Court Opinion

ID: 7108705
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:23:53.439571+00
Date Added: 2024-06-11T16:13:39.800119
License: Public Domain

WateemaN, J.
2 — The main controversy pertains to the meaning tc be given the trust clause in the deed from Yetzer and wife to the bank. It is insisted on the part of plaintiffs that no power of sale was given the bank, and that, even if such could be implied, 'it would not include the power to mortgage. The expressed object of the conveyance was “for the purpose of securing all of the depositors of the Cass County Bank, and to be wholly and fully used for the purpose of paying all the debts of the said Cass County Bank.” When all of the circumstances are considered, the relation and situation of the parties, and that Yetzer made known to the public the fact of this conveyance, it seems impossible to resist the conclusion that he intended to vest in the trustee the power to execute the trust. No particular form of words is necessary to create a power to sell. Such power exists whenever it is apparent that it is necessary to carry out the purpose of the grantor. Perry on Trusts, section 166; Beach on Trusts, section 461. And we may say that a power to mortgage is sometimes implied in a powef to sell. Waterman v. Baldwin, 68 Iowa, 255; Pike v. Baldwin, 68 Iowa, 263; Loebenthal v. Raleigh, 36 N. J. Eq. 169. But, in our opinion, the right expressly given in this case “to wholly and fully use” this property for the purpose mentioned is an expressed gift of the power to sell or mortgage, as the trustee might see fit. The trust here was coupled with an interest. Yetzer was a large debtor to the bank. The bank needed all of its resources at its immediate command to enable it to continue business. These considerations must be borne in mind when we attempt to construe what the grantors understood and intended the bank should do in the way of using this property. To say that it could only hold it subject to the claims of creditors is to deprive the word “use” of all significance whatever. See Waterman v. Baldwin, supra, in which the power included in the right “to dispose” of ’property is considered. It is said that the use made was but partial, and that, in any event, the bank must, if it used *516the property at all, do so “wholly and fully.” This is making these words a term of limitation. They should, in our opinion, be given just the opposite meaning. They are intended to take away any restriction on the trustee’s right. It could use, and use to the fullest extent, the property, and the whole of it.
3 II. It is contended that, if there was a right to sell or mortgage, it could be done only as trustee, and the deeds made by the bank to Yetzer to enable him to make the mortgages, were not executed by it in that capacity. If the effect of the whole transaction was to create a lien which the bank had authority to give, it would certainly be inequitable to hold that the mortgagees should lose their rights because of an informality in the proceeding. This covers the point also that the mortgages were not exe-. cuted by the bank, but by Yetzer. •
4 III. Another ground of attack upon which ulaintliffs rest is that the deeds to Yetzer were not authorized by the board of directors of the Cass County Bank. It is a fact that the matter was never brought up at any formal board meeting, for the board did not often meet. The management of the bank’s affairs was instrusted to the president and cashier. These officers, with the knowledge of the directors, had so executed deeds of other real estate belonging to the bank before this time. It was the usual course of business as sanctioned or ratified by the directors. The deeds were therefore not invalid on this account. The bank is bound by the acts of these officers, done according to custom and usage; and third persons dealing with them under such circumstances, and having no knowledge of want of authority, are protected, even when authority is lacking. Minor v. Bank, 1 Pet. 46; Mining Co. v. Anglo-Californian Bank, 104 U. S. 192; Foot v. Railroad Co., 32 Vt. 633; Phillips v. Campbell 43 N. Y. 271; Whitaker v. Kilroy, 70 Mich. 635 (38 N. W. Rep. 606).
*517'5 IV. It may be admitted that in these conveyances nothing is said to 'indicate that the transactions were had for the purpose of carrying out the trust. But all the facts and circumstances show that this was the purpose of the parties. The bank was in sore need of money. The sum of eighteen thousand dollars was raised by the mortgages. The bank received it all. Plaintiffs had their share of the benefits, for there is no evidence that the bank lost any part of it in buáiness. The title to the real estate was again placed in the trustee after the money was secured. There can be no conclusion reached but that the intention was to execute, in part, the trust, and every principle of equity requires that we sustain what was done. We may say further that if there was any informality of proceeding in these various transactions, the bank, by keeping the money received, has, ratified what was done. Eadie v. Ashbaugh, 44 Iowa, 519; Goodnow v. Stryker, 61 Iowa, 261; Milligan v. Davis, 49 Iowa, 126-129. Appellants, claiming through the bank, have only its rights, for this is not a case where the act done by the trustee was something that it had no right to do under the power given. The most that can be said is that the bank had no right to raise the money in the manner it did; that is, by deeding to Yetzer, and having him execute the mortgage, instead of making such instrument itself. But this is matter of form only. If the bank is not in situation to complain, we do not see how plaintiffs can do so. Manifestly it would be unjust to gjive these appellants the land free and clear of incumbrance, and permit the bank to retain the money obtained on the mortgages also.
6 V. If we were to admit that plaintiff received no benefit from the funds procured on the mortgages, still, as'we have found the trustee had a right to create such liens, we should have to say that the mortgage creditors should be protected. They were not obliged to see to the application of the money. They did not and could not know the debts of the bank. When they paid the money to the *518trastee, their responsibility ceased. Thomassen v. Van Wyngaarden, 65 Iowa, 687; Thompson v. Lambert, 44 Iowa, 239; Andrews v. Sparhawk, 13 Pick. 393; Norman v. Towne, 130 Mass. 52; Carrington v. Goddin, 13 Grat. 587; Conover v. Stothoff, 38 N. J. Eq. 55.
7 VI. As to the issue raised by defendants Applegate, it appears that their judgments were obtained after the trust deed to the bank was executed, and after these mortgages were made. Yetzer was largely in debt to the bank when the deed was made, and the bank was indebted to its depositors. Yetzer was the owner of nearly one-half the capital stock of the bank, and on this account was liable for its debts. The depositors were, 'in a sense, creditors of Yetzer. Tie had a legal right to prefer them as he did. This principle is too well established to need citation of authorities in its support. . But counsel for the Applegates seek to take their case out of that rule by invoking the doctrine applicable to co-partnerships, that, when there are firm debts and assets and individual debts and individual assets, the latter shall be first used to pay the individual debts. This is not a ease for the application of that rule. There is no co-partnership here. The Applegates were not creditors of the bank, but of Yetzer alone. We see no reason for giving them priority over the mortgages or the claims of the depositors. Our conclusion is that the decree of the trial court must be affirmed.