
    Gertrude Skidmore and Others, Respondents, v. Adele Gueutal and Frederick S. Myers, as Executor of the Wills of Louise C. Gueutal, Deceased, and Marie F. Pauly, Deceased, Appellants, Impleaded with George Gueutal, Respondent, and Flora Huston and Others, Defendants.
    First Department,
    March 10, 1911.
    Trust—when trustee does not take individual title on failure of trust — when trustee should not he charged with mortgage given to improve lands — partition — executor of trustee, when entitled to dismissal of complaint — appeal.
    Where a warranty deed designated the grantee as trustee, and she simultaneously executed a declaration of trust whereby she declared that she held the premises for the use and benefit of the “estate” of her mother and for the use and benefit of other persons including herself, the grantee cannot assert individual title to that portion of the lands held for the benefit of her mother’s estate, upon a decision that that portion of the trust is invalid for indefiniteness of the beneficiaries. This, because it is manifest that the grantor did not intend to convey that portion to tile trustee in her individual capacity, and it is immaterial whether the title to that portion on a failure of the trust became added to the personal estate of the mother, or vested directly in her next of kin or heirs, or remained in the grantor, which questions are not decided.
    Where such trustee, individually and as trustee for herself and the other beneficiaries, mortgaged a portion of the property and used the entire proceeds in improving the lands, and there is no showing that their value was not increased thereby, or that she did not act in good faith, her separate interest should not he charged with the amount of the mortgage.
    The complaint in an action by one of the beneficiaries to partition said land on a failure of the trust should he dismissed as to the executor of the. trustee, although he is alleged to have collected the rents and profits as executor and an accounting therefor is demanded, if it appear that he did not collect the rents as executor, hut rather as an agent for one of the beneficiaries who by the interlocutory judgment has been required to account therefor.
    Such executor has a right to appeal from the refusal of the court to dismiss the complaint as to him, although no relief was awarded against him as executor, for, being charged as such, he had a right to appear and defend, and to a dismissal of the complaint, with costs.
    Appeal by the defendants, Adele Gneutal and another, from an interlocutory judgment of the Supreme .Court in favor of the plaintiffs and the defendant George Gueutal, entered in the office of the clerk of the county of Hew York on the 24th day of March, 1910, upon the decision of the court rendered after a trial at the New York Special Term in an action for a partition.
    
      Hamilton H. Squier, for the appellants.
    
      I. Newton Williams, for the plaintiffs, respondents.
    
      William J. A. McKim, for the respondent George Gueutal.
   Laughliu, J.:

This is an action for the partition of two parcels of real estate situated in the borough of Manhattan, in the county of New York, the title to which on the 2d day of January, 1880, was in George Gueutal, subject to two mortgages aggregating $19,000. On that day lie conveyed the same to his daughter, Louise O. Gueutal, by a full covenant warranty deed, subject, however, to the payment of said mortgages which the grantee assumed and agreed to pay. In the conveyance the designation or description Trustee, &c.,” follows her name as party of the second part. The deed recites payment of a consideration of $6,168. Simultaneously with the execution of the deed the grantee executed an instrument described as a declaration of trust, in and by which she admitted and declared that the premises were conveyed to and were held by her “ in trust only for the use and benefit of the estate of Catherine Gueutal, and also for the use and benefit of Adele Gueutal, Marie Gueutal and myself and for our respective heirs, executors and administrators.” This declaration is immediately succeeded by the following provisions, to wit: “ The respective interests of the said cestuis que trust in the same being as follows, viz.: Interests of the estate of Catherine Gueutal in said property being thirty-nine hundred and sixty sixty-one hundred and sixty-eighths (3960-6168) of the same, .and the respective interests of the said Adele Gueutal, Marie Gueutal and myself in said property being seven hundred and thirty-six sixty-one hundred and sixty-eighths (736-6168) of the same.”

An action was brought by George Gueutal, 2d, a grandson of the grantor in the deed, and others against the grantee and others for the construction of this instrument as a declaration of trust, and on appeal therein from an interlocutory judgment overruling a demurrer to the complaint, taken upon the ground that it failed to state facts sufficient to constitute a cause of action, this court decided that the deed and declaration of trust should be construed together and that no valid trust was created, and that there was no necessity for resorting to a court of equity, inasmuch as any of the parties in interest might maintain an action at law for a partition of the property, and reversed the interlocutory judgment-and sustained the demurrer to the complaint, with the usual leave to amend. The grounds upon which the decision was based, as stated in the opinion, were that the instrument attempted to create a trust in perpetuity, that it was indefinite with respect to the beneficiaries in so far as it was for the benefit of the estate of Catherine Gueutal, and that it was at most a passive trust and that under the statute no title vested in the trustee, but passed immediately to the beneficiaries. (Gueutal v. Gueutal, 113 App. Div. 310.)

The decision upon which the interlocutory judgment was entered, from which the appeal has been taken, went upon the theory that as to the interest in the premises stated in the declaration of trust to have been conveyed for the benefit of the estate of Catherine Gueutal, the beneficiaries were not described with sufficient definiteness, and that, therefore, the title to that interest remained in the grantor. It is claimed that that decision was warranted, if not required, by the opinion of this court in the action to which reference has been made. In the discussion of the question on that appeal that view is intimated, but the point was not decided. The learned counsel for the appellants on the trial of the issues in this action contended, and he contends on this appeal, that the deed from George Gueutal to his daughter, Louise C. Gueutal, was'effectual to pass all of his title, and that the attempted declaration of trust by the grantee was voluntary, and since it has been held ineffective as to thirty-nine hundred and sixty sixty-one hundred and sixty-eighths of the title, she obtained good title to that part of the premises. In support of this contention he points to the consideration recited in the deed as having been paid by the grantee, and to the assumption of the mortgages by her, as well as to the warranty and covenants. Ho evidence, other than the recital in the deed, was offered to show the actual payment of the consideration recited as having been paid by the grantee. The plaintiffs, however, proved that on. the 2d day of January, 1879, the grantor, George Gueutal, and his son, Louis Gueutal, who were then copartners in business, made an assignment of all their property to Thomas Alexander, Jr., for the benefit of creditors, and the assignment directed the assignee to first pay said Catherine Gueutal $3,960, and each of the three daughters of George Gueutal named in the declaration of trust the sum of $736, it being recited that the firm owed them these respective amounts. It appears that when this assignment was first offered in evidence counsel for the plaintiffs also offered a later assignment by the same parties on the 7th day of February, 1879, to another assignee, Frederick Lewis, and stated that it was recorded in the county clerk’s office on the 8th day of February, 1879. The assignments when first offered were excluded on the objection of counsel for the appellants. Later on the first of these assignments was offered and received in evidence without objection, but the second assignment was not again offered in evidence. A conveyance of the premises in question by said Frederick Lewis as assignee to saicl George Gueutal on the 2d day of January, 1880, the same day on which he conveyed the premises to his daughter, was, however, offered and received in evidence. This conveyance recites that the premises thus conveyed were a portion of the estate of George Gueutal, duly assigned by him for the benefit of creditors on the 2d day of January, 1879. The indebtedness of George Gueutal and son to his wife and daughters, acknowledged in the assignment for the benefit of creditors, aggregates the amount of the consideration recited in the deed to his daughter, and the proportion that the indebtedness to his wife and to each of his daughters bears to the amount of the indebtedness to all of them corresponds exactly to the proportionate interests of the daughters and of the estate of his wife, who had died intermediate the date of the assignment for the benefit of creditors and the conveyance to the daughter, acknowledged in the declaration of trust. The inference, therefore, is fairly warranted that the consideration recited in the deed was not actually paid by the grantee, but that it was the indebtedness on the part of the grantor to his daughters and to his wife. These facts were not before this court on the appeal in the other action, but they do not require a different decision with respect to the validity of the trust, for in no view was the conveyance to the daughter made in trust to sell the premises for the benefit of these creditors, which would be a trust authorized by the statute as it existed at that time (K. S. pt. 2, chap. 1, tit. 2, § 53) and that is the only possible theory on. which the validity of the trust could be sustained. Although the indebtedness was doubtless the consideration specified in the deed, and was, in part at least, the moving cause which induced the grantor to execute the deed, yet neither the deed nor the declaration of trust made by the grantee states that the conveyance was made for the purpose of selling the land for the benefit of creditors, nor does either of the instruments refer to the indebtedness or show that it constituted the consideration. The intention, therefore, of the grantor, as shown by the deed and declaration of trust, even in the light of the assignment for the bénefit of creditors, was to convey the entire title, not merely as security for the payment of the indebtedness, but absolutely and for the use and benefit of his three daughters and of the estate of his deceased wife, and, therefore, no title vested in the daughter as trustee, but title vested at once-in the beneficiaries in the proportions stated in the declaration of trust. Of course, as stated in the opinion in discussing these questions on the appeal in the action to which reference has been made, there was no valid trust created for the benefit of the estate of Catherine Gueutal, but it was not necessary to decide and the court did not decide that title did not vest in her personal representatives as such, or next of kin or heirs, and it is not necessary to decide on this appeal whether the effect of the conveyance was to add it to the personal estate of Catherine Gueutal or whether it vested directly in her next of kin or heirs, for the administrator de bonis non of the estate of Catherine Gueutal is la party to the action, and no appeal has been taken by him, and it does not appear that there are any unpaid creditors, and her heirs and next of kin are the same, and, therefore, it is immaterial which of them take or in what capacity they take. If, however, that part of the title intended for the benefit of the estate of the grantor’s wife could not inure to such benefit, still it could not be held that the grantee is entitled to hold it as her own, for it is manifest that the grantor did not intend to convey it to her in her individual capacity. It is equally fatal to the contentions of the appellants whether it be held that the title passed on to the beneficiaries or remained in the grantor.

It does, however, appear by this record that after the conveyance to Louise C. Gueutal, she individually and as trustee for herself and her two sisters, and her sisters also, mortgaged one of the parcels for $15,000 on the 12th day of October, 1894, and that this mortgage is still unpaid, and that all of the proceeds thereof were used in improving that parcel. The defendant Adele Gueutal, one of the daughters of G eorge G ueutal for whose benefit the conveyance was made, has succeeded to the interests of her sisters Louise C. Gueutal and Marie F. 'Pauly. The seventeenth finding in the decision, on which the interlocutory judgment is based, charges her share and interest in the premises with the entire lien of this mortgage for $15,000, with interest thereon at the rate of six per cent per annum from the 12th day of October, 1909. An exception was duly filed to this finding, and on the argument of the appeal counsel for the appellants drew attention to these facts and made the point, not taken in the printed points, that this finding is erroneous. The sixteenth finding specifies the interest of each party in the premises, and in that finding it is also stated that the interest of Adele Gueutal is subject to this mortgage. The conclusions of law and the interlocutory judgment follow these findings. There is nothing to impeach the good faith of the mortgagors who made that mortgage, and it has not been shown that the value of the premises was not increased by the amount expended thereon, which was the entire proceeds of the mortgage.

In these circumstances, we are of opinion that the mortgage is not properly chargeable solely to the interest of the appellant Adele Gueutal, and, therefore, the decision and conclusions of law and interlocutory judgment should be modified by eliminating therefrom all provisions charging her separate interest with the amount of the mortgage.

It is claimed in behalf of the other appellant, the executor of the wills of Louise O. Gueutal and Marie F. Pauly, that he was not a proper party to the action, and that as to him as such executor, the complaint should have been dismissed, with costs. We are of opinion that he is right in his contention. It is alleged in the complaint that as executor of Louise G. Gueutal he has collected rents, and in the prayer for relief it is demanded that he account therefor. It was not shown that he collected any rents as executor. He did collect rents as agent for the appellant Adele Gueutal, and for those rents she has been required to account. When the defendant rested, counsel for the executor moved to dismiss the complaint as to lnm as executor, and the decision on the motion was reserved. No relief was awarded against the executor as such, and, therefore, counsel for the respondents contends that his appeal should be dismissed. He, however, had a right to appear and defend for the reason that relief was asked against him, which justified his defending the action, and the interlocutory judgment does not direct, as it should, a dismissal of the complaint as to him, with costs.

It follows, therefore, that on the appeal of Adele Grueutal the interlocutory judgment should be modified "as indicated herein, and affirmed, with costs to her payable by the respondents, and that on the appeal of Myers as executor it should be modified by directing a dismissal as to him, with costs, but without costs of the appeal for it does not appear that he presented a formal request or a conclusion of law to that effect, and his appeal was taken jointly with Adele Grueutal and he has been represented by the same counsel.

Ingraham, P. J., Clarke, Miller and Dowling, JJ., concurred.

Judgment modified as directed in opinion.  