Neal v. Bleckley , 51 S.C. 506 ( 1898 )

The opinion of the Court was delivered by

Mr. Justice Gary.

This action was commenced in February, 1895. John B. Neal did not answer. The case was heard by his Honor, Judge Gary, at the February, 1897, term of the Court, upon testimony which had been taken and reported by the master, and the decree herein was filed on the 21st of May, 1897. Pending the suit, the defendant, Sylvester Bleckley, died testate, ^nd by order of the Court his executors were substituted as defendants. In order to understand clearly the questions raised by the exceptions, it will be necessary to set out the complaint, answer, decree, and the exceptions.

1 Some of the exceptions, complaining of error on the part of the Circuit Judge in overruling the demurrer, are upon grounds that were not urged upon him, and cannot, therefore, be considered; but we will proceed to consider those that allege error in overruling the demurrer upon the grounds presented before the Circuit Judge upon the hearing of the case.

2 The first ground upon which the appellants contended that the demurrer should be sustained was: “Because the complaint does not allege that Mrs. Sarah C. Neal was ever appointed guardian ad litem of the minor plaintiffs.” Hven admitting that this objection could be taken by oral demurrer upon the hearing of the case, and admitting, also, that it was necessary to allege in the complaint that Mrs. Sarah C. Neal was appointed guardian ad litem of the infant plaintiffs, and that these infants had not been properly made parties plaintiff, still the demurrer could not be sustained, because there were other plaintiffs in whose behalf the complaint stated facts sufficient to constitute a cause of action. A complaint cannot be dismissed on oral demurrer when it states facts sufficient to constitute a cause of action as to any of the plaintiffs.

The second ground of demurrer relied upon by the appellants was: “Because the complaint does not allege the minority of the plaintiffs, or any of them.” This objection is disposed of by what was said in considering the first objection.

3 The third objection relied upon by the appellants was: “Because no cause of action is stated in the complaint in favor of these plaintiffs against these defendants, because it appears from the deed of trust, to which reference is asked, on the face of the complaint, and from other allegations of the complaint, that John B. Neal, trustee, has the right or power to sue for and recover rents, issues, and profits of the trust estate, for the reason that, as appears on the face of the complaint, his trust continues of force until the youngest of these children, the cestui que trustent, come of age, and the legal estate is, therefore, in him until that time.” The complaint alleges a breach of the trust by the trustee, and that the appellants participated in such wrongful act, with notice of the trust, and received a benefit therefrom. In Perry on Trusts, section 877, it is said: “If the trustee commit a breach of trust, and third persons obtain the benefit of it, they must be joined as defendants in a suit by the cestui que trust. If the trustee convey the property to a third person, with notice of the trust, or without consideration, such third person may be sued by the cestui que trust, and must be joined with the trustees in a suit for relief by the cesüd qtie trust.'1'1 In Wood on limitation of Actions, section 208, the following language is used: “If he” (the trustee) “has estopped himself from suing by a sale of the property, thus uniting with the purchaser in a breach of his trust, the wrong is to the beneficiaries, not to him; and, while he cannot sue, the beneficiaries, if under any disability, are not affected by the statute” (italics ours). Many other authorities could be cited to the same effect; but we deem it unnecessary to cite them to show that this objection was properly overruled.

4 The fourth objection relied upon by the appellants was: “Because, under the terms of the deed of trust, the children had no interest beyond a maintenance and education and support. They could not hold the trustee liable for more than that — ergo, they cannot hold these strangers liable for more than he would have been responsible for, since the complaint alleges they are trustees in their own wrong through his acts or breach of trust.” The Circuit Judge at that stage of the case could not have construed the deed, as it was not before him — the complaint only making reference to its record. But waiving such objection, as it will be necessary any ( way to construe the deed, we will consider this objection just as if the deed was at that time properly before the Court for interpretation. The deed (omitting the formal parts), is as follows: “To have and to hold, all and singular the premises before mentioned unto the said John B. Neal, his executors, administrators or assigns, in trust, however, for the sole and separate tise, benefit, and behoof of his children, Mary Tee Neal, Alfred McDonald Neal, Sarah V. Neal, Elizabeth A. Neal, Cynthea O. Neal, and J. B. Neal, jr., until the youngest of them have become of age; in that event, the estate herein conveyed to vest in fee simple in said children, their heirs and assigns forever. If before the youngest of said children shall become of age any of the said children of the said John B. Neal should die without bodily heirs, then the share or shares of the child or children so dying shall be divided equally between the survivors. But if the child or children so dying should have bodily heirs, then the share or shares of the child or children so dying shall descend to them and be divided equally between them. The said John B. Neal (his executors, administrators or assigns), trustee as aforesaid, is authorized and empowered to use the rents, issues, and profits in educating and supporting said children. He is hereby further authorized and empowered, whenever he deems it necessary and proper for the protection of:the interests of said children, to sell said land aud execute title therefor, and reinvest the proceeds thereof in real estate of equal value, for the zise of said children as aforesaid'1'1 (italics ours). It is contended that the use of the property was for the sole benefit of the trustee, subject to the provision that the children were to receive an education and support therefrom. 'The words: '•'■in trust, however, to and for the sole and separate use, benefit, and behoof of his childrenf and the power conferred, “to sell.said land and execute title therefor, and reinvest the proceeds thereof in real estate of equal value, for the zise of said children as aforesaidf mean just what they clearly express, that the use of the land was for the benefit of the children, and not of the trustee. The appellants contend that the provision of the deed that “the said John B. Neál * * * trustee as aforesaid, is hereby authorized and empowered to use the rents, issues and profits of said land in educating and ‘ supporting said children,” show that the rents, issues and profits of the land were to be the individual property of the said John B. Neal, subject alone to the education and support of the children^ that he was to have the income in consideration that he would educate and support the children. These words are found in an independent and separate sentence, and were only intended to confer the power upon the trustee, beyond all question, to expend so much of the income as might be necessary in educating and supporting said children. The express language of the deed is inconsistent with the idea that the trustee was to be the beneficial owner of the rents, issues and profits. The appellants rely principally Upon the authority of Rainsford v. Rainsford, Rice’s Eq., 343, and Perry on Trusts, section 612. In the case of Rainsford v. Rainsford, the Court says: “In the first clause of the will the testator gives'to ‘Esther eleven negroes, by name, absolutely and unconditionally, and in a subsequent clause, he makes a similar provision for his grand-daughter, Mary, both .then infant Children of his son, tlie defendant.’ The following is found in the 8th clause of the will, to wit; ‘And I do hereby appoint my son Thomas (the defendant) guardian of the said Esther and Mary, and direct that he shall have the use of the property herein devised to them until'vthey come of age or marry, for their maintenance and education.’ The language of these provisions of the will, when taken together, are too plain to admit of any doubt about their interpretation. Clearly the testator intended that the defendant should have the use and possession of the negroes until his daughter arrived at the age of twenty-one, or married; that he was to maintain and educate them, and upon the. happening of one or the other of these contingencies, the negroes were to be delivered over to them. The question then is, what did the testator intend by giving to the defendant the use of the negroes until the legatees came of age or married? Was it that he was to have the use as an equivalent for their maintenance and education, or-did he intend that the defendantshould.be held to a strict account for hire? There is no question that generally the usufruct' will follow the corpus of the legacy. But it is equally true that the testator had the legal right to confer on one a vested interest in the property bequeathed, and on another the use for a limited period, or until the happening of some contingency; and when he directs that Thomas shall ‘have the use of the property,’ his will is as clearly expressed, and of equal validity with the direct bequest of the corpus to Esther. Thomas is to have the use, and must provide for the education and maintenance of his daughters. This is the plain common sense interpretation of the language of the will. * * * The clause in question, in itself, I think, sufficiently indicates an intention that he should not be charged with hire. The testator appoints the defendant guardian of the legatees, which of itself would entitle him to the possession and charge him with an accountability for the income of the estate, and he must have intended something beyond this when he gives him the use; and for what else but that the use should be an indemnity for the education and maintenance provided for in the will.” In the case of Rainsford v. Rainsford, the words were quite different from those in this case. In that case, the use was conferred upon the trustee, who, by operation of law, as guardian, was entitled to the possession of- the slaves, but subject to accountability for their hire, and any other construction of the will would have rendered the words nugatory that conferred the use upon the trustee. The context showed that he was given the use of the slaves in consideration of his supporting and educating the infants. In the present case, however, the deed expressly provides that the trustee was to hold “for the sole and separate use, benefit, and behoof of the children,” and, in a separate clause, was only azithorised and empowered to use the rents, issues, and profits of said land in educating and supporting said children. There is not a single expression in this deed showing that any beneficial interest was intended to be given John B. Neal in the rents, issues, and profits; but he only had the power to use so much óf the income as was necessary to educate and support the children. We fail to see how the power to use certain trust property for a particular purpose can have the effect of making the trustee the beneficial owner of the property. Section 612 of Perry on Trusts, relied upon by the appellants, contains the following: “But when the income is expressly given to the pather for the maintenance of his children, these rules do not apply, for such gift is in some sort a gift to the father. If income is directed to be paid to a parent ‘for’ or ‘towards’ the maintenance of children, in case of their death under twentj'-one years, the shares of each, with all accumulations, is to the survivors, the father, having supported the children, is entitled to the income without account” (italics ours). The law stated in the foregoing section is not applicable to this case, for the reason that the income was not given to the trustee, but he was only clothed with a power for the purpose mentioned in the deed. Having reached the conclusion that the children were entitled to the rents, issues, and profits of the land, subject to the power hereinbefore mentioned, we will at this time consider to what extent the trustee had the right to dispose thereof, and the principles upon which the accounting should be had. First. The terms of the deed necessarily imply that the trustee had the power to sell the products of the land, as he would not otherwise have been able to carry out the purposes of the trust. Therefore, for any of the products which the trustee may have sold to the appellants for cash, and not as a payment on any precedent indebtedness, the appellants would not be chargeable.

5 Second. The trustee had no power to contract debts for the trust estate so as to make it liable for their payment. Any credit extended to him was as an individual, and not as trustee. Creditors, however, have an equity when they can show that the articles furnished and sold were for the benefit of the trust estate, to subject the rents, issues, and profits to the payment of their claims. In the case of Boggs v. Reid, 3 Rich., 463, the Court says: “The duty of a trustee is to hold and employ the property for the benefit of the cestui que trust. Persons, therefoi'e, who deal with him must do it upon his individual credit, and not upon the credit of the trust estate. Having the management of the estate, necessarily implies a power for its maintenance and support. He is authorized, therefore, to pay doctors’ bills and taxes, to purchase plantation tools and the necessary supplies for the slaves, and to reimburse himself out of the proceeds of the crop. But that is a matter with him and the cestui que trust, with which the creditors have nothing to do. They are the creditors of the trustee and not of the estate, and even the trustee is not authorized to pledge the capital, but must keep the expenditures within the income of the estate.” That case also contains other language applicable to this case. The appellants, under the principles just stated, are not chargeable with so much of the products as they can show were delivered to them in satisfaction of advancements made by them for the benefit of the trust estate, or in educating and supporting the children.

Third. If it should be found as a fact that the alleged permanent improvements were necessary for the enjoyment of the trust estate, such as the Court of Equity would then have sanctioned, if application had been made to it for permission to invest the income therein, then the appellants should be relieved from liability for receiving said products to the extent that the said improvements imparted value to the land by reason of any advancements which the appellants may have made for that purpose. Lewis v. Price, 3 Rich. Eq., 173.

6 Fourth. The appellants are chargeable with such of the products as were delivered to them in satisfaction of any individual indebtedness of John B. Neal or of his wife, as this was a clear violation of the trust.

3 The last objection to the complaint relied upon by the appellants on their oral demurrer was: “Because, if the allegations of the complaint are true, the trustees should' have brought action for claim and delivery of personal property, at the time of the conversion, for the recovery of the specific property taken.” This objection is disposed of by what was said in considering the third objection.

7 The appellants set up the defense of the statute of limitations, and contended that in any event the adult children were barred. This question was not passed upon by the Circuit Judge. We may say, however, that whether, even the adults are barred, will depend in a great measure upon the time when they received notice of the breach of trust. Jones v. Goodwyn, 10 Rich. Eq., 226; Wood on Rim. of Actions, section 208.

8 The appellants’ twenty-third exception is as follows: “Because said deed of trust provides that if any of said children should die before the youngest of them comes of age, and such child or children so dying should leave bodily heirs, the share or shares of such child or children so dying shall be divided equally between them; and as said event has not happened whereby said land is tp vest in said children, the decree to account and pay over to the plaintiffs is itself a perversion of the trust imposed by the said deed of trust upon said John B. Neal, and the Court erred in rendering the judgment herein for the said accounting to the said plaintiffs.” John B. Neal is not before this Court as appellant. Furthermore, if it should be found, as alleged in the complaint, that John B. Neal was guilty of a breach of trust, and that the appellants participated in such wrongful act, with notice of the trust, they would be estop-ped from urging such objection. Again, the Court can, by proper orders, protect the rights of any who have an interest in any sum that may be recovered in this action.

Under the views herein expressed, this Court deems it best not to consider the questions of fact raised by the exceptions, but to remand the case for an accounting upon principles herein stated.

It is, therefore, the judgment of this Court, that the judgment of the Circuit Court be modified, and the case remanded to that Court for such further proceedings as may be necessary to carry into effect the views herein announced.

Mr. Justice Pope did not sit in this case.