Waldrop v. Leaman

The opinion of the court was delivered by Mr. Chief Justice SimpsoN. Some time in 1866 the defendant, Samuel Leaman, was appointed by the court trustee of a considerable fund bequeathed by one Robert Workman to John D. Williams in trust for his imbecile son, Robert Workman, jr., during his life, to be used for the maintenance and support of his said son as long as he lived, and at his death the remainder to be equally divided amongst the children of the said testator then living, or the child or children of such as be dead, “the child or children taking amongst themselves such part as their parent would be entitled to if living.” Williams was the executor of the will, and to him, as executor, this bequest for the purposes mentioned was given ; and Leaman, by order of the court, was substituted in 1866 in his stead, as stated. Leaman gave bond for the faithful discharge of the trust, with James Bryson, William Leaman, James Bryson, Mary Waldrop, and the said John D. Williams as sureties, and thereupon took charge of the trust fund, which was turned over to him by Williams. Robert Workman, the testator, died in 1857, leaving three children, to wit, W. P. Workman, Mary Waldrop, and the cestui que trust, Robert Workman, jr. W. P. Workman died in 1869 without any child or children, and Mary Waldrop died in 1880, leaving children, to wit, E. E. Waldrop, Emma E. Nance, Mary E. Bryson, the plaintiffs in this action, and Susan Leaman, the wife of the said Samuel Leaman, and also a grandchild, W. Y. Winebrenner, the son of a deceased child. Robert Workman, — 446 — jr., the cestui que trust, died in 1882. Some time in 1881, after the death of Mary Waldrop, and before the death of the cestui que trust, the children of Mary Waldrop, the plaintiffs and defendants here, including the grandson, Winebrenner, and the husbands of the females, in consideration of one thousand dollars to each of said children and to said grandson, by and under seal bargained, sold, assigned, conveyed, and released to the said Samuel Leaman, &c., their entire interest, vested or contingent, in the said trust estate, with the condition that said Leaman was .to continue to support and maintain the cestui que trust as long as he lived, and upon failure to do so the conveyance was to be' null and void. The consideration expressed seems to have been paid, and on October 19, 1882, the deed was recorded in the clerk’s office of the county. The cestui que trust died, as stated, in 1882, and on October 2, 1884, the action below was commenced by E. F. Waldrop, Emma Nance, and her husband, W. D. Nance, Mary E. Bryson, and her husband, J. H. Brj^son, all of whom had signed the deed aforesaid, to vacate the same, on the ground of alleged misrepresentation of material foots concerning the trust estate, fraud, an'd undue influence by the said Samuel Leaman in procuring said deed; and also that the said céstui que trust had not been properly cared for, and for an accounting as if no such deed had ever been executed. The wife of Samuel Leaman, James Leaman, a surviving surety to the bond aforesaid, the executor of John D. Williams and his devisees and legatees were made parties defendants. The main issue in the case was as to the validity of the 1 deed and release, depending upon the testimony as to the alleged misrepresentations, fraud, and undue influence.’ The case was referred to a special referee, Mr. J. F. J. Caldwell, who reported that while there was no actual fraud or purpose on 'the part of the trustee, Leaman, to mislead the other, parties, yet that it did not appear that he had disclosed the true extent or condition of the estate, and it did appear that he had hidden away a portion thereof by having the Waldrop land, which he had purchased in part out of the trust funds, conveyed to his wife; this, with the gross inadequacy between the trust estate and the $5,000 paid to the parties, in his opinion, was suffi — 447 — cient to warrant the setting aside of the deed as to Leaman, the trustee, and that an accounting be had, which he recommended— in the accounting Leaman to have credit for the $5,000 paid, and for any other loss which he may have sustained in compromising and settling notes, &c., due the trust estate, under the impression that he owned them individually after the assignment and transfer above. But he recommended, as to the sureties on Leaman’s trust bond, that the deed should stand, operating as complete discharge to them. This report was confirmed by his honor, Judge Wallace, and from his decree this appeal is before us, the plaintiffs contesting it, because the sureties were held discharged, and the defendant, Leaman, contesting it, because said deed was not held valid as to him. Taking up Leaman’s appeal first. There can be no doubt as to the principles of law and equity governing in these matters of settlement between trustee and cestui que trust, and as to the con7 duct required of the trustee in the management of the trust estate. These principles have been fully and correctly stated in the argument on both sides, and therefore they need no elaboration here. Without referring to authorities or decided eases, of which the books are full, we may say, in brief, that the utmost good faith is required; there must be no suggestio falsi or suppressio veri. There must be no profit made to the trustee in the management of the estate, and all settlements between them must be fairly made, with no concealment, undue influence, or misleading. But at the same time, if the parties are of full age, sui juris, and capable of understanding their rights, with full opportunity of ascertaining them, under no disability, advised as to all the circumstances surrounding the matter, or in a situation, by reasonable and proper diligence, to be thus advised, and they proceed, they must abide the result; and should their action subsequently result in loss, there is no reason, as is said in Murrel v. Murrel, 2 Strob. Eq., 148, “why the Court of Equity, or any other, should be called to protect them from the consequences of their folly.” McDow v. Brown, 2 S. C., 95; Bossard v. White, 9 Rich. Eq., 496. . Now, the law being plain, the question here as to Leaman is mainly a question of fact. The referee found, as matter of fact, — 448 — that there was enough in the conduct of the trustee, in connection with the execution of the deed in question, to demand that it be vacated, and his honor, the Circuit Judge, has confirmed this finding. So that the question of reversal or affirmance of this much of the decree comes before us under the rule often referred to and acted upon, not only by our court, hut by all of the courts where justice and law are properly administered, to wit, such findings must be affirmed and taken as established facts in the case, unless they are clearly without any testimony to support them, or are obviously in conflict with the preponderance of said testimony. We have examined the testimony reported by the referee, with the rule above as our guide, and while we find some testimony to support the finding of the referee, in so far as the plaintiffs, Emma Nance and Mary E. Bryson, are concerned, we do not find any to sustain the finding as to E. F. Waldrop. It seems to us that Waldrop was the prime mover in this whole matter. He sought Leaman and proposed to sell. He took advice from an attorney, and through him examined the records, Leaman’s return, &c., and no doubt had full information as to the amount of the estate and of the solvent character of Lea-man’s bond, and he persisted in having the settlement made. That he was in need of money was not Leaman’s fault, nor is there the slightest evidence that Leaman took advantage of his impecuniosity. He was of full age and intelligent, and made this contract with his eyes open. Under these circumstances, even assuming that it was a foolish one on his part, “there is no reason why this court, or any other, should be called upon to protect him from the consequences of his own folly.” As to the inadequacy of the consideration. It is true, that in the light of subsequent events this looks striking, but is that the way to consider this matter ? Ought not the facts that these plaintiffs had no interest until the death of Robert Workman, jr., and that it depended upon their surviving him whether their interest would be realized — that Robert was stout and robust, and it was not at all certain but that he might out-live them, or some of them, and that Leaman was taking this risk, with the danger of losing all that he had — -be considered? What would have — 449 — been the market value of plaintiffs’ interests, if put up for sale, thus surrounded ? And ought not the inadequacy be looked at from that standpoint ? See 3 Am. & Eng. Ency. Law, 40. So much of the decree as sustains the deed, as a discharge of the defendants’ sureties on Leaman’s bond, we think, must be affirmed. The settlement between the trustee and those other parties was no doubt known. It was placed on record, and the sureties were well warranted in supposing that it was final; they were lulled into a feeling of security, and having no sense of danger, were prevented from even considering the propriety of taking any steps for their protection, which we think was sufficient. See Kirby v. Taylor, 6 Johns. Ch., 242; Aaron v. Mendel, 78 Ky., 427, cited by the referee; Brandt on Sur., sec. 211; Rosborough v. McAliley, 10 S. C., 245; and Motes v. Madden, 14 S. C., 488. Our conclusion leads to the result, that the judgment below should be affirmed as to the plaintiff’s, Emma Nance and husband, William D. Nance, and as to Mary E. Bryson and husband, J. H. Bryson, and as to the defendants, William Leaman, James W. Watts, as executor of John D. Williams, deceased, and the devisees and legatees of said Williams ; but that it be reversed as to E. E. Waldrop, the deed in question standing good as to him. And that an accounting should be had de novo, the trustee being entitled to a credit of the $5,000 paid out by him under the settlement to the successful parties and also to the liberal suggestion made by the referee in regard to any compromises or collections made by him of the notes, &c., due the estate since the execution of the deed. The other questions raised in the appeal, it seems to us, need not now be considered, in view of the conclusion reached on the question above. I think that the judgment of the Circuit Court should be affirmed, except so far as E. E. Waldrop is concerned, and that as to him it should be reversed, and that the case be remanded for such further proceeding as may be necessary to carry out the views herein above announced. My brethren, however, do not concur as to Waldrop. They are of opinion that the judgment below should be affirmed as a whole, and in accordance therewith, — 450 — It is tbe judgment of this court, that the judgment of the Circuit Court be affirmed.