Macy v. Hays

Hines, J. Grace S. Macy is the complainant in this case. Her maiden name was Grace Sanders. She married John H. Macy in 1894. There were born of that marriage two children, John H.- Macy III, and Elinor Macy. This husband died in 1903. Plaintiff married David H. Keefer in 1907, from whom she was divorced in 1916. Prior to October 31, 1912, plaintiff owned a piece of property in Connecticut, known as the Port Chester Place. On that day she deeded this property to her sister, Mary Sanders Hays, for the consideration of one dollar and other valuable considerations. This conveyance was made to defeat any claim which her then husband might have in this property upon her death. The sister held the title to this property for the plaintiff, and — 483 — treated it as her property. In April, 1918¿ the sister received an offer of $42,500 for the Port Chester Place, and telegraphed the plaintiff to ascertain if she should sell it at that price. Plaintiff accepted this offer and agreed to the sale; whereupon the sister conveyed the property to the purchaser and received the purchase-price. On May 24, 1918, plaintiff wrote to her sister, requesting the latter to hold the money arising from the sale of said property in trust. Accompanying this letter was a memorandum touching the disposition of said fund and the terms of said trust. On June 18, 1919, the sister executed a writing creating said trust, and the same was approved by the plaintiff, in writing-at the end thereof, signed by her and duly attested. Th'e instrument creating the trust was likewise signed by the sister, and the same was duly acknowledged by her. The above letter, the substantial parts of said memorandum and of the instrument creating said trust are set out in the statement preceding this opinion. Prior to August 31, 1914, plaintiff owned the premises known as 793 Piedmont Avenue, Atlanta, Georgia. She borrowed from Margaret B. Kemp, now Daman, the sum of $8,000, and to secure its payment she executed to the lender a mortgage on said premises. On said date plaintiff conveyed by deed said premises to William H. Hays, as trustee for her children above named, to hold the same until the youngest of them attained the age of 21 years. This conveyance was made “subject to the mortgage heretofore given to Margaret B. Kemp,” the mortgage so referred to being the security deed from plaintiff to said lender, sought to be canceled by plaintiff’s petition. Her said children became of age prior to October 14, 1918. On said date William H. Hays, as trustee, conveyed said property to said children. This conveyance was made “subject to a mortgage or loan deed of $8,000, given by” the plaintiff “to Mrs. Margaret B. Kemp, November 21, 1913.” On August 18, 1922, said children, in consideration of the sum of $20,000, conveyed by warranty deed said property to the plaintiff, subject to said loan of $8,000. In March, 1926, the children, by separate quitclaim deeds, conveyed said property to the plaintiff, “without reservation as to any loan, security deed, or mortgage.” On July 10, 1918, Margaret B. Daman sold and assigned to Mary Sanders Hays, trustee under said trust, the note given by plaintiff to her for said loan of $8,000, and by a quitclaim deed transferred to — 484 — said trustee all her rights under said security deed. The present suit was brought by the plaintiff against Margaret B. Daman and Mary Sanders Hays, to cancel said security deed made by plaintiff to Margaret B. Daman to secure said loan of $8,000, and said quitclaim deed from the latter to Mary Sanders Hays, trustee. On June 19, 1918, both of the above-named children of plaintiff were married. The daughter, Elinor, had born to her a daughter, but plaintiff’s son had no children at that time. The son reached his majority in 1916, and the daughter reached her majority on August 31, 1918. The case came on for trial; and the above facts appearing, the trial judge directed a verdict in favor of. the defendants, on which judgment was entered. The plaintiff excepted, and assigned error upon the following grounds: (a) The verdict and judgment are contrary to law. (b) The evidence demanded a finding that plaintiff’s money paid the debt secured by the security deed sought to be canceled, and the title residing in Margaret B. Daman by virtue of said security deed passed out of her and to plaintiff upon the payment of said indebtedness with plaintiff’s money, and the full right, title, and interest in said security deed was thereby vested in plaintiff, (c) The only purpose of the trust attempted to be created in Mary S. Hays in 1918 was to prevent plaintiff’s children from encumbering and wasting said property, which purpose was accomplished when said children afterwards, in 1922, conveyed said premises to plaintiff, whereby the trust as to said security deed became thereupon wholly executed, (d) The sale and conveyance of said premises by plaintiff’s children vested in her the full legal and equitable title to said premises, and the title under said security deed merged into the title of plaintiff under said conveyance from her children, and thereby became extinguished. It is insisted by counsel for the plaintiff that the effort to create the trust set up by the defendants was abortive, because the declaration of the trust does not meet the requirements of the statute of frauds, the same not having be.en signed by the plaintiff; and that in consequence the funds of the plaintiff were not impressed with a trust but remained her individual funds, and when used to pay off the loan due from her to Margaret B. Daman, such payment extinguished the lien of this security deed, and when the same was transferred to Mary S. Hays, trustee, the — 485 — latter held the same in trust for the plaintiff. In other words, it is contended that the funds used by Mrs. Hays in purchasing • this incumbrance was the individual money of the plaintiff and not trust money, and that in consequence this incumbrance was discharged by the plaintiff and not purchased by Mrs. Hays with funds which she held as trustee. It is true that an express trust can only be created or declared in writing. Civil Code (1910), § 3733; Smith v. Peacock, 114 Ga. 691 (3) (40 S. E. 757, 88 Am. St. R. 53); Jenkins v. Lane, 154 Ga. 454, 476 (115 S. E. 126). But no formal words are necessary to create an express trust. Whenever a manifest intention appears that another person shall have the benefit of the property, the grantee shall be declared a trustee, and a trust is created. Civil Code (1910), § 3728; Peavy v. Dure, 131 Ga. 104, 109 (62 S. E. 47). Applying the above principle, the declaration was sufficient to create a trust for the purposes therein declared; and the instrument being signed both by the plaintiff, who was owner of the funds which were to constitute the subject-matter of the trust, and by her sister, who was to hold them in trust, the requirements of the statute of frauds were met. The trust was thus created or declared in writing. So we are of the opinion that the contention that the trust was void for lack of compliance with the requirements of the statute of frauds is not well taken. It is next urged by counsel for the plaintiff that the evidence demanded a finding that her money paid the debt secured by the deed which she seeks in this proceeding to have canceled, and that the title of the grantee in this security deed passed out of her and into the plaintiff upon the payment of the debt thereby secured with the plaintiff’s money. We do not think that this position is well taken. It is true that the fund used by the trustee in purchasing the note of the plaintiff secured by this deed, and in acquiring the title thereby conveyed, was formerly the money of plaintiff. But before this was done these funds had become impressed with a trust. This was no longer the individual money of the plaintiff. By the declaration of trust, title to these funds had passed from the plaintiff into her sister, to be held for the purposes of the trust created by the instrument' hereinbefore dealt with. In fact this debt was not paid. The transaction was a' purchase of the note representing this debt, and the acquisition of — 486 — the title of the grantee in the security deed. We concede, although •the transaction did not purport to be a payment of this debt, but the purchase of the note given therefor by the plaintiff, that if the money of the plaintiff had been used the transaction would in effect have amounted to the payment of the debt and the extinguishment of the title of the holder of this deed. If the- money of the plaintiff was used to pay this debt, the title of the property which she had conveyed to the lender to secure its payment became re-vested in her. Title remained in the vendee in the security deed only until the debt thereby secured was paid in full. Civil Code (1910), § 3306. If such debt had been paid in full by the debtor out of her own funds, and the title taken in the name of her sister as trustee, the latter would have held the title for the benefit of the plaintiff, upon the principle that when the legal title is in one person but the beneficial interest from the payment of the purchase-money is in another, a trust is implied in favor of the person whose money is used in acquiring the title. Civil Code (1910), § 3739; Scott v. Taylor, 64 Ga. 506; Swift v. Nevius, 138 Ga. 229 (75 S. E. 8). But, as we have seen, the fund used by the trustee in purchasing the note of the plaintiff secured by this deed was not the money of the plaintiff, but it had been impressed with a trust under the instrument to which we have referred. The transaction was an investment by the trustee in the note of the plaintiff, secured by her deed to Mrs. Kemp, and transferred by the latter to the trustee. It is next insisted by the plaintiff that the only purpose of the .trust attempted to be created by Mary S. Hays in 1918 was to prevent plaintiff’s children from incumbering and wasting the Atlanta property which the mother had conveyed to William H. Hays in trust for them, and that this purpose was fully accomplished when the children afterwards, in 1922, conveyed said property to their mother, whereby the trust, as she contends, became thereupon wholly executed. The motive which prompts one to create a trust, and the purposes for which the trust is created, are entirely different. Conceding that the motive which prompted the plaintiff in creating this trust, and in authorizing the trustee to invest a portion of the trust funds in the incumbrance upon the Atlanta property, was to prevent the children from wasting and squandering this property, the purposes of the trust must be — 487 — ascertained from the declaration or instrument creating it. The purposes of the trust were twofold. First, the income therefrom was to be paid to plaintiff during her lifetime. Second, upon her death the principal of the trust fund was to be paid to the children of the plaintiff; and in the event that either of her said children had died leaving issue, then the portion of said principal fund which said child would have been entitled to under the trust was to be paid over to such issue, per stirpes. The instrument creating the trust further declares that in the event either of the children should depart this life without issue, prior to the death of the plaintiff, then the whole of said principal fund shall be paid over to the other of said children, or to the issue of said child in equal shares. Under these provisions of the instrument creating this trust, we do not think that the trust became executed upon the arrival at age of the children of the plaintiff who were in life at the time the trust was created. A trust is executory as long as something remains to be done by the trustee, either to secure the property, to ascertain the object of the trust, or to distribute according to a specified mode, or the trustee is to do some other act which requires him to retain the legal estate. Civil Code (1910), § 3736. We think the proper construction of the instrument creating this trust requires us to hold that it clothed the trustee with full title to this trust fund, and that, as to the children of the plaintiff, it should be considered as abiding in him until, upon the death of their mother, the identical persons who were to take and enjoy the remainder could be definitely ascertained. Up to that time the trust is executory, and the remainder is an equitable and not a legal estate. Watts v. Boothe, 148 Ga. 376 (96 S. E. 863); Woodbery v. Atlas Realty Co., 148 Ga. 712 (98 S. E. 472); Sparks v. Anderson, 150 Ga. 58 (102 S. E. 423); Sparks v. Ridley, 150 Ga. 210 (103 S. E. 425). Under the instrument creating this trust the income from the trust fund is to be paid to the plaintiff for life. Upon the death of the plaintiff the principal of the trust fund is to be paid to her children; and if either of her children should die before the death of the plaintiff, leaving issue, then the portion of said principal fund which said child would have been entitled to is to be paid over to such issue, per stirpes. In the event that either one of the children should depart this ■ life without issue, prior to the — 488 — death of the plaintiff, then the whole of said principal fund shall be paid to the other of said children, or to the issue of said child in equal shares. The persons who are to take the principal of this fund in remainder can not be ascertained until the death of the plaintiff. This being so, the trust did not become executed upon the arrival of the plaintiff’s two children at their majority, and by their conveyance to their mother of the Atlanta property in 1918. But the proper decision of this case does not depend upon the question whether or not this instrument created an executory trust. Granting that it was an executed trust, the plaintiff does not make a case for cancellation. The conveyance of this property from the children to the mother, made in 1918, was expressly made subject to the mortgage or loan deed held by Mrs. Kemp. So clearly under this conveyance the plaintiff acquired no title to the interest or estate held by Mrs. Kemp under her deed to the Atlanta property. But it may be said that the children, in March, 1926, by quitclaim deeds, conveyed this property to the plaintiff, “without reservation as to any loan, security deed, or mortgage;” and that the effect of this conveyance was to put the title to the Atlanta property in the plaintiff, free from the security deed to Mrs. Kemp, which she seeks to have canceled in this proceeding. These conveyances did not avail the plaintiff and entitle her to cancellation of this security deed, for two reasons. One is, that, if the execution of these quitclaim deeds was necessary to give her a cause of action for the cancellation of this security deed, they were made pendente lite, and for this reason her cause of action had not accrued and become complete at the time she instituted this suit. It is a well-established rule that a plaintiff must recover upon facts as they existed at the time of the commencement of the action. Wadley v. Jones, 55 Ga. 329; Baker v. Tillman, 84 Ga. 401 (11 S. E. 355); Graham v. Williams, 114 Ga. 716, 718 (40 S. E. 790). The second reason is, that, granting that the effect of these quitclaim deeds was to vest in the plaintiff the interest of the children in the incumbrance upon the Atlanta property, they certainly could not convey to her the interest of others who were interested as beneficiaries under this trust, in the purchase of this incumbrance. We have seen that it is possible that neither of these children may have any interest in the principal of this trust fund — 489 — at tlie death of their mother. If either should die before their mother dies, such deceased child would take no interest in the trust estate. If the deceased child left children, they would take the share in the trust fund which would go to such child if living. So the effect of these quitclaim deeds was not to convey to the plaintiff all the right, title, and interest of all parties who may take under the trust instrument. They' certainly did not convey the contingent interest which the descendants of these children may have in this trust fund. As the cancellation of this security deed would defeat the interest of these contingent remaindermen therein, its cancellation will be denied. Latham v. Inman, 88 Ga. 505 (2) (15 S. E. 8). Plaintiff next insists that the sale and conveyance • of the Atlanta property by her children vested in her the full legal and equitable title to said property, because the title under the security deed merged in the title of plaintiff under said conveyance from the children, the security deed thereby becoming extinguished. From what has been said, this contention is not well taken. The estate created by the security deed never vested in toto in the plaintiff. If the plaintiff had acquired the entire estate created by the security deed, and the title to the property subject to said security deed, the former estate would have been merged into the greater estate. This was not the case, and no merger of the two estates took place. In view of the rulings above, the court properly directed a verdict for the defendants. Judgment affirmed. All the Justices concur.