Smith v. Townshend

Baetol, J., delivered the opinion of this Court. The relief prayed by the bill in this case is, that certain deeds therein mentioned, made to John Hoye in his — 387 — lifetime, shall he vacated and set aside ; that George Smith, executor of John Hoye, deceased, shall he required to render an account of the trust, which was vested in his testator by the will of Paul Hoye, deceased; and that Edward Hoye, the new trustee, may render an account of his trust, and that the real and personal estate so devised in trust by Paul Hoye, and the real estate of which William W. Hoye died seized, he decreed to be sold, and the proceeds thereof be divided among the complainants and other parties interested ; it being alleged in the bill that the same is incapable of a just and equal partition among the parties entitled, and that it will be for their interest and advantage that the same be sold for the purpose of division. The provisions in the will of Paul Hoye, creating the trust, directed that the trust should continue till the youngest child of William W. Hoye should arrive at lawful age. At the time the bill was filed, Maria D. Hoye, the youngest child, was a minor; and for that reason, the appellants have argued that the bill was prematurely filed, and that to grant the relief prayed would break up and destroy the trust. But the bill charges that John Hoye, the trustee, violated his duty in purchasing the trust estate, and taking the deeds from the cestuis que trust; and so far as relief is asked in respect to the deeds, it is no valid objection to the bill that the trust was continuing. So soon as the trustee departed from his legal duty, in taking the deeds, the equity arose, and the right to apply to have them vacated. The bill also prays an account; and cestuis que trust have at all times the right to call a trustee into equity for the purpose of having an account of the trust property. We concur in the conclusions expressed in the opinions of the special judges, Mr. Gordon and Mr. Walsh, that the deeds to John Hoye mentioned in the bill of complaint, ought to he vacated and set aside, so far as they — 388 — purport to convey to him the interest and estate of the grantors in the lands devised in trust by the will of Paul Hoye. The principles which govern Courts of Equity in dealing with transactions of this kind are fully stated in Hill on Trustees, 785, 785 ; 1 Story’s Eq. J., secs. 321, 322, &c.; in Fox vs. Mackreth, 2 Bro. Ch. Cases, 400 ; Ex-parte Lacey, 6 Ves., 626 ; Coles vs. Trecotheck, 9 Ves., 234, and Morse vs. Royal, 12 Ves., 373, and by Chancellor Kent in Davoue vs. Fanning, 2 Johns. Ch. R., 252 ; and have been repeatedly recognized by this Court. In order to support a purchase of the trust estate by a trustee from the cestui que trust, it must appear that “ the trustee, has thoroughly divested himself of that character in the transaction, and entered into a new and distinct contract with the cestui que trust, that person having the fullest information on every subject.” “ There must be' no fraud, no concealment, no advantage taken by the trustee of information acquired by him in that character.” Without recapitulating the facts and circumstances of this case as disclosed by the proof, it is very evident that the grantors were ignorant of the quantity and value of the estate they were selling, no information on this subject appears to have been communicated to them by the trustee, who had possession of the title papers, and must be presumed todiave known the extent and value of the property. They looked upon- him as their benefactor, and dealt with him under the influence of the most implicit confidence in his benevolent intentions towards them. According to the evidence the price paid was greatly inadequate to the value of the property conveyed by the deeds ; and this is confirmed by the fact that the grantee promised to make other arrangements in satisfaction. Under such .circumstances the conveyances to the trustee of the trust property cannot be sustained. — 389 — In the opinion of this Court, the complainants are not estopped from impeaching these deeds, by reason of their having taken legacies under the will of John Hoye. This question is not properly presented by the record, being raised by the answer of Daniel J. Hoye, filed irregularly after the passage of the decree, and without leave of the Court. But inasmuch as the case will be remanded for further proceedings, it is proper to express our opinion on this point. The question of election does not arise upon the will of John Hoye. “ The intention to raise an election must be clear and manifest from the will itself.” Jones vs. Jones, 8 Gill, 197 ; White & Tudor’s L. Cases in Equity, 259, et seq. The legacies are not made a charge on the particular property derived by John Hoye under the deeds. He devises only the property that belonged to himself, and does not profess to devise by name or designation the trust property claimed by the complainants; there is, therefore, no inconsistency in their taking the legacies under the will, and claiming the trust estate conveyed by the deeds. The deeds in question convey also the interest and estate of the grantors in the lands derived from William W. Hoye, and the decree passed by the Court below declared them to be invalid in that respect also, and set them aside in toto. This, we think, was error. We agree with the opinion expressed by the Judge below, that there is no sufficient evidence of a resulting trust in John Hoye in these lands, and the appellants have failed to establish his title thereto as against William W. Hoye. But there is no reason why the deeds are not valid and effectual to convey to John Hoye all the estate held by the grantors therein. The deeds are not assailed as fraudulent in fact; there is no charge in the bill which affects their validity, except in so far as they purport to convey the property held in trust. — 390 — As to the rest, there was no disability in John Hoye to purchase; as to that property he was a stranger to the title, not a trustee ; the grantors were sui juris, and capable of executing a valid deed, and in the absence of the allegation and proof of fraud or mala fides in the transaction, the deeds, so far as they purport to convey the property derived from William W. Hoye have not beerr successfully impeached, and must be declared valid. In respect to that property, therefore, the complainants having no title or interest, have no equity to maintain this bill for the purpose of having a partition or a sale thereof. We have said that the complainants are entitled to have the deeds cancelled so far as they purport to convey the trust property. In granting this relief, it is equitable that the complainants be required to repay the purchase money with interest thereon, and that the trustee should be allowed such sums as may have been expended in repairs and improvements of a permanent character ; and these items, if such be proved, must enter into the account to be taken by the auditor. 1 Wh. & Tudor’s L. Cases in Eq., 116, m. In estimating the amount of purchase money actually paid for the trust property, it will be necessary to take proof of the value of the other property conveyed by the deeds, and in respect to which they are valid, and the purchase money to be refunded, will be only the excess, if any, of the price paid beyond the value of the other property which passed by the deeds. In our opinion the Court of Chancery has jurisdiction and power, under the averments in this bill, to decree a sale of tbe trust property for the purpose of a division among the parties entitled, upon competent and satisfactory proof that the same is not susceptible of partition without loss and injury to them, and that a sale will be advantageous to them. This question was decided in — 391 — Billingslea vs. Baldwin and Wife et al., 23 Md. Rep., 85, and rests upon the construction of the Act of 1785, chapter 72, and its supplement. See also Earle vs. Turton, October Term, 1866. (Decided 12th July, 1867.) In the record before us there is no competent and sufficient proof to authorize a decree to sell, the only evidence being that of Mr. Thomas Devecmon, which was taken irregularly under a commission executed without notice. To support the allegations of the bill in this behalf further proof is necessary. Without affirming or reversing the decree of the Circuit Court, this cause will be remanded under the Act of 1832, chapter 302 (Code, Art. 5, sec. 28), for further proceedings, that further proof may he taken, accounts stated and a decree passed in conformity with the opinion of this Court. Cause remanded.