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$ 14. Consideration necessary for executory trust. - A consideration is necessary in an executory agreement or trust in order to require them to be enforced, and it must be a legal and honest one. Tufts v. Tufts, 3 Woodb. & M., 456.
$ 15. - illegality of, as affecting bona fide purchaser.— The illegality of the consideration on which the trustee became such, or other fraud in the creation of the trust, cannot affect the title of a bona fide purchaser from such trustee. Gridley v. Wynant, 23 How., 500.
$ 16. Assignment in trust for benefit of creditors.— The assignee of an insolvent, in an assignment made for the benefit of creditors, although trustee for the creditors, stands in no fiduciary relation to the heirs of one of the members of the firm. Rothwell v. Dewees, 2 Black., 613.
$ 17. Executor or administrator as trustee.- Where an executor had a power to sell, coupled with a trust, or a power coupled with an interest, the residuary legatees took by devise and not by descent, although they were supposed to be also the cestuis que trust. Taylor v. Benham, 5 How., 233.
$ 18. An administrator has no right to sell any more of a trust estate conveyed to his intestate than belongs to him as heir. Robinson v. Codman,* 1 Sumn., 129.
S 19. Where property is devised to an executor in trust the relation of the executor as trustee to the trust estate is the same as it would have been had the property been bequeathed to him in trust by his individual name, and he had not been named executor. Parsons v. Lyman, 5 Blatch., 170.
$ 20. The distinction between a power and a trust is marked and obvious. The former is never imperative; it leaves the act to be done at the will of the party to whom it is given. The latter is always imperative, and is obligatory upon the conscience of the party intrusted, Stanley v. Colt, 5 Wall., 119.
$ 21. Ratification by cestui que trnst.- Although in the sale of trust property the trustee is bound to pursue the mode prescribed by the instrument creating the trust, yet the purchaser cannot object that another mode was pursued when the sale is ratified by the cestui que trust. Greenleaf v. Queen, * 1 Pet., 138.
$ 22. There can be no disseizin of a trust, though the exercise of an adverse possession for a great length of time may, in equity, bar or extinguish the trust. Baker v. Whiting, 3 Sump., 476.
S 23. Insurance of trust property – Rights of insurers.— Where one of several trustees of a church by authority of the others insured the trust property in his own name, and (being also a creditor of the church) had one of the policies made payable to one of his creditors, it furnishes no defense to the insurer. Insurance Co. v. Chase, 5 Wall., 509.
$ 24. Where trust property is insured in the name of the trustee, and there is no concealment or unfair dealing which can avoid the risk, the underwriter is concluded from any further inquiry. Ibid.
$ 25. Trust fonds deposited in bank in name of trustee.- When a bank account is a trust fund, designated as such by being kept in the name of the depositor as trustee, the bank is bound to presume that the checks of such trustee, when drawn in proper form, were drawn by him in the lawful exercise of his duty. But when a bank seeks to assert against a bank account designated as one kept by the depositor in a fiduciary character its lien as a banker for a personal obligation of the depositor, known to have been contracted for his private benefit, it must be held as having notice that the fund represented by the account is not the individual property of the depositor, if it is shown to consist, in whole or in part, of funds held by him in a trust relation. National Bank v. Insurance Co., 14 Otto, 54.
$ 26. No dower in trust estate.- Estates held by the husband in trust are not liable to the dower of the wife. Robison v. Codman,* 1 Sumn., 129; Powell v. The Monson & Brimfield Mfg. Co., 3 Mason, 347; Lenox v. Notrebe, Hemp., 251.
$ 27. Merger of legal and equitable estate.- Where a trust estate and a legal estate meet in the same person the former is merged in the latter. Robison v. Codman,* 1 Sumn., 129.
$ 28. Power of revocation.- Where a trust is created with power to modify, change and alter said trust or entirely revoke the same reserved to the maker, who is one of the cestuis que trust, and the maker executes a writing, in the manner described in the deed of trust, renewing the trust for a definite term of years from that date, it is not only a modification of the trust, but a complete exercise of the power of revocation, and leaves no residue of the original power in the maker, and a bill to revoke the latter trust must be dismissed. Hidell v. Girard Life Ins., etc., Co.,* 7 Rep'r, 391.
$ 29. Revivor of trust.— A trust once executed cannot be revived by the non-execution of a trust resulting from a subsequent agreement relative to the same subject. Baker v. Biddle, 1 Bald., 394.
$ 30. A state may become a trustee. Thus, where A. concluded with the republic of Texas a contract of colonization, perforined its conditions so as to entitle him or his assignees
to the lands described in the contract, but the state of Texas refused through her agents to convey the title to such lands to A. or his assignees, held, that the republic became a trustee for A., and that the trust thus imposed upon the republic of Texas was not extinguished by the formation of the state of Texas and her annexation to the Union, but was imposed and fastened upon the state as the sovereign successor of the republic. Hancock v. Welsh, 3 Woods, 351 ; 25 Int. Rev. Rec., 160; 8 Cent. L. J., 393.
S 31. Married woman may be trustee. There is no incapacity in a married woman to become a trustee and to exercise the legal judgment and discretion belonging to that character. The authority confided to a trustee is in the nature of a power, and it has long been settled that a marrried woman may execute a power without the co-operation of her husband. Hence a married woman may as trustee receive and convey title to land without joining her husband, provided that the conveyance affects no right of his, legal or equitable. Gridley v. Wynant, 23 How., 500.
$ 32. Married woman may incumber rents.- A married woman has the same power as a feme sole to incumber rents settled in trust for her sole and exclusive use and benefit. Cheever v. Wilson, 9 Wall., 108.
S 33. Trust relation between husband and wife.— A husband may be a trustee for his wife, and can be compelled, in equity, to account for any money or property belonging to her which he received from her to invest for her benefit, and neglected so to invest, in the same manner in which a stranger would be held to account. It makes no difference whether the property which he has received was settled by him upon his wife, or came to her through other sources. If the property was her own separate and exclusive estate, and he has agreed to become her trustee respecting it, his liability attaches, and he will be charged with the trust. Walker v. Walker, 9 Wall., 743.
$ 34. Legislature cannot defeat private trust. - The board of trustees of the Vincennes University was not a public corporation, and had no political powers. A donation of land by the general government for its support was like a donation by a private individual, and the legislature of the state could not rightfully exercise any power by which the trust was defeated. Trustees of Vincennes University v. Indiana, 14 How., 268.
$ 35. Statute of frauds.- In Texas an express trust as to real estate may be proven by parol evidence, the same as at common law, the courts of that state holding that trusts are not embraced in the Texas statute of frauds. Osterman v. Baldwin, 6 Wall., 116.
$36. Attachment of trust property.-- The attachment law of Maryland allows an attachment by way of execution to be issued upon a judgment and levied upon the credits of the defendant. Where an attachment of this nature was laid in the hands of the garnishees, who were trustees, and it appeared that, after performing the trust, there was a balance in their hands due to the defendant, the attachment will bind this balance. McLaughlin v. Swann, 18 How., 217.
$ 37. Shares in an illegal association do not pass as property by an assignment in trast. In 1816 an association called the Baltimore Company was organized in Baltimore for the purpose of furnishing advances and supplies in fitting out a military expedition under General Mina against Mexico, then a part of the dominions of the king of Spain. One of the shareholders having become insolvent in 1819, his trustee sold the share in 1825. The original transaction being illegal, the share could not be considered by the laws of Maryland as property passing by the insolvency to the trustee. Consequently the sale of the trustee passed nothing to the assignee. An act of the Maryland legislature, passed in 1841, made the sale of 1825 valid so far only as defects existed for the want of a bond by the trustee in insolvency, and the want of a ratification of the sale by the court. But it did not purport to cure other defects in the title of the trustee. Williams v. Gibbes, 17 How., 239.
$ 38. Trust to defraud creditors — New trust based upon - Statute of frauds — Extingnishment of trust.- Where A., while in prison, conveyed to B. his farm worth near $2,000, for the consideration of $250, and took the poor debtor's oath, and continued in possession of the farm for many years, till his death, it is prima facie evidence of a trust between A. and B. But being a trust to defraud creditors, equity will not lend its aid to enforce it. If B., after some years, execute the trust by receiving payment of what he advanced, and conveying the farm to C., at A.'s request, and for A.'s benefit, to borrow more money, it is questionable whether the original fraud can be objected to the enforcement of this new trust in C. But if C. gave back to B. a defeasance, rendering the conveyance to C. a mortgage, and C. assigns his interest to D., it must be distinctly proved that C. and D. recognized the estate to be held in trust by them for A., and in such manner as to take it out of the statute of frauds, or it could not be enforced as between them and A. Long possession by A., receiving interest from him, the sum paid by them being much below the value of the farm, and any writing, such as a receipt or bond, recognizing A.'s right as a mortgagor, are competent evidence to show this trust. Where the town purchased the farm with such a trust existing, if all the
written evidences of it were given up by A. to be canceled, and he made a new agreenient with the town to provide him with other buildings, and let him have a portion of the farm, the former trust is extinguished. And if the town fail to fulfill all the new agreement, the former trust does not remain, but the remedy of A. is at law for damages, or in chancery for a specific performance of such part of the new agreement as remains unfulfilled. Hunter v. The Town of Marlboro, 2 Woodb. & M., 168.
$39. Miscellaneous.— When property is conveyed in trust for the sole and separate use of the wife during the term of her life, and after the expiration of such term for the use of such person or persons, and for such purpose only, as she by her last will and testament shall appoint and direct, and in default of such appointment to the use of her next of kin and personal representatives, a court of equity cannot authorize the trustees to convey the property to the husband upon a bill filed by him and his wife against the trustees for that purpose. Markoe v. Maxey, 5 Cr. C. C., 306.
§ 40. Land was conveyed by W., a married woman, her husband H. joining in the deed, to P., in trust for her support during life, remainder to her children. The deed provided that H. should possess and manage the property during his life-time. P. was not to be liable for H.'s acts. H. was declared to be a co-trustee, but neither had power to charge the property with any future liability beyond H.'s support for life. H. survived W. and died insolvent. Held, that N., who had furnished H. supplies for carrying on the property, had no claim on P., the trust property or the children of W, for euch supplies, it not appearing what was the state of the account between the estate and H. at the time of his death, Hewitt v. Phelps, * 15 Otto, 393.
& 41. Where a question of doctrine or practice of a subordinate religious body arises, involving the execution of a trust, the rule of decision for the courts is to follow the views of the highest judicatory of that faith and order. Watson v. Jones, 13 Wall, 679.
$ 42. It is not a correct construction of the third and twenty-first sections of the act of congress incorporating the Mechanics' Bank of Alexandria that the stock of the bank shall be deemed to belong to the persons in whose names it stands upon the books of the bank, and that the bank is not bound to recognize the interests of any cestui que trust, and may refuse to permit the stock to be transferred whilst the nominal holder is indebted to the bank. Mechanics' Bank of Alexandria v. Seton, 1 Pet., 299.
$ 43. The same relation as that of landlord and tenant subsists between a trustee and a cestui que trust as regards the title. Walden v. Bodley, 14 Pet., 156.
$ 44. A deed conveying, in trust, to secure certain creditors, certain specified articles of personal property does not protect from the general creditors articles purchased to supply the place of the articles sold by the trustee, unless so stipulated in the deed of trust. Letourno v. Ringgold, 3 Cr. C. C., 103.
$ 45. A testamentary trust cannot be modified by a parol understanding between the testator and the trustee, Moore v. Mitchell,* 2 Woods, 483.
$ 46. The fact that the grantor and trustee and beneficiaries under a trust are citizens of diíferent belligerents will not invalidate a sale under the deed of trust. University v. Finch, 18 Wall., 106.
$ 47. Where trustees sell on a credit and receive money before it is due, discounting legal interest, it does not operate in equity as a discharge of the lien, but a court of chancery will consider the lien as still subsisting, and the purchaser as responsible to the creditor. Wallis v. Thornton, 2 Marsh., 422.
$ 48. There is no distinction between a trust created to pay debts generally and a charge upon lands for the same purpose. Notice of the charge does not vary the rights of the pur. chaser. Gardner v. Gardner, 3 Mason, 178.
$ 49. Where one purchased at trustee's sale the land of his infant brothers and sisters on time, but confessed a judgment in trust as due for them, this was not fraud, and his other creditors cannot set the judgment aside. Bank of Georgia v. Higginbottom, 9 Pet., 59.
$ 50. A party in possession of land and holding adversely does not charge himself as trustee by buying in a pretended right to the premises at an assignee's sale in bankruptcy, although the assignee held, as trustee, the interest of the bankrupt, whatever that might be. Cleveland Ins. Co. v. Reed, 24 How., 284.
$51. Where, in the event of the bankruptcy of the beneficiary, his interest in the income ceases, a limitation to wife and children, or, at the discretion of the trustees, accumulation for ulterior or stated purposes, is sufficient to exclude any possible future interest of the bankrupt in the fund. Nichols v. Eaton, 3 Cliff., 595.
$ 52. Where lands belonging to the state have been made a trust estate for the payment of bonds by legislative act, and placed in the hands of trustees, such trust property is subject to the power of a court of equity to raise therefrom the money to satisfy the liens on the trust estate, and may appoint its own agents to sell the property or a portion thereof. Vose v. Trustees of the Internal Improvement Fund, 2 Woods, 647.
II. CREATION AND DURATION.
Deed absolute; burden of proof, $ 53.- Lapse of time, $ 54.
$ 53. Where a trust is sought to be established under a deed absolute on its face the burden of proof is on the plaintiff. Prevost v. Gratz, SS 55-58.
$ 54. Length of time is no bar to a trust clearly established, but after the lapse of many years — forty years in this case — equity will presume that the trust was discharged rather than in the absence of evidence presume that the trustee was guilty of fraud. · Ibid. [NOTES. - See SS 59-84.]
PREVOST v. GRATZ.
(6 Wheaton, 481-514. 1821.) APPEAL from U. S. Circuit Court, District of Pennsylvania.
STATEMENT OF Facts. This was a bill in chancery filed in the court below by the plaintiff George W. Prevost, as administrator de bonis non, with the will annexed, of George Croghan, deceased, against the defendants Simon Gratz, Joseph Gratz and Jacob Gratz, administrators of the estate of Michael Gratz, deceased, for a discovery and account of all the estate of G. Croghan which had come to their hands or possession either personally or as the representatives of M. Gratz, who was one of the executors of G. Croghan, who died in August, 1782, having appointed M. Gratz, B. Gratz, T. Smallman, J. Tunis and W. Powell executors of his last will and testament. All the executors except W. Powell died before the commencement of the suit. B. Gratz died in 1800, and M. Gratz in 1811. W. Powell was removed from his office as executor, in the manner prescribed by the laws of Pennsylvania, after the death of M. Gratz; and the plaintiff was thereupon appointed administrator de bonis non, with the will annexed. The bill charged M. Gratz and B. Gratz (the representatives of B. Gratz not being made parties) with sundry breaches of trust in respect to property conveyed to them in the life-time of the testator, and with other breaches of trust in relation to the assets of the testator after his decease; and also charged the defendants with neglect of duty in relation to the property and papers of G. Croghan, which had come to their hands since the decease of M. Gratz.
Further facts appear in the opinion of the court.
The first point upon which the cause was argued respects the tract of land on the Tenederah river. It appears from the evidence that this tract of land, containing nine thousand and fifty acres, was conveyed by Colonel Croghan to Michael Gratz by a deed bearing date on the 2d of March, 1770, for the consideration expressed in the deed of £1,800. The deed is upon its face absolute, and contains the covenants of general warranty, and for the title of the grantor, which are usual in absolute deeds, but are unnecessary in deeds of trust. At the time of the execution of the deed Colonel Croghan was in the state of New York, and Michael Gratz was at Philadelphia. The land was, after the death of Colonel Crogban, and in the year 1795, sold by Michael Gratz to a Mr. Lawrence in New York for a large sum of money. The plaintiff contends that this conveyance made by Colonel Croghan to Michael Gratz, though in form absolute, was in reality a conveyance upon a secret trust, to be sold for the benefit of the grantor; and in this view of the case he contends further that he is entitled to be allowed the full value of the lands at the time that the present suit was brought, upon the ground of a fraudulent or improper breach of trust by the grantee, or at all events to the full amount of the profits made upon the sale in 1795, with interest up to the time of the decree.
The attention of the court will therefore be directed, in the first place, to the consideration of the question whether this was a conveyance in trust, and, if so, of what nature that trust was; and in the next place whether that trust was ever lawfully discharged or extinguished. If there be still a subsisting trust there can be no doubt that the plaintiff is entitled to some relief.
It appears from the evidence that Colonel Croghan and Bernard and Michael Gratz were intimately acquainted with each other, and a variety of accounts was settled between them from the year 1769 to a short period before the death of Colonel Croghan. During all this period Colonel Croghan appears to have had the most unbounded confidence in them; and particularly by his will, made in June, 1782, a short time before his decease, he named them among his executors, and gave to Michael Gratz, in consideration of services rendered to him, five thousand acres of land, and to his daughter Rachel Gratz one thousand acres of land on Charter creek, with an election to take the same number of acres in lieu thereof in any other lands belonging to the testator. The situation of the parties, therefore, was one in which secret trusts might probably exist, from the pecuniary embarrassments in which Colonel Crogban appears to have been involved, as well as from his extensive land speculations. And, in point of fact, some portions of his property were conveyed to one or both of the Messrs. Gratz, upon express and open trusts.
$ 55. When a trust is asserted to exist the burden of proof lies upon him who asserts it.
Still, however, the burden of proof to establish the trust in controversy lies on the plaintiff. The circumstances on which he relies are, in our judgment, exceedingly strong in his favor, and sufficient to repel any presumption against the trust drawn from the absolute terms of the deed. In an account which was settled in Pittsburg in May, 1775, between Bernard and Michael Gratz and Colonel Croghan, is the following item of credit: “ August, 1774. By cash received of Howard, for 9,000 acres of land at Tenederab, sold him for £850 15s. New York currency, is here.....
... £797 12 6 Interest on £797 12s. 6d., from August, 1774, to May, 1775, is eight months, at 6 per cent....
31 18 1
£829 10 7
There is no question of the identity of the land here stated to be sold to Howard with the tract conveyed to Michael Gratz by the deed in 1770. If the conveyance to Michael Gratz had been originally made for a valuable consideration then paid, it seems utterly impossible to account for the allowance of this credit upon any sale at a subsequent period. It seems to us, therefore, that the only rational explanation of this transaction is that the conveyance to Michael Gratz, though absolute in form, was in reality a trust for the benefit of Colonel Croghan. What the exact nature of this trust was it is, perhaps, not very easy now to ascertain with perfect certainty. It might have been a trust to sell the lands for the benefit of Colonel Croghan, and to apply the proceeds in part payment of the debts due from him to Bernard and Michael Gratz, or it might have been a sale of the lands directly to Michael Gratz, in part payment of the same debt, at a price thereafter to be agreed upon and fixed by the parties; and in the meantime there would arise a resulting trust, in favor of Colonel Croghan, by operation of law.