New v. . Nicoll

In 1866 certain real estate in the city of New York was conveyed to the defendant Nicoll upon trust to receive the rents, issues and profits thereof, and after paying therefrom all taxes, assessments and other charges thereon, to apply the rest and residue to the sole and separate use of Sophia V.I. Reynolds, during her natural life, and after her decease upon trust to convey the real estate as she by her last will and testament should direct, and in default of such direction to divide the same among his children. Nicoll took possession of the real estate and assumed the duties of the trust.

Upon the real estate were certain buildings which were rented to various tenants, and in 1873 those buildings were much out of repair, and certain repairs were necessary for the protection and preservation of the buildings, and to render them tenantable and fit for occupation. In the months of March and April of that year the plaintiff did a large amount of repairs upon those buildings, and this action was brought to recover against Nicoll as trustee, for such repairs. The plaintiff and defendant were the only material witnesses. There was no dispute that the plaintiff did the repairs to the amount claimed by him, but there was dispute as to the arrangement and employment under which the work was done.

The defendant testified that he did not employ plaintiff to do the work, and never promised to pay him; but that he employed one Osborn, who was to furnish all the labor and material for the repairs, and that he was to deal only with and pay him, and that he had mostly paid him. The plaintiff's evidence tended to show that he was employed by Osborn as agent of defendant, and that after the work was done the defendant promised to pay him for the work out of the trust estate. There was no claim by plaintiff that his contract for the work was made directly with the defendant, or that he had any interview whatever with the defendant until after the work was done. Whatever arrangement he made in reference to the work was made exclusively with Osborn who had died before this action was commenced. Plaintiff testified that he asked Osborn how he was to get his pay, and that Osborn said: "The estate is all right; do the work; make out your bill to the estate; I will certify it, and Mr. Nicoll will pay it," and that then he went on and did the work. At the time these repairs were made, the defendant had no trust funds in his hands out of which to pay for them.

The general rule undoubtedly is that a trustee cannot charge the trust estate by his executory contracts unless authorized to do so by the terms of the instrument creating the trust. Upon such contracts he is personally liable, and the remedy is against him personally. But there are exceptions to this general rule. When a trustee is authorized to make an expenditure and he has no trust funds, and the expenditure is necessary for the protection, reparation or safety of the trust estate, and he is not willing to make himself personally liable, he may by express agreement make the expenditure a charge upon the trust estate. In such a case he could himself advance the money to make the expenditure, and he would have a lien upon the trust estate, and he can by express contract transfer this lien to any other party who may upon the faith of the trust estate make the expenditure. (Noyes v. Blakeman, 3 Sand. Sup. Ct., R., 531; S.C., 6 N.Y., 567; Randall v. Dusenbury, 39 N Y Superior Ct. R. [7 J. S.], 174; S.C., 63 N.Y., 645; Stanton v. King, 8 Hun, 4.)

Here, if Osborn had any agency whatever for defendant, it was simply to employ some one to make the repairs. If he was authorized to make any contract about them, it was simply the ordinary contract in such cases which would bind the trustee personally, and not the trust estate. There can be no pretence that he was authorized to exempt the trustee from personal liability, and to make an express agreement charging the expense of the repairs upon the trust estate. It was not sufficient for him to show that he did the work upon the faith or credit of the trust estate. He could get a lien or charge upon the trust estate only by virtue of some agreement to that effect. Therefore, upon the facts of this case, viewed as favorably to the plaintiff as we are justified in viewing them, he cannot maintain this action.

The order of the General Term should be affirmed, and judgment absolute for defendant ordered, with costs.

All concur, except MILLER, J., dissenting and CHURCH, Ch. J., not voting.