Court Opinion

ID: 9339658
Source: CourtListenerOpinion
Date Created: 2022-12-16 19:24:12.360466+00
Date Added: 2024-06-11T17:15:19.942058
License: Public Domain

The Chancellor.
If the receipt of the trustee does not discharge the land from the trust, I should then consider the case as free from all difficulty. The interest of a grantor in a deed of trust is not analagous to the interest of a mortgagor, and is not the subject of lien or execution at law. Here was an absolute conveyance in trust for the payment of debts. It bears no analogy to a mortgage. See 1 Pow. on Mort. p. 10, note. The grantor has but a contingent, reversionary interest. The trustee holds the land in trust, first for the payment *110of the specified debts, and secondly for the benefit of the grantor, if any thing should be left after the payment of the debts. See Denn v. Dodds, 1 Johns. Cas. 160. This is not such a trust interest in the grantor, as is the subject of levy and sale at common law; a judgment at law is not a lien upon a mere equitable interest in land. 1 John. Ch. Rep. 52; 17 Johns. Rep. 350. The interest of the cestui que trust in real estate cannot be sold on an execution at law, unless where the trustee holds the title as a naked simple trust, and the whole beneficial interest is in the cestui que trust. Ontario Bank v. Root, 3 Paige, 478; Bogert v. Perry, 1 John. Ch. Rep. 52; 17 John. Rep. 350.
It may be well questioned, whether the writing of the trustee, indorsed on the deed of trust, operated to release the legal title of the trustee; it certainly does not amount to a technical release, not being under seal, and if it had that effect, it was by virtue of the receipt, expressed on the face of the writing. But suppose it did, still the release was evidently intended for the benefit of McIntyre, the money being paid by him, and he, having contracted for the interest of Grissom; and although the effect of it was to vest the legal title formally in Grissom, yet a court of equity looking to the true intent and object of the release, will regard Grissom as the mere instrument or conduit through whom the legal title was to pass from the trustee to McIntyre.
The consideration which laid the land open to the execution of the bank was paid by the complainant in good faith, with a view to perfect his own title, and to permit the bank to seize upon the mistake or accident, by which the legal title was momentarily vested in Grissom, and thus appropriate the money paid by the complainant to its own use, would be a perversion of the plainest principles of justice. It is obvious that the payment by McIntyre to the trustee, and his receipt and release, were both done and intended for no other purpose than that of consummating McIntyre’s contract of purchase from Grissom; and although the strict legal effect of the [receipt or release may have operated to clothe Grissom for the time with the naked legal title, yet this was not such an interest as could be covered by the judgment of the bank; because the payment of the money, by which the legal title reverted back to Grissom,[was made by McIntyre, which *111would, upon well settled principles of equity, create a resulting trust in his favor to that title, which a court of equity would promptly enforce. A court of equity will protect the equitable rights of third persons against the. legal lien of a judgment, and will limit such lien to the actual interest which the judgment debtor has in the estate. Kiersted v. Avery, 4 Paige, 9. In the case of Hamilton v. Smith, (2 Moll. Rep. 482,) it was held that a judgment against a person having a mere equitable title to land, does not bind the land in the hands of a third person subsequently getting the legal estate, though the holder of the judgment was a party in conveying the legal estate.
The statute of this state subjecting the interest of a cestui que trust in lands to execution, is a copy, as far as it goes, of the statute of 29 Char. 2, which has uniformly received from the English courts the construction I have laid down.
I have no difficulty in declaring, that if it should be necessary to the protection of the complainant, against the judgment of the bank, I should hold the legal title to the land in question as still remaining in the trustee, for the benefit of the complainant. A court of chancery will keep an incumbrance alive, or consider it extinguished, as may best suit the purposes of justice, and the honest intent of the parties. Star v. Ellis, 5 John. Ch. Rep. 393, and the authorities there cited. I am accordingly of opinion that the demurrer of the bank must be disallowed, and an answer filed within sixty days.