Hardy v. Holly

• Decision Date: 31 January 1881
• Citation: 84 N.C. 661
• Court: North Carolina Supreme Court
• Parties: JOSEPH H. HARDY and others v. AUGUSTUS HOLLY.

84 N.C. 661

JOSEPH H. HARDY and others

v.AUGUSTUS HOLLY.

Supreme Court of North Carolina.

January Term, 1881.

MOTION for an injunction, in an action pending in BERTIE Superior Court, heard at Chambers on the 24th of October, 1879, before Avery, J.

On the 19th of November, 1866, a deed was executed between Ella E. Hardy, John H. Hardy and Joseph H. Hardy, whereby, after reciting that a marriage was soon to be had between the said John H. and Ella E., and that it had been agreed between them that certain personal estate of the latter should be conveyed in trust to her sole and separate use and free from the control of her intended husband, the said Ella E. conveyed to the said Joseph H. certain bonds and notes belonging to her and then in her possession, “in trust for the sole and separate use of the said Ella E., after and during her coverture and subject to her exclusive control and disposition, as if she were a feme sole, by order or other writing under her hand and seal and directed to said trustee, as well principal money as interest; and to account with and pay over to her all accruing interest and profits arising therefrom, from time to time as collected, and for such payment her receipt shall be a full discharge, and her written order ample and sufficient authority for any disposition of the fund which she may direct; and in trust, in the event of the death of the said Ella E., the said John H. surviving, for such person or persons, in such estate and upon such limitations as she shall appoint, declare and direct by will or other writing in the nature of a last will, executed in her lifetime, and in form to pass such estate and funds as may then remain, and in default of such appointment, for such persons as would by law be entitled thereto as next of kin and heirs at law under the statute of distributions and laws of descent, to the said Ella E., (excluding her intended husband) in like manner as if she were unmarried at the time of her death; and in further trust that at all times during her coverture, the said Ella E. shall have power, in writing, to direct, and when so directed it shall be the duty of said trustee to exchange and convert the whole or any part of the trust fund into other property, real or personal, and to invest and re-invest the same, and the proceeds thereof as she may require in the purchase of other and different estate and funds, and such substituted property shall become and shall be held charged with the same trusts as attached to that for which it was substituted; and it is agreed that said Ella E. shall have power to change the trustee, and upon her nomination in writing, it shall be the duty of said trustee to convey the trust property to the person nominated to be held upon the same trust, &c. Which deed was duly proved and registered in the register's office of Bertie county where the parties all lived.

Soon after the execution of the deed, the proposed marriage took place, and the said Joseph H. accepted the trust and has ever since continued to act as trustee. In 1870, the trustee, in pursuance of his powers, invested some four thousand dollars of the trust fund in a certain tract of land, situate in Bertie county, which was conveyed to him upon the trusts declared in the deed of settlement. In October, 1875, the husband, John H. Hardy, applied to the defendant, Holly, for a loan of $1,500, to be used in conducting a mercantile business, which the latter agreed to make provided the wife would join in a mortgage, conveying the said tract of land as a security for the amount advanced, to which she assented and the mortgage was duly executed by the husband and wife and regularly proved and registered and the money procured upon it--the trustee, Joseph H. Hardy, however, being no party to it or assenting thereto or having any notice thereof; and no request being made to him by the wife in writing under seal or otherwise, to become a party to the mortgage deed or in any way to charge the land, or other part of the trust fund, with the debt intended to be secured.

The store intended to be conducted with the money borrowed was the property of the husband; but supplies for the family and farm were procured therefrom. The parties having failed to pay the amount borrowed, the defendant, according to the terms of his mortgage, has advertised for sale the lands mentioned and threatens to sell the same. The plaintiffs, who are the husband and wife and trustee before mentioned, seek to enjoin said sale and to have the said mortgage cancelled.

The case being before the judge of the superior court on motion for an injunction, after notice to defendant, he granted the same until the final hearing of the cause, and the defendant appealed.

Messrs. P. H. Winston, Sr., Pruden & Shaw, and Hinsdale & Devereux, for plaintiffs .

Messrs. W. A. Moore, and Coke & Martin, for defendant .

Was the consent of the trustee necessary to the validity of the conveyance from John H. and Ella Hardy?

1. The rules on this subject in England and America are different, and the courts of the states differ from each other. In North Carolina the rule formerly was that the consent of the trustee was necessary when personal property was conveyed for the sole and separate use of a feme covert, but no power to charge or dispose of it was given to the feme in the deed of settlement; but since the adoption of the constitution and enactment of the marriage act of 1871, the consent of the husband, in lieu of that of the trustee, is sufficient. But this rule has never been applied to similar conveyances of real estate. When that is the subject-matter of the conveyance, the assent of the trustee is not necessary unless required by the donor of the power as a condition precedent to a valid charge, or sale, by the feme. Bell on Property, (Law Library, vol. 70, 494); 4 Ired. Eq., 312. In England the rule is, that the general engagements of the wife shall operate upon her personal property, and her trustee shall be obliged to apply personal estate to the satisfaction of her general engagements. White & Tudor's L. C., 399; Huline v. Tenant; Brown's C. C., 16.

The counsel then discussed the North Carolina cases which are cited in the opinion of this court, and insisted that the consent of the trustee in a conveyance of real estate was not necessary,--commenting also upon State v. Ragland, 75 N. C., 12; Pippen v. Wesson, 74 N. C., 437; Etheridge v. Vernoy, 71 N. C., 184; Withers v. Sparrow, 66 N. C., 129.

2. As to the doctrine of the defective execution of powers: Whenever the formalities required by the power are not strictly complied with, the appointment will at law be void; but in equity the rule is this: Whenever a man having power over an estate, in discharge of moral or natural obligations, shows an intention to execute such power, the court will operate upon the conscience of the trustee to make him perfect this intention. Tollett v. Tollett, 1 White & Tudor, 182, 191 and 192 and top of page 296, 3 Am. Ed. 1859; 3 Ohio, 527; 2 Ball & Beatty, 44. Lord St. Leonard says: “It is only necessary that the intention to execute the power should appear clearly in writing; whether the donee of the power only covenant to execute it, or by his will direct the remainderman to create the estate, or merely enter into a contract not under seal to execute his power, or by letters promise to grant an estate, which he can only do by an exercise of his power, equity will supply the defect. 2 Sugden on Powers, ch. X., sec. 2, paragraph 5, et seq, and 2 Ball & Beatty, 44. See also Stead v. Nelson, 2 Beavan (17 E. C. L.) 245.

3. As to distinction between powers and trusts:...