North Baltimore Building Ass'n v. Caldwell

Bowie, C. J., delivered the opinion of this Court. The single question in this .case is, whether it is compatible with the duty of a trustee, appointed by decree of a Court to seil real estate, to bid for and purchase the property for a third person at a public sale of the same, under the decree. It is admitted, that the general principles of law preclude a purchase by the trustee for his own benefit, but it is contended the rule extends no further, and no decisions to the contrary are to be found in this State. The general rule of law and equity, and its reasons, are very concisely and clearly expressed by Chancellor Kent, in his Commentaries. 2 Vol. 6th Ed.,p. 618. “ An agent, acting as such, cannot take upon himself, at the same time, an incompatible duty. He cannot have an adverse interest or employment. He cannot be both buyer and seller, for this would expose his fiduciary trust to abuse and fraud.” Also, Story on Agency, 199, 200. Among other reasons assigned for setting aside a sale, where the trustee appeared as a bidder, was this, viz: “ If the trustee appeared at the auction professedly as a bidder, that would operate as a discouragement to others, who, seeing the vendor ready to purchase at or above the real value, would feel a reluctance p enter into the competition, and so the sale would be chilled. Ex parte Lacey, 6 Ves., 625, 627. Lewin on Trusts, 377, note e. In the last authority, it is laid down as a legal conclusion? [424] as a trustee cannot buy on his own account, it follows that lie cannot be permitted to buy as agent for a third person ; the Court can, with as little effect, examine how far the trustee has made an undue use of information acquired by him in the course of his duty in the one case as in the other.” Vide 10 Vesey. Ex parte Bennett, 383, 393. 2 Johns. Ch. Rep., 252. 4 Cowen, 734. It needs no elaboration to enforce these views or to show the antagonism between the interest of the vendor and the vendee. Although the facts of this case do not warrant, (and the counsel of the caveators expressly disclaim all imputation of improper motive in the trustee,) yet, the principle is too important to be departed from in the most unexceptionable cases. The order of the Court below will, therefore, be affirmed, with costs of this Court to the ■appellee, and the cause remanded. (Decided July 13th 1866.) Cause remanded.