Hayward v. Ellis

Putnam J. delivered the opinion of the Court. We have had occasion to consider and declare the law relating to the purchase of estate by executors, administrators, trustees &c., within a few years. In Jennison v. Hapgood, 7 Pick. 8, determined in 1823, it is declared, that ‘‘ the law will not permit one to buy an estate, which he was entrusted to sell, in such manner as to make any profit or benefit to himself. It is not strictly true that the trustee may not purchase ; in other words, the purchase is not merely void. If the cestui que trust should acquiesce in the sale, he would be bound ; but if he dissents in a reasonable time, the trustee will be considered as holding for the benefit of the cestui que trust. A court of chancery would have power to do justice in such a case, either by compelling a reconveyance, or the payment of the excess as ascertained by a second sale.” u In Fox v. M'Creth, the defendant was held to account for the difference between the purchase and resale ; but it was a case strongly marked with gross fraud.” These principles have a direct application to the case before us, and we had hoped that after that decision, executors, administrators, guardians and trustees would not have become purchasers, even with good intentions. We are satisfied that the rule, as one of public policy, is beneficial, and perhaps there are few cases which would lead more strongly to that opinion, than the one now under consideration. We have seen in the verdict between the same parties, that the jury have found that the appellant Hayward unfaithfully conducted himself in regard to his trust and duty. Now in the case before us, Hayward became the purchaser of the estate of the ward, through an agent. We regret that it does not appear that he adopted that course with a view to the benefit of the cestui que trust, as we have no doubt has been frequently done by trustees. If that appeared, this Court would, in the adjustment of the accounts, endeavour to give relief with as little damage to the party who had mistaken his rights, as would be consistent with the just claims of the cestui que trust [277] Now the guardians at this sale should have endeavoured to obtain the best price. It is proved that there was a bidding by some one at the auction, of more money than the agent for the guardian bid. The guardian was the auctioneer. A dispute arose concerning the bidding. There was .another offer. It was said that the other bidding was not in season, and the question was left to the auctioneer to determine. If the dispute haJ been between two strangers who were adversely bidding, and the auctioneer had been disinterested, the reference to him would have been common and fair. If the party claiming the purchase should have waived his right, the sale would have proceeded upon the advanced bidding. Now the reason, why sales by executors, administrators &c., to their agents, are to be maintained, is, that they acted bond fide, with the intent to obtain the most for those concerned in the estate. It is upon that ground that such sales are not held to be merely void. It frequently has happened, that the bidding by an agent for the account of the executor, administrator, &c. who acts honestly, is greatly advantageous to the cestui que trust. But in the case at bar the conduct of the guardian was sinister, adverse and disadvantageous to his ward. He was bound by his duty and oath to obtain the best price ; and at the time of the sale a better price was offered. The guardian, acting fairly, should have waived his right to his bidding, in favor of the party claiming to offer more, so long as any question could be made about it. But he determined in favor of his agent and against his ward. He might not have done so, if he had not been (perhaps unconsciously) influenced by an adverse interest in his own favor. If that bidding had been allowed, other and greater offers might have followed, and the full value of the estate might have been obtained. Again, the land was put up by estimation or measurement, at the election of the purchaser, to be made at the time of *he sale. The agent then made no election to have the land measured, and certainly should have been held to pay according to the estimate. But the measure is ascertained after the sale and the price reduced. In this matter, it is not reasonable to suppose, that if the guardian had been acting exclusively for his ward, there would have been such a course pursued in this particular. [278] There are various other circumstances which the counsel for the appellees have urged, and not without reason, tending to show that the guardians have conducted themselves with sinister motives, upon which we need not remark. The Court are to determine how this account shall be adjusted. The guardians are content to credit the amount which the agent bid at the auction. The appellees claim the amount for which the guardians resold the estate ; and the judge has allowed it. Upon the facts proved we are of opinion that there was a resale. There has been no acquiescence on the part of the cestui que trust. It is denied that the sale to Leach and Sturtevant was completed. It is true the deed from the guardians to them is not on record, and was in their power after it was given ; but it is replied, that it was obtained from the grantees for a particular purpose only, viz. to be used at the probate court; and it is proved that the grantees remain to this day in the possession of the estate. We think it should be treated as a resale of the property by the guardians. And we do not think there are any equitable considerations which should induce the Court to have the estate sold again, if the guardians have in fact rescinded the sale to Leach and Sturtevant. The rule laid down in Jennison v. Hapgood is, that the trustee shall not buy in such manner as to make any profit to himself. It may be that the estate has fallen in value ; but we are, under all the circumstances, satisfied, that the guardians are bound to account for the amount for which they sold the estate to Leach and Sturtevant. This is the main question. There are others which the Court have considered, and will decide without sending the case to auditors. It is contended for the appellees, that large sums of interest have been allowed by the judge to the guardians. We think the allowance was properly made. It is not like the adminis tration of the estate of an intestate. But the guardians were to make disbursements. They might have hired the money, and if they advanced it properly, we think they should have the interest. [279] It is also said the judge of probate has erred in allowing to the guardians 25 dollars which they paid to Warren for his agency. Now we think that was right, and upon this principle. The cestui que trust affirms the doings of the guardians. He calls for an account of what they have received. Of course he is to make the allowances for money paid and services rendered by which the sale was effected. Quoad, hoc, the guardians are to be considered as the authorized agents of the cestui que trust. And the same remark applies to the allowance for compensation for personal services. It cannot be said by the appellees that they were of no benefit. The guardians have effected a sale of the estate for as much as it is worth, we may presume, or the appellees would consent to take it back. The guardians should be paid ; and the allowance made by the judge is not deemed by the counsel for the appellees to be too great, if any allowance should be made for their services. And without more particularly stating the items and reasons, we are all of opinion that the decree ofs. the judge of probate should be confirmed, and that the papers be remitted to the probate court for further proceedings conformably to this decree.