Hendee v. Cleaveland

The opinion of the court was delivered by Powers, J. Mandamus is a proper remedy to cori’ect the records of the Probate Court in accordance with the facts. The case then stands for consideration as it would if the probate records disclosed the facts sought to be shown by parol. The defendant while guardian, under the statute, of the plaintiff’s wards, without any license from the Px-obate Court undertook to sell to his wards certain real estate of his own ; and in this accounting asks to be allowed for the same, against the protest of the wards or their legal representative, at the price he fixed when he made his conveyance. The defendant justifies his claim on tixe ground of his good faith in the transaction, and the action of the Probate Court taken two or three years after the conveyance, which he claims ratifies his action. A guardian in respect to his wards’ estate stands in the position [148] of a trustee, answerable to his wards for all advantage made by or through the estate ; and accountable for all waste or deterioration traceable to his default. He may handle the fund as it comes to him in any prudent manner that will make income, short of changing its character from personal to real property, or vice versa. He may thus change its character only by the license of the Probate Court. But the license of the Probate Court merely confers upon the guardian the power to invest the personal fund in real estate. It does not authorize any particular investment; but gives the right to make an investment. Armed with such license, the guardian is guided by his own discretion, respecting the investment he will make, subject, in the exercise of this discretion, to the peril of having his action reviewed by his wards when they come of age. It is doubtless, true, that a subsequent confirmation by the court of a precedent act done without authority, is equivalent to a delegation of power to do the act. The action of the Probate Court in March, 1876, professing to give the defendant authority to invest his wards’ funds in real estate, was in no sense a confirmation of his previous unauthorized investment. The notice of the application contemplated a prospective investment; and the court could act only upon the application as made. Parties interested had the right to assume that the action of the court would be in keeping with the tenor of the application, and would have no cause to understand that a previous default would be justified. But if the Probate Court upon a proper application for the purpose, duly advertised, had by formal decree ratified the defendant’s act in selling his own property to his wards, it would be no protection to him in this accounting. A guardian cannot deal with himself. In selling his own property to his wards he has an interest to get the largest price, while as guardian, acting for the interest of his wards, it is his duty to get the property at the lowest price. There is thus an irrepressible conflict between duty and interest; and all experience teaches what the inevitable result must be. This rule is so unbending that courts will not listen to proof that the guardian actually [149] gained no advantage. The rule does not rest upon any theory that wrong doing in fact has taken place ; but upon the broad ground of public policy that shuts the door against temptation, by forbidding the act. In Wormley v. Wormley, 8 Wheaton, 421, Judge Story says : “ No rule is better settled than that a trustee cannot become a purchaser of the trust estate. He cannot be at once vendor and vendee. He cannot represent in himself two opposite and conflicting interests, .... and the law has wisely prohibited any person from assuming such dangerous and incompatible characters.” And'in the leading case, in the same court, Michoud v. Girod, 4 Howard, 503, in which the English and American cases, as well as the civil law on the subject, are exhaustively reviewed, Justice Wayne tersely epitomized the rule and the reasons for it as follows: “ The general rule stands upon one great moral obligation to refrain from placing ourselves in relations which ordinarily excite a conflict between self-interest and integrity. It restrains all agents, public and. private; but the value of the prohibition is most felt, and its application is more frequent, in the private relations in which the vendor and purchaser may stand towards each other. The disability to purchase is a consequence of that relation between them which imposes on the one a duty to protect the interest of the other, from the faithful discharge of which duty his own personal interest may withdraw him. In this conflict of interest, the law wisely interposes. It acts not on the possibility, that, in some cases, the sense of that duty may prevail over the motives of self-interest, but it provides against the probability in many cases, and the danger in all cases, that the dictates of self-interest will exercise a predominant influence, and supersede that of duty. It, therefore, prohibits a party from purchasing on his own account that which his duty or trust requires him to sell on account of another, and from purchasing on account of another that which he sells on his own account. In effect, he is not allowed to unite the two opposite characters of buyer and seller, because his interests when he is the seller or buyer on his own account, are directly conflicting with those of the person on whose account he buys or sells.” [150] In Davone v. Fanning, 2 Johnson’s Chan. 252, Chancellor Kent, in a critical review of the authorities, lays down the same doctrine. The latter case was decided in 1816, and since that date the rule as there laid down has been rigorously adhered to by all the courts in this country. The investment of the defendant, however, though unauthorized and invalid, might be accepted by the wards at their election on coming of age, or they might ignore it and claim their money. The present guardian elects for them to take the latter course. The Probate Court, therefore, properly charged the defendant the $3200 invested in the tenement house. The item of $532.93 charged to defendant as interest upon the sum of $1400, invested in real estate without license, is a proper charge against the defendant. The wards may disregard this investment and claim their money with interest. There was no error in the judgment of the County Court, confirming the action of the Probate Court, and the same is affirmed; and it is ordered that this judgment be certified to the Probate Court.