Court Opinion

ID: 6121037
Source: CourtListenerOpinion
Date Created: 2022-02-04 18:46:09.559094+00
Date Added: 2024-06-11T08:23:16.747786
License: Public Domain

Brady, J.:
There being no doubt that the trust created by the testator was void because it suspended the power of alienation for more than two lives in being, the only question to be determined on this appeal is whether such a trust is legalized and rendered valid by the power coupled with it, authorizing the trustees to sell the trust estate.
This question has not been expressly adjudicated, perhaps, in this State, and may be said to be presented herein for the first time. The argument to sustain it is ingenious, but if it were successful it would validate many trusts that have been declared prohibited and void.
It is based on the proposition that section 14 of the article relating to the creation of estates declares distinctly what is meant by the
*152suspension of the power of alienation, which is prohibited, namely, “ such power of alienation is suspended when there are no persons in being by whom an absolute fee in possession can be conveyed,” and that the testator having conferred a valid power of sale, there is a person in being by whom an absolute fee in possession can be conveyed. The answer which seems to meet the question at once, and conclusively, is that the power of sale is possessed by persons in a representative capacity, and is discretionary and limited, because it .is for the purposes of the trust only, or, in other words, to make a change in the character of the trust property for reinvestment, and therefore to continue the trust. The statute clearly means persons having an absolute and unqualified, unconditional fee by inheritance or by purchase, which can be conveyed absolutely, not only with reference to the subject of the conveyance, but to the product of its sale. The chancellor said, in Hawley v. James (5 Paige, 445), “ a mere power to exchange lands, whether such exchange is made directly or by means of a sale and new purchase, is not a power to alien the estate within the interest and meaning of the Revised Statutes on this subject.” The opinion of the learned referee against the proposition is founded upon this theory, and the further point that if the appellants’ doctrine be correct, then by the simple device of a power of sale for the purpose of reinvestment, trust estates can be limited as by the rules of the common law, during any number .of lives, notwithstanding the changes made by the Revised Statutes. If the power of sale was absolute, so that when the trustees sold they could pay over the proceeds to the cestui que trust, there might be some force in the point taken; but such is not the character of the trust here. The right to sell is part and parcel of the trust for the trust itself, and may or may not be exercised during the life of the trust. It is therefore coequal with it and for it. In Belmont v. O'Brien (12 N. Y., 105), Justice Hand, in considering the statute of trusts, said: “ In most of those cases in our courts, where the sixty-third and sixty-fifth sections were said to have rendered property inalienable, the funds, or some part of it, or the income, was to be held in trust for a period not allowed by law, and in such cases a power of sale and exchange, or of conversion for the same purpose, did not remove the objection of inalienability. But if the purpose be lawful, there can be no objection to a power of sale, under the *153express direction of the original owner and grantor given at the time he creates his trust.”
Justice Denio, in Williams v. Williams (8 N. Y., 525), and Bronson, J., in Handley v. James (16 Wend., 163), as shown by the referee, have expressed themselves to the same effect. These views may be called dicta, but they foreshadow the result of judicial investigation, and on a question of construction are authorities. In McSorley v. Wilson (4 Sand. Oh. [m. p.], 515) we have an adjudication declaring the trusts void, though coupled with the power of sale.
In Amory v. Lord (9 N. Y., 403, 412, 413) Justice Gardner said: “ In this case the trust which contained a power of sale is void, because it establishes a perpetuity which the law prohibits. The whole estate upon which it was dependent falls within it.” See, also, Field v. Field's Executors (4 Sandf. Ch. [m. p.] 528), where the same result was declared, although the trustees were authorized to sell. It seems to be quite apparent that if the trust be void the property affected by it descends to the heirs at once. (Cases supra; Beam, v. Hockman, 31 Barb., 78.) If, therefore, the trust falls, the incidental relation of the trustees falls with it. The purpose of the trust being illegal, it would follow as a natural sequence that whatever was done by the trustees to perpetuate it would be invalid also, although the courts protect trustees acting in good faith under trusts assumed to be legal. It is not necessary, however, to pursue this subject further. It seems to be beyond doubt that a power of sale, conferred upon trustees, will not sustain a trust otherwise unlawful. The judgment of the Special Term, on this subject, should, therefore, be affirmed; the learned referee having made the proper disposition of the questions involved, but the allowances objected to, except for disbursements and referee’s fees, must be excluded. No costs of this appeal to either party. Order to be settled by Justice Brady.
Davis, P. J., and Daniels, J., concurred.
Judgment affirmed, allowances objected to excluded, except for disbursements and referee’s fees. No costs of appeal to either party. Order to be settled by Brady, J.