Tynan v. Warren

• Decision Date: 21 March 1895
• Parties: TYNAN v. WARREN et ux.
• Court: New Jersey Court of Chancery

31 A. 596

53 N.J.E. 313

TYNAN

v. WARREN et ux.

Court of Chancery of New Jersey.

March 21, 1895.

(Syllabus by the Court.)

Bill by Joseph B. Tynan against Richard Warren and another to establish a trust. Heard on pleadings and proofs. Decree for complainant.

George S. Hilton, for complainant.

Michael Dunn, for defendants.

GREEN, V. C. This bill is to establish a trust. The complainant, Tynan, and defendant Warren were sureties on an administrator's bond, dated February 8, 1876, in the penalty of $16,000, filed in the Passaic county surrogate's office. On a rumor that the administrators were mismanaging the estate, one of them, on May 6, 1876, assigned to Tynan and Wanen, as indemnity in respect of their liability, all his interest in a mortgage of $7,000 on property in Paterson, which mortgage at the time of such assignment was held by the Passaic County Savings Bank, as collateral for a note for $5,000, on which there was $3,400 due. The mortgage was afterwards foreclosed by the savings bank, and the property sold by the sheriff to Tynan and Warren, on their bid of $3,400. The costs, interest, and fees were paid by Tynan and Warren, each advancing one-half thereof. They then agreed to raise $3,500 by mortgage on the property; to pay the debt of the savings bank and other expenses. The bill alleges that then it was agreed between Tynan and Warren that the deed should be made by the sheriff to Warren; that Warren should execute a new bond and mortgage for such loan, pay the amount due the savings bank out of the loan, and apply the remainder thereof to the payment of other claims, including past-due taxes, expenses, etc., "and to hold the premises for the joint and equal benefit of himself and complainant, until the reason for the arrangement stated should cease to exist." The answer of defendant admits that the property was sold by the sheriff to Tynan and Warren; that each advanced one-half of the amount paid on the sale; that it was arranged between complainant and defendant that they should procure a loan of $3,500 from the Paterson Savings Institution on the property, to pay the balance of the purchase money and other expenses; that the deed was made out in defendant's name, at the suggestion of the complainant, and that it was agreed that he (the defendant) "should hold the title to said land in trust for the equal benefit of himself and the complainant, subject to the said mortgage for $3,500, * * * until a purchaser could be found for it." The defendant thus does not deny the allegation of the bill that the title was put in his name, to be held by him in trust for himself and complainant, but expressly admits that he did agree to take the title and hold the same in trust, for the equal benefit of himself and complainant, until a purchaser could be found for it.

This is an express trust. It is not one raised by law from the circumstances of the case, but created, and its terms and conditions fixed, by the express agreement of the parties. 1 Perry, Trusts, § 73. It was not necessary that it be created by writing (Jamison v. Miller, 27 N. J. Eq.586); but, resting in parol, the complainant, under the statute of frauds, could not enforce it by suit if properly contested; and this is all that is meant by the quotation from Baldwin v. Campfield, 8 N. J. Eq. 891, at page 892; "An express trust must be in writing." If a trust has been created by and rests in parol, and the defendant either does not answer (Smith v. Howell, 11 N. J. Eq. 349), or if he, by his answer, denies the trust, it cannot be enforced against him, for it cannot be legally proved (Walker v. Hill, 21 N. J. Eq. 191, affirmed 22 N. J. Eq. 513; Wakeman v. Dodd, 27 N. J. Eq. 504); or, if he admits the creation of the trust, he may successfully invoke the protection of the statute. This was at one time doubted, but is now indisputably established. Van Dyne v. Vreeland, 11 N. J. Eq. 370, 12 N, J. Eq. 143; Dean v. Dean, 9 N. J. Eq. 425; Ashmore v. Evans, 11 N. J. Eq. 151; 1 Perry, Trusts, § 85. On the other hand, the rule that if the defendant, by his answer, admits the alleged trust, and does not claim the benefit of the statute, equity will enforce the trust, if continuing (Flagg v. Mann, 2 Sumn. 486, Fed. Cas. No. 4,847), is recognized as long ago as Hampton v. Spencer, 2 Vera. 288; Nab v. Nab, 10 Mod. 404; Ryall v. Ryall, 1 Atk. 59; Cottington v. Fletcher, 2 Atk. 155. When this last rule originated, the answer of the defendant was taken under oath, and was required to be signed by the defendant. This latter requirement was so often disregarded that Lord Hardwicke (April 27, 1748) promulgated a rule of court making it obligatory. 2 Atk. 290; Hindes, Prac. 199; Daniell, Ch. Prac. 745.

The practice of the defendant signing the answer has not obtained in this state, the signature of counsel only being required (Dickerson v. Hodges, 43 N. J. Eq. 45, 10 Atl. 111); but the signature of the defendant was, of course, subscribed to the affidavit, and in this way became part of the answer when it was verified. The fact that bills now generally waive answer under oath results in the answers being rarely signed in any way by the defendant, and the answer filed in this suit is not in any place signed by the defendant. Does this fact take the case out of the rule stated, that where the bill charges a trust, and the answer admits it, it will be enforced if subsisting, unless the defendant claims the benefit of the statute? The solution of this question must depend largely on the reason of the rule. In ascertaining this reason, we may obtain much light from cases brought for the specific performance of parol agreements for the sale of lands, of which there are very many (see Pom. Spec. Perf. § 140, note 5); for the terms of the statute of frauds with reference to trusts and agreements for the sale of lands are, so far as the requirement of a writing signed by the party is con cerned, so similar that the application of the statute and the reasoning with reference thereto, in one case, must undoubtedly apply to the other,—a conclusion recognized in Story, Eq. PI. § 70; in Mitf. Eq. PI. 267, 268; Dean v. Dean, supra; Browne, St Frauds, § 113. Our statute relating to trusts (Revision, p. 445, § 3) Is an almost exact copy of 29 Car. II. c. 3, §§ 7, 8; and the fifth section of our act relating to agreements for the sale of lands is taken from section 4 of the English act (Append. Browne, St. Frauds). Prof. Pomeroy, speaking of the enforcement, by decree of the court, of a contract within the statute of frauds when a verbal contract is alleged by the plaintiff, and the defendant admits it in his answer, without at the same time interposing the statute of frauds as a defense in his pleadings, says (Pom. Spec. Perf. § 140): "Although this rule is firmly established, the cases and text writers are not agreed as to the reasons for its adoption. Three principal ones have been suggested: First. It has been said that such an admission by the defendant obviates all the dangers which the statute was intended to prevent; that the object of the legislature was to remove all the opportunity and occasion for frauds and perjuries which are furnished by mere parol testimony, and the written statements by both the parties in their pleadings, as to the terms of their agreement, leave no possible room for any fraud or perjury. Secondly. It has been suggested, and especially by Judge Story, that the answer signed by the defendant or by his attorney, and admitting the contract as set forth by the plaintiff, technically and literally satisfies the very demands of the statute, since it is a note or memorandum in writing, signed by the party to be charged, or by his agent duly authorized. Thirdly. It is argued that an admission of the contract, without at the same time setting up its invalidity or the impossibility of enforcing it resulting from the statute, is a deliberate and formal waiver of all benefit which the defendant might have derived from the legislation; this benefit being personal, and therefore capable of being waived. Both the first and second of these reasons are open to an objection fatal to each of them. If sound, they should apply with equal force to the case where the defendant sets up and relies on the statute after admitting the contract, and to that where he does not set up the statute. If an admission of the agreement obviates the dangers of perjury, or constitutes itself a memorandum, this would be none the less true if defendant should add to such admission a plea of the statute as a defense. The rule cannot be accounted for on either of these grounds. Its explanation must be found in the third reason, which alone is consistent with either doctrine." Story, Eq. PI. § 763, states the ground as being that the defendant has, by not claiming the benefit of the statute, thereby renounced its benefit although In Story, Eq. Jur. § 755. he suggests that the answer being signed by the defendant is a compliance with the statute. Chancellor Vroom, in Hutchinson v. Tindall, 3 N. J. Eq. 357, in which he refused to follow Hampton v. Spencer, 2 Vern. 288, in that it executed a trust set up in the answer, although not charged in the bill, says: "I am inclined to believe that if the present complainant had filed a bill claiming this deed to be a deed of trust, and praying that it might be so decreed according to the original intention of the parties, the answer of the defendant admitting the trust, would have been good evidence of it. It would have amounted to a sufficient declaration of the trust." Chancellor Williamson, while he does say in Dean v. Dean, 9 N. J. Eq. 425, at pages 427, 428, that the reason why the court will execute a parol trust admitted by the answer is because it takes the answer as the writing by which the trust, in the language of the...