Creighton v. Pringle , 3 S.C. 77 ( 1871 )

The opinion of the Court was delivered by

Wright, A. J.

The facts of the case are few, and so fully recited in the decree of the Chancellor, that their repetition here is unnecessary.

In his construction of the powers conferred on the Trustees, and the obligation imposed upon them by the marriage settlement, (of which a copy is filed as an exhibit to the bill,) he has regarded them, so far as refers to the relation in which the Trustees stood to the investment of the proceeds of the Clifford bonds, as resulting from the particular words in which they are expressed, irrespective of any control over them by the purpose and intention so plainly appearing throughout the whole instrument. He admits that if “ he had authority to sustain him in deciding that in the clause authorizing the sale or exchange ‘of the settled property,’ the word ‘hereinbefore’ could be substituted for ‘hereinafter,’” (which former word he was strongly disposed to think was intended,) •“ it would necessarily follow that no change or investment of the Clifford bonds, or any portion of them, could be made by the Trustees without first getting the written request of Mrs. Creighton for that purpose, and that even the payments made by Clifford beyond the interest could not be sustained.”

To show mistake in a written instrument, it is not indispensable that it should be by positive proof, through testimony outside of the instrument itself. If the use of a word, insensible in its application to the other parts of the deed, is to control its meaning so as to destroy the obvious intent, and even vitiate the purpose which is apparent from the context with which it is associated, then the rule which requires that such a construction shall be given to a will or deed as shall be consistent with its manifest intent, to be collected from it as a whole, will be entirely defeated. It is impossible, even from the first reading of the settlement, not to perceive that the word “hereinafter,” in the clause referred to, is senseless — no “uses, trusts,” &e., following it — while great precision has been used in their declaration in the clause which precedes it. The word “same” generally refers “to something which is mentioned before.” 'To retain the word “hereinafter,” makes the deed inconsistent with itself, besides requiring the Trustees to hold the proceeds of the property sold, or that for which it might be exchanged, on trust and conditions which could never attach, because not expressed. The plain intent of the deed is that the same uses, conditions, limitations, &c., which are annexed to the land and negroes specifically mentioned, were to attach on the property which was to be derived from their sale or exchange.

In Story’s Eq. Juris., Section 168, it is said, “and for the same reason, equity will give effect to the real intent of the parties, as gathered from the objects of the instrument, and the circumstances of the case, although the instrument may be drawn up in a very inartificial and untechnical manner. For, however just in general the rule may be, quoties in verbis milla est ambiguitas ibi nulla ex-positio contra verba expressa ftenda est, yet that rule shall not prevail to defeat the manifest intent and object. of the parties, where they are clearly discernible on the face of the instrument, and the ignorance, or blunder, or mistake, of the parties has prevented them from expressing it in the appropriate language.” A Court of Equity looks “ to the general intent of the deed, and will give it such a construction as supports that general intent, although a particular expression in the deed may be inconsistent with it.”—Arundel vs Arundel, 1 M. & K., 316; Stapilton vs. Stapilton, 1 Atk., 8.

We have no hesitation in holding that the word “hereinafter” must be read “ hereinbefore.”

There is nothing in the deed to show that the power to the husband and wife, or the survivor, to direct a sale or exchange of the property conveyed, was exhausted by a single exercise of it, and that the same authority which they had in that regard as to the land and negroes specifically conveyed, did not extend to the proceeds of their sale, or the securities in which such proceeds might be invested.

The property all came by the wife, and the right to sell or exchange was a privilege for her benefit, and that of her intended husband. The fund settled was not to remain, permanent, but to be of a character and kind preferred by the husband and wife or the survivor. If the sale or exchange of the. real and personal estate conveyed by the deed, thus made on the written request of the cestui que trust, subjected the substituted securities to a conversion at the sole discretion of the trustees, the preference of the cestui que trust might be unavailing, to resist the new change proposed by the trustees. Such a result was never contemplated by the deed. It would be a singular perversion of the privileges reserved to the cestui que trust.

The deed, in plain and comprehensive terms, conveyed the right to the wife, as the survivor, by providing that the trustees “ shall have and hold the moneys arising, or to arise, from such sale, exchange or substitution, and the property, real and personal, stock, certificates, choses in action, or other evidences of debt acquired by means thereof, to and for, and upon, the same uses, trusts, intents and purposes, and subject to the same declarations and limitations as are hereinafter (hereinbefore) set forth, limited and declared of and concerning the hereinbefore granted, released and assigned premises, and to and for no other use, intent or purpose whatsoever.” One of the intents and purposes is that, if the husband and wife, or survivor, should think it fit and beneficial to their interest, or the interest of the survivor of them, to have the aforesaid real and personal property, or any part thereof, so granted, released and transfered to the said trustees, sold and disposed of, or exchanged for other property, and the sale moneys invested in public or private stock, &c., or other property, the said trustees, on being thereunto requested, in writing, by the said husband and wife, or the survivor, shall absolutely sell, dispose of, convert or exchange the same, and so forth.

The plaintiffs do not complain of the investment in the bonds of Mrs. Heriot and others, in 1858 or 1859, of the money received on the Clifford bond. They acquiesced in the investment as judicious and properly secured, but they aver that the acceptance of Confederate Treasury notes on the Clifford and the said Heriot and other bonds, and their investment in stock of the Confederate States, was a breach of trust by the trustees, for which they are responsible. Mr. Hill, in his work on Trustees, 369, says: “If the power authorizing an investment of the trust funds on personal security require the observance of any formality, those formalities must be duly observed. Thus where the consent in writing of the wife is made requisite previous to such an investment, the trustees will be liable for investing with only her verbal consent.” We see nothing in the evidence leading to a belief that the investment in Confederate bonds was at the written request of Mrs. Creighton, and we concur with the Chancellor in his conclusion on this question of fact.

Concede, however, as contended for by the defendants, that her written request was not necessary, yet they will be equally liable. The money collected on the Clifford bonds (save as to a portion, to which we shall hereafter advert,) and loaned to Mrs*. Heriot and others, was equal to gold and silver coin, and was secured by mortgages of real estate. Was it consistent with the duty required by the trust coufided to them, to accept payment in a depreciated currency, and invest the same in Confederate bonds ? The trustees in fact paid for the mortgages so much in gold, and acknowledge satisfaction of them, in the receipt of a depreciated currency, for the amount due upon their face. Did they make any attempt even to show that in open market, in 1863, a bond secured by mortgage of real estate would only have brought the sum due upon it, to be paid in the then prevailing currency ? We may well infer from their failure to do so, that the value of such a bond would have commanded in such currency far more than the sum which it called for. If the trustees therefore had been invested with a discretionary power as to the investment, their course prevents them from claiming the benefit of the rule which sometimes excuses an error of judgment by a trustee, in doing or omitting to do the same act which prudent and cautious men in like matters do or abstain from doing in their own affairs.—Mayer and Wife vs. Mordecai, 1 S. C., 383.

What we have said as to the payment and investment of the Heriot and other bonds will apply to the $1,150 received in 1861, on the Clifford bond, for $30,210, by the said G. M. Coffin, with the consent of the said J. R. Pringle, and to the 12,970.30, on the same bond, by the said J. R. Pringle, in 1863. The balance due upon the bond was comparatively small, and it was secured by a mortgage of a large number of slaves. The bonds had been due for some years. The trustees having indulged, while the payment in a sound currency could have been compelled, there was neither a legal or a moral obligation on them to favor the debtor at the expense of the trust estate. The payment and investment cannot be approved.

It is objected by the defendants, “ that if the trustees had no right to receive the payment of the Cfifford or Heriot bonds, in Confederate Treasury notes, their receipts and satisfaction for these amounts are void, and the mortgages given to secure these amounts may be set up for the benefit of the remaindermen, and that the mortgagors are not parties to these proceedings.” The bonds were sacrificed by the parties having the legal title and right to receive, and unless there was fraud or collusion between them and the obligors, they must be hold paid. It is sufficient to refer to the ruling of this Court on the like proposition, in the case of Mayer and Wife vs. Mordecai.

We see no evidence of any acquiesence on the part of Mrs. Creighton. Her mere acceptance at times of the interest in the only currency then existing, cannot prevail to bind her to the unauthorized acts of the trustees. Her wants may have compelled her to accept the interest in whatever medium which could answer her necessary purposes. Confederate money could procure, though at an exorbitant rate, the means of subsistence, and these she was obliged to have.

A point made in the argument before us, by one of the counsel for the defendants, remains to be considered. Although it resists the right of the plaintiffs to the relief sought by the bill, on the ground that they have no equitable claim in the premises as against these defendants, yet it was not made in the answers, nor does it appear to have been referred to in the argument before the Chancellor.

It is claimed that the deed is only a conveyance to uses, and as such creates nothing but legal estates in the cestuis que use; that its form rests upon the statute of uses; and the Court is asked to apply the consequences which follow from this relation by holding that the whole estate vested successively in the parties, who, by the death of those who precede them in interest under the deed, are entitled to take. The doctrine contended for is founded on the statute of 27 Hy., 8, generally known as the statute of uses. It transfers the possession to the person entitled to the use, and so unites the possession with the use, that he who had the right to the use was seized of the land to the same extent, and “in quality, form and condition as he before had in the use.”

The statute, however, is only applied to simple trusts, whether designated in the instrument as a use or a trust, and operates upon the first use, notwithstanding the intention of the settler.—Lewin, 246. Although its purpose wras to vest the.legal and equitable estate in the person for whose benefit the use wras created, yet very soon after its enactment its whole purpose was defeated, by its being considered by the Court that there were modes of creating a trust by which the legal estate would still remain in the trustee, and the equitable interest be enjoyed by the cestui que trust. Mr. Hill, in his work on Trustees, page 63, says: “ It has been laid down that there are three direct modes of creating a trust of lands, notwithstanding the statute: 1st. Where a use is limited upon a use, as in a conveyance or devise to the use of A and his heirs, to the use of B and his heirs; 2nd. Where copyhold or lease-hold estates are limited by deed or will to a person upon any use or trust ; and, 3d. Where the donee to uses has certain trusts or duties to perform which require that he shall have the legal estate.”

If the trust is supposed to be created under the third mode, “ the point to be considered is, whether any legal interest at all, joasses to him under the limitation.”—Hill, 229. The question has been so fully considered and decided by the cases in our own Courts, that it would be but a loss of time to collect and compare the English authorities which have led our Judges to their conclusions. Nor is it necessary to encumber this opinion with the particular words of the instrument to which our Courts in the several cases gave construction. It may, in general, be said, that if any agency in regard to the trust, or its proceeds, is imposed on the trustees—if by the terms of the instrument, an active participation in the management of the trust property is required of him—if a discretion is allowed to the trustees in relation to the trust estate—and, in general, where the object of the trust would be otherwise defeated, a trust will not be held executed.—Posey vs. Cook, 1 Hill, 413; Rice ads. Burnett, Speer Eq., 579; Janey et. al. vs. Laurens, 1 Speers, 356; Wilson vs. Cheshire, 1 McC. Ch., 233; Ex parte Gadsden, 3 Rich., 467; Williman vs. Holmes, 4 Rich. Eq., 475.

In Rice ads. Burnett, Trustee, Speers Eq., 579, the marriage settlement conveyed real and personal estate of the intended wife to a trustee, to be held for her until marriage; after ‘that event in trust to permit the husband and wife to use and possess the said property for and during their joint lives, with the same right to the survivor during his or her life, with contingent remainders over, and with a provision that the property might be sold or exchanged with the joint consent, in writing, of trustees and eestui que trust, and the proceeds vested in other property subject to the same trusts.

It was held that the legal title to the real estate remained in the trustee. The provisions of the settlement in that case were not unlike those in the one before us. Here, to say nothing of there being a use to Creighton and wife during their coverture, and that the interposition of the trustees was necessary for the protection of the property against the creditors of the husband, and that, by the terms of the deed, the estate was to vest in the child or children of the wife living at the death of the survivor, “ free, clear and absolutely discharged of and from all and every further and other conditions, trust,” &c., (which implies the continuance of the trust until such event,) by plain and express words, on the written request of the husband and wife, or either of them as survivor, the trustees are required to sell and dispose of the real and personal estate, or any part of it, or. to exchange the same for other property, and the proceeds, or the substituted property, are to be held by them upon the same terms, trusts, &e. For the performance of this duty, it is absolutely necessary that the legal estate should be in the trustees. The sale or exchange and reinvestment are to be made by them, and if the use is to be held executed, how could the trustees perform the duties so imposed by the deed? If the trust is to be regarded as executed in the husband and wife, and the legal estate entirely out of the trustees, what estate did the purchaser take in the land and negroes conveyed by the trustees ? In Barker vs. Greenwood, 4 M. and W., 429, Parke, B., said: “ It is also equally clear and settled that if the testator distinctly expresses his meaning to be, that the trustees are to interfere in the execution of the trusts, and certain duties are cast upon them; if he order, for example, that they shall receive the rents, &c., there they take the legal estate, whatever words may be used; and the case of Gregory vs. Henderson, 4 Taunt., 772, shows that very slight circumstances of this nature are sufficient for this purpose.” There is something more to be considered as to the execution of the trust under this settlement. There was created, in favor of the trustees, a trust to preserve contingent remainders. This necessarily vested them with a legal title, for how could such interest be secured except through the legal title of the trustees ? If the trust was executed, the settlement then conferred a power which, by no possibility, could be executed. In Biscoe vs. Perkins, 1 V. and B., 485, “ A devise to trustees, their heirs, &c., for the life of the devisor’s son, to support contingent remainders, in trust to permit him to receive the rents for life, and after his decease to his first and other sons, intail: an equitable estate in the son: the legal estate in the trustees, with a legal remainder to the first and other sons.” In Janey et. al. vs. Laurens, Judge Evans, delivering the opinion of the Court, said: “So also in trusts for the use of a married woman, or to preserve contingent remainders, the very end and design of the trust would be defeated if the statute executed it.”

It is not to be forgotten that the settlement here conveyed both real and personal property. All was sold to one purchaser, Clifford, who gave separate bonds for the land and the slaves. The contest between the parties is as to the amount received on the bond for the slaves. “ But trusts of chattels are not within the purview of the Act.”—Lewin, 7; and language to the same effect will be found in all the elementary treatises on the subject. In Watson vs. Pitts, 2 McMul., 298, the Court said: “ The statute of uses has no application to trust of personalty.” In Rice vs. Burnett, the learned Chancellor, delivering the opinion of the Court,said: “Neither the statute of uses, nor the 10th section of the statute of frauds, embrace personal property.” See also Youmans vs. Buckners, 3 Hill, 222; Ramsay vs. Marsh, 1 McC., 255; Harlley vs. Platts, 6 Rich., 315. Deference to the counsel who pressed his argument on this part of the case with so much earnestness, has induced us to expend more time in the consideration of it than was due to any effect which possibly could be given to it in the cause, for suppose the use was executed, and the statute of Henry VIII applied to deeds or devises of personal property, how could it avail these defendants, who cannot and do not deny the sale of the slaves to Clifford, taking his bond for the purchase money — its collection — the investment of the proceeds in the Heriot and other bonds, and the reinvestment of the proceeds of these in Confederate securities? If they did not act in the premises under the deed, then they are mere volunteers, and having converted a trust fund, to which the plaintifls are entitled, must be subject to all the liabilities of other constructive trustees.

The decretal order of the Court was made on the 23d May, 1871. This opinion will be filed with it.

Moses, C. J., and Willard, A. J., concurred.