Subdivision 2 of section 105 of the Real Property Law, chapter 50, Consolidated Laws is transcribed from the following act:

CHAP. 311.

AN ACT to authorize executors and trustees, subject to the approval of the supreme court, to acquire or exchange lands for the purpose of straightening or improving boundary lines of real property.

Became a law April 19, 1898, with the approval of the Governor. Passed, a majority being present.

The People of the State of New York, represented in Senate and Assembly, do enact as follows:

SECTION 1. Whenever, by the provisions of a will, or of a deed of trust, a power of sale is given to one or more executors or trustees, it shall be lawful for any such executor or trustee, subject to the approval of the supreme court, to acquire or exchange lands adjacent to the land or lands subject to such power of sale, as may be deemed desirable for the straightening or improvement of the boundary lines thereof, upon such terms and conditions as may be approved by the supreme court; and the supreme court may, by order, on such terms and conditions as seem just and proper, authorize any such executor or trustee to acquire or exchange lands adjacent to the land or lands subject to such power of sale for the purposes. mentioned in this act.

§ 2. This act shall take effect immediately.23

Scope of Section. This section (105) is now substituted for all the prior legislation respecting sales and mortgages by trustees.24

The Old Law. Prior to the Revised Statutes one who had actual notice of a trust could not acquire the property free of the trust without the consent of the cestuis que trustent.25 But with the consent of the cestuis que trustent it was otherwise, until the clause against anticipation was invented and subsequently written in the statute.26 The trustees of an express trust, who had the fee, had at common law all the powers which legal ownership conferred, although in equity the cestuis were the absolute owners.27

Comment. The original of the first subdivision of section 105 of this act introduced a new rule, and, therefore, it applied only prospectively.28 As the object of the new rule was to protect the rights of the beneficiaries of express trusts, persons thereafter dealing with trustees must take notice of this limitation on their

23 Repealed by Real Prop. Law of 1909, § 460, art. 14, chap. 50, Consolidated Laws. See below, § 460.

24 Leases by trustees are the subject of the next two sections of the Real Prop. Law.

25 Shepherd v. McEvers, 4 Johns. Ch. 136; Briggs v. Davis, 20 N. Y. 9, 21; Kirsch v. Tozier, 143 id. at p. 395.

26 Harrington v. Erie County Sav. Bank, 101 N. Y. 257, 264; supra, pp. 476, 497.

27 Lewin, Trusts, 242, 412.

28 1 R. S. 730, § 64; Johnson v. Fleet, 14 Wend. 176, 183; cf. Losey v. Stanley, 147 N. Y. at p. 571.

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power; for, if the act or deed of a trustee is in contravention of the trust, it is void, not voidable.30 But the execution of a power of revocation or appointment conferred by a trust settlement does not contravene this section. A mere exchange or reinvestment is not necessarily in contravention of the trust.31 It is by force of this provision of the statute rendering trust estates inalienable that trust estates now tend to a perpetuity.32 This section (105) applies to express trusts valid as powers as much as to express trusts under the 96th section of this act.33

Effect of this Section on Estates in Remainder. This section authorizes a sale by direction of the court;34 but it does not, however, authorize the sale of the estate of remaindermen, for that estate vests in possession only when the estate of the trustee ceases.35 Estates in remainder of infants may, however, be sold under certain circumstances, pursuant to the Code of Civil Procedure and this

act.36

This Law Not Retroactive. The various amendments to I Revised Statutes, 730, section 65, are not retroactive.37 Prior to the act of 1882, the court did not have the power to enable a trustee to make a mortgage in contravention of an express trust to hold.38 But a mortgage given to preserve the trust property from a forced sale 'was not, even prior to 1882, necessarily in contravention of an express trust to hold an estate.39

29 Johnson v. Fleet, 14 Wend. at p. 183; Briggs v. Davis, 20 N. Y. at p. 21; Losey v. Stanley, 147 id. at p. 571.

30 Powers v. Bergen, 6 N. Y. 358, 360; Briggs v. Davis, 21 id. 574; Smith v. Bowen, 35 id. 83; Fitzgerald v. Topping, 48 id. 438, 444; McPherson v. Rollins, 107 id. 316; U. S. Trust Co. v. Roche, 116 id. 120, 127; Cuthbert v. Chauvet, 136 id. 326; Potter v. Hodgman, 81 App. Div. 233.

31 Hawley v. James, 5 Paige, 444, 445; s. c., 16 Wend. 163, 164; Belmont v. O'Brien, 12 N. Y. 394, 402. 32 Supra, pp. 455, 456; Hillen v. Iselin, 144 N. Y. at p. 379.

33 Russell v. Russell, 36 N. Y. 581, 584.

34 Matter of Asche, 75 App. Div. 486. 35 § 105, supra; Goebel v. Iffla, 48 Hun, 21; affd., 111 N. Y. 170; Matter

of Mills, 22 Misc. Rep. 629; Losey v. Stanley, 147 N. Y. 560, 571; cf. Ebling v. Dryer, 149 id. 460, 28 App. Div. 258; Weir v. Barker, 104 id. 112-118; and 88 67, 71, supra.

36 § 2348, Code Civ. Proc.; Matter of Asch, 75 App. Div. 486; chap. 154, Laws of 1903; §§ 67, 71, supra.

37 United States Trust Co. V. Roche, 116 N. Y. 120.

38 Cruger v. Jones, 18 Barb. 467; Briggs v. Davis, 20 N. Y. 15, 21 id. 574; Rathbone v. Hooney, 58 id. 463; Douglass v. Cruger, 80 id. 15; cf. Taylor v. Porter, Hill, 140; Powers v. Bergen, 6 N. Y. 358; Lytle v. Beveridge, 59 id. 592, 602; Ebling v. Dryer, 149 id. 460.

39 U. S. Trust Co. v. Roche, 116 N. Y. 120; cf. Matter of Nesmith, 149 id. 609; Boon v. Hall, 76 App. Div. 520, 524.

This Section Does not Authorize Sale for Reinvestment. This section of this act does not authorize a sale of a trust estate for the purpose of reinvestment, even though such reinvestment may augment the income of the trust estate.40

Sale to Trustee by Himself. This section does not authorize a proceeding by trustee for permission to convey to himself, so as by indirection to avoid the necessity of a partition action.41

Trustees May Exchange Lands, when. The act of 1898,42 which is now incorporated in the second subdivision of this section [105], authorizes an acquisition or exchange by executors and trustees who have power to sell given them by a deed or by a will. Before that act it was held that a mere exchange or reinvestment was not necessarily in contravention of a trust.43

Disposition of Property of Incompetent Persons. A separate statute provides for the disposition of the real property of infants and other incompetent persons.44

The same statute provides that real property, or an interest in real property, shall not be sold, leased, or mortgaged as prescribed in this title contrary to the provisions of a will by which it was devised, or of a conveyance or other instrument by which it was transferred to the infant or incompetent person.45

Deed from Trustee. A conveyance to " B., trustee," and to his heirs and assigns is simply descriptio persona, and a conveyance from "B., trustee" is sufficient to pass title in this jurisdiction,46 but elsewhere a recorded conveyance to B., trustee simpliciter, is operative as notice of a trust.47

Breaches of Trust. If a trustee contravene the directions of an express trust, either as to investments or otherwise, it is a breach of

40 Matter of Roe, 119 N. Y. 509. 41 Von Glahan v. Heins, 128 App. Div. 167.

42 Chap. 311, Laws of 1898.

43 Hawley v. James, 5 Paige, 444, 445; s. c., 16 Wend. 163, 164; Belmont v. O'Brien, 12 N. Y. 394, 402; Anderson v. Mather, 44 id. 245; and see 33 Barb. 473.

44 88 2348-2356, Code Civ. Proc.; chap. 154, Laws of 1903; cf. §§ 67, 71, Real Prop. Law; Matter of Adderly, 50 Misc. Rep. 189.

45 § 2357, Code Civ. Proc.; cf. 2 R. S. 195, § 6; O'Donoghue v. Boies, 159 N. Y. 87; Livingston v. Livingston, 56 App. Div. 484; Matter of Asch, 75 id. 486; O'Donoghue v. Smith, 184 N. Y. 365; Matter of Adderly, 50 Misc. Rep. 189.

46 Title Guarantee & Trust Co. v. Fallon, 10 App. Div. 187.

47 Sternfels v. Watson, 139 Fed. Rep. 505.

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trust. He must follow the directions of the settlor of the trust.4 Conversely if trustees obey the directions and a loss ensue they are not liable.49 If the instrument is silent concerning investments the statute or some ruling of a court of equity usually prescribes them.50 The general rule of the common law was, that the trustee could invest in real or government securities only.51 But this rule has been modified.52 A trustee may now invest in such securities as a savings bank of this State, or in bonds and mortgages on unincumbered real property worth fifty per cent. more than the loan.53 It is a breach of trust for trustee to profit by use of knowledge acquired as trustee, or by betrayal of confidence reposed in him as trustee.54 He cannot purchase from himself as trustee.55

Acquiescence of Beneficiaries in Breaches of Trust. Even though trus tee commit a breach of trust, if it is at the solicitation of the beneficiaries, or if they acquiesce in it, they will be estopped from questioning it.56

48 Birrell, Duties and Liabilities of Trustees, Lecture IV; Denike v. Harris, 84 N. Y. 89, 94; cf. § 114, infra.

49 2 Pomeroy, Eq. Jurisp. 647; Dunkle v. Butler, 30 Misc. Rep. 58; cf. Matter of Wotton, 59 App. Div. 584, 586.

50 § 21, Personal Prop. Law; King v. Talbot, 40 N. Y. 76; Adair v. Brimmer, 74 id. 539, 550; Matter of Reed, 45 App. Div. 196; Matter of Hall, 48 id. 488; modified, 164 N. Y. 196; Matter of Wotton, 59 App. Div. 584, 586; § 116, Real Prop. Law.

51 Ackerman v. Emott, 4 Barb. 626. 52 Ormiston v. Olcott, 84 N. Y. 339. 53 See 21, Fowler's Pers. Prop. Law of 1909.

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54 Steinbeck v. Bor Homme Mining Co., 152 Fed. Rep. 333; Slater v. Slater, 114 App. Div. 160.

55 Davoue v. Fanning, 2 Johns. Ch. 252; Anderson v. Fry, 123 App. Div. 46, 54; Weintraup v. Siegel, 57 Misc. Rep. 246.

56 Birrell, Duties of Trustees, 118 seq.; Matter of Reed, 45 App. Div. 202; Woodbridge v. Bockes, 59 id. 503, 518; affd., 170 N. Y. 596; Adair v. Brimmer, 74 id. 539, 552; Matter of Hall, 164 id. 196, 201; Byrne v. Jones, 159 Fed. Rep. 321; Blair `v. Cargill, III App. Div. 853; Vohmann v. Michel, 185 N. Y. 420; Bush v. Wright, 118 App. Div. 368; Hine v. Hine, id. 585.

§ 106. When trustee may lease trust property. A trustee appointed to hold real property during the life of a beneficiary, and to pay or apply the rents, income and profits thereof to, or for, the use of such beneficiary, may execute and deliver a lease of such real property for a term not exceeding five years, without application to the court. The supreme court may, by order, on such terms and conditions as seem just and proper, in respect to rental and renewals, authorize such a trustee to lease such real property for a term exceeding five years, if it appears to the satisfaction of the court that it is for the best interest of the trust estate, and may authorize such trustee to covenant in the lease to pay at the end of the term, or renewed term, to the lessee the then fair and reasonable value of any building which may have been erected on the premises during such term. If any such trustee has leased any such trust property before June fourth, eighteen hundred and ninety-five, for a longer term than five years, the supreme court, on the application of such trustee, may, by order, confirm such lease, and such order, on the entry thereof, shall be binding on all persons. interested in the trust estate.

Formerly section 86, Real Property Law of 1896, chapter XLVI, General Laws:

§ 86. When trustee may lease trust property. A trustee appointed to hold real property during the life of a beneficiary, and to pay or apply the rents, income and profits thereof to, or for, the use of such beneficiary, may execute and deliver a lease of such real property for a term not exceeding five years, without application to the court. The supreme court may, by order, on such terms and conditions as seem just and proper, in respect to rental and renewals, authorize such a trustee to lease such real property for a term exceeding five years, if it appears to the satisfaction of the court that it is for the best interest of the trust estate, and may authorize such trustee to covenant in the lease to pay at the end of the term, or renewed term, to the lessee the then fair and reasonable value of any building which may have been erected on the premises during such term. If any such trustee has leased any such trust property before June fourth, eighteen hundred and ninety-five, for a longer term than five years, the supreme court, on the application of such trustee, may, by order, confirm such lease, and such order, on the entry thereof, shall be binding on all persons interested in the trust estate.57

Section 86 was formerly chapter 886, Laws of 1895, printed in full under section 105.58

57 Repealed by Real Prop. Law of

1909,

460, art. 14, chap. 50, Consolidated Laws. See below, § 460.

58 Supra, p. 508