simmons has failed to do any of the things required to be performed by him -under the provisions of the booklet and the rules incorporated therein. The land was platted, sold and distributed in accordance with the plan therein set forth. The trustees were selected as provided in rule 9. The required sum was turned over to the trustees so selected to be held by them in trust to pay over on the contingency stated in rule 22, and is still in their custody for such purpose.
The first question presented is whether thé rights of the parties should be ascertained under the provisions of rules 9 and 22, or the bond sued upon, or both.
The rules referred to are as follows:
9. In order that each applicant will know that their interest is fairly represented in the distribution, the applicants, by their representatives, when they assemble to make the distribution, will elect three trustees from their number, to whom owner will convey this town site and farm property by warranty deeds; except the town reservations and except the reservations for public roads, churches and school purposes and railroads, and will furnish said trustees complete abstract of title, with the opinion of three eminent attorneys, showing the title good and clear of incumbrance, together wtih blank deeds for the trustees to distribute among the purchasers.
22. One of the proposed railroads through this property already has 10 miles graded, and owner has agreed to pay $50,000.00 bonus for the first railroad to come through this land down the river on the side of the new town and through it. This bonus, owner hereby contracts to pay when road located as above is running passenger trains, provided the road is running passenger trains before the day of farm and lot distribution, but, if no railroad located as above is running trains on the day of distribution, then owner hereby guarantees that he will on that day turn over to the three trustees, in trust, fifty thousand dollars in gold, to be by said trustees given as a bonus to the first railroad having an eastern or northern connection, which runs passenger trains through this property on line above indicated. This bonus guarantees to each purchaser, free of cost, the first railroad just where it should be, and it will doubtless make a race between the railroads to get there first.
Rule 22 does not purport to be a trust agreement. By its terms the owner contracts either to pay to a railroad on the day of distribution on the conditions named the sum specified, or, in the event the conditions have not on that day been met, to pay over to trustees, in trust, the said sum. In other words, the owner by the language of the rule contracts to create a trust for the accomplishment of the object therein stated. Clearly in the performance of his contract obligation, as set forth in the rule, the settlor not only had the right, but owed to the purchasers the legal duty, to create a valid trust for the purpose of inducing a railway company to build its line of railroad to the town site. Whether the purchasers contemplated the execution of a bond conditioned that the trust fund should revert to Dr. Simmons in the event the purpose of the trust should not be accomplished within a reasonable time is immaterial, if their rights are not affected by such condition.
The bond, being intended to secure the performance of the duties of the trustees, more minutely defines such duties than the provisions of the rule, and its conditions do no violence to such provisions. If the rule and
What then would be the effect of the omission of such provision from the conditions of the bond?
Article 1, § 26, of the state Constitution provides that “perpetuities and monopolies * * * shall never be allowed.”
A perpetuity is a limitation of property, taking the subject thereof out' of commerce for a longer period of time than a life or lives in being and 21 years thereafter. Words and Phrases, vol. 6, p. 5319; Purvis v. Sherrod, 12 Tex. 140; McIlvain v. Hockaday, 36 Tex. Civ. App. 1, 81 S. W. 54. Gray on Perpetuities (3d Ed.) p. 252, says:
“The tying up of property was attempted in two ways, first, by making vested estates inalienable, and, when the judges stopped this, then by the creation of indestructible future contingent estates; and to restrain these last the rule against perpetuities was devised.”
The same author (page 174) states the rule as follows:
“No interest is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest.”
The rule is not applicable to charitable trusts, but to trusts for private purposes, (R. C. D. vol. 21, p. 306) and to contracts (Id. p. 303; Gray on Perp. p. 308). “When an estate is given to trustees, but it is possible that no equitable interest under it may arise within- the limits of the rule, the whole trust is bad, * * * as when property is given upon trusts to arise when a gravel pit was worked out, or upon trusts to arise when a parcel of land could be sold at a certain price.” Id. p.- 361.
It is apparent that if rule 22 alone is looked to as expressly stipulating in detail all of the terms of the trust, the agreement is invalid, in that it is possible that the railroad may not be built, if at all, until after the expiration of the time allowed under the rule of perpetuities. The only provision of the bond affecting the interests of the purchasers, not expressly stated in the rule, is that the contingency in which the trustees are to pay over the fund must happen within a reasonable time. If the bond prescribing the limitation stated is void, then the trust agreement, lacking such limitation, offends against the rule, and is likewise void.
It is urged that under the terms of rule 22 the purchasers have a vested interest in the, bonus fund itself, and that the agreement is therefore not within the rule of perpetuities.
The next question arises by virtue of the interest earnings on the fund. To whom are they payable?
The remaining question is whether the attorney representing the purchasers should recover attorney’s fees.
We are of the opinion, therefore, that the judgments of the trial court and the Court of Civil Appeals should be so reformed as to: (a) Establish plaintiffs right, title, and interest in and to the reversionary interest in said trust fund, and declare its right to recover the same on the termination or dissolution of the trust, after the expiration of a reasonable time for the accomplishment of its object; (b) establish plaintiff’s right to all interest accrued and to accrue in said fund, and declare its right to collect the same, as provided in said' bond; and (c) deny payment of attorney’s fees for services'rendered on behalf of the intervening purchasers; and that, as reformed, said judgments should be affirmed.
The judgment recommended by the Commission of Appeals is .adopted, and will be entered as the judgment of the Supreme Court. We approve the holding of the tíommission on the questions discussed.
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