Court Opinion

ID: 7894111
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:51:26.974815+00
Date Added: 2024-06-11T16:32:00.692129
License: Public Domain

Bartol, C. J.,
filed the following dissenting opinion :
The question presented by this appeal is the validity of the mortgage dated February 14th, 1857, of certain property on Lombard Street, in the City of Baltimore, held by the appellee, J. H. B. Latrobe, Esq., as trustee. The mortgage was executed by Mrs. Rebecca A. Tyson, the mother of complainants, as trustee under a deed from W. K. Howard to her, dated July 30th, 1853. This last mentioned deed of trust is referred to in the mortgage, as containing a power to Mrs. Tyson of disposing of the property, and it is stated in the mortgage that the same is made in the execution of the power.
*340The validity of the mortgage is denied upon the ground that Mrs. Tyson, the trustee, had no power or authority to execute it. The question, therefore, which lies at the foundation of the case, is whether, by the true construction of the deed of July 30th, 1853, the power was conferred upon Mrs. Tyson to execute the mortgage in question, and this must be determined by the terms of the deed, and the nature and purposes of the trust thereby created. Before considering these, it may be proper briefly to state the origin and history of the title to the property. This will simplify the question and tend to avoid the confusion which has been caused by the complication of facts stated in the bill of complaint, many of which appear to me to have no material bearing upon the questions jiresented for the decision of the Court.
The Lombard Street property, described in the mortgage, was held by Nathan P. Tyson, in fee, and passed under his will, which empowered the executors to sell the estate, real and personal, for the purpose of paying legacies, and making the division therein directed. In the execution of this power, this Lombard Street property was sold by the executors, and conveyed to W. K. Howard, who took the absolute estate in fee ; discharged from the trusts declared in the will, and these are in no manner involved in the present controversy. In the division of N. P. Tyson’s estate, the complainants became entitled as cestuis que trust to $4500, being their share of the proceeds arising from the sale of the real estate, which was in the hands of George Carey, their trustee, under the will; and also to $4000 of the personalty, which was in the hands of their mother, (Mrs. R. A. Tyson,) as their guardian. These sums making $8500, were loaned to W. K. Howard, and secured by a mortgage of the Lombard Street property, executed by him on the 2nd day of October, 1852, in favor of Carey, as trustee, and Mrs. Tyson, as guardian. Afterwards,. Carey resigned the trust, and Mrs. *341Tyson was appointed in his place ; and then held as trustee and guardian, a mortgage on the Lombard Street property for $8500, for the use and benefit of the complainants, which constituted their whole interest in the property, the equity of redemption remaining in Howard ; who executed a second mortgage thereof to (x. W. Dobbin, Esq., trustee, dated June 30th, 1853, to secure the sum of $7338.54. This was the state of the title when Howard executed the deed of trust of July 30th, 1853, by which he conveyed the equity of redemption to Mrs. Tyson, in trust for the complainants. This deed was made “ for the consideration of ten dollars, and for other good causes and considerations,” and conveyed all the interest of Howard in the Lombard Street property, subject to the encumbrance of the two mortgages, before executed by him, one for $8500 and the other for $7738.54. The trusts created by the deed, and the powers therein reserved to Mrs. Tyson, the trustee, are declared and expressed in the following words:
“In trust and confidence, nevertheless, and to, for and upon the uses, and to the ends, interest and purposes following, that is to say, In trust for the proper use, benefit and behoof of Alexander II. Tyson, Jr., Mon-y Nevin Tyson, Henry Johnson Tyson a.nd Nannie Key Tyson, (the children of R. A. Tyson,) in equal proportions, share and share alike, until the said children shall respectively arrive at the age of twenty-one years, and when and as they respectively arrive at age as aforesaid, then the share or interest of him or her, shall be forthwith conveyed to them in fee: ” and with the further provision also that “in case of the decease of any of the above named children of the said Rebecca A. Tyson, under the age of twenty-one years, and without issue living, the part, share or interest of the one or more so dying, shall pass to and become the estate and property of the survivors or survivor of them, and the issue of any of them, who may have died,” and with the further proviso following, viz :
*342“ Provided, however, and full power and authority is hereby given, and expressly reserved to the said Rebecca A. Tyson, at any time during the minority of her said children, or with the approbation and consent of those of them who may have arrived at the age as aforesaid, to sell and dispose of the trust property and premises as aforesaid, at and for such price or consideration as to her may seem proper, and upon receipt of the purchase, or consideration money therefor, to execute and deliver in due form of law, one or more good and sufficient deed or deeds of conveyance and assurance to the purchaser or purchasers thereof, and after paying and discharging the mortgage liens on said property, with all interest thereon, shall and will apply the residue of said purchase money if any, by re-investment in such other property as to her may seem best, to the several and same uses, trusts and purposes as are hereinbefore expressed and declared in reference to the property hereby conveyed; the purchaser or purchasers however of the above described property, not to be bound to see, or attend to the application of the proceeds of any such sale, nor shall the hereby conveyed property or premises be in any way answerable for a misapplication of such proceeds of sale.”
Of the children of R. A. Tyson named in the deed two have died intestate and without issue, leaving the complainants as survivors.
After the execution of this last mentioned deed, viz: in January and February, 1855, the property was conveyed in fee to “the Convention of the Protestant Episcopal Church of the Diocese of Maryland,” and immediately leased by the Convention of P. E. C. to R. A. Tyson (as trustee under the deed of W. K. Howard) for 99 years renewable forever, at a rent of $450 per annum.
Dobbin’s mortgage which was temporarily released for the puipose only of admitting the ground rent to be created, was renewed by the execution of another mort*343gage for the same amount, of the leasehold estate then held by Mrs. Tyson, as trustee. The consideration paid by the “Convention of the P. E. C.” was $1500 ; and by that means, the mortgage for $8500, held by Mrs. Tyson, as guardian and trustee of the complainants, was paid and satisfied, and this sum was by her invested in a mortgage upon certain property on Hanover Street, to the same uses as were declared in Howard’s deed of July 30th, 1853. The validity of this transaction, whereby the estate was converted from fee-simple to leasehold is not assailed in the present suit. It is questioned in the bill of complaint ; but is not involved in this case, and is therefore not material to be now considered. At the time when the transaction with Mr. Latrobe took place, which is now the subject of investigation, Mrs. Tyson held as trustee for the complainants under Howard’s deed of July 30th, 1853, a leasehold estate in the property, subject to the encumbrances of Dobbin’s mortgage for $!7738.54. This mortgage was held by George W. Dobbin, Esq., as trustee appointed by a Court of Chancery, and represented funds held by him as trustee for Mrs. Tyson for life, remainder to her husband Dr. Tyson, lor life, if he should survive her, and after the death of them, remainder to the heirs of his body; with a limitation over upon certain contingencies, to the right heirs of Mrs. Mary Tyson, from whom the same was derived. By the order of the Chancery Court, Dobbin the trustee, was authorized to release the mortgage held by him on the Lombard Street property, and take in lieu thereof a mortgage for the same amount of certain jproperty on Hanover Street, which was held by trustees to the same uses and trusts last above mentioned. The object of this arrangement was to obtain the money required to complete certain improvements on the Hanover Street property then in progress. This money was obtained from Mr. Latrobe, and was secured by the mortgage now in question. The simple effect of this transaction was that *344the money used to satisfy Bobbin’s mortgage, to the amount of $7500, was borrowed from Mr. Latrobe, and the mortgage to him for that amount was placed upon the Lombard Street property, instead of the mortgage before held by Dobbin to the amount of $7738.54. Thus lessening the encumbrance upon the last named property by the sum of $238.54.
It seems to me that the argument of the appellants' counsel, that “their property has been by this proceeding subjected to an additional encumbrance,'' is altogether erroneous. The error proceeds from considering the property on Hanover Street, and that on Lombard Street, as if they were held in the same rights; while they were in fact held in different rights, and subject to trusts entirely different; and so far as this case is concerned, thejr are to be treated as altogether distinct from each other, in the same manner as if the Hanover Street property belonged to strangers, and the complainants had no interest therein. 'The investments made in the improvement of the Hanover Street property were made under the authority of the Court of Chancery, having charge of the trusts thereof. It is said that those investments have not proved safe or profitable ; but that cannot affect the rights of the parties in this case, these are the same as if those investments had proved to be judicious or profitable. The fact remains undisputed that, while the money secured by the mortgage held by Dobbin on Lombard Street, was by the authority of the Chancery Court, invested in the improvement of the Hanover Street property, and secured by a mortgage thereon, the money by which it was satisfied, and the consideration for which the Lombard Street property was released from its operation, was borrowed from Mr. Latrobe, upon the security of the mortgage now in question. It seems to me that the equities of the parties are in no respect different from what they would have been, if Mr. Latrobe had taken an assignment of the Dobbin mortgage *345instead of taking a new mortgage from Mrs. Tyson, in lieu of the Dobbin mortgage, which was released ; and it seems to me to be inequitable, under these circumstances, for the complainants now to claim to hold the property free and discharged from the encumbrance of the appellee’s mortgage. This claim on their part, is placed by their solicitors upon the technical ground, that the power of Mrs. Tyson, as trustee under the deed from Howard, was to “sell the property out and out, pay off the encumbrances, and re-invest the residueand that she had no power to execute the mortgage to the appellee; and consequently the same is invalid and inoperative.
If I am right in the view before expressed, that the substantial effect of the arrangement was to satisfy the existing encumbrance, and to substitute in its place another for a less amount, there could certainly be no just or valid ground of objection to the transaction. But apart from this consideration, I am of opinion that the execution of the mortgage in question was within the power given to the trustee by the deed of July 30, 1853. By the terms of that deed, which have been before recited, the trustee was directed to hold the property, subject to the encumbrances, for the use of the parties named, and to convey to them, as they may respectively arrive at the age of twenty-one years, the share to which each may be entitled. From this it appears that it was not the intention of the donor that the estate should be converted into money, nor is there anything to be found in the nature and purposes of the trust to require a sale of the property “ out and out.” The power to sell is conferred on the trustee, in her discretion, who is directed, in case of a sale, to pay off the encumbrances and to re-invest the residue, if any, to the same uses. I cannot perceive any good reason why it was not a valid exercise of this power, for the trustee to execute the mortgage to the appellee, which was a mere substitution of one mortgage for another.
*346The power to sell implies or includes a power to mortgage, unless thereby the objects and purposes of the trust would be defeated. In the early case of Mills vs. Banks, 3 Peere Williams, 1, (decided by Lord Macclesfield, in 1124,) it was held that et a power to sell implies a power to mortgage, which is a conditional sale.” In Ball vs. Harris, 4 Myl. & Cr., 264, (decided in 1839,) Lord Oh. Nottingham said “'‘So long ago as the case of Mills vs. Banks, it seems to have 'been 'assumed as settled, that a power to sell implies a power to mortgage, which is a conditional sale, and no case has been quoted throwing any doubt upon that proposition.” (p. 269.) In that case the trustee was empowered to sell to pay debts and to re-invest in other lands.
In Haldenby vs. Spofforth, 1 Beavan, 391, the trust was under a will, which directed the trustee to make sale and dispose of all the testator’s real and personal estate, and to apply the moneys to arise and be jtroduced from the sales of his real estate, and from the rents, .issues and profits thereof, in the meantime, and until such sales should be made and perfected, and the money arising from the personal estate, in the first place, to the payment of his debts, next to raise the sum of £3000, the interest whereof was to be paid to his wife for life, and after her death to be applied in the same way as the residue of the proceeds of the sales; and in the next place, to pay to each of testator’s three daughters the sum-of £1200 ; and “ as to all the residue of the moneys to arise, be produced and got in as aforesaid,” to divide the same between his six sons. The devisees in trust executed a mortgage of a part of the lands. The Master of the Rolls (Lord Langdale) decided that the trustees were not authorized to mortgage, there appearing a clear intention on the part of the testator, that his whole estate should be converted.
Where the object is to pay off the encumbrances, it is settled that a power to sell implies a power to mortgage. *347Many cases might be cited in support of this proposition. Hill on Trustees, 742, and note; 1 Sugden on Powers, 513 m.
In The Earl of Orford vs. the Earl of Albemarle, 26 L. J. Equity, 396, the trustee was empowered to sell, and apply the proceeds in paying off certain encumbrances upon the settled estates, as well as upon other family estates. It was held by Sir L. Shad well, Y. C., that the trustee was authorized to raise the sums required by mortgage of the estates.
In the recent case of Stroughill vs. Anstey, 1 DeG., McN. & G., 635, (decided in 1852,) the Chancellor, Lord St. Leonards, in a very able opinion, reviews the authorities, and while he decides that in the particular case before him the power of the trustees, who were directed to sell, did not authorize them to mortgage the estates; for the reason that the purposes of the trust required that the property should be converted by a “sale out and out.” Yet he expressed his approval of the decision in Ball vs. Harris, and said, “My own opinion is, that generally speaking, a power of sale, a power of sale out and out, for a purpose, or with an object beyond the raising of a particular charge, does not authorize a mortgage; but that where it is for raising a particular charge, and the estate itself is settled or devised subject to that charge, there it may be proper, under the circumstances, to raise the money by mortgage, and the Court will support it as a conditional sale, as something within the power, and as a proper inode of raising the money.”
The rule established by the authorities on this subject is thus succinctly stated in Hill on Trustees, 742, (4th Ed.)
“A power for trustees to sell, will authorize a mortgage by them, which is a conditional sale, wherever the objects of the trust will be answered by a mortgage; as for instance, where the trust is to pay debts, or raise portions. But where the trusts declared of the purchase money, show that *348the settlor contemplated an absolute conversion of the estate, a mortgage will he an improper execution of the power.”
Now, recurring to the terms of Howard's deed, I do not find in its provisions any intention that the property should he converted into money by a sale “ out and out.” Nor is that required in order to accomplish the purposes of the trust. The estate is settled subject to encumbrances. The power to sell is not given for ulterior purposes, requiring an absolute conversion of the property, in order to answer the objects of the trust; and therefore, I am of opinion, the trustee had power to execute the mortgage in question; and that the decree of the Circuit Court ought to he affirmed.