¶1 October 12, 1923. The opinion of the Court was delivered by
The decree of the Special Judge is so clear and conclusive that little need be added. Let the order be reported.
¶2 It is true that a trust cannot be destroyed. There was no attempt to destroy the trust. The intention or meaning of the deed of A.P. Aldrich and M.A. Aldrich to Robert *128
Aldrich, trustee, is clear and unmistakable. It is very clear that A.P. Aldrich and M.A. Aldrich intended to make a provision for their daughter, Rosa. It is also clear that they intended to save her from all possibility of a controversy with any husband, and to keep the management entirely out of her hands for her own benefit. There was no use to demand of her that she should do anything, so the deed deprived her of any right to manage or dispose of the property. A sale was provided for as it might become useless to her in its present form. The money derived from the sale was to be reinvested, it is true, but only as A.P. Aldrich and M.A. Aldrich may direct. No one had a right to complain of a failure to reinvest, except one who has some right in the property, or the proceeds of sale. No one had such a right, not even the daughter, Rosa. Rosa and those claiming under her cannot complain, because Rosa accepted the proceeds of sale. The sale and paying the money to Rosa was not only not a destruction of the trust, but was a carrying out of the trust in its fullest purpose.
¶3 The judgment is affirmed.
¶4 MR. CHIEF JUSTICE GARY and MR. JUSTICE WATTS concur.
¶5 MR. JUSTICE MARION concurs in result.
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Case posture Posture Before P.F. HENDERSON, SPECIAL JUDGE, Barnwell, December, 1922. Affirmed.Action by Martin C. Best against R.A. Deason and others. From an order sustaining a demurrer to the answer of A.P. Aldrich, and overruling a demurrer to the complaint, the defendant A.P. Aldrich appeals.
The decree of Special Judge P.F. Henderson, referred to in the opinion of Mr. Justice Eraser, follows:
The controlling question presented by the demurrer to the answer of the defendant, A.P. Aldrich, is whether or not under the terms of the deed from Lewis M. Ayer to Robert Aldrich, which is dated the 29th day of December, 1886, the subsequent conveyance, upon the written request of A.P. Aldrich and M.A. Aldrich, by the trustee, Robert Aldrich, to Alfred Aldrich, was legal.
The pleadings revealed the fact that the realty, which is the subject matter of this action, and other lands similarly affected, all of which is now quite valuable, was conveyed under the aforesaid deed by Lewis M. Ayer to Robert Aldrich in consideration of the sum of $3,345.90 to me in hand paid by Alfred P. Aldrich and Martha A. Aldrich, his wife. and that said deed was made in trust for the sole and separate use of his sister, Rosa, for and during her natural
life, and after her death to be equally divided among her children. And then follow two paragraphs in said deed, which add important items to the trust upon which said deed is made. These paragraphs read as follows:
But if the said Rosa should die without leaving a child or children alive, then in trust to be returned to the estate of the said A.P. and M.A. Aldrich, to be divided under the provisions of his or her will, and if no will as the law may direct. And on the further trust that the said land may be sold and the proceeds thereof reinvested as the said A.P. and M.A. Aldrich may direct, their consent being first obtained in writing, or if they be dead, by the consent of the said Rosa, approved by the said Robert, said consent and approval being in writing without the necessity of applying to the Court for that purpose.
On the 26th day of December, 1889, A.P. Aldrich and M.A. Aldrich in writing, requested and directed Robert Aldrich, the trustee, to sell and convey the property described in the deed from Lewis M. Ayer, for a consideration of $5,000, to Alfred Aldrich, and directed him specifically upon the receipt of said purchase money to transmit the same to the said Rosa, cestui que trust, under said trust deed, to be by her reinvested in such other property as she may elect.
Acting under this written direction and consent of A.P. Aldrich and M.A. Aldrich, Robert Aldrich did duly convey the property in question to Alfred P. Aldrich.
My construction of the papers above recited is that A.P. Aldrich and M.A. Aldrich out of their own funds purchased and paid for the realty in question, intending to buy the same primarily for the benefit of their daughter, Rosa; providing, however, in the trust deed, in effect, that if other disposition were not made of the property during the lifetime of Rosa that the remainder over therein should go to her children living at her death. But the said A.P. Aldrich and M.A. Aldrich further desired and provided, inasmuch
as they had paid the purchase price for the property, that should Rosa die and leave no children that the property should revert to the estate of A.P. and M.A. Aldrich. This provision, to my mind, shows an intention upon the part of A.P. and M.A. Aldrich to retain in themselves some measure of interest in and control over the property.
Then follows the very important paragraph in the deed in which it is provided that the trustee may sell the property upon the written request of A.P. Aldrich and M.A. Aldrich. My construction of this paragraph of the deed is that A.P. Aldrich and M.A. Aldrich realized that contingencies might arise, by virtue of which it might be necessary materially to change the method of investment, and that they carefully provided in the trust deed that should this contingency arise that by directing and requesting the trustee to act that they might make any change, no matter how sweeping, in the investment as they might desire to make. All that it was really intended to give Rosa's children under the trust deed was a remainder, if A.P. and M.A. Aldrich did not exercise the power reserved to them.
The contingency which they had foreseen seems to have arisen in 1889, when their daughter, Rosa, had removed to the State of California, as is set out in their written direction to the trustee, dated the 26th day of December, 1889. Rosa's welfare was their first consideration, and they then directed the trustee in writing to sell the property, and to transmit the proceeds to Rosa to be by her reinvested in such other property as she may elect. I think that such a reinvestment was in conformity with the general plan of the trust deed, and I hold that the plan outlined and provided for in the trust deed has been strictly followed in the written request and in the deed from Robert Aldrich to Alfred Aldrich.
The important remaining question is whether the plan provided in the trust deed, and later strictly followed by the interested parties, was legal. Inasmuch as it is a well-known
fact that the interested parties were amongst the foremost citizens of the State of South Carolina, the grantor being General Lewis M. Ayer, the original investors being Judge A.P. Aldrich and his wife, and the trustee being Col. Robert Aldrich, who later became one of the most brilliant Circuit Judges of this State, he and the aforesaid Judge A.P. Aldrich constituting two of South Carolina's ablest jurists — in view of these circumstances it would seem more than passing strange if a plan of action which was devised by, or at least participated in, by such brilliant lawyers as these should be found to be defective, illegal, or in any manner fraudulent, as is suggested by the answer of the defendant, A.P. Aldrich, Rosa's son.
This consideration, while it may be persuasive to a certain extent, is by no means to be considered controlling in our inquiry. The vital question is a cold question of law, namely, as to whether or not the plan followed in attempting to give to the purchaser a fee simple title, was legal, or was, on the other hand, in contravention to the law of trusts?
Let us then consider this interesting question to which I I have given considerable thought and independent research, as supplementary to the learned arguments of counsel. My general idea of matters of this kind is that unless some well-settled principle of law is transgressed, that the province of the Court in considering trust matters especially, is simply to determine the real intention of the parties. This idea is well expressed in 26 R.C.L., at page 1289, as follows: The provisions and conditions of the instrument creating the trust make the law by which the conduct of the trustee in the management and disposition of the trust property must be regulated and controlled. This general principle is recognized and followed in Foster v. Glover , 46 S.C. 522 ; 24 S.E., 370 .
The trust deed herein gives Robert Aldrich a full power of sale, subject, however, to the written direction and consent of his father and mother, Judge A.P. Aldrich and
Mrs. M.A. Aldrich, who had paid General Ayer for the land. This kind of a trust, in which the power of sale is to be exercised only upon the direction and at the request of some other person save the trustee, presents no new principle, but is met with by the Courts quite frequently.
In South Carolina we have instances of the same in such cases as Creighton v. Pringle , 3 S.C. 77 . Rice v. Bennett , Speers, Eq., 579; 42 Am. Dec., 336, and Pyron v. Mood , 2 McMul., 281. In each of these cases the request of the beneficiary was required to the exercise of the power of sale, and, when this request was given, the purchaser's title to the property conveyed by the trustee was considered complete even against remaindermen.
Passing to other authorities, it will be seen that the party whose consent is the controlling feature in the exercise of a power of sale need not necessarily be the beneficiary, but may be some third person.
Judge Freeman, in a full editorial note found in 19 Am. St. Rep. at page 278, says: The creator of a trust, the trustee of which is to have a power of sale, may impose any restraint upon such power which he may consider proper, and unless it is in contravention of law, its observance is essential to the valid execution of the power. * * * Thus a trustee may be given power to sell, subject to the approval of the person who created the trust, or with the assent of the beneficiary, or of the tenant for life, or of some other person. If, so, the power is not in being in the absence of such approval or assent, and any conveyance which the trustee may make is unwarranted. Sprague v. Edwards , 48 California, 239 . Mortlock v. Buller , 10 Ves., 308. Bateman v. Davis , 3 Madd., 98. Wright v. Wakeford , 17 Ves., 454; Rickett's Trust, 1 Johns H. 70.
In the Alabama case of Gindrat v. Montgomery , 82 Ala., 596 ; 2 South., 327 ; 60 Am. Rep., 769, a power of sale upon which the written request of a third person was required
was upheld and recognized as valid even against the interest of remaindermen.
There are two Georgia cases which, to my mind, are pertinent in this inquiry. Headen v. Quillian , 92 Ga. 220 ; 18 S.E., 543 . In his case property was conveyed to a trustee for the benefit of Eliza Headen during her life, with remainder over to her children with power of the said Eliza Headen to empower the trustee by writing under her hand to sell any part or whole of the trust property. It was held in this case against the remaindermen — the children of Eliza Headen — that a sale upon Eliza's request vested a fee-simple title in a purchase. It is true that in this case there was a reinvestment upon the terms of the original deed, but the principle which I refer to herein is the complete recognition by the Georgia Court of the right of a person other than the trustee to completely control the action of the trustee.
The other Georgia case which I refer to goes much further, and, while not entirely parallel to the present action, is very closely akin to it. I refer to the case of Vernoy v. Robinson , 133 Ga. 563 ; 66 S.E., 928 . In that case a trust deed to a trustee was executed, which provided that the wife of the grantor, Martha Ann Robinson, should have the property during her life and at her death all the property, as well what is hereby conveyed as what may be exchanged for as aforesaid, will go to such child or children as she may leave surviving her at her death, to be equally divided amongst them. The trust deed in said case, however, provided further, that should the said Martha Ann Robinson at any time require under hand and seal by writing * * * that any part or all of the above-named property shall be sold or exchanged for other property, or mortgaged for the purpose of raising money for her [own] use * * * that the * * * trustee shall execute all proper conveyance or conveyances for the purpose aforesaid. Martha Ann Robinson was later, upon the death of the trustee
first appointed, substituted as trustee, and she conveyed without reinvestment the property in question, and evidently used the proceeds of sale for her own purposes, thereby cutting off completely any beneficial interest that the remaindermen would otherwise have received. It is true that there was an order of Court involved in the case permitting the sale of the property, but the Supreme Court of Georgia in its decision held that the decree of Court was in effect void, as the remaindermen were not made parties to the proceeding. But the Supreme Court of Georgia held that Martha Ann had the power under the terms of the original trust deed to convey the property even without making reinvestment, without the assistance of the Court.
Hence I return to the observation first above made, that the real intention of the parties is the controlling consideration, and that if no well-known principle of law is violated, that the transaction will be upheld if the intention of the trust deed is faithfully followed.
The contention of the defendant, A.P. Aldrich, Rosa's son, that the plan followed by his grandfather, Judge A.P. Aldrich, and others involved, is that he gave him an estate in remainder in the property, and later deprived him of the same. I think that the possibility of such a contingency arising was contemplated in the original trust deed, namely, that Judge A.P. Aldrich and his wife reserved to themselves the power of providing such a reinvestment of the funds as they might see fit to have made. I see no reason why this is not legal.
I further particularly call attention to the fact that so far as the demurrer is concerned that there is no showing whatsoever that the proceeds of the sale may not have been reinvested in California upon the exact terms of the original trust deed.
Counsel for the defendant, A.P. Aldrich, cited the decision of United States Supreme Court in the case of Wormley v. , that in this particular case the purchaser would not be bound in any manner to see to the reinvestment of the funds, because it was in the power of Judge A.P. Aldrich and his wife, in my opinion, under the papers herein, to direct a reinvestment such as they did direct. The proposed reinvestment required the exercise of discretion by the party making it, and must take some time to be effected.
Along the same line counsel for the defendant, A.P. Aldrich, cite the South Carolina cases of Rabb v. Flenniken , 29 S.C. 278 ; 7 S.E., 597 , and Salinas v. Pearsall , 24 S.C. 179 , and similar decisions to the effect that Alfred Aldrich, the purchaser, was affected by the transaction herein with notice that a reinvestment upon the terms of the original trust deed was not intended, and that he knew that such an investment was not to take place.
These cases are differentiated from the present case by the fact that in the cases above cited the trust deed provided that the trustee must reinvest the proceeds of the sale in property, upon the same terms as were set out in the original trust deed. In the present case the provision of the trust deed is simply that the land may be sold and the proceeds thereof reinvested as the said A.P. and M.A. Aldrich may direct. Hence, in my opinion, the principle of Rabb v. Flenniken and other similar cases does not apply to the case at bar, for the simple reason that when Alfred Aldrich was advised that a reinvestment along lines directed by A.P. Aldrich and his wife was to take place, that this was all-sufficient, and that it was not his duty to follow the matter further.
Again, counsel for A.P. Aldrich object to the plan followed, because it worked, as they express it, a destruction of the trust, and because Alfred Aldrich, the grantee, had knowledge that a destruction of the trust was intended. The decision of the Supreme Court of South Carolina in the case of Thomson v. Peake , 38 S.C. 440 ; 17 S.E., 45 , 725 , to the effect that, Not only is a trust indestructible, but it is not transferable upon the mere volition of the trustee, is relied on.
An examination of the opinion in the Peake Case, however, reveals the fact that the reference made by the Court is to the possibility of a trustee himself attempting to destroy a trust, and that the principle does not in any manner extend to what was done in the case at bar.
Again, counsel for the defendant, A.P. Aldrich, contend that the plan followed by the Aldrichs herein was illegal, because it permitted reinvestment by Rosa Aldrich, instead of requiring the same to be made by Robert Aldrich, the trustee. I think and hold that the direct answer to this contention is that the trust deed did not necessarily require that Robert Aldrich, the trustee, should make the reinvestment. Most trust deeds do require the trustee to make the reinvestment. This one did not. It simply provided that the proceeds of sale be reinvested as A.P. and M.A. Aldrich may direct. They directed that Rosa make the reinvestment. I hold that this, while possibly unusual, was legal under the terms of the trust deed.
Again, counsel for A.P. Aldrich contend that permitting the removal of the trust fund and reinvestment in the State of California, and beyond the jurisdiction of the Courts of the State of South Carolina, renders the whole proposition void, and they cite the South Carolina case of Carr v. Bredenberg , 50 S.C. 471 ; 27 S.E., 925 , in support of this proposition. An examination of this case, however, reveals the fact that the case is an elucidation of the principles upon which a Court of equity will handle trust property
which such Court is administering, and does not affect a case in which the trust deed gives a perfect power of sale, and fully establishes the method upon which the sale may be made. Indeed, the express desire and intention of the parties to the trust deed herein was to avoid the necessity of applying to the Court.
To summarize:
My conclusion, after careful study of this case, is that the deed by the trustee, Robert Aldrich, to A.P. Aldrich, was made strictly in accordance with the terms of the trust deed, and was based upon a valid request, under the terms of the trust deed from Judge A.P. Aldrich and his wife; that the provisions as to reinvestment was in accordance with the terms of the trust deed, and that at least there was no duty whatsoever upon the part of Alfred P. Aldrich, the grantee, to follow the investment of the fund in California, where the same may or may not be invested upon the terms of the original trust deed. I do not think that the question of what investment was made in California would control this action, however.
As to the question of fraud: The answer alleges fraud only in that the sale was made upon a consideration which was grossly inadequate.
I am not unmindful of the recent decision of the Supreme Court of South Carolina in the case of Sams v. Sams , 117 S.C. 312 ; 108 S.E., 921 , which is based upon the older case of Amaker v. New , 33 S.C. 28 ; 11 S.E., 386 ; 8 L.R.A., 687, which decisions are to the effect that although longer than six years may have elapsed since the discovery of an alleged fraud which might vitiate a conveyance of land, that still a defendant may treat such a conveyance as null and void when it is set up against his interest. These cases differentiate the present case from the decision of the Supreme Court of South Carolina in Smith v. Linder , 77 S.C. 535 ; 58 S.E., 610 , cited to the effect that the discovery of fraud within six years must be pleaded. Hence
the fourth ground of demurrer to the answer must be overruled.
But I further hold, and the same is controlling so far as the question of fraud and also so far as the contention that A.P. Aldrich and his grantees became trustees of a constructive trust is concerned, that there was no illegality in the plan devised by or acted upon by the Aldrichs herein; that Judge A.P. Aldrich and his wife (Robert Aldrich, the trustee, acting with them) were the sole judges of what was an adequate consideration for the sale of the property; that they were within their rights when they determined that $5,000 was an adequate consideration, and hence that an allegation now made by the defendant, A.P. Aldrich, that the same was a grossly inadequate consideration does not and cannot raise an issue of fraud, because he is not in a position to raise such an issue.
As I have just stated, the same completely disposes of the contention as to the existence of a constructive trust in Alfred Aldrich and his grantees under the doctrine enunciated by the Supreme Court of South Carolina in Bradley v. Calhoun , 116 S.C. 7 ; 106 S.E., 843 , based upon Sullivan v. Latimer , 35 S.C. 422 ; 14 S.E., 933 . This doctrine comes into play only where the purchase was wrongful and inequitable when made. I hold in this instance, however, that the plan pursued was legal throughout. Hence the demurrer to the answer is sustained.
A demurrer was also interposed to the complaint. The foregoing consideration fully states my views as to the transaction involved. This demurrer might be sustained. I, however, think that inasmuch as all parties claiming any interest in the property in question are before the Court and represented by counsel, a better solution of the proposition is not to sustain the demurrer to the complaint, but to permit this action to go to complete adjudication, thereby setting at rest for all time the question of the validity of the title to the valuable tract of land involved herein.
Wherefore it is ordered, adjudged, and decreed, that the demurrer to the answer of A.P. Aldrich be and the same is hereby sustained, but that the demurrer directed to the complaint be and the same is hereby overruled. Source: CourtListener
