Starr v. Moulton

Mr. Justice Mulkey delivered the opinion of the Court: ¡None of the material charges in the bill, except those alleging a conspiracy between the defendants for the purpose of evading the provisions of the will, and imputing bad faith in negotiating the loan from Moulton, are seriously controverted, and may be regarded as substantially true. There is no question, but that some time before the 13th of October, 1875, Jeannette C. Starr, the executrix, entered into an arrangement with Dowling, by which he was to erect, on the east sixty feet of the lots, three buildings, in part payment of the remaining forty feet on the west side, which she was to sell to him, and that, for the purpose of enabling him to negotiate a loan from Moulton for $16,500, which was to be divided between them according to their respective shares in the lots, and to be used by them, in part, in the same proportion, in discharging an incumbrance of $8000 on the entire property, which existed at the time of Starr’s death, she was to convey to him the entire property, and, upon obtaining the loan, he was to re-convey to her the sixty feet off the east side of the lots; and that, upon the day above mentioned, the arrangement was fully carried out; that Moulton, through his agents, the Hosmers, advanced to Dowling the $16,500, for which Dowling executed to Edward D. Hosmer, as trustee, five trust deeds, to secure the same, each covering.one-fifth of the two lots; that the incumbrance of $8000 was paid off with the proceeds of the loan, and the residue of the part of the loan received by the executrix was applied in the erection of the buildings on the east sixty feet of th.e lots, and that the whole of this business was transacted in the name of Dowling. So far there is no controversy. It is insisted, however, by appellants, that, although Dowling was clothed with the legal title to the whole of the lots, at the time of the loan and of the execution of the trust deeds, yet, that so far as the east sixty feet is concerned, it was conveyed to him by the executrix, without consideration, for the express purpose of enabling her, through him, in evasion of the provisions of the will, to obtain a loan, from Moulton, of $9900—the amount received by her under the arrangement—which, as is claimed, could not have been done by her in her own name, for the reason, it -was unauthorized by the will; and that all this was fully known to the Hosmers, as agents of Moulton, at the time of the transaction, and that, therefore, the heirs are not bound by it. In answer to this, it is, in the first place, denied that the Hosmers knew anything about the private arrangements or understanding between Dowling and the executrix. But it is admitted that the Hosmers understood from Dowling that he had purchased the property of the executrix, and that they knew, from the abstract of title, that she had conveyed the same to him, which, it is admitted, the will clearly authorized her to do. In the second place, appellees insist, that under the provisions of the will, the executrix was not only authorized to sell the lots in question, but also to mortgage them. It "will be thus seen that but two questions are presented by this record, for determination—one of fact—the other of law. First.—Were the Hosmers, or either of them, chargeable with notice, at the time of the loan, of the fact that the east sixty feet of the lots had been conveyed by the executrix to Dowling, without consideration, for the purpose of enabling her, through him, to obtain the loan of $9900 of Moulton? Second.—Was the executrix, Under the provisions of the will, authorized to mortgage, in her own name, that portion of the lots retained by her, for the purposes for whi.ch the same was mortgaged by Dowling? The view we take of the latter question, renders it unnecessary to discuss the first. The general principles of law governing questions of this kind, may be regarded as settled by the current of authority,—yet, difficulty is often encountered in applying them to actual cases. In the case before us it is clear that the executrix had .power, under the will, to sell such portions of the real estate as she might deem pro}>er for the purposes of paying debts, removing incumbrances, or of improving the remainder with a view of making it productive. Throughout the will, expressions are to be found which tend to show that it was the intention and expectation of the testator that his executors would keep his estate intact, so far as they were able, and generally to manage it in such a way as to make it as productive as possible; and, to this end they were given the power to sell and convey such parts of it as they, in their discretion, deemed necessary to accomplish the purpose in question, and, this grant of power, under the circumstances of this case, we are of opinion, included the power to mortgage when that mode of raising money to answer the objects of the will would, in the judgment of the executors, be to the best interest of the estate. Butler v. Huestes, 68 Ill. 597; Pool v. Potter, 63 id. 537. By the seventh section they are clothed with discretionary power to sell such unproductive property as, in their judgment, would be to the interest of the estate to sell, or to convert the same into productive property bymahing improvements thereon, when justified by the condition of the estate. In the event of a want of means from other sources, how could means be raised to improve this unproductive property, if the executors possessed no power to mortgage it? It certainly could not have been intended that the productive realty should be sold for such purpose. It will be perceived that this power to improve the unproductive realty is practically unlimited. They are authorized to make improvements to any extent which, in their judgment and discretion, the condition of the estate warrants, and of this they are the exclusive judges, so long as they act in good faith and with ordinary prudence. Under these circumstances the testator must be presumed to have intended to give the executors such power over the estate as would enable them to raise whatever means would reasonably be required in making the contemplated improvements upon the unproductive property; or, in other words, it must be presumed, under the circumstances of this case, that the testator intended the power to raise the necessary means, to be co-extensive with that to make the improvements; and, we are of opinion, this would reasonably include the power to mortgage, as that is the ordinary method of raising money for such purpose. There is nothing disclosed by this record, which we have been able to discover, that indicates bad faith on the part of any one connected with the transaction complained of. The money was' advanced by Moulton in the regular course of business, and, we have no doubt, in good faith. It has been applied to entirely legitimate purposes, under the provisions of the will, and the property by which it was secured- must be held for its repayment. Where a trustee has acted in good faith in a matter pertaining to the trust, and it is evident, from the instrument creating the trust, that it was intended to clothe him with large discretionary powers in the discharge of his duties, and it does not clearly appear he has transcended them, courts, of equity are not inclined to disturb and unsettle an important business transaction thus entered into by him, to the detriment of third parties who have acted in equally good faith with himself. Upon the whole, we are of opinion that the decree of the circuit court was right, and, consequently, there was no error in affirming it. The judgment of the Appellate Court is affirmed. Judgment affirmed.