Town of Cascade v. Cascade County
| Decision Date | 28 January 1926 |
| Docket Number | 5857. |
| Citation | 243 P. 806,75 Mont. 304 |
| Parties | TOWN OF CASCADE v. CASCADE COUNTY et al. |
| Court | Montana Supreme Court |
Appeal from District Court, Cascade County; H. H. Ewing, Judge.
Action by the Town of Cascade against Cascade County and others. Judgment for plaintiff, and defendants appeal. Affirmed.
H. R Eickemeyer, La Rue Smith, and W. P. Costello, all of Great Falls, for appellants.
Ralph E. Bancroft, of Cascade, for respondent.
This is an appeal from a judgment and decree declaring the levy of certain taxes on real property in Cascade county vacated canceling a certificate of sale, and enjoining the officials of the defendant county from selling such property for delinquent taxes.
It appears from the complaint that the land in question stands of record in the name of three individuals, and was acquired in the following manner: One August Wedsworth died testate in Cascade county in 1915; he bequeathed a certain sum in trust for the purpose of establishing a library, reading room, and gymnasium in the town of Cascade, provided by will for the appointment of three trustees, in a certain manner, to administer the trust declared, and provided therein that the subject-matter of the trust should be known as the "August Wedsworth library and gymnasium fund," and that this fund should be administered "for the use and benefit of the town of Cascade and the inhabitants thereof" in perpetuity. In due time the trustees were duly appointed and entered upon the discharge of their duties. The will was admitted to probate, and the estate duly administered upon and closed. On March 16, 1921, by final order and decree of distribution, the assets thus bequeathed were distributed to the trustees, with directions to administer the trust in conformity with the directions of the testator.
Among the assets thus distributed was a mortgage upon approximately 2,760 acres of land in Cascade county. On January 5, 1922 the mortgagor, being unable to meet his obligation, conveyed the land by warranty deed, absolute upon its face, to the three individuals so appointed and acting as trustees, designating them as "trustees of the town of Cascade." This deed is attached to and made a part of the complaint. It is in the usual form of warranty deed, and conveys the land, "together with * * * the rents, issues and profits thereof; and also all the estate, right, title, interest, * * * possession, claim and demand, * * * as well in law as in equity * * * of the party of the first part, and warrants * * * the quiet and peaceable possession thereof, unto the said parties of the second part."
It is alleged in the complaint that, by agreement, the grantor was to hold possession of the land, rent free, for the usual period of redemption on foreclosure, but no such condition appears in the deed. The complaint alleges that the defendant county has pretended to tax the land so acquired for the years 1922, 1923, and 1924, and that such taxes are void for the reason that the land is the property of the town of Cascade, and as such is exempt from taxation; that for the delinquent taxes for the year 1922 the property was struck off to the county, and that the board of county commissioners threaten to sell the land at public auction.
A general demurrer was interposed to the complaint and by the court overruled. Thereafter the defendants answered, denying generally those allegations of the complaint referring to the acquisition of title to the lands and the invalidity of the tax. The action was tried to the court, and resulted in the judgment above referred to.
The judgment roll alone is before us, and the only specification of error made reads as follows:
"The court erred in overruling the demurrer to the complaint and in giving judgment against the appellants, for the reason that the complaint does not state facts sufficient to constitute a cause of action or to support the judgment."
The grounds on which it is contended that the court so erred are that the complaint shows on its face that the lands in question are not the property of the town of Cascade, but belong to the "August Wedsworth library and gymnasium fund," and that if this is found not to be a correct interpretation of the provisions of the will, still the town of Cascade has no such ownership of the land as to exempt it from taxation.
The question of ownership is all important in this case, for the reason that section 2 of article 12 of our state Constitution declares:
"The property of the United States, the state, counties, cities, towns, school districts, municipal corporations and public libraries shall be exempt from taxation; and such other property as may be used exclusively [for certain designated purposes] may be exempt from taxation."
This section contains two classes of exempted property, the first of which is absolutely exempt, regardless of the question of exclusive use, while the second class is exempt only if exclusively used for the purposes mentioned. Montana Catholic Missions v. Lewis and Clarke County, 35 P. 2, 13 Mont. 559, 22 L. R. A. 684. The section is to be strictly construed, and contains a description of all property which may be exempted from taxation. Cruse v. Fischl, 175 P. 878, 55 Mont. 258.
1. Counsel for defendant assert that the deed described above should have run to the grantees named, not as "trustees of the town of Cascade," but as trustees for the "August Wedsworth library and gymnasium fund," but suggest that the wording of the deed presents no difficulty, as, in equity, "that which ought to have been done is to be regarded as done." Section 8758, Rev. Codes 1921. We do not question but what the section quoted would warrant the reading of the deed as suggested, providing counsel are correct as to what "ought to have been done" at the time the deed was executed; a careful reading and consideration of the terms of the will creating the trust and of the nature of the trust will demonstrate that the deed should not have been drawn as suggested by counsel.
"A fundamental essential to the existence of any trust is the separation of the legal estate from the beneficial enjoyment." 26 R. C. L. 1196; Doan v. Parish of Ascension, 64 A. 314, 103 Md. 662, 7 L. R. A. (N. S.) 1119, 115 Am. St. Rep. 379, and note; Hospes v. Northwestern Mfg. Co., 50 N.W. 1117, 48 Minn. 174, 15 L. R. A. 470, 31 Am. St. Rep. 637. This "beneficial enjoyment," or, in other words, the equitable title to the subject-matter of the trust, is vested in the person for whose benefit the trust is created, known as the cestui que trust. Dillenbeck v. Pinnell, 96 N.W. 860, 121 Iowa, 201.
For whose benefit was this trust created? Surely not for the "August Wedsworth library and gymnasium fund"; the "fund" is but the subject-matter of the trust, legal title to which is vested in the trustees, for the use and benefit of the "town of Cascade and its inhabitants," who are entitled to the beneficial enjoyment of the fund thus created and set aside for the purposes designated. The "town" is but "an assemblage of inhabitants living in the vicinity of each other and not separated by any other intervening * * * division of the state" (Smith v. Sherry, 6 N.W. 561, 50 Wis. 210; Enterprise, Town of, v. State, 10 So. 740, 29 Fla. 128), and when organized as a municipal corporation such step is taken "for the purpose, mainly, that the people within their territorial limits may thereby be enabled, for their own interest and advantage, to administer their local and internal concerns; or in other words, that they may have the power of local self-government." Logan City v. Buck, 2 P. 706, 3 Utah, 301. For the purposes of the trust created by the will of August Wedsworth, the town of Cascade and its inhabitants are one and the same entity, and this entity is the cestui que trust.
2. The defendants contend that, if this be true, still the land is not the "property" of the town, as, under a strict construction of the Constitution, the term must be construed in its narrow sense as meaning the unqualified ownership of the land.
The article of our Constitution above referred to defines "property," as the term is used therein, to include "moneys, credits, bonds, stocks, franchises and all matters and things (real, personal and mixed) capable of private ownership." Section 17, art. 12. "Ownership of a thing" is defined in our statutes as "the right of one or more persons to possess and use it to the exclusion of others." Section 6663, Rev. Codes 1921. The constitutional provision is sufficiently broad to cover all manner of property as defined above, which may be possessed and used, under the above definition of "ownership."
But a trustee of property conveyed to him for the purpose of carrying out the trust declared does not possess and use the property to the exclusion of others, in the sense that that phrase is used in the above definition; he is but the holder of the legal title. "His is not a property right, but a legal duty founded on personal confidence; his estate is not that which can be enjoyed, but a power that may be exercised" (Arnold v. Southern Pine Lumber Co., 123 S.W. 1162, 58 Tex.Civ.App. 186 [1909]), "the equitable estate and beneficial interest, the use and enjoyment of the property or its proceeds, is in the cestui que trust" (Blackstone Com. 328; Blake v. O'Neal, 61 S.E. 410, 63 W.Va. 483, 16 L. R. A. [N. S.] 1147), "and, under the system now generally prevailing, the cestui que trust is regarded as the real owner of the property" (39 Cyc. 203).
Speaking of the equitable estate owned and enjoyed by the cestui que trust, the Supreme Court of California, in the case of Title Insurance Co. v. Duffill, 218 P. 14, 191 Cal. 629, said:
Such estates "are in...
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