Magraw v. Pennock

The opinion of the court was delivered, December 14,1853, by Lewis, J. — It would seem, that Mr. Magraw, on the trial below, objected to the mortgage being read in evidence, because he “is not a party to it; and that no representative of the [93] mortgagor is a party to it;” and now assigns for error, that “tbe proper legal parties have not been, and are not substituted on the record, as defendants in tbe suit,” &c. Mr. Magraw was substituted, without objection, in tbe place of James B. Irwin, whose death was suggested. It is stated in tbe entry, that II. S. Magraw is “tbe present trustee;” and tbe presumption, in the absence of objection at the time of substitution is, that he was properly appointed; and that the substitution was by his own consent. After such consent, and going to trial on the plea of “ payment with leave,” be cannot raise tbe objection, that he is not the proper party; nor can be, on such issue, be beard to allege, that other parties, without naming them, ought to be joined. But we see no valid objection to the proceedings on this ground. Irwin was a trustee, not merely to hold the estate, but also to perform certain duties pertaining to the trust. The proper court, therefore, bad tbe power, upon his death, to appoint Magraw in his place;, and upon such appointment, “ all tbe rights, powers, and authorities” of Irwin ceased, and vested in Magraw, “ as fully, to all intents and purposes, as if he had been originally appointed trustee.” Sec. 2, Act 14th April, 1828. Tbe proceeding on the mortgage is only against tbe land. Tbe plaintiff can demand no more than a judgment de terris. Magraw, in whom tbe real estate vested, was therefore a proper party. If others, entitled to be beard, are admitted, they will not be prejudiced by this trial. ■. Although the mortgage does not set forth tbe original nature of tbe debt, which it was given to secure, it recites tbe Act of 13th March, 1844, authorizing it to be given for money borrowed “ to pay the debts for which the trust property was in any way liable.” The trust was created in 1833; Irwin was appointed in the place of Darlington on the 30th June, 1843. In March, 1844, the act was passed, authorizing the mortgage. Irwin gave his bond to Pennock for the debt, binding himself personally for the amount; although the obligation shows'that he described himself as trustee, and was acting in regard to the trust, and not in respect to his own affairs. On the 22d October, 1844, the mortgage was given to secure the bond, with the written consent of John D. Mahon, and Agnes, his wife, according to the act of assembly authorizing it. An authority to borrow money, and grant a mortgage to secure it, in order to pay the debts for which the trust estate is liable, is an authority to grant a mortgage to such creditors themselves. If the debts are properly chargeable against the trust estate, a mortgage to secure them, and a mortgage to secure the money borrowed to pay them, are, in substance, identical; with this difference only, that it is less perilous to the eestuis que trust to execute the mortgage directly to the creditor, than to grant it to a stranger, [94] to secure money borrowed, which may be afterwards lost or misapplied. The law deals with matters of substance, and disregards forms, where they interfere with the justice of the case. Mr. Irwin, when called upon to execute the bond and mortgage in question, would be necessarily ignorant of the nature of the debts contracted, during the ten years in which his predecessor had acted. It is not proposed to be shown, that the bond was given for a debt contracted during the administration of Mr. Irwin. The plaintiff in error merely assumed to show, that it was given for “ a book account for goods, wares, and merchandize, sold and delivered to John D. Mahon and wife, at sundry times prior to the date of the mortgage.” It is clear, that the cestuis que trust have received the benefit of the debt in some way; and when Mr. Irwin saw that it was a debt for articles which they had received, and found that they recognized the demand, as one properly chargeable against the trust estate, and that they consented in writing, that it should be secured by mortgage on the estate, he had a right to presume, that it was a debt contracted to make improvements, or was otherwise properly chargeable upon the trust estate; and that it was his duty to execute the bond and mortgage. The Act of Assembly of 1844, clothed Mr. and Mrs. Mahon with full power to consent, or withhold their consent. They were both of full age and sound mind. There was no actual want of capacity or discretion, to act for themselves. The legal disability of coverture was, quoad hoc, removed by the statute; and Mrs. Mahon was thus rendered as competent to act in the premises, as if she had never been married. Clothed with such capacity and power, the law charges her with the duty of performing them fairly, or taking the'consequences of her own omission. It must be remembered, that Irwin was clothed with the legal estate, and that, at law, as such owner, he had the right to execute the mortgage, independent of the Act of 1844. The mortgage, at law, derives its force from his interest, and not from a mere power. It is true, that the execution of a mortgage, improperly executed, by a trustee, would make him liable to the cestuis que trust, in equity, for the breach of trust; and their equity might, under certain circumstances, follow the legal estate into the hands of the mortgagee, or the purchaser, under the proceedings to foreclose it. But the Act of 1844 interposes in this case, to protect the trustee and the estate from such liability.- If the cestuis que trust, who have no right at law, and who are only entitled to protection, upon principles of equity, have conducted unfairly in the matter, they have no right to relief. If, under statutory power to act in the premises, they induced their trustee to involve himself personally, for their debt, by consenting to secure it by the [95] mortgage upon their trust estate, they have not a shadow of equity. Under such a state of facts, it is against good conscience to permit them to throw their own debts upon their innocent trustee, in order that they may enjoy the profits of the estate, which they agreed to pledge for Ms security. The mortgage is his security, as well as that of the creditor. When it is remembered, that the trustee was but recently appointed; that he must have been ignorant of the nature of the debts which had been contracted before he assumed the duties of the trust; that the cestuis que trust were perfectly familiar with all the facts, and were fully competent to act, the presumption is, that the trustee was induced, by their own written consent, to believe that the debt was properly chargeable upon the estate. There was nothing offered, or given in evidence, to repel this presumption. They have therefore no equitable title to impeach the mortgage. We have already said, that it was good at law. It is not necessary to decide, that even if the trustee was aware that the debt was one for which the estate was, not liable, the cestuis que trust could not charge him with a breach of trust, to which, with full legal capacity to act, they gave their consent in writing. Enough has been said, to show that the purchaser under the mortgage would take the legal estate, together with the equitable interest of Mr. and Mrs. Mahon. If others have any vested' rights under the trusts, they can assert them, and have an adjudication upon them, when their rights of possession accrue. If the mortgage binds any interest whatever, it is sufficient to sustain the present proceeding. All that is decided at present is, that Mr. and Mrs. Mahon, by their written consent, given under the act of assembly, have concluded their own rights; although we have not decided, that they have prejudiced those of their children. This is not in opposition to the doctrine of Smith v. Rogers, 4 Barr, 101, and Bomberger v. Cliffinger, 5 W. & S. 311, where the objection to the title was not, that the power exercised under the statute did not bind the interest of the parties acting under it, but that it could not conclude those in remainder. Judgment affirmed.