Court Opinion

ID: 6122924
Source: CourtListenerOpinion
Date Created: 2022-02-04 20:09:28.334394+00
Date Added: 2024-06-11T08:23:59.608898
License: Public Domain

Gilbert, J.:
The referee has found, that in July, 1866, the defendant Nicoll, received a conveyance of certain premises situated in the city of *433New York, known as numbers one to forty Abattoir place, upon trust to receive the rents, issues and profits thereof, and after paying all taxes, assessments and other charges upon said premises to apply the rest and residue of the said rents, issues and profits to the sole and separate use of the defendant, Mrs. Reynolds, during her natural life, and after her decease upon trust to convey, etc., etc,; that Mrs. Reynolds died in 1876 and during the pendency of the action, and that the defendant Nicoll is her executor. The referee further found, that in March or April, 1873, Nicoll did, by virtue of his power and authority as trustee, employ the plaintiff to make certain specific repairs on the buildings on the trust estate; that such repairs were necessary for the protection and preservation of said buildings and to render them fit for occupation and tenantable and of use and benefit to Mrs. Reynolds; that Nicoll promised and agreed to pay the plaintiff for said repairs out of the rents issue* and profits arising under said trust; that at the time of tin employment of the plaintiff, Nicoll had no funds of the trust estatf with which to make said repairs; that the plaintiff made said repairs relying on said authority and said trust estate, and that since the debt to the plaintiff became due, Nicoll has received out of the rents, etc., of the trust estate sufficient money to pay all charges thereon, including the sum due the plaintiff. Accordingly a judgment was entered against the. defendant as trustee, and lu was ordered to pay the same out of the rents, issues and profits of the trust estate which have accrued since May 1, 1873, which were payable to Mrs. Reynolds under and by virtue of the trust deed aforesaid.
We might find fault with some of the findings, but, assuming them to be correct, the question is, whether the facts found are sufficient to create a charge upon the trust estate, and we are of opinion that they are not. A trustee cannot bind the trust estate by an executory contract. That point was expressly adjudged in Stanton v. King, by this court (8 Hun., 4), and by the Court of Appeals (MS.). The same principle as applied to executors and administrators had been frequently decided before. (Bloodgood v. Sears, 64 Barb., 76 ; Ferrin v. Myrick, 41 N. Y., 315 ; Austin v. Munro, 47 N. Y., 360.) The matter, therefore, ought to be deemed res adgudieata.
*434Tlio facts that the plaintiff made the repairs relying on the authority of the trustee, and on the trust estate, and that the repairs were necessary for the preservation of the subject of the trust, and that the trustee had no trust funds, we think, do not take the cause out of the principle stated. The reliance of the plaintiff was simply a mistaken one on his part. The law does not justify it. The necessity of the repairs relieves the trustee from an imputation that, in causing them to be made, he committed a breach of trust, but it gave no remedy to the plaintiff against the trust estate. Nor did the promise of the trustee to pay the plaintiff out of the trust fund absolve him from personal liability, or / create a lien on said fund; indeed there is no way by which a trastee can, by his own act, substitute a lien on the trust estate for expenses incurred by him in its management or preservation, instead of his personal liability for such expenses. He may, perhaps, cause expenditures to be made in fulfillment of his duty as trustee, and if he has no funds in hand to defray the same, he may make a special agreement that such expenditures shall be made on the credit of the fund, and that he shall be exempt from personal liability, except for the application of the fund to the payment of such expenditures, whensoever he can do so without committing a breach of trust, and such an agreement may be enforceable in a court of equity in a proper case. But the referee has not found, nor docs the evidence show, that such an agreement was made. The trustee did not ask to be relieved from personal liability. The’ plaintiff did not agree to look solely to the fund for his compensation. We have not seen the judgment actually entered in the case of Noyes v. Blakeman, cited by the plaintiff. The decision of the Superior Court in that case as reported, was, that “the agreement of the trustee that the plaintiff should be compensated for his services out of the rents and profits of the estate Was reasonable and just, and must be carried into effect.” And the decision was put exclusively on the ground that the trustee had an equitable lien for expenses reasonably and in good faith incurred by him in the preservation and reparation of the estate, and that he might transfer such lien to the jdaintiff. (3 Sand., 543, 544.) I infer from the opinions, delivered in the same case in the Court ol Appeals, that the judgment was affirmed upon the same grounds *435Neither court decided that a charge on a trust estate can be created by an executory contract of the trustee, however necessary or meritorious, without authority therefor in the deed of trust or judicially conferred. If the judgment entered in the case goes that length, it should not be followed as a precedent, because the subsequent cases in the Court of Appeals, which have been cited have established an opposite rule.
It is no doubt the duty of the trustee to pay all charges on the estate. But the demand of the plaintiff is not such a charge. The grantor of the trust did not intend to authorize the trustee to create charges on the estate indefinitely, and then pay them out of the trust fund. The word “ charges ” means liens or incumbrances which are jiaramount to the trust. Nor can the direction to pay all charges on the estate be construed as an authority to the trustee to make contracts which would be binding on the estate.
No cause of action against the defendant Nicoll as executor of Mrs. Reynolds has been shown.
The judgment must be reversed, the order of reference vacated, and a new trial granted, with costs to abide the event.
Dykman, J., concurred. Barnard, P. J., dissented.
Judgment reversed and new trial granted at Circuit, costs to abide event.