text:
    Charles L. Duvale v. Celine M. Duvale.
    1. When real estate is conveyed, to a wife, hut is paid for by her husband, a settlement and not a resulting trust will be presumed; but such presumption is rebuttable.
    2. A promise to devise property, made for valuable consideration, will be enforced; and if the promisor attempts to violate his promise during his life, equity will at once, upon the principle of quia limet. impress upon the property a liability to answer the promise.
    On final hearing.

      Mr. Henry 8. Terhune, Mr. Charles H. Ivins and Mr. Charles L. Corbin, for the complainant.

      Mr. William B. Guild, Mr. R. Wayne Parker and Mr. Cortlandt Parker, for the defendant.
   Reed, V. C.

This bill is filed by a husband against his wife. The subject-matter of the suit concerns a house and its curtilage, situated at the Atlantic Highlands, New Jersey, the legal title to which is in the wife. The land was purchased and improved, and the buildings upon it were erected with the money of the husband. The prayer of the bill is that the wife may be declared to hold the said property in trust for her husband; or that she may be compelled to execute a will in his favor for it.

The admitted facts are these : On May 7th, 1890, the husband contracted with one Kay and one Cornwall to convey to him a lot of land for the sum of- $3,000. On June 12th, 1890, a deed was made by Kay and Cornwall to the wife for said lot. The husband began the erection of a dwelling-house thereon, and also the general improvement of the property.

On September 9th, 1891, he purchased an adjoining lot from one Bernadou, for $1,000. On July 29th, 1892, he bought a third tract adjoining the homestead tract, from one Swift, for the sum of $2,250. The titles of both these lots were taken in the name of the wife. In the purchase of these lots, in the erection of the dwelling-house and the stables thereon, and in the grading and terracing of the grounds, the husband has spent from $35,000 to $45,000.

Upon the bare facts so far disclosed, no trust in favor of the husband results. The fact that the grantee is the wife of the payer of the consideration, rebuts, prima facie, the presumption of a resulting trust in the payer, which trust would have arisen had the grantee been a stranger. The grantee being a wife, the presumption is that the property was put in her name as a settlement.

But the presumption that the deed was made by way of advancement or settlement, is a rebuttable presumption. Facts antecedent to or contemporaneous with the purchase, or so immediately following the purchase as to constitute a part of the same transaction, may be put in evidence for the purpose of refuting the presumption of a settlement. Lew. Trusts marg. pp. 175, 177; Read v. Huff, 13 Stew. Eq. 229. So, also, subsequent admissions by either husband or wife, against his or her own interests, are evidential for the same purpose. Lew. Trusts marg. p. 177; Midmer v. Midmer’s Executors, 12 C. E. Gr. 548.

While the same kind of evidence which raises the presumption is admissible to overcome it, the circumstances in both instances must be so clear as to leave no reasonable doubt as to the intention of the parties. Peer v. Peer, 3 Stock. 432, 439; Read v. Huff, supra.

The testimony upon both branches of the complainant’s insistence, viz., first, that there was a resulting trust, and second, that there was a promise to make a will for a consideration which has been performed, is so entangled that a single statement of the facts disclosed upon the hearing must include that which bears upon both points.

The testimony of the parties themselves upon the substantial points is entirely contradictory. The husband swears that he and his wife, previous to the execution of the deed for the first lot, had been living for three consecutive summers at the Atlantic Highlands; that his wife, finding that the climate there suited her, urged him to buy a home at that place. Influenced by her request, he contracted in writing, in his own name, for the purchase of the first lot. Between the date of the making of the contract and the date of the execution of the deed for it, he had several conversations with his wife concerning the matter. In one or more of these she said to him:

“Look here, if you put that land in my name, it will prove to me that you are not going to run away with that woman you are keeping in New York, and it will make me happy.”

Mr. Duvale says: “She told me that she would sign any paper I wanted her to sign to secure me; whenever I wanted she would deed it back to me.” She said: “ I will sign anything you want and whenever you want it.” The allusion to the woman in New York, contained in the testimony, related to a Miss Hunter, with whom at one time the wife thought her husband had formed an illicit connection.

The deed for the property conveyed to the wife was drawn by Mr. Cannon, a lawyer of the State of New York. Mr. Duvale says that about the time the deed was made, perhaps a week later or a week earlier, he spoke to his wife about the execution of reciprocal wills in each other’s favor. When recalled to the stand on a subsequent day, he, after talking with Mr. Cannon, said that the conversation occurred before the execution of the deed to his wife. It is conceded that two wills were drawn and executed — one from her to him, and the other from him to her — of all the property of each respectively. These wills were executed on August 26th, 1890. Then followed the purchase of the two adjoining lots, the title to which was put in the name of the wife.

In March, 1893, Mrs. Duvale left her husband’s home at the Highlands. Mr. Duvale says that sometime during that month he saw her on the cars in Jersey City, a few days after she had left him, and she then told him that she had made a new will, and had given all her property to her relatives in France. She had in fact made such a will, on March 16th, 1893. In reply to her information, he says he told her that she had a right to make all the wills she wished to, but, of course, she would give him back his property, and that she replied “ Yes.” Then she said, “ but let me have it; I know that I have done wrong, and I will bring back that will and you can destroy it.” Mr. Duvale refused to accede to her proposition.

In June, she returned to her home in the Highlands. Shortly before this she seems to have executed another will, drawn by Senator Applegate, in favor of her husband. This will was subsequently destroyed by Mrs. Duvale, in the summer or fall of 1893. This is a brief statement of the husband’s account of the transaction.

Mrs. Duvale admits that they agreed- to make reciprocal wills, but she denies that she ever heard anything about the making of these wills until shortly before their execution. She also denies having had any conversation with her husband previous to the time of the execution of the deed to her, in which conversation she promised to sign any paper in respect to the property in his favor.

The case, so far as it rests upon the testimony of the parties themselves, therefore stands thus: The husband swears that' before the deed was made to his wife she promised to sign any paper to secure his title to it; that the wills were afterwards executed to effectuate that purpose, and that she destroyed the will in his favor and executed another to a new beneficiary. All the material parts of his testimony the wife denies.

Of the testimony of persons other than the parties, the most important is that of Mr. Cannon, who drew the deed, and also drew the wills.

Mr. Cannon says that he received instructions from Mr. Duvale to draw reciprocal wills. He thinks these instructions were contemporaneous with the closing of the title and the passing of the deed to the wife. His account is as follows:

“ Mr. Duvale asked me what would be the effect of putting the title m Mrs. Duvale’s'name in case Mrs. Duvale died intestate. I told him that according to our laws (and I think I looked up the laws of New J ersey), in both instances they never having had any children, it would go to the heirs-at-law of Mrs. Duvale. I said to Mr. Duvale that the only way I could see, if he placed entire confidence in his wife, between him and his wife, to make reciprocal, or, as we ■sometimes call it, counter-wills.”

As already observed, Mr. Cannon had already said that he received instructions to draw such wills, he thinks, on the 12th of June, when the deed was made. Drafts of these wills were sent by mail to Mr. Duvale on the 28th of June. Mr. Cannon accounts for the sixteen days intervening between the date of the deed and the reception of the wills by Mr. Duvale, by saying that he first drew what we termed drafts of the wills,” and submitted them to Mr. Duvale, by sending them by one of their clerks or an office boy to Mr. Du vale’s office. He thinks that the drafts came back to the office and that final drafts were sent by mail to Mr. Duvale on June 26th, as the charge for drawing them was made on that day. He says that he did not send the drafts immediately after receiving instructions to draw them, for that they were always behind in their office, in such matters.

The remaining testimony consists of subsequent admissions of the respective parties, concerning their understanding of the condition of the title to the property.

First in this line is the testimony of Edmund Moutenot, who is the only son of Mrs. Duvale by her first husband. It is conceded that in the agreement made between the husband and wife respecting the wills, at whatever period that agreement was made, it was understood that her will was to contain a legacy in favor of her son of $100.

Mr. Duvale says that after the execution of the wills he told Mrs. Duvale that she should inform her son that she had made such a will, so that he would not contest it after her decease. Moutenot swears that sometime between September 15th and October 15th, 1890, his mother came to his house near Belvi•dere, New Jersey, and she then and there said she had come to tell him what arrangement had been made between Mr..Duvale and herself in regard to this property. She said that the title was put in her name and that it was understood that she was to return those deeds if Mr. Duvale should ask for them for any reason. Then she spoke about the will; she admitted leaving everything to Mr. Duvale except $100, which was left to him ; in case anything should happen she did not wish him to bother the will. Moutenot also says that he was at the Du vales’ house in March, 18.93, about the time the will’ was destroyed. He says that he heard Mr. Duvale say to his wife, “ I would like to get the papers of my property back.” She replied, “I will make a new will.” He said, “You can give me a will to-day and make another to-morrow, and what I want is my title to the property back.” She said.he should have it.

Now, although Moutenot and his mother are estranged, I am convinced that his testimony is as correct as a restatement of a conversation usually is. Of more importance than the testimony of Moutenot is that of Dr. Du Plasse. He says he was the physician of Mrs. Duvale as well as the friend of both. He says that Mrs. Duvale was talking to him and his.wife, in his dining-room, sometime in 1892. She was complaining of her husband, and she said, “I don’t know what to do with my money.” Dr. Du Plasse said, “ Make my little girl your heir; give her your house and she will be satisfied.” Mrs. Duvale answered, “ I cannot dispose of my house because it has been put in my name under conditions that I .make my will in favor of Mr. Duvale.”

In the other testimony I find little of significance in respect to the question at issue.

In an affidavit to a bill filed to enjoin a railroad company from going through this property, and in the testimony delivered on the trial in the condemnation proceedings brought by the same railroad, Mr. Duvale- stated that Mrs. Duvale was the owner of the property. But the statements do not seem to be of much value. She did hold the legal title, and for the purpose which was in the mind of Mr. Duvale at the time, the language meant no more. Nor is the testimony of Mrs. Lewis and her son-in-law, that Mr. Duvale, at the time his wife left, said that he had given her the house and she had left it to strangers; nor of Mr. Parmalee, that he-(Duvale) said that he had given the house to her- to make her quiet and contented, if possible; nor of Eosalie Lehner, to the same effect, to my mind, significant, for when he said he had given her the property it was true that he had given it to her so long as she could herself enjoy it. On the other hand, I think Mr. Hamilton is mistaken when he says that Mrs. Duvale went before the commissioners in the conr demnation proceedings already mentioned and spoke of this property as her husband’s property, which had been put in her name. And I find little significance in the testimony of Mr. Bernadou, who was procured by Mr. Duvale to make the purchase for him of the second lot, when he says that at the time of that purchase Mr. Duvale told him that he wanted the deed made to Celine M. Duvale, remarking, “ she holds my home in her name.”

From this statement of' facts, colored as they are by the general complexion of the testimony, I have arrived at the conclusion that Mr. Duvale, when he directed the deed of the first lot to be made to his wife, intended that in case he survived her the property should be his.

If it be a fact that, at or preceding the time when the conveyance of the first lot to Mrs. Duvale was executed, a conversation was held between Mr. Cannon and Mr. Duvale, as detailed in Mr. Cannon’s testimony, it conclusively appears that Mr. Duvale, at the time of'the execution of the deed to his wife, intended to reserve the legal title in himself after her death.

I think that it is true that she, after he had contracted for the property, persuaded him to put it in her name; that she used, in her conversations with her husband, the arguments and promises which he attributes to her; that with this in mind Mr. Duvale had his talk with Mr. Cannon about the best method for carrying into effect his intention. Mr. Cannon suggested reciprocal wills. Then came the direction to draw the wills. The draft and execution of these wills were acts done in consummating the intention of Mr. Duvale in the method pointed out to him. Under these conditions a trust resulted to the husband.

If, however, the testimony should be regarded as insufficient to overcome the presumption of a settlement, how does the cáse stand in respect to the second ground, namely, that Mrs. Duvale, for a consideration of value which has been performed, promised to make a will devising this property to her husband ? She admits that they agreed to exchange wills. ■ This, however, did not create a contract which became enforceable. The mutual agreement lacked consideration. The execution of one of the wills was not such a part performance of the agreement as will confer jurisdiction upon a court of equity to decree the execution of the other. By the execution of the will, nothing was parted with by the testator or received by the named beneficiary. It was an act which became operative only in the event of death, if still unrevoked. By the existence of the absolute power of revocation until the occurrence of death, its execution was not detrimental to the one nor beneficial to the other during the life of the testator. But if the promise of the wife to make a will of this particular property was based upon a valuable consideration, then a court of equity will see that the promisee loses nothing by a breach of the contract. If a contract is to pay for services or for property by devise or bequest, an action will lie for the value of the services or the property, in default of the promised testamentary compensation. Ridgeway v. English, 2 Zab. 423 ; Smith’s Executors v. Smith, Dutch. 208; Updike v. Tenbroeck, 3 Vr. 105; Stone v. Todd, 20 Vr. 275.

If there is a promise to devise or bequeath specific property for services or for property, a court of law will allow an action to recover upon a quantum meruit, and a court of equity, where the contract is clearly proven, will, in its discretion, decree what is equivalent to a specific performance of the contract. 22 Am. & Eng. Encyl. L. 974; Waterm. Spec. Perf. 41.

Nor will the fact that the agreement rests in parol debar a court of equity from exerting its power in this way if there has been part performance. The leading case in this country upon this subject is Johnson v. Hubbell, 2 Stock. 332, decided by Chancellor Williamson in 1855. A married woman died, leaving a large estate and two children, a son and a daughter. In the then existing condition of the law the son inherited two-thirds and the daughter one-third of the mother’s estate. The father, who was tenant by the curtesy, persuaded the son to equally share the mother’s property with the daughter, by telling him that if he did not do so he, the father, would leave all his property to the daughter; but that if the son made an equal division of the mother’s property, he, the father, would leave his own property equally between the two children. The son, induced by these representations, executed the necessary deeds to accomplish an equal division. When the father died it was found that instead of leaving his property as he had promised, he had cut off the son entirely. A large portion he devised to his daughter, who had been cognizant of the inducements which led to the partition, and had participated in carrying out the arrangement for a division of her mother’s property. It was held that the contract between father and son was valid, and, although resting in parol, it having been performed by the son, and the contract being definite and certain, it was decreed to be specifically carried out.

The reasoning of the chancellor in Johnson v. Hubbell, was adopted as the ground of decision by the court of appeals of New York in Parsell v. Stryker, 41 N. Y. 480.

The principle so decided was recognized and applied by this court in the subsequent cases of Van Duyne v. Vreeland, 1 Beas. 142; Davison v. Davison, 3 Beas. 252; Pfluger v. Pultz, 16 Stew. Eq. 440.

Whatever may be thought of the policy which permits' a person to irrevocably direct'the disposition of his property after his death, without putting his intentions in the shape required by the statute of wills, it cannot be questioned that instances of glaringly fraudulent conduct in obtaining services or property by the inducement *of such unfulfilled promises, have led to a series of decisions in England and in this country, in which courts have taken hold of and remedied such instances of fraud, by seizing the property of the promisor and by devoting it to the-relief of the defrauded'party. The note of Mr. Freeman to the case of Johnson v. Hubbell, as reported in 66 Am. Dec. 773, contains a large collection of cases in which this • doctrine has been asserted.

It is proved to my satisfaction that Mr. Duvale spoke to his wife about the execution of the wills, if not at the time, soon after the deed of the first lot to her was executed. The execution of the will was delayed from June 28 th, when he received it, until August 20th, 1890. He says that she had an antipathy to signing a will, thinking that the fact of its execution would injure her health.

He had begun the improvements which were subsequently placed upon the property. He says that he requested her to execute the will, that she delayed- doing so, and that he finally told her that if she did not do so he would discharge the men and cease work upon the place; that he did discharge the men; that then she signed the will, and the work was resumed. This testimony impresses me as natural and veracious. The case then stands thus: She understood that she was to make a will not merely in consideration that he would make a will in her favor, but also in consideration that he was to add to the value of the property by improvements, the cost of which would amount to many times the cost of the lot itself. Upon the faith of her promise to do so and of her having done so, he proceeded to carry out his intention in the lavish spirit displayed by the testimony. In my judgment, she promised to make a will in his favor, including this property, upon a valuable consideration which he has performed, and that her promise should be specifically performed. The property included in the agreement covered all accessions to the original lot. When Duvale purchased the additional adjoining lots and added them to the first plot, and built within and improved the whole, all became subject to the terms of the agreement.

But in what shape should the decree be «.framed ? I do not think the decree will substantially differ whether it be drawn upon the theory that there was a resulting trust, or upon the notion that there was a promise to make a will. While it is true that a promise to make a certain will is not broken until the death'of the promisor, and it is true that actions in which such promises have been enforced have been in cases occurring after the death of the promisor, yet I do not see why the court cannot, upon the principle of quia timet, fix upon the property a liability to answer the promise, in any case where the promisor has, during life, repudiated its terms and attempted to make other disposition of the property. This Mrs. Duvale has done, and now, by her answer, claims the absolute right to do.

Chancellor Williamson recognized the right of the promisee to protection, upon the principle of quia timet, in the case of Van Duyne v. Vreeland, supra. Vreeland and his wife had adopted a child under a promise that all the property they had should, at his death, go to the child. Before his death Vreeland sold the property, for the purpose of cutting out the right of the adopted child, to a purchaser who had notice of such right. Although the complainant in that case, under the agreement, had no right to the property until the death of Vreeland, yet the chancellor decreed that the purchaser held the property subject to the agreement between Vreeland and his adopted son, and that upon the death of Vreeland, and after the accounting, the purchaser should convey the property to the complainant.

I will advise a decree that the defendant holds her title to the property in suit subject to the trust mentioned, as well as subject to her agreement to make a will for it in favor of the complainant ; also, that she be enjoined, while the complainant is living, from making a will devising the property to any person other than the complainant, and that in the event of her dying during the life of her husband, her heirs-at-law shall at once execute a conveyance of the said property to the complainant.


source: Caselaw Access Project

author: Stevens, V. C.

license: Public Domain

text:
    Morgan R. Smalley v. Gideon W. Smalley et al.
    A testator in Ms will provided as follows: “I give, devise and bequeath all of my property, both real and personal, to my six children, as follows, that is to say, after the settlement and payment of all my just debts, then the residue of my estate, both real and personal, to be gathered into one general fund and divided into six equal parts, as follows: To my six children, * * * each of them to receive a one-sixth share, which I give to them and to their heirs forever-.” — Held, that an implied power to sell testator’s real estate was not given to the executor by this clause.
    On petition.

      Mr. Charles L. Moffett, for the petitioner.

      Messrs. Steele & Meehan, for the defendants.
   Stevens, V. C.

The petitioner files a petition for the construction of the will of John Smalley, and prays that he, as executor, be decreed to make sale of testator’s real estate. The proceeding is fatally defective in that it should be by bill and not by petition. Receiver of State Bank v. First National Bank of Plainfield, 7 Stew. Eq. 457.

Outside of this objection, however, it is clear that the executor is not only under no obligation to convert the real estate into money for the benefit of testator’s children, but that he has no power to do so.-

The second paragraph of the will reads as follows:

“Second. J give, devise and bequeath all of my property, both real and personal, to my six children, as follows, that is to say, after the settlement and payment of all my just debts, then the residue of my estate, both real and personal, to be gathered into one general fund and divided into six equal parts, as follows : To my six children, Susan Maria Dunham, William H. Smalley, Samuel Smalley, Morgan Smalley, Kachel Henderson and Gideon W. Smalley, each of them to receive a one-sixth share, which I give to them and to their heirs forever.” . .

No express power of sale of testator’s real estate is conferred by this clause, and I have not been able to discover that it contains any implied-power.

By the direction that the. residue of his estate, both real and personal, shall be gathered into one general fund, I understand testator to mean that, after his debts and funeral expenses are paid, the amount and value of the real and personal property shall be ascertained, and, when ascertained, divided among the six children in shares of equal value. The division is, in terms, to be a division not only of personalty but of realty, and it is to take place “after” — that is, immediately after the settlement and payment of all the just debts. There is here no gift to the executors in trust; no direction to them to invest and ultimately pay over; no indication that the children are to take the proceeds of the sale of the real estate rather than the real estate itself. On the contrary, the testator uses language technically appropriate to carry his real estate to his children in specie. “ I give, devise and bequeath all my property, real and personal,” is-the language of the gift. There is absolutely no indication of an intention on testator’s part to put it in the power of his executors to change the nature of his property before it reaches its destination. The fact that the testator directs his estate, after payment of debts, to be gathered into one general fund, is of no consequence, because into that so-called fund he himself puts the real estate as well as the personalty and not the proceeds of the sale of it. The so-called fund or mass which is to be divided is a fund or mass composed of both realty and personalty. So far, therefore, as the will itself is concerned, I see no ground for supposing that a power of sale by implication is given.

The testator provides, in the second codicil to his will, that whereas, since the making of it, his son Samuel had died indebted to him, therefore his will and intention is

“that all sums due me and unpaid at the time of my decease from my late son Samuel Smalley -or his estate be deducted from any distributed share that his heirs would be entitled to.”

If the will itself does not confer a power to sell realty, I do not think his codicil does. The petition does not state the amount of testator’s personal estate or the amount of Samuel’s indebtedness to it. Had such statement been made, it would not have been material, for any practical difficulty (supposing it to exist) in making the proper deduction, would not of itself alone raise up an inference of an implied power to convert land into money. Says Chancellor Zabriskie, in Seeger’s Executor v. Seeger, 6 C. E. Gr. 91: “There is no authority or decision, so far as my researches have extended, which holds that in a will which contains no power or directions to sell, such power is created by implication because necessary or convenient to enable the executors to execute the directions of the will.” The word “ necessary ” in this passage is, perhaps, too strong in view of what is said in Lindley v. O’Reilly, 21 Vr. 646, but it is otherwise applicable to the present case.

The testator by this codicil does not attempt to modify the character or component parts of the “ distributed share ” given to Samuel’s children, but only declares what shall be deducted from that share. This being so, I do not see how the codicil can produce an effect which the testator, if we are to judge by his language, never intended it should produce.


author: Stevens, Y. C.

text:
    Elizabeth W. Brown et al., administrators &c. of Alexander Shiras, deceased, v. Thomas S. Murray, executor of Frances B. Shiras, deceased.
    A policy provided that, in consideration of an annual premium to be paid by A. S., the insuring company would insure his life in the amount of §2,000 for the term of his life, for the sole use of his wife, Frances, the sum so insured to be paid to A. S., his executors, administrators and assigns, within ninety days after due notice and proof of his death. A. S. and his wife both died several years after the delivery of the policy, but the wife died before the husband. — Held, that in equity the wife acquired a vested interest in the reserve fund belonging to the policy immediately upon its delivery, and that on her death such interest devolved upon her executors, who were entitled to it, as against the administrator of the husband.
    On final hearing.
    On October 20th, 1847, the Mutual Benefit Life Insurance Company issued to Alexander Shiras a policy of insurance containing the following provision:

      “Tliis policy of .insurance witnesseth that the Mutual Benefit Life Insurance Company in consideration of fifty-two dollars and eighty cents to them in hand paid by Alexander Shiras, and of the annual premium of fifty-two dollars and eighty cents to be paid on or before the twentieth day of October in every year during the continuance of this policy, do assure the life of Alexander Shiras, of Georgetown, in the county of Washington, District of Columbia, in the amount of two thousand dollars for the term of life for the sole use of his wife, Frances B. Shiras.
    “And the said company do hereby promise and agree to and with the said assured his executors, administrators and assigns well and truly to pay or cause to be paid the said sum insured to the said assured his executors, administrators or assigns within ninety days after due notice and proof of the death of the said Alexander Shiras, deducting therefrom all notes taken for premiums on this policy unpaid at the time.”
    Alexander Shiras paid the premiums on the policy up to the time of his death in November, 1894. Mrs. Shiras, the beneficiary named therein, died before her husband, in August, 1892.
    Alexander Shiras also held in his possession at the time of his death a certificate in the Clergyman’s Mutual Insurance League reading as follows:
    “ This certifies that Bev’d Alexander Shiras is a member of the Clergyman’s
    Mutual Insurance League, ........................ He having made application
    and paid his membership fee.
    “ This certificate is issued at his request in favor of his wife, Frances B. Shiras. And the said Frances B. Shiras will be entitled to receive from the league within 40 days after the death of the said Alexander Shiras the sum of two dollars from each and every member of the league. Provided that if the said Alexander Shiras be in arrears for dues at the time of his death, .................. this contract shall be void.
    “ Given at Bed Bank this 4th day of May, a. d. 1870.
    “ F. C. Putnam, Pres. Wm. D. Dunnelu, 1Veas.”

    The Mutual Benefit Life Insurance Company has paid the money due on the policy issued by it to the complainants as administrators of Alexander Shiras. The Clergyman’s Mutual Insurance League still retain the moneys payable on their certificate.
    The bill prays that decree may be made determining whether the insurance moneys above mentioned belong to the estate of Alexander Shiras or to that of his wife.

      Mr. Edward S. Atwater, for the complainants.

      Mr. William M. Lanning, for the defendant.
   Stevens, Y. C.

I think the obvious and proper reading of the clause in the policy of the Mutual Benefit Life Insurance Company, in respect of which the present controversy has arisen, is this:

“ The said company does hereby promise and agree to and with the said assured [Alexander Shiras], his executors, administrators and assigns, well and truly to pay or cause to be paid the said sum insured to the said assured' [Alexander Shiras], his executors, administrators or assigns, for the sole use of his wife, Frances B. Shiras.”

The wife died before the husband, and the question is, what interest did she take? Was it an interest which was contingent upon her surviving her husband, in which case the insurance money would belong to her husband’s estate, or an absolute interest, in which case it would, at the wife’s death, have passed to her executor for the benefit of her estate ?

Where a person procures a policy upon his life,, payable to another, and himself pays the premiums and retains the policy-in his own possession, there is some conflict among the cases as to whether the insured has power to change the beneficiary, and consequently some difference of opinion as to the nature of the beneficiary’s interest. But the question is not an open one in-this state, the law having been settled by Landrum v. Knowles, 7 G. E. Gr. 694. In that case a policy was taken by a wife on her husband’s life in favor of and payable to her children. She paid several premiums and then assigned the policy in payment of her husband’s debt. After the assignment the husband died,: and'the children filed a bill against the creditor, claiming the-whole amount of the insurance money. It was decided that the children were entitled to the reserve or accumulated fund belong-, ing to the policy at the time it was assigned and that the creditor was entitled.to .the balance. The chief-justice said: “The interest in this policy was effectually transferred to these appellants,. for by its very terms it is made payable to them, and it is difficult to perceive what ceremony or fact is wanting to the perfection of the gift to them. The mother pays the premium for the use and benefit of the children, and the insurance company, at her instance, in the policy, enter into an agreement to pay the insurance money to them. The gift to the children is voluntary, but very clearly it is completely executed as a gift by the mother, from whom it proceeds.” The meaning of this passage is unmistakable, and the case is all the stronger because the chief-justice is not speaking of a policy payable to the insured, his executors and administrators, for the use of the beneficiary, in which case the insured would properly retain possession of the policy as trustee, but of a policy payable directly to the children.

The point decided was that at the time of the delivery of the policy the gift was executed in the children, who immediately acquired a vested interest in the reserve fund belonging to it; but that as the wife had not entered into any covenant to pay future premiums and so was not bound to pay them, the children had an interest coextensive only with the value of the payments she had paid. Of this interest she could not deprive them, but she might deprive them of all other interest.

It will thus be seen that the court of errors has taken a middle ground. It refuses, on the one hand, to assert with Mr. Bliss, and with perhaps a majority of the state courts which have considered the question, that the person procuring the insurance and paying the premiums has no power to divert any párt of the fund from the beneficiary named (Bliss Life Ins. § 318; Continental Life Insurance Co. v. Palmer, 42 Conn. 60 ; Drake v. Stone, 58 Ala. 136; Harley v. Heist, 86 Ind. 197), and it refuses, on the other hand, to hold, as the supreme court of Wisconsin, in Foster v. Gile, 50 Wis. 606, held, that every policy made payable to a person other than the insured and remaining in the possession of the insured, should be read as if it contained a power of revocation, enabling him at anytime, at least with the consent of the company, to completely divest the beneficiary named therein of all interest.

The nature of the beneficiary’s interest having thus been ascertained, it will not be difficult to solve the question at issue. It is to be noted, in the first place, that Mr. Shiras did not at any time during his life attempt to alter the destination of the fund, and, in the second place, that his continued possession of the policy was consistent with the provision that the money was to be paid to himself, his executors and administrators, not, however, for his or their benefit, but “ for the sole use of his wife, Frances B. Shiras.”

The policy contains the only contract between the parties. By its terms, the right of the wife to the money is absolute. The gift is not limited in point of time and is not made contingent upon the happening of any event. The only duty which the trustees had to perform with respéct to the money they were to receive was to pay it over to the wife, who was to have the sole use of it. So broad is the language of gift, that I understand it to be conceded that had the wife survived the husband, she would have taken it absolutely. But it is said the gift was made contingent upon her survivorship. Not being able to find words of contingency in the policy itself, it is argued that we cannot suppose that the husband had the design of benefiting his wife’s relatives at the expense of his own. The case does not show what relatives Mr. and Mrs. Shiras had, nor how Mr. Shiras felt toward them. The facts are not before the court and could not be proved for the purpose of varying the terms of the contract. The effort really is to add to the' words “ for the sole use of his wife, Frances,” the further words “if she should survive him.” It would hardly be contended that the court would do this if the beneficiary were a child (United States Trust Co. v. Mutual Benefit Life Insurance Co., 115 N. Y. 153; Weston v. Richardson, 47 L. T. N. S. 514; Ricker v. Charter Oak Life Insurance Co., 27 Minn. 193) or a creditor, and on what principle would it do it in the ease of a wife? Should the same words be construed as giving to the wife one kind of interest and as giving to the child or creditor another kind ?

In all the eases cited by counsel there were to be found in the policy itself words importing contingency. Fuller v. Linzee, 135 Mass. 469, is a case of this description. There the language was, in ease the said assured [the wife] should die before the decease of N. Gr. F.” (the husband), the insurance money was to be paid to the children, and the court was able to declare that the policy itself warranted the inference that Mrs. Fuller was to take nothing unless she survived her husband.

In Olmstead v. Keyes, 85 N. Y. 593, the Mutual Life Insurance Company issued a policy upon the life of I. O. K., the husband (who procured it and paid the premiums upon it), to I. as trustee for his (I. O. K.’s) wife. The wife died in her husband’s lifetime and subsequently the husband married again and assigned his interest in the policy to his second wife. The court sustained the assignment. This case is plainly an authority in favor of the view I have taken, for Mr. Justice Earl says that the husband’s title came to him from his first wife, on her death, he being entitled to her choses in action jure mariti.

In Harley v. Heist, 86 Ind. 197, the policy was payable to the said assured [the husband], his executors, administrators and assigns, for the benefit of and payable to Wilhelmina, his wife.” The husband attempted to assign it to a creditor after his wife’s death. It was held that the assignment was invalid as against the claims of his wife’s heirs-at-law. And see Campbell v. New England Mutual Life Insurance Co., 98 Mass. 381, 400.

I am, therefore, of opinion that the complainants, who are administrators of the husband, should pay the money they have received on this policy to the executor of the wife for the benefit of her estate.

As to the certificate issued by the Clergyman’s Mutual Insurance League, I can find absolutely nothing in it which gives the complainants the semblance of any claim. If they have any by reason of their intestate’s membership or by reason of the constitution or by-laws of the league, the bill does not disclose it.


text:
    The New Jersey Building, Loan and Investment Company v. Ida M. L. Bachelor et al.
    A mortgage given by the grantee of land to a person other than the grantor, contemporaneously with the delivery of the deed vesting title, is entitled to priority over a mechanics’ lien for work done and materials furnished to the grantee under a contract partly performed before the title passed, only to the extent that it secures purchase-money.
    On final hearing.

      Mr. Barton B. Hutchinson, for the complainant.

      Mr. Isaac G. Kennedy, for the defendant McFarlan.

      Mr. James Benny, for the defendant "Walters,
   Stevens, V. C.

The complainant’s mortgage for $3,300 is dated July 27th, 1893, acknowledged July 28th, 1893, and recorded September 21st, 1893. The defendant McEarlan’s mortgage for $1,500 is dated May 31st, 1893, acknowledged July 27th, 1893, and recorded August 1st, 1893. ' The defendant Walters recovered judgment on his lien claim for $2,323.96. The claim was filed June 18th, 1894, and was made by him as contractor for work done and materials furnished in the making of additions to a dwelling-house* upon the mortgaged premises. The work was begun about June 20th, 1893, and completed about November 15th, 1893.

The questions raised by the pleadings and proofs relate to the priorities of these three encumbrances.

So far as the mortgages are concerned, the evidence satisfies me that while the mortgage of McFarlan is prior in date, the agreement between' the parties was that it was' to be postponed to the complainant’s mortgage: That such an agreement may lawfully be made is unquestionable. Hopler v. Cutler, 34 Atl. Rep. 746. The complainant is, therefore, as against the' defendant McFarlan, entitled to be first paid.

The mortgage of the defendant McFarlan, being a purchase-money mortgage, is entitled to priority over the lien claim of the defendant Walters. This is admitted. The important question is whether the lien of the complainant’s mortgage is prior to the mechanics’ lien either in whole or in part. The pertinent facts are these: The defendant Ida Bachelor was desirous of purchasing a house and lot belonging to the defendant McFarlan. Not having the money to make the purchase, her husband applied to the complainant, a building loan association, for a loan. The association having agreed to make it, Mrs. Bachelor was allowed by the vendor to take possession before she took title. After doing so, she contracted with the defendant Walters to make certain additions to the house. Walters began work on or about June 20th, and .did a considerable portion.of it before the deed was delivered. On the evening of July 27th, at Bayonne, McFarlan, the vendor, signed and acknowledged his deed to Mrs. Bachelor and formally delivered it to her, and she signed and acknowledged her mortgage to McFarlan and formally delivered it to him. No money was then paid, and the deed was immediately redelivered to McFarlan, it being understood that he would, on the next morning, take the mortgage to be given to the building loan association to its office in Trenton, and there receive the whole amount of the loan. Of this loan he was to retain $2,000, and the balance he was to hand over to Mrs. Bachelor. Accordingly, on the next morning (July 28th), Mrs. Bachelor signed the bond and mortgage to the building association, and acknowledged the latter before its local attorney. They bore date on July 27th. After they were acknowledged they were taken by the attorney to McFarlan, who, on receiving them, went to Trenton and delivered them, and also the deed, to the company’s secretary, at its- office. He received a cheek for $2,970, $2,000 of which he retained, and the balance of which he gave to Mrs. Bachelor. The deed, bond and mortgage were immediately sent by the company for record to the clerk’s office in Hudson county, instead of to the register’s, and the clerk not handing them to the register, they were not in fact recorded until the 21st day of September following.

On this state of facts, which has the prior lien, the building association or Walters?

There are several decisions on the general question.

In the first place, it is settled that a purchase-money mortgage given by a vendee to a vendor simultaneously with the delivery of the deed, will take precedence of a mechanics’ lien claim for work done for the vendee before he acquires the legal title. Mackintosh v. Thurston, 10 C. E. Gr. 248; Lamb v. Cannon, 9 Vr. 362; Wallace v. Silsby, 13 Vr. 1.

In the second place, it is also settled that, if the purchase-money or a part of the purchase-money be advanced by a third person, a mortgage given by the vendee to him simultaneously with the delivery of the deed by the vendor, will have like precedence. Bradley v. Bryan, 16 Stew. Eq. 396; Hopler v. Cutler, supra.

In the case in hand a part of the sum lent went to pay the purchase-money, and a part of it was paid to Mrs. Bachelor. What she did with it does not appear. Is this mortgage, under the circumstances, entitled to priority over the mechanics’ lien, and, if so, to what extent?

Although the delivery of the deed and the McEarlan mortgage took place on the evening of the 27th, and the delivery of the mortgage to the building association took place on the following day, I still think that the transaction was a single one and that it was the intention of the parties that it should be so considered. This is apparent from the fact that McEarlan kept possession of the deed’ conveying the title until he delivered it to the association. At the trial it appears to have been conceded by all parties that McEarlan contemplated making no final delivery of it until then. (See colloquy at conclusion of McEarlan’s evidence.) On this assumption it is plain, under the rules of law I have stated, that the lien of the building loan association is prior to the "Walters lien so far as the money advanced was used to pay purchase-money.

It is, however, argued by Walters’ counsel, that as to the rest of the money secured, the Walters lien is prior. The contention is that, to the extent that the land vests in the grantee beneficially, the lien of the mechanic must prevail. I am of opinion that this contention is well founded.

The claim of the vendor of property, who takes a mortgage to secure purchase-money, rests on the most satisfactory grounds. Looking at the substance of the transaction, all that the grantor really parts with and all that the grantee justly gets is the equity of redemption, and it is this equity alone which should become subject to the claim of the vendee’s creditors. By an extension of the rule, a third person who advances purchase-money, if he take a mortgage simultaneously with the passing of the title, is permitted to stand in the shoes of the vendor and to have the same protection that the vendor has. In this case, too, equity declares that all that the grantee really acquires is the equity of redemption. It would seem clear, on principle, that this ought to be the limit of the extension, and that whatever interest does vest in the grantee beneficially should become subject to such liens and interests as the law imposes upon land in the hands of an owner.

The test of momentary seizin cannot be the only one applicable to a case of this kind. If the grantor should convey to the grantee, in satisfaction of a prior debt due from the grantor to the grantee, would the grantee, be permitted to mortgage to a third person with such effect that his mortgage would be allowed to prevail over the widow’s dower and the claims of prior judgment and lien creditors? If so, on what principle? Simply because he mortgaged the instant he got the conveyance, and not some appreciable period of time, be it a minute or an hour, after-wards ? If the court were to hold the test of momentary seizin to be the only one in such cases, it would not only violate legal rules but it would defeat the plainly-expressed intention of the legislature. It was, without doubt, the legislative intention, by the Dower act, to endow the widow of every beneficial estate of inheritance of which her husband was seized at any time during the coverture; by the acts respecting judgments and mechanics’ liens, to bind the beneficial interest of the debtor in the land by the lien of the judgment or mechanics’ lien as soon as this land became vésted in him. In other words, the legislative design was to prevent the husband in the one case and the debtor in the other cases from making any use of his beneficial interest that would tend to defeat the just claim of the dowress or of any creditor. The distinction is clear. If the estate comes into the hands of the grantee subject to legal' or equitable liens, such liens will not be postponed to those of his own creation. But if he take it free from lien, he cannot create liens which will take precedence over the statutory ones. And here the technical rules of conveyancing come in to further the intention'of the legislature. It is elementary that the mortgagor cannot make a legal conveyance of land by way of mortgage until he becomes seized of that land; but at the moment of seizin — while he is, so to speak, in the act of becoming seized — the statutory lien fastens itself upon the estate, and any conveyance of it by the grantee must follow and not precede the lien thus attaching.

The case of the purchase-money mortgage is an exception in point of form and not of substance. For in substance, as I have said, the purchaser only gets, as the result of the one entire transaction, an equity' of redemption. This is well illustrated ■by the case of Wallace v. Silsby, 13 Vr. 1, a case at law, and therefore all the more significant. The question there was whether deeds of conveyance and reconveyance of certain minerals were to be regarded as parts of' one transaction in such manner as to prevent the first conveyance from vesting a greater interest in the subject-matter of the grant than the parties intended should be vested beneficially. It was held that they must be regarded as parts merely of one entire transaction; that the intention of the parties was to put the seizin in the grantee, nnder-whom the plaintiff in that case made his inequitable claim, for a particular purpose and only for an instant, and that the court, disregarding “ the outward figure and mode ” of the business, would look at its substance and .give effect to it as the parties really intended it should have effect. In the course of his judgment, the chief-justice'quotes with approval the following passage from Chancellor Kent: “A transitory seizin for an instant when the same act that gives the estate to the.husband conveys it out of him, as in case of a conusee of a fine, is not sufficient to give the wife dower. The land must vest in the husband beneficially for his own use, and then, if it be so vested but for a moment, provided the husband be not the mere conduit for passing it, the right of dower attaches.” The chief-justice then proceeds: “It is obvious that all the considerations here given for. the existence of this doctrine, in its application to dower, should be equally potent in their bearing on the law of the case now under consideration, for here, as in the .case of the momentary seizin of the husband, the grantor of the plaintiff was not beneficially seized even for a moment in the ore forming the subject of litigation.”

The case of Mackintosh v. Thurston, 10 C. E. Gr. 242, is not opposed to this view. It was there held .that a purchase-money mortgage has preference over lien claims for work done and materials furnished in buildings and improvements put upon the mortgaged premises by the purchaser between the execution of the contract of purchase and the conveyance, not only to the extent of the purchase-money, but also for all advances made in accordance with the written contract of purchase for building the houses, improving the grounds and paying taxes. Here it will be perceived that there was a written contract stipulating, for a conveyance on certain conditions. The grantee was to acquire the property only by conforming to those conditions, and the estate was to vest in. him beneficially subject thereto. The principle of decision is the same as that in Wallace v. Silsby. The same-remark is applicable to Clark v. Butler, 5 Stew. Eq. 664 Vice-Chancellor Van Fleet was there considering the case of a mortgagee who released in favor of a purchaser of part of the lands mortgaged and then took a .new mortgage from that purchaser, crediting the amount of. the new. mortgage upon the old. He held, as on principle he was required to hold, that the new mortgage was prior to a previously-existing mechanics’ lien.

It will be perceived that both of these cases gave to the vendee just such beneficial interest in the property as by the contract of purchase it was intended that he should acquire, but the case of Gibbs v. Grant, 2 Stew. Eq. 420, appears to go further. There, as here, work was done before the vendee got the legal title, and there, as here, a third person advanced to the grantee money, only part of which wept to pay purchase-money. Some of it went to workmen employed on the building, and the rest of it, we are told, went to the vendee. "What he did with it, the case does not show. The chancellor appears to have held that the entire amount of the mortgage had priority over the lien claim. The question here discussed does not seem to have been distinctly raised and passed upon, and hence the question may still be regarded as open. The cases cited by the chancellor in his opinion are no more than illustrations of the rule, as I have stated it. I am, therefore, of opinion that in order to give proper effect to the twenty-third section of the Mechanics’ Lien act, it must be held that the- lien attaches to the estate which comes into, the hands of the grantee to the full extent that he acquires a beneficial interest in it, and that such lien has priority over any liens which the grantee may seek to create therein.

Had the money which went to pay purchase-money been secured by one mortgage and the rest of the money lent been secured by another, given at the same time, the former mortgage would, in my view, have priority over the mechanics’ lien claim, and the latter would not. That the mortgagor has secured the whole loan by a single mortgage cannot change the result. Only to the extent that the mortgage secures purchase-money will it have priority over the lien of Walters.

A further question was raised in respect of the first mortgage. It was contended that as against the subsequent encumbrancers it was a valid lien only for the amount actually paid, viz., $2,970, and not for its face, $3,300. The difference between, these two amounts represents, the premium claimed by the association of which Mrs. Bachelor was a stockholder. The evidence is that this premium, together with the monthly payments required to be made by the bond and mortgage, go, with all the other premiums and payments received from other members, into a general fund, out of which dividends are made on the stock. It has been so often decided that contracts of this kind are valid that the question is not an open one. Mechanics’ Loan Association v. Conover, 1 McCart. 219; on appeal, 2 C. E. Gr. 497; People’s Building Association v. Furey, 2 Dick. Ch. Rep. 411; Bowen v. Lincoln Building Association, 6 Dick. Ch. Rep. 272.

It was said that this case differs from the cases cited in that here the money was loaned without any bidding. I do not understand that this is material. It does not affect the ground upon which transactions of this kind are vindicated. Clarksville Building and Loan Association v. Stephens, 11 C.E. Gr. 355.

A question is also made in reference to the amount of interest and premiums due. The bond and mortgage were given on July 27th, 1893, and there were three payments upon the stock and two payments of interest. The payments upon the stock were made in the months of July, August and September, 1893; the payments of interest in July and August. As the mortgagor thereafter made default, the principal sum of $3,300 became, by the terms of the bond and mortgage, payable in December, 1893. If anything more is claimed than this principal, with interest thereon at five per cent, from December, 1893, I will hear counsel as to whether, on the facts of the ease, such claim is sustainable.


author: Grey, V. C.

text:
    Alfred C. Walton v. William P. Walton et al.
    1. On application to hold a party for contempt, any facts existing when the application is made which would support a motion to release from custody, ought to he shown in answer to the application.
    2. Where the decree only directs the payment of money, it is a sufficient answer to an application to hold the defendant for contempt for non-performanee, to show that he is, in good faith, unable to perform the command of the decree.
    3. A final decree solely for payment of money declared to be due on contract, will not be enforced by attachment for contempt, unless special equities or fraudulent conduct requiring the use of this remedy be shown to exist.

      Messrs. Barton & Dawes, for the petitioner, John "Wright.

      Mr. Edwin Robert Walker and Mr. Garret D. W. Vroom, for the defendant W. P. Walton.
   Grey, V. C.

This is an application for an order to attach the defendant William P. Walton as for a contempt for disobeying an amended decree made in this court in this cause on April 21st, 1896, and duly served upon him, directing him, within two days after such service, to pay to the petitioner, John Wright, trustee &o., the sum of $1,938.76, with interest from August 1st, 1892, and further directing him and one Jacob Vreeland, Jr., to pay costs and counsel fee.

The facts shown upon which it is claimed the defendant William P. Walton should be attached are these:

William P. Walton was executor of the will of his father, William Walton, who died in the year 1876. By the. will the executor was directed to pay $2,800 into the hands.of Jacob Vreeland, Jr. (also a defendant in this suit), and Vreeland was directed to pay the interest thereof to the complainant, Alfred O. Walton, quarterly, during his life, and if he married and left heirs, at his death, to pay the principal sum

“ to said heir or heirs, as the case may be, but in case he should die without any heirs, then the said sum of $2,800 to be equally divided between my [testator’s] other children.”

Vreeland was a son-in-law of the testator, and at the time of the settlement of the estate, March, 1878, was worth $13,000.

The executor, by arrangement with Vreeland, and by his direction in settlement of this legacy, paid over $1,938.76 (part of this $2,800) to several of Vreeland’s creditors, on whose claims he (the executor) was surety, and paid only the residue; $861.24, directly to Vreeland himself.

Vreeland, as part of this settlement, gave to the executor a bond and mortgage, conditioned that he (Vreeland) should pay the interest as above stated to Alfred, and the $2,800 principal to his heirs, and in default of heirs to the testator’s children, as prescribed in the will.

In 1881 the executor consulted counsel regarding his responsibility und.er the will as to this legacy. He stated to the lawyer whom he consulted that he had paid the money into the hands of Vreeland, and was advised that Vreeland was trustee, and that he, and not the executor, was responsible for the money, and that Vreeland was not bound to give any mortgage securing it. There seems to have been no disclosure by the executor to his counsel, of.'the fact that the larger part of the legacy had, by Vreeland’s direction, been paid by the executor to certain of Vreeland’s creditors. There is no evidence that there was any fraudulent purpose in omitting to state this fact to his counsel. The executor seems to have believed that his payment by the direction of Vreeland, then entirely solvent, to other persons, was, in fact, a payment to Vreeland, as directed by the will. Acting on this opinion thus obtained, the executor shortly after-wards canceled the mortgage.

Vreeland continued to pay the interest to Alfred until 1892, when he failed, and the bill was filed in this cause, making the executor, Vreeland, and the children of the testator, defendants, and praying that Vreeland and the executor might be decreed to be personally responsible for the $2,800 and interest, and that Vreeland might be removed as trustee and a new trustee appointed.

In the meanwhile, the executor had become financially insolvent, and pending this suit, during an extension of time to answer, he placed a mortgage to one Allen, upon his farm, securing in great part previously-existing debts.

No defence was made to the bill of complaint in this cause, and a decree pro confesso was entered, and on February 25th, 1896, final decree was taken, removing Vreeland and appointing John Wright (the petitioner for the attachment against Walton) as trustee, and directing the executor and Vreeland to pay the $2,800, with interest from August, 1892.

The latter decree being afterwards, on April 21st, 1896, amended, so as to direct the payment by the executor and Vreeland of only the $1,938.76, and interest from August, 1892, with costs to be taxed, and counsel fee of $50. The petitioner, Wright (the new trustee), caused the amended decree to be served on the executor, and prays that he may be attached for disobedience of its command.

The executor admits the service, and by his answer says he is, because of his poverty, unable to obey the decree. The evidence taken on the hearing indisputably proves that the executor has no money wherewith to make the payment decreed to be made, and has no property except that which he now offers to the trustee. He delivered to the petitioner as trustee, on the hearing, in the presence of the court: (1) A deed conveying his interest in his farm; (2) A bill of sale for his horse and two wagons; (3) An assignment of his interest as lessor in the lease of the farm. These include all the property which he has been shown to possess, and these transfers are now in the possession of the trustee, awaiting his acceptance.

The act of contempt alleged is the omission to pay the money when ordered to make payment by decree of this court.

The only answer offered is the declaration that the defendant executor is, because of his poverty, unable to pay the money in compliance with the order of the court.

An attempt was made to influence the action of the court by showing that the complainant, who is entitled to the interest on the fund which has been dissipated, and two of the possible distributees, do not desire the executor to be attached. But it appears that the trustee has the legal right to these moneys, and may be responsible not only to these parties, but also to others who do not appear. The petitioner, as trustee, being entitled to receive the.fund, has the right to select such method of procedure to secure it as he may be advised and may determine will most fully- conduce to that end.

The recent case of Aspinwall v. Aspinwall, 8 Dick. Ch. Rep. 685, is cited by the respondent’s counsel as establishing the rule that a final decree for payment of money due upon contract, will not be enforced by attachment. The petitioner insists.that, in the case now before the court, there are special equities attendant upon breaches of trust and fraudulent appropriation of trust funds, which entitle the petitioner to the use of the remedy applied for, and that there are in the proofs indications of a purpose, on the part of the respondent,-fraudulently to anticipate the obligatory effect of the decree by disposing of' his property, and thus to contemn the authority of the court.

The petitioner also insists that the answer of the respondent cannot be received; that the court should direct an attachment in the first instance because of the failure to obey; that inability to perform can only be set up on application to be liberated; and if, after a proper time of incarceration, it appears that the defendant'canifot comply-with the decree, he can then be.set, free.

The rule is that any facts existing when the application to hold for contempt is made, which would support a motion .to enlarge from custody, ought to be shown in answer to th'e application to hold the defendant in contempt. The defendant, on the coming in of the order to show cause, should frankly exhibit the intent which actuates him, although he fails' to obey, and state the circumstances which show obedience to be beyond his power. Such a condition, when fairly proven to be actually existing when the decree was made, is to be considered as a showing of cause why the supposed offence was not committed. If it be true that the defendant could not, at any time since the making of the decree for payment, perform it, he certainly could not be in contempt of it, for the existence of a contempt of this character presupposes that, being able to perform the decree, the defendant willfully refuses or omits to obey.

In Wartman v. Wartman, Taney (U. S.) 362, it was held that the existing excuse relied on must be set up in answer to the application for the attachment, and would not secure a discharge after contempt.

In State v. Gulick, 2 Harr. 437, the supreme court held that it was too late for the defendant to excuse himself after the rule to attach was made absolute, unless by some matter which had arisen since the rule was made absolute.

There remains the further question of the sufficiency of the excuse which the defendant makes.

The proceedings in the cause show that the defendant executor has not for many, years had any part of the testator’s assets in his hands. The decree does not direct him to fulfill the trust which he undertook, nor to deliver any such assets to- the trustee. The bill prays, and the decree directs, that the defendant shall be personally responsible, and shall pay certain sums of money to the trustee. It is a decree for the payment of money.

The defendant shows to the court that he has neither money nor property with which to perform the decree.

The object of the application in this case is not the assertion of the dignity of the court, which has not been directly contemned, but it is the redress of the wrong done to the petitioner by the failure to obey the court’s decree. The defendant executor, against whom the order to show cause has been made, declares by his answer and testimony that he intends no disrespect to the court by his omission to obey its decree; that his reason for not obeying is that the decree directs him to pay money; that he is utterly insolvent, and has, since the decree was made, had no sufficient property or money to apply in such payment, but he tenders to the new trustee everything that he has, and submits whether he is in contempt for his failure to perform when performance is impossible to him.

This proof of inability to perform is, as above stated, not refuted. It is alleged that the defendant made a mortgage to Allen while his time to answer the bill of complaint was under extension, and that this mortgage was a fraudulent anticipation of the decree, and that he has spent a considerable sum in the defence of the recovery in this suit which should have been applied in satisfaction of the decree, and that he has declared he would not pay the petitioner’s claim.

I think the evidence shows that the mortgage to Allen was made in good faith, in great part to secure pre-existing debts; that the small sum of cash paid the defendant might readily have been used before the decree was made and therefore before it was obligatory upon him, and was too small to suggest a fraudulent purpose in making the mortgage, so that his testimony that he has no money or property sufficient to pay the sum decreed must be taken to be true. At the time the mortgage was made, a defence to the claim set up in the bill was still open, and there is no proof that there was any fraudulent purpose in securing the extension of time, which was done hi the ordinary way through counsel, and the transaction has no other coloring than an exercise by the defendant of his right to prefer Allen, whose debts he admitted, rather than the complainant, whose claim he denied and expected at that time to defend.

The defendant’s expenditure of money in defending these proceedings, by employing counsel &c. on application to open and amend the decree (in which he was in part successful) and in defence of the petition to attach him, cannot be imputed to him as in contempt of the decree. He had a clear right to make a defence and to employ counsel, even against the final decree, by petition to open or amend, or by appeal, or to answer the petition in this matter to save him his liberty. To hold his expenditures, fairly made for the purpose of exercising this right, to be in contempt would be an interference with an indisputable privilege.

So his declarations pending the proceedings that he would not pay are to be taken in connection with the whole of the proofs as to his state of mind on this subject, and they show that during the period of struggle to lessen the decree or to secure a new hearing, he made these statements.

It is nowhere shown that he had the means to pay and that he refused to apply them to the satisfaction of the decree.

I think the evidence shows that the defendant is unable to make the payment which he is directed to make by the decree, and that this is a sufficient answer to the petition to hold him as for a contempt for non-performance of the order of the court.

There is no proof of any purpose to defy the court’s decree or of a fraudulent purpose to avoid obedience, nor of any special equity which justifies the use of the extraordinary remedy sought. Aspinwall vr Aspimoall, ubi supra.

In State v. Trumbull, 1 South. 157, it was held that to justify an attachment for not obeying process of the court it must appear “that the disobedience was of such a nature as to indicate a design to' contemn the process or authority of the court.” Dodd v. Una, 13 Stew. Eq. 719; Fraas v. Barlement, 10 C. E. Gr. 86.

Inability to perform a decree for payment of money because of the insolvency of the defendant has been held a sufficient ground on which to refuse an attachment.

In McClure v. Gulick, 2 Harr. 343, it was declared that upon a proper case made, such as insolvency of the defendant clearly established, attachment might be refused. So, also, in State v. Gulick, 2 Harr. 436.

In Adams v. Raskell and Woods, 6 Cal. *318, it was held that where, on application for an attachment for not obeying an order to pay money, the defendant proved without contradiction that he had complied as fully as it was in his power.with the order of the court, he could not be imprisoned for neglecting to perform an act which was not in his power, and an order imprisoning him was reversed.

I think the prayer1 of the petitioner must be refused, but without costs as against the petitioner, and without prejudice to a renewal of this application, if any additional facts be presented, or the taking by the trustee of any step to enforce the decree by any other mode than the present petition.


author: Grey, Y. C.

text:
    Augusta Benz v. Peter Fabian et al.
    A gift by will of a house and furniture to a wife to use, occupy and dispose of * * * as she may think proper,” with a provision that if the wife “should continue in the use, occupation and ownership” of the house and furniture until her death, then that the same should go to testator’s children in equal proportions, and if the wife “should die before the majority of the youngest surviving” children, then that the rents from the property, after-payment of taxes and repairs, should be expended for the maintenance and education of such children as might still be in their minority. — Held, that the estate of the wife in the property given is general and indeterminate, as expressed in the words of the will; that the power of disposition is absolute and unlimited; that the effect of the devise to the wife, coupled with the unlimited power of disposal, vested in her a fee-simple estate in the property devised; that the limitations over, referred to in the will, are void because inconsistent with the devise in fee-simple to the wife.
    On bill, answer and proofs.
    The complainant, on the 8th day of January, 1886, received a mortgage, made to her by one Elizabeth Fabian, conditioned to secure the payment of the mortgagor’s bond for $300, which mortgage was recorded January 9th, 1886.
    The mortgaged premises consist of a house and lot of land in Trenton, Mercer county, New Jersey, and the mortgage purports to convey a fee-simple estate by way of mortgage, and recites title to have been derived under a devise from Nicholás Fabian by his last will, dated April 17th, 1869, proven July 20th, 1880. By this will, Nicholas Fabian, after providing for the payment of his debts, disposed of the mortgaged premises in these words:

      “Item. I give and bequeath unto my beloved wife, Elizabeth Fabian, my house in which I now reside, situate in the city of Trenton aforesaid, together with all furniture and household goods which may be in the same and to me belonging, of every kind and description, to use, occupy or dispose of the said house and lot and furniture and household goods as she may think proper. And if my said wife should continue in the use, occupation and ownership of the said house and lot and furniture and household goods until her death, then it is my will and I do so order that the same shall go to my children in equal proportion, to be divided at the majority of the youngest surviving; and if my said wife should die before the majority of the youngest surviving, then it is my will and I do so order that the proceeds from the rent of the same, after the expenses of taxes and necessary repairs, be expended for the maintenance and education of such of my said children as may still be in their minority.

      “Lastly. I hereby appoint my wife, Elizabeth Fabian, executor ®f this my last will and guardian of my said children.”
    Nicholas Eabian died in 1880, leaving him surviving his widow, Elizabeth Fabian, the mortgagor, and his children and heirs, Peter Fabian, the judgment debtor hereinafter named, and others.
    On September 19th, 1882, Frederic A. Potts recovered a judgment in Mercer county circuit court against Peter Fabian, which was at once docketed in the supreme court, for $832.61.
    On November 9th, 1888, Potts, the plaintiff, died testate, and the defendants Sarah B. Potts, W. R. Potts and Joseph T. Moore were appointed executors of his will and have proven it.
    On December 22d, 1892, Elizabeth Fabian made another mortgage to the complainant, on the same mortgaged premises, to secure the payment of $200. This mortgage was recorded on the day of its date, and purports to convey a fee-simple estate, and recites title under the will of Nicholas.
    On December 30th, 1894, Elizabeth died. She left a will, dated December 3d, 1894, which was proven March 2d, 1896, whereby she directed her debts to be paid, her estate, real and persona], to be sold, and, after paying the debts &c., “ to divide the rest and remainder, from the proceeds of such sale, among my children, their legal heirs, representatives or assigns in equal shares.”
    Elizabeth left her surviving her son, Peter Fabian, and other heirs-at-law.
    The executors of the will of Frederic A. Potts are made defendants in the bill of complaint, in respect to their claim of lien under the above-named judgment upon Peter Fabian’s estate in the premises mortgaged to the complainant.

      The complainant files her bill for the foreclosure of her two mortgages and sale of the mortgaged premises, and charges that the judgment held by the defendants, the executors of Potts, is subsequent and subject to the lien of both the complainant’s mortgages and acquired with full notice thereof.
    The executors of Potts, by their answer, admit the mortgages to be valid, but they claim that Peter Fabian, the defendant, in their judgment, has, either as one of the heirs-at-law of his father, Nicholas, or as one of his devisees, an interest in the mortgaged premises upon which their judgment on its entry became a lien.
    They admit the priority of the lien of the mortgages upon the premises to the extent of an estate during Elizabeth’s life, but they claim that Elizabeth, under Nicholas’ will, took no greater interest than a life estate; that Elizabeth continued in' the use, occupation and ownership of the premises &c. until her death, and that, under the limitation over in Nicholas’ will, his children (of whom Peter is one) took the fee of the premises &c. ;■ that the estate of Elizabeth terminated with her death; the mortgages she had made thereupon ceased to be liens upon the premises, and the Potts judgment is, therefore, a superior lien upon Peter Fabian’s share to both the complainant’s mortgages.

      Mr. Hugh H. Hamill, for the complainant. •

      Mr. John L. Connet, for the executors of Potts, defendants.
   Grey, Y. C.

There are two well-defined rules which have been recognized and applied in this state in the construction of wills in cases where there is a gift of property and also a donation of a power of disposal to the beneficiary.

In one class of cases, where there is a gift without definition of the estate given and also an unlimited power to dispose of the property, the generality of the gift and the unrestricted power of disposal are construed to pass an absolute estate to the beneficiary, and any subsequent gift over is held to be void, because such a limitation over is inconsistent with the complete estate given to the first taker.

In this class supporting this rule may be found the following-named cases : Robinson v. Dusgale, 8 Vern. *181; Maskelyne v. Maskelyne, Amb. *750; Hixon v. Oliver, 13 Ves. *108; Dutch Church v. Smock, Sax. 153; Den, ex dem. Sharp, v. Humphrey, 1 Harr. 25; Annin v. Van Doren, 1 McCart. 143; Borden v. Downey, 6 Vr. 74, affirmed on error; Downey v. Borden, 7 Vr. 461; McClellan v. Larchar, 18 Stew. Eq. 17.

The other construction is sometimes called an exception to the foregoing rule, and is applied when the estate given is, by the express terms of the will, defined to be a life estate, and, if a power of disposal be added, the beneficiary will take a life estate only, and the added power of disposal will be held to be a separate and distinct gift, which has no effect to enlarge the life estate into a fee or to prevent a limitation over.

Supporting this doctrine, but recognizing the force of the former construction when circumstances call for its application, are the following cases : Tomlinson v. Dighton, 1 P. Wms. *149; S. C., 1 Salk. *239 ; Cory v. Cory, 10 Stew. Eq. 200; Pratt v. Douglas, 11 Stew. Eq. 516; Wooster v. Cooper, 8 Dick. Ch. Rep. 683.

In the case of Kent v. Armstrong, 2 Hal. Ch. 637, the construction limiting the estate given to be a life estate only was carried further than in any other case in this state. The terms of the devise were that the testatrix gave the lands “ to my beloved daughter E. R. A., to be by her possessed, enjoyed and occupied to her and her heirs forever, * * * but if my said daughter should die without heirs and intestate,” then &c. over to others. The case was certified into the supreme court for its opinion as to the effect of this devise. That court reported its unanimous opinion that the devise gave E. R. A. an estate in fee-simple;' that the words without heirs and intestate” implied a power of disposition, and are inconsistent with and avoid the limitation over. There was a decree accordingly. On an appeal from this decree, the court of errors recognized the rule that the gift of an estate generally, with an unlimited power of disposal, would vest a fee, but held that in the case before the court the power of disposal was not absolute; that the words “ and intestate ” so limited the power that it could only be exercised in the mode prescribed, i. e., by will, and that this was such a restriction that it could not be presumed that the testatrix, by creating the power, intended to give an absolute estate. On the contrary, these “ qualifications and additions were annexed to the devise to limit what would otherwise have been an absolute interest.” On this ground it reversed the decree, and construed the devise to give a life estate only to E. E.'A., and that on her dying without issue and intestate, the executory devise over operated.

The case stands as the law of this state to establish the construction that where there is a devise in terms in fee, with a limitation over on the death of the devisee without issue and intestate, the power of disposition is limited to be exercised by the making of a will, and this is such a restriction of the power that the intention of the testator will be deemed to be to give a life estate only, with an added, though distinct and separate, power of disposition by will.

The declaration of Mr. Justice Eandolph (at p. 642), that words conferring a power of disposal will be held to give a mere .power, not only where an estate for life is given in express words, but also where the life estate arises by necessary implication or construction, was subsequently disapproved of in Downey v. Borden, 7 Vr. 468, by the court of errors, but the general rule of construction in this state of such devises, as established in Kent v. Armstrong, was fully accepted and declared by that court in the case of Cantine v. Brown, 17 Vr. 601.

The same rules of construction declared in the above-cited New Jersey cases are held to be equally applicable to bequests of personal estate and to devises of real estate. Pratt v. Douglas, 11 Stew. Eq. 516; Wooster v. Cooper, 8 Dick. Ch. Rep. 683.

Applying the law as declared in these cases to the construction of the devise to Elizabeth Fabian (the mortgagor) in the will of Nicholas Fabian, the subject-matter of the gift is found to be the house, the furniture &c. These things themselves are given, not merely the use and enjoyment of them.

Neither the words of the gift nor any other expressions in the will indicate any intention to give Elizabeth a life estate only. No limitation of the estate given her is expressed, either as to the time of enjoyment or the character or the quantity of the estate devised. The limitations over do not in any way define the estate given to Elizabeth. I think it must be held that the estate of Elizabeth in the property given, as expressed in the words of the will, is general and indeterminate, and the terms of the power of disposition must be examined to define it.

Upon examining the power of disposition, the house, lot and furniture &c. appear to be given to Elizabeth to use and occupy, or to dispose of “ as she may think proper.” There is no prescription as to the time when, or during which, or the manner in which, Elizabeth shall exercise this power. She had an unrestricted power to dispose of the property as she might think proper, and no direction as to what disposition she should make of the proceeds arising from her exercise of the power. The provision for the maintenance and education of the children is contingent upon the wife’s dying before' the majority of the youngest surviving, and, even if valid, would affect only the income which might be received from the property, and not the proceeds from any disposition made of the property.

In Mixon v. Oliver, 13 Ves. 108, there was a gift to a wife, to be disposed of as she thinks proper; ” the power was held to be unlimited and to vest a fee. The same ruling was declared as to the words “to be at the disposal of my wife * * * to whom she shall think fit to give the same,” in Robinson v. Dusgale, 2 Vern. *182. The rule thus early declared in England has been followed in this state, and a gift “ to my beloved wife” of “ one-third of all my estate * * * for to dispose of as she may see proper,” was held, in Downey v. Borden, ubi supra, to be an indeterminate devise of the third and the power of disposition to be unlimited ; so that a fee vested in the wife, though the power was not exercised and she died intestate, and the fee-simple estate of her heirs therein by descent from her, was sustained. In McClellan v. Larchar, ubi supra, there was given “ full power to alienate, convert or dispose of the same in such manner as she may deem best,” and it was held to be an unrestricted po wer and to vest a fee.

In the case in hand the testator, Nicholas Fabian-, farther shows his intent to give his wife unlimited power to make an absolute disposition of the property, for he predicates the first limitation over upon the condition that his wife should continue in the use, occupation and ownership of the said house and lot &c. until her death, thus showing that he recognized the possibility that by- the exercise of the unlimited power he had previously in his will given her she might, before her death, have ceased to be the owner.

I think the true construction of Nicholas Fabian’s will must be that the general devise to. Elizabeth shall be considered, with the unlimited power given her to dispose of the property, to have vested in her a fee-simple estate in the mortgaged premises; that the limitations over to the children of Nicholas of the house &e. and of the rents are void, because inconsistent with the devise to Elizabeth, under the doctrine fully stated in the cases above cited; that both the complainant’s mortgages are therefore valid liens upon a fee-simple estate in the mortgaged premises; that the defendant Peter Fabian took no estate under the will of Nicholas Fabian because the limitation over to Peter and Nicholas’ other children was void, being inconsistent with the devise in fee to Elizabeth, and Peter took nothing as heir of Nicholas because Nicholas had by his will devised his whole estate to Elizabeth, but on the death of his mother (Elizabeth) Peter did take, by descent from her, an undivided one-third part of her fee-simple estate in the mortgaged premises, subject to the complainant’s two mortgages and also subject to the exercise of the power of sale created in Elizabeth’s will.

The estate of Elizabeth, the mortgagor, being shown to have been a fee-simple at the time of making the complainant’s mortgages, it is of no significance whether she had, under the power to “ dispose of the said house ” &c. “ as she may think proper,” given her by Nicholas’ will, authority to make a valid mortgage on the premises, considering that authority to have been merely a power and not effective to define the estate given.

It was argued that this was but a power to sell, and that a power to sell did not necessarily give a power to mortgage, and that iu this case the will of Nicholas could not be construed to give the latter power.

If the question arose in the case, I should hesitate to hold that a power to dispose of property as the donee may think proper, with no direction as to any disposition to be made of the proceeds arising from such disposal, is limited in its exercise to the making of a sale only. The donor authorizes a disposition to be made of the land; he does not limit the mode in which the power may be exercised nor the extent of the estate which may be created under it; and if the donee does unlimitedly exercise the power so that she ceases to be the owner of the property thereby, the testator gives to no one the right to call upon her or her estate to account for the .proceeds.

By the authorization to the donee to dispose of the property “ as she may think proper,” it may be forcefully claimed that the donor of the power referred the selection of the mode of disposal, whether by sale, mortgage, lease or otherwise, to the discretion of the donee, and that the making of the complainant’s mortgages by the donee was thought by her to be a proper exercise of the power of disposition.

I do not consider it to be necessary to determine this point, inasmuch as the weight of authority seems to settle the primary question in favor of the complainant.

I will advise a decree in favor of the complainant in accordance with the views above expressed.