Case ID: wis_129/html/0534-01.html
Source: Caselaw Access Project
Author: {"author": "Siebegkee, J-.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Lueft and wife, Respondents, vs. Lueft, by guardian ad litem, Appellant.
    
      October 11
    
    November 7, 1906.
    
    
      Wills: Construction: Trustees: Pqwer to sell and convey land: Authority to mortgage: Infants: Authorizing mortgage of future interests in land: Application of proceeds.
    
    1. Where power given by a will to sell and convey land is coupled with charges upon the estate and the executors are intrusted with its management to carry out and discharge such obligations, the extent of the power conferred (and whether it includes the power to mortgage the land) is to be ascertained from the intention of the testator as evinced by the will in the light of surrounding circumstances.
    2. A will gave the residue of testator’s estate, after a bequest of $20,000, to the executors in trust “to hold, manage, invest,” etc., and “to lease, sell, deliver, transfer, 'grant, and convey the whole or any part thereof; to invest and reinvest the proceeds of sale, and generally to have, manage, and control” the estate as fully as the testator might do if living. The net income was to be used to maintain and care for his son W., and upon the death of W. without issue the trustees were to convey all real estate to testator’s son P. for life, with remainder to his lawful issue. The income of the real estate so held in trust was sufficient only to pay taxes, insurance, and repairs, but the trus- „ tees, with moneys obtained by mortgaging the land, improved it so that it yielded a net income for the care and maintenance of the son W. Held, that the giving of such mortgage was within the powers conferred by the will.
    3. After the death of W. without issue, there being no available means for payment of the mortgage, it was proper for the court, under ch. 300, Laws of XS99, in order to protect the interest of an infant daughter of the son P., to authorize another mortgage to pay off the first.
    4. It was proper also in such case for the court, in order to protect the infant’s interest, to direct payment of delinquent taxes on the land out 'of the money raised by the second mortgage, notwithstanding the duty of the life tenant to pay such taxes.
    5. The fact that executors had exceeded their trust in applying more than the net income to the support of W. was not material in the proceeding to authorize the giving of the second mortgage.
    
      Appeal from an order of the circuit court for Milwaukee county: Waebezv D. Tabbawt, Circuit Judge.
    
      Affirmed.
    
    This is an appeal from an order of the circuit court authorizing a referee to mortgage lands'in which a minor has an interest under a will. On February 17, 1895, Phillip Lueft, a resident of Milwaukee, died testate. His will was admitted to probate April 5, 1895. The executors named in the will duly qualified and letters testamentary issued to them, and they continued to act as executors and trustees during the continuance of the trust under the will. The will of Phillip Lueft, deceased, gave $20,000 out of his personal estate to his son Phillip Lueft, Jr., and then provided as follows :
    “All the rest and residue of my estate, real or personal, and wherever situate at the time of my death, I give, devise, and bequeath to my said executors, in trqst, however, for the following purposes, to wit: to hold, manage, invest, and reinvest the same, collect the rents, profits, and income arising therefrom ; to make all necessary repairs, and pay the taxes, assessments, and insurance thereon; to lease, sell, deliver, transfer, grant, and convey the whole or any part thereof; to invest and reinvest the proceeds of sale, and generally to have, manage, and control my said estate as fully as I might, if living, do myself; all subject, however, to the provisions, conditions, limitations, and restrictions hereinafter contained.
    “(A) I direct that during the continuance of this trust my said executors and trustees shall use the net income arising from the estate hereby devised and bequeathed to them as aforesaid, or so much of said income as may be necessary therefor, for the purpose of properly caring for and maintaining my son William Lueft, and his family, if any; it being my intention that my said son shall, in so far as said net income shall suffice, he maintained in the manner we have heretofore lived, and receive all necessary care, assistance, and comforts.
    “(B) All personal property herein bequeathed to my said executors and trustees shall be invested, kept invested, and reinvested by my said executors and trustees in good interest-bearing securities, secured by first mortgage on real estate situate in the city of Milwaukee, county of Milwaukee, and state of Wisconsin.
    “(C) In case my said executors and trustees shall sell any of the real estate hereinbefore devised to them, I direct that the proceeds of such sale or sales shall be invested, kept invested, and reinvested by my said executors and trustees in good interest-bearing securities secured by first mortgage on real estate situate in the said city of Milwaukee; for the purposes of this will the proceeds of such sales shall be deemed real estate and shall be disposed of by my executors and'trustees in the manner hereinafter provided for the disposal of my real estate.
    “(D) This trust shall terminate on the death of my said son William Lueft. In the event that on the termination of this trust my said son William Lueft shall leave him surviving lawful issue, I will and direct that my said trastees shall convey and pay over all the estate then in their hands to such lawful issue forever.”
    The will provided further that if this son, William Lueft, should leave no lawful issue, then the executors were to convey and dispose of the estate in their hands as follows: (a) To transfer to his son Phillip Lueft, Jr., all personalty in hand absolutely, and to convey to him all real estate for life with remainder in fee to his lawful issue surviving him, and if he should die leaving no lawful issue then to testator’s legal heirs; (b) if the son Phillip Lueft, Jr., should not then be living, to transfer the property to his lawful heirs; and (c) if he should leave no lawful issue then they were to transfer the estate in their hands to testator’s legal heirs. At the time of testator’s death his son William was insane, and had been in an asylum for the insane for some seven or eight years. He died September 7, 1901, unmarried, and leaving no issue. The son Phillip is married, and at the time of William’s death had, and still has, one child, a daughter, Flora Annie, who is a minor. She appears by guardian and prosecutes this appeal.
    
      Testator’s estate at the time of his death consisted of personal property amounting to $26,474, and two pieces of real estate — one piece situated on Twelfth street, appraised at $8,500, and another situated on Wells street, appraised at $5,000. The Twelfth-street property consisted of a lot and a half, upon which was located an old brick structure. About five years after testator’s death the executors, by moving the ■old structure to the rear of the lot and by constructing a new flat building on it, made improvements on the Twelfth-street property at a cost of about $36,000, which was paid by applying the legacy to Phillip Lueft, Jr., amounting to $20,000, by using $1,000 of cash on hand belonging to the residue of the estate, and by applying $15,000 raised by a loan on September 18, 1901, by the executors and trustees under the will, payment thereof being secured by a mortgage on the real estate so improved. They also expended $1,500 in improvements on the Wells-street property, putting it in proper condition for letting. This action of the executors is alleged to have been taken under the powers of the will, and for the purpose of increasing the income, which was insufficient to pay taxes, assessments, necessary repairs, expenses for the maintenance of the property, and the support, as directed by the will, of the son William.
    On March 30, 1903, Phillip Lueft, Jr., and his wife, under ch. 300, Laws of 1899, petitioned the circuit court to authorize a mortgage of $18,000 on this real estate, the avails i>f such mortgage to be applied in payment of the $15,000 mortgage given by the executors and trustees and interest due thereon, and to pay the unpaid taxes on the real estate for the years 1900, 1901, and 1902. Notice of such application was given to appellant and her guardian ad litem,.
    
    The petition set forth substantially the foregoing facts, and further alleged that the executors, as directed by the will, had supported the son William in an asylum for the insane nntil the time of his death; that the income from the real es-táte as so improved was insufficient to so maintain Mm and pay the expense of administration, the debts, taxes, assessments, and improvements on the real estate; that there was no-money of the estate on hand to pay the mortgage when due, and that there were taxes unpaid on the estate for the years 1900, 1901, and 1902; that a mortgage loan of $18,000 on the property would well promote the interests of the daughter, Flora Annie, prevent the probable foreclosure of the mortgage, pay the former loan of $15,000 with interest, and by redemption of the outstanding tax certificates prevent the issuance of tax deeds on the premises.
    The court, after a hearing and a reference respecting the application, made an ordei’, based on this petition, in which it found
    “that the interests of said Flora Annie Lueft, and of any after-born children of said Phillip Lueft, Jr., who will also-own and become interested in said real estate under and by said last will and testament of said Phillip Lueft, deceased, require and will be substantially promoted by the mortgaging, of the real estate mentioned in said petition and hereinafter described for the sum of eighteen thousand ($18,000) "dollars, for the reasons set forth in said petition,”
    authorized the execution of a mortgage, and directed the application of the money so borrowed in discharge of the former mortgage and interest due on it and the payment of unpaid taxes. From such order Flora Annie Lueft, by her guardian ad litem, appeals.
    For the appellant there was a brief by F. II. Bottum, guard-» ian ad litem, and By an, Ogden & Bottum, of counsel, and oral argument by L. M. Ogden.
    
    To the point that the executors had no power to mortgage the land they cited First Nat. Bank v. Nat. Broadway Bank, 156 N. T. 459; Potter v. Nodgman, 81 App. Div. 233; Willis v. Smith, 66 Tex. 31; Paiapsco O. Oo. v. Morrison, 2 Woods, 395: Greene v. Greene, 19 R. I. 619; Hannah v. Carnahan, 65 Mich. 601; Rutherford L. & I. Oo. v. Sanntrock, 44 Atl. 938 (see 60" ÜST. J. Eq. 471) ; Wilson v. Maryland L. Ins. Go. 60 Md. 150 y Bountree v. Denson, 59 Wis. 522.
    Eor the respondents there was a brief by Austin, Fehr & Gehrz, representing tbe mortgagee and bis assignee, and of counsel witb Emil Wallber, attorney for petitioners; and oral argument by G. A. Gehrz.
    
    They argued, among other things, that tbe language of tbe will should be construed as giving tbe executors and trustees power to improve the real estate and mortgage tbe same to enable them to complete and pay for such improvements. Lardner v. Williams, 98 Wis. 514; Hannah v. Carnahan, 65 Mich. 601; Price v. Courtney, 87 Mo. 387; Kent v. Morrison, 153 Mass. 137; Zane v. Kennedy, 73 Pa. St. 182; Leggett v. Firth, 53 ITun, 152, 156; Bteifel v. Ciarle, 9 Baxt. 466, 470, 471; 4 Kent, Oornm. 147; Mills v. Banks, 3 P. Wms. 1, 9; Jackson v. Everett, 3 Shannon (Tenn.) 811, 58 S. W. 340; Williams v. Woodard, 2 Wend. 487, 492; 11 Am. & Eng. Ency. of Law (2d ed.) 1060, 1061; 22 Am. & Eng. Ency. of Law (2d ed.) 1156; Loehenthal v. Baleigh, 36 IT. J. Eq. 169, 173.
   Siebegkee, J-.

Under tbe provisions of tbe will it is unquestioned that tbe executors took tbe residue of tbe estate for tbe purpose of applying tbe net income thereof, if necessary, to tbe care and maintenance, during bis life, of testator’s son William, and of bis family, if be bad any. In their administration of tbe trust, for tbe purposes and in tbe manner set out in tbe statement of facts, they mortgaged tbe real estate for $15,000 to pay in part for tbe improvements made-on it. Tbe inquiry is whether tbe executors bad power so to mortgage tbe real estate under tbe powers conferred by tbe will. Tbe chief difficulty arises in determining whether tbe power to make disposition of tbe real estate, given in tbe will, included tbe power to mortgage it for tbe purposes of administering tbe trust witb respect to tbe care and maintenance of tbe son William. Tbe decisions on tbe subject of the right of trustees to mortgage real estate under a simple power of sale are not harmonious. Lardner v. Williams, 98 Wis. 514, 74 N. W. 346. The weight of authority seems to be that a mere power to sell, such as that of a power of attorney to sell real estate, confers no power to mortgage. 1 Tones, Mortg. § 129, and cases cited; 2 Washburn, Real Prop. § 1690, and note. But when such powers, coupled with charges upon the estate, are conferred by. wills or other instruments, and the executors are intrusted with its management to carry out and discharge such obligations, no such limitation is implied. Under such circumstances the extent of the power conferred by such words as “to sell,” “convey,” and their equivalents is to be ascertained from the intention of the donor of the power in the light of the purposes and objects of the trust as expressed in the grant.

In the construction of powers conferred for such objects we again find the decisions upon the subject irreconcilable. Some of the courts have adopted the strict construction, and hold that no power to mortgage is implied by the language granting power to sell, convey, and dispose of the real estate, for the reason that such terms negative an intent of the donor to authorize mortgaging the estate. Of this class are the following cases: Bloomer v. Waldron, 3 Hill, 361; Potter v. Hodgman, 81 App. Div. 233; Price v. Courtney, 87 Mo. 387; Parkhurst v. Trumbull, 130 Mich. 408, 90 N. W. 25; Greene v. Greene, 19 R. I. 619, 35 Atl. 1042. Other courts .adopt a liberal interpretation of such terms when employed in granting such powers, and have construed them as expressly including the authority to mortgage. This rule is followed in Pennsylvania and other jurisdictions. Zane v. Kennedy, 73 Pa. St. 182; McCreary v. Bomberger, 151 Pa. St. 323, 24 Atl. 1066; Jackson v. Everett, 3 Tenn. Cas. 811; Steifel v. Clark, 9 Baxt. 466; Rutherford L. & I. Co. v. Sanntrock, 60 N. J. Eq. 471, 46 Atl. 648; Mills v. Banks, 3 P. Wms. 1; Ball v. Harris, 4 Myl. & C. 264; 4 Kent, Comm. 345.

Tbis court in tbe case of Lardner v. Williams, 98 Wis.. 514, treating of tbe question here involved, adopted tbe rule followed in many jurisdictions of looking into tbe instrument creating tbe trust and of giving effect to tbe manifest intent of tbe donor as shown by tbe light of tbe surrounding circumstances. Tbe principle of tbis rule is that if tbe purpose of' tbe trust can be answered and best accomplished by mortgaging tbe estate, and if tbis is not in violation of tbe intention of tbe donor, then tbis method of administration is proper and within tbe grant of tbe power. Such construction was-followed in Starr v. Moulton, 97 Ill. 525; Faulk v. Dashiell, 62 TeX. 642; Loebenthal v. Raleigh, 36 N. J. Eq. 169; Waterman v. Baldwin, 68 Iowa, 255, 26 N. W. 435; Kent v. Morrison, 153 Mass. 137, 26 N. E. 427. See, also, 4 Kent, Comm. 345, and cases cited; 1 Perry, Trusts (5th ed.) § 768.

Tbe will clearly declares tbe object of tbe trust conferred on tbe executors. They were to employ tbe residue of tbe estate transferred to them so that bis son William should be-cared for and maintained in tbe manner in which be bad theretofore received “all necessary care, assistance, and comforts,” and tbe cost thereof was to .be defrayed out of tbe net income of tbe estate. To accomplish tbis purpose tbe executors were vested with tbe residue of tbe estate, after a bequest of $20,000 out of tbe personal estate to bis son Phillip,

“to bold, manage, invest, and reinvest tbe same, collect tbe rents, profits, and income arising therefrom; to make all necessary repairs, and pay tbe taxes, assessments, and insurance thereon; to lease, sell, deliver, transfer, grant, and convey the-whole or any part thereof; to invest and reinvest tbe proceeds, of sale, and generally to have, manage, and control my said estate as fully as I might, if living, do myself.”

In its terms and phraseology tbis language is significant,, showing that tbe testator intended to confer on tbe executors all necessary authority under tbe power to manage tbe property throughout William’s life so as to provide for him as tbe testator bad done in bis lifetime. It is evident that be intended to invest them with broad and discretionary powers in the control and management of the property and in the conduct of William’s affairs for his benefit. The terminology necessarily implies that the executors were t6 handle the property in such ways as they found best under the circumstances to meet the charge imposed by the will. The terms of the will and the directions it imposed negative the idea that the executors were to be limited to an absolute sale of the real estate and to reinvesting the proceeds in interest-bearing securities. Testator manifestly contemplated that they should secure the largest possible income from the estate. The accomplishment of such an object implies that they were vested with a discretion to adopt such management as they, in their judgment, found would best attain the desired result. No portion of the will indicates an intention to restrict this authority by limiting the management and the disposition of the property to any specific method.

We should look to all parts 'of the will to ascertain the testator’s intention. Taking this view of the will, we think the language, “generally to have, manage, and control my said estate as fully as I might, if living, do myself,” is an expression of testator’s intention to confer broad and comprehensive powers for the purposes of this trust, and that such language should be construed as having a significance inclusive of every meaning in which the words may be used, instead of a restricted one. It appears that the real estate held in trust yielded no income above the necessary expenses of repairs, taxes, and insurance. After it was improved, as shown, it yielded a net income sufficient to furnish the son William the care and maintenance directed and the executors were thus enabled to accomplish the purposes of the trust. In the light of these facts it seems obvious that the provisions of the will were complied with by the executors in making the improvements and that their administration was in harmony with testator’s intention that the powers granted them should be co-extensive with tbe purposes of tbe trust, and included those required to carry out tbe improvements of tbe real estate, and for tbis purpose they bad authority to execute tbe mortgage for $15,000. Tbis mortgage being valid, and there being no means of payment available, it seems obvious that tbe only way to protect tbe infant’s interest and to prevent a sale of tbe premises in satisfaction of tbis mortgage is to authorize another loan to secure money to pay it. Such a course is promotive, within tbe contemplation of cb. 300, Laws of 1899, of her interests in tbe property.

It is suggested that tbe court erred in directing that tbe ■delinquent taxes be paid out of tbe money so to be raised in tbis proceeding, because tbe law imposes tbe duty of paying them on tbe lif'e tenant. Notwithstanding such duty of tbe life tenant, tbe court may very properly direct redemption from a sale for delinquent taxes to prevent tbe issuance of tax deeds, thereby protecting tbe infant’s estate. A delay of redemption until payment could be enforced against tbe life tenant might seriously imperil tbe infant’s interests.

It is urged that tbe executors exceeded their trust in •applying more than tbe net income to William’s support. Whether or not there is a basis for such a claim is immaterial in tbis proceeding. Tbe executors bad power under the will to make tbe $15,000 mortgage, and it was proper for the court to ^order a new loan to provide for its payment to protect tbe infant’s estate from loss as threatened if it were not paid.

We discover no error in tbe record, and find that tbe order ■of tbe circuit court was well founded.

By the Court. — Tbe order appealed from is affirmed.

Oassoday, O. J., dissents.