Opinion
03-16-1897
CARTER et ux. v. UHLEIN et al.
J. H. Dahlke, for complainants. Oscar Jeffrey, for defendants.
Bill by Jacob V. Carter and wife against Frank N. Uhlein and others to compel the sale of land under a trust. Defendants demur to the bill. Demurrer sustained.
J. H. Dahlke, for complainants.
Oscar Jeffrey, for defendants.
GREY, V. C. The bill in this case is filed by Jacob V. Carter and Jennie G., his wife, alleging that Jacob V. Carter and one Oscar Jeffrey were on August 1, 1877, seised in fee of a lot of land in the borough of Washington, in Warren county, known as lots No. 47 and 48 on the recorded map of that place, as tenants in common in equal parts. At the last-named date they mortgaged the land to the Bloomsbury National Bank to secure the payment of $1,000 owing by Carter and Jeffrey to the bank. This mortgage was recorded in Warren clerk's office, August 29, 1877. The bank assigned this mortgage to Anna Pardue, by an assignment recorded in that office January 9, 1884. About May 14, 1881, Carter had become indebted to Christopher F. Staats and Henry Winters in $600, and, to secure its payment, he, with his wife, gave Staats and Winters a mortgage upon all the interest of Carter and wife in three parcels of land in Washington, of which the third lot was that which had been before mortgaged to the bank. While these two mortgages were outstanding and unpaid, the first to the bank on the one lot only, the second on that and also on two other lots, the complainants desired to have all the indebtedness paid by the sale of the lot which was covered by both mortgages, so that the other lots 1 and 2 in the last mortgage might be released from the lien of that mortgage, and any surplus might come to the complainant Jacob V. Carter. To accomplish this purpose, they, with their co-tenant in common, Jeffrey, and his wife, appointed the defendant Frank Uhlein their trustee; and on the 1st day of September, 1882, they all joined in a deed conveying to Uhlein the third tract (the only one included in both mortgages, and which tract was lots 47 and 48 of village of Washington), to Uhlein, in fee, "upon the trust that he is to sell the said lot at public sale for the best price that can be obtained, and out of the proceeds he is to pay a mortgage held by Mrs. Anna Pardue for $1,000, which mortgage was executed by the said parties of the first part to the Bloomsbury National Bank, and assigned by the said bank to Mrs. Pardue. He, the said Uhlein, after paying the said mortgage, is to pay one-half of the remainder of the proceeds, after paying the arrears of interest and costs of selling, to Oscar Jeffrey, and one-half of the said remainder to C. F. Staats and Henry Winters, who are to credit the same to the account of Jacob V. Carter. The amount due Mrs. Pardue is $900 principal and arrearages of interest." This deed was acknowledged by Carter and his wife and Jeffrey and his wife, and on the 9th of September, 1882, was recorded. Uhlein received the deed and accepted the trust under the deed, entered into possession of the premises, and received the rents and profits, and is alleged in the bill to have continued in the enjoyment of the property until the time of filing the bill, May 26, 1896. The property conveyed by this trust deed is stated in the bill to be worth $2,000, though claimed by Uhlein to be worthless, and that for this reason he was unable to carry out the provisions of the trust deed. In fact Uhlein has not made any public sale of the premises in pursuance of the deed of trust, nor has he carried its provisions into effect. About the 9th of September, 1882, Uhlein procured a release to be made to himself from Staats and Winters, reciting the above mortgage made by Carter to Staats and Winters, and stating that Staats and Winters, "at the request of the party of the second part (Uhlein), have agreed to give up and surrender the lands hereinafter described unto the said party of the second part, and to hold and retain the residue of the mortgaged lands as security for the money remaining due on the said mortgage," and releasing the lots (above described as lots Nos. 47 and 48, village of Washington) conveyed in trust to Uhlein by the trust deed; and further reciting that the release was made upon the express trust that whereas, Mrs. Pardue was proceeding against Carter and Jeffrey to foreclose her mortgage, and Uhlein had agreed to act as trustee, and sell said described lot in order to save the cost of foreclosure, Uhlein in accepting the deed agreed to sell the land for the best price that could be obtained, either at public or private sale, and out of the proceeds of the sale to pay the mortgage ofMrs. Pardue and the expense of sale, and pay one-half of the remainder to Staats and Winters and the other to Jeffrey. This release of mortgage was recorded in the Warren county clerk's office, but the complainants state in their bill that they had no knowledge of the making and giving of that release, nor did they in any way consent to it. About the 9th of January, 1894, Uhlein paid and satisfied the Pardue mortgage, and caused it to be canceled. This also was without the knowledge of the complainants. Afterwards Winters assigned to Staats "all the right, title, and interest of, in, and to the bond and mortgage" made to Staats and Winters by the complainants, for $600, but when this was done the complainants were not informed. After the making of this last assignment, Staats filed a bill to foreclose the mortgage, and on this proceeding the lands in the mortgage described—except the third tract, Nos. 47 and 48, village of Washington, conveyed in trust to Uhlein—were sold by the sheriff to Staats by deed dated June 25, 1888. About August 7, 1893, Uhlein procured Jeffrey and his wife to convey to him all their right, title, and interest in the trust property, lots Nos. 47 and 48, village of Washington, by a quitclaim deed, which was afterwards recorded. On May 28, 1893, Uhlein granted a small portion of the premises conveyed to him in trust to one John Karr, for $425, which piece lies at the easterly end of the lot. The complainants insist that this sale to Karr by Uhlein was a private sale, and not a public sale, as was required by the terms of the trust deed under which Uhlein held the property, and that the sale was made without any knowledge or consent on their part. On December 3, 1895, Karr and his wife conveyed the premises purchased by them from Uhlein to the Washington Light, Heat & Power Company for $1,000, which deed was shortly afterwards recorded. The Washington Light, Heat & Power Company mortgaged the premises, with other property, to Prank P. McKinstry as trustee to secure the payment of a series of 30 bonds, for $200 each, aggregating $6,000. This mortgage was duly recorded. About August 7, 1893, Uhlein requested (through Jeffrey, now his attorney) the complainant to make a quitclaim deed for his interest in the trust property, assuring him that he had but little interest, but the complainant refused to make such a deed, declaring that he would stand on his rights in the premises. About January 11, 1896, Staats assigned "all his right, title, and interest in the bond and mortgage" given to him and Winters, and also "all his right, title, and interest" in the money to be realized from the deed of trust, so made to Uhlein, to the complainant Jennie G. Carter. Upon March 21, 1896, the complainant Carter and his wife joined in a notice to Uhlein to make sale of the trust lands under the trust, and to execute the same, and also gave him notice that Staats had acquired the right of Winters to the proceeds by assignment, and had assigned to Mrs. Carter all his right to the said proceeds of sale, and further notified Uhlein that unless he proceeded to make sale according to the requirements of the deed of trust suit would be brought for damages or a bill would be filed for specific performance of the trust. The complainants say that they have at other times requested Uhlein to carry out the trust deed and account for the rent, and Uhlein explained to them at the time of the service of notice that he had tried to sell the property in pursuance to the deed of trust, but could not sell it, and that he was since advised that he had a right to keep it as his own individual property, and that he purposed to do so, and would not account for the rents and profits; that they belonged to him. The bill makes defendants Frank M. Uhlein, the Washington Light, Heat & Power Company, and Frank P. McKinstry, trustee. It prays that the power company may be decreed to reconvey the premises purchased by them in violation of the trust; that Uhlein may be compelled to make sale of all the property embraced in the trust deed at public sale, and to pay over the proceeds realized from the sale to the complainant Jennie G. Carter, to the extent of her interest, and the surplus to the complainant Jacob V. Carter, together with all the rents, issues, and profits realized from the premises; or that they may be decreed to convey to some other trustees to make sale pursuant to the trust deed, and pay over the proceeds from the sale in accordance with that deed, or to reconvey the premises to the complainants under conditions, etc.
The defendants all jointly and severally demur to the bill, upon the grounds (1) that the complainants upon the case stated are neither of them entitled to any relief; (2) that neither of them have any interest in the premises described in the bill; (3) that Oscar Jeffrey ought to be made a party defendant; (4) that Jennie G. Carter ought not to have been a complainant; (5) want of equity in the bill. And by an amended demurrer allege further cause of demurrer on the additional ground (6) of laches; (7) the six-year statute of limitations; (8) that Staats and Winter should be parties.
The first ground of demurrer alleges that neither of the complainants is entitled to any relief, and the second ground is based on the claim that neither of the complainants has any interest in the premises described in the bill, and the fifth ground alleges want of equity in the bill. These may be considered together, as the same statements in the bill which exhibit the complainants' interest show their equity and their right to relief. The complainant Jacob Carter, with Oscar Jeffrey, made the trust deed to the defendant Uhlein in 1882, conveying to him the premises described in the bill, upon the trust that Uhlein should sell the property at public sale, and out of the proceeds should pay off the Pardue mortgage and costs of selling, pay one-half the remainder to Jeffrey, and the other half to Staats and Winters, who are tocredit it to the complainant Carter's account. Uhlein accepted this trust, entered into possession and enjoyment of the property under it, still keeps the property, and has in part, but not fully, performed the trust, and now claims to own the property free from the trust. These are the allegations in the bill, and these are by the demurrer admitted to be true. The bill asks that Uhlein be decreed to perform. Carter's equity is apparent upon the mere recital of these facts. Obviously he has the equitable right to compel the trustee, who has received his property under a trust to convert and apply it for his credit and benefit in the manner named in the trust deed, to proceed and execute that trust. The status of Mrs. Carter as a complainant, as the assignee of Staats, is discussed hereafter. She is shown to have an interest in the performance of the trust, and to be entitled to join her husband in bringing this suit.
The third ground of demurrer is based upon the objection that Oscar Jeffrey is not a party. He is alleged in the bill to have conveyed all his interest to the defendant Uhlein. No relief is sought against him. He is not a necessary party for any cause. The same reasoning applies to the sixth objection, that Staats should be a party. The bill shows that Staats assigned all his interest in the bond and mortgage, and also in the proceeds to be realized from the deed of trust, to the complainant Mrs. Jennie G. Carter. This allegation makes it plain that Staats has no further interest in the subject-matter of the suit. Neither discovery nor relief is sought against him. He has no interest which may be affected by a decree, or which he may hereafter assert in the trust or trust fund. Both Jeffrey and Staats are in the same position as a mortgagor who has parted with the equity of redemption. Neither Staats nor Jeffrey is a necessary party, and the demurrer on this ground must be overruled. Vreeland v. Loubat, 2 N. J. Eq. 104.
Another objection is taken on the fourth ground, that Mrs. Carter should not be a complainant. By the former practice, except in a few special cases, the wife, in asserting her rights against others than her husband, must join her husband as complainant in the suit. Story, Eq. Pl. § 61. By Revision 1877, p. 638, § 11, she may now have in her own name, and without joining her husband, the same remedies for the recovery and protection of her own property as if she were an unmarried woman. This statute has been held to authorize her to maintain a bill for specific performance of a contract in her own name, without joining her husband as a party. Young v. Young, 45 N. J. Eq. 28, 16 Atl. 921. She appears in this suit by reason that she holds by transfer the interest of both Winters and Staats in the balance due on their mortgage, and she also holds the interest of Staats in the proceeds of the sale, to be credited to Carter's account, etc. These interests are, like those of her husband and co-complainant, dependent upon the enforcement of the trust. Both Staats and Winters, before assigning any of their rights, by their deed of September 9, 1882, to Uhlein; released the trust land from their mortgage, and accepted instead the performance of substantially the same terms as those prescribed by the trust deed. The interests of Mrs. Carter and of her husband are therefore jointly served by requiring the performance of the trust. He is a cestui que trust, entitled to the creation of the credit in his favor in the ultimate residue to arise from the proceeds of the sale of the trust lands. She is entitled to Staats' place as receiver and holder of the credit in favor of her husband, and to whatever rights Staats had under the release agreement in the one-half of the surplus of the proceeds. The husband and wife occupy the position of persons having a common interest in the execution of a trust, where relief is sought against the trustee. The feme covert now has by the statute the right to the same remedies as if she were a feme sole. One of these rights is that of joining with any one in the prosecution of a suit in the result of which they have a common interest. A very slight interest indeed will justify making a party a co-complainant. In Rhodes v. Warburton, 6 Sim. 617, the legatees of a testator were joined as complainants with an executor in suing for a debt due the estate, and the bill was held not demurrable. The statute authorizing a married woman to sue in her own name is not intended to restrict, but to extend, the powers of a feme covert, and so that they may be equal to those exercised by a feme sole, and does not deprive her of the right to join with her husband in prosecuting a claim in which they may be jointly interested. I think the objection that Mrs. Carter should not be a complainant cannot prevail.
The sixth ground of demurrer sets up the six-year statute of limitations as a defense. The bill in this case seeks to enforce the performance of an express trust for the sale of lands. The words of this statute do not apply to suits in equity, but the courts of equity act in analogy to the law, and enforce the statutes of limitation in cases where they properly apply. But in a suit between a cestui que trust and a trustee, for the enforcement of an express trust, the rule in equity is that the statutes of limitation have no application; and certainly the six-year limitation which is set up by way of demurrer to the whole of the bill cannot be held to bar a suit which is brought to compel the performance of a trust for the sale of lands. No assertion by the trustee of exclusive individual possession by him for six years, even if admitted by the bill, would be any answer to an effort to force a sale of lands under the trust. Allen's Adm'r v. Woolley's Ex'rs, 2N. J. Eq. 212; Buckingham v. Ludlum, 37 N. J. Eq. 144.
Additional reasons which prevent the bar of the statute are equally applicable to the seventh ground of demurrer, which is laches. There is a statement in the bill that Uhlein used the premises as his own individual property, but no period of time is named when he so used it, and it is elsewhere alleged that he made the claim that he would keep the trust property as his own, after actual notice to perform the trust was served on him in 1896. The recital of the facts in the bill shows that the defendant Uhlein, at various periods between 1882, the date of the trust deed, and 1896, the time of filing of the bill in this cause, recognized the trust deed by accepting releases from Staats and Winter in 1882, by part performance of its requirements by taking of rents, and by payment of the Pardue mortgage in 1893. Uhlein also accepted a release from Jeffrey in 1893 of his interest in the trust, and solicited a release from the complainant in the same year, and only expressly declared his holding to be adverse to the trust when notified to perform in 1896. Here was a continuing trust, with no specification of time when it should be performed, under which the trustee was in possession. All his doings indicating ownership were consistent with the trust, until he sold to Karr at private sale in 1893, and they will be ascribed to the exercise of the power which came to him under the trust deed until, by acts openly hostile to and in denial of the trust, he asserts his personal claims, and it is from the date of this latter adverse action that the lapse of time and neglect to set up the trust must be computed. Kane v. Bloodgood, 7 Johns. Ch. 123. No laches can be imputed to the complainant in failing to enforce his remedy, so long as the acts of the trustee led the complainant reasonably to expect his trustee to perform his duty. Until Uhlein had conveyed a part of the trust land to Karr in 1893 by private, and not public, sale, all his acts were, as above stated, consistent with the duty he had undertaken, and the complainants had a right to await the full performance of that duty without bringing any suit to compel it. It would be wholly inequitable to permit a trustee holding title and possession under an express trust to set up as a defense the delay of his cestui que trust in forcing him to observe his trust, when by its terms no definite time is fixed for performance, and all his acts, until three years before filing the bill, were consistent with the belief that he would observe it, and nothing appears to show that the delay itself has in any way injured or misled him.
The fifth ground of demurrer objects that Staats and Winter should be defendants. I have already disposed of the omission to make Staats a party. The objection that Winters is not a party calls for a short statement of his interest. By the terms of the trust deed from Carter and wife and Jeffrey and wife to Uhlein, Staats and Winters were entitled to have one-half of the remainder of the proceeds of the sale of the trust lands after paying the Pardue mortgage and costs, and were to "credit the same to the account of Jacob V. Carter." The terms of this credit were not limited to the satisfaction of the mortgage of Staats and Winters. They were appointed by Carter to receive his share of this surplus, and were to credit it to his account generally. It might pay the Carter mortgage or his other indebtedness, if there were any outstanding, owing by Carter to Staats or Winters, or might remain in their hands, a cash asset to the credit of Carter. In setting out the transfer of Winters' interest, the bill states that he assigned all his interest in the bond and mortgage to Staats, but does not show that he passed his interest in the share of the proceeds which Winters and Staats were entitled to have and to credit to Carter's account, which might be applied to satisfy an indebtedness of Carter to Staats or Winters. There appears on the face of the bill an interest remaining in Winters in the unascertained fund to be derived from the sale of the trust lands, and Winters is not made a party to the suit. The indications are that this interest is very slight, and may on amendment of the bill be shown to be in fact no interest, but, as the bill stands, Winters appears to have some interest, and should be a defendant. The trustee has a right to have all the parties who are entitled to receive this fund before the court as parties to the suit, that he may not be called to account more than once for the same matter. Speakman v. Tatem, 45 N. J. Eq. 390, 17 Atl. 818. If one of the parties interested in the fund is not a party to the suit, the court cannot give relief. Munch v. Cockerell, 8 Sim. 219. The demurrer attacking the bill for want of Winters as a party will be sustained.
There is a substantial criticism to which this bill is open which has not been suggested by any of the stated grounds of demurrer, nor was it referred to on the argument. The defendant McKinstry is made defendant in respect to his holding a mortgage on the trust lands. This mortgage is alleged to have been made to McKinstry in trust "to secure the payment of a series of thirty bonds, for the sum of $200 each, aggregating in all $6,000, held by the defendant McKinstry or the bearer thereof." No specific relief is asked against either McKinstry as trustee or against the holders of the bonds. It is not shown whether McKinstry or other persons are "the bearers" and holders of these bonds. As McKinstry is the trustee in the mortgage, and the bonds are payable to bearer, the inference would be that the bonds were probably held by various bearers or holders. The enforcement of the trust deed made by the complainants and Jeffrey to Uhlein would directly affect the safety of these bonds by periling thetitle to the lands mortgaged to secure them, and the bondholders under the McKinstry mortgage, as cestuis que trustent, should be parties, or there should be in the bill some statement that McKinstry holds the bonds, or a showing of sufficient cause for omitting to make those who are holders defendants in this suit which threatens their security. Tyson v. Applegate, 40 N. J. Eq. 305. To leave it uncertain on the face of the bill who are the holders of these bonds, without an allegation that the holders are unknown, is bad pleading, in that it shows outstanding interests affected by the suit to exist, but shows no reason why the holders of these interests are not made parties. The bill will be dismissed, unless the complainants shall within 20 days amend it, by making Winters and the holders of the McKinstry trust bonds parties defendant, or by such proper allegation and statement as shall show that they ought not to be made parties defendant, or that for some sufficient reason they cannot be made parties defendant.