McQuillan v. Ayer

Brooke, C. J. (after stating the facts). Broadly, it is the claim of the complainant that the use of the word “trustee” after the name Edmund M. Spalding, in the patent to him from the government, was sufficient to put an intending purchaser upon inquiry as to the nature of the trust under which said lands were held by Spalding, and that the defendant, having failed to show that either he or his grantors made any such inquiry, should be held to hold said lands as to the one-tenth owned by complainant under the trust as they were held by Spalding. A large number of authorities are cited in support of this proposition, including the case of Geyser-Marion Gold Mining Co. v. Stark, 106 Fed. 558 (45 C. C. A. 467, 53 L. R. A. 684). With reference to these authorities it may be said that they measurably support the contention of the complainant. We think, however, that the question in issue is disposed of by a consideration of our own statutes and decisions. Under the statutes of this State an express trust can be created only in the manner prescribed by statute. Such a trust may be created for the “beneficial interest of any person or persons, when such trust is fully expressed and clearly defined upon the face of the instrument creating it, subject to the limitations as to time prescribed in this title.” Subdivision 5, § 8839, 3 Comp. Laws (4 How. Stat. [2d Ed.] § 10679). Section 8844, 3 Comp. Laws (4 How. Stat. [2d Ed.] § 10684), provides: [570] “Every express trust, valid as such in its creation, except as herein otherwise provided, shall vest the whole estate in the trustees, in law and in equity, subject only to the execution of the trust; and the person for whose benefit the trust was created, shall take no estate or interest in the lands, but may enforce the performance of the trust in equity.” Section 8845, 3 Comp. Laws (4 How. Stat. [2d Ed.] § 10685), is as follows: ' “The preceding section shall not prevent any person creating a trust from declaring to whom the lands to which the trust relates shall belong, in the event of the failure or termination of the trust, nor shall it prevent him from granting or devising such lands, subject to the execution of the trust; and every such grantee shall have a legal estate in the lands, as against, all persons except the trustees and those lawfully claiming under them.” Section 8848, 3 Comp. Laws (4 How. Stat. [2d Ed.] § 10688), provides: “When an express trust is created, but is not contained or declared in the conveyance to the trustees, such conveyance shall be deemed absolute as against the subsequent creditors of the trustees, not having notice of the trust, and as against purchasers from such trustees, without notice, and for a valuable consideration.” We think it clear that under the law of this State a purchaser from a trustee takes, not only the legal title, but the beneficial title as well, when the sale by the trustee is made rightfully and under the terms of the trust, or, if made wrongfully, when the purchaser is ignorant of the violation of the trust. 39 Cyc. p. 374, and cases cited. A conveyance by the trustee ordinarily effects a complete transfer of the beneficial as well as the legal estate. Thatcher v. St. Andrew’s Church, 37 Mich. 264. While it is clear that one purchasing from a [571] trustee is bound to take note of the limitations of the trustee’s title, as contained in the instrument creating the trust, or of such limitations as may be actually known to him, there is no doubt that under our statues, where the deed runs to one as a naked trustee, said trustee can convey to one ignorant of the terms of the trust an absolute title both legal and equitable. In the case at bar the only notice to the defendant or his grantors of the fact that others than Spalding were interested in the lands was contained in the use of the word “trustee” in the granting clause in the patent. The declaration of trust upon which complainant relies was unrecorded, and the record is barren of proof that either defendant or his grantors had any actual notice thereof, nor does the record show that in disposing of the lands Spalding was, in fact, guilty of any breach of trust. For aught that appears, he may have had the right under the terms of his trust to dispose of the lands held by him; he to account for the proceeds thereof to those interested with him in the lands. Counsel for complainant say: “If complainant has any rights in the property under her trust certificate, she is entitled to contribution for taxes paid, under the doctrine of liability of one cotenant to another. If she has no rights under such certificate, she is nevertheless entitled to reimbursement under the doctrine of liability of the owner of property to one who has paid the' taxes in good faith claiming title. Under the first doctrine the contribution should be nine-tenths of the taxes paid. Under the second doctrine the reimbursement should be of the whole amount.” It will be remembered that the learned circuit judge held that complainant had no rights in the property itself by virtue of the trust certificate, and with this holding we agree. He held, however, that the defendant should pay the taxes paid by the complainant since [572] defendant acquired title to the lands. Exactly upon what theory the defendant was held chargeable with, taxes paid after he acquired title, and relieved from the payment of those paid while the title was in his grantors, the record does not disclose. Defendant is in a court of equity asking affirmative relief against complainant. In our opinion, the maxim, “He who seeks equity must do equity,” is here applicable. There can be no doubt'that the payment of the taxes by complainant and her grantors from the year 1887 down inured to the benefit of the estate now owned by the defendant. The fact that those taxes were paid by the complainant and her grantors, not as cotenant, but in reliance upon void tax titles, does not, in our opinion, affect the equities. In the case of Sanborn Co. v. Alston, 153 Mich. 456 (116 N. W. 1099), this court said: “The name given to the title acquired by the tax purchaser under the provisions of the law is immaterial. Whether- we call the title absolute or conditional, he has a title which it is his right to protect by payment of subsequent taxes, and, when the original owner demands a reconveyance from him, he ought in justice and equity to be compelled to pay those taxes which the purchaser has been compelled to pay, or otherwise lose his title or lien. * * * It is also held that, where a party pays the taxes in good faith, claiming title, but having none, he is entitled to a reimbursement out of the land. Kemp v. Cossart, 47 Ark. 62 [14 S. W. 465]; Goodnow v. Moulton, 51 Iowa, 555 [2 N. W. 395].” The stipulation contained in the record fixes the amount of taxes paid by the complainant or her grantors, together with interest thereon, at the sum of $1,-729.30. Under the authority of Sanborn Co. v. Alston, supra, we are of opinion that the decree should be amended, compelling-defendant to pay this amount, [573] instead of the sum of $934.90, fixed by the court below. With this .modification, the decree is affirmed, with costs to appellant. Person, Kuhn, Stone, Ostrander, Bird, Moore, and Steere, JJ., concurred.