Opinion
March Term, 1864
Wm. Curtis Noyes, for the appellant.
C. Tucker, for the respondent.
In the autumn of 1834, Walter Smith acquired title to certain lands at Dunkirk, in Chautauqua county, for the benefit of himself and others, and in November of that year he conveyed one moiety thereof to Russel H. Nevins. On the same day said last mentioned deed was executed and delivered, an agreement was entered into between Smith and Nevins, wherein and whereby they agreed, each with the other, to convey one undivided fourth part of said lands to the New York and Erie Railroad Company, upon condition that said company should, within seven years from the 8th day of September, 1834, construct a single track of their road to Dunkirk. But if said company should fail to perform said condition, they would divide said lands amongst themselves. Subsequently, and prior to the 8th day of January, 1838, said Smith conveyed other lands to said Nevins, under like agreements as to the share of said railroad company. Nevins held said lands for the benefit of divers persons who had furnished the moneys to him to pay for the same.
On the 8th day of January, 1838, the several persons interested in said lands held a meeting in the city of New York, and agreed on a plan for dividing said lands amongst all those entitled to portions thereof. In pursuance of the arrangement then made, all the parties interested conveyed their interests in said land to Nevins, and Nevins was to convey to said persons the portions of the said lands to which they were entitled, except that the share of the railroad company was to be conveyed to said Nevins and Charles C. King, in trust to convey the lands set apart to said company on performance by it of the condition aforesaid as to the construction of its road to Dunkirk. In the mean time said trustees were authorized to sell and convey said lands and to deliver to said company the proceeds, after deducting the charges and expenses incident to said sale. But if said company should fail to perform said condition, then said trustees were to divide said lands, or their proceeds, amongst the several persons interested therein, in certain proportions.
To carry into effect this arrangement and division, Nevins conveyed the portion of the lands intended for the railroad company to Elihu Townsend, and Townsend conveyed to Nevins and King, the persons selected as trustees, and the trustees gave back to the railroad company a declaration of trust, setting forth the terms and conditions on which they held said land, and a like declaration setting forth the terms and conditions on which they were to convey said lands, or divide the proceeds, amongst the parties interested therein. All the conveyances aforesaid were executed and delivered on the 1st of March, 1838, except the declaration of trust in favor of Smith and the others, which is dated the 2d of March, 1838.
It is not found, nor does it appear, that in the deed from Smith to Nevins, or in that from Nevins to Townsend, there is any reference to the arrangement or trust in favor of the railroad company, or of the proprietors, in the event of the company failing to perform the condition.
The Guernsey judgment, under which the interest of Smith was sold, was docketed on the 26th of October, 1838; and the Holmes judgment, under which the plaintiffs redeemed, was docketed on the 6th of May, 1839. Unless the Guernsey judgment became a lien on the interest of Smith in the portion of the lands set apart to the railroad company, the sheriff's sale and the redemption under the Holmes judgment were void, and the plaintiffs are not entitled to recover, whether Stillman is or is not entitled to hold Smith's shares of the railroad lands.
It is not claimed by either side that a valid trust was created by all or any of the conveyances executed by the parties, in relation to the share of the lands intended for the railroad. The trust was undoubtedly void, and the only questions presented for decision in the case are whether the fee in said land remained in Smith, passed to the railroad company or to the trustees, or whether by reason of there being a valid power in trust in Nevins and King, the real interest in the lands was not an equitable interest merely, which passed through the receiver in the Tucker suit to Stillman, leaving the fee nominally only in Smith, which if sold, covered nothing but a mere nominal interest to the purchaser at the sheriff's sale.
Although the trust was void, there was a valid power in trust vested in Nevins King by the conveyances of the 1st of March, 1838. (3 R.S. 5th ed. 21, § 77.) That section is in these words: "When an express trust shall be created for any purpose not enumerated in the preceding sections, no estate shall vest in the trustees, but the trust, if directing or authorizing the performance of any act which may be lawfully performed under a power, shall be valid as a power in trust, subject to the provisions in relation to such powers contained in the third article of this title."
By the seventy-eighth section it is declared that in every case where the trust shall be valid as a power, the lands to which the trust relates, shall remain in or descend to the persons otherwise entitled, subject to the execution of the trust as a power.
Considering the conveyances from Smith to his immediate grantees, and from them to their grantees, and so on from one party to another until the title is finally vested in Nevins King, as separate and distinct transactions, the only parties to the trust would be Townsend and the trustees. In that case, the trust being void, the title under section seventy-seven above cited would be in Townsend. The several parties through whom the title passed, would in that view of the case have conveyed away their respective estates in the land, and there would have been no legal interest in Smith on the 26th of October, 1838, on which the judgment of Guernsey could be a lien, and the title of the plaintiffs to relief must fail.
The arrangement between the parties interested in the land prior to the 1st of March, 1838, created no trust. Their rights and liabilities rested in covenant, whereby each owner agreed to give a portion of his land to the railroad company. The title did not pass charged with any such obligation, except so far as either party had the right in equity to compel a specific performance.
But it is said that the several conveyances of the 1st of March, 1838, are to be treated as parts of one transaction, and hence that Smith who held the title in fee on that day to a part of the premises in question, is to be deemed and taken to be the person who conveyed in trust to Nevins King, and it was in him and not in the intermediate parties in whom the title remained; the trust being valid as a power in trust only.
Whatever consequence may follow from treating the several instruments executed on the 1st of March, 1838, as one instrument, the fact still remains that Smith on that day conveyed the fee to Nevins in that part of the lands that was intended for the railroad company, and Nevins by a similar conveyance conveyed the fee to Townsend. Neither took in trust, as in the conveyance to neither was a trust expressed, and no declaration of trust was ever executed by either.
The plaintiff does not ask that a part of the proceeds of the railroad land be awarded to him, because in equity his judgments are liens on the lands or their proceeds; but its claim to relief rests on the legal lien of the Guernsey judgment, and a sale in pursuance thereof. Unless, therefore, there was a legal lien, the plaintiff has no claim to relief at law, as title was out of Smith by a deed in fee, and the fee passed from him to Nevins; and as between them, Smith had no remedy at law or in equity. And it was not until the declaration of trust in behalf of the respective owners took effect that Smith was clothed with any interest whatever in the lands or their proceeds. The interest he then acquired, was an equitable title to enforce the execution of the power and the sale of the lands for an account and distribution of the proceeds.
The judgment of the court below should be reversed, and a new trial ordered, costs to abide the event.
The right of the plaintiff to maintain this judgment, depends primarily upon the question whether the judgment recovered by Guernsey against Smith, in October, 1838, was a lien upon the lands from which the fund in controversy was derived.
It is clear that the conveyance of the premises in question on the 1st of March, 1838, by Townsend and wife to Nevins King, taken in connection with the agreements executed by the latter to Smith, Townsend and others, and to the New York and Erie Railroad Company, although invalid as a trust, it not having been made for either of the purposes for which alone express trusts are permitted (see Statute of Uses and Trusts, §§ 45, 55), was nevertheless valid as a power in trust, under section 58 of the same statute. This is conceded by the counsel on both sides. Under this conveyance, therefore, Smith in common with his associates, had a contingent equitable right to his ratable proportion of the proceeds of the lands. It is not claimed that this equity could be seized and sold upon execution. The mode of reaching such an interest is prescribed by the statute. (1 R.S. p. 734, § 93; p. 735, § 103.)
But the counsel for the respondent contends that, aside from this mere equity, Smith had, subsequently to the creation of the power, a legal title to, or interest in the lands, upon which the judgment in favor of Guernsey might attach as a lien; and in support of this position he cites and relies upon sections 47 and 49 of the statute of uses and trusts. (1 R.S. pp. 727, 728.) He also cites section 58 of the same statute, and insists, no doubt justly, that this case falls directly within the latter section. His argument is, that as, under this section, no estate could vest in Nevins and King, the trust to them being valid simply as a power, Smith, as the beneficiary of the power, became, by virtue of section 47 of the statute, vested with a "legal estate in the land." But this is an entire misapprehension of the statute. A very clear exposition of these provisions of the statute concerning trusts, is given by COMSTOCK, J., in the case of Downing v. Marshall (23 N.Y.R. 366, 379). Section forty-seven refers exclusively to a class of passive trusts where the immediate possession and whole beneficial use of the land is given directly to the cestui que trust, the trustee being made by the deed the depositary of a mere naked title, with no active duties to perform in respect to the property. In such cases this section, in connection with section forty-nine, vests the whole estate in the beneficiary. The deed takes effect upon the title, but not according to its terms.
Section fifty-eight, on the other hand, applies to cases where active duties are imposed upon the trustee, and where no rights are given to the beneficiary except through the execution of the trust. In cases of this class, if the trust is not one which is authorized by section fifty-five, no estate whatever passes under the deed, either to the trustee or the cestui que trust, but the title remains in the grantor, the grantee becoming, if the duties imposed upon him are such as can be legally and properly executed, the mere trustee of a power. A case might perhaps be supposed, which would belong partly to one and partly to the other of these classes; as where, by the same instrument, the immediate possession and use is given to the beneficiary, while certain powers in relation to the property are at the same time conferred upon the trustee; but this is not such a case. Here no possession or pernancy of the profits is given to the beneficiaries, or either of them, and consequently they can take no title whatever under section forty-seven. The case falls entirely within section fifty-eight of the statute, and by virtue of the next section, viz: section fifty-nine, the estate in all such cases remains in "the persons otherwise entitled, subject to the execution of the trust as a power."
This language excludes the idea that any title passes to any one by virtue of the deed. The title does not pass; it " remains." The persons "otherwise entitled," must be those in whom the title would rest independently of the deed, being of course the grantors themselves. It is clear, therefore, that Smith had no title to the lands in question, under section forty-seven, as the beneficiary of the trust attempted to be created.
There is, however, another view of the case which, although not very distinctly presented, is perhaps hinted at in the brief of the respondent's counsel. It claims that the several deeds from Smith to Nevins, from Nevins to Townsend, from Townsend to Nevins and King, and the counter agreements executed by the latter, being all parts of one and the same transaction, are to be read and construed together as one instrument. Assuming this to be so (as perhaps it is, so far as the papers executed on or about the 1st of March, 1838, are concerned), it might be urged with much apparent force that as the conveyances from Smith to Nevins, and Nevins to Townsend, were merely preliminary to that from Townsend to Nevins and King, and designed solely as a means of conveying from Smith to Nevins and King the powers which were ultimately vested in them, no other or greater effect ought to be given to the two previous deeds than to the final deed from Townsend to Nevins and King. That deed conveyed no title, but simply a power. Why, then, it might be asked, should the prior deeds which, so far as the trust to Nevins and King was concerned, were merely intended to give effect to that deed, be held to have done more?
It would indeed seem that if the whole object of this series of deeds was to create the power vested in Nevins and King, then no title could have passed to any one under them, or either of them; in other words, that the effect would have been the same as if the conveyance had been directly from Smith to Nevins and King, in which case the title to such undivided portion of the lands as was conveyed by Smith on the 1st of March, 1838, would, under section fifty-nine of the statute, have remained in Smith; and in that case, if it could be fairly maintained that as to the ten thirty-eighth parts belonging to Smith, the fund in controversy should be held to have been derived from that portion of the lands, the plaintiffs would be entitled to the money they have received. There is, however, an insurmountable objection to this conclusion. The reasoning by which it is reached assumes that the sole object of the deed from Smith to Nevins on the 1st of March, 1838, was to create the power in Nevins and King, in which the series of conveyances resulted. But such was not the fact. That conveyance was given in part execution of the plan adopted to carry into effect the division and distribution of the lands among all the joint proprietors which had been agreed upon. It was thought proper for that purpose to vest the whole title and interest, both legal and equitable, in Nevins, and the deed from Smith was essential to that object. Unless that deed is held to have taken effect according to its terms, the whole scheme of distribution was a nullity. There was nothing whatever to prevent its taking effect as designed, and hence Smith, by its execution, was completely divested of all legal title to the lands, and as it has been shown that he could derive no such title under the trust, it follows that the judgment of the supreme court was erroneous, and should be reversed.
HOGEBOOM, J., was absent. All the other judges concurring, judgment affirmed.