Opinion
07-16-1909
McKIERNAN et al. v. McKIERNAN et al.
George S. Hilton, for complainants. Clifford L. Newman and William I. Lewis, for defendants.
Partition by Samuel G. McKiernan and others against John McKiernan and others. Heard on bill, answer, replication, and proofs. Decree for complainants.
George S. Hilton, for complainants. Clifford L. Newman and William I. Lewis, for defendants.
HOWELL, V. C. The bill in this case is filed to determine a trust relating to lands in Paterson, and for a partition of the lands. The facts are as follows: In 1888 the title to the lauds in question was taken in the name of John McKiernan, who at once executed a declaration of trust in favor of Samuel G. McKiernan, Anne McKiernan, Mary D. Crooks, Cornelius Doremus, Alpheus S. Allen, and himself, by which he declared that he held the said lands upon the following uses and trusts; that is to say: "First, in trust to sell and dispose of all the said several lots of land and premises to the best advantage from time to time and in such manner and for such price or prices as may in his judgment seem best, and upon such sales to make, execute, and deliver, full conveyances therefor with warranty and free from all incumbrances; second, in further trust to pay taxes and assessmentsand expenses of the management; and, third, to pay over 5/6 of the balance of the proceeds of the sale to the parties of the second part, and to retain the remaining 1/6 for his own benefit; and, fourth, in further trust; in case at any time the said parties shall agree to divide the remaining and unsold lands, to make such division and partition of the said lots and to convey the same in severalty to the said parties, retaining, however, his own share in severalty, in such manner as shall be agreed upon by and among them." John McKiernan, the trustee, died, and Samuel McKiernan was appointed trustee in his stead. Katherine Blauvelt Crooks, administratrix of the estate of James Crooks, who claims to have derived her right from Mary D. Crooks, one of the original parties to the declaration of trust, answers, admitting nearly all the material allegations of the bill. She joins in the prayer that the trust may be terminated, but claims that, by virtue of the declaration of trust, the lands in question have become converted into personalty, and that, therefore, she takes as administratrix the 1/6 share which originally belonged to Mary D. Crooks. This is the main question in the case. Complainant alleges that he has advanced money to pay taxes upon the property, and, in case a sale of the property shall be ordered, he asks that he may be reimbursed for his advances out of the fund. There is a decree pro confesso against all the defendants who did not answer.
1. As to the determination of the trust. It will be observed that the declaration of trust contains no limit upon the existence of the trust relation, and therefore the trust can be determined at any time by the decree of this court upon the consent of all the par ties. Perry on Trusts, § 920. Here the complainants and the answering defendant specifically pray for a determination of the trust. The other defendants must be held to have consented by their neglect to answer the bill and contest the prayer. A decree will there fore be made for the determination of the trust.
2. The next question is: The trust being determined, what becomes of the title? Was the land converted into personalty by the provisions of the declaration of trust? I think not. Although the legal title to the land was in the trustee, he derives all his powers and privileges from the declaration of trust. A reading of the first paragraph of the declaration will demonstrate that the trustee has merely a naked power to sell the lands which he held in trust. The sales are not compulsory. They are to be made in his discretion, and it is in his discretion whether he will sell any of the property or not, and, if he does, he has the sole discretion to say upon what terms the sale shall be made. He is to determine in the first instance whether he will retain the land or sell it, and, if he sells it, the time and the manner and the price or prices are to wait upon his judgment, and he is to do what he considers to be to the best advantage of all the parties. The argument is re-enforced by the fourth paragraph of the declaration, showing that the parties contemplated that there might be difficulty in selling the lands, and that there might be a necessity of resuming title in themselves, and that, therefore, the first paragraph of the declaration was not intended to operate as a present conversion because, if it did so operate, the declaration in the fourth paragraph would be futile. The doctrine of equitable conversion was mooted in a leading case so early as 1779 in Fletcher v. Ashburner, 1 Bro. C. C. 497, 1 W. & T. L. C. 968. Sir Thomas Sewell, M. R., in the opinion says that nothing was better established than this principle that money directed to be employed in the purchase of land and land directed to be sold and turned into money are to be considered as the species of property into which they are directed to be converted, and this in whatever manner the direction is given, whether by will, by way of contract, marriage, articles of settlement, or otherwise, and whether the money is actually deposited or only covenanted to be paid, whether the land is actually conveyed or only agreed to be conveyed, the owner of the fund or the contracting parties may make land money or money land. There must, however, be a positive direction to convert. A mere power is not sufficient. Romaine v. Hendrickson, 24 N. J. Eq. 231. It is only where the will or other instrument under which the action must be taken commands or absolutely requires the land to be sold that the conversion takes place. Roy v. Monroe, 47 N. J. Eq. 356, 20 Atl. 481. Chancellor Zabriskie says in Cook v. Cook, 20 N. J. Eq. 375: "When land is directed to be sold absolutely and positively without any time fixed for the sale, it is considered as converted into money from the death of the testator, but for this the direction must be imperative. If it is optional with the executor whether to sell or not to sell, or if it is only an authority to sell without any direction, then the land retains its character as land until it is actually sold. If the direction of the will as to the proceeds requires a sale, it is equivalent to a positive direction to sell, and the land is deemed personal property from the death of the testator." This declaration of the law has received the approval of this court in many cases. Wurts v. Page, 19 N. J. Eq. 365; Dutton v. Pugh, 45 N. J. Eq. 426, 18 Atl. 207, s. c. on appeal 46 N. J. Eq. 554, 21 Atl. 950, under the name of Jones v. Jones. I therefore conclude that the property in question is still real estate and that the title vests as such, and that, therefore, the answering administratrix takes no interest.
3. As to the reimbursement of the trustee. It appears that he has paid out of his own funds for taxes for the protection of theproperty and to save it from a tax sale upwards of $1,400. He claims that he should be reimbursed for this payment. By the terms of the declaration of trust, it was incumbent upon him to pay all taxes and assessments which had then been imposed or which might in the future be imposed upon the lands out of the proceeds of the sales which it was expected that he would make. If there had been sales of sufficient amount to keep the taxes down, it would have been the duty of the trustee to pay the taxes out of the proceeds. If he advanced his own money in good faith and in anticipation of making sales enough to reimburse himself, he should be reimbursed to the extent of his payment, with interest from the date thereof. I will advise a decree determining the trust and providing for a partition of the land among the defendants, who are entitled thereto as tenants in common. If there are any of the parties who desire to have their shares set off together, this may be done by taking the proper proceeding. I infer from the statements in the bill that the land consists of a large number of separate and independent lots, and that, therefore, it is capable of an actual partition. If this is correct, it will not be necessary to refer the matter to a master. Commissioners may be appointed by the court upon the present condition of the record.
Provision will have to be made in some way for reimbursing the complainant for the amount paid out by him to keep down the taxes. This probably can be best done by ordering a public or private sale of a sufficient portion of the land for that purpose.