Linder v. Nicholson Bank Trust Co.

I am unable to give my assent to the conclusions reached by the Chief Justice in the main opinion, and I must, in justice to my own convictions, set forth, briefly, the grounds of my dissent.

It must be borne in mind that we are dealing with a demurrer to a complaint and not with the case on its merits. Under the rule, the allegations of the complaint are taken to be true. It is gleaned from the complaint that Dr. W.L. Linder conveyed his property, consisting of real estate situate in the City of Union, S.C. to Nicholson Bank Trust Company, in trust, to hold and manage and rent and collect the rents for a period of five years, and apply the rents as directed by the deed of trust; the deed contained this further provision:

"And if at the expiration of five years I can satisfy the said Nicholson Bank and Trust Company, that I am able to properly manage my property, they to be the sole judgesthereof (italics mine), then to reconvey said premises to me, freed and discharged of all further trusts, * * * if,however, I am unable at the expiration of five years to satisfy my said trustees that I am capable of managing my property, then, and in such event the said trust, above createdand all the duties, responsibilities and obligations (italics mine), to continue the same for an additional period of five years."

At the expiration of which time the trustee should reconvey the property to Dr. Linder freed and discharged from the trust. If, however, he should die before the property bereconveyed to him, the trustee should sell the property, "andexecute and deliver good and sufficient conveyance therefore." (Italics mine.) He directed that the remainder of the proceeds of sale be paid one-third to his father, Dr. S.S. Linder, or his heirs, and two-thirds to his mother, Mrs. F. E. Linder.

It appears from the complaint that the father, Dr. S.S. Linder, and the mother, Mrs. F.E. Linder, died before the death of Dr. W.L. Linder. It further appears from the allegations of the complaint: "That the said William L. Linder never, from the execution and delivery of the deed, even attempted to satisfy his said trustee that he was capable of managing his aforesaid property, as plaintiffs are informed and believe; that though the original and extended periods of such aforesaid trustee deed expired long before the death of the said William L. Linder, yet he acquiesced in, and requestedhis trustee, before mentioned, to continue to controland manage his aforesaid property under such trust deedthroughout his life, and died without having had, or having requested, a reconveyance from his said trustee, as plaintiffsare informed and believe." (Italics added.)

The plaintiffs, who are the half brother and sister of Dr. W.L. Linder, are the only heirs at law of Dr. S.S. Linder, and are entitled under the deed of trust to the one-third of the net proceeds of the sale of the trust property given to Dr. S.S. Linder; that Dr. W.L. Linder died leaving of force a will by which he devised all of the property covered by the deed of trust, except certain specific legacies of money, to Mrs. Johnnie Willey Cousar, his cousin. The trustee has conveyed the property by deed in fee simple to Mrs. Cousar. This action is brought to set aside this deed, to require the trustee to sell the property and pay the plaintiffs one-third of the net proceeds of sale, and two-thirds thereof to the estate of Dr. W.L. Linder.

The demurrer is based on the grounds that it appears on the face of the complaint that the deed of trust had expired by its limitation on the 25th day of April, 1923: and that the deed was revoked by the will of Dr. W.L. Linder.

Argument on the demurrer was heard by Judge Sease, who sustained it, holding that: "The trust deed by its own terms fixed the duration of the trust, and, at the expiration of the ten-year period therein, declared the trust ended and terminated and became an executed trust and the title vested in the said William L. Linder and passed under his last will and testament. I further hold that the said last will and testament was a complete and formal revocation of the existence of such trust."

The appeal is from this order. The main opinion affirms it. Both the order and the main opinion, it appears to me, ignore the fact that we are dealing with a demurrer, in the consideration of which it must be taken as granted that the allegations of the complaint are true.

It is specifically alleged in the complaint that, at the expiration of the second five-year period of the trust, Dr. Linder not only did not demand a reconveyance of the property to him, but he acquiesced in the continued control and management thereof, and requested the trustee to continue tocontrol and manage it under such trust deed throughout hislife, and died without having had, or having requested, areconveyance from his trustee. Surely it will not be denied that Dr. Linder could waive the reconveyance to him at the expiration of the ten-year period, and here is the allegation of the complaint, admitted by the demurrer to be true, that he did waive it. The main opinion holds that the rights of the plaintiffs were dependent upon the contingency that Dr. W.L. Linder should die before the expiration of the ten-year period, and before the reconveyance to him. The contention is illogical. He had no right to demand a reconveyance until after the expiration of the ten-year period; it could not be reconveyed till after that time. He could have compelled it after that time, but he did not wish it reconveyed and requested the trustee to continue to hold and manage it under the terms of the deed of trust. When Dr. Linder provided by his trust deed that, after the expiration of the five-year period, if he failed to satisfy the trustee that he was capable of managing his property, the trust should continue for another five years with all of the provisions, duties, responsibilitiesand obligations thereof, he knew that one of the responsibilities and obligations of the trustee was to determine whether he was capable of managing his property; and he knew that he had made the trustee bank the sole judge of that question. Then I submit that that duty and obligation remained at the end of the second five-year period. It seems an inevitable conclusion that he and the trustee knew at that time that he was not able to manage his property properly; and hence he did not demand a reconveyance, but requested the trustee to continue in the trust. And the trustee did so continue till Dr. Linder died, a period of seven years.

I cannot see how it can be doubted that the trust was an active one, and that the title to the property was in the trustee bank.

The trust deed provided, not that if Dr. Linder died during the ten-year period, the trustee should sell the land, but that, if he died before the property was reconveyed to him, then the trustee should sell it and divide the proceeds as directed by the deed. It is uncontradicted that the property was never reconveyed to him, and it is alleged by the complaint, and admitted by the demurrer, that the trustee continued in active discharge of the trust at Linder's request. The entirely reasonable deduction is that it was not reconveyed because he did not wish it done, he waived it. He knew he had the right to have it done, and he voluntarily relinquished that right. That is waiver. The rights of these plaintiffs were fixed by his death without his having had the property reconveyed to him.

I quote with approval from appellant's brief the following:

"A cestui que trust, who is competent to act for himself, may be estopped or waive his right to enforce a trust in his favor, by words or acts on his part which show an expressed or implied intention to abandon, or not to rely on such trust." 39 Cyc., 519, 520.

"Manifestly a trust agreement, like any contract, may be modified by all the parties in interest." Klugh v. SeminoleSecurities Co., 103 S.C. 155, 87 S.E., 644, 646.

The title was in the trustee; the plaintiff's rights accrued to them under the deed by which the trustee acquired the title. How, then, could Dr. Linder devise it and deprive the plaintiffs of their rights?

In the case of McElveen v. Adams, 108 S.C. 437,94 S.E., 733, 734, it appears that Mrs. Adams delivered to her son a sum of money for certain purposes named by her, the remainder to be paid to certain of her heirs at law. This was held to create a parol trust. She left a will which attempted to dispose of this money other than as provided by the trust. On appeal this Court said: "The rights of the beneficiaries under the trust became vested when it was created; and by its terms both the legal title and the right to the custody of the money were in the defendant [the trustee], subject to the provisions of the trust. As the trust was irrevocable, the testatrix could not deprive the beneficiaries of their rights, which were paramount to those created by her will."

So, in the case at bar, plaintiff's rights became vested when Dr. Linder died without having the property reconveyed to him; his will, which could speak only after his death, could not deprive them of their vested rights which then accrued. In the case of Huguenin v. Adams, 110 S.C. 407,96 S.E., 918, 921, this Court said in the quaint, but forceful, language of Mr. Justice Gage: "But the appellants contend that, even though the deed be held valid, yet the maker of it has revoked and annulled it by her subsequent deed to E.C.L. Adams and by her will executed in 1915. * * * No authority is cited to sustain that postulate. A thing lawfully done cannot be undone in such fashion. It is true Mrs. Huguenin undertook, by deed and by will, to ignore the deed she had aforetime made to Julius H. Adams. How that came about it is not relevant to inquire. It is sufficient to say that her action to that end was abortive."

The trustee was active at the request of Dr. Linder for seven years after the expiration of the ten-year period, and continued so to the day of the death of Dr. Linder; all of that time the trustee was actively engaged in the duties of the trust. Hence the title remained in the trustee. Evidently the trustee recognized this, and evidently Mrs. Cousar recognized it, for she procured a deed from the trustee, although it is now said she acquired title under the will of Dr. Linder. It cannot be denied that the title was in the trustee when Dr. Linder died — and it could be divested of it only in the way prescribed by the deed which created the trust, viz., to sell the land and divide the proceeds.

In the case of Dumas v. Carroll, 112 S.C. 284,99 S.E., 801, that able Judge, Mr. Justice Hydrick, discussed this question and reviewed the authorities at length, and laid down the principle that:

"Where husband conveyed land in trust for wife to be conveyed by trustee to persons designated in wife's will, wife's deed did not convey legal title; the legal title being in trustee. * * *

"Where instrument creating a power specifies the nature of the instrument by which, it may be executed, as where it is to be executed by will, or by deed, the power can be exercised only in the manner specified."

In the present case the deed of trust specifically prescribed that the trustee must sell the property and make deed to the purchaser. It has no power to convey except as thus directed.

This Court in the case of Crayton v. Fowler, 140 S.C. 517,139 S.E., 161, held the trustee to accountability because he invested trust funds in a mortgage of, rather than in purchase of, real estate, as required by the deed of trust.

In the case of Bass v. Adams et al., 163 S.C. 381,161 S.E., 697, this Court held that bank stock held in trust could not be reinvested except in the manner directed by the instrument which created the trust.

In short, Dr. Linder could not devise the property because the title was not in him, and the trustee could not convey it except in the manner prescribed by the deed of trust. Dr. Linder died without having had the property reconveyed to him; he waived the right to do so; hence that condition arose which under the deed vested in plaintiffs the rights they claim in this action. They became vested before the devise to Mrs. Cousar could take effect and were not divested by the will.

The order appealed from should be reversed.