Losey v. Stanley

• Decision Date: 26 November 1895
• Citation: 147 N.Y. 560,42 N.E. 8
• Parties: LOSEY et al. v. STANLEY et al.
• Court: New York Court of Appeals Court of Appeals

147 N.Y. 560

42 N.E. 8

LOSEY et al.

v.STANLEY et al.

Court of Appeals of New York.

Nov. 26, 1895.

Appeal from supreme court, general term, Fifth department.

Action by George R. Losey and others against Leonora Stanley, administratrix, and others, to foreclose a mortgage. From a judgment of the general term (31 N. Y. Supp. 950) affirming a judgment of foreclosure, defendants appeal. Reversed.

This action was brought to foreclose a mortgage on certain lands in the city of Rochester, consisting of a tract of about 16 acres, executed by James W. Stanley, as trustee, on the 23d day of November, 1888, to George R. Losey and others, as security for a note of the mortgagor for the sum of $1,000, signed by him as trustee, and as a continuing security to the extent of $3,500 for further advances or responsibilities which might be made or incurred by the mortgagees for Stanley, either personally or as trustee. The mortgage contains a recital that it was made pursuant to an order granted by the supreme court October 22, 1888, and that it was given for the benefit ‘of said estate above described.’ Elizabeth J. Stanley, the mother of James W. Stanley, and the grandmother of the infant defendants, died March 20, 1871, seised of the premises embraced in the mortgage, and, by her will, devised and bequeathed all her estate, real and personal, to one Martin Briggs, upon the following trust, viz.: ‘To convert all my personal estate into money, and invest the same in safe security; and to take charge of, rent, and to receive the income and profits of, all my real estate; and, if deemed by him advisable, to sell and convey such real estate, and convert the same into money, to be invested in good, safe security and to pay over quarterly in each year to my beloved son, James W. Stanley, during his natural life, the net income of all my said estate, after deducting the expenses and charges of executing the trust, and the fees and commissions and charges of said executor and trustees.’ The testatrix, by the third item in her will, declared that ‘after the death of my said son, James W. Stanley, in case he shall leave a child or children born of his body in lawful wedlock, or a descendant of such child or children, then I give, bequeath, and devise all my said estate to such child or children of the said James W. Stanley, share and share alike, forever.’ There was a gift over to certain specific persons in case of the death of James W. Stanley ‘without lawful issue him surviving.’ The trustee named in the will accepted the trust, and subsequently died, December 24, 1883. James W. Stanley married after the death of his mother, and there were two children of the marriage living at the death of Briggs, aged, respectively, about nine and six years, and both are still living, and are the infant defendants. After the death of Briggs, and on the 18th of November, 1884, upon the potition of James W. Stanley, the beneficiary in the trust, an order was made by the supreme court appointing him the trustee in place of Briggs, deceased. The order of appointment recites that the guardian ad litem of the infants consented thereto. On the 22d day of October, 1888, the order was made which lies at the foundation of the present controversy. It was based on a verified petition of James W. Stanley, dated October 13, 1888. It alleges his appointment as trustee under the will of Elizabeth J. Stanley by the order of November 10, 1884; that the petitioner desires to raise by sale or mortgage of the real estate described, held by him as trustee, the sum of at least $3,500; that, in his opinion, such sale or mortgage would be for the best interests of the estate; and that the amount mentioned is ‘necessary for the purpose of preserving and improving said estate.’ The reasons why, in his opinion, such sale or mortgage was desirable, were stated as follows: ‘The property is in an unproductive condition, and at present is not producing the amount of the taxes assessed upon it. It is indebted for taxes already past due to the amount of upward of five hundred dollars. There are three dwelling houses on the premises, all of which need repairs, and which, when properly repaired, could be rented to much greater advantage to the estate. If kept in its present unproductive condition, the property will rapidly decrease in value, and would result in great loss to the estate.’ And, further: ‘That there is no property with which said estate can be preserved and improved as aforesaid, unless such petitioner is allowed to make such sale or mortgage.’ The petition alleges that the beneficiaries of the trust are the two infant defendants, and the devisees over, and states their respective names and residences, and the ages of the infants. It prays that the petitioner may be authorized, as such trustee, ‘pursuant to the statute in such case made and provided,’ to sell or mortgage the real estate upon such terms and conditions as to the court shall seem just and proper. The record discloses that, following the presentation of the petition, an order was made October 15, 1888, that notice of the proceedings be given to the infants, returnable October 17, 1888, and an affidavit was produced from the files of the court, made by James W. Stanley, the petitioner, of service by him, on the day of the date of the order, of a copy of the petition and notice on the infant children and their mother. The record further shows that on the return day of the order (October 17, 1888) the court appointed a guardian ad litem of the two infants to protect their interest in the proceedings. On the 22d day of October, 1888, the court granted the order to mortgage. It recites the filing of the petition of October 13th; that due notice of the application had been given to the beneficiaries of the trust; the appointment of a special guardian of the infants; his report dated October 19, 1888, in favor of the application, and his consent ‘in all ways to said application’; the consent of the ulterior devisees to the granting of the order; and that no one appeared in opposition. The order then proceeds: ‘It is hereby ordered that leave be, and is hereby, granted to said James W. Stanley, as such trustee, to sell either at public or private sale, in his discretion, or mortgage, for the amount of $3,500, with lawful interest thereon, the 5, 1888, that notice of the proceedings be real estate described in said petition, as follows.’ premises. The petition stated in general terms that the petitioner was trustee under the will of Elizabeth J. Stanley, but its contents were not disclosed, and it does not appear that the will was produced on the hearing, or that the court was in any way apprised of its contents, or of the interests of the infants thereunder. It does not appear that any evidence was presented to the court of the facts stated in the petition. It would seem that the court, in making the order, acted upon the petition alone, and the consent of the guardian ad litem, without further inquiry. The proposed mortgage was not reported to the court, and no order appears to have been made approving it, nor was any bond given for the protection of the interests of the infants. It appears from the findings of the court that the indebtedness of $3,500, for the recovery of which the mortgage was foreclosed, was for money borrowed on notes made by Stanley as trustee subsequent to the execution of the mortgage. The court found that no part of the money alleged in the complaint to have been borrowed by Stanley was used by him for the benefit of the trust estate. James W. Stanley died in the year 1890, before the commencement of this action.

Joseph W. Taylor, for appellants.

William F. Cogswell, for respondents.

ANDREWS, C. J. (after stating the facts).

This appeal presents a question of broader interest than attaches merely to the pecuniary rights of the parties to the litigation. It involves a consideration of the power of the supreme court in dealing with the real property of minors, and the extent of its jurisdiction in directing a sale or mortgage of their property. By the will of Elizabeth J. Stanley, a trust was created in the real property of which she died seised, during the life of her son, James W. Stanley, for his benefit, with remainder to his children or their descendants living at his death, and, in default of such issue, to certain other specified devisees. James W. Stanley was unmarried at the death of his mother, and the remainder to his children was contingent until the birth of issue. He subsequently married, and there were two children of the marriage (the infant defendants), who were living when the mortgage in question was executed. Under the will, the first-born child of James W. Stanley took at its birth a vested estate in remainder in the land devised, subject to open, and let in after-born children as they severally came into being; and such vested remainder became a fee simple absolute in the children living at the death of their father. 1 Rev. St. p. 723, § 13; Moore v. Littel, 41 N. Y. 66;Williamson v. Berry, 8 How. 495. The estate in the children of James W. Stanley was a legal estate. The estate of the trustee was for the life of James W. Stanley, and terminable at his death. The will created two distinct legal estates in the devised property, viz. an estate in the trustee for the life of the beneficiary, with the right of possession and to receive the rents and profits during the continuance of the trust, and an estate in remainder, which became vested on the birth of children, as before stated. The trustee had no power over the estate in remainder except such as may have been given him by the will. He could not sell or incumber it, or in any way, by his own act, alter or affect the interests of the remainder-men, unless authorized by the will. The provision of the statute of uses and trusts (1 Rev. St. p. 729, § 60), declaring that every valid express trust...