Court Opinion

ID: 6510682
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:22:04.766629+00
Date Added: 2024-06-11T15:54:31.291107
License: Public Domain

SOMERVILLE, d.
— The equity of the bill in this case depends, mainly, upon the determination of one question; and that is, whether the improvements made, by Mrs. Con-niff, as trustee under her husband’s will, upon a vacant lot in the city of Montgomery, were of such a character, and made under such circumstances, as to constitute, in her behalf, a charge on the trust property so improved, or on its rents and profits. It may be conceded, that if she is entitled to reimbursement, her equity may be subjected to the satisfaction of appellant’s judgment, in as much as she has been, as shown by the averments of the bill, pursued to insolvency in a court of law, — the remedy thus afforded being in the nature of an equitable garnishment.
The principle is well settled, both in this State and elsewhere, that the contracts of trustees, executors, administrators and guardians, apart from statutory provisions to the contrary, impose upon them a personal liability merely. The creditor, so contracting, must look to them alone for payment ; and if the contract is made under the authority of the trust, or in obedience to its duties, they, as trustees, can look to the trust estate for reimbursement by the beneficiaries in a court of equity. — Bailey v. Mundin, 58 Ala. 104; Sanford, v. Howard, 29 Ala. 684; Jones v. Dawson, 19 Ala. 672; 2 Perry on Trusts, § 485; Law of Trusts, Tiff. & Bull., 583; Code (1876), § 3747.
The will of the testator, in this case, obviously constitutes his wife a trustee, authorizing his estate to be “ kept together” in her possession, and the rents and profits to be appropriated for the support of herself and children. Power is also conferred to sell the trust property, and re-invest the proceeds in other property, at discretion. In 1872, she made a contract with Dickinson to construct a dwelling-house, with four rooms, and a kitchen, upon a vacant city lot, a part of the trust property, — he furnishing the lumber and other material. The lot was worth $500, and the cost of the improvements was about $2,200. The value of the lot, as improved, is averred to be $2,500, and its rental value $300. The bill seeks to subject either the property or the rents to an unpaid balance of about $900 on complainant’s judgment.
We do not think the complainant was authorized, under *584these circumstances, by the terms of the trust, to make the improvements in question; and she can not, therefore, claim reimbursement for them. It is said in Perry on Trusts, vol. 2, § 526 : “ If the trustees have the possession, control and management, they may make necessary repairs; but, without some general or special authority, they can not enter upon large improvements.” The principle is thus stated in Hill on Trustees, * 429 : “ Trustees, who are invested with general power of management, will be justified in laying out money in the repairs and improvement of the property, such as draining, building farm-houses, .&c., manuring, and other similar works. But, 'without -any general authority, or a special power, they would run the risk of having the payments disallowed, if they ventured to make such an application of trust funds.” And again,' in Lewin on Trusts and Trustees : “ A trustee, clothed with a trust to manage real estates for the benefit of a person absolutely entitled, but incapable from infancy or otherwise to give directions, may make repairs. But he must not go beyond the necessity of the case, as by ornamental improvements, or the expense will not be allowed.”
These general principles are illustrated, in their appropriate application, by the adjudged cases. In Green v. Winter, 1 John. Ch. 27 (7 Amer. Dec. 475), a trustee was authorized to, sell land, to raise money to pay off the incumbrances, &c. He, in the best faith, cleared land, and constructed houses and mills upon the trust property. For these expenditures he was refused allowance, on the ground that they were not within the purview of the trust. It was said by Chancellor Kent : “ To tolerate such wide deviations from the nature and terms of the trust, would be creating a most dangerous precedent. It would be placing trust property in the greatest jeopardy, and, perhaps, incumbering it with burdens too grievous to be borne.” He further added, that “it is the established doctrine, that; a trustee can only be allowed for necessary expenditures”; citing, in support of the proposition, Fountain v. Pellet, 1 Ves. jr. 537.
In Wykoff v. Wykoff, 3 Watts & Serg. 481, the court refused to allow a trustee for improvements, on the ground that they “ were not such as were necessary to the occupation and profitable enjoyment of the land.” It was forcibly suggested, that the operation of such a rule “ might be, in effect, to permit the cestui que trust to be improved, out of all claim to the land.”
Bostick v. Blakeny, 2 Bro. 653, was a case of trust to purchase land; and the land was purchased, and money expended by the trustee in repairs, and also improvements *585wliick were substantial and lasting. The sanction of the chancellor to the investment was refused, on the ground that, such a misapplication of the trust funds was unauthorized.
In Bellinger v. Shafer, 2 Sand. Ch. Rep. 293, the conveyance of a farm was made in trust for “ the support, maintenance and education” of certain children of the grantee. The father of the beneficiaries made improvements on the farm, by the erection of buildings, which was done by the express authority of the trustees. The expenses thus incurred were disallowed, though admitted to be a case of hardship, on the ground that it was unauthorized by the terms of the trust; and, furthermore, on the principle, that one person could not become the creditor of another, without the assent, express or implied, of the latter.
Permanent improvements, were, however, authorized in Cogswell v. Cogswell, 2 Edw. Ch. 231, under circumstances somewhat anomalous. Trustees under a will were there empowered to invest trust funds, already on hand, in erecting ware-houses on a vacant parcel of land. The action of tlie court was justified by the fact that municipal improvements had been made in close proximity to the land sfnce the testator’s death, whicli he could not have anticipated and it thus became afterwards practicable, by erecting such improvements, to lease the property for a permanent i¡erm at a high rent. We can not see that the principle of that case is at all unsound, when guarded by proper precaution.
The case of Hassard v. Rowe, 2 Barb. (N. Y.) 22, is a strong authority, however, to the contrary. A bill was there filed by a guardian, to enforce reimbursement out of his ward’s real estate, for money advance'1 for improvements. The property was situated in New York city, and was insured for $3,000. It was destroyed by fire; whereupon, the complainant, in good faith, erected two houses on the lot thus made vacant, in the construction of which he expended about $1,500 of his private funds, in addition to the money collected irom the insurance company on the fire policy. The relief sought was denied, with the remark by the court, that, among the numerous authorities cited by counsel, not one had been referred to, in which' the rule had been so far extended as to embrace a case like the one then at bar.
A careful investigation of this question leads me to believe, that the cases are rare and exceptional, where courts have authorized large improvements to be made upon trust property, even as a judicious investment of cash funds in. the hands of the trustee. But I have found no case in the books, where the trustee has been permitted to borrow money, or contract a large debt on credit, for such a purpose, and *586seek reimbursement out of either the corpus or the rents of the trust property. I should fear to establish such a precedent, as it might tend to encourage perilous speculations on the part of incautious trustees, and lead to consequences often hazarding the very existence of the principal of the trust fund itself. And it is manifest that the evil would be aggravated, where the authority is first usurped by the trustee, and the sanction of the court is afterwards solicited to give to this act retrospective validity. — Miller’s Estate, 1 Penn. St. Rep. 326.
We. are not to be considered, in these views, as denying the well-established doctrine, that a trustee should always be remunerated for necessary improvements, rendering permanent benefit to the estate of the beneficiary, unless prohibited expressly, or by the clearest implication, by the terms of the trust. — Myers v. Myers, 2 McCord’s Ch. 214; 16 Amer. Dec. 648.
The demurrer was properly sustained, so far as concerns all of the defendants to the bill, except Mrs. Oonniff. We see_no reason why the interest personally owned by her in the trust property can not be reached in this suit, and made liable to complainant’s claim, unless exempted from legal process, and such exemption is asserted in proper form and time. The chancellor erred in not allowing the bill to be retained for that purpose, and his decree is reversed, and the cause remanded.
Stone, J., not sitting.