Carr v. Branch

• Decision Date: 10 January 1889
• Citation: 85 Va. 597,8 S.E. 476
• Parties: Carr v. Branch et al.
• Court: Virginia Supreme Court

8 S.E. 476

(85 Va. 597)

Carr

v.Branch et al.

Supreme Court of Appeals of Virginia

January 10, 1889

1. Conversion—Of Realty—Loans by Trustee.

A devise of land, to be sold by the executors at such time and in such manner as they may deem best, the proceeds to be paid to a trustee for the benefit of certain persons named, constitutes an equitable conversion of the realty into personalty; and a county court has power to authorize the trustee, to whom the executors have conveyed, to borrow money to pay liens thereon, and to execute a deed of trust on the land for security; before sale has been made, though the cestuis que trustent are infants.

2. Same—Reconversion.

The conveyance by the executors to another person, and by him to the trustee, for the purpose of vesting the latter with the legal title, is not an equitable reconversion to realty, nor an election to treat the property as realty, as neither the trustee nor the infants have power to do either.

3. Same—By Election—Rights of Third Parties.

Filing a bill by one of the cestuis que trustent, who has attained his majority, to enjoin the sale on the ground that the deed of trust was invalid, and that the consideration therefor had failed, is not an election by plaintiff to take the property as land, if such a bill is not drawn on that theory, and also for the reason that such election would prejudice the rights of the creditor in the deed of trust.

4. Mortgages—Variance between Bond and Mortgage—Validity.

Though the bond for the borrowed money was executed by the trustee, who was also executor, and his co-executor, as executors, and was described in the deed as being executed by the trustee as such, and by his co-obligor individually, while the deed itself is executed by the grantors individually, the deed is valid as security for the money loaned, the executors being individually liable on the bond.

Appeal from circuit court of city of Petersburg.

In January, 1870, Edwin W. Friend died, leaving a will, whereby, after making certain devises and bequests, he directed the residue of his estate, real and personal, to be sold by bis executors, upon such terms, in such man-ner, and at such time, as they might deem best, and the proceeds thereof to be divided among his four children, of whom one was Mrs. Mary O. Branch. By a codicil to the will the legacy given in the body of the will to Mrs. Branch was given to her and her children, and Miles B. Branch, her husband, was designated as their trustee. The executors qualified without security, the will requiring none. Soon after the testator's death a creditors' suit was instituted in the hustings court of the city of Petersburg to settle the estate, and in that suit debts against the estate were reported amounting to a sum exceeding $2,000; and for that sum an execution against the executors personally was ordered to be issued, which was duly returned, "No effects. " A part of the residue directed by the testator to be sold consisted of a tract of land called "Burlington, " situate in Dinwiddie county, and containing about 350 acres. This land was conveyed by the executors to William A. Bragg in January, 1871, who, on the same day, conveyed it to R. K. M. Friend and Miles B. Branch, —to the latter as trustee for his wife and children. These conveyances, however, were merely formal, the object being to vest the legal title to the land in the grantees in the last-mentioned deed, in the proportions of 259-470 to Friend, and 211-470 to Branch, trustee. The execution above mentioned having been returned, "No effects, " and there being no personalty belonging to the estate in the hands of the executors out of which the execution creditors' debts could be satisfied, the hustings court of Petersburg ordered a sale of the Burlington farm for the purpose of paying the debts; whereupon a bill was filed by Miles B. Branch, trustee for Mrs. Branch and her children, in the county court of Dinwiddie county, then having chancery jurisdiction, in which, after setting forth, substantially, the foregoing facts, he averred that a sale of the land would be injurious to the interests of his cestuis que trustent, and prayed that, in order to prevent a sale, he be authorized to borrow a sufficient sum of money to pay the debts, and to secure the loan by a mortgage or deed of trust on the land. The cestuis que trustent were made parties defendant to the suit, and at the August term, 1872, a decree was entered authorizing the trustee to borrow the money, and to execute a bond or bonds therefor, and to secure the same by a deed of trust on "Burlington; " the money, when borrowed, to be applied to the payment of the debts aforesaid. It appears from the record that on the 14th of October, 1872, the said Miles B. Branch and R. K. M. Friend, as executors of the testator, executed their joint bond to the Life Association of America, a life insurance company incorporated under the laws of the state of Missouri, for the sum of $2,500, payable five years after the date thereof, and also their bonds for the annual interest; and on the same day they individually executed and acknowledged a deed of trust on the land to secure the said bonds. The money was paid over by the association, and was faithfully applied to the payment of the debts aforesaid. It also appears that on the 27th of September, 1872, a policy of insurance for $5,000 was issued on the life of the said R. K. M. Friend by the said association. Subsequently the said association was adjudged by a decree of a court of competent jurisdiction in the state of Missouri to be insolvent, and it was accordingly dissolved, and its assets, pursuant to the laws of Missouri, were transferred to the then superintendent of the insurance department of that state, whose lawful successor the appellant is. The said policy of insurance has never been paid. It was surrendered some time after it was issued, and a policy for $4,000 taken in its stead, which, in turn, was substituted by a paid-up policy for $436, payable on the 1st of November, 1927, and which is alleged to be worthless. The bond for $2,500, above mentioned, not having been paid at maturity, the trustees in the deed of trust were directed to sell the land conveyed thereby, whereupon the com-plainants in the court below filed their bill for an injunction. The bill is in the name of Edwin B. Branch, (one of the children of Mrs. Branch, who is now dead,) and who sues in his own right, —he having attained his majority in 1882, —and as next friend for the other children, who are still infants. The bill prays for an injunction on the ground that the deed of trust was executed without lawful authority, and is therefore void; and also on the ground that the policy of insurance on the life of the said R. K. M. Friend, and the loan of $2,500, attempted to be secured by the deed, constituted one transaction; and that the association having become insolvent, and unable to pay its liabilities, the consideration for the transaction has to that extent failed. It is also charged that the association was, in fact, insolvent when the policy was issued, and that its insolvency was fraudulently concealed, etc. An injunction was awarded according to the prayer of the bill, which was made perpetual by the decree complained of, so far as the interests of the children of Mrs. Branch in the land are concerned, and dissolved as to the interest therein of the said R. K. M. Friend; and commissioners were appointed to make sale of the last-mentioned interest, and to make report, etc. It is from this decree that an appeal was allowed by one of the judges of this court upon the application of Carr, superintendent as aforesaid.

Davis & McIlwaine, for appellant, R. H. & W. H. Jones, W. R. McElenney, and J. Lyon, for appellees.

Lewis, P. The testator, after making sundry specific bequests, says: "I desire the residue of my estate, real and personal, to be sold by my executors * * * at such time as they may deem best, " and the proceeds to be divided, etc. This language clearly manifests the intention of the testator, and amounts to an imperative direction that a sale be made. The question of conversion, according to all the authorities, depends on the intention of the testator, which need not be expressly declared, but may be derived from the general effect of the will. Hence it has been held that where a testator authorizes his executors to sell real...