Court Opinion

ID: 6807192
Source: CourtListenerOpinion
Date Created: 2022-07-23 18:48:46.904546+00
Date Added: 2024-06-11T16:03:15.987826
License: Public Domain

On the rehearing, April 3d, 1884, Richardson, J., being present, and Lewis, P., being absent.
H. R. Pollard and J. B. Donovan appeared for the appellants.
L. R. Page and Christian & Christian, for the appellees.
The will of John Tabb charged the annuity of $3,000, given to Phillip Tabb and his children, upon the whole of the estate given to J. Prosser Tabb. It needs no argument •or authority to prove that the annuity was charged on the estate, for the charge is created by express words. See Perry on Trusts, §§ 568, 569, 570, 571. As was said in the •opinion on the former hearing: “ The estate was obviously charged in the hands of Prosser. The testator expressly declares that he shall take subject to the condition of paying this annuity out of the annual profits.” Indeed, instead ■of a mere charge, the will may be more properly construed •as giving to Philllip Tabb and his children specifically $3,000 annually of the profits of the property devised and bequeathed to Prosser.
It is true the charge is upon the “profits.” But said Lord Tenterden in Doe d. Goldin v. Lakeman, 2 B. and A. (22 E. C. L. R.), 30 : “ It is an established rule that a devise of rents and profits is a devise of the land ”; and all the authorities are to the sam e effect. See Smith v. Dunwoody, 19 Georgia, 237; Den v. Danners, 1 Spencer (N. J.), 142, 144; Anderson *331v. Greble, Ashmead, 136, 138; Earl v. Grim, 1 Johns. C. R. 494; Drasadow v. Wilde, 63 Pa. St. 190, 172; France’s Estate, 75 Pa. St. 220, 223, 224; Van Rennselaer v. Dunkin’s Ex’or, 24 Pa. St. 252. A gift of the profits of land in fee or for life or years is a gift of the land itself in fee or for life or years, and a charge upon the profits is a charge upon the lands in the same manner and to the same extent. France’s Appeal, 75 Pa. St. supra, and the other cases cited supra.
Under the will of John Tahh, the charge of the annuity is coextensive with the gift to Prosser. All the estate given to Prosser is charged with the annuity; and so long as any of it remains, the annuitants are entitled to resort to it for their annuity, and they cannot be deprived of their lien on any portion of the estate without their consent, any more than a creditor, holding several securities, can be deprived of any one of them without a full satisfaction of his debt. And so Phillip Tabb and his children having had a right, under the will of John Tabb, to charge the whole residuary estate given to Prosser, which included the three tracts, known as the “ Courthouse,” “ Glebe,” and “ Gloucester Point” tracts, they are still entitled to resort thereto, unless their right to do so has been in some way released or divested. Has any such thing taken place ?
I. The suit brought to confirm the sale of “White Marsh,” which is relied on by opposite counsel as effecting a release, was instituted for the purpose of giving a clear title to the purchaser of that tract. It relieved “ White Marsh” alone, and no other property, of the annuity. On the contrary, the charge of the annuity on the remaining property was carefully and seduously retained throughout all the proceedings. In his bill J. Prosser Tabb said he “ only proposed” that “ White Marsh” should be exonorated from the charge of the annuity, “ leaving it unimpaired as to the other estate devised to your orator, and which is of itself *332ample security for the said annuity.” This is an explicit statement in the bill at the very origin of the suit of “all that was proposed”; and all the subsequent proceedings must be read in the light of that statement in the bill. Burging v. McDowell, 30 Gratt. 242. Phillip Tabb in his answer is equally distinct. For in consenting to the sale of “ White Marsh” by the court lie expressly stipulates that it shall be “without prejudice to the annuity, which he insists is created by the will on the remaining lands of the testator devised to the plaintiff as additional security therefor.” The commissioner to whom the cause was referred, in his report expressly recognized the continuing charge of the annuity on the remaining lands. And there is not a syllable in the decree that intimates or can be even tortured into a release of the remaining land, or a restriction of the annuitants for .their annuity to the proceeds of “ White Marsh,” or mther to George Hughes’ liability for such proceeds, which he afterwards so utterly failed to meet. It would indeed have been surprising if any court could have entered any such decree. For both J. Prosser Tabb and Phillip Tabb, recognizing that the $40,000 might fail to provide for the annuity, for the double reason that it might not be paid in full, or, if paid, might not be capable of being safely invested so as to yield permanently the extraordinary income of $3,000 a year—both of which things happened—had expressly stated that the annuitants were not to take the risk of either the $40,000 being paid, or of its realizing the said income of $3,000 a year, but' that the charge of the annuity was to remain unimpaired upon the other lands as additional security therefor. Any decree, therefore, releasing such other lands would not only have been without the consent of the annuitants, but in the teeth of the express reservation of the charge by all' parties, and would have been specially improper so far as the infant children of *333PMllip Tabb are concerned, who are entitled to said annuity after their father’s death. But argument to show the folly or impropriety of such release is needless, as the decree does not contain a syllable that affects to release the remaining lands, or to confine the annuitants to “ White Marsh ” or its proceeds.
II. Were the “ Courthouse,” “ Glebe,” and “ Gloucester Point ” tracts freed from the charge of the annuity by the conveyance of those tracts made by J. P. Tabb and wife to George Hughes on the 15th day of July, 1872?
On this point the court discusses at great length, in its former opinion, the question of the obligation of a purchaser to see to the application of purchase money; and we do not question the soundness of any of the doctrines laid down on that subject. But it seems to us, we say it with all deference, that those doctrines do not control the decision of this case. For in this case there was no sale and no purchase money. The three tracts in Gloucester county were exchanged with Hughes for the New York property. And Hughes paid no purchase money to J. P. Tabb. We shall hereafter attempt to show that that transaction was not an execution of the power contained in John Tabb’s will; and, if intended as an execution, was a gross breach of trust participated in by Hughes. But if that transaction was a valid one, it is evident there is no room for the application of the doctrines touching purchase money. For the exchange accomplished both the sale and the reinvestment, the New York property taking the place of the Virginia property ; and the only question is, Whether that transaction and that investment was a valid execution of the power?
On July 15th, 1872, when there was no occasion to sell the property for any interest of the estate,' and when the annuity to Philip Tabb was being regularly paid by the purchaser of “White Marsh,” J. P. Tabb and wife, said Tabb acting individually and not as executor, and not con*334veying pursuant to the power given by the will of John Tabb or anywhere referring to such power, conveyed the three tracts in Gloucester county to George Hughes. In making the said conveyance, J. P. Tabb was not acting in the interest of the estate or to meet any necessity of the estate, but in his own interest alone, and with a view by a desperate venture and a lucky stroke to better his own fortune; but even in this he was disappointed. Por he received in exchange from Hughes, as the consideration for this conveyance of the Virginia lands, property in the city of New York heavily mortgaged; and in less than two years the New York property was sold under the encumbrances existing at the time of the exchange, and brought less than the encumbrances. And so J. P. Tabb parted with the Virginia tracts, and never received any value therefor. All of these facts appear in the record, are admitted by opposite counsel in their printed brief, are stated expressly by Mrs. Annie P. Hughes in her bill filed in this suit, and are referred to in the former opinion of this court.
It seems plain under the most elementary principles that such a transaction by an executor or trustee cannot be justified. It is one of the plainest duties of an executor or trustee to invest the trust property in such manner that it shall be safe. See 1 Perry on Trusts, §§ 452,454. He cannot embark the trust estate in speculation, or put it in imminent peril of loss. The record shows that in this case J. P. Tabb, after parting with the three tracts in Gloucester county, had no property left belonging to the. estate of any value under his control; and this Hughes knew as well as he did. And yet he took the New York property, subject to an overwhelming encumbrance, which could be foreclosed the next day, and the property sold at a forced sale and at a sacrifice. He had no means to redeem the mortgage or to protect the property from forced sale at any time the encum*335brancer might choose to make it, and he was also entirely without means to buy at such sale, or to bid up the property so as to prevent its sale at a sacrifice. This was to put the trust property in such manifest hazard and jeopardy as to constitute a gross breach of trust; and this was well known to Hughes. Dr. Tabb may have been deluded by the hope that the New York property would increase in value, and that he would make a good bargain; but this was a speculation on the value of the property. It would not have been so bad if the exchange had been made for unencumbered property; for then J. P. Tabb could have controlled the time of sale and waited for a good price; but by the transaction he entered into he placed the trust-estate at the mercy of others, who, at any time they chose, could sell him at out a sacrifice and destroy the' whole trust-estate, against which action he had no means to protect himself. And so the event proved. For the property was sold for less than the liens on it, and J. P. Tabb, instead of receiving anything, had to pay personally a deficiency on the mortgages which he had assumed when he made the exchange. The transaction presents many elements of breach of trust.
1. The power given J. P. Tabb by the will of John Tabb was to “ sell and convey,” and under that power J. P. Tabb had no power to make an “ exchange,” much less such an exchange as this, involving the whole trust estate in the danger of almost certain loss. Taylor v. Galloway, 1 Ohio, 232; City of Cleveland v. State Bank, 16 Ohio St. 268; Ringgold v. Ringgold, 1 Har. & G. 11; Waldron v. McComb, 1 Hill 111; Griffith v. Morrison, 58 Tex. 46.
2. The power expressly authorized him to sell only “ for the interest of the estate.” It is elementary that the do-nee of a power cannot exercise it for his own interest or for any motive personal to himself. But in this case, when the exchange was made, there was no occasion for it or for the interest of the estate, and Hughes knew this.
*3363. It was a breach of trust in J. P. Tabb to undertake, without some controlling necessity, to invest the trust-estate in a foreign jurisdiction, subject to foreign laws and rules of property and remote from the beneficiaries. 1 Perry on Trusts (3d ed.), § 452, n. (1); Ormiston v. Olcott, 84 New York R. 339, 343-4.
4. If J. B. Tabb was intending to act in this transaction as executor, it was his clear duty to have taken the conveyance of the New York property to himself as executor, or indentified it in some way as for the benefit of his decadent’s estate; but he took the conveyance from Hughes to himself individually, which was a breach of trust participated in by Hughes.
5. This court has repeatedly decided that a sale by an executor at a sacrifice, not demanded by the necessities of the estate, is a breach of trust in which the purchaser will be held to participate. See Pinckard v. Woods, 8 Gratt. 140; Jones v. Clark, 25 Gratt. 642; Brockenbrough v. Turner, 8 Va. L. J. 278.
If such a transaction is denounced as a breach- of trust and the purchaser held to be implicated, how much more clearly was this ruinous exchange made by J. P. Tabb, which was not required by any necessity of the estate, and by which he destroyed the whole trust estate, a breach of trust, and how much more ought Hughes, who knew all the facts and circumstances surrounding the transaction as well as J. P. Tabb himself did, to be held to have participated in such breach of trust.
Nor can Annie F. Hughes claim to be a purchaser for value and without notice of such breach of trust. The record shows that she and her trustee had full knowledge of all the facts attending the transaction. In her bill filed in this suit she does not claim or pretend that 'she was a purchaser without notice. On the contrary, she sets out expressly in her bill the facts which constituted the breach *337of trust without the slightest intimation that she was not fully apprized of them from the beginning to the end. And yet nothing is better settled than that one who claims the protection extended to a honaflde purchaser without notice, must aver that fact in express' terms and prove it. 1 Perry on Trusts, § 219; Barton’s Chan. Pr. 375; Tompkins v. Mitchell, 2 Rand. 428 ; Downman v. Rust, 6 Rand. 591.
And Annie F. Hughes, so far from doing this, has expressly averred in her bill the facts constituting the breach of trust. Indeed, the whole frame of her bill shows that its real object was to require the annuitants before coming on the lands in her hands to exhaust any property which J. P. Tabb owned. And in addition, the settlements on Annie F. Hughes were post-nuptial settlements, made by Hughes when he was heavily indebted, and they are, therefore, presumed to be voluntary and fraudulent. Fink v. Denny, 75 Va. R. 663; Hatcher v. Crews, 8 Va. L. J. 293.
III. But there is another view which is conclusive of this case, and that is that the deed of 15th July, 1872, from J. P. Tabb and wife to George Hughes was not made in execution of the power contained in John Tabb’s will, and therefore conveyed nothing but the individual interest of J. P. Tabb as residuary devisee. The said deed was not an execution of the power, for the reason that it does not appear that it was intended as an execution of the power. It is well settled by every authority on the subject that a deed will not be construed as an execution of the power, unless it is apparent it was intended as an execution; and if it be uncertain whether it was so intended, it will not be construed as an execution. 2 Perry on Trusts, § 511 c, and cases there cited; Blagge v. Miles, 1 Sto. C. C. R. 426; 4 Kent. Com. 334-5 ; 2 Washb. Real Prop. 325; Wetherill v. Wetherill, 18 Pa. St. 272. Says Mr. Kent: “ The general rule of construction is, that if there be an interest and a *338power existing together in the same person, over the same subject, and an act be done without a particular reference to the power, it will be applied to the interest and not to the power. If there can be any legal interest on which the deed can attach, it will not execute a power.” Says Mr. Perry: “ If the donee of a power to sell land have also an interest in his own right in the same land, his deed of the land, making no reference to the power, will convey only his own interest; for there is a subject matter for the deed to operate upon, excluding the power, and therefore, as it does not conclusively appear that the deed was intended to be an execution of the power as well as a conveyance of the grantor’s interest in the land, it will be held not to be an execution of the power.” This principle is conclusive of this case. For the deed of July 15, 1872, by which the three tracts in Gloucester county were conveyed to George Hughes, was executed by J. P. Tabb individually, and he united his wife with him in the deed, which is an additional circumstance to show he was intending to convey his individual interest, and not under the power. He did not describe himself as executor, or in any way refer to his power under the will. He had an interest on which the deed could operate, for he was residuary devisee of the land, and owned it subject only to the annuity ; and, therefore, according to the rule laid down by Kent; Perry, and the other authorities, his deed cannot be held an execution of the power, but must be confined to his own interest and passed his own interest alone. And when we look outside the deed itself, it is still clearer he did not intend to execute the power, for he took the conveyance of the New York property to himself individually, and personally assumed the payment of the mortgage on the New York property, which is strong evidence he was acting only in his own behalf.
*339And in addition, since the transaction was proper, if he was only affecting his own interest, but was a gross breach of trust if made by him as executor, such a construction ought to be placed upon the transaction as would make it legal, rather than one which would attribute to J. P. Tabb a departure from his power and a gross breach of trust. Nor is it a case of defective execution, which a court of equity will aid; for to call into operation this curative action of the equity court, a distinct intention to execute the power must be apparent, and no such intention appears here. Morriss v. Morriss, 33 Gratt. 79; 1 Lead’g Cas. in Eq. 375. The deed of J. P. Tabb, not being an execution of the power, conveyed his own interest as residuary devisee alone in the property, which was subject to the annuity. If any authority were needed on this point, the case of Burwell's Adm’r v. Fauber, 21 Gratt. 446, 457, is directly in point and conclusive. It therefore follows that—1st. The deed of J. P. Tabb and wife of July 15, 1872, was not an execution of the power; and 2d. That it therefore conveyed only the individual interest of J. P. Tabb to Hughes, which passed subject to the annuity.
If this conclusion is sound, it solves the case. It is evident that J. P. Tabb was only intending to sell, and Hughes to buy, the lands subject to the annuity. When he bought “White Marsh” he was careful to require the sanction of a court of equity before he would accept the title; if he had intended to get a clear title to these lands, he would have gone into court for the purpose, as he did in the case of “White Marsh.” But he did not go into court because he and J. P. Tabb both well knew that no court of chancery would sanction J. P. Tabb’s making such a transaction as executor.
What we have thus arrived at as the legal effect of the deed of July 15, 1872, is shown to have been the actual in*340tention of the parties by the evidence of George Hughes, in which he expressly admits that he took the three Gloucester tracts free of encumbrances, “excepting as regards the brother’s lien through the father’s will’’ meaning the annuity to Philip Tabb and his children. So that it seems to us if the court should hold these tracts to be free of the annuity, it would not only violate all the authorities as to the legal effect of the deed of July 15,1872, but would give to George Hughes, and those claiming under him, what the court sees from the sworn testimony of Hughes he never, intended to buy or supposed he was acquiring, and what J. P. Tabb never intended to convey or supposed he was conveying to him. And of course if by the legal effect of the deed of 15th July, 1872, Hughes only acquired the individual interest of J. P. Tabb in the lands subject to the annuity, no person claiming under him, as Mrs. Hughes does, could claim any larger or greater interest.
Lacy, J., delivered the opinion of the court.
This cause was decided by this court by a decree entered therein on the 24th of January, 1884.
On the motion of the appellees, the following order was entered herein on the 28th day of February, 1884:
“ On mature consideration of the petitions of the appellees, and of Frederick Baillen, and Evelina Mary Baillen his wife (who was Evelina Mary Tabb), to set aside the decree pronounced herein on the 24th day of January, 1884, and to grant a rehearing of this cause, it is ordered .that said decree be set aside, and that a rehearing be granted, and that this cause be placed on the privilege docket.”
The rehearing thus granted was general, and all the ques*341tions involved in the cause have been reargued by counsel on both sides, and upon mature consideration the court is of opinion to reverse the decrees of the circuit court of Gloucester for the reasons stated in writing and filed with record in this cause at the first hearing of the same, and to reaffirm the decree of this court entered in this cause on the said 24th day of January, 1884.
Hinton, J., dissented.
Former opinion and decree affirmed.