Austin v. Young

• Decision Date: 01 March 1919
• Docket Number: No. 45/151.,45/151.
• Citation: 106 A. 395
• Parties: AUSTIN v. YOUNG et al.
• Court: New Jersey Court of Chancery

106 A. 395

AUSTIN

v. YOUNG et al.

No. 45/151.

Court of Chancery of New Jersey.

March 1, 1919.

Bill by William B. Austin against John L. Young and others. Decree advised dismissing the bill.

John Rauffenbart and U. G. Styron, both of Atlantic City, for complainant.

Thompson & Smathers, of Atlantic City, for defendant Young and others.

Albert C. Abbott, of Mays Landing, and E. A. Higbee, of Atlantic City, for defendant Aaron.

Bourgeois & Coulomb, of Atlantic City, for defendant Cravis.

LEAMING, V. C. This suit is to establish and enforce a trust of real estate in favor of complainant.

The primary inquiry herein is whether the trust which is claimed to exist is adequately manifested and proved by the writings which have been offered in evidence for that purpose.

By our statute of frauds it is declared as a rule of evidence that all declarations and creations of trust of lands shall be manifest ed and proved by some writing, signed by the party who is or shall be by law enabled to declare such trust, or else the trust shall be utterly void and of no effect. The exclusion of resulting and constructive trusts from the operation of that statute need not be here considered; the trust here alleged to exist is neither a resulting nor a constructive trust.

No consideration is necessary to support an express trust of lands if the existence of the trust and its terms are adequately established in the manner required by our statute, since, when a trust of lands is thus established as definitely and completely declared, it stands as in the nature of a completed gift vesting an absolute equitable estate or title in the cestui que trust. But, like other gifts, it must be fully completed to become effective as a gift. As equity cannot aid in perfecting a gift, it can only recognize a voluntary intention to create a trust in land in favor of another when the trust has been executed; that is, when the trust has been perfectly and fully declared, and has thus resulted in the creation of a defined equitable estate in the donee. Until then, in the absence of a consideration, equity will not enforce it, but will consider it a nullity.

But, when a valuable consideration exists between the alleged trustee and cestui que trust, a court of equity may deem a contract to declare a trust as equivalent to an actual declaration, upon the equitable rule that what ought to be done will be considered as done. This is sometimes expressed in the formula that a valuable consideration will induce a court of equity to complete an imperfectly created trust.

These general principles are given recognition in the following decisions in this state: Janes v. Falk, 50 N. J. Eq. 468, 472, 26 Atl. 138, 35 Am. St. Rep. 783; Landon v. Hutton, 50 N. J. Eq. 500, 25 Atl. 953; Wittingham v. Lighthipe, 46 N. J. Eq. 429, 19 Atl. 611; Owens v. Owens, 23 J. Eq. 60, 62. See, also, 3 Pom. Eq. Jur. §§ 996, 997. It is also the privilege of the answering defendants in this suit, who claim as innocent purchasers for value without knowledge of the alleged trust, to require the trust to be established by evidence in conformity to our statute without specifically pleading the statute as a bar. Whyte v. Arthur, 17 N. J. Eq. 521.

The exaction that the terms of an express trust must be disclosed by the written evidence with sufficient certainty to enable a court of equity to enforce its performance by its decree in no way denies to parol evidence its recognized office to disclose the circumstances under which the written evidence may be executed in appropriate aid of its construction; but the statutory written evidence, properly construed, must establish the existence of the trust and its terms.

Since it may be thought that the several writings which have been offered in evidence should, when considered together, be treated as an agreement to declare a trust, it must be first ascertained whether any consideration has existed to support an agreement of that nature.

By the testimony of complainant it appears that defendant Young told complainant that he (Young) would buy the property here in controversy, and would from time to time collect enough rents to pay for its maintenance, and, when he should be paid his expenditures in the transaction, he (Young) would convey the property to complainant. The property had formerly belonged to complainant and had been sold on foreclosure to the mortgagee; but complainant does not claim that Young was responsible for that The utmost claimed by complainant is that Young, as his friend, advised him to let the property be sold at the foreclosure sale, and stated that he (Young) would then go to the purchaser and fix it up for complainant, and that after the foreclosure sale Young stated to complainant that he would buy the property and hold it for complainant in the manner already stated. This promise on the part of Young was by parol and was purely voluntary. It was merely the expression of a friendly purpose of one friend to another to buy a property and carry it until the other should be able to take it over and relieve the purchaser from the expenditures or obligations incurred by him. Young was financially able to buy the property, while complainant was not. As a friendly act Young accordingly volunteered to buy it for the benefit of complainant in the manner stated. No amount appears to have been suggested as the price at which Young should purchase. The whole plan was apparently based upon the hope that Young would be able to buy at a favorable price and the further hope that he might become relieved from his expenditures and obligations incurred in connection with it, in which event he was to turn it over to complainant. The transaction was in no sense a loan of the purchase price from Young to complainant. No obligation for payment has been executed by complainant at any time, nor am I able to believe that any binding obligation of that nature was intended by either of the parties. It was to be, in effect, a mere privilege for complainant to take over the property if and when Young should be relieved from the expenditures and obligations incurred by him in the transaction. By indorsements on notes Young was already carrying obligations of complainant in a large amount. Complainant testified that the understanding was that he was to be privileged to receive a deed from Young for the property here in controversy when Young had received the money expended by him. Young has not testified; but other testimony of complainant and the testimony of Albertson strongly Indicate that Young's understanding of the original plan was that complainant would only be privileged to take over the property when Young should be fully discharged from all obligations incurred by him in behalf of complainant; that is, obligations incurred by Young as indorser on complainant's commercial paper as well as those incurred in connection with the property here in question. To that extent the terms of the alleged trust must be said to be uncertain, so far as the original understanding of the parties may be thought competent to define the terms of the trust. At the conclusion of the hearing it was urged by complainant that the transaction might be treated as a deed to Young, or to Young's appointee, to secure a debt of complainant, and hence, in legal effect, a mortgage, thus rendering parol testimony competent to establish complainant's equitable title. Not only does the bill allege that the legal title was held in trust for complainant, but the testimony clearly negatives the idea of a loan of money to complainant.

The foregoing brief statement of facts antecedent to the purchase by Young sufficiently discloses that the original promise of Young was purely voluntary, and was no more than a parol promise, wholly unsupported by any consideration, to purchase land with his own money and hold it in trust for complainant in the manner stated. A voluntary parol promise by one person to purchase land with his own money and hold it in trust for another is, of course, within the statute of frauds and unenforceable as an express trust. 39 Cyc. 47. As already pointed out, if the engagement should be in writing, the promise to become a trustee might be enforced if founded on a sufficient consideration; if not founded on a...