Case ID: ny_11/html/0536-01.html
Source: Caselaw Access Project
Author: {"author": "Edwards, J. Ruggles, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Forman and another, adm’rs, against Marsh and others.
    The object of the statute, (2 R. S. 195, § 180,) which declares that the proceeds of an infant’s lands sold by order of the court of chancery, shall be deemed real estate, was to preserve during his minority the character of the property in reference to the statutes regulating descents and distributions.
    The character impressed upon the proceeds by the statute ceases on the infant’s attaining his majority and obtaining possession thereof.
    Accordingly, where real estate of an infant was sold under the direction of the court, and a bond and mortgage thereon were executed to his special guardian to secure the purchase money; and the infant, after' his majority, settled the guardian’s account touching the trust and discharged him therefrom, took from him individually a receipt for the bond and mortgage and constituted him his attorney to collect and reinvest the amount secured'thereby in his discretion, and before payment of any part of the amount died intestate; Held, that' the bond and mortgage and the moneys secured thereby were personal estate, and to be distributed as such.
    
      Appeal from a judgment of the supreme court sitting in the fifth district.
    In 1835, certain real estate situate in the county of Onondaga, owned by Charles W. Forman, an infant, and which descended to him from his father, was sold by the direction and order of the court of chancery upon proceedings for that purpose duly instituted and conducted. Laban Haskins was the special guardian of the infant in this proceeding, and Richard Adams was the purchaser of the real estate. To secure the purchase money, which was $3000, Adams executed to Haskins as such special guardian his bond and a mortgage on the same real estate, conditioned for the payment of that sum in twelve years from the 1st day of April, 1835, and interest thereon annually. Charles W. Forman attained the age of twenty-one year.s on the 20th of September, 1847; and on the first of October ensuing, no part of the principal of the bond and mortgage having been paid, the following transactions were had between him and the guardian: Haskins presented his account as guardian, which included the interest received by him from year to year on the bond and mortgage and the disposition thereof, and showed him indebted to his ward in the sum of $310.38. This account was examined by Forman and agreed to as being correct, and he then executed to Haskins an instrument by which it was recited that he had examined the account and found it correct; and in which he acknowledged that he had received of Haskins the sum of $310.38, in full of the balance of the account as stated, and also the bond and mortgage made by Adams, upon which the whole amount of principal and some interest were due, in full satisfaction, payment and discharge of Haskins, and of his trust as guardian, and of all demands against him touching the guardianship or management of his estate. At the same time Forman executed to Haskins a power of attorney, in which this settlement was recited, and by which he constituted him his agent and attorney, to loan the sum of $310.38 and collect the interest thereon, and also to collect the interest on the bond and mortgage and to reinvest the same; and thereby Haskins was also authorized to collect the principal upon the bond and mortgage when he (Haskins) deemed i't advisable so to do, and to reinvest such principal in such manner and upon such terms as he should deem most advantageous, and in all respects to manage the same as should be in his (Haskins’s) judgment for the interest of Forman, the latter agreeing to pay him a reasonable compensation for his services. Simultaneously with the execution of the acquittance and power of attorney to Haskins, the latter executed to Forman- a receipt, by which he acknowledged the receipt from him of the $310.38, and of the bond and mortgage mentioned in the power of attorney to manage and dispose of pursuant to the directions and authority therein contained. On this occasion the bond and mortgage were present; but Forman did not actually receive from Haskins the sum of $310.38, and no assignment of the bond and mortgage was executed by him to Forman; they were left with and remained in the actual possession of Haskins until the death of Forman.
    In March, 1848, Charles W. Forman died intestate, and the plaintiffs in this suit were appointed his administrators-. He died without having married, and leaving him surviving relations on the part of his father and also on the part of his mother. ’ The principal of the bond and mortgage was unpaid at the time of his death. The administrators commenced the suit, claiming that the bond and mortgage and the moneys secured thereby were to be regarded as real estate, and should be disposed of according to the statute of descents; some of the defendants insisted that the same were personal estate, and to be disposed of according to the statute of distributions. The cause was heard at a special term of the supreme court, before Justice Mason, who was of the opinion that the bond and mortgage were to be regarded as real estate, and judgment was rendered accordingly. (See 7 Barb. 215.) From this judgment some of the defendants appealed. The cause was heard on appeal by the supreme court sitting at-general term in the 5th district, and the judgment at special term was reversed, and judgment rendered declaring that the bond and mortgage, and all moneys unpaid thereon at the death of Charles W. Forman, were to be deemed personal estate, and distributed as such. The plaintiffs appealed to this court.
    
      George F. Comstock, for the appellants.
    
      George Underwood, for the respondents.
   Edwards, J.

The question is presented, whether, at the time of the death of Charles W. Forman, the bond and mortgage in controversy were real estate descendible to his heirs, or personal estate distributable amongst his next of kin.

The right of the guardian to change the nature of the estate of his ward was acknowledged by the court of chancery at an early period, but it was restricted by two qualifications: First, that the change should be for the manifest advantage of the infant; and, second, that the right of succession to the property, in case of the death of the infant, should not be changed. (Earl of Winchelsea v. Norcliffe, 1 Vern. 435, and note 3; Witter v. Witter, 3 P. Wms. 101, and note 1; Peirson v. Shore, 1 Atk. 480; Oxenden v. Lord Compton, 2 Ves. jr. 69; S. C., Bro. Ch. C. 231; Ashburton v. Ashburton, 6 Ves. 6; Ware v. Polhill, 11 id. 257, 278; Ex parte Philips, 19 id. 122, 123.) In carrying out this principle it has been the practice of the court, in making orders for the sale of infants’ estates, to insert a provision declaring that their quality shall be preserved. This has been done not upon the ground that presumptive heirs or distributees have any right to, or interest in the estate, but because courts of equity have thought that justice required that even their mere possibilities should be protected. (2 Story’s Eq. Jur. § 1357.) There is also another reason founded upon the common law right of an infant to dispose of his personal estate, by will, at an earlier age than twenty-one years. (1 Vern. 435.)

In the year 1815, the legislature of this state passed an act providing, that in case of a sale by a guardian of the real estate of an infant, the proceeds of such real estate should be consiclered relative to the statute of descents and distributions, and for every other purpose, as if the real estate had not been sold. (Laws 1815, ch. 106, § 5, p. 104.) And the revised statutes declare that no sale of the real estate of an infant, made as therein provided, shall give to such infant any other or greater estate in the proceeds of such sale, than he had in the estate so sold, but the said proceeds shall be deemed real estate of the same nature as the property sold. (2 R. S. 195, § 180.) These statutes are merely enactments of the chancery rule as applicable to sales of the real estate of infants; and the impress of realty, which was formerly given by the court of chancery, is now given by the statute. The object of the statute undoubtedly is, as it was of the chancery rule, to deprive the guardian of the power to do an act which would affect the rights of the representatives of the infant, or which would give to the infant a power of testamentary disposition which he did not before possess. These are the only reasons for the rule which have ever been, or which can now be suggested. But it was never supposed, under the old chancery rule, that the real estate of an infant when converted into personal, or the personal estate when converted into real, retained its fictitious impression after the infant had attained the age of twenty-one years, and after the estate had come into his possession and under his control. Neither, in my judgment, should such an effect be given to the sale of an infant’s estate when made under the statute.

The principle contended for by the counsel for the plaintiffs is, that by the operation of the statute the bond and mortgage, although in fact personal estate,- had become real,- and that the quality which has thus been given to them cannot be changed, except by an actual conversion into personal estate, or by an act which, in equity, is considered equivalent to a conversion. The necessary effect of such a construction of the statute would be to introduce an anomalous estate into the law, and, as I think, it ought not to be adopted without good reason. It will be remembered that in this case the infant, after he arrived at the age of twenty-one years, came into the possession of the bond and mortgage, executed an instrument in which he acknowledged the receipt of them, and discharged his guardian from all claims against him in that capacity. The relation of guardian and ward had thus become terminated. All the ends contemplated by the statute had been accomplished. The course of descent had not been changed by any act of the guardian; and the infant had arrived at that age when the law regards him as competent to assume the entire control of his property. At this time the bond and mortgage were personal property in fact, and I think that they should be so regarded in law.

I agree with the counsel for the plaintiff, that this case is not to be governed by the rules applicable to equitable conversion. The bond and mortgage became impressed with the quality of real estate by the operation of the statute, and not upon any principle of equity. But the principles of equitable conversion may be referred to with great advantage by way of analogy and illustration. It is a general rule that where equity impresses a different quality upon property from that which it has in fact, such impression ceases whenever the possession of the estate, and the right to it, in each quality, meet in the same person; that is, when there is no other person than the one who has the actual possession, who has an equitable interest in retaining the fictitious character of the estate. Thus when real uses have been impressed upon personal property, and the personal fund and the uses come together in the same person, the uses are considered as discharged and merged; for there is no person to call for their application. (Pultney v. Darlington, 1 Bro. C. C. 223 ; Wheldale v. Patridge, 8 Ves. 228; Rashleigh v. Master, 1 Ves. jun. 201; Leigh & Dalzell on Eq. Cas. 174.) So where, by virtue of a contract of sale, there has been an equitable conversion of personal into real estate, and the property comes into the possession of a person who is entitled to it both as heir and executor, it immediately becomes in equity, what it is in fact, that is, personal property. It is discharged from the fictitious impression which had been given to it. If the impression of realty which was given to the property in question had been given by the application of equitable principles, as would have been the case if there had been no statute on the subject, then, as soon as the property was received by the person who alone was interested in it, after he became of full age and was competent to receive it, it would be considered both at law and in equity what-, it was in fact, that is, personal estate. The guardian could no longer affect the rights of those who might be interested in the estate, and no person whatever would have any right, which the law would acknowledge, to insist that one quality should be impressed on the estate rather than another. What reason then can be given why, in this case, an estate, which, under ordinary circumstances would be regarded as personal, should;,in the hands of an absolute and unqualified owner; who was competent to receive and hold it, have an entirely different quality impressed upon it, and should have that quality so inexorably fixed that nothing but a sale, or at least a contract of sale, could make it in law what it was in fact? I think that . such an effect cannot be given to the statute. There is nothing in its words or in its spirit which requires such a construction.

But it is said, and it was so held at the special term, that even if the principle contended for by the plaintiffs, that, in order to remove the impression of realty given to the infant’s estate, there must be either an actual or an equitable conversion of it into personal property, be untenable, still that the estate will retain the real quality which has been impressed upon it, unless the infant, after he arrives at full age, does some act indicating an intention to change such quality. This view seems to have been suggested by the doctrine of equitable conversion, or, perhaps it may be more properly said, it is founded upon the misapprehension of a rule applicable to personal property impressed with real uses. When the property thus impressed is in the hands of a third person, its character cannot be changed; without some act on the part of the person beneficially interested, indicating an intention to that effect. But when the property is at home,” as it is expressed, that is, when the fund and the uses are united in the same person, no election is necessary. (Pult ney v. Darlington, 1 Bro. C. C. 223; 7 Bro. P. C. 530; Rashleigh v. Master, 1 Ves. jun. 201; Wheldale v. Patridge, 8 id. 227.) In the present case the absolute property was in the possession of the party entitled to it, and, according to the rule of equitable conversion, if it were applicable, the real character which had been impressed upon it was gone.

But even if it had been necessary for the owner of -the property after it came into his possession to do some act, indicative of his intention that it should be considered as personal estate, I think that sufficient was done in this case; for, after the bond and mortgage had been received by Forman, he delivered them to his agent in the condition in which they were, that is, as personal property, and authorized him to collect the money due upon them and reinvest it in any way that he might deem safe. Here was as explicit a declaration of intention as could be made by acts, that the property should continue to be what it was in fact, that is, personal estate.

The judgment should be affirmed.

Ruggles, J.

The court of chancery has no inherent original jurisdiction to order the sale of an infant’s real estate. (6 Hill, 416.) The authority to direct such sale was first conferred by statute in 1814. This statute was amended in 1815; but for the purpose of determining the question arising in the present case, it will be sufficient to refer only to the provisions of the revised statutes of 1830 relating to that subject, on the construction of which the question depends. Section 175 (2 R. S.195) authorizes that court to direct a sale of infant’s lands when necessary for the maintenance or education of the infant, or when his interest requires or will be substantially promoted by it. Section 180 directs “ that no sale made as aforesaid of the real estate of any infant, shall give to such infant any other or greater interest or estate in the proceeds, than he had in the estate so sold; but the said proceeds shall be deemed real estate of the same nature as the property sold.” The first branch of this section was intended to protect the interests of those who might have future estates, vested or contingent, in the land; and has no application to the present case. The latter branch is the part on which the question in this case arises; and that question is, when shall the proceeds of the sale cease to possess the artificial character of real estate impressed upon them by the statute.

The duration of this artificial character is not limited by any express terms contained in the clause which creates it. If that clause is to be literally construed, the personal fund must retain the character of real estate as long as it exists. On that construction, if the bond and mortgage in question had been sold by Charles W. Forman after he attained the age of twenty-one years, it would nevertheless have retained its statutory character of real estate. The statute does not declare that its character may be changed by the act or election of its owner after he arrives at full age; and the idea that his act or election is necessary, or would be effectual for that purpose, is neither expressed nor implied by the language of the enactment. And yet it is not and cannot be contended that its statutory character of real estate is perpetual and immutable. The question then recurs, at what time or on what event is it changed, and when is the fund to assume its natural character of personal estate ?

The true answer to the question is, that the proceeds of the sale become divested of their artificial character of real estate as soon as the purposes of the statute in impressing that character upon them are accomplished; and this is when the infant becomes capable of disposing of his own property. The design of the statute was to take care of the infant’s interests during his legal incapacity, and no longer. The infant is a ward of the court only during that period. The special guardian is appointed only for that time. The chancellor’s power and authority cease with the infant’s disability, except for the purpose of taking the guardian’s final account; and that power is part of his general jurisdiction, independent of the statute. The trust created by the act, continues only during the infancy; and it would b.e unreasonable to suppose that the legislature intended that the fictitious character imposed on the fund, for. the purposes of the trust, should remain attached to it after the trust had expired. The statute, by declaring that the proceeds of the sale shall be deemed real estate of the same nature and quality as the property sold, prevents any change in the law of its devolution in case of the infant’s death; and the fund, therefore, in such case, goes to his heirs and not to his personal representatives, as it otherwise would. The object of the provision, however, was not to favor the heir against the next of kin; because as between them there is no equity during the life of the owner. But the design was to take away from both classes of representatives all temptation to tamper with the infant’s interests, by promoting or opposing a sale, with a view to their own expectations of succeeding to his property in case of his death during the period of his disability to dispose of the land. This reason for the provision ceases with the infant’s disability. To prolong the application of the statute to a fund like that in question, beyond that period, would be not only useless, but mischievous. It would give rise to great uncertainty and litigation upon the question •how long its statutory character and quality remained, and what acts of the party or other circumstances were necessary or sufficient to give it its natural character and attributes of personal estate.

I am of opinion, that when Charles W. Forman became twenty-one years of age, the bond and mortgage in question became personal property in law, as they were in fact, and that upon his death they went to his next of kin and not to his heirs at law, and that the judgment of the supreme court in general term ought to be affirmed.

Judgment accordingly.