Korns v. Shaffer

Weisel, J., delivered the opinion of this Court. This appeal is from a decree after an interlocutory decree under section 115 of the 16th Article of the Code of Public General Laws, and the proof taken under the ex parte commission must determine the questions both of jurisdiction and relief. The bill was filed by the appellee for a discovery and [89] an account, touching the proceeds of sale by the appellant of a canal boat, mortgaged to him to pay the purchase money, with a power in the mortgagee, in the event of a default in the payments, to talro possession of the boat and sell it after a specified notice, and upon such terms as he in his judgment might think proper, and to apply the proceeds to the payment of the debt secured by the mortgage and the necessary expenses of the sale, and to pay the surplus, if any, to the mortgagor, the appellee. The bill alleges that the appellant, after receiving various sums of money on the purchase, took possession of the boat, used her, and made profits by her trips, and then sold her, and asks a discovery of the amounts so received by him, and the sum for which she was sold, and for an account. The record shows that the' discovery was not insisted upon, the requisite proceeding under the 116th section of said Article of the Code not having been adopted. The exhibit with the bill, being the mortgage, contains the power to the mortgagee to take possession of and sell the boat, and to pay the surplus to the mortgagor. The mortgagee, in the exercise of the power, became the trustee for the mortgagor as to the surplus, and the existence of this relation determines the question of jurisdiction. As a trust was created and existed, the complainant had a right to the aid of a Court of equity for an account of the trust. The next question is, does the evidence support the decree? Two witnesses only were examined, the complainant himself and Frederick Iielfrich. The latter proved nothing material in support of the allegations of the bill. Shaffer, the appellee, was therefore the only witness in the case. He proved payments in the course of the year 1859, from trippage and other moneys, to the amount of $585 on the boat, leaving unpaid on the principal of the debt, besides interest, $865. He also proved [90] that the appellant took possession of the boat in February, 1860, and sold her, and bought her in at,his own sale for $800, and afterwards sold her to a man named Reid for $1,300. According to Helfrich’s testimony this latter sale occurred in April, 1860. If the appellant used her in the meantime, or what she produced to him from her trips while in his possession, does not sufficiently appear from the proof. The mortgage contains a power to sell, but upon terms different from those provided by the Act of 1825, ch. 203 ; nor were the provisions of that Act complied with in making the sale. The appellant cannot therefore shield himself as purchaser at his own sale under the 8th section of that act. The principle that a trustee, or one acting in a fiduciary character, cannot purchase at his own sale'has been repeatedly sanctioned and enforced by this Court. Keighler et al. vs. Sav. Manf. Co., 12 Md. Rep., 415 ; Ricketts & Whittington vs. Montgomery, 15 Md. Rep., 50 ; Cumb. Coal and Iron Co. vs. Sherman et al., 20 Md. Rep., 133 ; Md. Fire Ins. Co. vs. Dalrymple, October Term, 1865. That rule must apply to this case, there being nothing in the other facts proved to justify a conclusion that the appellee acquiesced in that sale. We must therefore treat the purchase by Korns at the first sale as void, and hold him accountable for the net surplus arising from the sale to Reid, which succeeded to the other within a short time. That sale was made for thirteen hundred dollars. That is Shaffer's recollection, corroborated by the witness Helfrich, as to the value of the boat at the time. On this basis the sum decreed b} the Court below to be paid to the appellee is considerably below what the balance appears to this Court to be ; but as there is no cross-appeal, the decree below must stand. The account comprised so few items that it was not necessary to refer it to the Auditor for adjustment, but the Court in its discretion could perform this duty and [91] ascertain the balance, without the aid of an audit. For this Campbell vs. Campbell’s Adm’r, 4 Hals. Chan. Rep., 743, is an authority. The decree below will be affirmed with costs to the appellee. (Decided 17th May, 1867.) Decree affirmed.