Saltmarsh v. Beene

COLLIER, J. — This cause comes up by appeal from the Equity .side of the Circuit Court cf Dallas County. From the record we learn that the plaintiff here,together with two other individuals, were appointed commissioners, by the judge of tho County Court of that County, to sell at public auction the real estate of Thomas Ewing, deceased. That both the plaintiff and defendant being desirous to purchase, the one the west and the other the east half of a quarter section of land, belonging to the estate, on the day of, and imm'ediately preceding the sale they agreed in writing to purchase the quarter section, and divide it by assigning each to the other, the part respectively stipulated for in their agreement. At the commissioners’ sale,"Beene became the purchaser, complied with the terms of sale, and received a deed, executed by all the commissioners. After-wards, being called upon to execute his contract, by making a deed for the west half, to the plaintiff, he refused to do so, but with a reservation of a right of way through the same. The plaintiff declining to yield to this requisition, the defendant brought an ac-' tion at law, to eject him from the possession, which he had before acquired. And (hereupon the plaintiff filed his bill to enjoin a trial at law, and to compel the defendant to perform his contract by executing a deed. The argument of this cause has taken a wide — 291 — range, and many questions have been discussed, the consideration of which is rendered unnecessary by the view we .shall take of it. The first question which naturally presents itself, is this — has the plaintiff acquired a right, by his contract with'the defendant, which a Court of equity will regard and protect 1 This must depend upon his right to purchase at the commissioners’ sale. By the civil law, the same person cannot be both buyer and seller; “ because, if he were permitted to be the purchaser, his duty and his interest would stand in direct opposition : for, as the representative of the owner, it would be his duty to bargain for the highest price, while, as purchaser, it would he his interest to give the lowest.” For these reasons, and to guard against frauds, which, in many instances would be beyond human detection, that law inhibited purchases by persons thus circumstanced. This rule of the civil law is practised upon in our Courts of Equity, and applied to trustees, agents, and generally to all persons who have been employed in a confidential character in relation to property. Whichcote vs Lawrence;* Campbell vs Walker ;† Lister vs Lister,‡ Green vs Winter;§ Crow vs Ballard;|| Lord Hardwick vs Vernon;¶ Ex parte Reynolds;** Ex parte Lacey;†† Owen vs Foulkes;‡‡ Ex parte James;§§ Pankist vs Alexander.|||| And it is immaterial, whether the sale be made privately or at public auction, the reason of the rule is as strong in the one case as the other; though the chances for detection would be more favorable in the latter, than the former, if any unfairness were — 292 — practiced by the purchaser. See the case of the York Buildings Company vs M’Kenzic* ° M ^ Nor does it make any difference though there be a plurality of trustees. — -A sale by one trustee to his co-trustee, is illegal. — Ringold et al. vs Ringold et al.† Each owes to his situation the same duty that ail do., and is, therefore not permitted to do any acs which may tempt him from its honest performance, or give him an interest adverse to his constituent. It is a well established rule of law, that a man can not do, indirectly, ¡hot which it is unlawful to do, directly. If, then, the plaintiff could not have purchased at the commissioners’ sale, (of which we have no doubt,) it was certainly incompetent for him to have purchased through the agency of the defendant. Such a purchase is obnoxious to every objection that could be urged against a purchase by the plaintiff, directly, with a force increased, by the increased difficulty of detecting any unfairness in the sale. While a trustee is restrained from purchasing at a sale made by himself, in that character, either personally, or through the intervention of an agent, he can not, at. such sale, become the agent of a purchaser.‡ Ex ' parte n ,. c* Bennett.§ The doctrine as to purchases by agents or persons exercising a confidential character, is founded rather upon general principles, than upon a state of facts as applicable to any particular case. In ex parte James,|| it was decided that the purchase was not permitted in any case, however honest the circumstances; the general interests of justice requiring it to be destroyed in every instance — no Court being equal to the investigation and ascertainment of — 293 — the truth in mwh the greater number of cases .HkLord Rosslyn was of an opinion, that to authorise'the sale to be set aside, it should be shewn that the agent or trustee had gained an advantage by the purchase-# Whichcote vs. Lawrence.*' But the correctness o,f Lord Rosslyn’s opinion is denied by Lord Eldon, in the cases of ex parte James and ex parte Bennett, already cited. And the true rule now recognised in the Courts of Chancery, both in England and this country, is that laid down in Lord Ahanley, in Campbell vs Walker,† that a trustee purchasing the trust property, is liable to have the purchase set aside, if in any reasonable time thereafter, the cestui que trust makes known his dissatisfaction.‡ If the general interests of justice inhibit the purchase of the trust property by the trustee, eitber by himself or an agent, it follows necessarily that he cannot purchase jointly with another. The plaintiff, by whatever name he may be technically designated, must be regarded in equity, as a trustee, subject to all the 'rules of law that, are applicable to purchases made by individuals standing in that character. And a purchase made by the defendant for the joint benefit of himself and the plaintiff, may be considered as if made by the plaintiff himself, if it were necessary. If a trustee purchases the trust property, and receives the proper evidences of title, his title will prevail against all strangers, and he may re-claim the property if dispossessed, or may maintain an action for any injury it sustains. But he cannot enforce a contract entered into, in contemplation of a purchase which is subsequently made. The policy of the law forbids the — 294 — trustee from speculating upon the confidence reposed in him; and by removing temptation makes him incapable of doing so ; and equity can never enforce a contract, denounced by the policy of the law, the more especially when the public interest does not demand relief. In treating of agreements in fraud of the policy of the law, Mr. Justice Story, in his Treatise on Equity, says: “ In general, (for it is not universally true,) where parties are concerned in illegal agreements or other transactions, whether they are mala prohibila, or mala in se, Courts of Equity, following the rule of law, as to participators in a common crime, will not, at present, interpose to grant any relief — upon the known maxim in pari delicto potior est conditio de-fendentis et possidentis.” The exceptions to the general rule, are found to be cases where the public interest would be promoted by granting relief: and then it is given to the public through the party. As coming within the exception, may he enumerated contracts violative of the laws to prevent usury, gaming, &c. There, the policy of the State demands relief. The learned author just cited remarks — “ The old cases often gave relief, both at Law and in Equity, where the party would otherwise derive an advantage from his iniquity: but the modern doctrine has adopted a more severely just, and probably politic and moral rule, which is to leave the parties where it finds them, giving no relief, and no countenance to claims of this sort.”* To the same • effect are Carrington vs Caller, and Holder vs Meggi 4. son. † Influenced.by these considerations, we are brought — 295 — to the conclusion that it is incompetent for equity to enforce the performance of the agreement set up by the bill, and must therefore leave the plaintiff, in the language of a very great Judge, to “ a sole reliance upon personal honor.” In attaining this conclusion, we have not thought it necessary to consider the discretionary power exercised by Courts of Equity, upon applications for the specific performance of contracts, but have placed our decision upon the ground of the invalidity of the agreement. In the case of Brannan, et al. vs Oliver,* in some of the reasoning employed in favor of the right of an administrator to purchase at a sale of the intestate’s •estate, the Court may seem to countenance the right of every description of trustee to purchase the property of his cestui que trusty when sold under an order of Court, and at public auction. But the grave-men of the argument employed, is this, that it was a practice of long continuance in this State, for executors and administrators to purchase at sales of the estates they represented, and that incalculable injury would result from a decision in opposition to that practice. And further, that the widow or some near relative was most usually the personal representative, and solicitous to purchase some portion of the estate, and unless allowed to do so directly, would procure some third person to become the purchaser, under such circumstances as to prevent detection, and procure through him the ownership. Neither of which reasons, have any application to one circumstanced as the plaintiff. So much as was said in that case, touching sales at auction under the order and su — 296 — pervision of a Court, was intended not to justify a departure from the strict rule ; but. to shew that a departure,to which we were forced, in order to prevent tne unsettling of titles and consequent litigation, was the less to be regretted in such a case; the opportunities for the detection of fraud being more favorable than where the sale was private. It may be very well to remark further in regard to that case, that it does not determine the right of all administrators and executors to purchase, hut only such as have an interest coupled with the trust. It is not pretended that the plaintiffs’ was more than a naked trust The decree is affirmed. GOLDTHWAITE, J., not sitting, Footnotes [*] 3 Ves. jr. 740. [†] 5 Ves. jr. 678. [‡] 6^. 631. [§] lJohn.Ch Rep. 27. [||] 3Bro.C.G 117. [¶] T4Ves. jr. 411. [**] 6 ib. 707 [††] 6 ib. 625 [‡‡] ib.630n [§§] 8ib.337 [||||] Hill Johns. Ch.R.394 collected. Vide also, 1 Story’s Equity, 317, 18, and 19, and the cases there [*] 8Bro Pari 42 ’T Ed. ’ [†] ti Har.& ‘ ’ ’ [‡] 1 lív. on Agen. 425 §ioves.ji-381‘ [||] ñs Ves.jr. ,345‘ [*] 530Vesdr’ [†] 5ib. eso [‡] kipmjs forred ,0- [*] 1 story’s and ’8, and CctSGS cited in notes, [†] Í2 Stewart. 175. [*] 2 Stewart 47'