Court Opinion

ID: 8186444
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:08:57.809911+00
Date Added: 2024-06-11T16:40:24.057998
License: Public Domain

Maeshall, J.
A rehearing was granted in this case on one question, namely, What is the most practicable and just ■method, from a business standpoint, conformable to the law as settled in the decision rendered, of saving the estate from loss without unnecessarily varying the plan of the grantor under which all parties claim ? It needs but little attention to the language of the question to discern that the result of the motion for 'a rehearing was to leave the legal principles, upon which the decision of the court was grounded, ii’revocably closed. Nevertheless counsel for appellants assumed the privilege of going into the whole case in the re-argument, and were permitted to do so; and while what we may say now outside of the question for consideration cannot affect the result, because of the importance of the subject reference will be made to some of the learned counsel’s contentions.
It is said that the only property involved in the action was four lots, not the whole property constituting the estate; that the primary object of the action was to obtain an adjudication respecting the power of the court to authorize a sale of real estate circumstanced like that in question, so as to bar possible remaindermen; that the remainder, after the expiration of the life estate, is vested in the appellants ; that if they were of age they could sell such remain*514der without the aid of the court, and that the life tenant can do the same; hence the court went beyond the scope of the action in laying hold of the entire property and administering it.
In the first place the court is by no means bound by the object or objects in view in instituting an action, except so far as such objects are legitimate from a legal standpoint. If there be one object which is legitimate, and it be sought for the purpose of carrying out others not legitimate, however praiseworthy be the motives from a philanthropic or moral standpoint, especially if such other objects affect the interests of infants or persons unknown who are liable, on the happening of a possible contingency, to be interested, it is not only proper, but it is the duty of the court, to so guard its decree upon the primary question, that the effect of it will be in all respects legitimate. It is not within the power of counsel for one party, or both acting together, to tie the hands of the court in the exercise of its equity powers to effect justice as to any question coming within the scope of any subject presented for consideration and decision.
In the second place, the subject of the action, not any particular object counsel may have had in view, fixed the limits of the field which the court had to investigate. What was that subject ? The sale of any particular lot or lots ? Certainly not. ' Obtaining money to satisfy the personal necessities of the respondent and her children ? Certainly not. The power of the court to sell real estate of minors and use the proceeds for their maintenance? Not that. Yet the several questions mentioned have been repeatedly pressed upon our attention, both to support the judgment appealed from and obtain a change of the directions of the court as to the proper decree. The subject of the action was the necessity of a change in the form of property the title and use of, which was vested for life in one person who-appeared as plaintiff, and the residue of the title was vested *515in other persons, made defendants as representing such residue for ail parties, who might on any contingency be entitled thereto upon the termination of the particular estate. Concurrent action of the parties in whom the title was vested, without the aid of the court, could not pass a full marketable title to the property; and that seemed to be necessary in order that a part of it at least might be sold for a full value and sufficient of the proceeds used to pay off liens which jeopardized the interests of all parties. The complaint spread before the court the condition of the estate, confessing but excusing, so far as intentional wrong-doing was concerned, guilt of waste by the life tenant, setting forth the dangers which her management had created and • which threatened to take the estate away from all interested under the common benefactor; and her inability, unaided by the court, to successfully cope with the situation. The court was asked to exercise its extraordinary powers by taking hold of the entire property and applying an effective remedy. Specific methods of relief were suggested and prayed for, going more to the use of the property so as to remedy the necessities of the unfortunate plaintiff and her children than that of saving the estate from destruction. The court was by no means bound to grant relief by adopting such methods, or dismiss the action, even in the absence of a general prayer for relief. The preservation of the entire property was the subject to be dealt with, so the life tenant, in her bill, prayed, among other things, that the court would do what in its judgment might seem meet and agreeable to equity. That expressly placed the entire title to the property under the control of the court, as it was any way, from the very nature of the action and of the facts. While the principle, that the court has power, by an action in rem, to preserve property under such circumstances, disregarding the mere form of it when that appears to be necessary, was invoked, that special jurisdiction seems to have *516been, entirely lost sight of in the effort to convert the property into money and use the proceeds to alleviate, in part, the pressing necessities of the parties to the action.
In the third place, it is not true that if the appellants were of age they could sell the estate without the aid of the court. They could sell their interests in the estate, that is all. Such interests may never ripen into an absolute title or property the appellants will be entitled to enjoy. That does not seem to have been appreciated, hence the pressing necessities of the respondent, in fact of all the parties to the action, have been urged as a justification for disturbing the scheme of the settlor of the estates by taking property for the benefit of the appellants, and of the respondent as well, which does not now, and may never, belong to either of them. Who can now point to the person who will, ultimately be entitled to the estate in remainder ? What can justify such judicial proceedings as that of taking and using part of it for the benefit of a mere trustee of the title, who, by the happening of any one of several possible contingencies, may be divested of such title and it he vested in another with absolute power of enjoyment and disposal? This court has no such power. It may bar remaindermen as to the particular thing, but cannot extinguish their rights in the equivalent of the property. This is not an action for the adjudication of the rights of either party, represented before the court, in the title to the property, but an action to authorize the preservation of it in the form of an equivalent of property in some other form.
If it were true that if the appellants were of age they, joining with the life tenant, could dispose of the entire property absolutely, the simple question before the court would be whether it is for the best interests of the appellants that their property should be sold and a part of it used for their benefit during their minority. To support the power of a court of equity to do that, no reference to judicial au-*517tborities reaching back a century would be necessary, inas' much as it is amply provided for by statute.
It is said the only relief prayed for not covered by statute is the right to apply the proceeds of the estate in remainder to relieve the necessities of the minors, and to reimburse the respondent for money paid out for their use over and above her income from the life estate; that in the action she tendered a surrender of her power of appointment under the settlor’s deed, and that by such means the several estates can be united and sold and the proceeds appropriated, as held by authorities, ancient and modern. On the first part of the proposition, as we have seen, the scope of the prayer for specific relief in the complaint by no means limits the jurisdiction of the court. On the facts found and the pleadings, the trial court pronounced judgment. A general appeal from that judgment presented to this court the question of whether it was proper on the undisputed facts. Judicial inquiry was not, by any means, circumscribed by the assignment of errors. It was and is limited only by duty to examine and correct the judgment in every respect where legal principles were violated to the prejudice of the appellants or those whom they represent, so far as such violations clearly appear from the record. Appellants are minors standing as the mere representatives of a title liable to pass out of them to others in spite of anything they or the life tenant or the court can possibly do. On the second part of the proposition under discussion, it must be said that we áre not acquainted with any authority, ancient or modern, to support it. Those cited to our attention do not apply, and it is firmly established, both at common law and by statute, that a special power, tó be executed by will, cannot be executed in any other way, or be released or extinguished so as to cut off a taker not participating in the extinguishment and who is entitled to take in case the power be not executed in the manner provided by the donor of the power. The power *518may be extinguished by a conveyance by the donee and life tenant to the holders of the estate in remainder in respect to whom such donee has the power of appointment so as to give a preference of one over another; or it may be extinguished by the holder of the life estate joining with the holders of the estate in remainder in a conveyance to a third person; but the effect of such a circumstance is by no means so far-reaching as to give the vendee under the joint deed a greater title than that possessed by the vendors. If such title be defeasible, the title of the vendee will be subject to the same infirmity. If the title be liable, upon the happening of a contingency, to go over to other persons, their interests will not be affected by the conveyance. The latter circumstance, which controls the situation dealt with in this case, is what makes the proposition urged upon us unsound and the authorities cited to support it not applicable. We may conclusively point what is here said by a brief reference to such authorities.
In Matter of Bostwick, 4 Johns. Ch. 100, the proposition decided was that when the income of a sum of money is devised to a mother, and the principal sum after her death to her children, the property may, by permission of the court, be broken in upon and used in part for the present education and maintenance of the children, and to pay debts previously contracted by the mother for their past maintenance, where there is an actual necessity therefor that cannot otherwise be satisfied. It will be noted that the title to the principal sum in remainder, in that case, was in the children absolutely. To support the decision, Harvey v. Harvey, 2 P. Wms. 21, was cited, where it was said “the Master of the Polls declared that where a legacy was given to an infant payable at twenty-one, without any devise over, the doctrine indicated was proper.”
In Matter of Burke, 4 Sandf. Ch. 618, the facts were that two infant children, living with their father, had an annual *519income consisting of the use of $60,000, the principal being vested in them contingent upon tbeir reaching the age of twenty-one, otherwise in the survivor of them, and if neither Teached such, age, then over to the brothers of the mother and their issue. The question was how much the father, who .possessed but a moderate income, ought to have out' of the income belonging to the children toward their support and education. No suggestion is found in the opinion of the court of a right to break in upon the principal sum, which was conditionally vested in the daughters. In Wooten v. House (Tenn. Ch. App.), 36 S. W. Rep. 932; McKnight's Ex'rs v, Walsh, 23 N. J. Eq. 136; Wilkes v. Rogers, 6 Johns. 566; and Billingsley v. Critchet, 1 Brown, Ch. 268, the infant child or children had a fortune absolute. There was no devise over, or right of survivorship.- It was held that the ■necessities of the children might be supplied out of the property.
It will readily be seen from the foregoing brief analysis of authorities that they do not. touch the question under discussion here. The distinction between such question and ■the one we have decided here is clearly pointed out in numerous English cases, holding that if there is an estate with a devise over which may take effect on a contingency, •such estate cannot be used for the benefit of the precedent holder without the consent of the contingent devisee or vendee. Greenwell v. Greenwell, 5 Ves. 194; Fairman v. Green, 10 Ves. 45; Lomax v. Lomax, 11 Ves. 48; Errington v. Chapman, 12 Ves. 20; Errat v. Barlow, 14 Ves. 202. In Greenwell v. Greenwell, the object was the same as that sought here. ' The title was in the grandchild to be preserved and, with the. accumulations, paid to him on his arriving at the age of twenty-one, and with like limitations ■over to his sisters in case of his death under that age. The father was dead and the children sorely in need of assistance because of the character and circumstances of the *520mother. The Lord Chancellor remarked, “ I fear if I should make a decree it would be my will and not that of the testator’s.” In view of the pressing necessities of the case it was decided to make the order prayed for conditional upon consent being given by all persons who would be contingently, entitled to the property.
In Fairman v. Green, the Master of the Rolls said on the same subject, “ The court has not done this except where all the parties who are to have maintenance were equally interested, and if there was a legatee over the court has always taken the consent of such legatee.”
Again in Lomax v. Lomax, the Lord Chancellor said: “If all die under twenty-one and a child not yet in existence should come into existence and attain that age, that child clearly would take the whole, therefore I may give it to-those children (if I grant the prayer) who may never become entitled to it.” And in the same line, in Errat v. Barlow, the’ conclusion was stated, in effect, thus: ‘ If the chance of surviving is equal among all the members of the class, and there is no other interested that upon any contingency can take that will be prejudiced, maintenance, when necessary, may be allowed, but it is impossible to give it where, in any event, the property may belong, ultimately, to other persons.’
The foregoing is the settled law as far back as we find adjudicated cases on the subject. They are in accordance with reason and common sense. Any other doctrine Avould sanction confiscation and render it impossible to settle an estate upon any plan that would, in any reasonable probability, be carried out according to the scheme of the settlor. A failure to keep in mind the distinction between taking the property of an infant and expending it for his benefit, and taking property to 'which such infant has a mere naked legal title, which may go over in possession and enjoyment te-sóme other person, is what has led to most of the difficulties-. *521in tbis case. It must not be forgotten, at any step in this litigation, or i/n administering the final decree that shall T>e rendered, that plaintiff has but a life, estate, coupled with a power of appointment by will to say how the estate in remainder shall be divided between her surviving children in. whom the immediate estate in remainder is vested, in case she leaves surviving children, such children to take equally if the donee of the power fails to execute it, and the estate to go over to others specified by th'e settlor in case of there being none of the immediate remaindermen to take. While that is a special discretionary power which, by the rules of the common law, may be separated from the life estate, the settlor having failed to provide clearly to the contrary, or extinguished as to any person interested by a conveyance by such person or by a joint conveyance by such person and the life tenant to another (Lewin, Trusts (10th ed.), 125; Pin-grey, Real Prop. § 1124; 2 Washb. Real Prop. 308, 309), it cannot be extinguished so as to cut off persons not participating, or executed at any other time or in any other manner than that indicated by the settlor. When authority t© execute a power by will is given, it is exclusive, by the rules of the common law as well as by statute. Pingrey, Real Prop. 1118; 1 Lewin, Trusts (ed. 1888)., *616-; 2 Perry, Trusts, § 5115; sec. 2146, Stats. 1898.
Finally, we are referred to Ex parte Yancey, 124 N. C. 151, as conclusive — so far as the decision of the highest court of one state can be considered' conclusive on a question in the courts of another state — on the point that the life tenant and the holders of the title in ■ remainder may, joining, convey the title, notwithstanding the future birth of a child may add to the class entitled to take under the deed or will after the expiration of the life estate. A moment’s examination of the case shows that the court only held that where all the remaindermen in being are before the court, a sale of a full title may be authorized though-*522there may be possibilities as to others being ultimately entitled to participate in the avails of the property as members of the class, the property, however, to be preserved in its new form for the benefit of those ultimately entitled thereto. That is what was decided in this case. The North Carolina court, however, held that where there is a right of survivorship, as here, between members of a class, the court cannot authorize a sale at all, because the ultimate takers in that event cannot be known. That doctrine, applied here, would defeat the whole object of this litigation; but that it is wrong in part seems clear, and is demonstrated by several well-considered cases cited in our former opinion. There is no good reason for saying that the court may authorize the sale of lands where the title in remainder is vested in a class which is subject to open and let in new members, but cannot if the scheme laid in the will or deed be such that members of the class may drop out and their interests go to the surviving members thereof. The theory, as before indicated, upon which the court takes jurisdiction, is that the proceeding is in rem, and that those having the vested interests stand for those having contingent interests. In that view, whether there be a contingency which wfill increase the class, or one which will decrease it or extinguish it altogether, should make no difference, since it is the res that is being dealt with and is to be preserved unimpaired in value for the ultimate taker or takers. However, it is the settled doctrine in North Carolina that a court of equity has no power to authorize a sale of property held by a title which may be divested by the happening of some contingency and the title thereby be vested in another not in being or that cannot be known. Justice v. Guion, 76 N. C. 442; Watson v. Watson, 3 Jones, Eq. 400; Williams v. Hassell, 74 N. C. 434. It will be noticed, in examining these cases, that the only power of the court suggested was to convert property from one form into another for the pur*523pose of preserving it or to increase' its value, not distributing it so as to prejudice the possible remaindermen; and -even that was denied where the property was held by members of a class with the right of survivorship in case of a member dropping out by death.
The foregoing review of authorities cited by counsel to support the contention for a decree allowing a partial distribution and consumption of the property in question, and •citation of authorities to the contrary, with what was said in the former opinion, we apprehend, show clearly the soundness of the conclusion which was reached.
"When the danger of loss to the estate shall have been securely fortified against, there is no reason why the equivalent of any of the property that shall have been sold, and the unsold lands, should not be used so as to provide for the respondent and her children so far as such provision may be consistent with a certain preservation of the property for the ultimate takers upon the expiration of the particular estate. Whatever the necessities of the parties may be,, the court cannot break in upon the estate in remainder to relieve them, and cannot sever the life estate from the residue of the title unless it appears that there is no other practical way to administer the property under the circumstances. The fact that where by a deed or will the life tenant and the re-maindermen are left free to convey the entire title, in case of a sale made by order of the court the value of the life interest may be computed upon the basis of the expectancy of life of the life tenant and paid over to such tenant, is not very persuasive in a case like this where the interests of the. parties are not separable without a clear violation of the expressed will of the common benefactor. While the life tenant, in the instant case, is competent to sell her interest so as to separate it from the power of appointment, she has no authority to separate her estate from the estate in remainder, *524and she should not be given that power by the court without some overpowering necessity existing to demand it, because that course would substitute a mere expectancy for a certainty, contrary to one of the most important features of the settlor’s scheme. The firm adherence of the court to the legal principles indicated is by no means inconsistent with anxious solicitude to relieve the misfortunes of the parties to this action so far as power exists in the court to do so, and that solicitude has been entertained here from the first. The situation mentioned, however, cannot obscure the fact that the respondent is responsible, before the law, for the dangers which necessitate the change in the property in question which has been directed by the court. The decision of the cause, with directions made to remedy the dangers which exist and guard against a recurrence of similar dangers in the future, was intended to be for the best interests of all concerned so far as such interests could be legally conserved.
The directions made as to the decree to be rendered in the court below were not intended to, and did not, differ from the judgment appealed from so far as relates to the mere machinery of selling and conveying the property. That whole subject, as well as the handling of the proceeds of the sale, within the limits of the plan outlined by the decision, was left expressly and plainly to be administered by the trial court. There is nothing in such decision preventing a new loan upon the life estate by permission of the trial court under the directions of the trustee for the purpose of taking up incumbrances bearing a high rate of interest, bought in for the benefit of the estate, or preventing a reduction in the rate of interest on such incumbrances if found to be too high, or changing any mere matter of administration so far as the same relates to the making of a proper deed to carry out the sale, if one shall be made. So in respect to the matters *525referred to, no modification in the decision heretofore made by this court is needed to meet the objections raised on the reargument.
The subject of what change can properly and safely be made in the manner of handling that portion of the estate which will be represented by the proceeds of the four lots, in case of their sale, and the care of the residue of the estate,.from the directions contained in the former decision, has received the most careful consideration, resulting in a conclusion that the life estate ought not to be separated from the estate in remainder, but that, if respondent desires to- substitute insurance upon her life in reputable level premium insurance companies, payable to the trustee for the remaindermen at her death, in place of her liabilities to the estate, that will accumulate in the hands of the trustee by a carrying out of the directions in such decision, she may properly be allowed to do so to an amount equal to that which would go to her upon a separation of her life interest in the proceeds of the sale of the four lots, if she adequately secures the payment of the premiums upon the policios of insurance, as such premiums fall due, and also secures the remaindermen by a mortgage on her life estate in the unsold property to their trustee, the prompt payment of future 'taxes on the property, and that, in the event of her taking advantage of this privilege, the unsold property should be released from the trust created by the decree. It has been concluded to make an addition to the directions contained in the decision heretofore made, in accordance with these views, thereby practically adopting a suggestion' made by appellants’ counsel on the argument. ■ That will result, if respondent so elects, in giving the trustee for the remainder-men, insurance for such money as may be paid out of the proceeds of the property sold, for her account, a return of the unsold property to the control of the respondent, as life tenant, and in securing to her a net income of about $1,500 *526per year as the property is now circumstanced, which will doubtless be largely increased as improvident leases shall expire. No other modification of the decision of record seems advisable.
By the Court.— The directions for the entry of a decree' in the trial court are changed, by adding thereto that such decree shall further provide, in substance, as follows: The respondent may, at her election, reimburse the estate for the' money paid out for her account by life insurance on her life-placed in reputable level premium insurance companies authorized to do business in this state, to the extent of such portion of the proceeds of the property sold as would go to-ller if the value of her life estate were estimated and paid to her; the sum so used, however, to be considered an investment of property of the estate in which respondent has. a life estate, secured by the life insurance, and not a payment to the life tenant out of it, of the value of such interest. The policies of insurance shall not be accepted, however, by the trustee, unless approved by the court upon the recommendation of the trustee, and the punctual payment., by the plaintiff of the premiums that shall fall due upon the policies, and the future taxes upon the unsold and all the property of the estate, be secured by the life tenant by a mortgage to the trustee upon her life estate in such property, so laid that it will be a first lien on such estate. Upon the insurance being given and accepted, under the conditions named, the unsold real estate shall be released from, the trust created by the decree and the life tenant restored to'the control thereof as such tenant, subject to the obligations incident to that relation to- the property. Upon the insurance premiums and the taxes on all the property of the estate for any year being paid by the life tenant, the trustee shall pay to her the income of the trust fund for such year, less the expenses of administering the trust, but if she shall fail to make any of such payments, the trustee-*527shall discharge the unpaid obligations out of any portion of the trust fund that would otherwise go- to the life tenant, paying the residue, if any there be, to- her; and if there be a deficiency, he shall enforce the mortgage security upon the life estate in accordance with the terms; thereof, to recover the amount of such deficiency. No costs shall be allowed, on the rehearing, to either party, except clerk’s fees, which shall be paid by the respondent.