Puzey v. Senier

By the Court, Cole, J. It is not denied that Allan Me Donald and Alfred Senier, by the ante-nuptial settlement of November 20th, 1855, took upon themselves the duties of trustees of Mrs. Puzey’s property, vested in them by that, settlement; and of course thereby became subject to all the obligations which the trust relation imposed upon them. Neither has it been questioned that, as a general rule, the trustee cannot purchase the trust property, and that the policy of the law is to shut the door against temptation, and prevent a man from acting in a case where interest will directly conflict with duty, as it would in buying property under such circumstances. It is true in certain cases the trustee has been permitted to buy the trust property, but it is the language of all the authorities that such a transaction is always scrutinized in a court of equity with a watchful and jealous eye, and will not be sustained to the disadvantage of the cestui que trust, except upon the most complete and satisfactory evidence of good faith and fair dealing on the part of the trustee, 1 Story Eq. Jur., § 321; Willard’s Equity, [377] 187; Stuart vs. Kissam, 2. Barb., Sup. Ct. R., 494; Davoue vs. Fanning, 2 J. C. R., 252 ; Gibson vs. Jeyes, 6 Ves., Jr., 266. The rule and the policy of it is laid down with so much clearness and sound reasoning in the above authorities that nothing further need be added upon that point. Applying this wholesome and well settled doctrine to the facts and circumstances of this case, and what follows? Clearly, as it seems to us, that the judgment of the circuit court is right, and must be affirmed. Without going into any minute examination of the testimony, we will merely say that it shows, conclusively, to our minds, that Senier obtained the trust property for an entirely inadequate and insufficient consideration. He knew previously what Mrs. Puzey’s property was worth; and it was difficult to believe that he supposed he was paying a full and fair value for it. He must have known better and been fully aware that the bargain was a very improvident one for Mrs. Puzey, even admitting that she was consulted about the terms of the sale, and fully consented to them. She was, undoubtedly, importuned by her husband to make the trade. But it was certainly the duty of both Senier and Allan McDonald to watch over her interests, and warn her against a bad bargain. This was the duty which the law imposed upon them, and which the relation between them and Mrs. Puzey required. It is immaterial to inquire what would have been the rights and powers of Mrs. Puzey over her property, under the act or February, 1850, passed for the more effectual protection of married women, if the ante-nuptial settlement had not been made; whether she would have had the unlimited power of alienation as incident to the right of property under that law and could have purchased Senier’s goods, drugs, store, &c., is a question not now before us. It is sufficient to say that here a valid ante-nuptial settlement was made, by [378] which- her property was vested in Allan McDonald and Senier, for certain purposes; that a trust was created and the the trustees assumed the trust. That being so, they are subject to all the conditions of this relation. They could not by any management or trading among themselves obtain her property without a fair equivalent. That they did overreach her and gain a great advantage in the disposition and sale of her property, satisfactorily appears from the evidence in the case. It was insisted by the counsel for the appellants that it would be a great violation of justice and equity, to permit the respondent to repudiate a sale of the trust property to the trustee made, as is contended, in good faith, after the respondent had received full consideration for such sale, without restoring to the trustee the consideration received. We have already indicated pretty clearly our notions in respect to this transaction, and stated that the evidence showed that the trustees obtained an undue advantage over the respondent in the trade which was made; and that their conduct in this matter was not fair and honest. Within the authorities this is a sufficient circumstance to invalidate the sale. It appears that Senier sold his goods, drugs, &c., to Allan McDonald, and the witnesses testify that it was the understanding that Mrs. Puzey was to have an equal interest with McDonald in the purchase and in the profits; but McDonald carried on the business in his own name and controlled the affairs and received most of the proceeds of the property. That Puzey and his wife might have received some portion of the proceeds of Senier’s property is quité probable; but it must have been a very inconsiderable part thereof. This whole matter seems to have resulted only to the mutual advantage of the two trustees, and in the entire sacrifice of Mrs. Puzey’s property. If she has in any manner been benefited by the trade, it is difficult to see how, or [379] to determine what part of the consideration, if any, she has received. We are of the opinion that the judgment of the circuit court does substantial justice in the premises, and should be affirmed. .