Case ID: pa_99/html/0138-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Justice Trunkey", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

McAleer’s Appeal.
    A. held certain real estate in trust for his wife for life and after her decease or remarriage in trust for her children by him. The deed of trust contained a power of sale to A. as the natural guardian of his children “ for such sum or sums of money as lie might deem best for the interests of his said children.” It also specially provided that A.’s wife should have no power of sale nor any right to dispose of the profits of the land in any other matmor than that specified by the deed of trust. A. and his wife afterwards executed a mortgage of the land, and A. then died. The mortgage being subsequently sued out, the property was sold thereunder, producing an amount greater than the mortgage debt. In a contest for the balance over and above the amount of the mortgage debt between the judgment creditors of A. and the trustee who had been substituted in A.’s place under the deed of trust. Held, that A. having executed the mortgage solely by virtue of the power of sale conferred upon him by the deed of trust the proceeds of sale under said mortgage were to be considered as belonging to the same persons and to be subject to the same trusts as the land itself, and not to A. individually, and that therefore the fund should bo awarded to the substituted trustee.
    November 7th 1881.
    Before Sharswood, C. J., Mercur, Gordon, Paxson, Trunkey, Sterrett and Green, JJ.
    Appeal from a decree of the Court of Common Fleas No. 2, of Allegheny county: Of October and November Term 1881, No. 288.
    This was an appeal by Mary Ann McAleer, trustee, from a decree of the said court, dismissing her exceptions to, and confirming the report of an auditor in the distribution of the proceeds of a sheriff’s sale of real estate.
    The facts were as follows: By indenture dated January 27th 18(H), Daniel McAleer and wife conveyed certain real to John Callaghan, who immediately re-conveyed the same to the said Daniel McAleer upon the following trust, to wit: “ In trust, nevertheless, and for the uses following, and none other, that is to say, for the sole and separate use of Mary Ann McAleer, wife of the said Daniel McAleer, while she continues the wife of the said Daniel McAleer, and in the event of bis decease before her, while she remains bis widow and unmarried, so that she alone or such person as she shall appoint, shall take and receive the rents, issues and -profits thereof, to be used and appropriated as she many deem advisable for her maintenance and the maintenance and education of the children begotten and hereafter to be begotten by the said Daniel McAleer on the body of the said Mary Aim McAleer, and in the event of the decease of the said Mary Ann McAleer, before the said Daniel McAleer, or her marriage after the decease of the said Daniel McAleer, then in trust for the children of the said Daniel McAleer aud Mary Ann McAleer, begotten and to be begotten as aforesaid, and their heirs, to take and receive the rents, issues and profits thereof, to be used and appropriated during their minority for and to their maintenance and education, and upon tlieir arrival at the age of twenty-one years, to them and their heirs forever, with power, nevertheless, to the said Daniel McAleer, the natural guardian of his said children, at any time hereafter to sell and convey in fee simple the whole or any part of the aforesaid premises and appurtenances, to any person or persons, and for such sum or sums of money as he may deem best for the interests of his said children and their heirs. And, provided, nevertheless, that nothing herein contained shall be taken and construed to authorize the said Mary Ann McAleer to sell and convey said premises and appurtenances or any portion thereof, nor to sell and convey, or otherwise, than as herein mentioned, to dispose of the rents, issues and profits aforesaid, but the same to be used and disposed of as herein limited and appointed.”
    The consideration named in said deeds was nominal, and it was admitted that the said Daniel McAleer at the time of making this voluntary settlement was possessed of considerable other estate, and was not indebted or contemplating indebtedness, so as to render it fraudulent as against creditors.
    On August 25th 1869, the said Daniel McAleer and wife, mortgaged the premises in question to Samuel Roberts, Sr., for $1,100, and subsequently, in 1871, they executed a second mortgage to him thereof for $2,800.
    Daniel McAleer died in 1873 and letters of administration upon his estate were granted to James P. Quinn. Mrs. Mary Ann McAleer was appointed by the court substituted trustee under the said trust deed.
    In 1878, John C. Bindley obtained a judgment against Quinn, administrator of Daniel McAleer, deceased, for $914.90.
    In 1879, the said first mortgage on said premises, for $1,100, was sued out, and the premises were sold at sheriff’s sale upon a levari facias for $8,000.
    Before the auditor appointed to distribute this fund, John C. Bindley claimed payment of his judgment against Daniel McAleer’s estate, with interest. This claim was contested by Mary Ann McAleer, trustee, who claimed the entire fund as trustee.
    The validity of the mortgage, under the power of sale contained in the deed of trust, w;as not questioned. But the contention arose upon the true construction to be given to the paid clause containing the power of sale — counsel for Bindley contending that the power of sale was reserved to Daniel McAleer for his own individual benefit, and counsel for the trustee claiming that the power of sale was part of the trust, and, if exercised, the proceeds were affected with the same trusts as attached to the original real estate.
    The auditor reported on this question as follows: “ As before said, the deed must speak for itself, and any trust not found in its words or necessary implications does not exist. It will be observed that the trust in the first instance is that Mary McAleer shall £ take and receive the rents, issues and profits,’ and in case of her death in the lifetime of Daniel McAleer or re-marriage afterwards, to the children £ to take the rents, issues and profits.’ This language is applicable to real estate, and could not be construed to refer to the proceeds of the same. The deed does not pretend to dispose of the proceeds in case Daniel McAleer should choose to sell the property. There is no direct trust as to them, and the words used could not bo construed as applicable to such proceeds, aside from the difficulty of raising a trust as to this fund. From the inference that the proceeds were to stand in place of the property, it is a convincing argument that the power to sell was not in execution of the trust, but intended to be used by Daniel McAleer for his own benefit and at his own will. If such bo the case, it falls within the principles of Tobin v. Gregg, 10 Casey, 446.
    “ I therefore find that J'. C. Bindley is entitled to the balance of the fund in court after paying the mortgages and costs, including costs of audit, and that the special return of the sheriff so amended should be confirmed.”
    Mrs. McAleer, trustee, excepted “to the finding of the auditor that the power of sale given in the deed wras for the benefit of Daniel McAleer and to the award to J. C. Bindley of the amount due on his judgment against Daniel McAleer’s administrator. The court, after argument, dismissed the exceptions and confirmed the report of the auditor, from which decree Mrs. McAleer, trustee, took this appeal.
    
      Bruce and Negley, for the appellant. —
    -Daniel McAleer’s purpose in making the voluntary settlement was to provide for his wife and children. There is nothing in the deed that intimates that the power of sale was to be exercised for bis own personal benefit. On tbe contrary, the power is vested in “ the said Daniel McAleer, the natural guardian of his said children,” to be exercised “ as he may deem best for the interest of said children and their heirs.” If Daniel McAleer in his lifetime had exercised the power of sale and endeavored to retain the proceeds as his own, a chancellor would have compelled him, under tbe terms of the trust deed, to account to the cestuis que trustcnt for the money.
    
      Knox <& Reed for the appellee. —
    The power of sale reserved in the trust deed is a general power, without any direct -trust expressed as to the proceeds. In such case, if the power be exercised, the proceeds form part of the assets of the settlor, subject to the demands of bis creditors: 2 Sugd. on Powers, 21; Mackason’s Appeal, 6 "Wr. 330; Tallmadge v. Sill, 21 Barb. 34; Johnson v. Cushing, 15 N. JET. 306; 4 Kent Comm. *319. There was no evidence to show that the money was raised by the mortgage for the purposes of the trust, or that Daniel McAleer used it otherwise than for his own personal benefit. He thus, by virtue of the power, exercised such acts of ownership over the property as to make the equity of redemption assets for the payment of his debts. He could not by any device put the estate beyond the reach of his creditors and still remain a beneficiary : Johnston <o. Harvy, 2 Penrose & Watts 82.
   Mr. Justice Trunkey

delivered the opinion of the court, November 21st 1881.

By deeds executed January 27th 1866, the naked legal title to the land was vested in Daniel McAleer, in trust that his wife, Mary Ann, should have the rents, issues and profits during her life, unless in case of her widowhood she should marry again, and, after her decease, or such marriage, their children shall have the rents and profits during their minority, and on their arrival at the age of twenty-one years to them and their heirs. Power was given to the trastee to sell and convey the whole or any part of the land, at any time, and for such prices as he should deem best for the interest of his children.

McAleer had previously owned the land, and it is admitted that he was not indebted or contemplating liabilities so as to make the deed void as to creditors. It is conceded that he had the right to create the trust in favor of his wife and children, and himself be the trustee. He mortgaged the premises, and he could have done this only by virtue of the power contained in the trust deed. The fund in controversy arises from sale of the mortgaged premises, and the appellee claims that in reality McAleer owned the land at and before the time of the sale.

McAleer was a mere trustee, without interest in the premises, and had no power other than to sell. He made an absolute gift of the land to his wife and children. In equity the entire estate was vested in the children of “ said Daniel McAleer and Mary Ann McAleer, begotten,” subject to the use of their mother during her life or widowhood. We are unable to adopt the view of the learned auditor, to wit: In case she survived her husband and died unmarried, there is no provision in the deed for the children, and the estate would then revert to Daniel McAleer’s heirs.” This is too strict a reading of the deed, avoiding its plain intent and the clear meaning of the language used, namely, that the children shall take the use immediately after their mother’s death, or before, should she become a widow and marry. Had McAleer’s wife died before him, and the power not exercised, at once they would have come into the enjoyment and use of their estate, and so will they if the widow marries, by the express terms of the deed; the necessary implication is, that they shall have it if the widow dies unmarried.

The power having been exercised, the proceeds of the land belong to the same persons, subject to the same uses, as did the land itself. The interest, or use, of the money belongs to them who were entitled to the rents, or use, of the land, and the omission to express in the deed that in ease of sale, the same persons should receive the interest of the money, who were entitled to the rents of the land, will not defeat the purposes of the trust. Conversion gave the trustee no interest, in the money, no power of appointment, no right of disposition for his own benefit, and will not deprive the owners of their property.

Decree reversed, and it is now considered and decreed that the money in court, less costs of audit, be paid to Mary Ann McAleer, trustee. Costs of appeal to be paid by the appellee, J. C. Bindley.