Hull v. Pace

Ellison, J. This is an action for an alleged balance of about $2,000, due on a note executed by defendant for the sum of $7,000. Plaintiff prevailed in the trial court. The action grows out of the following facts: Defendant executed to one Timothy B. Sweet, as trustee, his deed, whereby he conveyed to said Sweet certain real estate in Bates county, Missouri, in trust to secure the payment of said note. The trust deed named Ueorge M. Noble to be successor to said Sweet, in the event Sweet became disqualified, or refused to act as trustee. The deed also provided that in case of the death, absence, inability, or refusal to act, of both Sweet and Noble, then any attorney of record residing in the state of Missouri, whom the holder might, in writing, appoint, should become, on such appointment, the successor in trust to the trustee named in the deed of trust, with like powers and authority. Sweet and Noble each refused to act as trustee and this plaintiff, as the holder of the note, duly appointed H. C. Flower, an attorney of record in the state of Missouri, to act as trustee, under the provisions of the trust deed. The note being past due and unpaid, Flower, under the direction of plaintiff, proceeded to foreclose the [121] deed of trust by a sale, as therein provided. At this sale different bids were made for the property. Among them was a bid from a person abundantly solvent, who had the cash ready to pay his bid in case he got the property. This bid amounted to more than the debt ■and costs. But another bidder present at the sale made a higher bid than the one just referred to and Elower, the trustee, declared the property sold to him. It does not appear that the trustee made any inquiry or effort to ascertain before the crowd at the sale dispersed, if this purchaser could pay the amount of his bid. During the remainder of the day, the trustee ascertained that the bidder was not able to pay the amount of his bid that day; and, it seems, after getting from him $102.50, entered into an arrangement with him, whereby he should pay the next day, at Kansas City, a sum sufficient to make $300. At Kansas City, the next day, $87.20 was paid. Nothing more seems to have been paid. The trustee waited along on the broken promises of the bidder for two or three months, and he still not paying his bid, the trustee re-advertised and resold the property. At this last sale the property was sold for about $2,000 less than the debt, and it is for this sum this action is brought, as stated at the outset. It will be noticed that at the first sale there was a solvent and responsible bidder who bid more than the debt. In disposing of this case, we shall assume, for the purposes of this opinion, that the trustee abused his trust in his conduct at and after the first sale. His course with the bidder, for the purposes of this opinion, we shall assume was lenient and neglectful. The question then is, can the holder of the note be made to suffer the consequences resulting from such conduct on the part of the trustee? We have concluded that he can not. By appointment of the holder of the note, [122] the trustee succeeded to all the powers and duties of the original trustee. His appointment was authorized by the defendant in his trust deed. Cloud v. Kansas Loan Co., 52 Mo. App. 318. He became, by virtue of his trusteeship, the agent of both parties. Sherwood v. Saxton, 63 Mo. 78; Chesley v. Chesley, 49 Mo. 540; Carter v. Abshire, 48 Mo. 302. His duty was fidelity to both the holder and maker of the note.In all matters connected with a foreclosure of the trust deed, he owed to each a reasonable .discretion, to be exercised in the interest of each, in such way as not to unduly jeopardize the interests of either, within the terms of the instrument under which he was acting in their behalf.' And he is responsible to either who may suffer in consequence of his abuse of his trust. 2 Perry on Trusts, sec. 770; Pechel v. Fotoler, 2 Anst. 550. But neither of them is responsible to the other for his wrongful conduct. This was held in a case in point (the only one I have been able to find) by the supreme court of Texas. The court in that case said: “In accepting the deed of trust, he (the creditor) doubtless, assumes some new obligations; but so long as he discharges those obligations, he is not responsible for the negligence or mismanagement of the trustee. If he procures or connives at such negligence and mismanagement, they may well be imputed to him as his own. But the proposition that the trustee is the agent of the creditor in such a way as to make the creditor responsible for the trustee’s want of diligence, is one to which we do not assent.” Murrell v. Scott, 51 Texas, 520. Since he is the offspring of both, being appointed by one and accepted by the other, his duties pertaining to the interest of each and his relations to each being the same, he cannot be held, in the respect here considered, to be the separate agent of either. And the only principle upon which the holder could be held [123] liable to the maker for the wrongful conduct of the trustee would be that of agency; that is, that the holder had constituted the trustee his agent in the matter complained of, but, in most instances, where the trustee acts, he is representing both parties. The matter complained of in-this case was matter which arose under his appointment by joint principals. He was not assuming to- act solely for the holder. Being the agent of both, one is no more responsible for his conduct than the other. We have not been cited by counsel on either side to any authority which we consider applicable to the question. The bearing of those cited is too remote to be of any value. Among others, are some to the effect that the trustee is liable to the beneficiary for damages resulting from a breach of trust; but that is far from saying that the beneficiary is liable to the holder for the trustee’s conduct. Where the mortgagee is clothed with power of sale, as is frequently the case, he is then not only a beneficiary, but a trustee as well, and if he abuses his trust, he is liable to the maker for resulting damage, and so, as we have seen, would the trustee who is appointed by both parties. Lowelt v. North, 4 Minn. 32; Sabin v. Stickney, 9 Vt. 155; Howard v. Ames, 3 Met. 308. After a careful consideration of this case, we have arrived at the conclusion that the defense is not well taken and hence we affirm the judgment. All concur.