Briggs v. Palmer

By the Court, Johnson, J. The assignees of Hasten held the real estate in question in trust to sell for the benefit of creditors. The trust was expressed in the assignment, by which the estate was created, and vested in the assignees, and is one authorized by statute. The assignees, the moment they took the assignment, became trustees for the creditors, with power to sell and convey the real estate for their benefit, but with no power to convey for any other object or purpose, so long as the trust created remained undischarged. The statute declares that every conveyance made in contravention of the trust expressed in the instrument creating the estate shall be “absolutely void.” (1 R. S. 730, § 65.) The reconveyance, by the trustees, of the real estate embraced in the assignment, without paying and satisfying the debts for the payment of which the estate was created, was clearly in contravention of the trust. It was directly in opposition to the trust, and calculated, if not intended, to obstruct and defeat it, and falls clearly within the plain language and meaning of the acts. The conveyance must therefore be adjudged absolutely void, at least as to all creditors whose debts were provided for by the instrument creating the estate, and which remained unpaid at the date of such conveyance. By the assignment Hasten, the assignee, divested himself of the entire estate in the lands in question, retaining nothing except [405] the equitable and incidental right to discharge the trusts by payment of the debts before sale, and thus entitle himself to a reconveyance of the whole estate, or to claim a reconveyance of the residue remaining unsold after the debts were discharged, or payment of the residue of the proceeds of the sales. The conveyance from the trustees being void, Hasten had at the date of the defendant’s mortgage, no title or interest in the land, which he could convey or encumber by a mortgage, at least against creditors interested in the trust estate. It may be that such a conveyance would be good against all persons except creditors. And I am inclined to the opinion that it would be, notwithstanding the peremptory language of the statute. The statute declares that all conveyances of lands by a person not in possession, which are at the time held adversely, shall be void, and yet courts have uniformly held that such a conveyance was good as between the parties, and conveyed the title of the grantor, as against all the world except the adverse holder. (Livingston v. Proseus, 2 Hill. 526. Kenada v. Gardner, 3 Barb. S. C. R. 589.) So here, I apprehend, had no creditor interposed his claims, the title of Hasten thus derived from the assignees, would have been good as against all persons. But this does not, that .1 perceive, affect the question here, in a contest between a person claiming title under and in consonance with the trusts created by the assignment, and an incumbrancer of the title attempted to be conveyed in contravention of such trusts. The plaintiff’s title must be adjudged to stand upon the same footing with one derived directly from the assignees by a sale and conveyanee in pursuance of the trust. The trust was in nowise affected by the reconveyance, and it was the duty of a court of equity, when its aid was invoked, to compel its execution. The validity of the mortgage is in no way helped, by the fact that the mortgagee at the time of taking it had no actual notice of the claim of the Dorman estate, or of the assignment and reconveyance. The assignment and reconveyance were both matters of record, which the statute makes sufficient notice to all subsequent purchasers and incumbrancers. Hav [406] ing constructive notice of the assignment they were put upon inqniry as to all claims and rights under it. Nor is the recital of the assignees, in the reconveyance, that the debts were all paid, of any avail. The trustees could not by a recital in a deed of that character, contrary to the fact, affect the interests of cestuis que trust. They were put upon inquiry as to the facts, and it is no answer for them to say that they did not ascertain the true state of the case. The law imputes to them full knowledge of all the facts, and their mortgage must stand or fall by the state of facts actually existing at the time. The trustees have not the power to deprive the cestuis que trust of the protection of the statute by an erroneous statement. The risk was with the mortgagees as it is with all purchasers under a power. 0 [Monroe General Term, September 3, 1855. I am not aware of any principle which would allow the mortgagees, or their assigns, to redeem the real estate by payment of the amount at which it was bid off at the sale under the decree, or, in short, to redeem at all. The mortgagor having no title could create no incumbrance upon the estate.1 The mortgage could at most only operate as an assignment or equitable mortgage of Masten’s residuary interest after the trust was fully executed. Under this the defendant might probably have paid the debt before a sale and transfer of the title. But the title having passed in pursuance of' the trusts created, there can be no redemption by any one standing in the position of the assignor, or claiming under him, subsequent to the creation of the trust estate.' Their claim must now be upon the residuary portion of the avails of the sale, if any. I do not see how the defendant could redeem, even by paying the whole debt. But this he does not propose to do. I think there was no error either in the rulings or in the judgment at the special term, and that the judgment should be affirmed. Selden, T. R. Strong and Johnson, Justices.]