Newcomb v. Ketteltas

By the Court, Clerke, J. The principal facts presented by this demurrer are, that John Gardner by his will, bearing date the 2d July, 1817, devised in fee his real estate, consisting of about one hundred vacant lots, in an unimproved part of the city of New York, to trustees, for the purpose, first, out of the rents and profits to keep the property in repair and to pay all taxes and charges; and, secondly, to pay the residue to his children during their lives, two-thirds to his son John, and one-third to his daughters; if his son should die leaving issue, his share to be paid to-such issue; if without issue, to the daughters equally; if either of these should die leaving issue, such issue to take her share ; if without issue, her share of the rents to be distributed between the survivor and her issue. ' These trustees he also appointed his executors and the guardians of his children. ■ Gardner died soon after the date of his will. James Gardner and John Hyer, surviving trustees and executors, on the 26th of March, 1828, executed a lease to the plaintiff of a vacant lot belonging to the estate, for 21 years from the 1st of May then ensuing, at the yearly rent of $60 ; the lessee covenanting to pay all taxes and assessments, except for regulating streets and filling in docks, and to finish before one year from the commencement of the lease, one good substantial building to be of brick, on the front of the lot, at least 24 feet high, with a cellar six feet and a half deep, with stone foundation. The lease provided that, at the expiration of the term, the value of the buildings should be ascertained by sworn appraisers, and if the [628] lessors should not pay to the lessee such value within 30 days, they should again lease to him the premises for a further term of 21 years, for such rent as should be agreed upon by the parties, or be determined by the appraisers or umpire. A similar lease of the next adjoining vacant lot was executed between the same parties. The plaintiff erected buildings in compliance with these leases, and has performed all the covenants. At the time of the execution of these indentures, it was intended and understood, that an alley between the.lots should be also demised; but, this having been omitted by mistake, Hyer, the sole surviving trustee, on the 12th of September, 1831, executed to the plaintiff an instrument, in which he demised the alley for the remainder of the term, for the consideration of $15, but, by mistake, neglected to provide that it should continue during the renewal of the lease. Hyer was afterwards removed from the trust, and Thomas McCarty and Eugene Ketteltas, the respective husbands of the testator’s daughters, were substituted in his place. McCarty having died, Ketteltas remains sole trustee. Ketteltas insists that the leases are void. The main question, then, arising on the demurrer is, have trustees, to whom real property is devised in fee, power to execute leases of this description? It is denied by the counsel, in support of the demurrer, that such trustees have any power to demise the premises for a longer term than a year. The objection that they have exercised power improvidently, would, of course, be a different question— an objection entirely within the corrective equitable control of this court. There is not the slightest ground for doubting, that in granting these leases the trustees acted with prudence, circumspection, and for the best interests in all respects of the cestuis que trust. Indeed, the method which they adopted in this disposition of the property, which at the time of the testator’s death, consisted, as we have seen, of about 100 vacant lots, has probably saved a great proportion, if not the whole of it, from being consumed by taxes, assessments and other claims. This is not the only instance in which tracts of unproductive land in this city have been preserved by leases similar to these, [629] and transmuted into fruitful sources of wealth. I will therefore merely consider whether the trustees had any power to demise this property for a longer period than a year. It is, indeed, manifest, that the authority of a trustee over the legal estate vested in him, exists only for the benefit of the cestui que trust. Nevertheless, he can alienate the estate, either wholly or partially, to a purchaser for a valuable consideration. This is in fact an elementary axiom in the doctrine of trusts. Even when a trust is expressly circumscribed, and there is no doubt in regard to the limited extent of the power, the restriction is not so imperative as to preclude the exercise of the trustees’ judgment. It is even affirmed that where the interests of the cestuis que trust require it, they are in some instances not only permitted, but are bound, to regulate their conduct by a sound discretion. Thus, trustees, appointed expressly for the purpose of supporting contingent remainders, have, in certain exigencies, concurred with the tenant for life in destroying them, and the power has never <J>een successfully gainsayed. I adduce these instances, to show the extent, on general principles, of the discretionary power vested in trustees. We have seen that they are capable of alienating the property when the fee is vested in them; but, it is a well established principle, also amounting to an axiom, that all those who are capable of alienating property, or of entering into contracts respecting it, may make leases, which will endure as long as their interests in the thing leased, but no longer. (Cruise's Dig. Leases.) The counsel for the defendant objects, that the cases cited by the court below relate to leases by trustees of charities, on the ground that the latter have a perpetual interest in the premises, while the estate, vested in the trustees under "the will in question, may terminate at any moment. This may be a good argument to prove that the lease cannot endure longer than the trust continues; but it furnishes no reason to prove that it is, ab initia void, or that the trustee had no power to execute a lease at all for a longer period than a year. In short, I see no reason, upon principle, why there should be any difference, except [630] as to the precariousness of the term, between private and public trusts; the trustees in both cases are persons in whom the founder or testator has reposed unreserved confidence; and the principles continually applied to the one, are applicable to the other. When the mode of granting leases is .prescribed, the terms of the power must be strictly pursued.; where the power to grant them is expressly given, the trustees have a power, both in law and equity, to lease in the manner which to their judgment seems most beneficial; and, where no such power is expressly given, they must be guided by the general principles of the court, which will always interpose to secure the exercise of a reasonable discretion, or to rectify a departure from it. Among the comparatively recent cases bearing any analogy to the present, that of Naylor v. Arnitt, which I find in 1 Russell & Mylne, 501, is almost precisely in point. It will be seen that this related to a private, and not to a charitable or public trust. A testator devised lands to trustees upon trust, out of the rents and profits to pay two annuities, and, subject thereto, ■ to permit A. and after him his wife, to receive and take the. rents and profits during their respective lives; and after the decease of the survivor, he devised the lands to their children. Held, that the trustees could grant a valid lease of the lands for a term of ten years. Ho express power to lease was given in the will. It was alleged, that the lease had been granted fraudulently and corruptly; but it was admitted on the argument, that the plaintiffs ha.d not sustained this allegation ; and the question then was, as in this case, whether the trustee had, under the will, power to grant a lease for a term of years. The master of the rolls declared that the trustees had power to demise the lands, and pronounced the lease valid. I am not aware that this decision has ever been disturbed, or even questioned. With regard to the alley, the complaint expressly avers that the parties intended'that the right to use it should be included in the renewed lease, in the same manner as if this privilege had been expressed and granted in the original leases. This is a mistake which it is the province of a court of equity to rectify; [631] although in entertaining an application to supply a defect of this nature, the court will require strong evidence. The demurrer admits the essential fact—the fact of the mistake—and the only question, therefore, is whether it is such a mistake as the court csvlll rectify. The instrument is not voluntary, but founded on a consideration ; and was reduced into writing without containing the whole intent of the parties. It must, therefore, be reformed. [New-York General Term, April 9, 1855. Mitchell, Roosevelt and Clerke, Justices.] Oil the other points, presented by the demurrer, I also concur with the judge at special term, for the reasons given in his opinion, which it is unnecessary to repeat. The order of the special term should be affirmed with costs.