Charles v. Dubose

WALKER, J. In many of the adjudged cases there may be found loose expressions, to the effect that the purchases of trustees are void — that a trustee cannot purchase at Ms own [370] sale, and that a purchase by a trustee will be deemed to have been for the benefit of the cestui que trust; but the point of law actually recognized and decided in most (if not all) of those cases, is, that the purchases of trustees are voidable at the option of the beneficiary. The law is thus laid down in Campbell v. Walker, 5 Vesey, 680: “ Any trustee, purchasing the trust property, is liable to have the purchase set aside, if in any reasonable time the cestui que trust chooses to say he is not satisfied with it; The 'trustee purchases subject to that equity ; that if the cestuisque trust come in a reasonable time, they may call to have the estate resold.” The decisions in the cases of Creagh & Forwood v. Savage, 9 Ala. 959, Andrews v. Hobson, 28 Ala. 219, and McLane v. Spence, 6 Ala. 898, most clearly commit this court to the proposition, that such sales are voidable, and not absolutely void. In Beeson v. Beeson, 9 Penn. State Reports, 279, the English and American authorities are ably and elaborately reviewed', and the conclusion is attained, that the trust sale, at which the trustee purchases, is not, per se, void. To the same effect is the test in Hill on Trustees, 784. While the doctrine, that the purchase by a trustee at his own sale is simply voidable at the election of the beneficiary seasonably expressed, affords all necessary protection to those for whom he is acting, it is consistent with the other recognized doctrines, that the trustee has no right to abandon the purchase, — that its benefits may be claimed, where its maintenance will favor the interest of the cestui que trust; that the court of chancery will uphold the sale, where the beneficiaries have acquiesced for any considerable period ; and that the trustee is entitled to a restoration of the purchase money, and to a reimbursement of money expended in substantial repairs and improvements, where the sale is set aside at the option of the cestui que trust. — Hill on Trustees, marg. pp. 536-9. Where the trustee has sold for an increased price the property purchased by him at his own sale, the, law permits the beneficiaries to treat the sale as having been made for their benefit, and to claim the proceeds. — Cunningham v. Rogers, 14 Ala. 147. This principle is not inconsistent with the law as above laid down, but a legitimate sequence from it. It simply asserts the right of the cestui que trust to avoid [371] the purchase by the trustee, and therefore to regard the subsequent sale by him as a sale of trust property. It is not our purpose to disturb the decisions of this court, in reference to the sales of executors and administrators.— See Andrews v. Hobson, supra, and other cases cited. Subject to the exception indicated in those decisions, an exposition of the law, sound and consistent with authority, is found in the proposition, that the purchase by a trustee at his own sale is simply voidable, at the option of the cestui que trust, seasonably expressed ; and it is totally immaterial, that the trustee has acted with fairness, and made no profit. The election of the beneficiary to avoid the trust sale, may, no doubt, be signified by the bill in chancery which seeks to set it aside. But it follows from the view we have, taken of the law, that the title vests in the trustee, subject however to be defeated ; and by the purchase the property bought is no more trust property, unless the sale be avoided. The complainant desires the sale to be treated as avoided, and the property brought within the cognizance of the court as trust property, notwithstanding the sale. The decrees of the chancery court must be based upon appropriate pleadings ; and the complainant cannot have a decree setting aside the sale, and holding the trustee responsible for the property bought by him, without the proper allegations in his bill. If the purchase by the trustee was made by the consent of the beneficiaries, or has been ratified by them, the sale would be maintained. Such defensive matter the defendant has no opportunity to set up, unless he is informed by appropriate allegations in the bill, that the sale will be assailed. The bill does not assert that there was a sale ; but, on the contrary, denies it. Its language is : “ Your orator further showeth, that he is informed and believes, that said James H. Dubose pretends that he has heretofore sold said property, as trustee as aforesaid, under and by virtue of the deed, and purchased the same at said sale upon his own individual account; but your orator insists, that if such is the case, (which he denies,) the said James H. Dubose bought the same at a grossly inadequate price, and that it would be contrary to equity and good conscience to maintain' the validity of the sal e.” It is no averment of a fact, to say that the complainant [372] was informed that a sale was made. — Jones v. Cowles, 26 Ala. 614; Reid v. Walker, 18 Ala. 332. Hero, the complainant does not even say he was informed that a sale was made, but that he was informed that the defendant so pretended, which complainant denies. The proper test of the complainant’s right to have a decree avoiding the sale and holding the defendant accountable for the property, is to inquire whether, if the defendant had confessed everything in the bill to be true, the court, looking at the bill and the confession of its truth, could have rendered the decree.— 1 Daniell’s Ch. Pl. 425, 412; Pennebacker v. Rochester, 2 A. K. Mar. 315. We do not mean to decide whether, under an application of the above stated test, the complainant could have a decree setting aside the sale, if the bill had simply said that the defendant pretended there had been a sale, and expressed the election of the compainant that the sale should be set aside if it had been made ; but we are unanimously of the opinion, that a decree setting aside a sale, when the complainant denies that there had been a sale, would involve a total disregard of the rules of pleading and evidence which we have stated above, and would be tantamount to granting relief in opposition to the allegations of the bill. The chancellor did not err in declining to set aside the sale. There is, therefore, no error in the decree, prejudicial to the appellant, and it must be affirmed, at his costs. We find upon the transcripta cross assignment of errors by the appellee. There is no consent that we may consider the cross assignment of errors ; nor is there any joinder, from which wé could probably imply the consent.' In the absence of a consent, we cannot pass upon any errors against the appellee. In every case, in which this court has considered errors assigned by the appellee or defendant in error, it has been by consent.