CHAPTER VIII.

TRUSTS THAT ARISE BY CONSTRUCTION FROM POWERS.

§ 248. $ 249.

§§ 250, 251.

§ 252.

§ 253.

§ 254.

The nature of powers that imply a trust.

Court will execute such powers as trusts.

Instances of powers which the court will execute as trusts.
Instances of powers that are not trusts.

Where the power is too uncertain.

The power must be executed as given or it will remain a trust to be executed by the court.

§§ 255, 256. In what manner the court will execute a trust arising out of a

§ 257. § 258.

power.

Whether courts will distribute per stirpes or per capita.

And whether to those living at the death of donor or of the donee.

§ 248. PROPERTY is sometimes given to a person with a power to dispose of it for a particular purpose, or to a particular class of persons, or to certain persons to be selected or designated by the donee from a particular class. If the donee executes the power and disposes of the property, or designates or selects the persons who are to take under the gift, it goes as directed, and there is no great room for doubt or question; but if the donee refuses or neglects to execute the power, it becomes a grave inquiry whether the persons in whose favor the power might have been executed have any interest in the property, or any remedy for the non-exercise of the power by the first taker or donee. In dealing with the cases that have arisen upon these inquiries, courts have distributed powers into mere powers, and powers coupled with a trust, or powers which imply a trust. Mere powers are purely discretionary with the donee: he may or may not exercise or execute them at his sole

1 Brown v. Higgs, 8 Ves. 574; White v. Wilson, 1 Drew. 298.

will and pleasure, and no court can compel or control his discretion, or exercise it in his stead and place, if for any reason he leaves the powers unexecuted.1 (a) If the donee executes the powers, but executes them in a defective manner, courts may aid the execution and supply the defects, but they cannot exercise or execute mere naked powers conferred upon a donee. It is different with powers coupled with a trust, or powers which imply a trust. In this class of cases the power is so given that it is considered a trust for the benefit of other parties; and when the form of the gift is such that it can be construed to

1 Greenough v. Welles, 10 Cush. 576; Eldredge v. Heard, 106 Mass. 582. [Sayer v. Humphrey, 216 Ill. 426.]

2 Wilkinson v. Getty, 13 Iowa, 157; Arundell v. Philpot, 2 Vern. 69; Tompkyn v. Sandys, 2 P. Wms. 228, n.; Bull v. Vardy, 1 Ves. Jr. 272. [ Mutual Life Ins. Co. v. Everett, 40 N. J. Eq. 345; In re Courtier, 34 Ch. Div. 136; Larkin v. Wickoff, 72 A. 98 (N. J. Ch. 1909).] And even if a party intended to execute a power, but is prevented by sudden death, the court will not execute the power. Pigott v. Penrice, Com. 250; Gilb. Eq. 138; Sugd. on Powers, 392.

(a) Every power which is to be exercised solely for the benefit of others than the donee is to some extent a trust, even though the donor has vested in the donee the absolute right to decide whether or not he shall execute it. Although the court cannot compel the donee of such a power to exercise it, yet if he attempts to do so, the courts will see that he has not used the power to gain an advantage for himself or for anybody not included in the class of those for whose benefit he was authorized to exercise it. Degman v. Degman, 98 Ky. 717; In re Perkins, [1893]1 Ch. 283; Whelan v. Palmer, 39 Ch. Div. 648; In re Kirwan's Trusts, 25 Ch. Div. 373; Tempest v. Camoys, 21 Ch. Div. 571. See also Lovett v. Farnham, 169 Mass. 1; Price v. Bassett, 168 Mass. 598;

Read v. Patterson, 44 N. J. Eq. 211. Nor can he delegate the power. Hood v. Haden, 82 Va. 588. Hutchinson v. Tottenham, [1898] 1 Ir. 403; Cramton v. Rutledge, 157 Ala. 141.

In England a donee of a power of appointment with no duty imposed upon him of making the appointment, may extinguish the power by release or by contract not to execute it.

re

Conveyancing Act, 1881, § 52 (44 and 45 Vict. c. 41); In re Chisholm's Settlement, [1901] 2 Ch. 82; In re Somes, [1896] 1 Ch. 250; In Radcliffe, [1892] 1 Ch. 227; Smith v. Houblon, 26 Beav. 482. But it has been held that if there is coupled with the power a duty of exercising it, the power cannot be released. Saul v. Pattinson, 55 L. J. Ch. 831; Re Eyre, 49 L. T. 259.

be a trust, the power becomes imperative, and must be executed. Courts will not allow a clear trust to fail for want of a trustee; nor will they allow a trust to fail by reason of any act or omission of the trustee; therefore, courts will not allow a trust to fail, or to be defeated by the refusal or neglect of the trustee to execute a power, if such power is so given that it is reasonably certain that the donor intended that it should be exercised. There are mere powers and mere trusts. There are also powers which the party to whom they are given is intrusted with and required to execute. Courts consider this last kind of power to partake so much of the character of a trust to be executed, that they will not allow it to fail by the failure of the donee to execute it, but will execute it in the place of the donee.1 (a)

1 Burgess v. Wheate, 1 Wm. Black. 162; Sugd. on Pow. 393-398; Lucas v. Lockhart, 10 Sm. & M. 466; Harrison v. Harrison, 2 Grat. 1; Greenough v. Welles, 10 Cush. 576; Erickson v. Willard, 1 N. H. 217; Harding v. Glyn, 1 Atk. 496; Cruwys v. Colman, 9 Ves. 319; Forbes v. Ball, 3 Mer. 437; Witts v. Boddington, 3 Bro. Ch. 95; Walsh v. Wallinger, 2 R. & My. 78; Grieveson v. Kersopp, 2 Keen, 654; Jones v. Torin, 6 Sim. 255; Martin v. Swannell, 2 Beav. 249; Fenwick v. Greenwell, 10 Beav. 412; Fordyce v. Brydges, 10 Beav. 90; 2 Phill. 497; Burrough v. Philcox, 5 My. & Cr. 73; Falkner v. Wynford, 15 L. J. Ch. 8; 9 Jur. 1006; Penny v. Turner, 15 Sim. 368; 2 Phill. 493; Alloway v. Alloway, 4 Dr. & War. 380; Salusbury v. Denton, 3 K. & J. 535; Joel v. Mills, id. 474; Reid v. Reid, 25 Beav. 469; Brown v. Higgs, 8 Ves. 574; Babbitt v. Babbitt, 26 N. J. Eq. 44. In this case Lord Eldon said, if the power be one which it is the duty of the party to execute, made his duty by the requisition of the will, put upon him as such by the testator, who has given him an interest extensive enough to enable him to discharge it, he is a trustee for the exercise of the power, and not as having a discretion whether he will exercise it or not; and the court adopts this principle as to trusts, and will not permit his negligence, accident, or other circumstances to disappoint the interest of those for whose benefit he is called upon to execute it. In Att. Gen. v. Downing, Wilm. 23, Ld. Ch. J. Wilmot said, as to the objection that those powers are personal to the trustees, and by their death become unexecutable, they are not powers but trusts, and there is a very essential difference between them. Powers are never imperative: they leave the acts to be done at the will of the party to whom they are given. Trusts are always imperative, and are obligatory upon the conscience of the party intrusted. The court supplies the defective execution

(a) It is frequently difficult to determine whether a discretion given

to the donee of a power was intended to be the uncontrolled right to

Lord Hardwicke observed that such powers ought rather to be called trusts than powers.1 In all cases these powers or trusts

of powers, but never the non-execution of them; for they are not meant to be optional. But a person who creates a trust means it shall be executed at all events. The individuals named as trustees are only the nominal instruments to execute that intention, and if they fail, either by death, or by being under disability, or by refusing to act, the constitution has provided a trustee. Where no trustees are appointed at all, the court assumes the office. There is some personality in every choice of trustees, but this personality is res unius ætatis, and if the trust cannot be executed through the medium which was in the primary view of the testator, it must be executed through the medium which the constitution has substituted in his place. Brook v. Brook, 3 Sm. & Gif. 280; Withers v. Yeadon, 1 Rich. Ch. 324; Miller v. Meetch, 8 Barr, 417; Gibbs v. Marsh, 2 Met. 243; Grimke v. Grimke, 1 Des. Eq. 375, n.

1 Godolphin v. Godolphin, 1 Ves. 23.

choose between execution or nonexecution, or a right to decide, in the exercise of an honest judgment, when and to what extent the power should be exercised. If the former is the case the courts cannot interfere in case of non-execution, for there is no trust until execution is attempted. Towler v. Towler, 142 N. Y. 371. See also Condit v. Reynolds, 66 N. J. Law, 242; Smith v. Floyd, 108 N. Y. S. 775, 124 App. Div. 277.

If it was intended to impose upon the trustee the duty of exercising the power when in his honest judgment the proper time arrives or to the extent that the circumstances require in order to accomplish the intention of the donor, then the courts will compel the exercise of the power in a proper manner and at the proper time if the trustee arbitrarily declines or neglects to act, provided the beneficiaries are clearly defined. Smith v. Floyd, 140 N. Y. 337. See Re Stanger, 64 L. T. 693; Dillingham v. Martin, 61 N. J. Eq. 276; Cutter

v. Burroughs, 100 Me. 379. The rule is stated as follows by Jessel, M. R., in Tempest v. Camoys, 21 Ch. Div. 571. "It is settled law that when a testator has given a pure discretion to trustees as to the exercise of a power, the Court does not enforce the exercise of the power against the wish of trustees, but it does prevent them from exercising it improperly. The Court says that the power, if exercised at all, must be properly exercised. . . . But in all cases where there is a trust or duty coupled with the power the Court will then compel the trustees to carry it out in a proper manner and within a reasonable time."

But the court will not interfere with the trustee's honest discretion as to the particular time or manner of his bona fide exercise of the power. Re Burrage, 62 L. T. 752; Dick v. Harby, 48 S. C. 516. As to the court's control of discretionary powers of trustees, see infra, § 511, note.

In New York it has been provided by statute that every trust power is to be construed as imperative "un

must be construed according to the intention of the parties, to be gathered from the whole instrument.'

§ 249. In all cases where parties have an imperative power or discretion given to them, and they die in the testator's lifetime,2 or decline the trust or office, or disagree as to the execution of it, or do not execute it before their death, or if from any other circumstance the exercise of the power by the party intrusted with it becomes impossible, the court will imply a

6

1 Kerr v. Verner, 66 Penn. St. 326; Guion v. Pickett, 42 Miss. 77.

2 Maberly v. Turton, 14 Ves. 499; Att. Gen. v. Downing, Wilm. 7; Amb. 550; Att. Gen. v. Hickman, 2 Eq. Cas. Ab. 193.

Izod v. Izod, 32 Beav. 242; Doyley v. Att. Gen., 2 Eq. Cas. Ab. 194; Gude v. Worthington, 3 De G. & Sm. 389.

4 Wainwright v. Waterman, 1 Ves. Jr. 311; Moseley v. Moseley, t. Finch, 53.

5 Harding v. Glyn, 1 Atk. 469; Croft v. Adam, 12 Sim. 639; Hewett v. Hewett, 2 Eden, 332; Flanders v. Clark, 1 Ves. 10; Grieveson v. Kirsopp, 2 Keen, 653.

Att. Gen. v. Stephens, 3 M. & K. 347.

less its execution or non-execution is made expressly to depend on the will of the grantee." IV Consol. Laws [1909], p. 3405, § 157; Smith v. Floyd, 140 N. Y. 337; And it has several times been held that executors may execute a testamentary power where no donee of the power was named. Sweeney v. Warren, 127 N. Y. 426; Drake v. Paige, 127 N. Y. 562; Taber v. Willetts, 37 N. Y. S. 233, 1 App. Div. 285 (affirmed, 153 N. Y. 663); Lesser v. Lesser, 32 N. Y. S. 167. See also Bradt v. Hodgdon, 94 Me. 559.

When the purpose for which a power was given has been accomplished or has failed, the power ceases. Trask v. Sturges, 170 N. Y. 482. But a power of sale given to a trustee may continue after the main trust has terminated if such was the

intention of the donor. Binns v. La Forge, 191 Ill. 598; Moll v. Gardner, 214 Ill.,248, 252; Lawrence v. Lawrence, 181 Ill. 248; In re Sudeley, [1894]1 Ch. 334.

In New York and in several other States which have abolished trusts where the duties and powers imposed upon the person named as trustee do not require that he should be vested with a legal estate, many attempted trusts which fail as trusts are valid as powers in trust. Syracuse Sav. Bank v. Porter, 36 Hun, 168; Murray v. Miller, 178 N. Y. 316; Matter of Kellogg, 187 N. Y. 355; Townshend v. Frommer, 125 N. Y. 446; Murphey v. Cook, 11 S. D. 47; McLenegan v. Yeiser, 115 Wis. 304; IV N. Y. Consol. Laws [1909], p. 3391, § 99. It is otherwise in California. Estate of Fair, 132 Cal. 523.