Webb's Academy v. Hidden , 103 N.Y.S. 659 ( 1907 )

Lambert, J.:

William' H. Webb, in his lifetime and in the year 1889, caused to' be established Webb’s Academy and Home for Shipbuilders, It was incorporated under ,the laws of Hew York, and since its creation has been supported- through the generosity of the founder. This corporation is the plaintiff. William E. Webb, defendant, is.the only surviving son of William H.-Webb, and H. Ada Webb is his' wife. On the 26.th day of September, 1889, William H. Webb voluntarily gave to the plaintiff by deeds absolute, subject only to a life estate in himself, certain real estate of the approximate value of $2,000,000, which property passed into plaintiff’s possession and full enjoyment upon the death of its benefactor, and has since that time paid an annual income of over $87,000. On the 'same day Mr. Webb and his wife- joined in a deed of the premises involved in this action to one Thomas B. Hidden, and the latter, likewise on the same- date, made and delivered a deed of the said premises, the habendum clause of which is as follows: “ To have and to hold all and singular, the above granted premises together with the appurtenances and every part and parcel thereof, unto the said William H. Webb and his assigns for and during the natural life of said' William H. Webb, and upon and after his death unto the said Henrietta A. Webb, her heirs and assigns forever,, if she then be living; but if the said Henrietta A. Webb shall not survive the said William H. Webb, then upon and after the death of said William H. Webb, unto the said Webb’s Academy and Home for Shipbuilders, its successors and assigns forever, subject as aforesaid.” Mr. Webb and his wife thus joined in conveying to Mr. Hidden property which was owned in fee by Mr. Webb, subject to the dower rights of his wife, and he, Hidden, conveyed a life estate to Mr. Webb, with an absolute fee to Mrs. Webb if she survived her husband, otherwise to Webb’s Academy. The said Webb’s Academy is recited as one of the parties of the second part, but it in fact had no relation to the deed, except that in the event of Mr. Webb surviving his wife, it was to become the' owner of the fee. This deed, as well as the one npon which it was based, was recorded. Resulting from this situation, it must be assumed that at this time the academy had no interest in the transaction, except in the event of Mrs. Webb dying before her husband. It furnished no part of the consideration and its interest was entirely contingent upon the life of Mrs. Webb, who, in fact, survived her husband, and thus the record title became vested in her.

Upon the same day, and" probably as a part of a general scheme of providing for the academy, Mr. and Mrs. Webb made and executed a contract, which was delivered to Mr. Webb in which it was recited that “ Whereas, the party of the áecond part (Mr. Webb) now, previous to-and until the conveyance thereof hereinafter mentioned, the owner, subject to a mortgage for Eighty thousand dollars and interest of the following described premises ” (referring to the premises in suit), “ And whereas the party of the second part has this day pursuant to an agreement with the party of the first part, and subject to said mortgage for Eighty thousand dollars, conveyed the said premises to Thomas B. Hidden, and has secured, the said Thomas B. Hidden to convey the same as follows : to wit, to the party of the second part for and during his natural life, and upon his death to the party of the first part, her heirs and assigns, if she be then living, but if the party of the first part should not survive the party of the second part, then upon the death of the party of the second part, to Webb’s Academy and Home for Shipbuilders,” etc.; and “ Whereas it is a part of the agreement and' the consideration upon which said conveyances have been made, that if the party of the first part shall survive the party of the" second part, and the title to said premises become vested in her pursuant to said conveyances, she will forthwith perform, all acts and execute all instruments, which shall be requisite and proper, in order to vest in said Webb’s Academy and Home for Shipbuilders, the fee simple of said premises upon her death and subject to an estate in her for her own life, and also subject to said mortgage for Eighty thousand dollars, * * * and otherwise free and clear from any incumbrances thereon, * * * and to that end will either by a proper will duly executed devise the said premises in fee to said Webb’s Academy and Home for Shipbuilders, or by a proper deed duly executed and acknowledged convey to said Webb’s Academy and Home for Shipbuilders a remainder in fee in said premises, to take effect upon her death; How, therefore, in consideration of the premises-and of the sum of one dollar, * * * the party of the first part does, for herself, her heirs, executors and administrators, covenant and agree to and with said party of the second part, his heirs, executors, administrators and assigns, and to and with the -said Webb’s Academy and Home for Shipbuilders, its successors and assigns, that in case she shall survive the party of the second part and the title to said above described premises shall become vested in her pursuant to said conveyances,-she will forthwith do and perform all acts and things, and execute, acknowledge and deliver all instruments which shall be requisite and proper in order to vest in said Webb’s Academy and Home for ■ Shipbuilders, the fee simple to said premises after her death, and subject to an estate in her for and during her natural life, and subject also to said mortgage for Eighty thousand dollars, * * * and for that purpose will either by last will and testament, duly executed and containing apt' and effectual provisions,, devise the said premises to said Webb’s Academy and Home for Shipbuilders, its successors and assigns, or by deed duly executed, and containing apt -and effectual provisions, convey to said Webb’s Academy and Home for Shipbuilders a remainder in fee in said premises to take effect upon and after her death.” Mrs. Webb likewise covenanted and agreed for herself, her heirs, executors, administrators and assigns, with Mr. Webb, “that the above covenant and agreement is made to and With and shall enure to the benefit- of the said Webb’s Academy and Home for Shipbuilders,”, etc.'

The deeds referred to were duly recorded, and the ■ contract mentioned remained in the possession' of Mr. Webb, without any knowledge or privity on the part of the plaintiff, for the period of about ten years. Before Mrs. Webb came into the possession of the premises under the deeds and contract, mentioned, andón the 3d day of October, 1899, Mr. and Mrs. Webb entered into a new agreement, in which the provisions of the previous contract were recited and by m'utual agreement abrogated, and it was then agreed that the property should be transferred to the son of the parties in substantially the same language as was employed in the original contract in providing for its transfer to the plaintiff. William H, Webb died about October 30,1899. Before her death and the commencement of this action the son, William E. Webb, conveyed all his right in the premises to his mother, Henrietta A. Webb, and her estate is represented in this action by the defendant Hidden as trustee. The learned referee before whom this case was tried reached the conclusion that through and by the deeds and contract of September 26, 1889, an irrevocable trust resulted in behalf of the plaintiff, and that it was entitled to the premises, as well as the sum of $99,905.11 accrued interest and profits. The defendants have severally appealed from this judgment entered upon the report of the referee.

It was conceded upon the argument, and is manifest, that the plaintiff has no standing in court to sue upon the contract between Mr. and Mrs. Webb, there being no obligation on the part of either of them to the plaintiff. It is a stranger to the contract, its consideration and obligations. (Lawrence v. Fox, 20 N. Y. 268, and kindred cases.) ■ The judgment must be sustained, if at all, upon the theory that by the instruments of September 26, 1889, Mr. Webb by a voluntary act unknown to the plaintiff, to which he owed no legal duty, established an irrevocable trust in its favor.

It is not contended that a valid express trust under the statutes of Hew York was created, but that the conveyance to Henrietta A. Webb, in consideration of and conformity with the covenants on her •part contained in the contemporaneous agreement, established a trust relation between the grantee Henrietta A. Webb and the plaintiff as beneficiary of the trust, and the effect of the Hew York statutes relating to uses and trusts is conceded to be immaterial. The proposition of the learned counsel for the respondent is that William H. Webb, being the absolute owner of the estate, made a complete conveyance thereof to Mrs. Webb in consideration of her promise, and covenant that the academy should have the remainder after her death, and that there being complete conveyance of the property by the owner in consideration of the promise of the grantee to convey an estate therein to a third person, the conveyance is in legal effect, so far as concerns such third person, a conveyance in trust, and there was an immediate vesting of the estate not to be changed by any subsequent agreement between Mr. and Mrs, Webb.

The ■ fundamental question involved in the present controversy ■ relates to the establishment of an irrevocable trust duty imposed upon Mrs. Webb to convey, and we are of the opinion that such trust relationship does not exist. To constitute a trust there mtist be either an explicit declaration of trust or circumstances which clearly disclose that a trtist was intended to he created. If an irrevocable trust which passed title at that time to Webb’s. Academy' was not created the plaintiff’s case necessarily fails because a new agreement respecting the property could be made. “ It would,” says the court in Beaver v. Beaver (117 N. Y. 421), “ introduce a dangerous instability of titles, if anything less was required, or if a voluntary trust inter vivos could be established in the absence of express words, by circumstances capable of another construction,' or consistent with a different intention.” (Young v. Young, 80 N. Y. 438.) The terms of the conveyances and contract do not in express language vest the title to the premises in the plaintiff. The learned referee concluded that the contract, inclusive of the deeds,' was not an executory contract and within recall by the parties; that an estate was vested in Mrs. Webb burdened with a trust obligation which carried an immediate vested right in the plaintiff. ' Such a consequence was found to be the intention of the parties.

In this conclusion we are unable to agree. Mr. and Mrs. Webb owed no legal or moral duty to the plaintiff, based upon any legal or equitable consideration. The only possible right of the plaintiff . to the property in question depends upon the voluntary act of both Mr. and Mrs. Webb. She merged her right of dower in the conveyance to Hidden at the time the latter made the deed to her; and the question is : Was it the intention of these' two persons, all the covenants being upon the part of Mrs. Webb, to establish an irrevocable trust. ? If it was, why did they not reserve a life estate for themselves and cause the transfer of the property directly to the academy? This was done in the case of the other property conveyed at the same time. It would have been certain of producing the desired result, if the intention was in fact to make an irrevocable disposition of the property. The practical interpretation of. an agreement by the parties to it is always a consideration of great weight in ascertaining what the parties intended. (Insurance

Co. v. Dutcher, 95 U. S. 273; Sattler v. Hallock, 160 N. Y. 291.) For a period of upwards of ten years Mr. Webb, during all that time the president and sole supporter of the plaintiff, never told any member of the board of directors or officers of the plaintiff of the existence of this contract through which it now seeks to maintain title to the premises in question. This fact alone, to my mind,, is inconsistent with an intention to create an estate for the benefit of the plaintiff. Again, after the expiration of ten years and while Mr. Webb was in the possession of his life estate, he and his wife, acting in good faith and within their legal rights, as they interpreted the contract, annulled it and substituted therefor a new contract which gave the property to their son. They assumed that the contract in question was an executory contract and revocable at any time before execution. It is hard to conceive that these people entered into this contract between themselves, keeping it secret from the plaintiff and finally concurring in a contract óf annullment, if they, in September, 1889, understood that they were creating an irrevocable trust in favor of the plaintiff. The deed gave the fee of the premises to Mrs. Webb if she survived her husband. If she predeceased her husband, then it was to go to the plaintiff. The contract merely provided for the transfer of the premises to the plaintiff, upon the death of Mrs. Webb, provided she came into ownership under the deed. The contract must, therefore,, have been understood to have been executory during the entire lifetime of Mr. Webb, and as there was no obligation on the part of either of them to give the property to the plaintiff to the exclusion of their son, and the plaintiff not having changed its position in anticipation of coming into possession of the property, there is no reason why a court of equity should be astute to discover an intention where none is expressed, and where the facts and circumstances do not reasonably, if not irresistibly, lead to the disclosed intention to create a trust which should be irrevocable. It seems to us that the fair and reasonable construction of the conduct of the parties is that after the deed was made and delivered they agreed as to what they mutually desired to be done with the property in the event provided for in the contract, and that, as between themselves, they stipulated and agreed that this disposition should be made m the event that Mrs. Webb survived her husband, and if this event had happened while.the contract was-, yet in force, it is not to be doubted that Mrs. Webb -would have complied with its conditions. But before the contract could have any force or effect, and before its contents were known to the plaintiff, the parties thereto, in harmony with their natural right, executed a new contract upon a sufficient consideration and annulled the pre-existing one. If this does not negative the idea that the parties intended an irrevocable trust, it certainly makes that view as definite and certain as the contrary one, and the rule in such cases prevents the court from holding that a trust, has been created.

It is argued by the appellant that this case, in principle, is analogous to those cases.in which persons have made deposits in savings banks in trust for third parties, the depositor's retaining the evidences of the deposits and making no mention of the same to the persons in whose behalf the trusts are nominally made, and where the courts have held that if the depositors die without revoking the trust, the money is vested in the persons named as beneficiaries, but that during the lifetime of the depiositors the beneficiaries have no rights, and the dépositors have the power to revoke the trust. In Matter of Totten (179 N. Y. 112) the court .reviewed the decisions upon this line of cases and laid down the proposition that “ A deposit .by one person of his own money in Iris own name as trustee for another, standing alone, does not establish an irrevocable trust during the lifetime of the depositor. It is a tentative trust merely, revocable at will, until the depositor dies or completes the gift in his lifetime by some unequivocal act or declaration, such as delivery- of the pass book or notice to the beneficiary. In case the depositor dies before the beneficiary without revocation or some decisive act or declaration of disaffirmance, the presumption arises that an absolute trust was created as to the balance on hand at the death of the depositor.” The argument is not without force and the principle would seem to apply here. Although there may be no such thing as a tentative trust of real estate, yet there was an obligation binding upon the conscience of Mrs. Webb if she came into the possession of the.estate while the contract was in existence to execute the same.- That event did not happen. While Mr. and Mrs. Webb were alive, and while the fee of the premises in question and all rights, thereunder were vested in them, they had a clear right as against the plaintiff in this action to revoke the trust, and • to dispose of the property as they might mutually agree, for the determinant fact remains that there never was a delivery of any deed or conveyance passing title to or for the benefit of the plaintiff.

It does not seem necessary to discuss the suggestion that there may have been a power in trust, for if the parties had a right to revoke their contract, and we reach the conclusion that they had and did, there was no more foundation for a power in trust than there was for an irrevocable trust.

The judgment appealed from should bp reversed, and a new trial ordered before another referee, with costs to appellants to abide event.

Patterson, P. J., Laughlin and Houghton, JJ., concurred:'