Kenaday v. Edwards/Opinion of the Court

by by John Marshall Harlan

United States Supreme Court

134 U.S. 117

Kenaday  v.  Edwards

The appellees have moved to dismiss each of these appeals upon the ground that the value of the matter in dispute is not sufficient to give this court jurisdiction; and with the motions to dismiss was joined a motion to affirm the decree as to each appellant. Both motions to dismiss are overruled. As to Kenaday, the decree denies his right to property of which he claims to be the owner, and which is of the value of $11,000. He paid that sum for it in cash to Green, as trustee. It is true that there are funds in the registry of the court below which, in the event of the affirmance o the decree, can be paid over to him, and he be thus far reimbursed for what he paid to Green on the purchase of the property. But we think that the value of the specific property which is in litigation must determine the jurisdiction of this court. And the same principle must control the right of Green to appeal. It cannot be said that his right to commissions as trustee constitutes the whole matter in dispute between him and the appellees. He claims, as trustee, the right to hold and control the proceeds of the sale made to Kenaday. The order removing him as trustee involves his ownership and control of the trust-estate for the objects expressed in the will, and therefore the value of that estate is the value of the matter in dispute for the purposes of an appeal by him.

We pass to the consideration of the case upon its merits.

It is contended by the appellants that the general term cannot exercise any jurisdiction in equity unless (1) a suit or proceeding or motion be ordered by the court holding the special term, to be heard by the general term in the first instance; or (2) a motion be filed in a suit that by the rules of the general term is designated as an enumerated motion; or (3) an apeal by a party aggrieved be taken from an order, judgment, or decree of the special term which involves the merits of the action or proceeding. The argument is, as the application to set aside the order confirming the sale to Kenaday was heard and determined in special term; as such application could not be regarded as an enumerated motion; as an application to reopen the decree of confirmation was addressed to the discretion of the court, and not appealable, and, for that reason, did not involve the merits of the proceeding; and as there was no appeal from the order confirming the sale,-the general term was without jurisdiction to review the order of the special term refusing to set aside the previous order confirming the sale.

This argument is based upon a misconception of the object* and scope of the proceeding instituted by appellees on the 17th of March, 1888. By their petition filed on that day they assailed, as fraudulent, the sale made by Green to Kenaday, and asked that the order confirming it be set aside, and Green removed from the trusteeship. Upon that petition, Green and Kenaday were ruled to show cause why the order of March 7, 1888, ratifying and confirming the sale, should not be set aside, the sale itself vacated, and the trustee removed. They both appeared to that petition,-Kenaday, by affidavit, insisting upon his right to hold the property; and Green, by formal answer. The case was heard in special term upon this petition, and it was ordered that all of its prayers be denied. From that order the petitioners appealed to the general term. It was clearly an order involving the merits of the proceeding; because, unless reversed or modified, it sustained the sale to Kenaday, confirmed his right to hold the property as against the appellees, and held Green in the position of trustee. It was not an appeal simply from an order refusing to set aside the decree of confirmation, but one that involved the integrity of the order confirming the sale, and therefore the merits of the whole case made by the petition. As said by Mr. Justice MERRICK, in the opinion delivered by him when the court below overruled a petition for rehearing: 'It is apparent that in this case the most substantial rights of the parties were involved. Here is an application at the same term at which an order is passed ratifying a sale, which being passed, and not appealed from, nor corrected in any other mode, would definitely settle the rights of the parties, and deprive the petitioners absolutely and forever of a title to real estate, by the conversion of the realty into a sum of money, whether the full or an inadequate price for the value of the land need not be considered.'

The next contention of the appellant Kenaday is that he is a bona fide purchaser for value of this property from a r ustee who had full power, under the will creating him trustee, in connection with the deed to him from Chapman Maupin, the surviving trustee, to sell and convey; and that his right to hold the property cannot be affected, unless there was such inadequacy of price as indicated collusion between him and the trustee. It may be that the surviving trustee, under the broad powers of sale given by the will, could, in his discretion, have sold this property, if he had not surrendered his position as trustee, and if the title had not, by the decree of the court, been taken out of him. And it may be that it was competent for him, while holding the trusteeship, to transfer to some one else, by a written instrument, the powers the will gave him, but he had not exercised any such powers prior to the decree of March 29, 1882, divesting him of title, and substituting Green in his place as trustee. After that date he had no connection with the trust-estate, and his powers as trustee ceased. That he had the right to surrender his trust, and that it was competent for a court of equity to appoint another person to take the title to the trust property, cannot, in our opinion, be successfully questioned. But the order appointing a new trustee expressly declared that he should at all times be subject to the control and order of the court touching the trust. His subsequent sale, therefore, of the property was subject to confirmation or rejection by the court. He could not pass the title without its consent. The deed from Chapman Maupin, after he had ceased to be trustee, did not add to Green's powers, or place him or the trust-estate beyond the control of the court which appointed him.

It results, from what has been said, that the rights acquired by Kenaday under his purchase from Green were subject to the power of the court to ratify or disapprove the sale. The order approving the sale was improvidently passed, because made without notice to the beneficial owners of the propery, who were entitled to its income, and who were before the court for the protection of their rights. The confirmation was obtained by the trustee with knowledge that the appellees, if notified of the application to the court, would oppose its ratification.

Under all the circumstances disclosed by the record,-and which it will serve no useful purpose to state in detail,-we are of opinion that the court below did not err in setting aside the confirmation of the sale, vacating the sale itself, and removing the trustee without allowing him any commissions.

The decree below is in all particulars affirmed.

Notes