Opinion
Argued February 24, 1890
Decided March 11, 1890
John J. Macklin for appellant.
Thomas T. Sherman for guardian ad litem respondent. William V. Rowe for respondents George T. and George F. Vingut.
We approve of the construction adopted by the General Term in its examination of the statute under which authority was sought for the sale of the trust estate. (Laws of 1886, chap. 257). Such authority is given whenever it shall appear "that it is for the best interest of the estate so to do, and that it is necessary and for the benefit of the estate to raise by mortgage thereon or by a sale thereof funds for the purpose of preserving or improving such estate." Under this provision some necessity must exist for the use of money in the preservation or improvement of the property which the estate is not in a condition to supply, and which, therefore, can only be supplied by borrowing upon a mortgage or selling a part and using the proceeds. The permission given is in the nature of an exception to a general rule which the statute itself formulates. It forbids any sale in contravention of the trust. Where the testator has withheld from the trustees power of sale, and organized the trust for a fixed period, it amounts to a direction that the land shall be held for the beneficiaries and not its proceeds, and any sale by the trustees would be in contravention of the trust. But emergencies might arise in which funds would be required to save the estate from threatened loss, or to improve it where authority to improve was given, or it should be needed to prevent serious and increasing injury. To meet that emergency power was conferred upon the court to order a mortgage or sale, but not at all to sell for the mere purpose of reinvestment and with a view only to increase the annual income. That in a given case may be what an adult owner in the free exercise of his ownership would do as a profitable business measure, taking his own risk in the exercise of his own judgment, but such is not the condition or the duty of a trustee holding land for an infant, even though it be unproductive. The land will not run away or burn up or be stolen, and will be sure to await the infant when the period of possession arrives, while if turned into money for reinvestment risks of loss arise, although the trustee be entirely honest. The court, therefore, always hesitates to sell the land of an infant, even where no trust envelopes and protects it, and surrounds the process with all manner of guards and protection, and where it is put in trust and its enjoyment postponed during a period of infancy without a power of sale given to the trustee, it should only be to meet an emergency, to answer a clear and apparent necessity that authority to sell should be given by the court. And that, we think, is the plain meaning of the statute.
It is contended, however, that we should attach to it a different meaning and allow it a wider range, and the contention is supported in an elaborate brief which examines the law before and since the statute, and with an ample collection of the authorities. But the argument comes down to one single proposition, and that is that land may be sold to "improve" the balance of the trust estate, and that increasing its value in income or principal, or both, is the sort of "improvement" which the statute contemplates. The doctrine puts the court in the position of an owner striving for the greatest possible profit, instead of that of a trustee seeking first and foremost the safety and preservation of the trust estate. It is said the will authorizes the trustees to improve. Its meaning in that respect is not difficult to interpret. Its sixth clause defining the trust provides "after payment of all taxes, assessments and of so much money as may be necessary for repairs, insurance or improvements or betterments of any or all of my real estate to invest the balance," etc. The "improvements" contemplated and authorized were of the real estate, not of the trust fund, and of the class indicated by the other elements of the phrase used. And it is such improvements, rendered necessary in the ordinary and prudent care of the trust lands to which the statute refers.
In the present case no such improvements are shown to be necessary or even to be contemplated. The estate needs no additional money for its preservation. Its net income is $24,000 a year, and ample for all the purposes of the trust besides taxes, assessments, improvements and betterments. The testatrix assumed that it would be, for she contemplated that a surplus of income would remain, and directed that to be invested in productive real estate. She hoped that land would be added by purchase, not parted with by sales. And so the application to the court for an order of sale rested solely upon the ground that such action would probably result in increasing the trust fund. Not the least necessity for a sale was shown; all burdens were and could be easily borne without it, and the reasons for a sale rested only upon a business prediction as to future values. That will not do. There must be something more to justify the interference of the court.
The order should be affirmed with costs.
All concur.
Order affirmed.