Court Opinion

ID: 8190832
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:13:48.902331+00
Date Added: 2024-06-11T16:40:32.242370
License: Public Domain

Bajmtes, J.
(dissenting). I am unable to find in the authorities cited in the opinion of the court any support for the proposition decided. I think authority and reason are against the decision.
The trust period ends with the death of Elizabeth, Plank-inton. When the lease was made her expectancy was about sixteen years. She may live a few years more or less, but the variance between the estimated and the 'actual length of life is not material, and for all practical purposes the estimate may be assumed to be correct. No express power was given by the Plankinton will to the trustees to lease the trust property at all, but such power could fairly be implied from the will. The trustees were expressly authorized to sell unimproved real estate. By implication they were prohibited from selling improved real estate. After the expiration of *309tbe trust tbe will provided that tbe remainder in fee should vest in tbe testator’s grandchildren, if any there were. It may be conceded that broad general powers were given to tbe trustees during tbe trust period.
Tbe question involved is this: Where a remainder in fee is to vest in grandchildren after tbe trust terminates, and no express power is conferred to lease beyond tbe trust period, can tbe trustees make a valid lease for a period of .eighty years, and perhaps eighty centuries, after tbe trust ends ?
Tbe court answers tbe question in tbe affirmative, and cites tbe following authorities in support of its conclusion: 2 Perry, Trusts (4th ed.) §§ 484, 528, 608; 2 Beach, Trusts, § 446; Lewin, Trusts (11th ed.) pp. 632, 633; Underhill, Trusts (Am. ed.) 347, 349, note 2; Beckett, Trusts, § 570; Ricardi v. Gaboury, 115 Tenn. 484, 89 S. W. 98; Denegre v. Walker, 114 Ill. App. 234; Hale v. Hale, 146 Ill. 227, 253, 33 N. E. 858; Marsh v. Reed, 184 Ill. 263, 271, 56 N. E. 306; Denegre v. Walker, 214 Ill. 113, 73 N. E. 409; In re Hubbell Trust, 135 Iowa, 637, 113 N. W. 512.
Sec. 484 of Perry on Trusts states that “trustees must make reasonable leases.” Continuing it is said: “In one case a lease for ten years was allowed. Trustees have a general power of leasing, if the lease does not exceed the quantity of estate that is in them, and is a reasonable one.”
In a note to this section, found in tbe sixth edition, it is said that “tbe weight of authority is to tbe effect that the lease is not binding upon the remaindermen after tbe termination of tbe trust.”
Sec. 528 is to tbe effect that where trustees are charged with tbe payment of annuities, debts, legacies, or other sums out of tbe estate and there is no power of sale, they have an implied power to lease upon the ordinary terms or custom of the town in which the land is situated. Tbe cases cited, under this section do not involve leases extending materially beyond tbe duration of tbe trust, except tbe case of Black v. *310Ligon, 2 Harper, Eq. (S. C.) 205. I also exclude Newcomb v. Ketteltas, 19 Barb. 608, because it was not followed subsequently by the New York courts.
Sec. 608 reads as follows:
“There can be no doubt that it is the duty of the trustees or guardians of infants to lease the lands of their wards, as the wards are incapable of acting for themselves; and they must collect the rents and account for them; but they cannot execute leases extending beyond the majority of the infants; if they do, the infants, on coming of age, can disaffirm the lease and take the possession.”
Sec.' 446, Beach on Trusts and Trustees, recognizes the power of trustees to lease where they are given general control of the trust property. I quote from the text:
“It may be a question to what extent or for how long a time a lease may be given. In England a lease for a long period, as ninety-nine years, will not be sustained. In another case it was held that a lease might be made for a term of ten years. In a recent case it was held that where a will devises land to a trustee for the life of a third person, with power to sell, a lease executed by the trustee for a certain term, with an agreement to renew at the end of the term for another term, cannot be renewed by the lessee after the death of the person during whose life the trustee was to hold, as such an agreement in the lease does not bind the remainder-man.”
The foregoing is all there is to the section, aside from a reference to a Kentucky case which sustained a long-term lease on the well recognized ground of overruling necessity, which does not exist in the case we are presently considering.
The section cited from Lewin treats of perpetual charitable trusts which in no way involve the matter of leasing beyond the trust period.
The text referred to in Underhill is to the effect that a trustee who has the management of property “may grant a reasonable agricultural lease.” The cases cited in note 2, *311except in. so far as they bave been expressly or impliedly overruled, deal witb leases that did not extend materially beyond the trust period. In the note it is said: “As to whether a trustee can give a lease to extend beyond the period of his trust estate there is a singular dearth of authorities. Yet on principle it is clear that he cannot, except in the case of a charitable trust.”
Sec. 570 of Beckett on Trusts is simply a quotation from secs. 528-531 of Perry on Trusts, and no other authority is cited to support the text. Mr. Perry’s treatment of the subject has already been considered.
Ricardi v. Gaboury, 115 Tenn. 484, 89 S. W. 98, did not involve a trust estate. The question in that case was whether the courts of Tennessee, under their common-law or statutory powers, could authorize the leasing of a minor’s property beyond the period of his minority.
With the exception of the Iowa case, which will be referred to later, the remaining authorities cited are from the Illinois court. That court takes a position that is unique in reference to trust estates. It held in Marsh v. Reed, 184 Ill. 263, 56 N. E. 306, that where a will strictly and definitely limited the term for which the trustee could lease trust property the court could change the expressed intention of the testator and enlarge that time, in the absence of overruling necessity, if it appeared on the whole that the best interests of the parties would be conserved thereby.
This doctrine was condemned in no uncertain or doubtful language in Ruggles v. Tyson, 104 Wis. 500, 81 N. W. 367, and in the still later case of Will of Rice, 150 Wis. 401, 136 N. W. 956, 137 N. W. 778.
On the authority of Marsh v. Reed, the court héld in Denegre v. Walker, 214 Ill. 113, 73 N. E. 409, that, acting under the direction of a court of chancery, trustees might, with the consent of the adult parties in interest, make a ninety-nine year lease where the court was satisfied that it was clearly for *312tbe best interests of tbe estate 'and tbe beneficiaries that sncb lease be made.
Unless tbe Illinois antborities form an exception, there was not a single case cited in tbe brief of respondents’ counsel wbicb supports tbe conclusion reached by tbe court. I do not think a single one of tbe authorities cited by the court, tbe Illinois cases included, sustain such a conclusion.
Oases bolding a doctrine contrary to that now adopted by this court may be divided into two classes: (1) those bolding that tbe term of the lease cannot exceed tbe duration of tbe trust, in tbe absence of express authority from tbe person creating tbe trust, and (2) those bolding that leases may be made for usual and customary periods, but that tbe duration of tbe lease is approximately measured by tbe length of tbe trust period. Cases falling within tbe first class are In re Armory Board, 29 Misc. 174, 60 N. Y. Supp. 882; In re Opening of 110th St. 81 App. Div. 27, 81 N. Y. Supp. 32; Griffen v. Ford, 1 Bosw. 123; Gomez v. Gomez, 147 N. Y. 195, 41 N. E. 420; Matter of McCaffrey, 50 Hun, 371, 3 N. Y. Supp. 96; Weir v. Barker, 104 App. Div. 112, 93 N. Y. Supp. 732; Bergengren v. Aldrich, 139 Mass. 259, 29 N. E. 667; Standard M. P. Co. v. Prince Mfg. Co. 133 Pa. St. 474, 19 Atl. 411.
It is well said in Matter of McCaffrey, 50 Hun, 371, 374, 3 N. Y. Supp. 96, that “it would seem strange that one who bolds an estate in trust for tbe life of another should have a power over tbe remainder, wbicb would not have belonged to him if be bad held tbe estate absolutely for life and not in trust.”
Cases and authorities falling within the second class are In re Hubbell Trust, 135 Iowa, 637, 113 N. W. 512; Greason v. Keteltas, 17 N. Y. 491; Hutcheson v. Hodnett, 115 Ga. 990, 42 S. E. 422; 2 Kerr, Real Prop. sec. 1187; Jones, Landl & T. § 91; 1 McAdam, Landl. & T. (4th ed.) § 70.
Tbe lease we are considering does not fall within either *313of the classes mentioned. It exceeds the trust period and is neither reasonable nor customary, and in my judgment is contrary to the will, which carried the fee to the remainder-men.
“The difference in value between a leasehold of ninety-nine years and a freehold is largely due to the imaginary superiority of the freehold over a chattel interest.” In re Hubbell Trust, 135 Iowa, 637, 665, 113 N. W. 512, citing Att’y Gen. v. Owen, 10 Ves. 555, 559; Att’y Gen. v. Griffith, 13 Ves. 565.
The lease in question gives to the lessee an equitable interest in the property leased, which must on default be barred and foreclosed by a proceeding similar to the statutory action to foreclose a mortgage. Sec. 2197a, Stats.
Under the will the remaindermen were entitled to the fee. Instead they are getting the fee incumbered by a lease which will still be in force when they, and in all probability their children, are dead. These owners are barred from dominion or control over or use of the property. If they desire to sell they cannot break the property up into smaller parcels,, but must sell the ground covered by each lease as an entirety. If they do sell they get, not what the property is intrinsically worth, but such sum as a purchaser would be willing to pay for an annuity equal to the amount of the rent.
So far the leases in question have been spoken of as ninety-nine year leases. It would be more correct in all probability to refer to them as perpetual leases. The one pertaining to the Plankinton House, for instance, provides that the term is to begin July 1, 1911; that for the first five years of the term the rent shall be $100,000 per annum; for the next five years $115,000, and for the next five years $125,000, and for each and every of the remaining eighty-four years, $128,262. The lease contains no revaluation provision. At the end of the ninety-nine year period the value of the buildings may be appraised, and the then owners of the property are en*314titled to have tbe lease terminated by paying tbe value of sucb buildings. No one can tell bow numerous tbe owners will tben be or bow many of tbe parties in interest may be wholly unable to pay tbeir share of tbe cost of tbe buildings. If they are unable to do this, tbe lease automatically continues for a period of ninety-nine years more for a rental of $130,000 per year. Tbe same right exists to pay to tbe lessees tbe value of tbe buildings at tbe end of tbe second ninety-nine year period, and so on ad infinitum. If tbe owners are unable to pay at tbe expiration of any period, tbe lease continues for another ninety-nine year stretch. Tbe same general provisions are found in tbe leases of tbe other two parcels of real estate. No one is presently wise enough to say that tbe leasehold interest will ever terminate. No one is wise enough to say whether tbe rental is adequate or inadequate. ’William Woods Plankinton> testifying in tbe case, said in substance that at tbe time tbe lease was negotiated be thought it was a good deal for tbe estate, but that owing to tbe rapid increase in value of Grand avenue property during tbe two or three years that bad elapsed since tbe negotiations were entered into, be was inclined to doubt tbe wisdom of tbe arrangement.
Perhaps tbe provision for automatic renewals of tbe lease is not material, because if tbe trustees bad tbe power to lease for a period of ninety-nine years, I see no reason why they could not lease for 999 years. Tbe objections to tbe shorter period are as cogent as those to tbe longer one.
There is not a particle of evidence in tbe case showing or tending to show that leases for ninety-nine years are usual or customary in tbe city of Milwaukee or in tbe state of Wisconsin. It was not claimed on tbe oral argument that at tbe time John Plankinton made bis will there was a single ninety-nine year lease in existence in tbe state. It is a matter of common knowledge that business property, even in tbe city of Milwaukee, is not customarily leased for any sucb *315length of time. There is no testimony on the point one way or the other, bnt the writer hazards a guess that in the entire state of Wisconsin a dozen such leases cannot be found.
The attorneys for the lessee did not endeavor to sustain the judgment on the ground that the court affirms it. They say that “no question of authority of the trustees to make a lease beyond the term of the trust is involved.” Their main proposition in support of the judgment was that Elizabeth Planhinion and William Woods Planhinion, being of full age, had a perfect right to make any disposition which they saw fit of their interest in the estate, and that the court, having power to appoint a guardian for the minors, could direct such guardian to execute the lease, and that, thb minors being of the same class as unborn heirs who might become interested in the estate, the action taken by the guardian would be binding on all minor and unborn heirs. Stated more briefly, it was said that all persons having a present interest vested or contingent, as well as persons unborn who might acquire an interest in the future, were before the court and therefore bound by the judgment. The case of Gomez v. Gomez, 147 N. Y. 195, 41 N. E. 420, was relied on to sustain this contention. If the making of the leases was contrary to the will of the testator, this contention is entirely out of harmony with the cases of Ruggles v. Tyson, 104 Wis. 500, 81 N. W. 367, and Will of Rice, 150 Wis. 401, 136 N. W. 956, 137 N. W. 778. The leases are out of harmony with the will of the testator, unless it was and is the law that an implied power to lease at all carries the power to make what is practically a lease in perpetuity.
The principal contention made by the attorneys for the executors was that the court should approve of the lease on the ground of overruling necessity in order to preserve the estate. It was particularly urged that such doctrine, was applicable to the Plankinton House property. The parcels of real estate covered by the leases, however, had been yielding *316a net revenue of about $100,000 a year for tbe past six years so it is not apparent bow tbe doctrine of “overruling necessity” could apply without stretching it to tbe breaking point, ■and tbe court bolds that it does not apply.
While the eminent counsel who appeared for tbe respondents did not concede that tbe trustees did not have power to-make a ninety-nine year lease, they devoted little attention to tbe point, and at least one of them admitted on tbe oral argument that tbe weight of authority was to tbe contrary..
I summarize tbe conclusions reached as follows:
1. Tbe implied power to lease given by tbe Plankinton will was no broader than if express power to do so bad been thereby conferred without specifying tbe length of time that leases should run.
2. When power to lease is conferred by either of tbe above methods, tbe law forbids tbe execution of a valid lease that extends materially beyond tbe trust period.
3. If tbe most liberal rule laid down by any of tbe authorities be followed, tbe power to lease conferred was limited to a reasonable, usual, and customary period.
4. Considered in connection with tbe provisions of the-will, tbe leases under consideration are not reasonable and are not made for usual or customary periods.
5. Tbe testator intended to tie up bis estate during the-lives of bis children. He plainly provided that after their-deaths tbe fee should go to tbe grandchildren. He might have tied up tbe estate for a much longer period without violating tbe statute against perpetuities.
6. Turning over to tbe grandchildren this property, incumbered by a lease which may well remain in force for all time, and which prevents use, occupation, sale in parcels, or ' sale in entirety on tbe basis of tbe actual value of the property, is not tbe equivalent of tbe estate in fee devised by the testator, and tbe intention of tbe testator is violated by making such leases.
*3177. Under the doctrine of Ruggles v. Tyson and Will of Rice, heretofore cited, the trustees and all parties in interest, where there are minors involved, could not change the will of the testator or make a disposition of the property different from that made by the will.
8. The facts did not present a case of overruling necessity which would justify a departure from the terms of the will in order to save the trust property from destruction.
9. It is idle to speculate on what Mr. Plankinton would have done had he been on earth in 1911. When he made his will he was as well qualified to peer into the future as the trustees and the court are now. It may well be doubted whether if he were alive he would approve of the lease, and it is immaterial whether he would or not. We are concerned with what he did, not with what he might have done had he lived longer.
10. The leases in question are violative of the scheme of the testator for the disposition of his property. First, because he was presumed to know the law and to have made his will with reference thereto, and therefore to ha?e known that the implied power to lease given to the trustees did not confer power to make what in effect are leases in perpetuity; and, second, because the testator provided in his will that the owners of the vested remainders should take the title in fee in the full and unrestricted sense of that term. In practical effect they will receive an annuity instead.
YiNJE, J. I concur in the foregoing dissenting opinion of Mr. Justice BaeNbs.