Linder v. Nicholson Bank & Trust Co.

The opinion of the Court was delivered by Mr. ChiEE Justice Beease. This action is one to have declared null and void, and to cancel on the record, a deed of conveyance to certain real estate made by Nicholson Bank & Trust Company to its co-defendant, Mrs. Johnnie Willey Cousar. The material facts, upon which it is based, as alleged in the complaint, are these: William L. Linder, on April 25, 1913, executed and delivered to Nicholson Bank & Trust Company a deed to the involved premises, in fee simple, upon the following trusts and conditions: “In Trust, Nevertheless, for the following uses and purposes, and none other; that is to say, in trust to hold, manage, rent out, and collect the rents therefrom for a term of five years, and apply all such rents as follows: First, to pay the taxes and insurance and needed and proper repairs on the premises, to keep up my 5 shares of Building & Loan Association stock and my present Life Ins., paying all premiums thereon; and second, to the interest and principal of any indebtedness of mine to said Nicholson Bank & Trust Co., which now exists, or which I may in the meantime contract with them, if any; and to pay the interest, also the principal, if they have the funds on nand and think such advisable, on loan I have from the Life Insurance Company; and if at the expiration of such five years, I can satisfy said Nicholson Bank & Trust Company, that I am capable to properly manage my property, they to be the sole judges thereof, then to reconvey said premises to me, freed and discharged of all further trusts, and to pay over to me any surplus of the rents and profits on hand, if any; if however, I am unable at the expiration of such five years to satisfy my said trustees that I am capable of managing my property, *375 then and in such event, the said trust above created, and all of the provisions, duties, responsibilities and obligations thereof, are to continue the same for an additional period of five years; and at the expiration of such extended period, if extended as above provided, the said Nicholson Bank & Trust Company are to reconvey said premises to me (the said W. L. Linder), freed and discharged of all further trusts, and to pay over to me any surplus remaining of the rents and profits.- In the event, however, of my death at any time before my said trustees reconvey said premises to me, as above provided, and not leaving a wife or wife and child or children, then and in such event, the said Nicholson Bank & Trust Company are to sell the premises hereby conveyed, freed and discharged from all further trusts, in such manner and upon such terms as they may deem best, and execute and deliver good and sufficient conveyance therefor, and after paying the expense of such sales and any indebtedness of mine remaining unpaid, if any, to pay the remainder over as follows, to wit: to my father, Dr. S- S. Linder, or his heirs, one-third (1-3) thereof, and to my mother, Mrs. F. E. Linder, the remaining two-thirds (2-3) thereof, freed and discharged from all trusts.” The trustee never reconveyed the premises to the donor, William L. Linder; that William L. Linder died on March 11, 1930, without having been married, and leaving, therefore, no wife or child; that he left of force and effect his last will and testament dated June 20, 1929, which was admitted to probate first on March 12, 1930, in common form, and later, on January 16, 1932, in due form of law; and that the defendant Mrs. Cousar was named as executrix of the instrument. The first item of the will was as follows: “In compliance with my Mother’s wishes and as a token of love, gratitude and esteem on my own behalf, after the Payment of all my just debts and funeral expenses, including a simple marker for my grave giving the date of my birth and death, I do *376 hereby give, devise and bequeath all of my property and estate of every kind and nature whatsoever unto my beloved cousin, Mrs. Johnnie Willey Cousar, absolutely and in fee simple, with the exception of provisions hereinafter stipulated: viz. One Thousand ($1,000.00) Dollars each in cash or in property value shall be paid to the following cousins: Mrs. Edith Lyles Hill, Mrs. Helen Linder Bogan and Mr. Aromanas Coleman Lyles.” On August 12, 1930, Nicholson Bank & Trust Company, as trustee, under the mentioned trust deed, executed and delivered to Mrs. Cousar its deed, conveying in fee simple the lands conveyed by the trust deed. Dr. S. S. Linder, the father of William L. Linder, mentioned in the trust deed, predeceased the donor, William LLinder, and the plaintiffs are his heirs at law. William L. Linder never, from the date of the trust deed up to the time of his death, even attempted to satisfy his trustee that he was capable of .managing the property; that, after the expiration of the second five-year period provided for in the deed, he acquiesced in, and requested his trustee to continue to control and manage the property during his life; that, William L. Linder having died without having received a reconveyance of his property, and without leaving a wife or child, it was the duty of the trustee to sell the property covered by the trust deed and to pay one-third of the proceeds of sale to the plaintiffs as heirs at law of-Dr. S. S. Linder; that the deed of the trustee to Mrs. Cousar was improvidently and illegally made, and the same should be canceled. The defendants interposed a demurrer to the complaint on two grounds, namely: “1. That it appears upon the face of the complaint that it fails to state facts sufficient to constitute a cause of action in favor of the plaintiffs against the defendants in that it appears on the face of the complaint that the written instrument which is the basis of the plaintiffs’ alleged cause *377 of action and which is set out in complaint as part thereof, expired by its own limitation on the 25th day of April, 1923, almost seven (7) years prior to the death of Dr. W. L. Linder, the maker of said written instrument and beneficiary thereunder. “2. That it further appears upon the face of the complaint that it fails to state facts sufficient to constitute a cause of action in favor of the plaintiffs against the defend-' ants in that complaint shows upon its face that the written instrument, which is the basis of the plaintiffs’ alleged cause of action and which is set out in the complaint as part thereof, was formally and completely revoked by the will of Dr. W. L. Linder which is dated June 20, 1929, which is set out in complaint as part thereof, and which was admitted to probate in common form on, or about the 11th day of March, 1930, and in due form of law on the 16th day of January, 1932, the said Dr. W. L. Linder being the maker of said written instrument and beneficiary thereunder.” His Honor, Circuit Judge Sease, who heard the matter, sustained both the grounds of demurrer and dismissed the complaint. From his order thereon, the plaintiffs have appealed. That tliere was no error on the part of the learned Circuit Judge in sustaining the demurrer on the first ground there is, we think, no doubt. By the express terms of the trust deed, the trust was to continue for a period of five years, and, upon the expiration of that period, the trust was to terminate, and the trustee' was to reconvey the trust property to the donor, freed and discharged of all further trusts and to pay over to him the surplus of the rents and profits, if any, provided the donor could convince the trustee of his ability properly to manage his property. But, if the donor was unable to so convince the trustee, then the trust, with all the provisions, duties, responsibilities, and obligations, was to continue for an additional period of five years. In case of extension of the trust *378 for the additional period of five years, upon the expiration of such extended period, the trustee was to reconvey the trust property to the donor, freed and discharged of all further trusts, and to pay over to him any surplus of the rents and profits. Since there was no effort to convince the trustee of the donor’s ability properly to manage his property upon the expiration of the first five-year period, the trust was extended for an additional five-year period. The creator of a trust may, subject to the rule against perpetuities, specifically prescribe the duration of the trust, in which case it will ordinarily continue for the time stipulated, and terminate upon the expiration of such period. 39 Cyc., 95. Upon the expiration of the second five-year period, the trust terminated, and it was the duty of the trustee to then and there reconvey the trust property to the donor and pay over to him any surplus of rents and profits. During the first five-year period, the trustee had definitely enumerated duties to perform, which made the trust an active one. 39 Cyc., 30. These same duties rested upon the trustee during the second' five-year period, after the extension of the trust for an additional five years. Upon the expiration of the second five-year period, no further duty rested upon the trustee in relation to the trust property, except to reconvey the same to the donor and account to him for any surplus of rents and profits. The fact that it did not then discharge its duty did not enlarge its powers or confer upon it duties in relation to the trust property other than that of reconveying the same and accounting for the rents and profits. We think it impossible to agree with the position that the deed of trust could be altered by parol agreement. Since the duration of the trust was expressly limited to a maximum period of ten years, and since the trustee was expressly required to reconvey the trust property to the donor upon the expiration of the ten years, it follows that the provision in the trust deed to the effect that, in the event *379 of the death of the donor at any time before the trustee made the reconveyance to him, without leaving a wife, or child, the trustee should sell the trust property and divide the proceeds as directed, meant death at any time during one of the five-year periods and not to death at a time beyond the expiration of the second five-year period. As the death of the donor did not take place during either of the five-year periods, the plaintiffs never acquired any vested right or interest under the trust deed. Death of the donor during one of the five-year periods, without leaving a wife or child, was a condition precedent to the vesting of any interest or right, under the trust deed, in the plaintiffs. The trust having terminated upon the expiration of the second five-year period, there was thereafter no trust to be revoked by will or otherwise. The Circuit Judge having held that the trust ended and terminated at the expiration of the second five-year period, it was unnecessary for him to consider the question of revocation of the trust by the will of the donor, since there could be no revocation of that which did not exist. The will was rather a recognition of the previously terminated trust than a revocation thereof. The active duties imposed by the trust deed upon the trustee during the duration of the trust periods prevented the statute of uses from executing the trust during such periods. The only duty imposed by the trust deed upon the trustee, to be performed after the expiration of the second five-year period, was to reconvey the trust property to the donor and account to him for the surplus rents and profits. As to the trust property itself, the only duty imposed on the trustee was to reconvey the same to the donor. Did this duty prevent the operation of the statute ? It is well-settled law in this State that, where the trustee is charged with the duty to convey, such duty prevents the statutes of uses from executing the use and transferring the legal title in the cestui que trust. Huckabee v. Newton, 23 S. C., 291; Wieters v. Timmons, 25 S. C., 488, 1 S. E., 1; *380 Bowen v. Humphreys, 24 S. C., 452; Ayer v. Ritter, 29 S. C., 135, 7 S. E., 53; Holmes v. Pickett, 51 S. C., 271, 29 S. E., 82; Steele v. Smith, 84 S. C., 464, 66 S. E., 200, 29 L. R. A. (N. S.), 939; Snelling v. Lamar, 32 S. C., 72, 10 S. E., 825, 17 Am. St. Rep., 835; Carrigan v. Drake, 36 S. C., 354, 15 S. E., 339; Pope v. Patterson, 78 S. C., 334, 58 S. E., 945; Breeden v. More, 82 S. C., 534, 64 S. E., 604; Boney v. Cornwell, 121 S. C., 256, 113 S. E., 686. In all these cases, however, the duty imposed upon the trustee was to convey the trust property to some party other than to the donor. Since the plaintiffs acquired no vested rights under the trust deed during either of the five-year periods, and since all possibility of acquiring any rights under that instrument ended upon the termination of the second five-year period, it is clear that the trust property became the absolute property of the donor upon the expiration of the second five-year period. Had the trustee then performed the duty it was required to do by the express terms of the trust deed, viz., re-convey the trust property to the donor, that would have ended the matter. The donor being the sole cestui que trust after the termination of the second five-year period, we are inclined to think that the duty to reconvey to the donor was not such a duty that would prevent the statute from operating, as we are unwilling to extend the rule further than recognized in the cited cases. There is good reason in requiring a conveyance to vest the legal title in third parties, but we can see no such reason to revest the donor with the legal title to the property after the termination of the trust. But, had the statute not executed the use, there can be no doubt but that the donor was the sole beneficiary or cestui que trust after the termination of the second five-year period. The express trust having terminated, there was a resulting trust in favor of the original donor, and the original trustee held the legal title in trust for him. 39 Cyc., 109. *381 Since the original donor was the equitable owner of the trust property, he could have required the trustee to convey the property to him at any time he may have so desired. Being the equitable owner of the trust property, he had the right to dispose thereof by will, whether he held the legal title or not. Schmidt v. Schmidt, 7 Rich. Eq. (28 S. C. Eq.), 201, 39 Cyc., 202. He devised and bequeathed all his property and his estate of every kind whatsoever (with exception of the specific legacies) to the defendant Mrs. Johnnie Willey Cousar, absolutely and in fee simple. This was sufficient to transmit the property embraced in the trust deed to Mrs. Cousar, whether the testator had the legal title to the property or not. If he did not have the legal title, Mrs. Cousar had the same right to require Nicholson Bank & Trust Company to convey the same to her that William L. Linder had after the expiration of the trust term to require a reconveyance thereof to him. Nicholson Bank & Trust Company did that which Mrs. Cousar had the right to require it to do. The judgment of this Court is that the order of the Circuit Judge sustaining the demurrer on the first ground interposed be, and the same is hereby, affirmed. Messrs. Justices Stabler and Carter concur.