Waddell v. United Cigar Stores of America

Adams, J. This is a controversy without action submitted under „ Article 25 of the Consolidated Statutes to test the validity of a written instrument executed by the plaintiff and tendered to the defendant for the lease of a building situated at the corner of Patton Avenue and Haywood Street, in the city of Asheville, known as the Paragon Building. The house is a three-story brick structure which was erected twenty-five or thirty years ago — a barber shop in the basement; a bank and stores on the ground floor; on the second floor offices; and on the third a large hall. There is no elevator, and for this reason in part the rental value of the third floor is comparatively negligible. For the proposed lease, which is to continue for a term of thirty years from 1 January, 1928, the defendant agrees to pay $109,500 — for the first seven years $1,875 monthly in advance, and $2,000 each month for the remaining twenty-three years. If the agreement is mutually executed the lessee will be *437 obligated to keep tbe property in repair, to pay all sueb taxes and assessments as may be levied -against it, to keep it insured, and to pay any damages which may be sustained. The appellant raises the two questions whether, without reference to the judgment, the trustee is authorized by the sixth item of the will to make the contemplated lease, and, if not, whether such authority is conferred upon him by the judgment of the court. In regard to the first, the plaintiff says that the devise in trust “to handle, manage, control, and improve (the property) in such way as to him may seem desirable, and to collect all incomes therefrom” empowers him to execute the lease without the direction or permission of the court — a position not without the support of authority. 2 Perry on Trusts (6 ed.), secs. 484, 528, 608; 2 Thompson on Real Property, sec. 1094; In re Upham, 152 Wis., 275, 48 L. R. A. (N. S.), 1004, 1014; Pern. Horticultural Society v. Craig, 87 Atl., 678. On the other hand the point is made that trustees who are not given express authority to rent the trust property may not execute a lease for a term which is likely to extend beyond the trust period. Hubbell v. Hubbell, 13 L. R. A. (N. S.), 496, 503; Gomez v. Gomez, 31 N. Y. Sup., 206; ibid., 41 N. E. 420; Note 14 Ann. Cas., 651; South End Warehouse Co. v. Lavery, 107 Pac., 1008; Cox v. Lumber Co., 175 N. C., 299, 304. But this question is not necessarily presented: the testatrix provided that the trust should terminate upon the death of Eobert Bruce Johnston and William Johnston, whose expectancy according to the mortuary tables is respectively 44.9 and 45.5 years, a period, in either event, considerably longer than that of the lease. C. S., 1790. As the renting will not in any way alter or modify the ultimate devolution of the property, the Superior Court in the exercise of its equitable supervision had authority to make such order as it deemed beneficial if all interests were represented and the parties were properly within its jurisdiction. 26 R. C. L., 1301, sec. 154; In re Upham, supra. While there are decisions to the effect that a lease which is to extend beyond the termination of the trust is not binding, on remaindermen who are not subject to legal process (2 Perry oh Trusts, sec. 484 n.), the pivotal question is whether all the parties who are or may be affected with an .interest in the property had actual or virtual representation at the hearing. The testatrix devised the Paragon Building to her husband “to manage, control, and improve,” but she provided that the trust should survive him; that after his death the property should be held by the Wachovia Bank & Trust Company for the joint interest and benefit of Robert Bruce Johnston and William Johnston. Subject to the annuity given Gabrielle DeBossett Waddell the income derived from the property *438 must be paid by the trustee to the guardian of these two devisees until they arrive at the age of twenty-one years, and thereafter directly to themselves. If either die without children surviving him the net income shall be paid to the other; but if the deceased leave children his share shall be paid to their guardian until they attain their majority and thereafter to them share and share alike. Upon the death of Robert Bruce Johnston and William Johnston the trust shall come to an end and the property shall be delivered to the surviving child or children, per stirpes j and if no child survive them then to the diocese described in the will. In Ex parte Dodd, 62 N. C., 98, this Court held that if land be devised to a person for life with remainder in fee to his children a sale of the land cannot be ordered before the birth of a child, because there is no one in, esse to represent its interest; but if there be a living child in whom the fee can vest a sale may be ordered, though all the children of their class may not yet have been born. See Miller ex parte, 90 N. C., 625; Irvin v. Clark, 98 N. C., 437; Springs v. Scott; 132 N. C., 548; Lumber Co. v. Herrington, 183 N. C., 85; Bank v. Alexander, 188 N. C., 667. But the rule formerly prevailing has been modified by legislation. C. S., 1744, 1745, Pendleton v. Williams, 175 N. C., 248; Poole v. Thompson, 183 N. C., 588. The statutes just cited apply, however, to a sale of property in which there are or have been contingent interests. In the case before us it is not proposed to convey the legal title, or, as we have said, to change the course of devolution, but to execute a lease which, except as modified by statute, is treated as a chattel real, falling within the classification of personal property. It is obvious that between a sale and a lease of real property there is a distinction which often calls for the application of diverse principles. We have referred to those controlling in case of a sale; but a lease authorized by the decree of a court of chancery may be binding upon beneficiaries not in esse when their interests are the same as those of persons in being who are subjected by due process to the jurisdiction of the court. 26 R. C. S., 1302, sec. 155. The principle is thus stated in Denegre v. Walker, 2 Ann. Cas. (Ill.), 787, 790: “It is further insisted that persons not yet in esse may, on the happening of certain contingencies, become interested in this estate, and that no decree can bind such persons. This contention is without merit. In the case of Hale v. Hale, supra, in discussing this question, we said (p. 259): ‘Such possible parties cannot, as a matter of course, be brought before the court in person, and it would be highly inconvenient and unjust that the rights of all parties in being should be required to await the possible birth of new claimants until the possibility of such birth has become extinct. If persons in being are before the court who have the same interest and *439 are equally certain to bring forward the entire merits of the question and thus give such interests effective protection, the: dictates both of convenience and justice require that there should be a complete decree. . . . The rights of those in esse and those not in esse are protected by the decree in precisely the same way and to the same extent. . . . The decree, therefore, must be held to be valid as a conclusive disposition of the rights of all the beneficiaries, as well those not in esse as those who were made defendants to the bill by name.’ So in this case, parties not in.esse are protected the same as those before the court. Nor can we see how their interests could be diminished by the making of the lease.” The interest of Robert Bruce Johnston and William Johnston in seeing that the building is rented is identical with such interest as the contingent remaindermen might have. The living devisees may be regarded as certain “to bring forward the entire merits of the question” and to exercise diligence to protect all interests. It is found as a fact and set out in the judgment that the lease will benefit the trust estate and subserve the interest of the beneficiaries in being and in possibility, and as there is no provision that will interfere with the title or impair the interest or income of any of the contingent remaindermen we discover no sufficient reason for disturbing the judgment. Judgment Affirmed.