Case ID: ad_52/html/0473-01.html
Source: Caselaw Access Project
Author: {"author": "Hatch, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Christina M. Gardner, Respondent, v. Annie Dembinsky, Appellant.
    
      Marketable title — the purchase of land by a trustee or by a donee of a power in trust in respect thereto is voidable.
    
    A will provided, “ I leave my house, 48 Market St., City of New York, to my. Neice Margaret T. Mulvey, during her natural life, with the privalage of selling the same at her option, with the concent of my executors. And from the proceeds of sale my executors will give. Magge T. Mulvey Three Thousand Dollars. And to my Neice Bridget Mulvey Two Thousand Dollars. The ballance to be divided in Three Equal parts amongt's the following named parties.”
    After the death of a sister of the testator, to whose life interest the interest of Margaret T. Mulvey was made subject, the latter notified the executors of her election to sell the property. ■ The property was sold at public auction and was bid in by Margaret T. Mulvey, to whom the executors executed a deed of conveyance, although she had not been authorized by the court to purchase at the' sale. ., "
    
      Meld, without deciding whether the will vested the power of sale in the executors, or in Margaret T. Mulvey subject to the consent of the executors, that Margaret T. Mulvey was either a trustee or a donee of a power in trust and that her purchase of the property was voidable;
    That, under the circumstances, the grantee of Margaret T. Mulvey did not have a marketable title and could not convey a good title to the premises.
    Appeal by the defendant, Annie Dembinsky, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 6th day of March, 1900, upon the decision of the court rendered after a trial at the New York Special Term.
    
      Delos McCurdy, for the appellant.
    
      William H. Stockwell, for the respondent.
   Hatch, J.:

This action was brought to compel the specific performance of a contract for the sale of land, or in case performance could not be • had, that the plaintiff recover the sum paid '■ upon the contract, together with her costs and expenses. By the judgment it was determined that specific performance could not be had, as the defendant could not convey a good title to the land, and, therefore, a recovery was authorized for the sum of money paid out and the expenses as demanded in the complaint, and the same were declared to be a lien upon the premises, and direction was given to satisfy the same by a sale of the land. This judgment is attacked upon this appeal. It appeared by the testimony that Margaret T. Mulvey, the defendant’s grantor of the premises, was a niece of Thomas Gamble. The latter died leaving a last will and testament, by the terms of which, so far as is important to. this controversy, he devised as follows:

Firstly. After all my lawful debts and funeral expences are discharged, I leave my house 43 Market St., City of New York, to my Neice Margaret T. Mulvey, during her natural life, with the privalage of selling the same at her option, with the concent of my executors. And from the proceeds of sale my executors will give Magge T. Mulvey Three Thousand- Dollars. And to my Neice Bridget Mulvey Two Thousand Dollars. The ballance to be divided in Three Equal parts amongts the following named parties.
“ 1st Rev. Edward Southwell O. C. Pryer Resedence 234 East 28th New york or to his successor.
“ 2nd Rev F Derichmant superior. of the Missionaries of the Sacret Heart Watertown New York or his successor.
“ 3rd Convent of the most Precious Blood 291 Sumpter street Brooklyn; Rev Mother Gertrude Superior or her successor N. Y.” By the concluding clause of the will executors were appointed to carry out its ¡provisions. The land in controversy. is the same as that devised iii the above quoted clause of the will.

By another clause of the will the devise to Margaret T. Mulvey, of the premises, was made subject to a life interest of a sister of the deceased, who was to receive the rents therefrom. The sister having died, Margaret entered into possession of the property. Subsequently she elected to sell the property and notified the executors in writing of the fact. Thereupon, and on the 31st day of May, 1895, the premises were sold at public auction at the real estate exchange in the city of New York and were bid in by Margaret for the sum of $4,000, that.being the highest sum bid therefor. The executors of the will thereafter, and on the 4th day of June, 1895, executed a deed of conveyance which recited inter alla that part of the will conferring the privilege of sale upon Margaret at her option with the consent of the executors ; also the fact that she had made her election in writing; the advertising of the premises for sale at public auction; the amount of the bid therefor and that it was the highest bid. . The will and this deed were duly entered of record, On January 5, 1899, Margaret conveyed the premises by deed to the defendant for a nominal consideration of $1, as expressed therein, but in fact the consideration was $8,000, and she subsequently executed the contract of sale which is the subject of this action.

The court below was of the opinion that the correct construction of the will vested in Margaret T. Mulvey a power of sale of the property subject to the consent of the executors. This conclusion is attacked and the claim made that as the will vests in the executors the.power to make distribution of the proceeds of the property, they became vested with the power of sale and were the only persons who could execute the power. If in fact the power was vested in Margaret then no title could pass until she executed the deed to the defendant, for until that time she had not conveyed but held solely by virtue of the terms of the will.

It is also very doubtful whether this deed by her is effectual to convey good title, for, by the terms of the will, the executors were to give their consent. It is the express provision of section 122 of the Statute of Uses and Trusts (1 R. S. 736) that where the consent of the grantor or of a third person to the execution of a power is requisite, such consent shall be expressed in the instrument or shall be certified in writing thereon.. The revision of this law as it now appears in the Real Property Law (Laws of 1896, chap. 547), section 153, continues the rule. The deed in the present case contains no recital in compliance with this provision of law, in consequence of which it would seem that it is not in conformity to the condition authorizing the exercise of the power and that no title passed by it. (Griswold v. Perry, 7 Lans. 98 ; Barber v. Cary, 11 N. Y. 397 ; Matter of Vanderbilt, 20 Hun, 520.)

If, however, it be assumed that the executors are vested with the power of sale, and that the consent thereto was lodged in Margaret, for which claim there is foundation, as they were to make distribution of the money (Perry Trusts, § 501), we are confronted by the fact that Margaret was constituted by the terms of the will either a trustee or a donee of .a power in trust. She only, took a life interest in the property, if it remained unsold. If it was sold she became entitled to the sum of $3,000, and the other beneficiaries named in this class took the remainder in equal shares. This- relatian by the terms of the statute would seem to impose upon the executors, or upon Margaret, or both, a general power in trust. (1 R. S. 734, § 94; Real Prop. Law, § 117.) It is not necessary that we determine the exact relation which either the executors or Margaret have to this property, or the relation which each bore to- the other, or what the proper solution is of the questions to which we 'have called attention. Answers thereto are not necessarily required at this time. The question presented for our determination is, can the defendant convey a marketable title ? 'The settled equitable rule is that the parties who are placed in a situation of-trust and confidence in reference to property which is the subject-matter of sale and purchase are not authorized-to become purchasers at the sale and hold the same to their individual use, and this rule embraces all classes of trustees. (Taylor v. Klein, 47 App. Div. 343.) It is not enough to show that the transaction in such case was in all respects fair; it is the relation which prohibits the act, and as this may be abused if the transaction be permitted to. stand, the policy of the law requires that it be held voidable. It was said in Boerum v. Schenck (41 N. Y. 182) that the trustee or the devisee of a power in trust cannot sell to himself either directly or indirectly;” no circuity in the method by which title is vested in the trustee can avail to devise an indefeasible title. This rule was applied by the-second department of the Supreme Court and carried much farther in application to particular facts than is necessary to establish a defective title in this case. (Stokes v. Hyde, 14 App. Div. 530.)

It is doubtless true that title conveyed by a trustee vested with a power of sale, or a title acquired by a trustee upon a sale pursuant . to the terms of a trust in a particular case, is not void and will stand unless attacked, yet ifjit is voidable and cannot resist an attack made upon it by the party or parties in interest, then such trustee, or a grantee from him, cannot convey a marketable title, unless other considerations intervene which cure the defect. (People v. O. B. of S. B. B. Co., 92 N. Y. 98.)

The purchaser in the present case was bound by the will and wag required by the terms of the will to take notice of the relation thereto of Margaret T. Mulvey and of the executors, the character of such relations and the disability created thereby. (McPherson v. Rollins, 107 N. Y. 316; Moot v. Business Men’s Investment Assn., 157 id. 201; Taylor v. Klein, supra.) Such notice disclosed the fact that Margaret could not become a purchaser at the sale for her own benefit, certainly not without leave of the court authorizing her so to do. (Scholle v. Scholle, 101 N. Y. 167.) And there is no pretense that such leave was obtained. The defendant^ title, therefore, is open to attack by the beneficiaries under the will who were to take upon the death of Margaret, or upon a sale being made of the property. Being so open to attack, it is an-unmarketable title, which the plaintiff was not bound to take. It is apparent, therefore, that this renders unnecessary of determination the question in whom was vested the power of sale, for if we assume it was vested as claimed by the appellant in the executors or in Margaret,, the result would be the same; Margaret could not obtain and convey an indefeasible title under the proceedings which were had. The judgment should, therefore, be affirmed, with costs.

Patterson, Ingraham and McLaughlin, JJ., concurred; Rumsey, J., concurred in result.

Judgment affirmed, with costs.