This section is from the book "The Law Of Real Property and Other Interests In Land", by Herbert Thorn Dike Tiffany. Also available from Amazon: A Treatise on the Modern Law of Real Property and Other Interests in Land .
Equity will intervene to prevent a fraud upon a power, as it is termed, this consisting of the execution of a special power by the donee thereof with an ulterior purpose on his part not within the intention of the creator of the power. The word "fraud," as used in this connection, does not involve the idea of defrauding other persons, though such may frequently be its effect. It refers merely to the fact that advantage is sought to be taken of the power, by
Thrasher v. Ballard, 35 W. Va. 524, 14 S. E. 282. See Herrick v. Fowler, 108 Tenn. 410, 67 S. W. 861.
10. St. 1 Wm. IV c. 46 (A. D. 1830).
11. See Gainsford v. Dunn, L. R. 17 Eq. 405, for remarks by
Jessel M. R. criticizing this statute.
12. 37 & 38 Vict. c. 37, Sec. 1 (A. D. 1874).
13. Ante, Sec. 320, note 67.
14. 1 Stimson's Amer. Stat Law, Sec. 1658; New York Real Prop. Law Sec. 138.
There has been decided to be a fraud on the power when one having power to appoint among a class exercised the power in favor of one member of the class in consideration of a pecuniary consideration15 and likewise when the donee appointed to a child who was ill, and likely to die, in order that he might himself inherit what the child received.16 And the execution of a power was set aside when it was in favor of the donee's son in order that the son might be able to furnish security for the father.17
An appointment under a power may be a fraud thereon, although the donee intends no benefit to himself; as when it is made in pursuance of an antecedent agreement that the appointee shall transfer some interest in what he receives to a person or persons not objects of the power;18 or when it is made in a particuIt has been suggested that any court not bound by precedent on the subject should adopt this view even in the absence of a statutory provision, as was done in England on an appeal from Lower Canada. See remarks of Professor John C. Gray, 25 Harv. Law Ruv. at p. 27, citing McGibbon v. Abbott, 10 App. Cas. 653.
15. Budington v. Munson, 33 Conn. 481; Beatson v. Bowers, 174 Ind. 601, 91 N. E 922; Degman v. Degman, 98 Ky. 717, 34 S. W. 523; Holt v. Hogan, 58 N. Car. 82; Shank v. Dewitt, 44 Ohio St. 237, 6 N. E. 255.
16. Wellesley v. Mornington, 2 Kay & J. 143.
17. Bostick v. Winton, 1 Sneed (Tenn.) 524.
18. Farwcll, Powers, 474; Bir-ley v. Birley, 25 Beav. 299. See Horn v. Sayer, 184 111. App. 236. But an appointment is not invalid because the appointee immediately, even by the same instrument, makes a settlement of the appointed property on a person not an object of the power Ibid. And see, apparently to this efect, Glenn v. Glenn, 21 S. Car. 308.
Cases of fraud upon a power may arise in connection with powers of sale given for some particular purpose, as for support, it being in effect a fraud on the power if a sale is made, purporting to be a sale under the power, but not actually for the purpose for which the power was given.22 And there is what might be regarded as a fraud on a power of sale when there is a merely colorable sale, or the donee of the power is the purchaser as well as the seller.23 As there is if the donee is in terms given a right to exercise his judgment as to making a sale, and he fails to exercise his judgment in good faith.24 Likewise a power in terms to dispose of land may be such as to authorize a sale and not a gift, and a gift might be regarded as a fraud on the power.25 Ordinarily, however, such
19. D'Abbadie v. Bizoin, 5 Ir. Rep. Eq. 205.
20. Top-bam v. Portland, 1 De G. J. & S. 517, 11 H. L. Cas. 32.
21. Far well, Powers, 484; Leake, Prop, in Land, 432; Top-ham v. Duke of Portland, 5 Ch. App. 57; McCamant v. Nickolls, 85 Va. 331, 12 S. E. 160. See Fronty v. Godard, 1 Bailey Eq. (S. C.) 517; Hill v. Jon's, 65 Ala. 214; Hamilton v. Mound City Mut. Life Ins. Co., 6 Lea (Tenn.) 402.
22. Fleming v. Mills, 182 111. 464, 55 N E. 373; Griffin v. Griffin, 141 111. 373, 31 N. E. 131; nature of a trust, enforceable in favor of the objects of the power, the English courts have frequently implied a gift to such objects in default of appointment,27 and a like view appears to have been occasionally taken in this country.28 Whether such a gift he implied, or the power regarded as one in trust for the class named, seems to be immaterial as regards results.29 No gift can so be implied in case there is an express gift over in default of appointment.30
Hutchinson v. Cole, 6 R. I. 314. See ante, Sec. 324, note 80.
23. Wormley v. Wormley, 8 Wheat. (U. S.) 421, 5 L Ed. 651; Harty v. Doyle, 49 Hun .410, 3 N. Y. Supp. 574; Taylor v. Haskell, 178 Pa. 106, 35 Atl. 732; Middle-ton v. Bower, 75 W. Va. 187, 83 S. E. 723.
24. Stocker v. Foster, 178 Mass. 591, 60 N. E. 407; Penniman v. Sanderson, 13 Allen (Mass.) 193; Baird v. Boucher, 60 Miss. 326.
25. See Henderson v. Blackburn, 104 111. 227, 44 Am. Rep. 780; Huston v. Craighead, 23 Ohio
[Sec. 330 cases are treated by the courts as involving, not a fraud upon the power, but merely an improper exercise of the power, that is, an execution not within the scope of the power.
That there was a fraud on the power in the exercise thereof cannot ordinarily be asserted as against a bona fide purchaser for value claiming under the power.26