In Rayhol Co., our Supreme Court held that a court may deny a partition complaint if the parties enter into a reasonable agreement that expressly or impliedly debars a partition.Summary of this case from Sclafani v. Dweck
Ordinarily where the legal title to property is vested in two persons as tenants in common either is entitled to a partition, but the parties may enter into a reasonable agreement which will expressly or impliedly bar them from seeking it. A partition will not be granted where to do so would involve the violation of a valid trust or the defeat of its purposes. The plaintiff and defendant H hold title to certain real estate bought for H and her husband, the other defendant, by H's mother, J, the husband having assigned his interest in it to the plaintiff. The husband's father, D, gave them money to build a home on the property and he prepared and they agreed to sign, a deed of trust respecting it. Defendants' daughter having died, this deed, containing provisions affecting her, was never executed, but D made certain interlineations and erasures in it to adjust it to the situation, changed the trustee, and presented it to the defendants who approved it and expressed their willingness to sign it. D prepared a rough memorandum of agreement to sign the deed which the defendants executed, and thereafter prepared the deed of trust in final form but the proposed trustee refused to act and it was never signed. The memorandum expressed the willingness of the parties to sign "such a deed" when it should have been finally prepared, "it being understood that in substance this deed provides for the following" after which is a resume of its provisions, as they existed. The agreement and proposed deed made certain provisions for the life use by the defendants of the property and disposition of the proceeds if they should separate. The defendants built the home and subsequently separated. Held: 1. That from the language and surrounding circumstances the memorandum and suggested deed are to be regarded as a presently effective agreement, constituting a declaration of trust, leaving only for further action the formal preparation and due execution of an instrument adapted to carry that agreement into effect. 2. That the finding of the court that the agreement did not have the effect of limiting the right of either party to seek a partition must be regarded as a legal conclusion drawn from the terms of the memorandum and suggested deed, and the finding that the parties did not intend it should affect or limit that right must be regarded as a statement of the intention of the parties expressed in that memorandum and deed, which cannot be sustained. 3. That the partition of the property either by actual division or by sale would clearly defeat the rights established by the declaration of trust. 4. That even though a sale of the property were necessary under the provision of the trust, a sale in partition could not be regarded as the substantial equivalent of the sale by the trustee provided in the declaration of trust. A written agreement made with J at the time the defendants acquired the real estate, in which they agreed to secure the property, by way of testamentary provision, to their daughter, subject to heir life use, or if she died, to secure to J the share of the life use to which H was entitled, was sufficient to give rise to a trust, although it took the form of an undertaking to make the provision by will, and the existence of this declaration of trust is a material consideration in determining the intent of the parties as regards the subsequent memorandum of agreement.
Argued November 6th, 1929
Decided January 6th, 1930.
ACTION for a partition, or a sale of real estate and division of the proceeds, brought to the Superior Court in Fairfield County and tried to the court, Jennings, J.; judgment for the plaintiff and appeal by the defendant Florence Holland. Error; judgment set aside, and Superior Court directed to enter judgment upon the complaint for the defendant Florence Holland in accordance with this opinion and to proceed upon the counterclaim according to law.
The plaintiff and the defendant Florence Holland, hold the legal title as tenants in common to three small islands in Long Island Sound in the town of Darien. These islands were bought with money furnished by Mrs. Holland's mother, Mrs. Jenner, and title was conveyed directly from the seller to Mrs. Holland and her husband, the other defendant in this action. Mrs. Jenner intended to make a gift of the lands to the defendants subject to certain conditions which were expressed in a written agreement signed by them substantially contemporaneous with the deed. It recites that Mrs. Jenner had given the defendants a certain sum of money with which to acquire the islands and that the gift was made to enable them to provide a permanent home for themselves and for an infant daughter they then had, and upon the express understanding that the premises were to be conveyed to the daughter upon the death of the defendants; and it contains an agreement by them that each was to make and keep in effect a will by which either his or her interest in the property would be devised at death to the daughter, or if it should be sold, by which it would be provided that the proceeds should be used to purchase a home for them and their daughter or should be invested by them in certain designated kinds of securities, each of the defendants to receive during life one half of the income and to bequeath at death his or her share of the fund to the daughter; and that, should the daughter die before the defendants, the interest Mrs. Holland would have left to the daughter, had she been living, should then be left to Mrs. Jenner or her estate.
Mrs. Jenner suggested to Dr. Holland, the father of the defendant Raymond Holland, that he advance to the defendants, on similar terms to those upon which she had made the gift for the purchase of the land, money with which to build a home, and he did so. While the house was building Dr. Holland had a number of conversations with the defendants concerning the making of a formal agreement, which would secure succession of the title of the property to the daughter of the defendants or their issue and which would also secure to Mrs. Jenner or her estate and to himself or his estate, upon certain conditions, the return of the amounts invested in the house and lands. Dr. Holland caused to be prepared a so-called "suggested deed" which embodied all the understandings and agreements of the parties and which was in the form of an indenture between the defendants and the Bankers Trust Company of New York. It made various provisions for the daughter of the defendants, but before anything further was done she died. After that, on September 8th, 1917, Dr. Holland had another conversation with the defendants as to the execution of an agreement to carry out the understanding of the parties. At this time he had with him the suggested deed. He made certain erasures and interlineations in it to adjust it to the situation caused by the death of the daughter of the defendants by striking out all references to her and inserting provisions for the benefit of any child or children that might be born to them; and he also changed the name of the trust company from the Bankers Trust Company to the Stamford Trust Company of Stamford and inserted in the first provision of the trust the words "or the survivor" so that it should read: "To permit the parties of the first part or the survivor of them to occupy the premises as a residence." He showed the document to the defendants and both of them read it through, approved it and expressed a willingness to sign such a deed when it was finally prepared. Thereupon Dr. Holland hurriedly and roughly prepared a memorandum of agreement which the defendants signed. A copy of this agreement is printed in the footnote. Thereafter Dr. Holland caused to be prepared a deed of trust in a final form, but was unsuccessful in his negotiations with the Stamford Trust Company to induce it to act as trustee and this deed was never executed. The defendants occupied the property in question as a home until November 1st, 1924, when they separated. Since their separation each has occupied it at times and at times it has been leased. Since early in 1925 Mrs. Holland has intended to be a citizen of New York and has considered the premises only as a summer home. She has, however, spent between $8000 and $9000 in the maintenance and improvement of the property. The defendants have no living children.
"Darien, Sept. 8, 1917
"We, F. Raymond Holland Florence C. Holland, his wife, of Darien, Connecticut, being desirous of protecting the interests of Mrs. Wm. A. Jenner and Dr. W. J. Holland, who have united in giving us the land the house which we now own on Scotts Cove in the town of Darien, Connecticut, unite in expressing our approval of the suggested deed, which has been shown us by Dr. W. J. Holland express our willingness intention to sign such a deed when it shall have been finally prepared; it being understood that in substance this deed provides for the following:
"1. The transfer to some reputable capable trust company of the title to the property we hold in trust for the following objects:
"1. To secure to both of us during our respective lifetimes of its occupancy as a home for ourselves.
"2. To secure to the survivor of us, in the event of the death of one of us, of the occupancy of this property as a home.
"3. To secure the succession of the title to this property to any child or children who may be born to us who may survive us.
"4. In the event of a separation between us to secure to each of us, in case we mutually agree that the property should be sold that proportion of the value of the property which has been respectively contributed by Mrs. Wm. A. Jenner, the mother of Mrs. Florence C. Holland, Dr. W. J. Holland, the father of F. Raymond Holland.
"5. In the event of its being deemed desirable to sell the property, to secure the reinvestment of the proceeds either in another home, to be held in trust for us or the survivor of us or in good securities, the income to be paid to us or the survivor of us.
"6. In the event of the death of both of us without leaving children of our marriage, the property to be sold, or the securities representing the proceeds of a prior sale to be divided returned to the estates of Mrs. Wm. J. Jenner Dr. W. J. Holland in the proportions which they have contributed to secure us this property.
"Florence C. Holland : W. J. Holland
"F. Raymond Holland : Witness"
Mr. Holland organized the plaintiff corporation, transferring to it his interest in the premises and in return receiving all of the shares of stock except two, which were issued without consideration to two persons connected with the firm of attorneys who were his legal advisers. No claim is made that the plaintiff stands in any better position than would Mr. Holland were he seeking a partition of the property.
Finally, the court has found that, at no time, was there any understanding that in the event of a separation between the defendants either would be entitled to live on the premises so long as he or she desired to the exclusion of the other or the other's rights; that the memorandum of September 8th, 1917, was an informal document, roughly and hurriedly sketched, and whether considered alone or in connection with the surrounding circumstances it in no way limits or affects the right of either of the signers to seek a partition of the property nor was it intended by them or by Dr. Holland that it should in any way affect or limit that right; and that the premises in question are incapable of a physical partition and a partition by sale will better promote the interests and rights of all parties concerned. The court accordingly decreed a partition by sale and from that decree Mrs. Holland appealed.
William H. Comley, with whom, on the brief, was Charles E. Williamson, for the appellant (defendant Florence Holland).
Raymond E. Hackett, for the appellee (plaintiff).
It should be noted that at all times the defendants have held the property subject to the terms of a declaration of trust, for at the time they acquired it they executed a written memorandum in which they agreed, by way of testamentary provision, to secure the property, or the proceeds of it if sold, subject to life uses to themselves, to their daughter, or if she died, to secure to Mrs. Jenner the share of the life use to which Mrs. Holland was entitled. Such a declaration would be sufficient to give rise to a trust in which Mrs. Jenner or her estate would be a beneficiary; 1 Perry on Trusts (7th Ed.) § 82; and the fact that this declaration took the form of an undertaking to make provision by will does not affect its validity. Strakosch v. Connecticut Trust Safe Deposit Co., 96 Conn. 471, 114 A. 660; Hull v. Thoms, 82 Conn. 647, 651, 74 A. 925. In the absence of any agreement to the contrary, the buildings placed upon the land became a part of the freehold and would be equally affected by the trust. Frink v. Branch, 16 Conn. 260, 272; Ward v. Ives, 91 Conn. 12, 21, 98 A. 337. What would be the effect of this declaration of trust upon the right of the plaintiff to a partition we have no occasion to consider, but we do regard the existence of that trust as a material consideration in determining the intent of the parties as regards the memorandum of agreement made on September 8th, 1917, and the suggested deed referred to in it.
This brings us to the question of the correctness of the court's finding that that memorandum, whether considered alone or in connection with the surrounding circumstances, did not in any way limit or affect the right of either party to seek a partition of the property and was not intended to have such an affect. It will be noted that these findings are not, as the plaintiff seems to think, to the effect that this memorandum and the suggested deed were merely an informal expression of a willingness of the parties to enter into an agreement, rather than an expression of an actual and complete agreement then and there entered into by them, leaving only for future action the execution of a formal document designed to carry it into effect. But if the finding were susceptible of the construction which the plaintiff claims, we would not be able to sustain it. Whether it be regarded as one or the other of these things must depend "`upon the intention of the parties as gathered from the language used when interpreted in the light of the surrounding circumstances.'" Garber v. Goldstein, 92 Conn. 226, 228, 102 A. 605. The memorandum recites that the parties "unite in expressing our approval of the suggested deed, which has been shown to us by Dr. W. J. Holland and express our willingness and intention to sign such a deed when it shall have been finally prepared; it being understood that in substance this deed provides for the following." Here was the definite approval of the terms of a then-existing document which the parties had seen; an intention to sign "such a deed" when it was "finally prepared," not when it should be drawn up or the like; and an attempt at a resume of its provisions as existing, not a statement of terms which should be included in such an instrument thereafter to be drawn. That the memorandum was roughly and hurriedly sketched by Dr. Holland is of course of no moment, if its terms are clear. If we turn to the suggested deed as originally prepared we find a very complete and well drawn deed of trust which left nothing of importance for future consideration and agreement; and if we note the changes which Dr. Holland made in it, in view of the death of the defendants' daughter, we cannot find that they introduced into the situation any uncertainty as to the rights of the parties. There were two obvious reasons why the agreement was then signed and the deed was not then executed: The consent of the Stamford Trust Company to act as trustee had not been secured, and the document had been marred by Dr. Holland's corrections and interlineations. But the fact that the trust company might refuse to act would not prevent the memorandum of agreement and the document from constituting a complete declaration of trust; a trust never fails for the want of a trustee, but the courts will appoint some one to act if the person named in the instrument refuses. Babcock v. African Methodist Episcopal Zion Society, 92 Conn. 466, 473, 103 A. 665. The presence of the interlineations and corrections, instead of introducing an element of doubt into the situation, are the obvious reasons for the drawing and execution of the memorandum, in order that, whatever delays might follow in finally preparing a deed of trust for execution, there might be from that time forth a binding agreement defining the rights of the parties. Nothing in the other circumstances surrounding the situation suggests in the least that the purpose of the parties was other than to make a presently effective agreement, leaving only for further action the formal preparation and due execution of an instrument adapted to carry that agreement into final effect.
The finding of the court that the agreement did not have the effect of limiting the right of either party to seek a partition of the premises must be regarded as a legal conclusion drawn from the terms of the memorandum and suggested deed, and the finding that the parties did not intend it should affect or limit that right must be regarded as a statement of the intention of the parties expressed in that memorandum and deed; for if these documents constitute a complete agreement we cannot regard any unexpressed intent but only that which in them does find expression. Ziulkoski v. Barker, 94 Conn. 491, 494, 109 A. 185.
The main provisions of the declaration of trust stated in the agreement and the deed are these: That the parties or the survivor of them are to be permitted to use and occupy the premises as a residence for themselves and for any child or children that may be born to them so long as they continue to live together and that the premises should not be sold except with the written consent of both; that, if the parties separated, the trustee should sell the property and the proceeds should be invested; that thereafter, there being no child, the income should be paid to the defendants in proportion to the amounts advanced by their respective parents for the establishment of the home; and that at the death of either the proportionate share from which he or she had been receiving the income would be paid to that parent, or to his or her heirs, executor or administrator. At the time the agreement was executed the parties brought about a situation such that the partition of the property either by actual division or by sale would clearly defeat the rights established by their declaration of trust. Even if we assume — and we cannot do more, because this aspect of the trust declaration is not presented to us in this case — that by reason of their separation Mrs. Holland cannot longer insist upon the right to occupy the premises as a home but that the sale of the property may be necessary under the provisions of the trust, this would not alter the fact that the defendants voluntarily substituted for the method provided by law a plan for dealing with their common interests in the property complete in itself; and we would not be justified because a sale may now be necessary in any event, to refuse to give effect to that declaration. Nor can we regard a sale in partition as the substantial equivalent of the sale by the trustee provided in the declaration of trust. Sale in partition ordinarily means a sale by a committee appointed by the court at auction at a time fixed. Practice Book, p. 533. Sale by a trustee gives a greater opportunity to search out and obtain, by private negotiation, the best bargain reasonably possible and requires the use of all reasonable diligence by the trustee to secure such a bargain; it permits the beneficiaries to obtain offers for the property which they may submit to the trustee; and even though in this case the sale is directed to be made "forthwith" this could not have been intended to mean any more than as soon as would be reasonably possible in view of the duty of the trustee to secure the best price reasonably obtainable. Callaway v. Hubner, 99 Md. 529, 534, 58 A. 362; Winder v. Nock, 104 Va. 759, 763, 52 S.E. 561; In re Varet's Estate, 168 N.Y.S. 896; 2 Perry on Trusts (7th Ed.) §§ 770, 771; Lewin on Trusts (13th Ed.) pp. 1059-1062.
This being the situation, there can be no question that the plaintiff is not entitled to maintain its partition suit. Ordinarily where the legal title to property is vested in two persons as tenants in common either is entitled to a decree of partition by actual division or by sale. Scovil v. Kennedy, 14 Conn. 349, 361; Beecher v. Beecher, 43 Conn. 556, 560; Johnson v. Olmsted, 49 Conn. 509, 517; Candee v. Candee, 87 Conn. 85, 89, 86 A. 758. But the parties may enter into a reasonable agreement which will expressly or impliedly debar them from seeking a partition. Martin v. Martin, 170 Ill. 639, 642, 48 N.E. 694; Roberts v. Wallace, 100 Minn. 359, 111 N.W. 289; Yglesias v. Dewey, 60 N.J. Eq. 62, 47 A. 59; Friesner v. Friesner, 193 Iowa 576, 187 N.W. 437; Peck v. Cardwell, 2 Beaven, 137; 1 Tiffany on Real Property (2d Ed.) p. 711; 47 Corpus Juris, pp. 321, 322. So a partition will not be granted where to do so would involve the violation of a valid trust or the defeat of its purposes. Ogilby v. Hickox, 144 N.Y. App. Div. 61, affirmed, 202 N.Y. 614, 96 N.E. 1123; Springer v. Bradley (Mo.) 188 S.W. 175; Baldwin v. Humphrey, 44 N.Y. 609, 616; McLaughlin v. Greene, 198 Mass. 153, 156, 83 N.E. 112; Condict v. Condict, 73 N.J. Eq. 301, 75 A. 815; 47 Corpus Juris, 317. Although the terms of the statute which authorizes our courts to order the partition of the estates owned in common (General Statutes, §§ 6067, 6073) are broad, the proper protection of the rights of the owners of property held in common and of those who are entitled to the benefit of valid trust provisions require that they should be read as not intended to include the situations we have just discussed. Avery v. Payne, 12 Mich. 540; Springer v. Bradley, supra; LaCoste v. Duchesnay, L. R. (1924) App. Cas. 166.
The trial court was in error in entering a decree for the partition of the premises by sale. This requires that judgment should be entered upon the complaint in favor of the defendant Mrs. Holland. She, however, filed in the trial court a counterclaim asking, among other things, a decree compelling the execution of proper documents to carry out the trust declared in the agreement and suggested deed. In view of the decision of the trial court upon the complaint no action was taken upon this counterclaim. That it may have proper consideration, we therefore return the case for further proceedings.