GREEN, V. C.
(Syllabus by the Court.)
Bill by Joseph B. Tynan against Richard Warren and another to establish a trust. Heard on pleadings and proofs. Decree for complainant.
George S. Hilton, for complainant.
Michael Dunn, for defendants.
GREEN, V. C. This bill is to establish a trust. The complainant, Tynan, and defendant Warren were sureties on an administrator's bond, dated February 8, 1876, in the penalty of $16,000, filed in the Passaic county surrogate's office. On a rumor that the administrators were mismanaging the estate, one of them, on May 6, 1876, assigned to Tynan and Wanen, as indemnity in respect of their liability, all his interest in a mortgage of $7,000 on property in Paterson, which mortgage at the time of such assignment was held by the Passaic County Savings Bank, as collateral for a note for $5,000, on which there was $3,400 due. The mortgage was afterwards foreclosed by the savings bank, and the property sold by the sheriff to Tynan and Warren, on their bid of $3,400. The costs, interest, and fees were paid by Tynan and Warren, each advancing one-half thereof. They then agreed to raise $3,500 by mortgage on the property; to pay the debt of the savings bank and other expenses. The bill alleges that then it was agreed between Tynan and Warren that the deed should be made by the sheriff to Warren; that Warren should execute a new bond and mortgage for such loan, pay the amount due the savings bank out of the loan, and apply the remainder thereof to the payment of other claims, including past-due taxes, expenses, etc., "and to hold the premises for the joint and equal benefit of himself and complainant, until the reason for the arrangement stated should cease to exist." The answer of defendant admits that the property was sold by the sheriff to Tynan and Warren; that each advanced one-half of the amount paid on the sale; that it was arranged between complainant and defendant that they should procure a loan of $3,500 from the Paterson Savings Institution on the property, to pay the balance of the purchase money and other expenses; that the deed was made out in defendant's name, at the suggestion of the complainant, and that it was agreed that he (the defendant) "should hold the title to said land in trust for the equal benefit of himself and the complainant, subject to the said mortgage for $3,500, * * * until a purchaser could be found for it." The defendant thus does not deny the allegation of the bill that the title was put in his name, to be held by him in trust for himself and complainant, but expressly admits that he did agree to take the title and hold the same in trust, for the equal benefit of himself and complainant, until a purchaser could be found for it.
This is an express trust. It is not one raised by law from the circumstances of the case, but created, and its terms and conditions fixed, by the express agreement of the parties. 1 Perry, Trusts, § 73. It was not necessary that it be created by writing (Jamison v. Miller, 27 N. J. Eq.586); but, resting in parol, the complainant, under the statute of frauds, could not enforce it by suit if properly contested; and this is all that is meant by the quotation from Baldwin v. Campfield, 8 N. J. Eq. 891, at page 892; "An express trust must be in writing." If a trust has been created by and rests in parol, and the defendant either does not answer (Smith v. Howell, 11 N. J. Eq. 349), or if he, by his answer, denies the trust, it cannot be enforced against him, for it cannot be legally proved (Walker v. Hill, 21 N. J. Eq. 191, affirmed 22 N. J. Eq. 513; Wakeman v. Dodd, 27 N. J. Eq. 504); or, if he admits the creation of the trust, he may successfully invoke the protection of the statute. This was at one time doubted, but is now indisputably established. Van Dyne v. Vreeland, 11 N. J. Eq. 370, 12 N, J. Eq. 143; Dean v. Dean, 9 N. J. Eq. 425; Ashmore v. Evans, 11 N. J. Eq. 151; 1 Perry, Trusts, § 85. On the other hand, the rule that if the defendant, by his answer, admits the alleged trust, and does not claim the benefit of the statute, equity will enforce the trust, if continuing (Flagg v. Mann, 2 Sumn. 486, Fed. Cas. No. 4,847), is recognized as long ago as Hampton v. Spencer, 2 Vera. 288; Nab v. Nab, 10 Mod. 404; Ryall v. Ryall, 1 Atk. 59; Cottington v. Fletcher, 2 Atk. 155. When this last rule originated, the answer of the defendant was taken under oath, and was required to be signed by the defendant. This latter requirement was so often disregarded that Lord Hardwicke (April 27, 1748) promulgated a rule of court making it obligatory. 2 Atk. 290; Hindes, Prac. 199; Daniell, Ch. Prac. 745.
The practice of the defendant signing the answer has not obtained in this state, the signature of counsel only being required (Dickerson v. Hodges, 43 N. J. Eq. 45, 10 Atl. 111); but the signature of the defendant was, of course, subscribed to the affidavit, and in this way became part of the answer when it was verified. The fact that bills now generally waive answer under oath results in the answers being rarely signed in any way by the defendant, and the answer filed in this suit is not in any place signed by the defendant. Does this fact take the case out of the rule stated, that where the bill charges a trust, and the answer admits it, it will be enforced if subsisting, unless the defendant claims the benefit of the statute? The solution of this question must depend largely on the reason of the rule. In ascertaining this reason, we may obtain much light from cases brought for the specific performance of parol agreements for the sale of lands, of which there are very many (see Pom. Spec. Perf. § 140, note 5); for the terms of the statute of frauds with reference to trusts and agreements for the sale of lands are, so far as the requirement of a writing signed by the party is conand no objection to the nature of the proof can be offered, because the agreement or trust is admitted, and no proof of any kind is required."
The rationale of the rule would seem to be this: The statute offers protection to a defendant against a parol trust or agreement for the sale of land, by providing a rule of evidence which prevents its proof if he denies the alleged trust or agreement, or if, admitting the one or the other, he claims the benefit of the statute. If, however, he admits the trust or agreement, but does not vouch the statute, no rule of evidence is brought into operation, as there is no issue on that point to be tried, and the benefit of the statute is waived. In such case the court proceeds to enforce the trust or agreement if it can establish the one or the other from the admissions made by the answer, without resort to parol proof to ascertain its terms and conditions. In this point of view, the fact that the answer is in no way signed by the defendant does not prevent the application of the rule, and the defendant, having by his answer admitted the trust, and set out its terms, conditions, and limitations, and not having claimed the benefit of the statute, the same being an express trust with reference to the land, must be held to its terms and conditions, unless he has been in some way effectively relieved from the obligation of the trust.
The defendant claims by his answer that the trust is no longer subsisting, because the complainant relinquished his interest in the property in consideration of the defendant's assumption of certain claims. These allegations of the answer are put in issue by a general replication, and the parties, as witnesses, tell different stories. It is, however, admitted that the agreement, whatever it was, was a verbal one. Could it, if it was even as stated in the answer, have the effect defendant claims for it? It being admitted that the defendant took the title to the whole property on an agreement to hold it for the joint benefit of himself and complainant, he was the legal owner, subject, as to an undivided half, to a trust in favor of the complainant. As to this half, then, there was a legal estate in the defendant, and an equitable estate in the complainant The latter might not be able to enforce it, as has been shown; and this was probably what Mr. Williams meant by saying no papers were necessary. But defendant could not acquire complainant's equitable interest as he claims to have done by his answer, through a parol agreement. This would be a transfer of a trust estate; and section 4 of the statute of frauds provides that "all grants and assignments of any trust or confidence shall be in writing signed by the party granting or assigning the same, or by his or her last will in writing, or else shall be utterly void and of no effect." This is substantially section 9 of the English act Chief Justice Marshall, in Hughes v. Moore, 7 Cranch, 176, at page 191, says: "The court can perceive no distinction between the sale of land to which a man has only an equitable title and a sale of land to which he has a legal title. They are equally within the statute." In Darling v. Butler, 45 Fed. 332, plaintiff had executed and delivered to defendant a deed of certain land; but it was intended by both parties that the deed should not take effect until the defendant made a sale of the land for the plaintiff. It was held that the legal title passed, but the equitable title still remained in the plaintiff, and a subsequent oral sale thereof to the defendant was within the statute of frauds, and void; and in an action for the balance of the purchase money a demurrer to the complaint was properly sustained. Wallace, J., at page 335, says: "Nevertheless, the equitable interest could not be transferred by parol; and, without a new deed or a formal assignment or release of the plaintiff's equitable title, the defendant could acquire no better title to the lands than he had before [viz. the legal title, subject to the other's equitable title]. An oral agreement for the transfer of an equitable interest in lands is as inoperative under the statute of frauds as one for the transfer of a legal title." Dougherty v. Catlett (Ill. Sup.) 21 N. E. 932; Clitus v. Langford (Tex. Civ. App.) 24 S. W. 325; Richards v. Richards, 9 Gray, 313; Smith v. Bumharn, 3 Sumn. 465, Fed. Cas. No. 13,019; West v. Randall, 2 Mason, 203, Fed. Cas. No. 17,424. It is unnecessary, therefore, to ascertain which version of this parol agreement is correct, as it, whatever it was, was inoperative to transfer complainant's equitable title to defendant.
The defendant next claims that complainant has forfeited any rights he may have had in equity by his delay in prosecuting the same. Mr. Justice Story in Oliver v. Piatt, 3 How. 411, thus expresses a well-established rule: "The mere lapse of time constitutes of itself no bar to the enforcement of a subsisting trust,"—which, of course, refers to express trusts. This trust was recognized as an active subsisting one at the time of the alleged agreement at Mr. Williams' office. If the acts of the defendant since that time amounted to a renunciation of the trust, the rule that this court acts by analogy to the statute of limitations does not apply, because the statutory period has not elapsed, it being only 12 years prior to the filing the bill. This defense, if available, must come under the rule either of acquiescence or laches. I do not see how the first applies. The distinction between the two is pointed out in Hall v. Otterson (N. J. Ch.) 28 Atl. 907, at page 912. The complainant does not now object to the acts of defendant in which he has acquiesced. He does not challenge his collecting the rents or placing a mortgage on the property. The rule as to laches is well defined and is clearly stated by the chancellor in Van Houten v. Van Winkle, 46 N. J. Eq. 384, 20 Atl. 34, andin McCartin v. Traphagen, 43 N. J. Eq. 323, 11 Atl. 156, and in the citations in Hall v. Otterson, supra. I do not understand that mere delay in bringing a suit will deprive a party of his remedy, unless such neglect has so prejudiced the other party by loss of testimony or means of proof or changed relations that it would be unjust to now permit him to exercise his right. Applying this test, how has the defendant been injured by delay? There is no substantial dispute as to the terms of the trust. Some witnesses are dead, but, if alive, their testimony could only relate to the oral agreement as to the relinquishment of the equitable interest, which would be of no benefit. Defendant has collected the rents, and paid the expenses, and there is nothing to prevent his accounting. He still holds the title, so that the trust can be executed; and, if he had sold the property, he presumably would have the price or what represented it. Of course, the interests of the mortgagee cannot be affected. I see no reason why, under the authorities, the doctrine of laches should be applied.
I will advise a decree for complainant, in accordance with the prayer of the bill.