Case Name: Mary Lloyd Tyson, and others vs. John H. B. Latrobe, Trustee, and others
Court: Court of Appeals of Maryland
Jurisdiction: Maryland
Decision Date: 1875-05-12
Citations: 42 Md. 325
Docket Number: 
Parties: Mary Lloyd Tyson, and others vs. John H. B. Latrobe, Trustee, and others.
Judges: The cause was argued before Bartol, C. J., Stewart, Brent, Miller and Robinson, J.
Reporter: Maryland Reports
Volume: 42
Pages: 325–348

Head Matter:
Mary Lloyd Tyson, and others vs. John H. B. Latrobe, Trustee, and others.
Guardian and ward — Gonsiraction of Deed of Trust — Construction of Power to Sell, as embracing a Power to Mortgage— Equitable claim of the bona fide Lender of money upon a Void security to recover from the Owners of property upon which the money has been expended, to the extent of the Improvement of said property, or Addition to its Vendible value.
Certain real estate on Lombard slreet in the City of Baltimore, was mortgaged by Vf. K. H. to G. O. as trustee under the will of N. P. T. and to R. A. T. as guardian of two infants, to secure the payment of $4500 to the trustee, and $4000 to the guardian. On the same day R. A. T. was substituted for G. C. as trustee lor said children. A second mortgage was afterwards created on the same property for $Í738.54 in favor of G. W. D. as trustee for the same children, subject to a life interest in R. A. T. who-was their . mother, and A. H. T. their father. The equity of redemption in said property was then conveyed by the mortgagor to the said R. A. T. m trust for said children upon the same trusts upon which the mortgage debt of $4000 was held by her, but with the power, “to sell, and dispose of the trust property and premises aforesaid,” and on receipt of the purchase money to convey the same to the purchaser; and after paying and discharging the mortgage liens on said property, with all interest thereon, to ' ‘apply the residue of the purchase money, if any, by re-investment in such other property as to her may seem best,” §c.; subsequently R. A. T. as trustee and as guardian, made a deed in fee of said property for the sum of $7500 upon condition, that the grantee should lease the same to her as trustee, for the term of 99 years renewable forever, at the annual rent of $450, and the same was so leased to her, as trustee under the deed from W. K. H. The leasehold interest so acquired by her, was then mortgaged by her to G-. W. D. as trustee, to secure anew to him the sum of $7738.54, he having previously released his mortgage for that amount on the fee of said property, in order that said ground rent of $450 might be placed upon the property. This last mentioned mortgaged was afterwards released, and transferred to other property in which the said infants had a reversionary interest, and the leasehold interest created as above mentioned, was mortgaged by the said R. A. T. as trustee to J. H. B. L. trustee, to secure to him a loan of $7500, ostensibly for the purpose of improving other property in which said infants were interested, and it was stated in said last mentioned mortgage, that it was made in the exercise of the power contained in the deed of trust from W. K. H. On a bill filed by said infants after arriving at age, to have said mortgage to J. H. B. L. declared null and void, and to restrain a sale of the mortgaged property under a decree passed for that purpose, it was Huud :
1st. That R. A. T. in her capacity as guardian had no power to execute said mortgage.
2nd. That no such power was conferred upon her as substituted trustee under the will of N. P. T.
3rd. That said mortgage was clearly unwarranted by any of the terms or purposes expressed in the deed of trust from W. K. H.
4th. That as a general rule a power to sell and convey does not confer a power to mortgage.
5th. That questions of this sort must depend on the peculiar circumstances of the trust, and the intention of the parties as shown by the instrument.
6th. That every deed of trust must receive a construction to effect the purposes contemplated, according to its terms and provisions
ith. That the mortgagee ought to be permitted to assert an equitable claim, if he so desire, by original bill against the complainants, for any application by the said trustee, of the money procured by said mortgage, to the improvement of other property in which the complainants were interested, so far as they may have been benefited thereby in the rendering such other property more valuable or productive to them by its permanent improvement, or addition to its vendible value.
Appeal from the Circuit Court of Baltimore City.
On the 2nd of October, 1852, William Key Howard mortgaged a lot of ground on Lombard Street, in the City of Baltimore, to George Carey, as trustee under the will of Nathan P. Tyson, for the children of Alexander H. Tyson, and to Mrs. Rebecca A. Tyson, the mother and guardian of said children, they being infants. The mortgage was to secure the payment of 84500.00 to said trustee, and $4000.00 to said guardian. On the same day Mrs. Rebecca A. Tyson was substituted as trustee, in the place of George Carey. On the 30th of June, 1853, Howard created a second mortgage on said property, in favor of George W. Dobbin, as trustee for the same children, subject to a life estate therein of their said mother and father, to secure the sum of $7738.54. On the 30th of July, 1853, said Howard, conveyed his equity of redemption in said property, to the said Rebecca A. Tyson in trust for said children upon the same trusts upon which said mortgage debt of $4000.00, was held by her, but with the power to her “ to sell and dispose of the trust property and premises aforesaid ,” and on receipt of the purchase money to convey the same to the purchaser, and “ after paying and discharging the mortgage liens on said property, with all interest thereon,” to “ apply the residue of the purchase money, if any, by re-investment, in such other property as to her may seem best,” &c.; subsequently Mrs. Tyson, as trustee, and as guardian conveyed the Lombard Street property to the Convention of the Protestant Episcopal Church,- — for the sum of $7500.00, upon condition that the grantee should lease the same to her as trustee for the term of 99 years, renewable forever, at the annual rent of $450.00, and the property was accordingly so leased to her as trustee under the deed to her from William Key Howard. ' The leasehold interest so acquired by her was then mortgaged by her to George W. Dobbin, as trustee, to secure anew to him the sum of $7738.54, he having previously released his mortgage for that amount on the fee of said property, so that the same might be unencumbered when conveyed to the Convention of the Protestant Episcopal Church. This last mentioned mortgage was released as to this property, on the 14th of February, 1857, and transferred to certain property on Hanover Street, in which said infants had a reversionary interest. On the same day, the leasehold interest created as before mentioned was mortgaged by Mrs. Tyson, as trustee, to John H. B. Latrobe, surviving trustee of the Thornburg estate, to secure a loan of $7500.00, made to her ostensibly for the purpose of improving said property on Hanover Street; and it was stated in said last mentioned mortgage, that it was made in the exercise of the power contained in the deed of trust ffom William Key Howard.
The bill in this case was filed by Mary Lloyd Tyson, sometimes called Mary Nevin Tyson, and Nannie Key Tyson, the children of Alexander H. Tyson, now of age, to have said mortgage to J. H. B. Latrobe, declared null and void, and to restrain a sale of the mortgaged property under a decree obtained for that purpose.
The Court below, (Pinkney, J.,) passed a decree dismissing the bill with costs; and the present appeal is taken by the complainants from this decree.
The cause was argued before Bartol, C. J., Stewart, Brent, Miller and Robinson, J.
Thos. W. Hall, Jr. and 8. TeacJde Wadis, for the appellants.
The Court below erred in treating the question of the validity of the appellee’s mortgage as depending wholly, (or even depending at all,) upon the language of Howard’s deed to Mrs. Tyson, of July 30th, 1853. The opinion of the Court proceeds upon the assumption apparently that all Mrs. Tyson’s powers in the premises were derived from that deed. In fact, she took nothing under it, but the mere release of her son’s equity of redemption in property, upon which she already Held a mortgage for $8500 in trust, for her daughters, as their guardian and trustee under N. P. Tyson’s will. Her fiduciary relations and powers, so far as that property was concerned, were already fixed and defined, 1st, as guardian, by the law of the State under which she was appointed, and 2ndly, as trustee, by the terms of N. P. Tyson’s will. Howard’s deed could not possibly operate to change or modify her relations, or enlarge her powers as such guardian and trustee. In neither capacity had she any power to borrow $7500 upon the Lombard Street property, which she held in trust for her children solely. The mortgage given by Mrs. Tyson, trustee, upon the Lombard Street property, to secure repayment of said loan from the appellee to her husband and herself, was absolutely and necessarily ultra vires as against the appellants and their property, and void. Dolan vs. Mayor of Baltimore, &c., 4 Gill, 394; Huntt vs Townshend, 31 Md., 336; Lowry vs. Tiernan, 2 H. & G., 34.
The Court below is in error as to the proper construction of the power contained in Howard’s deed supposing said deed to have worked any enlargement of Mrs. Tyson’s powers as trustee. The power is, in terms, a power to sell and re-invest. Ho power to mortgage or create new liens is given. It is not sound doctrine to say that a power to sell ordinarily includes a power to mortgage, for the converse is the rule. Neither is a mortgage a conditional sale. It is a security for the payment .of money. 4 Kent’s Comm., 331; 1 Sugden on Powers, 513; Stroughill vs. Anstey, 1 DeG. McN. & G., 645; Haldenby vs. Spofforth, 1 Beav., 390; Hicks vs. Hicks, 5 G. & J., 75; Dougherty vs McColgan, 6 G. & J., 275.
The Court is further in error in the application of the principle adapted to the facts. If the principle were sound, the facts would not justify its application. No encumbrances were paid off by the mortgage to the appellee, nor was the money borrowed from the appellee raised for the purpose of paying off encumbrances. It was raised according to the express allegation of the answer and the assumption of the Court below, for the purpose of completing certain hotel improvements on the Hanover Street property. There is no conceivable theory applicable to the facts, which can uphold the imposition of an entirely new burden by way of mortgage as “ a valid exercise of a power” given to a trustee, to “ raise money” by way of mortgage, “ to pay off encumbrances.”
The Court below is also in error in supposing that the complainants, in order to entitle themselves to • relief in equity, should have tendered a return of the money borrowed from the appellee. They did not borrow it. They did not authorize or consent to the borrowing. There is no evidence that the application which is alleged to have been made of the money borrowed, has enured, or ever will enure, to the pecuniary advantage of the appellants, to the extent of one dollar.
The Court erred in dismissing the bill as without equity, when one of the strongest possible cases was presented for the equitable interposition of the Court, for the purpose of doing justice, it may be, between all parties. The bill should have been retained, and opportunity given to'the appellee, if desired, to prove his right, if any, to a substituted security upon the Hanover Street property, for that which he now claims upon the Lombard Street pro perty, and to which, it is submitted, he is entitled neither in equity nor in law.
[The argument oil the facts is omitted. — Ricp.]
John K. Cowen, for the appellee.
The mortgage to the appellee of the Lombard Street property, is, to all intents and purposes, valid on several grounds.
1st. Because the power given by Howard’s conveyance of the equity of redemption is, properly construed, a power to sell and raise money to pay off the encumbrances and invest the surplus, if any; and a power to sell and raise money has always been held to include a power to mortgage. Earl of Oxford vs. Earl of Albemarle, 17 Law Journal, (Equity) N. S., 396; Stroughill vs. Anstey, 17 Jurist,, (Part II,) N. S., 243; 1 Sugden on Powers, 552; 1 Powell on Mortgages, 60-61 and 65; Coote on Mortgages, (69 Law Libr.,) 204; 4 Kent’s Comm., 339, (1st Ed.); 2 Equity Cases, Abridged, 668, pl. 19; Mills vs. Bank, 3 Peere Williams, 9; Ball vs. Harris, 4 Mylne & Craig, 264.
2nd. Because the complainants are precluded by the proceedings which authorized Dobbin to release the mortgage on Lombard Street, from objecting to the transfer of the lien to Hanover Street, which these proceedings effected.
3rd. Because, even if the deed from Howard did not in terms authorize the mortgage to the respondent, yet a Court of Equity will under all the circumstances so construe the powers which the deed conferred as to bring the mortgage within its operation. 4 Kent’s Comm., 345; Sugden on Powers, 452, 453; Skinner, 427; Moseley, 140; 2 Vesey, Jun., 336.
The distinction is between the power to sell “ out and out,” as where an attorney is appointed for the purpose of selling and paying over the proceeds, and when the sale is for the purpose of effecting ulterior purposes, expressed on the face of the instrument authorizing it. Stroughill vs. Anstey, 1 De Gex, M. & G., 635, 647.
Where an estate is devised to trustees, charged, with debts, and subject thereto upon trusts for certain parties, so that a sale, though it may be authorized and required, is not the testator's sole object, the trustees may, for the purpose, of paying the debts more properly mortgage than sell. Perry on Trusts, 719; Ball vs. Harris, 4 Mylne & Craig, 264.
Not only, however, are the complainants precluded by the facts and by the proper construction of the deed from Howard to Mrs. Tyson of his equity of the redemption in the Lombard street property, from setting up the claim they now seek to establish, in disputing the validity of the mortgage to Latrobe, but they have no standing, on the shewing of their own bill in a Court of Equity.
No principle of the law is more familiar than this, that be who seeks equity must do equity. And yet here, with a mortgage upon the Hanover street property, directed to be made to them on the petition of their mother herself, in a case where they are parties, and made under the direction of the Court accordingly, they are actually seeking to set aside a mortgage given to secure moneys borrowed for their use and on their account, with the sanction of the Court. The proceeding “ is nothing more than an attempt on the part of "the cestui que trust, retaining the purchase money, to recover the estate.”
• The least the appellants could do, to secure a standing here, would be to tender to the appellee the money they borrowed from him, interest and costs, if they desired to vacate this mortgage, — or, at any rate, to tender him the security they hold on the Hanover street property. They offer to do neither. While suggesting this point, however, the appellee does not intend to forego, at all, his claim to the mortgage on the Lombard street property.

Opinion:
Stewart, J.,
delivered the opinion of the Court.
It appears, by the proceedings in this cause, that the complainants rightfully held the mortgage executed by Wm. Key Howard, on the Lombard street property, for the sum of 08,500 — 04,000 of that amount having been derived from the will of N. P. Tyson, as legacies, in the hands of Rebecca A. Tyson, as their guardian — the remainder, 04,500, being held by her, as the substituted trustee, in pursuance of the provisions of the said will.
Mrs. Tyson, in her capacity as guardian, had no authority, by law, to execute the mortgage to the appellee, upon the property of the complainants, as her wards. The Code, Art. 93, secs. 167, 168, 173, and Biddess vs. Thompson, 2 H. & G., 120, show with what strictness the guardian must act, in the management and disposition of the property of the ward.
Kor is it pretended that the will of N. P. Tyson, under the provision creating the trust, as to the funds belonging to the complainants, confers any authority upon Mrs. Tyson, the substituted trustee, to execute such mortgage.
But the deed from Wm. Key Howard to Mrs. Tyson, is relied upon by the respondent, as clothing her, as trustee, with the power to execute the mortgage in question.
That deed conveys Howard's equity of redemption in the Lombard street property, to Mrs. Tyson, and declares the purpose of the conveyance to be to vest the property in her in trust, for the benefit of the complainants, in equal portions, until they respectively arrive at the age of twenty-one; and then the share of each to be conveyed in fee.
Under it, Mrs. Tyson held the property as trustee, for the benefit of the complainants, the cesttds que trust, who, in equity, were actually seized of the freehold.
It also conveys to the trustee, the power and authority during the minority of the complainants, to sell the property ; and after discharging the mortgages thereon, to apply any residue of the purchase money by re-investment in other property, for the uses and purposes of the trust.
The terms of the deed in question are plain upon their face, leaving slight margin for discretion in the trustee, or construction on the part of the Court, as to the purpose of the donor, or the extent of power conferred upon the trustee. Decisions of Courts in England or this country, or elementary authorities as to the construction of deeds of doubtful import, afford but little aid in the interpretation of this deed, where the meaning of the donor is so distinctly expressed. It is his intention as indicated by the provisions of the instrument, creating the trust, that must govern; that is the great controlling principle in the construction of powers. 4 Kent, 374. No specific authority was given to mortgage the property ; nor was the exercise of such a power to be reasonably implied- — such implication was not necessary for the full and complete discharge of the trust. On the contrary, it was inconsistent with the declared purposes of the trust. Without a sale was • alone contemplated, there was no grounds for the direction to the trustee,' as to the investment of any residue.
The execution of the poiiver, if exercised by the trustee, necessarily imported the absolute or "out and out" disposition of the property; the discharge of the mortgages resting thereon, from the proceeds, and the investment of the residue. Unless a sale was made, there could be no investment of a residue after the discharge of the mortgages.
This is the natural and reasonable construction to be given to the instrument.
It would not only be a loose but uncalled for construction, to undertake to give it other meaning.
There is no occasion for this, to enable the trustee fully, fairly and efficiently to discharge the trust, for the benefit of the cestuis que trust. A conditional sale, or a mortgage of the property, would practically perpetuate the trust and contravene its object, and tend to defeat the power confided to the trustee.
Such disposition of the property, would accomplish the entire perversion of the intentions of the donor.
It is clearly unwarranted by any of the terms or purposes expressed in the instrument.
It does not appear from the record, that the execution of the mortgage in question by the trustee, and the receipt of the money under it, had the slightest reference to the purposes of the trust; hut that the money was obtained for mere speculative objects ; ostensibly for the improvement of certain other property on Hanover Street, in which the complainants were interested.
The provisions of the deed creating the trust, when brought to the notice of the Courts, cannot bo disregarded.
It is their duty to see that they are fairly pursued by the trustee, especially where the right of infants or other persons under the peculiar guardianship of the Court are concerned.
A Court of Chancery has no authority to engraft upon the instrument, creating the trust, by construction, other conditions than those provided therein.
It can only afford assistance in carrying into effect, the bona fide purposes of the donor. Lowry vs. Tiernan, 2 H. & G., 34.
Whether the mortgagee under the circumstances ought to be held answerable for the application of the funds, as having liad notice of the nature of the trust and the intended misapplication thereof, constituting a breach of the trust on the part of the trustee, it is not material, from the view we have taken of the matter, to inquire.
The receipt of the money was intended for another purpose, than the discharge of the mortgage on the Lombard Street property, to wit: the improvement of the Hanover Street property, by the trustee, Mrs. Tyson.
The transaction seemed to have been founded upon the theory, thatthechange of Judge Dobbin's lien on the Lombard Street property, and its imposition upon the Hanover Street property, gratified the provisions of the deed of trust, in two particulars — the discharge of a lien on the Lombard Street, and an investment in the Hanover Street property. But independent of their having been no sale of the property, required by the deed, before such results could be accomplished; the scheme totally failed to effect any of the purposes of the deed. Judge Dobbin's mortgage on the Lombard Street property was not really discharged, but only shifted to or substituted by his mortgage on the Hanover Street property, in which the complainants held the reversionary interest; and in its place, Mr. Latrobe's mortgage, was a substituted lien on the Lombard Street property. The actual effect of which was to burden the property of the complainants, with two mortgages in place of one, both of which, to all intents and purposes operated, notwithstanding the change of the lien, as encumbrances upon the complainants; and whether it was on one parcel of property or another, could not be considered a gratification of the terms of the deed, by applying the proceeds of a sale or quasi sale of the property. If by such a process the complainants have been relieved from liens on their property, we have not been able to perceive that such has been the result.
But the respondent alleges and insists, that as the money derived from his mortgage was applied, or was so intended, to make improvements upon the property of the complainants, on Hanover Street; that ought by a Court of Equity, to be considered, a fair execution of the power of the trustees ; at all events, sufficient, to bind the complainants, and estop them from setting up any equitable claim against his mortgage.
No such authority to improve property of the complainants was given by the terms of the deed nor can it be fairly implied.
In the absence of clear and specific authority from the deed of trust; or without the sanction of a competent Court; that any power was possessed by the trustee, to encumber the property of the complainants, for the purpose of investing the proceeds in uncertain and speculative improvement of their other property, is a proposition resting upon no substantial foundation ; but is at war with all the settled principles governing the fiduciary relations between the trustee and cestui que trust.
A clear power to sell, generally for certain purposes, to wit: for the purpose of raising money, may carry the authority to mortgage, or to sell on condition; if it is apparent the purposes of the deed may be accomplished, in that mode; but it can never be inferred, in opposition to the terms of the deed, and where the nature of the trust requires a sale of the property out and out; and its absolute conversion can alone afford the means of effecting all the objects contemplated by the instrument.
Under such circumstances it is obvious the mortgage of the* property is a nugatory act, beyond the scope of the authority of the trustee, and a manifest breach of the trust.
As a general rule, a power to sell and convey does not confer a power to mortgage.
Questions of this sort must depend on the peculiar circumstances of the trust, and tire intention of the parties as shown by the instrument.
A trust with a power of sale "out and out," will not authorize a mortgage ; and a trust for sale with nothing to negative the settlor's intention to convert the estate, absolutely, will not authorize the trustee to execute a mortgage. Lowry vs. Tiernan, 2 H. & G., 34; Dolan & Foy, vs. Mayor, &c., of Balt., 4 Gill, 394; Huntt vs. Townshend, 31 Md., 338; A Kent's Com., 378; Albany Fire Ins. Co. vs. Bay, 4 Comstock, 9; Haldenby vs. Spofforth, 1 Beavan, 390; Stroughill vs. Anstey, 1 DeG. McN. & G., 645; Coote on Mortgages, 59 L. L., 80; Perry on Trusts, sec. 768; Lewin on Trusts, 315; Hill on Trustees, 714; 1 Sugden on Powers, 538.
Every deed of trust must receive a construction to effect the purposes contemplated according to its terms and provisions. The directions of the deed in question, would not be gratified in any particular, if the trustee were permitted to add another mortgage to those already resting upon the property of the complainants, and which it was the evident design of' the deed, the trustee should discharge.
This was the sum and substance of the deed, and its natural and necessary import — and it would be foreign to its purpose to engraft upon it a power ad libitum, in the trustee, to mortgage the property therein embraced. The complainants having the equitable estate and being the sole beneficiaries, cannot be prejudiced by the unauthorized acts of their trustee; and the execution of the mortgage, between the trustee and Mr. Latrobe, was clearly extra vires, and a breach of the trust. The cases of Price and Nisbet vs. Bigham's Ex'rs, 7 H. & J., 296; Tiernan vs. Poor, 1 G. & J., 216; Brundige vs. Poor, 2 G. & J., 1, referred to by respondent's counsel, relate to the jus disponendi of the wife, over her separate property, and do not illustrate the power of Mrs. Tyson as a mere trustee, in this case.
The Circuit Court ought to have declared the mortgage inoperative and void as against these complainants, and restrained the respondent from the execution of the decree of the 22nd February, 1861; a decree will therefore be passed reversing the decree of the Circuit Court, and vacating the said mortgage, so far as it might affect the Lombard Street property, belonging to the complainants ; and perpetually enjoining the respondent from the execution of the said decree.
The bill' does not charge, nor is there any proof, that there was want of good faith in the execution of the mort gage, or wilful disregard of the interests of the complainants in the premises.
(Decided 12th May, 1875.)
If the trustee and mortgagee acted under a mistake, as to the extent of the power of Mrs. Tyson to impose a lien, as trustee, on the property of these complainants, for the money advanced by respondent; and if, as alleged by the respondent, the money was applied to the improvement of the Hanover Street property, in which the complainants were and are interested; the ends of substantial justice would seem to require that the complainants should not be discharged, under the circumstances, from all equitable obligation arising therefrom.
We think the respondent ought to be permitted, without prejudice by the decree in this case, to assert an equitable claim, if he so desire, by original bill, against these complainants, for any application of the said money by the trustee, to the improvement of the Hanover Street property, in which the complainants are interested, so far as they may have been benefited thereby, in the rendering the said property more valuable or productive to them, by its permanent improvement or addition to its vendible value.
Decree reversed"