In Leggett v. Perkins the inquiry was whether a trust to receive the rents and profits of lands and pay them to a trustee, could be sustained under the third subdivision of section 55, which authorizes a trust to receive the rents and profits of land and to apply them to the use of any person. Upon that question Parks v. Parks was cited with approval, but that in nowise constituted an approval of all the other questions passed upon by the chancellor in that case.Summary of this case from Hascall v. King
October Term, 1849
J.J. Ring, for appellants.
M.S. Bidwell, for respondent.
I think that the trustees took a fee in the premises in question by implication.
The devise to the daughters of the testator is not absolute, but (in the language of the will) " so that each may have and enjoy the income of an equal fifth thereof during their several natural lives." The testator then constitutes his executors trustees of their estate, authorizing them as such trustees "to take charge of, manage, and improve the same and to pay over to them, from time to time, the rents, interest and net income thereof." It is very obvious that a legal estate in the premises was necessary to enable the trustee to discharge these duties. ( Oates v. Cook, 3 Burr. R. 1684; Doe v. Woodhouse, 4 T.R. 89, 92; Fletcher on Trustees, 27; Greenleaf's Cruise, tit. 12, Trust, ch. 1, § 14, and note; Jickling's Analogy, p. 15, note.) To put the matter beyond a doubt, the testator has provided that the net income should be paid to the daughters after marriage without the consent of their husbands, with like effect as if they were unmarried. If the husband took an estate by the curtesy, as he would if the fee vested in the daughter, he would be entitled to the rents and profits, and the separate provision for the daughter would be wholly ineffectual. ( Greenleaf's Cruise, tit. 12, ch. 1, § 16; Doe v. Hoffman, 6 Adolph Ellis, 206; 2 Jarman on Wills, 202, 203, and cases cited.) Again, if the trust to receive rents and profits and pay them over to the daughters is authorized by the 3d subdivision of the 55th section of the statute of "Uses and trusts," the whole estate in law and equity, by the 60th section, vests in the trustees. (1 R.S. 729, § 55, sub. 3, § 60.) If not authorized, the trust is void, whatever may have been the intention of the testator. ( Id. 727, § 1.)
Whether such a trust is within the statute is therefore the great question in the cause. The decision of the chancellor in Gott v. Cook, affirmed the validity of a trust of this character. (7 Paige, 523.) The decree in that case was pronounced after an elaborate argument, with all the light afforded by the opinion of Judge Savage, in Coster v. Lorillard, and of Judge Bronson in Hawley v. James, and has never been reversed or shaken by any adjudication in this state, to my knowledge. As trusts are the peculiar subject of equitable cognizance, the principle thus established has become practically the law of the state. The same construction has been given to the statute by the superior court of the city of New-York, by the supreme court, sitting in the 6th district, by the same court in the first district in Mason v. Jones,¹ the decision in the last case being affirmed in this court upon an equal division of the judges. Nor is this all. In Parke v. Parke, in the court for the correction of errors, the point was distinctly presented, and the validity of a trust of this description affirmed by their judgment. The question should be at rest upon authority. The conflicting opinions of eminent judges are evidence that it was originally a doubtful question; and no one is authorized to assume now that he is infallibly right, to which ever side of the controversy he may incline. I shall adhere to the decisions that have been made, because upon such a question the judgment of the court of last resort, sustained as it is by the authority of every other adjudication made upon the same subject, is entitled to respect here. If, however, the question is deemed open, I shall follow those decisions, because, I think them right, and the exposition they have given to the statute the correct one.
I shall confine myself to a review of the more prominent objections urged against the validity of a trust of this description. 1st. It is said that the trust authorized by the statute "to receive the rents and profits of land, and to apply them to the use of any person," by necessary implication clothes the trustee with a discretion in the expenditure of the fund; that a trust to pay over the rents and profits to the beneficiary, deprives the trustee of all discretion and is consequently void. It should be remembered in considering this proposition, that the statute in reference to express trusts is merely permissive. It creates nothing. We might infer from the argument addressed to us, that the legislature had in the first instance annulled all trusts, and then proceeded to a new creation. It is more correct to say that they abolished all that they have not recognized as existing. The trusts preserved have their foundation in the common law, and their effect is to be determined by the application of common law principles. By that law the trustee must apply the trust fund according to the instructions of its author. His duty is the same now, if the directions given do not contravene the general object for which the trust is authorized by the statute. With this limitation the authority of the donor is as absolute now as before the statute. Now an express trust may be created according to the 3d subdivision of the 55th section, "to receive and apply the rents and profits of land to the use of any person." The subject is the rents and profits of land; the object, an application to the use of any person. When a trust is created of this nature, it is recognized as existing with all its common law incidents. The relation of the donor and trustee, the power of the former and the duty of the latter, are precisely what they were by the common law.
The statute no more prescribes the mode in which the profits must be applied, than the manner in which they are to be received. The details may be arranged by the donor in both cases for himself, or left to the discretion of the trustee. If the trustee may apply the fund to the education of the beneficiary, where no instructions are given, (and this is conceded,) the creator of the trust may direct it to be done. Because, in either case, the application would be to the use of the person designated, and within the letter and spirit of the statute. It is believed that in all cases, before and since the statute, the rule is uniform, that the creator of the trust may direct specifically the performance of those things, which the trustee, whose authority is derived from him, might himself perform, in the lawful execution of the trust, if no specific directions were given. The proposition under review annuls this power of the donor. It transfers to the trustee alone, a discretion in the application of the fund, which the donor could exercise himself by the rules of the common law, and declares that the relation between the trustee and beneficiary is fixed by statute, and must be the same in all cases, any differences in the character or circumstances of the latter to the contrary notwithstanding. This theory is to be established, if at all, by implication. The statute says nothing of the discretion of the trustee; it speaks only of the power of the creator of the trust. It does not in terms compel a donor, who may be supposed to feel the strongest interest in the beneficiary, and to possess an equal knowledge of his character and necessities, to lean exclusively upon the discretion of a trustee, in the administration of his bounty. The implication should be strong, that leads to such results. I will glance briefly at the argument by which it is maintained.
And first, it is alleged that the legislature had in view a particular class or description of persons as beneficiaries. "Persons who could not safely be trusted with the management of their own affairs, and for that reason a trustee was allowed to make the application for them." ( Hawley v. James, 16 Wend. 157;¹ 14 id. 321.)² The answer to this view is to be found in the law itself. The rents and profits arising from such a trust may be applied to the use of "any person," without regard to his condition, habits, character, or mental capacity. No judge or lawyer has ventured to deny this directly; or to assert that a trust for the benefit of a millionaire, in the full vigor of health and intellect, is not as effectual, as though its subject was a lunatic pauper. And yet to support this construction it has been constantly assumed that the legislature, in this respect, intended not only what they have not said, but the reverse of what they have declared. This assumption, indeed, is indispensable to the support of the hypothesis under review. According to that, the trustee, as remarked, must always sustain the same relation to the cestui que trust. He is to exercise a kind of guardianship in the expenditure of the fund, (16 Wend. 158,)¹ and a guardianship of precisely the same character in all cases. Such a doctrine would be any thing but a necessary implication from a statute, which admitted all persons without exception to the class of beneficiaries.
To give plausibility to a doctrine which places all cestuis que trust upon the same statute level of incapacity, as to the management of their own affairs, a common disability must in some way be established. Hence the attempt in all the arguments addressed to us, and all the opinions delivered upon this subject, sometimes from the history of this section, and sometimes from its language, to group the beneficiaries into classes, between which there was some supposed resemblance, and as to all of whom, a guardianship of the kind alluded to might exist without manifest inconvenience or absurdity. (14 Wend. 321.) It is this preconceived notion, which has induced those by whom it was entertained, to restrict the obvious meaning of the words occurring in the third subdivision of this section. "Apply," for example, which means the act of applying, and includes obviously any act of the trustee, by which the trust fund is applied for the benefit of the cestui que trust, whether expressly directed by the donor, or performed according to the discretion of the trustee, is limited to the latter exclusively; and the trustee by force of it constituted, in all cases, the discretionary almoner of the donor's bounty. "In no other way," it is said, "can we give force to the word apply." It seems to me very clear, that the term is robbed of half its power by the restriction. "Use," also one of the most comprehensive words in our language, and adopted by the revisers for that reason, is in this way held to mean a sort of benefit, conferred according to the discretion of a trustee: and "any person," as we have seen, to stand for some persons in particular.
There is nothing in the history of the law to give countenance to this construction. The section, as originally framed and passed, authorized a trust "to receive the rents and profits of lands, and apply them to the education and support, or either of them, of any person," c. By this provision, the trust was restricted to certain definite uses, education and support, but without limitation as to persons. A few months' reflection satisfied the revisers that a trust thus limited would not answer the exigencies of families or society, and on the 20th of April following, they recommended the substitution of "use," for "education and support, or either of them." They remark in their report, that the word "use" includes "education and support," and that " it will also include other purposes which ought to be provided for." The revisers sought to generalize what was before specific. The construction in question, reverses this order, and gives to general terms, a special and restricted application.
A third reason assigned is, that a trust created in the language of this section or by equivalent words, would vest a discretion in the trustee as to the application of the trust fund; and hence it is inferred, that such discretion is in all cases essential. One obvious answer to this position is, that it was not the object of the legislature to prescribe a formula to be followed in the creation of a trust, but to designate in general terms the purposes for which they might be created. (3 R.S. 582.) These general terms were intended to include within them an indefinite number of particular and special trusts, adapted to the exigencies of families, or the wants of individuals. If these terms are transferred from the statute to a trust deed, or a devise, they must necessarily give, as to all these particulars, a discretion to the trustee. For, in such case, the trust would confer upon the trustee all the power which the law conferred upon the author of the trust. But it by no means follows that the lawmakers intended that in all cases he should possess such discretion, under penalty of avoiding the trust. If the statute should authorize married women to execute a power of attorney, to convey her interest in real estate, it might be as plausibly contended, that she could not designate the vendee, the terms of the sale, or the amount of the consideration, because a power in the words of the statute, or in equivalent terms, would give a discretion to the attorney in all these particulars. By adopting the language of this subdivision, the trustee, for example, must apply all the rents and profits to the use of the cestui que use. But Judge Bronson, in Hawley v. James, remarks, it can make no difference whether the trust extends to all the rents and profits, or is confined to a specified sum of money. The donor may settle for himself the amount to be applied.
But there is an obvious difference in the legal effect of an instrument requiring the trustee to apply the rents and profits of the lands conveyed, and one directing "a specific sum of money" to be applied out of those rents and profits, and yet both are within the statute, by the concession of the advocates of the construction in question. So the trust authorized by the same section of the statute, to sell lands for the benefit of creditors, if created in the language of the statute, would oblige the trustee to sell for cash, and to distribute the fund, when received, pro rata among all the creditors of the assignor. But the latter may, notwithstanding, direct that the proceeds be applied in discharge of a single debt, or a class of debts, in preference to others of the same character. The trusts, although different in terms and in their legal consequence, are both valid, and, for the same reason, they are each of them within the general purpose sanctioned by the legislature.
Another, and to my mind conclusive, answer to this proposition is, that under a trust created in the language of the statute, the discretion of the trustee (if it exist at all) is wholly unlimited as to the mode in which the trust fund is to be applied to the use of the cestui que trust. He may expend it for the education, or support, or to gratify the taste, or caprice, of the beneficiary. The doctrine is, that the discretion implied from the terms of the statute, is essential to the validity of the trust. If so, the donor can no more restrict that discretion, than he can annihilate it. But it is conceded that he may direct a specific sum of money, less than the whole rents and profits, to be applied. This is a limitation of power. Again the revisers say that "Use includes education and support;" of course, if the statute is what they intended it should be, a trust to apply a specific sum for the education of any person designated, would be valid. But this is confining the trustee to a single use, instead of leaving to him, in the language of this section, the whole class of possible benefits, from which he might select one, or all, at his discretion.
Again, if a discretion is an essential element of a legal trust, I see no way to escape the conclusion, that the trustee must administer to the necessities of the cestui que trust, from day to day, and hour to hour. To avoid this absurdity, which was pointed out by the chancellor, it was distinctly admitted upon the argument, that the trustee was at liberty to pay over to the beneficiary, from time to time, sums of money "to be applied by him to his own use." This concession is a virtual surrender of the whole controversy. For if the discretion of the trustee is indispensable, in the application of the fund, he cannot delegate it to another, and certainly not to the beneficiary. In a word, the payment of a sum of money to the cestui que trust, is an application to his use, or it is not; if the former, it is authorized by the statute, and may be directed in the trust; if not, the trustee cannot make such payment in his own discretion or otherwise, without a violation of duty.
What, then, is an application "to the use of a person," within the statute? The advocates for a discretionary power in trustees over the fund, have told us that a payment over is not such an application, but have not informed us in what it consists. "To apply to the use of," is to execute the trust pro tanto. It is such an application as will discharge the trustee from all responsibility on account of the fund, or the part of it, thus applied. This requires, 1st. The authority, express or implied, of the creator of the trust. 2d. An act of the trustee in pursuance thereof. 3d. The assent, in some form, of the beneficiary, where he has legal capacity; or of his committee or guardian, where he has not. An application "to the use" of a person, like a delivery, or payment, implies an acceptance. The delivery of clothing to a madman, would no more be an application to his use, than the payment of money; for he has not the capacity to assent to either. The nature of the property applied is of no consequence, whether money or chattels. Judge Savage observed in Lorillard's case, "that to apply rents and profits to the use, does not mean to pay them over to the cestui que trust. In that case he would apply them himself to his own use." In what other way can they be applied? If the learned judge had pursued the subject, he would have discovered that his remark applied with equal force, not only to a payment of money, but to every species of property, whether procured by the trustee, or otherwise. In the final analysis it would be found, that the beneficiary must in all cases apply the thing bestowed to his own use. The reason is, that the donee cannot be compelled to accept the gift, or any part of it. The trustee has to deal with free agents, when the beneficiaries have legal capacity, and with their legal guardians when they have not. He is trustee of the fund designed for their use, not a committee of their persons. If they refuse to accept what he has provided, and is ready to deliver, whether money, or necessaries, there is no application; the trust is unexecuted; the property remains in the trustee, subject to his control, and for it he alone is responsible. On the other hand, if the trustee, in pursuance of an authority written out in the trust deed, or implied from it, delivers to the cestui que trust money or other property for his use, and it is accepted by the latter, the trust is so far executed, the application made, and if within the next hour, the gift is squandered or destroyed, the trustee is exonerated.
Again, it is said that if a person is competent to take care of the money when paid over, there is no reason why the estate should not be transferred to him out of which it is raised. The same reason might be urged against trusts of personal property of this kind, which are confessedly authorized by the statute. But to be influenced by this suggestion, we must shut our eyes to the light of history and experience. Every one knows, that there are individuals in every society, who are neither imbecile nor profligate, nor united with those who are so, who could properly dispose of a fixed income, and yet who ought not, from prudential reasons, to control the capital out of which it is raised. The difficulty does not lie in a want of capacity; but is to be found in their inexperience, the relation which they sustain to others, and sometimes in the nature of their pursuits. Of the men of the past age, whose labors in science and literature are now appreciated, how many might be named who, if living, would be deemed incompetent to manage an estate successfully. Yet men like these have their uses, although they know little of the value of property, or the modes of extracting rent from a refractory tenant. The statute does not exclude them from the class of beneficiaries; nor, as I read it, does it require a guardian or a trustee, to supervise their expenses; or make their degradation an essential condition of the trust. We are told that persons of this class can appoint agents to superintend their estates. So can the creator of the trust, and the law casts upon him this duty, whoever may be the cestui que trust. The chances of a judicious selection would be rather in favor of the man who provided the fund, than the one who was to expend the income.
And lastly, it is said that estates created under the third subdivision are inalienable; that a trust to pay over is passive, and opposed to the policy of our law, and the intention of a legislature. A trust to receive rents and profits, and pay them over, is essentially active in all its particulars. It was so at the common law, and is so now. ( Jick. Anal. p. 15, note and cases; 3 R.S. 582, Revisers' notes.) To pay over is an active duty, and the successful management of real estate, with a numerous tenantry, demands not only integrity, but the exercise of vigilance, together with a knowledge of business, and of property. The revisers say, "that active trusts are indispensable to the proper enjoyment and management of property. They therefore propose to retain them, only limiting their continuance, and defining the purpose for which they may be created." (3 R.S. supra.) I think effect should be given to their design, and that of the legislature. The objection, indeed, is rather to the policy of the statute, than the validity of a trust to pay over. If the law was more questionable than I believe it to be, it is no reason why it should be made more odious by construction.
The judgment of the superior court should be affirmed.
When the plaintiffs had closed the evidence on their part, the defendant moved for a nonsuit, which was not granted; but no exception was taken for that cause. The plaintiffs' counsel then requested the judge before whom the cause was tried, to give certain instructions to the jury, which the judge refused to do, but no exception was taken for that refusal. The judge then charged the jury that the devise in the will of Gerardus Post, if it did not vest in the trustees a fee in trust for the party beneficially interested, confers upon the trustees a power in trust for the benefit of the said parties, which may be exercised by the executor who proved the will; and further, that the plaintiffs Edward W. Leggett and Susan his wife, have not in them a sufficient title to enable them to sustain this suit. "To the said charge and opinions of the said chief justice the counsel for the plaintiffs excepted." The exception was in the words quoted, and probably ought to be confined to the last clause of the charge. The rule recognized in the case of Labon v. Woram, (1 Hill, 91,) ought to be followed in this court as well as in the supreme court; that an exception in general terms to the charge of the court, cannot extend to any matter but that which immediately precedes it. The matter which immediately preceded the exception in this case was, that part of the charge in which the judge stated that "the plaintiffs had not in them a sufficient title to sustain this suit." They could not have a sufficient title to enable them to sustain this suit unless they had the right of possession at the time of the commencement of the suit. (2 R.S. 306, § 25.)
The bill of exceptions does not show on what day the action was commenced; but the plaintiffs in their declaration allege that they were in possession of the premises in question, on the 1st day of July, 1846; and by 2 R.S. 304, § 7, such possession must be alleged on a day after their title accrued, and that title to be perfect, must include the right of possession. According to the admissions stated in the bill of exceptions, the plaintiffs on the 1st day of May, 1846, received one quarter's rent in advance, and that quarter did not end until the 1st of August, 1846. Having received the rent for that quarter, they did not show a right of possession on the 1st of July in that year. It would be a reproach upon the law to hold that the plaintiffs can be allowed to receive a quarter's rent in advance and then commence and maintain an action of ejectment against the tenant who paid the rent, before the end of the quarter. The defendant was entitled to a nonsuit on this ground, if upon no other.
It may, however, have a tendency to prevent further litigation between these parties, if the court express an opinion upon the other portion of the charge to the jury. No person can read the will without being satisfied that the testator intended that the part of his estate which was to be for the benefit of his daughters, should, during their lives be under the control and management of his executors as trustees. It is true, the testator has not used the most appropriate words to effectuate that intent, yet the words he has used cannot well be misunderstood. The devise to his daughters is: "I give unto my two daughters, Susan and Mary Jagger, the remaining two-fifths of my estate." Had the testator intended that his daughters should have the possession and control of the estate, he would have added nothing to the above devise; but he adds, "so that each may have and enjoy the interest or income of one equal fifth part thereof during their several natural lives." He gives the estate to his daughters so that they may have the interest and income thereof for life, and he then adds, "I hereby appoint my executors, hereinafter named, trustees to the estate of my two daughters, hereby authorizing and desiring my executors as such trustees, to take charge of all such portion of my estate as is herein given to them respectively, and to take care of, manage and improve the same, to the best advantage, and pay over to them respectively, from time to time, the rents, interest or net income thereof; and in case of the marriage of both or either of them, it shall be sufficient in making such payments from time to time, to take the receipt of my said daughters respectively, without the signature or consent of their respective husbands, and in the same manner and with like effect as if they were sole and unmarried." When a trustee is directed to pay over the rents and profits, he must necessarily receive them. (1 Cruise's Dig. 462, § 13.) The trustees are authorized to take charge of the estate, to take care of, manage and improve the same to the best advantage, to receive the rents and profits, and pay them over, and if necessary to the most advantageous management of the estate, they have power to make leases, in order that rents may be received and paid over; and this is enough to show that the charge of the judge was correct.
In a subsequent part of his will, the testator authorized his executors to sell and dispose of all, or any part of his estate, both real and personal, either at public or private sale, and at such times and such manner and for such sum or sums, as to them in the exercise of their best judgment may seem most expedient,c. The executors under the will had both a general and a special power in trust. They were authorized to convey in fee "to any alienee whatever." (1 R.S. 732, § 77.) They had a special power because they could alienate an interest less than a fee, (2 d sub. of § 78,) both powers were in trust, because persons other than the grantees of the power were to have the proceeds of such disposition. ( Page 234, § 94, and 2 d sub. of § 95.) Whether the trustees took an estate in fee or not, the lease given to the defendant by the executor who proved the will is valid. A power to make leases of one-fifth of the estate, during the life of each of the daughters, is necessarily implied in the express power to take charge of, or take care of, manage and improve the same to the best advantage, and pay over the rents. And were it necessary for the purpose of supporting the lease given to the defendant in this case, it might fairly be insisted, that the power to make leases was included in the power given in the will to the executors to sell and dispose of all and any part of the testator's estate, both real and personal, c. at such times and in such manner, and for such sum or sums as to them, in the exercise of their best judgment, may seem most expedient, c. A power to make leases is a power to alienate a part of the estate, (16 Wend. 153,) and by the lease in this case a part of the testator's estate was alienated to the defendant. The testator by the word estate may have intended his lands, instead of his interest in the lands.
The question principally discussed upon the argument in this cause was whether the trust in this case to pay over and consequently to receive the rents and profits was a valid express trust, within the third subdivision of the 55th section of 1 R.S. 728, which authorizes a trust "to receive the rents and profits of land and apply them to the use of any person during the life of such person, or for any shorter term." This is a question which has occasioned more discussion, and respecting which the distinguished jurists in the state have been more equally divided, than upon any other question to which the revised statutes have given rise; and yet had it been definitively settled when first raised, it would have been of very little importance how it had been determined. I had not, before I came into this court, had occasion to examine the question and form an opinion respecting it; but from reading the report of the leading cases in which the question had been discussed I had received a strong impression that a trust to pay over did not give to the trustee the discretion which the legislature by the words "to apply to the use of" intended he should have. And was the question now raised for the first time, I should be inclined to decide according to that impression, although it has been weakened by the discussions in this court. The argument has been exhausted on both sides, and I shall not make the vain attempt to add any thing to the argument, on the one side or the other. My inquiry will only be, has the question been so decided that it ought no longer to be regarded as an open question?
Upon the argument of this cause the case of Parks v. Parks was referred to as a case in which the court for the correction of errors decided in December, 1842, that a trust to receive the rents and profits of land and pay them over was a valid, express trust, under the third subdivision of the 55th section. That case has not been reported in any authentic form; but the printed case and the points made in that court have been furnished to this court; and from the New-York Commercial Advertiser of the 3d of January, 1843, it appears that the opinion of the Chancellor in that case was affirmed by a vote of 10 to 8; that Justice Cowen delivered a written opinion for affirmance, and Senator Bockee for reversal.
That case arose on the will of Peter Parks, who died in April, 1835, leaving a widow, Elizabeth Parks, his daughters Sarah Parks and Hannah Lyon, wife of Peter P. Lyon, and his sons, David, Samuel and Peter Parks — having in February preceding made a will, and thereby devised all his real and personal estate to his daughter Sarah Parks, her heirs, executors, administrators and assigns forever, to, for and upon the following uses, trusts, interests and purposes:
First, after paying his debts, funeral expenses, c. to permit his wife to enjoy the rents and income of his real and personal estate for and during her natural life, or so long as she should continue his widow; out of such rents and income were to be paid taxes, assessments, c. and upon the condition that she and his daughter Sarah Parks should live together on the premises then occupied by him, and that his daughter Sarah should receive her support out of the same during the life of his wife, or so long as she should continue his widow. In trust in the second place: That immediately after the decease or the marriage of his wife, he directed his daughter Sarah Parks to pay over unto his son Peter during his natural life the rent and income arising from his house and lot of ground number twenty-six Oliver-street — out of such rent and income she was first to pay taxes, assessments,c. A similar trust was made in favor of his son Samuel, of a house and lot number thirty Oliver-street. He devised a house and lot to his daughter Hannah Lyon in fee, and a house and lot to his son David for life, and after his death to his heirs, subject to the payment of a mortgage thereon. The will contains various other devises. David was dissatisfied with the will, and filed a bill before the vice chancellor of the first circuit, for the purpose of setting it aside. In his bill he alleged "that the devises and bequests of the entire estate of the said Peter Parks, deceased, real as well as personal, under the said last will and testament, and also all the trusts intended to be created by the said will, are in all things, in each and every particular, illegal, inoperative and absolutely void," and he prayed that the same might be decreed void and ineffectual in law. And the vice chancellor held that the will as to the real estate was null and void, and decreed accordingly.
From that decree Sarah Parks, executrix, and Elizabeth Parks, Samuel Parks and Peter Parks appealed to the chancellor, and he reversed the decree made by the vice chancellor, and held that the trusts were valid. (9 Paige, 107.) From the decree of the chancellor, David Parks, Peter P. Lyon and Hannah Lyon his wife, appealed to the court for the correction of errors, and the sixth point made in that court by the appellants was: "The trusts however, are not valid within the third subdivision of the 55th section of the revised statute on trusts, it not being to apply the rents and profits to the use of the beneficiaries, and the beneficiaries themselves not being such persons as are contemplated within the statute; and, in addition, the trustee is also a cestui que trust." And the third point on the part of the respondents was, "the trusts to receive the rents, and profits of number twenty-six, thirty and twenty-eight, Oliver-street, and thirteen Forsyth-street, and pay them over to the children mentioned in the several devises of these premises, are valid trusts."
The result in the court for the correction of errors has already been stated. Although the opinion of that court was concurred in only by a majority of two members, it ought to be regarded as the law of the land until the legislature shall alter it. I am therefore of opinion that the judgment of the superior court be affirmed with costs.
RUGGLES, SHANKLAND and HOYT, Js. were also for affirming the judgment. They concurred in the opinion that by the will a trust estate was given to the executors during the lives of the two daughters, and that the trust was valid.
The plaintiffs were entitled to recover on the ground that the wife took the land, either as devisee or as heir at law, unless my brethren are right in saying, that the testator intended, by the fourth clause of the will, to give a trust estate to the executors for the lives of the two daughters. If such was his intention, the question arises, whether the trust — which is one to receive and pay over the rents and profits of lands — is a valid trust under the third subdivision of the 55th section of the statute of uses and trusts. As the trust, if a good one, separates the legal from the equitable estate, and suspends the power of alienation, it is important that the point should be well considered. The same question, among others, was before us in the case of Mason v. Jones, upon the will of the late John Mason of the city of New-York, who left a very large estate. He attempted to create a trust to receive the rents and profits of lands, and pay certain annuities. After the case had been before us more than a year, it went off at the last May term upon an equal division of opinion among the judges, without deciding the point. Although the two cases differ in some particulars, yet, so far as relates to this question, the principle to be settled is the same in both; and the opinion which I prepared on this branch of the Mason case will, for the most part, be equally applicable on the present occasion. It was as follows:
The statute authorizes a trust "to receive the rents and profits of lands, and apply them to the use of any person." (1 R.S. 728, § 55.) Whether, under this provision, a valid trust can be created to receive rents and profits, and pay them over to the beneficiary, is a question which has undergone a good deal of discussion in the books. In favor of the validity of such a trust will be found the names of Chancellor Walworth, Judge Nelson and Senator Tracy. ( Gott v. Cook, 7 Paige, 536; Coster v. Lorillard, 14 Wend. 331, 394.) On the other side of the question are the names of Chief Justice Savage, Senators Maison and Young, and my own. ( Coster v. Lorillard, 14 Wend. 320, 351, 377; Hawley v. James, 16 id. 156.) And still the question remains open. It is a very great error to suppose that the validity of such a trust was established by the decision of the court of errors in Kane v. Gott, (24 Wend. 641;) for the court was careful not to meddle with the question. In that case the lands were directed to be sold and converted into personal property, and the decision was put upon the ground that it was a trust of personal property; and that the statute of uses and trusts, which relates exclusively to real property, had nothing to do with the case.
The question not only remains open, but every lawyer has known from the time the case of Coster v. Lorillard was before the court in 1835, that the judges were divided in opinion, and that the question had got to be settled by the court of last resort. In nearly all cases where wills have been made since that time, so far as I have either observed, or have learned from conversing with gentlemen conversant with such matters, the testator, if he wished to create a trust of this kind, has followed the words of the statute, and made a trust to receive and apply rents and profits. When that has not been done, especially in disposing of large estates, where wills are not often prepared without the aid of counsel, it is but reasonable to suppose that the testator preferred to take the hazard of having the provision declared void, rather than make such a trust as the statute mentions. But whatever may have been the mind of this testator, we must inquire whether the trust which he has made is authorized by law.
The opinion which I expressed on this question in Hawley v. James not only remains unchanged, but the more I have heard the matter discussed, and the more frequently it has been turned in my own mind, the more thoroughly am I convinced that such a trust as the testator has attempted to create cannot be supported. I shall not repeat, on this occasion, what I said in Hawley v. James, nor what has been said by other judges on the same side of the question. I shall do little more than suggest a few leading thoughts, and notice some of the most prominent arguments on the other side of the question.
It should be constantly borne in mind, that there is no longer any common law right to create trusts of real property. The legislature has abolished all trusts, save such as it has specially authorized; (§ 45;) and if the authority to make this trust cannot be found in the statute, it does not exist.
The testator has not followed the statute, either in form, or in legal effect. He certainly has not followed the words; and that is a matter of some importance in a case like this, where the legislature has so plainly declared the purpose of restricting trusts of real property, and confining them within certain specified limits. If there may be any departure from the language of the statute, it must be at the peril of failure, unless the words used are precisely equivalent to those prescribed by the legislature.
But we need not lay much stress upon mere words, for the legal effect of the statute has been disregarded by the testator. There is, in my judgment, a very plain and substantial difference between the statute trust, to receive rents and profits and apply them to the use of another, and such a trust as the testator has made, to receive rents and profits, and pay them over as a debt due to another. In one case, the trustee has a discretion in the application of the money; in the other he has none. Looking at the whole scope of the statute of uses and trusts, I cannot think that the legislature intended to authorize a trust which would suspend the power of alienation, without any discretion or authority in the trustee to direct the application of the trust money. I do not mean that the trustee must himself "purchase every loaf of bread, and every paper of pins" which the cestui que trust may need; (7 Paige, 537;) but I do mean, that the trustee must have the right to determine for what purposes the money may be expended, and to make the application himself, where he thinks those matters cannot, either in whole or in part, be safely intrusted to the beneficiary. If this trust had been created in the words of the statute, to receive and apply rents and profits; or in any other truly equivalent words, no one can doubt that the trustee would have had the right to control the expenditure of the money. But under the trust which the testator has made, the trustees have no power whatever over the expenditure of the money; but are bound to pay it over in gross sums as debts due to the beneficiaries. That would be well enough if the testator had created a trust under the second subdivision of the 55th section, which would not suspend the power of alienation. (16 Wend. 152.) But he has made a trust under the third subdivision of the section for the very purpose of tying up the property; and yet has not followed the only authority for making such a trust.
It is true that the statute does not, in terms, say that the trustee must have a discretion concerning the application of the money. But it does speak of a trust to receive rents and profits; a trust to apply them to the use of another, and a trustee to do the business; and it is impossible to deny that this language plainly and necessarily implies a power and discretion in the trustee to direct and control the application of the money.
It is said that the donor may direct the application of the money. I answer, that the statute does not say so. On the contrary, it provides for a trust to apply, and a trustee to make the application.
It is also said that there may be cases where the beneficiary will not be capable of managing the estate from which the rents and profits are to arise, and yet will be quite competent to expend the money with discretion; and in such cases, the only useful trust is that for managing the property and collecting the rents and profits. Should that be granted, it would prove nothing to the present purpose; for the legislature has not authorized a trust to receive only, but a trust to receive and apply. And besides, there is much less occasion for a trust to manage the estate — a thing which may be done by an attorney or agent — than there is for a trust to apply the rents and profits to the use of the beneficiary. If he is competent to expend the money with discretion, he will undoubtedly be able to appoint a proper agent to manage the property; and there will be no occasion for a trust for any purpose. But it is enough that the legislature has coupled the two things together; and where there is no authority to apply the rents and profits, there is no such trust as the statute allows
It is said that paying the money to the beneficiary is one mode of applying it to his use. But this argument does not prove enough; for the trust authorized by the statute is one to apply generally, and includes, not one only, but all legitimate modes of making the application. And besides, there may be cases where paying any considerable portion of the money to the beneficiary would not be applying it to his use, within the meaning of the statute. If he is a lunatic, or is spending the money in gaming and drunkenness, while his wife and children are suffering from cold and hunger, it would be a breach of the statute trust to put the money into his hands. And yet under the trust we have here, the trustee could not withhold a single dollar, and apply it himself to the relief of the suffering family. I know it has been said, that although the trust be to pay over, the trustee may nevertheless exercise a discretion, and withhold the money from a lunatic or a drunkard; and that the court of chancery would protect the trustee in doing so. ( Gott v. Cook, 7 Paige, 538, 9.) But I deny that the court of chancery has any such power. If it is a lawful trust the beneficiary may compel the execution of it. If it is not lawful, it must fall for that reason. Chancery has no power to get rid of the difficulty by making a new trust, instead of the one which was made by the donor. This was frankly admitted, and the dictum in Gott v. Cook given up, by the counsel who argued in support of this will.
I will notice, in this connection, that creditors are provided for in certain cases; (§ 57;) and when the statute is followed in making the trust, the trustee will have the right to prefer the claims of honest tradesmen, mechanics and laborers, to the demands of harlots, gamblers and sharpers. But where the trust is to pay over, the trustee has no such power.
It is true that the statute has not confined the trust to any particular description of beneficiaries, as infants, femes covert, drunkards, spendthrifts, or the like. But it is also true that no one will be likely to create such a trust as the statute authorizes, unless there is some reason growing out of the condition, character, or habits of the beneficiary, calling for the intervention of a trustee. The legislature evidently intended to confine trusts which suspend alienation within narrow limits; but they thought it better to do so by giving a special character to the trust, rather than by undertaking to describe all the different classes of persons for whose benefit the trust might be created. If an attempt had been made to specify, it might often become a question whether the beneficiary was within the description. It was, therefore, left for the benefactor to decide for himself who should be the object of his bounty, provided he made a trust to receive and apply. It was said, on the argument, that the beneficiary might often feel himself degraded by such a trust. As the trustee will always be the friend of the donor, and probably of the beneficiary also, there is very little reason to suppose that he will use his power in an unreasonable or offensive manner. But however that may be, the answer to the argument is, that if the beneficiary does not like such a trust as the law allows, he can let it alone. He is not obliged to have it.
The legislature has not limited the amount of property which may be conveyed in trust, nor the income to be derived from it. But this proves nothing in favor of a trust to pay over. It only proves that the legislature was willing to leave the donor free from all restraint, except such as results from the nature of the trust. He may make the gift as large as he pleases; but it must be upon such a trust as the statute allows. If that wounds the pride of the rich beneficiary, he must either bear it, or renounce the trust.
There is room for question whether a valid trust to provide for annuities can be created under the third subdivision of the 55th section. When the object is to provide for legatees, by paying them gross sums of money, the trust should be under the second subdivision. It should not be a trust to receive rents and profits, which suspends alienation; but a trust to sell, mortgage or lease lands, which does not interfere with the marketable quality of the property. (16 Wend. 152.) But if a good trust for annuities can be created under the third subdivision, the trustee must have the right to apply the money, instead of being obliged to pay it over, as the testator has directed in this case.
It is not the policy of our law to enable men to tie up their estates, where no valuable end is to be attained by it. When the circumstances of the case are such as to call for the intervention of a trustee to manage the property, and apply the income to the use of another, a trust suspending alienation has been allowed. If that trust shall be so extended by construction as to include cases where the trustee has no control over the money, it will enable men to fetter their estates, when no useful end is to be answered by it, and where they could not do it before this statute was passed. At the common law a trust to receive and pay rents and profits would not suspend the power of alienation. If we approve of this will, the legislature, instead of restricting trusts which tie up estates, has enlarged them to an almost unlimited extent. The shackles upon alienation will be more effectual than they were before the revolution: men who have gathered large fortunes, will have the means of gratifying the too common desire of controlling the property after they are dead: the passion for accumulation, already strong enough, will be stimulated; and the causes which are now constantly performing the office of agrarian laws will, in a great degree, be counteracted. In England, the efforts of the landed aristocracy to tie up estates were constantly resisted by the judges, who went so far in the opposite direction as nearly to repeal the statute de donis conditionalibus by construction. Our statesmen and legislators have given us no occasion for such a struggle; for instead of making laws in restraint of alienation, they have unfettered and promoted the distribution of estates, by abolishing entails, primogeniture and passive trusts; and finally, by abolishing feudal tenures of every description, with all their incidents. We cannot, I think, uphold this trust without forgetting the spirit of our institutions, and making a retrograde movement.
And finally, where the words of the statute are followed, and the trust is to receive and apply rents and profits, I have never yet met with any judge or lawyer who denied that the trustee had authority to make the application of the trust money. The trust which the testator has made gives no such right. It is not, I think, too much to ask those who say this is a good trust, to tell us how it is that a trust which does not follow the statute, either in form or effect, can be valid. That question has never yet been answered.
So much for my opinion in the Mason case. It is a remarkable fact that under different organizations of the court, the judges were twice equally divided in opinion on this question. The Mason case was first argued in April, 1848, when Judges Ruggles, Gardiner, Jones and Johnson, thought the trust was good; while Judges Jewett, Wright and Gray, agreed with me that it could not be supported. After four of those judges had given place to four others from the supreme court, the case was again argued in January last, when Judges Ruggles, Gardiner, Shankland and Hoyt were for upholding the trust; and Judges Jewett, Strong and Cady, concurred with me in the opinion that it was void.
On the argument of the case now before us, the counsel for the defendant insisted, that the validity of such a trust was adjudged by the court of errors, on a division of ten to eight, in the case of Parks v. Parks, which was decided in December, 1842. The evidence which the counsel furnished of the fact, was a copy of the error book, points and decree; from which it appeared that the chancellor decided in favor of a will containing a similar trust; and although objection to it was made by counsel in the court of errors, the decree was affirmed. If there was nothing to controvert this evidence, it would not be very satisfactory, because it may well be that the case was disposed of by the court of errors on some other ground. The very same kind of evidence, and that which is fully equal to it in degree, may be found in the case of Gott v. Cook, ( Paige, 521,) where the chancellor decided in favor of such a trust; and though objection to it was distinctly taken by counsel in the court of errors, the decree was affirmed. ( Kane v. Gott, 24 Wend. 641.) But on looking at the report in error it will be seen, that the court carefully abstained from deciding the point in question, and held the will valid on another ground. And such I have no doubt was the fact in Parks v. Parks, which was upon a complicated and very badly drawn will. From the report of the case in the court of chancery, (9 Paige, 107,) it appears that the chancellor was of opinion that most, if not all of that part of the will which he upheld, might stand as a good disposition of legal estates to the beneficiaries, without any trust; and the court of errors probably went upon that, or some such ground, in affirming the decree, without touching the question under consideration. The fact that the case in error has not been reported, furnishes evidence nearly, if not quite conclusive, that the validity of such a trust as we have here was not considered. The question was one of unusual importance: it had been debated at the bar and on the bench, for several years; and had it been decided either way by the court of errors while sitting at the capitol, the decision would not only have found its way into the books in due time, but it would have been announced in the city papers the next day, and been published all over the state within a week. And yet, although nearly seven years have elapsed since the supposed decision was made, during which time the question has still been mooted in the courts, it does not appear that any one ever heard of such a decision by the court of errors, until the fact was stated by the defendant's counsel on the argument of this cause. No opinions are produced; no judge, senator, reporter, counsel, or attorney, testifies that the point was considered; and I think it morally certain that it was not decided.
I think the judgment of the superior court should be reversed; and Judges JEWETT and STRONG concur in this opinion. But as my brother CADY surrenders his own opinion to the supposed authority of Parks v. Parks, there is a majority in favor of affirmance. And thus it happens that a great question, which has been litigated more than fifteen years, is at the last settled by a single vote, and that vote governed by a supposed decision which I verily believe was never made.