Arlington State Bank v. Paulsen

• Decision Date: 09 February 1899
• Citation: 78 N.W. 303,57 Neb. 717
• Parties: ARLINGTON STATE BANK ET AL. v. PAULSEN ET AL.
• Court: Nebraska Supreme Court

57 Neb. 717

78 N.W. 303

ARLINGTON STATE BANK ET AL.

v.PAULSEN ET AL.

Supreme Court of Nebraska.

Feb. 9, 1899.

Syllabus by the Court.

1. Whether the title to the testator's real estate vests at his death in his executors or heirs is not to be determined solely by the presence in or absence from the will of some particular words of conveyance, but is to be determined so as to accord with the testator's intention, as deducible from an examination of the entire will.

2. The presumption is that the executors are invested with such power and all the power necessary to enable them to carry out the testator's intention with reference to the disposition directed by him to be made of his property.

3. The will of a testator directed his executors to pay his debts out of his personal estate, and, if that proved insufficient, “to sell and convey” his real estate for that purpose, and “to sell and convey” his real estate, and pay the proceeds over, in certain proportions, to certain heirs. Held, that the legal title to the real estate of the testator vested on his death in his executors.

4. The executors of such will conveyed the testator's real estate to one of his heirs upon the sole consideration that she would mortgage it to secure money for the use of the executors, and then reconvey to the executors subject to such mortgage. This was done. Held, that the transaction between the executors and heir was not a sale and conveyance, within the meaning of the will.

5. The will gave the executors power to convey the real estate only to an actual, bona fide, money purchaser thereof.

6. The conveyance by the executors to the heir was a voluntary one, and, as to her and her grantees with notice, void at the suit of the estate and its creditors, and at the suit of prior judgment creditors of the beneficiaries of such estate.

7. One who took from such heir a mortgage on the real estate so conveyed to her by the executors, having knowledge at the time that the heir had not actually purchased such real estate, or one who, having knowledge of such facts in the premises as ought to put a prudent man on inquiry as to the character of the heir's title, took such mortgage without inquiry, when a reasonable investigation would have revealed the defect in the heir's title, is not a subsequent innocent purchaser, and entitled to protection as such.

8. That one is a subsequent innocent purchaser of real estate is an affirmative defense, which the claimant, to avail himself of, must plead; and upon him is the burden of proof to establish it.

9. One who claims the protection of the rule applicable to subsequent innocent purchasers without notice is not relieved from the duty of affirmatively pleading and proving the facts which he claims show him to be such innocent purchaser because he claims under the vendee of an executor, and the conveyance from such executor is attacked by the judgment creditors of the beneficiaries of the trust property as having been made without consideration, to the knowledge of the one claiming to be an innocent purchaser.

10. Where the will of a testator vests the legal title to his real estate in his executors, and directs them to sell and convey it, and pay the proceeds over, in certain proportions, to certain heirs, the interest of such heirs in such proceeds is property.

11. But the heirs have no interest in the real estate as such, and it cannot be seized on attachment by their creditors; nor is a judgment against them a lien thereon.

12. The district courts of the state are invested with ample powers to enjoin executors from diverting trust property, to annul conveyances made by them without consideration in violation of the trust, and, on application of a prior judgment creditor of a beneficiary of such trust property, when such creditor has exhausted his legal remedies, to compel the interest of such beneficiary in such property, if not exempt, to be applied to the payment of his debts.

13. The presumption is that a will which simply clothes executors with power “to sell and convey” the testator's real estate for paying debts, and make distribution of the remaining proceeds to certain persons, does not confer on the executors the power to mortgage such real estate.

14. But such presumption may be overthrown when an examination of the whole will shows that the disposition directed by the testator to be made of his property is of such a character as authorizes the inference that it was the testator's intention that his executors should have power to mortgage his estate.

15. When executors of a will have individual interests in the testator's property, whether a conveyance made by them shall be construed as an execution of the trust, or a conveyance of their individual interests, is a question of intention; and if, from the conveyance itself, it is apparent that it was intended as an execution of the trust in pursuance of the will, it will be so construed.

16. Where a trustee wrongfully makes a voluntary gift or conveyance of trust property, whether a subsequent creditor of the beneficiaries of such trust property may successfully invoke the aid of a court of equity to annul the wrongful disposition made of the trust fund, to restore it to the trustees and cause it to be applied to the payment of debts of the beneficiaries, not decided.

17. The doctrine or rule of subrogation is not a fixed and inflexible rule of law or equity. It does not owe its origin to statute or custom. It is a creature of the equity courts, invented and applied by them to do justice, or prevent an injustice being done, in a particular case, under a particular state of facts, where the law is powerless in the premises.

18. A testator directed his executors to sell and convey his real estate, and pay the proceeds over, in certain proportions, to certain heirs. The executors deeded the real estate, without consideration, to one of the heirs, and she mortgaged it to a trust company and a bank. In a suit by the judgment creditors of the heirs to annul the conveyances of the executors and the mortgages made by the heir, the creditors were given a decree as prayed; but held, that the mortgagees were entitled to judgments against the testator's estate for such of the moneys represented by their mortgages as were actually applied to the payment of debts allowed by the probate court against the testator's estate; as were actually used to discharge taxes against the real estate of the testator; as were actually applied to discharge debts of the testator secured at the time of his death by mortgages on his real estate,--such judgments to be liens against the property of the testator's estate as the allowed claims of other creditors, and paid in due course of administration.

Appeal from district court, Douglas county; Duffie, Judge.

Bill by the Arlington State Bank and others against Edmund Paulsen and others. Judgment for defendants, and plaintiffs appeal. Reversed.

E. Wakeley, A. C. Wakeley, and Paul Charlton, for appellants.

Lake, Hamilton & Maxwell, Cowin & McHugh, and C. A. Baldwin, for appellees.

RAGAN, C.

John T. Paulsen died in the city of Omaha on the 5th of September, 1889, leaving a widow and six children; having first made his last will and testament, which was subsequently duly probated. The testator left a widow, Anna C. Paulsen; four sons, Edmund, Henry K., Herman F., and William Paulsen; and two daughters, Augusta Paulsen (now Lammrich) and Emma C. Paulsen (now Woolridge). By his will the testator appointed his widow and his sons, except William, to be his executors, without bond. The persons so nominated by the testator were by the probate court of Douglas county duly appointed executors of the will, and accepted the trust. The testator died seised of real estate estimated to be worth from three to four hundred thousand dollars. Some of this real estate was incumbered with mortgages. More than $20,000 of claims, exclusive of the debts secured by real-estate mortgages, were filed against the testator's estate, and allowed by the probate court. The will of the testator, so far as material to this controversy, was as follows: “It is my will, and I do direct, that all my just debts be fully paid out of my estate, in the manner hereinafter provided. * * * It is my will, and I do direct, that any and all debts and demands against me, and existing at the time of my decease, be fully paid; and to that end, and for that purpose, I do direct that in the payment of my debts my executors shall use (1) any and all moneys I may have on hand at my decease; (2) the avails of any debts, claims, demands, notes, and mortgages that may be due and owing to me at my decease; and should the amount of my liabilities at my decease exceed the amount of money so on hand and the amount so due me as aforesaid, or should my said debts exceed the amount that can be realized on such claims, then I do direct that any such balance be paid out of the proceeds arising from the sale or sales of any land or lots of land [of] which I may die seised. If it shall become necessary for my executors to sell any of my real estate for the purpose of paying any debt or liability existing against my estate, I do direct and empower my executors hereinafter named to sell, and by deed convey, any such part or parts of the real estate of which I shall die seised as shall be necessary for that purpose. And it is my desire and my will, and I do direct, that in making such sale or sales, that my executors shall make sale of such part of my real estate, and on such terms and in such manner, as, in the judgment of my executors, shall be for the best interests of all persons interested in my estate. After my debts have been fully paid as hereinbefore provided, I do direct, authorize, and empower my executors to make a sale or sales of any part or all of the real estate of which I shall die seised, at such time and in such manner as shall, in the judgment of my executo...