Sorrels v. Childers

Wood, J., (after stating the facts). (1) The contention of counsel for appellant is shown in the concluding portion of his brief, wherein he says that, “Had Sisney foreclosed the mortgage under the power of sale contained in same, as Mrs. Holland did, he could have purchased all or any part of same at his sale, made himself. ” The conclusion of counsel is unsound for the simple reason that Mrs. Childers (afterwards Holland), as the mother of the minor children of Gr. W. Childers, stood in the relation to them as natural guardian. She, jointly, with the minor children, occupied the homestead that was the subject of the mortgage. This fiduciary relation precluded her from dealing with the lands embraced in the mortgage, constituting the homestead, in any manner that would not inure to their benefit as well as hers. In Foreman v. Holloway & Son, 122 Ark. 341, 183 S. W. 763, we held: ‘ ‘ Although the naked legal title to lands, included in a mortgage or deed of trust passes to the mortgagee, or to the trustee, for the purpose of .making the security available in the payment of the debt, it passes for no other purpose, and the beneficiaries in such instruments do not acqhire title absolute, except upon foreclosure, as the law requires.” Appellant contends that under this rule, Mrs. Childers acquired the absolute title in the tract of land which she purchased at the foreclosure of the mortgage. But, again, this rule is not applicable, for the same reason, that is, because of the trust relation that Mrs. Childers sustained as the natural guardian of her children in dealing with the land which constituted their homestead, as well as hers. The case here is controlled by the general principles announced in Hindman v. O’Connor, 54 Ark. 627, and Burel v. Baker, 89 Ark. 168. In the latter case we quoted from Hindman v. O’Connor, as follows: “As a general rule, a party occupying a relation of trust or confidence to another is, in "equity, bound to abstain from doing' everything which can place him in a position inconsistent with the duty or trust such relation imposes on him, or which has a tendency to interfere with the discharge of such duty. Upon this principle no one placed in a situation of trust or confidence In reference to the subject-matter of a sale can be purchaser, on his own account, of the property sold. If such a one purchases the property, it is in the option of the person interested in the property, and to whom the relation of trust and confidence was sustained, to set aside the sale .within a reasonable time, however innocent the purchaser may be. ’ ’ And, continuing further, the court, in Burel v. Baker, said: ‘ ‘ Mrs. Fletcher was, at the time she purchased the land in controversy at the foreclosure sale, in possession of it jointly with her infant children, enjoying it as the homestead of the deceased husband and father. She paid nothing for the land, and the effect of her purchase was in equity and good conscience merely to redeem it from the mortgage for the benefit of herself and her children, rather than to extinguish them, and when she violated that duty, a court of equity will hold her to be a trustee for the children and deal with the acquired title accordingly.” True, the case at bar is distinguished from Burel v. Baker, supra, in the fact that here Mrs. Childers used her own money to purchase the mortgage, and to thus remove the incumbrance from the homestead. But while that would subrogate her to the rights of the mortgagee to have the lands foreclosed to pay off the mortgage debt which she had satisfied with her own funds, it did not change her relation of trustee to her minor children, and on account of that relation, as already stated, she could not become a purchaser at the sale under which the mortgage which she had acquired was foreclosed, because, as purchaser, if she could acquire the absolute title for herself and thus ignore the interests of her minor children, she might obtain the absolute title to the property, and would be interested in acquiring the same for the amount of her mortgage debt, or even less. But as the guardian and trustee of her minor children, it was her duty, in the protection of their interests as the owners, of the fee, to make the land, at the sale, bring the highest price possible. Therefore, her individual interests and the interests of the children, which she had to conserve, would conflict. (2) As is said in Clements v. Cates, 49 Ark. 242: “The law forbids a trustee, and all other persons occupying a fiduciary or gM<m-fiduciary position, from taking any personal advantage, touching the thing or subject as to which such fiduciary position exists; or, as expressed by another, ‘wherever one person is placed in such relation to another, by the act or consent of that other, or the act of a third person, or of the law, that he becomes interested for him or interested with him in any subject of property or business, he is prohibited from acquiring rights in that subject antagonistic to the person with whose interest he has becomó associated.’ ” See, in addition to above cases, Haynes v. Montgomery, 96 Ark. 573. The familiar principles announced in the above cases are controlling here. The court below was guided by these, and its decree is in all things correct, audit is affirmed.