Wayne v. Myddleton

By the Court

Lumpkin, J.

delivering the opinion.

"William Pelot conveyed by deed certain slaves to Levi S. D’Lyon, Esq. in trust, for tho sole and separate use of his wife Elvina R. Pelot, during her life, and after her death to her children. There are several children in life; and the deed authorized the ' cestui que trust, Mrs. Pelot, by and with the advice and consent of her trustee, to sell and dispose of the trust estate whenever she should deem it proper to do so, and to re-invest the proceeds, &e. upon like trusts. Mrs. Pelot, being desirous of purchasing a small farm near Savannah, contracted with Augustus Myddleton for it, with the approbation of her trustee, at the price of $800. The growing crop, stock, cattle, &c., and the hire of three negro slaves belonging to Myddleton, to assist in the crop till the close of the year, were included in the contract, and all amounted to $1,476. No cash was to be paid, but the payment was to be secured by a mortgage on tho four slaves in the trust deed, and also by a ■ mortgage of the land. To consummate the agreement, Mrs. Pelot gave her two notes for $738 each, and also a mortgage on the four slaves owned by her as separate property, which said mortgage was also signed by her trustee. When the title to the land from Myddleton, and the mortgage from Mrs. Pelot and her trustee were exchanged, they were found to be defective; the title made by Myddleton was returned to him, and it was agreed that the title should remain in Myddleton until the notes were paid, as the mortgage which had been made to him had, by mistake, omitted the land. The crop, cattle, &c., and the services of the slaves, all valued at $676, were received by Mrs. Pelot by the consent of her trustee, and the land taken possession of by her. Upon failure to pay the first note, Myddleton foreclosed the mortgage, and sold the slaves in tho manner required by law, and received therefrom the net amount of $851 89, which being insufficient to pay the debt, he commenced an action of ejectment against the tenant of Mrs. Pelot for the land. Whereupon the cestui que trust, Elvina R. Pelot, and her trustee, filed their bill against Myddleton, to compel him to execute titles to the land.

On the trial Judge Fleming, among other things, charged the jury—

“ That if the trust deed ompowered Mrs. Pelot to mortgage the trust negroes, the power applied equally to after acquisition of property, especially when the mortgage was given to secure the purchase money; that the party had full power to make such a contract; it was made with a view to benefit the trust estate; if profitable, such would have been its effect; if loss has accrued, in equity and good conscience it ought to fall on the trust estate. If the property had risen in value to double the price at which it was sold, it would have inured to the benefit of the cestui que trust; and it is neither right nor equitable to give all the profit to one and visit all the loss upon the other. That it was not pretended but that the property sold by Myddleton was worth at the time the price agreed to be paid for it. That if it had been squandered, and the negroes sold at an undervalue, by reason of the default of Mrs. Pelot and her trustee to meet the payment, the consequence of this miscarriage should not fall upon Myddleton. That trust property was not to be exempt from the great principle of universal justice, that he who is to have the profit must run the risk.

“It was not denied but that equity would protect the capital of trust property from the debts of the cestui que trust; but will equity protect trust property from a mortgage given to secure a debt contracted for its benefit? The fact that the defendant knew that he was dealing with trust property, does affect this case, because knowing that fact, he was careful to deal only with those who had authority to deal with him. Whilst therefore it is true that equity will follow trust property in the hands of a purchaser with notice, yet it will not follow trust property in the hands of one authorized to buy. The actual contract, therefore, between these parties, is the one which the jury should enforce. The parties were entirely competent to contract.”

The foregoing extract, from the very able charge of the Circuit Judge, contains all that is necessary to the proper hearing and determination of this cause.

The Solicitors for the complainant excepted generally to the instructions of the Court, and more especially —

First. Because, although it be true that Mrs. Pelot had a life estate in the trust property, with remainder to her children, yet by the deed she had no power either with or without the consent of her trustee, to mortgage the trust property, so as to hazard and destroy the trust estate. Her only power under the deed was, to sell the property with the advice and consent of her trustee, and to re-invest the proceeds upon the same uses and trusts; a party, therefore, with knowledge of the trusts, taking a mortgage from her which he knew sho had no right to give, will he followed in equity, so as to prevent the trust estate from being destroyed by such illegal transaction.

Second. Because, Mrs. Pelot had no separate estate in this trust property which enabled her to bind, charge, or alien it by her contract, except in the mode and to the extent declared and authorized by the trust deed, and if she had, it could only be to charge the income during her life in the hands of the trustee, and not to defeat or destroy the remainder.

Third. Because, even if by the deed the parties had the power to mortgage the trust estate, for the purpose of acquiring by purchase other trust property to stand in the place of, and be substituted for the property mortgaged, it does not follow that they would also have power to mortgage at the same time the thing purchased, and thus defeat the remainder; and a person so dealing with them, with full knowledge, would himself become a trustee in equity for the cestui que trust in remainder.

Fourth. A court of equity will never suffer trust property, knowing it to be trust property, so to be dealt with, as to break in upon and defeat the rights of remainder men, and consequently a court of equity will not suffer a contract to be enforced through it, nor lend its protection to a party, when it would be productive of such consequences.

Fifth. Because, if property is covered with a trust, no change of its state or form can divest it of such trust, or give the trustee converting it, or those who claim in privity with him, any greater right than before the change. That consequently the negroes being converted, through the means of the mortgage, into the land, with the knowledge of Myddleton that the negroes were covered by the trusts of the deed, the land became in his hands immediately covered with the same trusts.

Judge Lumpkin, having made the above statement, proceeded as follows:

[1.] There is but a solitary point in this case. Was the contract made with Myddleton authorized by the deed of trust from William Pelot to Levi S. D’Lyonl The argument of complainants’ solicitors wholly overlooks, it seems to me, the power expressly given in ' that instrument to Mrs. Pelot, with the consent of her trustee, to sell and dispose of the whole of the property therein conveyed for 'the use of horsclf and children, and to ro-invest the proceeds. A power without limitation, except that the property substituted for the slaves shall be covered with the same trusts. But for this ample authority the reasoning of counsel might have been conclusive. At any rate it would have been applicable to the case.

We concur in the opinion, that the power of a married woman, with respect to her separate property, is an unimportant inquiry in the present discussion. Two opposite rules upon this subject have been laid down totally irreconcilable with each other. According to one, the feme-covert can exercise only the powers conferred upon her by the instrument under which she claims; according to the other, she is as to her separate property, regarded as a feme-sole, and capable as such of disposing of it at pleasure, except so far as she may be restrained by the instrument under which she claims. For myself, I am free to avow my adhesion to the doctrine which denies to the wife the power of stripping herself of the provision made for her by a considerate parent or friend, through her devotion to her husband. Either these settlements should be altogether abolished, or else the helpless and dependent sex should be protected from the hieles “ and the hisses of the husband and the avarice of his greedy, unfeeling creditors.” The contrary creed I hold to be repugnant both to sound legal principles and legislative policy.

With this passing remark I will proceed to review very briefly, the grounds taken in the writ of error.

It is contended that Mrs. Pelot had no power, with or without the consent of her trustee, to mortgage the trust property, so as to hazard and destroy the trust estate. The reply is obvious, she had the power to sell and dispose and re-invest, and could this be done free from the casualties of trade 1 Could she not have sold on credit as well as for cash, and thus have risked the entire loss of the capital, by the failure of tfie purchaser 1 And would this loss have affected the title of the property either in his hands or those claiming under him 1

Again; in re-investing the proceeds, might not the whole trust fund have been sunk on account of some defect in the title of the substituted property ? It is evident therefore, that the jeopardy to the trust estate, incident to any and every transaction in which the cestui que trust might engage, has nothing whatever to .do in determining her powers under the deed of her husband.

Nor is this view weakened at all by looking at the facts before us. It is conceded that the land and other property sold by Myddleton were worth what they cost. Can the obligation to pay be diminished, from the fact that the negroes sold in open market for less than they were supposed to he worth? Will chancery decree the property of Myddleton to the family of Pelot, because the slaves which he settled upon them have come short of discharging Myddleton’s bona fide debt ? The fallacy of such a position is too apparent to be gravely pressed upon the conscience of a court.

If there was in this case any fraud or undue and improper influence used by Myddleton, it would be quite another thing. None such is pretended, and if it were alleged, the complainants would have affirmatively to prove the imposition, and this they have not attempted. It is urged, that Mrs. Pelot had no separate estate in the trust property which enabled her to hind, charge or alien it by her contract. Admit that she had not, and that aside from the power of disposition conferred upon her hy the deed, she could only charge the income during her life — all this may be yielded, and still the point in discussion remains untouched. The controversy is, not what Mrs. Pelot might do by reason of her interest in the trust estate, but what were her powers of disposition under the deed? She might have had no interest at all under the instrument, and yet have possessed hy delegation from the grantor, the unlimited power of alienation. Granting ex gratia, that Mrs. Pelot had the power to mortgage the trust estate, for the purpose of acquiring by purchase other trust property to stand in the place of and be substituted for the property mortgaged, still it is denied that she had the power to mortgage at the same time the thing purchased. This objection like all the rest depends upon the extent of the power given by the deed to Mrs. Pelot. If it is wholly unrestricted, and such is our construction of it, then like any other party capable of contracting, she had the right to make her own bargain; she could have sold the negroes for cash, paid over the proceeds and taken a bond for titles to the land when the final payment was made, or given a mortgage lien upon the land and negroes, as she did, or at any rate intended to do.

In the former case, had Myddleton conveyed titles instead of giving a bond for titles, equity would have protected and enforced his lien on the land for the balance of the purchase money. Shall he be in a worse condition for having withholden the title ? In chancery, let it he recollected, that vendors of real estate have rights as well as cestui que trusts.

As to the fourth and fifth exceptions, we believe that they contain sound law. It will be time, however, to consider and decide the questions there raised when they are fairly deducible from the pleadings. We apprehend that it will not be disputed that Pelot himself had the right to insert in the deed of trust, at the time of its execution, any terms he might see fit, consistent with the laws of the land; and that in the exercise of this discretion he might have imparted such directions as would have periled, necessarily, the very existence of the trust estate, without affording the slightest pretext for the interference of a court of chancery. He might have provided that the slaves should have been employed on some unprofitable labour; that they should have been managed by a most improvident trustee ; that they should be hired annually to an irresponsible person, and that the power of selling them and re-investing the proceeds be confided to the most incompetent hands. Upon what pretext would equity have interposed and granted relief? As well might chancery lay hold of the property of the drunken father, to save and secure it to his innocent offspring.

It was doubted in the very earliest cases whether a feme-covert could exercise a power expressly given. 1 Ch. Cas. 18; Blithe’s Case, 2 Free. 91; Godolphin vs. Godolphin, 1 Ves. 21; Sug. Powers, 155. The result of the argument submitted on behalf of the plaintiff in error would be virtually to deprive her of this power.

As to the land being covered with the same trusts as the negroes, it will be time enough to assert that claim when it is paid for. Until then it belongs to Myddleton, and to no one else. Once paid for, it unquestionably becomes immediately encumbered with the same trusts as the slaves; and this, too, not only upon general principles, but by the very terms of the deed itself.

Thus we have felt it our duty, only to examine the terms of Pelot’s deed, and to ascertain the nature and extent of the powers conferred by it; and from the best consideration we can give the subject, we are fully confirmed in the correctness of the very clear and forcible opinion pronounced on the trial below. We are content to adopt it as our own. The decree must therefore be affirmed.