Case Name: Iverson et al. vs. Saulsbury, Respess & Co.
Court: Supreme Court of Georgia
Jurisdiction: Georgia
Decision Date: 1882-02
Citations: 68 Ga. 790
Docket Number: 
Parties: Iverson et al. vs. Saulsbury, Respess & Co.
Judges: 
Reporter: Georgia Reports
Volume: 68
Pages: 790–802

Head Matter:
Iverson et al. vs. Saulsbury, Respess & Co.
[This case was argued at the last term, and the decision reserved.]
While a chancellor sitting at chambers, on full notice to all parties, may order a sale of trust property, he has no power to grant authority to a trustee to mortgage a trust estate, and a mortgage so given will not bind the cestuis que trust.
(a.) We do not decide that a court of chancery in term time might not grant authority to encumber a trust estate.
Trusts. Powers. Courts. Mortgages. Before Judge Simmons. Bibb Superior Court. April Term, 1881.
Reported in the decision.
Lyon & Gresham, for plaintiffs in error.
Hall & Son, for defendants.

Opinion:
Speer, Justice.
Benjamin V. Iverson, as trustee for Mrs. Juliet A. Iverson and her children, petitioned C. B. Cole, judge of the Macon circuit, stating that the income of the trust estate held by hihi for plaintiffs in error was inadequate to their support and maintenance, and it was necessary for him to raise means for their support and to preserve and protect the' corpus of said estate, and the only way to do this was to negotiate a loan secured by mortgage on the house and lot, in the city of Macon, occupied by himself and family, and held by him as trustee. He, therefore, prayed for an order authorizing him to execute a mortgage upon the trust property specified to secure the payment of his note for the sum of $1,725.00. On the 9th June, 1866, Judge Cole, at chambers, appointed George W. Hardie, guardian ad litem for James S. Iverson, a minor son. He accepted the appointment, and united in the petition to have said loan negotiated and mortgage executed. On the nth June, Juliet A. Iverson and said Hardie, guardian ad litem, consented to the petition, and asked that it be granted. It was then, and on their statements, that the order was granted by Judge Cole. On the same day, B. V. Iverson, as trustee for his wife, Juliet A., and her children, executed a mortgage deed to James E. Graybill, on city lots 5 and 6, in square 70, to secure the payment of a note by B. V. Iverson, as trustee, for the sum of $1,725 00, payable six months after date. The mortgage was duly recorded, and payments made thereon to the amount of $1,306.00.
James Graybill-afterwards petitioned for the foreclosure of the mortgage on the property, in Bibb superior court, against B. V. Iverson, the trustee, who accepted service on the rule nisi. At April term, 1873, a rule absolute was allowed, foreclosing said mortgage for the sum of $1,046.33, with interest. Subsequently the fi. fa. issued from the judgment of foreclosure was transferred to defendants in error, and levied on lot 6 in square 70 as part of the mortgaged premises, and advertised for sale.
Whereupon Juliet A. Iverson, and her son James S. Iverson, the only beneficiaries, filed their bill in Bibb superior court, alleging the property levied on was held under a deed from- Samuel F. Dickerson, trustee, to B. V. Iverson, as trustee, for the sole and separate use of his wife, Juliet A., for life, with remainder to her children, which was but a reinvestment of money held by Benjamin V. Iverson, trustee, from the sale of a house and lot in Columbus, secured to the like uses by the will'of James Smith, the father of said Juliet A., the said lot being the residence of said cestuis que trust, and the only home they had, and that the money received on said mortgage, by said Iver-son was not applied to the uses or benefits of said trust, but was employed and put to his individual use, in farming on a plantation which he was carrying on on his own account, in Houston county. An injunction is asked for on the ground that B. V. Iverson, trustee, had as such, no power to execute said mortgage; that it was not a charge on the property, but a mere nullity; that it was not properly foreclosed ; no rule nisi as required by law ;. it was not signed by the court, or entered upon the minutes ; cestuis que trust were not made parties on the proceeding to foreclose ; the debt was not the debt of the trust estate, but of B. V. Iverson, individually.; that the mortgage deed, debt, etc., were clouds upon complainants' title. The purpose was to remove said cloud, to quiet, protect and insure said title against the debt and mortgage fi. fa., and have them declared void and of no effect, and to have the defendants enjoined accordingly.
To this bill defendants demurred on the grounds:
(i.) There was no equity in the bill.
(2.) That they had an adequate remedy at law.
(3.) Because James Iverson has no interest in the subject matter, and is an improper party.
(4.) Because B. V. Iverson is not a party to said bill.
(5.) Because Juliet Iverson has an interest in said property which she can mortgage, and she is estopped by the proceedings from disputing the validity of the mortgage.
The demurrer, on argument had, was sustained by the court, and complainants excepted, and assign the same as error.
The main question involved and relied upon by counsel for plaintiffs in error, is that the judge at chambers had no authority to sanction or authorize the execution of this mortgage upon the trust property, but that the order is void.
He insists that this being a simple trust for the sole and separate use of the wife for life with remainder to the children in fee, and with no special powers to the trustee, he could neither make this mortgage so as to constitute a charge upon this trust, nor did the judge of the superior court at chambers have any authority under the statute to confér such power on the trustee. It is a general rule, that trustees are not authorized to create any lien upon the trust estate, except such as are given by law. Code, §2335. It is admitted that there is no special power conferred upon- the trustee under this deed to execute this mortgage, but defendants in error rest their authority for the execution of this mortgage deed alone upon the order of Judge Cole, granted at chambers with the consent of the cestuis que trust under the act of 1853-4. Before the act of 1853-4 it was held by this court in the case of Arrington vs. Cherry, 10 Ga., 429, that a judge at chambers has no power, upon petition, to order a sale of trust property. "Chancery jurisdiction is conferred," said the court," in this state upon the superiof courts, and not upon the judges thereof." Subsequently to the rendering of this decision, which was pronounced in the year 1851, the legislature passed an act in 1853-54, which we find embodied in the Code, §2327, in the following language : "A trustee, unless expressly authorized by the act creating the trust, or with the voluntary consent of all the beneficiaries, has no authority to sell or convey the corpus of the trust estate, but such sales must be by virtue of an order of the court of chancery upon a regular application to the same. Such application may be made to the-judge in vacation on full notice to all the parties in interest, and the order for. such sale may be granted at chambers, the proceedings to be recorded as above provided, on application for appointment of trustee."
By the acts of 1853-54-55-56, thus codified, it will be seen that the judge may at chambers, on full notice to all the parties at interest, or to use the words of the original, act, 1853-54, pages 59 and 60, "where all parties in interest are represented and consenting and where there is no question of fact in dispute, the. judges of. the superior court are authorized to make and pass all orders and decrees in relation to the appointment and removal of trustees and the sale and division of trust or other property, or the investments of trusts or other funds."
Section 249 of the Code further declares, "said judges. cannot exercise any power out of term time except the authority is expressly granted, but they may, by order granted in term, render a judgment in vacation."
The power given by express statute to the judge in vacation acting as chancellor, seems under the act of 1853-4 to be limited to the appointment and removal of trustees, sale and division of trust or other property, or the investment of trusts or other funds. No authority is conferred upon him by order at chambers to charge a trust estate with liens or mortgages, and unless this power is conferred expressly he is forbidden to exercise such a power out of term time. We cannot see that the powers conferred on the judge under the acts recited gives any power to the judge at chambers to authorize a trustee to borrow money, make a mortgage, or create any change upon the trust estate.
The object of the act of 1853, seems to be to provide a speedy method for the appointment and removal of trustees, sale, division of trust property and investment of trust funds, and in this way in proper cases to benefit and promote the objects of the trust. This power thus conferred by statute is limited, and can be exercised only in the cases and mode prescribed by the legislature. Gray vs. Hart, 3 Sum., 339; 8 Howard, 441. We would not be understood as ruling that, on a proper case made, a court of chancery, which is the superior court sitting in term, would not have authority to charge a trust estate by a mortgage lien or allow the trustee to raise money on the same for the preservation or protection of the corpus of the estate, but we do not find any authority of that kind conferred by law on the judge at chambers under the act heretofore recited. It is insisted a power to sell necessarily includes the power to mortgage. But the Code provides that authority to act in chambers must be expressly granted. A contrary doctrine was likewise declared in 16 Beav, 400; 38 Barb, 473; 10 Barb, 522. Perry on Trusts, sec. 768.
" So a simple power to sell will not authorize a partition." Hill on Trustees, 476; 11 Vesey, 467. "Trustees with power to sell cannot grant leases." Hill on Trustees, 476; 8 Simon, 217; 3 Day, 389.
These views, in favor of this construction, given to the act of 1853 and 1854, under which it is claimed the judge at chambers authorized the execution of this mortgage, are strengthened by the rulings of this court in the case of Milledge vs. Bryan, 49 Ga., 397, in which it was held that the judge at chambers had no power by virtue of this act to order the sale of property belonging to minors, unless it was held by them in trust or was within equity jurisdiction by reason of some pending litigation in a court of equity. A like decision sustaining the last was rendered also in the case of Knapp vs. Harris, 60 Ga., 399.
If the order granted by the judge at chambers was void for want of authority, it is as though the mortgage was executed by the trustee alone. There is no special power in the deed to this trustee that gives him any authority either to sell or mortgage. The Code, §2335, denies to trustees the authority to create any lien upon the trust estate, except such as are given by law, and in construing this provision of the Code in the case of Taylor & Co. vs. Clark, 56 Ga., 309, Judge Warner, in delivering the opinion of the court, said: " We are not aware of any law in this state that gives to a trustee authority to create a'lien upon the property of the trust estate."
. As to the demurrer made that B. V. Iverson was not made a party defendant, this can be easily remedied by amendment. We are of opinion that the judge, under our view of the law erred in sustaining the demurrer and dismissing complainant's bill.
Let the judgment below be reversed,