Patrick v. Beatty

• Decision Date: 30 March 1932
• Docket Number: 468.
• Citation: 163 S.E. 572,202 N.C. 454
• Parties: PATRICK v. BEATTY et al.
• Court: North Carolina Supreme Court

163 S.E. 572

202 N.C. 454

PATRICK v. BEATTY et al.

No. 468.

Supreme Court of North Carolina

March 30, 1932

Appeal from Superior Court, Gaston County; Schenck, Judge.

Proceeding on agreed case between R. C. Patrick, trustee in bankruptcy of Paul C. Beatty, bankrupt, and Vennie H. Beatty, executrix and trustee of the last will and testament of R. H. Beatty deceased, and others. From the decree, the trustee in bankruptcy and Vennie H. Beatty appeal.

Error.

Controversy without action on case agreed. C. S. § 626.

R. H Beatty died in 1928, leaving a will which has been duly admitted to probate in Gaston County. The will is as follows:

"North Carolina, Gaston County.

"I, R. H. Beatty, of the county of Gaston and State of North Carolina, being of sound mind, but considering the uncertainty of my earthly existence, do make and declare this my last will and testament.

"Article One: I direct the payment of all my just debts and funeral expenses.

"Article Two. I hereby give, devise and bequeath all the rest of my estate, real, personal or mixed, wheresoever situated, whereof I may be seized or possessed, or to which I may be in any manner entitled, or to which I may be interested at the time of my death, unto my executrix and trustee hereinafter named, and to her heirs and assigns forever.

"In trust, nevertheless, as follows:

"Article Three: I will and direct that my said executrix and trustee shall manage, control and rent my real estate to the best advantage paying all building and loan dues thereon, as well as all taxes and assessments thereon, and after the payment of said charges, I direct that the remaining moneys be deposited in the bank, and to be held until a division is made among the devisees as hereinafter provided.

"Article Four: I will and direct that my mercantile business shall be continued by my said executrix and trustee, and that my family shall receive their support from said business, and that two-thirds of the annual yearly profits shall be used by my wife and son Jennings and one-third to my son Paul.

"Article Five: It is my will and desire that upon the payment of my life insurance that one-tenth of the same shall be placed in a separate account in the bank on interest, and that when a division of my estate is made among my wife and children, that the said one-tenth of my insurance shall be donated to my church to be used by it in erecting a brick church as a Memorial to me if it should see fit to accept the same upon the said condition; and I would like for my family to increase this fund from the inheritance if they see fit to do so.

"Article Six: I will and direct that the remaining insurance money be deposited in the bank on interest, and there to remain until a division shall be made among my sons and my beloved wife.

"Article Seven: When my son Jennings reaches twenty-one years of age, it is my will and desire, and I so direct that my estate be divided among my said sons and my beloved wife, the personal property to be equally divided among all; and to my sons Paul and Jennings and their heirs in fee simple I give and devise one-third each of my real property, and to my beloved wife I give and devise the remaining third during her natural life, and then one-third of her estate to my son Paul and his heirs in fee simple, one third to my son Jennings and his heirs in fee simple and one-third to First Wesleyan Methodist Church, Gastonia, N. C., its successors and assigns in fee simple.

"Article Eight: I hereby constitute and appoint my beloved wife, Vennie, my lawful executrix and trustee to all intents and purposes to execute this my last will and testament, according to the true intent and meaning of the same, and every part and clause thereof, hereby revoking and declaring utterly void all other wills and testaments by me heretofore made.

"In witness whereof, I the said R. H. Beatty, do hereunto set my hand and seal this 17th day of October, 1928.

"R. H. Beatty [Seal]."

Vennie Beatty is the duly qualified and acting executrix and trustee under the will. Jennings Beatty is a minor, 17 years of age, and Vennie Beatty is his guardian. Charles A. Ramsay, J. L. A. Rhyne, and B. M. Gibson are trustees of First Wesleyan Methodist Church of Gastonia. When the testator died Paul C. Beatty was a minor, 20 years of age, and was adjudicated a bankrupt on January 2, 1931, by the United States District Court for the Western District of North Carolina, and was discharged as a bankrupt on June 10, 1931. R. C. Patrick was appointed his trustee on January 15, 1931. The testator died seized of real estate situated in Gastonia.

It was adjudged upon the agreed facts that the legal and equitable title to the devised land is vested in Vennie H. Beatty, trustee and executrix; that neither the legal nor the equitable title nor the right of possession will vest in the beneficiaries until Jennings Beatty becomes 21 years of age; and that the plaintiff has neither the legal nor equitable title to the interest devised to Paul C. Beatty.

The plaintiff and Vennie H. Beatty excepted and appealed.

Paul E. Monroe and A. C. Jones, both of Gastonia, for appellants.

W. H. Sanders, of Gastonia, for appellee Paul C. Beatty.

ADAMS J.

The controversy between the parties originates in their diverse constructions of the second and seventh items of the will. The plaintiff says that, upon the death of the devisor, the trustee, Vennie Beatty, acquired the title and the right of possession to a one-third undivided interest in the devised real property for the benefit of Paul C. Beatty; that Paul C. Beatty is the equitable owner; and that the plaintiff has succeeded to his title as his trustee in bankruptcy. Vennie Beatty takes substantially the same position, but insists that the right of division and possession must await the majority of Jennings Beatty, while Jennings contends that he has a present right to call for a division of the property. The trustees of the First Wesleyan Methodist Church claim a present right to demand a partition. Paul C. Beatty insists that the equitable title and right of possession do not vest in him until Jennings Beatty attains his majority, and that his trustee in bankruptcy has no right or title to his interest.

The trustee of the estate of a bankrupt is vested by operation of law with the title of the bankrupt to *** property which prior to the filing of the petition he could by any means have transferred or which might have been levied upon and sold under judicial process against him. 9 Remington on Bankruptcy, 852; Bankr. Act § 70 (11 USCA § 110). As the clause is disjunctive we may first inquire whether the bankrupt's interest in the devised land is subject to sale under such judicial process.

Prior to the act of 1812 no equity could be sold under execution. The first section of this act empowered the sheriff or other officer to whom an execution on a judgment was directed to sell lands and tenements and goods and chattels held in trust for the judgment debtor; the second section authorized the sale of the equity of redemption in "all lands, tenements, rents, or other hereditaments *** pledged or mortgaged." Laws of North Carolina, 1812, 1 Rev. Sts. 266, §§ 4, 5. These provisions in modified form are now in effect. Not only equitable and legal rights of redemption in personal and real property pledged or mortgaged by the judgment debtor may be sold under execution, but real property or goods and chattels of which any person is seized or possessed in trust for him. C. S. § 677, subsecs. 3, 4.

In the case before us the interest of the bankrupt is not an equitable or legal right of redemption; the question is whether the interest of the cestui que trust in the real property held by the trustee is subject to sale under execution.

In the second item of the will the testator devised to Vennie Beatty, his executrix and trustee, and to her heirs, all his property, except such as was necessary to pay his debts and funeral expenses. He directed the trustee to hold the property in trust; to manage, control, and rent the real estate; to pay taxes, assessments, and dues; and to deposit the remaining moneys in a bank to be held until a division of the property could be made. According to the direction in item 7 the estate is to be divided when Jennings Beatty reaches the age of 21 years.

It was the purpose of the Statute of Uses, 27 Henry VIII, to transfer the use into possession by providing that, whenever one person was seized of an estate for the use of another the cestui que use should be deemed to be seized of the same estate in the land that he had in the use. Under these circumstances it was not necessary for him to appeal to the conscience of the feoffee or to resort to a court of chancery. But there were nonexecuted uses which could not be enforced in a court of law, and the courts of chancery, for the purpose of compelling performance, took jurisdiction of the uses which were not executed by the statute and developed the doctrine of trusts. Tyndall v. Tyndall, 186 N.C. 272, 119 S.E. 354. The statute...