Court Opinion

ID: 7914994
Source: CourtListenerOpinion
Date Created: 2022-09-08 22:09:53.527606+00
Date Added: 2024-06-11T16:32:45.909142
License: Public Domain

Allen, J.
(concurring specially): In the brief of appellee it is stated: “There are no intricate questions of law involved in the case and very few questions of fact.” The writer has found the question of law a perplexing one. Did the transferee, Stanfield, take the beneficial interest in the property subject to an equitable charge, or was a trust created?
More than a century ago Lord Eldon, in King v. Denison, 1 Ves. and B. 260, was troubled with the same question, and stated the distinction between a trust and an equitable charge:
“. . .. I will here point out the nicety of distinction, as it appears to me, upon which this court has gone. If I give to A and his heirs all my real estate, charged with my debts, that is a devise to him for a particular purpose, but not for that purpose only. If the devise is upon trust to pay my debts, that is a devise for a particular purpose, and nothing more; and the effect of those two modes admits just this difference. The former is a devise of an estate of inheritance for the purpose of giving the devisee the beneficial interest, subject to a particular purpose: the latter is a devise for a particular purpose; with no intention to give him any beneficial interest. Where, therefore, the whole legal interest is given for the purpose of satisfying trusts expressed, and those trusts do not in their execution exhaust the whole, so much of the beneficial interest as is not exhausted belongs to the heir: but, where the whole legal interest is given for a particular purpose, with an intention to give to the devisee of the legal estate the beneficial interest, if the whole is not exhausted by that particular purpose, the surplus goes to the devisee; as it is intended to be given to him. . . .
“There is a great difference here between a devise upon trust and a devise subject to a charge: but the object is affected much in the same way; compelling the party to make good the charge, or trust, by very similar operations, as applied in this court.” (pp. 272, 276.)
In Downer v. Church, 44 N. Y. 647, the testator died leaving a widow, but no child. By his will he “devised all his property to Church, charging it with the support and maintenance of his widow during her life.” The court stated:
“. . . The provision of the will, as stated in the case, is that the property is devised to Loren Church, subject to the support and maintenance of the widow. This language does not create a trust, it creates an encumbrance. The title to the property devised is vested in Church, charged with the support of the widow, as an encumbrance. There is no difficulty in his conveying such title as he has. The plaintiff takes it subject to the charge contained in the instrument creating the title in the defendant. . . .” (p. 651.)
*339In Morton v. Flanagan, 143 Kan. 413, 55 P. 2d 373, the testatrix died leaving no children, but left sisters. In her will she asked that her friend, Mrs. Flanagan, be appointed executrix. She directed that her debts and certain legacies be paid. The will stated: “Mrs. Lillian Flanagan is to have the distributing of this to be held as her own.”.
Did 'Mrs. Flanagan take the property subject to a charge or encumbrance? If so, she had the beneficial ownership, but the property was security for the payment of the debts and legacies.
Did the instrument create a trust? If so, the express trust was for the purpose of paying the debts and legacies. As these items did not exhaust the property, what disposition, was to be made of the surplus? Ordinarily it would go by way of resulting trust to the heirs of the testator, but if the intention was clear it could be retained by the trustee. This is illustrated by the following case.
In In re Foord (1922), 2 Ch. 519, the testator, after the payment of certain legacies, by his will provided:
“. . . All my effects including rubber and all other shares I leave absolutely to my sister Margaret Juliet on trust to pay to my wife per annum (three hundred pounds) with income tax, 1001 (one hundred pounds) to be free of income tax.” (p. 519.)
The estate was more than sufficient to pay the wife’s annuity. The court stated:
“This is a difficult case and on the border line. The question is whether the gift to the testator’s sister is a gift merely for the particular purpose of providing an annuity for the testator’s wife, in which case there is a resulting trust of the balance of the estate for the testator’s next of kin, or is not merely for that purpose, and as regards any balance belongs to the testator’s sister beneficially.” (p. 526.)
The court gave the balance of the property to the trustee. The trust did not exhaust the property, but the court found that the resulting trust that would usually arise was rebutted. The intention was clear that the trustee was to have the residue.
In Woodbury v. Hayden, 211 Mass. 202, 97 N. E. 776, the testatrix, after directing the payment of debts, etc., by her will, provided:
“. . . The balance of my estate, both real and personal, I bequeath to Joseph O. Hayden, of Somerville county and state aforesaid. The same to be used as far as necessary for the support and maintenance of my Aunt Almira Augusta Woodbury of Cambridge county and state aforesaid. . . .” (p. 205.)
When the testatrix was three years of age her mother .died and she was cared for by her aunt, Mrs. Woodbury. Her father had married *340again and for many years had lived in another state. The father had not supported the testatrix after she was ten years of age. Joseph O. Hayden, devisee in the will, was treasurer of the county, and testatrix had worked for him.
Did the will create a trust or an equitable charge? The court stated:
“. . . Was it her intent simply to provide for her aunt, then seventy-two years of age, so far as the property should be needed for that purpose, or was it her intent to give all she had to Mr. Hayden subject only to the needs of her aunt? The question, although narrow, is close and difficult. Without reciting the considerations urged by the respective counsel it is sufficient to say that the arguments appear very evenly balanced, and whichever direction is taken the path is not entirely smooth.” (p. 205.)
The court held the instrument was a trust. Hayden took the property for the particular purpose only, and the surplus went by way of resulting trust to the heirs of the testatrix.
In Crowley v. Nixon, 127 Kan. 178, 272 Pac. 104, a testator devised land to his son, but directed that the son pay certain sums within two years to the testator’s daughters. From the language of the will' the court held the son took the property upon condition. Ordinarily such arrangements are held to create an equitable charge.
For the distinctions between these various legal relationships, see Restatement of Trusts — as to a trust and an equitable charge, section 10; trust and condition, section 11; resulting trust, section 430. Where the express trust is fully performed without exhausting the trust estate, and the trustee is to keep the surplus, see section 431. I am inclined to think that Stanfield took the property in the first paragraph of the instrument as trustee of an express trust, and that the surplus, after performance of the trust, belonged to him.
The money in the bank mentioned in the second paragraph of the instrument was to be used by Stanfield to pay the expense of the last sickness and funeral expenses. Assuming the title to the money passed presently to Stanfield, it was an express trust for the purposes mentioned, and when such expenses were paid, the balance passed by way of resulting trust to the heirs of the settlor. Clearly he was not entitled to the residue.