Belmont and others against O'Brien

Belmont and others against O'Brien. A presumption arises that a mortgage is paid after the expiration of twenty years from the time the amount secured thereby becomes due. An uncanceled mortgage sixty years old, is not a valid objection to the title to the land covered thereby, where there is no evidence to rebut the legal presumption that it has been satisfied. Where, in contemplation of marriage, lands were conveyed to trustees to receive the rents and profits and apply them to the separate use of the wife during her life, and the trust deed contained a power to the trustees to sell the lands and reinvest the proceeds, and hold them so reinvested to the same use; Held, that the power was valid, and that a conveyance by the trustees passed a good title. Such power is not repugnant to the trust created by the deed ; nor is the conveyance by the trustees in violation of the statute (1 R. S., 730, 63, 65) prohibiting the alienation of trust estates. Where a deed, in trust to three persons, provides that in the event of the death of either of them the survivors might, with the consent of the cestui que trust, appoint a trustee in place of the deceased, and that thereupon the survivors and the substituted trustee should hold the trust estate with the same powers conferred on the original trustees; Held, • that on the death of one of the trustees, the survivors, without appointing a successor, could execute the powers expressed in the trust deed. On the 29th of October, 1849, August Belmont, being the owner in fee of certain real estate, situate in the city of New-York, executed, as party of the first part, a conveyance thereof to Jeremiah Larocque, as party of the second part. In this conveyance, it was recited that a marriage was about to be solemnized by and between the party of the first part and Miss Perry, and that it was proposed on his part to make a settlement of the lands described in the conveyance, for the use of his contemplated wife and her issue, through the medium of trustees, of whom he should be one, and Messrs. Francis Griffin and John Hone should be the others. By this deed the lands therein mentioned, for the purpose as therein stated of carrying the proposal into effect by vesting the title in the trustees, and to the intent that the party of the second part should immediately execute and deliver to the trustees a deed of settlement, in such manner and upon such trusts, covenants and conditions as Belmont should direct and approve, were granted, bargained and sold to the party of the second part; to have and to hold the same to him, for the uses and purposes and on the intent above expressed and declared. On the same day and immediately after the execution of the above mentioned deed to Larocque, a deed was made and executed between him as party of the first part, Belmont as party of the second part. Messrs. Griffin and Hone as parties of the third part and Miss Perry as party of the fourth part, whereby, after reciting the contemplated marriage and .settlement and the conveyance to Larocque, the lands were granted, bargained and sold to the parties of the second and third part, their heirs and assigns forever from and upon the solemnization of the proposed marriage to have and to hold the same to them, their heirs and assigns forever, as joint tenants and not as tenants in common, in trust nevertheless to take possession of and hold the same-luring the coverture of the party of the fourth part, for her separate use and benefit, and during such period to collect the rents and profits thereof and apply the same to her sole and separate use, free from the control of the party of the second part, the same as if she were a feme sole, her receipt to be deemed a sufficient voucher therefor; and in the event of the party of the fourth part surviving the party of the second part, without issue of the marriage him surviving, then upon the further trust to grant and-convey the premises to the party of the fourth part, in fey; but in the event of her surviving him with issue of the marriage him surviving, then the rents and profits to be applied to her use during her life, and the remainder to be conveyed to such issue in fee. By the deed it was declared, and it was stated to be upon the express condition, that the parties of the second and third parts thereto were and should be authorized, during the continuance of the trust, to lease and demise the granted premises for such lawful term or terms, and at such rents and upon such covenants as to renewals as to them should seem proper; and that they should be, and “ were authorized and empowered 'to grant, bargain, sell and convey in fee simple absolute, at public or private sale, for cash or upon credit, or partly for cash and partly upon credit, all or any part or parcel of the said trust premises, or of any other premises in which the proceeds thereof-might be reinvested, and to invest the proceeds of such sale or sales in other real estate or upon bonds and mortgages within the State of New-York, or in the public stocks of the United States or of the city of New-York, or in improving other parts of the said real estate, and to alter and change such investments from time to time as they might think proper ; and that the rents, profits, interest, dividends and other income-thereof should be held and applied by the parties of the second and third part upon the same trusts, with the like powers and upon the same conditions, covenants and agreements as therein expressed and declared.” The trust deed further provided that, upon the death of either of the trustees, the survivor or survivors might, with the consent in writing of the party of the fourth part, nominate and appoint another trustee in his place, and thereupon the trust premises should be held by the substituted trustee and the survivors, with the powers and upon the conditions expressed and declared in the conveyance concerning the same. Immediately after the execution of the above mentioned conveyances, Mr. Belmont and Miss Perry were married, she then being over twenty-one years of age. Soon after the marriage, Larocque, by quit claim deed, released any interest he had in the premises to Belmont. Griffin, one of the trustees, died in January, 1852. In May, 1852, Belmont and Hone, as surviving trustees, conveyed a portion of the trust premises to O’Brien, the defendant, and he executed to them, as such trustees, a mortgage thereon to secure the purchase price. Default having been made in paying the mortgage, this action was instituted by the surviving trustees against O’Brien to foreclose the mortgage, and judgment of foreclosure and sale was rendered. The sheriff, by virtue of the judgment, sold the mortgaged premises, which were purchased at such sale by one Egan at $4000, and he signed a memorandum of the purchase and paid $400- towards the price. Subsequently Egan refused to complete the purchase on the ground that the title to be conveyed to him was defective ; and a motion was made to the supreme court in the cause on the part of the plaintiffs, that the premises be resold by the sheriff, and that Egan be compelled to pay any deficiency of the $4000 and interest, after applying the proceeds of the resale towards that amount. A motion at the samé term was made on behalf of Egan, that he be discharged from the purchase, and that the $400 and interest paid by him to the sheriff be repaid, on the ground that the title was defective. On these motions being made, the court referred it to a referee to hear and report upon the objections to the title. The referee reported the facts above stated and that Mrs. Belmont, the party of the fourth , part to the deed of trust, was living, and that there was issue living of the marriage. He also reported that there were two mortgages upon the premises and other lands, unsatisfied of record; the one bearing date the 2d day of August, 1769, and registered in the office of the register of the city and county of New-York, on the 21st of August, 1769, given to secure the payment of the sum of four hundred and sixty-seven pounds currency with interest, and the other bearing date the 29th day of December, 1787, and registered in the same office on the 5th of February, 1788, given to secure the payment of the sum of twelve hundred pounds currency with interest.' The referee did not report, nor did it appear, when either of the mortgages was by its terms payable. The referee further reported “ that no evidence was given before him of the payment of any portion of the principal or interest or of any acknowledgment of indebtedness upon either of said mortgages at any time; whereupon he found and reported, that said mortgages had been paid and satisfied.” He further reported, that the title proposed to be given Egan, by a completion of the sale to him by the sheriff, was perfect, and that he should be required to complete the same. Upon this report the court made an order at special term, that Egan pay the residue of the purchase price and accept the title within ten days, or that the property be resold and he required to pay any deficiency. This order was affirmed by the court at a general term in New-York. Egan appealed to this court.. The cause was submitted on printed briefs. Dillon & O'Gorman, for the appellant, insisted: I. That the purchaser had a right to a good title and ought not to be compelled to accept a doubtful one. (1 Sugden on Vendors and Purchasers, pp. 505 to 512, 11 London ed.; 2 Vesey, 59; 16 Ves., Jun., 272; 2 P. Wms., 198; 2 Paige, 590.) II. That there were grave objections to the title in this case, rendering it, if not clearly bad, at least extremely doubtful: (1.) There are mortgages unsatisfied of record, affecting the premises. If it be conceded that they are to be presumed paid, this presumption may be repelled (2 R. S., 301, § 48), and the mortgages enforced; (2.) The power to the-trustees to sell is void, as being repugnant to the character of the estate created by the settlement. The estate conveyed to them was inalienable and no title passed to O’Brien by their deed (1 R. S., 728, §§ 55, 63, 65; Coster v. Lorillard, 14 Wend., 265; Hawley v. James, 16 Wend., 61, 121, 122); (3.) The power is void, because Larocque had no authority to grant such power (1 R. S., 730, §§ 65, 74); (4.) The execution of the power by the surviving trustees is bad. Jer. Larocque, for the respondents, insisted: That a power of sale could be given to trustees under a trust to receive the rents and profits of land and apply them to the use of a person under the third subdivision of the 55th section of the Revised Statutes relative to uses and trusts. That although the validity of such a power had never been directly adjudicated upon on such an objection as is now raised, yet that the point was directly involved in the decision of a large number of cases. (Champlin v. Champlin, 3 Edw. Ch. R., 570; Hawley v. James, 5 Paige, 323; Champlin v. Haight, 10 Paige, 274; S. C., 7 Hill, 245, Van Vechten v. Van Vechten, 8 Paige, 104; Irving v. DeKay, 9 Paige, 521.) That even if no express power of sale were' contained in the instrument itself, the-trustees would necessarily have it as incident to their estate, for the purpose of selling and reinvesting under the trust, they having the whole estate at- law and' in equity in them. (2 R. S., 15, 3d ed., §§ 60, 66; Waggener v. Waggener, 3 Monroe, 545; Saunders v. Morrison, 7 Monroe, 56; Stiver v. Stiver, 8 Ohio R., 221; Dexter v. Stewart, 7 John. Ch. R., 52; McCosker v. Brady, 1 Barb. Ch. R., 329.) [MAJORITY — Hand, J.] Hand, J. Egan the appellant, the purchaser under the decree of foreclosure, objects to the title on the ground that there are outstanding mortgages; and also, that the conveyance to O’Brien, the mortgagor, was invalid. One of the mortgages was given about 84, and the other 66 years before the sale. The referee does not find when they became due, nor who has since been in possession; but he states that no evidence was given of payment upon them, or of an acknowledgment of indebtedness thereupon, at any time; and he therefore finds they have been paid and satisfied. Without explanation, the presumption of payment arises from the lapse of time, in favor of a mortgagor in possession, (Ang. on Lim., 492 et seq., and cases there cited; 2 Hill on Mort., ch. 21; 2 Sug. on Ven. & Pur., 361; Matt. on Pres. Evid., 329 et seq., 352 et seq.; 2 R. S., 301, § 48.) It would have been more satisfactory if the referee had found the facts in relation to the possession, &c.; but he has found the mortgages paid and satisfied; and the onus, after this great lapse of time, may be considered to rest upon the purchaser. I think these mortgages constitute no valid objection to the title. The important question in this case is as to the validity of the deed to O’Brien ; for if the conveyance to him was not authorized, the purchaser at the sale upon the mortgage lie gave should not be compelled to fulfill his contract of purchase. Some eminent jurists in this state have said that land held in trust is inalienable. (See Wood v. Wood, 5 Paige, 600; Hawley v. James, id., 318; S. C., 16 Wend., 61; Coster v. Lorillard, 14 id., 265; Kane v. Gott, 24 id., 641; Irving v. De Kay, 9 Paige, 530; S. C., 5 Den., 646; Van Epps v. Van Epps, 9 Paige, 237.) And §§ 63 and 65 of the article “ Of Uses and Trusts” no doubt have had an important influence in the construction of several wills, which. have taken effect and have come before the court since those sections have been in force. Chief Justice Savage, in the case of Lorillard’s will, remarked in relation to a clause which it was contended authorized a sale of the income at least of trust property, “ the statute is paramount and must control the provisions in the will.” (14 Wend., 304.) And the language of Mr. Justice Nelson and some of the other members of the court was very much to the same effect. Section 63 inhibits the assignment or disposition of the interest of a person beneficially interested in a trust for the receipt of the rents and profits of lands. And by § 65 every sale, conveyance, or other act of trustees, in contravention of the trust, is declared to be absolutely void, where the trust shall be expressed in the instrument creating the estate. (1 R. S., 730.) In this case, the trustees by the deed creating the trust, are to have, take, collect and receive the rents, issues, profits and other income of the property, for the separate use and benefit of the cestui que trust, and apply the same to her separate use. This is a valid trust within. § 55, and the estate passed to the trustees so long as the execution of the trust should require it. But the same deed also, in express terms, authorizes the trustees to sell and convey all or any part of the trust premises, or any other premises in which the 'proceeds thereof may be reinvested, and invest the proceeds in any other real estate; or on botids and mortgages within the state, or in-certain public stocks, &c., and to alter and change such investments; and the rents and profits and income thereof are to be applied upon the saíne trusts". And the question is, whether a sale of the real estate or a portion of it by the trustees, under these provisions in the trust Conveyance, is in violation of the statute. It was said by the chancellor in Hawley v. James (5 Paige, 444, 445), that “the mere exchange of one piece of property for another by a trustee, under a valid power in trust, is not considered as an alienation of the estate or interest of the cestui.que trust, or person 'beneficially interested in the trust estate -and again, “ a mere power to exchange lands, whether such exchange 'is 'made directly, or by means of a sale and -new purchase, is 'not a power to alien the estate, within the -intent and meaning tif the provisions of the Revised Statutes on this subject.” And Mr. Justice Bronson expressed the same opinion when 'the cause came before the court for 'the correction of errors. (16 Wend., 163, 164.) And, consequently, such a power would not obviate the objection as to inalienability, within the rule against-perpetuities. If '-this be so, and it woüld seem that some of the decisions under -the present statute must have involved the very point, -it must be upon the -ground that, notwithstanding the power, the -fund is inalienable. The application tif this principle to this case is necessarily a strong argument,"if not conclusive, in Tavor of the plaintiffs. It is admitted that this instrument would -have conferred-an authority to sell before the Revised Statutes-; and if a sale for the purpose of "reinvesting -in other lands, to be held in trust for the same purposes, is not an alienation within .§§ 63 and 65, and §§ 14 and 15 (1 R. S., 723), then the sale is valid. And the'purchaser is not even bound to see that the money is applied to the purchase tif tither lands. (1 R. S., 730, § 66.) And I do not see why the power would not also have been valid, if the proceeds were to have been invested only in stock's or on bonds and mortgages -to the same uses, and not in the repurchase of lands. But if a sale by the plaintiffs be considered simply an alienation, I cannot think it is void as being prohibited by § 63 or § 65. This was an antenuptial agreement; and powers of sale and exchange have been considered usual and proper in marriage settlements. (Sugd. on Pow., 181; Sugd. on Sales, &c., 109; Brewster v. Angel, 1 J. & W., 608; Peak v. Penlington, 2 V. & B., 311; Hill on Trust., 472; Hill v. Hill, 6 Sim., 136.) The want of such power might sometimes be very prejudicial to those having an interest in the trust property. The phraseology of the statute in relation to trusts, and that in regard to powers, are not the same. Uses and trusts, except as there authorized and modified, are abolished; and the statute enumerates and defines the express trusts allowed by law. (1 R. S., 728, §§ 45, 55.) If is also declared that powers, as they then existed by law, were abolished; and that, from thenceforth, the creation, construction and execution of powers should be.governed by article third, “ Of Powers.” (1 R. S., 732, § 73.) And the next section defines a power, and that is followed by a classification of them ; but there is no such particular specification or enumeration of what are lawful, as in the article on trusts. There are powers unconnected with trusts (2 Sugd. on Pow., 187; 1 R. S., 732, 733; and see id., 734, § 96); and powers in the nature of trusts. (2 Sugd. on Pow., 173.) Most or all of the latter are by statute now denominated powers in trust; between which and a trust, or an estate held in trust, the statute recognizes an obvious distinction; although some of the trusts specified in § 55 are more properly mere powers in trust. No doubt the object of the execution of a power in trust should be for a lawful puipose. As, for instance, if it be to create a perpetuity, the power wonld be invalid. (1 R. S. 737, § 128; 1 Sugd. on Pow., 181; 2 Prest. Abs., 158, 496.) The statute must be allowed full force; and neither the trustee or the person beneficially interested can legally do any act in contravention of the trust; and courts cannot too carefully watch the rights of cestui que trust. But it could never have been intended to take away the joower of' the absolute owner of the property to limit the duration o: the trust by a power in trust within the rule against perpetuities. A power of revocation is recognized by the statute. (§§ 86, 105, 108, 114.) And trusts, under the third subdivision of § 55, may be for a shorter term than for life. The powers of charging, selling, exchanging, jointuring and leasing, usually inserted in marriage settlements, are in, effect powers of revocation and appointment; and postpone, abridge or defeat, in a greater or less degree, the previous uses and estates, and' appoint new uses in their stead. They operate as a limitation of the use. Until the conveyance, &c., this authority is a power, and when executed, operates by way of appointment; but derives its effect, except as to time, from the instrument by which the power was created. (See Butler's Note, 231, to Co. Litt., 271 b.; 1 R. S., 726, § 41.) The revision of our statutes has made great changes in our law of real property; but the absolute owner'of real estate, subject to the statutory provisions, has the entire disposition as before, and may create future estates, limit new uses, charge the estate, &c., himself, or by granting a power. And I do not see why a trust and a power in trust, in a proper case, may not still exist together, where they are not inconsistent. (Prest. Abs., 104, 158; and see 1 R. S., 729, § 58; ib., 732, § 74; ib., 735, § 105; Boyce v. Hanning, 2 Cr. and Jer., 334.) The same person may hold the estate in trust for one purpose, and at the same time be a grantee of a power in trust, to be executed or take effect at some future day, for' another. Here the owner in fee gave the power by the same instrument that conveyed the estate ; and suppose it had been an absolate power to sell and terminate the presen! use and appoint the money, it could never have been the intention of the legislature, not only to frustrate the intent, on of the grantor, but to make an entirely different conveyance; one giving a larger estate to the present cestui que use, at the expense perhaps of some other intended beneficiary or appointee. Where a sale is directed .in the instrument creating the trust, such sale is not “ in contravention of the trust.” Nor is it repugnant to the grant or devise; for that provides the defeasance, new use, executory limitation, or whatever it may be. In most of those ceses' in our courts, where the 63d and 65th sections were said to have rendered the property inalienable, the fund, or some part of it, or the income, was to be held in trust for a period not allowed by law. And in such cases, a power of sale and exchange, or of conversion for the same purposes, did not remove the objection of inalienability. But if the purpose be lawful, there can be no objection to a power of sale under the express direction of the original owner and grantor, given at the time he creates the trust. (And see Chance on Pow., Nos. 313, 314, 315, 321, 322, 323; 2 Prest. Abs., 158, 159; Sugd. on Pow., 179, 180, 1812; 2 id., 483, 493.) The objection, that the deed from Belmont to Larocque gave the latter no authority to grant such a power, is not well taken. The two deeds, for that purpose, might be considered one instrument; and besides, the first provided that the other should be executed immediately after, “ in such manner and upon such trusts, covenants and conditions as” the grantor should “ direct and approve.” The conveyance by the surviving trustees was good without the appointment of a new trustee in place of Mr. Griffin. Authority was given to the survivors to fill the vacancy, but they were not required to do so ; and it is therefore not necessary to inquire what would have been the rule, if the direction had been positive and imperative. The order of the general term, affirming the order at special term, should be affirmed, Denio, Ruggles, Johnson, Marvin and Crippen, Js. were also in favor of affirmance. Gardiner, Ch. J. and Dean, J., dissented. Order affirmed.